Q4 2023 Newmont Corp Earnings Call
Yeah.
Good morning, and welcome to Newmont's fourth quarter 2023 earnings so in 'twenty to 'twenty four gardens cool.
All participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the stock he followed by zero.
After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.
I would now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Please go ahead.
Okay.
Thank you Brian.
Good morning, everyone and thank you for joining our call today.
Okay.
Please go ahead, a cautionary statement.
The SEC filings, which can be found in our website.
Today I'm joined by my Executive leadership team, including the test.
Karen.
And we'll all be available to answer your questions at the end of the call.
And also I'd like to take a moment to acknowledge outbreak and colleague Rebecca.
Our chief operating officer for the past five years.
Ladies.
Bye.
These legacy Linde JUA.
Through his visible felt leadership.
<unk> has driven our fatality risk management program.
Changing thought it's fatality free performance.
Throughout the pandemic broke down the guidance <unk> provided through challenges, including theories of care and maintenance.
Enterprises and facts.
<unk> implementation.
Rob also represents the very best values when he got it pass through to budget challenges.
Resolving our community Buckeye in 2019.
Justified strike last year.
In both situations robstown sustainable solutions that protected long term value of evil.
Over the last five months.
And that Pasha has conducted a thorough.
Countability.
When we write with us.
Castro made before finishing up and heading back to the UK spend more time with family.
Yeah.
Yeah.
Before we get started.
It's been great sadness.
The tragic news regarding our pipeline.
Our recently acquired Jack Operation on December 20th last year.
I would like to take a moment to remember our colleague Adam Kennedy.
Adam was only 44 years old.
He was a partner of SAP.
Our brother.
A bed.
As a friend and a valued colleague.
Our condolences go out to Adam's loved ones during this difficult time.
And we are getting reminded how important it is to remain tight for takeout as when it comes to the safety of everyone who works at G mode.
Any fatality is totally unacceptable.
We fully understand that totally agree.
And the critical controls that need to be in place.
Hard to match them.
So we had they are taking the time.
To conduct a safety rates tick across all game on socks don't just five U G multiple horizons.
With a life of focus on the implementation of our fatality risk management system.
This work.
It includes training delivered by a lot of layers of management directors, and general managers and that safety and health and safety license.
All our fatality risk management standards.
And our critical control verification process.
We're all set including a thorough investigation into this tragic incident.
Which is being led by dipole American direct out of Africa business unit.
We're applying the lessons learned from this investigation at all of that managed operations globally.
And we will share the wadley without mining industry piece.
Nothing is more important to our commitment to the health and safety of our workforce and we are determined to create an environment where every person working.
Across all locations.
Site at World to their families and loved ones at the end of each and every shift.
Turning to our performance in 2023.
<unk> finished the year with a solid fourth quarter.
Putting us in line with the revised stand alone outlook that we issued.
A resolution of this pocket kind of screwed up.
In summary, we produced 5 million ounces of gold at all in sustaining costs $1444 an ounce.
In addition to go we produced nearly 900000 gold equivalent ounces from copper silver lead and zinc over the course of the year.
This performance enabled us to deliver $4 $2 billion in adjusted EBITDA.
Ted or the $1 $4 million to shareholders.
In the ER with liquidity above $6 billion.
In a few minutes Natasha and I will expand on how we expect to improve upon this.
This performance in 2024 or beyond.
With a focus on delivering meaningful value to our shareholders.
But before we do that.
Describe how we are transforming our business into a unique collection of the world's best gold and copper operations and projects.
Following last year's transaction.
Yeah.
When we announced a binding agreement to acquire Duke rescued by last year.
We outlined a powerful value proposition filter RAF full take commitments.
First to set that use sustainability expanded and strengthened its position as the golf sector recognize decided literally laid out.
Second to create the industry's strongest portfolio of world class gold and copper assets.
It's the most favorable mining jurisdictions.
But certainly the $500 million of annual synergies and realized a $2 billion in cash from portfolio optimization.
It's broadly to continue driving a disciplined balanced approach to capital allocation.
After closing the transaction, although they've been six last year.
Integration of the five do operations Al do you about operating model has been progressing very well.
And as we enter this critically important yeah.
Integration and transformation.
Myself and my executive leadership team accountable for delivering on these commitments.
And this will be our peak focus in 2024.
To support this work.
And today, we announced four key actions.
Get that will enhance our ability to deliver on our clear and consistent strategy.
First we plan to divest six high quality, but non.
Non core assets this year.
From this point forward, our world class portfolio will consist entirely of tier one and the burgeoning Tijuana operations and districts.
And it will have a significant exposure to growth in copper and gold from our industry, leading organic project pipeline.
Second.
We provided at 'twenty 'twenty, four and thought to your outlook.
Clearly getting a clear picture of the work, we're doing today to expand margins and appropriately secrets at projects, so there'll be not sustainable value.
Third with the clarity simplicity and focus that our tier one portfolio provides.
We have committed to deliver a third Oh, I've got a billion dollars cost and productivity improvements.
Cross the entire portfolio.
And these improvements are over and above our synergy commitment from the <unk> acquisition.
We expect to hit the $500 million annual run rate of improvement by the end of 2020 pounds.
