Newmont Corporation

Good morning and welcome to Newmont's first quarter 2023 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Tom Palmer, President and Chief Executive Officer, Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining Newmont's first quarter earnings call. Today I'm joined by Rob Atkinson and Brian Tabolt, along with other members of our executive leadership team, and we'll all 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 continues to lead the gold industry in safety, sustainability, profitable production and shareholder returns. Our solid first quarter performance is underpinned by our unmatched portfolio of world-class assets, our proven operating model, a balanced, disciplined approach to capital allocation, and most importantly, our values-driven commitment to leading sustainability practices. With a strong outlook, combined with the strength of our team and the quality of our assets, we remain on track to continue safely delivering long-term value to all of our stakeholders. During the first quarter, Newmont produced 1.3 million ounces of gold and 288,000 gold equivalent ounces from copper, silver, lead and zinc, generating nearly $1 billion in adjusted EBITDA and all in line with the expectations we provided in February for Q1. We continue to expect the gold production for this year will be weighted 55% to the second half, and we remain firmly on track to achieve our full-year guidance ranges. With $6.5 billion in total liquidity, we continue to maintain an investment-grade balance sheet providing the financial strength to sustain our business throughout the price cycle as we continue to invest in our most profitable growth projects and return cash to our shareholders. Through our established dividend framework, we declared a first quarter dividend of 40 cents per share, demonstrating both our ongoing commitment to shareholder returns and the confidence that we have in our business. During the first quarter, we further rationalize Newmont's portfolio with the sale of our interest in Triple Flag, generating $179 million in cash proceeds. And we remain on track to deliver an incremental $440 million of full potential cost of productivity improvements this year, a key part of Newmont's continued efforts to deliver stable production and strong margins from the industry's best portfolio of world-class assets. Our core values are safety, sustainability, integrity, inclusion, and responsibility. They have been developed and embedded over a long period of time and through multiple generations of leaders at Newmont. Together, they are fundamental to how we run our business, where we choose to operate, and how we conduct ourselves on a daily basis. Last week, Newmont launched our 19th annual sustainability report, and our second, annual taxes and royalties contribution report, providing a detailed and transparent look at our values-driven approach to sustainability and an overview of our tax strategy and economic contributions. And next month, we will issue our third annual climate report, outlining Newman's climate-related risks and opportunities, our strategic planning around various climate change scenarios, and the specific actions we are taking to reduce our carbon footprint. Each of these reports are part of a robust set that detail our company's management of the sustainability areas that matter most to our stakeholders and to our business. At the very core of Newmont's leading sustainability practices is our commitment to driving a fatality, injury and illness-free workplace. And this begins with a disciplined laser focus on safety fundamentals. In the first quarter, we completed more than 172,000 interactions by leaders in the field that were focused on the critical controls that must be in place at all times to prevent fatalities. To highlight one of the direct consequences of this work, compared to the same quarter last year, in Q1, we experienced a 56% reduction in potentially fatal incidents, or what we call significant potential events. This improvement could not have been achieved without our dedicated workforce and the supporting systems that we have in place to maintain and improve our safety culture. Last month, we recognized several members of our team through our annual CEO Safety Awards. Acknowledging those teams and individuals that set the standard for high quality health and safety practices. From a pool of over 50 nominees, we selected winners in three categories. Safe leader, safe team and partner in safety. We are really proud to be able to recognise the dedication demonstrated by our team members each and every day. We are also proud of our heritage as a values-driven organization with a clear purpose. We have learned that achieving our purpose requires strong governance and a commitment to accountability and transparency. As part of that commitment, Newmont has been disclosing our sustainability performance since 2004. Among the key highlights shown on this slide from our 2022 sustainability report is one of the most important focus areas for the mining industry today, creating a safe, healthy and equitable workplace, one that values our differences and ensures that everyone feels safe and is safe working at Newmont. Over the last 18 months, the mining industry has come under significant scrutiny following a West Australian parliamentary inquiry into issues of sexism, racism harassment and bullying in the workplace. I'm disappointed to acknowledge that Newmont is not immune to this unacceptable behaviour that is taking place in workplaces across the world. And it is vital that as leaders we make sustainable changes to address and eliminate these behaviours. To manage our response, last year I appointed a senior operational leader reporting directly to me and tasked with listening to our workforce to better understand what is being experienced so that we can make lasting and meaningful change. Over the last few months, more than 1,000 people have provided thoughtful feedback and personal experiences through 100 focus groups and more than 150 one-on-one interviews, assisting us in understanding the extent, nature and root cause of these behaviours in our organisation. We will remain transparent in our acknowledgement of these behaviours and have provided an overview of the emerging themes from these conversations in our annual sustainability report. This ask and listen process is helping us to identify the improvements required in our systems, the symbolic actions that we can take and our changes in our leadership behaviours that will drive a sustainable change in our workplaces. I'll now turn it over to Rob and then Brian to take us through each of our operations and key development projects, along with a review of our quarterly financial highlights. Then I'll wrap up with a brief update on our proposed acquisition of Newcrest. Over to you, Rob.

