Newmont Mining Corporation (NEM)

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Newmont Mining Corp (NEM)

Q3 2013 Earnings Call

November 01, 2013, 10:00 am ET

Executives

John Seaberg - Vice President of Investor Relations

Gary Goldberg - President, Chief Executive Officer, Director

Laurie Brlas - Chief Financial Officer, Executive Vice President

Chris Robison - Executive Vice President - Operations and Projects

Analysts

David Haughton - BMO Capital Markets

Patrick Chidley - HSBC

Jorge Beristain - Deutsche Bank

Paretosh Misra - Morgan Stanley

Brian MacArthur - UBS Securities

Garrett Nelson - BB&T Capital Markets

John Bridges - JPMC

Andrew Quail - Goldman Sachs

Presentation

Operator

Good morning, and welcome to the Newmont Mining third quarter 2013 earnings conference call. All lines will be on a listen-only mode until we open up for questions-and-answers. Today's conference is being recorded. If anyone has any 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, everybody. Welcome to Newmont's third quarter 2013 earnings conference call. With us in the room today, are Gary Goldberg, President and CEO, Laurie Brlas, Executive Vice President and CFO, Chris Robison, Executive Vice President, Operations and Projects and other members of our executive team, who will be available at the end of the call for questions.

Turning to our cautionary statement on slide two. We will be discussing forward-looking information, which is subject to a number of risks, as further described in our SEC filings, which can be found on our website at newmont.com.

Now I will turn the call over to Gary.

Gary Goldberg

Thanks, John, and thanks to our callers for joining us this morning. Newmont turned in very strong third quarter performance across all aspects of the business. This starts with safety and I am pleased to report that our team achieved its lowest total injury rate on record this quarter. Even more important, our performance is steadily improving. Since 2011, we have reduced our total injury rate by 33% and our lost time injury rate by 66%.

We are also delivering some of our best performance at two projects that recently reached commercial production. Akyem in Ghana and Phoenix Copper Leach in Nevada, where we built and commissioned a new solvent extraction/electrowining plant without a single lost time injury. Our ultimate goal is to eliminate all injuries at Newmont and we will continue to work towards that goal. This commitment to continuous improvement is at the heart of our underlying strategy.

Turning to slide four. The first element of our strategy is to secure the gold franchise. By this, we mean maximizing the value rather than the volume we deliver from our existing assets. Our cost and efficiency improvement programs are aggressive and they are gaining momentum. By the end of the third quarter, we have lowered our consolidated spending by $700 million compared to 2012 and we are just getting started.

The second aspect of our strategy is to strengthen the portfolio. Market conditions are challenging but they also create opportunities. We are working to improve the value, longevity and cost position of our portfolio to prudent investments and acquisitions in both gold and copper.

Finally, we are working to enable our strategy by building on the capabilities that give us a competitive advantage. These range from maintaining a strong talent pipeline and high technical standards to taking a more progressive approach to how we engage with host governments and communities. This gives you a sense of our objectives.

Now I would like to turn to slide five to look at our progress in meeting them. The numbers speak for themselves. Looking at the third quarter of 2013 versus the prior year's quarter, consolidated spending is down 13% or $700 million. All-in sustaining costs are down 16% at $993 per ounce. Gold cost applicable to sales are down 6%. Attributable gold production is up 4% and we remain on track to meet guidance.

Capital expenditures are down 36%, and as a result, we have lowered our capital expenditure guidance by a total of $400 million since the beginning of the year. Finally, we are creating value by optimizing our portfolio. We sold our interest in Canadian Oil Sands this past quarter and we are currently engaged with interested parties to sell our Midas operation in Nevada.

Let's look at production on Slide 6. Our Australia/New Zealand teams took the lead in improved gold production in the third quarter, mainly through productivity improvements. Nevada operations also had a strong quarter as they continue to make up for challenging first half.

In Africa, production was boosted by higher mill recovery. Copper production was lower than the third quarter of 2012, due mainly to processing lower than expected grade over at Batu Hijau.

On a positive note, this month, we produced our first copper cathodes at our Verde bioleach project in Peru and our new Phoenix solvent extraction electrowining plant to Nevada. The opportunity last week to visited Nevada and see firsthand this facility, and as some of you would have seen, we announced yesterday the Phoenix reached commercial production safely and efficiently.

Summing it up, we remain on track to meet our gold production outlook of between $4.8 million and 5.1 million ounces. For copper, we have revised our production outlook downward to between $135 million and 145 million pounds

Chris Robison will share more operational and project details in a few minutes, but first I will turn it over to Laurie Brlas, our new Executive Vice President and CFO to look at our financial performance.

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