Newmont Corporation

Good morning and welcome to Newmont's second quarter 2023 earnings call. All participants will be in a listen mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll 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 second quarter earnings call. Today I'm joined by my executive leadership team including our Chief Operating Officer Rob Atkinson and we'll all be available to answer your questions at the end of the call. I'd also like to introduce our recently appointed Chief Financial Officer Karen Oberman. Karen is a highly experienced financial professional who has held both CFO roles and board seats in the resource and energy sectors. She brings a breadth of global experience, and we are very pleased that she has joined the Newmont team. Before I begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. Guided by a clear, consistent strategy, Our focus is on running a safe and sustainable mining business to generate long-term value. Our business is underpinned by a strong balance sheet and a global portfolio with the size and scale to make decisions that deliver on our strategy. And while I'm not happy with our ultimate financial results for the second quarter, I am very comfortable with the prudent decisions that we made during the quarter to safeguard our workforce, protect long-term value, and position Newmont to deliver strong performance in the second half of this year and beyond. During the second quarter, Newmont produced 1.2 million ounces of gold and 256,000 gold equivalent ounces from copper, silver, lead, and zinc, generating nearly $1 billion in adjusted EBITDA and more than $650 million in cash from our continuing operations. There were four important decisions that we made during the second quarter. First, we decided to suspend operations at Penasquito to focus on finding an appropriate and sustainable resolution to the current dispute with the union representing our workforce in Mexico. This dispute is associated with a profit sharing agreement that we made with the union leadership only 12 months ago. And in May, we paid our employees their profit sharing bonus for the 2022 year, calculated in strict accordance with this agreement. The union leadership are now demanding more than double the agreed amount and have taken strike action through the withdrawal of labour. At Newmont, Penesquito sits within a strong, balanced global portfolio of operations, a portfolio that is supported by the industry's strongest balance sheet. During this important time for Penesquito, we will remain firm in our resolve and continue to make decisions that protect the long-term value of the operation and benefit our employees, our contracting partners, our host communities, our customers and all of our stakeholders. We strongly encourage the union leadership up to and including Senator Napoleon Gomez to cease this strike action and return their members to work. The second decision we made during the quarter was associated with protecting our workforce at Eleanor from the unprecedented wildfires being experienced this summer in Canada, evacuating the mine and placing the operation on care and maintenance. Third, at Cerro Negro, we made the decision to pause mining for two weeks and complete important safety inspections to ensure that we had the appropriate control environment in place at this remote underground mine and to protect the health and safety of our mining teams working there. And finally, at Achim, we made the decision to process lower-grade stockpiles that were originally planned for the fourth quarter in order to optimize the mine plan, ensuring that we are in a position to safely extract the maximum amount of ore as we complete the current layback in the Achim pit over the next few months. As planned, Higher gold production is expected in the second half of the year and will be driven by higher grades and tonnes mined from both Sabika Underground and Open Pit of the Harfo. Higher grades and tonnes mined at Cerro Negro as the first wave of our district expansions comes online in the third quarter. Higher tonnes mined and processed at Tanami where we will mine the highest grades for the year in the fourth quarter. higher-grade run-of-mine ore processed at the Chim as we return and complete the current layback. And when combined with the higher production that we expect from our two non-managed joint ventures, Nevada Gold Mines and Pueblo Viejo, we remain on track to deliver on our four-year guidance. We ended the quarter with $6.2 billion in total liquidity and maintained an investment-grade balance sheet preserving financial flexibility as we continue through a period of meaningful reinvestment and return a stable dividend to our shareholders. Consistent with our 2023 dividend payout range, we declared a second quarter dividend of 40 cents per share, demonstrating both our ongoing commitment to shareholder returns and our confidence in the long-term strength of our business. We remain on track to close on our acquisition of Newcrest in the fourth quarter and are leveraging the lessons we learned from the successful integration of Goldcorp four years ago as we build out our integration plans. We have also commenced the portfolio optimisation work associated with this transaction, making the important decision in June to defer the Anacotra Sulphides project. This is the first step in delivering significant value through portfolio optimization. And we will continue to evaluate opportunities to re-sequence project capital and rationalize the portfolio of the combined company over the next couple of years. At Newmont, we recognize that a strong safety and sustainability culture is not only an indicator of a reliable, well-run business, It is fundamental to delivering on our commitments to employees, contracted partners, host communities and all of our stakeholders. As we position ourselves to safely integrate Newcrest and enter this next chapter in Newmont's 102-year history, we made an important decision in the second quarter to further strengthen our commitment to responsible gold leadership and increase our focus on safety and sustainability. In June, we promoted Susie Retallick to the role of Chief Safety and Sustainability Officer, reporting directly to me. Susie is an industry leader with more than 20 years of experience in driving values-based decisions. Over the last five years, as our Senior Vice President of Health, Safety and Security, Susie has been instrumental in leading the delivery of a step change in Newmont's safety performance, in particular in the area of fatality risk management. Susie will apply the lessons we have learned from our significant improvement in health, safety and security to further improve our performance in the areas of environment and social responsibility. In this new role, Susie will also support me and my leadership team in the work we need to do as a company and as an industry to create workplaces that are free from harassment, assault, bullying and discrimination. I'll now turn it over to Rob and then to Karen to take us through each of our operations and projects, along with a review of our quarterly financial highlights. Over to you, Rob.

