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Edited Transcript of ABX.TO earnings conference call or presentation 12-Aug-19 3:00pm GMT

Q2 2019 Barrick Gold Corp Earnings Call

Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Barrick Gold Corp earnings conference call or presentation Monday, August 12, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Catherine P. Raw

Barrick Gold Corporation - COO of North America

* Dennis Mark Bristow

Barrick Gold Corporation - President, CEO & Director

* Graham Patrick Shuttleworth

Barrick Gold Corporation - Senior EVP & CFO

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Conference Call Participants

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* Danielle Chigumira

Macquarie Research - Analyst

* Greg Barnes

TD Securities Equity Research - MD and Head of Mining Research

* Howard Flinker;Flinker & Co.;Analyst

* Tanya M. Jakusconek

Scotiabank Global Banking and Markets, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2019 Second Quarter Results Conference Call. (Operator Instructions) As a reminder this conference call is being recorded and a replay will be available on Barrick's website later today, August 12, 2019.

I would now like to turn the conference over to Mark Bristow, Chief Executive Officer to Barrick. Please go ahead.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [2]

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So it's been 6 months since the big merger. Lots of people had lots of views about how it would work or wouldn't work. And it's been a fun 6 months. And today, I plan to share with you the enormous progress that our teams have made in building that business that we had envisaged. And that is really just to remind you, am I -- oh, good. Thanks. And to remind you that what we had in mind is a business that would create value for the mining industry. We wanted to be the most valued mining company in the gold space initially and ultimately in the resource space.

We've rationalized the corporate structure; assembled a new team or teams who are committed to and capable of achieving our ambitious goals; established 3 regions for the effective management of our global portfolio to bring that sort of Randgold agility into this new company; and aligned operational managements with our core vision, and that is delivering the best returns by combining the best assets with the best people.

But that's not all. In addition to settling down the new Barrick, we delivered the Nevada joint venture, the world's largest gold production complex in its richest gold field, and founded solution for the seemingly intractable situation in Tanzania through our in-principle agreement with the government and a buyout bid for Acacia. That's a lot of boxes ticked. And on top of that, we're making our first half year with another strong set of results, as I'll show you in this presentation, while continuing to cut unnecessary G&A costs.

This is the cautionary statement, which, unless you're a speed reader, is also duplicated in your pack. So you can -- for those slow readers, you can read it on your own time.

I'll start as usual with a look at our sustainability scorecard. From an already strong baseline, we are setting new targets to improve our safety, occupational health, environmental management, human rights and community development performance.

On the health and safety front, the group reduced both its lost time and total recordable injury rates during the quarter. In Africa, we're working with the authorities to contain the latest outbreak of Ebola in the DRC and stepping up our continued fight against malaria, the continent's deadliest killer.

There were no major environmental incidents during the quarter, and a survey of our tailing storage facilities confirmed that we were proactively managing that risk. For those who are interested, you can see the full report we filed in response to the Church of England request on our website. A number of our operations received positive results from the external ISO 14001 orders. And very importantly, Veladero has been recertified without qualifications. The Malian government has given the go-ahead for a groundbreaking solar power project at Loulo-Gounkoto, part of an energy efficiency drive, and our water usage continues to improve.

Our consolidated sustainability report for 2018 was also published today, and you can find this very detailed account of our performance and our plans on the website. We're proud of what we have achieved so far, but also we are under no illusion about the scale of the work that still has to be done or the specific social and environmental issues that's still need to be resolved.

Turning now to the past quarter and its highlights. I'm pleased to report that the results point to an annual production at the top end of our guidance range and the cost metrics at the lower end of the range. After payment of the quarter 1 dividend, debt net of cash remained unchanged, and the dividend has been maintained at the same level as quarter 2. Adjusted earnings of $0.09 per share are in line with the market consensus. Operationally, it was a strong performance across the board with Veladero, Loulo-Gounkoto and Kibali leading the pack.

Pueblo Viejo's exciting expansion project progressed, and the plant prefeasibility is scheduled for completion by the end of the year. On the exploration front, drilling at Fourmile returned this project's best-ever intersections while Loulo-Gounkoto and Kibali continued to confirm their brownfields' expansion potential.

