Q1 gold production and costs were consistent with full year guidance; debt net of cash was reduced by a further 17% from the end of Q4 to $1.85 billion with no significant maturities until 2033; operating cash flow increased to $889
Toronto, May 6, 2020 — Barrick Gold Corporation
(NYSE:GOLD)(TSX:ABX) built on the solid foundation it
laid last year with a robust first quarter performance from
all operations in the face of the challenges presented by the
global Covid-19 pandemic.
Q1 gold production and costs were consistent with full
year guidance; debt net of cash was reduced by a further
17% from the end of Q4 to $1.85 billion with no significant
maturities until 2033; operating cash flow increased to $889
million and free cash flow 1 to $438 million from Q4; net
earnings per share was 22 cents; adjusted net earnings per
share2 was 16 cents; and the quarterly dividend of 7 cents
per share was maintained.
President and CEO Mark Bristow said operational and
financial delivery were on plan despite the fact that the
group’s prime focus during the latter part of the quarter had
been on ensuring the safety of Barrick’s people, communities
and business in the face of the novel coronavirus pandemic,
while also coping with the restrictive conditions imposed by
governments.
“Our sustainability and regional teams have done a great
job in taking timely action to introduce comprehensive and
carefully considered measures at all our sites and offices
to manage and mitigate any impacts of Covid-19 on our
employees and contractors. A key focus of this plan is on
prevention, and all sites are working actively to head off an
outbreak,” he said.
Q1Report
2020
4 6 8
CLEAN ENERGY
CURBS COSTS
EXPLORATION
DRIVE EXTENDS
ASSET BASE
PEERLESS
RECORD OF
STRATEGIC
DELIVERY
CONTINUED ON PAGE 2
ALL AMOUNTS EXPRESSED IN US DOLLARS
STEPPING UP
COVID-19
RESPONSE
3
$0.07
QUARTERLY
DIVIDEND
MAINTAINED
PER SHARE
MASSAWA SALE
CREATES VALUE FOR ALL STAKEHOLDERS
OPERATING
CASH FLOW $889MILLION
FREE CASH
FLOW $438MILLION
%*DEBT
NET OF CASH TO $1.85 BILLION
h17
* QUARTER ON QUARTER
BARRICK MAKES SOLID START TO YEAR
PromPt and EffEctivE actions shiEld PEoPlE and BusinEss from PandEmic
1
BARRICK FIRST QUARTER 2020 2 PRESS RELEASE
Key Performance Indicators
Financial and Operating Highlights
Financial Results Q1 2020 Q4 2019 Q1 2019
Realized gold price3,4
($ per ounce) 1,589 1,483 1,307
Net earnings5
($ millions) 400 1,387 111
Adjusted net earnings2
($ millions) 285 300 184
Net cash provided by operating
activities ($ millions) 889 875 520
Free cash flow1
($ millions) 438 429 146
Net earnings per share
($) 0.22 0.78 0.06
Adjusted net earnings
per share2 ($) 0.16 0.17 0.11
Total attributable capital
expenditures6 ($ millions) 364 393 361
Operating Results
Q1 2020 Q4 2019 Q1 2019
Gold
Production4
(000s of ounces) 1,250 1,439 1,367
Cost of sales (Barrick's share)4,7
($ per ounce) 1,020 1,046 947
Total cash costs4,8
($ per ounce) 692 692 631
All-in sustaining costs4,8
($ per ounce) 954 923 825
Copper
Production9
(millions of pounds) 115 117 106
Cost of sales (Barrick's share)9,10
($ per pound) 1.96 2.26 2.21
C1 cash costs9,11
($ per pound) 1.55 1.90 1.66
All-in sustaining costs9,11
($ per pound) 2.04 2.82 2.46
Solid start to the year from all operations
Gold production and costs were consistent
with full year guidance
Debt, net of cash, down a further 17% to $1.85
billion with no significant maturities until 2033
Operating Cash Flow increased to $889 million
and Free Cash Flow1 to $438 million from Q4
Net earnings per share of 22 cents and
adjusted net earnings per share2 of 16 cents
for the quarter
Copper costs per pound significantly lower
demonstrating resilience of business
Successful completion of Massawa sale
creates value for all stakeholders
Signing of framework agreement in Tanzania
paves way for exporting concentrate
Continued focus on safety delivers
improvements in injury rates
2019 Annual Report highlights ten-year plan as
Barrick looks to next phase of value creation
Proactive engagement with all stakeholders
ensures protection of our people and supports
sustainability of the business during Covid-19
pandemic
Barrick's sustainability vision demonstrated by
publication of industry-first ESG scorecard
Brownfields exploration success points to life
of mine extensions
Global exploration portfolio expanded with new
projects and targets
Barrick declares $0.07 quarterly dividend per
share
CONTINUED FROM PAGE 1
“In Barrick’s spirit of partnership, we have extended Covid-19
support to our local communities and our host countries and
are working closely with their health authorities. To date we
have donated more than $20 million to our host countries,
many of whom have limited healthcare facilities, to fund the
purchase of medical equipment and PPE.”
