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spk03: good morning and welcome to newmont's third quarter 2023 earnings call all participants will be in listen only mode should you need assistance please signal 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
spk08: Good morning, everyone, and thank you for joining Newmont's third quarter earnings call. Today I'm joined by my executive leadership team, including Rob Atkinson and Karen Overman, and we'll all be available to answer your questions at the end of the call. I'd also like to introduce Natasha Bullion, who officially joined the Newmont executive leadership team at the start of this month. Natasha is a seasoned industry leader and brings more than 30 years of technical, operational and executive leadership experience across a diverse range of commodities. And we are very excited to have her join our team at Newmont.
spk07: Before we begin, please note our cautionary statement and refer to our FDC filings, which can be found on our website.
spk08: During the third quarter, we continue to execute on our long term strategic plan. Underpinned by a very clear and focused strategy, we are leveraging our leadership and collective experience along with the strength of our global portfolio and operating model to build a resilient and sustainable future for Newmont. Our pending acquisition of Newcrest is a significant event for our industry. It combines two of the sector's top senior gold producers to set the new standard for sustainable, responsible gold and copper mining, making this a very exciting and transformational time for Newmont and all of our stakeholders. But before we provide an update on the Newcrest transaction and what's to come, I'd like to start with our review of our safety performance. As a company, we have been on a very intentional and significant safety journey. and we are proud that Newmont has not had a fatality in five years. During this time, we redesigned our fatality risk management system to ensure our standards and critical control verifications were focused on risks and behaviours that could result in a fatality. We have completed more than 1.6 million interactions by our leaders in the field that were focused on the critical controls that must be in place at all times to prevent fatalities. We modified the safety targets in our annual incentive program to deliberately move away from the traditional lagging personal injury rates to leading metrics focused on fatality risk reduction and fatigue management. And we focused on doing a few things really, really well. including pre-start meetings, pre-task hazard assessments and in-field verifications. As a consequence of these actions, we have experienced a significant improvement in our safety performance, which is evidenced by the metrics you see here on this slide. However, health and safety is an area where you must always maintain a sense of chronic unease. we still experience at least one significant potential event every eight days. Each and every one of these are an opportunity to learn from and improve because the safety of our workforce must be considered in everything that we do, every hour, every shift and every day.
spk09: Turning to our quarterly highlights.
spk08: During the third quarter, Newark produced 1.3 million ounces of gold and 10,000 tonnes of copper, generating $933 million in adjusted EBITDA and over $1 billion of cash from continuing operations, a 53% increase over the prior quarter. And we declared a dividend of 40 cents per share from our established framework. Over the last few months, we achieved a number of important milestones in our key development projects, including fully lining the upper section of the new production shaft at Katamai in Australia, receiving full funds approval for the Pamor project at Portico in Canada, and reaching commercial production at the San Marcos deposit at Cerro Negro in Argentina. Importantly, earlier this month, we also reached a resolution with the union at our Penasquito mine in Mexico. And we are now focused on safely returning our teams to work and ramping up operations at this Tier 1 polymetallic mine. Throughout the negotiations to resolve this issue, we maintained a strong position and held steadfast to our values, honouring the collective bargaining agreement that we had in place and ensuring that we protected the long-term value for this mining operation, our workforce, local community, and all of our stakeholders. This unnecessary strike has caused significant hardship for many, many people. And our focus this quarter will be on the safe ramp-up of our operations, along with the seamless integration of the Newcrest assets into Newmont's global industry-leading portfolio. Now that we have a resolution to the strike at Penasquito, we are updating our outlook for the remainder of the year to incorporate the following three impacts. The first is to reflect the suspension of operations at Penasquito from early June to mid-October. The second is to reflect the lower-than-anticipated production from both Nevada Gold Mines and Pedlo Viejo. And the third is to reflect lower throughput at the Aharpa mill. And Rob will provide some more details on these matters in a moment. So for 2023, we now expect to produce 5.3 million ounces of gold from the current year-month portfolio, with a resulting organ-sustaining cost of $1,400 an ounce. As a reminder, our full year results for 2023 that we'll report in late February next year will incorporate around seven weeks of production from the five acquired Newcrest assets, with the transaction currently on track to close on Monday the 5th of November. I'll now turn it to Rob and then Karen to take us through the quarterly results and the important work ahead to deliver a strong fourth quarter. Then I'll provide an update on the Newcrest transaction and what will be the focus of our integration efforts from day one. How are you, Rob? Thank you, Tom, and good morning, everyone. I'll begin my discussion around the high margin Tier 1 assets in our portfolio today, starting with Boddington. During the third quarter, I had the opportunity to visit Boddington and spend time with the team as they continue to ramp up the planned waste movements in the north and the south pits and prepare for the planned mill maintenance shutdown in the fourth quarter. Laybacks are progressing well, and Boddington delivered solid production in the third quarter as expected. The strong quarterly performance has helped to offset the impact from no maintenance and unusually wet weather. Yet despite the heavy rainfall in the third quarter, effective utilization for the autonomous haul fleet has improved significantly compared to this time last year. Funds mined are expected to increase in the