Q1 2021 Newmont Corporation Earnings Call
Good morning, and welcome the new ball.
The first quarter 2021 earnings call.
All participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star followed by zero.
After todays presentation, there will be an opportunity to ask the question.
Please note this event is being recorded.
I would now like to turn the conference over to Eric Colby, Vice President of Investor Relations.
Please go ahead.
Good morning, and thank you for joining newmont's first quarter of 2021 earnings call today on the call. We have Tom Palmer, President and Chief Executive Officer, Rob Atkinson, Chief operating Officer, and Nancy The Chief Financial Officer, They will be available to answer questions at the end of the call along with other members of the exec.
The team.
Turning to slide two please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website I will turn it over to Tom on slide three.
Thanks, Eric.
Good morning, and thank you all for joining our call.
Before we begin.
I'd like to take a moment to acknowledge the 12 colleagues the way of loss to the COVID-19 pandemic five of this last year.
For each day, we have by belies the fatality investigation team.
And utilize the same methodology, we do for other employee contract the fatalities.
The intent of ancient base, the guy should what's the understand if any of that kind of the critical controls required change.
And ensuring that we learn and share of findings glycolate.
These losses have had a profound impact on the entirety of my family.
And it is with Greg humility that we are reminded that.
But the safety and wellbeing of our workforce.
And the host communities must come above all of us.
Turning to slide four for a summary of the quarterly performance.
The safety and sustainability framework is at the core of how we manage of business.
And I'm proud that newmont continues to lead the industry without ESG practices.
In March we delivered the first if the gold industry with production coming from an autonomous hopefully.
Our investment total this whole trucks, not only improved safety and productivity at boddington.
But also serves as a base case for replication at other operations and projects across the name of the portfolio.
We also entered into a 3 billion dollar sustainability linked revolving credit facility.
One of the first in the mining industry.
By aligning our financial strategies and the ESG performance, we are holding ourselves accountable and demonstrating newmont unwavering commitment to leading ESG practices.
During the first quarter.
The World Class portfolio produced one 5 million ounces of gold and.
317000 gold equivalent ounces from copper silver lead and zinc.
In line with our full year outlook.
Positioning able to Delhi, the stronger performance as expected in the second half of the year.
We generated significant operating cash flow of $841 million and free cash flow of $442 million.
Of which $438 million is attributable to newmont.
And in March we announced the acquisition of J T gold.
Expanding our industry, leading project pipeline to include the total project located in the Holly soda off the Golden Triangle District of British Columbia.
We continue to apply a disciplined approach to our capital allocation priorities and the live up on our commitments.
Yesterday, we declared the first quarter dividend of 55 cents per share.
Stay within our established dividend framework and consistent with our fourth quarter dividend.
Our first quarter dividend demonstrates our confidence in the strength of the business and continued commitment to predictable stable and sustainable shareholder returns.
We might kind of net debt to EBITDA ratio of two times.
And completed the redemption of the 2021 senior notes in April.
Reducing net debt outstanding by $550 million with available cash.
We also continue to invest in and develop a much profitable nature of projects.
Including Panama expansion too.
The Hopper no.
The mining method change, it's the Baker underground and yet of cut yourself thoughts.
Shifting now the safety and have continued focus on fatality prevention on slide five.
More than a year ago newmont by the symbolic charge.
Stepping away from the industry's traditional use of the lagging personal injury rate in our bonus programs.
The images that are focused on managing the critical controls that must be in place at all times to prevent the fatalities.
During the first quarter, we completed 65000 conversations both leaders in the field that we're focused on the east critical controls.
Proactively identifying and managing potential risks the could lead to a fatality.
This is an increase of nearly 60% since last quarter.
And demonstrates our commitment to the preventative pages, we're implementing at newmont.
As another example.
Fatigue has been identified as a critical risk any frequently effect of you know investigations in the potentially fatal events.
The tag is not fading of traditional flow because you know industry.
Typically it has been managed through administrative controls such as training and checklist.
Well of companies have looked to technology at the silver bullet to address the issue.
At an organizational level, we knew we needed to do more.
We needed to make fundamental changes to our roster is stopped times and accommodation to reduce the significant risk exposure.
We have recently completed the construction of new can't facilities as part of that tantamount to expansion.
These facilities were designed to provide the opportunity for quality sleep.
And have greatly reduced the commute times for our team members.
We have also completed upgrades to care facilities that you had the culture escaped the Cerro <expletive> and Miriam.
Ensuring the thank members of the appropriate privacy and accommodation to get proper slate.
As a result of these investments and out of camp facilities alone without well being programs are Randy global portfolio.
We have seen an 80% reduction in fatigue related incidents at the email since 2000 of not tight.
We will continue to make these changes to ensure that our team members can return home safely to their families at the end of the shift of work.
Turning now to our portfolio on slide six.
The money of 12 operating mines and two joint ventures, we.
We have nine world class assets.
Each of which delivered more than 500000 gold equivalent ounces per year.
The all in sustaining costs of less the $900 per ounce.
But the ball and life exceeding 10 years.
Importantly, all of a lot kind of in top tier jurisdictions that we define as countries of classified in the eye and the writings ranges by each of Moody's S&P and Fitch.
Underpinning our asset base.
The industry the largest gold reserves.
Including 94 million ounces of gold and.
And 65 million gold equivalent ounces from all of the meadows.
Our portfolio is also enhanced by the gold industry best exploration pop line of both Greenfield and brownfield opportunities.
Managed through our proven integrated operating model.
