NU Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 2, 2023

There are 12 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick's results presentation for the Q3 of 2023. Following today's presentation, a question and answer session will be conducted. June.

Operator

As a reminder, this event is being recorded and a replay will be available on Barrick's website later today, November 2, 2023. 2020. I would now like to turn you over to Mark Ristau, President and CEO of Barrick. Please go ahead, sir.

Speaker 1

Thank you, operator, and good afternoon and good morning, ladies and gentlemen. I'd start with the current global Metals and Minerals environment, which really reminds me of the past 2015 years, when the mining industry stalled after a very good run, compounded this time by inflation pressures and a few or no new discoveries and a chaotic global order. Then as now, it is plagued by the obsessive short termism of governments and investors alike, who demand instant gratification and reach for immediate solutions, dismissing The long term nature of mining. Whether you're building a sustainable business or a better world, Whether that's the global transition to renewable energy or a business that creates and delivers real value That's why Barrick has a long term vision of its future and a strategy which, as I'll show you in the course of this presentation, Is organically designed to deliver value today and growth tomorrow by building real partnerships Every quarter today, I'll be making some forward looking statements. So please take note of this cautionary statement, It has been a very busy quarter.

Speaker 1

Gold and copper production were both up on the previous quarter And have been up quarter 1 to quarter 2, quarter 2 to quarter 3. But we did have some setbacks, Notably the slower ramp up of the expansion of Pueblo Viejo, our flagship organic growth project in the Dominican Republic. This is impacting on our ability to achieve our gold production guidance for the year. 2020. But as I've often said, mining is a long game and we don't manage Barrick quarter by quarter.

Speaker 1

2017. Even though with the slower ramp up at PV, we still expect that mine to exceed 800,000 ounces for 2024 and our group projection of a 30% growth in gold equivalent production by the end of this decade remains intact. Otherwise, there was a lot of good news during the quarter, particularly the progress we're making with our other growth projects, Lemona and Ricadec and a strong financial performance. 2020. I'll tell you more about these and the other KPIs as we go through the presentation.

Speaker 1

The operating results for the quarter We're, as I've already said, an improvement on the previous quarter with higher gold and copper production at lower costs. We are expecting a further improvement in production in the 4th quarter, but as I pointed to the annual production is now expected to be marginally below the low end of the 4,200,000 to 4,600,000 ounce range. Copper remains on track to achieve its guidance of GBP 420,000,000 to GBP 470,000,000 As you can see here, the financial results were strong Free cash flow up significantly to $359,000,000 and a 26% increase Secures our capacity to continue investing in our growth projects independent of the market, While growing our business, we have also been driving a new safety culture, including a new set of standards 2017. Sadly, this key priority was impacted by 2 fatalities during the quarter, which are deeply disappointing for me and the company. We remain highly motivated to achieve these zero goals.

Speaker 1

And during the past quarter, we've developed and revised fatal risk management program Barrick has continued the very pleasing trend of increasing the amount of water we reuse and recycle at our operations and for quarter 3 recorded an 85% efficiency rate. We also continue to make good progress towards our Scope 1 and 2 emissions targets. And during the quarter, the group, including our power plants, posted a 6% decrease in emissions compared to the same period 2020. A key milestone in the terms of tailings management was also achieved during the quarter as Barrick confirmed to the global industry standard on tailings management and published its disclosure of all very high and extreme consequence facilities on the 4th August. Our teams have already commenced work to fulfill the requirement of the standard for our remaining facilities by 2025.

Speaker 1

Consistent with most gold companies, Barrick's Scope 3 emissions, which make up at least 40% of our total emissions, Through our extensive supplier engagement and data collection process over the past 3 years, We were able to set qualitative and quantitative targets that are achievable and measurable 2020. Turning now to the operational review in North America, Already the largest gold miner in the United States, we are committed to expanding our continental footprint 2020 beyond our substantial base at Nevada Gold Mines or NGM for short, into other prospective parts of the United States As well as Canada and also as I'll show you later, we're making significant progress Turquoise Ridge, where a successful turnaround exercise by its new management team has increased production by 14% against the same period in 2022, helped by the successful commissioning of the 3rd shaft. The mine has one of the highest grade ore bodies in the industry, but at the time of the merger was struggling to live up to its potential. It now once again fully justifies its Tier 1 status. The lessons learned at Turquoise Ridge, Mainly about the critical importance of teamwork and planned maintenance are now being rolled out at the other NGM mines.

Speaker 1

2019. As we often stress, NGM is rich in growth opportunities And there's a strong exploration drive to replace reserves as well as to find the next big standalone discovery. It's delivering very promising results in the three trends shown here, notably Leval and the Carlin Trend, Goldrush in the Cortez trend and the extensions at Turquoise Ridge. Drilling results from across the NGM portfolio have already provided support for its 3 year reserve and resource replacement plan. The Barrick owned Fourmile project adjacent to Cortez Goldrush, but not part of NGM, merits special And we fully expect it to become a long life high value mine.

Speaker 1

Conceptually, combined with Goldrush, It will be the largest gold mining operation in the Americas. The long wait for the government record of decision on Goldrush Has been frustrating, but the notice of availability for the final environmental impact statement for Goldrush was published by the EPA on October 27. So we expect to receive the record of decision This is an overview of our expanding work and land consolidation across North America. As you can see, we have many growth opportunities beyond NGM. And as we work through this in the coming quarters, we'll give you more Clarity on exactly where we're building those footprints.

Speaker 1

Across the U. S, our teams are hunting for and securing Significant early stage opportunities to feed into our project pipeline. In Western Nevada, Phase 1 drilling has been completed at Pearl Stream with Phase 2 scheduled to start soon. Further north at the advanced Donnan project in Alaska, which boasts a very large resource, We are progressing key work streams to continue moving it up the value curve as detailed in this slide. And in Canada, Field work was successfully conducted on 3 properties, building confidence and advancing each project 2020 towards testing priority target concepts.