And finally, we.
We announced a balanced shareholder return framework consist.
Consisting of a $1 per share annualized dividend.
And the new 1 billion dollar share repurchase program.
Our go forward portfolio.
Focused on tier one.
Good at copper operations and projects.
How did the wells, but favorable body jurisdictions.
And it has full tastes stages.
First it contained 10 tier one operations.
Representing all of that.
The world today.
One golf balls in the Newmont portfolio.
Second.
He has three emerging tier what operations.
Each has a clear path for Brian.
And we had the opportunity to create a T. One district in British Columbia.
A district, which Dupont will be operating for at least the big sectors.
And third it has.
Matched organic development pipeline with six large scale copper gold projects.
And full.
Underpinning our tier one portfolio.
The industry, most robust foundation of reserves and resources.
Going forward.
<unk> has the industry's largest gold resource space.
And we also have the largest bites of copper resources in the gold industry.
To put these numbers into perspective.
Do you want has been all but 30% larger gold reserve results Spike that out there is P M.
And we have a 40% larger pop up as a result, spike that out and Derisk go P. M.
No other gold producers in the world can offer the depth and quality.
Amongst tier one portfolio came to die.
Later on I'll provide a little bit more color about eight months longer term outlook and the exciting gold or copper opportunities ahead of us.
But first I'd like to step back and give some insight into how we are thriving.
2023 brought with it a number if you didnt challenges, which are now firmly behind us.
120 day labor dispute and kind of skate hard.
Asset integrity issues that were inherent in the original design of equipment.
Yeah.
And wildfires in Canada impacting eleonore.
Those three events they set out for auto production number did not reflect the full pack ability of our assets.
As we emerge on the other side are these events I.
I am proud of the decisions that we took to protect the long term interest of our company.
Rather than looking to say short term experience solutions.
However, I'm also not happy with the underlying level of operating performance.
We've had the opportunity to improve our compliance to bond plans.
To improve that fixed to buy ball equipment reliability.
And to improve our mill throughput and recoveries.
So our focus to 2024.
We'll be on safely integrating new teams.
The operations, you're going to ask you about operating model and culture.
Transforming our portfolio.
And laid the groundwork for sustainable operating performance.
It's an expansion and strong returns.
Finally.
This morning, we also announced that we have extended the completion date.
And increased the projected capital cost threat had about two expansion project.
In the second half of last year.
We completed the concrete lining of the top half for 700 pages of this one and a half kilometers.
She shops.
These milestone gave us the opportunity to assess the condition of the node either break and grab conditions at the very bottom of the shaft.
As well as incorporate the lessons learnt from bottom to top off the shelf.
Costs and schedule for the run time.
We have critically upset.
Number of options to safely address the non either break in line the last section of the shaft.
This work included key third party reviews before we landed automate it.
And it was this methodology and subsequent decision that would be.
For the cost and schedule update we provided to date.
Although I'm not happy with the extension of time and costs.
I'm confident.
We have chosen a method that is sites.
And we will ensure the shop construction these ultra quality necessary.
Law I'd like service cannibalize political body for many many years to come.
Yeah.
So with that I'll hand, it that Natasha.
Walk you through our operational priorities for 2024, and what we are doing to ensure we deliver on our commitments this year.
Gotcha.
Thank you Tom and good morning, Vince.
Since joining newmont's, you're not tired of that.
I have visited 14 asked me about 17 managed operations.
And I've been really paced by the quality of the assets. It dedication of our people I think commitments from our operational leaders people are safe and profitable production.
Now before I begin I'd like to provide a brief introduction to the operational team focused on integration I saw your deliveries in 'twenty three 'twenty four.
As mentioned Clos for Ted.
Our operating model, we have six regional business units each heated up a world class.
James do you want to be that well you can see on this slide.
It's kind of both integrated operating model and I, both alignment across our operating leadership team, while also empowering our managing directors.
By the extensive local and technical knowledge Andrew.
Oh, the functional expertise to lead each unique operation.
To support our operations from the project execution side, we haven't guided restructuring project.
This team of subject matter experts.
Looking across the full spectrum of our organic pipeline.
Studies.
Development construction and commissioning of projects.
They strengthen our operating model with blocks.
The team and an understanding of industry, leading practices in project development.
This year, we will have a nice decided this underperforming valleys Kevin managed operations.
Yeah.
Well also guiding our six non core assets through insights and predictive pricing for divestment.
As we work to deliver efficiency and meet the liability from our capital portfolio. We are committed to progress our four key projects in execution and keeping things on track in 2024.
As a result, we are entering the year with a strong focus on integration and decides to Henry without telling me.
I was thinking 'twenty 'twenty four will be largely determined by the performance of our six knight each tier one operations.
Hinton kind of mine Winnicki town.
Leanne tidy up.
Not on days to 19, the significant impact of ticket Henry from its full portfolio of operating assets.
I will also separately touch on telephone and how we are ensuring tie ins that integrity I think need to be up operation.
We update you on the key priorities to integrate I guess that the 'twenty 'twenty four and how do you say type of operations for the next five years and.
And I'll touch on some of the like each of the tier one managed upper ashes.
At Boddington, we I'll try.
