Good morning, and welcome to Newmont's third quarter 2020 earnings 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 Jessica Largent, Vice President of Investor Relations. Please go ahead.
Thank you. Good morning, everyone. Welcome to Newmont's third quarter 2020 earnings conference call. 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. Turning to slide two. Please take a moment to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website at newmont.com. Now I'll turn it over to Tom on slide three.
Thanks, Jess. Thank you all for joining us this morning. Before I start, I want to take this opportunity to thank Jess Largent, who will be leaving Newmont at the end of the year after more than five years with us, which included three years as head of our Investor Relations group. For those of you who have not yet had the chance to meet her, I'd also like to introduce Eric Colby, our Vice President of Strategic Communications. Eric was appointed to lead the Strategic Communications function earlier this year. He combines both investor relations and communications. Eric has been with Newmont since 2007, including three years working at Yanacocha in Peru.
Since 2013, Eric has led multiple transactions as part of our corporate development team, playing a key role in the divestiture of Batu Hijau, the acquisition of Goldcorp, and the formation of the Nevada Gold Mines joint venture. I want to thank Jess for her many contributions to Newmont, the support that she has provided me and my team, and wish her the very best of luck as she embarks on her next adventure. Turning back to results. I'm very excited to share with you our record third quarter performance as we continue to deliver on our purpose to create value and improve lives through responsible and sustainable mining. Turning to our quarterly highlights on slide four. Newmont has the industry's most diverse, balanced portfolio of well-positioned assets that provide stable production with significant leverage to rising gold prices.
We have continued to manage through the COVID pandemic from a position of strength. With a proven leadership team, operating model, and highly capable workforce, we are building on our track record of superior value creation. I am incredibly proud of how our teams across the world have responded to this pandemic, and the sacrifices people have made and continue to make to support Newmont and the communities in which we live and work. They have set a standard for leadership in our industry. All of our sites are now operational, and we delivered record financial results. We produced 1.5 million ounces of gold and 273,000 gold equivalent ounces from copper, silver, lead, and zinc, putting us well on track to achieve our full-year guidance this year.
We generated significant operating cash flow of $1.6 billion and free cash flow of $1.3 billion, the most in any quarter in Newmont's 100-year history. We have continued to safely advance project work at Tanami, Subika Underground, and Mustang. We also announced the sale of a royalty portfolio to Maverix Metals, which closed yesterday, and exploration joint ventures with Agnico Eagle in Colombia and Kirkland Lake in Canada. Our solid operating performance further improved our financial strength and flexibility. We ended the quarter with $4.8 billion of consolidated cash and reduced our net debt to adjusted EBITDA ratio to 0.4 x. Yesterday, we further demonstrated our confidence in the strength of our business and continued commitment to leading shareholder returns with a 60% increase to our quarterly dividend, which is now $0.40 per share or $1.60 per share annualized.
This is the second increase to our dividend this year and reflects the strength of Newmont portfolio to pay a higher dividend while we continue to advance profitable projects and maintain financial strength and flexibility. Newmont will remain disciplined in everything we do, including being prudent in our approach to capital allocation given the uncertainty in the world today. However, we will have an opportunity to evaluate even further returns to shareholders as we continue to build excess cash. Last, but certainly not least, we are the first and only mining company to achieve gender parity amongst our non-executive directors. Setting an example at the very top of our organization that is fundamental for sustained cultural change. Turning to slide five for more detail on our commitment to improving lives.
At Newmont, we have a fundamental belief that a commitment to leading environmental, social, and governance practices are essential to delivering sustainable long-term value for all of our stakeholders. This starts with a commitment to our people and the work we are doing to sustainably improve health and safety and create a more inclusive culture across our global business. We continue to perform well against our public sustainability targets to source from local suppliers, hire within the communities near our operations, respond to community complaints in a timely manner, reduce our water consumption, and complete planned reclamation activities. We are on track to meet a seven-year target to reduce our carbon emissions by 16.5% by the end of this year, and are also working to develop longer-term, science-based targets for emissions, which we plan to release next month.
We are committed to fully implementing the Global Industry Standard on Tailings Management that will help us improve how we manage these types of facilities. We are the second-most transparent company in the S&P 500 and placed 12th out of more than 200 companies on the Corporate Human Rights Benchmark. These achievements are the result of relentless hard work from generations of leaders, lessons learned, and improvements made that form the very DNA of Newmont. Turning to slide six. As a mining industry, we must continue to improve our health and safety performance. At Newmont, we have a relentless focus on ensuring that everyone who works in our business can return safely home to their families. As leaders, it is up to us to create a culture in which fatality risks are clearly understood and sustainably managed at all times.
Through visible felt leadership and the systems we put in place to manage risk consistently across our global business, we are working to significantly improve our safety performance. In response to eliminating fatalities and supporting an injury-free workplace, Newmont made a symbolic change this year, stepping away from our industry's traditional use of a lagging personal injury rate in our bonus programs to measures that are focused on managing the critical controls that must be in place at all times to prevent fatalities. This year, we have completed over 40,000 critical control-focused conversations in the field, conversations that have proactively identified and eliminated potential risks that could lead to a fatality. We've recently begun using digital tools, introducing an app across the organization to facilitate these conversations and capture more robust data that can quickly be analyzed and shared across our business globally.
