Newmont Corporation

Good morning and welcome to Newmont's first quarter 2019 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jessica Largent, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Newmont's first quarter 2019 earnings conference call. Joining us on the call today are Gary Goldberg, Chief Executive Officer, Nancy Beze, Chief Financial Officer, and Tom Palmer, President and Chief Operating Officer. They will be available to answer questions at the end of the call, along with other members of our executive team. Turning to slide two. Please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website at newmontgoldcorp.com. And now I'll turn it over to Gary on slide three.

Thanks, Jess, and thank you all for joining our call. Newmont delivered solid first quarter results as we continue to execute our strategy, which includes delivering superior operational execution, by running our mine safely and efficiently, sustaining a global portfolio of long-life assets by advancing profitable expansions and exploration on four continents, and leading the gold sector in profitability and responsibility. Turning to the details on slide four, in the first quarter, Newmont again delivered superior operational execution which we demonstrated by producing over 1.2 million ounces of attributable gold production at all-in sustaining costs of $907 per ounce, pouring our 10 millionth ounce at Tanami since mining began in 1986, and forging an agreement with Barrick to create a joint venture in Nevada by combining our operations to unlock synergies and new opportunities for our employees and stakeholders. We also continued to strengthen our portfolio in the first quarter. We commissioned the Tanami Power Project safely and on schedule, lowering power costs and carbon emissions by 20% and paving the way for a second expansion of this world-class asset in Australia. We invested in profitable growth through the Ahafo Mill expansion and Ketcher Main projects, which are expected to reach commercial production later this year. We progressed studies for future opportunities across our portfolio, including Tanami Expansion II and Yanacocha Sulfides, which continue to advance towards full funding decisions. And we announced, and last week closed, our acquisition of Goldcorp, which I'll discuss in more detail later. Finally, we delivered leading financial performance in the first quarter by generating adjusted EBITDA of $687 million and free cash flow of $349 million, maintaining one of the strongest balance sheets in the gold sector, supported by an investment-grade credit profile, returning cash to shareholders through an industry-leading quarterly dividend of 14 cents per share and a special dividend of 88 cents per share. We also continued to fulfill our commitments to leading environmental, social, and governance performance by upholding human rights, serving as responsible natural resource stewards and applying lessons to reduce risk and improve health and safety for the benefit of all employees and stakeholders. I invite you to read more about our performance, programs, and targets, as well as areas we can continue to improve on in Beyond the Mine, our annual sustainability report, which is available on our website. Turning to more about sustainability on slide 5. We began the year with a total recordable injury frequency rate of 0.52, a step back from our 2018 performance, and a reminder that we need to remain vigilant in reinforcing key safety systems and behaviors among our employees and contractors throughout our business. Earlier this month marked the anniversary of the tragic loss of our six colleagues at the Ahafo Mill Expansion Project in Ghana. Although a year has passed, the void in the lives of their families and friends remains, as their memories live on. We learned critical lessons from the thorough investigation conducted after the accident. These lessons have been applied at our operations and have been shared across the mining industry. Creating a more responsible and sustainable business is a continuous journey. The tragic failure of Vale's Brumadinho tailings facility in Brazil earlier this year highlighted the need for the industry to improve its management of these facilities. Newmont continues to review and improve our existing practices. To improve awareness of our facilities, we published a tailings fact sheet, which can be found on our website. We have 26 tailings facilities in which we safely place more than 100 million tons of tailings every year, guided by strict standards for managing and inspecting our facilities. We also actively support raising standards for tailings management across the mining industry, similar to how we've been able to raise our standards on cyanide management. We are committed to protecting the health and well-being of people and the environment. Turning to slide six. In January, we announced our intent to combine with Goldcorp, and just last week, we closed the transaction after receiving all regulatory and shareholder approvals. Newmont Gold Corp. is the world's leading gold business with the strongest portfolio of operating gold mines, projects, and reserves in favorable mining jurisdictions. Underpinned by a proven and scalable operating model, we'll target 6 to 7 million ounces per year of sustainable gold production, and we expect to enhance annual revenues by another $1.5 billion through silver, zinc, and copper production. We will have the financial flexibility needed to execute our capital priorities, deliver an industry-leading dividend, and maintain an investment-grade balance sheet. We have a deep bench of accomplished business leaders and high-performing technical teams with extensive mining industry experience, and we will maintain industry leadership in environmental, social, and governance performance. Beyond great assets, prospects, and people, Our value proposition is supported by our proven strategy and track record. We expect to generate $365 million in annual pre-tax savings through G&A synergies, supply chain efficiencies, and full potential improvements. Taken together, these efforts hold the potential to deliver total value creation of $4.4 billion. We also expect to unlock further upside through portfolio optimization, project sequencing, exploration, and divestments. As a result, Newmont Gold Corp. is set to deliver stable free cash flow from steady production and improving costs over a decades-long time horizon. Turning to our global portfolio on slide seven. Newmont Gold Corp.' 's industry-leading portfolio is based in four regions where we have the stability and proven operating model to create value. With the additional assets in Canada, Argentina, and Mexico, and the Pueblo Viejo joint venture in the Dominican Republic, we now have the strongest portfolio of operating mines in favorable jurisdictions, with 90% of our reserves based in the Americas and Australia. Turning to our projects on slide 8. Newmont Gold Corp has a robust project pipeline, creating a foundation for steady production and cash flow for decades to come. This pipeline gives us significant flexibility, and we will continue to advance only those projects that meet our minimum hurdle rate of 15% at a $1,200 gold price. The depth of this pipeline also allows us to optimize and sequence projects to ensure that capital is deployed effectively and efficiently. based on value and risk. This is the same approach we've taken to successfully deliver 11 projects on four continents on or ahead of schedule and at or below budget over the last six years. Turning to our production profile on slide nine, here's a look at Newmont Gold Corp's production through 2025. We are well positioned for the longer term And over the next seven years, the combined portfolio is capable of producing 7 to 8 million ounces of gold annually, with all-in sustaining costs declining from $945 per ounce in 2019 to $830 per ounce in 2025. I would emphasize that we are still targeting production of 6 to 7 million ounces of gold annually, and this outlook does not include the impact of potential divestitures or project optimizations. Turning to the Nevada joint venture on slide 10. In March, we entered into an implementation agreement with Barrick to form a joint venture that will combine our mining operations, assets, reserves, and talent in Nevada. We believe this arrangement will generate long-term value for all of our stakeholders by unlocking synergies, allowing profitable production to continue well into the future, and creating opportunities for employees and other stakeholders through a broader unified mining enterprise in Nevada. Under the terms of the agreement, Barrick and Newmont Gold Corp. will hold economic interests equal to 61.5% and 38.5% respectively. Barrick will operate the entity with overall management responsibility and will be subject to the supervision and direction of the Joint Ventures Board. which will be comprised of three individuals appointed by Barrick, along with Tom Palmer and myself. Collectively, both companies will have equal representation on the joint venture's technical, financial, and exploration advisory committees. Our teams have been meeting regularly to facilitate a smooth transition upon closing and ensure a successful partnership into the future. With that, I'll turn it over to Nancy on slide 11 to discuss our financial performance.