Q2 2023 Newmont Corporation Earnings Call
Speaker 1: Thank you.
Speaker 2: Good morning and welcome to Newmont's second quarter 2023 earnings call.
Speaker 2: All participants will be in a lesson at home mode.
Speaker 2: Should you need assistance, please signal a conference specialist pressing the star key followed by zero.
Speaker 2: After today's presentation there will be an opportunity to ask questions.
Speaker 2: Please note this event is being recorded.
Speaker 2: I would now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Please go ahead.
Speaker 3: Thank you, operator.
Speaker 4: Good morning everyone and thank you for joining UMONTS second quarter earnings call.
Speaker 4: Today I'm joined by my Executive Leadership team including our Chief Operating Officer Rob Atkinson and we'll all be available to answer your questions at the end of the call.
Speaker 4: I'd also like to introduce our recently appointed Chief Financial Officer Karen Obermann.
Speaker 4: Karen is a highly experienced financial professional who has held both CFO roles and board seats in the resource and energy sectors.
Speaker 4: She brings a breadth of global experience and we are very pleased that she has joined the Newmont team.
Speaker 4: Before I begin, please note our cautionary statement and refer to our FCC filings which can be found on our website.
Speaker 4: Guided by our clear, consistent strategy, our focus is on running a safe and sustainable mining business to generate long-term value.
Speaker 4: And while I'm not happy with our ultimate financial results for the second quarter, I am very comfortable with the prudent decisions that we made during the quarter to safeguard our workforce.
Speaker 4: year to deliver strong performance in the second half of this year and beyond.
Speaker 4: During the second quarter Newell produced 1.2 million ounces of gold and 256,000 gold equivalent ounces from copper silver lead and zinc.
Speaker 4: Generating nearly $1 billion in adjusted EBITDA.
Speaker 4: and more than $650 million in cash from our continuing operations.
Speaker 4: There were four important decisions that we made during the second quarter.
Speaker 4: First, we decided to suspend operations at Penasquito to focus on finding an appropriate and sustainable resolution to the current dispute with the unit representing our workforce in Mexico.
Speaker 4: agreement that we made with the union leadership only 12 months ago.
Speaker 4: And in May we paid our employees their profit sharing bonus for the 2022 year.
Speaker 4: calculated in strict accordance with this agreement.
Speaker 4: The union leadership are now demanding more than double the agreed amount.
Speaker 4: and have taken strike action through the withdrawal of labour.
Speaker 4: At Newmont, Penasquito sits within a strong, balanced, global portfolio of operations.
Speaker 4: A portfolio that is supported by the industry's strongest balance sheet.
Speaker 4: During this important time for Penasquito we will remain firm in our resolve and continue to make decisions that protect the long term value of the operation.
Speaker 4: and benefit our employees.
Speaker 4: our contracting partners, our host
Speaker 4: and all of our stakeholders. We strongly encourage the union leadership.
Speaker 4: up to and including Senator Napoleon Gomez to cease this strike action and return their members to work.
Speaker 4: The second decision we made during the quarter was associated with protecting our workforce at Elianore from the unprecedented wildfires being experienced this summer in Canada.
Speaker 4: evacuating the mine and placing the operation on care and maintenance.
Speaker 4: At Sarah <expletive> we made the decision to pause mining for two weeks.
Speaker 4: and complete important safety inspections.
Speaker 4: to ensure that we had the appropriate control environment in place at this remote underground mine and to protect the health and safety of our mining teams working there.
Speaker 4: And finally, the chim.
Speaker 4: We made the decision to process lower grade stockpiles that were originally planned for the fourth quarter in order to optimise the mine plan.
Speaker 4: ensuring that we are in a position to safely extract the maximum amount of ore as we complete the current layback in your chin pit over the next few months.
Speaker 4: As planned higher gold production is expected in the second half of the year.
Speaker 4: and will be driven by higher grades and tons mined from both Sabika underground and open pit at a harpo.
Speaker 4: Biogrades and Tuns minus Sarah <expletive> as the first wave of our district expansions comes online in the third quarter.
Speaker 4: I have tons mined and processed at Tenemigh.
Speaker 4: where we will mine the highest grades for the year in the fourth quarter.
Speaker 4: High grade run of mine ore processed to the gym as we return and complete the current layback.
