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.

Thanks, Rob. Turning to slide 17 for the financial highlights. During the first quarter, Newmont delivered solid results with $2.9 billion in revenue, an increase of nearly $300 million from the prior year quarter, driven by higher metal prices. Adjusted net income of $594 million, or 74 cents per diluted share. Adjusted EBITDA of nearly $1.5 billion, an increase of 30% from the prior year quarter. And strong pre-cash flow of $442 million, which includes unfavorable working capital changes of over $325 million in the first quarter, primarily driven by nearly $400 million of tax payments attributable to 2020. We declared a first quarter dividend of $0.55 per share or $2.20 per share on an annualized basis, demonstrating our continued commitment to sustainable returns and consistent with our fourth quarter dividend. Our dividend puts Newmont in the top quartile of the S&P large cap dividend payers and provides a yield of approximately 3.5% on our current share price. Turning to slide 18 for a review of our adjusted earnings per share in more detail. First quarter gap net income from continuing operations was $538 million, or 67 cents per share. Adjustments included 14 cents related to the unrealized mark-to-market losses on equity investments measured as of March 31st. Five cents primarily related to our sale of our interest in TMAC, which closed in January of this year. One cent related to reclamation or remediation adjustments at historical mining sites. and 3 cents related to tax adjustments and valuation allowance. Taking these adjustments into account, we reported first quarter adjusted net income of 74 cents per diluted share, an increase of 34 cents over the prior year quarter. One difference from 2020 that we would like to point out is that adjustments to net income do not include $21 million of incremental COVID costs. Adjusting for these costs would have resulted in two cents of additional net income in the first quarter, and we expect these costs to continue throughout the year as we protect against the impacts of the pandemic at our operational sites. Turning now to slide 19. Using our conservative $1,200 gold price assumption, Newmont expects to generate $3.5 billion of free cash flow over a five-year period. In addition, for every $100 increase in gold prices above our base assumption, Newmont delivers $400 million of incremental attributable free cash flow per year. Newmont is the only company in the gold mining industry with the ability to generate these levels of attributable free cash flow, enabling us to maintain flexibility in our balance sheet for debt repayments and opportunistic M&A, in addition to providing industry-leading shareholder returns. Turning to slide 20 for more details about our dividend. Our dividend framework provides shareholders with a stable base annualized dividend of $1 per share at a $1,200 gold price, along with the potential to receive 40% to 60% of the incremental attributable free cash flow generated at gold prices above our plan. This range provides Newmont with the flexibility to maintain a stable and consistent dividend payout, even when there are fluctuations in gold price. We will continue to review our dividend each quarter with management and our board, evaluating gold prices and Newmont's projected performance semi-annually to give us maximum flexibility in determining our dividend within the framework. The first quarter dividend declared yesterday was consistent with our fourth quarter dividend, calibrated at an $1,800 gold price assumption and a conservative 40% distribution of incremental free cash flow. Our dividend framework continues to be our primary vehicle for returning cash to our investors, and Newmont continues to lead the industry in shareholder returns, delivering $4.50 per share through dividends and share buybacks since 2019. Turning to slide 21, we continue to drive the business with our clear capital allocation priorities. which include reinvesting in our business through discipline investments and exploration in organic growth projects, returning cash to shareholders, and maintaining our financial strength and flexibility. During the first quarter, we delivered on each of these priorities with our investments in the first autonomous haulage fleet in the gold mining industry, improving safety and productivity at Boddington, progressing our profitable reinvestment in the business at the Tanami Expansion and advancing a HOPO North and Yonacocha sulfides, announcing the acquisition of GT Gold, maintaining our industry-leading dividend of $2.20 per share on an annualized basis, and announcing a new $1 billion share buyback program. We chose not to repurchase shares during the first quarter and continue to monitor up for opportunities. Maintaining a net debt to EBITDA ratio of 0.2 times and completing the redemption of our 2021 senior notes in April. Reducing our debt outstanding by $550 million with available cash. And maintaining financial flexibility with the completion of a $3 billion sustainability linked revolving credit facility, one of the first in our industry and a demonstration of our commitment to leading ESG practices. Under the new facility, the company will incur pricing adjustments on drawn balances based on sustainability performance criteria, measured through ratings published by MSCI and S&P Global, aligning our financial strategies and our ESG performance. As we look ahead to the second quarter, we are confident in our ability to continue delivering strong results and free cash flow to maintain our disciplined approach to capital allocations. With that, I'll hand it back to Tom on slide 22.

