newmont mining corp /de/ -...

NEWMONT MINING CORP /DE/

FORM 10-Q(Quarterly Report)

Filed 07/24/08 for the Period Ending 06/30/08

Address 1700 LINCOLN STREET

DENVER, CO 80203Telephone 303-863-7414

CIK 0001164727Symbol NEM

SIC Code 1040 - Gold And Silver OresIndustry Gold & Silver

Sector Basic MaterialsFiscal Year 12/31

http://www.edgar-online.com© Copyright 2008, EDGAR Online, Inc. All Rights Reserved.

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

For the Quarterly Period Ended June 30, 2008

or

For the transition period from to

Commission File Number: 001-31240

NEWMONT MINING CORPORATION (Exact name of registrant as specified in its chart er)

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. Yes � No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). � Yes No

There were 439,229,312 shares of common stock outstanding on July 18, 2008 (and 14,854,461 exchangeable shares).

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

� � � � TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) O F THE SECURITIES EXCHANGE ACT OF 1934

Delaware 84-1611629 (State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

1700 Lincoln Street Denver, Colorado 80203

(Address of Principal Executive Offices) (Zip Code)

Large accelerated filer Accelerated filer � Non-accelerated filer � Smaller reporting company � (Do not check if a smaller reporting company)

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TABLE OF CONTENTS

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Page

PART I

ITEM 1. FINANCIAL STATEMENTS 1 Condensed Consolidated Statements of Income (Loss) 1 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial Statements 4

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 48

Selected Financial and Operating Results 48 Consolidated Financial Results 48 Results of Consolidated Operations 54 Liquidity and Capital Resources 65 Environmental 68 Recently Adopted Accounting Pronouncements 68 Recently Issued Accounting Pronouncements 70 Safe Harbor Statement 72

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 73

ITEM 4. CONTROLS AND PROCEDURES 75

PART II

ITEM 1. LEGAL PROCEEDINGS 76

ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES 76

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 76

ITEM 6. EXHIBITS 77

SIGNATURES 78

EXHIBIT INDEX 79

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PART I—FINANCIAL INFORMATION

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited, in millions except per share)

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

ITEM 1. FINANCIAL STATEMENTS.

Three Months Ended

June 30, Six Months Ended

June 30, 2008 2007 2008 2007 Revenues

Sales—gold, net $ 1,339 $ 936 $ 2,850 $ 1,947 Sales—copper, net 183 340 615 553

1,522 1,276 3,465 2,500 Costs and expenses

Costs applicable to sales—gold (1) 655 586 1,296 1,216 Costs applicable to sales—copper (1) 104 128 254 251 Loss on settlement of price-capped forward sales contracts (Note 3) — 531 — 531 Amortization 184 186 366 365 Accretion (Note 20) 8 8 16 15 Exploration 59 46 98 85 Advanced projects, research and development 39 13 69 29 General and administrative 37 34 66 67 Write-down of investments 34 — 56 — Other expense, net (Note 4) 118 78 181 128

1,238 1,610 2,402 2,687

Other income (expense)

Other income, net (Note 5) 53 37 90 54 Interest expense, net of capitalized interest (27 ) (25 ) (47 ) (49 )

26 12 43 5

Income (loss) from continuing operations before income tax, minority interest and equity loss of affiliates 310 (322 ) 1,106 (182 )

Income tax benefit (expense) (Note 8) 37 19 (198 ) (25 ) Minority interest in income of consolidated subsidiaries (Note 9) (68 ) (98 ) (260 ) (154 ) Equity loss of affiliates — — (5 ) —

Income (loss) from continuing operations 279 (401 ) 643 (361 ) (Loss) income from discontinued operations (Note 10) (2 ) (1,661 ) 4 (1,633 )

Net income (loss) $ 277 $ (2,062 ) $ 647 $ (1,994 )

Income (loss) per common share (Note 12)

Basic:

Income (loss) from continuing operations $ 0.61 $ (0.89 ) $ 1.42 $ (0.80 ) Income (loss) from discontinued operations — (3.68 ) 0.01 (3.62 )

Net income (loss) $ 0.61 $ (4.57 ) $ 1.43 $ (4.42 )

Diluted:


Net income (loss) $ 0.61 $ (4.57 ) $ 1.42 $ (4.42 )

Basic weighted-average common shares outstanding 454 451 454 451

Diluted weighted-average common shares outstanding 456 451 457 451

Cash dividends declared per common share $ 0.10 $ 0.10 $ 0.20 $ 0.20

(1) Exclusive of Loss on settlement of price-capped forward sales contracts, Amortization and Accretion.

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in millions)


2

At June 30,

2008

At December 31,

2007

ASSETS

Cash and cash equivalents $ 1,036 $ 1,231 Marketable securities and other short-term investments (Note 15) 72 61 Trade receivables 251 177 Accounts receivable 159 168 Inventories (Note 16) 454 463 Stockpiles and ore on leach pads (Note 17) 367 373 Deferred income tax assets 102 112 Other current assets 406 87

Current assets 2,847 2,672 Property, plant and mine development, net 10,032 9,140 Investments (Note 15) 1,933 1,527 Long-term stockpiles and ore on leach pads (Note 17) 901 788 Deferred income tax assets 1,070 1,027 Other long-term assets 271 234 Goodwill 186 186 Assets of operations held for sale (Note 10) 3 24

Total assets $ 17,243 $ 15,598

LIABILITIES

Current portion of long-term debt (Note 18) $ 261 $ 255 Accounts payable 321 339 Employee-related benefits 147 153 Income and mining taxes 152 88 Other current liabilities (Note 19) 735 665

Current liabilities 1,616 1,500 Long-term debt (Note 18) 3,085 2,683 Reclamation and remediation liabilities (Note 20) 664 623 Deferred income tax liabilities 1,277 1,025 Employee-related benefits 212 226 Other long-term liabilities (Note 19) 153 150 Liabilities of operations held for sale (Note 10) 94 394

Total liabilities 7,101 6,601

Commitments and contingencies (Note 24)

Minority interest in subsidiaries 1,547 1,449

STOCKHOLDERS’ EQUITY

Common stock 703 696 Additional paid-in capital 6,651 6,696 Accumulated other comprehensive income 1,395 957 Retained deficit (154 ) (801 )

Total stockholders’ equity 8,595 7,548

Total liabilities and stockholders’ equity $ 17,243 $ 15,598

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in millions)


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Six Months Ended

June 30, 2008 2007

Operating activities:

Net income (loss) $ 647 $ (1,994 ) Adjustments to reconcile net income (loss) to net cash from continuing operations:

Amortization 366 365 (Income) loss from discontinued operations (4 ) 1,633 Accretion of accumulated reclamation obligations (Note 20) 21 19 Deferred income taxes (203 ) (143 ) Write-down of investments 56 — Stock based compensation and other benefits 24 25 Minority interest in income of consolidated subsidiaries 260 154 Gain on asset sales, net (13 ) (4 ) Other operating adjustments and write-downs 86 47

Net change in operating assets and liabilities (Note 21) (264 ) (726 )

Net cash provided from (used in) continuing operations 976 (624 ) Net cash (used in) provided from discontinued operations (Note 10) (112 ) 61

Net cash provided from (used in) operations 864 (563 )

Investing activities:

Additions to property, plant and mine development (897 ) (710 ) Investments in marketable debt and equity securities (17 ) (158 ) Proceeds from sale of marketable debt and equity securities 17 134 Acquisitions, net (Note 14) (325 ) — Cash received on repayment of Batu Hijau carried interest (Note 9) — 161 Other (16 ) 5

Net cash used in investing activities of continuing operations (1,238 ) (568 ) Net cash (used in) provided from investing activities of discontinued operations (Note 10) (6 ) 74

Net cash used in investing activities (1,244 ) (494 )

Financing activities:

Proceeds from debt, net 1,023 1,161 Repayment of debt (627 ) (418 ) Dividends paid to common stockholders (91 ) (90 ) Dividends paid to minority interests (147 ) (115 ) Proceeds from stock issuance 24 14 Change in restricted cash and other 7 2

Net cash provided from financing activities 189 554

Effect of exchange rate changes on cash (4 ) 5

Net change in cash and cash equivalents (195 ) (498 ) Cash and cash equivalents at beginning of period 1,231 1,166

Cash and cash equivalents at end of period $ 1,036 $ 668

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT S (Unaudited) (dollars in millions, except per share, per ounce and per pound amounts)

NOTE 1 BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements (“interim statements”) of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2007, filed February 21, 2008. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (GAAP).

References to “A$” refer to Australian currency, “C$” to Canadian currency, “IDR” to Indonesian currency, “NZ$” to New Zealand currency and “$” to United States currency.

Certain amounts for the three and six months ended June 30, 2007 have been reclassified to conform to the 2008 presentation. The Company reclassified the World Gold Council dues from General and administrative to Other expense, net , reclassified Accretion from Costs applicable to sales to a separate Accretion line item, reclassified regional administrative and community development from Costs applicable to sales to Other expense, net and reclassified marketing costs from Costs applicable to sales to General and administrative . The Consolidated Statements of Income (Loss) and the Consolidated Statements of Cash Flows have also been reclassified for discontinued operations. These changes were reflected for all periods presented.

NOTE 2 ACCOUNTING DEVELOPMENTS

Recently Adopted Pronouncements

Fair Value Accounting

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for the Company’s fiscal year beginning January 1, 2009.

FAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are described below:

4

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT S (Unaudited)—(Continued) (dollars in millions, except per share, per ounce and per pound amounts)

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by FAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company’s cash instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.

The Company’s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

The Company’s marketable debt securities include investments in auction rate securities and asset backed commercial paper. The Company reviews fair value for auction rate securities and asset backed commercial paper on at least a quarterly basis. The auction rate securities are valued based on quoted prices in markets that are not active. The Company determined the fair value based on indicative pricing from the underwriting bank. Such instruments are generally classified within Level 2 of the fair value hierarchy. The asset backed commercial paper falls within Level 3 of the fair value hierarchy because it trades infrequently and has little price transparency. The Company allocated an estimated impairment percentage to the various underlying asset classes within the asset backed commercial paper using unobservable inputs. The impairment value was applied sequentially to the various tranches within the asset backed commercial paper, resulting in an estimated fair value for each investment class. This value was supported by an indicative value obtained from a third party, which was facilitated by the Pan-Canadian Investors Committee for Third-Party Structured Asset Backed Commercial Paper.

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Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair Value at June 30, 2008 Total Level 1 Level 2 Level 3

Assets:

Cash equivalents $ 55 $ 55 $ — $ —Marketable equity securities 1,955 1,955 — —Marketable debt securities 34 — 4 30 Trade receivable from provisional copper and gold concentrate sales 125 125 — —Derivative instruments, net 59 — 59 —

$ 2,228 $ 2,135 $ 63 $ 30

Liabilities:

8 5 / 8 % debentures $ 93 $ — $ 93 $ —

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The Company’s trade receivable from provisional copper and gold concentrate sales is valued using quoted market prices

based on the forward London Metal Exchange and as such is classified within Level 1 of the fair value hierarchy.

The Company’s derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company’s derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy.

The Company has fixed to floating swap contracts to hedge the interest rate risk exposure on $100 of its 8 5 / 8 % uncollateralized debentures due May 2011. The hedged portion of the Company’s 8 5 / 8 % debentures are valued using pricing models which require inputs, including risk-free interest rates and credit spreads. Because the inputs are derived from observable market data, the hedged portion of the 8 5 / 8 % debentures is classified within Level 2 of the fair value hierarchy.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial assets (asset backed commercial paper) for the six months ended June 30, 2008.

The total amount of unrealized losses for the period was included in Accumulated other comprehensive income as a result of changes in foreign exchange rates from December 31, 2007.

In February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of FAS 159 were adopted January 1, 2008. The Company did not elect the Fair Value Option for any of its financial assets or liabilities, and therefore, the adoption of FAS 159 had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards

In June 2007, the EITF reached consensus on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classified nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF 06-11 was to be applied prospectively for tax benefits on dividends declared in the Company’s fiscal year beginning January 1, 2008. The adoption of EITF 06-11 had an insignificant impact on the Company’s consolidated financial position, results of operations or cash flows.

6

Balance at beginning of period $ 31 Unrealized losses (1 )

Balance at end of period $ 30

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Recently Issued Accounting Pronouncements

Hierarchy of Generally Accepted Accounting Principles

In May 2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”) which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. generally accepted accounting principles (GAAP). FAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “ The Meaning of Present Fairly in Conformity with GAAP.” The Company does do not expect the adoption of FAS 162 to have an impact on the Company’s consolidated financial position, results of operations or cash flows.

Accounting for Convertible Debt Instruments

In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”). Convertible debt instruments within the scope of FSP APB 14-1 are not addressed by the existing APB 14. FSP APB 14-1 requires that the liability and equity components of convertible debt instruments within the scope of FSP APB 14-1 be separately accounted for in a manner that reflects the entity’s nonconvertible debt borrowing rate. This requires an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component will be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. FSP APB 14-1 is effective for the Company’s fiscal year beginning January 1, 2009 and will be applied retrospectively to all periods presented. The Company estimates that approximately $350 of debt discount will be recorded and the effective interest rate on the Company’s 2014 and 2017 convertible senior notes (see Note 18 to the Consolidated Financial Statements) will increase by approximately 5 percentage points to 6.0% and 6.25%, respectively, for the non-cash amortization of the debt discount.

Accounting for the Useful Life of Intangible Assets

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”) which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“FAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under FAS 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141, “Business Combinations” (“FAS 141”). FSP 142-3 is effective for the Company’s fiscal year beginning January 1, 2009 and will be applied prospectively to intangible assets acquired after the effective date. The Company does do not expect the adoption of FSP 142-3 to have an impact on the Company’s consolidated financial position, results of operations or cash flows.

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Derivative Instruments

In March 2008, the FASB issued FASB Statement No. 161, “Disclosure about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“FAS 161”) which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for under FAS 133, and how derivative instruments and the related hedged items affect an entity’s financial position, financial performance and cash flows. FAS 161 is effective for the Company’s fiscal year beginning January 1, 2009. The Company is currently evaluating the potential impact of adopting this statement on the Company’s derivative instrument disclosures.

Business Combinations

In December 2007, the FASB issued FASB Statement No. 141(R), “Business Combinations” (“FAS 141(R)”) which amends FAS 141, and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141(R) is effective for the Company’s fiscal year beginning January 1, 2009 and is to be applied prospectively. The Company is currently evaluating the potential impact of adopting this statement on the Company’s consolidated financial position, results of operations or cash flows.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“FAS 160”) which establishes accounting and reporting standards pertaining to (i) ownership interests in subsidiaries held by parties other than the parent, (ii) the amount of net income attributable to the parent and to the noncontrolling interest, (iii) changes in a parent’s ownership interest, and (iv) the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. FAS 160 also requires that the reporting company clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective for the Company’s fiscal year beginning January 1, 2009. The Company is currently evaluating the potential impact of adopting this statement on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 3 PRICE-CAPPED FORWARD SALES CONTRACTS

In 2001, the Company entered into transactions that closed out certain call options. The options were replaced with a series of forward sales contracts requiring physical delivery of the same quantity of gold over slightly extended future periods. Under the terms of the contracts, the Company would realize the lower of the spot price on the delivery date or the capped price, ranging from $381 to $392 per ounce. The forward sales contracts were accounted for as normal sales contracts under FAS 133 “Accounting for Derivative Instruments and Hedging Activities”, as amended. The initial fair value of the forward sales contracts was recorded as deferred revenue, and the fair value of these contracts was not included on the Condensed Consolidated Balance Sheets.

In June 2007, the Company paid $578 to eliminate its entire 1.85 million ounce price-capped forward sales contracts. The Company reported a pre-tax loss of $531 ($460 after-tax) on the early settlement of the contracts, after a $47 reversal of previously recognized deferred revenue.

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NOTE 4 OTHER EXPENSE, NET

NOTE 5 OTHER INCOME, NET

NOTE 6 EMPLOYEE PENSION AND OTHER BENEFIT PLANS

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Three Months Ended


June 30, 2008 2007 2008 2007

Reclamation estimate revisions (Note 20) $ 59 $ 17 $ 61 $ 17 Community development 18 13 32 27 Regional administration 12 10 21 21 Western Australia power plant 8 2 13 7 Peruvian royalty 4 1 11 4 Pension settlement loss (Note 6) — 13 11 13 World Gold Council dues 2 3 5 6 Accretion non-operating (Note 20) 3 2 5 4 Other 12 17 22 29

$ 118 $ 78 $ 181 $ 128

Three Months Ended


June 30, 2008 2007 2008 2007

Canadian Oil Sands Trust income $ 31 $ 11 $ 55 $ 19 Interest income 7 10 17 23 Gain on sale of investments, net 10 — 10 —Income from development projects, net 9 — 9 —Foreign currency exchange (losses) gains, net (7 ) 8 (13 ) 3 Other 3 8 12 9

$ 53 $ 37 $ 90 $ 54

Three Months Ended


June 30, 2008 2007 2008 2007

Pension benefit costs, net

Service cost $ 4 $ 5 $ 8 $ 10 Interest cost 8 6 15 12 Expected return on plan assets (7 ) (6 ) (14 ) (11 ) Amortization of prior service cost — 1 — 1 Amortization of loss 1 14 2 16

$ 6 $ 20 $ 11 $ 28

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For the three months ended June 30, 2008 and 2007, the Company recognized pension settlement losses of $nil and $13, respectively, related to senior management retirements. For the six months ended June 30, 2008 and 2007, the Company recognized pension settlement losses of $11 and $13, respectively, related to senior management retirements. These costs were recorded in Other expense, net (see Note 4).

NOTE 7 STOCK BASED COMPENSATION

The Company recognized stock options and other stock based compensation as follows:

For the three and six months ended June 30, 2008 and 2007, 1,112,463 and 1,066,500 stock options, respectively, were granted at the weighted-average exercise price of $44 and $42, respectively. At June 30, 2008, there was $24 of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of approximately 2 years. The total intrinsic value of options exercised in the second quarter of 2008 and 2007 was $14 and $2, respectively. The total intrinsic value of options exercised in the first half of 2008 and 2007 was $25 and $7, respectively. During the six months ended June 30, 2008 and 2007, 616,914 and 1,112,947 stock options vested, respectively, at the weighted-average fair market value of $48 for both years.

For the three months ended June 30, 2008 and 2007, 6,743 and 33,286 shares of restricted stock, respectively, were granted and issued, at the weighted-average fair market value of $44 and $42, respectively. For the six months ended June 30, 2008 and 2007, 114,663 and 175,114 shares of restricted stock, respectively, were granted and issued, at the weighted-average fair market value of $48 and $45, respectively.

For the three months ended June 30, 2008 and 2007, 3,855 and nil shares of restricted stock units, respectively, were granted at the weighted average fair market value of $49 and $nil, respectively. For the six months ended June 30, 2008 and 2007, 8,927 and 20,212 shares of restricted

10

Three Months Ended


June 30, 2008 2007 2008 2007

Other benefit costs, net

Service cost $ 1 $ 2 $ 1 $ 3 Interest cost 1 2 2 3 Amortization of gain (1 ) — (1 ) —

$ 1 $ 4 $ 2 $ 6

Three Months Ended


June 30, 2008 2007 2008 2007

Stock options $ 5 $ 6 $ 8 $ 10 Restricted stock 1 1 3 3 Restricted stock units — — — 1 Deferred stock awards 3 2 5 4

$ 9 $ 9 $ 16 $ 18

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stock units, respectively, were granted, at the weighted-average fair market value of $49 and $45, respectively, per underlying share of the Company’s common stock.

For the three and six months ended June 30, 2008 and 2007, 393,533 and 365,776 deferred stock awards, respectively, were granted.

NOTE 8 INCOME TAXES

The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and paid the taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved. At June 30, 2008, the Company’s total unrecognized tax benefit was $163 for uncertain tax positions taken or expected to be taken on tax returns. Of this, $100 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate. Also included in the balance at June 30, 2008 is $15 of tax positions that, due to the impact of deferred tax accounting, the disallowance of which would not affect the annual effective tax rate.

On June 25, 2008, the United States Tax Court issued an opinion for Santa Fe Pacific Gold Company and Subsidiaries (“Santa Fe”), by and through its successor in interest, Newmont USA Limited, a member of the Newmont Mining Corporation affiliated group. The Tax Court issued the ruling for the tax years 1994—1997, which were years prior to Newmont’s acquisition of Santa Fe. The Tax Court ruled unfavorably on certain issues relating to the method in which Santa Fe was calculating adjustments related to percentage depletion in its Alternative Minimum Tax calculation. As a direct result of that decision, the Company increased its liability for uncertain income tax positions under FIN 48 by $27. Since the increase in the Company’s FIN 48 liability is attributable to additional alternative minimum tax amounts owed, these amounts can be used in the future by the Company as a credit against its regular US corporate tax liability. Management is currently exploring its legal options in order to decide how to proceed in response to the Tax Court opinion. As a result of the unfavorable Tax Court ruling, the Company increased its amount of accrued interest and penalties by $12 at June 30, 2008.

As a result of (i) statute of limitations that will begin to expire within the next 12 months in various jurisdictions, (ii) a possible payment to the United States taxing authority in connection with the recent Tax Court decision concerning the calculation of the Company’s alternative minimum taxes and (iii) possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its unrecognized income tax benefits will decrease between $45 to $55.

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NOTE 9 MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

Newmont has a 45% ownership interest in the Batu Hijau mine, held through the Nusa Tenggara partnership (“NTP”) with an affiliate of Sumitomo Corporation of Japan (“Sumitomo”). Newmont has a 56.25% interest in NTP and the Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns 80% of P.T. Newmont Nusa Tenggara (“PTNNT”), the Indonesian subsidiary that operates the Batu Hijau mine. Newmont identified NTP as a Variable Interest Entity as a result of certain capital structures and contractual relationships. As a result, Newmont fully consolidates Batu Hijau in its consolidated financial statements. The remaining 20% interest in PTNNT is owned by P.T. Pukuafu Indah (“PTPI”), an unrelated Indonesian company. Because PTPI had been advanced a loan by NTP and was not obligated to absorb the expected losses of PTNNT, PTPI’s interest was considered a carried interest and Newmont reported a 52.875% economic interest in Batu Hijau, which reflected Newmont’s actual economic interest in the mine until such time as the loan was fully repaid (including accrued interest). On May 25, 2007, PTPI fully repaid the loan (including accrued interest) from NTP. As a result of the loan repayment, Newmont’s economic interest in Batu Hijau was reduced from 52.875% to 45% and the Company recorded a net charge of $25 (after-tax) against Minority interest expense in the second quarter of 2007. During the second quarter of 2008, PTNNT advanced PTPI $20, which is included in Other current assets .

Newmont has a 51.35% ownership interest in the Yanacocha mine with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).

In April 2008, the Company purchased 15,960 additional shares of European Gold Refineries SA joint venture (“EGR”) for $11 in cash increasing its ownership interest to 56.67% from 46.72%. Swiss residents and Mitsubishi International Corporation hold the remaining 43.33%. The additional interest in EGR resulted in the consolidation of EGR and the remaining 43.33% is included in Other above as of May 1, 2008. Prior to consolidation, the Company accounted for EGR using the equity method of accounting.

NOTE 10 DISCONTINUED OPERATIONS

Discontinued operations include the Company’s royalty portfolio and Pajingo operation, both sold in December 2007.

For the six months ended June 30, 2008, the Company recognized a $5 gain primarily related to additional royalty portfolio revenue in excess of the 2007 estimate and a $1 gain related to Pajingo asset sales. Additionally, the Company received $5 in cash and $5 in marketable securities related to the Pajingo asset sales.

12

Three Months Ended


June 30, 2008 2007 2008 2007

Yanacocha $ 48 $ 7 $ 139 $ 41 Batu Hijau 19 91 120 112 Other 1 –– 1 1

$ 68 $ 98 $ 260 $ 154

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For the three and six months ended June 30, 2007, the Company recorded a $1,665 non-cash charge to impair the goodwill

associated with the royalty portfolio reclassification to discontinued operations in the second quarter of 2007.

The Company has reclassified the balance sheet amounts and the income statement results from the historical presentation to Assets and Liabilities of operations held for sale on the Condensed Consolidated Balance Sheets and to (Loss) income from discontinued operations in the Condensed Consolidated Statements of Income (Loss) for all periods presented. The Condensed Consolidated Statements of Cash Flows have been reclassified for assets held for sale and discontinued operations for all periods presented.

The following table details selected financial information included in (Loss) income from discontinued operations in the Condensed Consolidated Statements of Income (Loss):

13

Three Months Ended


June 30, 2008 2007 2008 2007

Sales—gold, net $ — $ 26 $ — $ 58

Income from operations:

Royalty portfolio $ — $ 21 $ — $ 63 Pajingo — 2 — 6

— 23 — 69 Loss on impairment of goodwill — (1,665 ) — (1,665 ) Additional (loss) gain from royalty portfolio (2 ) — 5 — (Loss) gain on sale of Pajingo assets (1 ) — 1 —

Pre-tax (loss) income (3 ) (1,642 ) 6 (1,596 ) Income tax benefit (expense) 1 (19 ) (2 ) (37 )

(Loss) income from discontinued operations $ (2 ) $ (1,661 ) $ 4 $ (1,633 )

The major classes of Assets and Liabilities of operations held for sale in the Condensed Consolidated Balance Sheets are as follows:

At June 30,

2008

At December 31,

2007

Assets:

Accounts receivable $ 3 $ 20

Property, plant and mine development — 3

Deferred income tax assets — 1

Total assets of operations held for sale $ 3 $ 24

Liabilities:

Income and mining taxes $ 87 $ 378

Other liabilities 7 16

Total liabilities of operations held for sale $ 94 $ 394

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The following table details selected financial information included in Net cash (used in) provided from discontinued operations

and Net cash (used in) provided from investing activities of discontinued operations :

NOTE 11 DERIVATIVE INSTRUMENTS

For the three months ended June 30, 2008 and 2007, losses of $1 and gains of $2, respectively, were included in Other income, net for the ineffective portion of derivative instruments designated as cash flow hedges. For the six months ended June 30, 2008 and 2007, gains of $2 and $nil, respectively, were included in Other income, net for the ineffective portion of derivative instruments designated as cash flow hedges. The amount to be reclassified from Accumulated other comprehensive income , net of tax to income for derivative instruments during the next 12 months is a gain of approximately $23. The maximum period over which hedged forecasted transactions are expected to occur is 3 years.

Foreign Currency Contracts

Newmont has entered into a series of foreign currency contracts to hedge the variability of the US dollar amount of forecasted foreign currency expenditures caused by changes in currency rates. Newmont entered into $/IDR forward purchase contracts with expiration dates ranging up to one year which reduced Batu Hijau Costs applicable to sales by $nil and $2 for the three months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, the $/IDR forward purchase contracts reduced Batu Hijau Costs applicable to sales by $1 and $3, respectively. During the third quarter of 2007, Newmont began a layered fixed forward contract program to hedge a portion of its A$ denominated operating expenditures and during the first quarter of 2008 began a layered fixed forward contract program to hedge a portion of its NZ$ denominated operating expenditures. The

14

Six Months Ended

June 30, 2008 2007

Net cash (used in) provided from discontinued operations:

Income (loss) from discontinued operations $ 4 $ (1,633 ) Amortization — 24 Deferred income taxes — 8 Gain on sale of investments, net — (40 ) Loss on impairment of goodwill — 1,665 Other operating adjustments and write-downs — 11 (Decrease) increase in net operating liabilities (116 ) 26

$ (112 ) $ 61

Net cash (used in) provided from investing activities of discontinued operations:

Investments in marketable securities $ — $ (2 ) Proceeds from sale of marketable securities — 79 Proceeds from asset sales, net 5 — Royalty portfolio sale expenses (11 ) — Additions to property, plant and mine development — (3 )

$ (6 ) $ 74

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programs include a series of fixed forward contracts with expiration dates of up to three years from the date of issue. For the three months ended June 30, 2008, the A$ and NZ$ operating hedge programs reduced Australia/New Zealand Costs applicable to sales by $4 and $nil, respectively. For the six months ended June 30, 2008, the A$ and NZ$ operating hedge programs reduced Australia/New Zealand Costs applicable to sales by $5 and $nil, respectively. All of the currency contracts were designated as cash flow hedges, and as such, unrealized changes in market value have been recorded in Accumulated other comprehensive income.

During the fourth quarter of 2007, Newmont began a program to hedge a portion of its A$ denominated capital expenditures related to the construction of Boddington. The program consists of a series of fixed forward contracts and bought call option contracts with expiration dates of up to one year from the date of issue. The A$ denominated contracts have been designated as cash flow hedges of future Boddington capital expenditures, and as such, changes in the market value have been recorded in Accumulated other comprehensive income . The realized gains and losses associated with the capital expenditure hedge program will impact Amortization during future periods in which Boddington assets are placed into service and affect earnings.

Newmont had the following foreign currency derivative contracts outstanding at June 30, 2008: Expected Maturity Date Fair Value

2008 2009 2010 2011 Total/

Average

At June 30,

2008 (1)

At December 31,

2007 (2)

IDR Forward Purchase Contracts:

$ (millions) $ 59 $ 15 $ — $ — $ 74 $ 1 $ (1 ) Average rate (IDR/$) 9,484 9,652 — — 9,518

A$ Operating Forward Purchase Contracts:

$ (millions) $ 127 $ 224 $ 168 $ 24 $ 543 $ 38 $ — Average rate ($/A$) 0.88 0.85 0.83 0.83 0.85

NZ$ Operating Forward Purchase Contracts:

$ (millions) $ 14 $ 22 $ 4 $ — $ 40 $ (1 ) $ — Average rate ($/NZ$) 0.77 0.74 0.71 — 0.75

A$ Capital Forward Purchase Contracts:

$ (millions) $ 141 $ 116 $ — $ — $ 257 $ 14 $ (1 ) Average rate ($/A$) 0.87 0.91 — — 0.89

A$ Capital Call Option Contracts:

$ (millions) $ 56 $ — $ — $ — $ 56 $ 1 $ 1 Average rate ($/A$) 0.95 — — — 0.95

(1) At June 30, 2008, the fair value of the IDR operating forward purchase contracts includes $1 in Other current assets, the fair

value of the A$ operating forward purchase contracts includes $20 in Other current assets and $18 in Other long-term assets, the fair value of the NZ$ operating forward purchase contracts includes $(1) in Other current liabilities, and the fair value of the capital hedge program related to Boddington includes $14 in Other current assets for A$ forward purchase contracts and $1 in Other current assets for A$ bought call option contracts.

15

(2) At December 31, 2007, the fair value of the IDR operating forward purchase contracts includes $(1) in Other current liabilities, the fair value of the A$ operating forward purchase contracts

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Diesel Fixed Forward Contracts

During the first quarter of 2008, Newmont implemented a program to hedge a portion of its operating cost exposure related to diesel prices of fuel consumed at its Nevada operations. The program consists of a series of financially settled fixed forward contracts with expiration dates of up to one year from the date of issue. The contracts have been designated as cash flow hedges of future diesel purchases, and as such changes in the market value have been recorded in Accumulated other comprehensive income .

Newmont had the following diesel derivative contracts outstanding at June 30, 2008:

Interest Rate Swap Contracts

At June 30, 2008, Newmont had $100 fixed to floating swap contracts designated as a hedge against a portion of its $223 8 5 / 8 % debentures expiring in 2011. Under the hedge contract terms, the Company receives fixed-rate interest payments at 8.625% and pays floating-rate interest amounts based on periodic London Interbank Offered Rate (“LIBOR”) settings plus a spread, ranging from 2.60% to 3.49%. For the three and six months ended June 30, 2008 and 2007, the hedge contracts decreased Interest expense, net of capitalized interest by $1 and $nil, respectively. The fair value of the interest rate swaps was $4 at June 30, 2008 and December 31, 2007.

Provisional Copper and Gold Sales

The Company’s provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the copper and gold concentrates at the forward London Metal Exchange price at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.

At June 30, 2008 and 2007, Batu Hijau had the following gross revenues before treatment and refining charges subject to final price adjustments:

16

includes $2 in Other current assets, $2 in Other Long-term assets , $(1) in Other current liabilities , and $(3) in Other long-term liabilities, and the fair value of the capital hedge program related to Boddington includes $(1) in Other current liabilities for A$ forward purchase contracts and $1 in Other current assets for A$ bought call option contracts.

Expected Maturity Date Fair Value

2008 2009 Total/

Average

At June 30,

2008

At December 31,

2007

Diesel Forward Purchase Contracts:

$ (millions) $ 11 $ 7 $ 18 $ 2 $ —Average rate ($/gallon) 3.42 3.50 3.45

At June 30, 2008 2007

Gross revenue subject to final price adjustments

Copper $ 251 $ 402 Gold $ 13 $ 28

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The average final price adjustments realized were as follows:

NOTE 12 INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share is computed similarly to basic income (loss) per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Options to purchase 1.1 million and 2.2 million shares of common stock at average exercise prices of $54.87 and $51.43 were outstanding at June 30, 2008 and 2007, respectively, but were not included in the computation of diluted weighted average common shares because the strike price of the options exceeded the price of the common stock and their effect would have been anti-dilutive.

Other outstanding options to purchase 2.8 million and 2.1 million shares of common stock were not included in the computation of diluted weighted average common shares for the three and six months ended June 30, 2007, respectively, because their effect would have been anti-dilutive.

17

Three Months Ended


June 30, 2008 2007 2008 2007

Average final price adjustments

Copper 20 % 26 % 12 % 4 % Gold (3 )% 2 % 3 % 2 %

Three Months Ended


June 30, 2008 2007 2008 2007

Numerator:

Income (loss) from continuing operations $ 279 $ (401 ) $ 643 $ (361 ) Income (loss) from discontinued operations (2 ) (1,661 ) 4 (1,633 )

Net income (loss) $ 277 $ (2,062 ) $ 647 $ (1,994 )

Denominator:

Basic 454 451 454 451 Effect of employee stock-based awards 2 — 3 —

Diluted 456 451 457 451

Income (loss) per common share

Basic:


Net income (loss) $ 0.61 $ (4.57 ) $ 1.43 $ (4.42 )

Diluted:


Net income (loss) $ 0.61 $ (4.57 ) $ 1.42 $ (4.42 )

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NOTE 13 COMPREHENSIVE INCOME (LOSS)

NOTE 14 ACQUISITIONS

On December 27, 2007, pursuant to a tender offer dated October 9, 2007, the Company purchased 155 million common shares of Miramar Mining Corporation (“Miramar”). The 155 million shares represented approximately 70% of the common shares of Miramar which, in addition to the 18.5 million shares previously owned by the Company, brought the Company’s interest in Miramar to approximately 78%. During the first quarter of 2008, the Company completed the acquisition by purchasing the remaining 50 million shares, bringing the Company’s interest in Miramar to 100%. All shares were purchased for C$6.25 per share in cash.

With the completion of the Miramar acquisition, the Company controls the Hope Bay project, a large undeveloped gold project in Nunavut, Canada. The Hope Bay Project is consistent with the Company’s strategic focus on exploration and project development and was acquired with the intention of adding higher grade ore reserves and developing a new core gold mining district in a AAA-rated country.

18

Three Months Ended


June 30, 2008 2007 2008 2007

Net income (loss) $ 277 $ (2,062 ) $ 647 $ (1,994 ) Other comprehensive income (loss), net of tax:

Unrealized gain on marketable equity securities (Note 15) 369 135 404 31

Foreign currency translation adjustments 59 59 (17 ) 65 Pension and other benefit liability adjustments 1 15 8 17 Change in fair value of cash flow hedge instruments:

Net change from periodic revaluations 34 — 51 4 Net amount reclassified to income (5 ) (2 ) (8 ) (1 )

Net unrecognized gain (loss) on derivatives 29 (2 ) 43 3

458 207 438 116

Comprehensive income (loss) $ 735 $ (1,855 ) $ 1,085 $ (1,878 )

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In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets acquired

and liabilities assumed based upon their estimated fair values on the respective closing dates. The Company is continuing to evaluate the assets acquired and liabilities assumed, and there may be adjustments to the estimated purchase date fair values. The Company will finalize the purchase price allocation in 2008. The preliminary purchase price allocation based on the estimated fair values of assets acquired and liabilities assumed is as follows:

The results of operations for Miramar have been included in the Company’s Condensed Consolidated Statement of Income (Loss). For the three and six months ended June 30, 2008, the Hope Bay project incurred a pre-tax loss of $10 and $13, respectively, primarily related to advanced projects, salaries and general and administrative costs. See Note 22 for more information on the Hope Bay segment.

In April 2008, the Company purchased 15,960 additional shares of EGR for $11 in cash bringing its ownership interest to 56.67% from 46.72%. Swiss residents and Mitsubishi International Corporation hold the remaining 43.33%. EGR owns 100% of Valcambi SA (“Valcambi”), a gold refinery business, and 100% of Finorafa SA (“Finorafa”), a gold distribution business. Valcambi is a London Gold Delivery precious metals refiner and manufacturer of semi-finished products for the Swiss luxury watch industry, and Finorafa is a distributor and financier of gold products in the Italian market, which is currently inactive. The additional interest in EGR resulted in the consolidation of EGR as of May 1, 2008 and increased Other current assets and Other current liabilities by $229 and $206, respectively. EGR’s revenue and expenses are included in Other income, net reflecting the service fee and secondary nature of EGR’s business to the Company’s central operations. Prior to consolidation, the Company accounted for EGR using the equity method of accounting.

19

Assets:

Cash and cash equivalents $ 38 Property, plant and mine development, net 1,865 Investments 40 Deferred income tax assets 94 Other assets 36

2,073

Liabilities:

Accrued liabilities 41 Deferred income tax liabilities 679

720

Net assets acquired $ 1,353

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NOTE 15 INVESTMENTS

During the second quarter of 2008, the Company recognized impairments in its investments for other-than-temporary declines in value of $23 in Shore Gold Inc.and $11 in other marketable securities, resulting in total impairments in the first half of 2008 of $32 in Shore Gold Inc., $13 in Gabriel Resources Ltd. and $11 in other marketable securities.

