DENVER--(BUSINESS WIRE)-- Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company) announced full year and fourth quarter 2017 results that demonstrated improved operational and financial performance.

Full Year 2017 Summary
• Net income (loss): Delivered full year GAAP net income (loss) from continuing operations attributable to stockholders of $(60) million or $(0.11) per diluted share; delivered adjusted net income1 of $780 million or $1.46 per diluted share, up 26 percent compared to the prior year
• EBITDA: Generated $2.7 billion in adjusted EBITDA2, up 12 percent compared to the prior year
• Cash flow: Reported consolidated operating cash flow from continuing operations of $2.4 billion, up 22 percent from the prior year, and free cash flow3 of $1.5 billion, up 88 percent from the prior year
• Gold costs applicable to sales (CAS)4: Reported CAS of $691 per ounce, in line with full year guidance
• Gold all-in sustaining costs (AISC)5: Reported AISC of $924 per ounce, in line with full year guidance
• Attributable gold production: Produced 5.3 million ounces of gold, up eight percent from the prior year, in line with full year guidance
• Portfolio improvements: Declared commercial production at the Tanami Expansion Project and approved the Tanami Power Project in Australia; achieved a full year of underground operation at Northwest Exodus and mined first ore at the Twin Creeks Underground mine in Nevada; approved and progressed expansion of the Ahafo Mill and produced first gold at Subika Underground in Africa; completed first full year of operations at Merian in Suriname; approved Quecher Main and increased ownership in Yanacocha in Peru; invested in early stage development projects in the Canadian Yukon, Colombia, Guiana Shield and the Andes; declared gold reserves of 68.5 million ounces, fully replacing depletion at a constant gold price, and increased gold resources6 to 48.2 million ounces
• Financial strength: Reduced net debt to $0.8 billion, ending the year with $3.3 billion cash on hand, and an industry leading, investment-grade credit profile; fourth quarter dividend declared raised to $0.14 per share, nearly three times higher than the prior year quarter
• Outlook: Released improved 2018 guidance at Investor Day for attributable production, CAS per ounce and AISC per ounce; increased 2018 capital outlook by $300 million7 following approval of the Tanami Power Project and the Turquoise Ridge Joint Venture Mine Optimization Project

“Newmont continued its steady trajectory of improving operational and financial performance in 2017, and built a stronger base for long-term value creation,” said Gary J. Goldberg, President and Chief Executive Officer. “We improved adjusted EBITDA by 12 percent to $2.7 billion and free cash flow by 88 percent to $1.5 billion on the back of lower cost production from newer mines and ongoing productivity improvements across the portfolio. This performance gave us the means to invest in five new projects, raise our dividend by 87 percent, and increase our investment in exploration – an investment that paid off as we added 6.4 million ounces of gold to our Reserve base, offsetting depletion for the first time in five years.”

Fourth Quarter 2017 Summary
Net income (loss): Delivered GAAP Net income (loss) from continuing operations attributable to stockholders of $(534) million or $(0.99) diluted share; adjusted net income was $216 million or $0.40 per diluted share, up 60 percent from the prior year quarter
• EBITDA: Generated $736 million in adjusted EBITDA, up 17 percent from the prior year quarter
• Cash flow: Increased consolidated operating cash flow from continuing operations to $754 million, up 28 percent from the prior year quarter; and increased free cash flow to $445 million, up 54 percent from the prior year quarter
• Gold CAS per ounce: Rose two percent to $693 per ounce
• Gold AISC per ounce: Rose five percent to $968 per ounce
• Production: Produced 1.3 million attributable gold ounces
• Shareholder returns: Nearly tripled the fourth quarter dividend declared to $0.14 per share compared to the prior year quarter

Full Year and Fourth Quarter 2017 Results

GAAP Net income (loss) from continuing operations attributable to stockholders for the full year was $(60) million or $(0.11) per diluted share, compared to a loss of $(220) million or $(0.41) per diluted share in the prior year primarily due to higher gold production, higher average realized gold prices and a prior year impairment at Yanacocha partially offset by the impact of changes in U.S. tax legislation. Net loss for the quarter was $(534) million or $(0.99) per diluted share, compared to a loss of $(391) million or $(0.73) per diluted share in the prior year quarter for similar reasons.

