Newmont Provides 2020 and Longer-term Outlook

Delivering stable production and improving costs through 2024

DENVER–(BUSINESS WIRE)–Newmont (NYSE: NEM, TSX: NGT) (Newmont or the Company) announced its 2020 outlook1 with attributable gold production guidance of 6.7 million ounces at AISC2 of $975 per ounce. Attributable gold production is expected to be between 6.5 and 7.0 million ounces per year longer-term through 2024 with improving costs. The Company expects to produce approximately 1.1 million gold equivalent ounces from other metals in 2020 and increasing longer-term through 2024.

Highlights

  • Attributable gold production3: Production guidance is 6.7 million ounces for 2020 and is expected to be between 6.5 and 7.0 million ounces longer-term through 2024.
  • Attributable gold equivalent ounce (GEO) production from other metals4: Co-product GEO production guidance is 1.1 million ounces for 2020 and between 1.0 and 1.2 million ounces in 2021; 1.1 and 1.3 million ounces in 2022, 1.3 and 1.5 million ounces in 2023 and 2024.
  • Gold costs applicable to sales (CAS): CAS guidance is $750 per ounce for 2020 and between $650 and $750 per ounce for 2021 and 2022; CAS is expected to improve to between $600 and $700 per ounce for 2023 and 2024.
  • Gold all-in sustaining costs (AISC): AISC guidance is $975 per ounce for 2020 and between $850 and $950 per ounce for 2021 and 2022; AISC is expected to improve to between $800 and $900 per ounce for 2023 and 2024.
  • Capital:

    • Attributable sustaining capital guidance is $975 million for 2020 and is expected to be between $0.9 to $1.1 billion longer-term through 2024.
    • Attributable development capital guidance is $575 million for 2020 and is expected to be between $500 and $600 million in 2021, between $300 to $400 million in 2022, between $100 and $200 million in 2023, and between $0 and $100 million in 2024.
    • Development capital includes Tanami Expansion 2 in Australia, Subika Underground in Ghana, Cerro Negro in Argentina, Musselwhite in Canada, expenditures related to the Company’s ownership interest in Nevada Gold Mines and to progress studies for future projects.

“As Newmont enters our centenary year in 2020, our people, mines, projects and balance sheet are all very well positioned to deliver stable and sustainable industry leading performance,” said Tom Palmer, President and Chief Executive Officer. “Our five-year outlook reflects steady gold production of 6.5 to 7 million attributable gold ounces as well as an additional 1.2 to 1.4 million gold equivalent ounces of copper, silver, lead and zinc. Our outlook also highlights our steadily improving cost profile, which includes more than half a billion dollars per year in sustainable operating, cost and supply chain improvements by 2021,” Palmer added.

___________________________________

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.

4Gold 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 ($16/oz.), Lead ($0.95/lb.), and Zinc ($1.20/lb.) pricing.

Outlook

Newmont’s outlook reflects steady gold production and ongoing investment in its operating assets and most promising growth prospects. The Company does not include development projects that have not reached execution stage in its outlook which represents upside to guidance.

Attributable production

Attributable gold production is expected to be stable at 6.5 to 7.0 million ounces across the five year period. The 2020 outlook of 6.7 million ounces increases from 2019 with a full year of production from the acquired Goldcorp assets. Production is expected to remain between 6.5 and 7.0 million ounces per year longer-term through 2024 supported by a steady base from Boddington, Tanami, Ahafo, Peñasquito, and the Company’s equity ownership interest in the Nevada Gold Mines joint venture, which is further enhanced by solid production from the Company’s nine other operating mines and its equity ownership in Pueblo Viejo.

Regional production overview:

Australia

2020

2021

2022

Moz

1.5

1.5 – 1.7

1.6 – 1.8

2020: Full Potential at Boddington improves mining rates and grade increases throughout the year with the stripping campaign nearing completion in the South Pit, KCGM benefits from higher grade and throughput from mining Golden Pike in the Fimiston pit, and Tanami continues to deliver solid performance.

2021-2022: Boddington reaches higher grade ore while Tanami and KCGM deliver steady performance.

Africa

2020

2021

2022

Moz

0.85

0.85 – 0.95

0.90 – 1.0

2020: A full year of production from the Ahafo Mill Expansion is offset by mine sequencing in both the Subika and Awonsu open pits, a change in mining method at Subika Underground and lower grades at Akyem.

