Creating value by improving production and costs through
2025
Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the
Company) announced its 2021 outlook1 with attributable gold
production guidance of 6.5 million ounces and AISC2 of $970 per
ounce. Attributable gold production3 is expected to be between 6.2
and 6.7 million ounces per year in 2022 and 2023, increasing to
between 6.5 to 7.0 million ounces in 2024 and 2025 while improving
costs.
HIGHLIGHTS
- Attributable gold production: Production guidance is 6.5
million ounces for 2021 and is expected to be between 6.2 and 6.7
million ounces through 2023 and between 6.5 and 7.0 million ounces
longer-term through 2025.
- Attributable gold equivalent ounce (GEO) production from
other metals4: Co-product GEO production guidance is 1.3
million ounces for 2021, between 1.2 to 1.4 million ounces in 2022
and 1.4 to 1.6 million ounces through 2025.
- Gold costs applicable to sales (CAS): CAS guidance is
$750 per ounce for 2021, between $650 and $750 per ounce for 2022
and $625 and $725 per ounce for 2023; CAS is expected to further
improve to between $600 and $700 per ounce for 2024 through
2025.
- Gold all-in sustaining costs (AISC): AISC guidance is
$970 per ounce for 2021, between $850 and $950 per ounce for 2022
and $825 and $925 per ounce for 2023; AISC is expected to improve
to between $800 and $900 per ounce for 2024 through 2025.
- Capital: Attributable sustaining capital guidance is
$950 million for 2021 and is expected to be between $900 to $1,100
million longer-term through 2025. Attributable development capital
guidance is $850 million for 2021 and expected to average between
$600 to $800 million per year through 2025, which includes
development capital expenditures for Tanami Expansion 2, Ahafo
North and Yanacocha Sulfides.
- Returns: Industry-leading dividend and dividend
framework5 including an annualized $1.00 per share sustainable base
dividend with additional returns at higher gold prices. Completed
the remaining $200 million of the 2020 share-repurchase program in
the fourth quarter for an average cost of $45 per share for the
total $1.0 billion program. Newmont is on track to return more than
$2.7 billion to shareholders since January 2019.
- ESG Commitment: Directing $500 million to climate change
initiatives through 2025 targeted to support the reduction of
greenhouse gas emissions 30 percent by 2030 and goal of net zero
carbon by 2050.
“Newmont’s outlook remains strong and stable as we apply the
rigor and discipline of our proven operating model across our
world-class portfolio. Our five-year outlook reflects improving
production and costs as we continue to deliver value from superior
operational and project execution,” said Tom Palmer, President and
Chief Executive Officer. “Our strong financial position allows us
to continue investing in profitable, organic growth while
simultaneously returning cash to shareholders through our industry
leading dividend framework.” Tom Palmer, President and Chief
Executive Officer
1 Outlook guidance used in this release are considered
“forward-looking statements” and users are cautioned that actual
results may vary; refer to the cautionary statement at the end of
this release. 2 AISC as used in the Company’s outlook is a non-GAAP
metric - see end of this release for further information and
reconciliation to CAS outlook. 3 Attributable gold production
outlook includes the Company’s equity investment (40%) in Pueblo
Viejo but does not include other equity investments. 4 Gold
equivalent ounces (GEO) is calculated as pounds or ounces produced
multiplied by the ratio of the other metal’s price to the gold
price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver
($22/oz.), Lead ($0.90/lb.), and Zinc ($1.05/lb.) pricing. 5
Investors are cautioned that the Company’s dividend framework and
the annualized dividend level are non-binding, refer to cautionary
statement.
OUTLOOK
Newmont’s outlook reflects increasing gold production and
ongoing investment in its operating assets and most promising
growth prospects. The Company has included Ahafo North and
Yanacocha Sulfides in its outlook for the first time as the
development projects are expected to reach execution stage in 2021.
Additional development projects that have not reached execution
stage represent upside to guidance. All production, cost and
capital figures assume a $1,200/oz gold price.
Newmont’s 2021 and longer-term outlook assumes operations
continue without major Covid-related interruptions. Newmont
continues to maintain wide-ranging protective measures for its
workforce and neighboring communities, including screening,
physical distancing, deep cleaning and avoiding exposure for
at-risk individuals. If at any point the Company determines that
continuing operations poses an increased risk to our workforce or
host communities, it will reduce operational activities up to, and
including, care and maintenance and management of critical
environmental systems. Please see cautionary statement in the end
notes for additional information.
Newmont Production and Cost Outlook:
2021
2022
2023
2024
2025
Attributable Production (Koz)
6,500
6,200 - 6,700
6,200 - 6,700
6,500 - 7,000
6,500 -7,000
CAS ($/oz)
750
650 - 750
625 - 725
600 - 700
600 - 700
All-in Sustaining Costs ($/oz)
970
850 - 950
825 - 925
800 - 900
800 - 900
Attributable gold production is expected to be stable at 6.2 to
7.0 million ounces across the five-year period. The 2021 outlook of
6.5 million ounces increases from 2020 with a full year of
production at the five operations that were placed into care and
maintenance in 2020 due to Covid-related precautions. Production is
expected to remain between 6.2 and 6.7 million ounces per year in
2022 and 2023, respectively. This is supported by a steady base
from Boddington, Tanami, Ahafo, Peñasquito and the Company’s equity
ownership interest in the Nevada Gold Mines joint venture.
