Good morning, and welcome to Newmont's 2021 Investor Update call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 over to Eric Colby, Vice President of Investor Relations and Global Communications. Please go ahead.
Thank you, and good morning. Welcome to Newmont's 2021 Investor Update. Joining us on the call today are Tom Palmer, President and Chief Executive Officer, Rob Atkinson, Chief Operating Officer, and Nancy Buese, Chief Financial Officer. They will be available to answer questions at the end of the call, along with other members of our executive team. Please take a moment to review the cautionary statement on slide two and refer to our SEC filings, which can be found on our website. I'll turn it over to Tom on slide three.
Thanks, Eric. Good morning, and thank you all for joining our call. As we near the end of an unprecedented year, we have been reflecting on the challenges we've experienced and the lessons we have learned. Although it was a year like no other, Newmont has continued to build on a strong foundation as the world's leading gold company. As a mining industry, we have risen to the challenges brought on by the pandemic and put what is most important first, the safety and wellbeing of our people. As one of the leaders in our industry, I'm proud of Newmont's response and encourage my peers to continue to stay vigilant in our fight against this terrible virus. Turning to slide four and Newmont's industry-leading portfolio. Among our 12 operating mines and two joint ventures, we now have nine world-class assets, with the inclusion of Yanacocha Sulfides in our outlook.
We are growing our presence in Ghana with the development of Ahafo North. We expect to bring both of these projects to full fund decisions in 2021. Underpinning our asset base are the largest gold reserves in the industry, with 96 million ounces of gold and a further 63 million gold equivalent ounces from copper, silver, zinc, and lead. Importantly, almost 90% of our reserves are in the Americas and Australia. We also offer substantial future upside through our resource base, with nearly 75 million ounces of measured and indicated gold resources. Turning to our long-term production profile on slide five. Consistent with our prior outlook, our managed portfolio and two joint ventures will produce more than 6 million ounces of gold per year through until at least 2030, with an improving cost profile.
As you can see here, our portfolio delivers steady gold production over the next decade, balanced across each of our four regions. This profile is further enhanced by the production of more than 1 million gold equivalent ounces from silver, lead, and zinc at Peñasquito and copper at Boddington and Yanacocha. Combined, we will deliver nearly 8 million gold equivalent ounces per year for the next decade, the most of any company in our industry. Turning to slide six. 2020 has been a year of uncertainty for everyone. Newmont has much to be proud of this year. First and foremost, our focus has been on protecting the health and wellbeing of our workforce and local communities. Although the world is still grappling with the pandemic, we remain disciplined in the application of our wide range of controls and safety protocols.
We continued to be recognized for our superior ESG performance, having achieved gender parity on our board and announcing industry-leading climate change targets with a goal to be carbon neutral by 2050. Supported by a proven operating model and a continuous improvement culture, our Full Potential program has now delivered more than $3 billion in sustainable cost and productivity improvements across our portfolio since 2014. We generated over $2.3 billion in free cash flow through the third quarter, more than 95% of which directly benefit Newmont shareholders. By maintaining our discipline across the price cycle, we continue to capitalize on our superior leverage to high gold prices and deliver record financial performance. Earlier in the year, we completed the sale of KCGM, Red Lake, and our interest in Continental Gold, generating total cash proceeds of $1.4 billion.
We continue to demonstrate our commitment to leading shareholder returns, raising our dividend twice during the year and announcing a dividend framework in October that provides returns above our sustainable base dividend in a stable and predictable manner. Through dividends and share buybacks, Newmont remains on track to deliver more than $2.7 billion to shareholders in 2019 and 2020. Turning to slide seven to provide some context on our outlook. At Newmont, we continue to develop our plans based on conservative assumptions. We utilize a $1,200 gold price to calculate our reserves and develop our mine plans. Our productivity assumptions are based on previous best demonstrated performance. Our five-year outlook shows increasing production and improving costs with the inclusion of Ahafo North and Yanacocha Sulfides. We have a lot to be excited about in 2021.
With Musselwhite fully operational after commissioning the new conveyor and materials handling system last month, Full Potential improvements across our portfolio are expected to deliver more than $300 million of value in 2021. Perhaps most importantly, we fundamentally understand the human contribution to climate change, have committed to directing $500 million towards climate initiatives over the next five years, supporting the new targets we have set. Turning to slide eight. At Newmont, our purpose is to create value and improve lives through sustainable and responsible mining. Through our response to the pandemic, our purpose has guided every decision we made and continue to make. I am incredibly proud of how our teams around the world have responded and the sacrifices people have made and continue to make to support our business and the communities in which we live and work.
They have set a standard for leadership in our industry. Looking at just one example of this work. In Mexico, our team there established infrastructure early on that is keeping our employees and surrounding communities safe. Our community response included providing thousands of cleaning kits for health clinics and families, tens of thousands of reusable masks, and thousands of books for distance learning. Across 18 test sites we have established throughout Mexico, we have performed over 50,000 COVID-19 tests, and as a consequence, managed the risk of a significant outbreak. We test our people when they arrive on site, as well as when they depart, so they can return to their families and communities safely. Turning to slide nine and our approach to climate change. We continue to meet our public sustainability targets.
To source from local suppliers, hire within the communities near our operations, respond to community complaints in a timely manner, achieve our previously set emission and water reduction targets, and complete planned reclamation activities. These commitments are part of the fabric of Newmont and essential to our license to operate. As we announced last month, we have raised the bar again and set targets to reduce our greenhouse gas emissions 30% by 2030, with the ultimate goal of achieving net zero carbon emissions by 2050. We have also committed to work collaboratively with our business partners to help reduce their emissions by 15% by 2030, and achieve the greatest mutual environmental benefit. Newmont will continue to strive to be a leader in transparent ESG reporting, and we plan to publish our inaugural Climate Strategy report in 2021, aligned with the Task Force on Climate-related Financial Disclosures. Turning to slide 10.
At Newmont, we take our climate change commitments seriously and make them because our relationship with the planet is absolute. We want a world that is not just sustainable, but thriving for generations to come. As a demonstration of that commitment, we will direct $500 million towards climate change initiatives over the next five years. These funds will be focused on investment in renewable energy and microgrid energy storage projects, as well as piloting new technologies. To further support this commitment, we are implementing a new energy and climate investment standard to drive energy efficiency improvements, formalize the incorporation of microgrid technologies, and integrate energy metrics into our process control systems. Moving now to our five-year outlook on slide 11. Over the next five years, we will steadily improve our attributable gold production to nearly 7 million ounces per year, underpinned by our foundation of nine world-class assets.
Our production profile has been enhanced with the investment in Ahafo North and Yanacocha Sulfides, both of which are slated for approval in 2021. Our All-In Sustaining Costs improved in 2021 and will further improve to between $800-$900 per ounce by 2024 as we deliver the benefits from investments in both the layback and autonomous haulage at Boddington, the current expansion at Tanami, sublevel shrinkage underground mining at Ahafo, a new mine at Ahafo North, the Yanacocha Sulfides project, and the delivery of $500 million in synergies from the Goldcorp acquisition. Significantly exceeding our original commitment of $365 million. This improvement is further supported by sustainable Full Potential improvements across our portfolio of 12 managed operations. Supporting our five-year production profile is an annual investment of $1 billion in sustaining capital and an average of $600 million-$800 million in attributable development capital per year.
Turning to slide 12. Our Full Potential program has delivered more than $3 billion in value since 2014. It is a program I have been leading over the last seven years. I am very proud of what we have achieved. Full Potential is an improvement program that is unsurpassed in our industry in terms of its sustainability and the value it has delivered. Its success goes to the very heart of our operating model and culture at Newmont. In 2021, we expect to deliver a further $300 million of value from Full Potential. Our focus for delivery next year includes advancing our technology initiatives, the rapid replication of best practices across our operations, continuing to leverage our operation support network, something that can only be achieved through our global operating model.
As a great example of this in practice, our global supply chain team is integrated into our technical and operating teams to ensure that the goods and services we purchase generate the most value rather than being the cheapest. A focus on the total cost of ownership is fundamental to our procurement strategy and has been for a number of years. In 2020, this approach resulted in the delivery of $180 million in value, significantly exceeding the $80 million target for this year. It is work like this that has us on track to achieve $500 million of synergies from the Goldcorp acquisition in 2021. Peñasquito is the major driver of this synergy value, and I'm pleased to report that in 2020 alone, we have delivered over $200 million in value from our Full Potential work at this world-class operation.
