Good morning, and welcome to the Newmont Goldcorp Business Update Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Gary Goldberg, Chief Executive Officer.
Please go ahead.
Good morning and thank you for joining us. Today, I'm joined by David Garofalo, President and Chief Executive Officer of Goldcorp. We and other leaders will be available to answer questions at the end of this call. Turning to Slide 2. Before we start, I'll ask you to review the cautionary statement shown here and refer to our SEC filings, which can be found on our website atnewmont dotcom.
And on Slide 3, you'll find additional information on the proposed transaction here. Turning to Slide 4. We're here today to announce the formation of the world's leading gold company. I'll start by giving you a little background and context. I've been CEO of Newmont for the last 6 years.
During that time, we've built a reputation for delivering on our commitments and building strong relationships across the gold and mining sectors. One of our strongest connections has been with the Goldcorp team based on our shared values and common cultures. We've looked at a number of opportunities to work together over the years and today's announcement would not have been possible without the solid connection and trust we've built through these interactions. You've heard me say often that we continuously evaluate many opportunities and weigh them based on their value and risk. Up until now, only one has met our criteria.
The transaction we are announcing today is another and one that positions our business as the gold industry leader for decades to come. Simply put, this is not a deal we have to do. This is a deal that we want to do. It's a deal that combines world class assets and prospects in favorable mining jurisdictions and that leverages the best of our proven abilities, including a common safety culture, superior operational execution and continuous improvement focus to the longer term benefit of our shareholders, employees and host communities. Let's turn to the transaction overview on Slide 5.
Newmont Goldcorp will be the world's leading gold business as measured by assets, prospects, people and value. We will operate a portfolio of world class assets on 4 continents with the ability to target sustainable production of between 6000000 and 7000000 ounces of gold annually and have the benefit of additional revenue from other products, including silver, zinc and copper. Combining forces will also give us the sector's best project pipeline and exploration portfolio in terms of quality and depth. These prospects translate to the gold sector's largest reserve and resource base and exceptional long term leverage to the gold price. Finally, Newmont Goldcorp will have the financial flexibility to execute capital priorities, deliver sustainable shareholder returns and maintain an investment grade balance sheet.
Our ability to make the most of this combination rests on great people and shared values. We are aligned in our commitment to doing things right, from sending people home safely every day to leading the way in our environmental, social and governance practices. Taken together, these attributes give Newmont Goldcorp a clear competitive advantage and the ability to generate industry leading returns for decades to come. Now I'd like to summarize the transaction highlights for you on Slide 6. Our Boards of Directors have unanimously recommended an all share combination of Newmont and Goldcorp to create the world's leading gold company.
Newmont will acquire the outstanding shares of Goldcorp at an exchange ratio of 0.328 of a Newmont share and $0.02 cash for each Goldcorp share. This equates to a Goldcorp equity value of $10,000,000,000 with a 17% premium based on the company's 20 day volume weighted average price as of Friday's close. After closing, Newmont and Goldcorp shareholders will own approximately 65% 35% of the combined company, respectively. Newmont Goldcorp will be listed on the New York Stock Exchange and will seek listing on the Toronto Stock Exchange upon close. We are pleased to announce the transaction was unanimously approved by the directors of both companies and we expect to close in the Q2 of 2019.
There are a number of regulatory approvals and other customary closing conditions that our teams will be working diligently to complete over the coming months. With that, I'd like to thank the Goldcorp team for their partnership and professionalism and turn it over to Dave for his perspectives.
Thanks, Gary. Over the past 6 years, the Newmont team has executed a thoughtful plan to position the company for long term success by optimizing their portfolio through non core asset sales, advancing profitable growth, investing in exploration to support a stable production profile and strengthening their balance sheet while returning cash to shareholders. At GoCorp, we've also spent the last several years focused on a highly complementary strategy to drive long term shareholder value with a mission to sustainably produce 3000000 to 4000000 ounces of gold annually from 6 to 8 large scale districts. These districts are located in areas with low political risk exploration potential. And we've been successfully progressing towards these goals.
