Newmont Corp (NEM) — Q1 2021 Earnings Call Transcript

Thank you, and good morning. Welcome to Newmont's First Quarter 2021 Earnings Call. Today on the call, we have Tom Palmer, President and Chief Executive Officer; Rob Atkinson, Chief Operating Officer; Nancy Buese, Chief Financial Officer. They will be available to answer questions at the end of the call along with other members of the executive team. Turning to Slide 2. Please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website. I'll turn it over to Tom on Slide 3.

Thanks, Eric. Good morning, and thank you all for joining our call. Before we begin, I'd like to take a moment to acknowledge the 12 colleagues that we've lost to the COVID pandemic over this last year. For each death, we've mobilized an investigation team and utilized the same methodology we do for other employees who contract fatalities. The intent of each investigation was to understand if any of the COVID controls require change and ensuring that we learn and share our findings globally. These losses have had a profound impact on the entire Newmont family. And it is with great humility that we are reminded that the safety and wellbeing of our workforce and health communities must come above all else. Turning to Slide 4, for a summary of our quarterly performance. The safety and sustainability framework is at the core of how we manage our business and I'm proud that Newmont continues to lead the industry with our ESG practices. In March, we delivered first for the gold industry with production coming from an autonomous haul fleet. Our investment in autonomous haul trucks not only improves safety and productivity at Boddington but also serves as a best case for replication at other operations and projects across the Newmont portfolio. We also entered into a $3 billion sustainability-linked revolving credit facility, one of the first in the mining industry. By aligning our financial strategies and ESG performance, we are holding ourselves accountable and demonstrating Newmont's unwavering commitment to leading the ESG practices. During the first quarter, our world-class portfolio produced 1.5 million ounces of gold and 317,000 gold equivalent ounces from copper, silver, lead, and zinc, in line with our full year outlook and positioning Newmont to deliver a stronger performance as expected in the second half of the year. We generated significant operating cash flow of $841 million and free cash flow of $442 million, of which $438 million is attributable to Newmont. In March, we announced the acquisition of GT Gold, expanding our industry-leading project pipeline to include the Tatogga project located in the highly sought-after Golden Triangle district of British Columbia. We continue to apply a disciplined approach to our capital allocation priorities and deliver on our commitments. Yesterday, we declared a first-quarter dividend of $0.55 per share set within our established dividend framework and consistent with our fourth-quarter dividend. Our first-quarter dividend demonstrates our confidence in the strength of our business and continued commitment to predictable, stable, and sustainable shareholder returns. We maintained a net debt to EBITDA ratio of 0.2 times and completed the redemption of our 2021 senior notes in April, reducing our debt outstanding by $550 million with available cash. We also continued to invest in and develop our most profitable near-term projects including Tanami Expansion 2, Ahafo North, the mining method change at Subika Underground, and Yanacocha Sulfides. Shifting now to safety and our continued focus on fatality prevention on Slide 5. More than a year ago, Newmont made a symbolic change stepping away from our industry's traditional use of lagging personal injury rate in our bonus programs to measures that are focused on managing the critical controls that must be in place at all times to prevent fatalities. During the first quarter, we completed 65,000 conversations by leaders in the field that were focused on these critical controls, actively identifying and managing potential risks that could lead to a fatality. This is an increase of nearly 60% since last quarter and demonstrates our commitment to the preventative measures we're implementing at Newmont. As another example, fatigue has been identified as a critical risk and is frequently a factor in our investigations into potentially fatal events. Fatigue has not been a traditional focus in our industry. Typically, it has been managed through administrative control such as training and checklists. While companies have looked to technology as a silver bullet to address the issue, at an organizational level, we knew we needed to do more. We needed to make fundamental changes to our rosters, staff times, and accommodation to reduce this significant risk exposure. We've recently completed the construction of new camp facilities as part of our Tanami 2 Expansion. These facilities were designed to provide the opportunity for quality sleep and to greatly reduce commute times for our team members. We have also completed upgrades to camp facilities at Yanacocha, Peñasquito, Cerro Negro, and Merian, ensuring that our team members have the appropriate facilities and accommodations to get proper sleep. As a result of these investments in our camp facilities, along with our well-being programs around our global portfolio, we have seen an 80% reduction in fatigue-related incidents at Newmont since 2019. We will continue to make these changes to ensure that our team members can return home safely to their families at the end of their shift at work. Turning now to our portfolio on Slide 6, we have 12 operating mines and two joint ventures. We have nine world-class assets, each of which delivers more than 500,000 gold equivalent ounces per year at an all-in sustaining cost of less than $900 per ounce and with a mine life exceeding 10 years, importantly, all allocated in top-tier jurisdictions. Underpinning our asset base are the industry's largest gold reserves including 94 million ounces of gold and 65 million equivalent ounces from other metals. Our portfolio is also enhanced by the gold industry's best exploration pipeline of both greenfield and brownfield opportunities, managed through our proven integrated operating model. One of the benefits of this integration is that we do not reinvent the wheel or duplicate efforts. For example, with the majority of our exploration activities occurring near existing operations, we have similarity not only with the geology and terrain but also the permitting, regulatory, and community relationships surrounding each of our operations. We firmly believe that we have the best portfolio to generate sustainable returns from our world-class responsibly managed assets located in the best gold mining jurisdictions. Turning to Slide 7, our portfolio will produce steady gold production of more than 6 million ounces per year through at least 2030 balanced across each of our four regions. This profile has been further enhanced by the production of more than 1 million equivalent ounces from silver, lead, and zinc at Peñasquito and copper at Boddington and Yanacocha. Combined, we will deliver nearly 8 million gold equivalent ounces per year for the next decade, the most of any company in our industry. Moving to Slide 8, for a look at our project pipeline. Our project pipeline is unmatched in the gold industry and is one of the best in the mining industry. There is significant value to unlock as we optimize and advance our longer-term projects at later pathways to steady production and cash flow well into the 2040s. In addition to our highly prospective gold projects, we have significant organic exposure to gold, copper, including Norte Abierto, Nueva Unión, and Galore Creek. In fact, if you assume that just one of these three mega projects comes to our production profile at the back end of this decade, Newmont's total production would be around 15% to 20% copper, providing us a natural exposure to a metal of growing importance for reducing carbon emissions and facilitating the ongoing transition to a new energy economy. It's also important to note that this pipeline does not include the various laybacks that will also extend mine life at our current open-pit operations including NGM, CC&V, and Porcupine. You will also see that we've added Tatogga to our project pipeline, another exciting gold-copper asset that I'll cover in more detail on Slide 9. In March, we announced the acquisition of GT Gold. The consolidation of this asset is a demonstration of Newmont's clear focus on our long-term strategy to build a portfolio of world-class assets located in the world's best mining jurisdictions. Our initial equity investment in GT Gold in 2019 was a stepping stone that enabled us to perform due diligence in the area and gain considerable insight into the potential of the Saddle North deposit and Tatogga property. We're committed to continuing to build a constructive and respectful relationship with the Tahltan Nation, including the community at Iskut. We understand and acknowledge that Tahltan consent is necessary for advancing the Tatogga project, and we will partner with the Tahltan Nation at all levels and with the Government of British Columbia to ensure a shared path forward. The deposit will be developed as an underground mine using a block cave mining method, and in addition, access from the belly floor, as you can see in this picture, will also enable us to reach the ore body relatively quickly. A very important feature of this project is that the combination of an underground mine and the ability to leverage the hybrid power infrastructure that's in place today will result in a low carbon intensity operation, supporting our industry-leading greenhouse gas reduction targets. The Tatogga project, including the primary Saddle North deposit, has the potential to contribute significant gold and copper annual production at attractive all-in sustaining costs over a long mine life. In addition to the known deposits of Saddle North, there are further exploration opportunities throughout the land package. The acquisition of Tatogga adds to Newmont's existing interest in this area and builds on a 50% ownership in the Galore Creek project. The transaction is expected to close in the second quarter, and we look forward to providing updates on this highly prospective project in the future. With that, I'll hand it over to Rob to discuss our operational performance on Slide 10.