Speaker 1

We move now to Latin America 2020. The main focus, however, has been, as I mentioned in the introduction, on the ramp up of the expanded Pablo Viejo Mine and the updating of the Ricordic feasibility study. At the time of the merger, The Tier 1 Puebla Viejo asset was destined to stop mining this year and processing by 2,030, constrained as it was by low grades and a lack of tailings capacity. A visionary expansion project has unlocked and optimized 20,000,000 ounces of reserves, Extending the mine's life well beyond 2,040 at an average annual production rate in excess of 800,000 ounces. A project of this size always comes with risks and challenges And in the case of PV, it was the failure of the gearboxes for the flotation cells and more recently, the partial failure of the end of the new conveyor belt to the Single Stage SAG mill.

Speaker 1

Long term engineering solutions have been developed With the design engineers and original equipment manufacturers and temporary fixes have been employed, 2020, including the use of mobile crushers. The equipment failures have restricted the scheduled commissioning and ramp up, But the remedial measures taken by the team are allowing the work and production to continue and certainly the ramp up, 2020, albeit at a slower pace. Despite the challenges, as I mentioned at the beginning, We still expect PV to produce more than 800,000 ounces in 2024. 2020. In the meantime, the new tailings storage facility, a crucial part of this expansion, Has received the environmental permit and the resettlement of the project affected people from the site will start 2020 4.

Speaker 1

At the beginning of the year, you might remember, Veladero was a Very stressed operation with the combination of operational and geopolitical challenges. We chose to cut back the mine plan and capital while we consider the mine's future in the context of the risk. 2020. In the interim, the mine's new management team has done an excellent job operating in this environment Enveladero is now set to achieve above the top end of its annual production guidance. During the quarter, the mine increased production and reduced costs and we expect it to be in a positive cash position by the end of the year and to post a positive outlook for 2024.

Speaker 1

The successful completion of its Phase 7A Leach pad has encouraged us to start the construction of Phase 7B, which is scheduled for completion 2020. Across 2019. LATAM, we are looking at new opportunities in the Dominican Republic and Chile. We have recently secured a substantial land package We're also working on extending Veladero's life by adding back some resources that were previously removed from the mine plan. And in Pakistan, the site infrastructure at Rykadik is now in place And we're making good progress with the update of the feasibility study scheduled for completion in the Q4 of next year With Leica podium having been appointed as our project engineering partner.

Speaker 1

Seismic surveys of aquifers in the area indicate potential to meet the mine's immediate water supply needs and drilling has commenced to confirm the potential of these aquifers. Construction of the mine is scheduled to start in 2025 with 2028 targeted for first production. When it is fully operational, Ricardec will rank among the world's top 10 largest copper mines. As elsewhere, Barrick is very conscious of its social license to operate. And in line with our pledge to roll out benefits for the local community well before mining started, We have delivered 3 primary schools, a health center and a mobile clinic to the surrounding villages.

Speaker 1

Last quarter, we also launched an international graduate program in Balochistan with an initial intake of 9 standing graduates, 4 of them women. Our intention is to start cultivating a cadre of future experts and leaders for Pakistan's fledgling mining industry. And we also plan to start the training of future employees from the region, In Papua New Guinea, it's been a long and winding road towards the reopening of Porgera, But the end has finally been brought into sight by the granting of a new special mining license and the execution of the mining development contract 2020 and a fiscal stability agreement. We are engaging with the land owners to extend the current compensation agreements 2020. Detailed reopening and ramp up plans are in place And we're taking all the preparatory steps to be ready for that day.

Speaker 1

It's been well worth our while to persist with My introduction to the Africa and Middle East regions part of the presentation The Loulo Gounkoto complex in Mali delivered its usual strong performance and fully deserves its place in our Tier 1 portfolio. It has an exemplary record of consistent reserve replacement An ongoing brownfields exploration indicates that it's likely to sustain this. Deep Framework Drilling is currently testing for repetitions of the high grade Yalea system. And elsewhere on the site, New high impact targets have been identified, while a project wide review has highlighted opportunities Barrick is Africa's largest gold miner And Kibali, the continent's largest gold mine. It has recovered well from a slow start to this year and is on track to meet its guidance as well as to replace depleted reserves again.

Speaker 1

Kibali is a leader in automation and mining 2020 and a poster child for renewable energy. Since operations began, we have built 3 hydropower stations at Kibali. Together, these stations currently meet more than 70% of the mine's electricity needs. Once its 16 Megawatt solar facility with battery storage is commissioned, the mine's electricity needs will be met entirely from renewable energy for 6 months of the year, reducing its greenhouse gas emissions The 2 Tanzania mines production were lower than in the previous quarter, but this is in line with their plans And they remain on track to meet their guidance for the year. In order to sustain their combined Tier 1 profile For decades to come, North Mara plans to extend its life through an optimized pit plan, There's still great potential for world class discoveries around our operations and further afield 2020 within the Africa and Middle East region.

Speaker 1

These are some of the many opportunities from Zambia in the south to Saudi Arabia in the North. With its wealth of resources and our strong partnerships there, Tanzania is a particularly strong candidate for our next million ounce discovery. In Zambia, the expansion of Lomuana is along with the Rykadek project, Another of our key growth projects and together they will make Barrick a major league copper producer Complementing our Peerless Tier 1 Gold Portfolio. We've accelerated its feasibility study completion towards the end of next year, with construction starting in 20252026 targeted for first production, 2020. Lemoana's 50,000,000 tonne per annum process plant expansion coupled with the planned super pit will lift copper production to some 240,000 tonnes of copper per year over a minimum of 36 year life of mine and several additional targets are expected to extend Our other copper mines, Jabal Said in Saudi Arabia and Zaldivar in Chile, both delivered consistent production.

Speaker 1

Jabal Said, A joint venture between Barrick and Maarten is serving as a springboard for expanding our very successful partnership. New permits around the mine are being brought to account and we're expanding our focus beyond the current Jabal Said catchment area And up to the Arabian Nubian Shield, which we believe is poised to become a major new mining destination. Ladies and gentlemen, value today and growth tomorrow has been the theme of this presentation and I believe we're equipped to deliver both on the back of our uniquely successful As you can see here, since the merger in 2019, we've replaced 125% of our reserves. Looking to the future as demonstrated, we expect reserve replacement and our organic growth projects to increase production by some 30% gold equivalent by the end of the decade. And so thank you for your attention And I'll hand you over back to the operator to manage questions and we'll be starting here in London

Speaker 2

Dan Major from UBS. A couple of questions. First one, Just on the guidance for this year, you've obviously indicated 3% or so below the bottom end of the range on production. Can you give us a steer on The cost trajectory in Q4 at a group level and where you expect to land for the year relative to the top end of the guidance.

