Q4 2023 Newmont Corporation Earnings and Guidance Call

Participants

Karyn F. Ovelmen; Executive VP & CFO; Newmont Corporation

Natascha Viljoen; Executive VP & COO; Newmont Corporation

Thomas Ronald Palmer; President, CEO & Director; Newmont Corporation

Andrew Bowler; Analyst; Macquarie Research

Daniel Morgan; Mining and Metals Analyst; Barrenjoey Markets Pty Limited, Research Division

Levi Spry; Analyst; UBS Investment Bank, Research Division

Unidentified Analyst

Presentation

Operator

Good morning, and welcome to Newmont's Fourth Quarter 2023 Earnings and 2024 Guidance Call. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Please go ahead.

Thomas Ronald Palmer

Thank you, operator. Good morning, everyone, and thank you for joining our call today. I'll please ask you to note our cautionary statement and refer to our SEC filings, which can be found on our website.
Today, I'm joined by my executive leadership team, including Natascha Viljoen and Karyn Ovelmen and will all be available to answer your questions at the end of the call.
I'd also like to take a moment to acknowledge our friend and colleague, Rob Atkinson. Our Chief Operating Officer for the past 5 years. Rob will leave Newmont in early May, although his legacy will endure. Through his visible (inaudible) leadership, Rob has driven our fatality risk management program, achieving 5-year fatality-free performance.
Throughout the pandemic, Rob navigated our operations through challenges, including periods of care and maintenance, border closures and vaccine implementation. Rob also represented the very best of our values when he guided Peñasquito through 2 major challenges. Resolving our community blockade in 2019 and an unjustified strike last year. In both situations, Rob found sustainable solutions that protected the long-term value of Newmont.
Over the last 5 months, Rob and Natascha has conducted a thorough handover of accountabilities, and Rob will remain with us to support Natascha and me before finishing up.
Before we get started, it is with great sadness that I share the tragic news regarding a fatal incident at our recently acquired Brucejack operation on December 20 last year. I'd like to take a moment to remember our colleague, Adam Kennedy. Adam was only 44 years old. He was a partner, a son, brother and uncle, a best friend and a valued colleague. Our condolences go out to Adam's loved ones during this difficult time, and we are again reminded how important it is to maintain a sense of chronic unease when it comes to the safety of everyone who works at Newmont.
Any fatality is totally unacceptable. We fully understand the fatality risks in our industry and the critical controls that need to be in place at all times to manage them. So we have been taking the time to conduct a safety reset across all Newmont sites, not just the 5 new Newmont operations. With a laser focus on the implementation of our fatality risk management system, this reset work includes training delivered by our line leaders, our managing directors, our general managers and our senior health and safety leaders. The training is on our fatality risk management standards, and our critical control verification process. We are also concluding our thorough investigation into this tragic incident, which is being led by David Thornton, the Managing Director of our Africa business unit.
We are applying the lessons learned from this investigation and all of our managed operations globally and we will share them widely with our mining industry peers. Nothing is more important than our commitment to the health and safety of our workforce, and we are determined to create an environment with every person working at Newmont across all locations, returns home safe and well, to their families and loved ones at the end of every shift.
Turning to our performance in 2023. Newmont finished the year with a solid fourth quarter, putting us in line with the revised stand-alone outlook that we issued following the resolution of the strike at Peñasquito.
In summary, we produced 5.5 million ounces of gold at an all-in sustaining cost of $1,444 an ounce. In addition to gold, we produced nearly 900,000 gold equivalent ounces from copper, silver, lead and zinc over the course of the year. This performance enabled us to deliver $4.2 billion of adjusted EBITDA, return more than $1.4 billion to shareholders and end the year with liquidity above $6 billion.
In a few minutes, Natascha and I will expand on how we expect to improve upon this performance in 2024 and beyond, with a focus on delivering meaningful value to our shareholders. But before we do that, I would like to describe how we are transforming our business into a unique collection of the world's best gold copper operations and projects following last year's transaction.
When we announced our binding agreement to acquire Newcrest in May last year, we outlined a powerful value proposition built around 4 key commitments. First, to set the new sustainability standard and strengthen Newmont's position as the gold sector's recognized sustainability leader. Second, to create the industry's strongest portfolio of world-class gold and copper assets in the most favorable mining jurisdictions. Third, to deliver $500 million of annual synergies and realize over $2 billion in cash from portfolio optimization; and finally, to continue driving a disciplined, balanced approach to capital allocation.
