Newmont Corporation · NYSE:NEM
Newmont — Newmont Mining — Denver Gold Forum 2015
46 slides from Newmont's conference presentation, Sep 22, 2015
Slide 1: Gary Goldberg, President and CEO – Denver Gold Forum
Gary Goldberg, President and CEO Denver Gold Forum September 22, 2015
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, and are intended to
Slide 3: Strategy to lead the gold sector in value creation
Strategy to lead the gold sector in value creation • Improve the underlying business – delivering ongoing cost and efficiency improvements • Strengthen the portfolio – increasing portfolio value and balance sheet strength • Create shareholder value – outperforming sector in free cash flow and shareh
Slide 4: Building on a strong track record
Building on a strong track record WhereNewmont Where are weistoday? Today Where are we is Where Newmont heading? Heading Safety Industry-leading safety performance Zero injuries and illnesses Costs AISC1 down 20% since 2012 Ongoing savings to offset inflation Portfolio ~$1.7B in non-core asset sales
Slide 5: Running safer and more productive operations
Running safer and more productive operations Injury rates (total recordable injuries per 200,000 hours worked) 0.7 0.6 0.65 Injury rates down 50% 0.5 0.47 0.4 0.39 0.3 0.31 0.2 2012 2013 2014 2015 YTD Labor costs ($ per gold equivalent ounce produced) $500 $492 Productivity up 40% $400 $433 $392 $30
Slide 6: Delivering competitive costs and stable production
Delivering competitive costs and stable production Gold all-in sustaining costs per ounce ($/oz) $1,177 AISC down 20% $1,113 $1,002 $920 – $980 $900 – YTD $1,000 $879 2012 2013 2014 2015E 2017E September 22, 2015 Newmont Mining Corporation I Denver Gold Forum I 6
Slide 7: Continuing to realize operations' Full Potential
Continuing to realize operations’ Full Potential Full Potential cash flow improvements by type (2012 – 2015 YTD) • Structured approach to accelerating value delivery 30% 42% Sustaining Capital • Cash flow improvements of $1 billion achieved to date7 Processing • Future savings expected to offset inf
Slide 8: Disciplined capital expenditure and investment
Disciplined capital expenditure and investment Consolidated capital expenditure ($M)2 $3,500 $3,000 Sustaining capital down 43% $2,500 $2,000 $1,500 $1,000 $500 $0 2012 2013 2014 2015E 2016E 2017E Sustaining capital Development capital September 22, 2015 Newmont Mining Corporation I Denver Gold Foru
Slide 9: Step change in portfolio value with further upside
Step change in portfolio value with further upside Divested Reinvested Midas, Jundee, Turf, Merian, Long Assets Penmont, Waihi Canyon, CC&V Mine life Less than 6 years More than 10 years Mine life up 66% Production 500Koz/year 1Moz/year Costs $900 – $950/oz Below $800/oz AISC down 19% Higher technic
Slide 10: Pipeline of viable and value-accretive projects
Pipeline of viable and value-accretive projects Project Integral September 22, 2015 Newmont Mining Corporation I Denver Gold Forum I 10
Slide 11: Self-funding profitable projects
Self-funding profitable projects Turf Vent Shaft Merian Long Canyon Phase 1 • Adds 100 – 150Koz* • Adds 400 – 500Koz* • Adds 100 – 150Koz LOM • $300 – $350M investment • $600 – $700M investment** • $250 – $300M investment • First production late 2015 • First production late 2016 • First production e
Slide 12: CC&V adds significant cash flow and upside potential
CC&V adds significant cash flow and upside potential • Transition and expansion progressing – on schedule • Initial opportunities identified – optimizing ore blending, grade, recovery and throughput • Value-accretive – adds 350 – 400Koz/year at AISC of $825 – $875/oz in 2016 and 20172 Leveraging syn
Slide 13: Exploration focused on high grade, near mine options
Exploration focused on high grade, near mine options Post-2020 production September 22, 2015 Newmont Mining Corporation I Denver Gold Forum I 13
Slide 14: 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, Newcrest and Yamana; net debt to EBITDA utilizes trailing 12
Slide 15: Maintaining flexibility across cycles
Maintaining flexibility across cycles Downside Upside $1,100/oz gold • Optimize capex • Reduce capex Improve the underlying • Continue to optimize • Cost savings to offset • Reduce support costs business costs and cash flow inflation • Develop Merian, Long Canyon Phase 1 Strengthen • Progress highes
Slide 16: Superior margins as gold fundamentals improve
Superior margins as gold fundamentals improve Global gold mine supply expected to decline by ~14% by 2020 • Current mine output expected to drop by ~25Moz due to declining grades and higher strip ratios • Development projects (scoping through commissioning) only partially offset decline with ~13Moz
Slide 17: Strategy to lead the gold sector in value creation
Strategy to lead the gold sector in value creation • Improve the underlying business – delivering ongoing cost and efficiency improvements • Strengthen the portfolio – increasing portfolio value and balance sheet strength • Create shareholder value – outperforming sector in free cash flow and shareh
Slide 18: Questions?
