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spk10: Good morning and welcome to Newmont's second quarter 2024 earnings call. All participants will be in lesson only mode. Should you need assistance, please signal a girlfriend 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 will now I'd 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.
spk03: Today, I'm joined by my executive leadership team, including Natasha Boullion and Karen Overman, and we'll all be available to answer your questions at the end of the call. Turning to the next slide, please note our cautionary statement and refer to our SEC filings, which can be found on our website. Before I cover our results for the quarter, I'd like to take a moment to provide an update on the important work we are doing to reinvigorate our safety systems. Following the tragic loss of four of our colleagues over the last year, we initiated a comprehensive, systematic review of our safety and risk management systems in order to better understand the key challenges and opportunities we have to improve our safety performance going forward. Our enhanced approach includes a heightened level of diligence across our entire fatality risk management assurance model, bolstering our leadership work in the field to ensure we have a balanced approach between both the quantity and quality of our critical control verifications and an increased focus on leaders, coaching leaders and their teams aimed at building and strengthening capability through all levels of our organisation. With this reinvigorated approach, we are actively driving improvements in safety performance and strengthening operational effectiveness across all of our managed operations. Turning now to our second quarter highlights. We delivered solid operational performance as planned, keeping us firmly on track to achieve our 2024 guidance and positioning us to deliver improving financial results. These solid results have also enabled us to progress our capital allocation priorities, which I'll touch on in a moment. With a continued focus on safety delivery, we've also made meaningful progress on the four key commitments we made to our shareholders at the start of the year. First, we continue to strengthen Newmont's position as the gold industry's recognised sustainability leader. During the second quarter, and as I just mentioned, we launched a safety refresh across our managed operations globally and are leveraging this important work to reinvigorate our safety systems, tools, standards and infield leadership work. Supported by this approach, we restarted operations at Cerro Negro in late May, returning our focus to safe and efficient mining in this highly prospective district in Argentina. In May, we also published our annual climate report. summarising our performance for the sites managed by Newmont throughout 2023. Moving to our second commitment, Newmont has created a world-class portfolio focused on Tier 1 and emerging Tier 1 operations and districts. From this portfolio, in the second quarter, we produced 1.6 billion ounces of gold and 477,000 gold equivalent ounces from copper silver, lead and zinc. Notably, this included 38,000 tonnes of copper for the quarter. We generated $1.4 billion of cash flow from operations and $594 million in free cash flow in the second quarter. And yesterday, we announced the monetisation of our Bata Hijau deferred payment obligations and we expect to receive $153 million upon closing by September 30th. It is also worth noting that Newmont received $44 million associated with contingent payments from production at Bata Hijau, bringing total proceeds that we will receive this year from our former operation to $197 million. In addition, we received the first $180 million payment from the sale that we announced last quarter the London Gold financing facilities. From these two transactions, we will receive nearly $530 million by the end of this year. With this progress and with the confidence we have in our divestiture program, we now expect to reach at least $2 billion from the sale of our seven high-quality non-core assets alone. Taking all of this into account, we continue to build momentum, enabling us to advance our capital allocation priorities. Since our last call, we continue to safely progress the projects we have in execution from our industry-leading organic project pipeline, including the second expansion at Tanami, our new mine at Harpo North, and the two new block Ks at Katia. We have retired $250 million in debt and we have returned approximately $540 million to shareholders in the form of regular dividends and share repurchases, which Karen will discuss in more detail in a few minutes. Turning now to synergies, we remain firmly on track to deliver above and beyond our initial commitment of $500 million. In the second quarter, we achieved $100 million in synergies, bringing our run rate to $205 million since we closed our acquisition of Newcrest only eight months ago. With this solid momentum, we have now disbanded our back office integration team and remain firmly on track to achieve a $335 million run rate by the end of this year, well ahead of our initial estimates. Looking at the three components of our Synergy delivery, and starting with full potential. We are now advancing into the delivery stage for the initiatives we have identified at Lahia, Cadia and Redcrest, with the largest value drivers coming from our two new Tier 1 assets in Lahia and Cadia. On our call last quarter, we provided an update on the opportunities we have identified at Lahia. In this quarter, I'll briefly describe some of the opportunities we see in front of us at CADIA. We recently completed our full potential diagnosis phase at CADIA, from which we have identified a series of initiatives that are expected to deliver more than $100 million of value by the end of next year. During this first phase, we had a team of experts from Newmont's Global Technical Services Group working to support the site to identify opportunities to high production and improved cash flows. As one example of this, and through collaboration with Bonington, CADIA is working to optimise the output from its high-pressure grinding roll circuit in the mill. With these HPGR improvements, CADIA will be able to lift its mill feed by approximately 80 tonnes an hour, or more than 600,000 tonnes a year. Implementing the initiatives we have identified and leveraging the experience we have gained over the last 10 years with our full potential program, we are working with the team at Cadia to increase average mill throughput to 34 million tonnes per annum, representing a meaningful step up in productivity from this world-class gold and copper asset. With La Hia, Cadia and Red Cris, all now entering the delivery phase of full potential, we are on track to meet our initial $200 million commitment. Moving to supply chain synergies, we continue to leverage our combined scale to drive improved commercial outcomes for both pricing and terms. In the second quarter, we realised $60 million in synergies from around 40 initiatives in contracted services, mining equipment, energy, information technology, among other categories. And we have a clear line of sight to reach $140 million run rate by the end of this year as we progress our commercial work across several spend categories, including chemicals, explosives, grinding media, tyres, fuel, as well as spare parts and roadables. And finally, turning to G&A synergies. we have now achieved 95% of our initial $100 million commitment, with an additional $15 million realised during the second quarter. The latest G&A synergies have primarily been coming from continued labour rationalisation and ongoing reductions in our contractor spend. Taking these synergies into account, combined with the higher production volumes anticipated in the second half of this year, we expect to deliver lower unit costs in the third and fourth quarters. And with that, I'll now turn it over to Natasha and then on to Karen for an update on our operational and financial performance for the quarter. Over to you, Natasha.
