Gold.com, Inc. Q1 FY2023 Earnings Call

Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick's Results Presentation for the First Quarter of 2023. Following today's presentation, a question-and-answer session will be conducted. As a reminder, this event is being recorded, and a replay will be available on Barrick's website later today, May 5, 2023. I would now like to turn you over to Mark Bristow, President and CEO of Barrick. Please go ahead, sir.

Thank you very much and ladies and gentlemen, a very good morning to those here in Toronto and of course a good day to those around the globe. As you know, we are going to be talking about our results for Q1 2023 today. And I thought I'd start off by just pointing to the fact that as the different global powers seek to extricate the world from the many challenges and indeed crises we currently have to contend with, we have a lot of talking, but don't see much action. Instead of fantasizing about some post-industrial idyllic state, the world's political and business leaders should perhaps be considering a better future for all, not just for the wealthy countries. This requires of course investment in the development of sustainable enterprises, driven by cleaner energy and extending to the many parts of the world, in fact, most of it, which have been left behind by the West's economic advances. Mining has historically been the catalyst for economic growth in underdeveloped countries, and I would argue that the case for investment in mining in those countries is stronger than ever, particularly as many are rich in the resources required to make the world a better place for all. At Barrick, we have always been committed to investing in the future, and in the process, we have created some remarkable value for our broad base of stakeholders. I'll share a few instances of those with you in the course of this presentation. This is the usual cautionary statement, a copy of which can be found on our website, should you wish to study it more closely. As guided at the start of the year, Q1 was a softer production quarter, due mainly to the major planned maintenance exercises at Nevada Gold Mines and mine sequencing at Kibali. Free cash flow increased despite the lower production, while adjusted net earnings per share also increased to $0.14. Operational highlights included the near completion of the massive Pueblo Viejo expansion project, which I'll tell you more about later, a robust performance from Turquoise Ridge, and the delivery of first production stopes ahead of schedule from the new Gounkoto underground mine. All-in-all, we're in good shape to ramp up our performance throughout the year. And I would point out that we are not forecasting a hockey stick end, but a stepwise move through the year. We also recently published our Annual Sustainability Report. And if you haven't seen it yet, it's well worth a look and it's on our website. Group operating results, this is a summary of those operating results which lists the factors that impacted production in quarter one, and those that are expected to drive performance through the latter half of the year. This should ensure we achieve our gold and copper production within guidance, as well as the cost guidance we provided at the start of the year. Despite the lower production, our high-quality asset portfolio increased free cash flow and allowed us to maintain a $0.10 quarterly dividend in line with our performance dividend policy. Our Tax Contribution Report was also published last month, which highlights our significant contributions to the countries where we operate. As shared with you last quarter, we experienced three tragic fatalities in January. We've taken a long, hard look at our safety protocols and practices. And during a weeklong group-wide workshop, we evolved a new approach, which we have called the Journey to Zero. Every one of our corporate and regional leadership teams have spent time at the operations, reinforcing our organizational values captured in our DNA, and reminding ourselves that safety comes with caring and committed partnerships, where we call on unsafe practices and stop work until we have a safe way to continue. Subsequently, we have seen an encouraging decrease in the number as well as the severity of work-related injuries. But as I said, this is a journey we have just commenced, and to which we are fully committed to achieving. It's actually quite encouraging. Today I sent a note to the North American teams including Nevada. They had their first injury-free April, so that's a good step forward. We've mapped that road to zero and how you can see the very specific steps we're taking towards achieving that goal. This has been the single biggest focus for the entire company and remains our top priority, with a particular focus on creating a culture where everyone has the responsibility to stop unsafe work practices. On the environment front, there were no Class 1 environmental impacts during the quarter. Our water use efficiency rate was again above the 80% target, and our greenhouse gas emissions decreased by 18% quarter-on-quarter. We have continued investing in our communities through our community development committees, and embarked on an educational partnership journey with Tanzania, amongst others. On the biodiversity front, the first white rhinos are expected to arrive in the Democratic Republic of Congo soon, as part of our mission to restock the species in the country's Garamba National Park, a UNESCO World Heritage Site, which we've long supported. As I mentioned earlier, we've just published our 2022 Sustainability Report and you can see some of its highlights here. It's worth noting that during the year, we spent $6 billion on goods and services with local suppliers, and invested some $36 million in community development projects, in line with our philosophy of partnering with our host countries. Moving to the operations, as usual, I'll start the operational review with North America, which as I've said before, we regard as our value foundation. From our base in Nevada, we've started looking at the potential Tier One hosting regions elsewhere in the United States, as well as in Canada, with the complex work of combining two sets of assets and people accomplished, a new leadership in place and a bankable 15-year business plan the vision