Newmont Corporation
Q3 2017 Earnings Call Transcript

Published: 26 Oct 2017

[Operator:]

Good morning and welcome to the Newmont Q3 2017 Earnings Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference call over to Ms. Jessica Largent, Vice President of Investor Relations. Ms. Largent, the floor is yours, ma'am.

[Jessica Largent:]

Thank you and good morning, everyone. Welcome to Newmont's third quarter conference call. Joining us on the call today are Gary Goldberg, President and Chief Executive Officer; Nancy Buese, Chief Financial Officer; and Tom Palmer, Chief Operating Officer. They and other members of our executive team will be available to answer questions at the end of the call. Turning to slide 2. Before we go further, 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 Gary on slide 3.

[Gary J. Goldberg:]

Thanks, Jess. And thank you all for joining us this morning. Before I start, I'd like to take a moment to introduce our new Vice President of Investor Relations, Jessica Largent. Jess joined Newmont in 2015 and most recently served as our senior director of planning, working closely with Investor Relations. Before that, she led the IR function at Turquoise Hill Resources. She brings 12 years of mining industry experience to her new role and we're excited to have her in this key leadership position. I also want to take this opportunity to thank Meredith Bandy. Meredith will be leaving Newmont after three successful years leading our IR function. I know you join me in welcoming Jess and thanking Meredith for her many contributions and wishing them both the best of luck. Turning to results, I'm pleased to report another strong quarter at Newmont including reaching commercial production at our Tanami Expansion project. Tom, Nancy and I look forward to presenting the team's latest work to execute our strategy, which includes delivering consistently superior operational performance, maintaining a global portfolio of long-life assets and progressing profitable expansions and prospects on four continents and living up to our commitment to lead the gold sector in profitability and sustainability. Turning for more details on slide 4. We delivered exceptional results this quarter keeping us on track to meet full-year cost and production guidance. This performance is the result of ongoing discipline in improving costs and efficiency and investing in growth across the cycle as production from our newest mines, Merian and Long Canyon, offsets lower production at our more mature operations. We were also honored to be recognized as the mining industry leader in the Dow Jones Sustainability Index for the third consecutive year. Superior operational execution gives us the means to continue investing in the future. We completed the first expansion of the underground mine and mill at Tanami safely, on budget and schedule and expect to generate internal returns of about 35%. We also announced plans to develop Quecher Main in Peru. This project focuses on mining the remaining oxide ore at Yanacocha, which will extend life until 2027 and facilitate future development of our considerable sulfide deposits. Finally, our exploration team is working on four continents to advance the next generation of Newmont mines. Operational excellence also translates to a strong balance sheet and robust returns. We generated nearly $500 million in free cash flow, more than double the prior year quarter. We also generated adjusted EBITDA of more than $650 million and lowered our net debt to EBITDA ratio to 0.4 times. Finally, we increased our third quarter dividend by 50% to $0.075. This performance is underpinned by our commitment to running safe and sustainable operations. Turning to slide 5. Newmont's mines continued to be among the safest in the world. With the last five years, we've lowered our total injury rates by more than 50%. We've also reduced our gold all-in sustaining cost by 22% in that same timeframe, proving that safety and efficiency go hand in hand. Last month, we were honored to be included in the Dow Jones Sustainability World Index for the 11th consecutive year and to be ranked as the mining industry leader for the third year running. Newmont was also rated the sector's top performer for water management, biodiversity and corporate citizenship. Index ranking is based on more than 600 data points. The way I look at it, leading sustainability performance translates into three main things, safe working conditions and good jobs for our employees, responsible economic development and environment management for our host communities and strong returns and growth prospects for our shareholders. We're proud of reaching these milestones. But we also understand there's always room for improvement. Turning to our cost performance on slide 6. Our all-in sustaining costs were $943 an ounce for the third quarter, reflecting strong performance at operations in all regions. We continue to focus on managing the things we control, improving ore body modeling and mine planning, increasing mill throughput and recovery and leveraging technology based on its value and viability. This helps us offset the things we don't control, including lower grades at maturing operations. Our all-in sustaining costs also reflect increased investment in exploration and advanced projects in keeping with our focus on creating long-term value. Year-to-date, all-in sustaining costs of $909 per ounce is well within our 2017 guidance of between $900 and $950 per ounce. Turning to production on slide 7. We produced 1.3 million ounces of gold on an attributable basis in the third quarter, a 7% improvement over the prior year quarter. As I mentioned earlier, this performance is based on lower cost production at our newest mines. It also demonstrates the benefits of managing a global portfolio. Outperformance in North America and Africa has helped us overcome extreme weather events in Australia and South America. And we remain on track to deliver on our commitments. Year-to-date production of 3.9 million ounces of gold puts us on pace to achieve our full year 2017 guidance of between 5.0 million ounces and 5.4 million ounces. Before we turn to our newest project, I'll take a moment to congratulate the team at Merian who celebrated their first full year of operation earlier this month and are hitting their stride with a new production record set during the quarter. Turning to our newest project on slide 8. Earlier this week, we approved the Quecher Main project in Peru. This project will extend Yanacocha's mine life to 2027, add profitable gold production from remaining oxide ores and serve as a bridge to future growth options, including developing Yanacocha's extensive sulfide deposits. Quecher Main is designed to maintain Yanacocha's gold production at about 200,000 ounces per year at incremental all-in sustaining costs of between $900 and $1,000 per ounce. We've improved our development capital to between $250 million and $300 million to develop a new oxide deposit and heap leach facilities. We expect to reach commercial production in the fourth quarter of 2019 and will update our guidance in December. The project will leverage Yanacocha's current infrastructure and defer certain reclamation costs while creating a platform for future growth. Turning to our longer-term growth options on slide 9. In North America, we're advancing Long Canyon Phase 2 as well as multiple underground expansions at Carlin. And we're working with Goldstrike to explore the Plateau property in the Canadian Yukon where we have an agreement to earn up to 80% equity through exploration investment. Plateau now covers more than 660 square kilometers of stake (08

