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Edited Transcript of NEM earnings conference call or presentation 22-Feb-17 3:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Newmont Mining Corp Earnings Call

GREENWOOD VILLAGE Feb 22, 2017 (Thomson StreetEvents) -- Edited Transcript of Newmont Mining Corp earnings conference call or presentation Wednesday, February 22, 2017 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Meredith Bandy

Newmont Mining Corporation - VP of IR

* Gary Goldberg

Newmont Mining Corporation - President and CEO

* Nancy Buese

Newmont Mining Corporation - Executive VP and CFO

* Tom Palmer

Newmont Mining Corporation - Execuive VP and COO

* Grigore Simon

Newmont Mining Corporation - Senior VP, Exploration

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Conference Call Participants

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* Andrew Quail

Goldman Sachs - Analyst

* John Bridges

JPMorgan - Analyst

* Jorge Beristain

Deutsche Bank - Analyst

* Evan Kurtz

Morgan Stanley - Analyst

* David Haughton

CIBC World Markets - Analyst

* John Tumazos

John Tumazos Very Independent Research, LLC - Analyst

* Kip Keen

S&P Global - Analyst

* Robert Reynolds

Credit Suisse - Analyst

* Greg Barnes

TD Securities - Analyst

* Michael Dudas

Vertical Research - Analyst

* Andrew Kaip

BMO Capital Markets - Analyst

* Tanya Jakusconek

Scotiabank - Analyst

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Presentation

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Operator [1]

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Good morning and welcome to the Newmont Mining fourth quarter and full-year 2016 conference call.

(Operator Instructions)

Today's conference is being recorded. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Meredith Bandy, Vice President of investor relations. Thank you, and you may begin.

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Meredith Bandy, Newmont Mining Corporation - VP of IR [2]

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Thank you, and good morning, everyone.

Welcome to Newmont's fourth quarter and full-year earnings conference call. Joining us on the call today are Gary Goldberg, President and Chief Executive Officer; Nancy Buese, Chief Financial Officer; and Tom Palmer, Chief Operating Officer. They and other members of our Executive Team will be available to answer questions at the end of the call.

Turning to slide 2 before we go further, take a moment to review the cautionary statement shown here or refer to our SEC filings which can be found on our website newmont.com. Now I will turn it over to Gary on slide 3.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [3]

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Thanks, Meredith, and thank you all for joining us this morning.

Our overarching goal is to create shareholder value over the short, medium, and long term. Today we'll cover what we did to make Newmont a more reliable and profitable business in 2016 and what we are doing to build on that trajectory in the years ahead.

Common themes include: running safe operations that meet the highest sustainability standards; applying best practices and technologies to improve costs; investing to strengthen our portfolio and reserve base; and generating superior returns.

We will deliver this performance by continuing to execute our strategy, turning to slide 4. Our strategy is to improve the underlying business, strengthen the portfolio, and create value for shareholders. In 2016, we improved our business by: maintaining low injury rates and no fatalities; reducing gold all in sustaining costs for the fourth consecutive year; and increasing attributable gold production to 4.9 million ounces.

We strengthened our portfolio by: building two new mines, Merian and Long Canyon in two prospective new gold districts; expanding profitable expansions in Cripple Creek and Victor, Tanami and Carlin; adding 10 million higher grade ounces to our reserve and resource base; and selling PTNNT for $920 million in gross cash proceeds.

These performance in portfolio improvements helped us create value by doubling free cash flow to $784 million, increasing adjusted EBITDA to $2.4 billion, and improving cash on hand to $2.8 billion. We also improved share price by 89% and doubled our dividend payout.

Strong performance starts at our operations, turning to slide 5. I will point out two milestones our team reached in 2016. First, we lowered our serious injury rates by 75%. This translated to only two serious injuries across our workforce of 28,000 people, good progress but two injuries too many.

Second, we were rated the top mining company in the Dow Jones sustainability index for the second year running and recognized for the most improved performance. This year we will continue to lower safety risks, including fatigue, by focusing on improving behaviors and systems. We are providing training to our drivers and installing monitors in our haul trucks to alert them to the onset of fatigue. Our team at Carlin piloted the technology before we invested and reported and 87% decrease in fatigue-related events.

Operational excellence also shows up in our cost performance, turning to slide 6. We have steadily reduced our all-in sustaining costs by a total of 22% since 2012. This excludes PTNNT. Nearly two-thirds of these savings are the result of cost and efficiency improvements supported by our Full Potential program. Our team has defined and delivered thousands of improvements through Full Potential and the program is still going strong.

We also rely on relevant technology to improve productivity. Automation and analytics are already delivering improvements and there is more to come.

Turning to our portfolio on slide 7. Comparing our divestments to our investments over the last three years, we have been able to lower unit costs by more than $100 per ounce and double mine life.

Divestments culminated in 2016 with the sale of PTNNT for a total value of $1.3 billion. This includes up to $403 million in contingent payments associated with copper price and future development. Our portfolio is now anchored in four key regions where we have the stability needed to continue investing over time.

Turning to recent investments on slide 8. Last year, we built an even stronger record of delivering profitable projects when most miners were delaying their capital spend. Our team built the first phase of Long Canyon safely two months ahead of schedule and $50 million below budget. Taking a phased approach helped us generate a greater-than-26% rate of return and reduced the payback period to about four years.

At Northwest Exodus in Tanami we advanced extensions that will add profitable production and mine life and serve as platforms for further growth. Both projects are expected to generate returns in excess of 30% at current gold prices.

Merian is another success story, turning to slide 9. We made our first investment in 2004 as a development partner with Alcoa. Since then our geologists have grown the reserve and resource base to 5 million ounces. The government of Suriname acquired a 25% interest in 2014. More recently we signed a development agreement with indigenous Pamakin people.

Finally we delivered the first phase of Merian on schedule and more than $150 million below budget last year and we continue to see promising exploration results. This is a great example of the type of long-term investments we will continue to pursue.

Turning to slide 10, for more on exploration. In 2016, we added 4.1 million ounces of gold reserves by the drill [bit] with particularly strong results at Tanami and Merian. We improved reserve grade by 13% through high-grade additions and the sale of PTNNT. These additions helped partially offset the completion of six million ounces and divestment of 2.6 million ounces. We also added 6.1 million ounces to our resource base including two million ounces at our Yanacocha sulfides project which is showing increasing promise.

In 2017 we expect to boost our exploration in advance projects expenditure by 22%. About two-thirds of that increase will pay for more brownfields and greenfields exploration. About one-third will fund studies for the next generation projects like Yanacocha sulfides, Long Canyon Phase 2 and the next expansion at Tanami.

