Q1 2020 Earnings Call
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.
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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 in a very good morning, and good afternoon, ladies and gentlemen.
Welcome to this.
Presentation, all about Twentytwenty.
Q1 results.
When I spoke you around this time last year I was able to report that we had made great progress towards achieving the images goals.
The structure of the company had been made fit for its purpose of becoming a model, although modern mining business.
Strong regional management teams had been installed.
All body ownership transferred back to the Mimes.
Debt reduced.
And the balance sheet strengthened.
In the posture.
We have worked to further improve operational performance.
And amidst all this activity.
We've concluded formal value creating transactions.
The historic Nevada Gold mines merger, which added a second tier one mine to our portfolio.
The disposal of our stake in Casey Jim.
And the buyout of the Acacia minorities, which enabled us to settle that companies dispute with the Tanzania and government and takeover control of its assets.
In quarter, one we have combined I'm a solid project.
With terrain goes nearby SAB adopt 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.
Joe that we are actively building on the solid foundation laid in 29 team as we are looking ahead to the next phase of value creation.
Please take note of the cautionary statement.
For those who are locked to read a little more it is available on our website.
The fact that this is a virtual presentation today reflects the grimaced reality of our age.
The covert 19 pandemic.
Which has locked to many of us down.
Whether in our homes.
Or at our operations.
Or elsewhere.
History, we'll judge our government's responded to this black Swan event.
Which don't do without warning.
Precipitated an extreme crisis.
And we'll have unforeseeable consequences laclede to change the world's for ever.
Speaking for Barrick, However, I can say the team responded immediately to the early signs of the crisis and therefore, we're prepared to deal with its impact.
On our people.
And our business.
Comprehensive action plans were promptly rolled out at all our sites and offices in an overall strategy we call the for peace approach.
Those peas standing for pro activity preparedness.
Prevention.
And perspective.
While our first priorities have been to safeguard their health and safety of our workforce and communities and to secure our largest our 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 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.
As a global problem from Nevada to Tanzania.
We hope at Barrick that our efforts will help not only the ill, but those are reflected in other ways by covert 19.
The fact that sustainability is core to barrick's management philosophy undoubtedly prepared us to buffer the impact of the M. At of the pandemic last month, we published our annual sustainability report, which you.
You can find online.
It contains what we believed to be an industry first E.S.G. scorecard.
Which rates our performance against 18 key indicators and takes accountability to a new level.
We gave ourselves at be ranking which shows an improvement in overall sustainability performance and progress on many of our K P eyes.
It also acknowledges that there's still work to be done.
We plan to update the score card at the end of the second quarter. One some of our peers have published additional 2019 information.
The health and safety of our employees is essential for the success of our business.
When I spoke to you last year, I said hours not comfortable with barrick's record on this front.
But as you can see higher there has been a steady improvement since then.
We plan to have all operational minds are so certified for health and safety by the end of next year.
All the mines in Barrick should also have received their environmental ASO certification later this year that is by the end of Twentytwenty.
In the meantime, there were no major environmental incidents during the past quarter.
Barrick takes it stewardship of the environment very seriously.
Our clean cloud strategy is reducing our carbon footprint substantially and we have set a target of further reducing our emissions by at least 10% in the next 10 years.
Water is also a precious resource and its conservation is high are now I environmental agenda.
In the first quarter, we again increased our water reuse and recycling right to 77%.
For asset Barrick.
Closing a mine responsibly is as important as finding new mine through exploration.
The approval of the tailings Retreatment project at our 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 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.
Barrick also continues to invest in its host communities and last quarter, we spend $4.2 million over and above covert 19 support on development projects.
And now to the results.
This table shows how our first quarter performance rated against our K P 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 year. Despite the impact of cobot 19, and the Lockdowns and gold production costs were consistent with guidance for the quarter.
Copper cost per pound were significantly lower demonstrating the resilience of the business against lower prices.
As you are aware.
We placed polgar and temporary care and maintenance in late April as a result of the government's response to our S ml extension request.
Ill elaborate later in the presentation, but this action has forced us to withdraw our twentytwenty guidance for program at this time.
Our revised group guidance with ADHD program is now 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 year given our solid start.
The situation in program as you can imagine is rapidly evolving. So we will provide further updates on our outlook in due course.
As previously communicated gold production in the second quarter is expected to be lower than the first due to mine sequencing and planned maintenance.
In addition, a safe and steady revitalization of the Veladero workforce following the lifting of quarantine restrictions and Argentina will also have an impact on performance.
Looking forward production is forecast to improve in the second half of the.
In line with our plans.
