Transcript from NCM HY Results - 16 Feb 2023

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Transcript from NCM HY Results - 16 Feb 2023

MORE RELEVANT SECTIONS ARE IN BOLD

Newmont Bid RNS:
https://www.newcrest.com/sites/default/ ... 216_Update on non-binding indicative offer from Newmont - Market Release.pdf

RNS:
https://www.newcrest.com/sites/default/ ... 6_Newcrest 2023 Half Year Results - Market Release.pdf

Presentation:
https://www.newcrest.com/sites/default/ ... 6_Newcrest 2023 Half Year Results - Presentation.pdf

Webinar:
https://edge.media-server.com/mmc/p/q6r6o5wr

(Transcript from Seeking Alpha used as basis for transcript)

Newcrest Mining Limited Q2 2023 Results Conference Call - February 16, 2023

Company Participants
Tom Dixon - Head, IR
Sherry Duhe - Interim CEO
Dan O'Connell - Interim CFO
Suresh Vadnagra - Chief Technical & Projects Officer
Craig Jones - Interim COO

Conference Call Participants
Rahul Anand - Morgan Stanley
Kate McCutcheon - Citigroup
Levi Spry - UBS
Andrew Bowler - Macquarie Research
Mitch Ryan - Jefferies
Anita Soni - CIBC Capital Markets
Daniel Morgan - Barrenjoey Markets
John Tumazos - John Tumazos for Independent Research.
Matthew Greene - Crédit Suisse

Tom Dixon
Good morning, and welcome to Newcrest Mining's Half Year Financial Results Conference Call. This is Tom Dixon, Head of Investor Relations for Newcrest. This call is being recorded today, Thursday, the 16th of February 2023, and I would like to remind you that Newcrest is a U.S. dollar reporting entity, and all dollar references in the slides today are to U.S. dollars. Any references to the prior period are to the 6 months ended 31 December 2021.
Just to note that we also request your limit to two questions per caller in our Q&A session at the end of this call, and please rejoin the queue if required. And with that, I'll now hand over to Sherry Duhe, our Interim CEO.
Sherry Duhe
Thanks, Tom. Good morning, everyone, and thanks for joining us today. It's a pleasure to be talking with you all again. With me on the call today is Dan O'Connell, our Interim Chief Financial Officer; Craig Jones, our Interim Chief Operating Officer; and Suresh Vadnagra, our Chief Technical and Projects Officer. Today, we'll give you an overview of the company's performance over the half year, including progress achieved on some of our key growth opportunities. Dan will then take you through the financial results, and we'll then be very happy to take any questions.

Now while we're here today to talk about the results, I would like to acknowledge the nonbinding indicative proposals received from Newmont. Today, we announced that the new Crest Board has unanimously rejected the latest proposal on the basis that does not represent sufficient value for Newcrest shareholders. The Board has, however, decided to allow Newmont access to limited non-public information on a nonexclusive basis so that they may consider any future proposals on terms that appropriately reflect the value of Newcrest. There's, of course, no certainty that any further discussions with Newmont will lead to a revised proposal, and we'll continue to keep the market informed of any material developments in line with our continuous disclosure requirements.

Moving forward, as always, please take the time to read the company's standard important disclaimers on Slides 2 and 3. Newcrest remains relentlessly focused on safety, building an empowered and inclusive culture and developing our sustainability credentials across our business. We were deeply saddened by the tragic loss of life at our Brucejack Mine in October. This news was devastating and a stark reminder that safety must always be our first and foremost fundamental priority. We have completed a comprehensive review of safety at Brucejack, and we're applying our learnings across the business to ensure safety remains at the forefront of everything that we do. Safety at Newcrest is more than just aiming to eliminate incidents and injuries. We're focused on preventing and eliminating sexual assault and sexual harassment from our workplace. And our Respective Work program is progressing to ensure everyone across our global workforce feel safe, respected and valued.

On the sustainability front, I'm pleased to report that we continue to progress multiple carbon emissions reduction initiatives as part of our group net zero emissions road map. We're also supporting our local communities through the Newcrest Sustainability Fund, and we have a number of programs underway as we strive to make a positive sustainable difference.
Now before we go through our half year performance, I really want to highlight the strength, capability and depth of leadership we have on the Newcrest executive team. I'm personally fortunate to have worked across different executive teams and iterations of those teams at multiple companies. And I'll say that our team here is one of the most capable, talented and diverse that I've seen. Our executives complement each other's strengths, whether it be across delivering commercial strategies and outcomes, focusing on operational discipline, delivering large-scale CapEx projects, managing risk or strengthening culture. We want a culture where our people are excited to come to work. And I've said this many times internally, I personally want people to be empowered, enabled and accountable because that's what's going to deliver exceptional results for all of our shareholders.
We have a clear strategy executed over a number of years, and that means today, we're uniquely positioned with a quality portfolio of long-life Tier 1 gold and copper assets. We continue to maintain our long reserve life advantage compared to our peers. We have a high-quality development pipeline and importantly, a significant and growing exposure to copper. Our industry-leading exploration and technical capabilities, coupled with a robust balance sheet position us well to execute our growth strategy.

