Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2022 second quarter results conference call. During the presentation, all participants will be in listen-only mode, and the conference is being recorded. Following the presentation, we will conduct a question- and- answer session. At this time, if you have any questions, please press star then one on your telephone keypad. At any time during the conference call, should you need operator assistance, please press star then zero. As a reminder, this conference call is being recorded, and a replay will be available on Barrick's website later today, August 8th, 2022. I would now like to turn the conference over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.
Thank you very much, and good morning and good afternoon, ladies and gentlemen, and welcome to our Quarter Two results update. At the halfway mark of the year, Barrick's performance and prospects continue to show the steady progress we envisaged at the time of the strategic merger when we radically changed its trajectory and started the journey towards a future-forward business. We have built a team and a structure capable of dealing with a range of global economic, social, and political challenges that are getting increasingly complex. We drove ownership of our ore bodies at the mine site and rationalized our portfolio to focus on world-class assets. We've shaken off the debt burden, strengthened the balance sheet, and introduced a dividend policy supported by our sustainably profitable strategy.
Our exploration teams continue to replenish reserves depleted by mining and in pursuit of our new Tier 1 discoveries and our growth opportunities. We've expanded our footprint across nearly all the world's major gold and copper regions. On every front, we're closing in on our goal of becoming the world's most valued mining company. At this point, I draw your attention to the usual cautionary statement shown here and is also available on our website. Now we can get on to the results for the quarter. In a testing operating environment, the team produced a stronger performance across the portfolio to keep us on track to meet our production guidance for the year.
At the same time, we've made significant progress in advancing our major capital projects, notably the massive expansion of Pueblo Viejo in the Dominican Republic and the start of the public comment stage on the Goldrush development in Nevada. The prospectivity of our copper portfolio is growing, and our energized brownfields and greenfields exploration continues to deliver results. Earnings were ahead of market consensus, and we maintained the quarterly dividend. Operationally, there were improvements across the board, and particularly at Carlin and Turquoise Ridge in Nevada, Veladero in Argentina, Bulyanhulu and North Mara in Tanzania, and Lumwana in Zambia. With strong gold production expected from Cortez in quarter four and copper production likely to be slightly up in the second half, we are still forecasting to be within annual production guidance.
Due to higher energy prices which flowed through to the cost of consumables and global supply challenges, both provoked by the crisis in Ukraine, costs are expected to be at or above the top end of our guidance, depending on how energy prices play out in the second half of the year. We're also now anticipating some slight project development delays of up to three months at Pueblo Viejo and up to six months at Goldrush versus previous market guidance, which I'll discuss later in my presentation. These are the numbers, and as you can see, healthy cash flows and a solid net cash position continue to support a robust return to shareholders. We've repurchased $182 million worth of shares under our $1 billion share buyback program, and we paid out Kibali's remaining cash surplus from the Democratic Republic of Congo.
It's worth noting that Q2 is traditionally our highest tax payment quarter as well as when we make most of our semi-annual interest payments on our bonds. Sustainability remains a key focus in every aspect of our business. To support our drive to net zero emissions, we have quantified our Scope 3 emissions, those produced by our value chain to get a full picture of our carbon footprint. This exercise has shown that Scope 3 emissions from our Tier 1 assets accounts for some 40% of the group's total greenhouse gas emissions, mainly from purchased goods and services, capital goods, fuel and energy use, and transport and distribution. We are now engaging with all our suppliers to help them set and achieve their own reduction targets.
On the health and safety front, the Latin America and Asia Pacific region has maintained its impressive record, reducing its total recordable injury rate for the year to date by 41% compared to the same period of 2021. This, I might add, at a time when we have 3,500 contractors added to the Pueblo Viejo's permanent workforce of 2,700 employees as part of our expansion project. Africa and the Middle East achieved a comparable reduction, but North America still needs to improve, and we'll continue to work on this. Despite the delay in energizing the Veladero power line, which will plug the mine into neighboring Chile's greener grid, we maintained our carbon dioxide equivalent emissions at the quarter one level. Average water use efficiency was again at 83%, ahead of the 80% target.
We invested $7.5 million in community projects through the mine's community development committees, bringing our year-to-date spend to almost $12.5 million . We also completed the public hearing engagements for Pueblo Viejo's new tailings storage facility, and Nevada Gold Mines renewed its partnership with Discovery Education and the Nevada Department of Education. Moving on to the operational section, we start our operational review in North America, where the management team has been strengthened by the appointments of Christine Keener as the region's Chief Operating Officer and Peter Richardson as the incoming Executive Managing Director of Nevada Gold Mines. A new North American organizational structure incorporating Nevada Gold Mines has been designed to integrate operational and project leadership to drive continued performance improvements and regional growth beyond Nevada and Hemlo.
Nevada Gold Mines had a good second quarter and is set up for further improvements in quarter three and quarter four. The complex is a core part of our portfolio, and following its creation three years ago, has produced 10.1 million ounces of gold and increased its pre-merger life substantially through an increased understanding of the ore bodies. It has also distributed $6.5 billion to its JV partners. For the quarter, Nevada Gold Mines posted an improved operational performance at all its sites apart from Cortez, which is transitioning from Pipeline, that's the open cast Pipeline project, to the next phase of Crossroads and is expected to start contributing its high-grade oxide ore in quarter four. The notice of availability for the Gold Rush project, as I indicated earlier, was published at the end of the quarter, which triggered the public comment period.
Given the delay, we now expect the Record of Decision in the first half of 2023. We are working on the impact of this delay and will update you when we release our 2023 guidance. Brownfields exploration is rapidly replacing reserves depleted by mining as well as identifying new targets. As you can see on this map, we have a wealth of quality prospects in Nevada, so let's take a look at just two of them by example. A 700,000-ounce maiden inferred resource has been identified at North Leeville, and both there and at the nearby North Turf, there's a high potential for further resource additions. North Turf continues to expand towards North Leeville with multiple high-grade intercepts. Underground drilling from exploration declines is expected to reach North Leeville late this year, when the two projects should be able to be combined.
