巴里克黃金 (GOLD) 2016 Q4 法說會逐字稿

Welcome to the Barrick Gold 2016 fourth-quarter and year-end results conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded and a replay will be available on Barrick's website tonight on February 16, 2017.

I would now like to the conference over to Kelvin Dushnisky, President.

Please go ahead.

Good morning.

Thank you for joining us.

Before we begin, I would like to highlight that during this presentation we will be making forward-looking statements.

This slide includes a summary of distinctive risks and factors that could affect Barrick's future performance and our ability to deliver on these forward-looking statements.

A copy of our most recent AIF will provide you with a more complete discussion.

I'm here today with our Executive Chairman, John Thornton; our Chief Financial Officer, Catherine Raw; our Chief Operating Officer, Richard Williams; our Executive Vice President of Exploration and Growth, Rob Krcmarov; and our Chief Sustainability Officer, Peter Sinclair.

Participating on the line are Curtis Cadwell from Cortez District; Bill MacNevin from Goldstrike; Greg Walker from Pueblo Viejo; Jim Whittaker from Lagunas Norte; Jorge Palmes from Veladero; and Harry Gonin from Turquoise Ridge.

As usual, our other general managers and members of the management team will also be available for questions following the formal portion of the call.

Now I would like to the call over to our Executive Chairman, John Thornton, for his opening remarks.

Good morning.

As you know, it is part of Barrick's DNA to be intentionally different.

We agree with John Templeton's observation that if you want superior performance, you must be different.

We also believe that if one understands what makes us distinctive, it will give you insight into our 2016 results and frame why you should have confidence in our future.

So here is the essence of what makes us distinctive.

First, our partnership culture.

You will recall that in 2015, we made our best leaders owners by giving them the opportunity to own a meaningful number of shares, as long as they performed at a high standard individually and collectively.

And to remind you, these leaders cannot sell those shares until they retire.

Last year, we created a program to make all our people owners, with shares in the Company.

As far as we know, this program is the first of its kind.

It is a 21st century expression of the partnership ethos that Peter Munk fostered in the Company's early years.

Today, we are once again a company of owners.

Everyone at Barrick is an owner.

That fact is in turn producing a true culture of owners.

Owners take responsibility, hold each other accountable, work with a sense of urgency, and always seek to improve.

Owners are all in.

Second, capital allocation.

Our overarching goal is to grow free cash flow per share, no matter the price of gold.

All prospective investments, whether external acquisitions or internal allocations for exploration, expansion, or other projects, compete for capital.

They must meet our stated target of a 10% to 15% return on invested capital through the metal price cycle, align with our strategic goals, undergo rigorous risk assessments, and be able to grow our free cash flow per share now and over the long term.

Our leaders at our head office devote the greater part of their time to the allocation of capital and people.

We created a new role that we believe is a first in our industry.

A Chief Investment Officer.

You all understand very well what a true CIO does.

He or she ensures that the same standards, scrutiny and rigor are applied consistently to every potential investment.

We appointed Mark Hill to the position.

Mark previously led the evaluations group at Waterton Global Resource Management, a private investment firm with an outstanding track record of capital allocation.

Expertise he combines with earlier experience at Barrick.

Third, talent and the allocation of talent.

When I became Executive Chairman, the first appointment we made was to elevate Darian Rich to the position of Executive Vice President, Talent Management.

Talent and the allocation of that talent is the first topic at our weekly executive committee meetings.

We are becoming a talent obsessed firm, as all true high-performance organizations are.

We are getting better at allocating it.

Over the past 1.5 years, by example, nearly every one of our general mine managers has rotated into new roles.

We have also created positions that address the demand for the 21st century.

In addition to the distinctive role of CIO, we created the role of Senior Vice President for Investor Engagement and Governance and staffed it with Daniel Oh, who has a background in governance from BlackRock.

We are tapping into all sources of talent.

We recruit highly skilled military veterans, frequently with a special forces background.

Young minds from or with a Silicon Valley background, and exceptional talent from across the mining industry.

For us, it is critical to have the right mix.

We like to remind ourselves that without Tom Brady, Bill Belichick is just a smart guy in a sweatshirt.

And without a world-class offensive line, Tom Brady is just an athletic guy under a 1,000 pounds of Atlanta Falcons.

Talent, allocating that talent, and fostering a partnership culture to nurture it, is everything.

Finally, our journey to become a leading 21st century company through reviving our innovated gene, the gene that will empower us to reimagine the future.

Last year we launched our digital transformation and partnership with Cisco.

The world has been changing much faster than the world of mining and we intend not nearly to catch up but to lead it.

We will embed digital technology into every fiber of our business, which will allow us to harness the power of transparency and real-time information to capture and create far more value, further growing our free cash flow per share.

We mean to redefine mining and ultimately to be one of this century's leading businesses in any industry and any region of the world.

These are the most important ways in which we are intentionally different.

They are how we intend to continue delivering superior performance and creating wealth for all owners and for the countries and communities with which we partner.

Thank you very much and I will now turn you back to Kelvin.

Thanks, John.

2016 was an exceptional year for the business.

At the start of the year, we identified a clear set of priorities and we committed to stay focused on them, just as we did in 2015.

Our first priority was to generate free cash flow at a gold price of $1,000 per ounce.

In 2016, not only did we achieve that objective but we generated a record level of annual free cash flow.

$1.51 billion to be exact.

In a year that saw an 8% increase in the gold price, we increased our free cash flow by 221%.

Our focus on operational excellence made this possible.

