Barrick Mining Corporation (B) Q2 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2022 Second Quarter Results Conference Call. During the presentation, all participants will be in listen-only mode and the conference is being recorded. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference call is being recorded, and a replay will be available on Barrick's website later today, August 8, 2022. I would now like to turn the conference over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.

Thank you very much and good morning, and good afternoon, ladies and gentlemen. And welcome to our quarter two results update. At the halfway mark of the year, Barrick's performance and prospects continue to show the steady progress we envisaged at the time of the strategic merger, when we radically changed its trajectory and started the journey towards a future forward business. We have built a team and a structure capable of dealing with a range of global economic, social and political challenges that are getting increasingly complex. We drove ownership of our orebodies at the mine site and rationalized our portfolio to focus on world-class assets. We've shaken off the debt burden, strengthened the balance sheet and introduced a dividend policy supported by our sustainably profitable strategy. Our exploration teams continue to replenish reserves, depleted by mining and in pursuit of our new Tier 1 discoveries and our growth opportunities. We've expanded our footprint across nearly all the world's major gold and copper regions. On every front, we're closing in on our goal of becoming the world's most valued mining company. At this point, I draw your attention to the usual cautionary statement shown here and as is also available on our website. And now we can get to -- get on to the results for the quarter. In a testing operating environment, the team produced a stronger performance across the portfolio to keep us on track to meet our production guidance for the year. At the same time, we've made significant progress in advancing our major capital projects, notably the massive expansion of Pueblo Viejo in the Dominican Republic, and the start of the public comment stage on the Goldrush development in Nevada. The prospectivity of our copper portfolio is growing and our energized brownfields and greenfields exploration continues to deliver results. Earnings were ahead of market consensus and we maintained the quarterly dividend. Operationally, there were improvements across the board and particularly at Carlin and Turquoise Ridge in Nevada, Veladero in Argentina, Bulyanhulu and North Mara in Tanzania, and Lumwana in Zambia. With strong gold production expected from Cortez in quarter four, and copper production likely to be slightly up on the second half, we are still forecasting to be within annual production guidance. Due to higher energy prices, which flowed through to the cost of consumables and global supply challenges, both provoked by the crisis in Ukraine, costs are expected to be at or above the top end of our guidance, depending on how energy prices play out in the second half of the year. We're also now anticipating some slight project development delays of up to three months at Pueblo Viejo, and up to six months at Goldrush versus previous market guidance, which I'll discuss later in my presentation. These are the numbers and as you can see, healthy cash flows and a solid net cash position continue to support a robust return to shareholders. We've repurchased $182 million worth of shares under our $1 billion share buyback program. And we've paid out Kibali’s remaining cash surplus from the Democratic Republic of Congo. It's worth noting that Q2 is traditionally our highest tax payment quarter as well as when we make most of our semiannual interest payments on our bonds. Sustainability remains a key focus in every aspect of our business. And to support our drive to net zero emissions, we have quantified our Scope 3 emissions, those produced by our value chain to get a full picture of our carbon footprint. This exercise has shown that Scope 3 emissions from our Tier 1 assets accounts for some 40% of the Group's total greenhouse gas emissions, mainly from purchased goods and services, capital goods, fuel and energy use and transport and distribution. We are now engaging with all our suppliers to help them set and achieve their own reduction targets. On the health and safety front, the Latin America and Asia Pacific region has maintained its impressive record, reducing its total recordable injury rate for the year-to-date by 41% compared to the same period of 2021. And this I might add at a time when we have 3,500 contractors added to the Pueblo Viejo's permanent workforce of 2,700 employees as part of our expansion project. Africa and the Middle East achieved a comparable reduction, but North America still needs to improve and we continue to work on this. Despite the delay in energizing the Veladero power line, which will plug the mine into neighboring Chile’s greener grid, we maintained our carbon dioxide equivalent emissions at the quarter one level. Average water use efficiency was again at 83%, ahead of the 80% target. We invested $7.5 million in community projects through the mine's community development committees, bringing our year-to-date spend to almost $12.5 million. We also completed the public caring engagements for Pueblo Viejo's new tailings storage facility, and Nevada Gold Mines renewed its partnership with Discovery Education and the State’s Department of Education. Moving on to the operational section. We start our operational review in North America, where the management team has been strengthened by the appointments of Christine Keener as the region's Chief Operating Officer and Peter Richardson as the Incoming Executive Managing Director of Nevada Gold Mines. A new North American organizational structure incorporating Nevada Gold Mines has been designed to integrate operational and project leadership to drive continued performance improvements and regional growth, beyond Nevada and Hemlo. Nevada Gold Mines had a good second quarter and is set up for further improvements in quarter three and quarter four. The complex is a core part of our portfolio. And following its creation three years ago, has produced 10.4 million ounces of gold and increased its pre-merger life substantially through an increased understanding of the orebodies. It has also distributed $6.5 billion to its JV partners. For the quarter, Nevada Gold Mines posted an improved operational performance at all its sites apart from Cortez, which is transitioning from pipeline, that's the open-cast pipeline project to the next phase of Crossroads, and is expected to start contributing its high grade oxide ore in quarter four. The notice of availability for the Goldrush project, as I indicated earlier, was published at the end of the quarter, which triggered the public comment period. But given the delay, we now expect the record of decision in the first half of 2023. We are working on the impact of this delay and we will update you when we release our 2023 guidance. Brownfields exploration is rapidly replacing reserves depleted by mining as well as identifying new targets. As you can see on this map, we have a wealth of quality prospects in Nevada. So let's take a look at just two of them by example. A 700,000 ounce maiden inferred resource has been identified at North Leeville. And both there and at the nearby North Turf, there's a high potential for further resource additions. North Turf continues to expand towards North Leeville with multiple high grade intercepts. Underground drilling from exploration declines is expected to reach North Leeville late this year when the two projects should be able to be combined. Staying on the Carlin trend, the REN project is showing resource growth as well, where we have identified a new Western mineralized corridor, Corona, just 250 meters from the existing infrastructure. This new corridor, together with the JV corridor, will drive resource additions to REN's maiden inferred resource of 1.2 million ounces, allowing us to advance this particular project to feasibility. I've indicated before that we want to expand our presence in both the United States and in particular, Canada. Canada, which is, in addition to being Barrick's home is a highly prospective region with a mining-friendly jurisdiction. We've established a strong new business team there, which has been evaluating multiple M&A and earn-in exploration opportunities to expand our portfolio. Four projects are already under option. Hemlo, our Canadian operation, which was badly hit by the pandemic, has received significant attention as we work to rescope it. We have been completely remodeling the mine. And as part of this, are considering a restart of the open pit. Down South, the Latin America and Asia Pacific region had a very busy quarter with the expansion of Pueblo Viejo and an intensified exploration drive, led by a new team around our existing sites and well beyond them in new destinations. And then there's Reko Diq in Pakistan, which is a very exciting project that I'll tell you more about later. In Papa New Guinea, Porgera's progress towards reopening has been delayed by the country's election. However, we are optimistic that we can get operations restarted by the restarted by