Newmont Corp (NEM) — Q1 2023 Earnings Call Transcript

Thank you, operator. Good morning, everyone, and thank you for joining Newmont's first quarter earnings call. Today, I'm joined by Rob Atkinson and Brian Tabolt, along with other members of our executive leadership team, and we will all be available to answer questions at the end of the call. Before I begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. Newmont continues to lead the gold industry in safety, sustainability, profitable production, and shareholder returns. Our solid first quarter performance is underpinned by our unmatched portfolio of world-class assets, our proven operating model, a balanced, disciplined approach to capital allocation, and most importantly, our values-driven commitment to leading sustainability practices. With a strong outlook, combined with the strength of our team and the quality of our assets, we remain on track to continue safely delivering long-term value to all of our stakeholders. During the first quarter, Newmont produced 1.3 million ounces of gold and 288,000 gold equivalent ounces from copper, silver, lead, and zinc, generating nearly $1 billion in adjusted EBITDA, all in line with the expectations we provided in February for Q1. We continue to expect that gold production for this year will be weighted 55% to the second half, and we remain firmly on track to achieve our full-year guidance ranges. With $6.5 billion in total liquidity, we continue to maintain an investment-grade balance sheet, providing the financial strength to sustain our business throughout the price cycle as we continue to invest in our most profitable growth projects and return cash to our shareholders. Through our established dividend framework, we declared a first-quarter dividend of $0.40 per share, demonstrating both our ongoing commitment to shareholder returns and the confidence that we have in our business. During the first quarter, we further rationalized Newmont's portfolio with the sale of our interest in Triple Flag, generating $179 million in cash proceeds. And we remain on track to deliver an incremental $440 million of full potential cost of productivity improvements this year, a key part of Newmont's continued efforts to deliver stable production and strong margins from the industry's best portfolio of world-class assets. Our core values are safety, sustainability, integrity, inclusion, and responsibility. They have been developed and embedded over a long period of time and through multiple generations of leaders at Newmont. Together, they are fundamental to how we run our business, where we choose to operate, and how we conduct ourselves on a daily basis. Last week, Newmont launched our 19th Annual Sustainability Report and our second Annual Taxes and Royalties Contribution Report, providing a detailed and transparent look at our values-driven approach to sustainability and an overview of our tax strategy and economic contributions. And next month, we will issue our third annual climate report, outlining Newmont's climate risks and opportunities, our strategic planning around various climate change scenarios, and the specific actions we are taking to reduce our carbon footprint. Each of these reports are part of a robust set to detail our company's management of the sustainability areas that matter most to our stakeholders and to our business. At the very core of Newmont's leading sustainability practices is our commitment to driving a fatality, injury, and illness-free workplace. And this begins with a disciplined, laser focus on safety fundamentals. In the first quarter, we completed more than 172,000 interactions by leaders in the field that were focused on the critical controls that must be in place at all times to prevent fatalities. To highlight one of the direct consequences of this work compared to the same quarter last year, in Q1, we experienced a 56% reduction in potentially fatal incidents or what we call significant potential events. This improvement could not have been achieved without our dedicated workforce and the supporting systems that we have in place to maintain and improve our safety culture. Last month, we recognized several members of our team through our Annual CEO Safety Awards, acknowledging those teams and individuals that set the standard for high-quality build and safety practices. From a pool of over 50 nominees, we selected winners in three categories: safe lead-up, safe team, and partner in safety. We are really proud to be able to recognize the dedication demonstrated by our team members each and every day. We are also proud of our heritage as a values-driven organization with a clear purpose. We have learned that achieving our purpose requires strong governance and a commitment to accountability and transparency. As part of that commitment, Newmont has been disclosing our sustainability performance since 2004. Among the key highlights shown on this slide from our 2022 sustainability report is one of the most important focus areas for the mining industry today: creating a safe, healthy, and equitable workplace, one that values our differences and ensures that everyone feels safe and is safe working at Newmont. Over the last 18 months, the mining industry has come under significant scrutiny following a West Australian Parliamentary inquiry into issues of sexism, racism, harassment, and bullying in the workplace. I'm disappointed to acknowledge that Newmont is not immune to this unacceptable behavior that is taking place in workplaces across the world. It is vital that we, as leaders, make sustainable changes to address and eliminate these behaviors. To manage our response last year, I appointed a senior operational leader reporting directly to me and tasked with listening to our workforce to better understand what is being experienced so that we can make lasting and meaningful change. Over the last few months, more than 1,000 people have provided thoughtful feedback and personal experiences through 100 focus groups and more than 150 one-on-one interviews, assisting us in understanding the extent, nature, and root cause of these behaviors in our organization. We will remain transparent in our acknowledgment of these behaviors. Andrew provided an overview of the emerging themes from these conversations in our annual sustainability report. This ask and listen process is helping us identify the improvements required in our systems, the symbolic actions that we can take, and our changes in our leadership behaviors that will drive sustainable change in our workplaces. I'll now turn it over to Rob and then Brian to take us through each of our operations and key development projects, along with a review of our quarterly financial highlights. Then I'll wrap up with a brief update on our proposed acquisition of Newcrest. Over to you, Rob.