Speaker 4: And when combined with the high production that we expect from our two non-managed joint ventures, Stavada Gold Mines and Keflaviejo.
Speaker 4: We remain on track to deliver on our four year guidance.
Speaker 4: We ended the quarter with $6.2 billion in total liquidity.
Speaker 4: maintained an investment grade balance sheet.
Speaker 4: preserving financial flexibility as we continue through a period of meaningful reinvestment.
Speaker 4: and return a stable dividend to our shareholders.
Speaker 4: Consistent with our 2023 dividend payout range, we declared a second quarter dividend of 40 cents per share.
Speaker 4: demonstrating both our ongoing commitment to shareholder returns and our confidence in the long term strength of our business.
Speaker 4: We remain on track to close our acquisition of Newcrest in the fourth quarter.
Speaker 4: and are leveraging the lessons we learned from the successful integration of Goldcorp four years ago as we build out our integration plans.
Speaker 4: We have also commenced the portfolio optimisation work associated with this transaction.
Speaker 4: making the important decision in June to defer the Anacosa Sulfides project.
Speaker 4: This is the first step in delivering significant value through portfolio optimisation and we will continue to evaluate opportunities to re-sequence project capital and rationalise the portfolio of the combined company over the next couple of years.
Speaker 4: We recognise that a strong safety and sustainability culture is not only an indicator of a reliable, well-run business.
Speaker 4: It is fundamental to delivering on our commitments to employees, contracted partners, host communities.
Speaker 4: to delivering on our commitments to employees, contracted partners, host communities and all of our stakeholders.
Speaker 4: As we position ourselves to safely integrate Newcrest and enter this next chapter in UMONTS 102 year history.
Speaker 4: We made an important decision in the second quarter to further strengthen our commitment to responsible gold leadership and increase our focus on safety and sustainability.
Speaker 4: In June we promoted Suzie Ritalik to the role of Chief Safety and Sustainability Officer, reporting directly to me.
Speaker 4: Suzie is an industry leader.
Speaker 4: with more than 20 years of experience in driving values-based decisions.
Speaker 4: Over the last five years as our Senior Vice President of Health, Safety and Security,
Speaker 4: Suzie has been instrumental in leading the delivery of a step change in Umod's safety performance.
Speaker 4: in particular in the area of fatality risk management.
Speaker 4: Suzy will apply the lessons we have learnt from our significant improvement in health, safety and security.
Speaker 4: to further improve our performance in the areas of environment and social responsibility.
Speaker 4: In this new role, Susie will also support me and my leadership team in the work we need to do as a company and as an industry.
Speaker 4: to create workplaces that are free from harassment, assault, bullying and discrimination.
Speaker 4: I'll now turn it over to Rob and then to Karen to take us through each of our operations and projects.
Speaker 4: along with a review of our quarterly financial highlights.
Speaker 4: along with a review of our quarterly financial highlights. apostle Shades!
Thank you Tom and good morning everyone. Turning to the next slide, let's begin in Australia.
Boddington delivered another strong performance in the second quarter, increasing both gold and copper production from sustained grades and improved mill throughput.
As part of our multi-decade Life of Asset strategy for Boddington, we have increased our autonomous haulage fleet with five additional trucks as we increase the planned waste movement in both the north and the south pits.
This investment into the next laybacks at Borington will support stable gold and copper production for many years to come.
We remain clearly on target to hit our 2023 production guidance and we are well positioned to deliver more than 1 million gold equivalent ounces from this cornerstone asset.
Moving to ten and mine.
The site has recovered extremely well following the record wet weather and extensive flooding experienced in the Northern Territory during the first quarter.
We doubled our quarterly gold production in the second quarter and remain firmly on track to land within our full year guidance ranges and will mine the year's highest grades in the fourth quarter.
In addition, we continue to progress the second expansion at Tannemann, with nearly 50% of the concrete lining of our 1.5 km deep shaft installed.
The lining and the furnishing of the shaft continue to be on the critical path as our project team works to deliver significant ounce and cost improvements to our Tier 1 operation at Tanami.
Moving up to Africa. In June I visited both the Haffle South and the Cheam as well as our Haffle North project in Ghana.
