NEWMONT CORPORATION
The following Management's Discussion and Analysis ("MD&A") provides information
that management believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of Newmont
Corporation , a Delaware corporation, and its subsidiaries (collectively,
"Newmont ," the "Company," "our" and "we"). Please see Non-GAAP Financial
Measures within Part I, Item 2, Management's Discussion and Analysis for the
non-GAAP financial measures used in this MD&A by the Company.
This item should be read in conjunction with our interim unaudited Condensed
Consolidated Financial Statements and the notes thereto included in this
quarterly report. Additionally, the following discussion and analysis should be
read in conjunction with Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations and the Consolidated Financial
Statements included in Part II of our Annual Report on Form 10-K for the year
ended December 31, 2021 filed with the SEC on February 24, 2022 .
Overview
Newmont is the world's leading gold company and is the only gold company included in the S&P 500 Index and the Fortune 500 list of companies. We have been included in the Dow Jones Sustainability Index-World since 2007 and have adopted theWorld Gold Council's Conflict-Free Gold Policy. Since 2015,Newmont has been ranked as the mining and metal sector's top gold miner by the S&P Global Corporate Sustainability Assessment.Newmont was ranked the top miner in3BL Media's 100 Best Corporate Citizens list which ranks the 1,000 largest publicly tradedU.S. companies on ESG transparency and performance since 2020.
We are primarily engaged in the exploration for and acquisition of gold
properties, some of which may contain copper, silver, lead, zinc or other
metals. We have significant operations and/or assets in the
Refer to the Consolidated Financial Results, Results of Consolidated Operations, Liquidity and Capital Resources and Non-GAAP Financial Measures for information about the continued impacts from the COVID-19 pandemic, the Russian invasion ofUkraine , and the resulting significant inflation experienced globally, as well as the effects of certain counter measures taken by central banks, on the Company. Also see discussion of Risk and Uncertainties within Note 2 of the Condensed Consolidated Financial Statements, relating to inflationary pressures and supply chain disruptions, with particular consideration on the outlook for increased costs specific to labor, materials, consumables and fuel and energy on operations, as well as impacts on the timing and cost of capital expenditures and the risk of potential impairment to certain assets. In the third quarter of 2022, as a result of these challenging market conditions, record inflation rates, the rising prices for commodities and raw materials, prolonged supply chain disruptions, competitive labor markets and consideration of capital allocation, the Company announced the delay of the full-funds investment decision for the Yanacocha Sulfides project inPeru . With the delay of the Yanacocha Sulfides project, management will focus its efforts on optimizing its allocation of funds to current operations and other capital commitments, while also assessing execution options and project plans options, up to and including transitioning Yanacocha operations into full closure. Refer to Note 2 of the Condensed Consolidated Financial Statements for further discussion. InFebruary 2022 , the Company completed the acquisition ofBuenaventura's 43.65% noncontrolling interest inMinera Yanacocha S.R.L . ("Yanacocha") (the "Yanacocha Transaction") and sold its 46.94% ownership interest inMinera La Zanja S.R.L . ("La Zanja"). Additionally, inMarch 2022 , Sumitomo exercised its option to require Yanacocha to repurchase its 5% interest which closed in the second quarter of 2022. AtSeptember 30, 2022 , the Company holds 100% ownership interest in Yanacocha. Refer to Note 1 of the Condensed Consolidated Financial Statements for further details regarding these transactions.
We continue to focus on improving safety and efficiency at our operations, maintaining leading ESG practices, and sustaining our global portfolio of longer-life, lower cost mines to generate the financial flexibility we need to strategically reinvest in the business, strengthen the Company's investment-grade balance sheet and return cash to shareholders.
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Consolidated Financial Results
The details of our Net income (loss) from continuing operations attributable to
Three Months Ended
September 30, Increase
2022 2021 (Decrease)
Net income (loss) from continuing operations attributable
to
$ 218
$ (0.01) $ 0.29 Nine Months Ended September 30, Increase 2022 2021 (Decrease)
Net income (loss) from continuing operations attributable
to
$ 1,029
The increase in Net income (loss) from continuing operations attributable toNewmont stockholders for the three months endedSeptember 30, 2022 , compared to the same period in 2021, is 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. The decrease in Net income (loss) from continuing operations attributable toNewmont stockholders for the nine months endedSeptember 30, 2022 , compared to the same period in 2021, is primarily due to higher Costs applicable to sales predominately resulting from cost inflation impacts and charges related to the profit-sharing agreement entered into by the Company (the "Peñasquito Profit-Sharing Agreement") largely associated with 2021 site performance, lower sales volumes, a non-cash pension settlement charge and the loss on the sale of the La Zanja equity method investment, partially offset by the Loss on assets held for sale in 2021 related to the Conga mill assets, lower income tax expense, higher realized gold prices and change in fair value of marketable and other equity securities.
