Newmont Corporation

A new month's first quarter 2021 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 Eric Kolbe, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining Newmont's first quarter 2021 earnings call. Today on the call we have 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 the executive team. Turning to slide two, please take a moment to review the cautionary statement shown here and refer to our FCC filings which can be found on our website. I'll turn it over to Tom on slide three.

Thanks, Eric. Good morning and thank you all for joining our call. Before we begin, I'd like to take a moment to acknowledge the 12 colleagues that we've lost to the COVID pandemic over this last year. For each death, we have mobilised the Fatality Investigation Team and utilise the same methodology we do for other employee or contractor fatalities. The intent of each investigation was to understand if any of our COVID critical controls require change and ensuring that we learn and share our findings globally. These losses have had a profound impact on the entire Newmont family. And it is with great humility that we are reminded that the safety and wellbeing of our workforce, and host communities must come above all else. Turning to slide four for a summary of our quarterly performance. Our safety and sustainability framework is at the core of how we manage our business and I'm proud that Newmont continues to lead the industry with our ESG practices. In March, we delivered a first for the gold industry with production coming from an autonomous Our investment in autonomous haul trucks not only improves safety and productivity at Boddington, but also serves as a base case for replication at other operations and projects across the Newmont portfolio. We also entered into a $3 billion sustainability linked revolving credit facility, one of the first in the mining industry. By aligning our financial strategies and ESG performance, we are holding ourselves accountable and demonstrating UMON's unwavering commitment to leading ESG practices. During the first quarter, our world-class portfolio produced 1.5 million ounces of gold and 317,000 gold equivalent ounces from copper, silver, lead and zinc. In line with our four-year outlook, and positioning Newmont to deliver a stronger performance as expected in the second half of the year. We generated significant operating cash flow of $841 million and free cash flow of $442 million, of which $438 million is attributable to Newmont. And in March, we announced the acquisition of GT Gold, expanding our industry-leading project pipeline to include the Totoga project, located in the highly sought-after Golden Triangle district of British Columbia. We continue to apply a disciplined approach to our capital allocation priorities and deliver on our commitments. Yesterday, we declared a first quarter dividend of $0.55 per share set within our established dividend framework and consistent with our fourth quarter dividend. Our first quarter dividend demonstrates our confidence in the strength of our business and continued commitment to predictable, stable and sustainable shareholder returns. We maintained a net debt to EBITDA ratio of 0.2 times and completed the redemption of our 2021 senior notes in April. reducing our debt outstanding by $550 million with available cash. We also continue to invest in and develop our most profitable near-term projects, including Tanami Expansion 2, Ahafo North, the mining method change at Sabeka Underground, and Yanakocha Sulfites. Shifting now to safety. and our continued focus on fatality prevention on slide five. More than a year ago, Newmont made a symbolic change, 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. During the first quarter, we completed 65,000 conversations by leaders in the field that were focused on these critical controls. So actively identifying and managing potential risks that could lead to a fatality. This is an increase of nearly 60% since last quarter and demonstrates our commitment to the preventative measures we are implementing at Newmont. As another example, fatigue has been identified as a critical risk and is frequently a factor in our investigations into potentially fatal events. Fatigue has not been a traditional focus in our industry. Typically, it has been managed through administrative controls such as training and checklists. Or companies have looked to technology as a silver bullet to address the issues. At an organisational level, we knew we needed to do more. We needed to make fundamental changes to our rosters, start times and accommodation to reduce this significant risk exposure. We have recently completed the construction of new camp facilities as part of our TANMI2 expansion. These facilities were designed to provide the opportunity for quality sleep and have greatly reduced commute times for our team members. We have also completed upgrades to camp facilities at Yanakocha, at Esquito, Cerro Negro and Miriam, ensuring our team members have the appropriate privacy and accommodation to get proper sleep. As a result of these investments in our camp facilities, along with our wellbeing programs around our global portfolio, we have seen an 80% reduction in fatigue-related incidents at UMOD since 2019. We will continue to make these changes to ensure that our team members can return home safely to their families at the end of their shift at work. Turning now to our portfolio on slide six. Among our 12 operating mines and two joint ventures, we have nine world-class assets, each of which delivers