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Newmont Mining Corporation Q4 2005 Earnings Conference Call (NEM)

February 27, 2006

Executives

Wayne Murdy, Chairman and Chief Executive Officer

Pierre Lassonde, President

Richard O’Brien, Senior. Vice President and Chief Financial Officer

Tom Enos, Senior Vice President of Operations

Bruce Hansen our Senior Vice President of Operations Services

Russell Ball, Vice President and Controller

Randy Engel

Analysts:

John Hill, Citigroup

John Bridges, JP Morgan

Mike Dudas, Bear Stearns

John Tumasis, Prudential

Dave Gagilano, Credit Suisse

Ron Duddy, Gold Stock Analyst

Mark Smith, Dundee Securities

Randy Engel

Thank you operator. Good afternoon to everyone and thank you for joining us on our fourth quarter and year end 2005 earnings call. Please note that this call is being presented and simulcast on our website at www.newmont.com and will be available for playback for a limited time. On today’s call we have Wayne Murdy, Chairman and Chief Executive Officer, Pierre Lassonde, President, Richard O’Brien, Senior. Vice President and Chief Financial Officer, Tom Enos, Senior Vice President of Operations, and Bruce Hansen our Senior Vice President of Operations Services. As we will be discussing forward looking information, you should be aware that there are risks unique to our industry which are described in detail with our filings with the SEC and with that, I’d like to turn the conference over to our Chairman, Wayne Murdy.

Wayne Murdy

Thank you Randy and good afternoon everyone. I’ll review our fourth quarter and year end financial and operating highlights, then Dick will provide the details of our financial results and Tom will cover our operations. Bruce will then give an update on our new projects and Pierre will review the merchant banking, reserves and exploration and give us his thoughts on the gold market I’m sure. I’ll conclude with our 2006 guidance.

Newmont had a strong fourth quarter and a solid year in 2005 generating industry leading operating cash flow of some $1.63 billion despite lower earnings from industry wide cross pressures and various non cash accounting items. During the fourth quarter, we had higher margins, selling 2.4 million consolidated ounces or 1.8 million equity ounces at an average realized gold price of $472 per ounce with costs applicable to sales of $230 per ounce. We generated fourth quarter income from continuing operations of $72 million or 16¢ a share, and generated net cash from continuing operations of almost $500 million at $489 million.

Dick will cover some of the accounting items, but these have the net effect of reducing the income from continuing operations for the fourth quarter by some $84 million or 19¢ per share after tax. For the full year 2005, we sold our target of 8.6 million in consolidated ounces that translated to 6.5 million equity ounces at an average realized gold price of $441 per ounce and costs applicable to sales of $236 per ounce. We generated full year income from continuing operations of $374 million or 84¢ per share. Again, accounting items had the effect of decreasing income from continuing operations by $34 million or 7¢ a share after tax. At year end, our balance sheet remains strong with cash and cash equivalents short term marketable securities and other investments of some $1.9 billion dollars. Finally, we increased our reserves for the fourth straight year, finishing 2005 with 93.2 million equity ounces using a $400 gold price assumption. Given the impact of some January transactions, January and February where we increased our interest in the Akyem project and the Boddington project on a pro forma basis our reserves at year end stood at 98.6 million ounces.

Before I turn it over to Dick, I’d like to say a few words about cost pressures. Over the past year, you’ve heard us and the rest of the industry talk quite a bit about cost escalation and its impact on margin growth. We have seen significant increases in fuel and other input commodity costs, labor costs, primarily in our Nevada operations and Australian operations. For 2006, our guidance indicates we expect our average cost applicable to sales to be in the range of $280 per ounce, and nearly $380 per ounce in Nevada. However, of the roughly $47 per ounce increase expected in Nevada, about $25 is attributed to the effect of accounting changes, deferred stripping specifically which in 2005 was a credit to our cost structure but in 2006 will actually be an additional expense. I also see the impact of expensing stock options, although that does not have near the effect of the deferred stripping change. This is something that will add a fair amount of volatility to the cost structure in all operations for all mining companies going forward. Of the remaining increase, approximately $10 is attributable to labor costs as we made a large out of cycle increase last year in Nevada which will impact the full year 2006 and $15 is the full year impact of increases in energy costs primarily electricity costs in Nevada.