Thanks, Nancy. And turning to slide 23. Newmont continues to be the world's leading gold company, and I am confident that our world-class portfolio and robust project pipeline have positioned Newmont to deliver on our commitment of creating value and improving lives through sustainable, and responsible mining. With that, I'll turn it over to the operator and 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 touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. And the first question will come from Fahad Tariq of Credit Suisse. Please go ahead.

Good morning. Thanks for taking my two questions. First, it sounds like across the portfolio, a consistent theme is second half weighted production. But I'm trying to figure out how much of that is sequencing and grade driven and how much of it is from the South American COVID issue that you mentioned. And also the muscle weight COVID issue that you mentioned. So any color there would be helpful, grades versus kind of COVID impact in the first half.

Thanks for that. Good morning. The needle movers in our portfolio are Halfway, Boddington and Penasquito. Penasquito on gold production is pretty flat through the 12 months, roughly 50-50, first half to second half. What's going to really move the dial in the second half is mine sequencing and grade at both Boddington and at Harfo. So Boddington, we've been laying back the fifth way back of the south bit of Boddington now for three and a half years. In the second half, we get access to the high-grade gold and copper and the benefit of autonomous haulage, which has been fully implemented by the second half. So you'll see that flow through in the second half as we get to that high grade. And at Harfo, a combination of the... The new underground mining methods, sub-level shrinkage, will bring through more volume and improved grade, and then you've got improved grade from the Sabika open pit as well. So it's largely mine sequence and grade driven, and it's those three operations that really will deliver on that second-half performance.

Okay, great. That's clear. And just my second question, there was a media article this morning talking about the GT Gold Satoga project and the local indigenous groups perhaps, you know, not really being open to the project. Maybe talk about the approach there, more specifics, and, like, historically, what levers has Meemawt used to kind of get that buy-in? Thanks.

Yeah, thanks, Fahad. So our relationship with the Tau-Tin actually started several years ago with – with our acquisition of 50% of the Galore Creek project in that part of British Columbia. So we have established relationships that we look to grow and build on with all representatives of the Taotao Nation. And when you look back at our long history of social responsibility, it is very much founded on building those relationships, understanding issues and concerns and how we can work together. We fully understand, we fully acknowledge that we will need Taupan consent to advance that project, and we will be endeavouring to work with them respectfully and engage with the leadership of those various communities to find a shared pathway forward. And that is very much the approach that Newmont takes wherever we're working in the world.

OK, thank you. Thanks, Mahat.

The next question comes from Tyler Langton of J.P. Morgan. Please go ahead.

Yeah, good morning. Thanks for taking my question. I guess just to start with Perunia, Coach, I guess there seems potentially some sort of increasing political risk there. I guess, I mean, you obviously have some time before a full funds decision, but I guess, you know, do those developments kind of give you any pause? And if you could also just remind us, Do you have any stability agreements when it comes to taxes and royalties or other rights?

Thanks, Tyrone. Good morning. We've been operating in Peru for 30 years. We basically were in Peru before democracy was in place, and so we've lived and worked through what has been a colourful democracy in Peru. modern history. This is just another chapter in that journey. So we will monitor the presidential elections carefully and how the Congress and ultimately the new president work together. We have had a very successful 30 years in Peru. When we think about making investments like the Anacotra sulphides, we think about making investments which for a project like sulphides is literally for decades with the quality of the sulphide deposit. around that young coach of property. So we'll look and understand these events coming up in the next month or two. That'll factor into our process of internal discussions with our board and our joint venture partners. And then ultimately, I look forward to being able to make a full-time decision and to regress sulfides and to have that delivering great returns for Newmont shareholders in the community and around Kahanaka for a long, long time to come.