the end of this year. Pueblo Viejo had a good quarter and is well positioned to achieve its production guidance. Meanwhile, its conversion into a long-life mine is progressing and the location of a new tailings facility site has now been settled. Detailed engineering and updated costing of the new TSF should be completed in the second half of the year. As you may recall, the mine was heading for closure because its vast resources could not be converted to reserves due to limitations on its tailings storage capacity. The plant expansion and new tailings facility will extend its life to 2040 and beyond with an average annual production forecast at above 800,000 ounces. Running a big mine while developing the massive expansion project is another demonstration of our various management's ability to handle complex challenges. That said, the global supply chain constraints have impacted the timing of delivery of some key components, which is putting pressure on the completion date. We now expect to be substantially complete by the end of this year, with commissioning commencing early into the new year. At the same time, Barrick's exploration team is looking for growth opportunities within the permit and the surrounding concessions along with a full revaluation of the district, drilling programs to test both the Arroyo del Rey and Zambrana Norte targets are being finalized, and will evaluate their potential to provide high-grade ore to the mine plan. As you know, Argentina has been going through some tough times, but Veladero, nevertheless, continues to improve its performance. With its fourth quarter traditionally a good one, the mine is still positioned to achieve its annual production guidance, although there are risks. Construction of the first stage of its Phase 7 heap leach treatment facility has been completed and construction of the final stage of Phase 7 is expected to start towards the end of the year. And exploration across the LatAm region is now being driven by one of three new exploration managers in the group, who is working closely with a dedicated growth manager to evaluate opportunities. While the LatAm exploration programs and priorities are being refreshed, work continued across the continent with encouraging results this quarter from Veladero, where the team is developing several early-stage near-mine targets. The LatAm region is prospective for world-class copper and gold discoveries. And we certainly have the teams with the required skills and experience to deliver them. Turning now to Reko Diq which is one of the world's largest undeveloped copper gold deposits. In terms of the framework agreement between Barrick and the Government of Pakistan, the project, which has been on hold since 2011, will be reconstituted and restarted. The mine will be operated by Barrick. And in line with our philosophy of partnering with our host countries, it will be owned 50% by Barrick, 25% by the Balochistan provincial government and 25% by Pakistan state-owned enterprises. This is an exciting opportunity for Barrick but equally for the country and the province. And we've been received with great enthusiasm and support by all the local stakeholders. This is Reko Diq's anticipated time line. Pakistan has an efficient administration, and we're currently working with all parties to finalize the underlying definitive agreements. There is also a legislative process to be completed. Once all of this is done, we will update the existing feasibility study currently scheduled for completion in 2024. Production could start in 2027 or 2028. With its unique combination of large-scale, low strip and good grades, Reko Diq will be a multigenerational mine with a life of at least 40 years. Turning now to Africa and the Middle East. The region continues to excel on all fronts with a standout performance from the Tanzanian mines. Virtually at a standstill, when we took over their management three years ago, they have been completely redesigned and reengineered, creating what are, in fact, two completely new mines with the potential as a combined complex to achieve Tier 1 status in the Barrick portfolio. In Mali, Loulo-Gounkoto delivered its usual strong performance and is firmly on track to achieve its annual production guidance. All of our operations -- of all our operations, this complex is the most exposed to higher fuel prices, but we're in the process of trebling its solar power plants capacity which will improve its energy source profile. On the exploration front, the Loulo District in Mali and across the river in Senegal is the gift that keeps giving. Brownfields exploration is likely to replace Loulo-Gounkoto's depletion depleted ounces against this year. Just across the border in Senegal, our Bambadji and Dalema permits host multiple targets with standalone potential. And in Central Africa, Kibali boosted production in quarter two, with throughput rising after the first quarter's planned mill maintenance. We now expect the replacement of the shaft winder in quarter four, which may impact slightly on production, but the mine remains on track to achieve production within guidance. Kibali is Barrick's leader in renewable energy, thanks to its three hydropower stations, which are shielding it from the full effect of higher fuel prices and exploration continues to replenish the reserve base while also looking for new discoveries. In Tanzania, as I pointed out in the intro to our Africa Middle East section, both mines hit their steady state run rate in quarter two, with North Mara increasing production by 18% and Bulyanhulu posting a 20% improvement. Bulyanhulu now has a life of more than 20 years, and continues to deliver significant growth in reserves. Development of its new Deep West extension is scheduled to start this quarter. North Mara's Rama open pit has been successfully ramped up, and the new Gena pushback is scheduled for the second half of this year. While continuing to replace resources depleted by mining, we are also targeting new opportunities within the North Mara District. We've expanded our footprint around Bulyanhulu through the acquisition of six highly prospective licenses, and we are also updating our geological models and generating targets, as I pointed out in the North Mara region. Turning now to our copper operations. In Zambia, Lumwana increased its Q2 production by 32%, thanks to higher grades and improved mill availability. Jabal Sayid in Saudi Arabia produced a consistent production performance and in line with Barrick’s policy of recruiting host country nationals has appointed its first Saudi General Manager. Production at Zaldívar in Chile was also consistent. Strong exploration results at Jabal Sayid have identified multiple growth opportunities with orebody expansion potential, both at depth and along strike, adding significantly to the life of mine. Major intersects shown here include one with an eye-watering 54 meters at over 15% copper. And in Zambia, Lumwana has been targeting near surface satellite deposits to support the conceptual pushback for the Chimi superpit, which will unlock the operation's full potential and extend its life to beyond 2060. We are working on this and expect to commence a pre-feasibility study next year. Ladies and gentlemen, that covers my review of the operations. Now I want to go back to the dividend to demonstrate Barrick's commitment to shareholder returns. The $0.20 dividend comprises a $0.10 base dividend and a $0.10 performance dividend governed by the amount of cash net of debt on our balance sheet at the end of each quarter. On an annualized basis, this equates to a peer-leading dividend yield of approximately 5%. Not only does our dividend framework deliver enhanced returns to our shareholders, it also provides them with flexibility and predictability throughout the financial cycle and to be used opportunistically when our shares do not reflect the value of our assets and prospects. We, as I pointed out earlier, introduced a $1 billion share buyback program, which we utilized for the first time this past quarter. And to finish my presentation, I thought it would be useful to wrap up the previous slides and summarize how this is creating value for our investors. We have the industry's largest portfolio of world-class gold and copper assets, and it's still growing. All our mines have reality-based tenure business plans, in some cases, being rolled out to 15 years and beyond, with no significant production dips. We do not need to call our new projects to maintain our 10-year plans. New projects, on the other hand, build on that solid production foundation we already have. In fact, our growth projects such as Pueblo Viejo and Reko Diq will boost our current long-term sustainability. Future growth is supported by Barrick's substantial project portfolio, which includes Donlin and Pascua-Lama, our growing near-mine opportunities that I've touched on in this presentation, along with a strong record of exploration success and reserve replenishment. Our sustainability policies and practices ingrained in Barrick's long before ESG became a thing, deliver measurable results that benefit all our stakeholders. And all of this is underpinned by disciplined shareholder returns. So let me end with this question. Where can you find a better investment case? Thank you for your attention, and we are available to take answers.