One of the benefits of this integration is the we do not reinvent the wheel and duplicate of it.
For example.
With the majority of the exploration activities occurring near existing operations.
We have familiarity not only with the geology and terrain, but also the permitting regulatory and community relationships surrounding each of our operations.
We firmly believe that we had the best portfolio to generate sustainable returns from our World class Responsibly managed assets located in the best gold mining jurisdictions.
Turning to slide seven.
Our portfolio will produce steady gold production of ball and 6 million ounces per year through at least 2030.
Balanced across each of about four regions.
This profile has been further enhanced by the production of more than 1 million gold equivalent ounces.
From silver lead and zinc the parents kicked up.
Copper at Boddington and yet of culture.
Combined we moved the leader nearly 8 million gold equivalent ounces per year full of the next day guide.
The most of any company you know industry.
Moving to slide eight for a look of that project pop line.
Our project pipeline is unmatched in the gold industry.
And it's one of the best in the mining industry.
There is significant value to unlock as we optimize and advance our longer term projects in light of the pathway the steady production and cash flow well into the 20th forties.
As you can see.
In addition to our holiday perspective Gulf projects, we had significant organic ex budge the gold copper porphyry.
<unk> not heavy at the.
Neither of you and your own and Galore Creek.
In fact, if you assume that just one of the three mega projects comes into our production profile at the backend of this decade.
We came off the total production would be around 15% to 20% of Copa.
Providing us a natural exposure to a metal of growing importance for reducing carbon emissions and facilitating the ongoing transition to a new energy economy.
It's also important to note that this pop line does not include the various lay backs that will also extend mine life of that.
Part of compete operations, including of chain safety in the Porcupine.
You will also see the we have added to Tiger two of our project pipeline.
Another exciting Gulf Pupper exit that I'll cover in more detail on slide nine.
In March we announced the acquisition of Jay take out.
The consolidation of the stats it he's a demonstration of the most clear focus on our long term strategy to build a portfolio of world class assets located in the worlds best mining jurisdictions.
Our initial equity investment in J take hold in 2019 was a.
Stepping stone that is.
And I would ask to perform due diligence in the area and guy and considerable insight into the potential of the settle north deposit and to type of property.
We are committed to continue building, a constructive and respectful relationship with the tahltan nation, including the community of the scope.
We understand and acknowledge the Tau tank of St is necessary for advancing the type of project.
And we will partner with the Tahltan nation at all levels and with the government of British Columbia to ensure assured the path forward.
The deposit will be developed as an underground mine with.
With the block cave mining method.
I need. The addition, excess from the valley floor that you can see in this picture will also enable us to reach the ore body relatively quickly.
A very important feature of this project is that the combination of an underground mine and in the ability to leverage the hot dry power infrastructure that's in place today.
Will result in a low carbon intensity operation.
Supporting our industry, leading greenhouse gas reduction targets.
But the tug of project include.
Including the primary settle north deposit.
Has the potential to contribute significant gold and copper of annual production at attractive all in sustaining costs over a long mine life.
In addition to the nine deposits of settle north.
There are further exploration opportunities throw out of the land package.
The acquisition up to tug of ads.
Adds to the most existing interest in this area and builds on our 50% ownership in the Galore Creek project.
The transaction is expected to close in the second quarter and.
And we look forward to providing updates on these highly prospective project in the future.
With that I'll hand, it over to Rob to discuss our operational performance on slide 10.
Thanks, Tom.
Before of stock I'd like to recognize the very significant airports. The continued to be applied at all of our operations and the ore.
The to manage COVID-19 and to keep our teams safe and healthy.
It is important to realize that this time of day may cause some weeks of Brian and these efforts will lead to continued for many months of CCAR.
Turning to slide 11, I'll give an update on the Africa performance.
Our assets in Africa delivered another strong performance in the first quarter.
Achieving maintained its momentum from court of for delivering a strong first quarter I agree and improvements to the middle.
We increased mill efficiency and the overall plant performance during the first quarter.
The improving throughput by 3%, whilst also reducing energy consumption by 4%.
These improvements are driven by food potential projects and are an example of how we continue to find innovative solutions, even if sort of mature operations.
The site is well positioned to deliver solid production throughout the year.
<unk> to reach its highest production and lowest costs during the fourth quarter.
Uh-huh food delivered higher suffers tons nine due to the mine sequencing improvements that resulted in an extra bench being mined in the wants it.
Helping to offset more grade during the first course of them.
We continue to progress the development of our new mining methods at.
Some level of shrinkage, which will increase tonnage improved productivity and reduced mining costs.
The team has commenced stoping ahead of schedule and we completed our first two or blast is.
A major milestone for the project.
As of the some level of shrinkage project progress is June 2021 we expect to see improvements in grade thread the.
And of 50% increase in the works on the signing by the fourth quarter.
In addition, we expect to reach higher ore grades from the open pit operations in the second half of the year positioning of hassle to deliver a very strong finish 2021.
Yeah.
Finally, we.
We continue to advance the permitting process with the Gyn and E P.
I'm pleased to announce that we've completed the environmental impact study of paid the invoice for the impairment this month, putting us on track for the funds decision in July of this year after the receipt of the children's content.
All other aspects of this project are proceeding well.
Turning to set the America on slide 12.
Both of America as being the reach of most impacted by the virus and we continue to see the most significant impact in Argentina and Peru.
We remain focused on the safety protocols to protect the health and well being of our workforce and communities as we continue to mitigate the impacts of travel restrictions caused by the virus.
