Thank you very much, good morning and good afternoon, ladies and gentlemen, and welcome to Barrick's Quarter One Results presentation. What a wild past 12 months it has been. You will recall it was Q1 2020 when we held our first all-virtual results presentation exactly a year ago. When we announced the merger between Barrick and Randgold back in September 2018, we said that its rationale was to combine the industry's best assets with its best managers to build its most valued gold business. It was and remains our long-term strategy, in a relatively short period of time, as I'll show you today again, we have also achieved a long list of established accomplishments.
Most recently, in a quarter still heavily impacted by COVID-19, we met our production guidance, maintained strong free cash flow, and increased our net cash by $500 million, in spite of an advanced tax payment of $72 million to the state of Nevada. The quarterly dividend has been increased threefold since the merger announcement. This year will be topped by a $750 million return of capital distribution, more than doubling the payout for the year on a per-share basis. Exploration, refocused and stepped up since the merger, is pumping exciting prospects into our pipeline from multiple targets across the group, and major growth projects such as the Pueblo Viejo expansion and the third shaft at Turquoise Ridge are making good progress. At Porgera, we are on track to resume operations later this year, following our binding framework agreement with the government of Papua New Guinea.
I refer you to this cautionary statement, which is also available on our website, should anyone wish to study it in more detail. Our businesses have, over a long period of time, earned their social license to operate. This has served us well at a time when ESG has become a key investment criterion. In our sustainability report for 2019, we published the industry's first ESG scorecard, rating ourselves against our peers and the requirements of the GRI sustainability reporting standards. The sustainability report for 2020, released a few weeks ago, which now also reflects the checklist of the Sustainability Accounting Standards Board, shows that we have made progress against almost all key ESG metrics. We have also advanced our emission reduction target from 10% to 30% by 2030, with the ultimate aim of achieving net zero by 2050.
The principles behind ESG have long been practiced by Barrick's two legacy companies and are deeply embedded in every facet of our business. We believe that a good company should also be a good neighbor, which is why we invest heavily in community development projects, guided by the fully functional community development committees we now have at all our mines. We also prioritize local employment. Last year, 97% of our workforce were host country nationals, and we give preference to local contractors and suppliers, with whom we spent more than $4 billion in 2020. We take great care to manage and minimize our environmental impacts, and all our operational sites have now been certified to the ISO 14001 global best practice standard. Still on the social and governance front, we are addressing the checkered human rights history of our Tanzanian mines through audits and training conducted by external experts.
These are the highlights from the 2020 sustainability report. It's a core Barrick philosophy that the benefits created by our operations should be shared equitably with all stakeholders, particularly our host countries and communities who are the owners of the resources we mine. As we have already seen in Tanzania and Papua New Guinea, governments of developing countries are demanding a bigger slice of ownership. Barrick's answer to this is to work to increase the size of the pie, benefitting all. Our sharp focus on safety continued to drive performance improvement and our total recordable injury rate was again reduced. Latin America has done particularly well on the safety front, but North America and Africa and the Middle East still have some work to do.
A number of our mines have already received their ISO 45001 certification, the rest are on track to achieve this compliance by the end of this year. We're also not easing up on our COVID controls, we've already started vaccinating the workforces at Nevada Gold Mines, Pueblo Viejo, and Jabal Sayid. A group-wide vaccination plan is currently in the works. There were zero high-severity environmental incidents in the group last year or during quarter one of this year. We are particularly proud of our water recycling and reuse programs, which in the first quarter of 2021 achieved an 84% efficiency rate, ahead of our 80% target. Carbon emissions continued to decrease in line with plan, we've been extending our environmental reach into the wilderness areas of our African host countries, where some important natural assets are under threat.
In terms of a recent agreement with the government of Mali, we are assisting with the rehabilitation of the neglected Fina Reserve, a UNESCO biosphere site. In the Democratic Republic of Congo, we support the Garamba National Park, home to the country's largest elephant population, as well as the critically endangered Kordofan giraffe. A s part of our support, we sponsor an elephant tracking program, and since September 2019, no incidents of elephant poaching have been recorded, which is a significant achievement in this part of the world. These are the highlights of the quarter. Our Tier one assets again produced solid performances with leading margins, getting us off to a strong start to the year and putting us on track to achieve our annual production target. A particularly notable feature was the 31% increase in copper revenues due to higher copper prices with continued strict cost control.
As guided, the quarter one results were softer for a range of operational reasons. We are forecasting a much stronger second half, driven by mine sequencing and planned maintenance at Nevada Gold Mines, the commissioning of a new leach pad valley at Veladero, the ramp-up of underground operations at Bulyanhulu, and higher grades forecast for Lumwana. The strong free cash flow and the increase in net cash are the highlights of the quarter. The sustainable quarterly dividend, coupled with the $750 million return of capital, represent an industry-leading return to our shareholders. An average lower gold price, which was $100 per ounce less than in the previous quarter, did however impact revenue. The copper operations benefited from a much higher copper price.
Over now to operations, we begin with the North American region, which is off to a good start to the year and on track to meet its annual guidance of 2.3 million ounces-2.45 million ounces of gold on an attributable basis. Nevada is Barrick's value foundation, with three of our Tier one mines, leading margins, a strong operating cash flow, and a solid net cash position. The joint venture has a good grip on its geological inventory, with the brownfields and greenfields exploration programs up and running and already paying dividends. Nevada is probably the world's most prospective gold district, major opportunities are taking shape around our core sites at Carlin, Cortez, and Turquoise Ridge. The potential to grow resources and add value from this asset base is very significant.
Production at our North American flagship Carlin mine was down because higher carbonaceous ore had to be blended with lower grade stockpile feed, which affected roaster feed grade. Costs were nevertheless well contained. Both Carlin roasters will be shut down for their annual maintenance during the second quarter, that's this quarter, that's partially why we are forecasting a better second half performance. At Carlin, we are looking to extend the known ore body deposits. Work on the north Carlin trend is targeting high-value breccia bodies open at depth with a view to enhancing the life of mine, as well as making new discoveries. Leeville continues to yield robust high-grade results and recently identified controls are opening up new peripheral targets. Two emerging high-grade zones have been identified within a broad mineralized horizon. Evaluation of the northern Leeville area's full potential has been accelerated and resource conversion is in progress.
