Edgar Filing: NEWMONT MINING CORP /DE/

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FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31240

LOGO

NEWMONT MINING CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		84-1611629
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

6363 South Fiddler’s Green Circle Greenwood Village, Colorado		80111
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (303) 863-7414

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). ¨ Yes x No

There were 491,247,996 shares of common stock outstanding on July 18, 2012 (and 4,914,758 exchangeable shares).

TABLE OF CONTENTS


	Page
PART I
ITEM 1. FINANCIAL STATEMENTS		1

Condensed Consolidated Statements of Income		1
Condensed Consolidated Statements of Comprehensive Income		2
Condensed Consolidated Statements of Cash Flows		3
Condensed Consolidated Balance Sheets		4
Notes to Condensed Consolidated Financial Statements		5

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		44

Overview		44
Selected Financial and Operating Results		46
Consolidated Financial Results		47
Results of Consolidated Operations		53
Liquidity and Capital Resources		58
Environmental		61
Accounting Developments		61
Non-GAAP Financial Measures		62
Safe Harbor Statement		64

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		65

ITEM 4. CONTROLS AND PROCEDURES		67

PART II

ITEM 1. LEGAL PROCEEDINGS		68

ITEM 1A. RISK FACTORS		68

ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES		68

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		68

ITEM 4. MINE SAFETY DISCLOSURES		68

ITEM 5. OTHER INFORMATION		69

ITEM 6. EXHIBITS		69

SIGNATURES		70

EXHIBIT INDEX		71

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in millions except per share)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Sales (Note 3)	$	2,229		$	2,384		$	4,912		$	4,849

Costs and expenses
Costs applicable to sales ⁽¹⁾ (Note 3)		1,002			917			2,019			1,857
Amortization		248			250			479			506
Reclamation and remediation (Note 4)		16			43			32			57
Exploration		106			89			194			151
Advanced projects, research and development		82			86			184			154
General and administrative		57			50			111			95
Other expense, net (Note 5)		126			87			246			160

		1,637			1,522			3,265			2,980

Other income (expense)
Other income, net (Note 6)		36			48			69			79
Interest expense, net		(71	)		(63	)		(123	)		(128	)

		(35	)		(15	)		(54	)		(49	)

Income before income and mining tax and other items		557			847			1,593			1,820
Income and mining tax expense (Note 9)		(175	)		(187	)		(518	)		(492	)
Equity income (loss) of affiliates		(11	)		—			(30	)		2

Income from continuing operations		371			660			1,045			1,330
Loss from discontinued operations (Note 10)		—			(136	)		(71	)		(136	)

Net income		371			524			974			1,194
Net income attributable to noncontrolling interests (Note 11)		(92	)		(137	)		(205	)		(293	)

Net income attributable to Newmont stockholders	$	279		$	387		$	769		$	901

Net income attributable to Newmont stockholders:
Continuing operations	$	279		$	523		$	840		$	1,037
Discontinued operations		—			(136	)		(71	)		(136	)

	$	279		$	387		$	769		$	901

Income per common share (Note 12)
Basic:
Continuing operations	$	0.56		$	1.06		$	1.69		$	2.10
Discontinued operations		—			(0.28	)		(0.14	)		(0.28	)

	$	0.56		$	0.78		$	1.55		$	1.82

Diluted:
Continuing operations	$	0.56		$	1.04		$	1.67		$	2.07
Discontinued operations		—			(0.27	)		(0.14	)		(0.27	)

	$	0.56		$	0.77		$	1.53		$	1.80

Cash dividends declared per common share	$	0.35		$	0.20		$	0.70		$	0.35

⁽¹⁾	Excludes Amortization and Reclamation and remediation.

The accompanying notes are an integral part of the condensed consolidated financial statements.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions)


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net income	$	371		$	524		$	974		$	1,194
Other comprehensive income (loss):
Unrealized loss on marketable securities, net of $18, $108, $(5) and $80 tax benefit and (expense), respectively		(273	)		(243	)		(313	)		(75	)
Foreign currency translation adjustments		(10	)		38			—			127
Change in pension and other post-retirement benefits, net of $2, $2, $4 and $3 tax expense, respectively		4			4			8			8
Change in fair value of cash flow hedge instruments, net of $8, $163, $(18) and $152 tax benefit and (expense), respectively
Net change from periodic revaluations		4			162			73			217
Net amount reclassified to income		(24	)		(39	)		(59	)		(72	)

Net unrecognized gain (loss) on derivatives		(20	)		123			14			145

Other comprehensive income (loss)		(299	)		(78	)		(291	)		205

Comprehensive income	$	72		$	446		$	683		$	1,399

Comprehensive income attributable to:
Newmont stockholders	$	(18	)	$	308		$	478		$	1,103
Noncontrolling interests		90			138			205			296

	$	72		$	446		$	683		$	1,399

The accompanying notes are an integral part of the condensed consolidated financial statements.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


	Six Months Ended June 30,
	2012			2011
Operating activities:
Net income	$	974		$	1,194
Adjustments:
Amortization		479			506
Loss from discontinued operations		71			136
Reclamation and remediation		32			57
Deferred income taxes		12			(38	)
Stock based compensation and other non-cash benefits		36			44
Impairment of marketable securities		32			1
Gain on asset sales, net		(10	)		(53	)
Other operating adjustments and write-downs		106			96
Net change in operating assets and liabilities (Note 23)		(768	)		(540	)