And guidance.
A good performance from all the operations ensured that the benefit 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 were 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 avoid said.
To be a world class business.
You have to have a global presence.
And as you can see.
Barrick is strongly represented in all the world's major goal districts outside Russia and Eastern Europe.
Brownfields exploration around our existing assets last year replaced all the reserves depleted by mining.
And I might add at a higher grade.
And we're looking for a similar performance this year.
Meanwhile, our generator of teams are looking further afield for our next tier one and tier two discoveries.
And we are also extending our horizons to Saudi Arabia, Japan, as well as Asia and the Pacific rim.
So we start [laughter] as our tour of the operations in Nevada.
Which we regard as our value Foundation.
Carlin is the largest of our Nevada operations and led by our strong management team.
We rank this mine would rank as an impressive stand alone mining company.
Production at Carlin was slightly lower than quarter for given scheduled autoclave maintenance and lower roasted throughput of calling all as higher grade Cortez or displaced the relatively lower grade call an all in the feed mix.
For the roasters.
Total cash costs were in line with the previous quarter.
And I might add the Carlin trend is the most active exploration area in barrick's portfolio 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 Cortez 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.
Our cost control efforts led to a 10% decrease in total cash cost per ounce compared to the prior quarter.
And of course four mile continues to offer further potential for life of mine extensions, even though it is not yet included in the Nevada gold mines portfolio.
For 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 in the right direction RMR to Ed.
In the meantime, construction of the Turquoise Ridge third shaft continues on schedule and within budget.
Another key project that will unlock value from the higher grade underground resources.
Among the smaller Nevada minds, Phoenix had a particularly good quarter, increasing production and reducing costs.
Long Canyon, where permitting for the protect expansion continues posted lower production, but costs were well contained.
Nevada is probably the world's most prolific gold district, and accordingly, there is enormous upside within Nevada gold mines portfolio.
I've already mentioned.
Okay, his deep south and turquoise ridge third shaft.
But in addition to these the final feasibility study on the Goldrush project is on track while drilling at 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 are favorable hosts drops, which our supply surprisingly underexplored and wait tier one potential remains at debt.
Mineral resource management and expiration at the existing mines are focused on optimizing their mining plans and extending their ore bodies and the exploration teams are hunting for more tier one assets.
So staying with four mile for a bet.
We already have a substantial mineral inventory at four mile and we believe there's potential for a lot more.
As you can see on this slide and oscillated whole 900 meters north of Darcy Dorothy points to additional extensions to what is already a significant minerals system.
Also shown here are 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 time.
Mineral resource.
Teams are infill drilling to establish continuity.
And get better stope definition.
We are also.
In the process of permitting the conversion of Nevada gold mines coal fired Ts power plant.
To achieve jewel fuel system, which will allow us to produce power from natural gas.
We expect the permit to be approved later this year with the goal of commissioning in the second quarter of Twentytwenty too.
The conversion will enable the facility to reduce carbon emissions by as much as 50%.
Thats, roughly 650000 tons of CEO to emissions saved per year.
We also progressing with a new solar project at the TSS power plant.
We intend to permit at 200 megawatt facility, although phase one will be 400 megawatts.
Permits are expected to be received between quarter three of this year and the first quarter next year and their initial hundred megawatts of power will reduce our greenhouse gas emissions by a further 130000 tons per year.
Of Seo too.
Moving up north into Canada.
Hemlo continues on its path to potential to tier two status.
After we put in a new management team and change the way it operated last year.
Among other things it has moved to an underground contract mining model and the open pit operational end in the second half of this year.
Since we restructured hemlo its performance has improved significantly as you can see higher.
But operationally it still has 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 ore body and controls to mineralization. We are now looking at extending its laugh beyond 10 years as well as reevaluating the potential of the whole Hemlo district.
This is an overview of our north American assets.
The numbers speak for themselves and it's worth noting that gold rush and four mile will ensure that Cortez lock Carlin 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 open up new search areas and pave the way for targeting and defining money.
Inventories.
This has also included.
Taking a fresh look at our closure portfolio.
I've already discussed our new approach to Golden sunlight through tailings retreatment.
And another example is the value being uncovered by our partners at SK Creek in British Columbia.
So moving south now to the Dominican Republic, where the Pueblo Viejo 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 costs were very well contained.
We expect production to be lower in the second quarter due to annual maintenance schedules and then pickup to within guidance by the end of the.
Incidentally.
PV was the first of our minds to cooperate with the government on covert 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 and told 2028.
So the program for the plant expansion can now progress independently of the TS Evthree program.
