DENVER-October 26, 2017-Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company) announced third quarter 2017 results.
Net income: Delivered GAAP net income from continuing operations attributable to stockholders of $213 million or $0.39 per diluted share, and adjusted net incomeof $183 million or $0.35 per diluted share
EBITDA: Generated $653 million in adjusted EBITDA, compared to $666 million in the prior year quarter
Cash flow: Reported net operating cash fl ow from continuing operations of $688 million and free cash flow
of $494 million
Gold costs applicable to sales (CAS): Reported CAS of $721 per ounce, with no change in the company’s full year guidance
Gold all-in sustaining costs (AISC): Reported AISC of $943 per ounce, with no change in the company’s full year guidance
Attributable gold production: Produced 1.3 million ounces of gold, up seven percent from the prior year quarter, in-line with full year guidance
Portfolio improvements: Declared commercial production at the Tanami Expansion Project in Australia; mined first ore at the Twin Creeks Underground mine in Nevada; and approved the Quecher Main project in Peru extending mine life at Yanacocha to 2027
Financial strength: Reduced net debt to $1.1 billion, ending the quarter with $3.0 billion cash on hand, and an industry-leading, investment-grade credit profile; third quarter dividend declared increased 50 percent from the prior year quarter to $0.075 per share
Outlook: Maintained company production, cost and capital outlook for 2017; the refreshed longer term outlook is expected to be provided at Investor Day in December 2017
“We delivered exceptional results and another profitable project this quarter with the completion of the Tanami expansion in Australia,” said Gary J. Goldberg, President and Chief Executive Officer. “Our free cash flow more than doubled to nearly $500 million and gold production rose seven percent compared to the prior year quarter as lower cost production from our two newest mines – Merian and Long Canyon – offset lower production at more mature operations. This performance gives us the means to fund our Quecher Main project in Peru – which will extend mine life to 2027 and enable future development at Yanacocha – and increase our dividend for the third quarter by 50 percent.”
Third Quarter 2017 Summary Results
GAAP Net incomefrom continuing operations attributable to stockholders of$213 million or $0.39 per diluted share for the quarter, up 22 percent from $169 million or $0.32 per share in the prior year quarter on higher gold production and lower income taxes partially offset by lower average realized gold prices.
Adjusted net incomewas $183 million or $0.35 per diluted share,down eight percent from $202 million or $0.38 per share in the prior year quarter. The adjustments to net income include $0.04 per share of tax and other adjustments.
Revenue rose five percent to $1.9 billion for the quarter as increased sales volumes offset a lower average realized gold price.
Average realized pricefor gold was four percent lower at $1,276 per ounce for the quarter compared to $1,329 in the prior year quarter; average realized price for copper improved by $1.02 to $3.06 per pound. Increased seven percent to 1.3 million ounces for the quarter as new production at Merian and Long Canyon was partially offset by lower throughput at Twin Creeks and lower grades at Boddington.
Gold CAS totaled $1,017 million for the quarter compared to $918 million in the prior year quarter. Gold CAS per ounce rose two percent to $721 per ounce compared to $706 in the prior year quarter on higher direct operating costs, primarily unfavorable Australian dollar exchange rates, partially offset by higher gold ounces sold and lower stockpile and leach pad inventory adjustments.
Gold AISC rose two percent to $943 per ounce compared to $925 in the prior year quarter on increased CAS per ounce and higher exploration and advanced projects spend, partially offset by lower sustaining capital.
Attributable copper production from Phoenix and Boddington was 12,000 tonnes compared to 15,000 in the prior year quarter.
Copper CAS totaled $36 million for the quarter. Copper CAS per pound improved 36 percent to $1.38 per pound for the quarter on lower co-product allocation of costs to copper.
Copper AISC: 36 percent to $1.65 per pound on improved unit CAS.
Capital expenditures decreased 28 percent from the prior year quarter to $194 million as growth projects including Merian and Long Canyon moved into commercial production partially offset by the ramp-up in expenditure related to the Ahafo expansions.
Consolidated operating cash flow from continuing operations increased 35 percent from the prior year quarter to $688 million with a reduction in working capital and taxes paid. Free cash flow increased 107 percent to $494 million for the quarter on higher sales volumes and lower capital expenditures.
Balance sheet improved as Newmont ended the quarter with $3.0 billion cash on hand, a leverage ratio of 0.4x net debt to adjusted EBITDA and one of the best credit ratings in the mining sector. Since 2013, Newmont has streamlined its balance sheet and reduced gross debt by over 33 percent and net debt by over 77 percent. The Company is committed to maintaining an investment grade credit profile.
Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term projects are presented below. Funding for the Tanami Expansion, Subika Underground, Ahafo Mill Expansion, Twin Underground and Quecher Main projects has been approved and these projects are in execution or in production. Additional projects represent incremental improvements to production and cost guidance.
(Australia) includes a second decline in the mine and incremental capacity in the plant to increase profitable production and serve as a platform for future growth. The project achieved commercial production at the end of August 2017 and is expected to maintain Tanami’s annual gold production at 425,000 to 475,000 ounces at CAS of between $600 and $650 per ounce and AISC of between $700 and $750 per ounce for the first five years of production. Capital costs are estimated at approximately $120 million with expenditure of approximately $45 million in 2017. The project has an IRR of more than 35 percent at a $1,200 gold price.
(Africa) leverages existing infrastructure and an optimized approach to develop Ahafo’s most promising underground resource. First production was achieved in June 2017 with commercial production expected in the second half of 2018. The project is expected to increase average annual gold production by between 150,000 and 200,000 ounces per year for the first five years beginning in 2019 with an initial mine life of approximately 11 years. Capital costs for the project are estimated at between $160 and $200 million with expenditure of $80 to $90 million in 2017. The project has an IRR of more than 20 percent at a $1,200 gold price.
Ahafo Mill Expansion
(Africa) is designed to maximize resource value by improving production margins and accelerating stockpile processing. The project also supports profitable development of Ahafo’s highly prospective underground resource. First production is expected in the first half of 2019 with commercial production expected in the second half of 2019. The expansion is expected to increase average annual gold production by between 75,000 and 100,000 ounces per year for the first five years beginning in 2020. Capital costs for the project are estimated at between $140 and $180 million with expenditure of approximately $40 to $50 million in 2017. The project has an IRR of more than 20 percent at a $1,200 gold price.
Together the Ahafo expansion projects (Ahafo Mill Expansion and Subika Underground) improve Ahafo’s production to between 550,000 and 650,000 ounces per year for the first five full years of production (2020–2024). During this period Ahafo’s CAS is expected to be between $650 and $750 per ounce and All-in sustaining cost is expected to be between $800 and $900 per ounce. This represents average production improvement of between 200,000 and 300,000 ounces at CAS improvement of between $150 and $250 per ounce and AISC improvement of $250 to $350 per ounce, compared to 2016 actuals.
(North America) is a portal mine beneath Twin Creek’s Vista surface mine with similar mineralization. First production was achieved in August 2017 with commercial production expected mid-2018. The expansion is expected to average between 30,000 and 40,000 ounces per year for the first five years (2018 to 2022). During this period CAS is expected to be between $525 and $625 per ounce and AISC between $650 and $750 per ounce. Capital costs are expected to be between $45 and $55 million with expenditure of $15 to $25 million in 2017, to reflect higher production and additional infrastructure to support a phased approach with exploration upside. The project IRR is expected to be about 20 percent at a $1,200 gold price.
(South America) will add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production is expected in early 2019 with commercial production in the fourth quarter of 2019. Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of approximately 200,000 ounces per year between 2020 and 2025 (100 percent basis). During the same period incremental CAS is expected to be between $750 and $850 per ounce and AISC between $900 and $1,000 per ounce. Capital costs for the project have been reduced to between $250 and $300 million with expenditure of $10 to $15 million in 2017. The project IRR is expected to be greater than 10 percent at a $1,200 gold price.
Newmont’s outlook reflects steady gold production and ongoing investment in its current assets and best growth prospects. Longer term guidance is expected to be updated at Investor Day in December 2017. Economic assumptions include $1,200 per ounce gold, $2.50 per pound copper, $55 per barrel WTI and $0.75 Australian dollar exchange rate for the remainder of the year.
Attributable gold production guidance is unchanged
— Production guidance for 2017 remains between 5.0 and 5.4 million ounces on Full Potential improvements in North America and Africa. Compared to the prior year, full year production at Merian and Long Canyon more than offsets declines at Twin Creeks and Yanacocha.
North America production guidance is unchanged
. Production guidance for 2017 remains between 2.1 and 2.2 million ounces following changes to blend management at Twin Creeks and improved mill grade and leach volumes at Cripple Creek & Victor.
South America production guidance is unchanged
Production guidance remains between 630,000 and 690,000 ounces in 2017. The Company continues to advance oxide and sulfide potential at Yanacocha which represent additional upside not currently captured in guidance.