Thank you. [Operator Instructions] Our first question comes from Greg Barnes of TD Securities.

Mark, a couple of questions. First on Goldrush's contribution over the next several years to Cortez. We only have, I guess, consolidated guidance for Cortez and we don't know how much Goldrush contributes to that in 2023, 2024. Can you give us some idea of what the amount is?

So Greg, we haven't really given much detail on that guidance, except that it really does take Cortez as a complex over 1 million ounces. And that will come as we define the project and conclude the feasibility study, then we'll be able to update that. We did give you a heads up last year, and I think that stands at this stage. And you've got a 5-year and 10-year profile. That's -- it's an integral part of the Cortez project.

A second question then on Pueblo Viejo. You've picked a new TSF site for it. Has the government signed off on that as well? Do you have buy-in from them for that new site?

Yes, absolutely, Greg. We have -- the government has released a press release confirming that. It's all subject, of course, to the environmental license being awarded. But we're comfortable. We've got the terms of reference agreed with the government, and we're busy with that. We expect to lodge that application towards the end of this quarter.

I believe, Mark, the government had a third-party review of independent experts reviewing these sites. They've signed off on all the two assets, given what you just said.

Yes. We've been working closely with the government. As you know, we started off with some challenges, but we've certainly found an agreeable way forward, acceptable way forward. And in fact, you want to see in the releases today that we've completed the public participation and consultation process as part of that. And I would just add, Greg, that were successfully completed.

Our next question comes from Anita Soni of CIBC World Markets.

Just a couple of operations that I -- you've read through some of the ones that would improve in the second half of the year. So just wanted to touch upon Cortez -- sorry Turquoise Ridge and also on -- sorry, it was -- which one is the lower one. I believe it was...

Cortez.

Sorry, Turquoise Ridge.

So, Anita, you're right. The two big improvements are an improvement in Turquoise Ridge. And I might add Turquoise Ridge is really doing well now as far as Turquoise Ridge underground goes. And the challenges are with the throughput and the processing facility and also Twin Creeks, the grade of some of the open pit material. But we're comfortable that Turquoise Ridge is ramping up as per the plan, particularly the most important part of that business, which is the Turquoise Ridge underground. And as we bring the Shaft 3 into production, we also have a development that's going out towards what we call BBT target, which is near the old Getchell pit, but it's an underground target. And again, we expect to continue to ramp up our underground operations there. The big fill up is the -- is out of Cortez. We've been processing much lower grade open pit ore from pipeline and we're busy transitioning to the next phase of Crossroads. And there's a very high-grade oxide portion of Crossroads that's in this year's mining plan. And we only get to it at the beginning of the fourth quarter, and that's a big step up. It's quarter, and that's a big step up. It's not changing throughput or anything like this. We use the oxide mill. It's got capacity. It's just about grade. And we've spent a lot of time focusing in on the reserve model and it's great. And we're comfortable as long as we can keep the mining rate where it is today that we'll get access to that, and you'll see it come through at the back end of the year. Those are the two big improvements if you look at it year-on-year, as I said, PV is pretty much on track. We keep the similar run rate as quarter two. Veladero, the same. Loulo-Gounkoto is bang on the run rate. Kibali, as I pointed out in my presentation is, seeks a better -- a slightly better increase in production, both in quarter three and quarter four. And North Mara is at the run rate, same with Bulyanhulu.

