Newmont Goldcorp Announces Third Quarter 2019 Results

Press Release

DENVER– Newmont Goldcorp Corporation (NYSE: NEM, TSX: NGT) (Newmont Goldcorp or the Company) today announced third quarter 2019 results.

• Net income: Delivered GAAP net income from continuing operations attributable to Newmont Goldcorp stockholders of $2,226 million or $2.71 per diluted share; delivered adjusted net income¹ of $292 million or $0.36 per diluted share, an increase of $0.03 compared to the prior year quarter
• EBITDA: Generated $1,079 million in adjusted EBITDA², an increase of 70 percent from the prior year quarter
• Cash flow: Reported consolidated cash flow from continuing operations of $793 million and free cash flow³ of $365 million, an increase of 85 percent and 137 percent over the prior year quarter, respectively
• Gold costs applicable to sales (CAS) ⁴:Reported CAS of $733 per ounce, an increase of 6 percent over the prior year quarter
• Gold all-in sustaining costs (AISC) ⁵:Reported AISC of $987 per ounce, an increase of 10 percent over the prior year quarter
• Attributable gold production:Produced 1.64 million ounces of gold, an increase of 28 percent over the prior year quarter
• Portfolio improvements: Closed the Nevada Gold Mines joint venture; divested the Nimba iron ore project in Guinea; announced process to review potential sale opportunities for Red Lake in Canada; achieved commercial production at the Borden mine in Canada, Ahafo Mill Expansion in Ghana, and Quecher Main in Peru; advanced Tanami Expansion 2 to execution
• Financial strength: Ended the quarter with $2.7 billion of consolidated cash and net debt of $4.8 billion, supporting an investment-grade credit profile; declared a third quarter dividend of $0.14 per share
• Outlook: 2019 attributable production of 6.3 million ounces, CAS at $715 per ounce and AISC at $965 per ounce

“Newmont Goldcorp generated $1,079 million in adjusted EBITDA and $365 million in free cash flow for the third quarter, building momentum for an even stronger fourth quarter,” said Tom Palmer, President and Chief Executive Officer. “We expect to deliver $240 million in annual run-rate improvements by the end of 2019 and exceed our initial synergy targets from the Goldcorp acquisition. We also continued to strengthen our portfolio and advance profitable growth by bringing on Borden, the Ahafo Mill Expansion and Quecher Main on time and within budget.”

Third Quarter 2019 Summary Results

Net income (loss) from continuing operations attributable to Newmont stockholders for the quarter was $2,226 million or $2.71 per diluted share, an increase of $2,387 million from the prior year quarter primarily due to the gain recognized on the formation of Nevada Gold Mines as well as higher production and realized gold prices.

Adjusted net income was $292 million or $0.36 per diluted share,compared to $175 million or $0.33 per diluted share in the prior year quarter. The adjustments to net income of $2.35 primarily related to a gain on the formation of Nevada Gold Mines, transaction costs associated with the Newmont Goldcorp transaction, tax and valuation allowance adjustments, changes in the fair value of investments, and reclamation and remediation charges.

Revenue rose57 percent to $2,713 million for the quarter primarily due to higher realized gold prices and higher sales volumes, including a full quarter from the Goldcorp assets.

Average realized price ⁶ for gold was $1,476, an increase of $275 per ounce over the prior year quarter; average realized price for copper was $2.37, a decrease of $0.13 per pound over the prior year quarter; average realized price for silver, lead and zinc were $17.18 per ounce, $0.84 per pound and $0.81 per pound, respectively.

Gold CAS increased 29 percent to $1,232 million for the quarter due to a full quarter of costs included from the Goldcorp assets. Gold CAS per ounce increased 6 percent from the prior year quarter to $733 per ounce primarily due to gold price-related royalties, and higher unit costs at Peñasquito and Red Lake, partially offset by higher ounces sold and lower stockpile and leachpad inventory adjustments.

Gold AISC increased 10 percent to $987 per ounce for the quarter primarily due to higher gold CAS per ounce and higher sustaining capital spend.

Attributable gold production ⁷ increased 28 percent to 1.64 million ounces for the quarter primarily due to new production from the Goldcorp assets and higher grades at Ahafo, partially offset by lower grades at KCGM, Boddington, Yanacocha and Merian.

Attributable gold equivalent ounce (GEO) production from other metals increased to 236 thousand ounces primarily due to new silver, lead and zinc production from Peñasquito, partially offset by the classification of copper as a by-product following the formation of Nevada Gold Mines and lower copper grades at Boddington. CAS from other metals totaled $160 million for the quarter. CAS per GEO increased 5 percent to $747 per ounce primarily due to an unfavorable strip ratio and higher mill maintenance costs at Boddington in Australia. AISC per GEO increased 33 percent to $1,155 per ounce primarily due to higher sustaining capital spend, higher treatment and refining costs and higher CAS per GEO.

