Newmont Corp (NEM) — Q3 2023 Earnings Call Transcript

Thank you, operator. Good morning, everyone, and thank you for joining Newmont's Third Quarter Earnings Call. Today, I'm joined by my executive leadership team, including Rob Atkinson and Karyn Ovelmen, and we'll all be available to answer your questions at the end of the call. I'd also like to introduce Natascha Viljoen, who officially joined the Newmont executive leadership team at the start of this month. Natascha is a seasoned industry leader and brings more than 30 years of technical, operational and executive leadership experience across a diverse range of commodities, and we are very excited to have her join our team at Newmont. Before we begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. During the third quarter, we continued to execute on our long-term strategic plan, underpinned by a very clear and focused strategy. We are leveraging our leadership and collective experience, along with the strength of our global portfolio and operating model to build a resilient and sustainable future for Newmont. Our pending acquisition of Newcrest is a significant event for our industry. It combines two of the sector's top senior gold producers to set the new standard for sustainable, responsible gold and copper mining. I think this is a very exciting and transformational time for Newmont and all of our stakeholders. But before we provide an update on the Newcrest transaction and what's to come, I'd like to start with a review of our safety performance. As a company, we have been on a very intentional and significant safety journey, and we are proud that Newmont has not had a fatality in 5 years. During this time, we redesigned our fatality risk management system to ensure our standards and critical control verifications were focused on risks and behaviors that could result in a fatality. We have completed more than 1.6 million interactions by our leaders in the field that were focused on the critical controls that must be in place at all times to prevent fatalities. We modified the safety targets in our annual incentive program to deliberately move away from the traditional lagging personal injury rates to the leading metrics, focused on fatality risk reduction and fatigue management. And we focused on doing a few things really, really well, including pre-start meetings, pre-task hazard assessments and infield verifications. As a consequence of these actions, we have experienced a significant improvement in our safety performance, which is evidenced by the metrics you see here on this slide. Whether health and safety is an area where you must always maintain a sense of chronic we still experience at least one significant potential event every eight days. Each and every one of these are an opportunity to learn from and improve because the safety of our workforce must be considered in everything that we do, every hour, every shift and every day. Turning to our quarterly highlights. During the third quarter, Newmont produced 1.3 million ounces of gold and 10,000 tonnes of copper, generating $933 million in adjusted EBITDA and over $1 billion of cash from continuing operations, a 53% increase over the prior quarter, and we declared a dividend of $0.40 per share from our established framework. Over the last few months, we achieved a number of important milestones at our key development projects, including fully mining the upper section of the new production shaft at Tanami in Australia, receiving full funds approval for the Pamour project Porcupine in Canada and reaching commercial production at the San Marcos deposit at Cerro Negro in Argentina. Importantly, earlier this month, we also reached a resolution with the union at our Peñasquito mine in Mexico. And we are now focused on safely returning our teams to work and ramping up operations at this Tier 1 polymetallic mine. Throughout the negotiations to resolve this issue, we maintained a strong position and held steadfast to our values, honoring the collective bargaining agreement that we had in place and ensuring that we protected the long-term value for this mining operation, our workforce, local communities and all of our stakeholders. This unnecessary strike has caused significant hardship for many, many people. And our focus this quarter, we are on the safe ramp-up of our operations, along with the seamless integration of the Newcrest assets into Newmont's global industry-leading portfolio. Now that we have a resolution to the strike at Peñasquito, we are updating our outlook for the remainder of the year to incorporate the following three impacts. The first is to reflect the suspension of operations at Peñasquito from early June to mid-October. The second is to reflect the lower than anticipated production from both Nevada Gold Mines and Pueblo Viejo. And the third is to reflect lower throughput at the Ahafo mill, and Rob will provide some more details on these matters in a moment. So for 2023, we now expect to produce 5.3 million ounces of gold from the current Newmont portfolio, with a resulting all-in sustaining cost of $1,400 an ounce. As a reminder, our full year results for 2023 that we will report in late February next year will incorporate around seven weeks of production from the five acquired Newcrest assets with the transaction currently on track to close on Monday, the 6th of November. I'll now turn it to Rob and then Karyn to take us through the quarterly results and the important work ahead to deliver a strong fourth quarter, then I'll provide an update on the Newcrest transaction and what will be the focus of our integration efforts from day one. Over to you, Rob.

