Newmont Corporation (NYSE: NEM, TSX: NGT): World’s Leading Gold Company and Producer of Copper, Silver, Zinc and Lead; Interview with Omar Jabara, Group Executive for Communications. PDAC Booth 2912
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 1/11/2020
Newmont Corporation (NYSE: NEM, TSX: NGT) is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s unmatched portfolio of world-class assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont Goldcorp is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. We learned from Omar Jabara, who is in charge of communications for Newmont, that the Company was ranked top miner in Newsweek's list of America's Most Responsible Companies, which together with robust financial performance and effective risk management is an indication of a well-run and well-managed business. We learned from Mr. Jabara that 2019 was a pivotal year for the Company because of the successful acquisition of Goldcorp, which was the largest acquisition in gold mining history, as well as the successful joint venture in Nevada with Barrick Gold called Nevada Gold Mines, also a very significant transaction, within gold mining space. Newmont's new five year guidance released in December indicated to the market that they are in a very strong position to deliver the highest production profile of any gold producer, while also leading in safety as well as in sustainability performance.
Newmont Corporation
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Omar Jabara, who is Group Executive for Public Relations and Executive Communications with Newmont. Omar, it's been a very exciting year for Newmont and, recently, Newmont was ranked the top miner in Newsweek’s list of America's Most Responsible Companies. Could you tell us a little bit about that and then could you update our readers/investors on what has been happening at Newmont and some of the highlights?
Omar Jabara: Sure, happy to do that Dr. Alper and thank you very much. As always, it's a pleasure to speak with you and also to be able to reach your readers/investors through Metals News. Regarding the Newsweek ranking that came out, this is their inaugural list of America's Most Responsible Companies and, of course, we were honored and humbled in many respects to be included on the list, but also to be the top mining company on that list, as well. Out of the 300 businesses across the US that actually made the list, Newmont ended up 39th overall, which is a very good standing when you consider the company we are in as far as other businesses that were part of the list -- all of the leading names that you can imagine as well.
We see this as another indication that our efforts to improve our environmental, social and governance performance, across the business, is not only being recognized, but the results are being demonstrated. We feel it's very important to our business, not only because it's the right thing to do, but because it's also an indication of a well-run and well-managed company if you're performing well in environmental, social and governance performance. Our robust financial performance and effective risk management also requires strong transparent governance and the integration of sustainability into all aspects of our business.
Dr. Allen Alper: That's excellent. That's fantastic to be recognized and ranked so highly. That's excellent. You all should be proud.
Omar Jabara: Well, thank you, we are proud. I think it's a credit to the entire Newmont team, from the Board on down to our frontline employees. But in particular, our employees who really embrace and take to heart their responsibility and the role that they play in ensuring that our Company is behaving responsibly, ethically and sustainably in everything we do. We are honored by this recognition as well as the others we've received in this space. We also understand there is always room for improvement and we're going to continue working and driving to improve our sustainability performance and take it to even higher levels. Again, not only just because it's the right thing to do, but it also helps drive good, strong business results overall.
Dr. Allen Alper: That's excellent. Could you tell our readers/investors about some of the highlights of 2019?
Omar Jabara: Sure. 2019 has been a pivotal and historic year for Newmont, as you can imagine. Not only did we successfully complete the transaction to acquire Goldcorp – which was the largest acquisition in gold mining history – to create what is now the world's leading gold company as measured by assets, prospects and talent in top tier jurisdictions around the world. But we also successfully completed the joint venture in Nevada to create Nevada Gold Mines, with our partner there, Barrick Gold – and that also was a very significant transaction. Each of these transactions, on their own, are the types of transactions, at least in gold mining, that happen maybe once in a generation. And we successfully completed both of those transactions in one quarter in the same year.
Obviously, it meant a lot of work for everybody across the business, but we feel now that Newmont is in a good place and well positioned as we leave our first century and embark on our next century. And, we're in a position of strength as far as our assets, our unmatched project pipeline, our proven performance and proven strategy. We're in a position to deliver value, not only for our shareholders but all of our stakeholders, not just in the near term but for decades to come.
Dr. Allen Alper: That sounds fantastic. Could you elaborate on some of the other highlights of the year?