spk07: Thank you, Tom, and good morning, everyone. Our managed operations delivered solid second quarter results in line with our expectations and outlook for the year. With a focus on safe and efficient production at each of our managed operations, we are heading into the second half of the year with confidence in our ability to deliver on our business plan and the commitments Tom reiterated earlier. And similar to the first half of the year, our operational results in the third and fourth quarters will be largely driven by production from our six managed Tier 1 operations. Reflecting on these and beginning with Tanami, we delivered higher production in the second quarter as planned while effectively progressing the second underground expansion. Tanami continues to be a reliable performer and remains well positioned to access higher grade stoves in the second half of the year from the Liberator ore body. Moving to Bonnington, We reported consistent results as stripping in the north and south bits continued ahead of plan in the second quarter. And with land, plant, and crusher maintenance now behind us, Boddington is expected to deliver strong mold throughput and slightly higher gold and copper production in the third quarter. At Benesquito, we delivered higher gold and zinc production due to higher grades from the Chile, Colorado bit, and strong mole performance in the second quarter. Production levels are expected to remain steady in the third quarter with significant increase in gold production in the fourth quarter as we return to mining ore from the Panasco pit toward the end of the year. Turning now to O'Hara Foam. The Gursky replacement was safely completed ahead of schedule. And I'm really proud of the HAFO team for completing this significant body of work so efficiently. The change-out spanned over 12 months and involved the fabrication of a new six and a half meter diameter girth gear along with the transport with more than 50 tons of steel all the way from Australia to Ghana. During this entire time, the team continued to optimize the processing circuit, ensuring our most productive milling circuit was able to run as efficiently as possible. Beginning in the third quarter, we expect a meaningful step-up in production from AHAFO, as we will improve mole throughput, deliver consistently strong mining rates from Subika underground, and access higher grades from the Subika open fences. At Cadia, we delivered solid gold and copper production as planned, due to steady grades and strong mold performance in the second quarter. As factored into our guidance, production at Cadia is expected to gradually decline through the rest of the year, as we transition mining to the next funnel cave. And we expect these lower grades to continue until the next funnel cave is fully ramped up. And finally, at Behave, second quarter production decreased from the first quarter, primarily due to heavy rainfall, which contributed to soft ground conditions that in turn impacted mine sequencing. Production levels are expected to remain consistent in the third quarter as the site commences a planned 120-day shutdown of the primary autoclave. And just to bring the autoclave shutdown into perspective, The process includes not only shutting down the autoclave itself, but also removing the brick layer and pyroflex membrane, inspecting the five and a half meter diameter steel shell, applying a high temperature tolerant membrane, and re-bricking the 48 meter long structure, which is nearly the length of an Olympic swimming pool. Once complete, we anticipate gold production will return to normal levels in the fourth quarter, positioning the year for a strong finish to the year. Taking everything into account, we anticipate an increase in gold production next quarter, setting us up to deliver the year's higher production in the fourth quarter. Our performance in the second half of the year will be driven by higher grades of Benesquito, Ohafo and Sanamai, improved throughput from Lahira and Boddington, along with an expected improvement from our non-managed operations. During the second quarter, we continued to progress the four key projects we currently have in execution. At Ohafo North, the construction of the crusher and mole are advancing well. We have bought the concrete foundations for the sag and ball mills and have erected all six carbon-enleashed tanks. Earthworks continue for the tiling storage facilities, along with the pre-mine development activities for this very exciting new mine in West Africa. At the second expansion at Tanamai, our team remains focused on the concrete liner of the lower section of the shaft. and we continue to advance construction activities both underground and on surface. Underground, we are progressing the crusher and conveyor systems and have just safely and successfully completed pouring nearly 200 cubic meters of concrete for the underground crusher chamber. On surface, we are working to complete the winder building, which will house the wasting operations for many decades to come. Turning to cation, the two block caves are each progressing well. We are continuing to commission two new draw points at Panel Cave 2 and 3, and we are anticipating that initial cation is expected to commence by the end of the year. For Panel Cave 1-2, we are advancing underground development and the engineering work needed to design the crushing and material handling systems at this Tier 1 gold and copper operation. With that, I'll turn over to Karen to cover our financial performance and the progress we are making on our capital allocation priorities.
