巴里克黃金 (GOLD) 2019 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

This is the conference operator.

Welcome to the Barrick 2019 First Quarter Results Conference Call.

(Operator Instructions) As a reminder, this conference call is being recorded, and the replay will be available on Barrick's website later today, May 8, 2019.

I would now like to turn the conference over to Mark Bristow, Chief Executive Officer for Barrick.

Please go ahead.

Thank you very much, and I'll start again, and good morning, ladies and gentlemen.

Welcome to this -- our first results presentation as a merged Barrick and Randgold.

And as I'm sure you would have already noticed and if you have followed some of the interviews this morning, we've certainly got off to a good start.

The first quarter's performance was both positive and productive with a strong across-the-board delivery from all the operations topped by the transformative and long-overdue creation of the Nevada Joint Venture.

It's worth noting again that the Barrick-Randgold merger was a very strategic one.

I think it's important that I stress this: designed to produce a company capable of rising above an industry in disarray to become its most valued gold business.

In the short time the 2 companies have been together, we've made significant progress towards the goals we set when we shared the deal with you and our investors and other stakeholders.

But I would also stress that speed is not necessarily of the essence when you're playing a long game.

Both Barrick and Randgold were built on the solid foundation of discovery, development and early acquisitions, and that future focus vision still directs our strategy today.

So whether you're a fund manager or a finance minister, don't look to us for instant gratification or easy pickings.

The stakeholders who will reap our rewards are those who share our long-term vision and invest in or work with us as partners, and that's really our commitment.

And in fact, this industry needs that to be able to recover its rightful place and become relevant again as an industry you can invest in.

Please take note of the cautionary statement as presented on the screen, and for those who would like to read them, they are in your pack.

I'll start, as usual, with a look at our health and safety record, which although are void of fatalities, remains an area of business which needs improvement, and certainly, it has my focus.

While Africa held steady, we have more to do in both North and Latin America, and this is receiving a lot of attention not only from me but from the executive team as well as the mine management.

It's an issue that is of fundamental importance to a heavy engineering budget business such as mining, and we are committed to creating an injury-free working environment across the group.

Similarly, the cardinal importance we have assigned to sustainability demands that we care for the environment and our communities around our mines.

We are reviewing all our community-led investments to ensure that they will create real value for the life of the mine and beyond.

We're also addressing the legacy challenges in some countries.

In the meantime, it's pleasing to note that there were no Class 1 environmental incidents in Q1 and that all sites in Africa and in the Middle East have completed their ISO 14001 recertification or surveillance audits, and with Latin and North American audits due in Q2 and Q3.

Turning now to the operations, these are the highlights of the quarter.

The quarter-on-quarter operational comparisons are obviously skewed by the merger, but it's important to note that all the operations delivered on plan, and even on a per-share basis, the adjusted earnings were significantly higher.

We have made rapid progress with integrating the organization, streamlining processes and ensuring that all sites have the geological, operational and technical capability to meet their business objectives.

As we reported earlier, the group has been divided into 3 geographical regions, each with a very strong executive and small but effective support team.

In line with my belief that people should be where they make the most significant contribution to delivering against our strategic objectives, we have reduced the Toronto corporate office to around 70 people.

Each and every one of those people has an important, real and focused role in Barrick's business, and we will be continuing to refine and rationalize our support structure with the focus now shifting to the nonmine site locations outside Toronto.

We're also making rapid progress with the establishment of the Nevada Joint Venture.

There are a few pronunciations I'm still working on as you all make up when I go through this presentation.

But for obvious reasons has been named -- and today we announced the formal name of this joint venture.

As you know, we are incorporating the joint venture into an organization, into a company, and that company will be called Nevada Gold Mines.

And we're going to disclose the logo just now -- a little while later.

And by the way, we didn't employ anyone to do this.

We did it ourselves.

And a little bit more, as I say, about that a little later.

The organizational structures are being finalized, and we're working towards realizing the synergies and cost-reduction opportunities, and those have not changed.

I'll talk you through the other highlights -- I will talk you through the other highlights on this slide when we get to their respective operations.

Looking at the operating results.

Gold production was up, which was great, and costs were a little better.

That means better than what we thought which was done or what we planned for.

And copper -- the copper assets all made a real contribution to the bottom line, and they were in line on production and slightly lower on the costs.

So as I pointed out to some of the journalists I've already interviewed with today is that, apart from the closing assets, every single other asset in Barrick made a contribution to the bottom line, which is a fantastic way to start a business like this.

And every way you cut the results, it's a solid set of results that came in ahead of market consensus as you would have noticed.

And net cash from the operations is up 27% supporting the payment of a dividend, and I think that's also critical is that we can afford our dividend.

And when you look at the balance sheet, the $500-odd million that came in from Randgold is still there, and it's been -- it's offset on the net cash position.

So again, we managed this business.

There was cost, as you know, in this quarter on the transaction, but all in all, the financial results were, at best, described as robust.

And when you look at the net debt, we now can boast a strong balance sheet relative to the rest of our peer group.

We start our review of operations in Nevada, where all our operations have been integrated into a single complex under a single executive General Manager to whom each operations manager reports.

While there were -- will be further changes, as you will imagine, within the -- as we roll out the Nevada Joint Venture, this principal will be carried over in the new structure, and that's quite important.

And I think some of you, some of the analysts have looked for more clarity.

You'll see that we desegregated Cortez and Goldstrike in our numbers today.

We'll continue to do that working towards being more transparent to -- allowing you to really understand our business and manage it.

And what I've always done, as you know in my career, is my intention is to give you an understanding of our business so that you get the model right.

I'm not intending to let you try and guess what our business plan is.

We're going to give it to you, and we're going to work on getting more granular as we go along.

At Cortez, production is transitioning as we messaged from as far as last year.

The open pit -- the high-grade open pit, what we call CHOP, Cortez Hill Open Pit, more towards the underground and lower-grade open pits, and that has impacted on our results.

It was always messaged that way, and so it shouldn't be a surprise to anyone.

