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spk04: 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.
spk02: Thank you, Operator. Good morning, everyone, and thank you for joining our call today. Please note our cautionary statement and refer to our FTC filings which can be found on our website. Today, I'm joined by my executive leadership team, including Natasha William and Karen Ogleman, and we'll all be available to answer your questions at the end of the call. I'd also like to take a moment to acknowledge our friend and colleague, Rob Atkinson. Our Chief Operating Officer for the past five years, Rob will leave Newmont in early May, although his legacy will endure. Through his visible self-leadership, Rob has driven our fatality risk management program, achieving five years' fatality-free performance. Throughout the pandemic, Rob navigated our operations through challenges, including periods of care and maintenance, border closures and vaccine implementation. Rob also represented the very best of our values when he guided Peresquito through two major challenges, resolving a community blockade in 2019 and an unjustified strike last year. In both situations, Rob found sustainable solutions that protected the long-term value of Newmont. Over the last five months, Rob and Natasha have conducted a thorough handover of accountabilities, and Rob will remain with us to support Natasha and me before finishing up and heading back to the UK to spend more time with FATMA. Before we get started, it is with great FATMAs that I share the tragic news regarding a fatal incident at our recently acquired Bruce Jack operation on December 20th last year. I'd like to take a moment to remember our colleague, Adam Kennedy. Adam was only 44 years old. He was a partner, a son, a brother, an uncle, a best friend and a valued colleague. Our condolences go out to Adam's loved ones during this difficult time. And we are again reminded how important it is to maintain a sense of chronic unease when it comes to the safety of everyone who works at Newmont. Any fatality is totally unacceptable. We fully understand the fatality risks in our industry and the critical controls that need to be in place at all times to manage them. So we have been taking the time to conduct a safety reset across all Newmont sites, not just the five new to Newmont operations, with a laser focus on the implementation of our fatality risk management system. This reset work includes training delivered by our line leaders, our manager directors, our general managers and our senior health and safety leaders, training on our fatality risk management standards and our critical control verification process. We're also concluding our thorough investigation into this tragic incident, which is being led by Dave Thornton, the managing director of our Africa Business Unit. We are applying the lessons learned from this investigation at all of our managed operations globally, and we will share them widely with our mining industry peers. Nothing is more important than our commitment to the health and safety of our workforce and we are determined to create an environment where every person working at Newmont across all locations returns home safe and well to their families and loved ones at the end of each and every shift. Turning to our performance in 2023, Newmont finished the year with a solid fourth quarter, putting us in line with the revised standalone outlook that we issued following the resolution of the strike at Pettiskeeto. In summary, we produced 5.5 million ounces of gold at all its outstanding costs of $1,444 an ounce. In addition to gold, we produced nearly 900,000 gold equivalent ounces from copper, silver, lead and zinc over the course of the year. This performance enabled us to deliver $4.2 billion in adjusted editor, return more than $1.4 billion to shareholders and end the year with liquidity above $6 billion. In a few minutes, Natasha and I will expand on how we expect to improve upon this performance in 2024 and beyond with a focus of delivering meaningful value to our shareholders. But before we do that, I would like to describe how we are transforming our business into a unique collection of the world's best gold and copper operations and projects following last year's transaction. When we announced our binding agreement to acquire Newcrest in May last year, we outlined a powerful value proposition built around four key commitments. First, to set the new sustainability standard and strengthen Newmont's position as the gold sector's recognised sustainability leader. Second, to create the industry's strongest portfolio of world-class gold and copper assets in the most favourable mining jurisdictions. Third, to deliver $500 million of annual synergies and realise over $2 billion in cash from portfolio optimisation. And finally, to continue driving a disciplined, balanced approach to capital allocation. After closing the transaction on November 6 last year, the integration of the five new operations into our Newmont operating model has been progressing very well. And as we enter this critically important year of integration and transformation, I'll be holding myself and my executive leadership team accountable for delivering on these commitments. And this will be our key focus in 2024. To support this work, earlier today, we announced four key actions that together will enhance our ability to deliver on our clear and consistent strategy. First, we plan to divest six high-quality but non-core assets this year. From this point forward, our world-class portfolio will consist entirely of Tier 1 and emerging Tier 1 operations and districts. And it will have a significant exposure to growth in copper and gold from our industry-leading organic project pipeline. Second, we provided a 2024 and five-year outlook, giving a clear picture of the work we're doing today to expand margins and appropriately sequence our projects to deliver sustainable value. Third, with the clarity, simplicity and focus that our Tier 1 portfolio provides, we have committed to deliver a further $500 million in cost and productivity improvements across the entire portfolio. And these improvements are over and above our synergy commitment from the Newcrest acquisition. We expect to hit this $500 million annual run rate of improvement by the end of 2025. And finally, we announced a balanced shareholder return framework consisting of a $1 per share annualised based dividend and a new $1 billion share repurchase program. Our Go Forward Newmont portfolio is focused on Tier 1 gold and copper operations and projects located in the world's most favourable mining jurisdictions. And it has 14 features. First, it contains 10 Tier 1 operations representing more than half of the world's Tier 1 gold mines in the Newmont portfolio. Second, it has three emerging Tier 1 operations that each have a clear path for growth. And we have the opportunity to create a Tier 1 district in British Columbia, a district in which Newmont will be operating for at least the next century. And third, it has an unmatched organic development pipeline with
