Q1 2020 Earnings Call
Good morning, and welcome to Newmont's first quarter to.
Oh come on 20 earnings call, all participants will beat any listen only mouth.
Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After today's presentation, there will be an opportunity to ask questions.
Please note this event is being recorded.
I would not like to turn the conference effort to Jessica Largent, Vice President of Investor Relations. Please go ahead.
Thank you and good morning, everyone welcome to new months first quarter 2020 earnings conference call.
Winding up on the call today are Tom Palmer, President and Chief Executive Officer, well back you within Chief operating Officer, and Nancy busy Chief Financial Officer.
It will be available to answer questions at the end of the call along with other members of our executive team.
Turning into slide too.
Please take a moment to review the cautionary statements showing here and refer to R.F.D.C. filing which can be found on our website at neumont dot com.
And now alternate over the thumb on slide three.
Thanks Jess.
Good morning, and thank you all for joining our coal.
<unk> core values of safety sustainability integrity inclusion and responsibility.
Fundamental to creating long term value for investors host government communities and employees.
A lot of the carpet dot team pandemic how purpose.
Create value and improve lives through sustainable and responsible morning.
Relevant today than ever before.
They need a slot for for review of held up in responding to the is unprecedented times from a position of strength.
The health and safety about people and has communities is Paramount in every decision we Mike.
This is why moved early and quickly proactively taking steps to prevent transmission of the current a virus.
But taking uninformed approach with the advantage of the World Health organization.
Center for disease control on prevention and external medical professionals.
Fully mobilized L. rapid response crosses management teams in early March and implemented a business continuity plans across the globe.
We've implemented wide ranging controls at all of our operations.
The health safety and well being of the amongst people and communities above all else.
These controls include but are not limited to.
Canceling all non essential travel closing offices and implementing remote work arrangements he nearly march.
Significantly reducing the number of people working at our operating thoughts to just be essential number of people required to operate and mind tied the mines processing plants and environmental control systems.
Enhancing temperature and questionnaire screening at entry points to have thoughts.
Implementing strict sexual distancing protocols in planes buffers lot vehicles offices and dining facilities.
Developed leadership continuity plans to key roles across the business.
Increased frequency of deep cleaning and sanitization surfaces.
Providing hard chain and helps support to debug communities, where employees and contractors leave at work.
And productivity ramping down certain operations to reduce the risk of transmission to debug communities with limited healthcare capacity.
We established a global supply chain task force to assist potential risks.
Volleyball contingency plans, but allow us to stay ahead of any potential disruptions.
Importantly, we have not experienced any material issues without supply chain and continue to benefit from a strong relationships and transparent <unk> without supplies.
Cross their thoughts we've increased infantry is key supplies to pragmatic levels.
<unk> three to six months way possible.
We remind diligent in monitoring critical watch lease autumns.
The date you want has no confirmed cases of cause adopting at any of its sides. Thanks to the discipline to that workforce in adhering to these protocols.
Oh I am incredibly proud of the while employees have responded to those challenging times.
In addition to their strict adherence to wear protocols by have further demonstrated they can beat button, but joining the fought against this pandemic in the communities with I leave at work.
We not only want to protect deaf people at highest communities, we want to build lasting resiliency. So that I host communities can thrive after the worst of this pandemic passes.
As a global business with operations in countries.
We are committed to doing out pot to combat this disease and protect out people and their livelihoods.
The strength about business and maintaining bright bust relationships not only allow us to enjoy a short term disruptions.
House to reach beyond their thoughts to create value and improve lives for all of our stock holders.
Associated with this can be we have night too important decisions.
First we have committed combined time pie for all of their employees through until at least the end of June to support them and their families and remove short term uncertainty.
And second.
We established a 20 million dollar global community support fund.
Post communities governments and employees.
Do you want global community support fun builds upon our other local contributions and efforts we have made over the last two months.
Input from local stakeholders, we have identified three focus areas to ensure that al financial support will have the most positive impact and reach those who made it must.
These three five because there is a employee and community health.
Food security and local economic resilience.
We will closely monitor the progress that outcomes of air support so that we are able to font and improve results along the y.
But the view to serving as a catalyst for long term resiliency and future community development.
Turning to slot five for a framework on how we are preparing for multiple scenarios.
It's the kind of at 19 pandemic continues to evolve now date bench the experience leaders and proven operating motto continue to serve as a competitive advantage.
We are proactively planning for and evaluating short medium and long term risk through a comprehensive framework.
Both the following options.
Maybe the virus in each about countries in order to be prepaid precise and efficient return to more normal operations.
2020.
We're sharing the greatest impact who operations and financial performance could occur during the second quota.
The way that we're all set planning for other scenarios, where we could see a resurgence of the virus ladder in 2020 and only 21.
And finally, we're evaluating a lower likelihood scenario, where there is a recurring seasonal impact from the virus.
We are currently in wife one.
And while there isn't increasing likelihood for a wife too.
We remain optimistic the worst the pandemic look past into coming weeks. After worldwide. If it's to contain also press the spread of the bars begin to tie code.
We are ramping up operations of Sarah Negro, <unk>, again, a culture, which rubble discuss Uh huh.
And shooting Penasquito is able to ramp up in the coming weeks.
2020 goal production will be towards the lower end of our previous gardens or approximately 6 million attributable gold answers.
Most costs the tracking towards the higher end up the gardens range.
In terms of our capital Spain.
We have still progressing the majority about development at the standing capital projects that key projects progressing on schedule.
These k. projects include 10 of my expansion too.
The development of Sublevel shrinkage modding method, it's a baker underground.
And that Lybeck set boddington at a half hour.
However, capital overall is trendy glow original gardens, as we've reduced not essential activities and spending in areas, where we were significantly <unk>.
For exploration approximately 80% of our budget is allocated to be mine activity.
And a lot of that work is continuing.
However, we have put at greenfield expiration on hold.
At affinity feasibility study work continues to advance remotely, but yanick coaches <unk>.
We will provide further clarity on at 2020 outlook when Penasquito it begins to wrap up.
However, it's worth noting that out gardens for 2021, 320 24 still stands.
Spot the disruption from <unk>, we are well positioned to withstand this pandemic.
Most importantly, you months long term value proposition remains unchanged.
Tending to look at <unk> portfolio on slot six.
