Q3 2020 Barrick Gold Corp Earnings Call
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Right.
[music].
Ladies and gentlemen, thank you for standing by this is the conference operator well.
Welcome to the Barrick 2023rd quarter results conference call and webcast.
During this presentation all participants are in listen only mode. Following the presentation, we will conduct a question and answer session.
That time, if you have a question. Please press star followed by one on your telephone keypad.
At any time during the conference should you need an operator, please press star and zero.
As a reminder, this conference call is being recorded and a replay will be available on Barrick's website. Later today November 15 2020.
I would now like to turn it over to Mark Bristow Chief Executive Officer. Please go ahead Sir.
Thank you very much Claudia and good morning afternoon, everyone and welcome to this presentation well about quarter three results.
Two quarters know into the car that non gene pandemic. It is clear on how effectively all barrick teams have continued to deal with the impact of the virus on our businesses.
Host country governments.
Our employees.
And the communities around our mines.
As I Trust today's results will show.
In the face of an unprecedented challenge we have been able to beat the earnings consensus reinforce our business planning.
And capitalize on the gold price to maintain an industry leading balance sheet.
We did not have to change our core strategy to contend with the Corona virus in.
In fact, it was that strategy, although flat structure with nimble and knowledgeable on the sought managers that direct as the pro active implementation of a comprehensive range of defensive measures.
<unk> partnership philosophy exported that response into our communities and our long relationship of trust and understanding without host countries stakeholders allow.
Allowed us to make a significant contribution.
Through our own campaigns.
And there's a host countries campaigns against a pandemic.
I point, you to the cautionary statement as shown on the screen.
This is also available on our website.
How are you can see how barrick's engagement to that stake holders continues to protect its people and support the sustainability of our businesses.
We have been working with our host countries.
To find appropriate solutions to all the consequential effectives effects of Cove at 19.
This call operation has resulted amongst other things and the installation of point of care PCR testing labs at each of our sites with the exception of those in North America, where the rig you led right three environment requires.
Alternative arrangements.
In this slide you can see a proactive and considered approach to the pen dare make has paid dividends.
That's an operational level there was a peak in cases in July.
As was seen globally. However.
However, due to our disciplined approach to screening along with our quick rollout of rapid tests to all the operations as well as enforcing strict protocols.
We were able to not only flatten the curve, but drive it down.
We are however, all acutely aware that we need to remain vigilant as the northern hemisphere winter approaches us.
Oh lost time injury frequency and total recordable injury frequency rates are at a significantly lower point than this time last year. Despite an increase recorded in this last quarter.
We have doubled down with senior executive leadership on reversing this trend through managing by walking about.
The group is on track to have all the operational bonds certified to the ISO 45001 health and safety standard before the end of next year.
Our environmental management also continues to make substantial progress.
And they have been zero Clos, one incidence across the group so far this year.
All our socks are also on track to get the new ISO 14001 certifications by the end of this year.
Incidentally its worth pointing out that job all sayiid in Saudi Arabia received its first ever certification last month.
Our water reuse and recycling rate of 82% for the quarter was above our annual target of 75% and.
Now power stations and renewable energy sources are on track to achieve the planned decrease in greenhouse gas emissions for the.
Creations have continued with their community development programs.
Over the same period more than $3 billion has been spent on the procurement of goods and services from local and national suppliers across our portfolio.
A modern mining business needs people, who share its vision and its values and our entrepreneurial agile.
Alive to technological and societal changes and profit oriented.
That is why in an industry traditionally dominated by white males. Berwick is bolding, an employee call aligned to a changing world.
Berwick has a long tradition of hiring locally for both operation operational and managerial roles.
Recognizing these employees are as good as you can find any way and the policy leads to greater team effectiveness.
And workforce stability.
Current staffing levels of nationals in management roles are 80%.
Within our African and Middle East region, 63% and Latam in the Asia Pacific and 97% in North America.
Berwick has now also embarked on a drive to recruit more young people and woman.
And it's worth pointing out that this is purely on a merit basis.
Also while many other companies rescinded all canceled university student programs due to COVID-19, each of the regions within the Berwick group offered and hosted student internship programs with the representation of.
Woman ranging from thirty-three 249% of the position sponsored.
Turning now to the results I'm pleased to report that these have been our third strong quarter in a row.
Keeping us on track to deliver on our annual production guidance and at the same time, highlighting the quality of our assets and our management teams.
How you can see the long list of achievements and initiatives and quarter three and.
And I'll deal with these in detail as I go along.
Driven in particular by calling in Pueblo vehicle production was up despite the shutdown of Paul Gras.
Per ounce costs also improved despite the underperformance of the turquoise ridge complex and increasing lawyer royalties, which are linked to the gold price.
The copper portfolio again delivered strung cashflow with per pound costs, continuing to track towards the lower end of our guidance.
Without tier one assets capitalizing.
Fully on a gold prostate was up 12% quarter on quarter bear.
Barrick's free cashflow increased by 151% to a record $1.3 billion and the highest in the industry this quarter.
Net debt was reduced by another 71% from the previous quarter and now stands at $417 million.
Given the strong balance sheet and the free cash flow art block.
The quarterly dividend has been increased two nine cents per share at 12.5% on the previous quarter and triple what it was prior to the merger announcement with Randgold in September 2018.