On the back of this work, we have reduced our significant potential events by two-thirds compared to 2019 and achieved a six-fold improvement from when I joined Newmont in 2014 and started us on this journey. Despite the significant leadership distraction due to managing COVID this year, we are on track to achieve the lowest personal injury rate in our company's history, with a total recordable injury frequency rate of 0.28 per 200,000 hours worked. It is no coincidence that visible felt leadership focused on fatality prevention is driving a significant improvement in all of our safety metrics. Turning now to the industry's best portfolio on slide seven.
Among our 12 operating mines and two joint ventures, we have eight world-class assets, each of which delivers more than 500,000 gold equivalent ounces per year at all-in sustaining costs of less than $900 per ounce and with a mine life that exceeds 10 years. Importantly, all eight are located in top-tier jurisdictions that we define as countries classified in the A and B ratings ranges by each of Moody's, S&P, and Fitch. We firmly believe that we have the right size portfolio to generate sustainable returns from our world-class, responsibly managed assets located in the best gold mining jurisdictions. Underpinning our asset base are the largest gold reserves in the world, with nearly 96 million ounces. We also offer substantial future upside through our gold resource base, with nearly 75 million ounces of measured and indicated resources.
In addition to this, we have 63 million gold equivalent ounces in our reserves, which includes 15 billion pounds of copper. Importantly, 90% of our reserves are in the Americas and Australia. Exploration always has been and will continue to be a core competency at Newmont. Our disciplined exploration program lays the groundwork for growing our reserve and resource base to sustain stable, steady production and cash flows for decades to come. Turning to slide eight. Our portfolio will generate more than 60 ounces of gold per year through 2029. This stable production profile is underpinned by our eight world-class assets, our industry-leading exploration program, and our next three development projects. Tanami Expansion 2, which is in execution, and then Ahafo North and Yanacocha Sulfides, both of which are in the late stages of definitive feasibility.
As you can see here, our portfolio provides steady production over the next decade, balanced across each of our four regions. This profile is further enhanced by more than 1 million gold equivalent ounces from silver, lead, and zinc at Peñasquito, and copper at Boddington and Yanacocha. Combined, we will deliver more than 7 million gold equivalent ounces per year for the next decade, the most of any company in our industry. Turning to our unrivaled project pipeline on slide nine. Our project pipeline is unmatched in the gold industry and is one of the best in the mining industry. 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.
Our near-term projects include Ahafo North, which is the best unmined gold deposit in West Africa, and for which we expect to reach a full funds decision early in the new year. Yanacocha Sulfides, which is also progressing towards a full funds decision next year and has the potential to extend Yanacocha's life well into the 2030s. Looking at the earlier stage projects in our pipeline, you will see two new projects in pre-feasibility. With Pamour at Porcupine, which was formerly the Century project, and Oberon at Tanami. The Pamour project is a layback to the existing Pamour open pit and is smaller in scope than the prior Century project, which required the relocation of the existing processing facilities in order to access the Dome ore body.
Developing Pamour is expected to extend mine life by another 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. Pamour is a great example of Newmont's disciplined investment system, which focuses on value creation and phased investment decisions to maintain our current production profile instead of progressing highly complex, capital-intensive projects. At Oberon, we are very excited that our near mine exploration efforts continue to identify highly prospective deposits with the potential to further extend life and improve costs at the world-class Tanami asset. Rob will cover some more details on Oberon shortly. At Coffee, we completed our exploration mapping exercise and are closing the camp ahead of the winter season. We remain excited about the potential at Coffee to fully optimize the ore body and improve value.
In addition to our highly prospective gold projects, we have significant organic exposure to gold-copper porphyries, including Norte Abierto, NuevaUnión and Galore Creek . In fact, if you assume that one of these three mega projects comes into our production profile at the back end of this decade, Newmont's total production would be around 15%-20% copper, providing us a natural exposure to a metal of growing importance for reducing carbon emissions and facilitating the ongoing transition to a new energy economy. It's also worth noting that since 2016, I have led the delivery of 10 projects on time and budget, achieving an average internal rate of return of over 30%. Going forward, we will build on this track record by continuing to apply our disciplined and rigorous approach to projects and ensuring Newmont is well-positioned to generate superior value throughout the price cycle.
Turning to our free cash flow generation potential on slide 10. Our balanced portfolio, combined with our discipline and operating model, provide significant leverage to high gold prices from the largest production and reserve base in the world. For every $100 increase in gold prices above our base assumption, Newmont delivers approximately $400 million of incremental attributable free cash flow per year. Using our conservative $1,200 gold price assumption, our base free cash flow would still total more than $5 billion over the next five years. At current gold prices, our portfolio will generate more than $19 billion of free cash flow over that same timeframe. To be clear, this is free cash flow that is entirely attributable to Newmont's account, enabling us to provide industry-leading returns. With that, I'll hand it over to Rob to discuss our operational performance on slide 11.
Thanks, Tom. Before jumping into the regions, I'll start with a general COVID update. Across our portfolio, we have continued our wide-ranging controls and safety protocols to place the health, safety, and well-being of our teams and our communities above all else. While we've had employees and contractors test positive for the virus, our effective testing, contact tracing, and quarantine procedures have proven to be effective in mitigating the spread to other employees and local communities. In the second quarter, we had five sites in care maintenance, and all five sites were operational in the third quarter. Peñasquito ramped up quickly and was achieving pre-COVID record levels in the plant by mid-June. Éléonore and Musselwhite ramped up early in the third quarter, and Yanacocha has returned to nearly full capacity.
