Mr. Mark Bristow reports
A YEAR OF DELIVERY AND DEVELOPMENT AS BARRICK MEETS TARGETS, ADVANCES GROWTH PROJECTS
Barrick Gold Corp. met its production targets for 2020, thanks to a consistent operating performance across the group that demonstrated management's ability to manage the impact of the COVID-19 pandemic and other challenges. While cost of sales per ounce was impacted, total cash costs and AISC (all-in sustaining costs) per ounce were contained within guidance despite higher royalty expenses from the higher gold price environment.
All amounts are expressed in U.S. dollars.
At the same time, Barrick has continued to progress major capital projects, including the Pueblo Viejo plant expansion, the development of the underground mine at Gounkoto, the transition to a new heap leach phase at Veladero and the re-establishment of the Bulyanhulu mine.
Key performance
indicators
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Barrick delivers on 2020 gold production guidance;
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Consistent operating performance across all quarters of the year demonstrated Barrick's ability to manage impact of COVID-19;
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Higher gold and copper prices delivered annual operating cash flow of $5.4-billion and record annual free cash flow
of $3.4-billion;
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Gold total cash costs and AISC
within guidance in spite of higher royalty costs;
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Strong performance from Barrick-operated copper assets with costs at low end, or below, the guidance range;
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Zero net debt achieved and credit rating upgraded;
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Net earnings per share of $1.31 for 2020; adjusted net earnings per share of $1.15 for the year (up 125 per cent on prior year);
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Pueblo Viejo plant expansion approved and work commences;
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Attributable group reserves partially replaced net of depletion, excluding Massawa disposition, while resources grow as focus on geology models pays dividends;
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Continued portfolio rationalization supports further industry consolidation;
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Exploration results confirm significant orebody extensions at most operations;
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High-grade resource continues to grow at Fourmile as attention turns to accelerating the project into the mine plan;
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Bedded down exploration focus and developing significant exploration opportunities across the portfolio; new frontiers opening in all regions;
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Significant safety improvement in 2020: 38-per-cent decrease in LTIFR (lost-time injury frequency rate) and 29-per-cent decrease in TRIFR (total recordable injury frequency rate) year on year;
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Zero Class 1 environmental incidents for Q4; continued to exceed 75-per-cent water reuse and recycling target for 2020;
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Barrick declares nine-cent quarterly dividend per share plus proposes $750-million capital return.
Financial and operating highlights
FINANCIAL RESULTS
Q4 2020 Q3 2020 2020 2019
Realized gold price ($ per ounce) 1,871 1,926 1,778 1,396
Net earnings ($ millions) 685 882 2,324 3,969
Adjusted net earnings ($ millions) 616 726 2,042 902
Net cash provided by operating activities ($ millions) 1,638 1,859 5,417 2,833
Free cash flow ($ millions) 1,092 1,311 3,363 1,132
Net earnings per share ($) 0.39 0.50 1.31 2.26
Adjusted net earnings per share ($) 0.35 0.41 1.15 0.51
Attributable capital expenditures ($ millions) 445 436 1,651 1,512
Debt, net of cash ($ millions) (33) 417 (33) 2,222
OPERATING RESULTS
Q4 2020 Q3 2020 2020 2019
Gold
Production (000s of ounces) 1,206 1,155 4,760 5,465
Cost of sales (Barrick's share) ($ per ounce) 1,065 1,065 1,056 1,005
Total cash costs ($ per ounce) 692 696 699 671
All-in sustaining costs ($ per ounce) 929 966 967 894
Copper
Production (millions of pounds) 119 103 457 432
Cost of sales (Barrick's share) ($ per pound) 2.06 1.97 2.02 2.14
C1 cash costs ($ per pound) 1.61 1.45 1.54 1.69
All-in sustaining costs ($ per pound) 2.42 2.31 2.23 2.52
Higher gold and copper prices drove annual operating cash flow up 91 per cent to $5.4-billion and annual free cash flow to a new record high of $3.4-billion. Net earnings per share were $1.31 for 2020 and adjusted net earnings per share of $1.15 were up 125 per cent on the previous year. The company ended the year with zero debt, net of cash, down from a peak of $13.4-billion in 2013, and with an improved credit rating of Baa1 from Moody's, among the best in the gold sector.
Barrick declared an unchanged quarterly dividend of nine cents per share and announced that it would propose a return of capital distribution of approximately 42 cents per share based on the issued and outstanding shares as of Dec. 31, 2020. The total distribution of $750-million is derived from the $1.5-billion in proceeds from the company's sale of non-core assets since 2019, and will be effected in three equal tranches to shareholders of record on dates to be determined in May, August and November this year. This return of capital is subject to shareholder approval at the annual and special meeting on May 4, 2021.
Senior executive vice-president and chief financial officer Graham Shuttleworth said this return of capital, which will provide shareholders with a significantly enhanced return in 2021, was in line with Barrick's strategy of returning surplus funds to shareholders.