spk06: Thank you, Natasha. Turning to the next slide, let's begin with a review of the financial highlights for the quarter. Building upon Tom and Natasha's remarks, NUMA delivered strong operational and financial results in the second quarter. We reported $4.4 billion of revenue at an average realized gold price of $2,347 per ounce, and costs applicable to sales of $1,152 per gold ounce, and all in sustaining costs of $1,562 an ounce, which were higher over the first quarter, primarily due to lower production volumes, higher royalties from a stronger gold price environment, and increased sustaining capital this quarter due to spend on tailings work at CADIA and the planned purchase of additional trucks at Marion. Taking everything into account, we reported adjusted EBITDA of approximately $2 billion driven by solid production volumes and higher gold prices. Adjusted net income was 72 cents per dilute share and was more than 30% higher than the first quarter. The most notable adjustment to net income for the quarter was an approximately 20-cent add-back related to a non-cash impairment to reflect our progress at the conclusion of phase one in the divestment process for North America. As a reminder, assets that are classified as held for sale require a specific evaluation under U.S. GAAP and need to be recorded at the lower recurring value or fair value most cost to sell. And we will continue to assess the current carrying value of all assets held for sale each quarter, which may result in future adjustments until the assets are divested. It is important to note that this impairment does not reflect the future potential at these operations in their entirety or what the ultimate purchase price might be. We also generated $1.4 billion of cash flow from operations and $594 million of free cash flow, which does not include the first $180 million payment received from the sale of the Lundin Gold Financing Facilities announced last quarter, but does include $263 million of unfavorable working capital changes, largely due to a build in stockpiles of $185 million, primarily attributed to Lahir and Telfer, a build and trade and other receivables of $140 million due to higher grade concentrate produced at Penesquito and the timing of sales at Cadia, and $107 million of reclamation spend primarily related to the construction of the Anacocha water treatment facilities. With $166 million in reclamation spent to date, we expect that payments will continue ramping up in the second half of the year which will be a working capital headwind in the third and fourth quarters. And while we are pleased with the improvement in free cash flow, we are still not satisfied and are working to further improve margins. Looking ahead, we anticipate higher free cash flows in the second half of the year, driven by increased production volumes and lower unit costs, as Tom and Natasha just mentioned. Heading into the second half of the year, we remain firmly on track to achieve our four-year guidance for production, cost, and capital spend. And as Natasha mentioned, production is expected to increase in the third quarter with the year's strongest performance anticipated in the fourth quarter. Unit cost will be closely correlated to production with the added benefit of whole potential improvements and additional synergies realized in the latter part of the year. Today, we announced two divestments, including the monetization of our Matsuhiju deferred payment obligations and the sale of our Lending Gold financing facilities. In total, these divestitures are expected to generate nearly $530 million in gross proceeds by the end of the year. With this momentum, the benefit of higher commodity prices contributing to enhanced free cash flows and the confidence in our asset divestiture program we were able to prioritize shareholder returns sooner than anticipated while concurrently executing on debt reductions. Since our last earnings call, we repurchased 5.7 million shares at an average price of $43 per share for a total cost of $250 million including 104 million repurchased during the second quarter, and 146 million in July. And we purchased $250 million in nominal debt for 227 million, or 90 cents on the dollar. Additionally, we maintained an investment grade balance sheet and ended the quarter with $6.8 billion in total liquidity. And we declared a fixed common second quarter dividend, 25 cents per share, in line with the dividend declared for the past two quarters. Looking ahead to the remainder of the year, we will continue to execute our balanced capital allocation strategy, focused on maintaining a strong balance sheet, steadily funding cash-generated capital projects, and returning capital to shareholders. With that, I'll pass it back to Tom for closing remarks.
spk02: Thanks, Karen.
