Barrick Gold Corporation

Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the BERIC 2022 third quarter results conference call. During the presentation, all participants are in a 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, then 1 on your telephone keypad. At any time during the conference, should you need operator assistance, please press star, then zero. As a reminder, this conference call is being recorded and a replay will be available on BAREC's website later today, November 3, 2022. I would now like to turn you over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.

Thank you very much, ma'am, and good afternoon and good morning, ladies and gentlemen. And again, welcome to our presentation of the Q3 results today. And we present, for those who don't appreciate it, we are presenting from the London Stock Exchange today. And it's so nice to see those familiar faces and not so familiar faces. It brings back lots of memories for me being here and also times like we are today, you know. not always up but also down. And so I look forward to getting some questions from the floor and thank you very much for coming out in person today. As I've said many times before, The troubles that have been closing in on the global economy, including the mining sector, tightened their grip in the last quarter. And Barrick, however, as I hope I'll be able to demonstrate once again, is well-placed to contend with these challenges, thanks to the disciplined execution of our long-term value-creating strategy. We have and still are focused on maintaining a strong balance sheet. Our dividend policy is delivering sustainable returns and we continue to extend our life of mine plans to ensure that our 10-year production profile remains intact. Our successful exploration programs are feeding high-quality prospects into an already bulging pipeline, and while our focus is on organic growth, we are also keeping an eye open for value-adding M&A opportunities, albeit that those capable of meeting our strict investment criteria remain few and far between. Please take note of our cautionary statement. And for those who wish to study it in more detail, it's available on our website. We had a softer quarter in quarter three. as I'm sure all of you noticed, and we guided you to. And it was mainly due to a sequencing at Carlin and Cortez, but a great uplift and some hard work in the fourth quarter should keep us on track to achieve our 2022 gold production guidance, albeit at the lower end of the range. Our copper portfolio, on the other hand, performed well and is trending towards the midpoints of our guidance. Expiration, as I said in the introduction, continues to discover new opportunities as well as to expand our existing asset base, and we expect to grow our reserves for the group again, and that is net of depletion as we did last year. Other highlights include the completion of the public comment stage in the Gold Rush project and a continued progress with the massive Pueblo Vergo expansion project with the submission of our environmental and social impact assessment for the new tailings storage facility. I should also point out that Barrick was serious about responsible tailings management long before recent calamities focused the industry's attention on this issue. And we've made excellent progress and are on track to comply with the new standards on time. And we've reviewed all our tailings facilities, both from the closed sites as well as our operating mines. I'll cover the financial results a little later. I've just given you a picture of our operating performance and how you can see the details. It's worth noting that higher energy-related input prices are having an impact on our cost structure, and so costs for the year are trending above the guidance range, and inflationary pressures remain a challenge. which we are actively managing. And I'll just point out that a lot of people just roll up inflation. But there is inflation, and we're managing that, and that's easily managed in many cases. But we have the added impact of the... geopolitical crisis and conflicts in Eastern Europe and other parts of the world which are seriously impacting on our fuel costs and, as a result, a number of our operations' electricity costs. Our drive to reduce greenhouse gas emissions by at least 30% by 2030 is also going to go a long way to mitigate the current impact of fuel prices. We have already seen the benefits of these investments and expect further reductions over the next 12 to 24 months. This is a solid set of numbers with a strong operating cash flow of $758 million plus the proceeds from ongoing sales of non-core royalty assets. Our robust balance sheet supports a $0.15 per share dividend made up of a $0.10 base dividend and a $0.05 performance enhancement. And in addition to this, our $1 billion share buyback program has repurchased $322 million worth of shares to date. That's equivalent to 1% of Barrick's issued and outstanding shares at the time that the program was announced. And when you add those together, year to date, we've returned just on $1.2 billion to shareholders. And we're on track when you look at our forecast for the rest of the year. that we'll exceed our record $1.4 billion return to shareholders of last year. So there's an extra component in returns with our commitment to continue to buy back shares when we feel that they're materially below their real value. And as you can imagine, after today, we're going to be buying back more, significantly more. Sustainability, as always, remains the cornerstone of Barrick's business. And again, I'd point out we practiced responsible mining long before ESG became the thing. We've adapted and adopted integrated holistic approach to sustainability because it's In its current form, ESG is skewed towards environmental concerns at the expense of social and governance. Social and the upliftment and development of societies and countries that have been left behind by the developed world is as big a global problem, we would argue, as climate change. And it should, in fact, be linked to it. Poverty is particularly a big issue in Africa, which hosts two of our Tier 1 mines and many of our prospects. Africa holds 17% of the world's population, but due to its developmental neglect, accounts for only 3% to 4% of global carbon emissions. Unless the plan is to keep Africa poor forever... Population growth and the fast pace of urbanization will cause this rate to rise, and even dramatically rise. We have invested heavily in clean energy at our African operations, and the Kabali gold mine in the Democratic Republic of Congo is now largely powered by three hydropower stations, which we built there. and a refurbished force station that provides energy to the community. We are also sponsoring major biodiversity initiatives designed to mitigate the climate change and nature loss risks posed by deforestation and the degradation of habitats. this risk is very real. And just on that, our current cost, blended costs, for the last 12 months at Kabali is just under 5 cents a kilowatt hour. So it's very much a mitigating investment. And our drive to 30% reduction by 2030 is, that will continue in real terms mitigating the increased cost of hydrocarbon fuel. And every one of our projects, investment projects for cleaner energy meets our 15% return hurdle rate. So it's a real investment. It's not just something to comply with... Last quarter, Barrick advanced its investment. in its Red Plus program surrounding our Lamina mine in Zambia. And for those who don't know, Red Plus is a UN-backed framework which covers the role of conservation, the sustainable management of forests and the enhancement of forest carbon stocks in developing countries through socio-economic and biodiversity-linked projects. In keeping with our holistic approach to sustainability, Barrick and Quarter 3 alone also invested $8.7 million in community development. So these collective sustainability approaches implemented by Barrick, clean energy, community development, and nature-based solutions through the REDD Plus programs will aim to address a just transition throughout the developing world. And we recently started to engage with the Dominican Republic government on another similar REDD Plus program as far as carbon credits go. And again, for those who don't appreciate it, if you want to invest in carbon credits, you have to do it in partnership with countries, with governments. Health and safety for our employees and the welfare of the communities around our mines are part of our sustainability strategy, and we continue to reduce the total recordable injury frequency rate and the lost time injury frequency rate at our mines. but I'm saddened to share with you that our journey to zero harm was marred by a contractor fatality at Pueblo Vergo last quarter. Certainly, at any one of these events, there are lots of lessons to be learned, and again, we make it our job to ensure that those lessons are shared with all our operations across the globe. With the threat of COVID-19 still lingering, we are continuing to encourage our workforce to be vaccinated. And we're proud to share with you that 80% of our workforce across the world have been at least partially vaccinated to date. I started the operational review... I start the operational review as usual in North America and at Nevada Goldmine's Barracks Value Foundation. As far as the original objectives of the joint venture are concerned, I can safely say, mission accomplished. We have created a whole that is truly greater than the sum of its parts. From this sound base, Nevada Gold Mines can now exploit the wealth of opportunities in its ambit. And we have recruited a future-facing management team, including a new North American Regional Chief Operating Officer and a new Nevada Gold Mines Executive Managing Director to lead the company into its new growth phase. But back to last quarter