We expect a maiden resource for the year-end and are confident that it'll continue to grow. We now move to Cortez, where production was impacted by resequencing as a result of a previously reported geotechnical event, which delayed stacking at the heap leach pad and affected the feed blend to the oxide mill. The mine expects a stronger second half of the year, thanks to a higher contribution of fresh ore from Pipeline as mining there ramps up. At Robinson, in the Cortez District, we are also converting improved geological knowledge into growth opportunities. Step-out drilling 300 m beyond the existing resource blocks suggests there's considerable near-surface upside that could lead to additional discoveries and validates my personal belief of the potential of this area. We're also looking at Pipeline, an old Tier one asset immediately adjacent to Robinson, which could provide a significant addition to Cortez's life of mine.
At Goldrush, the exploration declines have now intersected the ore body with positive results. Development is accessing ore for the initial bulk metallurgical campaigns and heading north towards the first vent shaft position. We're considering whether to assess Fourmile from surface or by underground from Goldrush, which is our preferred option. Fourmile, based on what we know, provides real potential to add to Goldrush's value in many ways. Not least of all, Fourmile is a higher-grade resource, and with its inclusion, it centers the main access development, allowing better utilization of the invested capital. At Turquoise Ridge, we had a better quarter with steady production and slightly better grades from the Twin Creeks open pit. Total cash costs were well within guidance.
Construction of the third shaft debottlenecks the hoisting and ventilation constraints, which will allow for higher underground production. It remains within budget. That's the Turquoise Ridge, the number three shaft. It remains within budget and on schedule for commissioning in late 2022. We have, at Turquoise Ridge, made considerable geological progress. Improved understanding of the controls of mineralization has provided a solid foundation for mine design and planning and has indicated a significant potential for a new high-grade underground operation. If, as anticipated, Turquoise Ridge and Twin Creeks are proved to be geologically connected, it could add significant high-quality ounces to this complex. Still in Nevada, production at Phoenix was consistent with the previous quarter, and costs were significantly lower due to increased copper by-product credits.
I would just point out that it's only at Phoenix where we allocate credits for the copper back to the all-in sustaining cost per ounce of gold. With total cash costs of $79 per ounce for the quarter, Long Canyon continued to boast some of the best margins in the industry. Long Canyon's mine life extension project is being reviewed, as we shared with you last quarter, and we are planning now, having reviewed it, to restart the permitting process for phase two. Further north in Canada, Hemlo had a challenging quarter as it continues to transition to an underground-only operation with the closure of the open pit in late 2020. Strong production is expected in the second half of the year, the mine remains on track to meet its annual guidance. Meanwhile, we continue to position Hemlo as a potential Tier two asset.
Mining from its new portal is expected to begin in the latter half of 2021. This will provide a third mining front and increasing flexibility to the mine. At Hemlo, the geologists have done a great job. The identification of significant new extensions outside the mine plan is expected to speed up its journey to Tier two status. Back to the United States, where our Donlin joint venture with NovaGold in Alaska has commenced its 2021 drill program of 20,000 meters. This program is aimed at testing the updated geological model and ore controls and to obtain additional geotechnical and geo-metallurgical data. This will support the completion of the updated geological resource and genetic models, after which we will decide on the next steps in this project's progression.
Now we move south to our Latin American and Asia Pacific region, where we continued to intensify our focus on generative exploration and new business. The region also houses two of our key projects, Pueblo Viejo's plant and tailings expansion and Veladero's transition to a new heap leach facility. We are guiding annual attributable production of 600,000 ounces to 660,000 ounces. For this moment, we also not including Porgera in this guidance. Pueblo Viejo is processing lower grades in line with plan as it advances development of its plant and tailings expansion project designed to extend its life to beyond 2040. Despite the lower grades, its costs for the quarter were well below the bottom end of guidance, confirming its status as a leading low-cost Tier one mine. The expansion project remains on track and on budget, and its SAG mill is now en route to the site.
Bulk earthworks for the plant have been completed, and it has formally engaged with government and other stakeholders to secure land for the new tailings storage facility. The integration of the Pueblo Viejo district structural framework with improved geological knowledge has revealed new targets. Particularly exciting is the gold mineralization at Zambrana, where ongoing work has confirmed multi-kilometer strike potential. Drilling is planned to start as soon as the permits have been approved for this project. As I pointed out last quarter, Veladero was the only Barrick mine where production was seriously impacted by the pandemic lockdown in 2020 in Argentina. Last quarter, it bounced back with a strong all-round performance well ahead of plan. The mine is currently running down the inventory from its old heap leach facility while it moves to its new phase six heap leach pad.
We are scheduling the commissioning of this phase six by the end of the second quarter. That's this quarter. The connection to the Chilean power grid via Pascua Lama was delayed also by the pandemic and remains set to be completed by the end of this year. Once we connect this and effectively connect to the Chilean power grid, we'll see a reduction both in Veladero's greenhouse gas emissions as well as operating costs. The pandemic also affected the district's exploration progress, but these are getting back. The programs are now getting back on track. Lama and the area between Veladero and Lama are sparsely drilled and poorly understood, so still lots to do to define the full potential of this region. Three near mine targets are being drill tested as we speak, and a new generation of standalone targets are being evaluated for the next season.
By way of example, at Lama East, two drill holes have confirmed significant extensions 300 m beyond the current resource. Both appear to have encountered over 200 m of mineralization starting near the surface. Assays are pending, initial chip samples have returned very encouraging grades. Further afield, we continue exploring our holdings along the Andean trend, where we have identified 11 areas of interest. We are currently evaluating multiple new targets marked by the yellow stars on this map. You would have seen last month's announcement that the government of Papua New Guinea and Barrick Niugini Limited have agreed on a partnership for the future ownership and operation of Porgera, which has been on care and maintenance since this time last year. The key principles of the agreement are listed here on this slide.