However, Goldcorp's Board and management team believe we can maximize the full value of our future by combining with another industry leader, Newmont. Turning to Slide 7. The formation of Newmont Gold Corp. Ensures that Canada will continue to be a pillar for an industry leading gold company that is responsible, invests in long term success of its assets and has financial strength to explore and develop the next generation of mines. Newmont Coal Corp.
Established its North American regional operating office in Vancouver, reserving jobs in Canada and establishing a base for certain global functions and centers of excellence for a Canadian workforce of more than 4,000 employees and a combined North American workforce of approximately 10,000 employees. Company operations to be overseen by the Vancouver office will include all sites in Canada and the United States, which combined have gold production of more than 3,000,000 ounces per year compared to 2,500,000 ounces of production currently managed from GOLCORP's Vancouver head office. Newmont Core Corp will also provide prospects for new investments in a reinvigorated exploration program in Canada and with the largest pipeline of feasibility and development stage assets in the Canadian gold business, including Gore Creek, Century and Coffee Projects. And the company will establish a share listing on the Toronto Stock Exchange providing Canadian investors with a dedicated investment vehicle. We've only strengthened our ability to continue honoring our commitments through collaboration agreements with 26 First Nation communities across Canada for sustainable development and benefit sharing with our partners.
Back to Gary for a review of our combined portfolio on Slide number 8.
Thank you, Dave. This transaction brings together 2 world class operating project and exploration portfolios. As you can see, we will significantly increase our presence in the Americas with the addition of Goldcorp's 4 operating mines in Canada and 3 operating mines and joint ventures in Argentina, Chile, the Dominican Republic and Mexico. Combined with Newmont's 12 operating mines in the United States, South America, Ghana and Australia, Newmont Goldcorp will be able to leverage its scale and operational expertise to unlock value. Collectively, our combined assets will establish Newmont Goldcorp as the world's leading gold producer with the ability to target sustainable production of 6000000 to 7000000 ounces of gold across 4 operating regions.
Turning to our combined project pipeline on Slide 9. Newmont Goldcorp will have the best project pipeline in the gold industry, providing the foundation for steady, profitable production and cash flow for decades. This pipeline gives us significant optionality and we'll continue to advance only those projects that meet our minimum hurdle rate of 15%. The depth of this pipeline also allows us to optimize projects to ensure that capital is deployed effectively and efficiently based on value and risk. Turning to our combined exploration portfolio on Slide 10.
Newmont Goldcorp's combined exploration portfolio includes 17 sets of near mine opportunities and 14 distinct greenfield targets. Newmont was one of the few gold companies that continued to invest in exploration through the last downturn, and we've been increasing our focus on growing reserves and resources to fill our longer term project pipeline. Similar to Newmont, Goldcorp is focused on the development of a world class target pipeline to deliver prospective future development opportunities. The majority of Goldcorp's exploration focus is on near mine development and greenfield exploration through investments in high quality exploration companies, which are intended to provide toll holds in highly prospective gold districts. Goldcorp will contribute over 20 strategic investments to our world class exploration program.
In summary, maintaining a superior exploration program will remain a cornerstone to Newmont Goldcorp's strategy for long term value creation. Turning to Slide 11 for a look at our reserves. We will have the largest gold reserve and resource base in the world along with the highest reserves per share in the gold industry. Also, more than half of our reserves will be located in Canada, the United States and Australia with the remainder in Latin America, Mexico and Ghana. Newmont Goldcorp's assets will be centered in the world's most favorable and prospective mining jurisdictions and gold districts, which is a distinct competitive advantage and positions us to deliver sustainable returns.