spk00: six
spk02: large-scale copper gold projects. And fourth, underpinning our Tier 1 portfolio is the industry's most robust foundation of reserves and resources. Going forward, Newmont has the industry's largest gold resource base and we also have the largest base of copper resources in the gold industry. To put these numbers into perspective, Newmont has an almost 30% larger gold reserve resource base than our nearest peer. And we have a 40% larger copper reserve resource base than our nearest gold peer. No other gold producer in the world can offer the depth and quality that Newmont's Tier 1 portfolio can today. Later on, I'll provide a little bit more colour about Newmont's longer-term outlook and the exciting gold and copper opportunities ahead of us. But first, I'd like to step back and give some insight into how we are framing the year ahead. 2023 brought with it a number of unique challenges which are now firmly behind us. The 120-day labour dispute at Penasquito, acid integrity issues that were inherent in the original design of equipment at Harpo, and wildfires in Canada impacting alien oil. Those three events meant that our final production number did not reflect the full capability of our assets. As we emerge on the other side of these events, I am proud of the decisions that we took to protect the long-term interests of our company rather than looking to seek short-term, experienced solutions. However, I'm also not happy with the underlying level of our operating performance. We have the opportunity to improve our -to-mind plans, to improve our fixed and mobile equipment reliability, and to improve our milled throughputs and recoveries. So our focus for 2024 will be on safely integrating new teams, new operations into our Newmont operating model and culture, transforming our portfolio, and laying the groundwork for sustainable operating performance, margin expansion and strong returns. Finally, this morning we also announced that we have extended the completion date and increased the projected capital cost for our TANOMI2 expansion project. In the second half of last year, we completed the concrete lining of the top half, or 700 metres, of this one and a half kilometre deep production shaft. This milestone gave us the opportunity to assess the condition of the known overbreak and ground conditions at the very bottom of the shaft, as well as incorporate the lessons learned from lining the top half of the shaft into the costs and schedule for the run home. We have critically assessed a number of options to safely address the known overbreak and line the lower section of the shaft. This work included key third-party reviews before we landed on a method. And it was this methodology and subsequent decision that had informed the cost and schedule update we provided today. Although I'm not happy with the extension of time and cost, I am confident that we have chosen a method that is safe and will ensure the shaft construction is of the quality necessary to reliably service TANOMI's prolifical body for many, many years to come. So with that, I'll hand it over to Natasha to walk you through our operational priorities for 2024 and what we are doing to ensure that we deliver on our commitments this year. Over to you, Natasha.
spk09: Thank you, Tom, and good morning. Since joining Newamont in October, I have visited 14 of Newamont's 17 managed operations. And I've been really impressed by the quality of the assets, the dedication of our people, and the commitment from our operational leaders to drive safe and profitable production. Now, before and again, I'd like to provide a brief introduction to the operational team focused on integration and value delivery in 2024. As mentioned last quarter, within our global operating model, we have six regional business units, each headed up by a world-class experienced Newamont leader, who you can see on this slide.
spk10: This
spk09: scalable integrated operating model enables alignment across our operating leadership team, while also empowering our managing directors to apply the extensive local and technical knowledge and draw on the global functional expertise to lead each unique operation. To support our operations from the project execution side, we have a dedicated, restructured project delivery team. This team of subject matter experts is working across the full spectrum of our organic pipeline, including studies, project development, construction, and commissioning of projects. They strengthen our operating model with block-guiding capability and an understanding of industry-leading practices in project development. This year, we will have a laser focus on the performance of our 11 managed operations in our Go Forward portfolio, while also guiding our six non-poor assets through a safe and productive process for divestment. As we work to deliver efficiency and reliability from our global portfolio, we are committed to progressing our four key projects in execution and keeping them on track in 2024. As a result, we are entering the year with a strong focus on integration and the safe delivery of our targets. Our success in 2024 will be largely determined by the performance of our six managed tier one operations, Burlington, Tanami, Inosquito, Ahofo, Lihue, and KDO, not underestimating the significant impact of the delivery from the full portfolio of operating assets. I will also separately touch on Telfer and how we are ensuring tailing stamp integrity at this new to Newmont operation. We are very clear on the key priorities to integrate and deliver 2024 and how to set up operations for the next five years, and I will touch on some of these at each of the tier one managed operations. At Burlington, we are progressing the stripping of the current laybacks in the north and south bits, as planned, with improved productivity from our fully autonomous college fleet. At our polymetallic mine, Inosquito, our focus is on delivering strong silver, lead, and zinc from the Chile Colorado pit, and continuing waste stripping in the Canisca pit to deliver higher gold rate in 2025. At Ahofo, we remain on track to replace the defective earth gear in the second quarter to maximize processing rates. At Tanami, we are improving material movement through the decline as we progress deeper underground. The Lehe team will be focused on simplifying the mine plan and improving asset reliability. And at our other new to Newmont operation, Cadia, we are commissioning the next block cave and progressing some important tailing rectification and expansion work to set up for the next decade of all feed. We have full potential teams on the ground at Cadia, actively working through our diagnosis phase and designing the initiatives to extract value and deliver the opportunities identified. So taking these key priorities into account, we anticipate that the production will be around 53% weighted towards the second half of the year. As we return to full processing rates at Ahofo, reach higher