Speaker 1

Yes, I think so the big driver in the growth that has been clipped back has been Pablo Verje expansion. That's still going to grow significantly in quarter 4. So and again, All the regions are growing and we expect our forecast for quarter 4 will be better than quarter And with that will come an improved cost profile as well. So that trend continues as we set out to do for the quarter. The impact is in the actual expansion of PV.

Speaker 1

And I'll just explain a bit to you because I think people would like to know. And that is when we commissioned This is these we commissioned the largest float cells ever built. And the OEM who supplied that, those float cells, we've used certainly my whole career. And they underdesigned the gearboxes and the shafts. So we've been able to retrofit And engineer a temporary solution.

Speaker 1

So those float cells are now working, but the supplier has agreed to Send us completely new assemblages by the end of this year and they'll come in 1 at a time. And so by the end of the year, we'll have that problem properly put to bed. And the engineered solutions Might last us 2 to 5 years, but normally, float sales will last decades. So we want to get it done properly. And at the same time, a bit like what happened in Loulo a couple of years ago, the end of the very large conveyor belt Failed right at the end.

Speaker 1

And that's the feed to the run of The crushed ore stockpile for the single stage SAG mill. We are experienced in this because as I pointed out, it happened with us before. And so we jumped around and Installed a whole lot of mobile crashes to be able to manage that situation. And again, we have A series of conveyors that have arrived on-site For our dolomite process upgrade. And we're going to use those we're actually, as I speak, installing them.

Speaker 1

And we'll use those in the short term period, so the next 4 odd months, while we reconstruct that And so we are expecting that production will range between 70% 75% of planned throughput, and we're now continuing with the ramp up Now, and this is a very complex flotation circuit. What we've effectively done, what we did with PV is that It had run into a part of the ore body, which is the rest of the ore body, 20,000,000 ounces, which has got a grade of around 2.4 And we needed to jack up the throughput. And so the way we did it, our process experts, As we installed a very big float circuit in the front end of the plant and increased the whole combination part of that front end. So then what the float does is it concentrates the gold and more importantly the sulphur, And so now we can go back from a 14,000,000 tonne front end plant back to a 10,000,000 tonne rest of the process. Putting in the same amount of gold, we dropped the costs materially because there's not a lot of processing in that circuit.

Speaker 1

And that unlocks the entire 20,000,000 ounces. And PV is a very low cost producer. We produce our own power. It's natural gas fired power station. And it's a very efficient operation all around.

Speaker 1

It's very compact. The Mining is efficient and so we have a profile. It will range between 800,000 And 1,000,000 ounces out to beyond 20 to 2040. And that's really the impact in the short term this year because But the big driver of the increase from this quarter to next quarter is still that project.

Speaker 2

Thank you. One more, if I might. Particularly prominent concerns in the industry around expropriation, nationalization elsewhere outside of your portfolio. If we go to Pakistan, Obviously, there's been a checkered history in this asset. Two questions.

Speaker 2

What gives you the confidence In the framework agreement that you're coming to now that a Cobre Panama situation is not going to occur down the line. And the second is, in the Rangold days, you always talked to 20% IRR at 1,000. What's your hurdle rate

Speaker 1

So Daniel, after 40 years, I think I understand my way around the mining industry. And I would point out that when we did the merger with Randgold, The Barrick portfolio, my recognition was the High nature of the quality of the assets, but every single asset had a problem. Argentina was in trouble. Tanzania, both mines were closed by the government and exactly what the reference of what you're referencing. Porger was ultimately canceled the permit.

Speaker 1

Rickadeck had been nationalized. There was Nevada was an inefficient arrangement of assets because of Barrick and Newmont owning assets intertwined and which should have been managed together, which they are today. And you look back, you go fast forward to today and look back, we've dealt with all those issues. The last Challenge, which is also an opportunity is the Pascua Lama process. But what we did do is fix Veladero.

Speaker 1

And so it creates and it's not about your agreement. It's about your license to operate. You can have Yes, you can pin any agreement in this modern world. Whether it's in a developed country or an emerging market country, you can do that. If you don't and that's what I've said for many years and you know this, I've said, the most important stakeholder in a mining venture is your host country, not your shareholders, because if you get it wrong, your shareholders end up with nothing.

Speaker 1

And so for me, and it's been that for my whole career, very early on, that's how we built Rayon Gold. Focus on your license to operate, make sure you share The benefits, the economic benefits with the host country And the people in that country, so employee locals, develop local management, and then you'll be able to manage most crisis. But if you don't have a social license, any as we're witnessing for the umpteenth time, And it's not particular to just this last year. If you don't have a social license, you can have any agreement you like, doesn't Saved the day. So yes, I think we're and it doesn't mean it's all utopia.

Speaker 1

You've seen the work we've had to put In Tanzania to get where we are and today we are a preferred partner. We're the biggest contributor to the economy in the entire nation. And that comes from accusations that we never gave anything. And so Mali, we've been through many challenges in Mali over the years. I think I've been through 16 different governments and 3 coups.

Speaker 1

We're still operating. We have a very strong social license in Mali. Doesn't mean to say we don't have challenges. And I think there's a message to the industry that, that is an important component of mining today. And mining today has got a lot of work to really establish its credentials to ensure that It can fulfill what the world needs from mining because without mining, we will never have

Speaker 3

Alan Spence, BNP Paribas. Thanks for the presentation. I've got two questions. I'll take them one at a time. The first one is on Carlin, the big drop in the open pit grade that was The Orphan Gold Star stopping, taking more from the stockpiles, how do we think about that through 2024 and the grade progression?

Speaker 1

Well, that's closed now. And so it's about I mean, the big challenge in Carlin is and Goldstrike, what I've Done with Goldstrike. As we've put it, it was it's always been a filler in our production And management try to make it a core business and it's not. And so we've got a We've put that in a separate category and we'll manage that going forward. Leeville has done extremely well.