Yes. I guess my second question was going to be on Veladero. It's running under. But you had a slight improvement over the course of the year.

Yes. Veladero is always -- I mean, we're really starting to understand the leach dynamics in Veladero because of the -- no one's really focused in on what that dynamic is. We've been building the next leach infrastructure. But now that we've got that infrastructure working Phase 6, and we're moving on to Phase 7, the big focus now is understanding the leach dynamics how we manage through the winter months. And we expect that there should be an improvement in leach kinetics as we go into the summer. And so again, we're forecasting an improved back last quarter of this year as we go into summer.

Okay. And then my second and last question relates to CapEx. I think you're running a little over 50% for the year. And I'm just wondering if your comments on cost being at or above the high end of the guidance range, does that also apply to the CapEx number? Should we be a little higher on the CapEx numbers…

They're interconnected as you know. And some of the -- it's a big strip year and so with the higher fuel price, , there's potential that -- and if we get our full strip done, there's -- depending on the fuel price, and that's driving our overall cost profile. But that -- you've picked up on it that capital -- sustaining capital does have an impact on all-in sustaining costs. So we are managing it. I think the point that I make to everyone is, these things are important. We don't try and -- we have assets that support whatever gold price you come up with. And we are -- and some assets are delivering strong cash flow. Others are requiring sustaining capital investments. But they all our assets survive at any accept sort of imaginable gold and copper price, and they designed to manage through the cycles in a profitable manner.

Our next question comes from Jackie Przybylowski of BMO Capital Markets.

Maybe I'll ask the first question just to circle back with something you mentioned in the introductory remarks on Canada. Can you give us a little bit more color? I know -- there's been a number of transactions that have come and gone in Canada, both on M&A and on exploration. What are your current thoughts? Or what are you currently seeing in the landscape out there today in Canada.

Well, Jackie, there are two things. First of all, as I've said on many occasions, we are very disciplined in how we look to grow. And when opportunities come and they are not able to meet our investment criteria, we don't transact. And that's what's happened in Canada recently. That doesn't mean to say that we're not committed to still growing in Canada. And I often say, if we can't buy it, we'll find it. And that's really been our focus overall because otherwise. If you just rearrange the assets in our industry, you don't create any value as we've seen over the years. So that's where our real focus is. We've got a great team in in Canada. We are slowly building portfolios. We have four different projects that we're focusing in on at the moment. And in the fullness of time, you'll see that. At the same time, in times like this where you get a sudden pressure on the industry and particularly the market itself, that puts the junior market under stress. And again, that makes sense for us to exploit, and we do that. I think I would end up with the fact that we've never bought any exploration project at full value, and we don't intend to start.

That's a fair comment. And you guys have definitely been disciplined on that. For my second question, maybe I'll ask you for an update on the process at Porgera. It sounds like you've come to an agreement and you're just going through a public notice process. Can you maybe talk a little bit about how long you expect that might take and when you might be able to put Porgera back into your guidance if you have an idea on that?

Yes. So we were going along -- we've had this conflict with a structure that in the old Porgera held 5% equity. And again, it held it for the benefit of the key SML landowners. And so those landowners have now signed up for the new transaction and the management of that particular vehicle is resisting following the guidance of their own shareholders. So that's a process that we're dealing with. At the same time, the elections, as you know, have been rather complicated. We expect the -- and we have a -- we're in the process, the electioneering process is now in a program, which should result in the person who -- or the party being designated to form a government. It will be invited by the Governor General. And we're right in that process as we speak today. And so we expect during this week to have a good feel of who's going to be leading the next government. And once that's done, we will be -- we feel that we'll be able to get on and close out because that's all we need is we need a shareholders agreement. We have agreement amongst the key stakeholders, the landowners, the provincial government of Enga and the other landowners and everyone that was included in the framework agreement as beneficiaries. And so then it's about finalizing the shareholder agreement of the new Porgera, applying for the SML special mining license, which will then allow us to move towards reopening the mine. And that's the process. And right now, what we -- I was there a couple of weeks ago. We met with the Prime Minister of that time. We are now in a period where there is no Prime Minister for a couple of days, and then we'll see the new Prime Minister's appointment this week, and we'll be able to get back to progressing this project.

So sorry, it sounds like there's a lot going on. But do you think that it's reasonable to assume it will restart for 2023?

So one thing I'm becoming used to is that Papua New Guinea is not always -- doesn't always work as a reasonable state. So we'll keep working on it. But I think our relationships and our confidence that everyone that is anyone in that process has got to a point where we understand where we want to get to, and it's going through the process. And of course, as you know, we've always respected the various stakeholders in any one of our businesses. And this is another one of those groundbreaking transactions. But the gold is still in the ground. And we're very comfortable that once we get the rules right, the agreements in place, we'll be able to operate comfortably back in Porgera.

Our next question comes from Lawson Winder of Bank of America Securities.

Mark, nice to hear from you. Thank you for the update. I wanted to come back to Pueblo Viejo, the CapEx. So in the MD&A, you guys flagged the potential for a material increase in CapEx depending on various factors. Can you maybe just speak to what are some of the factors driving that potential increase? And to what extent is the delay factoring in?

Yes. So we need to finalize the feasibility study. We had an initial site, which created all the controversy. We have moved that site. And the new site, as we flagged when we moved it and we had different choices, comes. And the driver is really volumes. So the volume of the key for the walls of the dam and also the total volume to build the walls. And if you remember, right in the beginning, we talked about the two different sites and the variations as far as being able to build those tailings facilities. At the same time, the new site also comes with more volume. And that's what we're busy doing now. We well ahead of our program to drill out the foundations to ensure how much we have to excavate and what's the size and components of the key that we have to put in for the wall and then we'll be able to share that with you. But what I can tell you is that the economics are still very robust, can tell you is that the economics are still very robust, Lawson.