Operationally, we continue to have a strong and strategically advantageous presence in Australia led by our world-class Cadia mine. Newcrest is also the leading gold miner in the Tier 1 jurisdiction of British Columbia, and our recently published life of mine plans at Lahir shows exciting upside potential.

So let me take you through some of the key achievements for the first half. On the production front, gold ounces increased by 25% compared to the same time last year, while copper production was up by more than 30%. Cadia continued to deliver very attractive cash margins for the business, and Lahir saw record material mine during the half. We also continued to maintain a sharp focus on cost control across the global portfolio, with our group all-in sustaining costs marginally lower at $1,089 per ounce. We generated just under $430 million of cash from our operations. And our first half profit was a solid $293 million, in line with our expectations.

Our first half performance, together with the cash received from Lundin Gold following early repayment of the gold prepaid credit facility, has enabled us to reward our shareholders with an interim dividend of $0.15 per share and a special dividend of $0.20 per share, both fully franked. These dividends demonstrate confidence in our balance sheet, our ability to fund our growth pipeline and our commitment to shareholder returns.
Our growth strategy continued to accelerate during the first half. I'll touch on key milestones achieved and the rest of our exciting growth portfolio in a little more detail. In the last 6 months, we've successfully executed Cadia's 2-stage plant expansion project. Mine development on the next panel cave, PC2-3, is also on track. The first draw bell was successfully fired in September, and our underground infrastructure is now in place. We expect first ore production to be delivered to the mill in the next month or so.

Cadia also marked a key strategic milestone in November with the PC-12 feasibility study approved to execution. PC-12, as you'll know, is the next panel cave at Cadia after PC2-3 and its development is expected to recover around 20% of Cadia's significant resources. The study delivered impressive financial returns with an IRR of 18% and an NPV of $1.4 billion over 16 years. Additionally, we've also applied our technical expertise in deep underground mining to create a more efficient cave. With substantially increased ore production across the life of the project, we now expect to deliver additional gold and copper production over the next decade and beyond.
Moving on to Lahir. We were pleased to release the findings of the Phase 14A feasibility study last month. Its development is another great example of our innovation and creativity in action, with the cutback expected to deliver gold production from an additional high-grade ore source, which would have otherwise been inaccessible through standard mining techniques. Most importantly, the study outlined a higher confidence plan for Lahir.

Over the past year, our team has been working hard to improve our knowledge of the cutback area with its design and stability now well supported by geotechnical drilling. A key driver to increasing production at Lahir is accessing the higher grade mineralization in the carpet ore body as soon as possible. Phase 14A allows us to add high-grade ore into the plant sooner, helping us to bridge the gap before we get to cope. Looking forward, we are assessing exciting options to apply steep wall technologies in the north and east of the copit ore body and an alternative lower cost and simpler seepage barrier design. Together, these have the potential to access additional high-grade zones outside the current ore reserve and extend Lahir's elevated production profile well beyond FY '31. There are very few mines in the world that can show an indicative production profile for 20-plus years with a further 20 million ounces of gold resources that are not currently in the mine plan. We're excited by the possibilities at Lahir, and we look forward to providing updates as the design optimization and associated impact on our longer-term production profile progresses.

It's been nearly 12 months since we added Brucejack into our portfolio, and we continue to see the upside potential of this Tier 1 asset. The transformation program at Brucejack is making great progress. We're on track to deliver around 50% of the ongoing synergy benefits by the end of this financial year, and our Edge program is well underway to target further cash flow improvements. Our progress on the debottlenecking study to increase mill capacity is really pleasing. We've already progressed the study to pre-feasibility, and we expect to lodge the permit application in the next month or so.
We're also very encouraged by our exploration program. Brucejack is one of the world's highest grade operating gold mines and has significant exploration upside. Recent drilling has delivered outstanding results across the Valley of the Kings and Golden Marmont discovery within the surrounding brownfields. These results continue to support the potential for significant resource growth. And with so much potential, we look forward to providing further updates on the Brucejack transformation program.

We continue to believe that Red Chris will soon be a Tier 1 operation capable of producing a significant amount of gold and copper at very attractive cash margins for many years to come. We're excited by the substantial and increasing exposure to copper, which Red Chris is expected to provide in the future. We continue to progress the block cave feasibility study with several optimization opportunities underway to add further value. The feasibility study is due to be completed in the first half of FY '24, and we believe this capture is only part of the longer-term opportunity given the success our exploration team has had to support future potential resource growth and mining optionality.

Our East Ridge discovery has delivered excellent drilling results with mineralization continuing to expand outside of our current resource estimate. Our first exploration target was defined at East Ridge last year. And pleasingly, the East Ridge system continues to remain open at depth. The exploration decline is also progressing at pace, helping us to further explore the Red Chris deposit underground and allowing us to build on our success and experience with block cave developments in Australia. FY '23, as you'll know, remains an investment year for Red Chris. But together with Brucejack, we're very excited for our future in this Tier 1 jurisdiction.

Moving on to Slide 12. We were delighted to further extend the life of our Telfer operation, again highlighting our ability to maximize the potential of our assets. As you're aware, Telfer is strategically positioned in the highly prospective Patterson province, and we are considering potential options to expand the resource base in the open pits and underground to unlock additional value.

