NEWMONT CORPORATION
pound amounts)
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"). We use certain non-GAAP financial
measures in our MD&A. For a detailed description of each of the non-GAAP
measures used in this MD&A, please see the discussion under "Non-GAAP Financial
Measures" within Part I, Item 2, Management's Discussion and Analysis.
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, 2019 filed with the Securities and Exchange Commission
("SEC") on February 20, 2020 .
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 for 13 consecutive
years and have adopted the World Gold Council's Conflict-Free Gold Policy. In
June 2020 , Newmont was ranked the top miner in 3BL Media's 100 Best Corporate
Citizens list which ranks the 1,000 largest publicly traded U.S. companies on
environmental, social and governance transparency and performance. Additionally,
in June 2020 , Newmont was added to the Corporate Human Rights Benchmark's
("CHRB") 2019 evaluation and was ranked 12th out of more than 200 companies that
were assessed against the CHRB's human rights performance criteria. We are
engaged in the exploration for and acquisition of gold and copper properties. We
have significant operations and/or assets in the United States ("U.S."), Canada ,
Mexico , Dominican Republic , Peru , Suriname, Argentina , Chile , Australia and
Ghana .
During the first half of 2020, the COVID-19 outbreak escalated to a global
pandemic, which has had varying impacts in the jurisdictions in which we
operate. In response, the Company temporarily placed five sites into care and
maintenance, including Musselwhite, Éléonore, Yanacocha and Cerro Negro in March
2020 and Peñasquito in April 2020 . During the second quarter of 2020, we worked
closely with local stakeholders to resume operations at all five mine sites. As
of September 30, 2020 , Musselwhite, Éléonore and Peñasquito were fully
operational while Yanacocha has ramped up to near normal operations. Cerro Negro
continues to operate at reduced levels while managing ongoing COVID-19 related
travel restrictions and collaborating with local authorities and trade unions.
Refer to the "Third Quarter 2020 Highlights", "Results of Consolidated
Operations", "Liquidity and Capital Resources", "Non-GAAP Financial Measures"
and "Accounting Developments" for further information about the impacts of the
COVID-19 pandemic on the Company.
On April 18, 2019 (the "acquisition date"), Newmont completed the business
acquisition of Goldcorp, Inc. ("Goldcorp"), an Ontario corporation. The Company
acquired all outstanding common shares of Goldcorp in a primarily stock
transaction (the "Newmont Goldcorp transaction") for total cash and non-cash
consideration of $9,456 . The financial information included in the following
discussion and analysis of financial condition and results of operations during
the period ended September 30, 2020 , compared to the same periods in 2019,
includes the results of operations acquired in the Newmont Goldcorp transaction
since April 18, 2019 . For further information, see Note 3 to the Condensed
Consolidated Financial Statements.
On March 10, 2019 , the Company entered into an implementation agreement with
Barrick Gold Corporation ("Barrick") to establish a joint venture ("Nevada JV
Agreement"). On July 1, 2019 (the "effective date"), Newmont and Barrick
consummated the Nevada JV Agreement and established Nevada Gold Mines LLC
("NGM"). As of the effective date, the Company contributed its Carlin , Phoenix ,
Twin Creeks and Long Canyon mines ("existing Nevada mining operations") and
Barrick contributed certain of its Nevada mining operations and assets. Newmont
and Barrick hold economic interests in the joint venture equal to 38.5% and
61.5%, respectively. Barrick acts as the operator of NGM with overall management
responsibility and is subject to the supervision and direction of NGM's Board of
Managers . The Company accounts for its interest in NGM using the proportionate
consolidation method, thereby recognizing its pro-rata share of the assets,
liabilities and operations of NGM. The financial information included in the
following discussion and analysis of financial condition and results of
operations during the period ended September 30, 2020 , compared to the same
periods in 2019, includes the results of operations of NGM since July 1, 2019 .
For further information, see Note 27 to the Condensed Consolidated Financial
Statements.
We continue to focus on improving safety and efficiency at our operations,
maintaining leading environmental, social and governance 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.
