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spk09: Good morning and welcome to Newmont's third quarter 2022 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 that this event is being recorded. I'd now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Please go ahead.
spk10: Thank you, operator. Good morning and thank you for joining Newmont's third quarter 2022 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 solid third quarter. and we remain well positioned to respond to the challenging market environment that our industry faces today. As we have done for more than 100 years, Newmont continues to leverage our leadership, collective experience and the strength of our global portfolio with the size and scale to build a resilient and sustainable future. Supported by our clear long-term strategy, we continue to focus on doing what we do best. delivering stable production from our responsibly managed portfolio of world-class assets, while investing in our future and creating value for all of our stakeholders. During the third quarter, Newmont produced 1.5 million ounces of gold and nearly 300,000 gold equivalent ounces from copper, silver, lead and zinc. As improved productivity and higher grades built to offset the typical wet season impacts we experience every third quarter at our operations in the Southern Hemisphere. We remain on track to achieve our full year guidance ranges as we build momentum for strong production in the fourth quarter. We continue to reinvest into our business, advancing our near-term projects, including the construction of the production shaft at Tanami and the development of our new mine, Ahafo North, along with a layback of the Parmore Pit at Porcupine and the first wave of district expansions at Cerro Negro. With $6.7 billion in total liquidity, we have maintained an investment-grade balance sheet with the financial flexibility to balance steady investment into our most profitable growth projects with strong shareholder returns. Last week, we declared a third quarter dividend of 55 cents, set within our established dividend framework, which is calibrated at an $1,800 gold price. This dividend demonstrates our confidence in our diverse global portfolio and our commitment to providing leading returns to shareholders. During the third quarter, we published our inaugural tax and royalty contribution report, providing an overview of our tax strategy and economic contributions. As the world's leading gold company, we have a responsibility to generate shared value through our contributions in taxes and royalties, as well as job creation and economic development in the host communities and countries where we operate. And we believe that transparency is a prerequisite for building and maintaining trust with all of our stakeholders. You can find this report on our website, along with several others that provide details around our non-financial reporting and leading approach to environmental, social and governance matters. In early 2020, Newmont made a symbolic change around how we manage our safety performance. Stepping away from the mining industry's traditional use of a lagging personal injury rate in our bonus programs, to measures that are focused on managing the critical controls that must be in place at all times to prevent fatalities. During the third quarter, we completed more than 160,000 interactions by our leaders in the field that were focused on these controls. This is a process we call critical control verifications. Since we made this change more than two years ago, Our leaders have now completed over one million critical control verifications, proactively identifying and managing the risks that could lead to a fatality, and helping to ensure that our workforce returns home safely to their families and friends after each and every shift. At Newmont, we have a diverse global portfolio of operations that we are managing to safely and responsibly deliver steady production over the long term. This year, we again expect to produce 6 million ounces of gold and 1.3 million gold equivalent ounces from copper, silver, lead and zinc, consistent with our full year outlook and the most of any company in our industry. This year is very similar to last year, with higher production expected in the fourth quarter to bring home a strong finish to the year. This production will be driven by higher grades at both Boddington and Miriam, in addition to improved mining rates and mill performance. Increased production from Sabika Underground at Aharfo, as mining rates improve with access to additional draw points, which in turn will deliver higher grade ore to the mill. Improved productivity at our Canadian operations, where each site is positioned to deliver higher grade during the fourth quarter. and higher production expected from Nevada gold mines, driven by both higher grade and higher tons mined from open pits at Carlin and Cortez, along with improved autoclave performance at Turquoise Ridge. In addition to higher production volumes, we also expect to have lower unit costs in the fourth quarter as we continue to take action to reduce or offset our exposure to elevated input prices and labor costs. We are working on improving productivity through increasing and optimizing truck payloads in both our open pit and underground haul truck fleets. Improving underground development rates through increased equipment effectiveness and the implementation of jumbo bolting and operations where this machine has not been used before. And leveraging our asset management operations support network. which is now remotely monitoring 3,500 fixed and mobile assets on a continuous basis. Through this work, we have seen all truck wheel motor lives increase by 85% and truck engine lives increase by 40%. We're also working to reduce our consumption of high-cost input materials through the use of new technology and alternatives. For example, We are on track to achieve a 25% reduction in grinding media consumption through the use of high chrome specialty forged balls, which have a much lower wear rate than the traditional steel ball. We are also reducing our consumption of cyanide through the use of best practice process control logic across our 12 operations. Importantly, We are continuing to drive to lock in best-in-class prices, reduce volatility in our long-term contracts, and manage our supply chains to ensure that we have key materials and consumables in sufficient quantities across all of our operations. The impact from these cost and productivity measures, coupled with higher production volumes, have us on track to deliver lower unit costs in the fourth quarter, giving us the confidence in our ability to achieve our full year guidance for 2022. I'll now turn it over to Rob for a more detailed look at our performance during the third quarter and what we can expect this quarter from our 12 managed operations and near-term projects. Over to you Rob. Thanks Tom and good morning everyone. During the third quarter between Tom and I we had the opportunity to visit six Mosquito, Tanamine, Merion, Porcupine, Cerro Negro, and Cripple Creek Invicta. It's been very impressive to see firsthand the resilience and the dedication that our people continue to demonstrate each and every day. Last month, I was also able to spend some time in Nevada, meeting with the new leader of NGM, Peter Richardson, and his extended team. It was a good opportunity to review the important work NGM is doing to further strengthen their And as Tom just described, across our global business, we are putting a significant focus on and effort into improving safety, cost, and productivity. So turning to the next slide, let's get into my update, starting with our operations in Africa. Achievement remained a solid contributor in the third quarter, with higher tons mined, steady grade, and sustained meal performance. In the fourth quarter, we expect to see an 8% increase in grade and a 30% increase in ore tons mined as we resequence our mining resources from the current layback due to being significantly ahead of our planned phase positions. As a result, ACHIEME is on track to deliver its strongest production performance of the year in the fourth quarter. Moving to AHAFO South, grade and mining rates continued to improve through the third quarter, increasing gold production by 20,000 ounces compared to the second quarter. We expect production at Ahapo to increase yet again in the fourth quarter, on the back of higher grades from the Sabika open pit, combined with an increase of high-grade ore tons from Sabika Underground. We now have up to 20 draw points available in the Sabika Underground, and with similar numbers expected in Q4, we are in a strong position to deliver on the increase in ore tons. record production drill meters while continuing to advance the development of the third production level in the mine. An additional underground production drill arrives in November, further assisting the delivery of the planned development for the fourth quarter and the resulting ore tons in 2023. And finally, we continue to progress the development of our new greenfield mine, Ahafo North. Engineering is more than 90% complete. and procurement sits at 70%, with the first wave of heavy mining equipment having been delivered and assembled on site and is now ready to commence work. We are continuing to progress towards gaining full land access, with approximately 75% of all the required activities now complete, including crop and land compensation