Looking now at the operations.
North America delivered its highest quarterly production for the year and is on track to meet its annual production guidance.
The call and complex produced a particularly strong high margin performance. Despite the extended shutdown of the gold quarry roaster for annual maintenance.
The maintenance significantly improve the roasters throughput and reliability and the impact of higher grade all from the open pits also contributed to Collins credible results.
Nevada has no shortage of opportunities and the richly endowed call and trained is our main hunting ground at present.
Framework drilling has identified the primary controls to mineralization and increase the potential of the leavell area.
Early visual trilling results are very encouraging, indicating a multi million ounce potential for that call and trained.
Meanwhile, framework drilling in the call and base and has opened up more than 16 square kilometers of prospective search space.
At Cortes production and costs were impacted by a decrease in the open pit stockpiles trucked from calling as well as by lower grades from the underground operation.
The complex remains on track to achieve its annual guidance, including increased contribution from.
From heap Leach production and quota for.
In the meantime, construction of the twin exploration declines at gold Rush now part of the Cortes complex is ahead of schedule and with contracted development complete the project is transitioning to owner operated operations.
Intersection of first or as part of exploration and development is on track for the first half of 2021.
Like calling Cortes has plenty of opportunities <unk>.
During the past quarter drilling has connected gold rush.
To the nearby Formyl project, which is looking increasingly robust.
Already more than 3 million ounce potential has been added to the back end of the current mind plan.
And was successful drilling at the Sofia and Dorothy areas. The total potential is likely to grow.
Combined with an expected resource increase at gold rush as we in full droll, we are well on our way to a 20 million ounce asset.
Which will keep the Cortes complex producing for decades to come.
Already there is sufficient high grade inventory to make us confident that four mile will be mined with production potentially starting in the back end of this decade.
Turquoise Ridge is still working through some issues and I've been spending a lot of time, there with Greg Walker and his team.
Production and quarter, three was impacted by maintenance and upgrade disruptions as well as palo equipment availability and utilization.
The fact is that turquoise ridge has the highest grades and the lowest costs and Ah, Nevada port failure and even so.
It's improvement potential is enormous.
We continue to work with the management team and its effectiveness as we develop new geological and grade control Muddles and put in place a maintenance strategy to address the current issues.
On the E. S. G front, we are also partnering with sandvik.
On the trial use of electric powered hold tracks for the underground.
We now know way to go with Turquoise Ridge.
And the road ahead is clear to all of us.
Meanwhile, construction of the mines third shaft remains unscheduled and within budget.
Commissioning is expected in late 2022.
We believe there's also still considerable upside at both turquoise ridge and twin Kris.
Combined which we referred to as the Turquoise Ridge complex.
We just need to bolda understanding of the geological formations.
As a starting point, we have sought to better understand what lies between turquoise ridge and twin creeks.
And identify additional target areas as this cross section indicates.
It's amazing to me.
Just how under explored this area is.
And I believe we are making rapid progress in building on that understanding.
Elsewhere, Nevada Phoenix is on track to achieve the upper end of its annual guidance production was impacted by lower grades and recovery this quarter, but costs benefited from higher copper bra product credits.
Long Canyon had another good quarter with increased production and lower costs delivering exceptional margins.
The permitting process for the main laugh extension.
Remains temporarily paused, while a water management review seeking to optimize the project is underway.
Over now to Alaska, the joint venture that's the Donlin joint venture successfully completed it's 2020 drilling program.
The aim of which was to increase our confidence in the geological model validate assumptions.
And improve our understandings to update the life of mine plan.
The results today to have reinforced the importance of doing this work.
While essays of being exceeded certainly while essays have exceeded muddled grade sicknesses. It is with higher grades over naira words.
The next step is to update the geological and mineral resource models. We anticipate another drove program in 2021 to focus on areas that require further validation.
By identifying and closing information gaps we still are convinced we are driving donlon further up the value chain.
Moving now to Canada, we're open pit mining at Hemlo finished up this week.
And a new underground contractor was fully mobilized on site in August to advance the ramp up of underground operations.
Construction has started on a new portal, which will improve operational flexibility by providing access to new mining fronts and increase throughput from existing levels.
Kembla has responded well to it's restructuring and repositioning as an underground operation.
And has the potential to grow into a tier two asset.
To this end extensions of the existing all body at depth and to the west as well as an improved understanding of the geological controls all point to improve production and the ability to extend the life of mine are too too said 2030.
And beyond.
In addition.
The black fly extension to the West of Hemlo mine looks the most promising at this stage.
And sits directly adjacent to current workings.
Changing is established that Goldman realization is present, and then use stratigraphic n-tuple more than 1500 meters from the Williams open pet.
Moreover, shallow historic drilling and sparse deep drilling confirms mineralization could be widespread within this target side.
In the Dominican Republic.
PV increased production by 16% as they expected after the previous quarters total plant maintenance shut down.
Costs also improved further increasing this tier one mine's margins.
The plotkin tailings expansion projects remain on track and on budget.
These are designed to increase throughput to enable of mine to maintain a minimum average annual production of some 800000 ounces, we are well beyond beyond its current horizon.
Approval of the environmental impact assessment for the plant expansion and cute quarter three represented a major milestone and.