When we launched Full Potential at Peñasquito last year, our team quickly identified that a crushing circuit at the front end of the mill, the augmented feed circuit, was the key bottleneck in the processing plant. That by working this bottleneck, we could sustainably increase throughput and improve the quality of crushed ore provided to the SAG mills, lifting the overall performance of the processing plant. The value we have delivered this year at Peñasquito has been achieved by working this bottleneck with rigor and discipline. I am very proud of the team for what they've achieved this year, despite all of the challenges that have been thrown at them in Mexico by the pandemic. We remain very focused on continuing to deliver value at Peñasquito as we work to further improve productivity and reduce costs.
I expect that this will ultimately allow us to extend mine life through resource conversion, as we have demonstrated at our other very large open pit mine, Boddington, over the last seven years. Turning to our project pipeline on slide 13. Our organic project pipeline is unmatched in the gold industry and sits as one of the very best in the mining industry. In addition to Tanami 2, which is in execution, we have two key development projects slated for full funds approval in 2021. Ahafo North, which is the best unmined gold deposit in West Africa, and Yanacocha Sulfides, which has the potential to extend Yanacocha's life out to at least 2040. The investment cost and benefits for these two projects have been included in our outlook for the first time this year, and Rob will provide some more details on both projects shortly.
Looking deeper into our pipeline, there is significant value to unlock as we optimize and advance our longer-term projects and lay the pathway to steady production and cash flow well into the 2040s and beyond. We also have an organic exposure to both gold and copper in excellent jurisdictions through Norte Abierto, Coffee Gold Project, and Galore Creek. If you assume that we'll bring just one of these mega projects forward into our production profile at the back end of this decade, then at that time, Newmont's metal production would include around 15%-20% copper. By doing nothing more than the rigorous development of our organic project pipeline, we will have a natural exposure to a metal of growing importance for reducing carbon emissions and facilitating the ongoing transition to a new energy economy.
Turning to slide 14 for a look at our world-class global exploration portfolio. Exploration is a core competency at Newmont, and another area we manage on a global basis in our operating model. The capability to grow our reserve and resource base across our global and balanced portfolio is a distinct competitive advantage. In 2021, we expect to invest around $250 million in exploration, with 80% of this dedicated to near mine brownfield exploration, and the remaining 20% on greenfield work. The weighting of this spend reflects the significant exploration upside potential we see across our existing portfolio of operations. Our drilling programs this year have been impacted by the decisions we took to idle exploration equipment in order to keep our people safe and protect them from the virus. We expect to deliver approximately 60%-70% of our targeted reserve replacement by the drill bit this year.
Our target, which is to replace, on average, 2/3 of depletion by the drill bit, remains firmly in place and is supported by this exploration investment. It is also worth noting that our exploration investment builds on the largest gold reserves in our industry, at 96 million ounces. Turning to slide 15 for a look at a few of our near mine exploration opportunities. At Peñasquito, we are focused on applying our proprietary exploration technology and expertise to a large resource base and very prospective land package, one that has potential to significantly extend mine life. In South America, we remain excited about the upside potential at Cerro Negro, where we have more than doubled our land holdings over the last year and now have access to over 100 known prospects.
At Tanami in Australia, our exploration work continues to identify highly prospective deposits with the potential to both extend mine life and increase production at this world-class asset. The overall deposit is the most prospective of these, and we look forward to sharing more with you on this next year. Last, but certainly not least, our exploration work in Africa is focused on transitioning our open pit operations at both Ahafo and Akyem to highly prospective underground deposits. We look forward to providing you more detail on these opportunities and others early in the new year, as we report our updated reserves and resources. With that, I'll turn it over to Rob to discuss our regional level guidance on slide 16.
Thanks very much, Tom. Turning to slide 17. We have the strongest and most sustainable portfolio in the gold industry. We remain focused on growing margins by really getting back to basics and applying operating, technical, and exploration discipline each and every day. One of our biggest differentiators is a highly engaged and experienced workforce who are collaborating and sharing leading practices and lessons learned. I'm very proud of our team and what they've safely accomplished while navigating an unprecedented year. I can assure you, our focus to drive efficiency and productivity gains is more important and more acute than ever. I'm very excited about the opportunity we have to deliver long-term value through our superior operating model and technical capabilities. Beginning the regional overviews with Australia on slide 18.
Australia remains a cornerstone region of Newmont's portfolio, producing over 1.3 million ounces in 2021 and increasing to between 1.4 million-1.5 million ounces in 2022 and beyond. We're also improving our costs nearly 25% over the next three years, with All-In Sustaining Costs between $650-$750 per ounce beginning in 2022, as our previous and current investments begin delivering significant value. Boddington's true potential improvements will sustain mill throughput of more than 40 million tons per annum and achieve consistently higher recoveries, increasing nearly 3% since 2017. Boddington will deliver higher gold and copper grades through 2023 as we wrap up our multi-year stripping campaign in the South Pit. The implementation of our autonomous haulage system is progressing well and is on track for completion in 2021.
As the world's first open pit gold mine with an autonomous truck fleet, Boddington will improve productivity by increasing mining rates with less equipment and extend mine life by two years. Importantly, we will also improve safety by reducing employee exposure to potential hazards. We're excited about getting the system up and running and very much see further upside potential in the future as we assess replication opportunities at other Newmont operations and projects. At Tanami, we're set to maintain production in excess of 500,000 oz per year through 2022, as our focus on improvements to shift and roster changes will deliver higher efficiencies and increase overall operating time. At the end of 2023 or early 2024, Tanami should reach commercial production on its second expansion and will deliver 550,000-600,000 oz per year at All-In Sustaining Costs of $600-$700 per ounce.
Turning to slide 19 for more on this world-class asset. Our Tanami operation has produced over 10 million ounces over the last 35 years and is a prime example of how our operating and technical discipline expanded margins and unlocked significant value from this asset. In fact, over a 10-year period through 2023, we're on track to deliver a 45% improvement in costs with an 80% production improvement. It's because of the focus on back-to-basics mining practices that earned Tanami the right to additional capital investment. In 2017, we successfully delivered the first expansion project, and in early 2019, we completed the power project, both of which have established a solid foundation for us to continue growing this world-class asset. Our current investment in the second expansion has the potential to extend the mine life beyond 2040.
This expansion will deliver significant value through the development of a 1.6-km-deep production shaft and supporting infrastructure, and increase production by around 150,000-200,000 oz per year, while reducing operating costs by approximately 10%. While the COVID-19 pandemic has posed challenges, changes, and delays for the project, I have been very impressed by the team with their ingenuity and proactiveness to ensure that critical path work can continue safely. Engineering and mine development work are over 50% complete, and about 22% of the overall project is now complete. In October, we achieved a significant milestone, completing the pilot hole, which provides us the ability and guidance we need to be able to develop the new shaft from both the top and the bottom.
We're also well underway on construction of an accommodation village near the underground mine, which is scheduled to be completed by the end of this month and will increase shift productivity by reducing personnel travel times. We are currently working through the bid process for the major contracts, which will be awarded in the new year. This work will give us a better understanding of the full impact of the pandemic on project work at a very remote underground mine in Australia, where we do expect to have stringent border controls in place for at least the next 12 months. Looking further ahead, Tanami Expansion 2 will provide a platform for us to further explore a prolific mineral endowment in the district.
Applying Newmont's extensive deep-sensing soil geochemistry and airborne gravity surveys across the district has delivered a robust portfolio of exciting targets, such as the Oberon open pit and the Auron underground targets, which have the potential to extend mine life and grow production at Tanami. Turning to slide 20 for a look at North America. In 2021, the North America region is expected to deliver over 1.7 million ounces of gold at All-In Sustaining Costs of $915 per ounce, benefiting from a full year of operations at Peñasquito, Éléonore, and Musselwhite. In 2022 and 2023, production will step down to 1.4 million-1.5 million ounces, and costs will trend higher as a result of mine sequencing.
However, it is also important to note that over the three-year period, we will benefit from Peñasquito's significant silver, zinc, and lead production, which is expected to add around 1 million gold equivalent ounces per year. In total, the North American region will deliver between 2.3 million and 2.9 million gold equivalent ounces per year over this time period. Peñasquito is Mexico's largest gold mine, second-largest silver mine, and one of the largest producers of zinc and lead. 2021 will be a very meaningful year as we expect to realize a full year of Full Potential improvements at the mill and reach higher gold grade from the Peñasquito pit. In 2022, we will continue stripping the Chile Colorado pit, which will deliver higher silver and lead production in 2023.
