Newmont Corporation

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Good morning and welcome to Newmont's full year and fourth 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 Tom Palmer, President and Chief Executive Officer. Please go ahead.

Good morning and thank you for joining Newmont's full year and fourth quarter 2021 earnings call. Today I'm joined by Rob Atkinson and Nancy Beazey, along with other members of our executive team. And we will be available to answer questions at the end of the call. Before I begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. Newmont delivered a strong finish to the year and has maintained its position as the world's leading gold company, with our unmatched portfolio of operations and projects in the most favourable mining jurisdictions. As we move into our next 100 years of sustainable and responsible mining, Newmont will continue to create long-term value for all of our stakeholders and differentiate ourselves through our clear strategic focus superior operational performance and an unwavering commitment to leading ESG practices. Turning to our highlights for 2021. UMON continued to operate from a position of strength in 2021, leveraging our scale and mine life to deliver strong ESG operational and financial performance. First and foremost, our focus has remained on protecting the health and wellbeing of our workforce and local communities as the world continues to grapple with the pandemic. We continue to be recognised for our leading ESG performance, building new pathways to decarbonisation and publishing our first climate strategy report. And during the fourth quarter, we safely commissioned the gold industry's first autonomous haul fleet at Boddington and formed an industry-leading strategic alliance with Caterpillar to achieve zero-emissions mining and support Newmont's climate initiatives. We finished the year strongly, meeting our updated four-year guidance and producing 16 ounces of gold at all its outstanding costs of $1,062 per ounce, and in addition produced 1.3 million gold-equivalent ounces from copper, silver, lead and zinc. These results generated $4.3 billion in cash from continuing operations and $2.6 billion in free cash flow, more than 99% of which is attributable to Newmont and available to execute on our balanced and disciplined capital allocation priorities. We refinanced near-term debt with the mining industry's first sustainability-linked bonds. preserving Newmont's financial strength and flexibility as we further align our financing strategy with our ESG commitments. In 2021, we returned $1.8 billion through our clear dividend framework and completed $525 million of share repurchases, leading the gold sector in shareholder returns. We also completed the acquisition of GT Gold, continued to advance our most profitable near-term projects. And two weeks ago, we announced the acquisition of Bonaventura's interest in Yanacocha, increasing Newmont's ownership in one of the largest and most productive gold mines in South America. We have successfully operated in Peru for more than 30 years. and we have a deep knowledge of Yanacocha and the value that it brings to Newmont stakeholders. Since 1993, Yanacocha has produced nearly 40 million ounces of gold. And similar to our acquisition of GT Gold in British Columbia's Golden Triangle, this transaction is in line with Newmont's strategy of district consolidation, enhancing our ownership of world-class assets in proven mining jurisdictions. Increasing our ownership in Yanacocha also means that Newmont is increasing our stake in the Salt Flies Project, which is the next exciting chapter in Yanacocha's long and profitable history. With a multi-decade mine life from just the first phase, this project will generate profitable production of more than 500,000 gold equivalent ounces per year at attractive oil and sustaining costs. Importantly, The metal produced from sulphides be approximately 45% gold, 45% copper and 10% silver, substantially increasing Newmont's copper position as the world transitions to a green economy. And looking ahead, we are already evaluating the second and third phases of the sulphides project, which have a potential to both increase production and extend mine life well beyond 2040. We are very fortunate to have had a strong partnership with Bonaventura over several decades and look forward to continuing to work with the people of the Kahamaka region and local agencies to sustainably and responsibly develop the next phases of Yanakocha's long life. Turning now to the strategic value that differentiates our portfolio. Each year, Newmont's portfolio of operations will produce more than 16 ounces of gold, along with nearly 2 million gold equivalent ounces from copper, silver, lead and zinc. Combined, that is nearly 8 million gold equivalent ounces per year for at least the next decade, the most of any company in our industry. At Newmont, we have created a robust and diverse portfolio of operations and projects around the globe. with the scale and mine life to deliver strong, long-term results. Among our 12 operating mines and two joint ventures, over 90% of our critical gold production comes from top-tier jurisdictions. And with the opportunity to acquire the outstanding 5% ownership in Yanakocha, 11 of our 12 managed operations will be 100% owned, ensuring that our stakeholders receive the full benefit from UMON's clear strategic focus and superior execution. Underpinning our portfolio is a robust foundation of reserves and resources. Including our recent acquisition of an increased interest in Yanacocha, UMON's reserve base now sits at 96 million ounces of gold and 68 million gold equivalent ounces from other metals, predominantly copper. We also offer substantial upside through a resource base of over 112 million ounces of gold and a further 112 million gold equivalent ounces from other metals, which includes almost 30 billion pounds of copper. Through our industry-leading organic project pipeline, we have multiple opportunities to increase copper production through the development of Yanacocha sulphides, Saddle North, North Abieto, Neva Union and Galore Creek, providing natural exposure to a metal of growing importance for reducing carbon emissions and facilitating ongoing transition to a new energy economy. Reserve replacement is a long-term process. And as Newmont has done for many years, we develop and implement plans that target replacing our annual depletion on average