Before I start, I'd like to recognize the very significant efforts that continue to be applied at all of our operations in order to manage COVID and to keep our team safe and healthy. It is important to realize that this pandemic has some way to run, and these efforts will need to continue for many months to come. Turning to Slide 11, I'll give an update on Africa's performance. Our assets in Africa delivered another strong performance in the first quarter, and the team maintained its momentum from quarter four, delivering a strong first quarter from higher grade and improvements to the mill. We increased mill efficiency and overall planned performance during the first quarter, improving throughput by 3% whilst also reducing energy consumption by 4%. These improvements are driven by full potential projects and are an example of how we continue to find elevated solutions even at our matured operations. The site is well positioned to deliver solid production throughout the year, expecting to reach its highest production and lowest costs during the fourth quarter. Ahafo delivered higher stoppage tons due to mine sequencing improvements that resulted in an extra bench being mined at Awonsu, helping to offset lower grade during the first quarter. We continue to progress the development of our new mining method at Subika, sub-level shrinkage, which will increase tonnage, improve productivity, and reduce mining costs. The team has commenced stopping ahead of schedule, and we completed our first two ore blasts this month, a major milestone for the project. As the sub-level shrinkage project progresses during 2021, we expect to see improvements in grade throughout the year and a 50% increase in ore tonnes mined by the fourth quarter. In addition, we expect to reach higher ore grades from the open-pit operations in the second half of the year, positioning Ahafo to deliver a very strong finish to 2021. Finally, at Ahafo North, we continue to advance the permitting process with the EPA. I'm pleased to announce that we've completed the environmental impact study and paid the invoice for the impairment this month, putting us on track for a full month's decision in July of this year after the receipt of the permit. All other aspects of this project are proceeding well. Turning to South America on Slide 12, South America has been the region most impacted by the virus, and we continue to see the more significant impacts in Argentina and Peru. We remain focused on the safety protocols to protect the health and well-being of our workforce and communities as we continue to mitigate the impacts of travel restrictions caused by the virus. We do expect the impact due to COVID to continue for some time until vaccinations are available and being administered in large quantities. Merian was the best-performing asset in South America despite heavy rainfall during the first quarter, which impacted productivity in the mine. The team continued to utilize an ore blending strategy to optimize mill performance, resulting in increased tons processed whilst maintaining stable grades. As the year progresses, Merian will transition from softer saprolite to harder ore, which will result in higher production through improved grades, but will be partially offset by lower mill throughput. Cerro Negro will continue to work closely with government representatives and other key stakeholders as we manage our operations through the evolving pandemic. As we reviewed the number of COVID cases in the country and the increasing case numbers at our old site, we made a decision to temper hours and suspend operations for five days in January and seven days in March to reduce the spread of the virus. While these decisions impacted first quarter production, the health and safety of our workforce remains our first priority, and despite stoppages during the quarter, we've been able to resume development at San Marcos and make good progress on the tailings storage facilities expansion. Cerro Negro continues to focus on safely ramping up site activities, increasing camp capacity, and appointing a new dedicated team to optimize the important and complex shift changes. Yanacocha has also experienced significant challenges due to COVID, and due to the pandemic, productivity will likely be impacted throughout the year. Despite the challenges from the virus, Yanacocha delivered higher grade material mined from Yanacocha main pits. These tons replaced on leach-plants during the quarter which we expect to result in higher production in future quarters. In February, we decommissioned the old site mill and completed our transition to leach-only operations as planned ahead of the developments of Yanacocha Sulfides, which will extend Yanacocha's operations well beyond 2040. We continue to advance the sulfides project; I can't be talking through our internal peer review process in preparation for full funds approval later in the second half of 2021. Yanacocha is a world-class asset in Newmont's portfolio with significant prospectivity, and we look forward to bringing you this next chapter in Yanacocha's long history of profitable production. Coming to North America, Slide 13. Peñasquito delivered another strong performance and achieved record core product sales of nearly 300,000 gold equivalent ounces in the first quarter due to higher grades and recoveries. The site also set a new monthly record for concentrate transport and shipping, rolling and selling over 125,000 tons in March. Full potential continues to deliver improvements to our mining and mill performance at Peñasquito. And as an example, we've increased the average payload for our haul trucks by 17 tons per load. This translates to an additional 12 million tons moved per year for next to zero cost, an increase of over 6%. The site is well positioned to remain a strong performer throughout 2021 and is also currently exploring our extensive land package of Q2 development opportunities. CC&V delivered lower grade and experienced geochemistry challenges