44
--------------------------------------------------------------------------------
Table of Contents Asset Sales Kalgoorlie We entered into a binding agreement datedDecember 17, 2019 , to sell our 50% interest in Kalgoorlie Consolidated Gold Mines ("Kalgoorlie"), previously included as part of theAustralia segment, to Northern Star Resources Limited ("Northern Star "). The Company completed the sale onJanuary 2, 2020 . As the sale was completed onJanuary 2, 2020 , there are no results for Kalgoorlie for the three and nine months endedSeptember 30, 2020 included herein.Red Lake We entered into a binding agreement datedNovember 25, 2019 , to sell theRed Lake complex inOntario, Canada , previously included as part of the Company'sNorth America segment, to Evolution Mining Limited ("Evolution"). The Company completed the sale onMarch 31, 2020 . As the sale was completed onMarch 31, 2020 , results forRed Lake for the nine months endedSeptember 30, 2020 are included within the discussion below; there are no results for the three months endedSeptember 30, 2020 included herein. For further information on asset sales, see Note 9 to the Condensed Consolidated Financial Statements. Consolidated Financial Results The details of our Net income (loss) from continuing operations attributable toNewmont stockholders are set forth below: Three Months Ended September 30, Increase 2020 2019 (decrease)
Net income (loss) from continuing operations attributable to
$ 611 $ 2,226 $ (1,615)
Net income (loss) from continuing operations attributable to
$ 0.76 $ 2.71 $ (1.95) Nine Months Ended September 30, Increase 2020 2019 (decrease)
Net income (loss) from continuing operations attributable to
$ 1,860
$ 2.31
The decrease in Net income (loss) from continuing operations attributable toNewmont stockholders for the three months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to (i) the recognized gain on the formation of NGM in 2019, (ii) lower sales volumes due to the sale of Kalgoorlie andRed Lake during 2020 and lower ore grade milled at Merian, Ahafo and Akyem, (iii) lower sales volumes, higher Care and maintenance costs due to certain sites experiencing reduced operations, and other incremental costs in response to the COVID-19 pandemic and (iv) pension settlement charges in 2020, partially offset by (i) higher average realized gold prices, (ii) lower income and mining tax expense, (iii) lower operating costs as a result of reduced sales volumes, (iv) lower exploration costs from the temporary reduction of exploration drilling activities as a result of the COVID-19 pandemic, (v) the change in fair value of investments, (vi) lower Goldcorp transaction and integration costs and (vii) lower general and administrative expense costs. The decrease in Net income (loss) from continuing operations attributable toNewmont stockholders for the nine months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to (i) the recognized gain on the formation of NGM in 2019, (ii) lower sales volumes, higher Care and maintenance costs due to certain sites experiencing reduced operations and other incremental costs in response to the COVID-19 pandemic, (iii) lower sales volumes due to the sale of Kalgoorlie andRed Lake during 2020, (iv) higher depreciation and amortization rates from the formation of NGM, (v) the impairment charge of TMAC Resources, Inc. ("TMAC"), (vi) pension settlement charges and (vii) charges from debt extinguishment, partially offset by (i) higher average realized gold prices, (ii) the recognized gain on the sales of Kalgoorlie,Continental Gold, Inc. ("Continental") andRed Lake in 2020, (iii) lower income and mining tax expense, (iv) lower Goldcorp transaction and integration costs, (v) the change in fair value of investments, (vi) lower exploration costs from the temporary reduction of exploration drilling activities as a result of the COVID-19 pandemic, (vii) lower reclamation and remediation adjustments, (viii) lower Nevada JV transaction and implementation costs and (ix) lower general and administrative expense costs. For discussion regarding variations in production volumes and unit cost metrics, see Results of Consolidated Operations below. The details of our Sales are set forth below. See Note 5 to our Condensed Consolidated Financial Statements for additional information. 45
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended
September 30, Increase Percent
2020 2019 (decrease) Change
Gold $ 2,860 $ 2,483 $ 377 15 %
Copper 43 40 3 8
Silver 138 78 60 77
Lead 30 25 5 20
Zinc 99 87 12 14
$ 3,170 $ 2,713 $ 457 17 %
Nine Months Ended
September 30, Increase Percent
2020 2019 (decrease) Change
Gold $ 7,347 $ 6,376 $ 971 15 %
Copper 101 163 (62) (38)
