Barrick: development not exploitation

As a preface to discussing the company's June quarter financial results, he said deglobalisation and a risk-on situation in the global economy requires companies [and countries] to reassess how they source minerals."We see in West Africa what happens when we neglect developing countries. The elected governments across the regions have failed, and all we want to do is lecture. The world needs to relook at how it manages its business. The US minerals policy has to reflect on how important it is to exploit other peoples' resources rather than its own," said Bristow.The company said it is on track to meet its full-year 2023 guidance of 4.2-4.6Moz of gold and 420-470Mlb of copperHaving participated in a mining summit in Islamabad, Pakistan recently, where the company is looking at developing the Reko Diq copper project in partnership with the government and Balochistan province, Bristow said mining has a key role to play in regional development."Mining is the force that makes undeveloped countries investable. … Pakistan realises that things need to change. There have been 70 years of mistakes, although the country has everything it needs to get on top of things. There needs to be a focus on development and not just exploitation. They have a strategy to turn red tape into a red carpet for investors, a massive transition," he said.With the first production slated for 2028 at the multi-generational mining project, Barrick has begun early benefit-sharing programmes and has established two primary schools. "There is no economy and such poverty that the children have to work to survive, so the schools are empty. We are educating the future operators of the mine ahead of the mine," said Bristow.June quarterBarrick Gold reported net earnings of US$305 million on sales of $2.8 billion for the June quarter, 37.5% less than the $488 million earned in the prior year quarter but 154% higher than in the March quarter, buoyed by an all-time high quarterly average gold price at $1972/oz.The company produced just over 1Moz of gold, 3.3% less than a year ago and 6% more than the March quarter. Its all-in-sustaining cost increased 11.8% compared to last year, although it was 1% less than in the March quarter.Barrick also produced 107Mlb of copper, 10.8% less than a year ago and 22% up on the March quarter. Its C1 cash cost was 34% higher than a year ago and 16% less than in the March quarter. The stronger June quarter was due to new equipment coming online at Lumwana in Zambia, with further improvements expected in the second semester.The company said it is on track to meet its full-year 2023 guidance of 4.2-4.6Moz of gold and 420-470Mlb of copper, with a stronger second half expected with the completion of major shutdowns at Nevada Gold Mines in Nevada, USA and the continued ramp-up of the Pueblo Viejo expansion in Dominican Republic.Barrick ended the quarter with $5.1 billion in cash and $4.8 billion in debt. It said it also achieved a 12% decrease in its greenhouse gas emissions compared with last year and 5% over the March quarter. The company maintained its 10 cents per share quarterly dividend.Bristow said that the cash balance is forecast to build materially in the second semester, at which point the company may look to initiate a share buyback."We don't want to risk our balance sheet right now. We are forecasting a growth in cash, and as we approach that, the preferred option is to repurchase the stock. We are trading below what we should be trading, so there is no risk in buying our stock back," said Bristow.PorgeraBarrick is working to restart production from the 600,000ozpa Porgera mine in Papua New Guinea, in which it owns a 25.5% stake by year-end. Mining stopped in 2020, having settled a tax dispute with the government. "We have applied for a Special Mining Lease, which was removed at the end of the last lease period. … We have started the preparation of mobile fleet and plant readiness," said Bristow.NevadaBristow said the Nevada Gold Mines joint venture with Newmont in Nevada, USA is on the cusp of a new growth phase, with production up 11% quarter-on-quarter and on track for guidance, while AISC has fallen from $1436/oz in the March quarter to $1388/oz in the June quarter. "We have replaced 16.5Moz of reserves depleted by mining since the creation of NGM in 2019, and we maintain a 15-year planning horizon," he said.Exploration at Horsham on the Carlin Trend has returned highlights of 32.6m grading 32.88gpt, with the company continuing to consolidate ground around. Barrick said its 100%-owned Fourmile discovery at Cortez is on the way to tier one status and has succeeded at Robertson and Turquoise Ridge.LumwanaAt Lumwana in Zambia, Bristow said the operation is transforming into a tier one asset with a projected expansion of Chimiwango into a super pit with a life-extending beyond 2060. The company has replaced the contract miner with its own fleet, which has dropped the production cost by $2/t. "This could be as important in value as our share of Reko Diq. A prefeasibility study will be completed next year, with production scheduled in 2028.ExplorationBristow highlighted that the company had replaced 125% of depleted reserves on a gold equivalent basis since the 2019 merger with Randgold Resources, which he maintains gives the company a competitive edge over companies that must acquire assets to counter depletion. Its proven and probable reserves at the end of 2022 were 104Moz.The company expects this to continue as it has acquired new prospective ground acquired in US, Canada, Dominican Republic, Peru, Chile, Tanzania and Cote d'Ivoire."We have put a lot of effort into exploration over the last four years, fixing our assets and building bench strength in exploration. … Our copper resources and resources to come will be significant growth for Barrick going forward," said Bristow.Shares in Barrick Gold are trading at $16.39, valuing the company at $28.8 billion.

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