Turning to slide 11 for a look at the global business. We ended 2016 with a streamlined portfolio of cash generating operations, a proven approach to improving cost and productivity and profitable options to expand mature mines and new gold districts in the Americas and to develop extensive underground resources in Africa and Australia. We also ended the year with nearly three-quarters of our gold reserves in the US and Australia.

Finally, our 29% holding in TMAC is not represented on this map or included in our reserves, but I would like to congratulate Terry and the Team at TMAC in Canada who poured their first gold earlier this month.

With that I will turn it over to Nancy for financial results on slide 12.

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Nancy Buese, Newmont Mining Corporation - Executive VP and CFO [4]

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Thank you, Gary.

As many of you, know I joined Newmont late last year. I've been on the job for just over three month and had the opportunity to visit two of our regions and meet many of our people. What stands out so far is the commitment to safety that permeates the business and the sense of pride in ownership people take in our performance and future prospects. Newmont is a great place to work and I'm proud to be part of the team.

I will turn now to our fourth-quarter financial performance on slide 13. We saw significant improvement in our financial position compared to the prior-year quarter. Gold production rose 17% with increases at most of operations and new ounces from Merian and Long Canyon.

All-in sustaining costs declined 11% through a continued focus on improving operational effectiveness and cost efficiency. Adjusted EBITDA more than doubled to $629 million. We also improved free cash flow by more than 200% to $289 million.

I will turn to slide 14 to review adjustments to our GAAP net income and EBITDA. Starting at the top, net loss per share excluding PTNNT was $0.73 for the fourth quarter. Adjusted net income per share was affected by three factors.

First, we adjusted out the impairment charge at Yanacocha which totaled $0.63 per share. As we announced last December we're completing a comprehensive update of our closure plan at Yanacocha and have increased our cost estimate to cover higher water management requirements. As a result we increased our reclamation liability and record an impairment. We originally indicated impairment range of $1 billion to $1.2 billion and came in just below that range at $970 million as we updated our assumptions.

Second, we adjusted out $0.22 for certain tax items including the valuation allowance on our deferred tax asset. Third, we adjusted out $0.13 related to a book loss on debt repayment and non-cash reclamation expense.

Taking these adjustments into account, we delivered adjusted net income of $0.25 per share up $0.28 from the prior-year quarter. Adjusted EBITDA of $629 million reflects the same drivers.

Turning to full-year results on slide 15. Strong operational performance drove a 7% increase in attributable gold production and a 2% improvement in AISD year on year. This translated to exceptional financial performance including an 89% increase in adjusted net income to $619 million, a 25% increase in adjusted EBITDA to $2.4 billion, and more than doubling our free cash flow to $789 million.

Turning to slide 16 and our full-year adjustment. Net loss excluding PTNNT was $0.41 per-share for 2016. Our full-year adjusted net income of $1.16 per share was impacted by two factors. The adjustment for the Yanacocha impairment I discussed earlier totaled $0.63 per share and adjustments related to valuation allowances on our deferred tax assets totaled $0.94 per share. Adjusted EBITDA of $2.4 billion for the year reflects impairment and reclamation charges related to Yanacocha closure estimates, loss on debt repayments, and reversing a net gain on asset sales as well as some other items.

Turning to slide 17. As Gary mentioned, performance and portfolio improvements have given us the means to execute our capital priorities which are defined by profitable growth, maintain industry leading financial flexibility, and return cash to shareholders.

In 2016 we generated $1.1 billion through asset sales and increase our cash on hand to $2.8 billion. Our nearly $6 billion of liquidity includes a $3 billion undrawn revolver and allows us to invest in our best growth options and to pursue opportunistic M&A.

We also reduced our net debt by two-thirds over the last three years resulting in a net debt-to-adjusted EBITDA ratio of 0.8 times and making our investment-grade balance sheet one of the strongest in the industry.

Finally, our fourth-quarter dividend doubled compared to the prior-year quarter and we enhanced our dividend policy to improve shareholder returns at the higher gold prices beginning in 2017. We are confident in our ability to generate cash through the cycle so we also increased the payout at lower gold prices.

Wrapping up my comments on slide 18. Consistently strong performance and a steady focus on value creation continue to differentiate Newmont in 2016. We ended the year with $1.47 in free cash flow per share and an 89% increase in share price both well above the sector average. With that I will hand the call back to Gary on slide 19.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [5]

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That you, Nancy.

Coming up 2016 we did what we said we would do and delivered sector-leading performance, portfolio improvements, and value. We also recognize that we have to continuously improve our record to stay in the lead.

Switching gears now to the future on slide 20. Our five-year outlook calls for steady gold production at competitive costs and ongoing investment in profitable growth. Lower cost production from our newest mines will partially offset the impacts of inventory adjustments and stripping campaigns at are more mature assets.

We also expect to increase spending on the next generation of growth prospects while maintaining our investment-grade balance sheet. Taken together these factors position us to maintain strong performance over the next decade and beyond.

Turning to our project pipeline on slide 21. Newmont's project pipeline is among the best in the gold sector in terms of depth and capital efficiency. This gives us the flexibility to maintain production levels while growing margins and mine life.

The projects that are included in our outlook are the current projects and sustaining capital projects you see here. These are the Tanami expansion and Morrison in Australia, Northwest Exodus and Goldstar in Nevada. The midterm projects that will improve our costs and production outlook are shown in green. These include the Ahafo Mill expansion, Subika underground and Ahafo North in Ghana, Twin Underground in Nevada and Quecher Main in Peru. With the exception of Ahafo North we expect to approve these projects during the course of this year. Finally, we continue to you to invest in our longer term projects shown here in dark blue.

Turning to slide 22, for the production profile associated with this pipeline. As you can see Newmont has a stable long-term asset base with considerable upside from its industry-leading project pipeline. Our gold production profile is forecast to remain at about 5 million ounces for the perceivable future and we continue to advance our mid- and long-term projects to sustain profitable production in the outer years.

We provided a seven-year view here in keeping with our focus on long-term value creation and we believe this outlook differentiates us from our competitors. Let me reiterate that when we talk about growth we are referring to growing margins, not ounces. Our work to develop a portfolio of lower cost, longer life assets and to generate industry-leading return on capital employed is paying off and we will continue this trajectory by taking a fit-for-purpose approach to developing our projects, weighing multiple options to improve risk and return, delivering projects safely, on or ahead of schedule, and at or below budget, and continuing to invest in early stage and exploration opportunities.

Turning to slide 23 for more on our guidance. Our current three- to five-year outlook is for steady production of 4.5 to five million ounces unchanged from prior guidance. In 2017 we expect gold production to increase to between 4.9 and 5.4 million ounces as a full year of production for Merian and Long Canyon more than offset lower production at Twin Creeks and Yanacocha.