A combination of covert 19, and postponement of the presidential election in the Dominican Republic to July has delayed the Ts F 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.
Is that quest care power plant, which has been successfully converted to natural gas another major con tributes into the reduction in our greenhouse gas emissions.
Valor Dara had a very challenging into the quarter, 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.
At this time with restrictions due to social distancing.
We expect to more tough quarters.
And production for the year is likely to be at the lower end of guidance for this operation.
Veladero as projects, including the power transmission line phase six pad expansion and a strip construction were ramp down due to the cap occupancy limitations imposed by the government during the covert 19 outbreak.
The commissioning of the power line has now been postponed from mid Twentytwenty to the end of this year and the phase six commissioning is postponed by three months.
Staying in South America, the El Indio trend, which runs along the Andy's and includes Valla Dara and our past Kalama project.
His retune 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 laugh 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 hence our 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 the mine on care and maintenance.
Last week, we filed a lawsuit and the PNG court 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 the mine and also directed the government to engage in negotiations with us to attempt to resolve the matter.
Okay.
So now.
Over to my old hunting grounds in Africa.
Starting at Loulo, Gounkoto, where throughput and recovery.
We're up and production, while slightly behind the previous quarter.
Was still ahead of plan.
Development of the complexes third underground mine at can Kotto.
Is scheduled 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.
Have has been installed but its commissioning we'll have to wait for the arrival of currently lockdown contractors.
With the remainder of the 20 megawatt capacity still to be completed by the end of September this year.
In the DRC Kibali came out of the block strongly increasing production and reducing costs and is on track for another good year.
We have now installed and commissioned the best battery storage needed to reduce the number of diesel generators required as spending reserve.
Ongoing brownfields and Greenfields exploration opportunities also bode well for the mine to replace its reserve depletion again this year.
And production at Tongon 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 contributor to all its stake holders and exploration to extended slas beyond the current two years is continuing.
West Africa.
Remains another exciting place to hunt for gold.
Loulo Gounkoto continues to live to deliver new opportunities to add resources and reserves and an interesting target has been identified at farther north.
In the been by GE joint venture modeling has highlighted new styles of mineralization, suggesting the existence of a prospective new car adore, allowing the prolific Senegal Molly shares.
And in Tanzania, We've made enormous progress since we established a tweak a joint venture in January but.
Bolstering our partnership with government.
North Mara has successfully transitioned from contractor mining to owner mining.
Export of the concentrate previously suspended by the government when it was in dispute with Acacia has begun.
And we'll be recognized and 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, bullion, Hulu has sufficient tailings material to keep the plod running while we progress to restart underground mining there on plan later this year.
And Buzz word years 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 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 major gold deposits and convert them and two world class Mimes, 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 vast 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 Beone Arabian shield, which while prospective has thus far only delivered one significant gold mine in the form of the Sukkari Gold mine in Egypt.
In our copper portfolio, Lumwana and Javale Saeed, both increased production and reduced costs.
Notably at Jabil exploration has been very promising and we have intersected very high grade mineralization from step out drilling that point to mine life extensions.
Production at Zaldivar was impacted by lower grades and recoveries.
Operated by our partner enter for gas to the development of Zaldivar secondary sulfide leaching project has been temporarily delayed by cobot 19 movement restrictions.
Whilst 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.
Workers continued on our SAP enterprise resource planning system.
Global rollout, where the first deployment will begin across the Nevada gold mining group during quarter three as planned.
The spot Covre 19 challenges we 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.
This more 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 in our 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 efficiencies and predictive mate maintenance capabilities.
Being already quite advanced in our underground automation, we are now focusing our attention on surface mining with haulage and drilling projects advancing throughout the quarter.
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 embarked on our first trials of battery powered electric underground equipment, which we believe has the potential to lower operating costs and increased efficiencies.
Similarly, our team at Loulo underground help develop that a system that automatically turn secondary fans on and off by using personal if RF ideas tracking systems, which will help in reducing power consumption.
This project is now being implemented across Africa underground mines.
We've touched on the macro grid stabilization at Kibali and are seeing significant benefits and advanced process control systems in our mailing and 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 10 year gold production plan, which you can see here.
I will point out that we have left program in the forecast, 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 our tenure planners bolt on our portfolio of tier one strategic and embedded projects of which all boast plus 10 year life of mine plans, except for tongue line.
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.
And as usual.
With the share price performance comparison.
Barrick's mantra is that the based assets.
Combined with the best people.
We will deliver the best returns.
And this is one way of measuring that.
In 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.
I. Thank you for your attention and I do have most of our senior executives on the call with me and so with that we would be delighted to take any questions you might pose.
