Edgar Filing: NEWMONT MINING CORP /DE/

Form 10-Q/A for Period Ended June 30, 2003

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q/A

(Amendment No. 2)

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2003

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31240

NEWMONT MINING CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		84-1611629
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1700 Lincoln Street		80203
Denver, Colorado		(Zip Code)
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (303) 863-7414

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12-b2 of the Exchange Act). x Yes ¨ No

There were 364,076,754 shares of common stock outstanding on July 30, 2003 (and 43,989,956 exchangeable shares).

Explanatory Note

This Amendment No. 2 on Form 10-Q/A (this “Amendment”) amends the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 filed on August 4, 2003, as amended on October 24, 2003 (the “Original Filing”). Newmont Mining Corporation has filed this Amendment to correct an error in the Statements of Consolidated Cash Flows as described in Note 23, Restatement of Statements of Consolidated Cash Flows, as well as to make corresponding textual changes in Item 2, Management’s Discussion and Analysis of Results of Operations and Financial Condition and to add related information in Item 4, Controls and Procedures. Other information contained herein has not been updated. Therefore, you should read this Amendment together with other documents that we have filed with the Securities and Exchange Commission subsequent to the filing of the Original Filing. Information in such reports and documents updates and supersedes certain information contained in this Amendment. The filing of this Amendment shall not be deemed an admission that the Original Filing, when made, included any known, untrue statement of material fact or knowingly omitted to state a material fact necessary to make a statement not misleading.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEWMONT MINING CORPORATION

STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME


	Three Months Ended June 30,
	2003			2002
	(unaudited, in thousands, except per share)
Revenues
Sales—gold	$	724,026		$	609,516
Sales—base metals, net		12,735			22,935
Royalties		10,461			11,202

		747,222			643,653

Costs and expenses
Costs applicable to sales (exclusive of depreciation, depletion and amortization shown separately below)
Gold		423,700			383,515
Base metals		9,973			8,674
Depreciation, depletion and amortization		139,337			123,602
Exploration and research		30,247			18,788
General and administrative		31,292			27,652
Write-down of long-lived assets		1,794			––
Other		2,454			(1,791	)

		638,797			560,440

Other income (expense)
Gain on investments, net		––			47,298
Gain (loss) on gold commodity derivative instruments, net		16,644			(9,478	)
Gain on extinguishment of NYOL bonds, net		94,414			––
Gain on extinguishment of NYOL derivatives liability, net		76,578			––
Dividends, interest income, foreign currency exchange and other income		32,318			14,843
Interest expense, net of capitalized interest of $1,758 and $1,223, respectively		(22,669	)		(35,101	)

		197,285			17,562

Pre-tax income before minority interest, equity (loss) income and impairment of affiliates		305,710			100,775
Income tax expense		(89,038	)		(29,821	)
Minority interest in income of subsidiaries		(35,807	)		(19,284	)
Equity loss and impairment of Australian Magnesium Corporation		(107,758	)		(688	)
Equity income of affiliates		17,740			18,008

Net income		90,847			68,990
Preferred stock dividends		—			(1,869	)

Net income applicable to common shares	$	90,847		$	67,121

Net income	$	90,847		$	68,990
Other comprehensive income, net of tax		19,130			29,828

Comprehensive income	$	109,977		$	98,818

Net income per common share, basic and diluted	$	0.22		$	0.17

Basic weighted average common shares outstanding		405,388			397,532

Diluted weighted average common shares outstanding		408,242			399,468

Cash dividends declared per common share	$	0.04		$	0.03

See Notes to Consolidated Financial Statements

NEWMONT MINING CORPORATION

STATEMENTS OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME


	Six Months Ended June 30,
	2003			2002
	(unaudited, in thousands, except per share)
Revenues
Sales—gold	$	1,438,582		$	1,091,750
Sales—base metals, net		32,168			32,305
Royalties		24,941			15,002

		1,495,691			1,139,057

Costs and expenses
Costs applicable to sales (exclusive of depreciation, depletion and amortization shown separately below)
Gold		822,709			712,050
Base metals		25,335			19,379
Depreciation, depletion and amortization		269,930			225,788
Exploration and research		51,719			30,355
General and administrative		57,702			48,967
Write-down of long-lived assets		1,794			––
Other		24,473			(921	)

		1,253,662			1,035,618

Other income (expense)
Gain on investments, net		84,337			47,298
Gain (loss) on gold commodity derivative instruments, net		71,669			(3,147	)
Gain on extinguishment of NYOL bonds, net		94,414			––
Gain on extinguishment of NYOL derivatives liability, net		76,578			––
Loss on extinguishment of debt		(19,530	)		––
Dividends, interest income, foreign currency exchange and other income		64,157			15,258
Interest expense, net of capitalized interest of $3,048 and $2,294, respectively		(52,615	)		(66,238	)

		319,010			(6,829	)

Pre-tax income before minority interest, equity (loss) income and impairment of affiliates and cumulative effect of a change in accounting principle		561,039			96,610
Income tax expense		(151,601	)		(31,009	)
Minority interest in income of subsidiaries		(73,596	)		(29,834	)
Equity loss and impairment of Australian Magnesium Corporation		(119,485	)		(688	)
Equity income of affiliates		26,278			19,412

Net income before cumulative effect of a change in accounting principle		242,635			54,491
Cumulative effect of a change in accounting principle, net of tax of $11,188 and $(4,147), respectively		(34,533	)		7,701

Net income		208,102			62,192
Preferred stock dividends		—			(3,738	)

Net income applicable to common shares	$	208,102		$	58,454

Net income	$	208,102		$	62,192
Other comprehensive income, net of tax		60,159			57,706

Comprehensive income	$	268,261		$	119,898

Net income per common share before cumulative effect of a change in accounting principle, basic	$	0.60		$	0.15
Cumulative effect of a change in accounting principle per common share, basic		(0.08	)		0.02

Net income per common share, basic	$	0.52		$	0.17

Net income per common share before cumulative effect of a change in accounting principle, diluted	$	0.60		$	0.15
Cumulative effect of a change in accounting principle per common share, diluted		(0.09	)		0.02

Net income per common share, diluted	$	0.51		$	0.17

Basic weighted average common shares outstanding		403,648			339,817

Diluted weighted average common shares outstanding		406,305			341,262

Cash dividends declared per common share	$	0.08		$	0.06

See Notes to Consolidated Financial Statements

NEWMONT MINING CORPORATION

CONSOLIDATED BALANCE SHEETS


	June 30, 2003			December 31, 2002
	(unaudited, in thousands)
ASSETS
Cash and cash equivalents	$	274,741		$	401,683
Marketable securities—short-term		12,030			13,188
Accounts receivable		44,971			44,510
Inventories		170,458			169,324
Stockpiles and ore on leach pads		277,021			328,993
Prepaid taxes		19,318			28,335
Deferred stripping costs—short term		28,660			32,085
Deferred income tax assets		53,482			51,451
Newmont Australia infrastructure bonds		114,287			—
Other current assets		63,365			43,687

Current assets		1,058,333			1,113,256
Property, plant and mine development, net		2,343,102			2,287,030
Mineral interests and other intangible assets, net		1,405,066			1,415,348
Investments		695,059			1,206,705
Marketable securities—long-term		291,004			—
Deferred stripping costs—long term		39,336			23,302
Long-term stockpiles and ore on leach pads		282,537			199,761
Deferred income tax assets		879,324			761,428
Other long-term assets		89,208			123,112
Goodwill		3,068,657			3,024,576

Total assets	$	10,151,626		$	10,154,518

LIABILITIES
Current portion of long-term debt	$	176,422		$	115,322
Accounts payable		151,042			105,277
Deferred income tax liabilities		9,171			28,469
Derivative instruments		7,914			74,999
Employee related benefits—short-term		117,196			100,936
Other current liabilities		420,049			268,460

Current liabilities		881,794			693,463
Long-term debt		1,277,166			1,701,282
Reclamation and remediation liabilities		421,970			288,536
Deferred revenue from sale of future production		53,841			53,841
Derivative instruments		17,254			388,659
Deferred income tax liabilities		742,237			656,452
Employee related benefits—long-term		214,697			234,103
Other long-term liabilities		379,677			364,376

Total liabilities		3,988,636			4,380,712

Commitments and contingencies (Note 18)
Minority interest in subsidiaries		362,196			354,558

STOCKHOLDERS’ EQUITY
Preferred stock—$5.00 par value;
Authorized—5.0 million shares Issued and outstanding—none		—			—
Common stock—$1.60 par value;
Authorized—750 million shares at each period end, respectively Issued and outstanding—
Common: 362.1 million and 353.2 million shares issued, less 90 thousand and 9 thousand treasury shares, respectively		579,733			565,019
Exchangeable: 55.9 million shares, less 10 million and 7 million redeemed shares, respectively
Additional paid-in capital		5,153,258			5,038,468
Accumulated other comprehensive income (loss)		(3,867	)		(64,026	)
Retained earnings (deficit)		71,670			(120,213	)

Total stockholders’ equity		5,800,794			5,419,248

Total liabilities and stockholders’ equity	$	10,151,626		$	10,154,518

See Notes to Consolidated Financial Statements

NEWMONT MINING CORPORATION

STATEMENTS OF CONSOLIDATED CASH FLOWS

As Restated. See Note 23


	Six Months Ended June 30,
	2003			2002
	(unaudited, in thousands)
Operating activities:
Net income	$	208,102		$	62,192
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		269,930			225,788
Accretion of accumulated reclamation obligations		11,320			––
Amortization of deferred stripping costs, net		(14,114	)		8,903
Deferred income taxes		8,745			(10,403	)
Foreign currency exchange (gain) loss		(51,884	)		1,482
Minority interest, net of dividends of $29,190 and $2,700, respectively		44,406			27,134
Equity loss (income) and impairment of affiliates, net of dividends		99,309			(14,859	)
Write-downs of inventories, stockpiles and ore on leach pads		17,941			15,897
Cumulative effect of a change in accounting principle, net of tax		34,533			(7,701	)
Gain on investments, net		(84,337	)		(47,298	)
Gain on gold commodity derivative instruments, net		(71,669	)		3,147
Gain on extinguishment of NYOL bonds, net		(94,414	)		––
Gain on extinguishment of NYOL derivatives liability, net		(76,578	)		––
Loss on extinguishment of debt		19,530			––
Gain on sale of assets and other		(11,027	)		(9,704	)
(Increase) decrease in operating assets:
Accounts receivable		8,000			14,413
Inventories, stockpiles and ore on leach pads		(25,574	)		(5,441	)
Other assets		7,332			14,881
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities		40,656			(35,603	)
Derivative instruments		(12,935	)		––
Early settlement of derivative instruments classified as cash flow hedges		(119,988	)		––
Other liabilities		(12,698	)		(42,896	)

Net cash provided by operating activities		194,586			199,932

Investing activities:
Additions to property, plant and mine development		(219,101	)		(140,810	)
Advances to joint ventures and affiliates, net		(46,203	)		(24,750	)
Proceeds from sale of short-term investments		1,653			406,731
Proceeds from the sale of TVX Newmont Americas		180,000			––
Proceeds from sale of marketable securities of Lihir		—			84,002
Proceeds from sale of cross currency swaps		—			50,816
Early settlement of ineffective derivative instruments		(30,153	)		––
Cash consideration for acquisition of Newmont NFM minority interest and other		(11,195	)		––
Cash consideration for the acquisition of Normandy and Franco-Nevada, net of cash received and transaction costs		—			(87,885	)
Proceeds from asset sales and other		988			19,888

Net cash (used in) provided by investing activities		(124,011	)		307,992

Financing activities:
Proceeds from long-term debt		115,000			489,131
Repayment of long-term debt		(322,360	)		(911,817	)
Dividends paid on common and preferred stock		(32,308	)		(25,871	)
Proceeds from stock issuance and other		24,851			62,898
Other		—			(691	)

Net cash used in financing activities		(214,817	)		(386,350	)

Effect of exchange rate changes on cash		17,300			14,400
Net change in cash and cash equivalents		(126,942	)		135,974
Cash and cash equivalents at beginning of period		401,683			149,431

Cash and cash equivalents at end of period	$	274,741		$	285,405

Supplemental information:
Accrual for NYOL bond extinguishment	$	98,398		$	—
Interest paid, net of amounts capitalized of $3,048 and $2,294, respectively	$	67,297		$	61,668
Income taxes paid	$	110,467		$	45,700

See Notes to Consolidated Financial Statements

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The following interim Consolidated Financial Statements of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited and prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles as long as the statements are not misleading. In the opinion of management, all adjustments necessary for a fair presentation of these interim statements have been included. These adjustments are of a normal recurring nature, except for the effects of the February 2002 acquisitions. These interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of Newmont included in its Annual Report on Form 10-K/A for the year ended December 31, 2002.