Thank you, Tom, and good morning, everyone. Since the start of the year, I visited three of our four regions at Newmont. I spent time underground with the team at Tanami, reviewing the status of our expansion project at this world-class asset with Mia Gous, our Senior Vice President in Australia, and our experienced leadership team. I traveled to Ghana to see firsthand progress at our Subika Underground mine and our Ahafo North project with Dave Thornton, our Senior Vice President in Africa. I also visited each one of our sites in Canada, Éléonore, Musselwhite, and Porcupine to review the productivity improvements we are achieving under the leadership of our North American Senior Vice President, Bernard Wessels. And as Tom just described, our site and regional leaders are very focused on safely delivering their plans while continually working to create a safe and inclusive environment for each person working at our operations. So turning to the next slide, let's begin with an update from South America. Peñasquito continues to deliver strong mill performance largely due to the implementation of our full potential program over the last four years and with the ongoing support from our operations support networks. With more than $300 million in annual synergies from processing improvements alone, our team has been hard at work further debottlenecking Peñasquito's processing circuit, improving flotation and filtering capacity, and optimizing maintenance schedules to increase mill availability. As a direct result, Peñasquito processed 9.9 million tonnes in the first quarter, putting us on track to mill an impressive 37 million tonnes of ore in 2023. Mining continues in the Chile Colorado pit as planned. And while gold production was lower compared to the fourth quarter, it was completely in line with the expectations we had previously communicated due to mine sequencing at this very large polymetallic mine. Linked to this sequence, coal production was strong this quarter, generating $266 million in revenue due to higher silver, lead, and zinc grades being delivered from the Chile Colorado pit. And also, please note that 55,000 gold equivalent ounces in finished goods inventory at Peñasquito were built up at the end of the quarter as a result of planned timing on concentrate shipments. This concentrate has since been sold, and the revenue will be realized in the second quarter. In Q2, we expect both gold and silver grades to decline by around 10% compared to Q1 due to the planned mining sequence with the full expectation that higher silver, zinc, and lead grades in the second half and resulting gold equivalent ounces will offset the planned lower gold grades in 2023. We expect gold and coal production at Peñasquito to be weighted around 55% to the second half of this year. Turning to our leach-only operations in Peru, Yanacocha delivered steady results in the first quarter. Production is expected to increase by more than 20% beginning in the second quarter when we start to realize the benefits from our continued use of injection leaching technology combined with our re-leaching programs. At Merian, our team has begun the planned stripping of the next layback in the Merian pit, and as reflected in our guidance, this will result in higher waste tonnes being mined and lower ore tonnes and ore grade being processed this year. And finally, in Argentina, Cerro Negro delivered another solid quarter due to higher underground mining rates and mill throughput. Gold production is expected to steadily increase each quarter from a combination of sustained productivity improvements and the progression of the first wave of our district expansions at Cerro Negro. We anticipate production will be weighted around 56% to the second half of this year, with the site on track to add high-grade ounces from San Marcos beginning in the third quarter. Now turning to Australia. Boddington continued its momentum from the fourth quarter, delivering strong gold and copper production in the first quarter, while also completing a planned 7-day preventative maintenance shutdown of the processing plant. As we look ahead, the site is expected to deliver improved results during the second quarter, supported by steady ore grades and strong mill performance. As we ramp up waste stripping in the South pit in the second half of the year, we expect to increase total material amount to around 20 million tonnes per quarter, helping to maintain steady gold and copper production despite planned lower ore grades being delivered to the mill. Now moving up to Tanami. As previously discussed, the Northern Territory in Australia experienced record wet weather and extensive flooding during late 2022 and the start of 2023, which resulted in the complete closure of the main route for supplies to Tanami from late December, with the Tanami track only fully able to transport normal loads in late February. This road closure impacted our ability to move key consumables to site, resulting in the depletion of all of our wet weather stocks on site and the cessation of milling operations and gold production for 32 days during Q1. However, during this period, our team remained agile and responded to this event with mining operations continuing and ore being stockpiled in front of the mill. Scheduled maintenance was moved forward to reduce downtime in subsequent quarters. In partnership with the Northern Territory government and local contractors, we successfully repaired and reopened the Tanami track. Due to these efforts, Tanami expects to recover most of the ounces from this event over the course of 2023 and is on track to