After closing the transaction on November 6 last year, the integration of the 5 new operations into our Newmont operating model has been progressing very well. And as we enter this critically important year of integration and transformation, I'll be holding myself and my executive leadership team accountable for delivering on these commitments. And this will be our key focus for 2024.
To support this work, earlier today, we announced 4 key actions that together will enhance our ability to deliver on our clear and consistent strategy.
First, we plan to divest 6 high-quality, but noncore assets this year. From this point forward, our world-class portfolio will consist entirely of Tier 1 and emerging Tier 1 operations and districts. And it will have a significant exposure to growth in copper and gold from our industry-leading organic project pipeline.
Second, we provided today our 2024 and 5-year outlook, giving a clear picture of the work we are doing to expand margins and appropriately sequence our projects to deliver sustainable value.
Third, with the clarity, simplicity and focus that our Tier 1 portfolio provides we have committed to deliver a further $500 million in cost and productivity improvements across the entire portfolio. And these improvements are over and above our synergy commitment from the Newcrest acquisition.
We expect to hit this $500 million annual run rate of improvement by the end of 2025. And finally, we announced a balanced shareholder return framework, consisting of a $1 per share annualized base dividend and a new $1 billion share repurchase program.
Our go-forward Newmont portfolio is focused on Tier 1 gold and copper operations and projects located in the world's most favorable mining jurisdictions. It has 4 key features. First, it contains 10 Tier 1 operations, representing more than half of the world's Tier 1 gold mines. Second, it has 3 emerging Tier 1 operations with a clear path for growth, along with the opportunity to create a Tier 1 district in British Columbia, a district in which Newmont will be operating for at least the next century. Third, it has an unmatched organic development pipeline with 6 large-scale copper gold projects. And fourth, underpinning our Tier 1 portfolio is the industry's most robust foundation of reserves and resources.
Going forward, Newmont has the industry's largest gold resource base, and we also have the largest base of copper resource in the gold industry. And to put that into perspective, Newmont has an almost 30% larger gold reserve resource base than our nearest peer. And a 40% larger copper reserve resource base than our nearest gold peer. No other gold producer in the world can offer the depth and quality that Newmont's Tier 1 portfolio can today.
Later on, I'll provide a bit more color about Newmont's longer-term outlook and the exciting gold and copper opportunities that are ahead of us. But I'd first like to give some insight into how we are framing the year ahead. 2023 brought with it a number of unique challenges, which are now firmly behind us. The 120-day labor dispute at Peñasquito, asset integrity issues that were inherent in the original design of equipment at Ahafo and Canadian wildfires impacting our Eleonore operation, all meant that our final production did not reflect the full capability of our assets.
As we emerge on the other side of these events, I am proud of the decisions that we took to protect the long-term interest of the company rather than seeking short-term experience solutions.
However, I'm also not happy with the underlying level of our operating performance. We have the opportunity to improve our compliance to mine plans, our fixed and mobile equipment reliability and our mill throughput and recoveries. So our focus in 2024 will be on safely integrating new teams and operations into our Newmont operating model and culture. On transforming our portfolio and are laying the groundwork for sustainable operating performance, margin expansion and strong returns.
Finally, this morning, we also announced that we have extended the completion date and increased the protective capital cost for our Tanami 2 Expansion project. In the second half of last year, we completed the concrete lighting of the top half or 700 meters of this 1.5 kilometer deep production shaft. This milestone gave us the opportunity to assess the condition of the node overbreak and ground conditions at the very bottom of the shaft.
As well as incorporate the lessons learned from line in the top half of the shaft into the cost and schedule for the [run home]. We have critically assessed a number of options to safely address the known overbreak and line the lower section of the shaft. This work has included key third-party reviews before we landed on a method. And it was this methodology and the subsequent decisions that we took that have informed the cost and schedule update we provided today.
Although I'm not happy with the extension of time and cost, I am confident that we have chosen a method that is safe and will ensure shaft construction is of the quality necessary to rely with service, Tanami's profilic ore body for many, many years to come.
So with that, I'll hand over to Natascha to walk you through our operational priorities in 2024 and what we are doing to ensure we deliver on our commitments this year. Over to you, Natascha.

