Barrick Mining Corporation

Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the BEREC 2020 First Quarter Results Conference Call. During the presentation, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. At that time, if you have a question, please press star followed by one on your telephone keypad. At any time during the conference, should you need operator assistance, please press star and zero. As a reminder, this conference is being recorded, and a replay will be available on Barrick's website later today, May 6, 2020. I would now like to turn you over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.

Thank you very much, and very good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of our 2020 Q1 results. When I spoke to you around this time last year, I was able to report that we had made great progress towards achieving the merger's goals. The structure of the company had been made fit for its purpose of becoming a model of a modern mining business. strong regional management teams had been installed, all body ownership transferred back to the mines, debt reduced and the balance sheet strengthened. In the past year, we have worked to further improve our operational performance and amidst all this activity, we concluded four more value creating transactions. the historic Nevada Gold Mines merger, which added a sixth tier one mine to our portfolio, the disposal of our stake in KCGM, and the buyout of the Acacia Minorities, which enabled us to settle that company's dispute with the Tanzanian government and take over control of its assets. In quarter one, we have combined our Messiah project with Teranga's nearby Sabadala mine in a deal which has already delivered significant value to all our stakeholders. The past quarter's results, which were published earlier today, show that we are actively building on the solid foundation laid in 2019 as we look ahead to the next phase of value creation. Please take note of the cautionary statement. For those who would like to read a little more, it is available on our website. The fact that this is a virtual presentation today reflects the grimest reality of our age, the COVID-19 pandemic, which has locked many of us down, whether in our homes, or at our operations, or elsewhere. History will judge how governments responded to this black swan event, which dawned without warning, precipitated an extreme crisis, and will have unforeseeable consequences likely to change the world forever. Speaking for Barrack, however, I can say the team responded immediately to the early signs of the crisis and therefore were prepared to deal with its impact on our people and our business. Comprehensive action plans were promptly rolled out at all our sites and offices in an overall strategy we call the four P's approach. Those P's standing for Proactivity, Preparedness, Prevention and Perspective. While our first priorities have been to safeguard the health and safety of our workforce and communities and to secure our logistics and supply chain, BEREC has also been engaging with our host governments since mid-February to support their own campaigns against the pandemic. On screen are listed some of the community assistance measures we have taken, and as you can see, to date we have contributed more than $20 million to host governments to fund the acquisition of medical supplies and facilities. Many of these countries are economically challenged. And poverty, which we found out, is a global problem from Nevada to Tanzania. We hope at Barrick that our efforts will help not only the ill, but those afflicted in other ways by COVID-19. The fact that sustainability is core to Barrick's management philosophy undoubtedly prepared us to buffer the impact of the pandemic. Last month, we published our annual sustainability report, which you can find online. It contains what we believe to be an industry-first ESG scorecard, which rates our performance against 18 key indicators and takes accountability to a new level. We gave ourselves a B ranking which shows an improvement in overall sustainability performance and progress on many of our KPIs. It also acknowledges that there is still work to be done. We plan to update the scorecard at the end of the second quarter, once some of our peers have published additional 2019 information. The health and safety of our employees is essential for the success of our business. When I spoke to you last year, I said I was not comfortable with Barrick's record on this front. But as you can see here, there has been a steady improvement since then. We plan to have all operational mines ISO certified for health and safety by the end of next year. All the mines in Barrick should also have received their environmental ISO certification later this year, that is by the end of 2020. In the meantime, there were no major environmental incidents during the past quarter. Barrack takes its stewardship of the environment very seriously. Our clean plow strategy is reducing our carbon footprint substantially, and we have set a target of further reducing our emissions by at least 10% in the next 10 years. Water is also a precious resource. and its conservation is high on our environmental agenda. In the first quarter, we again increased our water reuse and recycling rate to 77%. For us at Barrick, closing a mine responsibly is as important as finding new mines through exploration. The approval of the tailings retreatment project at our Golden Sunlight Mine in Montana goes to the heart of this. This will reduce long-term water treatment requirements and stabilize the old open pit while also generating revenues that will help cover the cost of rehabilitation. I have to say that after the merger, we had to take on some big legacy issues and Tanzania has added to the challenge. But we're dealing systematically with these matters. BAREC also continues to invest in its host communities, and last quarter we spent $4.2 million over and above COVID-19 support on development projects. And now to the results. This table shows shows how our first quarter performance rated against our KPIs. Although the bullets speak for themselves, I will deal with the key points in the course of this presentation. Barrick made a solid start to the year despite the impact of COVID-19 and the lockdowns and gold production and costs were consistent with guidance for the quarter. Copper costs per pound were significantly lower, demonstrating the resilience of the business against lower prices. As you are aware, we placed PORGRA in temporary care and maintenance in late April as a result of the government's response to our SML extension request. I'll elaborate later in the presentation, but this action has forced us to withdraw our 2020 guidance for Pogra at this time. Our revised group guidance without Pogra is now 4.6 to 5 million ounces, while group cost guidance is unchanged. Notwithstanding these events, we remain well-positioned to achieve our revised guidance for the year given our solid start. The situation in Pogra, as you can imagine, is rapidly evolving, so we will provide further updates on our outlook in due course. As previously communicated, gold production in the second quarter is expected to be lower than the first due to mine sequencing and planned maintenance. In addition, a safe and steady remobilization of the Valadera workforce following the lifting of quarantine restrictions in Argentina will also have an impact on performance. Looking forward, production is forecast to improve in the second half of the year in line with our plans and guidance. A good performance from all the operations ensured that the benefit of the higher gold prices was captured and delivered to the bottom line. Free cash flow increased to $438 million, and net debt was reduced by a further 17% to $1.85 billion, with no significant maturities until 2033. Adjusted net earnings were $0.16 per share, and the quarterly dividend underpinned by the strong balance sheet and the free cash flow outlook was maintained at $0.07 per share. I have always said, to be a world-class business, you have to have a global presence. And as you can see here, Barrick is strongly represented in all the world's major gold districts outside Russia and Eastern Europe. Brownfield's exploration around our existing assets last year replaced all the reserves depleted by mining and, I might add, at a higher grade. And we're looking for a similar performance this year. Meanwhile, our generative teams are looking further afield for our next Tier 1 and Tier 2 discoveries, and we are also extending our horizons to Saudi Arabia, Japan, as well as Asia and the Pacific Rim. So we start our tour of the operations in Nevada, which we regard as