I think the stripping of the current live acts in the nose and South Bay as planned with improved productivity from our fully autonomous.
Nick.
I know plenty of metallic mind things can turn our focus is on delivering strong. So then take anything from the Chile, Colorado pit I'm, continuing my stripping independence.
The higher gold grade in 'twenty to 'twenty five.
Idaho power filed we remain on track to meet like did you think that's good yeah. Its taken four attempts to maximize pricing right.
I tend to my <unk> printing material spend sue the decline I speak prizes.
The ground.
The team will be focused on simplifying the mine plan and improving asset reliability.
And I know I didn't you couldn't hear myself and I should caveat, we have commissioning to locate them.
I'm thinking something important I hate to specification and expansion.
I think that for the next day I O P.
We have full potential teams on the ground I can't hear an idea actively working through our diagnosis five and designing the initiatives to extract value and deliver the opportunities identified.
So taking these key priorities into your account.
Just the fact that the production will be around 53% weighted to the second half of it yet as.
Let me turn to food processing had a hard time reach higher grades from the labor line at full body kind of mine. In fact, he says I can do you can you launch sites into the Newmont offer I just model.
Touching briefly on Intelsat and noncore authorized stride yet.
We have focused on the media I didn't sink holes and cracks predicted that the kind of storage facility in the same that we stopped enrollment to complete the first phase of remediation work.
Early February we temporarily restarted the plant well evaluating options for say Liberty media I shouldn't often adjacent tiny.
And we'll provide an update on that Brett and I will take any school.
And with the focus on fatality risk management perspective, and for potentially life, leaving nine firmly on track to deliver on our commitments. This yet.
On top of delivering in 'twenty 'twenty four upper rationing he'd be all working to bring forward new low cost ounces from the four key projects we have in execution.
These projects contributed to think as expansion I tend to buy that's Tom just covered.
We have focused on society 96, you know if the shaft and continuing to construct a crushing and conveying infrastructure underground.
Two block cave projects.
Two because it does go and cut that we we have just to live it says or actually ramp up this is stuffy skies.
And our new mine son knows we are making good progress on the construction of the boat and other supporting infrastructure, along with waste stripping to in Dallas, just still like accent.
For stockpiling.
But in this new and very exciting by these combined with the underground potential off speaker and things that I never said, we have a tier one half of history.
It will be capable of producing around 850000 ounces of gold, but yet out to and beyond 2015, which was Nike spun off the worlds top golf mining districts by any nation.
So bringing all of this together.
As we focus on the integration and fast delivery dates yet.
Our tier one portfolio, two pretty decent amount $5 6 million ounces of gold and then all in sustaining cost of $6300 spouse.
Combined with a very significant one 9 million gold equivalent ounces from content. So that make you think actually lifting.
Our unit costs are expected to improve as compared to 2023.
Steady production that its audience and the delivery of synergies actually potentially improve things.
The lowest unit cost coming from newmont's manage tier one folks hired yet.
Oh capital reinvestment remains in line with the pre acquisition spending levels as we continue to focus on disciplined delivery and a balanced approach to capital allocation.
And with this stable production and structured reinvestment, we have a strong acquisition and integrate and deliver on our commitment in 2024.
I think it's nice to see you just future proof esports athletes with benchmark performance.
Congrats from 'twenty to 'twenty five and beyond.
And with that I'll turn it back to Tom.
Thanks to catch up.
Moving off the foundation, we are establishing in 2020 full attached I just covered.
I'd now like to provide a bit of color around the opportunities that we are seeing from a dark pool with portfolio.
We will continue to optimize the performance of our mature operations.
And argued newmont assets.
At Boddington stripping that we're doing today will bring forward a strong gold and copper grades starting in 2026.
All supported by the golf industry only fully autonomous hopefully.
In Panama the can.
Please for the sake of expansion will provide efficient access to all this.
Open up.
Underground ore body in 'twenty, and 'twenty seven and beyond.
That's been a scapegoat the stripping that we are currently doing will bring food I hard proportion of gold ounces for the panache got paid.
Balancing with the strong production of silver lead and zinc from the Chile, Colorado.
At a hotspot we are building out district potential with your low cost ounces from both underground and open pit at a hop itself.
You're buying a hotbed dog coming online in 2025.
Acadia will commission our second blockade in this time frame.
Rigging forward five all the public Reits.
Allstate parallel labor getting our full potential program to improve the reliability and throughput.
And finally, simplifying the East mine plan is expected to deliver a strong improvement in gold production.
Rich high grades from 549.
As I mentioned earlier.
A clear line of sight.
The key one managed operations and Apple folio.
We have identified $500 million of additional cost and productivity improvements.
Our synergy commitments.
So taking everything into account.
Over the next five years, we expect to deliver growing gold production.
Given by the completion of the life, except but boddington and pennant sweetheart.
The new ounces from our hotline to the completion of the second expansion of tenable and Bud peptides with Coyote.
Bonnie improvements combined with high brights.
And on top of this improving Gulf production GMO will produce a significant amount of copper along with silver lead zinc and molybdenum, but our global diversified tier one portfolio.
Yeah.
Driven by these hot metal production and with a focus on improving costs, we expect to deliver lower all in sustaining costs.
