And gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2018 Second Quarter Results Conference Call. During the presentation, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session.
I would now like to turn the conference over to Kelvin Dushnisky, President.
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. This slide includes a summary of the significant risks and factors that could affect Barrick's future performance and our ability to deliver on those forward looking statements. A review of our most recent AIF will provide you with a more complete discussion. I'm here today with our Chief Financial Officer, Kathryn Mura our Senior Vice President, Operational and Technical Excellence, Greg Walker our General Manager of Turquoise Ridge, Ari Gonin the CEO of Barrick Nevada, Joe McNevin and our Executive Vice President of Exploration and Growth, Rob Kritzmarov.
Our other general managers and members of the Barrick team will also be available for questions following the formal portion of the call. Gold production and costs for the quarter were in line with expectations and we remain on track to meet our gold production and cost guidance for the year. Catherine will speak to you in more detail about our guidance as well as our other financial results. Our growth projects in Nevada are progressing well and remain on schedule and within budget. Henri will provide you with an update on the 3rd shaft at Turquoise Ridge and Bill will speak to the recent progress made at Cortez Deep South and at Goldrush.
In the Dominican Republic, we made solid progress during the quarter advancing pre feasibility level studies for potential plant expansion at Pueblo Viejo. Greg will speak to you in more detail about this as well as our other operating results. Nevada remains a key focus key area focus for our exploration program and we're pleased to announce a new high grade gold discovery at Fourmile following more positive drill results during the quarter. Rob will provide you with an update on these encouraging results and planned drilling for the remainder of the year. With respect to the balance sheet, subsequent to the end of the quarter, we reduced our debt by another $629,000,000 bringing our total debt down to about $5,800,000,000 And earlier this month, we announced an enhanced strategic cooperation agreement with Shandong, further deepening our relationship.
And with that, I'll hand the call over to Catherine to take you through our Q2 financial results.
Thanks, Kelvin. As Kelvin mentioned, gold production costs were as expected for the quarter and as outlined in our production release on 11th. We reported a net loss for the quarter of $94,000,000 or a loss of $0.08 share, adjusted earnings of $81,000,000 or $0.07 a share and operating cash flow of $141,000,000 Earnings and operating cash flow during the quarter were impacted by planned maintenance activities at Barrack, Nevada and Pueblo Viejo and unplanned downtime at the Luana crusher, all of which we'll go into more detail in the rest of the presentation. These factors also impacted free cash flow, which despite lower year on year total CapEx was negative $172,000,000 for the quarter, but remains positive year to date. Project CapEx increased compared to the Q1 and also to last year, including an increase in spend at Crossroads, the Cortez range front declines, the Goldrush exploration declines, the Deep South expansion at Barrackenbargo as well as the construction of the 3rd shaft in Turquoise Ridge.
The underlying effective tax rate in the Q2 of 2018 was 48%, partly reflecting the in quarter impact of adjusting our tax guidance to 44% to 46% from 41% to 43%, the result of lower spot gold prices and a change in our first half sales mix. In the Q2, we began to implement our next wave of organizational restructuring to get us closer to our vision of a simplified decentralized org structure. We've reviewed all positions sitting above operations, reallocating and eliminating those roles where appropriate and simplifying our footprint. At this time, we're maintaining our full year general and administrative expense guidance as the expected savings from these changes are being offset by severance expenses in 2018. Moving on to guidance.
As Calvin mentioned, we remain on track to meet full year gold production and cost guidance. Production is second half weighted with cost steadily improving. We expect 3rd quarter gold production to be over 1,200,000 ounces, up from just over 1,000,000 ounces in the second quarter. We've updated our copper guidance, which primarily reflects the operational challenges of Omoana in the first half of the year. We expect copper production to be in the range of 3 £45,000,000 to £410,000,000 at a cost of sales of $2 to $2.30 per pound, C1 cash cost of $1.80 to $2 per pound and all in sustaining costs of $2.55 to $2.85 per pound.
