PRESS RELEASE - Newmont announces strong cash flow continues in third quarter, nine months

Newmont Mining Corporation generated strong cash flow during the third quarter and first nine months of 2000. Operating cash flow of $95.9 million, or $0.57 per share, for the three months ended September 30 was up 145 percent from $39.1 million, or $0.23 per share, in the comparable 1999 period. Nine-month cash flow of $286.0 million, or $1.70 per share, was 39 percent higher than the prior year's $205.2 million, or $1.22 per share.

However, with the weak gold price and several non-operating items, the company recorded a net loss of $18.7 million, or $0.11 per share, in the quarter compared with a net loss of $39.0 million, or $0.23 per share, in the 1999 third quarter. The latest period included two items related to Minera Yanacocha in Peru, the cost of settling long-standing litigation over ownership of the mine and an accrual related to a previously reported mercury spill. These were partially offset by an unrealized gain on the company's small hedge position. The 1999 quarter included a noncash loss for hedge-related accounting and a small gain on an asset sale. Excluding these items, the company had a net loss from operations of $0.01 per share in both periods.

``Our operations continue to perform well. Excluding non-operating charges, we were essentially earnings neutral at a $277 gold price,'' said Ronald C. Cambre, Newmont's chairman and chief executive officer. ``We expect an excellent fourth quarter and remain on target to produce a record 4.8 million ounces of gold in 2000 at a total cash cost of $173 an ounce. As a result, we will see a significant improvement in cash flow from 1999.''

At the same time, Cambre cited the achievement of several objectives that are expected to add significant long-term value for Newmont's shareholders. These include:

- The unitization of various exploration properties in northern Peru into Yanacocha, which becomes a 535-square-mile district under Newmont's 51.35 percent ownership. The ability to manage the district as a whole in terms of exploration, development and mine operations is increasingly important given the excellent results from this year's deep drilling program in the area.

- The final resolution of an eight-year dispute over the ownership of Yanacocha. Although Newmont and its partner, Buenaventura, had won their case against the Bureau de Recherches Geologiques et Minieres (BRGM), the French geologic agency, in the Peruvian courts, the French government had brought international arbitration charges against the government of Peru. That clouded title to the 24 percent ownership of Yanacocha previously held by BRGM. The cost of the final settlement to Newmont was $42.2 million pretax ($27.4 million after tax).

- Reaching two important milestones at Batu Hijau. The project generated equity income for Newmont for the first time in the third quarter, and yesterday, it passed the lenders' final completion tests so that $1 billion in project financing is now non-recourse to the partners. Considering that it has been only 10 months since Batu Hijau shipped its first concentrate, these are remarkable achievements.

- And, while not yet finalized, Newmont is working closely with the management of Battle Mountain Gold Company to complete the merger transaction involving the two companies before the end of the year.

Gold sales during the third quarter rose 10 percent to $362 million as production totaled 1.14 million equity ounces of gold, nearly 100,000 more ounces than in the year-earlier period, and the average realized gold price increased $6 to $277 an ounce. Total cash costs of $175 an ounce compared with $174 in the like period a year ago. The company's equity share of copper sales at Batu Hijau totaled 67.2 million pounds at an average realized price of $0.93 a pound.

North American operations produced 768,000 ounces of gold at a total cash cost of $210 an ounce in the third quarter, representing an 18 percent increase in output and a 2 percent decline in costs from the 1999 quarter. The improvement is primarily attributable to an increase in high-grade ore mined from the Deep Post pit in Nevada.

Overseas operations produced 685,100 ounces (390,600 equity ounces) of gold at a total cash cost of $99 an ounce, versus 677,500 ounces (393,600 equity ounces) at a total cash cost of $108 per equity ounce a year ago. Production at Yanacocha was essentially unchanged from 1999, but was below previous forecasts due to lower grades and an unusually wet September. Cash costs of $76 an ounce were $20 below those of the 1999 quarter. Although lower grades reduced production at Zarafshan-Newmont in Uzbekistan, productivity improvements continued to benefit cash costs. At Minahasa in Indonesia, costs were adversely affected by work stoppages resulting from local demonstrations.

Batu Hijau is progressing well on its ramp-up to full production and contributed $700,000 in net income for Newmont's 56.25 percent economic interest in the latest quarter versus a start-up loss of $1.3 million a year earlier. Compared with the second quarter of the year, copper sales of 119.4 million pounds (67.2 million equity pounds) were up 14 percent and gold production of 68,400 ounces (38,500 equity ounces) was 25 percent higher. Total cash costs of $0.60 a pound for copper after gold credits compared with $0.62 in the second quarter of 2000 and $0.68 in the first quarter.

