Gold.com, Inc. Q4 FY2023 Earnings Call

Thank you for standing by. This is the event operator. Welcome to Barrick's Results Presentation for the Fourth 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, February 14, 2024. 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 very good morning and good afternoon to everyone today. I want to start this presentation with some reflection back to the time of the merger where we committed to a clear strategy for building the new Barrick into the world's most valued mining company. And move on now to today, 5 years on, it's clear that we've come a long way in realizing that objective. As I'll show you through my presentation, our focus on Tier 1 assets has delivered a peerless gold portfolio with meaningful potential for further growth, matched only by the significant ramp up of our copper business over the next 4 years. Maintaining Barrick's unique record for replenishing our asset base, we have replaced more than 140% of our gold reserves since 2019 and more importantly at the same grade, which is critical. In Tanzania, our Twiga joint venture success has demonstrated the power of our partnership approach, and we are aiming to replicate that at many of our other operations, including Porgera and Reko Diq. Our belief that combining the best assets with the best people will yield the best returns has produced an industry-leading production profile backed by a strong balance sheet and a sustainable dividend and capital return policy. Under every heading—asset quality, operational excellence, peerless people, and sustainable profitability—we have now ticked virtually every box on our report card. As this presentation includes some forward-looking information, I'll start with the usual cautionary statement, which if you are so inclined, you can read at your leisure on the website. Protecting the health and safety of our people is Barrick's top priority, and last year, we made tangible progress in what we call our Journey to Zero, posting the best results since the merger. As you can see here, both lagging indicators, the lost time injury frequency rate and the total recordable injury rate continued to come down. There is, however, a lot more work to do on eliminating fatalities. Clearly a subject where there is no room for complacency. Our focus remains fixed on the Zero goal and the enormous progress made by our Latin America and Asia Pacific region shows that this is well within our global reach. In 2023, we were able to progress our sustainability strategy significantly. Our commitment to real sustainability has long been the bedrock of our business and it's based on a holistic approach, which integrates all aspects of our environmental and community responsibilities as distinct from the siloed ESG model. The numbers you can see here show the tangible benefits this strategy is delivering. As you all know, we had a slow start to the year with operational issues at NGM and Kibali. And then towards the end of the year, the commissioning setbacks with Pueblo Viejo’s plant expansion impacting on production. Notwithstanding that, we delivered a steady quarter-on-quarter improvement through the year and despite another good fourth quarter, we fell fractionally short of our gold guidance while copper met its guidance. Highlights of the year were our sustained and industry-leading gold and copper reserve replacement, which is one of the key differentiators between Barrick and its peers. Another consistent performance from the AME region and a strong financial performance, admittedly with the wind of a record gold price at our back. Our strong balance sheet reflected by our investment-grade rating also stands us in good stead as we navigate these uncertain times. The results for the fourth quarter reflect the improved performances from Cortez, Phoenix, and Pueblo Viejo, where we have now resolved the equipment issues in the flotation circuit. Costs were slightly higher than the previous quarter, mainly due to lower grade stockpile feed processed at Loulo-Gounkoto as a result of a pit wall failure at the Gounkoto open pit. Lower grades processed at Carlin, extra commissioning costs, and the impact of the tropical storm event at Pueblo Viejo rather than—and this is rather than what people jump to—a structural shift in inflation. I'll touch on all these as I go through the presentation. The financial numbers speak for themselves, but it's worth pointing out that year-on-year operating cash flow increased by 7% and free cash flow grew by 50%. Furthermore, adjusted net earnings per share increased by 12%, and the quarterly dividend was maintained at $0.10 per share in line with our policy. We, as usual, will start with the operational review in North America, which is still a work in progress, but on a much firmer foundation and under new leadership that is aligned with Barrick's DNA. At NGM, the long-awaited record of decision enabled Cortez to advance the Goldrush development late in the fourth quarter. In 2024, we are ramping up drilling and the evaluation of Barrick's 100% owned Fourmile project with a view to commencing a prefeasibility study by the end of the year, and I'll cover that in more detail a little later. And in line with Barrick's continued group-wide investment in accessing skills that are in short supply in the industry, NGM has established 3 early learning centers to increase childcare facilities in the region. And we've also progressed our mine education system, our trial mine training centers, as we call them in South Africa, to make sure that everyone that joins us goes through a proper induction and understands and is skilled enough to do the job. And it's an integral part of our focus on safety because that is a big issue. You know, everyone talks about all sorts of safety procedures, but we've landed on the view that operational excellence is really the foundation of a safe environment when people know what to do and they do it properly. As elsewhere in the group, the transition to renewable energy gathered pace with the commissioning of the substation and the first 100 megawatt solar farm in Nevada with the second 100 megawatts to be switched on later this year. This is a closer look at NGM and the details are in the MD&A for those who want to get into the details. Weather highlights include a near-record fourth quarter production from Cortez and the acceleration of the Goldrush development, which is forecast to produce 130,000 ounces in 2024 growing to around 400,000 ounces by 2028. All-in-all, we see an exciting future for Cortez. And then looking forward to 2024, we are also stepping up our planned underground development and grade control drilling efforts across both open pits and underground, as part of our production delivery assurance program at our Tier 1 operations and that does impact on the cost this year. Another noteworthy improvement during the year was the step up in performance at Turquoise Ridge following the commissioning of its 3rd shaft and improved performance at the Sage autoclave. We've still got some work to do on the Sage autoclave, but we're now very clear about what we have to do to really return that processing facility back to where we expect it to operate as far as availabilities go. Turquoise Ridge, because of that, is beginning to live up to its full Tier 1 potential. Costs for the complex were a little higher quarter-on-quarter owing to the mix of production, including higher cost stockpile material as well as some additional maintenance costs. I always refer to our Nevada Gold Mines Complex as our value foundation, and how you can see why. Far from being a mature destination, it is a world-class goldfield, which we're successfully exploring for both greenfields and brownfields growth opportunities. We now have a 5-year outlook on reserve replacement, and that's quite important. We've built that foundation, and now we can like we do in AME and LATAM, we can point to what we have to do to continue to convert over the next 5 years. And the other point is that this year we're going to be spending quite a bit more of our budget, same budget, but a little bit more, not a little bit, a substantial amount more on greenfields targets, because we've built the models and we're excited about the fact that in our view, this is not a mature gold field. There's lots of upside in it. One of those is the recent Robertson discovery where step-out drilling is confirming upside potential and the importance of Robertson as it comes with the additional advantage of mostly non-refractory oxide ore. And then, of course, at Carlin, the Greater Leeville hosts multiple opportunities which we expect to continue to support our reserve replacement. As I indicated earlier, I'm just going to focus a little bit on Fourmile and share the fact that we've decided to expand the drilling and other valuation work streams at this 100% Barrick owned project, with a view to starting a prefeasibility study at the end of 2024. And this year, we're actually budgeting $40 million for this project, $25 million for drilling and the rest will be other work streams to ensure that we are at a stage where we can take this towards a prefeasibility study at the end of the year. We believe that this drilling will outline the potential to more than triple the existing mineral resource base with mineralization hosted in rock units that can potentially support large-scale long-hole open stopping. Another key aspect of this year's program includes the evaluation of the access portal locations to support development along the strike of the ore body, which would initially be used for conversion drilling and then later be reused for mine haulage in support of a potential Tier 1 production profile. Outside Nevada, Barrick is actively expanding in North America and through generative work and land consolidation, we believe we'll now be able to start sharing with you the detail of our specific targets across the U.S. And the reason we haven't got all the detail in here is we're still working on consolidating some of the ground. As you know, we are also partners in the Donlin part project in Alaska, which we're systematically driving up the value curve. And as I've said many times before, I also believe we're underinvested in our home country, Canada, where we're examining opportunities in the prospective Sturgeon Lake and Patris projects through grassroots district-scale exploration programs. And finally, at our existing Hemlo mine, we continue to advance the open-pit project study. We moved now down south to