we had for Nevada Gold Mines can now be fully realized. In Q1, production at Carlin was impacted, as I've already said, by the planned conversion of the autoclave to a carbon-in-leach process plus the planned maintenance of the Goldstrike roaster. The focus is now on proving stability and throughput. At Cortez, the emphasis remains on ramping up the Goldrush Project with a record of decision now expected in the second half of this year. There is no significant impact anticipated for 2023 production and the potential impact to 2024 and onwards is being reviewed. Turquoise Ridge's performance continued to improve on the back of the first full quarter of production from its recently commissioned Third Shaft. In Nevada, the safe and efficient drilling ramp up this quarter returned robust intercepts across all the Tier One districts, delivering further resource growth in support of our 15-year plan. With snow receding from the higher ground and a very long winter, we are planning to build on our success at Fourmile by stepping out around the recent Dorothy discovery. As I said last quarter, this is a very exciting area where we continue to discover thick and continuous high-grade mineralization, which we expect will materially enhance the existing Fourmile resource. At Turquoise Ridge, drilling continues on extensions of the BBT resource, as well as testing between the Mega Pit in the hunt for a higher grade feeder. And on the Carlin trend, bold step out drilling between Leeville and Goldstrike is intersecting strong and continuous alteration and local high-grade mineralization worthy of follow-up. Elsewhere, as I pointed out in the beginning, in North America, our exploration is opening up new frontiers, and we've started building a significant presence there. In Western Nevada's Walker Lane mineral belt, we've secured the Pearl String property through an exploration agreement and additional claims staking. In Montana, we've staked 100 square kilometers of claims where we've identified a potential target area for both copper and gold. And we are working on other opportunities in other prospective regions in the Western United States. In Canada, we are progressing the Pic project near Hemlo relogging its historical core to guide modeling and targeting. Also in Canada, we've signed a binding term sheet with Midland Exploration to earn up to 75% of the Patris property in Southern Abitibi. We move now South to our Latin American and Asia Pacific region, which had a busy quarter highlighted by the progress at Pueblo Viejo, a prime example of successful value creation by Barrick. And of course, the exciting new Reko Diq project is starting to take shape, which I'll touch on in a little more detail and I'll update you on our stepwise move towards restarting the Porgera project. At the time of the merger in 2019, you would recall, Pueblo Viejo, a Tier One mine was rapidly nearing the end of its life, despite its enormous resources. It simply did not have the tailings storage capacity to process them. We are investing around $2 billion on a 100% basis in expanding and upgrading the operation. And after long and considered engagement with the Dominican government and the community around the mine, we have identified a site for a new tailings storage facility. The new plant was more than 90% complete at the end of the quarter, and we've started an aggressive commissioning program in April, targeted to be fully complete, in line with our plan during July. As a reminder, of what I have said in the past, the existing storage facility can cope with the tailings until 2027, when the new one will have been completed. The project will extend Pueblo Viejo's Tier One life by at least 20 years at an average annual production rate of more than 800,000 ounces per year. Its success is attributed to the partnership between management, our host country, and the surrounding communities. Management also deserves credit for keeping the mine operating efficiently, despite the inevitable disruptions caused by construction and the tie-ins. Veladero made a promising start to the year, but as I'm sure you all appreciate, Argentina has a worsening currency crisis and import restrictions, a change in fiscal policies almost monthly, and as a result, the operating environment is becoming increasingly difficult. We continue to work constructively with the San Juan Provincial Governor and his government to try and find solutions for the longer term. Our planned headcount optimization and the higher gold price have somewhat mitigated the operation's negative projections for this year. But there's still a lot of work to be done on the cost profile and the resource expansion to ensure Veladero's long-term success. We have had some recent success with our exploration programs around the operation, most notably at the Morro Escondido target, and we continue to extend the system through drilling. A generative exploration review of Central and South America continues to refine key focus areas, where ground consolidation is progressing as planned. Five drill-ready targets in the Austral project in Peru are moving up our resource triangle. As I've mentioned, we're testing some targets around Veladero as part of our life of mine extension strategy. A high-level project study on the Pascua-Lama project is also scheduled for completion later this year. Moving across the globe in Pakistan, the updated feasibility study on the Reko Diq project is scheduled for completion by the end of next year, with first production expected in 2028. In the meantime, our social investment program has started with the rollout of the first Community Development Committee and a drive to bring schooling to the region. The first school was inaugurated at the Humai village, which will provide education for children from the community. And we're also very proud of the fact that the enrollment of the first students was done on a 50% boy and 50% girl basis, which is a significant step forward in that region. The reconstruction of the runway at the site, which is now complete will improve access and reduce the need for road transport. The selection of a project engineering partner for the project, both for the feasibility study and later on design and construction is nearing completion and some key definition studies are now up and running. As I