as our value foundation. Carlin is the largest of our Nevada operations and led by a strong management team, we rank this mine would rank as an impressive standalone mining company. Production at Carlin was slightly lower than quarter four given scheduled autoclave maintenance and lower roaster throughput of Carlin ore as higher grade Cortez ore displaced the relatively lower grade Carlin ore in the feed mix for the roasters. Total cash costs were in line with the previous quarter and I might add the Carlin trend is the most active exploration area in Barrick's portfolio and has real potential to continue replacing the gold we mine well into the future. The Gold Rush project has now been integrated with the Cortez mining complex, where the Deep South underground development is on track to start contributing to production towards the end of the third quarter of this year. Although the oil feed grade compared to last quarter was slightly lower, our cost control efforts led to a 10% decrease in total cash cost per ounce compared to the prior quarter. And of course, Four Mile continues to offer further potential for life of mine extensions, even though it is not yet included in the Nevada Gold Mines portfolio. For the Turquoise Ridge Complex, integrating the two teams as well as geological models across the two legacy operations is key to unlocking the full potential of this Tier 1 facility. This is still a work in progress, but moving in the right direction, I might add. In the meantime, construction of the Turquoise Ridge third shaft continues on schedule and within budget. another key project that will unlock value from the higher-grade underground resources. Among the smaller Nevada mines, Phoenix had a particularly good quarter, increasing production and reducing costs. Long Canyon, where permitting for the pit expansion continues, posted lower production, but costs were well-contained. Nevada is probably the world's most prolific gold district, and accordingly, there is enormous upside within Nevada Goldmine's portfolio. I've already mentioned Cortez Deep South and Turquoise Ridge Third Shaft, but in addition to these, the final feasibility study on the Gold Rush project is on track while drilling at 4-mile depth continues to expand the mineralization. At Carlin, we are focused on Greater Leval, that is the area to the north of the current Leval underground operations and surrounding area. At Turquoise Ridge, the integrated geological model is showing us that between and below the Turquoise Ridge and Twin Creeks ore bodies are favorable host rocks which are surprisingly underexplored and where Tier 1 potential remains at depth. Mineral resource management and exploration at the existing mines are focused on optimizing their mining plans and extending their ore bodies, and the exploration teams are hunting for more Tier 1 assets. So staying with 4 Mile for a bit, we already have a substantial mineral inventory at 4 Mile, and we believe there's potential for a lot more. As you can see on this slide, an isolated hole 900 meters north of Dorothy points to additional extensions to what is already a significant mineral system. Also shown here are some very exciting results from drilling west of Four Mile. Our focus is to continue with our drilling program aimed at defining the full potential of the area and to build a district-scale framework. At the same time, our mineral resource teams are in full drilling to establish continuity and get a better stoke definition. We are also in the process of permitting the conversion of Nevada Goldmine's coal-fired TS power plants to a dual fuel system, which will allow it to produce power from natural gas. We expect the permit to be approved later this year, with the goal of commissioning in the second quarter of 2022. The conversion will enable the facility to reduce carbon emissions by as much as 50%. That's roughly 650,000 tonnes of CO2 emissions saved per year. We are also progressing with a new solar project at the TSF power plant. We intend to permit a 200 megawatt facility, although phase one will be for 100 megawatts. Permits are expected to be received between quarter three of this year and the first quarter next year. And the initial 100 megawatt of power will reduce our greenhouse gas emissions by a further 130,000 tons per year. of CO2. Moving up north into Canada, Hemlo continues on its path to potential Tier 2 status after we put in a new management team and changed the way it operated last year. Among other things, it has moved to an underground contract mining model and the open-pit operation will end in the second half of this year. Since we restructured Hemlo, its performance has proved significantly, as you can see here. But operationally, it still has further to go to deliver the efficiencies and throughput to become a true Tier 2 operation. Through taking a fresh and disciplined approach to understanding the ore body, and controls to mineralization, we are now looking at extending its life beyond 10 years, as well as re-evaluating the potential of the whole Hemlo district. This is an overview of our North American assets. The numbers speak for themselves, and it's worth noting that Gold Rush and 4 Mile will ensure that Cortez, like Carlin and Turquoise Ridge, maintains its Tier 1 status well into the future. There has been a big drive to review the regional geology, and accordingly several framework drilling programs are underway to fill in gaps in our knowledge, open up new search areas, and pave the way for targeting and defining mineral inventories. This has also included taking a fresh look at our closure portfolio. I have already discussed our new approach to golden sunlight through tailings retreatment. And another example is the value being uncovered by our partners at SK Creek in British Columbia. So moving south now to the Dominican Republic, where the Pueblo Vehicle Management Team is doing an outstanding job as the mine prepares for the expansion project. Production for the quarter was lower than the prior quarter due to the planned mine and processing sequence. Despite the lower production, costs were very well contained. We expect production to be lower in the second quarter due to annual maintenance schedules and then pick up to within guidance by the end of the year. Incidentally, PV was the first of our mines to cooperate with the government on COVID-19 rapid screening tests. The plant expansion engineering design and costing were completed during the quarter. The current Elriogal tailings storage facility has capacity for the expanded production until 2028. So the program for the plant expansion can now progress independently of the TSF3 program. A combination of COVID-19 and postponement of the presidential election in the Dominican Republic to July, has delayed the TSF-3 permitting process. And we are working with the government, as well as the political opposition, to bring the program back on track. The picture for your information in this slide is the Cresquea power plant, which has been successfully converted to natural gas, another major contribution to the reduction in our greenhouse gas emissions. Valadera had a very challenging end to the quarter, mainly because of the way the Argentine government responded to COVID-19, first by shutting down the mining industry and then allowing it to reopen. but this time with restrictions due to social distancing. We expect two more tough quarters and production for the year is likely to be at the lower end of guidance for this operation. Valadera's projects, including the power transmission line, phase six pad expansion and airstrip construction, were ramped down due to the camp occupancy limitations imposed by the government during the COVID-19 outbreak. The commissioning of the power line has now been postponed from mid-2020 to the end of this year, and the phase six commissioning is postponed by three months. Staying in South America, The El Indio trend, which runs along the Andes and includes Valadera and our Pasco Llama project, is rich in potential for major gold and copper discoveries. Now that we have a full exploration team for that region, we have embarked on an extensive compilation of legacy data to generate new ideas. At Valadera itself, Indications are that satellite deposits could extend its life beyond the current 10 years. And this is an overview of our Latin American footprint, which you can see boasts a mineral inventory approaching 100 million ounces of gold and ownership of some of the largest undeveloped assets in the region. We continue to believe in the prospectivity of this ground and hence our focused exploration effort in this region. In Papua New Guinea, as you know, the