Questions?
Slide 19: Appendix
Appendix
Slide 20: Central bank buying steady; moderate ETF liquidations
Central bank buying steady; moderate ETF liquidations Central Bank Net Additions (Moz) Q2 Annualized 20 10 0 Central Bank buying driven by -10 reserve diversification objectives -20 2003 2000 2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD ETF liquidations Global Gold ETF H
Slide 21: Mine supply growth challenged with fewer discoveries
Mine supply growth challenged with fewer discoveries Lower grades and investment Gold Mine Supply (Moz) in growth curtail mine supply 2015E – 2020E 100 2008 – 2014 CAGR: (3%) 95 CAGR: +4% 2003 – 2008 90 CAGR: (2%) 85 80 75 2015E 2016E 2017E 2018E 2019E 2020E 2000 2001 2002 2003 2004 2005 2006 2007 2
Slide 22: Gold fundamentals reaching inflection point
Gold fundamentals reaching inflection point • Increasing wealth trends in Asia drive jewelry, bar and coin demand • Higher expected investor interest drives demand to outpace supply Moz 160 140 120 100 80 60 40 20 0 2015E 2016E 2017E 2018E 2019E 2020E Jewelry Industrial Central Bank Purchases ETF Bu
Slide 23: Portfolio organized by four geographic regions
Portfolio organized by four geographic regions NEM market data (09/17/2015): Market cap: $9.1 billion Enterprise value: $15.2 billion # of operations: 13 Carlin Phoenix 2014A revenue: $7.3 billion Twin Creeks 2014A production: 4.8 Moz Au (attributable) Long Canyon CC&V Tanami Merian Batu Hijau Yanac
Slide 24: Conservative plan with upside leverage
Conservative plan with upside leverage 2015E CAS breakdown Royalty and other 6% • $10/bbl reduction in oil price adds ~$40M in consolidated free cash flow • $100/oz change in the gold price adds Materials Labor and ~$350M in consolidated free cash flow 30% services 43% • +$0.25/lb change in the copp
Slide 25: Gold reserve pricing sensitivities
Gold reserve pricing sensitivities* Gold reserve sensitivities (Moz) 100 95 90 ~90 85 ~86 80 ~82 75 70 ~72 65 ~65 60 55 50 $1,100 $1,200 $1,300 $1,400 $1,500 Gold Price (US$/oz) *All reserves noted in the this presentation are as of December 31, 2014. See 2014 Reserve report at www.newmont.com. 2014
Slide 26: Steady productivity improvements
Steady productivity improvements Labor $ per gold equivalent ounce ($/GEO) $800 $600 $400 $200 $0 North America South America Africa APAC Total Newmont 2012 2013 2014 2015 YTD September 22, 2015 Newmont Mining Corporation I Denver Gold Forum I 26
Slide 27: Creating value for shareholders
Creating value for shareholders 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
Slide 28: Strengthening the balance sheet
Strengthening the balance sheet • Revolver has one financial covenant: maximum net debt to book capital of 62.5%; compared to 17.9% as of 30 June 2015 • Prepaid ~$380M since November 2014; potential to repay further debt in 2015 • Extended revolving credit facility to 2020 Scheduled debt maturities
Slide 29: Gold price linked dividend
Gold price linked dividend • Strong operating and cost performance over the past year could allow us to maintain the dividend at lower gold prices than originally envisioned Annualized dividend per share (US$)* $2.50 $2.00 $2.00 $1.80 $1.60 $1.50 $1.40 $1.20 $1.00 $1.00 $0.80 $0.60 $0.50 $0.40 $0.10
Slide 30: Disciplined portfolio optimization
Disciplined portfolio optimization High De-risk Maintain Value Improve value Close or divest Low High Low Risk September 22, 2015 Newmont Mining Corporation I Denver Gold Forum I 30
