Newmont Corporation

Good morning and welcome to Newmont's first quarter 2022 earnings. Please signal a conference specialist by pressing the star key following 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 UMOD's first quarter 2022 earnings call. Today I'm joined by Rob Atkinson and Nancy Beazey, along with other members of our executive team, and we'll be available to answer questions at the end of the call. Before I begin, please note our cautionary statement and refer to our FSC filings, which can be found on our website. UMOD delivered on a challenging first quarter, as our operations and the mining industry as a whole safely managed through the Omicron surge over the first three months of this year. As we emerge on the other side of this wave, UMont remains well positioned to deliver solid performance in 2022, leveraging our scale and proven operating model to deliver long-term value from the world's best mining jurisdictions. The strength of our people and stability of our global portfolio not only allows us to endure short-term disruptions, It is the foundation of Newmont's clear and consistent strategy to create value and improve lives through sustainable and responsible mining. Turning to our quarterly results, let's take a look at the highlights. During the first quarter, Newmont produced 1.3 million ounces of gold and 350,000 gold equivalent ounces from copper, silver, lead and zinc. And despite challenges from the Omicron surge, and the knock-on impacts from this global pandemic, we remain on track to achieve our four-year guidance ranges as we build momentum for a strong second half. I recently visited a household in Cheeman, Ghana, as well as our body to mind in Australia, where I saw firsthand the significant efforts our teams are taking to protect the health and safety of our workforce while continuing to move critical projects forward. With $7.3 billion in total liquidity, we have a net debt to EBITDA ratio of 0.3 times, preserving Newmont's financial strength and flexibility to sustain and grow the business. We also continue to invest in and develop our most profitable near-term projects, including Harpo North, the second expansion at Tanabai, and Yanacocha Sulfides. Just last week, We announced the acquisition of Semitomo's interest in Anacocha, which will bring Newmont's ownership in this operation and the exciting salt ice project to 100%. And yesterday, we declared a first quarter dividend of 55 cents per share, set within our established dividend framework and consistent with our last five quarters. Newmont's core values of safety, sustainability, integrity, inclusion and responsibility are essential to creating long-term value for our investors, host governments, communities and employees. Last week, Newmont launched its 18th Annual Sustainability Report, providing a transparent look at our ESG performance and the issues and metrics that matter most to our stakeholders. And in March, we committed $5 million to provide relief and medical supplies to the millions of people affected by the war in Ukraine. We take pride in being a values-given organisation and our core values are fundamental to how we run our business and where we choose to operate. In light of the recent geopolitical events and the Omicron surge that have impacted so many around the world, Our commitment to sustainable and responsible mining is more relevant today than ever before. During our fourth quarter earnings call in late February, we provided an update on how the Omicron surge and the lingering effects of the pandemic were affecting our operations and the impacts that our stakeholders could expect in the first quarter. As you can see here on the slide, over the first three months of this year, We saw the largest spike in positive COVID cases at Yerbot since the start of pandemic. And this graph only shows positive cases and does not include absenteeism from adhering to post-contact isolation protocols. As a rule of thumb, every positive case identified at site, approximately two co-workers were sent home to isolate for a minimum of seven days. In addition, many of our team also needed to take time off to care for sick children and family members as COVID cases spiked in surrounding communities. Fortunately, due to our 35 vaccination status, the severity of any positive cases has remained low. As of today, eight of our 12 batting operations have a fully vaccinated workforce of employees and contractors. positioning us to emerge strongly on the other side of this wave and others that may come. However, as a consequence of managing through the Omicron surge, our operations have been impacted during the first quarter by lower productivity from close contact isolation protocols, by capacity constraints and various other safety measures. We've also experienced pandemic-related supply chain disruptions, and the impacts from various state and national border restrictions. This has affected both labour availability and the delivery of equipment and critical spares.

As we described in our guidance webcast last December,

We assured an escalation factor in 2022 when we developed our business plan to account for higher inflation expected during this year. During the first quarter, we remain in line with our inflation assumptions, but we are closely monitoring critical commodities and materials, such as natural gas and the immediate use for the production of explosives and cyanide.

And although difficult to predict at this stage,

The cost pressures from these new supply chain disruptions may increase our unit costs by another 3% to 5% and towards the high end of our guidance range. We will be closely monitoring this through the second quarter and will provide you with an update during our Q2 earnings call in July. On the production front, we are well positioned to land within our guidance and are tracking to around 100,000 ounces.

The second half with approximately to the back half of the year, driven by Panama, Oaxaca, Cerro Negro, and our Canadian operations.

And as we have demonstrated since the start of the pandemic, we will continue to be transparent as we can with our updates to the market as we leverage our proven operations to overcome these near-term uncontrollable disruptions and deliver that long-term commitment. At Newmont, we have a wide range of operations, along with a pipeline of more than 20 organic projects with the scale and by-laws to deliver long-term results.

We have a number of goals each year, and almost all of them are made of copper, silver, lead and zinc. per year for at least any company in our industry. And it is important to note that this is attributable production. Among our 12 operating mines and two joint ventures, nearly 90% of this attributable gold production comes from top tier jurisdictions. And with the acquisition of the remaining 5% ownership in Yamakocha, 11 of our 12 managed operations will be 100% owned, ensuring that our stakeholders receive the full benefit from UMOS' clear strategic focus and superior execution.