Within our portfolio of 12 up riding mines and two joint ventures.
Heaven unmatched eight well class assets.
Each of which totally by more than 500000 ounces of consolidated production per year.
Standing costs of less than not hundred dollars per gold equivalent out.
And the bond lost that exceeds 10 years.
Importantly, particularly in the current context, all like hide it in top t. jurisdictions that we define this country's classified in the eye and be writing ranges, but each of Moody's <unk> and feature.
In addition to eight existing well class assets you want has to emerging we'll cross assets, Indiana coach and myriad.
These emerging assets within <unk> office substantial upside to through further optimization and development over the coming years.
During the slot seven for look at our production for the next decade.
<unk> production <unk> would generate more than six being ounces of gold per year for the next 10 years.
Underpinned by a well costs assets.
Supported by industry, leading exploration program and organic project pipeline.
It's probably fall is further enhanced with either one of the half billion dollars per year in additional revenue from producing between 1.2 to 1.4 million gold equivalent outfitters from co products.
Silver laden zinc from Penasquito and cuppa from Boddington.
Combined we will deliver nearly 8 million go to cripple amounts as per year.
The most of any company you know industry.
Fitting to have free cash by generation potential on slide out.
We expect to generate substantial free cash fuck throw out the gold <unk>.
Every 100 dollar increasing goal pross above that bites assumption.
You want delivers approximately $400 million of incremental creepy to bowl free cash flow per year.
Using a conservative 1200, <unk> planning assumption.
Free cash flow would still total more than $5 billion over the next five years.
And the current gold prices, how portfolio, well Jenna right around $15 billion of free cash flow over the <unk> five year timeframe.
In addition, we had the potential for further up solid wood tile wins from favorable oil prices and foreign currency exchange rights.
You access free cash, we generate will be used to reduce their net debt.
Bought additional returns to shareholders.
Looking forward, we are well position to continue executing a capital priorities and staying focused on creating long term value.
No need to slide nine for review about performance against out promises.
Simply put.
<unk> is delivering on its commitments.
With well class assets in top T. jurisdictions.
The old industries based production, probably fall of more than six me in gold ounces per year for the next decade.
And the industry's largest gold reserves <unk> 6 million ounces.
Firmly position for long term success.
You know little library years since acquiring goal cool.
We have already realized significant value.
We originally committed to delivering $365 million per year in synergies by the end of 2021.
But now on track to realize $500 million of cash flow improvements, even 2021 and.
An increase of nearly 40%.
For accelerating G.N.I., an expiration see the cheese, along with high them planned full potential improvements.
It's worth noting that these cash flow improvements did not include out share synergies for that about a cold months John picture.
We have received $1.4 billion entitle cash price seats from divestments, making at target $1 billion to $1.5 billion.
Yeah commitment to leading shareholder returns remind strong because I never it's we returned at first quarterly dividend of 25 cents a share.
Fitting to slide 10 for look it out first quarter hotlines.
The strength of bypass strategy and operating model is shown throughout solid first quarter performance.
Bought the impacts and disruptive night chunk of the carpet daunting pandemic.
The first quarter, we produced nearly 1.5 million ounces of gold, but only for standing costs, a thousand a $30 per ounce.
And we also have produced 339000 gold equivalent out says from type products.
Regenerated operating cash flow of $935 million and free cash flow of $611 million.
And we continued to progress at full potential program across that portfolio.
Particular focus on the more than $240 million in value, we have identified penasquito, Sarah Negro and their minds in Canada.
During the quarter, we continue to strengthen how investment grade balance sheet.
Receiving $1.4 billion in proceeds after completing the style of K.C.G.M. continental goat and read like.
We refinanced approximately $1 billion a bit through the issuance of you send your notes at historically low coupon of 2.25%.
How many low would admit to adjust to the batat ratio to 0.7 times.
You want has one of the strongest balance sheets in the Gulf sick, though.
$3.7 billion cash total liquidity of $6.6 billion.
You know I prove how board approved I, 79% increase to a quarterly dividend to 25 cents per share 14 cents per shit.
You must first quarter dividend will provide investors with the highest dividend yield of any senior <unk>.
Testament to have financial flexibility.
Shade strength and conviction in the stability of our business.
We also I continued to execute <unk> during the first quota.
Well I'm back approximately $300 million with a shades.
Entitle, we have now retard $800 million or nearly 90 million shares at an average price just the $42 per share since initiating this program on me five months ago.
Excellent outcome.
With that alternate I have a drought chief operating officer, Rob Onslaught 11 to review our operational performance.
Thanks tone.
Something to slight 12 for a summary of operations.
The strength of our dog their supplying global portfolio <unk> tear locations.
Along with our operating model incapable workforce is a key differentiation for new more during this on the picture then too tight.
I was just today 10, or 12 operating mines and both of our joint ventures are operating.
These operations represent approximately 90% <unk> 2022 gold production and the U.S. Australia.
Surinam Dominican Republic material.
Argentina, I bowled de mining and essential activity.
Well, we have significantly reduce the number of people working on our site spikes.
Surely, 60%, which is equivalent to more than 10000 employees and contractions overall productivity remain time, and our workforces banning focus on safely delivering to our plans.
We have stopped <unk> are processing plants are being run near 100% underground development is progressing mostly to plan.
Moving to even train rosters means there is more of them same stockton into ships given the longer rosters no being warped, we can recruit most of this gap.
We're no longer hot seating equipment, or making sure to spend the time needed to sanitize all into passionately areas that are sites.
Alright consider any time required for these activities as it's simply must do to protect the hell I'm the safety of our workforce.
In mid March we proactively placed for operations uncaring maintenance in order to protect the health of our workforce neighboring communities and comply with government mandated restrictions.
Three of these sites <unk> set an integral daily at all.
Since resumed operations.
Yeah <unk> on March 17th in response to travel restrictions.
Personnel remain on site to perform essential work, including security <unk> treatment environmental protection and gold production continued from leech pants.
We are remobilizing planned to restart the meal and stuff. This main operations in the near future given that as part of the Peru economic reactivation plan.
Residences decreed that surface mines will be allowed to stop.
Send an agro operations were also placed on can mean to some march 23rd due to travel restrictions.
Angel personnel remain going site to maintain infrastructure continued environmental management provide security and continued grain control activities.
