Q2 2021 Barrick Gold Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by this is the conference operator.
Welcome to the Barrick 2021 second quarter results conference call.
During the presentation all participants are in listen only mode. Following the presentation. We will conduct a question and answer session at that time. If you have a question. Please press star followed by 1 on your telephone keypad.
At any time during the conference should you need operator assistance. Please press star zero.
As a reminder, this conference call is being recorded and a replay will be available on Barrick's website. Later today August 19, 2021, I would now like to turn you over to Mark Bristow Chief Executive Officer. Please go ahead Sir.
Thank you very much and.
Good day, ladies and gentlemen, and welcome to Barrick Q2 results presentation.
Despite the short spell a value creating consolidation preceding the pandemic.
I feel our industry is still too fragmented and needs to lift its horizon and focus a little more on the future.
We have been living on a rising gold price going back to the turn of the century.
With not much price goes on replacing the ore bodies, we mine with similar quality.
As a as I have said many times before having experienced a lost gold prospering without creating any real value.
The golden industry and to beef per many investors in the sector still cannot resist the layer of instant gratification.
Which comes at the price of investment in the future and sustainable profitability as we witnessed from 'twenty searching to 2015.
Barrick on the other hand has a fundamentally contrarian position ALS.
ALS is a long term strategy designed to manage the industry's best assets portfolio and project pipeline. So that they will deliver the best returns to all our stakeholders over the longer term.
And far into the future.
As I will show you in the course of this presentation on.
Hey, Jim on mines now all have reality base change your plans currently being refined and the teams challenge is to look for throw that out to 15, and even 20 years.
Please take note of our cautionary statement as per the slot and should you need to it is also available on our website.
It's a time when E S. G heads market scrutiny of the industry.
Barrick has an environmental social and governance strategy.
Bowled over many years and not freshly contrived to chick compliance boxes.
It's a central part of the business for managing by a diversity to board diversity.
Our climate specific strategy is grounded in climate science.
Rather than wishful thinking, what's ambitious, but realistic targets and measurable results, which we report transparently.
And comprehensively.
Protecting the health and safety of our employees is a central part of the strategy and while lost time injuries decreased again in quarter..2 this achievement.
It's over shadowed by the fatality of a contract is employee at our Hemlo mine in Canada after the quarter end.
And investigation into this tragic accident is underway while in the meantime, we continue to support the family.
On the environmental front, there were no class 1 incidents during the quarter.
We're continuing to maximize out water reuse and recycling rights.
Oh firmly on track to achieve our water efficiency target of at least 80 per cent by the end of this year.
In line with Barrick flat structure, and decentralized management the group's clobbered trading strategy is being implemented on the ground with each saw tailoring the strategy to achieve the optimal local outcome.
We are continuously seeking new technological developments that can accelerate or enhance these plans.
We have also continued the independent human rights assessments, we started in quarter, 1 with a review of the Kibali operation completed this quarter.
So these are the group's kpis and as you can see we've had a very busy quarter.
I'll deal with these as we go along.
The actions we took at the time of the merger 2 and a half years ago.
Clearly bearing fruit as evidenced by another sector, leading cash return to shareholders of an effective 23 cents for the quarter made.
Made up of the base, non saying dividend and the second 250 million tranche of share the shareholder approved return of capital.
While we've created a strong foundation for the achievement of our vision of managing the best assets with.
With the best people to achieve the best returns.
Barrick's future very much depends on what we are doing now.
In this regard I'm very happy to say that on a group basis, we look set.
To replace the reserves depleted by mining this year with ounces of at least the same quality.
We're expanding our presence in new countries within prospective gold fields, and our Greenfields exploration programs already identifying exciting new discovery opportunities.
It's also gratifying to note that our major capital projects have all made significant progress.
Despite some significant headwinds we delivered a credible set of operating results.
And unprecedented mechanical failure at the goldstrike roaster impacted the North American region.
But Africa, and the middle East and Latam.
Free cash and Asia.
Pacific both performed well and are trading to the higher end of their production guidance, if emphatically illustrating the value of Barrick global presence.
As you will see at quarter end, we had more than $5 billion in cash on the balance sheet not notwithstanding some significant cash outflows during the quarter in.
In addition to paying 1 of the industry's leading shareholder returns in the form of dividends and return of capital. The second quarter is also when the majority of our tax obligations at you and interest on our bonds are paid.
In addition, we made royalty and tax prepayments to support some host countries Covid campaigns.
It's worth noting that I'll focus on the future, which I will touch on in more detail on the presentation is not keeping us from rewarding our investors here and now.
And it's what all what will allow us to keep rewarding them in the future our strategy that I believe will differentiate us.
Over top.
We start our review.
All the operations in North America.
Nevada Gold Mines' hosted its first virtual tour during the quarter and.
And if you Miss debt you can still see the detailed presentations on the N G M website.
And it's short loss, Nevada Gold mines has achieved a great deal.
Bonds as well as the management have been successfully integrated into our Barrick style structure.