Okay, that's helpful. And then just switching to Penesquito, I guess, you know, sort of production, you know, kind of did, you know, quite well in the quarter in both, you know, sort of cash costs and all sustaining costs were, you know, sort of a decent amount below sort of the annual guide. Can you just kind of remind us, you know, your expectations for, you know, that mine for the year and kind of what to kind of expect in the following quarters?

It might get Rob to provide some colour on that. It's pretty steady performance. And we certainly look at... It's a polymetallic mine, so we certainly look at developing that mine and managing on the basis of the four metals that it's producing. But it's a pretty steady performance through the year, Rob, if you want to provide a bit more colour for Taylor. Thanks, Taylor. And I'd really just back up what Tom said, best way to describe Penesquito is steady performance. Where we get good gold one quarter, we go into other elements another quarter. But the key thing about Penesquito is that the mill is performing well, the mine is performing well, the team is performing well and managing COVID as well as possible in a country which

Okay, perfect. Thanks so much.

Thanks, Colin.

Our next question comes from Josh Wilson of RBC. Please go ahead.

Thanks. So for the 2021 outlook, the comment, I guess, is that there's the assumption of no major COVID interruptions. You know, the commentary on the call earlier was such that there's obviously a higher degree of interruptions in South America and then a brief stoppage, I guess, at Muscle White. You know, how would sort of those interruptions compare to some of the caveats within guidance?

Thanks, Josh, and good morning. I think we've certainly seen a number of impacts of both Yanukovych and Serenegro, and it's It's real in Argentina across our portfolio of eight countries where we're seeing the greatest impact from COVID. We get better and better and better at managing our protocols. Bob mentioned at Serenegro that a dedicated team managing shift changes, which is a very, very complex process in Argentina. Then how you're doing all your screening and monitoring and ensuring that you're bringing up a workforce in for their shift that... that are clear of the virus and quarantine if we do have a case. So it's really monitoring those two operations. Mexico, as a country, is still struggling with the virus, but we've got very, very good protocols in place throughout that country. The United States, fortunately, is starting to really turn the tide. We've seen the recent events in Ontario. I'm confident that the Canadian government will address those. through Australia and Ghana, we're seeing that the pandemic managed very, very well. So I think we're still going to need to have a chronic unease and be continuing to maintain the discipline around our protocols. As vaccines become available, encouraging our workforce to take the vaccines, supporting the governments where we can and all that out so that we can have an improving trend over time. So But I believe we've got the protocols and the discipline in place to be able to manage COVID and maintain our guidance through the course of this year.

Thank you. And then just maybe a question on some of the trends we're seeing. We've seen commentary, at least from maybe not as much the gold sector, but other resource companies about labor tightness in certain regions, and then obviously with higher commodity prices globally. Is there any commentary you could provide on what trends you're seeing across the portfolio on labor and costs?

Thanks, Josh. Monitoring that closely, labour costs make up about 50% of our cost base. That includes contracted services. We include an assumption for labour escalation in our budgets and then we flow that through to our guidance. So we've got some provision for that. The key indicator, leading indicator I look for in seeing whether we may be seeing some wage pressure is voluntary attrition. It's pretty healthy across our business. In some ways, our response to the pandemic and the fact that we chose and we continue to choose to manage the health and safety of our workforce and local communities above everything else has served us well in terms of the support that we have from our workforce. The areas that I'd be monitoring more closely on... on the risk of labour escalation in Australia. Pretty hot iron ore market. As you see, iron ore prices hit an all-time high. A West Australian government that is locking borders and encouraging the workforce to come from within that state, which puts pressures on the supply of labour. We're very fortunate. We've got very robust workplaces at both Boddington and Katamai. good leadership, healthy levels of attrition, and approaches like autonomous haulage just mitigate that risk significantly, where your truck fleet and a labour force for truck fleet is one of the greatest sources of labour. So monitoring carefully, but the voluntary attrition numbers are leading indicator is still pretty healthy across our business.

