THE CHALLENGES AHEAD

Leadership is also about being able to confront the challenges facing your business. Although Newmont remained the world’s largest gold producer in 2004, the Company’s gold production decreased from 2003 and is expected to decline again slightly in 2005 before recovering in 2007. The temporary drop in our production profile is the result of non-core asset sales and lower ore grades from our mature operating regions. We are working hard to reverse this trend, including developing new mines in both Nevada and Ghana.

Energy represents about 25% of the costs of producing an ounce of gold. Over the past two years, we have seen petroleum prices more than double, and given the ongoing supply shortages and current geopolitical situation, we believe that fuel prices are unlikely to fall any time soon.

To mitigate the impact of rising oil prices, Newmont purchased an approximate 6.6% interest in the Canadian Oil Sands Trust at a very attractive valuation. With approximately 40 years of oil reserves, the income from the Trust should provide a natural hedge against higher oil prices.

In Nevada, the price of electricity has risen considerably, significantly impacting costs. We are currently obtaining permits for the construction and operation of a 203-megawatt coal-fired power plant that applies state-of-the-art emission control equipment and is expected to save our Nevada operations up to $20 in total cash costs per ounce.

Our relentless focus on cost control and the fact that over two-thirds of our costs are denominated in US dollars give Newmont another competitive advantage. Two years ago, our cost structure positioned the Company in the 60th percentile on the industry cash cost curve. For 2004, our total cash costs of $231 per ounce placed us below the 40th percentile in the industry, reflecting our increased competitiveness.

INDUSTRY CASH COSTS ($ PER OUNCE)


⁽¹⁾Projected and actual total cash costs as of February 2005. Source: GFMS