Newmont Mining Corporation

Denver, Colorado

Nestled in the foothills of the Swiss Alps, in the village of Balerna, is a factory that, to a miner's eye, might seem surprisingly small. Yet the Valcambi refinery is vital to the gold business.

It supplies gold bars to the central banks of many governments, mints coins for national currencies and prestigious institutions, produces ingots sought by investors worldwide, and provides gold grain and semi-finished watch cases to jewelers

Profitable partnership
According to Michael Mesaric, Valcambi director and CEO, Newmont mined 46 percent of the 435 tons of gold doré refined at Valcambi last year and is its largest client. Newmont also owns 60.6 percent of Valcambi, has representation on its board of directors and benefits from a share of profits on more than 20 million ounces of precious metal each year.

While Valcambi may be little known to our employees, Newmont is well-known among Valcambi's 150 employees. They can spot Newmont gold from among its many shipments and can even pinpoint the mine it originated from.

Refining with precision
After pouring the gold into special molds to form anodes for further processing, samples are sent to Valcambi's world-class assayers, who perform some 55,000 analyses each year. Their analysis is monitored by independent assayers and the Swiss government, who record their own findings.

Depending on results, Valcambi uses one of three refining methods:

• Electrolysis, used on dorés with high gold and silver content. It is the most direct and efficient refining method.

• The Miller process, used when the material has mid-range gold and or silver content. This process, which involves chlorine gas, doesn't remove platinum or palladium.

• The pressure-leaching process typically used to refine gold recycled from jewelry.

Valcambi refines gold and manufactures value-added gold products to standards specified by the London Bullion Market Association for size, shape, content and luster. Perfect purity signifies that 999.99 parts of 1,000 are pure gold.

Mutual pay off
The Newmont-Valcambi relationship holds great benefits for both. Valcambi's stellar reputation in the gold industry - recognized by the regulators of the London Bullion Market Association, the London clearing market, and gold officials in Zurich and world-renowned national banks - is a good association for Newmont. In turn, the refinery benefits from a constant supply of gold from Newmont mines.

While it is unusual for a mining company to own a refinery, Valcambi shareholder and past board director Emilio Camponovo says it's the right recipe.

"I believe it's a good thing," says Camponovo, who founded the business in 1963 as a gold trading company. "The right composition should be a big mining company and local people."

Sustainable operations
Valcambi adheres to Switzerland's highest environmental standards and has targeted to receive ISO 14001 certification. The refinery works to the industry standards set by the World Gold Council and by regulators at the London Bullion Market Association. It is also a member of the Responsible Jewellery Council.

The company is developing plans to more cost-effectively treat its own wastewater, and already uses the world's most modern equipment to control air quality. Doré products with excessive traces of deleterious metals are immediately rejected and not allowed on the premises.

Additionally, before agreeing to refine a shipment of metal, Mesaric fully studies the mine, miners and middlemen supplying the metal. He refuses potentially lucrative business at the mere hint of sub-par social standards, such as the use of child labor or lax environmental standards.

Responsible supply chain
The partnership enables Newmont to create separate refining channels for gold we mine to ensure traceability. Gold historically has been shipped to refineries, melted and blended with gold that may have been mined using child labor or a mine that contaminates its environment.

Newmont is able to trace the spectrum of development to ensure the highest production standards are upheld. This increases profit margins as traceable gold is worth more than traditionally refined gold.

We partnered with Wal-Mart to create a traceable line of jewelry to ensure the gold within it is sourced from our mines that respect international laws and social and environmental standards.


Adding value
Valcambi refines platinum and palladium in addition to silver and gold to add value to the precious metals. Valcambi's 2008 output included some 1.5 million "value added pieces" such as minted coins or ingots, other investment-grade products for banks to sell to their customers, and "semi-finished pieces" such as coin blanks and luxury watches destined for national mints or luxury watchmakers.

Focused on the future  
In coming years, Valcambi is positioning itself to be the most flexible and fastest provider of refining and value-added services. Speed, precision and accuracy are Valcambi's competitive advantages within the refining industry.

"We want to be involved in all global markets," Mesaric said. "And, we want to be involved in every aspect of environmentally friendly production, by conserving energy and water through our production practices."

For Newmont, the possibility of having our gold singled out as a premium, prestigious, traceable and secure product helps demonstrate our commitment to industry leading performance.

March 1, 2010