The nearby Havieron project provides significant optionality to further leverage the existing Telfer processing infrastructure. Havieron has been a great exploration story, and we continue to assess several opportunities to maximize value and derisk the project through the feasibility study.

And lastly, our equity interest in Lundin Gold, owner of the Fridadelle-Norte mine in Ecuador, continues to deliver significant value. Following the early repayment from Lundin Gold for the gold prepay credit facility in January, Newcrest has received over $450 million of cash flows from the FDN financing facilities. This is a tremendous example of a high-returning asset.


And as you know, we're always looking to expand our existing assets through exploration success with our key focus areas right now, being Red Chris, Brucejack and Havieron. As I highlighted earlier, strong drilling results across these key areas continue to support our view for significant resource growth potential. We're actively looking to grow our copper portfolio in particular. And that progressing our search for the next Tier 1 copper and gold assets, working with the best partners to capture the best ground while leveraging our exploration capabilities and unique mining technical expertise.

We recently announced 6 new emerging projects in highly-prospective jurisdictions with some promising results already received at the Spring Peak project in Nevada with our new partners, Headwater Gold. We look forward to sharing further positive news as we drive the next generation of profitable growth for the company.
And with that, I'll now pass over to Dan, who will run through Newcrest's financial performance for the first half.
Dan O'Connell

Thanks, Sherry, and good morning. It's great to have a good set of financial results to talk you through. In the current period, we delivered an underlying profit of $293 million and operating cash flow of $429 million and an all-in sustaining cost margin of $585 per ounce. The result is notable given we were faced with drought conditions that we hear as well as the temporary suspension of operations at Brucejack following the tragic fatality in October. Pleasingly, we expect our operating and financial performance to improve in the second half. With the continued momentum in gold and copper pricing and a competitive cost structure, we are well positioned to deliver a strong full year financial result.

Our outlook for FY '23 has not changed as we continue to monitor the impact of cost inflation globally. Although the energy market remains relatively elevated and we continue to see high demand and constraints across labor, we are seeing cost pressures easing in some markets such as steel and shipping. We maintain our strategies to ensure that these areas of relief quickly flush through to our cost base, and we are well positioned to maintain strong cost control into the second half.

Newcrest is in great shape and we are on track to deliver our FY '23 group production and cost guidance. We're delivering healthy returns to our shareholders, and we are investing in projects that will deliver value for decades to come.
As Sherry highlighted earlier, we are very pleased to announce today an interim dividend of $0.15 per share and a special dividend of $0.20 per share. As highlighted on this slide, the special dividend represents the full distribution of cash received from Lundin Gold following the early repayment of the gold facility.

Newcrest continues to maintain its very strong balance sheet, and our debt maturity profile is well managed. Our balance sheet strength enables us to be resilient through the market volatility and puts us in an outstanding position to fund the exciting phase of growth we have ahead of us. We retain considerable capacity to execute our pipeline of organic growth projects with access to $2 billion in liquidity. Our debt maturity profile is well managed. Our next corporate bond repayment is not due until 2030, and we have a low weighted average bond coupon rate of only 4.3%.

Moving on to Slide 18. Our balance sheet is well positioned and set up to fund our major capital projects as this slide highlights our strong free cash flow and debt reduction over many years has put Newcrest in an excellent position, well within our financial policy metrics. We also have a long-standing focus on cost discipline and an ongoing commitment to disciplined capital management, which provides us resilience into the future.

Importantly, we continue to maintain our investment-grade credit rating, which is a key external measure of the financial strength of our company and, of course, allows us to access competitive debt capital markets if and when needed. Thanks for your time, and I'll now pass back to Sherry.

Sherry Duhe
Thanks, Dan. I'll close by saying that Newcrest has a strong value proposition, and we are very well placed for future success. We have an outstanding growth portfolio of Tier 1 assets with industry-leading long reserve life and a high-quality development pipeline. We're investing in our profitable and sustainable future that can deliver returns for decades to come. We have a significant and increasing exposure to copper, a key commodity for the energy transition. And we have an incredible overall pipeline of gold and copper growth projects and the commercial, financial, technical and operational capability to deliver them. Newcrest has upside potential through our successful exploration programs and our innovation capabilities to further maximize the value of our Tier 1 assets. This is a fabulous place for the company to be.
So thank you for listening. And with that, we're happy to take any questions.

Question-and-Answer Session

Operator
[Operator Instructions]. Your first question comes from Rahul Anand from Morgan Stanley Australia.

Rahul Anand
Look, the first one from me is around the dividend. I just wanted to get perhaps a bit more color in terms of the dividend payment, you've termed the $0.15 is the ordinary, the $0.20 as the special. And obviously, policy is 30% to 60% free cash. You had negative free cash for the period. with a $0.15 per share minimum. I just wanted to understand that $0.15 per share is an annual number, right, which would then mean that perhaps the ordinary should have probably sat at 7.5%, which is your minimum? Or is the policy for the $0.15 to be per period?

Sherry Duhe
Yes. Rahul, that's a great question. The minimum and the $0.15 is an annual figure. So you're correct in the implication behind that, that we've chosen to pay above that minimum at the half. Our dividend policy, which is unchanged, has always taken into account current period performance and, of course, modeling forward in our ability to fund all of our growth projects under array of different sensitivities around cost profiles, gold and copper prices, et cetera. And so based on the solid results of the period, how we see things going forward for the second half and our retained guidance on production and costs, we felt really confident that we could pay above that minimum and still maintain the balance sheet strength and flexibility to fund our growth that we require.

