Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick's results presentation for the first quarter of 2023. Following today's presentations, a question and answer session will be conducted. If you have a question and are joining the event by telephone, please press star, then one on your telephone keypad. We will also be taking questions from those in the room. As a reminder, this event is being recorded and a replay will be available on Barrick's website later today, May 5, 2023. I would now like to turn you over to Mark Bristow, President and CEO of Barrick. Please go ahead, sir.
Thank you very much. Ladies and gentlemen, a very good morning to those here in Toronto and of course, a good day to those around the globe. As you know, we're going to be talking about our results for Q1 2023 today. I thought I'd start off by just pointing to the fact that as the different global powers seek to extricate the world from the many challenges and indeed crises we currently have to contend with. We hear a lot of talking, but don't see much action. Instead of fantasizing about some post-industrial idyllic state, the world's political and business leaders should perhaps be considering a better future for all, not just for the wealthy countries. This requires, of course, investment in the development of sustainable enterprises driven by cleaner energy and extending to the many parts of the world.
In fact, most of it, which have been left behind by the West's economics advances. Mining has historically been the catalyst for economic growth in underdeveloped countries. I would argue that the case for investment in mining in those countries is stronger than ever, particularly as many are rich in the resources required to make the world a better place for all. At Barrick, we have always been committed to investing in the future. In the process, we have created some remarkable value for our broad base of stakeholders. I'll share a few instances of those with you in the course of this presentation. This is the usual cautionary statement, a copy of which can be found on our website, should you wish to study it more closely.
As guided at the start of the year, Q1 was a softer production quarter, due mainly to the major planned maintenance exercises at Nevada Gold Mines and mine sequencing at Kibali. Free cash flow increased despite the lower production, while adjusted net earnings per share also increased to $0.14. Operational highlights included the near completion of the massive Pueblo Viejo expansion project, which I'll tell you more about later, a robust performance from Turquoise Ridge and the delivery of first production stopes ahead of schedule from the new Gounkoto underground mine. All in all, we're in good shape to ramp up our performance throughout the year. I would point out that we are not forecasting a hockey stick end, but a stepwise move through the year.
We also recently published our annual sustainability report. If you haven't seen it yet, it's well worth a look, and it's on our website. Group operating results. This is a summary of those operating results which lists the factors that impacted on production in Q1 and those that are expected to drive performance through the latter half of the year. This should ensure we achieve our gold and copper production within guidance, as well as the cost guidance we provided at the start of the year. Despite the lower production, our high-quality asset portfolio increased free cash flow and allowed us to maintain a $0.10 quarterly dividend in line with our performance dividend policy. Our tax contribution report was also published last month, which highlights our significant contributions to the countries where we operate.
As shared with you last quarter, we experienced three tragic fatalities in January. We've taken a long, hard look at our safety protocols and practices, during a week-long group-wide workshop, we evolved a new approach, which we have called the Journey to Zero. Every one of our corporate and regional leadership teams have spent time at the operations reinforcing our organizational values captured in our DNA. Reminding ourselves that safety comes with caring and committed partnerships, where we call on unsafe practices and stop work until we have a safe way to continue. Subsequently, we have seen an encouraging decrease in the number as well as the severity of work-related injuries. As I said, this is a journey we have just commenced and to which we are fully committed to achieving. It's actually quite encouraging.
Today, I sent a note to the North American teams, including Nevada. They had their first injury-free April. That's a good step forward. We've mapped that Journey to Zero and how you can see the very specific steps we're taking towards achieving that goal. This has been the single biggest focus for the entire company and remains our top priority, with a particular focus on creating a culture where everyone has the responsibility to stop unsafe work practice. On the environment front, there was no Class One environmental impacts during the quarter. Our water use efficiency rate was again above the 80% target, and our greenhouse gas emissions decreased by 18% quarter-on-quarter. We have continued investing in our communities through our community development committees and embarked on an educational partnership journey with Tanzania, amongst others.
On the biodiversity front, the first white rhinos are expected to arrive in the Democratic Republic of Congo soon as part of our mission to restock the species in the country's Garamba National Park, a UNESCO World Heritage Site which we've long supported. As I mentioned earlier, we've just published our 2022 sustainability report, and you can see some of its highlights here. It's worth noting that during the year, we spent $6 billion on goods and services with local suppliers and invested some $36 million in community development projects in line with our philosophy of partnering with our host countries. Moving to the operations, as usual, I'll start the operational review with North America, which as I've said before, we regard as our value foundation.
From our base in Nevada, we've started looking at Tier One hosting regions elsewhere in the United States as well as in Canada. With the complex work of combining two sets of assets and people accomplished, a new leadership in place and a bankable 15-year business plan, the vision we had for Nevada Gold Mines can now be fully realized. In Q1, production at Carlin was impacted, as I've already said, by the planned conversion of the autoclave to a carbon and leach process, plus the planned maintenance of the Gold Quarry roaster. The focus is now on improving stability and throughput. At Cortez, the emphasis remains on ramping up the Goldrush project, with a Record of Decision is now expected in the second half of this year.
There is no significant impact in anticipated for 2023 production and the potential impact to 2024 and onwards is being reviewed. Turquoise Ridge's performance continued to improve on the back of the first full quarter of production from its recently commissioned, third shaft. In Nevada, the safe and efficient drilling ramp-up this quarter returned robust intercepts, across all Tier One districts, delivering further resource growth in support of our 15-year plan. With snow receding from the higher ground and a very long winter, we are planning to build on our new success at Four Mile by stepping out around the recent Dorothy discovery. As I said last quarter, this is a very exciting area where we continue to discover thick and continuous high-grade mineralization, which we expect will materially enhance the existing Four Mile resource.