more than double gold production in the second quarter. It's also important to note that all our key consumable stocks at site have returned to normal operating levels and we have continued to progress our second expansion at Tanami. The team has now completed more than 565 meters of the concrete shaft lining in addition to account expansion to accommodate our current and future workforce. Despite the temporary closure of the main access route during the quarter, the project remains on track to deliver significant ounces and cost improvements in the second half of 2025. And now moving to Africa. Akyem delivered lower ore grade in the first quarter as our team commenced stripping of the next layback in line with the expectations previously communicated. Strip ratios will remain high throughout the year as planned with stronger gold production expected in the second and third quarters due to higher grades coming through. At Ahafo, we delivered a solid quarter with strong mining rates and plant throughput partially offset by lower grades due to planned underground rehabilitation that impacted access to high-grade material at the Subika Underground. During Q1, the site experienced a conveyor failure that impacted one of the two conveyor systems transporting ore from the secondary crusher to the mills. However, the team was able to implement a system to bypass the conveyor and offset any impact on production. As a result, Ahafo remains on track to achieve its annual guidance range, with steady increases to production each quarter still expected as we open up additional draw points on the Subika Underground. We anticipate gold production at Ahafo will be weighted around 60% to the second half of this year due to higher mining rates and the delivery of more high-grade ore to the mill. Our Ahafo North project continues to progress well with approximately 85% of the total land area available for construction. As you can see in the photo on this slide, we have transported a large portion of the necessary civil construction and mining equipment from Ahafo South to Ahafo North as we prepare to develop this next important phase of our Ahafo complex in Ghana. Now moving across to North America. As discussed during our last earnings call, our North American operations have made tremendous progress due to the guidance from our experienced team of leaders, the strength of our integrated operating model, and the support from our proven full potential program. Starting with CC&V, our leach-only operation remains a solid contributor with slightly lower production compared to the previous quarter due to waste stripping in the Global Hill pit as planned. At Éléonore, the site delivered another strong quarter, driven by improved mining rates and mill performance compared to the fourth quarter. These improvements, combined with the progress we have made in workforce stability, will enable Éléonore to continue generating daily production levels throughout the year, more than offsetting planned lower ore grades. Musselwhite delivered lower ore grades and mining rates compared to the fourth quarter as the team focused on backfill activities to expose higher grade stopes. When combined with the efficiency improvements achieved through double lift stopping, Musselwhite is expected to deliver increased production each quarter in 2023, with nearly 56% of production anticipated in the second half of the year. Finally, Porcupine delivered higher ore grades and improved tonnes mined, largely offsetting the impact from planned mill maintenance during the first quarter. The Pamour project continues to progress well as we prepare for an investment decision in late 2023. Collectively, our Canadian sites have improved production by 26% compared to the same quarter last year, primarily due to continued focus on closely managing labor vacancies and absenteeism while improving productivity and reliability with greater access for our leadership and full potential teams post the Canadian border restrictions. Éléonore, Musselwhite, and Porcupine each achieved the highest quarterly performance in terms of development meters. For comparison, this is an overall improvement of 37% versus Q1 2022. As a direct consequence, tonnes mined improved 26%, and ore tonnes processed also increased 7%. These very pleasing results are a true testament to the power of our operating model and its ability to replicate leading practices across our global operations. Regarding our two non-managed joint ventures, our 38.5% ownership of Nevada Gold Mines and 40% interest in Pueblo Viejo contributed 321,000 ounces of attributable gold production in the first quarter, representing 20% of our combined non-managed joint venture production guidance for the full year. As highlighted at our full-year earnings presentation in February, a tragic workplace fatality occurred in our joint venture in Nevada Gold Mines. The fatality occurred at the Carlin Gold stream underground operation on January 23, and a detailed investigation was carried out by our JV partners, which included one of Newmont's most senior safety leaders as a key member of the investigation team. Newmont's executive leaders have also met to discuss and share safety strategies, interventions, and tactics to help ensure tragedies of this nature do not occur again at NGM. Both of these joint ventures are core to the Newmont portfolio, and we look forward to continuing to work with our managing partner to help ensure a safe and productive future for Nevada Gold Mines and Pueblo Viejo. With that, I'll pass it over to Brian to cover our financial results. Over to you, Brian.

