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Newmont Provides 2020 and Longer-term Outlook

Press Release

12/02/2019

Delivering stable production and improving costs through 2024

DENVER– Newmont (NYSE: NEM, TSX: NGT) (Newmont or the Company) announced its 2020 outlook1 with attributable gold production guidance of 6.7 million ounces at AISC2 of $975 per ounce. Attributable gold production is expected to be between 6.5 and 7.0 million ounces per year longer-term through 2024 with improving costs. The Company expects to produce approximately 1.1 million gold equivalent ounces from other metals in 2020 and increasing longer-term through 2024.

Highlights

  • Attributable gold production 3: Production guidance is 6.7 million ounces for 2020 and is expected to be between 6.5 and 7.0 million ounces longer-term through 2024.
  • Attributable gold equivalent ounce (GEO) production from other metals 4 : Co-product GEO production guidance is 1.1 million ounces for 2020 and between 1.0 and 1.2 million ounces in 2021; 1.1 and 1.3 million ounces in 2022, 1.3 and 1.5 million ounces in 2023 and 2024.
  • Gold costs applicable to sales (CAS): CAS guidance is $750 per ounce for 2020 and between $650 and $750 per ounce for 2021 and 2022; CAS is expected to improve to between $600 and $700 per ounce for 2023 and 2024.
  • Gold all-in sustaining costs (AISC): AISC guidance is $975 per ounce for 2020 and between $850 and $950 per ounce for 2021 and 2022; AISC is expected to improve to between $800 and $900 per ounce for 2023 and 2024.
  • Capital:
    • Attributable sustaining capital guidance is $975 million for 2020 and is expected to be between $0.9 to $1.1 billion longer-term through 2024.
    • Attributable development capital guidance is $575 million for 2020 and is expected to be between $500 and $600 million in 2021, between $300 to $400 million in 2022, between $100 and $200 million in 2023, and between $0 and $100 million in 2024.
    • Development capital includes Tanami Expansion 2 in Australia, Subika Underground in Ghana, Cerro Negro in Argentina, Musselwhite in Canada, expenditures related to the Company’s ownership interest in Nevada Gold Mines and to progress studies for future projects.

“As Newmont enters our centenary year in 2020, our people, mines, projects and balance sheet are all very well positioned to deliver stable and sustainable industry leading performance,” said Tom Palmer, President and Chief Executive Officer. “Our five-year outlook reflects steady gold production of 6.5 to 7 million attributable gold ounces as well as an additional 1.2 to 1.4 million gold equivalent ounces of copper, silver, lead and zinc. Our outlook also highlights our steadily improving cost profile, which includes more than half a billion dollars per year in sustainable operating, cost and supply chain improvements by 2021,” Palmer added.

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1 Outlook guidance used in this release are considered “forward-looking statements” and users are cautioned that actual results may vary; refer to the cautionary statement at the end of this release.
2 AISC as used in the Company’s outlook is a non-GAAP metric – see end of this release for further information and reconciliation to CAS outlook.
3 Attributable gold production outlook includes the Company’s equity investment (40%) in Pueblo Viejo but does not include other equity investments.
4 Gold equivalent ounces (GEO) is calculated as pounds or ounces produced multiplied by the ratio of the other metal’s price to the gold price, using Gold ($1,200/oz.), Copper ($2.75/lb.), Silver ($16/oz.), Lead ($0.95/lb.), and Zinc ($1.20/lb.) pricing.

Outlook

Newmont’s outlook reflects steady gold production and ongoing investment in its operating assets and most promising growth prospects. The Company does not include development projects that have not reached execution stage in its outlook which represents upside to guidance.

Attributable production

Attributable gold production is expected to be stable at 6.5 to 7.0 million ounces across the five year period. The 2020 outlook of 6.7 million ounces increases from 2019 with a full year of production from the acquired Goldcorp assets. Production is expected to remain between 6.5 and 7.0 million ounces per year longer-term through 2024 supported by a steady base from Boddington, Tanami, Ahafo, Peñasquito, and the Company’s equity ownership interest in the Nevada Gold Mines joint venture, which is further enhanced by solid production from the Company’s nine other operating mines and its equity ownership in Pueblo Viejo.