indicated earlier, and as you may have seen in the press, a New Porgera Progress Agreement was signed in March between Barrick New Guinea Limited, the Papua New Guinea government, and New Porgera Limited. New Porgera Limited has initiated the steps to apply for a new special mining lease, which is a key step to the reopening of the mine. There's currently a lot happening as we progress towards getting this mine up and running. Back across to Africa and the Middle East. This region finished well ahead of planned gold production for the quarter, setting the scene for another year of strong delivery. As I've said before, if North America is our value foundation, then Africa and Middle East region is foundational to Barrick's performance. In Mali, Loulo-Gounkoto produced its usual robust performance with new Gounkoto underground mine making its first contribution ahead of schedule. Loulo's 40-megawatt solar power expansion project continues to advance with commissioning of the first phase expected by the end of this year. When complete, it is slated to reduce carbon emissions by a further 63,000 tonnes of carbon dioxide equivalent. The Loulo-Faleme district, which straddles the border between Mali and Senegal, remains highly prospective. All key structural corridors in the region are being reviewed in the search for the next world-class discovery. At Bambadji in Senegal, drilling has started on priority targets along the 26-kilometer Main Shear zone. At Loulo, initial drilling on the Gara West corridor has confirmed the potential for a significant but largely untested mineralized structure. Across the continent in the DRC at Kibali, production was in line with planned sequencing and planned maintenance. Grades are forecast to improve from this quarter as development opens up access to new stoping fronts, improving underground flexibility. Like Loulo-Gounkoto, Kibali has a high potential for major discoveries, as has been shown in the past. Exploration continues along the principal mineralized corridor, which still hosts multiple opportunities. Targets currently being advanced include potential underground satellites at Mengu Hill and Oere and new mineralized systems between the KCD, Gorumbwa, and Kombokolo orebodies. And in Tanzania, we have another success story. You may recall that when we took over there a few years ago, these mines were derelict, burdened by major social and environmental liabilities and with operators despised by the entire country. In a very short order, we reinvented the mines, which now between them deliver a Tier One production profile, formed up groundbreaking benefit sharing partnerships with the government and settled the legacy issues. The potency of Barrick's stakeholder relations and impact is demonstrated by our recent commitment to invest $30 million in partnership with the government to extend and improve the country's educational infrastructure. Also during the past quarter, our growth initiatives in the Africa and Middle East region focused on expanding our footprint in all its Tier One districts as shown on this map and optimizing our exploration to deliver high-impact discoveries within our existing portfolio. We are reviewing new operational frontiers in West Africa, delivering new projects in Saudi Arabia, and we are developing multiple exploration opportunities across East and Central Africa for both gold and copper. Talking about copper, I turn now to our copper operations, which as you are aware, we are on track to deliver significant expansions. At the time of the merger, Lumwana in Zambia was a doubtful starter. But like Pueblo Viejo and the Tanzanian mines, we have transformed it almost beyond recognition. The Super Pit prefeasibility study, which includes a potential new mill expansion and tailings storage facility is advancing, scheduled for completion next year. This project could extend the mine's life into the 2060s and elevate it to Tier One status. In the meantime, we've also reinvigorated our copper belt exploration leadership and begun the transition to an owner-operator fleet for waste stripping at Lumwana, which should deliver a significant cost reduction. In Saudi Arabia, in conjunction with our joint venture partners Ma'aden and the Kingdom of Saudi Arabia, we have received an exploration license for the nearby Umm Ad Damar permit in addition to the Jabal Sayid South permit, and initial field work has started on both these prospects. The 2019 merger was designed to create a business that would deliver sector-leading returns. And as you can see from this comparison with the GDX and spot gold, we've outperformed these benchmarks. Step-by-step, we have worked to deliver on our strategy that we shared with the market back in September 2018, with just about every objective we outlined then having been fulfilled. Today, I'm immensely proud of where we have got to, although we still have a lot more to do. With a proven ability to replace the reserves we are mining, we are not reliant on M&A to grow. Our new projects on the horizon should see us grow our production profile. This affords us the luxury of focusing on our organic initiatives while being able to choose external opportunities when they arise. I believe we have passed an important milestone this quarter on our journey to become the world's most valued gold and copper miner. As I've often said, mining is a long-term game. The foundation we have laid will ultimately be reflected in the full value of the company. So, ladies and gentlemen, to finish off my presentation, here are some of the key reasons for investing in Barrick. We own what are indisputably the best assets in the business. We have a clear and proven long-term strategy, which we execute with disciplined effectiveness. We consistently invest in our future. Our existing mines support a 10-plus year production profile, which our organic growth projects will enhance. Our reserves are constantly replenished by our successful exploration programs, which include exploring worldwide for our next major discovery. Finally, we are a leader in sustainability and our actions in this field produce measurable results that benefit all our stakeholders. In short, at Barrick, we do as we say. Thank you for your attention. We will be happy to take questions starting I believe with these people in this room. Thank you.