Thank you, Tom, and good morning, everyone. I'll begin my discussion around the high-margin Tier 1 assets in our portfolio today, starting with Boddington. During the third quarter, I had the opportunity to visit Boddington and spend time with the team as they continue to ramp up the planned waste movement in the North and the South pits and prepare for the planned mill maintenance shutdown in the fourth quarter. Laybacks are progressing well, and Boddington delivered solid production in the third quarter as expected. The strong quarterly performance has helped to offset the impact from mill maintenance and unusually wet weather. Despite the heavy rainfall in the third quarter, effective utilization for the autonomous whole fleet has improved significantly compared to this time last year. Funds mined are expected to increase in the fourth quarter. And I'm pleased to say that we have successfully completed the commissioning of a further five new Cat autonomous haul trucks to accelerate stripping in 2024 and position this cornerstone gold copper mine to reach higher grades in 2025. Turning to Tanami. Our Tier 1 mine in the Northern Territory continues to deliver consistently strong results following the record wet weather and extended flooding experienced in the region during the first quarter of the year. We achieved record mill throughput in August, beating the previous record we set in March of this year. And we continue to expect to reach the year's highest rates and production levels in the fourth quarter. However, we are closely monitoring the impact and the status of the very large wildfires currently burning in the immediate vicinity of Tanami and in the Northern Territory, and we will continue, as always, to prioritize the health and the safety of our workforce. We also continue to progress our second expansion project at Tanami, and I was encouraged to see the headway the team is making during my recent visit. We've achieved a significant milestone in the concrete lining of our 1.5 kilometer deep shaft, fully aligning the upper sections and removing the mid-shaft. And as is typical with projects of this size, we will review the project plan as we commence the lining of the lower sections, taking into account the work that has been done so far, the current ground conditions and the overbreak needing to be mitigated in the lower section of the shaft. Once complete, this project will deliver significant ounce and cost improvements, further strengthening the already strong margins at our Tier 1 operation at Tanami, and we look forward to providing an update with our guidance in February of next year. Turning to Ahafo. As Tom mentioned, third quarter mill throughput was impacted by routine condition monitoring by our asset management team, which identified hairline fractures to one of the large grinding mills at Ahafo. To reduce any further deterioration and to prevent a catastrophic failure, we made the decision to operate at less than full capacity, bringing throughput to around 60% for the third quarter. We have in October swapped the gut tiers between our two milling circuits at Ahafo to ensure our most productive milling circuit is able to run at 100%. This will allow Ahafo to run at approximately 80% until we again reach full processing rates in the second quarter of 2024 when we will install a brand-new upgrade. Also, during the quarter, Ahafo accessed higher-grade ore from Subika Underground and successfully commissioned the replacement conveyor ahead of schedule and below budget. The Ahafo North project continues to progress as planned, and we have access to all critical parcels of land to commence construction of the processing plant and mine services facilities. Airports are ongoing, heavy mining equipment is being assembled and commissioned, contractors are fully mobilized, and we remain on track to commence pre-stripping of the first mining area called the pit in the fourth quarter of this year. Turning to Peñasquito. As Tom mentioned in his opening remarks, we reached a definitive agreement with the union and received approval from the Mexican Labor Court on October 13. We have safely restarted operations, and the ramp-up is progressing well so far. We are anticipating a return to full productivity in the next two to three weeks, and we have restarted waste stripping in the Peñasquito pit and are now feeding the crusher with ore from the Chile Colorado pit. We are importantly also continuing to strongly focus on the engagement with our workforce. This unnecessary strike caused significant hardship for all of our employees, contractors, communities, suppliers and customers. Peñasquito is the largest employer in Zacatecas with a direct workforce of more than 5,000 and another 28,000 people in neighboring communities who are part of the mines local and national supply chain, service providers and contractors. As we look ahead to the exciting and profitable future for Peñasquito, we will continue to honor our commitments, work closely with all of our stakeholders with the law and the collective bargaining agreement and work to protect the long-term value of this Tier 1 polymetallic mine. Moving to our non-managed joint ventures. Through our joint venture partnerships, Newmont has an interest in four Tier 1 assets Cortez and Turquoise Ridge. The joint ventures are core to Newmont's portfolio and contributed 352,000 ounces or 27% of attributable gold production in the third quarter. As Tom mentioned, reported performance from our non-managed operations has been below expectations for the year, impacting our ability to achieve our production and cost targets for 2023. We have adjusted our projections for both Pueblo Viejo and Nevada Gold Mines and look forward to an improved performance in the fourth quarter from our joint venture partners. On top of the 800,000 ounces of gold produced from our Tier 1 operations and joint ventures, the remainder of Newmont portfolio contributed approximately 500,000 ounces of profitable gold production, an increase of more than 100,000 ounces compared to the second quarter, and we anticipate solid results from these efforts through the rest of the year. Before I hand it to Karyn, I'd like to take a moment to cover a few highlights from our development projects we are currently executing. On top of the achievements that I already noted at our second expansion at Tanami and Ahafo North, we also achieved key milestones at Cerro Negro and Porcupine. At Cerro Negro, we declared commercial production for San Marcos across the six ore bodies associated with this exciting district expansion. This opens up a further 650,000 ounces of high-grade gold, which will be mined over the coming 10 years. This milestone was delivered on time and on budget, and we expect to start realizing the benefit from these high-grade stopes in the fourth quarter of this year. At Porcupine, the Pamour project has been approved for full funds by the Board. This opens up a further 2.1 million ounces of gold and will be mined over the coming 11 years, which helps extend the Porcupine complex operational life to at least 2035. Our mining team will commence pre-stripping in the fourth quarter and are tracking well to produce in 2024. And finally, we advanced our underground project to Akyem to the feasibility stage, where drilling from the surface has already delivered results that are beyond our initial expectations. And with that, I'll pass it over to Karyn to cover our financial results.