Net cash provided from continuing operations		964			1,403
Net cash used in discontinued operations		(8	)		(2	)

Net cash provided from operations		956			1,401

Investing activities:
Additions to property, plant and mine development		(1,578	)		(1,020	)
Sale of marketable securities		106			55
Purchases of marketable securities		(196	)		(15	)
Acquisitions, net		(22	)		(2,291	)
Proceeds from sale of other assets		13			6
Other		(37	)		(15	)

Net cash used in investing activities		(1,714	)		(3,280	)

Financing activities:
Proceeds from debt, net		3,343			775
Repayment of debt		(1,941	)		(973	)
Payment of conversion premium on debt		(172	)		—
Dividends paid to common stockholders		(347	)		(173	)
Dividends paid to noncontrolling interests		(3	)		(17	)
Proceeds from stock issuance, net		15			8
Other		(1	)		—

Net cash provided from (used in) financing activities		894			(380	)

Effect of exchange rate changes on cash		1			58

Net change in cash and cash equivalents		137			(2,201	)
Cash and cash equivalents at beginning of period		1,760			4,056

Cash and cash equivalents at end of period	$	1,897		$	1,855

The accompanying notes are an integral part of the condensed consolidated financial statements.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)


	At June 30, 2012		At December 31, 2011
ASSETS
Cash and cash equivalents	$	1,897	$	1,760
Trade receivables		290		300
Accounts receivable		359		320
Investments (Note 17)		132		94
Inventories (Note 18)		803		714
Stockpiles and ore on leach pads (Note 19)		798		671
Deferred income tax assets		255		396
Other current assets (Note 20)		738		1,133

Current assets		5,272		5,388
Property, plant and mine development, net		16,936		15,881
Investments (Note 17)		1,185		1,472
Stockpiles and ore on leach pads (Note 19)		2,579		2,271
Deferred income tax assets		1,686		1,605
Other long-term assets (Note 20)		1,002		857

Total assets	$	28,660	$	27,474

LIABILITIES
Debt (Note 21)	$	40	$	689
Accounts payable		574		561
Employee-related benefits		293		307
Income and mining taxes		173		250
Other current liabilities (Note 22)		1,287		2,133

Current liabilities		2,367		3,940
Debt (Note 21)		6,088		3,624
Reclamation and remediation liabilities (Note 4)		1,270		1,169
Deferred income tax liabilities		2,056		2,147
Employee-related benefits		487		459
Other long-term liabilities (Note 22)		403		364

Total liabilities		12,671		11,703

Commitments and contingencies (Note 26)
EQUITY
Common stock		786		784
Additional paid-in capital		8,291		8,408
Accumulated other comprehensive income		361		652
Retained earnings		3,474		3,052

Newmont stockholders’ equity		12,912		12,896
Noncontrolling interests		3,077		2,875

Total equity		15,989		15,771

Total liabilities and equity	$	28,660	$	27,474

The accompanying notes are an integral part of the condensed consolidated financial statements.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 1 BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements (“interim statements”) of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements for the year ended December 31, 2011 filed February 24, 2012 on Form 10-K. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles (“GAAP”) have been condensed or omitted.

References to “A$” refer to Australian currency, “C$” to Canadian currency, “NZ$” to New Zealand currency and “$” to United States currency.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

Goodwill Impairment

In September 2011, ASC guidance was issued related to goodwill impairment. Under the updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The update does not change how the Company performs the two-step impairment test under previous guidance. The Company’s January 1, 2012 adoption of the guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Fair Value Accounting

In May 2011, ASC guidance was issued related to disclosures around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity and disclosing quantitative information about the unobservable inputs used in fair value measurements that are categorized in Level 3 of the fair value hierarchy. The Company’s January 1, 2012 adoption of the updated guidance had no impact on the Company’s consolidated financial position, results of operations or cash flows.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 3 SEGMENT INFORMATION


	Sales		Costs Applicable to Sales		Amortization		Advanced Projects and Exploration		Pre-Tax Income (Loss)
Three Months Ended June 30, 2012
Nevada	$	571	$	258	$	47	$	43	$	217
La Herradura		93		33		6		11		46
Other North America		—		—		—		1		(54	)

North America		664		291		53		55		209

Yanacocha		614		177		62		18		333
Conga		—		—		—		12		(12	)
Other South America		—		—		—		19		(19	)

South America		614		177		62		49		302

Boddington:
Gold		264		157		49		NA		NA
Copper		42		38		12		NA		NA

Total		306		195		61		2		37

Batu Hijau:
Gold		18		11		3		NA		NA
Copper		88		70		14		NA		NA

Total		106		81		17		7		(16	)

Other Australia/New Zealand		331		182		33		18		101
Other Asia Pacific		—		—		2		4		(9	)

Asia Pacific		743		458		113		31		113

Ahafo		208		76		16		11		100
Akyem		—		—		—		5		(5	)
Other Africa		—		—		—		3		(2	)

Africa		208		76		16		19		93

Corporate and Other		—		—		4		34		(160	)

Consolidated	$	2,229	$	1,002	$	248	$	188	$	557

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


			Costs				Advanced
			Applicable to				Projects and		Pre-Tax
	Sales		Sales		Amortization		Exploration		Income (Loss)
Three Months Ended June 30, 2011
Nevada	$	529	$	224	$	56	$	38	$	195
La Herradura		81		27		5		3		44
Other North America		—		—		4		53		(8	)