Hi, Mark. Thank you so much for the presentation today. Nice to see you. I wanted to ask you about some statements you made in an article interview from back in March with S&P, and you made the comment that an M&A should only be pursued if the target is stressed. I wanted to get your idea as to what that stressed means? And further to that point, what type of M&A makes sense to Barrick today?

Yes, I can't recall the specifics, but it resonates. The main takeaway is that I've always believed there are two primary reasons to acquire companies: they either possess exceptional assets or they have valuable assets that are poorly managed. As we know, during periods of high commodity prices and limited options, even reasonably good assets can command a high valuation. This leads to decisions being based not solely on the asset itself but on predictions regarding gold prices and the assumption that they will rise. However, everyone knows that gold prices fluctuate. Consequently, the focus shifts to synergies and your capacity to enhance the opportunity at hand. We were discussing an interesting graph with the exploration team recently. Historically, Barrick during its peak and Randgold Resources throughout its existence both experienced significant increases in reserves and drilling success from their M&A activities. For instance, when Kibali started with 5 million ounces, we’ve since mined 10 and have 10 remaining, showcasing value creation. We acquired Loulo with 0.5 million ounces, which resulted in mining around 10 and still having over 10 left. That translates to 22 million ounces stemming from that initial 0.5 million. We also discovered Tongon and Morila, with Goldstrike being a prime example; Barrick initially bought it with 3 million ounces and it has produced 33 million ounces. These discussions highlight that if the goal is to create value instead of taking risks, then that’s where the opportunity lies. There are varying perspectives in Canada on how to generate value; some believe that growth only comes from M&A. I firmly assert that value creation comes from expanding reserves through drilling. Acquisitions may boost production, but that doesn’t guarantee value. Observing some of our competitors, it's clear that our messaging emphasizes sustainable profitability. Thus, the focus must be on evaluating acquisition targets and their impact on profitability, as our priority is to grow value, not just to grow. Our transactions have been strategic and based on a thorough two-and-a-half-year analysis, which we finalized in September 2018 with explicit goals, including staffing. In contrast, Newmont's acquisition of Goldcorp seemed opportunistic. This distinction highlights different strategies or philosophies, and Barrick has a clear business strategy. Regarding M&A, we have thoroughly explored all available options in the market and even considered many that weren’t publicly listed. While we haven’t recently completed any acquisitions, the Tanzanian and Nevada deals were swift as they fit our criteria seamlessly. This approach will remain consistent. Just like in 2011, when the gold price rose and investment waned, those who profited were the sellers, which doesn’t align with our business model.

Yes, I was going to ask one follow-up, and it's Lawson Winder from BofA Securities, by the way. Around that same time, you made a comment that you wanted to see copper grow to 30% of the profitability of the business. I think it's sub 20% right now. So I'd also love to get your thoughts on, what are the elements that drive that potentially beyond just the Lumwana Super Pit? Thanks.

Thank you for your question. Looking back to 2018, we clearly stated that to remain relevant as a gold miner in the public market, we needed to grow and include copper in our portfolio. Our interest in copper is not based on trends but on its strategic importance, which we view as comparable to gold. Since then, we've made significant progress, notably increasing production at Jabal Sayid by 50%. This site has transformed since 2019, and we have expanded its operations through strategic partnerships in Saudi Arabia, where we operate under a 50-50 arrangement, which is quite rare there. Our collaboration in Saudi Arabia presents further opportunities in South Asia. Initially, we considered selling Lumwana, but upon closer inspection, we managed to reduce mining costs by 50% and discover additional reserves in satellite deposits. These high-grade areas allow us to enhance our profile and develop our main ore bodies effectively. Lumwana positions us well to finance further expansion without facing additional capital dips. Regarding Reko Diq, it represents a world-class opportunity with both gold and copper production potential. We didn't acquire this asset; it was pre-paid by Barrick and Antofagasta. Our partnership now reflects a 50% stake in this previously shared asset, opening up new exploration possibilities. When considering our projects and their contributions, Lumwana alone is expected to match the output of our 50% share in Reko Diq. By the end of this decade, based on our current assets, we anticipate increasing our gold equivalent production by 20%, which is substantial in the mining sector. We have more reserves now than at the start of our consolidation efforts in 2019, allowing us to sustain our production without needing to make acquisitions. We also have a more than 10-year outlook, having advanced our understanding of our known resources significantly. Our geologists have great insight, and there's potential for new discoveries as they are well established in these regions. Additionally, exploration remains a critical area that many in the mining industry undervalue. Strong exploration capabilities, such as those possessed by Barrick, contribute to our strategic advantages that will yield long-term benefits, as building expertise in this area takes time.

