Q2 2020 Barrick Gold Corp Earnings Call
Every institution.
And every person on the planet.
The novel Corona virus descended on us without warning.
And as yet we cannot nothing about the lives it'll take.
Well pick shot the social economic destruction. This unprecedented event would leave and that's wake.
In hindsight.
The merger, all Barrick and Randgold could not have been more press yet.
For its creation of a modern.
Fit for purpose mining business that does not only continuing to fulfil our promise.
Oh, sustainable and superior value delivery.
But it's also provided us what's the mindset and the structures to combat the patent damage.
This has enabled us to Bob its impact on our people and our operations and as you can see from these results we have not only continued to meet job targets.
But also continued to advance our strategic projects.
And then the spirit of partnership.
Which is at the very hot off the Barrick culture.
We have provided much needed support to our host communities and countries in their own battle against code, but not gene.
And we will continue to do so.
I refer you to the cautionary statement up on the screen.
And it is also on our website should you want to review it in more detail.
As already mentioned.
Due to the effectiveness about code that 19 response.
As being the management structure, we introduced after the merger.
Oh flat.
Our job and de centralized structure across the group.
Allowed us to proactively implement a broad range of preventative measures at all now sites.
And immediately engage with our host countries.
To provide timely assistance to suppress the spread out the virus.
Barrick's traditionally strong focus on health and safety ensured that it wasn't well equipped with a comprehensive means and efficient systems.
To contain the virus.
I'm not many other things Barrick has to date provided more than $20 million to help the hard pressed health authorities and our communities and a host countries.
As we continue to demonstrate.
Mining companies can be a major that forceful good.
In these countries and that's true POC not to their governments.
Was there no operations Barrick's journey to zero harm continues to make steady progress.
And in quarter, two we reduced our lost time injury frequency rate.
16% and more importantly, when you look it's a slot it's the trading that matches.
And we also have seen a decrease in the number of total injuries.
Similarly.
We are improving our environmental record to ensure that we are building up business.
That will be acceptable to future generations. So.
So far this year.
There's been no cross one environmental incidents across the group.
Outside or two admissions have been reducing and I want to reduce reuse and recycling is improving.
By the end of this year all our margins would have achieved there are so 14000, then 120 15 environmental management certifications.
Our commitment to hot E.S.G. standards is also evident and now support for community development projects.
In addition to the code, but not gene aid we are providing we have invested almost $9 million in these projects year to date.
And more importantly, we have spent over $1 billion to support the local economies through the purchase of goods and services.
One example of these development projects is a scholarship fund for Native Americans in Nevada.
Two which barrick has committed.
The $13 million over the next 10 years.
Turning out total investment in this project to $26 million and ensuring that there is.
Bursary funds available for Native American partners for the next 50 years.
Operationally.
The Cortez provided many highlights with real delivery on many fronts endorsing our vision of the new barrick's capabilities as summarized yeah.
I'll talk you through the main points in the course of this presentation.
Hey, good by a strong performance from our tier one asset portfolio, notably, Nevada Gold mines, Loulo, Gounkoto and kabaddi year to date gold production was 2.4 million ounces, which means that at the halfway.
Mark we all well on track to end the within our guidance range of 4.6 million to 5 million ounces.
The copper portfolio also posted strong results with production in the upper hop up the guidance range and costs trending towards the low end.
Capturing the benefit of higher gold prices.
Free cash flow increased by almost 20% to more than half a billion dollars and adjusted net earnings per share rose to 23 cents well ahead of market consensus.
This result is a stellar one given the Q2 is the quota when we usually Seattle.
I'll talk about cash taxes and interest payments.
Debt net of cash was reduced by nearly 25% to $1.4 billion from the end of the first quarter.
And on the back of this strong performance.
The quarterly dividend has been increased by 14% to eight cents per share and that's not doubled since the second quota of Twain GE non gene.
I'm also pleased to confirm that to date out non core asset disposal program has delivered on our target of $1.5 billion.
With 1.25 billion know that 1.5 billion being reached received in cash and the rest and equity.
And this process is continuing.
Turning now to the operations, we start to Nevada, where the pandemic celebrated the integration of the Nevada Gold mines operations.
Strong management delivered to the bottom line despite the crisis.
And the support provided to the communities counties and the state reinforced the partnership principal and demonstrated mining is key role in balancing Nevada's economy.
The combination of call in gold struck has provided processing flexibility and geological opportunity.
Production for the quarter was down as expected because a plot maintenance at the gold rock goldstrike grossed up partly offset by the increase of higher grade Cortez all processed by the Carlin rose to one of the synergies captured by.
The Nevada gold mines joint venture.
Incidentally.
The Carlin open pit truck drivers were 602 shuttle employees across Nevada gold mines dispensing with the need for buses as part of our social distancing measures. During the initial early locked down a period of the pandemic.
We're still defining Nevada is full potential through the integration of exploration mineral resource management and mine planning.
But it is already evident that the Carlin trend holds significant promise for resource growth as well as new discoveries.
A number of high priority targets all being tested.
What's the nose Leavell project recently, delivering the best intercept to date of 21 meters at 65 grams, a tonne that's more than an ounce per ton.
The exploration team is ready, making good progress in advancing the programs and revising the models and priorities.
Over now to Cortez, which did particularly well topping the previous quarters already solid production numbers.
Cortez Hills underground continues to outperform with improved efficiencies supporting mining at a higher right.
The gold Rush team has also now being integrated into the Cortez organization.
The construction of gold rushes twin expiration declines is also now ahead of schedule and the transition from a contract up two Oh no operation has been brought forward to the fourth quarter of this year, that's about a six month Ford upbringing.
Forward. The project is scheduled to intersect first all in the first half of 2021.
With permitting expected later that year, and so 2021, we'll focus on validating the assumptions in the feasibility study, which is due to be completed in the early part of next year.
So it's early days.
Testing the geological extension at Cortez Hills underground, notably the foot wall of the hence unfolds as shown how the rod and diagram as a section across a problem in the left and plan.
