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Newmont Goldcorp (NYSE:NEM)
Q4 2019 Earnings Call
Feb 20, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning, and welcome to Newmont's full-year and fourth-quarter 2019 earnings call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jessica Largent, vice president of investor relations. Please go ahead.

Jessica Largent -- Vice President of Investor Relations

Thank you, and good morning, everyone. Welcome to Newmont's full-year and fourth-quarter 2019 earnings conference call. Joining us on the call today are Tom Palmer, president and chief executive officer; Rob Atkinson, chief operating officer; and Nancy Buese, chief financial officer. They will be available to answer questions at the end of the call along with other members of our executive team.

Turning to Slide 2. Please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website at newmont.com. And now I'll turn it over to Tom on Slide 3.

Tom Palmer -- President and Chief Executive Officer

Thanks, Jess. Good morning, and thank you all for joining our call. Newmont has a track record of superior operating and financial performance, and we are continuing to build on this proven record by exceeding the commitments we made early last year. As we enter our centenary year, I'm excited about the opportunities we have in front of us to safely deliver superior value for all of our stakeholders.

Turning to Slide 4 for a recap of our major achievements. In 2019, we continued to lead in environmental, social and governance stewardship by achieving our public targets and being recognized as the gold industry leader for our performance. Last year, we completed two historic transactions, creating the most balanced portfolio of long-life assets with the ability to generate robust free cash flow for decades to come. We produced 6.9 million gold equivalent ounces, including 6.3 million ounces of gold at all-in sustaining costs of $966 an ounce, in line with our full-year guidance.

We generated $3.7 billion in adjusted EBITDA and have realized significant value from the Goldcorp acquisition, exceeding our targets. We also reported the largest reserves in company history, with an industry-leading 100 million ounces of gold reserves. We drove improvement across our portfolio and have now delivered $2.7 billion in value through our Full Potential Program since 2013. We also delivered four projects on four continents on time and within budget, and approved full funds for our next expansion at Tanami.

We reached agreement to divest Red Lake, KCGM and our holdings in Continental to generate more than $1.4 billion in cash proceeds. And we returned an unprecedented $1.4 billion to shareholders last year, with $900 million in dividends and $500 million in share buybacks. This is unmatched in the gold industry. Our 2019 performance is evidence that we continue to deliver on our commitments.

Turning to Slide 5. We are making excellent progress and exceeding our commitments for value delivery from our five new operations. At the start of last year, we made a commitment to deliver $365 million of run rate improvements per annum by the end of 2021. I'm very pleased that we are on track to exceed that commitment by nearly 40%, realizing more than $500 million of cash flow improvements in 2021 through accelerating G&A and exploration synergies along with higher-than-planned Full Potential improvements at Peñasquito and Cerro Negro.

This year alone, we expect to achieve $340 million in cash flow improvements, representing over 90% of the commitment we made for value delivery from this transaction. Each of our accomplishments were grounded in the safety of our people and the sustainability of our operations. Turning to Slide 6. Improving safety remains a relentless focus for all of us here at Newmont.

Ensuring that everyone working in our business can return home safely to their family and friends is paramount. Through our visible, caring leadership and the integrated systems we put into place to manage risk consistently across our global operations, we are working to significantly and sustainably improve our safety performance. My expectation is that everyone who works in our business understands, first and foremost, the fatality risks associated with their work and are ensuring that the critical controls that are required to manage them are in place at all times. A robust safety culture is one that is constantly reinforcing systems, behaviors and actively sharing lessons learned from serious incidents.

This is fundamental to the well-being of our people and underpins our operating performance. Our sustainability performance is also about consistent application of sound governance practices across our global business, coupled with the quality of our engagement and the relationships with key stakeholders. As a measure of our industry-leading performance, we were honored to be recognized as the Top Gold Mining Company by the Dow Jones Sustainability Index for the fifth year in a row. Turning to a look at our global portfolio on Slide 7.

Our world-class assets are located in the most balanced and favorable jurisdictions. We have the industry's largest gold reserves at 100 million ounces, with nearly 90% located in the Americas and Australia. This offers Newmont shareholders exposure to 124 gold reserve ounces per 1,000 shares. Our reserve base also provides significant exposure to copper, silver, zinc and lead, representing an additional 63 million gold equivalent ounces.

Across our 12 operated mines and two nonoperated joint ventures, we have an average reserve life greater than 10 years, with mine lives at our largest assets: Boddington, Tanami, Peñasquito and Ahafo extending well into the 2030s, underpinning the strongest and most sustainable portfolio in the industry. Turning to Slide 8. We will produce a steady 6.2 million to 6.7 million ounces of gold per year through 2024. In addition, we'll generate $1.5 billion in revenue each year from producing between 1.2 million to 1.4 million gold equivalent ounces with silver, zinc and lead from Peñasquito and copper from Boddington.