Just to reiterate what we said at our Investor Day in November. We get to 30% copper organically through those two projects that Mark talked about in terms of the Super Pit and Reko Diq by the end of the decade. So we get there without doing M&A.

Mark, you've talked a lot about Argentina and how difficult it is to operate there. You did mention in your comments and your presentation that you're trying to work with the government to help things along. What kind of initiatives can you actually move forward there to…?

The governor's office in San Juan has developed a strong relationship with us, although navigating the Argentine political landscape is challenging due to its current confusion. The governor does rely on Buenos Aires for dollar allocations, and we've dedicated considerable time to discussions with the Governor of the Central Bank to clarify our needs for dollars, which he acknowledges are necessary. However, the Central Bank is not autonomous, and decisions are often influenced by politicians in the federal government. This has been a familiar struggle for me, having witnessed similar crises in other countries. Argentina possesses all the elements for a strong economy, including a sizeable agricultural sector, mining, oil, and a tourism industry, but the political situation is troubling, especially during an election year. In response to these challenges, we've reduced our workforce at Veladero and collaborated with the provincial governor to create jobs, removing nearly 2,000 positions while postponing capital expenditures until next year. Our commitment to the province includes participation in infrastructure programs that ensure employment, allowing us to remain constructive and continue investing in our workforce. The situation has evolved, and there’s potential for being cash flow positive this year because of these decisions. We are committed to mining responsibly, adhering to the philosophy that if gold cannot be mined profitably, it should remain untapped. At Veladero, we are pursuing mining with discipline and profitability, while also maintaining our exploration efforts for future value creation. I frequently visit the site, and it is frustrating because the country has so much potential, and the people are great, yet the political environment is chaotic.

Maybe a question for Graham, can you get cash out of Argentina currently?

I can answer that. Yes. So we do and we can and we negotiate that. I'll give you an example. Also, as you've noticed, we keep gold in this vault. We manage the gold because you don't want to sell the gold and end up with pesos that you can't spend. We really used gold as the ultimate currency with the approval of the government. But that in itself doesn't really get anyone out of trouble. The latest regulation is that when you pass something offshore, you can only pay for it 180 days later. For small companies, that's toxic. For Barrick, we've got a big balance sheet and strong partnerships on the supply side. We can manage that working capital pipeline. But inevitably, it's going to really strangle the mining industry in Argentina.

Just a question, tagging on to Lawson's, and you quoted this morning about not being interested in Teck metals. Is there competition for copper resources, mining companies just too intense, and not something that you can compete in?

I think we've got lots of competitive advantages, Greg, as you know, particularly in emerging markets. But again every potential transaction, to Lawson's first point, is different. Teck is not a super producer; it does have some assets. It's got a really good stake in a partnership in Peru. It's got old legacy assets here in Canada. It's got the new, what’s it? BT?

QB2.

QB2 in Chile has coal and significant debt. Considering that structure, Glencore's involvement has been noteworthy because they bring synergies that we lack. Given the current circumstances, it doesn't make sense for us to engage in anything like that. We don't deal with coal or debt. The synergies in Chile, with the Glencore Anglo assets, are substantial. We don't have anything to contribute. However, we find it very interesting to observe the discussion as it highlights the state of our industry, especially since we haven't invested in our future.

Thanks, Mark.

Anybody else who wants to ask a question? Can you ask the host to explain the trick to ask questions?

Operator, we can go to the telephone questions now please.

Sure. We will now begin the telephone question-and-answer session. The first question comes from Cleve Rueckert with UBS.

I wanted to revisit the long-term perspective you take, which we appreciate. However, I noticed in the press release a focus on some near-term operational work related to the assets. You mentioned an increase in quarterly production volumes throughout the year due to the efforts made in the first quarter. As we look ahead to 2024 and 2025, is there planned growth for both years? Should we expect this gradual improvement in volumes to continue through 2025, or will there be seasonal variations in the business as you take maintenance opportunities as needed?