And.
Lets says that certainly indicated the potential for life of mine extensions that will allow cortez mine to maintain its tier one status.
Even before the contribution.
Oh gold rush.
In the meantime.
Barrick's nearby full mile project.
Which has not yet being integrated into the Nevada Gold mine portfolio continues to report very significant drill results.
Informing the high grade of the mineralization as well as four miles exciting potential.
The model updates is underway with updated resources expected at year end.
At Turquoise Ridge.
Construction of the said shopped remains on schedule and within budget.
Commissioning is expected in light twentytwenty too.
The current focus is on continuing to improve underground efficiencies getting a better understanding of the all body and the geological model as well as driving the optimization of the mine plans and processing facilities.
Oh the operations the turquoise Ridge complex, which includes the legacy twin creeks has been one we have had to put extra effort into and consequently, there has been further leadership changes to accelerate this process.
This complex offers the most significant additional near and medium term opportunities to Nevada gold mines.
[noise] elsewhere in Nevada, Synnex and long Canyon, both operated within plan and are trending towards the high end of the guidance.
On the subject of Nevada, the state as being hit hard by the pandemic given its reliance on gaming and tourism.
We have recently worked with the governor and the legislature to deliver advanced Texas to support some of the state's needs in the medium term and we continue to engage to help with longer term solutions to the state's funding challenges.
In Canada.
That hemlo, often teetering on the verge of closure for 10 years now you'll recall that the mine was subject to a rigorous review, which was used to introduce our new approach to mineral resource management and mine planning.
The tailings plant and underground ore being de bottlenecked and the mine as transition to an underground contract up mining model.
Under an energetic and motivated new management.
Production from the restricted and revitalized hemlo. He was on track to achieve this year's guidance, although costs are trending higher.
Packed led primarily by higher gold prices and the high on net profit royalty.
One more challenging.
Lies ahead of us at hemlo, but beyond that the mine should be looking at a 10 year runway with potential upside.
And.
This potential upside at hemlo is significant.
We are growing our geological knowledge of the area revising the models to finding new targets with the potential to open up new mining fronts.
And acquiring additional rights.
Our aim is not only to escape extend the known ore bodies, but you find new ones.
District scale exploration well beyond the current no limits of the ore bodies has started that hamlet after years of an activity.
Follow up field work is underway on areas of interest knowing none to coincide with Goldman realization in and around they are existing operation as well.
In the Dominican Republic.
Probably vascos production was impacted as expected by a total clonch maintenance shutdown.
And.
As at the other operations higher royalties from the higher gold prices also took that toll on costs.
With major shed Jones day difference now complete for the yup.
Production should return to normal levels and the mine is working to get back to plan and the second half of the.
One of Barrick's.
Key strategic projects is the expansion of the plant and tailing facilities at the Pueblo Vascos joint venture, which is designed to extend the life of them on into the 20 Fortys.
The environmental impact assessment for the plant has been submitted to the authorities and orders have now been placed for the long lead items.
Field work for the baseline environmental assessment of the additional trading tailings capacity essential to the support to support the mine life extension has started and constructive discussions with the authorities regarding the permit.
Taking all well underway.
The project implementation strategy is based on committing 75% of the actual construction sub contracts.
Two Dominican controls contractors.
Following the recent elections, the political uncertainty and the Democratic Dominican Republic has dissipated and the new President will be installed next week.
His government.
His business and mining friendly and when I visited them recently he assured me we could rely on their support for the project and to get out we are looking to grow the mining Andrew Street.
Based on responsible mining.
In the meantime.
We are also exploring exciting new opportunities both within the joint venture lease and outside the lease area.
Bella Terra and Argentinian.
It was the only one of our minds with operations were directly hit by the pandemic.
A mandatory nationwide quarantine imposed by the government was followed by a particularly severe winter that impacted stacking and irrigation activities.
Consequently production for Twentytwenty is trending below guidance at slightly higher per ounce costs.
Open pit operations were halted for 17 days.
And then resumed at 30% of capacity for a further 23 days.
With personnel restrictions expected to remain until September the pit is currently operating at around 85% of capacity.
Construction of the Leach pad expansion project.
Also stopped at the start of the quarantine and the onset of winter delayed further work for some six months.
Additional resources will be remote mobilized at the start of the construction season.
To accelerate the progress of these projects construction of the piled on from Chile was similarly, how halted and we are now re planning the project.
But at the same time, we intend to give priority to the phase six leach pad construction.
We expect the commissioning of the pile on by the end of Twentytwenty what.
The remobilization of the project teams is also dependent on the easing of government restrictions relating to covert non cheap.
Remaining in the Andes, we continue to explore along the prospective El Indio bells.
At El tourist del Carmen the controls to the high grade mineralization are being investigated in an effort to identify mall.
At the same time.
Scoping level economics are being updated to determine how best to bring this project to a cast.
As far as Pascal Lama is concerned we all working towards a new geological model with resource updates expected in Twentytwenty one.
In Papua New Guinea as you I'm sure. All of you are aware, we placed polgar on care and maintenance off to the government decided not to renew our special mining lease license.
We believe the government's decision was taken without due process and in violation of the law and the matter is now before the court.
We continue to argue the merits of the benefit sharing scheme, we proposed in 20 non gene and revised recently.
And we continue to have the support of the landowners the communities and Civil Society.
And given the uncertainty of the situation as previously announced I would just remind you we have withdrawn guidance for this operation.
Now over to Africa, where Loulo Gounkoto cotton caught a delivered its usual solid performance and is trending above plan.
However, again higher royalties impacted the cost per house.
They've gotten caught a underground project, which will provide the complex with it stood underground mine is on track to stock development towards the end up this year.
And further extend its lot by continuing to replace its depletion from money.
Exploration across the Lula District has confirmed extensions to the transfer zone at Yalea and showing that the Loulo three system remains open downdip.
Two perspective, new Colorado's one to the south of Gounkoto and a second within the Babaji joint venture in Senegal have also been further define this quarter with encouraging results from drilling and this will be a focus for the team and then you feel season.