Natascha Viljoen

Thank you, Tom, and good morning. Since joining Newmont in October, I have visited 14 of Newmont's 17 managed operations. And I've been really impressed by the quality of the assets, the dedication of our people and the commitment from our operational leaders to drive safe and profitable production.
Before I begin, I'd like to provide a brief introduction to the operational team focused on integration and value delivery in 2024. As mentioned last quarter, within our global operating model, we have 6 regional business units, each headed up by a world-class experienced Newmont leader who you can see on this slide. This scalable integrated operating model enables alignment across our operating leadership team while also empowering our managing directors to apply the extensive local and technical knowledge and draw on the global functional expertise to lead each unique operation.
To support our operations from the project execution side, we have a dedicated restructured project delivery team. This team of subject matter experts is working across the full spectrum of our organic pipeline, including studies, project development, construction and commissioning of projects. By strengthen our operating model with block driving capability and an understanding of industry-leading practices in project development.
This year, we will have a laser focus on the performance of our 11 managed operations in our go-forward portfolio, while also guiding our 6 noncore assets through a safe and productive process for divestment. As we work to deliver efficiency and reliability from our global portfolio, we are committed to progressing our 4 key projects in execution and keeping them on track in 2024.
As a result, we are entering the year with a strong focus on integration and the safe delivery of our targets. Our success in 2024 will be largely determined by the performance of our 6 managed Tier 1 operations, Boddington, Tanami, Peñasquito, Ahafo, Lihir and Cadia, not underestimating the impact of the delivery from the full portfolio of operating assets.
I will also separately touch on Telfer and how we are ensuring tailings dam integrity at this new to Newmont operation. We're very clear on the key priorities to integrate and deliver 2024 and how this set up operations for the next 5 years.
I will touch on some of these in each of the Tier 1 managed operations. At Boddington, we are progressing the stripping of the current laybacks in the North and South pits as planned, with improved productivity from our fully autonomous (inaudible) fleet. And our poly metallic mine Peñasquito, our focus is on delivering strong silver, lead and zinc from the Chile Colorado pit, and continuing waste stripping in the Peñasco pit to deliver higher gold grade in 2025.
At Ahafo, we remain on track to replace defective girth gear in the second quarter to maximize processing rates. At Tanami, we are improving material movement through the decline as we progress deeper underground. The Lihir's team is focused on simplifying the mine plan and improving asset reliability. And at our other new to Newmont operation, Cadia, we are commissioning the next block cave and progressing some important tailings rectification and expansion to set up for the next decade of all feed.
We have a full potential team on the ground at Lihir and Cadia, actively working through our diagnosis phase and designing the initiatives to extract value and deliver the opportunities identified.
So taking these key priorities into account, we anticipate that production will be around 53% weighted towards the second half of the year as we return to full processing rates at Ahafo to reach higher grades from the liberator ore body at Tanami and safely integrate the new to Newmont sites into the Newmont operating model.
Now just touching briefly on Telfer and noncore operation in Australia. We are focused on remediating sink holes and fracs detected at the timing storage facility in December. When we stopped the mill to complete the first phase of remediation work. In early February, we temporarily restarted plant whilst evaluating options for further remediation of an adjacent tailing facility, and we'll provide an update on that work on our first quarter earnings call. And with a focus on fatality risk management, respected work and full potential in place, we remain firmly on track to deliver on our commitments this year.
On top of delivering in 2024 operationally, we are working to bring forward new low-cost ounces from the 4 key projects we have in execution. These projects include the second expansion at Tanami, as Tom just covered, where our focus is on safely lining the lower section of the shaft and continuing to construct to the crushing and conveying infrastructure underground. 2 block cave projects at Cadia to recover both gold and copper, where we have just delivered first ore as we ramp up the first of these caves. At our new mine, Ahafo North, where we are making good progress on the construction of the mill and other supporting infrastructure, along with waste stripping to allow us to start accessing the ore for stockpiling.
When this exciting new mine is combined with the underground potential at Subika, Apensu and Awonsu. We have a Tier 1 Ahafo districts that will be capable of producing around 850,000 ounces of gold per year out to and beyond 2050, which would make it one of the world's top gold mining district by any measure.
Now bringing it all together, as we focus on integration and safe delivery this year, we expect our Tier 1 portfolio to produce around 5.6 million ounces of gold at an all-in sustaining cost of $1,300 per ounce, combined with a very significant 1.9 million gold equivalent ounces from copper, silver, lead, zinc and molybdenum.
Our unit cost are expected to improve compared to 2023 due to steady production volumes and the delivery of synergies and full potential improvements with the lowest unit cost coming from Newmont's managed Tier 1 portfolio. Our capital reinvestment remains in line with pre-acquisition spending levels as we continue to focus on disciplined delivery and a balanced approach to capital allocation.
And with this stable production and structured reinvestment we are strongly positioned to integrate and deliver on our commitments in 2024, setting the stage to future-proof these world-class assets with benchmark performance and meaningful growth in 2025 and beyond.
And with that, I will turn it back to Tom.