Thank you.
I'll begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear town acknowledging your request. If you are using a speakerphone. Please pick up your handset before passing any Keith.
Try your question. Please press Star then two well pads for a moment as college during the Q.
Our first question comes from Chris Terry of Deutsche Bank. Please go ahead.
Okay.
Marketing.
A couple of course as you may all just spoken out individually, but just starting with the first one around cash flow and capex for the for the year Telecom I guess, a number of companies so far of being cutting their capex assignments that got less essential workers on site and objects in the context.
Girl and also the Alphaliner. Thank you mentioned around out there just wondered if you could comment a little bit more on where the where the capex is walker to come in and then maybe one just in terms of working capital.
You stopped upstarts for.
Targeting such or whether there's any considerations for twoq you win in the back half the year on on that side.
That's my first question. Thanks.
Gross sales so I'll add start off our passante Graham if I Miss anything.
They are there are some reshape drilling requirements in 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.
Both the.
Six number six expansion.
As well as the power line, we still will get a lot of that done if not all of that done this year on the airstrip. We are as we speak getting our working to try and mobile as that.
Seem to ensure that we.
We get that strip in place before the winter sets and the reason being that it's yet 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.
Once a week this spring arrives.
No and Nevada is pretty much on track with its key projects.
Program, you know there wasn't a big capital spend forecast for program because everyone was waiting for the HML extension outcome and and the rest of Africa is on track with all as key projects.
As I said.
The the shaft at turquoise ridge, and and the development that gold rush all on track.
Hemlo, we're busy working at the moment with the authorities to ensure that the new underground contract can be mobilized and takeover that the the previous contractors agreed to continue and so we are managing that.
Arrival of some of the coal Australian supervisors and skills to be able to affect that transition.
So you know, we we still see ourselves maintaining our capital guidance. Although there is probably some share jelling of that expenditure that will bring us closer that sort of more to the bottom of the guidance than the top of the guidance, but rest assured we are all working ray.
Hard.
You too.
To ensure that our investments stay on track Graham you ought to add to that.
I think it's fairly comprehensive very point out makers.
In the water, we have seen a slight increase in our capital one of those projects be the solar power that mark talked about in the presentation.
Yes, that's that's something new that we brought into the next but.
As Mark said when you look at the.
The overall picture, we're still very comfortable with the guidance we gave at the store yes.
Ethics progress we'll refine.
Refine that number and throughout the year.
And on cash flow Chris.
Thanks, Chris Thanks, just on the cash flow.
Yeah were where I mean, as you know cash flows got a lot lot of upward pressure at the moment because of the gold price.
And ER and that's our big focus we we kept the dividend as it was we are comfortable where we are we are very comfortable with our liquidity and and our forecasts and so yes, I think were in good shape to ensure that we can deliver on our plan.
And in addition, take any opportunities that we might be able to unlock during this time.
To further grow our business.
Yes, so just on the working capital is just to add to that and it is a bit higher than.
Than the previous quarter, we do tend to see an increase in working capital in the first quarter.
If you look back to that.
Corresponding quarter last year, you would've seen similar increase in working capital is in part due to the timing of payments.
That we accrued during year and then like in the first quarter for example.
The incentives.
We also made installment payment to our in Argentina on the power line.
So there were a few a few unusual that pushed a little bit higher but it is normal for this calendar year.
And finally, Chris on.
Our holding on building the inventory you had so many questions but on the inventory we've as you know very quickly.
Dan and his team across the drew move to increase our inventory of consumable goods and.
Fast moving items, two three months and more and but he is equally got a plan to bring that down.
At the end of the so that's that's a part of our working capital that will actively manage.
Okay. Thanks, just just a follow up before my in terms of.
Yeah.
You went through some of the some of the different verticals there with the election et cetera. Just can you just your models on the current plan for the expansion was sort of timeline you envisage potentially for for the mill expansion. Thanks.
So we progressing with thermo expansion as planned we have.
We are busy with the ordering of the long lead items and and we have completed the feasibility of the actual plant expansion and as I pointed out that now there's a gap developing between that and the TSS permitting process, but again, we have so.
Support bipartisan support on this project.
What we need to do is getting into the field and complete the Asia work and 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 answer, 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.
Okay.
Still struggling with your mute buttons anyway economics.
Right Roger I'll answer it.
Right.
Carrier John.
But.
Yes.
Right.
Between.
Okay.
But it's.
Plant expansion.
And as Mark mentioned.
Got you said capacity in your goal.
Thanks.
Into 2020 or so.