The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Company’s Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the period. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves that are the basis for future cash flow estimates and units-of-production depreciation, depletion and amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other minerals in stockpile and leach pads inventories; asset impairments (including impairments of goodwill, long-lived assets, and investments); write-downs of inventory to net realizable value; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. The Company bases its estimates on the Company’s historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

References to “A$” refer to Australian currency, “CDN$” to Canadian currency and “$” or “US$” to United States currency.

Certain amounts for the three and six months ended June 30, 2002 and at December 31, 2002 have been reclassified to conform to 2003 presentation.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) ACQUISITIONS

Newmont NFM Limited Scheme of Arrangement

On April 2, 2003, the shareholders of Normandy NFM Limited (an Australian corporation trading as “Newmont NFM” on the Australian Stock Exchange or “ASX”) voted to approve the proposed scheme of arrangement under which Newmont NFM would become a wholly-owned subsidiary of Newmont Australia Limited, a wholly-owned subsidiary of Newmont Mining Corporation, through the acquisition of the remaining minority interest of Newmont NFM. The Federal Court in Sydney, Australia approved the scheme on April 11, 2003 and the scheme became effective on April 14, 2003 after the orders of the Federal Court were filed with the Australian Securities and Investments Commission. Under the terms of the scheme, Newmont NFM shareholders could receive 4.40 ASX listed Newmont Mining Corporation CHESS Depositary Interests (“CDIs”) for each Newmont NFM share. Each CDI is equivalent to 0.1 Newmont Mining Corporation common shares. As an alternative to receiving Newmont Mining Corporation CDIs, shareholders could sell their Newmont NFM shares back to the company under a concurrent buy-back offer of A$16.50 per Newmont NFM share. On April 29, 2003, Newmont Mining Corporation issued 4,437,506 common shares to CHESS Depository Nominees Pty Ltd, and in turn, 44,375,060 CDIs were issued to former Newmont NFM shareholders. The market value of the issued Newmont Mining Corporation shares was approximately $105 million, based on the average quoted value of the shares of $23.58 two days before and after November 28, 2002, the date the terms of the transaction were announced. The market value of the issued shares, together with the cash consideration paid to those shareholders who elected to accept the buy-back offer of approximately $10 million (including transaction costs), gave rise to a total purchase price of approximately $115 million. The transaction was accounted for as a purchase of minority interest in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141 “Business Combinations” in the second quarter of 2003. Newmont NFM was delisted from the ASX in April 2003. Newmont has performed a preliminary purchase price allocation based on independent appraisals and valuations that gave rise to goodwill of $77.1 million. The final purchase price allocation is not expected to vary significantly from the preliminary allocation.

Normandy and Franco-Nevada

During the first quarter of 2002, Newmont acquired Franco-Nevada Mining Corporation Limited. (“Franco-Nevada”) and Normandy Mining Limited. (“Normandy”). The effective date for accounting purposes of the acquisitions was February 15, 2002. For more information on the acquisitions and the related purchase price allocation, see Note 3 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2002.

For information purposes only, the following unaudited pro forma data reflects the consolidated results of operations of Newmont as if the acquisitions of Franco-Nevada and Normandy had taken place on January 1, 2002 (unaudited, in millions, except per share data):


	Six Months Ended June 30, 2002
Revenues	$	1,368.8
Net loss applicable to common shares before cumulative effect of a change in accounting principle	$	(77.6	)
Net loss applicable to common shares	$	(69.9	)
Basic and diluted loss per common share before cumulative effect of a change in accounting principle	$	(0.20	)
Basic and diluted loss per common share	$	(0.18	)
Basic and diluted weighted average common shares outstanding		394.1

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On a pro forma basis during the six months ended June 30, 2002, the net loss includes mark-to-market losses on derivative instruments totaling $166.9 million, net of tax. The above pro forma amounts do not include the application of hedge accounting prior to the acquisitions to significant portions of the acquired derivative instruments, as hedge accounting documentation was not in place during those periods. The pro forma information is not indicative of the results of operations that would have occurred had the acquisitions been consummated on January 1, 2002. The information is not indicative of the combined company’s future results of operations.

Goodwill

Changes in the carrying amount of goodwill allocated to reporting units during 2002 and for the first six months of 2003 are summarized in the following table (unaudited, in millions).


	Nevada		Other North America			Total North America			Yanacocha		Other South America		Total South America
Balance at January 1, 2002	$	—	$	—		$	—		$	—	$		$	—
Purchase price allocation for Normandy and Franco-Nevada acquisitions		40.9		—			40.9			—		—		—

Balance at December 31, 2002		40.9		—			40.9			—		—		—
Reversal of valuation allowances for acquired deferred tax assets		—		—			—			—		—		—

Balance at March 31, 2003		40.9		—			40.9			—		—		—
Purchase price allocation for Newmont NFM Scheme of Arrangement		—		—			—			—		—		—
Reversal of valuation allowances for acquired deferred tax assets		—		—			—			—		—		—

Balance at June 30, 2003	$	40.9	$	—		$	40.9		$	—	$	—	$	—


	Pajingo		Other Australia			Total Australia			Zarafshan- Newmont		Other International Operations		Total Gold
Balance at January 1, 2002	$	—	$	—		$	—		$	—	$	—	$	—
Purchase price allocation for Normandy and Franco-Nevada acquisitions		56.9		140.8			197.7			—		—		238.6

Balance at December 31, 2002		56.9		140.8			197.7			—		—		238.6
Reversal of valuation allowances for acquired deferred tax assets		—		(18.5	)		(18.5	)		—		—		(18.5	)

Balance at March 31, 2003		56.9		122.3			179.2			—		—		220.1
Purchase price allocation for Newmont NFM Scheme of Arrangement		—		77.1			77.1			—		—		77.1
Reversal of valuation allowances for acquired deferred tax assets		—		(14.5	)		(14.5	)		—		—		(14.5	)

Balance at June 30, 2003	$	56.9	$	184.9		$	241.8		$	—	$	—	$	282.7

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Base Metals		Exploration		Merchant Banking		Corporate and Other		Consolidated
Balance at January 1, 2002	$	—	$	—	$	—	$	—	$	—
Purchase price allocation for Normandy and Franco-Nevada acquisitions		31.5		1,129.5		1,625.0		—		3,024.6

Balance at December 31, 2002		31.5		1,129.5		1,625.0		—		3,024.6
Reversal of valuation allowances for acquired deferred tax assets		—		—		—		—		(18.5	)

Balance at March 31, 2003		31.5		1,129.5		1,625.0		—		3,006.1
Purchase price allocation for Newmont NFM Scheme of Arrangement		—		—		—		—		77.1
Reversal of valuation allowances for acquired deferred tax assets		—		—		—		—		(14.5	)

Balance at June 30, 2003	$	31.5	$	1,129.5	$	1,625.0	$	—	$	3,068.7

During the six months ended June 30, 2003, the Company reversed valuation allowances for deferred tax assets related to capital loss carry-forwards in Australia due to capital gains generated by the sale of TVX Newmont Americas, the loss of tax attributes from the extinguishment of Newmont Yandal Operations Pty Ltd (“NYOL”) bonds (see Note 10 for discussion) and from tax benefits arising from the completion of the Newmont NFM Scheme of Arrangement. The valuation allowances were originally recorded as part of the purchase price allocation for the acquisition of Normandy and were therefore reversed against goodwill.

(3) INVENTORIES


	At June 30, 2003		At December 31, 2002
	(unaudited, in thousands)
Current:
In-process	$	41,782	$	46,435
Precious metals		23,923		19,467
Materials and supplies		104,753		103,310
Other		—		112

	$	170,458	$	169,324

The Company recorded aggregate write-downs of $5.1 million and $0.8 million for the three months ended June 30, 2003 and 2002, respectively, to reduce the carrying value of inventories to net realizable value. Write-downs in 2003 included $0.8 million at Yanacocha, $0.3 million at Yandal, $0.5 million at Martha and $3.5 million at Golden Grove. Write-downs in 2002 related to $0.8 million at Nevada.

The Company recorded aggregate write-downs of $10.9 million and $2.3 million for the six months ended June 30, 2003 and 2002, respectively, to reduce the carrying value of inventories to net realizable value. Write-downs in 2003 include $0.8 million at Yanacocha, $1.0 million at Yandal, $1.3 million at Minahasa, $1.0 million at Martha and $6.8 million at Golden Grove. Write-downs in 2002 primarily related to $2.0 million at Nevada.

Inventory write-downs are classified as components of Costs applicable to sales.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) STOCKPILES AND ORE ON LEACH PADS


	At June 30, 2003		At December 31, 2002
	(unaudited, in thousands)
Current:
Stockpiles	$	92,129	$	104,997
Ore on leach pads		184,892		223,996

	$	277,021	$	328,993

Long-term:
Stockpiles	$	164,830	$	136,116
Ore on leach pads		117,707		63,645

	$	282,537	$	199,761

Write-downs of inventories included in Costs applicable to sales totaled $5.1 million and $6.8 million for the three months ended June 30, 2003 and 2002, respectively, to reduce the carrying value of stockpiles to net realizable value. The 2003 stockpile write-downs included $1.4 million at Yandal, $2.1 million at Tanami, $1.0 million at Kalgoorlie, and $0.6 million at Martha. The 2002 stockpile write-downs primarily related to $6.6 million at Nevada.

Write-downs of inventories included in Costs applicable to sales totaled $6.8 million and $13.6 million for the six months ended June 30, 2003 and 2002, respectively, to reduce the carrying value of stockpiles to net realizable value. The Company also recorded a write-down in Nevada of $0.2 million for the six months ended June 30, 2003 to reduce the carrying value of ore on leach pads to net realizable value. Stockpile write-downs in 2003 include $0.8 million in Nevada, $1.4 million at Yandal, $2.1 million at Tanami, $1.0 million at Kalgoorlie and $1.5 million at Martha. $13.3 million of the stockpile write-downs in 2002 related to Nevada.

Stockpile and ore on leach pads write-downs are classified as components of Costs applicable to sales.

(5) GAIN ON INVESTMENTS, NET

Gain on investment for the three and six months ended June 30, 2003 and 2002 was as follows:


	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
	(unaudited, in thousands)
Gain on exchange of Echo Bay shares for Kinross marketable securities	$	—	$	—	$	84,337	$	—
Gain on sale of marketable securities of Lihir Gold		—		47,298		—		47,298

Total	$	—	$	47,298	$	84,337	$	47,298

Kinross Gold Corporation

On January 31, 2003, Kinross Gold Corporation (“Kinross”), Echo Bay Mines Ltd. (“Echo Bay”) and TVX Gold Inc. (“TVX Gold”) were combined, and TVX Gold acquired Newmont’s 49.9% interest in the TVX Newmont Americas joint venture. Under the terms of the combination and acquisition, Newmont received a 13.8% interest in the restructured Kinross in exchange for its then 45.67% interest in Echo Bay and $180 million for its interest in TVX Newmont Americas. Cash proceeds of $170.6 million were received immediately after the

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

close of the transaction. The remaining $9.4 million, originally held in escrow, were received subsequent to the end of the first quarter. Newmont recognized a pre-tax gain of $84.3 million on the transaction in Gain on investments, net in the Statement of Consolidated Operations.

Newmont classifies its investment in Kinross as a long-term, available-for-sale marketable security. At June 30, 2003, the fair value of the Kinross investment was $291 million. During the three months ended March 31, 2003, a loss of $45.3 million, net of tax, was recorded in Other comprehensive income, net of tax for the change in market value of the investment. During the second quarter of 2003, a loss of $3.2 million, net of tax, was recorded in Other comprehensive income, net of tax for the change in market value of the investment. Newmont will continue to monitor the market value of its investment in Kinross Gold Corporation. In the event that the decline in the market value of the Kinross shares continues in future periods, the Company will evaluate the need to recognize a loss for an other-than-temporary decline in the value of the investment.

Gain on Sale of Marketable Securities of Lihir Gold

At March 31, 2002, the Company held a 9.74% interest in Lihir Gold, which was accounted for as an investment in marketable securities. During the three months ended March 31, 2002, unrealized holding gains of $11.0 million were recorded in Other comprehensive income, net of tax to reflect the market value increase during the period. On April 12, 2002, Newmont sold its equity holding in Lihir Gold through a block trade to Macquarie Equity Capital Markets Limited in Australia for approximately $84 million, resulting in the recognition of a pre-tax gain of approximately $47.3 million in Gain on investments, net in the Statement of Consolidated Operations.

Sales of Debt Securities

As part of the Franco-Nevada acquisition in February 2002, the Company acquired significant investments in marketable debt securities. These debt securities are classified as available-for-sale and recorded at their fair values of $402.6 million under purchase accounting. All such securities were sold immediately after the Franco-Nevada acquisition for net proceeds of $402.9 million, resulting in the recognition of a pre-tax gain of $0.3 million, which is included in Dividends, interest income, foreign currency exchange, and other income for the six months ended June 30, 2002.

