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Newmont Mining Corporation (NEM)
CIBC 17th Annual Whistler Institutional Investor Conference Transcript
January 24, 2014 12:10 PM ET
Laurie Brlas - Executive Vice President and CFO
Alec Kodatsky - CIBC World Markets
Alec Kodatsky - CIBC World Markets
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Thank you, Alec. And thanks everybody for joining us this morning to hear a little bit about Newmont. I know we are approaching the end of the conference and the ski slopes are beckoning. So appreciate you staying with us and hearing about it.
Thanks to CIBC for hosting this wonderful venue. It's a great venue and I am happy to be here today and tell you a bit about our business and our strategy, and really what we're doing as you heard from a lot of other folks, but what are we doing to manage through this challenging environment that we are all facing.
But, first I have to remind you to look at our cautionary statement, here we go. And remind you to read our 10-K for all the details about those cautions and so forth.
Moving on, I'll start with what we feel differentiates Newmont from some of the other folks that you might talk to or look at. We are highly respected operator. We have been in business and production for over 90 years and we really focus on the operation side of our business.
Our commitment is to maximize value over the near-term and we also want to position the company to thrive in the medium-term as we see prices start to climb over the coming years.
We can't control metal prices, but we’re very focused throughout the entire organization on what we can control and you hear me talk about that a lot and you've seen it come through in our results.
So the first thing is improving operational cost and efficiencies, which is actually falls a little bit on, it’s similar to safety. We feel like if you have a safe environment, you're going to have a lot of operational efficiencies flow through that. We focus on our technical standards and also bringing on commitment to bring additional projects on at low safety rates.
So we are very pleased that we had the lowest safety rate, injury rate, in the history of Newmont this year. So we are very pleased by that. And as I said, we think that that leads to a real focus on the details of operation, if you are focused on the details of safety, you are focused on the details of operation. But we won’t be satisfied until everyone of our employees goes home safe every day.
Turning to our strategy. Our strategy centers around providing the highest risk returns in all price cycles, there we go. It consist of three major elements. The first is to secure the gold franchise.
And what we mean by that is running our existing businesses more efficiently and more effectively, that’s the best source of cash that we can find the best source of opportunity is to really focus on those. You saw that in our third quarter results. We are going to continue to focus on this. We reduce year-to-date consolidated spending by 13%.
We also reduce our all in sustaining costs in Q3 by 16% over the prior quarter. And we did that by a focus completely across the Board. It was sustaining capital. It was procurement. It was G&A. It was exploration. It was advanced projects. It was an effort by the entire organization to be focused on doing the right thing for shareholders.
Our second piece is to strengthen the portfolio. As I said, the first thing is just establish and get the best you can out of what you have. But as we look at our portfolio, we can consider options to add or divest.
We've got some interesting development projects that we are going to continue to evaluate. There are certainly acquisition opportunities out there and we also consider divestiture and I'll talk a little bit more about that.
But it's really focused on what mix of our portfolio will drive the most value, considering mine life, where we are on the cost curve, another criteria like political risk. So how can we reposition, remake our portfolio.
We are not rushing to do that, but it's something that we as a senior leadership spend a lot of time evaluating. We believe that although these market conditions we are all facing are very challenging, these challenges create some opportunities and we are looking to capitalize on the very best opportunities.
The third pillar of our strategy is to enable the strategy by strengthening the capabilities and systems and culture we need to succeed. So some of those systems became evident in what drives the cost reduction, what we call our full potential which is a systematic way of going through and identifying the opportunities to take the bottlenecks out of production and sharing those best practices across the globe. Those types of systems and strategies will help us drive the cost down.