Staying on the Carlin Trend. The Rain project is showing resource growth as well, where we have identified a new western mineralized corridor, Corona, just 250 m from the existing infrastructure. This new corridor, together with the JB corridor, will drive resource additions to Rain's maiden inferred resource of 1.2 million ounces, allowing us to advance this particular project to feasibility. I've indicated before that we want to expand our presence in both the United States and in particular Canada. Canada, which is in addition to being Barrick's home, is a highly prospective region with a mining-friendly jurisdiction. We've established a strong new business team there which has been evaluating multiple M&A and earn-in exploration opportunities to expand our portfolio. Four projects are already under option.
Hemlo, our Canadian operation, which was badly hit by the pandemic, has received significant attention as we work to rescope it. We have been completely remodeling the mine and as part of this, are considering a restart of the open pit. Down south, the Latin America and Asia Pacific region had a very busy quarter with the expansion of Pueblo Viejo and an intensified exploration drive led by a new team around our existing sites and well beyond them in new destinations. There's Reko Diq in Pakistan, which is a very exciting project that I'll tell you more about later. In Papua New Guinea, Porgera's progress towards reopening has been delayed by the country's election. However, we are optimistic that we can get operations restarted by the end of this year. Pueblo Viejo had a good quarter and is well-positioned to achieve its production guidance.
Meanwhile, its conversion into a long life mine is progressing and the location of a new tailings facility site has now been settled. Detailed engineering and updated costing of the new TSF should be completed in the second half of the year. As you may recall, the mine was heading for closure because its vast resources could not be converted to reserves due to limitations on its tailings storage capacity. The plant expansion and new tailings facility will extend its life to 2040 and beyond, with an average annual production forecast at above 800,000 ounces. Running a big mine while developing the massive expansion project is another demonstration of our Barrick management's ability to handle complex challenges. That said, the global supply chain constraints have impacted the timing of delivery of some key components, which is putting pressure on the completion date.
We now expect to be substantially complete by the end of this year, with commissioning commencing early into the new year. At the same time, Barrick's exploration team is looking for growth opportunities within the permit and the surrounding concessions, along with a full reevaluation of the district. Drilling programs to test both the Oro del Rey and Zambrano Norte targets are being finalized and will evaluate their potential to provide high-grade ore to the mine plan. As you know, Argentina has been going through some tough times, but Veladero nevertheless continues to improve its performance. With its fourth quarter traditionally a good one, the mine is still positioned to achieve its annual production guidance, although there are risks.
Construction of the first stage of its phase VII heap leach treatment facility has been completed, and construction of the final stage of phase VII is expected to start towards the end of the year. Exploration across the LATAM region is now being driven by one of three new exploration managers in the group who is working closely with a dedicated growth manager to evaluate opportunities. While the LATAM exploration programs and priorities are being refreshed, work continued across the continent with encouraging results this quarter from Veladero, where the team is developing several early-stage near mine targets. The LATAM region is prospective for world-class copper and gold discoveries, and we certainly have the teams with the required skills and experience to deliver them. Turning now to Reko Diq, which is one of the world's largest undeveloped copper-gold deposits.
In terms of the framework agreement between Barrick and the government of Pakistan, the project, which has been on hold since 2011, will be reconstituted and restarted. The mine will be operated by Barrick and in line with our philosophy of partnering with our host countries, it will be owned 50% by Barrick, 25% by the Balochistan provincial government, and 25% by Pakistan state-owned enterprises. This is an exciting opportunity for Barrick, but equally for the country and the province. We've been received with great enthusiasm and support by all the local stakeholders. This is Reko Diq's anticipated timeline. Pakistan has an efficient administration, and we're currently working with all parties to finalize the underlying definitive agreements. There's also a legislative process to be completed. Once all of this is done, we will update the existing feasibility study, currently scheduled for completion in 2024.
Production could start in 2027 or 2028. With its unique combination of large scale, low strip, and good grades, Reko Diq will be a multigenerational mine with a life of at least 40 years. Turning now to Africa and the Middle East. The region continues to excel on all fronts with a standout performance from the Tanzanian mines. Virtually at a standstill when we took over their management three years ago, they have been completely redesigned and re-engineered, creating what are in fact two completely new mines with the potential as a combined complex to achieve Tier 1 status in the Barrick portfolio. In Mali, Loulo-Gounkoto delivered its usual strong performance and is firmly on track to achieve its annual production guidance.
Of all our operations, this complex is the most exposed to higher fuel prices, but we're in the process of trebling its solar power plant's capacity, which will improve its energy source profile. On the exploration front, the Loulo district in Mali and across the river in Senegal is the gift that keeps giving. Brownfield's exploration is likely to replace Loulo-Gounkoto's depleted ounces this year. Just across the border in Senegal, our Bambadji and Diéma permits host multiple targets with standalone potential. In Central Africa, Kibali boosted production in quarter two, with throughput rising after the first quarter's planned mill maintenance. We now expect the replacement of the shaft winder in quarter four, which may impact slightly on production, but the mine remains on track to achieve production within guidance.
Kibali is Barrick's leader in renewable energy thanks to its three hydropower stations, which are shielding it from the full effect of higher fuel prices. Exploration continues to replenish the reserve base while also looking for new discoveries. In Tanzania, as I pointed out in the intro to our Africa/Middle East section, both mines hit their steady state run rate in quarter two, with North Mara increasing production by 18% and Bulyanhulu posting a 20% improvement. Bulyanhulu now has a life of more than 20 years and continues to deliver significant growth in reserves. Development of its new Deep West Extension is scheduled to start this quarter. North Mara's Rama open pit has been successfully ramped up and the new Gena pushback is scheduled for the second half of this year.