I believe it's a fair deal which represents a true win-win outcome for both parties. The underlying implementation agreements are in progress, and the mine will be restarted when these have been finalized. If all goes well, this could be by the end of this year. Over now to Africa and the Middle East, home to two Tier one mines and two copper mines. Another strong quarter means the region is well-positioned to achieve its annual attributable guidance of between 1.5 million ounces and 1.6 million ounces of gold and 320 million pounds to 360 million pounds of copper. The Africa and Middle East region boasts enormous prospectivity, supporting the potential to further add to the already robust 10-year plans. Loulo-Gounkoto this quarter delivered another stellar performance, beating its budget and boosting production by 25% quarter-on-quarter on the back of higher grades and increased throughput.
The complex continues to invest in its future and development of its third underground mine at Gounkoto is well underway. Studies are also continuing to advance a potential fourth underground mine at Loulo-3 and a pit expansion at Yalea South. Meanwhile, the Yalea underground system continues to expand, as shown on this slide, through the extension of its high-grade zone to the south. The Loulo district has been one of the world's most prolific producers of world-class gold discoveries, and we are confident that it still has the potential for more. It straddles Mali's border with Senegal, where we are finding interesting and extended new styles of mineralization, particularly in Kabew est and Soya in the Bambadji permit. On the Mali side, there's a potential new discovery at Yalea Ridge, while drilling beneath the Loulo-1 ore body has returned exciting intercepts.
In addition, there are at least three major structures immediately south of Gounkoto, where extensive anomalism points to the potential for further opportunities. As you know, last quarter, we repositioned Tongon to extend its life by reducing its throughput, and the Quarter one results reflect that transition. We're also looking at supporting the mine life extension through brownfields exploration on satellite target. As this map shows, the exploration team has identified a number of these targets, each with the potential of increasing Tongon's life of mine. What's important is quite a few of these priority targets are within 10 km of the Tongon mill. Now across to East Africa, where Kibali's Q1 production remained in line with plan as it keeps on track to achieve its annual guidance.
Recently, a new government has taken office in the DRC. We spent some time with the new government appointees, the new cabinet appointees, just 10 days ago and engaging with them. We have always had, as you know, a strong relationship with the Congolese government. I think now, after seven months of really no real cabinet to speak of, we now have a fully appointed and responsible and countable cabinet, supported by both the parliamentary and senate majorities. We are confident that we will be able to address some of the outstanding issues that have been on the table for some time now, including the free movement of cash from the country. At Kibali, our reserve replacement program targeting a third successive year of growth continues with quite some success.
Drilling on the world-class KCD ore body has confirmed alteration and mineralization over 500 m down plunge of previous drilling and the existing resource limits on all loads. KCD is all about these cigars that plunge down. They have a high level, a high number of ounces per vertical meter because of their grade. This work supports the extension of the KCD system and bodes very well for our ability to continue replacing depletion at Kibali for the foreseeable future. Likewise, exploration along the KZ trend has delivered a number of open pits, which will increase flexibility at the mainly underground Kibali by balancing the ore feed with more open pittable material. The exploration pipeline at Kibali continues to grow, and it is currently led by the Kalimba target.
Moving further east now to Tanzania and North Mara, where North Mara had a good quarter on the back of improved underground productivity and higher grades. We still have some work to do on the plant upgrade, our exploration team is looking at building up the life of mine. Continued work on the Gokona system is indicating potential lateral and down-dip extensions to the ore bodies, which could provide substantial resource growth to extend the life of the North Mara mine. The ramp-up of the underground mining and processing operations at Bulyanhulu is making very good progress towards achieving steady state production. The drill program in the high-grade Deep West zone continues to produce positive results. A little bit about our copper production.
Copper has been one of the top-performing commodities over the past 12 months, with the metal recently breaching $10,000 per tonne for the first time in over 10 years. As you know, I've spoken about copper for the last two years. We see our own copper portfolio as a source of differentiation to our gold industry peers, providing shareholders with meaningful exposure from assets that are in production today. Based on the current spot pricing, copper is expected to represent at least 20% of our gold equivalent ounces sold from 2021 to 2025, up from the 16% contribution in 2020 based on actual realized prices. As already referred to, Barrick's copper portfolio performed well on the back of higher copper prices. Lumwana's production was impacted by lower grades, but is expected to improve in the second half of the year.
Jabal Sayid continues to deliver a consistent performance, and drilling is on track to extend its life of mine once again. At Zaldivar, the operation is progressing its CuproChlor project and is still managing the impacts of the COVID-19 pandemic in Chile. We've recently focused in on some of the exploration near mine and adjacent exploration potential at Jabal Sayid, and recently we had some wide and high-grade intercepts well outside the known ore body. These intercepts are expected to add to, as I indicated earlier, the previously extended life of mine, and you can see them on these sections on the slide. As I said at the outset, Barrick's core belief is that the best assets managed by the best people will deliver the best results. Our management team's record speaks for itself.
As far as assets are concerned, Barrick's majority-owned and operates five of the world's 10 largest gold mines, with a sixth in the form of Turquoise Ridge, a close 11th. Our strategy is to concentrate on Tier one and Tier two mines. We have refined our portfolio accordingly through the disposal of non-core assets in a process which has already realized $1.5 billion and is still continuing. Most recently through the sale of Lagunas Norte in Peru and some smaller legacy sites. Each of our core mines has a high confidence 10-year plan in place. I would point out those are plans, not forecasts. Nevada Gold Mines, in fact, is looking beyond that. The rise in the gold price has prompted a resurgence, in my opinion, of the short-termism which plagues and has plagued the market, with investors going for short-term gains rather than sustainable growth.
Here at Barrick, it's all about building a business for owners. Our focus is firmly on the future and on the creation and delivery of long-term value to all our shareholders, as well as all our other stakeholders. Our foundational objective is to build a business capable of delivering the industry's best returns. Over two years on, we've made considerable progress towards that goal. The dividend has tripled. We are now proposing to more than double that with a return of capital in 2021. Cash flows have increased to record levels. A once crippling debt burden has been reversed. These achievements are being built on a foundation of a great asset base, a fit for purpose structure, and a lean and agile leadership who have more than lived up to our best people mantra. We've certainly had our fair share of challenges, no doubt, and then some.
We've overcome them and will continue to do that, I promise you. Looking ahead, our exploration teams are on the search for new opportunities to grow our sustainable, profitable strategy. We're more than ready to continue to exploit the openings that will be offered by the dynamics of our gold industry. Thank you, ladies and gentlemen, for your attention. We have most of our executive team on the call. With that, we'll be happy to open up for questions.
