Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2018 third quarter results conference call. During the presentation, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. At that time, if you have a question, please press star followed by one on your telephone keypad. At any time during the conference, should you need operator assistance, please press star zero. As a reminder, this conference call is being recorded, and a replay will be available on Barrick's website tonight, October 25th, 2018. I would now like to turn the conference over to Catherine Raw, Chief Financial Officer. Please go ahead.
Thank you. Morning, and thank you for joining us. Before we begin, I'd like to highlight that during this presentation, we'll be making forward-looking statements per the slide on the screen. This slide includes a summary of the significant risks and factors that could affect Barrick's future performance and our ability to deliver on these forward-looking statements. A review of our most recent AIF will provide you with a more complete discussion. I'm here today with our Executive Chairman, John Thornton, and Senior Vice President of Operational and Technical Excellence, Greg Walker, our General Manager of Turquoise Ridge, Ari Gonin, the CEO of Barrick Nevada, Bill MacNevin, and our Executive Vice President of Exploration and Growth, Rob Krcmarov. As per usual, our other general managers and members of the Barrick team will also be available for questions following the formal portion of the call.
Both gold and copper production and costs improved in the third quarter, and our operations generated significantly higher cash flow and free cash flow compared to Q2. We're on track to meet our gold and copper guidance production, as well as our cost guidance for the year, albeit our production will be on the lower end of that 4.5 million-5 million ounces. I'll speak to you in more detail about our guidance as well as our other financial results in a moment. Growth projects in Nevada are progressing well and remain on schedule and within budget. Henri will provide you with an update on the third shaft at Turquoise Ridge, and Bill will speak to recent progress at Cortez Deep South and Goldrush. At PV, Pueblo Viejo, we made good progress during the quarter, advancing pre-feasibility level studies for a potential plant expansion.
Greg will speak to you in more detail about this, as well as our other operational results. Nevada remains a key area of focus for our exploration program, and it goes from strength to strength. We continue to intersect high-grade mineralization at Fourmile and have expanded the project footprint both to the north and to the south. Rob will provide you with an update on these encouraging results and plan drilling for the remainder of the year. During the quarter, we signed a mutual investment agreement with Shandong, further strengthening our partnership, the strategic nature of that partnership in particular. Under that agreement, Shandong will purchase up to $300 million of Barrick shares, and we will invest an equivalent amount of shares in Shandong over a 12-month period.
The shares are being purchased on the open market. To date, Barrick has purchased approximately $120 million of shares of Shandong Gold in the Hong Kong Stock Exchange. Over the same period, Shandong Gold purchased around $109 million of shares in Barrick. Finally, but definitely not least, during the quarter, we announced an all-share merger with Randgold Resources that will create an industry-leading gold company powered by a common vision of long-term value creation. With that, I'll hand over to John Thornton, our Executive Chairman, who'll provide you with an update on this transformational transaction. Over to you, John.
Thank you, Catherine. Good morning, everyone. Thank you for joining us. I will be succinct, but I think it's important to go back over this topic, even though we've spoken to all of you, in many cases, numerous times, including last week when Mark Bristow and I toured both the U.S., Canada, and many parts of Europe, talking to shareholders of both Barrick and Randgold. You're aware that at the highest level, what we think we're doing is creating a singular company, the thesis of which is that the world's leading gold company should be focused on Tier 1 assets. By Tier 1 assets, we've defined those as producing more than 500,000 ounces per year, having mine lives greater than 10 years, and being in the lower half of the cash cost curve.
This combination will produce a company that has five of the 10 Tier 1 assets. In addition to which, there are two high-potential Tier 1 assets in Nevada. That's Fourmile and Turquoise Ridge. We also are optimistic about what we can do with Veladero and with Acacia North Mara mine. You can see a way clear to a scenario whereby this combination could have as many as nine Tier 1 assets within a relatively short period of time. Secondly, we think this will have the strongest management team, particularly given the record of Mark Bristow.