when Nevada Gold Mines had to deal with some operational issues. At Carlin, production was impacted by a temporary fall of ground, while Cortez was in the process of transitioning from open pit mining at Pipeline to a new phase at the Crossroads Pit. For the fourth quarter, Carlin expects higher open pit grades from Goldstruck, while Cortez is anticipating the Crossroads will also deliver a grade improvement. At Turquoise Ridge, the underground operations continued to make good progress, although production was down due to lower underground grades mined and lower autoclave recovery. The mine began commissioning its third shaft, and on the back of a change in management, we are starting to get through some of the maintenance and availability challenges that have impacted the SAGE processing facility for some time. And this slide shows the substantial exploration and expansion targets and their potential to continue to grow the Nevada gold mines reserve and resource base. NGM's greatly enhanced geological capacity has delivered an optimal balance between the search for long-term stand-alone deposits while extending and converting ounces around existing targets. At the same time, Barrick is also looking for new opportunities elsewhere in Nevada and North America as a whole. So let's take Greater North Leval as just one example of how Nevada Gold Mines is increasing its growth footprint. Continuing exploration and producing some of the best gold intercepts in the history of the Carlin complex, and for those geologists in this room, Carlin has produced some significant grade intercepts, with lots more to come. And this target clearly has a multi, multi-million ounce And we're going to be sharing a lot of these projects with you at the Investor Day in two weeks' time. So this is just a teaser of what's to come in two weeks' time. We then move on further south to Latin America. and a region where we had to take on many post-merger challenges. We've made enormous progress in minimising inherited liabilities and maximising assets, with the Pueblo Vergo expansion project in the Dominican Republic as a shining example of the latter. This region also includes our Asia-Pacific holdings where the revival of Pogra in Papua New Guinea and the development of the Rikadek project in Pakistan all go well for the future. And despite... Dealing with the expansion project, which is designed to extend its life beyond 2040 with an annual production rate of in excess of 800,000 ounces, Pueblo Verco posted a stellar set of operating results, increasing production 15% quarter on quarter, Construction of the processing plant as part of the expansion is now 70% complete and the environmental and social impact assessment as I indicated in my introduction for the new tailings storage facility has been completed in line with the government's terms of reference and has been submitted for approval. And our expectation is that this is going to convert a significant amount of resources already in the measured and indicated category to reserves for this mine. And essentially, as we indicated when we started out, it's like a new mine. It adds way past 2040 to the life of the mine. In order to size the TSF properly, which we're currently busy with, we're busy with that pre-feasibility study, we have been evaluating opportunities within and nearby the Pueblo Verga lease with some success. How you can see several new targets that the team has developed in which we are receiving follow-up work with encouraging results. We cross now to Argentina, which continues to be a tough operating environment while the government struggles with currency crises and hyperinflation. Fortunately, the San Juan province, which hosts Valadera, has been very supportive, and the mine now is in much better shape than when we found it. This is our first winter of operating on the new leach pad phase six facility. It is separate from the old one to five facilities and we are still getting our heads around the geomet and leach dynamics. which we believe have also been exacerbated by the abnormally long winter and freezing of part of the pads. In the meantime, construction of the Phase 7A leach pad continues to advance and work on 7B will start this quarter. And we hope to also see Valadera's long-awaited connection to the Chile power grid in the near term. A restructured exploration team has been progressing targets located across the continent and the region. And then a quick update on Pogra. The new joint venture company has now been incorporated in September, in fact, and while there are still some conditions precedence to be fulfilled, the path towards a restart is now clearer than when we last spoke at the last quarterly presentation. In Pakistan, the definitive agreements for the Rikadik joint venture have been finalised and the process has moved to its penultimate stage, legalisation and closing. The feasibility study update is targeted for 2024 and production for late 2027 into 2028. While I always refer to Nevada as Barrick's value foundation, our Africa and Middle East region is our most consistent producer of excellence performance on all fronts, as well as a rich store of gold and copper growth opportunities. Barrick's status as Africa's biggest gold miner is underlined by the Lulogonkoto complex, which routinely accounts for around 7% of Mali's GDP. It's been going strong for 18 years, and its continued success in replacing depleted reserves gives it a lease on life of at least another 10 years at sustained levels of production. We've been making a substantial investment in clean energy there and the expansion of the solar power plant by an additional 40 megawatts and 36 megawatt battery storage system is advancing steadily. This will replace another 23 million litres of heavy fuel when it's fully commissioned in 2024. When it comes to exploration success, the Lulo district remains one of our happy hunting grounds with a lot of discovery potential as shown here. The Yalia deposit, which is hosted within its 72-kilometer-long mineralized district, still holds strong potential to add further ounces, and the open extensions we are exploring are key to our continuing and highly successful depletion replacement strategy. Kabali, Africa's largest gold mine, produced another steady performance with improved costs across all matrix. Hydropower provides, as I said earlier, most of the mine's energy requirements, offsetting the impact of higher diesel prices. As I pointed out, its average energy spend of just on 4.5 cents per kilowatt hour makes it one of the industry's lowest cost producers. Like Lulugon Koto, Kibali is on track to meet its 2022 production guidance despite the 21-day planned shutdown of the shaft to replace the winder. And in fact, that's about to come up. I believe we started hoisting last night, so we're busy commissioning the new Wanda as we speak. So I think that's a day, Simon, a day earlier or two days earlier than what was planned. So a good job from the team. Also like Lulo. The barracks are the tier one asset in Africa. Kabali has many opportunities for reserve growth with the complex hosting many multiple targets. Our Tanzanian operations are again a great example of partnership in action. When we took over North Mara and Bully and Hulu, they were not only badly run, but effectively closed. And we've settled their legacy issues in a joint venture deal with the government and transformed them into new mines capable of a combined annual production in excess of 500,000 ounces. At North Mara, strong underground productivity and higher throughput drove an 8% increase in production versus quarter two, while it continues to ramp up its open pit operations. And Bullion Hulu's underground mine also continues to ramp up production. And we have a new fleet in the mine now which has enabled a step up of the development while we look to further mitigate the constraints imposed by the mine's narrow ore bodies. We turn now to our copper operations. with Lemwana and Jabal Saeed both delivering stellar results with exciting growth prospects while Zaldivar produces a consistent performance. Since 2019, we have extended Lemwana's life to 2042 and now have a real opportunity to increase its life of mine beyond 2060. Our success in drilling out the Lubwe target has provided the potential for a big pushback needed for the development of a super pit. And we've started work on a pre-feasibility study which is scheduled for completion next year. As you all know, Barrick's core belief is that the best assets managed by the best people will produce the best returns. I'd probably add the most consistent and best returns. Our sustainable dividend framework provides investors with an opportunity for enhanced performance-based rewards as well as financial flexibility and more importantly in a cyclical business, predictability. For the third quarter, as I noted earlier, the 15 cents per share dividend comprises a base and a performance component and on an annualised basis equates to a peer-leading dividend yield. And when you combine this dividend with the share buyback, it points to a total shareholder return of year-to-date, as I said, at $1.2 billion, which sets it on track to beat the record $1.4 billion return of last year. Ladies and gentlemen... In conclusion, we are successfully executing on our strategy of building the world's most valued gold and copper mining company as evidenced by these actions. With the industry's largest portfolio of Tier 1 gold assets and many growth opportunities that are within our grasp, we are confident in our continued ability to deliver on this strategy. clearly a compelling thesis for creating value. So I thank you for your attention, and the team is here, and we'll be happy to take any questions you might have. And I would suggest that we start by the people online. Claudia, is that good enough for you? Thank you. Thanks for that permission.

