Walmart Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 26, 2023

There are 8 speakers on the call.

Operator

Good morning, and welcome to Newmont's Third Quarter 2023 Earnings Call. All participants will be in listen only mode. 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.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for joining Newmont's 3rd quarter earnings call. Today, I'm joined by my executive leadership team, including Rob Atkinson and Karen Oberman, and we'll all be available to answer your questions at the end of the call. I'd also like to introduce Natasha Boulayune, who officially joined the Newmont executive leadership team at the start of this month. Natasha is a seasoned industry leader and brings more than 30 years of technical, operational and executive leadership experience Across a diverse range of commodities, and we are very excited to have them join our team at Newmont.

Speaker 1

Before we begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. During the Q3, we continue to execute on our long term strategic plan, Underpinned by a very clear and focused strategy, we are leveraging our leadership and collective experience Along with the strength of our global portfolio and operating model to build a resilient and sustainable future for Newmont. Our pending acquisition of Newcrest is a significant event for our industry. It combines 2 of the sector's top senior gold producers To set the new standard for sustainable, responsible gold and copper mining, making this a very exciting And transformational time for Newmont and all of our stakeholders. But before we provide an update Newcrest transaction and what's to come, I'd like to start with a review of our safety performance.

Speaker 1

As a company, we have been on a very intentional and significant safety journey, And we are proud that Newmont has not had a fatality in 5 years. During this time, We've redesigned our fatality risk management system to ensure our standards and critical control verifications were focused on risks And behaviors that could result in a fatality. We have completed more than 1,600,000 Interactions by our leaders in the field that were focused on the critical controls that must be in place at all times to prevent fatalities. We modified the safety targets in our annual incentive program to deliberately move away from the traditional lagging Personal injury rates to leading metrics focused on fatality risk reduction and fatigue management. And we're focused on doing a few things really, really well, including pre start meetings, pre task hazard assessments And in field verifications.

Speaker 1

As a consequence of these actions, we have experienced A significant improvement in our safety performance,

Speaker 2

which is

Speaker 1

evidenced by the metrics you see here on this slide. Where the health and safety is an area where you must always maintain a sense of chronic unease. We still experience at least one significant potential event every 8 days. Each and every one of these Every hour, every shift and every day. Turning to our quarterly highlights.

Speaker 1

During the Q3, Newmont produced 1,300,000 ounces of gold and 10,000 tons of copper, Generating $933,000,000 in adjusted EBITDA and over $1,000,000,000 of cash from continuing operations, A 53% increase over the prior quarter, and we declared a dividend of $0.40 per share from our established framework. Over the last few months, we achieved a number of important milestones in our key development projects, Including fully lining the upper section of the new production shaft at Catamoy in Australia, receiving full funds approval for the Pamor project Importantly, earlier this month, we also reached a resolution with the union at our Penasquito mine in Mexico. And we are now focused on safely returning our teams to work and ramping up operations at this Tier 1 polymetallic mine. Throughout the negotiations to resolve this issue, we maintained a strong position and held steadfast to our values. Honoring the collective bargaining agreement that we had in place and ensuring that we protected the long term value for this mining operation, Our workforce, local community and all of our stakeholders.

Speaker 1

This unnecessary strike Has caused significant hardship for many, many people. And our focus this quarter will be on the safe ramp up of our operations, Along with the seamless integration of the Newcrest assets in the Newmont's global industry leading portfolio. Now that we have a resolution to the strike at Penasquito, we are updating our outlook for the remainder of the year To incorporate the following three impacts. The first is to reflect the suspension of operations at Penasquito From early June to mid October. The second is to reflect the lower than anticipated production from both Nevada Gold Mines And the third is to reflect lower throughput at the Ahafo Mill.

Speaker 1

And Rob will provide some more details on these matters in a moment. So for 2023, We now expect to produce 5,300,000 ounces of gold from the current year on portfolio with the resulting all in sustaining cost $1400 an ounce. As a reminder, our full year results for 2023 That we'll report in late February next year will incorporate around 7 weeks of production for the 5 acquired Newcrest assets, With the transaction currently on track to close on Monday, November 6. I'll now turn it to Rob and then Karen to take us through the quarterly results and the important work ahead to deliver a strong 4th quarter. Then I'll provide an update on the Newcrest transaction and what will be the focus of our integration efforts from day 1.

Speaker 1

Thank you, Tom, and good morning, everyone. I'll begin my discussion around the high margin Tier 1 assets Our portfolio today, starting with Boddington. During the Q3, I had the opportunity to visit Boddington And spend time with the team as we continue to ramp up the planned waste movements in the North and the South pits and prepare for the planned mill maintenance shutdown in the 4th quarter. Laybacks are progressing well and Boddington delivered solid production in the 3rd quarter as expected. The strong quarterly performance has helped to offset the impacts from mill maintenance and unusually wet weather.

Speaker 1

Yes, despite the heavy rainfall in the Q3, effective utilization for the autonomous haul fleet has improved significantly compared to this time last year. Funds mined are expected to increase in the Q4, and I'm pleased to say that we have successfully completed the commissioning of a further 5 new cat autonomous haul trucks to accelerate stripping in 2024 and position this cornerstone gold copper mine To reach higher grades in 2025. Turning to Tana mine. Our Tier 1 minutee in the Northern Territory to deliver consistently strong results following the record wet weather and extensive flooding experienced in the region during the Q1 of the year. We achieved record mill throughput in August, beating the previous record we set in March of this year.