At ACHIE, I spent time with the team as we worked through the decision Tom covered earlier to prioritize safety, optimize the mine plan and maximize the ore extracted as we close out the current layback in the coming months.
As a consequence of this work, we expect grades to improve by 35% during the third quarter, positioning the site to deliver significantly higher production in the second half of the year and land within our 2023 guidance ranges.
At Ahafo South we delivered higher production as we accessed the third mining level and additional draw points in the Sabika underground ahead of plan.
Fine with access to higher grades from the open pit, the AHAFO mill will process higher grade from both underground and surface in the second half. AHAFO is also on track to commission a replacement conveyor in the third quarter and it remains on target to hit guidance for the year.
And finally, it was great to see first-hand the progress we are making on the Ahapo North project.
The highway relocation in bulk air force continues...
it to progress very well. And with a new mining fleet in place, the project team is preparing to commence pre-stripping in the second half of the year.
Moving across to North America.
As Tom described, Canada has been impacted by unprecedented wildfires.
with Quebec particularly impacted during the second quarter.
And in the second week of June , as the fire fronts approached the property, we made the swift and proactive decision to evacuate our workforce and place Elianor on care and maintenance to protect our employees and contractors.
During this time our first priority was and will always be
the safety and well-being of our workforce and local communities. We are now safely ramping up production activities as the forest fire threat continues to abate.
we will continue to monitor the situation in Quebec very closely as we work with the provincial government agencies to assess fire progress and air quality on a daily basis.
Moving to porcupine, we delivered another steady performance in the second quarter and remain well positioned to deliver improved production in the second half of the year, driven by higher grades from the Hollinger pits in Q3 and from Borden and Underground in Q4.
We continue to progress the Pemore project and are preparing for a full funds investment decision later this year.
We will complete commissioning of a new water treatment plant in the coming weeks, which will accelerate dewatering of the Tommor Pit and allow us to commence pre-stripping during the fourth quarter with first over expected in 2024.
At Muscle White we delivered consistent gold production as we progressed planned development activities that will increase stope availability in the second half of the year including access to another double lift stope. As a consequence we expect tons mined to increase by more than 30% and grades to increase by around 15%.
supporting a strong third and fourth quarter.
And finally, Cripple Creek and Victor delivered solid results due to higher grade and strong recoveries from our heap leach facilities.
And now moving down to South America. The Anacocca delivered a strong second quarter as we begin to realize the benefits from applying our injection leaching technology. At Mirian we continued the planned stripping of the next layback in the Mirian pit and the site is on track to deliver 40% higher grade from the Miraba.
that Tom referred to.
and grade is expected to increase by 50% as we begin to access the higher grade stops from San Marcos.
The first of six new deposits associated with the exciting underground district expansion is Cerro <expletive> .
San Marcos will continue to ramp up throughout the year and is expected to reach commercial production in late 2023.
Finally, as Tom discussed, we made the decision to suspend operations at Penasquito on June the 7th as we focus on finding a resolution to the dispute with union leadership.
We have and will continue to abide by the fair and equitable agreement that is currently in place and that was importantly fully agreed to only a year ago with the union.
We will continue to communicate directly with our employees.
and engage with the union leaders and government officials to find a fair, appropriate and sustainable resolution to this very disappointing dispute.
You can expect that we will provide a fulsome update to the market once an agreement has been reached and we look forward to returning our focus to safe and sustainable mining at Penasquito.
And now, I'll wrap up in the next slide with our two non-managed joint ventures.
Our share in Nevada gold mines and interest in Pueblo Viejo contributed 338,000 ounces of attributable gold production in the second quarter.
and we look forward to both joint ventures delivering on their expected strong second-hands.
And with that, I'll pass it over to Karen to cover our financial results.
Thank you, Rob, and good morning, everyone.
I'm happy to be joining the call today and look forward to presenting our second quarter financial results and answering any questions you might have.
Before I get started, I wanted to talk briefly about what brought me to Newmont. When I was doing my due diligence on Newmont, I was excited to learn about the company's clear and consistent strategy.
Leading approach to safety and sustainability.
its global diverse portfolio of assets and deep project pipeline to position Newmont for long term success.
Joining in May, I've had the pleasure to meet Newmont's senior leaders and the board and spend time with my very talented finance team.
