Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by this is the conference operator.
Welcome to the Barrick 2021st quarter results Conference call.
During the presentation all participants are in listen only mode.
Following the presentation, we will conduct a question and answer session at that time. If you have a question. Please press star followed by one on your telephone keypad.
At anytime during the conference should you need operator assistance, Please press star and zero.
As a reminder, this conference is being recorded and a replay will be available on barrick's website. Later today may six 2020.
I would now like to turn you over to Mark Bristow Chief Executive Officer. Please go ahead Sir.
Thank you very much and a very good morning, and good afternoon, ladies and gentlemen.
Welcome to the.
Presentation, all about Twentytwenty.
Q1 results.
Well I spoke to you around this time last.
Last year.
Was able to report that we had made great progress towards achieving the messages goals.
The structure of the company had been made fit for its purpose of becoming a model that.
The modern mining business.
Strong regional management teams had been installed.
Oh body ownership transferred back to the modest.
You had produced.
And the balance sheet strength and.
In the past yeah.
We have worked to further improve operational performance.
And amidst all this activity.
We concluded formal value creating transactions.
The historic Nevada Gold mines, imagine, which added 60, a one mine to our portfolio.
The disposal about stake in pay CGM and the buyout of the Acacia minorities.
Which enabled us to settle that companies dispute with the Tanzania, and government and take a the control of its assets.
In quarter, one we have combined Massawa project [laughter] with terrain goes nearby set but all of them on.
And the deal which has already delivered significant value to all our stakeholders.
The past quarter's results, which were published earlier today.
Show that we are actively building on the solid foundation laid Didnt 2019, as we are looking ahead to the next phase of value creation.
These take note of the cautionary statement.
Well that was what locked to read a little more it is available on our website.
The fact that this is a virtual presentation today.
Next the Grimaced reality about age.
The code that 19 pandemic.
Which has locked to many of us down.
Whether it now homes.
Or at <unk> operations.
Elsewhere.
History, we'll judge how governments responded to this black Swan event.
Which don't do without warning.
Precipitated an extreme crisis.
And we'll have I'd unforeseeable consequences laclede to change the welds whatever.
Speaking for Barrick.
Yes.
I can say the team responded immediately to the early signs of the crisis and therefore, what prepared to deal with its impact.
Oh now people.
And our business.
Comprehensive action plans will probably rolled out at all outside and offices and then overall strategy, we called the full piece approach.
Those people standing for productivity.
Preparedness for.
Prevention.
And perspective.
Wow, that's priorities have been to safeguard the health and safety about workforce and communities and to secure our largest logistics and supply chain.
Barrick has also been engaging with our host governments since mid February to support their own campaigns against a pandemic.
On the screen all listed some of the community assistance measures we have taken.
And as you can see to date, we have contributed more than $20 million to host governments to fund the acquisition of medical supplies and facilities.
Many of these countries are economically challenged.
And poverty.
Which we found out is a global problem.
Nevada to Tanzania.
We have at Barrick that our efforts will help not only the ill.
But those afflicted in other ways, but kind of at 19.
The fact that sustainability is core to directs management philosophy undoubtedly prepared us to buffer the impact of the M. At of the patent that make last month, we published our annual sustainability report.
Which you can find online.
It contains what we believe to be an industry first yes GE scorecard.
Which rights outperformance against 18 key indicators and takes accountability to add new level [laughter].
[laughter], we gave ourselves at be ranking which showed an improvement in overall sustainability performance and progress on many of our type yacht.
It also acknowledges that there's still work to be dot.
Well, we plan to update the score card at the end of the second quarter. One some of our peers have published additional 2019 in summation.
The health and safety about employees is essential for the success of our business.
And I spoke to you last year I said I was not comfortable with barrick's recalled on this front.
But as you can see how there has been a steady improvement since then.
We plan to have all operational model.
So certified for health and safety by the end of next year.
All the mines and Barrick should also have received the environmental ISO certification later this year that is by the end of Twentytwenty.
In the meantime, there were no major environmental incidents during the Pos quota.
Barrick.
Takes its stewardship of the environment very seriously.
Oh clean paused strategy is reducing our carbon footprint substantially and we have set a target of the that reducing emissions by at least 10% and the next 10 years.
Water is also a precious resource and that's conservation is high on now I environmental agenda.
And the first quarter, we again increased our water reuse and recycling right to 77%.
Well I said Barrick.
Closing a mine responsibly is as important as finding new models through exploration.
The approval of the tailings Retreatment project.
<unk> Golden sunlight mine in Montana goes to the heart of this.
This will reduce long term water treatment requirements and stabilize the old open pit, while also generating revenue <unk> revenues that will help help cover the cost of rehabilitation.
I have to say that after the merger we had to take on some big legacy issues and Tanzania has added to the challenge.
But we are dealing systematically with these matters.
Derek also continues to invest in its host communities and last quarter, we spend $4.2 million over and above cobot 19 support on development projects.
And now to the results.
This table shows how first quarter performance rated against up KP eyes.
Although the bullets speak for themselves.
I will deal with the key points in the course of this presentation.
Barrick made a solid start to the despite the impact of cobot 19, and the Lucked out and gold production costs were consistent with guidance for the quota.
Copper cost per pound was significantly lower demonstrating the resilience of the business against love up process.
As you are aware.
We placed polgar and temporary care and maintenance in late April as a result of the government's response to a S.M.L. extension request.
I'll elaborate later in the presentation, but this action has forced us to withdrawal out twentytwenty guidance for pulled right at this time.
Our revised group guidance without program is not 4.6 to 5 million ounces.
While group cost guidance is unchanged.
Notwithstanding these events, we remain well positioned to achieve our revised guidance for the given our solid start.
The situation in program as you can imagine is rapidly evolving. So we will provide further updates on the outlook in due course.
As previously communicated gold production in the second quota is expected to be lower than the first due to mine sequencing and plan to maintenance.
In addition, a safe and steady revitalization of the Veladero workforce. Following the lifting of quarantine restrictions in Argentina will also have an impact on performance.