North America		610		251		65		94		231

Yanacocha		524		190		66		11		232
Conga		—		—		1		7		(7	)
Other South America		—		—		—		7		(9	)

South America		524		190		67		25		216

Boddington:
Gold		269		117		31		N/A		N/A
Copper		54		27		7		N/A		N/A

Total		323		144		38		2		140

Batu Hijau:
Gold		92		30		7		N/A		N/A
Copper		242		79		18		N/A		N/A

Total		334		109		25		1		186

Other Australia/New Zealand		375		158		31		10		168
Other Asia Pacific		—		—		—		5		(34	)

Asia Pacific		1,032		411		94		18		460

Ahafo		218		65		20		8		119
Akyem		—		—		—		1		(1	)
Other Africa		—		—		—		3		(5	)

Africa		218		65		20		12		113

Corporate and Other		—		—		4		26		(173	)

Consolidated	$	2,384	$	917	$	250	$	175	$	847

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	Sales		Costs Applicable to Sales		Amortization		Advanced Projects and Exploration		Pre-Tax Income (Loss)			Total Assets		Capital Expenditures⁽¹⁾
Six Months Ended June 30, 2012
Nevada	$	1,294	$	525	$	100	$	77	$	586		$	7,280	$	370
La Herradura		186		65		11		17		91			353		29
Other North America		—		—		—		1		(106	)		199		—

North America		1,480		590		111		95		571			7,832		399

Yanacocha		1,208		338		112		35		682			2,775		243
Conga		—		—		—		39		(39	)		1,462		342
Other South America		—		—		—		44		(44	)		44		—

South America		1,208		338		112		118		599			4,281		585

Boddington:
Gold		562		294		81		N/A		N/A			N/A		N/A
Copper		103		68		18		N/A		N/A			N/A		N/A

Total		665		362		99		5		180			4,640		52

Batu Hijau:
Gold		52		30		6		N/A		N/A			N/A		N/A
Copper		260		155		30		N/A		N/A			N/A		N/A

Total		312		185		36		14		32			3,651		61

Other Australia/New Zealand		758		372		69		33		280			1,348		137
Other Asia Pacific		—		—		3		10		(4	)		606		8

Asia Pacific		1,735		919		207		62		488			10,245		258

Ahafo		489		172		40		22		250			1,328		108
Akyem		—		—		—		9		(10	)		750		189
Other Africa		—		—		—		5		(4	)		9		—

Africa		489		172		40		36		236			2,087		297

Corporate and Other		—		—		9		67		(301	)		4,215		37

Consolidated	$	4,912	$	2,019	$	479	$	378	$	1,593		$	28,660	$	1,576

⁽¹⁾	Includes a decrease in accrued capital expenditures of $2; consolidated capital expenditures on a cash basis were $1,578.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	Sales		Costs Applicable to Sales		Amortization		Advanced Projects and Exploration		Pre-Tax Income (Loss)			Total Assets		Capital Expenditures⁽¹⁾
Six Months Ended June 30, 2011
Nevada	$	1,111	$	496	$	128	$	55	$	411		$	6,797	$	228
La Herradura		146		45		9		9		80			260		41
Other North America		—		—		7		97		(58	)		2,294		27

North America		1,257		541		144		161		433			9,351		296

Yanacocha		886		343		119		17		381			2,634		127
Conga		—		—		1		10		(11	)		562		251
Other South America		—		—		—		14		(15	)		37		—

South America		886		343		120		41		355			3,233		378

Boddington:
Gold		501		217		59		N/A		N/A			N/A		N/A
Copper		107		55		14		N/A		N/A			N/A		N/A

Total		608		272		73		3		244			4,419		75

Batu Hijau:
Gold		232		64		14		N/A		N/A			N/A		N/A
Copper		611		168		38		N/A		N/A			N/A		N/A

Total		843		232		52		1		509			3,513		88

Other Australia/New Zealand		790		324		66		22		365			1,124		134
Other Asia Pacific		—		—		1		6		(34	)		625		4

Asia Pacific		2,241		828		192		32		1,084			9,681		301

Ahafo		465		145		42		15		255			1,037		37
Akyem		—		—		—		2		(2	)		351		67
Other Africa		—		—		—		3		(6	)		6		—

Africa		465		145		42		20		247			1,394		104

Corporate and Other		—		—		8		51		(299	)		4,979		18

Consolidated	$	4,849	$	1,857	$	506	$	305	$	1,820		$	28,638	$	1,097

⁽¹⁾	Includes an increase in accrued capital expenditures of $77; consolidated capital expenditures on a cash basis were $1,020.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 4 RECLAMATION AND REMEDIATION

At June 30, 2012 and December 31, 2011, $1,145 and $1,070, respectively, were accrued for reclamation obligations relating to mineral properties. In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At June 30, 2012 and December 31, 2011, $191 and $170, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.

The following is a reconciliation of Reclamation and remediation liabilities:


	Six Months Ended June 30,
	2012			2011
Balance at beginning of period	$	1,240		$	1,048
Additions, changes in estimates and other		105			32
Liabilities settled		(41	)		(15	)
Accretion expense		32			29

Balance at end of period	$	1,336		$	1,094

The current portion of Reclamation and remediation liabilities of $66 and $71 at June 30, 2012 and December 31, 2011, respectively, are included in Other current liabilities (see Note 22).

