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.
As a reminder, this conference call is being recorded and a replay will be available on Barrick's website tonight, October 25, 2018. I would now like to turn the conference over to Catherine Raw, Chief Financial Officer. Please go ahead.
Thank you. Good 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, Operational and Technical Excellence, Greg Walker our General Manager of Turquoise Ridge, Ari Goeman the CEO of Barrick Nevada, Dominic Nevin and our Executive Vice President of Exploration and Growth, Rob Krichmarov. 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 Q3 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 4,500,000 to 5,000,000 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. Ari will provide you with an update on the 3rd 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 planned 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. And under that agreement, Shandong will purchase up to $300,000,000 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 and to date Barrick has purchased approximately $120,000,000 of shares of Shandong in the Hong Kong Stock Exchange.
And over the same period, Shandong Gold purchased around 109,000,000 of shares in Ballack. And finally, but definitely not at least during the quarter, we announced an all share merger with Randgold Resources that will create an industry leading powered by a common vision of long term value creation. With that then, 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, and 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 Fristo and I toured both the United States, Canada and many parts of Europe talking to shareholders of both Barrick and Randgold. So you're aware that at the highest level what we think we're doing is creating a singular company which the thesis of which is that the world's leading gold company should be focused on Tier 1 assets. And 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 5 of the 10 Tier 1 assets. In addition to which, there are 2 high potential Tier 1 assets in Nevada, that's Fourmile and Turquoise Ridge. And we also are optimistic about what we can do with Valadero and with Acacia North Mara mine. So you can see your way clear to a scenario whereby this combination could have as many as 9 Tier 1 assets within a relatively short period of time. Now 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 2 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. So we think the combination of those 2 ends up producing by definition the most attractive financial returns because the 1st tier assets by definition have the highest margin and should throw off the most amount of cash and 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. So So 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. And we think it's very important that people vote and this is good not only for Barrick, not only for Rambo, 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 were up 28%. Over the same period of time, the senior gold peers are up approximately 3%. So that's an outperformance of more than 20%.
So I leave you with the plea, the enthusiastic plea to get out and vote and encourage your colleagues on the brown belt side to vote because we want to get this thing done and get moving and get on to the future. So thank you very much.
Thanks, John. So moving on to the financial highlights. During the quarter, we reported a net loss of $412,000,000 or $0.35 a share, but adjusted net earnings of positive $89,000,000 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 C Mark 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 and that resulted in a write down of just over 400,000,000 dollars 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 and 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. Our Q3 operating cash flow increased to 70 $6,000,000 compared to $141,000,000 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 $319,000,000 a significant increase compared to the negative free cash flow in the Q2. And this is despite increasing project capital at Barrick, Nevada and Turquoise Ridge. Ari and Bill will go into more detail on this.
And 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. So just a flag we do listen to you guys sometimes. The underlying effective tax rate for ordinary income in the Q3 of 2018 was 59%, partly reflecting the in quarter impact of adjusting our tax guidance to 48 percent to 50% from the previous guided 44% to 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, while costs elsewhere have remained relatively stable. We furthered 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 $235,000,000 in 2018, including $36,000,000 of one time severance expenses. This compares to our original guidance at the start of the year of roughly $275,000,000 The indicative annualized savings from our decentralized efforts at the current run rate is approximately $100,000,000 So 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 1,250,000 ounces in the 4th quarter, with full year production therefore at the lower end of the guidance range of 4,500,000 to 5,000,000 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 $950,000,000 to $1,100,000,000 of sustaining capital and 4 $50,000,000 to $550,000,000 of growth capital for a total of $1,400,000,000 to $1,600,000,000 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 results. Thanks.
Thank you, Catherine. In the Q3, we produced 1,150,000 ounces of gold and sold 1,200,000 ounces. As anticipated, gold production improved from the Q2, primarily driven by better throughputs and grade at Barrick, Nevada. This quarter over quarter production increase also reflects the completion of debottlenecking improvements at Pueblo Viejo. As a result, the order class had a 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 $7.85 an ounce, while cash costs were $5.87 per ounce. Quarter over quarter, this represents a decrease of 8% and 3% respectively. As Catherine mentioned, quarter 4 gold production is expected to be approximately 1,250,000 ounces. Although full production guidance is unchanged, we expect 2018 production from Pueblo Viejo to be lower than lower and we have lowered the bottom end of range for our Barrack, Nevada operations. On the copper side, production increased quarter over quarter to £106,000,000 driven by the steady improvement in grade, recovery and crush reliability of Nwana.