Production is further enhanced by the Company’s eight other
operating mines and its equity ownership in Pueblo Viejo.
Production is expected to increase to between 6.5 and 7.0 million
ounces due to the inclusion of profitable production from Ahafo
North and Yanacocha Sulfides and reaching higher grade in North
America.
Costs are expected to improve throughout the five-year period
with continuing Full Potential improvements and ongoing investment
in profitable projects. 2021 CAS is expected to be $750 per ounce
with a full year of production at the five operations that were
placed into care and maintenance as noted above. CAS is expected to
be between $650 and $750 per ounce for 2022 and $625 to $725 per
ounce for 2023, improving to between $600 and $700 per ounce in
2024 and 2025. AISC is expected to be $970 per ounce in 2021 driven
by CAS. AISC is expected to improve to be between $850 and $950 per
ounce in 2022 and $825 to $925 per ounce for 2023. Longer-term
through 2025, AISC is expected to improve to between $800 and $900
per ounce.
Newmont Co-Product Production and Cost Outlook:
2021
2022
2023
2024
2025
Attributable Co-product GEOs (K)
1,300
1,200 - 1,400
1,400 - 1,600
1,400 - 1,600
1,400 - 1,600
CAS ($/GEO)
600
600 - 700
550 - 650
550 - 650
450 - 550
All-in Sustaining Costs ($/GEO)
880
900 - 1,000
800 - 900
800 - 900
700 - 800
2021: Peñasquito benefits from a full year of production
and Boddington reaches higher copper grade, which improves
production and unit costs.
2022: Boddington increases production with higher copper
grade and Peñasquito begins stripping from mining in the Chile
Colorado pit.
2023-2025: Steady co-product production from Peñasquito
after completing the stripping campaign of the Chile Colorado pit
and slight decreases from Boddington due to mine sequencing are
offset by first copper production from Yanacocha Sulfides in
2025.
Regional Production and Cost Outlook:
Australia
2021
2022
2023
Attributable Production (Koz)
1,330
1,400 - 1,500
1,400 - 1,500
CAS ($/oz)
650
550 - 650
500 - 600
All-in Sustaining Costs ($/oz)
860
650 - 750
650 - 750
2021: Production benefits from Full Potential
improvements at Boddington that sustain mill throughput at greater
than 40 million tonnes per annum while the site also benefits from
higher grade in the South Pit. Tanami continues to deliver solid
performance with 500,000 ounces of production while advancing the
Tanami Expansion 2 project.
CAS benefits from higher grade at Boddington and stable costs at
Tanami.
AISC includes sustaining capital spend at Boddington to advance
Autonomous Haulage, which is expected to reach commercial
production in 2021.
2022-2023: Production at Boddington benefits from higher
grade and improved efficiency from Autonomous Haulage beginning in
2022 before transitioning to stripping the next layback in 2023.
Tanami will partially offset Boddington’s lower production in 2023
as Tanami Expansion 2 begins to ramp up.
Unit costs improve with higher grade and efficiency at
Boddington and improved underground efficiencies at Tanami as the
second expansion comes online.
Africa
2021
2022
2023
Attributable Production (Koz)
915
1,000 - 1,100
1,100 - 1,200
CAS ($/oz)
715
700 - 800
600 - 700
All-in Sustaining Costs ($/oz)
900
900 - 1,000
800 - 900
2021: Production in Africa improves with Subika
Underground delivering higher tonnes at Ahafo while Akyem benefits
from higher grade.
CAS per ounce remains steady with higher grade at Akyem, offset
by slightly higher costs at Ahafo due to stockpile processing and
stripping from the Subika open pit.
AISC is slightly higher from sustaining capital for underground
development at Ahafo and for the tailings storage facility at
Akyem.
2022-2023: Subika Underground continues to deliver higher
tonnes and Subika open pit reaches higher grade, partially offset
by mine sequencing at Akyem.
CAS improves from higher production at Ahafo with increased ore
tonnes from Subika Underground and the end of stripping in the
Subika open pit.
AISC increases in 2022 with sustaining capital spend for the
tailings storage facility at Ahafo. Ahafo North begins to ramp up
in 2023, contributing to the higher production and improving unit
costs.
North America
2021
2022
2023
Attributable Production (Koz)
1,760
1,450 - 1,550
1,300 - 1,400
CAS ($/oz)
730
700 - 800
750 - 850
All-in Sustaining Costs ($/oz)
915
900 - 1,000
1,000 - 1,100
2021: A full year of operations at Peñasquito, Éléonore
and Musselwhite increases production. Peñasquito reaches slightly
higher grade and sustains Full Potential improvements in the mill.
Porcupine benefits from higher underground and open pit tonnes
mined, partially offset by lower leach pad production at Cripple
Creek and Victor (CC&V).
Unit costs improve with higher production from a full year of
operations at Peñasquito, Éléonore and Musselwhite.