Thank you, Tom, and good morning, everyone. Since the start of the year, I visited three of our four regions in Newmont. I spent underground with the team at Tannemine, reviewing the status of our expansion project at this world-class asset with Mia Gause, our Senior Vice President in Australia, and our experienced leadership team. I travelled to Ghana to see first-hand the progress at our Sabika underground mine and our Half O'North project with Dave Thornton. And I also traveled to each one of our sites in Canada, Eleanor, Musselwhite, and Porcupine to review the productivity improvements we are achieving under the leadership of our North American Senior Vice President, Bernard Vessels. And as Tom just described, our site and regional leaders are very focused on safely delivering their plans whilst continually working to create a safe and inclusive environment for each person working at our operations. So turning to the next slide, let's begin with an update from South America. Penesquito continues to deliver strong meal performance, largely due to the implementation of our full potential program over the last four years and with the ongoing support from our operations support networks. With more than $300 million in annual synergies from processing improvements alone, our team has been hard at work further debottlenecking Penesquito's processing circuit. improving flotation and filtering capacity, as well as optimizing maintenance schedules to increase mill availability. And as a direct result, Penesquito processed 9.9 million tons in the first quarter, putting us on track to mill an impressive 37 million tons of ore in 2023. Mining continues in the Chile, Colorado pit as planned. And whilst gold production was lower when compared to the fourth quarter, it was completely in line with the expectations that we had previously communicated due to mine sequence at this very large polymetallic mine. Linked to this sequence, coal production was strong this quarter, generating $266 million in revenue due to higher silver, lead, and zinc grades being delivered from the Chile-Colorado pitch. And also, please note that 55,000 gold equivalent ounces and finished goods inventory of Penasquito was built up at the end of the quarter as a result of planned timing on concentrate shipments. This concentrate has since been sold and the revenue will be realized in the second quarter. Also in Q2, we expect both gold and silver grades to decline by around 10% compared to Q1 due to the planned mining sequence with the full expectation that higher silver, zinc and lead grades in the second half and resulting gold equivalent ounces will offset the planned lower gold grades in 2023. We expect gold and coal product production of Penasquito to be weighted around 55% to the second half of this year. Turning to our leach-only operations in Peru, Yanacocha delivered steady results in the first quarter. Production is expected to increase by more than 20% beginning in the second quarter when we start to realize the benefits from our continued use of our injection leaching technology combined with our re-leaching programs. At Merion, our team has begun the planned stripping of the next layback in the Merion pit. And as reflected in our guidance, this will result in higher waste tons being mined and lower ore tons and ore grade being processed this year. And finally, in Argentina, Cerro Negro delivered another solid quarter. due to higher underground mining rates and mill throughput. Gold production is expected to steadily increase each quarter from a combination of sustained productivity improvements and the progression of the first wave of our district expansions at Cerro Negro. We anticipate production will be weighted around 56% to the second half of this year, with the site on track to add high-grade ounces from San Marcos beginning in the third quarter. Now, turning to Australia. Boddington continued its momentum from the fourth quarter, delivering strong gold and copper production in the first quarter, whilst also completing a planned seven-day preventative maintenance shutdown of the processing plant. And as we look ahead, the site is expected to deliver improved results during the second quarter, supported by steady ore grades and strong mill performance. And as we ramp up waste stripping in the South Pit in the second half of the year, we expect to increase total material mints around 20 million tons per quarter, helping to maintain steady gold and copper production, despite planned lower ore grades being delivered to the mill. Now moving up to tannamite, and as previously discussed, the Northern Territory in Australia experienced record wet weather and associated extensive flooding during late 2022 and the start of 2023. which resulted in the complete closure of the main access route for supplies to Tannamine from late December, with the Tannamine track only being fully reopened and able to transport normal loads in late February. As described during our last earnings call, this road closure impacted our ability to move key consumables to site, resulting in the depletion of all of our wet weather stocks on site and the cessation of milling operations and gold production However, during this period, our team remained agile and responded to this event with mining operations continuing and ore being stockpiled in front of the mill. Scheduled maintenance was moved forward to reduce downtime in subsequent quarters, and in partnership with the Northern Territory Government and local contractors, we successfully repaired and reopened the Tannamine track. Due to these efforts, Tannermine expects to recover most of the ounces from this event over the course of 2023 and is on track to more than double gold production in the second