Newmont Corporation (NEM) Q3 2011 Earnings Report, Transcript and Summary

Good morning, and welcome to the Newmont Mining Third Quarter Earnings Conference Call. [Operator Instructions] 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. Sir, you may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us on Newmont's third quarter 2011 earnings call. Joining us today are Richard O'Brien, President and Chief Executive Officer, and other members of our executive leadership team. Before we begin, I'd like to refer you to our cautionary statement on Slide 2 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.

Thanks, John. Those of you on the webcast, we'll begin on Slide 3. In the third quarter, we continued to advance our strategic growth plans. We achieved several key project milestones, including initiation of earthworks at Conga in Peru, and our first concrete pour at Akyem in Ghana. Across our wider project pipeline, we have advanced approximately 20 earlier-stage development assets through our project pipeline in each of our 4 operating regions thus far in 2011. Our investment-grade balance sheet continues to strengthen as we delivered our 11th straight quarter of increase in gross margin, while generating quarterly records of revenue at $2.7 billion, operating cash flow of $1.3 billion and net income of $635 million adjusted. We also ended the quarter with over $3 billion in cash and marketable securities. We also continued to explore one of the most extensive land positions in the gold industry. Across our exploration portfolio, we are currently operating 100 drill rigs around the globe in over 40 locations, spanning greenfields and brownfields projects, as well as surface and underground opportunities. And as we announced on Wednesday, we increased our dividend again for the sixth straight quarter to $0.35 per share based on our average realized gold sales price for the third quarter of $1,695. This is a 133% increase over the year-ago quarter. On an annualized basis, Newmont's dividend stands at a yield of over 2%, which is higher than the current S&P 500 average yield and certainly the highest in the gold industry. And finally, thanks to the continued focus of our employees on disciplined execution, we are maintaining our outlook for production, operating costs and capital expenditures, as described further in our press release. Now I'll turn the call over to Russell Ball, our CFO, to discuss our third quarter results.

