紐蒙特黃金公司 (NEM) 2010 Q4 法說會逐字稿

Good morning and welcome to the Newmont Mining fourth-quarter and full-year earnings conference call. All lines will be on listen-only mode until the question and answers.

Today's conference is being recorded. If anyone has any objections, please disconnect at this time. I'd now like to turn the call over to John Seaberg, Vice President of Investor Relations for Newmont Mining Corporation. Thank you, sir. You may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us on our fourth-quarter and 2010 earnings and exploration update call.

With me today are the members of our executive leadership team who will be available for questions at the end of the presentation. Before we begin our call today, I would like to refer you to our cautionary statement on slide two as we will be discussing forward-looking information which is subject to a number of risks as further described in our SEC filings which can be found on our website at Newmont.com.

And now I'll turn the call over to Richard O'Brien, our President and Chief Executive Officer.

Thanks, John. For those of you with access to our webcast presentation, we will begin on slide three. In 2010, Newmont generated the highest revenue, net income and operating cash flow in our 90 year history.

A rising metals price environment converged with our emphasis on operational execution and yielded outstanding financial results. Today we will discuss our 2010 highlights but more importantly, we want to begin to tell you how we are leveraging our financial success and we will continue that story into investor day in April.

We closed the books on 2010 with over $5.6 billion in cash and marketable securities on the balance sheet. Our priorities for deploying cash remain consistent with what we've talked with you about before. They are designed to build our business and to maximize shareholder value.

First, we are developing our internal project portfolio with about $1.1 billion in consolidated capital spending planned for our major projects at Conga, Akyem and Hope Bay. Next, we are leveraging our superior land position and infrastructure in some of the world's most prolific mining districts.

In 2010 we delivered a net reserve increase on our base of well over 90 million ounces. We also continue to focus on near mine exploration and early-stage development opportunities.

Another way we are building for the future is by pursuing opportunistic M&A. This is evidenced by our announcement earlier this month that we plan to acquire Fronteer Gold.

The integration of Fronteer's assets particularly Long Canyon will allow us to develop a district that we believe closely resembles the Carlin Trend, a region where Newmont has established infrastructure, an experienced and motivated labor force and key relationships with various stakeholder groups.

While our land positions and exploration activities along with opportunistic M&A provide access to new opportunities, our financial resources provide us the flexibility to capitalize on each of those priorities as you can see on slide three. Taking a closer look at our gold and copper operating margins on slide four, you will see how Newmont has expanded its margins faster than the metal price for three years running.

Boosting our operating margins increases our operating cash flow which we can then deploy back into the business. We are bullish on gold and the first seven weeks of 2011 certainly support that optimism.

At $1350 gold for example, we expect that Newmont will be generating an operating margin of about $760 per ounce, providing additional cash flow to develop our business and increase shareholder value. Excerpts of our outlook are on slide five.

In 2011 we expect to produce between 5.1 to 5.3 million attributable ounces. This is a slight change from 2010 actuals due to lower expected Batu Hijau production as we move out of the bottom of the pit in phase five more into phase six stripping, partially offset by higher expected Nevada and Ahafo production.

Costs applicable to sales are expected to be between $560 and $590 per gold ounce and between $1.25 and $1.50 per pound of copper. As you have seen with other releases, industrywide pressures continue to impact CAS across the industry and we're no different, but as Russell will point out, much of our increase comes from the Batu Hijau change I just mentioned.

Capital spending on a consolidated basis is expected to be between $2.7 billion to $3 billion which translates to about $2.1 billion to $2.5 billion on an attributable basis and is a substantial increase from last year. As I mentioned at the start of our call, we're generating considerable cash flow in the current environment.

For 2011 this allows us to advance the development of a number of our projects including Akyem, Conga and Hope Bay, which collectively represent about 40% of that capital spending. The balance will be spent on a combination of several expansion and optimization projects, routine replacement and a number of new project development and other mine life extensions that we'll talk about briefly.