government's recent response to our engagement towards the extension of the SML came as a surprise. Consequently, we were forced to place the mine on care and maintenance. Last week we filed a lawsuit in the P&G Court seeking to quash the government's decision. We received a preliminary order that directed the government to cooperate with our efforts to secure and protect the mine and also directed the government to engage in negotiations with us to attempt to resolve the matter. So now, over to my old hunting grounds in Africa, starting at Lulo Goncoto, where throughput and recovery were up, and production, while slightly behind the previous quarter, was still ahead of plans. Development of the complex's third underground mine at Gunkoto is scheduled to start in the fourth quarter of this year. Meanwhile, the initial 5 megawatts of capacity of Barrick's first solar power plant in Africa has been installed, but its commissioning will have to wait for the arrival of currently locked-down contractors. with the remainder of the 20 megawatt capacity still to be completed by the end of September this year. In the DRC, Kibale came out of the block strongly, increasing production and reducing costs, and is on track for another good year. We have now installed and commissioned the best battery Storage needed to reduce the number of diesel generators required as spinning reserve. Ongoing brownfields and greenfields exploration opportunities also bode well for the mine to replace its reserve depletion again this year. And production at Tongon and Cote d'Ivoire remained on plan at lower unit costs. and this mine is on track to meet its guidance for the year. The mine continues to be a significant cash contributor to all its stakeholders, and exploration to extend its life beyond the current two years is continuing. West Africa remains another exciting place to hunt for gold. Lulo Goncato continues to deliver new opportunities to add resources and reserves, and an interesting target has been identified at Faraba North. In the Bambadji joint venture, modelling has highlighted new styles of mineralisation, suggesting the existence of a prospective new corridor along the prolific Senegal-Mali share zone. And in Tanzania, we've made enormous progress since we established the Twiga joint venture in January, bolstering our partnership with government. North Mara has successfully transitioned from contractor mining to owner mining. Export of the concentrate previously suspended by the government when it was in dispute with Acacia has begun and will be recognized in net income starting in Q2. In Tanzania, we have now settled most of the key issues between Acacia and the government. However, we still have to deal with some legacy issues that the company left in its wake. I'm confident we'll resolve these and in the meantime, our initial observations have made us feel quite bullish about resource extensions and new targets around the mine. Elsewhere in Tanzania, Bully and Hulu has sufficient tailings material to keep the plant running while we progress to restart underground mining there on plan later this year. And Buswagi is also processing stockpiles And it's interesting that we have discovered some potential new resource opportunities which are currently being evaluated at Buswagi. Following the incorporation of Tanzania, we have stepped up our exploration in the highly prospective Central and East African region, where we now have a strong presence. While it's early days, we've identified some exciting opportunities. And all I can say is, watch this space. As Rangold's track record showed, Africa is a place where one can discover major gold deposits and convert them into world-class mines. while at the same time making a difference for the better in countries challenged by underdevelopment. We have a strong asset base and two tier one mines there. And while Africa itself still has vast potential, we're also looking further north for growth. We already have a foothold in Saudi Arabia, and we're looking closely at the Nubian Arabian Shield, which, while prospective, has thus far only delivered one significant gold mine in the form of the Saqqari gold mine in Egypt. In our copper portfolio, Lemwana and Jabal Said both increased production and reduced costs. Notably, at Jabal, Exploration has been very promising, and we have intersected very high-grade mineralization from step-out drilling that point to mine life extensions. Production at Zolderweil was impacted by lower grades and recoveries. Operated by our partner, Antofagusta, the development of Zolderweil's secondary sulfide leaching project has been temporarily delayed recently. by COVID-19 movement restrictions. Whilst maintaining a very strong operational performance is important to us, across the Barrick Group we continue to look to how we can add more value to our operations and innovation and technology plays a key role in this. Work has continued on our SAP Enterprise Resource Planning System global rollout, where the first deployment will begin across the Nevada gold mining group during quarter three as planned. Despite COVID-19 challenges, we remain on track for completion of this large SAP rollout project by year end. And we then plan that the other regions will follow during 2021. This more streamlined and standardized global design will further improve our ability to report real-time cost and efficiency data and more importantly, manage on real-time information. We also continued our digital innovation in our underground mines, including projects where we can now remotely monitor in real-time a machine's location, productivity and health, as well as that of operators, increasing our efficiencies and predictive maintenance capabilities. Being already quite advanced in our underground automation, we are now focusing our attention on surface mining with haulage and drilling projects advancing throughout the quarter. Our surface haulage proof of concept, which will allow both manned and unmanned operations within the same zone, was successfully completed this quarter. In the quarter, we also embarked on our first trials of battery-powered electric underground equipment, which we believe has the potential to lower operating costs and increase efficiencies. Similarly, our team at Lulo Underground helped develop a system that automatically turns secondary fans on and off by using personal RFID tracking systems, which will help in reducing power consumption. This project is now being implemented across Africa underground mines. We've touched on the microgrid stabilization at Kibale and are seeing significant benefits in our advanced process control systems in our milling and processing circuits. By using these real-time data and model predictive control to rapidly optimize the circuits, we can increase throughput and reduce reagent usage. Along with this year's annual report, as promised, we published what we believe to be an industry-first 10-year gold production plan, which you can see here. I will point out that we have left Pogra in the forecast, but with its contributions shaded a different color, given that the asset is currently in care and maintenance. What makes us different to our peers is that our 10-year plan is built on our portfolio of Tier 1 strategic and embedded projects, of which all boast plus 10-year life of mine plans, except for Tongan. Consequently, our business has a standout value foundation that does not require new greenfields, bulls or discoveries to support our 10-year plan, giving our investors the comfort they require to invest for the long term. It goes without saying that any discoveries or acquisitions will add to our value proposition. In line with our mission, we have both the quality in management and the financial bench strength to continue to generate value for all our stakeholders and to provide Barrick with the free cash flow to invest in its own future. Ladies and gentlemen, I end as usual with a share price performance comparison. Barrick's mantra is that the best assets combined with the best people will deliver the best returns. And this is one way of measuring that. In the year to date, Barrick's share price has increased by 45%. and if we measure it from the time of the Rangold merger announcement, it is substantially more, outpacing both the industry and the gold price. I thank you for your attention, and I do have most of our senior executives on the call with me, and so with that, we would be delighted to take any questions you might post.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. We will pause for a moment as callers join the queue. Our first question comes from Chris Terry of Deutsche Bank. Please go ahead.