Thanks, Richard, and good morning, everyone. As illustrated on Slide 4, I'm pleased to be able to talk to you this morning about another strong quarter of operating and financial results. Clearly, we benefited from a 39% increase in the gold price, realizing $1,695 an ounce, which was $7 or approximately 0.4% lower than the average of the daily fix. This was due to the timing of doré sales, concentrated shipments and mark-to-market adjustments at quarter end in what was a very volatile quarter. Details of the realized gold price calculation for the quarter and year-to-date are included in our 10-Q on Page 49. Net income from continuing operations of $493 million was impacted by a noncash impairment charge of approximately $152 million on an after-tax basis. And this is related to marketable securities of Paladin Energy Limited, a uranium producer, and Pilot Gold, both acquired on April 6, 2011, as part of the acquisition of Fronteer. These charges were offset by a $10 million after-tax gain realized on the sale of a minority position in Lydian Resources. The net noncash impairment of $142 million equates to $0.29 a share on an after-tax basis and results in adjusted net income for the quarter of $1.29 a share. Net income for the quarter was also adversely impacted by an effective tax rate of 36% due to some timing issues and a valuation allowance on certain capital losses. In comparison with the quarter, the effective tax rate for the first 9 months of the year was 30% and our estimated effective tax rate for the year remains somewhere around 30%. The standout number for the quarter was a continued strong operating cash flow generation of almost $1.3 billion, a 48% increase from the year-ago quarter. The portfolio continues to deliver on what we consider to be the most important determinant of long-term value, operating cash flow per share. Moving to Slide 5. Gold production was down by about 7% from a year ago due to the transition from Phase 5 ore production to largely Phase 6 waste stripping at Batu Hijau in Indonesia and lower grades in mill throughput in Nevada. Gold cost applicable to sales of $622 an ounce was up 32% versus the prior year quarter due to a combination of lower production, higher input costs and a higher coproduct allocation of operating cost to gold from copper as a result of the relative outperformance of gold in the quarter. The coproduct accounting issue is, of course, just a geography issue on the income statement and has no bottom line impact. Gold CAS on a net attributable basis was $556 an ounce, again up significantly as a function of lower copper production from Batu Hijau and a lower realized copper price. The realized copper price for the quarter of $2.94 a pound was 20% lower than the year-ago quarter, reflecting both the weaker spot market during the quarter and a provisional pricing mark-to-market loss for the quarter of $74 million or $0.80 a pound. At the end of the third quarter, we had 102 million pounds of copper, provisionally priced at $3.24 a pound. Slide 6 provides a little more detail on the increase in our cost applicable to sales. Increased operating costs, including unscheduled maintenance, higher labor and contracted services costs increased CAS by about $45 an ounce. Lower production at all of our assets, excluding Batu Hijau, at least on a portfolio basis, increased CAS by $36 an ounce. Lower production at Batu Hijau and the coproduct accounting issue discussed earlier increased gold CAS by about $27 an ounce. The balances of the factors on the chart are largely self-explanatory, with a stronger Aussie dollar, a higher gold price, higher fuel costs and lower byproduct, copper and silver revenues collectively adding $45 an ounce. However, with a strong fourth quarter expected, particularly for our Nevada operations as Pete Bajo, Exodus, Chukar and Gold Quarry add significant ounces compared to the third quarter. As such, our 2011 outlook for CAS remains unchanged at between $560 and $590 an ounce, although likely to be towards the upper end of the range. Remember that these numbers are calculated under U.S. GAAP, which generally adds between $20 and $50 an ounce to similar cost calculated under IFRS. On Slide 7, you'll see how are gold margins have expanded over time versus the gold price, as our disciplined focus on execution has yielded consistent margin growth despite industry-wide cost pressures. Based on current spot prices and assuming the top end of our CAS outlook for 2011, we expect our gold margin for the year to be in excess of $1,100 or approximately 65%, a healthy margin by any measure. Turning to Slide 8 and our gold price-linked dividend policy. I wanted to take just a couple of minutes to explain the mechanics of the policy we originally announced in April, and then subsequently enhanced in September. Firstly, the amounts on the slide reflect annual dividend estimates. And since we pay a quarterly dividend, we need to divide the annual amounts by 4 to get the quarterly equivalent. The amount of the quarterly dividend payable is determined by the trailing quarters realized gold price, which can be found in our Form 10-Q and 10-K filings as discussed earlier. The dividend payable in December announced earlier this week of $0.35 a share reflects the realized gold price of $1,695 an ounce for the third quarter. Based on a $65 share price, this results in an effective annual yield of approximately 2.1% or approximately double that of our peers. At gold prices between $1,100 and $1,699 an ounce, the dividend increases or decreases by $0.20 a share for every $100 change in the gold price. At Gold price is between $1,700 and $1,999 an ounce, the dividend increases or decreases by $0.30 a share for every $100 change in the gold price. And then at gold prices between $2,000 and $2,599 an ounce, the dividend increases or decreases by $0.40 a share for every $100 change in the gold price. The result of this formula is that our shareholders will see an increasing share of incremental operating cash flows as the gold price increases. We are able to share these incremental cash flows based on the fact that we have the highest leverage to gold prices through the highest gold production per share outstanding. This allows us to pay the highest dividend per share while still investing organically to grow the business at the top line level. We have been consistent in our belief that at the end of the day, per share metrics has to matter. I believe this commitment to returning capital to our shareholders distinguishes us from our peers and the gold ETF in particular, and provides a compelling investment thesis, especially in the current interest rate environment. With that, I'll turn the call back to Richard.

