Q3 2022 Barrick Gold Corp Earnings Call
[music].
Ladies and gentlemen.
Thank you for standing by this is the conference operator.
Welcome to the Barrick 2022 third quarter results conference call.
During the presentation all participants are in a listen only mode.
Following the presentation, we will conduct a question answer session.
At that time, if you have a question. Please press Star then one on your telephone keypad.
At any time during the conference should you need operator assistance. Please press Star then zero.
As a reminder, this conference call is being recorded and a replay will be available on barrick's website. Later today November 3rd 2022.
I would now like to turn it over to Mark Bristow Chief Executive Officer.
Please go ahead Sir.
It's very much.
And good afternoon, and good morning, ladies and gentlemen.
And again welcome to our presentation of the Q3 results today, and we presented that as you're done appreciated we are presenting from the London stock exchange today, and and it's so nice to see those familiar faces and not so somebody advisors.
Yes, it brings back lots of memories for me being here and.
And also Tom Zachry odd to die.
Not always.
But also down.
And so.
So I look forward to getting some questions from the floor and thank you very much for coming out in person today.
As as I've said many times before.
The troubles that have been closing in on the global economy, including the mining sector in sick they tightened their grip in the last quarter and Barrick. However, there's a hope all ballots demonstrate once again is well placed to contend with these challenges.
Thanks to the disciplined execution.
Our long term value creating strategy.
We haven't still are focused on maintaining a strong balance sheet. Our dividend policy is delivering sustainable returns and we continue to extend our life of mine plans to ensure that all 10 year production profile remains intact.
Our successful exploration programs, while feeding high quality prospects into an already bulging Poplar island, while our focus is on organic growth. We all of a sudden keeping an eye open for value, adding M&A opportunities, albeit that that is capable of meeting.
King.
Our strict investment criteria remain.
Few and far between.
Please take note of it all.
A cautionary statement.
And for those who wish to just idea it's in more detail it's available on our website.
Okay.
We had a softer quarter in quarter three.
As I'm sure all of you have noticed and and and we guided you to.
And it was mainly due to a sequencing at calling and Cortez.
But a great uplift in some hard work in the fourth quarter should keep us on track to achieve our 2022 gold production guidance, albeit at the low end of the range.
Copper portfolio on the other hand performed well and is trending towards the midpoint of our guidance.
Exploration as I stated in the introduction continues to discover new opportunities as well as to expand our exam.
Listing asset base, and we expect to grow our reserves.
For the group again and that is net of depletion as we did last year.
Other highlights include the completion of the public comment a stage in the gold Rush project and our continued progress with a massive Pablo Vasco expansion project with the submission of our environmental and social impact assessment for the new tight each story.
Tightenings storage facility.
I should also point out that Barrick was serious about responsible tailings management logging before recent calamities focus the industry's attention on this issue.
And we have made excellent progress and are on track to comply with the new standards.
At a time.
And we've reviewed all all tailings facilities, both from the closed thoughts as well as our operating mines.
Mines.
I'll cover I'll cover the financial results a little later.
Okay.
Just giving you a picture of.
Our operating performance and how you can see the details.
It's worth noting that higher energy related input prices are having an impact on our cost structure and so costs for the trading above the guidance range range and inflationary pressures remain a challenge which.
We are actively managing and I'll just point out that a lot of people just roll up inflation, but there is inflation and we managing that and that's easily managed in many cases, but we have the added impact of the.
Geopolitical crisis and conflict in eastern Europe , and other parts of the world with Shaw seriously and in fact impacting on the.
Fuel costs and as a result Ah.
A number of their operations.
Electricity costs.
Our drive to reduce greenhouse gas emissions by at least 30% bought 2030 is also going to go a long way to mitigate the current impact of fuel prices, we have already seen the benefits of these investments and expect further reductions.
The next 12 to 24 months.
This is a solid set of numbers with a strong operating cash flow of $758 million.
Plus the proceeds from ongoing sales of noncore royalty assets.
All our robust balance sheet supports a 15 cent per share dividend made up all the 10 cent base dividend and a five cent.
Performance enhancement.
And in addition to this our $1 billion share buyback program has repurchased $322 million worth of shares to date, that's equivalent to 1% of barrick's issued and outstanding shares at the time of the program that the program was and now instead when you are.
And those together with two year to date, we've returned just started $1.2 billion to shareholders.
And we are on track when you look at the full cost for the rest of the.
That that.
Will exceed a record 1.4 billion dollar return to shareholders of last year.
So there's an extra component in returns with it all.
And to continue to buy back shares when we feel that they've materially, but below the real value and and and.
As you can imagine after today, we are going to be buying back more.
Difficult label.
Sustainability has always remains the cornerstone of barrick's business and again I'd point out we practiced responsible mining logging before E. S. G became the thing.
We've adapted and adopted integrated holistic approach.
Sustainability because it's.
Is it in its current form ESG is skewed.
Towards environmental concerns that they expand solve social and governance, social and and the uplift meant and development of societies in countries that have been left behind by the developed world.
Is a big is as big as global problem, we would argue as climate change and it should in fact be linked to it.
Poverty is particularly a big issue in Africa, which has two about tier one bonds and many of our prospects.
Africa hold 17% of the world's population.
But due to its development mental neglect accounts for only 3% to 4% of global carbon emissions.
Unless the plan is to keep Africa pull up for ever.
Population growth.
And the fast pace of urbanization.
What caused this right to raws and even dramatically Ross.
We have invested heavily in Keane energia to our African operations.
And the Kibali gold mine in the Democratic Republic of Congo is now largely pod by three hydro power stations, which we both there.
And our refurbished fourth station that provides energy to the community.
We are also sponsoring major biodiversity initiatives designed to mitigate the climate change and nature loss risks posed by deforestation in the degradation of habitats.