Over the coming months, my team and I will be focused on building upon the strong foundation that we have today, partnering with the business to improve our overall financial performance, and driving our disciplined capital allocation strategy with a balance sheet that can support our strategic initiatives throughout the commodity cycle.
According to the next slide, let's get started with a look at the financial highlights. In the second quarter, Newmont delivered $2.7 billion in revenue at a realized gold price of $1,965 per ounce. adjusted EBITDA of $910 million.
Cash from operations of $656 million, which includes over $100 million of unfavorable working capital changes.
Included in working capital changes were nearly $250 million in tax payments in the second quarter partially offset by draw un-receivable.
They would expect the draw on receivables to reverse in future quarters, the tax payments to decrease in the third and fourth quarter as they have in previous years.
In total, we generated $40 million of free cash flow for the quarter, which is net of more than $600 million of capital spend as we continue to progress our most profitable near-term projects and position the portfolio for growth, both in ounces and margins in future years. In total, we have $ Demand for utilities and book fiber, which is $ Photovolta drinkFel500
We maintained a strong cash position with $3.2 billion and an attractive leverage ratio of 0.7 times net debt with just a deeper dollar.
We also maintained solid margins in the second quarter driven by higher realized gold prices and steady direct costs.
Second quarter gap net income from continuing operations was $155 million or $0.19 per diluted share.
Jusness included, five cents related to unrealized mark-to-market losses and equity investments.
Recents related to transaction costs associated with our pending acquisition of New breast.
and 6 cents related to tax adjustments and other items. Taking these into account, we reported second quarter adjusted net income of 33 cents per diluted share.
It is also important to note that this number has not been adjusted for the $46 million in operating costs and depreciation at Penasquito since the strike commenced and at Eleanor while the site was proactively shut down due to the wildfires.
As Tom and Rob noted, Zumont remains well positioned to deliver a strong performance in the second half of the year and achieve our full year guidance.
In the second quarter, we declared a dividend of $0.40 per share or $1.60 per share on an annualized basis, consistent with the last two quarters, and calibrated within our 2023 payout range of $1.40 to $1.80 per share.
Thanks Karen. Over the last two months since we announced the binding agreement to acquire eucharist,
My team and I have engaged with many of our important stakeholders including employees, shareholders….
local communities and government leaders.
These conversations were aimed at listening to and answering questions.
whilst also ensuring that the benefits of the transaction and UMON's strategic rationale were well understood.
Over the next couple of months.
We will continue to progress the various regulatory approvals ahead of closing the transaction.
primarily in Australia and Papua New Guinea. And I'm pleased to advise we've already received clearance from the Canadian Government.
Earlier this month I visited Papua New Guinea for the second time.
Meeting with various government officials, including Prime Minister James Morape,
Deputy Prime Minister John Russo and Mining Minister Sarno Pala.
As we continue this engagement we remain excited for the opportunity to operate La Gia and develop the world-class Wapi Goulboo project.
We are diligently working towards lodging a scheme booklet and filing a proxy statement this quarter with shareholder votes expected in October .
We then expect to close the transaction in November and begin the important work to safely integrate the Newcrest teams and operations into our portfolio.
then be in a position to provide 2024 guidance for the combined company in February of next year along with our fourth quarter and 2023 results.
With that, I'll thank you for your time today.
and turn it over to the operator to open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star followed by the number 1 on your touch tone phone.
If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star followed by 2.
At this time we will pause to assemble our roster.
And the first question today goes to Greg Barnes of TD Securities. Greg, please go ahead, line is open.
Thank you very much. Tom, I just want to ask about inflationary pressures and how you see them evolving into...
the second half of 23 and 24 x any volume improvements you can get which obviously will help on that.
23 and 24 x any volume improvements you're going to get, which obviously will help on a goal per ounce basis.
Yes, thanks Greg and good morning.
What we're seeing in our direct costs is largely consistent with what we expected as we guided this year and I might just step through that in a little bit more detail. About half our cost base is labour, about 50% is labour, made up pretty evenly between employees and contractors.
Employees largely stable and expect that to remain largely stable through the rest of this year and into next. Certainly seeing some settling down in Australia, Canada, United States. Contracted services also have stabilised. So still at a higher cost that we saw with the inflation coming through last year.
its reagents particularly cyanide, explosive, steel for grinding media and the like.