[Nancy K. Buese:]

(10

[Tom Palmer:]

Thank you, Nancy. Shifting our focus to our regional performance. In North America, our teams are delivering solid results and advancing profitable expansions. In South America, we're recovering from difficult weather earlier this year and expecting a stronger second half. And we're also investing in growth at Yanacocha. In Australia, we continued to set record for mill throughput and recently reached commercial production at our Tanami Expansion. And in Africa, we continued to deliver exceptional results primarily due to Full Potential improvements in throughput and recovery and remain on track with our Ahafo expansion projects. Turning to more on North America on slide 15. Our operations are delivering strong results and have produced about 1.7 million ounces of gold year-to-date. This puts us on track to offset the deficit caused by a slide at the Silverstar mine in late 2016. We're now working to de-weight Silverstar as a first step in gaining access to the ore that was covered by the slide. And this production represents upside for 2018 and 2019. At Carlin, we're delivering strong second half results. A successful ground rehabilitation allows us to ramp up production at Leeville. Our Northwest Exodus expansion also continues on course and we recently commissioned power and ventilation systems. Some of you visited our Nevada operations last month and saw the semi-autonomous mining equipment at work in Leeville. We'll also use this technology at Northwest Exodus which is being designed to support autonomous operations. Long Canyon and Cripple Creek & Victor are also performing well and we've accelerated leach pad placements at both operations. Finally, our new Twin Underground mine is underway. Grid development began a month ahead of schedule and we mined first ore in August. This project is expected to improve mill recovery, extend processing life at Twin and reach commercial production in mid-2018. Turning to South America on slide 16. Our operations have turned the corner after the extreme weather impacts of the first half of the year and we're well positioned for a strong fourth quarter. As Gary mentioned, we achieved record production at Merian in August with steady improvement in mine productivity and continued strong performance at the mill. Construction of our new primary crusher is advancing on course and will be completed as we reach fresh rock in the second half of 2018. And we plan to launch our Full Potential program at Merian in the fourth quarter to identify and deliver further value. At Yanacocha, operations have dried out and the team remains on track to meet 2017 production guidance. However, we're now processing higher cost deep transition laws (15