While continuing to replace resources depleted by mining, we are also targeting new opportunities within the North Mara district. We've expanded our footprint around Bulyanhulu through the acquisition of six highly prospective licenses, and we are also updating our geological models and generating targets, as I pointed out, in the North Mara region. Turning now to our copper operations. In Zambia, Lumwana increased its Q2 production by 32%, thanks to higher grades and improved mill availability. Jabal Sayid in Saudi Arabia produced a consistent production performance and, in line with Barrick's policy of recruiting host country nationals, has appointed its first Saudi general manager. Production at Zaldivar in Chile was also consistent. Strong exploration results at Jabal Sayid have identified multiple growth opportunities with ore body expansion potential, both at depth and along strike, adding significantly to the life of mine.
Major intersects shown here include one with an eye-watering 54 meters at over 15% copper. In Zambia, Lumwana has been targeting near-surface satellite deposits to support the conceptual pushback for the Chimiwungo Super Pit, which will unlock the operation's full potential and extend its life to beyond 2060. We are working on this and expect to commence a pre-feasibility study next year. Ladies and gentlemen, that covers my review of the operations. Now I want to go back to the dividend to demonstrate Barrick's commitment to shareholder returns. The $0.20 dividend comprises a $0.10 base dividend and a $0.10 performance dividend governed by the amount of cash, net of debt, on our balance sheet at the end of each quarter. On an annualized basis, this equates to a peer-leading dividend yield of approximately 5%.
Not only does our dividend framework deliver enhanced returns to our shareholders, it also provides them with flexibility and predictability throughout the financial cycle. To be used opportunistically when our shares do not reflect the value of our assets and prospects, we, as I pointed out earlier, introduced a $1 billion share buyback program, which we utilized for the first time this past quarter. To finish my presentation, I thought it would be useful to wrap up the previous slides and summarize how this is creating value for our investors. We have the industry's largest portfolio of world-class gold and copper assets, and it's still growing. All our mines have reality-based 10-year business plans, in some cases being rolled out to 15 years and beyond, with no significant production dips. We do not need to call on new projects to maintain our 10-year plans.
New projects, on the other hand, build on that solid production foundation we already have. In fact, our growth projects, such as Pueblo Viejo and Reko Diq, will boost our current long-term sustainability. Future growth is supported by Barrick's substantial project portfolio, which includes Donlin and Pascua Lama, our growing near mine opportunities that I've touched on in this presentation, along with a strong record of exploration success and reserve replenishment. Our sustainability policies and practices, ingrained in Barrick's long before ESG became a thing, deliver measurable results that benefit all our stakeholders. All of this is underpinned by disciplined shareholder returns. Let me end with this question: Where can you find a better investment case? Thank you for your attention, and we are available to take answers.
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 Greg Barnes of TD Securities. Please go ahead.
Yes, thank you. Mark, a couple of questions. First, on Goldrush's contribution over the next several years to Cortez. We only have, I guess, consolidated guidance for Cortez, and we don't know how much Goldrush contributes to that in 2023, 2024. Can you give us some idea of what the amount is?
Greg , we haven't really given much detail on that guidance, except that it really does take Cortez as a complex over 1 million ounces. That'll come as we define the project and conclude the feasibility study, then we'll be able to update that. We did give you a heads up last year, and I think that's, that stands at this stage. You've got a five-year and 10-year profile. That's, it's an integral part of the Cortez project.
A second question on Pueblo Viejo. You've picked a new TSF site for it. Has the government signed off on that as well? Do you have buy-in from them for that new site?
Yes, absolutely. Greg, the government has released a press release confirming that. It's all subject, of course, to our environmental license being awarded. We're comfortable. We've got the terms of reference agreed with the government, and we're busy with that. We expect to lodge that application towards the end of this quarter.
I believe, Mark, the government had a third-party review of independent experts reviewing these sites. They've signed off on all of two, I assume, given what you just said.
Yes. We've been working closely with the government. As you know, we started off with some challenges, but we've certainly found an agreeable way forward, acceptable way forward. In fact, you ought to see in the releases today that we've completed the public participation and consultation process as part of that.
Okay.
They were
Okay.
I would just add, Greg, they were successfully completed.
Okay, great. Thank you.
Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.
Hi. Good morning, everyone. Thanks for taking my question. Just a couple of operations that you've went through some of the ones that would improve in the second half of the year. Just wanted to touch upon Turquoise Ridge and also on which one's the lower one? I believe it was.
Cortez.
We'll start with Turquoise Ridge.
Cortez.
Sorry, let's start with.
Cortez, yeah.
Let's start with Turquoise Ridge.
Anita, you're right. The two big improvements are an improvement in Turquoise Ridge. I might add, Turquoise Ridge is really doing well now as far as Turquoise Ridge underground goes. The challenges are with the throughput and the processing facility and also Twin Creeks, the grade of some of the open pit material. You know, we're comfortable that Turquoise Ridge is on ramping up as per the plan, particularly the most important part of that business which is the Turquoise Ridge underground. As we bring the shaft three into production, we also have a development that's going out towards what we call BBT target, which is near the old Getchell pit, but it's an underground target. Again, we expect to continue to ramp up our underground operations there.
The big fill up is out of Cortez. We've been processing much lower grade open pit ore from Pipeline, and we're busy transitioning to the next phase of Crossroads. There's a very high-grade oxide portion of Crossroads that's in this year's mining plan, and we only get to it at the beginning of the fourth quarter, and that's a big step up. It's not changing throughput or anything like this. We use the oxide mill. It's got capacity. It's just about grade. We've spent a lot of time focusing in on the reserve model and its grade, and we're comfortable as long as we can keep the mining rate where it is today that we'll get access to that, and you'll see it come through at the back end of the year. Those are the two.
Okay. Great. Thank you.
T hose are the two big improvements if you look at it year-on-year. As I said, PV is pretty much on track. You know, we keep the similar run rate as quarter two. Veladero the same. Loulo-Gounkoto is bang on the run rate. Kibali, as I pointed out in my presentation, is seeing a slightly better increase in production both in quarter three and quarter four. North Mara is at the run rate, same with Bulyanhulu.
Yeah. I guess my second question was gonna be on Veladero as it's running under what you said, a slight improvement over the course of the year?
Yeah. I mean, we're really starting to.
Yeah.