We will also begin stripping the next phases of the Peñasquito pit, which will continue through 2023 and resulting in lower overall gold production levels. Moving to Musselwhite, I'm very pleased to say that just last week, we safely completed two key projects that are critical to ensuring Musselwhite's future production, the new conveyor and the materials handling system. We're currently ramping up to full production and expect to deliver around 200,000 oz of gold in 2021. Annual production will then steadily increase with higher grade in 2022 and 2023 as mining progresses to the north in the PQ Deeps area. Full Potential at Musselwhite is in its early phase, but already the team has successfully identified 25 opportunities for prioritization during initial deployment, and we've begun fine-tuning our focus for 2021.
A couple of the primary value drivers are the optimization of trucking and fleet performance, along with improving our development rates and our backfill practices. At Éléonore, the leadership team has made significant progress driving cultural change and instilling operational discipline with a focus on sustainable improvements through streamlining operational and maintenance practices. By taking a measured approach to fully integrate the updated geological and geotechnical models, we're delivering an optimized life of mine plan that is focused on margins and not volume. In 2021, we expect annual gold production to be approximately 270,000 oz, which is above our steady state production of approximately 250,000 oz as mining transitions to lower levels in the mine. We recently completed the lower mine materials handling system to streamline the transportation of ore to surface as we transition to higher production rates from lower horizons five and six in 2022.
Across the Porcupine, where we're improving underground development rates with several new initiatives underway that will increase tons mined and processed in 2021. The site benefits from higher grades in the Borden underground and the Hollinger open pits in 2022, before Hollinger begins to ramp down in 2023. Porcupine is early in its Full Potential journey, but our team will deliver sustainable value from initiatives to increase recoveries through the lead nitrate circuit and improve stope efficiencies. We're advancing work on the Pamour project, just 10 km from the Porcupine plant, in the form of a lay-back to the existing Pamour open pit. Developing Pamour is expected to extend mine life by more than a decade, providing us more time to explore the Borden, Hoyle Pond and Dome ore bodies to find the next profitable extension of the Porcupine mine.
At our CC&V operation in Colorado, we are extending mine life beyond 2030 with the addition of a resource lay-back, as a result, 2021 production will be slightly lower at 260,000 oz as stripping impacts grade in leach tons placed. Now turning to our South America operations on slide 21. In 2021, the South America region will produce around 1.1 million ounces at All-In Sustaining Costs of $1,035 per ounce. Included in the attributable production outlook is our 40% equity investment in the Pueblo Viejo joint venture, which will contribute 325,000 oz in 2021. COVID-19 has been especially impactful through the South America region, we expect we will continue to see impacts well into 2021. As always, we will continue to prioritize the health and safety of our employees and our communities.
At Cerro Negro, we expect a step up in production next year as we return to more normal operations and reach higher grades. Full Potential also begins to deliver productivity improvements, including higher development rates, which we anticipate will deliver a 40% improvement in ore tons mined by 2024 as we move to mining five or six areas rather than just the three or four areas today. These improvements will deliver $50 million per annum in value when fully implemented. Near-term mine development is focused in the Marianas District, where we anticipate steady production from Mariana Central and increasing production at Mariana Norte in 2021. Emilia begins ramping up in 2021 and will be a major contributor in 2022 and 2023.
We expect the Mariana District expansion to begin adding to production in 2022 and fully ramping up in 2023 from San Marcos and Mariana Norte Este, and work to advance the prospective Eastern District expansion is continuing. At Merian, we'll deliver steady production and costs despite mining harder rock, which improves mine productivity and grade, but it is offset by lower mill throughput. The site is continuing to optimize mill performance in order to balance the impacts of the harder rock, and we will enter the next phase of stripping in the Merian pit in 2023. At Yanacocha, we're transitioning to leach only operations in 2021, as the oxide mill will begin ramping down ahead of the sulfides project.
Our team is very much focused on improving leach pad cycle times and maximizing recoveries, and we are very excited about the opportunity to expand both the oxide and sulfide potential at Yanacocha. Turning to slide 22 for more details on the sulfides project. As one of the largest and most productive gold mines in South America, Yanacocha has been a cornerstone asset to the Newmont portfolio for decades. Within our existing footprint is an exceptional ore body with the opportunity for incremental investments in the sulfides deposits and the ability to support a platform for developing district scale opportunities well into the future. With a multi-decade mine life that provides exposure to gold, copper and silver, the sulfides project generates profitable production while beginning to concurrently reclaim areas of the oxide deposits and assess options to reduce long-term water treatment costs.
The first phase of this project is focused on developing the Yanacocha Verde and Chaquicocha deposits, which will extend operations into the 2040s. In 2020, we progressed our definitive feasibility study work, which included advancing engineering, finalizing capital costs and schedule, refining our geological models and upside cases, and installing initial accommodation infrastructure. We expect to receive full funds approval and move the project into execution in the second half of 2021. Once approved, the project will have a three-year development schedule, with first gold anticipated in 2024 and commercial production in 2025. As a mega project with total consolidated development capital of approximately $2 billion, we are working closely with our partners to ensure alignment as we move forward.
Once completed, incremental average production will be about 500,000 gold equivalent ounces per year at All-In Sustaining Costs of $700-$800 per ounce for the first five full years from 2026 through to 2030. Looking ahead, the potential for second and third phases of the sulfides project could further extend mine life for decades with significant levels of gold and copper production. Turning to the Africa region on slide 23. In 2021, our operations in Ghana will deliver 915,000 oz of gold at an All-In Sustaining Costs of $900 per ounce. Akyem is positioned to deliver higher production and improve costs next year as the site benefits from higher grade ahead of a new layback, which will begin stripping in 2022.
Inclusion of this layback will extend the open-pit mine life by an additional four years to 2027, and will also provide us the future optionality as we continue to evaluate underground and additional open-pit growth opportunities at the site. Full Potential at Akyem continues to deliver value with the team focused on improving mill productivity through advanced process control. With a direct connection to our operation support network in Perth, the team benefit from the sharing of world-class technical expertise, real-time monitoring and coaching, and procedure adjustments to improve throughput and recovery. At Ahafo, our investments have built a world-class goldmine, capable of delivering over 500,000 oz of annual production with improving costs. Next year, we'll reach higher grades in the Subika open pit as we continue to develop Subika Underground, that will deliver higher grades in 2022.
In 2019, we successfully delivered the Ahafo Mill Expansion, which increased mill capacity by more than 50%. The increased mill capacity provided us the ability to change our mining method at Subika Underground to mitigate rock stress, transitioning from long-hole open stoping to a sublevel shrinkage mining method. The change allows us to safely increase tonnage from the underground, improve mining costs, and capture higher efficiencies. Full production from the Subika Underground will occur in mid 2022, with the first production starting in mid 2021. In 2022 and 2023, Ahafo will support the Africa region, achieving annual production of between one to 1.2 million ounces. Ahafo North begins to ramp up in 2023, contributing to the higher production and improving unit costs. The Ahafo district also provides significant potential, which includes underground opportunities at Awonsu, Apensu, and Subika, along with the highly prospective Ahafo North project.
Similar to Tanami in Australia, the ability for Newmont to expand in this prolific region is underpinned by our disciplined investment decisions that have created a solid platform for our future. Turning to slide 24 for more on Ahafo North. Ahafo North is located 30 km North of our existing Ahafo operations and is the best unmined gold deposit in West Africa. This open-pit operation is centered on nine deposits along a 14-km strike length and contains 3.5 million ounces of reserves and 1 million ounces of resources. During 2020, we've continued to advance the permitting process with the Ghana EPA, and the team is very focused on engineering and design work, as well as the construction, procurement, and community planning. As Tom mentioned, we remain firmly on track for a full funds decision in 2021, with a three-year development period thereafter.
When approved, our plans include building a standalone mill to produce an incremental 250,000 oz per year over a 13-year mine life for an investment of approximately $700 million - $800 million. Over the first full five years through 2028, the project will produce 300,000 oz per year at All-In Sustaining Costs of $600-$700 per ounce. Ahafo North functional and technical resources will be supported and shared with our current Ahafo operation, leveraging our proven operating model to reduce duplication in the region. We're very excited about progressing the Ahafo North project and look forward to developing this prolific ore body in the years to come. Finally, wrapping up with Nevada Gold Mines on slide 25.
Our ownership interest of 38.5% of Nevada Gold Mines will contribute an average of 1.2 million-1.4 million ounces of production for Newmont over the next three years, and costs are expected to improve by 2023 to between $850-$950 per ounce. As our operating partner covered during their Investor Day last month, 2021 and 2022 are years of investment to secure the long-term value of the joint venture. NGM is an important contributor to Newmont, we very much look forward to our partner safely delivering the planned ounces at the planned costs. With that, I'll now hand over to Nancy on slide 26.