[Gary J. Goldberg:]

Thank you, Tom. Turning to slide 20. Newmont is anchored in four regions where we have the stability and resources we need to continue investing over time. More than 70% of our production and about the same amount of our reserves are located in the United States and Australia. We continue to fund the high-margin projects to sustain future production and improve our return on capital employed. These factors position us to maintain stable returns over the next decade and beyond. We continue to optimize and deliver profitable projects. Turning to slide 21. For the past three years, we built Merian and the first phase of Long Canyon on time and 20% below budget. We reached commercial production at our Tanami Expansion this quarter and will finish Northwest Exodus next year, both expansions add profitable production and service platforms for further exploration. We also announced decisions to fund four expansion projects this year that will improve profitability and extend mine life at Ahafo, Twin Creeks and Yanacocha. Taken together, the nine projects we've approved over the last three years will add annual gold production of up to 1.7 million ounces at all-in sustaining cost of about $750 per ounce for the first five years and generate an average internal rate of return above 20%. Turning to our project pipeline on slide 22. Our pipeline is among the best in the gold sector in terms of depth and capital efficiency. And it gives us the means to maintain steady production while growing our margins and our reserves. Projects included in our outlook are the current and sustaining capital projects you see here, Morrison in Australia, Northwest Exodus and Twin Underground in Nevada and the Subika Underground and Ahafo Mill Expansion in Ghana. Midterm projects that will improve our outlook are shown in green, Ahafo North in Ghana and the Tanami power project in Australia. Finally, we continue to invest in advancing our longer-term projects shown here in dark blue. Tanami power is a new addition to the project pipeline, which I'll describe on slide 23. At Tanami, we're optimizing a project to shift from our current reliance on diesel fuel, which is trucked to the site, to natural gas that's delivered by pipeline. We'll contract with experts to construct the pipeline and two power plants and expect the project to take about 18 months to build and commission. The Tanami power project is expected to create value by significantly reducing power costs and carbon emissions and by improving supply reliability and scalability. We expect to reach a funding decision later this year. Turning to our longer-term production profile on slide 24. Our gold production is forecast to remain at about 5 million attributable ounces for the foreseeable future. And we continue to advance our mid- and long-term projects to sustain profitable production in the outer years. In short, Newmont has a stable asset base with considerable upside. We've provided a seven-year production profile in keeping with our focus on long-term value creation. And we believe this outlook differentiates Newmont. Our focus on long-term value creation shows up in our leading reserve profile. Turning to slide 25. Over the last 16 years, we've added more than 123 million ounces to our reserve base by the drill bit at a cost of just $24 per ounce. And half the gold we'll mine this year was discovered by our geologists. Our reserve profile compares favorably to the gold sector average with 129 ounces per 1,000 shares and operating reserve life of almost 12 years and more than 70% of our reserves located in the United States and Australia. We have a proven track record of converting about 80% of our resources into reserves. And this year, we plan to invest more than $200 million in our exploration program to build on that success. We also have more than 50 years worth of drilling results or more than 40 terabytes of information in our exploration database. This along with our proprietary exploration technology represents an unparalleled asset. Putting everything together. Four years ago, we launched a new strategic direction and a new era of productivity, performance and growth at Newmont. Going forward, we'll continue to execute our strategy but with an eye on the longer-term horizon. We'll demonstrate superior operational execution through safe, stable and profitable long-term gold production, continuous cost and productivity improvement and one of the strongest teams in the mining industry. We'll sustain a global portfolio of long-life assets by delivering ongoing margin growth, leading project development and exploration results and a positively differentiated reserve base. Finally, we'll establish ourselves as the frontrunner in terms of profitable and responsibility through ongoing capital discipline across investments and cycles, superior balance sheet strength and dividends and our ability to create and protect value through leading environmental, social and governance performance. Thank you for your time. I'll now turn it over to the operator to open the line for questions.

[Operator:]

Thank you, sir. We will now begin the question-and-answer session. The first question we have will come from John Bridges of JPMorgan. Please go ahead.

