Newmont Corporation

Good morning and welcome to Newmont's second 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 and Communications. Please go ahead.

Good morning, and thank you for joining Newmont's second quarter 2021 earnings call. Today we have Tom Palmer, Rob Atkinson, and Nancy Beezy. They will be available to answer questions at the end of the call along with other members of our executive team. Please note our cautionary statement on slide two and refer to our FCC filings, which can be found on our website. I'll now turn it over to Tom on slide three.

Thanks, Eric. Good morning, and thank you all for joining our call. In May, Newmont celebrated its 100th birthday, marking a major milestone in our company's long history of creating value and improving lives through sustainable and responsible mining. And while our organisation has certainly evolved, our strategy remains clear. We are focused on delivering value to all of our stakeholders from our world-class portfolio of long-life, responsibly managed assets located in the best gold mining jurisdictions. Turning to slide four for a summary of our quarterly performance. During the second quarter, Newmont produced 1.45 million ounces of gold and over 300,000 gold equivalent ounces from copper, silver, lead and zinc as we build momentum for a strong second half of the year. We generated operating cash flow of nearly $1 billion and free cash flow of $578 million, of which 97% is attributable to Newmont. In May, we completed the acquisition of GT Gold, consolidating our position in the highly prospective Golden Triangle District of British Columbia. And last week, we announced the approval of our Halfo North project, expanding our existing footprint in Ghana and adding more than 3 million ounces of gold production over a 13-year mine life. This project is expected to deliver an internal rate of return of over 30% at current gold prices and offers exciting exploration opportunities throughout the land package. Supported by our leading portfolio of operations and projects, we continue to apply a disciplined approach to our capital allocation priorities. Even after the redemption of our 2021 senior notes in April and the completion of the GT Gold acquisition, we have $7.6 billion in total liquidity. We have sustained a net debt to EBITDA ratio of 0.2 times, maintaining our financial flexibility whilst we continue to reinvest in our business and return cash to our shareholders. Yesterday, we declared a second quarter dividend of $0.55, maintaining an industry-leading dividend yield of over 3.5%. Set within our established framework, our second quarter dividend demonstrates our confidence in the strength of both our portfolio and our operating model to generate sustainable long-term value. In June, we published two important ESG-focused reports that touched every part of our business and operations. The first was our 17th Annual Sustainability Report, which continues to provide a transparent and detailed look at our ESG performance, focusing on the issues and metrics that matter most to our stakeholders. The second was our first Climate Strategy Report, which focuses on our approach to achieving our science-based climate targets and aligns with the reporting guidelines from the Taskforce on Climate-Related Financial Disclosures. These reports outline the key sustainability strategies that are embedded in our business and our culture at Newmont. Turning to slide five. Newmont is broadly recognised for our robust and disciplined practices when it comes to sustainability reporting, both within our sector and among all corporate reporters. And our long history of taking a leading approach to environmental, social and governance practices has positioned us as the gold sector's recognised sustainability leader. Newmont's strong ESG performance creates long-term value for our stakeholders. and drive superior business results through delivering safer, more efficient and reliable operations, greater productivity from well-managed resources, the ability to operate effectively in a broad range of jurisdictions, a proactive approach to managing risks and emerging issues, and most importantly, a reputation built on trust-based relationships and a track record of delivering on our commitments. Earlier this month, we hosted a webcast to provide an overview of our ESG journey, what we have done well, where we have learned lessons and our plans to continue improvement. If you weren't able to join us, I would invite you to listen to the replay which is posted on our website. Turning now to slide six. Newmont is the world's leading gold producer with an unmatched portfolio of world-class long-life operations. 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 inter-standing costs of less than $900 per ounce and with a mine life exceeding 10 years. And we believe that where we choose to operate matters. It is important to note that all of our world-class assets 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. Newmont has the best portfolio of assets located in the most favourable gold mining jurisdictions. that when coupled with the quality of our people and our integrated operating model, positions us to generate sustainable returns for decades to come. Turning to slide seven, our portfolio will produce steady gold production of more than 6 million ounces per year through until at least 2030, balanced across each of our four regions. This profile is further enhanced by the production of more than 1 million gold equivalent ounces from silver, lead and zinc at Penesquito and copper at Boddington and Yenicocha. Combined, we will deliver nearly 8 million gold equivalent ounces per year for the next decade, the most of any company in our industry. Moving to slide 8. 