During the second quarter of 2008, the Company sold shares of marketable equity securities recognizing a gain of $10. During the first six month period of 2008, the unrealized value of the

20

At June 30, 2008 At December 31, 2007

Unrealized Unrealized

Cost/Equity

Basis Gain Loss

Fair/Equity

Value

Cost/Equity

Basis Gain Loss

Fair/Equity

Value

Current:

Marketable Equity Securities $ 31 $ 43 $ (2 ) $ 72 $ 19 $ 39 $ — $ 58 Other investments, at cost — — — — 3 — — 3

$ 31 $ 43 $ (2 ) $ 72 $ 22 $ 39 $ — $ 61

Long-term:

Marketable Debt Securities

Auction rate securities $ 7 $ — $ (3 ) $ 4 $ 7 $ — $ (2 ) $ 5 Asset backed securities 30 — — 30 31 — — 31

37 — (3 ) 34 38 — (2 ) 36

Marketable Equity Securities

Canadian Oil Sands Trust 306 1,377 — 1,683 316 907 — 1,223 Gabriel Resources Ltd. 89 49 — 138 94 — — 94 Shore Gold Inc. 45 — — 45 80 — — 80 Other 17 1 (1 ) 17 37 15 (7 ) 45

457 1,427 (1 ) 1,883 527 922 (7 ) 1,442

Other investments, at cost 1 — — 1 — — — —

Investment in Affiliates:

European Gold Refineries — — — — 29 — — 29 AGR Matthey Joint Venture 14 — — 14 17 — — 17 Regis Resources NL 1 — — 1 3 — — 3

15 — — 15 49 — — 49

$ 510 $ 1,427 $ (4 ) $ 1,933 $ 614 $ 922 $ (9 ) $ 1,527

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Company’s investments in marketable equity securities increased by $513, primarily related to appreciation in the value of Canadian Oil Sands Trust.

During the first half of 2008, the Company purchased marketable equity securities of Gabriel Resources for $11 and other marketable securities for $6.

In April 2008, the Company purchased 15,960 shares of EGR for $11 in cash bringing its ownership interest to 56.67% from 46.72%, resulting in the consolidation of EGR. Prior to consolidation, the Company accounted for EGR using the equity method of accounting. The net investment was included in investments in affiliates until the purchase of the additional shares.

NOTE 16 INVENTORIES

NOTE 17 STOCKPILES AND ORE ON LEACH PADS

21

At June 30,

2008

At December 31,

2007

In-process $ 78 $ 64 Concentrate 17 69 Precious metals 19 27 Materials, supplies and other 340 303

$ 454 $ 463

At June 30,

2008

At December 31,

2007

Current:

Stockpiles $ 141 $ 204 Ore on leach pads 226 169

$ 367 $ 373

Long-term:

Stockpiles $ 668 $ 528 Ore on leach pads 233 260

$ 901 $ 788

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NOTE 18 DEBT

During the first half of 2008, Newmont borrowed net proceeds of $475 under its $2,000 senior revolving credit facility. Scheduled minimum debt repayments at June 30, 2008 are $178 for the remainder of 2008, $142 in 2009, $147 in 2010, $323 in 2011, $610 in 2012 and $1,946 thereafter.

NOTE 19 OTHER LIABILITIES

22

At June 30, 2008 At December 31, 2007

Current Non-

Current Current Non-

Current

Sale-leaseback of refractory ore treatment plant $ 24 $ 188 $ 22 $ 212 Corporate revolving credit facility — 475 — —5 7 / 8 % notes, net of discount — 597 — 597 8 5 / 8 % debentures, net of discount — 216 — 218 2014 convertible senior notes — 575 — 575 2017 convertible senior notes — 575 — 575 Newmont Australia 7 5 / 8 % guaranteed notes, net of premium 119 — 119 —PTNNT project financing facility 87 263 87 306 Yanacocha credit facility 14 69 14 76 Yanacocha bonds — 100 — 100 Project financings, capital leases and other 17 27 13 24

$ 261 $ 3,085 $ 255 $ 2,683

At June 30,

2008

At December 31,

2007

Other current liabilities:

Refinery metal accounts payable $ 223 $ —

Accrued operating costs 161 147

Accrued capital expenditures 118 172

Reclamation and remediation (Note 20) 78 71

Interest 38 40

Royalties 31 34

Taxes other than income and mining 28 23

Deferred revenue 7 3

Deferred income tax 5 131

Derivative instruments 1 3

Other 45 41

$ 735 $ 665

Other long-term liabilities:

Income taxes $ 119 $ 113

Derivative instruments — 3

Other 34 34

$ 153 $ 150

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At June 30, 2008 and December 31, 2007, $563 and $569, respectively, were accrued for reclamation obligations relating to mineral properties in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations.” 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, 2008 and December 31, 2007, $179 and $125, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities .

The following is a reconciliation of the liability for asset retirement obligations:

The current portions of Reclamation and remediation liabilities of $78 and $71 at June 30, 2008 and December 31, 2007, respectively, are included in Other current liabilities .

The Company’s reclamation and remediation expenses consisted of:

Reclamation estimate revisions for the first half of 2008 primarily relate to an increase in the reclamation liability at the former Mt. Leyshon and Midnite mine sites. The Mt. Leyshon reclamation revision was for site characterization, stabilization and long-term surface water management due to overflow discharge from heavy rain. The Midnite mine reclamation increased in light of the recent decisions made in the U.S. District Court for the Eastern District of Washington. Reclamation estimate revisions for the first half of 2007 relate to the former Resurrection and Empire mines.

23

NOTE 20 RECLAMATION AND REMEDIATION LIABILITIES (ASSET RETI REMENT OBLIGATIONS)

Six Months Ended

June 30, 2008 2007

Balance at beginning of period $ 694 $ 598 Additions, changes in estimates and other 59 35 Liabilities settled (32 ) (24 ) Accretion expense 21 19

Balance at end of period $ 742 $ 628

Three Months Ended


June 30, 2008 2007 2008 2007

Accretion—operating $ 8 $ 8 $ 16 $ 15 Accretion—non-operating (Note 4) 3 2 5 4 Reclamation estimate revisions—non-operating (Note 4) 59 17 61 17

$ 70 $ 27 $ 82 $ 36

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NOTE 21 NET CHANGE IN OPERATING ASSETS AND LIABI LITIES

Net cash provided from (used in) operating activities attributable to the net change in operating assets and liabilities is composed of the following:

The decrease in accounts payable and other accrued liabilities in 2007 includes $276 from the settlement of pre-acquisition Australian income taxes of Normandy and $174 from the final settlement of copper collar contracts.

24

Six Months Ended

June 30, 2008 2007

Increase in operating assets:

Trade and accounts receivable $ (31 ) $ (16 ) Inventories, stockpiles and ore on leach pads (102 ) (10 ) Other assets (29 ) (39 )

Decrease in operating liabilities:

Accounts payable and other accrued liabilities (70 ) (637 ) Reclamation liabilities (32 ) (24 )

$ (264 ) $ (726 )

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NOTE 22 SEGMENT INFORMATION

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

Three Months Ended June 30, 2008

25

Nevada Yanacocha

Australia/ New

Zealand Batu Hijau Africa

Other Operations

Sales, net:

Gold $ 495 $ 388 $ 272 $ 35 $ 107 $ 41 Copper $ — $ — $ — $ 183 $ — $ —

Cost applicable to sales:

Gold $ 238 $ 161 $ 170 $ 19 $ 46 $ 21 Copper $ — $ — $ — $ 104 $ — $ —

Amortization:

Gold $ 60 $ 44 $ 31 $ 3 $ 18 $ 5 Copper $ — $ — $ — $ 20 $ — $ —Other $ — $ — $ 1 $ — $ — $ —

Accretion $ 1 $ 3 $ 2 $ 2 $ — $ —Exploration $ — $ — $ — $ — $ — $ —Advanced projects, research and

development $ 2 $ 1 $ 2 $ — $ 3 $ 2 Write-down of investments $ — $ — $ — $ — $ — $ —Other expense $ 8 $ 20 $ 13 $ 9 $ 4 $ 1 Other income, net $ 3 $ 3 $ 12 $ (1 ) $ 9 $ —Interest expense, net of capitalized

interest $ — $ 3 $ — $ 6 $ — $ 1 Pre-tax income (loss) before minority

interest and equity loss of affiliates $ 189 $ 157 $ 65 $ 55 $ 45 $ 13 Equity loss of affiliates $ — $ — $ — $ — $ — $ —Capital expenditures $ 80 $ 38 $ 236 $ 32 $ 35 $ 3

Total

Operations Hope Bay Exploration

Corporate

and Other Consolidated

Sales, net:

Gold $ 1,338 $ — $ — $ 1 $ 1,339 Copper $ 183 $ — $ — $ — $ 183


Gold $ 655 $ — $ — $ — $ 655 Copper $ 104 $ — $ — $ — $ 104

Amortization:

Gold $ 161 $ — $ — $ — $ 161 Copper $ 20 $ — $ — $ — $ 20 Other $ 1 $ — $ — $ 2 $ 3

Accretion $ 8 $ — $ — $ — $ 8 Exploration $ — $ — $ 59 $ — $ 59 Advanced projects, research and

development $ 10 $ 9 $ 1 $ 19 $ 39 Write-down of investments $ — $ — $ — $ 34 $ 34 Other expense $ 55 $ — $ — $ 63 $ 118 Other income, net $ 26 $ — $ 1 $ 26 $ 53 Interest expense, net of capitalized

interest $ 10 $ — $ — $ 17 $ 27 Pre-tax income (loss) before minority

interest and equity loss of affiliates $ 524 $ (10 ) $ (59 ) $ (145 ) $ 310 Equity loss of affiliates $ — $ — $ — $ — $ —

Capital expenditures $ 424 $ 21 $ — $ 3 $ 448

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26


Nevada Yanacocha

Australia/

New Zealand

Batu Hijau Africa

Other Operations

Sales, net:

Gold $ 349 $ 208 $ 201 $ 59 $ 82 $ 36 Copper $ — $ — $ — $ 340 $ — $ —


Gold $ 254 $ 122 $ 131 $ 19 $ 45 $ 15 Copper $ — $ — $ — $ 128 $ — $ —

Loss on settlement of price-capped forward sales contracts $ — $ — $ — $ — $ — $ —

Amortization:


Accretion $ 2 $ 2 $ 2 $ 2 $ — $ —Exploration $ — $ — $ — $ — $ — $ —Advanced projects, research and development $ 2 $ 2 $ 1 $ — $ 3 $ —Other expense, net $ 10 $ 11 $ 10 $ 7 $ 2 $ 4 Other income, net $ 2 $ 5 $ 1 $ 1 $ — $ 1 Interest expense, net of capitalized interest $ — $ 1 $ 2 $ 10 $ — $ —Pre-tax income (loss) before minority interest

and equity income (loss) of affiliates $ 17 $ 35 $ 29 $ 205 $ 18 $ 13 Equity income (loss) of affiliates $ — $ — $ (1 ) $ — $ — $ —Capital expenditures $ 119 $ 58 $ 128 $ 17 $ 19 $ 5

Total

Operations Exploration

Corporate


Sales, net:

Gold $ 935 $ — $ 1 $ 936

Copper $ 340 $ — $ — $ 340


Gold $ 586 $ — $ — $ 586

Copper $ 128 $ — $ — $ 128

Loss on settlement of price-capped forward sales contracts $ — $ — $ 531 $ 531

Amortization:

Gold $ 154 $ — $ — $ 154

Copper $ 26 $ — $ — $ 26

Other $ 1 $ — $ 5 $ 6

Accretion $ 8 $ — $ — $ 8

Exploration $ — $ 46 $ — $ 46

Advanced projects, research and development $ 8 $ — $ 5 $ 13

Other expense, net $ 44 $ — $ 34 $ 78

Other income, net $ 10 $ 1 $ 26 $ 37

Interest expense, net of capitalized interest $ 13 $ — $ 12 $ 25

Pre-tax income (loss) before minority interest and equity income of affiliates $ 317 $ (45 ) $ (594 ) $ (322 )

Equity income (loss) of affiliates $ (1 ) $ — $ 1 $ —

Capital expenditures $ 346 $ — $ 4 $ 350

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27

Six Months Ended June 30, 2008

Nevada Yanacocha

Australia/ New

Zealand Batu Hijau Africa

Other Operations

Sales, net:

Gold $ 986 $ 887 $ 542 $ 147 $ 204 $ 83 Copper $ — $ — $ — $ 615 $ — $ —


Gold $ 453 $ 329 $ 326 $ 56 $ 95 $ 37 Copper $ — $ — $ — $ 254 $ — $ —

Amortization:


Accretion $ 3 $ 5 $ 3 $ 4 $ — $ 1 Exploration $ — $ — $ — $ — $ — $ —Advanced projects, research and

development $ 3 $ 3 $ 4 $ — $ 5 $ 3 Write-down of investments $ — $ — $ — $ — $ — $ —Other expense $ 15 $ 41 $ 23 $ 16 $ 6 $ 1 Other income, net $ 4 $ 7 $ 22 $ 2 $ 9 $ —Interest expense, net of capitalized interest $ — $ 3 $ — $ 13 $ — $ 1 Pre-tax income (loss) before minority

interest and equity loss of affiliates $ 406 $ 424 $ 149 $ 359 $ 75 $ 33 Equity loss of affiliates $ — $ — $ (5 ) $ — $ — $ —Capital expenditures $ 172 $ 77 $ 468 $ 61 $ 68 $ 16

Total

Operations Hope Bay Exploration

Corporate


Sales, net:

Gold $ 2,849 $ — $ — $ 1 $ 2,850 Copper $ 615 $ — $ — $ — $ 615


Gold $ 1,296 $ — $ — $ — $ 1,296 Copper $ 254 $ — $ — $ — $ 254

Amortization:

Gold $ 305 $ — $ — $ — $ 305 Copper $ 51 $ — $ — $ — $ 51 Other $ 2 $ — $ — $ 8 $ 10

Accretion $ 16 $ — $ — $ — $ 16 Exploration $ — $ — $ 98 $ — $ 98 Advanced projects, research and

development $ 18 $ 13 $ 1 $ 37 $ 69 Write-down of investments $ — $ — $ — $ 56 $ 56 Other expense $ 102 $ — $ — $ 79 $ 181 Other income, net $ 44 $ — $ 1 $ 45 $ 90 Interest expense, net of capitalized interest $ 17 $ — $ — $ 30 $ 47 Pre-tax income (loss) before minority

interest and equity loss of affiliates $ 1,446 $ (13 ) $ (98 ) $ (229 ) $ 1,106 Equity loss of affiliates $ (5 ) $ — $ — $ — $ (5 ) Capital expenditures $ 862 $ 30 $ — $ 5 $ 897

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28


Nevada Yanacocha

Australia/

New Zealand Batu Hijau Africa

Other Operations

Sales, net:

Gold $ 710 $ 505 $ 385 $ 115 $ 163 $ 68 Copper $ — $ — $ — $ 553 $ — $ —


Gold $ 525 $ 250 $ 279 $ 46 $ 86 $ 30 Copper $ — $ — $ — $ 251 $ — $ —

Loss on settlement of price-capped forward sales contracts $ — $ — $ — $ — $ — $ —

Amortization:

Gold $ 121 $ 82 $ 53 $ 11 $ 23 $ 8 Copper $ — $ — $ — $ 54 $ — $ — Other $ — $ — $ 2 $ — $ — $ —

Accretion $ 3 $ 4 $ 4 $ 3 $ — $ 1 Exploration $ — $ — $ — $ — $ — $ — Advanced projects, research and development $ 2 $ 4 $ 2 $ — $ 9 $ — Other expense, net $ 18 $ 28 $ 22 $ 11 $ 5 $ (9 ) Other income, net $ 3 $ 11 $ 8 $ 5 $ 1 $ 1 Interest expense, net of capitalized interest $ — $ 2 $ 2 $ 20 $ 1 $ — Pre-tax income (loss) before minority interest and

equity income (loss) of affiliates $ 44 $ 147 $ 31 $ 277 $ 40 $ 37 Equity income (loss) of affiliates $ — $ — $ (2 ) $ — $ — $ — Capital expenditures $ 277 $ 114 $ 224 $ 24 $ 56 $ 8

Total

Operations Exploration

Corporate


Sales, net:

Gold $ 1,946 $ — $ 1 $ 1,947

Copper $ 553 $ — $ — $ 553


Gold $ 1,216 $ — $ — $ 1,216

Copper $ 251 $ — $ — $ 251

Loss on settlement of price-capped forward sales contracts $ — $ — $ 531 $ 531

Amortization:

Gold $ 298 $ — $ — $ 298

Copper $ 54 $ — $ — $ 54

Other $ 2 $ — $ 11 $ 13

Accretion $ 15 $ — $ — $ 15

Exploration $ — $ 85 $ — $ 85

Advanced projects, research and development $ 17 $ — $ 12 $ 29

Other expense, net $ 75 $ — $ 53 $ 128

Other income, net $ 29 $ 1 $ 24 $ 54

Interest expense, net of capitalized interest $ 25 $ — $ 24 $ 49

Pre-tax income (loss) before minority interest and equity income (loss) of affiliates $ 576 $ (85 ) $ (673 ) $ (182 )

Equity income (loss) of affiliates $ (2 ) $ — $ 2 $ —

Capital expenditures $ 703 $ — $ 7 $ 710

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29

At June 30,

2008

At December 31,

2007

Goodwill:

Australia/New Zealand $ 186 $ 186

Total assets:

Nevada $ 3,220 $ 3,104 Yanacocha 2,132 1,908 Australia/New Zealand 2,383 1,876 Batu Hijau 2,337 2,471 Africa 1,146 1,082 Other operations 189 157 Hope Bay 1,877 1,566 Exploration 27 24 Corporate and other 3,929 3,386

Total assets from continuing operations 17,240 15,574 Assets held for sale 3 24

$ 17,243 $ 15,598

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NOTE 23 CONDENSED CONSOLIDATING FINANCIAL STATEM ENTS

Newmont USA, a 100% owned subsidiary of Newmont Mining Corporation, has fully and unconditionally guaranteed certain publicly traded notes. The following condensed consolidating financial statements are provided for Newmont USA, as guarantor, and for Newmont Mining Corporation, as issuer, as an alternative to providing separate financial statements for the guarantor. The accounts of Newmont Mining Corporation are presented using the equity method of accounting for investments in subsidiaries.

30


Condensed Consolidating Statement of Income

Newmont Mining

Corporation

Newmont

USA Other

Subsidiaries Eliminations

Newmont Mining

Corporation Consolidated

Revenues

Sales—gold, net $ — $ 960 $ 379 $ — $ 1,339 Sales—copper, net — 183 — — 183

— 1,143 379 — 1,522

Costs and expenses

Costs applicable to sales—gold (1) — 439 222 (6 ) 655 Costs applicable to sales—copper (1) — 104 — — 104 Amortization — 136 49 (1 ) 184 Accretion — 6 2 — 8 Exploration — 34 25 — 59 Advanced projects, research and

development — 13 26 — 39 General and administrative — 30 1 6 37 Write-down of investments — — 34 — 34 Other expense, net — 63 54 1 118

— 825 413 — 1,238


Other income, net 4 5 44 — 53 Interest income—intercompany 76 3 — (79 ) — Interest expense—intercompany (2 ) — (77 ) 79 — Interest expense, net of capitalized

interest (10 ) (15 ) (2 ) — (27 )

68 (7 ) (35 ) — 26

Income (loss) from continuing operations before taxes, minority interest and equity income (loss) of affiliates 68 311 (69 ) — 310

Income tax (expense) benefit (48 ) 67 18 — 37 Minority interest in income of subsidiaries — (75 ) 7 — (68 ) Equity income (loss) of affiliates 259 — 33 (292 ) —

Income (loss) from continuing operations 279 303 (11 ) (292 ) 279 Income (loss) from discontinued operations (2 ) — (1 ) 1 (2 )

Net income (loss) $ 277 $ 303 $ (12 ) $ (291 ) $ 277

(1) Exclusive of Amortization and Accretion.

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31



Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining


Revenues

Sales—gold, net $ — $ 647 $ 289 $ — $ 936 Sales—copper, net — 340 — — 340

— 987 289 — 1,276

Costs and expenses

Costs applicable to sales—gold (1) — 410 179 (3 ) 586 Costs applicable to sales—copper (1) — 128 — — 128 Loss on settlement of price-capped

forward sales contracts — 531 — — 531 Amortization — 146 40 — 186 Accretion — 5 3 — 8 Exploration — 32 14 — 46 Advanced projects, research and

development — 8 5 — 13 General and administrative — 32 — 2 34 Other expense, net — 59 18 1 78

— 1,351 259 — 1,610


Other income, net 15 30 (8 ) — 37 Interest income—intercompany 35 26 (1 ) (60 ) — Interest expense—intercompany (1 ) — (59 ) 60 — Interest expense, net of capitalized

interest (9 ) (12 ) (4 ) — (25 )

40 44 (72 ) — 12

Income (loss) from continuing operations before taxes, minority interest and equity income of affiliates 40 (320 ) (42 ) — (322 )

Income tax (expense) benefit (15 ) (12 ) 46 — 19 Minority interest in income of subsidiaries — (99 ) (4 ) 5 (98 ) Equity (loss) income of affiliates (426 ) — (47 ) 473 —

(Loss) income from continuing operations (401 ) (431 ) (47 ) 478 (401 ) (Loss) income from discontinued operations (1,661 ) 21 (1,672 ) 1,651 (1,661 )

Net (loss) income $ (2,062 ) $ (410 ) $ (1,719 ) $ 2,129 $ (2,062 )


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32



Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining


Revenues

Sales—gold, net $ — $ 2,104 $ 746 $ — $ 2,850 Sales—copper, net — 615 — — 615

— 2,719 746 — 3,465

Costs and expenses

Costs applicable to sales—gold (1) — 876 430 (10 ) 1,296 Costs applicable to sales—copper (1) — 254 — — 254 Amortization — 278 89 (1 ) 366 Accretion — 12 4 — 16 Exploration — 60 38 — 98 Advanced projects, research and

development — 24 45 — 69 General and administrative — 53 2 11 66 Write-down of investments — — 56 — 56 Other expense, net — 115 66 — 181

— 1,672 730 — 2,402


Other income, net (9 ) 53 46 — 90 Interest income—intercompany 145 20 — (165 ) — Interest expense—intercompany (4 ) — (161 ) 165 — Interest expense, net of capitalized

interest (20 ) (22 ) (5 ) — (47 )

112 51 (120 ) — 43

Income (loss) from continuing operations before taxes, minority interest and equity income of affiliates 112 1,098 (104 ) — 1,106

Income tax (expense) benefit (69 ) (163 ) 34 — (198 ) Minority interest in income of subsidiaries — (271 ) 8 3 (260 ) Equity (loss) income of affiliates 600 1 72 (678 ) (5 )

Income (loss) from continuing operations 643 665 10 (675 ) 643 Income (loss) from discontinued operations 4 1 3 (4 ) 4

Net income (loss) $ 647 $ 666 $ 13 $ (679 ) $ 647

(1) Exclusive of Amortization and Accretion.

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33



Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining


Revenues

Sales—gold, net $ — $ 1,390 $ 557 $ — $ 1,947 Sales—copper, net — 553 — — 553

— 1,943 557 — 2,500

Costs and expenses

Costs applicable to sales—gold (1) — 850 373 (7 ) 1,216 Costs applicable to sales—copper (1) — 251 — — 251 Loss on settlement of price-capped

forward sales contracts — 531 — — 531 Amortization — 287 78 — 365 Accretion — 10 5 — 15 Exploration — 58 27 — 85 Advanced projects, research and

development — 16 13 — 29 General and administrative — 60 — 7 67 Other expense, net — 108 20 — 128

— 2,171 516 — 2,687


Other income, net 17 48 (11 ) — 54 Interest income—intercompany 66 51 — (117 ) — Interest expense—intercompany (3 ) — (114 ) 117 — Interest expense, net of capitalized

interest (18 ) (24 ) (7 ) — (49 )

62 75 (132 ) — 5

Income (loss) from continuing operations before taxes, minority interest and equity income of affiliates 62 (153 ) (91 ) — (182 )

Income tax (expense) benefit (21 ) (50 ) 46 — (25 ) Minority interest in income of subsidiaries — (154 ) (8 ) 8 (154 ) Equity (loss) income of affiliates (402 ) — (30 ) 432 —

(Loss) income from continuing operations (361 ) (357 ) (83 ) 440 (361 ) (Loss) income from discontinued operations (1,633 ) 17 (1,641 ) 1,624 (1,633 )

Net (loss) income $ (1,994 ) $ (340 ) $ (1,724 ) $ 2,064 $ (1,994 )


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34

At June 30, 2008

Condensed Consolidating Balance Sheets

Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining


Assets

Cash and cash equivalents $ — $ 763 $ 273 $ — $ 1,036 Marketable securities and other short-term

investments 1 3 68 — 72 Trade receivables — 239 12 — 251 Accounts receivable 1,427 587 377 (2,232 ) 159 Inventories — 351 103 — 454 Stockpiles and ore on leach pads — 320 47 — 367 Deferred income tax assets — 81 21 — 102 Other current assets 1 100 305 — 406

Current assets 1,429 2,444 1,206 (2,232 ) 2,847 Property, plant and mine development, net — 5,226 4,825 (19 ) 10,032 Investments — 5 1,928 — 1,933 Investments in subsidiaries 5,476 25 862 (6,363 ) — Long-term stockpiles and ore on leach pads — 832 69 — 901 Deferred income tax assets 29 862 179 — 1,070 Other long-term assets 4,154 352 158 (4,393 ) 271 Goodwill — — 186 — 186 Assets of operations held for sale — — 3 — 3

Total assets $ 11,088 $ 9,746 $ 9,416 $ (13,007 ) $ 17,243

Liabilities

Current portion of long-term debt $ — $ 142 $ 119 $ — $ 261 Accounts payable 228 449 1,873 (2,229 ) 321 Employee related benefits — 114 33 — 147 Income and mining taxes 39 95 18 — 152 Other current liabilities 15 283 439 (2 ) 735

Current liabilities 282 1,083 2,482 (2,231 ) 1,616 Long-term debt 2,222 862 1 — 3,085 Reclamation and remediation liabilities — 471 193 — 664 Deferred income tax liabilities — 356 921 — 1,277 Employee-related benefits 2 173 37 — 212 Other long-term liabilities 267 118 4,180 (4,412 ) 153 Liabilities of operations held for sale 5 — 89 — 94

Total liabilities 2,778 3,063 7,903 (6,643 ) 7,101

Minority interest in subsidiaries — 1,586 266 (305 ) 1,547

Stockholders’ equity

Preferred stock — — 61 (61 ) — Common stock 703 — — — 703 Additional paid-in capital 6,366 2,646 2,430 (4,791 ) 6,651 Accumulated other comprehensive income (loss) 1,395 (12 ) 1,028 (1,016 ) 1,395 Retained (deficit) earnings (154 ) 2,463 (2,272 ) (191 ) (154 )

Total stockholders’ equity 8,310 5,097 1,247 (6,059 ) 8,595

Total liabilities and stockholders’ equity $ 11,088 $ 9,746 $ 9,416 $ (13,007 ) $ 17,243

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35

At December 31, 2007

Condensed Consolidating Balance Sheets

Newmont Mining

Corporation Newmont

USA Other


Newmont Mining


Assets

Cash and cash equivalents $ — $ 790 $ 441 $ — $ 1,231 Marketable securities and other short-term

investments — 3 58 — 61 Trade receivables — 174 3 — 177 Accounts receivable 1,407 1,730 405 (3,374 ) 168 Inventories — 378 85 — 463 Stockpiles and ore on leach pads — 330 43 — 373 Deferred income tax assets — 89 23 — 112 Other current assets 1 51 35 — 87

Current assets 1,408 3,545 1,093 (3,374 ) 2,672 Property, plant and mine development, net — 5,189 3,971 (20 ) 9,140 Investments — 7 1,520 — 1,527 Investments in subsidiaries 4,299 22 772 (5,093 ) — Long-term stockpiles and ore on leach pads — 718 70 — 788 Deferred income tax assets 119 680 228 — 1,027 Other long-term assets 4,037 329 131 (4,263 ) 234 Goodwill — — 186 — 186 Assets of operations held for sale — 2 22 — 24

Total assets $ 9,863 $ 10,492 $ 7,993 $ (12,750 ) $ 15,598

Liabilities

Current portion of long-term debt $ — $ 135 $ 120 $ — $ 255 Accounts payable 456 1,795 1,459 (3,371 ) 339 Employee-related benefits — 111 42 — 153 Income and mining taxes 66 (49 ) 71 — 88 Other current liabilities 20 302 349 (6 ) 665

Current liabilities 542 2,294 2,041 (3,377 ) 1,500 Long-term debt 1,747 935 1 — 2,683 Reclamation and remediation liabilities — 456 167 — 623 Deferred income tax liabilities 66 357 602 — 1,025 Employee-related benefits 2 193 31 — 226 Other long-term liabilities 263 113 4,058 (4,284 ) 150 Liabilities of operations held for sale 41 262 91 — 394

Total liabilities 2,661 4,610 6,991 (7,661 ) 6,601

Minority interest in subsidiaries — 1,467 273 (291 ) 1,449

Stockholders’ equity

Preferred stock — — 61 (61 ) — Common stock 696 — — — 696 Additional paid-in capital 6,350 2,647 2,434 (4,735 ) 6,696 Accumulated other comprehensive income (loss) 957 (28 ) 517 (489 ) 957 Retained (deficit) earnings (801 ) 1,796 (2,283 ) 487 (801 )

Total stockholders’ equity 7,202 4,415 729 (4,798 ) 7,548

Total liabilities and stockholders’ equity $ 9,863 $ 10,492 $ 7,993 $ (12,750 ) $ 15,598

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36


Condensed Consolidating Statement of Cash Flows

Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining



Net income $ 647 $ 666 $ 13 $ (679 ) $ 647 Adjustments to reconcile net income to

net cash provided from operations 36 367 (489 ) 679 593 Net change in operating assets and

liabilities 41 (294 ) (11 ) — (264 )

Net cash provided from (used in) continuing operations 724 739 (487 ) — 976

Net cash (used in) provided from discontinued operations — (130 ) 18 — (112 )

Net cash provided from (used in) operations 724 609 (469 ) — 864


Additions to property, plant and mine development — (330 ) (567 ) — (897 )

Investments in marketable debt and equity securities — — (17 ) — (17 )

Proceeds from sale of marketable debt and equity securities — — 17 — 17

Acquisitions, net — (7 ) (318 ) — (325 ) Other — (15 ) (1 ) — (16 )

Net cash used in investing activities of continued operations — (352 ) (886 ) — (1,238 )

Net cash (used in) provided from investing activities of discontinued operations — (10 ) 4 — (6 )

Net cash used in investing activities — (362 ) (882 ) — (1,244 )


Net borrowings (repayments) (657 ) (129 ) 1,182 — 396 Dividends paid to common stockholders (91 ) (1 ) 1 — (91 ) Dividends paid to minority interests — (147 ) — — (147 ) Proceeds from stock issuance 24 — — — 24 Change in restricted cash and other — 3 4 — 7

Net cash (used in) provided from financing activities (724 ) (274 ) 1,187 — 189

Effect of exchange rate changes on cash — — (4 ) — (4 )

Net change in cash and cash equivalents — (27 ) (168 ) — (195 ) Cash and cash equivalents at beginning of

period — 790 441 — 1,231

Cash and cash equivalents at end of period $ — $ 763 $ 273 $ — $ 1,036

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37


Condensed Consolidating Statement of Cash Flows

Newmont Mining

Corporation

Newmont

USA Other


Newmont Mining



Net (loss) income $ (1,994 ) $ (340 ) $ (1,724 ) $ 2,064 $ (1,994 ) Adjustments to reconcile net (loss) income to

net cash provided by operating activities 1,605 455 2,100 (2,064 ) 2,096 Net change in operating assets and liabilities 35 (434 ) (327 ) — (726 )

Net cash (used in) provided from continuing operations (354 ) (319 ) 49 — (624 )

Net cash provided from discontinued operations — 1 60 — 61

Net cash (used in) provided from operations (354 ) (318 ) 109 — (563 )


Additions to property, plant and mine development — (431 ) (279 ) — (710 )

Investments in marketable debt and equity securities — (124 ) (34 ) — (158 )

Proceeds from sale of marketable debt and equity securities — 134 — — 134

Batu settlement — 161 — — 161 Other — 5 — — 5

Net cash used in investing activities of continued operations — (255 ) (313 ) — (568 )

Net cash provided from investing activities of discontinued operations 1 7 66 — 74

Net cash provided from (used in) investing activities 1 (248 ) (247 ) — (494 )


Net borrowings (repayments) 429 165 149 — 743 Dividends paid to common stockholders (90 ) — — — (90 ) Dividends paid to minority interests — (115 ) — — (115 ) Proceeds from stock issuance 14 — — — 14 Change in restricted cash and other — (3 ) 5 — 2

Net cash provided from financing activities of continuing operations 353 47 154 — 554

Effect of exchange rate changes on cash — 1 4 — 5

Net change in cash and cash equivalents — (518 ) 20 — (498 ) Cash and cash equivalents at beginning of period — 1,040 126 — 1,166

Cash and cash equivalents at end of period $ — $ 522 $ 146 $ — $ 668

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NOTE 24 COMMITMENTS AND CONTINGENCIES

General

The Company follows FAS No. 5, “Accounting for Contingencies,” in determining its accruals and disclosures with respect to loss contingencies other than tax contingencies provided for in accordance with FIN 48 (see Note 8). 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 (greater than a 75% probability) that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.

Operating Segments

The Company’s operating segments are identified in Note 22. Except as noted in this paragraph, all of the Company’s commitments and contingencies specifically described in this Note 24 relate to the Corporate and Other reportable segment. The Nevada Operations matters under Newmont USA Limited relate to the Nevada reportable segment. The PT Newmont Minahasa Raya matters relate to the Other Operations reportable segment. The Yanacocha matters relate to the Yanacocha reportable segment. The Newmont Yandal Operations Pty Limited matter relates to the Australia/New Zealand reportable segment. The PTNNT matters relate to the Batu Hijau reportable segment.

Environmental Matters

The Company’s mining and exploration activities are subject to various 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 applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.

Estimated future reclamation costs are based principally on legal and regulatory requirements. At June 30, 2008 and December 31, 2007, $563 and $569, respectively, were accrued for reclamation costs relating to mineral properties in accordance with FAS No. 143, “Accounting for Asset Retirement Obligations.” The current portions of $53 and $57 at June 30, 2008 and December 31, 2007, respectively, are included in Other current liabilities .

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, $179 and $125 were accrued for such obligations at June 30, 2008 and December 31, 2007. These amounts are included in Other current liabilities and Reclamation and remediation liabilities . Depending upon the ultimate resolution of these matters, the Company believes that it is reasonably possible that

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the liability for these matters could be as much as 112% greater or 3% lower than the amount accrued at June 30, 2008. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are recorded in Other expense, net in the period estimates are revised.

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

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 $12 on the Remedial Investigation/Feasibility Study (“RI/FS”) under CERCLA. In October 2005, the EPA issued the RI/FS on this property in which it indicated a preferred remedy estimated to cost approximately $150. Newmont and Dawn filed comments on the RI/FS with the EPA in January 2006. On October 3, 2006, the EPA issued a final Record of Decision in which it formally selected the preferred remedy identified in the RI/FS.

On January 28, 2005, the EPA filed a lawsuit against Dawn and Newmont under CERCLA in the U.S. District Court for the Eastern District of Washington. 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. On July 14, 2008, after a bench trial, the Court held Newmont liable under CERCLA as an “operator” of the Midnite Mine. The Court previously ruled on summary judgment that both the U.S. Government and Dawn were liable under CERCLA. The Court has not yet ruled upon the allocation of liability among each of the U.S. Government, Dawn, and Newmont. In addition, the issue of whether the EPA’s preferred remedy is consistent with the National Contingency Plan has not yet come before the Court.

Newmont intends to continue to vigorously defend this matter and cannot reasonably predict the outcome of this lawsuit or the likelihood of any other action against Dawn or Newmont arising from this matter.

Dawn Mill Site. 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 and later received state approval for a revised closure plan that expedites the reclamation process at the site. The currently approved plan for the site is guaranteed by Newmont.

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Idarado Mining Company (“Idarado”)—80.1% Newmont Ow ned

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 obtained a $6 reclamation bond to secure their potential obligations under the consent decree. In 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 complete.

Newmont Capital Limited—100% Newmont Owned

In February 1999, the EPA placed the Lava Cap mine site in Nevada County, California on the National Priorities List under CERCLA. The EPA then initiated a RI/FS under CERCLA to determine environmental conditions and remediation options at the site.

Newmont Capital, formerly known as Franco-Nevada Mining Corporation, Inc., 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 and the EPA entered into a consent decree to settle all aspects of this matter except future potential Natural Resource Damage claims. The parties have entered into an agreement tolling the statute of limitations until December 31, 2008 to facilitate the finalization of the agreement. The consent decree will be subject to approval by the U.S. District Court for the District of Northern California.

Newmont USA Limited—100% Newmont Owned

Pinal Creek. Newmont is a defendant in a lawsuit brought on November 5, 1991 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. While Newmont has denied liability and is vigorously defending these claims, the Company cannot reasonably predict the final outcome of this lawsuit.

Grass Valley . On February 3, 2004, the City of Grass Valley, California brought suit against Newmont under CERCLA in the U.S. District Court for the Northern District of California. This matter

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involves an abandoned mine adit on property previously owned by a predecessor of Newmont and currently owned by the City of Grass Valley. The complaint alleges that the adit is discharging metals-bearing water into a stream on the property, in concentrations in excess of current EPA drinking water standards. Newmont cannot reasonably predict the likely outcome of this matter.

Gray Eagle Mine Site . By letter dated September 3, 2002, the EPA notified Newmont that the EPA had expended $3 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.