As I said to many of you as we went around the world last week, I'm hard-pressed to think of a chief executive in any industry who's had the two-decade-long record that Mark has had, much less a chief executive in the gold mining industry, much less one in the gold mining industry in Africa. We think the combination of those two ends up producing by definition, the most attractive financial returns because the first-tier assets, by definition, have the highest margin, should throw off the most amount of cash. That should allow you to reinvest in the business and also return to your shareholders healthy dividends, and hopefully alongside that will be capital appreciation. We think this is a compelling investment proposition.
Both ISS and Glass Lewis have recommended to both sets of shareholders that they vote for the transaction. We think it's very important that people vote. This is good not only for Barrick, not only for Randgold, but also we believe for the industry. You're all aware of the fact that the market to date has been very enthusiastic about the transaction. Barrick shares are up 25% since the announcement. Randgold shares are up 28%. Over the same period of time, the senior gold peers are up approximately 3%. That's an outperformance of more than 20%. I leave you with the enthusiastic plea to get out and vote, and encourage your colleagues on the Randgold side to vote, because we want to get this thing done and get moving and get on to the future. Thank you very much.
Thanks, John. Moving on to the financial highlights. During the quarter, we reported a net loss of $412 million or $0.35 a share, but adjusted net earnings of positive $89 million or $0.08 a share. The net loss primarily reflects the impairment of Lagunas Norte following an update of the feasibility study relating to processing of carbonaceous materials or what we call CMOP, and the treatment of refractory sulfide or what we call the PMR project. Based on the results of the study, we're now advancing the CMOP project only to detailed engineering and have chosen not to proceed with PMR at this time. As a result, we carried out an impairment assessment, that resulted in a write-down of just over $400 million.
On an adjusted basis, net earnings of $0.08 were higher than Q2, primarily reflecting higher ounces sold, lower cost of sales, a reduction in G&A, and the recognition of insurance proceeds associated with the KCGM pit wall incident, all of which offset the lower gold and copper realized prices in the quarter. Q3 operating cash flow increased to $706 million compared to $141 million last quarter, primarily driven by higher production and lower costs, as well as favorable changes in working capital. Stronger operating cash flow drove stronger free cash flow of $319 million, a significant increase compared to the negative free cash flow in the second quarter. This is despite increasing project capital at Barrick Nevada and Turquoise Ridge. Ari and Bill will go into more detail on this.
As well, we've broken out that capital, both in terms of project spend during the quarter, but also as a percentage of total spend on each project, per the request last quarterly call. Just a flag, we do listen to you guys sometimes. The underlying effective tax rate for ordinary income in the third quarter of 2018 was 59%, partly reflecting the in-quarter impact of adjusting our tax guidance to 48%-50% from the previous guided 44%-46%. The reason for this is the higher expected full-year tax rate, mainly reflecting lower than anticipated sales from operations in lower tax jurisdictions, in particular Barrick Nevada, whilst costs elsewhere have remained relatively stable.
We furthered our corporate rationalization efforts or decentralization efforts with the aim of getting us closer to our vision of a simplified lean head office, reallocating roles to operations where appropriate and eliminating those no longer required. As a result of these efforts, we now expect corporate administration expenses to be approximately $235 million in 2018, including $36 million of one-time severance expenses. This compares to our original guidance at the start of the year of roughly $275 million. The indicative annualized savings from our decentralized efforts at the current run rate is approximately $100 million. Now with respect to guidance, we remain on track to meet full-year production and cost guidance, and we expect gold production to be around 1.25 million ounces in the fourth quarter, with full-year production therefore at the lower end of the guidance range of 4.5 million-5 million ounces.
Similarly, we remain on track to meet our revised copper guidance per our Q2 results press release. Our guidance for total capital expenditure remains unchanged with $950 million to $1.1 billion of sustaining capital and $450 million-$550 million of growth capital for a total of $1.4 billion-$1.6 billion. We expect our full-year capital to now be at the low end of our guidance range, mainly as a result of lower mine site sustaining CapEx. I'll now hand it over to Greg who can take us through the Q3 operational details results. Thanks.