Combined, we'll deliver nearly 8 million gold equivalent ounces per year, the most of any company in our industry. Turning to Slide 9. Even during a year involving the closing of two historic transactions, our Full Potential program remained as strong as ever, delivering $430 million of value in 2019. Looking forward, all-in sustaining costs are expected to improve from $975 an ounce in 2020 to $850 an ounce in 2023 through the delivery of our Full Potential Program and ongoing investment in profitable projects.

Over this time, we will maintain our capital discipline through investing approximately $1 billion of sustaining capital per year to cover infrastructure, equipment and ongoing mine development. With that, I'll turn it over to our Chief Operating Officer Rob Atkinson on Slide 10 to review our operational performance.

Rob Atkinson -- Chief Operating Officer

Thanks, Tom, and I'll start with an update on Australia's performance on Slide 11. In 2019, Australia produced more than 1.4 million ounces of gold at all-in sustaining costs of $908 per ounce. At Tanami, we delivered a record year for production and costs with 500,000 ounces at an all-in sustaining cost of less than $725 per ounce. Through our Full Potential program, we delivered significant value from improvements at the pace plant and with greater pace fill reliability, the site can continue to sustainably increase mine productivity.

Successful delivery of the first Tanami Expansion project in 2017 and the Tanami Power Project in early 2019 have enabled this performance and established a foundation for us to continue expanding this terrific asset. Our next phase of investment in Tanami Expansion 2 has the potential to extend the life beyond 2040, will reduce operating cost by over 10% and will provide a platform for us to further explore a prolific mineral endowment in the Tanami district. At Boddington, we produced approximately 850,000 gold equivalent ounces in 2019 as Full Potential programs in mining and processing led to improvements in truck and shovel productivities, as well as increased gold recovery. Our planned stripping campaign in the South Pit is progressing very well.

In fact, full potential improvements to truck and shovel productivities has accelerated the time when we will reach higher grades to earlier in 2021. And at KCGM, we completed the sale of our 50% ownership in early January. We are supporting Northern Star and Saracen by providing transitional services through the second quarter. The Australia region has consistently exceeded conversion targets by more than offsetting depletion.

During 2019, Tanami added 1.5 million ounces of gold reserves, and over the last seven years, reserves have grown by more than 250% and resources have also increased by nearly 200%. Lastly, Boddington's autonomous haulage system was approved by our board of directors earlier this week, and this world-class asset is positioned to realize improved productivity and significant value over a 14-year reserve life. Turning to a bit more detail in Boddington's autonomous haulage system on Slide 12. Over the last several years, Boddington has delivered a step-change improvement in operational performance, which has increased mine and mill productivities, added 4.2 million ounces of gold reserves and extended mine life well into the 2030s.

These successes have now positioned the operation to make its next step-change improvement, the full automation of its haulage fleet. Boddington will invest $150 million to purchase 29 new Cat 793 haul trucks. It will retrofit seven existing trucks at the site and install the Caterpillar Command autonomous haulage system. This investment will enhance safety by removing people from the line of fire and reduce the potential for vehicle-to-vehicle interactions.

These systems will also improve productivity and create a more controlled, predictable and efficient haulage operation and ultimately, lower Boddington's mining cost per tonne, generating an internal rate of return of more than 35%. With the improved costs, mine life has extended by at least two years from additional lead banks in the north pit. The support we will receive from Cat will be essential to the success of this work. And we have a very strong working relationship with them, which has been formed over many years.

And we are also uniquely positioned to support effective implementation and operation of the fleet, thanks to the technical capabilities and previous experience of leaders throughout our business. The adoption of autonomous haulage has true replication potential and will inform our approach to implementing these systems at other Newmont operations and projects. Now to our Africa operations on Slide 13. 2019 was a record year for the Africa region with 1.1 million ounces of attributable gold production at all-in sustaining costs of less than $800 per ounce on the back of successfully completing Ahafo's expansion project.

We declared commercial production at the Ahafo Mill Expansion, which will maximize value from higher-grade underground ore, efficiently process ore from existing open pits and stockpiles, allowing us to deliver stable production well beyond 2030. Akyem delivered yet another solid quarter and offset lower grade as a site team worked closely with the process control team at our operations support hub in Perth to drive sustainable Sag Mill throughput improvements. This is just one example of how Newmont is leveraging its global capability to consistently drive improved performance and productivity right across our portfolio of operations and projects. Looking forward, as previously highlighted in our guidance, the region will step down to 850,000 ounces in 2020 as Ahafo progresses its stripping campaign for Phase 4 Subika open pit and advances underground development for the updated mining method at Subika Underground.

With the transition to a more productive underground mining method, Ahafo has increased its reserve and resource base, collectively adding 1 million ounces in 2019. Now to discuss our North America operations on Slide 14. North America produced more than 1 million ounces of gold in 2019, with a strong fourth quarter as expected. At Porcupine, we successfully ramped up the Borden underground mine, providing additional higher-grade ore.