Turning to Slide 12 for a financial summary. Newmont and Goldcorp's portfolios have historically delivered solid financial results. As you can see here, this combination will be especially powerful when it comes to returns, including the scale of our cash generation and earnings potential. This potential, combined with our investment grade balance sheet, provides us the ability to fund our most promising projects and target 6000000 to 7000000 ounces of gold production over a decades long time horizon. Getting into the specifics on how we'll create value on Slide 13.
We will apply the best of each company's operating models, systems and technologies to create a safe, high performing organization known for superior operational and project execution and leadership and sustainability and responsibility. As we target sustainable production of 6000000 to 7000000 ounces of gold annually, we will continue to be disciplined in our capital allocation strategy and maintain an unwavering focus on value and shareholder returns. Our investment grade credit profile and the equity based transaction will allow Newmont Goldcorp to maintain a strong balance sheet, which can be used to fund our most promising projects, repay debt as it comes due and deliver superior returns to shareholders. As I mentioned previously, we will advance our most promising projects that meet our minimum hurdle rate of 15%. And we've identified up to $100,000,000 in annual pre tax synergies that we expect Newmont Goldcorp to deliver along with additional upside from cost savings achieved with the application of our full potential continuous improvement program.
Both companies have a successful history of portfolio optimization, including monetizing non core assets through divestments. Taken together, our streamlining efforts have generated nearly $4,000,000,000 since 2013. Newmont Goldcorp is targeting $1,000,000,000 to $1,500,000,000 in asset divestitures over the next 2 years as we go through a disciplined process to assess our assets on a value and risk basis. Turning to Slide 14 for an overview of how this transaction will benefit our employees. Newmont Goldcorp will have 20,000 employees and a total workforce of approximately 38,000 individuals who will be focused on operating safely every day and driving a culture of 0 harm.
The combination will provide expansive career development opportunities and the ability to pursue new jobs in new places. However, these places will feel familiar due to our strong cultural alignment of inclusion, diversity and employee empowerment. Newmont Goldcorp will also continue leading the industry in environmental, social and corporate governance performance. Turning to Slide 15 to look at how we stack up against the competition. For our shareholders, the combination expected to be immediately accretive, and it positions Newmont Goldcorp as the go to gold equity.
We'll lead the pack in total enterprise value and reserves and continue to have a laser focus on returns, including free cash flow and providing an industry leading dividend yield. We intend to maintain a stable and sustainable annualized dividend of $0.56 per share with the usual review and approval through our Board process. And our key differentiators are supported by strong financial flexibility and an investment grade balance sheet. Turning to Slide 16 for a look at our governance and management. The combined entity will be led by an experienced management team with a proven track record of execution and delivery and a Board that is focused on creating value and improving lives through sustainable and responsible mining.
At close, the Board of Directors will be proportionally comprised of 2 thirds Newmont and 1 third Goldcorp Directors with Noreen Doyle serving as our Chair and Ian Telfer serving as Deputy Chair. At close, I will serve as Chief Executive Officer for Newmont Goldcorp and Tom Palmer will serve as President and Chief Operating Officer. Together, we will be responsible for appointing the remaining members of the new management team on a best talent basis. Tom and I will be working diligently with our team over the coming months to ensure a smooth and successful integration, which is anticipated to be substantially complete in the Q4 of 2019. Tom and I have both had significant experience preparing for and delivering complex business integration processes, so are well equipped to take on this key task.
As part of a planned and orderly leadership succession process, I've been engaged in discussions with the Board anticipating my retirement in early 2019. In October of 2018, Newmont announced Tom's promotion to President and COO as part of that process. To ensure a smooth and successful combination, I've agreed to lead Newmont Goldcorp through closure of the transaction and integration of the 2 companies. This is expected to occur in the Q4 of 2019, at which time Tom would become President and Chief Executive Officer. With this transition, Newmont Goldcorp will continue to have a proven leader who I've worked with, the Board to help develop and who is committed to advancing people, process improvements and performance.