2022-2023: Éléonore, Musselwhite and CC&V deliver
steady production while Porcupine benefits from higher grades in
the Borden underground and the Hollinger open pit mines in 2022
before Hollinger begins to ramp down in 2023. Peñasquito is mining
lower grade, harder ore from the Chile Colorado pit while stripping
the next phases of the Peñasco pit from 2022 to 2024.
Unit costs impacted by mine sequencing at Peñasquito, Éléonore,
CC&V and Porcupine which are partially offset by improved
productivity and efficiencies at Musselwhite with the completion of
the new conveyor system and lower mine material handling
system.
South America
2021
2022
2023
Attributable Production (Koz)*
1,075
1,050 - 1,150
1,000 - 1,100
CAS ($/oz)
850
700 - 800
700 - 800
All-in Sustaining Costs ($/oz)
1,035
900 - 1,000
950 - 1,050
*Includes Pueblo Viejo interest with ~325Koz in 2021, ~335Koz in
2022 and ~375Koz in 2023
2021: A full year of production from Cerro Negro is
partially offset by Merian transitioning to harder rock and
Yanacocha transitioning to a primarily leach operation in 2021
while developing the first phase of the sulfide resources.
Unit costs remain steady with higher production and improved
productivity at Cerro Negro, offset by lower production at
Yanacocha.
2022-2023: Production improving with higher ore tonnes
mined from Full Potential productivity improvements and mining from
five to six ore sources at Cerro Negro. Yanacocha and Merian
impacted by slightly lower production due to mine sequencing.
Unit costs remain stable with slight impacts from mine
sequencing at Yanacocha and Merian.
Nevada Gold Mines (NGM)
2021
2022
2023
Attributable Production (Koz)
1,370
1,200 - 1,300
1,300 - 1,400
CAS ($/oz)
760
700 - 800
700 - 800
All-in Sustaining Costs ($/oz)
960
900 - 1,000
850 - 950
Production, CAS and AISC for the Company’s 38.5 percent
ownership interest in NGM as provided by Barrick Gold Corporation.
2021 and 2022 are years of investment in the future of NGM.
Newmont Capital Outlook
($M)
2021
2022
2023
2024
2025
Total Consolidated Capital
1,900
2,300 - 2,500
2,200 - 2,400
1,400 - 1,600
1,100 - 1,300
Consolidated Sustaining Capital
1,000
900 - 1,100
900 - 1,100
900 - 1,100
900 - 1,100
Consolidated Development Capital
900
1,300 - 1,500
1,200 - 1,400
400 - 600
100 - 300
Total Attributable Capital
1,800
2,000 - 2,200
1,900 - 2,100
1,200 - 1,400
1,100 - 1,300
Attributable Sustaining Capital
950
900 - 1,100
900 - 1,100
900 - 1,100
900 - 1,100
Attributable Development Capital
850
1,000 - 1,200
900 - 1,100
200 - 400
100 - 300
Sustaining capital remains steady, covering infrastructure,
equipment and ongoing mine development.
Development capital includes spend for Tanami Expansion 2 in
Australia, Subika Underground and Ahafo North in Ghana, Cerro Negro
in Argentina, Yanacocha Sulfides in Peru, and expenditures to
progress studies for future projects as well as development capital
related to the Company’s ownership interest in Nevada Gold Mines
including Goldrush Declines and Turquoise Ridge Shaft. Yearly
decreases reflect the Company’s approach to only including
development projects that have reached execution stage or are
expected to reach execution in the next 12 months.
Consolidated Expense Outlook
Interest expense improves to $275 million in 2021 due to the
maturity and expected pay off of the 2021 Notes and refinancing of
$1 billion Senior Notes in March 2020 at a 2.25% coupon rate.
Investment in exploration and advanced projects is expected to be
$390 million in 2021 with a full year of production at the five
operations that were placed into care and maintenance in 2020 due
to Covid-related precautions. The 2021 outlook for general and
administrative costs remain flat at $260 million. Depreciation and
amortization is expected to be $2,500 million with a full year of
production from the five operations that were placed into care and
maintenance in 2020 due to Covid-related precautions.
Assumptions and Sensitivities
Newmont’s outlook assumes a $1,200 per ounce gold price, $22 per
ounce silver price, $2.75 per pound copper price, $1.05 per pound
zinc price, $0.90 per pound lead price, $0.75 USD/AUD exchange
rate, $0.77 USD/CAD exchange rate and $50 per barrel WTI oil
price.
Assuming a 35% incremental tax rate, a $100 per ounce increase
in gold price would deliver an expected $400 million improvement in
attributable free cash flow. Included within the attributable free
cash flow sensitivity is a royalty impact of approximately $20
million (or $3 per ounce) for every $100 per ounce change in gold
price.
Projects Update
Newmont’s capital-efficient project pipeline supports stable
production with improving margins and mine life. Funding for the
current development capital project Tanami Expansion 2 has been
approved and the project is in execution stage. The Company has
included the Ahafo North and Yanacocha Sulfides projects in its
outlook as the development projects are expected to reach execution
stage in 2021, but have not yet been approved for full funding.
Additional projects not listed below represent incremental
improvements to the Company's outlook.