over time. In 2021, we replaced more than 80% of reserve depletion despite the challenges created by the pandemic. And it is important to note that this does not include the 3 million ounces of gold reserves we just acquired through our purchase of Bonaventura's interest in Yanacocha. At Newmont, we firmly believe that the COVID-19 vaccine is critical in combating the spread of the virus and preventing severe illness and death. As you can see in this slide, the vaccination rates at our managed operations exceed national rates in all of the jurisdictions in which we operate. We took the important step of deliberately moving towards a position where all of our global workforce will be required to be vaccinated. To support this, Newmont continues to deliver vaccination awareness programs while also working with local communities and governments to both provide and improve access to the vaccines. And one of the most meaningful contributions that our leaders have made in the fight against COVID-19 is the time that they have spent with their teams, holding individual meetings, answering difficult questions, coordinating facilitated sessions with health professionals and guiding our workforce as they make the important decision to protect themselves and their loved ones. We are very proud of the work we have done and we will continue to be a values-driven organisation that makes decisions that prioritise the health and safety of our workforce and local communities above all else. Over the first two months of this year, the Omicron surge has impacted our operations and the mining industry as a whole. Fortunately, due to our high vaccination status, the severity of any positive cases has been low. Our workforce remains healthy and we are well positioned as we emerge on the other side of this current surge. However, as a consequence of safely managing through this surge, we expect that our production results in the first quarter of 2022 could be impacted by as much as 150,000 ounces. Around one third of that impact is coming from our Canadian operations and Cripple Preconvicta, as flight capacity constraints at our fly-in, fly-out operations and close contact isolation protocols have impacted productivity. Another third comes from Africa, where we are experiencing COVID-related supply chain disruptions and global border closures, which are impacting the availability of skilled workers from Australia and the delivery of critical spares and equipment. And the final third comes from our operations in Australia, but we're seeing the impacts of productivity and labour availability as we adhere to interstate border closures and close contact isolation protocols. We are closely monitoring the reopening of the Western Australian border, which is currently planned for March 5th. And this may lead to a surge of cases impacting the mining industry in that state. However, the reopening of this border will also allow one third of our team of Tanami who live in Western Australia to now move freely between work and home for the first time in months. As we near the end of February, we are encouraged to see declining case counts and have reported only one hospitalisation associated with the Omicron surge. Despite the challenges presented by managing the Omicron surge, we remain on track to end the year within our guidance ranges. We expect that production and unit costs will substantially improve each quarter, with approximately 53% of our production weighted to the back half of this year, driven by Boddington, AHAFO, Cerro Negro and our Canadian operations. And with that, I'll turn it over to Rob and then Nancy for a more detailed look at our four-quarter performance. Over here, Rob. Thank you, Tom, and good morning, everyone. To echo what Tom said, the pandemic continues to present challenges across our operations and the mining industry as a whole. I'm very proud of the resilience of our people and our systems, and I'd like to recognize the very significant efforts that continue to be applied at all of our operations in order to keep our teams safe and healthy. Turning to the next slide, let's take a deeper look, starting with Australia. Tannermine delivered another strong performance in the fourth quarter, as higher grades and strong mill performance more than offset impacts to productivity from COVID. And despite a tightening labour market and heightened protocols, the team added more than 800,000 ounces in reserve editions through drilling. We expect Tannermine to remain a solid contributor throughout the year due to steady production and higher grade as we progress our investment in the second expansion of Tannermine. A project with the potential to extend mine life beyond 2040. The team continues to advance the construction of the head frame. Eighty percent of the nearly one mile deep shaft has now been reamed. And more than 80 percent of the project engineering procurement has been completed. An important step in locking in long lead time materials and limiting exposure to rising costs. At Boddington, we delivered the site's best quarterly performance of 2021, overcoming challenges encountered during the third quarter and reporting improved production and lower costs as the team reached higher gold and copper grades in the South Pit. We expect tons mined and grade to further improve starting in the second quarter with 52% of production expected in the second half of the year. I am very pleased to announce that the gold industry's first autonomous haulage fleet at Boddington has reached full productivity, increasing Orton's mind in the fourth quarter and positioning Boddington to deliver a strong performance this year. Early in 2020, our Newmont team came together with our partners at Caterpillar to plan, construct, test and deploy the gold sector's first fully autonomous haul truck fleet. Despite facing some challenges while fine-tuning this new technology to operate in a deep, open-pit mine for the first time, the Bonnington AHS project was completed on budget and in record time, a major accomplishment for Newmont and the industry as a whole. Today, our autonomous trucks are operating at parity with the conventional haul truck. and we have a deep pipeline of optimisation projects aimed at improving consistency, efficiency and productivity throughout the year. The introduction of this technology allowed the site to replace 41 conventional trucks with 36 autonomous vehicles, resulting in important safety improvements and substantial