Our consolidated cost structure will also be negatively impacted this year by lower production from Yanacconcha our lowest cost operation where costs are expected to increase from last year’s $145 per ounce to an expected $185 per ounce this year. Almost all of the cost increase at Yanaconcha is due to the lower dominator, lower production, resulting from lower grades and higher stripping. We have several initiatives under way to address cost escalation. During the call you’ll hear about our development projects which over the next three to four years will give us five new mines producing about 2.5 million ounces with competitive cost structures. Three of these projects will come on in 2006. We’ve also begun construction on our power plant in Nevada having finally received the full clearance on our permits a couple of days before Christmas. Together we believe these initiates will help lower our average costs in Nevada and worldwide.

With that, now I’ll turn it over to Dick O’Brien for a closer look at the financial results.

Richard O’Brien

Thanks. Focusing on Slide 6 you can see revenues for the fourth quarter will be $1.3 billion at an average realized gold price of $472 per ounce. This compares to revenues for the prior year quarter of $1.2 billion at an average realized gold price of $436 per ounce. As Wayne mentioned, income from continuing operations for the fourth quarter were $72 million or 16¢ per share, compared with $150 million or 34¢ per share for the year ago quarter. For the full year 2005 income from continuing operations was $374 million or 84¢ per share, compared with $455 million or $1.02 per share for 2004. Looking at the next Slide, you can see that income from continuing operations for the fourth quarter was impacted by various items that had the effect of decreasing income from continuing operations by $84 million or 19¢ a share. Mention income from continuing operations for the full year 2005 was $374 million or 84¢ per share and was impacted again by a number of items that had the effect of reducing income from continuing operations by $34 million or 7¢ per share. As Wayne noted, we also generated net cash from continuing operations of $.25 billion in 2005.

Now to focus on operations, I’ll turn it over to Tom Enos.

Thomas Enos

Thanks, Dick. For the fourth quarter 2005 consolidated gold sales from continuing operations were approximately 2.4 million ounces at costs applicable to sales of $230 per ounce. For the full year, consolidated gold sales from continuing operations were approximately 8.6 million ounces at costs applicable to sales of $236 per ounce.

Looking at Nevada, fourth quarter gold sales declined by 7% from the year ago quarter as an 8% increase in mill through put a 14% in keep leach hall placed were upset by a 14% decrease in mill ore grade. Similar to the third quarter, the adverse mill grades were the continued result of unfavorable ground conditions and labor shortages at our underground operations which impacted production rates from higher grade underground ore zones. Costs applicable to sales for the fourth quarter increased 25% from the year ago quarter, primarily due to lower volumes, increased labor and underground services costs as well as increased diesel and input commodity prices. For the full year 2005, Nevada operations sold approximately 2.4 million ounces on a consolidated basis at costs applicable to sales of $333 per ounce. 2006 we expect Nevada’s consolidated gold sales to be approximately 2.6 million ounces at costs applicable to sales of $383 per ounce. As Wayne discussed, cost control and improving production are major focuses for our Nevada operations in 2006. We have made significant investments in new projects and new mining equipment and we expect these investments to help reduce costs by approximately 5%-10% in 2007. As Wayne mentioned, we have also begun construction on our Nevada power plant which will also contribute to lower costs.

Shifting to Peru, Minera Yanaconcha had a record fourth quarter, selling 1.1 million ounces on a consolidated basis at costs applicable to sales of $145 per ounce. Gold sales increased 25% from the year ago quarter as a 15% increase in ore placed on the leach pads was only partly offset by a (inaudible) increase in ore grade. Costs applicable to sales through the fourth quarter increased 10% $145 per ounce, the result of increased labor and commodity costs. For the full year 2005, the Yanaconcha sold 3.3 million ounces on a consolidated basis at costs applicable to sales of $147 per ounce. In 2006, we expect consolidated sales at Yanaconcha of approximately 2.6 million ounces at costs applicable to sales of $185 per ounce. The rise in costs is almost entirely attributable to the lower expected production resulting from lower grades.