(6) DEFERRED STRIPPING COSTS

Movements in the deferred stripping cost balance were as follows:


	Six months ended June 30, 2003			Year ended December 31, 2002
	(unaudited, in thousands)
Opening balance	$	55,387		$	91,631
Additions		84,238			65,371
Amortization		(71,629	)		(101,615	)

Closing balance	$	67,996		$	55,387

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(7) PROPERTY, PLANT AND MINE DEVELOPMENT


	At June 30, 2003							At December 31, 2002
	Cost		Accumulated Depreciation and Depletion			Net Book Value		Cost		Accumulated Depreciation and Depletion			Net Book Value
	(unaudited, in thousands)
Land	$	76,743	$	—		$	76,743	$	71,521	$	—		$	71,521
Buildings and equipment		4,156,356		(2,583,915	)		1,572,441		4,093,028		(2,371,017	)		1,722,011
Mine development		1,158,455		(670,688	)		487,767		1,005,166		(580,594	)		424,572
Asset retirement cost		131,649		(69,332	)		62,317		—		—			—
Construction-in-progress		143,834		—			143,834		68,926		—			68,926

Total	$	5,667,037	$	(3,323,935	)	$	2,343,102	$	5,238,641	$	(2,951,611	)	$	2,287,030

Leased assets included above in property, plant and mine development	$	351,498	$	(153,600	)	$	197,898	$	361,889	$	(146,884	)	$	215,005

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(8) MINERAL INTERESTS AND OTHER INTANGIBLE ASSETS


	At June 30, 2003							At December 31, 2002
	Carrying Value		Accumulated Amortization			Net Book Value		Carrying Value		Accumulated Amortization			Net Book Value
	(unaudited, in thousands)
Mineral Interests:
Production stage
Mineral interests	$	801,518	$	(373,726	)	$	427,792	$	712,098	$	(325,822	)	$	386,276
Royalties—net smelter returns		223,684		(19,387	)		204,297		222,614		(12,751	)		209,863
Royalties—net profit interest		18,290		(3,639	)		14,651		17,340		(3,231	)		14,109

		1,043,492		(396,752	)		646,740		952,052		(341,804	)		610,248

Development stage
Mineral interests		123,955		—			123,955		92,757		—			92,757
Royalties—net smelter returns		1,542		—			1,542		1,321		—			1,321
Royalties—net profit interest		6,911		(90	)		6,821		5,921		(50	)		5,871

		132,408		(90	)		132,318		99,999		(50	)		99,949

Exploration stage
Mineral interests		548,433		(10,813	)		537,620		632,284		(8,449	)		623,835
Royalties-net smelter returns		5,815		(351	)		5,464		5,700		(314	)		5,386

		554,248		(11,164	)		543,084		637,984		(8,763	)		629,221

Total mineral interests		1,730,148		(408,006	)		1,322,142		1,690,035		(350,617	)		1,339,418

Oil and gas:
Producing property
Royalties—net refining returns		44,293		(7,142	)		37,151		37,964		(3,842	)		34,122
Working interest		21,510		(2,174	)		19,336		18,430		(1,400	)		17,030

		65,803		(9,316	)		56,487		56,394		(5,242	)		51,152

Non-producing property
Royalties—net refining returns		5,545		—			5,545		4,751		—			4,751
Working interest		8,280		—			8,280		7,090		—			7,090

		13,825		—			13,825		11,841		—			11,841

Total oil and gas		79,628		(9,316	)		70,312		68,235		(5,242	)		62,993

Other		12,937		(325	)		12,612		12,937		—			12,937

Total	$	1,822,713	$	(417,647	)	$	1,405,066	$	1,771,207	$	(355,859	)	$	1,415,348

The Company’s intangible assets for mineral interests and oil and gas interests are subject to amortization. The aggregate amortization expense for the three months ended June 30, 2003 and 2002 was $39.6 million and $39.0 million, respectively. The aggregate amortization expense for the six-month periods ended June 30, 2003 and 2002 was $61.1 million and $54.4 million, respectively.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(9) INVESTMENTS AND EQUITY INCOME OF AFFILIATES

Investments:


	At June 30, 2003		At December 31, 2002
	(unaudited, in thousands)
Investments in affiliates:
Batu Hijau	$	684,905	$	660,928
TVX Newmont Americas		—		183,028
Echo Bay Mines		—		210,643
Australian Magnesium Corporation		—		44,244
AGR Matthey Joint Venture		10,154		11,213

	$	695,059	$	1,110,056

Other:
Newmont Australia infrastructure bonds—long-term		—		96,649

	$	695,059	$	1,206,705

Other:
Newmont Australia infrastructure bonds—short-term	$	114,287		—

Equity Loss and Impairment of Australian Magnesium Corporation


	Three months ended June 30,						Six months ended June 30,
	2003			2002			2003			2002
	(unaudited, in thousands)
Australian Magnesium Corporation	$	(107,758	)	$	(688	)	$	(119,485	)	$	(688	)

Equity Income of Affiliates:


	Three months ended June 30,					Six months ended June 30,
	2003			2002		2003			2002
	(unaudited, in thousands)
Batu Hijau	$	18,397		$	13,533	$	25,750		$	14,937
TVX Newmont Americas		—			3,892		810			3,892
AGR Matthey Joint Venture		(657	)		583		(282	)		583

Total	$	17,740		$	18,008	$	26,278		$	19,412

Investment in Batu Hijau

The Company and an affiliate of Sumitomo Corporation (“Sumitomo”) are partners with economic interests of 56.25% and 43.75%, respectively, in the Nusa Tenggara Partnership (“NTP”), which holds 80% of P.T. Newmont Nusa Tenggara (“PTNNT”), the owner of the Batu Hijau copper/gold mine in Indonesia. Due to the significant participating rights provided to Sumitomo under the terms of the NTP partnership agreement, the Company uses the equity method to account for its investment in NTP. The Company and Sumitomo have an indirect 45% and 35% interest, respectively, in PTNNT. The remaining 20% interest is held by an unrelated Indonesian company. Because the Company and Sumitomo have carried the investment of the 20% owner, the

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company and Sumitomo recognize 56.25% and 43.75% of PTNNT’s net income (loss), respectively, until recouping the bulk of the construction investment, including interest. Under the Contract of Work, a portion of PTNNT not already owned by Indonesian nationals must be offered for sale to the Indonesian government or to Indonesian nationals, beginning in the sixth year after mining operations commenced. The effect of this provision could potentially reduce the Company and Sumitomo’s ownership to 49% by the end of the tenth year after mining operations commenced.

The Company’s equity investment in PTNNT was $684.9 million and $660.9 million at June 30, 2003 and December 31, 2002, respectively, based on accounting principles generally accepted in the United States. At June 30, 2003, differences between 56.25% of PTNNT’s net assets of $266.5 million and Newmont’s investment included (i) $45.2 million for Newmont’s contribution prior to the formation of NTP; (ii) $106.9 million for the fair market value adjustment recorded by Newmont in conjunction with the purchase of a subsidiary minority interest, net of amortization; (iii) $395.6 million for the contributions and interest income recorded by Newmont classified as debt and interest expense by PTNNT; (iv) negative $120.6 million for contributions to PTNNT, through NTP, by Sumitomo disproportionate to its equity interest, net of amounts recorded; (v) negative $76.9 million for stockholders’ equity of the carried interest partner; (vi) $38.6 million for other intercompany charges; (vii) $30.9 million for capitalized interest; and, (viii) negative $1.3 million for other adjustments recorded by Newmont. At December 31, 2002, differences between 56.25% of PTNNT’s net assets of $257.6 million and Newmont’s investment included (i) $45.2 million for Newmont’s contribution prior to the formation of NTP; (ii) $109.1 million for the fair market value adjustment recorded by Newmont in conjunction with the purchase of a subsidiary minority interest, net of amortization; (iii) $391.2 million for the contributions and interest income recorded by Newmont classified as debt and interest expense by PTNNT; (iv) negative $122.6 million for contributions in PTNNT, through NTP, by Sumitomo disproportionate to its equity interest, net of amounts recorded; (v) negative $76.9 million for stockholders’ equity of the carried interest partner; (vi) $33.3 million for other intercompany charges; (vii) $30.9 million for capitalized interest; and, (viii) negative $6.9 million for other adjustments recorded by Newmont. Certain of these amounts are amortized or depreciated on a units-of-production basis based on proven and probable reserves. Below is a description of Newmont’s equity income (loss) in PTNNT, where the net income (loss) reflects the elimination of interest between PTNNT and NTP.

Newmont’s equity income in PTNNT for the six months ended June 30, 2003 was $25.8 million versus $14.9 million for the same period in 2002. Newmont’s equity income for the six months ended June 30, 2003 was based on 56.25% of PTNNT’s net income of $16.0 million, adjusted for the elimination of $3.6 million of inter-company interest, $4.2 million of inter-company management fees, the cumulative effect of reclamation and remediation liabilities of $8.0 million and other adjustments of $1.0 million. For the comparable 2002 period, Newmont’s equity income was based on 56.25% of PTNNT’s net income of $7.4 million, adjusted for the elimination of $3.6 million of inter-company interest, $5.1 million of inter-company management fees, and other adjustments of $2.0 million.

On May 9, 2002, PTNNT completed a restructuring of its $1.0 billion project financing facility (Senior Debt) that provides PTNNT the ability to defer up to $173.5 million in principal payments scheduled for 2002 and 2003. The restructuring was expected to provide a better match between the expected cash flows of the project and the maturities of the debt. Any deferred principal amounts were to be repaid between 2004 and 2010. Under this restructuring, Batu Hijau is not permitted to pay dividends or make other restricted payments to Newmont or Sumitomo as long as any amount of deferred principal is outstanding; however, there is no restriction on prepaying any of the deferred principal amounts. Amounts outstanding under the project financing were $783.2 million at June 30, 2003 and $913.3 million in December 31, 2002. The amount of deferred principal at June 30, 2003 was $43.3 million and at December 31, 2002 was $173.4 million. During the quarter ended June 30, 2003, PTNNT repaid $130.1 million of this facility all of which represented repayments

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of the deferred principal. Newmont and its partner provide a contingent support line of credit to PTNNT. During the first half of 2003 and 2002, Newmont funded zero and $24.8 million, respectively under this contingent support facility as its pro-rata share of capital expenditures. Additional support from Newmont and its partner available under this facility amounts to $115.0 million, of which Newmont’s pro-rata share is $64.7 million.

The following is NTP summarized financial information based on accounting principles generally accepted in the United States. The results of operations and assets and liabilities are not reflected in the Company’s Consolidated Financial Statements. As described earlier, the Company accounts for NTP as an equity investment.


	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
	(unaudited, in thousands)
Revenues, net of smelting and refining costs	$	102,718	$	94,083	$	177,591	$	165,988
Revenues from by-product sales credited to production costs	$	58,336	$	37,342	$	91,947	$	59,475
Gross profit	$	40,271	$	13,384	$	50,426	$	9,058
Net income before cumulative effect of a change in accounting principle	$	25,528	$	13,181	$	31,488	$	8,751
Net income	$	25,528	$	13,181	$	17,270	$	8,751

In the six-month period ended June 30, 2003, NTP recorded a charge of $14.2 million to reflect the cumulative effect of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 143 “Accounting for Asset Retirement Obligations.”


	At June 30, 2003		At December 31, 2002
	(unaudited, in thousands)
Current assets	$	254,748	$	313,110
Property, plant and mine development, net	$	1,672,313	$	1,658,912
Mineral interests	$	183,319	$	188,294
Other assets	$	291,795	$	282,133
Debt and related interest to partners and affiliates	$	261,640	$	259,793
Other current liabilities	$	187,975	$	103,117
Long-term debt—third parties (including current portion)	$	805,677	$	935,771
Other liabilities	$	149,420	$	163,346

For the six months ended June 30, 2003 and 2002, PTNNT recorded gross revenues, before smelting and refining costs, of $220 million and $212 million, respectively, which were subject to final pricing adjustments. The average price adjustment for copper was 2.38% and 5.2% for the six months ended June 30, 2003 and 2002, respectively. The average price adjustment for gold was 0.9% and 4.4% for the six months ended June 30, 2003 and 2002, respectively. At June 30, 2003, PTNNT had copper derivatives embedded in outstanding shipment contracts of 74.9 million pounds of copper recorded at an average price of $0.74 per pound. A one-cent movement in the average price used for these derivatives will have an approximate $0.5 million impact on PTNNT’s 2003 net income.

By-product commodities, gold and silver, represented 57% and 40% of sales, net of smelting and refining charges, and reduced production costs by 79% and 57% for the three-month periods ended June 30, 2003 and 2002, respectively, and 52% and 36% of sales, net of smelting and refining charges, and reduced production costs by 71% and 49% for the six-month periods ended June 30, 2003 and 2002, respectively.

PTNNT entered into a series of copper hedging transactions in March 2002. At March 31, 2002, 23,400 metric tons of copper were hedged. These contracts were settled during the second quarter of 2002. These

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

contracts allowed PTNNT to realize an average price of $1,619 per metric ton (approximately $0.73 per pound). In second quarter 2003, PTNNT entered into copper forward sales contracts covering 5,000 metric tonnes per month for each of August and September 2003 at a weighted average fixed price between $1,665 and $1,725 per metric tonne. Each contract is settled by cash on a monthly basis. These contracts had a positive fair value as at June 30, 2003 of US$0.4 million (US$0.3 million net of tax).