This risk is very real.
And just for just on that.
Current cost blended cost for the for the last 12 months at Kibali is just under five cents a kilowatt. So it's a it's very much a mitigating investment and our drive to 30% reduction by 2030.
We will therefore continue in real terms amidst the mitigating the increased cost of of hydrocarbon field and every one of you all.
The.
Projects investment projects for cleaner energy.
It's a 15% return hurdle rate so it's a real investment it's not just something to comply.
With.
Regulators.
Last quarter Barrick advanced its investment.
And it's a red plus program surrounding.
All of them on a mine in Zambia and for those who don't know Red classes are you in bagged back framework, which covers the role of conservation.
Sustainable management of forests, and the enhancement of forests carbon stocks in developing countries through so she can now they can buy a diverse city living projects.
In keeping with our holistic approach to sustainability back in quarter three alone also invested $8.7 million in community development.
So these collective sustainability approaches implemented barbaric clean energy <unk>.
Community development and nature based solutions through the Red plus programs will aim to address adjust transition throughout the developing world and.
And we recently starting to started to engage with the Dominican Republic government on another similar Red plus program.
As far as.
Carbon.
Credit score and and again for those of you don't depreciate. It if you want to invest in carbon credit you have to do it in partnership with countries with governments.
Health and safety for our employees and the welfare of the communities around Ahmad mines, all part of our sustainability strategy and we continue to reduce the total recordable injury frequency rate and lost time injury frequency rate at our mines.
But I'm saddened to share with you that our journey to zero harm was marred by a contract a fatality at Pueblo vehicle last quarter.
Certainly any one of these events there are lots of lessons to be learned and and again, we make it a odd job to ensure that those lessons are shared with all our operations across the globe.
With the threat of COVID-19 is still lingering we are continuing to encourage our workforce.
To be vaccinated, and we're proud to <unk> to share with you that 80% of our workforce across the world have been at least partially vaccinated to date.
Yeah.
I'll start with the operational.
Reviewed.
I'll start the operational review as usual in North America, and that Nevada Gold mines Barrick's value Foundation as far as the original objectives of the joint venture are concerned I can safely say.
I shouldn't accomplished.
We have created a hole that is truly greater than the sum of its parts.
From this sound base, Nevada gold mines cannot exploits the wealth of opportunities in the ambit.
And we have recruited a future facing management team, including a new North American regional Chief operating officer, and a new Nevada Gold mines executive managing director to lead the company into its new growth phase.
Yeah.
But back to last quarter, when Nevada gold mines had to deal with some operational issues at.
At Carlin production was impacted by a temporary fall of ground, while Cortez was in the process of transitioning from open pit mining at Potline too.
A new phase at the crossroads pit.
For the fourth quarter call and expect higher open pit grades from Goldstrike Cortez.
Cortez is anticipating the crossroads will also deliver a great improvement.
At Turquoise Ridge the underground operations continued to make good progress. So low production was down due to lower underground grades mined at lower autoclave recovery there.
The mine began commissioning its third shaft and on the back of a change in management, we are starting to get through some of the maintenance and availability challenges that have impacted this age.
Testing facility for some time.
And this slide shows the substantial exploration and expansion targets and their potential to continue to grow the Nevada Gold mines reserve and resource base N.
I N G M is greatly enhanced geological capacity.
Has delivered an optimal balance between the search for a long term standalone deposits, while extending and converting ounces around the existing targets.
At the same time Barrick is also looking for new opportunities elsewhere in Nevada, and North America as a whole.
So let's take.
Great North level is just one example of how Nevada gold mines is increasing its garage footprint.
Doing exploration in producing some of the best.
Intercepts in the history of the call and complex seven for those geologists in this room.
Colin has produced some significant right intercepts with lots more to come in and this target clearly has a multi multi million dollars potential and we get us be sharing a lot of these projects with you at the investor.
Today in two weeks time. So this is just a teaser of what's what's to come into.
In two weeks time.
We then move on to them.
Further south to Latin America.
And the region, where we had to take on many post merger challenges.
We've made enormous progress in minimizing inherited liabilities and maximizing assets with the Pueblo Viejo expansion project in the Dominican Republic.
Shining example of the latter.
This region also includes our Asia Pacific Holdings, where the revival of Paul Wright in Papua New Guinea, and the development of the Ricky <expletive> project in Pakistan, Oh go well for the future.
And the spot.
Dealing with the expansion project, which is designed to extend its life beyond 'twenty 40, with an annual production rate of in excess of 800000 ounces.
Pablo vehicle had posted a stellar set of operating results, increasing production and 15% quarter on quarter.
Construction of the processing plant as part of the expansion is now 70% complete and the environmental and social impact assessment as I indicated in my introduction for the new tailings storage facility.
Has been completed in line with the government's terms of reference, but it has been submitted for approval.
But that's.
Our expectation is that this is going to convert a significant amount of resources already in the measured and indicated category two reserves.
For this month and if essentially as we indicated when we started out.
It's like a new bond it adds you know white paws 2040.
To the life of the mine.
In order to size the.
T. His staff property, which we currently busy we're busy with that pre feasibility study we have been evaluating opportunities within.
And nearby that Pablo vehicle at least with some success.
You can see several new targets that the team has developed and which we all received receiving follow up work with encouraging results.
We cross now too.
To Argentina.
Which continues to be a tough operating environment.
While the government struggles with currency crises and hopper inflation.
Fortunately the sudden one province, which hosts fell out there has been very supportive and the mine now is in much better shape than when we found it.
This is our first winter of operating on the new Leach pad phase six facility. It is separate from the one the old one to five facilities and we are still getting our heads around the G. O Mad 10, Leach dynamics, which we believe have also been exacerbated body.
Avnet normally long winter and freezing.
