Q4 2020 Newmont Corporation Earnings Call
Good morning, and welcome to Newmont's full year and fourth quarter 2020 earnings call.
All participants will be in listen only mode.
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After todays presentation, there will be an opportunity to ask questions.
Please note this event is being recorded.
I would now like to turn the conference over to Eric Kobe, Vice President of Investor Relations and Communications. Please go ahead.
Thank you and good morning, welcome to Newmont full year and fourth quarter 2020 earnings call joining.
Joining us on the call today are Tom Palmer, President and Chief Executive Officer.
Rob Atkinson Chief operating officer.
Nancy BZ, Chief Financial Officer, and Randy Engel Executive Vice President of strategic development.
They will be available to answer questions at the end of the call along with other members of our executive team. Please.
Please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found at our website.
And now I'll turn it over to Tom on Slide three.
Thanks, Eric.
Good morning, and thank you all for joining our call.
'twenty 'twenty was a year of unprecedented challenges, but through it all we remain focused on continuing to differentiate ourselves as the clear industry leader.
And I'm proud to say that we have delivered record breaking results as a consequence.
Turning to slide four for a recap about Baidu Richard.
The safety and wellbeing of our employees and local communities remains a fundamental principle of our company.
Unfortunately, the world continues to grapple with the kinds of not taking pandemic and we remain disciplined in the application of the key health and safety protocols across our business.
Despite the challenges of managing through an unprecedented pandemic, we achieved the best safety performance in our company's history.
This was a result of having a clear focus on managing the fatality risks across the company.
And ensuring that we have a consistent and rigorous approach to the application of critical controls required to manage those risks.
We continue to lead the industry without ESG practices.
Setting targets to reduce greenhouse gas emissions 30 per se about 2030.
And achieved net zero carbon by 2050.
We met coal you got it's delivering more than five point non me in ounces of attributable gold production.
And all in sustaining costs of $1045 per ounce.
In addition to this we produced a further 1 million gold equivalent ounces from copper silver lead and zinc at all in sustaining costs of $858 per gold equivalent ounce.
Last year, our 12 managed operations supported by an integrated operating model and a culture of continuous improvement delivered $719 million in cost and productivity improvements through our full potential program.
We continue to maintain that discipline of improving margins at $200 per ounce.
Having us to capitalize on our significantly reached a high golf process and delivering record financial results.
In 2020, we generated $3.6 billion in great cash flow.
<unk> in the industry and ended the year with $5 $5 billion of cash on the balance sheet.
The strength and stability of that business supports our industry leading dividend framework.
This framework provides shareholders with the stability of our base annualized dividend of $1 per share calibrated at 1200 dollar gold price assumption.
And the potential to receive 40 to 60 per se of the incremental free cash flow generated adult prices above $200.
Demand continues to set the standard as the clear industry leader in shareholder returns.
Which we further differentiated with a 38% increase in our quarterly dividend that we announced yesterday.
Bringing our quarterly dividend to 55 cents per share.
And our annualized dividend rate to $2 20 per share.
With this increase our current dividend yield places us in the top 25 dividend pliers ultra large cap S&P 500.
We also recently announced a new $1 billion share buyback program.
This follows the $1 billion program, we completed in the fourth quarter.
Which reduced our total share count by 22 million at an average price of $45 per share.
Our industry, leading dividend and share repurchase program, a reflection of our commitment to deliver industry, leading shareholder returns whilst remaining focused on the financial strength and flexibility needed to create value throughout our cross cycle.
Shifting now to safety.
I'd like to expand a bit more on our 2020 site performance on the slot floor.
12 months ago I outlined the key change that we were making me about a ramp of safety measures.
Stepping away from the mining industry's traditional use of lagging personal injury rates and our bonus programs to me.
Measures that are focused on managing the critical controls that must be in place at all times to prevent fatalities.
At the time I also challenged management teams and boards you know, we just try to follow their lead and shift the focus away from pushing injury rights to measures that will lead to the creation of a fatality injury and illness free environment.
So I had to pick out.
During 2020, we completed a 70000 interactions by leaders in the field that we're focused on ensuring that the critical controls required to prevent a fatality understood and being effectively managed by our team members exposed to those risks.
As a consequence.
I'm proud to report, we reduced a significant potential gains by 63%.
And achieved the lowest personal injury rates in our company's history.
The total recordable injury frequency right on 0.33 per 200000 hours worked.
It is no coincidence that visible felt leadership focused on fatality prevention.
It's driving a significant improvement in all of our metrics.
Turning now to our portfolio on slide six.
Among our 12 operating mines in two John pitches, we have nine world class assets.
Each of which delivers more than 500000 gold equivalent ounces per year.
At all in sustaining cost of less than $900 per ounce.
With a mod loss that exceeds 10 needs.
Importantly, all are located in top tier jurisdictions.
We defined as countries classified in the eye and be writings ranges by teach Moody's S&P and Fitch.