Thank you, Rob. Let's get started with the financial highlights. During the third quarter, revenue was $2.5 billion at a realized gold price of $1,920 per ounce, and adjusted EBITDA was $933 million, which was up 10% from the third quarter of last year, driven by higher gold prices and lower direct operating costs. We also generated $1 billion of cash from operations and $397 million of free cash flow for the quarter, which is net of more than $600 million of capital spend as we continue to move through a period of significant reinvestment back into our business. And we closed the quarter with a steady cash position of $3.2 billion and a leverage ratio of 0.7x net debt to adjusted EBITDA. From a financial standpoint, our goal is to maintain a best-in-class investment-grade balance sheet while funding value-accretive projects and delivering healthy returns. And in recognition of Newmont's ongoing balance sheet strength and financial flexibility, I'm pleased to say that we have received a first-time A- rating from Fitch with a stable outlook. We also maintained solid margins in the third quarter, despite the challenges that Rob mentioned at Peñasquito, Ahafo and our non-managed joint ventures. Third quarter GAAP net income from continuing operations was $157 million or $0.20 per diluted share. Adjustments this quarter included $0.14 related to revisions in reclamation and remediation plans at former operations, $0.05 related to unrealized mark-to-market losses on equity investments, $0.02 related to transaction costs associated with our pending acquisition of Newcrest and $0.05 related to tax adjustments and other items. Taking these into account, we reported third quarter adjusted net income of $0.36 per diluted share. As a reference for those modeling, included in our quarterly results are $131 million in operating costs and depreciation at Peñasquito. This quarter, we declared a dividend of $0.40 per share, or $1.60 per share on an annualized basis. This dividend was declared within our established framework calibrated at a gold price of $1,700 per ounce and in line with our 2023 dividend payout range of $1.40 to $1.80 per share. Newmont has paid over $5 billion in dividends since closing the Goldcorp transaction in 2019, demonstrating our commitment to our shareholders. On the close of the Newcrest acquisition, Newmont will integrate five new operations into our robust global operating model. In February of next year, we expect to provide our 2024 outlook for the combined company with our fourth quarter and full year results. Consistent with our process, our outlook will inform our 2024 dividend payout range, which we will calibrate within our established dividend framework. As a reminder, we assess the variable portion of our dividends annually in alignment with the business planning cycle, projected cash flows and the current macroeconomic environment. Similar to this year, our 2024 dividend payout range will apply to our fourth quarter dividend to be declared in February and will be reviewed and approved by our Board of Directors each quarter. For a longer-term view of our portfolio, we will apply a disciplined and thoughtful approach to setting market guidance for the combined company. We expect to provide our long-term outlook after we've had some time on the ground with the Newcrest assets and following our annual strategy session with our Board of Directors, which typically takes place in June. We look forward to providing more information on the exciting opportunities ahead for both current and future stakeholders. And with that, I'll pass it on to Tom for an update on the Newcrest transaction.

