Newmont Q3 2024 Earnings Report

Newmont EPS Results

• Actual EPS: $0.81
• Consensus EPS: $0.86
• Beat/Miss: Missed by -$0.05
• One Year Ago EPS: $0.36

Newmont Revenue Results

• Actual Revenue: $4.61 billion
• Expected Revenue: $4.67 billion
• Beat/Miss: Missed by -$64.62 million
• YoY Revenue Growth: +84.70%

Newmont Announcement Details

• Quarter: Q3 2024
• Date: 10/23/2024
• Time: After Market Closes
• Conference Call Date: Thursday, October 24, 2024
• Conference Call Time: 11:00AM ET

Newmont (NYSE:NEM) engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana. The company was founded in 1916 and is headquartered in Denver, Colorado.

Newmont Q3 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to Newmont's Third Quarter 20 24 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.

[Tom Palmer, President and CEO at Newmont]

Thank you, operator. Good morning, everyone, and thank you for joining our call. Today, I'm joined by my executive leadership team, including Natasha Boulione and Karen Oberman, and we'll all be available to answer your questions at the end of the call. Please note our cautionary statement and refer to our SEC filings, which can be found on our website. Before we discuss our Q3 performance, I would like to take a moment to remember Antoine Fortin, who tragically lost his life at our Eleonore operation late last month.

[Tom Palmer, President and CEO at Newmont]

We recognize that this is our 5th fatality in less than a year and we are working diligently to strengthen and improve our safety systems along with the key safety tools that we use in the field. We are fully committed to understanding the factors that contributed to this tragedy and are taking decisive action to improve our safety culture with a clear focus on effectively controlling all of the risks that could lead to a fatality. We will also continue to transparently share the lessons we learn from the investigation with our peers in the industry to help improve the safety performance of our sector. At Newmont, we know that a strong safety culture is fundamental to sustainably delivering on our commitments and it is our accountability to ensure that everyone working at Newmont returns home safely after each and every shift. Turning now to a summary of our Q3.

[Tom Palmer, President and CEO at Newmont]

I'm honored to have recently been appointed as the next Chair of the International Council of Mining and Metals or ICMM. I look forward to playing an even greater role in advancing sustainability and responsible mining practices both at Newmont and across our industry. During my term as Chair, one of my key priorities will be building support for the consolidated mining standard initiative, an effort we have strongly supported and actively engaged in over the last few months. These consolidated standards will be essential for strengthening the industry's reputation and providing stakeholders with confidence that the commodities we produce are mined responsibly. Last week, we announced that we have partnered with MKS Pamp to launch our 1st mine to market traceable gold bar for sale in the United States, making Newmont's gold directly accessible to consumers and demonstrating our commitment through transparent sourcing.

[Tom Palmer, President and CEO at Newmont]

Shifting to our world class portfolio of Tier 1 and Emerging Tier 1 operations and districts. In the Q3, we produced nearly 1,700,000 ounces of gold and 430,000 gold equivalent ounces from copper, silver, lead and zinc. And notably, this included 37,000 tons of copper. We generated $1,600,000,000 of cash flow from operations and $760,000,000 in free cash flow. Our non core divestment program has advanced many fleets since our last earnings call with the 2 recently announced transactions expected to deliver up to $1,500,000,000 in combined gross proceeds.

[Tom Palmer, President and CEO at Newmont]

The first announcement was a definitive agreement to divest the Telfer mine and our 70% interest in the Havremon project in Western Australia, with total proceeds of up to $475,000,000 We continue to progress the closing conditions and expect to complete the transaction this quarter. The second announcement was a definitive agreement to sell the Achim mine in Ghana for up to $1,000,000,000 in cash consideration. And we also expect to close this transaction towards the end of the year. With this solid progress, we remain firmly on track to realize our commitment to generate at least $2,000,000,000 in gross proceeds from the divestment of our non core assets. It is also important to note that this is in addition to the $527,000,000 in cash proceeds that we have already received this year from the London Gold, Nata Hejal transactions.

[Tom Palmer, President and CEO at Newmont]

Our divestment progress and strong free cash flow generation have positioned us to be able to continue reducing debt and returning capital to shareholders. Since our last earnings call, we have retired $233,000,000 in debt and returned $786,000,000 to our shareholders through share repurchases and quarterly dividends. We also approved an additional $2,000,000,000 share repurchase program, bringing our total authorization to $3,000,000,000 In addition, we continue to safely advance the 3 projects we have in execution. The second expansion at Tanami, our new mine at Harfo North and the Panel Ks at Cadia. And finally, turning to synergies.

[Tom Palmer, President and CEO at Newmont]

When we announced our decision to acquire Newcrest, we committed to delivering $500,000,000 in synergies from 3 areas: G and A, supply chain and our full potential program. And as of today, we have achieved that $500,000,000 synergy run rate. Starting with G and A, a $100,000,000 synergy run rate was achieved through labor rationalization and reductions in both insurance costs and contractor spend. Moving to supply chain, our team has been leveraging the scale of our combined company to achieve improved commercial outcomes that have already brought our synergy run rate from this area to $200,000,000 And finally, we have begun to realize significant value from our full potential program and are in the delivery stage of our initiatives at Cadia, Red Chris and Lihir. From this work, we have successfully surpassed a $200,000,000 synergy run rate with potential upside to be realized in future years.