Thank you, Catherine. In the third quarter, we produced 1.15 million ounces of gold and sold 1.2 million ounces. As anticipated, gold production improved from the second quarter, primarily driven by better throughput and grade at Barrick Nevada. This quarter-over-quarter production increase also reflects the completion of de-bottlenecking improvements at Pueblo Viejo. As a result, the autoclaves had daily throughput records in excess of design capacity. Gold costs for the quarter were in line with our guidance, with all-in sustaining costs of $785 an ounce while cash costs were $587 per ounce. Quarter-over-quarter, this represents a decrease of 8% and 3% respectively. As Catherine mentioned, quarter four gold production is expected to be approximately 1.25 million ounces. Although full production guidance is unchanged, we expect 2018 production from Pueblo Viejo to be lower, and we have lowered the bottom end of range for our Barrick Nevada operations.
On the copper side, production increased quarter-over-quarter to 106 million pounds, driven by the steady improvement in grade, recovery, and crusher reliability at Lumwana. Accordingly, copper costs decreased significantly from the second quarter, in line with our guidance. Copper all-in sustaining costs of $2.71 per pound and cash costs of $1.94 per pound in quarter three. Represents a decrease of 11% and 8% respectively over the period. Also wanted to update you on our copper portfolio outlook. Firstly, the Zambian government has introduced an update of the mining tax regime with a proposal of January 1, 2019 effective date. The impact of this tax change would have a negative impact on the cash flow from Lumwana. We are engaging with the Zambian government in an effort to mitigate some of this impact, and we'll be able to update the market as discussions progress.
Secondly, we continue to see strong growth at our Jabal Sayid joint venture in Saudi Arabia, which saw a record throughput in the third quarter. As such, we intend to build on this strong record performance. We are currently studying options to improve Jabal Sayid's throughput from 1.8 million tons per annum in 2018 to 2.6 million tons per annum in 2021, an increase of almost 50%. This project is designed to remove constraints at the plant by adding additional tailings and concentrate filtration while optimized milling and flotation circuits. With an estimated CapEx of approximately $40 million, we currently anticipate this project will generate an IRR greater than 15% at $2.75 per pound. Moving to our pilot plant expansion at Pueblo Viejo. We continue to advance the pre-feasibility study on a plant expansion that would increase throughput by 50%.
This is designed to include the addition of a pre-oxidation heap leach pad, a flotation process, along with additional grinding and tailings capacity. On a 100% basis, this project continues to have the potential to bring roughly seven million ounces of measured and indicated resource to proven and probable reserves. This allows the mine to maintain average gold production of approximately 800,000 ounces after 2022. We're pleased to announce that in support of this pre-feasibility study, the pilot pre-oxidation heap leach pad is now in operation. As noted in the slides and the material, the material from cell one has commenced processing. Cell two is being loaded with material where irrigation and oxidation are underway. The construction of the pilot flotation circuit is well advanced, including the holding tanks and the thickness.
We're looking forward to providing you with further updates of our pilot testing as we advance the pre-feasibility study of this tier 1 asset. With that, I'd like to hand over to Ari, who will give us an update at Turquoise Ridge.
Thanks, Greg. As discussed last quarter, Turquoise Ridge is one of our emerging tier 1 mines in recognition of its growth potential, which is facilitated by the construction of the third shaft. The construction of the shaft continues to advance according to schedule and within budget. Ground was broken on the shaft site during the third quarter. We are now taking delivery of hoist components. As you can see in the photographs, shaft winches have been delivered. Fabrication of the shaft collar has commenced. The balance of 2018 will be focused on long lead time equipment purchases and collar excavation, also starting the headframe and the hoist installation. As of September the 30th, we have spent $59 million out of the total estimated capital cost of $300-$325 million.