We continued the implementation of our best-in-class program across the portfolio, reducing our all-in sustaining costs by 12% to $730 per ounce.

Full-year gold production of 5.52 million ounces, at the high-end of our guidance range, reflected strong operating performance.

As John mentioned, we announced a partnership with Cisco to launch Barrick's digital transformation, which is going to drive value across virtually every part of the business.

We maintained a sharp focus on capital discipline and strengthened our investment review process with the appointment of our Chief Investment Officer, Mark Hill, as John also indicated.

Total CapEx of $1.1 billion in 2016, also came in below our guidance for the year.

Our capital allocation goals over the past two years have centered on restoring our balance sheet to withstand gold price volatility and investing to improve the quality of our asset base.

Building on the success of 2015, when we reduced our debt by more than $3 billion, we reduced our debt by another $2 billion plus in 2016.

This brings our total debt to $7.9 billion, at which less than $200 million, is due before 2019 and approximately $5 billion is due after 2032.

Reflecting this progress and our confidence in the business, we are increasing returns to our owners through a 50% increase in our quarterly dividend.

So to summarize, in 2016, we set clear priorities and we met or exceeded them and the Company is on solid footing with good momentum heading into 2017.

This slide shows our priorities for this year.

The first is to continue to ensure that we generate free cash flow at a gold price of $1,000 per ounce.

Second, we will maintain a hard focus on disciplined investment.

Now that we have in place the necessary system to maintain capital discipline, we will prudently invest capital back into the business.

Exploration has one of Barrick's primary value drivers for a long time.

After several years focused on existing core districts, this year, we are increasing our investment and exploration, both near-mine and greenfield.

As part of this effort, we have intensified our focus on progressing the Frontera District on the El Indio Belt.

A region that has generated a number of great deposits and mines.

In September, we announced the appointment of George Bee as Senior Vice President for the Frontera District.

Along with his immediate focus on Pascua-Lama, George will drive our overall strategy to develop our assets in this highly prospective region of the Andes.

In addition to progressing the various organic opportunities in our portfolio, we will continue to evaluate external opportunities to increase the long-term value of the business, through acquisitions, joint ventures and other partnerships.

Debt reduction also remains a top priority.

By the end of 2018, we intend to reduce our total debt to $5 billion, and we'll be halfway there by the end of this year.

We will achieve this through a combination of cash flow from operations, potentially selling non-core assets and creating new joint ventures and partnerships.

As well, this year, we'll continue our commitment to operational excellence with our digital transformation which is being spearheaded at Cortez in Nevada.

Cortez will become Barrick's flagship digital mine.

Embedding digital technology in every dimension of the operation to deliver better, faster, and safer mining.

Building on the Cortez experience, Cisco our partner, will support Barrick as we transform our entire business over time.

Bringing digital technology to all of our mines and support functions, as well as to our head office.

To take full advantage of the digital transformation at Cortez and more, this year we'll unify our Cortez and Goldstrike operations.

Richard will cover this during his remarks.

None of our priorities for the year will be possible if we do not have the right talent in the right places, so we will continue our intensive focus on talent development in 2017.

We are seeing the highly positive impact of decentralization.

Empowering the mine general managers in partnership with our executive directors has resulted in improved production and more efficient operations.

We are cultivating a high-performance culture defined by a commitment to partnership, consistent execution and continual self-improvement.

We will also seek out fresh prospectus from other industries.

Challenging ourselves to think differently and becoming the natural choice for top talent, strategic partners, and long-term investors.

Now just before I turn things over to Richard, I want to acknowledge the exceptional efforts of the entire Barrick team in delivering our 2016 results.

They reflect the tireless effort of thousands of great people across the Company.

We are proud of all of them and we know they are enthusiastic and motivated to continue our upward trend on performance and to deliver strong results again this year.

With that, I'll ask Richard to walk you through our 2016 operational highlights and our three-year guidance.

Thanks, Kelvin.

Our first priority as you all know is safety, although you can see at the bottom left of this chart, considerable improvement in our injury frequency rate.

Our achieving lowest in our history and a 67% improvement since 2009.

It is sadly, with deep regret that I have to inform you the low note of 2016 result; that one of our contract workers in Chile, Williams Miranda, was killed on the 5th of February, while making improvements to the water management system on our Pascua site there (sic - see press release, "Williams Garrido").

Our thoughts are with his family, particularly his three young children, at this deeply sad time.

Moving to our second priority, which is to be a flawless and completely transparent custodian of the environment.

A nonnegotiable requirement for a 21st century business.

In 2016 we did reduce the number of recordable environmental incidents by 50% compared to the previous year but we have got a lot more to do yet.

Digital is going to help us here.

And for real advances, I ask you to look into what we are doing in Argentina and you will hear some of this later.

Our third priority is obviously the delivery of physical and financial objectives defined by a commitment to continually improving the plan, rather than just conforming to the plan at the start of the year.

The latter, just conforming is never enough in a capital-intensive industry when you seek superior returns from your many changing opportunities and when managing risk in a dynamic way.

As you can see, we have delivered superior cash from operations and capital.

We'll give you more of that later and most -- the most in a single year in the Company's history.

We achieved this by increasing operational margin, by relentless delivery of our best-in-class process.

Driving down operating costs and being increasingly efficient with the deployment of capital, at every level, including sustaining capital.

This has been driven in the main borrowing powers, networked and better informed and entrepreneurial leaders.

The guys on the ground working to that continual improvement philosophy.

All of which is driving us to a steady-state fashion towards our aspiration of achieving a very sustainable sub $700 all-in sustaining cost by 2019.