We do expect impacts due to COVID-19 to continue for some time until vaccinations of available and being administered of large quantities.
Meredith was the best performing assets in South America.
Heavy rainfall during the first quarter, which impacted the productivity in the mine the.
Team continued to utilize the north blending strategy to optimize no performance, resulting in the increase tons of process, whilst maintaining stable grades.
As the year progresses, Meredith will transition from soft of separately the harder ore, which will result in higher production through improved grades, but will be partially offset by lower mill throughput.
At Cerro <expletive> V has continued to work closely with government representatives and the other key stakeholders as we manage our operations through the evolving pandemic.
As we reviewed the number of COVID-19 cases in the country.
And the increase in case numbers out of our own site. We made the decision to temporarily suspend operations from five days of January and seven days in March to reduce the spread of the virus.
All of these decisions impact first quarter production, the health and safety of our workforce remains of our first priority.
And despite the stoppages during the course of them, we've been able to resume of developments at San Marcos and made good progress on the tailing storage facilities expansion.
Instead of the <expletive> continues to focus on safely ramping up safety activities, increasing cash capacity and appointing a new dedicated team to optimize the important and complex shift changes.
That of course has also experienced significant challenges due to COVID-19 and due to the pandemic productivity will likely be impacted throughout the year.
Despite the challenges from the virus and of course, you delivered higher grade material mined from the catch of main cabin fever pitch.
These tons were placed on the leach pads during the course of one which we expect the results in high production in the future quarters.
In February we decommissioned the oxide mill and complete the duct transitioned to leach on the operations as planned ahead of the development of the anecdotes of sulfate, which will extend the attic, which has operations well beyond 'twenty bought it.
We continue to advance the sulfides project and are currently working through our internal peer reviewed process in preparation for full funds approval later in the second half of 2021.
Yeah and of course is a world class asset newmont portfolio with significant part of the prospect Timothy.
And we look forward to bringing you. This next chapter of coaches long history of <unk>.
Total production.
Turning to North America slight the ft.
Dennis ketone delivered another strong performance and achieved record core product sales of nearly 300000 gold equivalent ounces in the first quarter due to higher grades and recoveries.
The site also set the new monthly record for concentrate transport and shipping loading and sell into over 125000 tons in March.
The potential continues to deliver improvements to our mining of mill performance at Penske Zone and as an example, we've increased the average payable for a whole trucks by 17 tons from all.
This translates to an additional 12 million tons of smooth per year for next to zero cost an increase of over 6%.
The site is well positioned to remain a strong performer throughout 2021 and is also currently exploring our extensive land package of future development opportunities.
G C N V delivered lower grade.
The east geochemistry challenges during the first quarter and as a result, all of that was planned to be mill was redirected to the leach pads.
Great improvements are expected during the second half of the year, helping to offset the challenges experienced this quarter.
At Musselwhite, we continues to closely monitor of the impacts from COVID-19 in Ontario, and have made the decision to temporarily suspend operations from five days in April to reduce the spread of the virus.
Despite the impacts from COVID-19, which drove changes to the planned mining sequence.
Great and ore tonnes mine continued to improve over the prior quarter.
We are also continuing our full potential work at musselwhite with the largest focus on increasing development base and driving productivity as the year progresses.
The Porcupine ongoing ground control rehabilitation of the Hoyle pond, the underground mine, coupled with mill and the equipment maintenance has resulted in more tonnes mined and of course states during the quarter.
We have begun the implementation of our full potential program of Porcupine, which will deliver efficiency improvements in the second half of the year.
And we know of continues to the strong improvements to the performance and productivity increasing underground development rates to an average of over 40 meters per day by the end of the first quarter. This isn't the improvement of 25% from 2020.
In addition, the site is poised tele remote mucking equipment for the first time, increasing tons of mining efficiencies out of the safety of our workforce.
Or will continue to be of stable contributor during 2021, as we expect it to deliver steady production increases from higher tonnes mined and processed the VA.
It's also important to note that the sites is making good progress in the fight against COVID-19.
I'm pleased to report that 70% of Eleonore workforce has been vaccinated so ball.
Turning to Australia on slide 14.
And of the mine delivered a consistent performance despite the heavy rainfall.
<unk> the ore tonnes mined during the course of.
For the rest of 2021, we will continue to monitor the impacts of COVID-19 on the northern territory due to the potential closure of of state and territory borders, but we expect that production will steadily increase the screen it improves throughout the year.
In addition, the team continues to advance 10 of mine expansion to supporting the site futures of long life low cost and very efficient producer.
We recently completed construction of the kind of facilities and the excavation of the upper section of the production shaft.
Putting us on track to deliver significant cost and efficiency improvements in the first half of 2024.
At Boddington, we delivered a solid quarter in line with our expectations and full year guidance.
Brian maintenance was completed during the first quarter, ensuring the plant continues to perform at high levels.
As we head into the second half of the year as highlighted in our previous guidance, we expect to achieve five of grades improved throughput and increase the ore tonnes mined juicy of efficiencies from the autonomous haulage and improved mill processing.
As you can see in the picture, we are well on our ways of operating the world's first open pit goldmine within the tone of his truck fleet and I will provide more details of the project slide 50.
I'm pleased to announce the first floating to the H S old trucks went live at the box of this year and we have successfully started the first phase of our transition from fully autonomous haulage fleet, which will improve safety and extend mine life of one of our core assets.
Today, we are operating four trucks hauling the ore from stockpiles to the crusher and the four additional trucks completion of the final testing.