In 2018 production will decline slightly to between 4.6 and 5.1 million ounces due to higher stripping at Boddington and lower grades at Cripple Creek and Victor, Twin Creeks and Akyem. Both Boddington and Twin Creeks returned a higher production in 2020.

Our all-in sustaining costs outlook for 2017 and 2018 is slightly higher primarily due to recent events that we continue to manage. First we are working to recover ounces that were impacts by a larger slip in Carlin Silverstar Mine in late November. We have taken that production out of guidance for now and it represents upside for 2018 and 2019.

Guidance also reflects the work we've done to fine-tune ground control plans at Leeville. Second, we adjusted our outlook to reflect the impact of record rainfall we have been experiencing at Tanami. The team is implementing recovery plans now.

Third we shifted the allocation of our cost between copper and gold production starting in 2017. And finally our increased investment in advanced projects and expiration will raise costs in the near term as we continue to invest in our ability to generate superior value over time.

Our cost outlook for 2019 through 2021 remains between $880 and $990 per ounce. Our sustaining capital spend reflects ongoing investment in our asset base and is expected to rise slightly in 2017 in keeping with prior guidance. This capital will mainly fund ongoing mine development, tailing storage capacity, and equipment rebuilds.

Longer term, we expect to hold sustaining capital to between $600 million and $700 million per year which is favorable to previous guidance due to a mix of sustainable cost savings and deferrals.

Development capital outlook for 2017 and 2018 supports our current growth projects. Our guidance does not include projects unless all studies are complete and full funds are committed.

We believe this aligns with how our shareholders think about their investments as well. Our outlook will improve as we add midterm projects over the next three years and our longer term projects thereafter.

Likewise, we do not include Full Potential savings past 2017 in our outlook. For the last four years we have more than offset the impacts of inflation through Full Potential and we expect this trend to continue.

As always, we take a realistic approach to guidance to drive the right focus within Newmont. With that high-level overview, I will turn it over to Tom on slide 24 for more details on our regional performance and outlook.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [6]

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Thanks, Gary, and I will start with North America on slide 25. In November 2016 we reached commercial production at Long Canyon, two months ahead of schedule and 20% favorable to budget.

We also met our investment case and completed expansions at Cripple Creek and Victor. We improved mill throughput and recoveries in 2016 and expect to further optimize performance through our Full Potential program. At Carlin we are funding a profitable extension of our Exodus Mine that will reach full production in 2018.

As Gary mentioned, we experienced another slip at the Silverstar Mine later last year. This prevented us from mining the last ore from this pit in 2016 as expected. We had planned to process some of this ore in the early part of 2017 but have taken those ounces out of guidance for now. This represents upside for 2018 and 2019 as we work through plans to reenter this mine.

Also we continue to make good progress at Leeville. The work we have done to refine our ground control management plans and change our mining method in some areas has been incorporated into our guidance for Carlin.

For the North America region, we expect higher production in 2017 as a full year of operations at Long Canyon offsets the impact of stripping and processing stockpiles at Twin Creeks. In 2019, you can see the impact of processing stockpiles as we work through stripping campaigns at both Carlin and Twin Creeks. Both sites returned to higher production levels in 2020.

It is also worth noting that we will continue to see seasonal impacts at Carlin with production weighted to the second half of the year. Long Canyon is ramping up steadily from its first gold pour in November and its production will also be weighted to the second half of 2017. Finally, we expect to reach a decision on our Twin Creeks underground mine later this year.

Turning to South America on slide 26. We commissioned Merian last October on time and 20% below budget. Merian's lower cost ounces have partially offset decline in production at Yanacocha. We're keeping our options open at Yanacocha through potential development of the Quecher Main deposit which could sustain upside gold production through to 2025. This project is not included in our current guidance and we expect to reach a decision to move forward later this year.

As Gary indicated, we are also advancing our sulfide studies at Yanacocha and declared our first resource of 2 million ounces in 2016. Project economics and technical viability continue to improve as we advance work in the Chaquicocha exploration decline and on autoclave testing to optimize our approach to mining and processing sulfide ores. We also continue to evaluate and refine our closure estimates and approach in Peru while preserving optionality for future development.

South America production is expected to increase slightly over the next two years as we hit our stride at Merian. In 2019 you can see the impacts of declining production at Yanacocha and higher stripping at Merian. Costs are projected to remain relatively stable over the next three years and in Full Potential which will launch at Merian this year represents further upside.

Finally, Dean Gehring, a experienced mining leader, will join the Newmont Team on June 1 to run our South American business. Dean succeeds Trent Tempel, who is retiring after 33 years of distinguished service with Newmont.

Turning to Australia on slide 27. Our team delivered exceptional performance in 2016 driven by record throughput at Boddington and KCGM and strong results at Tanami as they continue to adventure their expansion projects. This project adds a second decline to support a step change in mining rates and builds incremental plant capacity to match those rates and improve recoveries. The second decline is in use and the mill expansion is under construction.

As Gary mentioned earlier, progress has been impacted by two months of record rainfall in the northern part of Australia but we remain on track for completion in mid-2017.

Turning to the regional outlook. We come off record production at Boddington over the next three years as we move into the next layback. This will impact production and cost before their return to prior levels in 2020. The team expects to improve this outlook through Full Potential and by optimizing the Tanami expansion project. We added 1.6 million ounces of reserves at Tanami in 2016 bringing total reserves and resources to 5.6 million ounces. Our outlook also includes increased study cost to advance a promising second expansion at Tanami.

Turning to Africa on slide 28. Ahafo and Akyem achieved steady mill throughput and recovery improvements in 2016 and delivered our lowest regional injury rate.

Ghana recently elected a new president and we are encouraged by his willingness to engage and support mining investment. We continue to see Ghana as a good place to do business and we are making progress on securing the permits we need to expand the mill at Ahafo and build us a bigger underground. When approved the two projects will add between 225,000 and 300,000 ounce of gold annually and lower Newmont's all-in sustaining costs.

As Gary indicated, we expect to reach a decision in the first half of 2017. Both projects represent upside to our current guidance.

Otherwise, we expect production to decrease and cost to increase in 2017 and 2018 as we reach harder ore and deplete higher grade stockpiles at Akyem. In 2019, production and cost are forecast to improve as we reach higher grade ore at Ahafo. With that I'll hand it back to Gary on slide 29.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [7]

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Thanks, Tom. We continue to make Newmont a safer and more profitable business in 2016 with differentiated cash flow, financial strength, and growth prospects. We delivered industry-leading safety and sustainability performance at our operations, and increased adjusted EBITDA by 25% to $2.4 billion and more than doubled free cash flow to nearly $800 million on the back of superior operational performance.