- Tanami Expansion 2 (Australia)
secures Tanami’s future as a long-life, low-cost producer with
potential to extend mine life beyond 2040 through the addition of a
1,460 meter hoisting shaft and supporting infrastructure to achieve
3.5 million tonnes per year of production and provide a platform
for future growth. The expansion is expected to increase average
annual gold production by approximately 150,000 to 200,000 ounces
per year for the first five years and is expected to reduce
operating costs by approximately 10 percent.
- Ahafo North (Africa) expands our
existing footprint in Ghana with four open pit mines and a
stand-alone mill located approximately 30 kilometers from the
Company’s Ahafo South operations. An investment decision is
expected in the first half of 2021 and the project is expected to
add 300,000 ounces per year with all-in sustaining costs between
$600 to $700 per ounce for the first five full years of production
(2024-2028), with estimated capital costs of between $700 and $800
million. Ahafo North is the best unmined gold deposit in West
Africa with approximately 3.5 million ounces of Reserves and more
than 1 million ounces of Indicated and Inferred Resource and
significant upside potential to extend Ahafo North’s current
13-year mine life.
- Yanacocha Sulfides (South
America)* will develop the first phase of sulfide deposits and an
integrated processing circuit, including an autoclave to process
gold, copper and silver feedstock. The project is expected to add
500,000 gold equivalent ounces per year with all-in sustaining
costs between $700 to $800 per ounce for the first five full years
of production (2026-2030). An investment decision is expected in
2021 with a three year development period and estimated capital
costs of approximately $2 billion. The first phase focuses on
developing the Yanacocha Verde and Chaquicocha deposits to extend
Yanacocha’s operations beyond 2040 with second and third phases
having the potential to extend life for multiple decades.
*Consolidated basis
2021 Regional Outlooka
2021 Outlook (+/-5%)
Consolidated Production
(Koz, GEOs Koz)
Attributable Production
(Koz, GEOs Koz)
Consolidated CAS
($/oz)
Consolidated All-In
Sustaining Costs b ($/oz)
Consolidated
Sustaining Capital Expenditures ($M)
Consolidated
Development Capital Expenditures ($M)
Attributable
Sustaining Capital Expenditures
($M)
Attributable
Development Capital Expenditures ($M)
North America
1,760
1,760
730
915
300
25
300
25
South America
1,000
1,075
850
1,035
125
200
100
150
Australia
1,330
1,330
650
860
235
400
235
400
Africa
915
915
715
900
115
160
115
160
Nevada Gold Minesc
1,370
1,370
760
960
210
130
210
130
Total Gold
6,400
6,500
d
750
970
1,000
e
900
950
e
850
Total Co-productsf
1,300
1,300
600
880
2021 Consolidated Expense Outlook ($M)
(+/-5%)
General & Administrative
260
Interest Expense
275
Depreciation and Amortization
2,500
Exploration & Advanced Projects
390
Adjusted Tax Rate g,h
34%-38%
Federal Tax Rate h
27%-30%
Mining Tax Rate h
6%-9%
2021 Site Outlooka as of December 8,
2020
Consolidated Production
(Koz)
Attributable Production
(Koz)
Consolidated CAS
($/oz)
Consolidated All-In
Sustaining Costs b ($/oz)
Consolidated Sustaining
Capital Expenditures ($M)
Consolidated
Development Capital
Expenditures ($M)
CC&V
260
260
865
1,000
25
—
Éléonore
270
270
825
1,040
45
—
Peñasquito
660
660
575
750
155
—
Porcupine
360
360
785
940
35
25
Musselwhite
200
200
855
1,100
40
—
Other North America
—
—
—
—
—
—
Cerro Negro
270
270
775
975
50
75
Yanacochai
315
160
1,050
1,350
25
125
Meriani
425
320
725
855
50
—
Pueblo Viejo
—
325
—
—
—
—
Other South America
—
—
—
—
—
—
Boddington
830
830
735
915
145
50
Tanami
500
500
515
725
85
350
Other Australia
—
—
—
—
5
—
Ahafo
515
515
800
990
80
40
Akyem
400
400
600
765
35
10
Ahafo North
—
—
—
—
—
115
Other Africa
—
—
—
—
—
—
Nevada Gold Minesc
1,370
1,370
760
960
210
130
Corporate/Other
—
—
—
—
20
—
Peñasquito - Co-products (GEO)f
1,120
1,120
575
825
Boddington - Co-products (GEO)f
180
180
765
990
Peñasquito - Zinc (Mlbs)
475
475
Peñasquito - Lead (Mlbs)
190
190
Peñasquito - Silver (Moz)
30
30
Boddington - Copper (Mlbs)
80
80
a 2021 outlook projections used in this presentation are
considered forward-looking statements and represent management’s
good faith estimates or expectations of future production results
as of December 8, 2020. Outlook is based upon certain assumptions,
including, but not limited to, metal prices, oil prices, certain
exchange rates and other assumptions. For example, 2021 Outlook
assumes $1,200/oz Au, $22/oz Ag, $2.75/lb Cu, $1.05/lb Zn, $0.90/lb
Pb, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate and
$50/barrel WTI; AISC and CAS estimates do not include inflation,
for the remainder of the year. Production, CAS, AISC and capital
estimates exclude projects that have not yet been approved, except
for Ahafo North and Yanacocha Sulfides which are included in
Outlook as the development projects are expected to reach execution
stage in 2021. The potential impact on inventory valuation as a
result of lower prices, input costs, and project decisions are not
included as part of this Outlook. Assumptions used for purposes of
Outlook may prove to be incorrect and actual results may differ
from those anticipated, including variation beyond a +/-5% range.