what started as the Latin America region but has since expanded to encompass Asia and the Pacific. In Argentina, Veladero delivered something special in the shape of a performance that beat its production and cost guidance. We've been struggling with that mine, and last year we said let's stop, cut it back a bit, reestablish it, bring in a fresh set of eyes as far as leadership goes, and really the team did an excellent job in beating its guidance both on production and costs. In fact, as a product of that we've added back about 2 years of mining to the pit because we're much more comfortable about our ability to deliver value from that asset. And of course, we're all waiting for the new government to start delivering on their promises to be a lot more business-friendly. Elsewhere in the region, you'll have seen the years of negotiation with the government finally delivered a revived Porgera in Papua New Guinea and the mine is scheduled to start pouring gold again this quarter. And in Pakistan, the massive Reko Diq copper gold project continues to advance steadily towards first production in 2028. Our flagship growth project, the expansion of Pueblo Viejo in the Dominican Republic, as I shared with you last time, suffered some setbacks in the form of premature failure of flotation gearboxes and the collapse of the new crushed ore stockpile conveyor structure. And our highly committed and tenacious team overcame the challenges to deliver an improved performance in quarter four, notwithstanding in addition to these two events, a one-in-500-year tropical storm. And I think it's important that when we back in 2019, we had some focus on managing the water and particularly ensuring that it stays within the footprint of the mine. And we were able to manage this massive storm event and not have any major environmental incidents, so a real tribute to the management. Just to remind you, this project is designed to sustain average annual production in excess of 800,000 ounces of a life of mine beyond 2040 and we will have, as I said earlier, we expect to have this conveyor structure reinstalled later this quarter, at the end of this quarter in fact, and then we'll ramp up. We are currently working on the ramp-up and I thought I'd show you this slide, which is, you can see the progress following the repetitive failures of the new flotation gearboxes, which had to be redesigned, manufactured, and reinstalled and this I can confirm, as I indicated last quarter, has been completed and was completed at the end of December. And then the replacement of the crushed ore stockpile conveyor is underway, and we are busy operating under temporary installations and feeding the SAG mill, the second SAG mill, albeit at a reduced throughput. And that ramp-up will accelerate, as I said, after we install the replacement conveyor infrastructure at the end of this quarter. Elsewhere in the region, we continue to expand the Barrick footprint. And again, in LATAM, we've really cleaned up our portfolio, really refocused the exploration efforts on potential targets that have potential to meet our Tier 1 ambitions. And as part of that we've opened a new frontier in Ecuador and secured a high-quality portfolio together with an exciting advanced project in Peru. And in the Veladero district, field work is defining drill-ready targets and up in the Dominican Republic, exploration continues both within the Pueblo Viejo joint venture lease area as well as across the country. And again, I'm excited that we'll be able to show you some good results in the next couple of quarters arising from that work. For the 5th consecutive year, as I said in my introduction, in fact ever since the merger, the Africa and Middle East region delivered on its guidance and replaced its mined reserves. It has also become host to some of Barrick's most exciting organic growth prospects, notably the Lumwana copper mine's expansion. We start at Loulo-Gounkoto, where the results speak for themselves. Production was a little low, as I indicated earlier, and costs higher quarter-on-quarter on the back of lower grades in line with the revised plan following the Gounkoto pit wall failure. As elsewhere at Barrick, the complex is transitioning to renewable energy and its second solar project, a 40-megawatt solar farm with a 36-megawatt battery energy storage system commissioned ahead of time and below the original capital cost estimates this last quarter. Kibali is Africa's largest gold mine and a leader in automation and clean energy. Much of the energy that drives Kibali is already supplied by its 3 hydropower stations. And when the mine's new 16-megawatt solar power plant and battery storage system are commissioned in 2025, it'll increase its overall renewable energy penetration from 79% to 88%. And for 6 months of the year, its electricity demand will be met entirely from renewables. In Tanzania, our transformative Twiga partnership with the government continues to deliver exceptional results with North Mara and Bulyanhulu achieving the high end of their production guidance for the year, and we're also expanding our footprint in the country in the hunt for new world-class discoveries. Our strategic decision to invest in the expansion of our copper portfolio has led to the super pit expansion project at Lumwana in Zambia and this will transform Lumwana into one of the world's major copper mines with projected annual production of 240,000 tons per year over a 30-plus year life of mine. And it is a key component of the Zambian government's drive to revive the country's copper industry over the next 10 years. The estimated cost of the project, as I've already indicated before is around $1.9 billion and construction is scheduled to start early next year with 2028 targeted for first production. The project has been fast-tracked with the completion of the prefeasibility study, and we project to start ordering long lead items towards the end of this year. And here you can see our many brownfields and greenfields growth opportunities across the region. Of particular interest is our growing presence in Egypt and Saudi Arabia, where we are rapidly progressing exploration on the very promising Umm ad Damar permit, and we've already intersected significant VMS style mineralization at 4 prospects within this property. I've always said, ladies and gentlemen, to be world-class, you have to be global. And Barrick's presence now extends across all the world's major gold and copper districts outside Russia and China. And we've also, as I said, also rationalized our exploration portfolio. So we really have what's left is targets that have the potential to meet our investment criteria. This is a solid foundation on which we can grow our production and our value and is directed by our proven strategy and supported by the broad spectrum of skills we have developed to build a modern mining business. One of the key qualities that differentiates Barrick from its peers, as I noted earlier, is our ability to replace our reserves organically. Since 2019, we've replaced 140% of the gold we've mined, adding on a 100% basis 44 million ounces of proven and probable reserves across our managed assets. And in last year, we did it again. And I think people underestimate that. You know how I talk about M&A. And when you do the same thing all the time over and over again and expect a different outcome, there's a definition for that. Paying 50% premiums for assets and not realizing that the only way you can deliver is either find more or wait for the commodity price to lift your revenue line. Finding, particularly brownfields reserves, really does shift the assets, shift your capital. And again, I've demonstrated this many times throughout my career. And I have no doubt that our focus will deliver again. And we, I think, have some examples developing on which we can prove our strategy. So that's why Barrick is not forced to buy its growth. And this growth is organically embedded in our business. And our 10-year plan, which very few mining companies present is not there to brag about our profile, but it's to give the market a clear understanding that our focus goes beyond next year and that we are able to see challenges way ahead down our runway and address them. And that's always been our model. And again, I think the key here is that we're still working on the back end, as I indicated, of this profile to fill in the gaps. And based on our long track record, I have no doubt we will do it in the fullness of—Nevada is a very good example because we're starting to get to a point where we are able to look, as I said, forward a few years and know where the transition is, the replacement is coming from. And again, we've got a long tail in Nevada and the big challenges how we bring it forward. And one of the big focuses this year is going to be how we schedule the development of the Greater Leeville area, all those different mining sections in Northern Carlin. And to support this 10-year plan, here is our detailed 5-year production and cost outlook. Looking at the next 5 years, there are a few aspects to note and increasing production profile, which always brings the cost down an increase in capital expenditure over the next 3 years as we have now included the capital estimates for the Reko Diq and Lumwana super pit projects, after which capital starts to decline. Gold per ounce costs are flat year-on-year in 2024 and then start declining in line with the increasing production. Also, as previously flagged, production in 2024 is a little lower than our previous estimate, primarily due to the delay in the record of decision at Goldrush and the slower ramp-up of the expansion project at Pueblo Viejo. NGM was always going to be a softer year in 2024, so the delay in the record of decision for Goldrush has exacerbated this. Our track record of replacing reserves gives us the confidence to know we can deliver on this outlook without the need for dilutionary or delusionary acquisitions. And importantly, we have the balance sheet strength and operating cash flows to fund this growth while still maintaining our industry-leading credit rating. As I've often said, mining is a long game and that should not be measured by quarters. I have no doubt that our strategy and partnership approach, together with the quality of our assets and, most importantly, our people will deliver real and sustainable long-term value for our shareholders and our stakeholders. Thank you, ladies and gentlemen, for your attention, and we'll be happy to take questions. Operator over to you.