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. We continue to advance our mid-term projects, including Yanacocha sulphides, where we are preparing for a full funds approval in December of this year, With a multi-decade mine life that provides exposure to gold, copper and silver, the sulphide project generates profitable production and offers additional upside to extend mine life at this cornerstone asset. We are also executing the second expansion project at Tanami. Through the development of a 1.6km deep production shaft and supporting infrastructure, this project supports the site's future as a long-life and low-cost producer and it also provides a platform for us to further explore a prolific mineral endowment in the Tanami District. And as mentioned previously, we are pleased to announce that funding for the development of Ahafo North has been approved and this project has now advanced into the execution phase. Turning to the next slide for some more detail. Earlier this month, our Board of Directors approved full funding for the Ahafo North project. expanding our existing footprint in Ghana and adding more than 3 million ounces of gold production over an initial 13-year mine life. Located approximately 30 kilometres north of our existing Ahafo South operations, the Ahafo North project will include four open-pit mines and the construction of a standalone mill to produce approximately 300,000 ounces per year at very attractive oil and sustaining costs. The project is expected to deliver an internal rate of return of over 30% of current gold prices. A half a north is a significant goldmine by any measure. We have conducted extensive regulatory and community engagements, including meetings with traditional leaders and local government agencies and public forums to ensure that we earn and maintain social acceptance throughout a half a north life cycle. we will work to create lasting value for host communities through enhanced local sourcing and hiring. One key aspect of AHAFO North is our workforce planning, which includes a target to achieve gender parity in the workforce when operations begin. We are very excited about progressing AHAFO North and look forward to bringing you updates as we develop this new mine over the next two years. Turning to slide 10. The global pandemic has and will continue to challenge all of us for some time to come. And our commitment to protect the health and safety of our workforce and host communities remains our top priority. We believe that the COVID-19 vaccine is critical in combating the spread of the virus. We are encouraging our workforce to get vaccinated as soon as they become eligible, and we are working with our local communities and host governments to improve availability and deployment at all of our managed operations. These efforts are supported by our Global Community Support Fund, which is seeking to help with vaccine rollouts, vaccine education and awareness campaigns. We are seeing some of the highest vaccination rates in the United States and Canada, largely due to the widespread and early availability in these countries. But until the vaccine is available to everyone around the world, our people and operations will continue to be affected by this virus. And recent outbreaks have shown just how difficult this pandemic continues to be, testing our protocols and the resilience of our people and systems. The impacts of the pandemic are also driving cost inflation around the globe. We are now expecting cost escalation of around 3% to 5% for materials, energy and labour, and we expect these pressures to continue through until at least the end of next year. We are currently working on our 2022 business plan, ensuring that the high cost of inflation and the application of our wide-ranging controls and safety protocols are built into our assumptions going forward. However, despite the impacts of COVID, we remain in line with our guidance ranges. As a reminder, our guidance ranges are plus or minus 5% from the midpoints we published in December 2020. We are on track to achieve the midpoint to low end for production and the midpoint to high end for costs. Production remains back half weighted for the year with approximately 53% expected in the second half of the year. As a reminder, our cost guidance assumes a $1,200 gold price. At today's gold prices, you can expect an additional $20 to $30 per ounce for production, taxes and royalties. As we look ahead towards the second half of this year, we will remain diligent in supporting the vaccination efforts that are so urgently needed around the world. And we encourage everyone to get their vaccine as soon as they are eligible. ensuring that we are all doing our part to end this global pandemic. And with that, I'll turn it over to Rob Atkinson for a more detailed look at our global projects and operations. Over to you, Rob. Thanks, Tom. Turning to slide 12, I'll give an update on our regional performance, starting with Africa. Achim delivered another strong performance during the second quarter. as higher ore grades from changes in sequencing largely offset lower tons mined due to challenges with shovel availability. The site is well positioned to deliver solid production throughout the year, expecting to reach its highest production during the fourth quarter. A half-oak continues to be a solid contributor, delivering higher-grade material from our underground operations to offset unplanned mill maintenance and power outages. At Sabica, we continue to progress the development of our new underground mining method, sub-level shrinkage, and we expect to see steady increases in grade in underground ore tons mined in the second half of the year. In addition, we expect to reach higher ore grades from the open pit operations in quarter three and four, positioning the HAFO to deliver a strong finish to 2021. And after finalising the permitting process with the Ghanaian EPA, our Board of Directors approved full funding of the Hathor North project earlier this month. Spending will ramp up in the second half of the year, and all critical path equipment orders have been placed in support of initial construction activities to ensure timely execution of the project. The development of this prolific orebody will leverage our proven operating model with the project and resulting mine receiving functional and technical support from our existing world-class AHAPO South operation as we create the next generation of mining in Ghana. Turning to slide 13, Canamine delivered solid results in the second quarter. as higher ore grades more than offset unplanned mill maintenance and longer haul distances from the bottom of the mine. In late June, we detected our first positive COVID case at Tanami. Working closely with government representatives and other key stakeholders, we rapidly made the decision to place a site on care and maintenance beginning on June 26 to reduce the spread of the virus and protect the health of