Speaker 1

And we continue To expect to reach the year's highest grades and production levels in the Q4. However, we are closely monitoring the impact And the status of the very large wildfires currently burning in the immediate vicinity of Tanami and in the Northern Territory. And we will continue as always to prioritize the health and the safety of our workforce. We also continue to progress our second expansion project at Tanami mine and I was encouraged to see the headway the team is making during my recent visit. We've achieved a significant milestone in the concrete lining of our 1.5 kilometer feet shaft, fully lining the upper sections And removing the midshaft plug.

Speaker 1

And as is typical with projects of this size, we will review the project plan as we commence the lining of the lower sections, taking into account what has been done so far, the current ground conditions and the known over break needing to be mitigated in the lower section of the shaft. Once complete, this project will deliver significant ounce and cost improvements, Further strengthening the already strong margins at our Tier 1 operation at Tanami. And we look forward to providing an update with our guidance in February of next year. Heading to Amalfal. As Tom mentioned, 3rd quarter mill throughput was impacted by routine Condition monitoring by our asset management team identified hairline fractures to one of the large grinding mills draft gear at A half hole To reduce any further deterioration to the gear and to prevent a catastrophic failure, we made the decision to operate at less than full capacity, Bringing throughput to around 60% for the Q3.

Speaker 1

We have in October swapped the gush deals between our 2 milling circuits at a half hole To ensure our most productive milling circuit is able to run at 100%. This will allow Ahafo to run at approximately 80% Until we again reach full processing rates in the Q2 of 2024, when we will install a brand new Gert Gear. Also during the quarter, Ahafo accessed higher grade ore from Subika Underground And successfully commissioned the replacement conveyor ahead of schedule and below budget. The Happel North project continues to progress as planned And we have access to all critical parcels of land to commence construction of the processing plant and mine services facilities. Airports are ongoing.

Speaker 1

Heavy mining equipment is being assembled and commissioned. Contractors are fully mobilized, And we remain on track to commence pre stripping of the 1st mining area called the Sibenso pit in the Q4 this year. Turning to Penasquito. As Tom mentioned in his opening remarks, we reached a definitive agreement with the union And received approval from the Mexican Labor Court on October 13. We have safely restarted operations And the ramp up is progressing well so far.

Speaker 1

We are anticipating a return to full productivity in the next 2 to 3 weeks And we have restarted waste stripping in the Penasco pit and are now feeding the crusher with ore from the Chile, Colorado pit. We are importantly also continuing to strongly focus on the engagement with our workforce. This unnecessary strike Cause significant hardship for all of our employees, contractors, host communities, suppliers and customers. Penasquito is the largest employer in Zacatecas with a direct workforce of more than 5,000 and another 28,000 people in neighboring communities As we look ahead to the exciting and profitable future for Penasquito, we will continue to honor our commitments, Work closely with all of our stakeholders, comply with the law and the collective bargaining agreement and work to protect the long term value of this Tier 1 polymetallic mine. Moving to our non managed joint ventures.

Speaker 1

For our joint venture partnerships, Newmont has an interest in 4 Tier 1 assets, Pueblo Viejo, Harlan, Cortez and Turquoise Ridge. The joint ventures are core to Newmont's portfolio and contributed 352,000 ounces or 27% attributable gold production in the 3rd quarter. As Tom mentioned, reported performance from our non managed operations Has been below expectations for the year, impacting our ability to achieve our production and cost targets for 2023. We have adjusted our projections for both Pueblo Viejo and Nevada Gold Mines and look forward to an improved performance in the 4th quarter On top of the 800,000 ounces of gold produced from our Tier 1 operations and joint ventures, The remainder of Newmont's portfolio contributed approximately 500,000 ounces of profitable gold production, An increase of more than 100,000 ounces compared to the Q2. And we anticipate solid results from these assets through the rest of the year.

Speaker 1

Before I hand it to Karen, I'd like to take a moment to cover a few highlights from our development projects we are currently executing. On top of the achievements that I already noted at our second expansion in Tanami and the Hapo North, we also achieved key milestones at Cerro Negro, Occupying and achieving. At Cerro Negro, we declared commercial production for San Marcos, the first of 6 ore bodies associated with this Exciting district expansion. This opens up a further 650,000 ounces of high grade gold, which will be mined over the coming 10 years. This milestone was delivered on time and on budget, and we expect to start realizing the benefit from these high grade stopes in the Q4 this year.

Speaker 1

At Porcupine, the Pamor project has been approved for full funds by the Board. This opens up a further 2,100,000 ounces of gold And will be mined over the coming 11 years, which helps extend the porcupine of Complex's operational life to at least 2,035. Our mining team will commence pre stripping in the Q4 and are tracking well to produce 1st ore in 2024. And finally, we advanced our underground project to the team to the feasibility stage where drilling from the surface has already delivered results that are beyond Our initial expectations. And with that, I'll pass it over to Karen to cover our financial results.