Hard work on the set off of the joint venture during the quarter enabled Nevada Gold Mines to sprint out of the starting blocks on July 1. And the new business is likely to impact positively on Barrick's production profile for the year. I should mention that I've just returned from a tour of the group's operations, and all our management teams are making good and steady progress with the Nevada team doing particularly well given the short time that they have been together. This is in large part due to the planning and work that has gone into ensuring the business was ready for launch at the get-go.

This is a snapshot of our group's operating results, which built on the solid base established in quarter 1 and set up -- sets us up very well for a good finish to the whole year, 6 months ahead. And these are the numbers which speak for themselves. And since the end of the second quarter, we've repurchased $248 million of outstanding bonds due in 2020, ticking another box with respect to cleaning up the balance sheet. And this will not only reduce our debt, but it also reduces our interest payments. And we will continue to chisel away at our -- at the remaining debt, as we promised when we announced the transaction.

We'll start the operating -- operations report with an overview at Cortez in Nevada. As you know, since the end of the quarter, our Nevada mines have become part of the new joint venture. So going forward, we'll be reporting our attributable share of production from those operations.

Production at Cortez was up 7% on the previous quarter mainly as a result of mining more oxide ore from underground and higher throughput rates. The Deep South project continues to progress and is scheduled to start contributing to production next year. Guidance for the full year on a 100% basis is expected to be at the top end of our range that we shared with you in January. However, on an attributable basis, we have decreased our guidance, as you'll see in our handouts, to align with our 61.5% equity share in the new joint venture from July 1.

Goldstrike, as you see, had a difficult quarter, and production was down 22% due to persistent challenges in processing the high-ash-content stockpile, which resulted in lower autoclave recoveries. Roaster production was also down as less underground ore was available for processing, but as you saw in the previous slide, this was made up by more ore fed to the roaster from Cortez.

Goldstrike has now been combined with the Newmont Goldcorp’s Carlin. As a result, we expect to be able to exit some additional feed for the autoclaves and improve the production out of mill 5 and mill 6, an immediate synergy benefit that we promised you when we announced that Nevada -- the Nevada joint venture. Consequently, it is expected, as a complex, to outperform in the second half. And therefore, we have increased our attributable share of the gold production guidance range for the full year compared to what we guided at the beginning of the year. The combined Carlin-Goldstrike complex will be known as the Carlin Mine going forward.

Production at Turquoise Ridge also lagged that of the previous quarter mainly as a result of unplanned downtime caused by shaft, power and dewatering issues. Construction of the mine's third shaft continued to advance, however, on schedule and within budget. And the combined -- combination of Turquoise Ridge and Newmont's Goldcorp's Twin Creeks as part of Nevada Gold Mines is expected to have a significantly positive impact on our full year production and costs. And as a result, the guidance range for our share of production has been materially robust upwardly. The adjustment is driven by the fact that we are forecasting to increase the amount of higher-grade Turquoise Ridge ore to be processed given that we no longer are constrained by the previous Toll Milling Agreement.

When we announced Randgold-Barrick merger, we pointed to 2 tier 1 assets in Nevada with the potential to create 2 more. The combination of Twin Creeks and Turquoise Ridge delivered that third tier 1 asset with the fourth potentially in the making at Goldrush. Just out of interest, Nevada Gold Mines now boast 12 open-pit mines and 10 underground mines with proven and probable reserves of more than 48 million ounces. As I noted earlier, as a gold mining complex, it's the largest of its kind in the world, and it is set to deliver giant-size value creation initially in the form of significant synergies, which we pointed to at the timing of finalizing the joint venture with Newmont Goldcorp. We have increased the attributable production guidance range to between 2.1 million and 2.3 million ounces for the full year from 2 million to 2.2 million ounces at the lower end of the cost range.

One month since its official launch and having just come from spending nearly 1 week working with the Nevada management teams, I remain excited about their prospects. I can confirm that already the team is optimizing the ore routing, as shown here. And this is just for the Goldstrike column complex, as shown in this slide, with more to come as we rationalize the roaster feed with the best ore resources. And you would have seen that we are maintaining our guidance of between $450 million and $500 million in synergies over the next 5 years. And we're already about halfway of that $500 million on an annualized basis as we sit today.