Thanks, Rob, and good morning, everyone. Let's get started with the financial highlights. In the first quarter, Newmont delivered $2.7 billion in revenue at a realized gold price of $1,906 per ounce, driven from 21% of our anticipated full year production and including $376 million from our copper, silver, lead, and zinc coproducts; adjusted EBITDA of $1 billion and cash from operations of $481 million, which includes $360 million of unfavorable working capital movements, partly due to the timing of concentrate shipments at Peñasquito. As stated previously, we are currently in a period of meaningful reinvestment with capital spending for the first quarter of $526 million as we continue to progress our near-term projects and position our portfolio to be profitable and resilient for decades to come. Additionally, through the continued rationalization of our portfolio, we sold our stake in Triple Flag, which generated $179 million of proceeds, contributing to Newmont's strong liquidity profile at the end of the quarter with $3.5 billion of cash on the balance sheet. This investment-grade balance sheet continues to be an integral part of our capital allocation strategy, maintaining financial strength and flexibility while balancing sustainable reinvestment and meeting shareholder returns. First quarter GAAP net income from continuing operations was $339 million or $0.42 per diluted share. Adjustments included $0.05 related to a gain from the sale of our interest in Triple Flag as part of our ongoing portfolio optimization, $0.05 related to unrealized mark-to-market gains on equity investments, and $0.08 related to tax adjustments. Taking these into account, we reported first quarter adjusted net income of $0.40 per diluted share, relatively in line with the previous quarter despite lower production as planned and previously communicated. These results also include the impact from higher average realized prices, lower sales volumes, including the impact from the timing of concentrate sales at Peñasquito, as mentioned earlier, and lower total cost applicable to sales driven by lower overall production and higher oil prices. As a reminder, this higher gold price environment results in both favorable inventory adjustments as well as higher royalties and production taxes. As the year progresses, we anticipate that unit costs will decline as production increases and inflationary pressures stabilize, improving margins and strengthening our financial position. As a reflection of the confidence in our business and our strong financial position, this morning, we declared a first quarter dividend of $0.40 per share or $1.60 per share on an annualized basis, set within our established framework and in line with our fourth quarter dividend. This continues to be the highest dividend per share in the gold sector and remains within the top 20% of large-cap dividend payers in S&P 500. With this dividend declared, Newmont will have returned $4.5 billion to shareholders through dividends since introducing our framework in October 2020. We have now maintained a dividend yield above 3% for 10 consecutive quarters. With that, I'll pass it back to Tom.