Bringing our go forward portfolio down to $1150 per ounce by 2027.
For development capital.
We are applying a static.
Methodical approach to our project work.
To ensure we are efficiently, bringing forward opportunities that are aligned with our strategy. While also remaining disciplined about.
Capital allocation priorities.
We expect to spend an average of $1 $3 billion per year on development capital.
Driving healthy competition for investment.
It's been closed out.
Large projects, we have in execution and bring forward mixed Y unprofitable production from power organic project pipeline.
Demand is supported by the deepest and best project pipeline in the gold industry.
We will manage it with discipline and rigor to ensure that the best value accretive opportunities are fast at the right time after the write off.
We have three world class copper gold projects.
<unk> ramped up behind the four projects we have currently in execution.
Moving underground block cave at Red Chris.
I don't think that what the golf group block caves.
And processing, the salt bottle Gotta catch up.
And then when we look beyond those projects, we have three exciting long term opportunities to further diversify into copper.
Galore Creek.
And though there would be a truck.
Over the next 10 years demand for copper is expected to increase significantly.
Based on current copper production trends, we can expect to experience around 10 million tons shortfall of this critical metal by 2035.
Bridging this gap will require significantly more copper mines.
Couple of recycling and enhanced couple of etching processes.
We're adding an exciting opportunity to Dupont to help meet this demand with your organic copper exposure, we have in our portfolio.
Whilst continuing to provide unparalleled exposure to go and its enduring value.
And with that I'll hand, it over to Karen to talk through our balanced capital allocation strategy. Thank.
Karen: Thank you Sir.
Karen: Our capital allocation strategy is underpinned by three priorities working in unison. These priorities maintain the financial flexibility necessary to reinvest in our business goal of generating long term sustainable free cash flow in turn positioning us to return capital to shareholders through our balanced sure.
Karen: The return framework.
Karen: Beginning with financial flexibility the first of our three priorities, we intend to maintain an investment grade balance sheet.
Gross that up to $8 billion and liquidity of $7 billion, including approximately $3 billion of cash.
Karen: And by maintaining a strong balance sheet. We can ensure we have the ability to send we find cash generative capital projects, all while returning capital to shareholders.
Karen: As announced this morning, we have six assets currently classified as non core.
Karen: The anticipated proceeds from these divestments, along with free cash flow from operations.
Karen: I go through our capital allocation priorities, beginning with enhancing our financial strength and flexibility.
Karen: Divestiture proceeds will first be allocated to maintaining a minimum cash balance of approximately $3 billion and will then be applied to reducing debt to $8 billion or below.
Karen: Our initial target of $8 billion.
Karen: Cheap we return we intend to return both free cash flow from operations and divestiture proceeds to our shareholders, which I'll touch on in more detail in a minute.
Karen: Moving to sustainable investments as Tom and Hitachi mentioned over the next five years, we expect meaningful production growth from our long life low cost operation as we invest average of $1 $3 billion of development capital into projects that will generate the highest returns.
Yeah.
Karen: The third priority of our capital allocation approach a balanced shareholder return framework.
Karen: Time to return capital to shareholders through our base dividend and share repurchases.
Karen: To be clear, we are not yet where we want to be in terms of generating free cash flow to return to our shareholders, but believe we have the right framework in place to return increasing amounts of capital as our operational and financial performance improves.
Our balanced shareholder return framework begins with an annualized base dividend $1 per share amount that will remain fixed in currently equates to a quarterly dividend 25 cents per share.
Karen: We expect to be able to pay the base dividend from free cash flow over time, our dividend subject to approval from our board of directors and a quarterly basis.
Karen: Historically, our free cash flow generation has been weighted towards the back end of the year and we expect that will be the case in 2024, and our production profile and synergy realization is expected to be higher in the second half of the year and in the first half of year.
Karen: In addition, free.
Karen: Free cash flow generation in the first quarter 'twenty 'twenty four will be impacted by the came in at a stamp duty tax related to the acquisition of Newcrest.
Karen: Sam Judy was accrued in the fourth quarter and paid in February.
Karen: If necessary, we will use the flexibility of our balance sheet on the base dividend through the quarters with the annualized.
Karen: One dollar per share dividend expected to be ultimately funded with free cash flow.
Karen: Additionally, our board has authorized $1 billion share repurchase program.
Karen: And the city and that parameters I defined earlier are satisfied we intend to repurchase shares in line with our free cash flow and asset sale proceeds.
Karen: To reiterate our free cash flow and proceeds from divestments will be prioritized as follows.
Karen: The first dollar will be allocated to maintaining a minimum cash balance.
Karen: Second will be applied to reducing debt to $8 billion in the third will go towards share repurchases.
Karen: Our go forward portfolio positioned us to improve margins and performance overtime.
Karen: Funding, our capital allocation priorities, and allowing us to reward our shareholders directly with returns of capital.
Karen: And we believe reducing debt and returning capital to shareholders and attractive value proposition for new and existing investors, while also improving the company's financial position over the long term.
Karen: I'll now turn it back to Tom for closing remarks.
Tom: Thanks, Karen.
Tom: You won't go forward T one portfolio.