Thanks, Russell. An overview of our attributable Q3 results by region can be found on Slide 9, with a view of performance versus the prior year quarter. Russell has already discussed the key production and cost variances from Q3. And full variance explanations on our year-over-year performance can also be found in the release, or in our 10-Q. So rather than restate what's already been written, I'll discuss some relevant updates from our operations, and then we can devote a bit more time to your specific questions. We recently announced some organizational changes, which will further strengthen Newmont's leadership team. Gary Goldberg will join Newmont on December 5 as our Executive Vice President and Chief Operating Officer. And Brian Hill will be taking on a new leadership role as our Executive Vice President for Sustainability and External Affairs. Gary joins us from Rio Tinto, where he spent approximately 30 years, and he will be responsible for our worldwide operations, business excellence, health, safety and loss prevention and security. Since joining Newmont, Brian has been instrumental in leading strong and consistent performance from our operating portfolio, and in addition, has built a world-class operations leadership team and has assisted invisibly leading Newmont's culture shift. In his new role, Brian will help Newmont stay at the forefront of sustainability and stakeholder alignment on a global basis. We believe that bringing ESR and Government Relations under the same leadership will enhance Newmont's effectiveness in each of these disciplines at a time when our industry is facing growing challenges to access and government approvals. Turning to Slide 10. Our North American Q3 results were down from last year's third quarter due to lower than expected grades, as well as mine sequencing changes. At Leeville, we had a slight movement in our ventilation/backfill shaft, which impacted planned stope sequencing. The shift is being repaired -- the shaft is being repaired and we are utilizing a secondary backfill delivery system in order to safely maintain our Q4 production level and into 2012. Since completing our remediation work at Gold Quarry this quarter, the pit has been resequenced and we are encountering higher grade mill feed, which should continue throughout Q4. We have also successfully ramped up the Exodus mine and expect to continue to produce at targeted tonnages. Slightly lower grades are reflected in the revised outlook, and we are ahead of schedule with the development of a Pete Bajo underground mine, as we are producing more tons at higher grades than anticipated. And while as Russell stated, we're expecting a strong fourth quarter in Nevada, I can tell you that those plans showing that strength do not put at risk our performance in 2012. The team in Nevada feels confident in its capabilities to deliver this quarter and continuing into 2012 and beyond. In Mexico at La Herradura, quarterly and year-to-date attributable production reached record levels due to increased ore placements at La Herradura and higher ore grade at Soledad and Dipolos. Construction of the Noche Buena mine remains on schedule for completion in the first half of 2012. We are also supporting our partner as they embark on the construction of a gold mill that will have capacity of 8,000 tons per day and could result in an average additional gold production of 60,000 ounces per year on a consolidated basis. Moving to Slide 11. As you've probably read, recent roadblock activity has intermittently affected access to our Yanacocha mine and the Conga and Western Oxides projects this month. Mining operations in the pits were temporarily suspended but are now back to full operation. We continue to engage with central and regional government and community leaders to understand and address the concerns of our stakeholders in that region. Our team in Peru continues to do a very commendable job of working with local authorities for the safety of our people and the public. Turning to our Asia Pacific region on Slide 12. Regional volumes and costs in the third quarter were impacted, as Russell said, by the planned Phase 6 stripping campaign at Batu Hijau. At Boddington, work continues on optimizing the dry plant conveyor circuit to improve availability. Also at Boddington, CAS increased by $102 per ounce, driven mainly by lower tons mined at lower grade, 7 days of unscheduled downtime, mostly related to the conveyor issues, higher coproduct allocation of cost to gold, higher operating costs, and other gold-related costs such as royalties, partially offset by a favorable A dollar exchange rate variance net of hedges. Meanwhile at Jundee, we've increased exploration programs to expand mineralization and we are adding mineral inventory in new areas, reporting an extended mine life. I'll conclude the regional discussion on Slide 13 with Africa. Ahafo's production was down slightly versus the prior year quarter due to lower mill grade, which impacted CAS, as well as higher labor, diesel and royalty costs. In Q3, we successfully completed our AKOBEN audit. This is Ghana's annual EPA review, and Ahafo achieved a blue rating for 2010 performance, 1 of only 2 mines in Ghana to receive that high rating. The Ghana region continues to be our highest growth portfolio region in our portfolio, and we continue to see numerous opportunities around the Ahafo mine for expansion. Concluding on Slide 14. As I noted earlier, we continue to make good progress in advancing our strategic growth plans in each of our 4 regions. And I'd like to close today's call by noting some of the key milestones we've achieved across our development portfolio. At Akyem, since full funding approval in March 2011, the project has continued to advance with confirmation of the main civil and mechanical construction contracts, commencement of bulk earthworks and civil activities, the first structural concrete pour and the establishment of the first set of resettlement villages. At Conga, following the full funding approval, the project has continued to progress: infrastructure works, earthworks construction, drilling, detailed engineering, procurement of materials and equipment and securing remaining permits for construction. At Tanami, following full funding approval in July, the development efforts have progressed according to plans. The pilot hole for the shaft has been completed and the contractor is mobilized. The project will support underground expansion at the Callie and Auron ore bodies, reduce cutoff grade, enhance productivity and facilitate additional mine expansion. The project is expected to add average annual attributable gold production of approximately 60,000 to 90,000 ounces during the first 5 years of production, while also lowering costs applicable to sales for the first 5 years by approximately $100 per ounce. And at Long Canyon in Nevada, drilling is focusing on infill, mineralized extensions and district exploration. Extension drilling continues to highlight growth potential. We have advanced our studies and are on track to submit our plan of operations to begin the permitting process in the first half of 2012. Also in Nevada, we continue to work on several projects, including Pete Bajo, which achieved commercial production last month and is performing above our expectations with better grade and higher tonnage. At our Emigrant project, which is on schedule and on budget, we expect to start mining in the second quarter of 2012, with the first ounces expected to come off the leach pads later next year. At Twin Creeks, we received regulatory approval to commence mining at Vista 7 and we initiated stripping. And at our Phoenix operation, we're preparing to construct a copper leach project, which should add 20 million to 25 million pounds of copper production per year, beginning in the second half of 2013, which should reduce our CAS in Nevada. We're also studying options for a second mill, which would substantially increase Phoenix's copper and gold production. Meanwhile, in addition to the projects receiving full funding decisions in 2011, as I've just described, we're continuing to evaluate longer-term opportunities within the portfolio, such as the Sleeping Giants, Elang, Hope Bay, Cerro Quilish and others. We will keep you up to date on our key decisions and milestones on each of these opportunities as we reach and push through them. Finally, as I've said recently, our company is well positioned, with the right teams in place, a robust portfolio of development projects, the financial strength and flexibility to fund growth, internal growth, and generate economic returns for our shareholders. And as Russ described, we believe we have an industry-leading and unique dividend linked to the gold price. So taken in combination, and as you can see in the record earnings and margins that we continue to earn in this business, we believe that we offer both gold and generalist investors one of the most compelling investment opportunities available, particularly in the current economic environment where world instability and currency continues to build what we believe is a very attractive market for the gold price. So with that, I'd like to thank you all for listening and open the call for questions.