Still in Nevada, Goldrush and Fourmile are showing real potential with Goldrush on track to deliver a full feasibility study early in 2021, and first ore is expected later in that year or very early in 2022. Drilling continues to close the gap between the 2 orebodies. As you know, Fourmile was kept out of the Nevada joint venture, but we have the right to add it back in once we've determined its value and completed the feasibility study that supports the required investment thresholds. Drilling this part, Cortez returned some eye-watering intersections with best-ever grades that we've achieved in that Fourmile-Goldrush complex, as you can see here. And I've got no doubt that this deposit will continue to grow both in size and in value.

We move now to Canada where Hemlo continues to perform consistently to budget and is on track to achieve its annual production targets. Hemlo's tailing storage facility achieved a critical milestone last quarter with the go-ahead from both local First Nations for the expansion of the tailings facility. The team has also made significant progress with getting to grips with the geology and associated brownfields exploration as well as reviewing the mining methods and reoptimizing the plants against proper geological models. We are encouraged by the progress and believe there's real potential to increase the life-of-mine and take this operation to tier 2 status. Just a reminder, that's 10 years at about 250,000 ounces a year. So already now, when we've done the deal, Hemlo was one of those assets which everyone had a different view on. But definitely, our geologists have now got the hit around that -- the upside. And our mining team has worked with the mine management team, and Hemlo is looking a lot better than it was when we first started.

Pueblo Viejo experienced a slower quarter with production down in the back of lower feed grade and a total plant shutdown and autoclave maintenance. However, the operation is still planning to achieve guidance for the year. As with the rest of the legacy Barrick portfolio, in our Latin American region, mineral resource managers have now been appointed at all the mines, which are progressing towards full accountability for their own geological models and estimates. There's still a lot of work to be done, but the benefits of the new geological focus are expected to start flowing through in the second half of the year, beginning specifically at Pueblo Viejo in the Dominican Republic. We now have new geological models there and are revising the reserve and resource estimates based on these and revised mine plans, including the mine expansion project.

Next to the Nevada opportunities. PV offers what is probably our most exciting expansion project. The estimated initial capital cost of extending the mine's processing plant and tailings capacity will exceed $1 billion, but with the potential of converting 8 million ounces of measured and indicated resources immediately to reserves. This should extend the life-of-mine well beyond 2030. We are forecasting to complete this feasibility study in 2020, next year. The project specifically is expected to deliver annual production of around 80 -- 800,000 ounces from 2022 and in the lower half of the industry's cost range. Based on the work done so far, we remain bullish on the potential to add further targets for evaluation. And so this is a textbook example of what improved geological modeling and ore control can do for a mine whose tier 1 status was coming into question.

Moving now to Argentina. Work to reclaim Veladero's full potential produced a solid set of results for quarter 2 with production up by 7% and cost per ounce down by 5%. It is also on target to achieve annual guidance, and the focus is now on adding them to the mine's resources and reserve base and lowering the cost, thereby, extending its life-of-mine and returning it to tier 1 status. In addition, the team has done an excellent job in rehabilitating the mine's social license by improving relationships with the local community as well as the provincial and national governments. And also, 96 tonnes of mercury was safely removed from site during the quarter. Since the beginning of the year, we've renewed our commitment to South America. We've had a new regional exploration strategy and plan to invest $30 million in exploration in Argentina alone. Barrick holds a highly prospective land package along the El Indio belt, which spans Argentina, Chile and Peru, as you can see, on this slide. And in addition to hunting for new discoveries there, we already identified the possibility of extending Veladero's life-of-mine. At Pascua-Lama, we are reviewing the project's original parameters and defining its future potential.