Understand the leach dynamics in Veladero because of the. You know, no one's really focused in on what that dynamic is. We've been, you know, building the next leach infrastructure. Now that we've got that infrastructure working, phase VI, and we're moving on to phase VII, the big focus now is understanding the leach dynamics, how we manage through the winter months, and we expect that there should be an improvement in leach kinetics as we go into the summer. So again, we're forecasting an improved back, you know, last quarter of this year as we go into summer.
Okay. My second to last question relates to CapEx. I think you're running a little over 50% for the year, and I'm just wondering if your comments on cost being at or above the high end of the guidance range. Does that also apply to the CapEx numbers? Should we be a little higher on the CapEx numbers?
Yeah.
Considering the oil prices that haven't been priced there too.
They're interconnected, as you know. Some of the, you know, it's a big strip year. With the higher fuel price, there's potential that. If we get our full strip done, there's, depending on the fuel price, that. That's driving our overall cost profile. But that, you've picked up on it, that capital, sustaining capital does have an impact on all-in sustaining costs. We are managing it. I think the point that I'll make to everyone is, these things are important. We don't try and we have assets that support whatever gold price you come up with. We are, and some assets are delivering strong cash flow, others are requiring sustaining capital investments, but they all our assets survive at any except, you know, sort of imaginable gold and copper price.
They're designed to manage through the cycles in a profitable manner.
Okay. Thank you very much.
Pleasure.
Our next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.
Thanks very much for taking my questions. Maybe I'll ask the first question on just to circle back with something you mentioned in the introductory remarks on Canada. Can you give us a little bit more color? I know there's been a number of transactions that have, you know, come and gone in Canada, both on M&A and on exploration. What are your current thoughts, or what are you currently seeing in the landscape out there today in Canada? Thanks.
Well, Jackie, there are two things. First of all, you know, as I've said on many occasions, we are very disciplined in how we look to grow. When opportunities come and they are not able to meet our investment criteria, we don't transact, and that's what's happened in Canada recently. That doesn't mean to say that we're not committed to still growing in Canada. I often say, if we can't buy it, we'll find it. That's really been our focus overall, because otherwise, you know, if you just rearrange the assets in our industry, you don't create any value, as we've seen over the years. That's where our real focus is. We've got a great team in Canada. We are slowly building portfolios.
We have four different projects that we're focusing in on at the moment. In the fullness of time, you'll see that. At the same time, in times like this, where you get a sudden pressure on the industry and particularly the market itself, that puts the junior market under stress. Again, that makes sense for us to exploit, and we do that. I think I would end up with the fact that, you know, we've never bought any exploration project at full value, and we don't intend to start.
Well, that's a fair comment, and you guys have definitely been disciplined in that. For my second question, maybe I'll ask you for an update on the process at Porgera. It sounds like you've come to an agreement and you're just going through a public notice process. Can you maybe talk a little bit about how long you expect that might take and when you might be able to put Porgera back into your guidance, if you have an idea on that? Thanks.
Yeah. You know, we were going along. We've had this conflict with a structure that in the old Porgera held 5% equity. Again, it held it for the benefit of the key SML landowners. Those landowners have now signed up for the new transaction and the management of that particular vehicle is resisting following the guidance of their own shareholders. That's a process that we're dealing with. At the same time, the elections, as you know, have been rather complicated. We expect, and we have a process. The electioneering process is now in a program which should result in the person who or the party being designated to form a government.
It'll be invited by the governor general. We're right in that process as we speak today. We expect during this week to have a good feel of who's gonna be leading the next government. Once that's done, we feel that we'll be able to get on and close out, because that's all we need, is we need a shareholders agreement. We have agreement amongst the key stakeholders, the landowners, the provincial government of Enga and the other landowners, and everyone that was included in the framework agreement as beneficiaries. It's about finalizing the shareholder agreement of the new Porgera, applying for the SML, Special Mining License, which will then allow us to move towards reopening the mine. That's the process.
Right now, I was there a couple of weeks ago. We met with the prime minister of that time. We are now in a period where there is no prime minister for a couple of days, and then we'll see the new prime minister's appointment this week, and we'll be able to get back to progressing this project.
Sorry. It sounds like there's a lot going on, but do you think that it's reasonable to assume it'll restart for 2023?
One thing.
2023.
I've become used to is that Papua New Guinea doesn't always work as a reasonable state.
Sure.
We'll keep working on it. I think our relationships and our confidence that everyone that is anyone in that process has got to a point where we understand where we wanna get to, and it's going through the process. Of course, as you know, we've always respected the various stakeholders in any one of our businesses, and this is another one of those groundbreaking transactions. The gold is still in the ground, and we're very comfortable that once we get the rules right, the agreements in place, we'll be able to operate comfortably back in Porgera.
Thanks. Thanks, Mark.
Pleasure.
Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.
Hi, Mark. Nice to hear from you. Thank you for the update. I wanted to come back to Pueblo Viejo, the CapEx. In the MD&A, you guys flagged the potential for a material increase in CapEx, depending on various factors. Could you maybe just speak to what are some of the factors driving that potential increase and to what extent is the delay factoring in? Thanks.
Yeah. We need to finalize the feasibility study. You know, we had an initial site which created all the controversy. We have moved that site, and the new site, as we flagged when we moved it and we had different choices, comes and the driver is really volumes. The volume of the key for the walls of the dam and also the total volume to build the walls. If you remember right in the beginning, we talked about, you know, the two different sites and the variations as far as being able to build those tailings facilities. At the same time, the new site also comes with more volume. That's what we're busy doing now.
We're well ahead of our program to drill out the foundations to ensure how much we have to excavate and what's the size and components of the key that we have to put in for the wall, and then we'll be able to share that with you. What I can tell you is that the economics are still very robust, Lawson.
Okay. That's helpful. Maybe just to be a little bit more clear, if I'm hearing you correctly, it sounds like, you know, there is going to be some increase from the $1.4 billion estimate, and you guys just need time to figure out how large that's gonna be.
Yeah.
How Material it is. Is that fair?
