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, 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 the World 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 SAM S&P
Corporate Sustainability Assessment. 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 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 U.S., Canada,
Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia and
Ghana.
Refer to the “First Quarter 2022 Highlights”, “Results of Consolidated
Operations”, “Liquidity and Capital Resources” and “Non-GAAP Financial Measures”
for information about the continued impacts of the COVID-19 pandemic on the
Company.
In February 2022, the Company completed the acquisition of Buenaventura’s 43.65%
noncontrolling interest in Minera Yanacocha S.R.L. (“Yanacocha”) (the “Yanacocha
Transaction”) and sold its 46.94% ownership interest in Minera La Zanja S.R.L.
(“La Zanja”). Additionally, in March 2022, Sumitomo exercised its option to
require Yanacocha to repurchase its 5% interest which is expected to close in
the second quarter of 2022. Upon close, the Company will hold 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.
Consolidated Financial Results
The details of our Net income (loss) from continuing operations attributable to
Newmont stockholders are set forth below:
Three Months Ended
March 31, Increase
2022 2021 (decrease)
Net income (loss) from continuing operations attributable
to Newmont stockholders
$ 432
$ 538 $ (106)
Net income (loss) from continuing operations attributable
to Newmont stockholders per common share, diluted $ 0.54
$ 0.67 $ (0.13)
The decrease in Net income (loss) from continuing operations attributable to
Newmont stockholders for the three months ended March 31, 2022, compared to the
same period in 2021, is primarily due to lower gold sales volume, higher Costs
applicable to sales, a non-cash pension settlement charge in 2022, loss on the
sale of the La Zanja equity method investment in 2022 and higher reclamation and
remediation charges partially offset by higher realized metal prices, unrealized
gains on marketable and other equity securities in 2022 compared to unrealized
losses in 2021 and lower income tax expense.
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The details of our Sales are set forth below. Refer to Note 4 of the Condensed
Consolidated Financial Statements for further information.
Three Months Ended
March 31, Increase Percent
2022 2021 (decrease) Change
Gold $ 2,514 $ 2,482 $ 32 1 %
Copper 99 52 47 90
Silver 156 168 (12) (7)
Lead 44 44 – –
Zinc 210 126 84 67
$ 3,023 $ 2,872 $ 151 5 %
The following analysis summarizes consolidated sales for the three months ended
March 31, 2022:
Three Months Ended March 31, 2022
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,502 $ 92
$ 148 $ 44 $ 206
Provisional pricing mark-to-market
23 9 3 1 22
Silver streaming amortization – – 19 – –
Gross after provisional pricing and
streaming impact 2,525 101 170 45 228
Treatment and refining charges (11) (2) (14) (1) (18)
Net $ 2,514 $ 99
$ 156 $ 44 $ 210
Consolidated ounces (thousands)/pounds
(millions) sold
1,329 21 7,652 42 120
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,883 $ 4.51
$ 19.41 $ 1.06 $ 1.72
Provisional pricing mark-to-market
17 0.45 0.36 0.03 0.18
Silver streaming amortization – – 2.45 – –
Gross after provisional pricing and
streaming impact 1,900 4.96 22.22 1.09 1.90
Treatment and refining charges (8) (0.12) (1.86) (0.03) (0.15)
Net $ 1,892 $ 4.84 $ 20.36 $ 1.06 $ 1.75
____________________________
(1)Per ounce/pound measures may not recalculate due to rounding.