Speaker 1

The new Remnant Mining is a tough enterprise, as you know. So there are parts of our remnant mining, the old sections of Carlin that are still have a lot of new mining blocks. We've been able to Get ahead of the phases and drill out a future for them, but Goldstrike is not one of them. And then The open pits, we are transitioning from those open pits, but the core Focus for us too is expanding into the north through Levehill. And there's a lot of Golden Levo.

Speaker 1

And we are drilling brownfield extensions right along that call and trend today.

Speaker 3

Thank you. And then on the portfolio, just one operating asset in Canada, I know you've talked about wanting to have more there. I'm just interested in since The transaction when you're taking over, why hasn't more been done there? Has it been the case that the opportunities you've looked at Would compete on geology or valuation or is it something else?

Speaker 1

So we've there's been a lot of M and A in Canada, As you know, and a lot of and we've participated in just about every one and we've walked away from it. And what we have done is built a very significant portfolio now and we just referenced in the presentation the 3 key Projects that we're taking now to drilling, and they're all in the right place. And Our geological team there is as good as any of the teams we've got. And I guess from everyone In Canada, particularly, have this view that we Deserve to do M and A or should do M and A. And M and A is a part of a business that As the market we were talking about it the other day and Kevin made a very good point.

Speaker 1

Assets Some place in the market will always offer value. But in other stages of the market, they offer serious risk. And we saw that in 2011 when the entire mining industry blew its brains out. Yes, every one of them. Even Glencore is selling assets to survive.

Speaker 1

And the reason I'm here with The Randgold team and along with the Barrick team is because Barrick and the other big gold assets did the same. So it's a and for us, we're business. It's all about business. We're not about being big for the sake We believe in relevance. And there will be times when we have an opportunity to create value through acquisition.

Speaker 1

And we started out the merger with 3 very aggressive acquisitions, all at market, all at market. And there will be another time when we get another opportunity to do exactly the same. In the meantime, we just didn't rely It's not a strategy to rely on M and A and right now that's the mining industry because it's ex growth. And Barrick is a standout. We have despite the fact that we didn't do those M and A transactions, we can show you 30% growth.

Speaker 1

It hasn't cost us any money. It's just cost us effort. And the gold portfolio has got a steady growth out 2020, 2018 as we showed you at our Investor Day, this recent one on 12 September. And the copper profile is significant. And more importantly, we've got 5 years of actually planned replacement of gold.

Speaker 1

So we've got our brownfields exploration drilling way ahead of the face to be able to show that we will convert Inventory to resources, resources to reserves over that 5 years. And of course, as the years roll forward, we do more of that. And then we've got the new projects coming in. Lemana is going to dump a whole lot of copper reserves, The Lemana expansion into our portfolio and Ryker deck even more. And on top of that, about 15,000,000 ounces of gold in our reserves.

Speaker 1

So those Not only are we replacing the reserves in mine and our current Tier 1 assets, and I would point out our Tier 1 assets are by definition rather than made up. And that growth that we're talking about is new growth and it's both gold and copper because Reykjavik is that classic asset you want as a gold mine. It's got copper in it and it's got a lot of gold in it as well.

Speaker 2

Mark, lovely to have you back in London. Just on this Chart with your growth from 2022 to 29. Can you just remind us the cost of that and how the sort of capital spending comes Over the next few years, and I see we're sort of growing our debt levels from the low of a couple of years ago. What do you think peak debt might be in order for us to achieve this goal.

Speaker 1

So Justin, as you know, we come here every year By design to give this presentation and the LSE. If it wasn't for the Stock Exchange not requiring us to do a full IPO to continue our listing in London, we'd be listed here. So just apropos nothing. On the capital side, So let's start with LaManna. It's about $1,600,000,000 to $1,900,000,000 We're still in with the feasibility study, but we'll be with around there.

Speaker 1

And that's we should at market, at consensus prices, it's about $800,000,000 Simon, that we would fund from Barrick. And so that's it's an easy project for us to do whatever you The copper price is up or down. We'll put a bit more in orbit less. But again, Yes, that's a and if I take you back to Randgold, we've got and we can talk about this a bit. We've got gold assets are in well stacked up, And we've got long life assets now drilled out.

Speaker 1

So in the scenario that you find us Today, remember when we built our gold mines out and ran gold in the early 2000s, Gold price was not very high, but as we bolted, the gold price kept rising and we just delivered value for our Owners. And so it's a there's one good place to build copper mines and that's when the copper price is low. And particularly right now because I don't think any of us believe that the copper price is going to stay at this level. But we've got the gold strength to support that development. And also all our and then ricadec, It's about $5,500,000,000 for the first phase and $3,500,000 for the second phase, but that still Needs refining because we are doing the work on it.

Speaker 1

And we've got some big opportunities to reduce that first phase $5,500,000,000

Speaker 4

And that's

Speaker 1

on 100%. And that's on 100%, sorry. And then we also, as we've disclosed, working To project finance half of the first phase. So for Barrick, it's very affordable. If you look at whatever gold price you use, and we have used a CAD 3.75 Per pound copper price initially.

Speaker 1

And because of the gearing In the project finance, Ricohdec comfortably exceeds the 15% IRR. And so again, that's a project that's easily managed. We have Gold Rush is a $1,000,000,000 investment. It's a high grade mine. It's Easy again, easy to fund, that's on a 100% basis.

Speaker 1

And the other big capital project is PV and that was a $2,000,000,000 project with $1,000,000,000 into that. So those are the projects as they stand. I'll ask Graeme to have a to indicate to you the profile our capital profile. But you talk about debt. We don't really go into stacks of debt.

Speaker 1

We and because I would just point out everyone in the industry listen to people like you, not you because you didn't do it, But most fund managers asking for more and more dividends in an industry where it's capital intensive if you're growing it. And you noticed we didn't do that. Although we distributed significant amounts of cash back to our shareholders, It was based on our P and L and our free available cash, not going into debt to pay dividends. So today, we've paid down the debt to almost 0 leverage. We've spent $7,500,000,000 plus into our business and we've dividended out around $6,000,000,000 We know all cash returns, that's significant value we've created.