Freezing all part of the the pads.
In the meantime, construction of the phase seven a leach pad continues to advance and work on seven B will start this quarter.
You also see valid there is long awaited connection to the Chile power grid in the near term.
Our restructured.
Exploration.
Our teams has been progressing targets.
Located across the continent and the region.
And then a quick update on pull Gras.
The new joint venture company has not been incorporated.
And in September in fact, and while there are still some conditions precedent to be fulfilled a path towards a restart is now clearer than when we last spoke at the last quarterly presentation.
And Pakistan.
The definitive agreements for the rig codec joint venture have been finalized and that process has moved to its parent ultimate stage legalization and closing.
The feasibility study update is targeted for 'twenty 'twenty four and production for late 'twenty 'twenty seven into 2020 eight.
Okay.
While always.
Refer to Nevada is barrick's value Foundation.
Africa and Middle East region is most consistent producer of excellence performance on all fronts as well as our rich store of gold and copper growth opportunities.
Barrick status.
As Africa's biggest skull bond is underlined by the Lula gotten caught a complex, which routinely accounts for around 7% of bodies G. D. P.
It's been going strong for 18 years and its continued success in replacing depleted reserves gives it a lease on life of it.
Leased another 10 years at sustained levels of production.
We've made we've been making a substantial investment in clean energy they and the expansion of the solar power plant by an additional 40 megawatts and 36 megawatt battery storage system is at boarder seeing steadily.
This will replace another 23 million liters of heavy fuel.
That's fully commissioned in 'twenty 'twenty four.
When it comes to exploration success the.
The Lula district remains one of our happy hunting grounds with a lot of discovery potential as shown here.
The idea of a deposit which is hosted within its 72 kilometer long mineralized district.
<unk> holds strong potential to add further ounces and the opening of extensions. We are exploring all key to our continuing in the highly successful depletion replacement strategy.
Yeah.
Kibali.
Africa's largest GUL mod.
Produced another steady performance with improved cross.
Costs across all metrics.
Hydro power provides as I said earlier most of the mines energy requirements offsetting the impact of higher diesel prices.
As I pointed out its average energy spend of just four and a half cents per kilowatt hour makes it one of the industry's lowest cost producers.
Luckily you log on Qatar Kibali.
Kibali is on track to meet its 2022 production guidance. Despite the 21 day planned shutdown of the shop to replace the Wanda and in fact, that's been that's about to come up.
I believe we started hoisting lost not so we're busy commissioning the new order as we speak so.
I think that's the day Tom.
Days earlier or two days earlier than what was planned so good job from the team.
Also like Lula.
The barrick's other tier one asset in Africa Kibali has many opportunities.
For reserve growth with the complex hosting many multiple targets.
Our Tanzanian operations.
Or again, a great example of partnership in action.
When we took over north Mara in Bali and Hulu.
Not that I need badly run.
But effectively closed.
And we've said all their legacy issues and the joint venture deal with the government and transform them into new mines capable of a combined annual production in excess of 500000 ounces.
[laughter].
At North Mara strong underground productivity and higher throughput drove an 8% increase in production versus quarter two while it continues to ramp up its open pit operations and Boolean who lose underground mine also continues to ramp up production and we have a new fleet.
And in the mine now which has enabled a step up of the development. While we look to further mitigate this the constraints imposed by the mines narrower ore bodies.
We turn now to our copper operations.
With Laguardia and jumbo side, both delivering stellar results with exciting growth prospects, while at zaldivar produces a consistent performance.
Since 2019, we.
We have extended lemont is lost.
220, 42, and now have a real opportunity to increase its life of mine beyond 'twenty 60.
Our success in drilling out the lube way target has provided the potential for a big pushback needed for the development of a super pet and we've started work on a pre feasibility study.
<unk>, which is scheduled for completion next year.
Yeah.
As you all know very core beliefs is that the best assets.
Managed by the best people.
We will produce the best returns.
I'd, probably add the most consistent and best returns.
Our sustainable dividend framework provides investors with an opportunity for enhance performance based rewards as well as financial flexibility and more importantly in a cyclical business predictability.
For the third quarter as I noted earlier, the 15 cents per share dividend prizes.
And a performance component on an annual and on an annualized basis equates to a peer leading dividend yield.
When you combine this dividend with a share buyback.
It points to a total shareholder return they'll be here today as I said at $1.2 billion.
So I'd say, it's on track two to beat the record $1 4 billion returned all of last year.
Ladies and gentlemen.
In conclusion, we are successfully executing on our strategy of building the world's most valued gold and copper mining company.
Evidenced by these actions.
With the industry's largest portfolio of tier one gold assets.
And many growth opportunities that all within our grasp.
We are confident in our continued ability to deliver on this strategy.
Clearly.
Compelling thesis for creating value.
Thank you for your attention and we'll do the team is here and will be happy to take.
Any questions you might have and I would suggest that we start by.
The people are not.
Claudia that that's good enough for you.
Thanks for that division.
[laughter].
Thank you.
Now begin the question answer session.
To join the question queue you May Press Star then one on your telephone keypad.
You will hear a tone acknowledging your request.
If you are using a speakerphone please pick up your handset before pressing any keys.
To withdraw your question. Please press Star then two.
We will pause for a moment as callers join the queue.
The first question comes from Emily Chang with Goldman Sachs.
Please go ahead.
Good afternoon, Mark and thank you for taking my questions My.
My first one is around polgar out it looks like you've made some progress that with the application of the special mining license in the recent weeks that could you share some color around what the timeline here on out after that lease application is to watch startup and if you've got any color around whether or not that could be included into 2023.
Guidance.
So Emily.
This is Papua New Guinea, and I've learned not to stick my head out to fall when it comes to forecast.
