巴里克黃金 (GOLD) 2014 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Barrick Gold Q2 results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded on July 31, 2014.

I'll now turn the conference over to Amy Schwalm, Vice President, Investor Relations.

Please go ahead.

Thank you, Operator, and good morning everyone.

Before we begin I'd like to point out that we will be making forward-looking statements during the course of this presentation.

For a complete discussion of the risks, uncertainties and factors which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statements, please refer to our latest year-end report or our most recent AIF filing.

With that, I will hand the call over to Jamie.

Thanks, Amy.

Good morning and thank you to everyone for joining us on the call.

I'm here today with Kelvin Dushnisky and Jim Gowans, both recently promoted to Co-President.

As we announced a few weeks ago, Kelvin and Jim will be jointly responsible for the execution of Barrick's operating plans and strategic initiatives.

They will be working closely with Ammar Al-Joundi and Darian Rich, who are also here with me this morning.

Ammar, our Chief Financial Officer, was promoted to Senior Executive Vice President and will be working closely with our Chairman, John Thornton, on strategic priorities.

And Darian is now filling a newly created position, Executive Vice President, Talent Management.

In addition to these changes, yesterday we announced that two new independent directors have been appointed to the Board.

Turning to the highlights of the quarter, we reported adjusted net earnings of $0.14 per share and a net loss of $0.23 per share.

The net loss includes an impairment of $514 million for Jabal Sayid, which included $316 million attributable to goodwill.

Two weeks ago we announced a joint venture agreement with a Saudi Arabian Mining Company, Ma'aden, to operate Jabal Sayid, which will enable this project to move forward.

In the quarter we generated operating cash flow and adjusted operating cash flow of $488 million.

We're maintaining our 2014 production guidance of between 6 million and 6.5 million ounces, but for the second year in a row we have reduced our mid-year guidance for all-in sustaining cost, which remain the lowest of our peers, as well as adjusted operating costs and CapEx.

Our copper guidance is unchanged, and I'm happy to report that operations have returned to normal at Lumwana ahead of our expectations.

I'll speak more about that later.

Our all-in sustaining costs of $865 per ounce in the second quarter and $849 per ounce for the first half were 5% and 8% lower than in the same periods last year respectively.

The second quarter cost performance is especially notable in light of the expected lower production of 1.5 million ounces.

In addition to the reduced capital spending, it reflects a number of cost initiatives that are being carried out as part of the $500 million annual savings target we announced earlier this year, and which we expect to reach as a run rate by the end of the year.

The savings from our initiative to reduce external spending, which represents about half of the total, are being derived from three main areas.

The first, commercial savings, or about 40%, are from new contracts in place with improved pricing for items like heavy equipment and maintenance supplies.

Secondly, demand management, or about 30%, where I've eliminated some contractors and are in-sourcing some on-site work as well as using lower cost suppliers.

We've also launched a global review of all services contracts.

And lastly process improvements, or about 30%, such as reductions to working capital.

We've also launched global programs to reduce inventory and improve maintenance planning.

We're pleased that we've been able to reduce cost guidance again, reflecting our unwavering focus on operational excellence, cost reduction, and disciplined capital allocation.

We've reduced our outlook and narrowed the range for all-in sustaining costs to $900 to $940 per ounce, which is down from the previous guidance of $920 to $980 per ounce, based on the lower expected adjusted operating cost and additional reductions in capital spending in the first half of the year.

Our adjusted operating costs have been further reduced to $580 to $630 per ounce.

Our total CapEx guidance has been lowered by $200 million to $2.2 billion to $2.5 billion, compared to the original range of $2.4 billion to $2.7 billion.

Our first half capital expenditures of $1 billion were down from the $2.8 billion in the same period last year, or nearly 65%, due to our initiatives to reduce sustaining capital and from lower project capital expenditures.

These cost reductions are a testament to the commitment of our GMs and the operational efficiencies and improvements they have been implementing, as I've just spoken about.

Our five cornerstone mines produced about 900,000 ounces, or 60% of total production at average all-in sustaining costs of $730 per ounce.

That's almost $600 below the current gold price.

We continue to expect them to contribute about 60% of expected 2014 production at all-in sustaining costs of between $750 and $800 per ounce.

We also had good operating performance from our Australia Pacific operations, with some notable performances from KCGM on higher grades and recoveries, and from Cowal on higher throughput.