fourth quarter, I'm pleased to say that we've successfully completed the commissioning of a further five new cat autonomous haul trucks to accelerate stripping in 2024 and position this cornerstone gold copper mine to reach higher grades in 2025. Turning to Tannamine, our tier one mine in the Northern Territory continues to deliver consistently strong results following the record wet weather and extensive flooding experienced in the region during the first quarter of the year. We achieved record mill throughput in August, beating the previous record we set in March of this year. And we continue to expect to reach the year's highest rates and production levels in the fourth quarter. However, we are closely monitoring the impact and the status of the very large wildfires currently burning in the immediate vicinity of Tanami and in the Northern Territory. and we will continue, as always, to prioritize the health and the safety of our workforce. We also continue to progress our second expansion project at Tannermine, and I was encouraged to see the headway the team is making during my recent visit. We've achieved a significant milestone in the concrete lining of our 1.5 kilometer deep shaft, fully lining the upper sections and removing the mid-shaft plug. And as is typical with projects of this size, We will review the project plan as we commence the lining of the lower sections, taking into account the work that has been done so far, the current ground conditions, and the known overbreak needing to be mitigated in the lower section of the shaft. Once complete, this project will deliver significant ounce and cost improvements, further strengthening the already strong margins at our Tier 1 operation at Tannermine. And we look forward to providing an update with our guidance in February of next year. Getting to a half-home. As Tom mentioned, third quarter mill throughput was impacted when routine condition monitoring by our asset management team identified hairline fractures to one of the large grinding mills girth gear at a half-home. To reduce any further deterioration to the gear and to prevent a catastrophic failure, we made the decision to operate at less than full capacity bringing throughput to around 60% for the third quarter. We have in October swapped the girth gears between our two milling circuits at a HAPL to ensure our most productive milling circuit is able to run at 100%. This will allow a HAPL to run at approximately 80% until we again reach full processing rates in the second quarter of 2024, when we will install a brand new girth gear. Also, during the quarter, AHAPO accessed higher grade ore from Sabica Underground and successfully commissioned the replacement conveyor ahead of schedule and below budget. The AHAPO North project continues to progress as planned and we have access to all critical parcels of land to commence construction of the processing plant and mine services facilities. Earthworks are ongoing. Heavy mining equipment is being assembled and commissioned. Contractors are fully mobilized, and we remain on track to commence pre-stripping of the first mining area called the Subenso pit in the fourth quarter this year. Turning to Penasquito. As Tom mentioned in his opening remarks, we reached a definitive agreement with the union and received approval from the Mexican labor court on October the 13th. We have safely restarted operations, and the ramp-up is progressing well so far. We are anticipating a return to full productivity in the next two to three weeks, and we have restarted waste stripping in the Panasco pit and are now feeding the crusher with ore from the Chile, Colorado pit. We are importantly also continuing to strongly focus on the engagement with our workforce. This unnecessary strike caused significant hardship for all of our employees, contractors, host communities, suppliers, and customers. Penesquito is the largest employer in Zacatecas, with a direct workforce of more than 5,000, and another 28,000 people in neighboring communities who are part of the mine's local and national supply chain, service providers, and contractors. As we look ahead to the exciting and profitable future for Penesquito, we will continue to honor our commitments, work closely with all of our stakeholders, comply with the law and the collective bargaining agreements, and work to protect the long-term value of this Tier 1 polymetallic mine. Moving to our non-managed joint ventures. For our joint venture partnerships, Newmont has an interest in four Tier 1 assets, Pueblo de Havo, Carlin, Cortez, and Turquoise Ridge. The joint ventures are core to Newmont's portfolio and contributed 352,000 ounces or 27% of attributable gold production in the third quarter. As Tom mentioned, reported performance from our non-managed operations has been below expectations for the year, impacting our ability to achieve our production and cost targets for 2023. We have adjusted our projections for both Pueblo Vallejo and Nevada gold mines and look forward to an improved performance in the fourth quarter from our joint venture partners. On top of the 800,000 ounces of gold produced from our tier one operations and joint ventures, the remainder of Newmont portfolio contributed approximately 500,000 ounces of profitable gold production, an increase of more than 100,000 ounces compared to the second quarter. And we anticipate solid results from these assets through the rest of the year. Before I hand it to Karen, I'd like to take a moment to cover a few highlights from our development projects we are currently executing. On top of the achievements that I already noted at our second expansion at Tannemeyen and at Happelnor, we also achieved key milestones at Cerro Negro, Orca Pine and Achievement. At Cerro Negro we declared commercial production for San Marcos, the first of six ore bodies associated with this exciting district expansion. This opens up a further 650,000 ounces of high-grade gold, which will be mined over the coming 10 years. This milestone was delivered on time and on budget, and we expect to start realizing the benefit from these high-grade stoves in the fourth quarter of this year. At Porcupine, the Pomor project has been approved for full funds by the Board. This opens up a further 2.1 million ounces of gold and will be mined over the coming 11 years. which helps extend the porcupine complex's operational life to at least 2035. Our mining team will commence pre-stripping in the fourth quarter and are tracking well to produce first ore in 2024. And finally, we advanced our underground project to the feasibility stage, where drilling from the surface has already delivered results that are beyond our initial expectations. And with that, I'll pass it over to Karen to cover our financial results.
