Newmont Corporation (NEM) Q4 2007 Earnings Report, Transcript and Summary

Welcome to the Fourth Quarter and Year-end 2007 Conference Call. At this time all participants are in a listen-only mode. After the presentation we will conduct the question-and-answer session. [Operator Instructions]. This conference is being recorded. If you have any objections, you may disconnect at this time. I would like to turn the call over to Mr. John Seaberg. You may begin.

Thank you operator. Welcome everyone to our fourth quarter and 2007 earnings conference call. I'd like to introduce Dick O'Brien, who will be leading our presentation today. Thank you.

Thanks, John. Good afternoon. Thanks for joining us today in our fourth quarter 2007 earnings conference call. Before we get started, I just want to remind you that we'll be discussing forward-looking information involving a number of risks, certain of which are unique to our industry as described in our SEC filings. I also want to acknowledge that a number of analysts on this call have already had a full day of earnings reports and conference calls and we appreciate the time you take to set aside to participate in our call. So, thank you for that. As many of you are aware, we recently held an Analyst Day where we discussed in detail the results of operations for the fourth quarter and for the year, our reserves at the end of 2007, and our guidance for 2008. Because that information is available for you on our web site at www.newmont.com, today's call will be relatively short. So we will focus largely on our financial performance for the fourth quarter, which we didn't talk about at the Analyst Meeting, and for the year. We will also briefly recap what we accomplished in 2007 and we accomplished a lot to refocus our company on our core gold business and review our outlook for 2008. We will give you a brief update on Hope Bay and how we are integrating that asset and the Hope Bay team into our portfolio organization. Finally we will give you an update brief on the divestiture situation in Indonesia. Before we get started, another quick update. Some of you maybe aware there was an earthquake near Elko, Nevada early this morning. Brant Hinze called me very early this morning. His time indicated that they were checking to see what damage and we are pleased to report that there are no employee injuries or adverse impacts to our operations. We have had time to inspect our underground infrastructure and have found no deficiencies. We will of course update you if the situation changes. Looking at the first slide, in July 2007, our management team committed to refocusing on our gold... core gold business and with that commitment we stepped up, took decisive action, we implemented and successfully executed on several strategic initiatives. And those initiatives have provided us momentum as we move into 2008. So I just want to spend a minute making sure that people understand what we have accomplished here in a relatively short period of time. First, in June, towards the end of June, we closed out our hedge book position in Newmont as the largest unhedged gold producer allowing our shareholders to take full advantage of the current gold bull market So this year rather than delivering approximately 1 million ounces of $384 per ounce, which would have been our commitment had we not gotten out of the hedge book. Newmont and its shareholders will benefit from the current plus $900 gold price environment that we find ourselves in. Second, we had an extremely successful monetization of royalty assets delivering unrecognized value from our balance sheet in a really thoughtful transaction that allowed us to raise capital to provide capital for Miramar and other opportunities that we have in our current balance sheet. Monetization of our royalty assets successfully delivered unrecognized value from our balance sheet and provided about $600 million gain and about $1.3 billion of capital. So our foundation as we go into 2008 has been further strengthened by our renewed focus on operational improvements. We've had two very effective quarters in doing what we said we're going to do and delivering on our operational performance. In addition to that, we are getting more effective in our capital through a capital effectiveness program that we talked about in detail at our Analyst Day. We continue to focus on our continuous commitment to sustainable partnering with host communities around the world and this year we are proud to be included in the Dow Jones Sustainability Index World becoming the only gold company to be added to this index. And rest assured, we will continue to work hard to ensure that we live up to the promises that we've made. Before we turn things over to Russ... Russell Ball, our CFO to discuss 2007 results and the 2008 outlook, I'm just going to highlight a few things that speak to our ongoing transitional momentum over the last eight months. As I mentioned two strong consecutive quarters on the operational performance, we understand two quarters doesn't a year even make, it certainly doesn't a company make but I'm telling you, people here are motivated because we are beginning to turn around the operations and we're beginning to have more confidence in our capability to deliver on what we say we're going to do. Russ is going to talk about the 2008 guidance that we've given you. I can tell you that every person at Newmont is committed to doing everything it takes to delivering at or above that guidance. So we met our guidance in the fourth quarter on equity ounces and cost applicable to sales and we met that guidance even though we made the conscious decision to not accelerate production and sales in fourth quarter. I committed to people that we were not going to backend load this company anymore that we're going to try to flatten production out, we still do have weather dependencies and we still do maintenance in the second quarter as we explained but we have made a conscious effort to not put everything into the fourth quarter. And I would say many analysts mid-year said we'll never make it. You won't make it in the fourth quarter, too much production, your cost are really going to have to come down. We did it. We did what said we're going to do. We also in 2007 made significant investments in the future and we position the company take advantage of what believe will be strengthening gold price environment. So with that, I'm going to turn it over to Russ who will dissect our fourth quarter somewhat complicated reported financial results.