We expect to expand the use of autonomous units in the pit during the second quarter deploying the entire fleet of 56 trucks by the end of September.
As a reminder of the Hs project was approved in February of 2020, meaning the project was planned.
The structure.
And you're able to achieve first production in just over a year.
Being on track to deliver this project on time and on budget will be a huge accomplishment, especially during a global pandemic I'd.
And I'd like to thank our team at Boddington and our partners at caterpillar, including their dealership west strike of the room.
Ongoing dedication and drive during such an unprecedented time.
We have received very strong support from caterpillar threat of the project and we look forward to working together on the future endeavors.
In addition to the exceptional deliberated. This project we have already seen strong performance over the last month from these machines.
And the operating team the.
Fleet has been running nonstop since going live and been barge.
Eliminating stoppages from shift changes beyond the toilet breaks the cheek race, which increases productivity.
And the already the new vehicles have reached the unfortunately, the milestone moving over 1 million tons and less of six weeks.
It's also worth noting the significant productivity improvements that we will achieve with this fleet will also translate into lower fuel cost and consumption, reducing our carbon emissions at boddington and supporting the newmont's claimant initiatives.
But most importantly, the use of these autonomous trucks reduces the exposure of our workforce has the potential vehicle interactions, helping us to further reduce fatality risks and to ensure that our team members. The return home safely at the end of the of shifts at work.
The implementation of the industry's first of the telling them. The solids fleet will be a major milestone from newmont in the gold industry as a whole.
We will look to replicate this technology training and the experience all the sites around the globe leveraging our team of experts and the lessons that would allow us reported.
And we will also look to integrate further autonomous solutions both of the future of open pit and underground mining as we plan undeveloped assets in our project pipeline, ensuring that these important improvements to safety and productivity of applause.
Many of the across the global business.
And with that I'll hand, it over to Nancy on Slide 16.
Thanks, Rob.
Turning to slide 17 from the financial highlights.
During the first quarter Newmont delivered solid results with $2 $9 billion in revenue an increase of nearly $300 million from the prior year quarter, driven by higher metal prices.
Adjusted net income of $594 million or <unk> 74 cents per diluted share.
Adjusted EBITDA of nearly $1 $5 billion, an increase of 30% from the prior year quarter.
And strong free cash flow of $442 million, which includes unfavorable working capital changes of over $325 million in the first quarter, primarily driven by nearly $400 million of tax payments attributable to 2020.
We declared a first quarter of dividend of 75 cents per share or $2 20 per share on an annualized basis.
Demonstrating our continued commitment to sustainable returns and consistent with our fourth quarter dividend.
Our dividend puts newmont in the top quartile of the S&P large cap dividend payers and provide the yield of approximately three 5% on our current share price.
Turning to slide 18 for a review of our adjusted earnings per share in more detail.
First quarter GAAP net income from continuing operations was $538 million or 67 cents per share.
Adjustments include a 14th related to the unrealized mark to market losses on equity investments measured as of March 31st.
<unk>, primarily related to our sale of our interest in <unk>, which closed in January of this year.
One related to reclamation and remediation adjustments at historical mining sites.
And three cents related to tax adjustments and valuation of allowance.
Taking these adjustments into account we reported first quarter adjusted net income of 74 cents per diluted share an increase of 34 cents over the prior year quarter.
One of difference from 2020 that we'd like to point out is that of adjustments to net income do not include $21 million of incremental COVID-19 costs.
Adjusting for these costs what have resulted in two sense of additional net income in the first quarter and we expect these costs to continue throughout the year ethylene protect against the impacts of the pandemic and our operational sites.
Turning now to slide 19.
Using a conservative 1200 dollar gold price assumption newmont expects to generate $3 $5 billion of free cash flow over a five year period.
In addition for every 100 dollar increase in gold prices at all of our base assumption Newmont delivers $400 million of incremental attributable free cash flow per year.
Newmont is the only company in the gold mining industry and with the ability to generate these levels of attributable free cash flow.
The bling asked to maintain flexibility in our balance sheet for debt repayments and opportunistic M&A. In addition to providing industry leading shareholder returns.
Turning to slide 20 for more details about our dividend.
Our dividend framework provides shareholders with a stable base annualized dividend of $1 per share at the 1200 dollar gold price along with the potential to receive 40% to 60% of the incremental attributable free cash flow generated of gold prices above our plan.
This range provides newmont with the flexibility to maintain a stable and consistent dividend payout, even when there are fluctuations in gold price.
We will continue to review our dividend each quarter with management and our board evaluating gold prices of Newmont projected performance semi annually to give us maximum flexibility in determining our dividend within the framework.
The first quarter dividend declared yesterday was consistent with our fourth quarter dividend calibrated at an 1800 dollar gold price assumption and a conservative at 40% distribution of incremental free cash flow.
Our dividend framework continues to be our primary vehicle for returning cash to our investors and newmont continues to lead the industry and shareholder return.
Wondering $4 57 per share through dividends and share buybacks since 2019.
Turning to slide 21.
We continue to drive the business with a clear capital allocation priorities, which include reinvesting in our business through disciplined investments in exploration and organic growth projects.
Returning cash to shareholders and maintaining our financial strength and flexibility.
During the first quarter, we delivered on each of these priorities with our investment in the first autonomous haulage fleet in the gold mining industry and proving the safety and productivity at Boddington progressing our profitable reinvestment in the business at the Panama expansion and advancing of Hoffman of art and the anecdote yourself by it.