Wrapping it all up on Slide 17. We're very excited about this opportunity and have clear implementation plans in place to transform 2 world class companies into the world's leading gold company. For nearly 100 years, Newmont has been recognized as one of the world's premier mining companies. And today, with the combination with Goldcorp, we are in a position to continue leading the sector in profitability and responsibility for the next century. Thank you for your time.
And with that, I'll turn it over to the operator to open the line for questions. As a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we'll re prompt for additional questions.
We will now begin the question and answer session. Our first question will come from John Bridges of JPMorgan. Please go ahead.
Good morning, everybody. Good morning, Gary, Dave. Congratulations. I hear you, Gary, on this being a deal you want to do rather than one that you need to do. I just wonder for Dave, what drove the timing of this?
Because on paper, you're about to deliver on all the good works you've been working you've been on for the last couple of years. So I just wondered if what was driving this timing?
No, you're right, John. We actually had a very strong 4th quarter and we're starting to see a rebound in our production. It was up 25 percent quarter over quarter. Our all in sustaining costs were below $800 an ounce. So all that meaningful investment we've been making in our existing operations in brownfield expansions is actually starting to reap reward.
But this was a unique opportunity to provide us both the technical and financial firepower to advance our robust project pipeline. And we have a number of projects of scale in the pipeline, including Coffey, Nueva Union, Norte, Vierto and Sentry. And of course, Nume offerings in a large pipeline as well, including Galore in Canada and a number of other projects that only enhances our ability to deliver sustainable production long term. So it's a unique opportunity to create a leading gold company, the leading gold company in space with all the financial and technical firepower we need to advance that robust project pipeline on a combined basis.
As a follow-up, there were some press reports that there have been discussions between yourselves and Newcrest. I'm just wondering if there was an auction process, which means that there's less likely to be any competition for your hand in this marriage?
Yes. We don't comment on speculation and all the details of this deal will be in the Circular once it's mailed.
Okay. Thanks guys. Well done. Thanks John.
Our next question comes from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, good morning. Thanks for taking my question. Can you talk a little bit more about the $100,000,000 in annual synergies? I think looking at the operational map, it doesn't seem as obvious because there doesn't seem to be as much geographic overlap between the two companies. Maybe some more color on just the buckets or broadly where you see those synergies coming from?
Yes. Thanks, Fahad. At this stage, what we've done is gone through a process at a high level to go through and understand as we combine the organizations where there's potential overlap and where we see some initial areas that would streamline our overheads. And so that's basically the buckets that are there today. We're going to be in the process of moving our North American headquarters out of ELCO into Vancouver as part of our bolstered presence in Canada.
And we'll be looking for the best of the best to staff that up as we go through the process. We also have our full potential continuous improvement program that we'd be applying to Goldcorp's assets. They've been down a similar process, but applying the process that we've been able to demonstrate over the last 5 years very effectively to drive continuous improvement through the business is an opportunity we see. We've not included that in the $100,000,000 number as we presented this to the market.
Okay, great. And just a follow-up, just maybe more on the administrative side. Goldcorp was supposed to have their Investor Day this Friday with updated guidance maybe on an asset by asset level. Are we going to still expect guidance for Goldcorp's assets? And if so, when would that be?
As Gary said, we're looking at sustainable production from the combined portfolio of 6000000 to 7000000 ounces as we look at which assets are non core to the portfolio. So I think once we've been through that process, and I'll let Gary interject as well, then I think we'll provide holistic guidance for the combined portfolio.
I think as we go forward and get the information circulars out and move through the process, we'll be in a position to provide guidance on the combined entity
in the future. Thank you.
Thanks, Fahad.
Our next question comes from Matthew Murphy of Barclays. Please go ahead.
Hi, David. Hi,
Gary. Question for Gary just on the that 6000000 to 7000000 ounce target.
Have you identified roughly like how many ounces in
to get to that 6000000 to 7000000 ounces? Or is a lot to get to that 6000000 to 7000000 ounces? Or is a lot of that 6000000 to 7000000 ounces just reached by the natural decrease in production over time?