Tom: The new standard for gold and copper mining.
Tom: It provides shareholders with exposure to the highest concentration of tier one assets in the sector located in the most favorable mining jurisdictions.
Tom: And with it improving cost profile to maximize margins and generate strong free cash flow.
Tom: Industry, leading growth optionality in copper and gold through disciplined reinvestment and project execution.
Tom: And a balanced shareholder return framework.
As we look forward to this very important year.
Tom: Integration and transformation.
Tom: Very confident in the quality of our assets and the capability of our team to deliver on our commitments and justify our position as the benchmark gold equity.
Tom: This year, we will.
Tom: We're also continuing to work on transforming our go forward portfolio.
Tom: Totally building out the strategic lots upon plans.
Tom: Each of our managed operations.
Tom: And I look forward to updating you on the longer term potential of this world class portfolio at our capital market day, the second half of this year.
Speaker Change: And with that I'll turn it over to the operator open.
Speaker Change: The line for questions.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: We ask that you. Please limit inquiries to one primary question and one follow up question to.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause to assemble our roster.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Our first question today is from the line of Josh Wolfson of RBC.
Josh Wolfson: Josh Your line is now open. Please go ahead.
Josh Wolfson: Yeah.
Josh Wolfson: Yeah. Thank you very much operator.
Josh Wolfson: I guess I'll limit my my question, So just a single one.
Josh Wolfson: On the new crest reserve front it looks like the overall totals for gold declined by about a third.
Josh Wolfson: And I understand the differences are primarily due to reporting changes under SEC guidelines I'm wondering how we should be thinking about.
Josh Wolfson: Fire reserves that were there.
Josh Wolfson: In whether the company would expect to incorporate these as part of their reserve base in the future or if this is something different than that thank you.
Speaker Change: Thanks, Josh and good morning.
Speaker Change: So as we as we did the work to bring the Newcrest, our reserves and resources into the Dupont standards. We obviously have I I talked to a set of rules in terms of what.
Speaker Change: My son gave up reserve and resource.
Speaker Change: As the numbers come together once we have full transparency into the reserves and resources that were very consistent to what we should do.
Due diligence back from a mine.
Speaker Change: A number of moving parts to adjust and totally different time of the last couple of days, reflecting back on what we do with Goldcorp five years ago, I think getting giving each of you the opportunity to sit down in a more detailed session, where we can have all our IR team along with a return to governance at home process.
Speaker Change: We can take you through some of those detailed questions and ensure that we're adequately answer.
Speaker Change: Where do you want me to say much differences between the work's done is we've obviously got a display that statement. So on surgical per hour. Mr. Reid I should say the simplest makes up and we can spend some good talk to actually get through that if that's okay.
Mr. Reid: Yes. Thank you.
Jordan: Thanks Jordan.
Jordan: Our next question today is from the line of loss in the window of Bank of America Nelson. Your line is now if you. Please go ahead.
Jordan: Yeah.
Nelson: Thank you very much operator, and thank you all for the update today.
Nelson: Could I ask about the the capital return and how you thought about that and essentially what it looks like you've done to me as you shifted the capital from dividends to share buybacks.
Nelson: What drove that decision to make that a transfer of capital return.
Speaker Change: Yeah, Thanks, Louis and good morning, I'll kick off with like a carrier to build.
Speaker Change: When you look at where transformed.
Speaker Change: Hey, Bob.
Speaker Change: With the acquisition of decreased so as we reshaped.
Speaker Change: Does the portfolio. So that portfolio is very different from what you might close before so once we once we determine that go to a portfolio that we step back to look at.
Speaker Change: The appropriate capital allocation approach with strategy.
Speaker Change: Thanks to our portfolio.
Speaker Change: One assets with very long lives.
Speaker Change: We looked at our balance sheet with the debt that we brought on board.
Speaker Change: Following the transaction.
Speaker Change: When you looked at the number of shares that we issued.
Speaker Change: Transaction and they are important factors when you sit down with your capital allocation framework. If you step back from that first and foremost is ensure that we are.
Speaker Change: Putting money on the balance sheet, we are getting the cash to affirmative Karen talked about building that ketchup in order to pay down debt targets begun two really important stick that we do.
We're really clear in terms of.
Speaker Change: The amount of money we put towards.
Speaker Change:
Speaker Change: Is that the business to say that that average about two or $3 billion.
Speaker Change: And one dollar per share base dividend is something that is fixed and you put it in the bank in terms of what they can expect from 70 a month.
Speaker Change: So then it becomes what do we do with any dollar over and above having met those requirements.
Speaker Change: Cash proceeds coming in at any debt free cash flow that we generate.
Speaker Change: All it takes to us at a ratio of shares.
Speaker Change: I wanted to get a battleship all that gives us the vehicle to return.
Speaker Change: Any variable component of additional free cash flow.
Speaker Change: It was very much the context.
Speaker Change: Looking at the portfolio that we have transformed to and where we want to take that.
Speaker Change: That portfolio too in terms of its capital allocation settings. Kerry do you want to do with that sure just just to follow on to that.
Kerry: And then also as we looked at this portfolio, it's linking the return on capital directly to our free cash flow realization.