during the first quarter, and as a result, ore that was planned to be milled was redirected to the leach pads. Drilling improvements are expected during the second half of the year, helping to offset the challenges experienced this quarter. At Musselwhite, we continue to closely monitor the impacts from COVID in Ontario and have made a decision to temporarily suspend operations for five days in April to reduce the spread of the virus. Despite the impacts from COVID, which brought changes to the planned mining sequence, grade and ore tons mined continued to improve over the prior quarter. We're also continuing our full potential at Musselwhite with the largest focus on increasing development base and driving productivity as the year progresses. At Porcupine, ongoing ground control rehabilitation in the Hoyle and underground mining, coupled with mill and equipment maintenance, has resulted in more tons mined and processed during the quarter. We have begun the implementation of our full potential program at Porcupine, which will deliver efficiency improvements in the second half of the year. Éléonore continues to make strong improvements to performance and productivity, increasing underground development rates to an average of 40 meters per day by the end of the first quarter. This is an improvement of 25% from 2020. In addition, the safest way, tele-remote mucking equipment for the first time, increasing tons mined, efficiencies, and safety of our workforce. Éléonore will continue to be a stable contributor during 2021 as we expect to deliver steady production increases from higher tons mined and processed through the year. It's also important to note that the site is making good progress in the fight against COVID. I'm pleased to report that 70% of Éléonore workforce has been vaccinated so far. Turning to Australia on Slide 14. Tanami delivered a consistent performance despite heavy rainfall increasing ore tons mined during the quarter. For the rest of 2021, we will continue to monitor impacts of COVID on the Northern territory due to the potential closure state and territory borders. But we expect that production will steadily increase and grades will improve throughout the year. In addition, the team continues to advance Tanami Expansion 2 supporting the site's future as a long life, low cost, and very efficient producer. We recently completed construction of the camp facilities and the excavation of the upper section of the production shaft, putting us on track to deliver significant ounces, costs, and efficiency improvements in the first half of 2024. At Boddington, we delivered a solid quarter in line with our expectations and full-year guidance. Mine maintenance was completed during the first quarter ensuring the plant continues to perform at high levels. As we get into the second half of the year, as highlighted in our previous guidance, we expect to achieve higher grades, improved throughput, and increased ore tons mined due to efficiency from autonomous haulage and improved mill processing. As you can see in the picture, we are well on our way to operating the world's first open-pit gold mine with an autonomous truckload, and I will provide more details about the project on Slide 15. I'm pleased to announce that the first Boddington AHS haul trucks went live in March of this year and we've successfully started the first phase of our transition to a fully autonomous haulage fleet, which will improve safety and extend mine life as one of our core assets. Today, we're operating four trucks hauling ore from stockpiles to the crusher and four additional trucks completing the final testing. We expect to expand the use of autonomous units in the pit during the second quarter, deploying the entire fleet of 36 trucks by the end of September. As a reminder, the AHS project was approved in February of 2020, meaning the project was planned, constructed, and able to achieve first production in just over a year. Being on track to deliver this project on time and on budget will be a huge accomplishment especially during the global pandemic and I'd like to thank our team at Boddington and our partners at Caterpillar including their dealership WesTrac, for their ongoing dedication and drive during such an unprecedented time. We've received very strong support from Caterpillar through the project and we look forward to working together on future endeavors. In addition to the exceptional delivery at this project, we have already seen strong performance over the last month from these machines and the operating team. The fleet has been running non-stop since going live in March, eliminating stoppages from shift changes, meal, and toilet breaks, tea breaks, which increases its productivity, and already the new vehicles have passed the first major milestone of moving over 1 million tons in less than six weeks. It's also worth noting that the significant productivity improvements that we'll achieve with this fleet will also translate to lower fuel costs and consumption, reducing our carbon emissions at Boddington and supporting Newmont's climate initiatives. Most importantly, the use of these autonomous trucks reduces the exposure that our workforce has to potential vehicle interaction, helping us to further reduce fatality risk and to ensure that our team members return home safely at the end of the shift at work. The implementation of the industry's first autonomous haulage fleet will be a major milestone for Newmont and the gold industry as a whole. We will look to replicate this technology, training, and experience at other sites around the globe, leveraging our team of experts and lessons learned around Boddington, and we will also look to integrate further autonomous solutions both at future open-pit and underground mines, as we plan and develop the assets in our project pipeline, ensuring that these important improvements to safety and productivity are applied across the global business. And with that, I'll hand it over to Nancy on Slide 16.