Yes. Matthew, what we're doing is going through a process similar to what we followed over the last 6 years at Newmont, looking at value and risk, looking at whether we can improve the value or reduce the risk on assets and then make a decision as to which assets we would continue to operate or not. So we'll go through this entire process of optimizing the portfolio, looking at both the operating assets and the projects and looking at which we want to bring on, when we bring them on, it's going to be the other part of that process. So stay tuned as we go through this in terms of further details, but that's basically the process we intend to follow. Okay.
And then just as a background on
the deal, just interested in how much opportunity you did have to do due diligence ahead
of the deal?
Yes. Thank you, Matthew. We had an extensive opportunity to work with the Goldcorp team, visited operations, go through complete due diligence review of data rooms and ask and answer all the questions that we've asked along the way. And I'd just say we did the same. But on top of that, Gary my team have been working together for 3 years looking at opportunities together.
So it was
a high degree of familiarity between technical teams that we established over that period.
Thank you. Thank you.
Our next question comes from Josh Wolfson of Desjardins. Please go ahead.
Hi. I was wondering if you could provide any more details on what the non core assets are and the assets that would potentially be up for divestiture post this transaction?
Josh, at this stage, we want to go through the process reviewing value and risk, make sure we've achieved the best value that we can from the assets or reduced risk and then make a decision as to which assets to sell. We've laid out a timeline and a rough number here of $1,000,000,000 to $1,500,000,000 over a 2 year period. Had lots of inbound calls today from different folks who have interest in different assets. So, I know there's lots of interest out there, but we're going to go through our own internal process and be in a position as we get towards close to be able to move forward.
Okay. And then maybe as a follow-up, in terms of the portfolio assets that would satisfy the company's 15% threshold returns, beyond coffee within Goldcorp's portfolio, is there anything that Newmont would see as meeting that hurdle rate or could potentially meet that hurdle rate?
I think what you saw on the chart with all the different projects are all projects that we believe either are at or could achieve that sort of a hurdle rate. And that's why we go through a very detailed stage gate process of review along the way. And if they're not able to meet that, then we would go a different direction. But that clearly is one of the key financial hurdles that needs to be met along the way. Okay, great.
Thank you very much.
Thanks, Josh.
Our next question comes from Anita Soni of CIBC. Please go ahead.
Hi, good morning, guys. Question was the same as Josh's essentially about asset divestitures and someone laying out a timeframe. So, I think it's been asked and answered. Thanks.
Thanks, Anita.
Our next question comes from Brian MacArthur of Raymond James. Please go ahead.
Good morning. And this may fall under the synergy discussion that you can't give us a lot more info. But is there any tax efficiencies in all of this? Or is it it looks like you've got a lot of regional setup. Is there any benefit at a corporate basis?
I'll hand over to Nancy to address that.
Yes, great question. We are continuing to look at all the attributes of both companies and the combined entity, and we will certainly be looking to utilize tax pools in both Canada and the U. S. To the extent possible. It's still very early days as we put together the combined entity, but that's certainly those are attributes we're looking at and continuing to model.
So we do believe there'll be some positive outcomes from that pooling.
And would that be included in the 100,000,000 dollars
No, it would not.
Our next question comes from Paresh Sood of Morgan Stanley. Please go ahead.
Hey, guys. Congratulations. A couple of questions. First one, this deal, what does it do to your appetite for smaller deals here and there, whether that's something early stage or let's say something like KCGM, if it becomes available at the right price?
Abhush, I think just as we've been doing over the last 5 or 6 years, we'll always look at opportunities on a value versus risk basis. And if they make sense, then we'd move forward. And if not, we wouldn't.
All right. And if we look at your joint pipeline with Goldcorp and maybe some months when you start thinking about use of cash, But then how long do you need where you can start figuring out how to prioritize these projects and if some of Goldcorp's projects could rank above your projects?