The shaft is expected to increase annual production on a 100% basis to more than 500,000 ounces per year at an all-in sustaining costs of approximately $630 per ounce. Initial production from the new shaft is expected to begin in 2022, with sustained production starting in 2023. On mine exploration has continued to expand the deposit in multiple directions, building on the high-grade results we reported on the last quarter. Recent assay results from the North Zone Getchell program include 60 meters grading 11.1 grams per ton, extending mineralization by 75 meters from the nearest ore body.
Earlier this year, the Bass Pond East program extended mineralization to the northeast by 120 meters. Subsequent drilling has encountered significant grades, further extending that mineralization to the west by 55 meters, with intercepts grading 18.2 and 9.6 grams per ton. Drilling has also extended mineralization to the north by 35 meters with an intercept of 3.8 meters grading at 13.9 grams per ton. Follow-up drilling will continue in this area for the remainder of this year and in 2019. I will now hand over to Bill MacNevin to speak on the development progress at our Barrick Nevada projects.
Thanks, Ari. At the Deep South project, we broke through to the mine with the east decline last quarter. We've moved our focus to the west decline, mass excavation, and preparations to install our materials handling conveyor system. Our west decline is proceeding on schedule. The project is advancing to facilitate mining of the already permitted Cortez Hills lower zone and to be ready to support Deep South mine development upon receipt of the permit. Mining at Deep South is expected to result in production of approximately 300,000 ounces annually on fully ramped up between 2024 and 2028 with an expected cost of sales of approximately $650 per ounce. In July, the project received the Nevada state permits required for mining. Project permitting is advancing. The draft EIS was published for public comment on October 22.
We're working toward a record of decision in the second half of 2019. Goldrush is one of our most exciting projects. Our development work on the project continues in terms of both exploration and construction. Barrick has had more drilling success at Red Hill in the nearby Fourmile area, which Rob Krcmarov will describe in a moment. We're continuing development of the Goldrush exploration declines, as pictured in the bottom right. We've completed the portal pad for the decline access to Goldrush. We're currently taking rounds and advancing the declines. The declines are on track to reach the ore body in 2021, when we will conduct further exploration and provide a platform for mine development. A plan of operations for Goldrush mining project has been developed. We're working with our permitting agencies to formally initiate the permitting efforts.
With that, I'd like to hand over to Rob to provide an update on our recent exploration results in Nevada.
Thanks, Bill. In February and April this year during Investor Day and the first quarter results call, I highlighted the high-grade gold mineralization intersected in Fourmile. Subsequently, through our Q2 results call, we released further extremely positive results on what we now call a discovery. This quarter, I'm not only happy to show you more very high-grade drill results and an expanding mineralization footprint at Fourmile, but also some very positive and encouraging drill results elsewhere in the Goldrush camp. As we advance the resource to preserve drilling at Red Hill, which is basically the part of Goldrush above the water table, and as we increase our understanding of the geology and mineralization controls of this outstanding ore body, it's become quite apparent that high-grade mineralization in some areas is associated with a series of west-northwest structures.
A hole targeting the westward projection of one of these structural trends, located approximately 250 meters away from the closest resource block, that returned an intercept of 3.5 meters at 9.3 grams per ton, indicating potential to grow the Goldrush resource base to the west. That's in close proximity to the exploration declines currently in development. Stepping out a little, drilling at Blasdell, a target that was identified by a combination of really remarkable geological targeting. That included surface mapping, surface and downhole geochemistry, and state-of-the-art structural interpretation from downhole surveying. That's encountered a significant intercept in a location with virtually no drilling around it, thus opening a new, very large search base for us. Let's have a look at the cross-section A to A-dash. It's become apparent that the Saddle ore fault forms a fault-propagated fold, which localizes high-grade mineralization at Fourmile.