Speaker 3

Thank you, Rob. Let's get started with the financial highlights. During the Q3, revenue was $2,500,000,000 at a realized gold price of $19.20 per ounce. And adjusted EBITDA was $933,000,000 up 10% from the Q3 of last year, Driven by higher gold prices and lower direct operating costs. We also generated $1,000,000,000 of cash from operations And $397,000,000 of free cash flow for the quarter, which is net of more than $600,000,000 of capital spend As we continue to move through a period of significant reinvestment back into our business.

Speaker 3

And we closed the quarter with a steady cash Position of $3,200,000,000 and a leverage ratio of 0.7x net debt to adjusted EBITDA. From a financial standpoint, our goal is to maintain a best in class investment grade balance sheet while funding value accretive projects and delivering healthy returns. And in recognition of Newmont's ongoing balance sheet strength and financial flexibility, I'm pleased to say that we have received a first time A- rating from Fitch With a stable outlook. We also maintained solid margins in the 3rd quarter despite the challenges that Rob mentioned for Penasquito, Ahafo 3rd quarter GAAP net income from continuing operations was $157,000,000 For $0.20 per diluted share. Adjustments this quarter included $0.14 related to revisions in reclamation and remediation plans at former operations $0.05 related to unrealized mark to market losses Equity Investments, dollars 0.02 related to transaction costs associated with our pending acquisition of Newcrest And $0.05 related to tax adjustments and other items.

Speaker 3

Taking these into account, we reported 3rd quarter adjusted net income of $0.36 For a reference to those modeling included in our quarterly results are $131,000,000 in operating costs And depreciation at Penasquito. This quarter, we declared a dividend of $0.40 per share or $1.60 per share on an annualized basis. This dividend was declared within our established framework, calibrated at a gold price of $1700 per ounce And in line with our 2023 dividend payout range of $1.40 to $1.80 per share. Dumont has paid over $5,000,000,000 in dividends since closing the Goldcorp transaction in 2019, demonstrating our commitment to our shareholders. On the close of the Newcrest acquisition, Newmont will integrate 5 new operations into our robust Global Operating Model.

Speaker 3

February of next year, we expect to provide our 2024 outlook for the combined company With our Q4 and full year results. Consistent with our process, our outlook will inform our 2024 dividend payout range, Which we will calibrate within our established dividend framework. As a reminder, we assess the variable portion of our dividends Annually, in alignment with the business planning cycle, projected cash flows and the current macroeconomic environment. Similar to this year, our 2024 dividend payout range will apply to our 4th quarter dividend to be declared in February and will be reviewed and approved by our Board of Directors each quarter. For a longer term view of our portfolio, we will apply and thoughtful approach to setting market guidance for the combined company.

Speaker 3

We expect to provide our long term Outlook after we've had some time on the ground with the Newcrest assets and following our annual strategy session with our Board of Directors, which typically takes place in June. We look forward to these events and providing more information on the exciting opportunities ahead

Speaker 1

Thanks, Karen. The combination of Newmont and Bucharest Represent an exceptional value proposition for shareholders and all our other stakeholders. Through an unrivaled platform, featuring the industry's best talent, growing the highest concentration of Tier 1 assets In the most favorable jurisdictions, Vermont is uniquely positioned to generate superior returns for decades to come. Recognizing the strategic rationale to create the industry's strongest portfolio of world class gold and copper assets, 96% of those cast by Newmont shareholders and 93% of those cast by Newquay shareholders We're overwhelmingly in favor of this transformational transaction. All of the regulatory approvals And shareholder votes now secured.

Speaker 1

We expect to close the transaction on Monday, 6th November and set a new standard The gold and copper mining across the industry. Following the close of the transaction, The core of our portfolio will be 10 Tier 1 assets, representing more than half of the world's top tier gold mines. And these assets will have the scale, fine life, cost profile and resilience to position Newmont To deliver strong and stable returns for several decades. Leveraging the learnings from operating our current Tier 1 assets, Along with our comprehensive asset strategy work, we will be applying the strength of our operating model, our people and our systems With the newly acquired Tier 1 assets in La Heer and Cadia as well as Brucejack and Red Chris in our emerging Tier 1 district of British Columbia. There is no doubt that Newmont will be operating the world's best gold copper portfolio.

Speaker 1

Under one umbrella, Benefiting from our existing portfolio, operating model, sustainability practices and disciplined capital allocation process. Every one of our assets is managed through our integrated global operating model, Supported by a deep bench of experienced leaders and subject matter experts with a track record of safely delivering value. And within this global operating model, we will have 6 regional business units, each led by a dedicated Managing Director. From the start of November, Natasha will assume accountability for our Australian business unit led by Mia House, Our North American business unit led by Bernard Vessels and Papua New Guinea, where we have Alba and Pretorius returning to Newmont To head up this newly established business unit. Through early 2024, GOLF will continue to have Accountability for our African business unit led by Dave Thornton, our Latin American and Caribbean business unit led by Mark Rogers And our Peruvian business unit led by Rakhman Amadou.