The Company’s reclamation and remediation expenses consisted of:


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Reclamation	$	—	$	28	$	—	$	28
Accretion - operating		13		13		27		25
Accretion - non-operating		3		2		5		4

	$	16	$	43	$	32	$	57

NOTE 5 OTHER EXPENSE, NET


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Hope Bay care and maintenance	$	52	$	—	$	102	$	—
Community development		20		23		51		40
Regional administration		29		21		50		37
Acquisiton costs		12		20		12		21
Western Australia power plant		4		5		8		9
Indonesian value added tax settlement		—		—		—		21
Other		9		18		23		32

	$	126	$	87	$	246	$	160

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 6 OTHER INCOME, NET


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Income (loss) from developing projects, net	$	19		$	(4	)	$	33		$	20
Reduction of allowance for loan receivable		—			—			21			—
Canadian Oil Sands		11			10			20			16
Gain on asset sales, net		—			—			10			3
Refinery income, net		2			—			7			—
Interest		2			2			7			6
Gain on sale of investments, net		—			50			—			50
Foreign currency exchange, net		12			(18	)		(3	)		(29	)
Impairment of marketable securities		(8	)		(1	)		(32	)		(1	)
Other		(2	)		9			6			14

	$	36		$	48		$	69		$	79

NOTE 7 EMPLOYEE PENSION AND OTHER BENEFIT PLANS


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Pension benefit costs, net
Service cost	$	8		$	6		$	15		$	12
Interest cost		11			10			21			20
Expected return on plan assets		(11	)		(11	)		(22	)		(21	)
Amortization		8			7			14			12

	$	16		$	12		$	28		$	23


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Other benefit costs, net
Service cost	$	—		$	—		$	1		$	1
Interest cost		2			1			3			2

	$	2		$	1		$	4		$	3

NOTE 8 STOCK BASED COMPENSATION


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Stock options	$	3	$	7	$	7	$	10
Restricted stock units		6		11		11		21
Performance leveraged stock units		3		1		6		3
Strategic stock units		1		—		1		—

	$	13	$	19	$	25	$	34

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 9 INCOME AND MINING TAXES

During the second quarter of 2012, the Company recorded estimated income and mining tax expense of $175 resulting in an effective tax rate of 32%. Estimated income and mining tax expense during the second quarter of 2011 was $187 for an effective tax rate of 22%. During the first half of 2012, estimated income and mining tax expense was $518 resulting in an effective tax rate of 33%. Estimated income and mining tax expense during the first half of 2011 was $492 for an effective tax rate of 27%. The higher effective tax rate in the second quarter and first half of 2012 is a result of the following: (i) valuation allowances recorded on our Canadian deferred tax assets generated in 2012 due to care and maintenance expenditures at Hope Bay, (ii) an increase in mining taxes included in Income and mining tax expense, primarily related to Nevada and Peru, and (iii) a $65 non-recurring tax benefit in the second quarter and first half of 2011, recorded in connection with the conversion of non-U.S. tax-paying entities to entities currently subject to U.S. income tax which resulted in an increase in net deferred tax assets.

The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.

At June 30, 2012, the Company’s total unrecognized tax benefit was $245 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $28 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate.

As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $20 to $25 in the next 12 months.

The Company’s income and mining tax expense differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:


	Three Months Ended June 30,												Six Months Ended June 30,
	2012						2011						2012						2011
Income before income and mining tax and other items				$	557					$	847					$	1,593					$	1,820

Tax on income at statutory rate		35	%		195			35	%		296			35	%		558			35	%		637
Reconciling items:
Tax benefit generated on change in form of a non-U.S. subsidiary					—			(8	)%		(65	)					—			(4	)%		(65	)
Percentage depletion		(6	)%		(34	)		(7	)%		(56	)		(7	)%		(108	)		(6	)%		(111	)
Change in valuation allowance on deferred tax assets		2	%		13						—			3	%		46						—
Other		1	%		1			2	%		12			2	%		22			2	%		31

Income and mining tax expense		32	%	$	175			22	%	$	187			33	%	$	518			27	%	$	492

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 10 DISCONTINUED OPERATIONS

Discontinued operations include Holloway Mining Company, which owned the Holt-McDermott property (“Holt property”) and was sold to St. Andrew Goldfields Ltd. (“St. Andrew”) in 2006. In 2009, the Superior Court issued a decision finding Newmont Canada Corporation (“Newmont Canada”) liable for a sliding scale royalty on production from the Holt property, which was upheld in 2011 by the Ontario Court of Appeal. During the first half of 2012, the Company recorded an additional $71 charge, net of tax benefits of $4, to reflect an increase in future expected production at the Holt property due to new reserve and resource estimates published by St. Andrew and a higher gold price.

Net operating cash used in discontinued operations of $8 in the first half of 2012 relates to payments on the Holt property royalty.

NOTE 11 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS


	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012		2011
Yanacocha	$	97		$	72	$	195	$	126
Batu Hijau		(5	)		64		8		166
Other		—			1		2		1

	$	92		$	137	$	205	$	293

At June 30, 2012, Newmont had a 48.5% effective economic interest in PT Newmont Nusa Tenggara (“PTNNT”). PTNNT operates the Batu Hijau copper and gold mine in Indonesia. Based on ASC guidance for variable interest entities, Newmont consolidates PTNNT in its Condensed Consolidated Financial Statements.

Newmont has a 51.35% ownership interest in Minera Yanacocha S.R.L. (“Yanacocha”), with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 12 INCOME PER COMMON SHARE

Basic income per common share is computed by dividing income available to Newmont common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share is computed similarly to basic income per common share except that weighted average common shares is increased to include the potential issuance of dilutive common shares.