We firmly believe that where we choose to invest and operate matters. We have a disciplined geopolitical risk program that ensures we routinely assess our jurisdictions and our risk tolerance to deliver long-term results from established mining jurisdictions. It provides the pathway to steady production and cash flow well into the 2040s. We are entering a period of meaningful reinvestment as we continue to advance our near-term projects, including the second expansion at Tanami in Australia's Northern Territory, the development of a harbour wall in Ghana, and the Yannicoche Sulfides project, the next exciting chapter in Yermont's long and profitable history in Peru. And with that, I'll turn it over to Rob and then Nancy for a more detailed look at our first quarter performance. Over to you, Rob. Thank you, Tom, and good morning, everyone. Coming to the next slide, let's dive into the operations and projects, starting with Africa. Tom and I had the opportunity to separately visit Ghana recently, and we were impressed with the progress of both operations as they continue to advance important growth opportunities in this proven mining district, including sub-levels for the underground, their team laid back, and, of course, a half or more As indicated during our fourth quarter earnings call, a half or so is a challenging start to the year. The site's first quarter performance was impacted by supply chain disruptions and global border closures, impacting labour availability and the delivery of new equipment and critical spares. As an example, last year the site ordered four new drills for the underground and open pit operations. and we only received the first drill in March this year, with delivery of the remaining drills expected sometime in the third quarter, much later than originally planned. In addition, the delay of replacement parts for existing drills is compounding the situation, creating availability challenges with the equipment that we have on hand today. Improved mill performance has helped to offset these delays, but the impacts from the pandemic have affected our ability to ramp up mining rates in the Sipika Underground. And as a consequence, we are evaluating ways to improve our mining rates, which may include adding a third production level to access higher grades in late 2022 and into 2023, and we expect to have an update with our quarter two earnings in July. The team delivered a solid performance in the first quarter due to sustained throughput and strong recoveries. The team continues to progress stripping of the next layback in the open pit, which will extend mine life by an additional four years and provide future optionality for both underground and open pit growth. And finally, we continue the development of the Halfway North project. Engineering is nearly 90% complete and procurement is 60% complete. as we continue to work together with local communities, traditional leaders, and regulators to gain full land access and commence construction. And just in the last few weeks, Tom and I met separately with key stakeholders and received strong support for this important project. And last week, we also achieved an important milestone with the Cabinet in Ghana formally approving the diversion of the highway that currently passes through a section of the new mine site. When operations begin, a half an hour is expected to add approximately sourcing and hiring as we develop this prolific ore body. And now we turn into Australia. At Orrington and Tannermine, we experienced the impact from the Omicron surge in the first quarter as labor availability and close contact isolation protocols impacted the region. In addition, the West Australian border was reopened in early March, leading to an increase in on-site cases, but also allowing our teams, contractors and business partners to move more freely throughout the country and to tanymine for the first time in many months. At Boddington, we reported lower production compared to the fourth quarter due to planned maintenance and Covid-related absenteeism as we saw our first Covid cases on the site. These impacts were partially offset by improved grades and higher ore tons mined from Waddington's fleet of fully autonomous trucks. The team is diligently working multiple phase positions in the south pit to access higher grade ore. And we expect tons mined in grade to remain strong throughout the year as we continue to optimise consistency, efficiency and productivity from our autonomous truck fleet, a key component to delivering a strong finish to the year. At Tannemine, the site delivered a strong performance despite the impacts from the Omicron surge in the first quarter and a very competitive labour market in Australia. The site also delivered lower ore grade in the fourth quarter due to mine sequencing and unplanned maintenance at our processing facilities. The team continues to progress the second expansion at Tannemine, a project with the potential to extend mine life beyond 2040. As you can see here in the photo, the assembly of the head frame is nearing completion, which is an important milestone as we transition from the reaming of the shaft to commencing the shaft lining activities. Nearly 85% of the project engineering and procurement has been completed, and over the coming months, the site will focus on the completion of the head frame installation and commencement of the shaft lining, bringing tannamide that much closer to delivering significant ounce, cost, and efficiency improvements. And now over to North America. Tenestito delivered another solid quarter, a strong mill performance that delivered higher coal product production from lead and zinc, offset lower gold production. Stripping has continued in both the Panasco and Chile-Colorado pits, with lower gold grade and harder ore coming from Chile and Colorado in the first quarter. Looking ahead, due to efficient sequencing, gold production from this large polymetallic mine is expected to decrease in the second quarter but increase in the third quarter due to higher grade delivered from the Penasco mine. Moving to Canada, our operations in the country as a whole continue to be impacted by ongoing challenges stemming from the global pandemic and in a very competitive labor market. As indicated a couple of months ago, the Omicron surge reintroduced flight capacity constraints, testing requirements, and strict close contact isolation protocols. And working closely with the First Nations, we have maintained our stringent protocols and testing regimes, even as restrictions have relaxed. Due to the remote locations, These impacts were particularly pronounced at Musselwhite and Eleanor, where both sites delivered lower tons mined and processed compared to the fourth quarter. As an example, we saw absenteeism rates as high as 15% to 20% during the peak of the Omicron surge in our Canadian operations. And at Musselwhite, we decided to place the site on care maintenance for seven days in February to reduce the spread of the virus and protect the health of our workforce and communities. At Port-au-Prince, our oil grade was offset by a lower-tons process as a result of Covid-related labour absenteeism and mal-maintenance, in addition to challenging ground conditions and some ventilation constraints at Hoyle Pond. The site continues to progress the Pamoan Layback, a project that will extend mining at Port-au-Prince through 2035. Construction of the water treatment plant is well under way repairs to dewater the pit and advance towards full funds approval in the second half of this year.

And finally, at CC&V, the mine required a mill shutdown from a conveyor fire that occurred during the first quarter.

With the pending conclusion of our contract to supply concentrate from CC&V to Nevada Gold Mines, we are stepping back to a test our operating strategy at the site to determine if there is the potential for a simpler, higher-value, longer-life, leech-only operation that does not carry the complexity and cost of running a mill to process a relatively small amount of ore mining. This work is underway, and we expect to have an update with our quarter-to-year earnings in July. Coming to South America, Merian delivered a solid performance despite very heavy rain and no maintenance during the first quarter, as the site continues to utilise an ore-blending strategy to balance steady-grade and strong mill performance. At Yanacocha, record rain all resulted in a federal emergency declaration in Peru, impacting the site as it continues to deliver leach-only production while we work to develop the first phase of the sulphides project. which continues to advance towards an investment decision in late 2022. Engineering is approximately 50% complete, and the early earthworks and construction activities continue to progress at site. And once finished, Peronego delivered a strong performance in the first quarter as a result of higher grade light from Mariana Norte and Mariana Central, and ongoing improvements with productivity despite disruptions from the Omicron surge. During the first quarter, the team successfully completed the tailings storage for facility expansion project, and they continue to progress the first wave of expansions at Cerro Negro, including the development of the Marianas and Eastern Districts to extend existing operations beyond 2030. The team is currently advancing the development of the San Marcos deep line, and as you can see in the photo, the construction of the roads infrastructure platforms, and portal access are all well underway in the Eastern District. And with that, I'll turn it over to Nancy on the next slide.