Kerry: And then also just in terms of consistency in terms of where we were what 2023 or the absolute dollar amount of the dividend the base typically that we paid $1 60.
Kerry: Surround around one 4 billion so a base dividend today going forward a dollar within the share count is around one 2 billion. We believe that's the right level for our free cash flow generation going forward as we couple that with a variable portion with a return now that will be an important share repurchase I think we're just consist.
Kerry: With the new.
Kerry: Our equity that we just issued in terms of our ability to start to bring that down as well.
Speaker Change: That's great. Thank you both very much.
Kerry: Yes.
Speaker Change: Thanks, a lot.
Speaker Change: Our next question today is from the line of Andy says Sony of CIBC and he sent your line is open if you'd like to proceed.
Andy: Hi, Good morning, Tom Karen Natascha. So my first question is with respect to the metallurgical changes at tennis keto could you talk about that and.
Andy: What exactly happened there and what years does it impact.
Andy: And.
Andy: I noticed there was a reduction in reserves of tenants keto on gold and silver and I'm just wanted to see more clarity on that.
Speaker Change: Good morning, and I Hope I did pick up and they don't take Arizona.
Andy: Sure.
Speaker Change: And Robert if you wanted it you've been folks I think probably a couple of factors. There I think we drilled some 40 kilometers of.
Speaker Change: Infill drilling across business get out of the last period of time.
Speaker Change: And then looking at the <unk>.
Speaker Change: <unk>.
Robert: I have extensive reserves and resources and there's like a lay back in the past got paid its cut back Tim that's it scheduled out into the Twenty's thirty's, but as we do.
Speaker Change: Infill drilling.
Speaker Change: Say that the.
Speaker Change: The level of metal that we just showed them just because we got that right of density of drilling.
Speaker Change: And so you're seeing that reflected in terms of.
Speaker Change: The reserve resource numbers.
Speaker Change: It doesn't mean that we can't get that are like that back into the system and.
Speaker Change: And a real focus and a scooter always tune that we roll up athletes I'm talking that focus.
Speaker Change: To improve the operational efficiencies.
Speaker Change: Mike I don't think there's still plenty of upside there. So I would think about the timeframe out in front of us.
Speaker Change: Opportunities to improve cost productivity administrator.
All I can say opposite tough wise to bring those ounces banking again its feet as we focus on that challenge.
Speaker Change: But with that guide out in front of us.
Speaker Change: Second area and later as we as we looked at the block models and in our reconciliation over the last period of time, we will see.
Reconciliations for silver lead and zinc sitting between five and 10% to 110% Gulf was kind of a unit around.
Speaker Change: 90%, 95% so as we updated upon plans, we incorporated the reconciliations that where they say.
Speaker Change: We did have a lot of autosave, saying some of that a fixed five year was well that's the governance of that block model, we managed separately.
Speaker Change: It's governed separately from the development of the mine plans so that as we looked at our spectrum City I should say my view prep it updates to the locomotives.
Speaker Change: Okay. Thanks, a lot and then my other question is also operational technical in nature.
Speaker Change: Not quite sure what the right.
Speaker Change: Another break and Overbreak means can you just explain it in layman's terms, what's happening at town them I mean, my understanding I think it looks like it looks good.
Speaker Change: The issue is when.
Speaker Change: When you were drilling the shaft and there was Oh, I guess collapsed a little bit or is that am I mistaken assumption like what's going on in Panama.
Speaker Change: Yeah. Thanks, So maybe put the Panama production shaft is it a little bit of perspective, it's one five kilometers deep and they see the iva break which is the predominant challenge. We're working through is at the very bottom of that shop, especially the bottom couple of hundred meters.
Speaker Change: You throw out we tried it wasn't a hot plummeted <unk> shaft.
Speaker Change: Trace the Intel has talked to tile underground it's bit of a normal territory does it so it is a.
Speaker Change: That very bottom of the shop at the same yard of a break.
Speaker Change: As we write board shops, but I'd say six meter diameter shaft as well.
Speaker Change: Bright spots that shaft and relating that that parent drill.
Speaker Change: Rock sitting there should it come from the top and lawn down.
Speaker Change: That very thought about the shaft with even some broken ground, let's say you do get some some raveling up some ground breaking off into the either the very bottom of the shaft.
Speaker Change: And as that relaxed that that's broken out in areas too.
Speaker Change: Some areas doubled the diameter of that shop.
Speaker Change: At the very bottom.
Speaker Change: Make sure of underground mining at shops thinking about you you'll.
Speaker Change: You'll get pockets of ground Thats got some support conditions and so we're saying that what we call hybrid REIT, which banks, but with the shaft is water that.
Speaker Change: But you can safely reach out to to do rough body shop, creating in the lock to be able to then put the longhorn.
Speaker Change: So as we step through that 10 years ago people doing that work.
Speaker Change: In the shelf six industry, there would've been some very outside practices should be Alex.
Speaker Change: Filling in that area in order to be able to bring back into six by the diameter and then lawn that shopped.
Speaker Change: We're not prepared to do that so.
Speaker Change: Understood the level of Viper break and they developed a range of different methodologies for how we could safely rectify that.
Speaker Change: Had them a safe by third parties in Atlanta, the other one that we were.