We're seeing those largely consistent with what we expected. Natural gas prices have come off which is then flowing through to the prices that we're seeing for both cyanide and explosives. So a little bit of relief, few tailwinds with those consumables and we'd expect that to flow through the second half of this year. We'll see.
supply of natural gas may be tightened a bit which may put a bit more tension on those prices but certainly expecting to see that stable or a little bit of an improvement and still pretty much holding its own as we look at the grinding that we remove around the cycle
to see that carry on through the second half of this year but a volatile commodity and one that will continue to be conservative as we think about our assumptions for that. So a few tailwinds.
Greg, some stability.
and consistent with what we expected for 2023.
Great, that's very helpful, Tom. And just a follow on. In the presentation, you talked about the guidance you're going to provide in February .
I'm just wondering how detailed you expect to be in February around Newcrest and your expectations for how that's going to fold into the company.
We're certainly working towards being in a position where we can give you a view of 2024 for the combined portfolio which would include our view of the five new breast assets being folded into our operations. If things continue to go to plan in terms of regulatory approval.
mine plans and the assumptions we make for some of the key input assumptions and certainly working towards being in a position to provide the 2024 guidance for the combined portfolio in the February timeframe. And what about the 3-5 year guidance beyond that? Will that wait? We will monitor that and...
and see how those numbers come together, we'll certainly be looking in the 2024 timeframe to provide as much information as we think appropriate certainly for 2024 in that February timeframe and then look for a logical time for...
a capital markets day to share some more information on the combined portfolio and maybe even look to try and include some sort of site visit with that. So that's still work in progress Greg but certainly 2024 is in our sights for that February timeframe. Okay thank you Tom that's it from me. Thanks Greg. Thank you and as a reminder if you would like to ask a question
advisor or the independent expert for Newcrest reached our conclusion yet?
Good morning Anita and thank you for darling and I think what might be a little vacation period for you so good to hear your voice and hopefully you can get off this call.
back to some better use of time. They're still working through that process so that's they're working, it's in train working through but not finished yet so it's but it's on schedule in terms of when we need that information in order to be able to proceed for the timeline we had in the deck. Okay and then the...
Q3 I get well above your guide.
Certainly starting to see a step up in grade.
in both Q3 and Q4, pretty consistent across Q3 and Q4 for muscle-wide and meat are we? We're opening up a nice double lift-stoke coming on which is going to give us both some improvement in grade and volume and then we've got some stokes and some high-grade material also coming on as a result of the work in the first half.
Pretty consistent grade Rob through the second half and certainly seeing a step up in volume coming out. That will ramp up over the third and fourth quarter so the highest volume through the mill in the fourth quarter, grade pretty consistent. Then just in terms of
I should give a offer where you were talking, or maybe it was a team at 35% uptick in grades in Q3. Is that correct?
That's right, Anita. So in a chain we stepped out into stockpiles, got the...
those of you who know achievements, a long narrow pit and so as we're getting the last of the all from the bottom of the pit and the current layback and wanting to bring down the next layback we want to make sure that we maximise that all so we stepped out of the pit, made sure catch benches and the like were all in good shape and swung into the stock into the stockpoles we would have been in in the fourth quarter.
and now we're back in that ore and so we've basically got rutter mine, high grade ore from the bottom of the pit coming through. You'll see most of that through the, actually you'll see a good portion of that built through the third and fourth quarter now. The highest grades in the fourth quarter building up through the third.
Okay, and then lastly, Sarah and Edgar, I just want to make sure I heard you correctly. There's a 30% increase in Hahn's mind and 50% increase in grade, but I don't think Rob said which quarter it was. Does that start in Q3 or is it Q4 related? It starts in Q3, so it continues to post in Q3, about 15%, a little beyond that of what
You'll see the step up in grade at Sarah <expletive> pretty consistent through the third and fourth quarter at Sarah <expletive> . And then you'll actually see quite a step up in Tums Mind as we've got more ability to access ore, particularly as we start to extract ore from San Marcos for the first time.
Thank you.
Anita, probably one other on a half out. We've got the.