Silver 337 109 228 209
Lead 92 38 54 142
Zinc 239 87 152 175
$ 8,116 $ 6,773 $ 1,343 20 %
The following analysis summarizes consolidated sales for the three months ended
Three
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,864 $ 42
19 2 12 (1) 14
Silver streaming amortization - - 16 - -
Gross after provisional pricing and
streaming impact 2,883 44 150 35 113
Treatment and refining charges (23) (1) (12) (5) (14)
Net $ 2,860 $ 43
1,495 14 6,371 42 98
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,917 $ 2.94
12 0.15 2.00 (0.02) 0.15
Silver streaming amortization - - 2.40 - -
Gross after provisional pricing and
streaming impact 1,929 3.09 23.55 0.85 1.16
Treatment and refining charges (16) (0.10) (1.86) (0.12) (0.15)
Net $ 1,913 $ 2.99 $ 21.69 $ 0.73 $ 1.01 __________________________________________________________________________________________________________________________________________________________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
46
--------------------------------------------------------------------------------
Table of Contents The following analysis summarizes consolidated sales for the nine months endedSeptember 30, 2020 :
Nine Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 7,342 $
108
48 (3) 18 (3) 5
Silver streaming amortization - - 48 - -
Gross after provisional pricing and
streaming impact 7,390 105 372 106 304
Treatment and refining charges (43) (4) (35) (14) (65)
Net $ 7,347 $
101
4,210 40 20,260 133 313
Average realized price (per ounce/pound):
(1)
Gross before provisional pricing and
streaming impact $ 1,744 $
2.67
11 (0.07) 0.90 (0.02) 0.02
Silver streaming amortization - - 2.36 - -
Gross after provisional pricing and
streaming impact 1,755 2.60 18.34 0.80 0.98
Treatment and refining charges (10) (0.11) (1.68) (0.11) (0.21)
Net $ 1,745 $ 2.49 $ 16.66 $ 0.69 $ 0.77
____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
The following analysis summarizes consolidated sales for the three months ended
Three
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,485 $ 44
6 (2) - - -
Silver streaming amortization - - 11 - -
Gross after provisional pricing and
streaming impact 2,491 42 81 29 112
Treatment and refining charges (8) (2) (3) (4) (25)
Net $ 2,483 $ 40
1,682 17 4,552 30 107
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,477 $ 2.62
4 (0.13) - - -
Silver streaming amortization - - 2.41 - -
Gross after provisional pricing and
streaming impact 1,481 2.49 17.66 0.96 1.04
Treatment and refining charges (5) (0.12) (0.48) (0.12) (0.23)
Net $ 1,476 $ 2.37 $ 17.18 $ 0.84 $ 0.81 __________________________________________________________________________________________________________________________________________________________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
47
--------------------------------------------------------------------------------
Table of Contents The following analysis summarizes consolidated sales for the nine months endedSeptember 30, 2019 : Nine
Months Ended
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 6,384 $ 173
13 (3) - - -
Silver streaming amortization - - 16 - -
Gross after provisional pricing and
streaming impact 6,397 170 112 44 112
Treatment and refining charges (21) (7) (3) (6) (25)
Net $ 6,376 $ 163
4,656 63 6,719 47 107
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,371 $ 2.75
3 (0.05) - - -
Silver streaming amortization - - 2.39 - -
Gross after provisional pricing and
streaming impact 1,374 2.70 16.74 0.93 1.04
Treatment and refining charges (4) (0.11) (0.51) (0.12) (0.23)
Net $ 1,370 $ 2.59 $ 16.23 $ 0.81 $ 0.81 ____________________________
(1)Per ounce/pound measures may not recalculate due to rounding. The change in consolidated sales is due to:
Three Months Ended September 30,
2020 vs. 2019
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Increase (decrease) in consolidated
ounces/pounds sold $ (278) $ (7)
670 9 37 (5) 11
Decrease (increase) in treatment and
refining charges (15) 1 (9) (1) 11
$ 377 $ 3 $ 60 $ 5 $ 12 Nine Months Ended
2020 vs. 2019
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Increase (decrease) in consolidated
ounces/pounds sold $ (612) $ (61)
1,605 (4) 32 (17) (22)
Decrease (increase) in treatment and
refining charges (22) 3 (32) (8) (40)
$ 971 $ (62) $ 228 $ 54 $ 152
The increases in gold sales during the three and nine months ended September 30,
2020 , compared to the same periods in 2019, are primarily due to higher average
realized gold prices, partially offset by lower ounces sold due to certain
operations being placed into care and maintenance or experiencing reduced
operations in response to the COVID-19 pandemic, in addition to the sale of Red
Lake and Kalgoorlie during 2020.