Rahul Anand
Okay. Yes. It's just, I think, the classification is ordinary, which perhaps continues me, that's fine. Look, the second question is around Lihir. Obviously, at the half year, you're running behind your year-to-date run rate at a group level largely driven by Lihir. What gives you confidence that you can bridge that gap in the second half? Can you talk a bit about sort of you've got 1/5 of maintenance coming up as well at the asset? And then how are you seeing the ore body progress? And then perhaps if you could close that one-off with the 14A feasibility study. You've mentioned today, obviously, the potential to extend the elevated production profile beyond FY '31. If you can provide a bit more color around that and what's changed, that would be much appreciated.

Sherry Duhe
Sure. I'll take a start on that. And then Craig Jones, who is here with us may want to jump in and add a bit. But if you think about kind of what has happened in the first half of the year, the biggest single contributing factor were some quite extraordinary weather patterns and lack of rain. I'm pleased to say that Craig and I went out to visit the site a few weeks ago and brought the rain with us. So we've had a better period of rain. And obviously, we can't predict what happens with that through the second half of the year. But the results that we've seen in January and February have improved significantly, and we had to look very closely at our production guidance, and it's remained unchanged. We have, however, signalled that we expect Lihir will come in towards the bottom end of that range.
As it relates to 14A, as you'll have seen in the release that we put out, there are a number of things that we're looking at that are not yet quantified in those long-term indicative production profiles that we've put out post 2031. But the success that we're seeing in 14A is giving us new knowledge and technical capability that can be worked into that, and there'll be more information on that to come once those studies mature. Craig, would you add any other technical details on that?

Craig Jones
No, I think you covered it pretty well, Sherry. I think next -- this half, we expect to have a higher milling rate because of the water situation, and we'll also expect to see grades to continue

Rahul Anand
I don't think we can hear, Craig.

Sherry Duhe
Speak louder.

Craig Jones
Is it on? Can you hear me? Yes I think Sherry covered it pretty well. This half, we expect to see higher milling as a result of not having the impact of order that we had in the first half, and we can also expect to see higher grades as we move through the mine -- record mining production for the half really sets us up well to continue phasing through the pit into the higher grades.

Rahul Anand
Okay. I did faintly hear some of that, so I think that was all for me.

Sherry Duhe
Thanks, Rahul. We'll check the mics. But I think just to reiterate what Craig has said that we are expecting to see higher mill throughput in the second half. And as we know, 14A helps us to build that bridge to the higher grades in the copit, so we'll continue progressing towards that.

Operator
Your next question comes from Kate McCutchen from Citi.

Kate McCutcheon
A question on the balance sheet. I noticed that you drew more depth this half, but you've also elected to pay up the spatial. Can you just talk me through your thinking there?

Sherry Duhe
Yes. Kate, I'll have a go at that one. I think it's further to the question that I just answered from Rahul. When we look at what dividend will pay out, we don't just look at our current position on the balance sheet, but we look at the next several years out under a range of scenarios in terms of gold and copper prices. project progress, et cetera, to make sure that we have maintained our balance sheet strength and that we can fund through the period. that may result in certain periods and paying out a dividend that exceeds the positive free cash flow for that period, but we look at that on a multiyear basis in order to make that determination. And that was what enabled us to feel confident in this period, we could pay above the minimum.

Kate McCutcheon
I guess my question is you drew down with almost $400 million new debt, but then you're paying out of DB. Just a rationale.

Dan O'Connell
So maybe if I can take that one, Sherry. So the special dividend is a pass-through of the funds received from Lundin Gold on their repayment of the gold facility. We received those funds at the start of January, so they're not featuring in the cash balance you see for the half year. It is the first point on the special. So that's a direct pass-through. And as Sherry said, as it relates to the underlying interim dividend. We've considered the balance sheet under a range of scenarios and are very comfortable that we can both fund future growth and this interim dividend.

Kate McCutcheon - 24m 23s
Okay. And then turning to the Telfer or I guess Havieron what are the next things to work through that before the market will get an update on the feasibility study? I can't see any timing on when we're looking to get that. So interested in your thoughts on that project because it's still core and something that you're still weathered to for Telfer future post '25.

Sherry Duhe
Thanks for that, Kate. And indeed, we haven't put a time frame out and that was deliberate because there's quite a range of options that we're thinking about right now in terms of looking at what's the most value accretive way to take forward not only the Havieron project and the optionality that, that brings into the portfolio, but also looking at other options for extending the life cycle further in Telfer. And then as I mentioned on the -- in my remarks also looking at the wider Paterson province, so there's a lot of priority being put into that work, a lot of focus in that from the team, but we're not going to rush that. We'll take the time that it needs to take. And when we're ready to give an update, we'll bring that out to the market.

Kate McCutcheon
Okay. And just to clarify the plan to FY '25, is the standalone Telfer, it's not relying on anything site to bring down the fixed costs? Just trying to understand when the critical timing is to understand the future?

