Barrick Mining Corporation

Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the BEREC 2020 second 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 the time, if you have questions, please press star followed by 1 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 call is being recorded and a replay will be available on Barrick's website later today, August 10th, 2020. I would now like to turn the conference over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.

Thank you very much and a very good morning and afternoon to you, ladies and gentlemen, and thank you for taking the time to speak be on this call with us for Barrick's quarter two results. Who would have expected us to be where we are today? You know, this time last year, no one could have foreseen or even imagined that our world was about to change fundamentally in a way that would impact every country, every institution, and every person on the planet. The novel coronavirus descended on us without warning, and as yet we cannot number the lives it'll take or picture the social economic destruction this unprecedented event will leave in its wake. In hindsight, the merger of Barrick and Rangold could not have been more prescient for its creation of a modern, fit-for-purpose mining business that is not only continuing to fulfill our promise of sustainable and superior value delivery, but has also provided us with the mindset and the structures to combat the pandemic. This has enabled us to buffer its impact on our people and our operations. And as you can see from these results, we have not only continued to meet our targets, but also continued to advance our strategic projects. And in the spirit of partnership, which is at the very heart of the Barrick culture, we have provided much needed support to our host communities and countries in their own battles against COVID-19, and we will continue to do so. I refer you to the cautionary statement up on the screen, and it is also on our website should you want to review it in more detail. As already mentioned, Key to the effectiveness of our COVID-19 response has been the management structure we introduced after the merger. Our flat, agile, and decentralized structure across the group allowed us to proactively implement a broad range of preventative measures at all our sites and immediately engage with our host countries to provide timely assistance to suppress the spread of the virus. Barrick's traditionally strong focus on health and safety ensured that it was well equipped with the comprehensive means and efficient systems to contain the virus. Among many other things, Barrick has to date provided more than $20 million to help the hard pressed health authorities and our communities in our host countries. As we continue to demonstrate, mining companies can be a major force for good in these countries and a true partner to their governments. Within our operations, Barrick's journey to zero harm continues to make steady progress. And in quarter two, we reduced our lost time injury frequency rate by 16%. And more importantly, when you look at the slide, it's the trend that matters. And we also have seen a decrease in the number of total injuries. Similarly, we are improving our environmental record to ensure that we are building a business that will be acceptable to future generations. So far this year, there has been no class one environmental incidents across the group. Our CO2 emissions have been reducing and our water reuse and recycling is improving. By the end of this year, All our mines will have achieved their ISO 14001-2015 environmental management certifications. Our commitment to high ESG standards is also evident in our support for community development projects. In addition to the COVID-19 aid we are providing, We have invested almost $9 million in these projects year to date. And more importantly, we have spent over $1 billion to support the local economies through the purchase of goods and services. One example of these development projects is a scholarship fund for Native Americans in Nevada. to which Barrick has committed a further $13 million over the next 10 years, bringing our total investment in this project to $26 million and ensuring that there is a bursary funds available for our Native American partners for the next 50 years. Operationally, The quarter has provided many highlights with real delivery on many fronts, endorsing our vision of the new barracks capabilities as summarized here. I'll talk you through the main points in the course of this presentation. Anchored by a strong performance from our Tier 1 asset portfolio, notably Nevada gold mines, Lulo Goncoto and Kabali. Year-to-date gold production was 2.4 million ounces, which means that at the halfway mark, we are well on track to end the year within our guidance range of 4.6 million to 5 million ounces. The copper portfolio also posted strong results, with production in the upper half of the guidance range and costs trending towards the lower end. Capturing the benefit of higher gold prices, free cash flow increased by almost 20% to more than half a billion dollars, and adjusted net earnings per share rose to 23 cents, well ahead of market consensus. This result is a stellar one, given the Q2 is the quarter when we usually