Newmont Corporation (NEM) Q4 2022 Earnings Call Transcript

Newmont Corporation (NYSE:NEM) Q4 2022 Results Conference Call February 23, 2023 10:00 AM ET

Company Participants

Tom Palmer - President and CEO

Rob Atkinson - EVP and COO

Brian Tabolt - Interim CFO

Conference Call Participants

Emily Chieng - Goldman Sachs

Jackie Przybylowski - BMO Capital Markets

Carey MacRury - Canaccord Genuity

Anita Soni - CIBC World Markets

Cleve Rueckert - UBS

Fahad Tariq - Credit Suisse

Lawson Winder - Bank of America

Tanya Jakusconek - Scotiabank

Greg Barnes - TD Securities

Operator

Good morning, and welcome to Newmont’s Fourth Quarter Results and 2023 Guidance Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. 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.

Tom Palmer

Thank you, operator. Good morning, and thank you all for joining Newmont’s fourth quarter results and 2023 guidance call.

Today, I’m joined by Rob Atkinson and Brian Tabolt, our Interim CFO along with other members of our executive team. And we will all be available to answer questions at the end of the call.

Before I begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website.

We have quite a bit to cover this morning. So, I wanted to give you an overview of the topics we’ll be sharing. First, I’ll cover the highlights for ‘22 and our strong finish to the year. Then I’ll pass to Brian to take us through the financials. Next, Rob will walk us through our operational results for the fourth quarter and give a preview of what to expect this year from each of our operations and our two key projects. I’ll then summarize our 2023 and longer term outlook, along with our capital allocation strategy, and the expectations for our 2023 dividend. And finally, I’ll wrap up with some comments on our proposed combination with Newcrest.

So, with that, let’s get started with our 2022 highlights.

Newmont finished the year with a strong fourth quarter, leveraging our scale, our teams and our unmatched portfolio of world class assets to deliver industry-leading ESG, operational and financial results. We are well positioned to continue leading the sector, whilst remaining firmly grounded in our values and driven by our purpose to create value and improve lives through sustainable responsible mining.

At Newmont, when we talk about being a values driven organization, we have at the very core of this work, the protection of the health and safety of our workforce. This simply must be at the heart of any sustainable and responsible mining business. And perhaps the most important thing to share with you today is that we have remained fatality free for over four years.

We remain committed to continuously improve our disciplined and dedicated approach to safety, maintaining a clear focus on eliminating the risks that could lead to a fatality. We do this through the globally consistent management of the critical controls that must be in place at all times to prevent a fatality.

Last year, we completed more than 620,000 interactions by our leaders in the field that were focused on these controls, a process that we call Critical Control Verifications. This was an increase of more than 30% over the previous year, demonstrating the importance that we place on visible felt leadership to maintain a safe environment at every one of our 12 managed operations, our major projects and our exploration sites around the world.

We also continue to work to improve the effectiveness of our critical control verifications, through increased coaching and development of our frontline leaders. And last year, more than 50 Newmont leaders from across the world participated in field based fatality risk and culture reviews at sites that they do not typically work at. The purpose of these reviews is to identify any systemic issues or improvement opportunities at our managed operations.

As a direct consequence of all of this work, in 2022 we experienced a 36% reduction in the number of significant potential events from the previous year. However, health and safety is an area where you must always maintain a sense of chronic unease. We still experience at least one significant potential event every 10 days, and each and every one of these are an opportunity to learn and improve.

At Newmont, we recognize that a strong safety culture is not only an indicator of a reliable well run business, it is fundamental to sustainably delivering on our commitments to our employees, our contracted partners, our local communities, and all of our stakeholders.

Newmont delivered a strong fourth quarter, safely meeting our commitments in ‘22 and finishing the year in a position of strength with momentum coming into ‘23. We met our original guidance for production set back in December ‘21, producing an industry leading 6 million ounces of gold and 1.3 million gold equivalent ounces from copper, silver, lead and zinc. We ended the year in line with our guidance ranges for unit costs, as we continued to manage our exposure to the global pressures on input prices and labor costs that have impacted the entire mining industry.

These results generated $4.6 billion in adjusted EBITDA and $3.2 billion in cash from continuing operations, with $1.1 billion in free cash flow after reinvesting $2.7 billion into our business last year. As a key part of that reinvestment, exploration has always been and continues to be a core competency at Newmont. It is a critical component of our long-term strategy.

This morning, we announced that our global reserve base now sits at 96 million ounces. And we have successfully replaced depletion for the year. In fact, in the almost four years since we acquired Goldcorp and established the joint venture in Nevada, we have replaced all of our depletion with strong reserve additions.

As well as our robust base of gold reserves, we also reported nearly 600 million ounces of silver reserves and 16 billion pounds of copper reserves, providing natural exposure to a metal of growing importance, reducing carbon emissions.

Throughout 2022, we maintained a strong, flexible, investment grade balance sheet, whilst continuing to reinvest in our future and providing shareholder returns of more than $1.7 billion through our established dividend framework. These results, along with our stable financial position and strong free cash flow from the world’s largest attributable gold production base has Newmont positioned to safely deliver on our commitments in 2023.

And with that, I’ll hand it across to Brian to take us through our financial results for the fourth quarter.

Brian Tabolt

Thanks, Tom, and good morning, everyone.

Let’s start with the financial highlights for the quarter. Newmont had a strong finish to the year. In the fourth quarter, we delivered $3.2 billion in revenue driven by higher sales volumes and strong gold prices, adjusted EBITDA of nearly $1.2 billion and an impressive $4.6 billion for the full year, despite historically high and industry wide inflationary pressures, and strong free cash flow of $364 million.

It is worth noting that fourth quarter free cash flow included nearly $650 million of capital spend, an increase of more than $200 million from the fourth quarter of last year, as we are now firmly in a period of meaningful reinvestment. This demonstrated commitment to reinvestment is a core component of Newmont’s clear strategy to progress the most profitable projects in our industry-leading organic pipeline, further strengthening Newmont’s portfolio for the long term.

Compared to the third quarter, Newmont delivered strong top-line performance with a 16% increase in gold sales driven off the back of a strong fourth quarter production and an improved realized gold price of $1,758 per ounce. However, fourth quarter GAAP net loss from continuing operations was $1.5 million or $1.87 per share, driven by approximately $2 billion of non-cash accounting adjustments.

These adjustments which are further detailed in our earnings release and 10-K include $700 million of non cash reclamation adjustments, primarily related to higher estimated closure costs at Yanacocha and Porcupine resulting from cost inflation, and increased water management costs at operating portions of the sites and $1.3 billion of non-cash impairments which were comprised of approximately $500 million of asset impairments at CC&V and $800 million of goodwill impairments that Cerro Negro and Porcupine.

The site specific goodwill announced originated from the Goldcorp purchase price allocation four years ago, which was based on best estimates of each site’s value and country risk assumptions at that time. It should be noted that incrementally more value has been generated at Peñasquito that was originally allocated at the time, as Peñasquito alone has since delivered more than $700 million in annual synergies, far exceeding the value of these non-cash charges.

Taking these adjustments into account along with other immaterial items, we reported the fourth quarter adjusted net income $348 million, or $0.44 per diluted share, which, despite slightly higher costs from inventory write-downs and royalties, represents an increase of $0.17 from the previous quarter. Delivered by our balanced global portfolio, these strong results demonstrate Newmont’s continued financial strength and stability, enabling us to be flexible and resilient as we continue to generate long-term value for our shareholders, heading into 2023.