grades from the Liberator ore body at Tanami, and safely integrate the new to Newmont sites into the Newmont operating model. I'm touching briefly on TALFA, a non-core operation in Australia. We are focused on remediating sink holes and cracks detected at the tailing storage facility in December, when we stop the mold to complete first phase of remediation work. In early February, we temporarily restarted the plant while evaluating options for further remediation of an adjacent tailing facility, and we'll provide an update on that work on our first quarter earnings call. And with a focus on fatality risk management, respected work, and full potential in place, we remain firmly on track to deliver on our commitments this year. On top of delivering in 2024 operationally, we are working to bring forward new low-cost ounces from the four key projects we have in execution. These projects include the second expansion at Tanami, as Tom just covered. We are focusing on slightly lining the lower section of the shaft and continuing to construct the crushing and conveying infrastructure underground. Two block cave projects at Kadia to recover both gold and copper, where we have just delivered first ore as we ramp up the first of these caves. And our new mine, Ahofo North, where we are making good progress on the construction of the mill and other supporting infrastructure, along with waste stripping to allow us to start accessing the ore for stockpiling. When this new and very exciting mine is combined with the underground potential of Subika, Benso and Awonso, we have a tier one Ahofo district that will be capable of producing around 850,000 ounces of gold per year, out to and beyond 2050, which would make it one of the world's top gold mining districts by any measure. Now, bringing all of this together, as we focus on integration and size delivery this year, we expect our tier one portfolio to produce around 5.6 million ounces of gold and an all-in sustaining cost of $1,300 per ounce, combined with a very significant 1.9 million gold equivalent ounces from copper, silver, lead, zinc and polyptimine. Our unit costs are expected to improve compared to 2023 due to steady production volume and the delivery of synergies and full potential improvements, with the lowest unit cost coming from Newmont's managed tier one portfolio. Our capital reinvestment remains in line with the pre-acquisition spending levels as we continue to focus our disciplined delivery and a balanced approach to capital allocation. And with this stable production and structured reinvestment, we are strongly positioned to integrate and deliver on our commitments in 2024, setting the stage to future-proof these world class assets with benchmark performance and meaningful growth in 2025 and beyond. And with that, I'll turn it back to Tom.
spk02: Thanks, Natasha. Building off the foundation we are establishing in 2024 that Natasha just covered, I'd now like to provide a bit of colour around the opportunities that we are seeing from our Go Forward portfolio. We will continue to optimise the performance of our mature tier one operations and our new to Newmont assets. At Bodington, the stripping that we are doing today will bring forward strong gold and copper grades starting in 2026, all supported by the gold industry's only fully autonomous whole fleet. At Tanamai, the completion of the second expansion will provide efficient access to ore at depth and open up this prolific underground ore body in 2027 and beyond. At Penaschuto, the stripping that we are currently doing will bring forward a higher proportion of gold ounces from the Panasco pit, balancing with the production of silver, lead and zinc from the Chile Colorado pit. At Ahapo, we are building out district potential with new low cost ounces from both underground and open pit at Ahapo South and our new mine, Ahapo North, coming online in 2025. At Kadia, we will commission our second block cave in this timeframe, bringing forward high gold and copper grades, whilst in parallel leveraging our full potential program to improve their reliability and throughput. And finally, simplifying the year's mine plan, it is expected to deliver a strong improvement in gold production as we reach high grades from phase 14a. As I mentioned earlier, with a clear line of sight into the tier one managed operations in our portfolio, we have identified $500 million of additional cost and productivity improvements over and above our synergy commitments. So taking everything into account, over the next five years, we expect to deliver growing gold production driven by the completion of the laybacks at both Boddington and Penaschuto, the new ounces from Ahapo North, the completion of the second expansion at Tanami and both block caves at Kadia, and finding improvements combined with high grades at Lahia. And on top of this improving gold production, Newmont will produce a significant amount of copper, along with silver, lead, zinc and aluminum, from our global diversified tier one portfolio. Driven by this high metal production and with a focus on improving costs, we expect to deliver lower oil-sustaining costs, bringing our go-forward portfolio down to $1,150 per ounce by 2027. For development capital, we are applying a pragmatic and methodical approach to ensure we are efficiently bringing forward opportunities that are aligned with our strategy, whilst also remaining disciplined with our capital allocation priorities. We expect to spend an average of $1.3 billion per year on development capital, driving healthy competition for investment as we close out the four large projects we have in execution and bring forward the next wave of profitable production from our organic project pipeline. Newmont is supported by the deepest and best project pipeline in the gold industry, and we will manage it with discipline and rigor to ensure that the most value-accretive opportunities are advanced at the right time and in the right order. We have three world-class copper gold projects in our pipeline, ramped up behind the mine currently in execution, moving underground at the block cave at Redcrest, developing the Woffy Goldfield block cave and processing the sulphide oil at Yanukachua. And then, when we look beyond those projects, we have three exciting long-term opportunities to further diversify into copper, Galore Creek, Eder Union and North Aviento. Over the next 10 years, demand for copper is expected to increase significantly, and based on current copper production trends, the world can expect to experience around a 10 million ton shortfall of this critical metal by 2035. Bridging this gap will require significantly more copper mines, copper recycling and enhanced copper leaching processes, creating an exciting opportunity for Newmont to help meet this demand with the organic copper exposure we have in our portfolio, whilst continuing to provide unparalleled exposure to gold and its enduring value. And with that, I'll hand it over to Karen to talk through our balanced capital allocation strategy.