Cerro Negro is currently operating at about 60% of normal capacity as the site continues to be impacted by ongoing travel restrictions in Argentina due to the virus. We are working closely with the local authorities and unions and are mitigating the efficiency impacts of reduced staffing levels by consolidating our mining and processing efforts in the near term. I'm incredibly proud of the commitment of all of our teams during these difficult times and the efforts that they have demonstrated day in, day out to work and produce safely. Turning to slide 12 for an update on Australia's performance. At Boddington, we delivered solid third quarter production on the back of higher grades, which partially offset the wet weather that impacted mining productivity. As the stripping campaign winds down, we expect to benefit from higher grades through 2022.
Boddington is expected to finish the year strongly with higher production and lower operational costs in the fourth quarter. The Autonomous Haulage System is progressing well and remains on track to be fully operational in the first half of 2021, which will further enhance Boddington's safety and productivity while also extending mine life. The team continues to work very closely with Cat as they prepare to become the world's first open pit gold mine with an autonomous haul truck fleet. The Cat MineStar system has been installed, and we are expediting the delivery of the AHS trucks with 14 of the 29 arriving before year-end, ahead of schedule. Tanami delivered another strong quarter with higher grades, which helped offset COVID-related travel restriction and quarantine protocols that impact productivity. The team remains focused on improving productivity through optimized shift, roster, and flight schedules.
Despite the challenges over the course of 2020, Tanami remains on track to produce 500,000 ounces this year. Tanami Expansion 2 is progressing well, with around 40% of engineering work complete and close to 20% of the overall project complete. Earlier this month, 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 5.4 m wide shaft from both the top and the bottom. Construction for the camp is well underway, with around 75% of the new surface buildings in place. We continue to review the schedule and capital for this project to understand the full impact of potential delays due to the ongoing impact of COVID. Looking further ahead, we have significant near mine exploration upside with extensions to existing deposits and at Oberon, which has the potential to grow beyond 2 million ounces.
Oberon is an open pit deposit located only 28 km to the north of the Tanami underground mine and has the potential to grow production for the operation beyond the current 500,000 ounces per year. As Tom mentioned, Oberon is in pre-feasibility, and we've been remotely progressing our study work by evaluating mine planning scenarios and resource model updates. Recently, we resumed field work after working in close collaboration with traditional owners to access the area and safely remobilize our hydrogeological drilling efforts. Exploration drilling is planned to resume after the upcoming wet season. Turning to Africa on slide 13. At Akyem, we delivered solid third quarter performance with higher throughputs and recoveries, and we expect to reach higher grades in the fourth quarter, which will continue through 2021. At Ahafo, our investment in this world-class asset continues to deliver value.
Our transition to a more productive underground mining method at Subika Underground is progressing very well, with development rates ahead of schedule. During the quarter, we ramped up to mining 4 to 5 stopes concurrently in various locations of the mine, reducing congestion and increasing tonnes. Higher grades from the underground will help offset the stripping campaigns in the Awonsu and Subika open pits through next year. At Ahafo North, we continue to advance the permitting process with the Ghana EPA, and the team is focused on engineering and design work, as well as construction, procurement, and community planning. As Tom mentioned, we remain firmly on track for a full funds decision in 2021. When approved, our plans include building a standalone mill to produce approximately 250,000 ounces per year over a 13-year mine life for an investment of approximately $700 million-$800 million.
Ahafo North functional and technical resources will be supported from our current Ahafo operation, leveraging our proven operating model to reduce duplication in the region. Turning to our South America operations on slide 14. Merian delivered solid third quarter performance as we processed stockpiles to help offset lower tons mined, and we expect higher grades in the fourth quarter as we advance into the harder ore. Yanacocha ramped up from 80% capacity in July to near full capacity in September. In the third quarter, we processed higher leach tons and returned to more normal levels of throughput in the mill. As expected, the inability to place leach ounces in the second quarter will impact Yanacocha through 2020, but the team is working very hard to improve leach cycle times.
At Cerro Negro, we're focused on operating as efficiently as possible to help mitigate the ongoing impacts of the travel restrictions caused by the virus. As a result, we are currently running the mill in campaigns, and the team continues to demonstrate resiliency despite facing inclement weather in the third quarter, and complexities of managing varying workforce availabilities and shift changes. Mining is focused on development in the Marianas complex, but we are forecasting a slower ramp-up, delaying access to higher-grade stocks into 2021 while we work with the authorities on a longer-term plan to return to normal operations by the end of the year. It is worth noting that Cerro Negro is only approximately 4% of Newmont's full-year production. As Tom previously mentioned, we are well on track to deliver our 2020 guidance.
Looking ahead, we remain very excited about Cerro Negro, which has the potential to become the largest gold producer in South America. We have more than doubled our land position, and the mine and its surrounding areas are highly prospective and underexplored. Our exploration team has identified significant district-scale potential with more than 100 known prospects, and rank Cerro Negro as one of the most prospective land packages in our entire global portfolio. We are also very excited about Yanacocha Sulfides progressing to a full funds decision in 2021, and we will continue to share additional details as our definitive feasibility study progresses. Wrapping up with North America on slide 15. Peñasquito delivered solid third quarter performance as we safely and efficiently ramped up from care and maintenance.
While the site continues to manage through COVID-related workforce challenges, we've been able to maintain our record levels through the plant, and we also successfully completed a two-week mill maintenance shutdown in September, setting the operation up for a strong fourth quarter. Our Full Potential program continues to drive value from this world-class asset, and we are currently focused on improving fragmentation through our blasting process, and we continue to make enhancements to the front end of the mill to further improve throughput. In addition, we fully ratified the sustainable agreement with the Cedros community in August, which also helps us to explore our large land package that is currently only 20% explored. At Musselwhite, we successfully ramped up from care and maintenance in the third quarter and restarted stockpile processing.