Speaker Change: We believe we can say to human things down that affected that much cash to do that work. So we havent methodologies of how that will evolve site rock bolting for like alloy.
Speaker Change: Saif shop trading from the Galloway.
And then we will fill the bottom section of the shops that couple of hundred latest with concrete.
Speaker Change: And then we'll rewrite.
Speaker Change: Bottom section.
Speaker Change: It will come down in line, so that section alongside the rest of the shop and we will have a shaft that will be assembled safely to the appropriate quality.
Speaker Change: Alrighty, then run for decades to serve as the the orebody at depth. So that's the process that they through to determine.
Speaker Change: How to appropriately.
Speaker Change: To break areas. So hopefully that gives you some clarity.
Speaker Change: It does not.
Speaker Change: That part I is what I thought.
Speaker Change: Typical when someone hears the word one for Frank.
Speaker Change: It's the phrase under break that you also used to which I'm that's what confused me.
Speaker Change: Yeah.
Speaker Change: Could you explain that.
Speaker Change: Sure Bill.
Bill: Yes, there are.
Not a huge part of that the shop are there certain areas.
Bill: The REIT bore.
Bill: Has it moved past the sidewalk or whatever it might be.
Bill: And you've got a bit of the two protruding into the the diameter of the way you want a lot of the shops, it's really coming through in <unk> and and pay out a claim that break back to the fixed pay the diameter side, you've got the appropriate.
Bill: Dimension and tolerance today out of it like a pour concrete form the wall. So there are certain sanctions, where you haven't been able to read out the full six better diameter. So you have to do some rectification, but.
Speaker Change: Okay I'll leave it there and pass it onto the next person. Thank you.
Speaker Change: Thanks for that.
Speaker Change: Yeah.
Speaker Change: Our next question today is from the line of Daniel Major of UBS. Your line is now open.
Hi, there and thanks, thanks for the questions.
Daniel Major: Our question is around the <unk>.
Daniel Major: Some of the Newcrest assets observing I guess from a distance this company for quite.
Daniel Major: A long time.
Daniel Major: Two things the <unk> asset has been a perennial underperformer absence newcrest Porter.
Daniel Major: Why do you think youre going to be able to deliver better results and more consistent results and my hands on the new customer able to over the last 10 years.
Daniel Major: Yeah.
Speaker Change: Good morning, Daniel.
Speaker Change: A couple of years Morningstar suspects.
Speaker Change: Yeah.
Speaker Change: It's a big asset developed by Rio Tinto.
Speaker Change: It does it basically ego Bonnie.
Speaker Change: And then I think Chris I picked it up.
Speaker Change: The music.
Speaker Change: A big board likely he.
Speaker Change: He is best placed in a big tier one portfolio balance out the ebbs and flows of our large complex bonds. So first and foremost you can you can with the heat.
Speaker Change: And a balanced portfolio with dawn.
Speaker Change: Tier one operations you could develop strategic plans to optimize the value and allow the ebb and flow of gold production that flows from that as you go through the mining cycle to be a practice managed.
Speaker Change: That'd be my first.
Speaker Change: Observation.
Speaker Change: Second observation is that it.
Speaker Change: It suffered from being cash generating accident solar portfolio. Therefore, there hasn't been the appropriate time and attention on equipment reliability by fixed and mobile we're getting after that this year.
Speaker Change: This also complexity of that bond plan that we believe can be simplified as we think about how we present the different possible and handle the material and have the materials handling of that all through a complex processing plant what are clients, we see real opportunities there as well and one data point Daniel that I put out there for you.
Speaker Change: One swallow doesn't make a spring but.
Speaker Change: But as wave.
Speaker Change: Given our spray maps that we've had here at the BMO portfolio type of.
Speaker Change: What we can say that the dedication to that laboratories are on the ground managing director to build a 2020 full on plan and budget that they can get after.
Speaker Change: In the month of January.
Speaker Change: I think their plan.
Speaker Change: The first time in four years.
Speaker Change: And the cultural change and the morale that comes to be able to set a target to get after that.
Speaker Change: Feeds on itself and we see a real opportunity.
Speaker Change: So stretching their children targets for them to hit the box and they get the confidence that I can do things because they see it gave our portfolio.
Speaker Change: And if they were able to give it to support attention that it deserves and so hopefully that gives you some color for how we're thinking about that.
Speaker Change: That's very good thank you and then.
Speaker Change: The second question's a slightly similar.
Speaker Change: Again for asset that some have not.
Speaker Change: So potential but not in the food, particularly as we go through.
Speaker Change: How much money spending on at the moment and where from a timing perspective do you see it kind of fitting into the growth.
Speaker Change: Pipeline, particularly kind of referencing slide 21 of your presentation, where you've got your various longer term growth options.
Speaker Change: Yeah. Thanks, Danielle I mean, what's the Gulf is one of the great untapped copper resources in the world.
Speaker Change: And in a very prolific.
Speaker Change: <unk> its a wonderful part of the loan to a to b.
Speaker Change: Looking for it.
Speaker Change: Copper and gold.
Speaker Change: It's cyclical study five so there's not a significant amount of money being spent on that project a lot of the focus is.