Now, I’ll hand it over to Rob for an update on our operational results for the fourth quarter and a preview of 2023.

Rob Atkinson

Thanks, Brian, and good morning, everyone.

As Tom mentioned, our team safely delivered an exceptional finish to the year, and we’re very proud of what our 30,000 strong Newmont team was able to achieve during 2022, despite the very-challenging and volatile operating environment that the whole mining industry was navigating. Today, I’ll cover the site level highlights for the fourth quarter, along with an overview of what to expect in 2023 from each of our operations and our two key development projects.

So turning to the next slide, let’s get started with Peñasquito. When we acquired Goldcorp in 2019, we committed to delivering synergies of $365 million per year by applying the Newmont operating model to deliver value from G&A, supply chain, and most importantly, the implementation of our proven Full Potential continuous improvement program. Peñasquito alone has blown that target out of the water, delivering more than $700 million in annual synergies since we closed the acquisition nearly four years ago.

Our core capability at Newmont is safely operating Tier 1 open pit and underground mines, and over 80% of this value is delivered from mining and processing improvements. And we have not stopped yet.

Peñasquito delivered a strong fourth quarter, setting a new record in December for the tons we moved ex pit and exceeding our full year production guidance for the third consecutive year under the Newmont operating model.

During the fourth quarter, mining was primarily from the Chile Colorado pit as planned, resulting in lower gold grades and higher levels of silver, lead and zinc contents. And as we progress this year, we expect this mining sequence and trend to continue at our two-pit polymetallic mine as previously communicated and in line with our long-term mine plans. In the first quarter, we expect gold grade to decline more than 20% compared to the fourth quarter due to this mine sequence. And for the year we expect gold production to be around 25% lower than 2022, whilst our gold equivalent ounces will be steady year-on-year.

In South America, Yanacocha delivered slightly higher production during the fourth quarter compared to quarter three. With higher production expected in 2023 from higher leach recoveries due to the continued use of injection leaching, we continue to progress our review of the scope and the pace of the Sulfides project and expect to spend approximately $300 million to $350 million of development capital in 2023 and again in 2024. This spend is related to advanced engineering, procurement and completing camp construction.

At Merian, the site delivered its highest quarterly production in two years due to record mill performance combined with higher grades mined from both the Maraba and Merian II pits. Merian is expected to deliver lower production and higher unit costs in 2023 as we begin stripping the next phase of the Merian pit, resulting in lower grades presenting to the mill as part of our planned mine sequence for the site. In particular, in the first quarter, we expect grades to decline more than 15% compared to quarter four as we enter the stripping campaign.

And finally, at Cerro Negro, the site delivered another solid quarter due to higher grade and strong mill performance. Production from Cerro Negro is expected to steadily increase each quarter in 2023 due to sustained productivity improvements from our Newmont operating model. This will result in progressively higher tons mined and processed throughout the year.

We continue to progress the first wave of district expansions at Cerro Negro, which will contribute to the higher production this year. And we just hit an important milestone with the first blast to commence development at the Silica Cap portal. In December, this project received approval for $200 million that will be spent over the next two years to develop Cerro Negro’s future through both the Marianas and Eastern Districts. And these funds will primarily be spent on underground development activities. This investment will extend mine life beyond 2030, and we expect to see annual production increase to above 350, 000 ounces beginning in 2024.

Since we acquired Cerro Negro nearly four years ago, we’ve improved underground development rates by more than 50% and doubled the size of our land package to over 1,000 square kilometers, demonstrating both our operating capability and our confidence in the untapped growth potential from this highly prospective gold district in Argentina.

In North America, our Canadian operations all delivered higher production in quarter four, a combined increase of 30,000 ounces compared to quarter three due to strong grades and improved productivity.

At Éléonore, we finished 2022 with the strongest quarterly performance of the year. And importantly, key roles are all filled, and the team is ready to deliver higher ounces in 2023. This increase is largely driven by sustained productivity improvements as higher underground mining rates and strong mill performance will offset the lower grades coming through.

At Musselwhite, we delivered our best quarterly performance in terms of gold production, development meters and total tons mined in more than five years. We anticipate production in 2023 to be weighted around 65% to the second half of the year, steadily increasing each quarter as mining continues in the PQ Deeps area.

Porcupine delivered its strongest quarterly performance of the year and annual production is expected to slightly improve in 2023 due to higher tons mined and higher grade. We continue to progress the project to replace production from the Hollinger pit production with a layback of the Pamour pit. An investment decision is now expected in late ‘23 as we’ve been able to implement improvements to extend the life of the Hollinger pit.

And at CC&V, we achieved our highest December production in over three years, resulting in a solid fourth quarter from higher tons mined and placed on our leach pads. Production in 2023 is expected to decrease slightly due to lower grades as we extend mine life through the stripping of a layback in the Globe Hill pit.

In 2023, our four North American operations are expected to deliver nearly 1 million ounces of gold. This increase over 2022 will be safely delivered by a strong leadership team of experienced general managers who are in place, a stable workforce and without the challenges and constraints from COVID that we had to navigate through during the first half of last year.

Boddington delivered an exceptionally strong quarter with 20% higher gold production and more than 50% higher copper production compared to quarter three. We set two important records in the fourth quarter, a new all-time monthly production record in December for both gold and copper on the back of higher grades and strong mill performance, and the best quarterly performance for our autonomous haul truck fleet for the tons moved per hour, a key metric for every open pit mine.

Reaching these important milestones at a cornerstone operation like Boddington is a tremendous achievement, and we are proud of the hard work and dedication that our team has demonstrated in implementing leading technologies to promote both safety and productivity. The lessons we have learned will benefit not only Newmont but the gold industry as a whole, and we will look to leverage this technology and our experience at Boddington as we expand the use of autonomous solutions across our global business.

In 2023, gold production is expected to remain steady compared to 2022, as continued strong mill performance and tons mined offset lower grade associated with further stripping in Boddington South pit.

Tanami maintained strong production throughout the year and reliably delivered a solid fourth quarter from higher tons mined combined with higher grades despite an extreme weather event and record rainfall across Northwest Australia late in the quarter. Gold production is expected to be lower in 2023 and 2024 due to lower grades from the planned stope sequencing to allow for the underground construction of the crushing and conveying infrastructure associated with the Tanami Expansion project.

Due to the extreme weather events and associated flooding, the main access route for supplies to Tanami and Tanami track has been closed from late December through mid-February. And although our fourth quarter was largely unaffected by this event, critical consumables such as cyanide, explosives and other reagents that can only come to site by road have not been able to be delivered over the last 6 to 8 weeks, and we have consumed the stocks that we maintained on site. As a consequence, we had to cease milling operations at Tanami over the last few weeks, and this will have an impact on gold production for the first quarter. However, the bottleneck at Tanami is the mining operation, not the milling plant, and mining has continued throughout this period with the ore being stockpiled in front of the mill.

We restart the mill tomorrow and expect to recover the ounces that will be delayed from Q1, but that now means that we will have a production profile this year that will be strongly weighted to the second half. And with this impact, we expect only around 10% of Tanami’s 2023 gold production to be delivered during the first quarter.

We also continue to progress the expansion at Tanami. Overall progress is now at 50% with engineering and procurement effectively complete, protecting the project from any new inflationary or supply chain challenges in the coming years. 373 meters of concrete lining has now been installed in the upper part of the 1,500 meter deep shaft, and this furnishing of the shaft continues to be the critical path work for the project. Underground development for the project has largely been completed with crusher and conveyor chambers, all fully excavated and ready for construction of infrastructure to commence.