That shift to underground and higher grades will continue all the way out to 2022, and we've already started to see the improvement and the bigger contribution from the underground, which we call CHUG, Cortez Hills Underground operations.

And again, we've got the Deep South, not to be confused with South Deep, which will continue to expand that contribution.

So Goldstrike's production was down because of the preferential treatment given to Cortez' higher grade underground ore relative to the previous quarter.

So again, we are not working quarter-on-quarter, but this is our plan because we have to replace the higher-grade open pit ore, and so there was an offset, and again, that audit that we stockpiled from Goldstrike will go through the rest this quarter.

But again, we saw improvements in throughput and in recoveries from the TCM circuit at the autoclave from Goldstrike, so that was good.

And then Turquoise Ridge achieved a record production in the month of March, mining and hoisting more than 80,000 tonnes and Turquoise Ridge-Twin Creeks combination is a very important part of the Nevada synergies that we're working towards.

And the third shaft precollar construction for the Turquoise Ridge third shaft was completed and presink activities have started, and our capital team is fully engaged with the contractor to make sure that we keep that project on track.

Now moving back.

Voila, there's the logo.

It's about as good as we're going to do on the launch.

And now a look at the Nevada Joint Venture, which we expect to get its final sign-off at the end of this current quarter.

In the meantime, as I noted earlier, we are making exceptional progress in restructuring this new business.

And this is the new logo, which we selected in a democratic way, sort of a consulted and democratic way and -- with our colleagues from Newmont Goldcorp.

And as the map shows, the properties it will comprise of is Cortez, Goldstrike, Turquoise Ridge and Goldrush from Barrick's side, and Carlin, Twin Creeks, Phoenix, Long Canyon and Lone Tree from Newmont Goldcorp side.

And as also has been reported, Barrick will operate and own 61.5% of the business.

And it's worth noting that the mines making up the joint venture produced in excess of 4 million ounces of gold in 2018, making it the single-largest producer of gold as a complex in the world and significantly more than the next-biggest contributor.

And I think that's Muruntau and then the Olimpiada complex that Polyus owns in Siberia.

I might say that the Nevada mines is being structured in a great spirit of cooperation between Barrick and Newmont Goldcorp and excitement as well, not only about the new business but also the opportunities that this business is going to unlock.

Somebody said the other day that this is a deal that was tried so many times and -- but one thing that was always consistent that everyone always recognized the logic of it although it didn't happen.

And so it's very pleasing for us to be part of ultimately getting to that point.

In this regard, I'd also like to draw your attention to the first new opportunity even before we've closed the transaction, and that is the Cove-McCoy joint venture borehole intersection that we announced recently with our partners -- and our partners at Premier.

And as you can see there as I'm sure you noted that's been a very significant intersection.

Our geologists are quite excited about exactly that borehole.

And what's important about it is it's in a different part.

It's not in the traditional sort of Carlin-style trends that host the other big deposits in Nevada.

And it's also definitely highlights the significance and opportunity that we believe that this joint venture will continue to unlock in Nevada.

I mean, I'm a geologist and it's really an amazing place.

It's like the (inaudible) was in the sort of 80s -- 70s and 80s.

There's some very significant -- I mean you draw intersections there that I've never seen before, so -- and I think this just reinforces the potential of Nevada and really reinforces my and Barrick's commitment and determination to increase and maintain a dominant presence in this geological address.

At the Goldrush project, the twin exploration decline development accelerated during the quarter and each has now advanced some 680 meters out of the planned 4,000 meters.

A dedicated manager, we've restructured all the management across the Barrick group.

But specifically for Goldrush, we now have a dedicated manager on the feasibility side of Goldrush, and we've put the decline responsibility under the underground manager at the Cortez mine.

We will also continue to coordinate the Goldrush-Fourmile exploration efforts, consolidating the geological models to further understanding of the mineralized corridor between the 2, and I'm going to show you a slide just now.

But there's -- we've got 8 drill rigs at Fourmile where those 8 yellow circles are on the slide.

As you know, Fourmile has initially been excluded from the Nevada Joint Venture until the full extent of the mineralization has been determined and the feasibility work has been completed, and then under the agreement we have on certain conditions, of course, the ability to roll it back into the joint venture.

We are also and -- been reviewing the existing geotechnical data on all of Barrick's mines but with a particular emphasis on the operations in Nevada and Goldrush.

In the case of Goldrush-Fourmile and all of the Nevada underground mines, we believe this will help us to optimize final mining layouts and also the mining methods, and we're quite excited about the opportunity.

What's happened in Nevada is, because of the ground conditions and they're very variable, is that both on the Newmont Goldcorp side and on the Barrick side, we tended to go to the worst possible rock integrity and design accordingly, but that's quite variable, and there's some very competent parts of Nevada, which definitely support like long-haul open stoping with backfill, and with that comes very significant deficiencies.

So we're expecting to change a lot of the mining methodology both within the Barrick assets and particularly Goldrush as well as in some of the Newmont Goldcorp assets.

There's an example and I thought you'd appreciate this.

This is the Goldrush-Fourmile plot of the drilling results to-date, with the hot colors being -- so red above 5 grams a tonne.

Average grade for total resource, about 15 million ounces now, including inferred for Goldrush, and we've just started declaring the initial resource -- resources out of Fourmile, as you would see in the documentation.

But you can see the extent of this mineralization is continuous, and it really is a world-class occurrence.

And drilling, as you saw in the previous slide, is ongoing, and as far as Goldrush goes, we are now starting to extend the drilling on the edges of the orebody, and the big focus in Fourmile is to continue to build out the geological model.

And then once we start getting that [coating] together, we'll start working towards infilling it, and then I think you'll start seeing some consistent contributions to the growth in the declared inventories, whether it's in resources or reserves.

Moving then on to here, Canada.

Hemlo finished pretty much on target for the quarter despite the challenging start to the year and with the aim of making Hemlo a Tier 2 asset.

Its team is currently optimizing the mine design and schedule based on quite different geological modeling and updating, which we've been doing, and we've done a lot of geotechnical work again at Hemlo.