Speaker 1

And we're now and now we've got these projects where they all pass our filter of 15%. We look at return on capital investors of around 10% An IRR of around SEK 50,000,000 depending on the project. So but rickadeck is exceptional because we believe we can gear it, that it Gives us that sort of return. So you want to finish my finish the question?

Speaker 4

Yes. So Justin, I mean, as Mark has alluded We've got these 2 big capital projects that are on horizon and both of those are scheduled to really Start ramping up in 2025. So the sort of peak years from a capital point of view are 20252026. So this year, we'll spend around $2,500,000,000 on an attributable basis for our capital. Next year, we'll see a little bit more just as we Start to spend some money on those sort of pre in advance of those feasibility studies being completed at

Speaker 5

the end

Speaker 4

of 2024. Then 2025, those are our peak years. And then 2020 sorry, 2025 and 'twenty six are the sort of peak years. And then 2027, it starts to come back down again as those projects roll off. So the key point that Mark's making though is Even if we use commodity price assumptions below the current spot prices, so if you use consensus prices which are you have a declining profile.

Speaker 4

We don't build debt through this period. The cash flow from our Business funds all of that capital, so we don't have any debt buildup on that basis.

Speaker 1

So whichever way you cut it, Justin, you need to buy some more stock. Anybody else? Very good. Let's move to those on the call.

Operator

The first question comes from Lawson Winder with Bank of America Securities. Please go ahead.

Speaker 6

Great. Operator, thank you very much. Hello, Mark. It's very nice to hear from you. I would like to ask about Donlin.

Speaker 6

So in your project growth discussion in the MD and A, you mentioned of a portion of its interest in Donlin.

Speaker 1

I don't I'm not following you. I don't think we say that with reference to Donlin. So I've shown you the slide, I don't know if you can see it. But if you go back to the North American exploration slide, What we're busy doing, so let me explain to you. When we closed the transaction, Donnan had a global resource.

Speaker 1

It didn't really have an ability To model where the gold department was. And so we've Advanced our understanding of the ore body over the last couple of years and we've also really gone in To some details in the different phases, the different geological domains of the ore body and got to understand their variograms. And so we're now in a position where we are absolutely comfortable about the modeling and the ability to Optimizer Mining Mine Plans. And that's we've got a little bit more drilling to drill out some of the gaps, And so the first bullet there is the continuation of our geology work And we want to build in some measured resource. At the moment, we got most of the resource covered in indicated category.

Speaker 1

And this will be able to now and we've done our preliminary mine plans and modeling and pit scheduling. But with this, we can really go and start optimizing it and that's the next step. And at the same time, while we did that, we were able to collect more and more Samples to continue with metallurgical test work and processing trade offs and we've got some We got to build a lab scale Testing facility to be able to simulate some of our metallurgical flow sheets. And then The next one is, one of the big things that have changed in the last few years is the cost profile and the capital costs particularly. And so we need to refresh all the capital estimates So once we get a real handle on that and when it's not far away, we'll be able to do that.

Speaker 1

And then the important other aspect is because power, power cost, power generation, power strategy has all changed. And so there's work to be done there to make sure that we have that part of the project, which is a critical part of this project. Well understood. And we've still got some permitting to complete, particularly around the tailings storage facility. And then you start getting to the stage where you can actually understand At what gold price this project will be viable as an investment.

Speaker 1

And for us, we're a very focused gold mining company that has an obsession about sustainability and a big 32,000,000 to 36,000,000 ounce Resource is important in our portfolio. And certainly in my career, I've watched ore bodies go from unprofitable to Significantly profitable over time. And if you just go back to 99, gold price was 2.60. Today, it's 2,000. And if you look at the average grade of the industry, it's been declining materially as people can use higher gold prices to make money.

Speaker 1

So Yes, and that's the way we look at it. I can honestly say there hasn't been a day we've considered putting it out in the market to

Speaker 6

Okay. 2020. Thank you. And then just on exploration, there was a discussion again of North Eagle. So It's great to see the exploration success there to date.

Speaker 6

And I was just wondering, is there expected to be an additional maiden resource as of year end 2023 for that Fallon Miramar gap. And then is there any expectation for any significant update on North Leesville resource in any way for this year end update? Thanks very much.

Speaker 1

Yes, I think we'll be updating our reserves and resources at the end of this year as we always do. And with that will come some We'll definitely point to some of these emerging projects. They're extensions, but they're material extensions. And so let's we'll make a decision. I mean, we'll share that with you when we get there.

Speaker 1

And our objective has always been To replace the ounces that we're mining, but at the same time, we have guided that Nevada is on a 3 year rolling average that we look to replace the reserves. And so we build because a lot of the ore bodies are deep, we build the inventory, then we and that's what we've been doing. You roll forward the resources and then there will be a period where you've got enough of a pipeline to keep on an annual basis replacing The reserves. So we're getting there as far as North America goes, but you're going to see a big resource or inventory and resource growth going forward.

Speaker 7

2020.

Operator

The next question comes from Martin Pradier with Baritez Investment Research. Please go ahead.

Speaker 8

Thank you. My question is on Pueblo Viejo. I saw the recovery rate decline from 89% in Q2 to 70 2% in Q3. I'm wondering what I should expect for Q4 And if this is all related with the sales that you were talking, and the production in Pueblo Viejo was 79,000 ounces. If it will be materially higher in Q4 or we have to wait until Q1 for that?

Speaker 1

So 2020. The recovery is purely a result of the ramp up and that's as you feed these new processes or flow sheets, We've got to get everything balanced. And we did that and we've been using lower quality stockpile ore On the commissioning side, as you can imagine, our intention is not to try and put as much gold as we can onto the tailings dam. We've got to try and make it land in the gold room. So we've used a lower quality, Less sulfur rich and lower grade ore to commission the mine and that impacts on recovery.

Speaker 1

Slowly, we will wrap that up and we're busy with that right now, the ramp up. It was delayed because of those flotation cell challenges. And as we do that and we settle the process down, So we will shift back to better oil and we'll return back to the design recovery rate. Notwithstanding that, we expect to have an improved quarter 4 relative to quarter 3 in production wise, And we should start seeing the recoveries improve. And then quarter 3 will be the same.