spk03: At the start of this year, I outlined the four key commitments that we have made to our shareholders. And I'd like to end today's call with a recap of the progress we have made against them in the second quarter. First and most importantly, we commenced a systematic review of our safety and risk management systems. We safely delivered solid production as planned keeping us firmly on track to meet our full-year guidance for both ounces and costs. We announced meaningful progress on our portfolio optimisation commitments with the monetisation of our Bata Hijau deferred payment obligations. We realised $100 million in synergies, bringing the total delivered to $205 million since we closed our acquisition of Newcrest in November last year. We demonstrated our commitment to shareholder returns, delivering $540 million through both regular dividends and share repurchases. And we strengthened our balance sheet with $250 million of debt reduction. As we enter the second half of this year, I am confident in our ability to deliver higher production, more potential improvements and additional synergies all of which will contribute to lower unit costs in the third and fourth quarters. Execute on our portfolio optimisation strategy through the divestment of our non-core assets and to progress our capital allocation priorities, all positioning Newmont for a strong finish to this year.
spk02: And with that, I'll thank you for your time today and turn it back over to the operator to open the line for questions.
spk10: 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 headset before pressing the key. To withdraw your question, please press star then two. At this time, We will pause to assemble our roster. The first question comes from Lawson Winder from Bank of America Securities. The line is now open. Please go ahead.
spk12: Great. Thank you, operator, and good morning, Tom and team. Nice quarterly result, and thanks for the update. I would also like to just acknowledge Congratulations for realizing value on the deferred payments from Batohija, which I think most of us have forgotten about. But I wanted to ask about the larger asset sales process, Achene, Telfer, and the North American assets. What is your latest thinking on timing of each? And with the stronger gold price, are you seeing upward pressure on offer prices? Thanks very much.
spk03: Good morning, Lawson, and thanks for your question. It's a chapter that we closed in our relationship with Banta EGL and an asset I've been associated with for about 10 years at Newmont and was an active part of the original divestment process. So in some ways it's a sad moment to close that chapter on what is still a great copper mine and one that Newmont built a generation ago. But it's nice to be able to clean up our non-core portfolio and realise that sort of value. In terms of our broader portfolio optimisation rationalisation process, it's firmly on track and we continue to follow a very rigorous process to ensure we get full and fair value for these assets and that these assets are sold to operators that can continue to operate them and maintain them with the principles that we have at Nearmod. Maybe just covering the program, we've had four parallel streams running. The first one, as we've just talked about, is the cleaning up the opportunities around our non-core equity portfolio. The two major items there were the London Gold Transaction and Barter Hegel, but we'll continue to look for any opportunities there might be in that non-core equity portfolio. At Achim, we're well advanced in the process with Achim. We completed phase one some time ago. We had 20 parties through that process who made bids. And we've taken seven parties into phase two. And we're at the end of the phase two process. So we've had all those parties visit site and participate in management presentations. And they are now preparing their phase two bids for us to consider. So we're at that stage where really by the time you get into phase three, you're down to one or two parties starting to finalise that transaction. So that is progressing very well. It's progressing on track and we're certainly seeing a competitive process and good value coming through. The North American process, we're just concluding phase one. So we've had some 67 parties actively participate in phase one and we had around 24 bids submitted, and we had everything from bids for a single asset. If you remember, North America is Cripple Creek and Victor, Eleanor, Porcupine, Musselwhite, and our copy project up in the Yukon. So we've had a range of bids from a single asset to a bundle of assets to the full portfolio. And we are busily now having received those bids just in recent days, working through a process of assessing those, and determining which parties will take into phase two. Again, that's progressing well and there's some very nice competition in that process. I'm pretty more than pleased with how both the CHIM and North America are progressing. And then Telfer continues to progress well. We continue to actively work that process and also quietly confident around how that process is progressing also. So everything is on track. and pretty pleased with what we're seeing in terms of bids coming through and the type of organizations that are looking to make offers and ultimately acquire these non-core assets. Karen, do you want to build on that?
spk06: Yeah, and just as a reminder, the accounting treatment under U.S. GAAP requires that there's an advanced process. It's auditable. There's viable buyers. and the probability that the divestitures will be completed in 12 months, which for us would then be March of 2025.
spk12: Thanks for clearing up that timing. And just one follow-up on TELFR. Thank you for clarifying a lot of, I think, folks' thoughts around TELFR in terms of both timing and value. one bit of feedback we've been getting is just some concerns around the tailings dam issues and whether or not that might have impacted the ability to monetize that asset for value. Do you have any thoughts on that? Or is there any feedback you may have received from potential interested parties that might help calm some of those concerns?