Speaker 1

We are very fortunate to have Rob as a continuing member of our executive leadership team, Particularly during this important integration period, Natasha and Rob will work together closely in the coming months, And both leaders will be pivotal in delivering synergies for the Newcrest acquisition and driving operational results That demonstrates our position as the Benchmark Gold Equity. In just a few days, we'll be welcoming our Newcrest colleagues to Newmont. And on day 1, my extended leadership team and I will be on-site across every Newcrest location. As we begin our integration work with the Newcrest team, we'll be focused on 3 key systems That have been fundamental to our success at Newmont. The first is our fatality risk management program, Which is at the very core of our safety approach.

Speaker 1

And put simply, great companies do not kill people. 2nd is our RespectWork program. A key benefit from bringing these two companies together It's the alignment in our values and culture, in particular around safe and inclusive workplaces. We have the opportunity to learn from each other With the programs we both have in place. Like many other companies in the mining industry, We know there are systemic issues that allow sexism, racism, discrimination, harassment and bullying To continue to be experienced in our workplaces.

Speaker 1

These disrespectful behaviors have no place at Newmont. And we'll be working together to take actions to create a workplace where everyone is welcome and safe. The 3rd key system is our full potential program, which will commence rolling out both LaHir and Cadia in November To support the delivery of our synergy commitments. Full Potential is a program that I have led at Newmont over the last decade. It is the most sustainable improvement program that I've worked with in my 35 year career in the industry, and it was key To delivering over $1,000,000,000 in synergies from our acquisition of Goldcorp some 4 years ago.

Speaker 1

However, full potential delivers much more than just cost savings and productivity improvements. It sustains and improves our culture By breaking down barriers and encouraging active participation, global collaboration and sharing lessons learned across our organization. During our due diligence work back in May, we identified and committed to $500,000,000 in annual synergies And the delivery of these synergies over the 1st 24 months, we are very excited about the long term value and opportunities It will bring the both sets of stakeholders and our combined workforce. This transaction creates the best possible collection of Tier 1 gold and copper in the industry, all supported by the industry's best talent, technical capabilities, sustainability practices And disciplined capital allocation process. We'll also increase our investor outreach, Welcome to shareholders from Australia that will form an important part of our shareholder base as we look to establish And then grow our listing on the ASX.

Speaker 1

We have a long history and a shared heritage in Australia, And we will be strengthening our presence in this key mining jurisdiction, whereupon the close of this transaction, Around 30% of our revenues will be derived. We're looking forward to welcoming the experienced and talented team at Newcrest And providing our 1st integration update on the combined business in the Q1 of next year. And with that, Thank you for your time today and turn it over to the operator to open the line for questions.

Operator

Thank you. We will now begin the question and answer session. At this time, we will pause to assemble our roster. The first question today comes from the line of Lawson Winder with Bank of America. Please go ahead.

Operator

Your line is now open.

Speaker 4

Great. Thank you very much, operator, and thank you for taking the question, Tom and team. You've all discussed The likelihood for the combined company to have lower production than a combined 8,000,000 ounces annually, what is the urgency with which you intend To sell any non core assets to reduce from that level and improve the overall combined portfolio.

Speaker 1

Thanks, Lawson, for the question and good morning. In terms of as Karen talked about, in terms of us taking time to work through the What we'll turn out with more like a mid year when we'll run a Capital Markets Day to share that. What we'll look to do Almost immediately after close is we have a reserve and resource review team. We call it our 3R review. We'll have that team going into each of the 5 operations At Newcrest, we'll establish the reserve resources to the Newmont definition.

Speaker 1

And then with that reserve and resource review done, We'll then establish Newmont based resource models and then start to develop our mine plans based upon previous best demonstrated performance And then have those start to convert into business plans and then we'll iterate and work those. So we'll certainly work to produce A 2024 budget with a combined portfolio, but we're going to take our time to really understand and work those mine plans to understand the potential of those operations and We can deliver on those operations and also understand projects across that portfolio and how they re sequence together. So that's going to be Work will do diligently over the starting in early November for the 1st few months of next year. In terms of the full portfolio of 17 managed operations, As I've described in my remarks, Lawson, we can very comfortably manage those operations within our global operating model. This is in intensive purposes, is a bolt on of 5 operations in the Newmont's operating model.

Speaker 1

Two operations in the Australian business unit. I was running the Australian business unit some years ago, I had that number and a couple more from memory. Two operations into North American business unit and our vessels very capable to accommodate those 2 operations and manage them and then standing up our new Our business unit in Papua New Guinea, and as I mentioned, one of the very best leaders ever to work at Newmont, Alwyn Pretorius, who retired to go and work on his family farm in South Africa, He's coming back to the base and put more thing to stand up that business unit. So someone who's very experienced having run Very successfully, our business unit in Africa some years ago and then our Latin American Caribbean business unit. He understands Developing World.

Speaker 1

He understands Newmont Really well placed to stand up that new P and G business. So we will, paperfully run those 17 operations And Peter Tom and his team will then look at where the opportunities might be to optimize our portfolio. We have a commitment of $2,000,000,000 Over the 1st 24 months, that will be a combination of project resequencing, will become part of that business planning work that we'll do, but we'll also be looking to Where the opportunity is to rationalize our portfolio, and we'll be looking at those operations that are Tier 2. And we have a number of Tier 2 operations in our portfolio. Several have a potential to grow to Tier 1, But we have a number that are clearly Q2 and Peter will work through a very structured process to think about how we might rationalize the portfolio.