Thomas Ronald Palmer

Thanks, Natascha. Building of the foundation we're establishing in 2024 that Natascha just covered. I'd like to now provide a little bit more color around the opportunities that we are seeing from our go-forward portfolio. We will continue to optimize the performance of our mature Tier 1 operations and our new to Newmont assets.
At Boddington, the stripping we are doing today will bring forward strong gold and copper grades starting in 2026, all supported by the gold industry's only fully autonomous (inaudible). At Tanami, the completion of the second expansion will provide efficient access to ore at depth and open up this prolific underground ore body in 2027 and beyond. At Peñasquito, the stripping we are currently doing will bring forward a higher proportion of gold ounces for the Penasco pit, balancing the strong production of silver, lead and zinc from the Chile Colorado pit.
At Ahafo, we are building district potential with new low-cost ounces from both underground and open pit at Ahafo South and our new mine, Ahafo North coming online in 2025. At Cadia, we will commission our second block cave in this time frame, bringing forward higher gold and copper grades whilst in parallel leveraging our full potential program to improve their reliability and throughput.
And finally, simplifying Lihir's mine plan is expected to deliver a strong improvement in gold production as we reach high grades from Phase 14a.
As I mentioned earlier, with a clear line of sight into our, into the Tier 1 managed operations in our portfolio, we have identified $500 million of additional cost and productivity improvements over and above our synergy commitments. So taking everything into account, over the next 5 years, we expect to deliver growing gold production driven by the completion of laybacks at both Boddington and Penasquito, the new ounces from Ahafo North, the completion of the second expansion at Tanami at both block caves at Cadia, and mining improvements combined with higher grades at Lihir.
And on top of this improving gold production, Newmont will produce a significant amount of copper along with silver, lead, zinc and molybdenum. From a global, diversified Tier 1 portfolio. Driven by this higher metal production and with a focus on improving costs, we expect to deliver lower all-in sustaining costs. bringing our go-forward portfolio down to around $1,150 per ounce by 2027.
For development capital we are applying a pragmatic and methodical approach to our project work to ensure that we are efficiently bringing forward opportunities that are aligned with our strategy. whilst also remaining disciplined with our capital allocation priorities. We expect to spend an average of $1.3 billion per year on development capital. Driving healthy competition for investment as we close out the 4 projects in execution and bring forward the next way of profitable production from our organic project pipeline.
Newmont is supported by the deepest and best project pipeline in the gold industry, and we will manage it with discipline and rigor to ensure that the most value-accretive opportunities are advanced at the right time and in the right order. We have 3 world-class copper gold projects in our pipeline ramped up behind the 4 projects we currently have in execution, building underground with the block cave at Red Chris, developing the Wafi-Golpu block cave and processing the sulfide ore at Yanacocha.
And then when we look beyond these projects, we have 3 exciting long-term opportunities to further diversify the copper, Galore Creek, Nueva Unión and Norte Abierto. Over the next 10 years, demand for copper is expected to increase significantly.
And based on current copper production trends, the world can expect to experience around 10 million tonne shortfall in this critical metal by 2035. Bridging this gap will require significantly more copper mines as well as copper recycling and enhanced copper leaching processes, creating an exciting opportunity for Newmont to help meet this demand with the organic copper exposure we have in our portfolio, whilst continuing to provide unparalleled exposure to gold and its enduring value.
And with that, I'll hand it over to Karyn to talk through our balanced capital allocation strategy.

