Gold Market Update

1
NEWMONT
Gold Market Update Improving Fundamentals
January 2002
2
Improving Market Fundamentals

• Primary Bullish Factors
• Outlook for Declining Gold Supply
• Strong Physical Demand Opportunities Trends
• Coordinated Industry Marketing Program
• Reduced Incentives for Hedge-Related Selling
• Gold Market Dynamics Overview
• Promising Investment Environment

3
Outlook for Declining Gold Supply

• Significantly Slowing Production Growth
• New mine supply has slowed sharply in recent years

Year on Year Change
Source Gold Fields Mineral Services USB
Warburg.
4
Outlook for Declining Gold Supply (continued)

• Declining Leading Production Indicators
• Substantial reductions in capital programs and
  projects
• Significant cut-backs in exploration budgets

CAPEX/Oz Produced for Large N.A. Producers
Exploration Spending Average Gold Price
Source Goldman Sachs,GFMS, Metals Economics
Group Company Annual reports
5
Outlook for Declining Gold Supply (continued)

• Sharpest Decline Expected Since 1976
• Consolidation fewer credible gold projects
• Little additional production for the next 5 years

Global Gold Supply (1989-2000)
Global Gold Supply (10-Year Outlook)
4,500
4,500
4,000
4,000
3,500
3,500
3,000
3,000
2,500
2,500
Tonnes
Tonnes
2,000
2,000
1,500
1,500
1,000
1,000
500
500
0
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2001e
2003e
2005e
2007e
2009e
2000e
Mine production
Central bank sales
Mine production
Central bank sales
Old gold scrap
Net hedging
Net hedging
Old gold scrap
Implied disinvestment
Implied disinvestment
Source Goldman Sachs outlook.
6
Outlook for Declining Gold Supply (continued)

• Central Bank Agreement on Gold
• September 1999 Agreement between 15 European
  Central Banks termed the Washington Agreement
• Austria, Germany, France, Italy, Holland,
  Belgium, Finland, Ireland, Luxembourg, Portugal,
  Spain, Sweden, Switzerland, UK, European Central
  Bank

• Agreed to limit sales to 400 tonnes annually
  through 2004
• Removed much of the uncertainty over future
  Central Banks sales lending activities
• U.K. Central Bank 20 tonne bimonthly sales will
  be completed in 2Q 2002

Composition of C.B. Gold Holding
Source GFMS JP Morgan Research
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Strong Physical Demand Opportunities
Solid Jewelry Demand Backed by Unprecedented
Marketing Initiative

• Strong Physical Demand Growth Trends
• Initiation of Global Marketing Campaign
• Estimated 340-500 additional tonnes of gold
  jewellery demand by 2006
• Possible 30-40/oz increase in spot price

US Jewelry Demand
Source Murenbeeld Associates GFMS WGC
McKinsey analysis
McKinsey modelled changes in demand for gold
jewellery as functions of changes in gold price,
income per capita and population. There are very
high correlations for most countries between
actual recorded volumes and the model between
1980 and 1995.
8
Reduced Incentives for Hedgers

• To Hedge or Not to Hedge?
• Views of Non-Hedgers
• Preserve gold equitys embedded option value
• Maintain unlimited upside appreciation potential
• Reduce the supply acceleration impact of
  hedging
• Views of Active Hedgers
• Take advantage of golds contango to enhance
  revenues
• Significantly reduced contango during 2001
• Reduce cash flow volatility downside risk
• Requires the sale of some gold upside optionality

9
Reduced Incentives for Hedgers

• Declining US interest rates
• Stable to higher gold lease rates
• Lower contango
• At 1.0 contango, 1-year forward gold prices are
  less than 3 higher than spot prices

• Significantly Compressed Contango

Source JP Morgan Research
10
Gold Market Dynamics Overview
Central Bank Lending Producer Hedging Overview

• Gold Players
• Central Bank Lending
• Facilitates short selling
• Bullion Banks Speculative Investors
• Borrow gold sell short
• Require future gold flow to repay borrowed gold
• Gold Producers
• Sell gold forward
• Provides source of liquidity for short sales

11
Promising Investment Environment

• Weakening US Could Improve Gold Price
• Gold Behaving as Currency
• US trading at 16 year highs
• Gold stocks can hedge against US weakness

Strong Inverse Correlation USTW US Gold
US Trade Weighted Dollar versus Gold Price
Source - JP Morgan
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Promising Investment Environment

• Gold Stocks Up 25 YTD,
• SP500 Down 14

• Hedge funds less active in shorting gold
• Increasing US equity market uncertainty
• Increasing global economic uncertainty

SP 500 Index/Gold Price (18712001)
Source - M. Murenbeeld Associates Inc.
13
Promising Investment Environment

• Changing Real Interest Rate Environment

• Potential negative real interest rates
• The last time real interest rates were negative
• US gold prices rose from 330 to 410 per oz.

90-Day T-Bill less 12 Month
Inflation Rate
US Gold Prices
14
Improving Fundamentals - Conclusions

• Gold Poised for Significant Upside Appreciation
• Mine output set to decline
• Industry marketing initiative holds significant
  potential
• Hedging market fundamentals deteriorating
• Central bank sales stabilizing
• World economic political uncertainty increasing

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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE
HARBOR STATEMENT These materials include
forward-looking information and statements are
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Forward-looking statements are statements that
are not historical facts. These statements
include financial projections and estimates and
their underlying assumptions statements
regarding plans, objectives and expectations with
respect to future operations, products and
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performance. Forward-looking statements are
generally identified by the words "expect,"
"anticipates," "believes," "intends," "estimates"
and similar expressions. The forward-looking
information and statements in these materials are
subject to various risks and uncertainties, many
of which are difficult to predict and generally
beyond the control of Newmont, that could cause
actual results to differ materially from those
expressed in, or implied or projected by, the
forward-looking information and statements.
These risks and uncertainties include those
discussed or identified in the public filings
with the U.S. Securities and Exchange Commission
(SEC) made by Newmont. Such risks include, but
are not limited to, gold price volatility,
increased production costs and variances in ore
grade or recovery rates from those assumed in
mining plans.