Ross Adams Mine Site. By letter dated June 5, 2007, the U.S. Forest Service notified Newmont that it had expended approximately $0.3 in response costs to address environmental conditions at the Adams Ross mine in Prince of Wales, Alaska, and requested Newmont USA Limited pay those costs and perform an Engineering Evaluation/Cost Analysis (“EE/CA”) to assess what future response activities might need to be completed at the site. Newmont 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 has agreed to perform the EE/CA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.

PT Newmont Minahasa Raya (“PTNMR”)—80% Newmont Owne d

In July 2004, a criminal complaint was filed against PTNMR, the Newmont subsidiary that operated the Minahasa mine in Indonesia, alleging environmental pollution relating to submarine tailings placement into nearby Buyat Bay. The Indonesian police detained five PTNMR employees during September and October of 2004. The police investigation and the detention of PTNMR’s employees was declared illegal by the South Jakarta District Court in December 2004, but in March 2005, the Indonesian Supreme Court upheld the legality of the police investigation, and the police turned their evidence over to the local prosecutor. In July 2005, the prosecutor filed an indictment against PTNMR and its President Director, alleging environmental pollution at Buyat Bay. After the court rejected motions to dismiss the proceeding, the trial proceeded and all evidence, including that of the defense, was presented in court in September 2006. In November 2006 the prosecution filed its charge, seeking a three-year jail sentence for PTNMR’s President Director plus a nominal fine. In addition, the prosecution recommended a nominal fine against PTNMR. The defense filed responses in January 2007, and final briefing was completed in March 2007. On April 24, 2007, the court entered its verdict acquitting PTNMR and its President Director of all charges. In May 2007, the prosecution appealed the decision of the court to the Indonesian Supreme Court, despite Indonesian laws that prohibit the appeal of a verdict of acquittal.

In addition, on March 22, 2007, an Indonesian non-governmental organization named Wahana Lingkungan Hidup Indonesia (“WALHI”) filed a civil suit against PTNMR and Indonesia’s Ministry of Energy and Mineral Resources and Ministry for the Environment, alleging pollution from the disposal of mine tailings into Buyat Bay, and seeking a court order requiring PTNMR to fund a 25-year monitoring program in relation to Buyat Bay. In December 2007, the court ruled in PTNMR’s favor and found that WALHI’s allegations of pollution in Buyat Bay were without merit. In March 2008, WALHI appealed this decision to the Indonesian Supreme Court.

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Independent sampling and testing of Buyat Bay water and fish, as well as area residents, conducted by the World Health

Organization and the Australian Commonwealth Scientific and Industrial Research Organization, confirm that PTNMR has not polluted the Buyat Bay environment, and, therefore, has not adversely affected the fish in Buyat Bay or the health of nearby residents. The Company remains steadfast that it has not caused pollution or health problems and will continue to vigorously defend itself against these allegations.

Resurrection Mining Company (“Resurrection”)—100% N ewmont Owned

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 were 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 collectively implemented those orders by constructing a water treatment plant, which was placed in operation in early 1992. Remaining remedial work for this area consists of water treatment plant operation and continuing environmental monitoring and maintenance activities. The parties also entered into a consent decree with respect to the remaining areas at the site, which apportioned liabilities and responsibilities for these areas. The EPA approved remedial actions for selected components of Resurrection’s portion of the site, which were initiated in 1995. The EPA has not selected the final remedy for the site.

On August 9, 2005, ASARCO LLC, another potentially responsible party at the site, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). ASARCO is contractually responsible for 50% of the ongoing expenses at the water treatment plant. In June 2007, Resurrection, the EPA, the State and ASARCO reached a settlement relating to all outstanding issues at the site. The settlement, once fully approved, will modify certain responsibilities of the parties. In July 2007, the settlement was approved by the Bankruptcy Court. The settlement is also subject to approval by the U.S. District Court for the District of Colorado.

Other Legal Matters

Minera Yanacocha S.R.L. (“Yanacocha”)—51.35% Newmon t Owned

Choropampa . In June 2000, a transport contractor of Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles (85 kilometers) southwest of the Yanacocha mine. Elemental mercury is not used in Yanacocha’s operations but is a by-product 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 Yanacocha in response to the incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000 Peruvian soles (approximately $0.5) to the Peruvian government. Yanacocha has entered into settlement agreements with a number of individuals impacted by the incident. As compensation for the disruption and inconvenience caused by the incident Yanacocha entered into agreements with and provided a variety of public works in the three communities impacted by this incident. Yanacocha cannot predict the likelihood of additional expenditures related to this matter.

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Yanacocha, various wholly-owned subsidiaries of Newmont, and other defendants have been named in lawsuits filed by

approximately 1,100 Peruvian citizens in Denver District Court for the State of Colorado. These actions seek compensatory damages based on claims associated with the elemental mercury spill incident. In February 2005, Yanacocha and the various Newmont defendants answered the complaint in the Denver District Court. The parties in these cases have agreed to submit these matters to binding arbitration. In October 2007, the parties to the arbitration entered a court-approved settlement agreement, resolving most of these cases.

Additional lawsuits relating to the Choropampa incident were filed against Yanacocha in the local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits entered into settlement agreements with Yanacocha prior to filing such claims. In April 2008, the Peruvian Supreme Court upheld the validity of these settlement agreements, which should result in the dismissal of all claims brought by previously settled plaintiffs. Yanacocha has also entered into settlement agreements with approximately 350 additional plaintiffs. Approximately 200 plaintiffs claims remain.

Neither Newmont nor Yanacocha can reasonably predict the final outcome of any of the above-described lawsuits.

Conga. Yanacocha is involved in a dispute with the Provincial Municipality of Celendin regarding the authority of that governmental body to regulate the development of the Conga project. In the fourth quarter of 2004, the Municipality of Celendin enacted an ordinance declaring the area around Conga to be a mining-free reserve and naturally protected area. Yanacocha has challenged this ordinance by means of two legal actions, one filed by Yanacocha (as the lease holder of the Conga mining concessions) and one filed by Minera Chaupiloma (as the titleholder of the Conga mining concessions). In August 2007, a Peruvian Court of first instance upheld Chaupiloma’s claim, stating that the Municipality of Celendin lacks the authority to create natural protected areas. The Municipality of Celendin has not appealed the ruling. Based on legal precedent established by Peru’s Constitutional Tribunal and the foregoing resolution of the Chaupiloma claim, it is reasonable to believe that Yanacocha’s mining rights will be upheld.

Newmont Mining Corporation

On June 8, 2005, UFCW Local 880—Retail Food Employers Joint Pension Fund filed a putative class action in the federal district court in Colorado purportedly on behalf of purchasers of Newmont Mining Corporation (“Newmont”) publicly traded securities between July 28, 2004 and April 26, 2005. The action named Newmont, Wayne W. Murdy, Pierre Lassonde and Bruce D. Hansen as defendants. Substantially similar purported class actions were filed in the same court on June 15, 2005 by John S. Chapman and on June 20, 2005 by Zoe Myerson. In November 2005, the court consolidated these cases and, in March 2006, appointed a lead plaintiff. In April 2006, the lead plaintiff filed a consolidated amended complaint naming David Francisco, Russell Ball, Thomas Enos and Robert Gallagher as additional defendants. It alleged, among other things, that Newmont and the individual defendants violated certain antifraud provisions of the federal securities laws by failing to disclose alleged operating deficiencies and sought unspecified monetary damages and other relief. On October 20, 2006, the lead plaintiff, on behalf of a settlement class consisting of all purchasers of Newmont securities from November 1, 2003, through and including March 23, 2006 (except defendants and certain related persons), entered into a Stipulation of Settlement with defendants that (a) would release all claims asserted, or that could have been asserted, in the action; (b) would provide for a payment by

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Newmont of $15 to be distributed to class members pursuant to a plan of allocation developed by the lead plaintiff; and (c) would provide that all defendants deny any wrongdoing or liability with respect to the settled matters. On December 11, 2007, the Court approved the settlement but deferred entering a final order and judgment pending resolution of plaintiffs’ counsel’s application for attorneys’ fees.

Newmont Yandal Operations Pty Ltd (“NYOL”)—100% New mont Owned

On September 3, 2003, J. Aron & Co. commenced proceedings in the Supreme Court of New South Wales (Australia) against NYOL, its subsidiaries and the administrator in relation to the completed voluntary administration of the NYOL group. J. Aron & Co., a NYOL creditor, initially sought injunctive relief that was denied by the court on September 8, 2003. On October 30, 2003, J. Aron & Co. filed a statement of claim alleging various deficiencies in the implementation of the voluntary administration process and seeking damages and other relief against NYOL and other parties. Newmont cannot reasonably predict the final outcome of this lawsuit.

PT Newmont Nusa Tenggara (“PTNNT”)—45% Newmont Owne d

Under the Batu Hijau Contract of Work, beginning in 2005 and continuing through 2010, a portion of PTNNT’s shares must be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. As PT Pukuafu Indah (“PTPI”), an Indonesian national, has owned and continues to own a 20% interest in PTNNT, in 2006 a 3% interest was required to be offered for sale and in each of 2007 through 2010 an additional 7% interest must be offered (for an aggregate 31% interest). The price at which such interest must be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Jakarta Stock Exchange, or the fair market value of such interest as a going concern, as agreed with the Indonesian government. Pursuant to this provision, it is possible that the 80% ownership interest of the Newmont/Sumitomo partnership in PTNNT could be reduced to 49%.

Initial arbitration matter

In accordance with the Contract of Work, an offer to sell a 3% interest was made to the government of Indonesia in 2006 and an offer for an additional 7% interest was made in 2007. While the central government declined to participate in the 2006 and 2007 offers, local governments in the area in which the Batu Hijau mine is located have expressed interest in acquiring shares, as have various Indonesian nationals. In January 2008, the Newmont/Sumitomo partnership agreed to sell, under a carried interest arrangement, 2% of PTNNT’s shares to Kabupaten Sumbawa, one of the local governments, subject to satisfaction of closing conditions. The government of Indonesia has subsequently stated that it will not approve the transfer of shares under this agreement. On February 11, 2008, PTNNT received notification from the Department of Energy and Mineral Resources (“DEMR”) alleging that PTNNT is in breach of its divestiture requirements under the Contract of Work, and DEMR threatened to issue a notice to terminate the Contract of Work if PTNNT did not agree to divest the 2006 and 2007 shares, in accordance with the direction of the DEMR, by February 22, 2008, which date was extended to March 3, 2008. On March 3, 2008, the Indonesian government filed for international arbitration as provided under the Contract of Work, as did PTNNT. In the arbitration proceeding, PTNNT seeks a declaration that the government of Indonesia is not entitled

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to terminate the Contract of Work and additional declarations pertaining to the procedures for divesting the shares. For its part, the Government of Indonesia seeks declarations that PTNNT is in default of its divestiture obligations, that the Government may terminate the Contract of Work, and that PTNNT must cause shares subject to divestiture to be sold to certain local governments. The international arbitration panel has been appointed and briefing is under way, with a hearing expected in December 2008. Newmont believes there is no basis for terminating the Contract of Work, and PTNNT is vigorously defending the matter.

Second arbitration matter

In 1997, to enable development of the Batu Hijau mine, PTNNT secured an aggregate US$1 billion in financing from the United States Export-Import Bank, the Japan Bank for International Cooperation (formerly the Japan Export-Import Bank), and Kreditanstalt fur Wiederaufbau (the German Export-Import Bank) (collectively, the “Senior Lenders”). The Senior Lenders required the shareholders of PTNNT to pledge their shares as security for repayment of the loans. As part of that process, on October 30, 1997, the Minister of Energy and Mineral Resources approved the share pledge arrangements. The share pledge requirement does not impede the ability of PTNNT shares to be divested.

Subsequent to an additional 7% interest being offered for sale on March 28, 2008, the Director General of Mineral, Coal and Geothermal Resources at DEMR claimed that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered for sale that are pledged to the Senior Lenders as security for the repayment of the senior debt. In the letter, the Director General claims that Newmont would be in default under the Contract of Work if the shares of PTNNT offered for sale in March 2008, together with the shares offered in 2006 and 2007, were not in the possession of “Indonesian government and/or government owned entities”, free of any such senior pledge, by July 13, 2008. Consequently, on July 10, 2008, PTNNT filed a notice to commence an additional international arbitration proceeding, as provided for under the Contract of Work, to resolve the claim that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered that are subject to pledge obligations to the Senior Lenders. PTNNT has proposed that the share pledge issue be incorporated into, and be resolved as part of, the initial arbitration proceeding.

In addition, the Company has been in discussions to extend its forest use permit (called a pinjam pakai) for over three years. This permit is a key requirement to continue to efficiently operate the Batu Hijau mine. The permit extension has not yet been received and the resulting delay could have an adverse impact on operating and financial results.

Other Commitments and Contingencies

Tax contingencies are provided for under FIN 48 (see Note 8).

In a 1993 asset exchange, a wholly-owned subsidiary transferred a coal lease under which the subsidiary had collected advance royalty payments totaling $484. From 1994 to 2018, remaining advance payments under the lease to the transferee total $390. In the event of title failure as stated in the lease, this subsidiary has a primary obligation to refund previously collected payments and has a secondary obligation to refund any of the $390 collected by the transferee, if the transferee fails to meet its refund obligation. The subsidiary has title insurance on the leased coal deposits of $240

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covering the secondary obligation. The Company and the subsidiary regard the circumstances entitling the lessee to a refund as remote.

The Company has minimum royalty obligations on one of its producing mines in Nevada for the life of the mine. Amounts paid as a minimum royalty (where production royalties are less than the minimum obligation) in any year are recoverable in future years when the minimum royalty obligation is exceeded. Although the minimum royalty requirement may not be met in a particular year, the Company expects that over the mine life, gold production will be sufficient to meet the minimum royalty requirements. Minimum royalty payments payable are $11 in 2008, $17 in 2009 and 2010, $18 in 2011, $11 in 2012 and $54 thereafter.

As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit and bank guarantees as financial support for various purposes, including environmental reclamation, exploration permitting, workers compensation programs and other general corporate purposes. At June 30, 2008 and December 31, 2007, there were $747 and $662, respectively, of outstanding letters of credit, surety bonds and bank guarantees. The surety bonds, letters of credit and bank guarantees reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. Generally, bonding requirements associated with environmental regulation are becoming more restrictive. In addition, the surety markets for certain types of environmental bonding used by the Company have become increasingly constrained. The Company, however, believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements, through existing or alternative means, as they arise.

As a result of historical contractual arrangements, a Company subsidiary has managed certain reclamation activities at the Mt. Leyshon mine in northern Queensland, Australia. This mine, which has not operated for a number of years, is owned by Leyshon Resources Limited. In January and February 2008, extraordinary precipitation in northern Queensland resulted in discharges from the mine property of water containing elevated levels of certain metals. This event has resulted in environmental protection orders being issued by the Queensland government to Leyshon Resources Limited and to the Company’s subsidiary, and in renewed discussions with regulatory authorities in regard to a comprehensive closure plan for the property. The Queensland government is requiring Leyshon Resources Limited to post additional environmental bonding, which will be guaranteed by the Company’s subsidiary.

Newmont is from time to time involved in various legal proceedings related to its business. Except in the above-described proceedings, management does not believe that adverse decisions in any pending or threatened proceeding or that amounts that may be required to be paid by reason thereof will have a material adverse effect on the Company’s financial condition or results of operations.

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NOTE 25 SUPPLEMENTARY DATA

Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges for the six months ended June 30, 2008 was 14.9. The ratio of earnings to fixed charges represents income from continuing operations before income tax expense, minority interest and equity loss of affiliates, divided by interest expense. Interest expense includes amortization of capitalized interest and the portion of rent expense representative of interest. Interest expense does not include interest on income tax liabilities. The computation of the ratio of earnings to fixed charges can be found in Exhibit 12.1.

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The following discussion provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont,” the “Company,” “our” and “we”). References to “A$” refer to Australian currency, “C$” to Canadian currency, “IDR” to Indonesian currency, “NZ$” to New Zealand currency and “$” to United States currency.

This item should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report. Additionally, the following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements included in Part II of our Annual Report on Form 10-K for the year ended December 31, 2007.

Selected Financial and Operating Results

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (dollars in millions, except per share, per ounce and per pound amounts).

Three Months Ended


June 30, 2008 2007 2008 2007

Revenues $ 1,522 $ 1,276 $ 3,465 $ 2,500 Income (loss) from continuing operations $ 279 $ (401 ) $ 643 $ (361 ) Net income (loss) $ 277 $ (2,062 ) $ 647 $ (1,994 )

Per common share, basic

Income (loss) from continuing operations $ 0.61 $ (0.89 ) $ 1.42 $ (0.80 ) Net income (loss) $ 0.61 $ (4.57 ) $ 1.43 $ (4.42 )

Consolidated gold ounces sold (thousands) (1) 1,504 1,408 3,125 2,965

Consolidated copper pounds sold (millions) 51 97 157 188

Average price received, net (2)

Gold (per ounce) $ 900 $ 665 $ 917 $ 657 Copper (per pound) $ 3.57 $ 3.53 $ 3.93 $ 2.94

Costs applicable to sales (3)

Gold (per ounce) $ 440 $ 417 $ 417 $ 410 Copper (per pound) $ 2.02 $ 1.33 $ 1.62 $ 1.34

(1) Includes minority interests’ share and incremental start-up ounces of 16 and 17 in the three and six months ended June 30,

2008, respectively. (2) After treatment and refining charges.

Consolidated Financial Results

Our income from continuing operations for the second quarter and first half of 2008 was $279, or $0.61 per share and $643, or $1.42 per share, respectively. Results for the second quarter and first half of 2008 compared to 2007 were impacted by higher realized gold and copper prices, increased gold sales volume, $129 of favorable tax adjustments in the second quarter of 2008 and the absence of the 2007 loss on settlement of price-capped forward sales contracts, partially offset by lower copper sales volume and higher costs.

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(3) Excludes Amortization , Accretion and the 2007 Loss on settlement of price-capped forward sales contracts .

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Sales—gold , net for the second quarter of 2008 increased $403 compared to the second quarter of 2007 as a result of an 80,000 increase in consolidated gold ounces sold and a $235 increase in the average realized price per ounce after treatment and refining charges. Sales—gold, net for the first half of 2008 increased $903 compared to the first half of 2007 as a result of a 143,000 increase in consolidated gold ounces sold and a $260 increase in the average price realized per ounce after treatment and refining charges. The following analysis summarizes the change in consolidated gold sales revenue:

The change in consolidated gold sales is due to:

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Three Months Ended


June 30, 2008 2007 2008 2007

Consolidated gold sales:

Gross $ 1,342 $ 939 $ 2,860 $ 1,956 Less: Treatment and refining charges (3 ) (3 ) (10 ) (9 )

Net $ 1,339 $ 936 $ 2,850 $ 1,947

Consolidated gold ounces sold (thousands):

Gross 1,504 1,408 3,125 2,965 Less: Incremental start-up sales (16 ) — (17 ) ––

Net 1,488 1,408 3,108 2,965

Average realized price (per ounce):

Before treatment and refining charges $ 902 $ 667 $ 920 $ 660 After treatment and refining charges $ 900 $ 665 $ 917 $ 657

Three Months Ended

June 30,

Six Months Ended

June 30,

2008 vs. 2007 2008 vs. 2007

Increase in consolidated ounces sold $ 54 $ 93 Increase in average realized gold price 349 811 Decrease (increase) in treatment and refining charges — (1 )

$ 403 $ 903

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Sales—copper, net for the second quarter of 2008 decreased $157 compared to the second quarter of 2007 primarily due to lower sales volume. Sales—copper, net for the first half of 2008 increased $62 compared to the first half of 2007 primarily due to higher realized price partially offset by lower sales volume. For a complete discussion regarding variations in gold and copper volumes, see Results of Consolidated Operations below. The following analysis summarizes the change in consolidated copper sales revenue:

The change in consolidated copper sales is due to:

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Three Months Ended


June 30, 2008 2007 2008 2007

Consolidated copper sales:

Gross before provisional pricing and hedging $ 194 $ 337 $ 576 $ 582 Provisional pricing mark-to-market gain 8 41 90 47 Hedging loss –– –– –– (1 )

Gross after provisional pricing and hedging 202 378 666 628 Less: Treatment and refining charges (19 ) (38 ) (51 ) (75 )

Net $ 183 $ 340 $ 615 $ 553

Consolidated copper pounds sold (millions) 51 97 157 188

Average price realized (per pound):

Gross before provisional pricing and hedging $ 3.77 $ 3.49 $ 3.67 $ 3.10 Provisional pricing mark-to-market gain 0.16 0.43 0.58 0.24 Hedging loss –– –– –– ––

Gross after provisional pricing and hedging 3.93 3.92 4.25 3.34 Less: Treatment and refining charges (0.36 ) (0.39 ) (0.32 ) (0.40 )

Net $ 3.57 $ 3.53 $ 3.93 $ 2.94

Three Months Ended

June 30,

Six Months Ended

June 30,

2008 vs. 2007 2008 vs. 2007

Decrease in consolidated pounds sold $ (177 ) $ (104 ) Increase in average realized copper price 1 142 Decrease in treatment and refining charges 19 24

$ (157 ) $ 62

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The following is a summary of net gold and copper sales:

Costs applicable to sales increased in the second quarter and first half of 2008 from 2007 as detailed in the table below. The increase in the second quarter and first half of 2008 is primarily due to higher sales volume, increased input commodity prices and unfavorable Australian dollar exchange rate changes. For a complete discussion regarding variations in operations, see Results of Consolidated Operations below.

Amortization remained constant in the second quarter and first half of 2008 compared to 2007 as detailed in the table below. We expect Amortization expense in 2008 to be approximately $725 to $775.

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Three Months Ended


June 30, 2008 2007 2008 2007

Gold

Nevada, USA $ 495 $ 349 $ 986 $ 710 Yanacocha, Peru 388 208 887 505 Australia/New Zealand:

Tanami, Australia 85 87 174 160 Kalgoorlie, Australia 55 47 120 109 Jundee, Australia 101 50 188 90 Waihi, New Zealand 31 17 60 26

272 201 542 385

Batu Hijau, Indonesia 35 59 147 115 Ahafo, Ghana 107 82 204 163 Other Operations:

Kori Kollo, Bolivia 20 15 38 31 La Herradura, Mexico 21 15 45 29 Golden Giant, Canada — 6 –– 8

41 36 83 68

Corporate 1 1 1 1

$ 1,339 $ 936 $ 2,850 $ 1,947

Copper

Batu Hijau, Indonesia $ 183 $ 340 $ 615 $ 553

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The following is a summary of Costs applicable to sales and Amortization :

The Loss on settlement of price-capped forward sales contracts in the first half of 2007 resulted from the elimination of the entire 1.85 million gold price-capped forward sales contracts.

Exploration expense increased $13 for both the second quarter and first half of 2008, compared to 2007 primarily as a result of spending at Hope Bay and higher drilling costs. We expect 2008 Exploration expense to be approximately $220 to $230.

Advanced projects, research and development increased $26 for the second quarter and $40 for the first half of 2008 compared to 2007. The increase is due to spending at Hope Bay and higher spending on projects, including technical studies and drilling at Fort a la Corne and other projects. We expect 2008 Advanced projects, research and development expenses in 2008 to be approximately $160 to $190.

General and administrative expenses increased $3 for the second quarter and decreased $1 for the first half of 2008 compared to 2007. We expect 2008 General and administrative expenses to be approximately $140 to $150.

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Costs Applicable to Sales Amortization

Three Months Ended


June 30, Three Months Ended


June 30, 2008 2007 2008 2007 2008 2007 2008 2007

Gold

Nevada, USA $ 238 $ 254 $ 453 $ 525 $ 60 $ 66 $ 110 $ 121 Yanacocha, Peru 161 122 329 250 44 40 88 82 Australia/New Zealand:

Tanami, Australia 57 50 107 98 9 10 17 19 Kalgoorlie, Australia 54 35 108 92 3 5 7 13 Jundee, Australia 44 35 82 70 10 6 17 12 Waihi, New Zealand 15 11 29 19 9 6 15 9

170 131 326 279 31 27 56 53

Batu Hijau, Indonesia 19 19 56 46 3 5 11 11 Ahafo, Ghana 46 45 95 86 18 13 31 23 Other Operations:

Kori Kollo, Bolivia 11 8 19 15 3 2 5 5 La Herradura, Mexico 10 6 18 13 2 1 4 3 Golden Giant, Canada — 1 — 2 — — — —

21 15 37 30 5 3 9 8

655 586 1,296 1,216 161 154 305 298

Copper

Batu Hijau, Indonesia 104 128 254 251 20 26 51 54

Other

Australia/New Zealand — — — — 1 1 2 2 Corporate and Other — — — — 2 5 8 11

— — — — 3 6 10 13

$ 759 $ 714 $ 1,550 $ 1,467 $ 184 $ 186 $ 366 $ 365

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Other expense, net for the second quarter and first half of 2008 and 2007 is summarized as follows:

Reclamation estimate revisions for the first half of 2008 primarily relate to an increase in the reclamation liability at the former Mt. Leyshon and Midnite mine sites. The Mt. Leyshon reclamation revision was for site characterization, stabilization and long-term surface water management due to overflow discharge from heavy rain. The Midnite mine reclamation increased in light of the recent decisions made in the U.S. District Court for the Eastern District of Washington. Reclamation estimate revisions for the first half of 2007 relate to the former Resurrection and Empire mines. During the second quarter of 2008, we incurred $7 of additional costs at the Western Australia power plant as a result of an explosion on Varanus Island that damaged a natural gas suppliers plant. During the first half of 2008 and 2007, respectively, we incurred $11 and $13 settlement losses related to senior management retirements. Other expense, net also includes community development and regional administration expenses that were reclassified from Costs applicable to sales . These costs relate to our social responsibility, external and government relations, and regional office costs which are not a cost of mine production.

Other income, net for the second quarter and first half of 2008 and 2007 is summarized as follows:

Gain on sale of investments, net in the second quarter and first half of 2008 was primarily attributable to the sale of marketable equity securities. Income from development projects, net in 2008 includes revenue net of incremental operating costs for the Awonsu pit at Ahafo.

Interest expense, net of capitalized interest increased by $2 for the second quarter of 2008, compared to 2007 mainly due to decreased capitalized interest from the completion of the Nevada power plant and the Yanacocha gold mill projects. Interest expense, net of capitalized interest, net

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Three Months Ended


June 30, 2008 2007 2008 2007

Reclamation estimate revisions $ 59 $ 17 $ 61 $ 17 Community development 18 13 32 27 Regional administration 12 10 21 21 Western Australia power plant 8 2 13 7 Peruvian royalty 4 1 11 4 Pension settlement loss — 13 11 13 World Gold Council dues 2 3 5 6 Accretion non-operating 3 2 5 4 Other 12 17 22 29

$ 118 $ 78 $ 181 $ 128

Three Months Ended


June 30, 2008 2007 2008 2007

Canadian Oil Sands Trust income $ 31 $ 11 $ 55 $ 19 Interest income 7 10 17 23 Gain on sale of investments, net 10 — 10 —Income from development projects, net 9 — 9 —Foreign currency exchange (losses) gains, net (7 ) 8 (13 ) 3 Other 3 8 12 9

$ 53 $ 37 $ 90 $ 54

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decreased $2 for the first half of 2008 compared to 2007 mainly due to increased capitalized interest and interest on the convertible senior notes and corporate revolving credit facility. We expect 2008 Interest expense, net of capitalized interest to be approximately $60 to $80.

Income tax expense (benefit) during the second quarter of 2008 was ($37) compared to ($19) during the second quarter of 2007, and $198 for the first half of 2008 compared to $25 for the first half of 2007. The effective tax rate for the second quarter of 2008 was (12%) compared to 6% for the second quarter of 2007. The decrease from the 2007 second quarter rate primarily relates to the reduction in income taxes from the conversion of one of our non-US subsidiaries to a partnership for U.S. income tax purposes which conversion will give rise to a significant capital loss allowing us to recover income taxes paid in prior years. The other primary reasons that our effective tax rate in the second quarter of 2008 is lower than the United States statutory rate of 35% are: (i) U.S. percentage depletion, (ii) the effect of different income tax rates in countries where earnings are indefinitely reinvested, and (iii) the effect of our other foreign earnings, net of foreign taxes. The effective tax rate in the second quarter of 2007 is different from the United States statutory rate of 35% primarily due to (i) U.S. percentage depletion, (ii) a change in valuation allowance on deferred tax assets associated with foreign tax credits, (iii) the effect of different income tax rates in countries where earnings are indefinitely reinvested, and (iv) the effect of our other foreign earnings net of foreign taxes. For a complete discussion of the factors that influence our effective tax rate, see Management’s Discussion and Analysis of Results of Operations and Financial Condition in our Annual Report on Form 10-K for the year ended December 31, 2007, filed February 21, 2008. We expect the 2008 full year tax rate to be approximately 22% to 26%, assuming an average gold price of $875 per ounce.

Minority interest in income of consolidated subsidiaries decreased $29 in the second quarter as a result of decreased earnings at Batu Hijau partially offset by increased earnings at Yanacocha. Minority interest in income of consolidated subsidiaries increased $107 in the first half of 2008 as a result of increased earnings at Batu Hijau and Yanacocha.

(Loss) income from discontinued operations was ($2) for the second quarter of 2008 compared to ($1,661) for the second quarter of 2007, and $4 for the first half of 2008 compared to ($1,633) for the first half of 2007. Activity in the three and six months ended June 30, 2008 includes additional royalty revenue and the sale of Pajingo assets. Activity in the three and six months ended June 30, 2007 includes a $1,665 non-cash charge to impair the goodwill associated with the royalty portfolio.

Results of Consolidated Operations

Three Months Ended June 30,

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Gold Ounces or

Copper Pounds Sold (1)

Costs Applicable

to Sales (2) Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Gold

Nevada 554 531 $ 430 $ 478 $ 108 $ 124 Yanacocha (3) (51.3% owned) 432 312 374 392 102 128 Australia/New Zealand 301 298 565 440 102 88 Batu Hijau (3) (4) 37 90 518 213 99 52 Ahafo 134 123 390 364 147 108 Other (3) 46 54 428 286 95 65

Total/Weighted-Average 1,504 1,408 $ 440 $ 417 $ 108 $ 109

(pounds in millions) ($ per pound) ($ per pound) Copper

Batu Hijau (3) (4) 51 97 $ 2.02 $ 1.33 $ 0.38 $ 0.28

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Six Months Ended June 30,

Gold Ounces or


Costs Applicable


2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Gold

Nevada 1,080 1,091 $ 420 $ 481 $ 102 $ 111 Yanacocha (3) (51.3% owned) 972 767 339 326 91 107 Australia/New Zealand 587 582 555 479 96 92 Batu Hijau (3) (4) 157 174 358 263 72 63 Ahafo 239 248 425 344 138 93 Other (3) 90 103 404 302 97 82

Total/Weighted-Average 3,125 2,965 $ 417 $ 410 $ 98 $ 101

(pounds in millions) ($ per pound) ($ per pound) Copper

Batu Hijau (3) (4) 157 188 $ 1.62 $ 1.34 $ 0.33 $ 0.29 (1) Includes 16 and 17 incremental start-up ounces for the three and six months ended June 30, 2008, respectively which are not

included in Revenue , Costs applicable to sale s and Amortization per ounce calculations. (2) Excludes Amortization , Accretion and the 2007 Loss on settlement of price-capped forward sales contracts . (3) Consolidated gold ounces or copper pounds sold includes minority interests’ share.

Consolidated gold ounces sold increased 7% in the second quarter of 2008 from 2007, primarily due to higher production at Nevada, Yanacocha and Ahafo, partially offset by lower production at Batu Hijau. Consolidated copper pounds sold decreased 47% in the second quarter of 2008 from 2007, due to lower throughput and recovery at Batu Hijau.

Costs applicable to sales per consolidated gold ounce sold increased 6% in the second quarter of 2008 from 2007, primarily due to higher royalty, compensation and diesel costs and the strengthening of the Australian dollar, partially offset by higher by-product sales. Unfavorable exchange rate movements increased consolidated Costs applicable to sales by $11 per ounce, net of hedge gains, in the second quarter of 2008 compared to 2007. Costs applicable to sales per consolidated copper pound increased 52% in the second quarter of 2008 from 2007, primarily due to lower copper production at Batu Hijau.

Consolidated gold ounces sold increased 5% in the first half of 2008 from 2007, primarily due to higher production at Yanacocha, partially offset by lower production at Batu Hijau and Ahafo. Consolidated copper pounds sold decreased 16% in the first half of 2008 from 2007, due to lower throughput and recovery at Batu Hijau.

Costs applicable to sales per consolidated gold ounce sold increased 2% in the first half of 2008 from 2007, due to higher labor and diesel costs and the strengthening of the Australian dollar, partially offset by higher by-product sales. Unfavorable exchange rate movements increased consolidated Costs applicable to sales by $11 per ounce, net of hedge gains, in the first half of 2008 compared to 2007. Costs applicable to sales per consolidated copper pound increased 21% in the first half of 2008 from 2007, primarily due to lower copper production at Batu Hijau.

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(4) Economic interest decreased to 45% from 52.875% on May 25, 2007.

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Our 2008 annual gold guidance remains unchanged with consolidated gold sales of between 5.9 and 6.3 million ounces of gold at Costs applicable to sales of between $425 and $450 per ounce. Our Costs applicable to sales forecast for 2008 now assumes an oil price of $125 per barrel and an Australian dollar exchange rate of 0.95 for the remainder of the year. Our Costs applicable to sales are expected to change by approximately $4 per ounce for every $10 change in the oil price and by $3 per ounce for every A$0.10 change in the Australian dollar exchange rate. We are actively hedging a portion of our diesel and Australian dollar cost exposure.

We expect consolidated copper sales of approximately 280 to 330 million pounds of copper in 2008 at Costs applicable to sales of approximately $1.50 to $1.75 compared to our original guidance of between 345 and 365 million pounds of copper at Costs applicable to sales of approximately $1.30 to $1.40 per pound, due to extremely heavy rainfall during the first quarter of 2008 at Batu Hijau. See the Batu Hijau Operation discussion below for additional details.

Nevada Operations

Gold Ounces Sold

Costs Applicable


2008 (1) 2007 2008 2007 2008 2007

(ounces in thousands) ($ per ounce) ($ per ounce) Three months ended June 30, 554 531 $ 430 $ 478 $ 108 $ 124 Six months ended June 30, 1,080 1,091 $ 420 $ 481 $ 102 $ 111 (1) Includes nil and 1 incremental start-up ounces for the three and six months ended June 30, 2008.

Gold ounces sold in Nevada increased 4% in the second quarter of 2008 from 2007 due to higher production at Phoenix, Midas, Leeville and Twin Creeks, partially offset by the shutdown of the Lone Tree processing facilities which accounted for 19,000 ounces of sales in the second quarter of 2007.

Nevada’s gold ounces sold remained constant in the first half of 2008 compared to 2007 primarily due to the shutdown of Lone Tree processing facilities which accounted for 52,000 ounces of sales in the first half of 2007, offset by higher production at Phoenix, Midas, Leeville and Twin Creeks.

Underground ore mined in the second quarter of 2008 increased to 0.6 million tons, up from 0.5 million tons in the second quarter of 2007 due to 126% higher tons at Leeville, partially offset by 10% lower tons at Chukar and completion of mining at Carlin East. Surface ore mined in the second quarter of 2008 decreased to 9.2 million tons, down from 10.7 million tons in the second quarter of 2007 due to lower tons at Phoenix and Twin Creeks, partially offset by higher tons at Gold Quarry.

Underground ore in the first half of 2008 increased to 1.1 million tons, up from 1.0 million tons in the first half of 2007 primarily due to higher tons at Leeville, partially offset by completion of mining at Carlin East. Surface ore mined in the first half of 2008 decreased to 17.6 million tons, down from 21.2 million tons in the first half of 2007 due to lower tons at Phoenix, Gold Quarry and Twin Creeks.

Second quarter ore milled increased to 6.1 million tons in 2008 up from 5.9 million tons in the second quarter of 2007 primarily due to higher throughput at Phoenix, partially offset by the shutdown of the Lone Tree processing facilities at the end of 2007. Ore placed on the leach pads increased 115% from the second quarter of 2007 to 2008 due to higher placement at the Carlin leach pads.

Ore milled in the first half of the year was 12.3 and 12.1 million tons in 2008 and 2007, respectively, as higher tons at Phoenix were partially offset by the completion of Lone Tree milling in

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(2) Excludes Amortization and Accretion .

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2007. Ore placed on leach pads increased by 72% from the first half of 2007 to 2008 due to higher placement at the Carlin leach pads.

During the second quarter and first half of 2008, Phoenix sold 54,100 and 94,600 ounces of gold, respectively, at Costs applicable to sales of $361 and $378 per ounce, respectively, compared to 39,700 and 86,900 ounces at Costs applicable to sales of $844 and $810 per ounce in 2007. The cost improvements were driven by increased copper and silver by-product credits and increased mill throughput.

We have spent the past year completing optimization studies at Phoenix, focused on resolving issues with gold grade reconciliation, complex copper mineralogy, rock hardness, and operating and design inefficiencies. We have now completed an extensive re-drilling program and have incorporated the results into a new mine plan that more accurately defines the ore body. Based on the updated mine plan and current commodity price assumptions, gold production during the next five-years is expected to average approximately 200,000 to 250,000 ounces per annum at costs applicable to sales of approximately $400 to $500 per ounce. We continue to proactively focus on productivity and cost improvements, process optimization opportunities, and near mine exploration.

Nevada’s Costs applicable to sales per ounce decreased to $430 in the second quarter of 2008 from $478 in the second quarter of 2007 and decreased to $420 in the first half of 2008 from $481 in the first half of 2007. Lower costs were driven by the completion of higher cost Carlin East mining and Lone Tree processing, Leeville mine tonnage ramp up, Phoenix improvements, lower surface tons mined and lower contracted service costs.

Construction of the 200 megawatt coal-fired power plant was completed during the second quarter as expected at a total cost of approximately $620, in-line with previous expectations of $620 to $640. The lower cost of self-generated electricity, when compared with projected future market prices in the region, is expected to reduce Nevada’s Costs applicable to sales by approximately $70 to $80 per year.