spk03: Yeah, thanks, Lawson. The approach we took with Telfer and certainly talked to this a number of times over the last few months, is ultimately being radically transparent around those tailings issues. So since we saw the first of the sinkholes develop on Christmas Eve, have been very transparent with the regulators, with our workforce and with any potential buyers around what the issue is and what the work is to remediate those issues. The issues are well understood and the remediation is well understood and we have been completely transparent around what that looks like and the pathway to remediate. So there is a clear pathway to remediate and I might just get Natasha to give a little bit more detail as to what that looks like and maybe a bit of the timing around that because that then serves to understand with that transparency what any potential buyer is looking at in terms of the ability to acquire TELPHA and to be able to run the operation for someone So we're building stockpiles in front of the mill. So as soon as the tailings facilities are through their remediation work, the plan can start up and we can continue to process ore and produce gold again. Thanks, Natasha.
spk07: Thanks, Tom. Good morning, Daniel. Firstly, I just want to reiterate the point that we've been transparent with all parties involved throughout the process. Secondly, I want to reiterate that both the TSH 7 and 8 dams are stable. We're progressing the TSF7 rehabilitation as planned, and it is all around how do we fill in the sinkholes, placing membranes, and preventing in that way any further erosion in those areas. So whilst we're working on the stability on remediating the sinkholes in TSF7, TSF8, we've completed the rehabilitation, and we have an authorization to continue with a lift on TSF-8 that we are required to do before we can do any more depositioning on that dam. It is on schedule and we are planning to start up TELFA in the fourth quarter when the rehabilitation and the lift would have been done. And apologies. realize we're still talking to Lawson and we haven't progressed to Daniel. My apologies.
spk12: Quite all right. Thank you very much for those responses.
spk08: Thanks, Lawson.
spk10: Thank you. The next question is from Daniel Major from UBS. The line is now open. Please go ahead.
spk14: Hi, thanks so much. Can you hear me okay?
spk03: Yes, we can. Thanks, Daniel.
spk14: Great, thanks. Yeah, my question's focused on the decision to start the buyback and sort of comes in two parts. Firstly, from a perspective of kind of run rate of cash returns relative to debt reduction going forward, how should we look at that? You've sort of indicated around half of the free cash flow would be allocated to debt reduction and buybacks. Is that what we should be considering for the second half? That's the first part of the question.
spk03: Thanks, Daniel. Karen, maybe to pick that one up.
spk06: Sure. Yeah, we had time on the debt. So we purposely put out the billion tranche for 2026. And so our commitment was over a 24-month period when we put that in place. So we do have time on the debt. The BATU as well as the Lundin just allowed us to be able to opportunistically in the market do some open market purchases.
spk08: Hello? Sorry. Yeah.
spk02: Daniel, we missed the second part. Did you want to build?
spk14: Yeah, sorry. Well, the other part was the run rate of the buyback going forward, what we should be thinking. And then just to add to that, what gave you the confidence to initiate the cash returns earlier? Is it the gold price environment, the operational visibility for the second half or the certainty on or narrowing in on the proceeds for divestments?
spk06: All three of those, Daniel, provided that opportunity for us. You know, in terms of the pace of the share buybacks as we go forward, that will be driven by our free cash flow realization and proceeds from the divestiture. So, you know, as we've just mentioned, we're proceeding very well and are very confident in the ultimate execution on those divestments. But we'll pace our share buybacks as we realize those proceeds as well as the free cash flow.
spk03: Maybe just to build on the debt side, Daniel, it was opportunistically during the second quarter with those proceeds coming through. We've got that tranche sitting out there two years and we'll look to be opportunistic in terms of where there might be some good buying whilst we manage that period out to when that tranche is due.
spk14: Great. Thanks very much.
spk04: Thanks, Dan.
spk10: Thank you. The next question is from Tanya Jakukonek from Scotia Bank. The line is now open. Please go ahead.
spk11: Good morning. I think that's me. Thank you, everyone. I want to just ask a question on the technical side. Maybe, Natasha, to you, just on the Panasquito, you did mention and thank you that you Q3 should be similar to Q2 on the gold side, strong Q4 driven by grays as we get into the new pit. But the production from the non-gold metals did very well in Q2. A previous guidance had been that they would be evenly distributed throughout the year. How should I think about Penesquito on the non-gold side as we go through Q3 and Q4?
spk07: Thank you, Tonya. I think as we've spoken about before, we are mining predominantly in Serenib, in Jelly Colorado, this first three quarters of the year, as we are progressing a pushback in the Nazca fit. Jelly Colorado, as you would remember, is higher in zinc, lead, and the other metals. And therefore, our production in those other metals in the first three quarters are higher. We have been progressing this step back in Penasco Bed faster than expected. So we do expect to be back in the fourth quarter in Penasco Bed, giving us the advantage of higher gold grades in that fourth quarter. And we'll probably see about a 25% increase in gold grade in that fourth quarter.
