Mr. Mark Bristow reports
RESTRUCTURED BARRICK PICKS UP SPEED AS NEW EXECUTIVE TEAMS GET DOWN TO BUSINESS
Barely six weeks after its merger with Randgold, Barrick Gold Corp. is making good progress in achieving its short-term priority goals as well as its full-year objectives, president and chief executive officer Mark Bristow said today.
Mr. Bristow, who has already visited most of the group's operations in the Americas, some of them twice, said one of his first priorities had been to establish regional executive teams for North America, Latin America, and Africa and the Middle East. These are now in place and are already making a significant impact on the way Barrick operates.
He announced that Barrick's production guidance for 2019 was between 5.1 million and 5.6 million ounces of gold and between 375 million and 430 million pounds of copper. During 2019, the reserves and resources of newly acquired Randgold will be combined with Barrick's on the basis of common calculation criteria, and will be reported on that basis at the end of the year.
Turning to the operations, the higher cost of sales guidance for gold in 2019, of $880 to $940 per ounce and all-in sustaining costs guidance of $870 to $920 per ounce, primarily reflects the planned completion of mining at the comparatively high-grade, low-cost Cortez Hills open pit in the first half of the year. Lower costs at Turquoise Ridge, as well as the addition of lower-cost production from Loulo-Gounkoto and Kibali, are expected to partially offset this impact in 2019. Higher grades, improved efficiencies and tight cost discipline are expected to reverse this trend over the next two to three years.
Mr. Bristow said the Nevada assets, including Turquoise Ridge, were now being operated as a single complex, and were already delivering efficiencies. Still in Nevada, the recent Fourmile discovery has now been combined with the nearby Goldrush in a single project which has the potential to become Barrick's next Tier 1 gold mine. Shaft sinking and construction at Turquoise Ridge are also on track, and along with a focus on improved efficiencies and cost discipline, it too has the potential for Tier 1 status.
In Argentina, a concerted effort to drive Veladero back to Tier 1 status is under way as Barrick looks to expand its Latin American business. At Pueblo Viejo in the Dominican Republic, a scoping study and pilot plant support the expansion of what is already one of the world's largest open-pit gold mines. Mr. Bristow said there was a renewed focus on exploration across the group's Latin American portfolio.
The core African assets -- the Loulo-Gounkoto complex in Mali and Kibali in the Democratic Republic of the Congo -- continue to reinforce their Tier 1 status, and both are maintaining the grade of their reserves. The feasibility study on the Massawa project in Senegal has been completed, and an application for a mining permit has been submitted to the government.
Mr. Bristow said the company was continuing to engage in constructive discussions with the Tanzanian government on the impasse regarding Acacia, and noted that it was in the interest of all stakeholders, including the government, to find a solution to this issue.
On the new business front, Mr. Bristow said Nevada was a destination with enormous upside through brownfield extensions, new discoveries and combination opportunities with other operators in the area. The recently announced strategic alliance with, and additional investment in, Reunion Gold opens up a new frontier for Barrick in the Guiana shield. Exploration continues across the group's global portfolio.
Similarly, work continues on the rationalization of the group asset portfolio. Mr. Bristow said the identification and sale of non-core assets would be based on a carefully considered and value-based process.
"The new Barrick has a unique ability to grow three-dimensionally: through its large and high-quality exploration portfolio and geological capability; the brownfields extension potential at its existing operations; and new projects destined to become Tier 1 mines," Mr. Bristow said.
"This growth will be driven and directed by a management team with a mix of skills and experience that few other gold mining companies can match. In the short time that we've been together, the combined team has already made great progress in applying Randgold's proven strategy to a new global group that I am confident will soon earn its place as the industry's most valued company."