and resettlement negotiations. Important stakeholder engagement work with local communities, traditional leaders and regulators continue, and we remain on track to gain full land access for this important project in early 2023. And now, turning to our operations in South America. Cerro Negro delivered another solid performance in the third quarter, as lower Productivity from this remote site continues to improve, in particular development meters which have allowed us to access higher grades from the Amelia deposit. And I'm also pleased to announce that Cerro Negro is the first mine in Argentina to implement the AutoMine technology, a tele-remote operating system for underground loading and hauling. The implementation of this technology has eliminated safety risks associated with operator exposure underground, has allowed for the recovery of more ore from each of the stoves, has reduced equipment damage, and really importantly, in the Argentinian context, increased underground working time. We've had tremendous success with tele-remote operations at our Australian and Canadian underground mines, and this is yet another example of the value added through the rapid replication of leading practices across our global operations. Turning to Marion. we delivered slightly lower production compared to the second quarter due to very heavy rain in the third quarter and a mill maintenance shutdown. Merion is well positioned to deliver a strong finish to the year as we sequence into approximately 5% higher grades in the Meraba pit and deliver improved mill performance versus Q3 as a result of improved availability from the maintenance work that was performed. And finally, Yanacocha continued to deliver solid results. We saw improved recoveries from the use of a richer leaching solution, helping to offset lower tons mined and placed on the leach pads. And now, over to our operations in North America. Penesquito delivered another very strong performance in the third quarter, increasing gold production by more than 50% due to higher grade from the Penasco pit, whilst maintaining steady levels of silver, lead, and zinc production. It is important to note that 60,000 gold equivalent ounces in finished goods inventory at Penasquito was built up at the end of the quarter, as a shipment of gold-bearing lead concentrate that was produced at the end of September was not sold until the fourth quarter, partly due to impacts on shipping logistics from earthquakes and heavy rain in western Mexico. Looking ahead, and it is important to note, gold production as we mine around 35% lower gold grade ore from the chilly Colorado pit, which is part of our planned mine sequence in this large polymetallic mine. Moving to CC&V, we delivered steady production from higher tons mined in the third quarter. We expect production to remain consistent into the fourth quarter as we continue to optimize ore placement and reduce unit costs at this leach-only operation. And turning to Canada, Eleanor, Musselwhite and Porcupine all delivered improved production in the third quarter, a combined increase of more than 20,000 ounces compared to Q2. At Eleanor, we continued to increase staffing levels, especially those associated with critical roles, and improved productivity amid a very competitive labour market, delivering improved production from higher ore grade in the third quarter. In Q4, we will see an increase in the number of available stoves ready for ore extraction, improving our mining flexibility with four stoves available at all times. And we continue to increase our staffing levels, and importantly, we expect to be back to full complement by the end of this year. At Musselwhite, we delivered higher grade ore from the PQ deeps area in Q3, in grade in the fourth quarter as we mine our first double list stope in PQ deeps. And finally, at Porcupine, we mine higher grades from both the Hoyle Pond and Borden underground mines in the third quarter. In the fourth quarter, Hoyle Pond has a strong pipeline of stopes available, which will contribute towards a 10% higher grade compared to Q3. And in addition, as a result of the optimization of our maintenance into 2023, allowing for higher mill availability during the fourth quarter. And we continue to progress work on the Pamore project, a layback with the ability to extend mine life at Porcupine through to 2035. The work to dewater Pamore has commenced, with the interim water pumping and treatment plant successfully starting up after receiving all of the necessary permits. And now turning to our two operations in Australia. Boddington delivered lower gold and copper production compared to the second quarter as the site was impacted by very significant rainfall associated with some extreme winter weather in Australia's southwest. Some network outages which impacted the autonomous haul truck fleet and lower mill throughput due to crusher and conveyor maintenance in August were also contributors to Boddington's third quarter performance. Waddington is well positioned to finish the year strongly, as we sequence into a section of the South Pit with higher gold grades, approximately 12% higher than those in Q3. We have also resolved the network issues, and South West Australia is now moving into the typical hot, dry summer weather pattern. And turning to Tanamine, we delivered solid production results compared to the second quarter, due to sustained ore grades, tons mined, and mill performance, and we expect production to remain relatively consistent in the fourth quarter. We continue to progress the second expansion project at Tannemine, and we have now reached an important project milestone, completing the reaming of the 1.5 kilometer deep production shaft and the installation of the head frame and hoisting infrastructure. Lining of the shaft has commenced, And in the photo, you can see being lowered into the shaft what is called a stage or a Galloway, and that will be used to conduct this specialized work. Shaft lining will take around two years to complete and will be conducted in parallel with the installation of the major underground infrastructure, such as crushers, conveyors, ore bins, and pumping stations. The underground development work is largely completed, and we are now commencing the associated civil and structural works. And with that, I'll turn it over to Nancy on the next slide.
spk06: Thank you, Rob, and good morning, everyone. Let's start with a look at the financial highlights. In the third quarter, Newmont delivered $2.6 billion in revenue at a realized gold price of $1,691 per ounce, an adjusted EBITDA of $850 million, with our free cash flow being impacted by unfavorable working capital movements of more than $300 million in the third quarter. These items included a $95 million payment associated with the previously communicated Penesquito profit-sharing agreement reached during the second quarter, an $83 million payment of accrued severance related to the planned Ghanaian employment model change, and $80 million of sales value from the buildup of inventory at Penesquito, as Rob has mentioned. In the third quarter, we invested nearly $700 million through capital, exploration, and advanced project spend as we continue to progress our near-term projects, make progress toward achieving our climate targets, and orient the portfolio for the future of Newmont. Last week, we declared a regular quarterly dividend of 55 cents per share for the eighth consecutive quarter, in alignment with our dividend framework and calibrated at an $1,800 gold price. Compared to the second quarter, adjusted net income declined 19 cents by relatively consistent production and direct costs. This was due to lower metal prices for copper, gold, silver, and zinc, as average realized gold prices decreased nearly $150 per ounce in the third quarter. In addition to lower metal prices, we also experienced lower sales volumes during the third quarter, driven by the timing of concentrate sales at Penesquito. These impacts, along with other immaterial items, resulted in third quarter adjusted net income of $212 million, or 27 cents per diluted share. Underpinned by the largest production base in the sector, Newmont has established a healthy liquidity position to allow for balance sheet strength and flexibility in light of the current global economic conditions. During my tenure at Newmont, we have intentionally worked to provide clarity around our discipline in capital allocation for how we reinvest in our business and provide returns to shareholders. Grow our cash balances to $3.7 billion with total liquidity of $6.7 billion, while returning more than $6 billion to shareholders in dividends and share buybacks since 2019. Responsibly manage our long-term debt through refinancing at historically low coupon rates and in alignment with our ESG targets. and achieve a net debt to EBITDA ratio of 0.5 times, below our target of 1.0 times. With an investment grade balance sheet and no debt due until 2029, Newmont's financial position provides a platform on which to support the next decade of production performance and reinvestment into the business. As I reflect on the last six years I've spent at Newmont, I am so proud of the work that we have accomplished to build financial strength and flexibility as well as a framework for our capital priorities. And as I move to my next opportunity, I remain confident that Newmont will continue to prioritize long-term value to its shareholders. And with that, I'll turn it back to Tom.
