Newmont Eliminates Gold Hedges
News Desk
Gold Company, and Announces Strategic Initiatives
Thursday July 5, 4:15 pm ET
DENVER, July 5 /PRNewswire-FirstCall/ -- Newmont Mining Corporation
(NYSE: NEM - News) today announced the elimination of its entire 1.85
million ounce gold hedge position, establishing the Company as the
world's largest unhedged gold producer. Newmont also announced plans
to monetize components of its royalty and equity portfolio in the next
twelve months, resulting in the discontinuation of the Company's
Merchant Banking Segment as a separate business unit.
Commenting on the Company's strategic initiatives, newly appointed
Chief Executive Officer, Richard O'Brien, said, "With the elimination
of our gold hedge book, we have renewed our commitment to maximizing
gold price leverage for our shareholders. In addition, we are focused
on delivering improvements in our operating performance and cost
structure going forward. We intend to realize the value from a
significant portion of our non-core, Merchant Banking portfolio and
use the proceeds to fund the development and growth of our core gold
business."
During June 2007, the Company spent $578 million to eliminate its
entire 1.85 million ounce price-capped forward sales contracts. The
Company will report a pre-tax loss of approximately $531 million on
the early settlement of these contracts, after a $47 million reversal
of previously recognized deferred revenue.
In addition, as a result of the Company's decision to discontinue its
Merchant Banking Segment and monetize components of its equity and
royalty portfolio, the carrying value of the Merchant Banking Segment
goodwill was impaired as of June 30, 2007. Consequently, the Company
expects to incur a non-cash impairment charge of approximately $1.7
billion, to be recorded as part of discontinued operations, in the
second quarter of 2007. The Company has engaged financial and legal
advisors to evaluate alternatives to maximize the realized value of
the discontinued Merchant Banking portfolio. Potential alternatives
include, among others, a public offering and/or private sale
transactions.
Commenting on the Company's path forward, Mr. O'Brien said, "These
transactions form the foundation of a renewed focus on our core gold
business. Looking forward, we intend to maximize gold price leverage
for our shareholders, establish a sustainable and reliable production
base at competitive operating and capital costs, maintain our
financial strength and flexibility, and capitalize on our exploration
portfolio and land position."
Cautionary Statement
This news release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that
are intended to be covered by the safe harbor created by such
sections. Such forward-looking statements include, without limitation,
statements regarding future asset sales or other transactions and use
of proceeds of such sales. Where the company expresses or implies an
expectation or belief as to future events or results, such expectation
or belief is expressed in good faith and believed to have a reasonable
basis. However, forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to
differ materially from future results expressed, projected or implied
by such forward-looking statements. For a detailed discussion of
risks, see the company's 2006 Annual Report on Form 10-K, which is on
file with the Securities and Exchange Commission, as well as the
company's other SEC filings. The company does not undertake any
obligation to release publicly revisions to any "forward-looking
statement," to reflect events or circumstances after the date of this
news release, or to reflect the occurrence of unanticipated events,
except as may be required under applicable securities laws.