And while it's still early days in that project, the potential to bring cash flow forward and add reserves to Hemlo is very encouraging.

And so whatever happens going forward, Hemlo is going to be a different asset, and the challenge to the team is can we make it into a Tier 1 asset, which then we would be -- it would be a keeper in our portfolio.

So where we've had -- normally what we have in our portfolio is Tier 1, Tier 2, and then we have assets that we are looking to realize and give to somebody else to run.

Hemlo is a strategic asset in that it benefits more because of the tax shield that we have in this country.

So it always will -- provided we can create positive cash flow, it always delivers more value than an asset that doesn't have that sort of tax protection.

So now we come to the biggest challenge of all, and that is for me to try and pronounce Pueblo Viejo.

How did I go?

In the Dominican Republic, everyone has been trying to get me to practice this, and my assistant actually wrote the phonetics down.

Yes.

We need -- well, we've got some Spanish people.

That doesn't help much, either.

But anyway, Pueblo Viejo posted another good performance despite lower grades, which were offset by improvements in recovery and throughput enabling the mine to beat its production plans, which was very pleasing.

As with other Latin American operations, there's been an increase in focus on mineral resource management.

Now all our assets have mineral resource managers already.

They also, almost all of them, have different management.

So we've done a lot of change in the organization, not necessarily changeout but change around, and we've moved people around and given people a different focus, and it's brought a lot of energy to our team.

And all indication so far is that there's significant potential to convert some 7 million ounces in the short term of measured and indicated resources to probable reserve with still a lot more to come.

And PV has really been an exciting discovery for us.

We knew it was a good asset when we did the due diligence, but certainly, the more we've looked at it as a team, the more opportunity we've seen.

And a lot of it driven by the scoping studies to support a plant expansion.

Again as you know, the Barrick team has been talking about expansion at PV for some time, and we've now firmly set on a flow sheet where we believe we can deliver a plan that meets all our investment criteria and will be able to support plus 800,000 ounce production profile way out after 2022.

And it'll be a big project costing some $1.3 billion, and we're very excited about this.

And the other next step of course is we expect to complete the prefeasibility study this year, in fact, in quarter 3, and then the full feasibility study during next year.

So again, an exciting growth project for us.

Despite operational and management concerns, as I shared with you last time we chatted, Veladero in Argentina also had a satisfactory quarter after a poor start in the year.

And there's been a big focus on efficiencies, and costs have come down considerably on the back of business improvement initiatives.

And again, the gap in Veladero is that we've got a lot of work to do to catch up and infill the drill spacing.

The drill spacing is a bit wide still, and so you end up with surprises, both good and bad.

And as you know, those people who know me, the one thing I'm fully committed to is we take the risk out of grade by drilling the orebodies properly.

So we've got a big program in Veladero to -- we've redone all the -- relogged all the core.

We've now got the drill programs running to go and shorten up the drill spacings, and that will give us a lot more confidence in our plan.

We run about 6 years of life there, and then the big focus has shifted to looking for more because we'd like to extend that, and we haven't got a lot to deliver to be able to take that asset to a Tier 1 category.

There's -- as I pointed out, there's been a strong drive on brownfields and near-mine greenfields exploration to add ounces and extend the mine plan, and the drilling programs have been -- are ongoing.

And we've put some of our really top people down into South America to drive those.

Exploration teams are also evaluating targets across the Frontera District around Veladero and also further south at Del Carmen, we've -- and Rojo Grande, we've got some really good intersections.

And again, it's a Veladero lookalike target, slightly lower grade but still significant and better infrastructure than what Veladero had when we first discovered it.

In Papua New Guinea, Porgera had a good quarter despite again challenges rolling out after the earthquake of last year, and Porgera also has -- also has the potential to become a Tier 1 asset.

But it really needs additional investment for more drilling programs as well as infrastructure and equipment capital to enable it to reduce its operating cost.

It's really been quite a neglected asset.

It's a real geological Tier 1 opportunity.

Yes, this mine has been operating for 28 years.

And from our assessment of it, it certainly has got another at least 22 life, so it's not an insignificant asset in our portfolio.

As you know, Porgera operates in a difficult jurisdiction, and like our African mines, has to work hard to secure its social license.

And those people who were at the AGM yesterday would have experienced what has become quite sort of a repeated theme.

Again, I believe we have the skills to be able to work and change that risk profile, at least with our relationships with the communities.

Big focus for Porgera is this renewal of the special mining license, and we are fully engaged successfully on this.

We've had the first round of public consultation, which went very well.

We are engaged with the Prime Minister and his administrators.

As you know, there's a lot of dynamic politics in PNG at the moment, so we are managing the situation and working to continue the process of renewing that license.

We cross now to Africa, where our Loulo-Gounkoto complex in Mali met its guidance.

As at other operations, we're paying a lot of attention to replacing the reserves that are depleted by mining, and that's where those assets are, both Loulo-Gounkoto and Kibali as they've had a really good run, and so far, we've been able to extend the life of the mine, and there's still significant opportunity in the immediate vicinity of Loulo and Gounkoto.

Loulo and Gounkoto are located on part of a very significant geological province, which we refer to as the Kedougou-Kenieba Inlier.

And in fact, the structure that hosts that mineralization, including, of course, the Sadiola Anglo assets in the north and B2Gold assets in the south.

It's a very long structure to call the Senegal mining and share, and we control 70 kilometers of this track of that share just within the Loulo-Gounkoto mining licenses.

And additionally, we also have Bambadji on the western side of the border in Senegal and Bakolobi projects on the same structure.

The Maka belt, which hosts Massawa and the [Tauranga] assets are on the other side of that inlier, as you can see on that slide.

At Gounkoto specifically, exploration has highlighted the potential for a material contribution to the underground project below the super pit, and we're working now on drilling that out and designing the interface between the open pit, the super pit and the higher-grade underground resources below that pit.

The Yalea Structure is also delivering significant extensions to the high-grade deeper orebodies and are drilling, and we've taken a step back as well and looked at -- just it's worth remembering that Loulo or Yalea was this initial pit.