[Operator Instructions] Our first question from John Bridges, JPMorgan Chase. John D. Bridges - JP Morgan Chase & Co, Research Division: I was just wondering you mentioned the problems at Conga, but it seems as if the problems have changed. They've changed, I understand, from people being unhappy about mining to people being interested in how they can benefit from it. I just wondered if you could fill us in a little bit on that.

Yes, John, I think it's fair to say that Conga has been the best of community engagement in getting our permits and the not-so-best in terms of when we're actually in the field and beginning construction. And how does that arise? The permit that we received in support with 3,000-plus members from the community involved a lot of one-on-one engagement of our team in Peru with all of the regional authorities, as well as all the people who live in the region. And as a consequence of that, we've got a big push and support and no one showed up at that initial permitting hearing in anything other than a supportive position. So we started from a very great position. And I think what's happening now, John, is probably as we should expect over the next year or 2 as we continue in construction, we will see this intermittently from time to time. As people, I believe, first, they recognize that we have a lot of people out in the field now actually beginning construction rather than just talking about it. Second, I think they are interested in making sure that their land and water are taken care of and that's something we are absolutely committed to. And thirdly, as you know, we can't every offer everybody a job in the community, but we are really trying to involve the local, local contractors and their employees in participating in what we're doing in the region so that they, too, share in the economics. And I think it's that balance that we will have to continue to explain to people that we are both up for the environmental and social challenges and we want to meet those in ways which are responsive to the community. We're also up for making sure that we provide a long-term basis upon which we can operate in the region, which means we're just going to have to continue to engage with the regional authorities, the people who live in the region. And even as we're seeing here, people from outside the region who are using this as a platform for whatever ill they see in either the country or Peru or related to mining. John D. Bridges - JP Morgan Chase & Co, Research Division: Okay. And then on a happier note, people seemed to be very interested in your dividend. I just wondered whether you might consider putting it onto a sort of variable schedule rather than a step change to avoid missing the step by $5.

John, it's Russ. I'd just go back to the last quarter where we made that step by $1 and we didn't hear a lot of noise at $1,501 and we seemed to have heard an incredible amount of noise at $1,695 wherever we are. John, I think at the end of the day, we'll just stick with the policy. We have tried to make it as clear as possible. And in the event we want to revisit that, we'll let you know, if and when we decide to. But for now, we're holding a course on the adjusted policy, which shares, quite frankly, a significant amount of those operating cash flows and the higher metal prices with our shareholders.

Yes, we're thinking about handing out gold calculators to calculate our gold-linked dividend.

Our next question from David Haughton, BMO Capital Markets.

