Newmont Corporation · NYSE:NEM
Newmont — Newmont Mining — Q2 2018 Earnings Presentation
38 slides from Newmont's earnings presentation, Jul 26, 2018
Slide 1: Q2 2018 Earnings
Q2 2018 Earnings July 26, 2018
Slide 2: Cautionary statement
Cautionary statement Cautionary statement regarding forward looking statements: 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, which are intended
Slide 3: Gary Goldberg
Gary Goldberg President and Chief Executive Officer
Slide 4: Strong operational execution in Q2
Strong operational execution in Q2 Results in line with guidance – Q2 AISC1 of $1,024/oz and 1.2 Moz of gold production Superior operational Strengthening safety performance – through a focus on applying lessons learned execution Asset health center expanded – to include Merian in Suriname Delivered
Slide 5: Applying lessons to improve safety performance
Applying lessons to improve safety performance Total injury rates (total recordable injuries per 200,000 hours worked) 1.0 0.8 0.6 0.4 0.50 0.2 0.0 2012 2013 2014 2015 2016 2017 YTD 2018 Applying lessons from Ahafo Mill Expansion accident across organization • Internal investigation complete and new
Slide 6: Costs tracking in line with guidance
Costs tracking in line with guidance All-in sustaining cost1 ($/oz) $1,169 $1,099 $965 – $1,025 $997 $935 $913 $924 H1 = $998/oz 2012 2013 2014 2015 2016 2017 2018E July 26, 2018 Newmont Mining Corporation I Q2 2018 earnings I Slide 6
Slide 7: Gold production back-half weighted
Gold production back-half weighted Attributable gold production (Moz) 5.3 4.9 – 5.4 4.9 5.0 4.9 4.7 4.6 H1 = 2.4 Moz 2012 2013 2014 2015 2016 2017 2018E July 26, 2018 Newmont Mining Corporation I Q2 2018 earnings I Slide 7
Slide 8: Two projects delivered, Subika UG expected in Q4
Two projects delivered, Subika UG expected in Q4 Mine life Cost† Production Capital IRR Project (years) (AISC/oz) (Koz/yr) ($M) (%) Twin Underground 13* $650 – $750 30 – 40 ~$40 ~20% Northwest Exodus +10 ~$25 lower 50 – 75 ~$70 >40% Subika Underground 11 150 – 200 $160 – $200 >20% reduced by $250 –
Slide 9: 2018 operational outlook unchanged
2018 operational outlook unchanged Guidance5 metric 2018E 2019E 2020E – 2022E Gold production* (Moz) 4.9 – 5.4 Moz 4.9 – 5.4 Moz 4.6 – 5.1 Moz CAS ($/oz) $700 – $750 $620 – $720 $650 – $750 AISC ($/oz) $965 – $1,025 $870 – $970 $870 – $970 Sustaining capital ($M) $600 – $700 $600 – $700 $550 – $650
Slide 10: Galore Creek provides long-term optionality
Galore Creek provides long-term optionality • Agreement to acquire 50% ownership interest in Galore Creek; $100M upfront investment 6 • Aligns with Newmont’s strategy to create long-term value for stakeholders • Partnership with Teck in a favorable mining jurisdiction • World-class copper-gold depos
Slide 11: Nancy Buese
Nancy Buese EVP and Chief Financial Officer
Slide 12: Q2 results reflect expected seasonality
Q2 results reflect expected seasonality Financial metric Q2 2017 Q2 2018 Change Revenue ($M) $1,875 $1,662 -11% Adjusted Net Income7 ($M) $248 $144 -42% Adjusted Net Income ($/diluted share) $0.46 $0.26 -43% Adjusted EBITDA4 ($M) $699 $545 -22% Cash from continuing operations ($M) $525 $401 -24% Div
Slide 13: Q2 adjusted net income of 26 cents per share
Q2 adjusted net income of 26 cents per share GAAP to adjusted net income ($/diluted share) $0.18 $0.01 $0.51 $0.08 $0.26 Net income from Gain on asset Valuation allowance Other* Adjusted net income continuing and investment sales and other tax operations adjustments *Other includes restructuring and
Slide 14: Financial flexibility to execute capital priorities
Financial flexibility to execute capital priorities Maintaining investment grade balance sheet • Liquidity of $6.0B as of Q2 2018 • Net debt to adjusted EBITDA of 0.4x Growing margins, Reserves and Resources Returning cash to shareholders • Expected annualized dividends of ~$300M8 • Returned ~$220M
Slide 15: Tom Palmer
Tom Palmer EVP and Chief Operating Officer
Slide 16: North America building momentum for solid second half
North America building momentum for solid second half • Annual Mill 6 maintenance completed safely at Carlin • CC&V concentrate shipments to Nevada expected to increase in Q3 • Completed Twin UG and NW Exodus projects delivering higher-grade, lower-cost production • Long Canyon Phase 2 studies progr
Slide 17: South America advancing next wave of growth
South America advancing next wave of growth • Merian and Yanacocha deliver solid Q2 performance • Merian productivity expected to increase with additional haul truck capacity in H2 • Accelerating Quecher Main; expect first ore placed by late 2018 • Chaquicocha Oxides and Yanacocha Sulfides studies p
Slide 18: Australia mitigating geotechnical challenges at KCGM
Australia mitigating geotechnical challenges at KCGM • KCGM guidance updated following rock fall in Fimiston Pit; assessing longer-term impacts • Boddington delivers strong quarter ahead of stripping campaign in H2 • Strong mill performance at Tanami offsets lower grades in Q2 • Tanami Power project
Slide 19: Africa focused on safe project restart and strong H2
Africa focused on safe project restart and strong H2 • Steady production at Ahafo and Akyem with improved mill throughput • Ahafo Mill Expansion project recommencing; on-track for H2 2019 commercial production • Subika Underground ramping up with commercial production expected in Q4 • Advancing Ahaf
