Newmont Corporation

Good morning and welcome to Newmont's first quarter 2020 earnings call. All participants will be in a 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 2020 earnings conference call. Joining us on the call today are Tom Palmer, President and Chief Executive Officer, Rob Atkinson, Chief Operating Officer, and Nancy Beezy, Chief Financial 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 newmont.com. And now I'll turn it over to Tom on slide three.

Thanks, Jess. Good morning and thank you all for joining our call. Newmont's core values of safety, sustainability, integrity, inclusion and responsibility are fundamental to creating long-term value for our investors, host governments, communities and employees. In light of the COVID-19 pandemic, our purpose to create value and improve lives through sustainable and responsible mining is more relevant today than ever before. Turning to slide four for a review of how we've been responding to these unprecedented times from a position of strength. The health and safety of our people and our host communities is paramount in every decision we make. This is why Newmont moved early and quickly, proactively taking steps to prevent transmission of the coronavirus. By taking an informed approach with the advice of the World Health Organisation, the Centre for Disease Control and Prevention and external medical professionals, we fully mobilised our rapid response crisis management teams in early March and implemented our business continuity plans across the globe. We've implemented wide-ranging controls at all of our operations, putting the health, safety and wellbeing of Newmont's people and communities above all else. These controls include, but are not limited to, cancelling all non-essential travel, closing our offices and implementing remote work arrangements in early March, significantly reducing the number of people working at our operating sites to just the essential number of people required to operate and maintain the mines, processing plants and environmental control systems, enhancing temperature and questionnaire screening at entry points to our sites, implementing strict social distancing protocols in planes, buses, light vehicles, offices and dining facilities, Developed leadership continuity plans for key roles across the business. Increased frequency of deep cleaning and sanitisation of surfaces. Providing hygiene and health support to nearby communities where employees and contractors live and work. And proactively ramping down certain operations to reduce the risk of transmission to nearby communities with limited healthcare capacity. We established a global supply chain taskforce to assess potential risks and develop viable contingency plans that allow us to stay ahead of any potential disruptions. Importantly, we have not experienced any material issues with our supply chain and continue to benefit from our strong relationships and transparent engagement with our suppliers. Across our sites we have increased inventory of key supplies to pragmatic levels. ranging from three to six months where possible, and we remain diligent in monitoring critical watch list items. To date, Newmont has no confirmed cases of COVID-19 at any of its sites, thanks to the discipline of our workforce in adhering to these protocols. I am incredibly proud of the way our employees have responded to these challenging times. In addition to their strict adherence to our protocols, they have further demonstrated their commitment by joining the fight against this pandemic in the communities where they live and work. We not only want to protect our people and host communities, we want to build lasting resiliency so that our host communities can thrive after the worst of this pandemic passes. As a global business with operations in eight countries, we are committed to doing our part to combat this disease and protect our people and their livelihoods. The strength of our business and maintaining robust relationships not only allow us to endure short-term disruptions, they allow us to reach beyond our sites to create value and improve lives for all of our stakeholders. Associated with this commitment, we have made two important decisions. First, we have committed to maintain pay for all of our employees through until at least the end of June to support them and their families and remove short-term uncertainty. And second, we established a $20 million Global Community Support Fund to help host communities, governments and employees. The Newmont Global Community Support Fund builds upon our other local contributions and efforts we have made over the last two months. With input from local stakeholders we have identified three focus areas to ensure that our financial support will have the most positive impact and reach those who need it most. These three focus areas are employee and community health, food security and local economic resilience. We will closely monitor the progress and outcomes of our support so that we are able to fine tune and improve results along the way. with a view to serving as a catalyst for long-term resiliency and future community development. Turning to slide five for a framework on how we are preparing for multiple scenarios. As the COVID-19 pandemic continues to evolve, our deep bench of experienced leaders and proven operating model continue to serve as a competitive advantage. We are proactively planning for and evaluating short, medium and long-term risk through a comprehensive framework that involves the following actions. Mapping the virus in each of our countries in order to be prepared for a safe and efficient return to more normal operations. For 2020, we're assuming the greatest impact to operations and financial performance could occur during the second quarter. However, we're also planning for other scenarios where we could see a resurgence of the virus later in 2020 and early 21. And finally, we're evaluating a lower likelihood scenario where there is a recurring seasonal impact from the virus. We are currently in wave one, and while there is an increasing likelihood for a wave two, we remain optimistic the worst of the pandemic will have passed in the coming weeks after worldwide efforts to contain or suppress the spread of the virus begin to take hold. We are ramping up operations at Cerro Negro, Eleanor and Yanacocha, which Rob will discuss further. And assuming Penasquito is able to ramp up in the coming weeks, our 2020 gold production will be towards the lower end of our previous guidance, or approximately 6 million attributable gold ounces. whilst costs are tracking towards the higher end of the guidance range. In terms of our capital spend, we are still