The increase in copper sales during the three months ended September 30, 2020 ,
compared to the same period in 2019, is primarily due to higher average realized
copper prices, partially offset by copper being produced as a by-product at
Phoenix upon the formation of NGM on July 1, 2019 , compared to a co-product for
the first six months of 2019. The decrease in copper sales during the nine
months ended September 30, 2020 , compared to the same period in 2019, is
primarily due to copper being produced as a by-product at Phoenix upon the
formation of NGM on July 1, 2019 , compared to a co-product for the first six
months of 2019, lower ore grade milled at Boddington and lower average realized
copper prices.
The increases in silver sales during the three and nine months ended
September 30, 2020 , compared to the same periods in 2019, are primarily due to
higher ounces sold at Peñasquito due to the blockade in the prior year reducing
production and sales and nine months of operations in 2020 as compared to six
months in 2019 and higher average realized silver prices, partially offset by
Peñasquito being placed into care and maintenance during a portion of 2020 due
to the COVID-19 pandemic.
48
--------------------------------------------------------------------------------
Table of Contents The increases in lead sales during the three and nine months endedSeptember 30, 2020 , compared to the same periods in 2019, are primarily due to higher pounds sold at Peñasquito due to the blockade in the prior year reducing production and nine months of operations in 2020 as compared to six months in 2019, partially offset by lower average realized lead prices and Peñasquito being placed into care and maintenance during a portion of 2020 due to the COVID-19 pandemic . The increase in zinc sales during the three months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to higher average realized zinc prices and lower treatment and refining costs due to lower pounds sold, partially offset by lower pounds sold due to the timing of zinc shipments. The increase in zinc sales during the nine months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to higher pounds sold at Peñasquito due to the blockade in the prior year reducing production and nine months of operations in 2020 as compared to six months in 2019, partially offset by lower average realized zinc prices and Peñasquito being placed into care and maintenance during a portion of 2020 due to the COVID-19 pandemic. For further discussion regarding changes in volumes, see Results of Consolidated Operations below. The details of our Costs applicable to sales are set forth below. See Note 4 to our Condensed Consolidated Financial Statements for additional information. Three Months Ended September 30, Increase Percent 2020 2019 (decrease) Change Gold$ 1,130 $ 1,232 $ (102) (8) % Copper 28 28 - - Silver 45 60 (15) (25) Lead 17 25 (8) (32) Zinc 49 47 2 4$ 1,269 $ 1,392 $ (123) (9) % Nine Months Ended September 30, Increase Percent 2020 2019 (decrease) Change Gold$ 3,210 $ 3,412 $ (202) (6) % Copper 78 115 (37) (32) Silver 148 101 47 47 Lead 56 45 11 24 Zinc 167 63 104 165$ 3,659 $ 3,736 $ (77) (2) % The decreases in Costs applicable to sales for gold during the three and nine months endedSeptember 30, 2020 , compared to the same periods in 2019, are primarily due to lower ounces sold due to certain operations being placed into care and maintenance or experiencing reduced operations in response to the COVID-19 pandemic, in addition to the sale ofRed Lake and Kalgoorlie during 2020, partially offset by higher ounces sold at Musselwhite and Peñasquito during three and nine months endedSeptember 30, 2020 due to the fire at Musselwhite halting operations in the prior year and the blockade at Peñasquito reducing production for a portion of 2019 and higher ounces sold at Porcupine during the nine months endedSeptember 30, 2020 due toBorden achieving commercial production in the fourth quarter of 2019. Costs applicable to sales for copper during the three months endedSeptember 30, 2020 was in line with the prior year. The decrease in Costs applicable to sales for copper during the nine months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to copper being produced as a by-product atPhoenix upon the formation of NGM onJuly 1, 2019 compared to a co-product for the first six months of 2019, partially offset by higher mill maintenance costs at Boddington. The decrease in Costs applicable to sales for silver and lead during the three months endedSeptember 30, 2020 , compared to the same period in 2019, is due to decreased cost allocations and timing of sales. The increase in Costs applicable to sales for silver and lead during the nine months endedSeptember 30, 2020 , compared to the same period in 2019, is primarily due to increased production at Peñasquito due to the blockade in the prior year reducing production and nine months of operations in 2020 as compared to six months in 2019, partially offset by Peñasquito being placed into care and maintenance during a portion of 2020 due to the COVID-19 pandemic. The increase in Costs applicable to sales for zinc during the three months endedSeptember 30, 2020 , compared to the same period in 2019, is due to increased cost allocation and timing of sales. The increase in Costs applicable to sales for zinc during the nine months endedSeptember 30, 2020 , compared to the same periods in 2019, are primarily due to the blockade at Peñasquito in the prior 49
--------------------------------------------------------------------------------
Table of Contents
year reducing production and nine months of operations in 2020 as compared to
six months in 2019, partially offset by Peñasquito being placed into care and
maintenance during a portion of 2020 due to the COVID-19 pandemic.