Hi, Mark and team. A couple of questions for me. I'll just split them out individually, but just starting with the first one around cash flow and CapEx for the year to come. I guess a number of companies so far have been cutting their CapEx, saying that they've got less essential workers on site. And I guess in the context of Porgera and also the power plant, I think you mentioned around Valadero, Just wondered if you could comment a little bit more on, you know, where the capex is likely to come in. And then maybe one just in terms of the working capital as you've stocked up sites for ahead of COVID, et cetera, whether there's any considerations for 2Q and then the back half of the year on that side. That's my first question. Thanks.

Hello, Chris. So I'll start off, I'll pass on to Graham if I miss anything. There are some rescheduling requirements in Valadera, as you point out. We are focused on trying to achieve all our capital spend across the group, and although we've delayed both the number six expansion as well as the power line, we still will get a lot of that done, if not all of it done this year. On the airstrip, we are, as we speak, working to try and mobilize that team to ensure that we get that strip in place before the winter sets. And the reason being that it's going to make us our ability to remobilize and get those other capital projects up and running as soon as we can and make it more efficient once the spring arrives. Nevada is pretty much on track with its key projects. Pogra, you know, there wasn't a big capital spend forecast for Pogra because everyone was waiting for the SML extension outcome. And the rest of Africa is on track with all its key projects. As I said, the... The shaft at Turquoise Ridge and the development at Gold Rush are all on track. Hemlo, we are busy working at the moment with the authorities to ensure that the new underground contractor can be mobilized and take over. The previous contractors agreed to continue, and so we are managing that arrival of some of the core Australian contractors. supervisors and skills to be able to affect that transition. So, you know, we still see ourselves maintaining our capital guidance, although there's probably some scheduling of that expenditure that will bring us closer, you know, sort of more to the bottom of the guidance than the top of the guidance. But rest assured, we are all working really hard to ensure that our investments stay on track. Graham, do you want to add to that?

I think that's fairly comprehensive. The only point I would make is in Nevada we have seen a slight increase in our capital. One of those projects being the solar power that Mark talked about in the presentation. That's something new that we brought into the mix, but And as Mark says, when you look at the overall picture, we're still very comfortable with the guidance that we gave at the start of the year. And as things progress, we'll refine that number throughout the year.

And on cash flow, Chris, just on the cash flow, I mean, as you know, cash flow has got a lot of upward pressure at the moment because of the gold price. And, you know, that's our big focus. We kept the dividend as it was. We are comfortable where we are. We are very comfortable with our liquidity and our forecasts. And so, you know, I think we're in good shape to ensure that we can deliver on our plans and, in addition, take any opportunities that we might be able to unlock during this time. to further grow our business.

Yeah, so just on the working capital, just to add to that, I mean, it is a bit higher than the previous quarter. We do tend to see an increase in working capital in the first quarter. If you look back to the corresponding quarter last year, you would have seen a similar increase in working capital. It is in part due to the timing of payments you know, that we accrue during the year and then make in the first quarter, for example, employee incentives. We also made an installment payment to EPRE in Argentina on the power line. So there were a few unusual that pushed it a little bit higher, but it is normal for this time of the year.