I've got a question for Batu Hijau. Third quarter, you're usually at the bottom of the pit with the dry season. How is the current quarter looking? Have you had to retreat out of the bottom of the pit? Or are you still in the higher-grade material?

Dave, it's Russ. The third quarter at least for us is a bit of an anomaly. We have effectively mined out all of the Phase 5 ore. There was a little bit left behind from last year, so we are now in the heart of Phase 6 stripping, the wet season is approaching and we will be producing largely from stockpiles until towards the very end of 2013 when we get back into Phase 6 ore.

Yes, I'd like to think of it as we were in bonus time in Batu Hijau Phase 5. We actually thought we were closed out last year, but had a little better weather. And as Russ said, we were able to take advantage of that.

Okay, so tons up and grade down maybe for the next year in a bit. All right. At Yanacocha, I noticed the costs moving up. One of the commentary that we had seen in your report was that there was worker participation, royalties, high diesel. What should we be thinking about for the cost base going forward there?

Dave, for the year, we have provided in the appendix the updated guidance ranges for the regions. You should look to that. We have had some short-term geotech around El Tapado, which is a deposit that was going to deliver a significant proportion of our ounces this year. So we're working around that and we're working around that in a safe manner, and safety above production as always. So we're addressing that issue and that will really be a function of how and when we can access that ore and how much we have to lay back that slope. So you have the guidance for the year. We'll be somewhere between $560 and $600 for the year.

I was thinking further a feel than just this year, Russ.

Yes, as we go forward, David, what I was going to say is I think at Yanacocha, you can continue to expect some labor escalation. I think we're going to see that throughout the portfolio next year. And in addition to that, at Yanacocha, as the mine gets older, we have less flexibility between pits. And so as Russ mentioned, if we continue to see geotechnical issues at Yanacocha, you can expect to see both positives and negatives, depending on where we are going forward with that. In general, I think that we should expect industry kind of wide inflation numbers to impact us at Yanacocha similarly, whether that's around 10% or so from year-to-year or slightly higher, depending on where exactly we end up with some of the grade and other issues at Yanacocha.

Okay. To Boddington, grade off this quarter, saw some of the commentary and listened to what you were seeing. What should we be thinking about into next year? Should we be looking at getting back into the blue grade [ph] material through 2012?

Yes, we'll provide some more precision around guidance for 2012 later in the year. So we'll be able to give you a more of a heads-up on that. I would just say we continue to shake Boddington out on the operational basis. As I mentioned, we had some issues with the conveyor this year. We also had one of our rope shovels that was not available for parts of the quarter. And we're seeing a little bit more rehandling this quarter than we would like to see. So I would hope in a steady-state basis, that we are going to see even though the grades may not change significantly, I think we are going to expect to see a higher ore production rates going forward, hopefully more consistency in the dry plant and particularly in the conveyor part of the dry plant. And the wet plant continues to operate very well. So I think we have capacity and we just have to figure out how to use it. As I look at this, I think Boddington is a place where, much like we've seen at Ahafo, at Leeville, at Phoenix over time, we will certainly improve the performance out of Boddington as we continue to shake it out.

Okay. And for the balance of the year, it looks like a bit of a challenge to get to the guidance level. So are you expecting to pull something off in the fourth quarter or more of the same?

And there, are you speaking specifically, David, at the portfolio level or at Boddington?

Boddington.

At Boddington. Yes, I think what we're expecting is to not have some of the downtime that we've had, mining more ore tons. I think the team has a plan in place and I'd say for the first month or so, we feel like we're kind of on that plan. So hopefully more of that and less than the unplanned downtime.

Right. For both Boddington and Batu, you'd mentioned also on the commentary that there was a higher coproduct cost allocation to gold. Just what do you mean by that? Is that just on the basis of the gold-to-copper ratio or what else is at play?

Yes. So Dave, the ounces and pounds are obviously constant. But it's the relative performance of the gold price versus the copper price that determines how we allocate operating costs to the gold ounces or to copper pounds. So what we saw this quarter, significant outperformance in gold relative to copper. And what that does is drag ounces from copper pounds to gold ounces. And at the portfolio level, somewhere between $10 and $15 an ounce. Remember, most of our copper is coming out of Indonesia, and to a lesser degree, out of Boddington.

All right. Last question, you've had Fronteer assets for a little while now. I didn't see an update on what you're current thinking is. Have you had a chance to had a look at what you've got there, particularly at Long Canyon?

