Transcription
[Music] This is Kitco News special coverage of the future minerals [Music] Forum.
Hello and welcome to Kitco Mining's coverage at the Future Minerals Forum from Riyadh, Saudi Arabia. Joining me today is Tom Palmer, president and CEO of Newmont. Tom, welcome back to Kitco.
Thank you. Happy New Year to you.
Happy New Year, Tom. Um, it's a very happy new year for for Newmont—good starts to the year. You've been completing a Diversity Program that's gone very well. But before we get to get get to that, we're at the Future Minerals Forum. How has the event been for you? How's the vibe? What what's been of most interest to you here?
It's been a um, it's my first time here. We're a little bit busy this time last year. Um, we'd just closed the Newcrest acquisition, so we weren't able to make it. It is amazing, the uh the the number of people here, the presence here uh for a conference that's only 2 or 3 years old. Uh, it is it is clearly found its space, and the the opportunity to meet and engage with um with with other mining companies, with suppliers, with customers, uh and the the level of uh government participation here, truly truly an amazing venue. And uh, I think it's firmly on the uh on the map of uh of conferences for mining companies to get to. It is truly an impressive event. They say they've got over 20,000 delegates here. It's actually amazing.
To what extent do you think it signals that the the balance of power in mineral financing is perhaps tilting away from North America to to, you know, this part of the world or elsewhere?
I I I probably look at it less as a balance of power tilting away. I think as we think about the world going through the energy transition, the metals that are going to need to supply that, uh that uh different sources of funding, different partnerships are an important part of solving solving that equation. And I think it just brings a lot of new players because it's—they've been around for a while—but but another another player, another dynamic to some of the more traditional forms of financing partnerships within the mining industry.
Okay, let's talk more about Newmont and your performance last year. Newmont is the gold sector leader in terms of production, in terms of market capitalization, but um I think it's fair to say your performance has been pretty middle of the road. 2024, however, was a year of change for the company, with a successful divestment program. You've divested what six assets now, raised at least what $3.9 billion. Uh, you were looking to raise a lot less than that, so I imagine you're very happy with how that's gone. Um, and towards the end of the year, you announced a senior management overhaul. In what shape is Newmont today compared to a year ago?
Yeah, really important year for for Newmont, 2024. We closed the Newcrest acquisition, one of the largest uh acquisitions in the mining industry, not just the the gold mining industry, so a significant undertaking. 2024 is a year of integration, uh rationalization, and transition to a go-forward portfolio. So the it's it's been a year of transforming Newmont to the go-forward portfolio that we saw uh consistent with our strategy when we embarked upon a a conversation with Newcrest. Integration has gone exceptionally well. All the lessons we learned five or six years ago from our acquisition of Goldcorp were able to apply for Newcrest operations. Firmly embedded in the Newmont operation and then in Newmont leadership, Newmont culture firmly in place in those new operations. We're ahead in terms of our synergies at a flat gold price; we met our synergy targets a year ahead. So that's a really important component of 2024. An ambitious investment program, six assets uh we we declared as assets held for for divestment, so we we went embarked upon an investment program run very very well. You quoted the numbers; one more too in terms of that program, our Porcupine operation, and we're working our way through that process. But that allows us, knowing that we've got uh full fair value for those assets, we're going into hands of companies that will be able to take those those operations to their next chapter in their life, allows us to focus on 11 managed operations and three projects in execution going forward in 2025 and Beyond, and to shape our our leadership team, our management team to support that that smaller uh portfolio of operations going forward. So we we tweaked our our management structure to support that now that we had the confidence of that investment program behind us.
I think a lot of people were pleasantly surprised that the the amount you were able to realize from the the divestments which, as we discussed before coming on, is perhaps highlights the the quality of the assets that you were divesting plus also the quality of assets out there in general for people that are interested in growth.
Um, to what extent or not will some of those benefits be reflected in your 2024 results, which will be coming out in a few weeks' time?
