Denver Gold Group Tom Brady, Chief Economist January 2015 Agenda - PowerPoint PPT Presentation

Denver Gold Group Tom Brady, Chief Economist January 2015

Agenda • Brief Introduction and Newmont Overview • U.S. & Global Macroeconomic Trends • Commodity Review – Gold – Copper – Oil • China & Commodities • Status of the Commodities Cycle Long Canyon January 2015 Newmont Mining Corporation Slide 2

Tom Brady: brief background • 1996 PhD in Mineral Economics from CSM • JPM Commodity Research Desk • 1996 – 1998: Mining • Newmont Mining – Corporate Development analyst • 1998 – 2007: Energy / Oil & Gas • Risk Capital Advisors • Arthur Andersen • 2007 – Present: Mining • Newmont Mining – • Treasury: Financial Risk Management • Investor Relations • Strategic Planning • Chief Economist January 2015 Newmont Mining Corporation Slide 3

About Newmont • Founded in 1921 • Second largest gold mining company by production • ~ 30,000 employees and contractors ( was ~ 45,000) • Only gold mining company included in the S&P 500 Index and Fortune 500 • BBB rating from Standard & Poor’s; Baa2 rating from Moody’s • Publically traded on the New York Stock Exchange since 1940 - NYSE: NEM • Market Capitalization: ~$9.7B Gold pour at Gold Quarry, Nevada January, 2015

U.S. dollar strengthening Recent U.S. dollar appreciation expected to continue* 112 Trade Weighted USD Index 110 U.S. Dollar Strength ~9% increase since July 108 106 104 102 100 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 • U.S. dollar has strengthened on improved outlook for economic conditions Trade-weighted index up ~9% since July – • Market expects the U.S. dollar index to gain another ~3% in 2015 – Gold is priced in U.S. dollars and becomes relatively more expensive with dollar strengthening * Fed Reserve Broad (Trade-weighted) dollar index: currencies weighted based on international trade (China: 20%, Euro Area: ~17%, Canada: 13%, Mexico: 11%, Japan: 7%, UK: ~3%, South Korea: ~4%, Brazil: 2%, Others: 23%) January 2015 Newmont Mining Corporation Slide 5

Inflation has remained low by multiple measures Inflation less than 2% CPI - Headline 6.0 CPI - Core 5.0 PCE - Core 4.0 U.S. Inflation (%) U.S. Fed Target = 2% 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 • Multiple measures of US inflation remain below Fed’s target of 2% – Headline CPI (most often quoted): currently ~1.7% – Core CPI (excludes volatile food & energy costs): currently ~1.8% – Personal consumption expenditure (monitored by Fed): currently ~1.5% *Source: MacroBond January 2015 Newmont Mining Corporation Slide 6

Future inflation also expected to remain low Anticipated inflation to remain muted over the next 1 and 5 years 6.0 Expected Inflation (1 year) Expected Inflation (5 years) 5.0 Expected Inflation (%) 4.0 3.0 2.0 1.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 • Expected inflation from Univ. of Michigan monthly survey – Median of monthly survey of ~500 households • Median expectations are for inflation to remain ~3% over the next 1- and 5-years January 2015 Newmont Mining Corporation Slide 7

U.S. yield curve has steepened and shifted upwards Yield curves past, present & expected Current 4.00 2-Years Ago 3.50 Consensus Expectations (Q2 2015) 3.00 2.50 Yield (%) 2.00 1.50 1.00 0.50 0.00 1-Day 7-Day 1-Month 3-Month 6-Month 1-Year 2-Year 3-Year 4-Year 5-Year 6-Year 7-Year 8-Year 10-Year 20-Year 30-Year • Over the last 2 years, yields on bonds with maturities > 1-year have increased Lower demand for longer-dated bonds (as U.S. Fed tapers purchases) – Results in lower bond prices (and higher yields) • • Yield curve has steepened – Signals U.S. economic expansion has gained traction • Market expects higher rates (near- and medium-term bearish outlook for gold) January 2015 Newmont Mining Corporation Slide 8

