In the second quarter of 2023, Newmont's President and Chief Executive Officer, Tom Palmer, joined by his executive leadership team and the newly appointed Chief Financial Officer, Karyn Ovelmen, held an earnings call. During the call, Palmer discussed the company's cautionary statement, strategy, and financial results. Newmont produced 1.2 million ounces of gold and 256,000 gold equivalent ounces, generating nearly $1 billion in adjusted EBITDA and more than $650 million in cash from their continuing operations. They made four important decisions during the quarter to safeguard their workforce, protect long-term value, and position Newmont for successful performance.

Newmont made three decisions during the quarter: to suspend operations at Peñasquito due to a dispute with the Union leadership, to evacuate the Éléonore mine due to wildfires, and to pause mining at Cerro Negro for two weeks to complete important safety inspections. The company is encouraging the Union leadership to cease strike action and return their members to work, and is committed to protecting the long-term value of the operation and the health and safety of their employees.

At Akyem, the decision was made to process lower grade stockpiles to optimize the mine plan and maximize ore extraction. Higher gold production is expected in the second half of the year from Subika Underground, Ahafo, Cerro Negro, and Tanami, with higher grade ore at Akyem. This, combined with higher production from joint ventures, will help the company meet its full year guidance. The company ended the quarter with $6.2 billion in total liquidity and declared a dividend of $0.40 per share. The acquisition of Newcrest is expected to be completed in the fourth quarter, and the Yanacocha Sulfides project was deferred in June.

Newmont recently promoted Suzy Retallack to the role of Chief Safety and Sustainability Officer, reporting directly to the CEO. She has over 20 years of experience in driving value-based decisions and has been instrumental in leading the delivery of a step change in Newmont's safety performance in the last five years. In her new role, she will focus on improving the company's performance in the areas of environment and social responsibility, as well as creating workplaces that are free from harassment, assault, bullying, and discrimination.

In the second quarter, Boddington increased gold and copper production, while Tanami doubled gold production. At Akyem, the team is working to prioritize safety and optimize the mine plan to improve grades by 35% in the third quarter. These investments will help the sites meet their 2023 production guidance.

In the second quarter of the year, Ahafo South achieved higher production levels than expected due to access to higher grades from the open pit. The Ahafo North project is making progress, with the highway relocation and new mining fleet in place. In Canada, the workforce was evacuated due to a nearby forest fire, and production activities are now safely ramping up. Porcupine delivered a steady performance and is expected to increase production in the second half of the year due to higher grades from the Hollinger pit and Borden Underground. The Pamour project is also progressing and a full funds investment decision is expected later this year.

In the coming weeks, the commissioning of a new water treatment plant will enable the dewatering of the premarket and the commencement of pre-stripping. Musselwhite is progressing planned development activities to increase scope availability and increase tonnes mined and grades. Cripple Creek and Victor have seen higher grade and strong recoveries from their heap leach facilities. Yanacocha is beginning to realize the benefits from injection leaching technology. Merian is on track to deliver higher grade from the Maraba pit. Cerro Negro is expected to increase tonnes mined and grade as the underground ramps up to full productivity and San Marcos is expected to reach commercial production in late 2023. Peñasquito has suspended operations while they focus on resolving a dispute with the union leadership.

Karyn Ovelmen joined Newmont in May and was impressed with the company's clear and consistent strategy, leading approach to safety and sustainability, its global diverse portfolio of assets and deep project pipeline. Newmont will continue to abide by the fair and equitable agreement with the union and will communicate directly with employees and union leaders to find a resolution to the dispute. Karyn looks forward to Newmont's strong second half and presenting the financial results.

Newmont delivered $2.7 billion in revenue in the second quarter with an adjusted EBITDA of $910 million and cash from operations of $656 million. This included nearly $250 million in tax payments and over $600 million in capital spend. The company maintained a strong cash position with $3.2 billion and an attractive leverage ratio of 0.7 times net debt to adjusted EBITDA. They reported a second quarter adjusted net income of $0.33 per diluted share.

Newmont declared a dividend of $0.40 per share and has maintained a dividend yield above 3% for 11 consecutive quarters, the highest dividend per share in the gold sector. Tom Palmer has been engaging with stakeholders such as employees, shareholders, local communities, and government leaders to ensure the benefits of the transaction and Newmont's strategic rationale are well understood. They have already received clearance from the Canadian government and Tom visited Papua New Guinea to meet with government officials. They remain excited for the opportunity to operate Lihir and develop the world-class Waihi gold boom project.

