The speaker, Tom Palmer, welcomes everyone to Newmont's Second Quarter 2024 Earnings Call and introduces his executive leadership team. He mentions the company's cautionary statement and provides an update on their efforts to improve safety systems following the loss of four colleagues. The company has initiated a comprehensive review and is focused on strengthening safety performance and operational effectiveness. The speaker then highlights the company's solid operational performance in the second quarter and their progress towards achieving their 2024 guidance.

In the second quarter, Newmont has achieved solid results which have allowed them to progress their capital allocation priorities. They have also made significant progress on their four key commitments to shareholders, including strengthening their position as a sustainability leader and creating a world-class portfolio focused on Tier 1 operations. In addition, they have generated significant cash flow and have received payments from the monetization of Batu Hijau and the sale of Lundin Gold financing facilities.

The company has made significant progress in its divestiture program, with expected earnings of $530 million by the end of the year and a goal to reach $2 billion in sales from non-core assets. They are also making strides in their capital allocation priorities and have achieved $100 million in synergies in the second quarter. They are on track to exceed their initial commitment of $500 million in synergies and have disbanded their back-office integration team. The largest value drivers for synergies come from their two new Tier 1 assets, Lihir and Cadia, with opportunities identified at both locations.

In this paragraph, the speaker discusses the recent completion of the full potential diagnosis phase at Cadia, where a team of experts identified initiatives expected to deliver over $100 million in value. The team is also working to optimize the mill circuit and increase average mill throughput. The company is on track to meet their initial $200 million commitment for the Full Potential program. They are also leveraging their combined scale to drive improved commercial outcomes and have achieved $60 million in synergies in the second quarter. They have a clear plan to reach $140 million in synergies by the end of the year and have already achieved 95% of their initial $100 million commitment for G&A synergies.

In the fifth paragraph, the speaker discusses the latest G&A synergies and how they have primarily come from labor rationalization and reductions in contractor spend. They expect to see lower unit costs in the third and fourth quarters due to these synergies and higher production volumes. The focus is now on operational and financial performance for the quarter, with a particular emphasis on the six managed Tier 1 operations. Tanami saw higher production and progress on the underground expansion, while Boddington reported consistent results and is expected to see higher production in the third quarter. Penasquito also saw higher production in gold and zinc due to higher grades and strong mill performance.

Production levels at the company are expected to remain steady in the third quarter, with a significant increase in gold production in the fourth quarter as mining resumes at the Penasquito site. The Ahafo team completed a major girth gear replacement ahead of schedule, which will lead to improved production in the third quarter. Production at Cadia is expected to gradually decline due to mining transitions, while at Lihir, heavy rainfall and a planned shutdown will keep production levels consistent in the third quarter.

The autoclave shutdown process is a complex one that involves shutting down the autoclave, inspecting and repairing the membrane and steel shell, and rebricking the structure. This is expected to be completed in the fourth quarter and will lead to an increase in gold production. The company is also working on four key projects, including the construction of a new mine in West Africa and expansions at Tanami and Cadia.

In the second quarter, Newmont reported strong financial results, with $4.4 billion in revenue and an average realized gold price of $2,347 per ounce. Costs were higher due to lower production volumes, higher royalties, and increased sustaining capital spending. Adjusted EBITDA was approximately $2 billion, and adjusted net income was $0.72 per diluted share. The most significant adjustment was a non-cash impairment related to the divestment process for North America assets. These assets are required to be evaluated and recorded at the lower of carrying value or fair value of cost to sell.

The company will continue to evaluate and adjust the value of assets held for sale. They generated significant cash flow and are working to improve margins. They expect higher cash flow in the second half of the year and are on track to meet their cost and production goals. Production is expected to increase in the third and fourth quarters and unit costs will be closely related to production.

The company has announced two divestments and expects to generate $530 million in gross proceeds by the end of the year. They have prioritized shareholder returns, repurchased shares and reduced debt. They have maintained an investment-grade balance sheet and declared a fixed dividend. The company remains committed to their four key commitments, including a review of their safety and risk management systems, and has safely delivered solid production in line with their full year guidance.

In the recent quarter, the company has made progress on their portfolio optimization commitments by monetizing their Batu Hijau deferred payment obligations and realizing $100 million in synergies. They have also demonstrated their commitment to shareholder returns, reduced debt, and strengthened their balance sheet. The company plans to continue delivering high production and improving their unit costs in the second half of the year, while also focusing on divesting non-core assets and allocating capital. The first question in the Q&A session focused on the timing and potential impact of the larger asset sales process, including Akyem, Telfer, and North American assets.

The speaker is discussing the closure of a chapter in their relationship with Batu Hijau, a copper mine associated with their company for 10 years. They mention the divestment process and the value it brings to their noncore portfolio. They also mention their broader portfolio optimization rationalization process, which is on track and involves four parallel streams. The first stream involves cleaning up noncore equity opportunities, such as the London Gold transaction and Batu Hijau. The second stream involves the Akyem project, which is in its final stages of the bidding process. The third stream involves the North American process, which is currently in Phase 1 with 67 active participants and 24 bids submitted.

The company has received bids for its assets in North America, including single assets and bundles, and is currently assessing them. The Telfer asset is also progressing well in the divestiture process, and there is confidence in the bids received. The company must follow a specific process and timeline for divestitures under U.S. GAAP. There are concerns about the tailings dam at Telfer, but the company has not received any feedback from potential buyers indicating that it would impact the value or ability to monetize the asset.

