巴里克黃金 (GOLD) 2017 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

This is the conference operator.

Welcome to the Barrick 2017 First Quarter 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, April 25, 2017.

I'd now like to turn the conference over to Kelvin Dushnisky, President.

Please go ahead.

Good afternoon, and thank you for joining us.

Before we begin, I'd like to highlight that during this presentation, we'll be making forward-looking statements.

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

A review of our most recent AIF will provide you with a more detailed discussion.

I'm here today with our Chief Financial Officer, Catherine Raw; and our Chief Operating Officer, Richard Williams.

Also joining us are Bill MacNevin, CEO of Barrick Nevada; Henri Gonin, General Manager of Turquoise Ridge; Greg Walker, Executive General Manager of Pueblo Viejo; Jim Whittaker, General Manager of Lagunas Norte; and Jorge Palmes, Executive General Manager of Veladero.

As has become our practice, our other general managers and members of the Barrick team will also be available for questions following the formal portion of the call.

This morning at our Annual General Meeting, I discussed the strategic priorities we developed for 2017 that underpin our efforts to continue to create long-term shareholder value.

I'd like to touch on them briefly again.

The first priority is to continue to maximize free cash flow and target free cash flow generation of gold price of $1,000 per ounce.

Second, we'll maintain our discipline as we prudently invest capital in the business and continue to optimize the long-term value of the portfolio.

Debt reduction remains a top priority.

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

Fourth, we'll continue our commitment to operational excellence.

A good example of this is the step change we're making in Nevada with the unification of the Cortez and Goldstrike mines.

As fully integrating these operations, we expect to see significant productivity improvements and to accelerate the digital transformation in Nevada.

Of course, none of our priorities for the year will be possible if we don't have the right people in the right places.

So our fifth priority is to continue an intensive focus on talent development in 2017, developing our leaders to be the best in the industry.

During the first quarter, we made good headway on each of our priorities.

Our operations generated $495 million in operating cash flow, an improvement over the prior year quarter, and $161 million in free cash flow based on production of 1.31 million ounces and all-in sustaining costs of $772 per ounce.

Free cash flow was lower than the prior year period, which reflects a higher budgeted capital spending in the quarter.

We continue to strengthen our balance sheet and reduced debt by almost $180 million in the quarter.

We announced 2 new partnerships to further optimize our portfolio.

In March, we established a joint venture with Goldcorp on our Cerro Casale project.

And more recently, we announced a transformative strategic partnership with Shandong Gold Group in Argentina.

I'll speak more of this important new relationship in a minute.

Full year production guidance has been updated principally to reflect the anticipated sale of 50% of Veladero, which is expected to close at the end of the second quarter, and also to reflect the recent situation of Veladero as a result of a temporary restriction of the addition of cyanide to the heap leach facility.

On March 28, a coupling on a pipe carrying solution to the heap leach facility failed.

Although the situation was contained within the site and did not result in any impact to people or the environment, this is obviously not acceptable.

We are now reviewing with government authorities a comprehensive plan to help mitigate the [ inspection ] incident happening again.

Richard will speak to you in more detail on this during his presentation.

As I mentioned, foreign partnerships is a core element of our strategy to grow free cash flow over the long term.

This underpins our new strategic relationship with Shandong.

This key partnership embodies 3 steps.

In step one, Shandong will acquire 50% of Veladero for $960 million and will collaborate to maximize the long-term value of the mine.

In step two, Shandong will work with Barrick to explore the potential for investing in and jointly developing the Pascua-Lama project.

To advance this, Shandong will embed a team of underground mining engineers and project development specialists with our Pascua-Lama project team.

In step three, both companies will evaluate additional investment opportunities on the highly prospective El Indio Belt, which hosts a cluster of world-class mines and projects, including Veladero, Pascua-Lama and Alturas.

We also announced the Cerro Casale joint venture with Goldcorp.

Under this agreement, Goldcorp will purchase a 25% interest in Cerro Casale from Barrick, resulting in a 50-50 joint venture between our companies.

As consideration, Goldcorp will fund Barrick's first $260 million of expenditures at Cerro Casale and will spend an equivalent amount on its own behalf for a total project investment commitment of $520 million.