We firmly believe that we have the rock solid portfolio to generate sustainable returns from our world class Responsibly managed assets located in the best gold mining jurisdictions.
As we described in some detail on our exploration webcast last week.
Our portfolio is enhanced by the gold industry's best exploration clock, Lord of Greenfield and brownfield opportunities.
This exploration portfolio is managed through our proven integrated operating model, which ensures our exploration teams work hand in pain could have projects and operations teams.
One of the key benefits of this integration is that we do not reinvent the wheel could replicate.
With the majority of our exploration activities occurring near existing operations, we had familiarity not ideally with geology and terrain, but also the pivoting regulatory and committed relationships surrounding each of our operations.
Turning now to the reserve and resources underpinning our asset base on slide seven.
All reserves are the lifeblood of a mining company and replacing our reserves is critical to sustaining production.
As we reported last week, we ended the year with 94 million ounces of gold reserves.
Our team's ability to convert reserves and replace 80% depletion from such a challenging year was truly remarkable.
In addition to our reserves, we also offer substantial future upside to our resource space above the 101 million ounces of gold.
And we are in the very fortunate position of also having significant exposure to other metals, including copper steel and zinc.
These other metals are contributing substantial value to our portfolio to die.
Generating solid cash flows each and every quarter from payments Quito and boddington.
Turning now to our stable long term production profile slot Ike.
Underpinned by our leading reserve base and exploration program, our portfolio will produce steady gold production of more than 6 million ounces through until at least 2030.
Balanced across each about full wages.
This profile is further enhanced by the production of more than 1 million gold equivalent ounces from silver lead and zinc at Scioto and.
And copper at Boddington and yet a culture.
Combined we will deliver nearly 8 million gold equivalent ounces per year for the next decade.
Most of any company you know industry.
Then moving to slide nine for looking at ball gods.
And as we shared in December our five year outlook shows that we will steadily increase attributable gold production to nearly 7 million ounces over the next Fox news.
And our all in sustaining costs improve in 'twenty 'twenty, one to $970 per ounce and further increasing to between eight to $900 per ounce by 2024.
As we get the benefit from our investments in <unk>.
Thomas haulage at Boddington.
Improved underground mining methods at a high flow.
The expansion of Panama.
The development organic coaches Sulphides, and then you buy at a hopper north.
As well as continuing to deliver sustainable value from full potential improvements across our portfolio of 12 managed operations.
Turning now to our free cash flow generating potential on slide 10.
Okay.
Our balanced portfolio combined with a disciplined and integrated operating model provides significantly reached a high gold prices from our largest production and reserve price in the world.
Every $100 increase in gold price above our base assumption.
Newmont delivered its $400 million of incremental attributable free cash flow per year.
Using a conservative 1200 dollar gold price assumption.
Our base free cash flow, it's Duke title trade a half billion dollars over the next five years.
And at current gold prices, our portfolio will generate more than $15 billion of free cash flow by about.
But that same timeframe.
To be clear this is free cash flow that is entirely attributable to give months' accounts.
I'd like us to provide industry leading returns.
With that I'll hand, it over to Rob to discuss our operational performance on slide 11.
Thanks, Tom.
Before jumping into the regions I'd like to start by saying, how very proud I am okra and talk to them and what day of safely accomplished while navigating such a tough an unprecedented year in 2020.
Heading into 'twenty 'twenty, one we remain very diligent in our application of a wide ranging controls and safety protocols to place the health safety and wellbeing of our teams and our communities above all else.
Turning to slide 12, I'll give an update on Australia is performance.
In 2020, Australia produced approximately 1.2 million ounces of gold at all in sustaining costs $964 per events.
Boddington, we produced approximately 670000 gold ounces from 56 million pounds of copper and 2020.
The site delivered a single year record for mill performance, reaching 45 million tonnes processed against the nameplate capacity of 35 million tonnes per annum.
Achieving this level of performance is a testament to the successful implementation and consistent delivery of our proven full potential program, which is a direct result of the continuous improvement mindset all of our dedicated site leadership passing them.
We have completed three little potential refreshes at Boddington since 2013.
And continue to identify opportunities to take performance to the next level.
During the fourth quarter higher throughput and consistent grades drove strong production sustaining capital was higher than normal as we took early receipt of cat trucks as part of the autonomous haulage system, which drove higher all in sustaining force, we're well on our way to operating the world's first open pit gold mine within the autonomous truck fleet.
Improving the safety of our employees and extending life at one of Newmont's cornerstone assets.
Kin of the twin Tonight, you can't trucks have already arrived on site with four of those trucks fully commissioned and being put through the paces on this day circuit.
We'll soon begin full deployment of these impressive autonomous vehicles that will increase productivity and improved mining rates. These improved mining rates, coupled with higher grade expected later in the year from the south pit physicians boddington to deliver a stronger second half and over 1 million equivalent gold ounces for 'twenty or 'twenty one.