Moving to slide six, our 2011 costs applicable to sales are expected to be between $560 and $590 per ounce as I mentioned due to lower Batu Hijau and Yanacocha production, which results from higher waste removal and lower grades and higher energy and labor costs. On slide seven, we provided a comparison of our 2010 and 2011 capital spending, highlighting increased spending at Conga and Akyem.

In addition to that, our 2011 capital plan though does encompass continued reinvestment in each of our four regions. A few examples where we are deploying capital include in Nevada where we are spending about $100 million towards Leeville-Turf and Pete-Bajo two of the highest returning projects in our portfolio because they are very near existing infrastructure. At Yanacocha, we're spending about $200 million to bring forward the Western Oxides project and keep Yanacocha in production.

In our APAC region, about $120 million is going towards the Tanami, KCGM, Waihi and Jundee, where we are extending resources in each of those mines. And in Africa, we are excited about putting $75 million more towards the Subika underground development and continuing our Ahafo North early-stage work.

In addition, we have embarked upon several sustaining capital investments that maintain or extend mine production and boost mill efficiency across our operations. Actually sustaining capital as a percentage of total capital spending is lower this year than it was last year.

As I stated earlier, we're generating solid cash flow that we are redeploying back into the business. I will now turn the call over to Russell to discuss in a little more depth our 2010 operating and financial performance.

Thank you, Richard, and good morning, everyone. On slide eight, you will see our key operating and financial highlights for 2010.

We reported record results driven by strong metal prices and our continued focus on operational execution and [delivering]. Revenue at $9.5 billion, cash from continuing operations at $3.2 billion and adjusted net income of $1.9 billion are all record amounts for the Company.

As you can see on slide nine, we realized an average price of $1222 per ounce of gold and $3.43 per pound of copper for the year. And while both were record prices for Newmont, they remain significantly below current spot prices of approximately $1415 and $4.30 per pound, respectively. Our gold operating margin increased 30% year over year to $737 per ounce, outpacing the 25% increase in the gold price.

Turning to the fourth-quarter comparison on slide 10, attributable production was down 7% primarily on lower production from Nevada due to the pit wall failure at the end of 2009 and the cessation of mining at Deep Post at the end of 2009. And from Yanacocha due to lower leach ore placement, transitional ore stockpiling at La Quinua and lower mill grade due to mine sequencing.

These declines were offset by increased production from Boddington which commenced commercial production in November 2009. Adjusted net income was up 2% versus the year ago quarter as higher metal prices offset the impacts of lower production and higher operating costs which I will discuss in more detail on slide 11.

Slide 11 reconciles our actual costs applicable to sales of $485 per ounce with our original outlook provided in February 2010. Costs applicable to sales for gold were approximately $4 above the midpoint of our original outlook which was based on a $900 gold price assumption and an $0.80 Australian dollar exchange rate assumption.

The stronger Australian dollar added $22 per ounce to costs which were offset by approximately $10 per ounce in hedging gains from our Australian book for a net impact of $12 per ounce. Lower volumes primarily at Boddington versus our 2010 budget and given the fixed cost nature of our business added a further $9 per ounce.

Higher gold prices drove higher royalty and workers participation costs, which increased costs by about $7 an ounce. As I have said before, these types of cost increases that are tied to the gold price are ones we're happy to pay given the significant margin related expansion that occurs.

On the other hand, we saw favorable byproduct credits of $6 an ounce and diesel savings of about $2 an ounce given our assumption at the beginning of the year of $80 per ounce West Texas. Obviously with the unrest in Libya and the broader Middle East, oil prices have escalated significantly in recent weeks.

Before I turn it over to Guy Lansdown for his reserve and exploration update, I wanted to make a point in regards to reported costs applicable to sales per ounce on a go forward basis, historically a significant metric in this business. As a US company, Newmont will not be reporting under IFRS accounting for 2011 or indeed for anytime in the near future. And what this means is that our reported CAS per ounce number is no longer an apples to apples comparison with most of our Canadian peers who are now reporting under IFRS.