Thanks, Karyn. The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and all our other stakeholders. Through an unrivaled platform, featuring the industry's best talent, growing the highest concentration of Tier 1 assets in the most favorable jurisdictions, Newmont is uniquely positioned to generate superior returns for decades to come. Recognizing the strategic rationale to create the industry's strongest portfolio of world-class gold and copper assets, 96% of votes cast by Newmont shareholders and 93% of votes cast by Newcrest shareholders were overwhelmingly in favor of this transformational transaction. All of the regulatory approvals and shareholder votes now secured, we expect to close the transaction on Monday, the 6th of November, and set the new standard for gold and copper mining across the industry. Following the close of the transaction, the core of our portfolio will be ten Tier 1 assets, representing more than half of the world's top-tier gold mines. And these assets will have the scale, mine life, cost profile and resilience to position Newmont to deliver strong and stable returns for several decades. Leveraging the learnings from operating our current Tier 1 assets, along with our comprehensive asset strategy work, we will be applying the strength of our operating model, our people and our systems with the newly acquired Tier 1 assets in Lihir and Cadia as well as Brucejack and Red Chris in our emerging Tier 1 district of British Columbia. There is no doubt that Newmont will be operating the world's best gold and copper portfolio under one umbrella, benefiting from our existing portfolio, operating model, sustainability practices and disciplined capital allocation process. Every one of our assets is managed through our integrated global operating model, supported by a big bench of experienced leaders and subject matter experts with a track record of safely delivering value. And within this global operating model, we will have six regional business units, each led by a dedicated managing director. From the start of November, Natascha will assume accountability for our Australian business unit, led by Mia Gous; our North American business unit, led by Bernard Wessels; and Papua New Guinea, where we have Alwyn Pretorius returning to Newmont to head up this newly established business unit. Through early 2024, Rob will continue to have accountability for our African business unit, led by Dave Thornton; our Latin American and Caribbean business unit led by Mark Rogers; and our Peruvian business unit led by Rahman Amoadu. We are very fortunate to have Rob as a continuing member of our executive leadership team, particularly during this important integration period. Natascha and Rob will work together closely in the coming months, and both leaders will be pivotal in delivering synergies for the Newcrest acquisition and driving operational results that demonstrate our position as the benchmark gold equity. In just a few days, we'll be welcoming our Newcrest colleagues to Newmont. And on day one, my extended leadership team and I will be onsite across every Newcrest location. As we begin our integration work with the Newcrest team, we'll be focused on three key systems that have been fundamental to our success at Newmont. The first is our fatality risk management program, which is at the very core of our safety approach. And put simply, great companies do not kill people. Second is our Respect@Work program, a key benefit from bringing these two companies together is the alignment in our values and culture, in particular, around safe and inclusive workplaces. We have the opportunity to learn from each other with the programs we both have in place. Like many other companies in the mining industry, we know there are systemic issues that allow sexism, racism, discrimination, harassment and bullying to continue to be experienced in our workplaces. These disrespectful behaviors have no place at Newmont. And we'll be working together to take actions to create a workplace where everyone is welcome and safe. The third key system is our full potential program, which will commence rolling out at both Lihir and Cadia in November to support the delivery of our synergy commitments. Full Potential is a program that I have led at Newmont over the last decade. It is the most sustainable improvement program that I've worked with in my 35-year career in the industry, and it was key to delivering over $1 billion in synergies from our acquisition of Goldcorp some four years ago. However, Full Potential delivers much more than just cost savings and productivity improvements. It sustains and improves our culture by breaking down barriers and encouraging active participation, global collaboration, and sharing lessons learned across our organization. During our due diligence work back in May, we identified and committed to $500 million in annual synergies across three categories: G&A, supply chain and Full Potential. As we look ahead to the closing of the transaction and the delivery of these synergies over the first 24 months, we are very excited about the long-term value and opportunities it will bring to both sets of stakeholders and our combined workforce. This transaction creates the best possible collection of Tier 1 gold and copper assets in the industry, all supported by the industry's best talent, technical capabilities, sustainability practices, and disciplined capital allocation process. We'll also increase our investor outreach, welcoming shareholders from Australia that will form an important part of our shareholder base as we look to establish and then grow our listing on the ASX. We have a long history and a shared heritage in Australia, and we will be strengthening our presence in this key mining jurisdiction. We're upon the close of this transaction, around 30% of our revenues will be derived from Australia. We're looking forward to welcoming the experienced and talented team at Newcrest and providing our first integration update on the combined business for the first quarter of next year. And with that, I thank you for your time today and turn it over to the operator to open the line for questions.