Let's address this year first. We're targeting around 45-55 million ounces of attributable production, which is an estimate for the first and second halves of the year. The main factors contributing to this are that there will be no abrupt end in the fourth quarter. For Carlin, we anticipate an increase in production during the second quarter, while Cortez has shown consistent improvement quarter-over-quarter and is expected to remain steady in the third quarter. All the other operations in Nevada are already performing at expected levels. By the third and fourth quarters, Carlin and Cortez are expected to be in strong operational positions. Many of you are likely aware that in large transactions involving multiple assets, it’s crucial to ensure the right personnel are in place first. This includes considering unionized staff, especially since we've recently concluded a significant collective bargaining agreement negotiation. This reflects our different approach to managing these situations, as the union and non-union personnel are working together. Additionally, we've made changes to our management structure to move away from a more controlled strategy as we integrate the organization. Previously, Newmont management operated on four-day weeks, and those assets were lagging behind their plans, while Barrick focused prominently on cash flow and high grading, leading to different operational cultures. We've managed to align these cultures. Climbing the hill is challenging and requires building good habits over time, similar to our experiences with ramping up Kibali and Loulo. None of the mines we started with were perfectly operational from the outset, and we’re currently at that transitional phase where we’ve restructured management following the Barrick, Goldstrike, and Randgold models. We've established strong General Managers in Nevada, though building that capacity has taken time. We prefer a flatter management structure rather than central control. We also need to address neglected capital and maintenance issues, as our acquisition was somewhat contentious. We’re close to being comfortable with our processing facilities, although they are still somewhat limited by processes, especially as we explore underground operations involving double refractory ore. We are expanding the Gold Quarry roaster, which has been the least efficient of our two roasters, and this improvement will have a positive impact over the next couple of years. Production volumes are expected to increase significantly, reaching over 800,000 ounces again this year. We’ve optimized the front end of our processes while maintaining the same autoclave feed and improved temperature management to handle higher fuel loads. We’re seeing throughput increases of around 10%-12% in the autoclaves, and our new SAG mill adds significant capacity. This operational flexibility allows us to manage unexpected shutdowns more effectively. We’ve been investing in additional flexibility in Nevada by increasing underground stockpiles with better grades to mitigate risks. Kibali was another producer with lower output this quarter due to reliance on high-grade stockpiles from the previous quarter, but we are working to stabilize and maintain steady production for the remainder of the year. When I mention a new production profile, I mean this reflects our efforts to stabilize the organization moving forward.

Yes, that makes sense. I would say that the work you're doing over the last three years may not be clear to everyone, and you're getting tired of talking about it, but we're looking forward to...

No, I never get tired of discussing it because that's the essence of running a business. I would add a bit more even though you hadn't specifically asked. Consider the approach to dividends. Over the past three years, there has been a strong market demand for dividends, and many have complied. However, now we see companies paying dividends outside their established policies because of this pressure. We chose not to follow that trend. Our financial position is solid, we have the capacity to pay dividends, and we will do so. We repurchased shares when prices were low rather than at inflated levels, unlike some competitors. This highlights the distinction in how we operate compared to many others in our industry. As management, we are owners, so there is no need to push that mindset onto others. Our approach is fundamentally different, and we maintain a long-term perspective. I assure you that we will encounter opportunities as we move forward.

I think that point is clear from our perspective, particularly regarding the long-term view and the patience it requires. I wanted to ask you just one quick follow-up on Porgera. I appreciate that you're currently waiting for the mine lease to be approved. What happens after that? What are the key milestones? Do you have an export license in place? What needs to happen to get Porgera back into guidance and operational again?

The significant issue is the Special Mining Lease, which was transferred to Kumul three years ago. We understand what needs to be accomplished, and we're moving forward with the process. We plan to start the mine using thermal power as a backup. We are collaborating with the Hela Province to restart the gas power station in Hela, which is a unique aspect of Porgera. It is a low-cost, high-production gold project. Additionally, we have agreed on the scope of the shareholding for landowners, which will need to be ratified through a development forum, but this will not delay production. The restart hinges on the Special Mining Lease. We have only three points remaining to finalize the operator agreement, along with a few other documents, including the mine development agreement. We have reviewed our entire mobile fleet to ensure they are operational. We have also cleared out mud from the mine and will continue to do so. A fleet of trucks has been kept offshore in Australia, which we will bring onshore as we finalize our structure. This will support our mining efforts. We are gradually rehabilitating the tankage to ensure we are operationally ready once the Special Mining Lease is approved and we receive the fine. We are working closely with the government and the Mineral Resources Authority. Another critical issue is that we currently have over a thousand unemployed individuals. It is essential to get enough personnel in place while ensuring security around the mine, which is a government responsibility. We have all come to terms with this reality. Operating in Papua New Guinea poses significant challenges.