In 2001, PTNNT entered into two diesel hedging contracts for 360,000 barrels each at a fixed price of $27.39 per barrel and $27.98 per barrel, respectively. Each of these contracts cover purchases of 15,000 barrels monthly and expire in August and September of 2003, respectively. Each contract is settled monthly. In December 2002, PTNNT entered into an additional hedge contract for 60,000 barrels over the following 12 months at a fixed price of $27.50 per barrel. These contracts have all been designated as cash flow hedges and the fair value at June 30, 2003 and December 31, 2002 was $0.2 million and $0.6 million, respectively. At June 30, 2003, 140,000 barrels are outstanding for these contracts.

TVX Newmont Americas and Echo Bay Mines Ltd.

Newmont had a 49.9% interest and an equity investment of $183.0 million in TVX Newmont Americas joint venture at December 31, 2002. On January 31, 2003, Newmont sold its interest in TVX Newmont Americas for $180 million.

On January 31, 2003, Kinross, Echo Bay and TVX Gold were combined. Under the terms of the combination and acquisition, Newmont received a 13.8% interest in the restructured Kinross in exchange for its then 45.67% interest in Echo Bay. Newmont recorded a pre-tax gain on the transactions of $83.4 million (See Note 5).

Australian Magnesium Corporation (“AMC”)

At December 31, 2002, Newmont’s interest in AMC comprised a 22.8% equity and voting interest and a loan receivable in the amount of A$38 million (approximately $20.1 million) including interest capitalized since December 31, 2002. In addition, Newmont subsidiaries had obligations to contribute to AMC A$100 million in equity by January 31, 2003 and a further A$90 million in equity (reduced to A$75 million through a funding agreement reached in January 2003, though a condition required to bring the agreement into effect was not satisfied), contingent upon the Stanwell Magnesium Project not achieving certain specified production and operating criteria by December 2006. On January 3, 2003, Newmont purchased an additional 167 million shares at A$0.60 per share for a total of A$100 million (approximately $56.2 million) increasing its ownership to 40.9%, thereby satisfying its January 2003 equity contribution obligation. However, due to additional equity contributions by other shareholders on January 31, 2003, Newmont’s interest was decreased to 27.8%. As a result of this equity dilution in its interest in AMC, Newmont recorded an increase of $7.0 million to Additional paid-in-capital.

AMC’s primary asset is the Stanwell Magnesium Project (the “Project”), a proprietary chemical and dehydration process for producing anhydrous magnesium chloride as feed for an electrolytic cell to produce molten magnesium metal and magnesium alloys. The original funding arrangements for the Project amounted to approximately A$1.5 billion (approximately $1 billion), including contingencies and cost overrun reserves. Preliminary indications by AMC are that the project may now require A$150 million to A$200 million (approximately $100 million to $134 million) of funds in addition to the existing funding arrangements and potentially some form of third-party project financing support.

On April 17, 2003, AMC announced that it was unlikely that it would reach agreement with its independent engineering firm for a fixed price contract for the development of the Project. Following this announcement,

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AMC’s share price declined substantially and was A$0.24 per share on May 8, 2003. As a result, Newmont wrote down the carrying value of its investment at March 31, 2003 to the quoted market price of the AMC shares at that date of $A0.43 per share and recorded a loss for an other-than-temporary decline in market value of $11 million.

On June 5, 2003, AMC requested suspension of its securities on the ASX. Subsequently, on June 12, 2003 AMC announced a restructuring agreement with the project’s major creditors including Newmont (the “Agreement”). The Agreement was designed to give AMC time to assess the Project development options and to search for either a corporate or project partner. Work on the Project has essentially ceased and the site is in a care and maintenance status. It is not known if or when the Project or any other magnesium project will be developed by AMC. In addition, as part of the Agreement, AMC (i) will settle outstanding obligations to its outside creditors from existing cash reserves, (ii) has cancelled the senior debt facilities associated with the Project and the associated foreign exchange and interest rate hedging contracts and (iii) has agreed to release Newmont from the above-mentioned A$90 million (approximately $60.1 million) contingent funding commitment. Newmont has agreed to forgive its A$38 million (approximately $24.8 million) loan receivable and provide support in the form of an A$10 million (approximately $6.6 million) contingent, subordinated credit facility and to maintain the existing guarantee in relation to the QMC finance facilities described below.

As a result of the agreement, Newmont recorded an additional write-down in the second quarter of $107.8 million reducing the carrying value of its investment in AMC to zero. The write-down is attributable to the following: (i) $72.7 million representing the book value of its investment at June 30, 2003, (ii) $24.8 million for the loan receivable from AMC, (iii) $10 million charge to settle Newmont’s guarantee of the Ford contract (see discussion below), (iv) $6.6 million relating to the contingent credit facility, and (v) $1.1 million for various other items offset by a $7.4 million income tax benefit.

Newmont had guaranteed a $30 million obligation payable by AMC to Ford Motor Company (“Ford”) in the event the Project did not meet certain specified production and operating criteria by November 2005. AMC indemnified Newmont for this obligation, but this indemnity was unsecured. As of June 30, 2003, Newmont and Ford agreed to settle the liability in relation to the guarantee for $10 million in exchange for a release of the guarantee. Newmont has agreed not to seek recovery of this amount from AMC.

Subsequent to June 30, 2003, Newmont’s ownership interest in AMC was further diluted to 26.9% (See Note 21, Subsequent Events).

Newmont is also the guarantor of an A$71 million (approximately $47 million) amortizing loan facility of AMC’s subsidiary, QMC Finance Pty Ltd (“QMC”), of which A$67.5 million (approximately $45.0 million) was outstanding as of June 30, 2003. The QMC loan facility, which is secured by the assets of the Queensland Magnesia Project, expires in November 2006.

QMC is also a party to hedging contracts, which have been guaranteed by Newmont. The contracts include a series of foreign exchange forward contracts and bought put options, the last of which expire in June 2006. As of June 30, 2003, the fair value of these contracts was a positive A$5.5 million (approximately $3.7 million).

The guarantees under the QMC loan facility and hedging contracts could be called in the event of a default by QMC. Newmont’s liability under QMC loan facility guarantee is limited to the total amount of outstanding borrowings under the facility at the time the guarantee is called. Newmont’s maximum potential liability under its guarantee of the QMC hedging contracts, however, would depend on the market value of the hedging contracts at the time the guarantee is called upon. The principal lender and counterparty under the QMC loan and hedging facilities also have a fixed and floating charge over certain assets of AMC. In the event the guarantees are called, Newmont would have a right of subrogation to the lender under Australian law.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company is currently evaluating the impact of adoption of FIN 46, “Consolidation of Variable Interest Entities” on its investment in AMC and related entities, including QMC.

AGR Matthey Joint Venture

Newmont holds a 40% interest in a joint venture with the West Australian Mint and Johnson Matthey (Australia) Ltd. known as AGR Matthey Joint Venture (“AGR”). Newmont has no guarantees related to this investment. At June 30, 2003 and December 31, 2002, the difference between Newmont’s investment in AGR of $10.2 million ($11.2 million at December 31, 2002) and its share of AGR’s net assets consisted of a $2.4 million reduction in long-lived assets recorded by Newmont.

Newmont Australia Infrastructure Bonds

In June 1996, NP Finance Limited and GPS Finance Limited, wholly owned subsidiaries of Newmont Australia Limited (formerly Normandy), issued A$111.9 million (approximately $63.2 million) and A$21.9 million (approximately $12.4 million), respectively, of 7.906%, fifteen-year bonds at a premium to fund certain gas pipeline and power station projects. The bonds were issued at a premium due to unique tax-related benefits available to the bondholders and the issuer under Australian tax regulations. Interest is accrued and capitalized semi-annually in arrears in June and December of each year. Concurrently, with the issue of the Infrastructure Bonds described above, GMK Investments Pty Ltd (“GMKI”), a wholly owned subsidiary of Newmont Australia Limited (formerly Normandy), entered into an offsetting transaction, making payments to Deutsche Bank Aktiengesellschaft (“DBA”) equal to the face value of the bonds in return for DBA agreeing to purchase the bonds from each holder of the bonds in June 2004 and to sell those bonds to GMKI for a nominal amount at that time. The receivable from DBA also accrues interest receivable at 7.906% and such interest is capitalized semi-annually in arrears in June and December of each year. Because the arrangement does not technically qualify as a defeasance of debt, the receivable is presented in Investments at December 31, 2002. As of June 30, 2003, Newmont reclassified this investment as a current asset and the corresponding debt liability to Current portion of long-term debt (see Note 11, Long-Term Debt) since, as stated above, DBA is obligated to repurchase these bonds from each holder in June 2004. The repurchase of these bonds will effectively retire the outstanding liability and satisfy the receivable.

(10) EXTINGUISHMENT OF NYOL OBLIGATIONS

On May 29, 2003, Newmont made an offer through its wholly owned subsidiary, Yandal Bond Company Limited (“YBCL”) to acquire all of the outstanding 8 7/8% Senior Notes due in April 2008 of its wholly owned Australian subsidiary, NYOL. On May 28, 2003, YBCL made a separate offer to acquire all of NYOL’s gold hedge contracts from the counterparties. The offer to acquire the Senior Notes was at a price of $500 per $1,000 of principal amount. The offer to acquire the gold hedge contracts was at $0.50 per $1.00 of the net mark-to-market hedge liability as of May 22, 2003. As of June 30, 2003, YBCL had received binding tenders for the Senior Notes totaling $196.8 million, representing 83% of the total $237.2 million outstanding principal amount. Six of the total of seven counterparties to the gold hedge contracts, representing 94% of the gold ounces in the NYOL hedge book and 76% of the mark-to-market May 22, 2003 hedge liability, had assigned their hedge contracts to YBCL as of June 30, 2003. The transactions gave rise to a Gain on extinguishment of NYOL bonds, net of $94.4 million, net of transaction costs, and a Gain on extinguishment of NYOL derivatives liability, net of $76.6 million, net of transaction costs. The cash payments of $98.4 million to settle the extinguishment of the bonds were accrued in Other current liabilities at June 30, 2003 and were made subsequent to that date. YBCL subsequently received additional binding tenders for a portion of the remaining outstanding Senior Notes and extended the offer deadline (see Note 21, Subsequent Events).

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(11) LONG-TERM DEBT


	June 30, 2003			December 31, 2002
	(unaudited, in thousands)
Sale-leaseback of refractory ore treatment plant	$	298,944		$	307,880
8³/8% debentures, net of discount		182,696			204,658
8⁵/8% notes, due May 2011, net of discount		222,234			274,339
Newmont Australia 7⁵/8% notes, net of premium		121,027			152,690
Newmont Australia 7¹/2% notes, net of premium		91,400			101,850
NYOL 8⁷/8% notes		40,435			237,220
6% convertible subordinated debentures		99,980			99,980
Medium-term notes		17,000			32,000
Newmont Australia infrastructure bonds		116,933			99,680
Prepaid forward sales obligation		145,000			145,000
Revolving credit facility		19,000			—
Interest rate swaps		(8,086	)		(6,684	)
Project financing, capital leases and other		107,025			167,991

		1,453,588			1,816,604
Current maturities		(176,422	)		(115,322	)

	$	1,277,166		$	1,701,282

Scheduled minimum long-term debt repayments are $23.6 million for the remainder of 2003, $177.4 million in 2004, $437.0 million in 2005, $109.8 million in 2006, $74.8 million in 2007 and $631.0 million thereafter.

During the six months ended June 30, 2003, the Company repurchased $23.0 million of 8³/8% debentures, $52.4 million of 8⁵/8% notes due in May 2011, $30.9 million of Newmont Australia 7⁵/8% notes and $10.0 million of Newmont Australia 7¹/2% notes for total cash consideration of $135.8 million. As a result of these debt repurchases, the Company recognized a Loss on extinguishment of debt of $19.5 million.

In March 2002, Newmont, through an indirect, wholly-owned subsidiary, YBCL, made an offer to repurchase any and all of the outstanding 8⁷/8% Senior Notes due 2008 of NYOL. As of the offer date, $300 million principal amount of notes was outstanding. The transaction resulted in redemption of $62.8 million of the outstanding notes at 101% of the principal amount of the notes, plus accrued and unpaid interest as of the repurchase date.

On May 27, 2003, Newmont Mining Corporation initiated an offer through YBCL to acquire all of the outstanding 8⁷/8% Senior Notes due April 2008 issued by NYOL (see Note 10, Extinguishment of NYOL Obligations). At June 30, 2003, YBCL had acquired $196.8 million through this offer.