Now to Papua New Guinea where Porgera certainly has the potential to achieve tier 1 mine status, albeit in a tough neighborhood. This month, we made some progress in securing its future by getting a court approval to continue operating while our application to extend the special mining lease due to expire on August 16 is being considered. There is significant potential to double Porgera's life-of-mine currently standing at around 10 years. Porgera is a major contributor to the country's economy, and we are working hard to establish the kind of partnership with the government and the rest of the local stakeholders that has worked so well for us in other challenging jurisdictions.

Now over to Africa. The tier 1 Loulo-Gounkoto complex has delivered its usual solid performance, increasing production by 15% and continuing to replace the depleted ounces through brownfields exploration at a rate that supports its 10-year operating plan. As I mentioned earlier, the installation of the group's first 20-megawatt solar power plant is currently underway at Loulo. And staying in Mali, I'm happy to say that the mediation of our long-standing tax dispute with the government is making progress and a satisfactory outcome, I believe, could be in sight.

In addition to replacing reserves, our exploration teams are also looking for new tier 1 discoveries in the Loulo district. We dominate the highly prospective Senegal-Malian share zone across the Senegal-Mali border. And as you can see here, we have multiple targets along the 70 kilometers of struck we control. Also in Senegal, we have completed the feasibility study on the Massawa project and are now on the licensing and permitting process. Massawa is a valuable asset, and we are carefully considering how best to bring that value to account.

And in the Democratic Republic of the Congo, Kibali had another strong quarter, increasing production and reducing costs and remains on track to meet or even beat its annual guidance. Ongoing brownfields exploration points to continued replacement of gold depletion, and multiple opportunities within the main KCD orebody indicate that Kibali will continue to maintain its tier 1 status into the future.

We are excited about the potential for further tier 1 discoveries from the Congolese Craton, which, by the way, also extends down to Tanzania and hosts the Acacia assets. As you will have seen, the Acacia Board has now supported our offer to acquire the Acacia minority shareholder interest, following which, we'll integrate the company's assets into the Barrick portfolio. Acacia's troubled history includes a long standoff with the Tanzanian government, which has now accepted the resolution, agreed in principle between our Executive Chairman, John Thornton, and the country's President. Once we have the control of the Acacia assets, we'll have a lot of work to do to sort out the operations and rebuild in-country relationships, and of course, most importantly, the license to operate.

This, in summary, is where we are with the transaction to acquire the minority shares in Acacia and bring it back into Barrick along with the expected time line to closure of the transaction. We expect to issue just less than $25 million new Barrick shares to buy out the minority shareholders.

And this is a snapshot of our other gold mines. Kalgoorlie, operated by Newmont Goldcorp, is the only asset in our portfolio which could be performing better. Whilst it continues to be a valuable asset, we are moving down the road of selling our 50% stake in this archon of gold mining. Given we are not the operators, it does not fit with our falters as we do not want to be passive investors in assets that we own. Tongon had another solid operating quarter. With only 3 years left, we're exploring the potential for expanding its existing reserve significantly through ongoing regional exploration.

And as for our copper mines, all delivered credible results on the back of improved efficiencies and costs despite lower metal process. Some -- initial operational issues early in the quarter at Lumwana were successfully addressed in June.

Investors have asked me for a complete overview of global operations and the regional contributions to the group's production and how it is. And as you can see, our total attributable production forecast for 2019 remains unchanged, albeit at halfway, we are targeting to be at the upper end of the production range and the lower end of the cost ranges. As promised, we will be in a position to share our 5-year plans for our key operations with you when we present the Q3 results in early November.

And as I alluded to earlier, another box we have ticked is our goal to streamline the corporate oversight of the group and reduce unnecessary G&A costs. This slide shows the real progress we have made on this front with corporate administration charges for quarter 2 net of severance costs now at approximately $50 million and in line with our guidance for 2019.

Creating value, as I've said many times before, is all about being sustainably profitable. And to do that, as a gold miner, one has to invest in profitable production as well as replacing the gold we mine. We, as an industry, as you all know, have not done this very well. And as a result, the outlook of new global gold production is now declining. Our Barrick vision and the rationale behind our recent merger initiatives is to control the majority of the industry's tier 1 assets and to be present in the most prospective jurisdictions and, of course, be able to operate there successfully. We now have 6 tier 1 assets and a further 2 potential tier 1 assets in the making, which sets us apart from the rest of the industry. With the best assets and combining them with the best people, we are very confident we will deliver industry-leading value and buck the trend that you see here.