Thanks, Rob. Turning to slide 27 to review our consolidated capital and expense outlook. We continue to invest in our future. For 2021, we expect sustaining capital to remain steady at $1 billion. Development capital to increase to $900 million due to capital deferrals from 2020 as a result of COVID-19, in addition to spend of approximately $200 million as we advance Ahafo North and Yanacocha Sulfides. Note that this amount excludes approximately $200 million of capital related to Pueblo Viejo expected in 2021. Exploration and advanced project expenditures to increase to $390 million as we resume our most prospective drilling programs and advanced project study work. G&A to improve to $260 million with a continued focus on reducing support costs.
Interest expense to improve by 8% to $275 million, mainly due to our March 2020 refinancing of $1 billion at a rate of 2.25%, and our expectation to repay our 2021 notes due in June. Depreciation to increase, driven by a full year of production at all of our operations. Finally, our consolidated adjusted tax rate is expected to be between 34% and 38%, assuming a gold price of $1,500 per ounce, which includes 6%-9% related to mining taxes. Turning to slide 28. Our balanced portfolio, combined with our discipline and operating model, provides significant leverage to gold prices from the largest in the world. We will continue to generate $400 million of incremental attributable cash flow with every $100 increase in gold price above our base assumption. To be clear, this is free cash flow that directly benefits Newmont shareholders, enabling us to provide industry-leading returns.
Using our conservative $1,200 gold price assumption, our base free attributable cash flow would still total approximately $3.5 billion over the next five years, which now includes our investment in Yanacocha Sulfides and Ahafo North. Our ability to generate cash flow is unmatched. Coupled with liquidity of $7.8 billion, Newmont is in a very strong position to execute our capital allocation priorities. Turning to slide 29. Our capital allocation philosophy remains unchanged. It continues to balance the following three priorities. Reinvesting in our business through disciplined investments in exploration and organic growth projects with steady and consistent capital to fund the business, including investments to achieve our 2030 emissions reduction targets. We continued our leadership position in October in returning cash to shareholders when we announced our new dividend framework, which includes a sustainable base dividend with additional returns at higher gold prices.
Maintaining financial strength and flexibility to sustain the business across price cycles with one of the industry's lowest weighted average cost of debt of 4.2%. We are on positive outlook by Standard & Poor's, and we were upgraded by Moody's to Baa1 credit rating, further demonstrating our balance sheet strength. Finally, we completed our $1 billion 2020 stock repurchase program at an average price of $45 per share, and demonstrating our commitment to leading returns with more than $2.7 billion returned to shareholders in 2019 and 2020 through dividends and share buybacks. Let's turn to slide 30 to expand more on our dividend framework. As we announced in October, our most recent dividend increase was set within our newly established dividend framework.
This framework provides our shareholders with the stability of a base annualized dividend of $1 per share at a $1,200 gold price, and the potential to receive 40%-60% of the incremental free cash flow generated at gold prices above $1,200 per ounce. We will typically reassess the gold price semi-annually and recommend incremental dividend increases when we believe that gold prices have rebased at levels at least $300 per ounce higher than we applied to establish our prior dividend increase. As a reminder, for the third quarter, we chose a conservative gold price of $1,500 per ounce, which resulted in a 60% increase in our quarterly dividend, lifting our annualized rate from $1 - $1.60 per share, clearly leading the industry. While our dividend payout will always be subject to approval quarterly by our board, this framework will result in stability and predictability for our shareholders.
At current gold prices above $1,800 per ounce, we would expect to pay a total annualized dividend of between $2.20 and $2.80 per share. In addition to this framework, we have a number of tools available to deploy excess cash based on the circumstances at the time. These include further strengthening our balance sheet through debt repayments, opportunistic share buybacks, and further dividends. With that, I'll hand it over to Tom on slide 31.
Thanks, Nancy. Wrapping up on slide 32. As we head into 2021, we are very well positioned to generate significant free cash flow and do so for decades to come. Our clear strategy lays the groundwork to truly differentiate Newmont as the world's leading gold company, as we work to continue to demonstrate our commitment to our purpose of creating value and improving lives through sustainable and responsible mining. With that, I'll turn it over to the operator to open the line for questions.
We will now begin the question and answer session. To ask a question you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Fahad Tariq of Credit Suisse. Please go ahead.
Hi. Good morning. Thanks for taking my two questions. First, on Ahafo North and Yanacocha Sulfides, now that they're included in the guidance, is there anything that you're waiting on for the formal approval, or is it just the timing of the official approval next year? That's my first question.
Yeah. Thanks, Fahad, good morning. With Ahafo North, we're largely locked and loaded. We're just working through the final processes with the Ghana EPA, to close out the EIS. There's been a lot of community engagement work as part of that process. I was just working with that regulatory body in Ghana to work through that process. It'll be a cab that will come off the rank, in the earlier part of 2021. We just need to work through that process in Ghana. It's moving very smoothly. For Yanacocha Sulfides, we're still closing out the definitive feasibility study. There is still a good six months of work, as at the second half of the year, for approval as we close out largely the engineering work, to complete that definitive feasibility study.
Okay, great. That's very clear. My second question, on the $500 million of climate initiatives, is there any expectation of cost savings from those initiatives, specifically on, let's say, lowering diesel costs or energy costs for each of the mines?
Yeah. There'll be a mix of things that will come with that investment, and that money is included in our outlook, and it'll be a mix of development capital, a mix of operating expenditure. There'll be a number of instances where we'll get energy efficiency by putting in a better pump, a more efficient engine. We'll install, make an investment in different solar and wind plants. The microgrid technology is really around improvements to how we use energy. We would expect to get some improvements from those. We haven't quantified those improvements and put them into our guidance, they'd represent upside for that investment as it comes through.
Got it. Okay. That's it for me. Thanks.
Thanks, Fahad.
The next question will come from Josh Wolfson of RBC Capital Markets. Please go ahead.
Thank you. First up, on the total cash cost numbers and AISC, the numbers increased slightly versus, I guess, what the prior targets were issued last year. There's obviously been a number of changes.
Yeah
The operations from COVID-19 and then presumably different commodity prices versus the budget of $1,200. Could you maybe walk us through what those changes were on the costs and how we should think about the current projections over the five years on the costs in that context?
Yeah. I'll kick off, Josh, and might get Nancy to comment as well. There are COVID-19-related costs coming really across the board. A variety of different things, whether it's productivity impacts with the different protocols we've got in place, with the different cleaning regimes and so on and so forth, even the changes in mine sequences. There's an amount of money across the board, that is associated with that. If I look through the various regions, North America's mostly in line. When I look guidance on guidance plan on plan, pretty flat. South America's higher, so you are seeing the COVID-19 impacts around Cerro Negro, and that's factoring in some of the travel restrictions. At Yanacocha, you've got some costs associated with delayed stripping that's going through into this year and then some closure costs that are a bit higher. Australia is higher.
You're seeing some increased costs with sustaining capital moving from this year and next associated with autonomous haulage. Rob talked about the roster changes at Tanami. There'll be a bit higher cost associated with those, but you will get productivity improvements over time as that gets bedded in. Africa's largely in line. We're also seeing Nevada. As Barrick covered in their Investor Day a few weeks ago, you're seeing those higher costs coming through that they talked about that have been flowing through to our bottom line. That's a quick summary. I don't know, Nancy, if you wanted to add anything else to that.
Yeah, Tom, I think that mostly covers it. The only other thing I would add is that co-products were lower, and that was really just driven by higher production. Yes, those are the guiding points for the updates to the guidance.
Okay. Looking at 2023 and beyond, the costs are pretty much in line with the old guidance was. Is it fair to assume all the COVID-19 costs are excluded as of that point? Also looking at that, the range, in the future, that $800-$900, at least on the AISC figures, what should we think of maybe as being the more realistic type of cost figures in the current commodity price environment versus what the budget assumptions are?
Yeah. Again, I'll kick off and maybe get Nancy to talk to this one as well. You will certainly see some of those COVID-19 costs washing through in those out years. You are seeing the benefit in those out years that you weren't seeing in prior guidance from the investment in Ahafo North and a little bit of Yanacocha Sulfides coming in the back end of that. You are seeing that flow through. You will see, if gold prices stayed high, you will see some increase in our AISC. Nancy, do you have those numbers at your fingertips to share with Josh?
Yeah, I think the sensitivity is just really around taxes and royalties. The other thing you'll see is in that timeframe is for Australia in particular, TE2 is up and running, that will start to impact unit costs. Relative to the royalties in particular, as that impacts CAS, it's roughly $3 per ounce for every $100 change in the gold price. Hopefully that gives you a little sense of cost. I think that guidance that we provided is generally in line with prior periods.
Great.
Josh, that's about $1,200. It's $3 per ounce, every $100, about $1,200. That helps.
Okay, about $15-$20, Nancy, we can save at least versus today.
