Newmont Corporation

Good morning and welcome to Newmont's third quarter 2020 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 third 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 Beebe, 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, and thank you all for joining us this morning. Before I start, I want to take this opportunity to thank Jess Largent, who will be leaving Newmont at the end of the year after more than five years with us. which included three years as head of our investor relations group. For those of you who have not yet had the chance to meet him, I'd also like to introduce Eric Colby, our vice president of strategic communications. Eric was appointed to lead the strategic communications function earlier this year, and he combines both investor relations and communications. Eric has been with Newmont since 2007, including three years working at Yanacocha in Peru, And since 2013, Eric has led multiple transactions as part of our corporate development team, playing a key role in the divestiture of Bata Hijau, the acquisition of Goldcorp, and the formation of the Nevada Goldmine's joint venture. I want to thank Jess for her many contributions to Newmont, the support that she has provided me and my team, and wish her the very best of luck as she embarks on her next adventure. Turning back to results, I'm very excited to share with you our record third quarter performance as we continue to deliver on our purpose to create value and improve lives through responsible and sustainable mining. Turning to our quarterly highlights on slide four. Newmont has the industry's most diverse balanced portfolio of world-class assets that provides stable production with significant leverage to rising gold prices. We have continued to manage through the COVID pandemic from a position of strength. With a proven leadership team, operating model and highly capable workforce, we are building on our track record of superior value creation. I am incredibly proud of how our teams across the world have responded to this pandemic. and the sacrifices people have made and continue to make to support Newmont and the communities in which we live and work. They have set a standard for leadership in our industry. All of our sites are now operational and we delivered record financial results. We produced 1.5 million ounces of gold. and 273,000 gold equivalent ounces from copper, silver, lead and zinc, putting us well on track to achieve our full year guidance this year. We generated significant operating cash flow of $1.6 billion and free cash flow of $1.3 billion, the most in any quarter in Newmont's 100-year history. We have continued to safely advance project work at Tanami, Savika Underground and Musselwhite. We also announced the sale of a royalty portfolio to Mavericks Metals, which closed yesterday, and Exploration joined ventures with Agnico Eagle in Columbia and Kirkland Lake in Canada. Our solid operating performance further improved our financial strength and flexibility. we ended the quarter with $4.8 billion of consolidated cash and reduced our net debt to adjusted EBITDA ratio to 0.4 times. And yesterday, we further demonstrated our confidence in the strength of our business and continued commitment to leading shareholder returns with a 60% increase to our quarterly dividend, which is now $0.40 per share or $1.60 per share annualised. This is the second increase to our dividend this year and reflects the strength of Newmont's portfolio to pay a higher dividend while we continue to advance profitable projects and maintain financial strength and flexibility. Newmont will remain disciplined in everything we do, including being prudent in our approach to capital allocation given the uncertainty in the world today. However, we will have an opportunity to evaluate even further returns to shareholders as we continue to build excess cash. And last but certainly not least, we are the first and only mining company to achieve gender parity amongst our non-executive directors, setting an example at the very top of our organisation that is fundamental for sustained cultural change. Turning to slide five for more detail on our commitment to improving lives. At Newmont, we have a fundamental belief that a commitment to leading environmental, social and governance practices are essential to delivering sustainable long-term value for all of our stakeholders. This starts with our commitment to our people, and the work we are doing to sustainably improve health and safety and create a more inclusive culture across our global business. We continue to perform well against our public sustainability targets to source from local suppliers, hire within the communities near our operations, respond to community complaints in a timely manner, reduce our water consumption and complete planned reclamation activities. We are on track to meet a seven-year target to reduce our carbon emissions by 16.5% by the end of this year, and are also working to develop longer-term science-based targets for emissions, which we plan to release next month. We are committed to fully implementing the global industry standard on tailings management that will help us improve how we manage these types of facilities. We are the second most transparent company in the S&P 500 and place 12th out of more than 200 companies on the corporate human rights benchmark. These achievements are the result of relentless hard work from generations of leaders, lessons learned and improvements made that form the very DNA of Newmont. Turning to slide six, as a mining industry, we must continue to improve our health and safety performance. At Newmont, we have a relentless focus on ensuring that everyone who works in our business can return safely home to their families. As leaders, it is up to us to create a culture in which fatality risks are clearly understood and sustainably managed at all times. Through visible, felt leadership, and the systems we put in place to manage risk consistently across our global business, we are working to significantly improve our safety performance. In response to eliminating fatalities and supporting an injury-free workplace, Newmont made a symbolic change this year, stepping away from our industry's traditional use of a lagging personal injury rate in our bonus programs to measures that are focused on managing the critical controls that must be in place at all times to prevent fatalities. This year we have completed over 40,000 critical control focused conversations in the field. Conversations that have proactively identified and eliminated potential risks that could lead to a fatality. And we've recently begun using digital tools an app across the organisation to facilitate these conversations and capture more robust data that can quickly be analysed and shared across our business globally. On the back of this work, we have reduced our significant potential events by two-thirds compared to 2019. and achieved a six-fold improvement from when I joined Newmont in 2014 and started up on this journey. And despite the significant leadership distraction due to managing COVID this year, we are on track to achieve the lowest personal injury rate in our company's history, with a total recordable injury frequency rate of 0.28 per 200,000 hours worked. It is no coincidence that visible self-leadership focused on fatality prevention is driving a significant improvement in all of our safety metrics. Turning now to industry's best portfolio on slide seven. Among our 12 operating mines and two joint ventures, we have eight world-class assets, each of which delivers more than 500,000 gold equivalent ounces per year. at all in sustaining costs of less than $900 per ounce and with a mine life that exceeds 10 years. Importantly, all eight are located in top tier jurisdictions that we define as countries classified in the A and B ratings ranges by each of Moody's, S&P and Fitch. We firmly believe that we have the right sized portfolio to generate sustainable returns from our world-class, responsibly managed assets located in the best gold mining jurisdictions. Underpinning our asset base are the largest gold reserves in the world with nearly 96 million ounces. We also offer substantial future upside through our gold resource base with nearly 75 million ounces of measured and indicated resources. In addition to this, we have 63 million gold equivalent ounces in our reserves, which includes 15 billion pounds of copper. Importantly, 90% of our reserves are in the Americas and Australia. Exploration always has been and will continue to be a core competency at Newmont. Our disciplined exploration program lays the groundwork for growing our reserve and resource base to sustain stable, steady production and cash flows for decades to come. Turning to slide eight, our portfolio will generate more than 6 billion ounces of gold per year through 2029. This stable production profile is underpinned by our eight world-class assets. our industry-leading exploration program, and our next three development projects, Tanami Expansion 2, which is in execution, and then Ahafo North and Yanakoja Sulfides, both of which are in the late stages of definitive feasibility. As you can see here, our portfolio provides steady production over the next decade, balanced across each of our four regions. This profile is further enhanced by more than 1 million gold equivalent ounces from silver, lead and zinc at Penasquito and copper at Boddington and Yanacocha. Combined, we will deliver more than 7 million gold equivalent ounces per year for the next decade for most of any company in our industry. Turning to our unrivalled project pipeline on slide nine. Our project pipeline is unmatched in the gold industry and is one of the best in the mining industry. There is significant value to unlock as we optimise and advance our longer-term projects and lay the pathway for steady production and cash flow well into the 2040s. Our near-term projects include a half O North, which is the best unmined gold deposit in West Africa and for which we expect to reach a full funds decision early in the new year, and Yanakocha Sulphides, which is also progressing towards a full funds decision next year and has the potential to extend Yanakocha's life well into the 2030s. Looking at the earlier stage projects in our pipeline, you will see two new projects in pre-feasibility, with Parmore at Porcupine which was formerly the Sentry Project, and Oberon at Canami. The Parmore project is a layback to the existing Parmore open pit and is smaller in scope than the prior Sentry Project, which required the relocation of the existing processing facilities in order to access the dome or body. Developing Parmore is expected to extend mine life by another decade. providing us more time to explore the Borden, Hoyle Pond and Dome ore bodies to find the next profitable extension of the Porcupine Mine. Parmor is a great example of Newmont's disciplined investment system, which focuses on value creation and phased investment decisions to maintain our current production profile instead of progressing highly complex, capital-intensive projects. At Oberon, we are very excited that our near-mine exploration efforts continue to identify highly prospective deposits with the potential to further extend life and improve costs at the world-class Tanami asset. Rob will cover some more details on Oberon shortly. At Coffey, we completed our exploration mapping exercise and are closing the camp ahead of the winter season. We remain excited about the potential of coffee to fully optimise the ore body and improve value. In addition to our highly prospective gold projects, we have significant organic exposure to gold copper porphyries, including Norte Vieto, Neve Union and Galore Creek. In fact, if you assume that one of these three megaprojects comes into our production profile at the back end of this decade, Newmont's total production would be around 15% to 20% copper, providing us a natural exposure to a metal of growing importance for reducing carbon emissions and facilitating the ongoing transition to a new energy economy. It's also worth noting that since 2016 I have led the delivery of 10 projects on time and achieving an average internal rate of return of over 30%. Going forward, we will build on this track record by continuing to apply our disciplined and rigorous approach to projects and ensuring Newmont is well positioned to generate superior value throughout the price cycle. Turning to our free cash flow generation potential on slide 10, our balanced portfolio combined with our discipline and operating model, provide significant leverage to high gold prices from the largest production and reserve base in the world. For every $100 increase in gold prices above our base assumption, Newmont delivers approximately $400 million of incremental attributable free cash flow per year. Using our conservative $1,200 gold price assumption, Our base free cash flow will still total more than $5 billion over the next five years. At current gold prices, our portfolio will generate more than $19 billion of free cash flow over that same timeframe. To be clear, this is free cash flow that is entirely attributable to Newmont's account, enabling us to provide industry-leading returns. I'll hand it over to Rob to discuss our operational performance on slide 11.