It was about 1.5 million ounces, and there's no way -- and we didn't appreciate what we would discover below that pit, slightly removed.

This is a slightly different orebody.

And so we've gone back to that structure.

That's the orebody that we call the Purple Patch, which really made the Loulo-Gounkoto project.

And we've taken a step back.

As you see there, it's about a 7-kilometer strike.

Outside the Yalea drilling, there's not much information below 100 meters below surface so we've been modeling the geology and looking to extend our search below the current drilling dips.

And again, we think that there's opportunity to make additional discoveries.

Back then to Senegal and Massawa.

As you know, Massawa is currently in the process of applying for its mining license and the related permitting to be able to start to the development of the mine.

And at the same time, we're still exploring at Massawa.

We've got drill rigs running, looking to add to the reserve base.

Currently, the reserves are just shy of our 3 million-ounce hurdle rate to make it a Tier 2 asset in our portfolio.

And back in the Central Africa and the Democratic Republic of Congo.

Kibali made another strong start to the year, as you would've seen in our press releases, achieving a record for tonnes hoisted from the underground shaft at -- in March, which is very significant for us and also being able to maintain recovery at the nameplate rate, which is important.

Lower river levels during the dry season impacted on the availability of hydropower, and that drove the costs up slightly.

Like Loulo-Gounkoto, Kibali's exploration program continues to deliver sustained mineral resource and reserve growth, and latest results show, for instance up in the top left inside of the diagram, the opportunity to coalesce the Sessenge Open Pit and Gorumbwa Open Pit with the up-dip extensions of the 9000 Lode into potentially a super pit like we've got in Gounkoto.

And definition drilling recently on the 11000 Lode, what you see is the down-dip extension.

That has truly highlighted a significant potential for that orebody.

And what's more is it really encourages one because we keep finding new -- so Kibali is like a bundle of cigars, and we keep finding these new cigars on the way down, and we -- there's a mine that still has a lot of legs in it, and again, it's already a 10-year life at $1,000 gold price, and we have every expectation for that to continue to be replaced.

And then on the greater sort of host structure, which we refer to as the KZ structure, we have many more targets and potential to continue to add reserves and then, in particular, open pittable resources and reserves, and that really brings -- keeps the flexibility of Kibali and its mining flexibility if we can continue to ensure that we've got some open pit material that will support the high-grade underground reserves.

Zooming out now a little further, we see a vast gold district, which we refer to as the Congo Craton, which extends from the northeastern part of the DRC down into Tanzania.

And that brings me to the subject of Tanzania and Acacia, and we continue to engage with the government and the Board of Acacia regarding the standoff that they've got themselves into.

And the long impasse has already destroyed a great deal of value, and getting the conflicted parties to see that at this stage, almost any solution is better than none.

And that's proving difficult, I might add.

Nevertheless, as you know, we're full of commitment and tenacity, and I've got no doubt that we will eventually get there.

And as I've said before, just about any solution is a good one for all stakeholders.

We are engaged and somebody -- there was a rumor that we had stepped back.

We haven't stepped back.

We are still engaged in seeking to settle key documents and move these processes forward in a manner which is acceptable to all the stakeholders.

Just briefly, this is a snapshot of our other mines.

Tongon was again challenged by mechanical mishaps and power supply issues and just missed its production target, although it's still within its guidance, and we're comfortable with that.

At Kalgoorlie, attributable gold production was 5% lower at 55,000 ounces and -- compared to their previous quarter and primarily due to a combination of lower grade and mill throughput, mill throughput being a result of some weather issues during the quarter.

Lagunas Norte's production declined in line with expectations as the mine ages, and it'll be put on care and maintenance towards the end of this year with the objective that we'll continue to explore.

And there's a lot of sulfide and carboniferous material reserves potential, and the idea is -- the question is can we delineate enough for Lagunas to become an asset within our portfolio?

Or will we only get to a point where it's actually -- we're able to realize that asset?

And that's really the focus for Lagunas Norte going forward.

And then Morila is moving towards closure, and Golden Sunlight has largely ceased mining with its last mill run scheduled for later this month.

Elsewhere across the Barrick portfolio, the copper mines all did reasonably well with Lumwana and Jabal Sayid both exceeding our expectations and all the mines making a contribution to the bottom line.

In fact, all the assets, as I said earlier, except for the closing assets, made a contribution to the bottom line.

As highlighted here, gold mining is all about owning high-quality ounces.

Both Barrick and Randgold have a history of making world-class grassroots exploration discoveries as well as major reserve and resource additions to acquired assets as shown here.

And maybe because of the recent past, you forget this, but Barrick made some very, very significant discoveries in its time, and the geological exploration DNA is still very much alive in the country, and we've certainly contributed to that in contributing our team.

And this long-life high-grade reserve base is supported by an intense company focus on mineral resource management, which we've now embedded across the organization.

And as I indicated when we announced the merger is we're shifting from a focus on cash flow or high-grading assets to really -- and so when that happens, we tend to -- and of course it's the right thing to do, as I've said before, but now that we've got a balance sheet that's very manageable, we need to shift back to being driven by our orebodies, the optimal orebody management.

And that -- and because when you just focus on grade, you neglect the discipline of efficiency and cost.

And so that's what we're doing now is we're shifting that back to focusing on efficiencies and cost, of course, the orebody modeling itself.

And that doesn't mean to say that we're not focused on cash flow like somebody picked up incorrectly this morning.

We want to have the same cash flow as in the past but just offer lower grade base.

In other words, we want to focus on bringing our cutoff grades down, and a good example is Turquoise Ridge, where we currently are running at over 9 grams a tonne cutoff grade.

That's more than double Randgold's reserve grade, and we are absolutely clear that we'll get that down significantly.

First target is 2 [dots] down, so that's 7, and then we believe we can get it down to 5 and below that.

And that really opens up a whole new set of ounces in the reserve and a great tonnage curve.

And again, Nevada has many of those opportunities, and they're driven by the synergies that the joint venture will bring.

Everything we do in Barrick is designed to create value.