Okay. That's helpful. And maybe just to be a little bit more clear. If I'm hearing you correctly, it sounds like there is going to be some increase from the $1.4 billion estimate and you guys just need time to figure out how large that's going to be or how material it is. Is that fair?

That's exactly right, yes. And it's a whole package. So we want to get that settled. We want to apply for the -- we've got to plan for the permit. We'll have a pre-feasibility sort of level estimate at the end of this quarter and then we'll share it with the market.

Great. Can I also ask you about your new Asia Pacific team? Could that team -- and I believe it's based in Perth. Could that be interpreted as a desire for Barrick to reenter Australia after exiting a few years ago? And if so, is M&A, something that might be part of that reentry strategy?

So the focus for that team is -- by the way, that team is not running Porgera because there was sort of a rumor that we're going to run Porgera remotely. We're not going to do that. Our intention and we've already got a full Porgera team in Port Moresby. So we've still got some infrastructure in Cairns, and we're going to -- we will move all the significant leadership roles for Porgera to Porgera and Port Moresby in line with our commitment to be host country based. The Perth team is really charged with its -- currently working with the team in Pakistan. So that leadership structure will support our Pakistan project as we build the capacity, and we've already started employing people for that project. And then as to look at the entire part of from Pakistan, South and East, all the way to Papa New Guinea. And theoretically, there's nothing stopping us going back into Australia, provided that we can find things that fit our criteria. And as you know, Australia is quite a mature destination for exploration. M&A, my experience in Australia is -- it's not the place to go hunting bargains.

Our next question comes from Josh Wolfson of RBC Capital Markets.

Just following on Lawson's question about Pueblo Viejo Capital. I understand there's a range of possible options for the tailings dam and the volumes and energy prices associated with that. But if you have to sort of provide some sort of goalpost for us to think about in terms of what a material change would be for the capital. Is there a percentage we should be thinking about or any information you can provide there?

So Josh, it's got nothing to do with power. I just explained to Lawson. It's got to do with the amount the volume of material we have to move. We're busy going through that process of designing and calculating that. And I think it's appropriate for us. First of all, we need to share it with the government when we get to that point, and then we'll share it with the market. But I think it is substantial. But at the same time, it still delivers very robust economics. And this is a project that goes way beyond 2040. And by all accounts is going to deliver production above 800,000 ounces a year. We're busy with that feasibility study. When we're there, we'll let you know what it is.

Okay. And then looking at the timelines for the project or for the expansion there, when would you expect to be at a steady state run rate of that 800,000 ounces or higher? And then looking at the changes with the commissioning sort of timelines, how does that affect the 2023 production numbers?

So the guidance for the expansion, they're not directly linked, the tailings facility. What we had to manage was if we weren't going to get the tailings facility, it had a significant impact on the operation. And so the whole profile was going to change. We would have had to stop mining. And so we had to manage that because otherwise, we end up with nowhere to put the waste and it's asset generating waste. And so that's now clear, so we can move ahead. And in the meantime, with the endorsement from the government, we continued with the expansion program once we were cleared with the -- in obtaining a footprint to build the new tailings facility. So that expansion program is the one that we're referring to as being delayed. It was originally forecast to be quarter three. And we're now saying that it will be substantially complete at the end of the year, and we'll commission starting in the New Year. And that is -- to remind you starting in the New Year. And that is -- to remind you that really changes the front end of the plant from 9 million tonnes a year feed to 14 million tonnes. And what it does is that we reduce it in a float circuit. And so the back end of the plant is still has a capacity of around 9 million tonnes. And so by doing that, we continue the run rate, gold production rate from the past and slightly better if we can, and we keep the cost low. So that's the process. And now that we've got -- and we've got capacity to store material. Now that we know that we can continue at ramping up the new expansion. And so next year will be a better year, of course, and then we should get at towards the sort of planned run rate towards the end of next year or the back half of next year. So 2024 will be back in those high production profiles.

Okay. And then maybe just thinking about the impact of the steps for the remainder of the year and the project completion, is there any kind of interruptions we should expect to see towards maybe the year-end with the commissioning process or with the construction activity.

So that’s what I had pointed out in the presentation. We've got -- we're running multiple construction streams in parallel with the operation. So when you see the performance of this mine, it's spectacular. It's absolutely spectacular. And we've got 3,500 extra people. I don't know if you've ever been there, Josh, but it's quite a small footprint. And on top of that, this is our best safety site as well. So all around it -- and we've already done some tie-ins and we'll continue. We've been very focused on the tie-ins. We're very comfortable that the team understands exactly what it needs to do to deliver. And again, this is -- like many of our businesses, we're building long-term value. So our focus is ensuring that we deliver that solid foundation on which we can operate for the next 20, 30 years. And so experience has certainly taught me focusing on making sure it's done properly and the rest will come.

Our next question comes from Tanya Jakusconek of Scotiabank.

Maybe just on some of the development projects. I'm just going to circle back and finish off on Pueblo Viejo. So I understand the timeline, Mark, from you. So we are working on a pre-feasibility study that is going to be completed in Q3. So will we be getting an update with Q3 results on your findings on the prefeasibility study then?

So Tanya, all it is, is the cost of the tailings facility, and we'll release that once we've got a good idea of what that number is. And we need to bring it -- we need to deliver it to the government as well because remember, this is all part of our agreement with the government on a big expansion. But it doesn't really -- once -- it doesn't impact now the program of ramping up the expansion. The expansion is different to the tailings facility.

Yes. No, I appreciate that. So sometime Q3, maybe Q4, we will get a new costing number for the tailings. Is that...?

That's a fair assumption. And of course, it's in our interest to give it to the market as soon as we can.

Okay. And then the permit, which you are going to be filing in Q3 2022, when are you expecting the permit to be granted to you?