Thanks, Tom. Before jumping into the regions, I'll start with a general COVID update. Across our portfolio, we have continued our wide-ranging controls and safety protocols to place the health, safety, and well-being of our teams and our communities above all else. While we've had employees and contractors test positive for the virus, our effective testing contact tracing, and quarantine procedures have proven to be effective in mitigating the spread to other employees and local communities. In the second quarter, we had five sites in care maintenance, and all five sites were operational in the third quarter. Penesquito ramped up quickly and was achieving pre-COVID record levels in the plant by mid-June. Eleanor and Musselwhite ramped up early in the third quarter, and Llanacocha has returned to nearly full capacity. Cerro Negro is currently operating at about 60% of normal capacity as the site continues to be impacted by ongoing travel restrictions in Argentina due to the virus. We are working closely with the local authorities and unions and are mitigating the efficiency impacts of reduced staffing levels by consolidating our mining and processing efforts in the near term. I'm incredibly proud of the commitment of all of our teams during these difficult times and the efforts that they have demonstrated day in, day out to work and produce safely. Turning to slide 12 for an update on Australia's performance. At Boddington, we delivered solid third quarter production on the back of higher grades, which partially offset the wet weather that impacted mining productivity. As the stripping campaign winds down, we expect to benefit from higher grades through 2022. Boddington is expected to finish the year strongly with higher production and lower operational costs in the fourth quarter. The autonomous haulage system is progressing well and remains on track to be fully operational in the first half of 2021, which will further enhance Boddington's safety and productivity while also extending mine life. The team continues to work very closely with CAT as they prepare to become the world's first open-pit gold mine with an autonomous haul truck fleet. The CAT MineStar system has been installed and we are expediting the delivery of the AHS trucks with 14 of the 29 arriving before year end ahead of schedule. Tannamine delivered another strong quarter with higher grades which helped offset COVID-related travel restrictions and quarantine protocols that impact productivity. The team remains focused on improving productivity through optimized shift, roster, and flight schedules. And despite the challenges over the course of 2020, Tannermine remains on track to produce 500,000 ounces this year. Tannermine expansion two is progressing well with around 40% of engineering work complete and close to 20% of the overall project complete. Earlier this month, we achieved a significant milestone completing the pilot hole, which provides us the ability and guidance we need to be able to develop the new 5.4 metre wide shaft from both the top and the bottom. Construction for the camp is well underway with around 75% of the new surface buildings in place. We continue to review the schedule and capital for this project to understand the full impact of potential delays due to the ongoing impact of COVID. Looking further ahead, we have significant near-mine exploration upside with extensions to existing deposits and at Oberon, which has the potential to grow beyond 2 million ounces. Oberon is an open-pit deposit located only 28 kilometers to the north of the Tannamine underground mine and has the potential to grow production for the operation beyond the current 500,000 ounces per year. As Tom mentioned, Oberon is in pre-feasibility. and we've been remotely progressing our study work by evaluating mine planning scenarios and resource model updates. Recently, we resumed field work after working in close collaboration with traditional owners to access the area and safely remobilize our hydrogeological drilling efforts. Exploration drilling is planned to resume after the upcoming wet season. Turning to Africa on slide 13. At Achievement, we delivered solid third-quarter performance with higher throughput and recoveries, and we expect to reach higher grades in the fourth quarter, which will continue through 2021. At AHAFL, our investment in this world-class asset continues to deliver value. Our transition to a more productive underground mining method at Sabika Underground is progressing very well, with development rates ahead of schedule. During the quarter, we ramped up to mining four to five stopes concurrently in various locations of the mine, reducing congestion and increasing tonnages. Higher grades from the underground will help offset the stripping campaigns in the Iwanzu and Sabika open pits through next year. And at Ahapo North, we continue to advance the permitting process with the Ghana EPA, and the team is focused on engineering and design work, as well as construction, procurement, and community planning. As Tom mentioned, we remain firmly on track for a full funds decision in 2021. When approved, our plans include building a standalone mill to produce approximately 250,000 ounces per year over a 13-year mine life for an investment of approximately $700 to $800 million, and a Happo North functional and technical resources will be supported from our current AHAFO operation, leveraging our proven operating model to reduce duplication in the region. Turning to our South America operations on slide 14. Merian delivered solid third quarter performance as we process stockpiles to help offset lower tons mined, and we expect higher grades in the fourth quarter as we advance into the harder ore. Yanacocha ramped up from 80% capacity in July to near full capacity in September. In the third quarter, we processed higher leach tons and returned to more normal levels of throughput in the mill. And, as expected, the inability to place leach ounces in the second quarter will impact Yanacocha through 2020, but the team is working very hard to improve leach cycle times. At Cerro Negro, we're focused on operating as efficiently as possible to help mitigate the ongoing impacts of the travel restrictions caused by the virus. As a result, we are currently running the mill and campaigns, and the team continues to demonstrate resiliency despite facing inclement weather in the third quarter and complexities of managing varying workforce availabilities and shift changes. Mining is focused on development in the Marianas complex, but we are forecasting a slower ramp up delaying access to higher grade stoats into 2021 while we work with the authorities on a longer term plan to return to normal operations by the end of the year. It is worth noting that Cerro Negro is only approximately 4% of Newmont's full year production. So as Tom previously mentioned, we are well on track to deliver our 2020 guidance. Looking ahead, We remain very excited about Cerro Negro, which has the potential to become the largest gold producer in South America. We have more than doubled our land position and the mine and its surrounding areas are highly prospective and underexplored. Our exploration team has identified significant district scale potential with more than 100 known prospects and ranked Cerro Negro as one of the most prospective land packages in our entire global portfolio. We're also very excited about Yanacocha sulfides progressing to a full funds decision in 2021. And we will continue to share additional details as our definitive feasibility study progresses. So wrapping up with North America on slide 15. Penesquito delivered solid third quarter performance as we safely and efficiently ramped up from care maintenance. While the site continues to manage through COVID related workforce challenges, We've been able to maintain our record levels through the plant, and we also successfully completed a two-week mill maintenance shutdown in September, setting the operation up for a strong fourth quarter. Our full potential program continues to drive value from this world-class asset, and we are currently focused on improving fragmentation through our blasting process, and we continue to make enhancements to the front end of the mill to further improve throughput. In addition, we fully ratified the sustainable agreement with the Cedros community in August, which also helps us to explore our large land package that is currently only 20% explored. At Muscle White, we successfully ramped up from care maintenance in the third quarter and restarted stockpile processing. And I'm delighted to say that we achieved mechanical completion of the conveyor system yesterday and have started the important process of wet commissioning. Over the coming weeks, the conveyors will be tested to ensure all components of the conveyor belts are safe and fully operational as expected. And I very much look forward to completing the full commissioning and reaching nameplate capacity of the belts in December. Also, just last week, this project completed over 100,000 hours without a lost time injury. Again, I'm very proud of the great work of our site and project teams, along with our contractor cementation, to ensure that we keep the health and the safety of every teammate in the forefront of every shift. Development rates at Muscle White are exceeding plan and commissioning of the materials handling project has begun and is expected to be fully completed in November. We have also officially kicked off our full potential program at Muscle White, building on the virtual efforts over the last several months. Overall, Muscle White is very well positioned to be fully up and running as we enter 2021. and we'll be back stronger than ever before. At Eleanor, our third quarter performance improved as the site ramped up from care maintenance. Ongoing COVID-related restrictions continue to impact staffing levels, but development rates ramped up in September, and we are back to operating at normal capacity. Our site leadership team remains focused on improving efficiency and productivity, and is driving fundamental changes to how we operate at approximately 250,000 ounces of annual gold production with a sustainably lower cost base. We have made significant progress restructuring and reducing the overall number of site personnel, yet morale has improved and production levels are on the rise, which speaks to the cultural change taking place at Eleanor. Through our full potential program, we've delivered $24 million of value year to date, and expect to continue to deliver meaningful cost improvements in 2021 and beyond. Earlier this year, we commissioned the lower mine materials handling project safely and under budget, which will significantly streamline the transportation of ore to surface as we transition to higher production rates from the lower levels of the mine in the years ahead. Our exploration drills at Eleanor are returning very encouraging results. both laterally and at depth, and we are improving our understanding and interpretation of the geological model. We have also advanced our understanding of the district's geological framework, which will inform our 2021 drill program and targets less than 20% of the property drill tested to date. Porcupine delivered solid third quarter results, and the site is improving underground development rates with several new initiatives underway that will increase tons mined and processed in 2021. And CC&V also delivered strong results from an increase in tons mined and reaching higher grades at the bottom of the crescent pit. And with that, I'll turn it over to Nancy to discuss our financial results in slide 16.