And finally, Chris, on building the inventory, you had so many questions, but on the inventory, we've As you know, very quickly, Rian and his team across the group moved to increase our inventory of consumables and fast-moving items to three months and more. But he's equally got a plan to bring that down at the end of the year. So, you know, that's a part of our working capital that we'll actively manage.

Okay, thanks. Just a follow-up, if I may. In terms of Pablo Viejo, you went through some of the different details there with the election, etc. Can you just remind us on the current plan for the expansion, the sort of timeline you'd envisage potentially for the mill expansion? Thanks.

Okay, so we're progressing with the mill expansion as planned. We have... We are busy with the ordering of the long lead items, and we have completed the feasibility of the actual plant expansion. And as I pointed out, now there's a gap developing between that and the TSF permitting process. But again, we have bipartisan support on this project. What we need to do is get into the field and complete it. The ISHA work and the consultation, community involvement and engagement, which has been sort of prevented at this stage. We've got a little bit more engineering work to do on fatal flaw investigations. We're pretty comfortable of the answer, but we need to do that work. But other than that, we're in good shape to be able to ensure that we have that storage facility in place when we require it, which is post-2024, I believe. John Steele, are you on the call? Still struggling with your mute buttons.

Rod, you're going to answer it.

Carry on, John.

But so your current commissioning is planned for early 2022 of that, of the plant expansion. And as Mark mentioned, you know, we've got TSF capacity in your goal, you know, take us way out into 2028. So that's not a bottleneck for us so the project can proceed.

Yeah, and we had intended, if feasible, on the current program to commission TSF-3 from 2024, but a delay in that program won't impact the overall expansion.

Okay, thanks, Mark and everyone. All the best. Thank you.

Our next question comes from Matthew Murphy of Barclays. Please go ahead.

Hi. I had some questions just on the sensitivity of your guidance to the oil price, primarily I guess also Forex, but you've still got $65 oil in there. Just wondering if you have an idea of sensitivity to that or to diesel prices or any kind of metrics you can share.

So, Matt, again, there's swings and roundabouts. So the way we've looked at it is that this COVID challenge has certainly created some additional expenses in our business. At the same time, we've benefited from a lower oil price. Some of the impacts are dampened, particularly in Africa, where the oil price is much more structured and it doesn't pass through to the consumer as quickly as you see in parts of North America. But as a broad number, $10 on the oil is about $8 per ounce, just as a broad number. Remember, our utilization of hydrocarbons is quite different, some natural gas, some diesel, some heavy fuel. But as a rule of thumb, that's about the number.

Okay, great. That's helpful. Thank you. And then also just a quick one on Porgera, the disclosure on this tax claim. I'm wondering if you see this as at all related to the mine lease renewal or is it a totally separate issue?

So, Matt, very complex situation. I don't know if you've had a chance to read the order from the judge last Friday, but included in that was a very clear instruction for us to refrain from commenting over this process while we tried to focus on finding a mutually acceptable solution on a go-forward basis. it would be inappropriate for me to sort of comment on that question if you don't mind.

Yeah, no problem. I mean, maybe I can just ask on that court, I guess your next hearing is May 8th. Can you make any comment about, like, is there a potential to see a resolution at that time or is it kind of a preliminary hearing to see how things are coming along?

Well, all I can say is you know me, I'm very committed to finding solutions and spent my entire career working towards ensuring we have constructive partnerships with our stakeholders and there's no difference in that commitment when it comes to Papua New Guinea. And the order was very clear for us to engage in a committed way to working to find a solution, and he also indicated that should it not be possible for us to do so, he would be minded to appoint a court-appointed arbitrator to ensure that we do come to a solution.

Okay. Thanks, Mark.

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Yes, thank you, Mark. I was going to ask if you've actually engaged with the government, but I guess we'll leave that on the side in P&G. In terms of capital allocation, you are generating a lot of free cash flow now, and I expect you will going forward. One of your competitors suggested that, in their view, on free cash flow, 50% would go back into the business and 50% would be returned to shareholders. Is that a framework that you'd agree with or something that Barrick would pursue?

So, Greg, as you know, I've never been one to try and copy somebody else, and I have no intention of starting. We have always worked to present something that's different and trustworthy. You know, where Barrick has come from, it's been an amazing voyage. If you look back 2015 at $12 billion today, we can boast as having the strongest balance sheet in the industry, the mining industry. And so, you know, we've guided our dividend policy against the 1200 long-term gold price. Given the situation that we face today and the unprecedented scenario that is ahead of us, It's good practice. We believe, our board believes as well, that we maintain our dividends because we know we can afford them. We also ensure that we have the financial muscle to get through this challenge and also pursue other opportunities of value opportunities should they arise in this very dynamic environment. And then, as I've indicated before, it's very clearly our objective to get to a point where we will move away from a dividend policy that's supported by the robustness of our P&L to a more standard-style dividend policy, maybe along the lines that we used in Rand Gold, where we agreed to pay out certain of our cash flow bonds following provisions for our long-term business investment and balancing always whether we are able to outperform the market on value creation. And certainly everything points to a stronger gold price, certainly more upside than downside, and adding to that the sort of forecast reduction in new gold supply, every indication is that maybe we have to review that policy earlier rather than later going forward. But I think right now we're all clear that a strong balance sheet, independence of capital markets financially is a good place to be in the situation we find ourselves today. Great. Thanks, Mark.

Thanks for the clarity.

Our next question comes from Josh Wilson of RBC Capital Markets. Please go ahead.

It's just a question on Tanzania. With regards to sort of final resolution to sell the inventory and pay, I guess, the outstanding payment, you know, what deliverables are still required? What's the timelines for that? And then from an accounting perspective, how are we going to see that flow through the statements?

