More synergies to come from Barrick

The company saw its gold AISC increase 14.3% to US$1,164 per ounce compared with the prior year quarter and 19.9% compared with the December 2021 quarter, while its C1 cash cost for copper increased 13.1% to $1.81 per pound year-on-year and 11% from the December quarter."You can't blame everything on inflation as there are always there's swings and roundabouts. We have more fat to extract from copper, than the impact of inflation, and what I pointed today is that we've still got some real efficiencies to unlock," said Bristow.Bristow said the company believes its copper assets were poorly stewarded in the past which means it has been able to extract a lot of value. "We've moved away from an asset we would have sold to an asset we want to keep at Jabal Sayid [in Saudia Arabia]. We've increased the production by 50%; it's a small asset, but it's highly profitable and very low cost and a beachhead into that part of the world. This relationship we are building in Saudi Arabia is critical for our long-term ability of being able to pursue other big copper assets within the Tethyan belt," said Bristow.The company also sees the possibility of realising additional efficiencies at Nevada Gold Mines in Nevada, USA where it is operator. "There is a couple of other things we've still got to do and we've set ourselves a target of $50 million [in cost reductions] in Nevada, just to pull out the commercial inefficiency, and that is directly related to people and our management structure," said Bristow.Bristow said the company's focus on reducing costs and generating cash flow is reflected in the performance dividend policy it announced with its results, which it believes sets it apart from rival Newmont.Barrick declared a dividend of 20c comprised of a base quarterly dividend of 10c per share and a performance dividend enhancement of an additional 10c per share. The dividend policy will see shareholders receive an additional 5c per share if the company has a net cash position of up to $500 million, 10c for over $500 million and 15c for over $1 billion."We are comfortable we can always support a 10c base dividend, then how do you link it [to success] because Newmont links theirs to the gold price, which is not a good strategy. Our balance sheet is always going to be linked to our profit and loss performance and if we build cash and we're not spending it, it makes good sense on a formalistic basis to pay it out," said Bristow, who adopted a similar dividend policy when he ran Randgold, which merged with Barrick in 2019.Bristow argues that this approach maintains the flexibility to invest in new capital projects or increase the company's debt gearing without impacting the base dividend and provides shareholders with the ability to forecast what their dividends will be."The damping effect of this balance sheet formula ensures we never have a lazy balance sheet and provided we are always profitable; we will always be building our cash. If we are building our cash, we are building our war chest and at the same we are building dividends because we never get a situation where we are sitting on a whole lot of cash," said Bristow.Bristow said the company policy of focusing on exploration continues to return good results which support the future health of the company, rather than spending cash on acquisitions, citing 165% of reserve depletion replaced in Africa and elsewhere, which is enabling the company to move to the next level."We replaced all our reserves last year and we might this year, so now our focus is building resource replacement through 2024. In Nevada, when we took over all of the Barrick and Newmont assets, Newmont had given up and Barrick was busy high-grading the assets to try to deal with its debt so there was no future visibility on resource replacement. It has taken us three years to get those models up. We've now got solid geological models for all the mines, we know what it looks like ahead of us, not only the brownfields extensions, but building satellite targets," said Bristow.Exploration in Nevada is having success at Turquoise Ridge where drilling at BBT indicates the potential for a large increase in resources, with resource growth also coming at the Leeville and REN areas on the Carlin trend."These are all high grade, and we have got greenfield projects. For the first time today we pointed to greenfield projects because we really need another Goldstrike or Turquoise Ridge discovery, a big one of 20 million ounces because Nevada Gold Mines consumes 5Moz every year. That is the thing I find crazy in this industry. There are mighty companies, bigger than us that are paying dividends and they haven't replaced their depletion for years for years," said Bristow.Shares in Barrick Gold are trading at $23.19, valuing the company at $41.3 billion.

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