Omar Jabara: Certainly. This year we have been working very hard in the wake of the Goldcorp acquisition, as well as the Nevada Gold Mines joint venture, to ensure we deliver on the promised value improvements and synergies from those transactions. To back up a little, I want to speak for a moment about our track record over the last five years. Over the last five years, Newmont has delivered more than a 60% increase in total shareholder returns. And we're looking to build on that proven record, and have made good progress to not only meet the targets we set for synergies and value delivery from the Goldcorp acquisition, but to actually exceed those. Of course, our core value – central to everything we do and our first priority – is keeping our people safe in everything we do and having a relentless commitment to enhancing and always improving our safety systems and culture. That's core and foundational to everything we do. If we aren't getting that right, nothing else matters. That's the most important thing, above all else.
In early December we released our five year guidance and indicated to the market that we are in this very strong position to deliver the highest production profile of any gold producer, between 6.2 to 6.7 million ounces per year for at least the next five years, and quite likely beyond that, while also leading in safety, as well as our sustainability performance. We also have a proven track record of delivering our projects, either within or under budget, and on time or ahead of schedule. So we're proud of that track record. Of course, as you know, our project pipeline, with the Goldcorp acquisition, is second to none now, and that gives us the ability to be flexible and sequence projects, depending on market conditions, or where the business is positioned, or keep our powder dry, if you will, for later in a business cycle, if that's necessary. We have that flexibility, we have enough projects in our pipeline to be able to sequence them to suit the needs of the business.
Dr. Allen Alper: That sounds excellent.
Omar Jabara: Since 2013 we have delivered more than $2.5 billion in value, through our full potential continuous improvement program. That has helped us offset inflation – inflation as it relates to electricity, fuel, steel, labor costs and other increases that you would expect in mining. So that program has proven quite effective at managing our costs and keeping them very competitive, while also helping to improve safety and productivity, as well as efficiency. We're now applying that proven full potential program to our newly acquired assets, with the Goldcorp transaction, in places like Peñasquito in Mexico and Cerro Negro in Argentina, as well as the former Goldcorp mines in Canada. For 2019 we've identified $240 million in value, through that full potential program. We're on track to return more than $900 million dollars in dividends to shareholders in 2019 in the form of dividends.
We also recently announced our $1 billion share buy-back program, over the next 12 months. When we announced the Goldcorp transaction, we issued shares to be able to complete that transaction. With us buying back $1 billion in shares, that is immediately accretive to our shareholders because if there are fewer Newmont shares out in the marketplace, it means the shares of Newmont stock holders, will represent a larger portion of the Company that they own and the value that it delivers.
Dr. Allen Alper: That's excellent. That's really great for a lot of shareholders and stakeholders.
Omar Jabara: Yes sir. And we continue to operate our business using a conservative assumption of a $1,200 gold price, even though the gold price now is approaching $1,500, we still plan our business based on a $1,200 gold price. That means that we're able to remain profitable at that $1,200 gold price. Of course if the gold price is higher, we will be able to generate additional free cash flow, which we then can use in a variety of ways, including returning capital to shareholders, advancing projects through our very robust project pipeline, paying down debt, as well as other things.
Dr. Allen Alper: That sounds excellent. Could you tell our readers/investors about your Management team, their background and your background?
Omar Jabara: Certainly. Our President and Chief Executive Officer is Tom Palmer, a seasoned mining executive and professional. He joined Newmont in 2014 to run our business in Indonesia and shortly thereafter was promoted to run our business in the Asia Pacific region, which includes Indonesia as well as Australia and New Zealand. In 2016, he was promoted to become our Executive Vice President and Chief Operating Officer. He continued in that role until September 30th of this year, when Gary Goldberg, who had been our CEO, passed the baton to Tom, who is now leading the business.
Reporting to Tom, he has an executive team that covers all the key functions, but our Executive Vice President and Chief Operating Officer now is Rob Atkinson, who also like Mr. Palmer has a very strong background in operations and also a strong background in delivering step change improvements in safety, as well as productivity and efficiency.
Dr. Allen Alper: That sounds excellent.
Omar Jabara: We have Nancy Buese as our Executive Vice President, Chief Financial Officer. We have Nancy Lipson, who is our Executive Vice President, General Counsel and Steve Gottesfeld, who's our Executive Vice President, Head of Sustainability. We have Dean Gehring, who is our Executive Vice President, Chief Technology Officer, and Randy Engel, who is our Executive Vice President for Strategic Development. We have Jennifer Cmil, who is our Executive Vice President for Human Resources. We have Marcelo Godoy, who is our Senior Vice President for Exploration.