Thank you. We will now begin the question-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. The first question comes from Emily Chang with Goldman Sachs. Please go ahead.

Good afternoon, Mark, and thank you for taking my questions. My first one is around Polgora. It looks like you've made some progress there with the application of the special mining license in the recent weeks. Perhaps could you share some color around what the timeline here on out after that lease application is towards startup and if you've got any colour around whether or not that could be included into 2023 production guidance.

So, Emily, this is Papua New Guinea, and I've learnt not to stick my head out too far when it comes to forecasts. Right now we are planning that start-up at the end of the first quarter, so into April. But we've got a bit of time this year to get those boxes ticked, and that's really the key to get that done. And we've still got quite a way to go. We've got some condition precedents that we need to deal with. And then we've got to get the SML, the new special mining licence, applied for and delivered, and that's a process. There's nothing untowards in that. And then it's really the operating agreement is just about complete. That's the final significant agreement. And then the critical thing is employment and getting re-employing people. We've got, as we speak at the moment, just under 2,000 people on site, and we are employing, but we won't push that boat out until we get that SML in place. So then that's the process. We have... We've dry commissioned the processing plant. We've reviewed all the mobile fleet. We've got new mobile fleet inbound as we speak. And then we'll start the wet commissioning as soon as we clear as to the start update. So that's where we are. And the pit is in pretty good shape. The underground is now clear of all the sludge and slurry, and so we're in reasonable shape to be able to move towards reopening, official reopening. And that should take us sort of somewhere around four to six months to get it up to capacity.