At CC&V, we recovered ounces from the VLF1 leach pad that had been deferred from prior quarters. And at Éléonore, we delivered a strong fourth quarter with higher grades at Horizon 5 but expect a softer Q1 as a result of main sequence changes. Éléonore is a complex ore body when taking into account stope sequencing, backfill requirements and grade presentation. Our technical services and exploration teams are strongly supporting the operation to integrate our geology and geotechnical models to optimize a life of mine plan that will safely and sustainably mine our reserves and extend the life of this ore body.

At Musselwhite, rehabilitation work is nearing completion, and our contract to cementation is progressing well with the construction and installation of the conveyor. We are on track to have the conveying system fully commissioned and the Main back at full production by the start of October at the latest. Over the last six months, we've been mining ore and building a stockpile ready to feed the mill. This stockpile currently contains approximately 50,000 ounces of gold.

Commissioning of the mill is progressing very well, and in fact, we just processed first ore from our stockpiles through the mill this week. At Peñasquito, our work to sustainably improve the cost base offers the potential to build upon an already exceptional reserve and resource base, similar to what we have achieved at Boddington. In 2019, we declared gold equivalent reserves of more than 24 million ounces, underpinning a current reserve life of 12 years. And operationally, we delivered a strong finish to the year, which we expect to continue into 2020 as we reach higher grades in the main Peñasco pit.

Turning to Slide 15 for more detail. In 2019, we delivered more than $50 million in cash flow improvements from quick win initiatives at Peñasquito, exceeding our market commitment for Full Potential delivery at that operation. When we launched Full Potential at site, our team quickly identified that the crushing circuit at the front end of the mill, what we call the augmented feed circuit, was the key bottleneck in the processing plant. And that working this bottleneck to sustainably increase throughput and improve the quality of crushed ore provided to the Sag Mills would lift the overall performance of the processing plant.

Early quick wins in the augmented feed circuit came at the secondary crusher and high-pressure grinding rollers, where we replicated our success at Boddington and did a direct lift and shift of control logic to immediately improve the quality and quantity of feed. Taken together, these initiatives delivered record crushing throughput and record metal production for silver, zinc and lead in November. In 2020, we will continue to work this bottleneck hard. And for those coming to Peñasquito next week, I'm very much looking forward to taking you through more detail on this and other important work we are doing to deliver more than $100 million of further cost and productivity improvements at Peñasquito by 2021.

Rounding out the regions with South America on Slide 16. South America produced nearly 1.3 million ounces of gold and delivered all-in sustaining costs of approximately $815 per ounce in 2019. At Merian, we delivered better-than-expected fourth-quarter performance and have transitioned into mining harder ore at the Merian 2 Pit. Fresh rock will present higher grade and improve mine productivity, which helps to offset reduced mill throughput rates.

Yanacocha continues stripping the Quecher Main pit as we move out of higher-grade ore in the Tapado Oeste pit, and we are now placing Quecher Main ore on the new Carachugo leach pad, and we expect to see recovery of these ounces during 2020. At Cerro Negro, we mined higher grades as expected from Eureka and Mariana Norte and worked to develop out Emilia is progressing well as production begins to ramp up from this new mining area later in 2020. And with that, I'll hand it over to Nancy on Slide 17.

Nancy Buese -- Chief Financial Officer

Thanks, Rob. Turning to Slide 18 for the financial highlights. I'm pleased to report strong fourth-quarter and 2019 results. During the fourth quarter, Newmont delivered revenue of nearly $3 billion, an increase of 45% over the prior-year quarter, with the additional sales from our new operations and higher gold prices.

Adjusted net income of $410 million or $0.50 per diluted share and adjusted EBITDA of nearly $1.3 billion, an increase of 70% from the prior-year quarter. Cash from continuing operations was $1.2 billion driven by higher adjusted EBITDA. Free cash flow of over $775 million, an increase of more than $300 million from the prior-year quarter. With a solid finish to the year, we generated adjusted EBITDA of approximately $3.7 billion and free cash flow of more than $1.4 billion or $1.92 per share, of which we paid an annual dividend of $0.56 per share.

We also paid out an additional $470 million in 2019 in the form of a special dividend. Finally, in association with the $1 billion share buyback we announced in December 2019, we have already repurchased $500 million worth of shares. Turning to Slide 19 for a review of earnings per share in more detail. Fourth-quarter GAAP net income from continuing operations was $537 million or $0.66 per share.

Adjustments included $0.11 related to this change in fair value of investments, $0.10 related to tax adjustments and valuation allowance and $0.05 of other charges. Taking these adjustments into account, we reported fourth-quarter adjusted net income of $0.50 per diluted share. Turning to Slide 20. At Newmont, we build our annual business plan based on conservative assumptions, including a $1,200 gold price and a disciplined approach through which mine plans are developed based on reserves and the best demonstrated performance of plants and equipment.