cost savings over the long term. Already, our AHS fleet has moved over 45 million tonnes of material, and these trucks have travelled more than 1 million kilometres, generating tremendous results so far. Vehicle damage has declined nearly 50% in 2021 compared to 2020, and tyre damage decreased 93% for more controlled and efficient haulage. But more importantly, we've reported zero injuries in the mine since going live in October last year. In addition to improving productivity, an autonomous haul fleet is fundamentally safer, removing the exposure to potential vehicle interactions and the risks associated with fatigue. In November, we took another step forward in the use of technology to improve mining. announcing a revolutionary strategic alliance with Caterpillar to deliver first-of-a-kind battery electric autonomous vehicles at Tannemine and at CC&V as we make progress towards achieving zero-emissions mining. We will look to leverage our team of experts within both Newmont and Caterpillar, along with the lessons that we learned at Barrington, as we continue to implement important improvements to safety and productivity throughout our portfolio while also building pathways to decarbonization. Shifting to North America, Penesquito delivered another strong quarter with sustained mill performance and higher gold grade. The site is expected to deliver lower gold production and steady coal product production this year due to the Plan 9 sequencing at the Penasco and the Chile-Colorado pit, combined with lower grade and harder ore coming from the Chile-Colorado pit. Stripping in the Penasco pit will continue through 2022, and the site will also begin stripping the next phase of the Chile-Colorado pit in the second half of the year. And in the first half of this year, Penasquito will increase capital spend as the site expands camp facilities, ensuring that our team members have the appropriate privacy and accommodation to get proper rest, as well as improving their ability to manage the spread of any future surges of COVID variants. Turning to our Canadian operations, Eleanor delivered solid fourth-quarter results due to improved ore tons mined in mill. In addition, the site added more than 800,000 ounces in reserves from drilling and favourable revisions. Muscle white generated the year's strongest quarterly performance from higher-grade mine and improved mill performance in the fourth quarter. and Porcupine delivered consistent fourth-quarter results as higher throughput and recovery rates helped to offset less hydrate that were being mined from Hoyle Pond. In addition, the site continues to advance the Pamore project, just 10 kilometers from our existing plant infrastructure. This project involves a significant layback of the Pamore pit and will extend mining at Porcupine through 2035. The Pallore pit will need to be dewatered as part of this project, and the concrete foundations for the associated water treatment plant have been completed. Study work is progressing as the project prepares for full funds approval in the second half of this year. And finally, at CC&V, the mine continued to experience lower grades and recoveries in the fourth quarter, in addition to lower labour availability due to COVID. Turning to Africa. A team delivered another solid performance in the fourth quarter from higher grades, sustained throughput and strong recoveries. The team has begun stripping the next layback, extending mine life and providing future optionality as we continue to evaluate underground and open pit growth opportunities. A HAPO delivered a strong finish to the year, having more than 400,000 ounces in reserve additions from drilling, and generating a 19 per cent production improvement over the prior quarter due to higher tons mined from the Sabica open pit, coupled with strong mill performance, which more than offset challenges with labour and equipment availability at our Sabica underground operation. These challenges were driven by Covid-related supply chain disruptions and international border closures at a time that we are ramping up sub-level shrinkage at Sabica underground Consequently, we are expecting production at Ahapo to be weighted around 60 per cent for the second half of this year, as we increase underground tonnes and reach higher grade. Finally, in Africa, we continue to advance our Ahapo North project. In the fourth quarter, we received the tailings storage facility and water infrastructure permits from the EPA. and we expect to gain full land access later this year, as we work together with local communities and regulators to develop this prolific ore body. Now, turning to South America. Marion remains a strong performer, delivering higher throughput and steady grade in the fourth quarter, while adding nearly 400,000 ounces in reserve editions, primarily from drilling at the Maraba open pit, Production is expected to slightly increase this year as ore grade continues to improve through the first half and the site continues to utilise an ore blending strategy to maintain strong mill performance. The Anacocha continues to deliver leach only production while we develop the first phase of the sulphides project. Early stage engineering continues to progress as the pandemic allows And accommodation facilities for the construction and full-time workforce are expected to be completed in the first half of the year as the site prepares for an investment decision in late 2022. And finally, productivity and performance continues to improve at Serenegro, as higher ore tons mined were partially offset by lower grade in the fourth quarter. We expect production this year to remain in line with 2021, with around 55% weighted toward the second half of the year. Our team continues to advance the San Marcos decline and the first wave of district expansions, which includes the development of the Marianas and eastern districts to extend operations beyond 2030 and provide a platform for further exploration and future waves of expansions. The drilling and earthworks contracts have been put in place, and Cerro Negro added more than 1.1 million ounces to reserves for drilling in the eastern district, more than offsetting revisions and reinforcing the growth potential in this highly prospective and under-explored gold district. We look forward to bringing you further updates about our progress at Cerro Negro as we bring this project for full funds approval next year. And with that, I'll turn it over to Nancy on the next slide.