It's certainly what we'd see—what will be pretty consistent in terms of how we use those proceeds. So we talked about um our balance sheet settings that we're we're looking to um to have about $8 billion of debt, $3 billion of cash, uh and $5 billion of net debt that comes from there. So we will um we will continue to to work towards hitting those settings for our balance sheet, um and then um and then maintaining a competitive dividend—base dividend our dollar per share—and then any additional cash that we're generating um from our operating assets plus those proceeds we had returned to shareholders through a share buyback program. And we announced to late last year that we'd increase that share buyback program to $3 billion. So pretty clear what we're going to do with the the cash we're generating uh and and also the proceeds coming in from from those those divestments. What uh what that program allows us to do is get after our go-forward portfolio. So whereas 2024 was a year of integration, uh rationalization, and transition, our focus in 2025 is on safety, cost, and productivity. So really starting to demonstrate the strength of this portfolio we've assembled uh and to look to to grow margins through a focus on safety, cost, and productivity.
I'm glad you mentioned margins. With with the divestures and the the management overhaul, you know, you got a let's say a slimmer, fitter Newmont going forward. What impact do we expect to see on the company's all-in sustaining cost and all-in sustaining cost margin as a result of these changes?
Yeah, all sustaining costs uh are higher than we'd likely—so we work to do in that space. We're not happy with the all-sustaining cost that we're seeing at the moment, and what we indicated for for 2025 uh late last year. We are going through a process of reconfiguring our our business, so the new assets that we brought in, they're very long-life assets, so we're making sure that we're setting up a Lefroy or a Cadia or a Brucejack for the long term. There's a little bit of investment that comes with that in order to um to to ensure that we are growing margins from those operations within a balanced portfolio over time. Goldman Sachs initiated coverage on Newmont just in the last couple of days, and I think they did a beautiful job of of describing our equity story as they as they initiated coverage. That's really important work that we're getting after. So a little bit of investment in the early years to ensure those operations deliver value over the long term and the grand margin over the long term. The other important part of the Newmont story is we're investing in in laybacks and our big mines in Boddington and Peno, so we're in lower grades, but we swing back into higher grade grades in the next 2 or 3 years that will bring um our costs down. We're building a new mine in Gner, a half hour north, uh that's coming up out of the ground right now. First gold is on schedule for later this year. New lower-cost ounces come into our business from that, a panel cave 23 at the Cadia operation uh we we uh reached its hydraulic limit last year, so it's now caving as that mine comes on um next year and this year and in the next year, we start to see better grades of gold and copper come through, and the shaft tanami and the expansion underground of the crushing conveying infrastructure uh that investment we're making there will start to bring more ounces at lower cost uh in 2 or 3 years' time. So, number of investments we're making in our business today will improve our cost profile, improve our margins over the medium and long term.
Do you see a possibility of getting your all-in sustained cost down to let's say $1,000 an ounce?
That's a that's a big step down um from where we are today. We certainly see the the opportunity um cost productivity and the return on those investments to get at least a couple hundred out of our cost base in today's in today's dollars. So we're not happy with where we sit today, um and we're looking to get after that to to get our our cost down. A portfolio of our our strength; we expect to be first quarter wherever that number is, um so that's what we're focusing on getting after.
Okay. Newmont, for many years, has been the US gold company, um but as part of your divestment program, you sold the Cripple Creek and Victor operations in Colorado where you're based, where you're headquartered, and so now your only US production is from Nevada Gold Mines in which you're the the junior partner. Um, is that an issue for for Newmont, for Newmont shareholders?
I suppose it's all relative because uh the United States will have a new president next week and is perhaps looking at making Canada the 51st state, in which case you will have US production. That's it might be a little bit might a little bit a bridge too far, but um where it's it's not as dissimilar to where Newmont's been for the last five or six years. Cripple Creek and Victor has been our only managed operation in the United States. We're domiciled in the United States; we're 104 years old. Uh, it's it's firmly part of of who we are. Um, our we've been a a international mining company for a long long time. Um, our focus is on ensuring that we've got a balanced diversified portfolio of tier one operations in some of the best mining jurisdictions in the world. Uh, the fact that we don't manage an operation in the United States um is not an issue for us. Our strategy um has has three components uh that informed uh our discussions with Newcrest a couple of years ago. One was to have a solid foundation of tier one operations in the United States, Canada, and Australia, a foundation upon which we can then have um a balanced portfolio of operations in some other jurisdictions. So we've got plenty of operations in Australia, plenty of operations in Canada that we manage and a significant component—20% of our gold production—comes out of Nevada Gold Mines, so still the United States is a firm part of our portfolio. Second component is we believe that we can run tier one operations as well as or better than anyone else, so we're going to focus on demonstrating that with our go-forward portfolio. And the third part of our strategy is uh we're a gold mining company, but gold and copper come together many many times—geology, geography, and technology—and as we build out this this portfolio, as we bring on our organic project pipeline, I would say is the envy of the mining industry in terms of the gold and copper there, we'll grow that copper over time and increase our exposure to to copper.