For discussion regarding variations in operations, see Results of Consolidated
Operations below.
The details of our Depreciation and amortization are set forth below. See Note 4
to our Condensed Consolidated Financial Statements for additional information.
Three Months Ended
September 30, Increase Percent
2020 2019 (decrease) Change
Gold $ 517 $ 490 $ 27 6 %
Copper 5 6 (1) (17)
Silver 24 16 8 50
Lead 9 7 2 29
Zinc 26 13 13 100
Other 11 16 (5) (31)
$ 592 $ 548 $ 44 8 %
Nine Months Ended
September 30, Increase Percent
2020 2019 (decrease) Change
Gold $ 1,425 $ 1,218 $ 207 17 %
Copper 14 26 (12) (46)
Silver 82 26 56 215
Lead 31 13 18 138
Zinc 90 22 68 309
Other 43 42 1 2
$ 1,685 $ 1,347 $ 338 25 %
The increases in Depreciation and amortization for gold during the three and
nine months ended September 30, 2020 , compared to the same periods in 2019, are
primarily due to increased sales volumes at Musselwhite and Peñasquito and
Borden achieving commercial production in the fourth quarter of 2019. The nine
months ended September 30, 2020 , compared to the same period in 2019, was also
impacted by higher depreciation and amortization rates from the formation of
NGM.
Depreciation and amortization for copper during the three months ended September
30, 2020 was in line with the prior year. The decrease in Depreciation and
amortization for copper during the nine months ended September 30, 2020 ,
compared to the same period in 2019, is primarily due to copper being produced
as a by-product at Phoenix upon the formation of NGM on July 1, 2019 compared to
a co-product for the first six months of 2019.
The increases in Depreciation and amortization for silver and lead during the
three and nine months ended September 30, 2020 , compared to the same periods in
2019, are primarily due to increased production at Peñasquito due to the
blockade in the prior year reducing production and nine months of operations in
2020 as compared to six months in 2019, partially offset by Peñasquito being
placed into care and maintenance during a portion of 2020 due to the COVID-19
pandemic.
The increase in Depreciation and amortization for zinc during the three months
ended September 30, 2020 , compared to the same period in 2019, is primarily due
to allocation of costs and timing of sales. The increase in Depreciation and
amortization for zinc during the nine months ended September 30, 2020 , compared
to the same period in 2019, is primarily due to increased production at
Peñasquito due to the blockade in the prior year reducing production and nine
months of operations in 2020 as compared to six months in 2019, partially offset
by Peñasquito being placed into care and maintenance during a portion of 2020
due to the COVID-19 pandemic.
For discussion regarding variations in operations, see Results of Consolidated
Operations below.
Reclamation and remediation decreased by $24 and $49 during the three and nine
months ended September 30, 2020 , compared to the same periods in 2019, primarily
due to an update of the project cost estimates in the prior year at the Dawn,
Mule Canyon and Northumberland sites, and water management costs at the Con
Mine .
Exploration expense decreased by $40 and $80 during the three and nine months
ended September 30, 2020 , compared to the same periods in 2019, primarily due to
the temporary reduction of exploration drilling activities due to the COVID-19
pandemic.