At Turquoise Ridge, drilling continues on extensions of the BBT resource, as well as testing between the mega pit and the hunt for a high-grade feeder. On the Carlin Trend, bold step-out drilling between Leeville and Goldstrike is intersecting strong and continuous alteration and local high-grade mineralization worthy of follow-up. Elsewhere, as I pointed out in the beginning, in North America, our exploration is opening up new frontiers, and we've started building a significant presence there. In Western Nevada's Walker Lane mineral belt, we've secured the Pearl String property through an exploration agreement and additional claim staking. In Montana, we've staked 100 sq km of claims where we've identified a potential target area for both copper and gold. We are working on other opportunities in other prospective regions in the Western United States.
In Canada, we are progressing the Pic project near Hemlo, re-logging its historical core to guide modeling and targeting. Also in Canada, we've signed a binding term sheet with Midland Exploration to earn up to 75% of the Patris property in Southern Abitibi. We move now south to our Latin American and Asia Pacific region, which had a busy quarter highlighted by the progress at Pueblo Viejo, a prime example of successful value creation by Barrick. Of course, the exciting new Reko Diq project is starting to take shape, which I'll touch on a little more detail, and I'll update you on our stepwise move towards restarting the Porgera project. At the time of the merger in 2019, you would recall Pueblo Viejo, Tier One mine, was rapidly nearing the end of its life, despite its enormous resources.
It simply didn't not have the tailing storage capacity to process them. We are investing around $2 billion on a 100% basis in expanding and upgrading the operation. After a long and considered engagement with the Dominican government and the community around the mine, we have identified a site for a new tailing storage facility. The new plant was more than 90% complete at the end of the quarter, and we've started an aggressive commissioning program in April, targeted to be fully complete in line with our plan during July. As a reminder of what I have said in the past, the existing storage facility can cope with the tailings until 2027, when the new one will have been completed.
The project will extend Pueblo Tier One life by at least 20 years at an average annual production rate of more than 800,000 ounces per year. Its success is a tribute to the partnership between management, our host country, and the surrounding communities. Management also deserves credit for keeping the mine operating efficiently despite the inevitable disruptions caused by construction and the tie-ins. Veladero made a promising start to the year, as I'm sure you all appreciate, Argentina has a worsening currency crisis and import restrictions, a change in fiscal policies almost monthly, and as a result, the operating environment is becoming increasingly difficult. We continue to work constructively with the San Juan provincial governor and his government to try and find solutions for the longer term.
Our planned headcount optimization and the higher gold price have somewhat mitigated the operations negative projections for this year. There's still a lot of work to be done on the cost profile and the resource expansion to ensure Veladero's long-term success. We have had some recent success with our exploration programs around the operation, most notably at the Morro Escondido target, and we continue to extend the system through drilling. A generative exploration review of Central and South America continues to refine key focus areas where ground consolidation is progressing as planned. Five drill-ready targets in the Austral project in Peru are moving up our resource triangle. As I've mentioned, we're testing some targets around Veladero as part of our life of mine extension strategy. A high-level project study on the Pascua-Lama project is also scheduled for completion later this year.
Moving across the globe, in Pakistan, the updated feasibility study on the Reko Diq project is scheduled for completion by the end of next year, with first production expected in 2028. In the meantime, our social investment program has started with the rollout of the first community development committee and a drive to bring schooling to the region. The first school was inaugurated at the Hamai village, which will provide education for children from the community. We're also very proud of the fact that the enrollment of the first students was done on a 50% boy and 50% girl basis, which is a significant step forward in that region. The reconstruction of the runway at the site, which is now complete, will improve access and reduce the need for road transport.
The selection of a project engineering partner for the project, both for the feasibility study and later on design and construction, is nearing completion and some key definition studies are now up and running. As I indicated earlier, and as you have may have seen in the press, a new Porgera progress agreement was signed in March between Barrick Niugini Limited, the Papua New Guinea government, and New Porgera Limited. New Porgera Limited has initiated the steps to apply for a new Special Mining Lease, a mining lease, which is a key step to the reopening of the mine. There's currently a lot happening, as we progress towards getting this mine up and running.
Back across to Africa and the Middle East, this region finished well ahead of planned gold production for the quarter, setting the scene for another year of strong delivery. As I've said before, if North America is our value foundation, then Africa and Middle East region is foundational to Barrick's performance. In Mali, Loulo-Gounkoto produced its usual robust performance with new Gounkoto underground mine making its first contribution ahead of schedule. Loulo's 40-MW solar power expansion project continues to advance, with commissioning of the first phase expected by the end of this year. When complete, it is slated to reduce carbon emissions further by a further 63,000 tons of carbon dioxide equivalent. The Loulo-Fellami district, which straddles the border between Mali and Senegal, remains highly prospective, and all key structural corridors in the region are being reviewed in the search for the next world-class discovery.
At Bambadji in Senegal, drilling has started on priority targets along the 26 km main shear zone. At Loulo, initial drilling on the Gara West corridor has confirmed the potential for a significant but largely untested mineralized structure. Across the continent in the DRC at Kibali, production was in line with planned sequencing and planned maintenance. Grades are forecast to improve from this quarter as development opens up access to new stoping fronts, improving underground flexibility. Like Loulo-Gounkoto, Kibali has a high potential for major discoveries, as has been shown in the past. Exploration continues along the principal mineralized corridor, which still hosts multiple opportunities. Targets currently being advanced include potential underground satellites at Mengu Hill and Mofu-Weri, and new mineralized systems between the KCD Gorumbwa and the Kombokolo ore bodies. In Tanzania, we have another success story.