2019 operating and capital expenditure guidance
GOLD PRODUCTION AND COSTS
Production Cost of sales Cash costs All-in sustaining costs
(000s ounces) ($ per ounce) ($ per ounce) ($ per ounce)
Barrick Nevada 1,750-1,900 $920-$970 $640-$690 $850-$900
Pueblo Viejo (60%) 550-600 780-830 465-510 610-650
Loulo-Gounkoto (80%) 520-570 800-850 575-625 810-850
Kibali (45%) 330-350 890-940 555-605 670-730
Kalgoorlie (50%) 280-300 920-970 740-790 920-960
Turquoise Ridge (75%) 270-310 655-705 550-600 680-730
Tongon (89.7%) 250-270 945-995 710-760 780-820
Porgera (47.5%) 240-260 980-1,030 800-850 985-1,025
Veladero (50%) 230-250 1,250-1,350 770-820 1,150-1,250
Hemlo 200-220 890-940 765-815 1,100-1,200
Acacia (63.9%) 320-350 920-970 665-710 860-920
Other sites 190-250 1,075-1,165 895-945 1,055-1,115
Total gold 5,100-5,600 880-940 650-700 870-920
COPPER PRODUCTION AND COSTS
Production Cost of sales C1 cash costs All-in sustaining costs
(millions of pounds) ($ per pound) ($ per pound) ($ per pound)
Lumwana 210-240 $2.25-$2.50 $1.80-$2.10 $2.75-$3.15
Zaldivar (50%) 120-130 2.40-2.70 1.65-1.85 2.00-2.20
Jabal Sayid (50%) 45-60 2.00-2.30 1.60-1.90 1.60-1.90
Total copper 375-430 2.30-2.70 1.70-2.00 2.40-2.90
CAPITAL EXPENDITURES
Mine site sustaining 1,100-1,300
Project 300-400
Total attributable capital expenditures 1,400-1,700
2019 OUTLOOK ASSUMPTIONS
2019 guidance Hypothetical Impact on revenue Impact on cost of sales Impact on all-in
assumption change (millions) (millions) sustaining costs
Gold revenue,
net of royalties $1,250/oz +/-$100/oz +/-$535 +/-$17 +/-$3/oz
Copper revenue,
net of royalties $2.75/lb +/-$0.50/lb +/-$201 +/-$18 +/-$0.04/lb
Goldrush and Fourmile projects combined with potential for Tier 1 status
Continuing exploration within the Horse Canyon/Cortez unified exploration plan in Nevada has identified and extended ore-grade mineralization such that the Goldrush and Fourmile resource areas are coalescing on the same geological trend. The two are now being treated as one project which has increased the optionality for this project and the potential to become another Tier 1 mine for Barrick within the footprint of the Cortez district.
While the geological, geotechnical and geo-metallurgical aspects of the mineralized corridor are being reviewed, continuing development of the twin exploration declines at Goldrush will provide access to the heart of the orebody for further drilling and the conversion of resources to reserves. The exploration declines can be converted to production declines later.
Rod Quick, Barrick's mineral resource management and evaluation executive, confirmed that the project's feasibility study is currently scheduled for completion in early 2020, although the latest developments have afforded the feasibility team the opportunity to re-evaluate and optimize the project design, on the back of the increased resources. Current indicated mineral resources outside of reserves stand at 30.9 million tonnes at 9.4 grams per tonne for 9.35 million ounces and a further 11.9 million tonnes at 9.3 g/t for 3.55 million ounces in the inferred category. Current probable reserves on the Redhill portion of project stand at 6.4 million tonnes at 9.7 g/t for 2.0 million ounces.
Rob Krcmarov, executive vice-president exploration and growth, says the project has demonstrated the enormous potential of the Cortez region, which has historically produced more than 24 million ounces, and has 10.7 million ounces of reserves and 12.5 million ounces of measured and indicated resources and a significant mineral inventory yet to be defined. Barrick believes it could deliver further discoveries of a similar size to Goldrush, and therefore while continuing to explore the area, the company is also evaluating increasing processing capacity in the region.
Fourmile significant intercepts
DRILL RESULTS HIGHLIGHTED
IN FOURTH QUARTER 2018 PRESENTATION
Core drill hole Interval Width Au
(m) (m) (g/t)
FM18-43D 909.5-910.7 1.2 5.0
916.8-918.3 1.5 5.4
932.4-935.4 3.0 10.6
957.7-960.7 3 18.8
FM18-44D 1,079.3-1,083.1 3.8 11.6
FM18-47D 627.3-628.8 1.5 5.9
772-776.6 4.6 60.9
779.5-781.3 1.8 11.7
FM18-48D 1,102.8-1,105.8 3 17.6
FM18-49D 921.1-922 0.91 16.8
957.7-978.1 20.4 54.1
FM18-52D 873.1-899 25.9 34.6
935.6-956.9 21.3 30.2
(1) All intercepts calculated using a five g/t Au
cut-off and are uncapped; minimum intercept width is
0.8 m; internal dilution is less than 20 per cent of
total width.