The company has also launched a series of programs to ensure its recognition as a valued partner to the state and the community.
Nevada gold mines, and Nevada's mining industry as a whole has cemented that partnership through establishing the mining education texts.
An excise tax that will go directly to fund education in the state.
And this is an example of true collaboration.
Between industry.
Legislators from both sides and the Governor's office.
Across the region non core assets within the North American portfolio have been brought to account on the back of the higher gold price.
Elsewhere in the region, we are leading the industry and re looking at the way, we manage closure sustainably such as reprocessing tailings at Barrick Golden sunlight closure of property in Montana.
Nevada is far from being a mature gold province.
And there are plenty of opportunities for.
For significant reserve additions as well as new World class discoveries.
In the meantime.
The gold rush and for mild projects are making steady progress.
Colin had a challenging quarter no sooner had the annual maintenance shut down for both roast has been completed successfully then 1 of the goldstrike roaster moles failed.
Reducing throughput by some 40 per cent for that more.
It is pleasing to share with you that the team rose to the challenge.
By increasing throughput through the operating bowl adjusting all blends and prioritizing high grade oxide underground ore at Cortez mol.
Repairs on the Goldstrike Moe should be completed later in this quarter.
This chart underlines the point I made earlier about Nevada being far from mature as a gold region.
Exploration is delivering significant reserve additions.
Yeah, logical muddle refinements and new conceptual targets as I will touch on.
At legal.
Resource drilling is returning particularly strong results as you can see here. It has confirmed high grade continuity and the potential for connecting adjacent high grade intercepts.
Well to the east of significant intercept has expanded the mineralized footprint.
North level is on track to deliver a maiden resource by the end of this year.
Moving to Cortez, which was also impacted by the goldstrike more failure. However on.
It remains on guidance because of the reference I made early are all are paying oxide mol and heap Leach production.
Also on the Cortez region. The Robinson project has made enormous progress.
The latest work has confirmed its 4 million odd potential and we're aiming to complete a pre feasibility study by the end of this year.
The deposits on open in multiple directions as evidenced by the drill results at the does still part of the Robinson project and new targets have also been generated between Robinson and the World Class Potline mine.
This is a previously untested, but highly prospective area.
This is just another illustration of how much we still have to led and the upside potential that remains in front of us.
The gold rush feasibility.
Update is also was also completed during the quarter with total initial capital expected to be slightly lower versus the previous studies, although estimates of around $1 billion.
This study will support the conversion of reserves and then you and reflects the plan of operations submitted as part of the permitting progress process.
And we expect a notice of intent to be published imminently in the Federal Register.
That then sets the program to be able to expect and we do expect the record of decision in quarter 4 of next year.
There still remains the enormous potential for future improvement in the project economics from those resources not considered within the feasibility study and of course theres 4 mile that large contiguous to the gold rush ore body.
To put it plainly.
The updated study underscores our belief that this is a world class assets, which more than meets our investment criteria.
The high grade Barrick earned for mile project can also claim world class status and we still firmly believe that the full potential has not yet been reached.
It is planned to be X. It's it is planned to be accessed from gold rush for underground exploration work.
Work to expand the resource as we shared with you last quarter and we are currently evaluating the best way to ultimately mine this project.
Turquoise Ridge.
It's probably the Nevada sought with the most upside but at the same time, the complex, which includes twin creeks bonds and processing facilities.
With many challenges.
We've now improved the geology.
What day did the models.
And produced a revised high confidence mine plan on that foundation.
Plant upgrades and new investment in underground equipment and ventilation are expected to deliver an improved performance commencing in the second half of the year.
In line with Barrick clean energy strategy Turquoise Ridge is currently Trialing for a 50 ton electric trucks and as with all states of the off our technology. We are working through some teething challenges associated with ensuring the batteries are.
Bust enough for underground working conditions.
Meanwhile.
Construction of the mine's third shaft remains on time and within budget with sinking recently reached share it with the thinking recently, reaching its final depth.
Commissioning of the shaft is expected late late next year when the shaft is expected to start delivering on easing bottlenecking by increasing hoisting capacity, providing additional ventilation.
Which is 1 of the inhibiting factors and expanding the production out of turquoise Ridge underground and of course shortening haulage distances.
Our focus on quality geoscience and understanding the geological framework and controls to mineralization is delivering multiple targets in the gap between the giant turquoise ridge and Mega deposits.
Recent drilling validates our model and confirms the potential for significant brownfield discoveries in the area.
This really is 1 of the most exciting prospective areas and the Nevada Gold mines District.
And then elsewhere in Nevada, both Phoenix and long Canyon had good quarters strong copper byproduct credits drove down cost said Phoenix, while long Canyon continued to deliver exceptional margins.
At long Canyon I reviewed to optimize the project is continuing with the current expectation that's a model move into care and maintenance in quarter 1 of next year.
In Canada.
Hemlo is reinvention is an underground operation was impeded by Covid travel restrictions, which have impacted the Australian contractors with whom Barrick has worked very successfully in Africa.