Outlook cannot be guaranteed. As such, investors are cautioned not
to place undue reliance upon Outlook and forward-looking statements
as there can be no assurance that the plans, assumptions or
expectations upon which they are placed will occur. Amounts may not
recalculate to totals due to rounding. See cautionary at the end of
this release.
b All-in sustaining costs or AISC as used in the Company’s
Outlook is a non-GAAP metric; see below for further information and
reconciliation to consolidated 2021 CAS outlook.
c Represents the ownership interest in the Nevada Gold Mines
(NGM) joint venture. NGM is owned 38.5% by Newmont and owned 61.5%
and operated by Barrick. The Company accounts for its interest in
NGM using the proportionate consolidation method, thereby
recognizing its pro-rata share of the assets, liabilities and
operations of NGM.
d Attributable gold production outlook includes the Company’s
equity investment (40%) in Pueblo Viejo with ~325Koz in 2021; does
not include the Company’s other equity investments.
e Total sustaining capital includes ~$20 million of corporate
and other spend.
f Gold equivalent ounces (GEO) is calculated as pounds or ounces
produced multiplied by the ratio of the other metal’s price to the
gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver
($22/oz.), Lead ($0.90/lb.), and Zinc ($1.05/lb.) pricing.
g The adjusted tax rate excludes certain items such as tax
valuation allowance adjustments.
h Assuming average prices of $1,500 per ounce for gold, $22 per
ounce for silver, $2.75 per pound for copper, $0.90 per pound for
lead, and $1.05 per pound for zinc and achievement of current
production and sales volumes and cost estimates, we estimate our
consolidated adjusted effective tax rate related to continuing
operations for 2020 will be between 34%-38%.
i Consolidated production for Yanacocha and Merian is presented
on a total production basis for the mine site; attributable
production represents a 51.35% interest for Yanacocha and a 75%
interest for Merian.
Five Year Cost and Production Outlook (+/- 5%)
Guidance metric
2021E
2022E
2023E
2024E
2025E
Gold Production* (Moz)
6.5
6.2 - 6.7
6.2 - 6.7
6.5 - 7.0
6.5 - 7.0
Other Metal Production** (Mozs)
1.3
1.2 - 1.4
1.4 - 1.6
1.4 - 1.6
1.4 - 1.6
Total GEO Production (Mozs)
7.8
7.5 - 8.0
7.7 - 8.2
8.0 - 8.5
8.0 - 8.5
CAS*** ($/oz)
$750
$650 - $750
$625 - $725
$600 - $700
$600 - $700
All-in Sustaining Costs*** ($/oz)
$970
$850 - $950
$825 - $925
$800 - $900
$800 - $900
Sustaining Capital* ($M)
$950
$900 - $1,100
$900 - $1,100
$900 - $1,100
$900 - $1,100
Development Capital* ($M)
$850
$1,000 - $1,200
$900 - $1,100
$200 - $400
$100 - $300
Total Capital* ($M)
$1,800
$2,000 - $2,200
$1,900 - $2,100
$1,200 - $1,400
$1,100 - $1,300
*Attributable basis; **Attributable co-product gold equivalent
ounces; includes copper, zinc, silver and lead; ***Consolidated
basis for gold
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
U.S. generally accepted accounting principles (“GAAP”). These
measures should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP.
Costs applicable to sales per ounce/gold
equivalent ounce
Costs applicable to sales per ounce/gold equivalent ounce are
non-GAAP financial measures. These measures are calculated by
dividing the costs applicable to sales of gold and other metals by
gold ounces or gold equivalent ounces sold, respectively. These
measures are calculated for the periods presented on a consolidated
basis. Costs applicable to sales per ounce/gold equivalent ounce
statistics are intended to provide additional information only and
do not have any standardized meaning prescribed by GAAP and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. The measures are not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Other companies may calculate
these measures differently.
All-In Sustaining Costs
Newmont has developed a metric that expands on GAAP measures,
such as cost of goods sold, and non-GAAP measures, such as costs
applicable to sales per ounce, to provide visibility into the
economics of our mining operations related to expenditures,
operating performance and the ability to generate cash flow from
our continuing operations.
Current GAAP measures used in the mining industry, such as cost
of goods sold, do not capture all of the expenditures incurred to
discover, develop and sustain production. Therefore, we believe
that all-in sustaining costs is a non-GAAP measure that provides
additional information to management, investors and analysts that
aid in the understanding of the economics of our operations and
performance compared to other producers and provides investors
visibility by better defining the total costs associated with
production.
