Newmont Corp (NEM) — Q2 2021 Earnings Call Transcript

Good morning, and thank you for joining Newmont’s second quarter 2021 earnings call. Today, we have Tom Palmer, Rob Atkinson, and Nancy Buese. They will be available to answer questions at the end of the call, along with other members of our executive team. Please note our cautionary statement on Slide 2 and refer to our SEC filings, which can be found on our website. I’ll now turn it over to Tom on Slide 3.

Thanks, Eric. Good morning, and thank you all for joining our call. In May, Newmont celebrated its 100th birthday, marking a major milestone in our company's long history of creating value and improving lives through sustainable and responsible mining. And while our organization has certainly evolved our strategy remains clear. We are focused on delivering value to all of our stakeholders from our world-class portfolio of long life responsibly managed assets located in the best gold mining jurisdictions. Turning to Slide 4 for a summary of our quarterly performance. During the second quarter, Newmont produced 1.45 million ounces of gold and over 300,000 gold equivalent ounces from copper, silver, lead and zinc as we build momentum for a strong second half of the year. We generated operating cash flow of nearly $1 billion and free cash flow of $578 million, of which 97% is attributable to Newmont. In May, we completed the acquisition of GT Gold, consolidating our position in the highly prospective Golden Triangle District of British Columbia. And last week, we announced the approval of the Ahafo North project, expanding our existing footprint in Ghana and adding more than 3 million ounces of gold production over a 13-year mine life. This project is expected to deliver an internal rate of return of over 30% at current gold prices and offers exciting exploration opportunities throughout the land package. Supported by our leading portfolio of operations and projects, we continue to apply a disciplined approach to our capital allocation priorities. Even after the redemption of our 2021 senior notes in April and the completion of the GT Gold acquisition, we have $7.6 billion in total liquidity. We have sustained a net debt-to-EBITDA ratio of 0.2 times, maintaining our financial flexibility whilst we continue to reinvest in our business and return cash to our shareholders. Yesterday, we declared a second quarter dividend of $0.55, maintaining an industry-leading dividend yield of over 3.5%. Set within our established framework, our second quarter dividend demonstrates our confidence in the strength of both our portfolio and our operating model to generate sustainable long-term value. In June, we published two important ESG-focused reports that touch every part of our business and operations. The first was our 17th Annual Sustainability Report, which continues to provide a transparent and detailed look at our ESG performance, focusing on the issues and metrics that matter most to our stakeholders. The second was our first climate strategy report, which focuses on our approach to achieving our science-based climate targets and aligns with reporting guidelines from the task force on climate-related financial disclosures. These reports outline the key sustainability strategies that are embedded in our business and our culture at Newmont. Turning to Slide 5. Newmont is broadly recognized for our robust and disciplined practices when it comes to sustainability reporting, both within our sector and among all corporate reporters. And our long history of taking a leading approach to environmental, social, and governance practices has positioned us as the gold sector's recognized sustainability leader. Newmont's strong ESG performance creates long-term value for our stakeholders and drives superior business results through delivering safer, more efficient and reliable operations, greater productivity from well-managed resources, the ability to operate effectively in a broad range of jurisdictions, a proactive approach to managing risks and emerging issues, and most importantly, a reputation built on trust-based relationships and a track record of delivering on our commitments. Earlier this month, we hosted a webcast to provide an overview of our ESG journey. What we have done well, where we have learned lessons and our plans for continued improvement. If you weren’t able to join us, I would invite you to listen to the replay, which is posted on our website. Turning now to Slide 6. Newmont is the world's leading gold producer, with an unmatched portfolio of world-class long-life operations. Among our 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 all-in sustaining costs of less than $900 per ounce and with a mine life exceeding 10 years. And we believe that the way we choose to operate matters. It is important to note that all of our world-class assets are located in top-tier jurisdictions that we define as countries classified in the A and B rankings by each of Moody's, S&P, and Fitch. Newmont has the best portfolio of assets located in the most favorable gold mining jurisdictions. That, when coupled with the quality of our people and our integrated operating model, positions us to generate sustainable returns for decades to come. Turning to Slide 7. Our portfolio produced steady gold production of more than 6 million ounces per year through until at least 2030, balanced across each of our four regions. This profile is further enhanced by the production of more than 1 million gold 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. 