Thanks, Rob. Turning to Slide 17 for the financial highlights. During the first quarter, Newmont delivered solid results with $2.9 billion in revenue, an increase of nearly $300 million from the prior year quarter, driven by higher metal prices. Adjusted net income of $594 million or $0.74 per diluted share. Adjusted EBITDA of nearly $1.5 billion, an increase of 30% from the prior year quarter. A strong free cash flow of $442 million, which includes unfavorable working capital changes of over $325 million in the first quarter primarily driven by nearly $400 million of tax payments attributable to 2020. We declared a first-quarter dividend of $0.55 per share or $2.20 per share on an annual basis, demonstrating our continued commitment to sustainable returns and consistent with our fourth-quarter dividend. Our dividend puts Newmont in the top quartile of the S&P large-cap dividend payers and provides yields of approximately 3.5% on our current share price. Turning to Slide 18 for a review of our adjusted earnings per share in more detail. First quarter GAAP net income from continuing operations was $538 million or $0.67 per share. Adjustments included $0.14 related to the unrealized mark-to-market losses on equity investments measured as of March 31st, $0.05 primarily related to our sale of interest in TIMAC, which closed in January of this year, $0.01 related to reclamation and remediation adjustments at historical mining sites, and $0.03 related to tax adjustments and valuation allowance. Taking these adjustments into account, we recorded first quarter adjusted net income of $0.74 per diluted share, an increase of $0.34 over the prior year quarter. One difference from 2020 that we would like to point out is that adjustments to net income do not include $21 million of incremental COVID costs. Adjusting for these costs would have resulted in $0.02 of additional net income in the first quarter, and we expect these costs to continue throughout the year as we protect against the impact of the pandemic at our operational sites. Turning now to Slide 19, using our conservative $1,200 gold price assumption, Newmont expects to generate $3.5 billion of free cash flow over a five-year period. In addition, for every $100 increase in gold prices above our base assumption, Newmont delivers $400 million of incremental attributable free cash flow per year. Newmont is the only company in the gold mining industry with the ability to generate these levels of attributable free cash flow, enabling us to maintain flexibility in our balance sheet for debt repayments and opportunistic M&A, in addition to providing industry-leading shareholder return. Turning to Slide 20 for more details about our dividend. Our dividend framework provides shareholders with a stable base annualized dividend of $1 per share at a $1,200 gold price, along with the potential to receive 40% to 60% of the incremental attributable free cash flow generated at gold prices above our plan. This range provides Newmont with the flexibility to maintain a stable and consistent dividend payout even when there is fluctuation in gold price. We will continue to review our dividend each quarter with management and our board evaluating gold prices in Newmont's projected performance semi-annually to give us maximum flexibility in determining our dividend within the framework. The first quarter dividend declared yesterday was consistent with our fourth quarter dividend, calibrated at an $1,800 gold price assumption and a conservative 40% distribution of incremental free cash flow. Our dividend framework continues to be our primary vehicle for returning cash to our investors, and Newmont continues to lead the industry with shareholder return, delivering $4.50 per share through dividends and share buybacks since 2019. Turning to Slide 21. We continue to drive the business with our clear capital allocation priorities which include reinvesting in our business through disciplined investments in exploration and organic growth projects, returning cash to shareholders, and maintaining our financial strength and flexibility. During the first quarter, we delivered on each of these priorities with our investments in the first autonomous haulage fleet in the gold mining industry and improving safety and productivity at Boddington. Progressing our profitable reinvestments in the business at the Tanami Expansion and advancing Ahafo North and Yanacocha Sulfides. Announcing the acquisition of GT Gold, maintaining our industry-leading dividend of $2.20 per share on an annualized basis, and announcing a new $1 billion share buyback program. We chose not to repurchase shares during the first quarter and continue to monitor for opportunities. Maintaining a net debt to EBITDA ratio of 1.2 times and completing the redemption of our 2021 senior notes in April, reducing our debt outstanding by $550 million with available cash and maintaining financial flexibility with the completion of the $3 billion sustainability-linked revolving credit facility. One of the first in our industry and a demonstration of our commitment to leading ESG practices. Under the new facility, the company will incur pricing adjustments on drawn balances based on sustainability performance criteria measured through ratings published by MSCI and S&P Global, aligning our financial strategies and our ESG performance. As we look ahead to the second quarter, we are confident in our ability to continue delivering strong results and free cash flow to maintain our disciplined approach to capital allocation.