Yeah.
One last question on the capital side. When we looked at CapEx guidance last year, it was hard for us to get a perspective on what the outlook was, just given that there was two very large projects that could have been advanced, which are now indicated to be advanced. When we look at the new guidance range, there are some larger projects in the portfolio that could be advanced, as you talked about towards the latter end of the decade.
Are there any sort of big potential swing factors that we should think of in terms of that five-year capital spend guidance, beyond what's already in there? Or does the current CapEx guidance pretty much reflect all of the larger moving parts that could be included?
You are really seeing all of the moving parts now included with those two big projects coming in. I think the back end, year five, that may increase a little bit as we do some more work on projects early on. We'll be working hard to see if there's anything that makes sense to maybe bring into that back end of the five-year. You can largely look at that five years and say the big moving pieces are now in there with the Ahafo North and Yanacocha Sulfides.
Great. Those are all my questions. Thank you very much.
Great. Thanks, Josh.
The next question comes from Jackie Przybylowski of BMO Capital. Please go ahead.
Thanks very much. I just wanted to maybe first walk through the full funds decision for Ahafo North and Yanacocha Sulfides. What is it that the board will be looking for at this point? Is this sort of a stay there company, and you're just sort of waiting on pulling the trigger on these? What exactly is the missing piece still at this point for those two projects?
I'll skip through both of them, Jackie. Expect the Ahafo North launch in the first half of next year, Sulfides in the second half of next year. As we've taken both of those projects through our investment system over the last several years, so they've stepped through from concept to order of magnitude, to pre-feas, to feasibility and ultimately definitive as they come forward for full funds. Both of those projects being of a scale that would ultimately require board full funds approval. Part of our gate review process at each of those steps is to share those projects with the board. Both those projects have been socialized with the board now for a number of years.
They receive regular updates on progress as part of an annual regional review with the board, that have continued this year through our virtual environment and through our quarterly updates to the board. They are very familiar with those projects, and how they're progressing and the likely timeframe for them to come through. To ultimately move to full fund, they'll come through the investment committee that I chair, for formal management approval, and then we'll formally take it to the board at a board meeting. They'll be looking for us to be presenting a project that has addressed the risks, we understand the opportunities, and that we are going to generate a positive value for the business. We have a $1,200 benchmark and an internal rate of return of 15% for a pure gold project.
That is one of the key benchmarks that the board will be looking for Ahafo North. They'll also be looking at our experience with implementing similar projects as we have done. Ahafo North is a blueprint of Merian, which is a blueprint of the Akyem, which is a blueprint of Ahafo. It's right down our wheelhouse. For Yanacocha Sulfides, given it's 50% gold, 40% copper, 10% silver, we'll be looking at a range of commodity prices and looking at a range of different price assumptions for those different commodities and looking at those returns, particularly around a project that has a very, very long life from the first wave of deposits, and then there's a second and a third wave.
It's a little bit different story around Yanacocha Sulfides and its approval, but one that we've been sharing with the board over a long period of time, second half of the year for that one.
This is all information I would figure you'd already have collected. Are you just staggering the project decisions just to make it easier to manage?
Yes. It's more about finishing the due process of definitive feasibility. Definitive feasibility work for Ahafo North is largely done. It's the final permitting process with the EPA to get the permits to proceed. It's largely locked and loaded, but we work through that process with the EPA, which is going very well. Yanacocha Sulfide's still got some more study work to do. It's still got another six months of definitive feasibility. We know enough to be able to, given we expect to approve it next year, we know enough to include it in our guidance. There's still some engineering work for our project team to do to finalize sharpen pencils and the like. There's still a bit more work to do on that one.
Got it. Thanks. Just maybe a completely different question. You mentioned you're publishing an inaugural Climate Strategy report next year. What exactly is that going to look like? Are you going to be publishing new targets for Newmont's approach to climate change? What maybe can we expect that report would contain?
Yeah. It'll be same target, similar reporting just in the TCFD format. Steve Gottesfeld, are you able to speak? I might get Steve to just cover that one for you, Jackie.
Thanks.
Sure, Tom. You pretty much hit it right there, which is we will be putting out our Climate Strategy paper. This will be the first one that we do fully aligned with TCFD. As you saw when we reported in our sustainability report in 2019, we aligned that overall report with TCFD so that you were able to draw that information. This will be an independent report on our Climate Strategy as far as our specific targets, in both the short and longer term, you will see those laid out. We'll be now doing it in accordance with the guidance on TCFD in full. That will be a separate report from the overall sustainability report that we then publish later on in May. You'll see the TCFD-aligned report, I think, in end of February, early March.
Okay. Thanks very much.
Steve, maybe just a quick expansion, just a bit more on TCFD for the group on the call.
Sure. This is the Task Force on Climate-related Financial Disclosures, we will be laying out in a more fulsome way the decisions we're making, choices we're making, how we're doing at the financial risks and other climate-related matters in that report. It's a much more holistic report.
Thanks, Steve. Thanks, Jackie.
Thank you.
The next question comes from Anita Soni of CIBC World Markets. Please go ahead.
Hi. Good morning, everyone. My question pertains to Peñasquito. Could you give us an idea of the kinds of grades that we'll be seeing this year and the throughput level?
Good morning, Anita. I think I'm just looking for Rob. Can you pick that one up, Rob, and take Anita through that for us?
Yeah. I can indeed. Hi, Anita. How are you doing?
Hi. Good. How are you?
Very well, indeed. In terms of the throughput, which is obviously critical, what we're really looking at is a 43 million ton rate through the mill for next year. For the five years, it would kind of average over 42. On the grades, we are kind of kicking around the 0.72% gold, and then it goes up to 0.83%. Where you kind of see in 2024, we've going to got that drop in gold because of the sequence of the mine. We're down around about the 0.4%, but then the gold climbs up, and in year five we're back up to 0.8% in terms of gold. In that low year for gold, we are quite high with the gold equivalent ounces. It kind of balances it out quite nicely. Those are the kind of key figures there, Anita. Hope that helps.
Just to clarify, because I know you guys do metric tons or, sorry, short tons, and then you said percentage, did you mean gram per ton or did you mean percent?
Yes, grams per ton. Yep.
Okay. In terms of tons, is that short tons or long tons? You mean long ton?
I'm going to get corrected here. The long tons.
Long ton. Okay. Just in terms of the Yanacocha Sulfides, you know one of the considerations is the closure costs there. Can you give us an idea of, if you were not to proceed with the Yanacocha Sulfides, what kind of closure costs would you be looking at?
Thanks, Anita. I think that might be another one for you, Rob, if you've got that number, if you can get it.
Yeah. Thanks, Tom. Again, the provisions that we carry on our balance sheet is around about the $3 billion, Anita, is where it sits. Nancy, would that be right? I just want to double-check.
Yeah, that's probably in the ballpark. Yeah, that's correct.
Okay. By proceeding with Yanacocha Sulfides later on this year, I think you said that some of it might be mitigated a little bit. Would that number overall reduce?
Yeah
Is it just a matter of it being pushed out?
I think I'll jump in, and Rob feel free to build on this. A number of things happen with the infrastructure, Anita. You've actually installed a processing plant that can process the water that you use for your new water treatment facility. That can stay beyond. You'd obviously continue to do your concurrent reclamation on the oxide deposits while you're developing and mining the sulfide deposits. That work would continue in parallel. Rob, anything you'd build on that?
No, that's correct, Tom. I think the one thing I'd emphasize, it doesn't mean that those progressive rehabilitation stops. It continues, and that's a really important point. You covered the rest of it, Tom.
Okay. Just in terms of Cerro Negro, you mentioned some of the veins that are coming through. Can you give us an idea of what the longer-term, just an average sustaining capital number or development capital that we should be using at that asset, given that you're developing, I guess, new veins in the next few years?
I can kind of try that.
Go for it, Rob
to give a sense. I'll split it up between the two key areas. Anita, in the Marianas district, we're kind of looking at about $80 million-$100 million in terms of development capital. In the Eastern district, we're looking at a split between development capital and sustaining capital, but between $120 million in development, $100 million-$120 million in sustaining. That would allow us to get to the point over that plan where we've got those districts significantly opened up.
That's not random. That's over the next three years, right?
That's over the period. That's correct.
Okay. Over the next few years. Okay.
Roughly, Anita, if you think about a rule of thumb, that says $70 million a year sustaining, $40 million-$50 million per year development. Which will be an average over the five-year period.
Okay. I have two last questions. The first one is with respect to the reserve replacement. You guys said that you had a target right now of 60%-70% reserve replacement, and that you'd probably hit around 60%-70% as well of that. Multiplying that somewhere around the 40%-50% mark for this year?