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 and lay the pathway to steady production and cash flow well into the 2040s. We continued to advance our mid-term project, including Yanacocha Sulfides, where we’re preparing for a full funds approval in December of this year with a multi-decade mine life that provides exposure to gold, copper, and silver. The sulfides project generates profitable production and offers additional upside to extend mine life at this cornerstone asset. We are also executing the second expansion project at Tanami through the development of a 1.6-kilometer deep production shaft and supporting infrastructure. This project supports the site's future at a long life and low-cost production and it also provides a platform for us to further explore a prolific mineral endowment in the Tanami district. And as mentioned previously, we are pleased to announce that funding for the development of Ahafo North has been approved and this project has now advanced into the execution phase. Turning to the next slide for some details, earlier this month our Board of Directors approved full funding for the Ahafo North project, expanding our existing footprint in Ghana and adding more than 3 million ounces of gold production over an initial 13-year mine life. Located approximately 30 kilometers north of our existing Ahafo South operations, the Ahafo North project will include four open pit mines and the construction of a standalone mill to produce approximately 300,000 ounces per year at very attractive all-in sustaining costs. The project is expected to deliver an internal rate of return of over 30% at current gold prices. Ahafo North is a significant gold mine by any measure. We have conducted extensive regulatory and community engagements including meetings with traditional leaders and local government agencies and public forums to ensure that we earn and maintain social acceptance throughout Ahafo North's lifecycle. We will work to create lasting value for host communities through enhanced local sourcing and hiring. One key aspect of Ahafo North is our workforce planning, which includes a target to achieve gender parity in the workforce when operations begin. We are very excited about progressing Ahafo North and look forward to bringing you updates as we develop this new mine over the next two years. Turning to Slide 10. The global pandemic has and will continue to challenge all of us for some time to come. Our commitment to protect the health and safety of our workforce and host communities remains our top priority. We believe that the COVID-19 vaccine is critical in combating the spread of the virus. We are encouraging our workforce to get vaccinated as soon as they become eligible, and we are working with our local communities and host governments to improve availability and deployment at all of our managed operations. These efforts are supported by our Global Community Support Fund, which is seeking to help with vaccine rollout, vaccine education, and awareness campaigns. We are seeing some of the highest vaccination rates in the United States and Canada largely due to the widespread and early availability in these countries. But until the vaccine is available to everyone around the world, our people and operations will continue to be affected by this virus. Recent outbreaks have shown just how difficult this pandemic continues to be, testing our protocols and the resilience of our people and systems. The impacts of the pandemic are also driving cost inflation around the globe. We are now expecting cost escalation of around 3% to 5% for materials, energy, and labor. We expect these pressures to continue through until at least the end of next year. We are currently working on our 2022 business plan, ensuring that the high cost of inflation and the application of a wide range of controls and safety protocols are built into our assumptions going forward. However, despite the impacts from COVID, we remain in line with our guidance ranges. As a reminder, our guidance ranges a plus or minus 5% from the midpoints we published in December 2020. We are on track to achieve the midpoint to low end for production and the midpoint to high input costs. Production remains back half weighted for the year with approximately 53% expected in the second half of the year. As a reminder, our cost guidance achieved at a $1,200 gold price. At today's gold prices, you can expect an additional $20 to $30 per ounce for production taxes and royalties. As we look ahead towards the second half of this year, we will remain diligent in supporting the vaccination efforts that are so urgently needed around the world, and we encourage everyone to get their vaccine as soon as they are eligible, ensuring that we are all doing our part to end this global pandemic. And with that, I'll turn it over to Rob Atkinson for a more detailed look at our global projects and operations. Over to you, Rob.