We invested these proceeds back into the business by building two new mines and profitable expansions in the Americas and Australia and adding higher grade ounces to our reserve base. We optimized our portfolio with the sale of our PTNNT stake for $920 million in cash proceeds and we use these proceeds to retire more than $1.3 billion in debt improving our liquidity and doubling our dividends.

Looking ahead, we can't control the gold price, but we can and will work to outperform the gold sector by continuing to meet our challenges head-on and consistently delivering high quality business results, developing profitable projects on or ahead of schedule, and at or below budget, investing in exploration to expand our existing assets and develop the next world-class gold mines, and maintaining a strong balance sheet. Our ultimate goal is to lead the gold sector in profitability and responsibility.

We enter 2017 from a position of strength, but we recognize that leadership requires us to consistently meet or exceed our commitments and your expectations. Thank you for your time. I will turn the call back now to the operator to open the line for questions.

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Questions and Answers

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Operator [1]

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Our first question comes from Andrew Quail, Goldman Sachs. You may begin.

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Andrew Quail, Goldman Sachs - Analyst [2]

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Gary and team, good morning and thank you so much for taking my question, and congrats on a strong quarter.

Mine is on the projects. First one I suppose with Yanacocha and Quecher Main. Can you tell us how this ties in with what you guys are doing there with the impairment that you guys took this quarter? And also maybe I think Tom was touching on the closure cost, what is actually the current provision there for the reclamation? And I suppose is this an assets that we knew look forward if you don't go ahead with something like Quecher Main in the second half of 2017, is this an asset you would look to divest?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [3]

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Okay. A couple of different questions in there. Thanks, Andrew.

First of all on Quecher Main. Quecher Main is an incremental oxide expansion that adds about 200,000 ounces per year of production, total production, starting from after we approve it basically gives us from 2019 to 2025. So it's incremental, and really the way I have looking at it is a bridge to the development of the Yanacocha sulfide. It allows us to finish the study work through the next 2 1/2 to 3 years on Yanacocha sulfide so we are in a position to make an investment decision there.

The closure cost estimates are really -- it is an update primarily water related in terms of the increased to the cost we have estimated. It does not at this stage include Quecher Main is in the additional cost we might incur by operating Quecher Main or the benefit we'd get by extending the reclamation time. That would be something we would have to update as we approve the project.

The same thing with Yanacocha sulfide. Yanacocha sulfides both have an impact on reclamation costs but it also -- not in terms of adding to that, but also would extend when they occur, so pushes that out. None of that is included so right now we just assumed end of mine life at the end of 2019 and all those reclamation costs. That's why you see some of the Yanacocha cost going up here in the next couple of years as those additional reclamation costs are flowing through to our all in sustaining costs.

In terms of divestiture, your last question, had a very good meeting with the president when I was down in November. I'm encouraged by the approach he is taking and the approach not just for the country, but within the regions and the support and focus that he's placing on regional economies and the importance there.

The Kala Marka province is one that has not benefited as much by the presence of mining and I think changing things there is important. I'm encouraged by not only Quecher Main, but also the Yanacocha sulfide project and the way that is starting to shape up. It shows really good promise so from my standpoint it is one that we really see good potential in and want to see the full potential through.

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Andrew Quail, Goldman Sachs - Analyst [4]

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And the impairment this quarter was related to what exactly?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [5]

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It was a combination of additional -- well, we changed the reclamation cost provision and that was primarily due to changes in our view on how we would have to manage and treat water. That triggered an impairment to our carrying value so the $920 million.

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Andrew Quail, Goldman Sachs - Analyst [6]

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Got it.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [7]

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It essentially was triggered by that.

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Andrew Quail, Goldman Sachs - Analyst [8]

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Got it, and last one is obviously in Africa, in Ghana. What would be the final hurdle that you guys have to get over the line to approve Subika and Ahafo together? Is it sort of permitting or is obviously -- it doesn't look like it is economics given your balance sheet is so strong. Can you just walk us through the final steps?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [9]

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Sure thing, and I had the opportunity -- as we have a new president in Ghana as well, who was inaugurated in January and I had the opportunity to meet with him earlier this month and I came away encouraged about the focus that he is taking on looking to grow businesses in Ghana. I talked to him about our history and what the future potential is.

We are working through with the local regulators getting permits for Subika underground. I think we are making progress on that and also making good progress in regards to the mill expansion on the requirements around tailings dam construction.

I think the thing that I've seen in Ghana which isn't surprising getting some of them were broadly publicized issues with tailings dams. There is more focus on the construction. I think we did a good job with that at all of our operations, but we're taking the right time to make to make sure regulators and other stakeholders are comfortable with what's going on so that's taking a little bit more time.

I believe we're in a position here in the first half of this year to get those permit approvals in alignment with what is required to take the next steps. The economics look good on both of these projects.

We have done a good development work with Subika underground. That sits in a better place to see earlier first of production and the mill expansion is a simple expansion, primarily the grinding capacity and crushing capacity at Ahafo so there's not new technology or anything going. So they are really good additions to the portfolio there.

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Andrew Quail, Goldman Sachs - Analyst [10]

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Thanks. We've got a new president in the US. Have you met him?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [11]

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No. Have not met him yet. We are paying attention to what he brings along the way.

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Andrew Quail, Goldman Sachs - Analyst [12]

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Good. Okay. Thanks, Gary.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [13]

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Thanks, Andrew.

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Operator [14]

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The next question comes from John Bridges, JPMC.

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John Bridges, JPMorgan - Analyst [15]

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Good morning and congratulations on the results. Just digging a little deeper into the sulfide project, what those what's your vision for that? What are you going to be doing in the next couple of years as you study it? What could be and what would it cost?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [16]

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Yes, I think we will have more information to update the market later this year in terms of some of the details. At a high level it is looking to -- we have been doing the testing of the Yanacocha Verde, the bio leaching of copper, that is shown promising results. The next phase there is to look at a thiocynaate leach to leach gold from that after we have reached the copper. That is the next stage of that testing going on, but so far that looks good.

We continue to do work with the Chaquicocha underground development. We have had good exploration results and are looking at potential to extend that decline and do some additional drilling and that could help and actually provide even a bridge that we have not talked a lot about but an incremental that might be able to come out in advance of the overall Yanacocha sulfides projects that we have to do a little more drilling on that.

The third piece is we would produce a copper gold sulfide concentrate with high arsenic. We have done a lot of metallurgical testing both with the atmospheric leach process. We continue to test with Bonaventura but also testing the autoclave process results there are showing really good recoveries of both copper and gold so I'm encouraged. It is part of the encouragement I have seen we have also seen some early results that maybe the capital would not be quite as much is what we thought, but I'm going to hold and wait until later this year to provide an update when we get to the next stage on the project.