And as I signaled last July, following the completion of the four important project milestones of shaft reaming, head frame construction, underground development and the opening of state and international borders in Australia, we would assess project capital cost and schedule. We are expecting total capital costs of between $1.2 billion and $1.3 billion and the project completion in the second half of 2025. This is consistent with the direction we provided last July.

Tanami Expansion 2 remains a key project in Newmont’s portfolio and underpins Tanami’s future as a long-life, low-cost producer well into the 2040.

Turning to Africa. Our two operations in Ghana delivered this year’s strongest quarterly performance in Q4, increasing production by more than 45,000 ounces compared to Q3.

In December, Akyem delivered its strongest monthly production in seven years on the back of higher tons mined, higher grades and strong mill performance. In 2023, Akyem is expected to deliver lower production as we progress stripping of the next layback in the pit. And as a consequence, 2023 gold production will be around 20% lower than last year as a result of lower grades. Ore grade is expected to decline by more than 40% in Q1 compared to Q4.

Moving across Ahafo, the mill achieved record throughput during the fourth quarter, benefiting from higher grade and mining rates as Subika underground really starts to hit its stride. In 2023, gold production from Ahafo is expected to steadily increase each quarter as we open up more draw points in the Subika underground, lifting mining rates and resulting in the delivery of more higher grade ore to the mill over the course of the year. As a consequence, gold production will be strongly weighted to the second half of the year with around 15% of the year’s production to be delivered in the first quarter.

And I’m pleased to announce that we are making great progress with our new mine in Ghana, Ahafo North, where we gained land access and have commenced construction and highway relocation activities.

Ahafo North expands our existing footprint in the Ahafo complex, adding more than 3 million ounces of gold production over an initial 13-year mine life. And when combined with Ahafo South just 30 kilometers away, we expect to deliver an average of 850,000 -- I beg your pardon. 350,000 -- sorry. We expect to deliver an average of 850,000 gold ounces per year through until at least 2030 from our Ahafo complex.

Leaning into one of Newmont’s core capabilities, we have conducted extensive regulatory and community engagements to ensure that from the very start of this project, we earn and maintain social acceptance. The process of engagement is critical work that cannot and must not be rushed. There’s an African proverb that we consistently apply at Newmont. “If you want to go fast, you go alone. If you want to go far, we go together.” And as I signaled last July, gaining land access and commencing construction activities was a key milestone for us to reach in order to assess project capital cost and schedule. We are expecting total capital costs of between $950 million and $1.05 billion in project completion in the second half of 2025. This is consistent with the direction we provided last July.

We remain very excited about Ahafo North and look forward to bringing you updates as we develop this new mine over the next two years and create value from the best unmined gold deposit in West Africa.

Finally, to our two non-managed joint ventures. Our 38.5% ownership of Nevada Gold Mines and 40% interest in Pueblo Viejo contributed 1.45 million ounces of attributable gold production in 2022. For Nevada Gold Mines, disappointingly, fourth quarter and full year production fell below the lower end of the guidance range and above the higher end for costs that were provided by Barrick in November 2022. However, most concerning was that these two non-managed joint ventures have experienced three tragic fatalities over the last 12 months.

As for the 2023 guidance provided last week by Barrick, gold production is expected to increase by around 10% from both Nevada Gold Mines and Pueblo Viejo in 2023. Both of these joint ventures are core to the Newmont portfolio, and we look forward to our managing partners safely delivering on their 2023 commitment.

And with that, I’ll hand it back to Tom.

Tom Palmer

Thanks, Rob.

So bringing everything that Rob just covered together, we finished ‘22 strongly, and we are bringing that momentum into this year. As we’ve been signaling for some time, in 2023, we are expecting to produce around 6 million ounces of gold at an all-in sustaining cost of around $1,200 an ounce. Sustaining capital lifts to around $1.1 billion. Exploration and advanced project spend will be around $500 million. And we will see our highest development capital spend in a generation at around $1.3 billion.

At Newmont, we developed our business plans with discipline around the assumptions we make. In 2023, we anticipate that the current economic environment will continue to be volatile, and with this context believe that it is particularly important to understand the sensitivity of our free cash flow and all-in sustaining costs to the key assumptions we have made.

We have taken a conservative view of gold price for 2023 and are assuming $1,700 an ounce. This table provides our sensitivities to other metal prices, oil as well as the Australian and Canadian exchange rates. For ‘23, we have assumed normalizing levels of inflation as we progress through the year with an assumption that the year-over-year escalation rate will be around 3%. And as we do each year, we expect that this escalation will be offset by our ongoing discipline in delivering on full potential improvements.

This year, we are also including a guide on the sensitivity to our three main cost areas. 50% of our direct costs are labor, an area under continued pressure in our mining industry. We have assumed our labor costs will increase 4.5% compared to last year before returning to more historical levels, and we are keeping a close eye on contract labor, which tends to be much more volatile.

Materials and consumables account for the next 30%. We are seeing input prices for cyanide and explosives beginning to normalize with improvements in global supply chain performance. In addition, the price of the steel we use for grinding media and spare parts is now in line with last year’s average prices. These two categories, along with fuel and energy, remain highly volatile and impacted by the many macroeconomic events the world is experiencing. High levels of inflation have a material impact on our unit costs, and we will continue to remain transparent with the market as we monitor the inflationary environment over the coming months.

Turning now to seasonality on the next slide. We anticipate that gold production this year will be weighted 55% to the second half, driven by Ahafo, Tanami, Peñasquito and Cerro Negro, as Rob just explained. Q1 is expected to be our lowest gold production quarter with approximately 21% of annual production. However, we expect to have relatively steady spending for both, our sustaining and development capital throughout the year. We anticipate that production will increase and unit costs will decline each quarter as the year progresses.

Turning to our five-year outlook on the next slide. Supported by the industry’s most robust, balanced and diverse portfolio of operations and projects, we expect to deliver strong gold production and improving unit costs over the next five years, bringing our all-in sustaining cost to around $1,000 to $1,100 per ounce by 2025. This cost improvement will be driven by strong production from our world-class assets, Boddington, Tanami, Ahafo and Peñasquito, combined with the delivery of new low-cost ounces from our investments in Ahafo North, Tanami Expansion 2 and the district expansions at Cerro Negro.

Our near-term cost reductions are also supported by the delivery of full potential cost and productivity improvements across our 12 managed operations. This solid outlook, combined with the strength of our team and the quality of our assets, has the ability to generate substantial, attributable cash flows throughout the gold price cycle, allowing us to confidently execute on our capital allocation priorities and maintain our position as the world’s leading gold company.

Our capital allocation priorities remain unchanged with a clear and balanced strategy, first and foremost, to maintain the industry’s strongest balance sheet with financial strength and flexibility; second, to reinvest in our business through exploration and organic growth; and finally, to return excess cash to shareholders through dividends. I’ll take a moment to step through each of these priorities, explaining their significance to Newmont and how they work together in order for us to deliver a long-term stable outlook.

Starting with our first priority. Newmont has maintained an investment-grade balance sheet with financial strength and flexibility to ensure we have the right balance between resilience, returns and the ability to react. We have made deliberate efforts over the last few years to build the industry’s strongest balance sheet, growing our cash balances to $3.7 billion with total liquidity of $6.7 billion and no debt due until 2029.

This robust platform has allowed Newmont to enter the current phase of the commodity cycle in a uniquely strong financial position, enabling us to be resilient and agile in times of market instability.