Highlights of the quarter included the closing of the sale of the
Massawa project, which has created immediate value for all
stakeholders, including Barrick. In Tanzania, the signing of the
framework agreement with the government paved the way for
the resumption of concentrate exports.
Brownfields exploration continues to replenish reserves
depleted by mining while Barrick’s generative exploration
programs are identifying new projects and targets, and
expanding its global reach. Among other things, Barrick has
formed an alliance with Japan Gold, holder of the largest
exploration property portfolio in Japan.
Since the end of the quarter, the government of Papua New
Guinea has announced that it will not renew Barrick Niugini
Limited’s 20-year Special Mining Lease for the Porgera gold
BARRICK FIRST QUARTER 2020 3 PRESS RELEASE
mine. Barrick has said it will contest the move, which it regards
as tantamount to nationalization without due process. In the
meantime, BNL has placed Porgera on temporary care and
maintenance. In addition, due to the uncertainty related to the
timing and scope of future developments on the mine’s
operating outlook, we are withdrawing our full year 2020
guidance for Porgera at this time. As this is a rapidly evolving
situation, we will reassess on an ongoing basis and provide
further updates in due course, while maintaining operational
readiness.
Bristow said regardless of new discoveries, organic growth
from its existing asset base — which includes six Tier One
gold mines — would sustain Barrick’s recently published ten-
year plan that projects annual production of around five million
ounces of gold (subject to adjustment based on the outcome
of the process with the Government of Papua New Guinea
with respect to the Porgera Special Mining Lease extension).
A Tier One gold mine is one which has a life of at least 10
years and produces more than 500,000 ounces of gold per
annum in the lower half of the industry cost range.
Barrick has also published an industry-first ESG scorecard to
transparently report on its performance in terms of health and
safety; social and economic development; human rights; the
environment; and governance.
“Overall we scored a B grade, which we believe accurately
reflects our improvement in sustainability performance over
the year but also acknowledges that there is still some work
to be done,” Bristow said.
Conference Call and Webinar
Please join us for an interactive webinar today at 11:00 EDT/
15:00 UTC to discuss the results.
Webinar
US and Canada, 1 800 319 4610
UK, 0808 101 2791
International, +1 416 915 3239
The webinar will remain on the website for later viewing and
the conference call will be available for replay by telephone
at 1 855 669 9658 (US and Canada toll-free) and +1 604 674
8052 (international toll), access code 4363.
PRO-ACTIVE PREPARATION, RAPID RESPONSE BUFFER
COVID-19 IMPACT
Barrick’s deeply embedded health and safety culture,
combined with its flat organizational structure and agile
management style, cushioned the initial impact of the
coronavirus pandemic on its people, communities and
business.
President and CEO Mark Bristow says while crises of one
kind or another are endemic in big mining organizations,
Covid-19 is a true Black Swan event.
“Fortunately, Barrick had the management capacity to take
immediate and effective action based on well-established
health and safety resources and procedures. The streamlined
corporate structure we introduced last year, the strong
regional executive teams we established, and the transfer of
greater authority to the operations all contributed to fast
decision-making and prompt execution. We could also draw
on the experience Randgold gained in dealing with two Ebola
outbreaks in Africa,” he says.
BARRICK FIRST QUARTER 2020 4 PRESS RELEASE
Group sustainability executive Grant Beringer says Barrick is
employing a ‘4 P’ strategy to protect its employees,
contractors and communities. The four Ps are Proactive
Response, Preparedness, Prevention and Perspective.
Among many other things, these headings cover updating
Emergency Response Plans at each site, introducing a
Trigger/Threat Action Response Plan and the establishment
of Outbreak Control Teams for all mines. Temperature
screening is carried out at all access points to the sites and
offices, rapid antibody test kits are being rolled out across the
group, and social distancing and hygiene protocols have been
put in place.
