Q2 2022 Newmont Corporation Earnings Call

Yes.

Good morning, and welcome to Newmont's second quarter 2022 earnings call all participants will be in a listen only mode should you require any O.

She says please you can have a conference specialist by pressing the star key followed by zero. After today's 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 Tom.

Please go ahead.

Yeah.

Thank you operator, good morning, and thank you all for joining newmont's second quarter 2022 earnings call.

Today Im joined by Rebecca and Thanks, Basie, along with other members so that they can take it.

We will be available to answer questions at the end of the call.

Before I begin please note that cautionary statement and refer to our SEC filings, which can be found on our website.

<unk> delivered a solid second quarter as we continue to differentiate ourselves through our leading portfolio of assets and projects.

Now proven integrated operating model.

Our balanced and disciplined approach to capital allocation and most importantly, our values driven commitment to our purpose of creating value and improving lives.

Tenable and responsible mining.

Underpinned by these key differentiators and guided by a clear and consistent strategy.

<unk> remains well positioned to safely manage through the evolving and unprecedented challenges that our industry and will.

And the world at large.

Okay.

During the second quarter Newmont produced one 5 million ounces of gold.

An increase of over 150000 ounces from the first quarter and as expected.

In addition, we produced more than 330000 gold equivalent ounces from copper silver lead and zinc.

Bringing us to well over 1 million gold equivalent ounces for the quarter from a balanced global portfolio.

We generated significant operating cash flow of $1 billion.

And free cash flow of $514 million, an improvement of more than $206 million from the first quarter.

With seven $3 billion in total liquidity, we have maintained an investment grade balance sheet with a net debt to EBITDA ratio of three times.

Preserving our financial flexibility, whilst we continue to invest in our most profitable organic projects and returning cash to shareholders.

In June we completed the acquisition of similar time or interest in Yeti culture.

Bringing him on ownership in this operation and the exciting sulfides project to 100%.

And last week, we declared a second quarter dividend of <unk> 55 states, maintaining an attractive dividend yield of between three and 4% for the last seven consecutive quarters.

Sit within our established industry, leading framework and calibrate it at a 1900 dollar gold price.

Second quarter dividend demonstrates our confidence in the strength of both our portfolio and our operating model to deliver sustainable long term value.

In May we published our second annual climate report.

Part of this latest reports in our company's nonfinancial performance.

To address climate change and make a real impact we will need to leverage near months, leading ESG practices integrating operating model and the scale model off of our global portfolio.

These are all important components not only for creating long term value, but also for addressing the critical issues that are industry myself, none more important than the elimination of fatalities.

Safety is a core company value is at the very heart of operating in a sustainable business.

I expect it to be the first consideration before anyone begins work at AT&T in one location.

Ensuring that our workforce returns home safely after each and every shift.

We have continued our disciplined and dedicated approach to safety.

Maintaining a clear focus on managing the critical controls that must be in place at all times to prevent fatalities.

During the second quarter, we completed 155000 conversations but latest in the field that was focused on these critical controls.

Two years ago, we commissioned by ball technology together consistent data globally around these important discussions, which we call critical control verifications.

And I'm pleased to say that since then add leaders have now completed more than 800000 update conversations.

Over the last three years Newmont has continued to evolve our approach to safety across at level of business in.

Improving our fatality risk management programs to ensure it is as effective and as thoughtful as possible.

By combining our learnings from significant potential abates and critical control verification data. We are now able to gain a deep understanding of the fatality risks of each operation and importantly, what is needed to be done to reduce these risks.

The amount we have created a robust and diverse portfolio of operations, along with a pipeline of more than 20 organic projects with the skies and model off to deliver strong long term results.

<unk> will purchase more than 60 announcements of gold and <unk>.

Combined that is nearly 8 million gold equivalent ounces every year for at least the next day guide the most of any company in our industry.

Among our 12 operating mines and two joint ventures, mainly non percent attributable gold production comes from top tier jurisdictions.

We firmly believe that way, we choose to invest and operate matters.

And underpinning our portfolio is a robust foundation of reserves and resources, which combined with the gold industry Best organic project pipeline provides the pathway to steady production and cash flow well into the 24 months.

We are in a period of meaningful reinvestment as we continue to advance our near term projects, including the second expansion in Panama in Australia as Northern territory.

The development of a hopper north in Ghana.

And the yen at coach the Sulfides project. The next exciting chapter in year months long and profitable journey in Peru.

And in addition to our three nature projects <unk> has a deep pipeline of longer term projects that represent growth opportunities for later in this decade and beyond.

These projects and operations are managed through our proven integrated operating model with a strong track record of delivering long term value to all of our stakeholders.

<unk> operating model is built upon the fundamental principle that the whole is worth more than the sum of the individual cogs.

And it is strongly supported by our full potential continuous improvement program.

A program that is in place for over eight years at least.

More important today, but in a different thing.

Our team has taken the lessons learned during the pandemic to address the challenges that our industry faces today.

Tight labor market inflation and supply chain disruptions.

As the loan is reacting to these pressures we are actively deploying strategies to reduce our exposure.

Our global supply chain team is leveraging our scale and the strong partnerships. We have developed over many years with a K supplies and equipment manufacturers.

As the industry later, we have best in class properties as well as sophisticated ryzen full formula is built into our long term contracts to reduce volatility and mitigate logistical constraints in order to prevent disruption at our operations.

And whilst we can't talk about specific contracts several of them major equipment and parts supplies.

<unk> issued comprehensive price increases for the industry that range from 15% to 30%.

However through the efforts of our global supply chain team, we have negotiated lower pricing prices in some cases about 3% to 5% for the coming year.

In addition to this we are challenging the gold industry by implementing new technology to improve productivity and reduce labor risks such as that transition last year to a fully autonomous haul truck fleet at boddington.

We are leveraging our full potential program, which has been instrumental in delivering value. During these unprecedented times, helping to offset the impacts from current market conditions.

And we are utilizing real time data and our global team of subject matter experts to share knowledge and talent across our global portfolio provide.

Providing critical insights and driving improved performance that our operating teams simply cannot achieve on their own.

As one of the best tangible examples of this.

We have designed and implemented three operational support networks, covering our core areas of mining processing and asset management.

<unk> global networks bring together, our technical experts from around the world providing.

Providing 24 hour monitoring coaching and support through a consistent platform.

In the mining industry, we traditionally expect their frontline leaders to obtain their own data and insights as I manage everything involved and slightly leading attainment paper at the stop during and in the best shape.

Through our support Netbooks, we help add layers by monitoring operational performance and providing insights into the areas that need their attention saving time, improving focus and removing the need for so many people at <unk>.

And by offering a more flexible work environment CMO desirable to attract the best talent from within and beyond our industry, creating.

Creating a more diverse motivated and highly skilled team to coach and support not one but all of our operations.

In addition to our dedicated a disciplined approach to cost management.

You can also expect that we will remain transparent about what we are experiencing today and what we are anticipating in the future from this unprecedented environment.

Over the last eight months, we have observed cost pressures include.

Including the impact from Russia, the invasion of Ukraine.

And increasingly competitive labor market.

The highest global inflation rates at well, let's say in nearly 40 years.

As a consequence, we are anticipating an additional 7% of cost escalation. This year that is on top of the thought process. We had already included in our full year outlook, we established last December .

Around one third of this increase is related to labor costs.

We are seeing contracted services rights that are more than 10% higher than December last year.

Driven primarily by strong competition for specialized labor.

Higher levels of post pandemic attrition, resulting in high demand.

And the pass through of higher commodity prices and transportation costs.

The next third of the impact comes from an increase in prices for global commodities and raw materials.

We are observing escalation in the range of 20% to 30% for certain items, such as saw an odd and explosives, which is being driven by the increase in the price of natural gas and the availability of ammonia.

As well as an increase in the process still but it is being used in a variety of media and spare parts.

And the final third of the impact is coming from higher fuel and energy costs.

As an example diesel prices have increased by more than $50 per barrel, adding approximately $20 per ounce to OLED sustaining costs compared to our original guidance.

I will now turn it over to Rob and then Nancy for a more detailed look at our operational and financial performance and I will discuss how our second quarter results have been impacted by the current environment.

I will then wrap up with an overview of our outlook for the remainder of this year as we remain focused on implementing productivity improvements and offsetting the impacts of these challenging market conditions.

Over to Euro.

Thank you Tom and good morning, everyone.

Turning to the next slide.

Dive into our operations and projects starting with Africa.