	Three Months Ended June 30,					Six Months Ended June 30,
	2012		2011			2012			2011
Net income attributable to Newmont stockholders
Continuing operations	$	279	$	523		$	840		$	1,037
Discontinued operations		—		(136	)		(71	)		(136	)

	$	279	$	387		$	769		$	901

Weighted average common shares:
Basic		496		494			496			494
Effect of employee stock-based awards		1		1			1			1
Effect of convertible notes		1		6			5			6

Diluted		498		501			502			501

Income per common share
Basic:
Continuing operations	$	0.56	$	1.06		$	1.69		$	2.10
Discontinued operations		—		(0.28	)		(0.14	)		(0.28	)

	$	0.56	$	0.78		$	1.55		$	1.82

Diluted:
Continuing operations	$	0.56	$	1.04		$	1.67		$	2.07
Discontinued operations		—		(0.27	)		(0.14	)		(0.27	)

	$	0.56	$	0.77		$	1.53		$	1.80

Options to purchase 2 and 3 million shares of common stock at average exercise prices of $58 and $57 were outstanding at June 30, 2012 and 2011, respectively, but were not included in the computation of diluted weighted average common shares because their effect would have been anti-dilutive.

Under its convertible note indentures, Newmont is required to settle the principal amount of its 2014 and 2017 Convertible Senior Notes in cash and may elect to settle the remaining conversion premium (Newmont average share price in excess of the conversion price), if any, in cash, shares or a combination thereof. The effect of contingently convertible instruments on diluted earnings per share is calculated under the net share settlement method in accordance with ASC guidance. The average price of the Company’s common stock exceeded the conversion prices for all periods presented, resulting in additional shares included in the computation of diluted weighted average common shares.

In February 2012, the holders of the Company’s 2012 Convertible Senior Notes exercised their election to convert the notes. The Company elected to pay the $172 conversion premium with cash, and as a result no common shares were issued.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 13 CHANGES IN EQUITY


	Six Months Ended June 30,
	2012			2011
Common stock:
At beginning of period	$	784		$	778
Stock based awards		2			2

At end of period		786			780

Additional paid-in capital:
At beginning of period		8,408			8,279
Stock based awards		55			52
Conversion premium on convertible notes		(172	)		—
Shares issued in exchange for exchangeable shares		—			(1	)

At end of period		8,291			8,330

Accumulated other comprehensive income:
At beginning of period		652			1,108
Other comprehensive income		(291	)		202

At end of period		361			1,310

Retained earnings:
At beginning of period		3,052			3,180
Net income attributable to Newmont stockholders		769			901
Dividends paid		(347	)		(173	)

At end of period		3,474			3,908

Noncontrolling interests:
At beginning of period		2,875			2,371
Net income attributable to noncontrolling interests		205			293
Dividends paid		(3	)		(2	)
Other comprehensive income		—			3

At end of period		3,077			2,665

Total equity	$	15,989		$	16,993

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 14 ACQUISITIONS

On April 6, 2011, Newmont completed the acquisition of Fronteer Gold, Inc. (“Fronteer”). Under the Arrangement, shareholders of Fronteer received C$14.00 in cash and one-fourth common share in Pilot Gold, which retained certain exploration assets of Fronteer, for each common share of Fronteer. In connection with the acquisition, Newmont incurred transaction costs of $21, which were recorded in Other Expense, net in the first half of 2011.

On June 25, 2009 the Company completed the acquisition of the remaining 33.33% interest in Boddington from AngloGold Ashanti Australia Limited (“AngloGold”), with a transaction that included maximum contingent consideration of $100, based on an operating margin royalty. Since the completion of the acquisition, the Company has accrued the maximum royalty, of which $12 was accrued in the current quarter.

NOTE 15 FAIR VALUE ACCOUNTING

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:



		Level 1		Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

		Level 2		Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

		Level 3		Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	Fair Value at June 30, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	503	$	503	$	—	$	—
Marketable equity securities:
Extractive industries		1,110		1,110		—		—
Other		10		10		—		—
Marketable debt securities:
Asset backed commercial paper		19		—		—		19
Corporate		98		—		98		—
Auction rate securities		5		—		—		5
Trade receivable from provisional copper and gold concentrate sales, net		179		179		—		—
Derivative instruments, net:
Foreign exchange forward contracts		223		—		223		—

	$	2,147	$	1,802	$	321	$	24

Liabilities:
Diesel forward contracts		8		—		8		—
Boddington contingent consideration		44		—		—		44
Holt property royalty		243		—		—		243

	$	295	$	—	$	8	$	287

The Company’s cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.

The Company’s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The securities are segregated based on industry. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

The Company’s corporate marketable debt securities are valued using quoted market prices in non-active markets and as such are classified within Level 2 of the fair value hierarchy. The Company’s marketable debt securities include investments in auction rate securities and asset backed commercial paper. The Company reviews the fair value for auction rate securities and asset backed commercial paper on a quarterly basis. The auction rate securities are traded in markets that are not active, trade infrequently and have little price transparency. The Company estimated the fair value of the auction rate securities based on weighted average risk calculations using cash flow assumptions discounted approximately 42%, which reflects an estimated discount for lack of marketability. The Company estimated the fair value of its asset backed commercial paper using a probability of return ranging from 13%-74% for each class of notes, which is reflective of information reviewed regarding the separate classes of securities. As a result of utilizing the unobservable inputs noted above in its fair value estimation of the Company’s auction rate securities and asset backed commercial paper, both fair value estimates are classified within Level 3 of the fair value hierarchy.