For further information on the Peñasquito Profit-Sharing Agreement, refer to Note 3 of the Condensed Consolidated Financial Statements.
The details and analyses of our Sales for all periods presented are set forth
below. Refer to Note 4 of the Condensed Consolidated Financial Statements for
further information.
Three Months Ended
September 30, Increase Percent
2022 2021 (Decrease) Change
Gold $ 2,350 $ 2,516 $ (166) (7) %
Copper 48 72 (24) (33)
Silver 105 143 (38) (27)
Lead 26 42 (16) (38)
Zinc 105 122 (17) (14)
$ 2,634 $ 2,895 $ (261) (9) %
Nine Months Ended
September 30, Increase Percent
2022 2021 (Decrease) Change
Gold $ 7,586 $ 7,628 $ (42) (1) %
Copper 223 204 19 9
Silver 401 486 (85) (17)
Lead 98 129 (31) (24)
Zinc 407 385 22 6
$ 8,715 $ 8,832 $ (117) (1) %
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Three
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,386 $ 60
(24) (9) (6) - -
Silver streaming amortization - - 17 - -
Gross after provisional pricing and
streaming impact 2,362 51 117 27 122
Treatment and refining charges (12) (3) (12) (1) (17)
Net $ 2,350 $ 48
1,391 17 6,805 30 85
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,716 $ 3.45
(17) (0.53) (0.85) - -
Silver streaming amortization - - 2.45 - -
Gross after provisional pricing and
streaming impact 1,699 2.92 17.15 0.89 1.44
Treatment and refining charges (8) (0.12) (1.73) (0.03) (0.19)
Net $ 1,691 $ 2.80 $ 15.42 $ 0.86 $ 1.25
____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
Three
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,527 $ 75
5 (1) (29) 13 1
Silver streaming amortization - - 19 - -
Gross after provisional pricing and
streaming impact 2,532 74 157 43 134
Treatment and refining charges (16) (2) (14) (1) (12)
Net $ 2,516 $ 72
1,416 18 7,792 42 98
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,784 $ 4.18
4 (0.08) (3.79) 0.29 0.01
Silver streaming amortization - - 2.44 - -
Gross after provisional pricing and
streaming impact 1,788 4.10 20.17 1.02 1.36
Treatment and refining charges (10) (0.11) (1.83) (0.03) (0.12)
Net $ 1,778 $ 3.99 $ 18.34 $ 0.99 $ 1.24
____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
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Nine
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 7,642 $ 254
(22) (23) (18) (5) (18)
Silver streaming amortization - - 56 - -
Gross after provisional pricing and
streaming impact 7,620 231 440 101 460
Treatment and refining charges (34) (8) (39) (3) (53)
Net $ 7,586 $ 223
4,202 63 22,523 107 290
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,819 $ 4.03
(5) (0.37) (0.78) (0.05) (0.06)
Silver streaming amortization - - 2.45 - -
Gross after provisional pricing and
streaming impact 1,814 3.66 19.55 0.95 1.59
Treatment and refining charges (8) (0.12) (1.74) (0.03) (0.18)
Net $ 1,806 $ 3.54 $ 17.81 $ 0.92 $ 1.41 ____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
Nine
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 7,675 $ 204
(10) 5 (20) 2 5
Silver streaming amortization - - 58 - -
Gross after provisional pricing and
streaming impact 7,665 209 528 132 424
Treatment and refining charges (37) (5) (42) (3) (39)
Net $ 7,628 $ 204
4,277 49 23,938 134 319
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,794 $ 4.20
(2) 0.09 (0.85) 0.01 0.01
Silver streaming amortization - - 2.44 - -
Gross after provisional pricing and
streaming impact 1,792 4.29 22.08 0.99 1.33
Treatment and refining charges (9) (0.10) (1.76) (0.03) (0.12)
Net $ 1,783 $ 4.19 $ 20.32 $ 0.96 $ 1.21 ____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
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The change in consolidated sales is due to:
Three Months Ended
2022 vs. 2021
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Increase (decrease) in consolidated
ounces/pounds sold $ (46) $ (4)
(124) (19) (21) (4) 7
Decrease (increase) in treatment and
refining charges 4 (1) 2 - (5)
$ (166) $ (24) $ (38) $ (16) $ (17) Nine Months Ended
2022 vs. 2021
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Increase (decrease) in consolidated
ounces/pounds sold $ (136) $ 47
91 (25) (57) (4) 76
Decrease (increase) in treatment and
refining charges 3 (3) 3 - (14)
$ (42) $ 19 $ (85) $ (31) $ 22 For discussion regarding drivers impacting sales volumes by site, see Results of Consolidated Operations below.
