Newmont Corporation · NYSE:NEM
Newmont — Q2 2015 Earnings Presentation
37 slides from Newmont's earnings presentation, Jul 23, 2015
Slide 1: Q2 2015 Earnings
Q2 2015 Earnings July 23, 2015
Slide 2: Cautionary statement
Cautionary statement Cautionary statement regarding forward looking statements, including outlook: This presentation 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,
Slide 3: Overview – Gary Goldberg
Overview – Gary Goldberg
Slide 4: Steady reduction in injury rates
Steady reduction in injury rates Total Recordable Incident Frequency Rate (TRIFR) (per 200,000 hours worked) 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 2015 July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call | 4
Slide 5: Delivering our strategy
Delivering our strategy AISC1 of ~$900 per ounce – down 14% from Q2 2014 Improve the underlying 1.2 Moz of attributable gold production – equal to Q2 2014, offsetting divestments business Injury rates at historic lows – down ~40% from Q2 2014 Integrating CC&V – adds free cash flow and mine life with
Slide 6: Production increases offset divestments
Production increases offset divestments Attributable gold production (Moz) Attributable copper production (Kt) 1,250 1.2 Moz 1.2 Moz 50 Asset sales 0.1 Moz 41 Kt 40 1.1 Moz 1,000 30 20 Kt 20 750 10 500 0 Q2 2015 Q2 2014 Q2 2015 Q2 2014 July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call
Slide 7: Steady and sustainable reduction in AISC
Steady and sustainable reduction in AISC Gold all-in sustaining cost ($/ounce) $1,300 $1,200 $1,177 $1,113 $1,100 $1,002 $1,000 $900 $879 $800 $700 $600 FY 2012 FY 2013 FY 2014 2015 YTD July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call | 7
Slide 8: Opportunities and challenges
Opportunities and challenges • Batu Hijau – negotiating Contract of Work; completed labor agreement • Akyem and Ahafo – temporary power capacity in place; labor negotiations continue • Merian – finalizing engineering; construction ~25% complete • Cripple Creek & Victor – transaction expected to clos
Slide 9: CC&V improves free cash flow, mine life and costs
CC&V improves free cash flow, mine life and costs • Strong fit with Newmont’s strategy and operating experience • Adds 350 – 400 Koz in 2016 and 2017 at AISC of $825 – $875/oz • Expect to lower direct mining costs by up to 10% through improved productivity and optimization • Expansion will extend mi
Slide 10: Financial results – Laurie Brlas
Financial results – Laurie Brlas
Slide 11: Gold AISC down 14% despite lower price
Gold AISC down 14% despite lower price Gold CAS down* Gold AISC down* Gold price down 14% 14% 8% Q2 2015 versus prior year Q2 2015 Q2 2014 Average Realized Gold Price, Net ($/oz) $1,179 $1,283 Average Realized Copper Price, Net ($/lb) $2.41 $3.01 Attributable Gold Production (Koz) 1,236 1,220 Gold C
Slide 12: Fifth consecutive quarter of positive free cash flow
Fifth consecutive quarter of positive free cash flow Adjusted EBITDA up* Cash from continuing operations up* 32% 17% Q2 2015 versus prior year Q2 2015 Q2 2014 Revenue ($M) $1,908 $1,765 Adjusted Net Income4 ($M) $131 $101 Adjusted Net Income4 ($ per share) $0.26 $0.20 Adjusted EBITDA ($M) $692 $525
Slide 13: Strong adjusted net income and EBITDA
Strong adjusted net income and EBITDA Adjusted net income ($/share) $0.09 $0.26 $0.03 $0.14 $0.02 $0.02 Q2 2015 Discontinued Impairments and Restructuring, Tax valuation Q2 2015 Net Income Operations loss provisions acquisition costs allowances Adj Net Income and asset sales Adjusted EBITDA ($M) $8
Slide 14: Executing capital priorities
Executing capital priorities Improving financial flexibility $0.2B Marketable • $6B in cash, marketable securities and revolver capacity* Securities • $441M in Q2 2015 cash from continuing operations • $119M in Q2 2015 free cash flow De-levering the balance sheet $2.5B* $3.0B • Paid $75M in debt in
Slide 15: Industry leading net debt to EBITDA
Industry leading net debt to EBITDA Net debt to EBITDA* 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Newmont Competitor average *Competitors include Barrick, Goldcorp, AngloGold Ashanti, Agnico Eagle, IAMGOLD and Yamana; net debt to EBITDA utilizes trailing 12-month EBI
Slide 16: Outlook – Gary Goldberg
Outlook – Gary Goldberg
Slide 17: Long term outlook for gold production up 9%
Long term outlook for gold production up 9% 5 Attributable gold production (Moz) 2015 – 2017 outlook 5.2 – 5.5 Moz 4.7 – 5.1 Moz South America – Merian offsets declines at Yanacocha Africa – Lower grades at Ahafo APAC – Higher grades (Batu Hijau) & productivity (Tanami) North America – Carlin, Long
Slide 18: Long term cost outlook down 3%
Long term cost outlook down 3% Gold all-in sustaining cost per ounce outlook ($/oz) $920 – $980/oz $900 – $1,000/oz South America – Lower cost production from Merian Africa – increased stripping and lower grades Africa – Increased stripping and lower grades APAC – Higher grades (Batu Hijau) & produc
Slide 19: Capital outlook revised to include CC&V
Capital outlook revised to include CC&V Consolidated capital expenditure ($M) $2,000 $1,500 Sustaining capital $850 – $950M $1,000 $500 $0 2015 2016 2017 Sustaining capital Merian Turf Vent Shaft Long Canyon CC&V July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call | 19