Our second priority is to reinvest in our business through exploration and organic growth, ensuring that our current and future reserve and resource position can continue to support our industry-leading portfolio of operations and projects.

Our long-term outlook assumes annual investment of around $1 billion to $1.2 billion in sustaining capital, around $400 million to $500 million in exploration and studies, and around $800 million to $1 billion in development capital. Combined, this is an average annual investment of around $2.5 billion, a critical component in Newmont strategy to sustain strong production levels and improve margins over the long-term.

[Technical Difficulty] we are currently [Technical Difficulty] Due to the higher capital spend anticipated this year, Newmont expects to reinvest approximately $2.9 billion in 2023, which is around $400 million higher than our average annual investment. And it’s also important to note that these numbers exclude our equity method contributions to support the Pueblo Viejo expansion.

[Technical Difficulty] to maintain our [Technical Difficulty] profile for the next 10, 20, 30 years. Our portfolio of operations and organic project pipeline will produce more than [Technical Difficulty] of attributable gold each year, through [Technical Difficulty] in our industry. This profile [Technical Difficulty] production of approximately 1 million gold equivalent ounces from copper, silver, lead and zinc. Importantly, the majority of this metal production comes from the most favorable mining jurisdictions, balanced across 12 managed operations two non-managed joint ventures in nine countries around the world.

And it is this strength and scale that enables Newmont to confidently execute on a clear and consistent long-term strategy to deliver value to our workforce, our local communities and to our shareholders.

Then our final capital allocation priority is to return excess cash to shareholders, which is primarily done through our industry-leading dividend framework. Recognizing the importance of shareholder returns, 2.5 years ago, Newmont was the first in the gold industry to introduce a structured dividend framework. This framework provides shareholders with a stable base dividend of $1 per share, centered at gold reserve price of $1,400 per ounce and a variable component based on incremental free cash flow above that base assumption.

As we do each year, we have evaluated the 2023 dividend payout in conjunction with our annual business planning process. The expected range for dividends to be paid this year is $1.40 to $1.80 per share, and this range has been calibrated at a conservative $1,700 gold price.

Anticipated incremental free cash flow in 2023 has been adjusted to incorporate the current input costs being experienced across the mining industry from unprecedented levels of global inflation, the $400 million of higher capital spend above our long-term average, and considering the strength of our balance sheet during this period of meaningful reinvestment. Taking all of these considerations into account, and in line with what we have been discussing since our last earnings call in October, this morning, we declared a fourth quarter dividend of $0.40 per share or $1.60 per share on an annualized basis. This continues to be the highest dividend per share in the gold sector and within the top 80% of large cap dividend payers in the S&P 500.

With this dividend declared, Newmont will have returned over $4 billion to shareholders through dividends since introducing our framework in October 2020, maintaining a dividend yield above 3% for nine consecutive quarters.

Our proven track record of returning cash to shareholders clearly demonstrates our ongoing commitment to shareholder returns and the balanced long-term approach that we apply to our capital allocation strategy, ensuring that Newmont is well positioned to create value for many decades to come.

So, I’ve just taken you through the gold industry’s strongest business. Now from that solid foundation, let me walk you through the value proposition for our potential combination with Newcrest. Before I begin, please understand that other than these prepared remarks, I’m not able to provide any further details about the Newcrest proposal at this time as this is a live engagement.

Our proposal would combine two of the sector’s top senior gold producers and set the standard for sustainable and responsible gold mining. Newmont has a long history and shared heritage with Newcrest, establishing our Australian subsidiary way back in 1966, a subsidiary that would become Newcrest some 25 years later. As part of that shared history, our companies also have shared commitments to a strong safety culture and leading ESG practices, which is in addition to the complementary portfolios of world-class assets located in low-risk mining jurisdictions.

Our proposed combination would strengthen our established position in Australia, creating efficiencies and value with a shared workforce and large-scale supply chain optimization opportunities. And it would build upon the district potential in British Columbia’s highly prospective golden triangle through a combination of operating mines and development projects that would deliver value through shared technology, local capabilities and orebody experience.

With our scale and track record of successfully managing some of the mining world’s top Tier 1 assets, this combination would leverage Newmont’s experience from the Goldcorp acquisition, which demonstrated that we can generate meaningful improvements to performance, stability and profitability, especially at large open pit and underground operations. We have delivered more than $1 billion in annual synergies from our Goldcorp acquisition in 2019, far surpassing our initial estimate of $365 million and improving the ongoing performance of the acquired assets through Newmont’s operating model.

At Peñasquito alone, we have generated over $700 million of annual synergies by optimizing the processing plant and mining fleet while sustainably addressing community relations issues that have disrupted that site for over a decade. And as a reminder, upon completion of the Goldcorp acquisition, we focused on optimizing the combined portfolio, completing asset sales of more than $1.5 billion from that combined portfolio within the first 12 months.

And given the challenges that the mining industry is currently facing from a volatile macroeconomic environment, there has never been a better time for Newmont and Newcrest to come together.

We are disappointed that the Newcrest Board rejected our proposal, and we are currently engaging with the Newcrest team in relation to their offer to provide us access to more information. And if we can reach an agreement, this combination of industry-leading talent and decades of collective experience would create significant value across the global business with an ideal mix of gold and copper, strengthening Newmont’s overall position as the world’s leading gold company.

As I indicated, I will not be able to make -- provide any further details on the Newcrest proposal at this time as this is a live engagement. But I want to be clear with everyone on today’s call that we will continue to be disciplined as we assess all of the options to move forward, and we will act in the best interest of our shareholders.

Thank you. And with that, I’ll now turn it over to the operator to open the lines up for questions.

Question-and-Answer Session

Operator

Certainly. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Emily Chieng of Goldman Sachs.

Emily Chieng

My first question is just around the two expansion projects that you have going on, Tanami 2 and Ahafo North. I know you’re targeting first gold by the second half of 2025. But can you talk through what perhaps are the key constraints that you may face in achieving that timeline? Is it labor? Is it supply chain? I guess how much buffer is being built into that construction period there?

Tom Palmer

Yes. Thanks, Emily, and good morning. Both those projects have hit, as Rob was describing, important milestones that allow us to assess both schedule and cost to complete.

So for us, at Ahafo North, it was achieving land access, which we have achieved. So, that means we can now essentially pin our ears back and build a mine that we’ve built 3 times before. It’s the same mine is Ahafo. It’s the same mine as Akyem. It’s the same mine as Merian, and our EPCM contractor is like a podium who have been our key partner in Ghana for over 20 years. So, we know how to build Ahafo North very well. We’ve hit the key milestone in terms of land access. Our communication towers are going up, lands being cleared. We’ve got CAT gear on hard stands, temporary fuel facilities in place. And the schedule and the cost we provide, we are highly confident in delivering because we’ve hit that critical milestone.

For Tanami 2, the critical milestone for us was completing the reaming of the shaft, completing the development underground. So, some massive chambers underground that our mining team has very successfully completed and safely completed. The installation of the head frame above that shaft and the mobilization of the key team, a very specialized team that will spend the next two years in a Galloway, heading down that shaft, forming concrete and then installing pipes, infrastructure and then a separate team that will get underground to install conveyors and crushers.

So with that key milestone, we have confidence in both the schedule and the cost to run that project to complete. Engineering is done. Procurement is done. We’re 50% complete. So those -- we are at two important milestones, which is why we held back to now before we provided the update. So Emily, you should have a high degree of confidence in the Newmont team to deliver those projects within schedule and cost.