spk11: Thank you, Rob. Let's get started with the financial highlights. During the third quarter, revenue was $2.5 billion at a realized gold price of $1,920 per ounce. An adjusted EBITDA was $933 million, up 10% from the third quarter of last year, driven by higher gold prices and lower direct operating costs. We also generated $1 billion of cash from operations and $397 million of free cash flow for the quarter, which is net of more than $600 million of capital spend as we continue to move through a period of significant reinvestment back into our business. And we closed the quarter with a steady cash position of $3.2 billion in a leverage ratio of 0.7 times net debt to adjusted EBITDA. From a financial standpoint, our goal is to maintain a best-in-class investment-grade balance sheet while funding value-accretive projects and delivering healthy returns. And in recognition of Newmont's ongoing balance sheet strength and financial flexibility, I am pleased to say that we have received a first-time A-minus rating from Fitch with a stable outlook. We also maintain solid margins in the third quarter despite the challenges that Rob mentioned for Penesquito, AHAFA, and are non-managed joint ventures. Third quarter gap net income from continuing operations was $157 million, or 20 cents per deleted share. Adjustments this quarter included 14 cents related to revisions in reclamation and remediation plans at former operations, 5 cents related to unrealized mark-to-market losses on equity investments, two cents related to transaction costs associated with our pending acquisition of Newcrest, and five cents related to tax adjustments and other items. Taking these into account, we reported third quarter adjusted net income of 36 cents per diluted share. As a reference to those modeling included in our quarterly results, our $131 million in operating costs and depreciation at Penesquito. This quarter, we declared a dividend of $0.40 per share or $1.60 per share on an annualized basis. This dividend was declared within our established framework, calibrated at a gold price of $1,700 per ounce, and in line with our 2023 dividend payout range of $1.40 to $1.80 per share. Newmont has paid over $5 billion in dividends since closing the GoldCorp transaction in 2019, demonstrating our commitment to our shareholders. On the close of the new press acquisition, Newmont will integrate five new operations into our robust global operating model. February of next year, we expect to provide our 2024 outlook for the combined company with our fourth quarter and four-year results. Consistent with our process, our outlook will inform our 2024 dividend payout range, which we will calibrate within our established dividend framework. As a reminder, we assess the variable portion of our dividends annually in alignment with the business planning cycle, projected cash flows, and the current macroeconomic environment. Similar to this year, Our 2024 dividend payout range will apply to our fourth quarter dividend to be declared in February and will be reviewed and approved by our board of directors each quarter. For a longer-term view of our portfolio, we will apply a disciplined and thoughtful approach to setting market guidance for the combined company. We expect to provide our long-term outlook after we've had some time on the ground with the new Crest assets, and following our annual strategy session with our board of directors, which typically takes place in June. We look forward to these events and providing more information on the exciting opportunities ahead for both current and future stakeholders. And with that, I'll pass it on to Tom for an update on the Newcrest transaction.
spk09: Thanks, Karen.
spk08: The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and all our other stakeholders. Through an unrivaled platform, featuring the industry's best talent, running the highest concentration of Tier 1 assets in the most favourable jurisdictions, DuMont is uniquely positioned to generate superior returns for decades to come. Recognising the strategic rationale to create the industry's strongest portfolio of world-class gold and copper assets. 96% of votes cast by Newmont shareholders and 93% of votes cast by Newcrest shareholders were overwhelmingly in favour of this transformational transaction. All of the regulatory approvals and shareholder votes now secured, we expect to close the transaction on Monday the 6th of November and set a new standard for gold and copper mining across the industry. Following the close of the transaction, the core of our portfolio will be 10 tier one assets representing more than half of the world's top tier gold mines. And these assets will have the scale, mine life, cost profile and resilience to position Newmont to deliver strong and stable returns for several decades. Leveraging the learnings from operating our current T1 assets, along with our comprehensive asset strategy work, we will be applying the strength of our operating model, our people and our systems, to the newly acquired T1 assets in Lahere and Cadia, as well as Bruce Jack and Redcris in our emerging T1 district of British Columbia. There is no doubt that Newmont will be operating the world's best gold-copper portfolio, under one umbrella, benefiting from our existing portfolio, operating model, sustainability practices and disciplined capital allocation process. Every one of our assets is managed through our integrated global operating model, supported by a deep bench of experienced leaders and subject matter experts. with a track record of safely delivering value. And within this global operating model, we will have six regional business units, each led by a dedicated managing director. From the start of November, Natasha will assume accountability for our Australian business unit led by Mia House, our North American business unit led by Bernard Vessels, and Papua New Guinea where we have Albain Pretorius returning to Newmont to head up this newly established business unit. Through early 2024, Rob will continue to have accountability for our African business unit led by Dave Thornton, our Latin American and Caribbean business unit led by Mark Rogers, and our Peruvian business unit led by Rachman Amadou. We are very fortunate to have Rob as a continuing member of our executive leadership team particularly during this important integration period. Natasha and Rob will work together closely in the coming months, and both leaders will be pivotal in delivering synergies for the Newcrest acquisition and driving operational results that demonstrate our position as the benchmark gold equity. In just a few days, we'll be welcoming our Newcrest colleagues to Newmont And on day one, my extended leadership team and I will be onsite across every Newcrest location. As we begin our integration work with the Newcrest team, we'll be focused on three key systems that have been fundamental to our success at Newmont. The first is our Fatality Risk Management Program, which is at the very core of our safety approach. And put simply,
spk09: Great companies do not kill people. Second is our Respect at Work program.