Sherry Duhe
Yes, that's right. That's a stand-alone piece and the optimization studies of Havieron as they come forward would inform how -- if and how that might change in the future. Telfer has done a great job over the years of continuously managing their costs and extending the life cycle and that's part of those further life extension efforts that are also ongoing.

Kate McCutcheon
Yes. Okay. So, at this stage, happy with no or go under the current timing that you're looking at with everything?

Sherry Duhe
Sorry, I didn't hear happy with? Can you repeat that, Kate?

Kate McCutcheon
Sorry, you're confident that you're not going to have an ore gap. I'm just cognizant that -- there's no timing on Havieron?

Sherry Duhe
Yes. Yes, I think I probably just -- I probably just have to say, Kate, that we'll update once we get to the feasibility study on Havieron. That will be the next update on that.

Operator – 26m 52s
Your next question comes from Levi Spry from UBS.

Levi Spry
First question, I guess, is just around the offer. So, you rejected it as inadequate, but you're allowing BD. I'm just interested in the strategy here. Maybe you can talk us through how you're thinking about the value of NM paper in particular you're going to call out there. And then I guess in terms of the value of your paper, is there any studies or anything that you can bring forward? So, I'm thinking about the Red Chris feasibility study in particular.

Sherry Duhe
Thanks for the question, Levi. And I guess I should first clarify it was an offer. It wasn't a proposal. And we are not offering, I would say, full due diligence, if that's what you're suggesting. I think the offer to Newmont is to share limited non-public information simply because the second proposal that we rejected as just say that, that simply doesn’t offer sufficient shareholder value, but we are in the spirit of being reasonable, willing to have some conversations to help Newmont better understand the total value of our portfolio.
We are a great company with low-cost mines with a long reserve life and a growth pipeline. And so, an answer to the second part of your question. Obviously, we know our portfolio very well. We know what we think the upside opportunity is. And we'll continue to, as before, progress all of the studies to the point that they reach technical maturity so we can release them to the market, and that's really unchanged in the face of this offer and approach.

Levi Spry
And you work on their, the value of their paper?

Sherry Duhe
Yes. I wouldn't speculate at all on the value of their paper. That would be a question for them to answer. We're really focused on our own company, progressing our strategy and then helping them understand the full value of our company.

Levi Spry
Okay. And just in terms of Lundin, obviously, they're going really well. Can they repay any more of these facilities back quicker for you to flush out?

Dan O'Connell
I'd say that's a matter for Lundin to consider and consider in light of the debt arrangements that we have in place with them.

Operator – 29m 18s
Your next question comes from Daniel Morgan from Barrenjoey.

Daniel Morgan
You just said in reference to Levi's question that you know the portfolio very well. But I'm not sure the market would share that on some of your key assets like Red Chris, Havieron, Golpu, amongst others. Just wondering, are you considering releasing to the market a lot more information on these assets, so the market can appraise the Newmont proposal versus a stand-alone one? So, for instance, Havieron, you committed to a range where you talked about a range of outcomes, just then. Shouldn't we open up to the market more of what this might look like?

Sherry Duhe
Daniel, thanks greatly for that question. I think the simple answer to that is that whenever there is material information that we have that is technically mature, on an ongoing basis, we always release that to the market. We've -- currently in this period, as I've mentioned, we've released the feasibility study outcomes for both Cadia PC-12 and for Lahir 14A. The next 2 off the block, as you mentioned, would be Red Chris and would be the Havieron optimization, and that work is ongoing with priority. And as soon as we have that information, we'll be releasing that to the market as well.


Daniel Morgan
Okay. And just on maybe Golpu. Are you refreshing numbers on Golpu as a priority now that there's a proposal or an offer from Newmont and shareholders may want an updated vision of what that could look like? I know a number of years since the last sort of numbers you've given us?

Sherry Duhe
Yes. Thanks for that question as well. I'll take a crack at it, and then Suresh is with us on the line. He's actually in P&G today, so he may want to add something to that. But Daniel, in this case, I think that it would be premature for us to kick off a bunch of technical work that could be costly and will take some time to go through until we are sure that we've got a line of sight to a mutually agreed fiscal agreement. And so that remains our focus right now working with the government, working with our joint venture partner to determine can we reach that win-win solution that works for all of us, and that would then be a trigger for us to recommence that technical work. Suresh, if you're still on the line, you may want to add anything to that.

Suresh Vadnagra
I'm on the line, and I don't have anything to add. I mean our focus right now, as you said, is very much on finalizing an agreement with the state as well as with our joint venture partners before we would commence any meaningful technical work.

Operator -32m 17s
[Operator Instructions]. Your next question comes from Mitch Ryan from Jefferies.

Mitch Ryan
Just one question from me is regards to the Newmont deal. So, you've obviously declined the offer as you clearly stated, but can you please confirm whether Newmont has or a stated an intent to sign the NDA and take you up on your proposal?

Sherry Duhe
Mitch, thanks for that. Look, what we've said in the release is what I can say, we have rejected the offer. We have shared that news back with Newmont. We've made the offer subject to NDA, et cetera, to engage unlimited non-public information that the next step is with them to decide what they want to do with that.

Mitch Ryan
Okay. So, we haven't yet signed that NDA?