Separately, Goldcorp entered an agreement to purchase Exeter Resource Corporation, whose sole asset, the Caspiche Project, will be contributed to the JV.

50% of this acquisition cost incurred by Goldcorp will be deducted from the $260 million expenditure commitment that I just mentioned.

So as you can see, it's been a very busy quarter.

And now I'll ask Catherine to take you through our Q1 financial results.

Thank you, Kelvin.

Briefly, I'll go through the results of the quarter.

We delivered earnings per share for the quarter of $679 million or $0.58 per share, largely due to the $1.125 billion of impairment reversals, $522 million net of tax and noncontrolling interest relating to an increase in carrying value of Cerro Casale following the announcement of a deal that Kelvin has just gone into.

Adjusted earnings were $162 million or $0.14 per share, an increase of 27% from the same period in the previous year, primarily due to the impact of higher gold and copper prices but partially offset by 8% higher depreciation, a 30% -- a 36% increase in exploration and evaluation costs and a 2% increase in direct mining costs.

Q1 operating cash flow came in at $495 million, up 10% year-on-year, primarily as a result of the higher gold and copper prices.

This delivered free cash flow, defined as operating cash flow less capital expenditures, of $161 million, an 11% reduction versus the same quarter last year.

This reduction was primarily driven by higher capital expenditures and a higher working capital build.

As Kelvin mentioned earlier, disciplined investment is a priority for Barrick.

And as guided to at the start of the year, we are reinvesting in our business to sustain a strong free cash flow in the future.

The generation of free cash flow is the core overarching objective of Barrick.

Now if we look at our cash flow variance year-on-year in more detail, the largest contributors of free cash flow, as I've already said to earnings, was higher realized gold and copper prices.

Our realized gold price was 3% high year-on-year at $12.20 an ounce versus $11.81 in the previous year.

Our realized copper price was up by an extremely healthy 27% to $2.72 per pound for the quarter.

The largest attractor versus Q1 2016 was a planned increase in capital expenditures, the increase of $64 million compared to what was our lowest capital quarter of 2016 and was the result of a planned increase in mine site sustaining capital expenditures of Barrick Nevada relating to higher capitalized stripping costs and the timing of a large number of mine site sustaining projects in the current period versus last year as well as greater spending relating to leach pad development at Veladero.

Unfavorable working capital movements reduced free cash flow by $35 million.

This outflow was the result of increasing short-term VAT balances across a number of sites, including Acacia, inventory builds at Buzwagi and Bulyanhulu due to the export ban and an increase in stockpiles at Pueblo Viejo.

And now to the balance sheet.

We ended the quarter with $7.75 billion of debt, down from $7.93 billion at the start of the year.

We've paid down $178 million over the quarter, mainly due to maturities in the quarter as well as an advance payment towards our project to finance a loan at Pueblo Viejo.

The sale of 50% of Veladero and the expected proceeds of $960 million will help us to achieve our target of reducing our total debt to $5 billion by the end of 2018.

With that, I'll hand over to Richard.

Thanks, Catherine.

Before I get to the Q1 highlights, I just want to provide some detail on the recent 28th of March incident at Veladero.

On that date, the integrated and remote operating center based in Albardon helped us to detect the rupture of a pipe in the leach plant and allowed us, the team down there, to immediately take the necessary actions to contain the solution within the operating site, meaning there was no impact to the environment, our communities or our workers.

As a result of the incident, however, the San Juan authority ordered a temporary restriction on the addition of new cyanide until remediation is completed.

We're continuing mining, however, and stacking.

In response to that and with some support, the team at Veladero has presented holistic and long-term plan, partnering with the government to remediate and develop the operation going forward.

And this is with a focus initially on the reengineering of the leach facility, a slight adjustment on ongoing plan, together with other dimensions, which deliver effects such as community relation, integrated communication, investment and other changes on the ground.

These measures, for instance, include the construction in certain areas of additional containment barriers beyond the existing berm at the mine's heap leach pad area.

On the sites, we're relocating, replacing and upgrading piping in leach pad and, in particular, the process solution bearing pipes that failed are going to be rebuilt, reinforced and moved to the center of the leach pad and replaced with new 7-centimeter thick, high-density polyethylene pipes.