Thanks, Rob. Turning to slide 17 for the financial highlights. We delivered our strongest-ever quarterly performance across several financial metrics including record free cash flow of $1.3 billion, of which 97% is attributable to Newmont. Year-to-date, we have generated $2.3 billion in free cash flow, of which 96% is attributable to Newmont. Other notable third quarter results include revenue of nearly $3.2 billion, adjusted net income of $697 million, or 86 cents, per diluted share. Adjusted EBITDA of more than $1.6 billion, an increase of 54% from the prior year quarter. And cash from continuing operations of $1.6 billion, ending the quarter with a strong cash position of $4.8 billion. We ended the quarter with liquidity of nearly $8 billion, and our net debt to EBITDA ratio improved to 0.4 times. Earlier this month, S&T moved Newmont's outlook from stable to positive on strong free cash flow prospects and reconfirmed our BBB credit rating. As a reminder, our financial results proportionally consolidate the company's ownership interest in Nevada Gold Mines, but do not include the contributions from the company's investment in Pueblo Viejo, which appears in equity income versus in our operating results. For the third quarter, Our 40% of PV reported 87,000 ounces of production and would have added an additional $115 million of EBITDA. Turning to slide 19 for review of our earnings per share in more detail. Third quarter gap net income from continuing operations was $611 million, or 76 cents per share. Adjustments included 7 cents related to the change in fair value of our equity investments, $0.03 related to incremental COVID-specific costs such as additional screening protocols, transportation costs, and community fund disbursements. $0.10 related to pension settlement changes related to the Nevada Gold Mines transaction. $0.03 related to tax adjustments and valuation allowance. And $0.07 of other charges. Taking these adjustments into account, we reported third quarter adjusted net income of 86 cents per diluted share. While we adjusted EBITDA for approximately $32 million of non-recurring incremental COVID specific costs from our third quarter net income, we did not adjust out approximately $35 million of care and maintenance costs due to Yonacocha, Cerro Negro, and Musselwhite ramping up in the third quarter. With that, I'll hand it over to Tom on slide 19.