settle a lot of our cash taxes and interest payments. Debt net of cash was reduced by nearly 25% to $1.4 billion from the end of the first quarter. And on the back of this strong performance, the quarterly dividend has been increased by 14% to $0.08 per share and has now doubled since the second quarter of 2019. I am also pleased to confirm that to date, our non-core asset disposal program has delivered on our target of $1.5 billion. with $1.25 billion of that $1.5 billion being received in cash and the rest in equity. And this process is continuing. Turning now to the operations, we start in Nevada, where the pandemic accelerated the integration of the Nevada gold mines operations. Strong management of delivered to the bottom line despite the crisis. And the support provided to the communities, counties, and the state reinforced the partnership principle and demonstrated mining's key role in balancing Nevada's economy. The combination of coal and Goldstrike has provided processing flexibility and geological opportunity. Production for the quarter was down as expected because of plot maintenance at the Gold Strike roaster, partly offset by the increase of higher-grade Cortez ore processed by the Carlin roaster, one of the synergies captured by the Nevada Gold Mines joint venture. Incidentally, the Carlin open-pit truck driver's were seconded to shuttle employees across Nevada gold mines, dispensing with the need for buses as part of our social distancing measures during the initial early lockdown period of the pandemic. We're still defining Nevada's full potential through the integration of exploration, mineral resource management, and mine planning. But it is already evident that the Carlin trend holds significant promise for resource growth as well as new discoveries. A number of high-priority targets are being tested, with the North Leval project recently delivering the best intercept to date of 21 meters at 35 grams a ton, that's more than an ounce per ton. The exploration team is really making good progress in advancing the programs and revising the models and priorities. Over now to Cortez, which did particularly well, topping the previous quarter's already solid production numbers. Cortez Hills Underground continues to outperform with improved efficiencies supporting mining at a higher rate. The Gold Rush team has also now been integrated into the Cortez organization. The construction of Gold Rush's twin exploration declines is also now ahead of schedule and the transition from a contractor to owner operation has been brought forward to the fourth quarter of this year. That's about a six-month bringing forward. The project is scheduled to intersect first or in the first half of 2021, with permitting expected later that year. And so 2021 will focus on validating the assumptions in the feasibility study, which is due to be completed in the early part of next year. Though it's early days, testing the geological extension at Cortez Hills Underground, notably the footwall of the Hanson Fault, as shown here, the right-hand diagram is a section across A, A prime in the left-hand plan. And this has certainly indicated the potential for life of mine extensions that will allow Cortez Mine to maintain its tier one status even before the contribution of Gold Rush. In the meantime, Barrick's nearby four-mile project, which has not yet been integrated into the Nevada gold mine portfolio, continues to report very significant drill results, confirming the high grade of the mineralization as well as four miles' exciting potential. The model update is underway with updated resources expected at year end. At Turquoise Ridge, construction of the third shaft remains on schedule and within budget. Commissioning is expected in late 2022. The current focus is on continuing to improve underground efficiencies, getting a better understanding of the ore body and the geological model. as well as driving the optimization of the mine plans and processing facilities. Of all the operations, the Turquoise Ridge Complex, which includes the legacy Twin Creeks, has been one we have had to put extra effort into. And consequently, there's been further leadership changes to accelerate this process. This complex, offers the most significant additional near and medium-term opportunities to Nevada gold mines. Elsewhere in Nevada, Phoenix and Long Canyon both operated within plan and are trending towards the higher end of the guidance. On the subject of Nevada gold, The state has been hit hard by the pandemic, given its reliance on gaming and tourism. We have recently worked with the governor and the legislature to deliver advanced taxes to support some of the state's needs in the medium term. And we continue to engage to help with longer-term solutions to the state's funding challenges. In Canada, at Hemlo, after teetering on the verge of closure for 10 years now, you will recall that the mine was subject to a rigorous review, which was used to introduce our new approach to mineral resource management and mine planning. The tailings, plant, and underground are being de-bottlenecked. and the mine has transitioned to an underground contractor mining model under an energetic and motivated new management. Production from the restricted and revitalized Hemlo