It is really how we take the next stage. We have added several million ounces to resource here, I think about 2 million ounces to the resource base based on the work we have done and additional drilling we have done.

Anything else, John? Did we lose John? I think we have lost the line, operator.

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Operator [17]

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Apparently Mr. John has lost the connection. We do have our next question come from Jorge Beristain, Deutsche Bank. Your line is open.

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Jorge Beristain, Deutsche Bank - Analyst [18]

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Good morning, Gary. Jorge with DB. My question is circling back with Africa again and to dig a little bit deeper as to what has also been the holdup with getting Ahafo and Subika going. We know there were some tax issues about 18 months ago but we thought you had jumped ahead of those versus your peers settling with the government and that we had recently some tailings increased tailings risks globally. Can you comment on what has held up getting the green light so far?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [19]

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I think, Jorge, it really boils down to working through the permit time, the permits on the underground with that. It is the impact, what the concern was the groundwater table. When you go down deeper what is the impact of surrounding communities? So we had to work through in our ground water models to show with the impact is. I think we have good impact on that and the regulators now believe we have a good handle on that.

Getting that outlined was probably the big factor in the delay in getting that permit through. And the other point that you make in regards to tailings dams was just getting comfortable around what tailings dam construction method to use at Ahafo for the next stage of expansion. We have been working through with the regulators on that.

In terms of the tax issues, or more specifically the investment agreement, we actually negotiated for over 2 years changes to our investment agreement that allowed for increases in some of the royalty rates. I think it was a good process from what I've seen there versus other places in the world where we worked with government folks and came up with the new agreement, and actually had that been ratified by the parliament. So that is in place and has had approval here. That was a little bit over a year ago, towards the end of 2015 that that was approved.

That is in place and gives us the assurances and stability and confidence that we need to go forward with these investments once we get these permits confirmed.

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Jorge Beristain, Deutsche Bank - Analyst [20]

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Okay, got it, and then just on South America, just wanted to check. Your unit costs, particularly for AISC are not coming down as quickly as what we are seeing in the peers or in your peer group. So the question is is that because you have had some changes to the expected impairment down there and that is kind of taxing your AISC higher than your peers and that is something you said may be reversible?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [21]

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I think the key reason, and you are looking at Yanacocha. Let's set Merian aside because I think Merian is performing really well as a new operation as you would expect revenue operation like that. At Yanacocha it's more we're coming to the end of the mine life and production declines. And some of the inefficiencies you get around that as it declines, as we look at these incremental expansions.

We also have a small layback going on there that doesn't get into the higher grade parts of the ore body for another 1.5 years or 2 years so you are seeing some of those costs come through. It is not unexpected at this stage in the mine life to see the cost on that operation go up.

Operator, I think we lost Jorge as well. Operator, can we go to the next caller?

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Operator [22]

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The next question comes from Evan Kurtz with Morgan Stanley. Your line is now open.

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Evan Kurtz, Morgan Stanley - Analyst [23]

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Morning, Gary. I guess I will ask one before I fall off. My question is just on Silverstar. If you were to put that back in the numbers say in 2018 and 2019, what sort of impact with that have from both a volume aspects and a cost aspects? How costly are those ounces? And what is kind of the likelihood in the cost of actually doing what you need to do to get that mine back in operation and finish off those ounces?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [24]

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Thanks, Evan. I'm going to have Tom address that question. It is something that is still under study but I'll have him cover it.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [25]

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Thank you, Gary, thanks for the question. The first step for us is to step back and assess the nature of the slip, obviously, and do some geotechnical drilling to understand how we need to update our structural models and reassess what would be involved in doing some work on that high wall or removing the slip material then going back in. And we really need to go through that considered process over the first half of this year to make an assessment of what going back in looks like. Then I think we are in a position to start to get some information in terms of what that impact that will have on the longer term. For us at the moment it is really about just taking that step back and having a considered assessment of what we need to do to get back into that pit.

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Evan Kurtz, Morgan Stanley - Analyst [26]

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And how many ounces were left there at this point? Is that something you can flag?

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [27]

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Yes The order of around 200,000 recovered ounces is at the bottom of the pit. We were really right at the end of that mine.

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Evan Kurtz, Morgan Stanley - Analyst [28]

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Great, thanks, and then since I'm still on maybe I'll ask one more. Is there any update on KCGM?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [29]

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Nothing to add from our standpoint. I think we continue to operate that mine and it is doing what we expected to do in terms of operating performance, in terms of the process, we watch and see what happens.

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Evan Kurtz, Morgan Stanley - Analyst [30]

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Okay, great. Thanks. I will hand it over.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [31]

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Thank you, Evan.

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Operator [32]

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Our next question comes from David Haughton, Imperial Bank of Commerce. Your line is open.

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David Haughton, CIBC World Markets - Analyst [33]

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Thank you, Gary and team, for the update. Just a question on Ahafo North. I see the has the green status on your pipeline. Can you give us an update on what you are thinking there is a standalone project or satellite to Ahafo CapEx timing etc?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [34]

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Yes, I think what we are seeing with Ahafo North -- it is probably another 3 years or so down the road before it comes forward for an investment decision. We are doing more work drilling wise doing more work with community to make sure we've got the right approach there, kind of leveraging off the good work we have done both at Ahafo and Akyem community wise.

Initially there were talks whether we can mind the ore there or haul it down to the Ahafo mill. It's really looking like the better option would be to have a standalone mill up at Ahafo North to process that oar, and then we would take the loaded carbon, much like we're doing at Long Canyon where we take the loaded carbon from Long Canyon to Carlin we would take the loaded carbon down from Ahafo North down to Ahafo for final processing into Dore.

Doing more work there, and doing more work on some drilling, in particular grade estimation drilling there to make sure we get a good handle like we did with some of our other projects, Merian and Long Canyon, wanting to make sure we have a good handle on the grade in those first few years. It makes for a little additional cost but sure helps on the certainty side. We are continuing to work through that in terms of capital.

It is early days so I think let's get through and see where we finally land, but I would see it as something probably less than what we spent at Merian, given some of the other infrastructure that surrounds, but let's wait and see. I think production wise we're probably talking something in the 200,000 to 250,000 ounces year range at this time. That gives you some high-level.