Moving on to Australia and New Zealand, consolidated gold sales decreased 16% in the fourth quarter 2005, primarily as a result of lower grades at Tanami and Kalgoorlie combined with lower through put and Tanami and Pajingo. Cost applicable to sales increased 8% primarily due to lower production and increased commodity cost. Consolidated sales for the year were 1.6 million ounces at cost applicable to sales of $317. In 2006 we expect to sell approximately 1.5 million ounces at cost applicable to sales of $327 per ounce.

At Batu Hijau in Indonesia, copper sales decreased 22% in the fourth quarter to 129 pounds at consolidated gold sales remained constant from the year ago quarter at approximately 181,000 ounces. Cost applicable to sales per pound of copper and once of gold increased 25% and 19% respectively as a result of increased fuel, maintenance, consumable power and labor cost. For the full year 2005 on a consolidated basis, Batu Hijau sold 73 million pounds of copper and 720,000 ounces of gold at costs applicable to sales of 53¢ per pound and $152 per ounce respectively. In 2006 we expect to sell 565 million pounds of copper and 575,000 ounces of gold on a consolidated basis at cost applicable to sales of 45¢ per pound and $155 per ounce respectively.

Now I’ll turn it over to Bruce.

Bruce Hanson

Thank you Tom. At the Phoenix glut in Nevada, commissioning of the plant has already begun and we expect initial gold production to show up in April. Eagle project also in Nevada is approximately 86% complete. The production shaft has reached its final depth in November of 2005 and the mine is de-watered below the shaft bottom. The remaining construction work primarily relates to completion of the underground facilities. We see leave knoll ramping up to achieve approximately 2,100 tons per day of production by the end of 2006.

Also in Nevada, as previously discussed, we have begun construction of our power plant which was approved by our Board of Directors in January. Project engineering is 50% complete and we’re targeting a mid 2008 completion. This power plant again is a significant part of our cost control initiative and will provide long term reliable energy for projects like Leeville and Phoenix. In Ghana, we are now advancing both of our projects the Ahalo project and the Akyem project. At Ahalo, engineering procurement camp and general infrastructure construction is essentially complete. The process plant and related facilities are now approximately 76% complete and overall construction was 83% at the end of January. We’ve also begun commencing mining and stockpiling of ore which started in January for initial gold production in the second half of this year. In 2006 we expect Ahalo to contribute approximately 260,000 ounces. Annual gold sales from Ahalo are expected to average between 500,000 and 550,000 ounces at a steady production rate. As a result of continued exploration success, we are also already undertaking early studies of expansion opportunities at Ahalo looking at process capacity additions and potential underground development

The Akyem project was approved in 2000, in July of 2005. We are awaiting approval of our environmental impact statement and we are targeting initial production in the second half of 2008. We also expect Akyem to produce approximately 500,000 to 550,000 ounces a year on a steady state basis. Finally, as we announced this morning, Newmont’s Board of Directors has approved the development of the Boddington project in Western Australia. In February, Nemont entered into an agreement to acquire an additional 22.22% interest in Boddington from Newcrest Ltd. taking Newmont’s interest in the project to 2/3. The other 1/3 is owned by AngloGold Ashanti. The Boddington project has total gold reserves of over 11 million ounces and a current estimated life in excess of 15 years. Newmont’s share of initial capital will range between $900 million and $1 billion and we expect our share of annual production to be approximately 700,000 ounces for the first five years production and approximately 600,000 ounces per year for the life of the project. We are currently targeting completion and initial production toward the end of 2008. We feel that Boddington as substantial exploration opportunity and extensive non metallization material which indicates the potential to potentially ultimately double our reserves at Boddington. Now with that, let me turn it over to Pierre to talk about reserves at exploration and Newmont Capital.