[Tom Palmer, President and CEO at Newmont]

The majority of the value realized so far has been attributed to Cadia due to the work we've been doing to more efficiently move stockpile material and to optimize the output from our high pressure grinding roll system in the mill, an initiative that I touched on last quarter. And the remaining value has come from Red Chris and Lihir. At Red Chris, we're improving gold and copper recoveries from the optimization of both the grinding and flotation circuits, while also increasing throughput by delivering a more consistent ore feed to the mill. And at Lihir, we are focused on improving efficiency by debottlenecking the materials handling and crushing circuits, as we mentioned on our Q1 earnings call. With our synergy commitment now met and our divestment program well advanced, we are now focused on the sustainable value that we will deliver from our go forward portfolio of 11 managed large long life operations.

[Tom Palmer, President and CEO at Newmont]

So with that, I'll now turn it over to Natasha for an operational update and then to Karen to take us through our financial performance for the quarter. Over to you, Natasha.

[Natascha Viljoen, Executive VP & COO at Newmont]

Thank you,

[Natascha Viljoen, Executive VP & COO at Newmont]

Tom. As we enter the final quarter of 2024, I'd like to start by reemphasizing the operational priorities I highlighted at the beginning of

[Natascha Viljoen, Executive VP & COO at Newmont]

the

[Natascha Viljoen, Executive VP & COO at Newmont]

year. Our focus remains on 3 key objectives. 1st is making sure that every person walking through a Newmont gate is fully equipped and authorized to do their work safely. 2nd is continuing to deliver strong performance from our managed assets, while also guiding our non core assets through a respectful and productive process for divestment. And last is enhancing long term productivity at every one of our 11 managed Tier 1 and emerging Tier 1 operations.

[Natascha Viljoen, Executive VP & COO at Newmont]

Turning to the next slide, and let's begin with an operational overview. In the Q3, our managed portfolio delivered a meaningful step up in production as planned, producing 4% more gold than the 2nd quarter and building momentum for a strong finish to the year with an anticipated 1,800,000 ounces of gold in the 4th quarter or an approximately 8% increase over the 3rd quarter. This performance has been largely driven by our 6 managed Tier 1 operations, which I now will touch on in more detail, and I will start with Tanami. We began accessing higher grades from the Liberator ore body and remain on track to deliver this year's strongest grades in the Q4. At Bonnington, we continue stripping in the North and South Bids as planned, which is expected to continue through 2025 and will bring forward strong gold and copper grades starting in 2026.

[Natascha Viljoen, Executive VP & COO at Newmont]

Moving to Penasquito. We delivered steady gold, silver, lead and zinc production in the Q3 from the Chile, Colorado pit and commenced mining ore in the higher gold grade Penasco pit well ahead of plan due to efficient stripping. This will result in an increase in gold production in the Q4 and into 2025. And importantly, we have signed a new collective bargaining agreement with the union at Penasquito, which safeguards the rights of all workers and provides a solid foundation for operations at Penasquito through 2026. Turning now to Cadia.

[Natascha Viljoen, Executive VP & COO at Newmont]

As factored in our guidance, grades at Cadia are expected to continue declining in the Q4 as we transition to and ramp up annual CAFE23. We are progressing integrated studies to align CAFE development with life of mine tailings capacity, setting up Cadia for the next 3 decades of ore feed. Our focus for tailings is maximizing capacity in the current in pit storage facility, repairing the southern wall of the northern facility that slumped in 2018 and then raising the wall of the southern facility. These efforts are expected to contribute to a period of increased sustaining capital spend at Kalia over the next few years as we make the necessary but disciplined investment to remedy and expand the current timing facilities. At Lihue, we continue to progress the planned shutdown of the primary autoclave, which remains on track to deliver an approximate 50% step up in gold production in the Q4 of 2024 compared to the Q3.

[Natascha Viljoen, Executive VP & COO at Newmont]

As we look ahead to 2025, our operational focus at the year will remain on reducing complexity to deliver more sustainable and predictable results at this Tier 1 operation. In the short term, these efforts will result in lower than initially anticipated production next year due to lower throughput to allow for asset reliability improvement work and changes to the mine sequencing, including the establishment of wider ramps to manage surface water and repositioning ore roads to be more effective and efficient. Whilst we complete this work, we will be processing a higher proportion of lower grade stockpiles in 2025 and we anticipate that gold production next year from Lihir will be largely consistent with this year's and around 250,000 ounces lower than our initial guidance for 2025 that we provided back in February. Importantly, this work will simplify and improve operations at Lehigh for the long term, establishing it as a more consistent contributor as one of the 11 managed operations in our go forward portfolio. Similarly at Brucejack, we have taken a step back this year to do the development and drilling work to ensure that we improve our knowledge of this nuggety ore body.

[Natascha Viljoen, Executive VP & COO at Newmont]

We continue to experience periods of exceptional high grades including a one day average of 52 grams per tonne last month and an average of over 20 grams per tonne in the same week. As a result of the work we are doing, we anticipate that the gold production next year from Brucejack will also be largely consistent with this year or around 100,000 ounces lower than our initial guidance for 2025 that we provided back in February. Moving to our half of South. In the Q3, we achieved a significant increase in gold production of nearly 15% over the Q2, driven by higher mill throughput following the successful girth gear replacement in April and strong grades from our Subika open pit and underground mines. Looking ahead, we expect our half of South to maintain consistent production levels in the Q4 and into next year before declining in the second half of twenty twenty five when we complete mining activities at the Subika open pit as planned.

[Natascha Viljoen, Executive VP & COO at Newmont]

And finally, during the Q4, we expect to commence mining activities at our Hawthorne North and will stockpile ore to be used to commission the mill next year. This will be an essential milestone for our African business unit as Achim is divested and production is replaced with new low cost ounces from Ahafo North towards the end of 2025. Continuing with Ahafo North, we have made notable shift from land clearing and earthworks to constructing the infrastructure for this new mine. The carbon in leach tanks are complete and we continue constructing the crushing, conveying and more infrastructure, which you can see in the photo in our presentation. We recently completed the lining of the timing storage facility and are establishing the ore roads to begin stripping at this new mine in the Q4.