Our base plan at $1,200 gold price allows us to maintain an investment-grade balance sheet with a focus on our maturity profile, to maintain our infrastructure and invest in mine development through a steady $1 billion of sustaining capital. We continue investing in organic growth, including approximately $600 million to $700 million of development capital expenditures and another $250 million of exploration and $150 million of advanced project investment per annum, and returned cash to shareholders through an industry-leading annual dividend. In January, we announced a plan to increase our annual dividend by 79% to $1 per share, reflecting the confidence we have in our business to deliver substantial cash flows well into the future. The increased dividend will be effective upon approval and declaration of our first-quarter 2020 dividend in April.

Turning to Slide 21. We expect to generate significant free cash flow through this cycle. At current gold prices, our portfolio will generate more than $10 billion of free cash flow over the next five years. And even using our more conservative $1,200 gold price base, free cash flow would still total $5 billion over that same period.

As shown on this slide, for every $100 per ounce increase in gold prices above our base assumption, we'll deliver approximately $400 million of incremental attributable free cash flow per year. Excess free cash will be used toward debt reduction and further shareholder returns. Looking forward, we are well-positioned to continue a trajectory of industry-leading financial performance by executing our capital priorities and staying focused on long-term value creation. And now, I'll hand it over to Tom to wrap up on Slide 22.

Tom Palmer -- President and Chief Executive Officer

Thanks, Nancy. Turning to Slide 23. We continue to build momentum and are taking the necessary steps to position our business for long-term success. We remain focused on the five foundational principles of our strategy: keeping our people safe with our relentless commitment to our safety culture and systems; growing margins through the application of our operating, technical and exploration discipline; leveraging our exploration program and unmatched portfolio to grow reserves and resources; optimizing our world-class project pipeline; and maintaining discipline around capital allocation.

Thank you for your time. And with that, I'll turn it over to the operator to open the line for questions.

Questions & Answers:


Operator

[Operator instructions] And our first question comes from Matthew Murphy of Barclays. Please go ahead.

Matthew Murphy -- Barclays -- Analyst

Hi. I had some questions on some of the former Goldcorp asset reserves. I mean if we start with Éléonore, you're getting down there in reserve life now, and I'm just wondering what your confidence is to extend that back out. And what are the key factors? Is it exploration or is it more about getting cost down so you can bring in more economic ounces?

Tom Palmer -- President and Chief Executive Officer

Yeah, I'll start off, Matt, and I've got my chief technology officer, Dean Gehring with me here and might have a few comments as well. But the story for me at Éléonore is a parallel to the story you'll have seen us follow at Leeville. We've got a complex ore body where you need to make sure that geology model and your geotechnical model are well aligned and integrated to form your life of mine plan, and you're taking into consideration stope sequencing and backfill and the like. That is a key focus for us at that operation, so we've applied our Newmont discipline to how we determine reserves and resources.

We actually have the same people that worked through the very good work we did at Leeville several years ago, Kate Williams and Dave Thornton. The very same people are working on the ground with the team at Éléonore to build those integrated plans. And if you look at Leeville today and look at the life that it has in front of it, it's a great deal of credit can be put in the hands of Dave and Kate for that work. So we're getting those basic models and plans in place and then combining that with an exploration program combined with Full Potential bringing costs down to look to extend the life with reserves and resources that meet the Newmont standard.

Dean, was there anything you want to add to that?

Dean Gehring -- Chief Technology Officer

Yeah. Thanks, Tom. Matthew, one of the things -- a couple of things I would like to add to that. One is, as you probably know, at Newmont, we provide and apply very high standards to how we determine our reserves and resources.

And let me provide a little bit of background and also get and lead up to some specifics around your question on Éléonore. So our standard for our study requirements in our drill spacing far exceeds any regulatory agencies and current codes like JORC, SEC or 43-101. And I would also say we don't apologize for having those high standards because it has resulted in us -- that disciplined approach, it results in us being very consistent delivering against our plan. But to illustrate the point of how that plays through in our reserves and resource calculations, we can look at a mine like Cerro Negro as a starting point.

And so as we applied our standards to that site, we end up reclassifying about 1.5 million ounces, but it went from reserves to resources. And because it's still a highly prospective area, we're confident that those resources are going to come right back into reserves, just as we do a little bit more work. And just quickly to illustrate the point further, if we look at Peñasquito, we see that the reserves there maintained what they were before. But through our work, we actually added an additional 3 million ounces on the resource side.

But switching to Éléonore, specifically your question, if we go back to what Rob mentioned earlier, Éléonore is a complex ore body. And when we apply our demonstrated performance to the mining wits and the dilutions, we ended up revising about 1 million ounces out of there. And the rest of the revisions really came from geologic model update similar to what Tom mentioned earlier. So the net of all those revisions resulted in resources remaining about the same at 1 million ounces, but those resources that we have there are at a much higher level of confidence than they were before.