Achieving delivered a solid performance in the second quarter due to higher ore grades and tonnes mine. In addition to strong mill performance.

And the team is working to complete and open pit layback, and we expect stripping to decrease in the third quarter as we begin to reshape war and create future optionality for both underground and open pit growth.

<unk> delivered a strong second quarter performance, increasing gold production by more than 25% compared to the first quarter due to improved ore grades higher underground and open pit ore tonnes mined and steady mill performance.

Despite the challenges experienced during the first quarter from supply chain disruptions in global border closures as a result of Covid.

Team continues to successfully ramp up mining rates in this unique underground, which Tom will discuss later on.

We anticipate production at a handful to be wasted around 60% to the second half of this year as we continued to increase underground tons through increased development and reach higher grades positioning with Apple for a strong finish to the year.

And finally, the team continues to progress engineering and procurement for the a handful north project.

All of the permitting has been completed and we are encouraged by our recent discussions as we continue the important stakeholder engagement work with local communities traditional leaders and regulators to ensure full land access that it is appropriately cleared of all structures.

Yes.

As I have mentioned in previous updates this will be an important milestone, which will give us the opportunity to update the remaining cost and scheduled to develop this prolific ore body, ensuring that we can appropriately incorporate the impact from this land access delay.

As a consequence of working through this important activity preliminary capital costs are expected to be approximately 15% higher than our original estimate and we are anticipating a shift in commercial production from 2024 to mid 2025.

We look forward to providing additional details later this year as we work to add profitable production from the best online gold deposit in West Africa.

Now turning to South America.

Cerro <expletive> delivered another strong performance in the second quarter as a result of steady ore grade and ongoing improvements to mining rates and mill performance.

The team continues to advance the first wave of expansions et cetera, <expletive>, including the expansion of the Maui honest district, and the development of the eastern industry to extend existing operations beyond 2030.

The development of the San Marcos declining is progressing and we have successfully completed the first blast in the eastern district in May of this year, an exciting accomplishment as we continue to explore and develop the district potential in Argentina.

At <unk> the team delivered a steady performance despite very heavy rainfall in the second quarter.

Impacting mine sequencing and the resulting in lower ore tonnes mined and milled in addition to lower grades.

We anticipate higher production in the third and fourth quarter as the rainy season comes to an end improving mill performance and reaching higher ore grades in the second half of the year.

And finally, Yamana coccia continued to deliver solid production during the second quarter accelerating ounces from the re leaching program and improving recoveries from the use of our rich are reaching solution.

We anticipate production liana coach to be weighted around 55% to the first half of this year.

Site decreases ore tonnes mined and placed on the leach pads, while we work to develop the first phase of the sulfides project.

Engineering is nearly 60% complete and procurement is around 45% complete with approximately one third of the local contracts already awarded.

And then and as you can see in the picture here. The team is progressing the camp construction and early asked works as planned ensuring we have in place appropriate commendations for construction workforce and for future mine operations.

The project team is preparing for an investment decision in late 2022, and we currently expect capital spend to be around $2 $5 billion from the film funds approval date with commercial production in mid 2026.

We look forward to providing an update towards the end of the year and we remain very excited about the opportunity to develop the sulfide potential avionic culture.

And now over to North America.

Okay Mosquito delivered another solid quarter as higher gold and silver grades helped to offset the impact from planned mill maintenance and higher costs associated with the workforce negotiation announced earlier this month.

As part of the newly established profit sharing agreement Newmont payments Keto has agreed to pay an uncapped profit sharing bonus up to 10% of profits from the operation.

With an expense of $17 million related to 2021 results.

More than $65 per ounce to north America's second quarter, all in sustaining costs for gold and over $180 per ounce for core product gold equivalent ounces.

For 2022, we expect the profit sharing bonus that has additional costs of around $15 million at an 1800 dollar gold price, adding approximately $4 per ounce to north Americas, all in sustaining costs for gold and $10 per ounce for co product gold equivalent ounces.

We reached this agreement with the workforce attendance keto without interruption to the site and we continue to build an aligned and valued relationship with the union leadership to support the safe and viable operation of the mine well into the future.

Looking ahead costs are expected to stabilize as gold production from this large pulling the talent by increases in the third quarter due to higher grades delivered from the <unk> pit walls co product grades from silver lead and zinc begin to decline in the second half of the year as planned due to mine sequencing.

Moving to Canada.

Productivity and cost continued to be impacted by ongoing challenges stemming from a very competitive labor market in.

In addition to these challenges alien or experienced COVID-19 related absenteeism during the second quarter as flight capacity restrictions and strict protocols remained in place to protect the health of our first nation communities and workforce.

Musselwhite and Porcupine, both delivered an improved performance compared to the first quarter, increasing ore tonnes mined and processed with musselwhite delivering its best monthly performance in over three years.

Productivity and ore grades at both sites are expected to continue improving in the second half of the year as mining at Musselwhite progresses to the north in the PQ deeps area and Porcupine reaches higher grades from oil and Borden beginning in the third quarter.

And finally at <unk> the site delivered improved production compared to the first quarter due to higher ore tonnes mined and processed at our leach facilities.

And as Tom will discuss later on the mine is now operating as a lead Schaumburg facility with steady production from optimized or placement and declining per unit costs for the remainder of the year.

And now turning to Australia.

As mentioned during the first quarter earnings call. The Western Australian border was reopened in early March resulting in significantly higher case codes ongoing testing requirements and strict close contact protocols throughout the state.

Approximately one third of the boddington workforce and half of the tenant workforce tested positive for Covid in the second quarter and the high levels of absenteeism from positive cases, and close contact isolation protocols continued to challenge productivity at both sites.

In addition, Australia is experiencing a tightening of the labor market is a competition for skilled workers and contracted services has intensified in recent months.

Despite these challenges boddington delivered a strong second quarter performance.

The team reported an increase in gold and copper production of more than 25% compared to the first quarter as higher mill throughput and grade more than offset lower tonnes mined due to inclement weather.

Performance from bulletins fleets affiliate told us hold trucks continues to improve each quarter.

And for the remainder of the year bought into and will focus on achieving record mill throughput rates and increase in tonnes mined from this cornerstone asset.

At <unk>. The site also delivered improved production with an increase of more than 25% compared to the first quarter due to higher ore grades and increase in tonnes mined and improved mill performance, helping to offset the impacts from higher contracted services costs in a very competitive labor market.

With the ongoing challenges of securing specialized labor and contracted services. The team continues to successfully progress. The second expansion of the <unk> project that will extend mine life beyond 2014.

Nearly 90% of the project engineering and procurement has been completed.

<unk> the project from a number of inflationary pressures.

During the third quarter the team will complete the remaining of the one five kilometer deep five and a half meter wide shaft and the installation of the headframe and hoisting infrastructure, which as you can see here is nearly 95% complete.

And as I had mentioned in previous updates on this project. This will be an important milestone as we evaluate the remaining schedule and cost to complete the project with the key work remaining involving the concrete lining of this production shaft.

This process will also ensure that we appropriately incorporate the significant impacts from COVID-19 related restrictions and protocols and the current market conditions for labor and materials.

We continue to operate in a very competitive labor market in the northern territory with significant demand for mining competitors and infrastructure initiatives throughout Australia.

Based on our preliminary view, we expect capital costs to be approximately 25% higher than our prior estimate.

Shifting commercial production from 2024 into early 2025.

We look forward to providing additional details later this year and we remain excited to deliver significant cost and efficiency improvements at this world class asset and with that I'll turn it over to Nancy on the next slide.

Thanks, Rob, let's start with a look at the financial highlights.

<unk> delivered a solid performance in the second quarter with $3 $1 billion in revenue at a realized Boe price of <unk> hundred $36 per ounce.

Adjusted EBITDA of $1 $1 billion and solid free cash flow of $514 million, our strong cash flow generation allows newmont to provide superior shareholder returns largely to our industry, leading leading dividend framework.

Last week, we declared a regular quarterly dividend of 55 cents per share calibrated at $800 per ounce.

Administrating, our confidence in our future outlook and our commitment to leading returns.

And as Tom mentioned earlier, we're in a period of meaningful reinvestment and essential component and Brian production, improving margins and extending mine life.

In the second quarter, we invested more than $600 million through capital exploration and advanced project spend as we continue to progress our near term projects and invest in our future.

In July we paid $34 million in advanced projects and part of our initial $100 million commitment to caterpillar as we work to develop autonomous battery electric is on track for our open pit at <unk> and our underground mine autonomy.