spk10: Thank you, Tom. Our capital allocation strategy is underpinned by three priorities. Working in unison, these priorities maintain the financial flexibility necessary to reinvest in our business with the goal of generating long-term, sustainable free cash flow, in turn positioning us to return capital to shareholders through our balanced shareholder return framework. Beginning with financial flexibility, the first of our three priorities, we intend to maintain the investment grade balance sheet with gross debt of up to $8 billion and liquidity of $7 billion, including approximately $3 billion of cash. And by maintaining a strong balance sheet, we can ensure we have the ability to steadily fund cash-generated capital projects all while returning capital to shareholders. As announced this morning, we have six assets currently classified as 9-4. The anticipated proceeds from leased investments along with free cash flow from operations will cycle through our capital allocation priorities, beginning with enhancing our financial strength and flexibility. Investiture proceeds will first be allocated to maintaining our minimum cash balance of approximately $3 billion and will then be applied to reducing debt to $8 billion or below. Our initial debt target of $8 billion is achieved. We intend to return both free cash flow from operations and divestiture proceeds to our shareholders, which I'll touch on in more detail in a minute. Moving to sustainable investments, as Tom and Natasha mentioned, over the next five years we expect meaningful production growth from our long life, low cost operations as we invest an average of $1.3 billion of development capital into projects that will generate the highest returns. The third priority of our capital allocation approach is a balanced shareholder return framework designed to return capital to shareholders through our base dividend and share repurchases. To be clear, we are not yet where we want to be in terms of generating free cash flow to return to our shareholders, but believe we have the right framework in place to return an increasing amount of capital as our operational and financial performance improves. Our balanced shareholder return framework begins with an annualized base dividend of $1 per share, an amount that will remain fixed and currently equates to a quarterly dividend of $0.25 per share. We expect to be able to pay the base dividend from free cash flow over time. Our dividend is subject to approval from our board of directors on a quarterly basis. Historically, our free cash flow generation has been weighted towards the back end of the year, and we expect that will be the case in 2024 as our production profile and synergy realization is expected to be higher in the second half of the year than in the first half of the year. In addition, free cash flow generation in the first quarter of 2024 will be impacted by the payment of a stamp duty tax related to the acquisition of Newcrest. The stamp duty was accrued in the fourth quarter and paid in February. As necessary, we will use the flexibility of our balance sheets from the base dividend through the quarters of the year, and the annualized $1 per share dividend expected to be ultimately funded with free cash flow. Additionally, our board has authorized $1 billion share repurchase program. As the liquidity and debt parameters I defined earlier are satisfied, we intend to repurchase shares in line with our free cash flow and asset sale proceeds. To reiterate, our free cash flow and proceeds from investments will be prioritized as follows. The first dollar will be allocated to maintaining our minimum cash balance. The second will be applied to reducing debt to $8 billion, and the third will go toward share repurchases. Our goal board portfolio positions us to improve margins and performance over time, funding our capital allocation priorities, and allowing us to reward our shareholders directly with returns of capital. And we believe reducing debt and returning capital to shareholders creates an attractive value proposition for new and existing investors, while also improving the company's financial position over the long term. I'll now turn it back to Tom for closing remarks. Thanks,
spk02: Karen. UMox Go Forward T1 portfolio sets the new standard for gold and copper mining and provides our shareholders with exposure to the highest concentration of T1 assets in the sector, located in the most favorable mining jurisdictions, and with an improving cost profile to maximize margins and generate strong free cash flow. Industry-leading growth optionality in copper and gold through disciplined reinvestment and project execution, and a balanced shareholder return framework. As we look forward to this very important year of integration and transformation, I am very confident in the quality of our assets and the capability of our team to deliver on our commitments and justify our position as the benchmark gold equity. This year, we'll also be continuing to work on transforming our Go Forward portfolio, and importantly, building out the strategic and -of-mine plans for each of our managed operations. And I look forward to updating you on the longer-term potential of this world-class portfolio at our capital market days for the second half of this year. And with that, I'll turn it over to the operator to open the line for questions.