Right now we are planning that start up and at the end of the first quarter. So into April but you know we've got a bit of time this year to get those boxes ticked and that's the that's really the key.
To get that done and we've still got quite a way to go we've got some condition precedent and said we need to deal with.
And then we've got to get the S. M. L. A the new special mining license applied for and deliver that and that's a that's a.
That process, it's there's nothing untoward in that and then it's.
Rarely are the operating agreement is just about complete.
That's the final.
A significant agreement.
And then the critical thing is employment sudden getting re employing people. We've got as we speak at the moment just under 2000 people on site and we are employing but we wont push that bodes out until we get that ASML in place. So then that's the the process.
We have.
We are we've we've drive commission the processing plant we've reviewed all the mobile fleet, we've got new mobile fleet inbound as we speak.
And then we'll start the wet commissioning as soon as we clear as as to the the startup date. So that's where we are in the.
Pet is in pretty good shape there.
Underground is now clear of all the sludge in slurry and so we are in reasonable shape to be able to move.
Moved towards reopening official reopening.
And that should take us.
Somewhere around four to six months to get it up to capacity.
Great. Thanks, that's very clear and just a quick follow up around some of your operations in Africa that are you able to provide any color around what's happening in Mali around the government or any of the mining licenses and if the civil war in the DRC are impacting operations arnell. Thank you.
So in Mali, you know that's an order to it's not a review and we don't have mining licenses in Bali.
They decrease their law you know so there's a confusion you called change the law.
The but it is a audit and we're participating in that the auditors. We know them. They are you know top slot a highly skilled and experienced auditors from that part of West Africa and other mining we're comfortable with that process on the you're talking about.
The conflict narrow the Wanda border and Eastern D. C. That's a very long way.
From Kibali and it has absolutely no impact on our supply routes or operations.
Alright, thank you.
Once again, if you have a question. Please press Star then one.
The next question comes from Lawson Winder with Bank of America Securities.
Please go ahead.
Hi, Mark nice to hear from you and thank you for the update.
I wanted to ask about <unk>.
Rich the unplanned maintenance in.
At the autoclave and lower underground tonnes mined.
So just since the end of the quarter how is the performance.
In Q4 at the underground at <unk>.
And then.
Are there any additional autoclave maintenance maintenance expected or planned for a Q4. Thank you.
Hello, Allison so just to put a draw it's not production from underground.
And as part of the plan and it's not a it's not a it's not our fault. It's that's what happens you get you know as part of the schedule. So.
The issue really is that's driven turquoise ridge, if you remember twin.
Twin creeks turquoise ridge had a joint venture where we.
Twin creeks being then the newmont part of the partnership.
We did toll treating all the turquoise ridge underground ore, which is high grade rip very high grade compared to.
Twin creeks and we the newmont managed to us and they had a 25% share in turquoise ridge.
But they manage debt and preferred the open pit ore first which is low right.
And so there was never any pressure on the sage mol the whole facility.
When we took out of the one of the exciting things and turquoise ridge is the ability to step up the production out of the what we call truck to turquoise Ridge underground.
We did in.
And when we did and and and and the other thing remember the the deal was a hostile deal. So we didn't have a chance to do any due diligence and the the open pit.
Resources at twin creeks, who are lower than what we expected. So we bet that's got a big stockpile at much better grade than the than the so cut 40, you've heard us talk about cut 40, we've delayed that because we just mining ore that we called replace.
The stockpile grades with we still mining a bit of underground.
From twin creeks, but.
The key here is as we ramped up turquoise ridge and it's it's going extremely well the bonding we put pressure we pushed this age more and we kept.
Failing equipment, particularly the some of the valves around the autoclave. So we've had to retrofit retrofit some of these and and it's been going on for a long time and so what we did recently is we brought in some.
Better skills to lead that process to end demand as well so we've changed the whole management on demand and and we've set about a systematic upgrade of the mol and and and again, where we're seeing significant improvements in that in that process. It's just a disciplined than maintenance.
Again, you know we.
We we've.
We've had to work hard at the maintenance of the.
The newmont installations, because you know the the the the new months out of the operations work on diesel on a decline. So there's no pressure on the processing facilities and with the merger we've put pressure on the processing. So we upgrading as you know the call and go.
Inquiry roaster significantly to $100 million upgrade and we've had to really put a lot of focus back into into the sage mode to make sure that we can.
Meet the.
The production that we're targeting coming out of turquoise ridge. So again, it's an operational thing it's.
It's not fatal it's completely manageable it has.
Yeah.
Excuse me impacted on the last.
Half of.
The last six months of operations, but we're pretty comfortable we'll be on top of it as we got into towards the end of the year and again lots of and you know being having followed this industry for so long you can't have every quarter, beating the other and we had a soft quarter this quarter and the.
There are good reasons for it and some of them, we could've done better at as managers.
The good thing is that next quarters definitely gotta be a lot better this quarter and and with it will come you know.
<unk> costs et cetera, so and looking into next year and beyond.
Nevada Gold mines is in very good shape.
Certainly relative to any other goals complex in the world.
Or what was the other question did yours too.
Oh, Yeah I wanted to ask you one more question and thank you for your comments about the outlook for 2023 that would have been my natural follow up. So I also just wanted to ask about your comments around Argentina, and your latest thoughts on whether or not you see any potential for improvement from here based on what you're seeing at.
At both the state and federal level. Thank you.
Argentina is a very frustrating currency country on every aspect you. That's it's got so much going for it and it just the politics is just crazy.
And I'll just give you an example.
If you look at our truck drivers, which are part of a union and and the the regulations behind.
Adjustments salary adjustments.
<unk>.
And the Argentinian managing this process lots of south Africans used to manage sanctions they've introduced.
And artificial exchange rate so.
We've increased.
The last 12 months.
Draw that.
Salaries by 50% in U S dollars.