I'd also like to highlight something we talked about it last week at their exploration webcast.
The area between the north and South pits in the picture has had limited drilling to date, but from the knowledge that we do have we do believe there is potential to combine the pits into one larger super pit to further extend the mine life.
A ton of money, we produced nearly 500000 ounces at an all in sustaining cost of $745 per ounce one of our best performing assets in the entire newmont portfolio.
Panama continues to deliver productivity improvements setting new records for underground development and mining rates for the year.
The team continues to progress our second Turner mine expansion, which I'll now discuss on slide 13.
We remain very excited about the second expansion project to Panama and the sites future has a long life and low cost producer.
Through the development of a 1.6 kilometers deep production shaft and supporting infrastructure. The project will improve production by around 150 to 200000 ounces per year, while reducing operating costs by approximately 10%.
In addition, 10 of mine expansion to will provide a platform for us to further explore a prolific mineral endowment in the district, which has the potential to grow annual production to more than 700000 ounces per year.
As we mentioned during our exploration update we have added significant reserves and resources at 10, a mine and we're especially excited about the potential to advance near mine exploration at Oberon.
The 10 of mine expansion project is approximately 25% complete and we've invested around $130 million so far.
We've achieved a significant milestone finalizing the major construction contracts required to complete the project.
However, the pandemic has had an impact on construction contractors in Australia, which has resulted in higher than anticipated contracting rates.
In addition, we encountered unanticipated geological structures during the completion of the pilot hole and the raise bore drilling process.
As a result due to the ethical deviation from our plan, we've had to increase the shaft diameter from $5 seven meters to six three meters.
Article deviation was only 300 millimeters less than one fifth over the length of a shaft that theres nearly one mile deep. This is less than 0.2 of a per cent, but it's very important to ensure a controlled development and our final share that will operate in a safe and optimal manner for decades to come.
Taking into account the impact of Covid higher contracting costs and work, resulting from the increased shaft diameter. We have revised our projected total capital cost between 850 and $950 million.
The project is expected to reach commercial production in the first half of 'twenty 'twenty four.
And we continue to work closely with her E. P. C M whorley to safely deliver this important project.
It is important to note that this increase does not impact our long term outlook and incident in December.
I'm proud of the team a ton of money and the persistence as shown in executing such a complex project during a challenging year.
Turning to Africa on Slide 14.
Our assets in Africa had another year of solid performance in 2020, producing over 850000 ounces at all in sustaining cost of $890 per ounce.
A team delivered a solid quarter supported by higher grades and improved mill throughput by partnering with the process control team and our operations support hub in per day.
Newmont is leveraging its operating model to consistently drive improved performance and productivity right across our portfolio of operations and projects.
As we progress through 2021 of the sites is well positioned to deliver higher production and improved cost as it benefits from higher grades ahead of a new lead bank.
A handful continued its steady performance in the fourth quarter, our speaker underground delivered higher tonnes mined and grade.
We continue to progress the development of our change mining because sub level shrinkage, which will have safely increased tonnage reduce mining costs and patch a higher efficiencies.
We expect to continue the ramp up to full scale production of the sub level shrinkage method by bringing on first stoping area in quarter two this year.
And we expect to complete the full scale ramp up by mid 2022.
From 2021, we expect to see higher grades at <unk> and the ones that are open pits towards the second half of this year, which will drive higher second half production at the site.
Finally at our half one off the best online deposit in West Africa, We are finalizing the permitting process and we remain firmly on track for a full funds decision in the coming months.
Turning to South America on Slide 15.
South America the region, most impacted by the virus.
The strong finish to 2020, producing nearly 1.1 million attributable gold ounces at an all in sustaining costs of $1100 per ounce.
At Marion exceeded our outlook with nearly 350000 attributable ounces for the year and we surpassed 2 million ounces of gold produced since starting operations in October 2016.
During the fourth quarter the site delivered very solid performance based on higher throughput and recovery and utilizing an ore blending strategy that resulted in a single day record from mill performance of 54000 tons processed.
In 'twenty 'twenty, one Marion transitions from softer saprolite to harder ore, which supports higher production through improved recoveries and grades, but it's partially offset by lower mill throughput.
At Cerro Negro, we continued to manage government restrictions related to Covid.
Our disciplined safety protocols have allowed for more than 20 shifts changes since the pandemic began and we've performed over 14000 tests through the company's owned and operated onsite PCR testing lab.
While challenges remain with reduced levels of personnel during the quarter.
Should rates returning to pre COVID-19 levels and focus remains on improving these rates through a number of full potential initiatives.
In 2021, our forces on increasing development rates and the developments at the Marianas complex, which we expect will increase ore tonnes mined and sustained consistent levels of production.
I N a courtyard, we managed through significant COVID-19 challenges in 2020, delivering a steady end of year performance.