spk04: Thank you. We will now begin the question and answer session. We ask that you please limit inquiries to one primary question and one follow-up question. To ask a question, you may press star, then one, on your touchtone phone. If you're 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. Our first question today is from the line of Josh Wolfson of RBC. Josh, your line is now open. Please go ahead.
spk08: Yeah, thank you very much, operator. I guess I'll limit my questions to just this single one. On the Newcrest Reserve Front, it looks like the overall totals for gold declined by about a third. And I understand the differences were primarily due to reporting changes under SEC guidelines. I'm wondering how we should be thinking about the prior reserves that were there and whether the company would expect to incorporate these as part of their reserve base in the future or if this is something different than that. Thank you.
spk02: Thanks, Josh, and good morning. As we did the work to bring the Newcrest reserves and resources into the Newmont standards, we obviously have a tighter set of rules in terms of what makes a Newmont reserve and a Newmont resource. As the numbers came together, once we had the full transparency into the reserves of resources, they were very consistent to what we assured when we did our due diligence back in April and May. There's a number of moving parts to it, Josh, and talking to the team over the last couple of days and reflecting back on what we did with the Gold Corps five years ago, I think giving each of you the opportunity to sit down in a more detailed session where we can have our IR team along with Don Doe, who governs that whole process, we can take you through some of those detailed questions and ensure that we are able to adequately answer where you might be seeing those differences. But the work's done, as we've obviously done, to convey that statement. So I'd certainly look for our investor relations team to set those meetings up, and we can spend some good time taking you through that if that's okay.
spk08: Yes, thank you.
spk12: Thanks, Josh.
spk04: Our next question today is from the line of Lawson Winder of Bank of America. Lawson, your line is now open. Please go ahead.
spk07: Thank you very much, operator, and thank you all for the update today. Could I ask about the capital return and how you thought about that? And essentially what it looks like you've done to me is you've shifted the capital from dividends to share buybacks. So what drove that decision to make that transfer of capital return?
spk02: Thanks, Lawson. Good morning. I'll kick off and I'll get Karen to build. When you look at where we've transformed Newmont with the acquisition of Newprest, so as we shaped the Newmont Go4 portfolio, so that T1 portfolio, it's very different from what Newmont was before. So once we determine that Go4 portfolio, we step back to look at the appropriate capital allocation approach or strategy in the context of a portfolio of tier 1 assets with a very long life. We looked at our balance sheet in terms of the debt that we brought on board following the transaction. We looked at the number of shares that we issued in order to do this transaction, and they are important factors when you sit down and look at your capital allocation framework. So you step back from that first and foremost is ensuring that we are putting money on the balance sheet. We're getting the cash to the parameters that Karen talked about, building that cash up in order to pay down debt to the targets we're going to. Really important step that we do there.
spk07: We're really clear
spk02: in terms of the amount of money we'll put towards reinvestment in the business and setting that average of $1.3 billion. And a $1 per share based dividend is something that is fixed and you put in the bank in terms of what you can expect from Newmont. So then it becomes what do we do with any dollar over and above having met those requirements with the cash proceeds coming in and any debt-free cash flow that we generate in the context of us having reissued shares and a $1 billion share buyback gives us the vehicle to return any variable component or additional free cash flow. So it was very much the context of looking at the portfolio that we have transformed to and where we want to place that portfolio to in terms of its capital allocation settings. Karen, do you want to build on that?
spk10: Sure, just to follow on to that. And then also as we looked at this portfolio, it's linking the return of capital directly to our free cash flow realization. And then also just in terms of consistency, in terms of where we were in 2023, for the absolute dollar amount of the dividend, the base dividend that we paid at $1.60 was around around $1.4 billion. So our base dividend today going forward, the dollar with the new share count is around $1.2 billion. We believe that's the right level for our free cash flow generation as we're going forward. As we couple that with a variable portion of the return now, that will be in the form of a share repurchase, I think which is consistent with the new equity that we just issued and in terms of our ability to start to bring that down as well.
spk07: That's great. Thank you both very much.
spk04: Thanks, Walton. Our next question today is from the line of Anissa Soni of CIBC. Anissa, your line is open if you'd like to proceed.
spk06: Hi, good morning, Tom, Karen and Natasha. So my first question is with respect to the metallurgical changes at Penasquito. Could you talk about that and what exactly happened there? What years does it impact? And I noticed there was a reduction in reserves at Penasquito on gold and silver. I just want to seek more clarity on that.