Thanks, Rob. Through the strength of our portfolio and proven operating model, Newmont is able to generate the highest levels of attributable free cash flow in the gold sector. And our disciplined approach to capital allocation allows us to maintain financial strength and flexibility while balancing steady reinvestment into our future and industry-leading returns to our shareholders. In 2021, we continue to strengthen our balance sheet, ensuring that we are well positioned to sustain our business and continue leading the industry for decades to come. Let's start with a look at the financial highlights. As you can see, Newmont delivered a strong finish to the year. In the fourth quarter, Newmont achieved a record $3.4 billion in revenue, driven by higher sales volumes and strong gold prices. Adjusted net income of $624 million, or 78 cents per diluted share. Adjusted EBITDA of nearly $1.6 billion for the quarter and a record $6 billion for the full year. And strong free cash flow of nearly $900 million for the quarter, an amount entirely attributable to Newmont. Our unmatched cash flow generation enables Newmont to provide superior shareholder returns largely through our clear and stable dividend framework. This week, we again declared a regular quarterly dividend of $0.55 per share, resulting in a dividend yield of approximately 3.5% and positioning Newmont among the top 10% in the S&P 500. In addition to our dividends, we continue to execute on our second $1 billion opportunistic share repurchase program, a separate and independent tool that does not impact our dividend payouts. Since December 2019, Newmont has repurchased over $1.5 billion in share buybacks at an average price of less than $49 per share, contributing significant value to shareholders. With an additional $475 million left on the current program, we will look to execute on opportunities over the next 10 months to repurchase our shares. Fourth quarter gap net loss from continuing operations was $61 million, or $0.08 per share. Adjustments included $1.10 primarily related to non-cash reclamation adjustments at non-operating sections of the Yonacocha site. Based on our ongoing studies of water management and closure activities, the liability was increased by $1.6 billion, of which approximately one-third relates to the estimated cost to construct two additional water treatment plants over the next five years, and the remainder of the increase relates to ongoing closure operating costs, which we estimate include over a period of 50 years. Adjustments also include 21 cents related to the sale of the kcgm power business and the south arturo asset exchange with nevada gold mines five cents related to unrealized mark-to-market gains on equity investments and two cents of other charges taking these adjustments into account we reported fourth quarter adjusted net income of 78 cents per diluted share our balanced global portfolio combined with our discipline and integrated operating model, provides significant leverage to higher gold prices from the largest production base in the world. And for every $100 increase in gold prices above our base assumption, Newmont delivers $400 million of incremental attributable pre-cash flow per year. Nearly 18 months ago, we led the gold industry by announcing our dividend framework, differentiating ourselves with a clear and decisive strategy to provide stable and predictable returns to our shareholders. This framework provides a stable base dividend and returns 40% to 60% of the incremental attributable free cash flow generated above a $1,200 gold price. The fourth quarter dividend declared was consistent with the last four quarters, calibrated at an $1,800 gold price assumption and a 40% distribution of incremental pre-cash flow. Since introducing our framework, Newmont has returned more than $2 billion through dividends alone, demonstrating our confidence in the long-term value of our business and our commitment to leading returns. Our capital allocation priorities remain unchanged with a clear strategy to reinvest in our business through exploration and organic growth projects, to maintain financial strength and optionality in our balance sheet, and to continue to provide industry-leading returns to shareholders. Throughout the year, we delivered on each of these priorities by progressing our profitable reinvestment into the business with the advancement of our near-term projects and an ongoing commitment to our robust exploration strategy. Delivering the first autonomous haulage fleet in the gold mining industry, improving safety and productivity at Boddington. Advancing district consolidations with the GT Gold transaction and increasing our ownership in Yonacocha. Returning $2.3 billion to shareholders through dividends and opportunistic share buybacks. Issuing the industry's first sustainability-linked bond, efficiently refinancing near-term maturities and resulting in no debt due until 2029. And maintaining a strong balance sheet with $8 billion in liquidity and a net debt-to-EBITDA ratio of 0.2 times. preserving Newmont's financial strength and flexibility to sustain the business across price cycles. As we look ahead, we are confident in our ability to deliver on our disciplined capital allocation priorities, creating long-term value for the business and all of our stakeholders. With that, I'll hand it back to Tom to wrap up.