Our focus on higher grades for leaching helped to offset the impact of lower tonnes mined and higher than usual rainfall during the fourth quarter.
We've also begun their transition to leach only operations with a rundown of the oxide mill ahead of the development organic courts yourself sight unexpected production for 'twenty 'twenty, one to be weighted to the second half of the year as we leach higher grades.
Study work on the Sulfides project is progressing well is nearing completion and we expect to apply for flu fund's approval to move the project into execution during the second half of 'twenty 'twenty one.
Turning to North America on Slide 16.
North America delivered solid fourth quarter results ending the year with approximately one 5 million ounces of gold production and nearly 900000 gold equivalent ounces.
At Penske, So we delivered a very strong fourth quarter after overcoming a challenging year.
Top new records for mill throughput since the acquisition, averaging throughput of approximately 105000 tonnes per day.
And we saw record performance from the pyrite Leach plant for gold and concentrate production.
At Musselwhite, we completed two important projects that are critical to ensuring the state's future.
Conveyor and the materials handling system.
Musselwhite ramp help mining in the fourth quarter and reached its highest ore tonnes mined for a single quarter since the acquisition.
With underground development progressing ahead of plan.
Utilization of the new conveyor the materials handling system Musselwhite is positioned to produce 200000 ounces in 'twenty and 'twenty, one with a stronger second half as the ore tonnes mined continues to improve.
Eleonore delivered its strongest quarter of the year for both production and costs.
2020 was a transformational year for alien or as our site leadership team focused on resetting the operation and improving efficiency and productivity.
Resulting in higher margins.
Completing the warm by materials handling system earlier in October has also enabled the team at eleonore to achieve higher underground development rates from deeper in the mine.
Occupying delivered solid results for the year with nearly 320000 ounces of gold production meeting our full year guidance.
Fourth quarter results remained steady on increased underground development rates at Borden and higher grade mined coil.
In 'twenty 'twenty, one pocket pain will produce 360000 ounces of gold production with higher grades and improved mining rates being achieved in the second half of 'twenty 'twenty one.
And at <unk>, we remain focused on safely delivering on our plan with over 250000 ounces of production in 2021 with higher mill grades being achieved also in the second half of the year.
And with that I'll hand, it over to Nancy on Slide 17.
Thanks, Rob turning to slide 18 are the financial highlights.
As you can see on this slide we had an exceptional year and delivered our best quarterly performance of 2020 and the fourth quarter.
Moving $3 $4 billion in revenue an increase of over $400 million from the prior year quarter driven by higher pricing.
Adjusted net income of $856 million $1.06 per diluted share.
Adjusted EBITDA of nearly $1 $8 billion, an increase of 37 per cent from the prior year quarter.
And nearly $1 3 billion and free cash flow from the corner.
And in amount entirely attributable can you minus accounts.
This strong financial performance allows us to raise our dividend per a third time since the beginning of 2020.
With a fourth quarter dividend declared at 55 cents per share, which is almost four times larger than the fourth quarter dividends from 2019.
Turning to slide 19 per review of our adjusted earnings per share in more detail.
Fourth quarter GAAP net income from continuing operations was $806 million or $1 per share adjustments.
Adjustments included 18 cents, primarily related to the sale of royalty interests and changes in the fair value of our investments.
Three cents related to incremental COVID-19 specific costs.
Such as additional screening protocols.
<unk> cost and community find disbursements.
'twenty related to reclamation and remediation adjustment primarily organic how chat.
Six cents related to tax adjustments and valuation allowance.
And seven tenths of other charges.
Taking these adjustments into account, we reported fourth quarter adjusted net income and a dollar cents per diluted share.
An increase of 56 cents over the prior year quarter.
Turning now to slide 20.
We continue to execute on our capital allocation priorities, which include maintaining our financial strength and flexibility.
Reinvesting in our business through disciplined investments in exploration and organic growth projects.
And returning cash to shareholders.
Joining me are newmont reinforced its position as the clear industry leader for shareholder return and financial performance.
We maintain over $8 $5 billion in liquidity with $5 $5 billion of available cash.
$550 million of that cash will be used to repay our 2021 senior notes that are due in June of this year.
Our net debt to EBITDA ratio is now at 0.2 times.
And in the fourth quarter, we replaced on positive outlook by standard <unk> Poor's and we were upgraded by Moody's to B double a one credit rating.
Further demonstrating our balance sheet strength.
We returned over $2 $7 billion to shareholders through dividends and share buybacks in 2019 and 2020.
Newmont has a unique ability to lead and shareholder returns and maintain strength and financial flexibility and develop profitable projects.
The expansion of Tanner, My Hopper, North and Yannick hurt yourself.
Looking ahead in 2021, we will continue executing on our proven track record of superior shareholder returns with a new $1 billion share repurchase program and an industry leading dividend framework.
Turning to slide 21 for more details about the dividend.
In October Newmont establish the dividend framework that provides shareholders with a stable base annualized dividend of $1 per share at a 1200 dollar gold price.