spk02: Good morning, Anita. I'm happy to kick off. And Dean Garey is also here with Natasha and Rob, if you want to chip in, folks. I think probably a couple of factors there. I think we've drilled some 40 kilometres of in-field drilling across Penasquito over the last period of time. And then looking at the impacts that that may have in terms of reserves and resources. And there's a layback in the Penasco pit. It's cut back 10. It's scheduled out into the 2030s. But as we did that in-field drilling, didn't see the level of metal that we'd assumed as we got that greater density of drilling. And so you're seeing that reflected in terms of reserve and resource numbers. It doesn't mean that we can't get that layback back into the system. And our real focus at Penasquito is ensuring that we roll up our sleeves, tighten our focus, and look to improve the operational efficiencies at that big mine. And I think there's still plenty of upside there. So I think about the timeframe out in front of us and the opportunities to improve cost of productivity in Penasquito. I can see pathways to bring those ounces back in again as we focus on that challenge with a good decade out in front of us. The second area, Anita, is we looked at the block models and our reconciliations over the last period of time. We were seeing reconciliations for silver lead zinc sitting between 5 and 10% over, so 105 to 110%. Gold was coming in at around 90%, 95%. So as we updated our mine plans, we incorporated the reconciliations that we'd been seeing within our block models. So you're seeing some of that effect flow drill as well. The governance of that block model, we manage separately. It's governed separately from the development of the mine plans. So as we look at those reconciliations, we made the appropriate updates to the block models.
spk06: Okay, thanks for that. And then my other question is also operational, technical, and nature. I'm not quite sure what underbreak and overbreak means. Can you just explain it in layman's terms, what was happening at Tanami? I mean, my understanding, I think it looks like there was an issue when you were drilling the shaft and there was, I guess, collapsed a little bit, or is that a mistaken assumption? Like, what's going on at Tanami?
spk02: Yeah, thanks, Anita. So maybe put the Tanami production shaft in a little bit of perspective, one and a half kilometres deep, and the overbreak, which is the predominant challenge we're working through, is at the very bottom of that shaft. So it's at the bottom a couple of hundred metres. So we throw out a one and a half kilometre deep shaft. It's three CM towers, top to tail, underground in the middle of the Northern Territory, dead end. So it's at that very bottom of the shaft that we're seeing the overbreak. As we raise board the shaft, it's a six metre diameter shaft, as we raise board that shaft and you're leaving that parent drilled rock sitting
spk12: there as you
spk02: then come from the top and line down at that very bottom of the shaft within some broken ground. So you do get some rattling and some ground breaking off into the very bottom of the shaft. And as that relaxed, that's broken out in some areas, double the diameter of that shaft at the very bottom. It's the nature of underground mining and shaft sinking that you'll hit pockets of ground that's got some poor conditions. And so we've seen that, what we call overbreak, which means that the width of the shaft is wider than you can safely reach out to do rock bolting, shop creating and the like to be able to then put the lining on. So as we step through that, 10 years ago, if you were doing that work, in the shaft sinking industry there would have been some very unsafe practices to be able to fill in that area in order to be able to bring back into a six metre diameter and then line that shaft. We're not prepared to do that. So we first understood the level of overbreak and then developed a range of different methodologies for how we could safely rectify that, had them assessed by third parties and then landed on the one that we believe we can send human beings down at that depth, to that location and do that work. So we have a methodology now that will involve safe rock bolting from a Galloway, safe shop creating from the Galloway, and then we'll fill that bottom section of the shaft, those couple hundred metres, with concrete, and then we'll re-raise board that bottom section, and then we'll come down and line that section alongside the rest of the shaft. And we'll have a shaft that will be assembled safely to the appropriate quality that it runs for decades to serve as your body at depth. So that's the process we've been through to determine how to appropriately fill the overbreak area. So hopefully, Anita, that gives you some clarity.
spk06: It does. That part is what I thought. That's typical when someone hears the word overbreak. It's the phrase underbreak that you also used, which that's what confused me. Yeah.
spk02: Could you explain that for us? There's not a huge amount. It's pretty clear. There's not a huge part of the shaft. There are certain areas where the raised board has moved past the hard rock or whatever it might be, and you've got a bit of material protruding into the diameter of where you want to line the shaft. So it's really coming through, and that would be able to clean back, break back to the six-metre diameter so you've got the appropriate dimension and tolerance to be able to then lay poor concrete to form the wall. So there are certain sections where you haven't been able to ream out the full six-metre diameter, so you have to do some rectification work there.
spk06: Okay. I'll leave it there and pass it on to the next person. Thank you.
spk12: Thanks, Amanda.
spk04: Our next question today is from the line of Daniel Major of UBS. Daniel, your line is now open.
spk05: Hi there, and thanks for the questions. Questions around some of the Newcrest assets. Observing, I guess, from a distance this company for quite a long time, two things. The Lyehir asset has been a perennial underperformer ever since Newcrest bought it. Why do you think you're going to be able to deliver better results and more consistent results at Lyehir than the Newcrest were able to over the last 10 years or so?