And African Barrick Gold continued to report strong results, which included the initial production from the Bulyanhulu CIL expansion project.

At Cortez, production of 217,000 ounces at all-in sustaining costs of $754 per ounce was impacted by lower than anticipated grades due to negative grade reconciliations in the smaller pit where mining was focused.

We will be finished mining in this area by the end of this year, and we expect to partially recover the shortfall we experienced in the second quarter in the second half of the year with some production from the Cortez Hills open pit.

The Goldstrike operation turned in a strong performance, with production of 214,000 ounces at all-in sustaining costs of $886 per ounce.

Production was better than expected on higher grades and recoveries from the open pit.

And all-in sustaining costs also benefited from lower capital stripping costs related to the ongoing optimization of the mine plan.

Our patented thiosulphate project remains on track and on budget to start up in the fourth quarter, and will accelerate 4 million ounces through the autoclaves that otherwise would have become idle.

With the contribution from the modified autoclaves, we anticipate production in 2015 to increase to over 1 million ounces at Goldstrike.

The Pueblo Viejo mine contributed 161,000 ounces at all-in sustaining costs of $587 an ounce in the second quarter.

The autoclaves have achieved targeted and sustainable run rates.

Modifications to the lime circuit are essentially complete and the mine is progressing toward design capacities on silver and copper.

At Lagunas Norte, production of 115,000 ounces at all-in sustaining costs of $593 per ounce in the second quarter was impacted by a construction delay on the new Phase 5 area of the leach pad.

This required the ore to be stacked on an older and higher area of the pad, resulting in a longer recovery cycle.

Higher grades are anticipated in the second half of the year, as well as faster recoveries from the new leach pad phase, which is expected to be in operation in the third quarter.

The Veladero mine had a strong quarter, producing 189,000 ounces at all-in sustaining costs of $740 per ounce.

The costs there benefited from higher silver credits in the first half of the year, and all-in sustaining costs are expected to be slightly higher in the second half, primarily due to the timing of sustaining capital expenditures and also from lower silver credits as mining will be sourced mainly from a different pit.

Our copper operations produced 67 million pounds in the second quarter at C1 cash costs of $2.04 per pound.

As mentioned, I'm pleased to report processing resumed at Lumwana three weeks ago, well ahead of our expectations.

The reconstruction timeline was shortened due to the excellent work of our project team at site, and the fact that the foundations in the area where the conveyor collapsed were undamaged, which meant the repairs were limited to rebuilding a portion of the above-ground structure.

The mine produced 12 million pounds at C1 cash costs of $2.49 per pound before processing was suspended in April.

We expect to access better grade ore in the second half of the year at Lumwana due to higher stripping activities in the first half.

The Zaldivar mine produced 55 million pounds in the second quarter at C1 cash costs of $1.83 per pound.

We're maintaining our overall 2014 copper production guidance of 410 million to 440 million pounds, and our C1 cash costs guidance of $1.90 to $2.10 per pound.

As I mentioned at the start of the call, we recently announced a joint venture agreement with Ma'aden, in which it will acquire 50% of the Jabal Sayid copper project for $210 million in cash.

This agreement will allow the project to move forward with the benefit of Ma'aden's extensive experience in the Saudi Arabian mining sector, combined with Barrick's technical and operating experience.

We anticipate production will commence in late 2015 after completion of underground development work and HCIS-related security infrastructure, and the remobilization of the workforce.

This agreement is expected to close in the fourth quarter of this year.

Jabal Sayid is forecast to produce 100 million to 130 million pounds of copper concentrate a year at first quartile C1 cash costs during the first five full years of operation.

Once in production the mine has up to a 15-year life, based on current reserves of 1.4 billion pounds.

There is good underground exploration potential around the current reserves and in the surrounding areas of the mining and exploration license.

As we spoke about last quarter, we have a deep project pipeline with excellent potential to exceed our risk-adjusted return hurdles.

The options shown here on this slide range from mine expansions to third-party opportunities.

Each of these projects have to compete for capital along with our greenfield prospects, such as Gold Ridge and Spring Valley.

Our emphasis is on prolific belts in North and South America and we remain heavily focused on Nevada, where we have significant optionality and a proven track record of development.

We're advancing a number of projects through the pre-feasibility stage as you see here.