As a result them on underperformed and is trending to the bottom of its guidance for 'twenty 'twenty 1.
The transformation of the underground continues however, with mining from a new per portal expected to start in this quarter.
And in exploration.
We are continuing to define potential resource additions, which could extend the mine life beyond 2030.
Significant progress has already been made and delineating targets, which are outside him Lowe's current mine plan with recent drilling identifying the E zone below the western side of the old open pit.
Another point worth noting is that we are fortunate to have the support all day.
Our first nation partners as we secure the future of hemlo.
Further our field across the Canadian gold fields, we continue to hunt for new opportunities.
Capable of passing on investment filters.
And I personally believe Canada is going to be playing an increasing part in barrick's future.
At Donlin in Alaska, I am now beginning to be more comfortable that we are starting to get a better understanding of the fundamental characteristics of the ore body for ore bodies and it.
Better spatial resolution, where the metals and the ore types are and this is what we'll do derisk the mine plan and add value to the project.
This key piece of work is critical to developing and improved and considered mine plan with which to make a sensible decision as we progress towards updating the 2011 feasibility study.
As an aside.
We have an interesting portfolio of studies stage projects.
This includes potential world class projects like Donlin.
Alturas, no to I'll be alto and Pascua Lama, while these are all large capital intensive projects.
We continue to chip away and Derisk the projects to allow us to make a sensible development decision on.
We'll find other means to transform for the value to our shareholders.
In our Latin America Asia Pacific region, It exceeded its quota to production target led by valid era, which posted a solid performance on.
On the back of improved ore stacking and fresh ounces pulled from the recently commissioned phase 6 heap Leach facility.
Cost will also better than plan across the region.
At Pueblo Viejo per.
Action was impacted as expected by the planned autoclave maintenance shut down.
But demand remains well positioned to achieve its annual guidance.
Planted tailings expansion project, which is designed to unlock 9 million ounces of reserves and extend the mine life.
To be on the 20th Forties continued with work on the processing plant scheduled for completion by the end of 'twenty 'twenty 2.
Negotiations for the new tailings facility sought took a big step forward with Barrick and the potentially affected parties agreeing to an independent government led environmental impact assessment to be conducted in parallel with our own third party studies.
Despite the progress that has been made with the expansion project, including our ongoing engagement with local stakeholders to ensure we maintain our social license there have been some delays to the project timeline.
There is however, a cushion built into our plans and we need the new storage facility complete and operating by quarter, 1 'twenty 'twenty 6.
On the exploration front work on the Zimbra on a.
Target at Pueblo Viejo continues to define a 1 on a half kilometer long northwest striking target with strongly mineralized rock on soil samples within the mine lease area.
The target extends beyond the lease boundary, where barrick owns rights through a joint venture and we'll drill it up once the necessary permitting process has been completed.
We move now to.
2 valid era in Argentina, where heap leach processing was reduced in the first half of the while the mine transitioned to the new phase 6 facility.
This was successfully commissioned on time in quarter 2.
And in line with guidance supporting our higher than forecast production.
On a solid all round performance, which is expected to improve further in the second half of the year.
Well the exploration focus is on extending valid there is loss.
We're also looking at new opportunities between the mine and on nearby law on that project on the Argentinean side of Pascua Lama.
Drilling in this district has already confirmed and extensive gold copper mineralized system in the strat to graphically important area between the Pascua Lama deposit and the Penelope pull free target near Velo Dara, we refer to this target which is shown.
On this slide as Lama East.
And this.
As part of a portfolio of identified and press very prospective targets, which will be the focus on future work and there's clearly a significant exploration upside.
In this district in fact, we are planning as we come out of winter to be able to mobilize.
Total of around 12 drill rigs in this region.
Meanwhile, stepping even further out the exploration team continues to generate new targets along the southern part of the El Indio belt we.
We expect to start drilling in this in the district this quarter now.
Now that we have completed the initial phase of mapping evaluating and prioritizing various targets.
Our recent entry into the Guiana shield as part of this strategy to expand on exploration front tiers.
We've already moved from generative work to consolidating a meaningful land package through a number of exploration and in transactions in this country.
Then the copper project, which covers a large part of the country's prospective cartoony basin.
There's strong geological similarities to our West African projects, and we will be applying that expertise as we start to EXPAREL explore in that region.
And across now to Papua New Guinea, where the reopening of the program on a white the finalization of various agreements. This follows a signing of a binding framework agreement with the government earlier in quarter 2.
The mine is still on care and maintenance, although we have started opening up access to the bottom of the pit and underground workings we.
We have also started to build up a leadership team in preparation for the commencement of reopening operations.
In parallel the government is running the community and landowner consultant process.
Further around the world to Africa, and the Middle East region. This region delivered its usual robust results and is on track to achieve the upper end of its annual production guidance.
In Mali Lula on Qatar exceeded its full cost for the quarter on the back of a strong plant performance and kept cost below plan.
It also bolt full grade stockpiles, which will increase operational flexibility into next year.