Emily Chieng

Great. That’s very helpful. And just a follow-up around the cost outlook for the next couple of years there. I know you’ve mentioned we should expect to see costs come down by 2026 on some increased production. But, as we think about the 2024 and 2025 outlook, is the step down there from ‘23 through ‘26 also attributable to some production increases, or is there any sort of baked in expectation for the labor and consumable costs also coming down in that period as well?

Tom Palmer

We’re certainly expecting costs and inflation levels for this year to be the same as ‘22. We do assume a little bit of easing in ‘24, ‘25, ‘265. So that is partly a driver. In ‘24, there’s also the work we’re doing on productivity improvement and the additional ounces that you see coming through in that production profile. I think a big mine there is -- that contributes to that is Peñasquito. It’s a polymetallic mine. The gold equivalent ounces stay pretty stable. But depending on which pit we’re in, the gold ounces change quite significantly year-on-year, as you’re seeing ‘22 to ‘23. So, if you have a year of high gold ounces, that obviously helps your all-in sustaining costs for gold.

So, there’s some easing of inflation in ‘24, productivity improvements in ‘24, some more ounces from lower-cost operations coming through. ‘25, ‘26, ‘27 is really driven by the low cost ounces coming in from the investments we’re making, Cerro Negro, Tanami, Ahafo North and from our non-managed joint ventures. We’ll see some low cost ounces coming through from the Pueblo Viejo expansion. So, there’s a number of factors there.

Operator

The next question comes from Jackie Przybylowski with BMO Capital Markets.

Jackie Przybylowski

Thanks very much, and congratulations on the quarter. The first question I want to ask is regarding a press release you came out with a little while ago. I’m sorry, I’m going to mess this up. But you announced that Natascha Viljoen, I think it is, is going to be joining you at some point, maybe in about a year or so as your COO. Can you talk a little bit about what she’s going to bring to Newmont? And maybe what Rob Atkinson is going to be doing in his new role? Thanks.

Tom Palmer

Good morning, Jackie. And it’s Natascha Viljoen, and maybe the operator feels better try to pronounce his name. We’re part of a well-governed company. I think part of a hallmark of Newmont for many, many years is the work we do to ensure that we continue to develop our internal talent. We continue to strengthen our team by looking for opportunities to bring in external talent. And as I do the work with our Board and with my executive team, we’re constantly challenging ourselves to where can we continue to strengthen what is already a strong team, ensure that we are positioned to address the -- both the risks and opportunities out in front of us.

So over the course of these last 12 months, we have strengthened our general manager team. Across our 12 managed operations, we have the strongest set of general managers in my decade with Newmont. And there’s a mixture there of internal promotions and bringing in some external talent.

We have strengthened our -- our 4 -- 5 Senior Vice President team. So David Fry coming in to run our projects, one of the best in the industry for project delivery and a future leader of Newmont joined us last year. Four Senior Vice Presidents have come in, all internal appointments and promotions within our organization. And I would argue, we have our strongest operational team in my 10 years at Newmont.

We’ve brought in Aaron Puna joining us from Anglo American, who was running Anglo’s copper business in Chile, strengthening the leadership of our technical team, to be able to take us to our next chapter in Newmont’s journey. And Natascha’s appointment is a continuation of looking to continue to build on what is already a strong team. The nature of these sorts of appointments is very long term. You’re looking to understand how you strengthen this business over the long term.

So, as you saw in the announcement, Natascha could be up to 12 months before she joins us. And there will be a very orderly transition at that time with Rob. And then Rob, after more than four years in the COO role, will then turn his mind to working with me on the next opportunities that we have within our portfolio. So, this is about looking at where we want to place our organization strategically, ensuring we’re looking to continually build a strong team and ensuring that we’ve got a well-governed stable team for the long term.

Jackie Przybylowski

And if I could ask a second question. Your dividend sits at around $1,700 gold price. I know you’ve noted that it looks fairly conservative today, although these things are obviously very volatile. Can you talk a little bit about how you plan to either smooth that dividend, or if there’s any upside if full price stays over around current levels through the year. Could we see that dividend range that you mentioned earlier maybe go up or be exceeded by year-end?

Tom Palmer

Yes. Thanks, Jackie. I think we’ve -- we take a conservative view to gold price, as I said, and setting it at $1,700. We are in a volatile world. There’s a lot of experience that we bring in to our consideration of ‘23 based upon how ‘22 played out and even a couple of years before that. So, there are certainly lots of upside risk on gold price as you look into 2023. Equally, there are a lot of factors that present downside risk to gold price as we look into 2023. You only have to go back to late October to see the gold price was sitting down at $16.50. We’re enjoying it sitting above $1,800 at the moment. But when we sit here in February, we maintained a fairly sober view as to how 2023 might play out, both in terms of gold price and in terms of inflation. And we’re ensuring that we are positioning Newmont to be strong and resilient through what I anticipate will be a volatile year.

We’ve set up our range at $1,700 gold price at $1.40 to $1.80. And the dividend we declared this morning is set at $1.60. So that gives us some opportunity within that range to assess how the year plays out, and I’m confident that every quarter, we’ll have some good robust debates with our Board around what the appropriate debt payout is. But we certainly built a range that allows for some potential upside in gold price to play out through the year. But we’d want to see that play out rather than attempt to predict what gold may do or inflation may do in a, what I anticipate to be a very volatile year.

Jackie Przybylowski

Am I allowed to sneak in one more question?

Tom Palmer

Go for it, Jackie.

Jackie Przybylowski

Thank you. So, we had dinner together in December in New York, and you talked about growth and meaningful growth at that point and talking about how that would help your relevance or maybe introduce you to some new shareholders or new funds on the generalist side.

And so, this Newcrest proposal seems like it’s very consistent with that. If for whatever reason the combination of Newmont and Newcrest doesn’t end up working out, do you look to another growth vehicle, another M&A transaction to achieve that growth, or what would be your -- what would be your response to your plan going forward if this transaction does not happen?

Tom Palmer

Thank you, Jackie. Let me attempt to answer this question by staying away from the comments I made. As we spent most of the call covering, we have the best gold business in the industry by a long shot. We are very comfortable with the foundation that we have, and we will continue to act with discipline, both in assessing any opportunities and ensuring that we’re running -- safely running our business to deliver on our commitments.

As part of your first question, when we think about how we continue to strengthen a strong team, we do think about our strategy. We have -- Peter Toth’s been with us now for 6 or 9 months, supporting me and the Board and my executive team and thinking about our strategy. And as part of that work, we have a very clear eyed understanding of our capabilities as an organization today in 2023. I think we’re an ESG leader. And we believe that we run very large open pit and underground mines very well.

We understand our capabilities. We then look at what are the megatrends impacting the world, and our company, and those mega trends are coming from society and investors, they’re coming from technology, and they’re coming from geopolitical events around the world as we’re seeing playing out. So, we understand and assess those megatrends and determine what set of capabilities and what sort of organization we need to be 10 years from now, 15 years from now, 20 years from now. And we can do that because we transformed our business back in 2019 with the acquisition of Goldcorp and the establishment of the Nevada Gold Mines joint venture.

From that knowledge and that understanding, we then look to what it means to continue to be the responsible gold leader. We then look for what it means in terms of our gold industry that’s subject to those same megatrends that has to consolidate. And then, we look to what it means in terms of diversification, particularly as you think about copper. And we have, as I said in my opening remarks, 16 billion pounds of copper in our organic project pipeline. If we do nothing else, we are diversifying in the copper as we shepherd that project pipeline through.