But I think what's important to recognize out of all this is that we know how to mine deposits like Éléonore. To Tom's point, we have a strong technical team that allows us to deploy the resources where they're needed. And it allows us to take full advantage of our Full Potential program and also to rapidly replicate our best practices. So I'm fully confident that we're going to continue to extend the mine life there and that we're not looking at a short mine life.

Matthew Murphy -- Barclays -- Analyst

OK, thank you very much. And you touched on Cerro Negro, so I'll leave it there. Thanks a lot.

Tom Palmer -- President and Chief Executive Officer

Thanks, Matt.

Operator

Our next question comes from Chris Terry of Deutsche Bank. Please go ahead.

Chris Terry -- Deutsche Bank -- Analyst

Tom, Nancy and Rob, thanks for taking my questions. The first one is just around the autonomous opportunity that you've mentioned at Boddington. Just wondering if you can give a bit more color on the actual savings on a per tonne of mining. And also, just as a follow-up, will you likely wait until seeing how that goes at Boddington? Or are you looking at other sites between now and 2021 in advance of that? Thanks.

Tom Palmer -- President and Chief Executive Officer

Thanks, Chris. I'll take the second part of your question, and Rob, just pulling out he can give you the answer to the second part. If not, we can go off-line and get those numbers to you. Very important part of autonomous haulage is to bed it down and improve the operation of that technology in our gold mining environment and to manage through the change, management process associated with that.

So very important part of Boddington achieving the level of performance that it has, and through that level of performance, extending its mine life to underpin the replacement of a mining fleet with an autonomous mining fleet is an excellent opportunity for us to bring autonomous into our business. We would be looking, first and foremost, at using that technology to prove up the base case for some of the key projects that we have in our project pipeline. So it's been a very large gold-copper deposits that we've got a pre-feasibility study. So proving up Boddington and having that inform those pre-feasibility studies would be the first.

And then if there were opportunities around our business to either replace fleet or convert fleet, we would consider that. You need to have the mine life in front of you in order to be able to justify the replacement of a mining fleet. So those opportunities may present, but it's more about presenting the base case for those very important studies that we have at pre-feasibility stage. Rob?

Rob Atkinson -- Chief Operating Officer

Chris, thanks very much for the question. And we're conservatively estimating that we're going to get a 20% improvement in productivity with the trucks in terms of the material that they can move. And that will obviously transfer to a lower cost per tonne. The key areas that we'll be focusing on most of all are around the shift changes.

Obviously, that disappears, the maintenance requirements, the increased speed and also the ability to get greater payloads. So all in all, where we're sitting is about a 20% initial estimate. But obviously, we're going to be hoping to push that very, very hard, and we've certainly seen some great performance in other mining companies. And we certainly believe we can do that and some -- moving forward.

Chris Terry -- Deutsche Bank -- Analyst

Thanks. Thanks, Tom and Rob. And then just in terms of the operations, thinking about the 2020 progression. Just wondered if you could highlight just sort of the quarter-to-quarter and half-to-half split.

I noticed you mentioned Éléonore weak in the first quarter, obviously, Musselwhite, second half-weighted. You've gone through a couple of the other assets, but I just wondered if you could make some comments on that. Thanks.

Rob Atkinson -- Chief Operating Officer

Sorry. Just, Chris, is there an operation in particular you want to talk about?

Chris Terry -- Deutsche Bank -- Analyst

Just wondering in general as you go through your yearly guidance, just thinking about it maybe first half versus second half or just items to look for on a quarterly progression, just overall. I know you don't guide specifically to the quarter but just things that we should look out for as the year goes on.

Tom Palmer -- President and Chief Executive Officer

So Chris, Tom here. You are going to see a little bit softer first half to second half. You're looking at a maybe softer, I mean, like 48% versus 52% half to half. So in my world, that's a pretty even year.

Mine sequence, certainly at Éléonore, has you seeing some lower gold ounces, particularly in the first quarter. Musselwhite, you're going to obviously see a lower first half to second half as we start to feed ore in -- we're already feeding ore. In fact, Rob's being a little bit conservative. We actually produced our first gold this week from Musselwhite, and we'll ramp up that plant in the second half of the year.

Just looking down at the list of mine sites, you're going to see in Africa, weighted to the second half of the year, particularly at Ahafo as we start to get in some high-grade ore at Subika. You're going to be weighted to the second half of the year at Akyem as we get in some higher-grade ore in their open pit. Pretty even year through Tanami. Boddington, you're going to start to see them get into some high-grade in the second half of the year, so there's a weighting to the second half for Boddington.

Pretty even through Pueblo Viejo, Cerro Negro pretty even. Merian, you'll start to see them softer in the second half as we start to get into more of the high grade but harder ore and then start to price that through the primary crusher, you lose mill productivities. Yanacocha, as we get into the Quecher Main stripping campaign, you'll see a bit lower in the second half to the first. Peñasquito, you'll start to see us move into higher grade ores in the second half.