Looking forward production as full cost to improve in the second half of the inline with our plans.
And guidance.
Hi, good performance from all the operations ensured that the benefits of the higher gold prices was captured and delivered to the bottom line.
Free cash flow increased to $438 million.
And net debt was reduced by a further 17% to $1.85 billion with no significant maturities until 2033.
Adjusted net earnings was 16 cents per share.
And the quarterly dividend underpinned by the strong balance sheet and the free cash flow outlook was maintained at seven cents per share.
I've always said.
To be a world class business.
You have to have a global presence.
And as you can see a barrick is strongly represented in all the world's major gold district outside Russia and Eastern Europe.
Brownfields exploration around I existing assets last year.
Replaced all the reserves depleted by mining.
And I might add at a higher grade.
And when you're looking for a similar performance this year.
Meanwhile, our generate of teams are looking further afield for our next tier one and T. a two discoveries.
And we are also extending your horizons.
Saudi Arabia, Japan, as well as Asia and the Pacific grew up.
So we start [laughter] out tour of the operations in Nevada.
Which we regard as our value Foundation.
Collyn is the largest about in Nevada operations and led by a strong management team.
We rank this mine would rank as an impressive standalone mining company.
Production at Carlin was slightly lower then quota for given shed jolt autoclave maintenance and lower roasted throughput of called an old as higher grade Cortez or displaced the relatively low grade call an all in the feed mix.
For the roasters.
Total cash cost were in line with the previous quota.
And I might add the Carlin trend is the most active exploration area in Barrick sport failure and has real potential to continue replacing the gold we mine well into the future.
The gold Rush project has now been integrated with the court case mining complex, where the deep South underground development is on track to start contributing to production towards the end of the third quarter of this year.
Although the all feed grade compared to last quarter was slightly lower.
Cost control efforts led to a 10% decrease in total cash cost per ounce compared to the prior quota.
And of course.
Oh mile continues to offer the potential for life of mine extensions, even though it does not yet included in the Nevada gold mines portfolio.
Well the turquoise ridge complex integrating the two teams as well as geological models across the two legacy operations is key to unlocking the full potential of this tier one facility.
This is still a work in progress.
But moving into right direction Nahmad to Ed.
In the meantime, construction of the Turquoise Ridge said shop continues on schedule and within budget.
Another key project that will unlock value from the higher grade underground resources.
Among the smaller Nevada mines, Phoenix had a particularly good quarter, increasing production and reducing costs.
Long Canyon, where permitting for the protect Spansion continues posted lower production, but costs were well contained.
Nevada is probably the world's most prolific gold district and accordingly, they is enormous upside within Nevada gold mines portfolio.
I've already mentioned <unk> Court case, deep South and Turquoise Ridge said shop.
But in addition to these the final feasibility study on the gold Rush project is on track while drilling got four mile continues to expand the mineralization.
At Carlin, we are focused on greater level that is the area to the north of the current Leeville underground operations and surrounding area.
At Turquoise Ridge, the integrated Geological model is showing us that between and below the turquoise ridge and twin creeks ore bodies of favorable host drugs, which are supply surprisingly underexplored and wait till one potential remains that debt.
Mineral resource management and exploration at the existing bonds are focused on optimizing their mining plans and extending they all buddies and the exploration teams all hunting for more tier one assets.
So Steve <unk> with four miles for a bet.
We already have a substantial mineral inventory at four mile and we believe there's potential for a lot mall.
As you can see on this slide and oscillated whole 900 meters north of Darcy Dorothy points do additional extensions to what is already a significant minerals system.
Also show Anyhow, some very exciting results from drilling west of four mile.
Our focus is to continue without drilling program and that defining the full potential of the area.
And to both the district scale framework.
At the same Tom I'll mineral resource teams are in full drilling to establish continuity.
And get it better stope definition.
We are also.
In the process of permitting the conversion of Nevada gold mines coal fired T.S. power plant.
Two at June dual fuel system, which will allow it to produce path from natural gas.
We expect to permit to be approved later this year.
With the goal of commissioning in the second caught off Twentytwenty too.
The conversion will enable the facility to reduce carbon emissions by as much as 50%.
That's roughly 650000 tons of C O two emissions saved per year.
We also progressing with a new solar project at the T.S. if power plot.
We intend to permit at 200 megawatt facility, although phase one will be 400 megawatts.
Then that's are expected to be received between quarter three of this year and the first quarter next year and their initial 100 megawatts of power will reduce.
Greenhouse gas emissions by a third 130000 tons per year of C O two.
Moving up north into Canada.
Hemlo continues on its path to potential to tier twos status.
After we put a new management team and change the way it operated last year.
Among other things it does move to an underground contract mining model and the open pit operational and in the second half of this year.
Since we restructured hemlo. Its performance has proved significantly as you can see up.
But operationally, it's still as further to go to deliver the efficiencies and throughput to become a true tier two operation.
Through taking a fresh and disciplined approach to understanding the all body and controls to mineralization. We are now looking at extending its life beyond 10 years as well as reevaluating the potential of the whole Hemlo district.
This is an overview about north American assets.
The numbers speak for themselves and that's worth noting that gold rush and football will ensure that cortez locked karlan and turquoise ridge maintains its tier one status well into the future.
There's been a big drive to review the regional geology and accordingly, several framework drilling programs are underway to fill in gaps in our knowledge opened up new search areas and pave the way foot targeting and defining money.
Inventories.
This has also included.
Taking a fresh look at our closure portfolio.
I've already discussed a new approach to Golden Star lot through tailings Retreatment.
And another example is the value being uncovered by our partners at escape creep in British Columbia.
So moving south now to the Dominican Republic.
The popular Viasat management team is doing an outstanding job as the mine prepares for the expansion project.
Production for the quarter was lower than the prior quarter due to the plan to mine and processing sequence.
Despite the lower production cost went very well contained.
We expect production to be lower in the second quarter due to annual maintenance schedules and then pick up to within guidance by the end of the.
Incidentally.
D.V. was the first about minds to cooperate with the government on Cove at 19 rapid screening tests.