Thanks, Rob. Let's start with a look at the financial highlights. In the first quarter, Newmont delivered $3 billion in revenue at a realized gold price of $1,892 per ounce, adjusted net income of $546 million, or 69 cents per diluted share. adjusted EBITDA of $1.4 billion, and solid free cash flow of $252 million, which includes unfavorable working capital movements of $465 million in the first quarter, primarily driven by timing of cash collections and over $420 million of tax payments, largely attributable to 2021. Free cash flow was also impacted by higher capital spend as Newmont enters a period of significant reinvestment, an essential component in growing production, improving margins, and extending mine life. First quarter gap net income from continuing operations was $432 million, or $0.54 per share. Adjustments included $0.16 related to a non-cash loss on a pension annuitization settlement, $0.04 primarily related to a loss from the sale of La Zonja as part of the transaction to increase our ownership at Yonacocha, $0.05 related to the unrealized mark-to-market gains on equity investments, $0.04 related to tax adjustments and valuation allowance, and $0.04 of other charges. Taking these adjustments into account, we reported first quarter adjusted net income of $0.69 per diluted share. And our balanced portfolio combined with our discipline provides significant leverage to higher gold prices from the largest production base in the world. For every $100 increase in gold prices above our base assumptions, Newmont delivers $400 million of incremental attributable free cash flow per year. And Newmont is the only company in the gold mining industry with the ability to generate these levels of attributable free cash flow. allowing us to confidently execute our capital allocation priorities and build from our position as a world-leading gold company. A year and a half ago, Newmont was the first in the gold industry to announce a clear dividend framework with a decisive strategy to provide stable and predictable returns. Yesterday, we declared a first-quarter dividend of $0.55 per share, or $2.20 per share, on an annualized basis. calibrated at an $1,800 gold price assumption and a conservative 40% distribution of incremental pre-cash flow. We continue to review our dividend each quarter with our board, assessing gold price performance along with our operational and financial outlook over the long term to determine the payout levels within our dividend framework. Since its introduction 18 months ago, Newmont has returned $2.5 billion to shareholders from dividends. demonstrating our confidence in the long-term value of our business and our ability to maintain financial flexibility while steadily reinvesting in our future. 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 flexibility on our balance sheet, and to continue to provide industry-leading returns to shareholders. In the first quarter, 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, enhancing our ownership of world-class assets and proven mining jurisdictions through the acquisition of the remaining interest in the Anacocha and the Sulphides project. maintaining our industry-leading dividend of $2.20 per share on an annualized basis. It's sustaining a strong balance sheet with $7.3 billion in liquidity and a net debt to EBITDA ratio of 0.3 times, preserving Newmont's financial flexibility across price cycles. As we look ahead, we are confident in our ability to deliver on our discipline's capital allocation priorities, creating long-term value for the business and maintaining our position as the world's leading gold company. With that, I'll hand it back to Tom on slide 20.

Thanks, Nancy. UBOT has a long history of leading change in our approach to ESG, and these practices have been embedded in our culture and strategy and are woven into the very fabric of our company. Last week, Newmont launched its 2021 Agile Sustainability Report, part of a suite of reports on our company's ESG practices in the key areas that matter most to our stakeholders, including health, safety and security, human rights, the environment, social acceptance, governance and inclusion and diversity. Some of the highlights from this year's report include zero work-related fatalities for a third year in a row with our focus on verifying the critical controls that prevent fatalities and coaching frontline leaders to provide visible self-leadership. Continuing to put the health, safety and wellbeing of our workforce and host communities at the heart of every decision we made and continue to make during this pandemic. A key part of this was adopting the requirement for all of our workforce to be fully vaccinated. With contributions through our Global Community Support Fund, we supported COVID testing facilities, vaccine awareness campaigns, and vaccine roll-outs in areas near our operations. The initial reduction targets, and also to reach gender parity in senior leadership roles by 2030. by linking the interest rate paid to our ESG performance, this represents the next important step in aligning our financial performance.

And finally, you've all played an important role in creating economic value, contributing $10.8 billion to our operating costs and taxes. Next month, we will launch our second annual climate report. Risks and opportunities as we are taking to achieve our climate targets. Non-financial performance. Regularly ranking is one of the most transparent companies in the S&P 500.

And positioning new models for sustainability later. We understand that strong ESG performance is an indicator of a well-run organisation, and we will only be successful if we forge and maintain strong partnerships with local communities and demonstrate our ability to mine them for people. In order to address the critical global issues we face today, the mining industry will need leaders scale, mind-life, superior cash flow generation, and leading ESG practices. And we believe that Newmont is one of those leaders. We work with Newmont through our clear strategic focus and discipline, our unmatched global portfolio of opportunities, and an integrated operating model with a deep bench of experienced leaders. as we continue into our next 100 years of sustainable and responsible mining.

And with that, I'll turn it over to the operator to open the line for questions.

Thank you. We will now begin the question and answer session.

To ask a question, you may press star followed by one on your screen. Press star followed by two. At this time, we will pause to assemble our roster.

Our first question comes from Jackie Pobliski with BMO Capital Markets. Jackie, your line is now open. Thanks very much. I think I want to ask a question about your cash flow statement. It looks like you had a pretty high working capital spend in the quarter, and I was wondering if you would give us some color on the reasons for that and what you're doing with working capital. Thank you.

Thanks, Jackie. Good morning.

Just passing across to Nancy to pick that question up for you, Jackie.

So in working capital, really that was tax payments made in Q3 tied to the income.

We also had some inventory that had not yet been sold as of the end of the quarter. So those were the key drivers.

It looks like in some of your

Your capex spending, I guess specifically your development capex spending, is a little bit below the run rate for the full-year guidance. That is South America and Africa, which makes sense because the major projects there haven't been greenlit yet. But can you give us some color? Because I'm thinking, at least on Yanukovych at Salt Bites, the full funds decision isn't It's probably the same in Africa. Can you give us some colour in terms of, like, what the spending will look like? Do you expect to have pick-up in spending before full funds decisions, those sort of fourth quarter weighted in terms of... Thanks, Jackie.

I'll pick up Yannick Kocher first. You will see spending pick up. ahead of the full funds decision. So the first quarter was certainly the nicest in terms of spend. That builds... ..through quarters, so it's... You'll build through the second quarter the half-to-half weighting 42% spend in... ..in the second. So we will be building that spend towards full fund of approval at the end of the year for Yanacocha. And you're right, we're spending the money now on engineering, important work with the regulators and the traditional leaders around getting the areas of land cleared of structures and farms and the like to be able to do the highway diversion, which has just been approved by Cabinet.

and for us to come in and really start to break ground, which we're expecting we'll be moving through this quarter to get all that in place. And so as you get... ..north of the second half, so I'd be seeing a similar weighting for half north in the second half.

So if you're more like 45, 55 for H1 versus H2.

That's perfect. That's all my questions. Thanks very much, Tom and Nancy.

Thanks, Jackie.

Thank you, Jackie. Our next question comes from Josh Wilson with RBC Habital Markets. Josh, your line is now open.