These differences can be quite significant and without getting into the details, there are numerous costs that can be capitalized under IFRS that we will be expensing in 2011 and beyond. Our personal view is that the resulting lack of direct comparability between income statements results -- will result in even more attention to the cash flow statement and the Company's ability to generate operating cash flows, both on an absolute basis, but more importantly on a per-share basis as a measure of long-term value. Quite frankly we welcome this attention. With that brief diversion into the accounting debits and credits, I will turn it over to Guy.

Thanks, Russell. Onto slide 12, we are particularly encouraged by today's gold and copper reserves report which reflects over 8 million new gold ounces and reserves, a 2% growth net of depletion and 300 million new pounds of copper, representing a 3% increase over last year.

As a large senior gold producer, we are thrilled to be in a position to boost our reserves on a net basis and primarily through the drill bit. Our 2010 drilling program resulted in total corporate reserves at record levels of 9.4 billion pounds and near record reserves of 93.5 million ounces of gold.

North America was the largest contributor to higher gold reserves in 2010 with additions of Leeville-Turf, Twin Creeks, Phoenix, and La Herradura. Other large reserve additions were made at Tanami in the Asia-Pacific region and at Ahafo in the Africa region.

North America also made the largest contribution to non-reserve mineralization with significant additions at Gold Quarry, Leeville-Turf, Buffalo Valley and Twin Creeks. The initial NRM was declared at the Merian gold greenfield project in Suriname, solidifying the exciting potential in the region. Other noteworthy contributors to NRM included KCGM and Tanami in the Asia-Pacific region.

For 2011 we have budgeted about $360 million for exploration which covers both expense and capital on a consolidated basis and is an increase of over 40% from 2010. On slide 13, you can see the breakdown by region.

This larger budget gives us additional flexibility to work on substantial mine life extending projects such as Subika and Leeville-Turf. With more dollars to invest back into the business, we are focusing on large district potential targets like the sleeping giants in Nevada which includes Mike, Fiberline, Greater Phoenix and Copper Basin as well as Elang in Indonesia, Yanacocha Verde in Peru and Merian in Suriname.

Now I will turn the call over to Brian Hill to discuss our operational results.

Thanks, Guy. Turning to slide 14, before we jump into discussing the regional performance, it's important to step back and echo Richard's earlier points about investing in developing our business.

Newmont has a total land position of over 32,000 square miles around the globe. The opportunities to invest in our business are rich and varied from traditional oxide deposits to sulfide deposits and gold copper porphyries. We believe we have significant potential to develop new districts across our four regions and the scope of new development opportunities is nearly equal to that of our existing operations.

On each of our regional slides, we will share our capital spending budget with a breakout between near mine and sustaining capital. At our investor day in April, we will provide more details on how we are leveraging our existing operations into future development.

Let's begin our recap of regional performance with North America. Full-year 2010 attributable gold production in Nevada decreased 13% due to the completion of underground mining at Deep Post in 2009, lower Gold Quarry ore mined as a result of the pit wall failure which occurred in December 2009, lower leach tons placed at Twin Creeks and Carlin partially offset by increased underground mining at Leeville.

Total ore tons mined were 26% lower mainly due to the Gold Quarry slope failure and the completion of mining at North Lantern in April 2010. Ore placed on leach pads decreased 62% to 4.5 million tons. Costs applicable to sales per ounce increased 11% due to lower production partially offset by higher byproduct credits.

Full-year 2010 attributable gold production at La Herradura increased 54% to 49,000 ounces compared to 2009 due to the commencement of commercial production at the Soledad and Dipolos pits in January 2010 where we have been really pleased with the results. Costs applicable to sales per ounce increased 13% due to higher waste tons mined.

In 2011 we expect to produce 2 million to 2.1 million attributable ounces in North America at costs applicable to sales of approximately $560 to $600 per ounce. Our North American capital budget is $600 million to $700 million for 2011 which includes building on Hope Bay's successful drill program which yielded many high-grade intercepts last year.