We continue to expect Costs applicable to sales of approximately $400 to $430 per ounce for 2008. Ongoing labor and diesel cost pressures are expected to be offset by reduced electricity charges as a result of generating power for approximately one-half of the year from our newly constructed coal-fired power plant and reduced contracted services and other expenses.

Yanacocha Operations

Gold Ounces Sold (1)

Costs Applicable to

Sales (2) Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Three months ended June 30, 432 312 $ 374 $ 392 $ 102 $ 128 Six months ended June 30, 972 767 $ 339 $ 326 $ 91 $ 107 (1) Consolidated gold ounces sold includes minority interests’ share (51.35% Newmont owned).

Consolidated gold ounces sold at Yanacocha increased 38% in the second quarter of 2008 from the second quarter of 2007 due to higher production partially offset by a build in inventory. Ore mined and placed on the leach pads increased to 23.7 million tons in the second quarter of 2008 from 20.6 million tons in the second quarter of 2007. During the same periods, the amount of waste material mined decreased to 26.6 million tons from 32.1 million tons. Leach ore grade decreased by 13% from 0.017

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to 0.015 ounces per ton in the second quarter of 2008 from the same period in 2007. Gold production increased by 46% due to increased leach ore placement and production of 77,000 ounces from the newly commissioned mill. Start up of the gold mill occurred in late March and achieved commercial production in the second quarter of 2008. Total capital costs of the mill are expected to be $230, below previous expectations.

Consolidated gold ounces sold at Yanacocha increased 27% in the first half of 2008 from the first half of 2007 due to higher production. Ore mined and placed on the leach pads increased to 54.1 million tons in the first half of 2008 from 37.2 million tons in the first half of 2007. During the same periods, the amount of waste material mined decreased to 48.3 million tons from 61.8 million tons. Leached ore grade also increased by 7% from 0.015 to 0.016 ounces per ton in the first half of 2008 from the same period in 2007. Gold production increased by 31% due to the increased leach ore placement and production of 77,000 ounces from the newly commissioned mill. We continue to expect gold sales of approximately 1.7 to 1.8 million ounces for 2008.

Costs applicable to sales decreased in the second quarter of 2008 to $374 per ounce from $392 per ounce in the second quarter of 2007, due to higher production and lower waste material mined, partially offset by higher workers participation and royalty costs.

Costs applicable to sales increased in the first half of 2008 to $339 per ounce from $326 per ounce in the first half of 2007, primarily due to higher fuel costs and workers participation and royalty costs due to higher gold prices, partially offset by lower waste stripping costs. We continue to expect Costs applicable to sales of approximately $370 to $390 per ounce for 2008.

Australia/New Zealand Operations



58

Gold Ounces Sold

Costs Applicable to Sales (1)

Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Jundee 109 71 $ 401 $ 502 $ 84 $ 84 Tanami 95 130 605 382 102 75 Kalgoorlie (50% owned) 63 70 860 494 56 68 Waihi 34 27 441 417 248 221

Total/Weighted-Average 301 298 $ 565 $ 440 $ 102 $ 88

Gold Ounces Sold


Depreciation, Depletion

and Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Jundee 200 133 $ 410 $ 530 $ 83 $ 89 Tanami 190 243 565 402 91 78 Kalgoorlie (50% owned) 132 165 817 553 57 80 Waihi 65 41 448 478 226 228


(1 ) Excludes Amortization and Accretion .

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Consolidated gold ounces sold in Australia/New Zealand remained constant in the second quarter of 2008 from the second quarter of 2007 due to higher ore grades and recoveries at Jundee and higher throughput at Waihi, offset by lower ore grade, throughput and recovery at Tanami and Kalgoorlie. Costs applicable to sales per ounce increased 28% in the second quarter of 2008 from the second quarter of 2007 due to higher fuel prices, higher power costs, the strengthening of the Australian dollar and higher maintenance and contract services costs. During the second quarter of 2008, we hedged a portion of the Australian dollar denominated operating expenditures which reduced Costs applicable to sales by $3, or $11 per ounce for Australia/New Zealand.

Consolidated gold ounces sold in Australia/New Zealand remained constant in the first half of 2008 from the first half of 2007, primarily due to higher ore grades at Jundee and a full six months of production at Waihi, offset by lower ore grades at Tanami and lower ore grades and throughput at Kalgoorlie. Costs applicable to sales per ounce for the first half increased 16% in 2008 from 2007 primarily due to the strengthening of the Australian dollar and increased input costs, particularly diesel, electricity and labor. During the first half of 2008, we hedged a portion of the Australian dollar denominated operating expenditures which reduced Costs applicable to sales by $5, or $8 per ounce for Australia/New Zealand.

Jundee, Australia . Gold ounces sold increased 54% in the second quarter of 2008 compared to 2007 primarily due to a 63% increase in mill ore grade and 4% higher mill recovery. Increased mill ore grade was due to a combination of change in the mining schedule resulting in higher tons mined from Westside with higher grades and a higher blend of underground material fed into the mill. Costs applicable to sales per ounce decreased 20% in the second quarter of 2008 from the second quarter of 2007 due to higher production, partially offset by the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $30 per ounce, net of hedge gains, and higher fuel costs.

Gold ounces sold increased 50% in the first half of 2008 compared to 2007, primarily due to a 70% increase in mill ore grade and 5% higher mill recovery, partially offset by a drawdown of finished goods inventory during the first half of 2007. Costs applicable to sales per ounce decreased 23%, primarily attributable to higher production partially offset by higher fuel costs and the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $34 per ounce, net of hedge gains.

Tanami, Australia . Gold ounces sold decreased 27% in the second quarter of 2008 from 2007 due primarily to a 28% decrease in mill ore grade. Costs applicable to sales per ounce increased 58% in the second quarter of 2008 from the second quarter of 2007 primarily due to lower production, the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $39 per ounce, net of hedge gains, and higher mining costs mainly due to higher diesel prices.

Gold ounces sold decreased 22% in the first half of 2008 from 2007 primarily due to an 18% decrease in mill ore grade and a drawdown of finished goods inventory during the first half of 2007. Costs applicable to sales per ounce increased 41%, primarily due to lower production, the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $43 per ounce, net of hedge gains, and higher mining costs mainly due to higher diesel prices and higher milling costs mainly due to higher power costs.

Kalgoorlie, Australia . Gold ounces sold decreased 10% in the second quarter of 2008 compared to 2007 primarily due to a 9% lower mill grade and lower mill throughput as a result of a change in the mine plan due to a pit wall failure in January that covered a haul road resulting in longer hauls and delayed access to ore. Costs applicable to sales per ounce increased 74% in the second quarter of 2008 from the second quarter of 2007 primarily due to lower production, higher fuel costs, higher

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maintenance and contract services costs, additional leased trucks and the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $82 per ounce, net of hedge gains.

Gold ounces sold decreased 20% in the first half of 2008 compared to 2007, primarily due to 11% lower mill grade, 3% lower mill throughput and higher drawdown of finished goods inventory during the first half of 2007. Costs applicable to sales per ounce increased 48%, primarily due to lower production, the strengthening of the Australian dollar, which increased Costs applicable to sales by approximately $79 per ounce, net of hedge gains, higher fuel costs and higher contract maintenance costs.

Waihi, New Zealand . Gold ounces sold increased 26% in the second quarter of 2008 from 2007 primarily due to a 207% increase in throughput as harder Favona ore was milled in 2007, partially offset by 60% lower ore grade mainly due to milling of lower Martha grade ore in 2008. Costs applicable to sales per ounce increased 6% in the second quarter of 2008 from the second quarter of 2007 due to higher fuel costs and the strengthening of the New Zealand dollar, which increased Costs applicable to sales by approximately $22 per ounce, including hedge losses, partially offset by higher production and higher by-product credits.

Gold ounces sold increased 59% in the first half of 2008 from 2007, primarily due to higher throughput as a result of a planned mill suspension in first half of 2007 related to underground mine development at Favona and waste removal at the Martha open pit, partially offset by 61% lower grade mainly due to milling of lower grade Martha ore in 2008 and a drawdown of finished goods inventory during the first half of 2007. Costs applicable to sales per ounce were 6% lower due to higher production and higher by-product credits, partially offset by higher underground mining and milling costs and the strengthening of the New Zealand dollar, which increased Costs applicable to sales by approximately $35 per ounce, including hedge losses.

We now expect gold sales in Australia/New Zealand of approximately 1.10 to 1.15 million ounces for 2008 compared to original expectations of 1.05 to 1.10 million ounces at Costs applicable to sales of approximately $585 to $625 per ounce, excluding adverse changes in the Australian dollar exchange rate beyond a full year average rate of A$1.00:$0.938. Unfavorable changes in the Australian dollar exchange rate could result in operating costs for the region outside of the expected range for the full year, as a significant portion of costs are Australian dollar denominated. Costs applicable to sales in Australia/New Zealand are expected to change by approximately $13 per ounce for every $0.10 move in the Australian dollar exchange rate.

Development of the Boddington project remains on schedule and is approximately 77% complete, with initial mill start up expected in late 2008 or early 2009. Our share of the expected capital cost remains between $1,400 and $1,600.

Batu Hijau Operation

60

Gold Ounces Sold (1)


Amortization 2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce) Gold

Three months ended June 30, 37 90 $ 518 $ 213 $ 99 $ 52 Six months ended June 30, 157 174 $ 358 $ 263 $ 72 $ 63

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Amortization 2008 2007 2008 2007 2008 2007 (pounds in millions) ($ per pound) ($ per pound) Copper

Three months ended June 30, 51 97 $ 2.02 $ 1.33 $ 0.38 $ 0.28 Six months ended June 30, 157 188 $ 1.62 $ 1.34 $ 0.33 $ 0.29 (1) Consolidated gold ounces or copper pounds sold includes minority interests’ share. Our economic interest decreased to 45%

from 52.875% on May 25, 2007.

Consolidated copper pounds and gold ounces sold at Batu Hijau decreased 47% and 59%, respectively, in the second quarter of 2008 from 2007 due to lower throughput, grade and recovery of ores processed. Mill throughput was 24% lower for the quarter due to processing harder ores and blending limitations as a majority of the ore was sourced from stockpiles. These stockpiled ores were lower grade and resulted in lower recovery than the ores processed in the second quarter of 2007.

Consolidated copper pounds and gold ounces sold at Batu Hijau decreased 16% and 10%, respectively, in the first half of 2008 from 2007. This change was due to lower throughput, grade and recovery resulting from the processing of lower grade stockpiled ore, partially offset by concentrate inventory sales during the first quarter of 2008.

Total Costs applicable to sales decreased by $24 in the second quarter of 2008 from 2007 as a result of lower sales partially offset by higher mining costs due to increased diesel and labor costs. Costs applicable to sales per ounce of gold and per pound of copper also increased 143% and 52%, respectively, in the second quarter of 2008 compared to 2007, due to increased costs and lower production.

Total Costs applicable to sales increased by $13 in the first half of 2008 from 2007 as a result of increased diesel, labor, maintenance and contract services costs. Costs applicable to sales per ounce of gold and per pound of copper also increased 36% and 21%, respectively, in the first half of 2008 compared to 2007, due to increased costs and lower production.

The average realized copper price increased to $4.25 per pound in the first half of 2008 from $3.34 per pound in the first half of 2007. The higher copper price favorably impacted the provisional sales mark-to-market adjustment by $90 or $0.58 per pound for the first half of 2008 compared to $47 or $0.24 per pound for the first half of 2007. Additionally, lower treatment and refining costs in the first half of 2008 compared to the first half of 2007 increased the average realized copper price by $0.08 per pound.

Batu Hijau experienced extremely heavy rainfall during the first quarter of 2008, causing minor damage to pit infrastructure, as well as adding significant amounts of unexpected water to the pit. The de-watering program has yielded better than expected results and may contribute to increased production during the dry season, potentially offsetting portions of the wet season production shortfall.

We continue to expect gold and copper sales at Batu Hijau to be between 220,000 and 290,000 ounces of gold and between 280 and 330 million pounds of copper at Costs applicable to sales of $340 to $380 per ounce and $1.50 and $1.75 per pound, respectively, compared to original guidance of between 325,000 and 365,000 ounces of gold and between 345 and 365 million pounds of copper at Costs applicable to sales of $285 to $325 per ounce and $1.30 to $1.40 per pound, respectively. Potential production shortfalls due to restricted access in 2008 would be recovered in 2009.

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We currently have a 45% ownership interest in the Batu Hijau mine, held through the Nusa Tenggara partnership (“NTP”) with an affiliate of Sumitomo Corporation of Japan. We have a 56.25% interest in NTP and the Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns 80% of P.T. Newmont Nusa Tenggara (“PTNNT”), the Indonesian subsidiary that owns Batu Hijau. We identified NTP as a Variable Interest Entity as a result of certain capital structures and contractual relationships and have fully consolidated Batu Hijau in the consolidated financial statements since January 1, 2004. The remaining 20% interest in PTNNT is owned by P.T. Pukuafu Indah (“PTPI”), an unrelated Indonesian company.

Under the Contract of Work, beginning in 2005 and continuing through 2010, a portion of PTNNT’s shares must be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. The price at which such interest must be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Jakarta Stock Exchange, or the fair market value of such interest as a going concern, as agreed with the Indonesian government. Pursuant to this provision, it is possible that the ownership interest of NTP in PTNNT, owner of Batu Hijau, could be reduced to 49%.

PTPI has owned and continues to own a 20% interest in PTNNT, and therefore NTP was required to offer a 3% interest for sale in 2006 and an additional 7% interest in 2007. In accordance with the Contract of Work, an offer to sell a 3% interest was made to the government of Indonesia in 2006 and an offer for an additional 7% interest was made in 2007. While the central government declined to participate in the 2006 and 2007 offers, local governments in the area in which the Batu Hijau mine is located have expressed interest in acquiring shares, as have various Indonesian nationals. In January 2008, NTP agreed to sell, under a carried interest arrangement, 2% of PTNNT’s shares to Kabupaten Sumbawa, one of the local governments, subject to satisfaction of closing conditions. The Government of Indonesia has subsequently stated that it will not approve the transfer of shares under this agreement. On February 11, 2008, PTNNT received notification from the Department of Energy and Mineral Resources (“DEMR”) alleging that PTNNT is in breach of its divestiture requirements under the Contract of Work and threatened to issue a notice to terminate the Contract of Work if PTNNT did not agree to divest the 2006 and 2007 shares, in accordance with the direction of the DEMR, by February 22, 2008, which date was extended to March 3, 2008. On March 3, 2008, the Indonesian government filed for international arbitration, as did PTNNT, as provided under the Contract of Work. In the arbitration proceeding, PTNNT seeks a declaration that the Government of Indonesia is not entitled to terminate the Contract of Work and additional declarations pertaining to the procedures for divesting the shares. For its part, the Government of Indonesia seeks declarations that PTNNT is in default of its divestiture obligations, that the Government may terminate the Contract of Work, and that PTNNT must cause shares subject to divestiture to be sold to certain local governments. The international arbitration panel has been appointed and briefing is under way, with a hearing expected in December 2008. Newmont and Sumitomo believe there is no basis for terminating the Contract of Work, and PTNNT is vigorously defending the matter.

In 1997, to enable development of the Batu Hijau mine, PTNNT secured an aggregate US$1 billion in financing from the United States Export-Import Bank, the Japan Bank for International Cooperation (formerly the Japan Export-Import Bank), and Kreditanstalt fur Wiederaufbau (the German Export-Import Bank) (collectively, the “Senior Lenders”). The Senior Lenders required the shareholders of PTNNT to pledge their shares as security for repayment of the loans. As part of that process, on October 30, 1997, the Minister of Energy and Mineral Resources approved the share pledge arrangements. The share pledge requirement does not impede the ability of PTNNT shares to be divested.

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Subsequent to an additional 7% interest being offered for sale on March 28, 2008, the Director General of Mineral, Coal and Geothermal Resources at DEMR claimed that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered for sale that are pledged to the Senior Lenders as security for the repayment of the senior debt. In the letter, the Director General claims that Newmont would be in default under the Contract of Work if the shares of PTNNT offered for sale in March 2008, together with the shares offered in 2006 and 2007, were not in the possession of “Indonesian government and/or government owned entities”, free of any such senior pledge, by July 13, 2008. Consequently, on July 10, 2008, PTNNT filed a notice to commence an additional international arbitration proceeding, as provided for under the Contract of Work, to resolve the claim that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered that are subject to pledge obligations to the Senior Lenders. PTNNT has proposed that the share pledge issue be incorporated into, and be resolved as part of, the initial arbitration proceeding.

In addition, we have been in discussions to extend our forest use permit (called a pinjam pakai) for over three years. This permit is a key requirement to continue to efficiently operate the Batu Hijau mine. The permit extension has not yet been received and the resulting delay could have an adverse impact on operating and financial results. In 2005, relevant Indonesian governmental authorities reviewed the contractual requirements for extension of the pinjam pakai and determined that we meet those requirements.

Ahafo Operation

Gold Ounces Sold


Amortization

2008 (1) 2007 2008 2007 2008 2007

(ounces in thousands) ($ per ounce) ($ per ounce) Three months ended June 30, 134 123 $ 390 $ 364 $ 147 $ 108 Six months ended June 30, 239 248 $ 425 $ 344 $ 138 $ 93 ( 1 ) Includes 16 start-up ounces for the second quarter and first half of 2008.

Gold ounces sold at Ahafo increased 9% in the second quarter of 2008 compared to 2007 due to a 21% increase in mill ore grades, partially offset by 4% lower recovery and 3% lower throughput.

Gold ounces sold at Ahafo decreased 4% in the first half of 2008 compared to 2007 as a result of unplanned mill downtime and unexpected power interruptions, partially offset by higher grade and inventory sales.

Ore tons mined in the second quarter of 2008 increased to 2.6 million tons, up from 2.2 million tons in the second quarter of 2007. Total tons mined in the second quarter of 2008 increased to 14.4 million tons, up from 13.6 million tons in the second quarter of 2007 mainly due to equipment additions.

Ore tons mined in the first half of 2008 increased to 5.0 million tons, up from 4.8 million tons in the first half of 2007. Total tons mined in the first half of 2008 increased to 28.0 million tons, up from 24.4 million tons in the first half of 2007, due to equipment additions and increased mining efficiencies. Development of the Awonsu pit was completed during the second quarter of 2008.

Costs applicable to sales per ounce increased 7% and 24% in the second quarter and first half of 2008 compared to 2007, respectively, due to higher fuel, power, maintenance and contract services costs.

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( 2 ) Excludes Amortization and Accretion .

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We continue to expect gold sales of approximately 495,000 to 530,000 ounces for the year. We have revised our expectations for Costs applicable to sales to approximately $450 to $500 per ounce, driven by lower than expected costs for labor and power in the first half of the year, partially offset by anticipated power rate increases in the second half of the year. Regional management continues to negotiate with the Volta River Authority on the final price per kilowatt hour. Based on the current rate, we have incorporated a potential increase to 2008 Costs applicable to sales of approximately $15 to $30 per ounce.

Other Operations



Gold Ounces Sold


Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce)

Kori Kollo (2) (88% owned) 21 22 $ 474 $ 354 $ 107 $ 113 La Herradura (44% owned) 25 23 388 264 85 43 Golden Giant — 9 — 172 — —


Gold Ounces Sold


Amortization

2008 2007 2008 2007 2008 2007 (ounces in thousands) ($ per ounce) ($ per ounce)

Kori Kollo (2) (88% owned) 41 46 $ 461 $ 343 $ 112 $ 110 La Herradura (44% owned) 49 45 357 293 84 76 Golden Giant — 12 — 177 — —


( 1 ) Excludes Amortization and Accretion .

Kori Kollo, Bolivia . Consolidated gold ounces sold remained constant in the second quarter of 2008 from 2007. Costs applicable to sales per ounce increased 34% in the second quarter of 2008 from 2007, primarily as a result of additional Bolivian royalties. Consolidated gold ounces sold decreased 11% in the first half of 2008 from 2007 due to delays with Phase 7-B, the shortfall of ounces placed at Kori Chaca and lower recovery of transitional ore at Llallagua. Costs applicable to sales per ounce increased 34% in the first half of 2008 from 2007, primarily as a result of lower production, higher leaching costs and additional Bolivian royalties.

La Herradura, Mexico . Gold ounces sold increased 9% in both the second quarter and first half of 2008 from 2007 due to higher ore placement on the leach pads. Costs applicable to sales per ounce increased 47% and 22% in the second quarter and first half of 2008 from 2007, respectively, primarily due to increased waste stripping.

We expect consolidated gold sales for Other Operations in 2008 of approximately 160,000 to 180,000 ounces at Costs applicable to sales of approximately $360 to $400 per ounce.

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(2) Consolidated gold ounces sold includes minority interests’ share.

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Foreign Currency Exchange Rates

Our foreign operations sell their gold and copper production based on U.S. dollar metal prices. Approximately 28% of our Costs applicable to sales were paid in local currencies during both the second quarter and first half of 2008 and 2007. Variations in the local currency exchange rates in relation to the U.S. dollar at our foreign mining operations increased consolidated Costs applicable to sales per ounce by approximately $11, net of hedging gains, during both the second quarter and first half of 2008 as compared to the second quarter and first half of 2007.

Liquidity and Capital Resources

Cash Provided from (Used in) Operating Activities

Net cash provided from continuing operations was $976 for the first half of 2008 compared to Net cash used in continuing operations of $624 in 2007 due to significantly higher realized gold and copper prices, as discussed above in Consolidated Financial Results . The 2007 results were also negatively impacted by the $578 settlement of the price-capped forward sales contracts and the $276 settlement of pre-acquisition Australia income taxes of Normandy.

Investing Activities

Net cash used in investing activities of continuing operations was $1,238 during the first half of 2008 compared to $568 during the same period of 2007, driven largely by increased capital expenditures and completion of the acquisition of Miramar Mining Corporation (“Miramar”) in 2008 and the cash received on repayment of the Batu Hijau carried interest in 2007.

Additions to property, plant and mine development were as follows:

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Six Months Ended

June 30, 2008 2007

Nevada, USA $ 172 $ 277 Yanacocha, Peru 77 114 Australia/New Zealand:

Tanami, Australia 20 16 Kalgoorlie, Australia 5 2 Jundee, Australia 20 19 Waihi, New Zealand 18 19 Boddington, Australia 404 166 Other, Australia 1 2

468 224

Batu Hijau, Indonesia 61 24 Africa 68 56 Hope Bay 30 —

Other Operations:

Kori Kollo, Bolivia 4 —La Herradura, Mexico 12 8

16 8

Corporate and Other 5 7

$ 897 $ 710

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Capital expenditures in Nevada during the first half of 2008 were primarily related to the completion of the power plant and sustaining mine development. Yanacocha capital expenditures were primarily related to construction of the gold mill, development of the Conga project and leach pad expansions. Capital expenditures in Australia/New Zealand largely resulted from the continued construction of the Boddington project. In 2007, we commenced a hedging program to reduce the variability of the Australian denominated capital expenditures related to Boddington. At June 30, 2008, we have hedged 63% of our remaining forecasted Australian dollar denominated capital expenditures in 2008 and 2009 at an average rate of 0.90. Batu Hijau’s capital expenditures were predominately for sustaining mine development and construction of a second tailings pipeline. Capital expenditures at Ahafo were mainly as a result of mine equipment purchases, the development of Awonsu, Ahafo North and the Amoma pit and sustaining development. We expect to spend $1,800 to $2,000 on consolidated capital expenditures in 2008.

Capital expenditures in Nevada during the first half of 2007 were primarily due to the construction of the power plant, mine equipment replacement and sustaining mine development. Yanacocha capital expenditures were primarily related to construction of the gold mill and leach pad expansions. Capital expenditures in Australia/New Zealand largely resulted from the continued construction of the Boddington project. Batu Hijau’s capital expenditures were predominately used for mine equipment purchases, mine dewatering, and sustaining mine development. Capital expenditures at Ahafo were mainly as a result of power generation solutions, mine equipment purchases, and infrastructure and land acquisition.

Investments in marketable debt and equity securities, net. During the first half of 2008, we purchased marketable equity securities of Gabriel Resources for $11 and other marketable securities for $6. In the second quarter of 2008, we received cash of $17 for the sale of shares of marketable equity securities, realizing a gain of $10. During the first half of 2007, we purchased additional marketable equity securities of Gabriel Resources for $27, and other marketable equity securities for $7, partially offset by net proceeds of $10 from auction rate marketable debt securities.

Acquisitions. During the first half of 2008, we paid $318 to acquire the remaining outstanding common shares of Miramar, resulting in Miramar becoming a wholly-owned subsidiary. The total Miramar purchase price was $1,353. As a result of the completed acquisition of Miramar, we control the Hope Bay Project, a large undeveloped gold project in Nunavut, Canada. In April 2008, we purchased additional shares of EGR for $7, net of cash acquired, bringing our ownership interest to 56.67% from 46.72%.

Financing Activities

Net cash provided from financing activities was $189 during the first half of 2008 compared to $554 during the same period of 2007.

Repayment of debt. During the first half of 2008, we made scheduled debt repayments of $22 related to the sale-leaseback of the refractory ore treatment plant, classified as a capital lease, $43 related to the Batu Hijau project, $7 on the Yanacocha credit facility and $5 on Yanacocha capital leases.

During the first half of 2008, we received net proceeds of $475 under our $2,000 revolving credit facility compared to net proceeds of $810 during the same period of 2007. The facility is also used for the issuance of letters of credit totaling $476, primarily supporting reclamation obligations (see “Off-Balance Sheet Arrangements” below).

Scheduled minimum debt repayments are $178 for the remainder of 2008, $142 in 2009, $147 in 2010, $323 in 2011, $610 in 2012 and $1,946 thereafter. We expect to be able to fund maturities of

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debt from Net cash provided by operating activities , short-term investments, existing cash balances or available credit facilities.

At June 30, 2008, we were in compliance with all required debt covenants and other restrictions related to our debt agreements.

Dividends paid to minority interests. We paid dividends of $147 and $115 to minority interests during the first half of 2008 and 2007, respectively.

Dividends paid to common stockholders. We declared regular quarterly dividends totaling $0.20 per common share through June 30, 2008 and June 30, 2007. Additionally, Newmont Mining Corporation of Canada Limited, a subsidiary of the Company, declared regular quarterly dividends on its exchangeable shares totaling C$0.2022 per share through June 30, 2008 and C$0.2308 through June 30, 2007. We paid dividends of $91 to common stockholders in the first half of 2008 and $90 in the first half of 2007.

Proceeds from stock issuance. We received proceeds of $24 and $14 during the first half of 2008 and 2007, respectively, from the issuance of common stock related to the exercise of stock options.

Discontinued Operations

Net operating cash (used in) provided from discontinued operations was $(112) and $61 in the first half of 2008 and 2007, respectively, as follows:

During the first half of 2008, we made tax payments of $137 related to the December 2007 royalty portfolio sale.

Net cash (used in) provided from investing activities of discontinued operations was $(6) and $74 in the first half of 2008 and 2007, respectively. Cash used in investing activities of discontinued operations in 2008 included accrued expense payments on the royalty portfolio sale of $11, partially offset by $5 in proceeds from the sale of assets at Pajingo. During the first half of 2007, proceeds from the sale of marketable equity securities included $69 from the sale of Oxiana Limited shares and $10 from the sale of other marketable equity securities, partially offset by $2 in purchases of other marketable equity securities. We also had additions to property, plant and mine development of $3 at Pajingo.

Off-Balance Sheet Arrangements

We have the following off-balance sheet arrangements: operating leases (as disclosed in Note 29 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, filed on February 21, 2008) and $747 of outstanding letters of credit, surety bonds and bank guarantees. We also provide a contingent support line of credit to PTNNT of which our pro-rata share is $37. Batu Hijau has sales agreements to sell copper concentrates at market prices as follows (in thousands of tons): 280 for the remainder of 2008; 755 in 2009; 859 in 2010, 741 in 2011, 725 in 2012 and 890 thereafter.

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Six Months Ended

June 30, 2008 2007

Royalty portfolio $ (112 ) $ 42 Pajingo — 19

$ (112 ) $ 61

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Environmental

Our 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. We conduct our operations so as to protect the public health and environment and believe our operations are in compliance with applicable laws and regulations in all material respects. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. At June 30, 2008 and December 31, 2007, $563 and $569, respectively, were accrued for reclamation costs relating to currently producing mineral properties.

In addition, we are 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. We believe 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 our best estimate of our liability for these matters, $179 and $125 were accrued for such obligations at June 30, 2008 and December 31, 2007, respectively. Depending upon the ultimate resolution of these matters, we believe that it is reasonably possible that the liability for these matters could be as much as 112% greater or 3% lower than the amount accrued at June 30, 2008. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are charged to Other expense, net in the period estimates are revised. During the first half of 2008, we had reclamation estimate revisions of $61 that relate primarily to an increase in the reclamation liability at the former Mt. Leyshon and Midnite mine sites. The Mt. Leyshon reclamation revision was for site characterization, stabilization and long-term surface water management due to overflow discharge from heavy rain. The Midnite mine reclamation increased in light of the recent decisions made in the U.S. District Court for the Eastern District of Washington. During the first half of 2007, we had reclamation estimate revisions of $17 that relate to the former Resurrection and Empire mines.

For more information on our reclamation and remediation liabilities, see Notes 20 and 24 to the Condensed Consolidated Financial Statements.

During the first half of 2008 and 2007, capital expenditures were approximately $82 and $29, respectively, to comply with environmental regulations. Ongoing costs to comply with environmental regulations have not been a significant component of operating costs.

We spent $6 and $5, respectively, during the first half of 2008 and 2007 for environmental obligations related to the former, primarily historic, mining activities discussed in Note 24 to the Condensed Consolidated Financial Statements.

Recently Adopted Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for our fiscal year beginning January 1, 2009.

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FAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are described below:

The following table sets forth our financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by FAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Our cash instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.

Our marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by us.

Our marketable debt securities include investments in auction rate securities and asset backed commercial paper. We review fair value for auction rate securities and asset backed commercial paper on at least a quarterly basis. The auction rate securities are valued based on quoted prices in markets that are not active. We determined the fair value based on indicative pricing from the underwriting bank. Such instruments are generally classified within Level 2 of the fair value hierarchy. The asset backed commercial paper falls within Level 3 of the fair value hierarchy because it trades infrequently and has little price transparency. We allocated an estimated impairment percentage to the various underlying asset classes within the asset backed commercial paper using unobservable inputs. The impairment value was applied sequentially to the various tranches within the asset backed commercial paper, resulting in an estimated fair value for each investment class. This value was supported by an

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Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair Value at June 30, 2008 Total Level 1 Level 2 Level 3

Assets:

Cash equivalents $ 55 $ 55 $ — $ —Marketable equity securities 1,955 1,955 — —Marketable debt securities 34 — 4 30 Trade receivable from provisional copper and gold concentrate

sales 125 125 — —Derivative instruments, net 59 — 59 —

$ 2,228 $ 2,135 $ 63 $ 30

Liabilities:

8 5 / 8 % debentures $ 93 $ — $ 93 $ —

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indicative value obtained from a third party, which was facilitated by the Pan-Canadian Investors Committee for Third-Party Structured Asset Backed Commercial Paper.

Our trade receivable from provisional copper and gold concentrate sales is valued using quoted market prices based on the forward London Metal Exchange and as such is classified within Level 1 of the fair value hierarchy.

Our derivative instruments are valued using pricing models and we generally use similar models to value similar instruments. Where possible, we verify the values produced by our pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. Our derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy.

We have fixed to floating swap contracts to hedge the interest rate risk exposure on $100 of our 8 5 / 8 % uncollateralized debentures due May 2011. The hedged portion of our 8 5 / 8 % debentures are valued using pricing models which require inputs, including risk-free interest rates and credit spreads. Because the inputs are derived from observable market data, the hedged portion of the 8 5 / 8 % debentures is classified within Level 2 of the fair value hierarchy.

The table below sets forth a summary of changes in the fair value of our Level 3 financial assets (asset backed commercial paper) for the six months ended June 30, 2008.

The total amount of unrealized losses for the period was included in Accumulated other comprehensive income as a result of changes in foreign exchange rates from December 31, 2007.

In February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of FAS 159 were adopted January 1, 2008. We did not elect the Fair Value Option for any of our financial assets or liabilities, and therefore, the adoption of FAS 159 had no impact on our consolidated financial position, results of operations or cash flows.

In June 2007, the EITF reached consensus on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classified nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF 06-11 was to be applied prospectively for tax benefits on dividends declared in our fiscal year beginning January 1, 2008. The adoption of EITF 06-11 had an insignificant impact on our consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

In May 2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”) which identifies the sources of accounting principles and the

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Balance at beginning of period $ 31 Unrealized losses (1 )

Balance at end of period $ 30

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framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. generally accepted accounting principles (GAAP). FAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “ The Meaning of Present Fairly in Conformity with GAAP”. We do not expect the adoption of FAS 162 to have an impact on our consolidated financial position, results of operations or cash flows.

In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”). Convertible debt instruments within the scope of FSP APB 14-1 are not addressed by the existing APB 14. FSP APB 14-1 requires that the liability and equity components of convertible debt instruments within the scope of FSP APB 14-1 be separately accounted for in a manner that reflects the entity’s nonconvertible debt borrowing rate. This requires an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component will be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. FSP APB 14-1 is effective for our fiscal year beginning January 1, 2009 and will be applied retrospectively to all periods presented. We estimate that approximately $350 of debt discount will be recorded and the effective interest rate on our 2014 and 2017 convertible senior notes (see Note 18 to the Consolidated Financial Statements) will increase by approximately 5 percentage points to 6.0% and 6.25%, respectively, for the non-cash amortization of the debt discount.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”) which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“FAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under FAS 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141, “Business Combinations” (“FAS 141”). FSP 142-3 is effective for our fiscal year beginning January 1, 2009 and will be applied prospectively to intangible assets acquired after the effective date. We do not expect the adoption of FSP 142-3 to have an impact on our consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued FASB Statement No. 161, “Disclosure about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (“FAS 161”) which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for under FAS 133, and how derivative instruments and the related hedged items affect an entity’s financial position, financial performance and cash flows. FAS 161 is effective for our fiscal year beginning January 1, 2009. We are currently evaluating the potential impact of adopting this statement on our derivative instrument disclosures.

In December 2007, the FASB issued FASB Statement No. 141(R), “Business Combinations” (“FAS 141(R)”) which amends FAS 141, and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141(R) is effective for our

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fiscal year beginning January 1, 2009 and is to be applied prospectively. We are currently evaluating the potential impact of adopting this statement on our consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“FAS 160”) which establishes accounting and reporting standards pertaining to (i) ownership interests in subsidiaries held by parties other than the parent, (ii) the amount of net income attributable to the parent and to the noncontrolling interest, (iii) changes in a parent’s ownership interest, and (iv) the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. FAS 160 also requires that the reporting company clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective for our fiscal year beginning January 1, 2009. We are currently evaluating the potential impact of adopting this statement on our consolidated financial position, results of operations or cash flows.

Safe Harbor Statement

Certain statements contained in this report (including information incorporated by reference) are “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, and are intended to be covered by the safe harbor provided for under these sections. Our forward-looking statements include, without limitation: (a) statements regarding future earnings, and the sensitivity of earnings to gold and other metal prices; (b) estimates of future mineral production and sales for specific operations and on a consolidated basis; (c) estimates of future production costs and other expenses, for specific operations and on a consolidated basis; (d) estimates of future cash flows and the sensitivity of cash flows to gold and other metal prices; (e) estimates of future capital expenditures and other cash needs for specific operations and on a consolidated basis and expectations as to the funding thereof; (f) statements as to the projected development of certain ore deposits, including estimates of development and other capital costs, financing plans for these deposits, and expected production commencement dates; (g) estimates of future costs and other liabilities for certain environmental matters; (h) estimates of reserves, and statements regarding future exploration results and reserve replacement; (i) statements regarding modifications to our hedge positions; (j) statements regarding future transactions relating to portfolio management or rationalization efforts; and (k) projected synergies and costs associated with acquisitions and related matters.

Where we express 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, our 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 those forward-looking statements. Important factors that could cause actual results to differ materially from such forward-looking statements (“cautionary statements”) are disclosed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007, and in our other filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements. We disclaims any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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(dollars in millions, except per ounce and per pound amounts).

Metal Prices

Changes in the market price of gold significantly affect our profitability and cash flow. Gold prices can fluctuate widely due to numerous factors, such as demand; our forward selling by producers; our central bank sales, purchases and lending; our investor sentiment; the strength of the U.S. dollar; and global mine production levels. Changes in the market price of copper also affect our profitability and cash flow. Copper is traded on established international exchanges and copper prices generally reflect market supply and demand, but can also be influenced by speculative trading in the commodity or by currency exchange rates.

Foreign Currency Contracts

We have entered into a series of foreign currency contracts to hedge the variability of the U.S. dollar amount of forecasted foreign currency expenditures caused by changes in currency rates. We entered into $/IDR forward purchase contracts with expiration dates ranging up to one year which reduced Batu Hijau Costs applicable to sales by $nil and $2 for the three months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, the $/IDR forward purchase contracts reduced Batu Hijau Costs applicable to sales by $1 and $3, respectively. During the third quarter of 2007, we began a layered fixed forward contract program to hedge a portion of our A$ denominated operating expenditures and during the first quarter of 2008 began a layered fixed forward contract program to hedge a portion of our NZ$ denominated operating expenditures. The programs include a series of fixed forward contracts with expiration dates of up to three years from the date of issue. For the three months ended June 30, 2008, the A$ and NZ$ operating hedge programs reduced Australia/New Zealand Costs applicable to sales by $4 and $nil, respectively. For the six months ended June 30, 2008, the A$ and NZ$ operating hedge programs reduced Australia/New Zealand Costs applicable to sales by $5 and $nil, respectively. All of the currency contracts were designated as cash flow hedges, and as such, unrealized changes in market value have been recorded in Accumulated other comprehensive income.