We were executing are safe restock plan, including Remobilizing, our workforce the scientists on trying to having a significant proportion of corporations working again this week.
<unk>, we run don't activities in March 23rd to comply with the Quebec governments restriction on non essential travel within the province in order to mitigate the risk of transmission to northern <unk> first nations communities.
Following the directive given by the Quebec government on April 17th mining activities are no longer restricted.
We have been working closely with create first nation Grand codes. So.
Really helped board to determine an acceptable path forward the protects our employees and communities as we take the risk of transmission of the virus from other Canadian homes and cute she's very seriously.
Just last week, we agreed upon forward and that'd be gone ramping up operations and the L.A. and all.
And it must have white, we practically moves to Karen meets in some mumps and 23rd.
Just to minimize flying flying to stick to the cheap to prevent the possible transmission of the viruses communities, including nearby first nations communities in Northern Ontario.
We're developing plans to safely and efficiently resume operations.
And I go get for the first quarter, we incurred approximately $27 million appeared maintenance costs at least for operations, which are not adjusting those two of our results or you costs.
Across our entire portfolio. We also encode approximately $2 million Oh cool 19 specific costs release, Italians like health screenings travel arrangements and storage costs.
Subsequently on April the 12.
Ski tool moved into care to maintenance and we've continued to engage with government authorities at all levels to ensure the understand you want to industry meeting response to cool 19 globally and our belief that that mind can operate safely during this time.
Once we were able to resume operations the sites as well positioned to rent backup quickly.
<unk> like over a two week period.
It's toll mentioned, we look forward to providing further clarification one for Twentytwenty I would look as we get this operation.
Ronnie.
But the sites in carrying maintenance or overall stay indoors, approximately 50% or normal cast.
Approximately 70% coming from are important decision to continue to pay employees through June and the remaining 20% the traditional carrying maintenance activities, such as environmental management and security costs.
This in the basement helps to ensure we are very well positioned to ramp up safely and efficiently.
<unk> <unk> <unk> and the local communities.
Sunday night, too slight 17 for not decent Australia's performance.
I tend to mine I'm very proud of aren't team, but quickly adapting to the unique requirements on the fly and fly its operation.
There it here instead protocols, while altering transportation schedules you shift changes is commendable.
In addition, the willingness and dedication from our workforce to relocate to Darwin in the northern territory from other parts of Australia.
Rudest investigate the risk of minutes a state board a closures continue operation.
Excite me achieve solid performance during the <unk> as an increase in or tons mind help offset more grade from mine sequencing.
And we have improved loading whole productivity by establishing undergrad waste dumps to reduce hall is just surface and increase firing range.
Across new <unk>, we are very committed to continually improve our safety performance and utilize technology, where it makes sense to do so.
One Great example is your industry, leading robotic technology for Diamond rig drilling, we're deploying Panama, which removes or employees from the line of fire when drilling and renews fatality risk associated with equipment entanglement.
During 2020, we will integrate five <unk> fleet.
We'll replicate shouldn't press of technology, and although new one undergrads at school.
Looking ahead.
Really excited the program routine is meeting and tend to mine expansion to project, which is progressing well as we begin ramping up mine development.
Artino designs 560 meters in February and March well exceeding enraged.
March we finished the top section of the pilot tool breaking through to the mid shock chamber 655 meters and the team or no walking to establish a reasonable rig underground in preparation for drilling the bottom section of the pilot tool.
At 1460 meters.
We continue to award long lead procurement packages and decided to use a straight Williams steel construction of the crusher and head free to avoid any potential to lease from the delivery of Chinese source products. During this period of uncertainty.
I bought in two or three years stripping campaign and <unk>, it's progressing well.
We expect to retire grade late this year I continued through 22 21.
We approve the 20 this holic system in February and our investments of $150 million Buchanan vehicle with an order for 29 your cat 710, 93 whole trucks.
Wrong with plans to retrofit seven existing 793 years.
This one basements in technology will enhance safety and improved productivity to January significant value over a 14 year reserve length.
I'm Lesley in January we completed the sale of our 50% ownership interest in K.C.G.M., <unk>, Oh $800 million and we continue to advance the sale our business.
Turning to Africa, one slide 14.
After delivering a record of 2019, we clearly communicated <unk> the region <unk> production levels and 22 20.
We continue to invest in the future of our world class for operation.
Both of our gain minds continue to all three no team responded quickly too sure we have preventative controls in place for cool 19, Oh progressing critical items.
I didn't cheating solar throughput middle recoveries helped to offset or grades to to sequencing during the first quarter.
Site continues to drive improvements at both the minded mill and our team is leveraging the strength of it integrates adopt reaching model by working closely with our poor session.
Management operations support hubs in Paris.
A hassle, we continues to progress stripping at the one <unk>.
Advancing underground development for the updated mining method and should be called undergrad.
Oh transition show more productive underground mining <unk> very much on track and we anticipate ramping up or or tons mind. The second huh Oh this year.
In fact, our yesterday developing <unk> average has been about 75 meters per day.
Oh no. Our project work is advancing remotely with a fool funds decisions still expected in 22 22 one.
No so our North America operations on the slide 15.
And the <unk>, we continued to advance critical path.
And our full potential improvement program, which will allow us to maximize value from these actions <unk> our performance overtime.
For example that Penasquito, our focus on the basics and ruling out so potential at the same breaking records <unk> through the maintenance circuit within just a few months.
The site also achieved its highest ever production silver zinc and led during the month of March.
And I cheated reckon gold recovery from the pyrite leech gland.
For those of you heard the opportunities to attend our site tour in February I trusted our progress towards improving value. This world class Polymetallic Corporation was evident I remain very excited about the opportunity to eliminate constrains reduce costs and increase productivity ultimately, allowing us to.
Stand mine likes true resorts comparison.
Another significant milestone we recently achieved this to finalize a definitive agreement to resolve all standing disputes with the community sound. One <unk>. One is 25 neighboring communities yeah than mine in the states exactly tickets.
This agreement was signed with community elected Representatives and we'll be ratified in a general assembly. It will take place when kubat 19 gathering restrictions are listed by the government.
The agreement was developed and supported through the dialogue table sponsored by Mexico's Federal Department I'll be interior and representatives of the state government zakat tickets.