Tom Palmer is discussing inflationary pressures and how they are expected to evolve in the second half of 2023 and 2024. He states that labor costs, both employee and contracted services, have stabilized and are expected to remain stable for the rest of the year and into next year. Materials and consumables, such as reagents, cyanide, explosive, and steel for grinding media, are consistent with what was expected. Natural gas prices have decreased, which is resulting in lower prices for cyanide and explosives.

Tom Palmer is expecting to provide a view of 2024 for the combined portfolio, including the five Newcrest assets, once the regulatory approvals, shareholder votes, and integration planning are complete. He is also working towards providing three to five-year guidance beyond that in the February timeframe.

Anita Soni asked Tom Palmer if the independent adviser for Newcrest had reached a conclusion yet and if the grades for Musselwhite had improved by 30% in tons mined and 40% in grades. Tom Palmer replied that the process was still in train but on schedule and that the improvement in grades was for Q3.

Tom Palmer states that Musselwhite will have a consistent grade and increasing volume throughout the third and fourth quarter. Anita Soni then asked about Ahafo, which saw a 35% uptick in grades in Q3. At Cerro Negro, there will be a 30% increase in tons mined and 50% increase in grade, with the majority of this increase being seen in the fourth quarter.

Tom Palmer explains that Cerro Negro has seen a consistent step-up in grade in the third and fourth quarters, and the ability to access ore has increased, particularly with the extraction of ore from San Marcos for the first time. At Ahafo, the stars are aligning with high grades and tonnes coming from both open and underground mines. The fourth quarter is expected to be strong at Ahafo. There is no impact on the cost structure of Cerro Negro going forward due to the pause in mining.

Newmont Mining took the time to ensure that their expectations and conditions were clear and understood in the remote Cerro Negro mine in Argentina. This was done to make sure that the mining teams were prepared to enter the second half of the year, which would involve an increase in grade and tons. This was to ensure that best practices were executed at the site and that no additional costs would be incurred.

The union at Peñasquito will be going to pay the workers on June 8th. Tom Palmer and Mike Parkin discussed the stream delivery of silver and if there was any minimum delivery that they were tied to. They will be getting back to the team to run it to ground and let them know the details.

Tom Palmer explains that the union members who are on strike are not being paid by the union, and that no back pay will be provided. He further explains that this has created a ripple effect, with 2,000 workers, a larger contractor workforce, and an extended community of 28,000 people all not receiving wages or benefits. He encourages the union to get its members back to work so that wages can start to be paid again. In response to a question from Tanya Jakusconek, he states that the union is not paying workers and that the cost of care and maintenance will be taken out of the operating costs.

Tom Palmer explains that the company incurred $23 million of operating costs and $15 million in depreciation due to the suspension of operations in June. He also explains that the company is expecting a stronger fourth quarter due to wetter weather in the third quarter, and that Pueblo Viejo, Nevada Gold Mines, and Tanami are all expected to contribute to the second half performance. Additionally, Merian is expected to have a stronger second half, with consistent performance across both the third and fourth quarters.

Tom Palmer explains their supply chain strategy of having long-term strategic contracts and becoming price takers at a competitive price. This helps alleviate the volatility of price increases or decreases and allows for the inventory to eventually flow through the cost structure. Tanya Jakusconek then asks about the inflationary release they are seeing and if they are seeing cyanide prices coming down and when they will renegotiate at the lower prices.

In the second quarter, all the concentrate from Peñasquito has been sold and recognized, and there is only a small stockpile of concentrate left on site. Tom Palmer confirms that there will be some benefit from this in the third and fourth quarters.

Tom Palmer explains that the Tanami mine will see a step-up in volumes and grades in the third and fourth quarters due to the disruption from the weather in the first half. He also states that the grades will be consistent with what they have seen historically. Anita Soni asks about the spending at the different projects.

Tom Palmer provides an overview of the progress on the Tanami and Ahafo North projects. At Ahafo North, the work is in the process of gearing up, with land clearing and equipment being brought in, followed by pre-strip work and civil works. At Tanami, the critical path item of the shaft is underway, as well as most of the surface work. Underground excavation is complete, and construction crews are being mobilized to build out the conveyors, crushers, and other supporting infrastructure.

Tanami is actively working on a number of different projects, including Ahafo North, which is progressing well. Rob Atkinson explains that they have secured supplies and done engineering for both projects, giving them a large degree of confidence. The biggest challenge is shaft building, where they are dealing with patches of overbreak.

Tom Palmer confirms to Mike Parkin that there is no minimum payment on the silver stream. He then thanks everyone for attending the call and encourages them to enjoy the remainder of their day.

This summary was generated with AI and may contain some inaccuracies.