spk10: Thank you, Nancy. And building on your comments, we have maintained a disciplined and balanced approach to capital allocation, a key component in sustainably managing a mining business through the commodity cycles. Our capital allocation priorities remain unchanged and follow a clear hierarchy. First and foremost, to maintain an investment grade balance sheet with financial strength and flexibility. Second, to reinvest in our business through exploration and organic growth. And finally, to return excess cash to shareholders through dividends and opportunistic share buybacks. From the robust foundation of our balance sheet that Nancy just described, our next capital allocation priority is to sustainably reinvest in value accretive projects from our industry-leading organic pipeline. Our long-term outlook assumes an annual investment of around $1 billion in sustaining capital, $800 million in development capital, and $400 million in exploration and studies. Combined, this is an average annual investment of more than $2 billion every year, a critical component in Newmont's strategy to sustain strong production levels and improve margins over the long term. We have entered a period of meaningful reinvestment as we continue to advance our near-term projects, including the expansion of Kanamai in Australia, the Hafa North in Ghana, and Yanacocha Sulfides in Peru. In September, we announced that we had made the disciplined decision to delay the full funds approval of our Yannacocha Sulfides project in order to manage project execution risk, move out of a period of significant inflation, and to balance our development capital cash flows. To support this decision, I've also taken one of our best leaders in Dean Gearing to rigorously review the scope and pace of this project. As part of this work, Dean is stepping back and reviewing the Sulfides project in total, which will include assessing a range of scope and schedule scenarios through to and including the impacts of not proceeding at all. And as Dean progresses his work over the coming months, we will continue to keep you updated. So, on the back of a strong balance sheet and reinvesting into our business, our final capital allocation priority is to return excess cash to our shareholders two years ago umot was the first in the gold industry to announce a clear dividend framework providing our shareholders with a base dividend calibrated at our reserve price assumption of 1200 per ounce in addition our shareholders have the potential to receive between 40 to 60 percent of the incremental free cash flow we generate at gold prices above our base assumption. Now as we do at this time every year, we are currently working through our annual business planning process. As part of this exercise, there are two key inputs to our dividend framework that we are critically reviewing. The first, as I've been discussing for some time now, is the long-term gold price and the assumption we use for both reserve pricing and project approvals. This assumption is a key input for determining the payout level of our base dividend. The second key input is the free cash flow we expect to generate above this base level. And this is impacted by the current global economic environment that we are all operating in. Over the next month, we will finalise and our board will approve our business plan. We will then provide a comprehensive update on these inputs and associated outputs with our long-term outlook during our 2023 guidance webcast. However, I can assure you that we clearly understand the importance of returning cash to our shareholders, and we have a proven track record of doing so. With our third quarter dividend declared, we will return nearly $4 billion through dividends since we introduced our framework two years ago. We will continue to take a long-term view to determine the appropriate level of current dividend payouts, and we remain committed to a clear dividend framework. Before I wrap up, I'd like to take a moment to thank Nancy Beazey for her exemplary leadership and sound guidance during this transformative period in Newmont's history. Nancy has built a very capable and dedicated team that will continue to strengthen our financial position and support our capital priorities for a long time to come. And we wish Nancy all the very best for her next opportunity with Baker Hughes. And with that, I'll turn it over to the operator to open the line for questions.
spk05: Just confirming you're managing that operator. We will now begin the question and answer session.
spk09: To ask a question, you may press star followed by one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause to assemble our roster. The first question comes from Jackie of BMO Capital Markets.
spk08: Thanks very much, and thanks for the update, everyone. I guess I wanted to dig in a little bit on the dividend framework. In the past, it's a percentage of free cash flows above that $1,200 gold price. It's apparent in the last couple of quarters, I mean, you've kept the dividend stable, but that free cash flow number has maybe gone down. So the percent is sort of outside of your stated range. When you finalize your new dividend framework, whatever that's going to look like, do you have any thoughts to maybe making that a little bit more sort of flexible or calling it maybe a guideline instead of a hard rule to reflect sort of the reality of how you're using the dividend framework anyways? Or can you give a little bit of color and say your thoughts around the structure or how structured it will be going forward? Thanks.
spk10: Thanks, Jackie. Good morning. What you can expect to see with our framework is something that's consistent with what is out there today. So we're committed to that framework. but we will update it in terms of an assumption that we will update our reserve pricing so that inevitably will lead to a higher base dividend from the 1200 and then everything will shift across. So for argument's sake, if we went to a reserve price of 1300, then we would continue to move in $300 increments to 1600 and 1900 and then determine our payouts at those levels. So you're going to see a framework that looks very similar to the one that we're operating under today. We will continue to take a long-term view to determine the appropriate level of dividend payouts, and we'll do so through that framework that's going to look very similar to what you see today. And that long-term view will take into account both the historical gold price and our forward-looking view on gold price over the long term, so over a year or longer. And we'll include in that our expected free cash generation that's going to come from the longer-term outlook that we'll update and provide you with at our 2023 guidance webcast. So we look at the long-term, Jackie, both gold price backwards and forward, and our assumptions for it going forward, our long-term view going forward, and then we'll make some judgments about the free cash flow we'll generate and the rate of dividend that we pay out. we'll do that rather than look at a standalone period, whether it be a quarter or a six-monthly period. So we're going to maintain a framework that's going to look very similar to what it is today, and we're going to maintain a long-term view, both backward-looking on gold price and forward-looking on gold price, and the free cash flow that we expect to generate from our long-term outlook.