Pierre Lassonde

Thanks Bruce. And welcome everyone. As Wayne mentioned earlier, the achievement of our exploration team this year has been to replace reserves and grow reserves for the fourth straight year. Using $400 for price assumption, we grew reserves from 92.4 million to 93.2 million at year end and mostly from Ghana which continues to out perform and while we grew reserve by 17% to 18.7 million equity ounces. In Nevada we’ve also had a great year, Phoenix in particular added 600,000 ounces to now almost 9 million ounces of reserve and in Peru Menos Conga grew reserve by 36% to 6.1 million equity ounces and also notably Australia this year we placed reserve at 1.5 million ounces very notable achievement.

And also as Wayne pointed out subsequent to year end we acquired the remaining 15% of the Akyem project in Ghana and as well as signed a letter of agreement to acquire the 22% of Newcrest, increasing our total reserve to something like 98 million ounces. If you look at the reserve sensitivity, at $425 gold, our reserve would increase approximately 5 million ounces to actually 6 million to almost 99 million ounces and our $450 gold by about 11% in line with the gold prices really at 103.7 million ounces. A decrease of $25 would decrease our total reserve by about 8% to 86 million ounces. The further impact of higher gold price is constrained by limited drill veta n the margins of known metallization. What we’re really saying is that we have not drilled our pits at $450 or $500 gold as we just haven’t had the time or the money to do so. We are working on it. It will take a long time for that to get there. As we look at the fourth quarter and the full year 2005, our fourth quarter expenditures were $43 million and for the full year $147 million. For 2006, the guidance will be about spent at about $155 to $165 million in exploration and an additional $40 to $45 million for advanced projects research and development. And when we look at the dollars spent, 56% is mere mine ground fuel, and 46% is Greenfield. You can see that we are putting a lot more emphasis on Greenfield exploration to increase our non reserve metallization pipeline so that we can continue to grow our reserves in the future. For 2006 our outlook is the continued district expansion at Ahalo, since we started to work Ghana four years ago we’ve new discoveries and trend we hope will conti9nue this year. In New Zealand the ground expansion in Martha will go on the same as underground program at Kalgorlie and Jundee in Australia. And finally, we will do a fair amount of work on advance gold, copper target at Pajingo, Midas in Nevada, (inaudible) in Indonesia and Boddingtons in Australia. These are all very large scale gold, copper targets that could add significant metallization and down the road reserves to Newmont if we can bring in Minahasa.

I’d like to turn your attention to Newmont Capital which had a fabulous year in 2005. The royalty portfolio net income was up 24% to $23 million in the third quarter and it was up 20% to $79 million for 2005 versus 2004. The equity portfolio, the year end market value of the equity portfolio was $940 million, an increase of $433 million from year end 2004. If you look at our return on average invested capital for the year, it’s 80%. We’re quite proud of that. The unrealized capital gains exceed over $500 million at year end. In terms of our asset portfolio, and we’re talking here about our black gold property, the Alberta Oil Sand, we have started environmental base line studies and unshell drilling, we’ve done a pre-feasibility study which indicates that there’s a 165 million economically recoverable barrels of oil with potential production of 25,000 barrels per day via a phase development. We just completed the intro program for this winter. We got a look at the results and continue to develop this asset.

Finally, in terms of the gold market I’ll be very brief, I think that usually between February and May we see on a seasonal basis, the decline in gold price. We haven’t seen it this year and I think that is a very significant factor. It’s the need to grow BTF and the market has now taken over 430 tons of gold in 14-15 months. It has a significant impact on the gold market and whether or not we will see the seasonality this year, I believe remains a question. For the time being, we’re looking at a gold price for the next six to nine months of $525 to $600 in that bracket and you know, baring any unforeseen major blowup in the world. And with that, I will turn it over to Wayne for his concluding remarks.