Speaker 1

We are very comfortable, Lawson, to be able to run 17 operations in our business.

Speaker 4

Many thanks. And if I could follow-up just one final question on your full potential comments in your prepared remarks And the synergies, can you comment on which assets might get the greatest attention for that program post closing on the NCM side? And put another way, is there a Penasquito in the NCM portfolio that could materially exceed expectations, Including in the included in the initial synergy guidance. Thanks very much.

Speaker 1

Thanks, Lawson. So the $500,000,000 $200,000,000 is attributable To our full potential work, there are 2 Penasquitos in the Newcrest portfolio, Lihir and Cadia. That's where we're focusing our time and attention of the $200,000,000 we see, the order of $90,000,000 coming out of Lihir as we think about the opportunities to improve The work we do around the mine, the basics of mining from drill and blast to load and haul and maintenance or asset management work. So we're presenting The best ore consistently to the 4 auto plays in that processing plan. We'll have people on the ground next month to start Really getting in and understanding those opportunities that we saw during due diligence.

Speaker 1

I think we certainly plan to tell a story Out of Lakia, it looks very similar to the story we've told out of Penicero. And then Acadia, the other very large Tier 1 operation in the Newcrest portfolio, The opportunities in the processing plant, a big block cave mine, roughly 35,000,000 tons a year coming out of that underground mine. The opportunities we see are to work the bottlenecks in the processing plant is the availability, the reliability, getting Consistent throughput through the crushing and grinding circuits so that you've got consistent feed to the flotation circuit so you can then improve that throughput and recovery. Again, very similar To where we've worked Penasquito with a big mill, crushing and grinding circuit with multiple plantation circuits. So Penasquito story and the Boddington story in terms of working the mill is where we see the analogy for the analog To Acadia and then working the mine that will be very similar to the work that Rob and the team led at Penasquito to deliver significant improvement out of that mine, Thanks, Matt.

Speaker 4

Fantastic. I look forward to further updates and congratulations.

Speaker 1

Thanks, Matt.

Operator

The next question comes from Daniel Morgan with Berenbergen. Daniel, please go ahead. Your line is open.

Speaker 5

Hi, Tom and Tim. My first question is about the issues that you've had This year, how much of the issues you've had that has led to the production downgrade today, How much does that follow into 2024? Obviously, Penasquito doesn't, but can you just run Through some of the assets and whether some of the issues run into 2024.

Speaker 1

Thanks, Daniel, and good morning. And good morning to you, I think it is. And thank you for staying up in Australia To listen in and thank you for your coverage. If you look at the big assets within the Newmont portfolio today, Peter, now that we're up and running, we're very confident that there's been a reset of expectations with our workforce And the union that represents them. So we go into 2024 very confident about the ability to continue to get after cost and productivity improvements safely At that operation, the impact on 24 is the mine sequence.

Speaker 1

So where we were in the mine sequence when the operation operations were suspended Means that what we thought would happen in 2024 will be different now. It's a polymetallic mine, so we're in the Chile, Colorado pit, which is more of the other metals than gold. So We won't swing back in the Penasco now to Talatka. So therefore, it will be the balance of metals that come out of Penasquita that will be different in 'twenty four. And the gold equivalent ounces, if you buy from side to side.

Speaker 1

At a half row, We will be nursing the GURVE gear that's now on the mill. So there's 2 big SAG mills at Tahafo. The growth gear on the main feed of the processing plant is twothree of the throughput through the mill. It's now tickety boo and that can run at 100%. Now we'll now nurse the Gursky with the hairline cracks on the smaller mill.

Speaker 1

It's about a third of The throughput through until the end of Q1, start of Q2 of next year. So the processing plant at the half hour will run at around 80%, percent, 80% of throughput as we get through that very managed transition. Yes, probably the 2 impacts on our big Tier 1 operations, So we're thinking to 24. We're still to see plans out of our non managed joint ventures. They make up about 30% of Geomont's portfolio today.

Speaker 1

At Pemblevillena, we're commissioning a very significant expansion To a pressure oxidation service. So as that is understood and plans are built for 2024 that will reflect the latest information from that commissioning exercise. And then 3 big mines in Nevada. And as you work through 'twenty three and then understand impacts on 'twenty three performance and what that means for Mine, so you've pushed another things in 2024, potentially some impacts there that we'll learn about in the next couple of months as we work with our joint venture partners on those plans. So Hopefully, Daniel, that gives you some color as to how we think about the impacts from 'twenty three going into 'twenty four.

Speaker 1

I think the important thing is With all of the events we've had this year, all of that metal is still in the ground. And this is just a process of the time at which that metal presents. None of those issues have any impact in terms of the reserves that we have and it's just the timing at which they can be converted into metal and sold.

Speaker 5

That's probably a good segue, Tom, into my next question, Which is market can sometimes get fixated on short term issues and forget that the gold is still there. So if the market does do that and the share price underperforms as it has year to date, is it An opportune time at some point soon to look to a buyback to maybe communicate to the market That there is long term value in the share price and that the market may not be pricing in.