That's not a bottle mix for us.
For the project can proceed.
Yes, we had intended.
On the current program to commission.
Tier centsthree from Twentytwenty for.
But I really in that program.
The overall expansion.
Okay. Thanks, Thanks, Marc let Ron.
Thank you.
Our next question comes from Matthew Murphy of Barclays. Please go ahead.
Hi, I'm I had three questions just on the sensitivity of your guidance to the oil price primarily I guess also for X. I'm, but you've still got $65 oil in there just wondering.
If you have an idea sensitivity to to that or to diesel prices or any metrics you can share.
Matt.
Again, there's swings and roundabouts or the way we've looked at it is that there's covert challenge as it certainly created some additional expenses are now business at the same time, we've seen in how we benefited from a low oil price some of the the impacts.
Our dampened, particularly in Africa, where the oil prices much more structured and it doesn't pass through to the consumer as quickly as as you see in parts of North America.
But as a broad number.
$10 on oil is about $8 per ounce just as a broad number remember our utilization of.
Hydrocarbons is quite different some natural gas some a diesel some heavy fuel, but the as a rule of thumb that's about the number.
Okay, Great. That's helpful. Thank you.
And also just a quick one on corridor.
The the disclosure on this tax claim.
Wondering if you see this occurs at all or related to the mining lease renewal or is it a totally separate issue.
So Matt very complex situation that if you've had a chance to read the order from the judge last Friday, but included a net was.
I was a very clear distraction for us to 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 don't mind.
Yeah, no problem and maybe I can just ask on that core or I guess your next hearing is may eight.
It can you make any comment about like is there a potential to see a resolution at that time or that kind of a preliminary.
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 with our stakeholders and there's no difference in that commitment when it comes to capture New Guinea and at the you know the order was very clear for us to engaging in in Cannes and a committed way to working to find it.
Solution and he also indicated that should not be possible for us to do so he will 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 Greg Burns TD Securities. Please go ahead.
Yes. Thank you Mark I was going to ask if you've actually engage with government, but I guess, we'll leave that one sided PNG.
In terms of capital allocation, you are generating a lot of free cash flow now.
And I expect you will going forward.
One of your competitors suggested that in their view.
On free cash flow, 50% would go back into the business it's 50%.
Shareholders that a framework that you'd agree with or something that barrick would pursue.
So Greg as you know I've never.
I mean, one to try and copy somebody else.
And I have no intention of starting.
We avoid work to present something that's different.
And trustworthy.
You know where barrick has come from its it's been an amazing.
Voyage, if you look back 2015 at $12 billion today, we can boast as having the strongest balance sheet in the industry the mining industry.
And 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.
Scenario that is ahead of us.
[music].
It's good practice, we believe our board believes as well that we maintain our dividends.
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 pursue other opportunities of.
There's a value opportunities should they arise in this very dynamic environment, and then as I've indicated before.
It's very clearly our objective to get to a point, where where we will move away from a dividend policy that supported by the robustness of our PML two or more standard style dividend policy, maybe along the lines that we used in Rand gold, where we agreed to pay outs.
Certain of out.
Our cash flow falling provisions for our long term business investment and balancing always whether we are able to outperform the market on value creation, and ER and certainly everything points to a.
A stronger gold price, certainly more upside and downside and adding to that the sort of for cost reduction a new gold supplier.
Every every indication is that maybe we have to review that policy.
Earlier, rather than later 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 this situation we find ourselves today.
Great. Thanks, Mark Thanks, the clarity.
Our next question comes from Josh Wolfson of 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 AG outstanding payments.
You know what deliverables are still acquired what's the timelines for that and then from an accounting perspective. However, you see that forces statements.
So Josh all done dusted this as we speak their shipments are happening where.
We got a lot of concentrate to ship a we've already received some of the payments. So that's our fired barge that as we've indicated that you'll see most of that revenue come through in quarter two.
Depending on the actual final logistics.
Some of that might come.
Out in a quarter early quarter three but.
There's nothing left to do except to ensure that that concentrate arrives at the at the.
At the port and the enters delivered to the processing facilities.
Through our agents. So that's really where we are there's nothing else are left it's all done.
So just to add to that junction.
Our next home.
The.
The answer is we're obviously produced.
Back in 2017.
But when you look at it and come through and then second quarter. Then obviously be a disconnect between sales and production because there will be higher sales and production.
I am the cost cigarette inventory again, it's Jim.
Sitting on on our balance sheet.
So we'll as we sell that goal will bring to that costs.
The the pace each event of that channels will actually go to a individual operations and then those proceeds will be will be shared amongst the shareholders in the.