Yeah. We typically target replacing 2/3 of depletion on average each year with our investment. We're going to do it's complicated with the numbers. We're looking at coming in around 60%, 70% of that number this year.
Of that. Correct. Yep.
I'm sorry, I can't do the math for you quickly enough.
No, no. That's fine.
Eric and the team can take you through that.
Okay. Lastly, just in terms of broad strokes, I guess, moving into 2022, there's a reduction in the overall total cash costs. I guess predominantly that comes from some of the COVID-19 costs not being as onerous as they are in 2021. Longer term, there's a cost improvement on total cash costs. Can you just outline some of maybe the big three drivers of that in 2023 to 2025?
Yes. You will start to see autonomous haulage and getting into the really good grades in the South Pit of Boddington. It's going to be a key player. You will start to see us commissioning the shaft at Yanacocha. You will see some of the sublevel shrinkage mining at Ahafo starting to come into play. You'll see a little bit in that timeframe of Ahafo North at the back end. Sulfide's a little bit further on. It starts from next year, but you'll have the run rate of the synergies from the Goldcorp acquisition maintaining through there. You'll see that really next year, that's in the numbers. Anything I've missed, Rob or Nancy?
No, you covered it, Tom.
Okay. I lied. There's one more question. Yanacocha Sulfides, the $2 billion that you have in capital spend, I guess, over the next-
Yeah
couple of years. Could you just give us broad strokes, like what the spending will look like, 2022, 2023, and then into 2024, if there is any left in 2024?
Do you have that at your fingertips again, Rob?
I don't, off the top of my head.
That's what I'll split out as is.
Yeah.
You will-
Let me see if I
We haven't provided that level of detail yet, Anita, if you think about that spend, if you think second half of next year approval, we'll come out with a schedule with that approval then. You'll have a year of ramping up. You'll start in 2021, you're ramping up in 2022, then your heavy spends will be in the years two and three. We'll provide some more detail if that project's approved in the second half of next year.
Okay. Sorry, when did you say you expected Yanacocha Sulfides to start up, in the second half of 2024 or beginning?
It's a three-year development schedule from.
Yeah
approval in the second half of 2021, so it'll be the back end of 2024.
Thank you very much.
Just to clarify, that's the firs gold. The commercial production's 2025.
Yeah.
Okay.
Yeah. Autoclave will take a bit to ramp up. They don't ramp up in a month, unfortunately.
All right. Okay. Thank you very much.
Thanks, Anita.
Thanks, Anita.
The next question will come from Mike Jalonen of Bank of America. Please go ahead.
Morning, Tom, Nancy, and Rob. Just had a question on Peñasquito from the last time I was on. Just intrigued by the potential extension of mine life to 2040. Just wondering which targets could Basically, that's almost 10 years of production you have to fill in by my numbers. Also, you have an 18% interest in Orla, obviously owns Camino Rojo. They're looking at one day mining sulfides. Would Peñasquito's mill be used for toll milling for Camino Rojo? Orla's given you all an 18% of Orla. Thanks.
Thanks, Mike. I hope you've got your Newmont socks on today as well for the call. What I might do is get Rob to cover your first question, and Randy Engel, if you've got a phone connection, we'll get you to pick up the Orla question for us. Rob, maybe pick up the ability to do a Boddington with the existing ore body as well as the potential in that district.
No, I certainly will. Morning, Mike. I think I'll cover it in two ways, is that through our investigations and our modeling, we certainly identified quite a bit of mineralization within our existing pit shells, which do still require drilling to convert to reserve. This isn't all about greenfield, it's about how do we actually utilize the existing mine and do further laybacks, et cetera, to win back that ore. As I've mentioned before, a couple of other key comments is that we've got 650 sq km there. Only 20% has been explored. We're going to be spending around about the $10 million in 2021 to build that pipeline of new exploration targets to explore undercover for Peñasquito-style ore bodies.
Because it's linked to the Cedros agreement, we've now got the full permission to do that drilling, to do that work for the first time. We're going to be using our deep sensing geochemistry techniques. We've got a myriad of targets, quite honestly, that we've got to work our way through and then look at where the probability is the highest. Typically, in the past, outcropping has been the way that the geologists have worked there. We do believe that it will be more undercover. It really goes down to applying that systematic exploration approach and looking at the data sets and really examining the modeling.
As Tom said, if we look back what we've done at Boddington, that we've just been able to grow that progressively, A, because of what we've discovered at the end of a drill bit, but also the resources we've been able to change to reserves because of the cost improvements. It's a combination between that. We certainly believe that Peñasquito's got a huge amount to offer. In the coming year, we'll start unpicking all of that. Hopefully, that gives a little bit more color in terms of what the plan of attack is at Peñasquito. It's certainly one of our exploration team's largest focus areas.
Okay. Mike, it’s Randy. I’ll pick up on your question about processing and treatment. What I would say is Orla is definitely our core strategic equity position, in no small part because of the optionality that it provides for working together. The proximity there around Peñasquito is very beneficial potentially for Newmont in the future and for Orla. We’ve got a joint technical committee that we formed. We work very closely with those folks and really like what they’re doing so far.
Okay. Thanks, Randy and Rob. Rob, if you're interested, I have a photo of the original discovery outcrop on Peñasquito.
From many years ago. Thanks, everyone.
I'd be very interested, mate.
Thanks.
Thanks, Mike. Send it through.
The next question comes from Greg Barnes of TD Securities. Please go ahead.
Yes, thank you. Tom or Rob, what are the opportunities in this production outlook if gold stays in this $1,800 - $1,900 per ounce range?
Our production profile wouldn't change, Greg. We would just continue to run the business with the discipline and we get the benefit of the leverage to that gold price. That project pipeline and the production coming out of those operations would be largely unchanged. We would potentially look at any opportunities at the very back end of our five years, where we start to see development capital coming off to say, "Is there anything there that we could do? Is there something we could do around a copper project? Is there something we might be able to do with some proper work over the next two or three years on any of those mega projects for a low capital startup?" That would be the second half of this decade.
For the next five years, that plan that we've laid out today, that outlook we've provided today is largely how we'll run the business. We'll get the leverage to a gold price. We'll run it with the discipline at $1,200, and we'll get that $400 million for every $100 increase in gold price.
Okay. You don't try and adjust the mine plans, and this year, 2021, is at $1,200 gold. You don't adjust the mine plan-
Yeah
by and at all. You just run it at $1,200. You don't adjust for a higher gold price in that process.
When we do our business plans, and when we look at our strategic and long-term mine plans, we are looking at sensitivities downside to $1,200 and upside to $1,200. We understand the sensitivity of each of our mine plans. There's not many of them where you do things differently over the medium or long-term mine plans. I'll get Rob to talk to one example with Cripple Creek & Victor, where we have very deliberately done that. Dean Gehring's on the line. I might get Dean to talk to mine plan sensitivities a bit more. Particularly, Dean, if I'll get you to talk to how we think about our cutoff sensitivities to maximize value on a more tactical basis. We very much are looking at that on a tactical basis.
Why don't we get Dean Gehring, our Chief Technology Officer, to cover our mine plans first, and then Rob to talk about an example where we're doing some things with a resource layback at Cripple Creek & Victor. Over to you, Dean.
Yeah. Thanks, Tom. It is an important aspect of what we look at in terms of maximizing our near-term performance. We have employed a variable cutoff protocol at all of our operating sites. What that allows us to do is look at the price of the day to see what we can do to maximize value during that month's production. That is something that we do see benefit from, and it just depends on both what the price is and the current state we're in in terms of the sequencing of the mines. We don't leave it just static. We will maximize the value depending on what near-term prices are as well.
If the gold price stays in this range through 2021, is there upside to your production guidance?
You get to a point where you need to understand where your constraint is, Greg. It's really about understanding what our 12 mills basically can do and ensuring that we've got those mills filled with the highest value ore to produce production. That would be the limitation. Certainly, the Full Potential work is about understanding where the bottlenecks are, working those bottlenecks to either improve productivity, and that might be reduced cost or it might be more ounces. That's largely how we look at it. That production profile will largely hold. We'll be working on, I think you'd expect us to work on improving margins to that gold price rather than necessarily increasing volume.
Okay. That's helpful. Thank you.
Thanks, Greg. Rob, did you want to talk to that Cripple Creek & Victor example where we are deliberately bringing in a resource layback?