What are we going to do? We're going to do the room first. Okay. There's Greg's hands up.

Just a couple of questions. One, there's been some political turmoil in Pakistan over the past week. Do you see that having any impact on your schedule on Reko Diq with the sort of change in government? I'm not quite sure what's going on?

So let me try and explain the situation. When we initiated the recommencement of Reko Diq following the arbitration award, it was with Imran Khan. And he's the person who actually brought it back into play along with us. And then the government changed to the Sharif government. But we signed the framework agreement with Imran's government. And we've signed the final agreement with Sharif's government, which was no different. There's no change on the principles that were captured in the framework agreement. Then we had that whole process endorsed by the Supreme Court. So those are the three sort of legs of government. And a lot of people, it's an interesting political situation in Pakistan because there was a lot of speculation about what would happen at elections. Unlike many other emerging markets, everyone was encouraged to go and vote, and they did. So no one tried to boycott the elections. The outcome was interesting in that it was almost perfectly balanced amongst the three big political entities for want of a better word. Now as you can imagine, there's lots of energy being put into trying to form a government. The key is that whichever coalition forms—and it has to be a coalition, whatever happens and whichever government arises from this process, any government that's formed will have a very strong opposition. As far as Reko Diq goes, there's bipartisan support for that project, and we've never been partisan in anything we do. It's a bad strategy in emerging markets. So we're working. We're continuing as usual. I mean, some of the best progress that we've shown has been, and it's across the board, but has been with our local social programs and investment and working with the community. So right now as it stands, and not only is it the federal government, but also the provinces are voting, and there's new expected new chief ministers, which is essentially the provincial head of government, which is important for mining because a lot of the legislation is within the province rather than at the center. Right now, we'll continue as we do in most other countries.