You may recall that when we took over there a few years ago, these mines were derelict, burdened by major social and environmental liabilities and with operators despised by the entire country. In very short order, we reinvented the mines, which now between them deliver a tier-one production profile, formed a groundbreaking benefit-sharing partnership with the government, and settled the legacy issues. The potency of Barrick's stakeholder relations and impact is demonstrated by our recent commitment to invest $30 million in partnership with the government to extend and improve the country's educational infrastructure. During the past quarter, our growth initiatives in the Africa and Middle East region focused on expanding our footprint in all its tier-one districts, as shown on this map, and optimizing our exploration to deliver high-impact discoveries with within our existing portfolio.
We are reviewing new operational frontiers in West Africa, delivering new projects in Saudi Arabia. We are developing multiple exploration opportunities across East and Central Africa for both gold and copper. Talking about copper, I turn now to our copper operations which, as you are aware, we are on track to deliver significant expansions. At the time of the merger, Lumwana in Zambia was a doubtful starter. Like PV and the Tanzanian mines, we have transformed it almost beyond recognition. The Super Pit pre-feasibility study, which includes a potential new mill expansion and tailing storage facility, is advancing, scheduled for completion next year. This project could extend the mine's life into the 2060s and elevate it Tier One status.
In the meantime, we've also reinvigorated our copper belt exploration leadership and begun the transition to an owner/operator fleet for waste stripping at Lumwana, which should deliver a significant cost reduction. In Saudi Arabia, in conjunction with our joint venture partners Ma'aden and the Kingdom of Saudi Arabia, we have received an exploration license for the nearby Umm ad Damar permit in addition to the Jabal Sayid South permit, and initial field work has started on both these prospects. The 2019 merger was designed to create a business that would deliver sector-leading returns. As you can see from this comparison with the GDX and spot gold, we've outperformed these benchmarks. Step by step, we have worked to deliver on our strategy that we shared with the market back in September 2018, with just about every objective we outlined then having been fulfilled.
Today, I'm immensely proud of where we have got to, although we still have a lot more to do. With the proven ability to replace the reserves we are mining, we are not reliant on M&A to grow. Our new projects on the horizon should see us grow our production profile, this affords us the luxury of focusing on our organic initiatives while being able to choose external opportunities when they arise. I believe we have passed an important milestone this quarter on our journey to become the world's most valued gold and copper miner. As I've often said, mining is a long-term game, the foundation we have laid will ultimately be reflected in the full value of the company. Ladies and gentlemen, to finish off my presentation, how some of the key reasons for investing in Barrick.
We own what are indisputably the best assets in the business. We have a clear and proven long-term strategy which we execute with disciplined effectiveness. We consistently invest in our future. Our existing mines support a 10+ year production profile which our organic growth projects will enhance. Our reserves are constantly replenished by our successful exploration programs which include exploring worldwide for our next major discovery. Finally, we are a leader in sustainability, and our actions in this field produce measurable results that benefit all our stakeholders. In short, at Barrick, we do as we say. I thank you for your attention, and we'll be happy to take questions starting, I believe, with this people in this room. Thank you, Lawson.
Hi, Mark. Thank you so much for the presentation today. Nice to see you. Wanted to ask you about some statements you made in an article interview from back in March. It was with S&P. You made the comment that M&A should only be pursued if the target is stressed. I wanted to get your idea as to what that stressed means. Further to that point, what type of M&A makes sense to Barrick today?
Yeah. I can't remember that quote, I must admit. It makes sense. Whoever said it. You know, the point is that I've always said there are two reasons you buy companies. That is if they're really good assets or it's a company that has those really good assets and is badly run or inefficiently run. As you know and you've seen repeatedly, during these times of higher commodity prices and less options-Any asset that's half decent gets a big multiple on it. You start making a decision not against the asset, but your view of the gold price or the assumption the gold price is gonna continue going upwards. You know, I mean, everyone in this audience knows that doesn't happen.
You know, the gold price goes up and down, not necessarily in that order. So it does get then down to the synergies and the, whether you have the ability to add to the opportunity that you're pursuing. It's, there's an interesting graph. We were talking with the exploration team yesterday. If you take. I've shown this before, and we can share it with you. It's on our website. If you look at Barrick in its heydays, its early days, and Randgold Resources through its entire life, all the M&A we did, and we both did M&A, came with significant increase in reserves, material expansion on the drill bit. A classic one is Kibali, which had 5 million ounces. We've mined 10, and we've got 10 left. I mean, that's value creation.
We bought Loulo with half a million ounces and we've delivered, we've mined also around 10, and we've got 10 left or more than 10. It's 22 million ounces on the back of that first half a million ounces. Tongon, we discovered, Morila we discovered, and, you know, the classic one is Goldstrike when Barrick bought Goldstrike, I think they bought like 3 million ounces, and it's produced 33 million ounces. Those are the debates that we have. If you're really looking to create value rather than gamble, that's the opportunity. I've... You know, As you know, there's different views in Canada about how to create value.
Some people say you can only grow through M&A. I very clearly say you create value, the way you create value is through the drill bit, adding ounces. Buying them doesn't create value. It might increase your production. Again, if you take our, some of our peers and you listen to their messaging and you take my messaging, it's all about sustainable profitability. It's about how do you what's the acquisition target and what does it do to your profitability? Because that's our focus, grow value and not just growth. A classic example is if you look at our series of transactions in 2029, they were very strategic, driven off the back of a 2.5-year engagement, thorough due diligence.
We came out in September 20, 2018 with a clear set of deliverables, including people. If you take Newmont's acquisition of Goldcorp, it was purely opportunistic, so that's the difference. You know, I'm not trying to pick on anyone, but there's a different business philosophy in one, and there's a very clear business strategy when it comes to Barrick. When it comes to M&A, as you know, we have worked and looked at everything that's been put in the market, and we've also looked at many that haven't been put in the market. We haven't very recently done any. When you, when you look at the Tanzanian deal and the Nevada deal, that happened very quickly because they fitted all our filters easily.