Along with the potential to receive 40 to 60 per cent of the incremental free cash flow generated at gold prices above our base plan.
The fourth quarter dividend declared yesterday with calibrated at an 1800 dollar gold price assumption and a 40% distribution of incremental free cash flow, resulting in a 38 per cent increase over the prior quarter.
As Tom mentioned earlier at the current share price.
Current dividend translates to a yield over $3 five per cent.
Places us in the top 25 dividend payers in the large cap S&P 500.
The increase to our quarterly dividend reflects the strength and stability of our business.
A recognition of the current gold price environment, and our ability to maintain capital discipline.
We will continue to assess our dividend on a quarterly basis and are confident that our framework will provide shareholders with an attractive dividend yield and participation in our cash flow generation at these higher gold prices.
With that I'll hand, it back to Tom on Slide 22.
Thanks Nancy.
Before we move on to Q&A, I'd like to pause and acknowledge Randy Engel.
It was made the decision to retire in the second quarter. After dedicating 27 years of service to our company.
For the past 15 years, Randy has laid out a strategy and corporate development groups.
So moving on the senior and executive leadership teams of three Ceos.
Whether he's Korea, Randy and his team have completed more than $35 billion and transactions.
Including the purchase of Cripple Creek and Victor.
File about a he gel.
And most importantly, the acquisition of Goldcorp and the establishment of the Nevada Gold mines joint venture from 2019.
I'm enormously grateful to Randy for the contributions he has made to our company either he has distinguished career.
And for the friendship and support that he has provided to me during my time at Newmont.
I wish him all the very best in his well earned retirement and with whatever he chooses to embark on the next chapter of his loss.
Which will no doubt include lots of Tom in the outdoors with his family and friends.
With Randy's retirement.
Like roads.
Currently our senior Vice President of strategic development.
Share responsibility for strategy and corporate development reporting directly to me.
Blake has been with newmont per 25 use.
Soothing and a variety of positions, including general counsel at <unk>.
Senior Vice President correct Indonesian business.
Like has played a central role in all of the major transactions. We have completed since 2014 and is well per paid to succeed Randy.
As I have discussed many times at Newmont, we believe consistent operational environmental and social performance starts with good governance.
Which includes thoughtful succession planning.
This transition is another example of our commitment to sound governance practices and reflects our deep bench strength of capable leaders.
As we near a 100 per site.
I am more confident than ever that.
We are positioned to generate significant free cash flow and do so for decades to come.
Our clear strategy lies the grab work to truly differentiate newmont is the world's leading gold company.
As we work to continue to demonstrate our commitment to our purpose of creating value and improving lives through sustainable and responsible mining.
With that I'll turn it over to the operator to open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
And our first question will come from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, good morning, Thanks for taking my question.
I might have missed this but can you comment on churn that growth and the government restrictions that were imposed I think in December and how that impacts production going forward I know in the commentary you mentioned that the mine is ramping up again, but any color on kind of what the how long the impact could be or what youre seeing from a mining perspective.
It would be helpful. Thanks.
Thanks, and good morning Sahar al.
I'll pass that question across two brokers specific restrictions were associated with the shutdown around that Christmas from the period for the hull of the Baltic industry in Argentina.
And then I was curious restrictions or controls to people moving around the country.
Well at least at alphabet.
But a few die period back to work when the seed price.
Prior to Christmas.
We're operating deposits side protocols, Rob did you have any other day, Tom will come when you want to answer them.
No Tom Tom you covered the most significant one was that a whole country. One that was imposed between Christmas and new year, but we're now operating under the same restrictions as before so nothing else to add.
And from a percentage perspective.
Or are you basically saying it's back to 100 per cent of normal capacity.
Or is it still below capacity.
I'll just throw one thing that if I had.
Yes, Thanks, Tom.
Probably running about 80 to 85 per cent and that's primarily because of Covid impacts that are you know Argentina is still suffering from Covid and where we've got a few of our employees are testing positive and as a result, we do have a number of people unable to work so that is.
Really meaning that we're kind of averaging about 85 per cent.
Capacity at the moment.
Okay, Great. That's that's pretty clear that's it from me. Thanks.
Yeah.
Thanks Todd.
The next question comes from Jackie principally <unk> of BMO capital markets. Please go ahead.
Thank you very much.
I wanted to ask you a couple of questions about your dividend policy and maybe just to get some clarification on the first question would be the the framework that you've set up the 40% to 60% of your incremental cash flows Oh can you tell can you tell me, maybe what what you would need to see to move from the 40% that you.
You used for this dividend you reported the other day up more more closer to the 60 per cent level are what would be the what would be the driver two to change that part of the Formula and then and then just as a follow up question.
On the share buyback do you expect to complete most of that $1 billion. This year I know you have an 18 month window.
I'm just wondering if you could give us some sense on the timing of that and if that some discretionary or if you have a program in place thanks very much.