Thanks Nancy. Turning now to slide 20. Our capital allocation philosophy remains unchanged and continues to balance the following three priorities. Reinvesting in our business through disciplined investments in exploration and organic growth projects. Maintaining financial strength and flexibility to sustain the business across price cycles, and returning cash to shareholders. Newmont continues to set new standards as the clear industry leader in shareholder returns, which we further differentiated with the 60% increase in our quarterly dividend that we announced yesterday, bringing our quarterly dividend to $0.40 per share and our annualised dividend rate to $1.60 per share. This was our second substantial dividend increase this year, demonstrating the strength and stability of our business. Turning to slide 21 for more details. During 2019 and 20, we will have returned more than $2.5 billion to shareholders through dividends and share buybacks, an amount That is more than the total of our next eight competitors combined. Our 40 cents per share third quarter dividend represents a 186% increase from the third quarter dividend in 2019 and highlights the strength of our financial position. and our ability to continue paying an industry-leading dividend whilst we simultaneously invest in and develop our most profitable projects. Our most recent dividend increase was set within our newly established dividend framework. This framework provides our shareholders with the stability of a base annualised dividend of $1 per share, calibrated at a $1,200 gold price assumption and the potential to receive 40% to 60% of the incremental free cash flow generated at gold prices above $1,200 per ounce. Our third quarter dividend was calibrated at a conservative and stable $1,500 gold price assumption. As we have disclosed previously, Newmont generates incremental free cash flow of approximately $400 million for every $100 change in the gold price above $1,200. So at an assumed $1,500 gold price we would generate approximately $1.2 billion of incremental free cash flow annually. Our third quarter dividend increase was calibrated to share 40% of that incremental $1.2 billion free cash flow that Newmont will generate at an assumed $1,500 gold price. That 40% is approximately $480 million. This equates to 60 cents per share annualised, an increase of 60 cents per share annualised over our base $1 per share dividend. As a result, we are pleased to offer our shareholders an annualized dividend of $1.60 per share. We chose a conservative $1,500 assumed gold price for the calibration of our third quarter dividend to maintain financial discipline and prudence, as well as to instill stability and predictability into our dividend increase framework. We will typically reassess the gold price semi-annually and recommend incremental dividend increases when we believe gold prices have rebates at levels of at least $300 per ounce higher than we applied to establish our prior dividend increase. While the dividend will be assessed quarterly by our board, the framework aims to ensure stability and predictability, and we will evaluate the additional dividend in gold price increments of approximately $300 per ounce. In addition to this framework, we have a number of tools available to deploy excess cash based upon the circumstances at the time. These include further strengthening the balance sheet through debt repayments, opportunistic share buybacks, and additional dividends. Our commitment to industry-leading shareholder returns is evidenced by our track record, and we are confident our operational delivery and discipline will enable us to continue to enhance that record of performance. With that, I'll wrap it up on slide 22. Over the last 18 months, Newmont has assembled the gold industry's leading portfolio of world class operations and projects in top tier jurisdictions and will deliver more than 7 million gold equivalent ounces per year for the next decade and beyond. Our ability to generate substantial free cash flow across the price cycle is unmatched and our significant leverage to higher gold prices was demonstrated by our record third quarter free cash flow of $1.3 billion. As we continue in our 100th year, Newmont is leading the gold mining industry with a foundation that is stronger than ever and a proven strategy to deliver long-term value while improving lives. I'm very excited about what the future holds at Newmont and I look forward to keeping you updated on our performance. With that, I'll turn it over to the operator to open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Fahad Tariq with Credit Suisse.