David, what I would say is we have. We continue to pretty aggressively drill that up. And as I mentioned, we are getting prepared to file a permit application in the first half of next year. And as we do that, we'll be able to give you a much more current information on some of the drill results. What I'd say is we continue to see very positive implications of what we see out in the field. And I know most of my team was out in Nevada a couple of weeks ago and had a chance to visit the site. And I'd say to date, it's right on what we thought we were going to get out of this. And we'll continue to keep you informed.

Our next question from Brian MacArthur, UBS Security.

I just want to go back to the dividend. And as you pointed out, last quarter was a plus, this quarter was a minus. But can you just go through exactly how the realized price is calculated? I know there's Page 49. But can you clarify, when you have concentrate sales -- because obviously as we get around quarter end, this could be important and as that Batu Hijau ramps up later, 2 years from now and produces more, is it priced to your concentrate at the time it sailed [ph] for this pricing calculation? Or is it actually the sales when you realize it from the refinery at the end, i.e. what I'm trying to get a bit is does it both move over quarter-end or whatever? It could move like the price couple of bucks, which obviously makes a difference in this whole calculation.

Sure, Brian, it's Russ. There's a couple of things. The biggest determinant is the timing of when we actually sell our doré, and especially in a volatile quarter like this, what we saw is we generally do a flat -- we try and flatten that sales profile. And we just didn't hit the peak, so to speak, for the quarter. The issue on concentrate, and to answer your question directly, is both. When we sell, we declare and we recognize provisional revenue based on the spot price the day of sale. We only get paid somewhere around 97.5% of that because the smelters take that as a discount, and that's pretty standard terms. Then at the end of the quarter, we are forced to mark-to-market. And then in a down quarter, obviously, we saw that on the copper side. We saw a slightly positive adjustment as you'll see on Page 49. So there's a number of factors moving around. The provisional pricing is much less of an issue in my mind than the volatility in this quarter. So really it was question of timing. And when you see a $100 swing, that could make a big difference in your realized price for the quarter.

No, I get all that. I'm just worried about the situation, as you tons go [ph] up in the future, whether that's theoretically can move it by $2 at quarter end or something. Because if you come out like at $1,699 at sometime, you're going to get even more questions because of that as opposed to just volatility on the gold price. So that's why I just wanted to clarify that. The other thing it's done on consolidated, right, the sales?

Correct.

And again, as you buy or sell them, to Batu Hijau, again, that will change the whole -- that won't change the calculation then, I guess?

No, it won't because again the numbers in the Q and the K are all consolidated. And that's what we tied back. The key issue for us was providing a transparent link into the mechanics, which we hope that the table on Page 49 would guide people to and at least let them understand the mechanics and see them from quarter-to-quarter.

No, that's very helpful. I'm not trying to be nuisance. I just want to clarify it exactly because it's obviously going to be important when you look at, as you said, this quarter, you had a 20% -- the $5 cost you 20% in the dividends.

Yes, Brian, it's Richard. I think unintended consequences, trying to get people focused on a gold-linked dividend. We had to focus to something, we wanted it to be transparent. Look, we don't call our people up out in the field and say, "Move the shipments around a little bit so that we can adjust the price." We're also not hedging into a quarter. We're really just trying to let this be an effective price. I think it is so interesting that with that link now, I've heard more talk about average effective gold price with all the gold companies. I think it's great. Just keep asking everybody about how that ties to their dividend policy and we'll be in great shape.

Our next question from George Topping, Stifel. George Topping - Stifel, Nicolaus & Co., Inc., Research Division: See, I noticed there was no cash payments to minorities in Q3. Was none all due to CapEx or is something carried forward?

George, it's Russ. We actually declared a dividend in early October out of Indonesia, so you'll see that in the fourth quarter. George Topping - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And can you tell us how much that is or...

It was $200 million. George Topping - Stifel, Nicolaus & Co., Inc., Research Division: All right. Moving onto Boddington's Q3 grade. Did that reconcile to the block model? Was that as you were expecting for Q3?