So Jackie, that’s the lens with which we look at our organization. That’s the lens with which we look to try and bring in talent to ensure we’ve got a team that can lead this organization for the next 10, 15, 20 years. And that’s how we assess our business today, and that’s how we assess any external opportunities that may present.

Operator

The next question comes from Carey MacRury of Canaccord Genuity.

Carey MacRury

Just in your comments on capital allocation, you didn’t mention share buybacks. So I’m just wondering is that something you still consider as an option, or is the focus really on the dividend going forward.

Tom Palmer

Yes. Thanks, Carey, and good morning. Our primary vehicle for returns to shareholders has always been, since we introduced that dividend framework back in October 2020, to return cash through dividends. That’s a primary vehicle.

We don’t have an approved buyback program at the moment. If you look back at the majority of the share buybacks that we have done over the last two or three years, it’s been linked to asset sales. So, when we sold KCGM, Red Lake and our share in Continental and the Buriticá project in Colombia, those proceeds were primarily the vehicles that we used for share buybacks. And that’s typically what we do, otherwise, dividends is our primary vehicle.

Carey MacRury

Got it. And then, without trying to ask about Newcrest, just wondering if you can just share more broadly how you think about Papua New Guinea. I know you were in Indonesia quite a few years back. Just any thoughts on Papua New Guinea as a mining jurisdiction?

Tom Palmer

Again, Carey, I’ll avoid the direct question, but maybe answer more broadly. When we think about a balanced, diverse portfolio, think about our capabilities, we have demonstrated. If I look at Peñasquito in Mexico, look at what Newmont have done going into Peñasquito in that first year in 2019 to be able to work with government communities to address a decade-long issue and then deliver sensational performance out of that operation, beating guidance in three consecutive years since we’ve had that operation.

We have a core capability that’s running very large open pit and underground mines. We also have a core capability around social responsibility and being able to engage with communities. And in a balanced portfolio that has as a foundation top-tier jurisdictions, we can afford to balance some other jurisdictions that wouldn’t fit the top-tier category. We, today -- our portfolio today has us in Ghana, has us in Suriname. We’re down in Argentina. We’re in Peru. We’re exploring in French Guiana. So for us, it’s about understanding your core capabilities, understand the foundation of your business and then ensure you’ve got a balanced diverse portfolio that allows you to take some managed risk.

Operator

The next question comes from Anita Soni of CIBC World Markets.

Anita Soni

I had a lot to ask about the deal, but I guess I won’t be able to, particularly since I cover Newcrest. But, let me focus in on the dividend and ask, given the seasonality that you have that you mentioned this year about the development CapEx and sustaining capital are relatively flat, could we see that dividend sort of change over the course of the year quarter-to-quarter, like maybe hitting the bottom end at the $1.40 and then perhaps the top -- closer to the higher end at $1.80 as you progress through the year? Or would you be more inclined to smooth it out? And I guess I’m just trying to understand how you would -- what gets you to the $1.40, what gets you to the $1.80?

Tom Palmer

Thanks. Good morning, Anita. And apologies, I can’t cover your questions you want to cover. Maybe one day. The dividend is -- our dividend is about being stable and predictable over long term, and it is about using the strong balance sheet and the cash that we’ve generated from higher gold prices over time that now sits at our strong balance sheet. So, as we have those discussions and debates around the free cash flow that you might generate there in any given quarter or the level of investment in any given quarter, we don’t look to have our dividend whipsaw quarter-to-quarter. We look to give our shareholders some ability of confidence sand stability in our dividend as we move forward and not have it jumping up and down quarter-to-quarter, so. And we’ll use -- we will use our balance sheet to support that stability and predictability.

Anita Soni

Okay. So then, I guess, the second part of that question was basically then like in what instance would you be inclined to use the $1.40 rather than the $1.80?

Tom Palmer

So thanks, Anita. If you think about the world we’re living in and the volatility around gold price and inflation. As best we look at this year, conservatively, we think our unit cost is going to be $1,200 and $1,700 gold price. And we have picked the dividend for the first quarter at $0.40 or $1.60.

Now I preface this by saying our Board have the authority to approve every quarter. So, I would then point to those key assumptions, point to our sensitivities that we’ve provided. And so there is a circumstance here where the world could jump to $1,600, costs can go to $1,300. That would be a circumstance where we would then look at do we need to think about the lower end of our range?

Equally, there’s circumstances where costs could be a little bit better than $1,200, and gold could sit stubbornly above $1,800. That would give cause for us to have a discussion with our Board around what we might do over the course of this year. And we’re making decisions around that range for the 2023 year. We’ll come back and revisit it for 2024 much later in this year.

Anita Soni

So, the $0.40 you declared for Q4 is probably a good guide post borrowings, borrowing changes, right, to what we’re looking at. Is that fair to say?

Tom Palmer

Yes. I think we’ve put a marker out there for you in terms of as we sit here in mid-February, $400 gold, $1,700-- $1,200 unit costs, $1,700 gold price, $0.40 per share dividend is a good marker for you.

Anita Soni

I’m going to ask this question. It relates to the deal, but -- or the bid on the table or the indication. But how -- I mean, how does the dividend change and evolve given that Newcrest, and I happen to cover Newcrest, is a negative free cash flow more -- vary dramatically. The best way -- they’re in a very heavy capital reinvestment cycle. And how does that impact your -- how stable is the dividend post this year if this -- given the offers that are on the table right now?

Tom Palmer

Nice try, Anita. I’m sorry. But let me maybe come back and answer. I’ll try to answer your question. We spent a lot of time talking about our capital allocation hierarchy. And the tension between balance sheet strength, reinvesting in our business at the right level of spend, and that’s -- the cash you’re going to afford to do, but also your ability for execution and ensure that you can have a successful project. And we understand the importance of industry-leading returns to shareholders. So, for us, in whatever scenario we’re in, it’s that triangle of tension between balance sheet strength, reinvestment, leading shareholder returns. And that doesn’t change. That’s part of what Newmont is.

Anita Soni

Okay. And then one last one, in terms of the capital outlook, you’ve noted that it doesn’t include Yanacocha Sulfides in the out years. Just trying to get an understanding. The development capital, we have a conversation every year. But development capital, I mean, when you look at the development capital in 2026 and 2027, it’s probably going to come up to the level of 2025 and 2024. You mentioned 2023 is a little higher than normal, but it probably should come up like we should be using the 2024, 2025 levels as the out years as well.

Tom Palmer

Yes. I’ll just clarify that for you. What we’re trying to -- be very, very disciplined with what the guidance we provide on development capital, but I’d point you to that long run average. $800 million to $1 billion is what I’d encourage you to use if you’re modeling out into the future. And this year and next year, some of the biggest reinvestment we’ve done since we’ve built that back in the early 2000s. So this is an extraordinary period of reinvestment. The long-term average is much more like it.

Operator

Next question comes from Cleve Rueckert with UBS.

Cleve Rueckert

Tom, well done on managing all the information, I feel like we could spend the next year discussing the slides and everything that’s been presented. So, I have just a couple of follow-ups. Previously, just on the guidance, you had provided kind of two sets of guidance, one at your base case kind of explaining the assumptions behind that, and then another one with mostly different cost assumptions at kind of the spot scenario. And then, that framework was obviously incorporated into the dividend and cascaded down the line. Is the costs -- I mean, the cost structure that you’ve presented today, is that the base case, or is sort of that base $1 dividend at $1,400 an ounce gold, assuming slightly lower cost basis?