(2) Fourmile drill hole nomenclature: FM (Fourmile)
followed by the year (18 for 2018).
(3) True width of intercepts are uncertain at this
stage.
The drilling results for the Fourmile property contained in this press release have been prepared in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. All drill hole assay information has been manually reviewed and approved by staff geologists and rechecked by the project manager. Sample preparation and analyses are conducted by an independent laboratory. Procedures are employed to ensure security of samples during their delivery from the drill rig to the laboratory. The quality assurance procedures, data verification and assay protocols used in connection with drilling and sampling on the Fourmile property conform to industry accepted quality control methods.
Solar hybrid plant for Loulo-Gounkoto
As part of its cost-reduction program and drive to manage its carbon footprint, Loulo is to install a 24-megawatt off-grid solar hybrid plant to support its existing 63-megawatt thermal power station, by harnessing Mali's abundant solar resource.
This renewable energy project is part of Barrick's strategy of moving away from thermal power in Africa, where lack of infrastructure means that many mines need to rely on self-generated diesel energy, making this their largest cost item.
Utilizing hydropower in the Democratic Republic of the Congo, grid power in Ivory Coast and heavy-fuel baseload generators in Mali, Barrick has already cut its energy costs significantly, and the continuing rollout of renewable energy sources will ensure that its future needs are met in the most cost-efficient and environmentally friendly manner.
The solar feasibility study forecasts that the photovoltaic plant will replace 50,000 megawatt-hours/year of thermal generation, saving 10 million litres of fuel per year and reducing carbon dioxide emissions by 42,000 tonnes over the same period. The introduction of the solar component will cut the complex's energy cost by around two cents/kilowatt-hour.
Construction of the project -- which meets Barrick's investment criteria of 20-per-cent IRR (internal rate of return) -- will start later this year, and it is scheduled for commissioning in late 2020. The plant will use the latest weather prediction models, which will enable the power management system to switch between thermal and solar without compromising the microgrid.
Automation drives mining into the future
Autonomous production systems and projects throughout Barrick are being advanced as the group focuses on becoming the global leader in mining efficiency.
Mr. Bristow says to achieve its goal of being the world's most-valued gold company, in a rapidly evolving environment where the industry's shift to developing countries will continue, Barrick will have to be at the leading edge of automation.
"Kibali in the Democratic Republic of [the] Congo is currently at the forefront, with its mission control system which manages the underground ore handling logistics without human intervention from the surface, but across Barrick there are many automated operations and developments which are now being unified in a group strategy," he said.
These include underground drills that can be run from surface during shift changes; automated underground and open-pit haulage trucks; fully autonomous backfill systems; remote-controlled open-pit drills; and autonomous drilling of development and production blast holes by multiple units controlled by a single remote operator.
Glenn Heard, senior vice-president, mining, says continuing projects currently cover five main areas: underground development and production drilling, production and haulage, and open-pit haulage and production.
"At present all our systems have barriers which prevent human access to the autonomous operating zones. Our next big step will be to create a situation where autonomous and manned units can work together seamlessly within the same active areas, and we're working with Sandvik and other providers to achieve this," he said.
Lumwana seeks long-term partnership with Zambian government
Barrick, owners of the Lumwana copper mine, says it is continuing to engage with the Zambian government and community stakeholders about a mutually beneficial way forward for the operation.
Subsequent to the first Lumwana board meeting following the Barrick/Randgold merger, Barrick's chief operating officer for Africa and the Middle East, Willem Jacobs, said the company was mindful that the government was under pressure to increase its revenue. At the same time, however, its proposed tax changes would put Lumwana in a challenging situation.
"The proposed changes to taxes and royalties would imperil the mine's ability to sustain returns to all stakeholders, such as the significant contribution of more than $3.3-billion it has already made to the Zambian economy over the past 10 years," Mr. Jacobs said.
"Lumwana has made detailed proposals to the government about a partnership approach which would provide the state with an improved share in the economics of Lumwana without overburdening the mine. Finding a win-win solution between the industry and government would without doubt increase investor confidence in Zambia and safeguard the long-term prospects of its mining industry."
