Barrick Gold Corporation (NYSE:GOLD) 34th Annual Gold Forum Americas 2022 Conference September 20, 2022 12:40 PM ET
Company Participants
Mark Bristow – President, CEO
Conference Call Participants
Jackie Przybylowski – BMO Capital Markets
Mark Bristow
Thanks, Jackie, and very good morning to everyone here today. Really nice to be back in person. I’m sure you’ve all enjoyed it. We’ve had a lot of very engaging conversations over the last couple of days. I think what’s come through in this conversation and certainly our own deliberations is that once again we find ourselves living in interesting times as the global economies and geopolitical environment hit another inflection point. It’s arguable that the last time we faced such uncertainty was the Second World War. Getting out of the current situation is clearly going to require clear and focused strategies along with agile management. And so looking back the merger with Randgold Resources three years ago has been one of the sector’s most rewarding combinations of two world class companies in recent times. It’s shown again that success in business requires two things: a clear strategy and a set of objectives.
We started with a long-term vision focused on having the best assets managed by the best people and a plan, which as we intended is delivering industry leading results. Please take note of this cautionary statement and for those who wish to review it in detail, it is also on our website.
So let’s start with the assets. We operate in 18 countries on four continents. So our exposure to opportunities and our ability to manage risk are unparalleled in the industry, so is the quality of those assets. We majority own and operate six tier 1 gold mines which produce at least 500,000 ounces per annum, in most cases a lot more, have a bankable 10-year business plan and costs in the lower half of the average range. That’s our definition of tier 1. Barrick also is now the world’s largest gold miner and in terms of attributable ounces produced the second largest.
We are also expanding our copper business which will get an enormous boost from the Reko Diq project in Pakistan, set to be another world class mine. And we continue to invest in our future both by steadily replenishing our reserve base through brownfield’s exploration and by feeding new development candidates into our project pipeline. This is the real value we’ve been creating for our stakeholders. Gold production is built on a foundation of long-term plans, which underscores solid future cash flow at any realistic future gold price. Over the past three years, we have taken some of that cash flow to strengthen the balance sheet, turning Barrick around from a net debt to a net cash position and positioning us soundly to fund future opportunities independent of the market.
As you can see here, we have also been increasing our returns to shareholders. Our quarterly base dividend has been enhanced with a performance dividend determined by the amount of cash on hand. And if you annualize this year’s first two quarters, it equates to a peer leading yield of around 5%.
Additionally, reserves are replaced at 150% of depletion in 2021. And we are on track for further growth in 2022.
So let’s take a closer look at our project portfolio. We use a resource triangle model to manage this with new projects at its base, moving through a series of filters, a process which eventually promotes those that meet our investment criteria to the apex of the permit. You can see how well balanced it is in terms of region, as well as valuation level. And it contains some really exciting projects which are listed in the blue block on the right. And this is our 10-year plan, which shows a business that can sustain itself without the need to build new minds or buy an ounces.
At the same time, we boast a peer leading exploration group and have options within the portfolio that can see us grow this space, including nearly doubling our copper production. Long before ESG became a thing, its principles were embedded in Barrick’s policies and practices. We call it sustainability and we believe it is vital not only to mining companies’ success, but to their survival. Barrick has adopted a holistic approach to sustainability, appropriate to our global presence and our operations in many developing countries, climate change, poverty and biodiversity are inextricably linked worldwide. And it is only by finding integrated solutions to these challenges that we can make a real and lasting impact as a mining industry.
In the meantime, we are steadily curbing our carbon emissions with a detailed plan, targeting a reduction of 30% by 2030 enroute to our goal of a net zero by 2050, while maintaining our projected production profile. And it’s worth noting this initial 30% is largely focused on power and it — and every one of the projects that we’ve mapped out to that point delivers a return that exceeds our hurdle rate of 15%. So it’s a net benefit to our business.
As you can see, we at Barrick are looking forward to the future with confidence and indeed excitement, as I’ve shown the quality of our asset base is [peer less]. Our sustainable profitability strategy is supported by a reality-based implementation plan that works no matter what scenario we have to face in the future. We have a proven ability supported by our peer leading exploration capabilities to more than replace our reserves as well as a long constantly replenished pipeline of quality targets and projects. Combined with the strength of our balance sheet these add up to a compelling thesis for investing in Barrick, not only as a hedge against uncertain times but also as a future facing value creating business.
And finally, ladies and gentlemen, before I pass myself over to questions from Jackie, I’d like to finish with a mention of Barrick’s support for the World Gold Council’s 24/7 initiative, which is designed to modernize the way gold is traded and to elevate it into the mainstream of global financial markets. Among other things this involves the digitalization and tokenization of the market to facilitate greater participation, increased trust and unlock demand for the gold precious metal.
We like the other gold miners working closely with the World Gold Council are committed to deliver on this vision and we’ll be keeping you updated as we go.
Thank you for your attention and I’ll join Jackie.
Question-and-Answer Session
Q – Jackie Przybylowski
And while I’m sitting down just to mention on the Gold 24/7 initiative, David Tate, the CEO of the World Gold Council will be presenting after our session here around 11:50 this morning. So please stay tuned, you’ll get more information shortly.