Compared to the first quarter adjusted net income declined more than 20.

Due to the macroeconomic factors that Tom mentioned earlier.

In addition to lower realized metal prices for gold copper silver lead and zinc.

We sold 46% of our metal in the month of June at an average gold price of <unk> thousand $834 per ounce substantially decreasing our average realized gold price for the quarter compared to the <unk> price of $871 per ounce.

Average realized metal prices were also impacted by a $105 million of unfavorable mark to market adjustments on provision rates provide price sales due to a sharp decline in metal prices on June 30th.

These impacts alone resulted in a reduction to net income of approximately <unk> 19 per share compared to the first quarter.

Largely offsetting a 12% increase in gold sales volumes due to higher production from our operations in Australia and Africa.

In addition, we experienced an increase of approximately $80 million from higher labor and materials costs, and nearly $50 million from higher diesel and energy prices compared to the first quarter.

And as Rob mentioned, we incurred a 70 million dollar expense in the second quarter related to the Penske no profit sharing agreement.

These impacts along with smaller less meaningful items resulted in second quarter, adjusted net income of $362 million or <unk> 46 cents per diluted share.

Despite the current market environment, our capital allocation priorities remain unchanged with a clear strategy.

To reinvest in our business through exploration on organic growth projects.

Maintain financial strength and flexibility of our balance sheet.

And to continuing to provide industry, leading returns to shareholders.

In the first half of this year, we delivered on each of these priorities.

Aggressive are profitable reinvestment into the business with the advancement of our near term projects and an ongoing commitment to our robust exploration strategy.

Enhancing our ownership of world class assets and proven mining jurisdictions through the acquisition of the remaining interesting anecdotes here and there.

Sulfides project.

Maintaining our industry, leading dividend at $2 20 per share on an annualized basis.

And sustaining a strong balance sheet with $7 $3 billion in liquidity and a net debt to EBITDA ratio of three times.

Preserving financial flexibility with no debt due until 'twenty nine.

As we look towards the second half of the error, we remain confident in our ability to continue delivering strong results and free cash flow to <unk>.

Maintain our disciplined approach to capital allocation and creating long term value for the business and all of our stakeholders.

With that I'll hand, it back to Tom to talk about what to expect for the remainder of 2022.

Thanks, Nancy turning to the next slide.

During our first quarter earnings call in late April we provided an update on the impacts to our managed operations.

A consequence of slightly managing through the Alba chrome surge or the.

First four months of this year.

We also discussed the emerging impacts from Russian Division of Ukraine, combined with the ongoing impacts from the global pandemic on labor markets and global supply change and as a consequence input costs.

We advised that we will be closely monitoring nice matters during the second quarter and will provide an update with our Q2 earnings in July .

As a consequence of this work we have decided to update our full year guidance to incorporate the following items.

First as we discussed in our earnings call in April ramp up mining rights at our new <unk> underground mine at a half of sales have been impacted by supply chain disruptions that have delayed the delivery of the required production drills.

And global boarder clauses that are impacted labor availability of the key talent necessary to develop this new born and train operators.

As also discussed in April <unk>.

I can now confirm that we are advancing the development of a third production level Thats a baker.

Which will add optionality for this mine and minimize future disruptions.

We expect first oil from this new thirdly around the middle of next year.

Second as we discussed in April with the pending conclusion of a contract to supply concentrate from Cripple Creek and Victor the Nevada Gold mines, we step back to assess our operating strategy at Cripple Creek and Victor to.

To determine if there was the potential for a simpler higher value local life Leach only operation that does not carry the complexity and cost of running our mill to process, a relatively small amount of the oil volume.

This work has now been completed and we have made the decision to put the mill into care and maintenance and move to a heap leach only operation reducing production levels in the second half of this year and beyond as a consequence.

Third as Rob discussed we continue to be impacted by the ongoing challenges associated with slightly managing through the global pandemic.

These challenges are particularly pronounced in Canada and Australia.

Where we continue to adhere to strict close contact oscillation protocols and testing requirements in.

<unk> productivity and increasing costs.

And finally as I discussed earlier the impact on our input costs from escalation in the three key areas of labor.

Materials, and consumables and fuel and energy.

These impacts to our managed operations have been built into our second half forecast as we work to address the critical global issues, we face today and deliver on our updated guidance.

So.

For 2022, we now expect to produce 6 million ounces of gold.

Which is within our original guidance range, but now incorporates the following changes from the impacts I just described.

80000 ounces at our Hopper SaaS operation.

50000 ounces across our Canadian operations.

40000 ounces at Cripple Creek and Victor.

And 30000 ounces across the Australian operations.

The impact from these lower production volumes, coupled with higher input process from inflationary pressures.

<unk> also increased our gold all in sustaining costs for this year $1150 per ounce.

We remain within guidance for sustaining capital.

We anticipate our spend to be weighted around 55% to the second half of this year due to global supply chain delays in the first half and our input costs.

The unprecedented and evolving market environment has also impacted our expectations for development capital since we established that guidance in December last year.

As a consequence, we have reduced our estimate for development capital for this year to $1 1 billion.

Incorporating the lies in spending primarily associated with our Hopper North Atlantic Cod yourself thoughts.

In addition over the next few months, we will pass through the land excess milestone for ethanol.

And the completion of shaft <unk> milestone for the Panama expansion.

And being in a position to clearly evaluate the remaining cost and schedule to complete both of these important projects.

Building on the trends that Rob just described will be in a position to provide additional detail on both of these projects later this year.

As we look ahead.

We expect that inflationary pressures and the impacts from a competitive labor market will persist into 2023.

Resulting in production levels and unit costs that will be similar to this year.

We are actively working on our 2023 business plan and look forward to providing you additional detail on our long term outlook when we deliver our annual guidance in early December .

We will continue to be transparent regarding the challenges we are managing is evolving industry.

And we remain firmly committed to advancing the initiatives that are most important to our business, including climate change.

In May we published our second annual climate report, providing stakeholders with a more comprehensive understanding of how we manage the impacts of climate change at our operations and projects.

We believe that climate change is one of the greatest take substantial threats to our way of life.

And this report outlines near months climate related risks and opportunities are strategic planning around various climate change scenarios and the specific actions, we are taking to reduce our carbon footprint.

In addition to our climate report.

And our annual sustainability report published in April we will launch new months inaugural tax transparency report during the third quarter.

Which provide an overview of the taxes, we pay as part of the value we create in the countries where we operate.

In closing.

We have a tremendous opportunity to address the challenges of our dynamic and changing world from inflationary pressures and global supply chain disruptions to climate change and reducing fatalities in the mining industry.

Guided by our clear and consistent strategy.

We believe that Newmont has the size scale leadership and experience to navigate these challenges as we continue into a mixed 100 years of sustainable and responsible mining.

And we're about ready and excited for what is ahead.

And with that I'll turn it over to the operator to open the line for questions.

Thank you operator.

Thank you ladies and gentlemen, we will now begin the question and answer session to ask a question you May Press Star then.

Then one on your Touchtone phone.

You are using a speakerphone please pick up your handset before pressing the keys.

Your question. Please press Star then two at this time, we will post to assemble our roster.

Our first question comes from Mr. Lawson Winder from Bank of America.

Your line is open.

Okay.

Hi, Tom and Nancy and Rob Good morning, Thank you for the update.

I wanted to start on the dividend in light of.

Everything that's happening in terms of cost inflation and as well as your comments and plans to spend quite a bit on capital projects in 2020 234, perhaps even beyond during this peak period of meaningful investment when free cash flow could be sort of pressured by these two factors is.

The current dividend sustainable and then secondly.

You've commented Nancy in the past that the dividend payout levels are assessed each quarter and I'm curious when you think about that assessment and you go through that process.

Is it the yield that youre, focusing on or is it the payout ratio.

Thank you very much.

Thanks, Laura and good morning, again, I'll pick up when.

When would you be able to pass across to you.

The loss on the key aspect of our dividend framework is golf course, and we look back at gold price over a extended period of time not necessarily any volatility you might see in a particular quarter and.

I look at the gold price.

An extended period of time, when we sit down and have that discussion with our board to ultimately decide the dividend that we pay.

And determine.

The cash that we've generated in our capacity to pay a dividend.

Look back over a six month nine month 12 month period gold prices averaging.

Around between <unk> 119, $50, an ounce over that period of time.