And the permitting negotiations for T S have three or narrow work in progress.
We have repeatedly.
Reiterated the importance of ache investing an active exploration and to this effort we have established a presence in the Dominican Republic.
As far as exploit.
Exploration goes both within the hour as a member and a manager of the Peavey joint venture and also in our own right is Berwick elsewhere in the country.
At PV, we have updated the geological model and supplemented it with the structural model that has better enabled us.
To identify new set a lot targets.
Fellow Darragh in Argentina has had a very difficult time impacted initially by a nationwide quarantine followed by movement and social distancing restrictions that hampered remobilization back to site.
This in turn delayed the phase six expansion and the cross Andy's power transmission project, which was further complicated.
By us entering into that where the period associated with the southern Hemisphere winter.
Due to the ongoing financial crisis in Argentina, the government has maintained currency restrictions.
And the forced repatriation of export sales into peace us.
Valour Daraf Darragh, therefore has kept a cash needs sales strategy.
Sally only enough gold to cover its cash payment requirements to run the mind.
Valid error is incidentally, Argentina's largest dollar and.
Our objectives remain to restore valid there are two tier one status.
But clearly they are still several challenges to overcome.
Before we can achieve this.
Berwick.
Was once the leader and exploration and mining in Latin America, but then withdrew to less challenging havens.
Reestablishing a dynamic presence in the region.
Was one of our top post merger priorities.
And we've installed a world class exploration team with strong new leadership day.
At valid are we looking for higher grade oxide mineralization Q displace the low grade ounces in the current lots of mine plan.
At past car, we are working to test some gaps so now ongoing modeling with a targeted drilling program.
And elsewhere updated geology and resource models have been delivered for the Argentine inside of the al tourists project, where the benefits of a potential startup that is being investigated.
This plus 8 million ounce project has significant value and the focus now is to delivered to deliver and updated preliminary economic assessment of this project.
Also along the highly perspective L. E N D O belt, we have identified the potential for a tier one camp comprising four targets with a multi million ads potential in a 15 kilometer range.
Beyond the known L. India deposits, we have added 17, new targets to our resource triangle in this region.
As you all know.
After years of negotiation the government of Pappa, New Guinea suddenly announced on April the 24th that it would not extend our special mining lease for poor Gras, which we then immediately placed on care and maintenance, while embarking on a process of us.
Searching our legal rights.
At the same time however.
We have remained in constant touch with the government.
Seeking to find a mutually acceptable way forward for polgar of mine.
I I personally have had five face to face discussions with Prime Minister Merapi. Most recently on the 15th of last month.
After which in a joint announcement, we disclose that we had agreed in principle on a new partnership to reopen and operate demand.
The key conditions are that Barrick, New Guinea limited, which is the joint venture between Xinjian in Berwick will retain operate to ship.
There will be an equitable sharing of economic benefits and the government would require a major share of the equity.
Negotiations to formalize these principles and a framework agreement are proceeding.
Over now to Africa.
Where the ever reliable Zullo gone Carter has delivered it's usual solid performance.
Development of the gun Carter underground mine started.
Ah ahead of schedule last month's with the first blast for the portal.
The complex is third underground mine is now on track to deliver development or in the middle of next year.
As already indicated the complexes 20 megawatt solar plant. The first of its kind in Berwick group has been commissioned it'll reduce operating costs cut carbon emissions and save some 10 million liters of fuel per year.
In Mali as elsewhere in the Berwick group the.
The hadn't remains on for new ounces to replace mining depletion.
The Lula gone Carter, a private properties continue to yield strong results, which position us well for a significant loss extensions.
Across the border in Senegal in the Bumblebee Burgee joint venture and number of exciting new targets have enhanced the prospective 80 of that permit.
Auger drilling has successfully been used to penetrate the transported gravels that cover large areas adjacent to the filler me River and is generating a number of new exploration targets that.
That have Algiers quite excited.
During the quarter, we also announced the sale of Mirilla to Molly lithium.
This transaction is making progress.
And is expected to close shoot.
After years of trials and tribulations tongue on in the Cote d'ivoire has settled down as a consistently solid performer.
The emphasis now is on to extend.
The minds life by at least three years through the development of economic targets within hauling distance of the mind.
The aim is to achieve a longer life of mine with added value and Optionality in exchange for a slightly lower production profile.
And across to the east of the continent in the Democratic Republic of Congo.
Kibali also produced a good set of results.
With the underground operation setting, a new or delivery record.
The introduction of a non megawatt energy storing facility into the power grid has proved very successful.
It has reduced the implant of cyclical loads such as the shaft Wanda.
On the power grid, requiring less molto pop for the mines three hydropower stations at an estimated annual saving of about three and a half million liters of fuel and some 8000 tons of carbon dioxide.
Cabal is again on track to grow its mineral reserves net of depletion and its exploration pop line is laying the foundation for another year of growth and a steady 10 year plan.
The case said trade the K Z trained remains perspective for a good balance between open pets or open pit reserves and underground to ounces.
Further east and to the South.
Tanzania continues to shape up as a major success story with Barrick's African and Middle East team quickly cleaning up the mess left by Acacia.
Having restored a good working relationship with the previously alienated Tanzanian government.