2021-2022: Subika Underground begins to deliver higher tons and Subika open pit reaches higher grades, partially offset by sequencing at Akyem.

North America

2020

2021

2022

Moz

1.7

1.6 – 1.8

1.5 – 1.7

2020: A full year of operations at Peñasquito, Éléonore and Porcupine increase production. Peñasquito reaches higher grades and Musselwhite is expected to reach normal production levels in early October, partially offset by lower leach pad production at CC&V.

2021: Musselwhite contributes a full year of operations, Peñasquito continues in higher grade ore and achieves higher throughput, and Porcupine benefits from higher grades in the Borden underground and Hollinger open pit mines.

2022: Peñasquito is impacted by lower gold grade from mine sequencing.

South America*

2020

2021

2022

Moz

1.3

1.1 – 1.2

1.0 – 1.1

*Includes Pueblo Viejo interest with ~375Koz in 2020 and 2021, and ~385Koz in 2022.

2020: A full year of production from Cerro Negro and Pueblo Viejo is partially offset by Yanacocha depleting higher grades at the Tapado Oeste pit and Merian transitioning to harder rock.

2021: Cerro Negro transitions to lower grades as mining concludes in the Eureka District and Yanacocha ramps down the oxide mill.

2022: Merian enters a stripping phase partially offset by higher grades at Cerro Negro.

Nevada Gold Mines (NGM)

2020

2021

2022

Moz

1.4

1.3 – 1.4

1.3 – 1.4

Production for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product GEOs

2020

2021

2022

2023 – 2024

Moz

1.1

1.0 – 1.2

1.1 – 1.3

1.3 – 1.5

2020: A full year of production from Peñasquito is partially offset by lower copper production at Boddington.

2021: Boddington copper production increases with steady production from Peñasquito.

2022-2024: Peñasquito delivers higher silver and lead production from the Chile Colorado pit, followed by higher silver and zinc production from the Peñasco pit.

Gold cost outlook

  • Costs improve throughout the five year period with continuing Full Potential improvements and ongoing investment in profitable projects.
  • CAS is expected to be $750 per ounce for 2020 from lower production in Africa and South America, partially offset by improvements in North America with a full year of operations at Peñasquito. CAS is expected to be between $650 and $750 per ounce for 2021 and 2022, and between $600 and $700 per ounce in 2023 and 2024.
  • AISC is expected to be $975 per ounce in 2020 from higher costs in South America and Africa, partially offset by improved CAS in North America. AISC is expected to be between $850 and $950 per ounce in 2021 and 2022, and improves to between $800 and $900 per ounce longer-term through 2024. Future Full Potential savings and profitable ounces from projects that are not yet approved represent additional upside not currently captured in guidance.

Regional cost overview:

Australia

2020

2021

2022

CAS/oz

$735

$600 – $700

$550 – $650

AISC/oz

$920

$800 – $900

$700 – $800

2020: CAS benefits from lower spend at Tanami for paste fill operations and less stockpile processing at KCGM partially offset by increased stockpile processing at Boddington. AISC includes increased sustaining capital spend at Boddington to advance Autonomous Haulage and at Tanami for ventilation.

2021-2022: Unit costs improve as Boddington production increases.

Africa

2020

2021

2022

CAS/oz

$710

$700 – $800

$600 – $700

AISC/oz

$870

$850 – $950

$800 – $900

2020: CAS is higher than 2019 on lower production at Akyem and Ahafo with stripping in the Subika open pit and the change in mining method at Subika Underground. AISC is higher on increased unit CAS partially offset by lower sustaining capital at Ahafo.

2021-2022: CAS improves from higher production at Ahafo with increased ore tons from Subika Underground and the end of stripping in the Subika open pit. AISC increases in 2021 on higher sustaining capital spend for tailings storage facilities at both Ahafo and Akyem.

North America

2020

2021

2022

CAS/oz

$805

$700 – $800

$700 – $800

AISC/oz

$995

$850 – $950

$900 – $1,000

2020: Unit costs improve as Peñasquito delivers a full year of production with Full Potential improvements and the removal higher cost production from Red Lake, partially offset by lower production at CC&V and higher costs at Musselwhite prior to resuming full operations in October.

2021-2022: Unit costs improve with increased production and the delivery of Full Potential improvements throughout the region.