Thank you. We will now begin the question and answer session. Our first question comes from Matthew Murphy of Barclays. Please go ahead.
Hi, Mark and team. Just a question on the Turquoise Ridge. There's a mention of a fall of ground at Vista Underground. Can you remind me where is Vista Underground? Is that anything that is of concern in ground conditions? Anything that means on the outlook? Thanks.
Sorry, Matthew, what did you say about there's a reference to what?
A fall of ground.
Turquoise Ridge, and if you remember back at some of the other legacy operations in that region, has a history of poor ground conditions. We are managing some of that at the moment, particularly around the infrastructure. Again, as we change the way we mine, with more geotech input, we're comfortable that we'll move away from that. We've also improved our geological knowledge. Most definitely, we're comfortable that we'll continue to improve. The other thing about Turquoise Ridge is with the completion of number three shaft, we'll increase our hoisting capacity, which again, takes some of the pressure off, improve our backfill plans, and increase our number of face availability. Greg is actually on the call and maybe he wants to add to that. Greg?
Yeah. Mark, thank you for that, Mark. Matthew, to answer your question directly, the Vista Underground is actually at the Twin Creeks operation. It's a small underground that's operated over there. Relatively low ounces from the bigger picture. Turquoise Ridge is our main underground operation. The fall of ground there was significant to Vista, but it's not significant. As Mark said, it was a isolated geotech issue. No, it's not a major concern going forward. Just for your information, it's over at Twin Creeks, not at Turquoise Ridge.
Okay. I appreciate that. Thanks a lot.
Our next question comes from Josh Wolfson of RBC Capital Markets. Please go ahead.
Thanks. Mark, I can't help but notice there's been a number of announcements lately across different jurisdictions on the resource nationalism side. It's not just a traditional West African challenge, I guess, for Randgold. This is something that's also present in South America and also in Nevada. I'm just wondering from your perspective and obviously, given your decades of experience, what trends you're seeing and if this is a greater risk today than perhaps what you've seen in the past.
Josh, of course, in times like this where there hasn't been much economic activity and the gold industry, of course, benefits from times like this because the gold price is up. We've certainly managed expectations and also supported our host countries and host states by advancing some of our taxes. I would also point out, as one of the things that I've spoken to you about and shared with the market is, the gold industry has a real responsibility as a insurance policy, and when I say gold industry, the entire industry, and of course, as miners, we benefit and participate in that. It's also important that we continue to build long-term relationships with our stakeholders. As I've pointed out in many occasion, there's this short-termism that arises all the time. Last time, post the global financial crisis, there was this big demand for growth.
When the industry went out there and bought anything that it could and resulted in value destruction, then there was an enormous amount of wringing of hands and concern and that led to more demand from the industry as far as paying out dividends. We've seen again this time. We have to put a balance on this because when fund managers demand big payouts and dividends after a period where the industry hasn't spent a lot of money in investing in its own future. And then gets disturbed by the fact that other core stakeholders, like host countries of which we are actually mining their national assets. It's an imbalance and us in the middle as managers of these businesses and the industry have to balance that. As you've seen, Barrick has done that extremely well in following the crisis in Tanzania.
We've recently walked back a situation in Papua New Guinea that is now going to deliver on the split in economics, a fair split on economics. Again, we are going to have to do more of that as an industry if we want to remain relevant and be able to operate across the globe in some of these developing countries. As you point out, Josh, it's not only developing countries and emerging markets anymore, it's everywhere.
Okay. Just one other question on Porgera, the comment about looking to revise guidance once that advances. Is it fair to say that the production impact for 2021 will be pretty limited? This is just more on the capital side, in terms of the cost to restart?
Yes. The one thing you want to do is get this right. It's been a tough negotiation. We need to get this right. It is a world-class asset. It's in a very challenging geographical area as well as a geopolitical area. There are a lot of things that I'd like to see us improve on. One, particularly, the license to operate and our community relations, our relationship with landowners. Those landowners were very key in getting this settlement over the line. For me, we'd rather do that properly and make sure that we start a new Porgera that is capable of operating in a more harmonious way for another 20 years. That's why we've made the decision to keep it out of our guidance.
Great. Those are my questions. Thank you.
Thanks, Josh.
Our next question comes from Greg Barnes of TD Securities. Please go ahead.
Thank you. Mark, I just wanted to retouch on the tailings system at Pueblo Viejo and the new tailings facility and when you expect that to get permitted and actually developed.
Greg, again, these consultations and one of the things that we're absolutely committed to is full consultation with all interested and affected parties as well as key stakeholders. We've been doing that for a year now. We have a significant support base from the community and, of course, like anything, there are detractors in the process and we had an altercation just last week where a handful of detractors really prevented the right of interested and affected parties, one, to hear what we've got to say, and two, to be heard. We are very determined to proceed with that. We believe that this expansion is in the best interests of the communities and surrounding communities as well as the provincial and national economies.
Just to give you some background, since Pueblo Viejo poured its first gold in 2013, our average share of commercial tax, corporate tax that's paid to the central government treasury is 18%. We're a very significant part of the tax structure in Dominican Republic. Also we are by far the biggest employer in that region. Again, this development is going to bring our commitment. We're really far advanced in investing in economic businesses like agribusiness. It's a very big cacao growing area around where we're planning to build the impoundment facility. There's a lot of benefits that can come with this. It's a natural basin, which is not very prospective for agriculture or anything else. Again, a lot of those communities would benefit from a relocation program, some additional investment in their own agricultural businesses and other industries.
This is the first of our public consultation process and we've got time, and anyway, in these sort of things, time is not as important as the communication. Of course, we are openly inviting even the detractors to sit down and engage with us and understand what we're doing. Certainly, this project has had, even over the recent elections, had bipartisan support. We're very confident that we'll progress this and find an outcome that will benefit everyone and be acceptable to the majority.
Just to be clear, a delay in the TSF expansion would not delay you ramping up the expansion of the process plant, correct?
No, we've got capacity in our current infrastructure to be able to manage this properly. We need the TSF operational during 2025, so we are working. Of course, we would like to have a target nearer term so that we make sure that we do arrive at the right place before it becomes critical.