our workforce and communities right across Australia. I'd like to thank our team in Australia for the rapid response and courageous decisions during such an extraordinary and dynamic set of circumstances. And I'm proud of the resilience and strength of our workforce as we continue to learn from and manage the impacts and consequences of this virus. Although our second quarter was largely unaffected, we are forecasting a 40 to 50,000 ounce impact for the remainder of the year as a result of the care and maintenance period. We began ramping up out-of-care maintenance on July the 13th, and today Tannamine is now operating at 90%. And despite the impacts from COVID, we continue to advance Tannamine expansion too. During the second quarter, we progressed the hoist structure and our work on the mine shaft. remaining on track to deliver significant ounce, cost, and efficiency improvements in the first half of 2024. Warrington achieved near-record quarterly mill performance, reaching nearly 11 million tons processed during the second quarter. And we continue to expand the use of the gold industry's first autonomous haul fleet. And today we are operating 20 trucks in the South Pit, and we remain on track to deploy the entire fleet of 36 trucks by the end of quarter three. The efficiencies from autonomous haulage, coupled with improved performance from the mill, will continue to drive performance at Boddington. The improved mill performance helped to offset lower tons mined from ongoing shovel reliability and geotechnical challenges in the South Pit, which has the potential to impact our ability to reach as much of the higher grades as we have planned in the second half of the year. Turning to slide 14, Penesquito delivered another consistent quarter as we continue to execute on our planned full potential enhancements. And the most recent improvements in metal recovery rates will continue to support planned delivery into the future. The work we've done to optimize Penesquito since we acquired the site in 2019 demonstrates our ability to successfully operate and enhance value at large complex open pit mines. The site is well positioned to remain a strong performer throughout 2021 as we continue to realize higher than planned tons mine and improve recoveries from the fire outreach plan. CC&V delivered lower tons mine due to unplanned fleet maintenance, and the site continued to experience geochemistry challenges during the second quarter, resulting in lower grades and recovery. Mill performance was offset by higher leach pad recoveries, and grade improvements are expected during the second half of the year, helping to partially overcome some of the challenges experienced in the first and second quarter. At Porcupine, mill and ongoing equipment maintenance has resulted in lower tons mined and processed during the quarter. As we look towards the second half of the year, we expect underground development and grades will improve. And last month, our Flow Potential Program identified 20 initiatives at Porcupine, which will deliver efficiency improvements in the coming months. As mentioned previously, we continue to closely monitor the impacts from COVID at Musseline. In April, we made the decision to temporarily suspend operations for five days to reduce the spread of the virus. resulting in mill stoppages, reduced underground development, and lower personnel at site in late April and early May. We expect that these challenges will persist in the second half of the year, and we are continuing our full potential work at Musselwhite, focused on increasing development rates and driving productivity. Eleanor delivered another strong quarter, as development rates and mill throughput continued to improve over the prior quarter and prior year, offsetting the impact of lower personnel insight due to COVID. In addition, the site continues to increase the use of tele remote mucking equipment, which have helped to increase tons mined and drive important improvements to safety and efficiency. LA&R will continue to be a solid contributor during 2021, as we expect to sustain consistent production from stable tons mined and processed throughout the year. Turning to slide 15, despite heavy rainfall in the second quarter, Merion remains a strong performer in the South American region. The site continues to utilize an ore blending strategy to optimize mill performance, and during the second quarter, Merion delivered lower throughput as the site focused on processing harder, higher-grade ore. In the second half of the year, Merion will continue to transition from softer sacralite to harder ore, resulting in higher production from improved grades and steady throughput. Cerro Negro continues to improve productivity and performance as the site continues to manage through the evolving pandemic. During the second quarter, Cerro Negro delivered higher ore grades, and despite reduced personnel from COVID, The site continues to increase ore tons mined and processed each quarter. Due to the pandemic, Cerro Negro has delivered low development rates over the past year, limiting access to high-grade ore in the late 2021 and into 2022. However, the site is progressing future growth projects, such as the development of San Marcos and exploration in the Eastern District. Yanacocha has also experienced significant challenges due to the pandemic, impacting productivity through the year. Yet, despite the challenges from the virus, Yanacocha delivered higher grades in recovery from the leach pads, in addition to an increase in grade and more times mined from the Karachugo open pit. As we look towards the second half of the year, Yanacocha will focus on optimal oil placement on the leach pads and as the site has transitioned to leach-only operations ahead of the development of Yanacocha sulfides. The Yanacocha sulfides project has the potential to extend Yanacocha's world-class operations well beyond 2040, adding profitable production from one of the largest and most prolific gold districts in South America for decades to come. And despite potential impacts from the elections in Peru and the impacts of COVID, the project is progressing well. The team is focused on critical path activities, such as advanced engineering and procurement, as we prepare for full funds approval in December of this year. And with that, I'll hand it over to Nancy on slide 16.