Eric cemented the partnership and they jointly owed Triga minerals Corporation, which oversees the management of the minds as well as the implementation of the ground breaking 50 50 economic benefit sharing agreement.
Three guy last month paid her maiden dividend of $250 million.
The stagnant North Mara mine has been rapidly revived with a focus on improving the underground mine and the restart of an optimized open pit operation.
North bar as growth Poplar and aims to deliver plus 5 million ounces across twenty-six targets.
Meanwhile, extension drilling at Kokoda and Jenna is on track to deliver significant answers into the mind plan.
We are also updating geological and resource bottles to optimize the open pit and underground at North Mara a geological update of the Roma all body and mind plan is is schedule next.
And at Bouillon Hulu.
Mining has resumed after a complete underground refurbishment.
The first development, France have been advanced and the processing of fresh underground or his schedule for later this year.
Pause walkie as a stockpiled processing operation, which will either be sold and all converted to an alternate land use.
The export of stockpiled concentrate for these two operations that were previously halted by the government continued and was completed during this past quarter.
In parallel with the startup of the Bouillon Hulu underground.
We are also busy with a total re optimization of the underground operation starting with the geological Modelings.
The first seven intersections from the deep West drilling program have returned an average of 3.7 meters that's true with Ed.
At a grade of 25.6 grams per ton.
Geotechnical stress modeling and metallurgical tests trick is also underway on the material, which will be incorporated into an updated mine plan and feasibility study to come be completed next year.
We envisage that the combination of north Laura and bullion, Hulu could well and a tier one complex status.
Barracks copper portfolio did well again with cash cost per pound that will lower than the previous quarters.
And below the bottom end of their 2020 guidance.
Louisiana and Jamal side continue to show progress.
Wallet Zaldivar the team is actively engaged without partner on finding solutions.
Through the minds current performance.
Oh, five and 10 your plans are being updated and we will share them. When we report our annual results early next year.
As there are various feasibility feasibility than mine optimizations come to fruition. We also plan to extend and further optimize our loss of mine plans.
The link between Amman plans MRM and exploration is a critical connection that needs to remain dynamic ended and adjust to the specific needs of each mine.
M. R. Ram remains focused on the operational integrity of the five year plan.
Making sure that the answers are banked and all geological aspects such as grade G O Tech.
Or Joe met are understood well ahead of any money.
This ensures that we can deliver on our operational plan.
At the same time exploration is looking at that 10 to 20 year horizon.
To make sure all plans are in place to identify the all that can replenish the depletion over the longer term.
However over the medium term.
Within that five to 10 year period, there's an Indian.
Integrated approach between mineral resource management and exploration.
That is more dynamic in nature.
This dynamic process, then allows our mineral resource management and expiration teams to refiners strategy based on the requirements for each mind.
And region to achieve both a stable production profile and develop new opportunities for growth.
We set out two years ago.
To build something different.
Two what had become a norm for the gold mining industry.
Based on a clear strategy of focusing on the best people to.
To operate in industry, an industry, leading set of assets.
Whilst we are not there yet.
We have made progress.
As has the industry that followed.
The state of graphs rarely illustrates barracks performance across the key indicators, we sit at the beginning and before the gold price started it's upward trajectory.
Finally, ladies and gentlemen in conclusion.
I and as usual with a comparison of Berwick share price movement again spot gold and the G. D X index since the merger and over the year to date.
Just to remind you.
The rationale for the merger was our belief that the combination of the best people with.
With the best assets.
Would deliver the best returns.
These graphs clearly show how we have delivered so far.
Thank you very much for your attention I do have most of the Berwick senior executive team on the call and we would be happy to take questions.
Thank you.
Now begin the question and answer session to join the question queue. He May press star than one on your telephone keypad, you'll hear a tone acknowledging your request.
If you're using a speaker phone please pick up your handset before pressing any keys to withdraw your question. Please press Star then to to join the question can you. Please press Star then one now.
Our first question comes from Josh Wilson of RBC. Please go ahead.
Thank you Uhm, Mark et cetera like early on in the call. You mentioned the form are reserved was roughly 4 million answers just wanted to confirm with that stuff and you expect it to sit here and and there's been a number of positive exploration updates to cross the connection you mentioned this quarter Sofia. This.
Quarter Natural Hall Dora he last quarter does that incorporated all those opportunities or is that just a short term target.
Ah what we pointed out was that sat minute mineral inventory at the moment to find on the drilling that we've done so far I you know it by no means try to indicate the potential of of for a while I think the the main.
Progress that we made this this last quarter was really connecting.
Gold rush with four mile and that that sort of play.
Playing Ah Ah all body that you see in gold rush extended up in queue for Awhile and then as we move up further north and formyl. The the mineralization moves to a much higher grade more irregular shaped breccia host.
But there are still a lot of work to do at this stage we still.
Framing the mineralization and the potential footprint of formyl and it's gonna take some time to do that the Big question. Josh comes at the end is do you continue to try to define the full potential through surface drilling or do you get in an X.
And and access.
That part of the old bodies through developed.
Development and in drilling from underground.
Okay. So it still sounds like early days, but exploration is going well and I think the important thing too is that the team starting to understand these britches and we're getting a good understanding of the geometry, so that we can pull them with with.