Wayne Murdy

Thank you Pierre. Again, for 2006 we expect consolidated gold sales of about 8 million ounces of cost applicable to sales of approximately $280 per ounce. We also expect to generate consolidated copper sales of about 565 million pounds at costs of about 45¢ per pound. The guidance breakdown shown on this slide is also provided for your reference. In 2005 we saw a good year but a year that clearly had challenge. Earnings were affected by various non cash charges and asset write-downs. And of course we were not immune to the rising costs facing the industry. However, we generated industry rating operating cash flow for the year and saw margins improve in the fourth quarter. Our leverage to gold prices increased over the last six months of 2005 and we also increased our reserves for the fourth straight year. Looking forward, we see several positive developments that we believe will deliver increased leverage to gold price and value to our shareholders. We will be brining on three new projects this year in Nevada and Ghana and have two more significant projects, Boddington and Akyem in development for completion in 2008. We also remain steadfast in our commitment to cost control and our opposition to hedging. We believe we are in a long term bull market and that these projects are the cornerstone of Newmont’s growth story over the next several years.

Thank you very much for your time and with that; let me turn the call over to the operator so that we can take your questions.

Question-and-Answer Session

Operator

And our first question comes from John Hill of Citigroup

John Hill

Good afternoon everyone. Hello. I was just wondering if you could share a few additional thoughts on Boddington in terms of the flow sheet and some of the equipment selection. There have been a number of variables in air on that one over the years.

Wayne Murdy

Okay John, I’m going to ask Bruce to talk about Boddington. We’re very excited about that.

Bruce Hansen

We are extremely about Boddington, John. And you know, we’re looking at roughly a through pit rate at Boddington at approximately 35 to 38 million tons. The flow sheet will have primary and secondary pressures followed by a series of high pressure grinding rolls, feeding into ball mill, set of ball mills going into flotation followed by CIL. So it will be a big it will be a very robust plant, we’re very confident in terms of capacity of that plant and our ability to deliver it. On the mining side, we’ll have, we’ll be using large loke shovels, electric shovels, and we’ll be loading roughly 230 metric ton trucks, fairly significant fleet and you know fairly conventional in terms of its nature. So, a big project, but not overly complex.

John Hill

Okay, great. Thanks for that. And then very briefly, on the reserve side, there are some interesting asymmetries I guess. We took the gold price modeling assumption up from $375 to $400 that was worth 2.6 million ounces but in your sensitivities table if we carve 25 bucks on an ounce off today, we go down by 6.9 and I assume that’s lower grades in Nevada but I was just wondering if you could shed some light on that unusual asymmetry there?

Wayne Murdy

I think what you’re talking about there John, is the fact that you know in the actual results for 2005, that also had the net impact of increases in costs. When we look at sensitivities on a go forward basis, we’re essentially freezing costs and we’re adjusting the gold price only.

John Hill

Very good. Thank you.

Operator

Thank you. Our next question comes from John Bridges of JP Morgan.

John Bridges

Hi, John Bridges. I was just wondering with respect to the way the gold prices are moving up, I seem to remember on a visit a year or two ago, there was a lot of low grade material at Kalgoorlie, you know on the face of it, the lower grade there is a negative, but I seem to remember there was a big potential increase to the reserves. What’s the prognosis there?

Leroy Shoots

John, this is Leroy Shoots. At Kalgoorlie there’s a sizeable NRM that fell out of our numbers earlier on because of the pit angle not being able to take it in. We’ve seen, however, that this material has potential with the higher gold price environment to go underground but we’re investigating the engineering capabilities and the other process capabilities as well. So the upside is largely in that setting.

John Bridges

So you’re working on that one?

Leroy Shoots

Yes we are. We’ve got a plan this year to do some additional drilling in that setting.

John Bridges

I wonder also with respect to the Greenfields portion of your exploration project, could you point out or maybe rank the targets that you’re looking at?

Pierre Lassonde

John, it’s Pierre. In terms of the Greenfield, you were sticking basically 80% to the countries where we already operate so you look at our budget and that is quite significant. Our budget in Peru also is quite significant. And in Nevada and Australia the other two places and I would say that approximately 80% of our budget would be in those four countries. And then the other 20% of it you know in other places where we see opportunities.

John Bridges

Okay. Great. And for the technically inclined, is there you know a summary of the Boddington feasibility study we could get our hands on?

Wayne Murdy

John, I mean we put out a press release today and you know as things evolve we’ll be providing you with additional information. I don’t know if we have in essence a summary of the feasibility study that we are distributing.