No, that's part of the process we're working through in terms of prioritizing and optimizing both the operations and the projects and when is the right time to bring them in. So that work is ongoing as part of our overall integration process. Okay. So last one for me. I should
we read into that at all? Is Should we read into that at all? Is there something that we should understand from that for the future?
I'm sorry, I didn't follow what you were asking. Say that again?
Your overlap with Barrick has increased with this transaction with another JV. And so should we read anything into that? Is there something on the cards in the future around cooperation of some kind?
No, I think just as we have been cooperating with Barrick at our joint venture in Western Nevada and our joint venture in Australia. This adds another couple of joint ventures that we look forward to working with them on.
Our next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.
Okay, great. Good morning, everybody, and congratulations. Gary, maybe a holistic question for you. There's 20 minutees that you're going to have in your portfolio, like how many do you think are manageable? I mean, 20 is too many.
What do you think a manageable rate is for a 6000000 to 7000000 ounce ounce producer?
Tanya, thank you. Good question. I think from my standpoint, I look, we've got a well established regional structure in place already today that covers North America, South America, Australia and Ghana. So we're adding some basically an additional 6 operating mines plus other joint ventures to that. We'll go through the process value versus risk in terms of optimizing that portfolio.
What operations do we need, what projects, when do they come in and also go through and I haven't had much chance to really emphasize it, the exploration potential. I had a slide in the pack that showed all the areas where we're working for both brownfield and greenfield opportunities to be able to grow in these safe jurisdictions. So we'll go through a rigorous process, but I think within our existing continue to apply the good rigor and discipline that we've applied to our current portfolio to the overall asset base and do what makes the most sense for the business going forward.
Okay. I guess we'll get more on that. Then maybe just another question, if I could, just on Dave mentioned that you've been working with Goldcorp for the last 3 years looking at assets. Perhaps just more a little bit on the background to this acquisition in terms of when did this acquisition really start to play forward?
Like I say, we've been working with Dave and the team and his predecessors over the years in terms of looking at opportunities together. I won't get into what opportunities we've looked at, but we've developed a good relationship, one that common cultures is demonstrated and common values between the companies and it's something that's evolved over time to what we've been able to announce today.
Okay. I guess I'll wait for the information circular. Thank you.
Our next question comes from Mike Parkin of National Bank. Please go ahead.
Hi, guys. Largely my question has been answered. Thanks. Thanks, Mike.
Our next question comes from Chris Terry of Deutsche Bank. Please go ahead.
Hi, Gary and David.
I
think most of the key questions have been answered. Just coming at the divestiture and the overall mix of where you want the company to be with 6000000 to 7000000 ounces overall. Maybe you can just talk about the regions of the globe that you see as key developments of where you want to put the efforts, maybe what the mix from a jurisdiction point of view might be as a target?
Yes. I think, Chris, from our standpoint, it's not really targeting so many ounces from a region. It's where we'll find the best value from our assets and within the scope of those 4 operating regions. So clearly, Canada, we've grown both with the acquisition of the 4 operating mines, but we've had Galore Creek, you've got the Coffey project, you've got the other projects there. South America, we will continue to look at the projects there that we have and Goldcorp has had as it bring forward.
And we continue to move forward with good projects. You look in Australia, the Tanami, the next stage of expansion there and in Ghana with the expansion opportunities, finishing the mill expansion later this year and looking at the opportunities for further underground development at both Ahafo and Achim as well as the potential development of Ahafo North. So we'll be taking a look at that whole picture, but really it boils down to what's the best value versus risk and we'll put that whole picture together.
Okay. Thanks, Gary. And just a follow-up to that. You talked about the 15% hurdle requirement. Can you just talk through your views on cash cost position of assets, maybe mine life, some of the other considerations when you're looking at assets?
Is it plus 10 years, a certain position within the cost curve, etcetera?