Sherry Duhe
That's correct.

Operator
[Operator Instructions]. Your next question comes from Anita Soni from CIBC.

Anita Soni
Sherry, just a question. You mentioned the dividend. You were using a range of scenarios on your free cash flow outlook on various metal prices. Could you give something, one, the metal price ranges that you were using; and two, the outlook time frame that you were looking at when you determine that you've seen a free cash flow for the dividend declared?

Sherry Duhe
Thanks for that, Anita. I think on the first one, we run a range of different price scenarios, and we don't publicly disclose what those are. I think suffice it to say, we also run a range of other downside sensitivities, as I say, around cost projections, capital costs, et cetera, just to really stress test and make sure that even in sort of blackswan-type of event, we would still have a stable balance sheet, but we don't publish those prices. And then the second part of your question, can you repeat that again?

Anita Soni
The time frame on which you expect to be able to deliver that, yes, free cash flow.

Sherry Duhe
The time frame. And then on that, we really run out over a whole series of years. Obviously, the bigger focus will be over the next 2 to 3 years, but we do run long-term profiles just to check across the cycle given the significant growth projects that we have in play.

Anita Soni
Okay. Just to follow up on a comment you made when you were talking about acquisitions. You mentioned copper and copper and gold acquisitions. Could you kind of repeat what you said? I kind of missed that, and I was just trying to understand where you stand right now in terms of actively looking for perhaps what size of transactions are you looking at when you're looking at copper gold transactions?

Sherry Duhe
Yes. Anita, just to clarify on that because it's a really good question. I wasn't implying any sort of explicit acquisition opportunities that we were looking after. I made a couple of comments, one more generally and just in terms of how we see copper growth in the future. That one is mainly related to the next 2 projects that we have that could -- if completed in the case of Red Chris plus Wafi Golpu get us well over 50% of copper in the portfolio around the end of the decade. I did make another comment that you might be referring to around exploration, and that's obviously much more on the front end of things where it's relatively small amounts of spend that could lead to some very exciting things in the future. We continue to focus, of course, also on gold, but copper has a special place in our heart for all the many reasons that we've been talking about.

Operator -36m 12s
[Operator Instructions]. Your next question comes from Andrew Bowler from Macquarie.

Andrew Bowler
Just quickly on the Newmont offer. Can you give us an indication of how long you'll give them access and sort of how long this process could take? Or is it sort of up to them how fast they go at this stage?

Sherry Duhe
Andrew, that is a great question. And look, this -- I have to remind that this was an unsolicited offer. The company has not been put up for sale, and we have rejected their offer. As such, as you can imagine, we haven't put any timetable on the offer to share some limited non-public information should they choose to take us up on that.

Andrew Bowler
And just on Brucejack, you've got that debottlenecking study that's obviously to the stage now and you've got permitting to come. You talked about lodging that in the third quarter this year. Can you talk about what needs to be done before that happens? And is that lodging? Is that time critical to meet the construction window? Or you think the modifications is small enough, we'd be able to without the seasonal construction mode?

Sherry Duhe
Yes. Thanks. That's a great question. I might let Craig jump in and help on that, given that he's just come out of managing that asset in the last month here.

Craig Jones
Sure. And the focus, obviously, is doing all the right technical environmental studies before we put any permit application in full consideration by regulators, and that works underway. The -- in terms of timing, it's not timing critical for us at the moment. We have capacity within the existing permit conditions to run at higher rates, and we'll continue to do so to the limits of our permit that we currently have, and so not time critical for us at this point in time.

Andrew Bowler
And in terms of the ore sorting you're looking at the moment, can you just give us an idea of the scale of the potential of that project and the potential for the grade-up [indiscernible]?

Craig Jones
Yes. It's early days on that one. We're seeing some promising results from the test work that we've done so far. We will need to run some larger-scale trials to really get confidence in any results before we'd be able to talk about them, but there's some pretty interesting and promising results we're seeing so far.

Operator
Your next question comes from Matt Greene from Credit Suisse.
Matthew Greene
My first question is just on the here, probably a follow-on from Rahul's question earlier. So the 14A study was due in the December quarter, and that slipped into this year. And while 14A is obviously front-end production, there was quite a material change to that life of mine profile. So I guess the question is, is there a risk over here off a write-down, just given you've reset expectations on mill throughputs? And I think the focal some of those recovery studies just weren't feasible in the current environment. So I guess is there a risk of a write-down at here?

Sherry Duhe
Yes. I might let Dan take a crack at the write-down question in light of the ongoing impairment testing we do, where there have been no write-downs triggered in this period. But I would say that as we've talked about when we released that study, a lot of work went into the last year and really getting what I'd call a high confidence production profile that we've put out, albeit indicative long-term profile, but there are a lot of things that we're looking at that could actually significantly improve that profile post 2031.
What we didn't want to do though was build those in until we had more technical maturity around those. And as I say, we've got lots of new, really good information coming in from the learnings of 14A that will help inform those optimization so that we can get them to a technical maturity where they're bankable. Dan, do you want to share anything around the weight-down review process?

Dan O'Connell
Look, I'd simply refer to the fact that we regularly do impairment testing and did so, looking at both Telfer and Lahir in the current period. We take into account a range of considerations. And one of those considerations is obviously that revised profile, revised indicative profile, and you'll see that there was no impairment in the current period.