During the fourth quarter of 2007, we began a program to hedge a portion of our A$ denominated capital expenditures related to the construction of Boddington. The program consists of a series of fixed forward contracts and bought call option contracts with expiration dates of up to one year from the date of issue. The A$ denominated contracts have been designated as cash flow hedges of future Boddington capital expenditures, and as such, changes in the market value have been recorded in Accumulated other comprehensive income . The realized gains and losses associated with the capital expenditure hedge program will impact Amortization during future periods in which Boddington assets are placed into service and affect earnings.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARK ET RISK

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We had the following foreign currency derivative contracts outstanding at June 30, 2008: Expected Maturity Date Fair Value

2008 2009 2010 2011 Total/

Average

At June 30,

2008 (1)

At December 31,

2007 (2)

IDR Forward Purchase Contracts:

$ (millions) $ 59 $ 15 $ — $ — $ 74 $ 1 $ (1 ) Average rate (IDR/$) 9,484 9,652 — — 9,518

A$ Operating Forward Purchase Contracts:

$ (millions) $ 127 $ 224 $ 168 $ 24 $ 543 $ 38 $ — Average rate ($/A$) 0.88 0.85 0.83 0.83 0.85

NZ$ Operating Forward Purchase Contracts:

$ (millions) $ 14 $ 22 $ 4 $ — $ 40 $ (1 ) $ — Average rate ($/NZ$) 0.77 0.74 0.71 — 0.75

A$ Capital Forward Purchase Contracts:

$ (millions) $ 141 $ 116 $ — $ — $ 257 $ 14 $ (1 ) Average rate ($/A$) 0.87 0.91 — — 0.89

A$ Capital Call Option Contracts:

$ (millions) $ 56 $ — $ — $ — $ 56 $ 1 $ 1 Average rate ($/A$) 0.95 — — — 0.95

(1) At June 30, 2008, the fair value of the IDR operating forward purchase contracts includes $1 in Other current assets, the fair

value of the A$ operating forward purchase contracts includes $20 in Other current assets and $18 in Other long-term assets, the fair value of the NZ$ operating forward purchase contracts includes $(1) in Other current liabilities, and the fair value of the capital hedge program related to Boddington includes $14 in Other current assets for A$ forward purchase contracts and $1 in Other current assets for A$ bought call option contracts.

Diesel Fixed Forward Contracts

During the first quarter of 2008, we implemented a program to hedge a portion of our operating cost exposure related to diesel prices of fuel consumed at our Nevada operations. The program consists of a series of financially settled fixed forward contracts with expiration dates of up to one year from the date of issue. The contracts have been designated as cash flow hedges of future diesel purchases, and as such changes in the market value have been recorded in Accumulated other comprehensive income .

We had the following diesel derivative contracts outstanding at June 30, 2008:

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(2) At December 31, 2007, the fair value of the IDR operating forward purchase contracts includes $(1) in Other current liabilities, the fair value of the A$ operating forward purchase contracts includes $2 in Other current assets, $2 in Other Long-term assets , $(1) in Other current liabilities , and $(3) in Other long-term liabilities, and the fair value of the capital hedge program related to Boddington includes $(1) in Other current liabilities for A$ forward purchase contracts and $1 in Other current assets for A$ bought call option contracts.

Expected Maturity Date Fair Value

2008 2009 Total/

Average

At June 30,

2008

At December 31,

2007

Diesel Forward Purchase Contracts:

$ (millions) $ 11 $ 7 $ 18 $ 2 $ —Average rate ($/gallon) 3.42 3.50 3.45

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Interest Rate Swap Contracts

At June 30, 2008, we had $100 fixed to floating swap contracts designated as a hedge against a portion of our $223 8 5 / 8 % debentures expiring in 2011. Under the hedge contract terms, we receive fixed-rate interest payments at 8.625% and pay floating-rate interest amounts based on periodic London Interbank Offered Rate (“LIBOR”) settings plus a spread, ranging from 2.60% to 3.49%. For the three and six months ended June 30, 2008 and 2007, the hedge contracts decreased Interest expense, net of capitalized interest by $1 and $nil, respectively. The fair value of the interest rate swaps was $4 at June 30, 2008 and December 31, 2007.

Provisional Copper and Gold Sales

Our provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the copper and gold concentrates at the forward London Metal Exchange price at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.

At June 30, 2008 and 2007, Batu Hijau had the following gross revenues before treatment and refining charges subject to final price adjustments:

The average final price adjustments realized were as follows:

During the fiscal period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports file or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

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At June 30, 2008 2007

Gross revenue subject to final price adjustments

Copper $ 251 $ 402 Gold $ 13 $ 28

Three Months Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007

Average final price adjustments

Copper 20 % 26 % 12 % 4 % Gold (3 )% 2 % 3 % 2 %

ITEM 4. CONTROLS AND PROCEDURES.

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PART II—OTHER INFORMATION

Information regarding legal proceedings is contained in Note 24 to the Condensed Consolidated Financial Statements contained in this Report and is incorporated herein by reference.

ITEM 1. LEGAL PROCEEDINGS.

ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES.

Period

(a) Total

Number of

Shares Purchased

(b) Average

Price Paid

Per Share

(c) Total Number of

Shares Purchased

as Part of Publicly

Announced Plans or Programs

(d) Maximum Number

(or Approximate Dollar

Value) of Shares that

may yet be Purchased

under the Plans or Programs

April 1, 2008 through April 30, 2008 2,005 (1) $ 46.55 — N/A May 1, 2008 through May 31, 2008 1,879 (2) $ 47.97 — N/A June 1, 2008 through June 30, 2008 43 (1) $ 46.85 — N/A (1) Represents shares delivered to us from restricted stock held by our employees upon vesting for purpose of covering the

recipients’ tax withholding obligations.

The following matters were voted upon at the annual meeting of stockholders held on April 23, 2008:

All matters voted on at the annual meeting were approved, except Proposals No. 3 and 4. The voting results were as follows:

Proposal #1—Election of Directors.

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(2) Represents shares forfeited by an employee of previously granted restricted shares of common stock upon termination of employment.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .

1. Elect directors;

2. Ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as Newmont’s independent auditors for 2008;

3. Consider and act upon a stockholder proposal to approve majority voting for the election of directors in a non-contested

election; and

4. Consider and act upon a stockholder proposal regarding independent Board Chairman.

Name Votes For Votes Withheld

Glen A. Barton 355,463,803 6,895,812 Vincent. A. Calarco 354,544,473 7,815,142 Joseph A. Carrabba 355,971,505 6,388,110 Noreen Doyle 354,593,608 7,766,007 Veronica M. Hagen 355,995,523 6,364,092 Michael S. Hamson 354,571,997 7,787,618 Robert J. Miller 306,461,502 55,898,112 Richard T. O’Brien 355,948,972 6,410,643 John B. Prescott 309,756,874 52,602,741 Donald C. Roth 355,865,764 6,493,851 James V. Taranik 303,243,481 59,116,134

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Proposal #2—Ratification of Auditors.

Proposal #3—Stockholder Proposal to approve Majorit y Voting for the Election of Directors in a Non-Con tested Election.

Proposal #4—Stockholder Proposal regarding Independ ent Board Chairman.

There were no broker non-votes included in the results of the election of directors or the ratification of auditors.

77

Votes For 356,006,159 Votes Against 2,525,733 Abstentions 3,827,723

Votes For 140,515,119 Votes Against 164,498,741 Abstentions 4,701,359 Broker Non-Votes 52,644,396

Votes For 81,443,916 Votes Against 223,617,156 Abstentions 4,654,148 Broker Non-Votes 42,644,395

ITEM 6. EXHIBITS.

(a) The exhibits to this report are listed in the Exhibit Index.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exch ange Act of 1934, the registrant has duly caused th is report to be signed on its behalf by the undersigned thereunto d uly authorized.

78

N EWMONT M INING C ORPORATION (Registrant)

Date: July 24, 2008 /s/ R USSELL B ALL

Russell Ball Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: July 24, 2008 /s/ R OGER P. J OHNSON

Roger P. Johnson Vice President and Chief Accounting Officer

(Principal Accounting Officer)

Table of Contents

NEWMONT MINING CORPORATION EXHIBIT INDEX

79

Exhibit Number Description

10.1

Contract of Work dated December 2, 1986, between the Government of the Republic of Indonesia and PT Newmont Nusa Tenggara, filed herewith.

12.1 Computation of Ratio of Earnings to Fixed Charges, filed herewith.

31.1

Certification Pursuant to Rule 13A-14 or 15-D-14 of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Executive Officer, filed herewith.

31.2

Certification Pursuant to Rule 13A-14 or 15-D-14 of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Chief Financial Officer, filed herewith.

32.1

Statement Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Principal Executive Officer, filed herewith. (1)

32.2

Statement Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Chief Financial Officer, filed herewith. (1)

(1) This document is being furnished in accordance with SEC Release Nos. 33-8212 and 34-47551.

Exhibit 10.1

CONTRACT OF WORK

BETWEEN

THE GOVERNMENT OF THE

REPUBLIC OF INDONESIA

AND

PT NEWMONT NUSA TENGGARA

CONTENTS ARTICLE Page

INTRODUCTION 1

1 DEFINITIONS 3

2 APPOINTMENT AND RESPONSIBILITY OF THE COMPANY 5

3 MODUS OPERANDI 7

4 CONTRACT AREA 8

5 GENERAL SURVEY PERIOD 10

6 EXPLORATION PERIOD 11

7 REPORT AND SECURITY DEPOSIT 13

8 FEASIBILITY STUDIES PERIOD 16

9 CONSTRUCTION PERIOD 18

10 OPERATING PERIOD 19

11 MARKETING 23

12 IMPORT AND RE-EXPORT FACILITIES 26

13 TAXES AND OTHER FINANCIAL OBLIGATIONS OF THE COMPANY 28

14 RECORDS, INSPECTION AND WORK PROGRAM 37

15 CURRENCY EXCHANGE 39

16 SPECIAL RIGHTS OF THE GOVERNMENT 41

17 EMPLOYMENT AND TRAINING OF INDONESIAN NATIONALS 42

18 ENABLING PROVISIONS 44

19 FORCE MAJEURE 47

20 DEFAULT 48

21 SETTLEMENT OF DISPUTES 49

22 TERMINATION 50

23 CO-OPERATION OF THE PARTIES 52

ARTICLE Page

24 PROMOTION OF NATIONAL INTEREST 53

25 REGIONAL CO-OPERATION IN REGARD TO ADDITIONAL INFRASTRUCTURE 58

26 ENVIRONMENTAL MANAGEMENT AND PROTECTION 60

27 LOCAL BUSINESS DEVELOPMENT 61

28 MISCELLANEOUS PROVISIONS 63

29 ASSIGNMENT 65

30 FINANCING 66

31 TERM 67

32 GOVERNING LAW 68

ANNEX “A” - CONTRACT AREA 69

ANNEX “B” - MAP OF CONTRACT AREA 73

ANNEX “C” - LIST OF OUTSTANDING MINING AUTHORIZATIONS 74

ANNEX “D” - DEADRENT FOR VARIOUS STAGES OF ACTIVITIES 75

ANNEX “E” - FEASIBILITY STUDY REPORT 76

ANNEX “F” - ROYALTY ON MINERAL PRODUCTION 78

ANNEX “G” - ADDITIONAL ROYALTY ON MINERALS EXPORTED 81

ANNEX “H” - RULES FOR COMPUTATION OF INCOME TAX 84

CONTRACT OF WORK

This Agreement, made and entered into in Jakarta, in the Republic of Indonesia, on the Second day of December 1986, by and between the Government of the Republic of Indonesia, represented herein by the Minister of Mines and Energy of the Government of the Republic of Indonesia (hereinafter called the Government) and PT. Newmont Nusa Tenggara (an Indonesian judicial body incorporated by Notarial Deed Numbered 164 dated 18 November 1986, Ministerial Decree Numbered C2-8255-HT.01.01.TH’86 dated 27 November 1986), hereinafter called “the Company,” all of the shares in which at the time of its incorporation are owned by :

WITNESSETH THAT:

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1. Newmont Indonesia Limited, a company incorporated in the State of Delaware, USA, and having its registered office at 18th Floor, AMP Tower 535, Bourke Street, Melbourne, Victoria, Australia 3000 (hereinafter called “Newmont”).

2. PT. Pukuafu lndah, an Indonesian judicial body incorporated by Notarial Deed Numbered 22 dated September 25, 1978 Ministerial Decree Numbered Y.A.5/365/3 dated November 27, 1978 whose address is Arthaloka Building 14th Floor, Jalan Jenderal Sudirman, Jakarta, Indonesia.

A. All mineral resources contained in the territories of the Republic of Indonesia, including the offshore areas, are the national wealth of the Indonesian Nation, and the Government is desirous of developing the full potential of mining within its territories;

B. The Government is desirous of advancing the economic development of the people of Indonesia and to that end desires to encourage and promote the exploration and development of the mineral resources of Indonesia and, if an ore deposit of commercial quantity is found to exist, to take all appropriate measures, consistent with the needs of the people and the requirements of the Government, to facilitate the development of such ore deposit and the operation of mining enterprises in connection therewith;

C. The Government, through the operation of mining enterprises, is desirous of creating growth centers for regional development, creating more employment opportunities, encouraging and developing local business, and ensuring that skills, know-how and technology are transferred to Indonesian nationals, acquiring basic data regarding and related to the country’s mineral resources and preserving and rehabilitating the natural environment for further development of Indonesia;

NOW THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set out to be performed and kept by the Parties hereto, and intending to be legally bound hereby, it is stipulated and agreed between the Parties hereto as follows:

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D. The Company through Newmont Mining Corporation Ltd a company incorporated in the State of Delaware, U.S.A. has or has access to the information, knowledge, experience and proven technical and financial capability and other resources to undertake a program of General Survey, Exploration, development, construction, mining, processing and marketing hereinafter provided for, and is ready and willing to proceed thereto under the terms and subject to the conditions set forth in this Agreement; and

E. The Government and the Company are willing to co-operate in developing the mineral resources on the basis of the laws and regulations of the Republic of Indonesia, specifically Law No. 11 of 1967 on the Basic Provisions of Mining (Undang Undang Pokok Pertambangan) and Law No. 1 of 1967 on Foreign Capital Investment (Undang Undang Penanaman Modal Asing) and the relevant laws and regulations pertaining thereto.

ARTICLE 1

DEFINITIONS

The terms set forth below shall have the meanings therein set forth, respectively, wherever the same shall appear in this Agreement and whether or not the same shall be capitalised.

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1. “Affiliated Company” or “Affiliate ” means any person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with, the person specified. “Control” (including the terms “controlled by” and “under common control with” and “controls”) means the possession, directly or indirectly, of the ability to influence management decisions. Without limiting the generality of the above, such influence is presumed to exist if one person holds, directly or indirectly, 25% or more of the outstanding voting shares of another person.

2. “Subsidiary Company” or “Subsidiary” means any corporation controlled by a company through the direct or indirect ownership of fifty percent (50%) or more of the issued shares having power to vote.

3. “Enterprise” means General Survey, Exploration, evaluation, development, construction, operation, treatment and sale of minerals and all other activities by the Company for the purposes of or in connection with this Agreement.

4. “Expatriate Individuals” or “Expatriate” means individuals who are non-Indonesian nationals.

5. “Foreign Currency” means any currency other than Rupiah.

6. “Minerals” means all natural deposits and natural accumulations containing ores, minerals and/or basic chemical elements of all kinds, either in elemental form or in association or chemical combination with other metallic or non-metallic elements with the exception of hydrocarbon compounds, nickel, coal and radioactive minerals.

7. “General Survey” means an investigation or a preliminary exploration carried out along certain broad features of an area for surface indications of mineralisation.

8. “Exploration” means the search for minerals using geological, geophysical and geochemical methods and by boreholes, test pits, trenches, surface or underground headings, drifts or tunnels in order to locate the presence of economic mineral deposits and to find out their nature, shape and grade.

9. “Mining Area” means all those territories within the Contract Area containing potentially economic mineral deposit or deposits which the Company selects for mining development and designates by latitude and longitude on maps and by description upon or before the expiration of the Feasibility Studies Period as described in Article 8 of this Agreement and in which the Company shall propose to commence Mining.

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10. “Government” means the Government of the Republic of Indonesia, its Ministers, Ministries, Departments, Agencies, Instrumentalities, Regional, Provincial or District Authorities.

11. “Minister” or “Ministry” unless the context otherwise indicates means that member of the Government or that Government agency respectively charged with the administration of the Indonesian mining laws and regulations.

12. “Person(s)” means any individual, partnership, corporation, wherever organised or incorporated, and all other juridically distinct entities and associations whether or not incorporated.

13. “Rupiah” means the currency that constitutes legal tender in Indonesia.

14. “Associated Minerals” means minerals which geologically occur together with, are inseparable from and must necessarily be mined and processed together with the principal mineral.

15. “Mining” means recovery activities aimed at the economic exploitation of a certain ore deposit.

16. “Processing” means treatment of the ore after it has been mined, to produce at least a marketable mineral concentrate.

17. “Beneficial Use” means a use of the Environment or any element or segment of the Environment that is conducive to public benefit, welfare, safety or health and which requires protection from the effects of waste discharges, emissions and deposits.

18. “Environment” means physical factors of the surroundings of human beings, including land, water, atmosphere, climate, sound, odours, tastes and biological factors of animals and plants and the social factors of aesthetics.

19. “Pollution” means any direct or indirect alteration of the physical, thermal, chemical, biological, or radioactive properties of any part of the Environment by discharging, emitting, or depositing wastes so as materially to affect any Beneficial Use adversely, or to cause a condition which is hazardous or potentially hazardous to public health, safety or welfare, or to animals, birds, wildlife, fish or aquatic life, or to plants, and “pollute” has a corresponding meaning.

20. “Waste” includes any matter whether liquid, solid, gaseous or radioactive, which is discharge, emitted, or deposited in the Environment in such volume, constituency, or manner as to cause an alteration of the environment.

21. “Project Areas” means areas outside the Contract Area (as hereinafter defined) designated as such and delineated in a feasibility study report for mining development by the Company necessary for treatment and infrastructure facilities connected with such mining development.

ARTICLE 2

APPOINTMENT AND RESPONSIBILITY OF THE COMPANY

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1. The Company is hereby appointed the sole contractor for the Government with respect to the Contract Area. The Company shall perform work and obligations imposed on it by this Agreement, including the investment of capital in Indonesia and the payment of taxes to the Government, and shall have all rights conferred on it by this Agreement and in particular the sole rights to search and explore for minerals in the Contract Area (as hereinafter defined), to develop, mine wisely any mineral deposit found in the Mining Area, to process, refine, store, and transport by any means all Minerals extracted, to market, sell or dispose of all the product inside and outside Indonesia, and to perform all other operations and activities which may be necessary or convenient in connection therewith, with due observance of this Agreement.

2. Limited to the types of Minerals which may be exploited under this Agreement, as set forth in paragraph 1 above, the Company shall in no event deliberately search for, exploit, develop or otherwise deal in any way with radioactive minerals, hydrocarbon compounds or coal without first obtaining the approval of the Government.

3. The Company accepts the rights and obligations to conduct operations and activities in accordance with the terms of this Agreement. The Company shall conduct all such operations and activities in a good technical manner in accordance with good and acceptable international mining engineering standards and practices and in accordance with modern and accepted scientific and technical principles using appropriate modern and effective techniques, materials and methods to achieve minimum wastage and maximum safety as provided in the applicable laws and regulations of Indonesia. All operations and activities under this Agreement shall be conducted so as to avoid waste or loss of natural resources, to protect natural resources against unnecessary damage. Production shall not be restricted to the extraction of high grade ore to the neglect of low grade ore, but shall be related to the approved development plans and to economic cut-off grades throughout the Operating Period.

4. The Company shall conduct its operations under this Agreement in such a manner as to minimise harm to the Environment and shall utilise recognised modern mining industry practices to protect natural resources against unnecessary damage, to minimise Pollution and harmful emissions into the Environment in its operations and to dispose of waste materials in a manner consistent with good waste disposal practices. The Company shall otherwise conform with the relevant environmental protection laws and regulations of Indonesia.

5. In any event the Company shall be responsible for all damages as a result of emissions harmful to the Environment in the course of its operations, caused by the negligence of the Company. The Company shall also be responsible for reasonable preservation of the natural environment within which the Company operates and especially for taking no acts which may unnecessarily and unreasonably block or limit the further development of the resources of the area.

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6. The Company shall take all necessary measures in accordance with the laws and regulations of Indonesia to prevent and control fires and shall notify immediately the proper governmental authorities of any fire that may occur.

7. The Company shall take measures to prevent damage to the rights and property of the Government or third parties. In the event of negligence on the part of the Company or its agents or of any sub-contractor carrying on operations or activities for the Company under this Agreement, they shall be liable for such negligence in accordance with the laws of Indonesia.

8. The Company shall install and utilise such internationally recognised modern safety devices and shall observe such internationally recognised modern safety precautions as are provided and observed under conditions and operations comparable to those undertaken by the Company under this Agreement.

9. The Company shall likewise observe internationally recognised modern measures for the protection of the general health and safety of its employees and of all other persons having legal access to the area covered by this Agreement. The Company shall comply with the relevant health, safety and sanitary laws and regulations of Indonesia and comply with such instructions as may be given in writing by the appropriate authorities in accordance with such laws and regulations.

10. The Company shall have sole control and management of all of its activities under this Agreement and shall have full responsibility therefor and assume all risk thereof in accordance with the terms and conditions of this Agreement. Without in any way detracting from the Company’s responsibilities and obligations hereunder the Company may engage sub-contractors, whether or not Affiliates of the Company, for the execution of such phases of its operations as the Company deems appropriate. The records of such sub-contractors relative to operations for the Company under this Agreement shall be made available to Government inspectors.

ARTICLE 3

MODUS OPERANDI

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1. The Company is a corporation incorporated under the laws of the Republic of Indonesia and shall be domiciled in Indonesia and subject to the laws and the jurisdiction of courts in Indonesia which normally have jurisdiction over corporations. The Company shall maintain in Jakarta a principal office for receipt of any notification or other official and legal communication.

2. The Company contemplates a program for the Enterprise commencing with a General Survey of the Contract Area followed by Exploration on selected areas. The total program will be divided into five periods or stages hereinafter referred to as “General Survey Period”, “Exploration Period”, “Feasibility Studies Period”, “Construction Period” and “Operating Period”, respectively as further defined in the following Articles hereof.

3. The Company may contract for necessary technical, management and administrative services, provided that it shall not be released from any of its obligations hereunder. In the event that such services are contracted from Affiliates, such services will be obtained only at a charge not more than a non-affiliated party with equivalent qualifications to perform such services would charge for provision of such services to equivalent standards. All such charges should be fair and reasonable and accounted for in accordance with generally accepted accounting principles consistently applied. The Company shall produce on request by the Ministry evidence verifying all such charges.

4. The Company undertakes to conduct all activities hereunder in the manner and subject to the conditions of Article 2 and to continue such activities without interruption subject to Article 19 and Article 22, during the term of this Agreement, provided that such activities may be interrupted or suspended with the concurrence of the Government. Any such interruption or suspension shall not affect the mutual rights and obligations of the Parties hereto under this Agreement.

ARTICLE 4

CONTRACT AREA

declared before the date of the letter of approval in principle by the Government of the award of the Contract Area, and as set forth in Annex “C” attached to and hereby made part of this Agreement.

If any Mining Authorizations for Category “A”, “B” and “C” minerals and People’s Mining Activities (collectively referred to as “Authorizations”) either as set forth in Annex “C” or which at the date of the letter of approval in principle by the Government of the award of the Contract Area had a common boundary with the Contract Area, lapse, are cancelled, are relinquished or by any means the area of such Authorizations becomes vacant, then the Company shall have the right upon application to have such area included in the Contract Area. Any area so included shall fall into the earliest period or stage which then applies to any part of the Contract Area.

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1. The “Contract Area” means that area as defined in Annex “A” attached to this Agreement, as changed by an extension or reduction of the area in accordance with this Agreement. For all purposes of this Agreement, the original Contract Area shall be deemed to contain 1,127,134 (one million and one hundred twenty seven thousand and one hundred twenty four) hectares.

2. Excluded from the Contract Area are all existing

(i) Mining Authorizations granted and mining applications being processed for Category “A” and “B” minerals by the Government, and

(ii) Mining Authorizations granted and mining applications being processed for Category “C” minerals by the Government and Regional

Government, and

(iii) People’s Mining Activities

3. The Company may by written application to the Ministry relinquish all or any part of the Contract Area at any time and from time to time during the term of this Agreement. Any such application shall be submitted with a relinquishment report stating all the technical and geological findings of the relinquished areas and the reasons for the relinquishment supported by field data of activities undertaken in those areas. All basic data of the relinquished areas shall be submitted to the Government and will become the property of the Government. The Company, through relinquishment, should reduce the Contract Area :

(i) on or before the end of the General Survey Period to not more than seventy-five percent (75%) of the original Contract Area;

(ii) on or before the second anniversary of commencement of the Exploration Period to not more than fifty percent (50%) of the original

Contract Area; and

(iii) on or before the and of the Exploration Period to not more than twenty-five percent (25%) of the original Contract Area.

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4. The Company shall conduct work after Exploration on all prospective parts of the Contract Area with the objective of delineating Mining Areas for development during the full term of this Agreement. The Company’s development plans shall include the intended capacity of each mining and processing operation and any further evaluation work required as provided in the feasibility study and other Exploration activities. Those parts of the Contract Area not included in the intended development plan for development purposes should be returned to the Government with all the basic geological, explorational, metallurgical and other data related to those parts.

5. Any surrender of areas under this Article shall be without prejudice to any obligation or liability imposed by or incurred under this Agreement prior to the effective date of such surrender.

6. Every three years, after the commencement of the Operating Period, the Company shall submit to the Ministry copies of studies relating to the realisation of intended plans to achieve the intended capacities and make the necessary adjustment concerning the retained area in due observance of paragraph 4 of this Article.

ARTICLE 5

GENERAL SURVEY PERIOD

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1. The Company shall commence as soon as possible but not later than six months after the signing of this Agreement, a General Survey of the Contract Area to determine in what parts of the Contract Area deposits of Minerals are most likely to occur. The “General Survey Period” shall end on that date which shall be 12 (twelve) months after such commencement. The Company may apply to the Government to have any unexpired portion of the Preliminary Survey Permit (SIPP) period added to the General Survey Period. If approval is given by the Government for addition of the unexpired portion of the SIPP period to the General Survey Period then the sum of the two periods shall be called the “General Survey Period”. The Company shall spend not less than Forty Five United States Dollars (US$45.00) per square kilometre on field expenditure for the General Survey of the initial Contract Area during the General Survey Period including the SIPP period. Such expenses may include general organisational overhead and administrative expenses directly connected with field activities under this Agreement.

2. If at the expiration of eighteen (18) months from the date of signing of this Agreement or any time thereafter it appears to the Ministry that the Company has seriously neglected its obligations with respect to minimum expenditures as provided in paragraph 1 of this Article, the Ministry may require the Company to deliver to the Ministry a guarantee in the form of a bond or banker’s guarantee to a sum which shall not exceed the total outstanding expenditure obligations remaining unfulfilled. Such guarantee may at the end of the three year period commencing on the date of signing of this Agreement be forfeited to the Government to the extent that the Company may have failed to fulfill its expenditure obligations. Except to the extent of any forfeiture as aforesaid such guarantee shall be released at the end of that three year period.

3. In connection with the Company’s obligations under this Article, the Company shall submit to the Ministry within two (2) months from the expiration of the General Survey Period, a report setting forth the items and amounts of expenditure during the General Survey Period. The Company shall be prepared to support such report with documentation should the Government so request.

4. The Company may at any time discontinue the General Survey in any part or parts of the Contract Area on the ground that the continuation of such General Survey is no longer a commercially feasible or practical proposition and shall apply in writing to the Ministry with due observance of Article 4 paragraph 3 for the surrender of its rights and obligations for such part of the Contract Area. The Contract Area shall thereby be reduced to the area which remains after such surrender.

5. If at any time during the General Survey Period the Company discovers mineral deposits in any part or parts of the Contract Area and decides to proceed with the Exploration thereof it shall submit a written request and explanation to such effect to the Ministry and shall put such deposit or deposits into the succeeding stage without affecting its rights and obligations under this Agreement in respect of other areas.

ARTICLE 6

EXPLORATION PERIOD

The Company shall spend not less than Four Hundred and Fifty United States Dollars (U.S. $450.00) per square kilometre in field expenditure, for the exploration of the Contract Area during the Exploration Period.

Such expenses may include general organisational overhead and administrative expenses directly connected with field activities under the Agreement. The Company shall submit to the Ministry within 2 (two) months from the expiration of the Exploration Period a report setting forth the items and amounts of expenditures during the Exploration Period. The computation of such spending is based on the size of the Contract Area on the commencement of the Exploration Period. It is understood that as a consequence of the foregoing, different parts of the Contract Area will become subject to different provisions of this Agreement and of the Mining Laws and Regulations due to the different periods of activities applicable to such parts of said area.

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1. Upon completion of the General Survey the Company shall commence within the most promising parts of the Contract Area a program of Exploration based on the results of such General Survey. The program of Exploration shall as appropriate include detailed geology, geophysics and geochemistry as may be applicable, sampling, pitting, dredging and drilling to be undertaken during the “Exploration Period” .

2. The Company may at any time discontinue the Exploration in any part or parts of the Contract Area on the grounds that the continuation of such Exploration is no longer a commercially feasible or practical proposition and shall apply in writing with due observance of Article 4 paragraph 3 to the Ministry for the surrender of its rights and obligations for such part of the Contract Area. The Contract Area shall thereby be reduced to the area which remains after such surrender.

3. If at any time during the Exploration Period the Company discovers one or more deposits of minerals of apparent commercial grade and quantity in any part of parts of the Contract Area, and decides to proceed with further evaluation thereof it may submit written request to such effect to the Ministry and put such deposit or deposits into the Feasibility Studies Period without affecting its rights and obligations under this Agreement in respect of such other areas. Accordingly, the Exploration Period for each part of the Contract Area:

(i) shall commence immediately following the end of the General Survey Period, and

(ii) shall end 36 (thirty six) months thereafter, or at such earlier date in respect of a part of the Contract Area that with the approval of the

Ministry may proceed to the Feasibility Studies Period.

The Company’s giving notice that it does not intend to proceed with feasibility studies shall be without prejudice to any obligations or liabilities imposed by or incurred under this Agreement prior to the effective date of such notice.

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4. Prior to the end of the period allowed for investigation the Company shall give notice to the Government stating whether or not the Company desires to proceed with feasibility studies of the deposits found within the Contract Area. If the Company should give notice to the Government that it does not wish to proceed with feasibility studies, this Agreement shall thereupon terminate in the same manner and with the same result as if the Company had surrendered its rights and the Company shall turn over to the Ministry:

(i) maps indicating all places in the Contract Area in which the Company shall have drilled holes or sunk pits,

(ii) copies of logs of such drill holes and pits and of assay results with respect to any analysed samples recovered from them, and

(iii) copies of any geological and/or geophysical maps of the Contract Area which shall have been prepared by the Company.

ARTICLE 7

REPORT AND SECURITY DEPOSIT

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1. The Company will keep the Government advised through the Ministry concerning the Enterprise through submission of quarterly progress reports, beginning with the first calendar quarter plus any part of a calendar quarter that remains following the date of signing of this Agreement, as to the progress and results of the Company’s Exploration and development operations and activities under this Agreement. The Company will upon request keep the Minister advised from time to time of the Company’s plans concerning the Enterprise, including the progress of any construction, operation, employment and expenditure. These progress reports should be submitted within 30 (thirty) days after the end of each calendar quarter and be in such form as the Minister may from time to time prescribe. These quarterly progress reports relating to Exploration activities shall include:

(i) the results of geological and geophysical investigation and proving of ore deposits in the Contract Area and the sampling of such

deposits;

(ii) the results of any general reconnaissance of the various sites of proposed operations and activities under this Agreement;

(iii) if available, information concerning the selection of routes from the Mining Areas to a suitable harbour for the export of product;

(iv) if available, information concerning the planning of suitable permanent settlements, including information on suitable water supplies

for permanent settlements and other facilities;

(v) such other plans and information as to the progress of the Company’s activities in the Contract Area as the Ministry may from time to

time reasonably require.

2. Within one year from the time of filing the written notice provided for in paragraph 3 of Article 6 the Company will also file with the Ministry a summary of its geological and metallurgical investigations and all geological, geophysical, topographic and hydrographic data obtained from the General Survey and Exploration and a sample representative of each principal type of mineralisation encountered in its investigations.

3. At the latest one (1) year after the expiration of the Exploration Period, the Company shall submit to the Minister a general geological map of the whole Contract Area on the scale of 1:250,000 with attendant reports based on the Company’s geological observations; such geological map need only contain the observations of rock types and their distribution and structure which have been made by the Company during the General Survey and Exploration Periods.

The banker’s guarantee shall be released by the Government as to Fifty Thousand United States Dollars (US$50,000.00) after:

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4. In addition to the geological map as mentioned in paragraph 3 of this Article, the Company shall turn over to the Government:

(i) maps indicating all places in the Contract Area in which the Company shall have drilled holes or sunk pits,

(ii) copies of logs of such drill holes and pits and of assay results with respect to any analysed samples recovered from them,

(iii) copies of any geophysical maps of the Contract Area which shall have been prepared by the Company, and

(iv) all other information directly relevant to the Company’s Exploration activities under this Agreement which the Government may

request and which is, or could by the exercise of reasonable efforts by the Company have been, within the Company’s control in order to appraise the Company’s investigation activities under this Agreement.

5. The Company shall after the date of initialling the whole of this Agreement place with a bank appointed by the Government a deposit of Twenty-Five Thousand United States Dollars (US$25,000.00) less any amount already deposited on granting of the Preliminary Survey Permit (SIPP). Within 30 (thirty) days after the date of signing of this Agreement the Company shall deliver to the Government a banker’s guarantee in the amount of Seventy-Five Thousand United States Dollars (US$75,000.00). These two amounts shall hereinafter collectively be called “the Security Deposit”. If the Company has already deposited Twenty-Five Thousand United States Dollars (US$25,000.00) referred to above with a bank nominated by the Government, then no further Security Deposit shall be required if a SIPP is later granted.

(i) the expiration of the General Survey Period;

(ii) the submission as specified in paragraph 1 of this Article of four consecutive quarterly progress reports to the Ministry or where the General Survey Period is completed in less than one year, quarterly reports covering such lesser period, provided that where the General Survey Period has been agreed to have commenced prior to the date of signing this Agreement, report(s) covering this earlier period shall count towards satisfaction of this obligation, and

(iii) either:

(a) satisfactory performance (according to the Minister’s judgement) for such General Survey Period, or

(b) the expenditure by the Company in such General Survey Period of Fifty Thousand United States Dollars (US$50,000.00) on

the Contract Area.

The remaining fifty percent (50%) of this Security Deposit will be released on behalf of the Company when a general geological map (with attendant report thereon) based on the Company’s geological observations, on the scale of 1:250,000 has been submitted to and approved by the Minister which approval the Minister shall not unreasonably withhold or delay. In the event that the Company does not satisfy the above mentioned requirement within 6 (six) years after the date of the signing of this Agreement the balance of the said Security Deposit shall automatically be forwarded to the Government Treasury and the Company shall have no further claim thereon. Interest on the Security Deposit shall accrue for the benefit of the Company.

In respect of data relating solely to areas relinquished by the Company from the Contract Area pursuant to Article 4, the foregoing restrictions shall cease to apply as from the date of relinquishment of such areas. In addition, where this Agreement has been terminated pursuant to Article 20 or Article 22, the foregoing restrictions shall cease to apply.

Notwithstanding the foregoing, exclusive know-how of the Company, its contractors or Affiliates contained in data or reports submitted by the Company to the Ministry or the Government pursuant to the provisions of this Agreement and which shall have been identified as such by the Company, shall only be used by the Government in relation to the administration of this Agreement and shall not be disclosed by the Government to third parties without the prior written consent of the Company. Such exclusive know-how, as long as it remains exclusive know-how of the Company, its contractors or Affiliates as the case may be, remains the sole property of the Company, its contractors or Affiliates as the case may be.

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6. Except as otherwise provided in this paragraph 6, the Government has title to all data and reports submitted by the Company to the Ministry or the Government pursuant to the provisions of this Agreement. Such data and reports will be treated as strictly confidential by the Company to the extent that the Government shall so request; reciprocally the Government will treat as strictly confidential such data and reports to the extent that the Company shall so request provided, however, that data belonging to the public domain (because of having been published in generally accessible literature or of their mainly scientific rather than commercial value, such as geological and geophysical data) and data which has been published pursuant to laws and regulations of Indonesia or of a foreign country in which a shareholder may be domiciled (such as the yearly report of public bodies or companies) shall not be subject to the foregoing restrictions; provided further that the term “data” as used in this paragraph shall include (without limitations) any and all documents, maps, plans, worksheets and other technical data and information, as well as data and information concerning financial and commercial matters.

ARTICLE 8

FEASIBILITY STUDIES PERIOD

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1. The Feasibility Studies Period for any part of the Contract Area shall commence on the date the Company submits a written application hereinabove provided to the Ministry in relation to its decision to proceed with the evaluation and shall end upon the commencement of the Construction Period therefor as hereinafter provided.

2. As soon as the Company has submitted written application, the Company shall commence studies to determine the feasibility of commercially developing the deposit or deposits in question. The Company will be allowed a period of 12 (twelve) months to complete such studies and to select and delineate the area in which the Company may commence operation. Such area shall constitute the “Mining Area”, provided that the Minister may, subject to paragraph 2 of Article 16, on grounds of national security or that the conduct of mining in the proposed Mining Area will disproportionately and unreasonably damage the surrounding environment or limit its further development potential or significantly disrupt the sociopolitical stability in the region, object to the area proposed as the Mining Area within three (3) months of the Company’s designation of such Area. The Government and the Company agree to consult in good faith to overcome any such objections. If after a period of three (3) months from the date of notification of such objection by the Government there has been no resolution of the matter then either Party may proceed to resolve the matter in accordance with Article 21 paragraph 1. After the completion of such feasibility studies, the Company shall submit a Feasibility Study Report in the form set out in Annex “E”, which shall contain calculations and reasons for the technical and economical feasibility of the Enterprise supported by data, as specified in Annex “E”, calculations, drawings, maps and relevant information leading toward the decision whether or not to proceed with the Enterprise. The feasibility report shall also contain information concerning matters of interest to the Government during the whole life of the Enterprise. The Government may upon request by the Company, grant an extension of twelve (12) months for the Feasibility Studies Period if the Company considers that the data required and other necessary matters are not sufficiently available to come to a final decision or the Minister raises objections to the proposed Mining Area as set out above.