That's the way we'll continue to do it. Very clearly, as you go, like and this is like 2011. Gold price up, no one's invested, no one's got exploration teams, and so you have to buy. The people who make the money are the sellers. That sort of is, doesn't fit our business. You can go second one.
Yeah. I was gonna ask one follow-up, it's Lawson Winder from BofA Securities-
Yeah
... by the way. around that same time you made a comment that you wanted to see copper grow to 30% of the profitability of the business, and I think it's sub 20% right now. I'd also love to get your thoughts on what are the elements that drive that potentially beyond just the Lumwana Super Pit. Thanks.
That again, that's a, you know, thank you for that question because if you go back in 2018, we were very clear that if you wanna be relevant in this public market of mining, as a gold miner, you're gonna have to grow and include copper in your portfolio. We didn't do it because it's suddenly a fad and somebody's trying to make lots of batteries. We identified it as a very strategic metal. It's as strategic as gold is precious. We set out to build that. The growth sits in, you know, Jabal Sayid. We've increased the production there by 50%. It's a completely different mine to what it was in 2019.
We've grown its footprint materially with these last two deals in a real partnership with Saudi Arabia, where it's 50/50 and we are the operators in a formal structure. That's not common in Saudi. Of course, you've seen us working with Saudi and we've spoken a lot about the opportunities that that partnership will bring further into South Asia. Lumwana, we looked to sell it initially. By the time we had our first look at it, very quickly, I mean, we dropped the mining cost by 50% and we found a whole lot more pounds in satellite deposits. What those do is they slightly higher very low strip ratio, they allow us to keep building the profile and strip back the main ore bodies, the two main ore bodies.
So that's the sexy part of Lumwana, and that you can keep the money, you can finance that big expansion rather than go into another negative capital dip. Then, of course, you've got Reko Diq. Reko Diq is a world-class deposit. It brings both gold and copper production in an organic way. We haven't bought it. You know, it was, it was paid for a long time ago as an early-stage project by Barrick and Antofagasta. You know, we've now got 50% instead of less than that because it was a shared asset. We're partnering with the country. It's opening up a whole new exploration frontier for us.
When you just take that and Lumwana will be the equivalent of our 50% share of this two phases of Reko Diq as far as contribution on a, 'cause Lumwana, of course, we have a 100%. You take that and you take our projects in Saudi Arabia, those are all very attractive and make a big contribution taking us towards that. If you go back and blend it as a gold equivalent, you know, by the time we get to the end of this decade, just on what we've got, not on what we could get, we increase our gold equivalent production by 20%. That's material in this mining industry organically.
As you've seen, we have more ounces today than we started with when we did the first combination, three combinations, in 2019. That is significant as well in that we are not forced to buy our future production. We've been able to sustain it. We've got a more than a 10-year horizon. Again, the geologists were working through us this week, we can show granularity of replacement of the total resource we mine out five years now as we've extended our knowledge of our known ore bodies. All we need, and we run the risk of finding something now because our geologists are well embedded in these regions.
I would finish by saying on top of that, you know, exploration, which very few people in our mining industry really comprehend anymore, is also a key for mineral intelligence in proper organically driven M&A. Because you've now got people Barrick has, you know, 700 people, geologists? Joel.
200.
200 geologists across the group. Well, that's just exploration, not MRM. They're in the field, they are highly skilled, they're commercially savvy. That's another strategic advantage which will materialize with time because it takes time to build, you know, that intellectual capital, which is effectively what exploration is. Do you wanna say something, Craig.
Yeah. just to reiterate what we said at our Investor Day in November. We get to 30% copper organically through those two projects that Mark's talked about in terms of the Super Pit and Reko Diq by the end of the decade. We get there without doing M&A.
Mark, it's Greg Barnes from TD Securities. You've talked a lot about Argentina and how difficult it is to operate there, and you did mention in your comments, in your presentation that you're trying to work with the government to help things along. What kind of initiatives can you actually move forward there?
in the governor-
help the situation?
The governor's office in San Juan is, I think we've really built a strong relationship. As you can imagine, it's been difficult because the Argentinian political structure at the moment is completely muddled. So we've got that stability, but he still relies on Buenos Aires for allocation of dollars. We spend an inordinate amount of time with like the governor of the central bank trying to explain to him, "So Governor, do you need dollars?" "Yes, that's exactly what we need." "So we actually print dollars for you." That loop hasn't completed yet because what happens is he agrees, but the problem is the central bank is not independent in Argentina.
Some politician in the federal government makes decisions, and it's all about. We've seen, I mean, I'm an African, I've lived through these crises. I mean, Zimbabwe is probably the best, but we've lived through a number of these. When you get into that spiral and, you know, I always say, actually, Argentina would be do well without a government because it's got all the ingredients of a significant economy. It's got a massive agricultural industry. It's got a mining industry and some oil. It's got tourism, all dollar-based. For some reason, people. This is a year of electioneering. What we've done, as you've seen, is we've cut back Veladero. We've cut back on people. We've worked with the governor of the province to create employment positions.
We just haven't arbitrary cut back, but we've taken nearly 2,000 people out of Veladero. We've delayed the capital into next year. At the same time, through our construction royalty programs, we've worked with the province to ensure employment on provincial infrastructure programs. We've been constructive and, of course, invested in people. We continue to do that. It's a different place today and, you know, it's running the risk of being cash flow positive this year because we made those decisions. We haven't gone and mined in an irresponsible way. You know, you remember Julian Baring who used to say, "If you can't mine gold at a profit, leave it in the ground." That's really our philosophy in Veladero.