Newmont has extended its offer to acquire the remaining NYOL 8⁷/8% Senior Notes and acquired amounts subsequent to June 30, 2003. NYOL also entered into Voluntary Administration (“VA,” a form of insolvency proceeding in Australia) subsequent to June 30, 2003 (see Note 21, Subsequent Events).

(12) RECLAMATION AND REMEDIATION

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements.

Effective January 1, 2003, the Company adopted SFAS No. 143 “Accounting for Asset Retirement Obligations.” As a result, Reclamation and remediation liabilities increased by $120.7 million for the fair value of the estimated asset retirement obligations, Other accrued liabilities increased by $2.3 million for worker participation bonuses in Peru (bonuses required by law at Minera Yanacocha based on net income), Deferred income tax assets increased by $6.9 million, Property, plant and mine development, net increased by $69.1 million, Minority interest in subsidiaries decreased by $16.2 million and a $34.5 million loss was recorded for the Cumulative effect of a change in accounting principle, net of tax. At June 30, 2003 and December 31, 2002, $379.8 million and $254.1 million, respectively, were accrued for reclamation obligations relating to currently or recently producing mineral properties.

In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At June 30, 2003 and December 31, 2002, respectively, $62.5 million and $48.1 million were accrued for such obligations These amounts are also included in Reclamation and remediation liabilities.

The following is a reconciliation of the total liability for asset retirement obligations (unaudited, in thousands):


Balance December 31, 2002	$	302,229
Impact of adoption of SFAS No. 143		120,707
Additions to liabilities		21,460
Liabilities settled		(13,396	)
Accretion expense		11,320
Revisions		—

Balance June 30, 2003	$	442,320

The current portions of Reclamation and remediation liabilities of $20.3 million and $13.7 million at June 30, 2003 and December 31, 2002, respectively, are included in Other accrued liabilities.

On a pro forma basis, the liabilities for asset retirement obligations would have been $420.0 million and $422.9 million at January 1, 2002 and December 31, 2002, respectively, if SFAS No. 143 had been applied at the beginning of 2002.

There were no assets that were legally restricted for purposes of settling asset retirement obligations at June 30, 2003.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below presents the impact of the accounting change for the three- and six-month periods ended June 30, 2003 and the pro forma effect for the three- and six-month periods ended June 30, 2002 as if the change had been in effect for that period (unaudited, in thousands, except per share data):


	Three months ended June 30,						Six months ended June 30,
	2003			2002			2003			2002
				(pro forma)						(pro forma)
Increase/(decrease) to net income
Costs applicable to sales (exclusive of depreciation, depletion and amortization shown separately below)
Gold	$	4,815		$	1,752		$	10,112		$	1,905
Base metals		89			—			179			—
Depreciation, depletion, and amortization		(3,420	)		(3,307	)		(6,833	)		(6,614	)
Income tax (expense) benefit		(519	)		544			(1,210	)		1,648
Minority interest		(995	)		577			(1,953	)		1,204
Equity loss of affiliate		(319	)		(201	)		(799	)		(541	)

Net loss before cumulative effect of a change in accounting principle	$	(349	)	$	(635	)	$	(504	)	$	(2,398	)

Net loss before cumulative effect of a change in accounting principle per common share, basic and diluted	$	0.00		$	0.00		$	0.00		$	(0.01	)

The table below presents pro forma net income and earnings per share before cumulative effect of a change in accounting principle for the three- and six-month periods ended June 30, 2002 as if the Company had adopted the SFAS No. 143 as of January 1, 2002 (unaudited, in thousands, except per share data):


	Three months ended June 30, 2002					Six months ended June 30, 2002
	Net income applicable to common shares			Income per share		Net income applicable to common shares			Income per share
As reported	$	67,121			0.17	$	50,753		$	0.15
Change in accounting method SFAS No. 143		(635	)		—		(2,398	)		(0.01	)

Pro forma	$	66,486		$	0.17	$	48,355		$	0.14

(13) SALES CONTRACTS, COMMODITY AND DERIVATIVE INSTRUMENTS

Newmont has a “no hedging” philosophy and generally sells its gold production at market prices. Newmont has, on a limited basis, entered into derivative contracts to protect the selling price for certain anticipated gold production and to manage risks associated with sales contracts, commodities, interest rates and foreign currency. In addition, at the time of Normandy’s acquisition, three of its affiliates had a substantial derivative instrument position. These three affiliates are now known as Newmont Gold Treasury Pty Ltd., Newmont NFM and NYOL. Newmont is not required to place collateral with respect to its commodity instruments and there are no margin calls associated with such contracts. A number of NYOL’s hedging positions pertaining to one counterparty are governed by agreements that confer on the relevant counterparties a right to terminate the position prior to its agreed scheduled maturity date. Such a termination would result in an immediate cash settlement of that contract based on the contract’s market value on the date of termination. Exercise of termination rights may result in a cash settlement obligation to NYOL hedge counterparties in excess of funds available to NYOL. NYOL obligations, however, are non-recourse to Newmont and its other subsidiaries.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Gold Commodity Contracts

The tables below are expressed in thousands of ounces of gold, and prices for contracts denominated in A$ have been translated to US$ at the exchange rate at June 30, 2003 of US$0.67 per A$1.

On May 28, 2003, YBCL offered to acquire all of the gold hedge obligations owed by NYOL from the counterparties (see Note 10, Extinguishment of NYOL Obligations). The offer included two alternatives: the counterparties could elect to receive $0.50 for each dollar of net mark-to-market liability under their individual hedge contracts, as calculated by YBCL as of May 22, 2003; or, in lieu of cash, the counterparties could elect to assign all such contracts with NYOL to YBCL and enter into new hedging contracts with Newmont, such that Newmont would assume obligations equivalent to an undivided 40% of NYOL’s existing hedge obligations with such counterparty.

At the close of the offer YBCL had acceptances from six of the seven gold hedge book counterparties. All of the six counterparties elected to receive $0.50 for each dollar of net mark-to-market liability, as calculated by YBCL as of May 22, 2003. This resulted in a total cash payment from YBCL to the counterparties of approximately $77 million. A gain of $76.6 million was recorded in Gain on extinguishment of NYOL derivatives liability, net due to the extinguishment of the hedge book liability for the six NYOL hedge counterparties who accepted the offer.

NYOL was placed into VA on July 3, 2003 and deconsolidated from the Newmont group as of that date (see Note 21, Subsequent Events). Accordingly, the Company has reclassified to earnings as of June 30, 2003, $542,000 of Accumulated other comprehensive income (“OCI”) related to hedged forecasted sales designated against NYOL’s production scheduled to occur during the period ending September 30, 2003 (the period through which NYOL is expected to remain in VA). No similar reclassification has been made with respect to the amounts in OCI associated with sales expected to occur after September 30, 2003, as the Company believes that it is reasonably possible that those forecasted transactions will occur since the Company expects to regain control of NYOL or its assets by October 1, 2003. Accordingly, the balance deferred in OCI as of June 30, 2003 (a gain of approximately $43.8 million, net of taxes) relating to hedge contracts designated against forecasted sales of NYOL’s production beyond September 30, 2003, will continue to be deferred in OCI. The Company will continue to assess the probability of its regaining control of NYOL and making any necessary adjustments to the balance of OCI in future periods, if required.

For the three months ended June 30, 2003 and 2002, gains of $8.1 million and $1.4 million, respectively, were included in income in Gain (loss) on gold commodity derivative instruments, net for the ineffective portion of derivative instruments designated as cash flow hedges, and a gain of $8.5 million and a loss of $10.8 million, respectively, for the change in fair value of gold commodity contracts that do not qualify as hedges. For the half year ended June 30, 2003 and 2002, gains of $31.0 million and $5.9 million, respectively, were included in income in Gain (loss) on gold commodity derivative instruments, net for the ineffective portion of derivative instruments designated as cash flow hedges, and a gain of $40.6 million and a loss of $9.0 million, respectively, for the change in fair value of gold commodity contracts that do not qualify as hedges. The amount anticipated to be reclassified from Accumulated other comprehensive income (loss), to income for derivative instruments during the next 12 months is a gain of approximately $18.7 million. The maximum period over which hedged forecasted transactions are expected to occur is five years.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Gold Forward Sales Contracts

Newmont had no gold forward sales contracts outstanding at June 30, 2003 (unaudited), although positions existed at December 31, 2002. The fair values of these contracts at December 31, 2002 were as follows:


Gold Forward Contracts
(A$ denominated)	US $ (000)
Fixed Forwards	$	(138,095	)
Floating Rate Forwards		(37,401	)
Synthetic Forwards		(34,222	)

Total:	$	(209,718	)

Gold Put Option Contracts

Newmont had the following gold put option contracts at June 30, 2003 (unaudited):


	Expected Maturity Date or Transaction Date														Fair Value
Put Option Contracts:	2003		2004		2005		2006		2007		Thereafter		Total/ Average		June 30, 2003			December 31, 2002
															US$ (000)
US$ Denominated Fixed Purchased Puts:
Ounces		105		203		205		100		20		—		633	$	(7,591	)	$	(6,773	)
Average price	$	292	$	292	$	292	$	338	$	397	$	—	$	303
A$ Denominated Fixed Purchased Puts:
Ounces		—		—		—		—		—		—		—	$	—		$	(3,690	)
Average price		––		––		—		—		—		—		—		—			—
A$ Denominated Floating Forward Purchased Puts:
Ounces		—		—		—		—		—		—		—	$	—		$	(12,140	)
Average price		—		—		—		—		—		—		—		—
Total:

Ounces		105		203		205		100		20		—		633	$	(7,591	)	$	(22,603	)

Average price	$	292	$	292	$	292	$	338	$	397	$	—	$	303

Note: Through December 31, 2002, the floating forward purchased put option contracts were accounted for as cash flow hedges as they were statistically proven to qualify as highly effective cash flow hedges through that date. However, due to changes in market conditions during the first quarter of 2003, these contracts were no longer considered highly effective cash flow hedges. The effect of this change was gains of $5.3 million and $10.7 million that were recorded in Gain (loss) on gold commodity derivative instruments, net in income during the three and six months ended June 30, 2003, respectively.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Convertible Put Options and Other Instruments

Newmont had the following gold convertible put option contracts and other instruments outstanding at June 30, 2003 (unaudited):


	Expected Maturity Date or Transaction Date														Fair Value
Convertible Put Options and Other Instruments	2003		2004		2005		2006		2007		Thereafter		Total/ Average		June 30, 2003			December 31, 2002
(A$ denominated)															US$ (000)
Floating Convertible Put Options:
Ounces		—		—		—		—		—		—		—	$	—		$	(102,952	)
Average price		—		—		—		—		—		—		—		—
Knock-out/knock-in Contracts:
Ounces		—		—		—		—		—		—		—	$	—		$	(6,794	)
Average price		—		—		—		—		—		—		—		—
Indexed Forward Contracts:
Ounces		—		—		33		65		65		32		195	$	(4,937	)	$	(15,740	)
Average price	$	—	$	—	$	361	$	361	$	361	$	361	$	361
Total:

Ounces		—		—		33		65		65		32		195	$	(4,937	)	$	(125,486	)

Average price	$	—	$	—	$	361	$	361	$	361	$	361	$	361

Sold Convertible Put Options

Newmont had no sold convertible put option contracts outstanding at June 30, 2003, although a position did exist at December 31, 2002. The fair value of the position at December 31, 2002 was positive $14.3 million.

Sold Put Options

Newmont had no sold put option contracts outstanding at June 30, 2003 or December 31, 2002. A sold put position was created during the first quarter of 2003 and was closed out as part of the YBCL transaction during the second quarter (see Note 10, Extinguishment of NYOL Obligations ).

Price-Capped Sales Contracts

Newmont had the following price-capped forward sales contracts outstanding at June 30, 2003 (unaudited):


	Expected Maturity Date or Transaction Date														Fair Value
Price-capped Contracts:	2003		2004		2005		2006		2007		Thereafter		Total/ Average		June 30, 2003	December 31, 2002
(US$ Denominated)															US$ (000)
Ounces		—		—		500		—		—		1,850		2,350	N/A	N/A
Average price	$	—	$	—	$	350	$	—	$	—	$	384	$	377

Note: The fair value of the price-capped sales contracts of $53.9 million was recorded as deferred revenue in September 2001 and will be included in sales revenue as delivery occurs in 2005 through 2011. The forward sales contracts are accounted for as normal sales contracts under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities.”

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

US$/Gold Swap Contracts

Newmont Australia entered into a US$/gold swap contract whereby principal payments on US$ bonds are swapped into gold-denominated payments of 600,000 ounces in 2008. Newmont Australia also receives US$ fixed interest payments and pays gold lease rates, which are indexed to market rates. This instrument was marked to market at each period end, with the change reflected in income up until the contract was closed out during the YBCL buy back transaction (see Note 10, Extinguishment NYOL Obligations). However, the indexed portion of the transaction was held with the one counterparty who did not take up the offer. As such this portion of the transaction continues to be marked-to-market at each period end, with the change reflected in income. As at June 30, 2003 and December 31, 2002 the instrument had a negative fair value of $6.2 million and $47.8 million, respectively.