[John Bridges:]

I was just wondering, you mentioned the Morrison layback and that presumably is going to add ounces to the reserve base next year. Could you give us a bit of color on what ounces we can expect from that, maybe costs and maybe if there's a difference to the recovery that we've been seeing from the existing ore reserve there?

[Gary J. Goldberg:]

Yeah. Sure, John. In terms of Morrison, and we haven't yet approved it. It's a sustaining capital project. So, basically, it's about extending mine life. And we've been going through a process. In fact, we delayed approval probably about three or four months, did additional drilling, really focused on metallurgical testing. Tom and I were just out there a couple weeks ago and had a chance to kind of go through where they're at with the project. And the results look to have confirmed what we would have expected from metallurgical recoveries, which is good. And as we get further information together on that, that's one we can provide an update on in our December update when we have Alex Bates, the Regional Vice President, out at Investor Day to provide an update.

[John Bridges:]

So the recoveries are going to be lower than we've seen previously?

[Gary J. Goldberg:]

No, no, no. It confirmed we'd see good recoveries there. That's what we wanted to confirm and we see that coming through fine.

[John Bridges:]

Okay, fine. And then we've seen the first reserve reporting last night. How are you feeling about the reserve exercise that you're busy going through at the moment? Just wondered where you think you could be adding reserves this year.

[Gary J. Goldberg:]

Well, it's still early days as we look around where we've been focusing. We had a target, I think, we put out to the market in terms of about 3 million ounces by the drill bit. And we continue to see how that delivers both at Tanami where we see potential, Subika and potentially also down at Yanacocha.

[John Bridges:]

Yanacocha.

[Gary J. Goldberg:]

I've got Grigore here in the background whispering at me. Merian as well.

[John Bridges:]

Okay. So Yanacocha would be the Quecher Main material coming in, would it?

[Gary J. Goldberg:]

Yeah. It could be more resource there with the Chaquicocha at this stage.

[John Bridges:]

Oh, of course. You were having some success with another layback there, right?

[Gary J. Goldberg:]

Correct. In terms of looking at it, though that's not included in Quecher Main at this stage.

[John Bridges:]

Okay. And you were reiterating that the sulfides were coming on well. Any new developments there?

[Gary J. Goldberg:]

Nothing new. Tom and the team – actually, Dean Gehring will be providing an update at the Investor Day in December.

[John Bridges:]

Okay, cool. Looking forward to it. Thanks a lot. Thanks, guys. Good luck.

[Gary J. Goldberg:]

Thanks, John. Appreciate it.

[Operator:]

Next we have Michael Dudas of Vertical Research.

[Michael S. Dudas:]

Good morning, everybody, and welcome, Jessica. First question is – Gary, we're going to get a lot more information on the long-term outlook in December. But how do you see going into the budgeting for 2018 and beyond, any cost inflation, vendors starting to raise prices, offsets to what Full Potential could provide from an operating basis to maintain the strong cost performance you guys have had through the downturn?

[Gary J. Goldberg:]

Now, Michael, as you say, Full Potential continues to be a core to the business in looking at both efficiency and cost improvements. And I think with the focus and what the team has been working on here as we pull together our 2018 business plan, we'll be able to demonstrate that with the guidance in December as we present it. In terms of inflationary pressures, the key things we keep an eye on; obviously, the Aussie dollar is one element that we don't control directly and we see that flow through. As gold prices come up, that's come up a little bit. But that's pretty much kept in line there with the price. Oil price, it's been bouncing around. We've been using $55. We continue in our outlook going forward to be pretty much in that same ballpark. I think the only place – as we keep an eye is labor inflation and watching turnover as the leading indicator on that both in Australia and parts of North America. It's not any sort of a big jump up, but it's one we're keeping an eye on. Remember, overall, our focus. We build in in our planning process 3% a year inflation into the plans as the teams are developing their plans out for the first five years. So 3% each year. And the objective of the Full Potential effort is to at least offset or more than offset that 3% inflation. So in terms of other areas, mining equipment and supplies, we've extended our agreements, so not seeing anything in a major way there inflationary-wise. And likewise on the commodity inputs.