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David Haughton, CIBC World Markets - Analyst [35]

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That is excellent. Thank you, Gary. Just looking at Tanami now. Reserves have grown once again and exploration seems to be very kind to you, that's a very rich area. Moving on to the expansion beyond now, I know the latest one isn't even delivered yet I'm talking about the next. Is that contigent upon more expiration or do you see that there is enough material underground to warrant the next step beyond where we are already?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [36]

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From my standpoint we're looking at a variety of different options, whether it is additional declines, a production shaft, and different options in how we mine, the resource and reserve continues to grow their as you point out so we are continuing to do drilling. We are out of there right now because of the rain and the limits and getting into both the mine because we do not have the fuel to operate the mines so we're just going to stand by here for the next week or so.

But I am encouraged by the potential for this. You will remember 5 years ago we had a project to put in a production shaft which we put on hold because the mine wasn't performing and delivering the results it needed to. We've taken sort of that back off the shelf, dusted it off, but also looked at different places to put it because the ore body's grown quite a bit. And how big you make the shaft, how deep it goes, those are some of the different options being looked at here.

For me I think it's a good next stage but like you said we have to deliver the current expansion. We've got the mining part done, the mill part done here midyear. And make sure we know how that delivers so we can design what would be an incremental mine expansion and another incremental mill expansion.

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David Haughton, CIBC World Markets - Analyst [37]

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One last question and probably for Nancy, just very significant cash balance. I know that Newmont has carried quite a bit of cash over the last few years, $2.8 billion seems like a sizable balance of just wondering what was thought process was as to how much to keep and how much to use to retire debt?

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Nancy Buese, Newmont Mining Corporation - Executive VP and CFO [38]

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Yes, absolutely. We have done a lot this year in terms of retiring our debt and I think the main focus here is to retain our optionality and have a lot of financial flexibility regardless of what opportunities are in front of us. We'll continue to grow the business, invest in our longer-term opportunities, and also stay alert and aware for M&A as it may present itself.

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David Haughton, CIBC World Markets - Analyst [39]

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Okay, so keeping you powder dry basically?

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Nancy Buese, Newmont Mining Corporation - Executive VP and CFO [40]

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Exactly.

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David Haughton, CIBC World Markets - Analyst [41]

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Okay. Think you so much for that.

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Operator [42]

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Our next question comes from John Tumazos of John Tumazos Very Independent Research.

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John Tumazos, John Tumazos Very Independent Research, LLC - Analyst [43]

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Thank you for taking my question. I may be a little hazy in my memory, but when Frontier Gold was promoting Long Canyon, they were looking at a bigger than 1 million ounce deposit that was open and there have been no indication that it was hitting the sulfides. And the mine plan, and congratulations for pouring gold and making a little profit, for 1 million ounce deposit and the mining rate for ore is something like 6000 tons a day and waste is something like 125,000 to 175,000 tons a day or 20 to 30 strip.

Could you explain a little bit about the depth of the ore, topography constraints, water constraints? It appears that the project definition is more complicated than some of the broad expectations of 5 years ago.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [44]

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John, thanks for the question, and I think a couple of things. We've got a about 1.2 million ounces so we have grown the reserve from where we were when we first announced the project. We continue to do drilling around the deposit and really have closed it off in terms of extensions at depth and down dip.

Finding higher grades, it goes below the water table at that point. So how we manage mining below the water table is one of the things we will be starting as part of Long Canyon phase II, the next phase of the project. We're doing work on that.

In terms of current mining rates and strip ratios, you got a lot higher numbers than what we are actually doing and maybe you've got something tied and when doing development and not reflective of what we are seeing more steady state. Strip ratio ranges anywhere between 8 and 10 here over the next several years so higher strip ratio, but also higher grade on average. We get average grade that is around the ore body average at 1.9 pounds per ton.

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John Tumazos, John Tumazos Very Independent Research, LLC - Analyst [45]

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Thank you.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [46]

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Thanks, John.

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Operator [47]

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Our next question comes from Kip Keen, S&P Global.

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Kip Keen, S&P Global - Analyst [48]

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Hi, guys. Thank you for taking my question. Just a follow-up on John's question. If you looked at Long Canyon in terms of the acquisition cost, what would you expect payback on the projects and how many years would it take?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [49]

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I think at this stage it doesn't happen with phase I. Clearly it would be something that happens out in phase III which would be most likely an underground and a mill complex being installed there in terms of fully paying back the acquisition costs.

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Kip Keen, S&P Global - Analyst [50]

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Okay. Thanks for that, and just having recently been on the Barrick call, and they did mention some of their ongoing discussions with central buyers on Kalgoorlie. Is there anything you can add on your view of the asset there?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [51]

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We like the asset. We like operating it, and we are watching the process to see where it comes out.

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Kip Keen, S&P Global - Analyst [52]

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Fair enough. And longer-term or just in terms of M&A, you had mentioned you are obviously always watching the market, is there anything that you particularly like out there, any jurisdiction that you particularly like in terms of M&A right now?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [53]

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I think we've got a good footprint around the globe in areas where we have good operating capabilities and good relations. I think when you look at what we provided here today in terms of a 7-year outlook and what our production profile looks like, we could be opportunistic as we were with Cripple Creek and Victor at a time when prices were down and people needed the cash and we were able to acquire an asset for good value.

We will always look to see if there are things we can do to improve our portfolio quality in terms of either value or risk, but we've got a really excellent project pipeline that does those things today. We'll continue to focus more on early stage development, greenfield sort of things or brownfield in areas or jurisdictions that we are comfortable we can manage well in. We'll keep our eyes focused on those sorts of things.

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Kip Keen, S&P Global - Analyst [54]

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Final question, I appreciate that. In terms of one of the first questions that was asked about the new administration, obviously Scott Pruitt, he is now the administrator of the EPA and there are some changes expected there. Obviously it is early days, we can't say for sure what is going to happen at the EPA. But in terms of Nevada and perhaps in the US in general, do you feel like there will be some benefits in terms of permitting timelines?

Just looking for general comment on how you see that changing and, for example, if the waters of the US rule which obviously isn't enacted fully yet, goes to the wayside, would that benefit you in Nevada? Just some commentary there.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [55]

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Thank you for that. I think we are all kind of watching the different things coming from the administration. I saw some comments that Mr. Pruitt made yesterday in particular that I liked about having investor certainty. If there are going to be changes to regulations, having a good process for review and understanding of how those properly get implemented is a good thing, I think, for business overall in the US.

As it effects us directly, I think we already sat in a pretty good spot in terms of how we would work with regulators. We came up with a sage brush echo system program at the end of last year with the outgoing administration that really helped address some of the concerns around sage grouse and other species that are potentially at risk in Nevada, and how we would work with the different administrative groups to be able to continue and really not impact our operations.

I think we sat in a pretty good spot already, but we want to work with the incoming administration. I am looking to set up a meeting with Mr. Pruitt just to have that discussion around where we have concerns and where we could see logical changes going forward to any process that take into account not just our concerns, but all stakeholder concerns going forward, and do it in a proper manner.