Thank you very much. Thank you for the additional color on the costs versus what the guidance expectations were.

I'm wondering that 3% to 5% upside that would take you towards a higher end of the guidance range, what does that incorporate? Is that assuming current spot prices continue for the duration of the year, or are there other sort of factors at play?

Yeah, thanks, Josh. I might just talk you through another level of detail in terms of what makes up our operating costs and how does looking towards that... that top unit cost on a gold basis, it's probably closer to the 5% than the 3%. As we look across our portfolio on the total metal, it's somewhere between 3% and 5%. But if you look at the drivers of it, 50% of our spend is labour, and that's contracted labour as well as employees. So what we're seeing starting to come through with contracted services, whether it be specialised labour services or the general labour, is we are starting to see

of labour as well as wage coming into the prices that were being quoted for specialised services or shut-gants. Also for the first quarter, we had to actually reduce, we couldn't get the arms and legs of labour availability in Western Australia and

at time of the COVID being released into that community. So you're seeing, you know, if you think about that 3% to 5%, 50% of your operating costs, a lot of it is being driven by what we're starting to see come through for some of that contracted services around our operations globally. And given the quantity of that money, then that 5% is sort of indicative of what we're seeing. is a moving feast. We want to really see how that plays out through the second quarter. And, Josh, that will play through to expiration, and that will also flow through to some of the contracted services we'll be bringing in for... ..carefully. The next 30% is materials and consumables. The real driver in that space is ammonia, which... ..to an extent... growing media due to the rising steel prices. We're seeing increasing pricing, probably increases of 20% to 30% for our landed costs through to really representing a small proportion of our operating costs, probably less than 3% of our operating costs.

We just see that impact flow through.

What we're monitoring more carefully on the materials and consumables is what's happening in the global supply chain. And there's obviously a higher freight cost, but it's also monitoring carefully to ensure that we need to keep our operations running. So our focus is keeping a wary eye on cost, but more about actively monitoring our supply level for some of those critical materials and consumables. And then the last one's... 15% is energy, and the driver of that's diesel. We assume $6 a barrel, and we're obviously seeing prices over $100 a barrel. So that's flowing. Josh, I think what's going to drive that number will be labour as we look at our business through the remaining part of the year.

Great. Thank you for that. Maybe one more question on... On the topic, there were some disclosures there about supply chain challenges as well as I guess earlier commentary Rob provided on some of the challenges in Ghana.

You know, I'm wondering, you know, maybe I have some nightmares back from May 2009 of these issues as well, but, you know, is this a jurisdiction or kind of localized item on the supply chain for specific areas, or is it specific components, or is it across the board? Yeah, it's more specific components, Josh.

In the Africa example,

It's getting drills in that we need both in the open pit and underground to be opening up development fronts. And it's the equipment supply. It's like buying your motor car. You can get a lot of components together, but there are some components that are filled up, which means there is a delay in that equipment coming through. So the African example, it's drills, which will be impacting the mining industry globally. particularly the bigger underground, needs drills at critical time in opening up sub-level shrinkage. So that's the specific type of equipment and supply of Western Australia to Australia. And so we've had some challenges navigating back and forth through some of those border restrictions that are now open. And so we've got that flowing. So that is less of an issue, but we're still seeing those supply chain constraints

getting some critical pieces of equipment in order to do the work that we plan to do in our mining operations. Rob, did you want to build on that? Yeah, thanks, Tom. And just to add a little bit more colour, as Tom said, it was Ghana that really was specifically drilled.

You know, for the Ahapa North project, we're receiving our haul trucks, our graders, our water trucks, so those are coming through. And is there that level of tightness, or is that really kind of number one, the item that would stand out? I think the tightness on the equipment side, that's the one that's been a particular issue for us, Josh. I think the area that's going to be tight, both for supply and costs that we need to monitor. As I indicated earlier, it's going to be labour. I think that's going to be a key driver. And obviously some of the consumables, just ensuring that we're managing our... You know, we lead into our global supply chain, those long-term relationships, and we're monitoring that very, very closely. It's also linked to decisions we're making to de-risk some of our operations. Knowing that this issue's... potentially going to be with the world and the mining industry for some time, that decision we're looking at around Salipa Underground to drop down and open up a third level and have more headings from which to be able to take ore is de-risking that operation, sending back, making an investment now to de-risk that operation to better manage some of this volatility and disruptions coming ahead. So we're starting to make decisions that help us manage some of these issues going forward.

Thank you very much.

Thank you, Josh.

Thank you, Josh. Our next question comes from Tanya Jakuczynek with Scotiabank. Tanya, your line is now open.

Great. Good morning, everyone, and thank you for taking my questions. So many, but I'll keep it just as brief if I could. I just wanted to just come back to the guidance that you provided, and thank you for that. I just want to make sure I heard it correctly because there was a little bit of static on the phone. Tom, did you say that we're looking at 100,000 ounces below 6.2 million for this year?

Yes. Good morning, Tanya. Yes, that's correct. And if I give you a little bit more color on that, About 70, so it's the 100,000 ounces below the 6.2 midpoint that we're starting to see open up, that around about the 100,000 ounces. 70% of that will come from Sebeka to really de-risk that operation as we move forward. I think about 20% will come from Cripple Creek and Victor as we, again, look to move to a

with that simpler operation, just mining and heat leach, and incorporate some of the delays fully vaccinated at that site. So we've got some work to do now to get ahead of it on the heat leach pads.

And I think the move to a simpler, longer life operation will contribute about 20%. And then the remaining 10% we've made up across the three Canadian operations that have been pretty significantly disrupted through the first quarter. So, Tanya, around about 100,000 ounces, 70% for Beaker Underground, 20% CCNV, about 10% Canadian operations.

Okay. And does your guidance, you mentioned the 53 second half, and obviously, you know, first half is going to be weaker. Does all of the asset breakdowns that you provided in your Q4 numbers still stand? The only one I noticed that was a bit different was Penesquito. I think guidance had been equally weighted, but I think you mentioned Q2 is going to be weaker. Just wanted to make sure I understood that correctly.

That's correct. You'll see... When you look at gold production with where we're mining it, you're going to see a bit of a seesaw through the course of the year. So you'll see... ..it drop in the second quarter. It'll then climb again in the third, and it'll drop again in the fourth. But it's about evenly weighted across the two halves with a bit of that seesaw effect. So you're just seeing the different metals come through as we're mining through the different... the different phases of both mines, Tanya.