[Natascha Viljoen, Executive VP & COO at Newmont]

At the second expansion at Tanami, our focus remains on the concrete lining of the shaft and we have completed more than a kilometer of this 1.5 kilometer deep production shaft. As you can see in the photo, the winder building is now largely complete and we are preparing to install the wasting machinery, which will be used to raise and lower our people, equipment and ore within the mine shaft once complete. Arcadia Panel Caves project is progressing well. At Panel Caves 2, 3, we have achieved cave establishment, meaning that the intended fracturing has begun and gravity is now playing an important role in the mining process. This is a significant milestone for this multiyear project and we are successfully processing gold and copper ore from this cave.

[Natascha Viljoen, Executive VP & COO at Newmont]

Over the next decade, Panel Cave 2, 3 is expected to deliver 1,000,000 ounces of gold and more than 400,000 tons of copper and is anticipated to ramp up to an average of 400,000 gold equivalent ounces between 2027 from 2,032. At Panel Guide 1,200, we continue to advance underground development and the construction of the materials handling system. As a much larger cave, tunnel cave 12 is expected to deliver nearly 4,000,000 ounces of gold and more than 700,000 tons of copper over its 15 year cave life and it is anticipated to ramp up to an average of 525,000 gold equivalent ounces between 2,0302014. And with that, I'll turn it over to Karen.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

Thank you, Natasha. Turning to the next slide, I'll begin with an overview of our financial performance for the quarter. Building upon Tom and Natasha's remarks, Newmont delivered strong Q3 results. We reported adjusted EBITDA of $2,000,000,000 driven by sustained gold prices and strong quarterly production. And we recorded adjusted net income of $0.81 per diluted share, an increase of $0.09 compared to the 2nd quarter.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

We also generated $1,600,000,000 cash flow from operations and $760,000,000 of free cash flow, which does not include the approximately $300,000,000 in cash payments received during the Q3 from the sale of the Lundin Gold Financing Facilities and Batu Hiju contingent payments announced earlier this year. Free cash flow for the quarter includes $209,000,000 of unfavorable working capital changes largely due to the build in stockpiles of $202,000,000 mainly at Lihir and Telfer and $107,000,000 of reclamation spend primarily related to the construction of the Anacocha water treatment facilities. With $273,000,000 in reclamation spent to date, we anticipate an approximate $225,000,000 to be spent next quarter. These unfavorable working capital changes were partially offset by the favorable timing of accrued liability payments. Looking ahead, we expect to reach the year's strongest production volumes in the Q4, positioning us to deliver strong free cash flows and to continue returning capital to shareholders.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

As Tom mentioned, the divestitures announced to date from our non core portfolio are expected to generate up to $1,500,000,000 in gross proceeds on top of the nearly $530,000,000 in cash proceeds received from other investment sales in 2024. And as we committed to earlier this year, we have been using the proceeds to create long term value for our shareholders by strengthening our balance sheet and repurchasing shares. Since our last earnings call, we repurchased 9,400,000 shares at an average price of $53.16 per share for a total cost of $500,000,000 including $198,000,000 repurchased during the Q3 and $302,000,000 in October. And with $250,000,000 remaining in the current program, Newmont's Board authorized an additional $2,000,000,000 share repurchase program to be executed over the next 24 months, bringing our total authorization to $3,000,000,000 To date, we've now completed $750,000,000 of our $3,000,000,000 authorization. Additionally, we declared a fixed common third quarter dividend of $0.25 per share, consistent with the dividend declared for the past 3 quarters.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

And we purchased $233,000,000 in nominal debt for $210,000,000 or around $0.90 on the dollar, of which $150,000,000 was purchased during the Q3 and $83,000,000 was purchased in October. To date, we've now retired nearly $500,000,000 for the year. We maintained an investment grade balance sheet and ended the quarter with $7,100,000,000 in total liquidity. And our gross debt now stands at $8,500,000,000 compared to our target of $8,000,000,000 In line with our balanced capital allocation strategy, we continue to focus on maintaining a strong balance sheet, steadily funding value accretive capital projects and returning capital to shareholders. Looking ahead, we expect approximately 1,800,000 ounces of gold production in the 4th quarter as planned.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

Production from our managed Tier 1 assets continues to drive our strong operational performance and we remain on track to meet our full year production guidance. As signaled by our joint venture partner, production from Nevada Gold Mines and Puebla Viejo is expected to significantly increase in the 4th quarter, which is crucial as these sites comprise just over 20% of our attributable gold production for 2024. All in sustaining costs for the 4th quarter are expected to be approximately $14.75 an ounce, which represents an 8% reduction compared to the 3rd quarter. This favorable decline is expected to be driven by higher gold production volumes and will be slightly offset by higher sustaining capital reinvestment, primarily anticipated at Nevada Gold Mines based on the run rate through the Q3 and Cadia to remedy and expand the current tailings facilities as Natasha described. Increased production taxes and royalties from higher gold price environment and slightly higher G and A spend largely due to an increase in contracted labor.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

Turning to development capital, we expect to spend $320,000,000

[Karyn Ovelmen, Executive VP & CFO at Newmont]

during

[Karyn Ovelmen, Executive VP & CFO at Newmont]

the Q4, keeping us on track to meet our full year guidance estimates for earlier this year. And we continue to expect to invest an average of $1,300,000,000 per year into projects that will generate the highest returns.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

With that, I'll pass it back

[Karyn Ovelmen, Executive VP & CFO at Newmont]

to Tom for closing remarks.