Thanks, Nancy, and turning to Slide 23. Newmont continues to be the world's leading gold company, and I'm confident that our world-class portfolio and robust project pipeline have positioned Newmont to deliver on our commitment of creating value and improving lives through sustainable and responsible mining. With that, I'll turn it over to the operator and open the line for questions.

First, it sounds like across the portfolio, the consistent theme is second half weighted production. But I'm trying to figure out how much of that is sequencing and grade improvement and how much of it is some of the South American COVID issues that you mentioned and also the Musselwhite COVID issue that you mentioned. So any color there would be helpful, grades versus kind of COVID impacting the first half.

Thanks, Fahad. Good morning. The little moments in our portfolios are Ahafo, Boddington, and Peñasquito. Peñasquito on gold production is pretty flat through the 12 months, roughly 50-50 first half and second half. But it's going to really move the dial in the second half due to mine sequencing and grade at both Boddington and Ahafo. So Boddington we're being lying back for the fifth buyback of the south pit in Boddington, Ahafo, three and a half years in the second half. We get access to the high-grade gold and copper, and the benefit of the topmost haulage, which should be fully implemented by the second half. To see that flow through, I think in the second half, significant high-grade. And at Ahafo, the combination of the new underground mining method coupled with shrinkage will bring through more volume and improved grades. And then you've got improved grades from the Subika open pit as well. So it's largely mine sequence and grade driven, and it's those three operations that really will deliver on that second half performance.

Okay, great. That's clear and just my second question. There was a media article talking about the GT Gold at Tatogga project and the local indigenous groups perhaps are not really open to the project. Maybe talk about your approach there, more specifics and historically what levers has Newmont used to kind of get that buy-in. Thanks.

Thanks, Fahad. So our relationship with the Tahltan actually started several years ago with our acquisition of 50% of the Galore Creek project in that part of British Columbia. So we have established relationships that we look to grow and build on with the representatives of the Tahltan Nation. When you look back at our long history of social responsibility, it is very much founded on building those relationships, understanding issues of concern, and how we can work together. So we fully understand; we fully acknowledge that we'll need Tahltan consent to advance that project, and we will be endeavoring to work with them respectfully and engage with the relationship of those various communities to find their shared pathway forward. That is very much the approach that Newmont takes with everywhere we're working in the North.

Just start with sort of through and again, of course I guess there seems potentially some sort of increasing political risk there. I guess you obviously have some time before full funds decision, but I guess do those developments kind of give you any pause? Can you also just remind us - stability agreements when it comes to taxes and royalties or other rights?