Slide 20: Strong pipeline drives steady value creation
Strong pipeline drives steady value creation July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call | 20
Slide 21: Exploration focused on high grade, near mine options
Exploration focused on high grade, near mine options Post-2020 production July 23, 2015 Newmont Mining Corporation | Q2 2015 Earnings Call | 21
Slide 22: Tanami grown to nearly 11 Moz through exploration
Tanami grown to nearly 11 Moz through exploration 5.1 Moz produced; 5.6 Moz in Reserves & Resource6 Future growth potential • Extensions at Callie ̶ 4.7 Moz produced ̶ 1.7 Moz Reserves and Resource • Extensions at Auron ̶ 0.4 Moz produced ̶ 3.4 Moz Reserves and Resource • Federation Limb discovery (
Slide 23: Auron – significant growth potential at similar grade
Auron – significant growth potential at similar grade Auron • Reserves of 2.6 Moz ̶ 13.0 million tonnes at 6.2 grams of gold per tonne • Resource of 0.8 Moz ̶ 4.3 million tonnes at 5.7 grams of gold per tonne • Only 50% drilled to Reserve and Resource Auron drill hole Auron drill intercepts typicall
Slide 24: Federation Limb – new higher grade discovery
Federation Limb – new higher grade discovery Federation Limb • Resources of 0.5 Moz ̶ 2.3 million tonnes of ore at 6.9 grams of gold per tonne • Only 25% drilled to Resource Federation drill hole Federation Limb drill intercepts typically vary in thickness from 2 to 35 meters with grades of 2 to 200
Slide 25: Liberator – latest higher grade discovery
Liberator – latest higher grade discovery Liberator • Expect to declare first Resource in 2016 • Target open in all directions Liberator drill intercepts typically vary in thickness from 2 to 40 meters with grades of 2 to 30 grams of gold per tonne; select intercepts shown above July 23, 2015 Newmon
Slide 26: Maintaining flexibility across cycles
Maintaining flexibility across cycles Downside $1,100 gold Upside Develop Merian and Long Develop Merian and Long Develop Merian and Long Canyon Phase 1; slow other Canyon Phase 1, progress Canyon Phase 1, progress projects highest value options highest value options Further reduce sustaining capita
Slide 27: Capturing gold sector leadership
Capturing gold sector leadership Where Where is Newmont Newmont is Todaytoday? Where Where is Newmont Newmont heading? is Heading Safety Industry-leading safety performance Zero injuries and illnesses AISC $909/oz – down 14% from Q2 2014 All sites at or below $1,000/oz Portfolio $1.6B in non-core as
Slide 28: Questions?
Questions?
Slide 29: Appendix
Appendix
Slide 30: 2015 Outlook
2015 Outlooka a2015 Outlook projections used in this release (“Outlook”) All-in Consolidated are considered “forward-looking statements” and Consolidated Attributable Consolidated Sustaining Total Capital represent management’s good faith estimates or Production Production CAS Costsb Expenditures ex
Slide 31: Adjusted net income
Adjusted net income Adjusted net income (loss) Management of the Company uses Adjusted net income (loss) to evaluate the Company’s operating performance, and for planning and forecasting future business operations. The Company believes the use of Adjusted net income (loss) allows investors and analy
Slide 32: Adjusted net income
Adjusted net income Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net income (loss) attributable to Newmont stockholders $ 72 $ 180 $ 255 $ 280 Loss (income) from discontinued operations (1) (9) 2 (17) 19 Impairments and loss provisions (2) 12 5 49 7 Tax valuation allowan
Slide 33: Adjusted EBITDA
Adjusted EBITDA We also present adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) as a non-GAAP measure. Our management uses adjusted net income, adjusted net income per diluted share and Adjusted EBITDA as measures of operating performance to assist in compa
Slide 34: All-in sustaining costs
All-in sustaining costs Newmont has worked to develop a metric that expands on GAAP measures such as cost of goods sold and non-GAAP measures to provide visibility into the economics of our gold mining operations related to expenditures, operating performance and the ability to generate cash flow fr
Slide 35: All-in sustaining costs
All-in sustaining costs Advanced Treatment All-In (1) Excludes Depreciation and Costs Projects General Other and All-In Ounces Sustaining Three Months Ended Applicable Remediation and and Expense, Refining Sustaining Sustaining (000)/Pounds Costs per amortization and Reclamation and June 30, 2015 to
Slide 36: All-in sustaining costs
All-in sustaining costs Advanced Treatment All-In (1) Excludes Depreciation and Costs Projects General Other and All-In Ounces Sustaining Three Months Ended Applicable Remediation and and Expense, Refining Sustaining Sustaining (000)/Pounds Costs per amortization and Reclamation and (1)(2)(3) (4) Ju
Slide 37: Endnotes
Endnotes Investors are encouraged to read the information contained in this presentation in conjunction with the following notes, the Cautionary Statement on slide 2 and the factors described under the “Risk Factors” section of the Company’s most recent Form 10-Q, filed with the SEC on July 22, 2015