I just want to touch on Lumwana, given where the copper price is, the operation's generating significant free cash flow and actually challenging some of your bigger gold operations on that front. When the Randgold Barrick merger happened, there was a lot of talk that Lumwana could be monetized. Is that something that now is off the table in your view, and you want to maintain that exposure to copper?
Yeah. Greg, one thing that you can't accuse us of is selling anything for nothing. We have a very good understanding of what value mineral resources come with. Lumwana was one of those projects where certainly, we looked at it. It had a long bad history. It was very marginal. As we looked at it, we certainly had inbound interest in acquiring it. Nobody who showed an interest came anywhere near what we believed it was worth. The team that we put in there, and we've reshaped it to be like our AME operations, majority national management, very focused on profits and efficiencies. We reduced the mining cost by nearly 50% and we made it a very profitable business. It's still a low-grade operation, but it's a big operation.
Like all low-grade operations, when you have a big run-up in the commodity price, it's highly geared, and it really delivers significant increased cash flow. What we've demonstrated to ourselves both with Lumwana and Jabal Sayid, we certainly. I know that our basic approach to mining, we understand the copper business. We've proved that we can operate both high-grade, complex underground mines, copper mines in the form of Jabal Sayid, and also low-grade super pits like Lumwana. We see this as giving us a real into the understanding of the Central African Copper Belt. Again, I think with some of the geopolitical developments in South America, you're going to see a pivot to some of the other copper-endowed geologies of the world. We've got that interest and knowledge in the Pakistan region, which is highly prospective, although again, a challenging address.
With the work that we've done in the Central Copper Belt, we're much more comfortable about continuing to explore and invest in that part of the world. We also have a joint venture in the making with Ma'aden in the Arabian Shield. We've been working with the Egyptians on their latest bid round as well. That's also copper gold. We'll continue to find our own gold and gold copper opportunities.
Thanks, Mark. That's it for me.
Our next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.
Thanks very much. Thanks for taking my question. I just wanted to ask you about the presentation that you just gave. You've shown a lot of different exploration opportunities and initiatives that you're working on. Can you maybe help just to cut through a little bit, what might we expect to see in your next reserve update, and your next life of mine plan or new guidance? Can you maybe give us an idea of which of your exploration opportunities might start to show up in your numbers sooner?
Jackie, as you know, in the legacy Randgold assets, we had a system it's well established, and we replaced gold that we mine on a regular basis, not always every year, but most years. We've also got visibility for Loulo-Gounkoto and Kibali. We can show how we're going to convert ounces two, three years ahead of us. What we've been working on in the greater Barrick group now is building that same sort of geological competence to be able to deliver that, and integrating and bringing back the geologists into the business of mining. We've made great progress in Tanzania, again, where we can see that we will continue to replace the ounces that we are mining and certainly add to that.
The exciting one for me is Nevada and the Nevada Gold Mines and the tremendous progress that we've made with, first of all, integrating the exploration group back into partnering with the Mineral Resource Management group. As you would have picked up in the messaging today, we're starting to look at 15-year horizons in Nevada Gold Mines, because remember, that is a very big operation, bigger than most mining companies. Again, it consumes a lot of gold, so we need to be investing, and we need to have a longer runway in being able to manage that business successfully. We're certainly seeing that now. The objective of showing you the future is important because, again, what you can expect is a continued roll forward of our 10-year plans.
As I've pointed out to you before, we've got two and a bit years of higher capital as we recapitalize some of our Tier one assets. Then really we see our portfolio as we've got it today, really grows cash flow at any gold price. Because why? Because the sustaining capital comes down to a run rate of between $1 billion and $1.2 billion.
Yeah.
Really that allows free cash flow growth. Of course, that 10-year plan is a foundational base to our full commitment to grow further value for our owners and other stakeholders. That'll come from new exploration discoveries. Again, Nevada is very special in that the size of ore bodies that you require to deliver multi-million-ounce discoveries are quite small, relatively. We still believe there's enormous potential to discover, not only to extend and replace the ounces we mine on a brownfields basis, but to make significant greenfields exploration. That requires a real investment in R&D, the real creative side of geology and exploration. Then, of course, there's the easier projects to grow, like Pueblo Viejo, where unlocking that constraint on the storage facility really unlocks an ore body that's already drilled out. Then the Veladero is just more cash flow effectively.
It's not right up in our number one part of our components, but we are very committed. Again, one small or moderate discovery within tracking distance of Veladero is very material for us. Again, I need to remind you, we've got a full processing facility which can manage just about any type of metallurgical ore that you can imagine in that part of the world, whether it's copper gold or gold or silver, by the way. So we're challenging our geologists to get beyond just drilling on the edges of ore bodies and go out there. So the first couple of big holes we've drilled, the one I reported to you on Lama East is one of those results.
We're very busy in other parts of South America as we build our portfolio and continue to look to open up new frontiers, just as we are doing in the AME region. Of course, we've got Donlin, which we spoke about, and that is a big resource. Still a bit of a way to go before we are absolutely clear about the geology. I would like to believe that our settlement with Papua New Guinea and our proving to the market that we know how to manage even in that part of the world, because that part of the world is largely underexplored, and again, offers enormous opportunity to discover Tier one assets.
Again, I think our first focus, get this business back on track, tidy up the portfolio to quality assets, deal with the legacy liabilities, which we've made progress on. We certainly haven't completely dealt with all of them, but we are dealing with them. Then now that we've got that, a highly competent, very professional and agile leadership, and now it's time to focus on our future. That's something that, as you know, I really believe in. We've now got the balance sheet, the people and the vision to be able to continue to build on our sustainably profitable strategy.
Thanks very much, Mark. That's a really helpful color.
Our next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.
Great. Good morning. Good afternoon, everybody. Just a couple of questions, if I could. I just wanted to circle back to Porgera. Just wanted to ask, how long would the ramp up take to get to full capacity? Is six months an appropriate ramp up?
Tanya, yeah. Good morning to you. With six months to really get this to everyone on track to start the operation and then another six months. In fact, in our agreement, in our framework agreement, we've got seven months to get to sort of 80% of our targeted production. That's the sort of guidance we've agreed to. That is not the challenge. The challenge is to get from where we are today to starting the operation. That's our big focus now because there's quite a lot of work to do on settling a special mining license, agreeing on the full implementation agreement and dealing with all the various agreements that one has to negotiate and settle to be able to start operations. We have Barrick and BNL has the operatorship, it's very much in our control.