Further development in Nevada including Leeville-Turf and East Carlin, development at Pete Bajo and the Exodus exploration drift as well as work at the Noche Buena pit in La Herradura in Mexico.

As previously announced, Newmont plans to acquire Fronteer Gold which includes the Long Canyon development project. Turning to slide 15 you will see how we view Long Canyon in the context of other major gold trends in Nevada.

The chart at right shows where Long Canyon is in its current stage of development relative to the other more established gold trends in the region. We believe that it can potentially grow into the next major mineralized trend in Nevada and we expect to close this transaction in early April.

Turning to slide 16, our South American region's performance reflects the maturity of our Yanacocha mine combined with new contributions from the La Zanja and development activity at Conga. Full-year 2010 Yanacocha gold production attributable to Newmont decreased 27% from the prior year due to mine sequencing resulting in lower leach placement, transitional ore stockpiling at La Quinua and lower grade and recovery resulting in lower mill production.

Leach tons placed decreased from a record of 136 million tons in 2009 to 59 million tons in 2010. Costs applicable to sales per ounce increased 39% from the prior year due to higher waste material mined, lower production, higher labor, diesel and maintenance costs and higher workers participation and royalty costs as a result of higher gold prices. These were partially offset by higher byproduct credits.

Attributable gold production was 21,000 ounces in 2010 at La Zanja, which was in its first year of contribution to Newmont's operating results and we continue to be impressed with the operational leadership from our partners at Buenaventura. 2010 attributable gold production in South America is expected to be approximately 715,000 to 775,000 ounces, slightly lower than 2010 actuals, primarily due to lower leach production at Yanacocha.

Costs applicable to sales are expected to increase in 2011 to approximately $500 to $550 per ounce primarily due to lower leach production and higher contracted services and supplies. Our South American capital budget is $900 million to $1.1 billion in 2011, which includes construction activity at Conga where we have recently signed our EPC contractor as well as engaged contractors for mills and motors, the main access road, camp buildings and water treatment plants.

Our capital budget also includes development of the Western Oxides project in Peru and several sustaining capital projects in the region. On slide 17, our Asia-Pacific region saw a favorable boost in gold and copper production through a full year's contribution from our Boddington mine as well as the best ever gold production from our Batu Hijau mine.

2010 gold production at Boddington was approximately 730,000 ounces at costs applicable to sales of $590 per ounce. 2010 attributable copper and gold production at Batu Hijau increased 10% and 32% respectively in 2010 over the prior year due to higher grade and mill throughput as a result of mining at the bottom of phase five and processing softer ore.

Unseasonably dry weather permitted extended mining in the bottom of phase five during the fourth quarter. We expect to process stockpiled ore until phase six ore becomes the primary mill feed commencing in late 2013. Costs applicable to sales increased 11% per ounce and per pound due to higher waste mining, labor and diesel costs.

Across our other Asia-Pacific assets, full-year 2010 attributable gold production decreased 7% due to lower mill grade at Jundee and Waihi and lower mill grade and throughput at Tanami partially offset by higher grade, throughput and recovery at KCGM. Costs applicable to sales per ounce increased 9% due to lower production, higher diesel costs and a stronger Australian dollar.

2011 attributable production for the Asia-Pacific region is expected to be approximately 1.9 million to 2,000,000 ounces primarily as a result of lower production at Batu Hijau. Costs applicable to sales are expected to increase to approximately $600 to $675 per ounce in 2011 primarily driven by lower Batu Hijau production.

We expect attributable copper production for the Asia-Pacific operations of approximately 190 million to 220 million pounds at costs applicable to sales of approximately $1.25 to $1.50 per pound in 2011. Our 2011 capital spending budget for the Asia-Pacific region is $650 million to $750 million and includes efforts to increase resources and extend mine life at Tanami, Jundee and KCGM. In addition, we are evaluating further expansion opportunities at Boddington and mill optimization at Batu Hijau.