spk08: Okay, thank you. That's clear. I know this question was asked earlier, at denver but um maybe thought it would be worth asking again um if there's any changes you've got a lot of moving parts in your framework including um including how much ores classified as ore versus waste and everything just just given the change to the potentially the change to the gold price that you might use um is it is it fair to say that if you raise the gold price um in your framework, in your business plan, in your reserve and resource calculation, is it fair to say that the dividend is most likely to go down? Have you done enough work on that yet to make that determination?
spk10: Jackie, we're still in the middle of our business planning process, so that's still in flight in terms of the cash we generate at our new, assume we go to a new reserve price, the cash we generate at that new reserve price, and then our leverage to higher gold prices off the back of our plan. An important factor that we still don't have, which comes every year during November, is the updated plan details from our two non-managed joint ventures. So Nevada Goldmine and Tevlo Viejo make up a pretty significant part of our portfolio. So we need to include and understand those inputs before we can make a final determination. So it's still premature to be to be flagging one way or the other. It's still very much a process that's in train.
spk08: I appreciate that. Thanks very much, Tom. That's it for me.
spk10: Thanks, Jackie.
spk09: Our next question is from the line of Lawson Winder of BFA. Lawson, your line is open.
spk00: Hi. Good morning, Tom, Nancy, and Rob. Thank you for the update today. I wanted to ask, actually, on that exact point you just brought up, which is you are waiting on the sort of gold price assumption from PV and Nevada gold mines. And what I was wondering is, I mean, will that help you determine what gold price you use for the other assets, or could we have a situation where you use one for Nevada gold mines and Pueblo Viejo and another for the 100% owned Newmont assets? Thanks very much.
spk10: Thanks, Lawson, and good morning. When we think about reserve pricing, we will use the reserve price number that the manager of both those assets use for determining their reserves. So again, theoretically, if we chose a $1,400 reserve price and Barrick chose a $1,300 reserve price, we would declare our reserves on those two different prices. So we wouldn't try and have everything consistent. We would use the operator's reserve pricing and we would make that very clear in our reserve and resource declarations.
spk00: Okay, great. Thanks for saying that.
spk10: It won't be material. Given the margins you see of both those operations, that sort of movement between reserve pricing is unlikely to be material.
spk00: Okay. Thanks very much. I also wanted to ask about the AHAFO North land access. So, you know, obviously there's been several delays. I mean, for good reason. I understand that you guys are, you know, making sure you negotiate a very fair and long-lasting agreement. I just wanted to kind of better understand what steps are left and then what factors kind of give you confidence that you think you know, early 2023 is the timeline for ultimately getting that access agreement.
spk10: Yeah, thanks, Lawson. I'll kick off and maybe get robbed at a bit more colour. But what's really important in this process is patience. There's an old African proverb, and we're right in the middle of Africa in Ghana, that if you want to go fast, you go alone. If you want to go far, we go together. And if ever that's playing out, it's playing out in the Harpo North, where it is absolutely essential that we bring all of the stakeholders together along on the journey so that when we have full unfettered access to that land, we have the support of all of those stakeholders, and then we can get after that project to deliver value for the next couple of decades out of that mine. As opposed to going fast and alone, and I would predict a project that would be disrupted over the course of its life. And we've lost some hard lessons over 100 years in terms of the importance of bringing all your stakeholders along. So it's a very important principle that we apply. The gold hasn't gone anywhere. That project is going to be a terrific mine in the Newmont portfolio from about 25, 26 onwards and deliver great ounces at pretty good operating costs for a long time to come. But Rob, maybe it's you to talk to the sorts of things that we see that give us confidence that we're pretty much in the home straight as we move through November and December to early in the year getting full land access. Thanks, Tom, and thanks for the question, Larson. Just building on what Tom said, we are making very significant progress. As I mentioned, we're up to 75%. And that includes demolishing, removing structures, demolishing and removing fishponds, etc. And that's certainly some of the most topical work that we've had to do. We continue to enjoy very, very strong support from the regional and also the national governments. And we meet in a task force on a very, very regular basis. And that continues to progress well. So that gives us an enormous amount of confidence. We're not just talking about these things that you can see demonstrable progress on the ground itself. And I think the last part that I would just add is that Ghana is certainly in a challenging time financially. very much targeted for that line clearance being completed very early in the new year.
spk00: Okay, fantastic. And if I might, I'm not sure if Dean's on the line, but the language around the expected annual production at Yanacocha, I think before it was like 500 or 525,000 GEO, that was removed. So would it be fair to interpret that, I mean, even the scope of this project is under review, so I mean, it could be more or less sort of annual production if it does ultimately go ahead?
spk10: Thanks, Lawson. I might kick off. Dean is sitting alongside me, and I'll get him to build on it as well. The flow sheet for Yanacocha sulphides is largely set. You've got a copper concentrator that then provides a concentrate feed into the autoclave, and you've got high-grade oil from the Chucky Coacher Underground also provides feed into the autoclave. Autoclaved is sized. In fact, the autoclave is sitting in a factory in Turkey, fabricated. And that really determines your throughput and those gold equivalent ounces you'll get from gold, copper and silver. So really Dean's work, the central case is to move through to a full funds approval in two years' time. But Dean is looking at testing a bunch of scenarios. Is it a schedule-driven project? Is it a cost-driven project? Are there other ways that we can build some of the infrastructure smarter? Are there some lessons we can learn from other projects around the world? So it's really going back, stepping back and having a critical review of that project, more about where you can bring capital costs down within the constraints of a flow sheet that's going to give you pretty similar gold equivalent ounces. But Dean, I might need you to...
spk12: Yeah, Tom, the only thing I would add to that is that as we continue to interrogate the scope of the project and the cost, we're also looking at the existing operations. And so as we continue to make improvements there, that provides potential opportunity to extend oxide production, which is something we're also looking at.
spk10: So a key part of that, Lawson, is we're taking some technology that we developed at Cripple Creek and Victor. It's called injection leaching into the heat leach pads. And Yanacocha has got heap leach pads that we've been building and operating there for 30 years. And so we have the opportunity to take some of that technology and adapt it at Yanacocha and to extract more gold from the ore that we've already mined and placed on the heap leach pad. So how can we extend oxide production and also look at reducing costs at that oxide operation, which will then in turn support the economics of a sulfide project?