Regional production overview:

Australia

2020 2021 2022
Moz 1.5 1.5 – 1.7 1.6 – 1.8

2020: Full Potential at Boddington improves mining rates and grade increases throughout the year with the stripping campaign nearing completion in the South Pit, KCGM benefits from higher grade and throughput from mining Golden Pike in the Fimiston pit, and Tanami continues to deliver solid performance.

2021-2022: Boddington reaches higher grade ore while Tanami and KCGM deliver steady performance.

Africa

2020 2021 2022
Moz 0.85 0.85 – 0.95 0.90 – 1.0

2020: A full year of production from the Ahafo Mill Expansion is offset by mine sequencing in both the Subika and Awonsu open pits, a change in mining method at Subika Underground and lower grades at Akyem.

2021-2022: Subika Underground begins to deliver higher tons and Subika open pit reaches higher grades, partially offset by sequencing at Akyem.

North America

2020 2021 2022
Moz 1.7 1.6 – 1.8 1.5 – 1.7

2020: A full year of operations at Peñasquito, Éléonore and Porcupine increase production. Peñasquito reaches higher grades and Musselwhite is expected to reach normal production levels in early October, partially offset by lower leach pad production at CC&V.

2021: Musselwhite contributes a full year of operations, Peñasquito continues in higher grade ore and achieves higher throughput, and Porcupine benefits from higher grades in the Borden underground and Hollinger open pit mines.

2022: Peñasquito is impacted by lower gold grade from mine sequencing.

South America*

2020 2021 2022
Moz 1.3 1.1 – 1.2 1.0 – 1.1

*Includes Pueblo Viejo interest with ~375Koz in 2020 and 2021, and ~385Koz in 2022.

2020: A full year of production from Cerro Negro and Pueblo Viejo is partially offset by Yanacocha depleting higher grades at the Tapado Oeste pit and Merian transitioning to harder rock.

2021: Cerro Negro transitions to lower grades as mining concludes in the Eureka District and Yanacocha ramps down the oxide mill.

2022: Merian enters a stripping phase partially offset by higher grades at Cerro Negro.

Nevada Gold Mines (NGM)

2020 2021 2022
Moz 1.4 1.3 – 1.4 1.3 – 1.4

Production for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product GEOs

2020 2021 2022 2023 – 2024
Moz 1.1 1.0 – 1.2 1.1 – 1.3 1.3 – 1.5

2020: A full year of production from Peñasquito is partially offset by lower copper production at Boddington.

2021: Boddington copper production increases with steady production from Peñasquito.

2022-2024: Peñasquito delivers higher silver and lead production from the Chile Colorado pit, followed by higher silver and zinc production from the Peñasco pit.

Gold cost outlook

  • Costs improve throughout the five year period with continuing Full Potential improvements and ongoing investment in profitable projects.
  • CAS is expected to be $750 per ounce for 2020 from lower production in Africa and South America, partially offset by improvements in North America with a full year of operations at Peñasquito. CAS is expected to be between $650 and $750 per ounce for 2021 and 2022, and between $600 and $700 per ounce in 2023 and 2024.
  • AISC is expected to be $975 per ounce in 2020 from higher costs in South America and Africa, partially offset by improved CAS in North America. AISC is expected to be between $850 and $950 per ounce in 2021 and 2022, and improves to between $800 and $900 per ounce longer-term through 2024. Future Full Potential savings and profitable ounces from projects that are not yet approved represent additional upside not currently captured in guidance.

Regional cost overview:

Australia

2020 2021 2022
CAS/oz $735 $600 – $700 $550 – $650
AISC/oz $920 $800 – $900 $700 – $800

2020: CAS benefits from lower spend at Tanami for paste fill operations and less stockpile processing at KCGM partially offset by increased stockpile processing at Boddington. AISC includes increased sustaining capital spend at Boddington to advance Autonomous Haulage and at Tanami for ventilation.

2021-2022: Unit costs improve as Boddington production increases.