[Michael S. Dudas:]

In the trip out to the mines in Nevada last month, I enjoyed working the joystick on the semi-autonomous equipment. As you look forward and you're developing expansion to the mine plans or new mine plans, how much greater those types of equipment and concepts are going to be to put forth in the new generation of mines or to help for Newmont as you move forward?

[Gary J. Goldberg:]

Yeah, I'll take a brief shot. And then I'll have Tom Palmer give an update because he's got an extensive background in designing autonomous mines and give a little bit more background. But I think in terms of designing mines, it's clearly all part of the technology that we look at. We look at the value it delivers. You look at what we're developing at Northwest Exodus where we've allowed for. And we'll have autonomous equipment in use there. We have it already in use at Leeville right next door. So that's easy technology to transfer and at Subika. It's not limited by location. We're looking at Subika in Ghana as another place to use the autonomous equipment. And a good example there; you can put operation of that equipment, as you saw, up on the surface. And you don't have to go through the travel time back and forth to the face (31

[Tom Palmer:]

Yeah, thanks, Gary. I think my experience with this technology and automation is, first and foremost, it's fundamentally safer. You're taking human beings out of the process and the system runs without some of that risk. And to build on Gary's comment, the other thing it does, it can take people out of an environment, say, an underground environment where they're not exposed to the same level of things like diesel particulates. So there's a health improvement there as well as safety, first and foremost. In terms of the design of our mines, our underground mines going forward, as we talked about with Northwest Exodus, are designed to accommodate autonomous equipments. So we've got the option to bring that in. The surface mines, it's really something you look at as you go forward. My experience with this type of equipment in the iron ore industry is there was a capital offset when you're building a new mine to bring that equipment in. And the cost of running that equipment is still something that needs to catch up. So retrofitting or introducing autonomous equipment into existing mines is still something that we're looking at and considering. But there's still some work that the industry has to do to have a cost improvement that'll allow you to do that retrofit. So we're keeping an eye on those developments.

[Michael S. Dudas:]

Well, I trust Caterpillar is working hard on that from their end as well. I appreciate your thoughts, gentlemen. Thank you.

[Gary J. Goldberg:]

Thanks, Michael.

[Operator:]

Next we have David Haughton of CIBC. Please go ahead.

[David Haughton:]

Good morning, Gary, Nancy and Tom. Thank you for the update. Now just going over to Quecher Main. Can you just give us a bit of an outline about the throughput you expect, the grade and whether the material would be processed via the heap leach or the mill and what most of the CapEx would be dedicated to? Thank you.

[Gary J. Goldberg:]

David, we just happen to have RSVP here. And I'm going to introduce Dean Gehring who took over now about four months ago as the Regional Vice President and I'll have him handle that question. Dean.

[David Haughton:]

Thank you.

[Dean Gehring:]

Okay. Thanks, Gary. David, it's a good question. Quecher Main is just largely an extension of what we've been doing at Yanacocha for a number of years. Most of the capital is dedicated toward just building a new leach pad facility. We'll largely use existing equipment. The grades are similar to what we've been mining before in that area. And it's reflected in our guidance and some of the things that Gary said earlier about what we expect to see in terms of production. So it's all going to be oxide leach production. There isn't anything that's going to our gold mill.

[David Haughton:]

Okay, so all oxide leach. And what do you think the stacking rate might be there?

[Dean Gehring:]

Well, we put in about 16-meter lifts. We'll be doing two a year. So you'll see about 32 meters of stacking per year.

[David Haughton:]

What does that translate into tons, please?

[Dean Gehring:]

I have to look that up because if I gave it to you in tons, then it wouldn't necessarily tell you what it was in meters. So different people ask the question differently.

[David Haughton:]

Okay. Because I'll tell you how I model it. I model it on tons, grade, recovery and that gets me ounces. I don't know what meter lifts mean.

[Gary J. Goldberg:]

But I think at the end of the day, David, you can count – it's going to add about 200,000 ounces a year on a 100% basis once it starts production later in 2019.