progressing the majority of our development and sustaining capital projects, with our key projects progressing on schedule. These key projects include Tanami Expansion 2, the development of sub-level shrinkage mining method at Sabika Underground, and our laybacks at Boddington and Aharfo. However our capital overall is trending lower than our original guidance as we have reduced non-essential activities and spending in areas where we were significantly ahead of schedule. For exploration approximately 80% of our budget is allocated to near mine activity and a lot of that work is continuing. However we have put our greenfield exploration on hold. Our Affinity Feasibility Study work continues to advance remotely for both Yanacocha sulphides and a HAFO North. We will provide further clarity on our 2020 outlook when Penesquito begins to ramp up. However, it's worth noting that our guidance for 2021 through 2024 still stands. Despite the disruption from COVID-19, we are well positioned to withstand this pandemic and most importantly, Newmont's long-term value proposition remains unchanged. Turning to a look at our global diverse portfolio on slide six. Within our portfolio of 12 operating mines and two joint ventures, we have an unmatched eight world-class assets, each of which deliver more than 500,000 ounces of consolidated production per year at all in sustaining costs of less than $900 per gold equivalent ounce and a mine life that exceeds 10 years. Importantly, particularly in the current context, all are located in top tier jurisdictions that we define as countries classified in the A and B rating ranges by each of Moody's, S&P and Fitch. In addition to our eight existing world class assets, Newmont has two emerging world class assets in Yanacocha and Merion. These emerging assets within our portfolio offer substantial upside through further optimisation and development over the coming years. Turning to slide seven, we'll look at our production for the next decade. Our stable production profile will generate more than 6 billion ounces of gold per year for the next 10 years, underpinned by our world-class assets. and further supported by our industry leading exploration program and organic project pipeline. This profile is further enhanced with over $1.5 billion per year in additional revenue from producing between 1.2 to 1.4 million gold equivalent ounces from coproducts with silver, lead and zinc from Penesquito and copper from Boddington. we will deliver nearly 8 million gold equivalent ounces per year, the most of any company in our industry. Turning to our free cash flow generation potential on slide eight. We expect to generate substantial free cash flow throughout the gold price cycle. For every $100 increase in gold price above our base assumption, Newmont delivers approximately $400 million of incremental attributable free cash flow per year. Using our conservative $1,200 gold price planning assumption, our free cash flow would still total more than $5 billion over the next five years. And at current gold prices, our portfolio will generate around $15 billion of free cash flow over the same five-year time frame. In addition, we have the potential for further upside with tailwinds from favourable oil prices and foreign currency exchange rates. The excess free cash we generate will be used to reduce our net debt and provide additional returns to shareholders. Looking forward, we are well positioned to continue executing our capital priorities and staying focused on creating long-term value. Turning to slide 9 for a review of our performance against our promises. Simply put, Newmont is delivering on its commitments. With world-class assets in top tier jurisdictions, gold industry's best production profile of more than 6 million gold ounces per year for the next decade, and the industry's largest gold reserve base of 96 million ounces, we are firmly positioned for long-term success. In a little over a year since acquiring Goldcorp, we have already realised significant value. We originally committed to delivering $365 million per year in synergies by the end of 2021, but are now on track to realise $500 million of cash flow improvements in 2021. an increase of nearly 40% for accelerating G&A and exploration synergies along with higher than planned full potential improvements. It's worth noting that these cash flow improvements do not include our share of synergies from the Nevada Goldmine's joint venture. We have received $1.4 billion in total cash proceeds from divestments, meeting our target of $1 to $1.5 billion. And our commitment to leading shareholder returns remains stronger than ever, as we returned our first quarterly dividend of 25 cents per share. Turning to slide 10 for a look at our first quarter highlights. The strength of both our strategy and operating model is shown through our solid first quarter performance, despite the impacts and disruptive nature of the COVID-19 pandemic. In the first quarter we produced nearly 1.5 million ounces of gold at all in sustaining costs of $1,030 per ounce and we also produced 339,000 gold equivalent ounces from co-products. We generated operating cash flow of $935 million and free cash flow of $611 million and we continued to progress our full potential program across our portfolio with a particular focus on the more than $240 million in value we've identified at Penasquito, Cerro Negro and our mines in Canada. During the quarter, we continued to strengthen our investment-grade balance sheet, receiving $1.4 billion in proceeds after completing the sale of KCGM, Continental Gold and Red Lake. We refinanced approximately $1 billion of debt through the issuance of new senior notes at historically low coupon of 2.25%. And we lowered our net debt to adjust to the EBITDA ratio to 0.7 times. Newmont has one of the strongest balance sheets in the gold sector, with $3.7 billion of cash and total liquidity of $6.6 billion. In April, our board approved a 79% increase to our quarterly dividend to $0.25 per share and $0.14 per share. Newmont's first quarter dividend will provide investors with the highest dividend yield of any senior gold miner and is a testament to our financial flexibility, balance sheet strength and conviction in the stability of our business. We also continued to execute our buyback program during the first quarter, buying back approximately $300 million worth of shares. In total, we have now retired $800 million or nearly 19 million shares at an average price of just over $42 per share since initiating this program only five months ago. An excellent outcome. With that, I'll turn it over to our Chief Operating Officer, Rob, on slide 11 to review our operational performance. Thanks, Tom.