The details of our Costs applicable to sales are set forth below. Refer to Note 3 of the Condensed Consolidated Financial Statements for further information.
Three Months Ended
September 30, Increase Percent
2022 2021 (decrease) Change
Gold $ 1,345 $ 1,175 $ 170 14 %
Copper 36 37 (1) (3)
Silver 85 80 5 6
Lead 15 18 (3) (17)
Zinc 64 57 7 12
$ 1,545 $ 1,367 $ 178 13 %
Nine Months Ended
September 30, Increase Percent
2022 2021 (decrease) Change
Gold $ 3,910 $ 3,331 $ 579 17 %
Copper 131 102 29 28
Silver 337 230 107 47
Lead 66 55 11 20
Zinc 244 177 67 38
$ 4,688 $ 3,895 $ 793 20 %
The increase in Costs applicable to sales during the three and nine months ended
September 30, 2022 , compared to the same periods in 2021, is primarily due to
(i) impacts arising from the significant inflation experienced globally
including increases in labor costs, supply chain disruption, and an increase in
commodity inputs, including higher fuel and energy prices and (ii) higher
inventory adjustments at NGM, partially offset by lower sales volumes. The
increase in Costs applicable to sales during the nine months ended September 30,
2022 , compared to the same period in 2021, is also due to the Peñasquito
Profit-Sharing Agreement.
For discussion regarding other significant drivers impacting Costs applicable to sales by site, see Results of Consolidated Operations below.
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The details of our Depreciation and amortization are set forth below. Refer to Note 3 of the Condensed Consolidated Financial Statements for further information.
Three Months Ended
September 30, Increase Percent
2022 2021 (Decrease) Change
Gold $ 440 $ 475 $ (35) (7) %
Copper 7 6 1 17
Silver 29 43 (14) (33)
Lead 5 9 (4) (44)
Zinc 19 25 (6) (24)
Other 8 12 (4) (33)
$ 508 $ 570 $ (62) (11) %
Nine Months Ended
September 30, Increase Percent
2022 2021 (Decrease) Change
Gold $ 1,350 $ 1,400 $ (50) (4) %
Copper 24 16 8 50
Silver 115 123 (8) (7)
Lead 23 29 (6) (21)
Zinc 76 80 (4) (5)
Other 26 36 (10) (28)
$ 1,614 $ 1,684 $ (70) (4) %
The decrease in Depreciation and amortization during the three months ended
September 30, 2022 , compared to the same period in 2021, is primarily due to
lower production volume at NGM as a result of lower leach pad production and ore
grade mined and lower production at Yanacocha as a result of lower leach pad
production, partially offset by higher production volumes at Ahafo as a result
of higher ore grade milled.
The decrease to Depreciation and amortization during the nine months ended
September 30, 2022 , compared to the same period in 2021, is primarily due to
lower production volume at Peñasquito and Éléonore as a result of lower ore
grade mined and lower production volume at NGM as a result of lower leach pad
production and ore grade mined, partially offset by higher production at
Boddington as a result of higher ore grade milled and higher mineral interest
amortization at Cerro Negro.
For discussion regarding other significant drivers impacting Depreciation and amortization by site, see Results of Consolidated Operations below.
For discussion regarding variations in operations, see Results of Operations below.