spk03: And Natasha, maybe just building on that, I think the second quarter with ore coming from Chile, Colorado, good performance through the mill, so we're getting good throughputs and recoveries. So as we, and it's a third quarter that's also got feed primarily coming from Chile, Colorado. So if the mill can perform and the grades present, then we could potentially see some better leads and sinks because the ore's coming from Chile, Colorado, but it was that. A bit higher than maybe you're expecting was due to really good meal performance by Dave Meador and the team down there.
spk11: Okay. As I think about, you know, the second half, and I think, you know, you mentioned that there'll be a step up in production, so volume and then stronger volumes in Q4. And I think about this cost structure because in order for us to get these costs down, we do need the volume, number one, and obviously the $130 million in synergies that you mentioned. I'm just trying to picture, for myself, should I be thinking that the step up into Q3, almost like 26% of production coming out of the year, and then 28 in Q4, and $130 million majority of those savings coming in Q4. I'm just trying to understand how I'm going to get to your guidance on the costing side with the volume and the synergies, and also where these $130 million in synergies are coming from, if I can have a breakdown of those.
spk03: I paint the picture this way, and I think you're not too far off the mark. You're certainly going to see the synergies kicking through, particularly those coming from full potential in the fourth quarter as those programs get their momentum up. You're certainly going to see the highest quarter for gold ounces in the fourth quarter. That's from some of our key assets that Natasha covered in her comments. The two non-managed joint ventures, so NGM and PV, need to deliver on their commitments and they've got that strong fourth quarter. Our direct costs are pretty stable across the year and certainly what we're seeing in the first half flowing through the second half pretty stable. So I think the picture you're painting in terms of that third quarter weighting to the fourth quarter weighting is a reasonable position to be thinking about in terms of that weight between the third and the fourth quarter. You will see a step up in the third and then a step up into the fourth to get to our numbers.
spk11: And maybe just if I could have an understanding, thank you for that, maybe just an understanding of the $130 million in synergies. Can you just give me a breakdown of what's coming from? Is it like, you know, very little is left in G&A. Is it supply chain, like $30 million of it and $100 million in the operations? I'm just trying to understand how I should think about that $130 coming in here.
spk03: Yes, certainly when you think about G&A, and it's the same we saw for Goldcorp, similar size, companies that's around about the mark so we've largely seen that come through uh still pushing hard on uh we've got a strong commercial team working hard on all those fronts so you're going to see a good a good amount come from um that uh that's that supply chain work and then you'll start to see uh hopefully he and katie a bit of red grease in the in the fourth quarter so not much from from gna it's still a good percentage coming from supply chain as that work started to kick in and then you'll start to see in the fourth quarter some of the full potential for the operations starting to kick through. Really, they start to show up in 2025. But again, the split you're articulating is not too far off the mark.
spk11: Okay, great. Thank you so much. I appreciate you taking my question.
spk04: Thanks, Tanya.
spk10: Thank you. The next question is from Matthew Murphy from Jeffrey. The line is now open. Please go ahead.
spk09: Hi. Just to follow up on the share repurchases, margins are good. They're getting better. You still have asset disposals ahead and you're out pretty early and strong out of the gate on the buyback. how should we think about what happens when you hit the billion mark i think that's the total allowed right now um through 2026 um so should we be thinking you know the board will reevaluate that um potentially earlier than then or should we think about you know once you hit the billion do you start picking up capex again good morning matt um
spk03: Certainly the $1 billion was our initial commitment. So we committed to $2 billion of proceeds from divestments of the seven non-core assets and $1 billion going to share repurchase and $1 billion going to debt reduction. So that's how that comes together. Now as we start to see the divestment process come through and as I was talking earlier in terms of what we see coming now in terms of offers, both phase two and phase one offers, and get a view as to what the proceeds are, plus the cash that we'll generate in this price environment. As we near the end of that billion dollar program, we'll sit down with our board and discuss what another tranche may look like. But certainly as we think about our return of capital, it's through buybacks that will be the vehicle that we'll use. that you would expect that we would look to extend that program if everything would play out as we expect going forward. A conversation we'd have with the board at the appropriate time. Karen, did you want to build on that?
spk06: Absolutely. As I already indicated, the free cash flow realization and the divestitures will be what drives the share buyback. And administratively, as Tom said, we'll work with the board if we have to re-up the authorization to meet those share buybacks as we go forward.
spk09: Okay, great. That's very clear. And then maybe just as a follow-on on the CapEx question, do you view an increase in CapEx down the line? Is that kind of like a timeline-related thing where you integrate Newcrest for a number of years and kind of focus on capital returns and then eventually get back into potentially higher development CapEx?