But the drivers are still earning the same in pesos.
So that's that's how the ads are an unnatural and non market to a exchange rate when it's forced on to you and that's the problem in Argentina. As you are getting you know in forest in.
Our inflation or increase its price increases not really inflation.
Regulations, and and again and the and the and the government is obsessed about protecting dollars, but we make the dollars and that's what we say to the Central Bank Governor you know we make the dollars you should be working with us to get more dollars. They can settle your problems and.
And they've just introduced Eregulation way.
When we make purchases.
We have to we can only pay for the purchases 18 months after they arrive in country.
So it's it's fine for Barrick, because we got a balance sheet between us in Shandong, we can finance that but for sports.
Uh huh.
A smaller mining companies, it's very tough and and it's the same when when we were looking for to keep money offshore where you got to pay dividends and we wanted to get some returns back.
And and and they will give us at 20%.
Retention of the dollars offshore, but we are expected to pre finance the gold sales. So we do that because barrick's got a big trading arm and it's and we make money out of that trade, but again, if you don't have that capacity, it's hard to do business. So I'd say, you know and and we talk.
All the time to the central government and and and they're very accommodating in the conversation, but they just can't get themselves to understand what needs to be done to to unlock the hard currency component until they file their economy in and they've got plenty.
To deliver dollars you know, it's a great tourist.
Attraction, that's got fantastic agriculture, some of the best ones in the World and it's got mining so it should be able to work it out and for some reason.
The fucking Ah boy, there's always struggling to get get catch up with that.
Economics 101.
Does that answer your question.
Yeah, that's perfect and if I could actually sneak in one more question maybe just.
Your comments on M&A activity in the sector you mentioned.
You continue to be on the sharp outlook for opportunities, but they're just not meeting your investment.
Childers can you maybe just refresh us what those investment filters are in and.
Yeah.
How how important you consider M&A to barrick sort of strategy going forward.
So.
You should let me rephrase that because it doesn't seem to be able to get the message across.
The there's a scarcity of high quality assets.
And.
We coined the phrase tier one which has been an.
Adulterated by most <expletive>.
As far as the definition goes and and tier one assets and gold means half a million ounces.
But at least 10 years.
At the latter half of the cost curve.
And a tier one asset.
For a copper project is more than five.
Million tonnes of contained copper.
Or a 30 year life.
And and also at the lower half of the cost curve. That's simple and you do that you make money I can assure you make money and we use we calculate those returns at our long term strategic goal for us So that's what and Theres not many out there and we've.
We've actually there's probably.
And Gold's, probably 12 11 or 12, we've got six of those so you know theres not 22.
And.
So that's the challenge and we've you know you've seen us.
Play are in the in the market on all the sales at the backend of last year. The beginning of this year and walk away from every asset because it doesn't fit.
Our criteria and a lot of those transactions were done that.
I assume prices above what the spot process today and you've got the increase in costs. So you know it's not a healthy situation then and some folk in and Canada seem to think that the only way to grow through M&A and I can tell you that's not the way you grow value for shareholders.
The next question comes from Tanya you can disconnect with Scotiabank.
Please go ahead.
Good morning, everyone or good afternoon, and thank you. So much taking my questions I've got three I've tried to make some quick I'm. The first one is just some Nevada goldmine Mark when we were there at the on the mine tour in September we'd talked about Nevada Gold Mines' Q4, being about a million ounces of production I'm kind of.
For the quarter for Q4, now that we're one month into the quarter, how does that outlook and.
C L T K.
Paul with great in tray pack.
So I'm not sure where you got a million ounces.
I'm not sure Tanya, where you got those million answers from but.
A close not familiar neuron 950.
And ounces.
And we're on track for that this is a Nevada gold mines itself not North America, North America gets close to that yeah, no alcohol nice okay. Thank you for that.
And you talked a little bit about growing your reserves at year end 'twenty 'twenty. Two so first off just wanted to confirm that you know you're thinking about that 1300 dollar gold price up from 12.
And then when you talk about growing your reserves just wanted to go around the world and think about the asset.
Next year from Pueblo Viejo, and having that huge chunk of resources move to reserves. So I guess I don't understand why it's coming from it.
From popular gatehouse.
Louisiana, Inc. Please check we got the permit.
But you're right, let me start with Nevada, we you're right on that it's about 50%.
We'll replace in reserves, but we're growing the resources in Nevada, given its size. It's a cyclical thing. So it takes a while to build up the resources of menu and we showed you those resource growth projects, which will ultimately tranche decision back to our reserves and the reason for that for those who don't.
Follow this closely Lac Lac Tanya is we've got we drilled them out first from surface and we've got a developed to the resources and roll it out from underground. So this cycle is much longer than for instance, South African assets, where we're in Africa, we we we should.
Replace and add about a million ounces Simon.
About a million ounces net increase in reserves, three and a half or so.
It's it's the current production rates on 100% basis, and then there's about a million ounces of additional reserves.
Okay.
Yeah.
No I'm not because he's got to have it on the slide with the detail and then on.
Dominican Republic, we we've always pointed to 9 million ounces of potential conversion on a 100% basis.
And that that more than makes and and and and again, we are still working on the final pit, but we as I said resizing that.
That.
<unk> facility.
And that more than makes up for the rest so theres, some smaller additions and valid era, but it. It covers the 50 <unk> share of 50% that isn't converted in and.
In Nevada, and it's and it covers all of Latam Asia Pacific. So that's that's really the the broadly and we'll give you more detail as Graham says at the Investor day. So.
And then I would add the $1300 again, just to put things in perspective, it's not about $1300. It's about the input cost model, we used to say it long term gold prices and so more or less the.
Inflation and our view of the long term impact on input costs at this stage is it.
Round $100, an ounce and so that's where we are indicating we might land with the new.