To this, we're adding new valves to the system to better control the flow of the processing solution, and we're increasing the intensity of management and supervisory resources at that point.

In addition, I'm doubling up on what we discovered to be a successful addition.

And to be just transparent as possible, we're adding new high-definition cameras to monitor the leach pad and other areas of the operation remotely.

New cyanide addition, we're targeting to be subject to regulatory approval in June, and we'll continue to update our shareholders on this matter.

Right now onto the first quarter operating highlights.

First, and as always, we talk about keeping people safe.

And unfortunately, on the 5th of February 2017 this year, we lost one of our contractors, Williams Garrido, working higher on the Pascua site, leaving behind his partner, [ Carolina ], and 3 children.

A tragic event, which we regret deeply.

Notwithstanding this and in part because of this, we continue to drive forward on our efforts to keep people safe, and we use, as a measure of our performance, the total recordable injury frequency rate, set this year a tolerance of 0.4 to allow operations, and year-to-date, we're at 0.36 and targeting 0.32.

Now onto production.

We produced 1.31 million ounces of gold this quarter, which was within 2.2% of our original plan at a cost of sales of $833 an ounce.

The all-in sustaining costs in this first quarter was $7.72 an ounce, which, again, is slightly better than we originally planned in a high CapEx quarter relative to production, and this was possible given by our focus on cash costs delivered through the best-in-class efforts.

Copper production for the first quarter was 95 million pounds, lower compared to the same year -- same period last year, primarily due to lower production at Lumwana as a result of lower tonnes processed, combined with lower grades.

AISC for copper in the quarter was $2.19 per pound, as you can see in front of you.

Onto guidance.

Okay, we've decreased our '17 gold production guidance to 5.3 million to 5.6 million ounces from its previous range.

A significant portion of this reduction is attributable to the anticipated sale of 50% of Veladero, as Kelvin has already outlined, which is expected to close at the end of the second quarter.

This guidance also assumes the resumption of normal processing activities in the timeline I outlined before in June, of course, subject to further inspections and approvals.

Now onto capital.

We expect sustaining capital expenditures to remain in the range of circa $1 billion to $1.2 billion, with project capital expenditures on top of that to be $250 million to $300 million, respectively.

As you can see in front of you, as a result, we expect total capital expenditures to remain within the same range of $1.3 billion to $1.5 billion this year, and this range assumed expected savings from our improved capital management program, which is constant and ongoing.

Operational excellence.

Right, given, as you've heard us say a number of times, our enduring emphasis on continually improving the plan, I remain very excited by the returns on our investment in our operational excellence area.

We've been improving productivity in Nevada and have completed the unification of Cortez and Goldstrike, a great step change in organization.

And this has helped Bill and his team expedite the implementation of our digital transformation.

Just as one small example of this, we've overhauled our short interval control programs, allowing us to reorganize blasting between shifts, adding up to 7 hours a week.

These and multiple other efforts all add up to significant changes in productivity and in cash cost improvement, and it's just the start.

We continue to search in the longer term for innovative ways to transform our business.

We hosted a hackathon back in March, where we hosted, under Michelle Ash's guidance, 100 students, entrepreneurs and scientists to come up with ideas for 2 challenges we are currently facing.

One challenge thought of new ways to detect, track and optimize maintenance work at Barrick mines, and the other asked teams to develop innovative tools to consolidate exploration data from multiple sources.

The results were inspirational and potentially transformative and a great model for going forward.

And we intend, therefore, to sponsor up to 5 of these a year as we look outward to find new ways to solve our operational and efficiency challenges.

We're rolling out 2 remote operating centers where site activities will be monitored from as the first step.

Barrick Nevada team will operate by the means of an analytics and unified operating center in Elko with a capacity to get data, analyze it and use real-time information to unify our business functions that may inform and anticipate decisions that reduce risk and improve all our business, relentlessly driving transparency, which relentlessly drives performance.

The other incidentally is more advanced, and I referred to it a minute ago, is in our Argentinian -- our Argentina center in Albardon.

We're delighted to be hosting a mine tour for you all in June where you can come to Elko to see this phase of digital Barrick in action.

