Tom Palmer
President and Chief Executive Officer at Newmont
Thank you, operator. Hello, everyone, and thank you for taking the time to join our call. Today, I'm joined by Karyn Ovelmen, our Chief Financial Officer; and Natascha Viljoen, our Chief Operating Officer, along with the rest of my executive leadership team and will 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.
I would like to start by taking a moment to provide an update on our safety performance. Newmont is a values driven organization and ensuring the health and safety of our workforce is at the very heart of everything we do. We are working diligently to strengthen our safety performance and have been reviewing and refreshing key safety programs across our global business, centered around three key areas: culture, systems and skill development. Maintaining and improving our culture of keeping everyone who works at Newmont always safe relies on having simple, well-governed systems and standards to guide safe operations, along with a process to identify and then implement ongoing improvements we are also enhancing our frontline leadership capabilities by strengthening our hazard management, team leadership and task assignment training and supporting it with a fair, consistent accountability framework. This improvement work will empower everyone at Newmont to confidently make decisions that drive safe, productive work each and every day.
Turning now to our operational and financial performance last year. 2024 was a transformational year for Newmont. We took some very important steps to unlock the value of everything we have done so-far on our journey to build a world-class company with an outstanding portfolio of assets that will generate value and long-term success for decades to come. In 2024, we focused on three areas: first, to complete the integration of the acquired assets; second, the rationalization of our portfolio; and third, the stabilization of our business, both operationally and financially at a time where there is excitement of the demand dynamics we are witnessing, especially in the gold markets, but also at a time when Newmont and the broader mining industry have some challenges to work-through.
Let me start with the integration of our new operations. As with any acquisition, this is large and complex work. We have run into a few specific hurdles that we will need to clear before the true potential of these assets becomes evident in both our production and financial results. Two challenges have been at Cadia and Lahia and we are addressing them in a way to position these assets to thrive and deliver on their underlying multi-decade potential. As we address the challenges at both these assets, we are ensuring that we have robust operational and technical plans sitting behind the sustaining capital spend needed to get them up to a Newmont and Tier-1 lever. We acquired these assets with a view to creating value over a period of decades. And the investments that we're making now will set us up to deliver on that objective. We are putting this work-in motion with focus and confidence and over the next 12 to 24 months, we are deploying the full force of our operational and technical experience, including our sustainability leadership with a view to preserving and optimizing value for the long-term.
Turning now to rationalization. Our divestment program over the last 12 months has been a resounding success. We have sold or reached definitive agreements to sell all six of our non-core operations as part of the program we announced last February. And we have the potential to deliver up to $4.3 billion in pre-tax proceeds from this divestment program, which is expected to result in around $2.5 billion in cash proceeds in the first-half of this year-after taxes and closing costs. Importantly, the transactions announced so-far, including TELFA, are also expected to remove approximately $1.8 billion in closure liabilities from our balance sheet. This rationalization work is now positioning Newmont with a core set of Tier-1 assets that we see as being capable -- capable of capitalizing on the gold and copper cycles for several decades.
In candid with our work to integrate and rationalize our portfolio, we have also been working to stabilize production. As a result, we were able to exceed our production guidance by delivering 6.8 million ounces of gold and over 150,000 tonnes of copper last year, of which around 85% was produced from our go-forward core portfolio. We generated $2.9 billion in free-cash flow last year and record free-cash flow for the fourth-quarter of $1.6 billion, driven by strong gold prices, higher sales volumes and positive working capital movements. It is also worth pausing for a moment to acknowledge that our fourth-quarter reflects the true financial performance potential for our go-forward core portfolio can achieve and the positive effect it can have on our all-in sustaining costs.
Building on the three focus areas I've just covered, we also continue to advance our capital allocation priorities in 2024. We returned $2.3 billion through regular dividends and share repurchases, demonstrating our commitment to rewarding our shareholders. And we maintained a strong and flexible investment-grade balance sheet, ending the year with more than $3.6 billion in cash and $7.7 billion in liquidity. In addition to shareholder returns, over the last 12 months, we further improved our financial position by retiring $1.4 billion in debt, reaching our target balance of below $8 billion. As we move forward, we still have plenty of work ahead of us to capture the returns and margin potential we see as possible from our go-forward portfolio. And while we do not speculate on where gold prices are heading, we do continue to see robust demand and strong pricing given the geopolitical environment and gold's place as a long-term store of value, not only for individuals and professional investors, but for central banks as well.