Yeah. I think, Tom, I can. Greg, good morning to you. It's pretty straightforward, is that we've got a mine like CC&V that has had a huge mining history, both underground and above ground. Certainly, if the price of gold was significantly lower, we wouldn't be doing this. We've kind of balanced the whole operation, the confidence of what's under the layback, and have decided to move forward with the higher cost because we believe we can deliver it. In many ways, it's kind of a case-by-case kind of thing rather than a general rule, that in this particular case, we believe that we can do it quickly and successfully and make money from it. It's certainly not like another case that we've got poor confidence and that you just start stripping, hoping for the best.
It really is a calculated risk, but we are moving forward with a resource lay back at CC&V, which will prove to extend that mine's life by a considerable amount of time and make money, ultimately at $1,200 an ounce.
You see opportunities beyond CC&V, i.e., at Peñasquito or at Cerro Negro, or I don't know where else you could see opportunities similar to that, Rob?
Yeah. Certainly, Greg, that it really is that case-by-case example that if you've got the infrastructures there, you've got it set up, and that you've got things that you can do in the current to pay for this. We're certainly never going to run mines at a loss, and we've got to make sure we've got that discipline to make sure that our teams stay very, very sharp. I'm sure there will be cases. There are few at the moment, but it's that rigor that we're really trying to continually drive and that discipline. Did I cut you off, Tom? Sorry.
No, you're fine, Rob.
Thank you. That's helpful.
Thanks, Greg.
The next question comes from Tyler Langton of JP Morgan. Please go ahead.
Yeah, good morning. Thanks. Just had a question on the Full Potential. I think you mentioned $300 million of savings in 2021. Can you just talk, I guess, a little bit about what you would expect, like what areas the program could focus on 2022, and just sort of any initial thoughts on sort of what the benefits could be in 2022?
Thanks, Tyler. Was that where some of the benefits or the initiatives will be in 2021 or 2022? Or just-
I'm sorry, what the benefits, like for 2022, what areas the program could focus on, and then kind of compare it to the $300 million in 2021 on any initial thoughts on what the savings are?
Gotcha. Rob, do you want to pick that one up? Dean, I might get you to talk to this one as well in terms, Dean's the custodian of the program, and get Rob to talk to it. I think, Rob, Cerro Negro might be a pretty big lever for us in 2022 to build off 2021, with Peñasquito being a significant lever in 2021. Over to you, Rob.
Yeah. Okay, then. Thanks, Tom. Really appreciate the question. Again, without wanting to repeat, the Full Potential is such a critical program, and many of the things that we actually do, one year, it's how do we maintain those to make sure that they're delivering value again and again. If I pick on a couple, if we pick on Peñasquito as an example, that payload is somewhere where we're really focusing hard on payload. If we look back just six months ago, we were sitting at 295 tons per truck. We're now sitting at closer to 310 tons per truck. When you've got 80 trucks getting that extra 13, 14, 15 tons per truck day in, day out for a year, it adds up to millions and millions of tons.
Getting that kind of thing pushed to 310, then moving it to 315, then 320. I use Peñasquito, but payload applies to every one of our sites. We've kind of got these common examples, which we replicate. We share with all our other sites. We give them the procedures and the know-hows. Everybody can pick it up, whether it's underground, surface, vehicles, et cetera. We've got a variety of those initiatives, which will be year-on-year initiatives. The ones in particular that I'm looking forward to is certainly around the Cerro Negro, the Musselwhite, the Porcupine examples. The ones that are really picking up Full Potential for the first time. Cerro Negro, we believe it is a wonderful mine, it's got terrific prospectivity.
If we can get those development rates even to three-quarters of the level that we're enjoying elsewhere, there is significant value in terms of not only how quickly we develop the tunnels, but moving other material from resources to reserves. That's the same at Porcupine, it's the same at Musselwhite. Peñasquito will deliver. The important thing about Full Potential, and sorry for waxing lyrical, is even though Boddington's been going at Full Potential for seven, eight years, it's still got another $100 million it's looking at in the coming years. Every year, we're finding more and more things that we can get better and better at. With our operating model, is that being able to lift people's performance up to the leading level in the company quickly and easily. It just means that, again, the cash that we'll generate will be significant.
Dean, do you just want to talk a little bit more?
Yeah. Thanks, Robin. I think what's important to keep in mind is this has been a program spending away for a long time, as Tom mentioned in the opening remarks. We continue to see even operations like Boddington continue to add value in Full Potential year -over -year. It's not a one-and-done type game for us. I would expect all of the places that Rob mentioned earlier, but we're still going to see a lot of value from Peñasquito. We also, as Rob mentioned, really focus on some global themes. He mentioned the payload for one. This year, what I expect to see in the next year or two is a large focus on advanced mine control. In the past year, we focused on advanced process control, saw tremendous value out of that.
As Rob mentioned, what we do is we approach these projects from a global perspective. We rapidly replicate those across all of our operations so we can maximize that value. It doesn't just happen to speed of whatever one operation is able to implement these projects. We'll see advanced process control play out more in the or excuse me, mine control play out more in the technology arena in the next couple of years.
No, great.
Langton, just wrapping that up. We only build into our budget or our plans the next year of initiatives that need to have detail that people are then held, our general managers at our operating sites are held accountable for delivering on. We leverage that best practice through the year. We look to replicate, we build that into next year's plan with the expectation that at a minimum, we're offsetting inflation in the next year to try and control and manage cost escalation. That's something now that's been going on for seven or eight years.
No, perfect. Thanks. That's very helpful. Just quick final question on the reporting. Well, for Ahafo North, is that going to be reported as its own mine or would that be lumped in just with Ahafo?
We've got managers that are a single operation, so it is part of the Ahafo complex. I'm looking to Nancy. We will most likely have it separate and segmented both reserves and resources and in our reporting time.
Okay, perfect. Thank you so much.
Thanks, Lang.
The next question comes from Brian MacArthur of Raymond James. Please go ahead.
Good morning. My question relates to autonomous haulage. You talked a lot about the benefits out of Boddington when it comes in. In your 10-year plan or looking forward, is there anything that's changed from last year about where you're assuming of using autonomous haulage? Maybe you could just update us on where you think you might put that next. I guess that sort of gives you a bit of a clue on your confidence in the long-term nature of each of our orebody. If you just go through your thinking on that right now again.
Thanks, Brian. Good morning. I'll kick off and Rob, I'll get you to chip in. In that 10-year profile, the only operation with autonomous surface haulage is Boddington. We have autonomous drills, and we've got autonomous and semi-autonomous underground equipment through a number of our underground mines. Autonomous haulage at another one of our current managed operations would represent upside to that 10-year profile, and would likely be in the second half of the 10-year profile rather than the five years of our detailed guidance. Where our focus would be currently, and I think it's key work that I see us doing over the next two to three years, is really optimizing those three mega projects that sit at pre-feasibility study and determining which of those are the first to bring forward in the latter part of this decade.
I think it's autonomous haulage, improving autonomous haulage at Boddington in a gold mining environment, positions that technology to be the base case for a new mine and then could underpin and improve the economics of a new mine going forward. At this point in time, I would see the first of those mega projects at the end of this decade, which aren't in our 10-year profile, and autonomous haulage being part of their scope. There may be opportunities with some of our existing operations, but you need and what we're able to achieve at Boddington is mine life. We were able to improve cost and productivity at Boddington such that we had a mine life out in front of us that could justify the replacement of a truck fleet. You would need that in place at one of our existing operations.
There might be some interesting ones that come forward over the next period of time, focusing on the mega projects potentially in our existing operations. Rob, is there anything you'd add to that?
Thanks, Tom. I'd just probably add a couple, Brian.
Can I just check, I think we've lost your sound, Rob. I think your headphones might have died after an hour and a half. Brian, can I check you can hear me?
I can hear you. Thank you. Yes.
Yeah. Let's just get, Dean, did you want to make a point around the data that Rob was at that site?
Yeah. I'm sure it's very aligned with what Rob was about to say, too, is that there's obvious tangible benefits from autonomous haulage that Boddington will see and everywhere else we're able to apply that sort of application. What we also know is that there's a discipline that we learn just by using autonomous haulage. There's so much that we can gain by just understanding better how to use that data for predictability that will play out in many other applications, including smaller scale autonomous underground or even semi-autonomous type vehicles. We're going to see this leverage and this theme play out in many more applications.
Right. If I can just maybe follow up back to your comment, Tom, because I guess, part of what my question was, and that makes total sense what you're saying, is just when Mike's question comes up about Peñasquito at 2040, and then Rob mentioned some of that in-pit stuff and everything too. Would there be an opportunity there longer term? I guess that's sort of partly where I was going with that.