So, Josh, all's done and dusted. As we speak, shipments are happening. We've got a lot of concentrate to ship. We've already received some of the payments, so that's how far advanced it is. We've indicated that you'll see most of that revenue come through in quarter two. Depending on the actual final logistics, Some of it might come out in early quarter three. But, you know, there's nothing left to do except to ensure that that concentrate arrives at the port and is delivered to the processing facilities through our agents. So that's really where we are. And there's nothing else left. It's all done.

But just to add to that, Josh, on the accounting side, you know, the ounces were obviously produced back in 2017. But when you look at it as it comes through in the second quarter, there'll obviously be a disconnect between sales and production because there'll be higher sales than production. The cost of that inventory, again, is, you know, sitting on our balance sheet. So as we sell that gold, we'll bring through that cost. The proceeds of that sales will obviously go to the individual operations, and then those proceeds will be shared amongst the shareholders in the 84-16% split. That said, of course, we have our 50-50 sharing arrangement, so at the end of the day, everything will be trued up based on that 50-50 sharing. going forward.

And I'd just add to that, Josh, the first $100 million will be the first payment in the $300 million settlement agreement.

And again, just to remind you that that $300 million has already been accrued for, so it won't impact our earnings, it will only impact our cash flow.

Okay. And that's an operating-related item, just to clarify. What's an operating-related item? It's a cash flow from operations item for the payment for the tax payment to the government.

It's a tax payment.

Okay. All right. That's all my questions. Thank you.

Our next question comes from Carrie Smith of Haywood Securities. Please go ahead.

Thanks, operator. Mark, could you just tell me how you're dealing with testing for COVID at the site for asymptomatic employees who don't show any signs?

So we are not at this stage. Right now what we've done, Kerry, is, you know, I think the most important thing and something that people didn't get right, I think, right in the beginning is testing. education, preparedness, and screening, screening being temperature screening, making sure that everybody falls in a self-assessment form before leaving for work in the morning, and then immediately responding to any risk factors, whether it's high temperature or any type of symptoms, through isolation and immediate tracing and further isolation, and then testing. And that's the way we've managed it, and so far we haven't had any confirmed transmissions within our operations. We've certainly had staff that have, you know, been tested positive. At the same time, we have embarked on a big program of rapid test kits. The first country to work with us in partnership was the Dominican Republic, and we've certainly developed and are constantly refining our protocol of how we use that. And ultimately, that test is going to be an important test to measure the sort of immunity, the herd immunity going forward. We have also done in partnership with the rest of the industry a big project that's being rolled out at the moment in Argentina. The test kits in Peru have also started to be rolled out. We are in Africa. Willem and the team are working with our host countries on that. We have in North America now you know, a plentiful supply of proper DNA or PMR tests. And, again, I think we'll keep refining the way we manage our employees on the sites. But that's the approach we've taken. I think we've been a lot more effective in managing the – the pandemic and keeping our people visible and the disease visible rather than, you know, this temptation to lock it all away and then you don't see the actual, you know, impacts of it. So, you know, the team, I must say, the Barrick teams have done an amazingly good job. And maybe... I can ask Catherine just to explain to you some of the stats and the way her and the team managed the situation in Nevada, which is, you know, really a good example in a large scale of how the rest of Barrick has approached this crisis. Catherine?

Thanks, Mark. Okay, so if I... address Kerry's question directly. The way we've used the screening that we've been doing has been to minimize risk whether people are symptomatic or not. So to give you a sense of the scale of this, there are 7,000 employees within Nevada Goldmines and significantly more if you include contractors. Anyone coming to site, first of all, there's a single point of entry now and they're screened. They're screened with a questionnaire that that asks whether they're experiencing symptoms, whether they've been in contact with anyone with symptoms, or whether they've been to anywhere at the start, whether they've traveled to any location where COVID was a significant risk. What that allowed us to do was then to isolate people that were flagging on the questionnaire, whether they had symptoms or not. And so what we saw is that, you know, over the last sort of month and a half or eight weeks now, We've had a total of 593 employees off work for an average of seven days, either because they've been sent home based on the screening, there's 113 of those. They've self-selected because they have recognized their own risk, either because they are immunodeficient or for some other reason, or they've had symptoms or they've been caring for someone with symptoms. So in total, And the other one, of course, is a very small minority who've been affected by the fact that their kids are not in school. So in total, 593 offer an average of seven days. But what's more important, and I think this is significant, of those 593, 495 are now back at work. 83% have returned to work. So what we've seen is the real impact of this was in the first sort of three or four weeks, really over the end of March and in April. And we're beginning now to move into a more, I wouldn't say normal environment, but normalized environment. That means that when we do have a positive case, we've had seven confirmed positive cases to date in NGM. We're able to contact trace all of the people that they have been in contact with. We've minimized that to the extent as possible to minimize risk. We then self-isolate those people. They are then either tested or stay in quarantine until 14 days are up or tested and they're negative, and then they're able to return to work. So that's the process that has allowed us to take into account those asymptomatic individuals as well as those with symptoms.

Okay, that's helpful. I appreciate that.

Our next question comes from Kerry McCreary of Canaccord Genuity. Please go ahead.

Good morning. Maybe just a bigger picture question, you know, looking at your 10-year plan. You know, it's 5 million ounces for 10 years. I think your peer has a similar flat production profile for 10 years. Just wondering your thoughts on, you know, why this business isn't scalable. Like, is it possible to grow production creatively or is flat sort of the new normal once it gets to your size?