Announcing the acquisition of G take hold.
Maintaining our industry, leading dividend of $2 20 per share on an annualized basis and announcing a new $1 billion share buyback program.
We chose not to repurchase shares during the first quarter and continue to monitor our properties maintaining of net debt to EBITDA ratio of 0.2 times and completing the redemption of our 2021 senior notes in April.
Reducing our debt outstanding by $550 million with available cash.
And maintaining financial flexibility with the completion of of $3 billion sustainability linked revolving credit facility one of the first in our industry and the demonstration of our commitment to leading ESG practices.
Under the new facility the company will incur pricing adjustments on drawn balances based on sustainability performance criteria measured through ratings published by MSCI and S&P global aligning our financial strategies and our ESG performance.
As we look ahead to the second quarter, we are confident in our ability to continue delivering strong results and free cash flow to maintain our disciplined approach to capital allocation.
With that I'll hand, it back to Tom on Slide 22.
Thanks, Nancy turning to slide 23.
Newmont continues to be the world's leading gold company.
And I am confident that our world class portfolio and robust project pipeline.
We have positioned newmont to deliver on our commitment.
Of creating value and improving lives through sustainable and responsible mining.
With that I will.
Turn it over the operator and open the line for questions.
We will now begin the question and answer session.
I ask the 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.
Yeah.
And the first question will come from Fahad Tariq of Credit Suisse. Please go ahead.
Good morning, Thanks for taking my two questions. The first it sounds like across the portfolio of consistent theme is second half weighted production, but I'm trying to figure out how much of that is sequencing and great group in and how much of it of some of the South American COVID-19 issue that you mentioned and then also the musselwhite.
But issue that you mentioned so any color there would be helpful. If the grades versus kind of COVID-19 impact in the first half.
Thanks for the hi, good morning.
This is the the needle movers in our portfolio of half by voting to the pit of scale kind of skewed on the gold production is pretty flat through the the 12 months roughly 50 50 of those type of second half whats kind of really move the dog in the second half is.
The <unk> sequencing of great, but the baltics and in the Hopper so of Boddington with line.
Line back the fifth buyback of the south pit of floating to Napa three of the Ips in the second half we get access to the high grade gold copper and the benefit of the total the total which will be fully implemented by the <unk>.
Second half so you'll see that the flow through in the in the second half as we get to the call like right and at the half of the combination of the the new one.
On the Grand Monty method, sublingual shrinkage will bring three of them or volume.
Any proof, Brian and then you've got it right from the Baker of computers will so it's largely bought the secrets of Greg Griffin and.
The three operations of really move to deliver on the second half performance.
Okay, Great that's clear.
My second question there was of media article this morning talking about the G T called the toga.
The project them.
The local indigenous groups perhaps.
Uh huh.
No not really being open to.
The project maybe talk about the.
The approach there are more specifics than like historically, what libre has had the newmont used to kind of get that Brian. Thanks.
It takes the heart of our relationship with the Tahltan officially started civil of used gun with the with our.
<unk> of 50% of the Galore Creek project.
Part of British Columbia, So we had established relationships that we'd look to grow and build on with the with all of them will representatives at the top 10, I shouldn't and when you look back at our long history.
Of social responsibility. It is very much founded on building those relationships.
Understanding issues of concerns and how we can work together.
We fully we fully understand we fully acknowledge that we will need to el pen can sake.
To advance the project and we will be endeavoring to work with them respectfully.
And engage with the relationship with those various communities to fund eye shade pathway forward.
And that is very much the approach that the demos types with EBITDA with working from home.
Okay. Thank you.
Thanks, Tom.
The next question comes from Tyler Langton of Jpmorgan. Please go ahead.
Yeah. Good morning, Thanks for taking my question I.
I guess just to start with.
Rooney and of course, I guess there seems.
Yeah, potentially some sort of increasing political risk there I guess I mean, you're you're asking some time before of full funds decision, but I guess do those developments kind of give you any pause in the can also just remind us.
Can you give any sort of stability agreements when it comes to sort of taxes and royalties are sort of where other reits.
Thanks, Tom and good morning the.
With an operating in Peru with the.
The 30 years with thing.
Basically we're in Peru before democracy was was in place and so we've lifted work through what's been a colorful day.
<unk> improves.
Our history and this is just another chapter in that the journey. So we will monitor the presidential elections carefully and how that how the how the Congress.
Hopefully the new president of work together.
We have a very successful 30 years in Peru, when we see.
Think about making investments like the end of coaches so far as we think about making the.
<unk>, which grew four project, but so far it is literally for decades with the quality of the sulfide deposits.
Around the cut your property. So we look at we're looking to understand the debates coming up in the next months of them too.
That'll factor into out al.
The process of internal discussions with our board of that joint venture partners.
And then ultimately I look forward to being out of the Michael Foods lots decision on to the grid. So far it seems to have that delivering great returns for the market shareholders and the community at around kind of market for a long long topical.
Okay. That's helpful and then.
Switching to kind of skewed of I guess sort of production you know kind of did you know quite well in the quarter on both the use of cash costs.
And all in sustaining costs were you know sort of a decent amount below sort of the annual Guy can you just kind of remind us.
Your expectations for that mine for the year and kind of what the kind of expect them.
In the following quarters.
The market.
To provide some color on that it's pretty it's pretty steady performance and we certainly look at it the poly metallic moment. So we certainly look at developing that mine and managing all the devices of the format of sort of its producing.