We'll be hosting a 2-day tour up there where you'll see Barrick Nevada, the Codemine, potentially our software engineering facility, Cortez, Goldstrike and our new analytics and unified operating center.

Okay.

As Kelvin outlined at the start, our fifth strategic priority is talent development, underpinning everything, in fact.

And we couldn't achieve any of these former priority.

Number one, to [ fall ] without having the right talent in the right places.

As we've mentioned a number of times, developing our greatest asset, our people, is vital, and our goal is to recruit, manage and motivate such people to exceptional standards.

Taking account of new technology, we're leveraging digital and social network to hunt and attract such talent with a focus on digital skills needed to transform our business over the short and long term.

And we continue to expand the strategic veterans programs to attract highly specialized and suitable individuals.

I've identified over 200 veterans within our company that are already making a difference.

To support our talent and strategy and this strategy, we've developed the [ Barrick Learning Academy ] to support a streamlined learning experience, both operators, maintainers and salary professionals, 2 unique but interrelated groups across the company.

Our learning delivery methods are being upgraded to include a wide range of course types from on-demand to in-person based on individual needs reinforced with learning categories and course topics that are mapped to individual level and role.

Overall, it's to reinforce our best-in-class support for internal talent development with practices that will improve everything across the business over the long term.

It should be no surprise to anybody listening to this call that our investment in this area in Argentina is one of the key pillars of our go-forward transformative plan.

I will now turn over to Bill MacNevin for his detail.

Thanks, Richard.

Barrick Nevada has just passed the 60-day mark and is progressing well.

We're accelerating value capture by working as a united business.

We've consolidated the capital master schedule, enabling a holistic review of the capital spend.

We're aggressively pursuing value engineering opportunities to complete our capital projects in scope with less spend.

People are the cornerstone of our business, and we have mobilized talent for our greatest need and opportunities.

Specifically, we have sent experienced maintenance technicians from Goldstrike to Cortez, enabling knowledge transfer and upscaling our technicians.

Our mine rescue teams stand ready in the event of an emergency.

These dedicated teams emerging and operating as one.

We're capturing opportunities with urgency.

Last week, we started blasting at the Cortez open pit at shift change.

This will increase track utilization in the open pit and make our fleet more efficient.

Goldstrike will be implementing open pit shift change blasting also this month.

Moving on to Nevada's Q1 operational highlights.

With two of our world-class assets now working in a synchronized manner, achieving strong production of 521,000 ounces, which was 5% higher than the combined in the first quarter last year.

The higher production was due to higher grades mined and processed from Cortez Hills' open pit, combined with higher throughput at the oxide mill as a result of our best-in-class and digital process improvements as well as higher throughput at the (inaudible).

First quarter all-in sustaining costs of $694 per ounce was 19% higher than the prior year.

As mentioned by Catherine, the increase in sustaining CapEx is due to the high capitalized stripping, combined with other sustaining CapEx projects.

As you all know, Cortez was (inaudible) Barrick's digital transformation.

Following the integration of Cortez and Goldstrike, we've been able to accelerate the rollout of our digital mining solutions.

We expect Barrick Nevada's 2017 production to be between 2.18 million and 2.26 million ounces.

We continue to expect all-in sustaining costs to be between $630 and $680 per ounce.

I'll now pass over to Henri Gonin, General Manager of Turquoise Ridge.

Thanks, Bill.

During the first quarter, we produced 55,000 ounces.

Gold production for the quarter reflects a 10% improvement year-on-year.

This was as a result of 26% more ore tonnes mined, offset slightly by a 6% reduction in the mine's grade.

We successfully initiated several best-in-class initiatives focused primarily on increasing productivity in the mine and improving overall equipment effectiveness.

From a growth perspective, we've initiated the third shaft project, and we're currently procuring services to complete the surface strip ratio work.

We continue to expect 2017 production to be in the range of 260,000 to 280,000 ounces.

We now expect the all-in sustaining costs to improve to $630 to $710 per ounce compared to our original guidance range of $650 to $730 per ounce.

Thanks.

And I'd now like to hand it over to Greg Walker, Executive General Manager at Pueblo Viejo.

Thanks, Henri.

Pueblo Viejo started the year slowly relative to the first quarter last year.

Production was down 17%.