So it's the it's the gold price, which drives our dividend framework and then we look at our capacity to pay in terms of the percentage the free cash flow, we're generating based upon that gold price.

You might want to comment on yield is more Gulf crossing yes, it's certainly around gold price and margin is much more we're not solving for a particular deal I would also indicate too we've been on the more conservative side with a 40% payout at 1800 as we were entering this period of brand investment and the other piece I would note was when we put the framework.

Place several years ago, we started and have continued to enjoy quite high cash balances and we indicated at that time that that gives us quite a glide path. If prices were to change. So we had a great deal of conservatism built into the framework.

We continue to consider and evaluate it based on those cash balances in our ongoing outlook.

Expense here to build on that we also we also recognize that as a long term business that we'll reinvest from time to time, you'll have periods of greater reimbursement and lower reimbursement over the year on year or over a period of time. So we take that long term view and a consideration as we look at the spend profile of developing catheter.

Greg Thank you for the comment.

Very helpful. Maybe maybe I would ask it just.

Just one follow up along the lines of the <unk> dividend, which is when you speak of your capital allocation framework, which is.

Reinvest in the business and maintain the balance sheet and then.

And then three was industry leading returns it should we think of it as being 123, so reinvesting first strong balance sheet and then.

Sort of if there is capital leftover that then goes into the.

The dividend or is.

Is there a bit of give and take there for example could you sort of.

Delay some of these projects in order to.

Maintain a sort of.

Our competitive dividend.

Yes.

Goal that we have as a long term stability of the business and that absolutely requires reinvestment in these significant capital projects. So that will continue to be a very high priority for us and certainly our investment grade ratings and our balance sheet stability are also important so we will endeavor to maintain our margin. So we can deliver on all three of those.

As priorities that.

Certainly the long term value of the business is very important to us that they will continue to calibrate and balanced across all three of those imperatives.

Say reinvestment is certainly quite critical.

Okay. That's very helpful. And then just maybe sort of a conceptual maybe bit of a longer term question, but I mean, when you look at the cost pressures that you're facing in particularly the labor difficulties.

Does this create an imperative to accelerate your automation program and do what you did at boddington with.

A greater number of mines and to what extent can you accelerate that.

Yes, Thanks Lawson and good question I think technology is clearly part of the labor you have is a mining company to to improve productivity and ultimately reduce costs and Rob you might want to comment.

Well I think we have significantly benefited from having a ton of most haulage implies at boddington, probably less so from the cost pressure at this point in time.

The loss in more directly as opposed to the productivity given what western Australia is saying in terms of the introduction of the virus to that state over the course of the second quarter, but Rob I think if we had still had conventional people operating trucks at boddington they would've been.

Quite a significant impact through the second quarter as I think some mining companies who have conventional fleets in western Australia will have experienced during the second quarter. This year.

With over to the chairman.

The unpredictability of the bias not knowing who is going to turn up each day.

Would really impact to have 36 trucks guaranteed running day and there is really delivered we say often too but continued productivity. So it's been a good news story and Lawson. Thanks, Robyn most of them. We actually moved we haven't it's a control room, but I would say is this fleet of autonomous trucks in the latter part of last year knowing that.

Borders would eventually open up in Western Australia, we actually built.

Full back control rooms, so on the village.

From the Boddington <unk> thought we had.

We had several rooms set up from within which you could control the amount of boddington. So that if we did end up with.

A case of some of the key operators testing positive like could continue to oscillate and manage the bond from from the comfort of the room in the village.

So we are well positioned to use technology in this particular instance, but I think it will be a key driver.

In the mining industry, when we think about how we can manage some of the cultural deflationary pressures that we're experiencing in certain jurisdictions.

I'm going to ask one more.

Apologize for my colleagues have asked too many questions here, but I just I wanted to I wanted to get your thoughts on buy versus build it given the capex inflationary pressures here is there an incentive here to perhaps.

Look at additional M&A opportunities and.

Particularly larger more meaningful M&A opportunities and I'll leave it there. Thank you so much for your.

Your patients.

Thanks, Thanks, Lawson answers to those waiting in line, but will style Nicole until with the amount of information with shape. This quarter moved out in the colon and works for everyones question.

Most of that strategy doesn't change.

We are very much focused on.

Riding in our business and investing back in our business the best investment Chicken, Mike Beck within the projects very very well. So that is our main focus delivering value from that well managed operations and bringing on and developing our organic project pipeline.

But that doesn't mean that outright arms and turned on and if an opportunity presented where we could pick up.

An asset or a portfolio that met <unk> criteria around size scale cost profile and jurisdiction.

Then we would we would run the ruler over that if we felt that we could add more value.

With that assay portfolio sitting within <unk>.

Our operation but.

To be Frank 99% of the people who work at Newmont are focused on delivering value from the portfolio that we are managing today.

Thanks Lauren.

Thank you. Our second question comes from Fahad study from Credit Suisse Fahad. Your line is open.

Hi, Good morning, Thanks for taking my two questions first on the labor shortages that you're seeing particularly in Australia, and Canada can you just touch on the steps you are taking to address that shortage going forward.

It thinks about all the kick off and Rob you might want to build on both of those countries. So.

If you think about labor it's the.

Our workforce the people do newmont employees is relatively stable we're seeing.

And overall voluntary attrition that is at higher levels than we've seen in the past, which was towards the high level, but still within manageable levels of what we have seen in.

In the past so the inflationary pressure is really coming from the contracted services or the particular technical expertise that we say so the library you need to bring in to do large shutdowns or to repair a specialized equipment or to do particular contracted services work.

The additional cost that we're starting to see as people bid for work through that for the work that we send that why that.

That is an area that we're watching very carefully but the areas equally as important to me if not more important to me is actually having the people we didn't need to do the work. So we have a scope of work we need to do for a shutdown of a mill that you might take down say a couple of times a year.

If we can't get all of the people that you need and how are we thinking about the scope of work to ensure that when we bought them that mill up and re commissioning that we can run reliable reliably until its next knicks shutdown, so that the cost pressure, but probably more important for me is ensuring that we get the right. The right people working on the equipped.

To ensure that it is my time to the right level that you would have to build on that in Australia and Canada.

I'll just give one example.

The last bullet to Chuck.

We were 260 contracts to shore.

And literally we had some companies defaulting on entire packages of work so that that really means that we've got we're spending a lot more time with our contractors and our business partners to make sure that we're aligned with those was not only for the short term, but also for the long term and could.

Turning to deepen those relationships and I think just going back to what Tom said about our road employees is it.

No the <unk>.

<unk> proposition that nuance.

Both of us the safety aspect or environmental credentials as well as the leadership and the working conditions that is very very attractive to many people both inside our company know sage. So it really is around our contracting partners, where we're spending most time and will work to deepen those relationships just to build on.

Fahad and CMO remarks, I talked about one of the measures were put in place to mitigate some of these inflationary pressures our operational support networks.

One of those is in asset management, which which is obviously around how we do I might misquote.

True that asset management program. We are now looking at our micro shutdowns across their 12 managed operations around the globe and looking at how we can smooth out the timing of those shutdowns are when we do the different scopes of work. So is there a particular specialist skills that array around the world, we're ensuring that we're able to battle.

They use across.

There is various operations to ensure that we mitigate that risk of not having that critical resource available to do important maintenance work.

Okay. Thank you and just my second question switching gears to your inner coaches sulfides I noticed the Capex estimate didn't change in this press release.

Just curious if that is going to is the Capex review is done quarterly or monthly or if we should expect something that's part of the investment decision.

And if.

If the Capex review was done and the estimate wasn't changed whats different about the dynamic improve versus other parts of the world, where youre seeing labor and materials inflation. Thanks.

Yeah, Thanks to hug with so where we're at with the.

The sulfides project as we pass through the 50% engineering, Mark I wish because thats, where and that's pretty good for a project of this morning.

Monte project, that's a significant amount of engineering to have completed at this stage of the project weighting are dropping out the quantities.

Rod Rod as we speak through this quarter as we build towards investment decisions unusually large quantities to determine both the definitive schedule and the definitive estimate.

A key amount of work that all material that still to come.

So for US if you recall with we've actually ordered a number of long lead time on it so.

<unk> shows themselves, especially specialized steel involved with that oxygen plants.

Millimeters.

A lot. So we have derisked that project, because what's about cost and schedule by ordering some of those critical components and managing the lead times so looking forward.

There are two key components, it's all the what we call the Bulks will stick still to build a plant and all the skills involved in fabricating the meter tanks and pumps that you have.