Mr. Jacobs said media reports that Barrick had sold Lumwana were untrue, but given the challenging conditions the mine was facing, all options would have to be considered.
Willow Creek to reopen to the public
The Willow Creek reservoir restoration project, designed to create a natural spawning habitat for fish and to provide a recreational resource for the surrounding communities, is nearing completion and will reopen to the public early this year.
The Barrick-owned reservoir was built in the 1920s but drained in December, 2017, as a result of a gate malfunction. Since then, the company has invested $1.7-million and 20,000 man-hours in restoring the man-made lake. Among other things, Barrick volunteers have helped to install the proper fish habitats. Nevada Bighorns Unlimited, a sportsmen's group and Barrick partner, will finance the fish restocking in the North American spring this year. While the fishery will take a while to return to its original level, the public will, at the same time, be given access to the reservoir.
Barrick and the Nevada Department of Wildlife (NDOW) have formed a partnership to manage the maintenance of the reservoir and the restoration of fish stocks and habitats.
"Barrick has a record of responsible water management and this agreement again demonstrates its desire to be a good corporate citizen," said Caleb McAdoo, eastern region habitat supervisor for the NDOW. "The reservoir is important to Nevadans and our agreement will ensure its longevity and optimal use."
Bristow hits ground running in Americas
A fortnight after the merger between Barrick and Randgold was completed, new president and chief executive officer Mark Bristow and members of the combined executive team set out on a tour of the North and Latin American operations to accelerate the process of integration.
In Latin America they visited Pueblo Viejo and Veladero twice, and Lagunas Norte and Pierina each once. Mr. Bristow also met Governor Sergio Unac of San Juan province to stress Barrick's commitment to Argentina and the importance of a mutually beneficial partnership with government.
The North American leg of the tour took in Hemlo, Cortez, Goldstrike and Turquoise Ridge. Catherine Raw, chief operating officer, North America, noted, "Visiting these sites in January meant we had to deal with harsh weather conditions -- particularly at Hemlo, where temperatures reached minus 40 C, before windchill."
In his meetings with employees, Mr. Bristow reviewed 2018 performances and 2019 budgets, and spelled out what Barrick would have to do to achieve its new goal of becoming the world's most-valued gold company. He explained that the rationalization of the business was not merely a rightsizing exercise, but designed to ensure that the company was truly fit for purpose. Senior executives have been embedded across the operations to facilitate decision making at source, and people were being aligned with each other and with corporate goals.
Colin Bower, the new EGM (executive general manager) of the expanded Barrick Nevada, which includes Cortez, Goldstrike and Turquoise Ridge, noted: "The pragmatism of Mr. Bristow's approach to the business coupled with the direct communication was much appreciated. The Nevada team finished the visit with clarity of purpose, direction, and clear expectations of our contribution going forward."
Kibali breaks records across board, all key production parameters above plan
The Kibali gold mine produced 807,2515 ounces of gold in 2018, above its target of 750,000 ounces and 35 per cent higher than its output the previous year. This was achieved on the back of the successful ramp-up in underground production and a steady improvement in the processing plant recovery and throughput.
Mr. Bristow told a media briefing in Kinshasa that the record production was driven by the shaft operating at nameplate specification and the optimization of the underground materials handling system which has placed Kibali at the leading edge of gold mine automation in Africa.
Despite the high activity level, the mine recorded its safest year to date, with no lost-time injuries in the fourth quarter and no significant environmental incident. Mr. Bristow said the mine continued to offset the impact of its operations through environmental projects such as the 10,130 indigenous trees planted on the site last year, as well as biodiversity initiatives. On the health front, the malaria and HIV prevalence rates continued to decrease and stood at 12.9 per cent and 2.8 per cent, respectively, at the year-end.
The resettlement of 1,478 families from the Gorumbwa site to a new village has been successfully completed and will allow the development of the next satellite pit in the mine plan. In addition, continuing brownfields exploration around the mine has identified numerous opportunities for reserve replacement along the KZ trend and around KCD.
Mr. Bristow noted that Kibali's partnership philosophy was continuing to deliver dividends to the local economy, with $39-million paid to Congolese contractors in the last quarter of 2018 alone.
"Our commitment to the DRC, made 10 years ago when Randgold started developing Kibali, has not dimmed, and under the new banner of Barrick we expect to continue to make a significant and growing contribution to the country's economy and to unlock further value for all our stakeholders," he said.