The plant expansion engineering design and costing were completed during the quarter.
The current LDR gold tailings.
Storage facility has capacity for the expanded production until 2028.
So the program for the plant expansion cannot progress independently of the T. S. You have three program.
The combination of Cobot, 19, and postponement of the presidential election, and the Dominican Republic to July has delayed the T. S. S three permitting process.
And we are working with the government.
As well as the political opposition to bring the program back on track.
The picture for your information in this slide.
As the quest Guy a power plant, which has been successfully converted to natural gas another major cotton tribute shouldn't to the reduction in our greenhouse gas emissions.
That is there a head of very challenging into the quota mainly because of the way the Argentine government responded to covert 19.
First by shutting down the mining industry, and then allowing it to reopen.
But this time with restrictions due to social distancing.
We expect to more tough quarters and production for the is likely to be at the low end of guidance for this operation.
Veladero as projects, including the power transmission line phase six pad expansion and air strip construction, we're ramping down due to the cap occupancy limitations imposed by the government during the Cove at 19 outbreak.
The commissioning of the pile on has now been postponed from mid 2022, they end up this year.
And the phase six commissioning is <unk> postponed by three months.
Staying in South America, the El Indio trend, which runs along the Andy's and includes valid Dara and now passed a law that project.
Is rich and potential for major gold and copper discoveries.
Now that we have a full exploration team for that region. We have embarked on an extensive compilation of legacy data to generate new ideas.
At Veladero itself indications are that satellite deposits could extend its loss beyond the current 10 years.
And this is an overview of our Latin American footprint, which you can see boasts a mineral inventory approaching 100 million ounces of gold and ownership of some of the largest undeveloped assets in the region.
We continue to believe in the Prospectivity of this ground and heading south focused exploration effort in this region.
In Papua New Guinea as you know the government's recent response to our engagement towards the extension of the S ml came as a surprise.
Consequently, we were forced to place them on on care and maintenance.
Last week, we filed a lawsuit and the PNG caught seeking to quach the government's decision.
We received a preliminary order that directed the government to cooperate with our efforts to secure and protect them on and also directed the government to engage in negotiations with us to attempt to resolve the Mehta.
Okay.
So now.
Over to my old hunting grounds in Africa.
Starting at Loulo, Gounkoto, where throughput and recovery.
Well up and production, while slightly behind the previous quarter.
What's still ahead of plan.
Development of the complexes third underground mine that couldn't caught a.
Sure Joe to start in the fourth quarter of this year.
Meanwhile, the initial five megawatts of capacity of barrick's.
First solar power plant in Africa.
I have has been installed.
Thats commissioning well have to wait for the arrival of currently locked down contractors.
With the remainder of the 20 megawatt capacity still to be completed.
By the end of September this year.
In the D.R.C. Cabal it came out of the block strongly increasing production and reducing costs and is on track for another good yeah.
We have now installed and commissioned the best battery storage needed to reduce the number of diesel generators required as spending reserve.
I'm going brownfields, and Greenfields exploration opportunities also bode well for the mine to replace its reserve depletion again this year.
And production at tongue on in Cote Divoire remained on plan at lower unit costs and this mine is on track to meet its guidance for the.
The mine continues to be a significant cash contribute.
To all its stake holders and expiration to extend that slot beyond the current to yours is continuing.
West Africa.
Names another exciting place 204 goals.
Loulo Gounkoto continues to live do deliver new opportunities to add resources and reserves and an interesting targets has been identified at far up north.
In the button by GE joint venture modeling as highlighted new styles of mineralization, suggesting the existence of up perspective, new car udell, along the prolific Senegal Molly shares.
And in Tanzania, We've made enormous progress since we established a tweak a joint venture in January.
Bolstering our partnership with government.
North Mara has successfully transitioned from contract a mining to owner mining.
Export of the concentrate previously suspended by the government when that was in dispute with Acacia has begun.
And we'll be recognized net income starting in quarter two.
In Tanzania, we have now settled most of the key issues between Acacia and the government.
However, we still have to deal with some legacy issues that the company left in its way.
I'm confident we will resolve these and in the meantime, our initial observations have made us feel quite bullish about resource extensions and new targets around the mine.
Elsewhere in Tanzania, bully on Hulu as sufficient tailings material to keep the plod running while we progress to restart underground mining day on plan later this year.
And it was log is also processing stockpiles and it's interesting that we have discovered some potential new resource opportunities, which are currently being.
Evaluated at puzzle Augie.
Following a the incorporation of Tanzania, we have stepped up our exploration in the highly prospective central and East African region.
Where we now have a strong presence.
While it's early days, we've identified some exciting opportunities.
And all I can say is watch this space.
As Randgolds track record showed.
Africa is a place where one can discover a major gold deposits and convert them into world class bonds, while at the same time, making a difference for the better in carried in countries challenged by under development.
We have a strong asset base and two tier one mines there.
And while Africa stealth itself still as boss potential.
We're also looking further north for growth.
We already have a foothold in Saudi Arabia, and we're looking closely at the new being Arabian shield, which while prospective hazardous fall only delivered one significant goal bond in the form of the Sukkari Gol bond in Egypt.
In our copper portfolio, Lumwana and Javale Syeed, both increased production and reduce costs.
Notably at jump ball exploration has been very promising and we have intersected very high grade mineralization from step out drilling that point to mine life extensions.
Production that zaldivar was impacted by lower grades and recoveries.
Operated by our partner Antofagasta, the development of Zaldivar secondary sulfide leaching project has been temporarily delayed by covert 19 movement restrictions.
While maintaining a very strong operational performance is important to us.
Across the Barrick group, we continue to look to how we can add more value to our operations and innovation and technology plays a key role in this.
Work has continued on a SAP enterprise resource planning system.
Global rollout, where the first deployment will be getting across the Nevada gold mining group during quarter three as planned.
The spot covert 19 challenges we write remain on track for completion of this large SAP rollout project by year end.
And we then plan that the other regions will follow during 2021.
The small streamlined and standardized global design will further improve our ability to report real time cost and efficiency data and more importantly manage on real time information.