Around this this processing facility.

The cost of steel by special steel and standard steel for that work and labor in.

In the Caribbean context.

We will direct haul I haven't <unk> company that we have got a lot of control to be able to manage it it'll be a very much a local workforce. So the risk is is in the escalations that that the world is sitting around the cost of steel.

In giving an indication in this update.

$2 $5 billion from the point of full funds approval. We are incorporating an early looking into some of the escalation. We're seeing in steel for that go forward number from full funds. So there is some consideration for that for hot as we are right in the middle of doing out definitive estimate and schedule as we speak.

That's very clear thank you.

Thanks, a lot.

Yeah.

Thank you our next.

Churn comes from Jacky.

<unk> <unk> from BMO capital market Jackie Your line is open.

Like Jack are you there.

Yeah.

Yeah.

Jackie Unfortunately, we are not receiving any audio from you can you. Please make sure that you are on mute locally.

Operator, we'll take the next question Jackie to them too.

So if we could get that long connected so let's go to the next caller and we'll pick Jackie up again.

Of course.

Our next question.

It comes from.

Yeah.

Josh Wolfson from RBC capital markets. Your line is open.

Thank you very much back to the topic of capital allocation.

Tom and Nancy.

On the theme of the dividend the existing policy in place. We think had talked about 300 dollar gold price increments being the key factor in determining what the payout was going to be and Nancy I believe you mentioned that there had been some conservatism incorporated in there.

We are seeing in the current environment gold prices come off and still cost inflation be meaningful so it does the current policy.

Still maintain its relevance or is there some sort of additional thoughts that we should sort of be thinking about rather than strictly that $300 increment determining payout.

Thanks, Josh.

That was a stop Nancy.

I think we are dividend policies deliberately set up to be stable and robust over the longer term. So although we're seeing some volatility in Gulf crossing in during the last few weeks.

We'd need to see how that plays out going forward in this and there's lots of lots of pundits and authorities that views of our Gulf cost might do or not to.

We will continue to follow that framework look back at the gold price over extended period of time, the cash we've generated and are generating at mic judgments within our framework.

I think the area that as we look forward in terms of.

The dividend framework is the debate, we're having around Flores in the gold price and then ultimately what gopro can be used for the for doing a bond planning and for determining our reserves and resources and picking up the COO.

Conversation, we had our last earning calls and conversations we've had since then so.

If we were and we're still midstream inactivate looking at.

Looking at all of those things, but if we were to lift out of the Gulf process that we use for planning and for.

Reserve setting then we would step back and look at our dividend framework and the construct around that floor in the Gulf for us, which will have to move so I think that's probably the most material thing Josh in terms of your question, but we want to build it then.

Yes, that's exactly right. Tom said, if you remember back to our framework. We had indicated a dollar based dividend of 1200 dollar gold price and through the inflationary pressures and what we're seeing as Tom indicated around reserve pricing and everything else. The question becomes what is that for today and so what you may end up seeing and we'd still.

Got quite a lot of work to do it's a slight shift in the framework, but certainly we have the ability and while retaining the ability to pay a dividend into the future.

Great. Thank you for that insight.

And then also on the share buyback.

Notice there hasn't been much activity.

Year to date and we obviously.

Looking at the move today, but even before that prices.

Much below where the stock was trading throughout 2021, when there was meaningful activity.

What's the current thought process on how cash is allocated towards the buyback.

Yeah. Thanks for the question and it's one of our we continue to evaluate as we've indicated previously it's a very opportunistic tool and so we will use that at certain times as we've been doing that work over the past quarter to evaluate the impact on inflationary pressures with our capital projects. In particular, we've made the decision to think about where we want it.

Spend our dollars and that's really what resulted in us holding for the moment, we will continue to evaluate our share price and the use of our cash, but yes, I would consider that to be an opportunity to take tool that we will certainly is from time to time and we do have just a bit under half a billion dollars remaining on the existing program.

Okay. Thank you very much.

Thanks, Josh.

Thank you.

Our next question comes from Tanya <unk> from Scotiabank Danya. Your line is open.

Great. Good morning, everyone can you hear me.

Loud and clear thank you Tony and good morning. Good morning, Tom. Thank you for taking my questions and that's helpful.

And then start the first one maybe to Rob.

Figure out what's happening in Panama, I think to cause I was quite surprised at the increase in capital to that extent of 25%. That's mainly new projects that are coming in and so 25 is that quite a big number for me and also the slippage Jim over here when it's quite a slippage for me so I'm trying to understand.

What exactly is happening there just had that amount of tackling some slippage when we were quite advanced in that project.

Thanks, guys on the Gulf pick that up and then parts for Rob for more color the.

The key milestone with the.

Thinking up a production shaft of of that Dicks.

Our kilometers of mall deepen fob in a heartbeat is one issue to get to this point, where we now have a whole essentially within weeks away from being up in width and depth.

To be able to move down and survey the conditions of the wall all the way down to understand therefore, the work you have to do in lighting that shaft.

Two to do whatever bolting and Chubb credit you have to do when they come down into the <unk>.

Establishment of the hallmark and the installation of the public on the concrete lining.

It was we're always building to this point in time, where we will be out to survey the shaft and understand the time and materials required to complete the job. So I put it in perspective for everybody on the call.

If you've ever seen a skyscraper being built.

And the lift well going up with normally the branding of where it was building. The building you will say the liffe will going up in in.

A few betas once a week or wherever food is as they are putting the full booked together and lifting that.

That structure.

To establish that goodwill for the heart of that building.

No notice that takes many months to do that.

We are about to stop that process upside down for the shaft and its a depth. That's the equivalent to three of parts type buildings that we're hitting underground to put the homework in place with each and every day, establishing formula pouring concrete letting it sit moving forward on packing moving toward another step so really that serious task.

And we have stepped back now that we have the shaft almost finished we've done at an initial survey.

Got it as a funnel survey and then we can sit down with our contracting partners with excellent clarity on the condition of that shop on the tomo materials required over the next 18 to 24 months to law in that shop.

With concrete and the other supporting infrastructure all the way down.

We haven't provided an update on Panama too in terms of cost or schedule since the beginning of last year.

So what you're saying is update I'll give you a trend whilst we do that reminding work.

As an indication now at the time of materials to complete that work with a clearer understanding of what the shop looks like.

And a clear understanding of what the inflationary conditions in the Australia and in the Australia market. So what it is today is pricing and therefore cost and schedule based upon a whole we now have largely I put in the ground that goes one and a half.

Kilometers down.

So that those sorts of increases.

Similar to the Escalations that we have seen as an industry, particularly in Australia over that 18 month period.

But Rob did you want to provide any color on top of that thanks, Tonya and I'll just build off a couple of things that Tom said.

In General terms, you know aside from being at the moment in time, where we can really get the specific quantities of what's going to take to lighten that shaft.

In which I'd look at the increases at about 60% of that is also due to COVID-19.

Is it you know some of the key factors in that is it half of our project team was based in double EBITDA, So actually getting them. There we had that two weeks.

Where we have a COVID-19 case autonomy, we've had to shut down the whole operation, which ended up delaying the project, but at least six weeks and then with the absenteeism labor shortages and logistics as well that is also co.

Caused a significant delay as well as as well as the cost.

I think the final point just to really Echo what Tom said is that you know what the early parts of a project. We obviously have engineering that we assume but it's the only know that we've actually done. The work you can actually see the geology the overbreak the actual specifics and those engineering Amun so the engineered maturity.

Have changed quite markedly so also see about 60% of the capital increases due to Covid about 25% is really due to you know.

The engineering maturity.

Amongst other things, but the last thing is certainly see.

Tanya is that hopefully you can see in the picture. There is significant work that has been accomplished it's.

It's being done safely.

During a COVID-19 pandemic, we're very very proud of what we've achieved but.

Tom said.

This is a point in time, we're able to SaaS what has the last 18 months really made to that project and this is this is the outcome.

Thanks, Robyn and tend to still absolutely terrific project. This production shop, the Crusher Chamber on Tonight opens up one of the great Gold resources in the world. So still incredibly excited about this project as we reached this milestone and have a great great clarity on the cost and scheduled to bring it home.

Okay.

And maybe just on the other projects on line now.

This is jocelyn.

Asset.

Yes.

Thanks.

I'm just wondering you mentioned that you've done the costing as of now, but you're still on working on some steel.

So as we get to December when you have to make an investment decision on that one.