Speaker Change: Please go ahead with harmony at joint venture partnership P. J government to work through the necessary negotiations to ensure that you ultimately have.
Speaker Change: Investment regime that you can consider.
Speaker Change: But the level of investment I'm going to talk about the Brooklyn, it onto the B to B I secure our financial framework and so that that's the main focus with Buffy gone through at the moment.
Speaker Change: It sits there alongside archive at Red Chris.
Speaker Change: The ability to build up.
Speaker Change: Pressure oxidation circuit at.
Speaker Change: I've got a culture to the process itself, but also straight grade copper gold projects sits at <unk>.
Speaker Change: It's a great problem to have it sends an embarrassment of riches in terms of the projects are brought up to complete the capital behind them.
Speaker Change: Behind the <unk> projects, we have in execution. So it won't be golf is going to be a really really important mine too.
Speaker Change: To contribute to the world's makes a copa over the next several decades, so they need to have the appropriate investment environment.
Speaker Change: Will they be got back in and do the appropriate level of drilling and study work to understand ultimately what the cost of returns would be.
Speaker Change: Both the Gulf and Red Chris about block type bonds, we've got that technology in our portfolio, we've got that capability in our portfolio.
Speaker Change: Kite mines, you invest all of the capital upfront before you get a return.
Speaker Change: So it's critically important that you understand the ore body and you have to stay in the development costs before you commit to that.
Speaker Change: So that's going to be important part of the increase and won't adulthood.
Speaker Change: We wanted to make a decision about which projects flow kind of I'd say about half of adult tupac kinds of categories.
Speaker Change: Alright, Thank you very much.
Speaker Change: Alright, thanks, guys.
Speaker Change: Yeah.
Speaker Change: Our next question today is from the line of Greg Barnes of TD Securities. Greg Your line is now.
Greg Barnes: Yes. Thank you.
Greg Barnes: Tom and everybody.
Greg Barnes: Just on the dividend returning to that again I understand obviously, a base dividend and the ship buyback program, but.
Greg Barnes: How do you bring cost down and production up do you see yourself transitioning to a dividend policy. This progressive I you raised the dividend year after year, which some of your peers have been more successful on this front. That's the approach they've taken is that where you see this going.
Greg Barnes: Greg as I think about how to model.
Greg Barnes: Yeah.
Greg Barnes: Richards.
Greg Barnes: I put a six $1 share dividend in the model and just brought up phone.
Greg Barnes: Maybe any additional cash that we generate over and a bunch of a set of parameters on cash and debt.
Greg Barnes: And Luckily that variable component is starting to come through share buybacks just been through a merger transaction with <unk> share count.
Greg Barnes: And we would look to bring that shakeout back down again, so now for the foreseeable future bank on a dollar a share dividend and any variable components of share buyback.
Speaker Change: Okay, great that's very clear thanks.
Greg Barnes: Yep.
Speaker Change: That's great. Thank you.
Speaker Change: Alright, great.
Speaker Change: Yeah.
Speaker Change: Our next question today is from the line of carrying macquarrie of kind of crude carrier. Your line is now open. Please go ahead.
Carey MacRury: Hi, Good morning, just a question on the balance sheet, the $5 billion net debt target or their debt metrics here specifically targeting.
Carey MacRury: Yes, it's essentially.
Carey MacRury: Our goal is always to have the financial flexibility on the balance sheet and to maintain our investment grade rating that we currently.
Carey MacRury: As of today. So that is that's absorbing yes in terms of the the main metric looking at one times net debt to EBITDA ratio isn't going away.
Carey MacRury: Yeah.
Speaker Change: That's helpful and then maybe one other question if I can.
Speaker Change: During the transaction.
Speaker Change: The potential in that Golden Triangle area, No plans set up here, but can you talk a little bit about how you see that degree.
Speaker Change: That region evolves over the next few years.
Speaker Change: Yeah, Thanks, Gary just to get a little bit sorts of I'm pretty sure I heard you say, how do we see the Golden triangle opening up at the next few years.
Speaker Change: Oh, that's it in a couple of trips up that sadly.
Speaker Change: The last couple of months.
Speaker Change: Real potential.
Speaker Change: <unk> got a really solid understanding of what that ore body and loss. They have respect contributing nice cash.
Speaker Change: For quite some time to come from our national bodies.
Speaker Change: Exploration potential at around that valley of the kings areas, So really not radar skull opportunity there.
Speaker Change: So then switching across to Red Chris.
Speaker Change: Really important.
Speaker Change: Spending some time in the in the poll showed it at Red Chris and getting to appreciate the size and quality of that bet.
Speaker Change: That ore body is it is going to be an amazing.
Speaker Change: Block Cave mine, so, it's really going to be about ensuring that we work.
Speaker Change: To understand how.
Speaker Change: I have a bill that one to a high quality understand because I'm sure you'll understand it was meant to cover that and develop ethanol because that that bond move on for decades.
Speaker Change: The original guide what are the other opportunities around it.
Speaker Change: So that that is gonna be a real focus in terms of copper in that investment.
Speaker Change: And then we bridge of that up to the low credit and what we'll do with tagged to go off grid.
Speaker Change: Galore Creek.