We also continued our digital innovation and a underground mines, including projects, where we can now remotely monitor in real time and machines location productivity and health as well as that of operators increasing our AFFO.
Fishing season, and predictive major maintenance capabilities.
Being already quite advanced in a underground automation, we are now focusing our attention on surface mining with haulage and drilling projects advancing through out the quota.
Our surface haulage proof of concept, which will allow both manned and unmanned operations within the same zone was successfully completed this quarter.
In the quarter, we also balked at our first trials of battery powered electric underground equipment, which we believe has the potential to low operating costs an increase efficiencies.
Similarly, our team at Loulo underground helped develop that a system that automatically turn secondary fans on an all by using personal if RF ideas tracking systems, which will help and reducing power consumption.
This project is now being implemented.
Across Africa underground mines.
We've touched on the micro grid stabilization at Kibali and are seeing significant benefits and not bonds process control systems in our mulligan processing circuits.
By using these real time data and model predictive control to rapidly optimize the circuits, we can increase throughput and reduce reagent usage.
Along with this year's annual report as promised we published what we believed to be an industry first can you a gold production plan, which you can see yeah.
I will point out that we have left program in the full cost, but with its contributions shaded a different color given that the asset is currently in care and maintenance.
What makes us different to our peers.
Is that out can you a plan is both taught out portfolio of tier one strategic and embedded projects.
Which all boast plus 10 year life of mine plans, except for tongue God.
Consequently, our business has a standout value foundation that does not require new greenfield builds.
Or discoveries.
To support our 10 year plan.
Giving our investors the comfort they require to invest for the long term.
It goes without saying that any discoveries or acquisitions.
I will add to our value proposition.
In line with our mission.
We have both the quality and management.
And the financial bench strength to continue to generate value for all our stakeholders.
And to provide barrick with the free cash flow to invest in its own future.
Ladies and gentleman I end as usual.
With the share price performance comparison.
Barrick's mantra is that the best assets.
Combined with the best people.
Well deliver the best returns.
This is one way of measuring that.
And the year to date Barrick share price has increased by 45%.
And if we measure it from the time of the Randgold merger announcement, it is substantially more outpacing both the industry and the gold price.
Hi, Thank you for your attention and I do have most of our senior executives on the coal with me and so with that we would be delighted to take any questions you might pose.
Thank you.
I'll now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a town acknowledging your request. If you are using a speakerphone. Please pick up your handset before passing any keys to withdraw. Your question. Please press Star then too well pause for a moment.
That's colors join the queue.
Our first question comes from Chris Terry of Deutsche Bank. Please go ahead [noise].
But.
Mark and say or a couple of questions from me I'll, just split them out individually, but just starting with the first one around cash flow and capex for the for the year to calm I guess, a number of companies. So far thing cutting their capex, saying that they've got less essential workers on sorry.
I guess in that context to pull girl and also the power plant I think you mentioned around Veladero. It just wondered if you could comment a little bit more on you know where the where the capex is likely to come in and then maybe one just in terms of the working capital as you stocked up sorry.
Oh, I had a carve it et cetera, or whether there's any considerations for two Q women in the back half the year on on that saw it. That's my first question. Thanks.
For South, Texas, I'll add a start off I'll pass on to grab if I Miss anything yeah. They are they all summary share drilling requirements and invalid there as as you point out.
We are focused on trying to achieve all our capital spend across the group and the although we've delayed.
But the.
Six number six expansion as well as the power line, we still will get a lot of that Don if not all of that doesn't this year on they asked trip. We are as we speak getting a working to try to mobilize that team to ensure that we we get that strip in place before the.
A winter sets and the reason being that it's got to make us our ability to two remobilize and get those other capital projects up and running as soon as we can and make it more efficient a once a week. This spring arrives.
No, Nevada is pretty much on track with its key projects.
Polgar, a you know there wasn't a big capital spend or full cost for Paul grab because everyone was waiting for the a and say Mel extension outcome and and you know the rest of Africa is on track with all its key projects.
As I said.
The the shaft at turquoise ridge, and and a the development at gold Rush all on track.
Hemlo, we're busy working at the moment with the authorities to enjoy all that a than you underground contract or can be mobilized and takeover the C or the previous contract has agreed to continue and so we are managing that arrival of some of the coal Australia and.
Supervisors and skills to be able to affect that transition.
So you know, we we still see ourselves maintaining our capital guidance, although there's probably some share drilling of that expenditure that will bring us close that you out sort of more to the bottom of the guidance and the top of the guidance, but rest assured we all working really hard.
Two or two or to ensure that out investments stay on track Graham you ought to add to that.
I think that's fairly comprehensive there any point out what make as.
And then there's lot of we have seen a slight increase in our capital one of those projects being the solar power that Mark talked about in the presentation. So and that's that's something new that we brought into the mix, but as Mark said, it's when you look at the.
Overall picture, we're still very comfortable with the guidance, we gave it to started the year and.
You know as things progress, we'll refine where refine that number and throughout the year.
Okay. Thanks, Thanks, Robin thing critics right just on the cash flow.
Yeah were well I mean, as you know cash flows got a lot lot of upward pressure at the moment because of the gold price and and a and you know that's out big focus we Oh, we kept the dividend as it was ER, we are comfortable where we all we are very.
Comfortable with our liquidity at a at out for costs and so yeah. I think were in good shape to ensure that we can deliver on our plans and in addition take any opportunities that we may not be able to unlock a during this time to further grow our business.
Yeah. So just on the working capital just to add to that and it it is a bit higher then.
And the previous quarter, we do tend to see an increasing working capital in the first quarter next year. If you look back to the corresponding quarter last year, you would've seen in a similar increase in working capital. It is in part due to a the timing of payments a you know that we accrued during the year.
And then make in the first quarter for example employee incentives.
We also made installment payment to if you already in Argentina on the power line and so there were a few a few a unusuals get pushed a little bit higher but it is normal for this comedy.
And Eric.
On a on building on building the inventory you had so many questions but on the inventory. We've as you know very quickly reorder and his team across the drew move to increase our inventory of Ah consumable and.