So a bit stronger in the second half. Éléonore, I talked about. Peñasquito, pretty even year. And CC&V, we'll start to see some higher leach ounces coming through in the second half of the year.

Does that give you some flavor?

Chris Terry -- Deutsche Bank -- Analyst

Yes. Yes, that's great. That's very helpful. It's exactly what I was after.

Tom Palmer -- President and Chief Executive Officer

And then one other, Chris, to keep in mind as you're looking at cash flow, we'll start to ramp up our spend on development capital as we start to ramp up our work at Tanami 2. So you will see that in the second half as well.

Chris Terry -- Deutsche Bank -- Analyst

OK, great. Thanks for that. And the last one for me. I mean you've obviously done the main divestments, Kalgoorlie, Red Lake, where the portfolio stands today.

Is there anything that's noncore? I don't think so, but I just wanted to check.

Tom Palmer -- President and Chief Executive Officer

But Chris, there are 12 operations that we're going to drive value from, so you're going to see us absolutely focused on delivering and exceeding our commitments from those 12 operations. There are a couple of areas that we're working on that aren't part of our core operations. One is that we have a power business in Kalgoorlie that we're working through. If you remember from the announcement with Northern Star, they've got first rights to make an offer for that.

But that's material in terms of the value of that power business. And the other area we're doing is cleaning up our equity portfolio, so we're actively working that. And you might see the order through the combination of all of those things up to $300 million of proceeds, $200 million to $300 million of proceeds that may come from that. So I would call that sweeping up, but it's a material number as we work to clean house in the first half of this year.

Chris Terry -- Deutsche Bank -- Analyst

OK, great. That's all for me. All the best for the year. Thanks.

Tom Palmer -- President and Chief Executive Officer

Thanks, mate.

Operator

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Greg Barnes -- TD Securities -- Analyst

Yes, thank you. A question for Rob Atkinson on Peñasquito. Just curious on the work you're doing on the front end of the plant and how that debottlenecking is improving the throughput versus when you acquired the asset to where you think you can get it to.

Rob Atkinson -- Chief Operating Officer

Well, thanks very much, Greg, and very, very clear. That's where the bottleneck is that we're sitting at a rate of 37 million tonne throughput for the year. We're looking at getting that up to 39 million very quickly. Now that certainly isn't the end to it.

But as you balance the different products between the gold and the zinc and the lead and the silver, you do have to balance the back end of the plant with the front end, but we've certainly been able to took feed through that front end and we're looking at 39 million tonne throughput.

Tom Palmer -- President and Chief Executive Officer

Greg, are you coming to Peñasquito next week? Because we're going to go into some detail with the folks that are visiting.

Greg Barnes -- TD Securities -- Analyst

Yes, I am absolutely coming. And just wanted to jump the gun a little bit, Tom.

Tom Palmer -- President and Chief Executive Officer

All right.

Greg Barnes -- TD Securities -- Analyst

On Full Potential, have you fully deployed that across all of the Goldcorp operations now?

Tom Palmer -- President and Chief Executive Officer

Rob, you want to?

Rob Atkinson -- Chief Operating Officer

Not quite yet, but we've -- Éléonore is very well advanced. Obviously, Peñasquito is fully advanced. That Porcupine is ramping up. And given where Musselwhite is at with the conveyor, that's going to be the last one to ramp up.

But on the whole, we're making very, very good progress. And even though Full Potential isn't ramped up fully at Porcupine and Musselwhite, the level of engagement between our technical teams and our operational teams is very significant. So we're making very good progress.

Greg Barnes -- TD Securities -- Analyst

And how about at Cerro Negro, Rob?

Rob Atkinson -- Chief Operating Officer

I beg your pardon. Cerro Negro was one of the first to kick off, that's proceeding well. And again, we have a terrific SME support down there. And we're focusing on some key things down there.

Just a handful of things which will make a difference. And the big one is improving, the development rates there and the productivity of the equipment in general, and we're certainly seeing some good early wins here.

Tom Palmer -- President and Chief Executive Officer

Greg, both Peñasquito and Cerro Negro through the diagnosis and design phases and firmly into their delivery phases. So we're through that and we're into the 18-month delivery. Éléonore is now in there. They've been through the diagnosis and then now into the design phase.

So the two assets that deliver significant value in Peñasquito delivers huge value with firmly in the deliver phase.

Greg Barnes -- TD Securities -- Analyst

Yes, it looks like you could see that in the Q4 results. Thanks, Tom.

Tom Palmer -- President and Chief Executive Officer

Thanks, Greg.

Rob Atkinson -- Chief Operating Officer

Thanks, Greg.

Operator

Our next question comes from Josh Wolfson of RBC. Please go ahead.

Josh Wolfson -- RBC Capital Markets -- Analyst

Hi. Just switching over to the capital allocation side of things. With the buyback, I guess, half complete within a pretty short time frame, if and when that's ultimately exhausted, I guess, prior to the full sort of time lines, how do you see that program going forward? And I guess, what's the motivation to look at allocating funds toward that versus dividend?