3. At any time during the Feasibility Studies Period the Company may submit a written application to the Minister that it desires to proceed with the construction of a mine and facilities to be used by the Company in its operation. The Minister shall be deemed to have approved any such application if it does not, in writing, object to same within three (3) months of receipt of such application. Upon approval of that application the Company shall commence and with reasonable diligence execute to completion the design of the facilities and subject to completion of the design of the facilities shall supply the same for the approval of the Minister, together with an estimate of the cost of such facilities and a time schedule for the construction thereof which time schedule shall, to the extent economically and practically feasible, provide for completing the construction of such facilities within thirty

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six (36) months after the approval of the plans and designs and time schedule for construction of such facilities. Within three (3) months after submission the Minister shall notify the Company of his approval (which shall not be unreasonably withheld) or disapproval of the mining plan, design and time schedule for construction, subject to paragraph 2 of Article 16. In the event of disapproval, the Minister shall notify the Company of the cause for disapproval and the Government and the Company shall consult in a good faith attempt to remove the cause for such disapproval. If after a period of three (3) months from the notification of such disapproval there has been no resolution of the matter then either party may proceed to resolve the matter in accordance with Article 21 paragraph 1.

4. The Feasibility Study Report as described in Annex “E” shall include physical impact studies into the effects of the operation of the Enterprise on the Environment and shall be prepared in accordance with the terms of reference set out in Article 26. Such studies may be carried out in consultation with appropriately qualified independent consultants retained by the Company and approved by the Government which approval shall not be unreasonably withheld.

5. The Company shall collaborate with and keep the Government informed by regular reports as to the progress and results of and costs incurred in respect of the investigations and studies and shall as and when the Government may reasonably require furnish the Government with the investigations and studies referred to in paragraph 4 above and with copies of all relevant findings made and reports prepared by the Company.

6. The Company shall at the completion of all the investigations and studies submit to the Government a final report stating the results of and the cost incurred in respect of the investigations and studies and the Company’s analysis of and its conclusions and projections in respect of those results, and such other information relating to the Enterprise or the Mining Area which is in the possession of the Company and which the Government may reasonably request.

7. Subject always to the provisions of paragraph 6 of Article 7, all reports and information supplied to the Government under this Article shall be treated as confidential, with the exception of those required for use by the Government for the national interest, provided that (and subject as aforesaid) if this Agreement is terminated pursuant to Article 22 hereof the reports and information shall become the property of the Government and may be used by the Government in such manner as it thinks fit.

ARTICLE 9

CONSTRUCTION PERIOD

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1. As soon as approval is received from the Minister with respect to the design and time schedule provided for in paragraph 3 of Article 8, the Company shall commence construction of the facilities and execute the same to completion in accordance with the time schedule referred to in the said paragraph 3. If this time schedule proves unworkable the Company may seek the Minister’s approval for a revised time schedule.

2. The Company may make use of any facilities belonging to other companies whether or not affiliated with the Company and in the event of the Company making use of any such facilities as aforesaid it shall come to such arrangement as it shall think fit regarding payment, ownership or otherwise of such facilities, provided, however, that the Minister may make known to the Company objections based on grounds of national security, public interest or foreign policy of the Government.

ARTICLE 10

OPERATING PERIOD

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1. Upon completion of the construction of the facilities provided for in the Article 9, the Company shall commence operation of the Mining Area or part thereof for which such facilities have been constructed.

2. The Company shall conduct mining operations and any activity of the Enterprise with respect to a Mining Area, for the duration of the Operating Period of such Mining Area. The Operating Period for each Mining Area shall be deemed to commence on the first day of the calendar month following the first calendar month during which the average daily throughput is at least seventy percent (70%) of the design capacity of the facilities constructed for the purpose of Mining and Processing the deposit in such Mining Area, but not later than the date falling six (6) months after the date of completion of such facilities. The Operating Period for each Mining Area shall continue for 30 (thirty) years begining at the commencement of the first mining operation, or such longer period as the Ministry, on the written application of the Company, may approve. The commencement of the Operating Period shall not occur more than eight (8) years (or such longer period as may result from extensions granted by the Ministry for the completion of succeeding stages under this Agreement) from the commencement of the General Survey Period allowed for the whole Contract Area.

3. The Company shall process ore to produce a marketable concentrate. The Company will work towards and assist the Government in achieving the policy of the establishment of downstream metals processing facilities in Indonesia in relation to smelting, refining and/or metals manufacturing and fabricating if according to recognised economic, technical and scientific standards the Minerals to be mined by the Company are of sufficient tonnages and are Minerals amenable to smelting, refining or metal manufacturing and provided it is economically and practically feasible to do so. If and when any of such processing facilities are constructed, the Parties agree to discuss thereafter and consider, in good faith, the feasibility of subsequent additional processing facilities which may be in the form of increases in the capacity of then existing facilities or the establishment of facilities previously not in existence.

4. The Company shall submit to the Ministry copies of studies relating to the feasibility of establishing those facilities (as described in paragraph 3 of this Article) in Indonesia prepared by the Company in consultation with an agency acceptable to the Government.

5.

(i)

In the event that smelting, refining or manufacturing facilities are established in Indonesia by an entity other than the Company for the further processing of gold, silver and platinum, the Company shall make its products available to that entity for further processing on conditions not less favourable than the conditions that can be obtained by the Company from other further processors for the processing of the same quantity and quality at the same time and at the same place of delivery and provided the processed product bears a mark recognised in the case of gold by the London Gold Market, in the case

of silver by the London Silver Market and in the case of platinum by the London Metal Exchange and such product shall be in the form of good delivery bars acceptable in international precious metal markets. This obligation of the Company is subject to any smelting, refining or manufacturing contracts entered into by the Company prior to the establishment of such facilities.

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(ii) In the event that smelting, refining or manufacturing facilities are not established by the Company but are established by any party other than the Company in Indonesia, such party shall be permitted to purchase the product at the most favourable f.o.b. price given by the Company to any other purchaser, provided that the respective contractual terms and conditions given by the Company to that other purchaser shall also apply, subject to the rights and obligations of the Company as spelled out in Article 11. At any time if the Company wishes to establish its own smelting, refining or manufacturing facilities in Indonesia it can do so subject to approval of the Government which shall not be unreasonably withheld. This obligation of the Company is subject to any smelting, refining or manufacturing contracts entered into by the Company prior to the establishment of such facilities.

6. Project facilities shall include the mine’s processing facilities, and any port facilities, aircraft landing facilities and transportation, communication, water supply and other necessarily related facilities, for which the Company is, subject to the rights of third parties, hereby granted all necessary licences and permits to construct and operate in accordance with laws and regulations and such reasonable safety regulations relating to design, construction and operation as may from time to time be in force and of general applicability in Indonesia.

7. The Company shall submit to the Ministry the following Exploitation Reports:

(i) a monthly statistical report beginning with the first month following the commencement of the Operating Period which shall set forth the number and location of the workings on which work was begun during the preceding month; the number of workmen employed thereon at the end of the month; a list of the equipment at each working at the end of the month and a brief description of the work in progress at the end of the month and of the work contemplated during the following month.

(ii) a quarterly report beginning with the first quarter following the commencement of the Operating Period concerning the progress of

its operations in the Contract Area. This report shall specify in full:

(a) those workings in which ore is considered to have been found, regardless of whether the deposits are deemed to be

commercial or not (together with all data relative to the estimated volumes of the reserves, the kind or kinds of such ore encountered and the analyses

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thereof); the number and description of workings which have been placed in commercial production and full particulars concerning the disposition of such production; the number of workmen employed on each such working as of the work in progress at the end of the quarter in question and of the work contemplated during the ensuing quarter.

(b) the work accomplished during the quarter in question with respect to all installations and facilities directly or indirectly related to its exploitation program, together with the work contemplated for the ensuing quarter with respect to the same installations and facilities and indicating both actual and estimated investment in such installations and facilities made, committed or to be committed with respect to such installations and facilities.

(iii) an annual report beginning with the first complete year following the commencement of the Operating Period which shall include:

(a) the number and description of the workings which were in progress at the end of the year preceding the year in question (with a showing as to which are in commercial production); the number and description of workings abandoned during the year; the production of each of the workings, regardless of whether in commercial production or not, with a full description of the kind and quality and analyses of ore produced from each working, the number of workings on which activities are continuing at year end, but which have not gone into commercial production.

(b) the total volume of ores, kind-by-kind, broken down between volumes mined, volumes transported from the mines and their corresponding destination, volumes stockpiled at the mines or elsewhere in Indonesia, volumes sold or committed for export (whether actually shipped from Indonesia or not), volumes actually shipped from Indonesia (with full details as to purchaser, destination and terms of sale), and if known to the Company after diligent enquiry volumes refined, processed and/or manufactured within Indonesia with full specifications as to the intermediate products, by-products, or final products, outturned within Indonesia (with full showing as to the disposition of such intermediate products, by-products or final products and of the terms on which they were disposed); and

(c) work accomplished and work in progress at the end of the year in question with respect to all of the installations and facilities

related to the exploitation program, together with a full description of all work programmed for the

Monthly and quarterly reports shall be submitted in eightfold within thirty (30) days of the end of the month or quarter in question, as the case may be. Annual reports shall be submitted in eightfold within ninety (90) days of the end of the year in question.

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ensuing year with respect to such installations and facilities including a detailed report of all investment actually made or committed during the year in question and all investment committed for the ensuing year or years.

(iv) the Company shall also furnish the Government all other information related to the Company’s activities under this Agreement of

whatever kind and which is, or could by the exercise of reasonable efforts by the Company have been, within the control of the Company which the Government may request in order that the Government may be fully appraised of the Company’s activities.

8. The Company shall have full and effective control and management of all matters relating to the operation of the Enterprise including the production and marketing of its products in accordance with sound, long term policies. The Company may make expansions, modifications, improvements and replacements of the Enterprise’s facilities, and may add new facilities, as the Company shall consider necessary for the operation of the Enterprise or to provide services or to carry on activities ancillary or incidental to the Enterprise. All such expansions, modifications, improvements, replacements and additions shall be considered part of the project facilities.

9. The Government will cooperate with the Company to the end that the Company may in compliance with the existing rules and regulations select the vessels and other transportation facilities to be used in connection with imports and exports of articles under this Agreement.

ARTICLE 11

MARKETING

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1. The Company shall have the right to export its products obtained from the operations under this Agreement. Without in any way prejudicing the Company’s basic right to export its products such export will be subject to the provisions of the export laws and regulations of Indonesia. The Company will endeavour at all times to fulfill the requirements of the domestic market for its products provided that to do so will not jeopardise the Company in its ability to observe the provisions of committed sales agreements for its products.

2. The Company shall sell the products in accordance with generally accepted international business practices, at the best prices and on the best terms compatible with world market conditions and conditions obtainable in the circumstances then prevailing, provided that the Government shall have the right to prohibit the sale or export of minerals or materials derived therefrom as may be contrary to the international obligations of the Government or on the basis of external political considerations affecting the national interest of Indonesia. In the event of such prohibition (other than a quota requirement imposed pursuant to an International Commodity Marketing Agreement), if the Company is unable to find alternative markets on equivalent terms and conditions, the Government shall purchase the Minerals, at the then prevailing world market price.

3. The Company shall not enter into any contract for sale of its products being produced for a term in excess of three (3) years without the prior approval of the Government which approval shall not be unreasonably withheld or delayed.

4. In any event sales commitments with Affiliates shall be made only at prices based on or equivalent to arm’s length sales and in accordance with such terms and conditions at which such agreements would be made if the parties had not been affiliated, with due allowance for normal selling discounts or commissions. Such discounts or commissions allowed the Affiliates must be no greater than the prevailing rate so that such discounts or commissions will not reduce the net proceeds of sales to the Company below those which it would have received if the parties had not been affiliated. No selling discounts or commissions shall be allowed an Affiliate in respect of sale for consumption by it. The Company shall submit to the Government evidence of the correctness of the figures used in computing the above prices, discounts and commissions, and a copy of the sales contract.

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5. If the Government believes that any figures used in computing the revenues are not in accordance with the provisions of paragraph 4 of this Article, the Government may within 12 (twelve) months after the calendar quarter in which such products were exported, so advise the Company in writing. The Company shall submit evidence of the correctness of the figures within 45 (forty-five) days after receipt of such advice. Within 45 (forty-five) days after receipt of such evidence, the Government may give notice to the Company in writing that it is still not satisfied with the correctness of the figures and within 10 (ten) days after receipt of such notice by the Company a Committee, consisting of one representative of and appointed by the Government and one representative of and appointed by the Company, shall be constituted to review the issue. The Committee shall meet as soon as convenient at a mutually agreeable place in Indonesia and if the members of the Committee do not reach agreement within twenty (20) days after their appointment or such longer period as the Government and the Company mutually agree, the representatives shall appoint a third member of the Committee, who shall be a person of international standing in jurisprudence and if possible shall be familiar with the international mineral industry. The Committee after reviewing all the evidence, shall determine whether the figures used by the Company or any other figures are in accordance with paragraph 4 of this Article. The decision of two members of the Committee shall be binding upon the Parties. Failure of two representatives to appoint a third member of the Committee shall require the issue to be submitted to arbitration pursuant to Article 21 of this Agreement. Within ninety (90) days after the issue has been finally decided, pursuant to this paragraph, appropriate retroactive adjustment shall be made in conformity with the Committee’s decision. The Company and the Government each shall pay the expenses of its own member on the Committee and one half of all other expenses of the Committee’s proceedings.

6. In the event that the Company produces a concentrate containing gold, silver or platinum which are easily separable, the Company shall, if it is economically feasible, make maximum efforts to separate the gold, silver and platinum.

7. In the event of a sale of gold, silver or platinum to an Affiliate or to the domestic market or to the Government’s designated agency it is understood that, unless otherwise agreed by the Parties, the price of gold produced by the Company shall be determined on the day of sale at not less than the 15.00 hours gold fixing as agreed by members of the London Gold Market and as quoted for that day in the “Metal Bulletin”, that the price of silver shall be determined on the day of sale at not less than the silver fixing as agreed by members of the London Silver Market and as quoted for that day in the “Metal Bulletin”, and that the price of platinum shall be determined at not less than the Johnson Matthey unfabricated daily world producers’ price on the day of sale as quoted for that day in “Metals Week” less in each case selling expenses and charges as defined in Annex “H”. In the event that the London Gold Market or the London Silver Market ceases to be a suitable reference for pricing, the Government and the Company will consult together to

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agree on an acceptable method of determining such prices. The day of sale shall be construed as the day on which legal title to the products is transferred by the Company to the purchaser. Unless otherwise agreed this shall be the day of delivery. Payment shall be made to the Company in U.S. Dollars within two (2) days of the day of sale.

8. If at any stage in the course of its marketing arrangement, the Company refines, or takes delivery of gold or silver refined from its products, then such gold and silver will be in a form and bear marks which will make it acceptable in the international precious metals markets. For gold, this means the London Gold Market; for silver this means the London Silver Market.

ARTICLE 12

IMPORT AND RE-EXPORT FACILITIES

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1. The Company may import into Indonesia capital goods, equipment, machinery (including spare parts), vehicles (except for sedan cars and station wagons), aircraft, vessels, other means of transport and raw materials being items needed for use in the mining, exploration, feasibility study, construction, production and supporting technical activities of the Enterprise which shall be exempt or obtain relief from import duties and postponement of payment of value added tax (VAT) payable in accordance with the prevailing laws and regulations for the duration of the period commencing as from the date of signing of this Agreement up to and including the tenth year of the Operating Period. For any equipment directly used to support its technical operations such as laboratory and computer equipment located outside its field operations, the tax exemptions or tax reliefs shall be the same as above. In case the Company is operating more than one Mining Area, this tenth year of the Operating Period shall be computed from the date of the commencement of operation of the first Mining Area.

2. The exemption and reliefs from import duties and postponement of value added tax (VAT) as referred to in paragraph 1 of this Article shall apply only to the extent that the imported goods are not produced or manufactured in Indonesia and available on a competitive time, cost and quality basis, provided that for the purposes of comparing the costs of imports and the cost of goods manufactured or produced in Indonesia value added tax and import duties shall be applied to the cost of imports.

3. Any equipment (which must be clearly identified) and unconsumed material imported by the registered sub-contractor(s) of the Company for the exclusive purpose of providing services to the Company and intended to be re-exported will be exempt from import duties, value added tax and other levies. If such equipment and material shall not have been re-exported by the defined time, the sub-contractor(s) of the Company shall, unless extended or exempted for reasons acceptable to the Government, pay import duties, value added tax and other levies not paid upon entry. The Company shall be responsible for proper implementation of its sub-contractor(s) obligations under this Article.

4. Any item imported by the Company or its registered subcontractor(s) pursuant to this Article and no longer needed for the exploration and production activities of the Company may be sold outside Indonesia and re-exported free from export taxes and other customs duties (excluding capital gains tax) and value added tax after compliance with laws and regulations which shall at the time of such sale be in force and of general application in Indonesia. No imported item shall be sold domestically or used otherwise than in connection with the Enterprise except after compliance with import laws and regulations which are at the time of such import in force and of general application in Indonesia.

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5. In view of the fact that goods and services will have to be imported from abroad and that various parts of the Contract Area are remote, for all practical purposes from presently existing sea ports and other ports of entry for customs purposes, the Government will consider establishing such sea port or port of entry and the requisite customs office thereat as the Company shall reasonably request from time to time; in consideration thereof, each such customs office so established at the request of the Company shall be furnished and maintained by the Company at its expense and according to the existing rules and regulations.

6. During the period the Company is allowed to import free from duties the Company shall submit to the Government not later than November 15 of each year, except where the prevailing regulations provide for other procedures, a list of equipment and material to be imported during the next calendar year to enable the Government to review and to approve the various items to be imported for the Enterprise. Notwithstanding the foregoing the Company may request (stating the cause) the Government to amend the list of equipment and material as required during the year.

7. Without prejudice to the foregoing provisions as referred to in this Article, the Company shall duly observe import restrictions and prohibitions and rules and procedures of general application.

ARTICLE 13

TAXES AND OTHER FINANCIAL OBLIGATIONS OF THE COMPANY

Subject to the terms of this Agreement, the Company shall pay to the Government and fulfill its tax liabilities as hereinafter provided:

The Company shall not be subject to any other taxes, duties, levies, contributions, charges or fees now or hereafter levied or imposed or approved by the Government other than those provided for in this Article and elsewhere in this Agreement.

The Company shall pay, in Rupiah or in such other currencies as may be mutually agreed, an annual amount as deadrent to be measured by the number of hectares included in the Contract Area or Mining Area respectively, calculated on

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(i) Deadrent in respect of the Contract Area or the Mining Area.

(ii) Royalties in respect of the Company’s production of Minerals.

(iii) Additional royalty in respect of Minerals exported.

(iv) Income taxes in respect of all kinds of profits received or accrued by the Company.

(iv) Personal income tax.

(v) Withholding taxes on interest, dividends and royalties.

(vi) Value Added Tax on purchases and sales of taxable goods.

(viii) Stamp duty on legal documents.

(ix) Import duty on goods imported into Indonesia.

(x) Land and Building Tax (PBB) in respect of:

(a) the Contract Area or the Mining Area, and

(b) the use of land area and space in which the Company constructs facilities for its mining operations.

(xi) Levies, taxes, charges and duties imposed by Regional Government in Indonesia which have been approved by the Central

Government.

(xii) General administrative fees and charges for facilities or services rendered and special rights granted by the Government to the extent

that such fees and charges have been approved by the Central Government.

(xiii) Tax on the transfer of ownership of motorised vehicles and ships in Indonesia.

1. Deadrent in respect of the Contract Area or the Mining Area

January 1st and July 1st of each Year, such payments to be made in advance and in two instalments each payable within thirty (30) days after the said dates during the term of this Agreement and payable as stipulated in Annex “0” attached hereto.

Royalties will be computed from the rates specified in Annex “F” as follows:

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2. Royalties in respect of the Company’s production of Minerals

(i) The Company shall pay royalties in respect of the mineral content of products (as defined in Annex “F”) from the Mining Area, to the extent that any mineral in such products shall be a mineral for which value according to general practice is paid or paid to the Company by a buyer. Royalties shall be paid in Rupiah or such other currency as may be mutually agreed and shall be paid on or before the last day of the month following each calendar quarter. Each payment shall be accompanied by a statement in reasonable detail showing the basis of computation of royalties due in respect of shipments or sales made during the preceding calendar quarter.

(a) the tonnage or quantity by weight used in the computation shall be that quantity delivered for export shipment or for domestic

sale. In the case of concentrates or dore bullion, the quantity by weight of each mineral subject to royalty shall be properly determined by internationally accepted assay methods.

(b) for those Minerals having a London Metal Exchange price quotation or for which the saleable mineral content has an LME price quotation the price used in the computation shall be the average of the daily fixings for the London Metal Exchange first quoted on or after the date of export shipment or delivery to a domestic buyer, for the same or most equivalent traded type or grade of the Minerals concerned and as quoted for that day in the “Metal Bulletin” .

(c) for those Minerals (other than gold) having no London Metal Exchange price quotation the price used in the computation shall

be the average of the daily price first quoted after the date of export shipment or delivery to a domestic buyer as published for that day in “Metals Week” .

(d) in the case of gold the price used in computation shall be the 15.00 hours daily gold fixing as agreed by members of the

London Gold Market on the day of export shipment or delivery to a domestic buyer and as quoted for that day in the “Metal Bulletin” .

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(e) the royalty shall be increased or decreased in the same proportion that the current price shall be different from the prices set

out in Annex “F” for each mineral sold.

(f) the Government shall (upon written request from the Company) specify the metal price and royalty rate in column 5 of Annex

“F” for those Minerals for which no price reference is given.

(g) 1). In the case of gold :

a) If the sales price of gold is US$ 300 per troy ounce or lower, the applicable royalty rate shall be : 1% of the sales price.

b) If the sales price of gold is US$ 400 per troy ounce or higher, the applicable royalty rate shall be : 2% of the sales price.

c) If the sales price (G) of gold is between US$ 300 per troy ounce and US$ 400 per troy ounce, the applicable royalty rate

shall be :

[ 1 + ( G - 300 ) ] % of the sales price [ ] [ 100 ]

2). In the case of silver :

a) If the sales price of silver is US$ 10 per troy ounce or lower, the applicable royalty rate shall be : 1% of the sales price.

b) If the sales price of silver is US$ 15 per troy ounce or higher, the applicable royalty rate shall be : 2% of the sales price.

c) If the sales price (S) of silver is between US$ 10 per troy ounce and US$ 15 per troy ounce, the applicable royalty rate

shall be :

[ 1 + ( S - 10 ) ] % of the sales price [ ] [ 5 ]

3). In the case of platinum :

a) If the sales price of platinum is US$ 750 per troy ounce or lower, the applicable royalty rate shall be : 1% of the sales

price.

b) If the sales price of platinum is US$ 925 per troy ounce or higher, the applicable royalty rate shall be : 2% of the sales

price.

For example :

If the gold price used for computation is US$ 355.00 per troy ounce and the silver price is US$ 5.72 per troy ounce and the bullion consists of 9% gold and 87% silver and 4% other non recoverable associated products then the royalty due on each metric tonne (32,150.746 troy ounces) of bullion shipped would be computed as follows.

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c) If the sales price (P) of platinum is between US$ 750 per troy ounce and US$ 925 per troy ounce, the applicable royalty

rate shall be :

[ 1 + ( P - 750 ) ] % of the sales price 175

Royalty rate for Gold = [ 1 + ( 355 - 300 ) ]% 100

= 1.55%

Royalty rate for Silver = 1%

Gold Content (9%) : 2,893.5671 troy ounces

Silver Content (87%) : 27,971.1490 troy ounces

Gold Royalty = 1.55% of ($355 x 2,893.5671) = 1.55% of (51,027,216.36) = US$ 15,921.85

Silver Royalty = 1% of ($5.72 x 27,971.1490) = 1% of ($159,994.97) = US$ 1,599.95

Total Royalty = US$ 15,921.85 + US$ 1,599.95 = US$ 17,521.80

(ii) The Company undertakes that any mining, processing or treatment of ore prior to domestic sale or export shipment by the Company shall be conducted in accordance with such generally accepted international standards as are economically and technically feasible, and in accordance with such standards the Company undertakes to use all reasonable efforts to optimise the mining recovery of ore from proven reserves and metallurgical recovery of Minerals from the ore provided it is economically and technically feasible to do so, and shall submit evidence to the Ministry of compliance with this undertaking. Royalty shall not be payable on any industrial minerals derived from the Enterprise and used by the Company for public purposes such as but not limited to roads, bridges, railways, port facilities, airports, community buildings, housing or any other infrastructure used in relation to the Enterprise.

(iii) If in the opinion of the Government, the Company is failing without good cause to recover Minerals at the recovery rate indicated in

the feasibility study, it may give notice in writing to the Company. Within three (3) months of the receipt of this notice the Company shall either:

If following the completion of such studies, the Company fails within a reasonable period to achieve the recovery rate indicated by such studies, the Government shall have the right if the Company is not then observing its undertaking in sub-paragraph (ii) of this Article 13 paragraph 2 to increase the royalty applicable to the Minerals delivered for export shipment or domestic sale in proportion to the extent that the recovery of such Minerals by the Company falls short of the fair average rate indicated by such studies. But at no time shall the payment of such increased royalty free the Company from the obligation to observe its undertaking in sub-paragraph (ii) of this Article 13 paragraph 2.

The Company shall pay in Rupiah or in such other currencies as may be mutually agreed, additional royalty in respect of Minerals exported except as otherwise stipulated in column 6 of Annex “G” attached hereto. Additional royalty shall be payable only to the extent that any metal or mineral in the Company’s export products shall be an element for which value is according to general practice paid to the Company by a buyer. The rate of additional royalty to be paid shall be as stipulated in Annex “G” attached hereto. Additional royalty shall not be payable on the export of gold, silver

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(a) commence work to improve its mining method, treatment and processing facilities to the reasonable satisfaction of the

Government, provided that the Company shall in no event be obliged to conduct mining, processing or treatment activities otherwise than as provided in sub-paragraph (ii) of this Article 13 paragraph 2.

(b) submit to the Government evidence in justification of its performance in accordance with sub-paragraph (ii) of this Article 13 paragraph 2. In the event that the Government remains unsatisfied with the Company’s performance in mining ore from the proven, reserve and recovering minerals from the ore, the Government shall have the right to commission independent technical studies to determine a fair average recovery rate taking into account the nature of the proven reserve and the ore and the economic and technical feasibility of achieving increased recovery by the Company in accordance with sub-paragraph (ii) of this Article 13 paragraph 2. Such studies shall be carried out by internationally recognised consultants appointed by the Government and agreed to by the Company. The Government and the Company shall have the right to prepare submissions to the consultants. If the said consultants find that the performance of the Company’s operations is not satisfactory, then the cost shall be borne by the Company. If it is found that the performance of the Company’s obligation is satisfactory, then the cost shall be borne by the Government.

3. Additional royalty in respect of Minerals exported

or platinum in the form of Associated Minerals or dore bullion bars. The rules for calculating additional royalty shall be, with necessary adjustment, those rules of computation of royalty as referred to in paragraph 2 of this Article 13. The Government shall (upon written request from the Company) determine the type of product eligible for additional royalty for minerals and mineral products for which no product is specified in column 6 of Annex “G”.

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4. Income taxes in respect of all kinds of profits received or accrued by the Company

(i) The Company will pay corporate income tax on income, meaning any increase in economic prosperity received or accrued by the Company, whether originating from within or without Indonesia, in whatever name and form, including but not limited to gross profit from business, dividends, interest and royalties and the tax rates which shall be applied throughout the term of this Agreement shall be as follows:

(a) 15% tax rate for taxable income up to Rp 10,000,000 (ten million Rupiah, Indonesian currency);

(b) 25% tax rate for taxable income from Rp. 10,000,000 (ten million Rupiah, Indonesian currency) to Rp 50,000,000 (fifty

million Rupiah, Indonesian currency);

(c) 35% tax rate for taxable income above Rp 50,000,000 (fifty million Rupiah, Indonesian currency);

(ii) For the purposes of calculation of taxable income the rules for computation of corporate income tax as provided for in Annex “H”

attached to and made part of this Agreement shall apply and except as otherwise stipulated in this Agreement and the said Annex “H” , the rules as provided in Law No. 7 year 1983 and its implementations, shall apply.

5. Personal income tax

(i) The Company shall withhold and remit income taxes on remuneration of the Company’s employees according to Article 21 of

Income Tax Law 1984, Law No. 7 year 1983.

(ii) Expatriate Individuals who are employed or engaged by the Company or its Subsidiaries or its sub-contractors and who are present in

Indonesia for less than 183 days in any twelve month period shall be subject to withholding of tax at the rate of 20% (or such lesser percentage as shall apply under any relevant Double Tax Agreement) on the gross remuneration for services rendered in Indonesia

The Company and its Subsidiaries shall in accordance with the laws and regulations prevailing at the date of signing this Agreement withhold and remit to the Government withholding taxes at the rates not exceeding those specified in this Article (or such lesser rates as shall be applicable under any relevant Double Tax Agreement) upon the following:

The rate of such withholding tax prevailing as at the date of signing this Agreement is fifteen percent (15%) in the case of payments to a resident taxpayer and twenty percent (20%) in the case of payment made to a non resident taxpayer.

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based on Article 26 Income Tax Law 1984, Law No. 7 year 1983. The income of such Expatriate Individuals which is taxable in Indonesia shall include only remuneration paid to them for services rendered in Indonesia.

(iii) Expatriate Individuals who are employed or engaged by the Company or its Subsidiaries or its sub-contractors and who are present in Indonesia for more than 183 days in any twelve month period or intend to reside in Indonesia, shall be liable for Indonesian personal income tax. The Company shall deduct personal income tax based on Article 21 Income Tax Law 1984, Law No. 7 year 1983 from the income received by the employee from the Company with consideration being given to the regulations relating to deductible income. The income of such Expatriate Individuals shall include all kinds of remuneration paid to them by their employer but shall exclude employee benefits which either are not deductible in calculating the taxable income of the Company or are set out in paragraph 7 of Annex “H”.

6. Withholding taxes on interest, dividends and royalties

(i) Dividends, interest in whatever form including loan guarantees;

(ii) Rents, royalties and other compensation related to the use of rights and property;

(iii) Compensation paid for technical assistance or management services performed in Indonesia.

7. Value Added Tax (VAT) on purchases and sales of taxable goods

(i) The Company shall be registered as a taxable firm for Value Added Tax purposes and, accordingly, the Value Added Tax shall be

imposed on :

(a) Domestic sales of production including but not limited to dore bullion at a rate of ten percent (10%) of the sales value or any

other rate in accordance with the prevailing tax laws and regulations, and export sales of production at a rate of zero percent (0%) of the sales value.

(b) Subject to the provisions of Article 12 imported taxable goods such as equipment and other

On imported goods or goods domestically procured which are classified as luxury goods, at a rate of ten percent (10%) or twenty percent (20%) of imported or purchase value and being calculated in a manner no more onerous than in accordance with the prevailing tax regulations. The sales tax on luxury goods is levied in addition to the VAT as mentioned in sub-paragraph (i) of this paragraph 7 above.

As provided in Law No. 13 year 1985 dated December 27, 1985 re Stamp Duty.

The Company shall pay Land and Building Tax (PBB), in Rupiah or in such other currencies as may be mutually agreed, as follows:

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necessities at a rate of ten percent (10%) or any other rate in accordance with the prevailing tax laws and regulations.

(c) Domestic taxable services hired by the Company for construction services (such as building, roads, bridges and other similar

services) and domestic purchase of taxable goods at a rate of ten percent (10%) or any other rate in accordance with the prevailing tax laws and regulations.

(ii) From the date of registration as a taxable firm, the excess of input VAT as shown in the Periodical Tax Return filed by the Company

with the Directorate General of Taxation shall be repaid by the Government to the Company in accordance with the prevailing tax laws and regulations.

(iii) VAT due on purchases of domestic and imported capital goods by the Company may be deferred to a later date in accordance with

the Decree of the Minister of Finance No. 827 year 1984 or regulations or decrees having similar effect, due regard being had to the validity of such Decrees:

(iv) Sales tax on luxury goods:

8. Stamp duty on legal documents

9. Import duty on goods imported into Indonesia

(i) Exemption and tax reliefs on import of capital goods, equipment and machinery and supplies are accorded to the Company by virtue

of Law No. 1 year 1967 concerning Foreign Capital Investment as amended by Law No. 11 year 1970 as provided in Article 12 above.

(ii) Other goods including personal effects are subject to prevailing import duty regulations.

(iii) Excise tax on tobacco and liquor are subject to taxation in accordance with the prevailing law.

10. Land and Building Tax (PBB)

(i) During the General Survey, Exploration, Feasibility Studies and Construction Periods an amount equal to the amount of deadrent.

During the Operating Period an amount equal to the amount of deadrent plus an

Tax compliance of the Company and its subsidiaries or its Affiliates in connection with formal and material tax obligations such as Tax Identification Number, Tax Return, tax payment, reporting and rights on taxation namely tax objection, refund, tax credit, compensation and penalties are subject to provisions provided in Income Tax Law 1984, Law No.7 year 1983 and Law No. 6 year 1983 concerning General Tax Provisions and Procedures.

In determining the Company’s net taxable income, sound, consistent and generally accepted accounting principles as usually used in the mining industry shall be employed, provided, however, that where more than one accounting practice is found by the Government to prevail with regard to any item, the Government shall in consultation with the Company determine which practice is to be applied by the Company with regard to the particular item. Without limiting the generality of the foregoing, the Government shall in no event be bound by the Company’s characterization of any transaction with an Affiliate for accounting purposes. In the event that the Government establishes that any payment, deduction, charge for expenses or other transaction with an Affiliate is not fair, reasonable and consistent with the general practice that would have been followed by independent parties in connection with a transaction of a similar nature, the Government may, for the purposes of determing the Company’s income tax liability, substitute the payment, deduction, charge for expenses or other transaction which would have prevailed had the transaction occurred between independent parties.

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additional land tax equal to an amount of 0.5% x 20% of gross revenue from mining operations. Such payment shall be made as in paragraph 1 of this Article, and

(ii) an amount to be measured by the number of square metres of land area and floor space used by the Company for its facilities which are closed to the public, and such payment shall be made during the term of this Agreement in accordance with prevailing laws and regulations; it is understood and agreed that the tariffs imposed on the Company shall be those of general application in the mining industry in Indonesia.

11. Levies, taxes, charges and duties imposed by Regional Government in Indonesia which have been approved by the Central Government at rates and calculated in a manner no more onerous than in accordance with laws and regulations prevailing as at the date of signing this Agreement.

12. General administrative fees and charges for facilities or services rendered and special rights granted by the Government to the extent that such fees and charges have been approved by the Central Government.

13. Tax on the transfer of ownership

(i) on motorised vehicles levied by the Regional Government where the vehicles are registered at rates according to the relevant

Regional Government regulations,

(ii) on ships or vessels working in Indonesia levied by the Directorate General of Sea Communication, Ministry of Communication

where the ships or vessels are registered.

ARTICLE 14

RECORDS, INSPECTION AND WORK PROGRAM

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1. The Company shall maintain in Indonesia precise and systematic technical records relating to, and financial records showing a true and fair view of, all of its operations and the status of proven, probable and possible ore reserves, including mining, processing, transportation and marketing, in accordance with generally accepted accounting principles stated in Rupiahs or with the approval of the Minister of Finance in equivalent United States dollars. The financial and other records shall be maintained in the Indonesian language or with the approval of the Minister of Finance in English. The Company shall furnish to the Government annual financial statements consisting of balance sheet and statement of income and all such other financial information concerning its operations in accordance with generally accepted accounting principles in Indonesia and all such other information concerning its operations in reasonable detail and in such detail as the Government may reasonably request.

2. The Government and its authorised representatives have the right to review and audit such financial statement within five (5) years after submission by the Company. The failure by the Government to make a claim for additional payment on account of deadrent, royalties, corporate income tax or other payments to the Government within such five (5) years period shall preclude any such claim thereafter.

3. The Government and its authorised representatives may enter upon the Contract Area and any other place of business of the Company to inspect the operations at any time and from time to time during regular business hours. The Company shall render necessary assistance to enable said representatives to inspect technical and financial records relating to the Company’s operations and shall give said representatives such information as the said representatives may reasonably request. The representatives shall conduct such inspections at their own risk and shall avoid interference with normal operations of the Company.

4. The Company shall submit to the Government not later than November 15th (fifteenth) or February 15th (fifteenth) of each year during the term of this Agreement its work program, budget plan, sales contract and marketing/sales plan for the following year in sufficient detail to permit the Government to review such physical, financial and marketing/sales program and determine whether they are in accordance with the Company’s obligations under this Agreement. A work program and budget for the first year of this Agreement shall be submitted as soon as possible after the signing of this Agreement.

5. In addition, the following shall be delivered to the Ministry:

(i) Conformed copies of all sales, management, commercial and financial agreements concluded with Affiliates and independent parties

and all other agreements concluded with Affiliates, to be submitted within one month after conclusion.

The Company shall furnish to the Government all other information of whatever kind relative to the Enterprise which the latter may request, which is, or could by the exercise of reasonable efforts by the Company have been, within the control of the Company in order that the Government may be fully appraised of the Company’s exploration and exploitation activities.

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(ii) Monthly report setting forth the quantities and qualities of ore produced, shipped, sold, utilised or otherwise disposed of and the

prices obtained.

6. All information mentioned in paragraph 5 of this Article furnished to the Government shall be either in English or Indonesian and all financial data shall be recorded in Rupiah or United States of America currency and records shall also be kept of conversion rates applied to the original currency.