Following the current rainy season.
In Cote Divoire.
Tom One was on plan for the quota and is on plan year to date. The focus day is all about extending the mines like through the discovery of extensions and satellites and as a result, we are considering a plan to trade at a lower production profile.
For a longer life of mine and with significant added value and optionality, especially giving the current higher gold price.
Talk on is also located in the nearly permits and how you can see where we are exploring new car a dose for opportunities to further extend the life of mine, but the finding some new and exciting targets within hauling distance of.
The processing facilities.
Across to the eastern part of Africa Kabaddi in the Democratic Republic of Congo continued to deliver consistent results and is also tracking ahead of plan.
The mine is well positioned to replace it's depleted reserves this year and still boasts a wealth of breeze resource growth opportunities.
And then a further east to Tanzania, where.
Tanzania still a work in progress as we rebuild assets and relationships destroyed by Acacia.
But I must add the team has made significant process with this endeavor.
North Lora is fully operational again with production above plan.
But cost slightly elevated as we work to address the issues, we inherited which I have no doubt.
We will correct.
Recent drill results at the Kona.
Have exceeded great expectations, indicating an extensive upside potential beyond the existing drilling limits of the underground development.
We estimate that current targets have the capacity to replace depletion this year and the next.
There is also further potential to add an additional cut back to the Gen up pets and there is and this is also open at depth below the pets.
If you look at the slide on the left you'll see <unk> Green square with a couple of dots and that's a new COFINA targets and initial scout drilling at this new targets to the which is located to the west of the Kona pets.
As shown how aims to extend the good coda system by approximately 500 meters west of the current known mineralization systems.
And probably a new underground, which has been on care and maintenance for sometime now the team is doing a great job agreed commissioning them on.
Shopped refurbishment is due to start later this month and we're on track to resume processing underground all by the end of this year.
It was log is focused on the under and is on the other hand is all about optimizing throughput and managing the stockpile processing grade.
I'm also pleased to confirm that following the signing of our framework agreement with the government of Tanzania as of today all the stockpile concentrate has now been shipped with around 30%, having being shipped during the second quarter.
Also the first hundred million payment towards the settlement of the legacy disputes has been paid to the government as you would've seen in the press.
Overall, central and East Africa, or a happy hunting ground for our exploration teams.
Free many opportunities for resource replenishment as well as new discoveries.
Our teams are active both in east didn't DRC and throughout the Tanzania, and Goldfields building on our knowledge and expanding our portfolio.
As I mentioned and they entered in truck parts of this presentation a couple of bonds all had a very good quota.
With lumwana posting its best production and cost profile in yes.
Jumbos Saeed training at the top end of its guidance and zaldivar, although impacted by cobot non gene still delivering a very respectable performance.
In conclusion, ladies and gentlemen.
Looking back over the posture and a half I can report that all the opportunities created by the merger and subsequent transactions have been seized and more have been identified.
Our existing asset portfolio supports a 10 year organic production profile.
Which distinguishes us from the rest of the industry.
Oh exploration teams recently strengthened by the newly created positions Abbas Presidents exploration for Latin America, and Africa, and the Middle East continue to style the globe for the new opportunities that will sustain us and.
All that business.
Into the future.
And finally as shown on the slot.
Eric share price performance.
Reflects our ability to successfully deliver on our mission statement both from the time of the Randgold merger announcement.
And the current year to date.
Pacing, but the goal process and a industry peers.
Again, ladies and gentlemen, thank you for your attention and I'm happy to take questions and as you would have heard at the start of this presentation I have a the barrick team on the line as well should we need to call on them to expand on any of your questions. So operate.
Over that back over to you.
Thank you, we'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're using a speakerphone. Please pick up your handset before pressing any key.
To withdraw your question. Please press Star then too.
We'll pause for a moment as colors, China Kim.
Our first question comes from Chris Terry of Deutsche Bank. Please go ahead.
[laughter].
Oh.
Well done on a very solid quarter contracts that coating on for any particular my first question is just just around Kirby north and you've done a great job in.
Restocking, having raw materials on hand et cetera.
If you could talk through the second half the year, which operations, okay, dropping off which operations in most concerned about from a card point of view.
And is that is on the continued focus it's all about having a raw materials are separation of Workforces just figure talk through a bit more granular detail about how you're headed to the second all to mitigate the Congress.
Yeah, Chris the the Big thing Nahs.
Settling down to operations and also our biggest challenges is constantly reminding the communities and a host countries and state governments that covered as still that's no different too. When we started this pad there make back in February and that we need to maintain.
Trumpet a disciplined protocols.
And so you know the real risk is a is as we've seen in North America, particularly and and in Europe and recently in China. As these spock set up out to come from time to top and so it's making sure that we all are obsessed about protocols and.
We are not we now have a testing capacity rotce through a different organized odd organization a different operations, we have sponsored PCR facilities plus rapid tests.
Through all the countries, we operate except North America, which is U.S. and kinda do I still am mulling over the the approvals full does very rapid test. So that is and again the responds to any spot because oil at risk to our operations.
I think weve demonstrated I mean, the other risk Chris is Argentina remains a risk because we haven't had a positive case up invalid, there and what what we are working with US state government and the National government is you've got to get your head around the fact that you are going to have infections. It's how you managing that Jim.
Potent and the fact that you can limit the ER our factor effectively.
Africa. It came in a little later, but again, we are you know we're very proud of the responses from the host countries and and as you know, we very well connected to the health authorities right through Africa.
Because of the above the challenges we've had in the past that ongoing fought against malaria and other tropical diseases, so and rarely barrick's or community a management teams plus a health authorities are really an extension of.
The regional health authorities and so we've been able to rarely supports the ability to test quickly and a and we've been able to really deal with a few sparks recently just yeah. The weak we we did a complete test of our entire workforce in kibali.
For example, and the other thing that is important lot of people ask me so mark.