U.S. equities and gold prices Equities trending up while gold weakens 2,100 $1,800 S&P 500 Gold Price ($/oz.) 2,000 $1,700 LMBA P.M. Fix ($/oz.) 1,900 $1,600 S&P 500 Index 1,800 $1,500 1,700 $1,400 1,600 $1,300 1,500 $1,200 1,400 $1,100 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 • Since 1 Jan. 1, 2013: Gold prices down ~$500/oz. (- 30% ) S&P 500 Index is up over 600 points ( over 40% ) • Low inflation and less risk aversion driving investors away from safe-haven instruments such as gold January 2015 Newmont Mining Corporation Slide 9

Global economic growth recovering Annual global growth expected to increase to 4% 6.0 5.0 4.0 Annual Growth (%) 3.0 2.0 1.0 0.0 OECD Contribution -1.0 Emerging Market Contribution World GDP -2.0 -3.0 1990 1995 2000 2005 2010 2015E • Prior to 2001, global GDP changes generally based on OECD economic activity • Post 2001, emerging markets have been primary contributors driving average growth of ~3.5% per year • Global growth expected to average ~4% through 2019 *Source: IMF WEO Database January 2015 Newmont Mining Corporation Slide 10

Global economic growth and commodities Slower growth has weighed on the overall commodity sector 8.0 40 Commodities decline when world growth <4% 6.0 20 CRB Index (change) World GDP (%) 4.0 0 2.0 -20 0.0 -40 -2.0 -60 2016E 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 World GDP % CRB Index • The CRB index provides a direction of the overall commodity sector – Based on futures prices for a basket of 19 commodities • In general, global economic growth < 4% results in poor performance for a broad collection of commodities * Source: Dundee Securities January 2015 Newmont Mining Corporation Slide 11

Personal consumption expenditure and gold demand Global consumer spending Global consumer gold demand* North America Other (12%) East & (5%) Developing Asia India (3%) Middle East & (3%) (3%) Africa (3%) Affluent Asia (1%) Eastern Europe Western (5%) Europe China (5%) (10%) North America South & Central (34%) America (7%) India (27%) China (26%) Affluent Asia (13%) Western Europe (27%) Developing Asia (7%) Middle East & Eastern Europe Africa (6%) (6%) • Global spending was ~$31 trillion dollars globally in 2012 – ~75% of total in North America (U.S. and Canada), Western Europe and Affluent Asia (Japan, Australia, South Korea) – China and India represent ~5% and 3% of total, respectively • Over 50% of consumer gold demand in China and India *consumer demand includes demand for gold jewelry, bars and coins January 2015 Newmont Mining Corporation Slide 12

Strong gold fundamentals support long term pricing Global gold mine supply (2004 – 2013) Global gold mine supply projections* 120 (Moz) 100 80 60 40 20 0 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E • 60% from emerging countries (vs. 50% 10 years ago) • Mine supply has grown ~2%/year over the last decade • Longer-term mine supply growth challenged with fewer new discoveries, capital cost inflation, increasing nationalism and activism, aging mines and declining grades • Project cancellations and deferments expected to reduce mine supply by ~3%/year going forward *Source: GFMS and World Gold Council. January 2015 Newmont Mining Corporation Slide 13

Gold ETF liquidations have moderated Gold ETF holdings historical trends* 90 80 -28M ozs. In 2013 70 Holdings (Moz.) -5M ozs. In 2014 YTD 60 50 40 30 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Mar-11 Sep-11 Dec-11 Mar-12 Sep-12 Dec-12 Mar-13 Sep-13 Dec-13 Mar-14 Sep-14 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 • Global gold ETF volumes decreased over 30 percent in 2013 (~28M ounces) • Global ETFs currently hold over 20M ounces more than at start of the Financial Crisis *Source: Bloomberg January 2015 Newmont Mining Corporation Slide 14

Central banks continue to be gold buyers Central bank net-gold additions* NA & SA Int'l Banks 30 Former Soviet Union ME, Africa, Asia Known, not public Europe Central Bank Net Additions 20 Global Net Additions 10 (Mozs.) 0 -10 -20 -30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD • From 2004 – 2009, banks were net-sellers of over 70M ounces • Since 2010 banks have become net gold purchasers • Gold purchases assist to diversify reserves (primarily away from U.S. and European treasury securities) *Source: IMF and World Gold Council. January 2015 Newmont Mining Corporation Slide 15