Together with the wall start clans signed in December 2019, we're pleased and excited to bring months of <unk> with the Cedras community clothes, and really look forward to sustainably operating in this region for decades to come.
The definitive the Green also sets forth terms for the <unk> more than 10000 Heck tears of the <unk> land for exploration mineral production and other operational purposes and results Oh I was standing disputes between the two parties.
This world class acid already has reserves of approximately 26 million gold equipment and inches, but the significant exploration potential in this perspective district.
<unk> it would be for decades to come.
We're very pleased with the outcome of the agreement and believe it is at best path forward for both parties to develop a long term partnership to create value and improve lives shifting the dynamic from confrontation tour cooperation.
Lastly in response to placing the Saint <unk>, we're working with the government to determine a time frame <unk> although operations.
Does that could take this region has one of the lowest rates of cases of <unk> 19, and we believe our workforce can be kept safe by limiting personnel, one site and enhancing safety and health protocols are in social distancing and hynek.
Turning to Canada.
L. you know are we previously too many keys that we would step dangled production driven by mine sequence changes and our ongoing efforts to integrate our geology <unk> technical models to optimize a license pinemont planned to extend my life.
With the same previously and can mean since the team took the opportunity to proactively to refresh Ross was scheduled to be more efficient.
Progressing through potential remotely as we move into the deliver fees and leverage our experience from other on the ground operations.
The team has also spend time prioritizing the two potential initiatives that will be implemented as we restart including an asset management improvement plan.
With a new general manager in place we are strongly focused on the D.C.D. basics to ensure a strong foundation is in place.
Ramping the operation backup.
Musselwhite, our team was exceeding their commitments and the conveyor installation was approximately 65% complete and well ahead of schedule before we place to sites on <unk>.
We know every park so there can be our installation and Thunder Bay and installation of the conveyor won't be the first thing <unk> I started decision is made to resume operations.
So why materials handling project is 95% complete and we'll be ready for a film <unk> ones that can be installed.
Cool potential is progressing virtually but the focus on improvements underground development productivity.
Trucking performance technical updates to or body modeling and the site is ready to come back stronger than ever.
In fact, we currently have four to five <unk>.
To moving to can mean since we safely unsuccessfully restarts have been mill. After nearly 10 months down produced well ahead of plan approximately 15000 sentences in the first quarter.
Overall, we remain well positioned to run backup safely and efficiently.
We have support from our neighboring first nations communities should this a car over the next several weeks, we still anticipate being back to full production in L.A. <unk>.
Both pork complained in C.C.N.V. continue without interruption and finally, we completed the sale of Red Lake evolution mining $375 million.
Future contingent payments to an additional hundred million dollars tight to new resource discoveries.
Ruling out the regions to South America, and slide 16.
Marianne we delivered strong force for for performance at higher War tons mine is the same continues to benefit from productivity gains in March marian's processing team, a cheap 22 consecutive shifts, but I don't <unk> smashing the previous record to 14 shifts. An example of ongoing all three.
<unk> despite challenging times.
Yeah in a court chip production increased during first quarter has a real leaching program successfully delivered tolerances Wallace site was in Canada maintenance, we continue to recover sentences from the leech pad.
Saturday Magro main sequencing impacted grade in the first quarter, but we made solid programs to improve operational standards and apply back to basics mining practices, which includes improving development Grand control and backfield practices.
Oh <unk> Amelia was also progressing well prior to the second round.
We still expect to reach this new mining area Eastern Twentytwenty. However, we expect 22 22 production and costs to be impacted you to the cold did release it shut.
And as we continue to improve operational standards.
Looking forward study and engineering work continues to advance remotely <unk>, so things and we remain on trying to funds decision in 22 21.
Finally, an important milestone was passed recently and I'm very proud of the project team. We just passed 1 million see a smart in March.
And with that Oh hundred over to Nancy on slight 17.
<unk>.
Turning white 18 put the financial highlight.
The first quarter, you might solid results with revenue of nearly two point.
And increase the 43% over the prior you Cordova with the additional sales from our acquired operation in higher goal price.
Adjusted then income of $326 million or 40 cents per diluted share.
And adjusted either die of more than $1.1 billion, an increase in 63% prior you a quarter.
Cash from continuing operations with $939 million.
By higher adjusted either die and free cash flow of $611 million and increase the 75% to end the quarter with more than $3.7 billion up cash on hand.
Turning the slide 19, right you have earnings per share in more detail.
First quarter gap meeting time from continuing operations with $837 million or one dollar in four cents per share.
Adjustments included.
Response related to the gains from our sales a P.C.G.N. continental enrolled like.
Money to spend related to the change in care about you and impairment.
Nine cents related to the extinguishment adopt.
24 sons related to tax adjustment valuation allowance.
And to some other tribes.
Taking these adjustments into account.
According to first quarter adjusted net income of recording.
Elated chair.
Turning to slide 20.
It's time mention Yeah. My continues to respond to the public 19.
I'm not possession of strength and there has been no change in our industry meeting capital allocation priority.
Which include maintaining strengthening our investment grade balance sheet.
During our margins their delivery apart all potential program, which strike <unk> <unk> <unk>, regardless of current goal.
Well also growing our reserves and resources <unk> in our highest rate turning projects.
And returning excess cash to our shareholders.
We ended up quarter with total liquidity $6.6 million, including $3.7 billion cash on hand on our own drawn unbelievable 3 billion dollar revolving credit facility.
I'm not <unk> ratio encrypt 2.7 times.
And we proactively refinanced $1 billion of that I'll talk laid low coupon up 2.25%.
Align wants to save approximately $17 million, an annual interest payment and also improving your profile.
<unk>.
We have continued to in Boston profitable projects, such as 10 of my expansion too.
And musselwhite trails handling.
And those Robin mentioned, our study work in progress the next way, but profitable production <unk> purchase all fights with dancing.
You might remain committed to sustainable shareholder return across the cycle and we continue to demonstrate that's the first quarter.
Two weeks ago, we declared a first quarter Dividending crazy, 79% to 25 cents per share and we continue to execute on our share buyback program. It purchasing approximately $300 million during the first quarter.
Initiating a program in early December we have completed 80% of our 1 billion dollar authorization with nearly 19 million shares retired I didn't average price according to dollars per share.
Are shares like trading around $60 I buyback program husband incredibly cleaning up to shareholders.