The highlight of the quarter was the delivery of first oil from the complexes third underground mine at Concord too on.
Patrick on Qatar in line with guidance.
Yeah rich.
Also a part of the Lula on Qatar complex, which is located just a day Jason to the Elia open pit has recently emerged as a potentially exciting new discovery with results continuing to return impressive intersections.
A second phase of drilling is now underway.
The Lula district remains a hockey perspective, what.
Work on the Bombardier joint venture and the Senegalese side of the border continues and over the past 2 exploration seasons. We have screened screened a vast 40 kilometer long area.
We believe there's a high potential for a material new discovery or series of discoveries and we are seeking to consolidate and even larger land position in the district.
Across the river Theres, an intensified focus on extending the exploration targets to replace mine reserve depletion at both go on Qatar and Lula.
Tongue on encoder blah remained on track to achieve its annual production guidance.
Thanks to a higher throughput, which compensated for slightly lower grade <unk>.
Strong results from Brownfields exploration point to a high potential for lengthening the mine's life and we recently received confirmation of a 10 year extension to the tongue on mining lease.
On the nearly permit which hosts tongue on drilling on the Seydou South target has defined a plunging shoot of high grade mineralization, increasing the possibility of finding use that a lot close to the plant.
And at Bondi Ali and new mineralized target has been identified at caribou and we continue to investigate the feasibility of targets being mined and fed into the tongue on plant located between well up to 70 cost between about 40 to 70 kilometers.
As a way.
I Cross then 2 Central Africa, and the Democratic Republic of Congo, where Kibali production was well ahead of plan on the back of higher grades and it is set to achieve the upper end of its annual guidance.
The mine remains at the global forefront of automation.
And by the way during the quarter it implemented predictive maintenance software, which you uses machine learning to assist in failure mode identification edits hydro power stations.
Staying with Kibali 3 targets currently stand out from the exploration portfolio deep drilling has confirmed that the folded mine sequence, which host the vet.
Very high grade K C. D. All bodies is still in place 500 meters down plunge from the limits of the current resource.
Believe this is an amazing ore body and it still has a lot of pleasant surprises in store for us I'm sure.
Along the highly prospective K Z zone deep drilling is about to start at kalimba.
Results from recent drilling has confirmed that the high grade mineralization is not only confined to plunging chutes, but theres potential for the down dip extensions to be mined from underground.
Another interesting target that is currently attracting our attention is that M. M on target, which has many similarities to the main K C. D ore body and as you can see yeah, it's very close to the kibali processing facilities.
For the east and South North Mara in Tanzania continued to prove improve its underground productivity and achieved an optimal blend between fresh underground ore and lower grade stockpiled ore.
Further improvement is expected when its new mining fleet arrives in the second half of the year and.
Incidentally, we have just appointed a Tanzania and general manager for North Mara inline with Barrick Global policy of employing host country nationals, not only as labor, but in key leadership positions.
And then probably on Hulu the ramp up of underground mining and processing operations continued as we bring this long life low cost mine up to Barrick standards.
The development of an optimized mine plan continues to advance in a steady state annualized production is expected next year.
In the meantime, Barrick continues to strengthen its presence in Tanzania.
July we were granted non T new permits and multiple greenstone belts across the country.
And we await the outcome of our applications for additional ground.
Our copper portfolio again made a significant contribution to barrick bottom line.
Lamar on a higher throughput and grades drove an increase in production and this trend is expected to continue in the second half of the.
At Jumbo side.
It also had a good quarter.
And is on track to achieve its annual guidance as well as more than replace depleted reserves.
High grade oil from newly identified feeder zones point to a material life of mine extension.
Zelda of all is continuing to recover from the impact of Chili's Covid restrictions.
But significantly advanced the chloride Leach project.
Scheduled for completion.
In the first half of next year.
As part of the process of expanding our global footprint and pursuit of new discoveries and opportunities.
We secured for exploration licenses covering over 2900 square kilometers and Egypt, well endowed eastern Desert region.
The license areas.
Being selected for their structural and geological similarities to the World class Sukkari deposit.
When we merged Barrick and Randgold, 2 and a half years ago.
1 of our objectives was to create a modern business with a flatter leaner structure and a highly efficient executive oversight.
This has enabled us to cut general and administration cost.
More than 30% in absolute dollar terms, while at the same time increasing revenue.
On any measure our corporate costs are now substantially lower than our.
Peer group as shown in this slide.
And 1 of our key fundamental goals at the time of the merger was the creation of real value for our shareholders through improved operational effectiveness.
And streamlining our business.
Yeah on this slide you can see how we've achieved these objectives across multiple metrics for.
Increased cash flow and returns to our shareholders.
To increase cash on hand.
And balance sheet strength.
And finally, ladies and gentlemen.
As I have often stressed.
Our strategy is a long term 1 designed to deliver sustainable production and profitability at what ever conceivable growth gold price 1 can expect.
As we have shared with you at the start of the we.
We have a 10 year runway ahead of us.