Hi, good morning. Just one question for me. I didn't see in the presentation anything on synergy targets and maybe if that's changed or not. But in any case, can you provide some color on is the cash flow synergy target still $500 million for next year? How is that progressing? And anything else you could tell us on that front would be great.

Thanks for that and good morning. I'll kick off and pass it on to give you some stories of where we're delivering that value. But yes, we're on track to deliver the synergy targets as we've committed. The $500 million next year is still very much our commitment. That's incorporated in our long-term guidance. We'll update our long-term guidance in December at our guidance webcast. Just this week we've been meeting with our board to review our plan, which forms the basis for that guidance. But I remain very confident that we will deliver at least that $500 million of free cash flow next year. As I say, it is built already into our long-term guidance.

Rob, do you want to give a few stories? Thanks, Tom, and thanks for the question, Fahad. By far and away, the engine of our predominant synergy is at Penasquito. That team continues to do particularly well and have over-exceeded this year. And as a reminder, the key areas that we're focused on are primarily the front end of the process plan to allow more ore to flow through the mill. And we've successfully done that in spades. In terms of the mining initiatives, it is about improving the fragmentation to enable more dirt to go through the plant, but also just bringing greater and greater discipline into how we blast, how we demarcate, how the shovels dig, et cetera. But beyond that, we've also moved into the total cost of ownership and the supply chain side of things. So, you know, the procurement of non-OEM HME parts, Just to name but a few, but, you know, we've got 45 initiatives on the go down there, all delivering good values. So, very, very pleased with how things are going.

Thanks, Mahat.

Thank you.

Our next question comes from Tyler Langton with JP Morgan.

Good morning. Hope everyone's doing well. Just first question, I guess, with sort of COVID cases rising, I guess, is there, do you see any increased risk of just shutdowns at the mines, especially, I guess, the mines that were previously impacted? And then just with the Cerro Negro, I guess, it's operating at 65%. Is it really, to get back to 100%, is it really just based on having travel restrictions eased, or I guess, are there other sort of alternatives you can look at?

Good morning, Todd. Thank you. There's absolutely nothing wrong with With the Saranega operation, the constraints are all around the cover restrictions that everyone in Argentina will be managing to keep people safe and healthy. We continue to apply our COVID protocols with discipline across every one of our 12 managed operations, no matter where they are in the world. So in Australia, where there is no spread, there is no community virus in either Western Australia or the Northern Territory, where Boddington and Tanami are respectively. We still maintain all of our protocols at those operations to ensure that we manage the risk of this nasty virus spreading. We still have some 10,000 people who are either not on an operating site or an office environment working virtually, again, to protect their health and safety and the safety of the communities in which we live and work. What I might ask Rob to do is give you a story around Penesquita of the work that's being done which would be mirrored across every one of our operations to ensure that we keep people healthy and safe. It's a good story that really demonstrates the extra effort that people are going to, the resilience in our business and why I'm so incredibly proud of our Newmont workforce.