Also on this chart, given that effective and safe mining, even in the digital area and perhaps particularly so, depends on sound leadership.

One of the critical factors that's been highlighted by both Kelvin and John, is the active management and development of talent, ensuring that the right leaders are in the right place with the right energy and the right incentives to maximize their opportunities.

An example of such a change, is after an extraordinary successful three-year stint as boss of the Cortez business, Matt Gili is now supporting the Company as Chief Technical Officer.

With Basie Maree deploying back into the field, into Saudi Arabia to support our joint venture there at the Jabal Sayid, with a particular focus on business development.

We have moved Greg Walker into PV and you will hear more from him later, with Ettiene coming up to the headquarters to support project stewardship.

Harry Gonin, you will hear from later, moving into Turquoise Ridge from the Cortez underground; with Nigel Bain moving to an Executive Director position in North America (inaudible) permitting that, with Andy Cole moving on to Donlin.

All of this is part of keeping the team fresh and driving forward change.

As part of our best-in-class efforts to secure evermore efficiencies from our operations; we are unify today, Goldstrike in Cortez into a single business unit, although you will hear from them separately later.

This is a step change in organizational design and it is to be known as Barrick Nevada.

It is to be done in phases and this business unit, Cortez Goldstrike, will in time incorporate Turquoise Ridge.

It will be led by Bill MacNevin as its Chief Executive Officer, with Curtis Cadwell as the General Manager Operations or effective Chief Operating Officer.

The aim of this is to secure at least $100 an ounce for our combined all-into sustaining costs there on a consistent and sustainable basis, primarily due to better planning and capital allocation and enhanced business improvement execution, including the implementation of digital systems.

To that point, it will be supported directly by the Elko based, deliberately so, Barrick-run code mine.

Our digital innovation workshop shown here.

This is a new facility operating in partnership with Cisco as previously mentioned, McKinsey's and others, in ways that have already designing and rolling off the spoke digital management systems for our mines.

Designed by our operators for our operations.

We write the code to build the systems that mine the gold more efficiently, and we're already breaking new ground in the field of mining digitization with much more to come yet.

Moving on to guidance, over the next three years on the basis of current plans, our gold production is expected to be in the range of 4.6 million ounces to 5.9 million ounces with downward trend in all-in sustaining cost.

Beyond 2019, under current plans, we expect to maintain annual gold production of at least 4.5 million ounces.

Although you should all note, as it's been shown over the last three years, that these production plans are likely to change following investment in near-mine exploration and further operating efficiencies.

Both of which are likely to increase the amount of profitable ounces we can bring into the plan.

In 2017, we expect to produce 5.6 million ounces to 5.9 million ounces of gold and all-in sustaining costs of $720 to $770 per ounce.

An improvement over our previous 2017 guidance 5 million ounces to 5.9 -- 5.5 million ounces at the all-in sustaining cost at $740 to $790.

As we did last year, our intention is to improve upon this, as we advance our digital transformation and other best-in-class initiatives.

Okay, on to the CapEx guidance.

This slide gives you see the detail over the next years.

In 2017, mine site sustaining CapEx of $1.05 to $1.2 billion is an increase year on year, due to capital associated with our digital transformation, which will yield stronger free cash flows going forward.

Tailings expansion and higher stripping at Goldstrike and Veladero, as well as processing upgrades and equipment rebuilds at Hemlo, Lumwana, and PV.

Compared to our initial guidance provided the start of 2016, we have lowered the guidance for 2017 and 2018 by an average of $225 million in each year.

Project CapEx is expected to be $250 million to $300 million in 2017, and this increase from 2016 relates mainly to projects at Cortez, such as advancing the Lower Zone expansion project, stripping at Crossroads, finalization of the Robertson acquisition, and in addition to this, a slight increase at Pascua-Lama.

Now briefly on Pascua-Lama.

We've initiated a pre-feasibility study to evaluate the construction of an underground mine at Lama, stopping at the Lama site.

We'll provide more information on that project in our up-and-coming operations and technical update day on February 22.

Based on scoping work, the returns of the Lama project deteriorate if initial capital is much more than $1.5 billion, giving you a feeling on how we're looking at this.

Returns are also dependent on the ability to access Chilean oil sources in future phases of the project.

But be clear, as John has outlined, if we cannot build the project at an attractive return, we will not pursue it.

Going forward, our project capital is set to increase as we invest in new production from Cortez Lower Zone, Goldrush, expansion at Turquoise Ridge and the Lagunas Norte sulphide project.

We have not assumed any increase in Pascua-Lama spend following the completion of the PFS at this time in our go-forward business plan.

With that, I will ask Catherine to walk you through our strong fourth-quarter full-year results.

Catherine.

Thank you, Richard.

So briefly, I will go through the highlights of the fourth quarter.

We delivered earnings per share of $0.36 for the quarter and adjusted earnings per share of $0.22.

Taking the full-year earnings per share to $0.70, 133% increase from the previous year.

Q4 gold production was 1.52 million ounces, our highest quarterly production for the year.

Gold cost of sales was $784 an ounce for the quarter and that delivered an AISC of $732 an ounce.

Our Q4 copper production was 101 million pounds at a copper cost of sales of $1.45 per pound and an all-in sustaining cost of $2.04 per pound.

Operating cash flow for the quarter came in at $711 million, which delivered free cash flow, defined as operating cash flow less CapEx, of $385 million.

So for the year as a whole, Barrick generated $2.6 billion of operating cash flow, a 21% increase year on year.

