Q3 2021 Newmont Corporation Earnings Call
Good morning, and welcome to Newmont's third quarter 2021 earnings call all participants will be in listen only mode.
You need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
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 Tom Palmer, President and Chief Executive Officer. Please go ahead.
Good morning, and thank you for joining <unk> third quarter 2021 earnings call.
I am joined by Rob Atkinson, and 90 basis, along with other members of our executive team.
We will be available to answer questions at the end of the call.
Before I begin please note that a cautionary statement and refer to our SEC filings, which can be found on our website.
Do you want to elaborate on a challenging third quarter.
Alrighty strong free cash flow continuing to provide industry, leading shareholder returns.
Vesting in profitable projects, including our lightest hot side door, which was approved by our board in July.
This quarterly performance was achieved even as we continue to manage through the evolving complexities of the global pandemic and we remain committed to protecting the health and wellbeing of our workforce and local communities.
Throughout the body picked up we are continuing to see the non health related challenges caused by the pandemic.
<unk> labor shortages rising input costs and supply chain disruptions.
As the industry leader Newmont is well positioned to respond to these challenges by leveraging our proven operating model and balanced global portfolio to deliver.
Long term value from a responsibly managed assets.
Turning to our quarterly results, let's take a look at the highlights.
During the third quarter <unk> produced $1 4 million ounces of gold and 315000 gold equivalent ounces from copper silver latency.
We generated operating cash flow of $1 1 billion.
Strong free cash flow of $735 million.
Of which $715 million is attributable to newmont.
Supported by our clear strategic focus we continue to apply a disciplined and balanced approach to our capital allocation priorities.
With seven $6 billion in total liquidity, we have sustained our net debt to EBITDA ratio of two times, maintaining our financial flexibility, whilst we continue to reinvest in our business and return cash to our shareholders.
Earlier this month, we announced the transition to a fully autonomous haulage fleet at Boddington.
Important milestones for both newmont in the gold industry as a whole.
Our fleet of 36 trucks with improved safety and productivity at this cornerstone asset.
We also continued to invest in and develop our most profitable near term projects.
<unk> expansion to the highest I know.
The change to a more productive underground mining method at a hub myself and yet our coaches sulfides.
This quarter, we completed nearly $100 million of opportunistic share repurchases at an average price of $56 per share.
And we declared a third quarter dividend of 55 cents per share, resulting in a dividend yield of over 4%.
12 months ago, we announced our industry leading dividend framework.
<unk>, a clear pathway to stable and predictable returns.
Over the last four quarters <unk> has returned more than $2 billion to shareholders through dividends and share buybacks.
Demonstrating our confidence in the long term value of our business and our ability to maintain financial flexibility while steadily reinvesting in our operations.
At the moment, we have created a robust and diverse portfolio of operations and projects around the globe.
And we believe that way, we choose to operate matters.
Among our 12 operating mines and two joint ventures over 90% of our attributable gold production is from top tier jurisdictions, which we define as countries classified in the a and b ratings ranges by each of Moody's S&P and Fitch.
Underpinning our asset base is the gold industry based organic project pipeline.
With Greenfield and brownfield opportunities.
Managed through our integrated operating model with a proven track record of delivering value to all of our stakeholders.
Newmont has been kind and unmatched and industry leading project pipeline.
The pathway to steady production and cash flow well into the 2040.
Every one of our operations has near mine exploration opportunities that can leverage our existing infrastructure and extend mine life.
With the stability and depth of our brownfield portfolio, we are able to explore in some of the most prospective greenfield districts in the world in a disciplined and deliberate way.
This quarter, we continued to advance our major projects, including our second expansion at Panama, and Australia as Northern territory.
Through the development of a one six kilometers a day production shaft and supporting infrastructure. This project supports the thoughts future at the long life and low cost producer, while providing a platform to further explore a prolific mineral endowment in the Panama District.
Okay.
The development of a hearth I know approved in July this project expands our existing footprint in Ghana.
Adding more than 3 million ounces of gold production.
An initial 10 year mine life.
And the other coaches sulfides project.
This will extend mine life at this cornerstone asset for decades to come.
Newmont remains committed to the <unk> sulfides project, and we will be investing at least half a billion dollars through 2022 to advance critical path activities, including detailed engineering long lead procurement earthworks and the installation of accommodation facilities for the construction workforce.
As previously announced given the current status of the pandemic in Peru, and the potential for more contagious variance we have extended a full funds decision for the sulfides project to the second half of 2022.
The progress of the project as the pandemic allowed us.
Two weeks ago, I had the opportunity to visit Peru, and engage with government leaders and other key stakeholders to talk about our sites and mutually beneficial path forward.
I was encouraged by these interactions and look forward to this next chapter in <unk> long and profitable history.
The global pandemic has and will continue to challenge all of us for some time to come.
I'd like to take this opportunity to recognize the very significant efforts that are being applied at all of our operations vacate that workforce and local communities safe and healthy.
As you can see on this slide I'm, Rob had the opportunity to visit Ghana last quarter and experienced firsthand. The important work that team is doing to manage through the COVID-19 pandemic with agility and resolved.
In 2020 and 2021.
We invested more than $2 $7 million to Covid relief and local support in Ghana.
And $1 $4 million in health screening and security measures to protect our people and their families.
Partnership with Ghana Health and Education services these investments help too.
Tablets wide ranging protocols and controls at both a half of it Jim.
Distribute medical equipment and PPA at our mines, Nivola health facilities and other regional institutions.
<unk> PCR machines for effective testing and research.
A nice cold storage units with temperature monitoring and vaccine storage.
To raise awareness and share important health and safety messages through local radio programs.
And fun radio programs that provide essential lesson plans for students during school closures.
We are also focused on supporting the vaccination exiting Ghana and are working with the American Chamber of Commerce in Ghana, and Garnet Hill services to secure and deploy nearly 100000 vaccines in the area.
At Newmont, we firmly believe that the COVID-19 vaccines are critical in combating the spread of the virus.
And then two global vaccination rates substantially improve our people and operations will continue to be affected.
We are now deliberately moving towards a physician where ultimately all of our global workforce will be fully vaccinated and.
And we are closely monitoring and adhering to national vaccination mandates already in place.
We are taking this important step because we fundamentally believe that the vaccine is a critical part of supporting the recovery from the per day around the world.
Since March of last year.
Our focus has been on operating responsibly and efficiently.
Protecting the health and safety of our workforce and local communities from this virus.
Due to government imposed restrictions on movement and the ongoing application of Covid related protocols.