Our reserve long term gold price.
And on the copper side.
You know it'll be above 275, and we're busy working on that as well and we use an input cost model two to manage our long term revenues rather than take a guess at the ballpark.
Okay.
From my own understanding so.
When you do talk about the increase in your reserves at year end 2022. It does include the plethora of Yang help conversion from regional insurance carriers that yes exactly.
That's always been the case yet.
And then Mike and I would tell you that you point out that that remember when we when we did the deal D or was that it.
It was a real issue because it hadn't group repaid its capital.
Its original Cavalier paid at over $3 billion to the government and it had more reserves locked up then it had two it could produce I mean, it was we would have stopped some of the mining already this year, so I'm, sorry that that that commitment and partnership.
We've built with both the communities around our mine to be able to establish and sign off publicly on a new facility and the government has significant tenant effectively delivers a new.
Class 800 million.
This is a mine for Barrick.
Oh, no no no I understand.
And just my last question if I could I wanted just to ask about kind of inflationary pressures, you're seeing you mentioned electricity and gas and and you know that you know part of the world when you're operating in.
Our costs are high are you seeing any relief or or maybe not.
I you know the momentum has declined I guess and and and and and the growth of inflationary pressures on labor and consumables.
So I think if it is thought.
There is inflation and then there's input cost increases related to.
The geopolitical situation, which has got nothing to do with inflation, particularly coming out of eastern Europe .
It's more of the.
The cost of energy situation, but theres, others explosives et cetera.
You fix the process of Neurocrine, you take all of that L. A and but then there's inflation, which is a low coming issue and it's a it's a product of.
Excessive.
Quantitative easing and we have a well today that's.
The global death is multiples of.
Global GDP.
Which is an impossible.
Second you rarely have it means ways you know, we just haven't managed and we haven't allowed the see the damage of these.
Financial crises to be.
Labeled through inflation or adjustments currency adjustments and so that that in and again you know just let me remind you. It started last December when the fed said.
Inflation is transitory Linda.
And then in January It said no it's real fashion.
And then last months they said they think it's at an end.
And then it's not going away and today.
Let's talk again people are saying, they're seeing signs of reduction in costs, we are definitely seeing ups and downs in fuel price and gas prices and there's it's got to be very dynamic because right now in southern Africa people. The traders have moved to pricing gas and oil in Europe .
P N rights when it's actually being produced in South America. So it's a very crazy market and that's why Graeme says, we just not forecasting that you say that a couple of times, we will manage it as best we can and we've got contracts and on gas and yeah, we work hard on that and and.
We've upped the pace of investing in renewable energy and we weigh part way down the road on that way ahead of most companies and in achieving that as I touched on some of them and we and the connection into the chilly grid is significant forecasts and validated for instance, because it just takes them.
Way that diesel generation and likewise, Zambia, you know we've done a lot of African countries have renewable energy and the grid, but the grids are unstable. So we've pivoted to investing in grid stabilization technology. So that we can access the grid, whereas just.
No 15 years ago, we were moving off the grid, particularly barrick.
It goes unstable and diesel was attractive, but we've gone we've reversed that trend.
On the on the on the and I'll I'll get Greg to comment on on more on the cost but.
The costs saw the inflation cost we again are contractually. We we we are obsessed about commercial engagement.
We are working with each one of our suppliers through COVID-19.
<unk> increased the number of suppliers and the source of those are consumables. So we have a lot of flexibility. We have we are Bolton competition already we're not.
<unk> reliant on any one particular supply on and our commercial team has done an excellent job in managing those cost pressures and we will continue to do that you want to add.
Is this one.
Hum.
My tenure and I think mark covered most of the key points just to reiterate so as he says the biggest driver of that.
Net inflationary pressure that we're seeing is your energy process or at least half of that higher cost that we're seeing as it relates to energy prices so to the extent that.
You know we have seen diesel gas prices start to come off from the high during the middle of this year and to the extent that that continues we will see some.
Some response from that but you know theres a lot of other inflationary pressures.
On consumables labor other areas, which are you know.
It's not going to go away in a hurry. So so it really just depends a lot on on that energy outlook.
And.
Yeah.
Yeah.
Uh huh.
Finishing off on the labor inflation Theres some.
Well Theres nothing we haven't seen any major out of the ordinary shifting labor costs around the world apart from Argentina.
Argentina, there is of course pressure building in the United States.
Because the United States as an anomaly, it's supposedly the driver of all this inflation, but you're seeing inherent in an embedded dollar inflation, which is just not normal in a situation like this where you've got such a strong stand out currency and its end and in income.
And that's again I think there's there's a lot of damage to.
To the entire sort of balance consumptive and this dust real balance across across the globe, that's going to take some time to to work out what we have seen is that the the supply chains are improving.
And is there more are they starting to operate as the problem during parts of Covid is that there werent operational apart from not being <unk>.
Fishing, so were not operational many of them. So we should have for instance, we bought steel balls from China, then Europe , then China back to Europe .
As we as we try to manage that.
Those supply chains, and we we do a lot of that today and what we have done is both a global purchasing.
Platform, so with multiple suppliers. So we can move around.
Got a we've got a supply chain run by real supply chain executives not re traded marketing people.
And so our supply chain all as much is very efficient in managing these challenges.
Okay, great. Thank you so much I'll pass it down if I could somehow.
Thanks Tonya.
The next question comes from Anita Soni with CIBC World markets.
Please go ahead.
Hi, good morning I.
Just wanted to get an idea that's been you know.
Going forward into two.
2023.
And I think you've addressed it largely and I think well probably stay tuned for your Investor day on November 18th but.
As you look at you know the the production profile going into next year. Obviously, you are going to be closer to the bottom end of the guidance range. If we carry that through into 2020 three a similar kind of sort of performance versus b.