50
--------------------------------------------------------------------------------
Table of Contents Advanced projects, research and development expense decreased by$4 and$10 during the three and nine months endedSeptember 30, 2020 , respectively. The decreases compared to the same periods in 2019 were primarily due to lower spend on various projects and full potential initiatives inAfrica . The nine months endedSeptember 30, 2020 , compared to the same period in 2019, was also impacted by lower spend inNevada following the formation of NGM, partially offset by increased spend associated with full potential opportunities inNorth America . General and administrative expense decreased by$16 and$19 during the three and nine months endedSeptember 30, 2020 , compared to the same periods in 2019, primarily due to the progression of integration activities for theNewmont Goldcorp transaction and other cost reduction efforts. General and administrative expense as a percentage of Sales was 2.1% and 2.5% for the three and nine months endedSeptember 30, 2020 , compared to 3.1% and 3.3% in the same periods in 2019. Care and maintenance was$26 and$171 during the three and nine months endedSeptember 30, 2020 , respectively. Care and maintenance represents direct operating costs incurred at sites temporarily placed into care and maintenance or operating at reduced levels as a result of the COVID-19 pandemic. Other expense, net increased by$54 during the three months endedSeptember 30, 2020 , compared to the same period in 2019, primarily due to COVID-19 specific costs incurred as a result of the COVID-19 pandemic, higher settlement costs and increased impairments of long-lived and other assets; partially offset by decreases in transaction costs associated with theNewmont Goldcorp transaction. Other expense, net decreased by$59 during the nine months endedSeptember 30, 2020 compared to the same period in 2019 primarily due to decreases in transaction costs associated with theNewmont Goldcorp transaction and the Nevada JV agreement, partially offset by COVID-19 specific costs incurred as a result of the COVID-19 pandemic, higher settlement costs and increased impairments of long-lived and other assets. Gain on formation of Nevada Gold Mines was $- for both the three and nine months endedSeptember 30, 2020 , compared to$2,366 for the same periods in 2019. The gain on formation of NGM represents the difference between the fair value of our 38.5% interest in NGM and the carrying value of the Nevada mining operations contributed. Gain on asset and investment sales, net was$1 and$593 during the three and nine months endedSeptember 30, 2020 , respectively, and was$(1) and$32 during the three and nine months endedSeptember 30, 2019 , respectively. The change for the nine months endedSeptember 30, 2020 , compared to 2019, is primarily due to the 2020 sales of Kalgoorlie inAustralia , theRed Lake complex inCanada and our investment in Continental. See Note 9 for additional information on asset sales and Note 19 for additional information on investment sales. Other income, net decreased by$76 and$169 during the three and nine months endedSeptember 30, 2020 , respectively, compared to the same periods in 2019. The decrease for the three months endedSeptember 30, 2020 is primarily due to pension settlement charges and unrealized foreign exchange losses in the current year compared to unrealized foreign exchange gains in the prior year, partially offset by larger increases in the fair value of investments in the current year. The decrease for the nine months endedSeptember 30, 2020 is primarily due to an other-than-temporary impairment of our investment in TMAC, debt extinguishment charges and pension settlement charges, partially offset by larger increases in the fair value of investments in the current year. Interest expense, net decreased by$2 during the three months endedSeptember 30, 2020 compared to the same period in 2019 due to lower interest rates as a result of the Company's recent debt refinancing transactions. Interest expense, net increased by$18 during the nine months endedSeptember 30, 2020 compared to the same period in 2019 primarily due to increased debt balances as a result of theNewmont Goldcorp transaction and a decrease in capitalized interest. Income and mining tax expense (benefit) was$305 and$558 , and$446 and$703 during the three and nine months endedSeptember 30, 2020 and 2019, 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 ofthe United States dollar 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. See Note 11 to the Condensed Consolidated Financial Statements for further discussion of income taxes. 51