Thanks, Tom. Really just to build on that is that it also highlights how Newmont is living and managing the current situation with the virus. But penesquito, to give everybody on the line a sense that when we talk about COVID testing, it's easy to think, oh yeah, that's fairly simple. But in Mexico, we've got 18 testing centres. We've got seven at various airports throughout Mexico. We've got seven at various major bus stations throughout Mexico. And we've got four testing stations on site Now, that also has required to staff those up with nurses, and we've got 56 nurses and personnel operating those 18 centres. And as you can imagine, since COVID started, we have performed tens and tens of thousands of tests to make sure that our people are safe to go to the site. And also we're testing before people leave the site so they can go back to the communities safely and with the full knowledge that they're clear of the virus. But I think that story from Penasquito really highlights, just as Tom said, the effort and the commitment that our teams have to make sure that we operate throughout this virus very, very safely.

Thanks. That's helpful. And then just with the two projects for next year for Yonacocha and Oaxaca North, do you think it's a sense when next year you might make a decision? And is there any risk just from COVID sort of pushing those decisions out?

Thanks, Tyler. I'll kick off. Rob won't want to chip in. Halfo North will come first. It'll be early in the new year. It's locked and loaded. We're just working through with the EPA on the final permits. It's absolutely down the middle of our wheelhouse. The blueprints are the same as the original Halfo, Acheem and Miriam. A very straightforward mine to build, open pit mine and mill. It's only 30 kilometres from our existing Halfo operation. And a lot of the work, particularly in the first 12 months, is a relocation of the road and the clearing of topsoil and starting the initial earthworks, all of which is done with local Ghanaian workforce. And we build off a project team that's still in place at Aharpo, having just recently finished the Aharpo Ambulance Expansion and Seveka Underground. So very well positioned with Aharpo North and, as I say, Lockton later, waiting for those final I's to be dotted and T's to be crossed. Yannacotia sulphides is second half of next year, still doing the final engineering work around that definitive feasibility study. Again, pretty straightforward in terms of bringing that project on once it's approved. So we're mining today at Yannacocha, so it's deploying equipment to that layback. It's the Chukwukotja underground mine, which we've already developed quite extensively. So both sources of ore are well advanced. The key work is around the construction of a concentrator and the autoclave on the existing footprint. As you approve that project and do your early works, a lot of that is civil works to prepare the foundations for quite substantial processing plants. So not see any COVID-related restrictions to being able to bring that project on as we reach full funds.

Great. Thanks so much. Thanks, Tom.

Our next question comes from Greg Barnes with TD Securities.

Tom, just rehashing your commentary on the dividend framework, did I understand that you will reassess the dividend every six months now going forward based on the gold price?

Our board will look at it every quarter, Greg, but they'll look back at a semi-annual gold price period. If you look at the discussion we went through with the board this week to approve that dividend, the semi-annual period we looked back on was the first half of this year. Gold was averaging around $1,650 for the first half of the year. We took a conservative view to lower that to $1,500 and apply the 40%, so the lower end of our range, to that $1,500. So we'll look every quarter as a board, but then look back over that semi-annual period.

Okay, so in Q1, if you look back over the second half of 2020... Let's say we average $1,900, which it looks like we will. You'd use something like $1,800 as the basis of dividend.

I think as you use our framework and do those calculations, and I think I saw that in your report this morning, that is absolutely the discussion that our board will be going through. So you could do that calculation, say the 40% to 60% could be somewhere between $2.20 to $2.40. That would be subject to the board looking at not just that gold price but all of a number of other factors but that's the sort of discussion that we'll be having. That framework allows us to have that discussion and allows you and the investment community to make those determinations.

I was interested in your comments on copper and the projects in your portfolio. Is that an expression of increasing interest in copper or just a factoid out there that those projects have copper exposure and it's an interesting

It's just purely a factoid that we don't need to do anything other than develop our organic project pipeline and we'll get a natural exposure to copper at a time or it will be an important metal in the global community. Okay, good.

Thank you. Thanks Greg.

Our next question comes from Chris Terry with Deutsche Bank.

Hi, Tom, Nancy and Rob. A couple of questions from me. First one on the cash balance now at $4.8 billion. Just thinking about the mechanics of that, looking back, I guess, the last couple of years, you have had it down to about $2 billion or so, I think. But generally, you know, it's a reasonably high cash balance. But as you think about going forward, as that cash fields, you pay some of it into dividends, and then you should on our numbers become net cash relatively quickly. How do you think about the actual cash balance though? What you'll do with that? Is that going to be used to pay debt or what physical will you do with the actual cash? Thanks.

Yeah, absolutely. I'll take that one. You've got it just right. We have indicated publicly that we would like to keep cash balances somewhere in the $2 billion to $3 billion range. And I think in this time of COVID uncertainty, that remains prudent. We've also indicated that we will continue to use that cash for things like paying down our 21 through 23 debt, things like the share buyback that we initiated last year, and certainly contributions to the dividend as well as reinvesting in our business. So all of those things combined will give us that financial flexibility and optionality. But yes, In today's world, I think holding a bit more cash on the balance sheet is certainly something we will continue to do.

Okay. Thanks. Thanks, Nancy. And then just in terms of the project pipeline on slide nine, you talked about AHAFO North and Yanacocha Sulfides. $750, I think you said, for the AHAFO North CapEx and Yanacocha Sulfides second half next year decision. Can you just remind us the time period and the rough capital that that would be spent over? I think it's a pretty long-dated project, but just wanted to get an update. Thanks.