Higher guidance.
I'm not really seeing a material yeah, a big increase in production that would lend itself to a cost turn up the volume a benefit into next year I mean, when you look at costs going into next year, you're over here is it fair to say that you know costs will remain at the at the current levels going into next year or so.
Would you expect some relief.
Yeah.
Anita I look at this.
Like how long is a piece of string.
I think as well.
I know that a policy right now as we stand as will will work on the blended costs fall.
2022 into 2020, three and then play it as it.
As we go but that's so you know we've had a big the bell curve and in 2020, two and we'll use that as a base on which switched a bit we have not.
Our teams have designed cost guidance for the mines looking specifically at each single conceal ought to them and and and we'll share a little bit more with with of that with you and when we talk at the investment day.
And on the Investor Day, just just so I understand what you guys are going to be delivering it will it be the.
Detailed guidance for next year, and something a little less detail for the following years or will it be in short form.
Yeah.
We got it we got to look at we got to update our five year plans on the operations and we got to give you a sort of big picture look at our 10 year plan and will take it up further when we speak to you in February .
Alright, Thank you very much.
And the next question comes from Jackie Principal Lawsky with BMO capital markets.
Please go ahead.
Thanks, very much and good morning. Good afternoon, everyone. My first question I guess would be on the dividend I know you have a pretty specific framework in mind.
And we've seen a small decline in the dividend quarter over quarter because of that framework have you have you got any thoughts about maybe potentially modifying that framework to smooth the dividend.
Going forward or is this something you'd prefer to seize or am I accurate reflection of the current picture.
I'm, just asking I guess, because I mean, we did see your share prices. Our response has been fairly negative today and I'm wondering if that's part of the reason why I'm. So just wondering if you have any thoughts on how you might argue that if you're thinking about it going forward.
So Jackie it's it's.
Try and explain this to you.
So we didn't go out and try and buy our investors on the back of dividends.
At the beginning of the blocks in 2019, we were very clear I wanted to rebuild the balance sheet strength in it and we've we cleaned up $4 $2 billion of debt.
We're in a net cash position.
We grew our dividend every quarter or kept it the same all the way until this last quarter. We brought in this performance dividend as part of our policy and we specifically explained because this is a resource industry and you know there's a confusion about do you invest in your own future.
Or do you keep giving the money away that you need to invest and and and and and we were all organically driven.
And organically driven organization, we look to invest in our future. We don't we don't believe fundamentally that's the only way you can grow is through M&A.
So it's terribly important and the other thing as you know I've been around through these cycles before and I've had plenty of soft quarters.
The good thing about our soft quarters. The next call it is always better.
So but.
The weird going into completely uncharted territory, you've got a very strong yielding type of currency.
As our investors around the world are monetizing their investments they are unsure where it's growing is it a recession all we at sort of risk of a depression and and and we've got more passive money in the public market to market than we've ever had in the.
Ever in the history of of modern day rockets, and we don't know how that passive money is going to react to what we do know is that already the active funds in the resource industry has have dried up.
And in fact, a lot of them have cashed up and they sitting with cash so and they're not sharing it with anyone and they are banging the table demanding dividends and that's an unhealthy situation to have what we can assure you that is all.
Major part of our register understand us they are clear they they they all they all play out about growth they want us to do what we said, we would do and and we don't want to ever get into a situation, where we beholden on the market, we wanted to be able to invest in our own future and and we've got.
A plethora of opportunities we are very well positioned to continue to deliver on our strategy.
<unk> and our copper strategy is working as planned so.
Theres nothing that keeps me awake at not in in Barrick.
That's it.
This is Don.
Yeah, So Jackie just to sort of take take that in and simplified yeah. There's a formula that we put together was very purposefully done two to deliver an additional dividend and at times went out performance measured by available cash resources.
<unk> was strong and but to give people absolute clarity on how that would be calculated so that they have the visibility of that.
And while still maintaining a dividend through the cycle.
As Mark has pointed out this is a cyclical industry and therefore.
You know perpetually increasing dividends is just not a it's not a reality.
Having a formula that is clear and that is linked to that sound like cool and but which is underpinned by our base dividend.
We think it's irresponsible way of moving forward and it was deliberately put in place so that when the market corrected which it has.
Investors would have complete understanding of how that dividend would be determined so.
Answer to your question no we have no intention of changing that formula.
And I think the other thing I mean this is a very.
Yeah.
I find it difficult to follow it we have a mark in the industry.
At 1800 and above dollars people declare dividend policies.
Bob ratios.
<unk> share of cash flows et cetera.
Which we refrain from doing all linked it to the gold price the gold prices down $300.
The cost side of that question is up 100 plus dollars.
And people are still keeping the dividend the same and our resource industry that you're where your revenue as you you've you've lost.
40.
Not quite 30% of your revenue and you're keeping your dividend the same doesn't make sense and you're paying out more than your cash flow. So that's crazy and that's that's what the industry. Some of the fund managers are all looking for I'm, absolutely sure that the investors behind those funds don't want to see that they're in.
<unk> in our business because we're a resource business so that wasn't fully exposure of.
To the metals that we mine so.
And we plan to be absolutely.
Reliable in the way we run our business as we have done.
For the last three years and it's gonna be the site.
That's very clear thanks.
Thanks for that that answer that's that's really helpful and if I could ask as a follow up.
You you've mentioned growth opportunities and I know recognize it's been a big one for you I saw the comment in the MD&A and I know you're still waiting for them for some I guess.
And then to happen on the on this or bureaucratic side in Pakistan before.
Before you can move forward with record date, but is there any any way you can give us sort of a timeframe for when you see that sort of coming together and when you might be able to close that agreement and start restart that feasibility study and in the work that you're planning to do there.
We've we've set ourselves.