That's exactly right. Yes. It's a whole package. We wanna get that settled. We wanna apply for the permit. We've got to apply for the permit. We'll have a pre-feasibility sort of level estimate at the end of this quarter, and then we'll share it with the market.
Great. Can I also ask you about your new Asia Pacific team? Could that team, and I believe it's based in Perth, could that be interpreted as a desire for Barrick to reenter Australia after exiting a few years ago? And if so, is M&A something that might be part of that reentry strategy? Thanks.
You know, the focus for that team is. By the way, that team is not running Porgera because there was sort of a rumor that we're gonna run Porgera remotely. We're not gonna do that. Our intention, and we've already got a full Porgera team in Port Moresby. We've still got some infrastructure in Cairns, and we're gonna, we will move all the significant leadership roles for Porgera to Porgera and Port Moresby in line with our commitment to be host country-based. Perth, the Perth team is really charged with. It's currently working with the team in Pakistan, so that leadership structure will support our Pakistan project as we build the capacity, and we've already started employing people for that project.
It's to look at the entire part from Pakistan south and east, all the way to Papua New Guinea. Theoretically, there's nothing stopping us going back into Australia, provided that we can find things that fit our criteria. As you know, Australia's quite a mature destination for exploration. M&A, you know, my experience in Australia is it's not the place to go hunting bargains.
Our next question comes from Josh Wolfson of RBC Capital Markets. Please go ahead.
Thank you very much. Just following on Lawson's question about Pueblo Viejo capital. You know, I understand there's a range of possible options for the tailings dam and the volumes and energy prices associated with that. But if you had to sort of provide some sort of goalpost for us to think about in terms of what a material change would be for the capital, you know, is there a percentage we should be thinking about? Or any information you can provide there?
Josh, it's got nothing to do with power. I just explained to Lawson, it's gotta do with the volume of material we have to move. We're busy going through that process of designing and calculating that, and I think it's appropriate for us. First of all, we need to share it with the government when we get to that point, and then we'll share it with the market. You know, I think we're. It is substantial, but at the same time, it still delivers very robust economics. This is a project that goes way beyond 2040 and you know, by all accounts is gonna deliver production above 800,000 ounces a year. We're busy with that feasibility study. When we're there, we'll let you know what it is.
Looking at the timelines for the project or for the expansion there, when would you expect to be at a steady state run rate of that 800,000 ounces or higher? Looking at the changes with the commissioning sort of timelines, how does that affect the 2023 production numbers?
You know, the guidance for the expansion, they're not directly linked. The tailings facility, what we had to manage was if we weren't gonna get the tailings facility, it had a significant impact on the operation. The whole profile was gonna change. We would have had to stop mining and so we had to manage that because otherwise we end up with nowhere to put the waste, and it's acid-generating waste. That's now clear, so we can move ahead. In the meantime, with the endorsement from the government, we continued with the expansion program once we were clear in obtaining a footprint to build the new tailings facility. That expansion program is the one that we're referring to as being delayed.
It was originally forecast to be quarter three, and we're now saying that it'll be substantially complete at the end of the year, and we'll commission starting in the new year. That is, to remind you, that really changes the front end of the plant from 9 million tons a year feed to 14 million tons. What it does is that we reduce it in a flotation circuit, and so the back end of the plant still has a capacity of around 9 million tons. By doing that, we continue the run rate gold production rate from the past and slightly better if we can. We keep the costs low. That's the process.
Now that we've got capacity to store material, now that we know that we can continue at ramping up the new expansion, next year will be a better year, of course. Then we should get to the sort of planned run rate towards the end of next year or the back half of next year. 2024, we'll be back in those high production profiles.
Okay. Maybe just thinking about the impact of the steps for the remainder of the year and the project completion, is there any kind of interruptions we should expect to see in you know towards maybe the year end with the commissioning process or with the construction activity?
That's what I pointed out in the presentation. You know, we're running multiple construction streams in parallel with the operation. When you see the performance of this mine, it's spectacular. It's absolutely spectacular. We've got 3,500 extra people. I don't know if you've ever been there, Josh, but it's quite a small footprint. On top of that, this is our best safety site as well. All round it's. We've already done some tie-ins and we'll continue. We've been very focused on the tie-ins. You know, we're very comfortable that the team understands exactly what it needs to do to deliver. Again, this is, like many of our businesses, you know, we're building long-term value.
Our focus is ensuring that we deliver that solid foundation on which we can operate for the next 20-30 years. You know, experience has certainly taught me focus in on making sure it's done properly and the rest will come.
Great. Thank you very much.
Our next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.
Oh, great. Good morning, everyone, or good afternoon. Thank you for taking my questions. Maybe it's just on some of the development projects. I'm just gonna circle back and finish off on Pueblo Viejo so I understand the timeline, Mark, from you. We are working on a pre-feasibility study that is gonna be completed in Q3. Will we be getting an update with Q3 results on your findings on the pre-feasibility study then?
Tanya, it's all it is the cost of the tailings facility. We'll release that once we've got a good idea of what that number is. We need to deliver it to the government as well because remember, this is all part of our agreement with the government on a big expansion. It doesn't really impact the program of ramping up the expansion. The expansion is different to the tailings facility.
Yes. No, I appreciate that. Sometime Q3, maybe Q4.
Yeah.
We will get.
Yeah.
A new costing number for the tailings. Is that.
That's a fair assumption. Of course it's in our interest to give it to the market as soon as we can.
Okay. The permit which you are going to be filing in Q3 2022, when are you expecting the permit to be granted to you?
Yeah, it's a project that's been going on in parallel in consultation with the government. You know, I mean, Grant's on the call. Grant Beringer, do you wanna have a crack at that? Do you know how long it takes?
It is dependent on the government review. We intend to submit the ESIA towards the end of this month, early in September. They obviously need to do their review, the government, that is. We are expecting it in the first half of next year.
Okay. Is it when you are granted this permit that we would look at that resource to reserve conversion, in your reserve statements?
No. It's, you know, Rob, do you wanna comment on that? It's once we are clear, and we're comfortable that we'll deliver.