more than 500,000 gold equivalent ounces per year, at all its outstanding costs of less than $900 per ounce, and with a mine life exceeding 10 years. Importantly, all are located in top-tier jurisdictions that we define as countries classified in the AMB ratings ranges by each of Moody's, S&P, and Fitch. Underpinning our asset base are the industry's largest gold reserves, including 94 million ounces of gold and 65 million gold equivalent ounces from other metals. Our portfolio is also enhanced by the gold industry's best exploration pipeline of both greenfield and brownfield opportunities, managed through our proven integrated operating model. One of the benefits of this integration is that we do not reinvent the wheel and duplicate efforts. For example, with the majority of our exploration activities occurring near existing operations, we have familiarity not only with the geology and terrain, but also the permitting, regulatory and community relationships surrounding each of our operations. We firmly believe that we have the best portfolio to generate sustainable returns from our world-class, responsibly managed assets located in the best gold mining jurisdictions. Turning to slide seven. Our portfolio will produce steady gold production of more than 6 million ounces per year through at least 2030, balanced across each of our four regions. This profile is then further enhanced by the production of more than one million gold equivalent ounces from silver, lead and zinc at Penaskebo and copper at Boddington and Yanacocha. Combined, we will deliver nearly eight million gold equivalent ounces per year for the next decade for most of any company in our industry. Moving to slide eight, for a look at our project pipeline. 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 optimize and advance our longer-term projects and lay the pathway to steady production and cash flow well into the 2040s. As you can see, In addition to our highly prospective gold projects, we have significant organic exposure to gold copper portraits, including Norte Vieto, Neve Union and Galore Creek. In fact, if you assume that just one of these three megaprojects comes into our production profile at the back end of this decade, GMOCT'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 important to note that this pipeline does not include the various laybacks that will also extend mine life at our current open pit operations, including at Chin, CCNV and Porcupine. You will also see that we have added Toga to our project pipeline, another exciting gold popper asset that I'll cover in more detail on slide nine. In March, we announced the acquisition of GT Gold. The consolidation of this asset is a demonstration of GMOD's clear focus on our long-term strategy to build a portfolio of world-class assets located in the world's best mining jurisdictions. Our initial equity investment in GT Gold in 2019 was a stepping stone that enabled us to perform due diligence in the area and gain considerable insight into the potential of the Saddle North deposit and to Toga property. We are committed to continue building a constructive and respectful relationship with the Toutown Nation, including the community of Iskut. We understand and acknowledge that Taotang consent is necessary for advancing the Totoga project and we will partner with the Taotang nation at all levels and with the government of British Columbia to ensure a shared path forward. The deposit will be developed as an underground mine with a block cave mining method and in addition, Access from the valid floor that you can see in this picture will also enable us to reach the ore body relatively quickly. A very important feature of this project is that the combination of an underground mine and an ability to leverage the hydropower infrastructure that's in place today will result in a low carbon intensity operation supporting our industry leading greenhouse gas reduction targets. The Totoga project, including the primary Saddle North deposit, has the potential to contribute significant gold and copper annual production at attractive, always-sustaining costs over a long mine life. In addition to the known deposits of Saddle North, there are further exploration opportunities throughout the land package. The acquisition of Totoga adds to Newmont's existing interest in this area and builds on our 50% ownership in the Galore Creek project. The transaction is expected to close in the second quarter and we look forward to providing updates on this highly prospective project in the future. With that, I'll hand it over to Rob to discuss our operational performance on slide 10. Thanks, Tom. Before I start, I'd like to recognize the very significant efforts that continue to be applied at all of our operations in order to manage COVID and to keep our teams safe and healthy. It is important to realize that this pandemic has some way to run and these efforts will need to continue for many months to come. Turning to slide 11, I'll give an update on Africa's performance. Our assets in Africa delivered another strong performance in the first quarter. Achievement maintained its momentum from quarter four, delivering a strong first quarter from higher grade and improvements to the middle. We increased mill efficiency and overall plant performance during the first quarter, improving throughput by 3% whilst also reducing energy consumption by 4%. These improvements are driven by full potential projects and are an example of how we continue to find innovative solutions, even at our mature operations. The site is well