Great. Thanks, Mark. That's very clear. And just a quick follow-up around some of your operations in Africa there. Are you able to provide any color around what's happening in Mali around the government review of the mining licenses and if the civil war and the DRC are impacting operations there at all? Thank you.

So in Mali, you know, that's an audit. It's not a review. And we don't have mining licenses in Mali. They decrees, they law, you know. So there's a confusion. You can't change the law. But it is an audit, and we're participating. The auditors, we know them. They are, you know, top-flight experts. highly skilled and experienced auditors from that part of West Africa. They know mining. We're comfortable with that process. You're talking about the conflict near Rwanda border in eastern DLC. That's a very long way from Kibale, and it has absolutely no impact on our supply routes or our operations.

Great. Thank you.

Once again, if you have a question, please press star, then 1. The next question comes from Lawson Winder with Bank of America Securities. Please go ahead.

Hi, Mark. Nice to hear from you, and thank you for the update. I wanted to ask about Turquoise Ridge, the unplanned maintenance at the autoclave and then the lower underground Tons Mine. So just since the end of the quarter, how is the performance in Q4 at the underground at Turquoise? And then... Are there any additional autoclave maintenance expected or planned for Q4? Thank you.

Hello, Lawson. So just to put it right, it's not lower production from underground. It's lower grade, and it's part of the plan. It's not a fault. That's what happens. You get, you know, it's part of the schedule. The issue really is that's driven Turquoise Ridge. If you remember, Twin Creeks-Turquoise Ridge had a joint venture where we, Twin Creeks being the Newmont part of the partnership, where we did toll treating of the Turquoise Ridge underground ore, which is high grade, very high grade compared to Twin Creeks. And Newmont managed us, and they had a 25% share in Turquoise Ridge. But they managed it and preferred their open pit ore first, which is lower grade. And so there was never any pressure on the Sage Mill, the whole facility. When we took over, one of the exciting things in Turquoise Ridge is the ability to step up the production out of the, what we call, trug, Turquoise Ridge Underground, which we did. And the other thing, remember the deal was a hostile deal, so we didn't have a chance to do any due diligence. And the open pit resources at Twin Creeks were lower than what we expected. But it's got a big stockpile at much better grade than the... So cut 40, you've heard us talk about cut 40. We've delayed that because we're just mining ore that we can't replace the stockpile grades with. We're still mining a bit of underground from Twin Creeks, but the key here is as we ramped up Turquoise Ridge, and it's going extremely well, the mining, we put pressure, we pushed... the Sage Mill and we kept failing equipment, particularly some of the valves around the autoclave. So we've had to retrofit some of these and it's been going on for a long time and so what we did recently is we brought in some better skills to lead that process and the mine as well, so we've changed the whole management on the mine. And we've set about a systematic upgrade of the mill. And, again, we're seeing significant improvements in that process, just the discipline and maintenance. Again, you know, we've... We've had to work hard at the maintenance of the Newmont installations because, you know, the Newmont side of the operations were on a decline, so there's no pressure on the processing facilities. And with the merger, we've put pressure on the processing. So we're upgrading, as you know, the Carlin facilities. gold quarry roaster significantly. It's a $100 million upgrade. And we've had to really put a lot of focus back into the sage mill to make sure that we can meet the production that we're targeting coming out of Turquoise Ridge. So, again, it's an operational thing. It's not fatal. It's completely manageable. It has... excuse me, impacted on the last six months of operations, but we're pretty comfortable we'll be on top of it as we go towards the end of the year. And again, Lawson, you know, having followed this industry for so long, You can't have every quarter beating the other, and we had a soft quarter this quarter, and there are good reasons for it. Some of them we could have done better at as managers, but the good thing is that next quarter is definitely going to be a lot better than this quarter, and with it will come lower costs, et cetera. And looking into next year and beyond, Nevada gold mines is in very good shape, certainly relative to any other gold complex in the world. What is the other question? Did you ask two?

I wanted to ask you one more question. Thank you for your comments about the outlook for 2023. That would have been my natural follow-up. I also just wanted to ask about your comments around Argentina and your latest thoughts and whether or not you see any potential for improvement from here based on what you're seeing at both the state and federal level. Thank you.