spk00: Thank you very, very much, and Nancy, best of luck in your next role.
spk10: Thank you. Thanks, both.
spk09: Thank you. Our next question is from the line of Fahad Tariq of Credit Suisse.
spk13: Hi, thanks for taking my two questions. Maybe first on the shipping logistics issues in Mexico, can you just provide some more detail on what exactly happened? I haven't heard of your peers having similar issues within the country, and then also, Has it been resolved now?
spk10: Good morning, Farhad. I'll kick off and then pass to Daniel, who one of the hats Daniel wears is sales and marketing. So it's actually his area of accountability. He can give you some color in terms of what played out late in September. But as it turned out, we had a really nice shipment of good high-grade concentrates. that we were looking to get off to market at the end of September. It was produced in the trucks heading down to port. And I'll pass to you, Daniel, to give some color to Fahad in terms of how that played out in terms of that shipment not being able to get to market before the end of September.
spk02: Yeah, definitely. Thanks, Tom. And thanks for the question, Fahad. You know, it's nothing unusual, I'd say. It's really just a timing impact on the shipping logistics. There was a hurricane that came through the last week or so. and just based on those impacts, it impacts our timing to be able to get the comp straight onto the ships. Like Tom mentioned, there was some high gold grade that went into the con at the end of the month that we hoped to get out, and it just did, but kind of your second question has been resolved. There's no issues with customers or shipping at this point, and we're moving forward, so that will be recognized in the fourth quarter. We should see a nice sales pickup from that.
spk10: Just going on that, Daniel, it's sold. So we were able to sell it very early in the fourth quarter. And there's not any systemic issue there for hard. There's not something that's going to play out every quarter. It was an unusual combination of natural events, a hurricane and a number of earthquakes in quick succession that were quite disturbing in that isolated part of Mexico. But very much a one-off event.
spk13: Okay, that's clear. And then maybe just one more on Yanakocha and maybe Rob can weigh in on this. I noticed the cash cost came up quite substantially quarter over quarter, up about 34%. And then the presentation mentioned focusing on identifying opportunities to enhance performance. Maybe just touch a bit on the underlying kind of cost performance there and if there's anything of note other than just lower production quarter over quarter that led to the higher cost. Thanks.
spk10: Thanks, Fahad. I'll pick up the, in terms of the opportunity, it was a similar link to what we were just talking about with Lawson. It's that opportunity to look at where we can extract more gold from the heat leach pads that we have sitting there at Yannick Coach. And it's really that opportunity to apply what's called injection leaching. really drilling holes, getting drill rigs on top of those heat winch pads and drilling holes and then being able to pump solution down into those holes to be able to extract more gold. And looking quite interesting in terms of where we might be able to extract some additional gold and be able to do so at a relatively low cost. And Daniel, I'll try to you in terms of Bahad's question around the cash costs at Yanacoach. I don't remember anything standing out in my quarterly reviews.
spk02: Yeah, no, Fahad, I'm looking at the numbers as well, and there's nothing that I can notice either. So maybe we take it offline and we'll follow up.
spk13: Yeah, no problem. Sounds good. Thank you.
spk01: Thanks, Fahad.
spk09: Our next question is from the line of Tanya Jusnek of Scotiabank.
spk03: Great, Ted. Good morning, everyone. Can you hear me?
spk10: Good morning, Tanya. Yes, we can.
spk03: Okay, great. Thank you. Nancy, congrats on your new role and best of luck. I have a couple of questions. I wanted to start off just on inflationary pressures. I'm just trying to understand if, number one, you're seeing any relief in inflationary pressures in your cost structure. I know on the Q2 call I asked the question, how much inflation are you seeing? And I think, Tom and Rob, you mentioned about 12%. Is that what you saw also in Q3? And then looking out, have you seen any relief in consumables that didn't fuel for sure that labor at all in your portfolio? So that's my first question.
spk10: Thanks, Tanya. What we saw through the third quarter was direct operating costs almost in line with the second quarter, and it's that similar percentage that we talked So we didn't see it through the third quarter, but we are starting to see some relief across energy and consumable costs coming into the fourth quarter and then seeing that play out into 2023. Probably a couple of things I'd call out within that. One is that we'll have a bit of a lag in that fully starting to flow through where we see some of that relief. We're building... rise and fall adjustment mechanisms into a lot of our long term contracts that protect against the volatility but also mean that some of that relief takes a little longer to unwind. We're also running with greater inventory in some of those key consumables and so you've got that high cost inventory which is really about protecting production that has to flow through as well. So across diesel, steel, ammonia and cyanide, chemicals and reagents and grinding media, they make up about 45% of our cost base, and we are seeing some relief in those flowing into the fourth quarter, and we're anticipating that that will flow into 2023. However, the world is still very volatile, and as we think about doing our business plans and making judgements about 2023, we're keeping a wary eye in terms of the level of volatility in the world. On labour costs, They are proving to be a bit stickier. About 60% of our labour costs, the labour cost makes up half of our direct costs. About 60% of that is employees and that's pretty stable across the countries in which we operate in. We're seeing about a 4% increase on average across wages. So that's pretty robust and as Rob was talking, about we're starting to build back up to full complements as we come out the other side of some of the COVID impacts in the second half of this year. We're starting to see some voluntary attrition numbers returned at more long-run levels. So seeing some stability starting to get back into our business and not seeing tremendous escalation in our employee cost base. However, we're still seeing high levels of cost inflation on our contracted services. So the the label we use for shutdowns and other jobs around the world. We're still seeing the order of 10% in our cost base over what we were seeing this time last year. We see that as sticky and so we're starting to step back and say what do we need to do to think about doing our work differently in order to mitigate some of those cost impacts. There's a number of levers that we're looking to pull. to manage our costs. We're not sitting idly accepting costs coming at us. We're pulling a number of levers to improve our costs and productivity. And on the contractor side, we are actively looking at where we can bring contractors into our business as newborn employees rather than contracted services. Very much looking at doing that across some of our Canadian operations and looking to do that in Ghana at both a HAFO and a CHIB. Not accepting that we pay those higher costs and looking at what actions we can take to reduce that cost base.
spk03: Well, thanks for that. That was another thing I just wanted to know was the percentage of contractors you had and how can you kind of buffer that 10% cost. So that's good to hear. So I appreciate the insights into that. My second question would be on a hassle north, and I know we have done 75%. of what you need to do. I think that's what Rob's number that he gave. Yeah, of all activities that have been completed. Can I just understand from 75, so we've got another 25% to do from now until early next year. Can I just try and understand what are the critical examples of what needs to be done from now until early next year, that 25%? It takes...