“We believe that education and communication are key
components of an effective Covid-19 campaign. Our
workforce is regularly updated on the latest developments and
our plans. Fact sheets with specific information on symptoms,
hygiene and social distancing, designed to prevent
scaremongering or self-medication with potentially hazardous
substances, have been distributed to everybody at Barrick.
Daily situation reports from each region are circulated
throughout the organization.”
Beringer says Barrick is also engaging closely with its host
authorities and communities to support them in their fight
against the pandemic. To date, Barrick has provided host
governments with funding of more than $20 million, mainly to
acquire specialized medical equipment. In addition, the
company’s operations and subsidiaries have also been
individually involved in a number of diverse but effective local
charitable initiatives where the need for intervention has been
identified.
Barrick has also taken steps to ensure that its operations
continue to enjoy an uninterrupted supply chain, proactively
engaging with key suppliers to mitigate volatility and
uncertainty. With an integrated supply chain stretching over
multiple continents, dedicated international logistics partners
and strong relationships with key suppliers, Barrick has been
afforded the flexibility to deal with the challenges in an agile
manner.
“Not only have we focused on remaining active in ensuring
we have alternate procurement and logistic arrangements in
place, we have also increased the stocks of consumables and
other fast moving items at our mines. At the same time, the
team has been there to assist in procuring those often scarce
PPE and other medical supplies needed by our host
countries,” says Barrick’s group supply chain and commercial
executive Riaan Grobler.
In the Dominican Republic, the Quisqueya 1 power plant has been converted to accept natural gas instead of heavy fuel oil. It is expected to cut Pueblo Viejo’s
CO2 emissions by 260,000 tonnes per year.
CLEARING THE AIR, CURBING THE COST
Barrick’s clean energy strategy is playing a significant
and growing part in reducing the impact of its operations
on the environment. At the same time, it is also steadily
reducing their cost profile.
Metallurgy, engineering and capital projects executive John
Steele says the company is investing in cleaner energy
projects across all its operations with the aim of cutting more
than 1.5 million tonnes of CO2 per year from their GHG
emissions. This marks a major advance in a journey that has
taken Barrick and legacy company Randgold from diesel and
BARRICK FIRST QUARTER 2020 5 PRESS RELEASE
coal through heavy fuel oil and then to natural gas, hydro
electric and solar power.
The group’s second solar power plant is currently being
installed at Loulo in Mali. When the 20MW station is
commissioned in September this year, it is expected to reduce
diesel consumption by 10 million litres and CO2 emissions by
27,000 tonnes per year.
Kibali in the DRC relies mainly on the hydropower generated
by its three stations, but in a move to further reduce diesel
consumption, a 9MW battery has been installed to provide
power surge capacity which is currently supplied by
generators. This will reduce the need for thermal power top-
ups at an estimated saving of 4.5 million litres of diesel and
8,000 tonnes of CO2 per year. Despite its remote location, the
inclusion of seasonal hydro power allows Kibali to deliver
power at an annual average of 10 cents per kWh.
Nevada Gold Mines (NGM) has two power generation
facilities in northern Nevada with the TS Power Plant in
Dunphy and the Western 102 Power Plant outside of Reno.
The TS Power Plant began operations in 2008 and has a
capacity of 215MW power generation from its original coal-
fired process. The Western 102 Power Plant has a capacity
of 115MW, supplying power from natural gas fired generators,
and a 1MW Solar Facility.
NGM has embarked on a project to replace the last of its coal-
powered stations with natural gas to achieve an estimated
annual CO2 saving of 650,000 tonnes. Permit approval is
expected in the fourth quarter of this year. NGM has also
started a permitting process for a 200MW solar plant. The
100MW first phase of the project is expected to save 130,000
tonnes of CO2 annually.
“Nevada Gold Mines is committed to providing its operations
low-cost, secure power generation through northeastern
Nevada’s power grid now and into the future. The conversion
of NGM’s TS Power Plant and the potential for an additional
solar power facility illustrates this commitment while reducing
the mines’ carbon emissions,” said Greg Walker, executive
managing director, NGM.
In the Dominican Republic, the Quisqueya 1 power plant has
been converted to accept natural gas instead of heavy fuel
oil. It is expected to cut Pueblo Viejo’s CO2 emissions by
260,000 tonnes per year.