In addition to competitive labor markets in Canada and Australia.
We continue to experience productivity impacts at many of our thoughts.
Due to these impacts and some unexpected equipment reliability and weather related challenges.
We have decided to update our full year 2021 guidance.
We now expect to produce approximately 6 million ounces of gold just below our original guidance range.
And we are reaffirming our original guidance of $1 3 million gold equivalent ounces from copper silver lead and zinc.
Combined that is seven 3 million gold equivalent ounces. The most of any company in our industry and an improvement of almost 400000 ounces compared to last year.
Updates from our original gold production outlook largely due to <unk>.
Calendars of Boddington <unk>.
<unk> unusually severe weather and heavy rainfall.
Shovel reliability and operational delays associated with managing benchmark Jane as money moves into deeper sections of the pit.
This was combined with the continued ramp up of the autonomous haulage fleet.
Is the thought for insurance this technology for operation in a deep open pit mine for the first time in the mining industry.
As a result, boddington delivered lower XP tons than expected impacting our ability to reach higher grades.
Reducing <unk> full year gold production estimate by approximately 140000 ounces.
As Rob will discuss later, we remain very confident that the overall efficiencies delivered by economists haulage will more than offset any short term impacts on production at boddington This year.
Also at Nevada call bonds, we are experiencing the consequences of the challenges, notably operating partners in their release last week.
Collyn Cortez are expected to be at the low end of their annual guidance ranges largely due to the impact of the breakdown and repairs to the mill at Carlin Goldstrike roaster.
Political was reach is now expected to be below its annual guidance range.
As a consequence.
Gold production from Nevada Gold mines is expected to be at the low end of our annual guidance range.
In addition to this as I commented earlier the.
The global pandemic continues to evolve and impact all of our operations.
Panama was placed into care and maintenance in late June early July.
And we are continuing to experience lower productivity as a result of COVID-19 related absenteeism and tightening of the labor market in Canada.
The impact from lower production volumes, coupled with higher metal prices has also increased cost for the year.
For 2021 gold costs applicable to sales are expected to be $790 per ounce.
And all in sustaining costs are expected to be $1050 per ounce.
Okay.
Important to note that our original guidance was established using a 1200 dollar gold price assumption.
And we continue to use this assumption for our long term bond planning and reserve modeling to ensure that we maintain discipline across all of our operations.
However, due to the sustained high gold prices throughout this year and did response to feedback from the Investor community.
We are providing our updated full year cost outlook using it at $800 gold price assumption.
We expect these gold prices to continue through the fourth quarter.
Adding approximately $50 per ounce all in sustaining costs from inflation higher royalties and production taxes.
Finally, we are decreasing our development capital estimate from $850 million to $700 million.
With a portion of spending associated with our second expansion at 10 am I moving into 2022, but not impacting project schedule.
Yeah.
We are currently working to finalize our business plan for 2022.
And today, we have a much better understanding of the impacts from the global pandemic that we did at this time last year.
Looking ahead to 2022, we anticipate the production costs at a 9800 dollar gold price assumption will be similar to this year.
Gold production is expected to improve by around 5% compared to 2021.
We continue to manage the impacts from pandemic related labor shortages on productivity across our operations.
Keds and ISC per ounce are expected to be largely in line with 2021 as we build an increased cost for inflation by metal prices and ongoing COVID-19 related safety protocols assumptions going forward.
Capital in 2022 remains unchanged from our original outlook as we enter a period of significant reinvestment.
An important component and growing production improving margins and extending mine life.
These reinvestments back into our business will enable newmont to steadily increased production and improved cost over time from our portfolio of world class long life operations.
We look forward to providing you additional detail on our long term outlook in our annual guidance webcast in early December.
And with that I'll turn it over to roll for a more detailed look at global projects and operations of the year.
Bob.
Thank you Tom and good morning.
As Tom mentioned, the pandemic continues to present challenges across our operations and joint ventures, and I am proud of our people who continue to safely deliver Dan.
While COVID-19 infection rates are declining and vaccination rates are improving near our operations. The knock on effect from supply chain disruptions and tightening labor markets is creating new complexities to manage.
There is increased pressure on input commodity prices, such as steel and diesel in addition to unpredictable freight costs and timing of deliveries.
As an example diesel costs have increased significantly in recent months.
Adding $7 per ounce to our all in sustaining costs compared to the previous quarter.
And over $15 per ounce compared to the previous year.
We are also keeping a close eye and working hard to reduce voluntary attrition rates across our global business.
Labor markets, particularly in Canada, and Australia are creating an unprecedented labor shortage impacting productivity.
These inflation trends may show up in future contract renewals and we expect that we could start seeing additional impacts as early as the fourth quarter.
And while it is difficult to predict whether these trends will persist for the long term.
I am confident that our scale strong partnerships and proven operating model positions newmont to secure the most competitive supply contracts and limit the impacts on productivity and costs.
Turning to our regional updates starting with South America.
Maryann remains a strong performer in the South American region and is celebrating the fifth anniversary since declaring commercial production in October 2016.
The site continues to utilize an ore blending strategy to optimize mill performance, helping to offset unplanned mill maintenance and minor delays from heavy read at the start of the quarter.
Additionally, marine delivered higher tonnes mined and grade processed and we expect this trend to continue for the remainder of the year and into 2022.
Yeah.
Cerro <expletive> continues to improve productivity and performance significantly increasing tonnes mined and processed each quarter.
The site team is managing the impacts from the pandemic as well as possible and I am proud of the mitigation efforts shift change optimization and overall efficiency improvements delivered to help offset disruptions from earlier in the year.
Given the effects of the pandemic. The site has delivered more development rates in 2021, limiting access to higher grade ore and reducing production in the fourth quarter and into 2022.
And yet despite challenges from the virus. The site continues to progress future organic growth projects, including the development of San Marcos and the expansion in the Eastern District, which has the potential to extend mine life beyond 2030.
Yeah and of course, China has also experienced continued challenges from the pandemic impacting productivity, mainly due to reduced labor availability.
To offset these challenges the sites implemented mine sequencing changes focusing on higher grades efficient wholesale routes and optimal or placement on the leach pads.
As a result, Yannick court should deliver higher grade ore and improved recovery from the leach pads.
As discussed in our third quarter 10-Q, we continues to progress detailed study work to further define water management requirements, along with other closure activities and we will provide an update on this with our fourth quarter results.
And as Tom mentioned, we are progressing Yannick coaches Sulfates a project with the potential to extend mine life at this cornerstone asset well beyond 2014.
Turning to our North American region.