spk02: Good morning, Daniel. It probably is morning to you, I suspect. Lyehir is a big asset developed by Rio Tinto. Rio Tinto is invested into Lyehir gold mining, and then Newcrest, I picked it up 10 or a dozen years ago. A big mine like Lyehir is best placed in a big tier one portfolio where you can balance out the ebbs and flows of a large complex mine. So first and foremost, you can, with Lyehir in a balanced portfolio, with nine other tier one operations, you can develop strategic and -a-mine plans to optimise the value and allow the ebb and flow of gold production that flows from that as you move through the mining cycle to be appropriately managed. That's been my first observation. A second observation is that the Lyehir has suffered from being a mass-generating asset in a smaller portfolio. Therefore, there hasn't been the appropriate time and attention on equipment reliability based fixed in mobile. We're getting after that this year. There's also complexity in that mine plan that we believe can be simplified as we think about how we present the different types of ore and have the materials handling of that ore through a complex processing plant autoclaving. We see real opportunities there as well. And one data point, Daniel, that I put out there for you, one swallow doesn't make a spring. But as we're in the three months that we've had Lyehir in the new mobile portfolio and we've worked with the team there, the dedication of Albo Pretorio, so on the ground managing director, to build a 2024 mine plan and budget that they can get after, Lyehir in the month of January beat their plan for the first time in four years. And the cultural change and the morale that comes to be able to set a tone and get after that feeds on itself. And we see a real opportunity to set for the year some stretching of the general targets for them to hit the marks and to get the confidence that they can do things because they set their new mobile portfolio and they were able to give it the support and attention that it deserves. So hopefully that gives you some colour for how we're thinking about the year.
spk05: That's very good. Thank you. And then the second question is slightly similar, again, for an asset that had lots of potential but not moved forward particularly, is Wafi Golpu. How much money are you spending on it at the moment and where, from a timing perspective, do you see it kind of fitting into the growth pipeline, particularly kind of referencing slide 21 of your presentation where you've got your various longer-term growth options?
spk02: Thanks, Daniel. Wafi Golpu is one of the great untapped copper resources in the world in a very prolific ring of fire. It's a wonderful part of the world to be looking forward and mining copper and gold. It's still in the study phase, so there's not a significant amount of money being spent on that project. A lot of the focus is working with Harmony and joint venture partners and the PNG government to work through the necessary negotiations to ensure that you ultimately have an investment regime that you can consider the level of investment over the timeframe you've rocked in that mine to be a secure financial framework. So that's the main focus with Wafi Golpu at the moment. It sits there alongside the Bob Cave at Redcrest and the ability to build a pressure oxidation circuit at Yanukotia to process the sulphide oils of three great copper-gold projects. It's a great prop to have. It's an embarrassment to riches in terms of the projects that line up to compete for capital behind the four big projects we have in execution. So Wafi Golpu is going to be a really, really important mine to contribute to the world's need for copper over the next several decades. But you need to have the appropriate investment environment. You then will need to go back in and do the appropriate level of drilling and study work to understand ultimately what the cost and returns will be. Wafi Golpu and Redcrest are both Bob Cave mines. We've got that technology in our portfolio. We've got the capability in our portfolio. The Bob Cave mines, you invest all of the capital upfront before you get a return. So it is critically important that you understand the ore body and you understand the development cost before you commit to executing. So that's going to be an important part of both Redcrest and Wafi Golpu for new miners who make a decision about which projects follow the 10 mine to a half hour north in the two blockades of Canyon.
spk05: Alright, thank you very much.
spk02: Thanks, David.
spk04: Our next question today is from the line of Greg Barnes of TD Securities. Greg, your line is now open.
spk11: Yes, thank you. Good morning, Tom and everybody. Just on the dividend, returning to that again, I understand obviously a base dividend and the shared buyback program, but as you bring costs down and production up, do you see yourself transitioning to a dividend policy that's more progressive, i.e. you raise a dividend year after year, which some of your peers who have been more successful on this front, that's the approach they've taken. Is that where you see this going?
spk02: Greg, I think about how to model Yvonne returns. I put a fixed $1 of shared dividend into model and just run it forward.
spk12: Any
spk02: additional cash that we generate over in a fund to set the parameters on cash and debt, we're likely that variable component is likely to come through shared buybacks. Just been through a major transaction, we've increased our share count, and we would look to bring that share count back down again. So for the foreseeable future, bank on a dollar of shared dividend and any variable components of shared buyback.
spk12: Okay, great. That's very clear. Thanks, Tom. Yep, that's clear. Thank you. Great.
spk04: Our next question today is from the line of Kerry McCreary of Canaccord. Kerry, your line is now open. Please go ahead.
spk03: Hi, good morning. Just a question on the balance sheet, the $5 billion net debt target. Are there debt metrics here specifically targeting behind that?