This time around, we have a very equal partner in the form of the state, and with a real interest in this asset to be able to work with us to get this thing done. That's our timeframe. If everything works really well, we'll be there and starting to ramp up in quarter four. If it knocks on a bit, we might only start that ramp up in the beginning of next year.
Just the cost that you and your partner are going to have to incur to get this mine up. Can you just give us a size of what those could be? Will this be equity accounted?
We invest in it, we're funding it, and we recoup it as part of our. We recoup the capital, and then after capital, we share the economics 53%, 47% in favor of the government. That's the key, is the economic split for us, as you know. Of course, we've got the operatorship. It's around $300 million, including the money that we've already spent to get it back up to production. Mark Hill's on the call. Mark, have I got it more or less right?
Mark, that's right. That's correct.
When it's up, Graham, it's going to be equity accounted?
I just explained to you that we're invested and we recoup the capital.
Yeah. We'll move from proportional consolidation to equity accounting when the change goes through.
Okay, great. If I could just move to the DRC, I'm just trying to understand and appreciate, Mark, that we've got a new now responsible cabinet in place. I'm just trying to understand, your joint venture partner had given us some timelines in terms of getting cash out of the DRC. We were supposed to see this $500 million payment on 100% basis coming through in March and then sort of installments thereafter. Can you just give us an idea of what is happening? Is that no longer the case that we're not going to have installments anymore? My understanding was that we needed to have a parliament approval if we wanted to put a permanent mechanism in place to get the money out seamlessly. Can you just clarify some of this for me?
Tanya, let me just explain to you. First of all, DRC doesn't have exchange control approval, and it's never had it. There's a glitch in the 2018 mining code, which by the way, we all operate under protest. On top of that, our joint venture partner is correct because we give them that guidance. The expectation of moving from this paralyzed government situation, which we've endured for eight months now, a little bit over eight months, we've been expecting it to happen, and it hasn't happened as quickly as we expected. Even the appointment of the new cabinet, which as I indicated, is now supported by a majority in Parliament and in the Senate. That cabinet was only sworn in last Thursday evening. They've had their first cabinet meeting.
On top of that, we have had a special committee formed by decree to engage with the industry, not only Kibali, and to ensure that in the absence of the authority to do such, that we do have an authorized, what's the right word? Committee authority to be able to process and engage in finding a solution. Really the solution is about we don't want to, none of us want to do special deals in anything. We want the right to repatriate funds, not to take them out just because we feel like taking them out. They are monies that have been returned as part of our revenue and our commitment to returning the revenue from sales to the DRC. We want to use them to do three things. Of course, it's very important we pay back the debt. That debt comes with, in most instances, interest.
It's in everyone's interest, excuse the pun, to pay the debt back so that we can get into a bigger tax position, everyone benefits. The second part is we want to use those funds to be able to pay for services that we purchase from outside the country. The third and final one, when all that's said and done, is we want to pay dividends, because that's why we've invested in the first place. When you pay dividends, of course, the in-country shareholders benefit, as well as the government and treasury because of the withholding taxes. There's no argument about that philosophy. It's just about making sure that we do it in a proper way.
As you can imagine, this is an important factor for all miners in the DRC now because even the copper miners after the run-up in the copper price are generating free cash. There's been a lot of capital spent in the Katanga region as we did in Kibali. That's the background and the money is in our private bank accounts. It's not under threat. No one's trying to take it from us. It's been a very cordial and professional engagement and we're absolutely confident that we'll get to the point where we return to the normal operating process, which we have all become accustomed to until the 2018 transition.
Okay. We shouldn't be concerned whether these banks actually have your funds on deposit. You say it's in your private bank account, and you can see it.
We're not going to have to apply for piecemeal applications, that's something that I've been very clear about, is that we want a lasting solution, because again, when you talk to the new government and the various ministers as well as the president's office, we were very outspoken about the 2018 code and the fact that it was an attempt to sort of aggressively harvest something that hadn't even been invested in. Now we've got two years on, or a bit more than two years on, we've got all these super commodity prices, we've seen no investment into the DRC. There's a real desire and a commitment to work at attracting new investments. I must say the new prime minister is a young and energetic and very focused person from the industry. I've got high hopes for the mining industry in the DRC.
Okay. Should I think of it then that we are going to be getting this money out in installments, as was mentioned previously?
You'll see it coming out.
And we don't-
Of course, if you've got lots of debt, I mean loans, it'll come out quickly because we want to pay those loans off as quickly as possible. Everyone understands there's a benefit to all the stakeholders, both government and shareholders. The rest, we want to be able to continually work with it. The DRC has never been a country where you worry about your money, because it's never had exchange controls. People don't make a big fuss about whether they've got the balance, a big balance or a small balance in the country. We invest it in U.S. dollar accounts in international banks within the DRC, so it's never under threat. Of course, it'll support the dividend policies that'll come after the debt recoupment.
What we've done in Kibali specifically, AngloGold Ashanti and ourselves, is we've certainly indicated that we would be happy to pay some advanced dividends to ensure that our partner, at Kiba, gets some benefit while we're paying down the loans.
Can you just confirm this for me, Mark, that we do not need parliamentary approval to put a permanent mechanism in place to get this out?
No, because we've got this special committee opining on the process. At the same time, we also need to take away the, what's the right word, the contradiction in two articles within the law. That, again, is part of this process. Again, we couldn't get it done when we didn't have alignment within Parliament, but we certainly have now.
Okay. Just one other question just on Q2. It appears to me that with all the maintenance shutdowns that you have at several assets and better grade profiles in the second half of the year, Q2 could potentially be weaker than Q1 on a production basis. Is that something that I should think of? Is that a fair assumption?
Let's work backwards a bit. Really if you look at our guidance is 4.4 million to 4.7 million ounces for the year. Mid-year, we're going to be at half of the bottom end of that guidance, and then we'll fill up in the second half. That's the sort of guidance we're looking at, which will take us up well into our guidance. Similar outlook in quarter two as in quarter one. If it's softer, it's really a small percentage. It looks very much, if you take the 4.4 million ounces, which is the bottom end, divided by two, that's more or less what our target is for mid-year.