[David Haughton:]

Okay. Now maybe one for Nancy. Debt retirement in the quarter, you still got $3 billion of cash. Have you any thoughts of additional debt repayment going forward?

[Nancy K. Buese:]

Yeah, David. As we look at our maturities, we've got one set coming due in 2019 and a bit coming due in 2022. We continuously do liability management work around those tranches. And at this point in time, with where those are trading, it does not make sense for us to do early retirement. But we'll continue to evaluate that. Our current plan would be to pay those tranches off with cash on hand at the time that they mature.

[David Haughton:]

Okay. Thank you very much for that.

[Operator:]

The next question we have will come from Tanya Jakusconek of Scotiabank.

[Tanya Jakusconek:]

Good morning, everybody.

[Gary J. Goldberg:]

Good morning, Tanya.

[Tanya Jakusconek:]

Gary, questions for you, if I could. Thank you very much for the Tanami power project that you're talking about. Just wanted to get a little bit more information there. I know you're mentioning going from diesel to natural gas. Can you just remind me what your power costs are currently now, where you think they'll go and what percentage of your cost structure is power?

[Gary J. Goldberg:]

Yes. I'm having folks help draw that up here because I don't have that at the tip of my tongue. So let's find that and I'll come back here in a moment.

[Tanya Jakusconek:]

All those mines and you don't have them there? It's getting -

[Gary J. Goldberg:]

We have them there. I just don't have it in my memory banks at the top.

[Tanya Jakusconek:]

Okay. Well, then maybe, Gary, another question for you. Just coming back to Twin Creeks. I know we talked about negotiations with Barrick and I know I ask you every quarter. But December is coming. It's not too far away. How are the negotiations going on trying to resolve an amicable contract between the two to get the mineralization through your Twin Creek autoclave?

[Gary J. Goldberg:]

No. We continue to talk with our partner there about what the potential would be for the extension of this agreement. We're also working through as they're assessing different expansion plans and how to take the next step of expansion effectively and efficiently at Turquoise Ridge. So that work continues.

[Tanya Jakusconek:]

And I think they mentioned on their call that you're going to make a decision on that in January of next year. Is that correct?

[Gary J. Goldberg:]

I believe that's what they're targeting is a January capital decision on that expansion.

[Tanya Jakusconek:]

Okay. And just coming back if we have those and maybe just also the capital. What are we talking about in terms of the Tanami power from 35,000 feet, just sort of the range?

[Gary J. Goldberg:]

I'm going to hand over to Tom. I believe he's got both the cost number in terms of power costs and he can – we'll give more detail on the capital as we get a little bit closer to approval, which will be by the end of this year. But over on the power.

[Tanya Jakusconek:]

Okay. Thank you.

[Tom Palmer:]

Thanks, Gary. Good morning, Tanya. The roughly $0.25 kilowatt hour power cost today, diesel-fired power stations at Tanami. And with gas coming in, gas-fired power stations, you can expect to see in the order of 20% improvement there. So other key factors are that the reliability – we won't to see those same issues that we experienced earlier this year with diesel supply and quite a significant improvement in carbon emissions as a result of the cleaner fuel source. So I'm very pleased about that. In terms of -

[Tanya Jakusconek:]

And what percentage of – yeah, and what percentage of your cost is -

[Tom Palmer:]

It makes up about 25% of our costs...

[Tanya Jakusconek:]

Okay.

[Tom Palmer:]

...power generation.

[Tanya Jakusconek:]

Okay. So that would be the impact from that.

[Tom Palmer:]

Yeah.

[Tanya Jakusconek:]

And you could get that in, I think Gary said, in about 18 months once the decision is made.

[Tom Palmer:]

Yeah. Once we got the approval to proceed, we dropped the – there's a north-south power line that runs up through Alice Springs in Australia. So you connect to that and then run across to the mine site. So that's the order of a 400, 450 kilometer pipeline. And we'll run that right through to the underground mine at DBS and then connect to power stations. If you recall, the processing plant and the underground mine are around 45 kilometers apart. So (39

[Tanya Jakusconek:]

So you're talking at least towards the end of 2019, early 2020?