[Tom Palmer, President and CEO at Newmont]

Thanks, Karen. We remain confident in the long term strength of the go forward portfolio we have assembled and continue to make solid progress on the 4 key commitments we made at the start of the year to our shareholders. Since our last earnings call, we continue to diligently implement the lessons learned from our recent fatalities and are working to strengthen and improve our safety and risk management systems. We delivered higher production as planned, keeping us firmly on track to meet our full year production guidance. We generated $1,600,000,000 of cash flow from operations and $760,000,000 in free cash flow.

[Tom Palmer, President and CEO at Newmont]

We made meaningful progress on our portfolio rationalization with the announced divestments of Telfer, Havuron and Achin. We achieved our synergy run rate target of $500,000,000 We've demonstrated our commitment to shareholder returns delivering $786,000,000 from both regular dividends and share repurchases. We strengthened our balance sheet with $233,000,000 of debt reductions and we approved an additional $2,000,000,000 share repurchase program bringing our total authorization to $3,000,000,000 Having now gained almost a year of experience working with our new operations, we have developed a much deeper understanding of their long term contribution to our core portfolio and the work needed to create consistent and lasting value for our shareholders. Looking ahead to 2025, we expect gold production from our go forward Tier 1 portfolio to remain largely consistent with this year, driven by the lower than previously expected production from 2 of our new operations in Lihir and Brucejack. We expect unit costs from our core portfolio in 2025 to align with the trends we are observing this year.

[Tom Palmer, President and CEO at Newmont]

We also remain committed to the critical tailings work at Cadia, which may result in an annual sustaining capital spend of around $1,800,000,000 from our core portfolio over the next few years. And we continue to see higher previously expected direct costs and G and A spend that with the clarity of our go forward portfolio, we are now working to manage. With this context, my leadership team and I have a laser focus on the work we need to do to optimize our go forward portfolio of 11 managed operations and 3 projects in execution. Whilst we do anticipate production growth over time, our focus is firmly on expanding margins, generating a strong return on capital invested and creating value versus chasing volume. We are taking a critical look at our organic project pipeline and spending time to ensure that any reinvestment we make into our portfolio is both disciplined and deliberate.

[Tom Palmer, President and CEO at Newmont]

And we are applying an economic lens to the long term decisions we are making today, ensuring that we deliver on Dimont's purpose to create value and improve lives through sustainable, responsible mining for decades to come. With that, I'll thank you for your time today and turn it back over to the operator to open the line for questions.

[Operator]

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. And our first question comes from Daniel Major at UBS. Daniel, your line is open.

[Operator]

Please go ahead.

[Daniel Major, Analyst at UBS Group]

Hello, can you hear me okay?

[Tom Palmer, President and CEO at Newmont]

See you, thanks Dan. Tom here.

[Daniel Major, Analyst at UBS Group]

Great. Great. Thanks. Yes, sort of 2 parts to the question. But I mean, the first one is perhaps a kind of reflection on the industry as well.

[Daniel Major, Analyst at UBS Group]

But when I look back to February and you look at your cost profile in medium term, like many in the gold industry, you've got costs coming down over time over the next few years. Yet this year, all in sustaining cost $100 higher than you saw in February. Is it realistic and credible to actually assume that unit costs will moderate over time? Or should we rather be assuming the best case outcome is limiting inflation?

[Tom Palmer, President and CEO at Newmont]

Thanks, Dan. I'll kick that off and Karen, you might want to jump in as well. Certainly, if I think about the gold industry, there's always been a strong correlation between gold price and the cost of producing amounts of gold, given that inflation is one of those key structural elements behind the gold price. So as you look forward, if gold price eases, then you'd expect the cost of producing ounce to ease. And obviously, you're going to see some tracking between the cost per ounce and the gold price.

[Tom Palmer, President and CEO at Newmont]

Our focus is on what we're putting in place is that we have 11 managed operations going forward where we're going to be in a position to be looking over the long term and strengthening and growing those margins. The other comment I'd like before I pass to Karen, if you wanted to build on that, is when you look at the out year numbers that we had provided back in February, that assumed zero escalation. And so when you think about any forward looking numbers, there's no escalation. And obviously, what we're seeing as we get closer to 2025, the run rates we're seeing as we close out this year and that's going to flow into next year as we understand the cost for the next 12 to 15 months. Karen, anything you'd build on that?

[Karyn Ovelmen, Executive VP & CFO at Newmont]

No, I think that's right, Tom. It's just to emphasize those out years, as you mentioned, don't have an escalation in those. Generally speaking, as we indicated the costs that we're seeing here in 2024, we do expect those to trend into 2025. Costs were higher driven by higher direct costs primarily if you think about contracted labor, which is 50% of our cost structure. We've seen those increase into the Q3 and through the year.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

And so we expect that that's been built in now into our cost estimates as we head into 2025.

[Tom Palmer, President and CEO at Newmont]

Thanks, Karen. David, did you say you had a second part to your question?

[Daniel Major, Analyst at UBS Group]

Yes. I had a second part, if that's okay. Yes, just again, just thinking about your guidance comments for 2025. You previously looked at your in February around 6,000,000 ounces from the core portfolio in terms of gold. You highlight in the comments 250,000 ounces lower than your previous plans at Lihir and 100 at Brucejack.

[Daniel Major, Analyst at UBS Group]

So is it fair to then assume 350,000 off the 6,000,000 is the new base when we look into 2025?