The next question comes from Tanya Jakusconek with Scotiabank.

Mark, can you provide an update on the Goldrush permit? It appears to be delayed each quarter, and I’d like to understand the reasons behind these delays. During the mine tour in September, I noted that the portion of Nevada Gold Mine production, particularly Goldrush, was expected to yield around 100,000 ounces this year, with projections rising to commercial production by 2026, aiming for approximately 400,000 ounces. Can you clarify the current status of the permit acquisition and what production levels were anticipated for 2024 and 2025 that might be affected?

Yes. This is the challenge of operating in the United States. There are many positive aspects to it, but permitting is not one of them. Recently, there have been some Ninth Circuit Court rulings on permitting, but we are not legally affected by those. The Bureau of Land Management has slowed down the process. However, we have established a constructive working relationship with them and are actively engaged. The Environmental Impact Assessment is nearly ready to be submitted to Washington, if it hasn't been submitted already. That process is delayed, but we can manage the delay. We're currently holding around 1 million ounces, specifically between 950,000 and just over 1 million ounces for Cortez, with Goldrush integrated into Cortez, and we manage it that way. We are considering our next steps if the delays extend beyond this year. We have received some relief under our trial mining permit, which allows us to conduct exploration activities currently. Our focus is on managing these challenges while ensuring that we do not compromise infrastructure development and continue to implement our long-term plan for Cortez, which includes Goldrush. We will keep you updated. Right now, we have sufficient flexibility in our operations, which is crucial in Nevada. It has taken time to establish the working capital necessary to build that flexibility.

Okay. Am I correct to think of that 950,000 to 1 million ounces, that 100,000 of it is a Goldrush?

No, it's variable. I think Goldrush will slowly grow to your 400,000 ounces and maybe even higher as we develop it, but we're still learning about those breaches. Right now, the million-ounce profile for Cortez is built on what we have banked in the Goldrush project. We're still expanding and learning as we drill the ore bodies out. The nice thing, Carlin is 1.5 to 1.6. Cortez, it should settle out above 1 million ounces, which is a big shift. It was there a long time ago, not recently. You’ve got 500 going to 600, maybe a little bit higher in Turquoise Ridge; you've got Phoenix. That's what grows our profile gently over the next two, three years in Nevada, as we've shown you.

Okay, I think I'll move off that, and I just got two other projects I wanted to ask updates on, if you could, Mark. Can you give us an update on what's happening at Donlin Gold in terms of what you're seeing there and what your focus is for this year and longer term…?

We're focused on what we shared with you in quarter four. It was actually quarter three last year after our September annual trip, and that is very specific work streams on revisiting and optimizing certain work streams. One is, of course, the water management and ensuring that we address the issue around protecting the fish in the waterway. The second one is the tradeoffs on power, because currently the plan is to bring gas from a gas field that hasn't been developed, on a gas pipeline that doesn't have a road next to it. There's work to do on that tradeoff. We're doing a series of metallurgical tests and tradeoffs on the flow sheet, because it's a double refractory ore, and whether we can improve the recoveries, and is there another way to process this? That’s part of the tradeoff. We’ve gone back to the mining and mine schedule, improved our knowledge of the ore bodies, looked at bench huts and equipment sizing, then we can get our head around the costs. Another one is limestone; when you've got autoclaves, you need limestone. There’s always been talk of calcium carbonate rocks, and the area, we need to just check if they’re usable, whereas the closest source of limestone. There are a couple of these things that could materially change the project. We have worked hard with our partners. Remember, this is owned by the native Alaskans, and both the people who own the surface rights and the mineral rights, but also all native Alaskans will benefit. We’re working towards the next review workshop in September again. After that, we'll update the market. We see this as a significant resource. We are putting the necessary effort into it to try to get it into reserve for Barrick's set of filters.

You can get that as a reserve when, Mark, do you think?

I don't know. I'm still working on it, Tanya.

Okay. We will wait for the update then later this year on all those factors that you're looking at. If I could just ask, you mentioned the high-level study coming in at the end of the year on Pascua-Lama. Can you just remind me what's happening there?