What is what sort of response are you getting from the communities about you continuing to operate and what we we have demonstrated is that for its it very dangerous thing to lock this virus away, particularly in the developing world.
Well, you don't have capacity and people go back to small dwellings, and so I take a body or the same as what Loulo gounkoto talking on we are able to monitor our workforce our workforce goes back into the community every not we can and we do have the capacity and we do.
You actually do it is we can test the entire lift for us and so therefore, we've got absolute visibility to the community around our minds and so that concept is something that you know has really been.
Accepted by a host countries and and so far I'm very encouraged about the responsiveness across Africa and the way. They the virus is being managed sometimes even better than some of the more developed countries. We operate in but you know that's what it is this.
Virus is the same virus as in February when it first arrived it's it requires a real paranoia to manage it at a we have a concept treat everyone as though they've got the virus and then work around it and that's how we do it and and again there are I think everyone.
About management teams have excelled and prove they the the effectiveness of our flat or corporate structure and are the agility. We've created by ensuring that we have executive authority on the operations, but yeah. This.
Viruses unprecedented and we have to manage it every day.
On the logistics, but I mean with our logistics team has done an amazing job. We were in February already we started increasing or the the oh stalls, particularly on consumables and strategic items and we've we've got a three month.
No inventory, we have managed a couple of motor breakdowns and that during this last paired you don't see the result of it because we have the capacity to and the strategic spares to manage these process interruptions as we do all the time, so we haven't been impacted.
At all we did bolden alternate supply routes, we've shifted for instance, the purchase of steel bowls from China to Europe, and then back to China again and so.
Our team is very nimble and it's it's you know.
It's an integral part about business. So you know and all our projects on track except for the Argentinian projects, which I shared with you earlier, but and the other thing I would leave with you Chris says.
This the our strategic objectives are on track as well things like our commitment to change. The you know the demographics of our employment to to seek a much bigger gross of Ah I mean, a much bigger focus on employee younger people and and out and there is.
An Arctic color now report, which really expands on that human capital strategy to two to ensure that you know our commitment to build the most valued mining business is not just you know.
Cheap talk itself, it's a genuine strategic plan, which we measure against.
Great. Thanks, Thanks for coming in other Christian I wanted to follow up just want to make sure read this correctly, but I've heard from a strategic point of view, where you stand today, you might be able to extend Tom Grand everything else reminds us is the spot cargos across from the disappointing your voice.
Talked about keeping their reserve brought some side and from a copper gold perspective, I'm, giving you are talking to one off going up divestments you are comfortable where that is just wanted to get this talk broadly about your latest thoughts on on strategy commodity mix crossing sector I think nothing strange, but just wanted to get you gave for something.
Yeah.
So in a you know tongue on as a good example, yeah. The team again has done a really good job of adding more resources, we are busy with the.
Our final feasibility studies, but everything looks Soc us being able to.
To extend Tong bonds Lapa originally it was going to produce a big next year and then close but that's.
That's a not the case anymore and and we are looking to.
You have a slightly lower production profile next year, and then run for another four years or three years at about 180000 ounces and then a and then and then we've still got as I pointed out all these other opportunities we've already started to crack the control area on the tongue.
And.
As far as mineralization goes we're still managing on a 1200 dollar gold price. So we need to the business to make money at 1200, and a and this profile and so we end up with more ounces slightly lower production right, but for longer and I must say the.
African Middle East team has done an excellent job and and beefing up its profile going forward and a and tongue on is the classic opportunity, where we can benefit from the margin that the gold price office, because we were going to close it and 2022 at Nada.
Open until post 2024.
And we've got more that we can add to that process plant, which is now noted on bad full capacity. It generates more revenue at 1200 dollar gold.
And it creates an additional optionality.
The other opportunity we have at the gold prices in Nevada, as we but again the team has continued to to find RIS resources and convert them into <unk> reserves to keep out.
Processing facilities full but as we move more and more underground we do free up some capacity and oxide mills and of course, we've got the heap leach opportunities, where we can also.
Increase the stacking up slightly low grade, but as long as its got good mentality and so does we don't and we have a little bit of capacity at Kibali, but we keep we keep falling at with full grade ore. So anyway, we can benefit from this goal process.
Other than the gold price itself is we don't get a chain job a reserve grade a gold price so as to be able to accept lower grade material to full available capacity and we although we don't have much today, we have some and talking about and.
There's some that could materialize in the future.
As far as.
M&A goes.
We are very clear on I mean, we've proved us back and you are right back in 22.
2009, you know in the last big run up and goal post the great financial crisis, well, we intend to remain very disciplined on Oh, yeah. The 1200 as the new thousand for me.
And and M&A of course, we will pursue an M&A it our strategy to M&A doesn't change it's about the quality of the assets. The target assets, we are not going to increase any M&A activity on the back of you know bigger gold prices that that.
Is that we ignore the revenue side of our models when it comes to M&A, we want to see where the then 80 opportunity delivers assets that can survive the full saket kalla tee up the gold price and on you know.
Capa I think we've demonstrated a our team's ability to turn around a massive capa very low grade copper mine and in the Wanna its doing extremely well at the moment.
And I end and our strategy as we shared with the market at a investor day last year already is that we recognize that you know to remain relevant in this growing global market, we need to continue to to at least replaced what we mined.
And most importantly grow that opportunity with quality and our view is that show.
No in that endeavor, we are about two to five times a poll freeze.
Gold copper pull freeze that ER that will deliver on our parse out filters and it would increase the amount of capa that we mine and we've also said that we would upper right take on a copper portfolio should we.
We'd be able to exploit benefits from that strategically and the other thing I'd I'd say, Chris is the importance. This will the mining industry in this world needs to reinvent itself. I think you can you have seen the gold industry takes the lead.
Post or the Barrick merger with Randgold and then the newmont cut a consolidation of Goldcorp and then the subsequent transactions in Nevada, and and then us taking Acacia private masella.
Turning a merger and we've really you know this industry looks a lot better and is definitely delevering back to its shareholders with the higher gold price.