Tom Palmer

Certainly, we’ve tried to simplify what we provide in terms of our guiding information. And it’s taken the lessons we’ve learned from the volatility that we’ve all experienced over the last couple of years. And really just saying as best you can predict this year at $1,700gold, and here are numbers for this year. You look -- as you look forward into the out years, we are building mine plans on a $1,400 reserve price. And then, we will make assumptions around what the gold price will be for revenue and therefore, what that means in terms of taxes and royalties and those sorts of things. And linked to that is what do we assume for costs of producing that. So, that’s all flowing through more on an environment of what we predict the world to be. And we look to consensus numbers to drive that rather than have some sort of arbitrary gold revenue price number. But we build our mine plans on $1,400. And we expect to have -- you should expect from Newmont a $1 share base dividend year in, year out. It’s the variable component that will move year in, year out, depending on what’s happening in the gold price, what’s happening to input costs. And we’ll take consideration in terms of what the best we’ve got in the business. But $1 a share-based dividend, put it in the bank. That’s what Newmont would deliver at a $1,400 gold price.

Cleve Rueckert

All right. Just to clarify, I mean you’ve got the sensitivities on the guidance. Is that $1 base case dividend? Is that assuming kind of like $900 cash cost, $850 to $900 cash costs, or is it a lower level?

Tom Palmer

It’s -- the numbers, all the sensitivities you see there are linked to my $1,700 gold price assumption of moving around that. Our -- one, if gold went to -- if the price of gold went to $1,400, as a revenue Newmont would pay $1 a share dividend is what the base dividend is.

Cleve Rueckert

Yes, yes. All right. Okay. That makes sense. And then, I just wanted to follow-up. Emily asked the question earlier, but I just wanted to clarify on the declining costs, the costs decline specifically from ‘24 to ‘25. And I appreciate that you’ve got some volume growth built into the plan and that helps with the cost, but there isn’t any volume growth really at the midpoint from ‘24 to ‘25. So, is that mix -- you trading sort of higher cost volumes for lower cost volumes in the plan between those years?

Tom Palmer

That’s right. That’s where you’re starting to see lower cost ounces coming -- the more lower cost ounces coming into that profile from the investments that -- the investments we’re making in start to see ounces coming in from Tanami, ounces coming in from Ahafo North, ounces coming in from Pueblo Viejo, ounces coming in from Cerro Negro. So, it’s lower cost ounces coming into that production profile.

Cleve Rueckert

Yes. Okay. I just wanted to make sure that was clear. And then, just one last quick one for me. I just wanted to ask an operational question about Boddington. It had a good quarter. There’s been some volatility there around weather and around the autonomous fleet and obviously some learnings with the deployment of that fleet. I guess, are there any risks that you see around the autonomous fleet that you’re still monitoring? Or what’s the level of comfort there that you’ve kind of been able to iron out some of the -- I guess, some of the growing pains and really around the weather and some of the variables that the autonomous fleet might be a little bit more susceptible to?

Tom Palmer

Yes. Thanks, Cleve. Bulletproof, 100% confident in autonomous haulage, is reliable. I implemented the first autonomous haul fleet in 2011. This is proven technology. It’s just new in the gold industry. This is bulletproof proven technology in the future of mining. And it’s safer, fundamentally safer and you do risk -- in a major cost area. So there was some fine tuning last year, some -- it’s some tight areas of the pit you’re mining in but that conventional trucks would have had similar issues with. So, let me just spell any myth about autonomous haulage. It is proven technology bullet proof at Boddington. And you can expect to see more autonomous fleets open pit and underground across the Newmont business going forward.

Operator

Thank you. The next question comes from the line of Fahad Tariq of Credit Suisse.

Fahad Tariq

There is a sentence in the press release that talks about Yanacocha Sulfide and the different options up to and including transitioning Yanacocha operations into full closure. Can you just provide more color on what that would look like and what specifically that would mean for CapEx? Thanks.

Tom Palmer

So certainly, since we made the decision to defer the full funds approval by two years out to the second half of ‘24 and appointed Dean Gehring to Chief Development Officer focused on Peru and Yanacocha, Dean’s scope is to look at every option around Yanacocha Sulfides, including not proceeding with the project and putting the operation into care and maintenance.

And that -- as we’ve talked about before, that is about making sure you go to the edge and understand the art of what might be possible in terms of a profitable project for Yanacocha Sulfides, because Yanacocha is one of the great gold and copper districts of the world. It is a huge sulfide deposit with both gold and copper, and it’s right next door to Conga, which is one of the great copper deposits. So strategically, long term, copper and gold will be produced from this part of the world. But part of Dean’s scope is to look at the full spectrum, and that could include us making a decision to move the existing operation into closure.

The spend you see in our guidance is reflecting the spend that we would make this year and next year to get to full funds decision. We continue to -- the procurement of long lead time items and engineering and the construction of the camp. That camp will be necessary for closure, and it will be necessary for closure activities, in particular, the construction of a water treatment plant. So, those funds will be essential anyway.

So, if we were to have a scenario that Yanacocha moved into closure, then you would see us building, which we would be doing in any event, water treatment plants to process the mine-affected water that contains acid and to treat that water to neutralize it and discharge it into surrounding systems. And that would be a lot at Yanacocha forever. We are at Yanacocha forever. Our closure liability estimates 50 years of water treatment. And that’s appropriately accounted for in our balance sheet, and we would steward that operation in the closure, if that was the decision that we recommended to our Board.

Fahad Tariq

That’s very clear. Thank you.

Tom Palmer

Thanks, Fahad. And look, we’re here until we’ve answered all questions. So we’ll just keep working through everybody. If you’re able to stay with us, we’ll -- people in the queue and we’ll answer everybody.

Operator

The next question comes from Lawson Winder of Bank of America.

Lawson Winder

Thank you, operator, and good morning, Tom and Rob. Nice quarterly result. And thank you for remaining on the call to fit in these additional questions. I’d like to ask about your thinking around potential noncore assets. And so, in the context of when you acquired Goldcorp, you highlighted a few of the assets as potentially noncore. That would need to prove their worth to remain in the portfolio. So, in light of some of the impairments, I wanted to get your thoughts on whether any of these assets might now be under consideration for monetization.

Tom Palmer

Maybe just a quick bit of color over some of the impairments, which I think you’re seeing flow through the mining industry in general, just the -- when you’ve got the macroeconomic environments and country discount rates are playing into that. We’ve got some redistribution what we assumed for synergy value add of the Goldcorp acquisition where it came from, as Brian talked about, it’s a bit different. So, you’ve got some of that activity going on as we balance some of that out. And we strategically chose to move CC&V to a leach-only operation, and there’s some adjustments associated with the strategic decision around CC&V.

Any well-run organization should have a very clear-eyed view on the assets that they manage, where the opportunities are to run them, where the opportunities might be to transform them, where the opportunities might be to grow them and ultimately, where there might be a time where those assets are better in someone else’s hands. And any well governed organization should have a clear view of each of their operating assets and their portfolio as a whole and ensuring that they are then taking decisions that are in the best interest of the shareholders of that organization.

We do that work. That doesn’t mean that we have a whole list of assets set up for divestment. But similar to the answer I was just giving to Fahad around Yanacocha sulfides, it is essential as part of an exercise to go to the edge and say what would the world look like if that asset were divested? And what would we do if that was -- what would happen if that was in someone else’s hands? And what does that then mean for us in terms of what we could do with that operation in terms of improving its performance?