I just want to clarify we are expecting potentially a further update on that one including <unk>, Cerro <expletive> and Panama.

Yes, Thanks, Terry why don't pick up so far again in Rome.

Just to cover off we were saying Cerro <expletive> more sitting.

Two we have as we've looked at some of the inflationary or escalation pressures on steel in particular.

And providing that.

Sulfides number the go forward number two in a happy $1 from full funds is starting to incorporate some early views training views as to what that number looks like we still have to do the definitive estimates, which will actually give us some quoted numbers.

But we are starting to incorporate in that number.

Some of those things in terms of the update this quarter.

And Robert do you want to cover Cerro <expletive> and although I'll kick off with <unk>.

China is definitely good work is progressing well with enrollment that as you may remember.

A large part of the <unk> project is really about dewatering. The pit. So we're well on track for having Oh, the dewatering installed and mechanically complete by the end of this year. So we actually take it forward to the investment Committee.

In the latter part of this year for the actual layback.

And we will be able to provide.

The assumptions in the estimate they are post that but the good thing about <unk> is it's certainly progressing well consistently at Cerro <expletive>.

There's a lot of work going on there at the moment, we've got three portals, which we're working on and have established so that's going great guns I mentioned the boat.

The first blast as well. So we are we are walking along there quite nicely.

Certainly again from the end of the year, we will provide updates, but it's really going to be more of a progress and perhaps an update in terms of the development. We're still looking at $300 million development Capex for for Saturday <expletive> in total, but again the key thing I just want to make it crosses the very good progress that we're may.

At Cerro <expletive> in particular around productivity.

Okay, and then lastly, just another technical question, how should we think about <unk> going forward from an operational standpoint, I know you gave us guidance reduction for this year.

Just keen on understanding this asset just longer term, how we should be thinking about it.

Thanks, Thanks, Danielle I got picked up again, Rob and built on our <unk> moving to focus on open pit mining and heap Leach Charlie we will be working to to have say save the running as simply as it possibly can as efficiently as it possibly can.

Because it's got a single minded focus on.

Morning, efficiently and stacking on the heap leach efficiently and with that focus we expect that we will have a mind, it's very long life.

Cause of that simplicity and that efficiency brokerage you would've.

That's the key for me China, It's about how do we strip as much cost so to the operation in particular, you know the operating support networks, how do we leverage off that the proximity to Denver and obviously the technology that we're working on with caterpillar, but the key to this is simple mining leaching operation and.

Which we are really expecting to get a significantly longer life.

Long life assets is an important part of the Nemo portfolio.

And just maybe 100000 ounce producer is that how I should think about it.

No I'm more than more than that I think it would be pushing to get to 200000, but between 150 to 200000 run and run as efficiently as it can leaning into it as Rob said that proximity to Denver is how we're approaching it as opposed to trying to have something thats might be greatly between 202 hundred 50000 with all of the complexity of trying to produce.

Our concentrate and all the bandwidth that gets taken for running up a mill for a relatively small part of the value of the operation.

Okay. Thank you so much I'll pass it on to someone else.

Thanks Ted.

Yeah.

Thank you. Our next question comes from Anita Soni from CIBC. Your line is open.

Thanks, everyone and thanks for taking my call.

I'm just going to ask one more question about the dividend and then move again to I had a question on the dividend, Yes, you mentioned 40% of that.

Youre using a 40% I'm being conservative currently I'm calculating it.

Nearly 80%, 90% of your free cash flow for the past few quarters. So I just wanted to understand when you're right.

You're talking about the same basis of where you guys are using.

Free cash flow for the dividend.

Yes, Thanks, Haneda and so how do we think about it is we look at our plan period in our forecasting and we calibrate over the cash we believe we will generate during our.

For us it's a it's a five year planning period, and certainly over the much longer term and so we yes and in terms of our forecasting and our modeling. Our view is that we are around the sale of a 40% payout calibration at the 1800 dollar gold price.

Okay. So youre factoring in perhaps you know better.

Rather than what your near term and happening correct.

Well and I think youre, saying that where we're investing in our business and investing in our future and those are the indicated returns from these capital projects and the cash flow they will generate an incomplete.

Okay.

And then second question organically just I'll, just just to be clear how much do you plan on spending this year and that would not be included in the $2 5 billion $2 5 billion estimate correct.

Yeah.

We're thinking we're looking at about $3 million to $400 million this year.

On the project building up too.

To full funds approvals. So there's money we're spending on key critical path items that we're procuring.

There's money that we're spending on using local local contractors to do some of the early Earth works, which is a critically important part of ensuring that there is meaningful work for the communities in and around kind of awkward unit culture.

We are building the.

The camp construction Cat 4000 beds and you saw that in the photo.

How advanced that.

My experience in these mega projects is that they often fall behind in the very early days, because we don't have a COO.

A couple of I shouldn't say workforce de risking the project.

With the construction of that cap this year and the fourth key area for that spend is the engineering work that we're doing.

With bechtel and hedge.

That enables us to Derisk the project because of the level of engineering that we have that allows us to then be comprehensive without definitive estimate and out affinity schedule as we move towards full funds. So those are the four key areas.

But that three to four.

$100 million easily directed to and just.

If you picked it up we actually as we thought as we've looked through our development capital spend we have adjusted our overall did cap for this year down to $1 1 billion.

Okay and then my last question is with the outlook in 'twenty 'twenty four so I. Appreciate you know given you guys, giving at this point 23, similar number of plants seem that to me.

$6 million at about $900.

Cash costs.

Look into 2024, I mean, I think the original with Nanticoke, sorry, with the Hoffman orphan to be Panama expansion, that's where you would have seen perhaps an uptick in.

In production would you expect at this stage 2024 to be similar to 2023 and 2022.

Or are there any other areas, where you could potentially see improvement.

Into 2024 outside of the two projects.

Yes.

Thanks, <unk>, yes. It is.

Inevitably these projects are impacted and affected by the experiences of the last couple of years and that topics pushing out we'll start to see those ounces come on in 'twenty five Robyn 24. So if you look beyond 'twenty three to 'twenty four you're going to see.

A relatively flat production profile year on year slightly also stated kicking in 'twenty five and into 26. So then you've got kind of a cell phone is coming beyond that.

So 2024 looking pretty consistent through six G. I was just going to be the 77 5 million ounces gold and around about a roundabout six and that's really what we're aiming to do is to be.

Steady producer of gold at or around the six to six in a heartbeat and ounces of gold seven and a half to IP and ounces of gold equivalents.

All up.

24.

Pretty stable what are your thoughts will start to kick up from 10, a month, two and a half ago.

Okay. Thank you I'll leave it there and let other people ask questions.

Thanks Anita.

Thank you. Our next question comes from Brian Macarthur from Raymond James Brian Your line is open.

Good morning, and thanks for taking my questions most of them, but I just want to follow up a little bit on.

The provisional pricing and again I guess, what I can add on the realized price for zinc.

For dollar a.

Given we're close.

It seems awfully low did you have a lot of open pounds.

Quarter over quarter. If you just you said, 46% were subtle in tune, but even the June price with a lot higher than that it seems to be a big back half weighting. So can you just go through how that works again, specifically a penis.

Second part of your question then is pounds open now and where I'm going with this is how much of this is pack versus accounting because.

All of these questions rewriting a better cash flow over the last couple of quarters, there seems to be a pretty big base metal.

Fluids here that sort of varying quarter to quarter.

Thanks, Brian and I think it's potent area on pack in terms of how the quarter played out but I'll pass across to the financing of it sitting alongside available cycle, Daniel Horton who hum.

Who leads our.

Our commercial team. It does it does a lot of those styles, but let me tell you that with you Nancy Daniels of dialogue was very helpful.

Our Daytona great to have your entertainment too. So we did have a big change from March to June and so that's one one way to think about it and then really our concentrate sales take three to six months to finalize so that had a pretty significant impact and then also our ounces outstanding at the end of Q2, so our mark to market adjustments were about 40 million.

For zinc.

And $23 million for copper gold was about $21 million and silver at $15 million. So that was the largest component, but that's really.

What drove some of this provisional pricing adjustments Daniel anything else you that yeah, that's right and Brent maybe the only thing I'd add is the average price in June was around $18 30 per ounce. So.

It was significantly lower than that when he stopped for the average for the quarter and then the other point I'd make too is with what where gold prices trending right. Now obviously, we could expect another similar adjustment if prices continue to decline in the third quarter.