Thanks, Brian. I'd now like to provide an update on our potential acquisition of Newcrest. To briefly recap the key events and milestones over the last three months, on February 5, Newmont confirmed that we had submitted a nonbinding proposal to acquire Newcrest. Then on February 15, Newcrest advised that they had rejected our proposal but offered to provide us access to limited non-public information. After negotiating an appropriate nondisclosure agreement, we were provided access to this information. As part of this process, my executive leadership team and I, along with some of our key subject matter experts, held a face-to-face meeting with the Newcrest management team. After reviewing this additional information, we submitted a revised nonbinding proposal to the Board of Newcrest with the following terms: a proposal to acquire 100% of the issued share capital by way of an Australian scheme of arrangement under which Newcrest shareholders would receive 0.4 Newmont shares for each Newcrest share. Newcrest would have the right to fund and pay shareholders a special dividend of up to US$1.10 per share to realize the value of franking credits and that the Newmont offer is best and final, subject only to no superior proposal emerging. On April 10, the Newcrest Board then agreed to grant Newmont access to confirmatory due diligence to enable us to put forward a binding proposal. Newmont has been provided exclusivity for a four-week due diligence period that ends at midnight on May 11. Our proposed acquisition would combine the assets and talent of two of the sectors' senior gold producers and set a new standard for safe, profitable, and responsible gold mining. Newmont has a long history and shared heritage with Newcrest, establishing our Australian subsidiary way back in 1966, a subsidiary that would become Newcrest some 25 years later. As part of that shared history, our companies also have shared commitments to a strong safety culture and leading sustainability practices, which is in addition to the complementary portfolios of world-class assets located in low-risk mining jurisdictions. Our proposed acquisition would strengthen our established position in Australia, creating efficiencies and value with a shared workforce, technical expertise, and large-scale supply chain optimization. It would build upon the district potential in British Columbia's highly prospective golden triangle through a combination of operating mines and development projects that would deliver value through shared technology, mobile capabilities, and ore body expense. With our scale and track record of successfully managing some of the world's top Tier 1 assets, this transaction would leverage Newmont's experience from the Goldcorp acquisition, where we have demonstrated over the last four years that we can generate meaningful improvements to performance, stability, and profitability, especially at large open-pit and underground operations. Since we closed the Goldcorp acquisition just over four years ago on April 18, 2019, we have delivered more than $1 billion in annual synergies, significantly exceeding our initial commitment of $365 million. More than three-quarters of this synergy value was generated by focusing on the fundamentals of mining and processing and achieved through the disciplined application of our proven full potential program and leveraging our Newmont operating model with an experienced team of leaders and subject matter experts. Peñasquito, as the only Tier 1 asset in the Goldcorp acquisition, has been the main driver of this value, generating more than $700 million in annual synergies. At this very large open-pit mine, we have increased the average payload on our fleet of 85 large 330-tonne haul trucks by 17 tonnes per load with scope for further improvement. This translates to an additional 12 million tonnes of material moved per year for next to zero cost. Combined with other load-and-hold improvements, we have increased the annual total material moved at Peñasquito by more than 20% compared to 2020 with no additional equipment. Then turning to the processing plant at Peñasquito, we have worked to understand and then address the bottlenecks in the crushing, grinding, and flotation circuits of this complex polymetallic operation, delivering a 7% increase in annual throughput compared to 2020, which translates to around $300 million in free cash flow improvements each year from this operation. The Goldcorp acquisition involved the integration of five new operations, of which Peñasquito was a Tier 1 asset. It also involved entry into three new jurisdictions. By comparison, our proposed acquisition of Newcrest would also involve the integration of five new operations, but importantly, only one new jurisdiction. Notably, two of the operations, Cadia and Lihir, are Tier 1 assets with Red Chris and Brucejack representing a Tier 1 district in the Golden Triangle of British Columbia. In the four years since April 2019, we have delivered on our value proposition and exceeded the commitments that we made. We have strengthened our position as the industry's recognized responsible gold leader. We have enhanced our portfolio through the successful integration of the former Goldcorp assets into our Newmont operating model, delivering over $1 billion in annual synergies. We have optimized our portfolio, generating over $2 billion in proceeds from the divestments of Red Lake, our share of both KCGM and Continental Gold, along with the continued rationalization of our noncore equity portfolio. Notably, $1.5 billion of the proceeds from these divestments was delivered within the first 12 months of the acquisition closing, and we have led the industry on capital returns, returning more than $5.5 billion to shareholders over the last four years, while also completing over $1.5 billion in opportunistic share buybacks. Finally, our successful integration of the Goldcorp assets goes far beyond the synergies, assets investments, and leading shareholder returns. We have led the alignment of the former Goldcorp organization with Newmont's purpose, values, experience, and culture. We have fully implemented Newmont's safety systems and processes. We have integrated our sustainability goals and targets. Through our disciplined capital allocation process, the former Goldcorp assets have significantly benefitted from the combined entity's free cash flow generation capability. We have learned to operate in three new jurisdictions and forge lasting community and host country relationships. So in closing, I'm not able to provide any further details on the Newcrest proposal at this time as it is a live engagement. But I want to be clear with everyone on today's call that we will continue to be disciplined as we work through the due diligence process and determine synergies, and we will act in the best interest of our shareholders. Thank you for your time today. And with that, I now turn it over to the operator to open up the lines for questions.