Thanks, Jackie I'll I'll kick off from Nancy.
Chime in as well.
When we sit down with our board each quarter look at our dividend through.
Through that framework, Jackie we look back on.
Significant period of Tom in this discussion we had this week with the board was looking at the second half.
All right.
For 2020, we were adult was averaging.
A bit about I'd say and I'll go through that six month period. So.
We talked through lifting from assistant hundred Sun to the IC 100 zone because of that.
That growth performance.
We would continue to have those discussions every quarter certainly we talked about it now.
We introduced our prime book in October.
More likely to be a semiannual moves with conversations taking place each quarter.
Looking at what gold has been doing but.
But at least that that's lagging six month period, and we'd look into the future and be looking what the macroeconomic slide you indicated in terms of golf as we think about that.
40% to 60% range, but we certainly we certainly saw it in the discussion that there was good Gulf cost performance, we've had us lift from the 1500 build up to the $800 and then we're stupid upside in front of US is if golf nine times its cash.
Current levels or Ohio.
So that we thought that was a prudent decision within the context to that framework, we'll have that.
That conversation every quarter with Apple.
In terms of per share repurchase program. It is up to a billion dollars cyber I take months. So the previous program is very much linked to our business.
August KCG M, Greg like in Continental.
We recorded $1 $4 billion will be returned $1 billion.
From bonds debasement since 2019 to shareholders through that bought back through the course of last year with this program over an 18 month period up to $1 billion, we'd be looking to opportunistically.
Going to the market, where we saw a disconnect between.
Market value and al Al assistant so the intrinsic value of the business. So for us. It's a it's a dynamic where we'll be looking for.
For that disconnect and then you should expect to see a game.
Bob I'd also say that the dividend framework in our capital allocation strategy takes promisee either by the day shaped bought back as we move forward.
Nancy is there anything.
You'd add to that.
Yeah, Tom just a couple quick things just to reiterate Jackie that repurchase program doesn't impact our ability to continue to offer those higher dividends.
We are very flexible in that way I think that's it that's a key differentiator is our ability to offer both the it and.
With full transparency and I'll set the share buyback program and then really it isn't discretionary program and we will consider a number of factors when we decided to repurchase but the fundamental underlying thesis is that it will be an accretive purchase so lots of things to think about that our view is to provide more value to shareholders in an accretive way.
Thanks, Tom.
Thank thank you very much Nancy and Tom I appreciate that.
Thanks Jackie.
The next question comes from Chris Terry of Deutsche Bank. Please go ahead.
Oh, Tom Robin Nancy Thanks for taking my questions first one I had just related to what's built into the guidance surround around COVID-19, you sort of taking what you're seeing today or are you, allowing for potential hiccups that could occur or I'm, just trying to work out whether the.
The Guy and it's sort of the mid point of the outcomes of whether there's upside if things improve better on on around Covid and then just related to that just wondering if you could quantify maybe on a dollar per ounce basis, what the cost of operating in a COVID-19 environment is is today and maybe on an ongoing basis.
Thanks.
Yeah.
Thanks, Chris I'll get I'll I'll kick off from the banks, you'll we'll buy one.
Chip chip in as well.
We included about a 10 dollar announcing PEC score called Covid, It out and Ive got it.
And that's a lot to do with the Hot June Raj to ensure social distancing, but the additional logistics of moving people back and forth and.
And I would anticipate as we say in the world play out that way going to be managing COVID-19 protocols for at least all of 2021 and some cycle for us.
Well, we might see a little bit of movement.
Around that number.
But but that's what that's what we were expecting.
Hum.
Bravo Nancy did you want to provide any additional color on Nancy point to where there's some more detail there now and some of the particulars that we publish.
Tom I, just just to add to what you said I think Chris you know we have adapted very very well to the situation in one of the key things is that you.
You know a number of the folks that we've taken off the sites, we're working hard to make sure. We stay that way. So we've made a almost a permanent change, but I think the biggest change that we will see is that as the vaccinations are rolled out.
Depending like eases.
Being able to go.
Go back to that more normality.
People in buses people in cars et cetera, So you need less buses less cost to transport similar people in similar flights et cetera. Those are the things, which will make the big differences, but I think one of the key things that sees that we have adjusted very well to the situation that I think will continue to evolve.
This is the point.
That's it thanks.
Thanks, Yeah, just to reiterate it is about $10 an ounce built into our guidance for 2021, and then just as a reminder, at the impacts of Covid for this year will be reported and disclosed in the other expense line item in our financial statements.
Tom.
Thanks Nancy.
The other question I had just on a scooter.
Now that you've had being able to ramp the mine back up in the second half of last year. After the Covid Covid impact I was wondering if you could talk through what you're seeing and whether there's opportunities.
Recovery rates or mining and I know that was one of your target assets in the Goldcorp acquisition. So just wondering if you could give more detail.