Thanks Dick and let me firstly apologize for the non-accountants that spent [inaudible] this morning at least working their way through our numbers. I will say that despite the red ink, you see in the table up there, we actually had an extremely strong fourth quarter and I will explain why in some detail. Looking at the table, equity gold sales as Dick said right on line at about 5.3 for the year. We did as Dick said made conscious decision not to push our operations right to the limit. And in fact ended up sitting on about 80,000 equity ounces and 19 million equity pounds of copper at year-end in order to affect what Dick has talked to about a level or more consistent, if you want, production profile and not always having the back-end loading. And again that gives us more confidence going into 2008. The realized gold prices you see, strong fourth quarter at 785 and around 700 for the year, but clearly a long way off the roughly $949, $950 that we are sitting at today. So to Dick's point, the company is focused on delivering the numbers that I'll point out in our 2008 outlook. And if you do that we should see significant margin expansions and significantly improve bottom line. The cost applicable to sales, again a strong fourth quarter, we were at 384 and for the year around 406. As we spoke to the analysts a couple of weeks ago we mad a conscious decision not to hedge the Aussie dollar and that cost us $9 or $10. If you subtract that, we would have been roughly… we would have been at the higher end of our original guidance back in January this year. We do have an ongoing program to hedge some of those exposures and we have to reduce some of that volatility going forward. And as I said and I will move to the next slide, the accountants, myself included, managed to put a lot of red on the income statement. The one thing even as the accountants can't mess up is the cash flow. And if you look at the cash flow for the quarter, it speaks to the strength of the operation. We were at $630 million. You see the number there for the full year at $525 million. That really is impacted by some one-off transactions that we have provided more detail on earnings release in which you can find an excruciating detail in the 10-K, which was filed a couple of hours ago. The normalized number is about 1.6, but you can see the leverage for the fourth quarter at around 1.4 million, at again 785 we produced about $630 million in operating cash flow. Capital for the year, as Dick said, we continue to continue to focus through the capital effectiveness program and we came in at $100 million or so below the low end of our original guidance. So, while it might not have looked like it and certainly I think it was Victor Flores commenting this morning that you could drive yourself nuts trying to figure out what they actually earned. Hopefully as we turn to slide 5, I can do that fairly quickly because a lot of these items we had spoken to the Street about and disclosed to the Street before we reported numbers this morning. So, focusing on the quarter, we did end up having to take an impairment charge. It is a non-cash charge related to exploration goodwill. This goodwill was put on the books in February 2002 with the three-way acquisition of Normandy and Franco-Nevada. We have spent a lot of time discussing that accounting and the model we have to substantiate that value with the ACC over the years. What the model dose do is it requires us to update assumptions every year and when we updated the assumptions this year in light of higher capital operating and finding costs somewhat offset by a higher gold price assumption, a higher risk-free rate, which results in higher discount rate to apply to future cash flows and the less than expected exploration additions that were built into the model. Again, the model was meant to extrapolate or historical results are meant to extrapolate predictive success of the future and we had to adjust what was in the model for the results over the last couple of years, which we communicated to the Street a couple of weeks ago for 2007 at least. So, when we did that in random numbers, we weren't able to substantiate the value that was on the balance sheet so we took the $1.12 billion charge in the fourth quarter. Again, non-cash because there is no deferred tax implication, both the pre and post-tax numbers are the same. We did have to write down in terms of our accounting policy to investments, one was in Shore Gold and the other in the Gabriel, the Rosia Montana project. In