And to properly evaluate our assets, we have flexed them across the curve you see here.

At the base are our exploration programs and the projects that will deliver future value.

In the middle are our Tier 1 and Tier 2 assets, and those which have the potential to acquire that status, as I've discussed in my presentation.

And the flat bit at the top holds those assets which, in terms of our strategic criteria, could do better with different owners as we do not necessarily have the leverage left in them.

They have value, but they don't have the leverage.

And that's what mining business is all about, is can we -- where do we -- where can we best allocate our time to lever that assets to exploit the optionality of the market pricing as well as the geological potential?

That does not mean that any of those assets do not offer a value, and in fact, apart from the closure sites, as I've already said, we have no bleeders in our portfolio.

Every one of them made a contribution to the bottom line.

Preparations to bring some of these assets to account have already started, and I believe we will be able to deliver a substantial part of the process by next year as indicated when we presented the merger transaction initially.

So given our solid operational performance for the first quarter, Barrick, I'm absolutely convinced is back and on track, and it's on track to deliver against its plans for the year and beyond.

However, when one looks at mine plans and replacement rates, it is clear that the industry as a whole is not in good shape, and I've been saying that for some time.

And again, we see the industry toying with survival style mergers and acquisitions and again neglecting the requirement to continue to invest in the future of our industry.

And so one thing I'm sure of is that we are good to go, and I must say it's been an absolute privilege to work with the team in Barrick and to see the response and the agility out of those 3 teams as we deal with -- and we've certainly still got challenges, but also you've seen the results of that effort.

And there are very few people left in Barrick where -- who you have to tell twice to do anything, and so I'm really looking forward to continuing to build on what we've started in this company.

This quarter has seen a great start, and I'm confident that we are absolutely well on our way to achieving our strategic objective of becoming the world's most valued gold-mining business, and I say that with a focus on valued, rather than value or valuable.

And that gets back again to that conversation we had with Catherine, not this Catherine but the other Catherine, yesterday at the AGM because valued means that everyone looks at Barrick and says that's the company we want to be part of, that's the company we want to own stock, and that's the company we'd like to work for.

And we really believe that these people that run it act like owners and are absolutely committed to delivering sustainable returns not only for its shareholders but all other stakeholders associated with this.

So thank you very much for your attention, and we'd be delighted to take any questions you might have.

And Deni, I'm not sure how you want to manage this.

Let's start with the room.

Start with the room.

Okay.

All right.

Well, there we are.

We'll start with the room.

(Operator Instructions)

It's Greg Barnes from TD.

Mark or Catherine, there was no discussion in this presentation about the synergies in Nevada.

You've had some more time to look at that.

You promised some extremely large numbers, $500 million a year right out of the gate.

Has your thinking changed?

Have you -- are you prepared to give us some more thoughts on where you think that can go or how the numbers would evolve over the next several years?

So the short answer is it hasn't changed, and the second point is we'll tell you when we close.

We'll give you more color.

I mean we are working on it.

So what we've got is work streams on that, but there's a lot of work to do.

I mean the whole combination has been -- it's been exciting to see the consensus amongst both teams about being able to deliver on those synergies.

There have been some synergies that are not going to be as good as what we thought as we get into the weeds around some of the operational underground operations.

But at the same time, we've discovered new opportunities which will be able to offset that.

So we're comfortable with our target of getting to that $4.7 billion NPV of the synergies.

To give you some color, stockpile management is one that is coming out better than we anticipated, being able to look at what their feeds are versus ours and being able to maximize or to close versus waste.

So those are the sort of things that we're focusing on now.

And I would -- and again, I think we only get the full value of this combined team once we close.

Right now, there's been a massive amount of work on permitting and being prepared to put the permit applications in to be able to transport and change the way -- there's been an enormous amount of work on the whole supply chain procurement effective -- effectiveness and efficiencies and just the people.

So we've now got a management team sorted out.

Everyone has got a place, and the leader is Greg Walker, our -- the head of Operations for Catherine's division.

He will take on the role as Executive Managing Director, and underneath him, we've, again, managed to balance the leadership between the Barrick and the Newmont Goldcorp people very well.

And what's even more encouraging for me is some of the Newmont Goldcorp senior general managers are retiring, and we've been able to go past them collectively and find really quality younger people who want to make this their career.

And they've been operating in those assets for some time.

So it's really an extensive, exciting human capital opportunity as well as the actual physical mining synergies, and I'm sure that will bring either more innovative synergies out of the business as we go along.

I just want to follow up your comments about the ground conditions in Nevada and the changes you're making.

Is that going to speed things up on the ground or slow it down?

Or is it going to...

So a little bit of some -- a bit of both.

It's a good question.

Very good.

So the first thing is we need to do a lot more geotech work.

So we've had a full team dedicated.

We started with Goldrush.

We've done Turquoise Ridge, and we're -- and we've got a lot to do in the Newmont assets, but equally, Newmont has come to the same conclusion.

And they've recently employed some very high-quality geotech engineers, people who we know well and who will be joining our team.

So it's -- collectively, both sides have recognized the importance of geotech work.

Where we grew up, where I grew up, that's like falling off a bus, running deep-level South African mines and the whole geotech side of mine planning, whereas traditionally, Nevada has really focused on just the lowest common denominator effectively, and designing everything high cost, very conservative mine plans.

And we've already in CHUG, Cortez Hills Underground, we've already initiated long-haul open stoping with backfill and where our efficiencies are a whole lot better.

So there's a lot of opportunity.

Goldstrike as well, a lot of the parts of Goldstrike, again, we feel that having done the first bit of geotech work, and we're catching up with the drilling.

We've redirected some of the underground drill rigs to actually drill geotech holes because it's going to be critical in the mine design.

And again, we feel that it might delay things a little bit initially, that's why we're putting in those declines.

Is it really exploration and evaluation?

But in the long term, it will speed things up.

And I'll just give you another example.

The work there -- the intersections and the rock mass work that we're doing on Fourmile, that's a whole silicified, brecciated -- classic brecciated, Carlin-brecciated mineral deposit, which stands up very well.