At Boddington, we developed a revised mine plan in the fourth quarter to deliver the best possible grade to the mill. From a volume standpoint, it's notable that Boddington produced 206,000 attributable ounces of gold in the fourth quarter despite the seven-day total plant shutdown to integrate the sixth MP1000 secondary crusher.

Today we are seeing mining performance, processing throughput rates, grades and recovery consistent with our 2011 outlook. De-bottlenecking studies have commenced to identify opportunities to optimize production through the existing plant infrastructure and are planned to be complete during the second quarter of this year.

We also continue to promote Boddington's exploration potential as the deposit remains open laterally and at depth. Boddington's reserves remain over 20 million ounces of gold and approximately 40,000 meters of drilling is planned in 2011 as we target opportunities for extensions of the known resource and test regional targets.

Turning to slide 19, our Africa region had a terrific year. They continue to deliver consistent performance and symbolize why we are so excited about Newmont's future growth in this region.

Full-year attributable gold ounces produced increased 2% to 545,000 ounces due to higher grade ore mined at Apensu and the commencement of production at Amoma in October which began operations slightly ahead of schedule and under budget. Costs applicable to sales per ounce increased less than 1% to $450 per ounce due to higher labor, power, diesel and royalty costs partially offset by higher production.

2011 attributable gold production for the Africa operations is expected to be approximately 550,000 to 590,000 ounces primarily due to higher expected ore grades. Costs applicable to sales of approximately $485 to $535 per ounce are expected for 2011 primarily as a result of higher energy prices and higher labor and royalty costs.

Our 2011 capital budget for Africa is $450 million to $545 million, the bulk of which is allocated to advancing our Akyem project which will eventually support a doubling of our annual production in this region. In addition, we have capital allocated to the Ahafo North opportunity and to the Subika underground which is expected to contribute to Newmont's production later this year subject to permitting. I will now turn the call back over to Richard.

Thanks, Brian. Now I'd like to turn the discussion from our past performance briefly to the future. As you see on this map, we continue to maintain and expand our land positions and our investments in some of the world's most prolific gold producing regions.

We are building value for our shareholders by investing in each of our regions through near mine development and major projects, exploration and opportunistic M&A. We believe Newmont has some of the best development opportunities in the industry and the financial resources to pursue them.

And we're looking forward to sharing more details of our longer-term development plans with you at our investor day in New York on April 7. I would like to thank all of our employees and contractors around the world for all of their hard work to deliver on a really great 2010 and we have really strengthened our ability to continue to deliver strong and consistent performance and a very strong balance sheet to continue to allow us to build for the future.

Newmont turns 90 this year and with record financial results in 2010, we are embracing the future and believe our business is as strong as ever and we're well prepared to deliver value from our business platform. With that, I would like to thank all of you for listening and open the call for questions.

(Operator Instructions) John Bridges, JPMorgan.

Just wondered, this pullback to 5.1 to 5.3, is this the new base? Are you comfortable that you can maintain this level? I know you're going to talk in more detail in April, but is this the new base that hopefully you can grow from?

Yes, I think this is a pretty good base for us to look at for the next five years or so. I think as we have disclosed before, I think with a few things going on in Nevada with the repair of the Gold Quarry slide, I think we see Nevada continuing to stabilize and improve its production level.

I think in Australia, we will have to continue to see good drifting and good results at Jundee to continue to expand that mine in the next three to five years. But I think in general, John, across the portfolio, this is a good level for the future to build on.

Okay, good. And then just as a follow-up, the Western Oxides, I don't recall that project before. Could maybe Guy give us a bit more detail on that?

Sure, John. Thanks for the question. Western Oxides is a project that sits on the western side of the operation which composes Chaquicocha and Yanacocha, and it's really putting some more laybacks into those and additional smaller pits.

So it's really expanding the oxide deposits that we have there already. In addition to the Western Oxides, we're looking on the eastern side as well. We continue to build on our existing pits and develop further laybacks. So that's really what it is, the continuation of the current oxide pits.

So that's another example of projects that are coming about because of the higher gold price?

Yes, that's correct, and also increased exploration.