terms of our policy again if the securities under it cost for more than a six-month period, we write it down. Again non-cash and when those investments turn, clearly we will be able to recognize a gain if they do turn, otherwise we have recognized the loss to the end of the year. So, another non-cash charge. We, as Dick alluded to, had a very successful IPO of the royalty portfolio, another non-core asset. Again pre-tax gain of about $900 million, you will see reflected there as a post-tax gain of $600 million. Again because we made the decision in Q2 that we were getting out of the merchant banking business, which is reflected in the discontinued operation section of the income statement. We had a minor tax adjustment on Zarafshan was a gain. So we put it up there. And then we had other discontinued operations, which is basically the royalty portfolio to the date of the transaction, December 21. So, those royalties accrued to us for most of the fourth quarter but obviously one accrued to us for 2008 and onwards and a small gain from the sale of Pajingo asset. So when you do the math and as we spoke to our Board yesterday, you get to about $0.50 number for the quarter. Looking at the full year, in addition to those items we spoken to, we did have the loss in the second quarter that Dick... on third quarter at least that Dick mentioned when we eliminated the hedge book. That's reflected there of $358 million. In addition to that we had spoken previously to the Street about the charge we took on the minority interest loan repayment at Batu Hijau. In addition, we wrote off the merchant banking goodwill, again another non-tax charge. We took that in the second quarter and that again reflects our decision to exit the merchant banking business and that was again reflected in our second quarter results that are shown here for the year-to-date. Some minor other adjustments but again you can do the math somewhere in the 120 to 130 range is where we ended up for 2007. So while we do acknowledge certainly a lot of items or transactions that impacted both the quarter and the year, again a lot of them tied directly to the strategic initiatives that Dick alluded to. So, when you look at the cash flows and in particular based on the realized price, you can actually see we had a very strong quarter notwithstanding the fact that we once sat on a lot of inventory and two had a significant unrealized write... not writedown but mark-to-market adjustment on our copper provisional pricing at Batu. For those who follow the industry Freeport had a similar adjustment where essentially we reflect sales that are still outstanding and being provisionally priced at the spot price of year-end, which was I think $3.02 is what we use. Today with copper around 370 odd, we should see most, if not all of that, comeback in the first quarter or second quarter of 2008. So again it's just a timing issue and reflects the volatility, quite frankly of the copper price and the fact that all of our copper in this case and gold is unhedged. So again turning to slide 5 or 6 now, focusing on the outlook for 2008, again we communicated this a couple of weeks ago in our release and at our Analyst Day. Equity gold sales largely flat somewhere between 5.1 and 5.4, cost applicable to sales, I think it's a 6% increase. The last time I looked at it, it was about 4.25 to 4.50. I will predicate that with an $80 with taxes fuel assumption and an $87.5 Aussie, we are obviously offside on both those assumptions today, but at least in respect of the Aussie dollar we are putting in a disciplined hedging program that will eliminate some of that volatility going forward. Copper sales, slightly down as we... again we spoke to the analyst. 2008 and 2009 at Batu reflect years of lower grades and higher strip, 2010 and 11 were back in the heart of the old body at the bottom of Phase V and we will see those numbers climb significantly. The lower sales is reflected in the higher cost at Batu. Consolidated CapEx, which includes about $200 million of minority CapEx that we end up consolidating from Batu and Yanacocha somewhere between $1.8 billion and $2 billion and you can see the rest of the numbers. Just may be focusing on the tax rate for a second, obviously a lot of volatility and movement around that tax rate with all these non-recurring items, again as I've said before, somewhere between 30% and 34% is a long-term tax rate, excluding the effect of these once-off transaction, if you want, that can distort the tax rate significantly.