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Kip Keen, S&P Global - Analyst [56]

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I will get off in just a second, but can you add to that? What would be the primary concerns for you? What would be the things you would raise with Mr. Pruitt?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [57]

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I look at some of the things that had been getting implemented around reclamation bonding where federal or state jurisdictions already have things in place so we don't have overlap of requirements which is one of the things we come across today. Those are probably a couple of things that we focus on.

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Kip Keen, S&P Global - Analyst [58]

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Okay. Thank you very much. I appreciate it.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [59]

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Thank you.

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Operator [60]

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The next question comes from Robert Reynolds, Credit Suisse. Your line is open.

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Robert Reynolds, Credit Suisse - Analyst [61]

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Good morning, guys. My question is at Merian you added about 600,000 ounces to reserve there. Is that mostly in the oxide or sulfide or can you talk about how that could impact the mine plan?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [62]

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I think it is almost all oxide. We don't really -- we have sulfide there, it doesn't change the processing method. It is still the leaching process there.

I have our head of expiration here, Gregorio Simone, He can add to that.

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Grigore Simon, Newmont Mining Corporation - Senior VP, Exploration [63]

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Yes, the 600,000 ounces for the Newmont equity, of which Gary mentioned it is a combination of ounces coming from the extension from the (inaudible) as well as the success that we had in the lower part of the pit so the ounces are a bit of a combination of oxide ounces, of course the extensions and the different part of the pit, then, would be the sulfide ounces.

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Robert Reynolds, Credit Suisse - Analyst [64]

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Okay, and then in your cost outlook I think it mentions around 2019 there's higher stripping at Merian. Can you just talk about what your strip ratio is expected to be in 2017 and then what the life or mine strip ratio is at that asset?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [65]

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Okay. I'm going to hand that over to Tom Palmer to handle.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [66]

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The strip ratio will be around 3 1/2 to 4 on average through those years and that also represents about the life of mine strip ratio as well.

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Robert Reynolds, Credit Suisse - Analyst [67]

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Okay, and then you might have touched on it earlier, but at Long Canyon there is a higher grade resource they are, it is about 3 1/2 gram per ton of about 1.6 million ounces. Is that material that can only be accessed with phase II or could you mine some of that in phase I?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [68]

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That would be phase II and looking at going below the water table to access that.

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Robert Reynolds, Credit Suisse - Analyst [69]

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Okay. That's it for me. Thanks.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [70]

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Things, Robert.

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Operator [71]

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Our next question comes from Greg Barnes, TD Securities. Your line is now open.

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Greg Barnes, TD Securities - Analyst [72]

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Thank you. I believe the JV with Barrick at Turqoise Ridge expires this year. What is the plan there?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [73]

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The JV doesn't expire. We have a processing agreement that we process the ore from Turquoise Ridge at our Twin Creeks mill and at the end of this year that is scheduled to be out so that is what is changing this year there.

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Greg Barnes, TD Securities - Analyst [74]

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What is going to happen with the processing agreement?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [75]

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That is something we will work out with our joint venture partner.

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Greg Barnes, TD Securities - Analyst [76]

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And secondly, then, on CapEx if you do approve all the projects this year that you're talking about, would CapEx be up this year by a couple hundred million dollars in each year or something in that order?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [77]

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Yes. We will provide when we approve those projects we will update our development capital, but when you look at the two projects in Ghana that is roughly about what the impact would be for additional capital in 2017 and 2018 but we will provide that update along with the other projects as we approve them.

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Greg Barnes, TD Securities - Analyst [78]

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Okay. Thank you.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [79]

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Thanks, Greg.

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Operator [80]

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Our next question comes from Michael Dudas of Vertical Research. Your line is open.

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Michael Dudas, Vertical Research - Analyst [81]

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Hi. Just quickly your thoughts on expiration opportunities with much of your mine site drilling and what we can look for maybe this time next year.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [82]

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We continue, obviously, to focus the majority of our spend in the brownfield so around our existing operations in areas where we've talked about. Greenfields, we are working in places in eastern Nevada, western Utah, down in Peru, around the Guyana shield areas and the northern part of South America, and Ethiopia and also Mount Isa in Queensland in Australia, and, as I said, upping our spend both on expiration and advanced project spend really looking not for what we need here in the next 3 to 5 years but looking at the next 5 to 10 years what is important for the business.

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Michael Dudas, Vertical Research - Analyst [83]

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And just following up on your thoughts on the EPA and such. Geologic society, has the US may become a better, more attractive place to mine for over the next 4 or 6 or 7 years given what changes could possibly occur?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [84]

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I think we still look long-term for all of these sorts of things when there are different administrations whether it is here or in other countries and still look to invest where it makes sense for the long-term.

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Michael Dudas, Vertical Research - Analyst [85]

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As long as they don't change the mining law I guess it'll be helpful. Thanks, Gary.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [86]

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Thank you.

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Operator [87]

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Our next question comes from Andrew Kaip, BMO.

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Andrew Kaip, BMO Capital Markets - Analyst [88]

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Hey, Gary, Nancy, and Tom. Thank you very much for taking my questions. Got a couple. One, the sustaining capital, you made a remark that sustaining capital have come down in the 2017 timeframe because of savings as well as deferrals, and I'm just wondering if you could expand a bit on those two items and how that -- what were the drivers of those changes

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Gary Goldberg, Newmont Mining Corporation - President and CEO [89]

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I am going to have Tom Palmer cover that.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [90]

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I will give you two examples, Andrew. In terms of savings, a lot of our capital goes into tailings facilities. Say, for instance, Boddington which is a very large operation, a low-grade mine, obviously we generate a lot of tailings. We've got better contract rates for building our tailings extensions. So you get savings by building some of those and still constructing the same amount and getting them at a cheaper rate so it is starting to build some of that into our plans going forward.

And then there are other things we do. Another example would be Cripple Creek and Victor where we optimize our mine plans and some of the equipment that we thought we needed we declare in future years. So that is an example of deferrals that are reflecting in our sustaining capital going forward.

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Andrew Kaip, BMO Capital Markets - Analyst [91]

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Okay. Thanks. That provides a better understanding. And within that there is really -- is there a component of deferral of stripping programs that CapEx is inevitably going to have to show up in later years or was that mostly restricted to equipment and improved contracting rates and improved cost?

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [92]

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As you say, Andrew, it is more about the latter. It is improved rates, improved unit cost, deferral we'll have done mine to plan optimization. And as we talked about today we've got some maturing operations and we are moving into those stripping campaigns and talking about it as we continue to do those campaigns for the longer-term so we are not pushing any of that stuff out.