I I hope that.
Oh, Yeah that we will continue with that discipline and actually deliver value back to our shareholders. In this sort of economic global crisis that we find ourselves.
Okay. That's so quite a there's still some for me Mark no handed over they dropped out on Dan Donlan I'm, a week or so ago, just wanted to your comment on where that fits.
Within the portfolio overall loan or where do you see that.
So you know as I pointed out Weve already met up 1.5 billion dollar value delivery or by a you know bringing to account noncore assets, we will continue to do that.
And but the dominant does a nice clean goals opportunity, it's definitely a I a very large resource we have a we understand the economics of it we win win with the changes and Barrick, we got much more involved.
And and we it's sitting a at 1200 dollar called out review last year gave us about a 9% IR or.
When we look at the project it's got three.
Sort of risk baskets construction risk because of its location or the capital risk just because it's a very large asset 10 minutes in a moderate grade, but in that and that in a in a challenging environment and then which is always the case, it's the geology.
Risk and that's something we can de risk and so you know our engagement with no. The gold was let's really get down I put the best of our geologist both sides into this project employee some really quality skills into dorland and.
And then.
Take out the geological risk because once we have a clear definition of the reserves and more importantly, the shapes of the ore bodies. We can then set with confidence the mining plan and more importantly them the rate at which we can mine which of course, we'll see.
But the amount of goal that we can produce on an annualized basis and then all the rest is is able to be measured against that and so that set. Your return you know once you get the amount to goals you can produce and at what cost then it's a that's the basis to the.
Turning the returns you can deliver all stakeholders and the next variable is the actual gold price at these gold prices you know, it's a very valuable assets, we still adding value to it and you would've seen the first announcement out of Donlen as Donlen.
Because I believe that's way, Nova gold and Barrick should be focusing on is is darden and as that as a standalone business, we happen to be shareholders of it and we'll continue to drive that it's the biggest drilling project that we've that darden seen for some time as you know we.
Okay, and Barricor geocentric, we're obsessed about taking out the geology risk and ER and we've got probably another follow up early next year to test. The models that we will develop out of this drilling program, which we will finish this year.
And before the the winter sets and then and so and then we'll we'll we'll take it from there and a you know weve. It's definitely right now it's a it's a it's a key.
Project for Barrick, and and and very valuable today.
[noise] flagstar.
Our next question comes from Jackie Paris, Busky of BMO capital markets. Please go ahead.
Thanks, very much in just a follow up on something you alluded to not last comment Mark.
He mdna you didn't talk about how you haven't changed the 1.5 billion value realization, but you didn't say, there's more to come and I was wondering if you could comment on that or you are you still looking at noncore asset sales.
In the near term I guess, we'll be well first question. Thanks.
So Jack Yes. The answer is yes, yes, and yes. So I mean I think what you see how is that we set this 1.5 billion dollar a target people sort of right. They are browser, but but the two big drivers on that is the 750 million.
Our cash payment we received for our share of Ah Kalgoorlie.
Today, the value of the Massawa transaction as just on a $500 million.
We then cleaned up a whole lot of.
None so equity positions ownership of small projects you know back one stage was investing in juniors and so on so we tidy that up and I think what it shows is that every dollar is important for this barrick team.
So there is there were lots of transactions, we've done a sort of 510 $15 million tightening up the portfolio. As you would have seen we've recently or re entered into a definitive agreement I've asked Croquet Creek and again, we believe that that deal will continue.
To add value or a big shareholder in that project and we'll we'll we'll manage our way out of it over time.
And we've still got others to do there's a lot of work being done on our closure slots.
We've changed our closure strategy to too close to work engineer Assad to closure rather than try to kick the ball dog.
The road or the can down the road.
Just remain in compliance so and as we do that we convert a liability into an asset and we are able to bring it to a caps as you know as you would imagine the higher gold price turn some about small lot assets within our portfolio into something that's quite attractive.
And and we have number of those and so again, they might well prove to be just sort of foundation for startup initiatives and I'd just point out that's how I started randgold. Some yeah 30 years ago, and so and we are always support.
As far as you know entrepreneurial developments and opportunities. So we'll continue to do that we have other assets in our portfolio that again, we would we would want to bring to account and and and that's a appropriate time and you know the golds dominant asset.
Have a much bigger value today than they they had to even at the beginning of last year. So you can look forward to more of these sort of transactions.
That's that's really helpful color, Thanks, Mark and I'm sure I'm sure isn't the closure reclamation is it's very attractive for many years she perspective to the community.
If I could ask on me on the sale of then Shangdong gold equity that you held I know you 10 million shares approximately remaining is that a position you plan to keep and Conversely on t. any attempt to shangdong or are they are planning to still hold the barrick shares that they own.
So we worked you know that that investment was had many.
Reasons for it you know there was the IPO, which we supported and and Chen I'm coming are moving into the international Reis.
Arena, which we were able to support and also they were supportive of us in a time when we were working towards the merger between Barrick and and Randgold and and at the same Tom as you know when partnership down in Argentina, which is really.
No I started to you know to really.
Sure merits.
For for US, we believe we had fulfils.
Our role in that process. We are we have retained I cool investment with them and a and we have no intention of selling those shares certainly in the in the short term or even mediums.
But at the end of the day, our businesses about deploying how Ah onez capital to make a returns were not a passive investors by.
Nature or through strategy.
That again there.
For their investment and in Barrick. They are they've kept on it theyve done very well, but staying with it.
And you know our liquidity as such that that they can sell at Obi anytime they locked whereas for US we had fulfil the specific role and we worked with them to create some more liquidity through there I sort of offshore the Chinese offshore or so.
Structures, and we were able to bring in.
Other shareholders and and again those shareholders done very well out of that transaction. So you know I think again, a partnership and the way we work together to realize value for our respective bonuses is really underpins. The partnership that we have was shut up.
Got it. Thanks, Thanks, very much and one more question then I'll then I'll hop off and you can you give us an update I think you talked previously in the media.