Tongon achieves revised guidance after overcoming major challenges
After nine months of intermittent production caused by illegal strikes and social unrest, the Tongon gold mine returned to normal in the last quarter of 2018 and achieved its revised production target of 230,000 ounces for the year.
Speaking at a media briefing in Abidjan, Mr. Bristow said the government-endorsed reconciliation agreement between the mine, the employees and the community was designed to create a climate in which operations would run as normal and good relations could be rebuilt.
"This should mark a new beginning for Tongon, and it is significant that the Minister of Mines, Jean Claude Kouassi, visited the mine to sign this agreement in the presence of representatives of all the stakeholders," he said.
Mr. Bristow said Barrick was committed to continuing the Randgold policy of investment in community projects and noted that despite the many challenges it had faced, Tongon had to date spent about $10-million on these initiatives. All eight villages in the mine's ambit now have primary schools, medical care facilities and potable water, and the development of an agribusiness as a sustainable source of economic activity after the mine's closure is progressing.
During the year, the mine's grid power supply was frequently interrupted by the rollout of the power utility's new ring circuit, which also impacted production. Mr. Bristow said that the situation was much improved after the commissioning of the new circuit and Tongon was looking forward to a more stable supply as well as a more constructive engagement with the utility.
"It's worth noting that despite its troubled history, Tongon has remained profitable and has continued to pay dividends to its shareholders, including the government," Mr. Bristow said.
"We are committed to prolong the contribution it makes to the economy and the community by extending the mine's life. Exploration for additional reserves is continuing around the mine and indications are that this aim is achievable. We are also maintaining our search for new world-class gold deposits in our permit portfolio elsewhere in Cote d'Ivoire."
Loulo-Gounkoto complex continues to invest in its future and points to continuing improvement in production
The Loulo-Gounkoto complex in Mali posted a fourth consecutive quarterly improvement in gold production, despite an illegal work stoppage that caused it to miss its full-year production guidance of 690,000 ounces by 4 per cent. In addition to this, 2018 was a record throughput year of more than five million tonnes at close to the complex's reserve grade.
Speaking at a briefing at the mine for local media, Mr. Bristow noted that the complex, which ranks among the recently merged Barrick/Randgold group's Tier 1 assets, was continuing to invest in its future by exploring for additional reserves and upgrading plant and equipment.
"A preliminary economic assessment of the Loulo 3 open-pit and underground project has been completed and drilling continues to expand the area of high-grade mineralization south of the Yalea orebody. Exploration of the Faraba structure on the Gounkoto permit has shown the potential for multiple zones of mineralization to be extended," Mr. Bristow said.
"At the existing operations, we've commissioned the second crusher at Yalea, the full integration of the automated dispatch system at Gounkoto and the second radar for the geotechnical monitoring of the Gounkoto pit. The complex has also completed the striker belts project at Gara and moved ahead with the expansion of the tailings treatment facility."
Mr. Bristow said the continuing profitable growth of Loulo-Gounkoto was a shining example of what could be achieved through a genuine partnership between investors, managers and governments. He cited the tax holiday recently granted for the development of the superpit at Gounkoto as a typical instance of mutually beneficial co-operation.
"As Randgold, we've been engaged in Mali for 25 years and have worked together productively with successive governments. We look forward to continuing this relationship as Barrick with the recently elected government and the new minister of mines. Our differences over the tax issue remain on the agenda and we trust that through amicable mediation we'll arrive at a solution acceptable to both parties," he said.
Mr. Bristow noted that the complex continued to improve its safety and environmental management, and had obtained the new version of the ISO:14001 environmental certification while retaining its OHSAS 18001 health and safety rating.
The group was also maintaining its support for community development programs and projects. At its other Malian asset, Morila, the government has formally endorsed its plan to establish an agribusiness designed to mitigate the social and economic impact of the operations closure.
Technical information
The scientific and technical information contained in this press release has been reviewed and approved by: Rodney Quick, mineral resource management and evaluation executive of Barrick; Simon Bottoms, mineral resources manager, Africa and Middle East, of Barrick; Rick Sims, registered member, SME, vice-president, reserves and resources of Barrick; and Robert Krcmarov, FAusIMM, executive vice-president, exploration and growth, of Barrick -- each a qualified person as defined in National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
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