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Barrick Gold Corporation

Barrick Makes Solid Start to Year

Prompt and Effective Actions Shield People and Business from Pandemic

May 6, 2020

Toronto — 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 flow1 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.

Key Performance Indicators

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

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.

“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 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.

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Pro-Active Preparation, Rapid Response Buffer Covid-19 Impact

Barrick is employing a ‘4 P’ strategy to protect its employees, contractors and communities. The four Ps are Proactive Response, Preparedness, Prevention and Perspective.

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.

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.

Clearing the Air, Curbing the Cost

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.

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 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 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.

Barrick Publishes Industry-First ESG Scorecard

Participatory environmental monitoring sessions for local communities helps build the trust critical to our social license to operate.

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.

“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.”

Golden Sunlight Closure Solution Secures Sulphide Feedstock for NGM

President and CEO Mark Bristow (centre) visits the Golden Sunlight mine in Montana, USA, earlier this year.

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

Major discoveries are increasingly rare. What is required now is a much deeper geological insight at both the orebody and district level.

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.

“As a geocentric 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.

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Source: https://www.barrick.com/English/news/news-details/2020/barrick-makes-solid-start-to-year/default.aspx

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Barrick Makes Solid Start to Year

Prompt and Effective Actions Shield People and Business from Pandemic