Thanks. No, Chris, exactly. When we talk of value, we're talking about position on the cost curve for the assets. So that's of importance. We're looking at mine life and 10 years at a minimum would be one of the elements.
And then the return characteristics, which in our case we're saying is a minimum 15%. Those are the key areas that we focus on.
Okay. That's it for me. Thanks, Chris. Thanks, Chris.
Our next question is from John Tumazos of John Tumazos Very Independent Research. Please go ahead.
Congratulations, Gary, on your next endeavors.
Thank you, John.
On the surface, the Vancouver enlarged office would seem a little less efficient than Nevada reporting directly to Denver. And on the surface, the new office hub in Miami might a cynic could call it a new bureaucracy. Are there going to be some offsetting rationalizations? For example, will Newmont trim 50 or 100 people from the Greenwood, Colorado office or make some other cuts to offset the what a cynic might call the new bureaucracies?
First of all, John, in terms of new endeavors, we've got a pretty big plate in front of us here that we're going to be focusing and I'll be working closely with Tom on. In terms of the regional headquarters, the Miami office is not new. We moved our Lima office as part of integrating Merian and our Peru operations as well as other exploration efforts in South America to a new location. We assessed a number of different locations and decided to locate that group in Miami. That group is about 40 people.
So it's actually a bit smaller than what we used to have in Peru. But it's we still have presences in the regions and at the sites, but we've brought those things that make best sense to cover on a regional basis together there. So we'd be following that same model of what we would locate in Vancouver at the end of the day and what would still remain in Nevada and what would remain in different places around the world ultimately. But what we have is a global footprint and we have the 4 regional offices. That's where the people deal best with the issues in the region at the time.
And I think that's worked very successfully continue to look at there as well as our head office and what the needs are. We'll be locating some global functions in Vancouver as part of this process, which makes sense in terms of availability for talent that we're able to attract in Vancouver versus in ALCO. And I'm sensitive to the point that we've got to go through a proper process with our employees in ALCO and with the employees in Vancouver and quite frankly around the world as we go through and get the best of the best to set up the business for success in the future. Thank you. Thanks, John.
Our next question comes from Michael Dudas of Vertical Research Partners. Please go ahead.
Gary, David, good morning.
Good morning, Mike.
Gary, with this transaction, does this impact materially any of the outlook and the timing of what you discussed with the investor Internet discussion in December?
In terms of our portfolio, obviously, we'll have to take a step back and relook at sequencing of projects at the end of the day. But I think in terms of our base portfolio, we gave that guidance for 2019. I wouldn't see huge changes in terms of where we're at for 2019 in particular. But for the longer term outlook, clearly, we'd be we're set up now for decades out in the future, which is an important difference here in terms of the opportunity this gives us to optimize operations, projects and exploration portfolio.
All right. Understood. Just want to understand the near term outlook for the new projects, which you think confidently answered. Second question would be from a balance sheet perspective, maybe Nancy, how do you think about with the new profile and the capitalization of the company and what the debt metrics are, the opportunities for lengthening, reducing, maybe working capital opportunities to take out of the combined business and how much more leverage in this big larger organization could you be thinking about as you think about funding some of these projects over the next several years?
Yes, great question. We still have a very robust focus on the balance sheet. You've seen Newmont be a good steward of the balance sheet over the last number of years, and we will continue that philosophy with the combined entity. We will have a very manageable debt portfolio at closing and we'll continue to rationalize that and move towards a very much an investment grade balance sheet. We will still have the optionality to continue to pay our debt as it comes due and we'll be able to offer many returns to shareholders in the form of our sustainable dividend and our share buyback that we participated in over the last few years.
So the good news is the balance sheet will come more into line with what you've seen from Newmont over the last years, and it'll just take us a bit of time to get there. But we would still anticipate the same amount of net debt to EBITDA in that less than one times ratio, which is what we've sort of been striving for over time. So we're pleased with the balance sheet strength and we'll continue to focus on it in the way we have.