Great. Thank you very much.

Thanks, Geoff.

Our next question comes from Greg Barnes of TD Security. Please go ahead.

Yes, thank you. Tom, I guess this is a higher level question, but when I look at your portfolio of mega projects, as you called them earlier on, it's pretty striking how much copper is there. And you said you could see yourself getting to 20% copper exposure over time. Is that a conscious decision over the longer term to diversify the production base somewhat? or is it a function of the projects that are available to you that look attractive to you that you are adding to the portfolio like Totoga?

Yeah, thanks Greg. It's still very much a clear focus on gold as the core of our business, but organically we are seeing that as you look for the best gold projects they come with, particularly when you look at our world-class definition and look for those long-life projects and you look for those projects in the jurisdictions we're prepared to work in, they come with copper. So it's more of an organic benefit from that clean focus on the right size projects in the right jurisdictions. So the Toga project has some nice copper with it. The Anacocha has some nice copper with it. And several of those mega projects, particularly Neve Union and the Royal Creek bring with them some nice copper. So it's more of an added benefit. As we say, it's going to come on at a nice time when the world goes through their energy transition.

And just on Totoga, when I look at the acquisition price, and if I assume you used $1,200 long-term gold, that would have implied a pretty healthy long-term copper price. How did you approach the acquisition price for GT?

I don't know. I've got Eric sitting opposite me here, who's shepherded that one through. So why don't I get Eric just to give you a bit of color on that, Greg? Yeah, Greg, I don't know.

We... Obviously, we'll look at multiple price scenarios. So $1,200 would have been one of them. Our base copper price at the time, I think, was $275. Obviously, the copper price and the outlook is quite strong. So we didn't have a single case that we looked at. As you pointed out, there's a fair bit of copper, there's a fair bit of gold. So it's really the interplay of the two metals across different scenarios. As we've, I think, highlighted, we see... potential for Totova to be a world-class asset for us. And that means a long life, pretty significant production at good cost. Tom pointed out on the call that the geometry is pretty attractive to an efficient block cave. And so all of that was attracted to us when making the acquisition. Okay, great. Thank you. Thanks, Greg.

The next question comes from Tanya of Scotiabank. Please go ahead.

Good morning, everyone. Congratulations on those trucks at Bobbington. I love the color. Hope to see them one day. Just wanted to have a few questions if I could. I wanted to follow up on Josh's question on inflation. You talked about the workforce, Tom, in terms of watching, you know, movement there. Can you talk a little bit about if you're seeing any inflation in your capital or costs from steel and or other materials, please? Thank you.

Thanks, Tanya. Good morning. So materials and energy, if labour makes up 50%, materials and energy is the next 30% to 40%. And again, we leverage our global portfolio entering the long-term contracts and strategic relationships with suppliers. So that goes a long way to mitigating the impacts of near-term inflation where we've got rise and fall built into those contracts and stability. So it's a very important part of... of the Newmont story and the strength of our portfolio and how we look to run our business. We are seeing some pressure on steel generally around grinding media that we're watching carefully, and some pressure on freight, particularly as you see the amount of concentrates that we move out of Penesquita. So we're watching those carefully. In terms of capital projects, We've already accounted for a lot of that in terms of the Tanami expansion and the move to Australian steel, so that's been taken up in previous updates to guidance. As we move into a half-loan north, a lot of the work once we get to full funds approval for the next 12 to 18 months is earthworks. and then the civil works before you start to bring in your steel. So we're confident that with the estimates that we've got, what we'll bring forward for full funds is going to account for any escalation around steel. And similarly, as we start to button up the Anacocha sulphides, go through our internal peer reviews, and ultimately bring that forward for full funds, we're including in our estimates and in the contingencies estimates for where steel may move. So we do anticipate there will be some pressure on steel for capital projects and making sure we account for that in the budgets for full funds approval.

Okay. And nothing in cyanide at all? You're not seeing any inflation pressures there?