Advanced projects, research and development expense increased by$40 and$61 during the three and nine months endedSeptember 30, 2022 respectively, compared to the same periods in 2021, primarily due to payments made as part of the strategic alliance with Caterpillar Inc. ("CAT") relating to the Company's climate change initiatives and project spend relating to certain development projects at Cerro Negro inSouth America andGalore Creek in Corporate and other. For the nine months endedSeptember 30, 2022 , compared to the same period in 2021, the increase is partially offset by lower full potential spend at various sites. See Liquidity and Capital Resources within Part I, Item 2, Management's Discussion and Analysis for further information regarding the payments made to CAT. Income and mining tax expense (benefit) was$96 and$222 , and$343 and$798 during the three and nine months endedSeptember 30, 2022 and 2021, respectively. The effective tax rate is driven by a number of factors and the comparability of our income tax expense for the reported periods will be primarily affected by (i) variations in our income before income taxes; (ii) geographic distribution of that income; (iii) impacts of the changes in tax law; (iv) valuation allowances on tax assets; (v) percentage depletion; (vi) fluctuation in the value of the USD and foreign currencies; and (vii) the impact of specific transactions and assessments. As a result, the effective tax rate will fluctuate, sometimes significantly, year to year. This trend is expected to continue in future periods. Refer to Note 8 of the Condensed Consolidated Financial Statements for further discussion of income taxes. 40
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Three Months Ended
September 30, 2022 September 30, 2021
Income Tax Income Tax
Income Effective (Benefit) Income Effective (Benefit)
(Loss) (1) Tax Rate Provision (Loss) (1) Tax Rate Provision
Nevada $ 46 00 11 % $ 5 $ 160 20 % $ 32
CC&V (15) 7 (1) 21 14 3
Corporate & Other (79) 43 (34) (212) 7 (15)
Total US (48) 63 (30) (31) (65) 20
Australia 207 36 75 219 35 76
Ghana 106 35 37 109 34 37
Suriname 28 25 7 74 27 20
Peru (46) - - (597) - (1)
Canada (18) 28 (5) (49) 4 (2)
Mexico 85 45 38 211 26 55
Argentina (24) 100 (24) 10 200 20
Other Foreign 6 - - (17) (29) 5
Rate adjustments - N/A (2) (2) - N/A (8) (2)
Consolidated $ 296 33 % (3) $ 96 $ (71) (313) % (3) $ 222
____________________________
(1)Represents income (loss) from continuing operations by geographic location
before income taxes and equity income (loss) of affiliates. These amounts will
not reconcile to the Segment Information for the reasons stated in Note 3 of the
Condensed Consolidated Financial Statements.
(2)In accordance with applicable accounting rules, the interim provision for income taxes is adjusted to equal the consolidated tax rate.
(3)The consolidated effective income tax rate is a function of the combined
effective tax rates for the jurisdictions in which we operate. Variations in the
relative proportions of jurisdictional income could result in fluctuations to
our combined effective income tax rate.
Nine Months Ended
September 30, 2022 September 30, 2021
Income Tax Income Tax
Income Effective (Benefit) Income Effective (Benefit)
(Loss)(1) Tax Rate Provision (Loss) (1) Tax Rate Provision
Nevada $ 288 14 % $ 39 $ 493 18 % $ 89
CC&V (15) 7 (1) 71 10 7
Corporate & Other (446) 19 (84) (517) 12 (61)
Total US (173) 27 (46) 47 74 35
Australia 878 35 303 706 36 252
Ghana 383 35 133 363 34 123
Suriname 132 27 35 220 29 63
Peru (43) (5) 2 (562) (9) 53
Canada (104) 9 (9) 70 41 29
Mexico 273 - - (2) 753 32 239 (2)
Argentina (31) 168 (52) (9) (122) 11
Other Foreign 17 12 2 27 19 5
Rate adjustments - N/A (25) (3) - N/A (12) (3)
Consolidated $ 1,332 26 % (4) $ 343 $ 1,615 49 % (4) $ 798 ____________________________
(1)Represents income (loss) from continuing operations by geographic location before income taxes and equity income (loss) of affiliates. These amounts will not reconcile to the Segment Information for the reasons stated in Note 3 of the Condensed Consolidated Financial Statements.
(2)Includes tax settlement of
(3)In accordance with applicable accounting rules, the interim provision for income taxes is adjusted to equal the consolidated tax rate.
(4)The consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. Variations in the relative proportions of jurisdictional income could result in fluctuations to our combined effective income tax rate. InAugust 2022 , theU.S. government enacted the Inflation Reduction Act of 2022 (the "IRA") into law. The IRA introduced an excise tax on stock repurchases of 1% and a corporate alternative minimum tax (the "Corporate AMT") of 15% on the adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding$1 billion over a three-year period. The IRA is effective for fiscal periods beginning 2023. The Company is in the process of evaluating the impact of the IRA. No material impacts are expected to the consolidated financial statements or disclosures. Refer to Note 2 of the Condensed Consolidated Financial Statements for further information. 41
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Refer to the Notes of the Condensed Consolidated Financial Statements for explanations of other financial statement line items.
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