BOLI and then negotiations you're having with went to DRC in terms of cash repatriation is it possible to to update us on how those discussions are going.
Yeah, they are going extremely well. So just some background you know that 2018 mining code or sort of shopped upon everyone. And then there was a change in government and we've engaged with that government and it's a complex engagement because of the coalition that as you know the fan.
So the underpinning that government with the Kabila effect chat section, having more ministers than the CESI carry affection, but in the fullness uptime is you know weve. It took a long time to form the cabinet there've been some changes on both sides, but it's a better working.
Government today than it was even a quarter ago and and again, we've as you know we were very engaged and vocal around the 2018 mining code and and there's been different ways to interpret.
Repatriation of excess cash and.
And Kibali.
Really hasn't it makes it a barrick makes it its business to comply with legislation and so that one of the changes was you had to repatriate 60% of your gold revenues back into the country of course into a U.S. dollar account, which is important and even after repatriating that six.
Steve.
Percent, we weren't able to spend all 60.
Or percent of the repatriated funds so we crew.
Our cash balance in country, and we still are paying off the capital in up.
In Kibali and also we have.
Settled on a on a dividend strategy before capital the full capital amount was redeemed, which will benefit both our partner Sikkema and of course, the government through withholding taxes and so we've set out of the covenant pointed out its useless keeping this money and.
NDRC does it it doesn't draw a lot of interest it doesn't help anyone whereas as the sooner we can pay our capital of them quicker, we can revert to full dividend repayments and and we take away a cost on.
The income statement as well and everyone understands that Oh, we didn't want to do it in any sort of.
Purchased process, we wanted to do it under the proper regulations, which which we believe our embedded in the mining code and so we've had to work to tidy up some of the word age we have US we have approval now from the government and the central Bank to repatriate, it's it's really not.
Just a with the paperwork and and at the same time, we've been working with the parliamentary Subcommittee just starting up the legislation so that that that these sort of transactions can happen in the normal course of business and I just would play.
I got to everyone. The daughters are in the U.S. dollar bank accounts and and the and there's no.
There's no question about that they belong to Barrick and Anglogold of course, and a and we are you know we're taking some time because.
We were prevented from doing much.
Because of the delays in finalizing the cabinet, but now that once got government was property settled we were able to get to work and they're not yeah, We're rochester cost plus this happening.
Yes, that's really helpful. Thanks, very much mark I'm going to hop off and let someone else. That's question. Thank you. Thanks actually.
Our next question comes from Josh Wolfson of RBC capital markets. Please go ahead.
Thank you [laughter] I looked at the gold price today or something like 700 hours above your searching 50 budget and over $800 above your long term price assumption.
Companies position to be in a net cash.
Net cash position in and around yearend generating more than $3 billion of free cash flow.
You know when you when you look at the company's long term outlook in I guess M&A side, how do you leverage this kind of outside that you're you're currently experiencing today for nickel price without compromising the company's disappointing, which it seems very very clear that are the companies doing right now.
So Josh.
The first of all the way you do it is just you Doug blow your brain zox like what happened the to the industry or ER.
In the 2000 2000 2010 to 2015.
So that's the first point.
Secondly, a you know we've always said that we would adjust out dividends on a sustainable basis.
As and when it was required and and you'll see that we've added another say into the quarterly dividend already and we will reconsider that because if I can try to explain to you.
Our objective.
We haven't changed our strategy.
And by the way we are managing not 1500 dollar gold so our budget was.
The plan is that always at 12, it's it's it's measuring the performance of the teams we got to keep rising the gold price and we try and keep it was close to spots as possible challenge. We've had is that's part has been moving faster than we can.
But I must just reinforce we still allocate capital at 1200. The budget number is only for us to full cost revenues and and Youre. A prediction is correct you know if you take.
If you take.
You know the various coal prices and we do run models now we've got them up to 1900 dollar gold and we look at them. So that we the objective as not to waste any money and retain the dividend I mean that discipline of protecting our margins.
So that's so so then step back and say what do we got to do about at first of all what this is what is happening today as effectively fast forwarding.
The Barrick strategy of widen July all 23rd of September 2018, when we shared with the market our vision for the Barrick Randgold combination and this call process done two things.
It's fast forwarded that whole strategy and it's also allowed us to work through some of the riskier assets for instance, Argentina win win at the beginning of last year was not in good shape Bella Terra and the due diligence couldn't make.
Make money a at 1200 dollar along well long term gold price today, we've got a 10 year plan that does make money at 1200 dollar gold price and with the crises in Argentina, the higher gold price is helping us on out the loss of the wrinkles and that.
Asset, which is a very valuable asset going forward and it gives and then of course, we got all the other opportunity and so the same with Nevada is that you know we changed some of the open pit a shade Joe's or at the beginning of the a.
And then change them again, what cobot, but it's given us some flexibility to to manage that Ah that combination ER and a and also settle everything in the right place if that makes sense to you. So so Nevada is now going forward you haven't seen some of the.
The gaps that we close because the gold price has eased us over those gaps.
The same with with tongue on its kinda give us some breathing space again, we haven't changed the 1200 dollar test, but its given us some great breathing space and suddenly out geologists are starting to deliver additional opportunities there so and again.
If you got to north borrow which as you know the biggest sort of.
Workload right now in Barrick again this.
Does raise gold prices, just helped us get away or on the back of our promises a that we made to the market ever Tanzania, and government and and so they you know the concentrate was sold at a much higher process, which it was produced and so we were able to settle that hundred.
Million dollar first time, and two Tanzania, we've got a bigger stronger Tanzania and balance sheet because of the better revenues, we got from the remainder of the concentrate and we've got a capital profile. There that we can manage so we're able to manage that business on as an entry.
City with itself already generating the cash that we require us to invest in the rehabilitation for instance of or the poly and who the underground. So that's what we using the this process at the moment just as we did with Randgold resources you recall in.
2010, 11, we had our biggest sort of capital demand, we were growing some debt and where do at really helped us out of that position then and settled us.