7. The Company shall maintain all original records and reports relating to its activities and operations under this Agreement including all documents relating to financial and commercial transactions with independent parties and Affiliates in its principal office in Indonesia. These records and reports shall be open to inspection by the Government through an authorised representative. Such reports and records shall be maintained in Indonesian and all financial data shall be recorded in Rupiah currency, and the records shall also be kept of conversion rates applied to the original currency.

8. The Company shall require to the Company’s co-participants, Affiliates, contractors and sub-contractors to the extent that such co-participant, Affiliate, contractor or sub-contractor carries out operations and activities in furtherance of the Company’s obligations, activities, and operations under this Agreement, to keep all financial statements, records, data and information necessary to enable the Company to observe the provisions of this Article 14.

9. Without prejudice to paragraph 6 of Article 7 any information supplied by the Company shall (except with the written consent of the Company which shall not be unreasonably withheld) be treated by all persons in the service of the Government of the Republic of Indonesia as confidential, but the Government shall nevertheless be entitled at any time to make use of any information received from the Company for the purpose of preparing and publishing aggregated returns and general reports on the extent of ore prospecting or ore mining operations in Indonesia and for the purpose of any arbitration or litigation between the Government and the Company.

10. All records, reports, plans, maps, charts, accounts and information which the Company is or may from time to time be required to supply under the provisions of this Agreement shall be supplied at the expense of the Company.

ARTICLE 15

CURRENCY EXCHANGE

The terms and conditions of any such agreement shall not be less favourable than those contained in any other similar agreements by Bank Indonesia and other mining companies either in force or contemplated.

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1. All investment remittances into Indonesia (equity capital as well as loan) shall be deposited into a foreign investment account (PMA account) held at foreign exchange bank(s) in Indonesia and can be used in accordance with the prevailing investment regulations. Conversion of the foreign exchange from PMA account into Rupiah shall be effected through the foreign exchange bourse (bursa valuta asing) at the prevailing rate of exchange.

2. The Company shall be granted the right to transfer abroad in any currency it may desire funds in respect of the following items, provided that such transfers are effected in accordance with the prevailing laws and regulations and at prevailing rates of exchange generally applicable to commercial transactions:

(i) Net operating profits in proportion to the share holding of the Foreign Investor(s).

(ii) Repayment of the loan and the interest thereon, as far as it is a part of the intended investment, which has been approved by the

Government.

(iii) Allowance for depreciation of capital assets according to the foreign investment scheme.

(iv) Proceeds from sales of shares owned by the Foreign Investor(s) to the Indonesian Participant (as defined in Article 24 hereof) or to

Indonesian nationals.

(iv) Expenses for Expatriate personnel and training of Indonesian personnel abroad.

(vi) Compensation in case of nationalisation of the Company.

3. The proceeds of the export sale of Minerals and any products therefrom can be possessed and used according to the Company’s need. Without prejudicing the foregoing, the Company shall treat the export proceeds in accordance with laws and regulations that may from time to time be in force in Indonesia, except as Bank Indonesia and the Company may otherwise agree.

4. The Company in the exercise and performance of its rights and obligations set forth in this Agreement shall be authorised to pay abroad, in any currency it may desire, without conversion into Rupiah, for the goods and services it may require and to defray abroad in any currency it may desire any other expenses incurred for mining operations under this Agreement.

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5. In respect of other matters of foreign currency arising in any way out of or in connection with this Agreement, the Company shall be entitled to receive treatment no less favourable to the Company than that accorded to any other mining company carrying on operations in Indonesia.

6. The Company shall forward financial reports in accordance with the procedures required by Bank Indonesia.

ARTICLE 16

SPECIAL RIGHTS OF THE GOVERNMENT

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1. The Company and its shareholders agree that they will not without the Government’s prior approval:

(i) amend the Articles of Incorporation of the Company;

(ii) change the basic nature of the business of the Company;

(iii) voluntarily liquidate or wind up the Company;

(iv) merge or consolidate the Company with any other Company.

(v) guarantee or otherwise pledge the Minerals in the Contract Area.

2. The Minister may make known to the Company certain objections with regard to the Company’s plans or designs and the Government reserves the right to withhold its approval from plans and designs relating to construction, operation, expansion, modification and replacement of facilities of the Enterprise which may disproportionately and unreasonably damage the surrounding Environment or limit its further development potential or significantly disrupt the sociopolitical stability in the area. Such approval shall not unreasonably be withheld or delayed; and if within three (3) months after submission of such plans or designs the Government does not raise any objection, then such plans or designs will be considered approved.

3. The Government reserves the right of access to the Contract Area for the purpose of any investigation it wishes to make, provided that such investigation shall not unreasonably interfere with the Enterprise and that, if damages result to the Company’s property or operations from such investigation, the Government agrees to provide fair and reasonable compensation to the Company for such damages.

ARTICLE 17

EMPLOYMENT AND TRAINING OF INDONESIAN NATIONALS

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1. The Company shall employ Indonesian personnel to the maximum extent practicable consistent with efficient operations, subject to the provisions of the existing laws and regulations which may from time to time be in force in Indonesia.

2. The Company shall not be restricted in its assignment or discharge of personnel; provided however that subject to the foregoing requirements the terms and conditions of such assignment and discharge or disciplining of Indonesian personnel shall be carried out in compliance with the laws and regulations of Indonesia which at the time are generally applied.

3. The Company shall seek to provide direct Indonesian participation in the Enterprise through the inclusion of Indonesian nationals in the management of the Company and among the members of its Board of Directors. To this end at least one seat on the Board of Directors will continuously be occupied by an Indonesian national from the date of incorporation of the Company. The Company will also train Indonesian nationals to occupy other responsible positions.

4. The Company shall conduct a comprehensive training program for Indonesian personnel in Indonesia and, subject to the approval of the Government, in other countries and carry out such program for training and education in order to meet the requirement for various classifications of full time employment for its operations in Indonesia within the shortest practicable period of time after having submitted written application to the Government and upon approval thereof in accordance with paragraph 3 of Article 8 in relation to its decision to proceed with development of the deposits. The Company shall also conduct a program to acquaint all Expatriate employees and registered sub-contractors with the laws and customs of Indonesia.

5. The Company and its registered sub-contractors may bring into Indonesia such Expatriate Individuals as in the Company’s judgment are required to carry out the operations efficiently; provided however, that the Minister may make known to the Company, and the Company shall duly observe, objections based on grounds of national security or foreign policy of the Government. At the Company’s request (which shall be accompanied by information concerning the education, experience and other qualifications of the individuals concerned) and in compliance with the existing rules and regulations, the Government will make arrangement for the acquisition of all necessary permits, (including entry and exit permits, work permits, visas and such other permits, as may be required); in this connection the Company shall periodically submit its manpower requirement plans, manpower report, training program and training report in the framework of the Indonesianization process to the Government.

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6. The Company agrees that there shall at all times be equal treatment, facilities and opportunities among employees in the same job classification with respect to salaries, facilities and opportunities within the mining industry regardless of nationality and the Company shall duly observe the existing manpower laws and regulations which may from time to time be in force in Indonesia.

7. Prior to the establishment of a permanent settlement, the Company shall furnish free medical care and attention to all its employees working in the area covered by this Agreement as is reasonable and shall maintain or have available adequate medical services at least commensurate with such services provided in similar circumstances in Indonesia. If the Company establishes a permanent settlement, the Company shall furnish such free medical care and attention to all its employees and all Government officials requested by the Company working in the area covered by this Agreement as is reasonable and shall establish a staff and maintain a dispensary, clinic or hospital which shall be reasonably adequate under the circumstances according to the prevailing laws and regulations of Indonesia.

8. If the Company establishes a permanent settlement incorporating families for the employees associated with the Enterprise the Company shall provide, free of charge, primary and secondary education facilities for the children of all employees. Rules, regulations and standards of general application for comparable education facilities in Indonesia established by the Ministry of Education and Culture shall be followed.

ARTICLE 18

ENABLING PROVISIONS

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1. The Government will grant the Company the necessary rights and will take such other action as may be desirable to achieve the mutual objectives of this Agreement. The Company shall have the undermentioned rights:

(i) the sole right to enter the Contract Area or the Mining Area for the purposes of this Agreement, to make drill holes, test pits and excavations, and to take and remove, without royalty or other charge, samples for assays and for metallurgical, pilot plant and laboratory research purposes, including bulk samples of approximately 500 metric tons each and dredge samples of up to 50,000 cubic metres provided, however, the Company will not export any such samples without the prior approval of the Government. If the Company exports such samples, then the Company shall pay any obligations stipulated in this Agreement.

(ii) to enter upon and remain within the Contract Area and the Project Areas (including portions of the air space and shore line), except such area as may have been notified to the Company as being reserved by the Government either for purposes of national security or else covered by the plans provided for below. The Company shall recognise the items referred to in Article 16 of Law No. 11 year 1967, subject to the provision of paragraph 4 of the said Article 16.

2. In carrying out its activities under this Agreement, the Company shall have the right subject to the existing laws and regulations which may from time to time be in force in Indonesia to construct facilities as it deems necessary, provided that:

(i) in connection with the use of land by the Company for construction of facilities as provided in this Agreement the Company shall

pay the usual surveying and registration fees charged by the Land Registration Office. In acquiring titles to land outside the Mining Area, the Company shall comply with existing laws and regulations of general application.

(ii) in connection with the activities of the Company, the Company shall pay generally applicable fees and charges for services

performed, facilities provided and special rights granted by the Government, provided that such services, facilities and rights are requested by the Company.

3. Subject to laws and regulations which may from time to time be in force in Indonesia and subject also to the provisions of Article 25 paragraph 2 and Article 16 paragraph 2, the Company may at any time file with the Ministry a plan or plans, and may thereafter file additional or amended plans, covering:

The Government shall thereupon make arrangements for the Company to utilize and remain within all such areas and such land covered by such plans (or such comparable areas as may be agreed between the Government and the Company) and to exercise the other rights specified above with respect to each such area. The use and occupancy of any areas covered by such plans shall not be subject to payment by the Company of any levies other than those specified elsewhere in this Agreement. The plans filed pursuant to this paragraph shall to the extent practicable, give descriptions in sufficient detail to permit precise identification of the designated areas. The Government shall assist the Company in arrangements for any necessary resettlement of local inhabitants whose resettlement from any part of the Contract Area or the Project Areas is necessary and the Company shall pay for the resettlement and give reasonable compensation for any dwelling, privately owned lands (including such landownership based on any Indonesian customs or customary laws, generally or locally applicable) or other improvements in existence on any such parts which are taken or damaged by the Company in connection with its activities under this Agreement.

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(i) the area or areas in which the Company shall have the right to construct facilities related to production;

(ii) all other areas in which the Company shall have the right to construct any other facilities and the location of all such rights in and

over land, including easements, right of way and rights to lay or pass on, over or under land, any roads, railways, pipes, pipelines, sewers, drains, wires, lines or similar facilities, as may be necessary for the Enterprise; and

(iii) all areas in which the Company shall have the right to construct such additional facilities as the Company deems necessary or

convenient for the Enterprise.

4. Subject to the payments provided for in Article 13 of this Agreement and payments and provisions laid down in generally applicable Central Government, Regional Government and Provincial laws and regulations, and without prejudice to the rights of private parties and to payments of reasonable compensation as may be customary in the Contract Area, the Company at its own expense after approval of the Government may take and use from the Contract Area such timber (for construction purposes), soil, stone, sand, gravel, lime, water, and other products and materials as are necessary for or are to be used by the Enterprise. In doing so, the Company shall observe the existing regulations governing the exploitation and use of said natural resources.

5. The Company shall also have the right subject to the approval of the Government and in compliance with existing rules and regulations to clear away and remove such timber, overburden and other obstructions as may be necessary or desirable for the mining, construction of facilities and any other operations of the Company under this Agreement, provided that the Company shall take into account other rights granted by the Government such as grazing, timber cutting and cultivation rights, and rights of way, by conducting its operations under this Agreement so as to interfere as little as possible with such rights.

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6. The Company may, at its own expense, also take and use any of such products and materials from other areas outside the Contract Area subject to the rights of other parties, to the approval of the Government, and to the payment of such compensation as may be agreed between the Company and such other parties or Government and in accordance with the prevailing laws and regulations.

7. At the request of the Company, the Government shall co-operate in a joint endeavour to alleviate any interference which may arise from others operating under conflicting rights.

ARTICLE 19

FORCE MAJEURE

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1. Any failure by the Government or by the Company to carry out any of its obligations under this Agreement shall not be deemed a breach of contract or default if such failure is caused by force majeure, that party having taken all appropriate precaution, due care and reasonable alternative measures with the objectives of avoiding such failure and of carrying out its obligations under this Agreement. If any activity is delayed, curtailed or prevented by force majeure, then anything in this Agreement to the contrary notwithstanding, the time for carrying out the activity thereby affected and the term of this Agreement specified in Article 31 shall each be extended for a period equal to the total of the periods during which such causes or their effects were operative, and for such further periods, if any, as shall be necessary to make good the time lost as a result of such force majeure. For the purposes of this Agreement, force majeure shall include among other things; war, insurrection, civil disturbance, blockade, sabotage, embargo, strike and other labour conflict, riot, epidemic, earthquake, storm, flood, or other adverse weather conditions, explosion, fire, lightning, adverse order or direction of any Government de jure or de facto or any instrumentality or subdivision thereof, act of God or the public enemy, breakdown of machinery having a major effect on the operation of the Enterprise and any cause (whether or not of the kind hereinbefore described) over which the affected party has no reasonable control and which is of such a nature as to delay, curtail or prevent timely action by the party affected.

2. The Party whose ability to perform its obligations is affected by force majeure shall notify as soon as practicable the other party thereof in writing, stating the cause, and the parties shall endeavour to do all reasonable acts and things within their power to remove such cause; provided, however, that neither party shall be obligated to resolve or terminate any disagreement with third parties, including labour disputes, except under conditions acceptable to it or pursuant to the final decision of any arbitral, judicial or statutory agencies having jurisdiction to finally resolve the disagreement. As to labour disputes, the Company may request the Government to co-operate in a joint endeavour to alleviate any conflict which may arise.

ARTICLE 20

DEFAULT

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1. Subject to the provisions of Article 19 of this Agreement, in the event that the Company is found to be in default in the performance of any provision of this Agreement, the Government, as its remedy under this Agreement, shall give the Company written notice thereof (which notice must state that it is pursuant to this Article) and the Company shall have a period of a maximum 180 (one hundred and eighty) days after receipt of such notice to correct such default. The actual time within which to correct such default shall be stipulated in the said written notice in each individual case as may be reasonable under the circumstances considering the nature of the default. In the event the Company corrects such default within such period, this Agreement shall remain in full force and effect without prejudice to any future right of the Government in respect of any future default. In the event the Company does not correct such default within the time stipulated in the notice, the Government shall have the right to terminate this Agreement in accordance with the provisions of Article 22 as the case may be.

2. Notwithstanding the provision of paragraph 1 of this Article, in the event the Company shall be found to be in default in the making of any payment of money to the Government which the Company is required to make pursuant to Article 12 or Article 13, the period within which the Company must correct such default shall be 30 (thirty) days after the receipt of notice thereof. The penalty for late payment shall be an interest charge on the amount in default from the date the payment was due, at the rate of the New York prime interest rate in effect at the date of default plus 4% (four percent). This or other penalties provided for in this Article may not be taken as deductions in the calculation of taxable income.

3. The Company shall not be deemed to be in default in the performance of any provision of this Agreement concerning which there is any dispute between the Parties until such time as all disputes concerning such provision, including any contention that the Company is in default in the performance thereof or any dispute as to whether the Company was provided a reasonable opportunity to correct a default, have been settled as provided in Article 21.

ARTICLE 21

SETTLEMENT OF DISPUTES

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1. The Government and the Company hereby consent to submit to conciliation, where the Parties wish to seek an amicable settlement by conciliation, or to arbitration, all disputes between the Parties hereto arising before or after termination out of this Agreement or the application thereof or the operations hereunder, including contentions that a Party is in default in the performance of its obligations, for final settlement. Where the Parties seek an amicable settlement of a dispute by conciliation, the conciliation shall take place in accordance with the UNCITRAL Conciliation Rules contained in resolution 35/52 adopted by the United Nations General Assembly on 4 December, 1980 and entitled “Conciliation Rules of the United Nations Commission on International Trade Law” as at present in force. Where the Parties arbitrate, the dispute shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules contained in resolution 31/98 adopted by the United Nations General Assembly on 15 December, 1976 and entitled “Arbitration Rules of the United Nations Commission on International Trade Law” as at present in force. The foregoing provisions of this paragraph do not apply to tax matters which are subject to the jurisdiction of Majelis Pertimbangan Pajak (The Consultative Board for Taxes). The language to be used in conciliation and arbitration proceedings shall, unless the Parties mutually agree otherwise, be the English language.

2. Before the Government or the Company institutes an arbitration proceeding under the UNCITRAL Arbitration Rules with respect to a particular dispute, it shall have used its best endeavours to take all necessary steps to exhaust the administrative remedies available to it under the laws of Indonesia with respect to that dispute.

3. Conciliation or Arbitration proceedings conducted pursuant to this Article shall if appropriate arrangements can be made be held in Jakarta, Indonesia, unless the Parties mutally agree upon another location or unless the aforesaid rules or the procedures thereunder otherwise require. The provisions of this Article shall continue in force notwithstanding the termination of this Agreement. An award pursuant to such Arbitration Proceedings shall be enforceable against and binding upon the Parties hereto.

ARTICLE 22

TERMINATION

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1. At any time during the term of this Agreement, after having used all reasonable diligence in its endeavour to conduct its activities under this Agreement, if in the Company’s opinion the Enterprise is not workable, the Company shall consult with the Minister and may thereafter submit a written notice to terminate this Agreement and to be relieved of its obligations. Such notice shall be accompanied with all data and information of the Company’s activities under this Agreement which shall include but not be limited to documents, maps, plans, worksheets and other technical data and information. Upon confirmation of termination by the Minister or within a period of 6 (six) months from the date of the giving of such written notice by the Company, whichever shall be the earlier, this Agreement shall automatically terminate and the Company shall be relieved of its obligations under this Agreement except as hereinafter specifically provided in this Article.

2. If termination occurs during the General Survey or Exploration Periods, the Company shall have a period of 6 (six) months within which to sell, remove or otherwise dispose of its property in Indonesia and to furnish the Government with the information to be turned over to it in respect of the work which the Company has performed to the date of the giving of the aforementioned notice. Any property not so removed or otherwise disposed of shall become the property of the Government without any compensation to the Company.

3. If termination occurs during the Feasibility Studies Period all property of the Company, movable and immovable, located in the Contract Area shall be offered for sale to the Government, which shall have an option, valid for 30 (thirty) days from the date of such offer, to buy all such property at a price equal to the total original cost to the Company payable in any currency freely convertible in Indonesia and through a bank to be agreed upon by both parties within 90 (ninety) days after acceptance by the Government of such offer. If the Government does not accept such offer within the said 30 (thirty) day period, the Company may sell, remove or otherwise dispose of any or all of such property during a period of 6 (six) months after the expiration of such offer. Any property not so sold, removed or otherwise disposed of shall become the property of the Government without any compensation to the Company.

4. If termination occurs during the Construction Period all property of the Company, both movable and immovable, located in the Contract Area shall in the first instance be offered for sale to the Government which shall have an option, valid for 30 (thirty) days from the date of such offer, to buy all such property at a price equal to the total original cost to the Company payable in any currency freely convertible in Indonesia and through a bank to be agreed upon by both parties within 90 (ninety) days after acceptance by the Government of such offer. If the Government does not accept such offer within the said 30 (thirty) day period, the Company may sell, remove or otherwise dispose of any or all of such property during a period of 12 (twelve) months after

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the expiration’ of such offer. Any property not so sold, removed or otherwise disposed of shall become the property of the Government without any compensation to the Company.

5. If termination occurs during the Operating Period or by reason of the expiration of the term of this Agreement, all property of the Company, both movable and immovable, located in the Contract Area shall be offered for sale to the Government at cost or market value whichever is the lower, but in no event lower than the depreciated book value. The Government shall have an option, valid for 30 (thirty) days from the date of such offer, to buy all such property at the agreed value payable in any currency freely convertible in Indonesia and through a bank to be agreed upon by both Parties within 90 (ninety) days after acceptance by the Government of such offer. If the Government does not accept such offer within the said 30 (thirty) day period, the Company may sell, remove or otherwise dispose of any or all of such property during a period of 12 (twelve) months after the expiration of such offer. Any property not so sold, removed or otherwise disposed of shall become the property of the Government without any compensation to the Company.

6. It is agreed, however, that any property of the Company in Indonesia, movable or immovable, as shall at the termination of this Agreement be in use for public purpose such as roads, schools and/or hospitals with their equipment shall immediately become the property of the Government without any compensation to the Company; and the Company shall recognise the items referred to in paragraph (c) of sub-paragraph 1 of Article 24 of Law No. 11, 1967 relating to safety and the right to excavate, and paragraphs 3, 4, 5 of Article 46 of Government Regulations No. 32 of 1969.

7. All sales, removals or disposals of the Company’s property pursuant to the termination of this Agreement shall be effected according to the prevailing laws, and regulations; any gain or loss from sale or disposal as relating to the written down book value shall be determined in accordance with Article 13 of this Agreement. All values shall be based on generally accepted accounting principles.

8. Rights and obligations which have come into effect prior to the termination of this Agreement and rights and obligations relating to transfer of currencies and properties which have not yet been completed at the time of such termination shall continue in effect for the time necessary or appropriate fully to exercise such rights and discharge such obligations. Additionally, the Company shall be granted the right to transfer abroad all or any proceeds of sale received under this Article 22 subject to the requirement of paragraph 2 of Article 15.

ARTICLE 23

COOPERATION OF THE PARTIES

Such consultation shall be carried out in a spirit of cooperation with due regard to the intent and objectives of the respective Parties. Both Parties desire to realize the success of the Enterprise for the benefit of the people of the Republic of Indonesia, the development of the nation, the growth and development of the economic and social structure, the continued operation of the Company and the development of the mineral resources of the Republic of Indonesia.

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1. The Parties to this Agreement agree that they will at all times use their best efforts to carry out the provisions of this Agreement to the end that the Enterprise may at all times be conducted with efficiency and for the optimum benefit of the Parties.

2. The Company agrees to plan and conduct all operations under this Agreement in accordance with the standards and requirements imposed elsewhere in this Agreement for the sound and progressive development of the mining industry in Indonesia, to give at all times full consideration to the aspirations and welfare of the people of the Republic of Indonesia and to the development of the Nation, and to cooperate with the Government in promoting the growth and development of the Indonesian economic and social structure, and subject to the provisions of this Agreement, at all times to comply with the laws and regulations of Indonesia.

3. At any time during the term of this Agreement, upon request by either party, the Government and the Company may consult with each other:

(a) to determine whether in the light of all relevant circumstances the financial or other provisions of this Agreement need revision in order to ensure that the Agreement operates equitably and without major detriment to the interests of either Party. Such circumstances shall include the conditions under which the mineral production is carried out such as the size, location and overburden of mineral deposits, the quality of the mineral, the market conditions for the mineral, the prevailing purchasing power of money and the terms and conditions prevailing for comparable mineral ventures. In reaching agreement on any revision of this Agreement pursuant to this paragraph 3 both Parties shall ensure that no revision of this Agreement shall prejudice the Company’s ability to retain financial credibility abroad and to raise finance by borrowing internationally in a manner and on terms normal to the mining industry, and

(b) concerning the progress of the Enterprise. In this regard, the Government acknowledges that without prejudice to the other provisions

of this Agreement, the Company may apply for an extension of any period or stage referred to in paragraph 2 of Article 3 and the Government may in its discretion grant an extension of such period(s) or stage(s).

ARTICLE 24

PROMOTION OF NATIONAL INTEREST

By the end of the fifth year, at least 15%;

By the end of the sixth year, at least 23%;

By the end of the seventh year, at least 30%;

By the end of the eighth year, at least 37%;

By the end of the ninth year, at least 44%;

By the end of the tenth year, at least 51%.

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1. In the conduct of its activities under the Agreement the Company shall consistent with its rights and obligations elsewhere under this Agreement give preference to Indonesian consumers’ requirements for its products and the Company and its Affiliates and sub-contractors shall in good faith and to the fullest practicable extent utilize Indonesian manpower, services and raw materials produced from Indonesian sources and products manufactured in Indonesia to the extent such services and products are available on a competitive time, cost and quality basis, provided that:

(i) in comparing prices of goods produced or manufactured in Indonesia to the price of imported goods there shall be added customs

duties, other levies and expenses incurred up to the time the imported goods are landed in Indonesia.

(ii) in comparing the services available in Indonesia fifteen percent (15%) must be added to the charge of the imported services.

2. The Company shall, consistent with its rights and obligations elsewhere under this Agreement, process or cause to be processed, its ores in Indonesia to the most advanced stage possible subject to Article 10 paragraph 3 and, in the event it does not establish its own facilities, shall use existing processing facilities in Indonesia, provided that the charges, recoveries and services therefor are economic and competitive.

3. Subject to the provisions hereunder, the Company shall ensure that its shares owned by the Foreign Investor(s) are offered either for sale or issue firstly, to the Government, and secondly (if the Government does not accept this offer within thirty (30) days of the date of the offer) to Indonesian nationals or Indonesian companies controlled by Indonesian nationals. An offer to the Government or Indonesian nationals or Indonesian companies controlled by Indonesian nationals shall be called an offer to “the Indonesian Participant” for the purpose of this Article 24. In the event that the Government does not accept an offer pursuant to this Article, it may supervise the offer to Indonesian nationals or to Indonesian companies controlled by Indonesian nationals and the valuation of the shares pursuant to this Article 24, paragraph 6.

4. The number of shares to be offered to the Indonesian Participant in each year following the end of the fourth full calendar year of the Operating Period shall be the difference between the following percentages and the percentage of shares (if less than the following percentages) already owned by the Indonesian Participant at the relevant date of offer:

All obligations of the Company under this Article 24, paragraph 4 shall be deemed to be discharged as soon as not less than 51% of the total shares issued and outstanding shall have been offered to and purchased by the Indonesian Participant.

The timetable under which shares in the Company are to be offered to the Indonesian Participant may be extended with the approval of the Government.

The economic lives for the different investment categories for use in the determination of current replacement cost shall be in accordance with generally accepted accounting principles in the international mining industry. The inflation adjustment is to be applied to the investment listed above recognizing as working capital subject to inflation adjustment only that portion represented by tangible equipment and semi finished or finished goods, including but not limited to operating materials and supplies and spare parts and saleable mineral and/or metal inventories. The price per share of shares offered shall be that price

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5. The offer of such shares shall be made:

(i) Upon terms and conditions reasonably intended to ensure that such shares are not thereafter transferred to non-Indonesians, and

(ii) Within three months from the end of each calendar year and the Indonesian Participant shall within a period of three months from the

date of offer, advise the Company of its intention to exercise its option to purchase such shares.

6. The price at which shares shall be offered for sale pursuant to this Article 24, paragraphs 3, 4 and 5 shall be determined as of the end of the year preceding that in which the particular offering is to be made, and shall be the highest of:

(i) The then current replacement cost of the Company’s investment under this Agreement being the current replacement cost of the Company’s investment defined as the cumulative amounts expended by the Company for General Survey, Exploration, feasibility study, development and other pre-production costs, capital expenditure and working capital adjusted by an appropriate annual amount necessary to recognize the effect of inflation computed from the Export Price Index of Manufactured Goods reported by the United Nations Bulletin of Statistics, less:

(a) accumulated depreciation and amortization on the basis of the useful or economic life of the different investment categories

listed above, adjusted by an appropriate annual amount necessary to recognize the effect of inflation computed from the Export Price Index of Manufactured Goods reported in the United Nations Bulletin of Statistics, and

(b) liabilities as of the end of the year.

determined by dividing the current replacement cost by the total number of shares of the Company outstanding immediately prior to the offer.

The determination of current replacement cost shall be the subject of agreement between the Foreign Investor(s) and the Government. Failing such agreement, current replacement cost shall be determined by independent valuers to be appointed as provided for below;

or

The Government and the Company shall consult with representatives of the Jakarta Stock Exchange and other financial experts to determine the price at which shares should be offered for listing on the Jakarta Stock Exchange.

or

The Company and the Government agree that the value of the shares based upon a fair valuation of the Company as a going concern is to be determined by assessment of future earnings, dividend projections and judgement of an appropriate rate of return that recognizes the risk associated with future earnings and dividends.

In the event that agreement cannot be reached on the current replacement cost of the Company’s investment calculated in the manner set out above or the fair valuation of the Company as a going concern calculated in the manner set out above, then the current replacement cost of the Company’s investment or the fair valuation of the Company as a going concern will be determined by independent valuers on the basis that the Foreign Investor(s) is/are a willing but not anxious seller and as provided below using the valuation principles set forth above and in case of a valuation under (ii) or (iii) above, giving due consideration to the project investment risk.

Such independent valuers shall consist of one representative of and appointed by the Government and one representative of and appointed by the Foreign Investor(s). The independent valuers shall meet as soon as convenient at a mutually agreeable place in Indonesia and if the members of the independent valuers do not reach agreement within thirty (30) days after their appointment or such longer period as the Government and the Foreign Investor(s) may mutually agree the representatives shall appoint a third member of the independent valuers, who shall be a representative of an

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(ii) The price at which shares will be accepted for listing on the Jakarta Stock Exchange and offered for sale.

(iii) The value of the shares (in the proportion that they bear to the issued share capital of the Company) based upon a fair valuation of the

Company as a going concern to be agreed upon between the Government and the Foreign Investor(s).

internationally recognized Merchant Bank who is familiar with the international mining industry and not a national of the Republic of Indonesia or United States of America. The decision of two members of the independent valuers shall then be binding upon the Parties. Failure of the two representatives to appoint a third member of the independent valuers within forty (40) days of their appointment shall require the issues to be submitted to arbitration pursuant to Article 21. The Foreign Investor(s) and the Government shall each pay the expense of its own representative and one half of all other expenses of the independent valuers proceedings.

Upon receipt of payment, the Company shall cause prompt delivery of the shares to the Indonesian Participant. In the case of a sale of shares, as distinct from an issue, the Company will be receiving such payment as agent for the Foreign Investor(s) selling those shares. The Government will ensure that the Company can remit the amount of such payment to the relevant Foreign Investor(s) exempted from Indonesian taxes and the Government hereby indemnifies the Company in respect of any such taxes.

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7. The Company and the Government agree that, in view of the Company undertaking this obligation to offer for sale shares of the Company, the underwriting fee will be borne by the Company while the listing and/or brokerage commissions and fees, if any, incurred in any ensuing listing and/or sale of such shares shall be reasonable and not substantially reduce the proceeds of the sale and shall be shared equally by buyer and seller.

8. Shares purchased by the Indonesian Participant shall be paid for in Rupiahs (convertible at the prevailing exchange rate into United States Dollars applicable at the date of the payment referred below) or in United States Dollars. The proceeds of sale may be transferred abroad in accordance with Article 15, paragraph 2. Such payment shall be made within three (3) months after the date of acceptance of the offer referred to in Article 24, paragraph 5 hereinabove.

9. In the event of an increase in the share capital of the Company, the Indonesian shareholders shall be offered new shares in proportion to their existing shareholding so as to give them the opportunity to maintain their existing proportionate shareholding in the Company.

10. In no event shall shares held by Indonesians be treated less favourably than those held by any others.

11. The Government shall be entitled to appoint directors of the Company in proportion to the Government shareholding in the Company.

12. All or any of the rights of the Government under this Article (including the right to take up shares in the Company and the right to appoint directors) may be exercised with the consent of the Government by a nominee or nominees of the Government being a statutory body or other instrumentality of the Government either solely or jointly with the Government and in accordance with the terms in this Article, but so that the total entitlement of the Government and its nominee or nominees either solely or jointly shall not exceed that which the Government would have been allowed under this Article if it had exercised those rights solely.

For the purpose of determining the number of directors which the Government is entitled to appoint under paragraph 11, any shareholding of a nominee of the Government shall be deemed to be a shareholding of the Government.

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ARTICLE 25

REGIONAL CO-OPERATION IN REGARD TO

ADDITIONAL INFRASTRUCTURE

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1. The Company will at all times co-operate with the Government in utilizing its best efforts to plan and co-ordinate its activities, and proposed future projects in the Contract Area or the Project Area. Living accommodation and facilities and working conditions provided by the Company for its operations shall be of a Government standard commensurate with those of good employers operating in Indonesia.

2. In relation to the region, the Company will endeavour to assist in maximizing the economic and social benefits generated by the Enterprise in the Contract Area in respect to :

(i) co-ordinating such benefits with local and regional infrastructure studies undertaken by the Government together with any benefits

generated by other interested local, foreign and international public and private entities; and

(ii) assisting and advising the Government, when requested, in its planning of the infrastructure and regional development which the

Company may deem useful to the Enterprise and to existing and future industries and activities in the area of the Enterprise.

3. The Company shall allow the public and the Government to use the Company’s wharf and harbour installations, air strips, machinery, equipment, services and facilities ancillary thereto on such reasonable terms and reasonable charges as the Company shall impose, provided, however, that such use shall not unduly prejudice or interfere with the Company’s operations hereunder.

4. The Company shall during the Construction Period and substantially in accordance with the plans and designs for the Enterprise as approved by the Government at its own cost construct such new roads together with all warning devices, bridges and crossings as may be necessary for the purpose of this Agreement.

5. The Company shall allow the public and the Government to use free of charge any roads outside the Mining Area constructed and/or maintained by the Company, provided, however, that such use shall not unduly prejudice or interfere with the Company’s operations hereunder and that to avoid burdening the Company with excessive maintenance costs the Government and the Company shall together define what categories of traffic shall be allowed to use such roads and to what extent if any the Government or third parties shall contribute towards such maintenance costs.

6. The Company shall maintain and be responsible for the maintenance of all roads in the Mining Area.

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7. All roads constructed by the Company outside the Mining Area shall be public roads for the purposes of the provisions of the traffic laws and regulations which may from time to time be in force in Indonesia. To the extent that the plans and designs for the Enterprise as approved by the Government so provide and thereafter from time to time, the Government will make such special regulations under the traffic laws as it considers necessary or desirable for the proper safety of the users of the said roads.

8. If the Company’s use of the existing public roads results in or is likely to result in significant damage or deterioration, the Company shall pay to the Government or other authority having control over the road the cost (or an equitable proportion thereof having regard to the use of such road by others) of preventing or making good such damages or deterioration or of upgrading to a standard necessary having regard to the increased traffic and in addition the Government or other authority having control over that road may require the Company to pay a maintenance user charge based upon what is fair and reasonable having regard to the continuing cost (excluding any profit to the Government or such other authority) of operation and the maintenance of that road and the use of that road by others.

9. The Company shall at its own cost and in accordance with laws and regulations that may from time to time be in force in Indonesia, construct and provide all storage dams, water works, treatment, transmission and reticulation works (hereinafter called “the Water Works”) necessary to supply adequately the needs of the Enterprise.

10. The Company shall at its own cost operate and maintain and be responsible for the maintenance of that part of the Water Works necessary to supply the Enterprise from the point where such part is separated from the rest of the Water Works. The Company may charge reasonable rates and service charges for the water supply. If the Government is able to take over and adequately maintain that part of the Water Works, the Company and its employees shall thereafter pay reasonable rates and service charges for the water supply.

11. In the event that the Government is unable to provide adequate telecommunications facilities, the Company may in accordance with rules and regulations which may from time to time be in force in Indonesia, install and operate such telecommunications facilities, provided that it shall allow the Government and public to use such facilities on such reasonable terms and reasonable charges as the Company shall impose, on the condition that such use shall not unduly prejudice or interfere with the Company’s operations.

12. In the event that telecommunications facilities can be provided by the Government, the Company shall be obliged to use the Government’s network and pay standard charges for telecommunications services.

13. The Company may at its own cost, in accordance with the laws and regulations which may from time to time be in force in Indonesia, and subject to Government approval which shall not unreasonably be withheld construct and establish and develop a camp or permanent facilities sufficient to service the needs of the Enterprise.

ARTICLE 26

ENVIRONMENTAL MANAGEMENT AND PROTECTION

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1. The Company shall, in accordance with prevailing environmental and natural preservation laws and regulations of Indonesia, conduct its operations so as to control Waste or loss of natural resources, to protect natural resources against unnecessary damage, and to prevent pollution and contamination of the Environment, and in general maintain the health and safety of its employees and the local community. The Company shall also be responsible for reasonable preservation of the natural environment within which the Company operates and especially for taking no acts which may unnecessarily and unreasonably block or limit the further development of the resources of the area.

2. The Company shall include in the feasibility study for each mining operation an Environmental Impact Study to analyse the potential impact of its operations on land, water, air, biological resources and human settlements. The environmental study will also outline measures which the Company intends to use to mitigate adverse impacts.

ARTICLE 27

LOCAL BUSINESS DEVELOPMENT

The staff member appointed for this purpose shall be a full time employee of the Company.

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1. The Company shall to the extent reasonably and economically practicable having regard to the nature of the particular goods and services promote, support, encourage and lend assistance to Indonesian nationals desirous of establishing enterprises and businesses providing goods and services for the Enterprise and for the permanent settlement (if any) constructed by the Company and the residents thereof, and shall generally promote, support, encourage and assist the establishment and operation of local enterprises in the Mining Area.

2. The Company shall make maximum use of Indonesian sub-contractors where services are available from them at competitive prices and of comparable standards with those obtainable from elsewhere, whether inside or outside Indonesia.

3. Insofar as it is practicable the Company shall give first preference in its assistance hereunder to landowners in and other people originating from the area of the Enterprise.

4. The Company shall, at the commencement of the Feasibility Studies Period, appoint for such period as is reasonably necessary, a member of its staff who has had experience within Indonesia of the establishment, control and day-to-day running of enterprises controlled and run by Indonesians and who shall:

(i) identify activities related to the Enterprise including the provision of goods and services as described above which can be carried on

by Indonesians nationals or local enterprises;

(ii) advise and assist Indonesian nationals desirous of carrying on those activities or of establishing enterprises to do the same; and

(iii) implement, or assist in the implementation of, the Business Development Program as hereinafter described on behalf of the

Company.