South America

2020

2021

2022

CAS/oz

$790

$700 – $800

$800 – $900

AISC/oz

$940

$850 – $950

$1,000 – $1,100

2020: Unit costs increase on lower production at Yanacocha and from higher mine and milling costs at Merian from harder rock, partially offset by Full Potential improvements at Cerro Negro.

2021: Unit costs improve with lower operating costs at Yanacocha from the end of Quecher Main stripping and ramping down the oxide mill, partially offset by lower production at Cerro Negro.

2022: CAS increases with Merian entering a stripping campaign and Yanacocha production declining. AISC increases with CAS and higher sustaining capital at Cerro Negro.

Nevada Gold Mines

2020

2021

2022

CAS/oz

$690

$600 – $700

$600 – $700

AISC/oz

$880

$800 – $900

$800 – $900

CAS & AISC for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product costs per GEO

2020

2021

2022

2023 – 2024

CAS/GEO

$560

$550 – $650

$600 – $700

$450 – $550

AISC/GEO

$880

$900 – $1,000

$900 – $1,000

$750 – $850

2020: Unit costs improve driven by a full year of production at Peñasquito.

2021-2022: Unit costs per GEO increase from mine sequencing at Peñasquito, partially offset by higher copper production at Boddington.

2023-2024: CAS per GEO improves on higher production at Peñasquito and AISC per GEO improves on lower CAS and lower sustaining capital spend.

Consolidated Capital

2020

2021

2022

2023

2024

Total ($M)

$1,625

$1,500 – $1,700

$1,200 – $1,400

$1,100 – $ 1,300

$900 – $1,100

Sustaining ($M)

$1,000

$900 – $1,100

$900 – $1,100

$900 – $1,100

$900 – $1,100

Development ($M)

$625

$500 – $600

$300 – $400

$100 – $200

$0 – $100

Sustaining capital remains steady, covering infrastructure, equipment and ongoing mine development.

Development capital includes Tanami Expansion 2 in Australia, Subika Underground in Ghana, Cerro Negro in Argentina, Musselwhite in Canada, expenditures related to the Company’s ownership interest in Nevada Gold Mines and to progress studies for future projects. Yearly decreases reflect the Company’s approach to only including development projects that have reached execution stage.

Consolidated expense outlook – Interest expense increases to $300 million for 2020 from a full year of expense related to the acquired Goldcorp debt. Investment in exploration and advanced projects is expected to be $460 million in 2020 with a full year of spend for the acquired Goldcorp assets. The 2020 outlook for general & administrative costs is $265 million as synergies of $120 million are realized from the Goldcorp transaction and depreciation and amortization is expected to be $2,150 million.

Assumptions and sensitivities Newmont Goldcorp’s outlook assumes $1,200 per ounce gold price, $16 per ounce silver price, $2.75 per pound copper price, $1.20 per pound zinc price, $0.95 per pound lead price, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate, and $60 per barrel WTI oil price.

Assuming a 35% incremental tax rate, $100 per ounce increase in gold price would deliver an expected $400 million improvement in attributable free cash flow.

Projects update

  • Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low cost producer with potential to extend mine life to 2040 through the addition of a 1,460m hoisting shaft and supporting infrastructure to achieve 3.5Mt 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 beginning in 2023, and is expected to reduce operating costs by approximately 10 percent. Capital costs for the project are estimated to be between $700 million and $800 million. The project IRR is expected to exceed the Company’s hurdle rate of 15 percent.
  • Musselwhite Materials Handling (North America) improves material movement from Musselwhite’s two main zones below Lake Opapimiskan. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. The Company expects the project to be fully operational in mid-2020.

2020 Outlooka

2020 Outlook+/- 5%

Consolidated

Production

Attributable

Production

Consolidated

CAS

Consolidated

All-in Sustaining

Costsb

Consolidated

Sustaining

Capital

Expenditures

Consolidated

Development

Capital

Expenditures

Attributable

Sustaining

Capital

Expenditures

Attributable

Development

Capital

Expenditures

(Koz, GEOs Koz)

(Koz, GEOs Koz)

($/oz)

($/oz)

($M)

($M)

($M)

($M)

North America

1,675

1,675

805

995

335

60

335

60

South America

1,290

1,345

790

940

135

175

100

125

Australia

1,460

1,460

735

920

210

270c

210

270c

Africa

850

850

710

870

95

70

95

70

Nevada Gold Minesd

1,375

1,375

690

880

185

45

185

45

Total Golde

6,600

6,700e

750

975

1,000f

625

975f

575

 