spk03: No, Matt. We've been clear on our strategy. We've built a portfolio of tier one long life assets, 11 managed operations and non-managed joint ventures. Something that hasn't been seen before in the gold industry. I think for the first time, we have a long life, very long life gold mining business with tier one assets. Key to running a long life portfolio is your discipline around capital allocation. So we think about this this portfolio going forward and our pipeline of projects that's six big projects sitting in our pipeline. Our discipline around the amount of capital that we'll put towards sustaining capital for that portfolio and the $1.3 billion towards development capital doesn't change. It's the discipline around managing a long life portfolio and having a view on capital that's two decades out and thinking about what that means is key to what we've built. So we will demonstrate that over $1.3 billion is the amount of money that we allocate to reinvest back in the business each and every year.
spk09: Okay, great. That's clear. Thanks, Tom.
spk02: Thanks, Matt.
spk10: Thank you. The next question is from Anita Soni from CIBC World Markets. The line is now open. Please go ahead.
spk05: Hi, Tom and team. So, a lot of the questions have been asked and answered. I'm going to ask about the working capital as it evolves over the back half of the year. So, I think you said you had about 166 million of the 600 million reclamation spend spent to date. So, that leaves around 434. So, is it an even split for that spending in Q3 and Q4? And then also, The other aspect would be the Telfer spend. Are you going to continue to mine at that rate? And how much was that spend again? I thought I heard $185 million, but I could be wrong about that. Thanks.
spk03: Good morning, Anita. Thanks. I'll get Karen to pick up the working capital question and then Natasha on the approach to Telfer. That'd be Karen. Okay.
spk06: Thanks, Anita. The first half of the year traditionally tends to produce adverse working capital changes. So we expect a free cash flow generation to improve in the second half of the year. And as I mentioned in my prepared remarks, we do have some unfavorable impacts. So the Yannick Goetje water treatment, and as you said, yep, we've spent $166 today. And you're right, it's about $400 to $450 to be spent in the second half of the year, with more of that weighted towards the fourth quarter than the third. And then also just a reminder, the other kind of one time is the remaining stamp duty, which is about $30 million. That'll be expected to be paid in the third quarter.
spk07: And then, Jennifer, Anita from ITOP Productions. We will continue to mine as we know that the solution for the tiling stamps and as we're working through those solutions. And then we do have capacity in the plant to catch up to get that production through. And as we get that production through and declare the ounces, we'll also declare our unit costs.
spk05: Okay. And then what was the other one? I think there was another asset that had some working capital change. Was it Lahir that should unwind in Q4, I guess, when you ramp up, but perhaps draw down again in Q3?
spk06: The buildup in Q2 from earlier here, about a $75 million impact, so the average carrying cost per ounce of the stockpile is increasing from the initial low value that we had on the acquisition, and a lot of that has to do with purchase price accounting adjustments.
spk05: Okay. If I can ask just one more question. You reiterated your target of $2 billion from asset sales. Would you include this 500 or so million you realize from these non-core within that 2 billion or Is that excluding the is that excluding those two two assets lending and the about to use you Thanks for later the 2 billion dollars that we're committed to excludes Proceeds from London and bar to each else.
spk03: So we're committing to at least 2 billion dollars from the
spk05: Okay, thank you very much. That's it for my questions.
spk04: Thanks, Anita.
spk10: Thank you. The next question is from Bolt Brackett from Bernstein Research. The line is now open. Please go ahead.
spk15: Yeah, good morning. Thanks for taking my question. A bit in the weeds around here, I'm trying to understand the cadence of the shutdown and the guidance. So there's roughly five months left in the year. The shutdown is four months, but we should think about volumes as being sort of evenly split first half and second half. Are all four autoclaves being shut down, or is it in series or parallel, or how do I think about that cadence?
spk03: Yeah, well, autoclave four is the largest of the four autoclaves, represents 40% of the throughput. So you still have the other three autoclaves running. You get some low recoveries running through those other three autoclaves. The guidance filler here for the year reflected that the largest of the autoclaves being down for a 120-day shut. And then you're obviously going to see that impact through predominantly the third quarter and into the start of the fourth. So we're certainly reflecting the impact of that shutdown further here this year. I think Natasha said in prepared remarks, the third quarter is similar to the second quarter and then you'll see a is to get that autoclide tank up and running again with the year. It's not too far off being 50-50 waiting for the year as a consequence of that.
spk15: Okay, that's very clear. Thanks for the colour.
spk02: Thanks, Bob.
spk10: Thank you. The next question is from Brian Mark Arthur from Raymond James. The line is now open. Please go ahead.