Karyn F. Ovelmen

Thank you, Tom. Our capital allocation strategy is underpinned by 3 priorities: working in (inaudible) these priorities maintain the financial flexibility necessary to reinvest in our business with the goal of generating long-term sustainable free cash flow, in turn, positioning us to return capital to shareholders through our balanced shareholder return framework. Beginning with financial flexibility, the first of our 3 priorities, we intend to maintain an investment-grade balance sheet with gross debt of up to $8 billion and liquidity of $7 billion, including approximately $3 billion of cash.
And by maintaining a strong balance sheet, we can ensure we have the ability to steadily fund cash-generative capital projects all while returning capital to shareholders. As announced this morning, we have 6 assets currently classified as noncore. The anticipated proceeds from these divestments along with free cash flow from operations will cycle through our capital allocation priorities, beginning with enhancing our financial strength and flexibility.
Divestiture proceeds will first be allocated to maintaining our minimum cash balance of approximately $3 billion and will then be applied to reducing debt to $8 billion or below.
Once our initial debt target of $8 billion is achieved, we intend to return both free cash flow from operations and divestiture proceeds to our shareholders, which I will touch on in more detail in a minute.
Moving to Sustainable investments. As Tom and Natascha mentioned, over the next 5 years, we expect meaningful production growth from our long-life, low-cost operations as we invest an average of $1.3 billion of development capital into projects that will generate the highest returns.
The third priority of our capital allocation approach is a balanced shareholder return framework designed to return capital to shareholders through our base dividend and share repurchases. To be clear, we are not yet where we want to be in terms of generating free cash flow to return to our shareholders, but believe we have the right framework in place to return an increasing amount of capital as our operational and financial performance improves.
Our balanced shareholder return framework begins with an annualized base dividend of $1 per share, an amount that will remain fixed and currently equates to a quarterly dividend of $0.25 per share. We expect to be able to pay the base dividend from free cash flow over time. Our dividend is subject to approval from our Board of Directors on a quarterly basis.
Historically, our free cash flow generation has been weighted towards the back end of the year, and we expect that will be the case in 2024 as our production profile and synergy realization is expected to be higher in the second half of the year than in the first half. In addition, free cash flow generation in the first quarter of 2024 will be impacted by the payment of a stamp duty tax related to the acquisition of Newcrest. The same duty was accrued in the fourth quarter and paid in February.
As necessary, we will use the flexibility of our balance sheet to fund the base dividend through the quarters with the annualized $1 per share dividend expected to be ultimately funded with free cash flow. Additionally, our Board has authorized a $1 billion share repurchase program.
As the liquidity and debt parameters I defined earlier are satisfied, we intend to repurchase shares in line with our free cash flow and asset sale proceeds. To reiterate, our free cash flow and proceeds investments will be prioritized as follows: The first dollar will be allocated to maintaining our management cash balance; the second will be applied to reducing debt to $8 billion; and the third will go towards share repurchases.
Our go-forward portfolio positions us to improve margins and performance over time, funding our capital allocation priorities and allowing us to reward our shareholders directly with returns of capital. And we believe reducing debt and returning capital to shareholders creates an attractive value proposition for new and existing investors, while also improving the company's financial position over the long term.
I'll now turn it back to Tom for closing remarks.