I'm delighted to say that we achieved mechanical completion of the conveyor system yesterday and have started the important process of wet commissioning. Over the coming weeks, the conveyors will be tested to ensure all components of the conveyor belts are safe and fully operational as expected, and I very much look forward to completing the full commissioning and reaching nameplate capacity of the belts in December. Just last week, this project completed over 100,000 hours without a lost time injury. I'm very proud of the great work of our site and project teams, along with our contractor, Cementation, to ensure that we keep the health and the safety of every teammate in the forefront of every shift. Development rates at Musselwhite are exceeding plan. Commissioning of the materials handling project has begun and is expected to be fully completed in November.
We have also officially kicked off our Full Potential program at Musselwhite, building on the virtual efforts over the last several months. Overall, Musselwhite is very well positioned to be fully up and running as we enter 2021, and will be back stronger than ever before. At Éléonore, our third quarter performance improved as the site ramped up from care and maintenance. Ongoing COVID-related restrictions continue to impact staffing levels, but development rates ramped up in September, and we are back to operating at normal capacity. Our site leadership team remains focused on improving efficiency and productivity, and is driving fundamental changes to how we operate at approximately 250,000 ounces of annual gold production with a sustainably lower cost base.
We have made significant progress restructuring and reducing the overall number of site personnel, yet morale has improved, and production levels are on the rise, which speaks to the cultural change taking place at Éléonore. Through our Full Potential program, we've delivered $24 million of value year to date and expect to continue to deliver meaningful cost improvements in 2021 and beyond. Earlier this year, we commissioned the lower mine materials handling project safely and under budget, which will significantly streamline the transportation of ore to surface as we transition to higher production rates from the lower levels of the mine in the years ahead. Our exploration drills at Éléonore are returning very encouraging results, both laterally and at depth, and we are improving our understanding and interpretation of the geological model.
We have also advanced our understanding of the district's geological framework, which will inform our 2021 drill program and targets less than 20% of the property drill tested to date. Porcupine delivered solid third quarter results, the site is improving underground development rates with several new initiatives underway that will increase tonnes mined and processed in 2021. CC&V also delivered strong results from an increase in tonnes mined and reaching higher grades at the bottom of the Cresson Pit. With that, I'll turn it over to Nancy to discuss our financial results on slide 16.
Thanks, Rob. Turning to slide 17 for the financial highlights. We delivered our strongest ever quarterly performance across several financial metrics, including record free cash flow of $1.3 billion, of which 97% is attributable to Newmont. Year to date, we have generated $2.3 billion in free cash flow, of which 96% is attributable to Newmont. Other notable third quarter results include revenue of nearly $3.2 billion, adjusted net income of $697 million, or $0.86 per diluted share. Adjusted EBITDA of more than $1.6 billion, an increase of 54% from the prior year quarter. Cash from continuing operations of $1.6 billion, ending the quarter with a strong cash position of $4.8 billion. We ended the quarter with liquidity of nearly $8 billion and our net debt to EBITDA ratio improved to 0.4x.
Earlier this month, S&P moved Newmont's outlook from stable to positive on strong free cash flow prospects and reconfirmed our BBB credit rating. A reminder, our financial results proportionally consolidate the company's ownership interest in Nevada Gold Mines, but do not include the contributions from the company's investment in Pueblo Viejo, which appears in equity income versus in our operating results. For the third quarter, our 40% of PV reported 87,000 ounces of production and would have added an additional $115 million of EBITDA. Turning to slide 19 for a review of our earnings per share in more detail. Third quarter GAAP net income from continuing operations was $611 million or $0.76 per share. Adjustments included $0.07 related to the change in fair value of our equity investments, $0.03 related to incremental COVID-specific costs such as additional screening protocols, transportation costs, and community fund disbursements.
$0.10 related to pension settlement changes related to the Nevada Gold Mines transaction, $0.03 related to tax adjustments and valuation allowance, and $0.07 of other charges. Taking these adjustments into account, we reported third quarter adjusted net income of $0.86 per diluted share. While we adjusted EBITDA for approximately $32 million of non-recurring incremental COVID-specific costs from our third quarter net income, we did not adjust out approximately $35 million of care and maintenance costs due to Yanacocha, Cerro Negro, and Musselwhite ramping up in the third quarter. With that, I'll hand it over to Tom on slide 19.
Thanks, Nancy. Turning now to slide 20. Our capital allocation philosophy remains unchanged and continues to balance the following three priorities. Reinvesting in our business through disciplined investments in exploration and organic growth projects, maintaining financial strength and flexibility to sustain the business across price cycles, and returning cash to shareholders. Newmont continues to set new standards as the clear industry leader in shareholder returns, which we further differentiated with the 60% increase in our quarterly dividend that we announced yesterday, bringing our quarterly dividend to $0.40 per share and our annualized dividend rate to $1.50 per share. This was our second substantial dividend increase this year, demonstrating the strength and stability of our business. Turning to slide 21 for more details.
During 2019 and 2020, we will have returned more than $2.5 billion to shareholders through dividends and share buybacks, an amount that is more than the total of our next eight competitors combined. Our $0.40 a share third quarter dividend represents a 186% increase from the first.