spk08: A key benefit from bringing these two companies together is the alignment in our values and culture, in particular around safe and inclusive workplaces. We have the opportunity to learn from each other with the programs we both have in place. Like many other companies in the mining industry, We know there are systemic issues that allow sexism, racism, discrimination, harassment and bullying to continue to be experienced in our workplaces. These disrespectful behaviours have no place at Newmont. And we'll be working together to take actions to create a workplace where everyone is welcome and safe. The third key system is our Full Potential Program. which will commence rolling out both Lahir and Katia in November to support the delivery of our synergy commitments. Full Potential is a program that I have led at Newmont over the last decade. It is the most sustainable improvement program that I've worked with in my 35-year career in the industry, and it was key to delivering over $1 billion in synergies from our acquisition of Goldcorp some four years ago. However, full potential delivers much more than just cost savings and productivity improvements. It sustains and improves our culture by breaking down barriers and encouraging active participation, global collaboration and sharing lessons learned across our organisation. During our due diligence work back in May, we identified and submitted to $500 million in annual synergies across three categories. G&A, supply chain, and full potential. As we look ahead to the closing of the transaction and the delivery of these synergies over the first 24 months, we are very excited about the long-term value and opportunity it will bring to both sets of stakeholders and our combined workforce. This transaction creates the best possible collection of Tier 1 gold and copper assets in the industry, all supported by the industry's best talent technical capabilities, sustainability practices, and discipline capital allocation crisis. We'll also increase our investor outreach, welcoming shareholders from Australia. That will form an important part of our shareholder base as we look to establish and then grow our listing on the ASX. We have a long history and a shared heritage in Australia And we will be strengthening our presence in this key mining jurisdiction, where upon the close of this transaction, around 30% of our revenues will be derived. We're looking forward to welcoming the experienced and talented team at Newcrest and providing our first integration update on the combined business in the first quarter of next year. And with that, I'll thank you for your time today and turn it over to the operator to open the line for questions.
spk03: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 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 today comes from the line of Lawson Winda with Bank of America. Please go ahead. Your line is now open.
spk01: Great. Thank you very much, operator, and thank you for taking the question, Tom and team.
spk00: You've all discussed the likelihood for the combined company to have lower production than a combined 8 million ounces annually. What is the urgency with which you intend to sell any non-core assets to reduce from that level and improve the overall combined portfolio?
spk08: Thanks, Lawson, for the question, and good morning. In terms of, as Karen talked about, in terms of us taking time to work through the long-term outlook with more like a mid-year when we'll run a capital market stay to share that, what we'll look to do almost immediately after close is we have a reserve and resource review team. We call it our 3R review. We'll have that team go into each of the five operations at New Preston, establish the the reserve and resources to the Newmont definition. And then with that reserve and resource review done, we'll then establish Newmont-based resource models, and then start to develop our mine plans based upon previous best demonstrated performance, and then have those start to convert into business plans, and then we'll iterate and work those. So we'll certainly work to reduce a 2024 budget for the combined portfolio, but we're going to take our time to really understand and work those mine plans to understand the potential of those operations, ensure we can deliver on those operations, but also understand projects across that portfolio and how they re-sequence together. So that's going to be work we'll do diligently starting in early November for the first few months of next year. In terms of the full portfolio of 17 managed operations, as I've described in my remarks, Lawson, we can very comfortably manage those operations within our global operating model. This is an intensive purposes, is a bolt-on of five operations in a year-month's operating model. Two operations in the Australian business unit. When I was running the Australian business unit some years ago, I had that number and a couple more from memory. Two operations into North American business unit, Bernard Vessel's very capable to accommodate those two operations and manage them. and then standing up our new business unit in Papua New Guinea. And as I mentioned, one of the very best leaders ever to work at Newmont, Albain Pretorius, who retired to go and work on his family farm in South Africa, is coming back to base in Port Mawson to stand up that business unit. So someone who's very experienced, having run very successfully our business unit in Africa some years ago, and then our Latin American Caribbean business unit. He understands developing world, he understands Newmont, really well-placed to stand up that new P&G business. So we will capably run those 17 operations, and Peter Toth and his team will then look at where the opportunities might be to optimize our portfolio. We have a commitment of $2 billion over the first 24 months. That'll be a combination of project resequencing. It will become part of that business planning work that we'll do, but we'll also be looking to... where the opportunity is to rationalise our portfolio. And we'll be looking at those operations that are tier two. And we have a number of tier two operations in our portfolio. Several have a potential to grow to tier one, but we have a number that are clearly tier two. And Peter will work through a very structured process to think about how we might rationalise the portfolio. But we are very comfortable, Lawson, to be able to run 17 operations in our business.