I hope you will recognize that we've achieved a great deal in the first half of the year to deliver on our vision. I believe this is largely attributable to the successful application of Randgold's business model to the new Barrick's global scale, something many observers thought could not be done. Of course, the 2 businesses were always a great fit, but the merger would not have been effective so smoothly and delivered on its promises so fully had it not been for 2 years of careful conceptualizing, a thorough due diligence and detailed preparation for a new business directed by a clear strategy and managed by very capable and integrated team with a shared vision. I believe we have already established Barrick as a business with a distinctive brand. One that is synonymous with value creation and stands for sharing that value with all stakeholders. Does the market also see us that way? I'll let Barrick's share price performance since the merger answer that question. Do we have more to do and deliver on? Absolutely. I can confirm this is just the beginning, and there are more exciting opportunities out there, and we plan to make the best from them.

Thank you, ladies and gentlemen, for your attention. And at this point, we'd be delighted to take questions. And I believe we're going to start with those that have dialed in and then come back to this audience, if that's okay by you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) There are no questions at this time.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [2]

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Okay. Thank you. So let's open it to you, guys, here.

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Catherine P. Raw, Barrick Gold Corporation - COO of North America [3]

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(Operator Instructions)

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Greg Barnes, TD Securities Equity Research - MD and Head of Mining Research [4]

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It's Greg Barnes with TD. Just want to ask about Pueblo Viejo and the comment in the MD&A about the unconstrained TMS at liberating...

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [5]

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Unconstrained?

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Greg Barnes, TD Securities Equity Research - MD and Head of Mining Research [6]

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Yes.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [7]

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Unconstrained what?

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Greg Barnes, TD Securities Equity Research - MD and Head of Mining Research [8]

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TMS, tailings management...

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [9]

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Okay. So tailings -- TSF.

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Greg Barnes, TD Securities Equity Research - MD and Head of Mining Research [10]

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TSF, okay. Sorry. TSF. So I'm just curious what that means. I know tailing storage there has been an issue.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [11]

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Yes. We've got 4 sites of potential tailing storage capacity, and we're busy working through that. We've engaged with the government on that evaluation. And during the process of the feasibility study, we will select one of those sites once we've done all the geotech work, which is the most important, and also looked at ownership and the relocation action plan options and so on. And the important thing is that once we've selected that footprint and we get the application settle, it will bring -- it unlocks an enormous amount of reserves and resources. I'll rephrase it, unlocks an enormous amount of measured and indicated resources. As I indicated, the initial estimate is about 11 million ounces immediately because they drilled out to that level. And that's the only thing that's keeping them in resources is that we can't actually process them without a tailings facility. So that's the one aspect.

The other was -- is the mine was always going to have to cope with much lower grades as it mines out the -- the more it put, for example. And so the way to do it is how do you keep the production rate up at 800,000 to 1 million ounces and manage the cost? And the concept initially was to concentrate some of the lower grades into a concentrate and then leach -- water leach some of the higher sulfide material to reduce the energy component of their feed and merge them in with the main high-grade feed into the autoclave with a balanced energy component. And thereby, you want to effectively do because of the concentrate is that you can produce more gold because your front-end processing is high volume, but then when you get to the autoclave, it's concentrated.

After the merger, what we looked at is much more aggressive reduction in volume and the ability to float all of the material other than the high-grade feed, which doesn't need concentration, and then partially oxidize the sulfide through ultrafine grinding and tank leakage -- tank leaching. And that -- we have proof of concept of that sort of scale both at Tongon and in Kibali. In Tongon, we do partially oxidize the sulfide in the ultrafine grind. And if you put it into tankage, you can do that quite rapidly and under a very controlled environment. And so now what you've got is the optimal throughput, looks like 14 million tonnes but still feeding that 8-million- to 9-million-tonne autoclave capacity. And so you keep the throughput up, you drop the whole mining costs, and the overall operating cost is still in the bottom half of the industry cost curve. And of course -- and the indications are that we should be able to deliver production to -- right into the 20, 40s on that basis. And so it's important for us to have a tailing storage facility that has the capacity to expand into that life-of-mine plan.