[Tom Palmer, President and CEO at Newmont]

Yes. Thanks, Dan. Certainly, the 2 movers in terms of our managed portfolio. And as I think as Natasha said in her remarks, I followed up with the drivers behind that mine sequence at Lehi and getting in front of understanding the resource definition of Brucejack and the development work and the drilling you need to do for that all. Both of those are progressing well, but it's the ounces for next year reflect that important work.

[Tom Palmer, President and CEO at Newmont]

I think the numbers, if you then look at the rest of the portfolio and those trends coming through from 2024 flowing into 2025, the numbers more like 5.6 as you think about this portfolio for 2025, the core portfolio for 2025. Obviously, we've got some divestments to close out and still got some more work to do on that front. Some of that will flow into 2025 as we complete that divestment work, but that core portfolio, 5.6 is is about their gold production number for next year.

[Daniel Major, Analyst at UBS Group]

Okay, thanks. So yes, it's broadly flat production and costs into next year is the message.

[Daniel Major, Analyst at UBS Group]

Okay, thank you.

[Tom Palmer, President and CEO at Newmont]

Thanks, Dan. That's correct.

[Operator]

Next question comes from Josh Wolfson from RBC Capital Markets. Josh, your line is open. Please go ahead.

[Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets]

Hi. Thanks very much. I'm trying to wrap my head around the change, the significant change in sort of cost expectations and to some degree production expectations going forward versus what we had been hearing about previously. And I guess there's sort of 2 different aspects at least that I can understand. One is, despite the synergy targets being achieved, it sounds like there's some larger integration issues given the challenges or higher costs mentioned across Brucejack, Lihir and Cadia.

[Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets]

And then on the other hand, we're hearing significant and unexpected inflation expectation changes, which I guess would be a larger industry related item. I just want to sort of clarify, how should we be thinking about these things? And am I sort of assessing this appropriately? Thank you.

[Tom Palmer, President and CEO at Newmont]

Thanks, Justin. Let me kick off and I think Carrie, you might want to jump in. So I think picking up in a few parts. I think commentary around Lihir, Acadia, Sierra Negro, I think you mentioned is really the Q3 cost story. So it's around Lihir, we had some costs that we had assumed would be in the Q4 for the large autoclave shutdown specialist labor in the remote part of the world moving into Q3.

[Tom Palmer, President and CEO at Newmont]

So that's one of the drivers there. Cadill's power, where high power cost coming off our contract for price take up. Cerro Negro was more around the ramping up following the tragedy earlier this year and making sure we're focused on doing that work safely, some productivity impacts. And then the other factor in the Q3 was we had some concentrate sales at Penasquito where didn't get away at the end of the Q3 due to some weather impacts there that obviously flowed into the Q4. So that's sort of a bit of a wrap up of the Q3 cost story.

[Tom Palmer, President and CEO at Newmont]

When I look at 2024 flying into 2025, so there's 2 impacts as the volume impact we just talked about with Dan and the Leahy and Brucejack work next year linked to that. And then the cost impact is sustaining capital and particularly around the work we're putting into the Taltax facilities at Cadia. Cadia has got a 30 plus year life, several panel caves will come on and there's work we need to do to ensure that that talent's capacity is matched to the volumes coming out of those panel caves. So that story is around volume for those couple of key drivers and then sustaining capital. Karen or Tassar, anything you can build on the back of that?

[Karyn Ovelmen, Executive VP & CFO at Newmont]

Sure. Just to put a little more granularity in terms of 2024. So about a third of that is increased due to that lower sales volume, including impacts from sulfur, LaHir and Brucejack. Another third relates to that higher sustaining capital that we've been talking about, largely driven by Nevada. And then the remaining third, half of that is about royalties due to higher gold price and half associated with the G and A.

[Karyn Ovelmen, Executive VP & CFO at Newmont]

So our run rate synergies are driven by the targeted benefits at Cadia, Red Chris and LaHir. However, we've also had performance challenges within the business, including the Telfer tailings as well as the non management of underperformed expectations. But and I think further to that supply chain and G and A benefits have been impacted by our need to invest in the future of this combined Tier 1 portfolio with a key focus in areas with the integration from Newcreston to Newmont as needed. But we're not happy with where we're at and we're working to reduce these costs.

[Tom Palmer, President and CEO at Newmont]

Thanks, Ken.

[Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets]

Thank

[Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets]

you. And if I can so

[Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets]

if I can add sort of the follow-up question, just sort of understanding if there's a quantum that can be provided in terms of maybe what the inflation trend is, the company is seeing, something that we can think about for modeling forecasts on operating costs or capital costs? Is there a sort of any initial impressions you have on what inflation rates are running at currently?

[Tom Palmer, President and CEO at Newmont]

Yes, Josh. We're seeing in terms of input costs around consumables, fuel, materials, that's largely in line with what the world is seeing. So there's nothing particularly surprising for us there. It's the labor costs where we're seeing that escalation, particularly the contracted labor. We're seeing some of those escalations come through and then incorporating that in our in the sort of commentary or the steer we're giving for what plays into next year.

[Operator]

The next question comes from Matthew Murphy from Jefferies. Matthew, please go ahead. Your line is open.

[Matthew Murphy, Equity Analyst at Jefferies & Company Inc]

Hi. I'm wondering if you can elaborate a little more on what this outlook for 2025 means going forward in terms of those initial graphical kind of indications you'd put out had production growing over 6,000,000 ounces, costs falling to call it the mid-twelve 100s an ounce. I mean should we be doing thinking about 2025 continuing in 2026 and beyond, is this a 5,500,000 ounce a year, 1500 AISC type company that we're going to see going forward?