spk01: Many thanks.
spk00: And if I could follow up, just one final question on your full potential comments in your prepared remarks and the synergies. Can you comment on which assets might get the greatest attention for that program post-closing on the NCM side? And put another way, is there a penosquito in the NCM portfolio that could materially exceed expectations included in the initial synergy guidance? Thanks very much.
spk08: Thanks, Lawson. So of the $500 million, $200 million is attributed to our full potential worth. There are two kind of skiddos in the Newcrest portfolio, Lahia and Cadia. That's where we're focusing our time and attention. Of the $200 million, we see the order of $90 million coming out of Lahia as we think about the opportunities to improve the work we do around the mine, the basics of mining, from fill and blast to load and haul, and our maintenance or asset management work. So we're presenting... the best or consistently to the four autoclaves in that processing plan. We'll have people on the ground next month to start really getting in and understanding those opportunities that we saw during due diligence. I think we certainly planned to tell a story out of Lahir that was very similar to the story we've told out of Penasito. And then in Cadia, the other very large Q1 operation in the Newcrest portfolio, with the opportunities in the processing plant. A big block cave mine, roughly 35 million pounds a year coming out of that underground mine. The opportunities we see to work the bottlenecks in the processing plant is the availability, the reliability, getting consistent throughput through the crushing and grinding circuits so that you've got consistent feed to the flotation circuits and then improve that throughput and recovery. Again, very similar to where we worked Penasquito with a big mill, crushing and grinding circuit with multiple rotation circuits. So the Penasquito story and the Boddington story in terms of working the mill is where we see the analogy or the analogue to Acadia. And then working the mine at the Eart is very similar to the work that Rob and the team led at Penasquito to deliver significant improvement out of that mine to present the ore to a very hungry mill at Penasquito.
spk01: Fantastic. I look forward to further updates and congratulations.
spk03: The next question comes from Daniel Morgan with Baron Jerry. Daniel, please go ahead. Your line is open.
spk05: Hi, Tom and Tim. My first question is about the issues that you've had this year. How much of the issues you've had you know, that has led to the production downgrade today. How much does that follow into 2024? Obviously, Panasquito doesn't, but can you just run through, you know, through some of the assets and whether some of the issues run into 2024?
spk08: Thanks, Daniel, and good morning. And good morning to you, I think it is, and thank you for staying up in Australia to listen in, and thank you for your coverage. But if you look at the big assets in the Newmont portfolio today, Penosquito, now that we're up and running, we're very confident that there's been a reset of expectations with our workforce and the union that represent them. So we go into 24 very confident about the ability to continue to get after cost and productivity improvement safely at that operation. The impact on 24 is a mind sequence. So where we were in the mine sequence when the operations were suspended means that what we thought would happen in 24 will be different now. It's a polymetallic mine, so we're in the Chile-Colorado pit, which is more of the other metals than gold, so we won't swing back into Penasco now to later, so therefore it will be the balance of metals that come out of Penasco that will be different in 24, and the gold equivalent ounces, if you like, should stay the same. At Harpo, we will be nursing the girth gear that's now on the mill. So there's two big sag mills at Harpo. The girth gear on the main feed to the processing plant, which is two-thirds of the throughput for the mill, is now tickety-boo, and that can run at 100%. We'll now nurse the girth gear with the hairline cracks on the smaller mills, the second quarter of next year. So the processing plan at a half-hour will run at around 80%, 70, 80% of throughput as we get through that very managed transition. They're probably the two impacts on our big tier one operations. We think into 24. We're still to see plans out of our non-managed joint ventures. They make up about 30% of GMOD's portfolio today. At Pueblo Vieja, we're commissioning a very significant expansion to a pressure oxidation circuit. So as that is understood and plans are built for 24, that will reflect the latest information from that commissioning exercise. And then three big mines in Nevada, and as you work through 23 and then understand impacts on 23's performance and what that means for mine sequence and other things in 24, potentially some impacts there that we'll learn about in the in the next couple of months as we work with our joint venture partners on those plans. So hopefully, Daniel, that gives you some colour as to how we think about the impacts from 23 going into 24. I think the important thing is that with all of the events we've had this year, all of that metal is still in the ground, and this is just a process of the time at which that metal presents. None of those issues have any impact in terms of the reserves that we have, and it's just the timing at which they can be converted into metal and salt.
spk05: That's probably a good segue, Tom, into my next question, which is the market can sometimes get fixated on short-term issues and forget that the gold is still there. So if the market does do that and the share price underperforms, as it has here today, is it an opportune time at some point soon to look to a buyback, to maybe communicate to the market that there is long-term value in the share price and that the market may not be pricing it.