Yeah, Argentina's a very frustrating country on every aspect. You know, it's got so much going for it, and the politics is just crazy. And I'll just give you an example. If you look at our truck drivers, which are part of a union, and the regulations behind adjustments, salary adjustments... And the Argentinians are managing this crisis like the South Africans used to manage sanctions. They've introduced an artificial exchange rate. So we've increased over the last 12 months our driver salaries by 50% in U.S. dollars. But the drivers are still earning the same in pesos. So that's how an unnatural, a non-market exchange rate, when it's forced onto you. And that's the problem in Argentina is you're getting forced inflation or increase. It's price increases, not really inflation. through regulations. And again, and the government is obsessed about protecting dollars, but we make the dollars. And that's what we say to the central bank governor. You know, we make the dollars. You should be working with us to get more dollars so you can settle your problems. And they've just introduced a regulation where when we make purchases through We can only pay for the purchases 18 months after they arrive in country. So it's fine for Barrick because we've got a balance sheet between us and Shandong. We can finance that, but for smaller mining companies, it's very tough. And it's the same when we're looking to keep money offshore, we've got to pay dividends and we want to get some returns back. and they will give us a 20% retention of the dollars offshore, but we are expected to pre-finance the gold sales. So we do that because Barrick's got a big trading arm, and we make money out of that trade. But again, if you don't have that capacity, it's hard to do business. And we talk all the time to the central government, and they're very accommodating in the conversation, but they just can't get themselves to understand what needs to be done to unlock the hard currency component of their economy. And they've got plenty... to deliver dollars. You know, it's a great tourist attraction. It's got fantastic agriculture, some of the best wines in the world, and it's got mining. So it should be able to work it out. And for some reason, the folk in Buenos Aires are struggling to catch up with that, you know, economics 101. Does that answer your question?

Perfect. And if I could actually sneak in one more question, maybe just your comments on M&A activity in the sector. You mentioned that you continue to be on the sharp outlook for opportunities, but they're just not meeting your investment filters. Can you maybe just refresh what those investment filters are and – You know, how important do you consider M&A? It's a barracks sort of strategy going forward.

So, you know, let me rephrase that because I don't seem to be able to get the message across. You know, there's a scarcity of high-quality assets. And, you know, we coined the phrase Tier 1, which has been adulterated by most folk as far as the definition goes. And Tier 1 asset in gold means half a million ounces for at least 10 years at the lower half of the cost curve. And a Tier 1 asset... for a copper project is more than five million tons of contained copper or a 30 year life. and also at the lower half of the cost curve. And that's simple. And when you do that, you make money. I can assure you you make money. And we use – we calculate those returns at our long-term strategic gold price. So that's what – and there's not many out there. And we've actually – there's probably – In gold, probably 12, 11 or 12. We've got six of those. So, you know, there's not 22. And so that's the challenge. And you've seen us play in the market on all the sales at the back end of last year, the beginning of this year, and walk away from every asset because it doesn't fit our criteria. And a lot of those transactions were done at... at assumed prices above what the spot price is today, and you've got the increase in costs. So, you know, it's not a healthy situation. And some folk in Canada seem to think that the only way to grow is through M&A. And I can tell you that's not the way you grow value for shareholders.

The next question comes from Tanya Yakuskine with Scotiabank. Please go ahead.

Great. Good morning, everyone, or good afternoon. Thank you so much for taking my questions. I've got three. I'll try to make them quick. The first one is just on Nevada Gold Mines. Mark, when we were there on the mine tour in September, we talked about Nevada Gold Mines Q4 being about a million ounces of production coming for the quarter for Q4. Now that we're one month into the quarter, how does that outlook, feel to you? Is it still doable with grade and throughput?

So I'm not sure where you got the million answers. Hello. I'm not sure, Tanya, where you got those million ounces from, but close, not a million, around 950,000 ounces, and we're on track for that. This is Nevada gold mines itself, not North America. North America gets close to that.

Yeah, Nevada gold mines. Okay, thank you for that. And you talked a little bit about growing your reserves at year-end 2022. So first off, just wanted to confirm that, you know, you're thinking about that $1,300 gold price up from 12. And then when you talk about growing your reserves, just want to go around the world and think about the assets that are going to grow. When we were at Nevada Gold Mines, I think we talked about reserves not being replaced this year at Nevada Gold Mines. But maybe we can go around the world and see where else are we replacing. And is this separate from... you getting the permit in H-1 next year for Pueblo Viejo and having that huge chunk of resources moved to reserves. So I just want to understand where it's coming from and is it separate from Pueblo Viejo's reserve increase should we get the permit?

So you're right. Let me start with Nevada. You're right on that. It's about 50%. we'll replace in reserves. But we're growing the resources. And Nevada, given its size, it's a cyclical thing. So it takes a while to build up the resources. And we showed you those resource growth projects, which will ultimately transition back to reserves. And the reason for that, for those who don't follow this closely, like Tanya, is... We drill them out first from surface, then we've got to develop to the resources and drill it out from underground. So the cycle is much longer than, for instance, our African assets, where in Africa we should replace and add about a million ounces, Simon. About a million ounces net increase in reserves. Three and a half or so. No, it's the current production rate on a 100% basis and then about a million ounces of additional reserves. You okay? Okay. No, I'm not, because he's going to have it on a slide with the detail. And then on Dominican Republic, we've always pointed to 9 million ounces of potential conversion on a 100% basis. and that more than makes... And again, we're still working on the final pit. As I said, we're sizing that tailings facility, and that more than makes up for the rest. So there's some smaller additions in Valadera, but it covers our share of 50% that isn't converted in... in Nevada, and it covers all of LATAM, Asia Pacific. So that's really the broadly, and we'll give you more detail, as Graham says, at the Investor Day. And then I would add the $1,300. Again, just to put things in perspective, it's not about $1,300. It's about the input cost model we use to set long-term goal prices. And so more or less, the inflation, our view of the long-term impact on input costs at this stage is around $100 an ounce. And so that's where we are indicating we might land with the new reserve long-term gold price. And on the copper side, you know, it'll be above 275, and we're busy working on that as well. And we use an input cost model to manage our long-term revenues rather than take a guess at the gold price.