is on track to achieve this year's guidance, although costs are trending higher, impacted more. primarily by higher gold prices and the higher net profit royalty. One more challenging year lies ahead of us at Hemlo, but beyond that, the mind should be looking at a 10-year runway with potential upside. And this potential upside at Hemlo is is significant. We are growing our geological knowledge of the area, revising the models, defining new targets with the potential to open up new mining fronts and acquiring additional rights. Our aim is not only to extend the known ore bodies, but to find new ones. District scale exploration well beyond the current known limits of the ore bodies has started at Hemlo after years of inactivity. Follow-up fieldwork is underway on areas of interest known to coincide with gold mineralization in and around the existing operation as well. In the Dominican Republic, Pueblo Vergo's production was impacted greatly as expected by a total plant maintenance shutdown. And as at our other operations, higher royalties from the higher gold prices also took their toll on costs. With major schedule maintenance now complete for the year, production should return to normal levels and the mine is working to get back to plan in the second half of the year. One of Barrick's key strategic projects is the expansion of the plant and tailing facilities at the Pueblo Verros joint venture, which is designed to extend the life of the mine into the 2040s. The environmental impact assessment for the plant has been submitted to the authorities and orders have now been placed for the long lead items. Field work for the baseline environmental assessment of the additional tailings capacity essential to support the mine's life extension has started and constructive discussions with the authorities regarding the permitting are well underway. The project's implementation strategy is based on committing 75% of the actual construction subcontracts to Dominican-controlled contractors. Following the recent elections, the political uncertainty in the Dominican Republic has dissipated and the new president will be installed next week. His government is business and mining friendly and when I visited him recently, he assured me we could rely on their support for the project and together we are looking to grow the mining industry based on responsible mining. In the meantime, we are also exploring exciting new opportunities both within the joint venture lease and outside the lease area. Valadera in Argentina was the only one of our mines where operations were directly hit by the pandemic. A mandatory nationwide quarantine imposed by the government was followed by a particularly severe winter that impacted stacking and irrigation activities. Consequently, production for 2020 is trending below gardens at slightly higher per ounce costs. Open pit operations were halted for 17 days and then postponed resumed at 30% of capacity for a further 23 days. With personnel restrictions expected to remain until September, the pit is currently operating at around 85% of capacity. Construction of the leach pad expansion project also stopped at the start of the quarantine. and the onset of winter delayed further work for some six months. Additional resources will be mobilized at the start of the construction season to accelerate the progress of these projects. Construction of the power line from Chile was similarly halted, and we are now re-planning the project. but at the same time, we intend to give priority to the phase six leach pad construction. We expect the commissioning of the power line by the end of 2021. The remobilization of the project teams is also dependent on the easing of government restrictions relating to COVID-19. Remaining in the Andes, We continue to explore along the prospective El Indio belts. At El Tourist, El Carmen, the controls to the high-grade mineralization are being investigated in an effort to identify more. At the same time, the scoping level economics are being updated to determine how best to bring this project to account. As far as Pascualama is concerned, we are working towards a new geological model with resource updates expected in 2021. In Papua New Guinea, as I'm sure all of you are aware, we placed Pogra on care and maintenance after the government decided not to renew our special mining license. We believe the government's decision was taken without due process and in violation of the law. And the matter is now before the court. We continue to argue the merits of the benefit sharing scheme we proposed in 2019 and revised recently. And we continue to have the support of the landowners, the communities and civil society. And given the uncertainty of the situation as previously announced, I would just remind you we have withdrawn guidance for this operation. Now over to Africa, where Lulo Concotto delivered its usual solid performance and is trending above plan. Here again, higher royalties impacted the cost per ounce. The Goncato underground project, which will provide the complex with its third underground mine, is on track to start development towards the end of this year and further extend its life by continuing to replace its depletion from mining. Exploration across the Lulo district has confirmed