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended
September 30, 2020 September 30, 2019
Income Tax Income Tax
Income Effective (Benefit) Income Effective (Benefit)
(Loss)(1) Tax Rate Provision (Loss)(1) Tax Rate Provision
Nevada $ 220 20 % $ 45 (2) $ 88 22 % $ 19 (2)
CC&V 46 15 7 (3) 18 - - (3)
Corporate & Other (18) 157 (29) (4) 2,278 20 464 (4)
Total US 248 9 23 2,384 20 483
Australia 284 38 107 (5) 168 37 62 (5)
Ghana 164 37 60 (6) 145 34 50 (6)
Suriname 80 26 21 (7) 69 26 18 (7)
Peru 2 550 11 (8) 48 73 35 (8)
Canada (63) (33) 21 (9) (75) 31 (23) (9)
Mexico 175 46 80 (10) (5) (620) 31 (10)
Argentina (20) 15 (3) (11) 18 (506) (91) (11)
Other Foreign 10 - - 26 8 2
Rate adjustments - N/A (15) (12) - N/A (9) (12)
Consolidated $ 880 35 % (13) $ 305 $ 2,778 20 % (13) $ 558 ____________________________
(1)Represents income (loss) from continuing operations by geographic location before income taxes and equity in affiliates. These amounts will not reconcile to the Segment Information for the reasons stated in Note 4. (2)Includes deduction for percentage depletion of$(16) and$(10) and mining taxes of$14 and$7 , respectively. Nevada includes the Company's 38.5% interest in NGM. (3)Includes deduction for percentage depletion of$(3) and$(5) , respectively. (4)Includes valuation allowance of$(24) and$36 , respectively. (5)Includes mining taxes net of associated federal benefit of$23 and$13 , respectively. (6)Includes uncertain tax position reserve adjustment of$6 and $-, respectively. (7)Includes valuation allowance of$1 and$1 , respectively. (8)Includes mining taxes net of associated federal benefit of $- and$7 and valuation allowance of$10 and$13 , respectively. (9)Includes mining taxes net of associated benefit of$10 and$1 , valuation allowance of$2 and$7 , uncertain tax position reserve adjustment of$(7) and$(5) , and tax impacts from the exposure to fluctuations in foreign currency of$6 and$(9) , respectively. (10)Includes mining taxes net of associated federal benefit of$11 and$(9) , valuation allowance of$2 and$25 , uncertain tax position reserve adjustment of$(8) and$13 , and tax impact from the exposure to fluctuations in foreign currency of$18 and$(12) , respectively. (11)Includes valuation allowance of$8 and$13 and tax impacts from the exposure to fluctuations in foreign currency of$(11) and$(117) , respectively. (12)In accordance with applicable accounting rules, the interim provision for income taxes is adjusted to equal the consolidated tax rate. (13)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. 52
--------------------------------------------------------------------------------
Table of Contents
Nine Months Ended
September 30, 2020 September 30, 2019
Income Tax Income Tax
Income Effective (Benefit) Income Effective (Benefit)
(Loss)(1) Tax Rate Provision (Loss)(1) Tax Rate Provision
Nevada $ 487 20 % $ 98 (2) $ 238 20 % $ 47 (2)
CC&V 91 12 11 (3) 21 - - (3)
Corporate & Other (254) 30 (76) (4) 2,033 22 455 (4)
Total US 324 10 33 2,292 22 502
Australia 1,141 22 247 (5) 414 40 164 (5)
Ghana 346 35 122 (6) 292 34 98 (6)
Suriname 232 27 62 (7) 195 26 50 (7)
Peru (32) (156) 50 (8) 112 54 61 (8)
Canada (51) (61) 31 (9) (105) 11 (12) (9)
Mexico 299 (11) (33) (10) (182) 20 (37) (10)
Argentina (71) 62 (44) (11) 9 (1,133) (102) (11)
Other Foreign 21 - - 46 11 5
Rate adjustments - N/A (22) (12) - N/A (26) (12)
Consolidated $ 2,209 20 % (13) $ 446 $ 3,073 23 % (13) $ 703 ____________________________
(1)Represents income (loss) from continuing operations by geographic location before income taxes and equity in affiliates. These amounts will not reconcile to the Segment Information for the reasons stated in Note 4. (2)Includes deduction for percentage depletion of$(40) and$(25) and mining taxes of$36 and$18 , respectively. Nevada includes the Company's 38.5% interest in NGM. (3)Includes deduction for percentage depletion of$(8) and$(4) , respectively. (4)Includes valuation allowance of$(26) and$64 and uncertain tax position reserve adjustment of $- and$5 , respectively. (5)Includes mining taxes net of associated federal benefit of$55 and$41 , and valuation allowance of$(148) and $-, respectively. (6)Includes uncertain tax position reserve adjustment of$6 and $-, respectively. (7)Includes valuation allowance of$2 and$1 , respectively. (8)Includes mining taxes net of associated federal benefit of$1 and$9 , valuation allowance of$27 and$17 , and expense related to prior year tax disputes of$28 and $-, respectively. (9)Includes mining tax net of associated benefit of$11 and $-, valuation allowance of$11 and$3 , uncertain tax position reserve adjustment of$(12) and$3 , and tax impacts from the exposure to fluctuations in