Thanks, Russel. Moving to the next slide, I'd like to welcome the former Miramar employees to Newmont, if they are listening on the call. We appreciate your success as to date at Hope Bay and look forward to your contributions in the future as we develop this world-class gold deposit. In addition, they are now controlling one of the largest undeveloped gold projects in the world with Miramar having already identified over 10 million ounces of gold resources at Hope Bay. We've also added significant strength to our Newmont team. As we proceed with evaluating the development options available, the integration of the personnel continues to progress as planned with the cross-functional team now in place. Guy Lansdown, our Senior Vice President, Safety Project Development and Technical Services will provide project development executive oversight. Steve Enders, Senior Vice President, Exploration will provide exploration executive oversight and Brant Hinze, our Regional Vice President for North America will provide regional executive oversight as the Hope Bay operations team will ultimately become part of the North American regional team. For this acquisition, again building on the successes we had in 2007, another indication of momentum, buying an asset that we had initially invested in, we understood very well, able to do clean due diligence on, understood what was moving forward with the asset in development, district scale asset provides opportunities for sustainable, lower cost production in future high-grade reserve replacement. This is the value of thinking and investing strategically. We must get our execution of the operating assets right and we will and we've told you that we must also build for the future. So, we are doing both. And we'll update you as we determine how we are going to maximize the value of the Hope Bay asset for Newmont, our shareholders, and the local communities. The next slide, I just want to focus briefly on the Batu Hijau divesture update. The first slide just sets up the structure, really focusing in the red circle, what is it that's separate Batu Hijau. For those of you who have followed the situation, the government delivered a letter to us saying that if we don't complete the divestiture of the 3% and 7% vintage, which came due in 2006 and 2007, if we don't complete that by February 22, they will put us into default basically under the contract to work. So, this is the structure. You can see Sumitomo and ourselves currently own a certain percentage and you can see walking down the potential interest on the far right that we will end up with 49% in 2010 has under the contract to work, which we signed, we've acknowledge we've signed, we understand our obligations are committed to live up to them. We know just what we need to do here. The process is a bit undefined as to how we get it done. That's sort of what we have been working through over the last couple of years. But you'll note that today we have a 10% obligation that we need to divest. More precisely, we need to have offered. We have made offers; we're working with the Government. I would say it is day-to-day as to what happens. And going to the next slide, you can see that we did offer to sell 3% for a $109 million in 2006. We offered further 7% for $282 million in 2007. Central Government of Indonesia declined to accept those offers but instructed us to deal with the local governments, which we've been doing. You can see in the fourth bullet point, we actually did sell a 2% carried interest. We have an agreement to sell it. It is not sold yet, but we do have an agreement to sell. The Indonesian Government, as I mentioned, delivered this notice default on February 11. So we firmly, firmly disagree with the allegation that we have breached the contract to work. That said we are working with the government to try to make sure that we do everything that we can to avoid a default situation. And that we go ahead and continue to do what we thought we have been doing, which is to actually complete our obligation. We know we have an obligation to complete. We are doing everything we can to get that done. I hope we can continue to work constructively to try to avoid a situation where we would otherwise have to invoke international arbitration to protect our interest at Batu Hijau, a last resort. Hope we don't have to do that. It's day-to-day. We will let you know what the updates are as we come to conclusion here over… we hope, a relatively short period of time. So with that, the last slide really focusing on what is it all about here at Newmont. In 2007, the last half, it's been about getting the portfolio of assets right, focusing on our operational execution, beginning to focus on the future through our investment in Miramar and positioning this company as the world's premier unhedged gold company by getting out of the hedge book, selling the royalty portfolio to both raise cash but also to get us out of investments, which were in some cases not gold related and move us into a position where we have a future for continuing to build the business off of execution, and off of successful exploration project development. And as we move forward we have a number of projects, including Boddington, which we talked to the analysts about and anyone else who listen to our conference call. We're setting the company up for a lower cost structure overtime. And I just want to close by talking a little bit about margins and where we stand today. So last year average gold price $697, our CAS of 406 with a gross margin of $291 an ounce. Notably, if we took the aggressive stands of reporting byproduct credits differently, actually that margin would expand by a $120 to about $411 an ounce. Go forward to this year, because I can do the math. 950 mid-point estimate of our CAS 425, that's a $425 an ounce margin, quite a bit of expansion. And again looking forward to copper credits applied, we'd go up by a $130 an ounce to almost $555 an ounce. So, do we have gold leverage? Absolutely. Do we have project hedges? No. Every ounce we sell is sold at the current price. So, we're positioning this company for gold leverage. We're positioning the company for long-term success. We are going to execute on what we said we were going to do. We're going to deliver on the projects that we have in front of us, including Boddington, the gold mill will finish the power plant. We will reduce the cost structure in Nevada. If you look year-to-year our CAS, we are company who CAS is going to, I believe, be less… we will see less growth in our CAS than the rest of the industry, why? because we got focused on this last year because we have people who are committed to do what we say we are going to do. Our margins will expand this year. I think the company is set for success and not just for this year, but for the future. So, thanks my management team for providing the initiatives that we got done in 2007. Thanks to our investors for your patience as we work through this, but we are beginning to turn the corner here at Newmont. I feel positive about where we are. So, with that we will open it up for questions. Question and Answer