This is primarily due to reduced tonnes mined and processed.

This is also combined with lower head grades this year.

This is attributed to lower open pit utilization and lower processing throughput due to the timing of autoclave shutdowns.

The impact was partially offset by improved gold recovery, up 2.80% to 2.90%.

These timing issues will not impact the overall 2017 production.

The site expects to reach the plant.

Quarter 1, we saw the site awarded (inaudible).

This underlies our strong commitment to environmental management.

Mobile maintenance fleet -- sorry, our mobile maintenance team continues to improve.

In quarter one, they completed the first site overhaul of the -- our primary shovel.

Team did a very decent job and completed this task 7 days ahead of the scheduled time.

During quarter one, we also finalized discussions with the government of Dominican Republic, two important matters.

Firstly, the financial model, the budget for 2017 to 2019 was approved; and second was the AMT rate, which is the underlying tax rate for 2017 and 2019.

These new rates were favorable to PV compared to previous rates.

The next one, safety performance in quarter 1 was 0 reportable incident -- injuries.

We also initiated critical control safety program around the critical risk on site.

A particular focus was on the operation of mobile equipment, which remains the single greatest source of incidents for the site.

We continue to expect 2017 gold production to be in line -- in the range of 625,000 to 650,000 ounces.

We now expect the 2017 all-in sustaining costs to increase by $10 per ounce to $540 to $570 per ounce due to the delay in the connection -- connecting of the Quisqueya 1 power plant.

Connecting to the power grid would be resulting in lower-than-expected credits from the excess power sales.

Thanks.

And I'd now like to pass on to Jim Whittaker, GM of Lagunas Norte.

Thanks, Greg.

The first quarter was, indeed, a challenge for the Lagunas Norte team in Peru in general, but a dedicated effort by all involved was able to close the quarter with production at cost within expectations.

The 1 in 50-year weather event devastated many lowland areas in Peru and disrupted supply lines from FEMA to the mine site via our logistics center in the coastal city of Trujillo.

Our teams worked diligently through the highway (inaudible) closures, the loss of the tower on our principal power line and assisting our families and neighbors with emergency shelter, heavy equipment, foodstuffs and monetary support.

We had no reportable personnel or environmental incidents during this period.

Sustaining project development continues on track, focused on the solution injection, carbonaceous ore separation projects, both we built and implemented this year.

The future plant expansion project to employ milling, CIL, floatation and pressure oxidation processing is at final feasibility.

Guidance for production remains unchanged in the range of 380,000 to 420,000 ounces, and we now expect the all-in sustaining costs to be in the range of $540 to $600 an ounce due to improvements in the scope and timing of capital expenditures.

Thanks.

And I will now pass the discussion to Jorge Palmes, Executive GM at Veladero.

Thanks, Jim.

First quarter production of 151,000 ounce 14% was about the first quarter last year, mainly reflecting the higher grade of tonnes placed on the leach pad and annual (inaudible) planned maintenance.

Cost of sales per ounce was in line with the prior year higher reduction on sales, offset in increasing Barrick mining costs.

These costs were primarily related to labor, consulting and construction due to the inflation in Argentina, though it's been fully offset by the devaluation of the Argentinian peso.

First quarter all-in sustaining costs were $890 per ounce, an increase of 32% compared to the same prior year due to the higher sustaining capital expenditures relating to the construction of phase 4B and 5B of the leach pad.

Our integrated remote operation centers, or IROC, is working on a temporary basis, and we expect it to be fully implemented by [ others ] and is helping us to benefit from the monitoring of an integrated operation.

We have already seen an increase of 5% in production.

For the full year 2017, we now expect production to be in the range of 430,000 to 480,000 ounces.

The reduced production is primarily attributable to, as Kelvin mentioned earlier, the anticipated sale of 50% of the mine in Shandong Gold, our strategic partner at Veladero and potentially the Frontera District.

The revised production guidance also assumes the resumption of normal processing activities at Veladero mine in June, subject to some (inaudible) government approval of proposed modifications to the mine's operating systems, another related commitment.

Cost-wise, we now expect 2017 all-in sustaining costs to be between $890 to $990 per ounce.

I would like now to hand it back to Kelvin for some closing remarks.