Brian Hansen

John, we don’t have anything of that nature at this point. We have the release out there at this point.

John Bridges

Okay. Thanks guys.

Pierre Lassonde

Also John, just to reemphasize, we talked about asymmetry you know the fact is that today gold price is $550 our reserves are calculated at $150 (inaudible).then today’s gold price, but also the fact is that we just haven’t drilled our pit at $500 gold but are let alone $550. And you know the effort to do so and the money is significant and it will take us literally at least a couple of years to get there. So, there should be a little bit more to come and in terms of you know higher gold prices, but we’re also very mindful of profitless prosperity when you add the reserve ounces that will cost you $500, you know, your margin is only $50, we’d rather spend the money on ounces that will cost you $250 where you have a $200 or $300 margin. That’s the choice that we have to make otherwise we’d end up with the you know $500 million exploration budget.

John Bridges

That was the other John’s question I think but I think we understand that. I was just trying to get a sense as to where the you know the new reserve additions are going to come from.

Bruce Hansen

Okay.

Operator

Thank you. And again, if you would like to ask a question, please press star 1 on your telephone touchpad. And star 2 to cancel.

And our next question comes from Mike Dudas, Bear Stearns.

Mike Dudas

Good afternoon gentlemen. Can someone go over the copper realizations for 2006, how long the hedges may run through and when we might see more market based realizations for Batu Hijau?

Wayne Murdy

I’ll ask Russell to do that.

Russell Ball

Hey Mike, we’ll be filing a 10K on Wednesday and you will have plenty of detail and suffice to say these hedges are done in the first quarter of next year. There’s very little that rolls over into next year and the last schedule I looked at had about 60% for ’06 hedged. But we’ll check and finalize and if it’s anything different, I’ll let Randy know and he can get back to you. But it’s about 60% at $1.35.

Mike Dudas

For 2000 – I’m sorry for 2006?

Russell Ball

2006. There’s minimal that rolls over into 2007.

Mike Dudas

Terrific, thank you. And question for Pierre, where do you see the Newmont Capital opportunities going for the next couple of years, given what you have on the plate and some of the things that may not be as visible to the rest of the market?

Pierre Lassonde

Well if we told you, you couldn’t trade it. Mike, you know the, where we’ve done of course exceeding well is our position with Canadian Oil Frame, it does represent probably over 80% of our capital gain and we continue to hold that position. We continue to believe the stock is going to go higher and once the dividend reaches approximately $10, $11 a share which we think it’s going to be in the next 18 months, it’s the equivalent of $10 an ounce on the price of gold on energy at you know $55, $60 oil. Anything higher in oil price will have higher dividends, so that means a great deal to us. In terms of our position you know we have made a number of you know fairly public in terms of the Gabriel and the Shore and others and we continue, the great thing about this statement is that you know there are discoveries all the time and we continue to look for opportunities. We have 300 and almost 50 geologists that our eyes and ears on the ground and they feed us opportunities and we continue to believe that there will be new discoveries made by juniors over the next 2-3 years and we want to participate in at least one or two of these five new (inaudible) discoveries. We will be there. We are absolutely totally confident that it will come.

Mike Dudas

Terrific. One final question for Tom. Could you elaborate a little more on the labor issues, especially on the underground side in Nevada and do you think that could limit some development that you or other companies might have over the next three to five year as some of these horse transition lower given some of the lack of availability not only in Hard Rock but other types of mining from a skill set base?

Thomas Enos

Well I think we’ve got our arms around it. We put in place a training program. We’re also in the process of building a sub-division in Elko to – it’s been an issue for employees, the underground employees. Just no place to live, so I think we’re in front of that one.

Mike Dudas

Terrific. Thanks gentlemen.

Operator

Thank you. And our next question comes from John Tumasis, Prudential.