Fast moving items, two three months and mall and but he is equally gotta sad to bring that down at at the end of the Ah. So you know that's a that's a part of our working capital that we'll actively manage.
[noise]. Okay. Thanks, So just just a follow up before my in terms of.
Well you know you went through some of the some of the different they tells them with the election et cetera. Just can you just remind us on the current plan for the expansion was sort of part one you Didnt research potentially for for the mill expansion. Thanks.
Okay. So we progressing with a Boeing spansion as glad we have Oh, we're busy with the ordering of the long lead items and and we have completed the feasibility of the actual plod to expansion and as I pointed out that now there's a gap.
That being between that and the T.S. have permitting process, but again, we have a support bipartisan support on this project what we need to do is getting into the field and complete the is show work and a and the consultation community involvement and engagement which has.
Been sort of prevented too as Ed at this stage, we've got a little bit more engineering work to do on fatal flaw investigations, we're pretty comfortable of the onset, but we need to do that work and so but other than that were in good shape to to be able to ensure that we have that.
Storage facility in place when we require it which is post twentytwenty for I believe Jarden steel are you on the call.
Those try Mark I cannot tell me right yeah.
Yeah, Roger Roger at odds are it.
Well it depends on the congrats.
But I got it ought to start.
Current commissioning is planned for 2022.
Oh, well, but [noise].
For the plant expansion.
And as Mark mentioned, you know Weve got to yourself get passed in your goal.
You know, Texas way off into 2020 or so.
That's not a bottleneck for us.
So the project can proceed.
John We had intended it feasible or on the current program to commission or tier said three from 2024.
I totally and not program would impact the overall expansion.
Okay. Thanks, Thanks, Rockland wrong or all the best Thank you.
Our next question comes from Matthew Murphy of Barclays. Please go ahead.
Hi.
Some questions just on the sensitivity of your guidance to the oil price, primarily I guess also forex, but you've still got $65 oil in there just wondering.
If you have an idea sensitivity to to that her to diesel prices or any kind of metrics you can share.
Oh, so Matt.
Again, there's swings and roundabouts or the way we've looked at it is that you know this co that challenge as it certainly created some additional expenses and a business at the same time, we've seen a you know we benefited from a low oil price some of the the impacts are.
Our dampened, particularly in Africa, where the oil price is much more structured and it doesn't pass through to the consumer as quickly as as you you see in parts of North America.
But as a broad number.
$10 on the oil is about $8 a out just as a broad not but remember our utilization of hydrocarbons is quite different sudden natural gas a diesel or some heavy fuel, but the as a rule of thumb that's about the number.
Okay. Great. That's helpful. Thank you and then also just a quick one on corridor.
The disclosure on this tax claims.
I'm wondering if you see this as at all.
Related to the mining lease renewal or is it are totally separate issue.
Hi, Matt very complex situation data, if you've had a chance to read the order from the jobs last Friday, but included and that was.
I was a very clear destruction and for us student to refrain from commenting over this process. While we tried to focus on finding a mutually acceptable solution on a go forward basis and so it would be inappropriate for me to sort of comment on that question, if you're not bought.
Yeah, No problem I mean, maybe I can just ask on that court a I guess your next hearing is may eight.
It can you make any comment about.
Is there a potential policy or resolution at that time or is it kind of a preliminary a preliminary hearing to see how things are coming along.
Well all I can say as you know me I'm very committed to finding solutions and spent my entire career working.
To.
Towards ensuring we have constructive partnerships without stakeholders and there's no difference in that commitment when it comes to Papa New Guinea and a at the you know the the Odell was very clear out for us to engage and in a in <unk> and the committed way to working to find it.
Solution and he also indicated that should not be possible for us to do so he would be minded to appoint a a court appointed arbitrator too to ensure that we do come to a solution.
Okay. Thanks Mark.
Our next question comes from Craig Barnes of TD Securities. Please go ahead.
Yes. Thank you Mark I was going to ask if you've actually engage with the government, but I guess, we'll leave that one side in PNG.
In terms of capital allocation, you are generating a lot of free cash flow now.
And I expect you were going forward.
One of your competitors suggested that they have you.
On free cash flow, 50% would go back into the business and 50% would be returned to shareholders is that a framework that you'd agree with or something that barrick would pursue.
The Greg as you know I've never.
Being one to try and copy somebody else.
And I have no intention of starting.
We are boys work to present something that's different.
And and trustworthy, yeah wed Barrick has come from that it's been an amazing Oh boy edge. If you look back 2015 at $12 billion today, we can boast as having the strongest balance sheet in the industry the muddying industry.
And a and so.
No we've we've.
Guided our dividend policy against the 1200 long term goal process.
Given the situation that we face today and the unprecedented a scenario that is ahead of us.
It's good practice, we believe our board believes as well that we maintain our dividends or and because we know we can afford them. We we also ensure that that we have the financial muscle to to get through this challenge and also.
Puts you at the opportunities or that value opportunities should they arise in this very dynamic environment and then as I've indicated before it's very clearly objective to get to a point, where where we will move away from a debt.
With that policy that supported by the robust that's about P. an l.
You are more standard style dividend policy, maybe along the lines that we used in Rand gold way, we agreed to pay out certain about or cash flow falling provisions for our long term business investment and balancing all eyes.
We are able to outperform the market value creation.
And ER and certainly everything points to I stronger gold price, certainly more upside and downside and adding to that the sort of full cost reduction a new gold supply.
Every every indication is that maybe we have to review that policy or earlier, rather than laitek going forward, but I think right now we're all clear that a strong balance sheet.
Independence of capital markets financially is a good place to be in a situation. The in the situation we find ourselves today.
Great. Thanks, Mark Thats the clarity.
Our next question comes from Josh Wolfson at RBC capital markets. Please go ahead.
Thanks, just a question on Tanzania with regards to sort of final resolution to sell the inventory and pay I guess the outstanding payments Oh, we know what deliverables are still acquired what's the timelines for that and then from an accounting perspective, how are we gonna see that flow through the statements.