Slide 20: 2018 earnings and cash flow weighted to Q4
2018 earnings and cash flow weighted to Q4 • North America – expect to reach Silverstar ore and higher grades at Leeville in Q4 • Australia – stable production at Tanami; Boddington stripping and KCGM mitigation ongoing • South America – increasing haul capacity at Merian; higher grades at Yanacocha
Slide 21: Gary Goldberg
Gary Goldberg President and Chief Executive Officer
Slide 22: Global portfolio of long-life assets
Global portfolio of long-life assets Operations and sustaining projects Improvements since 2012 Current projects 3 new lower cost mines Mid-term projects Long-term projects 9 profitable expansions Average project IRR >20% $2.8B in non-core asset sales North America Carlin Improved value and risk pro
Slide 23: Leading project pipeline and track record
Leading project pipeline and track record Long-term projects (>3 years; not in outlook) Mid-term projects (<3 years; not in outlook) Greenfields Sustaining projects (in outlook) Conceptual/ Scoping Current projects (in outlook) Prefeasibility/ Canadian Yukon Feasibility Definitive Greater Leeville F
Slide 24: Steady long-term production profile
Steady long-term production profile Projected production profile (Moz)* Industry-leading long-term pipeline 6.0 Divested Current Mid-term Feasibility projects projects projects** 5.0 4.0 3.0 Existing assets and sustaining projects 2.0 1.0 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 25: Progressing long-term growth options
Progressing long-term growth options • North America – UG expansions (Carlin, Long Canyon); Greenfields (Canada, US) • South America – Expansions (Yanacocha, Sabajo); Greenfields (Andes, Guiana Shield) • Africa – UG expansions (Ahafo, Akyem); Greenfields (Ethiopia) • Australia – UG expansions (Tanam
Slide 26: Leading in profitability and responsibility
Leading in profitability and responsibility • Safe, stable and profitable gold production over longer horizon • Ongoing margin, Reserves and Resources growth across four anchor regions • Superior balance sheet, dividends and sustainability performance Tanami core (Auron) July 26, 2018 Newmont Mining
Slide 27: Questions?
Questions?
Slide 28: 2018 Outlook
2018 Outlooka Consolidated a2018 Outlook in the table above are considered “forward-looking All-in Consolidated statements” and are based upon certain assumptions, including, but not Consolidated Attributable Consolidated Sustaining Total Capital limited to, metal prices, oil prices, certain exchang
Slide 29: Adjusted net income
Adjusted net income Management 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 analysts to understand the results of the contin
Slide 30: Adjusted net income
Adjusted net income Three Months Ended Six Months Ended June 30, June 30, (1) Net loss (income) attributable to Newmont stockholders from discontinued 2018 2017 2018 2017 operations relates to (i) adjustments in our Holt royalty obligation, presented net of Net income (loss) attributable to Newmont
Slide 31: Free cash flow
Free cash flow Management uses Free Cash Flow as a non-GAAP measure to analyze cash flows generated from operations. Free Cash Flow is Net cash provided by (used in) operating activities less Net cash provided by (used in) operating activities of discontinued operations less Additions to property, p
Slide 32: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Management uses Earnings before interest, taxes and depreciation and amortization (“EBITDA”) and EBITDA adjusted for non-core or certain items that have a disproportionate impact on our results for a particular period (“Adjusted EBITDA”) as non-GAAP measures to evaluate th
Slide 33: 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, such as Costs applicable to sales per ounce, to provide visibility into the economics of our mining operations related to expenditures, operating performan
Slide 34: All-in sustaining costs
All-in sustaining costs Advanced Projects, (1) Excludes Depreciation and Research and Treatment All-In amortization and Reclamation and Costs Development General Other and All-In Ounces Sustaining remediation. Three Months Ended Applicable Reclamation and and Expense, Refining Sustaining Sustaining
Slide 35: All-in sustaining costs
All-in sustaining costs Advanced (1) Excludes Depreciation and Projects, Research and Treatment All-In amortization and Reclamation and Costs Development General Other and All-In Ounces Sustaining remediation. Six Months Ended Applicable Reclamation and and Expense, Refining Sustaining Sustaining (0
Slide 36: All-in sustaining costs – 2018 outlook
All-in sustaining costs – 2018 outlook Similar to the historical AISC amounts presented above, AISC outlook is also a non-GAAP financial measure. A reconciliation of the 2018 Gold AISC outlook range to the 2018 CAS outlook range is provided below. The estimates in the table below are considered “for
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 Form 10-Q, filed with the SEC on July 26, 2018 and disclos
Slide 38: Endnotes
Endnotes 7. Adjusted Net Income is a non-GAAP metric. Adjusted Net Income per share refers to Adjusted Net Income per diluted share. See slides 29-30 for more information and reconciliation to the nearest GAAP metric. 8. Anticipated annualized dividends of ~$300M represents management’s current expe