'Fabulous district to be in' - BC is the prize says Newmont CEO Tom Palmer post Newcrest deal

British Columbia was a focus of last year’s mega-merger between Newmont Mining and Newcrest, says Tom Palmer, president & CEO of Newmont Mining (NYSE:NEM).

In February Palmer spoke to Kitco Mining at the BMO Global Metals, Mining & Critical Minerals Conference 2024 in Hollywood, Florida.

The $16.8 billion acquisition of Australia’s Newcrest by US-based Newmont was finalized last November.

Palmer said the value proposition for the transaction centered around three areas: the ability to further strengthen Newmont’s portfolio with Tier 1 acquisitions; the opportunity to consolidate assets in the United States or Australia; and exposure to copper.

Tier 1 assets are those considered “company-making” mines. They are generally large, low-cost and have long mine lives.

“A significant proportion of the metal that we'll produce out of British Columbia will be copper from the Red Chris block cave, it'll be copper from Galore Creek, our partnership with Teck [Resources] (TSX:TECK), and we'll have a nice amount of gold from Brucejack as well as Red Chris and Galore Creek. Fabulous district to be in,” said Palmer, referring to B.C.’s Golden Triangle.

Newmont recently announced it is selling seven mines to help raise $2 billion. They include Éléonore, Musselwhite and Porcupine in Canada, Cripple Creek and Victor in the US, Aykem in Ghana, and Australia’s Telfer mine. It also plans to divest two non-core projects, Havieron in Australia, and the Coffee gold project in Canada’s Yukon territory.

Palmer said all the mines on the chopping block are Tier 2 assets.

“Their production profile is not going to hit our Tier 1 definition, so they won't get the management time and the capital within a Newmont portfolio,” he said.

Newmont’s edited portfolio will produce between 6 and 7 million ounces of gold “literally for decades,” said Palmer, adding the goal is to bring all-in-sustaining costs (AISC) down to $1,150 an ounce with the next two to three years.

“As we hit our marks in each of those operations, the strength of those margins is what's going to enable Newmont to be resilient through a gold price cycle,” he said.

The company plans to reduce its debt from $9 billion to $8 billion and expects to spend $1.3 billion a year on development capital. The (annual) $1 per share dividend will be maintained and stock buybacks are planned as financial targets are met.

These days, gold companies aren’t only pressured to produce, but to adhere to environmental, social and governance (ESG) considerations.

Palmer said both open-pit and underground battery electric equipment will be a key part of Newmont’s moves to achieve net-zero carbon emissions.

“The combination of autonomous haulage and battery electric equipment and renewable energy is what an open-pit mine and quite frankly an underground mine is going to look like
in the future,” he predicted.

Coverage of the BMO Global Metals, Mining & Critical Minerals Conference sponsored by First Majestic Silver (NYSE:AG).

0:00 Newmont-Newcrest deal
2:37 British Columbia
9:19 Assets for sale
10:58 Balance sheet
13:10 Decarbonization efforts
15:36 2024 goals

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