Thanks, Tom. Turning to Slide 12, I'll give an update on our regional performance starting with Africa. Akyem delivered another strong performance during the second quarter as higher ore grades from changes in sequencing largely offset lower tons mined due to challenges with shovel availability. The site is well-positioned to deliver solid production throughout the year, expecting to reach its highest production during the fourth quarter. Ahafo continues to be a solid contributor delivering higher-grade material from our underground operations to offset unplanned mill maintenance and power outages. At Subika, we continued to progress the development of our new underground mining method, sublevel shrinkage, and we expect to see steady increases in grade and underground ore tons mined in the second half of the year. In addition, we expect to reach higher ore grades from the open pit operations in quarter three and four, positioning Ahafo to deliver a strong finish to 2021. After finalizing the permitting process with the Canadian EPA, our board of directors approved full funding of the Ahafo North project earlier this month. Spending will ramp up in the second half of the year, and all critical path equipment orders have been placed in support of initial construction activities to ensure a timely execution of the project. The development of this prolific ore body will leverage our proven operating model with the project and resulting mine receiving functional and technical support from our existing world-class Ahafo operations as we create the next generation of mining in Ghana. Turning to Slide 13, Tanami delivered solid results in the second quarter as higher ore grades more than offset unplanned mill maintenance and longer haul distances from the bottom of the mine. In late June, we detected our first positive COVID case at Tanami. Working closely with government representatives and other key stakeholders, we rapidly made the decision to place the site into care and maintenance beginning on June 26 to reduce the spread of the virus and protect the health of our workforce and communities across Australia. I'd like to thank our team in Australia for their rapid response and courageous decision during such an extraordinary and dynamic set of circumstances. I am proud of the resilience and strength of our workforce as we continue to learn from and manage the impacts and consequences of this virus. Although our second quarter was largely unaffected, we are forecasting a 40,000 to 50,000 ounce impact for the remainder of the year as a result of the care and maintenance period. We began ramping up out of care maintenance on July 13, and today Tanami mine is operating at 90%. Despite the impacts from COVID, we continue to advance the Tanami mine expansion. During the second quarter, we progressed the hoist structure and our work on the mine shaft, remaining on track to deliver significant ounce, cost, and efficiency improvements in the first half of 2024. Boddington achieved near record quarterly mill performance, reaching nearly 11 million tons processed during the second quarter. We continue to expand the use of the gold industry's first autonomous haul fleet, and today, we are operating 20 trucks in the south pit with plans to deploy the entire fleet of 36 trucks by the end of quarter three. The efficiencies from autonomous haulage, coupled with improved performance from the mill, will continue to drive performance at Boddington. The improved mill performance helped to offset lower tons mined from ongoing shovel reliability and geotechnical challenges in the South Pit, which has the potential to impact our ability to reach as much of the higher grades as we have planned in the second half of the year. Turning to Slide 14. Peñasquito delivered another consistent quarter as we continued to execute on our plan full potential enhancements, and the most recent improvements in metal recovery rates will continue to support planned delivery into the future. The work we've done to optimize Peñasquito since we acquired the site in 2019 demonstrates our ability to successfully operate and enhance value at large complex open pit mines. The site is well-positioned to remain a strong performer throughout 2021 as we continue to realize higher than planned tons mined and improve recoveries from the pyrite leach plant. CC&V delivered lower tons mined due to unplanned fleet maintenance, and the site continued to experience geochemistry challenges during the second quarter, resulting in lower grades and recovery. Mill performance was offset by higher leach pad recoveries and grade improvements are expected during the second half of the year, helping to partially overcome some of the challenges experienced in the first and second quarters. At Porcupine Mill, ongoing equipment maintenance has resulted in lower tons mined and processed during the quarter. As we look towards the second half of the year, we expect underground development and grades will improve. Last month, our full potential program identified 20 initiatives at Porcupine which will deliver efficiency improvements in the coming months. As mentioned previously, we continue to closely monitor the impacts from COVID at Musselwhite. In April, we made the decision to temporarily suspend operations for five days to reduce the spread of the virus, resulting in mill stoppages, reduced underground development, and more personnel at the site in late April and early May. We expect that these challenges will persist in the second half of the year. We are continuing our full potential work at Musselwhite focused on increasing development rates and driving productivity. Éléonore delivered another strong quarter as development rates and mill throughput continued to improve over the prior quarter and prior year, offsetting the impact of lower personnel due to COVID. In addition, the site continues to increase the use of teleremote mucking equipment, which has helped to increase tons mined and drive important improvements to safety and efficiency. Éléonore will continue to be a solid contributor during 2021 as we expect to sustain consistent production from stable tons mined and processed throughout the year. Turning to Slide 15. Despite heavy rainfall in the second quarter, Merian remains a strong performer in the South American region. The site continues to utilize an ore blending strategy to optimize mill performance. During the second quarter, Merian delivered lower throughput as the site focused on processing harder, higher-grade ore. In the second half of the year, Merian will continue to transition from softer satellite to harder ore, resulting in higher production from improved grades and steady throughput. Cerro Negro continues to improve productivity and performance as the site continues to manage through the evolving pandemic. During the second quarter, Cerro Negro delivered higher ore grades, and despite reduced personnel from COVID, the site continues to increase tons mined and processed each quarter. Due to the pandemic, Cerro Negro has delivered low development rates over the past year, limiting access to higher-grade ore in late 2021 and into 2022. However, the site is progressing future growth projects such as the development of San Marcos and exploration in the Eastern District. Yanacocha has also experienced significant challenges due to the pandemic impacting productivity through the year. Yet despite the challenges from the virus, Yanacocha delivered higher grades and recovery from the leach pads in addition to an increase in grade in Quecher Main golden pit. As we look towards the second half of the year, Yanacocha will focus on optimal ore placement on the leach pads as the site transitions to heap leach-only operations ahead of the development of Yanacocha Sulfides. The Yanacocha Sulfides project has the potential to extend Yanacocha’s world-class operations well beyond 2040, adding profitable production from one of the largest and most prolific gold districts in South America for decades to come. Despite potential impacts from elections in Peru and the effects of COVID, the project is progressing well. The team is focused on critical path activities such as advanced engineering and procurement as we prepare for full funds approval in December of this year. And with that, I'll hand it over to Nancy on Slide 16.