This is Guy. The block model that we've got at present is performing well. The grades that we are mining do reconcile back to the block model, so we feel pretty confident with where we are in regard to the grades the block model does have itself. One of the challenges is mining at the rate that we're meant to. We mined at a bit of lower rates than we had planned for the quarter. And as Richard said and Russell said, we are having challenges on the dry plants, but we have a team that is getting on top of this. We've got a project in place to upgrade those conveyors as we speak. And in addition, we're looking at some debottlenecking projects to further debottleneck the dry plant because that's where our bottleneck is. Our opportunity to increase production is in the dry plant. Our wet plant is operating much better than performance. So I would expect that once we get our mining rates up to where they are planned to be, our grade will come along with it. George Topping - Stifel, Nicolaus & Co., Inc., Research Division: Okay, good. And then finally just on Yanacocha. We were anticipating more tons being placed on the heap leach. How are things shaping up there for the expansion for going into Q4?

Yes. I'd say at this point, we look to be on plan for Q4 at Yanacocha, really don't anticipate any issues. And part of the cost structure in -- or sorry, this last quarter having to do with an adjustment on the heap leach, we're not expecting any of that in the Q4 at the current moment.

And George, it's Russ. Just adding to that, we have seen as we step out onto the margin of these deposits more transitional materials and the paleosoil material, which we are stockpiling. And we're referring [ph] at when that goes in either through the mill or on a dedicated leach pad. So we have seen more of that material and that's going into inventory, as opposed to going on the heap today because of obvious concerns around recovery.

Our next question from Mike Dudas, Sterne Agee. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: First question is, one, could you maybe characterize how the labor contractor, equipment rig markets are relative to what your near-term plans are? And also, as you're ramping up the capital spending, are things getting pushed out as it gets more difficult to find the quality people contractors and getting first in line for equipment?

Mike, it's Guy. This is obviously a challenge for everybody, capital cost inflation. The approach that we've taken is on our major projects, we've got our EPCM contractors locked in place. We've got good teams, not only from our perspective but also from our EPCM teams. We are locking in contracts, the construction contracts as we speak. As we said at Akyem, we have all of the major construction contracts in place except for one. And at Conga, we continue to bid out the work. But we have the earthworks construction package in place, and we're bidding the remainder as we speak. So we feel pretty confident that we've got an approach that will address that risk. In addition to that, our equipment, we have placed purchase orders and the like for long-lead equipment such as mills and mining equipment. So we feel relatively confident that we've got good plans in place. In addition, we've allowed metal ounces for escalation in line with industry escalation rates that we can expect. So we feel relatively confident going forward.

Mike, it's interesting -- it's Russ. When you look at the portfolio, North America now for us is one of the more cost-competitive environments to do construction and projects. And to Guy's point, if you look at the Western Australia, in particular, and South America, whether it's Peru or Chile, those are probably the more challenging. So you have look at it on a regional basis. It's not a one size fits all as we see this sort of to speed recovery in the world today.

Yes, Russell is absolutely right. So in North America, we're going to have -- our projects are not going to face as a big challenge as they would, to Russell's point, in Chile and Australia. Peru is hotting up a bit, but we feel we're ahead of the markets and ahead of the projects that are likely to come out. And in Africa, we're in a good position with regard to where we are with contracts and the like. So we feel confident with our path forward.

And Mike, it's Richard. I'd just say that one of the benefits of the portfolio projects we have is it's diversified across the regions. It's not one all big project. We have a number of different-sized projects, and I think that allows us to see the whole portfolio. In some places, we'll have more escalation. In others, there'll be less. So I think that's one of the great things about having a larger portfolio and then certainly, we had several years ago. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: Yes, definitely we're going to get some more credit for your U.S. operations and valuation going forward. My second is, I guess, maybe if Randy's there. When you're looking at -- given your pipeline of projects and the advance that you've made over the past couple of years, how do you characterize -- are you changing the return requirements? Or how you look at what's important to Newmont when you're looking at potential acquisitions, either in size or in adding balance to the company going forward?

Mike, really, it's the 5 main criteria that we keep talking about. We're looking for anything that helps us enhance the combination of competitive growth. On returns, we look for returns usually in that kind of mid-teen level at a relatively conservative metal price, which isn't the easiest thing to do when you burden up acquisitions with premium. We also look at, number three, at opportunities that enhance our exploration position. We obviously try to balance out by keeping our balance sheet intact. As we've talked before, as Richard and Russ both mentioned, we have a bias toward keeping our share count down. We just put all of those into the mix and those criteria continued to be at the forefront of our thinking on M&A as well. Michael S. Dudas - Sterne Agee & Leach Inc., Research Division: So no real changes given the structure and the shape of the market?

No, not really.