Subtracting capital expenditures from that number, Barrick delivered $1.5 billion of free cash flow.

As this chart illustrates, our focus on the quality of ounces rather than the quantity, a more disciplined approach to capital, and the benefit of rising gold prices has led to threefold increase in free cash flow year on year, excluding the impact of the PV streaming deal at 2015.

Now to go into a bit more detail on how we generated that free cash flow.

I am going to look at this excluding the impact of the PV stream and of divested sites.

We tackled this free cash flow generation on a number of fronts.

The first of course is the gold price.

This is the largest contributor to free cash flow as prices averaged 8% higher year on year.

This was slightly offset by realized copper prices averaging 3% lower year on year.

The second was capital.

A more disciplined approach, as well as lower stripping at Veladero given its difficult year, through a combination of permanent savings in Veladero lead to a reduction in 2016 of $327 million.

The third was cash costs.

Operating costs delivering $251 million in cash flow improvements due to improved sales mix.

As we get more production, especially with the best-in-class improvements from our higher-quality low-cost site Cortez and Pueblo Viejo, at lower fuel and energy prices, and the impact in general across our portfolio of the best-in-class program and the effect it has on labor, contractor and consumable costs.

Volumes adjusting for the divested sites were up 114,000 ounces year on year and interest costs were down year on year, the benefit of buying back debt.

All of this was slightly offset by higher working capital, primarily due to higher inventories at Cortez and Veladero and higher income taxes paid.

Turning to the balance sheet, we ended the year with $7.9 billion of debt.

In the fourth quarter, we paid down just under $0.6 billion of debt, to take our total debt reduction to just over $2 billion for the year.

This has led to an annualized interest savings of $100 million, which takes the total savings to $235 million over the last two years.

Our goal, as Kelvin stated, is to reduce our total debt to $5 billion by the end of 2018.

We intend to do half of that this year.

We'll do that through free cash flow generation, through cash on hand, and through further asset sales, joint ventures, or partnerships.

To the result of this debt reduction has been significantly improve our financial flexibility and allow us to weather future gold price volatility.

We now have less than $200 million of debt due before 2019, $2.4 billion in cash and a $4 billion undrawn credit facility.

The majority of our debt is due post 2032 and the credit agencies have begun to take notice.

Both Moody's and S&P upgraded the outlook in 2016, albeit not the credit rating.

As disclosed in yesterday's press release, we intend to file a shelf prospectus.

You should regard this is routine housekeeping.

We're doing so to position ourselves with the same flexibility as our peers.

To follow on from Richard's comments on 2017 guidance, we provided a more detail here of our expectations as of now.

Just as last year, we will update our guidance if required with each quarter.

I also refer you to page 34 of our MD&A.

At the current spot price we expect our tax rate to be about 45%.

Our exploration evaluation costs are increasing to $185 million to $225 million.

We are increasing our exploration budget as we move into new areas and seek to add or progress of pipeline of opportunity.

Project expenses are also stepping up in 2017 to $230 million to $270 million, primarily resulting from a Lama prefeasibility study, as well as water management costs associated with requirements with the temporary closure plan at Pascua-Lama.

Finally, our G&A is expected to increase in 2017.

$40 million of the $285 million is stock-based compensation.

This is a variable cost dependent on Barrick's performance.

If we do well the share price does well.

$45 million relates to Acacia and $200 million, up from $163 million in 2016 in corporate administration.

Now this increase primarily relates to the overhead associated with delivering Barrick's digital transformation and the related IT cost to upgrade our infrastructure and ensure our networks are secure.

2017 sees the bulk of this activity.

Our aim is to rationalize this number over the next three years.

With that I will now hand over to Richard again to introduce the GMs to discuss their operations.

Thank you very much, Catherine.

Okay.

As we have been doing up to now, in all of our calls, I want to hand you over to the general managers who again, operating as Chief Executive Officers, looking long but delivering short, and starting with Curtis Cadwell, our Executive General Manager at Cortez.

Thank you, Richard.

Cortez continued to deliver outstanding results in the fourth quarter, with production of 310,000 ounces at cost of sales of $846 per ounce and an all-in sustaining cost of $517.

These strong results closed out 2016 with our best quarter, where our best-in-class initiatives made tangible production and cost saving contributions.

Notably, we saw a 10% increase in underground production and a 20% increase in mill throughput.

Not coincidentally, both of those divisions completed 2016 without a reportable safety or environmental incident.

Regarding growth, development of the range front declines continues with advanced rates coming in ahead of plan.

The declines are being excavated using road header technology and will ultimately be fitted with a conveyor system for more efficient ore transportation from the deeper portions of the Cortez hills underground.

I'll take you through more details for this project on our operations and technical update webcast on February 22.

At Goldrush, permits to begin constructing the access declines have been received.

Once developed, these declines will be used for underground exploration.

Thanks.

I will now hand it over to Bill MacNevin at Goldstrike.

Thanks, Curtis.

Q4 was a strong quarter with improvements in operational performance across the site driven by best-in-class progress.

2016 was a remarkable year for Goldstrike.

Along with reducing our costs significantly, we brought the TCM circuit performance in line with our expectations.

In 2017, our focus continues to be on operational excellence in conjunction with our best-in-class program.

We expect 2017 production to be lower than 2016 at 910,000 ounces to 950,000 ounces at higher all-in sustaining costs of $910 to $980 per ounce.

Due to higher sustaining capital expenditures for tailings expansions and the underground sustaining projects to enable us to mine deeper.

Thank you, and now I'll hand over to Greg Walker at Pueblo Viejo.

Thank you, Bill.