The Company’s net trade receivable from provisional copper and gold concentrate sales, subject to final pricing, is valued using quoted market prices based on forward curves and, as such, is classified within Level 1 of the fair value hierarchy.

The Company’s derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company’s derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

The estimated value of the Boddington contingent royalty was determined using a Monte Carlo valuation model which simulates future gold and copper prices and costs applicable to sales. This contingent royalty is capped at $100, and at June 30, 2012, the Company has accrued the maximum of $100. At June 30, 2012 the Company used the following long-term price assumptions: 1) $1,500 per ounce gold price, 2) $3.50 per pound copper price, 3) $90 per barrel of oil, and 4) a $1.00 A$/US$ exchange rate. The Company used an approximate 4% discount rate in the model. The contingent royalty liability is classified within Level 3 of the fair value hierarchy.

The estimated fair value of the Holt sliding scale royalty was determined using a Monte Carlo valuation model to simulate future gold prices utilizing a long-term gold price assumption of $1,500 per ounce, various gold production scenarios based on publicly available reserve and resource information for the Holt property and an approximate 4% weighted average discount rate. The sliding scale royalty liability is classified within Level 3 of the fair value hierarchy.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial assets and liabilities for the six months ended June 30, 2012:


	Auction Rate Securities		Asset Backed Commercial Paper		Total Assets		Boddington Contingent Royalty			Holt Property Royalty			Total Liabilities
Balance at beginning of period	$	5	$	19	$	24	$	54		$	176		$	230
Settlements		—		—		—		(22	)		(8	)		(30	)
Revaluation		—		—		—		12			75			87

Balance at end of period	$	5	$	19	$	24	$	44		$	243		$	287

At June 30, 2012, assets and liabilities classified within Level 3 of the fair value hierarchy represent 1% and 97%, respectively, of total assets and liabilities measured at fair value.

NOTE 16 DERIVATIVE INSTRUMENTS

The Company’s strategy is to provide shareholders with leverage to changes in gold and copper prices by selling its production at spot market prices. Consequently, the Company does not hedge its gold and copper sales. The Company continues to manage certain risks associated with commodity input costs, interest rates and foreign currencies using the derivative market. All of the derivative instruments described below were transacted for risk management purposes and qualify as cash flow or fair value hedges.

Cash Flow Hedges

The foreign currency, diesel and forward starting swap contracts are designated as cash flow hedges, and as such, the effective portion of unrealized changes in market value have been recorded in Accumulated other comprehensive income and are reclassified to income during the period in which the hedged transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings.

Foreign Currency Contracts

Newmont utilizes foreign currency contracts to reduce the variability of the US dollar amount of forecasted foreign currency expenditures caused by changes in exchange rates. Newmont hedges a portion of the Company’s A$ and NZ$ denominated operating expenditures which results in a blended rate realized each period. The hedging instruments are fixed forward contracts with expiration dates ranging up to five years from the date of issue. The principal hedging objective is reduction in the volatility of realized period-on-period $/A$ and $/NZ$ rates, respectively.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

In June 2011, Newmont began hedging a portion of the Company’s A$ denominated capital expenditures related to the construction of the Akyem project in Africa utilizing foreign currency contracts. The hedging instruments are fixed forward contracts with expiration dates ranging up to two years.

In July 2011, Newmont began hedging a portion of the Company’s A$ denominated capital expenditures related to the construction of a mine shaft at Tanami in Australia utilizing foreign currency contracts. The hedging instruments are fixed forward contracts with expiration dates ranging up to three years.

Newmont had the following foreign currency derivative contracts outstanding at June 30, 2012:


	Expected Maturity Date
	2012			2013			2014			2015			2016			2017			Total/ Average
A$ Operating Fixed Forward Contracts:
A$ notional (millions)		641			1,048			762			471			244			28			3,194
Average rate ($/A$)		0.93			0.93			0.90			0.89			0.90			0.88			0.91
Expected hedge ratio		78	%		68	%		50	%		33	%		17	%		4	%
A$ Capital Fixed Forward Contracts:
A$ notional (millions)		27			51			22			—			—			—			100
Average rate ($/A$)		1.00			0.98			0.96			—			—			—			0.98
Expected hedge ratio		37	%		28	%		40	%		—			—			—
NZ$ Operating Fixed Forward Contracts:
NZ$ notional (millions)		41			37			4			—			—			—			82
Average rate ($/NZ$)		0.78			0.78			0.78			—			—			—			0.78
Expected hedge ratio		60	%		29	%		8	%		—			—			—

Diesel Fixed Forward Contracts

Newmont hedges a portion of its operating cost exposure related to diesel consumed at its Nevada operations to reduce the variability in realized diesel prices. The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates ranging up to three years from the date of issue.