Accordingly, copper costs decreased significantly from the Q2 in line with our guidance. Copper all in sustaining costs of $2.71 per pound and the cash costs of $1.94 per pound for Q3 represents a decrease of 11% and eight percent 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 Moana.
We are engaging with the Zambian government in an effort to mitigate some of this impact and we'll keep when we'll be able to update the market as discussions progress. Secondly, we continue to see strong growth at our Jabal Sayed joint venture in Saudi Arabia. We saw record throughput in the Q3. As such, we intend to build on this strong record performance and we are currently studying options to improve Jebel Said throughput from 1,800,000 tons per annum in 2018 to 2,600,000 tons per annum in 2021, an increase of almost 50%. This project is designed to remove constraints of the plant by adding additional tailings and concentrate filtration, while optimized milling and flotation circuit.
With an estimated CapEx of approximately $40,000,000 we currently anticipate this project will generate an IRR greater than 15% at $2.75 per pound. Moving to our pilot plant expansion at Provo Viejo. We continue to advance the pre digitally study on a plant expansion with increased throughput by 50%. This is designed to include the addition of a pre oxidation heap leach pad, flotation process along with additional grinding and tailings capacity. On a 100% basis, this project continues to have the potential to bring roughly 7,000,000 ounces of measured and indicated resource to proven and probable reserves.
This allows the mine to maintain average production 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 1 has commenced processing and Cell 2 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 about pilot testing as we advance the pre feasibility study of this Tier 1 asset.
With that, I'd like to hand over to Henri to give us an update of Turquoise Ridge.
Thanks, Greg. As discussed last quarter, Turquoise Ridge is one of our emerging Tier 1 minutees in recognition of its growth potential, which is facilitated by the construction of the 3rd shaft. The construction of the shaft continues to advance according to schedule and within budget. Ground was broken on the shaft site during the Q3, and we are now taking delivery of hoist components. As you can see in the photographs, shaft winches have been delivered and fabrication of the shaft collar has commenced.
The balance of 2018 will be focused on long lead time equipment purchases and collar excavation and also starting the head frame and the hoist installation. As of September 30, we have spent $59,000,000 out of the total estimated capital cost of $300,000,000 to $325,000,000 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 cost of approximately $6.30 per ounce. Initial production from the new shaft is expected to begin in 2022 with sustained production starting in 2023. Our mine exploration has continued to expand the deposit in multiple directions, building on the high grade results we reported in the last quarter. Recent assay results from the North Zone Getchell program include 16 meters grading 11.1 grams per tonne, extending mineralization by 75 meters from the nearest ore body.
Earlier this year, the Basquon East program extended mineralization to the Northeast by 120 meters and subsequent drilling has encountered significant grades further extending that mineralization to the west by 55 meters with intercepts grading 18.29.6 grams per tonne. Boerling 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. And then I will now hand over to Bill McNevin to speak on the development progress at our Barrack Novara projects.
Thanks, Andre. At the Deep South project, we broke through the mine with the East decline last quarter. So 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 and 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 once fully ramped up between 20242028 with an expected cost of sales of approximately $6.50 per ounce.
In July, the project received the Nevada state permits required for mining. Project permitting is advancing and the draft EIS was public for public comment on October 22. We're working toward a record of decision in the second half of twenty nineteen. Goldrush is one of our most exciting projects and 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 Four Mile area, which Rob Kripcanoff will describe in a moment.
We're continuing to develop development of the Goldrush exploration declines as pictured in the bottom right. We completed the portal pad for the decline access to Goldrush and 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 platform for mine development. A plan of operations for Goldrush Mining Project has been developed and 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 April of this year during Investor Day and the Q1 results call, I highlighted the high grade gold mineralization intersected in formaldehyde. Subsequently for 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. So 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.
Well, a whole targeting the Westwood projection of 1 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 tonne, indicating potential to grow the Goldrush resource base to the West. And that's in close proximity to the exploration declines currently in development. Now stepping out a little, drilling at Blasdell, a target that was identified by a combination of really remarkable geological targeting and 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. So let's have a look at the cross section A to A. It's become apparent that the Sadler Fault forms a fault propagated fault, which localizes high grade mineralization at Fourmile.