As a reminder, we build our annual business plan based on conservative assumptions, including 1200 dollar gold price.
<unk> every 100 dollar in gold price above are based on well January incremental $400 million, an attribute Bull Creek cash flow annually.
What gold prices currently around $1700 per hour.
Favorable oil prices in foreign exchange rate. These tailwinds, one more than offset any short term disruption as we managed through these challenging time.
<unk> Oh, he ended up with the time to wrap up on flight 21.
Thanks, Nancy concluding on flawed 22.
You want has a long and proud history of safety leadership yeah.
S G. stewardship <unk>.
Developing the industry's best talent.
Focusing on operating discipline and profitable growth.
From this foundation, we remain focused on improving our ability to leave out differentiated superior.
<unk> shareholder returns.
We will do this but developing of people.
Optimizing our assets delivering based projects exploring perspective properties and strengthening balance sheet.
And I'm very excited to continue string cutting out position as the world, leading gold company with a workforce and cultural determination that a thick and to know.
Thank you for your time.
That <unk> the operator to open the line for questions.
We will now be him a question and answer session.
ASCII question, you May pass star than one on your Touchtone phone.
If you're using a speaker phone please pick up your handset before pressing the key.
To withdraw your question. Please press Star then too.
At this time, we will paused momentarily to assemble our roster.
In our first question will come from Tyler length of J.P. Morgan. Please go ahead.
Good morning at Tom Robbins Fancy things, taking the question and hope you're all doing well.
I think you mention time and sort of that and mine's, representing sort of 90% of plan production Rob rating I'm. Just wondering you know are those operating you know at full rates are there any sort of you know limitations on them from Cove. It and then just you know with costs. I think you mentioned that you're cast costs would be sort of at a higher end and I just.
What.
To get a sense of what you were also assuming for currency in oil and if if there's a benefit there.
Things taller and and please bear with us taller and the other people to ask questions were all like kind of different locations around the globe.
Well now telephones it at home, so hopefully technology pays with us and I hope everyone on the cold is.
Families are all safe and healthy.
Tall of the probably the the operations that way ramping up.
<unk> <unk> <unk> there'll be a fairly slow ramp up until you know and.
Negro as we work at white through the logistics of maybe people around Argentina to get them to work. So we will want to work with their employees and work with the various stakeholders at a national provincial and and local township level to make sure we can move.
Through through the country through the provinces to get them to work so ramp up will be a little slower at.
As a consequence and similar ideally in all we we we held back when the Quebec government lifted the restrictions because we wanted to have the flame judgment of the first <unk>.
And we seem to to work through the particles, we have for operating and again, we want to work with him and his slowly bring people back and demonstrate them to them that we can fight for advantage.
The the risk of spread of your fiction ran those communities.
<unk> with the.
The decree from the previous <unk>. The last couple of dies it will allow us to to to brand backed up by smelling a bonding operations. So that that will move at a care a maintenance pretty spot like the rest of our operations around the globe as Robin <unk> largely operating as.
Expected. We are thing the lies the chief change <unk> chatted with <unk> challenges, where you can't do that today due to to clean down vehicles before another person gets on but a number for locations with extended as she frosted straight is Tom and so you wouldn't back some of that some of that efficiency.
<unk>.
What <unk> to some of the costs that.
Smell get Nancy to talk to some of.
<unk> and and when and how we bought see that that coming through.
Just in terms of a broader costs, we all tracking to the the heart rending back audience, we really wanting to see as we indicated that now.
Box wanting to see Penasquito come back out of care a maintenance, we're cautiously optimistic on that front. We've got some very good engagement going on with the Mexican government. We have present at out plan for how we would upright penasquito and vanished.
<unk> that plan on what I consider the benchmark in the morning industry go I believe the work. These strain government is dry morning industries down. So we have leverage that work those discussions of going very well.
But also I got great support from the U.S. government in the U.S. embassy in in those those discussions with amazing government, but we cautiously optimistic we want we want to see through went out the other sort of a decision being might become Medicare maintenance and then we'd be in a position to provide provide some updated that god is bus, but the <unk> production and.
Cost.
Is there anything you'd add in terms of some Thomas question around costs.
Thanks to them and I just had a couple things <unk>.
I think just walking from the basics, what what were clearly outlined does it when we're in carrying maintenance no. That's typically 20 per cent of our cast because of the decision that we need to provide continuity and pay that takes it out to you know 50 per cent, even when you're in can maintenance. So that's the kind of base.
Point no as <unk> the lights are they <unk>.
It's just set an angle that we're progressively building up so you can expect to see you know that to go from 50 to 60 to 75 <unk> becoming weeks. So that's that's roughly the way in which I would approach it.
And Nancy do Wanna covered some of those those tile wins on foreign exchange oil.
Yeah. Thanks.
Parlor, yes, we do published an annual sensitivity guyton, Yeah, just a couple of notes on that so we had budgeted oil $60 a barrel and arsenic activity is probably 10 dollar change in in a price.
I can barely boil it at 25 million dollar increase any trivial free cash, but you can use one of them out the round on on that likewise on the hockey dollar we budgeted is 75 cents.
Eight.
Nickel change and I'll be dollar way, it's $40 million of additional attributable free cash flow.
Certainly won't be a some tailwind associated with W.T.I. am well all facts.
We think about where we like Wow that's cool.
Yeah. That's that's helpful and just a final question just on capital case, and I guess <unk>. The the quarter 3.7 billion of cache of completed <unk>, 80% of the buyback.
<unk> sort of creates some uncertainty, but you just share some thoughts around capital allocation going forward with you know sort of by back from the dividend.
Thank you want to pick that one up as well.
Yeah, Yeah, I think Oh, the important point on our our discipline of on top of allocation certainly has not changed to we've been very clear about sharing the shareholders and also reinvesting back in our business. We will continue to adhere to those principles. So when you think about that does not increase was predicated.
Earlier this year on oil pipe I'm, sorry, I don't go price of 1200, and we still maintain that 1200 that dividend.
Certain affordable and then on the shared buyback argue that we had a billion dollar program or about 80 per cent into that we were able to get almost all of those shares well under $45 and so on you as well continue to keep that program outstanding and will continue to think about what we won't do but if you consider hollow.
<unk> will be about half back in business and then on the other half will continue to focus on balance sheet dividend and share buybacks to all of those tours tools are still wasn't into a box set up for consideration.