Matthew Greene
Okay. Just to clarify that, you tested it on the revised life-of-mine profile that you announced a few weeks back with these results?

Sherry Duhe
Yes, absolutely. As you would always do, any time we reach a milestone decision, particularly where that's something that's announceable, that has to be factored into the testing and also, of course, reviewed by the external auditors. And as Dan has said, that did not trigger any impairment of that asset.

Matthew Greene
Understood. That's clear. My second question just on Red Lake. The study, if I recall, I think you were expecting at the second half of last calendar year. So it's about a year late on the optimization. Is it -- can you just talk us through what you're looking at here? And perhaps a bit of an update undercutless caving trials that you've been doing? Are you looking to integrate that into the Red Lake study?

Sherry Duhe
Okay. That's great. If Suresh is still on the line, given that he's got carriage of that project, I might let him talk a bit more about the details. I think we've covered the high level already. But Suresh, if you're there, if you want to share a bit more flavor on the optimization work we're doing on Red Chris.

Suresh Vadnagra
Yes. I absolutely love to talk about the optimization work that we're doing on Red Chris. Firstly, our original time frame for the release of the study was this half of this financial year. We're now saying that the study will be completed in the first half of FY '24. So it's not a 12 months late as you previously suggested. It's not a delay either, it's an extension. There are a number of value optimization options that we would like to run to ground and incorporate into the study rather than handling them or dealing with them subsequently to the study.
That includes looking at different extraction level footprint to try and optimize for value as well as optimize the cash flow. It's looking at different comminution circuits or just looking at the modifications and saying, well, can we do things in a better way than what we previously thought through the FS as well as looking at the timing for the plant expansion relative to the ramp-up in the cases that's at looking at different footprint options as well.
I think in terms of the study itself, it's progressing well. We're pretty excited about some of the value optimization options that we're looking at and are looking forward to sharing those with the market once we've completed the feasibility study. Sorry, there was a second half to the question, but you broke up a little bit. My loan in P&G wasn't great. So if you could just repeat that, I'll answer that as well.

Matthew Greene
Yes. Thanks, Suresh. Thanks for clarifying on Red Chris. The second part was just on the undercutless caving trial that you've been doing.

Suresh Vadnagra
Right. Yes. Look, I think the undercutless trial, we were doing in Cadia has been impacted in terms of its schedule by a number of issues in Cadia, which we've spoken about previously in the market, including 14 event-related issue. We're about to recommence the trial sometime in the near future and intend to progress it. Absolutely, we're still very focused on understanding the opportunity that undercutless caving offers us and incorporating it into some of our future caves, right, not just in regress, but potentially in some of the future codes in Cadia as well.


Operator -44m 0s
Your next question comes from Daniel Morgan from Barrenjoey.

Daniel Morgan
So, in your release on Newmont, you said you've opened up DD on a non exclusive basis. Just wondering, have you had others knock on the door for some or all of your assets? And would you open it up to others on a similar situation?

Sherry Duhe
Yes. And Daniel, I think you probably know what answer I'm going to give to this question. I'm not able to comment or speculate on any other conversations other than those that are material and market-sensitive and ready to be shared. And I would just clarify again that we've offered some access to limited non-public data to Newmont as to them to decide if they want to take us up on that offer. And then, of course, for us to discuss what that might look like.

Daniel Morgan
Yes, I understand. Just a follow-up, would you consider either a sale of Havieron or Telfer? I mean that's a Tier 2 asset according to your map. And/or your stake in Lundin Gold, which although that is going very, very well, might be attracting a holding company discount in your structure?

Sherry Duhe
Thanks, Daniel. You're definitely fishing here. Look, I think what I can say is that we continue to focus on our strategy, which is a great strategy. We've got a fantastic portfolio of assets and growth projects. We are very focused as much as we've ever been on capital discipline and really rigorously looking at our growth opportunities to make sure that if they are to progress, they meet our hurdle rates.

In the case of Telfer and Havieron, we've got this optimization study that will really inform our future steps not only for Havieron, but Telfer in the wider Patterson province. And obviously, we continue to look at our portfolio at all times to make sure that we're investing in the best projects and holding the best assets going forward.

Operator
Your next question comes from John Tumazos from John Tumazos for Independent Research.

John Tumazos
Thank you for your presentation, and I apologize for not knowing all the details of your company. First, could you give us a little background on Namosi project in Fiji. I searched on your website and something came up about a woman's farmers market, which I'm sure is appetizing, but probably we need to know more about the geology.
Second, in Red Chris and Wafi Golpu, where there's a lot of capital that maybe the other partner can't fund, how does the dilution formulas work where if you spend and the partner didn't match? How much does your stake increase how quickly?

Sherry Duhe
Okay. Thank you, John, for your questions. I'm not really sure I know what the women's farmers market reference is either. I might have to do some googling to myself to see what that is.

John Tumazos
I've searched on your website, and that's what came up.

Sherry Duhe
Okay. I might -- given that Suresh also has carriage of all of our longer-term projects, inclusive of Namosi, let him give you just a liner overview of the project. It is one that's pretty far out into the future, but could be quite exciting for us.
In regards to Red Chris, Suresh may also want to have something here, but the specific details around our joint venture partnerships and any dilution clauses are confidential in nature. So we wouldn't be able to talk in details around that. But Suresh, is there anything you would add there?