Sure.

No I mean, you got a lot of the site, but I mean some.

Some of those aren't delaying three to six months or what what do you. What's your general timing lag that normally for the gold like the base metal side I can say.

Yeah. It can be three to six months whats the general global too.

Yes, Brian the majority of our gold production comes in the form of Dori and that that really settles in the near term. So that's not where we're seeing the biggest impact gross impact of that paint.

And boddington can you scale on the concentrate shipments are about three to six months on settlements and so they are they are longer longer timeframe on boddington its more around that three month time frame.

So that's call it 20%, 30% of our total production of concentrate does have a pretty significant impact on the realized price when when our prices are dropping like like we've seen in the recent months.

Makes sense. The other thing then so all this discussion about how you said it I know everybody focuses on the gold price where your dividend.

<unk> Gold company, but how do you start to think about this I mean, just this quarter. As you said you had like $90 million in adjustments, some byproduct or whatever how does that generally thought it into your long term thinking for setting that dividend as well and over time, you might grow other parts of the business as well.

Yeah, Thanks, Brian and we do look at the the longer term as we consider it and as we put the framework in place two years ago. So we certainly think about all those puts and takes and we have our long term economic guideline that we use and we do quite a lot of work on a regular basis to look at that forward forward curve, whereas consensus had it and then the impact on our <unk>.

So all of that is baked in and we do see some pretty significant disconnects from time to time, but I would say over the long term the trend line stay very much in alignment with our economic guidelines. So this is I would say this was a bit of an unusual quarter in terms of just the way the timing and the pricing aligned but over the long term, we do start to see those peaks and valleys.

It flattened out.

Great. Thanks, Yeah, I would agree with that there were some unusual quarter. Thanks, thanks very much that's very helpful.

Yeah.

Thanks, Brian .

Thank you. Our next question comes from Greg Barnes from TD Securities. Greg Your line is open.

Yes. Thank you just a question around the inflationary pressures that you're seeing.

Are they peaking now or are you do you sense that.

What we've seen the first half because he is going to continue in the second half.

Thanks, Greg and good morning.

Good question to ask everything way, we're saying.

Is that a.

Commodity level.

They are paid.

Flattening out so as we look forward, we're seeing that.

The $20 an ounce that builds into that that increase toyotas sustaining costs that that's that's pretty flat.

Labor I would size the difficult one.

With that specialized Libre I think there is I think globally, the wells being shifted on us access in terms of of.

What about a bit of deliberate decisions people are making about about things.

So there's something about to give you bought one example in the Australia and cortex.

Locke.

200, $200 billion to $250 billion of infrastructure projects that are on the slide.

Typically in around major cities look at that specialized LIBOR by going to fly in fly out four months ought to work on a.

Shut down or to work on a project or am I going to go and work on this bridge or this freeway extension I think you're seeing that play out across the world in different places. So I think it's still a question mark over by the labor what $20 an ounce built.

It's basically can predict the year going forward.

Yes.

It's a pretty good estimate.

And then and then fuel and energy, obviously, you've got the collateral impacts on on.

On fuel in particular diesel cross so.

Some instances outside probably commodities, probably based predicted there is still some volatility and that's that's where we're going to be leaning into controlling those things that we can control. So the work we're putting into the as I've described before operational support networks to ensure that we are leaning into our global supply chain that we.

We are ensuring our inventories with our Nate debate with my tiny nice inventory, we've moved more to a local original supply the trying to navigate I like our global supply network. So there are a number of things we're doing to mitigate the work we've done with we supply is lending into the relationships you spend years building.

To ensure that we've got one supply to cross protection.

Focusing on all of those things that we can't control and sort of a volatile world. So sorry, it's probably not the most satisfactory answer but there are some levels of profitability, but still some levels of volatility.

Okay.

And then maybe there is just a technical question for Nancy but not alone in this why the gold sale always get heavily weighted towards the end of the quarter.

Okay.

I think it's that way with with most of the miners, but typically we will have a golf course scheduled for the last week of the quarter and we ensure that those get.

Shipped and sold at market and I think that's very common we do the same thing at the end of every month and so that's a very normal cycle for us, but the Gulf ports are schedule to really align with closing everything out at the end of the month and ensuring we have time to chefs get get sales accomplished in those kinds of things, but that's a very common cycle for us in terms of sales.

Yeah, everybody else just seems 46% in June alone does seem like a lot.

That's that's quite normal and also sometimes it has to do with transportation contracts and there have been disruptions in those as well so simply just getting the dore to market can be a challenge from time to time. So in this particular quarter I do also think that had an impact on that.

Back back portion waiting.

Okay. Okay. Thank you.

Thanks, Greg.

Thank you.

Our next question comes from Adam Josephson from Keybanc, Adam Your line is open.

Yeah.

Thanks, Tom and Nancy good morning.

Tom Forgive me if you've addressed this at various parts of the call, but you talked about your expectation that gold causally flattish next year.

And on the one hand, I think you said you've entered into some contracts and embed. Some degree of inflation next year on the other you have the one time costs into Q that kind of skewed that wont repeat and I think others have referenced the fact that many global commodity prices have fallen quite considerably in recent weeks because of.

The expectations about it.

Eminent global recession, how are all of those factors weighing into your <unk>.

Preliminary thinking that gold cost will be flattish and how.

How much upside or downside risks on do you think there is to that flattish cost next year.

Yeah.

Yeah, Thanks, Adam good morning.

The starting point for US is how we how we say I mean production is a key driver of our costs and so I assume that that production level year on year being at or about about the side might be might be a tad bidders, we as we see some improvement come through so that's that becomes the number one driver in terms of costs that we see that but pretty consistent production.

Then.

Then we brought in the middle of Al.

Our business planning process at the moment.

Then looking and debating and discussing what we're seeing in terms of our input costs.

We're seeing the various <unk>.

Contracts that we've got playing out in terms of whether it be.

Contract contracted services live or whether it be around workforce, whether it be the assumptions you make around diesel in the next year.

Functions, we micro RAF spare parts.

The assumptions we make around.

<unk>.

And saw an order in the contracts that we've got in place with our suppliers. So well go up what's happening in the world in terms of.

In terms of inflation and then we've got one of the things that go to our cost base.

What have we got what are we seeing in terms of those costs in those locations based upon the contracts that we have and we put all that into a melting pot and start to do our planning work and we're seeing.

Unit costs for next year on us on a very similar production profile come out at around the same levels that we're seeing for this year. So in terms of trying to give you some indication as to how 'twenty threes looking compared to 22.

Where we see hearing in July there'll be owner Theyre planning process with the melting pot, it's looking at or around the same now.

And then could you want to yeah. We also have in the past continue and we'll continue to do so provide great sensitivity around some of our most critical input costs. So when you think about the free cash flow generated from our operations, you'll be able to to really indicating there. If we have another $10 change in diesel price what impact is that going to have on free cash flow as well as other end.

So we will continue to provide that transparency and all of that will be a part of our guidance in December once that's updated for 2023 to Tom's point at this point it looks quite similar but we haven't finished all of that work.

And I just wanted to follow up to that Tom before I ask one other question, which is on the labor piece, how sticky do you think that inflation is likely to be I know you mentioned, Tom there was there's some global infrastructure projects happening which is.

Which is taking some labor away from you arguably on the other school of thought that if the global economy goes into recession. Some of those folks who were who had.

Stopped flying in and out to mines will perhaps have little choice, but to go back to their previous jobs.

Do you think that it's I think we'd say it most pronounced across United States, Canada and Australia.

And and but.

If I look at Canada and Australia.

If this there're some.

Big projects and end demand for labor and a diminishing pool for library to the mining industry. So.

Well I would predict that that will be reasonably sticky at least at least into 2023, when when I look at the markets in which we are operating in those countries up ROE on a good day.

Sitting alongside of me, who we.

Around that supply chain, Robert Dan anything you'd add to that.

I thought I'd just echo what you said told me I think in those countries. In particular, you know the skills coming into mining are not flowing.

As much as in the past that we are relying on the established skill base and with the increased competition that would be highly unlikely that those wages essentially would go down so I completely agree.

And I think Thats right.

Got it.

Okay Mike.

Sure Thanks, Adam could kick out.

Yeah, Okay, sorry to interrupt Tom just on the production.

You're expecting flattish gold production this year and next year and it sounds like into 'twenty, four as well and obviously your peers are.

Experiencing similar bottlenecks in terms of their ability to grow production just myriad supply chain labor.