Second question is around Nevada, and you can see in the final chart, there is a pickup in '25. Is there a broader turnaround happening there, Mark, or is that just Goldrush finally kicking in?

No. There's the Nevada team is now really starting to make progress and we've put a lot of effort in there. It was a big merger with two very distinct cultures. And then we had COVID, and then you have this big turnover that we saw right across the United States economy where an effectively, what people refer to as skill shortage. We really had to invest in and then you have the lithium miners or promoters and we're the biggest miner in the U.S., so we're a supplier of people to any promotional effort. But we've brought that turnover down materially in Nevada. We've got a new management team. It's much more caring, because that's the way we are. We might be tough on standards, but we're soft on people. And I'll just give you some examples. If you look at the roasters' performance in the last two quarters of last year back to where we had them right in the beginning. And the Gold Quarry roaster, which we've had to spend a lot of time and money on, is really starting to live up to better efficiencies. We've got the final leg in its expansion now in the middle of this year, and then we'll have that 20% increase in throughput. We've spent a lot of time on the SAG mills, the whole SAG infrastructure; we're now getting that back to where we want it to be and that is very core to our to Turquoise Ridge, which is one of the major high-grade deposits, long-life deposits within the complex. Actually, I was down there last week, Saturday, this last Saturday. For me, it was really encouraging how we're managing the rock mechanics and the way we're mining. We're doing now in Turquoise Ridge open stopping, backfill, and also, cut and fill but on a much larger scale than they used to do it. And we're doing it safely and very efficiently. So, I'm very confident that you'll start seeing those costs come down because it's an 11-gram ore body. It's got a lot going for it. If we can get that the autoclaves working and we've got one more big change to do in the flow sheet of the autoclaves in SAG. And what we've done, Greg, is we've put—we've formed a team of autoclave experts. Barrick is the biggest operator of autoclaves in the world. We've got them all around the world and we've put a group of process engineers together to look at all our autoclave installations and see how we can really learn from each other and lift the game to best practice. We really uncovered some bottlenecks in the SAG mill that we've been depressurizing the autoclaves too frequently largely around valves, the longevity of valves. The reason is that we haven't got—we're missing a component of being able to normalize the pressure across the valve when we turn it off and on. That's a big step forward, which we just—it's not a large expense. We've just about finished the design because we've got many examples and we'll put that in place. For me, that's a key step forward and we've done a lot in the SAG. We have a team now working on process optimization and automation as far as process controls go. We're really at the stage where the operators and the management are now up to speed and the next step is you can use the automation because putting in automation without a competent operating team, it's not an efficient way to get to increase throughputs. The same in the—we've got a completely new team in the roasters at Carlin and again, we are now performing above our KPIs, which has been a long time since we've done that. So all around, I mean, your commentary is real and I'm excited about improvements on that. What is dampening our costs at the moment is that we made a decision to bring in some contractors to get ahead of our development because on the double refractory ore, which comes from our big high-grade deposits. We're process constrained as far as the roaster or nearly processed, not quite because we've improved the efficiency. The flexibility in your mine, this is a big mine. It should have flexibility. It's a big mining complex. When you're producing 3.3 million ounces a year, you shouldn't be worried about catching up a 1,000 ounces or 2,000 ounces here and there. What we found is that we were, through lack of flexibility underground because we're moving the whole business underground is that our development, and you know this better than anyone, you get behind on development, you constrain your mining flexibility and then you've got problems because you can't deal with a fall of ground or a sort of operational issue. In all our underground mines, we've brought in contractors to just help the team get ahead, and it'll be a 12 to 18-month program, and that does impact the costs because it's an extra cost. Then we'll take it back from the contractors in the fullness of time. So all around, Nevada's in a better spot. I think you'll see. Last year, we had a bad start, but we increased our performance every quarter. We didn't quite catch up, but we did, and that will continue in this year. You'll see the performance improve through the year, and I believe that we are building. As I said last year, we're largely complete with the merger challenges. It's now about focusing on efficiencies and delivery.

Lawson Winder from Bank of America. Thank you very much for the presentation today. I love this chart that you have up of the 5 year production and gold cost forecast, and in particular the cash cost. Effectively, this chart is showing here all in sustaining cost declining from the $1,300 range down to the $1,200 range. My question would be, I mean, is Barrick's objective over the next 5 years to move from the $1,300 per ounce that you use today for reserves and for planning to $1,200 per ounce in 5 years? And then as a follow-up, I would ask, what inflation assumptions are built in here for '24 and then '25 to '28?

So all sustaining cost come down to a thousand, just to correct you. You can see the flat year-on-year. I'll let Graham comment on the way we manage our inputs on this model. But that's exactly right. The point here is that there's—and not to tell you how to do your work, but no one ever looks at grade. Some—I think some analysts do, but a lot of people don't. They just look at the cost. This industry is high grading. When you look at Barrick's grade, it's not high grading at all. Our grades in the next 5 years are almost flat. We manage optimization of our ore bodies. Sure, there are times when we sort of look a little different to the market. That's why we put these charts up, and we're not different from the market. We have some cost drivers, and let me tell you what they are on there. The first one is PV, and PV is a low-cost operator. Even with its current challenges, its 2024 is going to be one of our lowest cost mines, but it's going to come down even further, as we steady out at above 800,000 ounces. Goldrush, we're now focused on development, which we haven't been able to do for the last 3 years, and that comes with costs. The Goldrush cost profile is higher in these next 2 years as we ramp up the and put the infrastructure in and get the ventilation up to standard and things like that, which is the big challenge there. Porgera sits at $1,900 an ounce in this model because it's a ramp up. That's not what it's long. It's also a low-cost producer. Those are the drivers and Carlin has—we had the crossroads challenge where we had a large chunk of what we had modeled as high-grade that was faulted out. We need to work that through and get those costs down because the way that Carlin was structured—and it's a big ship, so it takes a bit of time to turn—but again, we're on it. You'll see Carlin grades are sort of 4.3, 4.4, so high grade. It's got open pits embedded in that. So there's nothing here that—and well, let me rephrase it. We can explain these costs, and they're not systemic in our operating cost. They're driven by specific decisions and events. Do you want to explain the assumptions?