Greg will provide more color on our second half expectations for both gold and copper. Our guidance for total CapEx remains unchanged with $950,000,000 to $1,100,000,000 of sustaining capital $450,000,000 to $550,000,000 of growth capital for a total of $1,400,000,000 to $1,600,000,000 of capital for the year. And now on to the balance sheet. At the end of the second quarter, the company had a consolidated cash balance of approximately $2,100,000,000 Subsequent to the end of the quarter, Barrick completed a make whole purchase of the outstanding principal of the 2021 note, dollars 629,000,000 reducing our total debt to just under $5,800,000,000 And to put the scale of our debt reduction into perspective, over the last 5 years, we've repaid over $10,000,000,000 And as it stands today, the company has less than $100,000,000 in debt due before 2020 and more than 85 percent of our outstanding debt matures after 2,032. For more detail on our results, I want to draw your attention to our MD and A, including the earnings and cash flow waterfalls as well as some new charts on copper and on year on year mine variances to help aid people to understand our quarterly results.
I'd now like to hand it over to Greg, who'll take you through the operational results for the Q2.
Thank you, Catherine. In the Q2, we produced 1,070,000 ounces of gold in line with our guidance for the quarter. Production was impacted by scheduled maintenance shutdowns at Barrick Nevada, Roaster and the Pueblo Viejo Auto Class. We're pleased to announce that both these shutdowns were successfully optimized. This reflects our focus on increasing the overall availability of our processing facilities by consolidating work and extending time between planned maintenance.
For example, at Barrick, Nevada, the completed 18% faster than prior roaster shutdowns. Gold costs for the quarter were in line with our expectations with all in sustaining cost of $8.56 per ounce, while cash costs were $605 per ounce. Costs were impacted by planned maintenance, higher fuel costs and the impact of lower ounces sold in the quarter. Looking forward, we expect gold production and cost to improve steadily over the second half of the year, driven by stronger performance at Barrick, Nevada and Pueblo Viejo as well as the restoration of full production processing capacity at Porgera much earlier than anticipated following the earthquake in late February. For Q3, gold production is expected to be around 1,200,000 ounces.
At Barrack, Nevada, we expect throughput and grade to improve given the completion of the maintenance during the first half as well as the increased production coming out of Cortez Hills open pit. At Pueblo Viejo, we see transition into higher grades in Phase 5 and Phase 6 of the Moore pit And excuse me, throughput in quarter 3 is expected to remain in line with the quarter 2 as we complete the second of our older class shutdowns for the year. We expect higher throughput atueblo Viejo in the 4th quarter. On the copper side, production for the 2nd quarter was £83,000,000 at an all in sustaining cost of $3.04 a pound, The C1 cash cost of $2.10 a pound. Looking forward, copper production is expected to improve progressively over the 3rd 4th quarters, driven by a steady improvement in grade and the crusher reliability at La Mina as well as optimization of the stacking procedures at Beldeba.
Moving on to our pilot plant expansions at Provol Viejo. We continue to advance the pre feasibility study on a planned expansion that would increase throughput by 50%. This is designed to include the addition of a pre oxidation heat leach pad, a flotation process along with the additional tailings capacity. On a 100% basis, this project continues to have the potential to convert roughly 7,000,000 ounces from measured and indicated resource into proven and profitable reserves and allow the mine to maintain an average annual gold production of 800,000 ounces after 2022. We're pleased to announce that in support of this feasibility study, we've completed the construction of the pilot pre oxidation heap leach pad.
As noted on the slide, irrigation of cell 1 has commenced and cell 2 is ready for material to be stacked. Moving on to the flotation process, civil works for the pilot flotation concentrator has begun, which leverage off the existing infrastructure as shown in the picture at the bottom right. Next steps for this project is contract tenders for structural mechanical and electrical work to be completed. We look forward to providing you further updates as the pilot test work as we advance the pre feasibility study for this core mine. With that, I'd like to hand over to Anri to provide you an update at Turquoise Ridge.