So, we are constantly working through that process, challenging and debating. And with that set of 12 managed operations we have today, we have a very clear idea of the improvement opportunities that we want to get after.

In Canada, the border has really only opened up 6 or 7 months ago. As Rob said, we have got three very experienced general managers now in place across those operations. And Rob and I are focused on delivering the value from those operations that we haven’t had a full license to do because of not being able to get across the border into Canada, having the operations shut down at different times, having covered protocols in place, ‘23 is the year where we start to demonstrate what those assets can do.

So clear eyed view, Lawson, about our portfolio. But in terms of ‘23, we are very much focused on delivering value from our 12 managed operations.

Lawson Winder

Okay, fantastic. I’d like to also ask about Ghana sort of as a jurisdiction. So, two of your African-based peers have had some sort of minor tax disputes. But from a Newmont point of view, outside of the requirement to sell gold to the government in [indiscernible], I mean I’ve seen nothing similar, perhaps a reflection of your excellent local relationships there. Do you see any signs of fiscal regulatory environment changing in Ghana at all? Thanks.

Tom Palmer

Yes. Thanks, Lawson. We’ve obviously been in Ghana for 20 years. I think we’re the largest taxpayer in Ghana, and we pay our taxes in U.S. dollars. So, we’re a pretty important player in the Ghanaian context. And we have long-term robust relationships with all stakeholders in Ghana, including the government.

You’ve only got to look at the coordinated process that we have been going through to get full land access to Ahafo North, involving the traditional leaders, youth and traditional leaders at the -- around the mine site, working with the [indiscernible] working with several levels of government to productively and sustainably work through that process. Those relationships also apply to when you sit down and talk about how we can support the government to pay fair taxes, but also to support investment in the country and to help manage through that process.

So, we are very confident of our position in Ghana, the relationships and our standing to be able to navigate through some of the noise that you read about at the moment.

Lawson Winder

Excellent. And if I could maybe ask a very similar question just on Argentina. So, thinking about Cerro Negro and the somewhat difficult financial regulatory environment there. Is Newmont currently successful extracting profits from that operation? And that’s it for me. Thank you.

Tom Palmer

Yes. Thanks, Lawson. The phase of -- that we’re in at Cerro Negro is actually reinvesting back in the business. So, as we’re generating a profit from a mine, as Rob said, it’s getting more and more profitable, we’re sinking that money back in to some pretty significant expansion at Cerro Negro with several underground mines being developed. That will, in future years, increase production with lower cost ounces. So, at this point in time, we’re in a position where that profit we’re generating, we’re putting back into that Cerro Negro business.

Operator

The next question comes from Tanya Jakusconek of Scotiabank.

Tanya Jakusconek

Great. Good afternoon, everyone. Thank you for operator for getting my name right. That’s great. Just wanted to ask in a different way, it is about the Newcrest offer. I just wanted to confirm, Tom, that you did say that you are in negotiations with Newcrest right now. You’ve taken their proposal on providing you with the nonpublic information or a nonexclusive basis. And obviously, they wanted a signature, a non-compete on that. I just wanted to confirm that that’s what you said.

Tom Palmer

Thanks, Tanya. We haven’t been going that long. I think it’s still morning in Toronto somewhere...

Tanya Jakusconek

Well, I’ve been up very early.

Tom Palmer

It’s lunch time. Look, Tanya, the best thing I can do is just repeat what I said, which is we are disappointed that the Newcrest Board rejected our proposal, and we are currently engaging with the Newcrest team in relation to their offer to provide access to more information. And I better leave it at that in terms of repeating that statement.

Tanya Jakusconek

Okay. From a bigger picture then, you talked about Newmont taking pride in their ESG record and ESG focus. So, I guess, I have a question that does pertain to this deal, but just how do you think about submarine tailings disposals? Is that something that meets your filter for ESG on how you look at that?

Tom Palmer

Thank you, Tanya. And again, I’ll attempt to answer this question without straying into those specifics. Newmont are actually experts in submarine tailings. We use that technology at Minahasa in Indonesia and at Batu Hijau, very successfully. And I was -- if you remember, I was the Senior Vice President for Indonesia and accountable for Batu Hijau when it was in Newmont, and I kept that accountability as I became Senior Vice President for Asia Pacific and then the Chief Operating Officer. So within the Newmont organization, there is a lot of knowledge and capability around submarine tails.

So, if I then answer your question more broadly, as I’ve said many times before, our radar is turned on. And if we see opportunities to pick up a Tier 1 asset that we believe is a core capability, whether they be open pit or underground, we will look at that that opportunity irrespective of where it is in the world is a first instance. And if an asset had submarine tailings or some other aspect, one of the questions we would ask is we then step through those filters, is is that asset better in the Newmont portfolio or someone else’s, and can a sustainable performance be delivered by the Newmont operating model and the Newmont capability? Now with discipline, many times, we might say, no, not prepared to do that. But we wouldn’t -- not have our filter trip because it had some aspect such as submarine tails or some other aspect that may be an environmental or social aspect.

Again, if I bring it back to Peñasquito, we’ve got to look at Peñasquito and say, goodness me. I don’t think anyone can resolve the community blockades. That’s a big risk for Newmont. We backed ourselves and our capability to go on their and resolve that social issue sustainably. So, we wouldn’t stop us looking at a particular opportunity because of a particular social, environmental issue, but we would we will reflect upon our capabilities and whether that asset is better in Newmont’s portfolio or not.

Tanya Jakusconek

Now that’s a fair answer. And then, just maybe finally for -- because I do also cover Newcrest. Just maybe on the -- any dealings with Australia usually takes a lot in terms of closing a transaction. So hypothetically, if the deal was to occur, could you just review and walk through us what is needed, obviously, shareholder approvals, and then obviously, what [Technical Difficulty] would be?

Tom Palmer

Sorry, Tanya. I’m not able to get into that detail because of where we sit. I’d just say Australia is a jurisdiction. We’ve been basically in Australia by a few years in the ‘90s for almost 60 years. We’re a taxpayer in Australia. We’ve got two big gold mines in Australia. We’re exploring in Australia. It’s our backyard. So, I can’t talk about your particular question, but Australia is literally our backyard.

Operator

And our final question comes from the line of Greg Barnes of TD Securities.

Greg Barnes

Hi Tom, sorry to drag this on. On the variable portion of the dividend on the old framework you paid out 40% to 60% of free cash flow with it. I don’t see mention of that this time around. Is the variable really just at your discretion, or is there a formula behind that?

Tom Palmer

Thanks, Greg, and good morning. We can certainly get Daniel take you through that in detail. But it does -- the numbers do add up. So, for every $100 increase in gold price above that $1,400, we generate $400 million of free cash flow out of our portfolio on average over the -- as you look at that portfolio going forward.

So, to do a notch up from 1,400 to 1,700 is $1.2 billion. But for ‘23, we’ve got to take off $400 million of that because of the reinvestment this year. That gives you $800 million. And we’re returning between 40% and 80% of that amount through that dividend range we provided. So that ratio still holds with the map, and we can certainly jump into the detail with you offline, if you want.

Greg Barnes

No. That’s fine. That works. Thanks, Tom.

Tom Palmer

Thanks, Greg. Is that it for questions, operator?

Operator

Yes. This actually concludes the question -- oh, go ahead.

Tom Palmer

Sorry to jump across you. Thank you, everyone, for staying on to answer all the questions. And please have a good day. And look forward to -- for those investors on the call, look forward to seeing some of you next week. Okay. Thank you, everyone.

Operator

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