Okay, so just from my own understanding, folks, when you do talk about the increase in your reserves at year-end 2022, it does include the Pueblo Viejo conversion from resources to reserves. Exactly.

That's always been the case, yeah. I think, you know, Tanya, to point out that, remember, when we did the deal, DR was a real issue because it hadn't repaid its capital yet. Its original capital had paid out over $3 billion to the government, and it had more reserves locked up than it could produce. I mean, we would have stopped some of the mining already this year. So that commitment and partnership we've built with both the communities around our mine to be able to establish and sign off publicly on a new facility and the government is significant and it effectively delivers a new plus 800 million ounces a year mine for Barrick.

No, no, no, understood. And just my last question, if I could, I wanted just to ask about the inflationary pressures you're seeing. You mentioned electricity definitely, and, you know, you're part of the world where you're operating. Your power costs are high. Are you seeing any relief or maybe not as, you know, the momentum has declined, I guess, in the growth of inflationary pressures on labor and or consumables?

So I think we need to start, there's inflation, and then there's input cost increases related to the geopolitical situation, which has got nothing to do with inflation, particularly coming out of Eastern Europe. And that's more a cost of energy situation. But there's others, explosives, et cetera. So you fix the crisis in your Ukraine, you take all of that away. But then there's inflation, which is a long-coming issue, and it's a product of excessive quantitative easing. And we have a world today that's... global debt is multiples of global GDP, which is an impossible thing to really have. It means we just haven't managed and we haven't allowed the damage of these financial crises to be through inflation or adjustments, currency adjustments. And so that... And again, you know, just let me remind you, it started last December when the Fed said inflation is transitory. Then in January it said, no, it's realflation. And then last month they said they think it's at an end. And then, oh, it's not going away. And today... This talk again, people are saying they're seeing signs of reduction in costs. We're definitely seeing ups and downs in fuel price and gas prices. And it's going to be very dynamic because right now in southern Africa, people, the traders have moved to pricing gas and oil at European rates. when it's actually been produced in South America. So it's a very crazy market, and that's why Graham says we're just not forecasting that. He said that a couple of times. We'll manage it as best we can, and we've got contracts in. on gas, and we work hard on that, and we've upped the pace of investing in renewable energy, and we're way down the road on that, way ahead of most companies in achieving that, as I touched on some of them. And the connection into the Chile grid is significant. for costs in Valadera, for instance, because it just takes away that diesel generation. And likewise, Zambia, a lot of African countries have renewable energy in their grid, but the grids are unstable. So we've pivoted to investing in grid stabilisation technology so that we can access the grid, whereas just 15 years ago, we were moving off the grid, particularly Barrick, because it was unstable and diesel was attractive. But we've reversed that trend. And I'll get Graham to comment more on the cost. But the inflation costs, we, again, contractually, we are obsessed about commercial engagement. And we're working with each one of our suppliers. Through COVID... We increased the number of suppliers and the source of those consumables. So we have a lot of flexibility. We have built in competition already. We're not reliant on any one particular supplier. And our commercial team has done an excellent job in managing those cost pressures, and we'll continue to do that. Do you want to add anything?

Is this on? Yeah. Hi, Tanya. I think Mark's covered most of the key points. Just to reiterate, as he says, the biggest driver of that inflationary pressure that we're seeing is energy prices. So at least half of that higher cost that we're seeing is related to energy prices. So to the extent that we have seen diesel gas prices start to come off from the high during the middle of this year, To the extent that that continues, we will see some respite from that. But there's a lot of other inflationary pressures on consumables, labor, other areas which are not going to go away in a hurry. So it really just depends a lot on that energy outlook. And yeah, I think that covers it.

On finishing off on the labor inflation, we haven't seen any major out-of-the-ordinary shift in labor costs around the world apart from Argentina. There is, of course, pressure building in the United States. Because the United States is an anomaly. It's supposedly the driver of all this inflation, but you're seeing embedded dollar inflation, which is not normal in a situation like this where you've got such a strong standout currency and in-country. And that's, again, I think there's a lot of damage done to the entire sort of balance, consumptive industrial balance across the globe. That's going to take some time to work out. What we have seen is that the supply chains are improving and they're starting to operate. The problem during parts of COVID is that they weren't operational yet. apart from not being efficient. They were not operational, many of them. So we shift, for instance, we bought steel balls from China, then Europe, then China and back to Europe. as we try to manage those supply chains. And we do a lot of that today. And what we have done is built a global purchasing platform with multiple suppliers so we can move around. We've got a... We've got a supply chain run by real supply chain executives, not retreaded mining people. And so our supply chain is very efficient in managing these challenges.

Okay, great. Thank you so much. I'll pass it over to someone else. Thanks, Tanya.

The next question comes from Anita Soni with CIBC World Markets. Please go ahead.

Hi. Good morning. I just wanted to get an idea as we, you know, go forward into 2023. And I think you've addressed it largely, and I think Walt could probably stay tuned for your investor day on November 18th. You know, as you look at, you know, the production profile going into next year, obviously you are going to be closer to the bottom end of the guidance range. And if we carry that through into 2023, a similar kind of, you know, sort of performance versus the prior guidance, not really seeing a material, you know, a big increase in production that would lend itself to a cost, sort of a volume benefit into next year. When we look at costs going into next year, year over year, is it fair to say that costs will remain at the current levels going into next year, or would you expect some relief into the second half of the year?