One addition to the pipeline from last quarter is the 60% owned South Arturo joint venture project, about 8 kilometers away from Goldstrike, which now has an approved EIS.

This is another example of near mine exploration success in Nevada in an established camp, which has produced nearly 41 million ounces to date.

We expect to begin developing the high grade portion of the deposit in late 2015 for modest capital, less than $35 million on 100% basis, and mining costs that are lower than Goldstrike.

Development of South Arturo is consistent with our strategy of focusing on the highest value ounces with the best risk-adjusted returns.

The bulk of the ore will be processed through Goldstrike's refractory plants to yield approximately 440,000 ounces on 100% basis in 2016 and 2017.

Our exploration budget continues to be weighted to near mine areas where we have had excellent success in the past at finding new deposits.

I was at Goldrush in Nevada during the second quarter with a few others from our senior management team, as well as the exploration and project teams, and I came away with a renewed sense of excitement about this project.

Goldrush is one of the highest grade greenfield discoveries in the past decade.

It's also the only 10 million ounce-plus discovery by a major producer in the past five years.

And it's located just six kilometers from our Cortez mine in the heart of the Cortez camp.

This is an area which has significant existing infrastructure and which has produced some 18 million ounces to date.

We've doubled the size of the total resource at Goldrush twice since we announced it three years ago, and it currently stands at nearly 16 million ounces, and we haven't yet found the edges of the deposit.

During the quarter we submitted a permit application for an exploration decline from the north.

The proposed decline would provide a platform to enable us to test for additional mineralization beyond the northern extent of the deposit.

And drilling to date has continued to improve our confidence in the continuity of the existing resource, but the decline would also help to better define it.

We expect to have a pre-feasibility study on Goldrush completed in the middle of next year.

I was also just in Santiago a few weeks ago, and can report that the ramp-down of Pascua-Lama has been completed on budget and schedule.

We still expect to spend about $300 million this year related to the ramp-down, care and maintenance activities, and social and environmental obligations, which is still in line with our original guidance for the year.

As we have stated, we won't make a decision to resume construction until we have clarity in a number of areas, including improved economics, the metal price outlook, and less uncertainty on legal and other regulatory requirements.

We'll resume using the phased approach we are now taking with all projects, and that will allow for better planning, execution, and capital deployment as well as improved cost control.

This will give us more leverage and flexibility in contracting with suppliers, contractors, and governments.

It is critical to maintain this flexibility in order to help mitigate the impact of cost escalation and commodity price risk.

We continue to evaluate opportunities to improve the risk-adjusted return, such as strategic partnerships and royalty or streaming deals.

During the second quarter we signed a Memorandum of Understanding with a group of 15 Diaguita indigenous communities and associations in Chile's Huasco province.

The MOU marks a first step in establishing dialogue and working to build trust with members of this important stakeholder group.

As part of the Memorandum of Understanding we will make technical and environmental information about the Pascua-Lama project available to the communities and will provide financial resources and materials required to support analysis of this information.

Turning to our balance sheet.

While Barrick is in a much stronger position than it was last year, we continue to be focused on reducing debt levels further to increase our flexibility and also our ability to be opportunistic.

We continue to have a modest debt maturity schedule in the next several years, with only $300 million of debt due by the end of 2015, which is well below the $488 million of operating cash flow we generated in the second quarter alone.

The end of the second quarter we had $2.5 billion of cash and equivalents and $4 billion available under our undrawn credit facility.

A few closing comments.

As you know, in recent years Barrick has had some challenges and uncertainties that were made even more challenging as the gold price plummeted, the largest drop in three decades.

We faced this head-on by focusing on returns over production within our disciplined capital allocation framework, a concept that continues to be at the core of every decision, some of which have been very difficult.

This framework also included making significant strides in reducing costs and cutting, suspending, or deferring lower-return capital investments as well as also optimizing our portfolio.

The proof of this is that we have lowered our costs and CapEx guidance during the year for the second year in a row.

But there still is more that can be done as we continue to prioritize operational excellence.

Portfolio optimization will continue to be an ongoing dynamic process as we concentrate on the assets that have the best ability to generate free cash flow over the long term.

More than $1.3 billion of non-core assets have been divested over the past year alone, none of which were expected to contribute any meaningful free cash flow at current prices in the foreseeable future.