So that's what we've been working with, with the government. PV is a very significant contributor to Dominican Republic corporate tax. More than 23% of all corporate taxes is paid by PV. It's a very profitable business, paid a lot of tax, employs a lot of people. And so we've worked with the -- both the federal government, central government and the provincial government and all other stakeholders to get everyone aligned on how important this asset is.

And the other thing I don't think a lot of people understand is that, Barrick, in acquiring the Placer Dome PV right at the beginning, also took on a lot of commitment to rehabilitate old mining liabilities from the previous owners of that region. And again, it's made an excellent job in doing so. And we've still got work to do, but I think that's -- all that is important to the government as is the direct investment.

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Greg Barnes, TD Securities Equity Research - MD and Head of Mining Research [12]

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Some of the new locations for the new TSF off your current property and you have to...

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [13]

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Yes. They're adjacent to and inclusive of the edges of the agreed license.

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Tanya M. Jakusconek, Scotiabank Global Banking and Markets, Research Division - Analyst [14]

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Tanya Jakusconek, Scotiabank. Mark, can I ask about -- you mentioned that you're renewing reserves and resources at various mine sites. So will we have that information when you put out your 5-year guidance? And maybe just talk about how you're approaching reserve. The 2 companies have very different approaches to that.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [15]

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So we haven't finalized exactly how we're going to do it. Our reserves will be shared with you, as normal in the annual report next year as we normally do. At this stage, if I were to -- so Africa is still running at a $1,000 gold price in the -- and the debate is do we change that? In the rest of the business, $1,200 is the number. We're using our long-term $1,200 gold price. And we've undertaken that by the end of the year, we will have tested all the assets and their risk because it's -- you know this, it's oversimplifying things to just say use the gold price because many times you can -- depending on the orebody, you can run a $1,200 whittle, and it works in $1,000 and makes money. So that's what we've been doing with the Nevada mines, particularly.

But given the outlook on world gold supply and where the gold price is, the industry is not profitable at $1,200. So that might well be our final number, but we've still got some work to do, right, as we're working through -- and the other thing, you can't just take those big Nevada mines and say, "Well, we're just going to run them at $1,000." They've got to be redesigned. So part of this optimization, orebody modeling programs we've got is all about testing that opportunity, along with, for instance, Turquoise Ridge is already -- its kind of grade is already down at 6.6 because of -- we've taken out the processing charge to be able to drop that. And our intention is to go down to sort of 5.5, 5.75, around there. That's the optimum cutoff grade as we see it today in Turquoise Ridge. And so we've got quite a lot of work streams running at the moment. But it won't be more than $1,200, I guess, is my guidance.

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Tanya M. Jakusconek, Scotiabank Global Banking and Markets, Research Division - Analyst [16]

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And you have enough information at that point, then you can share with us...

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Graham Patrick Shuttleworth, Barrick Gold Corporation - Senior EVP & CFO [17]

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Yes. Yes, yes. We've got enough information today. We've got a good handle on what it looks like. I can tell you know that if you move from 9, which we were, cut off in Turquoise Ridge to 5.5 is about 3.5 million ounces unlocked just on that movement. And there's a lot more work to be done. Veladero has got some work to be done. Again, when we got -- looked at Veladero, the first half with Mark's team, we didn't even really know what we are putting on the heap leach. Now we do. And we know what's coming. Now the other thing is how much more can we drill out of the current pit shell. That's 4 corners out. It's -- I can't tell you in Spanish, but the English translation is the Four Corners project, which is really looking for -- to the deep extensions of the pit at Veladero and the opportunity to add life. And it's got to be somewhere between 0.5 million and 2 million ounces potentially to add to that. Now that would be very significant for Veladero. And then we've got the others satellite, nearby satellite assets.