Covid difficulties.

What do you think.

Keith.

It's as if no matter how hard the gold prices and it is still relatively high by historical standards. The industry just doesn't have the ability to increase production and that doesn't seem like it's going to change anytime soon.

Agree disagree any thoughts along those lines.

Yeah. Thanks, Adam certainly from a demand perspective, as we as we transformed our business three years ago.

The strategy is to be able to mine tine.

Six months to fix a halfway in ounces of gold each and every year and another 152 million.

Analysis from copper silver lead and zinc, although we might have some some some years, where you have some she moved to the upper end of that band and now the issue of the lower end of that band.

<unk> around that consistent delivery of metal over the long term and our focus on reinvesting back in the business is to bring on lower cost.

Gold ounces and any other metals, but to extend mine life. So when we think about growth. It is as much about growth in margins as we need to back pricing in bond loss as opposed to focusing on trying to have growth in ounces.

This margin and model off so these projects 10, aby <unk> sulfides, we'll bring on low cost ounces that will help strengthen our cost base, but more importantly, they extend them on life and now our narrative of being very reliable long lock producer of gold at those levels.

Mine tide.

And just one last one for me Tom along those lines in terms of that.

Yeah.

Additional risks that E E.

You and others Youre dealing with I mean, theres growing social unrest throughout the world not just in mining heavy countries how is that.

Acting youre thinking about.

Just long term production planning and your ability to grow production in the future given the the specter of higher taxes, increasing disruptions et cetera.

Yeah, Thanks, Adam I mean, a very important part of <unk>.

Mobile strategy is as I've talked about scale its cost base model off in the other key part entities, where we choose to operate matters. So we.

A lot of time and attention in terms of understanding the jurisdictions that marine maintaining and developing relationships. The jurisdictions that marine we're bidding all of those jurisdictions for a very long period of time and if we were to choose to go into a new jurisdiction, we will spend a lot of time and attention on that to ensure that we could operate it nicely.

<unk> for the long term. So every location that we're operating in.

We're very comfortable with the relationships, we have and the relationships that we can my time to support our business going forward and we believe it is a differentiator for new money in the gold industry today al very clear focus of way, we choose to operate minutes.

Thanks, so much.

Thanks, Adam.

Thank you Adam.

Our next question comes from Mike Parkin from National Bank, Mike Your line is open.

Hi, guys.

You answered my question, there on where you're seeing the contract to serve a sleeper.

Competition that seems to be.

Kind of government related infrastructure builds.

My other question was.

In terms of concentrate processing are you seeing any pressures there in terms of that group's ability smelters group's ability to process con or.

The cost to process con escalating due to as you've done with it.

Alluded to.

Input commodity costs rising are you seeing anything on on your smelter relationships showing pressures in terms of processing the con.

Yeah. Thanks, Mark just just before our cost across our Daniels, probably best place to give you some color on that question, but on your on your comment on the first one certainly there's government related infrastructure, which I think will still continue to see in some of those jurisdictions, even in a recessionary environment.

But some of those jurisdictions also have preceded to get demand for mining projects.

<unk> work in mining projects. So I think that's the COO.

Couple of dynamics, playing out there Daniel do you want to talk about the Coke concentrate yeah definitely thanks, Mike for the question you know I think the strategy. We use in terms of our customers is long term in nature and so while.

We may see periodic disruptions and our smelting and the smelting cost the relationships are very strong and very long term. Many of these partners have been with us for decades. It at a different site. So not seeing anything that we would flag at this point.

And our our concentrates, especially for penni scalar a pretty unique unique material about the smelters are in high demand for so nothing nothing notable at this point.

Okay. Thanks, very much guys.

Thanks, Bob.

Thank you.

The next question comes from Bob Brackett from Bernstein Research Your line is open.

Thank you in terms of the half one north delayed land access do you have a sense of where those local stakeholder concerns are and how intractable or tractable. They are and how may be slower how quickly will be to address.

Hey, good morning, Good morning, Bob we have a very robust.

Our relationships with all of the cases to I call. It is in that process. So there.

The government plays a key role in all of it.

Although there is important so the government whether it be the original minister or the the API. The mining Minister, it's very very good relationships with ice case to Iqos.

The traditional latest.

The off onto Heaney, the king of the Ashanti is a very important stakeholder in that process very good relationships with the top of Haney and then the communities in and around the Hopper.

But our communities Fox Chase to those communities and we are working very closely with them.

Two to work through.

Our resolution of all outstanding matters, so that we can clean crops and structures and start work. So this process is one of insuring and I think it's one of the whole box of of GM altered areas Gi practices, it's ensuring that we work together with all stakeholders and ensure that we are always aligned together.

Before we move forward. So we don't want to Berlin and stopped building a mind, if we haven't got everybody working together on this project because with 100 years of experience. We know we know if you don't do that will you.

Your pie the pop up for that in the years ahead. So we don't want to stop work and to work with everyone aligned.

And I think the work we're doing is progressing very very well.

Very pleased with how it's coming together, but we want to make sure that every one of those stakeholders is supportive of this project as we start with Brexit, but Robert do you want to build upon that I think the only other thing I'd add Bob is it.

In Ghana. This type of development is critical for economic shortly.

Stating the area.

Providing.

The jobs and training as well as the other benefits that come to the community. So certainly the vast majority of people absolutely see that absolutely wanted to it but the key thing for US is just making sure. We've got that full alignment for this last part of Oh, gaining access before we actually.

Turning to first saw it.

On the on the ground, but this.

The support for the economic development is very very strong in Ghana as well.

Great Thanks for that.

Thanks, Bob.

Thank you.

Our next question comes from John Tumazos from very independent Research John Your line is open.

Thanks to the Newmont team for the service and keeping the results are as good in a tough time.

Is it right to sort of interpret that in terms of the background macros.

You are not reacting to.

Tuesday.

July 25th coefficients, specifically that your expectation of the long run.

Likely normal.

And since the balance sheet is so great.

But if you borrow a little bit for capex or to fund a dividend or share buybacks.

Okay with a 0.3 debt to EBITDA ratio.

And I'm, specifically thinking about how.

Difficult. It is right now with the gold price falling and the cost having risen 12%.

And the spot gold market having.

About climate for jewelry demand was disposable incomes and central bank purchases or was any etfs or selling and for all we know the euro goes to 50% because a lot of these European governments are broke.

And the dollars inadvertently strong so you're working through.

These things because who knows maybe the Ukraine warheads and by the way the dividend is tagged to price, but costs are going the wrong way.

And I'm not sure that there's a natural ceiling or floor in the gold market.

Because we don't know what the natural ceiling or floor is for inflation interest rates of the euro exchange rates all of that stuff. Please.

Thank you John I think you characterized how do we think about our business over the long term very nicely.

And.

It's one why we put a lot of time and attention to my timing, a very strong balance sheet.

It gives us the strength when there's some volatility, but we do take a long term view and the long term view.

On golf Ross is due to robust over the long term, but you characterized our approach quite nasty message you want to build on that yeah. Thanks, Tom and I would also have we know that the gold prices cyclical over time and so our goal is to ensure we're preserving margins at times of high gold price and adding cash to our balance sheet, which is exactly.

What we've done during this last cycle of rising gold prices, who knows where it is headed today, but that's why we wanted to be in the position that we're in very strong production profile for decades to come as well with a lot of cash on hand. So we will continue to evaluate all of those factors, but we truly have engineered the business to navigate through all parts of the cycle.

So following up.

The various capital projects to strengthen the company.

For.

510, 20 years from now are Paramount.

Exactly John and I think the strength of our company over the last several years has been the result of the capital investments that we made over the previous fall abused.

Through the through the cycle I mean, we were investing in and marrying of Suriname at the bottom of the cycle back in 2014 50 days. So it's.

It's taking a long term view working through the cycle, ensuring you have always got a robust base.

And and reinvestment.

In the business so that it can be strong for a very long period of time.

Thank you and congratulations on weathering things as well as you have.

Yeah.

I think all providers is that a consensus of people.

Yes that is correct, ladies and gentlemen. This concludes the question and answer session I would like to turn the conference call back over to Tom Palmer for any closing remarks, Tom. Please go ahead.

Yes.

Thank you operator, and thank you everyone for your questions today and for taking the time to do so.

Threw out.

A summary of the second quarter, a discussion on where we sit for the reminder of how did this year and please enjoy the rest of you wake up thank you everyone.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may disconnect your lines now.

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