Yes. It's a project that's been going on in parallel in consultation with the government. So there's -- I mean, Grant's on the call. Grant Beringer, do you want to have a crack at that? Do you know how long it takes?

Yes. So it is dependent on the government review. We intend in submitting EISA towards the end of this month in September. And they obviously need to do their review the government that is. But we are expecting it in the first half of next year.

Okay. And is it when you are granted this permit that we would look at that resource to reserve conversion in your reserve statements?

No. It's -- Rod, do you want to comment on that? It's once we are clear and we're comfortable that we will deliver.

Yes, no, once we are clear that we're going to get the permit, then we're happy to sign off on the reserve increase. So we don't necessarily need to have the terms in hand. We just need to be confident that there's nothing that's going to impede that granting of the permits. So once the EISA as is done, we're happy and we engage with governments, then we're happy to declare their reserve increase. So still expecting that reserve increase this year, Tanya

Okay. So we could get it this year, so with your year-end financials.

Yes.

And then just so -- just for clarity, with the plant expansion and all of the tie-ins that we may need to do at the end of this year, is it safe to assume that Q4 might be slightly weaker than Q3 because of these tie-ins?

Sort of within plan, and it's going to be there and thereabouts, Tanya. No, we don't expect any significant variation. Of course, we would like to bring any production a little bit more into Q3 to ensure that we have that flexibility you referred to. But right now, it's not -- we're not looking to go beyond the sort of run rate that -- for quarter four, the run rate that we've had in the first two quarters of this year are still achievable.

Okay. And then when we come to this CapEx number for the tailings, Mark, I remember, I think from the previous conference call that of the $1.4 billion, I think $500 million to $600 million was the previous tailings facility. So is it safe to assume that whatever CapEx increases are going to occur, it would be on the $500 million to $600 million separate from the remaining $1.4 billion plus, obviously, we've got three months delay. So there's a bit of costing on that. Is that a safe assumption?

Yes. There are some increases as we point to in the expansion project. That's within the guidance. And then we will redefine the tailings facility, capital estimates along with the new plan when once we've done the drilling. Tanya, it's really about the drilling, the estimates on volumes. So how deep do we have to dig the key to tie it in? Because remember, this mine sits in a seismic active zone. Our current gold tailings facility is probably the best constructed tailings facility in the world today. And we have absolutely committed to ensure that this tailings we have absolutely committed to ensure that this tailings dam is designed like that one, if not better, to ensure the safety and competency of the facility itself.

Appreciate that.

Tanya, your assumption is correct.

Would it be that whatever CapEx increase we have, I should look at it based on the 500 million, 600 million…

Yes, it will be in addition to that. It will be in addition to it.

Maybe I'm just going to leave Pueblo Viejo, if I could. And I just want to come back to just Nevada. Just two things on Nevada, just as the delays on Goldrush, you started the public hearings. Maybe just an update on how that's going. Is it because we're having issues on the public hearing side that we slipped six months? So maybe just a little bit more detail on the slippage there.

No. We're not having any delays as you can -- as you know and the United States permitting takes time, and you need to consult. And so we are in that consulting process, I might add that there was slippage on the record of availability, but the BLM and the Department of Interior worked very hard and we were able to bring that forward after some slippage. So that's encouraging. Our teams are completely engaged along with the BLM and the external consultants that are working with the BLM to progress the permitting of this asset. And so Tanya, that's the -- and again, the impact of this has in the long term on Cortez is enormous. It really takes Cortez as a complex over 1 million ounces. So mid-tier it becomes -- so you've got Carlin at 1.5 million to 1.6 million ounces, you're going to have Cortez at over 1 million ounces. And then Turquoise Ridge at the sort of 600,000 ounce mark. And those are three world-class assets that really are the foundation to Barrick's production profile. And I would suggest it's equally important to our partners in Newmont to ensure that we build that foundation properly. So this is going to go on for a very long time. Goldrush, then Fourmile. We've got some very exciting projects. We touched on North Leeville and the REN project, but we've got numerous other projects across the Carlin portfolio that have potential to continue to deliver opportunities as we go more and more underground. And then we've got those greenfields projects that we've touched on in previous quarters, and we'll update you again towards the end of the year, which is the ones that sort of taking down the fence have created. And I'm talking specifically the gap between Turquoise Ridge and Twin Creeks, and then South Carlin and then, of course, more opportunities around the Cortez complex as well. So I'm super excited about the potential at both the brownfields potential adding life and the greenfields potential that our exploration teams are now starting to identify.

Okay. So I was just trying to understand whether there was any issues with the, I guess, the local...

No, not at this stage, of course, we're going to have lots of detractors. And we're going to have to engage in a robust way to keep this project moving along. But at this stage, we do not have any concerns about the process or the arguments for and against.

Okay. And if I could, my last question is just on Long Canyon. I see that it's no longer for sale. You took that off. I'm just wondering what's the change there? Do you see something different for this asset? Maybe the underground potential, maybe what's changed there?

So this asset was one of those that the market -- and remember, when we did the deal with Newmont, it was a hostile deal. And so we had to trust the market and the market didn't get it right in some of the assets. And so we -- the next phase of Long Canyon hadn't been permitted. It's been a great asset to date. It's got resources. And so our view was that it didn't really fit. It's an outlier within our portfolio in Nevada. And we felt that, that was an opportunity to see if there was anybody else who wanted to take this project on. The interest that was shown on that project -- just like, by the way, Tanya remember, Lumwana when we put on the market and then people felt this was somewhere. You could bargain hunt. Well, we're not prepared to do that, and we couldn't get anyone that we felt was -- had the capacity to ensure that our model of responsible mining would be respected in Long Canyon. So it's still got some residual leach potential, and our team is now refreshing the process of continuing to license the project. And we're comfortable that we'll manage that. And on top of that, the sale process got caught up with a sudden drop in the gold price sentiment turned lots of things. And we definitely are not in a frame of mind of a fire sale in Long Canyon. So it's back in our portfolio.