Posted by mine and business plans developed at Conservative 1200 dollar an ounce gold price assumption.
Below we as a team have made good progress there's still some work to be done to unlock the full potential of Nevada, Pablo there for a valid era and progress.
And then there's the poplar on other ready defined opportunities locked for mile Donlin and the South American portfolio.
After that it's about investing in our future through our rapidly developing greenfields initiatives, which I firmly believe will add significant value in due course.
And while we aim.
To keep our feet firmly on the ground. We're certainly also keeping an eye on.
On the big Blue Sky above us.
Thank you for your attention and we will be happy to take questions.
Thank you we will now begin the question and answer session.
And the question queue. You May Press Star then 1 on your telephone keypad, you will hear a tone of acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then 2 to join the question queue. Please press Star then 1 now.
Our first question comes from Greg Barnes of TD Securities. Please go ahead.
Thank you Mark.
Noticeably absent for many of you on discussion with press releases when they talk about inflation pressures cost pressures.
Some of your peers have highlighted 3% to 5% upside to cost through 'twenty 'twenty, 2 but it doesn't pay you stay on the same pressures.
Yeah, Greg on I think yeah. There is some pressure depends on your outlook on the oil and gas process. That's that's probably up to 1 percentage. If you look at where we are year to date, we're tracking against that budget. So.
If you take the current spot and you project it out to the end of the it'll it'll add about 1 per cent. So overall. If you include the impact of a higher gold price another per cent, but I think I would you know you know better than me the the the whole issue.
Around cost in the gold industry, often is more a grade function than a real cost function as far as we're concerned to the other cost pressures all with steel is as you know.
But a big capital projects, we got a little but of an impact on Pablo therefore, because of some delays because of logistics, but we've caught up on that most of the steel for the other projects, including most of the P. V steel we already pre ordered we also when Covid star.
Ted.
<unk> increased our stockholding on consumables and we've kept it up there and that's again and managing that the other big cost pressure is is about the supply chain challenges.
Challenges around the world as the World gets back toward starts to plan to get back to normality and again our teams have brought a lot of flexibility we used too long supply chains out of Africa, we use multiple suppliers. So we've.
Being able to Dodge being caught by 1 supply chain on a and a major sort of breakdown on on logistics and and also we've just become so much better at consolidating.
All shipments and so all round and we still not I don't believe we're we want to be I'm paranoid when it comes to logistics and supply chain management and and so there's still more to do the the we've taken out hundreds of millions of dollars of cost in Nevada.
We are making real headway on and Pueblo Viejo, we still got challenges down in Argentina, because of the financial cross the stay of the currency crisis and that whole restriction that we're experiencing but other than that you know all round and then of course, there's no cost.
And efficiencies.
They are the more efficient you become everyone's talking about technology and automation and all that sort of stuff. Yeah. We're really focused on efficiencies and as you know we've just started to see the first signs of benefits from our.
Rolling out a brand new a data platform and and everything that comes with it and your objective at the when.
When we when we merged with Randgold was to really Jack up the ability for our management to report on real time data and with that comes a greater efficiencies. So we're just starting to see the benefits of that we've got I think 3 mode.
Moms to go and and then we're ready and then it's about making sure that we affect the benefits that we've been doing a lot of training to get our managers ready to be able to use utilize this.
New real time data platform. So yeah, and then on top of debt Rayon and his team on the the supply chain and procurement side you know, we've we've changed a lot of contracts.
We've really used our buying power on muscle around the world to and we've built a strong partnership with.
Our 2 big equipment supplies, caterpillar and sandvik and and so all around I think we've we're in good shape and we're we're definitely not going to use the the the pressures on inflation, whether it's transitory or real as an excuse our job as managers is to constantly.
They look ways too and it and it always helps when you got high quality assets to be able to manage that in the gold industry.
Do you think you'll be able to contain that into 2020 to mark or.
She is building as you look out for next year, well I think the key is you need to.
To predict telling me once the commodity prices are kind of left a lot, but you know a lot of the big capital projects that we've got going with secured and so we're in good shape with with that and then on I I. I also you know I am worried and you saw you know there's there's some.
On much unknown and the and the global economy, and we saw this you know spark downwards.
On the gold price and other commodities over the weekend, it's a big Ramonda for the fact that you know things go up and down not necessarily in that order and so we are not interested in trying to maximize real time opportunities now.
We are delivering the sort of returns and industry, leading returns as we announced again today because of what we did on the back of the 2018 merger plans.
What we're doing today is really the future you know what's going on with the future of Barrick Le plaque, so where where we've shown that we can deliver.
You know right up there with the best we don't have to put out ore bodies at risk and we are investing not only in extending our current ore bodies dropping the cutoff grade increasing the life of mine maximizing the are the returns, but that we're investing in our future and so you know and we have used $200.
Disciplined.
And and that keeps the focus on cost control and efficiency and I would just finish by saying.
1 of the big challenges in hot price.
Phases of the cycle is this.