John Tumasis

Good afternoon. Could you elaborate a little bit on the $300 I believe I heard $380 cost up with the sales force for Nevada this year? Hopefully the leevill ounces will be much lower cost than that. Gas prices have fallen. Last year I thought was an easy comparison at $333 and just give us a little rundown of what’s getting better and what’s getting worse

Wayne Murdy

Hey John. I think maybe let me just cover a couple of things. First of all, part of the increase is in fact accounting changes. It’s the expensing of deferred stripping and in that $333 if you go back to the detail in the press release you’ll see that there was actually a $23 credit for deferred stripping. Next year that will be a expense of $5. So that’s obviously a sizable swing for us. While the gas price drop off is well appreciated, the big factor for us is what’s happened to electric costs out there. But the big item for us, was freight (inaudible) for that kilowatt hour for the majority of our electricity out there and that’s been a big factor and then the third item is on the labor cost we did do an out of cycle 8% across the board increase to our union and non-union people last August. And the impact of that on the full year is about $10. Leeville is coming on slower than we anticipated (inaudible) bring that up to 2,100 tons a day by the end of the year, but it will be well into next year when we get to the full capacity there of about 3,200 tons a day. And that is primarily the result of ground conditions there which have been much more difficult. We’ve run into more water and tougher ground conditions than was anticipated on the surface. So, while we are going through the toughest part of that this year, we look out in 2007, we can see costs coming back up to 10%. I think we have some other moves in place as you are aware we haven’t invested a lot of capital, (inaudible) it has cost with us, we’re putting in a new mining fleet in a large part of Nevada last year and this year and so we’ll see improve maintenance costs so while this is a difficult year to look at, we think we can see the other side (inaudible) much better cost structure.

John Tumasis

Thank you for your explanation.

Operator

Thank you. Our next question comes from Dave Gagilano, Credit Suisse.

Dave Gagilano

Hi, thanks. In you remarks you commented briefly on the 2007 allocs for Nevada, I was just wondering if you could shed some light on the 2007 operating outlook for Yanaconcha as well?

Wayne Murdy

I think in 2007 will again see production decline and again that’s grade and strip related and then we kind of turn the corner, but again as we’ve said several times of the last couple of years, Yanaconcha you know has gone through those real easy years, it’s becoming a more mature operation and while 2007 has a fair amount of strip, and that will affect the cost structure, longer term you know Yanaconcha is going to settle in to kind of a you know 230, 250 cost structure there. The key thing is in the out years being able to bring production back up a little bit, but we’re in the big decline now with 2006, 2007. We’re building a gold mill down there. We’re looking at the development of the Conga project which again is further out, it’s in a 2010 time period, but this is a wonderful district. It has always performed very well but clearly we’re past its prime date and so it’s a matter of it settling down, but it will be a very good long term producer with very competitive cost for us. Not going to be at $140, $150 an ounce unfortunately.

Dave Gagilano

Okay, and in terms of for modeling purposes in terms of the order of magnitude of the production decline, in ’07 versus ’06?

Wayne Murdy

If you look at the 10Q and that comes out. Pardon me, the 10K, there’s good guidance that we’ve been giving there and will be pretty consistent.

Randy Engel

Dave, it’s Randy as well. If you refer back obviously to last quarter’s Q and the previous quarters Q, a 10% to 20% decline in ’06 over ’05 and then we showed another 35% decline in 2007 over 2006.

Dave Gagilano

Perfect. And just a follow question unrelated. Realized gold price in the third quarter noticeably lower than spot, is that just a timing issue? Is there anything we should be looking at there?

Russell Ball

Dave, Russ. It was timing and then also we had 150,000 ounces that we delivered at $350.

Dave Gagilano

Okay.

Russell Ball

Yeah, price capped.

Dave Gagilano

Any of those price capped out as far as ’06?

Russell Ball

No there’s nothing for ’06 or ’07.

Dave Gagilano

Okay.

Russell Ball

The only items that we will be delivering at non spot is the prepaid forward which is 161,000 ounces, June ’06 and June ’07 and that has a structure that allows us to participate up to $380 and then we’re capped out.

Dave Gagilano

Okay. Thanks.

Operator

Thank you. Our next question comes from Ron Duddy, Gold Stock Analyst.