These efforts have lowered our cost profile, and while it has meant lower production, they have strengthened our industry-leading portfolio overall, which includes our five cornerstone gold operations.

Our deep pipeline of high quality projects, particularly in Nevada, also gives us some tremendous options for future growth in areas we know very well and where we've have had a lot of historic success in developing mines.

As a result, Barrick is stronger, leaner, more financially flexible, and more agile, and now better-positioned against price downside and more strongly positioned for the upside.

To wrap up, I would like to say that having been with Barrick since 1993, I feel a deep connection to the Company and to all of our great employees -- the best in the industry, in my view.

I have been extremely fortunate to have worked with some amazing people at Barrick over two decades, many of whom are still here and many of whom have gone on to other successes elsewhere.

I'm genuinely proud of Barrick's people for persevering and focusing on the job at hand during some difficult times over the past couple of years.

I want to emphasize that none of what has been accomplished would have been possible without the outstanding efforts and dedication of our employees around the world who stepped up to the challenge and delivered results.

And to all of them, a huge thank you.

We couldn't have done it without you.

I also want to thank our investors, the analysts, other members of the investment community, and key stakeholders who have continued to support us.

It has been an honor and a privilege to have been here at Barrick for so many years and I am grateful to have had the opportunity to play a role in repositioning and strengthening the Company over that time.

I'm confident that Barrick is in very good hands for the next phase of its successful evolution and I look forward to its future with a great deal of optimism.

I'll now open it up to questions.

Thank you.

(Operator Instructions)

The first question is from Andrew Quail of Goldman Sachs.

Please go ahead.

Good morning, Jamie and team.

Firstly, Jamie, congratulations on a long and very distinguished career at Barrick.

Thank you.

Couple questions.

Cortez, obviously lower than expected grade.

Everyone knew it was going to come off this year.

Do we still see that rebounding in third quarter and beyond?

Good morning, it's Jim Gowans speaking.

I guess the short answer to your question is yes.

We do have some challenges on one portion of our ore body in terms of grade reconciliation, but we have some mitigations in place now and we should be able to bring that back up to the lower part of the guidance for the year.

Great.

Okay.

So it will be driven by grade.

On Jabal Sayid, obviously a positive announcement there.

You guys have mentioned the timeline, obviously.

What is actually the expected CapEx to finish it off?

Andrew, there's not a significant amount of capital to finish it off.

We've spent the bulk of the capital and we've got about $75 million or $100 million-ish to go, just to complete some of the HEIS and some of the commissioning, et cetera.

So it's no a material amount.

That's what I thought.

Just one more maybe an accounting question on Pascua.

Are we going to expect most of that to be expensed through the P&L, or is there some of that that will be capitalized going forward?

I know it was mentioned, but just I think your other expenses jumped up on that.

Is that something we can sort of put throughout our models going forward in the P&L, in the other expenses?

Hi, Andrew, it's Ammar.

It's going to be mostly expense.

It's care and maintenance largely at this point.

To the extent that there are any specific capital items that would be treated differently but you can effectively think of it mostly as expense.

Thanks very much, guys.

Thanks, Andrew.

Thank you.

The following question is from Stephen Walker of RBC Capital Markets.

Please go ahead.

Thank you.

And again, Jamie, congratulations on your positive contributions to Barrick over the years.

Thank you, Stephen.

I just want to talk strategically about obviously the success in Nevada, but some of the challenges, I guess the challenges in planning going forward.

When I look at the refractory ore from North Arturo, obviously Turquoise Ridge, potential for expansion there and then Goldrush, which I believe a component of that is double refractory, i.e.

carbonaceous rich.

Can you talk a little bit about sort of what is the longer term requirement, i.e.

in the next five years for the metallurgical facilities?

Goldstrike obviously is the core and those autoclaves are being converted to thiosulfate.

You're going to need sort of additional capacity in the western part of the state with Turquoise Ridge and Goldrush, I would assume.

Are there plans for another permitting and building another roaster/autoclave complex to handle what could be more material from the new discoveries?

Or is there existing capacity at Goldstrike?

A little bit about --

Good morning, it's Jim Gowans here.

You're right, we are in the process of planning that.

It's still in early stages.

That's one of the items that's on the pre-feasibility for Goldrush, because it's predominantly a refractory ore, is to take a look at all our processing requirements across the northern half of the state and then see how we balance the needs against capacity.