Thank you, Tom, and good morning, everyone. Turning to the next slide, let's begin in Australia. Boddington delivered another strong performance in the second quarter, increasing both gold and copper production from sustained grades and improved mill throughput. As part of our multi-decade life of asset strategy for Boddington, we have increased our autonomous haulage fleet with five additional trucks as we increase the planned waste movement in both the north and the south pits. This investment into the next laybacks at Barrington will support stable gold and copper production for many years to come. We remain clearly on target to hit our 2023 production guidance, and we are well positioned to deliver more than one million gold equivalent ounces from this cornerstone asset. Moving to Tannamai, the site has recovered extremely well following the record wet weather and extensive flooding experienced in the Northern Territory during the first quarter. We doubled our quarterly gold production in the second quarter and remain firmly on track to land within our full-year guidance ranges and will mine the year's highest grades in the fourth quarter. In addition, we continue to progress the second expansion at Tanami with nearly 50% of the concrete lining of our 1.5-kilometer deep shaft installed. The lining and the furnishing of the shaft continue to be on the critical path as our project team works to deliver significant ounds and cost improvements to our tier one operation in Tanami. Moving up to Africa. In June, I visited both Ahafo South and Achim, as well as our Ahafo North project in Ghana. At Achim, I spent time with the team as we worked through the decision Tom covered earlier to prioritize safety, optimize the mine plan, and maximize the ore extracted as we close out the current layback in the coming months. As a consequence of this work, we expect grades to improve by 35% during the third quarter, positioning the site to deliver significantly higher production in the second half of the year and land within our 2023 guidance ranges. At a half-o-south, we delivered higher production as we accessed the third mining level at Underground ahead of plan. Fined with access to higher grades from the open pit, the AHAFO mill will process higher grade from both Underground and surface in the second half. AHAFO is also on track to commission a replacement conveyor in the third quarter, and it remains on target to hit guidance for the year. And finally, it was great to see firsthand the progress we are making on the AHAFO North The highway relocation and bulk air force continue to progress very well. And with a new mining fleet in place, the project team is preparing to commence pre-stripping in the second half of the year. Moving across to North America. As Tom described, Canada has been impacted by unprecedented wildfires, with Quebec particularly impacted during the second quarter. And in the second week of June, as the fire fronts approach the property, We made the swift and proactive decision to evacuate our workforce and place Eleanor on care and maintenance to protect our employees and contractors. During this time, our first priority was and will always be the safety and well-being of our workforce and local communities. We're now safely ramping up production activities as the forest fire threat continues to abate. And we will continue to monitor the situation in Quebec very closely as we work with the provincial government agencies to assess fire progress and air quality on a daily basis. Moving to porcupine, we delivered another steady performance in the second quarter and remain well positioned to deliver improved production in the second half of the year, driven by higher grades from the Hollinger pit in Q3 and from Borden and Underground in Q4. We continue to progress the Timor project and are preparing for a full funds investment decision later this year. We will complete commissioning of a new water treatment plant in the coming weeks, which will accelerate dewatering of the Timor pit and allow us to commence pre-stripping during the fourth quarter with first ore expected in 2024. At Muscle White, we delivered consistent gold production. as we progress planned development activities that will increase stope availability in the second half of the year, including access to another double lift stope. As a consequence, we expect tons mined to increase by more than 30% and grades to increase by around 15%, supporting a strong third and fourth quarter. And finally, Cripple Creek and Victor delivered solid results due to higher grade and strong recoveries from our heap leach facilities. And now, moving down to South America. Yanacocha delivered a strong second quarter as we begin to realize the benefits from applying our injection leaching technology. At Merion, we continued the planned stripping of the next layback in the Merion pit, and the site is on track to deliver 40% higher grade from the Meraba pit in the third quarter, putting Merion on target to hit full-year guidance. Moving to Cerro Negro, in the third quarter, Tons Mined is expected to increase nearly 30% as the underground ramps up to full productivity following the safety pause that Tom referred to. And Grade is expected to increase by 50% as we begin to access the higher grade stoves from San Marcos, the first of six new deposits associated with the exciting underground district expansion at Cerro Negro. San Marcos will continue to ramp up throughout the year and is expected to reach Finally, as Tom discussed, we made the decision to suspend operations at Penasquito on June the 7th as we focus on finding a resolution to the dispute with the union leadership. We have and will continue to abide by the fair and equitable agreement that is currently in place and that was importantly fully agreed to only a year ago with the union. We will continue to communicate directly with our employees and engage with the union leaders and government officials to find a fair, appropriate and sustainable resolution to this very disappointing dispute. You can expect that we will provide a fulsome update to the market once an agreement has been reached, and we look forward to returning our focus to safe and sustainable mining at Penasquito. And now I'll wrap up in the next slide with our two non-managed joint ventures. Our share in Nevada gold mines and interest in Pueblo Viejo contributed 338,000 ounces of attributable gold production in the second quarter. And we look forward to both joint ventures delivering on their expected strong second halves. And with that, I'll pass it over to Karen to cover our financial results.