[Operator Instructions]. Our first question comes from John Tumazos of John Tumazos Independent.

Good afternoon. In terms of the monies you are spending for the Hope Bay drilling this year, how much would be step-out or new exploration as opposed to infill drilling and testing the data from Miramar?

John, it's Dick. This is an advanced exploration project. As you know, there are some areas where we are going to be doing some infill drilling, but we believe that this has substantial long-term value. We will be doing some step-out drilling as well. We haven't given the precise figure for what our budgets are for this year. Suffice it to say that our exploration budget is up to about… given the numbers it’s up about $40 million, part of that's inflation, but a big part of it is Miramar. We will be spending money on significant drilling activities up at Miramar.

And John, Russ, just adding to that, we should be careful in not expecting reserve additions instantly. We have put the project into a stage-gate process. The way we look at is we will see significant or potentially significant NRM in additions in 2008 and into 2009 and 10 on the reserve side. So, again, we have a program, but we have just inherited the assets and the exploration folks are working with, most of the Miramar team that came over to really determine where we want to put those dollars. It's still very early in the process, as you know we just essentially acquired the asset.

Thank you.

Our next question is from John Hill of Citi.

Thank you very much and thanks for a very forthright presentation following up on a lot of operations at Investors Day a few weeks ago. Dick, I was just wondering when you think about funding the company's cash flow deficit for 2008, including acquisitions and such of course, will you might commit to filling this cash deficit without further equity dilution?

Will we commit? No, we will tell you that we will make sure that we utilize our equity judiciously, that we will value it appropriately, but will I commit to not issuing equity, no, I don't know exactly what we are going to do John. But I will tell you we will do everything we can to make sure that we ensure shareholder value. At this point we have a cash flow deficit for the year, which we plan on funding through a combination of balance sheet sources that we have today, some additional borrowings. Do I see anything and that normal environment would require the issuance of equity, no. But would we over time consider if we saw something else, we might.

And John, Russ, I'll just add to that for those who haven’t had a chance to look at our 10-K, we moved our investment in Canadian Oil Sands Trust from a current liability to a long-term liability... long-term assets, sorry, based on... it's been a long couple of days, based on our intension or discussions amongst management that we see no likelihood of selling that asset in the next 12 months basically [ph] part on the IPO, the significantly higher proceeds we received, the strong operating cash flow from the fourth quarter and current metal prices, which at 900 turns that deficit into a surplus.

Great. But just for clarification as we ranked the various alternatives for funding that cash deficit everything from perhaps examining the treatment of byproduct revenue streams and such or asset sales, do you regard equity dilution to be high on the priority list or rock bottom at the lower end of the priority list?

Clearly John, equity is at the bottom, it's not our first... it's not the first arrow we're going to pull out of the quiver. I believe that with additional strength in gold prices, margin expansion, we have other opportunities before we need to dive into the equity portfolio.

Great. Just putting in a plug for per share reserves, per share production and per share earnings and cash flow. Thank you.

Interesting that you choose to apply that to us and how many other companies have acquired reserves and production over the years. I would like to see somebody do that analysis. Good question.

Our next question is from Victor Flores of HSBC.

Yes. Thanks. Good afternoon. Russ, I did say you could drive yourself nuts but I can assure you that I am completely saint.

We never questioned that Victor.