Adjusted net income for the full year was $780 million or $1.46 per diluted share, compared to $619 million or $1.16 per diluted share in the prior year. Adjusted net income for the quarter was $216 million or $0.40 per diluted share, up 60 percent from $133 million or $0.25 per share in the prior year quarter. The principal adjustments to fourth quarter net income included $1.30 per diluted share of net tax adjustments, including non-cash charges of $346 million related to the re-measurement of U.S. deferred tax assets and liabilities and $395 million related to tax restructuring, following the enactment of the Tax Cuts and Jobs Act, and $0.11 per share for reclamation and remediation expense at the Company’s former historic mining operations.

Revenue rose nine percent to $7,348 million for the full year, and fourth quarter revenue rose eight percent to $1,935 million, on increased sales volumes and higher average realized gold prices.

Average realized price8 for gold was one percent higher for the full year at $1,255 per ounce and six percent higher for the quarter at $1,270 per ounce compared to the prior year. The average realized price for copper for the full year was 32 percent higher at $2.83 per pound and was 29 percent higher for the quarter at $3.20 per pound.

Attributable gold production increased eight percent to 5.27 million ounces for the full year compared to the prior year primarily due to new production at Merian and Long Canyon, partially offset by lower grade at Twin Creeks, Yanacocha and Tanami, and adverse weather conditions at Yanacocha and Tanami; production for the fourth quarter rose one percent to 1.34 million ounces on higher throughput and grade at Merian and Tanami and a full quarter of production at Long Canyon which offset lower grade and recovery at CC&V, harder ore at Akyem and lower grade at Boddington.

Gold CAS rose nine percent to $3,875 million for the full year, and rose three percent to $1,009 million for the quarter on higher production.
Gold CAS per ounce rose one percent to $691 per ounce for the full year due to higher direct operating costs, partially offset by higher gold ounces sold and lower leach pad inventory adjustments and rose two percent to $693 per ounce for the quarter on higher mill maintenance costs at Boddington.

Gold AISC rose one percent to $924 per ounce for the full year primarily on higher unit CAS and rose five percent to $968 per ounce for the quarter on higher unit CAS, increased sustaining capital and higher advanced projects and exploration costs.

Attributable copper production was six percent lower at 51,000 tonnes for the full year and 15 percent lower at 11,000 tonnes for the quarter as mining focused on gold bearing zones at Phoenix. Copper CAS was 28 percent lower at $163 million for the full year and was 27 percent lower at $44 million for the quarter. Copper CAS per pound improved 25 percent to $1.47 per pound for the full year due to lower co-product allocation of costs to copper and similarly improved 14 percent to $1.62 per pound for the quarter. Copper AISC improved 22 percent to $1.80 per pound for the full year and improved 10 percent to $2.08 per pound for the quarter on improved unit CAS.

Capital expenditures9 decreased 24 percent to $866 million for the full year due to completion of projects at Long Canyon and Merian, partially offset by increased investment in the Ahafo expansions, but rose three percent in the fourth quarter to $309 million with increased investment at the Ahafo expansions, infrastructure for hard rock mining at Merian and the development of Twin Underground.

Consolidated operating cash flow from continuing operations increased 22 percent to $2,350 million for the full year and increased 28 percent to $754 million for the quarter on higher net income and favorable working capital movement. Free cash flow for the year increased 88 percent to $1,484 million and increased 54 percent to $445 million for the quarter on higher adjusted EBITDA and favorable working capital partially offset by higher capital expenditures.

Portfolio Improvements Minera Yanacocha SRL (MYSRL), the owner of Yanacocha, purchased the International Finance Corporation’s five percent equity stake in Yanacocha for $48 million in December 2017. The transaction10 increased Newmont’s ownership in Yanacocha from 51.35 percent to 54.05 percent and was structured as a share buyback, with MYSRL purchasing the interest using existing cash balances.