And of course, the Pascua-Lama review is -- could well -- and -- because we're agnostic where it goes. And some of those Lama assets might be best served to process them at Veladero. So we've got our complete relook both Veladero as of JV, and then what we can add to it and then what it looks like maybe in Pascua-Lama or maybe Pascua on its own and Lama more associated with Veladero. So all those aspects we're looking at.

Porgera, I think, again, we've got the drill rigs. We're drilling already. We're very excited about the potential there. PV, you've seen the benefit of geology. We've redone -- we've remapped and relogged every single bore whole. So a lot of our exploration team spent the last 6 months in the mines catching up the geology. They're now just starting to migrate back into sort of more greenfield focus. Same with Goldrush-Fourmile, again, we've now got the structure right under Rod Quick's guidance. And Rob Krcmarov and his exploration team are now -- the Fourmile work is going to be wider spacing, getting the framework together for Fourmile. And then Rob and his team are going to go out to try to find the next one. And Rod Quick and the MRM feasibility team will then drill it out to feasibility. So we've got all those work streams going, and we've got a good handle on our life-of-mine framework. Some still needs a bit of drilling to bank. But we will do like we did in Randgold. We will show you the bank reserves. We will show you the inventory and how it fits in with the life-of-mine plans. And then we'll be able to work with you as we complete the testing of the sort of blue-sky inventory going forward. So -- and I'm pretty sure we'll start with a 5-year plan because, as you can see here, I'm getting nervous here in front of you.

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Tanya M. Jakusconek, Scotiabank Global Banking and Markets, Research Division - Analyst [18]

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And when we say the 5-year plan, we're meaning the Barrick, 5 years and the Nevada joint venture, 5 years. Everything really?

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [19]

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Nevada joint venture is called Nevada Gold Mines, which consolidate into Barrick. It's Barrick.

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Tanya M. Jakusconek, Scotiabank Global Banking and Markets, Research Division - Analyst [20]

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Okay. Okay. So all of that.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [21]

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All of that.

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Tanya M. Jakusconek, Scotiabank Global Banking and Markets, Research Division - Analyst [22]

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And then if I can ask one more question. Just on North Mara on the tailings, we saw this morning that we got the export permit to export gold, but what about the tailings disposal and...

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [23]

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Okay. So that's important for you to know that the miners got the ability to ship the gold because of the stock. But it still can't operate because it can't use the tailings dam. And so our team have been up there to meet with the environmental ministry as well as the other related ministries, mines ministry and so on. We are running a coordination committee on a weekly basis with the Acacia team just to make sure that we are moving forward because, as I've pointed out many times, there's a -- the government of Tanzania has been very consistent in managing this and it had nothing to do with the negotiation. It's their view of poor performance. And we've -- and so we've studied the North Mara dam. We have a plan. We've shared it with government. We believe it's both responsible, and it will mitigate the issues that they have with their tailings dam. And the key thing is to get water off the dam as quickly as possible, and then in the longer term to build a new dam. So we believe that we'll get that properly done once we get to -- over the vote and the final consolidation of those assets, we should be in a position to start stocking things up. If we don't manage to convince people to stock them up before then. And the same goes with Buly.

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Catherine P. Raw, Barrick Gold Corporation - COO of North America [24]

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Okay. Any more questions?

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [25]

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Okay. The team's here. So we've got Mark from Lat Am is here. He leads the Lat Am team. We've got [Bennies] and a couple of people from our corporate executive team. So welcome to Part 3. Unfortunately, it's just tea and coffee. Traditionally, in Randgold, there used to be wine and champagne. But we have to understand, get a -- make a license if we wanted to do that, which is quite hard. So join us.

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Catherine P. Raw, Barrick Gold Corporation - COO of North America [26]

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Sorry, Mark. There's 2 questions on the call. Thank you.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [27]

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Okay.

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Operator [28]

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(Operator Instructions) Our first question comes from Danielle Chigumira with Macquarie.

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Danielle Chigumira, Macquarie Research - Analyst [29]

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Perhaps, a predictable question from me. Given the speed at which you're already achieving the planned synergies at the Nevada JV, do you have any idea on the quantum or -- of potential upside for synergies? Or when you would get some visibility on how much larger the synergies could be?