spk10: Thanks, Daniel. I'll get Rob to provide a little bit of colour on that. It's going to be more of the same. We're basically following a project plan that's got the work we've got, what we have been doing to get to 75%. It's continuing on that pathway to get the final 25% done. That's correct. And warning, Daniel, the two critical elements are just to complete the demolition of all the structures, and we're expecting that should be done in the next five, six weeks. And then it's finalizing the remainder of the payments, which is the end of the year. And again, that's just working very, very closely with the impacted farmers and other people like that. So it really boils down to those two key elements. And as Rob indicated in his remarks during the presentation, Tanya, the first of the heavy mobile fleet is on the ground assembled. So as soon as we pass that milestone, we're able to mobilize equipment pretty readily to start clearing ground in the initial mining area and starting the civil works around the processing facility.
spk03: Okay. That's good. Thank you for that. And then my final question is just coming back to Yanacocha and this injection leaching that you are now doing in the old leach pads. A couple of questions on this. Number one, are you then expecting the oxide production from the existing operations to be longer, i.e., you're expecting more years of this than you had originally anticipated in your previous life-of-mine plans, which means that you have a bit more of time to make a decision on the anticoagulant sulfides. Is that how I should think about it?
spk10: Ted, I'll kick off and get back to you. to provide some more colour. Certainly when we provide our updated guidance, we'll incorporate the additional ounces that we expect to come from the work we've done to date on this. The oxide mine at Yanacocha will move into closure. I mean, sulphides is really just a pimple on the disturbed area at Yanacocha. I mean, it's Yanacocha we've disturbed 75%, an area that's equivalent to 75% of the island of Manhattan. Sulfides is a small footprint for a processing facility, an underground mine and a small layback at one of the open pits. So we will continue to extract as much oxide gold as we can from existing heat bleach pads. And then that facility will move into closure as we exhaust the oxide oil that we're mining. But Dean, did you want to build on that at all?
spk12: Yeah, the only thing I'd add to that is that we won't be doing guidance to come.
spk03: Okay. And just as a bigger picture maybe for you, Tom, as you look at this Yanakocha Salfaizen, I think in your comments you said maybe this isn't built at all and that's the decision made. How do we look at M&A now for you? Has M&A moved up higher in your profile in terms of you've got your Tanami Phase 2 coming on, you've got a half on north, this gets pushed out? Does M&A play a role now? Thank you.
spk10: Thanks, Kat. You know, I wouldn't couple a review of sulfides to doing something differently on the inorganic front. I would... Two things I'd say. One is Dean's work is very important that you bring someone like Dean in to look at a project like sulfides, that you do step back and go to the edge to say, what would it look like if we didn't proceed with this project because that can often lead you to some pathways that have a more value-accredited project that we could develop. Bearing in mind that we're sitting on a fabulous... I mean, this is a copper project, so we're sitting on a fabulous copper deposit with multiple lives once that processing plant's built and you've got the Congo copper deposits beyond that. So there's the strategic element around Yanacocha, but we must step back and look at all options and go to the precipice, because I think we'll learn a few things by doing that. We would then, if there was a scenario where we decided to put sulphides on the shelf for a period of time, then next step for us would be to go back into our organic project pipeline and say, what else is in there that stacks up in terms of projects we may bring forward? We've got the coffee project up in the Yukon. We've got opportunities around a half hour. We've got further opportunities around Tanami. So we would examine... other projects in an organic project pipeline as alternatives to a different scenario around Yanacocha. Inorganically, I see that as a separate exercise. We have a set of operations and organic project pipeline that can comfortably sustain 6 million ounces of gold for at least the next decade. We've shared that with the market before and we'll continue to share that with the market. For us on the inorganic side, it's having the radar turned on. And if we see projects or assets or companies out there that we believe underneath the Newmont operating model we could add more value from, and they came onto our radar, passed through our filters, we would have a good hard look at that. But I would certainly see that separate to the work we do with our current set of operations and our organic project public.
spk03: Okay, thank you for that. I noticed that you didn't mention Nueva Union and Norte Albuerto. Would those be lower priority down versus what you mentioned, coffee, a half of Tanami, etc. Would that be lower priority for you?
spk10: No, I wouldn't assume or infer that because I didn't mention that that would be lower priority. You've got Galore Creek, Nueva Union, Norte Albuerto. they absolutely would be part of that assessment. There's added complexity with those three projects because they're all joint ventures. But absolutely, as you look at our organic project pipeline and the gold and copper content in those projects and where we see the world inevitably going in terms of the demand for copper, they would be very much in that equation as we assess our internal organic options.
spk03: Okay, thank you so much. I'll leave it to someone else to ask a question. Appreciate the insights.
spk10: Thanks, Tanya. And operator, we'll continue through the top of the hour and continue to take questions until we've exhausted the list.
spk09: Great. Our next question is from the line of Anita Soni of CIPC. Anita, please go ahead.
spk07: Hi, good morning, everyone, and congratulations, Nancy, on your new role at Baker Hughes and best of luck. So firstly, I guess I wanted to dig a little bit more on the cost going into the second, I guess, the Q4, and then also into 2023. So we've seen sort of like a $30 per ounce incremental quarter over quarter over the last three quarters. Could you give us an idea as we go into Q4, like the kind of, you know, sort of, you've given us on asset level, but just an overall ballpark, you know, increase in production that you're seeing like an order of 10, 15, 20%, just to get an idea of what kind of cost relief we could see going into Q4?
spk10: Good morning, Anita. I'll link off and I might get Rob and Daniel to chip in as well. When you look at our unit costs for the fourth quarter, we're certainly looking at our strongest production quarter. So we're going to get the benefit of the additional ounces sold improving our unit costs And we'll also have the benefit of those that concentrate sale that didn't get away in the third quarter sitting in our fourth quarter. So that will play on the denominator side of the unit cost. For the direct costs, we're certainly starting to see some relief through the fourth quarter. but that's got to actually wash out in terms of some of the flow through on rise and fall in our contracts and inventory that we're carrying. So I would expect that the direct costs for the fourth quarter are going to be reasonably flat compared to the third quarter because of that flow through. And if we continue to see that relief, it's more likely to be what we might see come presenting into 2023. And as I said with an answer to the earlier question, with a caveat that we're still in a very volatile world and what may or may not play out around the world geopolitically and the impact that has on costs is something that we need to be very careful about. Rob or Daniel, anything you'd add in terms of additional colour on that? Not for me, Tom. The only thing I'd simply say, Anita, is that there's an enormous amount of focus on the costs, you know, and whether it's the quotes that we're getting I mentioned that a team that's prioritizing what we're actually doing in the pit based on the mining phases, et cetera, to make sure that we're managing costs just as closely as we're managing production. But aside from what Tom added, I don't have much more to say.