We're mining the gold in a proper, disciplined way. In a profitable way. We haven't stopped exploring because that's the future and the value creation. Again, you know, I go there often every quarter. The frustration is it's such a great country with really good people. It's got all these ingredients and politically, it's just in a mess.
Maybe a question for Graham. Can you get cash out of Argentina currently?
I can answer that, yes.
Yes, okay.
We do and we can, and we negotiate that. I'll give you an example and also as you've noticed, we keep gold in this vault. We manage the gold because you don't wanna sell the gold and end up with pesos that you can't spend. We really use gold as the ultimate currency, and with the approval of the government. That in itself doesn't really get anyone out of trouble. On top of that, I'll just give you some of the, you know, the latest regulation is when you buy something offshore, you can only pay for it 180 days later. For small companies, that's, you know, that's toxic. For Barrick, we've got a big balance sheet. We've got, you know, strong partnerships on the supply side.
We can manage that, working capital pipeline. It's, you know, inevitably, it's gonna really strangle, the mining industry in Argentina.
Just a question tagging on to Lawson's. You were quoted this morning about not being interested in Teck metals. Is the competition for copper resources, copper mining companies, just too intense and not something that you can compete in?
You know, I think we've got lots of competitive advantages, Greg, as you know, particularly in emerging markets. Again, you know, every potential transaction, to Lawson's first point, is different. Teck at the mo-- you know, Teck is not a, it's not a super producer. And it's, but it does have some assets. You know, it's got a really good stake in a partnership in Peru. It's got old legacy assets here in Canada. It's got the new, what's it? QB2
QB2.
QB2 in Chile. It's got coal. It's got a lot of debt. When you look at that structure and Glencore's of intervention there has been interesting because what Glencore offers that we don't have is synergies, opportunities to really create value. You know, I think, well, I know from our side, we at given the current situation, there's no logic for us to get involved in anything like that because we don't have coal, we don't like debt, and the synergies in Chile with the Glencore, Anglo assets are very real. We don't have anything to offer, so.
At the same time, we're finding it very interesting to follow the debate because it really is indicating where our industry has got to, given that we haven't invested in our future.
Thanks, Mark. I'll hand it over.
Anybody else wanna ask a question?
Go to the mic. Go. I'll come to you.
Can you ask the host to explain the trick to ask questions?
Operator, we're gonna go to the telephone questions now, please. Sure. We will now begin the telephone question answer session. To join the question queue via the phone, 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. The first question comes from Cleve Rueckert with UBS. Please go ahead.
Hey, good morning, everybody. Thanks for taking my questions.
Thank you.
Mark, I just wanted to go back. I know you always sort of take the long view and we appreciate the, like the long-term, the sort of multi-decade managerial focus. You know, I really noticed in the press release the, you know, sort of a little bit of a tilt towards, you know, some of the near-term operational work that you're doing on the assets and, you know, the improvement that I think you talked about, that stepwise increase on quarterly production volumes now throughout the year as a result of the work that you did in the first quarter. I'm just wondering if, you know, as we look into 2024 and 2025, you know, there is growth in the plan for both of those years.
Should we expect now just that stepwise improvement in volumes to continue through 2025, or will there continue to be some seasonality in the business as you take maintenance opportunistically here or according to the plan?
Let's just deal with the first this year. You know, this year we're looking roughly 45, 55. If you take the 4.4 million ounce attributable production, first half, second half, roughly. The drivers of that are. There's no sudden finish in quarter four. I'll just take you through the drivers. Carlin, we expect to step up in quarter two. Cortez will be you saw it, a proven quarter-on-quarter. It'll be similar in quarter three. All the rest are already at run rate in Nevada. Then quarter three and quarter four, Carlin and Cortez will be really at a good place operationally. Also, I think a lot of you will understand this. When you do these big transactions, particularly these big multiple assets.
You know, we had to get the people right first. Also remember, it's partly unionized. We just completed a big CBA negotiation, which is again, just tells you we bring a different philosophy to these things because the union is working alongside non-union people. That's a big step in the United States because it's very clearly understood they work for us, but they're represented by their union. Also, we've changed management because we've moved from a more controlled strategy as we've merged the organization. Remember, it was four-day weeks for management in Newmont. The Newmont assets were behind on their plans. Barrick was obsessed with cash flow and high grading. Culturally, they were different and also operational culture was different.
We've brought all that back. Now it's a case, and I've done this so many times. You know, when you, when you're climbing the hill, it's like, it's tiring, you know, and you, and you have challenges, and slowly you build a habit, and then you get the habit right. Then you'll see it becomes... I mean, you guys will-- some of you have worked through it with Kibali when we ramped it up, you know, Loulo as well. None of the mines we started had sort of straight out the block perfect. We at that stage now, and we've now changed the management as per the Barrick or stroke Randgold model, in that we flatten it. GMs run the mines, not somebody in the corporate. We build strong people around them.
We've got very good GMs now in Nevada, it's taken some time to build some capacity around. They, you know, they are in their own right, big. Running it centrally is not, and I don't like doing that anyway. Now we've got a much better, flatter structure. Also we've had to deal with neglected capital and maintenance, and remember it was a hostile transaction. We took it as it came. We're getting to the point now where we're comfortable with our processing facility. It's still process constrained because as we go underground, we go more to do double refractory ore. We're expanding the Gold Quarry roaster, which was the highest cost, most inefficient of the two roasters.
