Newmont 10-Q 2022-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

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

For the Quarterly Period Ended September 30, 2022

or

☐ 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

NEWMONT CORPORATION

(Exact name of registrant as specified in its charter)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

There were 793,738,731 shares of common stock outstanding on October 25, 2022.

TABLE OF CONTENTS

GLOSSARY OF ABBREVIATIONS

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(1)See Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis.

(2)See Results of Consolidated Operations within Part I, Item 2, Management's Discussion and Analysis.

NEWMONT CORPORATION

THIRD QUARTER 2022 RESULTS AND HIGHLIGHTS

(unaudited, in millions, except per share, per ounce and per pound)

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(1)Excludes Depreciation and amortization and Reclamation and remediation.

(2)See Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis.

NEWMONT CORPORATION

THIRD QUARTER 2022 RESULTS AND HIGHLIGHTS

(unaudited, in millions, except per share, per ounce and per pound)

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(1)Attributable gold ounces produced includes 81 and 85 thousand ounces for the three months ended September 30, 2022 and 2021, respectively, and 220 and 254 thousand ounces for the nine months ended September 30, 2022 and 2021, respectively, related to the Pueblo Viejo mine, which is 40% owned by Newmont and accounted for as an equity method investment.

(2)Attributable gold ounces sold excludes ounces related to the Pueblo Viejo mine, which is 40% owned by Newmont and accounted for as an equity method investment.

(3)For the definition of gold equivalent ounces see Results of Consolidated Operations within Part I, Item 2, Management's Discussion and Analysis.

(4)Excludes Depreciation and amortization and Reclamation and remediation.

(5)See Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis.

Third Quarter 2022 Highlights (dollars in millions, except per share, per ounce and per pound amounts)

• Net income:** Reported Net income (loss) from continuing operations attributable to Newmont stockholders of $218 or $0.28 per diluted share, an increase of $226 from the prior-year quarter primarily due to the Loss on assets held for sale in 2021 related to the Conga mill assets, lower income tax expense and a gain on the change in fair value of marketable and other equity securities compared to a loss in the prior period, partially offset by lower realized metal prices and sales volumes, and higher Costs applicable to sales predominately resulting from impacts due to cost inflation.

• Adjusted net income:** Reported Adjusted net income of $212 or $0.27 per diluted share, a decrease of $0.33 per diluted share from the prior-year quarter (see Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis).

• Adjusted EBITDA:** Reported $850 in Adjusted EBITDA, a decrease of 35% from the prior-year quarter (see Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis).

• Cash Flow:** Reported Net cash provided by (used in) operating activities of continuing operations of $2,188, a decrease of 26% from the prior year, and free cash flow of $703 (see Non-GAAP Financial Measures within Part I, Item 2, Management's Discussion and Analysis).

• ESG:** Published inaugural Taxes and Royalties Contribution Report in August 2022, providing an overview of the Company's tax strategy and economic contributions as part of its commitment to shared value creation.

• Global Project Pipeline:** Delayed the full-funds investment decision for the Yanacocha Sulfides project in Peru due to challenging market conditions with the intent to focus funds on current operations and other capital commitments while management assesses execution options and project plans.

• Attributable production:** Produced 1.5 million attributable ounces of gold and 299 thousand attributable gold equivalent ounces from co-products.

• Financial position:** Ended the quarter with $3.1 billion of consolidated cash, $653 million of time deposits with a maturity of more than three months but less than one year, and $6.7 billion of liquidity; declared a dividend of $0.55 per share in October 2022.

PART I—FINANCIAL INFORMATION

NEWMONT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)

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(1)Excludes Depreciation and amortization and Reclamation and remediation.

(2)For the three months ended September 30, 2021, potentially dilutive shares were excluded in the computation of diluted loss per common share attributable to Newmont stockholders as they were antidilutive.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

NEWMONT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

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Metal Prices

Changes in the market price of gold significantly affect our profitability and cash flow. Gold prices can fluctuate widely due to numerous factors, such as demand; forward selling by producers; central bank sales, purchases and lending; investor sentiment; the strength of the USD; inflation, deflation, or other general price instability; and global mine production levels. Changes in the market price of copper, silver, lead and zinc also affect our profitability and cash flow. These metals are traded on established international exchanges and prices generally reflect market supply and demand, but can also be influenced by speculative trading in the commodity or by currency exchange rates.