Date on that asset and where the potential loss.
Yeah. Thanks, Chris way, we've really placed with helping us get us not only ramped up out of care by this book is performing and the upsell opportunity and Rob do you want to provide a little color to that Chris.
No certainly certainly willing just to reemphasize, what we've achieved at Penske too has been.
I think quite remarkable.
When you actually look at last year.
But 13 records that we broke when the reason you see that as you know there was a base there Randy augmenting augmented feed.
And not only have we increased it on average, but we can't we still got some room to go and if we compare what we did at boddington.
14, a half million tons through the mill and are on a named.
Nameplate capacity of 36, we've still got a long ways to go of Penske Tuesday to really make sure that we're sustaining those but are working very very positively I think in the in the mine as well you know.
The basics such as payload and for example, we've been able to increase payload there by nearly 15 tons per truck, which may not seem a lot, but given the size of the fleet and that's 25000 tons a day that we're able to do and when you couple that with the the drill and blast improvements the the supply.
<unk> improvements are the pyrite Leach performance, where we also saw a record performance in the last four months of last year that are it's a site, which is showing that it really can perform across a whole number of things. So in short very pleased with it I think the potential upside.
Is it still very significant just doing the basics and the full potential process that newmont has used over many many years as a fundamental part of that.
Thanks, Thanks, Robin that's it from me and all the best Randy Whomever, Tom and thanks.
Thanks, very much I appreciate it.
The next question comes from Tanya Jackie <unk> of Scotiabank. Please go ahead.
Good morning, everybody and thanks for taking my question I'll start with the easy one I am which as Randy congratulations on your retirement.
Thanks, Tanya you're welcome I'm moving on to them just a second easier one which is just from.
<unk> profile for 2021.
I just wanted to make sure I had all of the mines that were second half weighted.
That was a hassle him Gannett co chat muscle park at time T. C M D.
Is that correct those are the only ones.
That's sounds correct tenure at outside if you want to get into a macro level, it's the rough trends guy to be.
Maybe 47, 48, 50, 253 first half second half a day.
Got to pay the bigger mines that will drop that so it'll be boddington and a half of the other ones will contribute but in terms of the the big boss that contribute to that you will see that.
Let's see our North American region, and our South American region lots of inventory.
Just a little bit to the second half and then Youll see.
With Australia and.
Africa, probably more like 45 55 because of the good contributions from those big assets coming in the second half.
Okay. So boddington is also second half.
Yeah.
Yeah, but boddington Sacred heart, you really get a second half and into that let them out of the second half that should get that autonomous fleet up a lot you get into some really good price.
In the second half of the year.
And that's nothing with tennis keto that we should be aware of because that one can be quite corner, you know quite dependent per quarter.
Yeah, Bob any comments you'd want to buy components caito.
Not at the moment Tanya we're in pretty good shape. There. So it's looking as though it's going to hold up to a fairly even first half to second half.
Okay perfect.
I have you on Rob I, just wanted to circle back to Panama and just wanted to talk about the capital increase and you know just so that I understand it's about $150 million I'm just trying to understand that part of it is to deal with increased from <unk>.
Market pricing some of it is like change in scope and I think some of it is also differ from start up is that correct.
Yeah.
I'll just continue on that Tanya.
Tanya is it the other part is really COVID-19.
<unk> itself and if I give an example that we had we had plan to do all of our engineering in South Africa, but because of the logistics the the bandwidth et cetera, we had to move that to Santiago in Chile that coupled with just getting people in and out of Australia has proven to be quite difficult.
And then as you may remember that we had to change manufacturing plants from China back into Australia. So there is that kind of 30 per cent related to COVID-19 as well.
Okay. So so 30% to Covid and then the other 70 percentage, it's pretty much change of scope higher contract pricing and a bit on timing.
But that in fact the day.
The the change of scope would include that.
The larger diameter.
Sure. So if you include that most definitely and then she asked me the the competitive market that we're seeing in Australia.
Especially for those shafts sinking contractor. So those are the those are fast moving big ones.
Okay and then just lastly, you know given you know what we're seeing here I'm just wanted to make sure I asked about inflationary pressures, but are we starting to see inflationary pressures come through the the capital and cost structure at all.
Okay.
I think it's quite a unique circumstance in munis.
In Australia.
Tenure with the nitrous thinking that ball deep shaft and a great location in a country. That's got international borders closed.
As we look into a hopper and Orange for the next the next project, where we're doing work in all of the work in 2021 is this Grand clearing Road division and using local local car.
Contractors with with some of the the plant coming through in 2022, and you would expect to see.
Under the Covid restrictions lifting so not seeing the same level of cost escalation.
There.
As we're saying quite some unique circumstances.
The scope of the work and the location from Panama.
Okay, well that's good to hear thank you very much for that.
Thanks Tanya.
The next question comes from Anita Soni of CIBC World markets. Please go ahead.