Quarter dividend in 2019 and highlights the strength of our financial position and our ability to continue paying an industry-leading dividend whilst we simultaneously invest in and develop our most profitable projects. 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, calibrated at a $1,200 gold price assumption, and the potential to receive 40%-60% of the incremental free cash flows generated at gold prices above $1,200 per ounce. Our third quarter dividend was calibrated at a conservative and stable $1,500 gold price assumption. As we have disclosed previously, Newmont generates incremental free cash flow of approximately $400 million for every $100 change in the gold price above $1,200. At an assumed $1,500 gold price, we would generate approximately $1.2 billion of incremental free cash flow annually.
Our third quarter dividend increase was calibrated to share 40% of that incremental $1.2 billion free cash flow that Newmont will generate at an assumed $1,500 gold price. That 40% is approximately $480 million. This equates to $0.60 per share annualized, an increase of $0.60 per share annualized over our base $1 per share dividend. As a result, we are pleased to offer our shareholders an annualized dividend of $1.60 per share. We chose a conservative $1,500 assumed gold price for the calibration of our third quarter dividend to maintain financial discipline and prudence, as well as to instill stability and predictability into our dividend increase framework. We will typically reassess the gold price semi-annually and recommend incremental dividend increases when we believe gold prices have rebased at levels of at least $300 per ounce higher than we applied to establish our prior dividend increase.
While the dividend will be assessed quarterly by our board, the framework aims to ensure stability and predictability, and we will evaluate the additional dividend in gold price increments of approximately $300 per ounce. In addition to this framework, we have a number of tools available to deploy excess cash based upon the circumstances at the time. These include further strengthening the balance sheet through debt repayments, opportunistic share buybacks, and additional dividends. Our commitment to industry-leading shareholder returns is evidenced by our track record, and we are confident our operational delivery and discipline will enable us to continue to enhance that record of performance. With that, I'll wrap it up on slide 22.
Over the last 18 months, Newmont has assembled the gold industry's leading portfolio of world-class operations and projects in top-tier jurisdictions and will deliver more than 7 million gold equivalent ounces per year for the next decade and beyond. Our ability to generate substantial free cash flow across the price cycle is unmatched, and our significant leverage to high gold prices was demonstrated by our record third quarter free cash flow of $1.3 billion. As we continue in our 100th year, Newmont is leading the gold mining industry with a foundation that is stronger than ever and a proven strategy to deliver long-term value while improving lives. I'm very excited about what the future holds at Newmont, and I look forward to keeping you updated on our performance. With that, I'll turn it over to the operator to open the line for questions.
We 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 speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Fahad Tariq with Credit Suisse.
Hi, good morning. Just one question from me. I didn't see in the presentation anything on synergy targets, and maybe if that's changed or not. In any case, can you provide some color on, is the cash flow synergy target still $500 million for next year? How is that progressing? Anything else you could tell us on that front would be great.
Yeah, thanks, Fahad, and good morning. I'll kick off and pass to Rob to maybe give you some stories of where we're delivering that value. Yes, we're on track to deliver the synergy target as we've committed. The $500 million next year is still very much our commitment. That's incorporated in our long-term guidance. We'll update our long-term guidance in December at our guidance webcast. Just this week, we've been meeting with our board to review our plan, which forms the basis for that guidance. I remain very confident that we'll deliver at least that $500 million of free cash flow next year. As I say, it is built already into our long-term guidance. Rob, do you want to give a few stories?
Yeah. Thanks, Tom, and thanks for the question, Fahad. By far and away, the engine of our predominant synergy is at Peñasquito, and that team continues to do particularly well and have over exceeded this year. As a reminder, the key areas that we're focused on are primarily the front end of the process plant to allow more ore to flow through the mill, and we've successfully done that in spades. In terms of the mining initiatives, it is about improving the fragmentation to enable more dirt to go through the plant. Also just bringing greater and greater discipline into how we blast, how we demarcate, how the shovels dig, et cetera. Beyond that, we've also moved into the total cost of ownership in the supply chain side of things, so the procurement of non-OEM HME parts, just to name but a few.
We've got 45 initiatives on the go down there, all delivering good value. Very, very pleased with how things are going.
Thanks, Fahad.
Thank you.
Our next question comes from Tyler Langton with JPMorgan.
Good morning. Hope everyone's doing well. Just first question, I guess, with sort of COVID cases rising, I guess, do you see any increased risk of just shutdowns at the mines, especially, I guess, the mines that were previously impacted? Then just with Cerro Negro, I guess it's operating at 65%. To get back to 100%, is it really just based on having travel restrictions ease, or I guess, are there other sort of alternatives you can look at?
Good morning, Tyler. Thank you. There's absolutely nothing wrong with the Cerro Negro operation. The constraints are all around the travel restrictions that everyone in Argentina will be managing to keep people safe and healthy. We continue to apply our COVID protocols with discipline across every one of our 12 managed operations, no matter where they are in the world. In Australia, where there is no spread, there is no community virus in either Western Australia or the Northern Territory, where Boddington and Tanami are respectively. We still maintain all of our protocols at those operations to ensure that we manage the risk of this nasty virus spreading. We still have some 10,000 people who are either not at an operating site or an office environment, working virtually, again, to protect their health and safety and the safety of the communities in which we live and work.
What I might ask Rob to do is give you a story around Peñasquito of the work that's being done, which would be mirrored across every one of our operations to ensure that we keep people health and safety. It's a good story that really demonstrates the extra effort that people are going to, the resilience in our business, and why I'm so incredibly proud of our Newmont workforce. Rob?