And so now you're recircling back and looking at permitting and maybe looking at the background.

Exactly.

Our next question comes from Jatinder Goel of BNP Paribas.

First question on Cortez and Fourmile royalty that's reared and thus sold to Royal Gold, was there any interest from your perspective, Mark, to acquire that royalty stream or at the JV level at NGM or it did not make financial sense?

So Jatinder, as everyone recognized, it's quite a big price tag, the -- what was paid for that royalty. Of course, we're always interested. I think it would be incorrect for me to disclose our corporate considerations and strategy around that. But I think one thing that's important is it's a real endorsement on the capacity of both Nevada Gold Mines management and its ability to grow that resource. And I think that's what's in the price is that I believe that we can continue to grow that resource. From Nevada Goldmines point of view, our focus is to grow our resources. And so we'd rather spend money, particularly at that sort of level back in our ore bodies. And I hope that explains your question adequately, Jatinder.

Just to follow up on that. I mean you run the asset. So no one can know about the reserve resource and potential production and cost situation better than you, especially sitting outside, evaluating that. So from that perspective, is it a difference in gold price assumption that would result in a different valuation? Or was it a question of you trying to put your money at better place, as you said, on exploration rather than trying to buy back the royalty stream.

Yes. I think you've answered your own question, Jatinder.

Okay. That's very clear then. Just one more on cash flow modeling perspective. From Kibali, is it going to be once a quarter with like a one quarter lag type of cash inflow or repatriation just to see the consistency of that cash coming through? Or can it still be subject to different timings in terms of how it comes into Barrick?

So we are busy progressing that -- the agreement that we have with the government is that we will split the cash flow more or less 50% towards repaying the debt, outstanding debt and 50% towards dividends. That way, everyone gets a bit of the slice of the cake, particularly our partners, SOKIMO. They get the dividends, the government gets -- withholding tax on the dividends and we see a continual wind down of the outstanding debt. So that's the plan. Whether we do it each quarter or biannually, that's something we'll make a decision on. We'll certainly inform the market.

Our next question comes from Brian MacArthur of Raymond James.

Most of my questions have been answered. But I just wanted to follow up on a comment, Mark, you made about Bulyanhulu. You talked about 20 years now. You've sort of rebuilt the whole mine. A number of years ago, there was talk that this could be a much bigger mine than it currently is. Now that you've got it figured out the new mine, you've got a long reserve life. Is there any possibility of going towards those 500,000 ounces a year numbers that were talked about maybe 15 years ago?

So the best way to explain that, Brian, is there's no chance and probably no other charts. So because let me explain you that was what kept failing Bulyanhulu is this is an ore body about 250,000 ounces between 200,000 and 250,000 ounces a year. And it's a narrow ore body, high grade. Every time you reduce the feed grade and you just can't make it work. And so the only way we will get that increase open up new working front, so new faces. And to do that, you need additional orebodies. How we did the deal and expanded that footprint around Bulyanhulu because our geologists feel that there's certainly potential for additional orebodies and that perhaps there’s a bit more folding than people in the past understood. And so we could open up addition working areas and not rely on: one, the current infrastructure on its own; and two, trying to mine at any faster rate given the size of the ore body, then we could add to it. So that’s why at the stage, the life of the mine just gets bigger and bigger. And so North Mara is about 300, a little bit more, maybe, depending on grade produced and Bulyanhulu is just over the 200,000, maybe up to 230,000, 240,000 ounces a year. And if you add them together, there's the 500,000 ounces. They're both good cost mines. And Buly has got a longer life than North Mara, but North Mara has equally got more untested prospectivity today than Buly has.

[Operator Instructions] Our next question comes from Adam Josephson of KeyBanc.

Mark and Graham, good afternoon. Kind of a two-part question about costs for either of you. Can you talk about what assumptions are embedded in your thinking that gold cash cost will be at the high end or perhaps slightly above your full year range, bearing in mind that global commodity prices, as you know, have been falling quite precipitously in recent weeks. And then if, in fact, you end up at that the high end or slightly above the high end, what do you think a reasonable expectation is for next year in terms of cash cost per ounce. I know you've said that -- you've indicated you expect production to be up to some extent next year. With that in mind, again, at this early stage, what do you think is the most -- is the most reasonable expectation for what the year-over-year change might be, if any?

So I'm going to try and just talk to the operations, and I'll let Graham fill in the gaps. So Adam, the point here is one minute, we're talking high gold prices and how that’s going to change the world and then everyone has seizers over the costs. At the end of the day, they are what they are, and you've got to manage them. And one of the things that we're absolutely in is inflationary times. And we can wish that away, but it's not going to happen until somebody does something about it. So we are dealing with costs. And on top of that, we've got the Eastern European crisis -- Europe crisis, which has brought a very stressed fuel market to bear. And that's both oil or diesel and gas. And the gas markets are moving around, the amount of gas being exported out of the U.S., for instance, where we rely and are growing our capacity to take on more gas power generation. Those are all complex situations. So you can't just look at the commodity price and say that's going to be what -- that's going to be able to be imputed through to the costs. And on top of that, Barrick at the moment has a number of big sustaining capital programs, particularly strips in our pits. And again, that comes with extra cost and extra fuel costs will impact on those two. So we're just giving you the numbers. And this doesn't put us at risk. I mean, that's the good thing about having world-class assets as it doesn't put us at risk. And it certainly doesn't impact on the way we allocate capital. And it's -- our job as managers to manage that impact. And absolutely right now, we don't want to compromise any of our commitments as far as capital goes, whether it's growth capital or sustaining capital because we've got -- we're probably the only gold company and copper business that doesn't rely on a new project to deliver our five-year plan and our 10-year plan. We're absolutely comfortable with our ability to manage the cyclicality of the commodities that we mine. And so of course, we constant -- and we've taken about $500 million out of Barrick's logistics, supply chain and procurement. And in fact, we've got budgeted improvements again this year that will offset the inflation pressure, whichever inflation it is. The issue around Eastern Europe or just general embedded inflation, which is something that you can see everywhere at the moment. And everyone still denies that it's a real issue for our global economy. With that, I'll pass it on to Graham. We can give you some additional color on how we look at the capital, I mean, how we look at the cost.