Thanks, Nancy. Over the last year, as we celebrated our 100th anniversary, it has been an important milestone to pause and reflect on our company, our industry, and the lessons we have learned. Our clear strategy lays the groundwork to truly differentiate Newmont as we position ourselves to continue leading the gold industry today and well into the future. And as we begin a new year, I am confident that our clear strategic focus, proven operating model, superior execution and leading ESG practices will enable Newmont to deliver long-term value to all of our stakeholders through sustainable and responsible mining. With that, I'll turn it over to the operator to open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, 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 the roster.

Number two, please.

And our first question will come from Fahad Tariq of Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my two questions. First, Tom, you made a comment about 150,000 fewer ounces in Q1. How should we be thinking about the rest of the year? Will those ounces be made up, or should we be thinking that this is a net negative to the midpoint guidance for the year? Thanks.

Thanks, Fahad. Good morning. We still expect to be within guidance, so we see opportunities to work to recover some or all of those ounces. Clearly, we're only coming to the latter end of February, so plenty of opportunity in front of us. We're going to be weighted to the second half of the year with a couple of our big assets, Halfo and Boddington in particular. So it's how the sequence of those mines shape up and how we move through and the graders it presents. but we certainly see ourselves firmly within guidance for production and costs. So 10 months in front of us, plenty of opportunity to work through from the Omicron surge.

Okay, that's clear. And then my second question, we haven't heard much on potential improvements in 2022. Could you maybe give an overview of any targets or guidance for the year and whether or not the cash cost guidance that has been provided already incorporates that?

Thanks, Fahad. So the cash cost guidance does provide for about just under $300 million of full potential improvements, 290, across the board. And just to give you a highlight of some of our top initiatives, one of the biggest drivers will be Musselwhite, where we're looking at getting early entry back into the mine after a blast. and then increasing the underground shift length, so really basic operational things. We're seeing opportunities around drilling and the rate at which we do the slot raises at Eleanor. That's another significant one. Again, Penesquito features firmly. You're looking at just use of available time on equipment. You're looking at recoveries within the sulphide plant. You're looking at the augmented feed circuit, particularly as we move... That's the front end of the mill, particularly as we move into some of the harder ores coming out of the Chilli Colorado pit. So there's some of the top initiatives. We're also just coming out of a refresh at Boddington. And this may represent, you know, an example of upside to some of the full potential work that's built into the plan. Boddington was the first site that we implemented full potential at back in 2014. So it's been through multiple refreshes over the last eight years and continues to identify value. The real opportunities as we look into this year and next from Boddington is around the fact that we've now got an autonomous haul fleet. So with the predictability and the controllability of an autonomous haul fleet, there's two key areas that we're looking to leverage. One is the speed and the delays around AHS. That's all about keeping those trucks running and maximising, optimising their speed. And because they present every time to a shovel at exactly the location you ask it to spot up to, there's a real opportunity and significant value around the queue and hang times at shovels. So some real opportunities going forward at Boddington from a recent refresh that's not included in the output we provided back in December.

That's very clear. Thank you. Thanks, Mahat.

Our next question comes from Tanya Jackie Skonic of Scotiabank. Please go ahead.

Good morning, everyone. Thank you for taking my questions, and congrats on ending a strong year and a great reserve day. I have a couple of questions. Just if I could start, Tom or Rob, just on the quarterly guidance so I understand correctly. You know, 53% weighted to the second half. You've given us Boddington, AHAFO, Sierra Negro. How about the Canadian asset distribution and how should I think about Penasquito, another one of your big assets?

Thanks, Tanya, and good morning. I might start with Penasquito and then work backwards. Penasquito on a gold basis is about 50-50. So pretty consistent through the year when you look at gold. In the Canadian assets, Musselwhite is 60-40 split, very much seeing as a fly-in, fly-out operation at Musselwhite. In this first quarter with the Omicron surge, you're seeing those impacts are weighted to the second half, 40-60. The other two Canadian sites are around 45-55. If you move into South America, Serenegro is about 45-55. Boddington in Australia is following the portfolio, $47.53. And a half-o, and it's particularly driven by two things, but both Subika-related, both open pit and underground. We're moving to higher grades in the Subika open pit as we move through that layback. And as we start to get equipment and people back moving into the underground and start to get more access to broken stocks, you'll see more material move through from the underground mine. So a half-o is $40.62. So the portfolio at $47.53. Okay.

And then the only other one I think you mentioned was Cripple Creek, which is the second half weighted?

That's right. Cripple Creek is $43.57. So weighted, you know, $60.40 to the second half. And that's linked to recoveries coming off the heat glitch. So the timing is the grades of dolge are placed and the recoveries coming through in the second half.

That's very, very helpful. And I don't know if Nancy could chime in on the capital distribution, if there's anything we should be aware of on the capital going through the year.

I've got it here. So development capital, as we look through the year, is sitting at about, weighted to the first half, $55.45. So slightly weighted to the first half. And if I look at our sustaining capital, it's about the same, $55.45. So the sustaining development capital weighted slightly to the first half. Tanya?

All right. So we should see, obviously, better free cash flow coming out in the second half of the year as we get to the capital and better performance from the assets.

That's all.

Thank you. And maybe just going on to some other tech questions, I just wanted to ask about, I'm intrigued about Yanacocha Phase 2 and 3. I don't know from a high level. Tom, if you can kind of give us some, you know, concepts of how you're seeing those two phases.