spk02: Daniel? Yeah, Nita, I think the only thing to mention is obviously our royalties and taxes would come down in the fourth quarter with a lower gold price. So we have those sensitivities out there in those materials. But aside from that, direct costs seem to be consistent with the third quarter.
spk07: Okay, and then I guess moving into 2023, a couple of questions. You said on the last Q2 conference call that you were sort of looking at a $900 per ounce and 6 million ounce outlook for the next couple of years in 2023, 2024. Is there any change to that? And I guess what I'm trying to drive at is, It seems like the costs are a little bit higher, even, you know, with this inventory release that you're talking about, a little bit higher than that number that you were previously talking about at 900. And the second part of that question is, is there anything we should be thinking about in terms of production when you're talking about labor? Like, is there, you know, development issues? You mentioned that Eleanor, you're getting back to full staffing levels. But, you know, is that something we should be thinking about in terms of, you know, when we look at the production gearing towards 6 million ounces? Big question, I know. Sorry.
spk10: Yeah, thanks, Anita. So still very much seeing 2023 playing out as I indicated on the last call. And in round numbers, it's looking like around 6,000 ounces again and around about that $1,200 per ounce cost. We will see some relief coming through.
spk07: Sorry, did you say $1,200 or $900?
spk02: Yeah, so $900 would be the cash. Okay, I'll copy all the starting costs, Anita.
spk07: Okay, all right.
spk10: Same number. So no change, Anita. We're still washing through to understand some of this relief and those direct costs coming through. The other caveat is a significant percentage of our base is our non-managed joint ventures. And so we're still to see Nevada Goldmines and Pueblo Viejo come in. Everything I've seen to date would point to six million ounces for 2023, and around about that $900 has. 2024 is where we are starting to see some relief come through, both in terms of what we're seeing come through on some of the input costs, whether it be energy, some of our key consumables, but also we're not sitting idly, as Rob and I were talking about, and the work we're doing on bringing costs down and improving productivity. We're actively working those. We're looking for those to shore up and to support 2023, but certainly be delivering improved cost performance into 2024. So I'm not sitting on my hand saying 24 is going to look exactly the same as 23. I'm working on 24, having improved position on 23. Because then we get into 25, when we do start to get the benefit of the lower cost ounces from both Tanami 2.5 O North. So we then will see some increase in production and improvement in cost on the back of those investments that we're making. So 23, we're looking pretty similar. 24, we were working hard to have an improvement in cost at steady production. Anything that we can bring into 23, we'll aim to do as upside.
spk07: And then just one last question, if I may. You mentioned that the last, I think the last thing you said was that on Yanococha sulfide that you were also assessing the impact of not moving forward at all with that. Could you just remind us what your current assessment of the liability, closed reliability would be on Yanococha sulfide?
spk10: Yeah, a couple of important things to note there, Anita. So the closure liability sits at around just over $3 billion. But it's important that the anacocha, the oxide operation at the anacocha, moves into closure regardless of sulfides. Sulfides is tracheoculture underground mine, a small layback on the anacocha verde open pit, and the construction of a processing facility for that ore. The rest of that operation, all of the waste dumps, all of the old open pits, all of the heat-leach dumps, move into closure irrespective of any decisions we make or their timing or any other catch-and-solid types.
spk07: Okay, so how would we think about the spend on that $3 billion over the course of, I guess, the next five or ten years?
spk10: Yep, so if you think about... The money we will spend at Yanacocha, a big ticket item, are the water treatment plants. So there are two large acid water treatment plants that we are constructing. We're actually doing the study work to gear up to build. And we'll build through 23, 24, and 25. We'll commission around 26. And that's to take all the mine-impacted water. So it's got acid in it. treat that water so we can discharge that to the environment. These are very large water treatment plants. So there's an expenditure on those plants and I think we've indicated to the market that we'll spend $350 million through 2023 and 2024 on those water treatment plants. That's the big closure spent. Then there's the work you do on rehabilitation and submitting some old infrastructure. And then you've got the ongoing cost of processing water in perpetuity at Yanacocha, which is what closure is. It's collecting that water, processing it, and discharging it. So once you get through the other side of that investment in water treatment plants over the next four to five years, then you've got a long-run spend on running water treatment plants in perpetuity. And that closure liability assumes that cost for the next 50 years. About 75% of that cost is the cost of water treatment over the next 50 years.
spk07: And then the last one, sorry if I may, because it reminded me, you were doing some work on tailings rehabilitation in terms of trying to get an assessment on costs, I guess, at the Denver Gold Forum. on the tailings dams that you had highlighted that didn't meet the international standards. Could you provide a little bit more color on what we should expect there in terms of, you know, the cost to remediate bottom pentanamide? And I think it's important to plan a muscle weight as well.
spk10: Yes, thanks, Anita. It's an important one to clarify that every mining company that is a member, so the 26 companies that are members of the International Council of Mines and Metals, so ICMM, have committed to implementing the global industry standard on tailings management. That's the standard that we developed in conjunction with the United Nations and the Church of England post the tragedy of Brumadino. And so that standard has some requirements that every one of those mining companies to ensure that they are addressing their extreme or very high consequence classified tailings dams by August 23. and then all others by August 25. So this was a clear commitment made by ICMN members. So we are assessing the work that we need to do around our facilities. So as you pointed out, there are facilities at Porcupine, at Penesquito, at Harpo, Yanacocha and at Jim. And the work involves additional buttressing at different locations as you assess those current constructions against that global standard. And in some instances, it may be that the next lift we do is to a different design standard. So rather than it be an upstream lift or a modified centerline, it has to be a full downstream lift. So every mining company will be assessing their tailings facilities. And my expectation is that every mining company will be identifying additional costs to comply to this standard to improve our management of tailings facilities as an industry.
spk07: Sorry, is the requirement to go to all downstream facilities? Is that what the requirement is?