Only a few intersections so there's a lot of learning going on at the moment as far as the the classic formyl brachia hosted or bodies concert.
Thank you and for a peavey could you remind us maybe the timelines of the steps needed for the tailings permitting so so the the next step I guess of unlocking the resources and reserves can can come forward. So we've got a number of scenarios on the tiling.
<unk> you know, we're comfortable with our partners that yeah. The expansion is it makes good sense and we've committed to proceeding with that we have you know the the the government is very pro. This project. This P. V is one of the law and fact, it's by far the largest.
Contribute it to the.
Commercial tax paid in the country and it has been for a very long time and and with the Covid crosses now, it's even more significant and and so but at the same time, there's work to do and where need to complete the fatal flaw Ah Ah investigations.
With across the footprint, we are working and engaging with the communities and other interested in it affected parties and and Josh. These these sort of processes.
You cannot drive them against the timeline, we were and we know we don't have pressure to deliver this weird rather deliberate you.
Properly and in a in a in a way that you know.
Has the support by the majority of the communities.
Around the the the tailings facility.
Thanks for taking my questions. Thanks, Josh.
Our next question comes from it Danielle Chigney era as Bernstein. Please go ahead.
Okay.
Take more question and homey.
Between 10 points, making 20 creeks and could you give us an idea of land. That's an explanation currently ranks intentions woozy and.
And potential opportunities within the family room.
Danielle it's been you know I'm, a geologist and it's been a an absolutely fascinating.
Last 18 months working with expiration in mineral resource teams as you know the legacy Berwick team is quite geocentric and you know we've uncovered enormous opportunities within the call and tenders are referred in the presentation that that certainly is a.
Massive and you know, it's sort of like the Holy Grail, an exploration certainly in the Americas.
And then yeah Cortes itself going back to the famous pop loud deposits and and a similar.
Sort of connection between pop line and and Robertson.
And we've got a we've talked about already the the gold rush in Cortez, then you get to.
Turquoise Ridge, which the turquoise Ridge underground mine is a amazing Ah Ah Ah Ah mineralization and it's in all body that had when we got there had very little understanding in fact, one of my first meetings with the team was we.
We don't really understand the controls of mineralization and you've seen in the numbers.
Turquoise ridge as a super high grade deposit it's.
And we've made a lot of progress in understanding it and then you've got the old getchell that the early discoveries in the form of the gatchell put in and the twin Creek side of things and traditionally there's been a a fence farm fades separating the newmont assets with the.
With the Berwick assets and when you look at the two different geology is there quite different as we start unpacking them, we see similarities and of course, there is a connection somehow between the two because they're not far away and so we've had a lot of and also simplistically.
People didn't challenge themselves on how do you fit the two together and so there has been some historical drilling we have invested an additional boreholes in the last.
As a 12 months and now we starting to see the complexities between the.
They took turquoise ridge and to increase deposits.
It said chin.
Unexplored Ah part of.
The whole, Nevada, Goldfields, greater Goldfields and I'd I'd just to add to the intrigue northeast out in the in the in the open Plains. We've got evidence of the same prospective sequences that host.
Most of the deposits within the these are calling systems and so it's really is an open book.
Turquoise Ridge complex as a as a whole and and I mean, I am very Ah you know we caught it certainly Colin is is is got a clear clear a framework on which to base an observation that there's enormous prospective witty and we we refer.
To you know multibillion out as potential.
Turquoise Ridge is a little early still and a big focus is getting a mine is too.
To to be able to have proper mind clans based on Ah, both geological and and mineral.
Models, and ultimately grade control models and but at the same time, we now venturing be between as we show you in that section between the two no in port and and the inventory and and.
And Ah historical production out of that region is substantial so you know all I can say is it's it's definitely prospective and and it's something that we that attracts is significant part of our budget as far as what we would called brownfields exploration.
And.
And and I have no doubt will extend that further out into the.
Outside the known geology choose to see what's out there.
Under the cover.
[noise] [laughter], that's very true and just changing tack slightly and the mentioned positive environmental impact and keystones first little tint commodity and Kiki.
Some of the positive impact on the car.
Say that again I I didn't hear what you were saying.
And could you quantify see positive impact on you.
Molly from the energy storage facility.
The energy storage facility amazing piece of equipment, it's actually a very large battery about nine megawatts, it's new technology and what happens is traditionally we used a spinning reserve add a diesel generators osophy generators to be able to to supply that the.
The immediate demand when we hoisted we turned on the the shaft hoist motors or we turned on the big malls or whatever.
With this Ah facility, we can now switch off the Jane sits and during the period, where the rivers are completely full and so the hydro power station then keeps that battery full and it's a baseload.
And then the battery behaves as a responsive.
Provider of energy for you are those quick demands and we've also identified a further benefits and that when we start our power grid is that many graduates of mine restricted grid power grid, we use that.
That Ah Ah facility to load the grid and so again that takes away the need to start off by a heartbeat jenn sets and and so the the savings are significant and we're just into it now the first thing we measured was you know the impact on.
Fuel as you've seen and we share that with you as well as.
Green or cash emissions, but ultimately it hits the bottom line as far as power Costco and I would just take you back Kibali is only profitable because of the hydropower.
Installations three of them otherwise if we were to do just rely on diesel it we would be a very marginal operation and so any way. We can we can harness that hydro power station and reduce the consumption of diesel a hits the bottom line and and.