Yeah, thanks, Tanya. So the Yanacocha Sulfide Project is, you know, the bulk of the money is to put in place a concentrator and a an ore clover, a pressure oxidation fertility, which really allows us to open up and be able to process the sulphides ore. And to pay for that investment, we've got the layback in the Yannacocha Verde open pit, which is the low-grade ore we'll put through the concentrator, and our first underground mine at Yannacocha, Chuckycocha. So we're punching in off the wall. In fact, we already have punching off the high wall of that mine. that pit to start to develop the underground mine. And that mixes with the concentrate, and you're going to produce, obviously, copper, gold and silver coming out of that. In 30 years of mining at Yanakocha, we've mined 30 years, 40 million ounces of oxide ore. Just like we saw in Nevada a generation ago, sulphide ore sits underneath all that oxide ore. So all of those various deposits that we've mined, or the vast majority of those various deposits that we mined, have sulphide ore underneath the oxides. And so our drilling programs and our study work is looking at which of those deposits come next in line to feed that processing facility. So that processing facility will process sulphides ore within the existing footprint of Yanakocha for literally decades, like we've seen in Nevada with the roaster at Mill Sticks. So which of those deposits come through? We're working through, but we have a second phase of deposits, and then we've got a third phase of deposits that we are actively exploring. And we see, as you see with many base metal projects, that the opportunity, once you've got your facility up and running, and I'm sure we'll see some more ounces come from both the Anacocha Verde Open Pit and Chucky Coacher Underground, that will extend life at existing rates. But then the phase two deposits, there will be opportunity for us to increase throughput as we optimise the processing facility and are able to present ore in different grades and extend life further. So I certainly see the opportunity as we commission this processing facility, second half of this decade, start to see whether there's opportunity to creep up in terms of ounces and pounds produced, extending life and then additional deposits coming into further increased throughput and extend life well into the 2040s and beyond. So hopefully that gives you some colour.

Yeah, thank you. And then is the third phase the phase that you think about Conger and Keelish?

No. No, the third phase is still existing sulphide deposits in the existing footprint of the Anacocha. So when we think strategically, it's about that foundation of a long-term operation, all the things you can then do with the workforce and the communities around that operation, then allows you to look very long-term as to when does that Conga then come in and when does Achilles then come in over that long-term timeframe. So they are upside on top of Phases 2 and 3. The Phase 4 then.

All right. I have another phase for you to work on.

Right.

If I could just two other quick ones, like I just to understand the reclamation obligation, understand, you know, the one at Yannick Coach had a lot to do with water, but made me think about just your overall portfolio and the industry in general. Tom or Rob, should I be thinking that these reclamation obligations, we will start to see, you know, some bigger numbers come out of other assets within your portfolio, given all of the new, you know, legislations going through? Like, can you give us any colour on what you're seeing in terms of reclamation obligations?

Sure, sure, Tanya. It's reclamation obligations dominated by Yannick Kocher. And it's the, you know, you've got a... A disturbed area of the 75% size of the island of Manhattan and significant volumes of water with the rainfall you have up there. And by the way, the sulphides project doesn't add any additional reclamation. We are essentially working within that existing footprint. That dominates it. The same discipline we apply at the Anacocha, we apply across our business. So we apply 50 years. to our reclamation obligation. So if you've got to treat water, as we do at Yannacocha, then we are assuming we're treating that water for 50 years in our assumptions, and we apply today's technology to those assumptions for 50 years. So the opportunity to have a long-life operation such as Yannacocha and look for where there's technology to better manage, control and process water represents upside to those numbers. That methodology, that discipline is consistent across our portfolio. So Yanacocha dominates. The next big operation is Penasquito, which is a significant step down from the Yanacocha obligation. And then you're into the Cripple Creek and Victors and the Porcupines and the Boddington. But it's Yanacocha and then Daylight, Penasquito, and then Daylight to those other operations in terms of the closure obligations.

You're not seeing anything, Tom, right now in legislation that will make you change anything in your approach for additional money?

No. Often it's about the rehabilitation you're doing or it's capturing and treating mine-affected water. And in terms of what we're doing, and either the regulation requires that or Newmont requires that, we are treating the water to either drinking water standard or agricultural standard, depending on the catchment area for that water that we're discharging.

Thank you. I'll leave it to someone else to ask questions. Thank you so much for your insights.

Thanks, Tanya.

The next question comes from Jackie Prisbolowski of BMO Capital Markets. Please go ahead.

Thank you very much. I just sort of want to go back to the Yanukovych's project just for a moment. On the change to your partnership structure or the acquisition of one of Ventura's stakes, now that you own nearly the entire project, does it change your approach at all, whether that's timing or? Anything else? Does it remove any limitations that you may have had with the partnership, like maybe point of insurance funding capability or anything like that? Or how are you approaching this similarly or differently now versus before you purchased the stake?

Thanks, Jackie, and good morning. No change to the timetable we're working to. It's a late 22 approval. It's pretty dominated by ensuring that we can clearly see that the pandemic will allow us to mobilise a workforce. We continue to do early work works. We continue to do the long lead time procurement. We will have the autoclave vessel on the construction site location by the end of the year as we seek full funds. So that will significantly de-risk the project. The other critical path or key item we're working on, which is important for these very large multi-billion dollar projects, is to get the engineering to a level where you can have an accurate cost estimate, see full funds, and then de-risk the execution of the project. And best practice in mining and oil and gas for multi-billion dollar projects is to get a high level of engineering done. And a lot of our spend this year is on that engineering work with both Bechtel and Hatch. So we'll make sure that we have the pandemics allowing us to mobilise a workforce of 3,000 plus people, the engineering to a level that allows us to have accurate cost estimates, to continue the procurement, and late 2022 is the optimum timeframe for us to move forward and seek full funds.