Yes, sure. So the key thing here, Lawson, is the—as always with cost is energy. We always say that around 20% of our cost is energy directly. But indirectly, when you look at energy in terms of the way it impacts our reagents and other consumables in terms of the way it impacts the supply chain and knock-on costs on just our suppliers and their input costs, it's probably more like 50% when you look at the real impact of energy across the group. So that's always going to be a key driver. We're using $85 Brent as our assumption for this year. So that's pretty close to spot. I think spot is at about $82 at the moment. That's a little higher than what the average was for 2023, but we're looking at where it is today. Long term, we bring that down to about $75 for our long-term planning beyond 2024. The other key area of input price pressure is on labor. Labor makes up around 35% to 40% of our direct costs. There, we're seeing an inflationary pressure year-on-year of around 4%. So that has a small impact on costs. Other than that, most of the other input costs are relatively similar to 2023, and we were able to bring down a lot of the costs in 2023 compared to 2022. There are some areas where it's still sticky, particularly regionally in North America, things like cement, lime, explosives, steel. There's still a little bit of inflationary pressure in those areas, which we're working on to bring down. But we've made a lot of progress. So those are the key drivers. Just in terms of your first question, which was really about, are we planning to reduce our long-term planning price? The answer to that is no. The $1,300 is where we'll continue to plan. As we've said in the past, we always look at input costs and that's what we use for determining our long-term planning prices, and those are certainly not going lower. So $1,300 is where we'll be. It's just we'll make a lot more money, and we'll lock in that profitability.

This is Ralph Profiti from Eight Capital. You spent some time talking about Nevada Gold Mines. I wanted to address the reserve replacement where you've done a lot of work on this sort of 5 year plan. Do you think you're in a position to have enough data and outlook that year-over-year reserve replacement will be consistent at the similar grade? Or is the profile going to look a little bit more latent? Where operating mines diminish and some of these more towards the later end of that guidance period, we see the pickup?

So we're now modeling it. We had a budgeted 50% replacement in Nevada this year North America and we beat that replacement just because we were more efficient with our drilling. But as we go into the next 5 years, it is still lumpy because Nevada, a lot of our reserves are underground. We build a resource inventory and then there's a conversion behind that. But we now, as I pointed out, are able to point to a 5 year program over those 5 years in Nevada, we'll replace all the gold we mine. The inventory is a lot more reliable. And then we move it through inferred, indicated, and measured. That model is—and a large—like Leeville has been a work in process. The reason we can shift some of our capital to more greenfields targets is we now that systematic—we've caught up with the drilling. And well, we are catching up because this year is quite a big expense on drilling. With the development getting ahead, we can cover the reserves and the grade control confidence because that's all a part of good underground mining practice. But we've been able to reallocate some of that budget to more greenfields targets, and we've got a lot. We have a number of greenfields targets. When you look at Fourmile and you look at the way we've managed that, that is exactly 1 mile away from Cortez. It's a multimillion ounce—it's 14 million ounces in Goldrush and there's substantially more, and it's higher grade, because we go into breaches from more flatter sort of planar ore bodies because we go into a big brittle halo around intrusive. The rock is behaving differently, giving us really chunky grades, breccia-shaped ore bodies. So—and the question is how many more of those are there? I'll give you an example, we shared with you a drill hole last quarter in the Mega Pit in Turquoise Ridge, the old Twin Creeks. We drilled a hole down there. The Mega Pit is the only Tier 1 ore body in the Carlin area, the whole Carlin region, where no one's ever found the feeder. We know the feeders are the ones that really deliver the value in the Carlin system. We drilled that hole. It was significant, 70 meters at ore grade. We are slowly getting enough data to vector in just to really test that concept. We got the whole a little bolder basin. We've got the north and southern extensions now of the Turquoise Ridge underground mine. We're back in looking at Getchell because our confidence in being able to manage the rock mechanics. We now have rock mechanics everywhere. When we got there, there were none. Our underground controls are being able to mine safely without really getting impacted by poor ground conditions gives us much more confidence to go back into Getchell. We've got—there's an extension further Northern Leeville, what we call the Greater Leeville. The geologists have come up with 4 different names. But in my mind, it's the Greater Leeville area. We've got another new target that we've shared, it's on the map. Trying to model the Goldrush 4 mile trend because it's another Carlin trend and look for duplications, structural duplications is the big focus on our team now. I had said to the geology team. When we got the—there were no exploration was like its own silo, and there was no MRM. Today, we've got an integrated team that really understands what it's doing. I challenged them to drill, I said like 15% of your budget needs to be drill holes where there's no other drill holes within 3 miles. They said, look, we've got like 40% of that, we're already there ahead of what I was pushing. I think there's real opportunity. There's more opportunity outside the joint venture area as well in Nevada that we're chasing.

It's Anita from CIBC. Just a couple of quick questions. The first one, just on Kibali. I think you said you guys—sorry, it was Loulo that had a pit wall failure. Is that cleaned up now? Or is that—so it shouldn't impact grades going into this year?