Okay. And just my last question on the guidance. I just wanted to see how has your April performance been with respect to Omicron, like in these jurisdictions? Have you seen an improvement in productivity and performance?

Certainly coming out the other side, I might just quickly work through the four regions, Tanya. Coming out the other side, certainly in Canada, except for I'd say Eleanor, where we are still very strict with our protocols of testing and isolating because of our close connections with the First Nations communities around that mine. So we've kept some pretty stringent controls in place at Eleanor. But in general, certainly the U.S. Cripple Creek and Victor open up. Ghana is is common, it's just progressing well. Australia is where, I think Australia in general is awash with the virus at the moment. So April is still being impacted through Tanami and Boddington, but starting to come out the other side of that is you're really getting the herd immunity in the communities in and around Australia. Penesquito is solid and pretty solid through the in terms of being the other side of the Omicron surge.

Okay, so it looks like you're coming through it, which is good. And then I'll leave it to one more question, just if I could. You mentioned that you're closely monitoring labor and obviously your consumables. Can I ask about your labor? Do you have any contracts, union contracts or others that come up for renewal this year that could put more pressure on your costs above and beyond?

We've got negotiations in process currently in Ghana. Mexico is scheduled for July. Peru is in process, and then Suriname, it's been delayed, and then we've got a number of sites that aren't covered by collective agreements. So they're active, but there's nothing that we're seeing unusual in terms of how those negotiations are proceeding.

Okay, so that's within your guidance range. You've assumed whatever wage inflation is assumed in your guidance for these contracts.

That's correct, Tanya.

And what about your global supply chain? Do you have any renewals on cyanide and or other that's coming through?

No, there's nothing coming through in the medium term on that front, Tanya. For that one, it's more more managing the landed cost from the input cost of gas and the logistics costs of getting it to where it needs to go.

Okay, and nothing else within the supply chain that has to be renegotiated?

Nothing material, Tanya.

Okay, perfect. Thank you so much. I'll let someone else ask.

Thanks, Tanya.

Thank you, Tanya. from Lawson Linder with Bank of America. Lawson, your line is now open.

Thank you, Operator. Good morning, Tom, Nancy, and Rob as well. If I could maybe just go back to the cost guide issues one more time and sort of get some very specific clarity on the on the exporter to fuel and just verify that, you know, if we were to mark the market WTI at $100 per barrel versus your $60 per barrel and all else sort of, you know, stayed within the assumption ranges, that you still believe you'd be able to stay within your guidance.

Good morning, Lawson, and congratulations on your new role. Yes, when we're talking about that guidance range, staying within our guidance range, but certainly seeing us push towards the top... ..around current fuel levels and... And probably the other... ..the other piece of information to have at hand when looking at the GMO portfolio... ..per barrel change in oil price was impacted by $15 million per year. But for every $100 increase in gold price, we generate an additional $400 million of free cash flow. So the revenue side is certainly compensating for the additional cost of diesel or oil. But the assumptions we're making around current oil prices and as we're thinking about what oil is going to do going forward this year, that is being incorporated into that indication we're giving around the move to the top end of our guidance. And obviously we want to understand this world a bit more through this quarter. And as I indicated in our remarks that... OK, that's excellent, Connor.

Thank you. And then on the cyanide cost, typically cyanide... So I'd be curious to know if you're seeing inflation across all regions or are there particular regions where you're seeing that inflation more than others? Particularly in reference to the 20 to 30% increases in those prices that you're seeing.

We're pretty much seeing that across the board and it's being driven by what's happening with that. It's a little bit different driver than I guess normal because of the circumstances.

Okay, that's great. And then also if I could follow up on the working capital build. Nancy, you mentioned that part of that is inventory build. I'd be curious, to what extent might that inventory build be sort of structural or supply chain related? And in that same vein, to what extent might that build unwind through the rest of the year?

That was truly just a quarter-end convention that happens from time to time.

So that will release all of those sales that have already taken place. taken place into April, and then sometimes we have a little bit of a buildup at the end of the quarter, and sometimes we don't. But, yeah, I wouldn't think of that as a consistent variable for modeling throughout the year.

And so you would expect a typical unwind? Yes, absolutely. Great. Okay. And then just one final question. I understand you intend to be opportunistic with that. What are the indicators that tell you that it's a good time to repurchase your shares?

Yeah, we always look at a myriad of factors, including current valuation. We'll always think about what's proper value and when is a good time to get out and buy shares. So In the volatility we're seeing today, we're certainly just evaluating as we always do opportunistic times and appreciate that we still have some runway left on that current program.

Okay, excellent. Thank you all very much. Thanks, Lawson.

Thank you, Lawson. Our next question comes from Greg Barnes.

We'll talk about supply chain issues and cost pressures across the board. Are you seeing impacts on your capital projects timing and capex-wise? Morning, Greg.

I'll pick that up and maybe Rob might throw you for a little bit more color. So that The key capital projects, so I might maybe just talk through the three of them, Greg. We are certainly seeing impacts on that specialised labour that we will need to line that shaft. And we are now only a matter of a month or two away from having completed the reaming of the one and a half kilometres. The headframe is nearing completion as well and we

we've set up then for the next couple of years to line that shaft in order to complete it.

So getting that specialised labour to site, set, ready to go for what is a very specialised job in lining that shaft is key. We have an important milestone as we finish the reaming and that shaft to pause and understand that program of work by scheduling the cost to fit that out. So I would say in the third quarter we're in a good position to say this is what the run to home looks like. But we'll have a pretty good view of that within a matter of a couple of months. But it's more going to be on the specialised labour that we need to get there that's going to drive TANAMI 2 forward. Greg, I'll pause on H1, but do you want to go to Colorado? I think the only other Colorado, Greg, is that, you know, we have done 85% in engineering and procurement, the good planning work and the good supply work that we've done. But as Tom said, it really is around that labour availability, in particular in Australia.

We're pleased that the borders are open. That helps, but...

you know, these are very specialist skills and, you know, the rates that we are seeing being creeping up the third of that. Then on a half-way north, engineering's not... Rob indicated an earlier answer to a question.

We've got a lot of the key heavy mobile equipment landed in Ghana now, so we are really, really... ..starting to do the civil works and then... ..and then start to build the...

So, again, for that one, getting that clear date where we have unfettered access to that land, which will happen through the second quarter, that's the important milestone for us to then step back and understand what that schedule looks like to have that equipment that's there of that project, both schedule and cost.

So, probably similar timing to what we've done with the other projects.

the tannamite too, during the third quarter, I think we'll be in a good position to give an update.

Rob, I'm getting towards there. Anything you have to say about that on the half an hour?