Thanks, Rob. Turning to Slide 17 for the financial highlights. Newmont delivered strong performance in the second quarter with over $3 billion in revenue, an increase of $700 million from the prior year quarter driven by higher sales volumes in metal prices. Adjusted net income of $670 million or $0.83 per diluted share. Adjusted EBITDA of nearly $1.6 billion, an increase of over 60% from the prior year quarter, and strong free cash flow of $578 million, also an increase of about 50% from Q2 of 2020. Yesterday, we declared a regular quarterly dividend of $0.55 per share, an increase of $0.30 or 120% over the prior year quarter. With a yield of over 3.5% at our current share price, Newmont is among the top 10% of the S&P’s large cap dividend payers. Turning to Slide 18 for a review of our adjusted earnings per share in more detail. Second quarter GAAP net income from continuing operations was $640 million or $0.80 per share. Adjustments included $0.03 related to unrealized mark-to-market gains on equity investments, $0.02 related to reclamation and remediation adjustments at historical mining sites, $0.02 related to tax adjustments and valuation allowance, and $0.02 of other charges. Taking these adjustments into account, we've reported second quarter adjusted net income of $0.83 per diluted share, an increase of almost 160% or $0.51 over the prior year quarter. As a reminder, due to our status as a US GAAP filer, our adjustments to net income do not include $19 million of incremental costs incurred this quarter as a result of the COVID pandemic. Adjusting for these costs would have resulted in approximately $0.02 of additional net income per share in the second quarter, and we expect these costs to continue throughout the year as we prioritize the health and safety of our workforce and local communities. Turning now to Slide 19, under our conservative $1,200 gold price assumption, Newmont expects to generate $3.5 billion of attributable 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, allowing us to balance steady reinvestment in the business, continue to strengthen our balance sheet, and also provide superior shareholder returns through our industry-leading dividend framework and opportunistic share buybacks. Turning to Slide 20 for more 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. We will continue to review our dividend each quarter with management and our board evaluating our operational and financial performance and outlook semiannually to give us maximum flexibility in determining our dividend within the framework. The dividend declared yesterday was consistent with our first quarter dividend, calibrated at an $1,800 gold price assumption and a 40% distribution of incremental free cash flow. Our second quarter dividend demonstrates our confidence in our future outlook and our ability to maintain capital discipline. 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, maintaining our financial strength and flexibility, and returning cash to shareholders. During the second quarter, we delivered on each of these priorities by progressing our profitable reinvestment in the business, particularly with the execution of the Tanami Expansion, the approval of Ahafo North, and the advancement of Yanacocha Sulfides, investing in exploration with 55 drill rigs working around the globe, completing the GT Gold transaction in May of this year, maintaining our industry-leading dividend established within our framework to provide stable and predictable returns, repurchasing 2.4 million shares translating to approximately $150 million of our $1 billion share buyback program, and maintaining a strong balance sheet with a net-debt-to-EBITDA ratio of 0.2 times, giving us the flexibility to reduce our debt outstanding by $550 million with available cash and still maintain cash balances of $4.6 billion at the end of the quarter. We are confident in our ability to continue delivering strong results and free cash flow to maintain our disciplined approach to capital allocation. The progress we made in the first and second quarters enabled Newmont to return over $1 billion to shareholders in the first half of this year while we continue to reinvest in our business and support our operations with a strong and flexible balance sheet. With that, I'll hand it back to Tom on Slide 22.