Thanks very much for taking my question, and I apologize because I acknowledge that you've just mentioned you don't want to give more information about the Newcrest transaction. But if I could ask on that anyway. Let's say you finished the due diligence on the schedule where the exclusivity period is still intact and it's approved by all shareholders. Can you talk a little bit about the timeline for sort of when the earliest transaction closing would be and sort of what your thoughts would be for the integration of the assets?

Thank you, Jackie. I will do my best to answer your question while being mindful of the need to keep some details confidential. We will go through the due diligence process in exclusivity for four weeks, and we are committed to analyzing that information thoroughly to make informed judgments and decisions. This is a key strength of Newmont, as we have a capable team experienced in this area. We are applying comprehensive resources from the Newmont organization to this due diligence and will work hard throughout the process to ensure it goes smoothly. If all progresses well, we aim to reach a binding agreement and then seek the necessary regulatory approvals in Australia, Papua New Guinea, the United States, and Canada. Understanding these approval pathways is crucial, and moving toward closing is contingent on that. It typically requires a few months to navigate these steps. One of the main advantages of this deal is that we already have established operations and infrastructure in Australia and Canada. For integration, we will streamline two operations within our existing team in Australia. The same applies to Canada, where our operations report to Bernard Wessels and his leadership team. As for Lihir in Papua New Guinea, it is a new market for us, similar to Indonesia. I have significant experience in managing operations in emerging markets, and there are parallels between our approach in Lihir and our previous successes in Indonesia. I hope this gives you insight into our integration strategy.

No, that's helpful. Tom, I think when you or the media discussed this transaction initially, it was expected to close around year-end or early 2024. However, I would anticipate that as this process has continued, the timeline may be delayed. Is it correct to assume that mid-2024 might be the earliest timeframe? I'm considering this from a modeling perspective.

Yes, Jackie, I think that's too far into the future to predict accurately. The work of those approval processes is work in progress, preferred timeframes will be shorter than what you just articulated.

Okay. That's helpful. And maybe just as a follow-up question or a related question. You mentioned a potential sanctioning decision or investment decision for Pamour in late '23. You've previously talked about Yanacocha Sulfides investment decision as well. Can you talk a little bit about what you're going to be looking for, either independently of this Newcrest transaction or potentially in light of this Newcrest transaction? What you're looking for in order to make a positive sanction decision on the projects that you've got in your portfolio today?

Yes. Thanks, Jackie. I'll address Pamour specifically. Pamour is a layback of an existing open pit. As we deplete the ore out of Hollinger in the middle of Timmins, we will move across to Pamour, which is also being dewatered as part of the closure plans. Pamour is essentially Hollinger's replacement in terms of providing lower-grade ore to supplement high-grade ore through the mill of Porcupine. It's a straightforward layback investment decision. We are diligently working towards this projection in the year end for the investment decision. We've already started the procurement of some long lead items for early deployment as the site dewaters. Regarding Yanacocha Sulfides, Dean Gehring, our Chief Development Officer for Peru, is still dedicated to understanding all options for the Yanacocha Sulfides. This includes assessing the potential of preserving the project and placing it on care or maintenance. Dean will continue diligently working through that process with the team in Peru, and a decision is anticipated in the second half of '24. That’s also independent of any external factors that may be occurring. Generally, if we were to successfully acquire Newcrest, I would reference our track record with Goldcorp, where we rationalized the portfolio within the first 12 months to ensure adherence to our capital allocation strategy, balancing the strength of our balance sheet with steady reinvestment in the business and leading shareholder returns. The mantra at Newmont for over a decade has been value over volume, and that would certainly apply if this transaction were to proceed.

Good morning, everybody. Thank you so much for taking my questions. I am just going to circle back, Tom, if I can just on the Newcrest potential acquisition. Just wanted to check with you, do we not require also Mexican approval for that as well, or is that not needed?

No, I don't believe Mexican approval is needed, Tanya. I think it's the jurisdictions in which they're operating. I'm just looking to Peter, and I don't believe that.

I don't believe so either, Tom.

Okay. So it's only the other four that you mentioned. That's helpful. Thanks. Just one last question to deal with. And then just on the shareholder vote, just to confirm that you need 66 and two-thirds votes of the Newcrest shareholders and 50%, plus 1 for Newmont? Just want to make sure that I have those right.

Tanya, just checking with the team, you broke up a little bit on this point. So we are checking percentage-wise; it’s 50% plus one for Newmont. We believe that is the case, and it's two-thirds for Newcrest; we believe that is the case. If that is incorrect, we will circle back and clarify that.

I wanted to discuss your coproduct guidance for the year. We were a bit too high on Q1, and as a result, you came in lower. Can you help clarify this? I know Rob covered some of it, but I think I missed parts. Overall, for Newmont, how should I consider the coproducts for the year? We had mentioned improvements at Peñasquito expected in the second half. I just want to understand how to view coproducts for Newmont as a whole.