So, Kerry, if you look at that graph, there's a couple of, you know, blaringly obvious points. One is for the first five years, we bring down the costs and increase the cash flow, and I assume you've modeled that, both in the form of capital to a proper sustainable capital, because what you're referring to is a sustaining business, not a growing business. And then the costs are coming down, And then within a margin, we expect that to continue on the back five. And again, you know, if you want to compare us, there is no comparison because we don't have to build out anything. So there's no massive peak in capital. In fact, the capital that we referred to in the presentation today really sets us up for the rest of the 10 years. And the big ones... are PV and Dominican Republic, the Shaft and Turquoise Ridge, but the others are all genuine sustaining capital. Even Gold Rush is just a continuation of development to deliver more ounces. And I think that's the standout in the Barrick 10-year plan. Bulls on, of course, tier one assets, which mean that you've got significant production for more than 10 years in your business plan based on a $1,200 long-term gold price. And so when you look at this business, it's a genuine business where the growth is in financial delivery, in profits depending on the gold price that you assume. Now, over and above that, we're spending 170 odd million dollars a year in exploration. And as you've seen just in the last 15 months, we're not shy in creating M&A opportunities that deliver real value. And so that's the difference is this is not a sustaining business or a business that you refer to as a consistent production. It's a solid foundation on which to continue to build our value-creating opportunities for our owners. And I think that, you know, hopefully you get it now because you're definitely missing something if you're, you know, and again, there's nothing in this plan that we can't take you to and show you. So there's no... soon-to-be-discovered answers. There might be some answers that we need to change the definition, take out some of the risk, but it's already in the plan and accessible from current infrastructure or infrastructure that we are committed to invest during the next four or five years.

I guess what I'm saying is, Randall, you were able to grow production over a long period of time. There seems to be a view in the industry that once you hit 5 million ounces, 5 million ounces is what it's going to be. It can't be a 6 or 7. I know it's not about just production. It's about possible to grow.

I don't think you're listening, Kerry. This is based on what we've got today. It's not based on any So there's no recognized benefit for the $1.6 billion we're going to invest in exploration in the next 10 years. And so as a basis to build a business, this is a standout business. This is exactly where we got to in Rangold, where you and other analysts, when we plateaued, And we said, now we're in a stage where we are able to throw out returns and replace the gold we are mining in a long-term sustainable fashion. Everyone said, where's your growth? Until we did the deal with Barrick, and then suddenly everyone realized, when you look back at how Rangold delivered that value, the first part was, of course, increase in value. in reserves and increase in production. But at the same time, that came with capital spend to deliver that. And then you get to a point where you start really delivering real value for the shareholders and ran gold in a time where the industry destroyed value, continued to grow its dividends for... for 13 years in a row and performed in the market despite the ups and downs of the gold price at a level of total shareholder return that ranked it in the top 100 value creators of all listed stocks globally. So, you know, that's what we are doing here is we're building a world-class business capable of competing in the public markets, and delivering the returns and value that one would expect, plus offering the insurance that we've all witnessed in the last nine, ten weeks, and I might add since 2008. It's just that some of the management teams didn't deliver that big opportunity back to the shareholders post the 2012 peak. But certainly now we have an industry that's a lot more disciplined, and we've seen that industry really live up to that gold insurance that miners offer in times of crisis like we're experiencing.

Great. Great. Thank you very much.

Our next question comes from Tanya Jakoskonek of Scotiabank. Please go ahead.

Great. Good afternoon, gentlemen. Mark, Graham, maybe can you just talk about some of the cost impacts that you're seeing in the business because of this COVID and maybe some of the opportunities on the other side?

So, Tanya, I'll kick off. Of course, you heard earlier one of the biggest opportunities is is the oil price. At the same time, our costs really are – some of the costs are working capital costs because we've expanded our inventory to ensure that we have the ability to manage any supply chain interruptions. We've definitely got opportunities on tightening up on our contracts as some of the supply – You know, because the mining industry has common consumables and not all the mining industry, global mining industry is in the same place at the moment as far as robust performance goes. And so there's a lot of things which for us at Barrick is a normal course of business. We're always focusing on tightening our costs, making sure our contracts are fair and appropriate given the market conditions. We've still got significant opportunities to continue to improve our operational efficiency just because we started with a fairly lazy organization back last year, and we've shown a lot of progress, but we've still got more to go. The work that Graham and his team are doing on making sure that we have a fully integrated system data system, financial business system that enables our managers to make real-time decisions within the shift. Those are things that are all going to continue to help us become more and more competitive in driving our EBITDA margins. And even if you look at today's results compared to our quarter one results last year, our EBITDA margin is significantly higher than it was just 12 months ago. So we're obsessed about efficiency, cost focus, making sure that we are businesses focused on profitability and and cash flow, and so, you know, the COVID situation, what it has offered to us is that, as you know, there was some apprehension on whether we could introduce the RAM gold flat integrated management model. We did that. We've worked hard at it with the regional executive teams, and this corona challenge has definitely honed our management skills and forced and fast-tracked our ability to be agile and integrated in the way we run things. And it's proved that this model, this modern model of making sure that you don't have this corporate tower of authority sitting somewhere far away from your operations – is the right way to go. And so if there's anything that I would say this has helped us or taught us is really that honing our ability to manage in a more modern and agile way. And on top of that, our HR team has really focused on making sure that our employment strategy has shifted to younger people more diverse employees coming from, you know, the countries in which we operate. And again, in the fullness of time, you'll see the impact of that.

So if I understand it correctly, when you said that, you know, you can improve on your productivity is one aspect of it. And the second is, maybe cutting costs on the contractor side. Would that be a fair statement?

