Newmont Mining (NEM)

Q4 2011 Earnings Call

February 24, 2012 10:00 am ET

Executives

John Seaberg - Vice President of Investor Relations

Richard T. O'Brien - Chief Executive Officer, President and Executive Director

Russell D. Ball - Chief Financial Officer and Executive Vice President

Gary J. Goldberg - Chief Operating Officer and Executive Vice President

Guy Lansdown - Executive Vice President of Development

Randy Engel - Executive Vice President of Strategic Development

Grigore Simon - Vice President of Generative Exploration

Analysts

John D. Bridges - JP Morgan Chase & Co, Research Division

Jorge M. Beristain - Deutsche Bank AG, Research Division

Patrick Chidley - HSBC, Research Division

Michael Jalonen - BofA Merrill Lynch, Research Division

Paretosh Misra - Morgan Stanley, Research Division

Dave Hove - Stifel, Nicolaus & Co., Inc., Research Division

John Charles Tumazos - John Tumazos Very Independent Research, LLC

Presentation

Operator

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Good morning, and welcome to the Newmont Mining Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, please disconnect at this time. And now I'd like to turn today's conference over to Mr. John Seaberg, Vice President of Investor Relations for Newmont Mining Corporation. Thank you.

John Seaberg

Thank you, operator, and good morning, everyone. Welcome to Newmont's Fourth Quarter and Full Year 2011 Earnings Conference Call. Joining us today are Richard O'Brien, President and Chief Executive Officer, and other members of our executive leadership team.

Before we begin this morning, I'd like to refer you to our cautionary statement on Slide 2 as we will be discussing forward-looking information, which is subject to a number of risks, as further described in our SEC filings, which can be found on our website at newmont.com.

And now I'll turn the call over to Richard.

Richard T. O'Brien

Thanks, John. For those of you on the webcast, we'll begin on Slide 3. 2011 was another step in the transformation of our company as we built upon the strong foundation of our core operating regions and defined the next phase of our evolution. We are continuing to make progress on the strategy we discussed with you at April Investor Day last year. We discussed delivering competitive growth and returns, unlocking our exploration upside, maintaining a strong balance sheet and returning capital to our shareholders through a gold-linked dividend.

And while strategy sets the future, execution sets the base. So as we've been saying since 2007, everything at Newmont begins with execution. Good performance in our operations allows us to do many things. And in 2011, we delivered again on our original expectation and outlook for the year. Gary Goldberg will talk more about that in a moment.

Also in 2011, we took tangible steps to move our project pipeline forward. In particular, we announced initiation of construction at Akyem in Ghana, Conga in Peru and the Tanami shaft in Australia, which Guy Lansdown will speak to later in the presentation. And as we have said, competitive returns do require capital discipline. And from time to time, this means that not every project makes it to the next stage of development, and Hope Bay is such a project. And Russell will speak about the financial statement impacts of removing Hope Bay from our development pipeline later in the presentation.

With respect to the exploration upside, we had a successful year and delivered on our exploration program. As you saw yesterday, we announced year-end reserves of 99 million ounces of gold and nearly 10 billion pounds of copper. To put this in perspective, by year-end 2011, with 5.3 million ounces of net additions, that net additions exceeded the sum of the net reserve additions published by the other 4 North American senior gold companies combined. So for the near term, our exploration team is focusing on numerous opportunities, one of which is Long Canyon, Nevada, and Guy will provide you more information on that momentarily.

I'd just like to mention another exploration opportunity because Gary Goldberg and I just recently returned from Indonesia, where we were briefed on progress at the Elang exploration project, where we have 2 drill sites working already and we're adding a third. This is a longer-term prospective opportunity for Newmont, which is a large copper gold porphyry with similarities to our Batu Hijau project. And it's projects like Long Canyon and like Elang that underpin our belief that we can continue to deliver reserve additions through the drill bit that will, over time, allow us to discover the Newmont behind Newmont.

We will pursue our new projects and continue to explore and fund our exploration and development program and return capital to shareholders. We can do all of that because we have a strong base of operating cash flows and a very strong balance sheet.

In 2011, through our gold-linked dividend, we paid out nearly $0.5 billion in dividends or $1 per share, equating to only 23% of our adjusted net income. And as you know, we designed our gold-linked dividend to enhance investors' leverage to gold price, and it delivers. Since we announced the enhanced gold-linked dividend, Newmont's share performance has more closely correlated to the gold price than any of our peers.

By delivering on our strong strategy and maintaining our track record of operational execution, all of that underpins the success of this company and we can only accomplish that through the hard work and dedication of all of our employees, contractors and business partners across Newmont. And I want to thank all of those people for their efforts throughout 2011. But I also know that human capital strategy is important for the future and continuing to be able to retain our existing employees and attract some of the best expertise in the industry is important to our future as well.

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