Thanks, Tom. Really just to build on that, is it also highlights how Newmont is living and managing the current situation with the virus. Peñasquito, to give everybody on the line a sense that when we talk about COVID testing, it's easy to think, oh, yeah, that's fairly simple. In Mexico, we've got 18 testing centers. We've got seven at various airports throughout Mexico. We've got seven at various major bus stations throughout Mexico, and we've got four testing stations on-site. Now, that also has required to staff those up with nurses, and we've got 56 nurses and personnel operating those 18 centers. As you can imagine, since COVID started, we have performed tens and tens of thousands of tests to make sure that our people are safe to go to the site.
Also we're testing before people leave the site so they can go back to the communities safely and with the full knowledge that they're clear of the virus. I think that story from Peñasquito really highlights, just as Tom said, the effort and the commitment that our teams have to make sure that we operate throughout this virus very, very safely.
No, thanks. That's helpful. Just with the two projects for next year for Yanacocha and Ahafo North, do you have, I guess, a sense when next we might make a decision? Is there any risk just from COVID sort of pushing those decisions out?
Thanks, Tyler. I'll kick off. Rob might want to chip in. Ahafo North will come first. It'll be early in the new year. It's locked and loaded. We're just working through with the EPA on the final permits. It's absolutely down the middle of our wheelhouse. The blueprints are the same as the original Ahafo, Akyem and Merian. A very straightforward mine to build. Open pit mine and mill. It's only 30 km from our existing Ahafo operation, and a lot of the work, particularly in the first 12 months, is the relocation of a road and the clearing of topsoil and starting the initial earthworks, all of which is done with local Ghanaian workforce. We build off a project team that's still in place at Ahafo, having just recently finished the Ahafo Mill Expansion and Subika Underground.
Very well positioned with Ahafo North and, as I say, locked and loaded, waiting for those final Is to be dotted and Ts to be crossed. Yanacocha Sulfides is second half of next year. Still doing the final engineering work around that feasibility study. Again, pretty straightforward in terms of bringing that project on once it's approved. Sulfides is a layback of the existing Yanacocha Verde open pit that we're mining today at Yanacocha, so it's deploying equipment to that layback. It's the Chaquicocha Underground Mine, which we've already developed quite extensively. Both sources of ore are well advanced. The key work is around the construction of a concentrator, and the autoclave on the existing footprint. Again, as you approve that project and do your early works, a lot of that is civil works to prepare the foundations for quite a substantial processing plant.
Not see any COVID-related restrictions to being able to bring that project on as we reach full funds.
Great. Thanks so much.
Thanks, Tyler.
Our next question comes from Greg Barnes with TD Securities.
Yes. Thank you. Tom, just rehashing your commentary on the dividend framework, did I understand that you will reassess the dividend every six months now going forward, based on the gold price?
Our board will look at it every quarter, Greg. They'll look back at a semi-annual gold price period. If you look at the discussion we went through with the board this week to approve that dividend, the semi-annual period we looked back on was the first half of this year. Gold was averaging around $1,650 for the first half of the year. We took a conservative view to lower that to $1,500 and apply the 40%, so the lower end of our range to that $1,500. We'll look every quarter as a board, but then look back over that semi-annual period.
Okay. In Q1, if you look back over the second half of 2020, let's say we averaged $1,900 Which it looks like we will, you'd use something like $1,800 as the basis for dividend.
I think as you use our framework and do those calculations, and I think I saw that in your report this morning, that is absolutely the discussion that our board will be going through. You could do that calculation, say the 40%-60% could be somewhere between $2.20-$2.40, and that would be subject to the board looking at not just that gold price, but all of a number of other factors, but that's the sort of discussion that we'll be having. That framework allows us to have that discussion and allows you and the investment community to make those determinations.
Just I was interested in your comments on copper and the projects in your portfolio. Is that an expression of increasing interest in copper or just a factoid out there that those projects have copper exposure, and it's an interesting angle?
It's just purely a factoid, that we don't need to do anything other than develop our organic project pipeline, and we'll get a natural exposure to copper at a time where it will be an important metal in the global community.
Okay, good. Thank you.
Thanks, Greg.
Our next question comes from Chris Terry with Deutsche Bank.
Hi, Tom, Nancy, and Rob. A couple of questions from me. First one on the cash balance now at $4.8 billion. Just thinking about the mechanics of that, looking back, I guess the last couple of years, you have had it down to about $2 billion or so, I think. Generally, it's a reasonably high cash balance. As you think about going forward, as that cash builds, you pay some of it into dividends, and then you should, on our numbers, become net cash relatively quickly. How do you think about the actual cash balance, though? What you'll do with that? Is that going to be used to pay debt, or what physically will you do with the actual cash? Thanks.
Yeah, absolutely. I'll take that one. You've got it just right. We have indicated publicly that we would like to keep cash balances somewhere in the $2 billion-$3 billion range. I think in this time of COVID uncertainty, that remains prudent. We've also indicated that we will continue to use that cash for things like paying down our 2021 through 2023 debt, things like the share buyback that we initiated last year, and certainly contributions to the dividend as well as reinvesting in our business. All of those things combined will give us that financial flexibility and optionality. Yes, in today's world, I think holding a bit more cash on the balance sheet is certainly something we will continue to do.
Okay. Thanks, Nancy. Just in terms of the project pipeline on slide nine, you talked about Ahafo North and Yanacocha Sulfides. $750 million, I think you said for the Ahafo North CapEx and Yanacocha Sulfides second half next year decision. Can you just remind us the time period and the rough capital that would be spent over? I think it's a pretty elongated project, but just wanted to get an update. Thanks.