Speaker 1

Thanks, Daniel. I'd certainly say for anyone looking at Newmont stock today, there's some tremendous buying out there In terms of the transaction we're about to close and the portfolio that we'll be stewarding in any less than 2 weeks' time. Daniel, the process we'll work through we'll diligently work through our business planning. As I was mentioning in the answer to the previous question, we've got 5 new assets And work through a process of determining our 2024 budget and continuing in parallel to work on the longer term plans. That will then inform our capital allocation process, which for us is ensuring we're maintaining a strong balance sheet, ensuring that we're directing appropriate levels of cash reinvestment back in the business to extend the life and the growth and ensure we've got returns available to our shareholders.

Speaker 1

Our capital allocation strategy adds returns 1st and foremost being through our dividend framework. So we'll work through our business planning process, particularly for 2024 year And look to how we calibrate our dividend framework, when we think about assumptions about gold price, the cash flow we're generating And some of the other macroeconomic events that will be impacting our business in our world at that time. That will be the primary debate and discussion we'll have. But as we have that debate and we present those numbers to our Board and we look at the cash we're generating, we look at our share price, It is an area that we will continue to debate as a second order capital allocation element for returns to shareholders and whether there would be some Benefit in terms of how we're seeing the business and whether there would be any benefit in seeking permission from the Board to establish a buyback So it will be part of the debate, but our first order returns to our shareholders through the dividend framework.

Speaker 5

Thank you so much, Tom, and I look forward to meeting you in the coming weeks.

Speaker 1

Thanks, Daniel. We'll likely see you in a couple of weeks, Maybe in

Operator

Spanish. Our next question comes from the line of Tanya Jaskeuskanac with Scotiabank. Please go ahead, Tanya. Your line is open.

Speaker 6

Great. Good morning, everybody, and thank you so much for taking my questions. Just have a couple that I just need some clarity on. Tom, can we just go back to the Newcrest merger That is pending. Can we just talk about Newcrest's reserves and resources?

Speaker 6

When you report your guidance In February of 2024 for the year and your reserves and resources, will you be Those reserves and resources based on your inputs, just like you did with Cool Corp when you took over, you made adjustments from the reserve The resource category and if so, can you review with us some of the minds that we may see some shift? Thank you. That's my first question.

Speaker 1

Thanks, Tanya. Yes, you can expect something very similar to what took place when we acquired Goldcorp. So we'll have a team, a technical team on the ground across those 5 operations through November December Assessing the reserves and resource at each of those operations and assessing those against our You want definition. So we obviously report under SEC rules and Newcrest report under JORC. So there will be some differences in terms of what is classified as reserve and resource, And we also have a very high standard at Newmont.

Speaker 1

A Newmont reserve is a higher standard in the industry. You will see some movement back and forth. In the various announcements we've made since we announced the binding agreement, you'll see us talk about a couple of instances about reserves and resources, And you'll see us report them separately for the 2 companies because there are 2 different definitions for those. So we are working towards with that temporary time frame To update reserves and resources for the combined portfolio. Daniel, in terms of any sort of signaling, we haven't and I think it's Important note for everybody is we had access to a data room for 4 weeks back in April May To assess and to submit a binding offer and to determine our synergy values and to make some judgments about Poly optimization.

Speaker 1

Since that time, both companies are required to run as independent companies. And so we have had an integration team working I'm planning for integration, but we have not had any access to any additional Newcrest information since that time. We get the keys to the car on Monday, 6th November. That's the first time we get access to reserves of resources, mine plans and the like and can start that work. So it's in front of us, Tanya, in a couple of weeks' time.

Speaker 6

Okay. So there isn't anything that you can think of. For example, the Lihir where Some of those reserves, I think about 3,000,000 ounces or thereabouts are in the reserve category that needs the additional layback from the, I think, the dam wall To be included, whether something like that could shift from reserves to resources given Newmont's stricter definition. Have you I'm just giving that as an example. I'm just wondering if there's anything between the two accounting, the 2 IFRS and U.

Speaker 6

S. GAAP on the reserves that just is glaring to you at this point?

Speaker 1

Nothing at that level of granularity, Tanya, but the expectation will be similar to the Goldcorp experience. You will see without going into specifics, you will see Newcrest reported reserves in some instances moving to Newmont reported resources. You'll also see, I think many people fully understand, as we move from interest Reporting to accounting for U. S. GAAP accounting, our definitions for stockpiles and for sustaining capital and other things will change.

Speaker 1

Our co product, by product accounting will change. There will be some moving parts around all of that as well. But we don't have that granularity yet, Daniel.

Speaker 6

Okay. So and then just on the long term guidance, I think, I heard that, that will be provided after the Board strategy meetings in June. So should we be thinking midyear for a 5 year guidance outlook?

Speaker 1

That's what we're planning to do, Tanya. We want to get through that good working session with our Board and then really look to set up a Capital Markets Day where We can come together and work through that longer term view, certainly the 5 year and certainly the portfolio we're creating here, we'll be Looking to show the 5 to 10 year view of the strength of this portfolio, but we certainly want to work with those mine plans Over the 1st few months of next year, we're doing a lot of time to really have a right month story to share with the market.

Speaker 6

Okay. And then just maybe on any more Severance and or restructuring costs that we are going to be incurring in Q4 or have these all been taken in Q3?

