On track to meet full-year guidance with solid first quarter results; Newmont continues to invest in the Company's future and diverse world-class portfolio
DENVER--(BUSINESS WIRE)-- Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced first quarter 2021 results.
FIRST QUARTER 2021 HIGHLIGHTS
Produced 1.5 million attributable ounces of gold and 317 thousand attributable gold equivalent ounces from co-products
Reported gold CAS* of $752 per ounce and AISC* of $1,039 per ounce
Generated $841 million of cash from continuing operations and $442 million of Free Cash Flow (99 percent attributable to Newmont)*
Full-year production continues to be back-half weighted, in line with 2021 guidance**
Declared first quarter dividend of $0.55 per share, consistent with the previous quarter***
Ended the quarter with $5.5 billion of consolidated cash and $8.5 billion of liquidity with a net debt to adjusted EBITDA* ratio of 0.2x
Reduced $550 million of debt outstanding with available cash in April 2021
Executed $3.0B sustainability-linked revolving credit facility, demonstrating Newmont’s unwavering commitment to industry-leading environmental, social and governance (ESG) practices
First production from Boddington Autonomous Haulage System, delivering safety and productivity improvements; leading the way as the industry's first autonomous haulage fleet
Announced acquisition of GT Gold,+ located in the prospective Golden Triangle adding profitable copper and gold exposure to Newmont's industry-leading project portfolio
Continued focus on fatality prevention through global application of critical controls
“In the first quarter we delivered a solid financial performance with $1.5 billion in adjusted EBITDA and $442 million in free cash flow, putting Newmont on track to achieve our full-year guidance with improving production expected in the second half of the year. We remain confident in the strength of our business as we invest in our world-class portfolio, strengthening the balance sheet and sustaining our quarterly dividend of $0.55 per share," said Tom Palmer, President and Chief Executive Officer. "We remain focused on proactively eliminating risks that could lead to a fatality and continue to lead the industry with our safety and sustainability practices. We believe that strong ESG performance is a key indicator of a well-managed business and we continue to hold ourselves accountable to create value and improve lives through sustainable and responsible mining."
- Tom Palmer, President and Chief Executive Officer
*Non-GAAP metrics; see footnotes at the end of this release.
**See cautionary statement at end of release regarding forward-looking statements.
***See the cautionary statement at the end of this release, including with respect to future dividends.
+The GT Gold transaction is expected to close in the second quarter of 2021, subject to meeting normal closing conditions. See the Company’s news release, dated March 10, 2021, for additional information.
FIRST QUARTER 2021 FINANCIAL AND PRODUCTION SUMMARY
Q1'21 Q1'20 Q4'20
Attributable gold production (million ounces) 1.46 1.48 1.63
Gold costs applicable to sales (CAS) ($ per ounce)
$ 752 $ 781 $ 739
Gold all-in sustaining costs (AISC) ($ per ounce) $ 1,039 $ 1,030 $ 1,043
GAAP Net income (US $ millions)$ 538 $ 837 $ 806
Adjusted net income (US $ millions) $ 594 $ 326 $ 856
Adjusted EBITDA (US $ millions)$ 1,457 $ 1,118 $ 1,772
Cash flow from continuing operations (US $ millions)$ 841 $939 $ 1,686
Capital Expenditures (US $ millions $ 399 $328 $ 398
Free cash flow (US $ millions) $442 $ 611 $ 1,288
Attributable gold production1 was in line compared to the prior year quarter, decreasing 2 percent to 1,455 thousand ounces primarily due to the sale of Red Lake, lower leach pad production and the ramp down of the mill at Yanacocha, lower mill throughput at Nevada Gold Mines, lower ore grade milled at Merian and lower production at Cerro Negro as the site focuses on returning operations to full capacity while managing ongoing Covid-related impacts. These decreases were largely offset by higher ore grade milled at Peñasquito, Musselwhite, Boddington and Akyem.
Gold CAS2 improved 7 percent to $1,065 million from the prior year quarter primarily due to lower ounces sold. Gold CAS per ounce improved 4 percent to $752 per ounce primarily due to higher by-product credits from higher realized metal prices and lower stockpile and leach-pad inventory adjustments, partially offset by higher gold price-driven royalties and lower ounces sold.
Gold AISC3 remained flat compared to the prior year quarter at $1,039 per ounce as higher sustaining capital spend and higher advanced projects spend were largely offset by lower CAS per ounce.