Thanks Tyler, good morning. We've been operating in Peru for 30 years. We're basically in Peru, before democracy was in place, is how we've linked and worked through what has been a color democracy in Peru's modern history. This is another chapter in that journey, so we'll monitor the Presidential Elections carefully and have the Congress and hopefully the new President work together. We have been very successful over the past 30 years in Peru. When we think about making investments like Yanacocha Sulfides, we think about making investments for projects like Sulfides if you literally for big ice with the quality of the Sulfide deposit around the Yanacocha property. We're looking to understand these developments in the next month or two, and that will factor into our process of internal discussions with our board and our joint venture partner. I look forward to being able to make a full fast decision on the rest of Sulfides; I have that delivering great returns for Newmont shareholders and the community around our project for a long, long time to go.

Okay, that's helpful. Then just switching to Peñasquito, sort of production kind of did quite well in the quarter, and both use of cash costs and all-in sustaining costs decent amount below guide. Can you just kind of remind us your explanations for that mine for the year and what to kind of expect in the following quarters?

I'll get Rob to provide some color on it. It's pretty steady performance, and we certainly look at it - it's a polymetallic mine, so we certainly look at developing that mine and managing on the basis of the form at its sort of producing. But if you see, it's pretty steady performance through the year. Rob, if you want to provide a bit more color to Tyler.

Thanks, Tyler. I'd really just back up what Tom said; the best way to describe Peñasquito is steady performance, where we get good gold one quarter, and we go into other elements another quarter. The key thing about Peñasquito is that the mill is performing well. The mine is performing well. The team is performing well in managing COVID as well as possible in a country which has suffered huge impact due to the pandemic. It really is going to be a very steady but successful year in Peñasquito.

So for the 2021 outlook, the comment I guess is that there's the assumption of no major COVID interruptions. The commentary on the call earlier was such that there's obviously a higher degree of interruptions in South America and then at brief stop I guess at Musselwhite. How would sort of those interruptions compare to some of the caveats with the new guidance?

Thanks, Josh. Good morning. I think we're certainly seeing a number of impacts at both the Yanacocha and Cerro Negro. It's a real arching scene across our portfolio at countries where we're seeing the greatest impact from COVID. We get better and better at managing our product goals, both mentioned at Cerro Negro, and the dedicated theme managing shift changes, which is a very, very complex process in Argentina and how you're doing all your grading and monitoring and ensuring and everything up with the workforce for the shift that - clear of the virus and quarantine if we do ever close. So it's really monitoring those two operations. Mexico as a country is still struggling with the virus, but we've got very, very good protocols in place throughout that country. Well, in the United States, fortunately it's starting to really turn the tide. You've seen the recent events in Ontario, and I'm confident that the Canadian government will increase those through Australia and Ghana. We've seen the pandemic managed through very well. I think we're still going to need to have a chronic analyze and the continuing demand time and discipline around our protocols as vaccines become available, encouraging our workforce to take the vaccines and supporting the governments where they can. All that outside of it, we can have an improving trend over time. So I believe they've got the protocols and the discipline in place to manage COVID and maintain everyone through the course of this year.

Great, thank you. And then just maybe a question on some of the trends we're seeing. We've seen commentary at least from maybe not as much the gold sector but other resource companies about labor tightness and sort of regions; obviously with higher commodity prices globally. Is there any commentary you can provide on what trends you're seeing across the portfolio on labor and cost?

Thanks Josh. Monitoring that closely; labor cost backs up about 6% of their cost base that includes contracted services. We employed an assumption for labor exploration in our budgets, and then we flow that through to our guidance, so we've got some provision for that. The key leading indicator I look for in seeing if we may be seeing some wage pressure is voluntary attrition. It's pretty healthy across our business. In some ways, our response to the pandemic and the fact that we chose and we continue to choose to manage the health and safety of our workforce and local communities are about everything else is that it has served us really in terms of support that we have from our workforce. The areas that I've been monitoring more closely on the risk of labor escalation - Australia, it's pretty high in all markets as you see, with commodity prices hitting an all-time high. I wish the Australian government would lock borders and encourage the workforce to come from within that state, which puts pressure on the supply of labor. We're very fortunate; we've got very robust workplaces at both Boddington and Tanami. Good leadership, healthy levels of attrition, and projects like tonnage haulage just mitigate that very significantly where your truck fleet and a labor force; the truck fleet is one of the greatest sources of labors. So, monitoring closely. But the voluntary attrition numbers are leading indicators across our business.

Great. Thank you very much.

Tom, I guess this is a higher-level question. But when I look at your portfolio, maybe on projects since you called in earlier on, it's pretty striking how much copper is there, and you said you could see yourself getting into 20% copper exposure over time. Is that a conscious decision? Over the longer term to diversify the production base or not? Or is that function of the projects that are available to you that look attractive to you think you're adding for like Tatogga?