The April 16%.
Split.
That said of course, we have a 50 50 sharing arrangement shut in of the Guy everything will be trued up.
Based on that 50 50 sharing.
Cool.
Just add to that workers that are just the first hundred million will be the first payment in the 300 million settlement agreement.
And again again just.
Just to remind you that at three that 300 million has already been accrued for.
So it won't impact earnings a little earlier impact on cash.
Okay, and that's an offering related items just to clarify.
Watson operating margin.
Cash flow from operations item for them for the payment for the tax payments.
Government.
It's a tax payment.
Okay.
All right that's on a question. Thank you.
Our next question comes from Kerry Smith of Haywood Securities. Please go ahead.
Thanks, operator.
Could you just tell me how.
Here are dealing with testing for call. It at sites for asymptomatic employees, who don't show any signs.
So we are not at this stage we are.
Right now what we've done carriers.
I think their most important thing and and something that people didn't get dropped I think right in the beginning is.
Education preparedness and screening screening being a temperature screening.
Making sure that.
Everybody falls and a self assessment for before leaving for work.
In the morning, and then immediately responding.
To any risk factors, whether its high temperature or.
Any top of symptoms through oscillation and immediate tracing and third our oscillation and then testing and that's the way we've managed to attend so far we haven't had any.
Confirmed our transmissions with India operations, we've certainly had staff that have proof.
Being tested positive.
At the same time, we have embarked on a big program of Rapids.
Test kits.
The first country to work with US in partnership was the Dominican Republic, and we've certainly developed and are constantly refining our protocol of how we use that and ultimately that test is going to be an important test add to measure the the sort of immunity there.
The immunity.
Going forward, we have we have also done what's the in partnership with the rest of the industry a big project, it's being rolled out at the moment in Argentina.
The test kits in Peru of have also started to be rolled out we are in Africa vellum and the team are working with our host countries on that we have in North America now you know.
Plentiful supply of a proper DNA or PM our tests.
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.
Our effective.
In managing the the the pandemic 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.
You know impact of it so and the team I must say the Barrick teams have done an amazingly good job and.
And maybe I cannot Katherine just to explain to use some of the stats and the way.
The team managed the that the situation in Nevada, which as you know a ready a good example in a large scale out here are the rest of Barrick has as approach. This.
Crisis Kathryn.
Thanks Mark.
Okay. So if I.
Just curious questions directly in at the way the way we use screening that we've been dealing.
Has been to minimize risk whether it be question to mashek or not.
Switching gears, a sensor to scan at et cetera.
1000 employees within methodical mines and significantly more once 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 with symptoms or whether they tend to anywhere.
Whether they travel to any location.
I.
It was significant risk what that allowed us to do which then to isolate people flagging on the question and whether they had symptoms or not.
And so what we saw or is that you know I said at the last month harmful eight weeks now we've had a total of 593 employees of slot for an average of seven days I.
Either because they send time based on the screening it's 117 insiders if self selected because they have recognized around risk either because they are and the United fishing tool for someone to region.
Alright.
Attach in terms of caring for some moments in terms of entitle and the other one of course is it's a very small minority has been affected by the fact that kicks in on him school. So in type of 593 offer an average seven days, but what's more important I think that's a significant onstage 593 495 and our basket.
83% for tend to work.
What we've seen is a real impact at this was in the sense sort of three or four weeks.
Really.
At the end of March and April.
And with beginning now to moves into more.
Said normal environment that normalized Empire.
And.
That means that when we do have a positive case, we had seven consent positive cases today to then GM, we're able to contact trace all as the people that they've been in contact with Weve minimized fashion to the extent as possible to minimize risk. We then shelf isolate those people.
Then I detest Edelstein quarantine and channel absolutely engaged for Apple tested and then negative and then they're able to pretend to say so so thats. The prices for this allows us to take into account size asymptomatic individuals as well as sizes.
Okay. That's helpful. Appreciate that.
Our next question comes from carry Macquarie of Canaccord Genuity. Please go ahead.
Hi, Good morning, maybe just bigger picture question looking at your tenure plan.
You know its 5 million ounces for 10 years I think here. Your peer has similar flat production profile for 10 years just wanted your thoughts on.
You know wireless businesses scalable like a is it possible to grow production accreted players flat sort of normal once you get your size.
So I carry.
If you look at that graph, there's a couple of.
Larry obvious points, one is for the first five years.
We will bring down the costs and increased the cash flow and I assume you've modeled that both in the form of capital.
Sure 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, 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.
The capital that we referred to in the presentation today, a ready sets us up for the rest of the 10 years and the big ones.