I think the only other one, Greg, that is just a significant milestone that I mentioned in my preamble about the road. That's a road that goes through the lease. You know, we've got full cabinet approval to move that. So again, in terms of schedule, that was a very positive step. And then the third one is the anti-coach assault policy. I think given what we're seeing in the world, fortuitously, the decisions we made that were driven by the pandemic to pause or to delay the full funds approval, but to continue... with committing to, we committed to move forward with 23 major equipment packages. And we've locked in factory slots and in a lot of instances pricing for the autoclave, the core part of the pressure oxidation circuit, the autoclave vessel, will actually be on the ground at Yanakocha by the end of this year. So we've been able to de-risk a number of elements of that project by making the decision to commit to some of those packages of work. Engineering's around 50% complete. We've got hand construction well advanced. So there's a bunch of stuff we're doing to de-risk that project whilst we move towards full funds. And we're working very closely with Bechtel to understand the inflationary pressures around the other things that come with that project as we gear up with both a labour construction workforce and then all of the other pieces that you need to build that facility as we take that engineering, that detailed engineering, and work out detailed costs. So that's important input to the full-price decision later this year. Rob, anything to add to that? You covered the majority of it well, Tom. I think the only other thing, Greg, this is where you're not there. The construction of the camp continues to go on really well, and obviously that's key to allow the workforce to come in and start the major construction. Greg, does that give you the sort of colour you're looking for? Yeah, I think we're going to get a Q3 update on what that project looks like as well, or that would be... Q4, Greg, we... We'll flick... The engineers say we'll flick the line on the engineering in the next month or so. drop out all those detailed schedules, and then you've got quite an extensive piece of work to do basically cost and schedule estimate to build towards the full funds decision. So that'll consume the third quarter. So it'll be into the fourth quarter before you have all that come together. But certainly the other two projects, the third quarter. Okay. And just to finish off, others of your peers have talked about CapEx inflation and the $150

at least on Tanami and the half of north. There's certainly elements that... ..the mining industry are talking about in terms of that cost escalation.

We've been able to avoid, because of the procurement we've got underway and the engineering that we've done and the like, However, so the issue for us is more that the pandemic has impacted the pace at which you can do the work. And so for us, it's going to be as we actually, as we pause at those milestones and understand the work going forward, and you look at what the schedule is against what we assumed it to be, for us, it's probably going to be more an issue of the indirect costs. So that's going to be a factor for us.

And we'll see elements, I think...

we'll see elements for the lining of a shaft and that specialised labour that will have some cost escalation. Sort of jumping around it a bit, Greg, I think there'll be an element of it, And there's an element that's pandemic-related given we were into those projects. I don't know, Rob, whether you wanted to... I would just reinforce, Greg, that the biggest issue, and obviously the cost of labour goes into our capital as well. That's the biggest thing around the long lead time items and the advancement of the engineering. But it's hard to provide that risk to the upside. And as Tom mentioned before, we're seeing it in particular in Australia. And there's no doubt that's something that we're managing closely and going to have to keep an eye on.

Can you give us an idea of how much it's going up percentage-wise? This is what perhaps you expected, or is it too early to say yet? Given the capital projects, we hit those milestones.

have those definitive schedules and then costs, I think probably better to give you the definitive numbers as they apply to those two projects. But it's a bit more generic.

Fair enough. Thanks, Tom. What's up, Rhoda?

Go ahead.

Understood, thank you. Our next question comes from of Credit Suisse. Fahad, your line is now open. Hi, thanks. My questions have been answered. Thank you. Thanks, Sahad.

Our next question comes from Anita Soni with CIBC World. So I just wanted to follow up on Greg's question related to CapEx. So, like, I was looking back through the transcript, and previously you got a 45-45 split on capital. Understanding and what I assumed was that if the spending's not happening, you only came in at 18%, it's kind of moved into the next, because of the rate of spend, because you can't get the labor or whatever delays that you have, that next year, and perhaps a year after you might see the budgets go up a little bit because in all sides, like, reasonably, if you're saying that, you know, the timelines might be impacted by this, should we be thinking about perhaps a delay in the startup of Yanukovych's sulfides?

Good morning, Anita. Yeah, I think in terms of that spend profile, I think you're describing it well into the following year and the following year.

There'll be an element of maybe a bit more spend next year, but I think you'll also see that it'll move our way moving forward. Still progressing towards the end of the year, a full funds decision for sulfides. and once that full fund decision is taken, camp will be complete.

So we'll have beds for 4,000 people. Bechtel are gearing up and basically Bechtel hire the workforce directly for a lot of that work. And so with the assumption we get a full fund decision at the end of the year, we will gear up and start to ramp up into 23. So I wouldn't see... a delay in upstarting to break ground seriously on geonic acid sulfide.

Okay.

And then the second question is a bit big picture.

As I look through all of the assets and operations, for the most part, the grades, like I would have thought it was more of an impact on tonnage with, you know, Omicron, but There are some assets where grades came in. Expect that to rebound, you know, closer to reserve grade, you know, at most of the operations.

Like I'd name Eleanor as one of them. Definitely Achievement, a HOFO.

Penesquito, the recovery rates were actually quite low versus the prior quarter, but that may be a grade-weighted decision. And then the last one, CC&V. That heat leach, that grade is really low compared to what these operations have. That would be great.

Thanks, Sarah. What I might do is give you a bit of a general overview on that, maybe get Rob just to give a bit of a colour on some of those operations.

But I think we talk about the direct impacts from the pandemic as being chronic, and so your mind sequences are different from what they would have otherwise been if you were able to just have unfettered access to run your business as normal. So some of that grade discrepancies are in a particular month or quarter compared to where you assumed you would be. But certainly as we get the stronger second half of this year, part of that is linked to moving into higher grades. And, Rob, I don't know if you wanted to pick up a petosketa or a cripple cricket.

I'm more than happy to go offline with you and for you as well.

Yeah, I think... Anita, just to reinforce what Tom said, we're not seeing any major great challenges. It truly is the timing that, you know, with the challenges through COVID, some of our development's got behind. We haven't had the availability of the stops. And as Tom rightly said, we're out of sequence, you know, in particular those underground mines in Canada that you mentioned. In Penasquito, there's nothing major or nothing different that's happened there.

And you'll certainly see that in the coming months. In terms of the heap leach, the heap leach is happening again.