spk13: Good morning, and thank you for taking my question. It has to do with reclamation, and obviously there's some significant money going into Yanacocha. But as we think longer term, when you talk about your $1.3 billion sustainable capital, are there other assets that I think at three to five years that could have significant capital requirements, i.e. cash out the door, as opposed to book accounting that I need to think about in my long term? cash flow analysis?
spk03: Good morning, Brian. Certainly when we think about, as I was commenting earlier on our capital allocation, whether it be development capital or sustaining capital, you think about this portfolio going forward, having a reliable, predictable spend on sustaining capital to manage our business going forward, tailings stamps and the like. And in terms of your broader part of that question, is it as it relates to reclamation, remediation, and the like. Karen, I'll get you to pick that one up.
spk06: Yeah, just to clarify, that comes out of working capital. But those are actual payments for accruals that have already been recorded on the book. So the expense has already been taken for those. And so it's truly just cash outflow that has been for accruals that are already recorded on the balance sheet. The Anacocha Water Treatment Facility is the big one. No expectation of any significant changes to what we've been outlining as we go through. As we've indicated, the spend will be approximately around $600 million in total in 2024. It goes up higher in 2025, and that's above our historical outflow, which was annually around $200 million to $300 million. So, yeah, it's specific to the Anacocha liability. but don't expect any other significant increases in that. If anything, we would expect that to go back to historical levels beginning in 28, 29 time period.
spk03: And then Brian, thanks Karen. In terms of our portfolio, certainly our go-forward portfolio, organic culture is an order of magnitude larger in that reclamation liability than any other of operations. So the other big mines, the penesquitos, the The Boddington's, the Nevada Goldmine's complex, order of magnitude lower. So Yannick Ocher is quite unique in that respect.
spk13: Great. That's what I thought, but I just figured I'd check. And the second part, I think you've been very careful. You talk about when you're selling these assets, you want them to go to operators to maintain them going forward. Can I assume, I'm going to assume... that you're going to sell the reclamation liabilities to the buyers of this. And the second part of that, I guess, within those assets, the one that's highlighted in the 10Q is maybe Porcupine has. Potentially, there's studies going on there about reclamation. Again, I'm just trying to – I know you're very careful about this, and reclamation is very important in the overall analysis, but I'm just trying to figure out how I can think about that.
spk03: Yes, thanks, Brian. Yes, the expectation is that as we divest these assets, and particularly when you're in a competitive environment, which is what we're seeing, is that that reclamation liability passes on to the new owner. And I'd also look to our track record as we've sold and rationalised and optimised our portfolio over the last 10 years, that that has been part of how we've gone about it. So what you've seen in terms of a KCGM or a Red Lake or a Waihi, a Bantahijau, similar process going forward.
spk13: Great. Thanks very much.
spk02: Thanks, Brian.
spk10: Thank you. And the next question is from Mike Parking from National Bank. The line is now open. Please go ahead.
spk00: Hi, guys. Thanks for taking my questions. Just a couple of follow-up ones. Natasha, could you just give me an idea of when we should expect that fourth autoclave to go down and add a service for the reline?
spk07: Mike, on the 1st of August, and it's 120 days. Okay, perfect.
spk00: And then a couple of questions for Karen. Depreciation for ounce rates. on NUCRIS assets? I'm assuming they're not quite stable yet, or have you finalized your purchase price accounting? And is it fair to kind of use Q2 rates on a go-forward basis, or should we still expect those to kind of bounce around a bit?
spk06: Yeah, there should still be slight variabilities as we go through and adjust from a purchase price accounting perspective, but they should be, generally speaking, well set. You know, I think we've had some, there's some ups and downs in depreciation. They're higher a bit. Ounces mined at Penesquito, higher ounces mined in acid additions at Ahapo, and increased as a result of the drawdown in inventory at Yenicocha. And all of that partially offset by the decrease as we, as you record things as assets held for sale. You know, you cease depreciation and amortization on those assets once you put that into that classification. So those will be the big variances. as you go forward. But generally speaking, the new crest from a purchase price accounting perspective has been pretty settled.
spk00: Okay. And then a question on taxes. Are you making payments in installments based off your budget gold price, or given that we're sitting up closer to, well, it was $2,400 12 hours ago, a little lower now, but obviously a much more robust metal price environment, are you truing up your payments or should we you know this metal price environment sustains should we start to think about catch-up payments in q1 q2 of next year to make up for the difference between budget and and realize yeah it will start accruing in arrears as we go forward okay thank you that's it for me thanks bob
spk10: Thank you. This concludes the question and answer session. I would like to turn the conference back over to Tom Palmar for closing remarks.
spk03: Thank you, operator, and conscious we're just at the top of the hour, so thank you all for your time over the last hour, and have a good day, and we'll look forward to catching up with you soon. Thanks, everyone.
spk10: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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