But it's steady pretty steady performance through the year of rope, if you want to provide a bit more color Tom.
Yeah. Thanks, Tyler I'd really just back up what Tom said is that you know it the best way to describe the Miskito US is steady performance are the you know where we get a good gold one quarter, where you go into other elements on the.
All of the quarter, but the key thing of the pain of Schizo was the mill is performing well. The mine is performing well the team is performing well and managing COVID-19 as well as possible in the country, which has suffered huge impact students of the pandemic, but it really is going to be a very steady, but a successful year of kind of schedule.
Okay perfect. Thanks, so much.
Thanks, Tom.
The next question comes from Josh Wolfson of RBC. Please go ahead.
Thanks.
So for the 2020 outlook are the comments I guess is is that there's the assumption of no major COVID-19 interruptions.
You know the the commentary on the call earlier was such that there is just there's obviously a higher degree of interruptions in South America, and then and then.
Brief stoppage I guess at Musselwhite.
How would sort of those interruptions compare it to some of the the cabinets within guidance.
Thanks, Josh and good morning.
I think we've certainly seen that.
The number of impacts it but at the end of culture in the Cerro <expletive> and that's.
It's the real in Argentina of cross sell of a portfolio of like countries. The way, we're seeing the greatest impact from from kind of the we get better and better and better at managing al how protocols of mentioned at Cerro <expletive> I've noted it did it kind of thing managing shift changes, which is of very very complex processes. Not just played out and then how are you doing.
Oh, yeah, the screening and monitoring and ensuring that you're bringing up the workforce.
For the sheets that but of course.
Cure the virus in quarantine if we do have the other case, so it's really monitoring those two operations makes the cause.
For the countries is still struggling with the virus, but we've got very very good protocols in place throughout that country.
The the United States Fortunately is.
He is starting to really turn the tide, you've seen the rates of events in Ontario, and confident that the Canadian government will look Chris because.
True, Australia, and Ghana was saying that the.
David kind of managed very very well. So I think we're still going to do day to be have a corn economies and the continuing to my time with discipline around the protocols. It's.
His vaccines become available encouraging our workforce to type of vaccines supporting the government's really came from all of that out. So that we can have an improving trimmed out of the time so.
Well I I believe we've got the the protocols and the discipline in place to be able to manage our cash.
All of it and nine kind of go on through the course of the issue.
Great. Thank you and then just maybe a question on some of the trends we're seeing we've seen commentary at least from from maybe not as much of the gold sector, but other resource companies about labor tightness in certain regions, and then obviously with higher commodity prices globally.
Is there any commentary you can provide on what trends youre seeing across the portfolio on on labor and costs.
Thanks, Josh.
Monitoring that closely life line.
The costs make up about 50% of the cost base.
If I can please contracted services.
We include an assumption for a library of escalation in our budgets and then we fly that through the way I got it. So we've got some provision for that the key indicator leading into kind of our look for.
The saying.
Seeing whether we might be seeing some wage Chris Schott These voluntary attrition.
It's tricky hilty across their business.
In some ways out of our response to the pandemic and the fact that we chose and we continue to choose to manage the health and safety of our workforce Michael communities by the everything else has served us well in terms of the support that we have from from our workforce.
The the areas that ought to be monitoring more closely.
On the labor risk of liver Escalations of Australia pretty football in all market, because you say Oh I know crosses the hip.
And all the Hong Kong of wished Australia and government studies that is locking borders and encouraging the workforce to come from within that state, which puts pressure zone from.
On the the supply of labor.
We're very we're very fortunate we've got very robust.
Workplaces of both boddington and turn them on.
Good leadership Hill.
Of the levels of the accretion and projects like autonomous haulage, just mitigate agree significantly where.
When your truck fleet.
And our lives of course with truck fleet is one of the greatest source of the the bladder.
Monetary occasionally.
But the voluntary attrition numbers of leading indicators to a pretty healthy across the business.
Great. Thank you very much.
Thanks, John.
Our next question comes from Greg Barnes of TD Securities. Please go ahead.
Yes. Thank you Tom I guess is of the higher level question, but when I look at your portfolio of Mega projects that you called them out of the wrong.
Pretty striking how much coffers, there and you said you could see yourself getting the 20% copper exposure of at the time is that a conscious decision of the longer term to diversify.
The production base somewhat.
Or is it a function of the projects that are available to you that look attractive to you you are at the airport.
We liked the toga.
Yeah. Thanks, Greg.
Still very much of a clear focus on when the gold is is the core of our business.
But organically your way of saying that as you look for the best gold projects. They come with particularly when you look at Al will class definition and look for those long life.
The projects and you look for those projects in the jurisdictions with the pay to working they come with come with copper. So it's more of an organic benefit from that please focus on the Russell as projects in the rocky restrictions so the.
Tiger project has some lost coupled with at the end of Concho has some non coupled with the and several of those mega projects, particularly.
But you could go on at the Little Creek bring with them.
So the NAS Copa so it's more of a an added benefit.
And as we say, it's going to come out of the North Tom with the we'll go through the energy transition.
And just on the toga when I look at the acquisition price and if I assume you use 1200 adult alongside of gold that would've been applied a.
Pretty healthy long term copper price how did you approach the acquisition price of the G T.
Brian It's a good Eric sitting opposite many of whose.
There is shipping at that one through so one of them they get Eric just to give you a bit of color on that Greg Greg.
Obviously, we will look at multiple price scenarios, the 1200 would've been one of them our base copper price.