Thanks, Mark. I mean I think you've really addressed the question quite well, and it is very tricky to be forecasting costs in the current environment. I will just say that the current guidance for 2022 in terms of this at or slightly above our previous guidance is a function of an expectation of $110 oil. And as you will have seen, a few weeks ago, we were trading over $120, and then we dropped below $100. So it's moving around all over the place. It's difficult to predict, and that's why we're reluctant to be drawn on a particular number. And as we look to 2023, as Mark has indicated, it's so much depends on the global economic environment when we get there. So I think that's something we'll give you guidance on at the end of the year, as we always do.

Yes. Mark, just back to what you were saying about we look at some of these commodity prices falling hard. And as you said, some people are quick to assume that inflation is going to dissipate, go away, whatever the case may be. But what you're saying is that that's just not the way it's looking at all that supply chains are still quite problem. Can you just go into what you're seeing, Mark, in terms of supply chain, et cetera, and how that's affecting the inflation that you're dealing with and presumably affecting what you think will be the persistence of that inflation?

Yes. So supply chains, it's one is the cost. The other is the ability to manage it. I think the latter we've got our head around it. We managed COVID extremely well. The team did -- I often use the example that we moved our purchases for steel balls from China to Europe, back to China, back to Europe. We have the flexibility of multiple suppliers. We've beefed up our inventory to beyond three months and even a little bit more in some of the core assets that are under threat because of the Ukraine crisis. But there are a number of crises developing at the moment. We're not sure exactly. You've got the USA-China issue recently been sort of exacerbated by what happened around [Thailand]. So a number of issues developed. The way we manage that is ensuring when we have partnership relationships. We are very significantly contracted and we've got excellent supply infrastructure now and ability to procure. I'll give you an example. In PV, we had some real stress on some key components on the expansion. And what we've been able to do is move steel into the country, and we are building a manufacturing industry there. And we've been able to manufacture a lot of our equipment for Pueblo Viejo without hurting it too much on the delay because otherwise, we would have had a situation where you don't have control of the delivery. So my personal view is like every crisis and particularly every big inflation period or global economic crisis that I've lived through, it's always worse than it seems, and it takes longer to come out of. And we, as the global economy have -- very few people are around that understand inflation. And I certainly lived through the last significant inflation period. And again, it requires diligence. It definitely requires world-class assets, and you will get through it. And it's agility, innovation and most importantly, the skill profile of your employees, and then we'll get through it. And I think Barrick boasts all those components required to manage this situation. I think just to finish, Adam, if I may, I often point out that this world is, it's so muddled. And we went from COP26 where everything was going to be green and clean to a situation where all that was thrown out the window, and now look at where we are. We're burning coal and every other bit of fossil fuel we can. And just like COVID, there's no global coordination. There's a lot of sort of disengagement. What I referred to the issues we dealt within COVID as COVID nationalism. And you're seeing the same again. And so -- and on top of that, no one is caring about the emerging markets. And then when you look at the drive behind some of these ESG strategies, none of them seem to be sustainable and sustainable is the real focus when you talk ESG is how do you build sustainable industry, a sustainable global economy. And you can't do that without investing in the developing world, which has largely been neglected. And even last night in the United States Senate, they passed this big bill, but no one even mentioned the emerging markets and the developing world and what is needed there to bring them along. And we all know that this will -- there's no island on this world. You can't do things in isolation but more and more, we see evidence of that happening. And at the same time, all this requires more and more mining, more and more responsible mining if we're going to get it right. So what we and Barrick are very clear about our core focus is sustainability. We look at high-quality assets. We look to develop them wherever they are in the world, and we benefit our host country stakeholders as much as we benefit our own shareholders.

Thank you for that, Mark. And just one on the buyback, if I may. Obviously, last quarter, inflation was intensifying and gold prices fell from $2,050 all the way down to $1,700. And I assume that's what caused the dislocation in your stock that you were thinking about. Can you -- was the dislocation in your mind more about the gold price having gone to $1,700? Or what specifically was the dislocation in your mind? And relatedly, do you expect these buybacks to be ongoing or should we not assume or expect level of such buybacks in subsequent quarters for whatever reason?

So we were very clear that we're going to use this facility to buy back our stock when we feel that it's trading at a discount to what we feel is fair and tighten up the market when we can. And that's what happened last quarter. As you pointed out, the share price showed a lot of weakness and we were -- went into the market in a considered way, we're not planning to buy back all our shares. But in a considered way, we were active in the market. And again, today, we feel the same applies, and we will continue with this buyback strategy that we shared with the market. And again, in a considered way, all the time we feel that it's in the interest of our genuine long-term shareholders to take out some of the softness in the market when we can.

There are no more questions from the conference call.

Well, again, ladies and gentlemen, thank you very much for your time. It was an efficient use of your time, I'm sure. So again -- and thanks for the questions. And as is usual, if there's anybody out there who failed to think of something to say or ask or didn't want to ask it in this public forum, we're always available to take your questions as a management team. You know us all and just reach out to us or reach out to Lois or Kathy, or any of our investor team, and we'll make sure that you get the answer. So again, thank you very much. And enjoy the summer for those in the Northern Hemisphere, and we'll speak to you soon.

This concludes today's conference call. Should you have any additional questions, please contact the Barrick Investor Relations Department. You may now disconnect your lines. Thank you for participating and have a pleasant day.