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [30]

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So Danielle, if you see our announcement today, we are reinforcing $450 million to $500 million in synergies. And we are at about -- we announced that we could see in the short term about $240 million on an annualized basis already identified and have been affected. We have rearranged the pie chart in the presentation you'll see today because there's got to be swings and roundabout, a little bit more here and a little bit less there. But overall, in the guidance, we're showing that we can see above the $480 million that we originally identified right in the beginning of the engagement with Newmont at the time.

So we're very comfortable about that. We're already getting those benefits. Of course, some of them are hidden in some of the underperformance of the operation, also the fact that Newmont hadn't read -- although they had guided the markets on the collapse of gold quarry pit and the cessation of operations at mill 5. Now that's a benefit because we're not going to switch off mill 5. So that is a genuine synergy, which would have materialized in Newmont's hands, as an example. So they lost a little stuff. But as I said in the presentation, the ones that we're already delivering on are the picture I showed you on ore arrangements. And that's both the autoclave at Goldstrike and the roaster are receiving ore from Barrick and Newmont, which were not in the mine plans or very far out in the mine plans. So we brought them forward. And then it's the Turquoise Ridge-Twin Creeks immediate benefits, which are significant. And then we've already got things with -- on consumables. We renegotiated most of the major bulk consumables contracts, which have reduced the pricing. And we are looking to about $110 million of procurement and logistics benefits in that $480 million. And we're well down the road on that.

So we're in good shape and got no reason to change that guidance. And it'll wash out after a while because there's been costs, transaction costs, retrenchment costs and other stuff. But right now, I think we're pretty much settled with that.

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Operator [31]

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Our next question is from Howard Flinker with Flinker & Co.

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Howard Flinker;Flinker & Co.;Analyst, [32]

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I have 2 questions. One, I read the other day that a company in Senegal was assessed taxes and had no opportunity to appeal. Is your tax circumstance the same? Or did you copy your contract from Mali when you first went into Senegal? That's my first question.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [33]

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So I don't know the company you're talking about. Do you, Graham?

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Graham Patrick Shuttleworth, Barrick Gold Corporation - Senior EVP & CFO [34]

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So that's news to me...

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Howard Flinker;Flinker & Co.;Analyst, [35]

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Teranga Gold. I was astonished to read what I did. They just had to pay it. They could not appeal. They could not protest, nothing. Just fork over the money. Thank you very much.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [36]

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Oh, well. If you want to have that discussion, rather have it with Mr. Young.

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Howard Flinker;Flinker & Co.;Analyst, [37]

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But I'm asking you this...

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [38]

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We have a stability clause in our investment convention.

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Howard Flinker;Flinker & Co.;Analyst, [39]

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You do. You do.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [40]

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We have a stability clause in our investment convention, and we're pretty comfortable with the way things operate in Senegal.

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Howard Flinker;Flinker & Co.;Analyst, [41]

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I suspected so, but I wanted to clarify that. And second, do you have any thoughts about Argentina? Their currency devalued 25% this morning.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [42]

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So we operate in emerging markets, things go up and down, not necessarily in that order. I think in Argentina for us is a place -- certainly, we had a town hall there the other day with the Governor of San Juan province, and we see a real commitment to mining. He quite to me said, San Juan is a mining province. It's all about mining responsibly. But it's not a province that can live without mining. And again, we are actively exploring in Argentina, both down the El Indio trend in the form of -- we've got a very big target, similar to Veladero, slightly lower grade at this stage, which combines Alturas in Chile with Rojo Grande or Del Carmen in Argentina. And it's a very exciting project, very large, which we're exploring. And we've also moved further down the Andean trend, and we're looking at new opportunities. We have a full, dedicated exploration team. We've just moved one of our geologists to -- from PV down to lead the -- do -- be the exploration manager in Argentina. So yes, we're very committed, long-term investors in Argentina.

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Operator [43]

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There are no more registered questions from the conference call.

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Dennis Mark Bristow, Barrick Gold Corporation - President, CEO & Director [44]

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All right. Thank you very much, everyone. You're welcome to join us for some tea and cookies.

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Operator [45]

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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.