Thanks, Jorge.

Let me end with the highlights of our progress for the quarter.

We continue to generate significant cash flow.

We've won partnerships that will provide tremendous opportunity for our shareholders.

And we're especially enthusiastic about what the future holds for us, together with Shandong Gold, as they become integrated into Veladero and potentially into the high perspective of (inaudible).

Our debt reduction strategy is on track.

And we're making great progress on unification and digital transformation at Barrick Nevada.

Just before we go to Q&A, I want to mention for those interested that we'll be hosting a sustainability briefing webcast on May 9. And as Richard indicated, I'd also like to remind you about the Nevada mine tour we're hosting on June 20 to 21.

So with that, let's open the call for the Q&A session.

Thank you.

(Operator Instructions) The first question comes from Andrew Quail of Goldman Sachs.

One question.

You guys -- obviously, I think, Richard, you mentioned that you were 2% below your budgeted guidance internally for gold production for the quarter.

Can you just give us some context or some guidance of what we expect for the next 3 quarters, as in sort of weighted production just for the straights estimates in our model?

Yes, Andrew, it's Kelvin.

Listen, I guess, the starting point, and as you know, we don't guide quarterly and the reason is, things tend to change through the year, particularly as we try and improve on our plan, continue improvement initiatives.

But having said that, I can tell you that the production in the first and second half of the year are relatively similar.

Q1 was always scheduled to be our lowest production quarter.

That gives you a sense direction of how the rest of the year looks.

Okay.

So -- okay.

So Q2 is going to be okay if you guys have kept your guidance unchanged?

Correct.

Well -- sorry.

You trimmed it for the Veladero.

The next question comes from Kerry Smith, Haywood Securities.

Kelvin, I'm not sure who could answer this, but you had an application into approving the leach pad expansion at Veladero.

Does that whole expansion approval get impacted by what's going on there now?

Or are they 2 separate approval processes?

You're referring to phase 6 to 9, Kerry.

I'm going to turn that over to Richard (inaudible).

Yes, sure, Kerry.

Just come back up from Argentina, and let's clarify the approval processes.

In terms of the ability to get cyanide moving back into the system, we're sitting and engaging literally as we speak with the authorities going through our multiple point plan.

As I outlined, primarily focused on ensuring the integrity of the leach pad is a standard, which everybody is 120% happy with.

So that's moving along pretty well actually.

And so what we're expecting is the approvals for that to move on time and allow us to get to a point where we're putting cyanide back in and cyanide outlined earlier.

So that's process one.

Process two, which you refer to, which is getting permission, if you like, to get to phase 6 to 9 expansion, is moving also exceedingly well.

The two themselves are not connected.

However, the way in which we approach engagement with the Argentina authorities, we see this as a strategic partnership.

So consequently, the way in which I like to discuss it with them is everything starts with getting our existing leach pad to a standard that we're all happy with.

And then from there, everything else flows.

But again, to reassure you, the discussions on phase 6 to 9 have gone exceedingly well.

We think the plan is great, as do the authorities we've been speaking to.

But we discussed this in the realm as you'd expect at a time like this.

Okay.

And is it possible to put a rough bracket on the capital cost that might be associated with the proposals that you're providing for this -- the restart here on step one?

The restart, okay, yes.

The way in which we've expressed this, you may have seen a bit of it, is that we look at -- we put a commitment around about $0.5 billion of sustaining capital over the next 5 years.

The actual cost of getting the reengineering done contained within that, there's been a little bit of reallocation of cost, if you like, within the sustaining capital to ensure its focus on the level and standards of engineering that we need to do.

Of interest with respect to the pipes that -- the famous pipes that we're dealing with, serious as they are, we had a plan in place, fully engineered and permitted, to move those pipes.

And that permitting for process was complete by the 31st of March.

So one of the reasons that we can move so quickly is we have the material in place, we have the engineering plan in place, we have the people on site now working with it and all we're seeking to do is to clarify the authorities, the existing plan that they have approved is exactly what they want it to be and ensure that the additional containment berms in the places where they're absolutely essential, plus other things, again, are the belts and braces that they're content with.

So really, the way in which you should look at this in terms of incremental cost from a technical or a sustaining capability level is it's contained within the $500 million sustaining capital plans.