Turning to the next slide, as the world's leading gold producer, it is our responsibility to maximize the full value of the unique combination of our people, our assets, our projects and our culture to generate long-term shareholder value. With this in mind, combined with a clear line-of-sight of our go-forward portfolio, we are committed to making meaningful improvements to our safety, cost and productivity performance. The results of these efforts will drive stable and predictable production, allow us to better manage costs on a gold equivalent ounce basis and capture the incremental margins and cash flows we are seeing as a result of strong gold prices. But to explain where we are going, it is important to first appreciate where we are today.
Newmont's high-quality portfolio is a great platform for investors to gain exposure to gold and copper fundamentals, while benefiting from the improvements we are making to drive operational performance. Our portfolio includes more than half of the world's Tier-1 gold operations. We have the largest scale, longest life and highest-quality combination of assets with the capacity to perform for decades and through commodity cycles. Another key characteristic of our business is the quality of the jurisdictions in which we operate. This is an advantage that helps reduce some of the geopolitical risks inherent in our industry. So with the right mix of assets, we now have a laser-focus on safely improving costs and productivity and each of our managed operations so that our go-forward portfolio of Tier-1 assets operate with a Tier-1 cost structure.
Turning to the next slide, in our go-forward portfolio, we have 11 managed operations and three key projects in execution, strategically diversified across the world's most favorable mining jurisdictions. But it's what we will deliver from this portfolio that will truly set us apart from our peers. Over the next decade, we expect that Newmont will produce roughly 6 million ounces of gold and around 150,000 tons of copper on average each year. The investment cycle that we are currently in, combined with the cost of productivity improvement we are doing will help us maximize our margins, not only in a strong gold market like we see today, but also future commodity cycles, enabling us to generate the highest possible margins. As-is typical with large long-like mines, there will naturally be some periods with lower production and some with higher production. But overall, this unique combination of assets sets us up to deliver robust and sustainable production for the foreseeable future. And underpinning this portfolio is more than 40 years of high confidence, reserves and resources with decades of upside from mineral inventory and our ongoing exploration of endowment.
As announced today, our gold reserve base now sits at 134 million ounces and is supported by 170 million ounces of gold resources. In addition to the largest gold resource base in the industry, we also have significant copper reserves and resources, providing organic opportunities to further diversify into the future. Our gold reserves for 2024 were declared using a $1,700 an ounce gold price, which was increased from $1,400 an ounce. This increase was made following our standard annual review process and takes into consideration the three-year trailing average price, analyst forecasts and current economic conditions. With the long-life nature of our assets, combined with the maturity of our governance processes, we have full confidence that we will continue to develop optimal mine plans at these price assumptions, as demonstrated by no material reduction in the reserve gold grade due to the increased price.
I would also like to briefly note revisions we made to the reserves for two of our new assets Lihir and Brucejack. These revisions were a result of applying Newmont governance and technical rigor and include appropriate updates to the final pitch shell design at Lahia as well as updates to the resource model of Brucejack to appropriately increase grade reliability.
I'll now step through each of the large long-life operations in our portfolio and the expectations for the year ahead, starting with Cadia. Cadia is one of Australia's largest gold copper mines and an industry-leader in both block cathing and automation. Lock or panel caves cycle through natural periods of harvest and investment. When we assured ownership, was just coming out of a harvest phase and Panel Cave 2 was beginning to ramp-down from peak production. Today, we are transitioning to our next panel cave, PC23, building Panel Cave and also catching-up on a historical underinvestment in both tailings remediation and storage capacity. As we progress this work, we are ensuring that we are optimizing capital intensity and the balance between tailing storage capacity and the mine and processing plant run-rates.
Moving to the next slide, I'll cover another of the new assets in our portfolio. At Lahia, the focus remains on creating stability in both the mine and processing plant by addressing the critical issues that we have identified in both systems. We have optimized the mine plan, taking into consideration the significant cultural heritage site within the mine, the mine layout and sequence and equipment reliability to deliver a more sustainable long-term mine plan. We have also established a run-of-mine stockpile in coupling the mine and processing plan and ensuring that we can deliver stable and quality feed to the mill where asset reliability is our key focus. This work will result in stable production in '25 through to 2027 as we move waste in the Phase 14A layback in order to access higher grades. And this will then result in an estimated 30% lift in-production in 2028 and beyond.