Great. Thanks, so much.
Hmm Bank Tata.
Our next question comes from Chris Terry Oh Deutsche Bank. Please go ahead.
Oh cool broadband.
<unk> during well a couple of questions just firstly on the on the free cash flow just thinking about that the next couple of corridors with the operations you have off line.
Whether there's there's like a working capital implications drum I guess Oh it was stalking some of the raw materials on saw it which is obviously sensible just some of them moving parts on the cost. So I just wanted if she can comment maybe nancy on free cash flow expectations or some of the.
Moving parts, two q. and and and maybe three q. Thanks.
Sure I'd be happy to take that one yeah, I really don't think we'll see much I no real significant changes you might see later on in the year, there will be some tax payment and cute too, but fundamentally in order to get what we need it site I guess it it's not going to be material left out a significant change.
On working capital numbers.
Okay. Okay. Thanks, and then just another one maybe you can see Nancy just in terms of the cafe or something it was mentioned earlier in the cold. It's luck it'd be lower this year do we just think about is saying.
<unk> 2020 false or whatever you darn spending 2020, you would spending.
<unk>.
Yeah, I think what you'll see as just as a result in some of that.
These sites didn't count maintenance up to see some about topics roll from 2020, and a 20 wine and like like drop the backside of 20 wine and and take this summer that we'll get pushed overtime I wouldn't anticipate a big quote unquote catch up with you well in the plan period right now.
So thanks, Thanks, and then just a lot from from me on on most of what is it is it's decision there on that delay started it is it purely based on quite a bit or have you taken the time right now wallets off line to.
Do further work on material handling et cetera, and there's there's an advantage to to spending the time wallets off line getting metal rod and bring it back home on this just wanted if you could clarify some of the thinking that.
Yeah, Thanks, Chris <unk> the decision to put.
Muscle what the care of maintenance was.
On the basis of the the guys, where we have with the local communities for local for smashing communities in around that mine and and the very serious concerns around the vulnerability of those communities to the spread of infection, particularly when you have a workforce that heads up in northern Ontario from Southern Ontario further afield.
So he guide you with that community and addressing they concerns we might proactively the decision to put that operation into care of maintenance and that includes the the team we had constructing that combined system. So the there's a small tell your mum saw it who who are basically.
Keeping keeping equipment turning over so it's ready to restart again, managing environmental control systems.
Doing guides very close with those communities as we're doing other parts of the world to demonstrate the protocol. We have implies that are working very effectively around the world and and I remain hopeful that is where you can demonstrate our ability to to manage the risky and fiction that week and we can stop it operation back up again and get.
The construction that comes I completed, but just confirming that we have stopped don't work at most of what including the combined construction.
Oh, okay.
So I should just just just one other one or maybe two smallpox, but just to clarify on the 90% of production <unk> currently running do we just adjust on a G.I. bison. So let's see we penasquito off line just adjust directly for Penasquito to think about it on a percentage of.
Gee I was online is is that the right way to think about that.
We're just looking at each other on where they <unk> Nancy will just you want to pick up that what all we can take it off line, but secrets and give you some direction on that.
Okay, Okay, Oh, Lord <unk> actually one one another one just just writing on a on searing I'm a little bit just wanted if you could comment a little bit on repatriation because some of the card see constraints. It in that country does that impact anything.
<unk> at all thanks.
Yeah, Thanks things <unk>.
Oh, good Nancy probably best to comment on that one.
Yep.
Your other question, sorry, surprising for amount of kicking myself up and get quickly enough, but I'm not on the question on that was it is not yet you know that's really Oh, that's really gold online.
That one will turn on question no. We do not have concerns there we have our ratified in Bozeman agreement that covers this particular issue and so we are we are not concerned about the current.
Okay. Thanks, Thanks, everyone appreciate it.
Thanks, Chris <unk>.
Our next question comes from Greg <unk> of P.D. Securities. Please go ahead.
Yes. Thank you the definitive agreement that you've concluded with such was community other financial something that deal that you need to address.
[noise] things great.
Did you want to pick that went up when we do have stayed SCOTUS filled in the law and you could pick that up as well a bucket won a few but it's a great question.
<unk>.
Okay. So am I I might just kick off and then speech to to pick it off.
I agree they're they're most definitely is financial.
Implications to the to the agreement <unk> you know that's been a large parts of the negotiation that I was you'll remember the the negotiation. It involves line rental it involved water. It involved you know compensation and involves infrastructure improvements.
As well as employment opportunities et cetera, So there's a variety of things, but what I would definitely say before <unk>. It comes in is that you know we are very very pleased with it was outcomes and certainly we believe that it's very fair very reasonable and it gives a sense yeah.
<unk> moving forward, but Steve do you want to add to that.
Sure things, Rob the only thing I would I really is that it was all within our budget plans, so where we ended up landing all consistent with where we had expected to go and so while they're say oh water component to this which is a longer term.
Because also part of the Klan. The other amounts really you have all come in mind, so no impact on any.
Guidance or anything like that.
Oh, that's great that's very helpful. Great on the cat.
Sorry, sorry, great. The number the numbers are relatively low and smoke hundreds of millions of dollars. It's a a few million dollars.
Okay. Okay. Good that's clear on the Catholics. It was it was low in the quarter relative to the old guidance does not reflect just delays.
I think it's something appraised so was shut down I was that a conscious effort to bring Catholics down for this year.
It's mildly related great. So we've you you are saying cover related to lies in its lots of being to where we have my to deliberate decision to move not essential people only keep on sought people who are essential to <unk>.
Planes any environmental control systems, running so where where we will will I hate on Sistani capital spending Hum, we've made a decision to to slide that down and you can actually move people off saw it and.
<unk> some of that that's <unk> and protect the risk of fiction spreading familiar with some of the development capital projects like tantamount to we focused on what the critical path was in that project and then dropping off some work <unk>. For example, it will building a and you came out where they.
Shaft with onto grant monies, we've we've slide that with down because it's not on the critical path. So.
Tiny capital D., she's probably trekking two around but not hundred Midland.
Mock development capital around the 500 billion dollar Mark So some of those rights you're seeing now we'll probably hold for these three years, we're probably looking capital up somewhere around.
1.1, 0.41, 0.4, rather be in dollars across by Sistani development capital.