You've all discussed the likelihood for the combined company to have lower production than a combined 8 million ounces annually. What is the urgency with which you intend to sell any noncore assets to reduce from that level and improve the overall combined portfolio?

Thanks, Lawson, for the question. In terms of it, as Karyn talked about in terms of us taking time to work through the longer-term outlook with more like a midyear then we will run a Capital Markets Day to share that, what we'll look to do almost immediately after close is we have a reserve and resource review team. We call it our 3R review. We have that team going in each of the five operations at Newcrest and establish the reserve and resources to the Newmont definition. And then with that reserve and resource review done, we're going to establish Newmont-based resource models and then start to develop our mine plans based upon previous best demonstrated performance and then have those start to convert into business plans, and then we'll iterate and work those. So we'll certainly work to reduce a 2024 budget for the combined portfolio, but we're going to take our time to really understand and work those mine plans to understand the potential of those operations, ensure we can deliver on those operations, but also understand projects across that portfolio and how they come together. So that's going to be work we will do diligently over the starting in early November for the first few months of next year. In terms of the full portfolio of 17 managed operations, as I've described in my remarks, Lawson, we can very comfortably manage those operations within our global operating model. Listen, this is an intensive purposes a bolt-on of five operations in the Newmont's operating model. Two operations in the Australian business unit. When I was running the Australian business units some years ago, I had that number and a couple more from memory, two operations in the North American business unit. Bernard Wessels is very capable to accommodate those two operations and manage them and then standing up our new business unit in Papua New Guinea. And as I mentioned, one of the very best leaders I've been work at Newmont, Alwyn Pretorius, who retired to go work on his family farm in South Africa, is coming back to Newmont and stand up that business unit. So someone who's very experienced having run very successfully our business unit in Africa some years ago and then our Latin American business unit. He understands the developing world, he understands Newmont and he is really well placed to stand up that new PNG business. So we will capably run those 17 operations and his team will look at where the opportunities might be to optimize our portfolio. We have a commitment of $2 billion over the first 24 months. That will be a combination of project resequencing, part of that business planning work that we'll do, but we'll also be looking to where the opportunity is to rationalize our portfolio. And we'll be looking at those operations that are Tier 2, and we have a number of Tier 2 operations in our portfolio. Several have the potential to grow to Tier 1, but we have a number that include and Tier 2 and work through a very structured process to think about how we might rationalize the portfolio. But we are very comfortable also to be able to run 17 operations in our business.

And if I could follow up just one final question on your Full Potential comments in your prepared remarks and synergies. Can you comment on which assets might get the greatest attention for that program post closing on the NCM side? And put another way, is there a Peñasquito in the NCM portfolio that could materially exceed expectations included in the initial synergy guidance?