Speaker 1

The severance costs in Q3 are really largely unrelated to this transaction that was associated with the reset work happening down at Yanacocha As we're ramping down there, we've got folks taking some voluntary redundancies. So we will start to see the transaction related Severances flow in the Q4 and then they'll flow into the Q3 of next year is where you'll see them. Probably The larger numbers will be in the Q1 of next year than the Q4 of this year.

Speaker 6

Okay. So more costs in Q4 and Q1 to come. And then my last question, if I could, is I just kind of would like Yes. Okay. With the transaction, yes.

Speaker 6

And then just my last question is just your view on sort of all of these index rebalancing from now until year end. Could you give us some overall qualitative information in terms of what quantitative you have in terms of How you see all of these index rebalancing occurring or what's your view is on that from now till year end? It's still hard with all this movement in the share prices

Speaker 1

Thanks, Santa. Lots of early parts happening at the moment, certainly with the and we're right live in that process of the index Rebalancing as Newcrest coming off the ASX and our secondary listing coming on the ASX and all of that work happening We look at our modeling getting through and out the other side of the rebalancing between Our headstock in the New York Stock Exchange and the secondary listing in the ASX is likely to be a month or 2 for that to settle out. So we anticipate with and certainly as we've had conversations with Shareholders in Australia and describing what we can anticipate happening, quite a bit of volatility and liquidity before things start to settle out in terms of New York Exchange and ASX. We think there'll be some movement of potentially up to 10,000,000,000 that could flow from one to the other. We also anticipate that we'll have something in the order of $10,000,000,000 to $15,000,000,000 Aussie market cap sitting on the ASX, representing 20% to 30% of our market That will be the starting point that we'll lean into and look to work that secondary listing alongside our primary listing.

Speaker 1

So We've got some modeling that sort of shows some scenarios as to where we may land between New York Stock Exchange and ASX, and that and we fully anticipate that it'll Volatile and liquid for a month or couple of months before everything settles down, it's been a lot of side of the book.

Speaker 6

Okay. So what I take from that is some outflows from now until year end with all of this rebalancing and then settling in and then Obviously, on a positive side with the Australian listing.

Speaker 1

The positive side of the Australian listing with a very savvy mining Investment community and some very sticky funds with the big super funds there and lots of interest as we've engaged with that investment community. And then you'll also see I think you'll see positive trends as from a passive standpoint with our larger market cap as things settle out. I think you're going to see some of that flow as well. So Noisy, but there's some very good signs as to what this portfolio is going to be able to attract.

Speaker 6

I appreciate it. Thank you so much for taking my questions.

Operator

Our next question comes from Josh Wolfson with RBC. Please go ahead. Your line is now open.

Speaker 2

Yes. Thanks very much. I understand there's a lot of moving parts But is it possible to provide some goalposts or some indication of what the cost structure looks like Even just for the Newmont portfolio going forward, when we take a look at the numbers, 4th quarter based on guidance looks an annualized rate of 6,000,000 ounces, which is, let's call it, average for the company. And the implied AISC is closer to about 13.50, Which would be quite a bit higher than where the company was discussing costs, at least for 2024, the old structure. So I understand a lot of moving parts, but just anything on inflation or costs for some the Newmont portfolio going forward?

Speaker 2

Thanks.

Speaker 1

Thanks, Josh. Good morning. I mean, it's a tricky one this year because of some of the events we've managed, Which are really impacting ounce production. They've been having a flow on impact on the unit cost. But when we look Through that to our direct cost base, it's very much in line with what we're expecting for this year.

Speaker 1

And then as we look into next year, that direct cost base is looking pretty steady. So it's sort of staying at the levels that we've seen And the sort of stabilizing out of inflation very much as we look into next year as we're doing early planning work, At least the direct cost base looks very similar this year. So I think for us it will be working through the ounce profile for this combined portfolio. Thinking about we'll think about our portfolio in a couple of different chunks as we're doing our plan. What will be The Tier 1 operations and the emerging Tier 1 operations that we manage and how we think about those, we'll be thinking about 3 non managed joint ventures We'll have in our portfolio Nevada Gold Mines, Ed La Viejo and Bridgit Del Monte.

Speaker 1

And then we'll be thinking about those Tier 2 assets and how we manage those Tier 2 assets And those candidates that would be more likely to be part of that portfolio optimization. So we think about what's our cost Thanks for the Tier one operations and emerging of the Tier one portfolio that we manage. We'll be challenging our non managed joint ventures around their cost base. And then we'll be looking at how we manage our Tier 2 assets going forward. So we'll be having those debates in fairness to build our business plans.

Speaker 1

The high level answer to your question is that direct cost base is very consistent with what we see this year, and we'll be working to ensure that we've got Some of those we've got we're through and out the other side of some of those challenges that we've had with push fires and flooding, a strike And a manufacturing port with a earth gear at a half hour. So we'll certainly be looking at the plan 24 being pretty consistent in that profile for most of those operations of a pretty consistent cost base.

Speaker 2

Okay. And then another question. I'm not sure if you can provide many details A review of this, but following the Newcrest recent operating update, I'm just wondering the performance These assets, has that affected your views on maybe some of the complexity or the strategy for integrating this portfolio or maybe how How are you going to manage that process?