Thanks, Chris. It's round numbers, $2 billion. We're at 51.35% interest in Yanacocha, so it's roughly $1 billion to Newmont's account. It's a three-year development. If you look at the three big capital projects and if you want to model our development capital going out on the back of those, $750 million for Tanami, $750 million for Ahafo North, and $1 billion for Yanacocha Sulfides over the next four, maybe a little bit into five years. That's about roughly our spend on development capital. Pretty steady. That's another important factor behind our dividend framework, is we've got a steady $1 billion in sustaining capital, a steady $400 million combined between advanced projects and exploration, and roughly a steady $800 million to $1 billion in development capital that we want to maintain. Our framework then allows us to share excess cash to shareholders.
Okay. That makes sense. Next year, those two main updates, and then looking at slide nine, any of the other pre-feasibility type projects that will move to the next gate?
I think the ones to keep in mind that will, in our project pipeline, is what we don't show on that is that we're sinking a shaft at Turquoise Ridge. We own 38.5% of that. The Peñasquito expansion, which we own 40% of that, is getting close to full fund. They're a couple of other very important catalysts within the Newmont portfolio. We will be continuing to optimize the three big mega projects, Galore Creek, Norte Abierto, and NuevaUnión . Only able to do one of those at one time, very end of this decade, early the next. Pamour and Oberon, the second underground of the Ahafo Apensu, moving underground after we've finished the laybacks at Akyem, all of those will push through to execution. Coffee, we're just buttoning up a drilling program as we go into winter.
Coffee would be another potential Ahafo North type project that we could be bringing through to follow on. You get Tanami 2, the Ahafo North. Coffee's got the potential to follow on from that. Plenty of activity happening in that pre-feasibility study phase.
Okay, that's clear. The last one from me, with the automation at Boddington due, I think you said early next year, what's the latest thoughts on how long you'd assess that for before you'd maybe look at other sites and rolling that out on other operations?
We don't need to do much assessing of autonomous haulage. It's proven. I implemented the first autonomous mine in Pilbara almost 10 years ago. It's proven technology. There's no piloting or assessing. It's changing a fleet over, and it's got a business case. What you'll work through with the existing operations, you've got to have enough life in front of you and a value proposition to change out a fleet. Boddington presented that business case. There has to be a business case. Then there's some very important part of our purpose statement is improving lives. We've got to think about those communities in which we live and work and whether autonomous haulage is part of that equation when you think about some of the locations that we're in. We'll continue to assess whether there's opportunities for autonomous surface haulage.
There's plenty of opportunities for underground autonomous operation, and we're doing quite a bit of that already. I expect you'll see more underground autonomous before another open pit. The real opportunity for us is to improve the value proposition around those mega projects that sit at pre-feasibility. When you have within your portfolio an autonomous operation, you can train a new workforce up in that operation and underpin a base case for those projects. Too big a risk to be doing your first rodeo with autonomous haulage with a brand-new project. That's one of the strategic elements of Boddington.
Thanks, Tom. Appreciate it. All the best.
Great. Thanks, Chris.
Our next question comes from Anita Soni with CIBC World Markets.
Thanks, guys. Thanks for taking my question. I would want to delve a little bit further into slide nine and slide 10, which was the capital and the projects. I think you just mentioned that Coffee, you were talking about them in the context of Tanami and Ahafo North. Do I understand that to mean that the capital would be in the range of about $700 million-$800 million? Is that what your trends are back there?
Not quite, Anita. I think it'd be a lower number. The two broad categories I have for projects are major and mega. Major projects for me is anything, it's in the hundreds of millions. It could be anything from $300 million up to $1 billion. Then a mega project is anything greater than $1 billion. It's a different way, from my experience with projects, it's a different way you implement those two types of projects. Coffee is a similar size to a Ahafo North or a Tanami in terms of the complexity of the work.
Okay. It's more along the range of 250,000 ounces, 300,000 ounces rather than 500,000 ounces.
Yes.
Okay. All right. Second question, I'm trying to understand this free cash flow profile that you have a little bit further. Not included in there is the Ahafo and the Yanacocha Sulfides, and obviously all the other projects that we've talked about. What is included is Tanami, which is in execution, right?
That's correct, Anita. Once those projects move into full fund, then those projects will take some of the free cash flow that we're showing there. However, that's only showing free cash flow from gold. It's not showing the free cash flow from the other metals. That chart needs to be read from both of those perspectives.
All right. It does include the gold that kicks in for those. I think those only kick in around 2024 or 2025 anyway, right?
Those projects are in the back end of our slide, back end of our 5 years. They are important projects. I'm excited to be able to bring them forward and show you what those projects do to both our production profile and our cost.
Okay. With respect to exploration, that's something that I'm just interested in. Looking at the exploration budget going forward next year, do you guys have an idea of whether or not they'll stay the same, increase, or what are you looking at at this stage?
It's the same year on year. It's $250 million in exploration. 80% of that spend is near mine. It's been around conversions and extending life.
Okay. I think that's all I have. Thank you.
Great. Thanks, Anita.
Our next question comes from Mike Jalonen with Bank of America.
Oh, hi, Tom, and everyone. Just that you've intrigued me on the Pamour open pit. That Century Project had gone pretty quiet since the merger. It's coming back to life. What's changed from what the prior owner was saying about Century versus a smaller pit? You're not moving any buildings. Just curious what kind of crush rate could it be? Thanks.