And we believe that we may have identified another similar structure about 1 kilometer west of Fourmile. As I mentioned through some thoughtful targeting, we infected a very wide zone of favorable alteration and strong geochemistry, culminating in a mineralized intercept of 3.4 meters at 12.5 grams per tonne and 1.4 meters at 60.9 grams per tonne. Very encouraging given that the nearest drill hole testing the structural trend is over 7 50 meters away. Moreover, in this isolated hole, the mineralization is not in the most favorable host rock and so perhaps somewhere else along or near the Bassville Fault, we'll find even stronger mineralization, perhaps in the same sorts of silica sulfide bridges that make such an host that's 4 mile. So while it's early days, the results are encouraging and could develop into yet another success story.
And in the meantime, we've added an extra drill for this area scope out its continuity and potential. And I am looking forward to updating you on this target in the future. Looking at 4 mile 3rd 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. Enfield 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.
So 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 tonne as well as 25.9 meters at 34.6 grams per tonne and 21.3 meters at 30.2 grams per tonne. At the other edge, so 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 migrating steps from large step outs to the west on the side.
So at Fourmile, you
can see our excitement is not only at a very high grade, 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 LASL 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. And with that, I'd like to
hand it back to Catherine.
Thank you, Rob. Well, that wraps up the presentation. So operator, let's open the call for Q and A. Thank you.
Thank you. We will now begin the question and answer session. 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 is 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 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 non core assets which we intend to sell. And of course, we're always guided by what's the best value we can receive. So at any one point in time, before we actually execute on something, we would look at all the options and decide which was in the best interest of the shareholders and then take that action.
Okay. And then perhaps as a follow-up, the I see the heap leach project at Provo Viejo and remember from a much earlier site visit that you were constrained by tailings capacity. Any progress on getting some more tailings capacity? Because there's a big reserve there that is available if you can get the extra tailings capacity?
Yes. Thanks, John. It's Greg Walker. I'll answer that one. The 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. And you're right, to bring those 7,000,000 ounces in, we need to be able to process the tons and we need the extra capacity. So we're advancing the what we call in Talosand 3 project. It's in early pre feasibility and we're looking at that.
So the answer to your question is yes, we're expanding at a timely space.
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 and 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, but 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 Thompson speaking. So 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.
And what about the status of discussions with the government in Tanzania?
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.
And any kind of timeframe you could provide? No. Just a second 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. So when we look at sustaining, we split it into pure sustaining, which is equipment purchases, tailings, fan lifts, etcetera. And then there's obviously stripping and development. So 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 both sides.
Thanks, Craig. The sustaining capital is as Kashif said driven by 2 things execution of projects. So 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 fall will fall in early in the year.
So they're behind on stripping in general and also at Porger, the stripping rates down. So those two areas of reduced capital. The negative capital component is in development. So we're behind in development at Hemlo and at Goldstrike. So that's also reduced our capital spend, our sustaining capital spend.
Okay. So we're not seeing a lower systemic or lower structural sustaining CapEx. It's just various issues that have resulted in lower sustaining CapEx.
Yes. 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 Craig.
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 understand that it's a new layback on the Moore pit.
But were understand that it's a new layback on the Moore pit. But were we expecting this? And 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? And I know recoveries are expected to improve, but just how is this progressing this year and that?
Thank you, Tanya, for the question. Firstly, I'd say that Fredloviajo operationally is operating well. As I said in my presentation, they've had record throughputs in the order class. So operationally, they're going well. But as you rightly point out, the current area we're mining, we've had encountered 2 areas.
1 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 Q4. The grade for the Q4 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. So we see it as a short term localized area for the recovery and the grade. But once again, I'll reiterate that the operational performance of the mine is going well and they're getting good performance from their throughput.
So we're getting like were we expecting this carbonaceous material at all like or did was this a surprise?
Sorry, I missed that point of your question. Sorry about it. We were expecting carbonaceous material, but there was a greater quantity than we expected and the impact on the recovery was more than is usual. We encountered that material at different times as we mined through that ore body, But there was slightly more than we expected, but the impact was greater than had been historically. The process plan 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 percent 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% 90%, correct.
Okay. And then the grade is declining. I think they have it going a bit lower than 4 grams per ton. And we're out of this area. So into 2.90 I'll just
give you some just to answer your question on the grade. We've completely grade controlled drilled our 4th quarter mining for Puerto Viejo. We've estimated and are relatively conservative estimate that it'll be just over on 4 or just over 4 grams per ton. So we've got high confidence of that number.
Okay. And we're out of the material?
We will be by the end of next year, yes.
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. And maybe just two other questions, if I could. Just coming back on the ACASIA. 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, but I can't do that. I apologize.