All-in sustaining cost (“AISC”) amounts are intended to provide
additional information only and do not have any standardized
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. The measures are not necessarily
indicative of operating profit or cash flow from operations as
determined under GAAP. Other companies may calculate these measures
differently as a result of differences in the underlying accounting
principles, policies applied and in accounting frameworks such as
in International Financial Reporting Standards (“IFRS”), or by
reflecting the benefit from selling non-gold metals as a reduction
to AISC. Differences may also arise related to definitional
differences of sustaining versus development (i.e. non-sustaining)
activities based upon each company’s internal policies.
The following disclosure provides information regarding the
adjustments made in determining the all-in sustaining costs
measure:
Costs applicable to sales. Includes all direct and indirect
costs related to current production incurred to execute the current
mine plan. We exclude certain exceptional or unusual amounts from
Costs applicable to sales (“CAS”), such as significant revisions to
recovery amounts. CAS includes by-product credits from certain
metals obtained during the process of extracting and processing the
primary ore-body. CAS is accounted for on an accrual basis and
excludes Depreciation and amortization and Reclamation and
remediation, which is consistent with our presentation of CAS on
the Condensed Consolidated Statements of Operations. In determining
AISC, only the CAS associated with producing and selling an ounce
of gold is included in the measure. Therefore, the amount of gold
CAS included in AISC is derived from the CAS presented in the
Company’s Condensed Consolidated Statements of Operations less the
amount of CAS attributable to the production of other metals at our
Peñasquito and Boddington mines. The other metals CAS at those mine
sites is disclosed in Note 4 to the Condensed Consolidated
Financial Statements. The allocation of CAS between gold and other
metals at the Peñasquito and Boddington mines is based upon the
relative sales value of gold and other metals produced during the
period.
Reclamation costs. Includes accretion expense related to
reclamation liabilities and the amortization of the related Asset
Retirement Cost (“ARC”) for the Company’s operating properties.
Accretion related to the reclamation liabilities and the
amortization of the ARC assets for reclamation does not reflect
annual cash outflows but are calculated in accordance with GAAP.
The accretion and amortization reflect the periodic costs of
reclamation associated with current production and are therefore
included in the measure. The allocation of these costs to gold and
other metals is determined using the same allocation used in the
allocation of CAS between gold and other metals at the Peñasquito
and Boddington mines.
Advanced projects, research and development and exploration.
Includes incurred expenses related to projects that are designed to
sustain current production and exploration. We note that as current
resources are depleted, exploration and advanced projects are
necessary for us to replace the depleting reserves or enhance the
recovery and processing of the current reserves to sustain
production at existing operations. As these costs relate to
sustaining our production, and are considered a continuing cost of
a mining company, these costs are included in the AISC measure.
These costs are derived from the Advanced projects, research and
development and Exploration amounts presented in the Condensed
Consolidated Statements of Operations less incurred expenses
related to the development of new operations, or related to major
projects at existing operations where these projects will
materially benefit the operation in the future. The allocation of
these costs to gold and other metals is determined using the same
allocation used in the allocation of CAS between gold and other
metals at the Peñasquito and Boddington mines.
General and administrative. Includes costs related to
administrative tasks not directly related to current production,
but rather related to support our corporate structure and fulfill
our obligations to operate as a public company. Including these
expenses in the AISC metric provides visibility of the impact that
general and administrative activities have on current operations
and profitability on a per ounce basis.
Other expense, net. We exclude certain exceptional or unusual
expenses from Other expense, net, such as restructuring, as these
are not indicative to sustaining our current operations.
Furthermore, this adjustment to Other expense, net is also
consistent with the nature of the adjustments made to Net income
(loss) attributable to Newmont stockholders as disclosed in the
Company’s non-GAAP financial measure Adjusted net income (loss).
The allocation of these costs to gold and other metals is
determined using the same allocation used in the allocation of CAS
between gold and other metals at the Peñasquito and Boddington
mines.
Treatment and refining costs. Includes costs paid to smelters
for treatment and refining of our concentrates to produce the
salable metal. These costs are presented net as a reduction of
Sales on our Condensed Consolidated Statements of Operations. The
allocation of these costs to gold and other metals is determined
using the same allocation used in the allocation of CAS between
gold and other metals at the Peñasquito and Boddington mines.
Sustaining capital and finance lease payments. We determined
sustaining capital and finance lease payments as those capital
expenditures and finance lease payments that are necessary to
maintain current production and execute the current mine plan. We
determined development (i.e. non-sustaining) capital expenditures
and finance lease payments to be those payments used to develop new
operations or related to projects at existing operations where
those projects will materially benefit the operation and are
excluded from the calculation of AISC. The classification of
sustaining and development capital projects and finance leases is
based on a systematic review of our project portfolio in light of
the nature of each project. Sustaining capital and finance lease
payments are relevant to the AISC metric as these are needed to
maintain the Company’s current operations and provide improved
transparency related to our ability to finance these expenditures
from current operations. The allocation of these costs to gold and
other metals is determined using the same allocation used in the
allocation of CAS between gold and other metals at the Peñasquito
and Boddington mines.