But that's one of the things we're looking at for sure.

If you had to permit a new metallurgical plant somewhere through greenfields, what sort of timing would that take?

Have you had any sort of estimates as far as the engineering/permitting/construction timeline would be like?

Yes, Steven, it's Kelvin here.

It's pretty early and it would depend on specifically what we were trying to permit.

But a pretty good guess would be 3 to 4 years from the time of having engineering available.

Thank you for that.

Maybe just switch gears a little bit.

At Pueblo Viejo, the targeted -- you're not quite achieving the recoveries for silver and copper, and it's having an impact obviously on cost as well as the taxes paid at that operation, maybe two-fold question.

When do you anticipate achieving the silver and copper recoveries?

And then secondly, Ammar, what is the potential impact if any on sort of the percentage taxes that are being paid currently and your outlook into 2015?

Stephen, it's Jim Gowans.

I'll answer the first part of the question.

In terms of the gold and silver, our copper circuits we're expected to be at capacity in Q4.

That's a lower priority for us.

The silver circuits are actually coming along quite well.

We're currently sitting at around 83, which is slightly over the feasibility study in terms of recoveries, but of course that's been -- we've only been achieving that with any kind of consistency in the last couple months.

But I anticipate that we should be able to hold those levels because of changes we've made in the circuit in terms of heat recovery.

The other part of the question?

Sure.

Stephen, with respect to the tax, as I think most of you know the tax structure associated with Pueblo Viejo incorporates a minimum tax that effectively puts the burden of operational performance to plan on Barrick.

As Jim said, the primary gold circuit is working quite well.

The silver circuit is going to be working well.

And that's the majority of the economics.

The copper's a pretty small part.

So right now we don't expect any material changes from the forecasted tax rates that we've presented.

Thank you very much for that.

Thank you, Stephen.

Thank you.

The following question is from Jorge Beristain of Deutsche Bank.

Please go ahead.

Good morning, Jamie.

And again, congratulations on your tenure at Barrick and your --

Thanks, Jorge.

Great performance over the time.

Thank you.

I just wanted to ask more of a strategic question.

These recent changes with the creation of the split CEO role on a go-forward basis, I was wondering was that part of the corporate governance changes that Barrick had implemented earlier this year and had been talked about for the past year?

Or was this something that was a fairly new decision after the corporate governance improvements?

Jorge, this is something that has evolved just more recently and is just part of how the evolution of we want to manage the Company.

It's a process that we've gone through as part of how we're looking to focus more on operational excellence.

Were those changes, the decision to split the role, was that basically done on the former board?

Because I now see you're transitioning a few new board members currently.

So I'm just trying to understand, was that a decision put through by the former board or was it partly put through by some of the new board members that had recently been named?

Kelvin speaking, Jorge.

I think the answer would be that would be more the new board, reflecting the ongoing changes.

Okay.

Well we have a dual CEO structure here at DB, so anyway, just trying to understand what was driving that and the timing.

Thank you.

You're welcome.

Thank you.

The following question is from John Bridges of JPMorgan.

Please go ahead.

Good morning, Jamie, everybody.

Again, best of luck in your new endeavors and congratulations on what you've achieved.

Thank you, John.

Just wondered, following on from Steve's question, I know a former CEO had a South African solution to the metallurgical program of regulating material up to the existing facilities.

What would you say the probability would be of building a new facility?

It seems as if the new era in gold is to make do with what you've got rather than build fresh, new stuff.

It's Jim Gowans here.

That's all part of the studies and we're pretty much in very early stages of that.

We have to match all our capacities for autoclaving or roasting or our TCM.

I think it's a bit too early yet.

And the rail option, I was exposed to that many years ago.

Is that off the table or is that still one of the options?

No, it was one of the -- it's one of the things that we're looking at in terms of transportation.

Okay.

And then just still in Nevada at Cortez, you talk about not having permits for the lower part of Cortez.

Is that below the water table?

What was the issue with that?

It's below their current water pumping levels and it's more of a geological or geographical cutoff.

So we're just -- we're in the process of doing that, if we could extend our declines down into that area.

I'm just a bit surprised that you wouldn't have preemptively got that permitted, because the deeper portions of Cortez has always been in the longer term planning.

It's an ongoing process, balancing off our permits against the production profiles over the years.