Touching briefly on Brucejack, the underground development and drilling work to improve our knowledge of this nuggetty ore body and reduce grade variability is progressing very well. We are applying the lessons we learned a dozen years ago in Panamai with a similar role body by tightening our drilling density in order to improve the resource model and deliver steady and lasting value over the long-term.
Moving then to our legacy Newmont operations and starting with our large polymetallic mine Pedasquito. Following the successful stripping campaign in 2024, we will deliver higher gold grades for the Panasco pit this year, resulting in a 30% increase in gold production compared to last year. 2026 will then see a higher proportion of silver lead and zinc content due to higher production from the Chile, Colorado pit as per our normal mining sequence. At Boddington, a large gold and copper mine in Western Australia, the investment in stripping of planned laybacks in both the North and South Pits progresses well. Paving the way for higher grades to be accessed, 30% more gold to be delivered starting in 2027. At our Harpo complex, 2024 was a record production year in the 20-year life of our South operations. This strong performance will continue through the first-half of this year. At which stage the open-pit reaches the end of its economic life and we move across to mining lower-grade ore from the open-pit, driving a slight reduction in-production compared to the record levels of last year. This reduction will be partially offset by our new Ajafa North mine, which comes online in the second-half of this year, enabling the Ahafa complex to continue to contribute around 750,000 ounces per year in 2026 and beyond. At, we expect production will remain consistent in 2025 but will be weighted around 60% to the second-half of the year, driven by the higher-grade stopes we'll access from both the Auron and Liberator ore bodies. We continue to advance the expansion project at Tanamine, which will provide a meaningful reduction in operating costs and increased gold production by around 35% beginning in 2028.
Finally, we expect that our production in 2025 will be further enhanced by around 1.4 million ounces of gold from our non-managed joint-ventures. And in the medium-term, our managing partner has indicated that they will deliver approximately 20% more gold in 2027 compared to last year. So as we look beyond 2025, we expect to add more than 10% of annual gold production by 2028 as we bring forward the high-quality low-cost ounces from the laybacks and projects that I've just described.
Turning to the next slide. The three key projects we currently have in execution advanced substantially in 2024, and I have full confidence that we'll continue building on that momentum this year. Beginning with the Hafo North, we made a notable shift from land access and clearing activities in 2023 to the construction of the mine and processing infrastructure, progressing the highway diversion and commencing stripping last year. With this solid progress, we remain on-track to pull first gold in the second-half of 2025 and declare commercial production towards the end of this year.
Turning to the second expansion at Tanamine. We made really solid progress last year, achieving two important milestones. We completed the concrete lining of the top 1.3 kilometers of this 1.5 kilometer deep shaft, pouring over 30,000 tonnes of concrete. And we successfully backfilled with concrete the 160 meter section of overbrake at the very bottom of the shaft and it is now ready to be raised board.
In 2025, our focus shifts to equipping the top 1.3 kilometer section with services whilst we raised or that bottom 160 meters in parallel. In conjunction with this critical pathwork, we will also be progressing the construction of the underground crushing and materials handling infrastructure along with the surface infrastructure. We continue to expect to declare commercial production in the second-half of 2027 and significantly reduce operating costs in 2028, underpinning future as a long-life low-cost producer. Moving to the panel case at Cadia, which I touched upon earlier. We reached some important milestones last year.
In Panel Cave 2/3, we achieved cave establishment and have now delivered more than 1 million tons of ore from this new cave to our processing plant. At Panel Cave 1/2, we completed more than 12 kilometers of underground development. Combined, these two caves are expected to deliver more than 5 million ounces of gold and 1 million tonnes of copper and will position Cadia to continue operating to the middle of this century. Turning now to the impact from our investment cycle and the current gold price dynamics on our costs. 2025 has already proven to be an exciting year for a variety of reasons. The current gold prices are at near-record levels, surpassing $2,900 an ounce, more than $500 higher than the price we realized in 2024.
While higher gold prices contribute to our free-cash flow generation and will continue benefiting our shareholders, I also want to be very transparent about the impact of both our current investment cycle and higher gold prices have on our unit costs. All the sustaining costs for our core portfolio are expected to be around $1,620 an ounce in 2025. This increase is a result of a variety of factors that can be split into two major drivers: higher sustaining capital investment and macroeconomic factors. First, we are estimating a $40 an ounce increase tied to the elevated sustaining capital spend at Cadia associated with the investment in both remediation and storage capacity that I described earlier.