extensions to the transfer zone at Yalia and shown that the LULO 3 system remains open down dip. Two prospective new corridors, one to the south of Goncoto and a second within the Bambadji joint venture in Senegal, have also been further defined this quarter, with encouraging results from drilling. And this will be a focus for the team in the new field season following the current rainy season. In Cote d'Ivoire, Tongwon was on plan for the quarter and is on plan year to date. The focus there is all about extending the mine's life through the discovery of extensions and satellites. And as a result, we are considering a plan to trade a lower production profile for a longer life of mine and with significant added value and optionality, especially giving the current higher gold price. Tongan is also located in the Nyeli Permit and how you can see where we are exploring new corridors for opportunities to further extend the life of mine by defining some new and exciting targets within the hauling distance of the processing facilities. Across to the eastern part of Africa, Kabali and the Democratic Republic of Congo continued to deliver consistent results and is also tracking ahead of plan. The mine is well positioned to replace its depleted reserves this year and still boasts a wealth of resource growth opportunities. And then further east to Tanzania, where Tanzania is still a work in progress as we rebuild the assets and relationships destroyed by Acacia. but I must add the team has made significant process with this endeavor. North Mara is fully operational again with production above plan, but costs slightly elevated as we work to address the issues we inherited, which I have no doubt we will correct. Recent drill results at Gakona have exceeded grade expectations, indicating an extensive upside potential beyond the existing drilling limits of the underground development. We estimate that current targets have the capacity to replace depletion this year and the next. There is also further potential to add an additional cutback to the Jena pits and this is also open at depth below the pit. If you look at the slide on the left, you'll see a green square with a couple of dots, and that's a new coffea target. And initial scout drilling at this new target, which is located to the west of Gokona Pit, has shown how it aims to extend the Gokona system by approximately 500 meters west of the current known mineralization systems. At Puli and Hulu Underground, which has been on care and maintenance for some time now, the team is doing a great job of recommissioning the mine. Shaft refurbishment is due to start later this month, and we are on track to resume processing underground ore by the end of this year. Buswagi's focus, on the other hand, is all about optimizing throughput and managing the stockpile processing grade. I'm also pleased to confirm that following the signing of our framework agreement with the government of Tanzania, as of today, all the stockpile concentrate has now been shipped, with around 30% having been shipped during the second quarter. Also, the first $100 million payment towards the settlement of the legacy disputes has been paid to the government, as you would have seen in the press. Overall, Central and East Africa are a happy hunting ground for our exploration teams, offering many opportunities for resource replenishment as well as new discoveries. Our teams are active both in eastern DRC and throughout the Tanzanian gold fields, building on our knowledge and expanding our portfolio. As I mentioned in the intro part of this presentation, our copper mines all had a very good quarter. with Lemwana posting its best production and cost profile in years, Jabal Saeed trending at the top end of its guidance, and Zaldivar, although impacted by COVID-19, still delivering a very respectable performance. In conclusion, ladies and gentlemen, looking back over the past year and a half, I can report that all the opportunities created by the merger and subsequent transactions have been seized and more have been identified. Our existing asset portfolio supports a 10-year organic production profile, which distinguishes us from the rest of the industry. Our exploration teams recently strengthened by the newly created positions of Vice President's exploration for Latin America and Africa and the Middle East, continue to scale the globe for the new opportunities that will sustain us and build our business into the future. And finally, as shown on the slide, Barrick's share price performance reflects our ability to successfully deliver on our mission statement both from the time of the Rangold merger announcement and the current year to date, outpacing both the gold price and our industry peers. Again, ladies and gentlemen, thank you for your attention and I'm happy to take questions and And as you would have heard in the start of this presentation, I have the Barrick team on the line as well, should we need to call on them to expand on any of your questions. So, operator, back over to you.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one 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 two. We will pause for a moment as callers join the queue. Our first question comes from Chris Terry of Deutsche Bank. Please go ahead.