Thomas Ronald Palmer

Thanks, Karyn. Newmont's go-forward portfolio sets the new standard for gold and copper mining and provides our shareholders with exposure to the highest concentration of Tier 1 assets in the sector located in the most favorable mining jurisdictions and with an improving cost profile to maximize margins and generate strong free cash flow. We provide industry-leading growth optionality in copper and gold through disciplined reinvestment and project execution and provides a balanced shareholder return framework.
As we look forward to this very important year of integration and transformation I am very confident in the quality of our assets and the capability of our team to deliver on our commitments and justify our position as the benchmark gold equity. This year, we will also be continuing to work on transforming our go-forward portfolio and importantly, building out the strategic and life of mine plans for each of our managed operations. And I look forward to updating you on the longer-term potential of this world-class portfolio at our Capital Market Days in the second half of this year.
And with that, I'll turn it over to the operator to open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question today is from the line of Daniel Morgan of Barrenjoey.

Daniel Morgan

Tom and Tim. First question is just, obviously, there's a lot of operational issues short term in nature in 2024. How many of these are resolved by the end of this year in your mind? And then does anything carry on into 2025?

Thomas Ronald Palmer

I very much see the operational issues as 2023 events that are largely behind us. So I look into this year with our, particularly with our go-forward portfolio, the one matter that carries over '23 and to '24 is the defected girth gear at Ahafo. And we'll work through a process of replacing that girth throughout the first half of this year. So very much got firm line of sight on that work and that impact of that girth gear reflects in the guidance we provide for the Ahafo operation.
I think, Daniel, the other factor that flows from '23 into '24 is our life cycle of our mines. We have 2 of our biggest operations in Boddington and Peñasquito, both in a stripping campaign in 2024. If we hadn't had the strike in '23, we would have been back into the Peñasco pit and high-grade gold. We look to have a balanced portfolio in terms of those tripping campaigns. So we have a situation now in '24 where both Penasquito and Boddington are into lower grades because they're doing a bunch of waste stripping.
We'll work through that in Peñasquito this year. Boddington stripping campaign is through '24 and '25 before we see the higher grades come back again at Boddington in '26. But operationally in that go-forward portfolio, no carryover issues, Daniel, and we're very much getting after those. And then we'll see the ounces come through because we hit higher grades. Well, the ounces come through because some of the investments we've been making start to deliver lower cost ounces in '25 and beyond.

Daniel Morgan

And just a follow-up, I guess, on that, is there any key downside risks that you might call out in achieving your guidance? Like any key assumptions or key assets or anything that you've baked into your thinking, which you'd be thinking could carry a risk during the year?