Yes, thanks Greg. It's still very much clear focus on gold as the core of our business. But organically the way I've seen that as you look for the best gold projects, they come with - particularly when you look at our world-class initiatives and look for those long-life projects and you look for those projects in the jurisdictions we're prepared to work in; they come with copper. So it's more of an organic benefit from that. We focus on the right size projects in the right jurisdiction. The Tatogga project has some nice copper; the Yanacocha has some copper with it. Many of those mega projects, particularly Galore Creek, bring with them some nice copper. It's more of an added benefit, as we say, it's going to come out of nice time with a world-class energy transition.

And just Tatogga, when I look at the acquisition price and if I assume you assumed $1,200 long-term gold that would have implied a pretty healthy long-term copper price. How did you approach the acquisition price to GT?

I've got Eric sitting opposite me; he's shepherded that one through, so why don't I get Eric to just give you a little bit of color on that Greg.

Greg, we obviously look at multiple price scenarios since $1,200 would have been one of our base copper prices at the time; I think it was $2.75. Obviously, that copper price and the outlook is quite strong, so we didn't have any single case that we looked at. As you pointed out, there's a fair bit of copper and a fair bit of gold. So it's really the interplay of the two metals across different scenarios. As we've highlighted, we see the potential for Tatogga to be a world-class asset for us, and that means a long life, pretty significant production at good cost. Tom pointed out on the call, the geometry is pretty attractive for an efficient block cave, and so all of that was attractive to us when making the acquisition.

Congratulations on those trucks at Boddington. I love the color. Hope to see them one day. Just wanted to have a few questions if I could. Wanted to follow up on Josh's question on inflation. You talked about the workforce, Tom, in terms of watching movement there. Can you talk a little bit about if you're seeing any inflation in your capital, cost some steel and or other materials, please? Thank you.

Thanks, Tanya. Good morning. So materials and energy and labor make up 50%, materials and energy make 30% to 40%. Again, we leverage our global portfolio to enter into long-term contracts and strategic relationships with suppliers, so that goes a long way to mitigating the impacts of near-term inflation where we've got rise and fall both into that contracts and stability. So it's a very important part of the Newmont story and the strength of our portfolio in how we look to run our business. We are seeing some pressure on steel generally, around writing media that's watching carefully, and some pressure on frac particularly with, as you see the amount of concentrate that we move out of at Peñasquito. So we're watching those carefully. In terms of capital projects, we've already accounted for a lot of that in terms of the Tanami Expansion and the move to Australian steel, so that's been taken up in previous updates to guide us. As we move into Ahafo North, a lot of the work for the once we get the full funds approval for the next 12 to 18 months of efforts, and the civil works before we start to bringing in steel. We're confident in what the estimates that we've got, what we've looked forward to for full funds, has got to account for any escalation around steel. Similarly, as we start to button up Yanacocha Sulfides, both around peer reviews and bringing that forward full funds. We're including in our estimates and contingencies estimates for wage still make moves. So we do anticipate there'll be some pressure on steel for the capital projects, and making sure we're calculating budgets that we look forward for full funds approval.

Okay, and nothing on cyanide at all. You're not seeing any inflation pressures there?

No, Tanya.

Okay, great. Thanks for that. And I guess just a continuation on the themes I keep asking, maybe just an update on any changes or royalties, taxation, and any jurisdictions that you operate in, that you're hearing of in including the U.S.?

No, it's all - I mean again it's pretty picture of our strategies where we choose to have our operations that brings with it, a lot of stability around our investment agreements, whether in place or royalty budget. So we're not seeing any pressure on that front across that jurisdictions.

Okay, and then just last question before I hand it over to someone else. Just wanted to make sure that the guidance that you provided with your Q4 release, which was production was going to be 47%, 48% expected in the first half and 52%, 53% in the second half still is intact?

It is. I'd say I'd look more 47% in the first half and 53% in the second half, and it's going to be dominated by Ahafo and Boddington reaching the greater buying and higher grades. As you move through the third quarter into the fourth and the second half. So I'd sort of factor in 47%, 53%.

And if I could squeeze just one more in, within treat about vaccinations 70% at Éléonore. Just maybe if you could share any other mines that you have, where you have your vaccination for COVID is actually very well? I didn't hear anything about Africa, just wondered if you could share just a bit more color on that.

Sure, Tanya. We're certainly encouraging the rollout in Ontario, and I'm sure you're living the experience right now; so doing what we can to support the rollout for our Musselwhite port operations. Cripple Creek and Victor certainly see the rollout in Colorado. We've been setting up clinics for our workforce and their families and continue to do that and provide access to vaccines and lots of education encouragement around the efficacy of these vaccines. Through Peru, Argentina, and Mexico, there’s a much longer road to home. So we must maintain those protocols. Vaccines will come and we'll support but we work on the expectations that there's still many months ahead. In Australia, I think we're starting to see some rollout of vaccines. So I'm pleased already that we’ve been looking to work with the Ghanaian Government for the rollout. It's going to be a long process Tanya, I think, before the world is fully vaccinated. So I think we're going to be living with masks for a long time to come in operations.