positioned to deliver solid production throughout the year, expecting to reach its highest production and lowest costs during the fourth quarter. A HAPO delivered higher surface tons mined due to mine sequencing improvements. that resulted in an extra bench being mined at Awansu, helping to offset lower grade during the first quarter. We continue to progress the development of our new mining method at Sabita, sub-level shrinkage, which will increase tonnage, improve productivity, and reduce mining costs. The team has commenced scoping ahead of schedule, and we completed our first two ore blasts this month, a major milestone for the project. As the sub-level shrinkage project progresses during 2021, we expect to see improvements in grade throughout the year and a 50% increase in ore tons mined by the fall quarter. In addition, we expect to reach higher ore grades from the open pit operations in the second half of the year, positioning the handhold to deliver a very strong finish in 2021. Finally, at AHAPO North, we continue to advance the permitting process for the Ghanaian EPA. I'm pleased to announce that we've completed the environmental impact study and paid the invoice for the main permit this month, putting us on track for a full funds decision in July of this year after the receipt of the challenge permit. All other aspects of this project are proceeding well. Turning to South America on slide 12, South America has been the region most impacted by the virus and we continue to see the most significant impacts in Argentina and Peru. We remain focused on the safety protocols to protect the health and well-being of our workforce and communities as we continue to mitigate the impacts of travel restrictions caused by the virus. We do expect impacts due to COVID to continue for some time until vaccinations are available and being administered in large quantities. Burien was the best performing asset in South America, despite heavy rainfall during the first quarter, which impacted productivity in the mine. The team continued to utilize an ore blending strategy to optimize mill performance, resulting in an increased times process whilst maintaining stable grades. As the year progresses, Merian will transition from softer saprolite to harder ore, which will result in higher production through improved grades, but will be partially offset by lower mill throughput. At Cerro Negro, we have continued to work closely with government representatives and other key stakeholders as we manage our operations through the evolving pandemic. As we reviewed the number of COVID cases in the country, and the increasing case numbers at our own site, we made the decision to temporarily suspend operations for five days in January and seven days in March to reduce the spread of the virus. While these decisions impact first quarter production, the health and safety of our workforce remains our first priority. And despite stoppages during the quarter, we've been able to resume developments at San Marcos and make good progress on the tailing storage facilities expansion. Serenegro continues to focus on safely ramping up site activities, increasing camp capacity, and appointing a new dedicated team to optimise the important and complex shift changes. Danukochuk has also experienced significant challenges due to COVID, and due to the pandemic, productivity will likely be impacted throughout the year. Despite the challenges from the virus, Yanacocha delivered higher-grade material mined from the Catramaine and Karatugo pits. These tons were placed on the leach plants during quarter one, which we expect to result in higher production in future quarters. In February, we decommissioned the oxide mill and completed our transition to leach-only operations as planned ahead of the development of Yanacocha sulfite, which will extend Yanacocha's operations well beyond 2040. We continue to advance the sulphides project and are currently working through our internal peer review process in preparation for full funds approval later in the second half of 2021. Yanacocha is a world class asset in UMass portfolio with significant further prospectivity and we look forward to bringing of profitable production. Turning to North America, slide 13. Benesquito delivered another strong performance and achieved record coal product sales of nearly 300,000 gold equivalent ounces in the first quarter due to higher grades and recoveries. The site also set a new monthly record for concentrated transport and shipping, loading and selling over 125,000 tons in March. The potential continues to deliver improvements to our mining and mill performance at Penesquito. And as an example, we've increased the average payload for our haul trucks by 17 tons per load. This translates to an additional 12 million tons moved per year for next to zero cost, an increase of over 6%. The site is well positioned to remain a strong performer throughout 2021. and is also currently exploring our extensive land package for future development opportunities. CC&B delivered lower grade and experienced geochemistry challenges during the first quarter, and as a result, ore that was planned to be milled was redirected to the leach patch. Green improvements are expected during the second half of the year, helping to offset the challenges experienced this quarter. At Muscle Wife, we continue to closely monitor the impacts from COVID in Ontario and have made the decision to temporarily suspend operations for five days in April to reduce the spread of the virus. Despite the impacts from COVID, which drove