Speaker 1

We expect to be fully back at Full operations at the during quarter 1 next year and towards the back end of quarter 1 next Q3. But notwithstanding that, as I pointed out, the design profile for Pablo Viejo is above 800,000 ounces. And certainly, from what we see today, we will get to above 800,000 ounces in 2024. So a softer start, but a strong finish for the year.

Speaker 8

Okay. Thank

Operator

you. The next question comes from Tanya Yakupznik with Scotiabank. Please go ahead.

Speaker 9

Great. Thank you so much for taking my questions and good afternoon everyone. Maybe just on Pueblo Viejo, I'm Just looking at your Investor Day presentation of November 2022 when you gave the production profile for Pablo Viejo. And 2024, Mark, was supposed to be 1,000,000 ounce year So I'm just trying to understand from you as we've had these delays and push outs and so forth, 2019. Should I be thinking of moving that 1,000,000 ounce production profile down to, am I looking in the 900,000 ounce range and taking that differential and pushing it into 2025 where we had to get back down to about 900,000 Genesis.

Speaker 9

So I'm just trying to understand overall what 2024 looks like relative to what you provided for us in the Investor Day.

Speaker 1

So, Tanya, you must have a very sharp ruler. I do. I

Speaker 8

have a ruler.

Speaker 1

You're definitely So that's correct. The situation here is, at this stage, what we can say was certainly is Certainty is we'll break the 800,000 ounces. The answers we don't make in next year will roll forward into the other years. So that's correct. But what we wanted to point out that despite the slower ramp up, our job is to get this Mine complete and running.

Speaker 1

We'll still beat the design, the long term design production. And could it be significantly above 800,000 ounces? Yes. Would it be 1,000,000? No.

Speaker 1

So it's somewhere between the 2. That's the way and we'll tidy that up, Tanja, with you when we speak to you in early February when Give the full guidance at that time. But we just felt that this is one that you need to be aware of. Yes.

Speaker 9

I just wanted to make sure that when you provide guidance for next year in February, I don't have

Speaker 1

Yes. That's why we've given you that guidance.

Speaker 9

Yes. I appreciate that. Thank you. And should I be thinking Because of the revisions to the production profile for 2023 on lower production and higher costs and then sort of this push out of Pueblo Viejo. Should I be thinking that The capital returns should just mainly focus on dividends for the remaining part of this year and into next year versus share buybacks even though your stock is relatively cheap.

Speaker 9

Should I be thinking

Speaker 1

about that? No, I don't think you should Anything like that, right now, we've got a dividend policy. And that is As soon as we get cash or net cash in the balance sheet at the end of the quarter, we'll pay an extra dividend and it's very clear our guidance. And And Tania, we've been very loyal to that strategy unlike any of our peers. At the same time, we can change that because if we buy back stock, then it will push the net cash position below 0 and we won't pay the dividend.

Speaker 1

So we can do both. We can or we can do one or the other. We can do both. It's exactly but we need to get some we need to keep a strong balance sheet because right now, 2020. As I pointed out, we are independent of the market.

Speaker 1

And so and I've been there before in these stages, And it's not in our interest to stress our balance sheet when, as you heard from Graeme, we've got some significant capital ahead of us And that capital delivers real returns. And so that's our focus. As we have Always been our whole career. We worry about creating value from mining World class orebodies are not trying to buy our stock by paying more and more dividends on the back of increasing debt.

Speaker 9

Okay. So priority of dividend over share buyback is what I've taken from this.

Speaker 1

No, it's not. It's either or.

Speaker 9

Either or. Yes. And then my final question, if I could. I just wanted to come back to the health and safety. I'm just trying to understand, Mark, what's going on with health and safety with these fatalities.

Speaker 9

We talked a little bit about it On another conference call, last year, we had quite a number of fatalities and then another 2. Can you just review with us, is it that Procedures aren't being followed, your procedures need to be updated, like what exactly is occurring? I'm just trying to wrap my head balance, all of what I'm seeing.

Speaker 1

So the one fatality still hasn't really been classified, the one in The United States. So that still needs a bit of work before we can talk in too much detail. But the fundamental aspect of this is Operational Excellence, Tanja. And when you get And it's the requirement to get people to concentrate and to be properly qualified to Do the job and be aware of what they need to do before they embark on any work. And we've when you go through these stages, you got to spend a lot of more time in making sure that we are Training our people correctly and that they are able to deal with the challenges of work underground and work In a heavy industrial environment or heavy industry environment.

Speaker 1

Like all accidents, There's some neglect in it, either not really doing a proper risk analysis before Starting the work, all that you overlook procedures and standards. And the question and it's easy for us to Blame that, but it's there's more to it than this when you manage health and safety and just like you see our Our environmental strategy is starting to work. It takes time in a big organization to Really make sure that every person who comes in the gate and every person who works in this walks into a specific environment within that Heavy Industry is qualified to be there and is capable of working safely and that's our big focus right now.

Speaker 9

Okay. So you've tightened your procedures, I'm assuming, in terms of 1Q We've

Speaker 1

tightened our procedures. We've introduced Training schools, proper training mines in Nevada because a lot of in America you don't have this Philosophy of a technical qualification, so we're doing it ourselves. We've Partnered with the technical training institutions, both in Northern and Southern Nevada. And in Africa, we've revisited that induction And making sure that our technicians like electricians are current or kept current and by through our training programs.

Speaker 9

Okay. We'll talk about this more when I see you

Speaker 10

in person.

Speaker 9

I'll leave it here and let someone else have questions.

Speaker 1

Thank

Operator

you. The next question comes from Mike Parkin with National Bank. 2020. Please go ahead.

Speaker 10

Hi, guys. Thanks for taking my question. Just a little bit of Looking for some additional color on 2024 for PV. With respect to downturns, will there be Kind of major downturns to get the conveyor fixed and up and running, get the new gearboxes and drive shafts We're pleased with the more robust units on the leach tanks. And would that all kind of happen in Q1?

Speaker 10

Or I would imagine it's likely a bit of a back half weighted year for the asset. Just any kind of additional color you could provide would be fantastic.