Yeah. You know, once we're
Carry on.
Yeah. Once we are clear that, you know, that we are gonna get the permit, then we're happy to sign off on the reserve increase. We don't necessarily need to have the terms in hand. We just need to be confident that there's nothing that's gonna impede that granting of the permit. Once the issue is done, we're happy and we engage with government, you know, then we're happy to declare the reserve increase. Still expecting that reserve increase this year, Tanya.
We could get it this year, so with your year-end financials.
Yeah.
Just for clarity, with the plant expansion and all of the tie-ins that we may need to do, you know, at the end of this year, is it safe to assume that Q4 might be slightly weaker than Q3 because of these tie-ins?
Sort of within plan. It's gonna be there and thereabouts, Tanya. No, we don't expect any significant variation. Of course, we'd like to bring any production a little bit more into Q3 to ensure that we have that flexibility you refer to. You know, right now we're not looking to go beyond the sort of run rate that for quarter four, the run rate that we've had in the first two prior quarters of this year is still achievable.
Okay. When we come to this CapEx number for the tailings, Mark, I remember, I think from the previous conference call that of the $1.4 billion, I think $500 million-$600 million was the previous tailings facility. Is it safe to assume that whatever CapEx increases are going to occur, it would be on the $500 million-$600 million separate from the remaining $1.4 billion+ obviously we've got three months delay, so there's a bit of costing on that.
Yeah.
Is that a safe assumption?
Yeah. There are some increases as we point to in the expansion project. That's within the guidance. You know, then we will redefine the tailings facility capital estimates along with the new plan, once we've done the drilling. Tanya, it's really about the drilling, the estimates on volumes. You know, how deep do we have to dig the key to tie it in? Because remember, this mine sits in a seismic active zone. Our current El Llagal tailings facility is probably the best constructed tailings facility in the world today. We have absolutely committed to ensure that this tailings dam is designed like that one, if not better, to ensure the safety and competency of the facility itself.
No, no, I appreciate it.
But.
I appreciate that.
Your assumption.
Oh, go ahead.
Yeah. Your assumption is correct.
Would it be that whatever CapEx increase we have, I should, you know, look at it based on the $500 million-$600 million?
Yeah, it'll be in addition.
Compared to that.
To that.
This tailings.
Yes. It'll be in addition to it.
That's correct.
Okay. Maybe I'm just gonna leave Pueblo Viejo if I could, and I just wanna come back to just Nevada. Just two things on Nevada. Just the delays on, you know, on the Goldrush. You started the public hearings. Maybe just an update on how that's going. Is it because we're having issues on the public hearing side that we slipped six months? Maybe just a little bit more detail on the slippage there.
No. We're not having any delays. As you know, in the United States, permitting takes time, and you need to consult. We are in that consulting process. I might add that there was slippage on the Notice of Availability. The BLM and the Department of the Interior worked very hard, and we were able to bring that forward after some slippage. That's encouraging. Our teams are completely engaged along with the BLM and the external consultants that are working with the BLM to progress the permitting of this asset. Tanya, that's the. Again, the impact this has in the long term on Cortez is enormous. You know, it really takes Cortez as a complex over 1 million ounces.
You've got Carlin at 1.5 million- 1.6 million ounces. You're gonna have Cortez at over a million ounces, and then Turquoise Ridge at the sort of 600,000-ounce mark. Those are three world-class assets that really are the foundation to Barrick's production profile. I would suggest it's equally important to our partners in Newmont to ensure that we build that foundation properly. You know, this is gonna go on for a very long time. Goldrush, then Fourmile. We've got some very exciting projects. We touched on North Leeville, and the Wren Project. We've got numerous other projects across the Carlin portfolio that have potential to continue to deliver opportunities as we go more and more underground.
We've got those greenfields projects that we've touched on in previous quarters, and we'll update you again towards the end of the year, which is the ones that sort of taking down the fence has created. I'm talking specifically the gap between Turquoise Ridge and Twin Creeks and then you know South Carlin and then of course more opportunities around the Cortez complex as well. You know, I'm super excited about the potential that both the brownfields potential adding life and the greenfields potential that our exploration teams are now starting to identify.
I'm just trying to understand whether there was any issues with the, I guess, the local.
No, not at this stage. Of course, we're gonna have lots of detractors, and we're gonna have to engage in a robust way to keep this project moving along. At this stage, we do not have any concerns about the process or the arguments for and against.
Okay. If I could, my last question is just on Long Canyon. I see that it's no longer for sale. You've took that off. I'm just wondering what's the change there. Do you see something different for this asset? Maybe the, you know, underground potential maybe. You know, what's changed there?
This asset was one of those that, you know, the market didn't get it right in some of the assets. Remember, when we did the deal with Newmont, it was a hostile deal. We had to trust the market. The next phase of Long Canyon hadn't been permitted. It's been a great asset to date. It's got resources. Our view was that it didn't really fit. It's an outlier within our portfolio in Nevada. We felt that that was an opportunity to see if there was anybody else who wanted to take this project on.
The interest that was shown on that project, just like, by the way, Tanya, remember Lumwana, when we put it on the market and then, you know, people felt this was some way, you know, you could bargain hunt? Well, we're not prepared to do that. We couldn't get anyone that we felt had the capacity to ensure that our model of responsible mining would be respected in Long Canyon. It's still got some residual leach potential. Our team is now refreshing the process of continuing to license the project, and we're comfortable that we'll manage that.
On top of that, the sale process got caught up with a sudden drop in the gold price, sentiment turned, lots of things. You know, we definitely are not in a frame of mind of a fire sale in Long Canyon. It's back in our portfolio.
Now you're circling back and looking at permitting and maybe.
Yeah.
Looking at the ground.
Exactly. Exactly.
Okay. Thank you so much for taking my question.
Pleasure.
Our next question comes from Jatinder Goel of BNP Paribas Exane. Please go ahead.
Thank you, operator. Good morning and good afternoon. First question on Cortez and Fourmile royalty that Rio Tinto sold to Royal Gold, was there any interest from your perspective, Mark, to acquire that royalty stream or at the JV level at NGM, or did it not make financial sense?