Okay.
And our Canadian operations also white Eleonore and pocket pain, we continue to be impacted by Covid absenteeism and the tightening of the Canadian labor market and we expect these sites to be at the low end or below our annual production guidance ranges.
We expect these labor trends to continue into 2022 with the effects, having been particularly impactful at musselwhite and daily and all.
As labor shortages and access to specialized services has resulted in lower tonnes mined and processed than planned.
Porcupine delivered higher tonnes mined from the Hollinger open pit, helping to balance the impact of higher than expected levels of graphite and the Hoyle pond undergrad, which resulted in drilling delays and as a consequence resulted in less high grade ore being mined from the underground.
I visited our Canadian operations last month, and I'm pleased to report that we are making a lot of positive enrollments at musselwhite Eleonore Porcupine to increased development rates through the use of jumbos and tele remote loaders and driving productivity hard through the execution of the suite of our full potential initiatives.
With the full support of our subject matter experts deployed to these sites these initiatives will improve efficiency and production.
Moving to <unk>.
Mine experienced lower grades and recovery in the third quarter. However.
However, higher tonnes mined and changes to mine sequencing during the third quarter.
To increase Leach pad production in the fourth quarter and into 2022.
And finally <unk> delivered another strong performance in the third quarter due to higher tonnes mined and processed in addition to strong recovery rates from a number of full potential improvements.
Since acquisition payments keto has delivered over $375 million and free cash flow improvements with more than 80% of this value is delivered for mining and processing improvements, which continue to generate value today, and we'll do so well into the future.
Shifting to Australia.
<unk> delivered solid performance in the third quarter as higher grades helped to offset lower tonnes mined and processed as a consequence of the COVID-19 related care maintenance period in late June and early July.
Although this period has reduced the site's full year production by approximately 40000 ounces, Panama is fully operational and performing very well and is fully expected to deliver a strong finish to the year.
In addition, the team further advanced Panama and expansion too.
And during the third quarter, we progressed the construction of the headframe and have now completed nearly 70% of the <unk> of the nearly one mile deep shaft remaining on track to deliver significant cost and efficiency improvements in the first half of 2024.
As Todd mentioned Burlington experienced heavy rainfall in the third quarter impacting the ramp up of autonomous haulage and reducing tons mined.
I am pleased to share that boddington continues to achieve superior performance, reaching nearly 11 million tonnes processed during the third quarter.
We're also proud to deliver the gold industry as far as the tone of this whole truck fleet. The first of its kind in our sector.
I'd like to thank our team and our partners at Caterpillar for their ongoing partnership dedication and drive as oriented continues to ramp up the truck fleet to full productivity and to fine tune the technology for very productive operation and a deep open pit mine.
Delivering this project on time and on budget during a global pandemic is an enormous accomplishment leveraging newmont scale technical expertise and partnerships to manufacture deliver assemble commission and operate a fleet of 56 autonomous trucks and less.
In 18 months.
As we look ahead, we expect to reach improved grades and achieve higher tonnes mined June pump to the efficiencies from autonomous haulage, increasing production in the fourth quarter and into 2022.
Okay.
And finally, turning to Africa.
Achieving delivered another consistent performance.
<unk> very heavy rainfall in the third quarter as higher throughput with strong recoveries helped to offset unplanned mill and equipment maintenance.
<unk> is well positioned to reach higher grades and delivered its highest production of the year during the fourth quarter.
Uh-huh delivered a very strong third quarter as higher tonnes mined from the <unk> open pit and improved mill performance helped to offset challenges with whole truck availability at our underground operation.
That's the Zika, we continues to progress the development of our new underground mining method sub level shrinkage and we expect to reach full production by year end as planned improving grades and underground tons mined.
In addition, the team continues to advance a half an hour.
We have began mobilizing key personnel and I am pleased to say that engineering is approximately 80% complete.
We continue to engage with local communities and regulators to ensure a mutually beneficial path forward as we develop this prolific ore body and create the next generation of mining in Ghana.
And with that I'll turn it over to Nancy on the next slide.
Thanks, Brad through the strength of our integrated operating model in mind.
Financial position 100 year history.
And long term value with disciplined and balanced approach to capital allocation and the industry.
Let's take a look at the financial highlights.
In the third quarter, Newmont delivered $2 $9 million in revenue and average realized gold price of seven $778 per ounce.
Adjusted net income of $483 million or 60 cents per diluted share.
Adjusted EBITDA for $1 3 billion.
A decrease from the prior years quarter due to lower gold prices lower sales volume and cost pressures stemming from the global pandemic.
Our strong free cash flow of 700.
$35 million of which 97% is attributable to newmont.
Although quarterly free cash flow is lower than our record performance last year, we achieved a 27% improvement compared to the second quarter.
Our unmatched cash flow generation allows us to provide superior shareholder return.
Largely through our industry, leading dividend framework.
This week, we get there.
Our regular quarterly dividend <unk> <unk> per.
Per share an increase of 38% over the prior year.
Our last three quarters.
With a yield of approximately 4% our regular dividend are highest in the gold industry, placing them among the top 10% of the S&P large cap dividend payers.
Third quarter GAAP net loss from continuing operations was $8 million or one cent per share.
Adjustments included <unk> 46 cents related to a loss recognized on the pending sale of the Taco Bell App that currently in care and maintenance in Peru.
Sale of these assets reduced storage costs, while we maintain long term optionality around the future development of the project.
Adjustments.
12, that's related to unrealized mark to market losses on equity investments.
10 cents related to reclamation and remediation adjustments at historical mining sites.
<unk> related to tax adjustments and valuation allowance.
And one of other charges.
Taking these adjustments into account, we reported third quarter adjusted net income of 60 cents per diluted share.
As a reminder, due to our status as a U S. GAAP filer, our adjustments to net income does not include the $23 million of incremental cost incurred this quarter as a result of the Covid pandemic.
Adjusting for these costs what have resulted in approximately three tenths of additional net income per share.
Expect these costs to continue throughout the year as we prioritize the health and safety of our workforce community.
Numerous dividend framework is based on our unmatched ability to generate attributable free cash flow.
For every $100 increase in gold prices above our assumption of $200 Newmont delivers $400 million I think from Hell attributable free cash flow per year.
And Newmont is the only company in the gold mining industry with the ability to generate these levels are attributable free cash flow.
As Tom mentioned, we announced our dividend framework, one year ago, providing shareholders with a stable <unk> annualized dividend of $1 per share.
<unk> to receive between 40 and 60% of the incremental attributable free cash flow generated in other 1200 dollar gold price.