We've got the stars really lining up in terms of the real sweet spot in the Sabika open pit as well as now having the third level of Sabika underground open, more than 20 draw points open. So we've got both the combination of high grades and tums coming out of open pit and underground at a halfway. So it's another important one to be thinking about as you think about Sabika.
Thanks, Anita.
Thank you. The next question goes to Mike Partin of National Bank. Mike, please go ahead, your line is open.
Yeah, thanks. Can you just give a bit more color in terms of the background on pausing at Sierra <expletive> the mining and does it have with what you've kind of investigated and decided on a go forward basis doesn't have any material impact on the cost structure of that asset going forward?
Good morning Mike, certainly absolutely no impact on cost tractor going forward.
From time to time, certainly in my experience and Rob's experience, you'll get an event, we had a significant potential event in the underground mine that involved a loader, that we weren't happy that we had the control environment in to be managing at the standard that we'd expect around, basically it was a piece of equipment that was in the underground mine.
involved in an incident. It's a remote mine, as you know Sierra Negroes is in a very remote part of Argentina in Patagonia and we wanted to ensure that the standards that we expect were clear across the four crews that were there and that we went through the underground mine and did the appropriate inspections to make sure that equipment and conditions underground.
are well understood. They're obviously working underground in remote locations so it's briefly important that we can be satisfied that the expectations are well understood and the conditions underground are well understood.
We're also entering into a second half which is a step up in both grade and term. So we're moving into a period of time where we're going to be asking the team to step up and be working more fronts. So we took the time to ensure that.
Conditions were clear and expectations were set. There's nothing in terms of additional cost base. It's more about just ensuring that the leaders at all levels and their mining teams are understanding the standards that we expect And that we can confidently move forward with mining what will be a strong second half for Ceradegra. Okay, so it
Pretty much some of it's more kind of ensuring operational best practices of new mind are being executed at that seat. That's right, Mike. We will do that from time to time. In my experience, there are times when you must always maintain a chronic unease with safety and there will be events that come from time to time.
And part of maintaining solid safety performance is recognising when you may need to just pause and ensure everyone's got their mind on the game, understand what's expected and then move forward with confidence. So that's something we do from time to time. Certainly Sarah and Agra we've decided that this needed a couple of weeks down.
I'd expect as we do our integration planning for Newcrest and think about five new operations coming into our portfolio, think about the work we might do through November and December , that's certainly one of the debates we're having in terms of how do we ensure that the standards that we expect at Newmont are there in place in day one at those Newcrest operations. So it's something that certainly both Rob and I have done.
in our careers from time to time when we see a need to reset expectations. Okay, excellent.
And just one question on Penasquito with respect to the stream. Is there any minimum delivery of silver that you tie to or are you fully free to shut down and not deliver silver when you're not producing?
That's correct, that's my understanding Mike, but we'll get the team to just run that to ground and if it's different from that we'll let you know, but that's our understanding.
Okay, that's it for me guys. Thanks so much. Thanks Michael. Thank you. The next question goes to Tanya Jakub Skonek of Scotiabank. Tanya, please go ahead, your line is open.
Good morning everyone. Thank you so much for taking my question. I wanted to ask about Penasgido just to get some clarification just from so many news articles that keep coming out. I'm just trying to understand, you know, with the union being on June 8th, is there
I just want to make sure that I understood some of the articles that came out. Has the union gone to paying the workers? Because, you know, my understanding was the workers aren't being paid being on strike, but the union has gone in to pay the workers. Do we know if that's a correct statement from some of the papers I was reading?
Daniel that's correct the members the union members who are on strike are not being paid by the union but they're members of and as part of our position at the negotiating table we're not paying back pay.
So the union's not paying and you're not paying so they haven't been paid since June 8th? That's right. So a workforce of some 2000 people aren't being paid. You've got a much bigger contract at workforce that aren't being paid. You've got an extended community to some 28,000 people that rely upon...
those wages to receive some benefits they're not being paid. We're the biggest taxpayer in the state of Zacatecas. They're not getting taxes and our contributions are close to $2 billion a year to the Mexican government through both taxes and royalties are not currently being paid.