Balance sheet improved as Newmont ended the quarter with $3.3 billion cash on hand, a leverage ratio of 0.3x net debt to adjusted EBITDA and one of the best credit ratings in the mining sector. Since 2013, Newmont has streamlined its balance sheet and reduced gross debt by over 33 percent and net debt by over 83 percent. The Company is committed to maintaining an investment grade credit profile.

Projects update

Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term development capital projects are presented below. Funding for Subika Underground, Ahafo Mill Expansion, Twin Underground, Quecher Main and Tanami Power projects has been approved and these projects are in execution. Additional projects represent incremental improvements to production and cost guidance. Internal rates of return (IRR) on these projects are calculated at a $1,200 gold price.
• Subika Underground (Africa) leverages existing infrastructure and an optimized approach to develop Ahafo’s most promising underground resource. First production was achieved in June 2017 with commercial production expected in the second half of 2018. The project is expected to increase average annual gold production by between 150,000 and 200,000 ounces per year for the first five years beginning in 2019 with an initial mine life of approximately 11 years. Capital costs for the project are estimated at between $160 and $200 million with expenditure of between $80 and $90 million in 2018. The project has an IRR of more than 20 percent.
• Ahafo Mill Expansion (Africa) is designed to maximize resource value by improving production margins and accelerating stockpile processing.
The project also supports profitable development of Ahafo’s highly prospective underground resources. First production is expected in the first half of 2019 with commercial production expected in the second half of 2019. The expansion is expected to increase average annual gold production by between 75,000 and 100,000 ounces per year for the first five years beginning in 2020. Capital costs for the project are estimated at between $140 and $180 million with expenditure of approximately $75 to $85 million in 2018. The project has an IRR of more than 20 percent.

Together the Ahafo expansion projects (Ahafo Mill Expansion and Subika Underground) improve Ahafo’s production to between 550,000 and 650,000 ounces per year for the first five full years of production (2020 to 2024). During this period Ahafo’s CAS is expected to be between $650 and $750 per ounce and AISC is expected to be between $800 and $900 per ounce. This represents average production improvement of between 200,000 and 300,000 ounces at CAS improvement of between $150 and $250 per ounce and AISC improvement of $250 to $350 per ounce, compared to 2016 actuals.
• Twin Underground (North America) is a portal mine beneath Twin Creek’s Vista surface mine with similar mineralization. First production was achieved in August 2017 with commercial production expected mid-2018. The expansion is expected to average between 30,000 and 40,000 ounces per year for the first five years (2018 to 2022). During this period CAS is expected to be between $525 and $625 per ounce and AISC between $650 and $750 per ounce. Capital costs are expected to be between $45 and $55 million with expenditure of $15 to $25 million in 2018. The project IRR is expected to be about 20 percent.
• Quecher Main (South America) will add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production is expected in early 2019 with commercial production in the fourth quarter of 2019. Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of approximately 200,000 ounces per year between 2020 and 2025 (100 percent basis). During the same period incremental CAS is expected to be between $750 and $850 per ounce and AISC between $900 and $1,000 per ounce. Capital costs for the project are expected to be between $250 and $300 million with expenditure of $80 to $90 million in 2018. The project IRR is expected to be greater than 10 percent.
• Tanami Power (Australia) will lower Tanami power costs by approximately 20 percent beginning in 2019, mitigate fuel supply risk and reduce carbon emissions by 20 percent. The project includes a 450 kilometer natural gas pipeline to be constructed connecting the Tanami site to the Amadeus Gas Pipeline, and construction and operation of two on-site power stations. The gas supply, gas transmission and power purchase agreements are for a 10 year term with options to extend. The project is expected to result in net cash savings of approximately $34 per ounce beginning in 2019. Capital costs are estimated at between $225 and $275 million with annual cash lease payments over a 10 year term beginning in 2019 with approximately $10 million of owner’s costs paid in 2018. The project IRR is expected to be greater than 50 percent at $0.75 AUD.