Speaker 1

No, Josh. Nothing's changed from our due diligence. We're crystal clear on how we will manage those operations and how we Clear on how we will manage those operations and how we will integrate them into our operating model and we're well advanced in Planning in terms of what we'll do on day 1, week 1, month 1 and the first 100 days. So there's nothing about Anything that happened in the sort of the more recent times that changes our long term view on those assets and how we integrate management.

Speaker 2

Great. Thank you very much.

Speaker 1

Thanks, Matt.

Operator

Our final question today comes from Anita Soni with CIBC World Markets. Anita, please go ahead. Your line is open.

Speaker 7

Okay. Thank you, Tom and team for taking my questions. So the first one I think was is related to capital allocation. When you deliver on the $2,000,000,000 in portfolio optimization, can you give us an idea whether or not that could be used To support a dividend if needed? Or do you think you have uses for that capital In terms of reinvesting in your portfolio?

Speaker 1

Yes. Thanks, Anita, and good morning. So the portfolio optimization will come from categories. 1 will be resequencing the projects of the combined portfolio so that the if you match the 2 portfolios together, what would have been the cash going towards Development projects are reinvesting. That will change and that will then lead to free cash flow that we're generating That would then be informing the decisions we make around calibrating our dividend framework.

Speaker 1

So that portfolio optimization will actually lead to generating free cash flow for Support of the dividend. Then the portfolio optimization with the proceeds that we received from divestments of assets. 1st and foremost, we will bring that on to our balance sheet to strengthen our balance sheet and then make judgments about how we use the cash on our balance sheet. And certainly, as we did with the Goldcorp, we look back to our Goldcorp experience and we look at where our to the answer to the earlier question, we look at where As share price is trading, we have a robust view of where we're valued. And if we thought that there was some opportunity to buy back some shares, then that would be the base we would have With our Board, but the first and foremost that cash will come on to our balance sheet and be used to strengthen and bolster the balance sheet of the combined organization.

Speaker 7

Okay. Thank you. Second question, just more a little more on the nitty gritty. Looking at Boddington, is that an appropriate run rate this quarter? Is that kind of what you'll be doing in terms of Throughput in grades as you go into 2024 and continue with that layback?

Speaker 7

Or will that become more, I guess, exacerbated and more Stockpile use and more waste stripping happening.

Speaker 1

Certainly, as we and a bit of a higher sustaining capital, Anita was around getting our hands on 5 trucks to get after the and we had access to those 5 trucks, so getting them In early, I think after the waste movement in the North pit to really start to open up the North and South pit for the next Swing into the high grade ore. So we'll move through 2024 and 2025 into some more waste movement, Some are run of mine ore coming into the plant, but also starting to supplement that with stockpiles. So you will see a movement In that normal cycle of Boddington, we're moving into more waste and some stockpiles and so some lower Gold and copper in that normal band that Boddington operates through. So you will see a bit of that dynamic playing out in 2024 before you get back into the

Speaker 7

Okay. Thanks. And the final question is with regards To the projects and particularly Tanami where I think you pared back some of revised your development capital Number, citing the rainfall events that you had. I just wanted to understand when you guys review the projects and the capital And where you basically do you think you're okay on your capital at Tanami Expansion 2 right now? Or should we be expecting to see an update there?

Speaker 7

And I ask this because we've seen unit cost escalation across the board and we just haven't had an update on like both capital numbers for about a year or so.

Speaker 1

Thanks, Anita. So we've reached an important milestone at Tanami where we've removed the mid shaft plug, we've lined the upper Part of the shaft and now we're at that mid shaft level setting up the infrastructure to then get after the lining at the lower It's an important milestone where you pause and understand the work in front, what you've learned from lining the top part of the shaft, You're going to apply those learnings to the bottom half of the shop and what the condition of the bottom half of the shop is as she's now going to the run home. That work is happening right now. As we're seeing in the Australian market, I The key cost pressure in capital projects is labor. And so just ensuring we understand the labor.

Speaker 1

We have 1 half of labor there and All crews, we get set to go for that 2nd round of sharp lining. That work is live as we're working that through as part of our planning Processes and doing our cost and schedule for the run home. That would certainly be something that we would be expecting to provide an update with 2020 4 guidance in the latter part of February next year. So we're at the milestone of the project and that's nicely lined up with February 24 update.

Speaker 7

Okay. So just on that note, can you just go over so February 2024, You will provide guidance for the combined portfolio for 2024 sorry, for 2024 only. And then June, you will provide the combined portfolio Or mid year, you'll provide a 5 year for the combined portfolio. Is that correct?

Speaker 1

That's correct, Amita.

Speaker 7

Okay. And then lastly, on the dividend, what you would set it for next year, that would be in February as well, right?

Speaker 1

2024 dividend would be dividend would be calibrated for 2024, and we will be sharing that information with our Got it. In February 2024.

Speaker 7

Okay. Thank you. That's it for my questions.

Speaker 1

Thanks, Anita.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Tom Parler for closing remarks.

Speaker 1

Thanks, operator, and thank you all for taking the time to listen to our call today, and please enjoy the rest of your day. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Walmart Q3 2023
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