spk10: Yeah, essentially, our goal is always to have a financial flexibility on the balance sheet and to maintain our investment grade rating that we currently have today. So that is the absolute goal, but yes, in terms of the main metric, looking at it, one-times net debt to EBITDA ratio as we go forward.
spk03: That's helpful. Then maybe one other question is like Ben, during the transaction, you guys talked about the potential in the Golden Triangle area, no plan set out here, but can you talk a little bit about how you see that or how that region evolves over the next few years?
spk02: Yeah, thanks, Kerry. Just a little bit of silence. I'm pretty sure I heard you say, how do we see the Golden Triangle opening up over the next few years? I've actually had a couple of trips up there, sadly, over the last couple of months. Real potential at Bruce Jack to get a really solid understanding of that old body in life and to have Bruce Jack contributing nice cash for quite some time to come from a nice old body and then the exploration potentially around that valley of the Kings area. So really nice, really nice gold opportunity there. As you then swing across to Redcrisp, really important, spending some time in the core shed at Redcrisp, and getting to appreciate the size and quality of that old body, it is going to be an amazing block cave mine. So it's really going to be about ensuring that we work to understand how to build that mine to a high quality, understand the cost, understand the schedule, understand the various approvals being covered there, and develop that mine because that mine will run for decades with the original cave and then the other opportunities around there.
spk05: So
spk02: that is going to be a real focus in terms of copper and that investment. And then we bridge off that up to Galore Creek, and the work we'll do with KEC to build off Redcrisp and then up into Galore Creek, and then ultimately develop Galore Creek as another great copper mine. So it'll be Bruce Jack potentially the transition from pit to underground and then we'll really open up the decades of Redcrisp and pivot off that into Galore Creek. Natasha, do you want to do a little?
spk09: No, I think that's perfect.
spk02: Thanks, Tom. Thanks, Karen.
spk04: All right, thanks.
spk02: Thanks, guys.
spk04: Our next question today is from the line of Tanya Jakusinek of Scotiabank. Tanya, your line is now open. Please go ahead.
spk01: Great. Good morning, everyone, and thank you for taking my questions. I just wanted to come back to just, you know, a lot of information has come out today, and I'm sort of looking out to what else is coming out above and beyond what you put out. Looks like at your investor day you mentioned new life of mine plans. We've got some Cadia news, block Cadia news coming out in second half of the year. So, I'm going to assume that all of the reserves, Tom, are now done to your standard on these new Crest assets. The life of mine plans are just going to be based on these new reserves. And will we get more information than just the charts that you've put out, the two charts on the five-year production and cost for your tier one assets? What are we getting beyond this? I'm asking at this investor day.
spk02: Yeah. Thanks, Natasha, and good morning. So, the reserves of resources are set to Newmont Standard. I'm looking across the room to Dom Dale, and he's breathing a sigh of relief because he's had a significant lift from November 6th to a few weeks ago to get that through our processes. So, they've been to Newmont Standard. And you're right, what we're doing now is doing the... So, Transva Hardy, who's the group head of our mineral resource management group, is now running strategic mine plans and life of mine plans on the top of those reserve resource statements to build out potential of that go-forward portfolio on top of that five-year outlook. We'll work that over the course...over the months ahead. We've got an important strategy day with our board in June. Our annual strategy day is always in June, and we'll spend some time with our board looking at that long-term potential, debating that, understanding that, to then build towards an investor day in the second half. We will start to show you and share with you a picture beyond the five years that we're looking at, and what we see is the potential for this...this new month upgraded portfolio over the next five, 10, 15, 20-plus years. We're still debating the timeframe for that, but where the current thinking is we've revert to our normal timeframe, which is typically being around that November timeframe that we have our capital markets day, and also talking about doing one in New York and one in Australia so we pick up both sides of our markets. But that's the work in front of us this year is to really get after that strategic life-long plan so we give you that...so we have confidence to give you that longer-term story for this portfolio.
spk01: OK, so what I'm understanding from you is that we are going to get above and beyond just the five years that you've provided for us here so we would have a visibility for maybe 10 years-plus in your investor day.
spk02: That's correct,
spk01: Tanya. OK. OK, and then my second question, I just wanted to understand, I think, Tom, you mentioned that you're certain that your six operating assets are going to be sold, the non-core one, in 2024. Does that mean that we are going to be seeing your financials going forward as having discontinued assets from Q1 onward on all of these six assets?
spk10: Tanya, the expectation is at the end of the first quarter, 2024, that these six assets will be held as assets held for sale.
spk01: OK. All right. So then you're reporting on your operating assets and the other ones will change a little bit as we look at what you're reporting on production costs, et cetera. Correct. OK, thank you so much for taking my question.
spk02: Great, thanks, Tanya.
spk04: My apologies. This concludes the question and answer session. I would like to turn the comments back over to Tom Palmer for some closing remarks.
spk02: Thanks, operator, and thank you all for your time and the forwarding catching up with you soon. Thanks, everyone.
spk04: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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