Pueblo Viejo finished the year strongly with an excellent fourth quarter, producing 189,000 ounces at an all-in sustaining cost of $443 an ounce.

As part of our best-in-class program, the optimization projects continued to contribute to the improved operational performance at Pueblo Viejo.

With increased available in our primary mining fleet, gold recovery up 4% from 87% to 91%, and increased autoclave throughput up 4%, all contributing to an excellent year.

Silver recovery in particular continued to improve.

Up from 67% in the third quarter to 79% in quarter four.

This is well up on the 53% we had in the first half of 2016.

During quarter four, we finalized an agreement with the government of the Dominican Republic through the Ministry of Mines and Energy, to rehabilitate their historical Mejita tailings dam facility.

This work commenced in November.

In addition to realizing improved throughput and recovery in quarter four, our business improvement programs continue to drive value creation in all operational areas.

This has allowed us to reduce the impact of lower head grade in 2017 and set our guidance range at 625,000 ounces to 650,000 ounces at an all-in sustaining cost of $530 to $560 per ounce.

Thank you.

I will now hand over to Jorge Palmes at Veladero.

Thanks, Greg.

Veladero 2016 was a very challenging year.

In Q2, severe winter resulted in 42 days of loss production.

In Q3 production was impacted by the two-week suspension of an operation due to environmental incident, quickly followed by recovery action plan in Q4.

We recently completed a series of remedial works to prevent such an incident from occurring again.

Included in the deployment, an unmanned vehicle for remote sensing.

Looking forward, our digital transformation at the Barrick's first Integrated Remote Operation Center will help us drive high returns.

For 2017, we expect increase production of 770,000 ounces to 830,000 ounces at all-in sustaining cost of $840 to $940 per ounce.

And with that I will now hand it over to Jim Whittaker at Lagunas Norte.

Thanks, Jorge.

2016 was great year at Lagunas Norte.

Production was in line with our expectations.

Note that 2016 all-in sustaining costs was below guidance and the mine is generating significant cash.

There has been a marked improvement in health, safety and environment, along with strengthening relations with our unions and nearby communities.

2017 guidance shows slightly lower production due to material depletion in the mine and we expect the all-in sustaining cost to be in the range of $560 to $620 per ounce.

We continue to develop improvement projects and exploration options to bridge the gap to the refractory ore mine life-extension project.

I will update you on these projects on the February 22 operations and technical update webcast.

Thanks.

I will now hand it over to Henri Gonin, General Manager at Turquoise Ridge.

Thanks, Jim.

Production for the fourth quarter was higher than expectations, contributing to a record-breaking production year at Turquoise Ridge.

Higher production levels facilitated driving our operating costs down and therefore allowing Turquoise Ridge to increase its free cash flow contribution.

Improvements were realized through improved asset management practices and mine engineering to take advantage of the larger ore geometry.

Several operational improvements initiatives have increased the efficiency and mining intensity.

The forecast for 2017 is set at 260,000 ounces to 280,000 ounces on a 75% basis.

That is an improvement over 2016 at an all-in sustaining cost of $650 to $730 per ounce.

The focus for 2017 will remain on productivity increases, completing optimizations studies on the north zone and continuing to advance the Third Shaft Project.

Thanks and I'll now hand it back to Richard.

Thanks, Henri.

I'll briefly touch here on our copper operations.

Copper production for 2016 decreased 96 million pounds, or 19% compared to 2015, due to lower production contribution from Zaldivar following the divestment of 50% of our ownership there.

Excluding the impact of this divesture, copper production increased by 7 million ounces primarily related to the achievement of commercial production at Jabal Sayid.

We announced the Jabal Sayid mine reaching commercial production halfway through 2016 and it continues to perform in line with expectations now led by Basie.

For 2017, we've increased our production guidance as we ramp up production there.

With that briefly, I will pass over to Rob to take you through our 2017 exploration strategy and 2016 reserves and resources update.

Thanks, Richard.

When you think about delivering organic value, you should think about our strategy that spans the spectrum from short to long-term [horizons].

To be a truly best-in-class (inaudible) that requires technical bits and execution skills and multiple disciplines.

From grassroots exploration, to adding ounces post acquisition, near-mine exploration and an ability to form strong collaborative partnerships.

We have accomplished all of these and will continue to do so.

While I am going to go into all of these points on our operations and technical update webcast, today I will take the time to highlight two of them.

That's our continued value generation around Alturas and our partnerships.

I will also briefly going into reserves and resources noting that Rick Sims is on the line as well for any detailed questions on the subject.

While Alturas is a current example of value delivery, we do not stop and rest.

We continue to see upside in the district as the recent high-grade results demonstrate.

These are north of the very high-grade intersected in 2016 and further extend the potential high-grade on below.

Also note that these results are not included in the most recent 2016 resource figures for Alturas and could have a positive impact on the overall project economics.

It's early days but we are excited and see potential to expand to the north and south.

Most recently we have partnered with Osisko Mining to explore part of the Labrador Trough in Quebec.

We think it is an area that's been under appreciated for it's gold potential, and for the next two years, we will be leveraging off of Osisko's reconnaissance expertise in this region.

The Osisko team, as you know, has an impeccable exploration credentials, having successfully discovered Eleonore in the James Bay Region of Quebec under Andre Gaumond's leadership, as well as their most recent discovery of Windfall Lake.

As you can see on the slide, we have a large land position and the early stage results are extremely encouraging.

Ultimately, we are thrilled with the prospect of this new initiative for Barrick would yield not one but multiple high-grade modest CapEx discoveries.