Other Sales Contracts, Commodity and Derivative Instruments

Foreign Currency Contracts

Newmont acquired certain currency swap contracts in the Normandy transaction intended to hedge the currency risk on repayment of US$-denominated debt. These contracts were closed out during the quarter ended June 30, 2002 for net proceeds of $50.8 million. The contracts were accounted for on a mark-to-market basis until closed out, resulting in a loss of $10.9 million for the three months ended March 31, 2002.

Newmont also acquired currency swap contracts to receive A$ and pay US$ designated as hedges of A$ denominated debt. The A$-denominated debt was repaid during the quarter ended June 30, 2002 and the contracts are currently undesignated. The contracts are accounted for on a mark-to-market basis. At June 30, 2003 and December 31, 2002 they had a negative fair value of $2.7 million and $21.9 million, respectively.

Interest Rate Swap Contracts

During the last half of 2001, Newmont entered into contracts to hedge the interest rate risk exposure on a portion of its $275 million 8.625% notes and its $200 million 8.375% debentures. Newmont receives fixed-rate interest payments at 8.625% and 8.375% and pays floating-rate interest amounts based on periodic LIBOR settings plus a spread, ranging from 2.60% to 4.25%. The notional principal amount of these transactions (representing the amount of principal tied to floating interest rate exposure) was $200 million at both June 30, 2003 and December 31, 2002. Half of these contracts expire in July 2005 and half expire in May 2011. For the quarters ended June 30, 2003 and June 30, 2002, these transactions resulted in a reduction in interest expense of $1.9 million and $1.4 million, respectively, and $3.6 million ad $2.9 million for the first halves of 2003 and 2002, respectively. These transactions have been designated as fair value hedges and had a fair value of $21.1 million and $13.8 million at June 30, 2003 and December 31, 2002, respectively.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(14) STATEMENT OF COMPREHENSIVE INCOME


	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
	(unaudited, in thousands)
Net income	$	90,847		$	68,990		$	208,102		$	62,192
Other comprehensive income, net of tax:
Sale of marketable securities of Lihir, net of tax $17,053 and $10,732, respectively		––			(29,036	)		––			(18,273	)
Unrealized (loss) gain on marketable equity securities, net of tax of $678, $(1,071), $12,655 and $(1,163), respectively		(3,307	)		2,499			(49,068	)		2,714
Foreign currency translation adjustments		26,146			17,288			32,109			18,125
Changes in fair value of cash flow hedge instruments, net of tax of $1,589, $(16,747), $(20,441) and $(23,631), respectively		(3,709	)		39,077			72,546			55,140
Exchange of Echo Bay shares for Kinross shares		––			––			4,572			—

Total other comprehensive income, net of tax		19,130			29,828			60,159			57,706

Comprehensive income	$	109,977		$	98,818		$	268,261		$	119,898

(15) DIVIDENDS, INTEREST INCOME, FOREIGN CURRENCY EXCHANGE AND OTHER INCOME


	Three Months Ended June 30,					Six Months Ended June 30,
	2003		2002			2003		2002
	(unaudited, in thousands)
Interest income	$	2,815	$	5,102		$	5,020	$	7,898
Foreign currency exchange gains (losses)		27,178		6,144			51,884		(1,482	)
Gain on sale of exploration properties		189		4,649			1,462		6,402
Other		2,136		(1,052	)		5,791		2,440

Total	$	32,318	$	14,843		$	64,157	$	15,258

(16) ACCOUNTING CHANGES

Depreciation, Depletion and Amortization

During the third quarter of 2002, Newmont changed its accounting policy, retroactive to January 1, 2002, with respect to depreciation, depletion and amortization (“DD&A”) of Property, plant and mine development to exclude future estimated development costs expected to be incurred for certain underground operations. Previously, the Company had included these costs and associated reserves in its DD&A calculations at certain of its underground mining operations. In addition, the Company further revised its policy such that costs incurred to access specific ore blocks or areas that only provide benefit over the life of that area are depreciated, depleted or amortized over the reserves associated with the specific ore area. These changes were made to better match DD&A with the associated ounces of gold sold and to remove the inherent uncertainty in estimating future development costs in arriving at DD&A rates. The cumulative effect of this change in accounting principle through December 31, 2001 increased net income during the six months ended June 30, 2003 by $7.7 million, net of tax of $4.1 million, and earnings per common share, basic and diluted, by $0.02 per share.

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reclamation and Remediation

In August 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, which established uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was adopted as required on January 1, 2003. See Note 12, Reclamation and Remediation, for complete disclosure of the impact of adopting SFAS 143.

(17) SEGMENT INFORMATION

Financial information relating to Newmont’s segments is as follows:

Three Months Ended June 30, 2003

(Unaudited, in millions)


	North America									South America						Australia
	Nevada			Other North America			Total North America			Yanacocha		Other South America		Total South America		Pajingo		Other Australia			Total Australia
Sales, net	$	185.6		$	35.7		$	221.3		$	231.7	$	19.2	$	250.9	$	32.7	$	160.3		$	193.0
Gain on investments, net	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—
Gain on extinguishment of debt and other obligations, net	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—
Royalties	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—
Interest income	$	—		$	—		$	—		$	0.1	$	—	$	0.1	$	—	$	2.3		$	2.3
Interest expense	$	0.1		$	—		$	0.1		$	1.0	$	0.1	$	1.1	$	—	$	5.4		$	5.4
Exploration and research expense	$	5.5		$	––		$	5.5		$	3.7	$	0.1	$	3.8	$	1.2	$	2.1		$	3.3
Depreciation, depletion and amortization	$	34.7		$	8.0		$	42.7		$	40.4	$	1.8	$	42.2	$	6.9	$	20.5		$	27.4
Pre-tax income (loss) before minority interest, equity income (loss) and cumulative effect	$	6.3		$	2.4		$	8.7		$	101.0	$	5.3	$	106.3	$	12.0	$	6.0		$	18.0
Equity loss and impairment of Australian Magnesium Corporation	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—
Equity income (loss) of affiliates	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	(0.7	)	$	(0.7	)
Cumulative effect of a change in accounting principal, net of tax	$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—
Amortization of deferred stripping, net	$	(5.4	)	$	(0.2	)	$	(5.6	)	$	—	$	—	$	—	$	—	$	0.1		$	0.1
Write-down of long-lived assets	$	—		$	—		$	—		$	1.2	$	—	$	1.2	$	—	$	0.6		$	0.6
Capital expenditures (restated - see Note 23)	$	30.4		$	1.8		$	32.2		$	64.4	$	0.1	$	64.5	$	4.7	$	14.4		$	19.1
Deferred stripping costs	$	49.4		$	6.6		$	56.0		$	—	$	—	$	—	$	—	$	9.2		$	9.2
Total assets	$	1,539.2		$	142.0		$	1,681.2		$	1,208.0	$	27.5	$	1,235.5	$	178.4	$	1,591.1		$	1,769.5

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Three Months Ended June 30, 2003

(Unaudited, in millions)


	Zarafshan- Newmont, Uzbekistan		Other International Operations			Total Gold			Base Metals			Exploration			Merchant Banking		Corporate and Other			Consolidated
Sales, net	$	21.4	$	37.4		$	724.0		$	12.8		$	—		$	—	$	—		$	736.8
Gain on investments, net	$	—	$	—		$	—		$	—		$	—		$	—	$	—		$	—
Gain on extinguishment of debt and other obligations, net	$	—	$	—		$	—		$	—		$	—		$	171.0	$	—		$	171.0
Royalties	$	—	$	—		$	—		$	—		$	—		$	10.4	$	—		$	10.4
Interest income	$	—	$	—		$	2.4		$	—		$	—		$	—	$	0.4		$	2.8
Interest expense	$	0.2	$	—		$	6.8		$	—		$	—		$	—	$	15.9		$	22.7
Exploration and research expense	$	—	$	2.1		$	14.7		$	1.0		$	8.3		$	—	$	6.2		$	30.2
Depreciation, depletion and amortization	$	2.9	$	8.1		$	123.3		$	6.7		$	0.9		$	5.6	$	2.8		$	139.3
Pre-tax income (loss) before minority interest, equity income (loss) and cumulative effect	$	9.0	$	4.8		$	146.8		$	(5.1	)	$	(9.7	)	$	175.1	$	(1.4	)	$	305.7
Equity loss and impairment of Australian Magnesium Corporation	$		$			$			$			$			$		$	(107.8	)	$	(107.8	)
Equity income (loss) of affiliates	$	—	$	—		$	(0.7	)	$	—		$	—		$	—	$	18.4		$	17.7
Cumulative effect of a change in accounting principal, net of tax	$	—	$	—		$	—		$	—		$	—		$	—	$	—		$	—
Amortization of deferred stripping, net	$	—	$	(2.2	)	$	(7.7	)	$	—		$	—		$	—	$	—		$	(7.7	)
Write-down of long-lived assets	$	—	$	—		$	1.8		$	—		$	—		$	—	$	—		$	1.8
Capital expenditures (restated - see Note 23)	$	0.1	$	12.3		$	128.2		$	4.1		$	—		$	—	$	4.1		$	136.4
Deferred stripping costs	$	—	$	2.8		$	68.0		$	—		$	—		$	—	$	—		$	68.0
Total assets	$	101.7	$	189.9		$	4,983.1		$	244.2		$	1,217.4		$	2,279.6	$	1,427.3		$	10,151.6

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Three Months Ended June 30, 2002

(Unaudited, in millions)


	North America								South America						Australia
	Nevada			Other North America			Total North America		Yanacocha		Other South America		Total South America		Pajingo		Other Australia		Total Australia
Sales, net	$	186.6		$	40.9		$	227.5	$	149.0	$	23.5	$	172.5	$	23.1	$	129.7	$	152.8
Gain on investments, net	$	—		$	—		$	—	$	—	$	—	$	—	$	—	$	—	$	—
Royalties	$	—		$	—		$	—	$	—	$	—	$	—	$	—	$	––	$	––
Interest income	$	—		$	—		$	—	$	0.1	$	—	$	0.1	$	0.2	$	4.0	$	4.2
Interest expense	$	—		$	—		$	—	$	2.5	$	0.1	$	2.6	$	—	$	10.0	$	10.0
Exploration and research expense	$	3.9		$	—		$	3.9	$	2.5	$	0.2	$	2.7	$	0.4	$	2.5	$	2.9
Depreciation, depletion and amortization	$	25.2		$	9.1		$	34.3	$	26.2	$	3.8	$	30.0	$	6.4	$	23.3	$	29.7
Pre-tax income (loss) before minority interest, equity income (loss) and cumulative effect	$	(0.1	)	$	7.7		$	7.6	$	47.7	$	8.2	$	55.9	$	10.1	$	7.5	$	17.6
Equity income (loss) of affiliates	$	—		$	—		$	—	$	—	$	—	$	—	$	—	$	3.1	$	3.1
Amortization of deferred stripping, net	$	3.2		$	(0.3	)	$	2.9	$	—	$	—	$	—	$	—	$	—	$	—
Write-down of long-lived assets	$	7.4		$	—		$	7.4	$	—	$	—	$	—	$	—	$	0.1	$	0.1
Capital expenditures	$	12.0		$	3.7		$	15.7	$	43.3	$	0.4	$	43.7	$	3.6	$	16.3	$	19.9
Deferred stripping costs	$	76.6		$	6.1		$	82.7	$	—	$	—	$	—	$	—	$	—	$	—
Total assets	$	1,895.7		$	175.8		$	2,071.5	$	1,089.6	$	41.4	$	1,131.0	$	209.8	$	2,121.9	$	2,331.7


	Zarafshan- Newmont, Uzbekistan		Other International Operations		Total Gold		Base Metals		Exploration			Merchant Banking		Corporate and Other			Consolidated
Sales, net	$	22.2	$	34.6	$	609.6	$	22.9	$	—		$	—	$	—		$	632.5
Gain on investments, net	$	—	$	—	$	—	$	—	$	—		$	47.3	$	—		$	47.3
Royalties	$	—	$	—	$	––	$	—	$	—		$	11.2	$	––		$	11.2
Interest income	$	—	$	—	$	4.3	$	—	$	—		$	0.3	$	0.5		$	5.1
Interest expense	$	0.2	$	—	$	12.8	$	—	$	—		$	—	$	22.3		$	35.1
Exploration and research expense	$	—	$	0.6	$	10.1	$	1.1	$	4.0		$	—	$	3.6		$	18.8
Depreciation, depletion and amortization	$	3.1	$	10.6	$	107.7	$	6.7	$	2.0		$	6.0	$	1.2		$	123.6
Pre-tax income (loss) before minority interest, equity income (loss) and cumulative effect	$	9.1	$	6.6	$	96.8	$	7.8	$	(5.9	)	$	52.2	$	(50.1	)	$	100.8
Equity income (loss) of affiliates	$	—	$	—	$	3.1	$	—	$	—		$	1.2	$	13.0		$	17.3
Amortization of deferred stripping, net	$	—	$	—	$	2.9	$	—	$	—		$	—	$	—		$	2.9
Write-down of long-lived assets	$	—	$	––	$	7.5	$	0.1	$	—		$	—	$	—		$	7.6
Capital expenditures	$	0.8	$	5.1	$	85.2	$	2.5	$	0.0		$	0.6	$	0.7		$	89.0
Deferred stripping costs	$	—	$	—	$	82.7	$	—	$	—		$	—	$	—		$	82.7
Total assets	$	105.1	$	530.1	$	6,169.4	$	488.9	$	226.6		$	2,073.9	$	878.7		$	9,837.5