This framework provides stable and predictable industry, leading returns for our shareholders and demonstrates our confidence in our long term outlook and our ability to maintain capital discipline.
A third quarter dividend declared was consistent with our second quarter calibrated at $200 gold price assumption of 40% distribution incremental free cash flow.
And we continue to review our dividend on a quarterly basis with our board evaluating our operational and financial performance and outlook over a long period of time.
Our capital allocation priorities remain clear.
To reinvest in our business through exploration and organic growth projects.
<unk> financial strength and Optionality on our balance sheet.
To provide industry, leading returns to shareholders.
Throughout the year, we delivered on each of these priorities.
It's progressing our profitable reinvestment in the business, particularly with the advancement of the Panamax engine.
Oh, north and anecdotes of Salt life.
Delivering the first autonomous haulage fleet in the gold mining industry, improving safety and productivity at Boddington.
Completing the GC bold transaction in May of this year.
Returning more than one $3 billion to shareholders through dividends and nearly $250 million through opportunistic share buybacks.
And maintaining a strong balance sheet with $7 6 billion in liquidity and no.
Debt to EBITDA ratio of two.
Hi, Chris.
Preserving newmont's financial strength and flexibility to sustain business across price.
With one of the industry's lowest weighted average cost of debt at four 3%.
As we look ahead, we are confident in our ability to deliver on our disciplined capital allocation priorities, creating long term value for the business and maintaining our position as the world's leading gold company.
And with that I'll hand, it back to Tom to wrap up.
Thanks Nancy.
Newmont has an unmatched portfolio of world class Longwall operations and.
And our organic project pipeline that is the best in the industry.
And while we and the broader mining industry.
<unk> to face a range of challenges brought forth by this global pandemic.
I am confident that our clear strategic focus proof.
Proven operating model superior execution, and leading ESG practices.
Position Gamont to remain the world's leading gold company and continue to deliver long term value to all of our stakeholders.
And 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 you are 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 the roster.
Yeah.
Yeah.
Yeah.
Okay.
Yeah.
And our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question, maybe first on slide 11 on the North American operations can you talk a little bit about what.
What steps are being taken to address the absenteeism at musselwhite and eleonore as far as I can Paul.
And competitors.
Arent facing similar issues. So I'm just curious what exactly is happening there and what steps are being taken.
Thanks, Rod and good morning, I'll pop off.
The question across to Rob.
<unk> seen a combination of two things I think Rob can expand on in terms of actions, we're taking voluntary attrition, particularly at a couple of a fly in fly out. So it so still at levels that you would typically expect in a follow up I saw slight change 12, 30%.
But what we're seeing on top of that he is the compounding of absenteeism associated with Covid.
You can get a 10%, 15% <unk> on top of that many people are unable to obtain work.
Because of Covid related absences.
Sort of sits behind the number.
Two of our three thoughts.
Our phosphate salts and I'll get Rob to talk to some of the actions, we're taking to mitigate some control that.
That trend thanks to all of them in the <unk>.
The other thing I, just mentioned to build on what Tom said booths, certainly fun to be in Timmins.
At points in the third quarter with some of the highest at some of the highest infection rates of Covid in Canada as well.
In particular at Musselwhite, we were up to 15% absenteeism because of what Tom spoke about the steps we've taken we've taken the basic steps where every person that Samsung is being a.
<unk> managed very high profile in terms of.
Is it work crews know the reasons why and the follow up and the necessary management data.
There's also in terms of recruitment.
We've got a very focused team dedicated team just on the Canadian.
Market to make sure that we are turning around employment as quickly as possible trying to new employees and onboarding them very very quickly, but certainly it boils down to the basics as the vaccination rates go up.
As the controls.
And really doing the basics of management well if there are people that were seeing regularly off they are being managed very very closely.
But there is nothing no rocket science, it's really just doing the basics very very well.
Okay, Great and then maybe just switching gears to a hospital I don't think the guidance change for the full year. So it implies a really high production rate in Q4, Rob maybe if you could just speak to that is that the expectation.
I'll pick that up and again throw across to Rob, but you all certainly is going to say.
Strong.
Fourth quarter out of a half.
Compared to the first three quarters, which were pretty consistent.
We'll get you to talk to the drivers behind that strong fourth quarter.
Certainly.
Underground continues to come along very well and we did our first firing earlier in the year for the sub level shrinkage. So we are seeing higher grade come through there.
The performance of a hassle and generally.
The open pit and the mill has been very positive. So I think it's again just the factors of the decision we made around the underground really starting to bear fruit as well as good productivity elsewhere in the operation.
Okay, Great. That's it for me thank you.
Thanks Todd.
The next question comes from Michael Glick of Jpmorgan. Please go ahead.
Hi.
<unk> could you walk us through what you're currently seeing down to specific items, such as consumables and other raw materials.
And how you are working to mitigate inflation from a both a capex and opex perspective going forward.
And then kind of based on what Youre seeing in <unk>, how should the cost trajectory look into 2022.
Thanks, Mark I'll kick off get Rob to provide some color on I'll also all staying gehring, who.
Does that Chief Technology Officer, and is accountable for our global supply chain to make some comments on trends as well.
We certainly we've been flagging.
At the end of last quarter that we'll see in cost inflation trends.
Starting to see some of those flow through now and it's part of a fourth quarter story.
Third we are certainly seeing those flowing through into into at least 2022.
It was part of.
In our comments about how we're starting to see 2020 to shape up so 2022.
I think going to be for the mining industry.
Cost escalation story, we've got pretty consistent little on improvement on production. So it's certainly a cost escalation story, we're seeing it's still upwards of around.
5% when you when you aggregate it all together across materials energy and labor.
But we are seeing some pretty significant movements within that aggregate a demo in fixed in some instances, we're seeing some improved costs.
Firstly in Australia.
Pillar parts are coming in cheaper as a consequence of.
Exchange rates and the lock.
But we are seeing some some significant trends as I say at this stage I have guided at around the.
The 4% Mark bucket, Rob if you wanted to add any color to that maybe if you can then build on that.
Thanks, Tom and I'm going to just talk about it.
I collapsed in terms of what are we doing to offset it.
Before handing over to Tina.
The prices and the inflation that.
Michael very much the full potential is is what we're focused on is it all operations.
Each could.
We've got a suite of projects, which.
Not only assist productivity, but it's also about cost reduction.
And.
The big move us that we're focused on is things that payments keto, including the recovery.