And the the exploitation of that high price and and the consumption of ore bodies and we've seen that starting to appear in in the lower grade and we're going to see it at the end of the year with a declaration of of reserves. So you know I think that's a big driver and the same on the copper.
Because these big copper prices mask the debt the mining discipline the processing discipline of of of miners. So we.
You know, we can't complain about anything we have to run the job with.
The the deck of cards, we get the.
Fed and and that's that's yeah.
So there will be inflation I think there's so much money around.
For me the big worry us.
How does the real will deal with what's coming at US you know, we don't understand the impact of.
The pandemic on the rest of the global economy, it's been very insulator, we have no real handle yet on the impact of the developing world and its prescriptions on climate change without really an engagement.
With the emerging and developing world and I'm concerned that like we saw in in 2008, 2000 and on and the global financial crisis, We really only saw the impacts of that 3 years later so.
Yeah, I think we're in for a couple of surprises that not all good ones because as much as we want things to look better.
Thanks, Mark I'll pass it on.
Okay.
Our next question comes from Anita Soni of CIBC World markets. Please go ahead.
So just following on Greg's question. Thanks for some fulsome answer there I think your prior cost guidance had on them.
And expectation for cost decline for next year, so given that youre looking at a 1% to 2% increase is that relative to that.
He sort of mid to top end of the guidance range that you've given for this year, which is about 700 to 730, which is kind of where we said or is that relative to the mid range. So.
Basically I'm asking can we expect cost to go down year over year or are we just looking at them I'm not as much of an increase as your peers on forecasting.
No I think that's a really good question and again I would you know I would explain it I mean, you know our business so well.
The the big driver of that if we're looking at cost per ounce is exactly the profile of next year. You know, we've got a depth and are in Nevada.
Which.
Will impact our cost, but our forecast is based on that step we've got Pueblo vehicle that we bring into production next year. So it's exactly how the team can actually stick to the the plans and we are busy with those plans right now and then we're bringing Cobra and.
And and and we had always planned to bring Polgar N.
And our.
Next year and so that comes initially with a higher cost per ounce, but just because of the startup cost.
But other than that all the other mines are particularly are looking good and and again a gold rush.
Once we get that into production, which as you know as we said the record of decision is expected mix next year.
End of next year, so again that helps and a plan to keep the cost going down on each of the the the answer broadly is a trained as Don Graham do you want to add to that.
Yeah, the only on the comment I would I would point out Mark is just debt.
D a.
The guidance for 2021 was based on our budgeted price of gold was 1700, whereas in our 5 year planning for 'twenty 'twenty 2 owners, we use 1200 gold.
When we come to update our guidance for 2022, we'll probably do that using a higher gold price something that's close to spot and that does tend to push the price is up just because of the impact on of royalties on those royalties.
Is it not.
Problem do you have have that's a good point thank you Graham.
Yeah. That's a good point, thank you and that's it for my questions I'll pass it on to the next person.
Right.
Our next question comes from Mike <unk> of Bank of America. Please go ahead.
Oh, Hi, Mark and Graham.
Just had a question on this government led.
Gerrick environmental assessment for the mine life.
Extension project, which is as you mentioned mark on parallel what's your own studies.
Who would want us just like a commodity or a panel on independent people that'll be appointed to it or just.
I wanted to get more detail on that.
But so under the and we follow the international guidelines on tailings dams as you know and the consolidation process for interested in affected parties as well and and so we've gone through a process as barrick.
We've looked at some 22 different sorts.
We've narrowed that down to not to Sox and and Ah in any of these processes and we've started the public engagement on these sites. We started an informal engagement in 'twenty 'twenty and then from the beginning of this year, we started the public.
Process and you would've seen that because of all the price that comes out of that sort of consultation.
As has always been the case in our Dominican Republic. There are a few a handful of detractors that makes a lot of noise and so.
Pablo Erika is very important to the Dominican Republic economy, just to give you a feel for it if you just average its contribution towards the corporate.
Corporate tax for Dominican Republic, since 2013 to the end of 'twenty 'twenty 2 is 18% of all corporate tax. So it's very material as you can imagine.
And so the the government again, we didn't want to end up in a fight yeah. We we really do believe in a proper engagement, we were starting to run into detractors that we're taking the law into their own hands and so in cooperation with the government, we engaged and we we are.
<unk> attempted to find out what the real worry was and the worry as in most cases about the impact of environment, the safety of and security of the environment. When you bolt such a big storage facility.
And again for full disclosure.
The resort areas the original owners of P V and it's small.
For my life and they left enormous.
Unaddressed, environmental hazards and pollution and part of the acquisition Barrick committed and has.
Cleaned up debt environment, and and were all in line with International standard. So you know we agreed with the detractors that the best way to give them comfort.
Is that the GAAP, we we of course are going to do our own third party studies.
Studies.
And they really revolve around biodiversity.
Hydro geology, and hydraulics Ah just for potential Leafs and different pumping tests and then also the water systems themselves.
And and where we we off course of Oh, we have started doing it and we will continue to do it and and we've agreed that the government will appoint an independent <unk>.