[Tom Palmer, President and CEO at Newmont]

Good morning, Matt. I think if I look at costs, you're certainly going to in the outlook we've given in February, there was no escalation there. So as you make assumptions about what escalation inflation may do linked to what gold price might do and there's a key link between gold producers and gold price, then that's going to be a pretty significant driver of the cost of producing an ounce of gold at Newmont and any other gold mining companies. So that's one trend that will flow through. And obviously, gold price softens and those costs come off.

[Tom Palmer, President and CEO at Newmont]

We see a portfolio as we complete our divestment work in the 1st part of next year, really start focusing on our 11 managed operations and the 3 projects we've got in execution. Those projects in execution will start to deliver new ounces in the latter part of next year and then they'll flow through to 2026 and 2027. So we do have some new lower cost ounces coming on and that will help us have a portfolio of operations that over the long term are around or about at 6,000,000 ounce run rate and about 150,000 tons of copper. We're not going to chase volume for volume sake, where our focus is going to be on driving margins and ensuring that we're getting the best value, the best return on that capital that's invested. Another driver of our all in sustaining cost is the important work we're putting into tailings facilities and ensuring that we have a set of tailings facilities that have the appropriate capacity and structure to support these very long life operations.

[Tom Palmer, President and CEO at Newmont]

So we have some of that spend, which is it's not spend that's consistent over the whole time, but there are periods of elevated spend in sustaining capital in any mining company as you ensure your tailings facilities are up to scratch. So that's another factor in terms of our 2025 and 2026 story.

[Natascha Viljoen, Executive VP & COO at Newmont]

If I can probably just

[Matthew Murphy, Equity Analyst at Jefferies & Company Inc]

Go ahead, sir.

[Natascha Viljoen, Executive VP & COO at Newmont]

I wanted to build a little bit on Tom's point on the $6,000,000 run rate. And just as a reminder, Boddington is in 2 years of high stripping and lower than normal ounces. So Boddington will get back to its normal production. Then Eskatea, we will start to see coming back in the New Year. Kydia, we have been predicting all along that we will see lower grades coming through, but as PC2, 3 comes in during the next 2 years, we'll see Gredia production step up as well.

[Natascha Viljoen, Executive VP & COO at Newmont]

And then Lehigh is also 2 years of high investment, and we'll start to get back into higher grade ores in the near term. And that's to just build a little bit of granularity on Tom's point.

[Tom Palmer, President and CEO at Newmont]

And particularly, we get more ounces out of the shaft, Tanami as it gets commissioned into 20 7, 20 8. We got half our north start to just go into the second half of next year. So we've got that reinvestment back in the business. Brings ounces on that complement the numbers we're talking about for this year and next year.

[Matthew Murphy, Equity Analyst at Jefferies & Company Inc]

Okay. And is there a timeline where you're thinking you'll be able to provide more formal asset by asset multiyear guidance? Is that the plan maybe early next year?

[Tom Palmer, President and CEO at Newmont]

It will be in due course, Matt, into next year. We'll certainly be focusing on giving greater granularity on the 2025 numbers in February. We're busy still and that we're still in this during the end of the second phase of the divestment of our North American assets and that works progressing well, but we need to close out that work. And as we've got that clear line of sight to completing that divestment program, focusing on our 11 managed operations going forward and that's 3 projects and execution. And with that clarity, we'll look to come back with some more color on this go forward portfolio into next year.

[Operator]

The next question comes from Anita Soni from CIBC. Anita, your line is open. Please go ahead.

[Anita Soni, Managing Director at CIBC Capital Markets]

Yes. One of the questions that I guess are now part of the questions I had were all very detail oriented, but don't seem that relevant anymore. Could I just ask you in terms of, I guess, longer term Cadia, the dust emissions, like when do you expect to get approvals for that? And that's what gets you to 35,000,000 tonne per annum, right?

[Natascha Viljoen, Executive VP & COO at Newmont]

Sorry Anita, I'm not sure if you if I could just put a little clarity, dust emission emissions. I just want to make sure that I understand your question.

[Anita Soni, Managing Director at CIBC Capital Markets]

Sorry, on Cadia, the original goal or target was to get to, I think, 35,000,000 tonnes per annum. Is that still valid? And what kind of approvals

[Anita Soni, Managing Director at CIBC Capital Markets]

do you need? And when do you expect those?

[Natascha Viljoen, Executive VP & COO at Newmont]

Yes. Okay. I just wanted to make sure that because the dust is not necessarily directly related to the tiling stamp approvals.

[Natascha Viljoen, Executive VP & COO at Newmont]

There's a couple of things that needs to happen around the tiling stamp that is all underway. The first thing, as I've mentioned, is the repair of the southern wall of the northern dam. And then there's further expansions that is underway. There's a number of permit applications that's in place and underway. And we are balancing the permitting requirements, the expansion of the tailings dam and the efficiency.

[Anita Soni, Managing Director at CIBC Capital Markets]

Okay. Cerro Negro, original target I think was around 3,500,000 tonne per annum. I think you're doing you're significantly under that right now and have been for a while. When do you think you'll get that asset up to the original target? Or is that still valid?

[Natascha Viljoen, Executive VP & COO at Newmont]

Cerro Negro, our largest focus area for Cerro Negro is in productivity and making sure that we the baseline operation gets back to where we need it to be from a productivity point of view. We've got all of the mining areas available. We have all of the equipment available. So the focus is 100% on productivity to bring us back to where we need to be.

[Tom Palmer, President and CEO at Newmont]

Thanks, Vedanta.

[Operator]

The next question comes from Mike Parkin from National Bank. Mike, your line is open. Please go ahead.

[Michael Parkin, Head of Mining Research at National Bank Financial]

Hi, guys. Congrats on getting the synergy target achieved. Of the $500,000,000 how much of that flow through OpEx?