Decreases in the market price of metals can also significantly affect the value of our product inventory, stockpiles and leach pads, and it may be necessary to record a write-down to the net realizable value, as well as significantly impact our carrying value of long-lived assets and goodwill. Refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for information regarding the sensitivity of our impairment analyses over long-lived assets and goodwill to changes in metal price.

Net realizable value represents the estimated future sales price based on short-term and long-term metals prices, less estimated costs to complete production and bring the product to sale. The primary factors that influence the need to record write-downs of our stockpiles, leach pads and product inventory include short-term and long-term metals prices and costs for production inputs such as labor, fuel and energy, materials and supplies as well as realized ore grades and recovery rates.

The significant assumptions in determining the stockpile, leach pad and product inventory adjustments for each mine site reporting unit at September 30, 2022 included production cost and capitalized expenditure assumptions unique to each operation and short-term and long-term assumptions as follows:

The net realizable value measurement involves the use of estimates and assumptions unique to each mining operation regarding current and future operating and capital costs, metal recoveries, production levels, commodity prices, proven and probable reserve quantities, engineering data and other factors. A high degree of judgment is involved in determining such assumptions and estimates and no assurance can be given that actual results will not differ significantly from those estimates and assumptions. As discussed in Note 2 and Note 12 of the Condensed Consolidated Financial Statements, future write-downs to the Company's stockpile, leach pad and product inventories is a potential risk in light of the current challenging market conditions, including but not limited to, significant inflation experienced globally.

Interest Rate Risk

We are subject to interest rate risk related to the fair value of our senior notes which consist of fixed rates. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. The terms of our fixed rate debt obligations do not generally allow investors to demand payment of these obligations prior to maturity. Therefore, we do not have significant exposure to interest rate risk for our fixed rate debt; however, we do have exposure to fair value risk if we repurchase or exchange long-term debt prior to maturity which could be material. See Note 9 to our Condensed Consolidated Financial Statements for further information pertaining to the fair value of our fixed rate debt.

Foreign Currency

In addition to our operations in the U.S., we have significant operations and/or assets in Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia and Ghana. All of our operations sell their gold, copper, silver, lead and zinc production based on USD metal prices. Foreign currency exchange rates can fluctuate widely due to numerous factors, such as supply and demand for foreign and U.S. currencies and U.S. and foreign country economic conditions. Fluctuations in the local currency exchange rates in relation to the USD can increase or decrease profit margins, capital expenditures, cash flow and Costs applicable to sales per ounce/ pound to the extent costs are paid in local currency at foreign operations.

Commodity Price Exposure

Our provisional concentrate 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 respective metal concentrates at the prevailing indices’ prices at the time of sale. The embedded derivative, which is not designated for hedge accounting, is marked to market through earnings each period prior to final settlement.

We perform an analysis on the provisional concentrate sales to determine the potential impact to Net income (loss) attributable to Newmont stockholders for each 10% change to the average price on the provisional concentrate sales subject to final pricing over the next several months. Refer below for our analysis as of September 30, 2022.

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(1)The closing settlement price as of September 30, 2022 is determined utilizing the London Metal Exchange for copper, lead and zinc and the London Bullion Market Association for gold and silver.

ITEM 4. CONTROLS AND PROCEDURES.

During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as amended). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in its reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Information regarding legal proceedings is contained in Note 17 of the Condensed Consolidated Financial Statements contained in this report and is incorporated herein by reference.

There were no material changes from the risk factors set forth under Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The risks described in our Annual Report and herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows and/or future results.

(1)The total number of shares purchased (and the average price paid per share) reflects: (i) shares purchased pursuant to the repurchase program described in (2) below; and (ii) represents shares delivered to the Company from stock awards held by employees upon vesting for the purpose of covering the recipients’ tax withholding obligations.