Outlook
Newmont’s outlook reflects stable gold production and ongoing investment in its operating assets and most promising growth prospects. Newmont does not include development projects that have not yet been funded or reached execution stage in its outlook, which represents upside to production and cost guidance.

Attributable gold production is expected to be between 4.9 and 5.4 million ounces in 2018 and 2019, mainly driven by Full Potential mine plan, throughput and recovery improvements. Longer term production is expected to remain stable at between 4.6 and 5.1 million ounces per year through 2022 excluding development projects which have yet to be approved.

• North America production is expected to be between 2.0 and 2.2 million ounces in 2018 with production from Northwest Exodus, Twin Underground and the Silverstar pit offsetting higher stripping at Carlin and Twin Creeks and lower grade ore at Cripple Creek & Victor. Production declines slightly in 2019 to between 1.8 and 2.0 million ounces due to planned stripping at Carlin and then increases to between 1.9 and 2.1 million ounces in 2020 due to higher grades at Twin Creeks, Cripple Creek & Victor and Long Canyon. The Company continues to pursue profitable growth opportunities at Carlin and Long Canyon.
• South America production is expected to be between 615,000 and 675,000 ounces in 2018 as Merian delivers mine and mill productivity improvements that partially offset Yanacocha’s lower production resulting from lower grades and recoveries from deep transitional ore. Production is expected to be between 590,000 and 690,000 ounces in 2019 with the addition of Quecher Main and between 475,000 and 575,000 ounces per year in 2020 as Yanacocha laybacks are mined out and Merian transitions from saprolite to hard rock. The Company continues to advance near-mine growth opportunities at Merian and both oxide and sulfide potential at Yanacocha.
• Australia production is expected to be between 1.5 and 1.7 million ounces in 2018 due to higher grade, recovery and throughput improvements at Tanami and KCGM which offset increased stripping at Boddington. Production is expected to be between 1.4 and 1.6 million ounces in 2019 and 2020. In 2020, Boddington completes stripping and accesses higher grade ore which offsets the impact of processing lower grade stockpiles at KCGM. The Company continues to advance studies for a second expansion at Tanami.
• Africa production is expected to be between 815,000 and 875,000 ounces in 2018 as Full Potential mining improvements at the Subika open pit and a full year of Subika underground production offset the effects of harder, lower grade ore at Akyem. Production is expected to be between 1.1 and 1.2 million ounces in 2019 as the Ahafo Mill expansion reaches commercial production and between 880,000 and 980,000 ounces in 2020 as both Ahafo and Akyem reach lower open pit grade. The company continues to advance the Ahafo North project and other prospective surface and underground opportunities.

Gold cost outlook – CAS is expected to be between $700 and $750 per ounce in 2018 following production increases in North America and Africa and Full Potential cost and efficiency improvements across the portfolio. CAS is expected to be between $620 and $720 per ounce for 2019 and between $650 and $750 per ounce longer term through 2022. AISC is expected to be between $965 and $1,025 per ounce in 2018 as improved CAS offsets increases in exploration and advanced projects spend. AISC is expected to be between $870 and $970 per ounce in 2019 and longer-term through 2022. Further Full Potential savings and profitable ounces from projects that are not yet approved represent additional upside not currently captured in guidance.
• North America CAS is expected to be between $760 and $810 per ounce in 2018 with Full Potential efficiency and cost improvements. CAS is expected to be between $680 and $780 per ounce in 2019 and between $655 and $755 per ounce in 2020 on higher production at Twin Creeks, Cripple Creek & Victor and Long Canyon. AISC is expected to be between $945 and $1,020 per ounce in 2018 on improved unit CAS. AISC is expected to be between $870 and $970 per ounce in 2019 and between $825 and $925 in 2020.
• South America CAS is expected to be between $705 and $765 per ounce in 2018 due to lower production and increased costs from processing deeper transitional ore at Yanacocha. CAS is expected to be between $560 and $660 per ounce in 2019 as Quecher Main reaches commercial production and be between $690 and $790 per ounce in 2020. AISC is expected to be between $945 and $1,045 per ounce in 2018 on higher unit CAS and increased sustaining capital for additional haul trucks at Merian. AISC is expected to be between $810 and $910 per ounce in 2019 on improved unit CAS and be between $970 and $1,070 per ounce in 2020.
• Australia CAS is expected to be between $675 and $725 per ounce in 2018 with Full Potential mine plan, throughput and recovery improvements. CAS is expected to be between $670 and $770 per ounce in 2019 and 2020. AISC is expected to be between $830 and $890 per ounce in 2018 on improved unit CAS. AISC is expected to be between $840 and $940 per ounce in 2019 and 2020.
• Africa CAS is expected to be between $680 and $730 per ounce in 2018 with Full Potential mine plan, throughput and recovery improvements. CAS is expected to be between $520 and $620 per ounce in 2019 and between $610 and $710 per ounce in 2020. AISC is expected to be between $865 and $925 per ounce in 2018 as Subika Underground reaches commercial production. AISC is expected to be between $700 and $800 per ounce in 2019 as the Ahafo Mill expansion reaches commercial production and between $775 and $875 per ounce in 2020.