Right next on that's helpful.
Our next question comes from Cat Tanya Jay cues conduct Scotiabank. Please go ahead.
Oh good morning, everybody. Thank you for taking my question, Rob maybe for yourself and pick Tom I'm, just looking out you know your data some amount for the impact of cold there on your cost structure in in Q1, but I think let's say this cold weather than let's say everything went up.
Normalize it to them you know arm are we going to be taken additional costs through the cost structure for coal that either you know all of this social destined thing that's impacting.
I will call and or productivity.
[noise] attend Euro Okie golfing muck it rubbed a call made and Nancy money from what she'd be made a few comments as well I think.
Normal Oh, I think for many many months.
Managing.
Distancing and we're going to be managing screening underwear saw it. So it's I'll think about maybe people ran to saw it on buses I'll think about pre stuff meetings I think about daunting facilities think about office cleaning think about playing flawed.
I think about the people you have doing temperatures screening at the entry point to saw it I think we going to be.
I think that's going to be with us.
<unk> for a long time to count.
So some of those cost you see you will get more efficient with those costs, but I think some of those costs that way, saying, you'll see part of out of.
Oh, Yeah, Cos spice going forward.
Scheme of things and not a huge but that will be part of the costs going forward to.
Nancy or rubber you want to cheat on.
Oh, Okay cool, Okay, cool, Tim Hi, Tania.
I think what <unk> cool that 19 is also done for us. It. It's it's also sharpening our focus you know we already had a very keen eye on productivity.
Before this but what we have signed is that you know because we've stood done you know about 50% of people at a site is knowing essential pass smell. It really low is just to take the opportunity to say well oh, they actually needed back on site or should they be based in regions should be work from home or ultimately should they still be walking.
For us at all so it does give us the opportunity to really think about it.
The business is running <unk>, we can do and I think you know so much of doing the the adding school this way today.
Also letting us to think about travel right, we've been doing in the past and the way in which we've been communicating to face to face meetings et cetera. So there's a whole host of improvements I think that we can make as a result of this but just I <unk> you know we are into the the new normal.
That's definitely we we have caught a additional costs.
I'm very hopeful that given that created minds that we've got given the the use of technology given the the way in which required that we we may think seen somebody is a significant increasing productivity rather than not a reduction but nancy do on today.
Yeah, I think that's exactly right. It's a great time for us to really evaluate our prophecies and consider how we think about productivity across the globe.
No that that we will be adjusting out any they quoted related costs.
And some of those carrying maintenance costs for us in particular as the U.S. gap quite low compared to other minors is going to be a little bit low in the rural <unk> well be smaller then you'll see in other places, but we will capture those indicate.
Filings, there's the two pieces of it is the actual costs related to cold dead, but I think Rob make acquaintances. It's just a really good opportunity for us to take all your glance at everything and really think about our productivity at all sites and any other way across the globe. So well, we'll keep on that path.
Okay, and maybe Rob like well when when you ever revealing somebody and finally get develop not weren't that you like doing and you had said several sites. It was ahead of schedule. It appears that some some married your productivity still quite high it has not been impacted is that a fair statement.
That's that's great.
We've got some areas, which are progressing very well and.
If I pick on a a few that you know the its beak underground, but at some level shrinkage. The advanced rates. The 10 of mine and even musselwhite before we stopped they are you know we were making terrific progress on the conveyor belt.
Penasquito you know one of the unfortunate things cost to visit we'd broken a whole host of records for the site.
As well so in general being very very pleased about how things have been operating but the likes of Boddington I Ching Apple kind of mine you know see see in the Porcupine. They are all still producing very whale and very nicely Tanya.
That's good to hear thank you very much and good like if they won.
<unk>.
Again, if you would like to ask a question. Please press Star then one.
And our next question will come from Anita Sunny of C.I.B.C. Please go ahead.
Oh. Thank you. Good morning, guys I just put a question on Penasquito could you I'm assuming that one is that okay germane shut down at this point I apologize I jumped on late but it could you give us an idea of how.
Argue that we ran going over the next a couple of quarters.
[noise] thanks for Nader.
Tome here and I'll I'll get I'll I'll I'll I'll start off and have you get Roberta chip in as well I think.
And it's good off of understood yet question correctly, it's to leave in care a maintenance ramped down.
We are cautious optimistic we've had some very good engagement with the government and good support from the U.S. government U.S. embassy in.
Helping us guys with the government M. of also presented in fact, a couple of Tom's we've had more than a couple of times now with multiple where Peter Russians out playing for raced out and we have.
Draw upon the protocols we have implies.
<unk>, which are working very very effectively to demonstrate to the to the mixing government, we concisely ramped up penasquito, particularly given it's like <unk> Province studies, it's a very low right of the virus.
Sought as you know that's a that's remind what assign a strip and and self contained.
Accommodation. So we we mind cautiously optimistic that through the the cool. So this month that we will start to get some approvals to to restart.
But we do you want to see that happened before we we take a step and start to updike.
Oh God, it's in the lock so we continue doing God's with the government answer the questions that I have enough.
Cautiously optimistic but it can it can ramp up in the near future. If it if we did get that crane lot. It's hardly a wake up to to get Penasquito pick up and running and then it's back to where we went through the forces quota.
Is there anything you'd have to.
To that.
I think just a couple of other background things tome incessantly.
We are low being very hard that 18 to me is the date that we're very much focused on and that's what the government has said that industry should can demonstrate the <unk> controls in place can stop.
And just to add to what Tom said <unk> have been zero cool that cases, and that's obviously were the minds that so that that'll help. So again, we're we're cautiously optimistic we're working hard the sites in great condition and when we do and the are able to run puppet will be straight you know to phase six and.
Hopefully whether it was higher grade and you know get back on track as quickly as possible.
Alright, Thank you have to from the question.
Right thing for me to take care.
Our next question will come from Jackie <unk> B.M.L. capital markets. Please go ahead.
Oh, thanks, very much I, just want to follow up a little bit more on any his last question under the impression that be a Mexican government has has approved restarting mine's. Just generally may 30th so is that the case, where if you were able to demonstrate the to save.
<unk> earlier, but to worst case scenario would be may 30th or do you envision knows that potential that you could be cause longer than that if if they don't decide in your favor.
[noise].