Thanks, Greg. At Turquoise Ridge, the construction of the 3rd shaft continued to progress during the quarter according to schedule and within budget. During the Q1, we announced that we appointed Tyson Mining as our shaft sinking contractor for this project and they are now in the process of mobilizing on to site. Dewatering is underway and advancing according to plan and the construction of surface infrastructure for electrical distribution and other mine site utility construction are well distribution and other mine site utility construction are well advanced. The balance of 2018 will be focused on long lead equipment purchases, collar excavation and we will install the hoists.
We continue to expect initial production from the 3rd shaft in 2022 with sustained production from 2023 and that has an estimated capital cost of between $300,000,000 $325,000,000 on 100% basis. The shaft is expected to increase annual production on 100% basis to more than 500,000 ounces per year at an all in sustaining cost of approximately $6.30 per ounce. As we discussed at the Investor Day, the future is unwritten for Turquoise Ridge and the near mine exploration represents a key area of future growth potential. The deposit is open in multiple directions with a wide spectrum of projects including the Getchell Fault and the Backspond East project. Turning to date has continued to expand the deposit with the first hole of the North Zone Getchell program intersecting 16.5 meters at 16.9 grams per ton during the quarter.
This intercept extends the mineralization by 120 meters with further drilling planned along that same fault. Similarly, drilling as part of the Bass Pond East program has extended known mineralization to the Northeast by another 120 meters with an intercept of 6.7 meters at 15.3 grams per ton. Additional drilling will also continue in this area to the Northeast. And I'd like to now hand over to Bill McNevin to speak about our development progress at Barrick, Nevada.
Thanks, Andre. At the Deep South project, we kept advancing during the quarter, utilizing Roadheader Mining Technology and completed our East decline. 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 we're fully ramped up between 2024 and 20 28 with expected cost of sales of $6.50 per ounce. In July, the project received the Nevada State permits required for mining.
Project permitting is advancing and we expect the draft EIS to be published for public comment in the second half of the year and a record of decision in H2 of 2019. On the Goldrush, which is one of our most exciting projects, and our development work on the project continues in terms of both exploration and construction. We're continuing to work on converting the 9.4 1,000,000 ounces of measured and indicated resources to proven and probable reserves, adding to the 1,480,000 ounces we converted in 2017. We've had more drilling success at Red Hill and the nearby Four Mile area, which Rob Kripchnoff will describe in a moment. We're continuing development of the Goldrush exploration declines as pictured in the bottom right.
The declines are on track to reach the ore body in 2021, when we will conduct further exploration and it provides a platform for mine development. A plan of operations for Goldrush Mining Project has been developed and we are working with our permitting agencies to formally initiate their permitting efforts. With that, I'd like to hand over to Rob to provide an update of our recent exploration results in Nevada.
Thanks, Bill. As you noted, Red Hill infill drilling continues to meet expectations and we hope to convert more resources to reserves at year end. As you know, this is a prolific district and in combination with Goldrush, we expect will form the basis of the future of Barrick, Nevada for decades to come. In February this year during Investor Day, I highlighted some of the high grade gold mineralization in the sector. And in March for our Q1 results call, I shared more positive results.
And today, I'm thrilled to say we continue to encounter some truly outstanding intercepts in our exploration work. During the Q1, I highlighted positive geology on holes with pending results. Well drilling has encountered grade thicknesses in excess of 1,000 gram meters. We now have confirmed the high grade discovery, actually with a footprint that is over 600 meters long strike and over 200 meters wide. And we continue to intercept favorable geology in recently drilled holes.
So the Varrock exploration team has done it again and what started as 2 drill holes in 2016 has become the discovery that you see today. It is in geological interpretation, proprietary geochemical methodologies coupled with structural geology, drilling and other techniques, Fourmile has now advanced to the point where we're increasingly confident that we could have a truly remarkable discovery on our hands. So based on this success, we've increased our current Four Mile budget by over $10,000,000 significantly increasing the number of drill holes to complete bold step outs in search of additional high grade high value targets. So what are we after at Fourmile? And to be clear, we're not looking for more of the same, bearing in mind that Goldrush is a fantastic ore body on its own.