However, in addition to this, there is investment that we intend to make over the long term, although our partnership in San Juan is long, in areas of training, education, capacity building in terms of the human labor force.

And at the moment, we're looking at this in detail because, clearly, one of the elements of our go-forward plan is to ensure that both the supervisors and the operators and all those operating on the mine site are operating at the standards that we'd like them to be.

So we're jointly investing in this in terms of time and facilities, and you'll see there will be a small incremental cost in terms of CSR spend, if we call it that, but again, that will be contained within the $500 million.

Right, okay.

So just so I'm clear, the cost for this remediation is -- this $500 million number you're quoting was really the sustaining CapEx you had in the plan for the next 5 years, and there is an incremental cost to do the work you're talking about now, which is not modest -- which is not material relative to the $500 million number is what you're saying.

Did I understand that correctly?

That's right.

I just want to clarify.

Our guidance is our guidance.

So when we took -- when you look at our 2017 guidance, it factors this in.

So what we're talking about in terms of the remediation work, community spend, et cetera, a, this is over a period of time.

It was also -- a lot of it is just part of the plan as we reach the intended but need to clarify in terms of making sure the Argentinian authorities understood.

And when Richard talked about that incremental community cost, this is small dollars.

This is not a significant impact on AISC or the capital spend at Veladero.

In fact, I don't think you'd even come in, in capital, you'd see it in your cash (inaudible).

Yes, (inaudible) it's important because it's interesting.

Just to give you and having just come back now, to give you a for instance, in terms of the type of efforts that are going into Argentina, which were always part of the plan, but we're basically highlighting them and putting additional focus in, would be the remote operating center, which we've taken the models from Nevada, and we've brought it in to Argentina.

Secondly is our Codemine, the Codemine which is very successful in reducing software applications, leading to better (inaudible) range of other methods in Nevada that you'll see, should you come there in June.

We're also seeking to do exactly the same thing in Argentina so that we're building, again, the same relationship between, if you like, academia, the computer sciences elements of San Juan University and ourselves and our operators to end up with an Argentinian contribution for the digital design.

And in addition to that, and it was why I highlighted it in one slide -- forgive me, it's why we put a slide in here about talent development.

What we're seeking to do across the whole Barrick portfolio, as other companies do, and it's not in itself radical, I'm just highlighting the focus we have on it, is we're looking to train our people in ways that make them surely the most excellent in the modern digital era.

And again, we're focusing on doing that in San Juan.

And in doing it, in partnership with the San Juan authorities themselves constitutionally, reporting to the governor, we're doing it in ways that ensures that as a development partner, we're both yielding the maximum benefit.

And the other point on this, apologies because it is so important, the other point on this when discussing with the Argentine authorities, is you've noticed there's obviously been a very big change for our operations down there in bringing Shandong in.

Now the engagement in Shandong, as Kelvin has outlined, has been done over a long period of time.

And they've been selected as a partner.

There's been a selection process to this.

And they've been selected because they are technologically really advanced.

Their environmental track record is also exceedingly good, and their commitment to community and individual development within their operations in -- not just within Shandong province itself, province of 100 million people, is quite exceptional.

So when being down there and engaging with both the Argentinian authorities at the federal or provincial level and our own workers with Shandong alongside, we've all been struck that, actually, we've got ourselves a partner here that in many respect is going to help us collectively raise our game, to some being more familiar value of the part.

So it's a pretty -- I know we're into a challenging position, and we are discussing this with the Argentinian authorities.

But again, not wanting to add any spin to this, the fact of the matter is, we've got a great partner, and we're in conversations with the Argentinian authorities in ways that we end up with quite a robust plan.

Okay, great.

And, Catherine, one last quick question.

What would the approximately gain be on the Veladero sale if it goes through at the $960 million?

Of the Veladero sale?

Yes.

Well, we've not provided that guidance, but it would be at the order of $600 million.

The next question comes from David Haughton of CIBC.

I was listening to Greg Walker go through the PV updates, and he had mentioned something that was interesting.

It's the revision to the tax rates.

Perhaps you can give us a little bit of detail as to what those tax rates are because you had mentioned they were beneficial.