Yeah, look, if you've got a very long-life mine at Peñasquito, it is well suited to autonomous haulage. When you think about it, the technology is pretty straightforward. It's the change management associated with introducing the technology is the really complex or hard work. As you think through the change management and the benefit of autonomous haulage, in a place like Mexico or Ghana, then you've got to weigh up. When we think about our purpose being creating value and improving lives, we got to weigh up, what are we going to replace the economic livelihood that currently comes through jobs, driving trucks, with autonomous haulage. That's the social complexity that we need to work through with a change management with an existing operation if you were to change a fleet over. That would be one of the areas that we'd need to work through.
If our thesis proves out with Peñasquito and we do end up with a very long life.
Great. Thank you. Very helpful and very clear. Can I ask just one quick question to make sure I heard this right? The $500 million for climate change.
Is that going to be booked in normal operating costs? Or did someone say it was going to the advanced projects?
It's a-
line? I just wasn't sure where it would go.
It'll be a mix. It's a mix of both development capital and operating expenditure. There'll be operating expenditure where you change out pumps at end of life and you put in more energy-efficient pumps. There'll be a bunch of that, which is included in the outlook. There'll be some specific development capital around solar plants and wind plants and some of the microgrid stuff. It's a combination of the two, Brian.
It would be at the asset level, not in the corporate.
Yeah. It would be at the asset level. The only thing you'd carry at advanced projects, for instance, if we determine that piloting hydrogen power in a vehicle as an advanced project, that was something that would go in advanced projects. That would be small scale. The money's more around renewable energy, microgrid technology, and more energy-efficient equipment at our mine sites.
Great. Thank you very much for answering all my questions.
Thanks, Brian.
The next question will come from Michael Dudas of Vertical Research Partners. Please go ahead.
Yeah. Good morning, gentlemen. Nancy.
Morning, Mike.
Maybe a follow-up from Brian on the $500 million, on the climate change initiative. That's $100 million a year over the next five years. Is that the total budget? For example, some of these potential solar, wind energy projects, is that what you anticipate over a five-year period is what the investment will be? Is that just the baseline and if there's a project that comes in vogue that's going to cost more, you'll have a separate allocation decision on that? To follow up on that.
Yeah
on the climate issue, from what you were talking about on reduction of 30% by 2030. The 15% you're expecting from your suppliers and vendors, is that something that it's going to be audited or is that a best efforts? How is that going to be portrayed relative to how you're acting towards your vendors on the climate initiative?
Yeah. Thanks, Mike. Steve, I'll get you to pick up the second part of the question, if Steve's still with us. Second part of the question in terms of the Science Based Targets and those Scope 3 targets and how we're measured on those. The $500 million is putting our money where our mouth is, Mike. We've committed to these targets by 2030, and we're putting some serious money behind supporting us getting there. That doesn't mean it's $500 million and we're there. It's about $500 million to get inertia and momentum behind this work, and demonstrating that we can put in solar plants and wind plants and microgrid technology in around some, particularly some of our remote sites, and get that benefit and get on that pathway to our 2030 targets and starting to see the, through the other side of that to 2050.
It's also about having an investment system that starts to encourage our operations to look at more energy-efficient solutions, whether that be having that as part of your control systems for monitoring those key metrics in the control systems. Whether it's the maintenance teams looking at what's the best pump to put in when it comes to managing climate, not just what's the most cost-effective pump. It's about putting money where our mouth is to get the support behind that. Steve, did you want to pick up how we measure or to account for those Scope 1, 2, and 3 targets?
Sure, Tom. Can you hear me okay?
Sure can.
Yeah.
Great. Okay. Keep in mind, I know you were asking specifically on Scope 3 here as well. Our Scope 1 and 2 are the 30% target. Scope 3 is 15% target by 2030. Those primarily relate to the work we do with our joint ventures and then, of course, our supply chain. Really, about half of our Scope 3 emissions are really related to our joint ventures. We'll be working closely with them to achieve that target. We also have signed a commitment with SBTi, who will be assisting us in doing the evaluation and in auditing around those targets. We'll be reporting out against our performance in connection with the Scope 1, Scope 2, and Scope 3 targets in our TCFD Task Force on Climate -related Financial Disclosures on an annual basis. You will see that work.
I think the Scope 3 is the most complex, as you know. There's quite a bit of work to do with our partners, with our suppliers as we assess what that actual baseline work is. A number of them, as you know, are coming out with their own targets. Working with them to know how to incorporate those, calculate those amounts.
Yeah, certainly a lot of momentum behind this initiative, for sure. Thank you for that detail. My second question is regarding on the capital allocation side, just for clarity. The dividend policy, this next meeting for the six-month period, is that coming in the first calendar quarter of 2021? Is that a meeting that you'll assess the current gold price versus the $1,500? Is that fair to speculate?
Yes. We'll sit down. We sit down every quarter, and the board approves our dividend every quarter. As part of that process, we will assess where gold has gone over the previous 6-12 months, and make some judgments there. We'll meet and approve the dividend, as we have been doing, as we always do each quarter. We'll look back, as this framework gets up and running, it's semiannual, we shouldn't expect that there's dividends going up and down on a quarterly basis. We'll be looking for stability and predictability. We'll certainly be having a good discussion, [in February], based upon the previous six to nine month period.
My final question is, you certainly went through, obviously, dividend policy, the capital spending, the growth. You have a lot great pipeline, et cetera. Didn't really touch on acquisitions. Has that policy changed at all as things evolve, especially with regard to valuations in the marketplace and the competitive returns relative internally? Maybe what is deemed to be out there given there's been such variation in some non-precious metal prices here over the past several weeks to months?
Yeah, Mike, our radar's turned on, and our definition of a world-class asset is our filter. If something popped on our radar that was so great at 300,000 oz, it had $900 All -In Sustaining Costs or less, at least 10-year mine life, and most importantly, in the right jurisdictions. If something tripped those filters, we would have a very good look at that because that would complement our portfolio and would fit within our operating model very comfortably, whether that was a single asset or a couple of assets of that size. That radar's turned on, and we continue to look and monitor. Difficult, very difficult in the current environment with travel restrictions to do proper due diligence. It's something that I think COVID-19 does impact robust M&A, and that currently, clearly, the current gold prices would make M&A difficult.
It is part of our equation. We've certainly got the financial strength and flexibility to do something if we saw that it could add value to our portfolio underneath our operating model. The radar's turned on. 99% of the people working at Newmont are focused on delivering value from our 12 managed operations and supporting our two joint ventures.
Understood. Thanks, Tom. Appreciate it.
Thanks, Mike.
The next question comes from John Tumazos from John Tumazos Very Independent Research. Please go ahead.
Thank you for taking my question. Some of the ESG strategies of companies are new to us, and I apologize for my unfamiliarity. Glencore, for example, wants to have less emissions by not investing in mines and specifically not reinvesting in coal and letting things deplete. Will your $500 million investments meet your corporate cost of capital hurdle rates, or would you accept a little less because of the GHG goals first? Second, do the successes of high-grade Cerro Negro extensions, Turquoise Ridge expansion, Gold rush, or maybe Four mile, help to reduce greenhouse gas emissions? Does the 2030 target assume the same cutoff grades, the same output? How does lower grade stuff, Norte Abierto, Conga, Yanacocha Sulfides, your complex ores impact the GHG goals? Excuse me.
Yeah. Thanks, John. Our portfolio has actually progressed into more underground mining, which does help you reduce your greenhouse gas emissions. That helps, you can introduce technology into those underground mines, like we have at Borden electric vehicles reduce not only greenhouse gas emissions, they reduce heat load in the underground mine, which reduces ventilation requirements, which in turn reduces, ultimately, greenhouse gas emissions. It also reduces diesel particulates in underground mines and makes it a quieter, cleaner, more healthier working environment. That's part of what's built into our plans, is we do have a progression to underground mines that helps. We do expect to see some of the energy that we take off the grid become more renewable energy.
Yeah, Tom, I know while you're changing out your headsets, I can continue some of the discussion. These investments, as you mentioned, will be looked at on a case-by-case basis. We'll certainly be looking at the greenhouse gas reductions and some of the things that is obviously driving them. We also expect that there will be some amount of return on them. Where we'll see these play out as we continue to look at expansion projects or even improving our existing operations through normal capital replacements. Tom, just check to see if you're back with us yet.
Eric, do you want me to-
I'm back, so I can close, Rob.
No problem, Tom.
Must be paying my phone bill. Sorry, John, that I dropped out. Hopefully, the rest of the team are able to cover your answers.
You did very well.
We have to close now. Thanks, mate. I think, operator, is that the last of that is? Well, thank you, everyone. I know we've run over, but we wanted to take everyone's questions. Thank you very much for your time this morning. Thank you for your continued interest in Newmont. Please, I wish you and your families a safe and happy holiday season, and look forward to seeing you all in the new year. Please all take care.
The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.