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Six Months Ended June 30, 2003

(Unaudited, in millions)


	North America									South America									Australia
	Nevada			Other North America			Total North America			Yanacocha			Other South America			Total South America			Pajingo		Other Australia			Total Australia
Sales, net	$	406.6		$	76.0		$	482.6		$	461.2		$	39.9		$	501.1		$	58.5	$	284.9		$	343.4
Gain on investments, net	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—
Gain on extinguishment of debt and other obligations, net	$	—		$	—		$	—		$	—		$	—		$	—			—	$	—		$	—
Royalties	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—
Interest income	$	—		$	—		$	—		$	0.5		$	—		$	0.5		$	—	$	3.6		$	3.6
Interest expense	$	0.1		$	—		$	0.1		$	2.4		$	0.1		$	2.5		$	—	$	14.3		$	14.3
Exploration and research expense	$	8.8		$	—		$	8.8		$	5.6		$	0.1		$	5.7		$	1.5	$	3.5		$	5.0
Depreciation, depletion and amortization	$	66.3		$	18.2		$	84.5		$	75.9		$	3.9		$	79.8		$	12.5	$	40.3		$	52.8
Pre-tax income (loss) before minority interest, equity income and cumulative effect of a change in accounting principle	$	43.7		$	5.4		$	49.1		$	205.1		$	11.0		$	216.1		$	23.1	$	2.5		$	25.6
Equity loss and impairment of Australian Magnesium Corporation	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—
Equity income of affiliates	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	0.5		$	0.5
Cumulative effect of a change in accounting principal, net of tax	$	(14.4	)	$	(3.4	)	$	(17.8	)	$	(32.4	)	$	(0.2	)	$	(32.6	)	$	0.8	$	(1.1	)	$	(0.3	)
Amortization of deferred stripping, net	$	(12.0	)	$	(0.3	)	$	(12.3	)	$	—		$	—		$	—		$	—	$	(0.9	)	$	(0.9	)
Write-down of long-lived assets	$	—		$	—		$	—		$	1.2		$	—		$	1.2		$	—	$	0.6		$	0.6
Capital expenditures	$	52.6		$	2.2		$	54.8		$	99.7		$	0.6		$	100.3		$	6.4	$	23.5		$	29.9
Deferred stripping costs	$	49.4		$	6.6		$	56.0		$	—		$	—		$	—		$	—	$	9.2		$	9.2
Total assets	$	1,539.2		$	142.0		$	1,681.2		$	1,208.0		$	27.5		$	1,235.5		$	178.4	$	1,591.1		$	1,769.5


	Zarafshan- Newmont, Uzbekistan			Other International Operations			Total Gold			Base Metals			Exploration			Merchant Banking		Corporate and Other			Consolidated
Sales, net	$	42.6		$	68.9		$	1,438.6		$	32.2		$	—		$	—	$	—		$	1,470.8
Gain on investments, net	$	—		$	—		$	—		$	—		$	—		$	84.3	$	—		$	84.3
Gain on extinguishment of debt and other obligations, net	$	—		$	—		$	—		$	—		$	—		$	151.5	$	—		$	151.5
Royalties	$	—		$	—		$	—		$	—		$	—		$	24.9	$	—		$	24.9
Interest income	$	—		$	—		$	4.1		$	—		$	—		$	0.1	$	0.8		$	5.0
Interest expense	$	0.4		$	—		$	17.3		$	—		$	—		$	—	$	35.3		$	52.6
Exploration and research expense	$	—		$	3.9		$	23.4		$	1.7		$	15.7		$	—	$	10.9		$	51.7
Depreciation, depletion and amortization	$	5.5		$	15.3		$	237.9		$	13.8		$	1.7		$	10.3	$	6.2		$	269.9
Pre-tax income (loss) before minority interest, equity income and cumulative effect of a change in accounting principle	$	18.8		$	7.0		$	316.6		$	(8.9	)	$	(17.8	)	$	248.6	$	22.5		$	561.0
Equity loss and impairment of Australian Magnesium Corporation	$	—		$	—		$	—		$	—		$	—		$	—	$	(119.5	)	$	(119.5	)
Equity income of affiliates	$	—		$	—		$	0.5		$	—		$	—		$	—	$	25.8		$	26.3
Cumulative effect of a change in accounting principal, net of tax	$	(1.3	)	$	(3.2	)	$	(55.2	)	$	(0.2	)	$	—		$	—	$	20.9		$	(34.5	)
Amortization of deferred stripping, net	$	—		$	(0.9	)	$	(14.1	)	$	—		$	—		$	—	$	—		$	(14.1	)
Write-down of long-lived assets	$	—		$	—		$	1.8		$	—		$	—		$	—	$	—		$	1.8
Capital expenditures	$	0.6		$	19.4		$	205.0		$	6.1		$	—		$	—	$	8.0		$	219.1
Deferred stripping costs	$	—		$	2.8		$	68.0		$	—		$	—		$	—	$	—		$	68.0
Total assets	$	101.7		$	189.9		$	4,983.1		$	244.2		$	1,217.4		$	2,279.6	$	1,427.3		$	10,151.6

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Six Months Ended June 30, 2002

(Unaudited, in millions)


	North America								South America						Australia
	Nevada			Other North America			Total North America		Yanacocha		Other South America		Total South America		Pajingo			Other Australia			Total Australia
Sales, net	$	362.9		$	76.5		$	439.4	$	289.2	$	43.4	$	332.6	$	39.9		$	185.9		$	225.8
Gain on investments, net	$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—
Royalties	$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—
Interest income	$	—		$	—		$	—	$	0.2	$	—	$	0.2	$	0.4		$	5.4		$	5.8
Interest expense	$	0.1		$	—		$	0.1	$	5.4	$	0.2	$	5.6	$	0.2		$	15.9		$	16.1
Exploration and research expense	$	6.3		$	—		$	6.3	$	4.3	$	0.6	$	4.9	$	0.6		$	3.1		$	3.7
Depreciation, depletion and amortization	$	52.0		$	17.7		$	69.7	$	61.2	$	6.9	$	68.1	$	9.9		$	35.3		$	45.2
Pre-tax income (loss) before minority interest, equity income and cumulative effect of a change in accounting principle	$	(9.0	)	$	10.1		$	1.1	$	75.4	$	13.1	$	88.5	$	17.9		$	(3.8	)	$	14.1
Equity income (loss) of affiliates	$	—		$	—		$	—	$	—	$	—	$	—	$	—		$	3.1		$	3.1
Cumulative effect of a change in accounting principal, net of tax	$	0.9		$	7.2		$	8.1	$	—	$	—	$	—	$	(0.4	)	$	—		$	(0.4	)
Amortization of deferred stripping, net	$	9.5		$	(0.6	)	$	8.9	$	—	$	—	$	—	$	—		$	—		$	—
Write-down of long-lived assets		15.3			—			15.3		—		––		—		—			0.3			0.3
Capital expenditures	$	20.7		$	6.9		$	27.6	$	69.7	$	0.6	$	70.3	$	5.7		$	21.6		$	27.3
Deferred stripping costs	$	76.6		$	6.1		$	82.7	$	—	$	––	$	—	$	—		$	—		$	—
Total assets	$	1,895.7		$	175.8		$	2,071.5	$	1,089.6	$	41.4	$	1,131.0	$	209.8		$	2,121.9		$	2,331.7


	Zarafshan- Newmont, Uzbekistan		Other International Operations		Total Gold		Base Metals		Exploration			Merchant Banking		Corporate and Other			Consolidated
Sales, net	$	37.4	$	56.6	$	1,091.8	$	32.3	$	—		$	—	$	—		$	1,124.1
Gain on investments, net	$	—	$	—	$	—	$	—	$	—		$	47.3	$	—		$	47.3
Royalties	$	—	$	—	$	—	$	—	$	—		$	15.0	$	—		$	15.0
Interest income	$	—	$	—	$	6.0	$	—	$	—		$	1.1	$	0.8		$	7.9
Interest expense	$	0.3	$	—	$	22.1	$	—	$	—		$	—	$	44.1		$	66.2
Exploration and research expense	$	—	$	0.6	$	15.5	$	1.2	$	7.4		$	—	$	6.3		$	30.4
Depreciation, depletion and amortization	$	5.4	$	16.0	$	204.4	$	7.0	$	3.5		$	8.2	$	2.7		$	225.8
Pre-tax income (loss) before minority interest, equity income (loss) and cumulative effect	$	14.5	$	8.9	$	127.1	$	6.2	$	(10.8	)	$	53.1	$	(79.0	)	$	96.6
Equity income (loss) of affiliates	$	—	$	—	$	3.1	$	—	$	—		$	0.7	$	14.9		$	18.7
Cumulative effect of a change in accounting principal,
net of tax	$	—	$	—	$	7.7	$	—	$	—		$	—	$	—		$	7.7
Amortization of deferred stripping, net	$	—	$	—	$	8.9	$	—	$	—		$	—	$	—		$	8.9
Write-down of long-lived assets	$	—	$	—	$	15.6	$	0.3	$	—		$	—	$	—		$	15.9
Capital expenditures	$	2.7	$	5.9	$	133.8	$	4.1	$	0.2		$	0.6	$	2.1		$	140.8
Deferred stripping costs	$	—	$	—	$	82.7	$	—	$	—		$	—	$	—		$	82.7
Total assets	$	105.1	$	530.1	$	6,169.4	$	488.9	$	226.6		$	2,073.9	$	878.7		$	9,837.5

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(18) COMMITMENTS AND CONTINGENCIES

General

The Company follows Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies,” in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred and the amount of the loss can be reasonably estimated. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it as at least reasonably possible that a loss may be incurred.

Operating Segments

The Company’s operating segments are identified in Note 17. Except as noted in this paragraph, all of the Company’s commitments and contingencies specifically described in this Note 18 relate to the Corporate and Other category. The Newmont Madencilik A.S. matters are related to the Other International operating segment. The Nevada Operations matters under Newmont USA Limited are related to the Nevada operating segment. The Minera Yanacocha matters are related to the Yanacocha operating segment. The Yandal Gold Pty Ltd. and the Newmont Australia Limited matters are related to the Other Australia operating segment.

Environmental

The Company’s mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. At June 30, 2003 and at December 31, 2002, $379.8 million and $254.1 million, respectively, were accrued for reclamation costs relating to currently producing mineral properties. On January 1, 2003, the Company adopted SFAS 143, “Asset Retirements Obligations” (see Accounting Changes).

In addition, the Company is involved in several matters concerning environmental obligations associated with former mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. The Company believes that the related environmental obligations associated with these sites are similar in nature with respect to the development of remediation plans, their risk profile and the compliance required to meet general environmental standards. Based upon the Company’s best estimate of its liability for these matters, $62.5 million and $48.1 million were accrued for such obligations at June 30, 2003 and December 31, 2002, respectively. These amounts are included in Other accrued liabilities and Reclamation and remediation. Depending upon the ultimate resolution of these matters, the Company believes that it is reasonably possible that the liability for these matters could be as much as 49% greater or 32% lower than the amount accrued at June 30, 2003. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are charged to Costs and expenses, Other in the period estimates are revised.

Details about certain of the more significant sites involved are discussed below.

Battle Mountain Resources, Inc.—100% Newmont Owned

San Luis, Colorado: The San Luis open-pit gold mine in southern Colorado was operated by Battle Mountain Resources, Inc. and ceased operations in November 1996. Since then, substantial closure and reclamation work has been performed. In August 1999, the Colorado Department of Public Health and Environment (“CDPHE”) issued a

NEWMONT MINING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

notice of violation of the Water Quality Control Act and in October 1999 amended the notice to authorize operation of a water treatment facility and the discharge of treated water. Battle Mountain Resources has made all submittals required by the CDPHE notice and conducted the required response activities. Battle Mountain Resources negotiated a settlement with CDPHE resolving alleged violations that became effective September 1, 2000. In October 2000, the CDPHE received an “Application for Reconsideration of Order for Civil Penalty” filed by project opponents, seeking to appeal the terms of the settlement. The application was denied by CDPHE. Project opponents filed a judicial appeal in the District Court for Costilla County, Colorado, and Battle Mountain Resources intervened to protect its interest in the settlement. In May 2002 this matter was resolved and the settlement was upheld in favor of CDPHE and Battle Mountain Resources.

