Newmont Mining Corporation (NEM)

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Newmont Mining Corp (NEM)

Q2 2013 Earnings Call

Jul 26, 2013, 10:00 am ET

Executives

John Seaberg - Vice President of Investor Relations

Gary Goldberg - President, Chief Executive Officer, Director

Tom Mahoney - Interim Chief Financial Officer, Vice President, Treasurer

Randy Engel - Executive Vice President - Strategic Development

Chris Howson - Vice President, Controller

Analysts

John Bridges - JPMorgan

David Haughton - BMO

Patrick Chidley - HSBC

Stephen Walker - RBC Capital Markets

George Topping - Stifel

Jorge Beristain - Deutsche Bank

Anita Soni - Credit Suisse

John Bridges - JPMorgan

Paretosh Misra - Morgan Stanley

Farooq Hamed - Barclays

Brian MacArthur - UBS

Adam Graf - Cowen & Company

Presentation

Operator

Good morning, and welcome to Newmont Mining second quarter 2013 earnings conference call. All lines will be on a listen-only mode until we open it up for question-and-answers. Today's conference is being recorded. If anyone has objections, please disconnect at this time.

I would now like to turn the call over to Mr. John Seaberg, Vice President of Investor Relations for Newmont Mining Corporation. Sir, you may begin.

John Seaberg

Thank you, operator, and good morning to everyone. Welcome to Newmont's second quarter 2013 earnings conference call. Today, our speakers are joining us from our office in Elko, Nevada, as our directors and executives have been out visiting our North America operation this week. Our President and CEO, Gary Goldberg and other members of our executive team are on the line and will be available to answer questions at the end of our call.

Turning to slide two. I would like to refer you to our cautionary statement as we will be discussing forward-looking information which is subject to a number of risks, as further described in our SEC filings which could be found on our website at newmont.com.

Now, I will turn the call over to Gary in Nevada.

Gary Goldberg

Thanks, John and good morning, everyone. I will start by discussing our safety performance. Safety is our most important value and I am pleased to report that we have kept our reportable injury rate at or below 0.5 injuries per 200,00 hours work for three quarters in a row. Our goal is to eliminate all workplace injuries and our projects team in Peru is proving this is possible by reaching a new milestone of 40 million hours working safely.

As context, the small mines such as Waihi would have to run for nearly 40 years without a lost time injury to reach this milestone. Unfortunately this performance is overshadowed by the loss of our colleague, Corey Vasquez, in June. Corey was operating an underground loader at our Exodus mine in Nevada preparing a stope for backfilling. This loader traveled over the edge of the stope and Corey did not survive the fall. Our thoughts and prayers are with his family and co-workers and a full investigation is underway.

I will walk you through the highlights of our second quarter performance on slide 4. Our operations are performing in line with expectations and our cost improvement efforts are really gaining momentum. Our quarterly revenues were U.S.$2 billion and cash flow from continuing operations was $293 million, or $0.59 per share We reduced spending by $362 million, or 10% compared to the first half of 2012, excluding development capital.

Our capital expenditures were also down $458 million, or 29% compared to the first half of 2012. In accordance with U.S. GAAP, we wrote down the value of our assets, stockpiles and ore on leach pads, by $1.8 billion on an attributable basis net of taxes. Tom will walk you through the details later in his presentation. Including these write-downs, our production, CAS, and all-in sustaining costs, remained in line with guidance.

I would like to now take a minute to cover what we are doing to strengthen the business for all cycles and turning it to slide 5. We have been taking action to respond to the volatility we face today. At the same time, we believe that the long-term gold and copper demand outlook remains bright.

Our work to build the more resilient business includes accelerating the pace and magnitude of our cost and efficiency improvements, strengthening our fundamental technical skills from resource modeling through reclamation, optimizing our portfolio, exploration strategy and project pipeline and investing in only our most promising growth opportunities. Finally, preserving financial flexibility.

Let's turn to our production performance for the quarter summarized on slide 6. As we recently announced, second quarter gold and copper production was in line with the prior year and sales were slightly higher. We remain on track to meet full year guidance of 4.8 million to 5.1 million ounces of gold by year end and we expect a stronger second half performance due to improved mill throughput here in Nevada and new production at Akyem in Ghana. Copper production in the second quarter was in line with our plans and we are maintaining our annual outlook of 150 million to 170 million pounds of production.

Let's turn to slide 7 to see the regional details. North America gold production is in line with the second quarter of 2012, and as I mentioned, expected to improve as the year progresses. Gold production at La Herradura in Mexico was down for the quarter due to lower leach recoveries. Mexico production will be lower for the balance of the year, due to a land dispute and we have adjusted our attributable gold production outlook for La Herradura, down 25,000 ounces from original guidance.

Australia and New Zealand delivered higher production compared to the previous year's quarter and compared to plan. This performance was driven by the team at Tanami who delivered higher mill throughput and higher grade to exceed 2012 production levels. I am pleased with the work that Carlos Santa Cruz and his team are doing to improve our operational performance in the region.

Read the rest of this transcript for free on seekingalpha.com