Australia production guidance is unchanged
. Production guidance for 2017 remains at between 1.5 and 1.7 million ounces. The Company is studying a further expansion at Tanami which represents additional upside not currently captured in guidance.
Africa production guidance is unchanged
. Production guidance for 2017 remains between 775,000 and 835,000 ounces following Full Potential improvements to throughput and recovery at Akyem.
Total gold cost outlook is unchanged
— CAS guidance for 2017 is unchanged between $675 and $715 per ounce on increased production and mining and processing improvements in North America, Africa and Australia.
AISC guidance for 2017 is unchanged
between $900 and $950 per ounce on CAS improvements and reduction of sustaining capital in North America, Africa and Australia.
North America cost guidance is unchanged
. CAS per ounce guidance for 2017 remains between $675 and $725 on increased production, mine plan improvements at Carlin and Full Potential cost savings at Cripple Creek & Victor and Long Canyon. AISC per ounce guidance for 2017 remains between $855 and $930 on lower CAS and sustaining capital.
South America cost guidance is increased
. CAS per ounce guidance increases to between $725 and $775 in 2017 related to lower silver by-product credits and higher costs related to processing deeper transitional ores at Yanacocha. AISC per ounce guidance increases to between $965 and $1,025 in 2017 on higher CAS, reclamation and sustaining capital.
Australia cost guidance is unchanged
. CAS per ounce guidance for 2017 remains between $640 and $690 on Full Potential improvements to mining costs at Boddington. AISC per ounce guidance for 2017 remains between $795 and $855 on lower CAS and sustaining capital improvements.
Africa cost guidance is improved
. CAS per ounce guidance for 2017 improves to between $655 and $705 on lower inventory adjustments and Full Potential improvements at Ahafo. AISC per ounce guidance for 2017 improves to between $830 and $880 on lower CAS.
Together, Boddington and Phoenix are expected to produce between 40,000 and 60,000 tonnes of copper in 2017, unchanged from previous guidance. CAS guidance remains between $1.45 and $1.65 per pound and AISC guidance remains between $1.85 and $2.05 per pound; higher costs at Phoenix due to lower copper grades are offset by lower costs at Boddington due to improved mine planning and cost improvements.
— Capital guidance for 2017 is unchanged between $890 and $990 million, including the remaining capital for the Northwest Exodus and Tanami expansions, the initial capital for Subika Underground, the Ahafo Mill Expansion, Twin Underground and Quecher Main. Sustaining capital outlook for 2017 is unchanged between $575 and $675 million.
Conference call information
Newmont Mining Corporation (NYSE: NEM) announced it will report third quarter 2017 operations and financial results before the market opens on Thursday, October 26, 2017 and will hold a conference call at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) the same day. The earnings call will also be carried on the Company’s website.
Conference Call Details
Intl Dial-In Number
Intl Replay Number
Replay Access Code
The third quarter 2017 results will be available before the market opens on Thursday, October 26, 2017 on the “Investor Relations” section of the Company’s website,
. Additionally, the conference call will be archived for a limited time on the Company’s website.
Cautionary Statement Regarding Forward-Looking Statements, Including Outlook:
This 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. Such forward-looking statements may include, without limitation: (i) estimates of future production and sales; (ii) estimates of future costs applicable to sales and all-in sustaining costs; (iii) estimates of future capital expenditures; (iv) estimates of future cost reductions and efficiencies; (v) expectations regarding the development, growth and potential of the Company’s operations, projects and investment, including, without limitation, expected returns, life of mine, commercial start and first production and upside; (vi) expectations regarding future debt repayments; and (vii) expectations regarding future free cash flow generation, liquidity and balance sheet strength. 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 the Company’s operations and projects being consistent with current expectations and mine plans; (iii) political developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; (vii) the accuracy of our current mineral reserve and mineralized material estimates; and (viii) other assumptions noted herein. Where the Company 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”. Other risks relating to forward looking statements in regard to the Company’s business and future performance may include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational risks, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s 2016 Annual Report on Form 10-K, filed on February 21, 2017, with the Securities and Exchange Commission (SEC), and as well as the Company’s other SEC filings. 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.
Investors are reminded that this news release should be read in conjunction with Newmont’s Form 10-Q expected to be filed on or about October 26, 2017 with the SEC (also available at
Jessica Largent, 303.837.5484
Omar Jabara, 303.837.5114
The above information was disclosed in a filing to the SEC.