So we are very encouraged by what we see from the initial borehole intersections.

And definitely that mass mining, underground mining will be -- will definitely be possible in the Fourmile area.

And I can rabbit on for -- we can go to the work that has been done at Carlin underground as well, and there's a lot of work to be done there because, again, that's technically quite a challenging underground mine.

And again, our work that we're doing in the design and planning we're doing I think we'll come up with some opportunities there.

We are replanning all of Barrick's mines, and we expect to do the same on the other side of the Nevada JV as well.

Mark, Stephen Walker here with RBC Capital Markets.

You talked about Cortez Hills Underground and potential to take the cutoff grade from 9 to 7 to 5 grams.

That's Turquoise Ridge, yes.

Turquoise Ridge, sorry.

And if you look at a similar analysis for underground at Goldstrike and at Cortez Hills, does the geometry of the ore deposits allow you to increase the volume?

And secondly, does the mining cost decline -- decline in mining cost that you're starting to look at allow you to maintain the margins as you drop the cutoff grades, either it's Turquoise Ridge or elsewhere?

Yes.

I think that's -- I mean, look -- and Turquoise Ridge is a spectacular example of -- as we know, right now, we've been mining -- and I mean the margin -- the costs that Newmont Goldcorp were charging us to process that ore set the cutoff grade.

And so effectively, a bit like in the old days in South Africa, we were mining through 5-gram ore and leaving it behind.

Ultimately, that becomes viable because you've now got it developed in the long run.

But what the combination with Twin Creeks is going to do is we now are only paying for the real cost of that processing facility, and so that drops the cost significantly, I want to say, $45.

That's 1.5 gram just there.

So that brings a whole lot of the what we call white areas or areas that are developed and are below the cutoff grades suddenly become above the cutoff grades without any capital requirements, as an example.

So there's an opportunity to that.

And of course, you can't apply long-haul open stoping to narrow orebodies, but you can to big, wide orebodies, and there are lots of those in Nevada.

And again, so when you look at the CHUG underground, the old CHUG underground, which is a flatter orebody and it was more -- and was narrow, you can't go and do that.

But on the Deep South and the upper levels of that is -- it's quite a -- I'm still getting used to the terminology.

But that trend, which we're already mining and we just developed the declines down, and so that -- and the reason we call -- Deep South is below the water table, old water table.

Middle and Low Zone.

So yes, okay.

So it's the Middle and Low zone.

That's the way I understand it.

So we're already mining the Middle Zone, and all that is bulk mining.

And that brings significant improvements in costs, and that will continue to happen.

And again, that design in Goldrush, we believe that it will change that mine.

And our focus on Goldrush is to really make it a very modern, new-world style type of mine with the knowledge that we've got, and we should be able to do that with -- Turquoise Ridge is going to be sort of halfway right now.

We just have been trialing roadheaders, so self-miners.

And again, we believe that there's enormous opportunity with that at -- because Turquoise Ridge is -- part of Turquoise Ridge got traditionally very bad ground.

And so not to blast it, really, but it changes the risk profile of support, et cetera.

And again, just to add to that, our automation initiative.

So what we did is we -- people thought we threw out the sort of digital and automation initiatives at Barrick here.

We didn't.

We just transferred them back into the mines we're in.

So right now, we've got some really exciting pockets of automation, whether it's open-pit drilling or haulage, and we are actually at the point now where we're trialing the automatic trucks with -- alongside manned trucks.

So that artificial intelligence is important to be able to manage that space around the truck.

And again, Kibali is the leader in proper automation, where you have one operator on surface and he or she, and most important part is that she part, is able to run 3 different operating sections on their own because it's automated.

So again -- and again, what we've done in the automation side is we've said we've challenged the team to say we want to deliver those efficiencies.

We just don't want to automate for the sake of automation.

And so again, I think over the next couple of years, you'll see that the benefits of that effort.

Josh Wolfson at Desjardins.

Mark, you mentioned a pretty sizable capital number for the Pueblo Viejo project.

When I think about that bigger picture, there's one aspect, which is the major tailings dam expansion unlocks a lot of ounces, and then the second part which allows you to process a lot of that ore a lot earlier, but there's not as huge margin opportunity there.

So in the past, you've talked about that project providing very good returns and easily surpassing threshold hurdles.

So what are we missing with that kind of capital number?

How does it work?

So you're looking at -- conceptually, imagine 27 million ounces, conceptually, with a $1.3 billion investment, 800,000-plus ounces a year at the sort of the costs that you see now.

You don't have to -- you could do it on your [own].

And so it makes real returns, significant returns.

So -- and part of that -- so the -- you're right that we needed a tailings disposal site that will support that sort of size mine, and we are working on that.

We've got a number of targets that we're evaluating or potential sites that we're evaluating.

And then the -- and the process side is very simple.

Originally, the team was looking at a concentrate part.

So you have a high-grade zone direct feed, a high-grade ore.

You have a lower grade ore in some very big stockpiles at around 3 grams.

John, 3 grams, yes?

And so the idea then is to take part of that, float it.

So you concentrate the gold, and then part of it that you oxidize through a dump-leach-based process, just putting water through a dump, and you partially oxidize the sulfide.

(inaudible)

Yes.

So what we're doing now is we're looking at -- so -- and that's all quite risky, and it's rehandle.

So what John and the team have done is that we have true-tried and full-scale confirmation of being able to concentrate and do ultrafine grind both in Tongon and at Kibali.

And then the idea is you take that concentrate, ultrafine grind it, which starts the oxidation process and finish it in tanks and so that you can control the partial -- because all you want to do is take the sulfide down, the energy down a little bit so that you can put it through the autoclave.

So you're taking a large amount of the lower-grade ore, concentrating it, reducing the sulfur content and putting it through the process.

And so that -- and so the back end of the mine is the same.

And the opportunities that we're now modeling are quite exciting because your 800,000 ounces is the bottom end of a profile that we are doing a trade-off on.

And as you increase that efficiency of that concentration, so you drop the costs.

And as you drop the costs, you unlock the reserves.