Next, we are estimating a $35 an ounce increase of a higher proportion of the costs at our four polymetallic mines being allocated to gold over other metals. This non-cash impact to our gold oil sustaining cost is due to the way we categorize co-product costs under US GAAP and driven by the increase in our gold reserve price compared to our reserve prices for copper, silver, lead and zinc. Next, for 2025, we have assumed a $2,500 gold price. And for every $100 increase in gold price, we expect a $10 increase in our all-in sustaining costs due to taxes, royalties and profit-sharing payments. And finally, we are forecasting a $44 an ounce increase linked to a 3% assumption for inflation this year compared to 2024.
We recognize that our all-in sustaining costs are not where we want them to be. So in addition to the work we are doing to bring on new low-cost ounces and normalize our sustaining capital spend over the next three years, my team and I are working to reduce costs and improve productivity across our go-forward managed portfolio. Over the last few years, Newmont has been on a journey to build the world's leading gold and copper company. And after doing the work to rationalize our portfolio, we are now firmly focused on improving costs and productivity across our entire organization. This is key to ensuring that our assets reliably and predictably generate the most profitable 6 million ounces of gold per year over the long-term. The program behind this cost and productivity work has three key components. Our G&A costs are too high for our go-forward portfolio. And we have a laser-focus on ensuring that these costs are reduced as we transition from 17 to 11 managed operations over the course of this year.
Second, we are well into the process of evolving our commercial work at Newmont to ensure we have the capability to extract the full benefit of our scale, both in terms of our supply-chain spend as well as the web revenue we receive from and concentrate sales. Third, with the clarity of our go-forward portfolio, we are applying the full force of our operating and technical capability to systematically improve productivity across all 11 of our managed operations, whilst achieving the industry-leading safety record that we demand. And I will provide further updates on this program as we progress and move forward through this year.
Bringing it all together, over the last year, we have developed a much deeper understanding of our go-forward portfolio and the work ahead of us to deliver meaningful improvements to safety, costs and productivity this year. And while we progress this work, we are providing shorter-term and high confidence guidance for 2025. This year, we expect gold production from our go-forward Tier-1 portfolio to be around 5.6 million ounces at an all-in sustaining cost of $1,620 an ounce. Our sustaining capital is expected to be $1.8 billion and will remain at this level over the next couple of years as we complete our current investment cycle on the tailing storage facilities at Cadia. And we will continue to maintain discipline with our development capital spend, holding our investment to $1.3 billion for 2025.
We expect the production from our core Tier-1 portfolio will be around 52% weighted to the second-half of this year, driven mainly by the timing of production from our non-managed operations. Taking this trend into account, in the first-quarter, we expect to deliver around 23% of the forecast gold production from our core portfolio. This will then be supplemented by around 250,000 higher-cost ounces from our non-core assets held for divestment. Our unit costs will also be impacted by the timing of sustaining capital spend from both our managed and non-managed operations. And this is currently expected to be around 52% weighted to the first-half of this year. So compared to the rest of the year, we anticipate that our all-in sustaining costs will be highest in the first-quarter. As a consequence, we anticipate a notable decrease in our first-quarter free-cash flow compared to the fourth-quarter of last year.
And looking ahead to the remainder of the year, we expect to generate sequentially higher free-cash flow each quarter. And with this momentum, we'll be well-positioned to deliver on our commitments in 2025, whilst also funding our capital allocation priorities and building a stable future for Newmont. Our capital allocation strategy remains unchanged and is driven by three key priorities. First, to maintain financial strength and flexibility with cash above $3 billion and debt below $8 billion. Second, to steadily reinvest in our business with the goal of generating long-term sustainable free-cash flow. And third, to return capital to shareholders through our predictable $1 a share annual dividend and our share repurchase program.
In order to maintain consistent cash levels through this year, the timing of share repurchases is likely to be closely correlated with our projected free-cash flow, along with the timing of proceeds from our non-core asset divestments. After a period of integration, rationalization and stabilization, our focus is now on our go-forward portfolio. Last year, we focused on integrating four new assets, divesting our six non-core assets and laying the foundations for delivering cost productivity improvements as safe, productive and profitable future. With 2024 now behind us, we move to strengthen our value proposition by leveraging the true potential of our assets and projects to improve our safety, costs and productivity performance, positioning Newmont to focus on margins and growing free-cash flow for the benefit of our shareholders.
And with that, we'll thank you for your time today and turn it back over to the operator to open the line for questions.