What we want is even better. And so our objective remains to find high grade, high value and the Fourmile discovery has done just that. Fourmile is slightly geologically
different from Goldrush and I'm
going to explain what I mean by that. The rocks have been metamorphosed due to the proximity of the nearby intrusion which helps
focus fluid flow and this is
what we see in other great mines such as Goldstrike. The mineralization at Fourmile is typically hosted in an intensely solverized matrix supported breccia with sharp boundaries as you can see from the photo above. The breccia hosted mineralization is localized in a fault propagated fault hinge. It spans multiple stratigraphic horizons and appears to become pipe like at depth. And you'll note this is different than the more strataform nature of the mineralization at Goldrush.
Incidentally, the slide shows the detailed results of whole FM18-1D, which is an example of strong and continuous mineralization in solvitized breccia. Now let's get to those results. So the Fourmile area is pictured above where we're completing Titus based drilling and assays have returned to 13 holes to date with 10 of those holes intersecting significant mineralization in 2018. So that's a remarkable 75% of the drill holes this year. As you can see in the slide, the intercepts speak to themselves.
13.9 meters at 56.8 grams per tonne, 16.6 meters at 71.6 grams per tonne and 16.8 meters at 57.9 grams per tonne. And what's more open to the West where there's plenty of room to grow. And so these are truly exceptional results. And so for reference, these grades are well over double the average grades for Goldrush reserves and resources. This style of extremely high grade mineralization typically requires close based drilling for inferred resource classification.
As such, we're still on track to deliver an initial modest inferred resource at year end. It will take time to do sufficient drilling to define the full potential. In the meantime, bold wide spaced step out drilling continues in the general area to find more of these high value ounces. So the Goldrush deposit and Fourmile discovery truly adds to the remarkable story coming from Nevada and I look forward to sharing more updates from both in the future. So with that, I'll hand back
to Hillb. Well, thanks, Rob. So halfway through the year, we're progressing well against our full year priorities. We expect gold production and cost to improve steadily over the second half of the year and we're on track to meet annual guidance. The organic projects continue to advance on schedule and on budget.
We're really excited about the success of our exploration activities, as Rob just mentioned, and we look forward to updating the market on our progress at Formile and on our other programs over the remainder of the year. And finally, before we close, I'd like to add a few personal comments. By now, many of you will know that I'll be leaving Barrick to take on the opportunity as CEO of AngloGold Ashanti. If you can't get rid of me just yet, I'll be here through the end of August to ensure an orderly transition. It's truly been a privilege to spend the past 16 years at this company.
We have some of the most talented and dedicated people in the industry. The support and friendship of the entire Barrick team has been amazing and I couldn't be more grateful for it. Equally, it's been a privilege to work every day for you, our shareholders, and I greatly value the support and trust you've placed in us over the years. Barrick has an outstanding pool of talent with great bench strength and
I have no doubt that
the company will put the right leadership team in place to take Barrick forward. I'd like to thank our Executive Chairman and our Board of Directors for their confidence in me. And I'd also like to thank them and my Barrick colleagues from around the world their support and friendship. I'm looking forward to watching and cheering the company on and I hope that I can stay in touch with many of you on the call as well. That concludes the presentation.
And with that, let's open the call to Q and A.
Thank you. We will now begin the question and answer session. Our first question comes from Chris Terry of Deutsche Bank.
Good morning, Kelvin and team. Thanks for taking my questions. My questions are mainly on the strategy side and I guess where to from here. The first one I had is just around the JV with Shandong Gold and how you look at that going forward and what the opportunities are there? And the second one is just really around the copper portfolio and the recent performance of Luana and how you see that positioned in the medium term within Barrick?
Thanks.
Maybe I'll start, then maybe Kathy, you can join in as well as Craig. Chris, first of all, thank you for the question. I think in regard to Shandog, as we've indicated in the past, the relationship has gone extremely well. And the benefits of the ENHANZE agreement, I think, would relate to things like strengthening continue to strengthen collaboration between our 2 companies, more communication, knowledge sharing. We'll be looking at other investment opportunities together potentially as well.