Thanks, Mike, and really pleased we're getting a question from you. Look forward to a question from you each quarter. I'll pass across to Rob to give you some color on Pamour.
Yeah, Mike, good morning. It really is the simplicity of it and the lack of complexity, to be honest. Obviously it's an existing mine that just needs to be dewatered. We've got a good geological model there. We can use the current plant infrastructure. It also provides us with that kind of 10, 11, 12 years of mine life that allows us to further explore the Borden, the Hoyle Pond, and the Dome ore bodies. It really was just a fairly simple value equation, and we just thought that was the simplest route, but also the most value-accretive route.
Where do you go from here with this project? As you can see, I'm trying to get some numbers or some timeline.
Well, we are just doing the studies at the moment. As that slide indicated, we are still at the early stages. I would expect we'll be able to give you more of a timeline in next year, once we've progressed it a bit more. Just a kind of rule of thumb that we're expecting, it's going to be a 3 to 4-year planning preparation stage, and then we're expecting around about the 12-year, 13-year kind of life at between 150,000 ounces-200,000 ounces kind of thing. That's broad brush. Certainly, Mike, it's early days. The team is working hard on it at the moment to come up with suitable mine designs and dewatering schedules. Certainly in the new year, we'll be able to provide more color.
Okay. I guess just turning to Oberon. I can't remember if that was discussed when we were at Tanami there in November, a couple of years ago. Maybe just remind me where that is, and just seems pretty exciting.
Yeah, Mike, again, I wasn't on that tour. With you, I think, Mike, we might have touched on it in terms of the geological overview that Chris Robinson did. We've done a power of drilling since you were up there. Sorry, Rob.
No, no problems. It literally is just a stone's throw away. It's less than 30 km from the underground.
Robinson has a strong arm.
Certainly, there's a huge amount of synergies that we can get there. It is an open pit, but it's also got underground potential as well. In terms of proximity, it's very close, which allows us to potentially use the existing infrastructure. That's certainly one that the team has focused very hard on. As I mentioned, the drilling program, we've struggled this year because of COVID, not being allowed to drill on Aboriginal land. We've got those approvals and post the wet season, we can straight back to it again.
Okay, well, thanks for that. I look forward to the next trip to Tanami, maybe November. We'll see. Thanks.
That would be fantastic. There's a lot to show off.
Thanks, Mike.
Our next question comes from Michael Dudas with Vertical Research Partners.
Yeah, hi. Good afternoon, everybody. Good morning, I guess, where you guys are, everyone. Just maybe, you mentioned briefly about ESG in your prepared remarks, et cetera. Thinking about from the energy standpoint, when you're looking at your development projects, obviously you're probably re-looking, probably always looked them from the best environmental and social efforts from a development standpoint. Any opportunities or thoughts on, let's decarbonizing them from that standpoint? Are you looking into investments that you haven't talked about in some of the development work that may lead towards some requirement investments to improve that metric from a carbon-free standpoint?
Thanks, Michael. We're working right at the moment through our 2030 target, so we're resetting our emission targets, both tons and intensity, such that they're science-based. We're also debating an aspirational target for 2050. Because we've got a long life portfolio, we can actually see out to that far and start to talk about how we support the global community in terms of how we develop our projects and our operations. Our portfolio has a natural move to underground mining. As we move to more underground than open pit, we reduce both our emissions on an intensity and tons basis. We look at where our power sources are coming from, both what we can do to convert power and where we're pulling power off the grid, what the suppliers are doing, how we can encourage suppliers to improve their emissions intensity.
For instance, in Ghana, we've supported the installation of solar power cells that go into the grid as part of that process. If we're serious, then we need to be thinking about what we're doing with our investments to ensure that we're reducing our emission intensity. That is the move to more electric equipment, the move to autonomous haulage at mines. Although it's still diesel-fired trucks, you are more efficient because the automation doesn't have the human element in terms of how those engines are operated. We need to look at different fuel sources. We already apply a carbon price to some of our key investments, $20 a ton and $40 a ton to assess what we do. Our Full Potential program, our continuous improvement program, a key element of that is improving energy efficiency, which improves the cost, improve productivity, and reduce emissions.
We need to think about, and our industry needs to be part of the discussion around where are we putting our money, where our mouth is with these targets and with our aspirations, and starting to develop technologies that can ultimately lead to a carbon neutral world. They're the debates we're having right now. I think if you want to be a leader in this industry, then you have to be demonstrating through your actions, ESG leadership. We're having those debates, and stay tuned. We're going to talk about our new targets next month, and then continue to talk about how we deliver those in the weeks and months beyond that.
Tom, if I could just add that, just to build on that, Michael, that Ian Geering, who leads our technical service, is also employing some key specialists in this domain, and we've got power and electricity specialists, which will really help us in terms of not only managing the current power that we're pulling from there, whether it's the stranded power or whether it's from the grid. Also working with the suppliers, as Tom said, about the future, whether it's gas plants, solar plants, other type of electricity plants. Again, it isn't just about the targets. We're actually building the teams that we need to do that work.
That sounds all very encouraging. Thanks, Rob.
Thanks, Michael.
This concludes our question and answer session, and I would like to turn the call back over to Tom Palmer for any closing remarks.
Thank you, operator, and thank you, everyone, for joining us today. Please, you and your families stay safe and well. Thank you.
The conference has now concluded. Thank you for attending today's presentation.