In Latin America, construction of the 23 kilometre cross-Andes
powerline, which will link Veladero in Argentina with the
Chilean grid, is underway. Sustainable power from the Chilean
grid — which globally has the largest percentage of renewable
energy in its supply — will replace 25MW of diesel-fired
generation on site. This is expected to save 32 million litres
of fuel per year, as well as the considerable cost of trucking
it up the Andes, and cut CO2 emissions by 83,000 tonnes.
Participatory environmental monitoring sessions for local communities helps build the trust critical to our social license to operate.
BARRICK PUBLISHES INDUSTRY-FIRST ESG SCORECARD
Long before ESG became a metric, its principles were
embedded in every aspect of Barrick’s and Randgold’s
businesses, helping management to make better
decisions, de-risk projects, discover new opportunities,
maintain a social license and deliver real value to
stakeholders.
Following the very comprehensive post-merger Sustainability
Report Barrick published last year, this year’s even more
detailed report features the mining industry’s first ESG
scorecard. Developed with the assistance of independent
sustainability consultants, it rates Barrick’s performance
against its peers on social and economic development; health
and safety; the environment and human rights; and
governance.
Group sustainability executive Grant Beringer says Barrick is
committed to transparently measuring and reporting its
performance.
BARRICK FIRST QUARTER 2020 6 PRESS RELEASE
“The 2019 scorecard gave Barrick a B grade, which reflects
the improvements in sustainability performance we have
made across the group through the year; however, we have
not yet met all the high standards we have set for ourselves,
and there is still work to be done,” he says.
“We are committed to improving our performance and our
grade, and will be tracking our progress on a monthly basis.
An updated scorecard will be published at the end of Q2 this
year.”
President and CEO Mark Bristow (centre) visits the Golden Sunlight mine in Montana, USA, earlier this year.
GOLDEN SUNLIGHT CLOSURE SOLUTION SECURES
SULPHIDE FEEDSTOCK FOR NGM
Conventional closure methods would have left Barrick’s
Golden Sunlight mine in Montana with the burden of water
treatment in perpetuity.
Barrick engineers worked out, however, that the tailings were
a significant sulphide resource (as well as containing some
gold) that could be used to produce a sulphide concentrate
through flotation. This would remove a potential ground water
pollutant, minimizing its post-closure water treatment needs
and reducing the mine’s overall environmental liability.
In addition, in a unique win-win deal, Nevada Gold Mines has
agreed to purchase the concentrate from Golden Sunlight.
Golden Sunlight will receive a stable long-term price for its
concentrate while NGM has secured a new fuel supply (with
a gold price upside) for its refractory process plants for at least
the next five years.
NEW EXPLORATION DRIVE EXTENDS ASSET BASE,
BRINGS NEXT TIER ONE DISCOVERY CLOSER
Since geology was reinstated as the flywheel of the
Barrick engine, the group’s exploration teams have made
significant advances in replenishing the company’s
reserves as well as stepping up the search for the next
big discovery.
BARRICK FIRST QUARTER 2020 7 PRESS RELEASE
“As a geology centric organization, we understand that major
discoveries are increasingly rare,” says executive VP
exploration and growth Rob Krcmarov. “What is required now
is a much deeper geological insight at both the orebody and
district level.”
During the past quarter, significant advances have been made
on three projects. At Turquoise Ridge in Nevada, upgrading
the geological understanding has already identified multiple
targets, including open-ended mineralization and untested
structural intersections in favorable host rock below the mine.
In the DRC, new trends that have emerged in the central and
northern parts of the Kibali permit have shown the potential
for high grade mineralization. In Tanzania, a full relog and
remodel of the Gokona/Nyabigena deposit has materially
changed the understanding of the controls on mineralization,
leading to the identification of multiple open targets with the
potential to grow the resources beyond depletion for the
foreseeable future.
President and CEO Mark Bristow says in order for Barrick to
be a global leader it needs a global presence.
“We’re already on the ground in all of the world’s major gold
destinations aside from Russia and East Europe. We’re
looking at a future built around our existing big operations in
Central, East and West Africa, in Nevada, the world’s most
prolific goldfield, in the massively underexplored Dominican
Republic, and along the Andean trend. But we’re also looking
at new frontiers such as Japan, where we’ve formed an
alliance with the holder of the largest exploration portfolio in
the country. What’s particularly interesting to us is that while
Japan hosts one of the world’s highest-grade gold mines, it
has seen no modern exploration,” he says.