So John all done dusted that as we speak the shipments are happening or where are we got a lot of concentrate to ship a we've already received some of the payments. So that's how far at Bob's did as we've indicated that you'll see most of that revenue comes.
Through in quarter, two depending on the actual final logistics or some of that might come out.
Out and caught it early quarter, three but yeah, there's nothing left to do except to ensure that that concentrate arrives at the at the.
Or at the Port and a and has delivered.
To the processing facilities or through our agents or that's ready where we are there's nothing else are left it's all done.
So just to add to that Josh and then on the accounting side.
You know the.
The ounces or we're obviously produced.
Back in 2017.
So when you look at it and because it comes through and then second quarter.
Obviously be a disconnect between sales and production because there will be higher sales and production.
The the cost of that inventory again, it's.
Sitting on on our balance sheet and.
So we'll as we sell that goal will bring to that cost.
The the proceeds of that all that sounds well, obviously guy to a individual operations and then most proceeds will be will be shared amongst the shareholders in the in the 80, 416%.
Script.
That can of course, we have a 50 50 sharing arrangements or at the end of the day everything will be trued up on based on that 50 50 sharing.
Got caught.
Okay and the in the large I guess had a that the first Josh the first 200 million or it will be the first payment and the 300 million settlement agreement.
And again just to kind of just to remind you that that three that 300 million has already been accrued for so it won't impact on earnings.
Actual cash.
Okay, and that's an operating related items just to clarify.
What's an operating related onto I, just feel free cash flow from operations item for the for the payment for the tax payments to the government.
It's a it's a tax payment.
Okay.
All right. That's all my questions. Thank you.
Our next question comes from Kerry Smith of Haywood Securities. Please go ahead.
[noise], Thanks affair [laughter] Mark.
Tell me how.
You're dealing with the testing for coal would have to sites for asymptomatic employees, who don't show any signs.
So are we are not at this stage, we are Oh right now what we've done areas.
I think the most important thing and and something that people didn't get dropped I think right in the beginning is.
Education preparedness and screening a screening being a temperature screening, making sure that ER, everybody folds and a self assessment for before leaving for work in.
In the morning, and then immediately responding.
To 80 risk factors, whether its high temperature, all or any top of symptoms through oscillation and immediate tracing answer the oscillation and then testing and that's the way we've managed to it and so far.
Are we haven't had any.
Confirmed.
Transmissions with in now operations, we've certainly had stopped that have proof or you know being tested positive.
At the same time, we have a embarked on a big a program of.
Rapids test kits.
The first country to work with US and partnership was the Dominican Republic, and we've certainly developed and all constantly refining our protocol of how we use that and ultimately that test is gonna be unimportant test to match a the the sort of immunity the head.
Immunity.
Going forward, we have Ah we have also done what's the in partnership with the rest of the industry a big project, it's being rolled out that's above and in Argentina. The test kits in Peru of have also started to be rolled out we are in Africa.
Well and the team are working with our host countries on that we have in North America. Now you know are plentiful supply of a proper or deny or p. about tests.
And and and and again I think we'll keep refining the way we manage our employees on the sites, but that's the approach we've taken I think we've been a lot more or effective in managing the.
The the pad there make and keeping.
Our people visible and the disease visible rather than the temptation to lock at all or why and then you don't see the actual or you know impacts of it so and I you know the team I must say the barrick teams have done and amazingly good job and.
And maybe I can ask Katherine just to explain to use some of the stats and the way I heard the team managed the the that situation in Nevada, which is.
Ready a good example in a large scale of how the rest of Barrick as has approached this ER crisis Kathryn.
Thanks, Mike.
Okay. So if I adjust kerry's question sort of direct came in at the way the way we've used the screening that we've been doing.
Has been to minimize risk whether people are symptomatic or not so so to give you a sense at the scanner Terra well 70000 employees within methodical mines and significantly more if you include contractors anyone coming to site.
Festivals as a single point of entry now and that screamed that screens with a questionnaire.
It asks whether they're experiencing symptoms, whether they put in contact with anyone but sometimes well whether they've been to anyway. That's just stopped whether they travel to any location went like 'cause it.
It was a significant risk well that's allowed us to do which then to isolate people slogging on the question have whether they had symptoms or no.
And so what we saw or is that.
No I didn't say that allow sort of not at the half for eight weeks now we've had a total of 593 employees Oh flat for an average of seven days.
I think because they've been centime based on the screening it's 113 at Sanish.
Self selected because they have recognized that right risk either because they are I mean, I just fish until for someone to reason.
Well, what they've been Ah that's had symptoms so they've been carrying for some of them with symptoms. So in total and the other one of course is it's a very small minority has been affected by the fact that kicks in online school. So in type of 593 offering have mentioned seven days, but what's more important than I think there's a significant upside is 593 409.
95, now basket was 83% to pretend to walk so what we've seen is the real impact at this was in the sense sort of three or four weeks.
Really I, it's at the end of March and I'm in April.
With beginning now to two moves into more.
I wouldn't say normal environment that normalized environment and.
Ah that means that when we do has a positive case, we touch seven consigned punch tips cases today to then GM, we're able to contact trace all us to people that they've been in contact with Weve minimized matches to the extent as possible to minimize risk. We then shelf isolate those people.
Then I detest it'll stay in corn teen until 14 days or Apple tested and then negative and then they're able to return to work. So say so that's the price sensitive allows us to take into account that was a symptomatic individual says why this nice with symptoms.
Okay. That's helpful. Appreciate that.
Our next question comes from carry Macquarie of Canaccord Genuity. Please go ahead.
Hi, Good morning, maybe just a bigger picture question you know looking at your tenure plan.
You know its 5 million ounces for 10 years I think your your peer has similar clot production profile for 10 years just wanted your thoughts on.
You know why this business isn't scalable like he is it possible to grow production currently are flat sort on the normal once you get your science.
Hi, Kerry.
If you look at that graph, there's a couple of.
Larry the obvious points one is for the first five years.
We we bring down the costs and increase the cash flow and I assume you've modeled that.
Both in the form of capital.