No. Okay.

Okay, great. Thanks for that. And I guess just a continuation on the themes that I keep asking, maybe just an update on any changes of royalties, taxation in any jurisdictions that you operate in that you're hearing of, including the U.S.? ?

No, no, it's all... I mean, again, it's a key feature of our strategy is where we choose to have our operations. That brings with it a lot of stability around our investment agreements, whether in place or royalty regime. So we're not seeing any pressure on that front across our jurisdictions.

Okay. And then just my last question before I hand it over to someone else is just wanted to make sure that, you know, the guidance that you provided with your Q4 release, which was that production was going to be 47%, 48% expected in the first half and 52%, 53% in the second half still is intact?

It is. I'd say I would look more at 47% in the first half and 53% in the second half. And it's going to be dominated by a half bow and Boddington reaching the greater volumes and higher grade. So as you move through the third quarter into the fourth and that second half. So I'd sort of factor in 47, 50 through it.

Okay. And if I could squeeze just one more in, just that I was intrigued about the vaccination, 70% at Eleanor. Just maybe if you could share any other minds that you have where you have, you know, your vaccination for COVID is actually very well. I didn't hear anything about Africa. So just wondered if you could share just a bit more color on that.

Yes, sure, Tanya. So we're We're certainly encouraging the rollout in Ontario, and I'm sure you're living that experience right now. So we're doing what we can do to support the rollout for our mussel white porcupine operations. Cripple Creek and Victor, certainly seeing the rollout in Colorado. We've been setting up clinics for our workforce and their families and continue to do that and provide access to vaccines and lots of educational encouragement around the efficacy of these vaccines. Through Peru, Argentina and Mexico, Suriname, a much longer road to hope. So we must maintain those protocols. Vaccines will come and we will support, but we work on the expectation that's still many, many months off. Australia need to get their act together and get the vaccines rolled out and look forward to that increasing over time. so that one, we can drop those interstate borders that are impacting on mining operations and then open up international borders to allow that country to go up again. And in Ghana, I think we're starting to see some rollout of vaccines. Some clinics are already at our sites in Ghana. So, again, looking to work with the Ghanaian government for the rollout. It's going to be a long process, tenure, I think, before the world is fully vaccinated. So I think we're going to be living with hygiene, social distancing, and masks for a long time to come in our operations.

Okay, thank you so much.

Thank you.

The next question comes from Mike Jelanin, Bank of America. Please go ahead.

Oh, hi, Tom. Clearly, I need to go work at Eleanor to get vaccinated here in Canada. But I Just following along Greg's question with your three big copper or gold projects, I'm seeing a number of juniors with gold, big gold, copper projects, a couple of gold projects, and got mark counts of a billion plus. Just wondering, how does Newmont serve its value in these projects? I don't know much of Nova Union, No Child There Till, or Glare Creek are much in your share price, correct me if I'm wrong. Just wondering what steps you could take. Thanks.

Thanks Mike and good morning. We're working on it in the same way that we did an exploration webcast earlier this year and we'll certainly look to do an ESG webcast on the back of our new sustainability report in the coming months. We're working on providing some more details and maybe doing so through another webcast we can have a little bit more time and provide some details and cover on most projects as well as some of the other projects that sit in our organic project pipeline. so that we can lift the level of understanding and the appreciation that we have of those projects and how we can sequence them in and why we are so confident about our business over the next several decades. On Sunday, we turned 100, and we've got through our gang project pipeline an ability to see well into our next century. So we're excited about it, and I think that's an opportunity for us to provide the investment community with some more details on that.

Okay, thanks, and happy birthday.

Excellent. I'll blow out a candle for you.

The next question comes from Anita Sonny of CIBC. Please go ahead.

Hi, good morning, everyone. So first I want to commend you guys on your initiative to reduce risk around fatigue. I know that thought is actually a real risk. What made me leave engineering about 18 years ago, and sadly after I left, I Someone died at Batu Hiju because we worked back-to-back shifts, so commend you on that. But related to that question, could you give us an idea of if there's any kind of cost that we should expect associated with those kinds of initiatives?