Now earlier in our conversation, Tom, you spoke about your your plans for the uh use of proceeds. Um, could that potentially include acquiring other assets? You you mentioned the your your pipeline, but uh could there be other opportunities out there that you're now cashed up and able to take advantage of?
We're very clear on uh on where we sit as a business. We have just done a major transaction. We have assembled the best portfolio of tier one gold assets in the industry, um and we're about demonstrating the value that comes from that set of operating assets and then starting to look at how we bring on and shape and develop the six big projects we have in our pipeline. That's our sole focus too happy for now. You've given out okay.
As 2025 gets underway, how do you see the setup for gold and for gold companies?
I think gold price uh you certainly see the uh the current gold levels that we're seeing at the moment. Uh, lots of reasons why you'd expect to uh to see that that gold price level maintained but maybe go a bit higher. So lots of lots of reasons for why gold price is where it is and and like it to stay there. I think the real challenge for Newmont, a real challenge for the gold mining industry, is demonstrating that we can manage our costs, manage our productivities, and generate a sustainable margin to that gold price. I think you're seeing a disconnect between gold equities uh and the gold price, and uh we need we need to demonstrate that we can manage our business well, uh deliver uh good returns, uh and deliver value for our shareholders. That's key focus for us in 2025.
To what extent do you touch on a very important point there, I think, Tom, the which I think is overhanging the sector—the gold price has gone up a lot; investors expect all the gold price has gone up, the the margins must have gone up a lot, but they haven't. Uh, is that something that's really holding the sector back, the the inability to control cost or expand margins?
But you certainly see that the drivers of gold price often drive the cost of a business, so you can see that that LJG compression that comes uh so you're seeing, I think as a as from an industry is starting to see—well, we are seeing that dynamic play out. What we have assembled within our Newmont portfolio, with a portfolio that is exclusively tier one operations, is is a set of operations that should be able to be resistant to some of those traditional pressures. We're in the process—we've just been through a process of of um integration, investment, and transition. We're now configuring a portfolio so that we can demonstrate that margin resilience over time, but the onus is on us in 2025 to prove the point.
Now you've just gone through a process of change. Um, with a bit of luck and assuming business goes to plan, where do you want Newmont to be by the end of this year, the end of 2025?
We want to have uh safely divested um uh the operations. So we we've made announcements, but we're going to now hand them safely over to their new owners. That's an important part of this year. Uh, zero fatalities is an important part of uh uh our scorecard for this year. Uh, really focusing on on ensuring that we've got the uh right leadership behavior, the right safety environment for the 40,000 people that work at Newmont to come to work and be confident they go safely home with their families at the end of a a day or shift or rotations time at the office. Um, we've got um some big projects we're developing; we want to hit some important milestones—a half north first gold, a continue to develop the uh the draw points at Cadia, uh continuing to hit some key milestones at the Tanami Expansion Project. Really important year to bring those projects on um and to deliver on our commitments around um safety, as I already mentioned, cost, and productivity. Uh, so just delivering on what we said we're going to do in 2025, completing out investments, delivering on our projects, and delivering on our our operative performance is is our focus.
Issue? Well, Tom, I wish you the best of luck with that.
Tom Palmer, thank you very much for joining us today.
Thank you. Stay tuned for more from the Future Minerals Forum in Riyadh, Saudi Arabia. I'm Paul Harris, and this is Kitco Mining. This is Kitco News special coverage of the Future Minerals Forum. [Music]