Slide 31: Key expenditures are in line with historical averages
Key expenditures are in line with historical averages Exploration and advanced project expense per ounce produced* $140 $120 $100 $80 Historical $60 average = ~$71 $40 per ounce $20 $- FY2014 2015E FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Total capital expenditures per ounce produced* $700 $
Slide 32: Merian progressing on time and on budget
Merian progressing on time and on budget * Strong feasibility and economics • Low strip ratio of 3:1 LOM • Capital Costs: $0.9B – $1.0B • Production: 400 – 500 koz/yr • Gold CAS: $575– $675/oz • Gold AISC: $650 – $750/oz • Reserves: 4.8Moz at 1.2 g/t3 Exploration upside • Agreement covers 500,000 he
Slide 33: Long Canyon Phase 1 opens new district
Long Canyon Phase 1 opens new district Strong economics Leverages regional synergies • Phased approach to • Process ore via heap leach versus new mill development • Equipment and expertise from existing operations • Capital costs: $250M – $300M • Production: 100 – 150Koz LOM Additional upside potent
Slide 34: 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 & Resource5 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 35: 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 36: 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 37: 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 September 22, 2015 N
Slide 38: Turf Vent Shaft is a platform for growth in Nevada
Turf Vent Shaft is a platform for growth in Nevada Progress Supports higher production rates • Reached full depth of 2,050 feet in December • Introduces higher grade ore to Mill 6 • Proceeding on time and on budget • Provides increased ventilation capacity • First expected production in late 2015 •
Slide 39: Platform for future growth in Ghana
Platform for future growth in Ghana Ahafo Mill Expansion • Adds 3.2 million tonnes per annum of milling capacity • Offset the impacts of harder ore and lower grades at Ahafo • Capital costs: $140M – $160M • Production: 100 – 125Koz first five year average • Decision to proceed in 2H 2015 Leverages e
Slide 40: Executive compensation tied to shareholder returns
Executive compensation tied to shareholder returns CEO compensation Base salary Personal Restricted Stock 13% objectives Units 22% Personal bonus 6% Two-thirds of compensation Company bonus Operating based on stock 14% performance performance Performance Stock Units 45% September 22, 2015 Newmont Mi
Slide 41: Incentives plan supports strategic objectives
Incentives plan supports strategic objectives • Health and Safety Personal • Operational Excellence Bonus (EBITDA, Cost) 30% • Growth (Reserves, Projects) Company Bonus • People (Leadership, Personal 70% objectives) • Sustainability and External Relations (Regions only) 2015 Corporate Performance Me
Slide 42: 2015 Outlook
2015 Outlooka a2015 Outlook projections used in this presentation All-in Consolidated (“Outlook”) are considered “forward-looking statements” Consolidated Attributable Consolidated Sustaining Total Capital and represent management’s good faith estimates or Production Production CAS Costsb Expenditur
Slide 43: 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 44: 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 45: 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 46: 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 23, 2015