Thanks, Lawson. The $500 million, $200 million is attributable to our Full Potential work. There are two Peñasquitos in the Newcrest portfolio, Lihir and Cadia. That's where we're focusing our time and attention of the $200 million. We see the order of $90 million coming out of Lihir as we think about the opportunities to improve the work we do around the mine, the basics of mining from blast and maintenance asset management work. So we're presenting the best ore consistently to that processing plant. We'll have people on the ground next month to start really getting in and understanding those opportunities that we saw during due diligence. I think we certainly plan to tell a story out of Lihir very similar to the story we've told out at Peñasquito. And then Cadia, the other very large Tier 1 operation in the Newcrest portfolio. We see opportunities in the processing plant. Big block cave mine, roughly 35 million tonnes a year coming out of that underground mine. The opportunities we see are to work the bottlenecks in the processing plant, the availability, the reliability, and getting consistent throughput through the crushing and grinding circuit so that we've got consistent to the service and then improve both throughput and recovery. Again, very similar to where we've worked Peñasquito with a big mill, crushing and grinding circuit with multiple planting service. So Peñasquito story and the Boddington story in terms of work in the mill is where we see the analogy or the analog to Cadia and then working on mine at Cadia is very similar to the work that Rob and the team led at Peñasquito to deliver significant improvement out of that mine to present a very hungry mill at Peñasquito.

My first question is about the issues that you had this year, how much all of the issues you've had that has led to the production downgrade today? How much does that follow into 2024? Obviously, Peñasquito doesn't. But can you just run through some of the assets and whether some of the issues run into 2024?

Thanks, Daniel, and good morning to you. I think it and thank you for staying up in Australia to listen in, and thank you for your coverage. But if you look at the big assets in the Newmont portfolio today, Peñasquito is now that we're up and running, we're very confident that there's been a reset of expectations with our workforce and the union that them. So we go into '24 very confident about the ability to the cost and productivity improvement safely at that operation. The impact on '24 is the mine sequence. So where we were in the mine sequence when the operations were suspended means that what we thought would happen in '24 will be different now. So polymetallic mine, so we're in the Chile Colorado pit, which is more on the other metals and gold. So we won't swing back into Peñasquito now; therefore, it will be the balance of metals that come out of Peñasquito that will be different in '24, and the gold equivalent ounces decreased. At Ahafo, we will be nursing the girth gear that's now on the mill. So there's two big SAG mills at Ahafo. The girth gear on the main feed to the process plant is two-thirds, and the throughput for the mill is now and that can run at 100%. We'll now nurse the girth gear with the hairline cracks on the small amount, about one-third of the throughput until the end of the first quarter, start of the second quarter of next year. So the processing plant at Ahafo will run at around 70%, 80% of throughput as we get through that very managed transition. There are probably the two impacts on our big Tier 1 operations we think in the '24. We still to see plants out of our non-managed joint ventures, they like about 30% of Newmont's portfolio today. At Pueblo Viejo, we're commissioning a very significant expansion to a pressure oxidation circuit. So as that is understood and plants are built in '24, that will reflect the latest information from that commissioning exercise. And then three big mines in Nevada and as you work through '23 and then understand impacts on '23 performance and what that means for mines other things in '24 potentially some impacts there that we'll learn about in the next couple of months as we work with our joint venture partners on those plants. So hopefully, Daniel, that gives you some color as to how we think about the impacts from '23 into '24. I think the important thing is that were all of the events we've had this year, all of that metal is still in the ground. And this is just a process of the time at which that metal present. None of those issues have any impact in terms of the reserves that we have, and it's just the timing at which they can be converted into metal and sold.

I understand there's a lot of moving parts here. But is it possible to provide some goalposts or some indication of what the cost structure looks like even just for the Newmont portfolio going forward? When we take a look at the numbers, fourth quarter, based on guidance, looks to be an annualized rate of 6 million ounces, which is, let's call it, average for the company, and the implied AISC is closer to about $1,350, which would be quite a bit higher than where the company was discussing costs at least for 2024 under the old structure. So I understand a lot of moving parts, but just anything on inflation or costs for some of the Newmont portfolio going forward.