We believe that we may have identified another similar structure about one kilometer west of Fourmile. As I mentioned, through some thoughtful targeting, we intersected a very wide zone of favorable alteration and strong geochemistry, culminating in a mineralized intercept of 3.4 meters at 12.5 grams per ton and 1.4 meters at 60.9 grams per ton. Very encouraging, given that the nearest drill hole testing this structural trend is over 750 meters away. Moreover, in this isolated hole, the mineralization is not in the most favorable host rock, perhaps somewhere else along or near the Blasdell fault, we'll find even stronger mineralization, perhaps in the same sorts of silica sulfide benches that make such an excellent host at Fourmile. While it's early days, the results are encouraging and could develop into yet another success story.
In the meantime, we've added an extra drill to this area to scope out its continuity and potential, and I am looking forward to updating you on this target in the future. Looking at Fourmile third quarter drill intercept highlights, results have been received for 30 holes year to date. 26 of those intersected significant mineralization for a really remarkably high success rate. Infill drilling continues to intersect very high-grade results, as can be seen in the middle of the slide. I want to draw your attention to some of the excellent results we received this quarter from some of the step out holes.
Looking to the south or to the right of the slide, you can see highlights such as 39.3 meters at 25.6 grams per ton, as well as 25.9 meters at 34.6 grams per ton. 21.3 meters at 30.2 grams per ton. At the other edge, to the left of the slide, we intersected 20.4 meters at 54.1 grams per ton gold from a very large step out to the north. Over 400 meters in fact. From the edge of the main cluster of drilling, as well as a couple of other very high-grade intercepts from large step-outs to the west on the side. At Fourmile, you can see our excitement is not only at the very high grades but also the expanding footprint.
We're well on track to providing an initial modest inferred resource at year-end, a resource that we expect will continue to grow in subsequent years. Moreover, it's clear that the Goldrush camp has significant untapped upside potential to yield additional ore bodies, and hopefully, the encouraging very early-stage drill result at Blasdel will be testament to that. This exciting area will continue to be a focus for years to come, and these results highlight Nevada's role in Barrick's future. With that, I'd like to hand it back to Catherine.
Thank you, Rob. That wraps up the presentation. Operator, let's open the call for Q&A. Thank you.
Thank you. We will now begin the question and 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. Our first question comes from John Bridges of JPMorgan.
Thanks, everybody. Thanks for taking the question. You must now be making some progress as to what the shape of the new company's going to be. Listening to John, I hear the tier 1 assets. I'm just remembering the plan for the earlier Newmont-Barrick combination and the idea of spinning off a bunch of assets after that in a spin-off. Is there anything like that envisaged once the deal is completed?
John, thanks for the question. The short answer is no. However, the more complete answer might be, as you will have gathered, we have identified nine core assets, which we intend to sell. Of course, we're always guided by what's the best value we can receive. At any one point in time, before we actually execute on something, we would look at all the options and decide which one's in the best interest of the shareholders and then take that action.
Okay. Then perhaps as a follow-up, I see the heap leach project at Pueblo Viejo and remember from a much earlier site visit that you were constrained by tailings capacity. Any progress on getting some more tailings capacity? That's a big reserve there that is available if you can get the extra tailings capacity.
Yeah. Thanks, John. It's Greg Walker. I'll answer that one. As I said in the presentation earlier on, we're advancing the expansion project. We've rolled tailings capacity, pre-oxidation, and flotation into one project. Now it's the combined expansion project. You're right, to bring those 7 million ounces in, we need to be able to process the tons, and we need the extra capacity. We're advancing the, what we're calling Tailings Dam 3 project. It's in early pre-feasibility, and we're looking at that. The answer to your question is yes, we're expanding our tailings capacity.
Will that require some extra cost to buy the extra land, or how do you see that going forward?
That capital is being defined at the moment. We have put our estimates into our plans going forward. You're right. It's not so much buying the land, getting access to the land, it's also the construction of the dam as well.
Okay, thanks, guys. Good luck.
Thanks, John.
Our next question comes from Greg Barnes of TD Securities.
