Newmont Mining Corporation (NEM)

NEM 
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Newmont Mining Corporation (Holding Company) (NEM)

Denver Gold Forum Conference Call

September 24, 2013, 1:05 PM ET

Executives

Gary Goldberg - President and Chief Executive Officer

Analysts

Presentation

Gary Goldberg

Good morning, everyone, and thanks for attending. It's a pleasure to be here at the Denver Gold Forum. I'm happy to be here today to give you an update on our business and our strategy. We've been a respected global mining house for more than 90 years, and we've adapted to industry changes throughout that timeframe.

Today we'll be looking at what we're doing, not only just to whether the challenging times, but to make the most of those challenging times through our value over volume approach. I refer like we all do to our cautionary statement on Slide 2 here, and remind you to take a look at the Form 10-K for more detail.

I'll start by making remarks with our most important value, which is safety. You can see on here, in fact quite frankly, you don't see a safe operation that isn't also an efficient operation or vice versa. It's gratifying to see our safety performance improve, as we focus on embedding the underlying behaviors that create a safe workplace.

We're also proud of the fact that we have some of the best underground mine rescue teams in the nation. Here in the right you can see our Carlin Team, which took first place and also we have the Midas Team that took fourth place in the Mine Rescue Competition.

However, our strong performance has been overshadowed this year by the loss of a colleague in Nevada, in June, and that's not acceptable to any of us. Our ultimate goal is to send our people home safely, every day, and we're relentless about improving our performance in safety across every aspect of the business.

Continuous improvement is at the heart of our refresh strategy. Our strategy has three key elements. The first is to secure the gold franchise by running our existing business more efficiently and more effectively. The second is to strengthen the portfolio by targeting investments and acquisitions in gold and in copper that improve value, mine life and our position on the cost curve. The third is to enable that strategy by strengthening the capabilities, the systems and the culture that we need to succeed. Taken together, these commitments have fundamentally changed Newmont's focus from volumes to value.

Our work to secure the gold franchise or really to get our house in order has begun to deliver results. These results will have the effect of reducing our production cost by 10% to 15% over the next three years. At our operations, we've launched an in-depth continuous improvement program that we call full potential. This will deliver significant improvements to our technical performance, operating cost and capital expenditures.

At our offices, we have reduced corporate headcount by nearly 30%, as a result of a more streamlined and decentralized operating model. We will deliver more savings through overhead reductions at our regional offices. With these efforts, we are targeting all-in sustaining cost reductions of approximately $125 per ounce by 2015. Achieving these goals will require us to consistently deliver on our plans.

This year, we're already on track to meet or exceed our production and cost outlook. We continue to expect 4.8 million to 5.1 million ounces of gold production and 150 million to 170 million pounds copper production. We've reduced our capital expenditure guidance by 8% or some $200 million so far this year.

Total capital spending so far this year is down 29% versus last year or approximately $500 million. We have reduced our exploration spending by 30% or $60 million year-to-date versus last year. Our all-in sustaining costs are down approximately $20 per ounce over prior year's first half actual. This may seem small, but it's a significant change from the increasing year-on-year trend that we've experienced and others in the industry have experienced.

Finally, our consolidated spending is down 10% through mid-year or $362 million. Cost and capital discipline are key to preserving our financial flexibility. As of June 30, we have about $5 billion in available liquidity, including $1.2 billion in cash and marketable securities and a $3 billion revolver. Most of our debt is long dated with favorable terms.

Strong financial management has allowed us to retain an investment grade credit rating and ratios that demonstrate the health of our balance sheet. Our new CFO, Laurie Brlas, who is here with us today in the crowd, is an industry veteran. I'm glad to have her. She has joined about two weeks ago, and she will be instrumental in maintaining and improving on our financial performance.

We're also continuing to optimize our portfolio. In July, we announced and realized total net proceeds of $575 million through our sale of our Canadian Oil Sands asset. This transaction represents a net gain of about $300 million, which will be recorded in this third quarter. Preserving our financial flexibility ensures that we'll have the ability to build and invest in our best projects globally.

Today, Newmont's global portfolio and project pipeline includes the Akyem and Turf Vent Shaft, which is anticipated to contribute to a stable operating portfolio of approximately 5 million ounces of gold production per year over the next three years. Our focus is on continuing to strengthen our global portfolio and deliver value to our shareholders, which may include divestment of non-core assets. We are committed to this objective and is evidenced by last week's announcement of signing a Letter of Intent to sell our Midas operation in Nevada to Waterton Global.

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