Speaker 1

So we can manage the downtimes in our current profile and all the leach tanks and the retrofits or the The fitting of the new assemblages will happen before the end of the year. And then by that stage, we should be Properly ramped up as far as process flow sheet that sort of thing. And then we've got a lower throughput in the Q1 because we've engineered an interim solution, which gets us 70% to 75% of the way to our full design throughput. And that's independent of the current conveyor Infrastructure. So to fix that and erect the new extension Will not be impacted by our and certainly won't impact the operation.

Speaker 1

And then we'll switch over to the newly installed Conveyor once it's all done and dismantle the temporary conveyor system that we've put in its place. So that's why we're confident that we'll crack the 800,000 ounces next year. And if we get it done earlier and we can we get the ramp up more efficient earlier, it all helps to the point That Tania was talking about. So we will get more, not less, above the 800,000 ounce forecast.

Speaker 10

A follow-up on that is just the work on the needed new tailings dam. Is that continuing to track Well to plan from the May site tour or is there any delays in terms of getting final sign off on permits To get that work underway or the relocation of some of the villagers, I believe, had to be moved out of the way. Is that all tracking to plant?

Speaker 1

Yes, it's all tracking to plant and it's fully permitted. So The work we've got to finish for the actual design is we've got a couple more holes to finish On the main wall, just to make sure that the because this is the L'Agol Dam, Which we're using now is one of the most engineered tailings facilities in the world, and it survived seismic events. And so this is a very highly engineered dam. Foundations are critical in the way we engineer it. So We're busy with that work.

Speaker 1

And then but the dam itself is permitted and we're far down the road on our program with the community. And as I pointed out in my presentation, we'll start moving And these are people, some of them are effectively squatters on state land or on other people's owned land, but they have a right under the Dominican Republic law to that land because they've been living there for so long. And what we're doing is building new village infrastructure, so proper communal village living And with the infrastructure and all the services as well. So it's been relatively easy to Find solutions and get the commitment to relocate. And we're busy with that.

Speaker 1

And as you know, we've done some of the biggest relocations in the world in Randgolden And they've been all been successful.

Speaker 10

Great. Thanks very much for that color.

Speaker 1

Thank you.

Operator

2020. The next The question comes from Anita Soni with CIBC World Markets. Please go ahead.

Speaker 11

Good morning, Mark and team, and thanks for taking my question. Q3. First question is with regards to costs. So I can see they came down this quarter and are trending more towards the guide that you put out at the beginning of the year. Can you talk about some of the areas where you've seen cost relief and any implications that has to the CapEx number going into next year?

Speaker 1

So Anita, nice to hear from you. I mean, we're forecasting another decline in costs Along with the further increase in production in 'twenty I mean in quarter 4, the world is very dynamic as you know. And oil and gas are one of the key drivers of our costs So yes, I think that's a good trend. I would Prefer if you let us guide you on the costs for next year when we give you the full guidance. But that's really the trend at the moment.

Speaker 1

And you're right, we are getting back towards the guided costs. We're not going to make it quite make it there because one of the drivers of the cost too, as Graham has said before, Is the higher gold price on the royalties. So $100 is $5 on the cost Graeme? So $100 is $5 above our and remember we planned at $6.50 16.50 16.50, sorry. 2020.

Speaker 1

Yes.

Speaker 11

So my second question is with respect to the softer quarter sorry, softer years that you're 2020. So would it be safe to assume that next year, I think you were guiding to Nevada gold mines being a pushed out into 2024 and maybe it's not as soft as you have previously guided.

Speaker 1

No, I think our guidance for 2024 that we last spoke about And again, we were saying, one of the things just like I did in Argentina, we need to give this team a bit of a breather. It's really right at the edge all the time, and it's just not getting on top of things. And so that's the discussion You and Tania and I and a couple of other analysts had when we were down together in PV. And We're mindful of that and we gave that indication of where things are going to land and I think Right now, that's where I'd like it to stay until but we'll tidy it up next year when we talk to you in February.

Speaker 11

Okay. That's it for me and my questions.

Speaker 1

Thank you, Anita.

Operator

The next question comes from Jackie Przybylowski with BMO Capital Markets. Please go ahead.

Speaker 5

Thanks very much. Thanks for taking my question. I appreciate your time. My first question, I'm sure you've been asked this a lot, but maybe it'd be helpful to ask you on the call. You've said before that you'd be looking at copper assets.

Speaker 5

I know you've addressed this sort of indirectly today, Q3. But if you could just maybe be a bit more direct. When you were talking about buying Freeport, you said you would do it if you saw it at a distressed discount. And that moment is obviously past. You've also been linked in the media to potentially looking at buying First Quantum in the past.

Speaker 5

I mean, I think everybody would agree that it looks like the stock price is a bit of a distressed discount at the moment. Does that change your view on acquiring First Quantum at this point.

Speaker 1

So Anita, right now, things are very fluid. As you can imagine, it must be a tough Time for 1st quantum. The press is not my investment banker. And so it would be I think it would just be ill advised for me to comment on that question. I think First Quantum needs to focus on its challenges And none of us like to see that sort of event in our industry.

Speaker 5

Absolutely. Thanks, Mark. And it's Jackie, By the way, if I could ask on

Speaker 1

excuse

Speaker 5

me, that's okay. It was a tough question, so I understand the mistake. Maybe on Recotec. There's been a lot of talk again in the media about potential partners at Recotec. And I think I actually asked you guys this Last quarter, but since then there's been more talk about whether it's the Saudis or Egyptian individuals.

Speaker 5

Can you just reiterate like how you expect the project to look from your side? You looking to retain your 50% stake in Ricoh Dick or would you entertain partners coming in, in terms of sharing the Barrick equity?

Speaker 1

So Jackie, what I can tell you is that Gib was asked this question by A reporter of left field, never spoken to him about it and he's got about little or no chance, Probably no chance of ever getting equity in ricadik and I think he knows that. So

Speaker 5

That's very clear.

Speaker 1

And that's no reflection on Agib. He's a great friend of mine, but we're not selling equity. It's not an equity sale list. The conversation around Saudi and Pakistan And their equity is as you know, Saudi was a big player in supporting the IMF rescue of Pakistan. It's a long term friend, partner and supporter of Pakistan.