Barrick manages the industry's largest inventory of gold reserves and resources with a strong track record of adding reserves and resources at our operations through exploration and acquisitions.

Although our reserves declined again in 2016, about 60% of our production was replaced by new reserves through drilling and cost improvements on operating site.

This is evidence of our overall focus on enhancing mineral resource management and create the best short-term and long-term value from our mines.

Which again is a reflection of our emphasis on producing profitable [outlets].

Other than production depletion, the single largest factor was due to a reduction in reserves from Pascua-Lama and that was due to modified pick design.

I should also note, that if the Lama pre-feasibility study concludes that a phased underground development option meets their risk and financial criteria, and is a more compelling investment proposition than their permanent [bi-national] plan, we would expect to recalculate reserves and resources at Pascua-Lama to reflect an underground mine plan.

That would likely result in a reduction to current reserves and resources at this project.

We increased our resource price assumptions to $1,500 per ounce to show us where to place our focus when the gold price increases.

Richard indicated resource increases were mainly due to the higher resource gold price.

Meanwhile, we are managing a quality pipeline as high-grade M&R resource additions went directly to reserve.

The increase of our inferred resource reflects our commitment to continue to extract value from existing operations.

Approximately 5.2 million ounces were added through drilling, including 2.4 million ounces at Veladero, 1.3 million ounces at Hemlo and 1.3 million ounces at Alturas.

These ounces provide a solid reserve replacement platform, having sufficient grade to move directly to reserve within drilling through our Mine X program.

Increased investment in advance exploration and drill testing will further increase our inferred resource and mineral [entry] to see the reserve replacement pipeline.

With that, I will hand it over to Peter Sinclair of Chief Sustainability Officer.

Thanks, Rob.

You heard today how we are transforming our business.

What is also evolving, is the way we think about sustainability.

In 2016, we created a new sustainability vision to better reflect Barrick's culture and values.

This vision naturally centers around the partnership culture that John referred to earlier.

This culture starts inside our business, in the way we, as owners, treat each other, take responsibility, and always seek to improve.

It naturally extends to our relationships with our host communities, governments, and others.

We know from first-hand experience, that when we get these relationships right, success follows.

And by that I mean a safer, more efficient workplace, fewer environmental incidents, and stronger support from local communities.

Our digital transformation is instrumental in realizing our new sustainability vision.

Let me give you two concrete examples.

Publicly sharing real-time water quality data at our Pascua-Lama project, helps build trust by giving local communities immediate assurance that we are protecting their precious water resource.

Real-time, digital tracking of our energy use at Pueblo Viejo, helps improve efficiency, drives down costs, and helps us reduce greenhouse gas emissions.

An important pillar in the climate change strategy we are developing this year.

These and other initiatives improve the way we share information, drives fact based decisions and transform our commitment to transparency into action.

Lastly, reflecting on our 2016 performance, I am delighted that Barrick is included in the Dow Jones Sustainability World Index for the ninth straight year.

A real tribute to our people throughout the Company.

And with that, I'll hand it back over to Kelvin.

Thanks, Peter.

To summarize, we are pleased with our performance for the year and we fully expect to carry this momentum into 2017.

We hope that you will join us for our operations and technical update webcast on February 22, where we can spend more time discussing our operations, projects and digital transformation.

So thank you, and now we would like to open the call for any questions.

(Operator Instructions)

Andrew Quail, Goldman Sachs.

Good morning, everybody.

Thanks very much for the update.

Congratulations on another very strong quarter.

My question is mainly about that growth or the projects, you obviously provided a nice update over night.

I suppose, looking at your guidance for CapEx, which is encouraging, you guys are talking about expansion CapEx in 2017, 2018 and 2019 as your sustaining comes down.

Is that, if you do not do any of these projects, does that go to zero.

Or can you give us a bit more of an idea about the order that you guys are looking at these projects now versus last year's investor day in February?

Thanks, Andrew.

Lets turn it over to Richard to respond to

Sure.

Thanks, Andrew.

Just to remind you of the order, the Turquoise Ridge investment is really continuing from now and through to 2019.

Lagunas Norte, again investment continues so that we can actually see the production advantage of that from 2020.

Goldrush again starting to be able to deliver, again production from 2021 and in terms of the Cortez investment, again through to 2222.

With respect to the schedule of investments, that's where we are, which is as briefed.

In terms of the quantum of the investments, just like we been driving sustaining capital down.

The same process is being worked on in terms of those particular capital investments and you will -- you should expect those numbers to change over time.

We could get a -- I am assuming an update hopefully this year about these approvals of these projects and therefore, we can add them to our models post 2021?

Yes.

Absolutely Andrew.

We have allocated quite a lot of time for this on the February 22 technical update.

Again not wanting to consume too much time on your answer here, I very much look forward to discussing this again with you at that time.

Great.

Thanks very much.

Thanks, Andrew.

Mike Jalonen with Bank of America.

Thanks.

Hello, Kelvin and everyone and Mr. Chairman.

Just a question, two questions.

First your debt reduction target, $1.5 billion this year.

I get probably about $1 billion of free cash flow, which is obviously very impressive.

I guess the balance that comes from asset sales, but Barrick has not sold an asset, correct me if I'm wrong, in about a year and there has been some press on Super Pit possibly being sold but the buyer does not have any -- does not have the money, so just wondering about that.

Secondly, on permitting, following on Andrew's point.

With the new Trump administration and all the talk about what they may do to the EPA, is a good news for your permitting on the US projects?

Thanks Mike.