And do you have foundation that really allowed us to keep growing really in the report if you look at the the dividend strategy, you're already got a nice steady increase profile and so again already today because of our delivery we have abeta business.
Based on which to predict how long term profitability honest Soc local basis, and and you know I've got every confidence that we'll continue to improve a dividend returns.
In the you know going forward as we are.
Demonstrate that our businesses are solid and can support the.
The dividend strategy and then at a point, we promised a market we would get you a point to other write some sort of a change in dividend policy or more along a ratio line or maybe something we had luck we had an randgold resources, but right now is still a building.
In that business and delivering on the promise, but on the on the strategy, but it's going to happen a lot quicker on the back of this call process.
Got it one more question just looking at managing the business through the cycle and recognizing we're probably not the loans here.
Something that hasn't been discussed much in the sector, but might be emerging as you know, there's the concept of hedging and maybe hedging in the method to reduce.
Our earnings volatility oriented and improve then there's nobody is that something that the company would consider X sort of project development just looking at that.
So you guys Amazes me Josh.
[laughter] your voice one minute, you asking for discipline and ER and.
Making sure that we don't hedge and the next minute, you're watching us to sort of throw away that discipline and do some more stuff because the gold prices higher payout all out and ER and then hedge so.
So I'm confused.
But to confuse you.
Barrick strategy on hedging we are not NT hedging, we believe that unit two times that you hedge when you pulled moms 'cause it it's an option available.
No other minor has.
To be able to manage your capital profile, and and I and Graham and I have done. This many times in our Korea, and we've done it well and we've never had to pop back Guy edge.
At the same Tom.
We do it when we closing a mine to ensure that we cover the risk of revenues in a in a you know in a cyclical industry.
But so those are the two situations of course in transactions, where you've got short term risk and youd and what are the things I'm obsessed about is ER is exposing barrick.
To market dictation.
And so I always want to balance sheet that we can manage our business irrespective of the capital markets. Today, We've got some $6.7 billion of liquidity, So I'm pretty sure where we're good to go but this is a unprecedented crisis and too.
Manager business any business in this situation recklessly is not at Boston Mama, So that will continue to be conservative.
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Yeah. They are times, when we will hedge but certainly not now.
Great. Thank you.
Our next question comes from Craig Barnes of TD Securities. Please go ahead.
Yes. Thank you Mark from your comments earlier on about Donlin and somebody other big projects. It sounds like you're more of a seller of those projects from a builder.
And this kind of environment.
So Greg.
No that.
Famous saying Everything's got a process.
Yeah, we'll sell anything as long as we feel that we're getting more than or what it's worth or more as I said earlier, our view is that worst activities and done and are still adding value. It's a very substantial gold resource.
Thing that a trees me about it is geologically you know so as gio statistically, it's well north of 30 million ounces.
We understand the metallic Gee, it's it's moderate great.
The Big question is are the actual all body geometry, or the department of the goals within the ore bodies and and so far we've done.
We've made a huge progress in understanding the controls and recently, we were about 10% into our next phase of drilling and and so far we've been encouraged by the slightly higher grade.
That we brought against the model, but it's still early days, you've got another 90% of that drove program to finish but you know if you look at donlin compared to some of the other assets in our portfolio. It's a pure gold play it fits it's in a.
Mining friendly jurisdiction or it's just in a very challenging geographical setting that's the thing that carries the right. So the way to deal with that as too is to take the risk out of the.
The revenue risk, which is focused on the ore body.
Okay.
Just on.
On your comments in the presentation, you did say turquoise ridge that you had that's been a big focus for you in Nevada, and having some challenges you change our leadership team, but also has some near term upsides can you just explain to us what's going on at turquoise.
Sure. So turquoise is a combination of alone sort of medium grade underground mine and twin creeks, and then a low grade a pet and then the high grade Turquoise Ridge underground and as you recall turquoise ridge was always restricted.
By a toll milling agreement with twin creeks because to increase the.
The autoclave facility and and all the processing facilities by the way. So so now its and so the the focus in turquoise ridge on geology geological control and their ability to monitor a high rates has never been there and so weve and.
And and at the same Tom the focus on the legacy Newmont side was also not about throughput.
And so when we consolidated those two operations, we had we had a culture they not only the two different.
Cultures from the two different companies, but also culture that wasn't obsessive about efficiencies and so we leaned on a processing facility in in.
Twin creeks, the autoclave and we certainly pushed it hard and and we exposed some very real plot bottlenecks at the same Tom in twin in Turquoise Ridge underground that's the legacy Barrick.
It where it had some hoisting capacity restrictions, we've identified them and we've we've largely addressed them. The big challenge, we have there's ventilation and that's the to the to the number three shopko really deal with two things add more flexibility and hoisting capacity, but more important.
Really address the ventilation restrictions and at the same time and turquoise Ridge was being high graded and so as Rod ROI says yeah, we run our businesses optimized to the ore body. So we've re optimize that ore body and that gives lower grades of course, but it will it calls on the.
That to be offset with.
Bigger mining rights.
And ER and again of all the or the.
Complexes within the Nevada Gold mines Turquoise Ridge Geological geology is leased understood and complication between turquoise ridge and twin creeks, because the strategic or fee and the controls change substantially across that period. So we've.
Got the drill rigs and working on it we've changed the geology, we still and now you've got to try and told a new planning system and Gregs just put in a completely new padding facility.
Philosophy across to the in Nevada Gold mines and this asset look it's it's certainly progressing but the the whole model of turquoise twin Turquoise Ridge complex is to increase the the feed through the Autoclaves ER and.
Immediately you get an impact of a higher grade and you can see that in the these results, but it's not where we wanted to be and so as you unlock those bottlenecks you you deliver or a relatively higher grade nada, you're not high grading asset, but they're really.
Typically higher grade.
And immediately alone cost and so we're not what I'm, saying to the market, we're not there yet and and this is you know the other sort of.
We've had many challenges as you do and managing such two such large organizations.