To a proper sustainable capital because what you're referring to is a sustaining business not a growing business and then the costs are coming down and then within a margin we expect that to continue on the back five.
And again, you know if you want to compare US there is no comparison, because we don't have to build out to anything so there's no massive Pete can capital in fact, a the capital that we referred to in the presentation today are ready sets us up for the rest of the 10 years and the big ones.
Or PV and Dominican Republic, the shopped and turquoise ridge, but the others are all genuine sustaining capital even.
Gold Rush is just a continuation of development to deliver more ounces and I think that's the that's the stand out in the Barrick Kenya plan.
Bolt on of course tier one assets, which mean that you have got significant production for more than 10 years in your business plan based on a 1200 dollar long term goal process and so when you look at this business, it's a genuine business with.
The growth is then.
In a financial delivery in in profits depending on the gold price that you are as you know out over and above that.
We spanning 170 odd million dollars, the a and expiration.
And as you've seen just in the last 15 months, we not shy and creating M&A opportunities that deliver real value.
And so that's the difference is this is not a sustaining business or or a business that you referred to as a consistent production. It's a solid foundation on which to continue to bolt.
HM value, creating opportunities for Ah Onez and I think that you know if im hoping you get it now because you'd say definitely missing something if you're you know and again, there's nothing in this plan.
That recon take you to and show you.
So there's no soon to be discovered ounces there might be some ounces that we need to change the definition.
Take out some of the rest, but it's already in the plan and accessible from current infrastructure or infrastructure that we are committed to invest a during the next four five years.
I guess, what I'm, saying is Randgold, you know you're able to grow production over a long period of time, there seems to be a you know.
You in the industry that once you get 5 million ounces, you know pipe <unk> 5 million ounces is one that's gonna be it can't be six or seven and I know, it's not about just production that's not absolutely isn't possible to grow I really [laughter].
But I don't think you listening.
Kerry. This is this is based on what we've got today, it's not based on any so there's no. There's no recognized benefit for the the or the $1.6 billion, we gotta invested expiration than the next day and yes, and so as a as a basis to book.
The business.
Yeah. This is a stand out businesses is exactly where we got to in Randgold way you and other in a Atlas.
When we plateaued and we said now we're in a stage, where we are able to throw a lot returns and replace the goal. We are modeling and there's no long term sustainable fashion, everyone said, whereas your growth until we did the deal was Barrick and then suddenly everyone.
Our largest when you look back at the house.
Randgold delivered that value. The first part was of course, increasing.
In reserves and increase in production, but at the same Todd that came with <unk> capital spending to deliver that and then you get to a point, where you start really delivering real value for the shareholders and and and.
Randgold in a time, where the industry destroyed value a continued to grow its dividends for.
For 13 years in a row and performed in the market. Despite the ups and downs of the gold price in a in a at a level of total shareholder return that ranked at the top Henry hundred value creators of all listed stocks globally. So you know that.
That's what we are doing yards, we baldyga will Clos business.
Capable of competing in in the in the public markets.
And delivering the returns and value that one would expect plus offering the insurance that we've all witnessed a in the last 910 weeks and I bought add or.
Since 2008, it's just that some of the management teams didn't deliver that big or opportunity back to the shareholders post the to any 12 peak, but certainly now we have an industry. That's a lot more the disciplined and we've seen that into.
The story really live up to its.
To that gold insurance, a that a that mine as in times of crosses lock were experiencing.
Great great. Thank you very much.
Our next question comes from 10 year check as chronic of Scotia Bank. Please go ahead.
Hey, good afternoon to handle on Mark Graham maybe can you just talk about some of the cops and Pat that you're seeing in the business because of the code Red and maybe some of the opportunities on the other side.
So Tanya I'll kick off.
Of course, you heard earlier, what are the biggest opportunities as.
As a the oil price.
At the same time out costs rally or some other costs are working capital cost because weve expects bad at a inventory to ensure that we have the ability to manage any supply chain interruptions. We've got definitely got a opportunities on top they got bought out.
Contracts as some of the supply or you know because they they the mining industry has common consumables that not all the mining industry global modest rate is in the same place at the moment as far as robust performance goes and so there's a lot of things, which.
Before I said Barrick is a normal course of business, we're always focusing on tightening our costs, making show up contracts, all fair and appropriate given the market conditions, we've still got significant opportunities to continue to improve.
Offer operational efficiency, just because we started with a fairly lazy organization back last year and and we are rarely we've showed a lot of progress, but we've still got more to go the work that grab and his team are doing on.
Making sure that we have a fully integrated.
Data system financial business system that enables our managers to make real Tom and decisions you know with in the shift those are things that are all guy to continue to two to help us become more and more competitive and.
In in driving yacht EBITDA margin and even if you look at today's results compared to our quarter. One results last year, you know <unk> EBITDA margin is significantly higher than it was just a 12 months ago. So we're obsessed about efficiency cost.
<unk> focus on making sure that we are businesses.
You know focused on profit ability and.
Cash flow and and and so you know the co that situation what it has offered.
ER to us is that.
As you know.
There was some apprehension on whether we could introduce the randgold flaps.
Integrated management model, we did that Weve worked hard at it with the regional executive teams ABS. This corrode or a challenge has definitely hurt and management skills and forced.
And fast tracked our ability to to be agile and integrated in the way we run things edits proof that this model. This modern model of making sure that you don't have this corporate tower of authority sitting somewhere far away.
Hi from your operations is the right way to go and and so if there's anything that I would say.
That says.
That helped us or taught us Israeli that ER honing, our ability to manage and a more modern and agile way and on top of that Oh H R.
Team Israeli focused on making sure that our employment strategy has shifted to younger people more diverse or.
Employee please coming from you know the countries in which we operate and and again in the full the sub time, you'll see the impact of that.
Well I understand it correctly and when you asked that then you know if you can improve on your productivity is one aspect of it and the second and maybe cutting costs on the contractor side with that same huh.
Yeah, exactly I mean, there's lots of opportunities we've already taken out I think [laughter].
Brian and his team of just in Nevada.