Excellent. Just one quick follow-up. Gary, when you looked at the assets in the transaction valuation, I assume you've seen the $12,000,000 to $12,500,000 long term gold price. How does it look from a sensitivity analysis as you think about maybe in a more difficult price environment that we're looking at these assets on return from an operational standpoint?
No, I think as we've assessed the overall acquisition, we're really positioning this business to be in a position to work through the cycles. And that's why we look at optimizing assets, projects, the whole portfolio to be able to be in a position to thrive through the cycles. That's where we have the flexibility with the different projects as to timing. And we've had the same with Newmont, and this gives us even more flexibility in terms of the overall portfolio.
Our next question comes from Andrew Tepes of Barclays. Please go ahead.
Hey, good morning. I appreciate the comments you just made on the balance sheet. But just to clarify, is there a specific credit rating that you plan to target? And then as a follow-up, do you envision the 2 balance sheets becoming 1 credit in the future, either through guarantees or some other method?
Yes, absolutely. We were out visiting the rating agencies last week, and we had very good robust conversations about that. We anticipate maintaining our credit rating of investment grade at this point in time and we anticipate that the agencies will comment further soon this week and then we'll also see likely ratings update after closing is the anticipated timing. So yes, we anticipate being one credit going forward and the Goldcorp notes and such would move up under Newmont. We'll consider other options for those, but fundamentally think of it as one credit post closing.
Thanks very much. Thank you.
And our next question will come from Anita Soni of CIBC. Please go ahead.
Hi. Thanks for allowing the follow-up. So questions that I have. First, on your dividend prioritization. Previously, it was a big priority for Newmont, and I just want to know where that stands now going forward?
And secondly on the guidance, Newmont you guys have provided your guidance back in December. Goldcorp has not and they've canceled their Investor Day. So I'm just wondering when we're going to get the Goldcorp side of the equation. Will that be with some reporting of results? And would that be Goldcorp Goldcorp still reporting their results and putting that out?
Or is that going to be when should we be looking for what the combined company will be producing in 2019?
Yes, absolutely.
Brent, you covered the dividend first.
Yes. That has been a priority for us and we do anticipate remaining at the $56 dividend as we move forward. That's very much in line with the same philosophy that Newmont has had. And on the combined entity, we still have the capacity to pay that dividend. As we've indicated a stable sustainable dividend over time is our target and we will continue to honor that commitment.
From the perspective of additional guidance and more information
Yes. I'll appeal that. Thanks very much. So as I said earlier, Anita, we will be providing guidance on the combined entity in due course once we've gone through a process of evaluating the core and non core operations in the combined portfolio and then provide holistic guidance for the new entity.
Our next question comes from Steven Butler of GPM Securities.
Gary, question for you. You said in your introductory remarks that you don't have to do this deal, but you want to do this deal here today. Can you give us again the key reasons for that? I guess you were talking about in your remarks increased flexibility in the project pipeline. And obviously, given what's happened to the share price relative to exchange ratios, it seems to be very accretive to your financial and valuation metrics.
Is that the 2 key reasons? Or anything else you'd like to say?
Yes. I think as I look, it's the list, first of all, it's accretive to shareholders as you pointed out. So that's key. The ability to come in and go through our disciplined process to optimize the overall portfolio to a production level of roughly 6000000 to 7000000 ounces a year, the synergy value, the upside potential from that in terms of being able to apply our full potential continuous improvement program across the portfolio, we think is good. And when you optimize the projects, when they come on, when is the right time, we see decades out into the future that we've set the company up for.
So that's really it. We put ourselves in the position of the best portfolio of operating assets, projects and exploration
This concludes our question and answer session. I would like to turn the conference back over to Gary Goldberg for any closing remarks.
Thanks all for joining the call today. I want to thank Dave and his team and the Newmont team that have been involved in this process and look forward to continuing to share with you what the future will look like. And thank you for your interest in the Newmont Goldcorp strategic combination. Have a safe day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.