Look, I think -- I can deal with both of those.

In terms of TCGM, correct, started the process in the second quarter of last year.

We're in advanced discussions with a proposed buyer.

We cannot really comment beyond that point.

Again as we've always indicated, if we get a price we think is right, we're happy sellers.

If not we're also very happy to own that asset, so stay tuned and we'll update as that continues.

As far as permitting in the US under the new administration, I think so, I think we'll see some positive signs.

The initiative toward deregulation and streamlining and removing red tape, all of that feels very positive.

As you know, we've got a lot of long experience, particularly permitting in Nevada.

Basically throughout administrations we have been pretty successful far as that goes.

We are encouraged and I think that as far as the projects we have on the pipeline, we will only see good things as far as that goes.

Okay.

Thank you.

You are welcome.

Andrew Kaip, with BMO.

Good morning gentlemen and congratulations on a strong finish to 2016.

I have a couple of questions.

First, Richard I understand the desire to consolidate Goldstrike and Cortez into a single operating unit and the synergies that can be derived from that.

I guess the question I have is, from an analyst perspective, are we going to lose any visibility on those two operations, or will you still be providing the level of detail on an operation by operation basis?

On that, you're going to actually get more detail I suspect over time.

Our intention is to ensure as we brief that consolidated business unit, remember it will eventually go through to Turquoise Ridge given our insights delivered by this digital program, as well.

We're actually going to provide what you're used to now and some advantage, I've reassured on that one.

We will provide consolidated numbers, so we will report all-in sustaining cost et cetera, from a consolidated basis.

But what we hope to do is give you the insight and transparency into how those numbers were achieved within the MD&A's.

Thank you very much.

With regard to -- Lagunas Norte, I noticed that reserves increased and can you just confirm that increase is largely attributed to sulfide reserves being added to the reserve statement for Laguna?

Jim Whittaker is on the line.

Jim, you want to respond?

Yes sure.

Thanks Kelvin.

Andrew how is it going?

Basically the situation at Lagunas Norte is -- to keep the answer very short, we had a lot of material that was once treated as a waste because of the high carbon content and this was stockpiled in the mine.

It's generally an oxide material with some sulfite.

What we have done, we have been looking at away to either dry or wet separate that material and what happens is it gives us some leverage to heap leach more oxide material in the coming years.

Which is why you see this immediate bump in reserves and resources and it also -- the finer fraction of that material, will also be available for feed into the future PMR project.

I will go over this more in detail on the February 22 on the technical update.

So just -- so you have added oxide, leachable oxide reserves.

Can you give us a sense of that split between the finer fraction and what you might put on a heap leach or are we going to have to wait for February 22?

Right now we're looking at about it 60 /40 split between oxides and sulphides and fine sulphides but -- we're at a design stage, at a feasibility design stage; we still have to check some of the numbers but we tried to base some of our economics on that split.

Okay.

That is great.

Thanks.

Just finally, can you provide a little more clarity on Pueblo Viejo and the agreement to rehabilitate the historic tailings facility?

I guess what I'm trying to understand is, you are constrained by tailings capacity at Pueblo Viejo and with this move is there the capacity to increase your tailings?

Thanks Andrew.

You broke up but we got the question.

Greg, can you respond please?

Yes.

No problem.

The answer, the simple answer is no, the rehabilitation of the historical tailings facility will not give us capacity.

What we are doing there is, that geotechnically the existing tailings facility is not up to the standard that we would expect and we are going into the -- it's a government -- government tailings facility and we are going in and strengthening the berms and cleaning up the area generally.

It is a rehabilitation issue and a closure issue is not going to give us any capacity for tailing storage.

And then how is the permitting process for additional tailing storage capacity going at PV?

At this point, we are not [intermitting].

We have just finished our scoping study in that issue and we will be having more discussion on February 22 in more detail.

That project continues.

But we have, as I said, we have just finished scoping and we are moving towards doing some more test work and some more understanding and moving towards prefeasibility in the second half of this year.

Okay.

Thank you.

Thanks, Andrew.

David Haughton with CIBC.

Good morning John, Kelvin and team.

Thank very much for the update.

The first question could be to Richard if you do not mind.

You mentioned, Richard, the potential for as much as $100 per ounce saving with the consolidation in Nevada.

Just wondering what kind of high-level ideas you have got as where that saving could be sourced from?

Yes.

Thanks, David.

The first thing is, life of mine planning.

Pulling together a consolidated group under Bill MacNevin to look at all the opportunities in Cortez and Goldstrike is -- it may not sound like a radical step forward, but it is actually giving the team down there, ownership of the long plan that is going to yield some, as I said, advantages in both cost and in capital investment.

That is the first area.

The second area is, although our best-in-class process, as you know, has been pretty relentless and it's driven on a week-by-week, month-by-month basis.

There have been inconsistencies in its delivery between Cortez and Goldstrike in different areas and delivering a consistent effect, particularly in the underground between both of those mines, is also going to yield rapid advantage.

Then the third, with respect to the digital investment.

Again, it is early in terms of where we are right now.

But we are looking to be able to deliver a 20% reduction in unit cost in the underground as a result of that digital investment.

I say that very early on because we are obviously in the trial phase of that in Cortez.

But once and we're very confident about where it is going to go, once that has been delivered; we will roll it out very rapidly to Goldstrike and that will of course at operating costs, deliver that advantage.

It is all three of those things coming together under a single team motivated to do it, that is going to allow it.

That is some -- that is the answer.

Just on that last point there, Richard, the 20% saving underground.

Would that include things like smart ventilation, remote mining, et cetera?