Thomas Ronald Palmer

Thanks, Daniel. I'll start. I'm just looking across to Natascha who might want to build on this. Nothing out of the ordinary, Daniel. It's, when we build our plans, we've certainly built them. We're using our methodologies, which we used for many years at Newmont, where we, we build it from bottom up based on our previous demonstrated performance, and we built some stretch into those plans. So there's nothing unusual about that in terms of what we're looking to do from a mining, [appraising] perspective and then the various reliabilities that sit around by fixed and mobile equipment.
So nothing particularly extraordinary. And I think we've had 3 months with our new to Newmont operations. And I think we've been able to go through a period of time, as you can imagine, when you go through an acquisition, to shake out the unknown and knowns and ensure that we build those into our plan and budget for '24. Natascha anything you can build off in terms of that?

Natascha Viljoen

I think when I can probably build this is the clear focus that we have. We know exactly what we need to do in each of these operations to deliver on 2024 and set up for beyond 2024. So other than just being clear on any potential risk that would have been considered. It is being very clear on our deliverables.

Operator

Our next question today is from the line of David Radcliffe of Global Mining Research.

Unidentified Analyst

My first question is in relation to the 6 assets you've identified for divestment. Are you able to provide some more color on how far along this process is? Is it just starting? Or are we above or maybe we received a few indicative offers? And then is this process to do all 6 or 1 (inaudible) at stage.

Thomas Ronald Palmer

Very much at the start of the process. So what we've been looking to do is we closed the transaction is work through an understanding portfolio and then realize that transformational nature of the Tier 1 go-forward portfolio. We made the decision then that we wanted to provide that clarity and transparency around the 6 very high-quality assets that are in great locations in Canada, Ghana and Australia. But they're not Tier 1. We can't ever see a pathway to Tier 1. Therefore, they won't get the management time, attention or access to capital in a Newmont portfolio. So we made the decision to be clear about that, and to provide that transparency so we can focus on our go-forward Tier 1 portfolio and safely manage those assets through our divestment process this year.
So that we're at the starting point in terms of having made and communicating that decision. So we'll start the process from today. And obviously, because we're transparent about it, we expect inbounds will come from today as well.
Probably, David, into 3 categories when you think about a process this year, I think there'll be a process that will follow for Telfer in Australia. It's quite unique in terms of its circumstance. Similarly, (inaudible) Ghana will have a suite of different types of buyers and a separate process. And then we think about the North American assets probably being in a process themselves. So imagine 3 processes and some stagger around that process over the course of this year with the more complex one being how we think about the 4 North American assets and they copy project (inaudible).

Unidentified Analyst

Great. That's very clear. Then maybe just follow up on that. Could you maybe clarify how the divestments fit into the capital allocation framework? So the first $1 billion would be obviously for a debt reduction, then the next $1 billion, I guess, and just maybe a simplistic way to think about it, towards the buyback. And in the event the proceeds exceed this level, would they likely flow to debt reduction because I'm sure that $8 billion target is made an initial target or potentially to shareholders?

Thomas Ronald Palmer

Thanks, David. So net free cash flow, we generate over and above those commitments plus the proceeds from divestments. The very first dollar will be maintaining that $3 billion of cash on the balance sheet. And building that cash to get ready to pay down debt to get to that target of around $8 billion of debt. And then beyond that, that third dollar would go to share repurchases through that program.
You move through the other side of that, we've got, we've got our $3 billion of cash a little bit more on the balance sheet. We've got $8 billion in debt, and we've fulfilled the $1 billion share repurchase program. Likely the discussion and debate we would have is do we authorize another share repurchase program to, for those proceeds really net free cash would be the likely -- likely in pathway assuming all of those other capital allocation parameters are met.

Operator

(Operator Instructions) Our next question today is from the line of Levi Spry of UBS.

Levi Spry

I just had a question around the 5-year guidance. Just trying to understand what was in there, what wasn't? And I guess, what could change, specifically thinking about some of the projects that you called out on one of the other slides. Can you sort of just walk us through what is in the, I guess, development capital in 2027, '28 versus the studies?