RPV and Dominican Republic, the shaft in.
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 a 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 bras and so when you look at this business, it's a genuine business where the.
Growth is then.
In financial Delevering in in profits, depending on the gold price that your as you now over and above that.
We spanning 170 odd million dollars a year in 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.
Our nation on which to continue to bolt.
Of value, creating opportunities for our owners and I think that.
Hopefully you get had now because you did say definitely missing something if you're you know and again, there's nothing in this plan.
That we can take you to ensure you.
So there's no soon to be discovered ounces there might be some answers 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.
During the next four five years.
I guess, what I'm, saying is angle you were able to grow production over long period of time, there seems to be a you know.
In the industry that once a 5 million ounces.
Hi mine ounces is when it's going to be can be a six or seven.
No it's not a beverages production I don't.
As a possible to grow.
So I don't think you listening.
Hi, 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 recognize benefit for the the.
The $1.6 billion, we got that vested exploration in the next 10 years and so as a as a basis to build a business.
Yeah. This is a standout businesses is exactly where we got to in Randgold way you and other in a analysts.
When we plateaued and we said now we are in a stage, where we are able to throw a lot returns and replace the goal. We are mining in as in a long term sustainable fashion, everyone said Where's your growth until we did the deal with Barrick and then suddenly everywhere.
Unrealized when you look back at how Randgold delivered that value. The first part was of course, increasing.
In reserves and increase in production, but at the same time that came with a capital spend to deliver that and then you get to a point, where you start really delivering real value for the shareholders and and.
Iran Gold in a time, where the industry destroyed value.
Continued to grow it 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 the at a level of total shareholder return that ranked at the top hundred hundred value creators of all listed stocks globally. So you know that.
Thats, where we are doing here as we building a world class 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.
We've all witnessed.
In the last 910 weeks and Ahmad AD.
Since 2008, it's just that some of the management teams didn't deliver that big.
Opportunity back to the shareholders post the 2012 peak, but certainly now we have an industry. That's a lot more the disciplined and we've seen that.
Industry really live up to its.
To that gold insurance.
That that mine as of that in times of process like were experiencing.
Great. Thank you very much.
Our next question comes from Tanya Jakusconek Scotiabank. Please go ahead.
Hey, good afternoon gentleman.
Mark Graham maybe can you just talk about some of the CCOP and Pat.
Because of this call that and maybe some of the opportunities on the other side.
So today are out kickoff.
Of course, you heard earlier, what are the biggest opportunities as.
As a the oil price.
At the same time, our costs really are some other costs are working capital cost because we've expanded our inventory to ensure that we have the ability to manage any supply chain interruptions.
We've got definitely got opportunities on tightening up on our contracts as some of the supply.
No because they the mining industry has common consumable they're not all the mining industry global monasteries is in the same place at the moment as far as robust performance goes and so there's a lot of things, which.
For us at Barrick is a normal course of business, we're always focusing on tightening our costs, making sure our contracts are fair and appropriate given the market conditions.
We've still got significant.
Opportunities to continue to improve our offer operational efficiency, just because we started with a fairly lazy organization back last year and and were really we've showed a lot of progress, but we've still got more to go the work that Graham and his team.
Not doing on.
Making sure that we have a fully integrated.
Datas system as a financial business system that enables our managers to make real time and decisions you know with in the shift those are things that are all greater continue to two to help us become more and more competitive in.
In driving our EBITDA margin and even if you look at today's results compared to our quarter. One results last year, you know our EBITDA margin is significantly higher than it was just 12 months ago. So we're obsessed about efficiency cost.
Focus.
Making sure that we are businesses.
You know focused on profitability and and cash flow and and and so you know the covered situation what it has offered.
To asses that.
As you know.
There was some apprehension on whether we could introduce the randgold flat.
Integrated management model, we did that Weve worked hard at it with the regional executive teams as this corona.
Challenge has definitely her into our management skills and forced.
And fast tracked our ability to to be agile and integrated in the way we run things edit proved that this model. This modern model of making sure that you don't have this corporate cower of authority sitting somewhere far away from.
Your operations is the right way to go and and service anything.
That I would say that says.
Helped us are taught us Israeli that ER honing our ability to manage in a more modern an agile way and on top of that.
Our HR.
He has really focused on making sure that our employment strategy has shifted to younger people more diverse.
Employee please coming from you know the countries in which we operate and and again in the fullness of time, you'll see the impact of that.
Yeah, I understand correctly.
Let them now you can improve on your productivity is one aspect of it and the second and maybe cutting costs on a contractor fine with that.