Certainly, starting point in the coproduct will be certainly within guidance. There are no changes there. In terms of the weighting, if I look across Boddington and Peñasquito, this is where we have the coproducts, Tanya. Copper at Boddington, we expect high grades in the first half, potentially dropping into lower grades later in the mine life. So, copper production would be in the range of 52% first half and 48% second half. When looking at Peñasquito, we are weighted to the second half for silver, lead, and zinc. Silver is anticipated at around 44-56 first half to the second half; zinc at about 40-60 first half to second half; and lead at around 45-55 first half to second half. The geo for the year certainly remains within the guidance ranges that we provided.

And then if I could just finally ask maybe for your thoughts about Mexican law or changes thereof and what your thoughts are and how you are reading into that, please? And thank you.

Yes, thanks, Tanya. Maybe for others on the call that might not be following Mexico as closely. Just in the last week or so, Congress in Mexico approved an amendment to a version of an initiative that’s around forming a legal framework for the mining industry. It's gone through Congress, and the legislative process continues towards the Senate for further debate and discussions. There remains uncertainty surrounding the scope of the reform, making it difficult to speculate on the impact it may have on the mining industry or specifically on Newmont. We are monitoring this closely as it's being conducted, conducting our regular reviews of what has been proposed in that initiative. We are working with the Mexican mining chamber, which has taken the lead on this issue on behalf of the mining industry in Mexico. It is an important legal reform, and we expect, and hope, the Senate promotes some open and constructive dialogue with all stakeholders involved. That's not limited to the mining companies but the communities, the local and municipal governments, and the lawmakers responsible for reviewing this initiative. It's still early days; there's a long way to go. Our expectation and hope are that there is critical debate focused on improving circumstances in Mexico.

Is your understanding that whatever claims you have in effect would be grandfathered for any changes on tenure, etc.?

That's our understanding, Tanya. We are working to ensure we fully comprehend that. It’s primarily about future concessions rather than affecting current ones.

Both related to the Canadian operations. Rob, could you elaborate on the improvements in labor availability? Is the situation more or less resolved now? Do you have the right number of people on-site across the Canadian operations?

Yes, we do. We're really focused in two areas, with very strong recruitment, and we have been able to do that very successfully across the three operations. Additionally, we focus on ensuring that our current workforce is consistently attending work. So there is a strong emphasis on managing absenteeism, and those initiatives are paying off significantly. The situation we had last year is vastly different this year. We are in good shape.

Okay. Good. That's good to hear. And then as a follow-up on the Canadian operations, it sounds like the milling operations, mining operations, lots of productivity improvements year-over-year, but the ASIC remains elevated. Is there something that's part of the equation that maybe we're missing? Is it just higher sustaining CapEx this quarter?

I'll touch on the first issue that you mentioned. The performance in Canada has been very, very positive across the board in terms of development meters and material movement, which we've been very pleased with regarding physical performance. This also relates to how well the plant operates, recovery, and solution losses, etc. Overall, we are satisfied with productivity metrics, and that also corresponds with how effective we are in underground operations. Brian has some detailed insight concerning the ASIC.

Yes, thank you, Rob, and thanks for the question, Fahad. I think as it relates to Musselwhite, if you look at our earnings release, our ounces sold were lower, and our sustaining capital is slightly higher for the quarter. That's largely in line with what we expected for Musselwhite for this period, and that is what drove the higher ASIC.

My first question pertains to the overall strategy and the potential acquisition of Newcrest. You mentioned that your operations are scalable, and I'm trying to understand if we should take that to mean that upon acquiring Newcrest, your plan would be to manage their 2 million ounces of assets alongside your approximately 6 million ounces, resulting in a total of about 7 million ounces produced. Or do you foresee some rationalization of assets in your future strategy?

Anita, I think there are two parts to answer that question. We have an operating model that is scalable, able to integrate the existing five operations of Newcrest with our 12 managed operations and manage those operations safely and effectively. However, our focus remains on value over volume. We still have substantial work to undertake in the context of Newcrest, and it would be inappropriate to comment specifically given it's a live engagement. We do look back at our playbook and our experience with Goldcorp, where we divested KCGM, Red Lake, and Continental Gold within the first 12 months, garnering $1.5 billion in proceeds. As we progress through our due diligence on this engagement, our focus on rationalization of the portfolio, the value over volume strategy as well as the potential synergies will remain paramount.

Sure. Okay. Remind me of the divestitures that you did with the Goldcorp transaction. I think there were just two, right? Red Lake and...