Newmont had the following diesel derivative contracts outstanding at June 30, 2012:


	Expected Maturity Date
	2012			2013			2014			2015			Total/ Average
Diesel Fixed Forward Contracts:
Diesel gallons (millions)		16			22			10			1			49
Average rate ($/gallon)		2.91			2.92			2.88			2.85			2.91
Expected hedge ratio		71	%		50	%		24	%		8	%

Forward Starting Swap Contracts

During 2011, Newmont entered into forward starting interest rate swap contracts with a total notional value of $2,000. These contracts hedged movements in treasury rates related to a debt issuance that occurred in the first quarter of 2012. On March 8, 2012, Newmont closed its sale of $2,500 senior notes consisting of 3.5% senior notes due 2022 in the principal amount of $1,500 (10-year notes), and 4.875% senior notes due 2042 in the principal amount of $1,000 (30-year notes). As a result, the forward-starting interest rate swaps were settled for $362, of which $349 represented the effective portion of the hedging instrument included in Accumulated other comprehensive income. The net proceeds from the debt issuance were adjusted by the settlement amount of the swap contracts and included as a financing activity in the Condensed Consolidated Statements of Cash Flow.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

Fair Value Hedges

Interest Rate Swap Contracts

Newmont had $222 fixed to floating swap contracts designated as a hedge against 8 5/8% debentures which matured in May 2011.

Derivative Instrument Fair Values

Newmont had the following derivative instruments designated as hedges at June 30, 2012 and December 31, 2011:


	Fair Value
	At June 30, 2012
	Other Current Assets		Other Long- Term Assets		Other Current Liabilities		Other Long- Term Liabilities
Foreign currency exchange contracts:
A$ operating fixed forwards	$	102	$	121	$	2	$	1
A$ capital fixed forwards		1		1		—		—
NZ$ operating fixed forwards		1		—		—		—
Diesel fixed forwards		1		—		6		3

Total derivative instruments (Note 20 and 22)	$	105	$	122	$	8	$	4


	Fair Value
	At December 31, 2011
	Other Current Assets		Other Long- Term Assets		Other Current Liabilities		Other Long- Term Liabilities
Foreign currency exchange contracts:
A$ operating fixed forwards	$	121		112		6		4
A$ capital fixed forwards		—		—		—		1
NZ$ operating fixed forwards		2		—		1		—
Diesel fixed forwards		4		—		2		1
Forward starting interest rate swaps		—		—		399		—

Total derivative instruments (Note 20 and 22)	$	127	$	112	$	408	$	6

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

The following tables show the location and amount of gains (losses) reported in the Company’s Condensed Consolidated Financial Statements related to the Company’s cash flow and fair value hedges and the gains (losses) recorded for the hedged item related to the fair value hedges.


	Foreign Currency Exchange Contracts				Diesel Forward Contracts						Forward Starting Swap Contracts
	2012		2011		2012			2011			2012			2011
For the three months ended June 30,
Cash flow hedging relationships:
Gain (loss) recognized in other comprehensive income (effective portion)	$	23	$	126	$	(16	)	$	(5	)	$	—		$	—

Gain (loss) reclassified from Accumulated other comprehensive income into income (effective portion) ⁽¹⁾		38		49		1			5			(3	)		—

For the six months ended June 30,
Cash flow hedging relationships:
Gain (loss) recognized in other comprehensive income (effective portion)	$	85	$	193	$	(4	)	$	10		$	36		$	—

Gain(loss) reclassified from Accumulated other comprehensive income into income (effective portion) ⁽¹⁾		85		91		4			9			(4	)		—
Gain reclassified from Accumulated other comprehensive income into income (ineffective portion) ⁽²⁾		—		—		—			—			2			—

⁽¹⁾

The gain (loss) for the effective portion of the foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales. The loss for the effective portion of the forward starting swaps reclassified from Accumulated other comprehensive income is included in Interest Expense.

⁽²⁾	The ineffective portion recognized for cash flow hedges is included in Other Income, net.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	Interest Rate Swap Contracts					8 5/8% Debentures (Hedged Portion)
	2012		2011			2012		2011
For the three months ended June 30,
Fair value hedging relationships:
Gain (loss) recognized in income (effective portion) ⁽¹⁾	$	—	$	1		$	—	$	(1	)
(Loss) recognized in income (ineffective portion) ⁽²⁾		—		(1	)		—		—

For the six months ended June 30,
Fair value hedging relationships:
Gain (loss) recognized in income (effective portion) ⁽¹⁾	$	—	$	3		$	—	$	(6	)
(Loss) recognized in income (ineffective portion) ⁽²⁾		—		(2	)		—		—

⁽¹⁾	The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net.

⁽²⁾	The ineffective portion recognized for fair value hedges and the underlying hedged debt is included in Other income, net.

The amount to be reclassified from Accumulated other comprehensive income, net of tax to income for derivative instruments during the next 12 months is a gain of approximately $49.

Provisional Copper and Gold Sales

The Company’s provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the gold and copper concentrates at the prevailing indices’ prices at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.

London Metal Exchange (“LME”) copper prices averaged $3.57 per pound during the three months ended June 30, 2012, compared with the Company’s recorded average provisional price of $3.52 per pound before mark-to-market adjustments and treatment and refining charges. LME copper prices averaged $3.67 per pound during the six months ended June 30, 2012, compared with the Company’s recorded average provisional price of $3.65 per pound before mark-to-market adjustments and treatment and refining charges. During the three and six months ended June 30, 2012, changes in copper prices resulted in a provisional pricing mark-to-market loss of $18 ($0.40 per pound) and gain of $13 ($0.12 per pound), respectively. At June 30, 2012, Newmont had copper sales of 40 million pounds priced at an average of $3.44 per pound, subject to final pricing over the next several months.