Listen, just sort of following on, on the discussion on Hope Bay, when do you think you will be in a position to share with the market what do you think the likely development plan would be for that asset? The Miramar guys had put out some various scenarios looking at how to potentially tackle the various deposits that are up there. When do you think you'll be in a position to say here's Newmont's vision for this asset?

Victor, this is Guy Lansdown. Victor, as Russel said it's currently in our stage-gate process and the plan is to go through the current phase through the end of this year, beginning of next year. So that's the kind of timeframe we are looking at.

Basically, another say year to year-and-a-half of really wrapping your arms around it?

Yeah. I'm sorry, you had a question about the permits.

No, I am just saying you might want to mention it.

Yeah, we are waiting permits on those north and we will continue to be doing engineering and the work required to put the reminder of our permits in place.

Okay. Great. Thank you. And then just following on two other projects, can you give us update on what your current thought process is on both Akyem and Conga?

Both projects are up for review this year. We haven't given a precise time frame, but we continue to optimize those projects and should bring them forward to our Board for consideration this year.

So, you mean... sorry, so when you mean that you are assessing them, it's not an assessment of we might keep it, we might not. It's an assessment of how best to proceed with them.

Well, this is an assessment with their current environment of construction and projects and the way we are addressing capital factored at Newmont, we've taken both projects Conga and Akyem, put them in our stage-gate process, we are fully evaluating the feasibility and economics. And as we continue to optimize that, we're just trying to decide how best to bring the projects forward and we will bring those forward for Board consideration this year.

Okay. Fair enough. Thank you so much.

Our next question is from David Haughton of BMO Capital Markets.

Good afternoon, and thank you. Russell, a question for you, I know that when you went through slide 5, you'd identified some of the issues that had taxed attached to it and though it didn't, just as a simple summary, for those items that are abnormal, as you've identified them in slide 5 what's the tax payable or tax effect in the P&L?

Hi Dave, good question. The numbers that you see here reflect after-tax, the write-down on the market of securities, which are held up in Canada, the long-term tax rate is 18%, the rates are essentially tax effective at 35%. The merchant banking, goodwill and the exploration goodwill have no tax impact. So the pre and post-tax numbers are the same.

Okay. All I am trying to do here is to get an idea of what's your adjusted net profit after-tax compared to flushing all these things through. That's what I'm trying to get to. Thank you.

I'd say going back to the royalty portfolio, we... what you see on the income statement is net of the tax rate, 35%. However, through some good and effective tax planning, we have reduced that to somewhere between 10% and 15% on an actual cash flow basis. So while we've taken the full 35 to the income statement, because there's some tax attributes, we had some tax planning, that was put into place, in fact related to the Miramar acquisition, we were able to reduce the leakage to about 10% to 15%.

All right. Thank you for that. The other question I have, having a look at the cash flow statement, lots of big numbers going in and out. Can you just confirm that the Franco numbers are in and the cash going out to Miramar is out in 2007 period, it all happened during the last couple of days of the year?

So Dave, what we did is we took the royalty portfolio, the income from the royalty portfolio and showed that in cash flow from discontinued operations. So that's effectively below the line. Again what we're trying to show is what's indicative going forward, we have to say it will on be the plight next year. So we went back to '06 and '05 and did the same treatment and took those cash flows related to that royalty portfolio and put it down into discontinued operations.

All right. Thank you very much, Russell.

Thanks, Dave.

Our next question is from Mark Smith of Dundee Securities.

Yeah, just a very, very quick question. Just as you... if you are to deliver additional interest in Batu Hijau to the Indonesian government or locals at what point in the ownership structure, do you start to equity account it rather than consolidate it?

Yeah David. That's an interesting question. Where we are is we end up consolidating because of the post Enron, if you want, special purpose entities we have a 45% economic interest in PTNNT. We do consolidate because of our disproportionate share in the economic benefits of the partnership that sits above that. While it's not an exact science and it's a function of the deals we structure, whether these deals are carried interest or whether we actually collect cash. I'd say that just as a best-case estimate, probably the '09 timeframe, we would end up deconsolidating if we carry the interest, if we sell it for cash that might happen sooner. But again it's a function of these deals and the transactions we enter into. So it's hard to give you an exact date. It will be a function of, as Dick says, how the negotiations progress and where we end up on providing financing or not providing financing. As part of that November 30 offer to the local governments we did provide what we believe to be a very attractive financing scheme that would encourage them to take ownership under our financing, because quite frankly we would like them as long-term partners with us on the Batu Hijau project.

