Newmont Mining Corporation (NEM)

NEM 
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Newmont Mining Corp (NEM)

Q1 2014 Earnings Conference Call

April 25, 2014 10:00 AM ET

Executives

Kirsten Benefiel – Director, Investor Relations

Gary J. Goldberg – President and Chief Executive Officer

Mary Lauren Brlas – Executive Vice President and Chief Financial Officer

Chris Robison – Executive Vice President, Operations and Projects

Analysts

David Haughton – BMO Capital Markets

John Bridges – JPMorgan Chase & Co

Andrew C. Quail – Goldman Sachs & Co.

Brian Hsien Yu – Citigroup Global Markets Inc.

Paretosh Misra – Morgan Stanley & Co. LLC

Presentation

Operator

Good morning and welcome to the Newmont Mining First Quarter Earnings Conference Call. All lines will be on a listen-only mode until we open for questions and answers. Today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'd now like to turn the call over to Kirsten Benefiel, Director of Investor Relations. You may begin.

Kirsten Benefiel

Thank you, operator, and good morning, everyone. Welcome to Newmont's first quarter 2014 earnings conference call. Joining us on the call today are Gary Goldberg, president and chief executive officer; Laurie Brlas, chief financial officer. They and other members of our executive team will be available to answer questions at the end of our call.

Turning to slide two, I’d like to refer you to our cautionary statement. We will be discussing forward-looking information, which is subject to a number of risks. More information is included in our SEC filings, which can be found on our website at newmont.com. You can also find our latest financial information and additional data in the investor briefcase on the financial information page of our website as well.

Now, I will turn it over to Gary.

Gary J. Goldberg

Thanks, Kirsten, and thank you for joining us this morning. Our trajectory of strong cost and production performance continued in the first quarter of this year and that’s what we are focused on during this call.

I realized there may also be interest in recent media speculation and therefore I want to address that upfront. We are always opened opportunities that can make our company stronger and benefit our shareholders and other stakeholders. While I cannot comment on roomers or speculation I can tell you that we continue to be focused on running our business. That means meeting our commitments, maintaining our standards, and delivering shareholder value.

Now, I would like to turn to our first quarter results, which include reductions of $82 million in gold all-in sustaining costs, and 4% improvement in gold production over the prior year quarter. Running our operations more efficiently is at the heart of these results and closely linked to our safety performance.

Turning to Slide four. I am pleased to report that we have sustained six straight quarters of industry leading injury rates. Thanks to widespread ownership for working safely and efficiently. However, this performance is overshadowed by the tragic loss of our colleague Simon Donkor, a crusher operator at Akyem operations who died on March 26.

We are taking steps to understand what went wrong and to prevent a similar accident, both at Akyem and at all of our operations. Totalities are unacceptable, but we will honor Simon’s passing by renewing our commitment to safety and we will not led up. Continues improvement is a way of life across all aspects of our business.

Turning to Slide five. Newmont is the premier U.S. based gold mining company and I will take a minute to cover what makes us a global leader. We have a strong asset portfolio with 70% of our production derive from Australia, New Zealand and the United States. We will deliver production of about 5 million ounces of gold per year over the next three years, and 90% of our revenues come from gold.

We lead the gold sector in safety and sustainability, and believe that these attributes are key to both attracting the best people and protecting our investments. As we have demonstrated, we are relentless in our work to improve cost and efficiency. Our team reduced gold all-in sustaining cost by $82 million in the first quarter of 2014 and we are on track to save at least $600 million to $700 million by 2016.

Turning to our balance sheet, we are maintaining financial flexibility in a challenging price environment. Most recently we prepared to reschedule our debt payments and revised our dividend policy to adapt and thrive.

Finally, we’ve established a more disciplined approach to screening investments based on their value and risk profile and our ability to execute. Viewing our assets and opportunities through this lens has helped us prioritize our best organic development options and move forward with divesting assets that are not a good fit.

Now I would like to turn the specifics of what we delivered in the first quarter of 2014.

Moving to Slide 6. Our operation started the year on solid footing, lowering cost, and increasing attributable gold production by 4% compared to the prior year quarter. We set ourselves the challenge to produce gold more efficiently and we are meeting it through improved technical fundamentals from ore body modeling, and mine planning to mill throughput and recovery. We also improved attributable copper production by 20% over the prior year quarter primarily through new production at our Phoenix Copper Leach operation.

I’ll take you through our regional performance starting on Slide seven. In North America, strong production in Nevada was partially offset a loss of gold production in Mexico due to an explosives permitting issue at La Herradura. This issue has been resolved, and the operation is expected to return to full production in the second quarter.

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