Yes, thanks, Anita, and good morning. I mean, you are seeing it incorporated into our guidance around sustaining capital, and in some instances with Tanami expansion too, it's in the development capital. But it's part of those plans to build additional camp facilities. The agriculture sulfides will have included in its scope In fact, probably some early lead time items, additional camp facilities to allow people to have their own room and their own bed. So it's accommodated within our $3 a year of sustaining capital and the $600 to $800 million on average of development capital. So it's not big money in the overall scheme of things. It's about having the intent and the will to do something in this space. In terms of productivity improvements around start and finish times and ensuring that fatigue breaks, the length of shifts, number of consecutive shifts, the length of time that someone can work, in my experience, you will have that payback in dividends many times over by getting the right level of rest amongst your workforce so that they are working productively with their back work. So the things we're doing around rosters, start times and the like will improve our productivity over time, is my expectation, rather than be a cost to the businesses.

Second question, a little bit more in the detail on Cerro Negro. The grades went down a little bit. I'm just wondering how we can expect that to play out over the course of the year and what was the reason? I mean, are you using stockpiles right now and then you'll return once you can get, I guess, the mining rates up from direct access is my guess. I just don't know. I don't have the colour on that.

thanks they don't get to repeat that question yeah hi Anita I'm very fairly straightforward that because of COVID because of the absences you know the production from our higher grade stoves at Marianas Norti and Eureka were more and limited because of the lack of development so it's purely There was purely a sequencing due to lack of employees, but those are the areas that we're most focused on. And, you know, the workforce is back working. We're nearly at full rate. So hopefully, you know, in the coming months, we'll see that turn around. But it was just a timing issue due to lack of employees.

And then lastly, more of a big-picture question perhaps for Nancy. just looking at your um your dividend payout ratio um and that we're you know just currently sitting slightly below but you do have a good on gold price but you do have a good cash balance can you give us an idea um you know if we're thinking about downside risk on gold price you know um how do you how do you play it like uh sort of play with the cash balance that you have i notice that it's you know Prior to these gold prices, it was sort of sitting around $3 billion as the cash balance you wanted. Would you think about, you know, sort of reducing that cash balance as needed if gold priced at personal fame period to maintain that dividend? Yeah.

Thanks for the question, Anita. Yeah, we've said in prior times that at a $1,200 gold price, we would like to keep around a $2.5 to $3 billion cash balance. We are certainly carrying significantly more than that today, but I do think that's a testament to a couple things. One is our ability to be very nimble with the dividend, and we've provided a very clear framework and a lot of transparency about the optionality between that 40% and 60%. So there's some great points about that. And then the other piece is we are still in a time of very much uncertainty around COVID, and we also have a lot of development capital. So I think carrying considerably higher balances than that at today's gold prices is a great strategy for us, but certainly a lot of optionality and flexibility around those balances, which is what we've consistently stated.

And, Anita, maybe to build on that, we look with our board back over – a long period of time at gold prices and the cash was actually generated. And that factored into our decision to step up and calibrate at the $1,800 mark and only return 40% of that cash. So the stability and sustainability of our dividend is very robust. So we didn't make that decision to go to the $1,800 mark lightly. And our expectation would be, when we look forward at our portfolio and our performance, that we can sustain... those levels for some time.

And just lastly, I know it does say in your disclosure that it does already include your free cash flow projections include AHAFO North and, again, a coach of sulfides. And just wanted to confirm that, you know, any lumpiness in those spends would also be included within that $1,800 quarter to 60 and those two projects.

Absolutely.

All right, thank you.

I'm looking forward to that discussion there, please. Thank you very much. Thanks, Anita. And I think that's the end of the questions that we could see in the queue, and I'm conscious we've gone past the top of the hour. So thank you all for your time. Please, and a number of you are in Toronto and Ontario at the moment, and likely still in lockdown, so please, everyone, stay safe and well, and we look forward to seeing you and speaking to you soon. Thanks, everyone.