Jatinder, you know, as everyone recognized, it's quite a big price tag, what was paid for that royalty. Of course, we're always interested. I think it would be incorrect of me to disclose our corporate considerations and strategy around that. I think one thing that's important is it's a real endorsement on the capacity of both Nevada Gold Mines management and its ability to grow that resource. I think that's what's in the price, is that belief that we can continue to grow that resource. From Nevada Gold Mines' point of view, you know, our focus is to grow our resources. We'd rather spend money, particularly at that sort of level, back in our ore bodies. I hope that explains your question adequately, Jatinder.
Yes, thanks, Mark. Just to follow up on that, I mean, you run the assets, so no one else can know about the reserve resource and potential production and cost situation better than you, especially sitting outside, whoever's evaluating that. From that perspective, is it a difference in gold price assumption that would result in a different valuation, or was it a question of you trying to put your money at better places, as you said, on exploration rather than trying to buy back the royalty stream?
Yeah. I think you've answered your own question, Jatinder.
Okay. That's very clear then. Just one more on cash flow modeling perspective. From Kibali is it going to be once a quarter with like one quarter lag type of cash inflow repatriation, just to see the consistency of that cash coming through? Or can it still be subject to different timings in terms of how it comes into Barrick?
We are busy progressing that. The agreement that we have with the government is that we will split the cash flow more or less 50% towards repaying the outstanding debt, and 50% towards dividends. That way, everyone gets a bit of the slice of the cake, particularly our partners, SOKIMO. They get the dividends, the government gets the withholding tax on the dividends, and we see a continual wind down of the outstanding debt. That's the plan. Whether we do it each quarter or biannually, that's something we'll make a decision on. We'll certainly inform the market.
Understood. Thank you very much, Mark and team. All the best.
Yep.
Our next question comes from Brian MacArthur of Raymond James. Please go ahead.
Good morning. Most of my questions have been answered, but I just wanted to follow up on a comment, Mark, you made about Bulyanhulu. You talked about, you know, 20 years now, you've sort of rebuilt the whole mine. A number of years ago, there was talk that this could be a much bigger mine than it currently is. Now that you've got it figured out, the new mine, you've got a long reserve life, is there any possibility of going towards those 500,000 ounces a year numbers that were talked about maybe 15 years ago?
The best way to explain that, Brian, is there's no chance and probably no other chance.
Okay. That's good to check.
Because let me explain to you, that was what kept failing, Bulyanhulu.
Yeah.
You know, this is an ore body that can deliver about 250,000 ounces, between 200,000 and 250,000 ounces a year. It's a narrow ore body, high grade. Every time you push the tonnage, you reduce the feed grade, and you just can't make it work. The only way we will get that increase is to open up new working fronts, so new faces. To do that, you need additional ore bodies. That's why we did the deal and expanded that footprint around Bulyanhulu, because our geologists feel that there's certainly potential for additional ore bodies and that perhaps there's a bit more folding than people in the past understood.
If we could open up additional working areas and not rely on, one, the current infrastructure on its own, and two, you know, trying to mine, you know, at any faster rate given the size of the ore body, then we could add to it. That's why at this stage, the life of the mine just gets bigger and bigger. North Mara is about 300, a little bit more maybe, depending on grade, producer and Bulyanhulu is just over the 200,000, maybe up to 230, 240 thousand ounces a year. If you add them together, there's the 500,000 ounces. They're both good cost mines.
You know, Bulyanhulu's got a longer life than North Mara, but North Mara is equally got more untested prospectivity today than Bulyanhulu has.
Right. That's what I thought, but I just thought I'd check with you. Thanks very much.
Once again, if you have a question, please press star then one. Our next question comes from Adam Josephson of KeyBank. Please go ahead.
Thank you, operator. Mark and Graham, good afternoon. Hope you're well. This kind of a two-part question about costs for either of you. Can you talk about what assumptions are embedded in your thinking that gold cash costs will be at the high end or perhaps slightly above your full year range, bearing in mind that global commodity prices, as you know, have been falling quite precipitously in recent weeks. If in fact you end up at that, the high end or slightly above the high end, what do you think a reasonable expectation is for next year in terms of cash cost per ounce?
I know you've said that you've indicated you expect production to be up to some extent next year. With that in mind, again, at this early stage, what do you think is the most, i s a most reasonable expectation for what the year-over-year change might be, if any?
I'm gonna try and just talk to the operations, and I'll let Graham fill in the gaps.
Thanks, Mark.
Adam, the point here is, you know, one minute we're talking about high gold prices and how that's gonna change the world, and then everyone has seizures over the costs. At the end of the day, they are what they are and you've got to manage them. One of the things that we're absolutely in is inflationary times, and we can wish that away, but it's not gonna happen until somebody does something about it. We are dealing with costs and on top of that, we've got the Eastern European crisis, Europe crisis, which has brought, you know, a very stressed fuel market to bear. That's both oil or diesel and gas. The gas markets are moving around.
You know, the amount of gas being exported out of the U.S., for instance, where we are, you know, where we rely and are growing our capacity to take on more gas power generation. Those are all complex situations. You know, you can't just look at the commodity price and say that's gonna be what it, you know, that's gonna be able to be imputed through to the cost. On top of that, Barrick at the moment has a number of big sustaining capital programs, particularly strips in our pits. Again, that comes with extra cost and extra fuel costs will impact on those too. We're just giving you the numbers. This doesn't put us at risk.
I mean, that's the good thing about having world-class assets is it doesn't put us at risk, and it certainly doesn't impact on the way we allocate capital. It's in our job as managers to manage that impact. Absolutely right now, we don't wanna compromise any of our commitments as far as capital goes, whether it's growth capital or sustaining capital, because, you know, we're probably the only gold company and copper business that doesn't rely on a new project to deliver our five-year plan and our ten-year plan. We're absolutely comfortable with our ability to manage the cyclicality of the commodities that we mine.