We had indicated earlier that Shandong is also doing their own independent evaluation, focusing on the Llama side, the Casa Llama in Argentina. That's a high level evaluation that they're conducting, including looking at possible synergies between Llama and Veladero. So that work will continue. And again, they're doing that in family. But you should consider it kind of a new level of advancing the relationship, which has gone extremely positive so far.
Greg, could you tell me?
I'll just touch on the Moana. You're mentioning Moana's performance in the first half. The issue there was the crusher availability impacted really on the production. And that was a short term issue. The site management through SAM has managed that issue, and we don't expect that to continue into the second half of the year.
So we expect a stronger performance from Longliner in returning to
plan. And just maybe on the copper portfolio more generally, do you still looking to potentially monetize some of the assets down the track? Or have you changed your view at all in the lower copper environment? Or is it really just going to take for copper to rally and then you reconsider things from there?
Well, you sort of answered your own question. I think what we said at the Investor Day was very much that our views on copper remain the same insofar as we're a gold company that doesn't want to put gold funds into copper necessarily at this time. But I think with the strong well, up until sort of first half year, strong performance from our copper portfolio, our outlook for copper prices and our feeling that the our copper portfolio is could be with more daylighting to the market. I think at this moment, I would say we're still just it's business as usual with no imminent plans.
Okay. Thanks, Catherine. Just the last one for me. Any updates on Tanzania? Thanks.
Well, I think as we've indicated earlier, the discussions are ongoing. And I don't think there's much more to add to that at this point, Chris, but we'll certainly keep the market posted.
Okay. Thanks very much.
Thanks for that question.
Our next question comes from John Bridges of JPMorgan.
Good morning, Kelvin, everybody. Just firstly, the Fourmile, where possibly could you fit that into a production schedule if you were able to fast track it into the sort of Goldrush development?
I'll turn it over to Rob.
The honest answer is I don't really know. First, we need to finish scoping it out and then we need to do the various studies. But obviously, Goldrush is starting in 2022 and so it will be sometime after that. We need to put in a significant amount of development if we choose to go from the Guybrush exploration decline. So that will take some time.
Okay. Okay. And then following on in Tanzania. If the ACA sorry, if the UK regulator decides it's a related party transaction that or the it's a related party transaction and asks and Acacia puts the vote as a special resolution rather than an ordinary one, would that be a problem for the Tanzania decision when it finally comes through?
John, I'm going to put that
to Rich Haddock, who's here with its foil. And Rich is our counsel and has been involved in these Acacia discussions as well. At this point, everything we're working on is not a related party transaction. And if we're able to develop a proposal to put to Acacia, we don't expect that to the independent directors. We don't expect that to change.
Okay. Any new idea on when there might be a proposal for the Board at Acacia?
We continue to engage with the government with no artificial time lines on those negotiations.
Okay. Good luck,
guys. Thanks,
Our next question comes from David Houghton of CIBC.
Good morning, Kelvin, Catherine and team. Thank you very much for the update. I'd just like to ask on 2 aspects, Goldrush Fourmile being one of them, the other one is PV. So perhaps if I could start with Goldrush. Is it your thinking that this would simply be incorporated within the Greater Goldrush footprint?
Or are there enough differences between Fourmile Met and Goldrush Met to make you think a little bit differently on that?
Yes. We'll start. Rob will address Fourmile and then Greg will talk about PD.
At Fourmile, my understanding is that we haven't done metallurgical work, but visually the mineralization looks reasonably similar. It's probably going to be double refractory and probably going to be roaster oil.
Okay. And I've been hunting around, I just can't see maybe it's me, the kind of CapEx that you've been spending for the development on Goldrush so far this year?
Yes. So that's within our project spend and also within the capital within the Nevada site. So if you read the MD and A, we've got some sort of verbiage on it. But I take your point, you would like more detail on the specific spend at our individual projects.
Yes. I just looking for a breakout. It's a significant project coming forward and worthy, I think, of being broken out at this stage.