Yeah.
Lastly, I mean, there's lots of opportunities we've already taken out I think.
Ryan and his team of just in Nevada.
Take it out taking out about $115 million just in contract efficiency just renegotiating contracts.
And so and as you know there's a lot more that we can do.
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.
Challenges you already see who your partners are and we will definitely work on strengthening those positive partnerships and changing those.
Less committed partnerships that we have an hour organization.
And maybe get Graham.
Actually Sandler Oneill additional costs on this call that from Asia, saying anything that may take longer.
Additional cost there are more than offset by the 25 dollar per hour improvement from your fuel.
Another one field.
Well I think Tanya.
You heard Mark say right at the beginning of that conversation and 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.
Those inefficiencies are not insignificant.
And as you say social distancing.
And.
Not being able to Pete move Stauffer around you used to so possibly having inefficiency annual staffing.
Not being able to transport goods away used to do it so having to.
Contracts different types of freight yet is that mainly multiple touch points, which.
Which impact Youre your efficiency, so whilst we've been able to.
Yeah, the restrictions that are being put in place they do come with the cost and that's why we are reluctant to produce so to put that number out and say yeah. This is what you should expect I mean that numbers is a theoretical calculation.
And again as Mark indicated quite often when you see such a sharp drop and in the Donald will price it doesn't always pull through TV. The the liter of diesel price so ill.
Trying to get to theoretical about isn't isn't that useful what we rather try to point to that we've had two 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 other factors.
Currently stand fine grained.
The U.S. dollar denominated Arnie.
Okay, and Canadian neuro and other than it would have less of an impact on a dollar per outstanding on fuel.
I wouldn't say it was evenly.
And as much is 30% you know we really are predominantly a dollar based organization and even in places where we could costs in local currency for example fuel.
You know the underlying driver that it is a dollar based and you know.
Yeah, It's a dollar based underlying product.
So I wouldn't put it is as much as that I would say will be lower than that probably less than 20% would be FX.
That's helpful.
Our next question comes from key at S&P Global. Please go ahead.
Our next question comes from kept Keane of S&P Global. Please go ahead.
Yourself on mute.
Our next question comes from Helen read of routers.
Please go ahead.
Hi, there Mark I just had a question about.
Is that something.
Actively looking.
How to 19 chains, the M&A checks and secondly.
Somebody.
And the Trump administration drafting a legal.
Yes.
Our mining on the need is that something that on the cards for Eric.
Hello.
Without plan to go to the mood right or not a as gold miners and copper mine as a.
Really.
A on a on Grasberg ER I think it's very clear what are what I've said before and our 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.
To to reap positioned ourselves as miners I think what we've seen in this covered challenges the real contribution that mining gives to its host countries and 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 Arca in 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.
For us as a mining industry to stand up and and Chan and advertise the partnerships that we do bold and that the difference that we make and the value we create across the world and I think it can be done better times.
We've seen the first I mean since the Barrick Grand goal deal there's been a number of deals that have already consolidated the industry, particularly in the gold space.
We've seen recent deals during this at the beginning part of this covered and which are closing now that are sort of necessity driven deals.
And I've got no doubt that we will continue to see.
You know transactions that makes sense.
In this environment because at the impact.
Of this.
The scenario is real.
And out of.
These sort of black Swan event, you always have a paradigm shift and so what you know in my view, what you've seen is a sudden drive towards via E. Part of his key on the back of the start of the Democratic engagement in the U.S. press.
Potential or elections, which is now sort of calm down as you've got one candidate, but a strike straight out of that and there was weve, there's covered as highlighted the gap and this global business.
Or a family of aus.
In the form of our attention to social engagement 10 responsibility governance issues and most importantly, something I've always talked about as poverty and you know there's definitely.
Every reason to believe that the world.
It's going to be a different place going forward and we as miners are gonna have to make sure that we.
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 value and ER and they have that very strong financial platform on which to make.
Acquisitions, and pursue opportunities and ER and and embedded in that or is the is our tier one quality portfolio that ensures that we are a long term business and allows our shareholders to invest with.
At the visibility there sort of runway visibility of our.
Future upward or ability to do continue to deliver value. So all those sort of things are going to drop.
I believe a dynamic M&A environment and that cannot be up to us as managers, whether we.
Ensure that we continue to.
Take up these challenges and consolidate this industry and deliver real value to our owners all like we didn't 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 hand, 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 also.
You don't know how much I look forward to seeing all of you again and ER and we're working hard at that in the meantime, you can be rest assure that we are all very focused on continuing to deliver on 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 todays 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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