Thanks, Nancy, and I'll wrap it up on Slide 23. I'm privileged to lead an organization with a proven track record and a long history of value creation. Capitalizing on the strength of our people, assets, and integrated operating model, Newmont is well-positioned to lead the industry with our commitment to create value and improve lives through sustainable and responsible mining. As our company moves into its next 100 years, we remain focused on delivering value to all of our stakeholders from our world-class portfolio of long-life responsibly managed assets, located in top-tier jurisdictions. With that, I'll turn it over to the operator to open the line for questions.

Yeah, thanks, and good morning to Tom, Rob, and Nancy. Just I guess I had a question on COVID and I know it's probably tough to calculate, but do you have a sense sort of the impact from COVID restrictions on production in Q2? And then just as you look out to the second half, I mean, Rob, you mentioned the impact at Tanami. But are there any other operations that you are particularly sort of watching for risks to production?

Yes. Thanks, Tyler. I’ll pass it across to Rob, as we are certainly continuing to manage the virus across just about every one of our locations. But Rob, maybe you can give a bit of color as you flip around the globe.

Yes. Thanks, Tyler. If I kind of start off in Australia, obviously the Tanami mine, we had that first positive case and it resulted in a complete shut down. It's two weeks plus a few days. But the biggest worry we have in Australia is that each state and territory have different rules and regulations and aren't necessarily allowing free travel between the states. We’ve obviously got people that work in different states, so that's a risk moving forward that we're carefully managing. In terms of the biggest area, which we're still concerned about is South America; that's where we had the largest impacts. We've had several key outbreaks and had to shut down several times in the second quarter. But vaccines are starting to get through there and build up, particularly in Yanacocha where vaccines are coming through. The absenteeism, Tyler, is the biggest unpredictable factor. You can sometimes have shovel operators away, and that poses the biggest challenge. But certainly, with the vaccines coming on, we're very hopeful that it will reduce those impacts. In Canada, I mentioned about Musselwhite; we had that week in April and May where we had to go into care and maintenance, resulting in significant impacts. As each Canadian province has seen higher absenteeism recently, it impacts development activities, etc. The key thing is that we are managing the situation very well, yet the unpredictability of the virus presents a clear challenge.

Tyler, to build on Rob's comments, we will continue to make decisions that put the health and safety of our workforce and local communities front and center. We had a positive case come through at midnight on a Friday night. Within two hours, our team had decided to put the operation in care and maintenance and ensure safety protocols were followed at the mine site. We will make courageous decisions centered on health and safety. With the size and strength of our portfolio, we can continue to manage these pandemic impacts within the guidance we have provided.

That's very helpful. Switching to Ahafo North, I know there was just a slight increase in the CapEx with the full funds decision versus the previous guidance. I’m just trying to understand what level of input cost does that assume? Is it more recent prices for materials and energy? Similarly, what about the operating cost assumptions?

Yes. Thanks, Tyler. The slight bump in capital cost from our previous guidance was to reflect current prices and COVID-related impacts. We've already placed orders on several critical path items to lock in pricing and schedule. We're managing both capital and operating costs strategically by addressing current inflation pressures as well as anticipating those that may cycle out as we approach the start of operations.

Great. That makes sense. That’s it for me. Thanks so much.

Thanks, Tyler.

Hi, good morning. Just building on the last question about the COVID impacts. Can you remind us where some of the production offsets are coming in the second half of the year? Which operations are expected to make up for some of these COVID issues predominantly in South America and Australia?

Thanks, Fahad, and good morning. The needle-moving sites that drive our portfolio movements include Peñasquito, which is steady but consistent, and Boddington where we are moving into higher-grade ore in the latter part of the year. Our performance at Tanami is also improving with some stronger grades expected. Ahafo is positioned for a stronger second half as well, particularly in underground operations. So we are optimistic.

Okay, that's really clear. Thanks. And my only other question is on the Yanacocha Sulfides. If there were a situation where your joint venture partner was unable to contribute to the funding, would there be an appetite from Newmont to maybe consider buying out a larger stake of the project?

We're excited about Yanacocha Sulfides and its long-term potential, similar to what we experienced with Carlin from the early to mid-90s. Yanacocha is a cornerstone asset and a key district for us. If opportunities arise to consolidate our share in this prolific district, we would certainly consider it.

Josh we can't hear you. You must be on mute or something. Operator, it looks like we might have a connection issue with Josh.

Tom, I'm trying to understand the Boddington commentary. Rob seemed to imply that you wouldn't get as much high grade in the second half as you expected, but you still expect production to be up strongly. How do you reconcile those comments?