I think it would include -- over time it will include all of that, David.

In terms of our digital program, the first thing we are focused on the underground is the classic short end control.

To know where everything is, to be able to manage shift by shift and intra shift, a much more effectively, the flow of people and material and ore.

That in itself is increasing throughput remarkably.

If we then fold -- if they we then move forward from that increased investment automation plus everything else we have outlined there, electrification and more, you then really start getting into some significant moves down the cost curve.

The first instance is gaining control of things through insight and then thereafter, is building upon automation and elsewhere.

Again very successful elsewhere in the mining industry and in itself not radical, but something we're going to execute very quickly.

The second key question I have got is an observation on the all-in sustaining costs going through each of the operations.

There are only two operations in 2017 expected to have lower all-in sustaining costs then 2016 and that is Cortez and Acacia.

Just wondering whether that is a reflection of some deferrals of sustaining CapEx rolling out of 2016 into 2017 or whether there is some one-off lumpy items in this year that would taper off through time.

So it is a bit of both actually.

Again some of the lumpy items that we would have to do, obviously as Bill outlined, is stripping in Goldstrike, getting ourselves dewatering done so we can go deeper in Goldstrike.

The tailings expansion, that just to came to fruition at this moment in the life of mine plan, so it is there.

Again, I -- repeating the point, as of last year, we are expecting this capital plans to be improved over time.

They are not static.

Although our initial estimates of cost and in time is what we are presenting at this moment.

What we're developing and I am quite proud of what you guys are doing, is the ability to execute faster and a lower cost on these things.

And that is kind of where -- when I look at the all-in sustaining cost where it is now, my view is, it will change positively over time.

David, I would just highlight that if you look at our CapEx guidance at 2017 versus last year, you will see that our CapEx guidance has actually gone down.

So you haven't seen the impact of deferrals in 2016 to 2017 impact of our overall CapEx, as we've seen scope change and as we have a more efficient.

The other thing I would highlight is, there is a capital increase from Veladero because we weren't able do a lot of the stripping that we had planned in 2016 and we have now had to move that to 2017.

So just to reassure you, this isn't us just pushing capital from one year to the next.

Thank you Richard and Catherine.

Looking for to hearing more next week.

Thanks, David.

Greg Barnes, with TD Securities.

Thank you.

Just want to go back to PV, Pueblo Viejo.

I believe the agreement you had with the government back in 2013 came to an -- end of 2016 regarding the 50/50 split of cash flows between the mine and the government.

What happens now?

Greg?

Yes.

Sorry.

Greg Walker, please.

Sorry.

Off hand I don't have an answer to that question.

I'll have to follow that up.

Sorry.

I can answer that question.

Which is, part of what you're talking about is the minimum tax.

It was for three years and it has being renegotiated as we speak.

So we will update you when we get the results of that.

But our expectation is that we would effectively renew that for another three years, but the exact chance are being negotiated as we speak.

Would 50/50 splits more or less continue then?

We will have to get back to you, but effectively the tax rates are split between an income tax and net profit interests that getting to roughly 50%.

The exact number will be based upon the model and will be based upon a negotiation with the government.

I would use that for the moment but we will update you when we get that result, probably with our next quarterly results.

Okay.

Thank you.

Just a second question too.

The Lama project, just trying to get some sense of what exactly you are targeting underground in terms of the size of the ore body or the scope tons grade.

What is the are you chasing there with the bulk mining method?

Okay.

Just a general answer and put if off to February 22 were will give you much more detailed update and George Bee is going to be around to detail you.

But essentially the ore body issue, as you have been briefed up to now, is distributed on both sides of the border.

On the Lama side it's particular high in silver and then more gold over on the Chilean side.

There's a split between refractory and non-refractory ore and obviously the grade -- there are a lot of great differences throughout the ore body.

The way in which the study is working at the moment, is to move underground to the point of the ore body.

It will yield early cash flow with respect to our returns and that will be looking at the nature of the ore in terms of refractory and non-refractory, as well as the grade, as well as its position in terms of access as you would expect.

The prefeasibility study, to remind you, is coming out in August.

Again before I get too drawn into detail, I think it may be best if we wait for George Bee to brief you on February 22, next week.

Catherine?

I just went to add that -- August deadline is not an external date.

We hope to finish that for internal review by August and we will update the market accordingly.

Do not put that in your specific expectations for a press release on that.

Thank you.

Okay.

Thank you

Thanks, Greg.

We have time for one more question.

Anita Soni, with Credit Suisse.

Good morning, guys, and congratulations on the good results.

My questions mostly have been asked.

I just wanted to get a little more color on Pascua in the reserve impact that you have going to an underground.

Could you give an idea of how much reduction would the rest of the ounces move to resources at that time?

Thanks for your question, Anita.

It's too early to say, but basically completed a scoping study.

We're working towards the prefeasibility study, right now it is quite a moving target.

We'd like to pin that down later this year.

We will be able to speak that as well next week, Anita, during the update as well.

Thank you.

This concludes the time allocated for the question and answer session.

I would like to turn the conference back over to Kelvin Dushnisky.

Please go ahead.

Thank you operator and thank everybody who dialed in today.

We apologize for the length of the presentation.

It didn't leave us enough time for questions.

We were a little time-constrained but for those of you who can join us, we look forward to speaking with more next week on our operations and technical update webcast.

Thank you very much again.

This concludes today's conference call.

Should you have additional questions, please contact the Barrick Investor Relations Department.

You may now disconnect your lines.

Thank you for participating and have a pleasant day.