Well, I’m going to start by asking about growth, because it’s always a hot topic with you and I’m sure a hot topic here, and because you left me hanging last year at this time with about 8 seconds left in the presentation, you said you might do something big and bold. And I think that was in the context of Canada. I’m going to leave us with more time so you don’t end with that mic drop moment this year on me. You didn’t do anything big in bold in Canada – sorry, you didn’t do anything big in bold in Canada last year. Is that still something that’s on your plate? Is that still something you’re thinking about?
Mark Bristow
No, I think Jackie, we got to — I think everyone works at start I see, everyone loves to create rumors about what I’m going to do, or not going to do. I think the one point about I would point out is if you — if you think something — about something that I might do, why don’t you just ask us. So I think the key there is we are very, as I said again and I say all the time, we run our business on very clear filters. We don’t have to change priorities because the gold prices come down to $100 or the costs have gone up $100. We have always made sure that everything we invest in can ride the cycle. And so — and you know, when you look at long term business and you stick to proper principles and I’ve been doing this for 30 years, you don’t end up at a cul-de-sac or in a cul-de-sac because the environment changes around you.
So, our philosophy is when everyone else can’t mine at a profit, we’ll still be doing that. We do want to grow in Canada. We participated in all the M&A transactions. They didn’t fit our criteria and so despite our ambition to grow in Canada, we are not going to do it for the sake of meeting a bold sort of proposal or promise or premise. But we are very involved in Canada, we’ve expanded our exploration presence there, and you’re going to see us continuing to hunt down those high-quality assets. And that’s the same goes for all other regions in which we operate.
Jackie Przybylowski
And you’ve said before, I think specifically, on your Q1 earnings call, but you’ve said before that you have the capacity to grow on several fronts at the same time. I think you mentioned, Asia Pacific, North America, Africa, Middle East. Can you talk about how you would see sequencing or managing projects across the world?
Mark Bristow
Yes. So our opportunities are not mutually exclusive, so we don’t need to — the way Barrick works is we have regional owners, which are quite capable and do run their businesses, largely independent. I mean, we act as a shareholder oversight, managing capital allocation, et cetera, and making sure that we know what our orebodies are. So Reko Diq is definitely the first in line now, but should there be something that pops up in AME we have the ability to build out any operation, and it won’t impact on the Reko Diq plan. And likewise in North America, if we had, if we found an asset or moved an asset up the triangle and it arrived at the apex, and it met our criteria as a Tier-1 asset, or even a Tier-2 asset, we would be able to build it comfortably.
And just to add to that, in Randgold in 2009, we were finishing Tongon. We were starting building, Kibali, and we had some big expansion in Loulo-Gounkoto. So we’ve done it before. And remember we ran up the capital the debt, and then like we did in 2019, we used that higher goal price to clear out the debt. And we were able to stand apart from the rest of the industry. So we are very, very clinical in the way we approach things.
Jackie Przybylowski
I’m going to leave time for the rest of the audience, if anyone has any questions for Mark. Well, there’s a question at the front.
Unidentified Analyst
Hi Mark, it’s [Chris Whipple] from Perth, Western Australia. I noticed on your global map, you’ve got presence in most of the continents, but Australia is not one of them. Could I have some comments in terms of your views and opportunities in the Australian scene?
Mark Bristow
So I’m pleased to announce that we do have a presence in Australia that currently the design team for Reko Diq is operating out of Perth. And so is our Asia Pacific exploration group. We look at every opportunity, the only place we are not operating in at the moment is Eastern Europe including China, we don’t operate in Russia or China, but everything — every other big gold or copper geological province is in our focus. The challenge in Australia is, it’s very efficient mining environment. It’s hard to find opportunities that you have still got upside. But we, we do look at every opportunity. And again, we’d rather, we need to go where there’s opportunities to find big deposits. And we, it’s a bit of a crowd in Australia right now, but we don’t, we don’t specifically exclude it.
Jackie Przybylowski
I think there’s the question again at the front there, if the gentleman will standup.
Unidentified Analyst
Hi Mark. I was just in Nevada. And could you, is there a way to quantify NGM in terms of it’s a 68-32 or something partnership with Newmont. So the Nevada Gold Mine’s operation, could you quantify, like if it were a pie, how much growth you can see out of Nevada and Nevada Gold Mines?
Mark Bristow
So it’s our best opportunity to grow both brown fields and green fields right now, it’s an exciting business. And by the way, when you look at Nevada Gold Mines on its own, it’s 30 million ounces, it’s the highest grade in the industry, three grams a ton, and it’s 30 million ounces. It’s got the longest life, proven life of mine. It’s got three tier one assets. I mean, it’s a spectacular project, which I mean operation, which is what we envisaged when we engaged with Newmont to encourage the joint venture. And it’s been a very successful joint venture. And I can, I’ll just summarize in the last three years since the joint venture, we’ve mined more than 2.1 million ounces, we’ve distributed $6.5 billion of dividends to the partners. And we’ve added an about 15 — between 15,000 and 17,000 ounces of reserves and defined resources.
So that just shows you the prospectivity. And we only now starting to hone in on the greenfields opportunities because that’s been neglected for a while and we are hosting a visit there Thursday, Friday, and we will be releasing the visit presentations onto our website. So those people who would like to pick up on it, I encourage you to look into our website. They’ll be available from the end of the trip. And if you have any questions, you’re welcome to reach out to us.
Jackie Przybylowski
And with that unfortunately we’re out of time. I’m looking forward to the trip myself and thank you very much for your presentation, Mark.
Mark Bristow
Thanks.
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