Attributable gold equivalent ounce (GEO) production from other metals decreased 6 percent to 317 thousand ounces primarily due to lower ore grade milled at Peñasquito, partially offset by higher grade and throughput at Boddington.
CAS from other metals totaled $182 million for the quarter. CAS per GEO2 improved 8 percent to $555 per ounce from the prior year quarter primarily due to a lower allocation of costs to other metals and higher sales at Peñasquito, partially offset by unfavorable foreign currency impacts from the strengthening of the Australian dollar and higher copper price-driven royalties at Boddington. AISC per GEO3 improved 5 percent to $819 per ounce primarily due to lower CAS from other metals, partially offset by higher sustaining capital spend.
Net income from continuing operations attributable to Newmont stockholders was $538 million or $0.67 per diluted share, a decrease of $299 million from the prior year quarter primarily due to the recognized gains on the sales of Kalgoorlie, Red Lake and investment holdings in Continental Gold, Inc. (Continental) in the prior year, higher income tax expense and lower sales volumes in the current year. These decreases were partially offset by higher average realized prices in the current year, the impairment charge of TMAC Resources, Inc. (TMAC) in the prior year and charges from debt extinguishment in the prior year.
Adjusted net income4was $594 million or $0.74 per diluted share,compared to $326 million or $0.40 per diluted share in the prior year quarter. Primary adjustments to first quarter net income include changes in the fair value of investments, gains on asset and investment sales, reclamation and remediation charges and valuation allowance and other tax adjustments.
Adjusted EBITDA5 improved 30 percent to $1,457 million for the quarter, compared to $1,118 million for the prior year quarter.
Revenue increased11 percent from the prior year quarter to $2,872 million primarily due to higher average realized metal prices, partially offset by lower sales volumes.
Average realized price6 for gold was $1,751, an increase of $160 per ounce over the prior year quarter. Average realized gold price includes $1,780 per ounce of gross price received, the unfavorable impact of $20 per ounce mark-to-market on provisionally-priced sales and reductions of $9 per ounce for treatment and refining charges.
Capital expenditures7 increased 22 percent from the prior year quarter to $399 million primarily due to higher sustaining capital spend from Boddington Autonomous Haulage and higher development capital spend. Development capital expenditures in 2021 primarily include advancing Tanami Expansion 2, Yanacocha Sulfides, Cerro Negro expansion projects, Ahafo North, the Subika Mining Method Change, Quecher Main and projects associated with the Company’s ownership interest in Nevada Gold Mines.
Consolidated operating cash flow from continuing operations decreased 10 percent from the prior year quarter to $841 million primarily due to higher tax payments and other net unfavorable working capital movements , partially offset by higher average realized metal prices. Free Cash Flow8alsodecreased to $442 million primarily due to lower operating cash flow and higher capital expenditures as described above.
Balance sheet ended the quarter with $5.5 billion of consolidated cash and approximately $8.5 billion of liquidity; reported net debt to adjusted EBITDA of 0.2x9.
Nevada Gold Mines (NGM) attributable gold production was 303 thousand ounces with CAS of $745 per ounce and AISC of $868 per ounce for the first quarter. EBITDA10 for NGM was $294 million.
Pueblo Viejo (PV) attributable gold production was 91 thousand ounces for the quarter. Pueblo Viejo EBITDA10 was $117 million and cash distributions received for the Company's equity method investment totaled $38 million in the first quarter.
Newmont continues to maintain wide-ranging protective measures for its workforce and neighboring communities, including screening, physical distancing, deep cleaning and avoiding exposure for at-risk individuals. The Company incurred incremental Covid specific costs of $22 million during the quarter for activities such as additional health and safety procedures, increased transportation and community fund contributions. During the second quarter of 2020, the Newmont Global Community Support Fund was established to help host communities, governments and employees combat the Covid pandemic. Amounts distributed from this fund were $1 million during the quarter and have been adjusted from certain non-GAAP metrics. The remaining $21 million is not adjusted from our non-GAAP metrics.
We have mobilized a Covid vaccine working group with representatives from across the globe. Newmont views vaccination as critical in the fight against Covid-19 and actively encourages our workforce to get vaccinated as they become eligible. We are working to support authorities, through our Global Community Support Fund, to improve the availability and deployment of vaccines to our workforce and host communities.
Newmont’s capital-efficient project pipeline supports improving production, lowering costs and extending mine life. Funding for the current development capital project Tanami Expansion 2 has been approved and the project is in execution stage. The Company has included the Ahafo North and Yanacocha Sulfides projects in its long-term outlook as the projects are scheduled to be approved for full funding in 2021. Additional sustaining and development projects, not listed below, represent incremental improvements to the Company's outlook.
Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low-cost producer with potential to extend mine life beyond 2040 through the addition of a 1,460 meter hoisting shaft and supporting infrastructure to achieve 3.5 million tonnes per year of production and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years and is expected to reduce operating costs by approximately 10 percent. Capital costs for the project are estimated to be between $850 million and $950 million with a commercial production date in the first half of 2024.
Ahafo North (Africa) expands our existing footprint in Ghana with four open pit mines and a stand-alone mill located approximately 30 kilometers from the Company’s Ahafo South operations. An investment decision is expected in July 2021 and the project is expected to add 300,000 ounces per year with all-in sustaining costs between $600 to $700 per ounce for the first five full years of production (2024-2028), with estimated capital costs of between $700 and $800 million. Ahafo North is the best unmined gold deposit in West Africa with approximately 3.5 million ounces of Reserves and more than 1 million ounces of Measured and Indicated and Inferred Resource11 and significant upside potential to extend beyond Ahafo North’s current 13-year mine life.
Yanacocha Sulfides (South America)12 will develop the first phase of sulfide deposits and an integrated processing circuit, including an autoclave to process gold, copper and silver feedstock. The project is expected to add 500,000 gold equivalent ounces per year with all-in sustaining costs between $700 to $800 per ounce for the first five full years of production (2026-2030). An investment decision is expected in the second half of 2021 with a three year development period and estimated capital costs of approximately $2 billion. The first phase focuses on developing the Yanacocha Verde and Chaquicocha deposits to extend Yanacocha’s operations beyond 2040 with second and third phases having the potential to extend life for multiple decades.
1 Attributable gold production for the first quarter 2021 includes 91 thousand ounces from the Company’s equity method investment in Pueblo Viejo (40%).
2 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
3 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.
4 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
5 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.
6 Non-GAAP measure. See end of this release for reconciliation to Sales.
7 Capital expenditures refers to Additions to property plant and mine development from the Condensed Consolidated Statements of Cash Flows.
8 Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities.
9 Non-GAAP measure. See end of this release for reconciliation.
10 Non-GAAP measure. See end of this release for reconciliation.
11 See note to U.S. Investors at the end of this release; such resource estimate for Ahafo North is comprised of 610,000 ounces of Measured and Indicated Resource and 410,000 ounces of Inferred Resource as at December 31, 2020.
12 Consolidated basis.
Newmont’s outlook reflects increasing gold production and ongoing investment in its operating assets and most promising growth prospects. The Company has included Ahafo North and Yanacocha Sulfides in its outlook as the development projects are expected to reach execution stage in 2021. Additional development projects that have not reached execution stage represent upside to guidance. All production, cost and capital figures assume a $1,200/oz gold price.
Newmont’s 2021 and longer-term outlook assumes operations continue without major Covid-related interruptions. If at any point the Company determines that continuing operations poses an increased risk to our workforce or host communities, it will reduce operational activities up to, and including, care and maintenance and management of critical environmental systems. Please see cautionary statement in the end notes for additional information.
For a more detailed discussion, see the Company’s 2021 and Longer-Term Outlook released on December 8, 2020, available on www.newmont.com.
Five Year Cost and Production Outlook (+/- 5%)
Guidance metric 2021E 2022E 2023E 2024E 2025E
Gold Production* (Moz) 6.5 6.2 - 6.7 6.2 - 6.7 6.5 - 7.0 6.5 - 7.0
Other Metal Production** (Mozs) 1.3 1.2 - 1.4 1.4 - 1.6 1.4 - 1.6 1.4 - 1.6
Total GEO Production (Mozs) 7.8 7.5 - 8.0 7.7 - 8.2 8.0 - 8.5 8.0 - 8.5
CAS*** ($/oz) $750 $650 - $750 $625 - $725 $600 - $700 $600 - $700
All-in Sustaining Costs*** ($/oz) $970 $850 - $950 $825 - $925 $800 - $900 $800 - $900
Sustaining Capital* ($M) $950 $900 - $1,100 $900 - $1,100 $900 - $1,100 $900 - $1,100
Development Capital* ($M) $850 $1,000 - $1,200 $900 - $1,100 $200 - $400 $100 - $300
Total Capital* ($M) $1,800 $2,000 - $2,200 $1,900 - $2,100 $1,200 - $1,400
$1,100 - $1,300
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