Africa

2020 2021 2022
CAS/oz $710 $700 – $800 $600 – $700
AISC/oz $870 $850 – $950 $800 – $900

2020: CAS is higher than 2019 on lower production at Akyem and Ahafo with stripping in the Subika open pit and the change in mining method at Subika Underground. AISC is higher on increased unit CAS partially offset by lower sustaining capital at Ahafo.

2021-2022: CAS improves from higher production at Ahafo with increased ore tons from Subika Underground and the end of stripping in the Subika open pit. AISC increases in 2021 on higher sustaining capital spend for tailings storage facilities at both Ahafo and Akyem.

North America

2020 2021 2022
CAS/oz $805 $700 – $800 $700 – $800
AISC/oz $995 $850 – $950 $900 – $1,000

2020: Unit costs improve as Peñasquito delivers a full year of production with Full Potential improvements and the removal higher cost production from Red Lake, partially offset by lower production at CC&V and higher costs at Musselwhite prior to resuming full operations in October.

2021-2022: Unit costs improve with increased production and the delivery of Full Potential improvements throughout the region.

South America

2020 2021 2022
CAS/oz $790 $700 – $800 $800 – $900
AISC/oz $940 $850 – $950 $1,000 – $1,100

2020: Unit costs increase on lower production at Yanacocha and from higher mine and milling costs at Merian from harder rock, partially offset by Full Potential improvements at Cerro Negro.

2021: Unit costs improve with lower operating costs at Yanacocha from the end of Quecher Main stripping and ramping down the oxide mill, partially offset by lower production at Cerro Negro.

2022: CAS increases with Merian entering a stripping campaign and Yanacocha production declining. AISC increases with CAS and higher sustaining capital at Cerro Negro.

Nevada Gold Mines

2020 2021 2022
CAS/oz $690 $600 – $700 $600 – $700
AISC/oz $880 $800 – $900 $800 – $900

CAS & AISC for the Company’s 38.5 percent ownership interest in NGM.

Attributable co-product costs per GEO

2020 2021 2022 2023 – 2024
CAS/GEO $560 $550 – $650 $600 – $700 $450 – $550
AISC/GEO $880 $900 – $1,000 $900 – $1,000 $750 – $850

2020: Unit costs improve driven by a full year of production at Peñasquito.

2021-2022: Unit costs per GEO increase from mine sequencing at Peñasquito, partially offset by higher copper production at Boddington.

2023-2024: CAS per GEO improves on higher production at Peñasquito and AISC per GEO improves on lower CAS and lower sustaining capital spend.

Consolidated Capital

2020 2021 2022 2023 2024
Total ($M) $1,625 $1,500 – $1,700 $1,200 – $1,400 $1,100 – $ 1,300 $900 – $1,100
Sustaining ($M) $1,000 $900 – $1,100 $900 – $1,100 $900 – $1,100 $900 – $1,100
Development ($M) $625 $500 – $600 $300 – $400 $100 – $200 $0 – $100

Sustaining capital remains steady, covering infrastructure, equipment and ongoing mine development.

Development capital includes Tanami Expansion 2 in Australia, Subika Underground in Ghana, Cerro Negro in Argentina, Musselwhite in Canada, expenditures related to the Company’s ownership interest in Nevada Gold Mines and to progress studies for future projects. Yearly decreases reflect the Company’s approach to only including development projects that have reached execution stage.

Consolidated expense outlook – Interest expense increases to $300 million for 2020 from a full year of expense related to the acquired Goldcorp debt. Investment in exploration and advanced projects is expected to be $460 million in 2020 with a full year of spend for the acquired Goldcorp assets. The 2020 outlook for general & administrative costs is $265 million as synergies of $120 million are realized from the Goldcorp transaction and depreciation and amortization is expected to be $2,150 million.

Assumptions and sensitivities –Newmont Goldcorp’s outlook assumes $1,200 per ounce gold price, $16 per ounce silver price, $2.75 per pound copper price, $1.20 per pound zinc price, $0.95 per pound lead price, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate, and $60 per barrel WTI oil price.

Assuming a 35% incremental tax rate, $100 per ounce increase in gold price would deliver an expected $400 million improvement in attributable free cash flow.

Read More: https://www.newmontgoldcorp.com/newsroom/news-details/?newsId=3df88c03-294d-4e86-a550-edf603666942

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