You know, of course, we've taken about $500 million out of Barrick's logistics, supply chain, and procurement. In fact, we've got budgeted improvements again this year that'll offset the inflation pressure, whichever inflation it is. You know, the issue around Eastern Europe or just general embedded inflation, which, you know, is something that you can see everywhere at the moment. Everyone still denies that it's a real issue for our global economy. With that, I'll pass it on to Graham. He can give you some additional color on how we look at the capital. I mean, how we look at the costs.
Yeah. Thanks, Mark. I mean, I think you've really addressed the question quite well, and it is very tricky to be forecasting costs in the current environment. I will just say that the current guidance for 2022 in terms of this, you know, at or slightly above our previous guidance is a function of an expectation of $110 oil. As you would have seen, you know, a few weeks ago, we were trading over $120, and then we dropped below $100. It's moving around all over the place. It's difficult to predict, and that's why we're reluctant to be drawn on a particular number.
As we look to 2023, as Mark has indicated, it's, you know, so much depends on the global economic environment when we get there. I think that's something we'll give you guidance on at the end of the year, as we always do.
Yeah. No, thank you. Mark, just back to what you were saying about. Yeah, we look at some of these commodity prices falling hard, and as you said, some people are quick to assume that inflation's gonna dissipate, go away, whatever the case may be. What you're saying is that it's not, that's just not the way it's looking at all, that supply chains are still quite problematic. Can you just go into what you're seeing, Mark, in terms of supply chains, et cetera, and how that's affecting the inflation that you're dealing with and presumably affecting what you think will be the persistence of that inflation?
Yeah. Supply chains, you know, it's one is the cost, the other is the ability to manage it. I think the latter, we've got our head around it. You know, we managed COVID extremely well, the team did. I often use the example that we moved our purchases for steel balls from China to Europe, back to China, back to Europe. You know, we have the flexibility of multiple suppliers. We've beefed up our inventory to beyond three months and even a little bit more in some of the core assets that are, you know, that are under threat because of the Ukraine crisis. There are a number of crises developing at the moment. We're not sure exactly.
You know, you've got the U.S.A.-China issue recently been sort of exacerbated by what happened around Taiwan. A number of issues developed. The way we manage that is ensuring, one, we have partnership relationships. We are very significantly contracted, and we've got excellent supply infrastructure now and ability to procure. I'll give you an example. In PV, we had some real stress on some key components on the expansion, and what we've been able to do is move steel into the country and we are building a manufacturing industry there. We've been able to manufacture a lot of our equipment for Pueblo Viejo without, you know, hurting it too much on the delay, because otherwise we would have had a situation where you don't have control of the delivery.
My personal view is, in like every crisis and particularly every big inflation period, or global economic crisis that I've lived through, it's always worse than it seems, and it takes longer to come out of. We as the global economy have very few people around that understand inflation. I certainly lived through the last significant inflation period, and again, it requires diligence. It definitely requires world-class assets, and you will get through it. It's agility, innovation, and most importantly, the skill profile of your employees, and then we'll get through it. I think Barrick boasts all those components required to manage this situation. I think just to finish, Adam, if I may.
Yeah.
You know, I often.
Yeah.
Point out that this world is, you know, it's so muddled. We went from COP26 where everything was gonna be green and clean to a situation where all that was thrown out the window and now look at where we are. We're burning coal and every other bit of fuel, fossil fuel we can. Just like COVID, there's no global coordination. There's a lot of sort of disengagement. What I, you know, refer to the issues we dealt with in COVID as COVID nationalism, and you're seeing the same again. On top of that, no one's caring about the emerging markets. Then when you look at the drive behind some of these ESG strategies, none of them seem to be sustainable.
Sustainable is the real focus when you talk ESG, is how do you build sustainable industry, a sustainable global economy? You can't do that without investing in the developing world, which has largely been neglected. Even last night in the United States Senate, they passed this big bill, but no one even mentioned the emerging markets and the developing world and what is needed there to bring them along. You know, we all know that this world. There's no island on this world. You can't do things in isolation. More and more we see evidence of that happening. At the same time, all this requires more and more mining, more and more responsible mining if we're gonna get it right. You know, what we and Barrick are very clear about, our core focus is sustainability. We look at high quality assets.
We look to develop them wherever they are in the world, and we benefit our host country stakeholders as much as we benefit our own shareholders.
Thank you for that, Mark. Just one on the buyback, if I may. Obviously, last quarter, inflation was intensifying and gold prices fell from $2,050 all the way down to $1,700, and I assume that's what caused the dislocation in your stock that you were thinking about. Was the dislocation in your mind more about the gold price having gone to $1,700? Or what specifically was the dislocation in your mind? Relatedly, do you expect these buybacks to be ongoing, or should they be? Should we not assume or expect the level of such buybacks in subsequent quarters for whatever reason? Thank you.
We were very clear that, you know, we're gonna use this facility to buy back our stock when we feel that it's trading at a discount to what we feel is fair, and tighten up the market when we can. That's what happened last quarter. As you point out, the share price showed a lot of weakness and we went into the market in a considered way. You know, we're not planning to buy back all our shares. In a considered way, we were active in the market. Again, you know, today, we feel the same applies, and we will continue with this buyback strategy that we shared with the market.
Again, in a considered way, all the time we feel that, you know, it's in the interest of our genuine long-term shareholders to take out some of the softness in the market when we can.
Thank you, Mark.
There are no more questions from the conference call.
Well, again, ladies and gentlemen, thank you very much for your time. It was an efficient use of your time, I'm sure. Again, thanks for the questions and as is usual, if there's anybody out there who failed to think of something to say or ask or didn't wanna ask it in this public forum, we're always available to take your questions as a management team. You know us all, and just reach out to us or reach out to Lois or Kathy, or any of our investor team, and we'll make sure that you get the answer. Again, thank you very much, and enjoy the summer for those in the Northern Hemisphere, and we'll speak to you soon.
This concludes today's conference call. Should you have any additional questions, please contact the Barrick Investor Relations Department. You may now disconnect your lines. Thank you for participating, and have a pleasant day.