Our message to the union leadership is we have a fair and equitable agreement. We paid in accordance with that and we strongly encourage them to get their members back to work so that we can start paying wages again. Okay. Yeah, it's just there was an article, Tom, that's saying that the union leader, the union was taking money from their...
coffers and paying the workers. I just wanted to clarify that. And just how should we think about the cost of the, you know, on a monthly basis being on care and maintenance as we go into July ? How should I think number one, what sort of cost should I be thinking about you incurring on care and maintenance?
And number two, would that be coming through the operating costs or would you take that out and put it under other? Thank you. Thanks. We always give their honest goosebumps on the very initially rant that goes on their
Thanks Anita, so you'll see and I'll get Daniel to catch up with you after the call but we've got something in our earnest release if you think about those costs through the month of June at Penasquito we incurred $23 million of operating costs and another $15 million depreciation
due to the suspension of operations. So it's down for most of June . That's a pretty good indicator of what that's going to look like. Okay, and I would run that through the costs. You're not going to take it out separately. Sometimes you've taken it out and excluded it out of operating costs into other items. No, we don't plan to do that Tanya. So what you describe is how best to model it.
Okay, thank you for that. And then if I could just go back to Anita's question on just the second half performance with some of the minds that I think you said, the integral would be evenly distributed, a half of these off- psychopathiceline etc we could call it.
muscle are going to get higher Q4. Is there any other operation that's going to have a higher Q4? Because when I look at the numbers, you're looking at a production profile of Q4 being significantly stronger than Q3.
Is that how I should think about it? That's right Daniel, we're building towards a strong fourth quarter. You'll have some across some of the parts of the world in which we operate you tend to get a bit more wet weather in the...
in the third quarter so you typically see us have those drier locations that really bring it home in the fourth quarter. Peplo Viejo ramping up with 40% of Peplo Viejo that's an important part of H2. Devona gold mines got into a strong second half that's an important part of our H2.
Tanami, we've got pretty consistent tons through the mill in the second half but we move into our highest grade stopes in the fourth quarter so that's an important story. I think we've probably covered most of them. Miriam's certainly got a stronger...
are pretty consistent across Q3 and Q4. So I think we've covered the key drivers of H1 versus H2 and where the higher fourth quarter would come from.
Okay, no, I appreciate that. It's just, you know, when you look at the, you know, production profile, excluding pen and FIDO, depending on what happens there, you know, it is looking at the fourth quarter is the one that is going to carry quite a bit of weight for your, in order to get your guidance. That's right, tenure. And if I could just do one final question.
Sorry? Sorry?
Go for it Tanya. Okay, sorry I thought you were able to say something else. Another follow up on Greg's questions on the inflationary relief that you are seeing. I just wanted to confirm because some companies are not seeing exactly the same thing.
would be also fair to say that you are seeing cyanide pricing coming down relative to what you have. And I just kind of wonder in your agreement to restock your inventories on these lower level prices that are out there. Some contracts for some come up in three months, six months. I'm just wondering how.
when we are expecting you to renegotiate at these lower levels so we can see when those would go through your cost structure. Tanya, we, without our supply chain strategy, particularly with our key commodities is to have strategic contracts that are long term.
the volatility of our price increases or price decreases and then with the inventories we have at sites then it takes a little while for that to flow through. So we are on the back of natural gas prices coming off we are seeing ammonia prices down, agnostic soda prices are also down and we're...
we are seeing improvement in both cyanide cost and explosive cost. So that is flowing through and it's linked back to that key commodity price and it's flowing through our contracts as it washed through our inventories and we just continue to...
through those contracts take the prices as we've agreed in those contracts and that then takes normally a month or two or three to flow through our inventories. Okay. So those you could see then coming in and into Q4.
Yes, we'll see some of that benefit in Q3 and Q4 absolutely. Okay, great thank you. I will get back in the queue. Thank you. Thank you. Thank you. The next question goes to Brian McArthur of Raymond James. Brian , please go ahead, your line is open.
Good morning. Can I just follow up on Penasquita? Tanya covered the ongoing cost, but where's the concentrate situation? Is there concentrate in transit that's offsite, that's provisionally priced and you're going to have some sales in Q3 if nothing happens? I was looking at your sales versus your production and I know it varies quarter by quarter and lead versus Sink.
in the second quarter so there's nothing in the supply chain from the mine site to the filters that hasn't been sold and recognised.
and then we have a small amount of concentrate stockpiled on site but not much. Site's been put into care and maintenance in very good nick and everything's safe and secure on site so the expectation that common sense prevails and we've got a workforce back at work we can ramp up very quickly with a lot of experience of being able to ramp up.