We're seeing significant benefits as a result of that and the Canadian sites, we've moved across to jumbo rigs instead of between Bolthouse, and Taylor Motors, which is improving our productivity significantly and even doing more of the basics at Cerro <expletive>, where we reduced.
Further equipment, we took a further 15 pieces of each of these heroes in the third quarter to make sure that we're running that fleets as efficiently as possible and as such just managing the consumables that we do need but the full potential which we're managing it but do you want to talk about inflation, yes.
Yes, thanks, Rob.
One of the big areas will receive probably the largest variability is actually at freight.
But when you unpack that a bit freight makes up about <unk>, 5% of all of our landed cost of our major consumables. So you need to keep that in perspective, but one of the things we're doing to mitigate that as we're looking for opportunities using the the ability of our global supply chain looking at our operations global fence seeing what we can do to maximize.
The amount of freight we put on either either ships are in containers. So we get the best pricing possible.
The other thing that we do and along the lines of mitigation is we actually put in place.
Pricing mechanism that are transparent and they are really based on largely on the input pricing of a lot of the commodities that we have as it helps to actually soften the impact of inflation that we see.
And then just just could you talk about your view on industry consolidation just all the things you just mentioned would seem to point to kind of more scale is the more effective way to operate in this environment.
Yeah. Thanks, Bob.
Certainly I'll see how industry with.
A number of public listed companies in the Gulf Spicy is order of magnitude more than any other commodity that in itself.
An opportunity for consolidation in terms of the additional.
By the age that you have.
The elevated gold prices I think probably hold off a lot of that consolidation.
I think.
<unk> believes that it will be necessarily some of these need to medium term cost escalation that will drive.
<unk> I think the and I believe that the issue around the work that needs to take place.
All mining companies to achieve 2030.
Robin reduction targets greenhouse gas reduction targets and ambitions to achieve net zero by 2050, which we are clearly seeing many governments around the world saw it up too in order to achieve those targets, you'll need scale and you would need loss.
And over the course of this decade, we will see consolidation driven by that imperatives.
I predict.
Climate change will be the driver rather than some near term COVID-19 related to escalation.
Understood. Thank you very much.
Thanks, Michael.
The next question comes from Greg Barnes of TD Securities. Please go ahead.
Thank you Tom I just wanted understand the.
To the autonomous truck fleet at Boddington.
On time on budget, but you seem to be having some challenges to get it working the way you wanted to work what are those challenges and what are you doing to address it.
Thanks, Greg and good morning.
The key challenge behind commissioning, the autonomous fleet and I'll get Rob to provide some more color.
It was associated with.
With the significant wet weather that you had in that mine at the Tommy trying to trying to commission the trucks.
Through and now got the Crux Commission and some of those some of those tuning issues in place.
And I'll pass across to Rob to give you some color on how the how that fleet is performing now that we have had about a month under our belt of fully autonomous operation in that mine, which is one of the factors. When you can actually move to fully autonomous and you don't managing the the interaction with vehicles that have people inside of them.
And Rob provide you some of some data thats in the context of the wet weather has continued.
In South Western Australia. In fact October was the already not even end of the month is already the wettest month since records began in that part of the world. So with that context, I'll get Rob to give you some color on how autonomous haulage is performing things stove and thanks for the question Greg.
Certainly with every passing week the autonomous haulage.
Is getting more and more productive.
Just to tell a little bit of the story is that.
Since we initiated zero injuries. We've noted over 600000 kilometers, we're up about 21 million tons and we've connected all the machines. So there is an awful lot of good work, which is going on at the start of September we will renovate at 53% EU, which is one of the critical metrics.
Of making sure that the trucks are utilized as much as possible, we're now up above the 61%.
Over the last week, and we've actually hit a shift by shift up around 68, 69% to you now.
We've got to achieve that in a consistent basis, but one of the critical things, particularly important for next year is it next year's tonnage is roughly averaging about 135000 tons out of pit. We've already achieved 160000 ton. These so whilst we still got things just aren't open to fine tune.
As Tom said, whether it be some road with whether it's the road conditions as a result of the weather et cetera. We are very pleased about how things are progressing we got terrific support from caterpillar.
We've got a number of people from caterpillar dedicated on the site. So certainly we think things are progressing well, but the rain play played havoc.
The honest, but in terms of the commissioning we've still got to remember it's been the quickest commissioning of any EHR system, that's being achieved to date and so.
So far.
Every passing week as I said things get better and Greg.
Ex pit tonnes of presenting to the mill the mill is running exceptionally well and it's running at record rates.
We were.
Feeling we are confident around the fourth quarter and particularly as we enter into the next G for that truck fleet to deliver good ex pit tonne General Mills is performing well.
I'm not sure what 68% EU means Rob.
Oh, sorry.
So basically.
It's essentially seeing.
Often as Youre running.
Productive work and typically one of the key reasons that we went to told me is that if you've got humans operating them typically youre lunched, a laser toilet breaks things like that.
The EU is one of the key EU is effective utilization Greg.
Okay. So what the targeted EU for the autonomous fleet. This is the human fleet I guess.
It would be the target that we justified it on is 68% and certainly where we will be planning is certainly trying to achieve a lot higher than that.
So you've already achieved targeted rate them.
We've achieved that.
Inter shifts kind of levels, where we have just been running averages 60, 61%. So as I say as you know with each passing shift we're getting further insights further improvements.
I'm very very confident we will be up there.
Hitting those targets next.
Next year.
Okay, great. Thank you.
Thanks, Greg next question comes from Josh Wolfson of RBC capital markets. Please go ahead.
Thank you very much for taking my questions.
I appreciate the disclosure for the 2022.
Preview on the expectations looking at the existing five year guidance.
There was some expectation for cost reduction into 2022.
The big step down there previously and then there were still some reduction expected thereafter.
Future years, 'twenty 'twenty at $3 24, as well when you look at.
The trends that we're seeing in the sector you.
Should we still expect that kind of trajectory longer term or is there potential that some of the operating improvements are going to be offset by by these trends as they continue.
Thanks, Josh and good morning.
Suddenly going to save costs.
Okay.
<unk>, Montana in the industry elevated because of the escalation pressures that we've been talking about the inflation pressures.
The cost improvement is still coming at Nemo, because it's associated with the reinvestment, we're making back in our business.
So we'll continue to see improvements at boddington with autonomous haulage as it is now being commissioned as Rob was just talking about how you can tune a very predictable autonomous system because of the automation now for slate.
We will see improvements from the commissioning of the shaft, Panama, we can bring all the surface much more efficiently.
Underground mining method at <unk>.
More than half of our north.