So, David, listen, I'm going to turn it over to Greg.

But just to be clear, he was referring to the annual minimum tax, not the overall tax rate.

And you'll recall the special lease agreement we have in place in PV stays in effect as it is.

The annual minimum tax is what came up for renewal in 2017 over a 3-year rotation.

Greg, sorry, you can add to that.

Thanks, Kevin.

Yes, as Kelvin said, the negotiation was the AMT, which is the annual minimum tax, and while the tax rate is favorable and is in our benefit for the next 3 years, we don't expect that they'll come into play.

So instrumentally, it won't have any effect on our FX.

The only time it will come in play is if there was a particular hiccup to the operations in play.

It's a safety net tax for the government rather than the (inaudible).

I must say the discussions we had with the government were excellent.

Our relationship with the Dominican government in the past was not always great, but I must say that these negotiations were very good, relatively quick.

We put forward our plan, they came back with proposed changes and within a matter of days, we had all sorted it out.

So the discussion was good, the partnership with the government is in a good position at the moment.

It's good to hear that it's a healthy relationship.

I understood that there were 2 parts, really, to the tax.

You got your 25% tax rate, then you got effectively a net profit interest that goes to the government.

And you had waived the carry so that the government could participate early.

That carry was to get back in to give you some shelter from the NPI this year and into next year.

And I'm wondering what the status is for that.

Yes, you're correct.

The amount -- it is favorable to us the next 3 years, but offhand, I don't have the exact numbers to give you offhand.

But you're right, we do get a favorable kick from the depreciation over the next couple of years (inaudible).

So, Dave, this is as planned.

So effectively, what you're saying is we're now able to depreciate that is as agreed.

So just as with the original (inaudible), everything is moving smoothly, and these changes have gone through smoothly.

Okay.

And similar to Kerry's question on gain of sale from Veladero.

With Cerro Casale, I presume that the write-back of the previous impairment kind of reflects the sale price.

So does that mean that they would not be a gain or a loss on sale of the stake in Cerro Casale?

So the impairment reversal factors in the majority of it.

The one thing it doesn't factor in is our net controlling interest and the impact -- that's the sort of new valuation with that.

So you'd really see some noise in our -- on close of that deal, probably in our second quarter results.

But yes, effectively, this reversal does factor in the sales price associated with that.

The next question comes from Steven Butler of GMP Securities.

A question for Jim Whittaker, I guess.

Jim, on Lagunas Norte, you talked about, obviously, the heavy rains, we're all aware of that, in Peru causing road closures and power outages.

And obviously, the production numbers weren't too bad from Lagunas Norte.

Would you expect production numbers to be fine going into the second quarter?

Or is there often a lag and impact from rainfall on the heap leach pad?

So I'm just sort of wondering how you feel you're starting out in the second quarter in Lagunas Norte.

And indeed, was there any -- anything that really materially affected the ability to stack?

Because you've talked about road closures and power outages.

But were you actually limited at site to stack materials because of the rainfall perhaps somewhat?

Thanks for the question.

The major effects at the site, it started with logistics problems on the coastline, and that is obviously -- was an issue because it limited our ability to bring in people and material resources from the coast to the mine site.

And at the same time, we're having some problems with 1 power on our power line.

Now both these issues were taken care over time.

And actually, we're out of the wet season now.

We're seeing quite a bit more drier climate and expect that to continue on until the end of this year.

The major losses that we've seen through the first -- through the month of March was due to when we were switching from line power into generated power, and that caused a reduction in our ability to be able to pump liquid through the heap leaching.

So in summary, the mine's ability to move material from the mine to the heap pad is not affected.

But our ability to move solution through the piles was affected.

We're currently around the middle of a guidance, and we don't expect that to change in the remainder of the year.

Thanks, Steven.

Okay.

Operator, I understand there's no more questions.

So just before we leave, I'd like to thank everybody very much for joining us today.

We hope that we'll be able to -- some of you will join us on our sustainability call and the others will join us on the Nevada mine tour in June.

And otherwise, we look forward to updating you on our progress again on our Q2 call.

So thank you very much.

This concludes today's conference call.

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

You may now disconnect your lines.

Thank you for participating, and have a pleasant day.