Thank you. I was just wondering if you could give us any kind of update on the Acacia situation and the comments in the press recently about the potential for Barrick to take Acacia back in again.
It's Kevin Thomson speaking. We can't comment on what may or may not happen with Acacia down the road. What we can tell you is we have had no discussions with Acacia about a potential going private transaction.
What about the status of discussions with the government then?
Discussions are ongoing. We had a team in Tanzania last week. The discussions have slowed down, but they are ongoing, and we continue to be optimistic that we will get to the right place.
Any kind of timeframe you could provide?
No.
Just a secondary question. Catherine, it was mentioned that the CapEx for the year will come in at the low end of the range on lower sustaining CapEx than mine sites. Can you give us some more color around why that's happening?
Well, I can, and then I'll let Greg go into it. When we look at sustaining, we split it into pure sustaining, which is equipment purchases, tailings dam lifts, et cetera, and then there's obviously stripping and development. What we're seeing is on the pure sustaining side, what we've seen effectively is a combination of rescope and execution, just meaning that that capital is not going to be spent, but maybe you can give a bit more detail on both sides.
Yeah. Thanks, Greg. The sustaining capital is, as Catherine said, driven by two things, execution of projects. There's a couple of our projects that are being delayed, and therefore, the capital spend is pushed out. We've had a look at the scope, and we've redefined, and that's reduced the overall CapEx. Also, if you remember, KCGM had an issue with a wall fall early in the year. They're behind on stripping in general, and also at Porgera, the stripping rate's down. Those two areas are reduced capital. The negative capital component is in development. We're behind in development at Hemlo and at Goldstrike, so that's also reduced our capital spend, our sustaining capital spend.
Okay, we're not seeing a lower systemic or lower structural sustaining CapEx. It's just various issues that have resulted in lower sustaining capital.
Yeah, there's been no conscious effort by the company to defer capital. It's simply been a couple of issues that have come up, as you see, Greg.
Okay, great. Thank you.
Our next question comes from Tanya Jakusconek of Scotiabank.
Great. Good morning, everybody. Just have a few questions. Maybe I'll start with the technical question for Greg. Greg, can you just review what's happening at Pueblo Viejo? Because it is a little bit of a disappointment this year in terms of how the mine's been operating. I'm just trying to get an understanding of this carbonaceous material that we've been encountering. Understand that it's a new layback on the Moore pit. Were we expecting this? Maybe just an idea of how the grade in this area versus your block model has been coming out, and are we getting out of it? I know recoveries are expected to improve, but just how is this progressing this year on that?
Thank you, Tanya, for the question. Firstly, I'd say that Pueblo Viejo operationally is operating well. As I said in my presentation, they've had record throughputs in the Autoclave, so operationally they're going well. As you rightly point out, the current area we're mining, we've encountered two areas. One is the carbonaceous material, and secondly, underperformance of the grade against our model. As you also pointed out, we're mining out of that area in the near future. What we have done is we've looked at the performance, we've looked at the model, and we've taken those model recovery and grade issues, we've taken them into account for our fourth quarter. The grade for the fourth quarter will still be strong.
It's within our 4 to 4.3 grams per ton range that we have set for the quarter, but it will be on the bottom end of that range. We see it as a short-term, localized area for the recovery and the grade. Once again, I'll reiterate that the operational performance of the mine is going well and they're getting good performance from their throughput.
Were we expecting this carbonaceous material at all? Was this a surprise?
Sorry, I missed that point of your question. Sorry about that.
Oh.
We were expecting carbonaceous material, but there was a greater quantity than we expected, and the impact on the recovery was more than as usual. We encounter that material at different times as we mine through that ore body, but there was slightly more than we expected, but the impact was greater than had been historically. The process plant has made some modifications, and we've looked at how we can blend that material and reduce the impact going forward.
Okay. I think Goldcorp gave some guidance last night that the recovery was about 86% in Q3, and we're supposed to be going to 90% in Q4. Is that what you're envisioning?