spk08: Thanks Daniel. I'd certainly say for anyone looking at Newmont stock today, there's some tremendous buying out there in terms of the transaction we're about to close and the portfolio that in only less than two weeks' time. Daniel, the process will work through. We'll diligently work through our business planning. As I was mentioning in the answer to the previous question, we've got five new assets to develop, new mine-based mine plans too, and work through our process of determining our 2024 budget and continuing in parallel work on the longer-term plans. That will then inform our capital allocation process, which for us is ensuring we're maintaining a strong balance sheet ensuring that we're directing appropriate levels of cash towards reinvestment back in the business to extend life and for growth, and ensuring we've got returns available to our shareholders. Our capital allocation strategy has returns first and foremost being through our dividend framework. So we'll work through our business planning process, particularly for the 2024 year, and look to how we calibrate our dividend framework, and we think about assumptions about gold price, the cash we'll be generating, and some of the other macroeconomic events that will be impacting our business and our world at that time. That will be the primary debate and discussion we'll have. But as we have that debate and we present those numbers to our board and we look at the cash we're generating, we look at our share price, it is an area that we will continue to debate as a second order capital allocation element for returns to shareholders and whether there would be some in terms of how we're seeing the business and whether there would be any benefit in seeking permission from the board to establish a buyback program. So it'll be part of a debate, but our first order returns to our shareholders is through the dividend framework.
spk05: Thank you so much, Tom, and I look forward to meeting you in the coming weeks.
spk08: Thanks, Daniel. I'll likely see you in a couple of weeks, maybe in Australia.
spk03: Our next question comes from the line of Tanya Jaskuskanek with Scotiabank. Please go ahead, Tanya. Your line is open.
spk04: Oh, great. Good morning, everybody, and thank you so much for taking my questions. I just have a couple that I just need some clarity on. Tom, can we just go back to the Newcrest merger that is pending? Can we just talk about Newcrest's reserves and resources? When you report your guidance in February of 2024 for the year and your reserves and resources, will you be adjusting those reserves and resources based on your input, just like you did with Cool Corp when you took over? You've made adjustments from the reserve to the resource category. And if so, can you review with us some of the lines that we may see some shift? Thank you. That's my first question.
spk08: Thanks, Tanya. Yes, you can expect something very similar to what took place when we acquired Goldcorp. So we'll have a team, a technical team on the ground across those five operations through November and December, assessing the reserves and resource at each of those operations and assessing those against our UMON definitions. So we always report under SEC rules and Newcrest report under under JORC. So there will be some differences in terms of what is classified as reserve and resource, and we also have a very high standard at Newmont. A Newmont reserve is a higher standard in the industry. So you will see some movement back and forth. In the various announcements we've made since we announced the binding agreement, you'll see us talk about a couple of instances about reserves and resources, and you'll see us for those. So we are working towards that temporary timeframe to update reserves and resources for the combined portfolio. In terms of any sort of signalling, I think it's important for everybody is we had access to a data room for four weeks back in April and May to assess and to submit a binding offer. and determine our synergy values and to make some judgements about portfolio optimisation. Since that time, both companies are required to run as independent companies. And so we have had an integration team working on planning for integration, but we have not had any access to any additional Newcrest information since that time. We get the keys to the car on Monday the 6th of November. That's the first time we get access to reserves and resources, mine plans and the like, and can start that work. So it's in front of us, Tanya, in a couple of weeks' time.
spk04: Okay, so there isn't anything that you can think of. You know, for example, the Lahir where some of those reserves, I think it's about 3 million ounces or thereabouts, are in the reserve category that need the additional layback from the, I think, the dam wall. to be included, whether something like that could shift from reserves to resources given, you know, Newmont's stricter definition. I'm just giving that as an example. I'm just wondering if there's anything between the two accountings, the two IFRS and U.S. GAAP on the reserves that just is glaring to you at this point.
spk08: Nothing is at that level of granularity, Tanya, but the expectation would be similar to the Goldcorp experience. You will see, without going into specifics, you will see Newcrest-reported reserves in some instances move into Newmont-reported resources. You'll also see, as I think many people fully understand, as we move from interest reporting to accounting for US GAAP accounting, our definitions for stockpiles and for sustained capital and other things will change. Our co-product, by-product accounting will change. There'll be some moving parts around all of that as well. But we don't have that granularity yet.
spk04: Okay. And then just on the long-term guidance, I think I heard that that will be provided after the board strategy meetings in June. So should we be thinking mid-year for a five-year guidance outlook?
spk08: That's what we're planning to do, Tanya. We want to get through that good working session with our board and then really look to set up a capital markets day where we can come together and work through that longer-term view, certainly the five-year and certainly the portfolio we're creating here will be looking to show the five- to ten-year view of the strength of this portfolio. But we certainly want to work with those mine plans
spk07: over the first few months of next year in order to really have a robust story to share with the market.