Any thoughts on the strip ratio on that?

I don't have that information available. Sorry, John, but we can get that for you.

I can get that for you later, John.

Jorge Beristain, Deutsche Bank.

My question is for Richard really in terms of if we could get an update as to how you're thinking about how much free cash flow would be left over for dividends. Basically you've doubled your CapEx program to about $2.8 billion of which around 1.7 is discretionary.

You're embarking on a $2.3 billion acquisition. So you're spending about $4 billion on what I would consider growth and discretionary opportunities.

Your dividend policy at $0.60 remains around a $300 million total cash outlay. So I was just wondering if you could kind of compare and contrast if you think now that you've announced this growth plan that there will be any room left for incremental dividends in 2011 or are you comfortable with the current level?

I would say, Jorge, that obviously the dividend is a Board decision, but I would tell you how we think about it which is based on the current balance sheet that we have, the fact that even with an announced acquisition of Fronteer Gold which is for all intents and purposes covered by our generation of free cash flow in 2010, I think we are well positioned to continue to both invest in the business as well as look at returning capital to shareholders. So, I think the Board has that flexibility.

With respect to your question on free cash flow generation, obviously it depends on gold price. But given where we are today, I would say we're $500 million plus of free cash flow with a significant balance sheet to carry that through.

So I think to the extent that the market [pays for] dividends and will associate share increases with that, I think we are prepared to consider that. To the extent that the market prefers growth and we should be investing in our growth platform, we will consider that. The great news about Newmont and our balance sheet and cash flow is we can do both.

And, sorry, just following up a little bit on John's question about the kind of steady state for the foreseeable, you said about the next five years, you kind of see the volumes in a 5.1 million to 5.3 million ounce range. So the current CapEx program is not really pulling forward any kind of incremental volumes that we would see in the near term?

Well, we are making a number of investments which I would say it's far too early to evaluate whether they are going to add production in the next three to five years. We certainly have a number of projects which will add production beyond the five-year period in this capital profile.

And when we come to investor day, we will be able to give you a little better view into what we think of the future even beyond 2012 or 2013 as we start to continue to reinvest in the business. I'm going to ask Randy to add to that.

If you look at the chart that we showed on page seven, we have about 25 -- about 23% of our project capital going into other projects. That would be the area where we are investing in some of the longer-term potential increases in production.

But the bulk of what we have got, roughly three-quarters of it, is going into Conga. As you can see, we have got about $550 million to $700 million going into Conga this coming here.

We have got about $300 million to $375 million going into Akyem and then about $70 million to $100 million going into Hope Bay. So that's -- most of what you are seeing in the increase this year is focused on in particular Conga and Akyem.

And then in April you will give more of a medium-term volume target at your investor day?

We plan to do that, yes.

David Christie, Scotia Capital.

Just three questions probably. First of all on Boddington, the sort of 750,000 to 800,000 ounces a year, is this sort of where you see the mine going for the long-term now or are we going to get up to sort of where we previously expected it to get to?

David, it's Brian. I think our intention is to work towards where we expected Boddington to be on the longer term which is in that 800,000 to 850,000 ounce range. As I mentioned, we are in the middle of some significant work around de-bottlenecking.

We're really comfortable that we're seeing grades reconcile well with our revised model. And for us now, it's really about optimizing that existing plant, getting the plant availability up to the point where we want it to be. But our objective is to work towards getting to that longer-term target.

When you calculated reserves and resources there for this year, did you change how you did it at all as far as dilution or grades reconciliation?

David, this is Guy. When we did reserve calculation, we've taken into account the latest models and adjustments that we have seen to date, and as you can see, our reserves have remained pretty much in line with what we had last year.

Okay, that's good. And in the exploration spend, you upped the exploration spend by $100 million from last year, actually more than that. Can you give me an idea of where the biggest spends are happening?

Sure, David. This is Guy again. The bulk of our spend, about $10 million went into generative exploration.

We put more funds into our generative programs. But the bulk of the additional spend went into the near mine mainly in North America and Hope Bay.