But this one is the one that's taking a little bit more it's been a little more challenging to get everyone aligned.
And and acting as one team with one mission and so we have beefed up the the management there we've moved a the general manager in a along.
A very competent GM.
An ex legacy executive.
To help US there we've moved some of our best underground.
Leadership out of Carlin underground to give it extra and we've brought in some external expertise on the processing side and and and we've really I mean I was there with the reach with the geology leads from Barrick just a couple of weeks ago, and we've really we make a lot.
The progress on geology and twin.
Twin creeks turquoise ridge had a big gap and it's it's models and and those are rapidly improving as well so nothing that's that's not fixable.
And what I'm, saying in the in the results presentation and and then published results is that this is still a very exciting upside opportunity at turquoise ridge, where the others are more now we've we've taken out the big synergy or delivered on the big synergies nuts, the bump and grind.
Hard work.
Okay. Thanks, Mike that's helpful.
Thanks, Greg.
Our next question comes from Tanya Jakusconek Scotia Bank. Please go ahead.
Hello, everybody.
Just wanted to come back so hi, Mike and Nevada, if I could just on long Canyon looks like the permitting has pause there and you sort of revealing the water management and a situation what's happening there mark.
So tanya the when we got a head around.
Long Canyon at the Phase two underground and then I mean open pit extension and the phase three underground.
Model, you know term Canyon as has got a shortlist.
Had a had some and they they then feasibility study and the associated.
Environmental impact process.
We didn't we Didnt lock, what we saw and there was resistance or over it and that's the plan was to really attempt to deepwater the whole compartment.
And again something that the new Barrick has brought into Nevada as you don't have to deepwater.
And tie up compartments.
On every project and many projects as we go under underground, we've really put I hate around understanding the aquifers and the the whole water table.
Geometries, and so there is a wetland.
On the valley from a long Canyon are they all open aquifers, we believe that you can do a better job.
To ensure that we impact on and it's only a short term impact on the on the on the does protect and particularly the water balance is manageable and ER and again too as we do and as I've always done and as grant believes we.
We reached out to some of the critics.
All of the critics actually engaged with them or shared with them that we feel we can do it better we've been working hand in glove, what the authorities and the various federal and state.
ER institutions that are responsible for oversight on the environment and its impact and impact on it and and so we felt it was to review and we finished that review and the outcome of that reviews that we can do this differently and there are a number of options around.
Whether you minded.
You limit amounting to a pets and no underground or you will you replace the some of the pet with a smaller underground long Canyon is a very profitable business. They are maybe there's a big community that's supported by that operation in the area.
And so that's what we've done as we've said it doesn't change our guidance and our long term outlook. It's a relatively small contributor, but it's a very profitable contribute and it's also you know makes sense to be able to monetize and deliver on our closure plans properly. So.
Thats really the in a nutshell, where we are with a long canyon.
Okay, and then maybe at the last company and recently my comments and the press on a New York.
Thanks can you give us your thoughts on that and what a re domiciling that cost.
So you know this report.
Overstepped has sort of reporting license.
He called me and talk to me for half an hour about many things and at the end asked me about a listing and if you look at that Wall Street Journal report in the second sentence. It's very clearly says that I said, we are not considering it or flattening out or doing anything about it add today, we talk Phil.
Yes, obviously about the London stock exchange listing the importance of being in the resource markets, Canada, and New York Stock exchange are the two largest or public markets.
For companies like Barrick, we're very comfortable in Ontario, we have restructured our business in Canada. It doesn't mean to say that we're not committed to the Canadian mining industry.
Hemlo has really delivered some exciting opportunities and we continue to hunt for new opportunities in.
In Canada.
The New York Stock Exchange I know the debate again with US reporter was around.
Or the you know the S&P and how important does is it and again as I pointed out Oh, a outperformance of our stock is extremely efficient.
In the market and but the S&P does bring other additions it helps us grow a base it is possible to get onto the S&P without.
Re domiciling and to read domiciled in the U.S. just to be able to get on the S&P. That's a that's a questionable decision because the cost of moving domiciled says is high so yeah. That's the background to the conversation I think he he desperately needed ahead.
Line, which was not necessarily in line with our conversation.
No I figured that can my last time looking at me Domiciling, Eric when I get the active buyers I think the cost of the next 300 million is that fair assumption.
Yeah.
At least.
Yeah, Yeah yeah.
Graham do you want to comment on that I mean, we've looked at at the merger we looked at it but I I think you're pretty close to the number.
Correct, Yeah I mean.
It's it's it's that sort of order of magnitude, let's put it that way. It's a complicated question. It depends on many factors many assumptions not leasable your gold price assumption in terms of what's your valuations are relative to your tax base. So that's not a sort of simple answer too simple question, but it is it's potentially significant.
No I think that when I get it Atlas gold with much lower than it was.
Like it was 300 million Hello, Okay. I mean, yeah, we've got a lot better things to do right. Now then see consider doing that no artificial patent filings.
Yes.
Yes, I got it thank you.
Thank you.
There are no more questions from the conference call.
Right well.
Ladies and gentlemen, again, thank you very much for.
Making the time to share with us.
Our results.
Again, or myself and Graham and the team are available to two to take calls should you want to ask specifics that you don't really want to share publicly we're all available or as we always all its a barrick is and as such a good position now we're excited about being able.
So to continue to deliver a on that promise. We made you back and on the 23rd of September 28, gene and and again, the Weve certainly not short of opportunities both organic and we yeah. We are keeping a beady eye on opportunities outside our core.
Current.
Portfolio an expiration.
Undertakings.
I hope that next time, we do this it'll be a face to face but.
Having said that what we would like to leave you with is that we are absolutely driven about delivering.
On our Oh strategic objectives.
Covered or no covered so thanks, again, and I look forward to catching up Syria.
This concludes today's conference call.
Do you have additional questions. Please contact the Barrick Investor Relations Department you May now disconnect. Your lines. Thank you for participating and have a pleasant day.
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