A reconciliation of the 2021 Gold AISC outlook to the 2021 Gold
CAS outlook, 2021 Co-product AISC outlook to the 2021 Co-product
CAS outlook are provided below. The estimates in the table below
are considered “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbor created by such sections
and other applicable laws.
2021 Outlook - Gold (7)(8)
(in millions, except ounces and per
ounce)
Outlook Estimate
Cost Applicable to Sales (1)(2)
$
4,750
Reclamation Costs (3)
150
Advanced Projects and Exploration (4)
150
General and Administrative (5)
230
Other Expense
20
Treatment and Refining Costs
50
Sustaining Capital (6)
870
Sustaining Finance Lease Payments
30
All-in Sustaining Costs
$
6,250
Ounces (000) Sold (9)
6,400
All-in Sustaining Costs per Oz
$
970
(1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2)
Includes stockpile and leach pad inventory
adjustments.
(3)
Reclamation costs include operating
accretion and amortization of asset retirement costs.
(4)
Advanced Project and Exploration excludes
non-sustaining advanced projects and exploration.
(5)
Includes stock based compensation.
(6)
Excludes development capital expenditures,
capitalized interest and change in accrued capital.
(7)
The reconciliation is provided for
illustrative purposes in order to better describe management’s
estimates of the components of the calculation. Estimates for each
component of the forward-looking All-in sustaining costs per ounce
are independently calculated and, as a result, the total All-in
sustaining costs and the All-in sustaining costs per ounce may not
sum to the component ranges. While a reconciliation to the most
directly comparable GAAP measure has been provided for 2021 AISC
Gold and Co-Product Outlook on a consolidated basis, a
reconciliation has not been provided on an individual site or
project basis in reliance on Item 10(e)(1)(i)(B) of Regulation S-K
because such reconciliation is not available without unreasonable
efforts.
(8)
All values are presented on a consolidated
basis for Newmont.
(9)
Consolidated production for Yanacocha and
Merian is presented on a total production basis for the mine site
and excludes production from Pueblo Viejo.
2021 Outlook - Co-Product
(7)(8)
(in millions, except GEO and per
GEO)
Outlook Estimate
Cost Applicable to Sales (1)(2)
$
790
Reclamation Costs (3)
10
Advanced Projects and Exploration (4)
10
General and Administrative (5)
30
Other Expense
—
Treatment and Refining Costs
160
Sustaining Capital (6)
130
Sustaining Finance Lease Payments
20
All-in Sustaining Costs
$
1,150
Co-Product GEO (000) Sold (9)
1,300
All-in Sustaining Costs per Co Product
GEO
$
880
(1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2)
Includes stockpile and leach pad inventory
adjustments.
(3)
Reclamation costs include operating
accretion and amortization of asset retirement costs.
(4)
Advanced Project and Exploration excludes
non-sustaining advanced projects and exploration.
(5)
Includes stock based compensation.
(6)
Excludes development capital expenditures,
capitalized interest and change in accrued capital.
(7)
The reconciliation is provided for
illustrative purposes in order to better describe management’s
estimates of the components of the calculation. Estimates for each
component of the forward-looking All-in sustaining costs per ounce
are independently calculated and, as a result, the total All-in
sustaining costs and the All-in sustaining costs per ounce may not
sum to the component ranges. While a reconciliation to the most
directly comparable GAAP measure has been provided for 2021 AISC
Gold and Co-Product Outlook on a consolidated basis, a
reconciliation has not been provided on an individual site or
project basis in reliance on Item 10(e)(1)(i)(B) of Regulation S-K
because such reconciliation is not available without unreasonable
efforts.
(8)
All values are presented on a consolidated
basis for Newmont.
(9)
Co-Product GEO are all non-gold
co-products (Peñasquito silver, zinc, lead, Boddington copper)
Conference Call Information
A conference call will be held on Tuesday, December 8, 2020
at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time); it
will also be carried on the Company’s website.
Conference Call Details
Dial-In Number
855.209.8210
Intl Dial-In Number
412.317.5213
Conference Name
Newmont
Replay Number
877.344.7529
Intl Replay Number
412.317.0088
Replay Access Code
10150145
Webcast Details
Title: Newmont Investor Update URL:
https://event.on24.com/wcc/r/2850221/000FA926EFD4104E6BD7D3588A48A4CD
The webcast materials will be available before the market opens
on Tuesday, December 8, 2020 on the “Investor Relations” section of
the Company’s website, www.newmont.com. Additionally, the
conference call will be archived for a limited time on the
Company’s website.
About Newmont
Newmont is the world’s leading gold company and a producer of
copper, silver, zinc and lead. The Company’s world-class portfolio
of assets, prospects and talent is anchored in favorable mining
jurisdictions in North America, South America, Australia and
Africa. Newmont is the only gold producer listed in the S&P 500
Index and is widely recognized for its principled environmental,
social and governance practices. The Company is an industry leader
in value creation, supported by robust safety standards, superior
execution and technical expertise. Newmont was founded in 1921 and
has been publicly traded since 1925.