Nancy Buese -- Chief Financial Officer

Yes, Josh, thanks for the question. So on the buybacks, I think they would consider that really tied to our asset sales. And so between that and an opportunity to buy back shares at a very, very attractive share price, we feel like that was the right thing to do, and so we will continue that program through the end of 2020. And we will also consider, at these gold prices, when we think about capital allocation, we'll continue to manage the balance sheet, and we'll think about other shareholder-friendly actions.

Certainly, a key one of those will be to determine our appropriate level of dividend on a go-forward and sustainable basis. So that's something that we will continue to evaluate. And truly, to remember that the dividend at $1 is sustainable at a $1,200 gold price so at a more robust pricing going forward, that's something we will be definitely continuing to revisit.

Josh Wolfson -- RBC Capital Markets -- Analyst

OK. So it's safe to say, I guess, the approach seems to be windfall of cash flow is attributed to the buyback and business sustainability is the focus for the dividend?

Nancy Buese -- Chief Financial Officer

Yes, that's correct.

Josh Wolfson -- RBC Capital Markets -- Analyst

OK, great. Thank you.

Tom Palmer -- President and Chief Executive Officer

Thanks, Josh.

Operator

Our next question comes from Anita Soni of CIBC. Please go ahead.

Anita Soni -- CIBC -- Analyst

Good morning, everyone. I'm just looking at Porcupine, can you just talk about the changes to the reserve there? I know you moved Dome -- or you said you were going to move Dome from reserves into resources. But to me, it looks like you've taken 8 million ounces out totally out of the global inventory. Is that correct?

Tom Palmer -- President and Chief Executive Officer

Probably need to go off-line with you on that one, Anita. We certainly moved some Century out of reserve into resource and we certainly kept some reserve in where we could still mine those ounces. So that might be one that we can quickly get Jess and Dean to jump off the line and take you through.

Anita Soni -- CIBC -- Analyst

All right. And then when you were -- you talked about -- or Rob talked about applying your more rigorous drill density requirements. Did you also take a look at -- and this is to the overall Goldcorp, all of the assets. Did you also take a look at Goldcorp's cost assumptions at this stage or is that still to come?

Tom Palmer -- President and Chief Executive Officer

I'll get Dean to comment on that one for you, Anita.

Dean Gehring -- Chief Technology Officer

Yes, Anita, we looked at the whole suite of variables that go into calculating the reserves so we looked at the cost assumptions. And also, as Nancy mentioned during her part of the presentation, we also consider best demonstrated performance. So we don't build in stretch or upside into any of our reserves or resource determinations.

Anita Soni -- CIBC -- Analyst

All right. And so given that Musselwhite perhaps won't be looking to grow as it previously did, you're OK with the cost structure that's supporting the current reserves right now?

Dean Gehring -- Chief Technology Officer

Yes. And then we also took a look at that, too, in terms of its best demonstrated performance.

Anita Soni -- CIBC -- Analyst

All right. And then just in terms of areas where we saw declines at other assets that you own that were within your portfolio. Can you talk about -- so you had some wins at Tanami and you talked a bit about that. But could you just talk about what was happening at Ahafo South, as well as at -- sorry, at Merian?

Tom Palmer -- President and Chief Executive Officer

Again, Anita, we can probably go off-line on that detail. But I mean, Ahafo South, there's ounces coming in with the change in mining method. And Merian, we've got ounces coming in as we continue to drill out around there. Terrific story at Tanami, the story here as talking more about is the Oberon deposit with the first ounces coming into resource.

That's going to be a terrific addition to the Tanami story. But more than happy to maybe jump off-line and go through asset-by-asset and take you through that detail.

Anita Soni -- CIBC -- Analyst

All right. Thank you. I look forward to that call.

Tom Palmer -- President and Chief Executive Officer

Thanks, Anita.

Operator

Our next question comes from Mike Jalonen of Bank of America. Please go ahead.

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Good morning, Tom, everyone. Just had a question, we haven't really heard much of Nevada Gold Mines. I know Mark Bristow spoke about it. But on Page 5, your synergy value chart.

Mark spoke about another $60 million of synergies in Nevada, lowering the cutoff grade on his call last week. Just wondered, do those fit on Page 5 anywhere? Or is that just Newmont?

Tom Palmer -- President and Chief Executive Officer

Mike, terrific to get a question from you. Slide 5 is just the Goldcorp synergies, so we have built into our guidance for Nevada Gold Mines the synergies that Barrick have provided publicly. So that's built into our plan. But in the $500 million of cash flow that we will deliver in 2021, in the $340 million of cash flow that we will deliver this year, all of that comes from the five new operations that came into our business from Goldcorp.

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

OK. All right. I'll thank you for that clarification. So you and Greg Barton's next week.

Tom Palmer -- President and Chief Executive Officer

Yes, thanks, Mike.