Dawn Mining Company LLC (“Dawn”)—51% Newmont Owned

Midnite Mine Site: Dawn previously leased an open-pit uranium mine, currently inactive, on the Spokane Indian Reservation in the State of Washington. The mine site is subject to regulation by agencies of the U.S. Department of Interior (the Bureau of Indian Affairs and the Bureau of Land Management), as well as the United States Environmental Protection Agency (“EPA”).

In 1991, Dawn’s mining lease at the mine was terminated. As a result, Dawn was required to file a formal mine closure and reclamation plan. The Department of Interior commenced an analysis of Dawn’s proposed plan and alternate closure and reclamation plans for the mine. Work on this analysis has been suspended indefinitely. In mid-2000, the mine was included on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In March 2003, the EPA notified Dawn and Newmont that it had thus far expended $11.5 million on the remedial investigation/feasibility study under CERCLA.

The EPA has asserted that Dawn and Newmont are liable for reclamation or remediation work and costs at the mine. Dawn does not have sufficient funds to pay for the reclamation plan it proposed or for any alternate plan, or for any additional remediation work or costs at the mine. Newmont intends to vigorously contest any claims as to its liability.

Newmont cannot reasonably predict the likelihood or outcome of any future action against Dawn or Newmont arising from this matter.

Dawn Mill: Dawn also owns a uranium mill site facility, located on private land near Ford, Washington, which is subject to state and federal regulation. In late 1999, Dawn sought state approval for a revised mill closure plan that, if implemented, would expedite the reclamation process at the mill. The State of Washington has approved this revised plan. The currently approved plan for the mill is secured by a $14.1 million bond, which is guaranteed by Newmont.

Idarado Mining Company (“Idarado”)—80.1% Newmont Owned

Telluride and Ouray, Colorado: In July 1992, Newmont and Idarado signed a consent decree with the State of Colorado (“State”), which was agreed to by the U.S. District Court of Colorado to settle a lawsuit brought by the State under CERCLA.

Idarado agreed in the consent decree to undertake specified remediation work at its former mining site in the Telluride/Ouray area of Colorado. Remediation work at this property is substantially complete. If the remediation does not achieve specific performance objectives defined in the consent decree, the State may require Idarado to implement supplemental activities at the site, also as defined in the consent decree. Idarado and Newmont have obtained a $5.8 million reclamation bond to secure their potential obligations under the consent decree. In

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addition, Idarado settled natural resources damages and past and future response costs, and agreed to habitat enhancement work under the consent decree. All of this work is substantially completed.

Newmont Madencilik A.S.—100% Newmont Owned

The Ovacik mine has a long history of legal challenges to the operation of the mine and, in particular, its use of cyanide in gold production. These challenges involve a multitude of proceedings and have a complex procedural history that, in June 2001, resulted in a judicial order granting the plaintiffs’ request to cancel Ovacik’s operating permits. Newmont has appealed this decision and, at present, the mine continues to operate under interim licenses pending the outcome of Newmont’s appeal. In addition, the Ovacik mine is the subject of a separate action being brought against the Turkish government in the European Court of Human Rights (“ECHR”). The plaintiffs in that case assert that the Turkish government’s authorization of operating permits and use of cyanide for the Ovacik mine violates Turkish law and Turkey’s obligations under the European Convention on Human Rights. Plaintiffs have asked, among other things, that the ECHR grant interim relief ordering the shutdown of the mine pending the ECHR’s hearing and decision on the merits. Newmont has intervened in this action. Newmont cannot reasonably predict the final outcome of any of the above-described legal proceedings. Either the Turkish courts or the ECHR, however, might grant relief that could require the closure of the mine or the interruption of mining activities.

Newmont Capital Limited—100% Newmont Owned

Lava Cap Mine Site: In February 1999, EPA placed the Lava Cap mine site in Nevada County, California on the National Priorities List under CERCLA. The EPA then initiated a remedial investigation/feasibility study under CERCLA to determine environmental conditions and remediation options at the site.

Newmont Capital owned the property for approximately three years from 1984 to 1986 but never mined or conducted exploration at the site. The EPA asserts that Newmont Capital is responsible for clean up costs incurred at the site. Newmont Capital has sought to resolve this matter through a de minimis settlement with EPA. The parties have entered into a tolling agreement until December 31, 2003 to facilitate settlement negotiations with respect to potential claims under CERCLA. Based on Newmont Capital’s limited involvement at Lava Cap mine, it does not believe it has any liability for environmental conditions at the site, and intends to vigorously defend any formal claims by the EPA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.

Newmont USA Limited—100% Newmont Owned

Pinal Creek: Newmont is a defendant in a lawsuit brought in U.S. District Court in Arizona by the Pinal Creek Group, alleging that the company and others are responsible for some portion of costs incurred to address groundwater contamination emanating from copper mining operations located in the area of Globe and Miami, Arizona. Two former subsidiaries of Newmont, Pinto Valley Copper Corporation and Magma Copper Company (now known as BHP Copper Inc.), owned some of the mines in the area between 1983 and 1987. The court has dismissed plaintiffs’ claims seeking to hold Newmont liable for the acts or omissions of its former subsidiaries. Based on information presently available, Newmont believes it has strong defenses to plaintiffs’ remaining claims, including, without limitation, that Newmont’s agents did not participate in any pollution causing activities; that Newmont’s liabilities, if any, were contractually transferred to one of the plaintiffs; that portions of plaintiffs’ claimed damages are not recoverable; and that Newmont’s equitable share of liability, if any, would be immaterial to Newmont. While Newmont has denied liability and is vigorously defending these claims, we cannot reasonably predict the final outcome of this lawsuit.

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Nevada Operations: In November 2002, Great Basin Mine Watch and the Mineral Policy Center (Appellants) filed suit in U.S. District Court in Nevada against the Department of the Interior and the Bureau of Land Management (BLM), challenging and seeking to enjoin the BLM’s July 2002 Record of Decision approving the company’s amended Plan of Operations covering the Gold Quarry South Layback Project, and the BLM’s September 2002 Record of Decision approving a new Plan of Operations for the company’s proposed Leeville Mine. Appellants seek a declaration that the BLM’s decisions were unlawful and an injunction prohibiting Newmont’s approved activities. Newmont has intervened in this action on behalf of the government defendants and has filed an answer denying all of Appellants’ claims. While Newmont believes that this appeal is without merit, an unfavorable outcome could result in additional conditions on operations that could have a material adverse effect on the company’s financial position or results of operations.

In October 2002, Great Basin Mine Watch (Appellant) filed an appeal with the Nevada State Environmental Commission, challenging the Nevada Division of Environmental Protection’s (NDEP) renewal of the Clean Water Act discharge permit for Newmont’s Gold Quarry Mine. This permit governs the conditions under which Newmont may discharge mine-dewatering water in connection with its ongoing mining operations. Appellant alleges that the terms of the renewed permit violate the Clean Water Act and Nevada water quality laws. Newmont has intervened in this action on behalf of the NDEP. A hearing before the Nevada State Environmental Commission was held in June 2003 in Elko, Nevada. At the end of the hearing, the Commission ruled in favor of NDEP on all claims and affirmed NDEP’s renewal of the Clean Water Act discharge permit. It is unclear at this time whether Great Basin Mine Watch will appeal this decision. While Newmont believes that this appeal is without merit, an unfavorable outcome could result in additional conditions on operations that could have a material adverse effect on the company’s financial position or results of operations.

In December 2002, Great Basin Mine Watch filed an appeal with the Nevada State Environmental Commission challenging NDEP’s November 2002 decision renewing a water pollution control permit for Newmont’s Lone Tree Mine. This appeal alleges that NDEP’s renewal violated various procedural and substantive requirements under Nevada’s water quality laws. Newmont has intervened in this appeal. A hearing before the Nevada State Environmental Commission was held on February 25-26, 2003 in Carson City, Nevada. At the close of the hearing, the Commission ruled in favor of NDEP on all claims, and affirmed NDEP’s renewal of the permit. Great Basin Mine Watch appealed this decision in the Nevada District Court in Carson City.

Gray Eagle Mine Site: By letter dated September 3, 2002, the EPA notified Newmont that the EPA had expended $2.6 million in response costs to address environmental conditions associated with a historic tailings pile located at the Grey Eagle Mine site near Happy Camp, California, and requested that Newmont pay those costs. The EPA has identified four potentially responsible parties, including Newmont. Newmont does not believe it has any liability for environmental conditions at the Grey Eagle Mine site, and intends to vigorously defend any formal claims by the EPA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.

Resurrection Mining Company (“Resurrection”)—100% Newmont Owned

Leadville, Colorado: Newmont, Resurrection and other defendants were named in lawsuits filed by the State of Colorado under CERCLA in 1983, which were subsequently consolidated with a lawsuit filed by EPA in 1986. These proceedings sought to compel the defendants to remediate the impacts of pre-existing, historic mining activities near Leadville, Colorado, which date back to the mid-1800s, and which the government agencies claim are causing substantial environmental problems in the area.

In 1988 and 1989, the EPA issued administrative orders with respect to one area on the site and the defendants have collectively implemented those orders by constructing a water treatment plant, which was placed

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in operation in early 1992. Remaining remedial work for this area primarily consists of water treatment plant operation and continuing environmental monitoring and maintenance activities. Newmont and Resurrection are currently responsible for 50% of these costs, but their share of such costs could increase in the event other defendants become unable to pay their share of such costs.

The parties also have entered into a consent decree with respect to the remaining areas at the site, which apportions liabilities and responsibilities for these areas. The EPA has approved remedial actions for selected components of Resurrection’s portion of the site, which were initiated in 1995. The EPA has not yet selected the final remedy for the site. Accordingly, Newmont cannot yet determine the full extent or cost of its share of the remedial action that will be required. The government agencies may also seek to recover for damages to natural resources. In March 1999, the parties entered into a Memorandum of Understanding (“MOU”) to facilitate the settlement of natural resources damages claims under CERCLA for the upper Arkansas River Basin. The MOU provides a structure for evaluation of damages and possible restoration activities that may be required if it is concluded such damages have occurred.

Other Legal Matters

Newmont USA Limited—100% Newmont Owned

Peru: In February 2002, a French citizen filed a complaint against the Company and certain of its subsidiaries and former officers, Compañia de Minas Buenaventura, S.A.A. (“Buenaventura”), one of Buenaventura’s subsidiaries, and other individuals, in U.S. District Court in Denver. The plaintiff alleges that he had an arrangement with Normandy Mining Limited, under which his fee was dependent on the outcome of the Minera Yanacocha shareholder dispute (which was resolved in 2000 pursuant to a comprehensive settlement agreement among the parties). The suit alleges that the defendants violated the federal Racketeer Influenced Corrupt Organization Act (“RICO”), and a parallel Colorado statute, by corrupting the Peruvian Supreme Court in 1998. Various common law torts including conspiracy, defamation, and tortuous interference with beneficial economic interests are also alleged. The suit seeks damages of not less than $25 million plus interest (which could be subject to trebling), as well as unspecified punitive damages. A motion to dismiss this lawsuit is currently pending before the Court, and the Company is and will continue to vigorously defend itself against these allegations.

Minera Yanacocha—51.35% Newmont Owned

Choropampa: In June 2000, a transport contractor of Minera Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles (85 kilometers) southwest of the mine. Elemental mercury is a byproduct of gold mining and was sold to a Lima firm for use in medical instruments and industrial applications. A comprehensive health and environmental remediation program was undertaken by Minera Yanacocha in response to the incident. In August 2000, Minera Yanacocha paid under protest a fine of 1,740,000 soles (approximately $500,000) to the Peruvian government. Mineral Yanacocha has entered into settlement agreements with a number of individuals impacted by the incident. In addition, it has entered into agreements with three of the communities impacted by this incident to provide a variety of public works as compensation for the disruption and inconvenience caused by the incident.

On September 10, 2001, Mineral Yanacocha, various wholly owned subsidiaries of Newmont, and other defendants were named in a lawsuit filed by over 900 Peruvian citizens in Denver District Court for the State of Colorado. This action seeks compensatory and punitive damages based on claims associated with the elemental mercury spill incident. The Denver District Court dismissed this action on May 22, 2002, and the court reaffirmed this ruling on July 30, 2002. Plaintiffs’ attorneys have appealed this dismissal.

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In July 2002, other lawsuits were served against Minera Yanacocha, various wholly owned subsidiaries of Newmont and/or other defendants in the Denver District Court for the State of Colorado and in the United States District Court for the District of Colorado, by approximately 140 additional Peruvian plaintiffs and by the same plaintiffs who filed the September 2001 lawsuit. These actions also seek compensatory and punitive damages based on claims associated with the elemental mercury spill incident. All of these lawsuits have been stayed pending the outcome of the appeal in the September 2001 matter.

Additional lawsuits relating to the Choropampa incident were filed against Minera Yanacocha in two of the local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits previously have entered into settlement agreements with Minera Yanacocha. The two courts issued opposite rulings on the validity of these agreements. Resolution of the matter is now pending bef