Newmont Mining Earnings Call Nuggets: Peru at Conga, Milling Rate

On Friday, Newmont Mining Corporation (NYSE:NEM) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here are the key executives takeaways from the conference call.

Peru at Conga

John Bridges – JPMorgan: Just wondered if you could so give us a little bit guidance as to what sort of the changes in the plan in Peru at Conga could – how big a change in cost could that have?

Richard T. O’Brien – President and CEO: John, that’s precisely what we’re evaluating just to put it the context. As we going through this review, which I expect will take a bit of time, we’re evaluating both the technical aspects, and as I said, the first thing to recognize is that the EIA that we did, did meet all the technical requirements for its approval and did confirm to both international and Peruvian standards. So, we will continue to evaluate the recommendations around things that we should consider. When we evaluate that we’ll look at two things, both how it impacts the timing of the Conga project as well as the costs. So, that’s something that we’re in the process of evaluating, and recognizing that we just received the report last week, we’re still in process on that. But I guarantee you, John, when we go through this, when we get to the point where we know what the cost structure would be, we are going to look at the economics of this project, just as we’ve said, and we feel that we have other options in the portfolio should those economics turn out to not be favorable, and that’s something that that we could not go forward with. That said, that’s not where we are today, we continue to evaluate.

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John Bridges – JPMorgan: And you’ve got a dividend to maintain as well?

Richard T. O’Brien – President and CEO: We do, and we feel absolutely good about maintaining that dividend with or without Conga.

John Bridges – JPMorgan: Further on that; on the costs side, so, you’ve made a bit of progress there. Any areas that you feel you can focus on to better control costs?

Richard T. O’Brien – President and CEO: Yes, I think as Russell said, we have a number of areas where we are going to focus, and I think it goes right on through. As we look at the opportunities that we have in the world today, I think one of the things you’re going to see is us focus more on select opportunities and really continue to build the early stage of the pipeline. But looking at expiration of the advanced projects, we probably will have some opportunities in that as we go forward even this year to reduce capital, yet not impact the plans that we have. And I’d say, right on through project construction, where we are going to be looking in particular at our overheads, as well as the project teams that we have in place. And then right on through into G&A, and when I say G&A I mean the corporate wide structure both in Denver and around the world to see where we have duplication. We have been investing as we have talked about in new systems. Our SAP rollout will be completed by the end of the year. We will be incorporating savings going forward from that as we look into our 2013 budget process and cycle and in that plan I fully expect that we will see costs come down across the Company.

John Bridges – JPMorgan: And just finally with this change to some of the Canadian reporting companies to IFRS then they seem to have more flexibility now on how they report cost. Would it be possible to get a bit more information on strip ratios so we can sort of better compare your cost with some of those guys?

Russell Ball – EVP and CFO: It’s Russ. Clearly under U.S. GAAP we have, as you I think alluded to, less flexibility around that reporting. We are looking at providing more information around an equivalent to a 43-101. We’re working through some of the legal issues related there too. We will endeavor and John’s group has been working on this to provide more of that color to let your guys do a better job modeling perhaps at our Investor Day on May 23. So you should look for more granularity around the projects on May 23. It probably won’t get us all the way to where you’d like to be, but it will certainly get us further than where we are today.

Milling Rate

David Haughton – BMO Capital Markets: Yanacocha had a pretty good result going through the mill. The milling rate was well above what we thought on the grades. What should we be thinking about that going forward?

Gary J. Goldberg – EVP and COO: Yes. Steve, it is Gary Goldberg here. We had higher grades, particularly in the first quarter and that was expected, little better results than what might have been modeled at the one pit but right now we’re still looking at staying within the guidance that we provided.

David Haughton – BMO Capital Markets: And the nameplate of the mill was around about 6 million tons per annum, but it seems to be overachieving. Is that just the softness of the ore at the moment or is that you’ve debottlenecked it so that we can see sustained good throughput?

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Richard T. O’Brien – President and CEO: It’s Richard, David. We have had success at that mill from really the day we started it to actually get over nameplate and maintain it there. And I think it’s a combination of both the ore quality, but also we have done a significant study over the last year or two on a business excellence study to get more throughput, and that’s true of our mills around the world, but this is one where we actually see it in practice every day.

David Haughton – BMO Capital Markets: And I guess philosophically from the point of view of Conga. One of the appeals I guess of Conga was that it’s like a trial mine of potential sulfides below Yanacocha. Where does the Yanacocha sulfides fit in all of this? Is it just still too nebulous for you to be thinking about it?

Richard T. O’Brien – President and CEO: Yes. So, let me take that. Actually what we said about the Conga project was that it was going to help get us more into copper and it does have the quality about copper and gold in a larger porphyry. It is a different deposit though than Yanacocha. This is a typical sulfide deposit or copper porphyry rather, and when we’re talking about the deposits below Yanacocha, it’s significantly different, in that it is a deposit which is going to require more technical work for us to assess the commercial practicability of actually producing that and what I would say is as we review Conga, we are reviewing all of our investments in Peru, including those potential deposits. So, all of that is something that we’re looking at, at the moment, and as we get to Investor Day and beyond, we’ll keep you informed as to what we think are the prospects of those. So, I think it’s both timing, and as we’ve said, technical feasibility for those. So, we’ll keep you informed.

David Haughton – BMO Capital Markets: Switching back to Nevada, most of the work appears to be focused on Long Canyon. Has there been any work undertaken on Sandman or Northumberland that was also picked up with the Fronteer package?

Grigore Simon – SVP, Exploration: Yes, this is Grigore Simon. Most of the focus is correct to is at Long Canyon. At Sandman, what we are doing, we are moving the project into the pre-scoping and scoping phase. We will be spending a bit more time there. As far as Northumberland is concerned, we are evaluating options in terms of further exploration progress, but we really didn’t spend a lot of time there last year, and this year it’s a pretty small program overall.

David Haughton – BMO Capital Markets: Given the work on Sandman, is there potential for it to be brought on stream before Long Canyon?

Grigore Simon – SVP, Exploration: Right now, honestly I don’t see how that one would happen because Long Canyon looks much more prospective. So we will – in a portfolio context, we will be pushing Long Canyon faster than Sandman at this stage. But again, it doesn’t mean that we are not going to move along Sandman. It’s just that it is not going to move at the same pace.

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