And you didn't mention anything about the government. There's nothing that you need to see or get assurances on the government side to make a full-funds decision? I heard you say earlier you're pretty comfortable, but is there anything on that side that you're waiting for?

Nothing we're waiting for, Jacqui. If anything, the government is having a few changes But the bureaucracy is still working well, as it always has in Peru. The government has certainly made signals that if there are any tax changes, if there are any, they would be modest. But we... And certainly the way the Congress is playing out, the opportunity for there to be change is diminished. So we look at, you know, as I was talking through with Tanya, we look at this as a multi-decade investment. and we're confident that we can navigate through the current administration to seek full funds approval. So nothing we're waiting for on that front.

Great. Thank you. One other question, just to change of subject, I guess, on the share buyback. I know you've pushed back the expiry of your share buyback program, but you've now done over half of the $1 billion. Is there any thought to... to expanding the program to raising the total buyback size, I guess, as you get closer to that billion dollars. Can you maybe just talk about how you think about how much of that you're planning to execute this year and if there is an opportunity to raise that?

Thank you. Thanks, Jacqui. We certainly look at chair buybacks as we have done over the last, as Nancy was talking about in the prepared words, It's our second program, and we've brought back $1.5 billion at less than $49 a share in today's prices. That's a very significant return on investment. So we see it as a tool that is independent to our dividend framework. We believe, in talking with our board, that the remaining roughly $500 million in the next 10 months of this year is adequate for us to be able to execute on that aspect of our capital allocation priority. And we will have the discipline, as we've demonstrated, to only go back in and buy our stock where we see that that makes good sense. And as we near the end of the year and sit down and talk with our board, we'll certainly debate whether it makes sense to think about having another program as we move into 2023. So that will be part of an ongoing discussion with our board as we look at our different capital allocation priorities. To answer your question, we think there's ample opportunity with what we've got available to us over the next 10 months to do what we need to do. And we have the cash available to execute on both our dividend framework and on our share buyback.

That's great. Thank you very much, Tom. That's all my questions.

Thanks, Jackie.

Next question comes from Cleve Rueckart of UVF. Please go ahead.

Great. Thanks for taking my questions. Good morning, everybody. Tom and maybe Rob, I just wanted to come back to the autonomous college fleet. I think that slide 12 that you have laid out there has got some pretty impressive statistics. Maybe you could just tell us, given what you've learned since that's been ramped up, Are you finding other opportunities to make similar investments across the portfolio? Maybe give us a sense of how much savings it's actually generating in terms of reducing the wear and fewer operators and things like that.

Thanks, Cleve. I think that's a terrific question for Rob, and he'll certainly make sure that he talks about our alliance with Caterpillar and Cripple Creek and Victor and Tanami as well as other things. Over to you, Rob. If I start off with Borington, certainly the performance is very, very pleasing. As I mentioned in the script, we're now performing at the traditional level of the trucks, which is terrific to see in such a short period of time. We have still got an abundance of opportunities, whether it be around the speed, whether it be around the sequencing for the shovels, about reducing the hang time, further improving hot seating, further improving refueling, et cetera. So we are continuing to focus on that haul fleet at Boddington to really make sure that it doesn't just match conventional hauling, that it exceeds it by a long, long way. And, you know, with the analytics that we've got, and this is one of the key parts of the partnership with Caterpillar, is that, you know, we are sharing data like never been shared before, and we're doing that data analytics. And autonomous haulage is all about improving second by second, and that's the opportunity we've got at Barrington. So I think we're really at the start of a long process, and it's going to be exciting. I look forward to talking about improvements as we go on. In terms of other opportunities, as Tom mentioned, the partnership and the strategic alliance with Caterpillar is incredibly exciting. And, you know, the first cab off the rank is going to be at CC&V to make that automated. And, you know, certainly we believe that, you know, the cost benefits of that will really enhance that operation. Now, when we look at autonomous elsewhere, you know, we're obviously looking at tannamine in the underground space, which is going to be key. But also, as we look further ahead, the PAMOR project, you know, sub-level shrinkage at Sabica. We've spoken about that before. And then at Yanakocha in the underground mines there. So, you know, we've got a number of great opportunities to use this absolute proven technology. But again, the key between our relationship is One thing putting in the technology is how you use it, and in particular the data. And that's where the exciting part is. And I think we've still got a long way, sorry, not a long way to go, but a lot of improvements to come.