As we uncover the fresher ore, we'll see that heat bleach grade raise. So it is around the timing, it is around the sequence, and we can underplay, especially on those underground mine sites that were affected by the Omicron, just the lack of development has impacted getting to some of the stops at the time we expected. But no major issues. The grade is certainly still on the ground, and you'll see that rebound later in the year.

Okay, and so we looked at these assets if we were trying to, you know, compare where you would be. It's a combination of, you know, slightly getting behind on development work on some of these things, so, right?

Yes, you know, up to two years, you know, there's other operations which have been, you know, relatively unaffected, but, you know, it's,

The worst is up to two years. There's some which may only be six months.

All right. Okay. Thank you very much.

Thanks, Anita.

Thank you, Anita. Our next question comes from Adam Josephson with KeyBank.

Adam, your line is now open.

Good morning, everyone. Thanks for taking my questions. Tom, a couple of questions for you on cost, if you don't mind. So if your gold CAS ends up being, call it 850, 860 this year, just given the general stickiness of inflation that you and many others are experiencing, how, if at all, does that affect your thinking about your gold CAS guidance for next year, which would imply quite a healthy decline in cost per ounce amid this highly inflationary environment?

Good morning, Adam. When you look at our out-year cost guidance, we don't assume any standard year that we were seeing before this pandemic. We would typically have 2% to 3% escalation with them to get built into that number as we build towards guiding for next year.

What... ..and the war in Ukraine... ..so...

In terms of what CAZ might look like next year, a few key events play out this year. What's going to happen with the pandemic? Are the supply chains going to settle down? What's going to play out in Ukraine? And as we... ..actually, next week, with our key leaders around the business starting to map out our business plan, and we build towards an October board meeting to approve the plan, and then we guide in December. So... The coming months are ones in which we will step back, look at what's happening on a macroeconomic sense, what's structural, what's cyclical, what is 23 looking like, and therefore what are our unit costs going to look like next year. So that's how we look at it.

Yeah, no, I appreciate that. Yeah. And just relatedly, as you said, this is unprecedented. None of us have seen inflation like this. Just drawing on past cycles that you've been through, how long would you expect this inflationary cycle to last for? Or is there no way to answer that question because we're seeing things that we've never seen and consequently drawing on past cycles is almost meaningless in this environment?

I think we are in uncharted territories, Adam, and it's, as I think you're seeing throughout the, you know, in terms of what I'm observing in the mining industry, as folks are out reporting, very, very similar commentary. So uncharted territory, I still, as we look at macroeconomics and have the debate, still see it as more cyclical and a long cycle than structural.

is inflationary cycles just for you, just roughly speaking?

Roughly speaking, a couple of years, inflationary cycles, but I'm drawing on straws here. Yeah, no, I... And I'm drawing on straws, but it's just a circumstance that is unprecedented in modern histories.

No, understood. Thank you very much, Tom.

Sorry to cut you out.

No, thank you.

Thank you, Adam. Our next question comes from Mike Parkin with National Bank. Mike, your line is now open.

Thank you guys for taking my questions. Most have been asked.

Just one on the follow-up in terms of delays and challenges with sourcing equipment. Can you just speak to is it a function of delays in manufacturing the equipment or is it more of a function of securing containers and getting it shipped to site? Can you just get a bit more color in terms of where the underlying delay is situated.

Good morning, Mike. The delay for some of that key equipment, the drills that have been particularly problematic for us, is manufacturing. So it's actually getting the drill in the queue and manufactured. So it's the labour availability within those shops and then having the materials that you need fabricate those drills and then have them come out the door. So as Rob was indicating, we've got all of the heavy mobile equipment for Hartman North on the ground in Ghana. So although there are challenges with logistics and freight, we can get from a manufacturer's warehouse to our facilities. albeit with some delays. But the key issue is within the manufacturing shop. Rob, do you want to build on that? I'll just add a couple of points there, Mike. I think it's very significant in the industry that we know that there's significant delays for new cars, whether it's the microchips, whether it's capacitors, et cetera. And each one of the equipment manufacturers, they can get some things but not all things. You know, they're managing their supply chains very, very carefully. So it's nothing different to what the car manufacturers are saying. And, you know, again, one of the advantages in Newmont is that we have got a global supply chain. We've got excellent relationships with our equipment manufacturers. But, you know, it's just staying abreast of their challenges, whether they're in China, whether it's from India, et cetera, and those areas. electrical components as well as those ones which are manufactured elsewhere. Great. Thanks, guys. Really appreciate the call. Thanks, Bob.

Thank you, Mike. Our next question comes from Cleave Records with UBS. Cleave, your line is now open.

Oh, great. Thanks. And thanks, everybody, for staying on the line. Appreciate your generosity with the time. I have a couple of questions that hopefully we can work through pretty quickly.

I want to just first ask the inflation question a little bit differently. At what point would you reevaluate the gold price assumed for budgeting? When could you possibly move from $1,200 an ounce?

