Newmont Sells 5.3 Million Equity Ounces of Gold in 2007

DENVER, CO - Newmont Mining Corporation reported 2007 operating and reserve results as well as the Company's operating outlook for 2008. For the quarter ended December 31, 2007, the Company reported equity gold sales of 1.4 million ounces at costs applicable to sales of $384 per ounce. For the year ended December 31, 2007, the Company reported equity gold sales of 5.3 million ounces at costs applicable to sales of $406 per ounce. Consolidated capital expenditures for the quarter and year ended December 31, 2007 were $511 million and $1.7 billion, respectively, which were below the Company's original outlook of $1.8 to $2.0 billion for 2007.
Richard O'Brien, President and Chief Executive Officer, said, "We are pleased with our operating results from the fourth quarter, resulting in gold sales performance consistent with our original expectations for the year. We expect our 2008 gold sales performance to be comparable with our 2007 results, with equity gold sales expected to be between 5.1 and 5.4 million ounces at costs applicable to sales of between $425 and $450 per ounce. Building on our strong operating performance from the third and fourth quarters of 2007, as well as the momentum we established with the completion of our Miramar acquisition and the sale of our royalty assets and certain other equity interests in December, we have embarked on 2008 with a renewed focus on operational and project execution as well as financial performance."
The Company reported year end 2007 proven and probable reserves of 86.5 million equity ounces compared with 93.9 million equity ounces at the end of 2006. As shown in the chart on the following page, during 2007 the Company added 4.2 million equity ounces of gold reserves due to margin changes and additional drilling. The gold price basis for the Company's reserve calculations increased to $575 per ounce in 2007 from $500 per ounce in 2006. Gold reserves were revised down at Ahafo in Ghana by 2.4 million equity ounces due to increasing operating and capital costs, by 0.8 million equity ounces at Nevada due to geotechnical and metallurgical changes, as well as higher operating costs, and by 0.2 million equity ounces at various locations due to operating cost inflation. Gold reserves were also impacted by 0.9 million ounces as a result of the previously announced reduction of the Company's economic ownership at Batu Hijau in Indonesia and by the sale of Pajingo in Australia.
For 2007, the reserve additions from exploration of roughly 3.5 million equity ounces were primarily due to further extension drilling at Boddington, Jundee and Tanami in Australia, with 2.5 million equity ounces added to reserves in 2007, and the remaining additions coming from Batu Hijau, several open pit and underground sites in Nevada, and La Herradura in Mexico.
For 2007, the Company's reserve grade remained relatively constant at 0.033 ounces per ton compared to 0.034 ounces per ton in 2006 in spite of downward pressure on grade due to both higher metal prices and the average depletion grade of 0.042 ounces per ton in 2007. The Company's reserves sensitivity to a $25 change in the gold price between $575 and $650 per ounce, assuming costs remain constant, is approximately 3.0 to 4.0 million equity ounces. The Company's ability to project reserve sensitivities at significantly higher gold prices is constrained by limited drill data.
Looking to 2008, greenfield exploration will focus on the South America, North America and West Africa regions building on the encouraging results from these areas in 2007, as well as further non-reserve mineralization (NRM) conversion at Boddington. In South America, exploration will continue to focus on sulfide targets at Yanacocha in Peru and on greenfields projects in the Andes of Peru and the Guiana Shield, where the Company recently applied to the government of Suriname for a Right of Exploitation for the Merian II and Maraba discoveries at the Nassau joint venture. The Company expects to spend approximately $220 to $230 million on exploration activities in 2008, including approximately $29 million at the recently acquired Hope Bay project in Nunavut, Canada.
Due to recent reserve replacement results, required changes to the Company's valuation model assumptions, primarily the discount rate, reserve growth rate, reserve finding costs, operating and capital costs, and new industry-developed interpretation of the accounting rules for impairment analysis, the Company will likely recognize a non-cash $1.1 billion Exploration Segment goodwill impairment as part of continuing operations in the fourth quarter of 2007.
The Company continues to focus on cost mitigating initiatives, including this year's anticipated completion of the power plant in Nevada and commissioning of the gold mill at Yanacocha, as well as the implementation of operational diagnostic and continuous improvement measures at the Company's operations globally. The Company expects to realize cost savings in Nevada of approximately $25 per ounce annually from its Nevada power plant investment that is expected to be commissioned by mid-2008.
The Company's 2008 costs applicable to sales outlook is subject to impact by changes to commodity prices and exchange rates. The Company's 2008 costs applicable to sales outlook assumed an oil price of $80 per barrel and an Australian dollar exchange rate of 0.875. During 2008, the Company anticipates consuming approximately 3 million barrels of oil. Additionally, the Company expects to spend approximately 20% of its total costs applicable to sales denominated in Australian dollars.
Equity gold sales in Nevada are expected to remain relatively stable in 2008 at approximately 2.27 to 2.40 million ounces, primarily due to increased leach production at Twin Creeks as well as Leeville operating at designed capacity for a complete year, offset by lower production from the closure of the Lone Tree processing facility.
Costs applicable to sales in Nevada are expected to be slightly lower in 2008 at approximately $400 to $430 per ounce, partially due to anticipated cost savings of approximately $25 per ounce realized from the power plant and reduced milling costs due to the closure of the Lone Tree processing facility.The Company continues to address the operational challenges at Phoenix. The new crusher is expected to be completed and operational in the second quarter of 2008, and the new mine plan remains on schedule to be completed by mid-2008.
The company's address is 1700 Lincoln Street, Denver, CO 80203, (303) 863-7414, fax: (303) 837-5837, email: [email protected], www.newmont.com.