Okay, thank you so much.

Tom, I wanted to connect my question regarding your three major copper and gold projects. I'm noticing several junior companies with significant gold and copper projects and market caps over a billion. How does Newmont perceive value in these projects? I'm not very familiar with the Galore Creek specifics or your share price, so please correct me if I'm mistaken. I'm curious about the steps you might take. Thanks.

Thanks Mike, and good morning. We're working in same way that we hit an exploration webcast early this year, and we'll certainly look to do an ESG webcast on the back of our new sustainability report in the coming months. We're working on providing some more details and maybe doing so through another webcast so we can link the level of understanding and the appreciation that we have all those projects and how we can sequence the need and why we're so confident about our business over the next several decades. I hope someday we turn 100. And we've got through our gain project pipeline and ability to see early around next century. So we're excited about it, and I think there's an opportunity for us to provide the investment community with some more details in that.

Okay, thanks and Happy Birthday.

I'll blow out a candle for you.

I want to commend you on your initiative to reduce risk around the teams. I know that is a real risk. That made me leave engineering about 18 years ago, and sadly after I left, someone died because of work back-to-back shifts. I commend you for that. Related to that question, could you give us an idea of any costs we should expect associated with those initiatives?

Thanks, Anita, and good morning. I mean, we're seeing an incorporated our guidance around sustaining capital, and some Tanami Expansion 2 in the development capital. But as part of those plans to build additional camp facilities, Yanacocha so far will have included in a potential item effectively probably at similarly, lead-time items additional camp facilities, so they'll be able to have their own room and their own bed. So it's accommodated within millions dollars of year of sustaining capital and $600 million to $800 million in average development capital. It's not big money in the overall scheme of things; it's about having the intent and the will to do something in this space. In terms of productivity improvements around staff, finish time and ensuring their fatigue breaks, the length of shifts and number of consecutive shifts; in my experience, you have that tie back in dividends many times over, by getting the right level of rest amongst your workforce so they're working productively when they're at work. So the things we're doing around roster start times and alike will improve their productivity over time, is my expectation rather than the cost of the business.

Second question a little bit more in detail on Cerro Negro. The grades went down a little bit. I'm just wondering how we can expect that to play out over the course of the year and what was the reason. I mean are you using stockpiles right now? and then you'll return once you can get, I guess the mining rates up from direct access, is my guess. I just don't know - I don't have a color on that.

Thanks, Anita. I'll get Rob to take that question.

Hi, Anita. Fairly straightforward; that's because of COVID, because of the absences, the production from our higher-grade stopes at Merian's north and Eureka were bore and limited because of the lack of development. So it's purely a sequencing due to lack of employees. But those are the areas that we're most focused on, and the workforce is back working and we're nearly through rates. Hopefully, in the coming months, we'll see that turn around, but it was just a timing issue due to the lack of employees.

Okay, and then lastly, more of a big picture question perhaps on for Nancy. Just looking at your dividend payout ratio in that where you know just currently sitting slightly below. But you do have a good on gold price. But you do have a good cash balance. Can you give us an idea if we're thinking about downside risk on gold price? How do you play with the cash balance that you have? I noticed that it's prior to the gold prices it was sort of sitting around $3 billion as the cash balance you wanted. Would you think about, you mentioned reducing that cash balance as needed if gold price dips for a sustained period.

Thanks for the question, Anita. Yes, we said in prior times that at a $1,200 gold price, we would like to keep around $2.3 billion to $3 billion cash balance. We're certainly carrying significantly more than that today, but I do think that's a testament to a couple of things. One is our ability to be very nimble with the dividend, and we provided a very clear framework and a lot of transparency about the optionality between that 40% and 60%. So there's some great points about that. And then the other piece is, we're still in a time of very much uncertainty around COVID and we also have a lot of development capital. So I think carrying considerably higher balances and not at today's gold price is a great strategy for us. But certainly a lot of optionality and flexibility around those balances, which is what we've consistently stated.

And, Anita, I need to build on that. We look with our board back over a long period of time at gold prices and the cash that we generate, and that factored into a decision to stay up and calibrated I think $100 mark and on return 40% of that cash. So at the stability and sustainability of our dividend is very robust. So we didn't make that decision to go to the $1,800 mark lightly, and our expectation would be, when we look forward in our portfolio and our performance that we can sustain those levels for some time.

And just lastly, I know it does, and your disclosures already include your free cash flow projections include Ahafo North and Yanacocha Sulfides and just wanted to confirm that any lumpiness in those spends. But also being included within that $1,800 40% to 60% and those projects.

Absolutely. I appreciate your understanding.

Thanks, Anita, and I believe we’ve reached the end of the questions. We can definitely wrap this up. We've already passed the halfway point of the hour. Thank you all for your time. If you're currently in Toronto, please stay safe and well, and we look forward to seeing and speaking with you soon. Thanks, everyone.