And so that's the model that we're doing now.

And by quarter 3, we'll have a good handle on the actual -- the scope.

We've got a scoping study, which works, and we will have a sort of pre-feasibility type project by the back half of this year.

I mean by next year, we'll have finished.

I don't know, John, you want to add anything to that?

Yes, the essence is the tank oxidation with ultrafine grind, as an engineer, that gives us controllability because we can vary the grind to get the oxidation we require.

On the pad, we get what we get in terms of oxidation.

But now that we've got a process that we can control, we've got a really viable project on our hands.

And the other thing, I would just point out to you, Josh, is in the Goldrush plan, there was always this long-standing debate about whether we have to [drill] another roaster or not as Goldrush grows.

And so with the joint venture, that goes away, largely, unless we find another 20 billion or 30 billion ounces.

So -- and that's not part of the -- of field to find more big deposits there.

I mean, geologically, that place has still got a whole way to go.

And in terms of generating the returns, it sounds like it's a lot more than just accelerating production.

It's really reducing the cutoff and...

Exactly.

No, it's a classic economies of scale project.

That's what really drives this project.

Steve Butler, GMP.

Mark, there was a previous slide before this one, Tier 2 assets, can you remind us again what you define as the lowest parameters for a Tier 2 asset in the portfolio?

3 million ounces, returns of $1,000 dollar long-term gold price.

And Massawa is just beneath that, you said, in the resource?

Yes, just short of that.

And I mean Massawa is a particularly interesting example.

It's one of the best, by far, undeveloped gold deposits in Africa.

And again, there's a couple of junior companies around it that have installed infrastructure.

And so unless you -- and again, this is a project that we would be prepared to support in realizing its value, and we've engaged with the Senegalese government because, again, the Senegalese government haven't really benefited from gold mining.

There's been gold mining in Senegal, but they've all been marginal.

And so how do you -- can you exploit the installed infrastructure already in that region and not pull them out of mine.

And I mean that's the difference between our focus always is how do you make money, not how do you produce ounces.

So there's an opportunity to work on that.

Right now, we've got a focus on completing the process with the Senegalese on getting this project across the line.

Ralph Profiti from Eight Capital.

We have Fourmile currently excluded from the Nevada joint venture.

Is that due to the 43-101 disclosure?

Or is there a potential that the economics may be different inside and outside the joint venture depending on what you have on what comes out of the feasibility study?

So as you will recall when we did this joint venture, it was negotiated under quite a lot of pressure, and the principles of the deal was based on market consensus of the assets, the net asset value.

And very clearly, Fourmile wasn't in the market models.

And so -- and we know how valuable Fourmile is.

So we felt that we would -- we didn't want to put it in because there was no value.

There was no market value on it.

What we have agreed is -- and Newmont tipped out a couple of long-dated assets as well where there was no value and then because they were not -- they were marginal in the current markets.

For Fourmile and for the other assets, either party has an ability to bring it into a joint venture at the feasibility NPV provided it delivers 15% IRR at $1,200 gold.

Am I correct?

And it will be also brought in not only at the NPV of $1,200 gold with an IRR of 15% but it would attract the same premium multiple as the vending partner.

So if Barrick was trading at 1.3x, you would pay -- and also the joint venture will pay for the cost of the feasibility, so you'll recoup the feasibility, and will come into the joint venture, and the other party can elect to maintain its shareholding by making good on the cash flows to the vending partner or can take the dilution.

That's the way it is structured.

Am I correct in that?

Thanks.

We're done, Nicky -- I mean Deni.

(Operator Instructions) Our question comes from Chris Terry of Deutsche Bank.

Mark and team, a few questions for me.

I understand you haven't got the medium- to long-term guidance out yet, and you're still working through that.

I just wondered if there was an update on the timing for that and, maybe just conceptually, whether you could step through, excluding the Nevada opportunity, obviously, on the JV but just step through some of the other things you found in the last 3 months and how that sizes up for the medium term.

And then I was just also interested on the comments around divestments overall.

I know you're taking a longer-term approach to that.

But assets like Porgera, I think, it was interesting you talked about that was a Tier 1 opportunity.

So I was just wondering whether you could make some high-level comments on some of the assets and the time line maybe on the divestments.

Okay.

So on divestments, obviously, the target is around $1.5 billion of realized value as part of that program, and I won't be adding any more color to that process.

I think that's good enough for you to measure me against.

Right now, I don't want to start a public negotiation on these assets.

They're all, as I pointed out, valuable.

There's some that still needs some additional work to really get our head around the true value, and we're busy with that.

And also, we are mindful that any transaction we do, we're clear about maintaining our relationship with our host countries because there's no country in which we will be realizing assets that isn't an important destination for our ongoing exploration.

So that's the reason behind that.

On the guidance, I have this ongoing negotiation with my team so we have to reach a compromise, and that is that we will definitely have it to you this year, but we have given you very clear guidance.

5.1 million to 5.7 million ounces, and that's a 5-year horizon before -- 5.1 million to 5.6 million ounces and for the next 5 years, that range, before any disposals.

And that the cost profile, all-in sustaining cost is sitting at $870 to $920.

But at the back end of that 5 years, it will be below all -- I mean at the bottom end or below that number.

That's in the guidance we're giving you.

And because we've -- you've consistently seen that guidance both from Randgold and Barrick.

It's just we've got a little more work to be able to be comfortable with that, but that -- we're comfortable that we'll meet that guidance easily.

And by the way, there's nobody else that has that sort of guidance over 5 years.

And the one thing I would add is we will meet our 5-year guidance when we give it to you, unlike most other people in this industry.

One follow-up just in copper, specifically.

You've got a slide there in your pack, the last 3 months or so, most investors have gotten a little bit more bullish in copper.

I just wonder whether you could talk about the role of the copper assets and how you think about that within the mix.

Yes.

So copper is an absolutely strategic metal for us.

Why?

Because with the merger, we moved into much younger geological provinces, particularly the whole western seaboard of the Americas, both south and north.

And with that comes an association between gold and copper.