Suresh Vadnagra
Yes. exactly, as you said, right, in terms of the JV partners and the dilution mechanism, that might be part of the JV agreements. Those are confidential, and we can't necessarily discuss them right now. Having said that, we work very, very closely with our JV partners on both of these projects. We're very clear on the approach that we're taking for the development of those projects and the capital costs associated with them and provide them with the detail that they are by able to understand how they support the project as well. I mean it is a real partnership and a collaborative partnership.
In relation to Namosi isles, I also don't know the reference that you're making and we might go to go and have a look at our website to understand that a little bit better. Namosi is an interesting project. It's a great copper deposit, albeit low grade some of the challenges associated with developing that deposit more related to waste management. So how do we deal with the tailings storage facilities where do we locate them, how do we manage some of the waste rock from the mine as well, and then some of the other challenges are related really to infrastructure. So predominantly thought and plant given the location that it's in and some of the limitations of the infrastructure that currently exists in that location.
Now we haven't done any meaningful studies on Namosi for a while now. We constantly, my language, kick the tires on it and try and rethink about Namosi and look at whether we can think about it in a different way. But at the moment, there aren't any active studies going on.

John Tumazos
So the first significant digit could you tell us what the tonnes and grade are?

Suresh Vadnagra
I'd need to look that up. And I think if you look at our resource and reserve statement, I'm pretty sure that the Namosi resources are in there, and that will give you as good an indication of that as you would me.

Operator
[Operator Instructions]. You have a follow-up question from Anita Soni from CIBC.

Anita Soni
I wanted to ask about your Respect at Work program. I think it was introduced about 8 months ago now. I think I recall it at year-end, I think 2022. I'm just wondering, what initiatives you have taken and what sort of results are you seeing? And I'm just trying to understand how effective that program has been to deal with the issue.

Sherry Duhe
Yes. Thanks, Anita. And I think it's probably safe to say that this is going to be an ongoing priority of our company as it is for our industry and society at large forever more to come. There have been any number of things that have come out in terms of training to employees, having lots of different line-led conversations to help develop a common vocabulary around how we talk about this and how we help each other eradicate poor behaviours from the workforce. We certainly have seen an increase in reporting as a result of that, and that's encouraging, not because things are happening because we don't like them to happen, but because we're finding out about it and being able to deal with it.
A recent key step that we've taken is actually to put some new roles in place at each one of our sites. We're calling them respective work managers. And we've also just put in place a corporate respective work general manager, and that's really important to have people that are partnering with all of our site managers and line managers at each site and again, across the company to help build up that vocabulary, the training, the support and the mentoring to get to where we need to go.
This one, for me, Anita, is one that I'm particularly passionate about because in my 30-year career, too many bad things have been happening for too long, and there wasn't a way to actually address those things or to help people to work through that. So whilst it's sounds a bit silly to say that you're excited about something like this, I actually am because I look forward to a day when we're not having these conversations any longer because these things are gone out of the workforce. I've got 2 children who I'd love to invite to come and work in the mining industry one day, and I think this is taking us down that road to where we can make this a safe and respected place to work each and every day.


Anita Soni – 52m 15s
Okay. My second question as a follow-up is just sort of following on one of the other questions in terms of the studies and disclosures. You did say that once you get to a certain level that you disclosed the results of a study. But I have to say as a North American analyst, the results of the study are just from my perspective are really -- it doesn't compare to what we get in North America, because we are able to tire kick the fundamental technical assumptions on what's delivered out there.

So, I guess the question is, if you're trying to daylight value in the value of your company, wouldn’t it be better to a little bit more forthcoming to the analysts in the market with the things that you could disclose, the way they’re disclose in North America helps that effort and if you’re not going to do that, isn’t it reasonable to assume that you’re going to continue to have a discount then as people can’t wrap their heads around or tire kick and get comfortable with some of your assumptions in that.

Sherry Duhe
Thanks, Anita, and probably would love to have an off-line conversation with you on exactly what you're seeing that would help kick the tires more because, as I've said, we will be updating this year as we get to the feasibility on Red Chris, which we're really excited about. And also, as we get to the full year, we'll be giving a more fulsome update on what's happening at Brucejack in the transformation program. And certainly, at that time, once we feel like those things are properly technically assured, we really want you to have a full understanding of the great potential that we're seeing in both of those assets.

Anita Soni
But what I'm talking about is 43-101 document, where the actual feasibility study and the engineer is signing off and all the check samples and everything that they get -- statistics that went behind everything is disclosed so that people kind of take a look at. I had some of these questions on 14A 2 weeks ago, and I mean I didn't really get an adequate answer in terms of what angles and how you were coming up with them. So, in any event I'll leave at that.


Operator
Thank you. There are no further questions at this time. I'll now hand back to Ms. Duhe for closing remarks.

Sherry Duhe
Okay. Well, thanks, everyone, for calling in today. I know it's a very busy day of results and really appreciate your time and look forward to continuing to keep you updated on all the great things that are happening in Newcrest. Thanks again.


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