The end of the year.
Paul the closure.
It's at the behest of.
One the Supreme.
Supreme Court because you know this is something we believe in we believe in managing risk responsibly and we pass it on through the praises of the country to the Supreme Court for reference once that's done it will go back to Parliament.
Get a certain.
The legislation passed in it and it's an omnibus legislation focussed on the whole industries, which we've negotiated.
And and and and once we've got that we all saw in the documents.
All of the documents I'll say, it's old the old agreement, so I'll say it all they just waiting for that process, but we have in the meantime, we are doing some work.
We've completed the baseline study the environmental baseline study, we need to get that in place because we need a couple of seasons to be able to refresh the 2011.
Environmental permitting because it's timed out and but so we need some and we did that we're in improving the infrastructure with the with the air strip at sought and we started to invest in our education initiatives potable water.
Uh huh.
And where we've certainly done all the remodeling, we can do and designing of the the limited amount of drilling that we play into Geo Tech and so we've done all of that design and we've engaged with the the tendering for the drilling.
The work that we plan to do both water and.
And the confirmation drilling of the of the maiden resources.
And ER and we Gotta do some seismic work. So we also are busy with that final design on the seismic work focused on understanding the aquifers.
We've of course, as you would imagine well down the road on infrastructure and logistics planning and a confirmation and and and designing the way we got to manage our access in and in and out of the.
The the project, we also building a.
The project team, which will be located out of Dubai, initially and ultimately migrate to the to the country, but the in the design side of things. It's it's the most central place its a short flight and they are four plots or we can do quite a which is right next to them on.
And and better we can get all the engineers and experts into Dubai, one flat probably anywhere in the world. So.
That's what that's the sort of.
Preliminary work that we're doing ahead of.
Of any final closure of the <unk>.
Of the agreements.
Thanks, It sounds like next year is going to be super busy there.
Next year is going to be super busy and Barrick as it always is this year was very busy as well.
Absolutely. Thank you very much mark.
Okay.
The next question comes from Cleve Rueckert with UBS.
Please go ahead.
Hey, everybody, Hey, Mark Hi, Graham Thanks for taking our questions here are just a few quick ones hopefully from us.
In terms of the sequential increase in production Mark sorry, if I missed it but did you give us a sense of how much you expect the grades to increase is that is that production increase pretty much all grade and and then I guess with that I'm just trying to figure out how much we could expect costs on a per ounce basis to come down with that.
Increase in production.
You know I think it is a slightly grade improving and and it's also oxides are a bit of an increase in recovery because we use the oh, five, particularly at crossroads and and there will be a drop in and.
And.
And costs the unit cost per ounce costs on the back of an increasing.
Production level and I think that's a good enough, but a guidance Ah at this day I've got compliance setting in front of me sort of giving me faces.
Alright.
It's it's it's great improvement not moving more tons.
They looked at it and and in Nevada, There's always some timing variation, but it's usually when we mining through leasable material then we put it on the leach pads.
That's and that's very important for us because it adds ounces without consuming capacity, but as far as as far as the the the rest is gone the auto claims you know where where process constraints. So the way to change it as his grade and all oxide ore.
Through the oxide moles.
Okay, Alright, that's that's clear and then you know I got to ask just a follow up question on capital allocation. You know look the message about this industry being cyclical has not gone unnoticed. So.
<unk> your approach to it but you did say earlier in the call that you know what with the stock where it is you're going to increase buybacks.
And you know I mean that obviously has an effect on the cash balance and I'm. Just curious you know how you're thinking about it if you've got any feedback from you know from your larger shareholders. Whether you know there's a preference for for for buybacks today or you know kind of allowed to allow the cash balance to build and and let the you know that the dividend do what it does on.
The back of that.
So we manage that all the time.
Yes.
And and and.
And it's not about capital allocation is about returns to Sheila held is and their ability to invest in our growth projects and and so when you look at our adaptation.
Really it's a first we it's it's it's absolutely the right thing to do and you get a share price sitting where it is today to buy it but it's the best use of funds because you know it is clearly no one believed in us and we do and so we've continued to buy on a proper concerted program.
You know every day. So we don't just go and buy a whole pile, we manager the purchase the repurchase plan.
Of course, we have committed to a base dividend, so we manage that and our cash flow, but the the performance dividend is linked to the cash on the balance sheet and that is.
And it's designed that way as Graeme pointed out early because when we invest in our project will drive that cost that cash position down for a period and so we will and we know that we can.
I'll I'll hurdle rates are so high that.
We beat most fund managers growth performance and investing in our own projects and that's what we have full otherwise if the if our investors or the fund managers, who are custodian of Alvarez investors' money feel they can do better than they should sell the stocking and invest that money elsewhere.
But that's a business that's our model and that's why people buy our share now that you know I'm sure that makes sense to you.
That's clear thanks, Mark appreciate it so you had a couple of weeks.
At this time there are no more questions from the conference call.
Okay. Thank you everyone that's it.
We held in this whole now and having very good questions.
Just wanted to drink.
[laughter].
Do you not get out that the Canadians are the questions.
Yeah.
Alright, well. Thank you everyone again for coming are we gonna be outside and so if you have questions that you too shy to ask and then public were above 100% available to answer them, but the whole team as they all got the EXPAREL explore as the the tax guys and the people involved in <unk>.
He has done and and of course the the.
The beanies, the chief beneath as well so.
You'll see outside thanks again, thank you everyone who's been fined and appreciate your time and we look forward to talking to you at our Investor Day, and we're on the road show and so you'll see some of you as we go around the world to to get into.
Into New York in two weeks time such as.
This concludes today's conference call.
Should you have additional questions. Please contact the Barrick Investor Relations Department.
You may now disconnect your lines.
Thank you for participating and have a pleasant day.
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