changes to the planned mining sequence, grade and ore tons mined continued to improve over the prior quarter. We are also continuing our full potential work at Musselwhite with the largest focus on increasing development rates and driving productivity as the year progresses. At Porcupine, ongoing ground control rehabilitation in the Hoyle Pond underground mine coupled with mill and equipment maintenance has resulted in more tons mined and processed during the quarter. We have begun the implementation of our full potential programme at port time, which will deliver efficiency improvements in the second half of the year. Eleanor continues to make strong improvements to performance and productivity, increasing underground development rates to an average of over 40 metres per day by the end of the first quarter. This is an improvement of 25% from 2020. In addition, the site has deployed tele-remote mucking equipment for the first time, increasing tons mined, efficiencies and the safety of our workforce. Eleanor will continue to be a stable contributor during 2021 as we expect it to deliver steady production increases from higher tons mined and processed throughout the year. It's also important to note that the site is making good progress in the fight against COVID. And I'm pleased to report that 70% of Eleanor's workforce has been vaccinated so far. Coming to Australia on slide 14. Panamine delivered a consistent performance despite heavy rainfall, increasing overtones during the quarter. For the rest of 2021, we will continue to monitor impacts of COVID on the Northern Territory due to the potential closure of state and territory borders. but we expect that production will steadily increase as grade improves throughout the year. In addition, the team continues to advance tannamine expansion too, supporting the site's future as a long-life, low-cost, and very efficient producer. We recently completed construction of the camp facilities and the excavation of the upper section of the production shaft, putting us on track to deliver significant ounce, cost, and efficiency improvements in the first half of 2024. At Boddington, we delivered a solid quarter, in line with our expectations and full-year guidance. Plan maintenance was completed during the first quarter, ensuring the plan continues to perform at high levels. As we head into the second half of the year, as highlighted in our previous guidance, we expect to achieve higher grades, improved throughput, and increased over time due to efficiencies from autonomous haulage and improved mill processing. As you can see in the picture, we are well on our way to operating the world's first open pit gold mine with an autonomous truck fleet, and I will provide more details of the project in slide 15. I'm pleased to announce that the first Boddington AHS haul trucks went live in March of this year, and we have successfully started the first phase of our transition to a fully autonomous haulage fleet, which will improve safety and extend mine life at one of our core assets. Today we are operating four trucks hauling ore from stockpiles to the crusher and have four additional trucks completing the final testing. We expect to expand the use of autonomous units in the pit during the second quarter, deploying the entire fleet of 36 trucks by the end of September. As a reminder, the AHS project was approved in February of 2020, meaning the project was planned, constructed, and able to achieve first production in just over a year. Being on track to deliver this project on time and on budget will be a huge accomplishment, especially during a global pandemic. And I'd like to thank our team at Barrington and our partners at Caterpillar, including their dealership Westrack. for their ongoing dedication and drive during such an unprecedented time. We have received very strong support from Caterpillar throughout the project, and we look forward to working together on future endeavors. In addition to the exceptional delivery of this project, we have already seen strong performance over the last month from these machines and the operating team. The fleet has been running nonstop since going live in Binbarch, eliminating stoppages from shift changes, meal and toilet breaks, fatigue breaks, which increases productivity. And already, the new vehicles have reached their first major milestone, moving over a million tons in less than six weeks. It's also worth noting the significant productivity improvements that we will achieve with this fleet will also translate to lower fuel costs and consumption. reducing our carbon emissions at Boddington and supporting Newmont's climate initiatives. But most importantly, the use of these autonomous trucks reduces the exposure that our workforce has to potential vehicle interactions, helping us to further reduce fatality risk and to ensure that our team members return home safely at the end of their shift at work. The implementation of the industry's first autonomous haulage fleet will be a major milestone for Newmont and the gold industry as a whole. We will look to replicate this technology, training, and experience at other sites around the globe, leveraging our team of experts and the lessons that we've learned at Oriented. And we will also look to integrate further autonomous solutions, both at future OpenFIT and on the ground map, as we plan and develop the assets in our project pipeline, ensuring that these important improvements to safety and productivity are applied across the global business. And with that, I'll hand it over to Nancy on slide 16.