All right. Thanks very much.

Our next question is from Terry Ortslan of TSO & Associates. Terry Ortslan - TSO & Associates: Thanks. Russel, the Miramar Hope Bay numbers are in the... on slide 6, advanced project numbers?

Yes. Some of it’s in advanced projects and some of it's in exploration. That's about 30 in each, 30 of it in the advanced projects and about 30 in exploration. Terry Ortslan - TSO & Associates: Okay. On the CapEx numbers, what's the sustaining capital component of that $1.8 billion to $2 billion number that you have for this year?

Now, $1 billion to $1.1 billion of the three big projects that 600, 650 being Boddington, 200 on the power plant and roughly the same down in Peru just for round numbers. And the balance being sustaining and other in the operations. So, when we look at it, it's roughly 50%, 55% those three big projects and the balance right evenly across the portfolio. Terry Ortslan - TSO & Associates: Right. And you also gave us the assumption for the, for the cost by I think $70 or $80 barrels of oil, is that?

Yes, $80. Terry Ortslan - TSO & Associates: And what's the sensitivity for each 10 bugs or so.

We run about 3 million barrels a year. Terry Ortslan - TSO & Associates: Okay. Fair enough. All right great, thank you.

Thank you.

Our next question needs from Damon Wells of Damon Wells Interests.

Good afternoon. Could you give us some idea of these higher than nature of your extensive landholdings of which, and those part of that might one day be perspective I understand the acreage of the square miles is quite huge but could you quantify and describe that please?

Could I quantify, probably If have the 10-K in front of me, I could give you the hectares that we own. But, I would tell you we have substantial land positions in Nevada where we are behind the U.S. Government, the largest landholder in Nevada. Some areas highly prospective, some areas we are already operating on and others where we have attended facilities like our power plant. So, we have many usages of the assets that we have in Nevada, still some exploration opportunity there. In addition we've properties in Peru, where we think the Conga District and around Yanacocha continues to be prospective for us. So, we still have opportunities there and of course Canada we have Hope Bay highly prospective area, a big green stone belt, which as just a small part of it has been explored to date. And then finally, we still have some areas in Indonesia, under our contract of work and do we also have some properties still near, some of our underground in Australia. And in Ghana of course we have the half of north projects still developing along that strike. We still have exploratory work going on. So, we continue to feel good about the project around half.

Well, that's good...

Actually I don't have the exact numbers, but again, we think there is a good option to be had in Newmont with respect to our ongoing ability to deliver to exploration and the numbers are in the 10-K for our land holdings.

That's very encouraging. Thank you for answering the question.

You're welcome. Thank you for your question.

[Operator Instructions]. And our next question comes from Brian MacArthur of UBS Securities.

Good afternoon. I was wondering if you can give me any guidance on the 2% that you proposed to, sell to the other partner, was that based on the 2006 valuation, 2007 valuation or can you give me any guidance whatsoever?

Yes Brian, again as I said we have two valuations, we gave you the numbers for the interest but on 100% basis the '06 was $3.6 billion, the '07 was $4 billion. I will say that as we work through the valuation that was required at the end of '07 we expect it to be significantly higher than that but again we are still working through that evaluation. The offer we made to the local government in order to encourage them to participate in the project was for the '07 share at the '06 price. So, it was based of the 3.6, valuation of 3.6 billion on a 100% and it was carried interest. So they had accepted the financing offer we provided.

And sorry, the other 2% that one, under the same deal.

That is just the only 2% with carriers that we have completed Brian.

Okay. So that was done under those terms okay. Thank you.

All right. Thank you very much everyone for your attendance and your questions today, we know a number of you have a lot of work to do so we're going to let you get back to it and we have a lot of work to do, we are going go back to running our gold company to deliver maximum value to shareholders. Thanks.