Letter to Shareholders

What have we done well for our shareholders? What do we need to do better? What do we want the future to hold? Like most committed business leaders, these are the questions that I contemplate every day. In my letter to you this year, I wish to share my reflections on these questions.

We achieved a number of notable accomplishments in 2009. With gold prices rising in 2009 by 12%, our revenues increased by 26% to a record $7.7 billion. Our gold operating margin increased to 57%, generating record operating cash flow for our shareholders of $2.9 billion, up 109% from $1.4 billion in 2008. Equity sales and operating costs were again consistent with market expectations, as we sold over 5.3 million equity ounces of gold at costs applicable to sales of $417 per ounce, down 4% for the year. We also sold 226 million pounds of copper during 2009, providing an ongoing and significant source of cash flow for our shareholders. Benefiting from strong operational performance, we also generated a 72% increase in adjusted net income to $1.4 billion in 2009, or $2.79 per share, representing the compelling profitability and financial leverage that well-managed gold mining companies are capable of generating in a robust gold price environment. We expect to improve gold price leverage and cash flow generation as we continue to ramp-up production at our 100% owned Boddington mine in Australia. We completed the acquisition of the remaining 33% interest in the Boddington project from AngloGold during the first quarter of 2009, with commercial production achieved at Boddington during the fourth quarter. During 2009, we also completed our Community Relationships Review, which has been instrumental in improving and implementing global standards and policies to further more sustainable relationships with host communities. Our year-end reported proven and probable equity gold reserves also increased by 8% in 2009 to 91.8 million ounces, while our equity copper reserves increased by 17% to 9.1 billion pounds. Our achievements in 2009 will provide Newmont with an ongoing foundation of operating and development capacity for decades to come.

Before turning to our vision for the future of Newmont, I want to discuss some trends in gold equity valuations, and more specifically, trends in our share price performance. With the rapidly inflating operating and capital costs experienced across our industry from 2004 through 2008, gold mining profit margins generally stalled, resulting in commensurate stalls in share prices. With the advent of the exchange traded gold funds, many traditional gold investors were able to put their money into an alternative investment vehicle that, arguably, offered gold price exposure without the operating, technical and geopolitical risks typically associated with gold mining stocks. Prior to 2009, in the absence of significant exploration success and stagnating profit margins, many investors opted to obtain their gold exposure through these exchange traded funds. However, in 2009 things began to change for gold mining companies, and in particular Newmont, as our operating costs began to stabilize and gold prices began to run. As I described earlier, in 2009 Newmont’s operating costs declined by 4% and our average realized gold sales price increased by 12%. As a result, our gold operating margin increased by 28%, resulting in an increase in profitability of almost 2.3 times the average annual gold price increase for the year.

In 2009, through operating scale and disciplined execution, we delivered significant gold price leverage in our financial performance — record revenues, record earnings and record cash flows, yet our stock price was up only 16% last year, less than the S&P 500. Clearly, our financial results have not yet fully translated into proportionate stock price leverage. However, with the benefit of stabilizing production and operating costs expected from our existing assets, coupled with the “call option” provided by our exploration portfolio and the production potential associated with our project pipeline, Newmont offers investors a competitive investment alternative for those seeking leveraged exposure to gold and copper.

As we look to Newmont’s future, we are committed to driving increasing shareholder value through exploration success, internal project development, a more focused effort on operational excellence and opportunistic acquisitions. With the completion of construction of Boddington last year, we are now turning our attention to the development of our next generation of major gold and copper projects, including Akyem in Ghana, Conga in Peru, Hope Bay district in Canada and our portfolio of growth projects in Nevada. As we prepare to embark on our next major mine development campaign, we are pursuing a strategy to increase the potential valuation leverage in our stock in a rising commodity price environment. Specifically, our strategy calls for us to (1) enhance the profitability and sustainability of our business by aggressively exploring and developing our best gold and copper assets while pursuing accretive gold and copper acquisitions; (2) continue refining our planning and execution capabilities through innovation and business process improvement initiatives like our Business Excellence program; and (3) improve our safety, social and environmental responsibility record through focused efforts such as our Safety Journey and our Community Relationships Review. Each of these strategic objectives is intended to build a rock-solid foundation for our business as we continue uniting our operations across the globe as One Newmont. With a target of 30-40 million ounces of gold development opportunities, as well as approximately 2 billion pounds of copper development potential within our existing project pipeline, we are building our Company to last for decades to come. Finally, we are committed to building a brighter future for our employees and our local communities through more sustainable business practices, as memorialized in our Community Relationships Review and recognized through our selection to the Dow Jones sustainability World Index for the third year in 2009.

Despite these accomplishments, I believe we still have opportunities to significantly improve our business. First, it is with great sadness that I reflect on the loss of four of our employees as a result of fatal accidents during the course of 2009. The impact of these losses on the families and friends of our fallen employees cannot be effectively captured or articulated. Their loss also deeply affects our extended family of employees and strengthens our resolve to continuously improve the safety of our global operations and our commitment to eliminate all workplace accidents and injuries. We continue to believe that we just get to a “zero injury,” and not just a “zero fatality,” workplace. In honor of those who we have lost, I wish to thank all of our employees who tirelessly maintain their commitment to the highest possible standards of safety every day. Similarly, I wish to thank the thousands of dedicated people who helped us safely complete the construction of our Boddington mine.

I am infinitely proud and amazed at the commitment our employees and their families made to the development of Boddington. We learned a number of valuable lessons while building Boddington in the face of inflation, labor challenges and the global financial crisis. To institutionalize the lessons we have learned from our experiences developing Boddington, we are now implementing a series of risk management and business improvement processes through the application of lean six sigma principles in our Business Excellence initiative to further drive business efficiency and effectiveness throughout our organization. We have also learned from our experiences in Ghana during the past year, where we experienced a rainfall overflow event resulting in the release of diluted cyanide solution from an event pond at our Ahafo mill. As with our commitments to improving our safety and project development records, we are also committed to improving our environmental and social practices by applying the lessons we learned through our experiences in Ghana, and elsewhere, and to building on the principles established in our Community Relationships Review.

In closing, this is a “New” Newmont, uniquely positioned for the future. I am extremely proud of our focus, commitment, and talented employees, all of which have put our Company in a position to once again take a leadership role in safety, environmental stewardship, social responsibility and shareholder returns. We have a solid portfolio of core operating assets and a highly competitive project pipeline. Our business environment is favorable and improving and our financial position is sound. In short, we have much to be thankful for, yet much to accomplish. We could not have positioned ourselves for success without the tireless contributions of our Board, our employees and the commitments of their families — I am tremendously grateful to all of these people. In particular, I would like to thank Governor Robert Miller, who will be retiring after eleven years of distinguished service on our Board. It is with a heartfelt thank you that I turn my energy and focus to 2010 and to realizing the tremendous future Newmont has in store for years to come.

Sincerely,

Richard O’Brien
President and Chief Executive Officer