Mobile expert to to lead a independent study of course, along the accepted.
God lives in assessing such installations and and subsequent closure plans and and we will of course there'll be a the government will no doubt.
Compare I'll work with the independent work, we have a coordinating committee to make sure that we don't run on a you know diverge in our work and that if there are any issues. We are informed and we will be able to attend to them and so.
And I think this is a again you know Barrick has led some.
Innovative engagements and our our ambition to become a truly modern mining business and I think you know this doesn't disturb us at all and we are very comfortable with the sites we have.
Finally selected and these independent this independent set of experts consultancy.
Will also review our approach at.
For all methodology on how we investigated and prioritized down to these 2 socs and normally under the the protocols, we would end up selecting 1 but because of the the commitment to try and make sure that we are absolutely transparent in our process we've agreed.
That will study the 2 the number 1 and 2 selection in that process. So I hope that explains it well enough mark.
Well. Thank you for that I guess I'm just wondering.
Global experts Oh, I guess, it will take time to be chosen and they're starting from square 1 versus obviously barrick.
Well, we are working with the government already on where most of the sites. We have already started the process, we need to get the draw holes and we've got a draw on machines available. We've got 14 holes to draw on the 1 side and probably a slightly less on the other because we've already drilled some holes because.
It's actually located sway that where the the conveyor belts.
Tranche graces 2 the first shot.
And then we we need to get on a full year and then there's 6 months of modeling full year, all of our samples and testing and and analysis and we should you know we are happy with our program. If we start soon enough they've selected 5.
The shortlist are people. They all day I have got approval to fast track the procurement and voters comes under the government policy and and in the meantime, we are working with the director generals and Ministry of environment to ensure that we start the process agree on this.
Its in and get into the field and start a measuring.
Measuring the foreigner in Florida as part of biodiversity tastes, so where we're comfortable on where and shape did their job is to make sure that.
And what the detractors are looking for is that there's there's somebody independent of the interested party being us.
Oversee this process.
Okay, well. Thank you for a fulsome answer we look forward to what happens here on.
Thank you again.
Our next question comes from Jackie Principal Husky of BMO capital markets. Please go ahead.
Thank you very much for taking my question I wanted to ask you for your dividend policy I know Mark you've previously talked about how you see commodity prices going up and down on it it's maybe too soon to say, but.
You've got a strong dividends for 'twenty 'twenty..1 is there any thought or can you make any comments on whether that a special dividend program.
May be extended to 2022.
So the answer is.
More than likely not a we've said that you know this year was on.
Unpredictable, we had a particular opportunity to return.
On capital on a cost effective way of particularly for our Canadian investors.
And we took that opportunity and it was the proper opportunity and it is a genuine return to.
2 shareholders and what's more you will see now we were committed to that there's a lot of people asked whether it wasn't that a genuine move of course. It is I always remind people that most of our shareholder. So yeah. We don't do things in a in a haphazard manner. We promised them all goodwill works for 2 of them.
More defined rich.
The return of excess funds because that is the debate right now and and we we are in that phase of discussing exactly how to do it as you know in in Rand Gold I was a big supporter of and and we led ever first ever I think.
Fixed balance sheet number and then pay the rest out.
And so I think we've shared Jacky with you all the options and we'll keep working on it and I think also 1 thing is you just need a day like yesterday or today. This morning to remind you exactly what we all about and it's not just about.
Paying dividends. It's also about paying tax it's about ensuring we have a business that's sustainable throughout the cycles and it's something we absolutely emphatic about price.
Lon.
Okay.
Okay.
Right.
Yeah.
Okay.
Mike.
Sorry can you hear me.
Yeah, we can tell you I think that's a little bit of interference on the line.
It wasn't Sherman yeah.
On a separate question I noticed in your MD&A you for it and then Cathryn Ross is going to be leaving and I'm sorry to see her go I think she's been a great contributor to Barrick, but you also mentioned in the in the paragraph day, you'll communicate any a successor in and maybe changes to the regional management structure.
In due course can you talk a little bit about what your thoughts on what your options might be in terms of changing that regional management structure do you have anything specific in mind at this point.
Dr. Katherine sitting in front of me, we are equally shale sorrow.
Private thing for Kathryn as you can see she's agreed to stay on until the end of the and work with me because she's got some strong views and and and they align with them on on bringing women into senior positions also use different perspective. So we also.
I wanted her respect catherines a request on timing, we've got plenty of time to work through it we've got a strong team Kathryn is not leaving behind a big hole.
But a very strong team, Nevada is a is a strong team. So we see the opportunity of being able to bring somebody into that position that really is able to grow into the future of Barrick and and you know we've got a group of people that I'll be drawing on our way.
Got our HR people scouring the globe for talent, we've of course got internal talent as well that we'll look at and so you know I think it's something that we'd rather do properly and in a rush and and the key for me is you know.
1 of the things that we need to keep focused on is.
Is continuing to deliver on my promise to the market that springs younger people are.