And copper has many similarities on process -- in the process front and also geologically, apart from the fact that, in many cases, it cohabits with gold.

So that's the reason.

And we were very clear when we launched this merger that we have specific criteria.

And for copper, it's got to meet our investment criteria, and that's hard for a copper mine.

And secondly, we would certainly invest in anything that was copper and gold, and we would also invest in pure copper if there was an opportunity where our presence at an address gave us a competitive advantage over the traditional copper miners.

So that's really the guidance in which we will operate, and I've got no reason that we're going to change that there.

I'll give you a simple example.

Jabal Sayid is in an area which is part of the, what we think as Arabian Shield, which we all know as geologists, but we think that that's the same geology as the Nubian Shield so we call it the Nubian-Arabian Shield (sic) [Arabian-Nubian Shield].

There's a quarry in there which is technically a Tier 1 asset, but there's going to be no other sort of big discoveries like that because no one is going to really look for it.

And our relationship with Ma'aden in Saudi Arabia gives us that opportunity to explore that whole Arabian shield and across the Red Sea into the Nubian shield with a partner that knows how to operate in those jurisdictions.

I mean, culturally, we've got the geological expertise, and they have the geopolitical key.

And so it makes sense for -- and by the way, Jabal Sayid has got some significant upside, which we're already working on.

When we got there, people were worrying about whether they could actually deliver on its design, and we think it can and certainly geologically it can.

And again, there's been very little geological modeling or nominal resource manager, no geology-driven business because it's high-grade copper.

And so it makes sense for us to -- and so what we are doing is putting together a dedicated exploration team to evaluate that region, and at the same time, we will expand and deliver the full potential on Jabal Sayid, and then we'll make the decision in the fullness of time.

But yes, that asset really does make significant cash flow.

And if we can jack it up in its throughput, then it's going to make even better cash flow.

Our next question comes from John Bridges of JPMorgan.

Congratulations on the progress.

Keep up the good work with the Spanish.

I still struggle with it and occasionally slip into Afrikaans, which creates all sorts of problems.

Just wondered, you've been talking this morning about Acacia and forcing the issue.

Does that mean buying out minorities?

Is that -- how do you see the way forward with that issue?

So I think all options are on the table, whether it's taking out the minorities or encouraging the Acacia Board to run a strategic program or something in between.

The problem is that we are not prepared to overpay for these assets.

Right now, it's really in a bad space, and we need a lot of work to get it back on an even keel.

And that requires -- and again, I think everyone understands that it's very difficult for Acacia Board to actually run that company.

And I know I'm a bit concerned that all the effort we've made, we don't seem to be able to get through to anyone.

We certainly making progress with the Tanzanian government.

But again, there's a standoff of the 2 parties, and we're in the middle trying to facilitate it.

And also, we have an argument over whether we can exercise our assets as the major shareholder, and so it's a very complex situation.

And also -- and so when you get into that environment as a mediator, it's difficult because both parties are still trying to keep all options open, and it makes a difficult negotiation.

So as you see, we've been -- we go a few steps forward and a couple of steps back and -- but as I've said before, there is no doubt in my mind when we get to the solution, whatever it is, it's going to be good for stakeholders because, right now, it's not good for anyone.

I'm a little bit confused because my understanding was the Tanzanians wanted to talk to you and the Acacia people wanted to be involved, but they weren't able to.

Well, yes, to a degree.

I mean that's the lip service.

The Tanzanian government are very committed to trying to find a solution.

The problem is, is there a commitment on both sides and enough courage to be able to close out?

And we can't sign anything that we're not prepared to because we're not in a position to lead.

So our only role is to be able to play a messenger and end up in which we are well advanced and getting to is try and get an agreement at the basic, detailed agreement that we can deliver to the Acacia Board and its independent committee.

And then it's up to them to make that decision.

It will be a lot easier if Acacia were more engaging in their discussion.

But again, I think you're seeing everyone protecting a bit of their own turf because it's a complex situation.

There's not a lot of trust left on either side.

So we're going to continue working with it.

And again, we've assured Acacia that we're working to get this thing done, and we will present it with them.

But at the same time, they've also questioned our right to be able to vote our shares.

And so that's, in itself, doesn't make -- then you've got to ask the question, so why are we here?

Why doesn't Acacia go and do the deal?

And the answer is they can't.

So we'll eventually get somebody to see reason, I hope.

Not from the lack of trying on Barrick, I must say, for a long time now.

Our next question comes from John Tumazos of John Tumazos Very Independent Research.

So in the quarter, Barrick had about a 2% return on equity.

Assuming constant gold prices, Mark, when you got things coming in a couple of years, what's a reasonable target, 6%, 8%, for ROE?

So if you look at -- that's a tough question to answer, and I think our legal people are going to be cringing about exactly what I'm going to say now so -- I could see it in this audience.

So if you look at our dividend policy, I mean our dividend we just paid, we can afford it, very much afford it.

That's a 1.2% yield.

That's significant in the gold industry, making it out of real money.

And we just started.

So I've said, right, and John Thornton said this too, our focus is to drive this business to be able to deliver real value for its stakeholders.

In Randgold, we got the dividend yield up significantly, and I've got no doubt that we've got -- on balance, we're -- we've got a better portfolio of assets, and there's no better way than with the best people and the best assets to produce the leading returns.

And so it's my objective to be able to become the go-to gold company when it comes to returns, and that's our focus and every reason we have to be able to continue to deliver on that.

This concludes the question-and-answer session.

I would like to turn the conference back over to Mark Bristow for closing remarks.

Again, well, thank you very much again for your patience and your questions.

And do we have -- I mean, traditionally -- we can't serve a glass of wine or anything.

Yes, can we?

So you can have a cup of tea or coffee with the team.

I think, next door, there's refreshments over there.

Traditionally, in Randgold, we used to offer you a glass of wine, but we'll work on that.

I think we've got to get a liquor license or something.

Thanks very much for your attention.

Cheers.

This concludes today's conference call.

You may disconnect your lines.

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

Thank you for participating, and have a pleasant day.