spk10: No, it's a requirement to make an assessment for that dam in its circumstances. And that may mean that where someone's been able to do a particular type of lift, you've got to go to a more robust lift. That would be my expectation. We're certainly seeing... where we're putting additional buttressing in as a consequence of our assessment work, and at different times we'll use a different technique for lifting, for the next lift on a dam. And we're not Robinson Crusoe, we're not unusual, and I would anticipate that other mining companies will be going through exactly that same exercise. 25% of our sustaining capital budget, so that billion dollars, is on tailings, tailings and water. When we look at our sustaining capital budgets going forward, we typically, for a business of our size, spend about $1 billion. I would anticipate that's probably going to go more like $1.1 to $1.2 billion going forward. And a good proportion of that will be associated with the additional work we're doing on tailings, and some of it will be linked to energy decarbonisation projects as well. So as I'm looking at our long-term view, A billion dollars for a company of Newmont's size is probably going to be 1.1 or 1.2 billion dollars going forward. Tailings is an important component of that. Rob, did you want to jump in? Yeah, just a couple of other things, Anita, is that about the upstream, you know, if there are companies that do choose the upstream method, obviously the level of scrutiny that's going to be required for those is going to be very, very significant. But given I was just recently at Nevada, you know, and we were overlooking Carlin, I know the Nevada gold mining team are planning on putting buttressing in at the tailings dams there, and that'll flow through in their budgets. And also, one of the very significant considerations at PV is around how that new tailings dam is going to meet the requirements of this standard. So, you know, it's certainly, as Tom said, we're not Robinson Crusoe. And my comments at Denver Gold were encouraging and challenging the investment community to ask the questions of the mining companies about what they're doing to comply with this standard because it should be more transparent and we should be being held to account as a mining industry and we should be getting asked more questions than we are today.
spk07: I'll leave it at that. Thanks.
spk05: Thanks, Anita.
spk09: Thank you. Our next question is from the line of Mike Parkin of National Bank.
spk11: Hi, guys. Thanks for taking my question. Just really one left. Can you comment in terms of your new neighbors in Zacatecas State with, you know, Tech and ICNICO partnering on San Nicolas? Was that something that interested you or the fact that it's primarily a base metal project, it was not of interest to you?
spk10: It was something that we were aware of, Mike, but It probably didn't tip our radar in terms of what we already had in our organic pipeline. It was probably a little bit on the small side for us as we thought about... And for us, it's about how do we look at that opportunity? And sure, it challenged you in terms of further diversification, but we've got a polymetallic mine at Penasquito. But it's more about if we're going to... put management bandwidth into Mexico, then I would prefer us to have a single-minded focus on our exploration program to find the elephants that we believe sit under cover in or around Penasquito. There is no way that the Penasco and Chile Colorado deposits are the only deposits that are sitting there. They were discovered because they were outcropping. And I'd rather have our team laser focused on the exploration program on our existing leases rather than be distracted by something that's a smaller show next door. I think it's a great combination, though. Nika and Tech, two companies that we're partners with in different projects, and I think it's a great partnership, and hopefully they can do something with it.
spk11: And just on that regional exploration at Penasquito, it was a while ago that we were down at Penasquito, just pretty much on the onset of COVID-19. You were talking about implementation of your proprietary technology for kind of deep cover discovery. Can you just give us a bit of an update in terms of where things are, where we could expect an update on that?
spk10: Thanks, Mike. I remember that trip well because the world was closing around us as we were all trying to fly home from Penasquito. But I'll get Rob to... Maybe give a bit of color on that. It's called Deep Sense in Geochemistry, where we've got some proprietary technology for the same trace elements in soil samples to direct our exploration efforts. Thanks for the question, Mike. And certainly, going back to what Tom said before, we are applying significant effort and significant resources down at Penesquito to our target areas. We've done substantial drilling in and around Cedros. You may remember that when we visited, we just struck an agreement with the local community to allow us access. So that drilling is proceeding well. And we've also been doing some diamond drilling further afield. In terms of the DGS, what we are having to do on those kind of wide open plains, there's a lot of contamination the rock so that we can then do the sampling there that typically we do on the surface. So it is proceeding well. We've got access in a number of the areas that we need to be in. And certainly in terms of our budget next year, we're going to have six, seven rigs working down there at any point in time. But we are using every possible source of information, whether it's a DGS technique, whether it's the typical drilling, whether it's prior knowledge, or whether it's other radiometric surveying, et cetera. So again, it's something which we'll be able to provide updates as we pull that information together, as we do more and more drilling. But the one thing I'd certainly reassure you is that there is a huge amount of effort going on down there.
spk11: I look forward to further updates. Thanks very much, guys. That's it for me.
spk10: Thanks, Mark.
spk09: Thank you, and our last question for today comes from John Tunisos of Very Independent Research.
spk01: Thank you for your patience. With cost of sales up about $229 from the fourth quarter of 2020, should we assume other things held constant, like exploration results? that you need to raise your gold price from $1,200 to $1,400 to stay even, first question. And second, with the plunge in gold prices to the mid-$1,600s, does that undermine the basis for raising the gold price from $1,200 for reserves, in which case you'd raise your cutoff grades or take a few reserves out?
spk10: Thanks, John, and good morning. We're certainly seeing, in answering Anita's questions, seeing our costs increase as we look into next year up to the $1,200 mark. I don't accept that they are all structural. Some will be. And I think we are working hard on cost and productivity improvements to get on top of some of those costs. So I think there's work. for us to wash through some of that and to have a little less volatility in the world. So ultimately where that cost base runs out at, it's going to be higher than where we have been, but maybe not as high as where we're seeing now. When we debate and look at reserve pricing, it's less around the cost base that our business is at and more around looking at the macroeconomics of gold and where do we see a floor in the gold price over the long run. And as we've triangulated a whole bunch of different analysis, that's where the $1,300 or $1,400 is falling out. And we find it difficult to see a world where gold price would go much below that. So that's what's more driving that discussion debate internally around do we lift our reserve pricing? Now, with those higher costs that we're seeing at the moment and we're working to manage and that lead to reserve pricing, we may well find that our reserves and resources are pretty much awash as we come out the other side. So that is a little bit of insight into how we work through that process. So less about what the costs are doing, more about what we see the long-run gold price doing. And then we work bloody hard on understanding, managing our costs and controlling what we can control. and look to bring them down, make investments back in our business so that we are always having a base business that has a solid margin to not only reserve pricing but where the gold price might be at any point in time.
spk05: Thank you. Thanks, John.
spk10: I think, Operator, that looks like it might be the last of the questions.
spk09: This concludes the question and answer session. I would now like to turn the conference back over to Tom Palmer for closing remarks.
spk10: Thank you, Operator, and thank you, everyone, for your time, and please enjoy the rest of your day and week. Thanks, everyone.
spk09: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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