Anita, look, this is like how long is a piece of string? I think, well, I know that our policy right now as we stand is we'll work on the blended costs for both. 2022 into 2023 and then play it as we go but that's so you know we've had a big bell curve in 2022 and we'll use that as a base on which but we have our teams have design cost guidance for the mines, looking specifically at each single, uh, consumable item and, and, uh, and, and we'll share a little bit more with, of, with, of that with you when, when we talk at the investment day.

And on the investor day, just, um, just so I understand what you guys are going to be delivering, will it be the detailed guidance for next year and, um, you know, something, uh, a little less detailed for the following years, or will it be in chart form at this stage?

We're going to update our five-year plans on the operations, and we're going to give you a sort of big-picture look at our 10-year plan, and we'll tidy it up further when we speak to you in February.

All right. Thank you very much. The next question comes from Jackie Priswellowski with BMO Capital Markets. Please go ahead.

Thanks very much, and good morning, good afternoon, everyone. My first question, I guess, will be on the dividend. I know you have a pretty specific framework in mind, and we've seen a small decline in the dividend quarter over quarter. because of that framework. Have you got any thoughts about maybe potentially modifying that framework to smooth the dividend out going forward, or is this something you prefer to see sort of an accurate reflection of the of the current picture. Um, and I'm just asking, I guess, because I mean, we did see your share prices, uh, response has been fairly negative today. And I'm wondering if that's part of the reason why. Um, so just wondering if you have any thoughts on, on, uh, how you might review that if, if you're thinking about it going forward.

So, um, Jackie, it's, it's, um, let me try and explain this to you. Um, So we didn't go out and try and buy investors on the back of dividends right in the beginning out the blocks in 2019. We were very clear we want to rebuild the balance sheet, strengthen it, and we cleaned up $4.2 billion of debt. We're in our net cash position. We grew our dividend every quarter or kept it the same all the way until this last quarter. We brought in this performance dividend as part of our policy, and we specifically explained, because this is a resource industry, and, you know, there's a confusion about do you invest in your own future or do you keep giving dividends? the money away that you need to invest in. And we are organically driven. We're an organically driven organization. We look to invest in our future. We don't believe fundamentally that the only way you can grow is through M&A. So it's terribly important. And the other thing is, you know, I've been around through these cycles before and I've had plenty of soft quarters. The good thing about a soft quarter is the next quarter is always better. But we're going into completely uncharted territory. You've got a very strong yielding paper currency. Investors all around the world are monetizing their investments. They are unsure where it's going. Is it a recession? Are we at recession? sort of risk of a depression, and we've got more passive money in the public markets than we've ever had in the history of modern-day markets. And we don't know how that passive money is going to react. What we do know is that already the active funds in the resource industry have dried up. And in fact, a lot of them have cashed up and they're sitting with cash. And they're not sharing it with anyone. And they are baying the table, demanding dividends. And that's an unhealthy situation to have. What we can assure you that is our... The major part of our register understand us. They are clear about growth. They want us to do what we said we would do. And we don't want to ever get into a situation where we beholden on the market. We want to be able to invest in our own future. And we've got a plethora of opportunities. We are very well positioned to continue to deliver on our strategy organically. And our copper strategy is working as planned. So, you know, there's nothing that keeps me awake at night in Barrick. Do you want to add to that?

Is this on? Yeah, so Jackie, just to sort of take that and simplify it, the formula that we put together was very purposefully done to deliver an additional dividend at times when our performance measured by our available cash resources was strong. But to give people absolute clarity on how that would be calculated so that they have the visibility of that while still maintaining a dividend through the cycle. As Mark has pointed out, this is a cyclical industry and therefore perpetually increasing dividends is just not a reality. So having a formula that is clear and that is linked to that cycle but which is underpinned by a base dividend is, we think is a responsible way of moving forward. And it was deliberately put in place so that when the market corrected, which it has, investors would have complete understanding of how that dividend would be determined. So in answer to your question, no, we have no intention of changing that formula.

And I think the added thing, I mean, this is really, I find it difficult to follow. We have a mark in industry. It was at $1,800 and above. People declared dividend policies of ratios, share of cash flows, etc., which we refrained from doing or linked it to the gold price. The gold price is down $300. The cost side of that equation is up 100 plus dollars. And people are still keeping the dividends the same in a resource industry where you've lost 30% of your revenue and you're keeping your dividend the same. It doesn't make sense. And you're paying out more than your cash flow. So that's crazy. That's what the industry, some of the fund managers are looking for. I'm absolutely sure that the investors behind those funds don't want to see that. They're investing in our business because we're a resource business and they want full exposure to the metals that we mine. So... And we plan to be absolutely reliable in the way we run our business, as we have done for the last 30 years. And it's going to be the same.

That's very clear. Thanks for that answer. That's really helpful. If I could ask as a follow-up... You've mentioned growth opportunities, and I know Rekha Dik has been a big one for you. I saw the comments in the MDNA, and I know you're still waiting for some, I guess, events to happen on the sort of bureaucratic side in Pakistan before you can move forward with Rekha Dik. But is there any way you can give us sort of a timeframe for... when you see that sort of coming together and when you might be able to close that agreement and restart the feasibility study and the work that you're planning to do there?