[Tom Palmer, President and CEO at Newmont]

Good morning, Mike. Obviously, the G and A component of that is part of your OpEx. The supply chain is a combination between improving costs and opportunity to get to productivity and volume. A lot of the full potential work is around volume. So you get more productivity with the current gold price, you get that benefit flowing through.

[Tom Palmer, President and CEO at Newmont]

So probably of the amount of that delivery, it's probably less than half has come from that operational exit of the cost improvements as opposed to the productivity and volume improvements and the free cash flow that you get coming through. And if I look through that if I look at where we sit, it's one of the earlier questions, as we're closing out the integration, an important part of closing out the integration is completing our divestments and having a clear line of sight to 11 managed operations 3 projects in execution, I'm not happy with the G and A that we have for that go forward business. And that's an area that we're going to be focusing on to get that number down to match the go forward business. And that's a little bit of that high cost to carry as you look through that transition. But as we get that clarity on the remaining divestments going out the door, we need to ensure that our G and A is matching the size of the go forward business and expect to see some be working hard to get some improvement in that area in the months ahead.

[Michael Parkin, Head of Mining Research at National Bank Financial]

Okay. And just a follow-up on that. Because you've achieved that, is that fully reflected in your Q3 numbers? Just wondering, like, you look at your quarter over quarter OpEx, you're up about 7% quarter over quarter. So trying to understand how where the savings come in with the Q4 guidance if all the synergies have already been realized?

[Michael Parkin, Head of Mining Research at National Bank Financial]

Or is it a bit of a deferral in terms of when they start to flow through the financials?

[Tom Palmer, President and CEO at Newmont]

Yes. I think you see certainly those that impact the cost base are there and they're in our direct costs. I think what you're going to I think key driver is going to flow through in the Q4 is a very strong gold production quarter and we're certainly well set up to be delivering on those commitments through the Q4. So that's what you're going to see drive that improvement in the Q4 is that higher production, getting the sales matching that production to ensure that the unit costs are coming to the levels that have guided to for the Q4.

[Operator]

The next question comes from Lawson Winder from Bank of America. Lawson, your line is open. Please go ahead.

[Lawson Winder, Analyst at Bank of America]

Thank you, operator. Good morning, Tom and team, and thank you for the update. I just wanted to ask about capital allocation and in the context of a new story that the Prime Minister of PNG recently called on all stakeholders involved in Wafi to finalize the special mining lease and the mine development contract sort of ASAP. I think you actually set a deadline of like December of this year. And so that got me thinking in terms of capital allocation, is that a sign that Wafi might be taking precedent as a preferred project in the portfolio over some of the other options?

[Tom Palmer, President and CEO at Newmont]

Good morning, Lawson. We continue to work very closely with Job Venture Partners, Harmony and the PNG Government on those negotiations to convert what is a very robust and competitive framework MOU through the mineral development contract and ultimately a special mining lease that would then move into a process of starting to understand updates to feasibility studies and a whole bunch of study work that would come once you've reached that conclusion of those negotiations. So important work and working very constructively with all of the parties around the table. Any project in our pipeline is competing for capital, and we are going to be very disciplined in terms of any project that we take into execution, going to have confidence in terms of the cost to build at the time to deliver it and the returns from that invested capital. Our plate is full with 3 projects in execution, Katamai Expansion 2 at Half Road North and the Panel Cades at Cadia.

[Tom Palmer, President and CEO at Newmont]

We're going to ensure that we properly deliver on our commitments on those projects and then and only then we bring on our next project. And Wafi Golpu sits there in the pipeline with 5 other very interesting projects to compete for capital.

[Lawson Winder, Analyst at Bank of America]

Okay. Thanks very much for that context. And then just as a follow-up on some of the earlier questions on the labor inflation that drove the cost a little higher in the quarter. I believe yourselves and some of your peers budgeted approximately 4% labor inflation for 2024. I mean, it would be helpful to kind of put some numbers around that in terms of what's the realized experience in terms of labor inflation so far this year?

[Lawson Winder, Analyst at Bank of America]

Are you expected versus that 4% that seemed to be the industry standard at the start of the year?

[Tom Palmer, President and CEO at Newmont]

Yes. Thanks, Lawson. In our direct costs, half the cost is labor. About half of that is employee base and that's the 4%. So when you think about the people who work for Newmont across 9 countries, when you average out aggregate the wage escalation, it's about 4%.

[Tom Palmer, President and CEO at Newmont]

The other cost base is the cost to for all the contracted services we use, whether that be maintenance shutdowns, maintenance that you use to supplement your workforce, cost of running camps, cost of flying people to and from all of those sorts of costs. That's where we're seeing some escalation beyond what we'd assumed at the start of the year. And as we look into 2025, then that's what we're guiding to today in terms of how we're seeing those costs flow through. So obviously, those costs have escalated over the course of this year and looking to capture that level of escalation that we see flowing through to next year in terms of that broader unit cost for Newmont in 2025.

[Operator]

Next question comes from Alex Hacking from HSBC. Alex, your line is open. Please go ahead.

[Alexander Hancox, Manager at HSBC]

Yes, thanks. I just wanted to clarify some of the guidance commentary from earlier. So on next year, production from Tier 1 minutees is going to be flattish. What assumption is embedded in that on Nevada gold mines? Thank you.

[Tom Palmer, President and CEO at Newmont]

Yes. Thanks, Alex. To answer that question, we provided granularity on Bahir and Zoosjak in terms of pretty significant movers in our managed portfolio. The rest of the operations in our core portfolio going forward, we're assuming that the run rates you're seeing through the course of this year will flow through 2025. So just to clarify, Nevada gold mines flat next year?

