The Use Of Computers At Newmont's Corporate Office

Over the past several years, computerized financial models have been an important part of Newmont's strategic planning process. Two applications will be discussed in this paper: a general purpose financial model of Newmont, and a detailed operational/financial model of Magma Copper Company. Newmont?s general purpose financial model was developed using Lotus 1-2-3. It was designed to aid management in assessing the financial consequences of investment and financing decisions associated with long-term strategic planning by simulating the consolidated effect from individual transactions. Not only is the model capable of assessing the sensitivity of specific decisions to changes in the external economic environment (i. e., commodity prices, interest rates, inflation and exchange rates), it can also evaluate the effect from operating and financial decisions, including changing production levels and cost structures at individual operating units as well as simulating several types of transactions, including equity and debt issues, acquisitions and divestitures. The analysis of Magma Copper Company required the development of a detailed operating and financial model of the Company. The model was developed using IFPS in the corporation?s UNISYS (then Burroughs) B7900 mainframe computer and included separate pro forma financial statements for each of San Manuel-Pinto Valley's mines and concentrators, as well as Magma's smelting and refining operations. The outcome of this analysis was the decision to merge Magma Copper and Pinto Valley Copper Corporation, and to recapitalize the new corporation in order to provide funds for a retrofit and expansion of its Arizona smelter and expansions of its refinery and SXEW facilities.