We expect that to continue and will share that with you as we settled down. This this piece of equipment and we we've already seen merit and being able to use this technology elsewhere across the group.
[noise] that's great. Thank you.
Our next question comes from Richard Hatch of Bahrenburg. Please go ahead.
Thanks, and get Moody, Mark and congressional get set of numbers and two questions and the first one and just to get the the Ah Latam Portfire can you just give us a bit more of an update almost guy on with high school on.
Doing what when the next to the key milestones off that I sat in where that might say and he talks about algeciras in the 8 million out deposit there or more I mean, where did where do you think high school on those will sit in the in the pecking order down down there and then the second one she's gonna Molly.
[noise] headlines coming out about it.
General recommending a review of mining contracts, let me just recap assault on where you stand with you physical agreements in Mali. Thanks. Thanks, Rich. So past guys. You know as you know as part of the past quite Llama project that essentially the the the the mine in.
The structure was.
Largely constructed not fully about 70% of it.
But the all body filed.
And I.
Always and and and so.
When we looked at it during a due diligence we recognized an opportunity and and to give you. An example at about 50% of the data is not being captured in those models. So.
What we've done is we've put in into Latam of a full feasibility team one to focus in on Pasqua N llama and and that same team brings a a a a a a level of expertise to.
Sure evaluation team down and and Alturas Delcarmen region.
And so I just dealing with Pascal first we've we've now completed the full ordered of all the infrastructure, which is on the Argentinean sad.
In llama and and the and the major all body sits in the Chilean sod in the form of Pasqua and we've now reviewed all the data sets all the ball logs, we've gone back and selected certain Bohol loves we've we've we've.
Created not only a geological model and and then all resource model. We've also in the in the process of constructing a G O met model so putting the metallurgy together because yeah. This is a very complex.
Set of various Ah all bodies at many of them, which are essentially silver in nature and.
Predominantly silver and now with that model in place as we start Ah.
Putting it all together of course, we are Ah Ah identifying gaps in the information be it metallurgy metallurgical characteristics or styles of mineralization or just the sort of connection the geological connection. So we are now moving to <unk>.
Wards addressing some of those gaps within the hour target is to get to the back end of next year with a revised Ah feasibility study you know it might not be it a bankable level, but it's certainly you'll be at a stage where we can.
Evaluate the real potential of these series of of assets and make a decision whether it's it said, it's a national asset that can be developed in a responsible manner.
For the benefit of of the stakeholders, including both countries.
Or not and so that's all a commitment on these projects arnelle tourists.
Again, you know this is a project that was.
Sort of setting and the expiration domain it really hadn't been looked at by an integrated team that looks at you know viability and value and so we've done a complete review with the teams involved.
And and again, we've identified gaps within that model. It's certainly the inventory sits at more than 8 billion ounces and and we've got some work to do to be able to put it additional frame frames into the very and again, it's a series of styles of mineralization.
And as I pointed out in my presentation is.
There's a potential for a startup pit, which is always helpful and and starting up these massive deposits on the Argentine inside.
And so again that the objective is take that to the first step of an integrated project feasibility in the form of a preliminary economic assessment will then be able to a really understand the potential of that and then make a decision.
And that all fits with our resource triangle, you know our resource triangle is all about starting with ideas and concepts moving them up towards the apex of the triangle at each beria, we need a tested against our investment criteria. So we've introduced that discipline.
Cross outgroup as far as the expiration teams got.
We've also got the al Indio part of it you know a L. A N D. O was a very high grade deposit. It was you know it was mine then transported his whole so a very high grade deposit again, there are other satellites around it we've gone back and put some.
Geology into the controls and.
And again as I pointed out if you if you Ah.
Your focus in and look at what we've got in the history, and then focus out and look at the potential of that region. We believe that it's got some significant potential the second question was.
Molly just on the that comes out.
We've I mean this is we've had done this before rich [laughter].
And I was there with the team just last week, we met with the new Prime Minister the interim government and in the interim leader of the government and his government Minister our minds and finance in particular.
And and and again it was a breath of fresh air you know the the Prime Minister.
And his team one to make a difference they see their responsibility as rebuilding that platform on which the elected government will be able to continue to bold the economy.
The Minister of mine said to me you know Mark our job here, we know you've had lots of frustrations in the past hour job is to work together and deliver real value and make a difference and rarely unlock the potential of mining in Mali, and and you know Berwick is the biggest tax.
Player in the country by a country mile.
And and.
And we've got a long history going back twenty-three years in the country and and and it and the Auditor General which was referred to in the speech you know he's he's often around he comes and digs around in our business test us against our various conventions and and again, what you know what I think.
Some of the the statements was taken out of context, but it's natural.
Given the circumstances of the regime change that there is some distrust and so you know one would expect there to be some audits.
Conducted against certainly any agreement subcontracts with its mining or others. During the the final period of the previous regime and you know I don't see I don't see that as it as being sinister at all certainly from my conversations it is not sinister Ah.
Very clearly the mining industry and the various conventions and and Molly has always respected than the legal rite of investors.
Two two stability agreements, but at the same time the mining industry has contributed significantly more than 50% of the economic benefits of the mining and so I've got no doubt that any audit and investigation will demonstrate the.