We've set ourselves the end of the year for the closure. It's at the behest of, one, the Supreme Court, because this is something we believe in. We believe in managing risk responsibly, and we've passed it on through the President of the country to the Supreme Court for reference. Once that's done, it'll go back to Parliament to get certain legislation passed, and it's an omnibus legislation focused on the whole industry, which we've negotiated. And once we've got that, we'll sign the documents. All of the documents are settled. All the agreements are settled. They're just waiting for that process. We have, in the meantime, we are doing some work. We've completed the baseline study, the environmental baseline study. We need to get that in place because we need a couple of seasons to be able to refresh the 2011 report. environmental permitting because it's timed out. So we need some, and we did that. We're improving the infrastructure with the airstrip at site, and we've started to invest in education initiatives, potable water, and we've certainly done all the remodelling we can do and designing of the limited amount of drilling that we plan to do, geotech, and so we've done all that design. We've engaged with the tendering for the drilling work that we plan to do, both water and... and the conformation drilling of the main resources. And we're going to do some seismic work. So we're also busy with that final design on the seismic work focused on understanding the aquifers. We've, of course, as you would imagine, wailed down the road on infrastructure and logistics planning and confirmation and designing the way we're going to manage access in and out of the system. the project. We're also building a project team which will be located out of Dubai initially and ultimately migrate to the country. But in the design side of things, it's the most central place. It's a short flight and there are four flights a week into Quetta, which is right next to the mine. But we can get all the engineers and experts into Dubai, one flight from anywhere in the world. So that's the sort of preliminary work that we're doing ahead of any final closure of the agreements.

Thanks. It sounds like next year is going to be super busy there.

Next year is going to be super busy in Barrick, as it always is. This year was very busy as well.

I believe you. Thanks very much, Mark.

The next question comes from Cleve Rueckert with UBS. Please go ahead.

Hey, everybody. Hey, Mark. Hi, Graham. Thanks for taking our questions here. Just a few quick ones, hopefully, from us. In terms of the sequential increase in production, Mark, sorry if I missed it, but did you give us a sense of how much you expect the grades to increase Is that production increase pretty much all grade? And then, you know, I guess with that, we're just trying to figure out how much we could expect costs on a per ounce basis to come down with that increase in production.

Yeah, I think it is a slightly grade improving, and it's also oxide, so a bit of an increase in recovery because we use the Mil-5, particularly at crossroads. And there will be a drop in... in costs, unit costs, that's per ounce costs, on the back of an increasing production level. And I think that's a good enough bit of guidance at this stage. I've got compliance standing in front of me, sort of giving me faces.

All right. But it's great improvement not moving more tons.

No, no. Look, in Nevada, there's always some ton variation, but it's usually when we're mining through leachable material and we put it on the leach pad. And that's very important for us because it adds ounces without consuming capacity. But as far as... As far as the roasters go and the autoclaves, you know, we're process constrained. So the way to change it is grade and all oxide ore through the oxide mills.

Okay, all right, that's clear. And then I've got to ask just a follow-up question on capital allocation. Look, the message about this industry being cyclical has not gone unnoticed, so we appreciate your approach to it. But you did say earlier in the call that with the stock where it is, you're going to increase buybacks, and that obviously has an effect on the cash balance. And I'm just curious how you're thinking about it. Have you gotten any feedback from your larger shareholders saying, whether there's a preference for buybacks today or allow the cash balance to build and let the dividend do what it does on the back of that.

So we manage that all the time, right? And it's not about capital allocation, it's about returns to our shareholders and the ability to invest in our growth projects. And so when you look at our allocation, really it's absolutely the right thing to do when you get a share price sitting where it is today, to buy it. It's the best use of funds because, you know, clearly no one believes in it and we do. And so we've continued to buy on a proper considered program. You know, so we don't just go and buy a whole pile. We manage the purchase, the repurchase plan regularly. Of course, we have committed to a base dividend, so we manage that in our cash flow. But the performance dividend is linked to cash on the balance sheet, and it's designed that way, as Graham pointed out earlier, because when we invest in a project, we'll drive that cash position down for a period. And we know that we can... our hurdle rates are so high that we beat most fund managers' growth performance in investing in our own projects, and that's what we have for. Otherwise, if our investors or the fund managers who are custodian of our investors' money feel they can do better, then they should sell the stock and and invest that money elsewhere. But that's our business. That's our model, and that's why people buy our share. And I'm sure that makes sense to you.

That's clear. Thanks, Mark. Appreciate it. See you in a couple weeks.

At this time, there are no more questions from the conference call.

Okay, thank you, everyone back there. We're out in this hall now. Anybody got questions? You just want a drink. You're not going to outbid the Canadians on questions, are you? All right, well, thank you, everyone, again, for coming. We're going to be outside, and so if you have questions that you're too shy to ask in public, we're 100% available to answer them. The whole team is here. I've got the explorers, the tax guys, and the people involved in Pakistan, and, of course, the... the beanies, the chief beanie as well. So we'll see you outside. Thanks again. Thank you everyone who phoned in. Appreciate your time. And we look forward to talking to you at Iron Vest today. And we're on a road show, so we'll see some of you as we go around the world to get into New York in two weeks' time. So cheers.