Thanks, Brock.
Thank you. We have a follow up question from Anita Soni of CIBC Market. Anita, please go ahead, your line is open.
Sure, thanks for giving me my follow up. So a few more questions in terms of the details. At TANMI, could you just go over what you're looking for in terms of grades and tons in the Q4, Q3?Shows the modespecs in select order
No problems Tanya, the two, three, three, three consistent... Anita! Sorry, did I call you? Sorry, I'm losing the plot. I did it, that's what Daniel was writing me a note to say. Tanya, if you're still listening, my apologies, and Anita, my apologies.
I need a holiday. Sorry, I'm embarrassed. The high grades are in the fourth quarter. You'll actually see a little bit of a step off in the third quarter from what we were able to see in the second. And then we get into some nice high grade stops in the fourth quarter. It's pretty consistent.
through the mill and a step up in the third and fourth quarter as they're freeing clearly some of the disruption from the weather in the first half. So you see a step up in volume through the mill but the real grades flow in the fourth quarter. Nothing outrageous, certainly well within the grades that we've seen historically. Okay and then in terms of the project.
North, it seems like the spend is not, you know, it's got the same startup as Tanami expansion and I only see about 30% of the spend and where Tanami is about half the spend. So could you just give us a little color on the time frames and the cadence of spending at both Tanami and Half Moon one? Sure I'll start off with Anita and Rob might want to build on this but
The halfway north has really been a first half or a quarter of just getting the work fronts opened up. So a lot of clearing of land, bringing equipment in and so gearing up with positioning ourselves to really get stuck in to.
doing the pre-strip work and then the civil works will then start constructing the processing plant and other infrastructure. So it's in a process of gearing up and then being able to accelerate up in terms of an open pit mine with a processing plant.
Tanami, we're in that serious process of stepping through the shaft, doing the concrete lining and then bringing in the various facilities that get attached to that concrete wall. So that's in an hour, starting to get a pretty steady state for that critical path item.
The other thing that's largely the surface work in terms of most infrastructure is largely done. There's a whole bunch of winding equipment to install at the appropriate time on surface and not completely done. But at Tanami we've got the underground excavations all done but you're really in that process now mobilising those construction crews underground to start building up the
the conveyors and the crushers and all the supporting infrastructure for that. So gearing up to get that work front really going ahead. So quite different projects in terms of infrastructure underground, a sharp lining and then building an open pit mine and the associated infrastructure. Robert, anything to build on that? Anita, I would just emphasise what Tom said. The number of fronts that we're actively working on at Tannamein is far larger than a handful north.
So every part of that project is getting worked on. And as Todd said, and I have for North, and seeing it just a month or so ago, the civil works is progressing very, very well. And in the coming months, that's when we will see significant spend, whether it be the contractors coming in, it's the fuel getting erected, it's the hiring of cranes, it's the digging of trenches, etc., it's the construction of the tailings dams. So as...
as that next few months passes, the number of fronts that we start working on at a half or north significantly increases and as such we'll see that increase in spend as well. And then in terms of you know the that work how much has been sort of like I guess committed or you know how much of that work in the next in the back half of this year and early next year do you have enough visibility on the on the cost level?
In terms of the one-horse point... I guess I'm just trying to understand if you haven't... Yeah. What I was trying to understand is if you haven't really started getting into the guts of it, how certain are you that the CAPEX guidance range is still good? The key thing, which I certainly see in Utah...
as well so we've got a large degree of confidence.
The biggest thing is always with shaft building. We progress down there and at the moment we're lining that very well. We've got patches of overbreak, which we'll deal with. But at the moment because of the engineering, the procurement, we're still very much on track.
Okay, thank you. That's it for my questions. Thanks, Anita.
Thanks operator, just a quick one for Mike Parkins question, just confirmed there's no minimum payment on the Silverstream Mike if you're still listening on the call. Thank you all for making the time for the call this quarter and please enjoy the rest of your day and thank you for your time. Thanks everyone.
Thank you, the conference has now concluded. Thank you for attending today's presentation, you may now disconnect your lines.