Thanks, Chris. It's round numbers, $2 billion. We're at 51.35% interest in Anacotia, so it's roughly $1 billion to Newmont's account, and it's It's a three-year development. So if you look at the three big capital projects and if you look at our... If you want to sort of model our development capital going out on the back of those, 750 for Tannamide, 750 for Harco North and a billion for Yanacocha sulphides over the next four, maybe a little bit into five years. That's about roughly our spend on development capital. Pretty steady. And that's another important factor behind our dividend framework is we've got a steady billion dollars in sustaining capital, steady $400 million combined between advanced projects and exploration. and roughly a steady $800 billion in development capital that we'd want to maintain, a framework that allows us to share excess cash to the shareholders.

Okay, that makes sense. So next year, those two main updates, and then looking at slide nine, any of the other sort of pre-fees, feasibility-type projects that would move to the next gate?

Yeah, I think the ones to keep in mind that we'll... Project Pipeline is what we don't show them. That is, we're sinking a shaft at Turquoise Ridge. We own 38.5% of that. The Pedlo Viejo expansion, which we own 40% of that, is getting close to full fund. So there are a couple of other very important catalysts within the Newmont portfolio. And then we will be continuing to optimize The three big megaprojects, Galore Creek, Nordea Vieta, Nebe Union, only ever do one of those at one time, very end of this decade, early the next. So, Palmore and Oberon, the second underground of the Harpo, Pensu, moving underground after we've finished the laybacks at Achim, all those will push through. And then coffee, we're just buttoning up a drilling program as we go into winter, and coffee would be another potential, a Harpo North-type project that we could be bringing through to follow on. So you've got Panama 2, a Harpo North. Coffee's got the potential to follow on from that. So plenty of activity happening in that pre-feasibility study phase.

Okay, that's clear. And the last one from me. With the automation at Boddington due, I think you said early next year, what's the latest thoughts on how long you'd assess that for before you'd maybe look at other sites and rolling that out on other operations?

We don't need to do much assessing of autonomous haulage. It's proven. I mean, I implemented the first autonomous mine in the Pilbara almost 10 years ago. So it's proven technology. There's no piloting or assessing. It's it's changing a fleet over and it's got a business case. So what you'll work through with the existing operations, you've got to have enough life in front of you and a value proposition to change out a fleet. Boddington presented that business case, so there has to be a business case. And then there's a very important part of our purpose statement is improving lives. And we've got to think about those communities in which we live and work and whether autonomous haulage is part of that equation when you think about some of the locations that we're in. So we'll continue to assess whether there's opportunities for autonomous surface haulage. There's plenty of opportunities for underground autonomous operation and we're doing quite a bit of that already. I expect you'll see more underground autonomous before another open pit. The real opportunity for us is to improve the value proposition around those mega projects that sit at pre-feasibility. When you have within your portfolio an autonomous operation, you can train a new workforce up in that operation and underpin a base case for those projects. a risk to be doing your first radio with an autonomous haulage with a brand new project. So that's one of the strategic elements of Boeing 2.

Thanks, Tom. Appreciate it. All the best. Great. Thanks, Bruce.

Our next question comes from Anita Soni with CIBC World Markets.

Thanks, guys. Thanks for taking my question. I wanted to delve a little bit further into slide nine and slide 10, which was the capital and the projects. So I think you just mentioned that coffee, you were talking about them in the context of Tanami and the Hocklin North. So do I understand that to mean that the capital would be in the range of about $700 to $800 million? Is that what you're trying to drive at there?

Not quite, Anita. I think it would be a lower number, but I categorize, the two broad categories I have for projects are major and mega. It's in the hundreds of millions of dollars. It could be anything from $300 million up to $1 billion and then a mega project is anything greater than a billion. It's actually a different way, from my experience with projects, it's a different way you implement those two types of projects. Coffees are similar size to a Harfo North or a Tau Mai in terms of the complexity of the work.

So it's more along the range of like 250,000 ounces, 300,000 ounces rather than 500,000. Thank you. Yes, yes. Okay. All right. Second question, just to try and understand this free cash flow profile that you have a little bit further. Not included in there is the Hopla North and Yanacocha sulfides and obviously all the other projects that we've talked about. But what is included is Tanami, which is an execution, right? Yes.

That's correct, Anita. Once those projects move into full funds, then those projects will take some of the free cash flow that we're showing there. However, that's only showing free cash flow from gold. It's not showing the free cash flow from the other metals. That chart needs to be read from both of those perspectives.

But it does include the gold that kicks in for those, but I think those only kick in around 2024, 2025 anyway, right?

Those projects are in the back end of our five years, but they are important projects. I'm excited to be able to bring them forward and show you what those projects do to both our production profile and our cost.

Okay. And then with respect to exploration, that's something that I'm just interested in. Looking at the exploration budget going forward next year, do you guys have an idea of whether or not they'll stay the same, increase, or what are you looking at at this stage?

It's the same year on year. So it's about $250 million in exploration. And 80% of that spend is near mine. It's in around conversions and extending loss.

Okay. I think that's all I have. Thank you.

Right. Thanks, Linda.

Our next question comes from Mike Jelonen with Bank of America.

Hi, Tom and everyone. You've intrigued me on the Pammer open pit. That Venturee project had gone pretty quiet since the merger. It's coming back to life. What's changed from what the prior owner, was saying about century versus a smaller pit. You're not moving any buildings. Just curious, what kind of fluctuate could it be? Thanks.