Yeah, that's very clear. Thanks, Rob, for the color. You know, just one other question I wanted to follow up on, you know, on the dividend and capital allocation. You know, it's nice to see what I think was a a pretty positive outcome at Yenicocha after maybe a year and a half of a little bit of uncertainty. It does take up Newmont's CapEx obligation at the mine. I was wondering if that changes at all where you fall in the 40% to 60% band of incremental free cash flow returns. You know, I think, Nancy, you said in your prepared remarks, you're at the bottom at the 40% at 1,800 gold. You know, I guess, does that change at all with more CapEx this year and next year? And then, you know, I guess just to finish it out, you know, in terms of your use of cash, would you be comfortable consuming cash to continue buying back stock? I think the cash balance declined very slightly for the year in 2021, but ultimately, how are you thinking about the cash balance as it stands? Would you use more cash to buy back stock, or do you anticipate it being flat at the end of the year? Thanks very much.

Thanks, Cleve. Our dividend framework is predicated on the fact that at our base dividend of $1 a share, we pay for our reinvestment back in the business over the long term. So those projects are profitable and returning, assuming gold is at $1,200 and Atacocha Sulphides has got other metals associated with it. So our dividend framework, reinvestment back in the business comes first. and we pay a base dividend of $1 a share. And for every $100 increase above that, we're generating that $400 million of free cash flow every year, of which we're returning 40%. So it is robust and independent of the decisions we've made to reinvest back in the business. Nancy, did you want to pick up in terms of our cash balances and how we think about dividends and share buybacks?

Yeah, exactly as Tom said, is we can create opportunities on all fronts in terms of reinvestment in the business, the dividend structure, and the share buyback. And as we ended the year with over $5 billion in cash on hand and $8 billion of liquidity, we do have the ability to do all of that. And so that's what you'll see us focus on, is that reinvestment in the Yonacocha consolidation does not impact those numbers or limit us in any way. And you'll see us continue to work with our board and evaluate opportunities for the dividend over time. So, yes, we are pegged at the $1,800 and 40% right now. We'll always look at opportunities to consider, you know, raising that if appropriate.

Okay. I guess, Nancy, just quickly, does the higher CapEx at Yedicocha, change where you are relative to the 40% or is it relatively?

I'll answer, Cleve, no, absolutely not.

Yeah, okay, okay, very clear. Thank you, guys.

Thanks, Cleve. Operator, I'm conscious that folks on this call will want to get to another call at the top of the hour, so if you maybe just take one more and we'll make sure we've got you free and clear at the top of the hour.

Next question comes from Adam Josephson of KeyBank. Please go ahead.

thanks everyone good morning congratulations on a really good finish to your year tom or nancy just on your cost outlook for this year you mentioned 150 000 ounce production impact you're expecting in the first quarter obviously brent crude today is at 104 barrel because of russia ukraine are you thinking any differently about your gold cas or asic guidance than you were you know two three months ago uh And within that, are you thinking about any of the components differently, energy, transport, labour, et cetera?

Thanks, Adam. I'll pick that one up. In terms of both, particularly, there's probably two factors associated with what's happening in the Ukraine at the moment. We're certainly seeing oil prices go up, the diesel price for us, and natural gas prices are going up, and natural gas is used to make ammonia, which is... are then used to make our explosives, ammonium nitrate. Our energy costs make up around 15% of our operating costs. So operating costs are much more dominated by labour at 50%, and materials and consumables, it's about 30%. So it's only 15% of our cost base. And as we looked into this year, understanding the volatility that was ahead of us, the uncertainty around COVID, we had factored in on an aggregated basis escalation into our guidance. And so some of the things that we're seeing now, we've already accommodated in terms of how we thought about our cost guidance. So as we sit here today, we don't see that either the impact of the Omicron surge or some of these near-term events impacting on our ability to land within our guided number for all the sustaining costs around. To give you an idea of sensitivity, for every $100 increase in gold price, we generate $400 million of free cash flow. So you're seeing with the current events, gold price well over $1,900, and we guided at an $1,800 gold price. Every $10 increase in the barrel of oil represents only $15 million of free cash flow. So there's a significant difference. And again, if I use the same words I was using with Tanya, there's daylight between the sensitivity to gold price and the sensitivity to a barrel of oil.

Yeah, no, absolutely. Thank you for that, Tom. And just one last one on the sequencing of costs. You mentioned that cost per ounce will decline for obvious reasons. as the year progresses, but would you care to give us any more context in terms of the degree of change by quarter, just in the event that we're perhaps underestimating the one key impact of the production loss, or any other sequencing that you would have us be mindful of in terms of our cost modeling?

the cost will follow closely those production numbers. So it's very much cost is being driven by production as we look at those trends. So the trends we talk through at a portfolio level and the different assets that we talk through over the course of the last few minutes, cost will follow that trend. So as production is increasing, the cost will decrease at similar percentages. Thanks very much.

Thank you.

Thanks Adam. I think that's probably it Operator.

This concludes our question and answer session. I'd like to turn the conference back over to Tom Palmer for any closing remarks.

Thank you Operator and thank you everyone for making the time to call today and please look after yourselves and continue to stay safe and healthy. But thank you everyone for your time.

Conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.