Cautionary Statement Regarding Forward Looking Statements,
Including Outlook:
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbor
created by such sections and other applicable laws. Where a
forward-looking statement expresses or implies an expectation or
belief as to future events or results, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
However, such statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ
materially from future results expressed, projected or implied by
the forward-looking statements. Forward-looking statements often
address our expected future business and financial performance and
financial condition; and often contain words such as “anticipate,”
“intend,” “plan,” “will,” “would,” “estimate,” “expect,” “believe,”
“target,” “indicative,” “preliminary,” or “potential.”
Forward-looking statements in this news release may include,
without limitation, (i) estimates of future production and sales,
including production outlook and average future production; (ii)
estimates of future costs applicable to sales and all-in sustaining
costs; (iii) estimates of future capital expenditures, including
without limitation development capital expenditures for Tanami
Expansion 2, Subika Underground SLS, Ahafo North, Yanacocha
Sulfides and other projects; (iv) estimates of future cost
reductions, full potential savings, value creation, improvements,
synergies and efficiencies; (v) expectations regarding the project
pipeline, including, without limitation, with respect to Tanami
Expansion 2, Subika Underground SLS, Ahafo North, Yanacocha
Sulfides and other projects, and the development, growth and
exploration potential of the Company’s other operations, projects
and investments, including, without limitation, returns, IRR,
schedule, decision dates, mine life and mine life extensions,
commercial start, first production, average production, average
costs, impacts of improvement or expansion projects and upside
potential; (vi) expectations regarding future investments,
including in connection with climate change targets and
initiatives; (vii) expectations regarding free cash flow, and
returns to stockholders, including with respect to future dividends
and future share repurchases; (viii) expectations regarding future
mineralization, including, without limitation, expectations
regarding reserves and recoveries; (ix) estimates of future closure
costs and liabilities; (x) expectations regarding the timing and/or
likelihood of future borrowing, future debt repayment, financial
flexibility and cash flow; (xi) expectations regarding climate
change initiatives and reduction of greenhouse gas emissions; and
(xii) expectations regarding the impact of the COVID-19 pandemic.
Estimates or expectations of future events or results are based
upon certain assumptions, which may prove to be incorrect. Such
assumptions, include, but are not limited to: (i) there being no
significant change to current geotechnical, metallurgical,
hydrological and other physical conditions; (ii) permitting,
development, operations and expansion of operations and projects
being consistent with current expectations and mine plans,
including, without limitation, receipt of export approvals; (iii)
political developments in any jurisdiction in which the Company
operates being consistent with its current expectations; (iv)
certain exchange rate assumptions being approximately consistent
with current levels; (v) certain price assumptions for gold,
copper, silver, zinc, lead and oil; (vi) prices for key supplies
being approximately consistent with current levels; (vii) the
accuracy of current mineral reserve and mineralized material
estimates; and (viii) other planning assumptions. Uncertainties
relating to the impacts of COVID-19, include, without limitation,
general macroeconomic uncertainty and changing market conditions,
changing restrictions on the mining industry in the jurisdictions
in which we operate, the ability to operate following changing
governmental restrictions on travel and operations (including,
without limitation, the duration of restrictions, including access
to sites, ability to transport and ship doré, access to processing
and refinery facilities, impacts to international trade, impacts to
supply chain, including price, availability of goods, ability to
receive supplies and fuel, impacts to productivity and operations
in connection with decisions intended to protect the health and
safety of the workforce, their families and neighboring
communities), and the impact of additional waves of the pandemic or
increases of incidents of COVID-19 in the areas and countries in
which we operate. See end note regarding outlook assumptions and
note that outlook estimates used herein represent a range of + / -
5 percent unless otherwise indicated. Investors are reminded that
only the third quarter has been declared by the Board of Directors
at this time. Future dividends have not yet been approved or
declared by the Board of Directors, and an annualized dividend has
not been declared by the Board. Investors are cautioned that the
Company’s dividend framework is non-binding. Management’s
expectations with respect to future dividends are “forward-looking
statements” and non-binding. The declaration and payment of future
dividends remain at the discretion of the Board of Directors and
will be determined based on Newmont’s financial results, balance
sheet strength, cash and liquidity requirements, future prospects,
gold and commodity prices, and other factors deemed relevant by the
Board. The duration, scope and impact of COVID-19 presents
additional uncertainties with respect to future dividends and no
assurance is being provided that the Company will pay future
dividends at the current payment level. For a more detailed
discussion of risks and other factors that might impact future
looking statements, see the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019 filed with the U.S. Securities
and Exchange Commission (the “SEC”), under the heading “Risk
Factors”, as well as the COVID-19 related “Risk Factor” in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020,
filed with the SEC, available on the SEC website or
www.newmont.com. The Company does not undertake any obligation to
release publicly revisions to any “forward-looking statement,”
including, without limitation, outlook, to reflect events or
circumstances after the date of this news release, or to reflect
the occurrence of unanticipated events, except as may be required
under applicable securities laws. Investors should not assume that
any lack of update to a previously issued “forward-looking
statement” constitutes a reaffirmation of that statement. Continued
reliance on “forward-looking statements” is at investors’ own
risk.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201208005394/en/
Media Contact Courtney Boone
303.837.5159 courtney.boone@newmont.com
Investor Contact Eric Colby
303.837.5724 eric.colby@newmont.com
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