spk04: Okay. And then just maybe on any more severance and or restructuring costs that we are going to be incurring in Q4, or have these all been taken in Q3?
spk08: The severance costs in Q3, Really largely unrelated to this transaction, though, associated with the reset work happening down at Yanacocha, as we're ramping down there, we've got folks taking some voluntary redundancies. So we will start to see the transaction-related severances flow in the fourth quarter, and then they'll flow into the third quarter of next year is where you'll see them. The larger numbers will be in the first quarter of next year than the fourth quarter of this year.
spk04: okay so more costs in q4 and q1 to come and then my last question if i said is i just kind of would like yeah okay with the transaction yeah um and then just my last question is just your view on sort of all of these index rebalancing from now until your end um could you give us some you know overall um qualitative information in terms of or quantitative if you have in terms of how you see all of these index rebalancing occurring, what your view is on that from now until year end. It's a little hard with all this movement in the share prices as we look at the stock. Yeah.
spk08: Thanks, Sandra. Lots of moving parts happening at the moment, certainly with the right live in that process of the index rebalancing as Newcrest coming off the ASX and our secondary listing coming off the ASX and all of that work happening. as well as the volatility in terms of gold price movements. And so there's lots of moving parts affecting stock performance at the moment. And we look at our modeling getting through and out the other side of the rebalancing between our headstock in the New York Stock Exchange and the secondary listing in the ASX. It's likely to be a month or two for that to settle out. So we anticipate, and certainly as we've had conversations with shareholders in Australia and describing what you can anticipate happening. Quite a bit of volatility and liquidity before things start to settle out in terms of New York Stock Exchange and ASX. We think there'll be some movement of potentially up to 10 billion Aussie that could flow from one to the other. We also anticipate that we'll have something of the order of 10 to 15 billion dollar Aussie market cap sitting on the ASX representing 20 to 30 percent of our market cap That will be the starting point that we'll lean into and then look to work that secondary listing alongside our primary listing. So we've got some modeling that sort of shows some scenarios as to where we might land between New York Stock Exchange and ASX. And we fully anticipate that it will be volatile and liquid for a couple of months before everything settles down and you can get a line of sight on the book.
spk04: Okay. So what I take from that is some outflows from now until year-end with all of this rebalancing and then settling in and then obviously on a positive side with the Australian listing.
spk08: The positive side of the Australian listing with a very savvy mining investment community and some very sticky funds with the big super funds there and lots of interest as we've engaged with that investment community. And then you'll also see, I think you'll see positive trends as from a passive standpoint with our larger market cap, as things settle out, I think you're going to see some of that flow as well. So noisy, but there's some very good signs as to what this portfolio is going to be able to attract.
spk04: I appreciate it. Thank you so much for taking my questions.
spk03: Our next question comes from Josh Wolfson with RBC. Please go ahead. Your line is now open.
spk06: Yeah, thanks very much. I understand there's a lot of moving parts here, but is it possible to provide some goalposts or some indication of what the cost structure looks like, even just for the Newmont portfolio going forward? When we take a look at the numbers, fourth quarter based on guidance looks to be an annualized rate of 6 million ounces, which is let's call it average for the company and the implied AISC is closer to about 1350, which would be, you know, quite a bit higher than where the company was discussing costs, at least for 2024 and with the old structure. So I understand a lot of moving parts, but just anything on inflation or costs for some, the new Mon portfolio going forward. Thanks.
spk08: Thanks, Josh, and good morning. It's a tricky one this year because of some of the events we've managed which are really impacting our production. They've been having a flow and impact on unit cost. But when we look through that to our direct cost base, it's very much in line with what we're expecting for this year. And then as we look into next year, that direct cost base is looking pretty steady. So it's sort of staying at the levels that we've seen in the sort of stabilizing out of inflation very much as we look into next year as we're doing our early planning work. The direct cost base looks very similar this year. So then for us, it'll be working through the ounce profile for this combined portfolio, thinking about, we'll think about our portfolio in a couple of different chunks as we're building our plan. What'll be the tier one operations and the emerging T1 operations that we manage and how we think about those. We'll be thinking about three non-managed joint ventures that we'll have in our portfolio, Nevada Goldmines, Pebble Viejo, and Frigida Noto. And then we'll be thinking about those tier two assets and how we manage those tier two assets and those candidates that would be more likely to be part of that portfolio optimization. So we think about what's our cost base for the tier one operations and emerging tier one portfolio that we manage. We'll be challenging our non-managed joint ventures around their cost base and then we'll be looking at how we manage our tier two assets going forward. So we'll be having those debates internally to build our business plans. But the high level answer to your question is our direct cost base is very consistent with what we see this year and we'll be working to ensure that we've got some of those, that we're through and out the other side of some of those challenges that we've had with bushfires and flooding, a strike and So, we'll certainly be looking at the plan for 24 being pretty consistent in that profile for most of those operations of a pretty consistent cost basis.