quarter. It's also important to note that all of our key consumable stocks at site have returned to normal operating levels and we have continued to progress our second expansion at Tannermine. The team has now completed more than 565 metres of the concrete shaft line workforce. And despite the temporary closure of the main access route during the first quarter, the project remains on track to deliver significant ounce and cost improvements in the second half of 2025. And now moving to Africa. A team delivered lower ore grade in the first quarter as our team commenced stripping of the next layback in line with the expectations previously communicated. Strip ratios will remain high throughout the years planned with stronger gold production expected in the second and third quarters due to higher grades coming through. At Ahafo, we delivered a solid quarter, as strong mining rates and plant throughput partially offset lower grades due to planned underground rehabilitation that impacted access to high-grade material at the Sabika Underground. During Q1, the site experienced a conveyor failure that impacted one of the two conveyor systems was able to put a system in place to bypass the conveyor and offset any impact to production. As a result, AHAFO remains on track to achieve its annual guidance range, with steady increases to production each quarter still expected, as we open up additional draw points in the Sabika Underground. We anticipate goal production at AHAFO will be weighted around 60% to the second half of this year, due to higher mining rates and the delivery of more high-grade ore to the mill over the course of the year. Our AHAFO North project continues to progress well, with approximately 85% of the total land area available for construction. And as you can see in the photo on this slide, we have transported a large portion of the necessary civil construction and mining equipment from AHAFO South to AHAFO North as we prepare to develop the Ghana now moving across to North America as discussed during our last earnings call our North American operations have made tremendous progress due to the guidance from our experienced team of leaders the strength of our integrated operating model and the support from our proven full potential program starting with CCMV our leech only operation remains a solid contributor with slightly lower production compared to the previous quarter due to waste stripping in the Globe Hill pit as planned. At Eleanor, the site delivered another strong quarter, driven by improved mining rates and mill performance compared to the fourth quarter. And these improvements, combined with the progress we have made in workforce stability, will enable Eleanor to continue generating steady production levels throughout the year, more than offsetting planned lower ore grade. Musselwhite delivered lower ore grade and mining rates compared to the fourth quarter, as the team focused on backfill activities to expose higher grade stopes. And when combined with the efficiency improvements achieved through double lift stoping, Musselwhite is expected to deliver increased production each quarter in 2023, with nearly 56% of production anticipated in the second half of the year. And finally, Porcupine delivered higher ore grade and improved tons mined, largely offsetting the impact from planned mill maintenance during the first quarter. The PAMOR project continues to progress well as we prepare for an investment decision in late 2023. Collectively, our Canadian sites have improved production by 26% compared to the same quarter last year, primarily due to a continued focus on closely managing labour vacancies and absenteeism, whilst improving productivity and reliability with greater access for our leadership and full potential teams post the Canadian border restrictions. Eleanor, Musselwhite and Porcupine each achieved their highest quarterly performance in terms of development meters. And for comparison, this is an overall improvement of 37% versus Q1 2022. And also as a direct consequence, Tons Mind improved 26% and ore tons processed also increased 7%. These very pleasing results are a true testament to the power of our operating model and its ability to replicate leading practices across our global operations. And these improvements go beyond just the ounces delivered. We have also seen the significant potential event frequency rate at our four North American operations cut in half due to an increased focus on critical control verifications. proving once again that a strong safety culture is key to delivering on our commitments. Finally, to our two non-managed joint ventures. Our 38.5% ownership of Nevada Goldmine and 40% interest in Pueblo Bejejo contributed 321,000 ounces of attributable gold production in the first quarter. representing 20% of our combined non-managed joint venture production guidance for the full year. As highlighted at our full year earnings presentation in February, a tragic workplace fatality occurred at our joint venture in Nevada gold mines. The fatality occurred at the Carlin Gold Strait underground operation on the 23rd of January, and a detailed investigation was carried out by our JV partners. which included one of Newmont's most senior safety leaders as a key member of the investigation team. NGM and Newmont's executive leaders have also met to discuss and share safety strategies, interventions, and tactics to help ensure tragedies of this nature do not occur again at NGM. Both of these joint ventures are core to the Newmont portfolio, and we look forward to continuing to work with our managing partner to help ensure a safe and productive future for Nevada gold mines and Pueblo behavior. And with that, I'll pass it over to Brian to cover our financial results.