Dr. Allen Alper: Oh, that's an excellent, very strong team that Newmont Gold has. Would you say a couple words on your background?
Omar Jabara: I joined Newmont in 2017, so I've been with the Company more than 12 years. In February of 2020, it'll be 13 years that I will have been with the company and I've been in the communications function that entire time. It's been an amazing opportunity to work for such a well-respected, but also well anchored Company that takes its core values to heart. Our values are essential to not just who we are as a business, but who we attract and retain as individuals, within the company.
A lot of folks are interested in working for Newmont, because we're a well-run Company and we deliver good, strong results for our shareholders, but also because we have strong environmental, social and governance performance. We are a values-based Company and that guides how we behave, with each other, our local communities, other stakeholders, local governments, etc. We do that with integrity. The reason for that is not only because it's the right thing to do, but as you know, mining is a long-term business. When we make these large capital investments, we seek to get returns on those investments over a span of decades. So we can't be short-term focused or look to make a quick buck. Because, one, that doesn't really work and, two, that hurts our ability to successfully, safely and responsibly develop the next generation of Newmont mines, wherever they may happen to be in the world. You never want to be in a position where your last mine is the reason you can't get your next mine permitted or built.
Dr. Allen Alper: That's an excellent approach. Could you tell our readers/investors a little bit about 2020 and your long term outlook?
Omar Jabara: For 2020 we have guided to the market that we expect to produce 6.4 million ounces of gold. . For the years beyond that, through 2024, we expect our production profile to be in the range of 6.2 to 6.7 million gold ounces. We also have co-product production, what we call gold equivalent ounces, which can be in the form of silver, copper, lead, zinc that come out of the ground with the gold. For those, we are guiding in 2020 to produce 1.1 million ounces in 2020 gold equivalent ounces, in addition to the pure gold that we're going to produce.
Our cost applicable to sales, or gold all-in sustaining costs for 2020, we have a targeted $975 per ounce for 2020. And between $850 and $950 per ounce for 2021 and 2022. We expect all-in sustaining costs to improve to between $800 and $900 per ounce for 2023 and 2024.
Dr. Allen Alper: That's excellent. Could you tell our readers/investors why they should consider investing in Newmont Goldcorp?
Omar Jabara: I would be happy to. Newmont, as an investment vehicle, is unique in the gold industry, in that we have an unmatched project pipeline, which will allow us to produce between 6 and 7 million ounces of gold consistently, over at least a two-decade time horizon. Because our project pipeline is so robust, we have the ability to sequence those projects in a way that makes sense. So depending on what market conditions are doing, we can dial projects up or dial them back. Of course, doing it in a way that is value accretive to our owners, to our shareholders.
Underpinning all that is our Company's purpose and values. Our purpose is to create value and improve lives, through sustainable and responsible mining. That relates to mining and gold mining being a long-term business. And to be a well-run and successful long-term business, you have to be guided by strong values and principles so that you're not playing the short game, but you're playing the long game where you have that credibility and trust from stakeholders, local communities, employees, governments, investors and lenders over the long-term. It's those relationships that actually carry our business into the future. It's been part of Newmont's DNA for nearly the last 100 years and it's served us well, as we've been able to survive for that long. Not just survive, but also thrive. And that formula we believe will serve us well for the next 100 years.
Dr. Allen Alper: Those are fantastic reasons to consider investing in Newmont Goldcorp. Omar, is there anything else you'd like to add?
Omar Jabara: I would just like to thank you again, Dr. Alper, for all the work you do to educate investors and others about the importance of mining and particularly responsible mining, as essential to supporting our standard of living and way of life and underpinning the technological innovation that's driving progress and value creation in our world today. Be it in all the smart technology that's out there, in mobile devices, computers, and all the tools we rely on to keep our economy running strongly and helping people improve their lives. So without safe and responsible mining, none of that is possible.
Dr. Allen Alper: That sounds excellent. We’ll publish your press releases as they come out so our readers/investors can follow your progress.
https://www.newmont.com/
Omar Jabara
303.837.5114
omar.jabara@newmont.com
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