And <unk> sulfides are all investments that we're making that will deliver improved costs over the over the guidance the five plus.
<unk> <unk> period, what we're seeing so those investments being made to that improvement in cost will come with those investments because we will be delivering and producing.
And so as that at much better margins, what we're seeing as a consequence of.
<unk> is those key three key development projects tantamount to a hotline northern Yana coaches sulfides being delight sitting on top of each other some more so we will see through 'twenty, two and 'twenty three are significant.
Development capital spend in fact, it'll be development capital spend.
That we haven't.
Executed Nemo data generation, so it's a significant reinvestment in our business and we really start to see the benefit from that investment latter part of 'twenty three to 'twenty four 'twenty five 'twenty six 'twenty seven with some of those projects.
Our slot July in terms of when we say it does.
Beta margin ounces coming through and some stacking up of our development capital as a consequence of managing around Covid.
Okay. Thank you and then.
On the capital numbers. Similarly, theres been a number of changes for some of the existing projects and sequencing, obviously with <unk> sulphides.
How should we be thinking about that it sounds like.
The baseline sustaining capital numbers, maybe should be higher longer term is that reasonable to assume.
Adjusted sustaining capital for a portfolio of our size is really a battle.
It might be non 51 year.
50, another EBIT as I look at our business plan, it's a pretty steady state for a portfolio of that size is around the <unk> 1 billion.
The development capital market, Rob just to provide a little bit more color Tom.
<unk>, Panama expansion, two and a half I know some of the factors that impact cost.
We have got locked in.
I'll get Rob to capitalize to forget our coaches sulfides, obviously, we're delighted with.
A full fund due to COVID-19 to the second half of next year.
We're continuing to do all the detailed engineering, we're continuing to do the critical path procurement, which is locking in.
Chris slots for oxygen plants, and specialized steel forward, our clients and the logs.
De risking <unk> sulfides in this environment and then Rob maybe some color on Panama, two and a half on north in terms of cost. Thanks.
Thanks very much so.
In terms of.
Turning to the engineering is progressing very well and it's at that high level, where you've got a high degree of confidence around what you need to do.
Vast majority of the cost at 10 of mine is around the <unk> and the fixing of the shafts. So we are certainly confident at this point in time that that work is contained the biggest challenge. We've got is just around the labor rates and again.
The post Covid World in Australia in terms of orders, that's managed but thats, where the majority of costs and we've got a good partner and rocking and rolling and as I said, the engineering being so well progressed is so key.
<unk> north.
We preordered all the equipment and.
So that equipment is is making its way over or being manufactured as we speak the engineering again was at a very high level and I think.
We've got a little bit of contingency there, but we're not seeing anything at the moment.
Thats overly worrying us.
Apart from what Dean said in terms of potential delays and the nature.
Nature of the freight business, but all in all because the engineering, so well progress I think we've got a high degree of confidence.
Okay. Thank you very much.
Thanks, Josh.
The next question comes from Tanya Jackie <unk> of Scotiabank. Please go ahead.
Good morning, everyone and thank you so much for taking my questions and Rob.
Rob can I just keep you on again just to clarify on Boddington and Greg asked that and I don't know what that EU was either.
Wanted to just make sure I understood that.
With the rain hopefully behind us keeping the road.
Clear and clean.
<unk>.
Trucks are performing.
Do you expect.
Cause opex. So I'm just wondering if we've taken out.
The issue is that them just stopping like we've cleaned it out with caterpillar.
Yes, Tony in terms of the communication.
Those are things, which.
We have learned that theres going to be time to time, where you do get.
A communication issue for very general reasons in the system is built that if there is a communication issue things store and we've certainly managed through that very well, especially being the deep mine.
Some new techniques being done compared to the Cobra, but in terms of the roads. The feedback that I've had from the boddington CMO. The roads are in better shape than they've ever been and SaaS.
SaaS and move these trucks are able to pick up.
An awful lot of detail, whether it be <unk>, whether it be <unk> coming into the road, whether it be washouts from bonds et cetera. So there is a huge amount of attention there and when I talk about good with the team has done an enormous amount of work, but all in all tenure.
Certainly we are in good shape. The roads are in good shape to technologists at Gucci, the only thing that.
It's still raining.
And that's something we're continuing to manage but on the plus side.
Feedings were getting Es sets us up very well for wet seasons in the future. So just building on that tenure.
Ladies performing at record levels or required levels, even during a wet October.
At Boddington, we're about to enter into summer in Western Australia.
And you don't see a cloud in the Sky from about November through to March April. So the system is June and well set up to have a very solid run.
Over the next six months and beyond.
And we're getting better grades on top of that right.
Right on top of the high grades and the.
South pit at Boddington.
And maybe just on that one in Australia, Rob on Panama expansion like you mentioned that deferral of $150 million in capital and it has not impacted the <unk>.
Online can you just share with us some more details on what exactly is being deferred and should I take that 150 and added to the 2020 capital, which I think Tom mentioned.
Going to be similar like no change to Capex for 2022, So maybe just some clarity there.
In terms of the Capex is going to be spread over 'twenty. Two 'twenty three is not all going to come in 'twenty two and.
In terms of the key work it really is around completing the reasoning and starting to.
The shafts. So in terms of the schedule of that work is still very much on track and that capital will be spread over the next couple of years, rather than just next year and take it to the broader question Al development capital spend will be similar levels to what we currently guiding to for 'twenty, two and 'twenty three and what do you what youll see.
<unk> 24 is a little bit of that a little bit more capital in 'twenty four as a consequence of that.
The three key projects sitting on top of each other at the July cut yourself thoughts.
Well the spend levels, a little bit more in 'twenty four.
Okay, Great. That's helpful and then Tom as I have you on just two questions for you like you mentioned supply chain disruption I'd like to get a bit of clarity on what you're seeing.
The first question and the second question is.
As we are seeing these inflationary pressures come through the cost structure.
Are we looking at you adjusting gold prices for your reserves and resources next year.
And also given the higher gold price can we see you have a higher gold price guidance for cost for next year.
Thanks Tanya.
We will continue to try and add to our long term mine planning reserve and resources at 1200.
That maintains a disciplined strategic mine planning and ensuring that were making very conscious decisions. If we want to to change cutoff grades to bring certain lybeck suitable skype seem so.
Strategic mine planning.
Conversion of reserves to resources no change to the 1200.
Yes, we will provide you cost guidance next year at the <unk> hundred dollar gold price assumption and as I commented in my.
In.
In the script.
All in sustaining costs next year, assuming gold is at $800 is going to be pretty much. The same number that you've seen for this year as we start to.