The average London P.M. fix for gold was $1,609 per ounce during the three months ended June 30, 2012, compared with the Company’s recorded average provisional price of $1,607 per ounce before mark-to-market adjustments and treatment and refining charges. The average London P.M. fix for gold was $1,651 per ounce during the six months ended June 30, 2012, compared to the Company’s recorded average provisional price of $1,651 per ounce before mark-to-market adjustments and treatment and refining charges. During the three and six months ended June 30, 2012, changes in gold prices resulted in a provisional pricing mark-to-market loss of $2 ($2 per ounce) and gain of $4 ($1 per ounce), respectively. At June 30, 2012, Newmont had gold sales of 74,000 ounces priced at an average of $1,600 per ounce, subject to final pricing over the next several months.

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 17 INVESTMENTS


	At June 30, 2012
	Cost/Equity		Unrealized					Fair/Equity
	Basis		Gain		Loss			Basis
Current:
Marketable Equity Securities:
Paladin Energy Ltd.	$	60	$	7	$	—		$	67
Other		14		6		(3	)		17

		74		13		(3	)		84

Marketable Debt Securities:
Corporate		48		—		—			48

	$	122	$	13	$	(3	)	$	132

Long-term:
Marketable Debt Securities:
Asset backed commercial paper	$	25	$	—	$	(6	)	$	19
Auction rate securities		8		—		(3	)		5
Corporate		48		2		—			50

		81		2		(9	)		74

Marketable Equity Securities:
Canadian Oil Sands Ltd.		303		296		—			599
Gabriel Resources Ltd.		76		1		—			77
Regis Resources Ltd.		36		260		—			296
Other		68		8		(12	)		64

		483		565		(12	)		1,036

Other investments, at cost		12		—		—			12

Investment in Affiliates:
Euronimba Ltd.		2		—		—			2
Minera La Zanja S.R.L.		61		—		—			61

	$	639	$	567	$	(21	)	$	1,185

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	At December 31, 2011
	Cost/Equity		Unrealized					Fair/Equity
	Basis		Gain		Loss			Basis
Current:
Marketable Equity Securities:
Paladin Energy Ltd.	$	60	$	13	$	—		$	73
Other		15		7		(1	)		21

	$	75	$	20	$	(1	)	$	94

Long-term:
Marketable Debt Securities:
Asset backed commercial paper	$	25	$	—	$	(6	)	$	19
Auction rate securities		7		—		(2	)		5
Corporate		10		1		—			11

		42		1		(8	)		35

Marketable Equity Securities:
Canadian Oil Sands Trust		302		401		—			703
Gabriel Resources Ltd.		76		236		—			312
Regis Resources Ltd.		36		218		—			254
Other		92		16		(17	)		91

		506		871		(17	)		1,360

Other investments, at cost		11		—		—			11

Investment in Affiliates:
Minera La Zanja S.R.L.		66		—		—			66

	$	625	$	872	$	(25	)	$	1,472

Included in Investments at June 30, 2012 and December 31, 2011 are $7 and $11 of long-term marketable debt securities, respectively, and $10 and $4 of long-term marketable equity securities, respectively, that are legally pledged for purposes of settling asset retirement obligations related to the San Jose Reservoir at Yanacocha.

During the three and six months ended June 30, 2012, the Company recognized impairments for other-than-temporary declines in value of $8 and $32 for marketable equity securities.

During the first half of 2012, the Company made net purchases of corporate marketable debt securities of $91.

The following tables present the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	Less than 12 Months				12 Months or Greater				Total
At June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Marketable equity securities	$	34	$	14	$	—	$	—	$	34	$	14
Asset backed commercial paper		—		—		19		6		19		6
Auction rate securities		—		—		5		3		5		3

	$	34	$	14	$	24	$	9	$	58	$	23


	Less than 12 Months				12 Months or Greater				Total
At December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Marketable equity securities	$	42	$	18	$	—	$	—	$	42	$	18
Asset backed commercial paper		—		—		19		6		19		6
Auction rate securities		—		—		5		2		5		2

	$	42	$	18	$	24	$	8	$	66	$	26

While the fair values of the Company’s investments in asset backed commercial paper and auction rate securities are below their respective cost, the Company views these declines as temporary. The Company intends to hold its investment in auction rate securities and asset backed commercial paper until maturity or such time that the market recovers and therefore considers these losses temporary.

NOTE 18 INVENTORIES


	At June 30,		At December 31,
	2012		2011
In-process	$	123	$	159
Concentrate		192		116
Precious metals		36		12
Materials, supplies and other		452		427

	$	803	$	714

NOTE 19 STOCKPILES AND ORE ON LEACH PADS


	At June 30,		At December 31,
	2012		2011
Current:
Stockpiles	$	590	$	506
Ore on leach pads		208		165

	$	798	$	671

Long-term:
Stockpiles	$	2,187	$	1,904
Ore on leach pads		392		367

	$	2,579	$	2,271

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(dollars in millions, except per share, per ounce and per pound amounts)


	At June 30,		At December 31,
	2012		2011
Stockpiles and ore on leach pads:
Nevada	$	608	$	536
La Herradura		21		6
Yanacocha		591		512
Boddington		456		435
Batu Hijau		1,331		1,119
Other Australia/New Zealand		165		161
Ahafo		205		173

	$	3,377	$	2,942

NOTE 20 OTHER ASSETS


	At June 30,		At December 31,
	2012		2011
Other current assets:
Refinery metal inventory and receivable	$	393	$	796
Prepaid assets		176		93
Derivative instruments		105		127
Restricted cash		2

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