Okay.

Thanks again and best of luck, everybody.

Thanks, John.

Thank you.

Following question is from Kerry Smith of Haywood Securities.

Please go ahead.

Thanks, operator.

Kelvin, how long do you think it would actually take to permit the portal at Goldrush?

I think, Kerry, we're targeting the end of next year.

And when did you make --

So end of 2015.

End of 2015.

And when did you make the application?

It's already underway.

So went in like this quarter, basically?

July, yes.

July.

Okay.

So end of 2015.

And then do you expect that the exploration effort might slow down a bit until you get the portal in so you can drill from underground, or will you kind of continue on with the same level of exploration from surface that you've had?

Maybe Jim can comment more, but the infill drilling is continuing so we don't see any slowdown, Kerry, at this point.

Yes, same.

So it's full speed ahead then.

Okay, that's good.

Thank you.

Thanks, Kerry.

Thank you.

(Operator Instructions)

Following question is from David Haughton of BMO.

Please go ahead.

Yes, good morning.

And Jamie, adding to the weight of analyst support there.

Congratulations for a distinguished career.

Thanks, David.

Just thinking about Pascua, I know that you've got the $300 million for the costs this year.

What would your expectation be for care and maintenance going forward at that operation or at that mine?

Hey, David, it's Ammar here.

The care and maintenance right now is about $15 million a month.

We're working obviously to bring that number down, but that's where it is right now.

Thank you, Ammar, and congratulations in your new role.

Thank you.

What would be the next steps that you're looking at to move this forward from a government and community relation?

I understand that you've got the MOU.

It is a surprise you've got it now instead of some time ago.

But what other avenues are you moving forward on, just to get an idea of that social side of things?

It's Kelvin.

On the social side, first of all the MOU with the Diaguita we think is very positive in that it's the first one of its kind in Chile, in fact, and it's an agreement to dialogue and move the project forward.

So we're very encouraged by it.

We're doing a lot of work as well in the communities alongside the project while we're in this suspension stage.

It's important that we keep our relationships positive in the local area.

As far as the next steps, we have the conceptual design completed now for the water management system, which as you know is kind of the rate limiting step, and we've had initial discussions with government and those discussions are going to continue through this summer.

So we expect that before the end of the year we'll be in a position to have a very good understanding of what the permitting timeline will be.

Thank you, Kelvin.

Congratulations to you too and to Jim and your co-roles there.

Thank you.

Thanks, David.

Just on the water management, that is a critical piece to be able to move the permitting forward.

Do you have an expectation once it's approved what kind of capital outlay would be required to get it up to the standards that the government has an expectation of?

The estimate we're using at this point I think hasn't changed from before.

And Ivan Mullany is here, he'll correct me if I'm wrong, but I think the number we're using is about $300 million for the total system.

That's correct.

How long would you expect for that to take to complete?

About a year, construction about a year.

And back to a question of expense versus capital.

I guess this is a legitimate capital item rather than being expensed.

To the extent that work gets done, that would be capitalized.

And that's what I was referring to when I said earlier there's the care and maintenance and then once we approve specific capital items, they'd be capitalized.

What I do want to point out, though, is we have mentioned this and I'll mention it again.

We are taking a very systematic, staged approach to this project right now.

We are only going to spend money when everything is lined up, which kind of makes sense, and we know that the overall project returns make sense.

So that money has not yet specifically been approved, but we're going to finalize the design, make sure that the government's okay with the design, and then go ahead from there.

Thank you.

Just shifting the other side of the world now.

Looking at Jabal Sayid and the relationship that you've now got with the Saudi Mining Company, just thinking in the longer term, can you see further opportunities in that part of the world with this relationship?

It's Kelvin.

Look, I can tell you we had a very positive, encouraging meeting when we were at Saudi, and one of the points that were raised to us is that Saudi would like to consider us a preferred partner now on a going forward basis.

So I can't speak to the geology, but I can also say that the Saudi government is also undertaking a survey, a detailed survey, almost like a USGS-type survey on the geology in the country.

So they've encouraged us to look carefully at that.

And again, they're considering us a preferred partner.

So that's kind of at the higher level in addition to the advantages now of being partner obviously with the state-owned mining company.

All right.

I guess Rob Krcmarov could talk to the geology because that Nubian Shield area is really quite fascinating and relatively speaking under-exploited.