[Tom Palmer, President and CEO at Newmont]

Alex, I'm answering that question in terms of the rest of our portfolio without getting specific.

[Alexander Hancox, Manager at HSBC]

Okay. And then on the following up on Matt's question on the midterm outlook, it sounds like 6,700,000 ounces in 20.28 is under review, let's say. But did I hear you say, Tom, that 6,000,000 ounces is kind of a midterm target or did I mishear that?

[Tom Palmer, President and CEO at Newmont]

Thanks.

[Tom Palmer, President and CEO at Newmont]

Thanks, Alex. When I look at our 11 managed operations and the 3 projects we've got in execution that will deliver ounces over the next 3 to 5 years into that portfolio of operations. It remains 11 managed operations because they're all essentially brownfield expansions. And the long life, I mean, each of those ore bodies underneath those 11 managed operations has got several decades out in front of them. I look at that portfolio and say it can reduce over the long term at average around 6,000,000 ounces of gold, about 150,000 tons of copper.

[Tom Palmer, President and CEO at Newmont]

Might have some years we pushed north of 6 and there'll be other years where you're south of 6, but over the long term, that's what that's how we think about this portfolio we've assembled. 11 plus 3, 6, 150. Our growth is in margins, Alex, where we focus our time. Thanks, Alex.

[Operator]

The next question comes from Tanya Jakusconek from Scotiabank. Tanya, your line is open. Please go ahead.

[Tanya Jakusconek, Analyst at Scotiabank]

Great. Good morning, everyone. Thank you so much for my questions. Just wanted to come back to the cost. So just so that we understand what is Newmont related and what is industry related.

[Tanya Jakusconek, Analyst at Scotiabank]

Just want to make sure Tom and Natasha understand that what's Newmont related in these costs have to do with your particular operations on volumes, which you've given us on lower volumes at Lihir and Brucejack. And then you've given us, the additional sustaining capital that you have at some of your in Acadia on your tailings and Nevada Gold Mines, some other stuff there. You mentioned G and A as well on your all in sustaining. Is it fair to assume that the only industry related costs is your labor, which pertains to the contractors, which is happier. 50% is your labor cost and 50% of that is contractors.

[Tanya Jakusconek, Analyst at Scotiabank]

If that's the case, Tom, I remember you mentioning that contractor inflation was like 12% or 14%, if I can remember correct. Can you just maybe share with us where you are seeing this contractor inflation? Is it related in Australia? Is it in the U. S?

[Tanya Jakusconek, Analyst at Scotiabank]

I'm just trying to understand if it's also that's my first question. Just I'm trying to understand if I understand this correctly.

[Tom Palmer, President and CEO at Newmont]

Thanks, Tanya. Good morning. Just clarifying, you're talking about 25 versus 24 as you're looking at your numbers?

[Tanya Jakusconek, Analyst at Scotiabank]

Yes.

[Tom Palmer, President and CEO at Newmont]

Yes.

[Tom Palmer, President and CEO at Newmont]

I think certainly the 25 the 24 to 25 stories is the volume story and the sustaining capital story. Largely what you're seeing is the cost we're seeing this year for labor, whether it be employees or contracted labor, staying about the same going into next year. And it's the driver is lower volume and the sustaining capital 24 to 25.

[Tanya Jakusconek, Analyst at Scotiabank]

Percent. But this labor that contractors, am I correct to have that 12% to 14% inflation in your contractors? Has that not changed? I'm just trying to understand if that's still the case.

[Tom Palmer, President and CEO at Newmont]

Yes. I think about answering it this way, Kenya, in terms of what's in our cost run rate as we close out 'twenty four, it's flowing into 'twenty five. We're not seeing a step up of the sort of percentages you're talking about. The rate of our costs as we close out the year, we're seeing that flow into 25.

[Tanya Jakusconek, Analyst at Scotiabank]

Okay. All right. Okay. Maybe I'll ask my second question then. Maybe just on Natasha, you mentioned that as we look into next year and the year after, next 2 years, we're going to have Acadia's production decline from about this 370,000 ounce level.

[Tanya Jakusconek, Analyst at Scotiabank]

Could you kind of just share with us where I should think about the line before we set back up again and the other case then?

[Natascha Viljoen, Executive VP & COO at Newmont]

Comes in? I think, yes, that's right, Tania. And you will remember we have been saying that as BC1 and BC2 come to the end of their life or of its life, we see lower grades coming through and we have been predicting that we'll continue to see that going into next year. At the same time, BC2, 3 is now ramping up. So we've seen that cave actually cave and we will slowly ramp that up over the next 2 years to full production.

[Natascha Viljoen, Executive VP & COO at Newmont]

And BC2, 3 will then start to replace the lower production from BC1 and BC2. And then BC1 and 2 is only targeted towards the end of the decade.

[Operator]

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

[Tom Palmer, President and CEO at Newmont]

Thank you, operator, and thank you, everyone, for joining us this morning, and have a good rest of your day. Thank you.

[Operator]

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

Participants

Executives

• Tom Palmer, President and CEO
• Natascha Viljoen, Executive VP & COO
• Karyn Ovelmen, Executive VP & CFO

Analysts

• Daniel Major, Analyst at UBS Group
• Josh Wolfson, Director, Head of Global Mining Research at RBC Capital Markets
• Matthew Murphy, Equity Analyst at Jefferies & Company Inc
• Anita Soni, Managing Director at CIBC Capital Markets
• Michael Parkin, Head of Mining Research at National Bank Financial
• Lawson Winder, Analyst at Bank of America
• Alexander Hancox, Manager at HSBC
• Tanya Jakusconek, Analyst at Scotiabank