The following analysis summarizes consolidated sales for the three months ended
March 31, 2021:
Three Months Ended March 31, 2021
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Consolidated sales:
Gross before provisional pricing and
streaming impact $ 2,523 $ 48
$ 163 $ 59 $ 151
Provisional pricing mark-to-market
(28) 5 – (13) –
Silver streaming amortization – – 21 – –
Gross after provisional pricing and
streaming impact 2,495 53 184 46 151
Treatment and refining charges (13) (1) (16) (2) (25)
Net $ 2,482 $ 52
$ 168 $ 44 $ 126
Consolidated ounces (thousands)/pounds
(millions) sold
1,417 12 8,531 50 119
Average realized price (per
ounce/pound): (1)
Gross before provisional pricing and
streaming impact $ 1,780 $ 3.94
$ 19.15 $ 1.18 $ 1.27
Provisional pricing mark-to-market
(20) 0.36 0.05 (0.27) –
Silver streaming amortization – – 2.44 – –
Gross after provisional pricing and
streaming impact 1,760 4.30 21.64 0.91 1.27
Treatment and refining charges (9) (0.10) (1.91) (0.03) (0.21)
Net $ 1,751 $ 4.20 $ 19.73 $ 0.88 $ 1.06
____________________________
(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 March 31,
2022 vs. 2021
Gold Copper Silver Lead Zinc
(ounces) (pounds) (ounces) (pounds) (pounds)
Increase (decrease) in consolidated
ounces/pounds sold $ (156) $ 28
$ (18) $ (8) $ 2
Increase (decrease) in average realized
price
186 20 4 7 75
Decrease (increase) in treatment and
refining charges 2 (1) 2 1 7
$ 32 $ 47 $ (12) $ – $ 84
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
March 31, Increase Percent
2022 2021 (decrease) Change
Gold $ 1,184 $ 1,065 $ 119 11 %
Copper 46 27 19 70
Silver 97 75 22 29
Lead 22 19 3 16
Zinc 86 61 25 41
$ 1,435 $ 1,247 $ 188 15 %
The increase in Costs applicable to sales for gold during the three months ended
March 31, 2022, compared to the same period in 2021, is primarily due to lower
by-product credits and higher third party royalties, partially offset by lower
sales volumes.
The increase in Costs applicable to sales for copper during the three months
ended March 31, 2022, compared to the same period in 2021, is primarily due to
higher sales volumes, higher co-product allocation of costs at Boddington and
higher shipping costs at Boddington.
The increases in Costs applicable to sales for silver and lead during the three
months ended March 31, 2022, compared to the same period in 2021, is primarily
due to higher co-product allocation of costs at Peñasquito, partially offset by
lower sales volumes.
The increase in Costs applicable to sales for zinc during the three months ended
March 31, 2022, compared to the same period in 2021, is primarily due to higher
sales of zinc concentrate and higher royalties resulting from the higher
realized zinc prices at Peñasquito.
For discussion regarding variations in operations, see Results of Consolidated
Operations below.
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
March 31, Increase Percent
2022 2021 (decrease) Change
Gold $ 444 $ 456 $ (12) (3) %
Copper 8 4 4 100
Silver 44 41 3 7
Lead 10 10 – –
Zinc 35 29 6 21
Other 6 13 (7) (54)
$ 547 $ 553 $ (6) (1) %
The decrease in Depreciation and amortization for gold during the three months
ended March 31, 2022, compared to the same period in 2021, is primarily due to
lower sales volume at (i) Peñasquito as a result of lower ore grade milled and
lower mill
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recovery and (ii) CC&V as a result of lower leach pad recoveries and lower ore
milled due to the mill shut down and temporary idling in the current year.
The increase in Depreciation and amortization for copper during the three months
ended March 31, 2022, compared to the same period in 2021, is primarily due to
higher co-product allocation of costs to copper at Boddington and higher sales
volumes.
The increases in Depreciation and amortization for silver and zinc during the
three months ended March 31, 2022, compared to the same period in 2021, is
primarily due to higher co-product allocation of costs at Peñasquito.
Depreciation and amortization for lead remained consistent during the three
months ended March 31, 2022, compared to the same period in 2021.
For discussion regarding variations in operations, see Results of Consolidated
Operations below.
Advanced projects, research and development expense increased by $13 during the
three months ended March 31, 2022, compared to the same period in 2021,
primarily due to increased spend associated with full potential programs at
various sites and early project study cost at Akyem.