 

 

 

 

 

 

 

Total Co-products

1,105

1,105

560

880

 

 

 

 

2020 Consolidated Expense Outlook($M) +/-5%
General & Administrative

265

Interest Expense

300

Depreciation and Amortization

2,150

Advanced Projects & Exploration

460

Adjusted Tax Rateg,h

38%-42%

Federal Tax Rateh

29%-33%

Mining Tax Rateh

8%-10%

2020 Site Outlooka as of December 2, 2019

Consolidated
Production
Attributable
Production
Consolidated
CAS
Consolidated
All-in Sustaining
Costsb
Consolidated
Sustaining
Capital
Expenditures
Consolidated
Development
Capital
Expenditures
(Koz) (Koz) ($/oz) ($/oz) ($M) ($M)
 
CC&V

285

285

1,000

1,175

35

Éléonore

355

355

760

915

50

10

Peñasquito

575

575

570

725

165

 

Porcupine

325

325

795

975

40

 

Musselwhite

140

140

1,460

1,930

50

50

Other North America

 

 

 

 

 

 

 

 

 

 

 

 

Cerro Negro

405

405

560

710

45

75

Yanacochai

415

215

1,105

1,260

35

100

Meriani

465

350

715

840

50

 

Pueblo Viejo

 

375

 

 

 

 

Other South America

 

 

 

 

 

 

 

 

 

 

 

 

Boddington

700

700

855

1,015

95

40

Tanami

480

480

455

685

85

225c

Kalgoorliej

285

285

915

1,035

25

 

Other Australia

 

 

 

 

5

 

 

 

 

 

 

 

Ahafo

480

480

810

960

60

30

Akyem

365

365

575

695

25

10

Ahafo North

 

 

 

 

 

25

Other Africa

 

 

 

 

5

 

 

 

 

 

 

 

Nevada Gold Minesd

1,375

1,375

690

880

185

45

 

 

 

 

 

 

Corporate/Other

 

 

 

 

30

 

 

 

 

 

 

 

Peñasquito – Co-products (GEO)k

975

975

515

805

 

 

Boddington – Co-product (GEO)k

130

130

910

1,105

 

 

 

 

 

 

 

 

Peñasquito – Zinc (Mlbs)

425

425

 

 

 

 

Peñasquito – Lead (Mlbs)

200

200

 

 

 

 

Peñasquito – Silver (Moz)

30

30

 

 

 

 

Boddington – Copper (Mlbs)

55

55

 

 

 

 

a2020 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 2, 2019. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, 2020 Outlook assumes $1,200/oz Au, $16/oz Ag, $2.75/lb Cu, $1.20/lb Zn, $0.95/lb Pb, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate and $60/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. 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.

bAll-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 2020 CAS outlook.

cIncludes finance lease payments related to the Tanami Power Project paid over a 10 year term beginning in 2019.

dRepresents the ownership interest in the Nevada Gold Mines (NGM) joint venture. NGM is owned 38.5% by Newmont Goldcorp 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.

eAttributable gold production outlook includes the Company’s equity investment (40%) in Pueblo Viejo with ~375Koz in 2020; does not include the Company’s other equity investments.

fTotal sustaining capital includes ~$30 million of corporate and other spend.

gThe adjusted tax rate excludes certain items such as tax valuation allowance adjustments.

hAssuming average prices of $1,400 per ounce for gold, $16 per ounce for silver, $2.75 per pound for copper, $0.95 per pound for lead, and $1.20 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 38%-42%.

iConsolidated 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.

jBoth consolidated and attributable production are shown on a pro-rata basis with a 50% ownership for Kalgoorlie.

kGold 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 ($16/oz.), Lead ($0.95/lb.), and Zinc ($1.20/lb.) pricing.

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 for the period ended September 30, 2019. 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. The other metals’ CAS at the Peñasquito, Boddington, and Phoenix mines is disclosed in Note 5 to the Condensed Consolidated Financial Statements. The allocation of CAS between gold and other metals 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.

Contacts

Media Contact
Omar Jabara

303.837.5114

omar.jabara@newmont.com

Investor Contact
Jessica Largent

303.837.5484

jessica.largent@newmont.com

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Author: dmnnewswire