Thanks, Greg. We're moving into the higher grades in the south pit, and the production is expected to trend upwards. There is a risk some high-grade material could tip into January, but we are focused on ensuring that we manage this transition effectively and get as much high-grade material as possible into year-end.

Okay. So there's going to be a lower production from Boddington in the second half than previously expected?

Yes, there is a possibility some may tip into early 2022, but we are still focused on managing Boddington successfully.

Some of your comments about inflationary pressures seem to contrast with earlier statements. Where is this cost pressure coming from?

As we sit in the middle of our business planning process, we’re seeing inflation across labor, materials, and energy. Labor markets in Canada and Australia are heating up and we are observing an uptick in costs, which we expect to flow through to 2022. Additionally, we are seeing pressures on materials like steel and fuel.

So there will likely be upward pressure on the 2022 cost guidance?

That's right. We're expecting about a 5% aggregated number for costs moving forward.

I just wanted to follow up on Greg's question about inflation. You're indicating inflation on both the operating and capital cost sides. However, your guidance remains unchanged for 2021. Can you clarify why costs have decreased while others are increasing?

Yes, we’re still tracking within the midpoint to the high-end of our cost guidance for 2021. We're watching inflation closely as we move into 2022, and are building assumptions to accommodate inflation in our long-term guidance as well. In December, we’ll update our long-term guidance on costs considering these inflationary pressures.

Thank you for clarifying that. Just one more on Yanacocha Sulfides—given the new political environment in Peru, is there anything that would make you cautious about proceeding with the project?

We are taking a long-term view. The new president's actions and cabinet assembly will provide critical indicators. We know the importance of mining to Peru's economy and will engage with the new government to show the potential benefits of the Yanacocha Sulfides project.

Good morning, everyone, and thank you for taking my questions. I want to follow back on the inflation question you mentioned; what areas of labor have seen much higher inflationary pressures especially in underground mining?

We are indeed experiencing high demand for skilled labor in Canada, especially for technical staff as projects ramp up across the country. The mobility of workers has created a tight labor market, particularly affecting our ability to hire underground miners in both Canada and Australia.

In addition to miners, we are seeing higher prices and competition for contractor services as well. This affects all aspects of our operations.

Could you provide clarity regarding materials? Are you seeing inflation in steel, cement, or cyanide?

Primarily, we are seeing price increases in steel. Additionally, we are experiencing higher freight costs, which further fuel inflationary pressures.

Regarding the Boddington geo-technical issue, could you remind me of its nature?

It's quite seasonal; heavy rainfall can impact geotechnical stability in the walls, prompting us to take safety measures in operations.

We're also actively ensuring our bench hygiene for future operations. We've had some record rainfall in the region recently.

On your Goldstrike Roaster, what impact did the downtime have for Q3?

We expect about a 40,000-ounce impact from the roaster downtime, which went down at the end of May and is expected to be operational in September.

And could you provide an update on illegal miners in Ghana?

There has been a significant turnaround this year. The authorities are working closely with us to manage illegal activities, and we are increasing our monitoring efforts. Our relationship with local communities is strong and continues to improve.

We focus on community hiring and support local procurement efforts. These actions have reinforced our presence and collaborative efforts in the region.

Regarding the input cost or inflationary pressures, you're indicating around the midpoint or top end of the guidance range. Could that point to the second half exceeding that plus 5% increase?

Yes, we will factor in production taxes and royalties, especially given current gold prices. This will influence our guidance expectations.

As for the 2022 guidance, can you confirm development costs are already in your current guidance, and that those escalation factors include COVID impacts?

Yes, we are incorporating COVID costs into our projections for operating costs moving into the next year.

We are maintaining our conservative planning at a $1,200 gold price, ensuring we account for inflation while being flexible with our future guidance and assumptions.

We will continue providing clarity around various price drivers, especially with respect to taxes and royalties, to help you predict costs associated with higher gold prices.

What is the stakeholder engagement like with the local communities around Yanacocha, especially considering issues of investment and ensuring funds reach them?

We've been in Peru for over 30 years, and our relationship with the Cajamarca community is improving. Our extensive local hiring and content programs benefit the community significantly, and we continuously work on strengthening these relationships.

We focus on building up local relationships and working on initiatives that create sustainable value for the communities.

On freight issues, are you encountering challenges securing container availability for transporting concentrates or supplies?

We're not seeing significant impacts on freight accessibility at this time, so we remain optimistic about logistics.

Thank you, operator, and thank you all for joining us today. Please stay safe and healthy as we all navigate the ongoing pandemic. Thanks everyone.