Copper – Attributable production is expected to remain between 40,000 and 60,000 tonnes in 2018 and 2019, increasing to between 45,000 and 65,000 tonnes longer term through 2022 as Phoenix moves into higher copper zones. CAS is expected to be between $1.65 and $1.85 per pound in 2018 due to lower grades at Boddington and increasing costs at Phoenix as the mine plan focuses on gold producing zones. CAS is expected to be between $1.80 and $2.20 per pound in 2019 before falling to between $1.40 and $1.80 per pound longer term as Phoenix moves into higher copper zones. AISC is expected to be between $2.00 and $2.20 per pound in 2018 on increased unit CAS. AISC is expected to be between $2.25 and $2.55 per pound in 2019 and between $1.80 and $2.10 per pound longer term.

Capital – Total capital is expected to increase to between $1,200 and $1,300 million for 2018 with the approval of the Tanami Power Project6 and the TRJV Mine Optimization Project and is expected to remain between $730 and $830 million for 2019 as expenditures related to Quecher Main are offset by sustaining capital savings across the portfolio. Primary development capital includes expenditure on the Ahafo Mill and Subika Underground expansions in Africa, Twin Underground in North America and Quecher Main in South America. Sustaining capital is expected to be between $600 and $700 million in 2018, between $600 and $700 million for 2019 and between $550 and $650 million per year longer term to cover infrastructure, equipment and ongoing mine development.

Consolidated expense outlook – Interest expense for 2018 is expected to be between $175 and $215 million due to lower debt balances while investment in exploration and advanced projects is expected to be between $350 and $400 million. 2018 outlook for general & administrative costs remains unchanged at between $215 and $240 million and guidance for depreciation and amortization remains unchanged at between $1,225 and $1,325 million.

Assumptions and sensitivities – Newmont’s outlook assumes $1,200 per ounce gold price, $2.50 per pound copper price, $0.75 USD/AUD exchange rate and $55 per barrel WTI oil price. A $100 per ounce increase in gold price would deliver an expected $335 million improvement in attributable free cash flow. Similarly, a $10 per barrel reduction in the price of oil and a $0.05 favorable change in the Australian dollar would deliver an expected $25 million and $45 million improvement in attributable free cash flow, respectively. These estimates exclude current hedge programs; please refer to Newmont’s Form 10-K which was filed with the SEC on February 22, 2018 for further information on hedging positions.

1 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
2 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
3 Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities.
4 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
5 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
6 See Cautionary Statement Regarding Reserves and Resources at the end of this release.
7 Includes $225-$275M for a capital lease related to the Tanami Power Project paid over a 10 year term beginning in 2019.
8 See end of this release for reconciliation to Sales.
9 Capital expenditures refers to Additions to property plant and mine development from the Consolidated Statements of Cash Flows later in this release.
10 For further information on this transaction see Note 12 to the Consolidated Financial Statements in the 2017 Form 10-K.

2018 Outlook a
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