Yeah, I think I think that's a couple of aspects to answer. This question. One is mixing government as many governments makes the on particular as it's I think the virus it makes it <unk>.
Other countries.
Mixing government is still grappling with how they managed to spread of these flowers and so as as I work through that those those circumstances for them more broadly can move and change what what were working with all the by says is that El al plans, we presented to that makes in government <unk>.
They very pleased with those we operate you know like <unk> in Mexico that he's he's remarried and we can manage at protocols very well.
And that they'd be dedicated to watch that that we'd be part of the the the pool of companies that that'd be looking at for some approvals around my I say.
But <unk> I don't want to get in front of the government. We <unk> go good plans in place, but I want to see that approval come through and then we can then we can get food and provide some some direction about penasquito, we continue to support the government and and wait for them to go through that process.
Give us the approval somebody cautiously optimistic.
But you had anything to that.
I think I think Jackie the only other additional one I would say is that you know since the.
The order from the government came out we've been working with the government from day one.
Thing 'cause told him say that we've been every single day, we've been working with them. We presented our case. So we think we we have go to a very strong position, but you know the 18th that may as well. It's the the government has indicated but it's Tom rightly said, you know that that could change, but that's what we're.
Because stone at the moment and you know given that are processes and procedures are the very very high Orthodox we we remain quite hopeful, but we've had a tremendous amount of the law being this is not a last minute case at all and we'd been with the government in supporting the government in the community every step of the way you. So we're we're <unk> we're understood.
And yeah very hopeful we can be one of the forced to lead the way I'm sure the Mexican mining industry hard to its best good.
I didn't think and maybe just a second question. If you wouldn't mind, maybe giving us an eight on what you're thinking on capital allocation. I know you. Just recently raised the dividend with with strong gold prices I can you may be just give us a update on what you're thinking is in terms of dividend bye bye.
And another capital allocation decisions you make something.
Thanks, Thanks check email last Nancy Nancy just keeping a warning now to get off mute fancy.
<unk>.
She's had a few <unk> [laughter], yeah I'm I'm.
Hailing at the Bingo game this morning.
So thanks very much no Jackie it's really our our our commitment to disciplining Papa allocation how's not change and the way we're thinking about it.
Meaning to consider about <unk> back in the business in terms of.
Long term side of things from the projects and things.
Work on exploration in front of those pieces together P.S. is really great turning pops the shareholders.
Reminder, without a five year guidance from well even though.
We've given we're really thinking about our our contributions in our quick cash flow through the cycle with crisis, both high and low.
C.S. continue to in Boston, New business on the one side and on the other side of the larger will be asking team. They do the work that we've demonstrated around them quibbling about sheet.
Really working on our out yet that powers and improving those rate.
Including the way that looks over time and will do exactly what we plan on they'll share buyback, which was incredibly freedom to shareholders and then the other piece about was really what we've done with a debit. So as we are in this period of time I went generating significantly cash flow in those those.
<unk> capital allocation pop not changed and will continue to hear about.
There are ways to provide by U. doctor shareholders, but also maintain model.
But that's just one really really hasn't changed anyway.
Right, Thanks very much.
[noise] things check you take care.
Our next question is from Brian Mcarthur of Raymond James. Please go ahead.
I can warning I want to follow up a little bit on Tonya's question. Just can you remind me where we are.
I'm I'm getting a ton of must haulage working at Boddington and the second part I guess it just in this cold with 19 world I'm looking longer term.
Cost structures does this all accelerate moving economists haulage to some of the other minds, obviously there'd be a distance even advantage there and potentially a cost savings.
[noise] things brought I'll <unk> I'll kick off I think in pass passed to Rob or think <unk> I think it's more than just a ton of us foliage I think it's the use of technology and automation, whether it be I've been paid for undergrad. So I think there is certainly an opportunity to.
We're saying we we've we're implementing technology now there's even more of a decent skies for for implementing technology, and allowing more more work to be done.
With automated equipment, but the other thing ways, saying is the basement, we might need technology to be out of work remotely. He's working their effectiveness I was rub talked about the ability to to have less people in operating sought it's still be out of work very effectively supporting operating sought out of original.
Or or a central location, let them, but he's working very very well.
And but also just how many people do you actually need to run a business and started thinking this in these new normal that we got to have going forward the technology beyond automation, he's giving us some many opportunities and we were actually I'm seeing how come with very effectively oh, so they something that we as we talk about.
The three scenarios that way of looking at and we modeling.
<unk>, we're actively talking about how do we reshape these business in the context of having impacts from this pandemic that are going to to live with this for many months many user aid.
<unk> specific question around what am I <unk>, a ton of muscle budget Boddington rubbish, you want to pick that one out.
I certainly will to them and thanks to the question Brian. It's it's moving at peace that we have all don't the 29 73, so that's well and truly in the cat and system and we'll start seeing those arrive later on in the in the year. So we continue to be Betty So you <unk>.
But what that's going to be like but that <unk>, well and truly on track and as you rightly said it not only improve safety. It can improve productivity very significant <unk>. That's what the teams very much focused on is that how do we improve the productivity with these trucks.
Just to build on a couple of other things that <unk> you know in terms of our automation plans to Sublevel shrinkage and Africa, you know one of the key reasons for changing to that was the ability to potentially also meet left in the future you know our relationships with the likes of casting the introduction of mine style Yeah tournament.
Drills that we've got it penasquito. So we've got the hardware, but it's also the data and you know what you do it that fast. It is just so important and one of the key differentiates as I think with <unk>. The the operating support hubs that we've gotten path and we've got in Denver, where you actually monitor the maintenance performed.
Oh, you're equipment and also your mail performance and you're able to give that seat back real time. So in many ways. It's not just automation, which I think people think more more but it's also that we might choose die. So.
Please people, where you put your expertise and giving that real life feedback to <unk> the field, but the good news is you know they told him the structure bowling to very much on track.
Thank you very much.
Thanks, Brawn take care.
That's concludes the question and answer session I would like to turn the conference back over to Tom Palmer for any closing remarks.
Well think or if you're one for joining us to die on this cool. Thank you for your interest in a gym on at most importantly, please take care of you'll you'll safety you'll health in place look after your families and look forward to to speaking to you and then not too distant future. Thank you everyone.
A conference off now concluded. Thank you for attending today's presentation and you may now disconnect.