Put together our plan is still a few moving parts on Nevada goldmine still to come in but it's everything is directionally pointing to similar levels to this year.
And I didn't have to build a gold price drop has become more cost then.
When production drivers as I have been for this year and our gold production is sitting up around.
5% more than this year. So if you were to put a pin in a number is probably going to be in and around $6 2 million ounces.
At year.
We will continue to provide a view of all in sustaining cost at a $200 gold revenue products. So we will continue to provide that.
As a reference point in our guidance, but we will we will give you. The 100 dollar we will issue an eight $800 flat for the <unk> that we got to and show you that that cost profile.
Dana market you just to talk to the <unk> first part of the question around supply chain disruption and what we've seen it sure Tom.
Can you the main place that we're seeing this supply chain disruption is really on the logistics the freight and shipping and what's driving that is availability on inland shipping and freight is just the availability of truck drivers.
We're seeing that the manufacturers the factories, they've kind of worked their way through COVID-19.
Theyre getting back up to production, but the consensus market consensus is that we're still going to see that.
This persistent pressure through the end of the year, largely driven by the availability of people to move products around.
Okay. Thank you for that and thanks, Tom I just wanted to make sure those costs were at 1800 and not at 200, and then I have to adjust that way. So thanks for the clarity.
Thanks, Tania and operate it for the people on the call, we will keep going and take everyone's questions. If you've got the time available will stay on the call as long as maybe to answer your questions. So operator, we are ready for the next one.
The next question comes from Anita Soni of CIBC World markets. Please go ahead.
Hi, So a couple of questions still remain.
Kind of build backyard, if he said that the cash cost around 790 <unk>.
In your prior guidance.
750, right now you are saying six to as the production numbers that youre kind of at the low end of your original guidance range on production. So I'm just trying to build back that 5% escalation and how much. Additionally on the price change and then.
Just seeing if that gets you to that $6 790. So could you tell me how much the royalties would impact the Princeton nickel price versus.
So just make sure I have understood. Your question, so you're talking about 2022, yes.
Yes.
I'm talking about 2022, and I'm, just saying like the.
Basically looking at the fact that you are talking about 5% escalation.
On the op cost side.
But the midpoint of the old range, that's about $35 an ounce. So I guess, we're not at the mid point because we're not at the mid point on production. So it'd be at the higher end on that and then sort of just trying to build back the difference.
Try to get to the 790, if there's something missing component that I don't have in getting to 790.
Yes.
So you've got.
The production impact.
Got.
Impact of about 5% and then you've got your Texas production taxes and royalties.
The combination of those three will bridge the gap between our 1200 buildup to al.
I think under Bill the number in 2022.
Is the royalty impact about 15 to $20 per ounce.
More at least 30, okay.
Okay.
Hey, Josh per ounce, Okay, and then the $115 million Panama deferral.
You maintained the two to $2 2 million for 2022, I'm, just I would've expected that I guess to go up if youre deferring, Panama deferral or sorry, just deferring the Panama Capex or is it just a matter that the nuggets being pushed out consistently so that the <unk>.
22 spend related to Panama is being pushed into 2023 and perhaps into 2024.
Not the way it works or is there some offset.
No it's essentially it's essentially that.
That wave moving for Panama from 'twenty, one into 'twenty, two and what was in 'twenty two will move into 'twenty three and then if your local.
Overall development capital number.
Harper North numbers that we are ashamed of 'twenty, one, but maybe into 'twenty two and then pushes out into 'twenty three 'twenty four and then you have to catch all flights has a similar so it's.
It's sort of a combination of the three with that Spain, and moving around that ends up with some more issues. When they guide you'll see some more development capital in 'twenty four but similar rights for the name of portfolio in 'twenty, two and 'twenty three.
And then new guide in December It will continue to not include Diana coaches Sulphide, then because it hasn't really gotten full funds decision is that.
We will include <unk>.
<unk> sulfides spin is included in our current guidance yet.
<unk> sulfides spend with delay in full funds approval to the second half of the year will be E mail updated.
<unk> guidance in early December the <unk>.
<unk> the timing of that project is that when you look at a five year view of our production he already gone to say a very small number of the.
Gold and copper.
Coming into our production profile, we really get the benefit of that gold and copper at good prices in 2728.
And beyond so we're going to see that we've got to say the spin, but we're not going to say the benefit in FRP guidance.
Okay.
Just to reiterate.
Intense capital spend that you have in the next two years include Gianna culture sulfide stones.
Numbers for the next year.
Yes, it does.
Okay, Alright, thank you sorry.
And actually probably the more.
More to the point.
Falloff in 2024 that also include <unk>.
Sulphide said.
Yes, that's right so what you're seeing in our development capital spend.
<unk> in our current guidance includes the big ticket items are tantamount to hopper and Deanna coaches outlets.
Okay. Thank you.
Thanks.
The next question comes from Brian Macarthur of Raymond James. Please go ahead.
Hi, Good morning, I think you just answered my question, there, but but one other thing I just wanted to follow up on it. It's Congress. So I have three questions.
What triggered us to do this now where there is anything to do with changing government or anything.
Yes.
Total book value of $570 68, and you talk about equipment and assets, so I assume <unk>.
<unk> equipment assets as something else, but any clarity on that so I'm just trying to figure out what's in there and then three there is still $900 million on the boxes is there stuff. There that you can use in the anecdotes of sulfides other equipment or stuff I'm, just trying to figure out exactly what that transaction is.
Thanks, Brian and I'll take your first and third and I'll ask Nancy to talk to the book value.
The non hundred million.
There is.
The deposit that's the reserves and the value of that.
When they are constructed.
What's significant Dan.
So that infrastructure is still there and valued and of course we.
The montney once upon a time, so we know the ore body.
We're going to build a modern day once upon a thompson of the ore body very well.
The mill the mill is really the mill that we sold we have been spending two and a half million dollars or thereabouts Ebrahim took care of maintenance to keep the mill and all those bits and pieces in good condition.
Very large mill in fact at the time it was the largest mill in the world.
It's quite unique in terms of.
Who could buy that piece of equipment and use it so when we had.
In approach from somebody to buy that equipment, because they had a place to sell it when you take the opportunity to.
To fill that mill. So the timing really came from someone coming to market at all to say, we're interested in taking that mill off your hands.
We signed the care maintenance cost setting in any future development of Congo, which is still some time off the flagship will be very very different but it wouldnt evolve.