Phil, maybe you'd like to comment, if you can, off the top of your head, between the split between Crossroads, Range Front, Deep South and Goldrush at the moment, ballpark?
Probably won't be able to just drop them ballpark in terms of spend. We do have them all broken out, David. So I think what we can do is give an indication of that in future. But like at present most of our spend is obviously in the more advanced projects with particularly Deep South being at the front, Goldrush is following that and the spend profile in the 5 year timeframe drops off from there. But I'm sure as we continue to have fabulous results like this, we'll be looking to spend a lot more on in that time frame for those particularly form off, right?
So I think we can do something in future.
That'd be great. Thank you, Bill. I appreciate that. Maybe I could just move on to PV, if you don't mind. So going through now into Phase 56, you've got access there coming up in the second half this year.
And I heard Greg talking about the throughput flat for Q3 moving up into Q4. I'm just wondering if you could just give us a little bit of an idea about the throughput trajectory that we should be thinking about and the sort of grades that we can anticipate coming out of PV?
Thank you, David. The reason PV throughput is flat in Q3, I said similar to Q2, because we have 4 other parts there. We relined 2 in Q2 and we'll do the other 2 in Q3. So the production won't improve won't increase in Q3. It will return to full production rates in Q4, so which is a rate of around 7,900,000 to 8,000,000 tons per annum.
The grades you can expect we go into, we move back into grades of around 4 grams to 4.3 grams per ton will be the grades in the second half of the year.
Thank you, Craig. And with this maintenance schedule, should we be thinking frequently about Q2, Q3 as being soft periods for maintenance?
Because the schedule is not an annual schedule. It rolls on about 10 to 11 months, so it moves. So that number will move next year. It will be more likely moving into Q1 and Q3 rather than Q2 and Q3 sorry, Q1 and Q2 next year, sorry.
Sorry, go ahead, Greg.
No, I was just going to repeat, Greg.
Okay. So the heap leach looks quite interesting. I presume that you're only really going to be irrigated and then just I presume you'd put the pregnant liquor through the back end of your plant there.
Can you just That's not correct.
No, no, no, please explain.
This is a pre oxidation. We're actually oxidizing sulfur. We're not recovering gold out of that circuit. Effectively, we're washing sulfur out of the ore and then we'll pick that material up and put it through the normal process. What it does is it allows us to reduce the amount of sulfur going to the autoclaves, which allows us to process higher sulfur grade material than previously able to using the limited oxygen we had in the auto class.
Thank you for that explanation. And assuming that this pilot works to the extent that you'd like it to, when could you see it going into a full scale?
As we said, we're running a pre feasibility, which we should have in around Q3, Q4 next year. From there, we'll move forward. And then looking at in Q4 2021, having the full scale pre oxidation up and running.
Okay, great. Thank you very much. And Kelvin, before I leave you, best wishes for your new role at AngloGold, which I've also covered for 20 years. So our paths will be crossing again.
Well, thanks very much, David. I appreciate that.
Our next question comes from Carey MacRury of Canaccord Genuity.
Just wanted to see if there's any color you're looking at increasing potentially processing capacity in Nevada.
Yes,
Yes. Carrie, as we put out there, we're doing work at the moment. We're in the middle of a pre feasibility study assessing the different options. We're excited about what we're working through and we're seeing some very positive results. So we expect to be putting something to present in Q1.
So I think it will take till then, but we're very excited about the potential we've got. So we are doing that work at present.
And this is expansion of grocer capacity, I presume?
We're looking at the different options and that's looking at being the most preferred.
Yes. Karen, the order we're looking at going forward, as Rob said, most of it is refractory. So we'll be looking at either Autoclave or Roasters, so you're correct.
Okay. And then secondly, I understand that you've your concentrated Lamanna had what looks like decent amounts of cobalt in it. I'm just wondering where cobalt prices are. Is that something that you've looked at potentially recovering?
No, we haven't looked at it in the past. But now that you raised the point, we may look at it, but it's not on our horizon. I don't think we'll be looking at it.