No, no. I mean it's impacting the profile because we're still putting the ramp down, but we knew it was a slide. We just didn't expect it to go all the way to the bottom. In open pit mining, we monitor pit walls all the time, and from time to time, they do fail and it's best that you know about it so that no one gets injured. We've got very focused controls on pit wall stability. We see it coming.

And then secondly, I was going to ask about Fourmile and you went into that a little bit. But could you just give us an idea of how much of Fourmile is in the resource? And what would we expect—the what would we expect to be included in the PFS in terms of like the base that you'd be working with?

Let me just answer the first one differently, and that is Fourmile is now just starting to come into our 10-year plan because we've rolled it forward a year. Just for your information. As you know, under the deal, we can put Fourmile to Newmont as our partner if we get a feasibility study and it meets certain criteria. Newmont needs to pay up or dilute. That's the agreement we have. We have a good relationship with Newmont at the Nevada joint venture level. Our view is that we need to continue to show prospectivity. I think currently, the reserves, I can't recall about 3 million ounces. Simon, do you want to take a need to through that?

Yes. So currently, we've got 2.7 million ounces in inferred, and we've got a small amount in indicator. So the resource base that we are expecting to define by the end of this year will support the initial prefeasibility study. That prefeasibility study, we see being the first of several incremental studies as we continue to expand the ore body, because through the course of this year as well as defining the resource base, we'll still be defining significant additional inventory, which we expect to outline the growth of Fourmile through the next 10 years.

Follow-up on that. So 2.7 million ounces of inferred will be the base. And what grades are up that are?

No, that's our current resources. By the end of this year.

Yes, what's the grade?

10 grams.

It's Jackie Przybylowski from BMO. Thanks very much, Mark. I just had another question about Fourmile. So I hope you don't mind. You mentioned in the MD&A that you're considering a service portal to decouple the project from Goldrush. And then you—and then I think the wording you used is, but to ultimately complement the Goldrush development. Can you talk a little bit about what that means? Would you consider keeping it outside of the joint venture? Or is it still within the joint venture just operating separately, but processed through the same mill and infrastructure is that so what you mean?

Well, I'll answer that first.

So Graham is clearly scared of what I'm going to say. There's a process that I've just touched on Twiga into the joint venture. We got to demonstrate viability. At the same time, there are always negotiable options as we do it. The key is when you look at Goldrush, it's not the optimal access because we access it on the 20 clients and they come out on the hill and then you've got to get the ore to the processing facility. What we're looking at is there's two other accesses. The one that's most attractive is the Northern Access, which is a 6-kilometer drive, but it brings out the ore in the valley close to the processing facility. That makes good sense on logistics. At the same time, if you drive a drive through that strike, you open up the entire area for infill drilling, and it will be easy to move it from because trying to bank all these ore bodies from the surface is a very expensive exercise. Just to give you an idea, taking the section from Rose to Sofia, we can access that through the twin drives from Goldrush and the intention is to do that. Under our agreement, we can use Nevada joint venture infrastructure. If you drill out that area, we would save about $500 million. That’s the difference in trying to drill close base holes from the surface. Where we're going with Simon is what we want to do is show the viability and the prefeasibility. Then the question that we've got to decide is do we take part of this or all of this or to feasibility and pass the test? Or do we sit down with Newmont and structure a more reasonable way of bringing this asset, which is absolutely critical for the long-term profile of Nevada Gold Mines in some form? We've had very high-level conversations about the concept, but we're not—we haven't engaged in any formal discussions. But from our point of view, it's very important for us to demonstrate to our shareholders the value of this world-class asset. We allocated part of our global exploration budget to doing this work this year. It's a 3-year program to get this done.

And just to be crystal clear, Jackie, the intention would always be that it would come into the joint venture. That's not what we're saying. We're just saying we could access it from a separate access.

No, I appreciate that. And one other question on a different topic. If you don't mind walking us through maybe the process of restarting Porgera. Just some modeling help. I would expect as the year goes on, they'll be more and more ramped up. If you could maybe give us some color in terms of like what Q1 might look like would be helpful.

This is Papua New Guinea, Jackie. So we've got 60,000 ounces in our guidance attributable this year. I think we've spent a bit of time with all of you on explaining to you that what we do start doing as soon as we start generating revenues, even at these high costs, we start paying back our care and maintenance costs. We sweep all the non-land owner equity that we don't own to start repaying. The cash flows start moving fairly quickly. I'll give you the hurdles. By the end of this quarter, we'll have a better sort of better granularity for you. The—we've commissioned the plant now, and we've run non-gold material through it. We're now starting to gear up to put gold-contained material into the process broader. It won't be our best, and we can do that and produce gold with certain oxide material, but we need the power supply to switch on the autoclaves. That's the next step. Right now, we've just deployed a—we just secured a helicopter, which can work with our team to erect the—I think there's 3 or 4 pylons that have been toppled to put them back in place. We're working with the community and the Hela Governor, which is a different province to where we operate to make sure we secure the gas-fired power supply to the mine because we need that to be able to run the mine properly. That's all built into this year's ramp-up. I think by the end of the quarter, we'll have a much better outlook for you on the granularity of where we're going.

I’d just say it’s very much a second half of the year profile, Jackie. We will produce some gold in the first half, but it's really about the second half where we expect to produce the majority of that guidance that Mark spoke about.

We're well on track. We've done better than we expected on employing people and ramping up employment. We've still got security issues that we're dealing with. I don't know how close you follow Papua New Guinea, but they had those rights in Port Moresby the other day, and the security capacity of the government is under pressure. But we are working. The one thing is everyone appreciates, I mean, after all these couple of years, there's no doubt about the importance of Porgera to the economy of Papua New Guinea because it is a very profitable business. It delivers real value to the economy.

It's Martin Pradier from Veritas Investment Research. Just a question here on Lumwana. We were expecting some cost reduction going forward. I know that cost has been increasing a lot this year. Can you give us more detail on that?