(2)In January 2021, the Company announced that the Board of Directors authorized a stock repurchase program to repurchase shares of outstanding common stock to offset the dilutive impact of employee stock award vesting and to provide returns to shareholders, provided that the aggregate value of shares of common stock repurchased under the new program does not exceed $1 billion. In February 2022, the Board of Directors authorized the extension of this program to December 31, 2022. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including trading volume, market conditions, legal requirements, business conditions and other factors. The repurchase program may be discontinued at any time, and the program does not obligate the Company to acquire any specific number of shares of its common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

At Newmont, safety is a core value, and we strive for superior performance. Our health and safety management system, which includes detailed standards and procedures for safe production, addresses topics such as employee training, risk management, workplace inspection, emergency response, accident investigation and program auditing. In addition to strong leadership and involvement from all levels of the organization, these programs and procedures form the cornerstone of safety at Newmont, ensuring that employees are provided a safe and healthy environment and are intended to reduce workplace accidents, incidents and losses, comply with all mining-related regulations and provide support for both regulators and the industry to improve mine safety.

In addition, we have established our “Rapid Response” crisis management process to mitigate and prevent the escalation of adverse consequences if existing risk management controls fail, particularly if an incident may have the potential to seriously impact the safety of employees, the community or the environment. This process provides appropriate support to an affected site to complement their technical response to an incident, so as to reduce the impact by considering the environmental, strategic, legal, financial and public image aspects of the incident, to ensure communications are being carried out in accordance with legal and ethical requirements and to identify actions in addition to those addressing the immediate hazards.

The health and safety of our people and our host communities is paramount. This is why Newmont continues to sustain robust controls at our operations and offices globally in response to the on-going COVID-19 pandemic.

The operation of our U.S. based mine is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our mine on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has also increased in recent years.

Newmont is required to report certain mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, and that required information is included in Exhibit 95 and is incorporated by reference into this Quarterly Report. It is noted that the Nevada mines owned by Nevada Gold Mines LLC, a joint venture between the Company (38.5%) and Barrick Gold Corporation (“Barrick”) (61.5%), are not included in the Company’s Exhibit 95 mine safety disclosure reporting as such sites are operated by our joint venture partner, Barrick.

On September 28, 2022, the Company announced the appointment of Brian Tabolt to interim Chief Financial Officer (principal financial officer), effective November 2, 2022. Mr. Tabolt has served as Newmont’s Vice President, Controller and Chief Accounting Officer since 2021. Mr. Tabolt participates in the Company’s standard compensation programs at the E5 Vice President level. In consideration of the interim service as Chief Financial Officer, Mr. Tabolt will receive a temporary 20% increase in his current base salary and a restricted stock unit grant to be awarded on November 3, 2022 of $700,000, that vests ratably over a three-year period. All other components of Mr. Tabolt’s compensation remain unchanged and consistent with the Company’s disclosed compensation programs. As previously disclosed, there are no other arrangements or understandings related to his appointment to this interim role between Mr. Tabolt and any other persons. Mr. Tabolt does not have a family relationship with any member of the Board of Directors or any executive officer of the Company, and Mr. Tabolt has not been a participant or had any interest in any transaction with the Company that is reportable under Item 404(a) of Regulation S-K.

During the period in which Mr. Tabolt serves as interim Chief Financial Officer, the Company has appointed Joshua Cage to serve as interim Controller and Chief Accounting Officer (principal accounting officer). Mr. Cage has over 18 years of service with Newmont in roles of progressive responsibility and has held the position of Assistant Controller since 2014. Prior to that, he served as Senior Director, Business Planning, Site Controller – Indonesia and Director, Technical Accounting and SEC Reporting. Prior to joining Newmont, Mr. Cage held audit manager and senior auditor roles at Ernst & Young and KPMG, respectively. Mr. Cage participates in the Company’s standard compensation programs at the E6 level. In consideration of the interim service as Controller and Chief Accounting Officer, Mr. Cage will receive a temporary 25% increase in his current base salary and a restricted stock unit grant on November 3, 2022 of $250,000, that vests ratably over a three-year period. All other components of Mr. Cage’s compensation remain unchanged and consistent with the Company’s compensation programs. There are no other arrangements or understandings related to his appointment to this interim role between Mr. Cage and any other persons. Mr. Cage does not have a family relationship with any member of the Board of Directors or any executive officer of the Company, and Mr. Cage has not been a participant or had any interest in any transaction with the Company that is reportable under Item 404(a) of Regulation S-K.

Additionally, the Leadership Development and Compensation Committee approved an additional annual perquisite for Mr. Robert Atkinson, Executive Vice President and Chief Operation Officer, of up to $40,000 for 2022 of reimbursed personal travel costs to the United Kingdom.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.