I would say just one thing that Randy and the team have been working on is pretty specific country-level cost-to-capital reconciliation in terms of where we see risk, how that risk portfolio is looking, which allows us, again, to look into that entire portfolio and rate and rank our properties and projects across the risk spectrum. So I think a little more precision with that is helping us well.

Yes. Mike, I think is rather than change our criteria, what we're is we're seeing perhaps more favorable opportunities as our currency rises.

Our next question from George Topping, Stifel. George Topping - Stifel, Nicolaus & Co., Inc., Research Division: Just a quick follow-up. I was interested in Conga in Peru, the role of the new Humala government, have they been in contact with you or talked to you, pressurize perhaps? Any information you can give us on that?

Yes. This is just my impression after talking with Carlos Santa Cruz, who is our Regional Vice President. And if you look at the outcome of what's happened since President Humala has been elected, first, throughout his campaign, he was very clear that there was going to be a mining tax put in place shortly after his administration came into office. And when he was elected, shortly after he came into office, he called the mining companies just as he said he would. We engaged in discussions with them. And I think in a relatively short period of time, the mining companies working together and together with the government came up, I think, with something which will be implemented here shortly. But I think something that works for the country, works for us, I think, recognizes that mining is an important and integral part of the economy in Peru. And I think as a result of that, we feel like we were included in the discussion. He gave us a heads-up on what he was going to do, and then it got down to the specifics and we got through it. As we get into Conga, I think that is more of a regional issue than a central government issue. But I would say, again, between ourselves and Buenaventura, I think working closely with central and regional governments, because the central government obviously helps to set the pace for the country and I think can influence the regions in the right way. And I think when we are sitting down with them in the last -- when we have been in the last couple of weeks, we see the kind of support that we would hope for and the kind of leadership that we would hope for. So what I would say is so far, our experience has been very good. We continue to hope that if we engage, they will support and engage back. And so far, that seems to be the case. I think as we get down into the regions and in particular -- these are not what they're called, but what I think of them, the micro regions of the various mayoral districts around Conga, that is really an individual to individual kind of approach. And I think those are more complicated because each of those has their own kinds of outcomes that they're looking for, their own set of priorities and those are not necessarily set with or in conjunction with the central government. So it's kind of piece by piece, which is why if you ever go out our Conga site, you'll see we have a fairly big environmental and community responsibility team. That team is out engaged with the community to make sure we do know what the issues are. And I think even in this period over the last month, we knew there was activity coming. We're pretty well plugged in. What we're trying to do is to respond to those things and let people know that we will listen and that they don't need to stand in the road to protest because that's what leads to people either being in an area where there might get hurt, luckily, that's not happened. But we do have lots of equipment and people out there, and we're just going to ensure that we do everything possible to keep the community, our contractors and our employees safe, while we continue to build the project.

Our last question from John Tumazos, Independent Research.

I pay great attention to the successor companies. After a team of geologists find something like Long Canyon and sell it to a good company like Newmont. And maybe, Richard, to Newmont Mining, such people not on your payroll, outside your company are just as important as your own exploration department. While GAAP accounting requires you to write down Pilot Gold because its stock price fell this past quarter, it surprised me that we didn't hear you say that we bought x million shares of Pilot Gold in the open market because it was a good investment or something like that. Or the other successor to the other half of the team, Renaissance gold. Do you pay particular attention to these project generator companies?

Let me start and then Randy can jump in. John, we've got plenty to do here. And really, we are not trying to build value for shareholders through investing in other companies. Our job is to invest in our assets, our people, the projects that we have. And look, with Pilot, we actually -- well, with both of these securities, as we took them in, we actually had some restrictions on our ability to sell them for the first 4 months. We're just now into that period of deciding what we're going to do with the securities. But we don't really watch successor companies. We've got plenty to do on our own.

John, it's Randy. We held on to 19% of Pilot. We felt that, that was a prudent level to hold onto. We tried to keep a good connection with each of those companies and it fits into the portfolio. Our sense is that we've got a good balance of those, and we will keep an eye on them going forward.

At this time, there are no further questions. I'd like to turn the call back over to Richard O'Brien. Thank you, sir.

Thank you very much. And thanks to all of you for attending our conference call today, and we'll look forward to seeing some of you between now and February when we have our next. Thanks a lot.

This concludes today's conference. You may disconnect at this time. Thank you for your participation.