At the time I think it was $2 75, obviously that the copper price and the outlook is quite strong. So we didn't have a single case that we've looked at is as you pointed out there's a fair bit of copper theres, a fair bit of gold. So it's really the interplay of of the the two metals across different scenarios.
As we've I think highlighted we see potential for to Tokyo to be of World class asset for us and that means the long life pretty significant production at good cost Tom pointed out on the call. The the geometry is pretty attractive to an efficient block cave and so all of that was was attractive.
To us when when making the acquisition.
Okay, great. Thank you.
Thanks, Greg.
The next question comes from Tanya Jackie Scott of Scotia Bank. Please go ahead.
Hi, good morning, everyone and congratulations on the tax that top boddington I loved the collar.
See them one day.
Just wanted to have a few questions if I could.
Wanted to follow up on.
Josh question on inflation.
You talked about the warrant for some Tom in terms of watching.
Movement that can you talk a little bit about if youre seeing any inflation in your capital our costs from steel and other materials. Please thank you.
Thank you Tanya and good morning.
So materials and energy.
Flight of makes up 50% of it feels that energy is the next 30% to 40%.
And again, we we labor channel global portfolio to enter into long term contracts.
And strategic relationships with suppliers, so that goes a long way to mitigating the impacts of nature of inflation, where we've got rajan full built into those contracts and stability filter very important part of of the Newmont story of the strength of L. L.
Our portfolio and how we look to run that business.
We are seeing.
Some pressure on the <unk> generally moran grinding media, the watching carefully and some pressure on Friday.
Particularly as you see the the the amount of concentrates that we moved out of.
That's the kind of scared us sort of watching those carefully.
In terms of capital projects.
Tom.
The.
We've already accounted for a lot of that in terms of the Panama the expansion and the and the move to Australia in steel. So that's that's been taken up in previous updates to go at it because we're moving to a hotline north.
A lot of the work for the once we get the full funds approval for the next 12 to 18 months he the earthworks.
And as of the Civil works before you start to bring you stew. So.
We're confident that with the estimates that we've got but will bring forward from food pharmacy. So it's going to account for any any of it.
Escalation around steel and similarly is as.
As we start to the button up piano coaches so far as go throw in total peer reviews and all of them to bring that forward from full funds, we're including in our estimates any of the contingencies.
Estimates for we are still might move sort of.
We do it we do anticipate there will be some pressure on steel for the capital projects and making sure we account for that.
The budgets that we put the full funds of peripheral.
Okay and nothing in cyanide at all Youre, not seeing any any any inflation pressures there.
No the tenure.
Okay.
Okay got it thanks for that and I guess, just the continuation on the themes that I keep asking maybe just an update on any changes.
Changes of royalties taxation in any jurisdictions that you operate in that you're hearing of them, including the U S.
No no. It's all it's all of minutes.
It's a big picture of our strategies, where we choose to we choose to have that of operations that brings with it a lot of stability around kind of envision.
Non agreements, whether it twice of royalty rights of doing so.
We're not seeing any pressure on that front across the jurisdictions.
Okay and then just my last question before I hand, it all makes of someone else's.
Just wanted to make sure that Tom you know the.
The guidance that you provided with the Q4 release, which was that production with any of the 47, 48% expected in the first half of $52 53 in the second half still is intact.
The days outside of local board of 47 in the first half and 53 in the second half.
It's going to be dominated by a half flow and boddington, reaching breaching the grant of volumes and high grade. So as you move through the third quarter into the fourth in the second half so.
What sort of factor in 47 53.
And if I could squeeze just one more and just that I was intrigued about the vaccination 70% of eleonore.
Just maybe if you could share of any other mines that you have where you have you know you of vaccination of COVID-19 is actually very well I didn't hear anything about Africa. So just wondering if you could share just a bit more color on that.
The short tenure so we.
We are certainly encouraging the rollout of <unk> in Ontario.
And I'm sure you already living net experience right now.
So it's doing what we can do to support the rollout for Ya and muscle of pork upon operations Cripple Creek and Victor.
Suddenly say the rollout, Colorado, we've been setting up clinics for.
Reported and their families and continue to do that and provide access to vaccines and lots of education of encouragement around the.
The efficacy of this vaccine.
Three of Peru, Argentina.
In Mexico, Suriname much longer rugged hub.
So we must of my time, thus protocols vaccines will come and will support but we work on the expectation that still many many months of.
The strike did to get their act together.
And get the back of sites rolled up.
And look forward of that that increasing the tonne. So.
The one one we can drop those of you just type orders sort of that are impacting on mining operations in the not the top international borders to allow allow them to the country to back up again and in Ghana, I think the way starting to see some some some rollout of exiting some clinics already at Epsilon and gotten the stuff of getting lucky to work with the Ghanaian government for the rollout it's going to be a long process.
Yes.
The 10 year I think before before the world is fully vaccinated. So I think we've got to be ready with blockchain regime, social distancing and bus for a long time the comedy of operations.
Okay. Thank you so much.
Thank you.
The next question comes from Mike. Your line is bank of America. Please go ahead.
Oh, Hi, Tom are currently I think the goal workout eleonore to get vaccinated and here in Canada.
Just following along on Greg's question with your three big copper gold projects.
A number of <unk>.
<unk> with both the gold copper projects.
The copper gold project got Mark counts of 1 billion plus just wondering how does newmont surface value in these projects I don't know much on the other.
Union No child, Greg tell our Galore Creek or much of in your share price correct me if I'm wrong, just wondering what steps you could take.
Thanks.