Yes flagship with a very large mills. So the trigger was an approach by somebody who has to pay to tie quite a unique piece of equipment and for us to get some money for it.
Did you want to talk to the book value question, Yes, carrying value really just represents what was on the Buck minus depreciation over the period of time that we've held it instead of loss just just triggered by the actual sale, but truly nothing more than that it's been there for quite some time.
Great. Thank you very much.
Thanks, Brian.
The next question comes from Danielle <unk> of Bernstein. Please go ahead.
Good morning, and thanks for taking my question another follow up from kind of an expansion.
Wanted to get some clarity on the fact that you've delayed $150 million of Capex, but kept the overall capex budget and flat with previous guidance. So what gives you confidence that the overall budget flights.
The tightness that we're seeing in labor market.
That's the first question.
Thanks, Danielle I'll kick off and pass across to Rob.
The nature of where we're at with the <unk> expansion project, having largely.
We'll be at 70% sunk the shelf now you're really in a very serial process with with a dedicated contract.
<unk> net shop consults.
<unk>.
Theories prices that takes quite a number of months to concrete law in mobile in the shop.
And put the put the there is.
The supporting infrastructure around that so we were very clear given the amount of progress we've made on the pathway in front of us.
The best contractor in the business mobilized to site to do that work and because you've got that clarity in terms of your contracted clarity in terms of the amount of work we've done on the schedule in front of US we have confidence around now but that schedule in Spain, but Robert do you want to provide a little color on that.
And just building a little bit more on that Daniel.
Panama to.
You will have seen the presentation of the picture.
<unk> that's.
<unk> come a long way all the refrigeration has progressed well with finished the crusher Chamber underground power station extension has continued the bulks cuts have been done so as Tom said, we haven't got anything to start.
Really it is making sure that we maintain and keep hold of the expertise that we need to do to do the remain to do that.
<unk>. So those are the key things and Daniel the risks.
With that nature of work in front of you is being able to get people to the <unk> to do the work.
Vaccination rates in Australia are now up in the.
Up in the mid 70, percents and very much on a trajectory to.
Clearly the new year to be 90, plus percent across the whole of the country.
Some of the challenges of being able to move people around the country through the state borders will drop away in the first quarter and we will have.
Clear run through to be able to to hedge basically the arms and legs on site to do the work.
Thank you, that's very useful and on a completely different track and gateway.
Okay have you seen any impact of the new labor law introduced in September in terms of limiting use of contractors does that impact you at all.
None whatsoever, Daniela and we fully comply with the with some of those labor requirements, but.
No impacts in fact.
<unk> is running superbly.
Really hitting its strengths.
Thank you guys.
Thanks Danielle.
The next question comes from Adam Josephson of Keybanc. Please go ahead.
Good morning, everyone. Thanks, very much for taking my questions I appreciate youre doing so.
Tom on your production comments for next year.
Given what you've experienced this year, what gives you confidence in that 5% growth forecast for next year and along somewhat similar lines.
How do you feel about the 2023 outlook that you gave last December in light of what you've seen thus far this year.
Thanks, Adam.
Very confident in the number that we're looking at for next year.
And I'll look at that number.
And we have a number of world class assets that make up that <unk>.
<unk> numbers out in Australia Boddington in Panama are important contributors. The strat areas is just about through the worst of all of the constraints they've had around.
Around COVID-19 restrictions.
Labor market, so it's more of a cost issue.
<unk> autonomous haulage system running at Boddington, which is the largest area for labor at Boddington.
If you didn't have autonomous haul trucks with just mitigated that area with that fleet. So.
That production number underpinned by those two big assets in Australia, very confident the hopper sale.
In Ghana.
Underground mining method coming on stream as we speak.
It set up for a very solid year very.
We're very much rolling out the vaccines now in Ghana as I mentioned in my comments.
<unk> and vaccines that we're looking to distribute not only to our workforce their families and the communities in which we live and work.
<unk> I just meant.
Mentioned and to Daniel's question.
It is it is it really hitting its straps and running well that is the engine room of Nemo, and then Nevada gold mines.
Colin Cortez and turquoise ridge fully expect that those three big World class assets, along with <unk> will continue to.
To deliver on their commitments a little color on Pueblo Viejo had a few of our team down there in the last couple of weeks they've exploration rights are essentially 100%.
So the ability for that operation in the Dominican Republic to continue to run and run well, So Nemo will deliver on.
Its production outlook, if those assets that I mentioned deliver on their commitments and I am confident that those assets.
In terms of 2023.
Turning to 2023.
You will have an impact.
Cabot is going to be with us for a while so you will have an impact we have had a couple of years, we haven't been out what to do the development rights that you would have ideally lock two as you're managing health and safety and all the other <unk>.
<unk>.
That will have a flow on throughput fallen impact through 2022, and 2023 as well as some of the delays on.
Our development capital spend and when you can get some of the ounces flowing through from those projects. So I think youll see a COVID-19 related impact on 22% and 23, so fairly flat and then youll get some benefits coming more in the $24 25, so a little bit of delay as a result of both COVID-19 COVID-19 impacts both operating and what Youre doing to do.
And your bonds as well as yet the development of key growth capital spending.
I appreciate that and then on the inflation topic, you said I think on the last call that you expected that the inflation of the five ish percent to run through at least the end of next year I'm just wondering based on your experience in previous cycles.
How long have these inflation cycles typically lasted in and what do you expect I mean at what point. Consequently would you expect that inflation start to abate or is it just a situation of high prices of a cure for high prices and eventually these high prices are going up.
Choke off some economic growth or how are you thinking.
Along those lines.
Yeah. Thanks, Adam I think the world is in Unchartered territory in terms of this inflation so I.
I would say I don't believe it's structural.
Leave it will be cyclical, but I think it will be.
Our longer cycle than normal and Covid is going to take type that cycle. So certainly seeing this certainly say hold all the indicators and so we're going to have elevated pricing and thats going to be with us through 2022.
And outside too early to predict to say whether that cycle. Then comes down to getting 23 oil will stay as they will we will put a lot we'll put a lot of attention into our 2022 cost guidance to include inflation and then typically we don't tend to try and predict that far out into the future with our cost numbers. So we would talk to al <unk>.
<unk> and beyond numbers.
Not fully having accommodated inflation, we'll just do it in the next year, but very hard to predict that.
I really appreciate that Tom Thank you.
Thanks, Adam.
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, and thank you everyone for joining us and please as though as the world is starting to open up place.
Place.
Your health and safety and the safety of your loved ones, particularly as we enter into the winter months in the northern hemisphere, but thank you for your time everyone.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.