That's our understanding, yes.

All right.

Thank you, everybody.

Thanks, David.

Thank you.

Thank you.

The following question is from Ron Stewart of Macquarie.

Please go ahead.

Congratulations, guys.

Jamie, hope all is well.

Congratulations on a great career with Barrick.

Thank you, Ron.

The question I have for you is on Goldstrike, the thiosulfate project.

You're talking about commissioning and getting it going in Q4.

Can you give us a little bit more color on how that's going, and do you expect early 2015 to be at 100% capacity with that project?

Ron, it's Jim Gowans.

It's good to hear a familiar voice on the phone.

Yes, Jim.

The answer is that the construction on that project is on schedule and on budget.

It's going quite well.

We've actually on the part of the CIO circuit that was integrated with the rest of the process plant, we've already switched over and brought it back online.

We will start to commission other parts of the circuit in late August, September, and the main part of the circuit we're looking at around towards the end of the year.

Currently I don't see any flaws yet.

Great.

We're looking forward to seeing how that's going.

Just on a different matter, in respect of the overall strategy for the Company, there was a mention of it that there's a strategic review ongoing right now.

Do we expect to get a little bit more clarity on the overall strategy of the Company going forward through the quarter or maybe at the Q3 release?

Do you have any comment to that?

Maybe I can comment.

It's Kelvin.

The board sets strategy with input from management, and that's a process that's undergoing now.

I don't want to speculate or be definitive around timing, but I think we look to have something on that before the end of the year.

And as I said it's a process that's ongoing as we speak.

Okay.

Congratulations again, everyone, and thank you.

Thanks, Ron.

Thanks.

Thank you.

The following question is from Stephen Walker of RBC Capital Markets.

Please go ahead.

Thank you.

Just a follow-up on Jabal Sayid.

A couple things.

First of all the operator, it's 50/50 joint venture presumably, but are you still the operator?

Secondly, if you are being considered as a strategic or favored partner in Saudi Arabia, Ma'aden have obviously base metal, precious metals, assets, and smelting infrastructure.

Is it I guess possible to see that joint venture relationship expand?

And I guess what I'm getting at is Jabal at this stage core or non-core vis-a-vis potential asset sale?

And then maybe speaking more broadly, if 50/50 JV is -- again you have a number of joint ventures, but you've always wanted to own 100% of your assets.

Is the strategy now evolving towards owning 50% or 60% of an asset, being the manager of the project versus owning 100%?

And I guess that has previously indicated that that's where Pascua-Lama could go.

I guess two questions.

I apologize for the comment, extended comment first of all.

Could you elaborate on the strategy going forward that you expect in Saudi Arabia?

And secondly, will that apply to some of your other assets as well where you could be bringing in strategic partners?

It's Kelvin.

I'll respond to the first part.

Maybe Marty can follow up.

As far as Jabal Sayid goes, it's a 50/50 kind of classic JV.

We are the operators.

There will be a four person board, two members from the Company and an executive committee which we'll appoint the Chairman of.

So we appoint the GM, and otherwise it kind of follows standard 50/50 JV procedure like you'd see anywhere in North America.

Our commitment is that for the other concessions that we presently own, an exploration license is part of the JS process.

If we develop those further they would also be on a 50/50 basis.

But any other assets in the country we'll have the option to either, if we chose to, develop on our own or in partnership with Ma'aden, which could make sense.

I can tell you the relationship with Ma'aden is a very positive one and they're keen on doing things with us.

So we have a lot of options there.

And we're not really restricted in any way.

Steven, with regards to the broader strategic partners going forward, we absolutely -- we at Barrick absolutely are understanding that the market is changing and the value of bringing in strategic partners to certain projects.

If you're serious about giving the best return to shareholders, you've got to structure things in the best way.

And I think the old ways of a mining company coming in and wanting to do everything by themselves wasn't always the best strategy.

So we're open to that, and I imagine the industry is probably going to be more open to that going forward.

Thank you for that.

Thank you.

There are no further questions registered at this time.

I'd like to turn the meeting back over to Mr. Sokalsky.

Thank you, operator.

And thank you everyone for being on the call today.

As we've indicated in our presentation, Barrick is very well positioned for the future and we look forward to speaking with you again.

Thank you.

Thank you.

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