Yeah, that's where we're at too. Great. Thank you so much, and good luck on the DRC.
I don't need any luck. Thank you, Tanya.
Our next question comes from Mike Parkin of National Bank. Please go ahead.
Hi, guys. Thanks for taking my questions. Just with Porgera and the restart. Looking at reported COVID numbers, they seem really low. There is a fairly significant recent jump in the numbers. Boots on the ground or at least communication to staff at site, is there any kind of COVID challenge that maybe puts a little bit of additional kind of challenge on the restart of Porgera?
Mike, where I come from, I've dealt with, and so has many members of my team, with numerous pandemics, viral pandemics, not just COVID-19. The best way to manage these pandemics is with proper planning and some paranoia. Absolutely. Mark Hill and the team, we've started employing and building capacity back into Porgera itself. That's a very real focus for us, mobilizing the ability to do testing. We have testing facilities in all our operations now, or right adjacent to them. Some we own and some are in partnership with the local authority or the national authority across our organization. We are currently, as we speak, mobilizing laboratories into Porgera and again, making sure that we have adequate antigen tests which have become extremely accurate over time. Then it's all about outreach into the communities.
We've started that. We will treat Porgera as we start employing, as we do on every one of our operations. Of course, as you've seen that the international community has reached out to Papua New Guinea to support an early vaccination process. Again, I mentioned in our presentation that we have a global vaccine initiative that we're working on. Where we can, we are facilitating in countries where we aren't able to do it ourselves, and where we are able to directly invest and support countries and regions, we do that as well. Definitely COVID is a challenging situation in Papua New Guinea. Again, that country's infrastructure and health facilities are not the best. You need to manage it with a real focus.
Great. Thanks very much for that. Everything else I had has already been asked. Thank you.
Thanks, Mark.
Our next question comes from Kip Keen of S&P Global. Please go ahead.
Thanks for taking the question. Just looking more generally in terms of acquisitions, as you look at the market out there and what's available, you see whether it's a gold or copper company miner, they tend to look fairly conservatively at what's available out there. That is not much. When you look at the potential acquisitions out there, how do you view the market in terms of what's available?
Yeah. Kip, it's a good observation. I don't know how to answer that question. There's still consolidation in my mind required, particularly in the gold industry. The problem is that a lot of the high-quality assets are embedded in individual companies. It's hard to get a deal that brings a significant portfolio with it. Again, I think to be able to do value-creating M&A, one needs the support of the fund managers and investors. Otherwise, it's a better option to continue to explore. Hopefully I've demonstrated that Barrick's real focus over the last six months, once we got settled, is really building that capacity for organic growth. On the copper side too, there's very few pure copper plays. I think everyone, again, has been caught flat-footed in this copper price run-up.
As you know, we've been talking about it for a long time, and we've certainly focused in on our portfolio to make sure that it's efficiently run and we maximize the returns on a rising copper price. Again, we've invested in additional expertise in our exploration teams to be able to build better copper exploration strategies, and also through the whole spectrum of various gold-copper geological environments. At the same time, in markets, there are always opportunities to deliver value. We've proved that through our history. Barrick and Randgold have delivered significant value through opportunistic M&A transactions throughout their history. We constantly looking at opportunities. We run our ruler over any new announcement, any new development. What's important is we have the skill base and the balance sheet to be able to exploit an opportunity when it does arise. We'll continue to do that.
We are kept honest by our filters, I might add, Kip. We're not obsessed with growth, but we are obsessed with creating value through growth.
Yeah. No, fair enough. Well, in that sense, given the dearth of discovery in the past, say, 10 or so years, do you put more focus on exploration? Obviously, you have done to a degree, but does it become a greater focus in the next couple years?
Yeah, there's a great slide that we shared with the market when we announced the merger with Randgold Resources, where we showed the growth in Barrick and Randgold Resources and the value creation from primary discoveries. Also equally, both companies delivered significant value by post-acquisition expansions. Kibali is a classic example in the DRC. The best way to create real value in this industry is to make your own discovery. The second-best way is to find somebody who's made the discovery and hasn't worked out how valuable it is yet. Therein lies the importance of having a highly skilled exploration and Mineral Resource Management team in one's business.
Okay, thanks.
Our next question comes from Brian MacArthur of Raymond James. Please go ahead.
Hi, good morning, Mark. Maybe just following a little bit on that discussion, and we did talk about your copper portfolio earlier, and you mentioned Reko Diq in Pakistan. Just a couple of questions. First of all, can you remind me where we stand on that potential award settlement? The second part, I guess, is a more philosophical question. Again, that project, if I remember, had decent infrastructure, pretty good geology, but it's also in a pretty tough country, but that's something as you've said in the past, you've had the skills to deal with. Are you thinking more now philosophically that's something you might like to develop or you just have to wait for the settlement?
Is it something more that now that copper price is up, these things that you said are pretty scarce, maybe there's a partner or somebody else that can come in and develop it. Just philosophically how you look at something like that.
As you know, one of the philosophies that we brought in Barrick in 2019 was, I'm not a big one that takes on host countries in a fight. We reached out on the back of what John Thornton had already started to find a solution that was constructive with the Tanzanian government. We've been very successful in that. Again, you've seen us manage situations whether it's historically we had issues over in Mali because governments are not there for long anymore in this modern world. They move around, turn over quite a lot. I think I've worked with 20 different finance and mines ministers in Mali. We did the same in South America, both in Argentina to build a stronger, more transparent, engaging partnership with both the Argentinian federal government and more importantly, the San Juan provincial government.
We did the same in dealing with the legacy challenges around Pascua in Chile. We've built a much stronger, better relationship in Chile, and whilst we've got some way to go to evaluate fully the potential of Pascua, we are busy with that. We've done the same in Reko Diq in that where there is an award out there, it's a $6 billion award. It's shared with our partners, Antofagasta. To go and try and garnish that amount of money from Pakistan, which has just been lent $6 billion by the World Bank, IMF is a hard task. We believe that it's a world-class asset, as you point out, Brian, and there's merit in finding a way where we will earn back our own award.