We're generally looking at processing of our concentrates and considering what our options are over the course of this year. So we'll provide more information on that.
Our next question comes from Stephen of RBC Capital Markets.
Great. Thank you very much. Good morning. Just a couple of questions on strategy. As part of the Q2 severance expense of $30,000,000 my understanding is the projects team and head office no longer exists with individuals moved to other offices or, employment terminated.
I struggle with this a little bit. And I guess my question is, these teams are generally provide oversight directly to head office for major projects. Can you talk a little bit about the rationale for not having the projects team at head office? And does that imply that, A, there's no greenfields projects expected of any significance in the pipeline and B, M and A becomes a higher priority if you're looking at bringing on additional production at some point?
Stephen, thanks for the question. The difference between projects and technical services. Our projects team per se, we haven't had a full blown projects team in Barrick for some years. What you're talking about now is the technical services and the governance support team from a technical perspective. That team still exists in Toronto.
We have reduced the number of people in that team, but we still have oversight for all of the technical functions in our Toronto office: mining, mill maintenance and capital projects. Those roles will be decentralized and moving out to our Nevada office Henderson, but they still will be supplying oversight for the company. So we still have those functions available and we still use those functions. They're not only just for oversight and governance, but also technical support. So and also we are beating up the skills and the ability of our mine sites.
Our mine sites and our brownfields projects are being run by the mine site CFOs and the CEOs, but we still have oversight from Barrett.
That's helpful. And maybe as a follow-up question. In the recent announcement about the strategic cooperation agreement with Shandong, clearly that's advancing at various stages and various levels. I guess my question is, is it conceivable that Baer could end up with an operating joint venture in China or a development project in China? Is that something you foresee?
Or is this mainly a focus on the Americas?
Well, I think at this stage, that's not what the agreement implies. So the two things I think that are most important from the agreement or that I think people should be focusing on from that agreement is 1, the LAMA evaluation study and 2, our commitment to act as a partner and help Shandong create a mine of the future. And so what we're doing is working together. We're leveraging what their technology and advances are and the research and development they're putting into their own minds. And they're obviously leveraging off the work that we're doing to innovate and to move our minds into the 21st century.
So really, those are the two elements of the partnership that have moved to the next stage. We have always worked closely with our partners on any potential projects, assets, sales or M and A, just as you would with any partner, whether you have an agreement or not. It indicates a level of trust. So I just want to give you that sort of context so as to not answer your question directly, but really say that that's what the partnership agreement is supposed to be about.
All right. Thank you, Catherine. That's all my questions.
Thank you.
Our next question comes from Anita Soni of Credit Suisse. Good morning. Thanks for taking
my call. I just wanted to get an idea of how you see Calgary. So Newmont put out revised mine level production guidance this morning and I'm just wondering how you plan to offset that production decline in Calgary?
Yes, thank you for that Anita. The full impact of the well sleep at KCGM is just, as you said, Newmont put out today their guidance and their plan. We're working closely with Newmont. As you know, Newmont are the managers of that JV for on our behalf. So we're working through them.
We have built we had already built into our second half forecast some of the impact from that slip wall slip and we are now building the remainder of that impact into the wall slip. So even given that loss of ounces at KCGM, we will still be within our guidance limits for gold production for the year.
And I would also highlight that we the benefit of having a portfolio, you will see we've made changes across our gold mine to still end up at the same place. That really is the strength of Barrick is that we can have these external factors hit us, whether it's earthquakes, whether it's non operated joint ventures and still be able to meet our guidance. And I think that really illustrates the strength of our portfolio.
Sure. Thank you very much.
Thanks, Amina. I understand that's the last question. I know it's a busy morning with many earnings calls. So operator, thank you very much. And we'd like to thank everyone who dialed in today.
And I know that my colleagues will look forward to updating you on our progress during the Q3 call in October. So thank you very much.
This concludes today's conference call. You may disconnect your lines. Should you have any additional questions, please contact the Barrick Investor Relations department. Thank you for participating and have a pleasant day.