Good morning, everyone. So Tanya asked a similar question to what I was going to ask about grade and then also about Panama and then you answered into the read through on a hassle north but could you just remind me.
What capital we're looking at a half of what the old guidance was.
I think the whole guidance correctly, Eric if I get this wrong, but it's seven to 50 million.
So from a head for the Hopper.
Okay. So we could see a little bit higher but not to the extent that town in Ireland.
I agree.
Yeah, I'd say I'd say, you're looking at a seven to 800 million dollar range for sort of Hopper, we're not saying that besides challenges for that that project scope of Sweden.
At the same time.
Okay. So that leaves me with just one more question, which is the.
The dividend should go back to that.
You said you would assess it every quarter, but you know it.
Probably be sort of like a reassessment on nickel price every six months or so.
Given that were you know slightly under on the $1800 that you're using right now, but also that you have afforded like 40% versus the.
So 40 to 60 per cent framework that you had outlined.
If we remain at 70.
70, 17, 75 level from maybe even 17 50 for the next three months.
How do you think that dividend like would've ball, but there is enough buffer room rate to maintain the 55 that like what's your expectation of what.
What the dividends the accident the act that could be up here should we expect 55 cents for the next three quarters or you know could could you see that being paired back next quarter, we're in quarter three.
Yes.
But the key thing with that dividend framework was too to have stability and predictability with it.
10 years, so we will certainly not looking to have it go up and down on a quarterly basis.
Sitting at the end of the day. So that's a board decision of a day look at the circumstances at the time, but they.
But having those $300 increments.
I'm looking at it every quarter, but really starting to Orient does have a longer time on a semi annual prices fall for lifting or lowering or keeping the dividend side, you showed up and keep a deep to have to go up and down. So we would look back at.
I had an IPO meeting, we'd look back at the gold price over the last six to nine months and make judgments that where it's at.
And where we see the macroeconomics Guy would look at the strength of our balance sheet.
Our ability to to maintain dividend levels. So it's very much looking to have some stability and predictability for our shareholders.
Based upon a long term view of Gulf cost per click or specifically, having to keep moving forward as well as well as that business performance. So yeah absolutely.
Clarity.
1500 gave us a little bit more buffer room, so now that we're sort of.
You know with this little bit of a wobble I just wanted to understand a little bit more you know in finer and finer detail exactly where you were what your thoughts here, but it sounds like it's more you know close to 1800 would be enough to maintain the 1800.
And when we look at the Gulf cost cash flow on the balance sheet as well.
As we make those judgments.
Okay. So you could draw on cash reserves.
Okay. Thank you very much.
Yeah.
Okay.
From conscious.
You'll have another call coming up at the top of the hour so.
Maybe we take one more question on that allow you to get to your to your next call and we can follow up with US we missed out on.
The next question comes from Danielle Sugar Mirror of Bernstein. Please go ahead.
Great. Thank you and one follow up on Australia in inflation. So is it accurate to say that the inflation that you're seeing there maybe on the capex side because of the specific work that you're doing rather than on the opex side.
And just a broader question around crazy that day.
Like I had to know off the old one data.
It's a it's a it's quite you'd make capital that's collection both in terms of the nature of the job at the quite unique contractors, who can sink a shaft and lot of shops.
This dip.
And then when you've got international border restrictions and you'll see that constrained in terms of.
Who are the quality contract, which you can access so that.
That particular scope of work that contractor market is hot it due to COVID-19, we're not saying the cost escalations.
I know operating side, we have long term contracts in place with strategic suppliers.
And Dale a libre two in either which is a important input cost as.
Is it very hill to cycle. So we don't see operating cost as collections.
Great. Thank you that's very clear.
And just secondly on Covid, it's safe for where you were great in South America in Ghana are you engaging with the government on how you guys can help intensive vaccine deployment, whether that's using your own facilities or funding vaccines directly.
Police and local communities and what kind of conversations are you having that.
Yes, so we operate across eight countries around the world.
They are of different sizes.
Rolling FX gains.
And we're engaging with governments in every one of those countries, particularly places like Garda and trip to.
Latin American countries.
You see where we can help and support them in the.
In terms of not only the rollout of the vaccine.
Vegetation around.
The importance of Opex and I should say, yes.
Engagement, it's a continuation of the Engadget with had been all of those governments as we finished that way through the pandemic.
To protect the health of our host communities.
And then share with them they can operate safely.
Between Washington price relationships and discussions that Tom.
With strengthened traded well.
Sure in the last 12 months with extended.
Okay. That's useful thank you.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Tom Palmer for closing remarks.
Thank you operator, my apologies, we couldn't get to all of your questions styles unconscious.
Got it.
Coal to get home a place a place now.
Eric So who was in the queue and we'll be back in touch with you to make sure. We follow up with you all my questions.
Thank you for you Tom and I wish you all my a good rest of the day. Thanks, everyone.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Okay.
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