The value of that mining brings and hopefully and that's the conversation we had with the Prime Minister how do we make it better and how do we make the benefits more efficient and and not waste some of those benefits through bureaucracy and inefficiencies within the administration.
It was for me everything that one would expect and that sort of conversation and I would add to that as you've seen we've agreed to sell marella to Molly lithia much I think today changed its name and.
And again, we work with the with the with the previous administration on getting the approvals and meeting the various condition President's and and an odd gauged went with the the the transitional government has also been positive and they very clearly recognized the opportunity.
He had given you know a different set of investment parameters that Molly lithium brings and at the same time Berwick you know.
Agreed and has retrenched, it's entire workforce given paid up all the rights of those people at Marella have a fresh start but they've been paid for the historical employment and and and and so you know every.
Everything that we did was because we in our mind, we had got too close you in Murillo said made good sense for us to pay out People's rights and and give them a fresh start and so volley lithium also starts with a fresh start.
Ooh.
That's a lot more I appreciate it and get shot speech seem fine.
Our next question comes from Greg Barns, but T D Securities. Please go ahead.
Thanks, Mark in the empty and a little brief come into the country changes to the minerals traction Nevada.
Okay. So there's some legislation resolutions passed recently.
Whereas like growing and where does it leave here.
Well you know I think just to give you some background with the.
And when I assume they're all in in.
Berwick one of my first stops with Catherine Ah Ah Ah She executive in charge of North America was to visit the Governor's office and.
Yeah, and we talked about techs and the stakeholder benefits and you know all of this whole ongoing conversation of does southern Nevada benefit from northern Nevada activities, and so on and win Covid head.
Immediately the first stop I had was a back and.
Las Vegas to meet with the team from the Governor's office and we made offers of advancing some of our taxes to assist in this crosses slack Ah Lok Barrick and Newmont did back in the 2008 financial crosses.
And so for that offer to be effective.
They had to be a special legislation assembly, cold and and and and along with other various bits of legislation that needed to be addressed given the circumstances that we found ourselves in.
In this and.
In this current scenario.
Out of that was a surprise move to try and.
Motivate additional.
Resolutions on changing the tech structure for the mining industry and the mining industry is is protected by the constitution, and and and the and it's one of the few industries apart from game.
Being that pays tax.
In Nevada, and so we had already reached out to the Governor's office to to say you you need we need as the Nevada and business need to look at.
Broadening the tech space and making sure that there was an easier way to plan the treasury because the the collection of taxes and finding revenues for the ongoing management of Nevada as a state is quite complex and fraught with challenges.
And so that and so there was a movement within the legislator to introduce some resolutions, including one which stuck with the current tax structure, but lifted the cap and and so and we as you.
Can imagine the industry engaged robustly with that in that debate and subsequent to that and we had already started that the Nevada team has invited the the various legislators both from the assembly and the Senate that's.
The state Assembly and Senate to visit and and spend time in the mining areas and you would have I think remember we invited some of the federal.
Legislators as well as the governor to the mines last year and that's been a very productive process because there's there's so little none of them of how the role that mining plays and and certainly in Tom's lock. This this is.
As gold offers a natural head to investors it offers a natural urge.
To the state of Nevada, and and and in fact in the space of just over a decade, Nevada has benefited by having golf lines and it's back yard.
Twice already so I think for what was initially quite a sort of political move has become a a very concerted engaged process and our team I'll search it certainly engaged at every level along with the.
The Nevada Mining Association, that's the rest of the industry. We have Ah have spent a lot of time with the Governor's office and individual leaders and the vet and the two houses and and again. This is a long process. If you Wanna go down the route of changing the constitution.
Then introducing sort of radical tax structures I think we're all agree that we've.
We've got to we've got to find a middle ground on on what's good for the mining industry to keep it alive and ensure that it it it survives the troughs and is able to do what it's doing in the in the peaks and at the.
Same time.
You know.
For the industry and other industries to be able to contribute to the the the treasury requirements.
Requirements and I think there's no better time as you've seen right round. The world way. This covid is sort of highlighted the critical nature of and the importance of being able to fund.
States and governments and and so and I I I certainly on on where we are today and with the amazing work that we are team. That's the Berwick in Nevada Mining Association team has done I'm.
Optimistic that we'll find a solution that's good for everyone in and puts mining right in the in the center of you know societies understanding of the importance of having more than just the gaming industry too.
To support the the Nevada economy, and and I would add that Nevada has been attracting a lot of I T.
You know, leading our T organizations and sort of modern style businesses.
Which again are you know are able to position, Nevada as a as a as a goto destination for business.
Thanks Martin.
Okay.
Once again, if you have a question please press star than one.
Our next question comes from Howard Slinker are Flickering company. Please go ahead.
Oh Mark hologram.
I'm confused by footnotes in the income statement.
Sure he had right off in a reverse the footnotes nine being 13 at nine a I couldn't find them.
He only nine I saw was a two orange statement about.
Oh, sorry.
<unk>.
Yeah. Those how we are at this stage of your life I thought you your eyes would have deteriorated to a point, where your card read the fine print.
[noise].
But let me pass it on to drive because you're always catch us out with these little questions Graham.
Well I I'm curious, how they can understand I'm too old to take these things so bad so.