Capable women executives to balance Oh are you you know future leadership of this organization.
That's that I think will be in the forefront of our minds as we.
Go through this process.
I'm sure, you'll do pop up somewhere.
He's a very talented for 2 it [laughter] absolutely [laughter]. Thanks, Mike.
And.
Yeah.
Our next question comes from John Tumazos of John Tumazos, very independent research. Please go ahead.
Thank you very much mark.
It seems like inflation trends are the highest in for decades.
Maybe more.
And it could be a really good time for gold despite todays price action.
Given your large cash hoard.
Do you think it's a better strategy.
To buy Barrick shares.
To buy someone else's shares for consolidated assets.
Aren't you stick to your knitting, where some of the main projects.
Donlin Creek, nor until you have your 2.
Others could be multibillion dollar.
You might need to cash inside the company.
So John I guess not to teach you to suck eggs.
The whole game, and and and and our business is 1 we want to maintain our relevance within the global markets and we are both newmont and Barrick have demonstrated if your larger you attract Generalists Center you Register and we certainly have done that both of us and.
And this industry needs consolidation by that very thesis.
Because you know we sold that led by Barrick a merger with Randgold and then the subsequent consolidation of Nevada, and then they take out of the minorities in Acacia followed by Newmont's acquisition of Goldcorp.
On a kirkland life acquisition of detour, the Australian consolidation, both in Australia and across the.
Pacific.
And then everything Dod because the gold price got so high that no 1 needed to do anything except sit back and take a COVID-19 rest.
So no and and and so we've seen a big GAAP developed between the the the 2 leaders in the industry and the rest of the industry in and it doesn't make sense you know, we still too fragmented it's still needs consolidation at the same time, we're not replacing the ounces.
We're mining with the same quality answer so it's always difficult to seek value that's why I'm, a big proponent of at market.
Transactions, albeit that if we can get on it.
Our company early enough, we can offer both its share holders and ask all shareholders value.
Value creation, but once you get it into the get something identified and in the heart of promotion you know.
Undeveloped projects always peak never to reach the same peak once they start producing so it's a it's a challenge to do that it's not a good idea to spend dollars on something like that the.
The last boom Ah ended up with a you know.
Big.
Hi speed accidents, all around the mining industry because people did that so.
We are mindful of that we certainly have the expense too to ensure we don't do anything rash at the same time high quality assets. All know was a a lot.
At any part of the cycle and then.
On top of that you would have seen me talking a lot about organic growth. It's what I have built my career on.
We are you know we've put a lot of money and investment are in Upskilling, our exploration teams and we're starting to see the results of that are.
As I stated in the beginning this is a long game.
We are not shy as we've indicated of reacting 2 opportunities.
And at the same time, we're we're definitely not cutting back on our own investment in in future. So I hope that and on the end of the day, we would rather reward all of our members are our shareholders are with some cash value.
And if you know the biggest challenge in the gold industry, which is very cyclical is is to determine what the value is the value often of a share is.
The value of that moment or that year, and so you know I'm not we as a management team and as a board we've done buybacks in the past, we will do them in the future, but the debate is is this the right time right now.
Thank you.
Our next question comes from Matthew Murphy of Barclays. Please go ahead.
Hi, Mark just a question on gold rush and the record of decision timing slipping a bit again.
On at what point does that fall on the critical path is it on the critical path right now and if not at what point does it become critical path and like how challenging a permitting process do you expect gold rush to be.
Okay.
You know its been a longtime coming the delay that we've experienced in the notice of intent is.
On a per.
Product of the change in administration.
Which we've gone through and we've been it's been confirmed that it will be published.
And in the immediate in the short term.
That really sets the probe program for the record of decision.
Where we're.
The only thing I can say is we've been exploring gold rush, we all have developed into the ore body. We all know that the authorities are completely at and in sync with what we're doing and where you know we're managing it against the plan of operations.
And so there's no reason for us to believe that day.
The record of decision won't.
<unk> be forthcoming we've put some cushion in that time, when we say end of 'twenty to 'twenty 2.
Got you got you back on.
I don't know if you want to add anything Kathryn.
Well I need to confirm what you've just said, which is unit gold rush has been a longtime coming we've engaged throughout its part of a complex the way in which we're developing the whole body takes into accounts all of the environmental community Native American issues that have been the focus of the new.
Administration.
And with regards to the exploration declines on the exploration development underground that allows us to be able to ramp up quickly once the record of decision is received.
And so at this time the timeline fits in with our touch 10 year mine plan.
Any further slippage and well obviously have to review that.
Greg do you want to add anything.
Yeah.
We've got the whole team here.
Oh not cause that.
Katherine just kind of a it's typically it's in the direct answer is it's not on the critical path with them on it but.
And we expect the record of decision in June for next year.
Okay.
Great. Thank you.
Yeah.
There are no more questions from the conference call.
This concludes today's conference call.
Should you have any additional questions. Please contact the Barrick Investor Relations Department you May now disconnect your lines.
For participating and have a pleasant day.
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