Interest expense, net of capitalized interest decreased by $12 during the three
months ended March 31, 2022 compared to the same period in 2021 as a result of
the repayment of debt throughout 2021 and into early 2022.
Income and mining tax expense (benefit) was $214 and $235 during the three
months ended March 31, 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 U.S. 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. Refer to Note 8 of the Condensed Consolidated Financial Statements for
further discussion of income taxes.
Three Months Ended
March 31, 2022 March 31, 2021
Income Tax Income Tax
Income Effective (Benefit) Income Effective (Benefit)
(Loss)(1) Tax Rate Provision (Loss)(1) Tax Rate Provision
Nevada $ 152 16 % $ 25 (2) $ 165 17 % $ 28 (2)
CC&V (6) – – (3) 17 6 1 (3)
Corporate & Other (184) 23 (43) (4) (232) 8 (19) (4)
Total US (38) 47 (18) (50) (20) 10
Australia 292 35 103 (5) 217 36 79 (5)
Ghana 124 34 42 135 33 45
Suriname 71 27 19 80 28 22
Peru 2 50 1 (6) (2) 100 (2) (6)
Canada (49) 2 (1) (7) 90 14 13 (7)
Mexico 225 44 100 (8) 273 27 73 (8)
Argentina (5) 340 (17) (9) (9) 122 (11) (9)
Other Foreign 6 – – 9 – –
Rate adjustments – N/A (15) (10) – N/A 6 (10)
Consolidated $ 628 34 % (11) $ 214 $ 743 32 % (11) $ 235
____________________________
(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.
(2)Includes deduction for percentage depletion of $(14) and $(14) and mining
taxes net of associated federal benefit of $7 and $8, respectively. Nevada
includes the Company’s 38.5% interest in NGM.
(3)Includes deduction for percentage depletion of $- and $(2), respectively.
(4)Includes valuation allowance of $6 and $25, respectively.
(5)Includes mining taxes net of associated federal benefit of $14 and $14 and
tax impacts from the exposure to fluctuations in foreign currency of $(5) and
$4, respectively.
(6)Includes mining taxes net of associated federal benefit of $1 and $- and
valuation allowance of $(1) and $(1), respectively.
(7)Includes mining tax net of associated federal benefit of $1 and $4, valuation
allowance of $- and $1, uncertain tax position reserve adjustment of $(3) and
$1, and tax impacts from the exposure to fluctuations in foreign currency of
$(1) and $2, respectively.
(8)Includes mining tax net of associated federal benefit of $15 and $14,
valuation allowance of $- and $(2), uncertain tax position reserve adjustment of
$(8) and $-, and tax impact from the exposure to fluctuations in foreign
currency of $13 and $(19), respectively.
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(9)Includes tax impacts from the exposure to fluctuations in foreign currency of
$(18) and $(10), respectively.
(10)In accordance with applicable accounting rules, the interim provision for
income taxes is adjusted to equal the consolidated tax rate.
(11)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.
Equity income (loss) of affiliates decreased by $11 during the three months
ended March 31, 2022, compared to the same period in 2021, primarily due to
lower performance at the Pueblo Viejo mine. For the three months ended March 31,
2022 and 2021, earnings before income taxes, depreciation and amortization
related to the Pueblo Viejo Mine (“Pueblo Viejo EBITDA”) was $80 and $117,
respectively. Pueblo Viejo EBITDA is a non-GAAP financial measure. For further
information regarding Pueblo Viejo EBITDA, refer to “Non-GAAP Financial
Measures” within Part I, Item 2, Management’s Discussion and Analysis. For
further information regarding Equity income (loss) of affiliates, refer to Note
10 of the Condensed Consolidated Financial Statements.
Refer to the Notes of the Condensed Consolidated Financial Statements for
explanations of other financial statement line items.
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