Thanks, Josh. This year has been challenging due to various events that have affected our ounce production. Although costs have shown some slowing impact, our direct cost base aligns closely with our expectations for the year. Looking ahead to next year, that direct cost base appears stable, indicating no significant changes from the current levels. As we plan for next year, we see inflation stabilizing, keeping our direct cost base similar to this year. We will focus on our ounce profile for the combined portfolio, categorizing it into different segments for planning purposes. This includes our Tier 1 operations and emerging Tier 1 operations, alongside three non-managed joint ventures: Nevada Gold Mines and Pueblo Viejo. We will also consider how to manage our Tier 2 assets moving forward. Our discussions will help shape our business plans. In short, our direct cost base remains consistent with this year, and we plan to navigate the challenges we've encountered, such as bushfires and flooding, as well as strikes and manufacturing issues. Consequently, we expect the 2024 plan to reflect a stable profile for our operations and a consistent cost base.

Just have a couple that I just need some clarity on. Tom, can we just go back to the Newcrest merger that is pending? Can we just talk about Newcrest's reserves and resources? When you report your guidance in February of 2024 for the year and your reserves and resources, will you be adjusting those reserves and resources based on your inputs just like you did with Goldcorp when you took over? You've made adjustments from the reserve to the resource category? And if so, can you review with us some of the mines that we may see some shift? That's my first question.

Thanks, Tanya. Yes, you can expect a process similar to what occurred when we acquired Goldcorp. We will have a technical team on-site at those five operations during November and December to evaluate the reserves and resources for each one in line with our Newmont standards. We comply with SEC regulations, while Newcrest adheres to IFRS, which will lead to some differences in reserve and resource classifications. Additionally, Newmont maintains a higher standard for reserves. You will notice fluctuations in the announcements we make regarding reserves and resources, as we will report them separately for both companies due to differing definitions. We are working towards an update for the combined portfolio in February. It's also important to note that we had access to a data room for four weeks back in April and May to evaluate and submit a binding offer, as well as assess synergy values and portfolio optimization. Since that time, both companies have operated independently. We have a team planning for integration, but we haven't had access to additional Newcrest information. We will gain access to the reserves and resources, as well as mine plans, on November 6th, which will allow us to begin that work shortly.

So the first question is related to capital allocation. When you achieve the $2 billion in portfolio optimization, can you provide insights on whether that could support a dividend if necessary? Or do you believe you have other uses for that capital regarding reinvesting in your portfolio?

Thanks, Anita. The portfolio optimization will arise from two areas. One involves resequencing the projects within the combined portfolio, wherein we align the two portfolios. This will affect the cash directed towards development projects and reinvestments, leading to a change that will ultimately enhance the free cash flow. The free cash flow we generate will guide our decisions about adjusting our dividend framework. This optimization will enable us to generate free cash flow to support the dividend. Additionally, the proceeds from asset divestments will first be added to our balance sheet to strengthen it, after which we will decide how to utilize that cash. Reflecting on our Goldcorp experience, we will analyze our share price and assess our valuation. If we see an opportunity for share repurchases, we would discuss it with our Board. However, our priority will be to enhance and support the balance sheet of the combined organization with that cash.

Okay. Second question, just more a little more on the nitty-gritty. Looking at Boddington, is that an appropriate run rate this quarter? Is that kind of what you'll be doing in terms of throughput in grades as you go into 2024 and continue with that layback? Or will that become more, I guess, exacerbated and more stockpile use and more waste stripping happening?

Certainly, we are managing a significant level of sustaining capital, Anita. We are focused on acquiring five trucks to advance our operations, with access to these trucks allowing us to begin moving waste in the North pit. This will help open up both the North and South pits to access high-grade ore. Throughout 2024 and 2025, we’ll continue with more waste movement and process run-of-mine ore at the plant, while also beginning to replenish our stockpile. You can expect a transition into the typical cycle of increasing waste movement and stockpile usage, which will result in lower gold and copper production within the usual range that Boddington operates. You will notice these dynamics unfolding in 2024 and 2025 before we return to high-grade ore production.