Other items affecting the quarter's performance were higher charges for exploration (deep drilling at Yanacocha), interest (with commercial production, interest at Batu Hijau is no longer capitalized) and general and administrative expense (reflecting the growth and international scope of the company's operations). Other costs of $13.3 million pretax included an accrual of $9.5 million for individual compensation and community infrastructure improvements in two villages in Peru affected by a mercury spill in June by a contract carrier. A year-ago, dividends, interest and other income included $5.2 million, net of tax, from an asset sale.

A year ago, Newmont entered into a modified gold price protection plan by purchasing put option contracts paid for by the sale of long-dated call options. In the latest quarter, a noncash gain of $24.2 million on the mark-to-market value of the call options and a $3.7 million charge for amortizing the put options (recorded as a reduction in the selling price) resulted in a net after-tax gain for the quarter of $13.3 million. In the third quarter of 1999, a noncash mark-to-market loss of $51.3 million on the call options and a $12.2 million charge for put amortization resulted in a net after-tax loss of $41.3 million.

For the first nine months of 2000, Newmont had operating net income of $4.6 million, or $0.03 per share, versus $5.7 million, or $0.04 per share, in 1999, which included start-up losses at Batu Hijau of $14.7 million in 2000 and $9.3 million in 1999. Non-operating items resulted in a net loss for the 2000 nine months of $28.4 million, or $0.17 per share, compared with a net loss of $22.0 million, or $0.13 per share, in the 1999 period. Such items during the latest period included $30.6 million in after-tax charges related to Yanacocha and a net after-tax charge of $2.4 million on the put and call options. In the 1999 period, $41.3 million in noncash hedge-related charges was offset in part by $13.6 million in asset sales.

Nine-month gold sales of $1.08 billion were 11 percent higher than a year ago as equity gold production rose 12 percent to 3.3 million ounces and the average realized gold price rose $1 to $282 per ounce. Total cash costs of $175 per ounce were $4 below the year-ago average, while total production costs, including depreciation, of $233 an ounce was $1 below the 1999 figure. The company's equity share of copper sales at Batu Hijau totaled 188.1 million pounds at a price of $0.85 per pound.

North American operations produced 2.14 million ounces of gold during the first nine months of the year, almost 200,000 more ounces than during the year-earlier period. Almost all of the increase came in Nevada, as output declined at the Mesquite mine in California, which is reaching the end of its economic life. Total cash costs for all of North America declined slightly to $209 an ounce.

Overseas operations produced 2.05 million ounces of gold (1.18 million equity ounces) in the 2000 nine months, 17 percent more than the 1.76 million ounces (1.01 million equity ounces) in the 1999 period. Total cash costs were sharply reduced to $105 per equity ounce from $121. Most of the production increase and cost reduction occurred at Yanacocha. Production declined slightly at Zarafshan-Newmont with lower grades, while the start-up of heap leach operations at Minahasa helped lift overall output there by 6 percent.

Batu Hijau in its first nine months of operation produced 352.4 million pounds of copper (198.2 million equity pounds) and 180,200 ounces of gold (101,400 equity ounces). Total cash costs of $0.63 per pound of copper, after gold credits, was based on equity copper sales of 188.1 million pounds.

Capital investments, including equity funding of Newmont's share of the Batu Hijau project and 100 percent of expansion costs at Yanacocha, totaled $347.8 million in the first nine months of 2000 versus $288.8 million in the year-earlier period.

At September 30, 2000, Newmont had cash and equivalents of $48.3 million, versus $55.3 million at December 31, 1999, and stockholders' equity, including minority interest in Yanacocha, of $1.62 billion versus $1.58 billion at December 31. Long-term debt of $1.09 billion compared with $1.04 billion at year-end, representing 40 percent of capitalization in both periods.

Looking ahead, Cambre said Newmont expects its North American operations to produce nearly 1 million ounces of gold at a total cash cost of less than $200 an ounce in the fourth quarter. Overseas operations are expected to produce almost 500,000 equity ounces of gold in the fourth quarter at a total cash cost of approximately $100 an ounce. For the full year, record production is expected at both Nevada (in excess of 2.9 million ounces) and Yanacocha (1.8 million ounces, or 925,000 equity ounces). Batu Hijau is expected to produce approximately 160 million pounds of copper (90 million equity pounds) in the fourth quarter at a total cash cost of about $0.50 a pound for copper. (*)