With that really grows our profile, as you point out, in Nevada over the next couple of years. Gently, but it's an improving profile. Then PV is a big step up back to above 800,000 ounces. We go straight there almost this year. What's nice is the front end of, you know, for just to remind you what we've done there is we've expanded the front end, jacked up our, put in a concentrator. Really, on that basis, we've kept the autoclave feed the same. We've changed the whole temperature management in the autoclave, so it can take higher fuel. We're definitely seeing sort of a 10-12% increase in throughput in the autoclaves. The SAG mill we've put in is enormous.
We've built some flexibility into that operation to be able to where it's a bit like Kibali, where you can catch up. Whereas in Nevada, it's always unless we've got oxide ore, you know, or heap leach or the refractory flow sheet is really your bottleneck. On the way we've built-- we're building flexibility for Nevada now with the new team, is, we're building some extra flexibility underground because that's the way you do it is, you open up some ore stopes underground with a little bit more grade in it, and then you manage that so that when you have an unplanned shutdown, you can start up and feed high-grade ore for a while and tidy it up.
Then, you need to invest in, and that's what we've been doing, is putting in that extra flexibility.
Great.
Those are the drivers that take us to the better second half. Kibali was the other soft producer this quarter. That was because we, at the end of last quarter, remember that quarter four was a higher production quarter, and we fed on our stockpile, the high-grade stockpiles from Kibali. We're building that back up. You'll have a very steady run rate for the last part of the year, for the last three quarters. When I say it's a different-
Great.
profile to what you've seen this previous couple of years as we stabilize the organization. AME, as you know, as I said, it's pretty flat. Yeah.
Yeah, that makes sense. I would say that, you know, the work that you've been doing over the last three years, maybe it's not clear to everyone, and you're getting tired of talking about it, you know, we're looking forward to.
No, no, I never get tired of talking about it. because that's what.
Good. Good.
the business. I would, you know, I'd just add a little bit, you hadn't asked the question, but again, you look at our policy around dividends. You know, everyone, I mean, this last three years, we've had the market calling for dividends. Everyone's been paying dividends. Then suddenly what? Now you see people still paying dividends outside their dividend policy because the market's banging the table saying, "I want some dividends." We didn't get caught up in that, you know, in that sort of vogue. Our balance sheet is in good shape, and the dividend's there. As we promised, and we can afford it. We're, you know, and we'll pay it.
We bought shares back when the share price was down, not when the share price was relatively high like some of our colleagues or our peers. You know, you can see the difference in the way we run our business compared to a lot of others in this industry. That's because, you know, we are owners, first of all, as management. I don't have to try and make people owners because they are. It's a different approach. We do have a long-term horizon. I tell you, we will get opportunities.
Yeah. No.
One thing you can be sure about is when the right opportunity arises, it'll happen.
I think that's yeah, I think that point is very, very clear, at least from our perspective.
Thank you.
-commend for taking the long-term view and patience that takes. I wanted to ask you just one quick follow-up on Porgera. You know, I appreciate that you're, you know, sort of waiting for the mine lease to get approved. What happens after that? I mean, what are the just quickly, what are the key milestones, you know, you have an export license in place, is, you know, what needs to happen to get Porgera sort of back into guidance and up and running?
The big one now is SML. You know, that's what was taken away and issued to Kumul back three years ago. You know, we've all got our head around what needs to be done and that's the process. We will start the mine up on thermal power as the backup power. We are working with the Hela province to restart the gas power station in Hela, which will, you know, that's really what makes Porgera is a low cost, you know, high production when it comes to gold project. Apart from that, we have agreed the scope of the shareholding that the landowners get.
That has to be ratified through a development forum, but it doesn't hold the production up. The production, the restart is all around the SML. The operator agreement, which we've got, I think, three points left on it. There are a couple of the mine development agreement. Is it mine development contract? I think it's called MDC. That's also a document that has to be completed. We are, you know, we are now working towards. We've done all the sort of review of all the mobile fleet, so that they're operational because we can. We've cleaned out all the mud from the mine. We're continuing to do that.
We have a fleet of trucks in Australia that are very secondhand but close to new that we have kept offshore, which we'll bring on shore as we finalize the structure. That'll help with the mining. We're doing some rehab on the CIL tankage and slowly inching our way to be operationally ready when the SML is approved and we're working, you know, hand in glove with the government and the MRA, the Mineral, what's the name? Authority. You know. The other big thing is we're just over 1,000 people unemployed now.
We are employing people, and that's one of the big critical paths, is getting enough people up to run it. We're dealing with the security around the mine, which is a government thing, and I think we've all landed on that now. you know, Papua New Guinea is a tough place to operate, so.
Understood. All right. Thank you very much, Mark. Appreciate it.
The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Great. Good afternoon, everyone. Thank you for taking my questions. Mark, can you just give me an update as to what's happening with the Goldrush permit? Seems to be getting delayed, quarter-over-quarter. I'm just trying to understand what exactly is keeping up the delay. You know, just looking at the mine tour that we did in September. I thought Nevada, that portion of Nevada Gold Mines production, I think Goldrush was gonna be at about 100,000 ounces this year on 100% and moving higher to, like, commercial production in 2026. I thought it was about 400,000 ounces or thereabout.
Can you kinda give me an idea of, you know, A, what's happening with the, you know, obtaining this permit and, B, you know, what sort of production profile was scheduled in, you know, to come in 2024, 2025 that could potentially be impacted? Thank you.
This is the challenge of doing business in the United States. There are lots of good things about it, but permitting is not one of them. There's been some Ninth Circuit Court decisions around permitting just recently. We are not impacted by that in any legal fashion. Again, the BLM have slowed the process down. What I can say is that we've got a very good, constructive working relationship with them. We're back on engaged and the EIA is right at a point where it's nearly ready to go to Washington, if it hasn't already got there at the moment. That is delayed.
