Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Barrick Gold Corp (GOLD, Financial) reported a 68% increase in adjusted net earnings per share quarter-on-quarter.
- The company achieved a substantial free cash flow growth, with gold margins up 39% and copper margins rising by 124% quarter-on-quarter.
- Gold production increased slightly quarter-on-quarter, and copper production also saw an increase with falling costs due to higher grades and mining fleet upgrades.
- The company is making significant progress on major growth projects, including a new potential Tier One gold mine in Nevada and the transformative expansion of its copper business.
- Barrick Gold Corp (GOLD) restarted its share buyback program and maintained a quarterly dividend of $0.10 per share.
Negative Points
- Slightly higher costs were reported, primarily due to higher royalties and operational challenges at specific sites like Pueblo Viejo and Carlin.
- The company is facing power supply challenges in Zambia, impacting the Lumwana project, although mitigation measures are in place.
- Operational flexibility at Carlin was affected by the Gold Quarry pit redesign following a pit wall failure in Q1.
- The company is dealing with ongoing negotiations with the Mali government regarding increased benefits from the mining industry, which could impact future operations.
- There are concerns about the sustainability of achieving targeted recovery rates at Pueblo Viejo, with current efforts focused on optimizing grind and flotation processes.
Q & A Highlights
Q: I wanted to start on the copper and ask about Lumwana. With the current power situation in Zambia, do you anticipate improvements, and what is the latest thinking on a power solution for the Lumwana project ramping up in 2028?
A: There are plans to put extra power infrastructure into Zambia, and we have been awarded the capacity required for the expansion. We have a back-to-back agreement to purchase third-party power at a discount and have full backup diesel power on site. We are also working on co-generation to generate power ourselves and feed it through the grid.
Q: On capital allocation, the company has started a buyback. Is it reasonable to assume this could continue, or is it a one-off?
A: We put in the buyback approvals to manage shorts in the market and any stock softness. Our discipline is real, and we will manage capital allocation carefully. We will continue to buy back shares within the guidance shared with the market, and our objective is to get the share price up while maintaining a strong balance sheet.
Q: Would the company consider spinning out some assets or divesting non-core positions to realize value quicker?
A: Moving high-quality assets out of the portfolio makes no sense. The mining industry has too many companies with not enough management. Breaking companies up without competent management is a challenge. We are focused on long-term value creation and believe in maintaining our current structure.
Q: Can you review how Fourmile gets vended into Nevada Gold Mines (NGM)? What type of study is required, and who controls the timeline?
A: The joint venture agreement has specific provisions. The asset goes into the joint venture provided it meets a minimum return hurdle rate, based on a feasibility study. The value is determined based on market valuation, and the feasibility study benefits from existing infrastructure. The cost of the feasibility study is also part of the compensation.
Q: Regarding Pueblo Viejo, you mentioned recovery rates. How do they evolve over 2025, and what are the targeted rates?
A: The targeted recovery rate is in the mid-80s. We are focusing on optimizing the grind, flotation, and recovery. The goal is to achieve 80% by the end of this year and then increase to 85-86% over the next couple of years.
Q: For Carlin and Cortez, the stripping rates picked up. Will the current rates continue until mid-2025?
A: The rates will come down slightly. The focus is on getting Crossroads sorted out, and we are on top of that. The 7C failure in Gold Quarry pit is being addressed with geotechnical work to redesign the pit.
Q: How does the rest of the year evolve for Turquoise Ridge?
A: Turquoise Ridge is focused on backfill and infrastructure. We slowed down mining and processing to catch up on backfill. The plan is to improve all the way up to the end of the year, and we are confident we will catch up to the plan.
Q: Can you bring us up to date on discussions with the Mali government?
A: We are working constructively with the government to find a way forward. We are the biggest contributor to the Mali treasury and are happy to share benefits, but it needs to be affordable for the company. We are engaged with the President's office and relevant ministries.
Q: What is the critical path for the Pueblo Viejo tailings relocation work?
A: The preference is to relocate key communities upfront. We are working with the communities and authorities to manage the relocation. The next big step is the completion of the feasibility of the dam itself, expected this quarter.
Q: How does reserve replacement look for this year?
A: With the two big feasibility studies, we more than replace our reserves and resources. Kibali, Loulo-Gounkoto, and other assets are in good shape to replace depletion. We are evaluating each asset independently to ensure any changes in reserve price add value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