Okay. Maybe I'll move on then 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
NewCo?
Yes. First of all, I don't think I ever said they were core. I think what I said they were I think I said they were strategic. And what I meant by that at the time and I think still obtains is that these as you can appreciate, copper is a strategic mineral very much in the focus of the Chinese and others around the world. And so the question for us going forward is, given that we're in copper, how do we treat that in the future?
And 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 Western Americas? And then secondly, the question still to be addressed is over time, 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 in which we might have an economic interest that would be attractive to us and also could be used for that matter in respect of trading for gold assets. So both our partners in Saudi Arabia and our partners in China, this is of high, high interest to them. And so we're engaged with both of them, what you might call sort of slow motion long term conversations about how to maximize the value of those things to them and to us.
Okay. So they could be used for other asset swaps. Okay. Thank you for
your color. Tanya, just because there are analyst notes out there saying certain things about our copper assets, it doesn't necessarily mean that's what we're saying. So I think that may be where some of this confusions come from.
Okay, great. Thank you. I just wasn't at the meeting, so I just hear the chatter. Thanks.
Our next question comes from Kerry Smith of Haywood Securities.
Thanks, operator. Catherine, maybe just on the G and A guidance, the $235,000,000 which includes this 36,000,000 dollars 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 $200,000,000 run rate next year for your corporate G and A?
So obviously, that's a rather complicated question, given what is in theory about to happen post the 5th November. But in terms of the decentralization efforts of Barrick, our intention is to have completed these by the end of the year. And in terms of reductions and exits, that would be by the end of the year. So if there is any rollover, it would be minor and it would be really only into Q1. But 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 company looks like, I can't really comment on what the G and A is going to be for next year, and that's the work we'll be doing between November 5 the end of the year.
Right, right, right. Okay, I understand. And perhaps somebody could just give me some sense for the EIS has 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. So we're still in the comment period. So therefore, we can't really comment on the fact that we're still in the comment period. So why don't we circle back to that question maybe next quarter and we can give you a bit more detail then, okay?
Sure, sure. That's fine. And then the third question is for Rob. Just on this Blasdell 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 Slash Goldrush that might sort of open up some new exploration targets for you?
Or how does it relate lithologically to what you see at Fourmile and Goldrush?
So, Carey, looking at the cross section, it's actually in the unit. It's in the stratigraphic unit below at Fourmile. So 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 Blasdell fault the optimum position is. So hopefully, the prime ecological structure will be mineralized in that area there. But what is encouraging is that there is a system that's operating a long way away from Fourmile and really the challenge now is to find out where is the focus of that system.
Right. Okay. And 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 extrude? It looks like they're 1,000 meter holes anyhow.
Yes. I think we'll have hopefully 3 holes by the end of this year. These are down to mean holes, as you say, they take a while.
Right. So that will be 3 incremental holes to the one you have then, Rob?
I think so.
Okay, great. Okay, perfect. Thanks a lot. Appreciate it.
Thank you.
Our next question comes from Carey MacRury of Canaccord Genuity.
Hi, 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 completed? And do you think you can make a decision?
And secondly, if you do make a positive decision, what's sort of a theoretical timeline to permit and construct that?
Bill, do you want to comment on that? And then I can give the sort of corporate polish afterwards.
All right. So we've been doing we're in the middle of our 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. So essentially what we're doing is we're putting together our PFS.
In the first half of next year, we'll present that and 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 the complexity of everything that's going on in Nevada at the moment as well as also understanding the geology and the ore sources. Because 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. So that's really making us move relatively carefully over this whole thing. So this is really a 2019 and I would say second half of twenty nineteen based upon current sort of timings.
And so don't hold me to that in the future. But that will be when we can provide a little more insight into all of this. So 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?
We will if we were going to talk about it, we will put that in our formal documentation of press releases and presentations and things. So the fact that we haven't done that yet means that we don't want to talk about it quite yet. So maybe leave that one until 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 of guys that due to challenges of kind of a very full due to challenges of kind of a very full employment environment and some of the other operations in the states. Are you finding pressure for pure labor showing up more than it has historically?
Phil, I think this one's for you.
Yes. I think not just in Nevada across the whole of the U. S. There's a tight labor market. We've been working we've been preparing ourselves for that for several years.
So we do a lot of work on pipelining and developing our own internal talent as well as looking proactively ahead. So 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. So 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.
So we're meeting our needs.
All right. 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 Katharine 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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