We've got it at between 89% and 90%. Correct.
Okay, then the grade is declining. I think they have it going a bit lower than 4 grams per ton. We're out of this area.
I'll just give you some guidance, just to answer your question on the grade. We've completely grade controlled drilled our fourth quarter mining for Pueblo Viejo. We've estimated at a relatively conservative estimate, that'll be just over on 4 or just over 4 grams per ton. We've got high confidence of that number.
Okay. We're out of the material?
We will be by end of next year, yes.
Oh, end of next year. Okay.
No, no. At the end of this year. We will be by the end of the quarter.
Okay, thank you. Maybe just two other questions if I could. Just coming back on Acacia. Maybe, Kevin, you can tell us, it's taking a bit longer than we all expected. Maybe what are some of the points of contention that we're dealing with? Just a bit of clarity of what the negotiations are focused on.
Tanya, I'd love to get into the specifics, I can't do that. I apologize.
Okay. Maybe I'll move on to the copper assets. Maybe for John, I think on your town hall, you mentioned that the copper assets were core to Barrick, and now with the merger with Randgold, I seem to have heard in the market that maybe Lumwana may not be core. Can you just give us an idea of what the copper assets are in the new co?
Yes. First of all, I don't think I ever said they were core. I think I said they were strategic. What I meant by that at the time, and I think still obtains, is that as you can appreciate, copper is a strategic mineral very much in the focus of the Chinese and others around the world. The question for us going forward is, given that we're in copper, how do we treat that in the future? I think where we're headed is, on the one side of the coin, we accept and recognize we'll always have copper in the portfolio insofar as copper, gold appears together in many parts of the Western Americas.
Secondly, the question still to be addressed is, over time, how do we take our copper assets and use them to our, both financial and strategic advantage with potential partners around the world who may want to build serious copper companies, which we might have a economic interest that would be attractive to us? Also could be used, for that matter, in respect of trading for gold assets. Both our partners in Saudi Arabia and our partners in China, this is of high interest to them. We're engaged with both of them, what you might call a sort of a slow motion, long-term conversations about how to maximize the value of those things to them and to us.
Okay. They could be used for other asset swaps. Okay. Thank you for that.
Yeah.
Tanya, just because there are analyst notes out there saying certain things around our copper assets, it doesn't necessarily mean that's what we're saying. I think that may be where some of this confusion's come from.
Okay. Great. Thank you. I just wasn't at the meeting, so I just hear the chatter. Yeah. Thanks.
Our next question comes from Kerry Smith of Haywood Securities.
Thanks, operator. Catherine, maybe just on the G&A guidance, the $235 million, which includes this $36 million of severance, is there any severance that would roll into 2019, or will it all be cleaned up this year and we could look at a roughly $200 million run rate next year for your corporate G&A?
Obviously, that's a rather complicated question, given what is in theory about to happen post the 5th of November. In terms of the decentralization efforts of Barrick, our intention is to have completed these by the end of the year. In terms of reductions and exits, that would be by the end of the year. If there is any rollover, it would be minor, and it would be really only into Q1. That is based upon the work that really began in earnest in March, April of this year. The plans that we had in place and the execution of those plans over this 2018 period.
Clearly, in terms of the transaction, and understanding what the new company looks like, I can't really comment on what the G&A is going to be for next year, and that's the work we'll be doing between November the 5th and the end of the year.
Right. Okay. I understand. Perhaps somebody could just give me some sense for the EIS that's been filed for Deep South. How many comments have you got as it relates to that document? Or what has been the tone and the tenor of those comments?
Okay. We're still in the comment period, therefore we can't really comment on the fact that we're still in the comment period. Why don't we circle back to that question maybe next quarter, and we can give you a bit more detail then. Okay?
Sure. That's fine. Then the third question is for Rob. Just on this Blasdel discovery, this one hole, you were saying it's in a different lithologic unit. Is it in a unit that actually sits above the mineralized envelope at Fourmile/Goldrush that might sort of open up some new exploration targets for you? How does it relate lithologically to what you see at Fourmile and Goldrush?