So most definitely, you'll see a short—some reduction in costs for the year and our guidance, you'll see it. The big focus at the moment is we're still pre-stripping what we call the 2042 plan, which is the plan before the Super Pit. But Martin, to your point, the mining costs are critical. The mining efficiencies and mining costs are the real driver on this expansion. You will see those costs come down as we mobilize those machines and make sure that we start mining because the big thing first was to establish the pit, so that we can mine efficiently.

Yes, I would just say you're right, from 2025, there's a big step down in costs as we get those efficiencies.

Simon, do you want to comment?

Yes. I mean, obviously, those efficiencies also come with scale as we expand. With the expansion, we're currently mining at an annual run rate of about 130 million tons will be moved incrementally over the course of about 4 to 5 years and stepping up to 250 million tons per annum. So with that step up, obviously, with scale of economy, we'll also be shifting to a much larger fleet in line with the new fleet that we've been gradually bringing into Lumwana and just started to come online at the end of last year.

So there's your answer. So you're right.

Yes, a couple of questions. Yes, the first one a couple around on CapEx. First one, kind of reasonably simple one. How much of the guidance within your guidance story is included for early development spend on Lumwana and Reko Diq?

Do you want to answer that?

So for Reko Diq, the capital guidance for 2024 is $140 million for our share, is that right, please? $280 million for the project, and for Lumwana, our capital spend is $100 million.

And then just second one on—when I look at the slide on the 5-year forecast, you see your CapEx coming out to about $3.5 billion. As we head towards the sort of finalization of the budgets for both kind of major projects, how are you feeling in terms of the range of CapEx previously given continued inflation since those estimates are given, are these still the right kind of ballpark? Or should we expect the CapEx to edge up from the previous ranges you gave for both Reko Diq and Lumwana?

So I can answer that. Based on the prefeas, the numbers are there and thereabouts. But remember, we're moving toward feasibility study, proper design, and so we'll expect to tidy up on those capital estimates toward the end of the year. Right now, we've got no reason to change the numbers.

Yes, that's right. I mean, I think, Dan, the key is there's a lot of trade-off studies going on at the moment. So, as you would imagine, that involves potentially putting in more CapEx, but then getting OpEx benefits for it. That's what the team is busy with. When they finish that work, we'll have the updated numbers. With that, we'll come the operating costs as well. But yes, we're still in the same ballpark.

Just to build on that, it's worth noting that Lumwana is going to be one step ahead of Reko Diq because it's an expansion. The same Lycopodium partners are working with our both teams. We're really looking for to lever our purchasing power, the way we design things. A lot of benefits in running—it's like running a mega mine development. We expect to see some efficiencies or benefits on that.

Just one more, if I could. Just on your reserve assumptions, Graham, you mentioned you're sticking with $1,300 on the gold side. $3 is pretty conservative on the copper front. I know, as a management team over the years, you've been conservative on these assumptions for good reasons. But is that a number that is going to stay? And if you were to move that higher, would that change in any way your design of your copper expansions?

I believe this is a strategic question, Dan. The $1,300 figure, especially when considering our gold deposits, has some exceptions like Tongon, where we have full capital repayment and low sustaining capital. We plan to adjust because we want to extract all possible gold before the mine closes. Generally, when examining Barrick's ore bodies, altering the $1,300 just adds low-grade waste since the ore body shapes are still within that $1,300 range. For copper, we'll look at marginal opportunities when prices are higher, as we have in the past. For instance, when gold reached $1,800 in 2011, we extracted a significant amount from the Yalea pit, even though recoveries were low. Once we covered the strip costs, it proved to be a good business move. We will manage the inherent flexibility of each ore body, but currently, the $1,300 threshold for gold deposits sets the geological limits, along with $3 for copper projects. As we enhance our understanding of Reko Diq, we may revisit those numbers, but for now, there's no need for change. I've also collaborated extensively with Simon on this, and with the $3 mark, we integrate the entire economic ore body within that threshold. Simon, would you like to add anything?

No, I think you've covered it well, okay.

The only other thing I would point to, Dan, is that we did lift the resource price for our copper resources this year to $4 to reflect, I guess, the point that you're making, which is that the risk on copper seems to be on the upside and we wanted to make sure that we weren't sterilizing assets and opportunities. We take on board your point that copper prices could go a little higher.

The fundamental reason for this is that, similar to using a $1,700 resource, we want to keep the infrastructure away from the ore body. That is our resource. While $4 is not a very ambitious target, we want to ensure that we don’t place infrastructure incorrectly. A good example can be seen at Escondida and Zaldivar, where there is infrastructure scattered throughout the pit that shouldn't be there, and moving it is costly.

The next question comes from Bob Brackett with Bernstein Research.

You mentioned adjectives assigned to M&A that included the dilutionary and delusionary. What would the opposite of those adjectives look like to you?

How do you mean? Explain that.

Yes. So what M&A would be neither dilutionary to Barrick or delusionary to you as a team that you would contemplate? I can throw out an option if you need further idea.

I got it. So let's go back in history. We acquired BHP's assets in Mali to start Randgold. That was a very accretionary acquisition. We then acquired Moto in a hostile takeover. That was equally accrete. Which is Kibali. The Randgold-Barrick merger was definitely a value-creating exercise and it's a long-term platform. Most other companies that did M&A around that time and paid premiums for it, I think it's not possible to show a long-term new foundation for those transactions. We did the Acacia takeout, which again has been a spectacular investment. Of course, although we didn't issue paper for the Nevada joint venture, the sum of the whole is substantially more valuable than the sum of the individual parts. Those are the only transactions I've been involved in, and they all worked. I speak on behalf of myself and the team at Barrick. Those are value-added transactions, and they've all come with—they're all at market and all had organic growth embedded in the asset as well. That’s what we'd like to do—those are the opportunities that we look for.