Speaker 1

And those conversations Are being held in some form, but and we're there to support and we are, as you know, Strong partners of Saudi Arabia and Saudi Arabia and we are very committed partners to Pakistan and Pakistan. And we're there to help wherever we can, but we're definitely not meddling in any conversation. And the one thing that is clear is Our 50% is not for sale.

Speaker 5

So I

Speaker 1

think that will probably help. If you ask me again next quarter, I'll give you the same answer, I promise.

Speaker 5

I'll ask you to respond to the next media rumor. I appreciate it. Thank you very much for your color.

Operator

The next Question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Speaker 7

Mark, congratulations on everything. I hope I don't offend you, but I did a little spreadsheet comparing 56 companies Some of them weren't gold companies.

Speaker 1

Yes.

Speaker 7

And those 56 companies in the last 3 years bought back $73,000,000,000 worth of their stock. Every steel, every forest products and every fertilizer company I looked at bought back stock. The gold companies are different, Mark, so I don't compare you to gold companies. There actually are 5 companies that bought back over $1,000,000,000 so far this year. And The biggest one was Vale that spent $14,250,000,000 on buybacks the last 3 years so far.

Speaker 7

Last year Barrick bought back stock. This year, you're not. How do buybacks compare to Expanding Luana, extending Pueblo Viejo, Rico Deak, just Walk us through how you make those choices.

Speaker 1

So, John, that's a good question and thank you for the compliment. Well, I think it was a compliment.

Speaker 7

Certainly, I compare you to real companies and not gold companies. Yes.

Speaker 1

Thank you. So again, as I pointed out earlier, one of the things if you go back through my career and Most of my career has been with Graeme and we have a very clear outlook on how we manage the balance sheet is that you need to have a capital allocation strategy And a policy, and we've got one. We worked to one win right out the blocks in 2019 and then we built one and shared it with you 18 months ago. And today it stands that we don't we pay a base Dividend of $0.10 a quarter anytime because our long term business strategy Delivers that base dividend no matter what the gold price is or what the most Foreseeable gold price or minimum gold prices. And then once we get a net positive cash position, We add to that $0.10 Now the way we can manage that is and we want that because we're in a growth phase.

Speaker 1

And I've proven before and I am determined to prove it again, if you keep investing Into profitable assets, ultimately you make more money than you need to reinvest in your future. And that's what happened in Randgold after 10 years, and we had 13 years of growing dividends, no matter what the gold price was. And so the way we can manage that buyback relative to dividend is When we see the trajectory going above net cash, we have a choice, Buy back the stock or let it go past that point and then at the end of the quarter, if we've got net cash, we It triggers our dividend policy, so that as management, we can manage that and we never put the balance sheet at risk. And I've always said the one thing you need to know in mining is that when the market goes against you, you have no friends. And when you ask for money at that time, you get slaughtered.

Speaker 1

All the stock buying will never help you. So I've always worked to be independent of the market that's and shareholders Like that. They might not like that in hot times. We've just been through a very hot time. But look how suddenly The base metal companies have started having to cut back on expenditure, reduce staff, Deferred capital, lots of things, because everyone thought that commodity prices continue to go up and up and never come down, and that's not the case.

Speaker 1

So for us, that's the way we manage share buybacks. And at the time, as you know, we had a lot of cash flow. We were able to choose, we had to balance our returns to our shareholders, we've done that, but we also saw a significant weakness in our stock price and more importantly, a relative weakness relative to the rest of the gold industry, which itself is weak. And so we felt that taking some of that extra cash coming off our P and L and buying shares is The right thing to do. I've always felt as a mining industry and Barrick is in a particular place, it's Got a lot of outstanding shares.

Speaker 1

It's hard to make a dent on them, but we will continue to do that. When we have an opportunity and we got free cash, We'll buy the stock back. If it goes too low, we'll buy it back as well. So but it's we passed I believe we passed that Real tough part in rebuilding Barrick. We've set a solid foundation.

Speaker 1

We've built a strong team. We know where we're going. We're not going to regret any of the decisions we've made because they've been well made. And we can afford our growth and there are not many mining companies that can show 30% organic growth ahead of them. And I think we're well positioned to benefit from the long term bullish output put on copper.

Speaker 1

And Right now, I can't see much downside risk on gold just because of the chaotic Global environment we find ourselves in, whether it's the global economy or just the geopolitical risk and everything else that goes with it.

Speaker 7

So basically the growth for Ricoh Deeck is more valuable than buying back shares in Your opinion.

Speaker 1

Yes, in the short term, because if you get caught in the market without money For a big project like Ricardek, then you hurt the overall long term reserves. And so that It's the choice of capital allocation and we are not going to issue new stock. We are not going to put our shareholders at risk At all in the next 5 years, we can see it, it's banked and ultimately Our share price will go up naturally because we're going to show people we've got the discipline. People are still thinking we're going to do some crazy M and A transaction. That's not the case.

Speaker 1

We've demonstrated that should the opportunity arise to create value through Acquisitions, we'll take it, even if we have to be aggressive. But right now, We're in good shape and we don't have any regrets if you look back 5 years.

Speaker 7

Mark, I know this wasn't on your watch, but from 'ninety four to 'ninety eight, the stock was much higher than today. And even through the dog years when the Swiss were selling out their gold reserves

Speaker 1

Yes, I think John, I don't have to lecture you on this. Yes, it takes one bad decision to damage a reputation. It takes years to rebuild it. And Yes, we literally had to rebuild the Barrick portfolio, I mean, piece by piece, 2019. As I pointed out earlier in the presentation, so and the 90s you're talking about, remember, I modeled Randgold on 2019.

Speaker 1

The 90s Barrick. And that was a different company to what transpired in 2010, 2011, 2011, 2012 and 2013, where effectively the company wrote down Yes, dollars 20,000,000,000 of investments and they were all U. S. Dollar investments. On top of that, there was the equity issues.

Speaker 1

So there was a it was in a very stressed

Speaker 7

Congratulations on all the good work you've done, Mark. Thank you.

Speaker 1

Coming from you, John, I'll take that as a real compliment. Thank you.

Operator

There are currently no more questions from the conference call.

Speaker 1

Well, thank you very much, ladies and gentlemen, both on the call and here in London. It's great to be back in London. Nice to make sure

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