Kerry , looking at the cross-section, it's actually in the stratigraphic unit below at Fourmile. Given that it's a one-off isolated hole that's a long way from the nearest hole, 700 meters, we don't know where along the Blasdel fault the optimum position is. Hopefully, the prime lithological structure will be mineralized in that area there. What is encouraging is that there is a system that's operating a long way away from Fourmile, really the challenge now is to find out where is the focus of that system.
Right. Okay. How many holes do you think you'll be able to drill in that new area between now and the end of the year with this one extra? It looks like they're 1,000-meter holes anyhow.
Yeah. I think we'll have hopefully three holes by the end of this year. These are 1,000-meter holes, as you say, they take a while.
Right. That would be three incremental holes to the one you have then, Rob?
I think so.
Okay. Great. Okay. Perfect. Thanks a lot. I appreciate it.
Thank you.
Once again, if you have a question, please press star then one. Our next question comes from Carey MacRury of Canaccord Genuity.
Good morning. Just a question on Nevada. Clearly, you're having a lot of exploration success there, and I know you're looking at increasing processing capacity. Just wondering, A, what the timeline looks like on when those studies will be complete, when you think you can make a decision. Secondly, if you do make a positive decision, what's sort of a theoretical timeline to permits and to construct that?
Bill, do you want to comment on that? Then I can give the sort of corporate polish afterwards.
All right. We're in the middle of a PFS study. That's going extremely well. A lot of work obviously on the engineering side of things, and we're also doing considerable work to understand the nuances of the permitting processes that would be required to go forward. Essentially what we're doing is we're putting together that PFS. In the first half of next year, we'll present that, then we'll make a decision on the next steps.
Just to support that, this is something we're sort of treading carefully around, making sure we understand exactly all of the implications given everything that's going on in Nevada at the moment, as well as also understanding the geology and the ore sources. Obviously with this drilling at Fourmile, and good results out of Goldrush, we have to do that in parallel in order to properly understand the value proposition that this can give us. That's really making us move relatively carefully, over this whole thing. This is really a 2019, and I would say second half of 2019 based upon current sort of timings. Don't hold me to that in the future. That will be when we can provide a little more insight into all of this.
We'll keep asking these questions, and we'll keep sort of giving you vague detail until then. Okay?
Is there any sense of how big an expansion we're looking at, or is there a range of options you're looking at there?
If we were going to talk about it, we will put that in our formal documentation of press releases and presentations and things. The fact that we haven't done that yet means that we don't want to talk about it quite yet. Maybe leave that one till year-end. Okay?
Okay. Thank you.
Thanks.
Our next question comes from Mike Parkin of National Bank.
Hi, guys. Thanks for taking my question. I was wondering if you could make a comment on the competition for labor in your Nevada operations. We've heard from a couple guys that they're looking to recruit out of that state for skilled workers due to challenges of kind of a very full employment environment in some of the other operations in the state. Are you finding pressure for your labor showing up more than it has historically?
Bill, I think this one's for you.
Yeah. I think, not just in Nevada, across the whole of the U.S., there's a tight labor market. We've been preparing ourselves for that for several years. We do a lot of work on pipelining and developing our own internal talent, as well as looking proactively ahead. It is a tight market, but we're meeting our needs by being very proactive and particularly about putting time and effort into developing the pipeline. We've got amazing group of young professionals, both within our team at present as well as what we're engaging with the universities and others and bringing through. I suppose we believe we're in the middle of a cycle that's going to extend for a while like this, so we're making sure we're being proactive about it. We're meeting our needs.
Great. Thanks very much.
We have no further questions registered at this time. This concludes the question and answer session. I would like to turn the conference back over to Catherine Raw.
Okay. Well, thank you, operator, and thank you all for dialing in, and have a good day. That concludes today's conference call.
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