Good morning, Cleve, and a very good question. We are actively debating that now, I think it is. We are now seeing, I think, the same way that we're working our way through the inflation piece, as you indicate, and Adam was trying to explore it. That inflationary piece is driving gold price. We're now seeing gold price at current levels and as As we start to get in amongst our macroeconomics and start to have our internal debate, start to do our business planning work, where is gold price heading and what does the floor look like for gold price is a debate that is active with us now and we'll be having that debate over the coming months as we think about whether we're getting into a zone where it's time to look at resetting the floor for gold price. So I guess just in terms of timing, that sort of sounds like it would be a year-end budgeting decision. It's certainly something we are actively debating around whether it's something we incorporate into our planning processes this year. As you unpack the macroeconomics around gold, you are seeing some fundamental shifts. Right. Okay. And then just, you know, following up on the CapEx, you know, Tom, I think you said that Bechtel is doing the Yanacocha work for you. Are those engineering and construction projects being done on a fixed price basis at all, or is it cost plus? I mean, is there any shared risk on the cost side with your subcontractors? Yes, a bit. I might just pass across to Rob, who manages the very close relationships to those two EPCM contracts. Yeah, it's a bit variable across our projects, I suspect. It is, Cleve. You know, depending on what we're doing, there's some things that you lock in without a doubt. And, you know, we must prefer making sure that we've got things, we've got that confidence and clarity. But, you know, we've got other areas such as we've explained before where the labour costs have gone up, the materials are capped, the manufacturing's capped. but it's the labour costs which are flexible. So we typically like to have full confidence and full knowledge of what we're planning, but it's a little bit variable depending on the work that we're doing. In the big project, we've, the only coach has solved, our supply chain team and the Bechtel supply chain team are working hand in glove as we understand, obviously those 23 key work packages that are out there now, but as we look at all of the, all of the material, all of the steel and the fabrication of that steel and the other things to assemble a processing plant, working hand in glove in terms of understanding that all those elements, what around the world, what's the status of those workshops and their capacity to take work packages. So there are elements of, as Rob says, variable, but there are elements where you actually want to be working hand in glove with that contractor to get the best outcome to deliver the project on time and on budget and deliver the value they're expecting from it. So good horses for courses. Got it. That's very clear. And then just, you know, finally, again, a little bit unrelated, but I'm just wondering if you're able to kind of adapt your COVID protocols to, you know, I guess the the changing circumstances of the virus. I mean, Tommy, I think you said at the very beginning of the call that the severity of Omicron that you saw in your sites was much lower than the previous variants. I'm just wondering if you're able to adapt the protocols that you use, the protocols that you have in place to varying severity. Thanks, clearly. A very important decision we took, and I think very few other companies have taken, but I am so glad we took the decision, is to require every person who works at Newmont to be fully vaccinated. We lost 25 colleagues to this virus over the last two and a half years, and through the Omicron surge, we had one person hospitalised with an underlying health condition, and you saw the spike in those positive cases. and us having made that decision has saved lives. And that is going to put us in good stead going forward for future waves because we have a workforce that is now . So that is going to put us in a good position. Rob, did you want to maybe talk about how we think about managing our ability to open up or tighten up our protocols. And obviously an underlying workforce that's fully vaccinated gives us a lot of confidence in decisions we make. Certainly, Cleve, and it's... ..which we meet on a regular basis. We exist for exactly that. And it's to respond, to make sure that as things, you know, open up, that we open up the measures that we have. And just as an example, when I was in Ghana a couple of weeks ago, for the last two years, everybody's been wearing masks, everybody's been sitting separately at lunch. There's no longer the need for masks. There's no longer the need for people to sit separately at dinner and lunch, et cetera. And the same is at CCNV. And, you know, at Penesquito, we've got a clear plan in terms of how do we start relaxing those metrics. In Canada as well, we've relaxed at Porcupine. But then similarly, the likes of Eleanor, because of the First Nation that Tom spoke about, we are making sure that additional precautions are taken to protect those First Nation. But similarly, we are constantly monitoring through our health partners the different measures variants which are coming up, so we are very able to quickly ramp up those protocols as and when needed. But as as because of the vaccination, It has allowed us to utilize less vehicles because we can get more people in the vehicles. We can get back to more people on planes. We can get people back onto the buses, et cetera. So we're really responding to where the virus is at. But at all times, we can quickly go back if need be. And it's something that we assess on a very regular basis. Very clear. Thanks again for taking the questions. I just appreciate it. Thanks, Clayton.

Thank you, Khalif. Our next question comes from Michael Dadas with Vertical Research. Michael, your line is now open.

Good morning, gentlemen and Nancy. And you guys have done a terrific job this morning of sharing your thoughts and being very frank on what's going on in the industry. So my questions are all done, and best of luck. We'll talk to you next quarter.

Thanks, Michael.

Thank you, Michael. Our next question comes from Brian MacArthur with Raymond James. Brian, your line is now open.

Good morning, and again, thank you for taking all the time today. Most of my questions have been answered on this cost thing, and I think we've been through it a lot, but can I just be check one thing. We're talking, when you're saying 3% to 5%, if I put it this way, is gross dollars up on the cost base. And where I'm going with this, maybe I guess it's the only silver lining in any of this. When you did your guidance, I mean, you used $1.15 for zinc and $3.25 for copper. So we're not talking on a per geo basis or anything here, because You should get a pretty big credit if zinc prices stay where we are and copper prices stay where we are. I mean, is there not, I mean, on a margin basis, at least a $200 million plus offset to all of this still? You're not factoring that in your guidance when you talk 3% to 5% off.

Thanks, Brian. You are honing in quite nicely. It is predominantly cost-driven. And if you were to model on all its Australian costs per gold ounce, I'd probably use 5%. And I think we will get some benefit as we then come back to our total metal profile with a good another million and a half ounces, probably a lot of gold equivalent ounces of how those metal prices play out in terms of how you calculate a GEO. That'll give you some benefit in the unit costs and maybe a bit lighter than the 5% as you are quite rightly pointing out.

Great. Thanks very much.

Thanks, Brian.

Thank you, Brian. Our next question comes from Tanya Dukosonek with Scotiabank. Tanya, your line is now open.

Oh, my God. Thank you so much for taking another question from me. I'm just thinking as I listen to all of this on costs and I know at the beginning of the year when you gave guidance, Tom, in December, you know, you were thinking an embedded 5% within the cost structure. Now we're looking more, you know, 8% to 10%, you know, in the structure. And I'm just kind of thinking, you know, a lot of what we saw in Q1, we didn't really see the full impacts of the oil price come through the cost structure, I think, for most of the companies. And, you know, I know that yours is quite low. You've given guidance on $60 a barrel, and it's only a $2 per ounce move or a $10 per barrel move. I'm kind of just wondering, at what point do we get through that $2? Like, when are we going to get to actual spot pricing? And when we do, am I looking more at a sensitivity of $6 per ounce or a $10 barrel move? I'm just trying to see as we work through the hedges and get to full exposure so I can kind of look into my 2023 numbers. Thank you.

Thanks, Kenya. You're certainly seeing what we saw play out in the first quarter was escalation or inflation at the levels that we'd assumed. So it's really as we... So it's more of a production story related to the Omicron surge that is around Q1. And we now pivot into more of a cost story and additional inflation as we move into the remaining three quarters of the year. So you're starting to see in this quarter those higher diesel prices flow through. And just clarifying, we don't hedge any of our oil. So it's spot price that you see flow through in our cost base. So you're certainly seeing that oil price in our costs as we're into the second quarter and moving forward.

Okay, so that $2 per ounce is a good number to use going forward?

Yes.

Okay, great. Okay, great. Thank you so much.

Thanks, Tanya.

Thank you, Tanya. There are currently no further questions in queue. So, again, if you have a question, please press star followed by 1 on your telephone keypad.

I think we might be good to finish up, operator, by the looks of it.

Let's see. Okay, if you would like to close out the Q&A session, we can do that. One moment. This concludes the Q&A answer session. I would now like to turn the conference back over to Tom Palmer for closing remarks.

Thank you operator and thank you everyone for taking the extra time to work through our call with us today and please have a lovely weekend and I look forward to catching up with you on our analyst round table in a couple of weeks time. Thanks everyone.

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