Newmont expects talks on higher royalties in Peru

Newmont Mining Corporation NEM -3.67% ("Newmont" or the "Company") today announced that its second quarter 2011 attributable net income from continuing operations increased 37% to $523 million ($1.06 per share)(1) compared to $382 million ($0.78 per share) in the second quarter of 2010. Adjusted net income(2) increased 18% to $445 million ($0.90 per share) in the second quarter of 2011, from $377 million ($0.77 per share) in the second quarter of 2010.

As previously announced, based on the Company's average realized gold price of $1,501 per ounce for the second quarter of 2011, Newmont's Board of Directors approved a third quarter 2011 gold price-linked dividend of $0.30 per share(3), an increase of 50% over the $0.20 dividend paid in the second quarter of 2011, and an increase of 100% over the $0.15 dividend paid in the third quarter of 2010.

Second Quarter Highlights:

Consolidated revenue of $2.4 billion, an increase of 11% from the prior year quarter;

Average realized gold and copper price of $1,501 per ounce and $3.78 per pound, up 25% and 62%, respectively, from the prior year quarter;

Attributable gold and copper production of 1.2 million ounces and 44 million pounds, down 5% and 45%, respectively, from the prior year quarter, impacted by processing lower grade stockpiles at Batu Hijau and lower grade ore at Nevada;

Operating cash flow from continuing operations of $414 million, 45% lower than the prior year quarter due primarily to approximately $300 million in tax payments in Indonesia related to 2010 earnings;

Gold and copper costs applicable to sales ("CAS")of $583 per ounce and $1.34 per pound, respectively ($588 per ounce and $1.41 per pound, respectively, on an attributable basis(4));

Net attributable CAS(4) for gold of $499 per ounce; and

Maintaining 2011 outlook for production, CAS, and capital expenditures.

Newmont does expect there will be discussions about higher mining royalties, O'Brien told analysts on a conference call.

“I think it will be industry wide. And I think we have a pretty good sense of what that will be, and we've incorporated it into our economics,” he said.

“I won't tell you what our assumption is, but we have made some assumptions,” O'Brien said.

Newmont has been operating in Peru for decades, “through several changes of not just presidents but political styles”, he commented.

The company also takes a longer term view of its investment decision, beyond the current political climate, because the Conga project is expected to be in production for some 20 to 30 years, he said.

Newmont's annual attributable production from the Conga mine in the first five years is forecast at 300 000 oz to 350 000 oz of gold and 80-million to 120-million pounds of copper, at estimated costs of $400 to $450/oz of gold and $1.25/ob to $1.75/ob of copper in the same period.

Production is expected to start up in late 2014 or early 2015.

Newmont and Buenaventura already operate the Yanacocha mine in Peru.

Newmont, which has mines in the US, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico, reported second-quarter adjusted net income of $445-million, 18% higher than a year earlier, after higher gold and copper prices offset lower production and increased costs.