If Antofagasta can't get their head around operating there, we'll work to find a way to compromise and settle on their side of the claim. That area has got enormous mineral endowment, both gold, copper and other rare elements and metals. As I've experienced in my professional life when I first started out in sub-Saharan Africa, it was almost a no-go place, and today it's very easy to operate in. The world moves on, and I think that we've had very constructive discussions with the Pakistan and Baluchistan authorities. I can certainly say Barrick's prejudice is to find workable compromise solutions that deliver constructive outcomes to these often acrimonious situations. That covers your question.
No, that's very helpful. You are still able to negotiate them even though this settlement's out there.
No, absolutely, because there's very clearly The settlement is not there.
Right
been approved. Now it's how does Pakistan deliver on that? Again, just building on my own personal view about responsible mining and how we deal with our host countries. The same, we've started that even before we took up the Randgold deal. It's much more constructive to do that where people benefit out of paying off a sort of judgment like this. Again, there's water to flow under the bridge, and we've got a bit like the Porgera. Porgera was a pretty challenging engagement, but the outcome, I hope, will be worth it for all stakeholders.
Great. Thanks very much. I'm just trying to figure out what the option value might be there because it could potentially be meaningful.
That option value is a good way to look at it. There's a value and what we prepare to do is take a long-dated position as far as getting full access to that value.
Great. Thanks very much. I appreciate the color, Mark.
Okay. Right.
Our next question comes from John Tumazos of John Tumazos Very Independent Research. Please go ahead.
Congratulations on all the great work, Mark.
Thank you.
How's the outlook for just getting around and drilling all the meters you want to drill and exploring and replacing reserves this year?
So we-
Given the pandemic and all the challenges.
Well, as you know, we haven't stopped. I fundamentally believe in managing by walking about, and we've continued as normal. We've just finished as part of this quarter 1 results. We had full management reviews with all our operations and onsite team effectiveness and strategic review workshops. We've had to be a little flexible in the way we do things. On the drilling side, the big challenge is to get drill companies to work for us. In Africa, we are Boart Longyear's biggest client and have been through every part of the cycle because we believe in investing in our future. We've worked very hard to get drill rigs onto the Andes. That's been a big challenge during this time. Certainly from the Argentinian side, we now have drill rigs up there.
As you would've read, we've just completed the drilling, some confirmation re-drilling on the Chilean side in Pascua. Again, we could do with a few more rigs. At this stage, we've been working on incentives and how we partner with the drilling companies to be able to achieve our objectives. A fantastic example of the tenacity that's required to get rigs into some countries, particularly over a crisis like this, has been Saudi Arabia. Again, you saw today the results of that effort to bring rigs into the country and get the drilling started. Those have been the biggest challenges. Again, in Nevada, we've had to work much harder to build a more business relationship with the drilling companies.
I don't think we're quite there yet, but we are prepared to invest in drilling companies to be able to get them to a level where they are able to deliver on what we want them to do. We see that as a very critical part of our business. I think in summary, the challenges have been the Andes, for many reasons, because Chile has also battled with the COVID pandemic and Argentina as well. Again, I'm pleased to say that the teams have made progress and we do have drilling ongoing. We've just mobilized. Last year in Donlin, we didn't have a single COVID case, touch wood. Hopefully it continues this summer. We've just mobilized the rigs into Donlin. We are demobilizing the rigs that are down in the Andes right now because we're moving into winter.
Mark, in other cycles 10 years ago, it was hard to get the tires for the big trucks. Maybe once or twice a generation or so ago, cyanide was short. What else besides drill rigs is hard for you to get enough of, besides great drill intercepts?
John, our focus, what we bring is mining, I often say is all about logistics, supply chains. I would argue we've probably got the best supply chain organization in the mining industry. When you see how they managed the impact of this crisis and built flexibility, as soon as we saw it coming, we built flexibility into our supply chain. We were able to switch from China to Europe back to China seamlessly on supplies, things like cyanide, in particular. Again, we are all about long-term relationships. We've done a lot of work. We've built some very strong partnerships on a global basis with tire suppliers. Again, because we're loyal through the cycle, and the fact that we run long-term contracts, we find that we've really very seldom been held to ransom by our long-term partners on every aspect of it.
We have visibility of every single consignment. We manage every aspect of the supply chain and we monitor it, because effectively, we just move stuff as miners. We blast the stuff underground or in the pit. We move it to the processing plant. We move a whole lot of stuff to the processing plant to process that ore, and then we ship out bars of gold. It's just one big movement. I can clearly confirm that on the tire side, we're in good shape. We're certainly expecting some squeeze. Again, we've spent a lot of time building those relationships across the Barrick group, and we've got a lot of buying power, as you can imagine.
Mark, you made overtures a year or two ago toward Freeport when copper was bottoming. It was a good show. They didn't want to dance, but you gave it a good try at the right time. Almost tongue in cheek, maybe you should take a look at Ford Motor. They're having a big trouble with logistics. Their output's down 50% this quarter. All in fun, Mark. Thank you.
I'm glad you recognize that my copper vision had merit. Yeah. Maybe we should have done it a little differently, what it proves is that we are absolutely focused on creating value, we recognize when there's an opportunity. I think we also learn from times when we fail on our endeavors, at the same time, we are not reckless in how we engage on pursuing opportunities that we recognize. Yeah, that was one opportunity. We're hunting some more now. I think what I hopefully shared with you today is that we're also investing in our own future, which is in my career, that's always been the biggest value creator.
Mark, sometimes the other guy knows every one of his assets are good and his commodity is low. Once in a while, they're going to say no, but keep trying.
Exactly. Don't you worry.
Good stuff.
Don't you worry.
There are no more questions from the conference call.
All right. Well, thank you everyone. That was quite a conversation and I really appreciate your input and for you to stay in with us in this conversation. Look forward to the next time we talk and hopefully, everyone will make an effort to join the Nevada Gold Mines team in its virtual investor day coming up. I'm sure you'll find it very interesting and see a little bit more of the color and detail of what that team has achieved with a set of really high-class assets. Again, thank you for your time. Again, if there's anything that you've forgotten to ask or you think of after we sign off, please feel free to reach out to the team. Again, thank you.