Operator

Our next question comes from Adam Graf of B. Riley. Please go ahead.

Adam Graf -- B. Riley FBR -- Analyst

Hey, everyone. Just a quick question. Just thinking down the line a bit longer term. You guys have some big projects that are JV-ed with some base metal producers who have their own projects and their own balance sheet capacity.

And I was just curious if you maybe could give us some color on how you're coordinating longer term with your JV partners in regards to the development and the timing of those projects, considering they're not benefiting from the higher gold price.

Tom Palmer -- President and Chief Executive Officer

Yes. Thanks, Adam. So one of the beauties of our portfolio is it's some -- as it's now positioned, is that we have, across those 12 operations and the ore bodies that sit underneath them and the three projects that we have in either definitive feasibility study or execution. So Tanami 2, Ahafo North and Yanacocha Sulfides, the ability to sequence those projects in.

And they are the three projects that underpin the 6 million to 7 million ounces of steady development capital spend over the better part of this decade that Nancy was talking about. Those three projects, plus the exploration potential of our existing assets and the opportunity to improve the performance of our existing assets, give us a steady profile north of 6 million ounces for this decade at least. So we'll talk more about that in the weeks ahead. But what that allows us to do with those three big projects, Norte Abierto, Nueva Unión and Galore Creek that I see sitting in pre-feasibility study is for us to work with our joint venture partners to apply some of our key strategic mine planning methodology that we have within Newmont, understand those ore bodies, to optimize those ore bodies, to establish a competition for capital and see which of those come forward first because we'll only implement those in series, which of those will come first toward the latter part of this decade, if not the start of the next decade, for implementation.

And I think that sits pretty consistently with our joint venture partners are thinking about those projects. So I think we're aligned. And the beauty of our portfolio is that we have plenty of time to really optimize those projects and bring them on. And we will get from each of those projects, along with Yanacocha Sulfides and excellent exposure to copper as the globe goes through the energy transition.

So I'm very excited about our organic pipeline, and I think we can work well with our JV partners to bring them on when they're ready to come on.

Adam Graf -- B. Riley FBR -- Analyst

Excellent. Thank you very much.

Tom Palmer -- President and Chief Executive Officer

Thanks, Adam.

Operator

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

John Tumazos -- Very Independent Research -- Analyst

Thank you for taking my question. With the interruptions at Musselwhite and Peñasquito and the declassifications at Éléonore, and the Yukon and Dome and the Red Lake sale, all in all, are you still happy with the Goldcorp purchase? You appeared to buy it almost at the bottom and at about 30% of what Goldcorp had spent on its assets.

Tom Palmer -- President and Chief Executive Officer

John, in a word, yes, it's a fantastic acquisition. Those assets are terrific ore bodies. There's excellent infrastructure and they're in very good hands, and we're going to deliver huge value from them. So it was a fantastic acquisition.

And I think we're demonstrating what those assets can really do when they're in the hands of an operating company like Newmont.

John Tumazos -- Very Independent Research -- Analyst

Is it a reasonable hope or expectation for the Éléonore resources to come back to reserves? And also the Coffee, Yukon and Dome, Century resources? Or should we limit that optimism just to Éléonore?

Tom Palmer -- President and Chief Executive Officer

But yes, you should be optimistic about Éléonore and the upside potential as we apply Newmont exploration skills to that asset. For Coffee, we've put that study back where it should be in pre-feasibility study. And it's one of the deposits that our head of exploration is very excited about, and we want at least two seasons of drilling to prove out that ore body. And what we're looking at with the Century project is understanding what that mixed life, what that mixed layback is at Porcupine.

So we're actively working that project at the right level to look to see what we can do to bring those ounces into that business. And we're working and we'll continue to work bloody hard at Porcupine to get their productivities up and improve their cost, which will further enhance the ability to bring -- essentially what will be a layback, back into that mine.

John Tumazos -- Very Independent Research -- Analyst

Thank you for your service to the company.

Tom Palmer -- President and Chief Executive Officer

Thanks, John.

Operator

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

Tom Palmer -- President and Chief Executive Officer

Thank you, everyone, for joining us, and thank you for your continued interest in Newmont. Have a good day. Thank you.

Operator

[Operator signoff]

Duration: 54 minutes

Call participants:

Jessica Largent -- Vice President of Investor Relations

Tom Palmer -- President and Chief Executive Officer

Rob Atkinson -- Chief Operating Officer

Nancy Buese -- Chief Financial Officer

Matthew Murphy -- Barclays -- Analyst

Dean Gehring -- Chief Technology Officer

Chris Terry -- Deutsche Bank -- Analyst

Greg Barnes -- TD Securities -- Analyst

Josh Wolfson -- RBC Capital Markets -- Analyst

Anita Soni -- CIBC -- Analyst

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Adam Graf -- B. Riley FBR -- Analyst

John Tumazos -- Very Independent Research -- Analyst

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