5. The Company shall, in consultation with the Government prepare a Business Development Program for the development of Indonesian businesses and enterprises associated with or incidental to the Enterprise which shall be submitted to the Government as part of the Company’s feasibility study report as described in Annex “E” .

6. The Business Development Program will make provision as far as is practicable for the following:

(i) enterprises involved in the supply and maintenance of mining equipment (other than that carried out by the Company) and the

provision of consumable supplies;

(ii) subcontracting to self-employed equipment operators or road construction and maintenance;

and may include provision for other activities agreed to by the Company and the Government.

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(iii) subcontracting of site preparation, construction and maintenance of houses, government buildings, industrial facilities and other

works and buildings and facilities to be established, including concreting, welding, tank constructions, steel fabrication, plumbing, electrical work and timberwork;

(iv) enterprises involved in town services such as sewerage and garbage collection, treatment and disposal, passenger transport, freight

carriage of consumer items and stevedoring (except in relation to the shipping of the produce of the mine);

(v) enterprises involved in trade stores, supermarkets, other retail outlets, canteens, restaurants, taverns, cinemas, social clubs, cleaning

and laundry, and vehicle maintenance and repair facilities;

(vi) enterprises involved in the supply of fresh fruits, vegetables, meat and fish;

7. The Business Development Program shall also include details of:

(i) the time schedule for its implementation;

(ii) those additional activities which could be established by Indonesian nationals;

(iii) those activities in which the Company intends to commence operating but which will be transferred to Indonesian nationals at a later

date, on a commercial basis; and

(iv) any facilities by way of training, technical or financial assistance which can be made available to facilitate the smooth transition of

ownership and operation to Indonesian nationals.

8. The Business Development Program shall be reviewed annually by the Company, in consultation with the Government, and may be altered by mutual consent between the Company and the Government with a view to securing the maximum benefit to Indonesian nationals and local enterprises from the operations of the Company and the carrying out of the Enterprise.

9. The Company shall consult from time to time with representatives of the Government and furnish the Government at quarterly intervals with a report concerning the following:

(i) the implementation of the training and manpower aspects of the Business Development Program;

(ii) the implementation of provisions relating to local purchasing of supplies; and

(iii) the implementation of provisions relating to local business development.

ARTICLE 28

MISCELLANEOUS PROVISIONS

To the Government addressed to:

The Ministry of Mines and Energy of the Republic of Indonesia c/o: Directorate General of Mines Jl. Jenderal Gatot Subroto Kav. 49 JAKARTA - INDONESIA

To the Company at its principal office in Jakarta with one copy by airmail, telegram, telex, cable or radiogram, with postage or transmission charges fully prepaid to:

Newmont Indonesia Limited 18th Floor, A.M.P. Tower. 535 Bourke St , Melbourne 3000 Victoria, Australia Telex No. 32026

or such other address as the Company may notify from time to time.

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1. Each of the Parties agrees to execute and deliver all such further instruments, and to do and perform all such further acts and things, as shall be necessary or convenient to carry out the provisions of this Agreement.

2. Any notice, request, waiver, consent, approval and other communication required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable or radiogram, with postage or transmission charges fully prepaid, to the Party to which it is required or permitted to be given or made at such Party’s address hereinafter specified, or at such other addresses as such Party shall have designated by notice to the Party giving such notice or making such request:

3. The Minister may take any action or give any consent on behalf of the Government which may be necessary or convenient under or in connection with this Agreement for its better implementation and any action so taken or consent so given shall be binding upon the Government and any instrumentality or sub-division thereof.

4. When required by the context of this Agreement, each number (singular or plural) shall include all numbers and each gender shall include all genders. The headings appearing in this Agreement are not to be construed as interpretations of the text or provisions hereof, but are intended only for convenience of reference.

5. The terms of this Agreement constitute the entire agreement between the Parties hereto and no previous communications, representations or agreements, either oral or written between the Parties hereto with respect to the subject matter thereof shall vary the terms of this Agreement.

6. Unless the context otherwise expressly requires, where reference is made in this Agreement to the laws or regulations of Indonesia such reference shall be to the laws

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and regulations of Indonesia generally applicable to foreign mining companies in Indonesia in force from time to time. 7. Where an approval or consent or concurrence of a Ministry or the Government of Indonesia or any sub-division or instrumentality thereof

is required, and where an application is made by the Company to the Government of Indonesia under this Agreement such approval or consent will not be unreasonably withheld or delayed.

ARTICLE 29

ASSIGNMENT

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1. This Agreement may not be transferred or assigned (including for the purpose of financing) in whole or in part, without the prior written consent of the Minister; provided however that where the Minister consents to a transfer or assignment, the Company shall not be relieved from any of its obligations hereunder except to the extent that the transferee or assignee shall assume and in fact perform such obligations.

2. The shareholders in the Company shall not transfer shares in the Company without the prior written consent of the Minister which shall not be unreasonably withheld or delayed; provided that the written consent of the Minister shall not be required in the case of:

(a) a transfer of shares pursuant to Article 24 or;

(b) a transfer by a shareholder of all or some of its shares to a Subsidiary.

ARTICLE 30

FINANCING

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1. The Company shall have sole responsibility for financing the Enterprise and shall maintain sufficient capital to carry out its obligations under this Agreement. The Company may determine the extent to which the financing shall be accomplished through issuance of shares of the Company or through borrowings by the Company, provided that from the start of the Construction Period the Company shall endeavour to maintain a ratio of shareholders capital to third party borrowings so as to guarantee the continuing solvency of the Company in order to protect the legitimate interests of the Government, the lenders and the shareholders.

2. Any long term borrowing by the Company under this Agreement shall be on such repayment terms and at such effective rates of interest (including discounts, compensating balances and other costs of obtaining such borrowings) which are reasonable and appropriate for mining companies in circumstances then prevailing in the international money markets after complying with existing procedures for obtaining foreign loans.

ARTICLE 31

TERM

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1. This Agreement shall become effective on the date set out at the beginning of this Agreement.

2. Subject to the provisions herein contained, this Agreement shall continue in force until the expiration of the last Operating Period for a Mining Area and for such additional period, if any, for which this Agreement shall be renewed or otherwise extended.

3. Notwithstanding paragraph 2 of this Article, the Government agrees that within a reasonable period prior to the expiration of the Operating Period for any Mining Area it will give sympathetic consideration to any request by the Company to extend the Operating Period in question by the maximum period permitted by law in recognition of the requirements for appropriate economic recovery of Minerals from any such Mining Area.

ARTICLE 32

GOVERNING LAW

In witness whereof, the Parties hereto have caused this Agreement to be duly executed as of the date appearing at the beginning of this Agreement.

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1. Except as otherwise expressly provided herein, this Agreement, its implementation and operation shall be governed and construed and interpreted in accordance with the laws of the Republic of Indonesia.

2. This Agreement has been drawn up in both the Indonesian and English languages and both texts are valid. In the event of any divergency between the two texts, however, the English text shall prevail and shall be considered the official text.

FOR:

THE GOVERNMENT OF THE REPUBLIC OF INDONESIA,

By:

Minister of Mines and Energy Prof. Subroto

FOR: PT. NEWMONT NUSA TENGGARA

By: John C. Quinn

and

By: Jusuf Merukh

ANNEX “A”

CONTRACT AREA

The “Contract Area” is the mainland of the island of Lombok and Sumbawa bounded by points 1 through 194 as defined by coordinates listed below:

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Point Latitude Longitude 1. 8° 34' 57" S 116° 16' 04" E 2. 8° 34' 57" S 116° 45' 16" E 3. 8° 32' 28" S 116° 45' 16" E 4. 8° 32' 28" S 116° 46' 04" E 5. 8° 27' 28" S 116° 46' 04" E 6. 8° 27' 28" S 116° 50' 14" E 7. 8° 25' 59" S 116° 50' 14" E 8. 8° 25' 59" S 116° 55' 11" E 9. 8° 25' 03" S 116° 55' 11" E 10. 8° 25' 03" S 116° 58' 23" E 11. 8° 24' 07" S 116° 58' 23" E 12. 8° 24' 07" S 117° 01' 20" E 13. 8° 22' 34" S 117° 01' 20" E 14. 8° 22' 34" S 117° 03' 25" E 15. 8° 24' 59" S 117° 03' 25" E 16. 8° 24' 59" S 117° 05' 22" E 17. 8° 22' 26" S 117° 05' 22" E 18. 8° 22' 26" S 117° 06' 22" E 19. 8° 22' 02" S 117° 06' 22" E 20. 8° 22' 02" S 117° 12' 47" E 21. 8° 24' 03" S 117° 12' 47" E 22. 8° 24' 03" S 117° 15' 12" E 23. 8° 25' 03" S 117° 15' 12" E 24. 8° 25' 03" S 117° 17' 49" E 25. 8° 25' 59" S 117° 17' 49" E 26. 8° 25' 59" S 117° 18' 41" E 27. 8° 26' 31" S 117° 18' 41" E 28. 8° 26' 31" S 117° 21' 50" E 29. 8° 27' 40" S 117° 21' 50" E 30. 8° 27' 40" S 117° 24' 19" E 31. 8° 26' 31" S 117° 24' 19" E 32. 8° 26' 31" S 117° 25' 03" E 33. 8° 25' 59" S 117° 25' 03" E 34. 8° 25' 59" S 117° 25' 27" E 35. 8° 23' 34" S 117° 25' 27" E 36. 8° 23' 34" S 117° 27' 27" E 37. 8° 24' 35" S 117° 27' 27" E 38. 8° 24' 35" S 117° 32' 33" E 39. 8° 23' 30" S 117° 32' 33" E 40. 8° 23' 30" S 117° 34' 37" E 41. 8° 25' 35" S 117° 34' 37" E 42. 8° 25' 35" S 117° 38' 02" E 43. 8° 27' 07" S 117° 38' 02" E 44. 8° 27' 07" S 117° 41' 03" E 45. 8° 28' 36" S 117° 41' 03" E 46. 8° 28' 36" S 117° 44' 08" E 47. 8° 30' 00" S 117° 44' 08" E 48. 8° 30' 00" S 117° 45' 08" E 49. 8° 32' 08" S 117° 45' 08" E 50. 8° 32' 08" S 117° 48' 09" E

- 70 -

51. 8° 33' 57" S 117° 48' 09" E 52. 8° 33' 57" S 117° 47' 08" E 53. 8° 34' 31" S 117° 47' 08" E 54. 8° 34' 31" S 117° 46' 16" E 55. 8° 38' 02" S 117° 46' 16" E 56. 8° 38' 02" S 117° 47' 08" E 57. 8° 38' 30" S 117° 47' 08" E 58. 8° 38' 30" S 117° 46' 44" E 59. 8° 42' 32" S 117° 46' 44" E 60. 8° 42' 32" S 117° 51' 14" E 61. 8° 42' 00" S 117° 51' 14" E 62. 8° 42' 00" S 117° 54' 35" E 63. 8° 43' 00" S 117° 54' 35" E 64. 8° 43' 00" S 117° 55' 55" E 65. 8° 57' 00" S 117° 55' 55" E 66. 8° 57' 00" S 117° 53' 27" E 67. 8° 56' 31" S 117° 53' 27" E 68. 8° 56' 31" S 117° 50' 58" E 69. 8° 55' 03" S 117° 50' 58" E 70. 8° 55' 03" S 117° 48' 53" E 71. 8° 56' 31" S 117° 48' 53" E 72. 8° 56' 31" S 117° 45' 52" E 73. 8° 55' 59" S 117° 45' 52" E 74. 8° 55' 59" S 117° 41' 55" E 75. 8° 57' 03" S 117° 41' 55" E 76. 8° 57' 03" S 117° 39' 51" E 77. 8° 58' 32" S 117° 39' 51" E 78. 8° 58' 32" S 117° 37' 50" E 79. 8° 59' 28" S 117° 37' 50" E 80. 8° 59' 28" S 117° 35' 53" E 81. 9° 00' 31" S 117° 35' 53" E 82. 9° 00' 31" S 117° 33' 04" E 83. 9° 01' 28" S 117° 33' 04" E 84. 9° 01' 28" S 117° 31' 04" E 85. 9° 02' 00" S 117° 31' 04" E 86. 9° 02' 00" S 117° 28' 31" E 87. 9° 02' 30" S 117° 28' 31" E 88. 9° 02' 30" S 117° 27' 40" E 89. 9° 03' 29" S 117° 27' 40" E 90. 9° 03' 29" S 117° 23' 39" E 91. 9° 04' 00" S 117° 23' 39" E 92. 9° 04' 00" S 117° 19' 53" E 93. 9° 03' 29" S 117° 19' 53" E 94. 9° 03' 29" S 117° 16' 00" E 95. 9° 02' 30" S 117° 16' 00" E 96. 9° 02' 30" S 117° 14' 30" E 97. 9° 02' 00" S 117° 14' 30" E 98. 9° 02' 00" S 117° 11' 23" E 99. 9° 03' 30" S 117° 11' 23" E 100. 9° 03' 30" S 117° 10' 19" E 101. 9° 04' 00" S 117° 10' 19" E 102. 9° 04' 00" S 117° 09' 47" E 103. 9° 06' 00" S 117° 09' 47" E 104. 9° 06' 00" S 117° 05' 45" E 105. 9° 06' 30" S 117° 05' 45" E 106. 9° 06' 30" S 117° 00' 48" E 107. 9° 06' 00" S 117° 00' 48" E 108. 9° 06' 00" S 116° 57' 51" E 109. 9° 04' 33" S 116° 57' 51" E 110. 9° 04' 33" S 116° 52' 22" E 111. 9° 04' 00" S 116° 52' 22" E 112. 9° 04' 00" S 116° 51' 34" E

- 71 -

113. 9° 03' 33" S 116° 51' 34" E 114. 9° 03' 33" S 116° 48' 37" E 115. 9° 02' 36" S 116° 48' 37" E 116. 9° 02' 36" S 116° 46' 00" E 117. 9° 01' 30" S 116° 46' 00" E 118. 9° 01' 30" S 116° 44' 00" E 119. 8° 57' 15" S 116° 44' 00" E 120. 8° 57' 15" S 116° 43' 27" E 121. 8° 51' 50" S 116° 43' 27" E 122. 8° 51' 50" S 116° 45' 48" E 123. 8° 49' 49" S 116° 45' 48" E 124. 8° 49' 49" S 116° 46' 45" E 125. 8° 45' 00" S 116° 46' 45" E 126. 8° 45' 00" S 116° 45' 48" E 127. 8° 41' 00" S 116° 45' 48" E 128. 8° 41' 00" S 116° 45' 16" E 129. 8° 39' 00" S 116° 45' 16" E 130. 8° 39' 00" S 116° 45' 48" E 131. 8° 36' 30" S 116° 45' 48" E 132. 8° 36' 30" S 116° 37' 30" E 133. 8° 39' 00" S 116° 37' 30" E 134. 8° 39' 00" S 116° 36' 26" E 135. 8° 41' 00" S 116° 36' 26" E 136. 8° 41' 00" S 116° 35' 22" E 137. 8° 42' 30" S 116° 35' 22" E 138. 8° 42' 30" S 116° 34' 29" E 139. 8° 43' 30" S 116° 34' 29" E 140. 8° 43' 30" S 116° 33' 29" E 141. 8° 46' 40" S 116° 33' 29" E 142. 8° 46' 40" S 116° 31' 57" E 143. 8° 47' 40" S 116° 31' 57" E 144. 8° 47' 40" S 116° 30' 32" E 145. 8° 50' 13" S 116° 30' 32" E 146. 8° 50' 13" S 116° 32' 40" E 147. 8° 51' 42" S 116° 32' 40" E 148. 8° 51' 42" S 116° 35' 38" E 149. 8° 53' 26" S 116° 35' 38" E 150. 8° 53' 26" S 116° 34' 41" E 151. 8° 54' 55" S 116° 34' 41" E 152. 8° 54' 55" S 116° 32' 40" E 153. 8° 55' 51" S 116° 32' 40" E 154. 8° 55' 51" S 116° 26' 15" E 155. 8° 57' 11" S 116° 26' 15" E 156. 8° 57' 11" S 116° 01' 37" E 157. 8° 56' 23" S 116° 01' 37" E 158. 8° 56' 23" S 115° 59' 04" E 159. 8° 54' 47" S 115° 59' 04" E 160. 8° 54' 47" S 115° 57' 03" E 161. 8° 51' 50" S 115° 57' 03" E 162. 8° 51' 50" S 115° 53' 38" E 163. 8° 50' 21" S 115° 53' 38" E 164. 8° 50' 21" S 115° 50' 37" E 165. 8° 49' 25" S 115° 50' 37" E 166. 8° 49' 25" S 115° 49' 37" E 167. 8° 43' 13" S 115° 49' 37" E 168. 8° 43' 13" S 115° 52' 38" E 169. 8° 43' 56" S 115° 52' 38" E 170. 8° 43' 56" S 115° 01' 37" E 171. 8° 42' 52" S 116° 01' 37" E 172. 8° 42' 52" S 116° 02' 57" E 173. 8° 40' 03" S 116° 02' 57" E 174. 8° 40' 03" S 116° 03' 53" E

The total area of the above defined “ Contract Area ” is by theoretical calculation assuming the side of an equatorial degree square as being 111.11 km based on Indonesian topographic map (Peta Ikhtisar Top), issue printed 1975 on Scale 1 : 250,000 deemed to contain approximately 1,127,134 ( one million and one hundred twenty seven thousand and one hundred thirty four ) hectares (until a more accurate map and/or method is agreed upon by the Company and the Government to calculate the surface land area).

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175. 8° 34' 58" S 116° 03' 53" E 176. 8° 34' 58" S 116° 02' 57" E 177. 8° 30' 32" S 116° 02' 57" E 178. 8° 30' 32" S 116° 01' 29" E 179. 8° 25' 59" S 116° 01' 29" E 180. 8° 25' 59" S 116° 02' 25" E 181. 8° 23' 27" S 116° 02' 25" E 182. 8° 23' 27" S 116° 05' 54" E 183. 8° 21' 06" S 116° 05' 54" E 184. 8° 21' 06" S 116° 08' 27" E 185. 8° 20' 29" S 116° 08' 27" E 186. 8° 20' 29" S 116° 09' 59" E 187. 8° 18' 53" S 116° 09' 59" E 188. 8° 18' 53" S 116° 11' 24" E 189. 8° 17' 57" S 116° 11' 24" E 190. 8° 17' 57" S 116° 12' 22" E 191. 8° 16' 20" S 116° 12' 22" E 192. 8° 16' 20" S 116° 14' 04" E 193. 8° 15' 00" S 116° 14' 04" E 194. 8° 15' 00" S 116° 16' 04" E

ANNEX “B”

MAP OF CONTRACT AREA

- 73 -

ANNEX “C”

LIST OF OUTSTANDING MINING AUTHORIZATIONS

- 74 -

No. HOLDER OF MINING AUTHORIZATION LOCATION AREA

EXTENT OF

AREA ( HA ) MINERAL COMMODITY REFERENCE

1.

UD Pelita Dua

Nusa Tenggara Barat (DU.59)

1,976

lead and associated minerals

No. 269K/22/030000 /1984. dated. 15 - 10 - 1984

2.

idem


1,900

idem

No. 270K/22/030000/1984. dated. 15 - 10 - 1984

3.

idem


1,938

idem

No. 271K/22/030000/1984 dated. 15 - 10 - 1984

4.

Haji Musa Affendy, SH


2,000

idem

No. 2737/SK-DJ/396 DUP/1983 dated - 1 - 8 - 1983

5.

PT Aneka Tambang (Persero)


23,764,435

idem

No. 862K/21/030000/1985. dated 1 - 8 - 1985

6.

CV. Kade Gudang


5,000

Provincial announcement

7.

idem


5,000

idem

8.

idem


5,000

idem

9.

idem


5,000

idem

10.

idem


5,000

idem

ANNEX “D”

DEADRENT FOR VARIOUS STAGES OF ACTIVITIES

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Period General Survey Exploration

Feasibility Studies Construction Operating

Year I II*) I II III IV*) V*) I II*) I II III I – XXX

U.S. Dollars per hectare per Annum 0.025 0.05 0.10 0.12 0.15 0.25 0.35 0.50 0.50 0.50 0.50 0.50 1.50x ) 3.00y ) *). Extension period subject to the approval of the Minister x). Laterite and other extensive surface deposits y). Deposits other than x).

ANNEX “E”

FEASIBILITY STUDY REPORT

In accordance with Article 8 of this Contract of Work, the Company shall submit to the Government a full report on the feasibility studies conducted by the Company.

Without limiting the generality of Article 8, these investigations and studies shall include:

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1. A thorough geological investigation and proving of the ore deposits in the Mining Area including proven, probable and possible ore reserves to the extent necessary for the economic feasibility of the Enterprise to be judged and the testing and sampling of those deposits substantially in accordance with the agreed work program.

2. Detailed and reconnaissance site information for the operations included in the Enterprise together with the preparation of suitable maps and drawings of such sites.

3. A study of the technical and economic feasibility of the mining, transporting, handling and shipping of ores, concentrates and other forms from the Mining Area including engineering investigations of possible port sites, road links from mine sites to river terminals and other appropriate means of transport.

4. An investigation into the possible effect of any proposed barging or shipping transportation.

5. An investigation into the location and design of an airstrip and associated landing and terminal facilities, when deemed necessary.

6. Investigation and planning for the development of a suitable permanent settlement, including design of housing facilities and associated social, cultural and civic facilities as may be necessary to meet the needs of a community of such a size as is likely to be generated by the Company’s operations within a period of five years following the commencement of the Operating Period.

7. A study into future employee requirements for the Enterprise with a view to estimating the kind and extent of training required to ensure the replacement of Expatriate workers by Indonesians and maximum rate of localisation as is consistent with the safe and efficient operation of the Enterprise.

8. Physical impact studies into the likely effects of the operation of the Enterprise on the Environment, such studies to be carried out in consultation with appropriately qualified independent consultants and under the terms of reference set out in Article 26 of this Agreement.

9. An investigation into the number and types of local businesses likely to be required to service the needs of the Enterprise and the permanent settlement likely to be generated thereby within a period of five years following the commencement of the Operating Period.

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10. Metallurgical and market research to establish the recoverability of ore, and the possibility of selling ore concentrates and likely contract terms on which such products could be sold.

11. A preliminary investigation into the feasibility of establishing a smelting and refining operation sufficient to indicate the approximate capital and operating costs thereof and to possible future sources of power.

12. A thorough financial analysis, based upon appropriate criteria for a mining company, of prospective cash flow and rates of return of the Enterprise.

13. An investigation into suitable water supply facilities for mining, industrial and permanent settlement purposes.

14. Complete studies and investigation in relation to the following:

(a) the feasibility and cost of establishing suitable telecommunications facilities;

(b) the feasibility and cost of construction and operating facilities to supply the power required for construction, mining, industrial and

permanent settlement use in connection with the Enterprise; and

(c) the feasibility and cost of establishing suitable Water Works required in connection with the Enterprise.

ROYALTY ON MINERAL PRODUCTION

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ANNEX “F” F/-1-

ROYALTY International metal price US$ per metric tonne

Explanation No. Mineral US$ per kg in mineral or ore

US$ per tonne mineral

1 2 3 4 5 6 1. Natural/rock asphalt — 0.50 — — 2. Coal —

3. Graphite — 0.50 — — 4. Iodine — 50.00 2500 — 5. a. Iron in iron ore — 0.25 80 —

b. Iron in complex ore 0.0005 — 80 — 6. Bauxite — 0.25 500 — 7. Chromium — 0.25 100 — 8. Copper 700 — 9. Lead 0.015 — 300 — 10. Zinc 0.01 — 300 — 11. Tin

12. Monazite — — — — 13. Rutile (or Titanium in Rutile) — 0.25 — — 14. Molybdenum 0.07 — 3240 — 15. a. Nickel in oxide ore

b. Nickel in sulfide ore

16. Manganese — 0.30 — — 17. Gold See Article 13.2 See Article 13.2 See Article 13.2 See Article 13.2.(i).(g).1).

F/-2-

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No.

Mineral ROYALTY International

metal price US$ per metric tonne

Explanation US$ per kg in

mineral or ore US$ per tonne

mineral

1 2 3 4 5 6 18. Silver See Article 13.2 See Article 13.2 See Article 13.2 Re.Article.13.2.(i).(g).2) 19. Platinum See Article 13.2 See Article 13.2 See Article 13.2 Re.Article.13.2.(i).(g).3) 20. Mercury 0.15 — 15,000 — 21. Sulphur 0.002 — — — 22. Pyrite — 0.15 — — 23. Ocher — 0.25 — — 24. Asbestos — 0.25 — — 25. Serpentine — 0.10 — — 26. Magnesite — 0.50 — — 27. Steatite — 0.10 — — 28. Perlite — 0.10 — — 29. Ceramic Felspar — 0.25 — — 30. All sorts of clay

a. Fire clay — 0.10 — — b. Ball clay — 0.10 — — c. Bentonite — 0.05 — —

d. Building material clay (brick, tile, etc) — 0.05 — —

31. Barite 0.05 — — 32. Kaolin — 0.10 — — 33. Fuller’s Earth — 0.10 — — 34. Diatomite — 0.10 — —

F/-3-

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ROYALTY International metal price US$ per. metric tonne

Explanation No. Mineral US$ per kg in mineral or ore


1 2 3 4 5 6 35. Limestone — 0.05 — — 36. Marble — 0.10 — — 37. Dolomite — 0.05 — — 38. Gypsum — 0.15 — — 39. Phosphate rock — 0.25 — — 40. Gravel — 0.05 — — 41. Quartz sand and quartzite 0.10 — — 42. Ornamental building material — 0.10 — — 43. Diamond — 5% of sales price — — 44. Gemstone — 5% of sales price — — 45. Zircon — 0.25 — — 46.

Ilmenite (or Titanium in Ilmenite — 0.25 — —

1) For Minerals or ore for which no international price is given the royalty will be determined by the Government at the required time, upon

written request for the Company (See Article 13.2(f)). 2) For Minerals which are not mentioned, the royalty will be determined at the required time, upon written request from the Company. 3) One tonne Iodine means crude, processed prior to sublimation.

ADDITIONAL ROYALTY ON MINERALS EXPORTED

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ANNEX “G” G/-1-

No.

Mineral ADDITIONAL ROYALTY International


Stage of products eligible for exemption

from Additional Royalty US$ per kg element in mineral or ore


1 2 3 4 5 6 1. Natural/rock asphalt — 0.50 — — 2. Coal — — 3. Graphite — 0.75 — — 4.

Iodine

—

100.00

2,500

Produced crude Iodine before being resublimed

5. a. Iron in Iron ore — 0.25 80 Pellet b. Iron in complex ore 0.0005 — 80 Pellet

6. Bauxite — 0.25 500 Alumina 7. Chromium — 0.25 100 — 8. Copper — 700 Concentrate 9. Lead 0.015 — 300 Concentrate 10. Zinc 0.01 — 300 Concentrate 11. Tin — — 12. Monazite — 6% of sales price — — 13. Rutile (or Titanium in Rutile) — 0.25 — — 14. Molybdenum 0.07 — 3,240 Concentrate 15.

a. Nickel in oxide ore

Ferro Nickel, sinter electr.

b. Nickel in sulfide ore nickel

G/-2-

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No.




from Additional Royalty US$ per kg element

in mineral or ore US$ per tonne

mineral

1 2 3 4 5 6 16. Manganese — 0.50 — — 17. Gold ) ) As Associated Mineral,

) ) dore bullion. )Refer to Article 13.2.(i).(g). )

18. Silver ) ) idem. 19. Platinum ) ) As Associated Mineral 20. Mercury 0.15 — 15,000 As Associated Mineral 21. Sulphur 0.002 — — — 22. Pyrite — 0.15 — — 23. Ocher — 0.25 — — 24. Asbestos — 0.25 — — 25. Serpentine — 0.10 — — 26. Magnesite — 0.25 — — 27. Steatite — 0.10 — — 28. Perlite — 0.10 — — 29. Ceramic Felspar — 0.20 — —

G/-3-

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No.




from Additional Royalty US$ per kg element in mineral or ore


1 2 3 4 5 6 30. All sorts of clay

a. Fire clay — 0.10 — — b. Ball clay — 0.10 — — c. Bentonite — 0.075 — —

d. Building material clay (brick, tile, etc) — 0.075 — —

31. Barite — 0.10 — — 32. Kaolin — 0.10 — — 33. Fuller’s Earth — 0.10 — — 34. Diatomite — 0.10 — — 35. Limestone — 0.075 — — 36. Marble — 0.15 — — 37. Dolomite — 0.075 — — 38. Gypsum — 0.15 — — 39. Phosphate Rock — 0.25 — — 40. Gravel — 0.075 — — 41. Quartz sand and quartzite — 0.10 — — 42. Ornamental building material — 0.10 — — 43. Diamond — 5% of sales price — — 44. Gemstone — 5% of sales price — — 45. Zircon — 0.25 — — 46. Ilmenite (or Titanium in — 0.25 — —

Ilmenite) — — — 1). Minerals used as raw material for producing clinker or cement are exempt from Additional Royalty. 2). One tonne Iodine means crude, processed prior to sublimation.

ANNEX “H”

RULES FOR COMPUTATION OF INCOME TAX

- 84 -

1. “Year” means subject to any other agreement by the Parties, (A) the calendar year or part thereof from the date of this Agreement to the first December 31 occurring, (B) each subsequent full calendar year from January 1 to December 31, inclusive during the term of this Agreement and (C) for the calendar year or part thereof in which this Agreement shall terminate, the period from January 1 to the date of termination.

2. “Products” means all ores, minerals, concentrates, precipitates and metals mined and produced and other material derived therefrom after deducting any quantities thereof which are lost, discarded, destroyed or used in research, mining, processing or transportation.

3. “Operating Expenses” in any year means the amount deductible from income of all expenses attributable to the Enterprise in such year. Operating expenses shall include, inter alia, the following amounts:

(a) Amounts in respect of material, supplies, equipment and utilities.

(b) Amounts for contracted services on behalf of the Enterprise.

(c) Amounts for premiums for insurance (foreign and domestic) on physical assets, inventories, and for premiums against business and

operational interruptions and for premiums against public liability claims provided that where such premiums are paid to Affiliates the premiums shall not exceed those payable in arms length transactions to a party not related to the Company.

(d) Amounts in respect of damage or losses to the extent not fully compensated for by insurance or otherwise.

(e) Amounts for royalties, interest and other payments including those to Affiliates for patents designs, technical information and

services provided that such amounts and payments shall not exceed those payable in an arms length transaction with a party not related to the Company.

(f) Amounts in respect to losses resulting from obsolescence, theft, or destruction of inventory.

(g) Amounts for rentals such as, for example, those charged for equipment, plant, land and buildings.

(h) Amounts for Deadrent, Land and Building Tax, Royalties, Value Added Tax, Sales Tax on luxury goods, stamp duty, transfer tax,

personal income tax on employee’s benefits paid by the Company as stated in paragraph 7 sub paragraph (a) and (b) of this Annex “H” , import duties and any other levies paid pursuant to this Agreement, except income tax.

(i) Amounts for treating, smelting, refining and other processing expenses.

Depreciable assets comprise tangible assets with a useful life of more than one year and include, by way of example, buildings, machinery, equipment, dredges, vessels, railways, rolling stock, bridges, piers, roads, docks, construction in progress and other tangible assets depreciable under generally accepted accounting principles, plus all things made available by the Company for public purposes, such as, among others, roads, schools and hospitals and their respective equipment.

Amortizable assets include, by way of example, (A) patents, franchises, concessions, licences, leasehold interest and other intangible assets amortizable under generally accepted accounting principles and (B) all expenses incurred prior to commencement of any operating period in question, including acquisition of mining or prospecting rights or mining or prospecting information, General Survey, Exploration, feasibility and development expenses, employee training, education grants and all other deductions allowed under this Agreement and permitted under the tax laws of Indonesia.

The following items shall also be included in Selling, General and Administrative Expenses of the Company:

- 85 -

(j) Amounts for handling, loading, storing, transporting and shipping.

(k) Amounts for repairs and maintenance.

(l) Amounts for commissions and discounts.

(m) Amounts for deductions permitted by paragraph 4 through 11 below.

4. “Depreciation” in any year means the deduction from income of an amount in respect of depreciable assets on a declining balance basis computed at a rate of 25 (twenty five) percent per year.

5. “Amortization” in any year means the deduction from income of an amount in respect of amortizable assets computed at a rate of 25 (twenty five) percent per year on a declining balance basis.

6. “Preproduction Expenses” already expended by shareholders or the Company and directly related to the project of the Contract of Work may be consolidated into the account of the Company as a tax deductible item by way of amortization. These Preproduction Expenses must be audited by public auditor and approved by the Directorate General of Taxation.

7. “Selling, General and Administrative Expenses” in any year are deductible from income and include but are not limited to management expenses, compensation fees for services rendered abroad, executive salaries, communication expenses, dues and subscriptions, advertising and other selling expenses, public relations, office expenses, marketing expenses (but not unrelated product research), legal and auditing expenses, general overhead expenses, including reasonable charges of Affiliates to be allocated to the Indonesian operations to the extent that these charges represent actual cost of services provided in such year.

(a) Wages, salaries and other compensation, including employee remuneration, of personnel employed or engaged by the Company or

any of the Affiliates of the Company

- 86 -

who are assigned to the Enterprise on a temporary, part-time or permanent basis. Such costs shall include employee benefits paid by the Company in respect of sickness, disability, termination, pensions, thrift plans, incentives, children’s education at site, compensation training and other education programmes provided they are not categorized as fringe benefits.

(b) All necessary facilities provided in the Mining Area or in the neighbourhood thereof for employees including but not limited to

facilities for housing sustenance, recreation and transport.

(c) Administrative overhead charges for product research, market development and technical, legal and accounting services of personnel

employed or engaged by an y of the Affiliates of the Company, who are not assigned to the Company but who render such services for the benefit of the Enterprise.

(d) All necessary travel expenses incurred in connection with the Enterprise in Indonesia and to and from Indonesia and other countries.

In case such personnel are assigned to the Enterprise, such travel expenses shall include reasonable relocation expenses of them and their dependents to and from Indonesia and their country of residence.

(e) Charges for laboratory and technical services rendered to the Company by any of its Affiliates and/or sub-contractors. Such charges

shall consist of the cost of such services and shall be limited to not more than the cost which a non-affiliated party would charge for such services.

8. “Interest Expenses” paid or accrued in any year on loan capital provided that the loan capital of the Company over the equity capital of the Company does not exceed a maximum debt equity ratio of 75 : 25 and the interest on loans does not exceed the generally applicable market rate at the time of borrowing.

9. “Losses” in any year means the excess of all deductions over Gross Income in such year. In the event a loss is incurred in any year, such a loss can be carried forward and may be deducted from net income accruing in the eight (8) years next succeeding the year in which such a loss was incurred. Those losses first occurring shall be deducted first from net income accruing in the next eight (8) succeeding years.

10. “Exploration Expenses” in any year means all amounts deductible from income in respect of expenses incurred in such year in connection with exploring or evaluating mineral deposits, including but not limited to camp construction costs, compensation payments, surface rentals, development drilling, pumping, labour, clearing, access roads, power and water connection, service charges for erecting transmission lines, piping, communications facilities of the property and other similar expenses incurred in preparing a Mining Area for Mining or Processing of Minerals.

- 87 -

11. “Other Expenses” in any year means amounts deductible from income in respect of proper expenses incurred in the year in gaining or producing income or incurred for the purpose of the Enterprise in such year as provided in accordance with Article 6 of the Income Tax Law 1984, Law No. 7 Year 1983.

12. “Gross Income” means all amounts, other than exempt income defined under the laws and regulations prevailing as at the date of signing this Agreement, paid to or accrued by the Company and comprises:

(a) the gross proceeds received or accrued from the sale of the products F.O.B. point of shipment in Indonesia on the basis described in

Article 11.

(b) receipts of a capital nature, treated in accordance with Article 4 paragraph (1) sub-paragraph (d) of the Income Tax Law 1984, Law

No. 7 Year 1983.

(c) other income of the Company actually received or accrued and not mentioned above.

13. “Taxable Income” in any year means Gross Income in such year after deducting therefrom all amounts in respect of expenses, costs and allowances (including the items defined in paragraphs 2 to 11 above) as permitted by the prevailing laws and regulations and by this Agreement.

Exhibit 12.1

NEWMONT MINING CORPORATION AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Amounts in millions except ratio)

Six Months Ended

June 30, 2008

Earnings:

Income from continuing operations before income tax expense (1)(2) $ 1,106 Adjustments:

Fixed charges added to earnings 51 Dividends from equity affiliates —Amortization of capitalized interest 9

$ 1,166

Fixed Charges:

Net interest expense (3) 47 Portion of rental expense representative of interest 4

Fixed charges added to earnings 51 Capitalized interest 27

$ 78

Ratio of earnings to fixed charges 14.9 (1) Income from continuing operations before income tax expense, minority interest and equity loss of affiliates. (2) Excludes interest on income tax liabilities. Interest and penalties related to income taxes are included in Income tax expense . (3) Includes interest expense of majority-owned subsidiaries and amortization of debt issuance costs.

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

I, Richard T. O’Brien, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Newmont Mining Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 24, 2008

/ S / R ICHARD T. O’B RIEN Richard T. O’Brien

Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)

I, Russell Ball, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Newmont Mining Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 24, 2008

/ S / R USSELL B ALL Russell Ball

Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Newmont Mining Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”) and pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Richard T. O’Brien, Chief Executive Officer of the Company, certify, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 24, 2008

Note: A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/ S / R ICHARD T. O’B RIEN Richard T. O’Brien

Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 of Newmont Mining Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”) and pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Russell Ball, Chief Financial Officer of the Company, certify, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 24, 2008

Note: A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/ S / R USSELL B ALL Russell Ball

Chief Financial Officer

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