The company has been transparent about the tailings issues at Telfer mine, discussing them with regulators, workers, and potential buyers. They have a clear plan for remediation and are currently building stockpiles while the tailings facilities are being worked on. The TSS 7 and 8 dams are stable, and work is being done to prevent further erosion. The company has authorization to continue with a lift on TSS 8 before depositioning can resume.

The company is on schedule to start up Telfer in the fourth quarter after completing rehabilitation and lift work. The next question is from Daniel Major about the decision to start a buyback. The company plans to allocate around half of their free cash flow to debt reduction and buybacks, with a commitment over a 24-month period. The company has time on their debt and the Batu and Lundin transactions allow them to opportunistically make open market purchases. The run rate of the buyback going forward is uncertain, but the company was confident in initiating cash returns due to the gold price environment, operational visibility for the second half, and certainty on proceeds from divestments.

The pace of share buybacks will be determined by free cash flow and proceeds from divestitures. The company is confident in executing on their investments and will buy back shares as they realize these proceeds and free cash flow. They will also be opportunistic in managing their debt. At Penasquito, production of non-gold metals was strong in Q2 and is expected to be evenly distributed throughout the year, with a strong Q4 driven by grades as they enter a new pit. However, the company is currently mining in Chile Colorado, which has higher levels of zinc, lead, and other metals, resulting in higher production of these metals in the first three quarters. The company is progressing a pushback in the Penasquito pit faster than expected.

The company expects to see an increase in gold grades in the fourth quarter due to higher grades in the Penasquito pit. The second quarter saw good performance from ore coming from Chile Colorado, which could potentially lead to better lead and zinc production. The company is expecting a step-up in production in the second half of the year, with the majority of cost savings coming in the fourth quarter. The $130 million in synergies are expected to come from various programs, with the highest gold production also expected in the fourth quarter.

The company's non-managed joint ventures need to meet their commitments and have shown a strong fourth quarter. Direct costs have remained stable throughout the year, with a possible increase in the third and fourth quarters. The company expects to achieve $130 million in synergies, with a significant portion coming from supply chain improvements and contributions from the Lihir and Cadia mines. The split between G&A and supply chain is close to the expected breakdown.

Matthew Murphy from Jefferies asked about the share repurchase plan and how it will be affected by improving margins, future asset disposals, and the current $1 billion limit set for 2026. CEO Thomas Palmer responded that the company is committed to using $2 billion from divestments for share repurchases and debt reduction, and they will discuss extending the program with the Board as they near the end of the $1 billion plan. CFO Karyn Ovelmen added that free cash flow and divestitures will be the main factors driving the share buyback.

In this paragraph, Tom discusses the possibility of increasing CapEx in the future and emphasizes the company's commitment to disciplined capital allocation. He also mentions their long-term view and the importance of managing their portfolio of assets. Tom states that they will continue to allocate $1.3 billion towards reinvesting in the business each year and that this will not change. Another question is asked by Anita Soni, but it is not specified what the question is about.

Anita Soni asks about the working capital for the back half of the year, specifically in regards to the $600 million reclamation spend. Thomas Palmer defers to Karyn Ovelmen and Natascha Viljoen to answer. Ovelmen explains that the first half of the year traditionally sees adverse working capital changes, but they expect free cash flow to improve in the second half. The remaining $400-450 million of the reclamation spend will be weighted towards the fourth quarter. Viljoen confirms that they will continue mining at Telfer and have capacity in the plant to catch up on production. Soni asks about another asset that had working capital changes, possibly Lihir, which should unwind in Q4 when they ramp up production.

The paragraph discusses the impact of the Lihir acquisition on the company's financials, specifically the increase in carrying cost per ounce due to purchase price accounting adjustments. The company has reiterated its target of $2 billion from asset sales, which does not include proceeds from the sale of Lundin and Batu Hijau. The shutdown at Lihir is expected to last for four months, with the largest autoclave being down for 120 days. This will have a significant impact on the company's production and is reflected in their guidance for the year.

The company is experiencing the impact of the Lihir shutdown and expects to see higher production in the fourth quarter. There may be significant capital requirements for reclamation and remediation in the future, but these expenses will come out of working capital and have already been recorded on the balance sheet. The Yanacocha water treatment facility is the largest expense in this area.

The company does not anticipate any significant changes to their outlined plans and expects to spend around $600 million in total by 2024, with a higher amount in 2025. The Yanacocha liability is the largest in their portfolio, but they do not expect any other significant increases and anticipate it will return to historical levels in 2028-2029. The company aims to sell these assets to operators who will then take on the reclamation liabilities. This has been their practice in the past when divesting assets.

The speaker discusses how they have approached the acquisition of assets, such as KCGM and Red Lake, and mentions that the fourth autoclave will go down for service on August 1st. The next question is about depreciation rates on the Newcrest assets, and the speaker explains that they may vary slightly due to purchase price accounting adjustments, but should generally be stable. They also mention that taxes are paid in installments based on the budget gold price, but the current price is higher.

During a recent conference, a question was asked about the impact of the current metal price environment on payments. The response was that payments will start accruing in arrears and there may be catch-up payments in the future if metal prices continue to remain high. The conference ended with closing remarks from Thomas Palmer, who thanked everyone for their time.

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