We were directed to address the significant issues related to the project's design, including critical flaws and social concerns. When I took on my role at Barrick, we approached the government to resolve these issues as we were preparing for a conflict. We decided to focus on finalizing the construction permit. There were several factors to address, such as water disposal systems and various infrastructure challenges, and we are making progress in resolving these. We are close to completion. The exploration permit remains active, and last year we conducted drilling that indicated a large portion of the resource could be processed via standard leaching or agitated leach methods. Our goal is to prove the project's viability so we can present it to the governments of Chile and Argentina, highlighting the potential benefits. We aim to initiate a permitting process to further explore the model and advance from there. It's our duty to ensure these countries recognize the inherent value in both the infrastructure and the resource.

The next question comes from Martin Pradier with Veritas Investment Research.

I want to know, when I look at cost increases that you have this quarter, there were 16% year-on-year gold, and over 40% on copper. What gives you confidence? What are the two or three things that give you confidence that you will be able to maintain the cost flat year-on-year?

It's all in the production, as you know. We had a soft quarter, so the costs were up because the production was down, and on a unit basis that drives all-in sustaining costs. With a pickup, as I pointed out, if you've got 45% of sort of 4.4 million ounces, middle of guidance, and you're going to increase production by to 55% of that, it drives costs. You want to add to that, Graham?

No, that's spot on. I mean, if you look at the delta in production from Q4 to Q1, you were down about 15%. Costs went up 15%. Strong correlation.

If you look at the volumes, were down 9% compared to Q1 last year.

That's too far back. Quarter four and quarter one.

You can't really look at Q1 last year. That was pre the inflationary pressure we experienced post the Ukraine crisis. Remember, last year, we started the year with a $65 oil price assumption. 2022 ended up being close to $100 for the actual oil price and that drove significant inflation through the business last year. This year, we're using assumptions for key inputs based on prices that are very similar to what we experienced in 2022.

You would say that this is in line with what you're expecting to cost the Q1 or was higher than expected?

It's in line, because as we indicated at the start of the year, we expected this first quarter to be the weakest quarter, so we expected cost to be highest in this first quarter. As production steps up, we expect the costs to come down. We expect to meet both our production and cost guidance metrics for the year.

The next question comes from Mike Parkin with National Bank Financial.

Thanks for taking my questions. Most of them have been asked and answered, but just a follow-up on Nevada. It sounds like you're doing a lot of good things in terms of getting the management in place that you want. In terms of the more general labor force, how are you tracking relative to filling job openings and just any kind of overall commentary around the Nevada Gold Mines, employment scenarios? It's still a bit challenging, like it is in some of the other areas of the world, or you're finding it easing and getting closer to full employment plans?

We made a strategic decision some time ago to move away from an outdated mining skill pool and focus on investing in younger engineers and their skills. This approach has been very successful. We have implemented various initiatives to provide young people with the necessary training and experience to enter the workforce. Recently, we organized 110 job fairs, compared to about 50 before. Almost half of the young graduates who joined us last quarter were unfamiliar with mining until they gained experience in Nevada. Simultaneously, we've improved our campus programs for geologists, mineral resource managers, and planners. We now operate three mining schools or training centers focused on underground, open pit, and processing training. In the United States, we often find that our skilled workforce comes from the military or has basic diesel mechanic training, but they lack specialized training. We are working to address that. One of our key initiatives is to standardize operating procedures across our Nevada operations. I spent about a week on-site recently, meeting new recruits from other industries, some of whom are in their 30s and 40s. We are already noticing signs of a tightening labor market, distinct from our targets among young professionals. Over the past three months, we have hired around 100 young graduates each month in Nevada, and our turnover has significantly decreased by about 20%. We are improving management efficiency, offering childcare from early morning until evening, and actively seeking multiple candidates for each position, particularly in driving roles. Our efforts emphasize a commitment to hiring locally, resulting in a substantial increase in Nevadans within our workforce and a jump in local purchases to 80%, up from around 20% when I started. While I can't share specific numbers, the trends are positive. Contrary to the belief that young people lack ambition, we've recently hired top graduates from British Columbian universities because we actively recruited them. Their potential is exciting and may transform our operations. For instance, while older civil or electrical engineers might struggle with AI or data analytics, younger graduates are well-versed in these areas from their studies. This shift aligns with the industry's future, and we've enhanced efficiencies through better data access on our large trucks. It's not only about being proficient in AI but also having the comprehensive engineering skills to effectively apply that knowledge in our field.

There are no more questions from the conference call.

Thank you very much, everyone. Great seeing you again, and we'll be catching up with some of you during the next while. The team is always available. We are going to see some of you down in the Dominican Republic, I believe. We look forward to that. If you've got any questions we haven't had time to ask, the team is around, and we're all on the end of the phone. Thank you very much again.

This concludes today's event. 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.