Yeah, exactly. I mean, there's lots of opportunities we've already taken out. I think Rion and his team have just in Nevada taken out about $115 million just in contract efficiencies, just renegotiating contracts. And so there's a lot more that we can do. South America, we've done a lot, but there's still more to do. And I think as we build relationships with our contractors, I mean, that's another big thing about this COVID challenge is you already see who your partners are. And we will definitely work on strengthening those positive partnerships and changing those less committed partnerships that we have in our organizations.

And maybe just for Graham, is it fair to assume that any additional costs from this COVID from the spatial distancing and things that, you know, may take longer to do and additional costs there are more than offset by the $25 per ounce improvement from your fuel, from the lower fuel price?

Well, I think, Tanya, you know, as you heard Mark say right at the beginning of that conversation, you know, we were reluctant to get into promising that big reduction because we are mindful that we're also dealing with the inefficiencies associated with COVID. And those inefficiencies are not insignificant. As you say, social distancing and, you know, not being able to move staff around that you're used to. So possibly having inefficiency in your staffing. You know, not being able to transport goods the way you used to do it, so having to contract different types of freight. You know, there's many multiple touch points which impact your efficiency. So whilst we've been able to overcome, you know, the restrictions that have been put in place, they do come with a cost. And that's why we are reluctant to put that number out there and say, you know, this is what you should expect. That number is a theoretical calculation, and again, as Mark indicated, quite often when you see such a sharp drop in the dollar oil price, it doesn't always pull through to the liter of diesel price. So trying to get too theoretical about it isn't that useful. What we're rather trying to point to is that we've had some swings and roundabouts, and on the whole, we're comfortable with the guidance that we set out with at the start of the year.

Okay. And is it just also safe to assume, just from a currency standpoint, Graham, that about 70% of your costs are U.S. dollar denominated, so only 30% would have exposure to Canadian euro and others, and it would have less of an impact on a dollar per ounce than your fuel?

I wouldn't say it was even as much as 30%. We really are predominantly a dollar-based organization, and even in places where We incur costs in local currency, you know, for example, fuel, you know, the underlying driver of that is a dollar-based, you know, it's a dollar-based underlying product. So, you know, I wouldn't put it as much as that. I would say it would be lower than that, probably, you know, less than 20% would be FX.

Okay, that's helpful. Thank you very much.

Our next question comes from Kip Keen of S&P Global. Please go ahead. Our next question comes from Kip Keen of S&P Global.

Please go ahead.

Our next question comes from Helen Reed of Routers News. Please go ahead.

Hi there, Mark. I just had a question about Grassberg. Is that something, is that mine something that you're still actively looking at? How does COVID-19 change the M&A picture? And secondly, I'm not sure whether you saw, but the Trump administration is drafting a legal blueprint for mining on the moon. Is that something that's on the cards for Barrick?

Helen. We don't plan to go to the moon right now, not as gold miners and copper miners. Really. On Grasberg, you know, I think it's very clear what I've said before. And I would just add that, you know, this world today, our mining industry needs reshaping, reinvention, revitalization and definitely modernization. And so, you know, I would say that, you know, this is a great opportunity to reposition ourselves as miners. I think what we've seen in this COVID challenge is the real contribution that mining gives to its host countries. And, you know, across the board, it's been absolutely impressive at the work and the outreach that mining has brought to. And otherwise, you know, miners are – it's our business. We manage crises and challenges every day. And I've seen and witnessed the impact that miners have made across the globe, particularly in emerging markets. And so I think it's time for us as a mining industry to stand up and share and advertise the partnerships that we do build and the difference that we make and the value we create across the world. And I think it can be done better. And so, you know, we've seen the first, I mean, since the Barrick Grand Gold deal, there's been a number of deals that have really consolidated the industry, particularly in the gold space. We've seen recent deals during the beginning part of this COVID and which are closing now that are sort of necessity-driven deals. And I've got no doubt that we will continue to see transactions that make sense in this environment because the impact of this scenario is real. And out of these sort of black swan events, you always have a paradigm shift. And so in my view, what you've seen is a sudden drive towards the E part of ESG on the back of the start of the democratic engagement in the U.S. presidential elections, which has now sort of calmed down as you've got one candidate. But straight out of that, and this COVID has highlighted the gap in this global business environment family of ours in the form of our attention to social engagement and responsibility governance issues and most importantly something I've always talked about is poverty and you know there's definitely every reason to believe that the world is going to be a different place going forward and we as miners are going to have to make sure that we stay relevant in this very dynamic environment. And with that, I'm convinced it's going to bring significant opportunities. And I do believe that, as I said in my presentation, Barrick has a standout executive and operational team capable of unlocking real value. And they have that very strong financial platform on which to make money acquisitions and pursue opportunities. And embedded in that is our tier one quality portfolio that ensures that we are a long-term business and allows our shareholders to invest with the visibility, the sort of runway visibility of our future ability to continue to deliver value. So all those sort of things are going to drive, I believe, a dynamic M&A environment, and it's going to be up to us as managers whether we ensure that we continue to take up these challenges and consolidate this industry and deliver real value to our owners or, like we did in 2012, not do the right things and end up looking back at a lost opportunity and a lot of value destruction.

There are no further questions from the conference call. I would like to hand the call back over to Mr. Bristow for closing remarks.

Ladies and gentlemen, thank you very much for making the time to join us today. I look forward – you don't know how much I look forward to seeing all of you again, and we're working hard at that. In the meantime, you can be rest assured that we are all very focused on continuing to deliver on that very strong foundation we built in 2019. I urge you all to be safe and practice that social distancing and look forward to the next time we meet. Thank you very much.

This concludes today's conference call. Should you have additional questions, please contact the Barrick Investor Relations Department. You may now disconnect your lines. Thank you for participating and have a pleasant day.