So the areas that we would be focusing on are Leeville-Turf, Hope Bay, Midas, Fiberline. Those are just examples of where we are putting them.

In addition, we're spending dollars on Elang. We just got our permit to start exploring there. So the bulk of the dollars are as you can see in North America and Hope Bay.

And those are all expensed exploration that you're doing, that $345 million?

That's -- I believe it's --

The 360 includes both spent and capital.

Yes, that's great, so $360 million is consolidated exploration expense including capitalized expense.

Okay, so what would be the expense portion of that?

David, right. Somewhere around $300 million to $340 million just depending on where we end up putting the drills. The near mine reserve stuff and in-fill drilling gets capitalized. It'll be somewhere around the $320 million number.

Okay, that's good. And just on the production side, give me an idea -- the production in Nevada seems quite a bit better than I was expecting for this year. Could you give me an idea of what the breakdown is between the various assets there?

We don't give the production by each asset but Brian can give you sort of a headline on what has kind of changed from maybe what we saw a year ago.

Yes, I think, David, one of the big things we saw was increased production coming out of Leeville. We have seen higher grades coming out of Leeville than we had anticipated, and Leeville's probably the predominant asset which has led to better production.

We have also seen some increased production and performance coming out of Phoenix in 2010. So those are probably the two assets that have contributed the most to seeing better production coming out of Nevada.

And the Gold Quarry, are you getting that up and running faster as far as --

We're not back into ore yet but we expect to be back into ore relatively soon. That whole remediation effort has gone extremely well, a little bit quicker than planned, and we're expecting to be back into ore in Gold Quarry before late Q2.

Okay, so that is quite a bit earlier. Thank you very much.

(Operator Instructions) Patrick Chidley, HSBC.

Just a -- questions on the CapEx expenditure for example in Australia. I see the Boddington capital this year is still going to be quite high. I'm wondering if that is a level you're planning to continue.

Patrick, it is Brian. No, that's related to some very specific work we are doing around tailings expansion, some of the other work we are doing around plant optimization. But it's not going to be a level that we expect to see on a longer-term basis.

So would we expect that in 2012 to come down dramatically?

I would certainly expect it to come down in 2012.

Okay and then at the other operations in Australia also, fairly high dollar per ounce capital numbers. Is that something that is related to new shafts or new expansion capital or is it again a level that we should expect long-term?

Most of it is related to new development. We've got some significantly interesting parallel resources that we are developing at the Tanami.

So a lot of it is around development work to delineate those resources which we will talk more about at investor day. Similar at Jundee, we're looking at developing additional shoots at Jundee, expansion at Waihi, layback at KCGM. A lot of it is around looking at delineating new resources and extending the mine lives.

Okay, so not something that we should expect to continue at that level going forward as a long-term --

Patrick, I would say hopefully we will continue to see success particularly around the Tanami and Jundee which will allow us to realize production quicker than we thought and to go ahead and capitalize and build out for that. That would be a great result from our perspective.

The numbers at Tanami, do they exclude a new shaft there or have you sort of come to a decision on that?

They do not currently include new shaft in these numbers, no.

Okay, and just a quick one on -- you mentioned a little bit more the Merian project in Suriname, 1.8 million ounce resource with a positive scoping study. I'm wondering if you could flesh out a few more details on just how positive that was and what the plan is going ahead.

Patrick, this is Guy. We've completed really the pre-feasibility study what we called our stage two [with this] pre-feasibility study. So we've gone through that process.

At the moment we are in discussions with the government, trying to get our mining agreement or the mineral agreement. And from what we've seen from the drill results and the initial studying we've done, we were very happy to advance it into the next stage.

So that presumably could be I'm [seeing] it's a new front for Newmont in terms of possibly new mines there.

Yes, that's right. I mean, if you think about it in terms -- we think about it in terms of a district as well because we have got some pretty big exploration projects in Suriname. We've talked a bit about Cassador which is a new discovery we made last year, and we've also got the Saramacca deposit that we continue to explore on. So we're pretty excited this could turn into a new district for the Company.