REVITALIZED VELADERO POISED FOR NEW FUTURE
The life of the Veladero gold mine in Argentina has been
extended to at least 10 years following a comprehensive
review of its strategy and business plan, says Barrick
president and CEO Mark Bristow.
Bristow was briefing an Argentinian audience of local media,
government authorities and local business and community
leaders on the mine’s progress from Barrick’s offices in Chile,
via a video conference to comply with the Covid-19 related
travel restrictions imposed by Argentina.
“Our review included the reinterpretation of the mine’s geology
and an ongoing infill drilling campaign. We established
exploration and resource management teams to identify
satellite orebodies with the potential to deliver an increase in
resources and reserves. Our aim is to extend Veladero’s life
of mine beyond 2030 and elevate it to a Tier One mine,” he
said. Barrick defines a Tier One mine as one that will produce
at least 500,000 ounces per annum, has a life of more than
ten years and total cash costs per ounce8 at the lower half of
the industry range.
Bristow said the next step in Veladero’s transformation would
be to connect the mine to cleaner, cheaper power from the
grid in neighboring Chile. Once commissioned in the second
half of this year, this could halve the mine’s carbon footprint
and potentially reduce its cut-off grade, creating an
opportunity to further increase the mineable reserves.
Projects related to revitalizing Veladero, such as the leach
pad expansion, have created new employment opportunities,
with the number of direct employees and contractors rising
by 1,400 to almost 5,000 since January 2019, and the number
of local suppliers increasing almost threefold12. In line with
Barrick’s local employment policy, 99% of Barrick’s workforce
at Veladero are Argentinian.
Since 2005, Veladero has contributed some $9.5 billion to the
Argentinian economy through taxes, royalties, salaries and
BARRICK FIRST QUARTER 2020 8 PRESS RELEASE
payments to local suppliers. The mine has established a new
community fund which, depending on production, is expected
to generate more than $88 million for local infrastructure
development over the next decade.
“Argentina has the potential to rebuild its economy for its
people and Veladero can make a significant contribution to
that process. Realizing that potential requires the government
and the industry to work together towards long-term goals and
to guard against short-term fiscal measures which could
destroy this opportunity,” Bristow said.
Barrick has completed the transaction of combining its Massawa gold project in Senegal with Teranga Gold Corporation’s Sabodala gold mine.
A PEERLESS RECORD OF STRATEGIC DELIVERY
In the 15 months since the Randgold merger, Barrick’s
Strategic Matters Group has driven the historic Nevada
Gold Mines joint venture transaction, and the successful
sales of Kalgoorlie in Western Australia and the Massawa
project in Senegal. It also worked with Barrick’s Africa and
Middle East team to secure the Acacia minorities buyout,
create a new joint venture with the government of Tanzania
and settle all outstanding disputes.
The group is led by senior executive vice-president Kevin
Thomson, who describes it as a small team of highly
experienced people, based in the Toronto corporate office,
with a deep industry knowledge and uniquely specialized,
diversified and complementary skillsets that enable it to go
well beyond a typical corporate development function.
“It operates on a tightly integrated basis with the rest of the
organization, and interacts constantly with Barrick’s technical,
exploration, tax, financial and legal teams across the globe,
as well as leading banks and law firms,” he says.
“The group has an unparalleled record of success in executing
and delivering major strategic initiatives. Among other things,
it has achieved some of the highest transaction multiples in
the industry through the divestment of non-core assets over
the past five years.”
Barrick Completes Massawa Transaction
In line with its strategy of focusing on Tier One assets, Barrick
has completed the transaction of combining its Massawa gold
project in Senegal with Teranga Gold Corporation’s Sabodala
gold mine. Barrick and its Senegalese partner previously held
a 90% interest in the Massawa project.
Mark Bristow said Massawa was one of the largest
unexploited gold deposits in West Africa and its legacy
company, Randgold Resources, had developed this over a
period of years to the point where its value could now be
optimally realized for the benefit of all its stakeholders which
includes the Senegal Government.
“Teranga is best placed to achieve this as it already owns the
nearby Sabodala mine and Sabodala’s combination with
Massawa is expected to deliver significant synergies. Barrick
will participate in the upside of the combined asset through
the 11% interest it acquired in Teranga through this
transaction,” he said.