Would you explain to me, where I can find them.
Shoulder Harry not.
Not be is on page 120.
Not be is on page 125.
The one MBNA.
Oh, it's an a M D N a R C I didn't printer. Thank you.
That's where I confusion and out of curiosity, what does a battery cost.
Is it millions of dollars is a few hundred thousand dollars.
It's it's millions of dollars.
Because it's more than just a battery it's it's the technology and the software that goes with it to be able to.
Manage that interchange and to be able to you know to bring that power on and off as it's needed instantaneously and then recharge et cetera. So it's it's a it's a large investments.
Oh, I see okay and of course, if it means that you don't have to start an instructor production, that's probably an intangible benefit as well.
Well the most important thing is that we we don't have to keep what's called spinning reserve. So we don't have to keep.
Generators running should be able to take that search when we need it because we can get it from the battery. So that's the real critical benefit from.
Okay, Thanks, scars and Harry and Howie with with the way we did it as we did it in partnership with the suppliers. So it was and then 136 Bruce.
Prove it success and that then we pay for the full amount.
So it's been a long development process to get to where we are.
Okay. Thanks.
Our next question comes from Cleave Rueckert F U B S. Please go ahead.
Our next question comes from Cleave Ruecker F E. B S. Please go ahead.
Hey can you guys hear me okay.
We can work.
You know what happened for Senator.
I just have one quick question for you and thanks for all the time.
The cost side, obviously, there's been a lot of moving pieces. This year and we talked about royalties they talked about covid costs.
Oil has been kind of an offset.
Obviously trending towards the high end of the cost guidance I'm, just curious as shrimp for a bigger picture what would it take to get to the lower in that range.
The cash cost for gold.
So the big one the big driver is.
Is the gold price and royalties and royalty structures, Nevada has got quite a complex royalty structure Ah Ah Hamler, particularly and then of course, the whole of Ami Africa Middle East has got royalties and and we budget.
[noise] Guardans on a 1200 dollar golf price. This I think this year, we budget to 2020, we used 13 50. So you know that's one of the drivers.
The other the other side of it is the mix in Nevada, which.
Because of turquoise ridge performing at a slot Lila level say that has an impact on the mix on the overall so you don't see that because the other operations have done, particularly well, but you know with as we ramp up turquoise ridge that will also help with.
With the overall costs.
And then and this quarter as well as catching up on some of the capital that we didn't spend last quarter, and so that and and now our Orleans sustaining cause you know we have a different impact.
As as we wouldn't that total cash cost.
But it's you know it's it's not that we don't have anything that's ready out of out of sync and our operations apart from us.
That's clear excellent Mark and then maybe one quick follow up on the on the dividend.
A couple of months ago, you were gonna come back with more detailed dividend policy.
The end of the queue for you really should updated thoughts on on how you're thinking about it.
Should stay on.
1200 dollar gold price.
Structure for the for the regular dividend.
To that special dividend or a buyback mixer.
The station, which you know was not the case for a long time and Barrick has the directors were pointing out to me yesterday.
Yeah.
Our focus right now is yeah at nine cents, we already do get to that 1200 dollar run rate or the way, we can sustain our dividend.
Over time.
Graham as more than adequately shared the various options that we are debating on you know returning additional capital to Ah Ah Onez.
And we'll continue and debating that but certainly for the medium term.
Yeah, we we both Graham and I are have always been.
I have always been fiscally conservative in the way we run our businesses. We are we are you know supported by the board on on this view and you know we're not out of the woods yet on this covered challenge and we certainly don't have clear visit visit.
Let's see of the full runway ahead of us so yeah, we felt it was appropriate.
To to deliver on our commitment to the market and ensure that we have continued to.
Improve our dividends on the with the objective of that being sustainable and then you know we've got time to reflect on exactly how and Weve certainly got lots of inbounds.
From our various interested isn't affected parties.
But as you've seen today, we and and as we buy back in 2008, we were we we weren't or we didn't address react just on everyone's women demand we were very conservative in how we manage in the show.
Short term and and I you know right now I think a stronger balance sheet is better. It does two things that protect you from any crisis. It's certainly protect you from the capital markets should we are you know.
Get challenged within and ER expected event and within the markets I'm talking about.
And Enett continues to shore up the quality of our paper, that's our share price and that's all good for this.
This phase in the <unk> and in in it you know the market and the gold price has moved very rapidly and energy and our voice or.
Been of the opinion when things move so rapidly. It's it's wiser to be more considered then then more reactive to the situation and so we that's the way we're going to.
Managers and out to the financial results next year. So you know and I and I think you've got a good idea of.
The the the various options, we mulling over with now our board of directors.
That's very clear thank you.
There are no more questions from the conference call.
Alright. Thank you very much everyone as normal we are available should you need to reach out and I.
Get traditional color on our results. We thank you for making the time, we look forward to.
To.
During this back face to face soon enough.
And I would just point out too that we are now working furiously on our.
Invested I planning and a and have you sent out the inverted.
Okay. So we are setting it up for the 20 EPS, we I think we position the the presentations so that everyone can have access.
Access to it without you know really this is eating into your sleep, Tom and we look forward to speaking to you then unless we have a chance to speak before then thank you very much again for your time today.
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