As I said in my speech, we right now, the delay we can manage. We're still guiding around 1 million ounces, 950,000 to just over 1 million ounces for Cortez. Goldrush is embedded in Cortez, and we manage it that way. We are looking at whether, you know, if this goes beyond this year. We have had some relief under our HICCUP permit, which is the project exploration permit under which we're doing trial mining at the moment. That's that, you know, right now we're looking at, you know, where's the critical path and how can we manage and not compromise the infrastructural development and be able to deliver on our long-term plan for Cortez. Goldrush is embedded in that plan, Tanya.
You know, as I said, we are looking at it. We'll let you know. Right now, we have enough flexibility in our operations. I think that's, as I touched on earlier, that's the big thing that I see in Nevada, that it's taken time to put the working capital in to build the flexibility. You know, Kibali is a 750,000 ounce producer. It's got lots of flexibility 'cause it's embedded in the business. Same with Loulo. But Nevada never had that, and we are doing that. I think the fact that we're saying to you the ROD is delayed, we're not sure exactly when. We do expect it to be this year, but at this stage we've got flexibility to manage it. That's a new development in Nevada.
Am I correct to think of that 950,000-1 million ounces at 100,000 of it is Gold Rush?
No. It's variable. Yeah, I think, Gold Rush will slowly grow to your 400,000 ounces and maybe even higher, as we develop it. You know, we're still learning about those breccias. Right now, the million-ounce profile for Cortez is built on what we have banked in the Gold Rush project. We're still exploring, we're still expanding, we're still learning, as we drill out the ore bodies.
Okay.
You know the nice thing about this is, you know, Carlin at 1.5 million-1.6 million. Cortez, I mean, it should fit settle out above 1 million ounces, which is a big shift. You can see it's never been there. It was there a long time ago, but not recently. Then you've got 500,000 going to 600,000, maybe a little bit higher in Turquoise Ridge. Then you've got Phoenix. You know, that's what grows our profile gently over the next two to three years in Nevada, as we've shown you.
Okay. I think I'll move off that and just I've got two other projects I just wanted to ask updates on, if you could, Mark.
Sure.
Can you give us an update on what's happening at Donlin Gold, in terms of what you're seeing there and what your focus is for this year and longer term?
what we focused on-
Pascua-Lama
is what we shared with you in quarter four. Actually it was quarter three last year after our September, annual September trip. That is very specific work streams on revisiting and optimizing certain work streams. One is, of course, the water management and ensuring that we address the issue around protecting the fish in the waterway. The second one is the trade-offs that we on power because, you know, currently the plan is to bring gas from a gas field that really hasn't been developed on a gas pipeline that doesn't have a road next to it. You know, there's work to do on that trade-off.
We are doing a series of metallurgical tests and trade-offs on the flow sheet because it's a double refractory ore, and whether we can improve the recoveries and is there another way to process this also? That's part of the trade-off. We've gone back to the mining and the mine schedule as we've improved our knowledge of the ore bodies and now looking at bench heights and equipment sizing, then we can get our head around the costs. Another one is limestone, because, you know, as you know, when you've got autoclaves, you need limestone. There's always been talk of calcium carbonate rocks in the area, but we need to just check if they are actually usable or where is the closest source of limestone.
There's a couple of these things that could materially change the project. We have also worked hard with our partners because remember, this is owned by the native Alaskans and both people who own the surface rights and the mineral rights, but also the whole of all the native Alaskans will benefit from this project. That's where we are. We are working towards the next review workshop in September again. After that, we'll be able to update the market. We are-
Are you around?
Just to assure you.
Uh-huh
that we see this as a significant resource. We are putting the necessary effort into it to try and get it into a reserve on Barrick's set of filters.
you can get that as a reserve when, Mark, do you think?
I don't know. I'm still working on it, Tanya.
Okay. We'll wait for the update then, later this year on all of those, factors that you're looking at. If I could just ask, you mentioned, high-level study, coming at the end of the year on Pascua Lama. Can you just remind me what's happening there? I sort of, lost track.
We, you know, we were instructed to... Basically, the project that was originally conceptualized and designed, had a lot of issues, critical issues, the way it was designed, etc. Also social issues. When I assumed the role here in Barrick, we went to the government, and we said, "Let's deal with this because we were lining up for a fight." We agreed to go down and put those that permit to bed, just the construction permit. A lot of the stuff like trenches that, you know, that put the water or exposed the water, the big, some of the stockpiles that were being blown all over the place, and there was a whole lot of other infrastructure. We are busy closing those.
We're very close to completing that. At the same time, the exploration permit is still very much intact. We've what we've done is we've embarked and, you know, we did some drilling last year, and we've shown that a substantial part of the resource has can be processed through standard leaching and or agitated leach. We can do that. We can change the circuit that's already built in the Lama infrastructure.
That's what we've been looking at, and we wanna take it to a point where we can demonstrate a viable, potentially viable project which we can then take back to the governments of Chile and Argentina and point out the opportunity and then work to get a permitting process going to be able to drill out the model and take it from there. That's where we're going. I think it's our responsibility to do that to ensure that those countries understand there's value in this, both infrastructure and the resource.
Okay, great. I'll leave it for someone else to ask questions.
Thank you, Tanya.
The next question comes from Martin Pradier with Veritas Investment Research. Please go ahead.
Thanks for taking my question. I want to know, when I look at cost increases that you have this quarter, there was 16% year-on-year in gold and over 40% on copper. What gives you the confidence? What are the two, three things that give you confidence that you will be able to maintain the cost flat year-on-year?
Martin, it's all in the production, as you know. You know, we had a soft quarter, so the costs were up because the production was down and on a unit basis that drives all-in sustaining costs. With the pickup, as I pointed out, if you got 45% of this sort of 4.4 million ounce middle of guidance, then you're gonna increase your production by, to 55% of that, it drives costs. That's really the biggest driver. You wanna add to that, Graham?