So those divestitures included Red Lake, our 50% share in KCGM, and Continental Gold in the Buriticá project in Colombia. We completed those three divestments within the first 12 months, totaling $1.5 billion. Over the last four years, we have also finalized our continued rationalization of our noncore equity portfolio with Triple Flag being the last piece of that. This has generated over $700 million in proceeds during that timeframe.

Okay. And then I guess my next question would be, it's been about four years since the last major transaction. If this deal were to close, do you think you'd be done for a while, or would you be looking to do something else, I guess, I thought I’d ask.

Thank you, Anita. I probably can't comment on specifics due to the live engagement. We will remain disciplined in our decisions regarding whether this proceeds or not. If we are successful, it will involve considerable effort on integrating and delivering on synergies. If this acquisition occurs, it will be a transformational endeavor. Our focus will solely be on fulfilling our commitments, and we possess the experience to manage that.

I have one more question. This is not related to the transaction, but more about operations. I noticed you mentioned in your ASIC commentary that costs were higher due to lower volumes and royalties from the higher gold price. That's a good issue to have. Regarding the lower consumables and inputs, can we interpret that as some relief from input cost pressures? What should we expect for the remainder of the year in terms of unit costs, rather than volume?

Sure. Thanks, Anita. The lower consumables were primarily due to the fact that Tanami was down for 32 days due to weather impacts in the Northern Territory. That's the main contributor to that Q1 explanation for consumables in terms of costs. As you've mentioned, the Q1 unit cost is driven by the 21% weighting in the first quarter. As we look to the end of March and consider the remaining nine months, our assumptions around inflation across our cost base, which is primarily labor, consumables, and energy, remain consistent and are holding. We're monitoring closely, but we're not observing any significant changes from our assumptions.

Okay. So you're good for landing at the midpoint of the guidance range for the year at this point?

Yes, still on track to land on that midpoint of our guidance, as you mentioned.

Tom, I just wanted to ask about your views on the safety culture at NGM and what improvements you envision.

Good morning, Greg. I'm going to kick off, and Rob spends time updating Peter at NGM every couple of weeks. We maintain a close relationship, focusing on improving safety performance rather than solely on production metrics. It's important to emphasize a chronic unease regarding safety performance. We've had periods free from fatalities as an organization, yet we continue to average a significant potential event every ten days. While we do not have an in-depth knowledge of operations we do not manage, we have many practices we can share with all mining companies to foster safety improvements across the industry.

Thanks very much, Tom. To build on that, Greg, we are always open to sharing our extensive learning journey, filled with lessons that have led to the systems we've developed. We've been transparent with our colleagues at NGM. They have an excellent team dedicated to improving safety despite facing challenges. Conversations we've had with them involve sharing what has worked for us and collaborating on best practices. They've been pro-active about addressing safety culture.

And Tom and Rob, your views on the safety culture at Newcrest, if you have any?

Yes, Greg. It is essential to conduct confirmatory due diligence; one component involves site visits. Getting senior leaders on-site allows them to gain a comprehensive understanding of the culture, including the safety culture. This is an important part of our due diligence process. While I cannot comment on this specific engagement, it is crucial to our decision-making process. We ensure senior leaders are present to assess safety culture.

All my questions have been answered. Congrats on the good quarter.

I just wanted to touch on the issues you talked about in Western Australia. I feel that it was important enough to feature in your conference call, so we should probably delve into that a little more. I do recall meeting the gentleman appointed to lead that initiative. But it's no secret that Newcrest has found itself at the center of some of these issues. I'm trying to understand how you propose to improve operations while also addressing the hot-button issues of sexual harassment and bullying. I believe Newcrest has a program dubbed “Respect at Work,” but I’m unsure if any tangible results have emerged yet. How do you plan to address these matters?

Yes, thank you, Anita. This is indeed a critical question. Alex Bates is responsible for the initiative, spending time at each of our sites, conducting focus groups, and engaging in one-on-one discussions. These issues are present in society at large. Our engagement has revealed that every workplace, including ours, and across the mining industry was affected. We are committed to initiating behavioral changes to improve workplace culture, focusing on empowering individuals in positions of privilege to lead these changes. This work is crucial not just internally at Newmont but also if we were successful in acquiring Newcrest, we would apply similar approaches.

Thanks for the question, Anita. I think, operator, is that it for questions?

Thanks, operator, and thank you, everyone, for your time this morning, and please enjoy the rest of your day. Thanks all.