Thomas Ronald Palmer

What you're seeing from the -- if we just step through that to make sure we're tracking. What you're seeing in the production and cost profile is just that go forward Tier 1 portfolio. So it does not include the 6 asset sales for divestment. It does include the ounces to start to come through from the investments that we're making in those 4 projects that we talked about. So it's seeing ounces come through in that time frame from the 2 block caves at Cadia, shaft at Tanami and Ahafo North. And a significant proportion of that $1.3 billion of development capital in that time frame is about funding those 4 projects in execution. As we think towards the end of that 5 years, we certainly started to see the spend on those projects drop off.
It's going to be around about that time frame that we're starting to think about what's that next cab off the rank in terms of projects that would maintain that average of $1.3 billion. But the vast majority of what you see in that 5-year profile, particularly the cost profile, the all-in sustaining cost profile and the gold production profile is the existing operations moving through different stages of the mine cycle. We're getting to higher grades and that investment paying off in terms of additional ounces and better grains.

Levi Spry

Just so as I got that, is the does it -- does it cater for capital on Red Chris and Wafi-Golpu, for instance?

Thomas Ronald Palmer

No, no. When we guide, we guide only to projects in execution. So if you go to the detail of our development catalyst projects in execution. Once a project is approved by our Board for full funding, then we guide to that number. But what we give in terms of being able to model something, we'd say you can expect Newmont to spend on average $1.3 billion of development capital every year. But those 4 projects are the only ones that are in guidance because they're the only 4 that have full funding approval.

Operator

Our next question today is from the line of Andrew Bowler of Macquarie.

Andrew Bowler

I think most of my questions have been answered. I guess, from me, I think the early notations from Newmont were that we'd get a 5-year outlook more towards the middle of this calendar year. Can you just talk about why we've received something (inaudible) and obviously, it's positive to have more clarity, but what sort of changed to bring forward this announcement and whether or not that's what you're seeing in the Newcrest assets generally? Is there an enhanced level of confidence now compared to when you took the keys late last year?

Thomas Ronald Palmer

Yes. Thanks, Andrew. Good question. When we were -- provided that indication that we've come out with some nearer-term numbers in February and June-ish or middle of the year for some longer term or that 5-year. We're doing that in the context of not having information about Newcrest. So it was before we closed the transaction and what would we learned is we got the keys to the car. The integration has gone very, very well. We've very much approached it as a bolt-on of 5 operations into the Newmont operating model.
From day 1. We put Newmont general managers at each of those sites, that's made a significant difference in terms of setting our expectations and being able to influence those operations in terms of a Newmont approach and Newmont culture access to Newmont resources to build plans and understand the work.
We also had a huge number of lessons that we're able to bring forward from similar experience with Goldcorp 5 years ago when we bolted 5 operations into our portfolio. So as all of that came together, and we started to build our plan, we started to get the confidence that we could not only provide numbers for 2024, but give you a view for those 5 years within the February time frame.
So we went for it. And we went through that process of building those plans, getting those approved by our Board and guiding the market with them today. Our focus now is that on the strategic and life of mine plants to really start to work those 11 managed operations that we have in that go-forward portfolio and start to build out that portfolio view over the 5- to 10- to 15- to 20-year time frame. And we'll look to spend some time with our Board at our annual strategy session in June to work through that. And look to come to -- back to you in the second half of this year with a longer-term outlook for Newmont.
We're debating the timing at the moment, but we're contemplating returning to what's been our traditional slot, which has been around the November time frame and also debating that we'll hold a Capital Markets Day in New York. And hold one in Sydney or Melbourne as well as in that time frame. So that's how we're thinking about it at the moment, but rolling up the sleeves and getting stuck into the strategic life of mine plans now that we've got a solid foundation of the 2024 and the 5 year (inaudible)

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Tom Palmer for closing remarks..

Thomas Ronald Palmer

Thanks, operator, and thank you all for making some time to -- on the call today and look forward to catching up with you in not too distant future. Thanks, everyone.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.