No, that's spot on. I mean, if you look at the delta in production from Q4 to Q1, you were down about 15% and costs were up 15%. You know, it's a very strong correlation there.
You get that, Martin?
Yeah, if you look at the volumes, we're down 9% compared to Q1 last year.
That's too far back.
No.
Quarter four and quarter one.
You can't really look at Q1 last year because, you know, that was pre the inflationary pressure that we were experiencing post the Ukraine crisis. If you remember, you know, last year we started the year with a $65 oil price assumption. 2022 landed up being, you know, close to $100 of actual oil price and, you know, that drove significant inflation through the business last year. This year when we look at our assumptions for some of those key inputs, we're using assumptions that are based on prices that are very similar to what we actually experienced in 2022. Really, the Q1 of last year isn't a relevant comparison quarter.
Okay. You would say that this is in line with what you're expecting the cost, the Q1? Or it was higher than expected?
Yeah. It's in line because, yeah, as we indicated at the start of the year, we expected this first quarter to be the weakest quarter, and so we expected costs to be highest in this first quarter. As the production steps up, we expect the costs to come down. As we've reiterated, we expect to meet both our production and cost guidance metrics for the year.
Great. Thank you very much.
Thank you.
The next question comes from Mike Parkin with National Bank Financial. Please go ahead.
Hi, guys. Thanks for taking my questions. Most of them have been asked and answered, just a follow-up on Nevada. It sounds like you're doing a lot of good things in terms of getting the management in place that you want. In terms of the more general labor force, how are you tracking relative to filling job openings and just any kind of overall commentary around the Nevada Gold Mines employment scenario, is it still a bit challenging like it is in some of the other areas of the world, or are you finding it easing and you're getting closer to full employment plans?
We made a, as you know, a while back, made a strategic decision to not continue to change, to chase a ever-decreasing, ever-aging, traditional mining skill pool, and to go and invest in younger engineers and skills. We've been extremely successful in that endeavor. We've started a focused process, multiple set of processes to ensure that we give those young people the skills and experience that is needed to go into the workforce. Part of that is, I think we had... Darren, 50 job fairs or job engagements. What do you call them?
We had over 110.
110. This last year or this last quarter?
We had over 50 this last quarter.
Quarter, yeah. We had 50 job fairs this last quarter, and it's interesting, nearly 50% of young graduates that have joined us this last quarter have never didn't know what mining was about until they came for an experience at Nevada. At the same time, we've enhanced our Compass program for like geologists and mineral resource managers and planners and that sort of thing. We now have three mining schools or mining training centers. We train for underground, we train for open pit, and we train in process. Because United States doesn't have a trade-type mentality, you don't. A lot of our skilled people come from the army or, you know, or have just learned sort of a diesel mechanic skill, but they're not trained.
When we bring in those people, we can train them. It's also part of our initiative to standardize all standard operating procedures across the Nevada business. I was there just 10 days ago. I spent just over a week there, and we visited these schools. The other thing that struck me for the first time, you're getting 35-year-old, 40-year-old new recruits coming back to work. They're from another industry. The first signs we're seeing of a tightening labor market. Those are different to the people we're actually targeting, which is the young skills. Again, we've gone all engineers, all financial people.
We don't try and go to a mining school because, you know, you get a good civil engineer and we've been extremely successful in attracting young people. I think we've employed about 100 young graduates per month the last three months, just in Nevada. Again, the way we've slowly changed our organic organigram within Nevada, we are now refreshing our planned headcount because. I can tell you that the turnover has reduced materially, like I wanna say 20%.
At least.
Yeah. Also now we're saying, 'Okay, we've been operating at plan for a long time as we change the way we operate and how we manage people and more efficient.' I mean, we've done some interesting things like introduced childcare from 4:00 A.M. in the morning to 8:00 P.M. at night. We're looking at multiple people for one job, particularly on the driving side. We're looking at being innovative because it's driven by our commitment to be Nevadan-focused as far as employment goes. Again, our percentage Nevadans in our workforce are significantly up and so is our local purchase. I mean, 80% of all our purchases are now Nevada-based. When I first arrived there was like 20. A lot of effort in that.
I'm not answering it in real numbers, as we progress this, we've certainly got all the arrows pointing in the right directions. One thing I can tell you is that people that say that young 22-year-olds to 26-year-olds haven't got ambition is untrue. There's a lot. I mean, we've just employed some of the top students out of the British Columbian universities for Nevada because we went and got them. You know, we are seeing. We're excited about that potential because that also will change the way we operate. You know, I'll give you an example. You take a 50-year-old mining and civil engineer or electrical engineer and ask him to do AI or data analytics, he struggles.
Get a 24-year-old young graduate in any one of the engineering fields, it's part of their course. They're good at it. We've, you know, that's where this world is going. Just accessing the data points on a big 300 ton truck, we've been able to improve our efficiencies and it's not just about being AI savvy. You've got to have the full engineering skill to be able to apply it in our industry anyway.
Thanks very much, Mark. Appreciate that. How did Kelly?
There are no more questions from the conference call.
Right. Thank you very much, everyone. Great seeing you again, and we'll be catching up with some of you during the next while. Again, I'll just say we know the team's always available. We are gonna see some of you down in Dominican Republic, I believe, so we look forward to that. Again, if you've got any questions we haven't had given you time to ask, the team's around and we're all on the end of a phone. Thank you very much again.
This concludes today's event. Should you have additional questions, please contact the Barrick Investor Relations department. You may now disconnect your lines. Thank you for participating, and have a pleasant day.