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Andrew Kaip, BMO Capital Markets - Analyst [93]

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Okay. Thanks, guys. At Long Canyon, it strikes me that the grade -- the grade from a heap leach perspective is already very attractive. And I am just wondering as you move toward permitting below the water table, is the move to -- and you are looking at the prospects of higher grade resources to convert to reserves. Is the move in phase II really towards permitting a milling complex sooner rather than later?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [94]

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Yes. We need to do is get the reserve and resource figured out, the elements of the water and how we are going to manage it so that we can put together our overall permit requirements for both the mill and expansion of the leach.

We have not firmed up that it automatically goes to the mill. I think economics may drive it that way but we need to do the study work on it. At this stage, because we have phase I in place we want to be very methodical in our review and make sure we bring the permit along at the right time in the process.

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Andrew Kaip, BMO Capital Markets - Analyst [95]

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Okay, great, and then just finally on another expiration project Sabajo. Now that you are operating in Suriname I'm just wondering -- and you are looking at acquiring additional ground in Sabajo, is there an update that you can provide on this activities?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [96]

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Sabajo is actually about 40 kilometers west of Merian and the way we're assessing it today as a satellite or body that could feed ore to the mill at Merian, it provides some additional saprolite ore that we could truck over. So we're setting options on how we can truck it and when the right time frame is for that. It is probably not going to add to Merian until the 2020 to 2021 timeframe based on we know today but it is still early days. We're just moving that project in our project pipeline along to the next stage so it is still early days to know the details on it.

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Andrew Kaip, BMO Capital Markets - Analyst [97]

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Okay. Thank you very much.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [98]

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Thanks Andrew.

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Operator [99]

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Our final question comes from Tanya Jakusconek from Scotia Bank. Your line is open.

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Tanya Jakusconek, Scotiabank - Analyst [100]

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Great. Good morning, everybody. Thank you for taking my question. Actually I have a couple. The first one, Gary, can we go back to the reserves and resources? And can you talk a little bit about the 2.6 million ounces that got reclassified into resources from reserves? And what caused those to move and what assets are they exactly?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [101]

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Sure I can do that. Thanks, Tanya. I think one of them, and when you look at our reserve resource release you can see there were price changes that affected the reserves by about 600,000 ounces. That was primarily a change in the copper price assumption at Phoenix that moved around 500,000 ounces from reserve to resource so that's what we'd call a reclassification so that added about 500,000 of that 2.6 million.

We had changes to Carlin due to updated pit designs. Those show in revisions on the reserve side, and that adds to the reclassified, the 2.6 million. You see a very small number for revisions because that is a net number and that's how it additions, that we see for other reasons, at Carlin and Ahafo North, against some the revisions.

The Carlin pit design and also a Boddington change where we've updated the requirements to support the tailings facility expansion and moved about 600,000 ounces from reserve to resource. So that gives you about -- it is the majority of what that 2.6 million in reclassification is for those three. The others were just technical updates as we revise requirements for drill spacing in different areas.

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Tanya Jakusconek, Scotiabank - Analyst [102]

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I have a 0.6 for Boddington and 0.5 for Carlin. I didn't have a number for Ahafo North. Is that in the 0.5 to 0.6 also?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [103]

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Yes. Carlin was 0.7, Boddington 0.6 and Phoenix 0.5 of that reclassification. Ahafo North was plus 0.5 and there was another Carlin plus I think it was about a 0.6, that is offsetting in the reserve side.

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Tanya Jakusconek, Scotiabank - Analyst [104]

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Okay. Thank you for that, and then my second question is on Twin Creeks, the underground project. Can you just remind us, given that this one is going to be you are making a decision on the second half of this year or mid-year -- can you remind us the operational parameters, CapEx cost et cetera on this asset?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [105]

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What I would say. This is like what we've done with Carlin, where we come to the end of an open pit and the do a decline basically down into the reserve next to or adjacent to and below the open pit. It is small in terms of its overall contribution. We will update the market once we get that but it's not big in terms of cost or in ounces but it does add an increment at Twin Creeks.

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Tanya Jakusconek, Scotiabank - Analyst [106]

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Any sort of sizes? Is it under 50,000 ounces a year? Do we have any idea of size just to have it in perspective?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [107]

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Sure thing, Tom?

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [108]

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It is a 40,000 to 50,000 ounces. That sort of range.

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Tanya Jakusconek, Scotiabank - Analyst [109]

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Yes and okay and the capital would just be a decline to get to it? Would that be a safe thing to model?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [110]

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Yes, I think that's right. We have done the early study work there we actually installed the decline and we've got access to the ore body in place so it actually would be a pretty short timeframe there, but it's small.

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Tanya Jakusconek, Scotiabank - Analyst [111]

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It's small, okay. And maybe just a last question on Boddington and Twin Creek again and I think you mentioned Carlin too. I think you said that the production will be declining over the next couple of years and that coming back up again. When you say coming back up again are we coming back to what sort of level? Is it back to 2016 levels?

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Gary Goldberg, Newmont Mining Corporation - President and CEO [112]

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We will run through -- start with Boddington will have Tom go through.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [113]

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Yes, Boddington returns back. In 2019 you can expect to return back to 2016 levels.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [114]

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And Carlin?

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [115]

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Carlin will return to similar levels again.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [116]

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And same thing to -- Twin won't come up quite as much.

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Tom Palmer, Newmont Mining Corporation - Execuive VP and COO [117]

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Twin won't come up as much.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [118]

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And Ahafo comes up a lot more as we get into the much higher grade at the bottom of the next pushback in 2019.

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Tanya Jakusconek, Scotiabank - Analyst [119]

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And that was more because of grade. Okay. That is very helpful. Think you very much.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [120]

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Great. Thanks, Tanya.

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Operator [121]

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And now I will turn the call over to Gary for closing remarks.

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Gary Goldberg, Newmont Mining Corporation - President and CEO [122]

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Thank you, operator, and thank you all for your questions.

Our team delivered exceptional performance, portfolio improvements, and value last year, this year we'll build on that trajectory by delivering steady gold production at competitive costs and continuing to improve those costs for our full potential program. We will also continue to invest in profitable growth by completing the Tanami expansion in Australia, by reaching decisions to fund expansions at Ahafo, Twin Creeks, and Yanacocha that represent upside to our current guidance, and by pursuing early stage and expiration opportunities to build our reserve base. Finally, we'll maintain an investment-grade balance sheet and the leading talent, governance, and sustainability practices that underpin long-term value creation.

Thank you for joining us and have a safe day.

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Operator [123]

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And that concludes today's conference. Thank you for your participation. You may now all disconnect.