Any view on when the government will come to an agreement there with you?

Difficult to say, Patrick. We are in the throes of talking to them at present.

I think it's fair to say that this could be an emerging district, that clearly it is a longer-term orientation for us with some shorter-term challenges with respect to just making sure that we get the right agreement with the government.

And I think this is something that our South American team is great at and we will work through this and hopefully be able to build on a recent meeting that the president had with some people in the region to get support for the project. So I think things are going pretty well.

Okay, great. Just a quick one on Elang. You mentioned Elang. You got a permit to start exploration. How much work and what kind of work will you be doing this year?

This year we have got to reestablish the camp, and then we've got to start working with the communities before we get back onto the ground and drilling. But we do plan on actually getting some drills into the ground later on this year.

Brian MacArthur, UBS Securities.

I'd just like to go back to Boddington and make sure I've got this clear. We talked about a longer-term goal of 850 I think you said and originally I thought it was going to be higher than that and sort of going back down to that level.

Should we now think of it more just a flat line as opposed to better stuff in the [early] years? The second part of the question is if that is the case, I guess the gold grade's a little lower but the copper grades have been higher and continue to be higher.

Should we also then establish our copper production going forward at more a level you've sort of forecast this year versus what might have been in the original feasibility or do we still just have to do a little more work to know exactly what is going on?

It's Brian, Brian. I think we should be thinking in terms of that longer-term 850,000 ounce production rate for now.

As I said, we are doing some more de-bottlenecking and we will look at ways in which we may be able to further optimize that asset considering the 20 million plus reserve base that we have at Boddington.

In terms of copper, I think where we are seeing copper is copper's performing about in line with the expectations right now. So that's where I would be sort of projecting it as we go forward. It's always reconciled relatively well with our model and we don't really see any change in the copper.

And I would just add to that, Brian, that we have done a good job of getting back into Boddington and looking at the capital that could be invested in the plant if we determine that it makes sense to speed up production, if we can just get the base established for really what is in front of us. And Guy and Brian and the team have done a nice job drilling up the pit for this year and into next year.

So I think we feel pretty good about this level of production. I would say this is a long-term asset, as Brian said.

We have a tremendous plant capability down there. Darren and the team in Australia are working on the mining rate and I think that there continues to be opportunity, but that opportunity is going to take some time for us to develop and again, we'll give you a further update in April as it goes on.

But for now, I think this is a pretty good level for us to project off of. And hopefully as with a lot of opportunities at Newmont, we see more opportunities in the future both in and around Boddington.

Great, that's very helpful. Maybe just quickly on Yanacocha. You talk about obviously cost being up here with contractor services, and obviously the world has changed.

Just given the mix of things that's going on there over the next couple of years, should we again sort of predict same sort of production and cost for the next two to three years there or do you get an adjustment all before Conga comes in?

No, this is sort of the comfortable level at which we would be looking at Yanacocha over the next couple of years. And as Guy talked about, Western Oxides, we do have some really interesting opportunities in the pipeline that if they do come to fruition, we have the opportunity to look at increasing that rate.

And I would just add to that that when we're talking about production rates and costs, I think it's really important to continue to remember what we started with which is we're in a bullish environment for gold.

We will continue to find opportunities to expand the business in that environment. It will also impact our costs though.

Last year when we gave guidance, we were providing guidance at $900 an ounce. This year we're providing guidance at $1300 an ounce.

And that change alone really does impact our costs. And as Russ says, that's sort of a high-class problem for us and we'll go with higher costs as long as we have increasing margins, why you see us focusing on increasing margin to drive cash flow and generate value for the business through reinvestment both in exploration and into our projects. And I think that is the story you are going to continue to hear us pound away in April and I think provide further evidence for.

Great. Thanks very much. That's very helpful.

Okay, thanks all for attending today and we look forward to seeing you in April in New York. Thanks.

Thank you. That does conclude the conference for today. You may disconnect your phone lines at this time.