foreign currency of$(1) and$6 , respectively. (10)Includes mining tax net of associated federal benefit of$14 and$1 , valuation allowance of$(2) and$27 , uncertain tax position reserve adjustment of$(13) and$13 and tax impact from the exposure to fluctuations in foreign currency of$(128) and$(41) , respectively. (11)Includes valuation allowance of$8 and $- and tax impacts from the exposure to fluctuations in foreign currency of$(42) and$(112) , respectively. (12)In accordance with applicable accounting rules, the interim provision for income taxes is adjusted to equal the consolidated tax rate. (13)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. During the quarter, the Nevada legislature passed three resolutions proposing amendments to the Nevada Constitution to modify provisions regarding the Net Proceeds of Minerals tax, which could significantly increase the mining taxes paid by NGM. These resolutions will require further approval over a multi-year process which would ultimately include a statewide vote. NGM has engaged stakeholders to discuss the potential impact of the resolutions, the fiscal requirements of the State, and the economic contributions of the Nevada mining industry. OnMarch 18, 2020 , the Families First Coronavirus Response Act ("FFCR Act"), and onMarch 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous income tax provisions such as the accelerated recoverability of alternative minimum tax credits and relaxing limitations on the deductibility of interest and on the use of net operating losses. The Company has analyzed this legislation and has determined that it has no effect on the income tax expense. However, due to the provision accelerating the recoverability of alternative minimum tax credits, the Company received a refund of all outstanding alternative minimum tax credits as ofSeptember 30, 2020 . In addition to the FFCR and CARES Acts, governments in various jurisdictions in which the Company operates, passed legislation in response to the COVID-19 pandemic. The Company has evaluated these provisions and determined there is no impact on the income tax expense. Equity income (loss) of affiliates was$53 and$119 during the three and nine months endedSeptember 30, 2020 , respectively, and was$32 and$53 during the three and nine months endedSeptember 30, 2019 , respectively. The increases are primarily due to income of$52 and$135 , respectively, from thePueblo Viejo mine, which was acquired as part of theNewmont 53
--------------------------------------------------------------------------------
Table of Contents Goldcorp transaction. For the three and nine months endedSeptember 30, 2020 , earnings before income taxes and depreciation and amortization related to thePueblo Viejo Mine ("Pueblo Viejo EBITDA") was$115 and$298 , respectively, and was$80 and$154 during the three and nine months endedSeptember 30, 2019 , respectively. Pueblo Viejo EBITDA is a non-GAAP financial measure. See "Non-GAAP Financial Measures" within Part I, Item 2, Management's Discussion and Analysis. For additional information regarding our Equity income (loss) of affiliates, see Note 12. Net income (loss) from discontinued operations was$228 and$145 for the three and nine months endedSeptember 30, 2020 , respectively. The change is primarily due to the change in fair value of the Holt royalty obligation and option. Refer to Note 18 for additional information on the Holt royalty obligation and option. Net income (loss) from discontinued operations was$(48) and$(100) for the three and nine months endedSeptember 30, 2019 , respectively. The change was primarily due to an increase in the Holt royalty obligation resulting from an increase in the expected gold price and a decrease in the discount rate. For additional information regarding our discontinued operations, see Note 13 to our Condensed Consolidated Financial Statements. Net loss (income) attributable to noncontrolling interests from continuing operations was$17 and$22 during the three and nine months endedSeptember 30, 2020 , respectively, and was$26 and$83 during the three and nine months endedSeptember 30, 2019 , respectively. The change is due to net losses at Yanacocha in the current year compared to net income in the prior year. Results of Consolidated OperationsNewmont has developed gold equivalent ounces ("GEO") metrics to provide a comparable basis for analysis and understanding of our operations and performance related to copper, silver, lead and zinc. Gold equivalent ounces are calculated as pounds or ounces produced multiplied by the ratio of the other metals' price to the gold price, using the metal prices in the table below:
© Edgar Online, source