spk06: Okay. And then another question. I'm not sure if you can provide many details or a review of this. You know, following the Newcrest recent operating update, I'm just wondering, you know, the performance of these assets, has that affected your views on maybe some of the complexity or the strategy for integrating this portfolio or maybe how you're going to manage that process?
spk08: No, Josh, nothing's changed from our due diligence. We're crystal clear on how we'll manage those operations and how we'll integrate them into into our operating model and we're well advanced in planning in terms of what we'll do on day one, week one, month one, and the first 100 days. So there's nothing about anything that's happened in the more recent times that changes our long-term view on those assets and how we'd integrate and manage them.
spk09: Great. Thank you very much. Excellent.
spk03: Our final question today comes from Anita Stoney with CIBC World Markets. Anita, please go ahead. Your line is open. Okay.
spk02: Thank you, Tom and team, for taking my question. So the first one I think is related to capital allocation. When you deliver on the $2 billion in portfolio optimizations, can you give us an idea whether or not that could be used to support a dividend if needed or you know, do you think you have uses for that capital in terms of reinvesting in your portfolio?
spk08: Yeah, thanks, Anita, and good morning. So the portfolio optimization will come from two categories. One will be resequencing the projects of the combined portfolio, and so if you match the two portfolios together, what would have been the cash going towards development projects and reinvesting? That will change, and that will then lead to free cash flow that we're generating. that would then be informing the decisions we make around calibrating our dividend framework. So that portfolio optimization will actually lead to generating free cash flow for support of a dividend. Then the portfolio optimization is the proceeds that we receive from investments of our teams. First and foremost, we would bring that on to our balance sheet to strengthen our balance sheet and then make judgments about how we use the cash on our balance sheet. And certainly as we did with the Gold Corp, back to our Gold Corp experience, and we'd look at where our, to answer the earlier question, we'd look at where our share price is trading. We'd have a robust view of where we're valued. And if we thought that there was some opportunity to buy back some shares, then that would be the bait we would have with our board. But first and foremost, that cash would come onto our balance sheet and be used to strengthen and bolster a balance sheet at the combined organisations.
spk02: Okay, thank you. Second question, just more a little more on the nitty gritty. Looking at Boddington, is that an appropriate run rate this quarter? Is that kind of what you'll be doing in terms of throughput in grades as you go into 2024 and continue with that layback? Or will that become more, I guess, exacerbated and more stockpile use and more waste stripping happening?
spk08: Certainly, a bit of the high sustaining capital, Anita, was around getting our hands on five trucks to get after the, and we had access to those five trucks, so getting them in earlier to get after the waste movement in the north pit to really start to open up the north and south pit to the next swing into the high grade ore. So we'll move through 24 and 25 into some into some more waste movement, some run of mine ore coming into the plant, but also starting to supplement that with stockpile ore. So you will see a movement into, in that normal cycle of Boddington, moving into more waste and some stockpiles and so some lower gold and copper in that normal band that Boddington operates through. So you will see a bit of that dynamic playing out in 24-25 before you get back into the
spk07: Okay, thanks.
spk02: And the final question is with regards to the projects, particularly Tanami, where I think you, you know, you pair back some, revise your development capital number, citing the rainfall events that you had. I just wanted to understand when you guys uh review the projects in the capital and where you you know basically do you think you're okay on your capital at tanami expansion 2 right now or should we be expecting to see an update there and i asked this because you know we've seen unit cost escalation across the board and you know we just haven't had an update on like those capital numbers for about a year or so
spk08: We've reached an important milestone at Tanami where we've removed the mid-shaft plug and we've lined the upper part of the shaft and now we're at that mid-shaft level setting up the infrastructure to then get after the lining of the lower part of the shaft. So it's an important milestone where you pause and understand the work in front, what you've learned from lining the top part of the shaft, how you're going to apply those learnings to the bottom half of the shaft and what the condition of the bottom half of the shaft is as you now go to the run home. That work is happening right now. As we're seeing in the Australian market, I think the key cost pressure in capital projects is labour, and so just ensuring we understand the labour. We have to have labour there and full crews as we get set to go for that second round of sharp lining. That work is live as we're working that through as part of our training processes and doing our cost and schedule for the run home that would certainly be something that we would be expecting to provide an update with our 2024 guidance in the latter part of February next year. So we're at the milestone of the project, and it's nicely lined up with our February 24 update.
spk02: Okay, so just on that note, can you just go over? So February 2024, you'll provide guidance for the combined portfolio for 2024 only. and then June you will provide the combined portfolio, or mid-year you'll provide a five-year for the combined portfolio, is that correct?
spk07: That's correct, Amanda.
spk02: Okay, and then lastly, the dividend, you know, what you would set it for next year, that would be in February as well, right?
spk08: 2024 dividend would be calibrated for 2024 and we will be sharing that information with our guidance in February 2024.
spk02: Okay, thank you. That's it for my question.
spk09: Thanks, Anita.
spk03: This concludes the question and answer session. I would like to turn the conference back over to Tom Parler for closing remarks.
spk07: Thanks, Operator, and thank you all for taking the time to do our call today, and please enjoy the rest of your day. Thank you.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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