Yes, Thanks, Mark and good morning, what we're working on the in.
In the same way that we did an exploration of webcast early this year and we'll we'll certainly look to do in ESG webcast on tobacco fail in the U S sustainability report.
In the coming months, we are working on providing some more detail that might be doing side through another webcast. We can have a little bit more Tom but provide some some details and color on those projects as well as some of the other projects that of the city now organic project top line so that the.
This is the we can lift the level of understanding from the appreciation that we have both of those projects and how we can sequence of the beam and why we are confident about.
About half the business side of the five of the mixed several decades.
On Sunday, we took 100.
And we've got a we've got through out of organic project top line and ability to see Willie New index century. So we're excited about it and I think that's an opportunity for us to to provide the investment community with some more details of that.
Okay, Thanks, and happy birthday.
Excellent.
The blow out of candle Floyd.
The next question comes from Anita Soni of CIBC. Please go ahead.
Hi, good morning, everyone. So firstly I want to commend you guys on the on your initiatives to reduce Greg around the Keith I know that that is actually a real risk the what maybe leave engineering of about 18 years ago, and probably after I left them.
Someone died at that to you because the work back to that yet so.
And then John that but related to that question could you could you give us.
Idea of theirs.
Any kind of cost that we should expect associated with those kinds of of shifts.
Okay.
The things takes the nadir and good morning, the I mean, the last thing of incorporated into our guidance throughout the sustaining capital and in some instances with 10 of my expansion to what's in the pit and the development capital.
But it's part of the size of plans too.
The build to build additional facilities yet of cut yourself thoughts we'll have included the discussed.
In fact, it probably some early lead time items.
Additional facilities to allow people to have their own route and they're on the run.
Debt.
So it's it's the culminated within the $1 a year of the sustaining capital.
And the the $6 million to $800 million in average of the development capital.
So that's it's not big money in the overall scheme of things, it's about having the intent and the will to do something in this price.
In terms of productivity improvements around the start and finish times and ensuring the fatigue breaks the length of the ships number of consecutive shifts the length of Tom and southern from work.
In my experience.
You have that payback in dividends, many times out of the but getting the right level of risk amongst your workforce.
The productive productively with the <unk>.
So the the things we're doing around roster of stopped Toms and the like will improve the productivity over Tom It's my expectation rather than the cost of the business.
Okay.
Second question, a little bit more of in the detail on Cerro <expletive> the grades went down a little bit I'm. Just wondering how we can expect that to play out over the course of the year and what was the reason I mean are you using stockpiles right now and then you'll return.
You can get I guess, the mining rates up from direct access is my guess I just don't know I don't have the color on that.
Thanks day, they'll get the rope to take that question of what yeah, Hi, Anita very fairly straightforward.
Because of COVID-19 because of the absence of as you know the production from our higher grade stopes at the Marianas Norte Terry.
In Eureka, where ball.
Limited because of the lack of development. So it's purely of sequencing due to lack of employees, but those of the areas that we're most focused on and are in all of the workforces back working.
True rates so hopefully.
Months, you will see that turning around but it was just a timing issue due to a lack of employees.
And then lastly of more of a big.
I think to your question perhaps from.
Oh for Nancy.
Just looking at your your dividend payout ratio and.
And that we're currently spending slightly below but you do have a good eye on.
The gold price, but do you have a good cash balance can you give us an idea.
That's what we're thinking about downside risk on gold price you know.
How does how do you how do you play like the sort of play with the cash balance that you have I noticed for the.
The prior to the gold prices at the sort of sitting around 3 billion as the as the cash balance you wanted would you would you think about sort.
Sort of.
Where do you think that cash balance as needed.
At school price debt.
First the same period.
Good day.
Yeah, Yeah. Thanks for the question Yeah, We've said in prior times that out of 1200 dollar gold price.
Wed like to keep around of two and a half to $3 billion cash balance.
We're certainly carrying significantly more than that today, but I do think that's a testament to a couple of things one is our ability to be very nimble with the dividend and there's like we provided the very very clear framework and a lot of transparency about the optionality between the 40 and 60%. So there is some kind of gray.
Great points about that and then the other piece is we are still at the time of very much uncertainty around COVID-19 and we also have a lot of development capital. So I think hearing considerably higher balances the not at today's gold price as it is the great strategy for us that's certainly a lot of optionality and flexibility around the balances which is what we've consistently stated.
And the data might be the to build on that.
Look without ball with that guy of AR.
The long period of time, and petco of prices and the cash flow actually generated.
That's factored into our decision to step up and calibrated the ICT 100 build of Mark and under returned 14, 40% of that cash so.
The stability and.
And sustainability of dividend this is very robust.
So we didn't make that decision to go to the ICT 100 build of Mark likely.
And our expectation would be when we look forward of their portfolio of an outperformance that we can we can sustain.
Thus labels for some time.
And just lastly, I know it does say in your disclosure about it does already include your free cash flow projections include the harpoon north and yeah of the coach of sulfides and John just wanted to confirm that that Tom any lumpiness from those are in the high.
But also being included within that 1800 dollar according to the 16th.
Got it.
Thank you for the discussion there.
Thank you very much.
Thanks.
It takes the data.
I think that's the end of the questions that we could see in the Q and I'm conscious with going off the top of the hour. So thank you all for your time.
Plays in a number of few of.
Average or entre of I don't fear at the moment and lots of extended Lockdown plays everyone's side by side of the World and we look forward to Sydney and when speaking to your sort of thanks, everyone.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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