[Tom Palmer:]

Possibly a bit earlier, Tanya.

[Tanya Jakusconek:]

Okay.

[Tom Palmer:]

All going well, the weather looks after us; I'd see that we'd be up and running a bit earlier than that.

[Tanya Jakusconek:]

Okay, so in the 2019 frame. Okay, perfect. Thank you very much. I look forward to getting that capital number.

[Operator:]

The next question we have will come from Lucas Pipes of FBR Capital Markets.

[Lucas N. Pipes:]

Hey. Good morning, everybody.

[Gary J. Goldberg:]

Good morning.

[Lucas N. Pipes:]

Gary, I had a bigger picture question for you. And yesterday, I was on a Freeport call that lasted very long about the issues they're dealing with. Obviously, you have exited Indonesia, but it's not just Indonesia. I think when you look across the industry, kind of resource nationalism is a problem. And how do you think about that? Am I wrong in that assessment? And then more importantly, as you think about your portfolio longer term, is it changing the way you want to allocate capital? Thank you.

[Gary J. Goldberg:]

No. Thanks for the question, Lucas. I look at it a couple of different ways. One, I think in terms of how the industry presents itself to the world from a cost standpoint. The effort to go to all-in sustaining costs was a step in the right direction to try to get a better view out to the world in terms of what the actual cost of production is. And for the most part, we've stayed very true to what that means. That hasn't necessary been the case everywhere. But I know the World Gold Council is taking another look at that approach and making sure that we get a true measure and metric of what the cost of production is out there. And not everything's represented even in all-in sustaining costs. So I think making sure we get the right view on cost out's important because the first thing people look at is what gold price is and what the cost numbers are and say they want a bigger piece of the pie. I think in terms of where we operate, I think we've got very stable regions that we operate in. That doesn't mean we're immune. I know we had the recent efforts in Western Australia to look to raise the royalty rate. And I think that's been a big process and congratulations to the team. At this stage, Alex Bates and the team, they're working with the other gold producers in Western Australia to help educate the politicians in Western Australia and the rest of the marketplace in terms of what the effect of raising royalty rates has. And this is consistent whether it's in Western Australia or anywhere else in the world. If you raise the cost of production through having higher royalty rates, it raises cutoff grades and reduces mine lives. So it's not good for long-term investments. You have to have fair share in your revenues. And I think just being more transparent about what is being shared and improving on that, that's something I know we're working with ICMM. We look at our own reporting of taxes. We have our social responsibility report. We provide that information. But I think that's a key area. On top of that, we've got agreements with governments. You just heard the extension of the agreement in Ghana for five years as a good example of having an agreement where they've been very consistent and lived up to that, a little different than our experience was in Indonesia. And we've got agreements in Peru and agreements in Suriname as well. So I think it's working with the government officials and making sure they understand what our economic situation looks like and what the impact can be in the long term on mine life, community and jobs at the end of the day.

[Lucas N. Pipes:]

Great. Well, very much appreciate your answer and good luck with everything. I look forward to your Investor Day in December.

[Gary J. Goldberg:]

Thanks, Lucas.

[Gary J. Goldberg:]

And thank you, everyone, for joining our call this morning. Our team delivered another strong quarter, keeping us on track to meet production cost and capital guidance for 2017. We also continue to invest in the future with our Tanami Expansion reaching commercial production on time and budget and our Quecher Main project set to extend life at Yanacocha. Finally, we generated even stronger cash flows, giving us the means to maintain robust returns and distinguish ourselves as an industry leader in sustainability. I'll end by inviting you to join us at our Investor Day on December 6, where we'll introduce you to the rest of our regional business leaders, share our refreshed five-year outlook and bring you up to speed in how we're leveraging technology to raise our performance to the next level. Thank you for joining us and have a safe day.

[Operator:]

And we thank you, sir, and to the rest of the management team also for your time today. Again, the conference call has now concluded. At this time, you may disconnect your lines. Thank you again. Everyone, take care and have a great day.