Take it out taking out about $115 million just didn't contract efficiency just renegotiating contracts.
And so and as you know there's a lot more that we can do a south America, we've done a lot, but there's still more to do and.
And I think as we build.
Relationships with our contractors I mean, that's another big thing about this covered a challenges you already see who your partners are and we will definitely work on strengthening those positive partnerships and changing those are less committed part.
And the ships that we have an l. organization.
And maybe that's a grand [laughter] actress Sam that the any additional costs on this call that from spatial and thing and things that you know may take longer.
An additional cost that are more than offset by the 25 dollar per hour improvement from your fuel another fuel price.
Well I think Tanya.
Mark say right at the beginning of that conversation and you know we were reluctant to and get into a promising that big reduction because we are mindful that were also dealing with the inefficiencies associated with kogan and those inefficiencies I'm not insignificant.
As you say social distancing and you know you know not being able to people move.
So off around that you used to so, possibly having inefficiency and you will start saying.
You know not being able to transport could you see the way you used to do it sort of having to.
Contract different types of freights, yeah, there's there's many multiple touch points, which.
Which impact Youre your efficiency, so whilst we've been able to overcome yeah. The restrictions that are being put in place. They do come with the cost and that's why we are reluctant to sort of two to put that number out and say yeah. This is what you should expect I mean that number is is a theoretical calculation and again as mark.
Indicated it quite often when you see such a sharp drop in the in in the dollar will price it doesn't always could pull through to the the because the link to diesel price. So it's you know trying to get to theoretical about it isn't isn't that useful.
What we rather tried to point to is that we've had some swings and roundabouts and on the whole we're comfortable with the guidance that we set out with at the start of the.
Okay, and then also status M. That's my can be found fine grind out having a coffee U.S. dollar denominated only 30% what had exposure to Canadian euro another them. It would have less of an impact on a dollar per outstanding I feel.
I wouldn't say it was even its as much as 30% you know we really are predominantly a dollar based organization and even in places where we incur costs in local currency. Yeah. For example, Q. Yeah, you know Oh, you know the underlying driver that.
It is a dollar based yeah.
Yeah, It's a dollar based on the line product.
So Pete I wouldn't put it this is as much as that I would say would be lower than that probably less than 20% would be FX.
Okay. That's helpful. Thank you I cannot.
Our next question comes from kept keen and S&P Global. Please go ahead.
Our next question comes from kept Keane of S&P Global. Please go ahead.
Self off mute.
Our next question comes from Helen read of Routers News. Please go ahead.
Hi, there Mark I just had a question about grasberg and is that something that mine something that you're still actively looking at how does Kevin 19 change the M&A picture and secondly, I'm not sure whether you saw that and the Trump administration interest.
Thing illegal bleep flare blueprint for mining on the mean is that something that's on the cards for Eric.
[laughter], yeah that [laughter].
Without plan to go to the mood right or not.
Robot is.
And copper mine as a.
Ready or [laughter].
A on a on Grasberg ER I think it's very clear what are what I've said before and I would just add that you know this world today, our mining industry needs.
Reshaping reinvention revitalization and definitely modernization and so you know I would say that yeah. This is a great opportunity odd to to reap position ourselves as models I think what we've seen in this covert challenge.
Just the real contribution that mining gives to its host countries and a in a across the board it's been absolutely impressive.
At the work and and the outreach that mining has brought to an otherwise.
Miners are we at our business, we manage crises and challenges every day and a and and I hear you know I've seen and witnessed the impact that miners have made across the globe, particularly in emerging markets and and so I think it's time for us.
There's a mining industry to stand up and and Chad and and advertise the partnerships that we do bold and that the differences that we make and the value we create across the world and I think it can be done bad times. So.
No we've seen the first I mean since the Barrick bread goal deal there's been a number of deals that have already consolidated the industry, particularly in the gold space a.
We've seen recent deals during this.
At the beginning part of this covered and which are closing now that all sort of a necessity driven deals.
And I've got no doubt that we will continue to see or you know transactions that make sense.
In this environment because it's the impact.
Of this.
The scenario is real.
And out of.
These sort of black Swan events, you always have a paradigm shift and so what you know in my view, what you've seen is a solid drive towards the end he part of E.S.G. on the back of the start of the Democratic engagement in the U.S. press.
Is it angel or elections, which is now sort of calm down as you've got one a cabinet that but a strike straight out of that and there was we there's covered as highlighted the gap and this global business or a family of aus.
ER in the form of our attention to social engagement and responsibility governance issues and most importantly, something I've always talked about as poverty and you know there's definitely a every reason to believe that the world is going to be a different place.
Going forward and we as miners are gonna have to make sure that we Ah stay relevant in this very dynamic environment and and with that I'm convinced is going to bring significant opportunities and I do believe that as I said in my presentation.
Barrick has a standout executive an operational team capable of unlocking real values and ER and they have that very strong financial platform on which to make or acquisitions and pursue opportunities.
<unk>.
And and embedded in that or is the is the our tier one quality portfolio that ensures that we are a long term business and allows our shareholders to invest with a the visibility that sort of runway visibility.
Future, but ability to did continue to deliver value. So all those sort of things are going to drop I believe a dynamic M&A environment, and it's kinda be up to us as managers whether we.
ER ensure that we continued to.
Take up these challenges and consolidate this industry and deliver real value to our own as all like we did and 2012 not do the right things and end up looking back at a lost opportunity and a lot of value destruction.
There are no further questions from the conference call I would like to end the call back over to Mr. Bristow for closing remarks.
Well, ladies and gentlemen, thank you very much for making the time to a Joe it to join US today I look forward.
You don't know how much I look forward to see all of you again and a and we're working hard at that in the meantime, you can be rest assured that we are all very focused on continuing to deliver on ER that very strong foundation, we both in trading 19 I.
As you all to be safe and practice that social distancing and look forward to the next time. We me. Thank you very much.
This concludes today's conference call.
Should you have additional questions. Please contact the Barrick Investor Relations Department you May now disconnect your lines.
Thanks for participating and have a pleasant day.
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