Capital expenditures ⁸ rose by 56 percent to $428 million, primarily due to increased sustaining capital investment from a full quarter with the Goldcorp assets and higher spending for growth projects, including Quecher Main, Ahafo Mill Expansion, Tanami Expansion 2, Yanacocha Sulfides, and Ahafo North.

Consolidated operating cash flow from continuing operations increased 85 percent from the prior year quarter to $793 million due to higher realized gold prices and inclusion of sales from the Goldcorp assets, partially offset by costs related to the Newmont Goldcorp transaction. Free cash flow alsoincreased to $365 million for the quarter, primarily due to higher operating cash flow, partially offset by higher capital expenditures.

Balance sheet ended the quarter with $2.7 billion of consolidated cash and a leverage ratio of 1.4x net debt to pro forma adjusted EBITDA⁹, issued $700 million of 2.800 percent Senior Notes due 2029 and retired $626 million of 5.125 percent Senior Notes due 2019 on October 1.

Corporate update

Nevada Gold Mines joint venture: On July 1, 2019, Newmont Goldcorp and Barrick Gold Corporation consummated the transaction establishing Nevada Gold Mines LLC (NGM). NGM is owned 38.5 percent by Newmont Goldcorp and owned 61.5 percent and operated by Barrick. The formation of NGM diversifies the Company’s footprint in Nevada and allows Newmont Goldcorp to benefit from additional efficiencies through integrated mine planning and processing. The Company accounts for its interest in NGM using the proportionate consolidation method, thereby recognizing its pro-rata share of the assets, liabilities and operations of NGM. Third quarter EBITDA for NGM was $234 million. Attributable gold production was 344 thousand ounces with CAS of $701 per ounce and AISC of $920 per ounce.

Projects update

Newmont Goldcorp’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term development capital projects and recently completed projects are presented below. Funding for Musselwhite Materials Handling has been approved and the project is in execution. Additional projects not listed below represent incremental improvements to production and cost guidance. Internal rates of return (IRR) on these projects are calculated at a $1,200 gold price.

• Quecher Main (South America) adds oxide production at Yanacocha, leverages existing infrastructure and enables potential future growth at Yanacocha. First production was achieved in late 2018 and commercial production was declared on October 31, 2019. Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of approximately 200,000 ounces per year between 2020 and 2025 (100 percent basis). During the same period, incremental CAS is expected to be between $750 and $850 per ounce and AISC between $900 and $1,000 per ounce. The full project, including future leach pad expansions, is expected to be completed for approximately $275 million¹⁰ of development capital which is below the Company’s initial estimate. The project IRR is expected to be 15 percent.
• Ahafo Mill Expansion (Africa) is designed to maximize resource value by improving production margins and accelerating stockpile processing. The project also supports profitable development of Ahafo’s highly prospective underground resources. First production was achieved in September 2019 and commercial production was declared on October 15, 2019. The expansion is expected to increase average annual gold production by between 75,000 and 100,000 ounces per year for the first five years beginning in 2020. Capital cost for the project was approximately $175 million. The project IRR is expected to be more than 20 percent.
• Borden, North America (North America) is a new underground mine expected to extend profitable production at the Porcupine complex. Commercial production was declared on October 1, 2019.
• Musselwhite Materials Handling (North America) improves material movement from Musselwhite’s two main zones below Lake Opapimiskan. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. The Company expects the project to be fully operational in mid-2020 after development progress was impacted by the conveyor fire at Musselwhite.

1		Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
2		Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
3		Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities.
4		Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
5		Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
6		Non-GAAP measure. See end of this release for reconciliation to Sales.
7		Attributable gold production includes 94,000 ounces from the Company’s equity method investment in Pueblo Viejo (40%)
8		Capital expenditures refers to Additions to property plant and mine development from the Consolidated Statements of Cash Flows.
9		Non-GAAP measure. See end of this release for reconciliation.
10		The Quecher Main project has incurred development capital costs of approximately $185 million through October 31, 2019, and will complete Phase 3 and 4 of the leach pad expansion over the next 3 years with a remaining capital investment of approximately $90 million.

Outlook

Newmont Goldcorp’s 2019 outlook reflects a full-year of Newmont operated assets and the Goldcorp assets from April 18, 2019. The Company does not include development projects that have not yet been funded or reached execution stage in the outlook below, which represents upside to guidance. The Nevada guidance includes the Company’s owned and operated Nevada assets through June 30, 2019, and has been updated to reflect the Company’s ownership interest in Nevada Gold Mines for July 1, 2019 to December 31, 2019. Longer term guidance is expected to be updated on December 2, 2019.

Attributable gold production is expected to be 6.3 million ounces in 2019. Production is fourth quarter weighted with the completion of the Ahafo Mill Expansion in Africa, the Borden project in Canada and higher grades expected at Cerro Negro, Éléonore, and Tanami.

Read More: https://www.newmontgoldcorp.com/newsroom/news-details/?newsId=03bcd9a7-a272-4ce5-9aa4-739b76f5aff1

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