The next question comes from Tanya Jakusconek with Scotiabank.

I just wanted to ask Graham in the capital for Porgera. Can you just give me an idea of what we need to spend this year to get this mine up and running?

Tanya, it's approximately $70 million our share.

And then Mark, I have two questions for you on Nevada Gold Mine. I wanted to ask the Cortez where you are going to be seeing lower production in '24 over '23 due to the Crossroad resource model change and reducing off-site mill. Can you just explain to me what's exactly happening at Crossroads?

So at Crossroads, we had—what we've been doing since 2019 is spinning our wheels to bank the deposits. I’ll just give you on the Newmont side, most of the models, the business plans were 12 or 18 months old. Barrick's side, it was almost current because Barrick was focused on high grading and Newmont was focused on survival. When we put the 2 together, as we pointed out at the time, there was a lot of—there wasn't a mineral resource management department even if we had a catch up. We have caught up a lot; we're still catching up a bit because of the pressure on accessing people. We brought in contracts because we just weren't getting on top of the development. We had pushed it ahead, but not enough. At Crossroads, when we—as we drilled it out, there was a high grade. When we were there, the analysts on the last visit, we were right in the high grade of the ore body. What we hadn't seen is a fault that part of that high-grade depth. When we went down another bench when we drilled the holes, we ended up modeling a fault that cut off the ore body, which reduced the volume of high-grade material. If you recall, there was always a bit of a spark in production in Cortez in our forecast. That's the reason. We've drilled the ore body out this. We—what we're doing now is pushing back the Crossroads pit and it will come back into the schedule next year, but not at the grade that we were expecting. The team has also been able to add other oxide material from some of the other pits and the expansions to those pits, which will help us feed, but not at the grade that we had originally planned. That's the story for the oxide drop in this year.

So did we lose ounces at Crossroads is what is with the fault?

Yes. So Tanya, just to complete that, we lost the ounces and the delay on the ROD because once we got the Record of Decision, we really had to refocus Goldrush to ramp up. We have to get the ventilation shafts in place. There's a whole lot of infrastructure that we need to put in place to get that long-term ramp-up in the mine. Those both impacted 2024.

Maybe I could just ask on just Nevada Gold Mines in general. There's a lot of work that you're doing there. I'm just trying to understand the labor. You mentioned that the turnover has decreased. Can you just give me an idea of what the turnover rate is right now in Nevada Gold Mines? I know when we were there that you were looking for a lot of positions to be filled, like where are we on that and where the training program going for these underground mine just trying to get an understanding over there.

We're below 15% turnover now, which is substantial. What's it? 14%. So we are below 14%. It's interesting, our training mines, people that go through the trading mines, so far, we haven't got a lot of data, but they generally stay because now we've got properly skilled people, and there's no stress in their lives. They know what to do. The other thing too is the first phase of putting these 2 mines together, and it's important to this conversation about people because you can go and smash 2 different cultures together and force it for a while. If you're building a business and our mining industry doesn't have that. If you look across the mining industry and you look at the executive groups, there's no executive group in the mining industry that is entrenched as much as the Barrick team. We've put an enormous amount of time and effort into our skill base. First one under Greg Walker's—we need to get everyone together and iron out discrepancies and disparities and all that sort of stuff and bring the union in because there's a unionized workforce embedded in the call and open cost side of the business. In 2023, you remember—end of 2022 when Greg left, it was specifically designed to change the culture another step. We moved the ownership from ALCO back to the operations. When you're transitioning, you've got to have more control. We changed all the general managers at the end of 2022. We shifted the control back and reduced and we're still reducing that ALCO footprint. We've brought in some new senior management to lead the team. That management didn't come from Barrick; we brought it from outside. The results you see here, and I've got no doubt you're going to continue seeing, is a product of that human capital engineering effectively to get it, as I say, in the MD&A and in my presentation, really to align it with the Barrick DNA. I've spent a lot of personal time there leading this process because it's people. I'm more comfortable today than I've ever been that we're making real progress with the people. If you want sustainable change, you've got to get people aligned. I mean, it's like this—when you look at this head office, this corporate office, 48 people. If you take out the big wings, it's probably 38. It does double the amount of work than 3x the people did before. They're young, very energetic, super-efficient in what they do, and they're fully plugged into our organization. We have rotations now with these young folks into our operations. Our analysts because we've got financial analysts, this is financial as analyzing our efficiencies embedded here under Brucent. It's very efficient. We're using our data platforms so that we're fully connected across the organization around the world. We can consolidate—when I ask questions now, we can consolidate the financials, even income statements across the group, distill them or look at benchmarking and measure the way the one company will run, particularly like Lumwana now with our drive to get these costs down on the big plant. It really is motivating to get people aligned with the business rather than just coming in to do a task.

I'm just trying to benchmark, Mark, how is 14%. Is that an average for Nevada itself? That seems a bit high. I'm just trying to benchmark the turnover.

No. I mean in America—a view of American that's low, very low. We're going to get it lower. The point is when you tip this, when you create the trust between the workforce and the leadership, you tip it and then you become a winning team. When you become a winning team, everyone gets bonuses. It feeds on itself. Otherwise, you always have it. The first time in my entire career, 40 years, the first time I found people scared of being fired was in Nevada. There was fear because of that management style, which was very non-confrontational but quite tough. Didn't go well for inclusivity. Barrick is a caring organization. We care about our people and our team. Do that, you start getting the benefits, and we're seeing that.

There are no more questions.

Well, thank you very much, everyone. Thanks for coming, and those particularly made the effort to come out here. I think we've got some snacks, so join us next door if you wish, you're welcome. For those on the call, sorry about that, bon appétit wherever you are. Thank you.

This concludes today's call. You may disconnect your lines. Thank you for participating, and have a pleasant day.