Ron Duddy

Gentlemen, great quarter an annual rate of 7.2 million ounces a year equity basis. I’m carrying the most recent public statement that I have for you has a total production for ’07 of around 7.7 million ounces. Is that still in the range of reaching?

Wayne Murdy

No, I’m not sure where you got that from, but we’ve been very consistent in our guidance for this next year. The guidance that we’ve put out is 6.25 equity ounces.

Ron Duddy

No I mean for ’07, 2007?

Wayne Murdy

We’ve never given specific guidance for ’07.

Ron Duddy

I think maybe at Denver, but okay. And my other question has to do then with the cash cost. Obviously the fourth quarter of ’05 benefited from higher production to cut the cash cost to $230 and then it’s going to jump up to $283, I’m just taking the mid point for all of ’06. Give us some kind of sense on how it gets to $283? Does it pop right up the first quarter or is it sort of increasing through the year?

Wayne Murdy

A significant portion of it as I pointed out is the accounting changes. We used to be able to capitalize deferred stripping and amortize that, so there’s a fairly significant swing there that take place and that will take place right from the beginning. Again, we give annual guidance and we’ve stayed away from quarterly guidance. It’s like you’re 2.4 million comment for the fourth quarter. We typically do better at the end of the year, but you can’t take our guidance and divide it by four, it just doesn’t work that way.

Ron Duddy

Okay, so the first quarter is going to be fairly close to the $283 number?

Wayne Murdy

It will be what it is. I mean we give guidance for the year.

Ron Duddy

Okay, great. Thank you very much.

Operator

Thank you. And our next question comes from Mark Smith, Dundee Securities.

Mark Smith

Just have a couple of really quick questions. With regard to Boddington, when – are you guys going to consolidate that or equity account that?

Richard O’Brien

The legal structure is actually an undivided interest so we will probably be equity accounting for it. I say probably because proportional accounting. I say probably because the accounting profession continues to look at this. It’s not clear that by 2008 when we get into production what the rules will be.

Mark Smith

Okay. No, that’s fine. Okay, so when you said $900 to $1 billion capital that was entirely Newmont’s portion of val on an equity basis..

Bruce Hansen

That’s correct.

Mark Smith

Okay. And this year your capital guidance for 2006 does that include any capital for Boddington?

Wayne Murdy

Yes it does.

Russell Ball

It includes our original share, Mark, which was 49, but that’s stepping up with the Newcrest acquisition it will be about another 47 million a year. So there will be a delta for a change in scope.

Mark Smith

So what is the exact number now for 2006 for Boddington?

Russell Ball

It’s an additional 47 million, again depending on how the project develops and how the expenditures go.

Wayne Murdy

We’re looking in aggregate at about $200 million to Newmont’s account for Boddington in 2006.

Mark Smith

Okay, that’s cool. That’s good. Just another quick question. Just on the same note because we’re switching back from consolidated to equity accounting. When you give your guidance for capital expenditures for 2006 over all, does that include the 100% of Yanaconcha and Batu Hijau or is that just your equity portion of Batu Hijau and Yanaconcha?

Wayne Murdy

That’s consistent with the financial statement so it is the consolidated total. So it’s 100% of Batu and 100% of Yanaconcha.

Russell Ball

All of those numbers in the release look at our financial guidance for ’06 are on a consolidated basis. So the same logic would apply for the exploration.

Mark Smith

Yeah, but you don’t to that much exploration on Batu Hijau right now, right?

It’s hard to break that out. Okay. Thanks Russ, thanks guys.

Operator

Thank you. There are no further questions at this time. I will return the meeting back over to Randy Engel for any closing statements.

Randy Engel

Okay. We want to thank everybody for joining us on the call today. Again, reminding you if you have follow up questions you’d like to report to us, you can reach either the Investor Relations Group or the Media Group on the numbers posted at the end of the Release. Thank you very much for joining us.

Operator

Thank you for participating in today’s teleconference and have a great day. You may disconnect at this time.

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Source: Newmont Mining Q4 2005 Earnings Conference Call Transcript (NEM)
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