Thanks, Mark. I'm really pleased we're getting a question from you. We'll do a question from you each quarter. I'll pass across to Rob to give you some color on PAMO.

Yeah, Mike, good morning. It really is the simplicity of it and the lack of complexity, to be honest, that Obviously, it's an existing mine that just needs to be dewatered. We've got a good geological model there. We can use the current plant infrastructure. And it also provides us with that kind of 10, 11, 12 years of mine life that allows us to, you know, further explore the Bourbon, the Hoyle Pond, and the Dole Moor bodies. So it really was just a fairly simple value equation, and we just thought that was the simplest route, but also the most value-created route.

So where do you go from here with this project? As you can see, I'm trying to get some numbers or some timeline.

Well, we are just doing the studies at the moment. And as that slide indicated is that we are still at the early stages. So I would expect we'll be able to give you more of a timeline in, you know, next year once we've progressed it a bit more. But just a kind of rule of thumb that we're expecting, you know, it's going to be a three to four year kind of planning preparation stage. And then we're expecting, you know, around about the 12 year, 13 year kind of life at between 150,000 to 200,000 ounce kind of thing. So, yeah. that's, that's broad brush, but certainly Mike, it's, it's early days. Uh, the team is working hard on it at the moment to come up with suitable mind designs and, uh, the watering schedules and, uh, you know, certainly in the new year, we'll be able to provide more color.

Okay. And I guess it's turning to Oberon. I was at, I can't remember if that was discussed when we were at Tanami there in November, uh, a couple of years ago, uh, maybe, uh, just remind me, uh, where that is. And, uh, Just seems pretty exciting.

Yeah, Mike, again, I wasn't on that tour.

I think, Mike, we might have touched on it in terms of that geological overview that Chris Robinson did, but we've done a power of drilling since you're up there. Sorry, Rob.

No, no problems. But it literally is just a stone's throw away. It's less than 30 kilometres from the underground. Bosman has a strong arm, doesn't he? And certainly, there's a huge amount of synergies that we can get there. It is an open pit, but it's also got underground potential as well. So, in terms of proximity, it's very, very close, which allows us to potentially use the existing infrastructure. And that's certainly one that, you know, the team is focused very hard on. The drilling program, we've struggled this year because of COVID, not being allowed to drill on Aboriginal land. But we've got those approvals and post the wet season, we get straight back to it again.

Okay. Well, thanks for that. I look forward to the next trip to Tanami, maybe November of what we'll see. Thanks.

That would be fantastic. There's a lot to show off. Thanks, Mike.

Our next question comes from Michael Dudas with Vertical Research Partners.

Yeah, hi. Good afternoon, everyone. I guess where you guys are, everyone. Just maybe just telling you, mentioned briefly about ESG and your prepared marks, et cetera. Thinking about from the energy standpoint, when you're looking at your development projects, obviously you're probably re-looking, probably always look them from the best environmental and social efforts from a development standpoint. But any opportunities or thoughts on, you know, decarbonizing from that standpoint? Or, you know, are you looking at some investments that, you know, we haven't talked about in some of the development work that may lead towards some requirements for investments to improve that metric from a carbon-free standpoint?

Thanks, Michael. We're working right at the moment through our 2030 target, so we're resetting our emission targets, both tons and intensity, such that they're science-based. And we're also debating an aspirational target for 2050. And because we've got a long-life portfolio, we can actually see up to that far and start to talk about how we support the global community in terms of how we develop our projects and our operations. Applefolio has a natural move to underground mining. So as we move to more underground than open pit, We reduce both our emissions on an intensity and tonnes basis. We look at where our power sources are coming from, both what we can do to convert power and where we're pulling power off the grid, what the suppliers are doing, how we can encourage suppliers to improve their emissions intensity. For instance, in Ghana, we've supported the installation of solar power cells that go into the grid as part of that process. And then if we're serious... then we need to be thinking about what we're doing with our investments to ensure that we're reducing our emission intensity. So that is the move to more electric equipment. The move to autonomous haulage at Boddington, although it's still diesel-fired trucks, you are more efficient because the automation doesn't have the human element in terms of how those engines are operated. we need to look at different fuel sources. We already apply a carbon price to some of our key investments, $20 a tonne and $40 a tonne to assess what we do. Our full potential program, our continuous improvement program, a key element of that is improving energy efficiency, which brings improved cost, improved productivity and reduced emissions. And we need to think about and our industry needs to be part of the discussion around where are we putting our money, where our mouth is with these targets and with our aspirations and starting to develop technologies that can ultimately lead to a carbon neutral world. They're the debates we're having right now. I think if you want to be a leader in this industry, then you have to be demonstrating through your actions ESG leadership. We're having those debates and stay tuned. We're going to talk about our new targets next month and then continue to talk about how we deliver those in the weeks and months beyond that.

And, Tom, if I could just add that, just to build on that, Michael, that Dean Gearing, who leads our technical service, is also employing some key specialists in this domain and we've got power and electricity specialists, you know, which will really help us in terms of not only managing the current power that we're pulling from there, whether it's the stranded power or whether it's from the grid, but also working with the suppliers, as Tom said, about the future, whether it's gas plants, solar plants, other type of electricity plants. So, again, it isn't just about the targets. We're actually building the teams that we need to do that work.

That's also encouraging. Thanks, gentlemen. Thanks, Michael.

This concludes our question and answer session, and I would like to turn the call back over to Tom Palmer for any closing remarks.

Thank you, Operator, and thank you, everyone, for joining us today, and please, you and your families, stay safe and well. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.