President and chief executive Mark Bristow said despite 2020's unprecedented difficult operating conditions -- which in addition to the pandemic had included a coup in Mali, the financial meltdown in Argentina and the Papua New Guinea government's flirtation with resource nationalism -- the company made further progress toward delivering on its environmental, social and governance (ESG) commitments, and expected to improve on its rating in last year's industry-first scorecard, published in its sustainability report.
"We have a detailed road map towards clearly defined emission reduction targets, based on climate science and operational realities. Unlike others, our plan does not rely on mine closures and production cutbacks. Our ultimate aim is net zero emissions with landmarked targets towards this goal, which are constantly reviewed and updated as new emissions-reduction opportunities are identified and realized. In addition, each operation has an effective plan for the continued transition to cleaner, more efficient energy sources, and our water usage performance continues to improve," Mr. Bristow said.
"Our long-established partnership philosophy is the beating heart of our ESG strategy. It was invaluable in our management of the impact of the coronavirus on our business and our people and it also enabled us to provide much-needed support to our host communities and governments. On an everyday level, every operational site now has a fully functional community development committee to deal with local issues."
The group's total attributable gold resources grew in 2020, net of depletion and excluding the impact of the disposition of Massawa, as a result of the focus on high-confidence geology models following the merger with Randgold. Attributable gold reserves achieved a 76-per-cent replacement of depleted ounces, excluding Massawa, with the Africa and Middle East region once again more than replenishing its reserves.
Mr. Bristow said that since the merger with Randgold, the company had made significant progress in improving its knowledge of the legacy Barrick orebodies and in developing life-of-mine optimizations based on updated models, operating plans and cost forecasts.
"As our understanding of the orebodies increases, the potential for resource conversion to reserves will grow, but we still have some way to go to reach the replacement levels of the Africa and Middle East region across the group," he said.
Mr. Bristow said an in-principle agreement about the future of the Porgera mine, which has been on care and maintenance for most of the past year, was reached with the government of Papua New Guinea in October, 2020, and teams from both sides continue to work on the details of a mutually acceptable settlement.
In the meantime, Porgera has been excluded from the group's 2021 production guidance of 4.4 million to 4.7 million ounces of gold but, if an agreement is reached, will be added back in once the terms and timing of the settlement have been finalized. The company is expecting per-ounce costs to be similar to prior year actual results. Sustaining capital guidance includes investments previously deferred due to the COVID-19 pandemic.
Q4 and full year 2020 results presentation
Webinar and conference call
Mr. Bristow will host a virtual presentation on the results today at 11 a.m. EST/4 p.m. UTC, with an interactive webinar linked to a conference call. Participants will be able to ask questions.
United States and Canada (toll-free): 1-800-319-4610
United Kingdom (toll-free): 0808-101-2791
International (toll): 1-416-915-3239
The Q4 and full year 2020 presentation materials will be available on Barrick's website and the webinar will remain on the website for later viewing.
Barrick proposes return of capital distribution and declares dividend
Barrick today announced it intends to propose to shareholders a return of capital distribution of approximately 42 cents per share. Barrick also announced that its board of directors has declared a dividend for the fourth quarter of 2020 of nine cents per share, payable on March 15, 2021, to shareholders of record at the close of business on March 1, 2021.
The return of capital will be proposed to shareholders at Barrick's annual and special meeting on May 4, 2021. This distribution is derived from a portion of the proceeds from the divestiture of Kalgoorlie Consolidated Gold Mines in November, 2019, and from other recent dispositions made by Barrick and its affiliates. It is proposed that the total distribution of approximately $750-million will be effected in three equal tranches to shareholders of record on dates to be determined in May, August and November, 2021.
Senior executive vice-president and chief financial officer Graham Shuttleworth said that the return of capital distribution demonstrates Barrick's commitment to return surplus funds to shareholders as outlined in the strategy announced at the time of the Randgold merger in September, 2018. Since that time, the quarterly dividend has tripled, and this capital distribution further increases returns to shareholders.
"The board believes that the return of capital distribution is the most efficient way to return these surplus funds to shareholders. Based on the current number of outstanding shares, this distribution represents approximately 14 cents per share for each tranche, or approximately 42 cents per share in total. In addition to the current quarterly dividend of nine cents per share, this distribution will provide shareholders with a significantly enhanced return in 2021," said Mr. Shuttleworth.
The board continues to review further returns to shareholders, which will be balanced and evaluated equally across other capital uses, including disciplined growth and debt management.
Barrick digital moves forward with key initiatives
With the implementation of SAP S4 HANA at Nevada Gold Mines in 2020, Barrick laid one of the key foundations for its updated digital road map. As the remaining mines and regions bring SAP on line in 2021, a major portion of the data used for operational and financial analysis will become standardized globally.
Having successfully implemented the financial consolidation process into OneStream during Q4, the next building block is a concurrent rollout of a more agile financial planning system, also within the new OneStream application. The full integration of these two major platforms (SAP and OneStream) will enable much quicker insight into the group's key cost drivers and enormously increase the potential for efficiency analysis, benchmarking and other value-added reporting.
Barrick's global data platform (GDP) is at the core of its digital strategy and drives the way in which data move between different systems and enables improved visibility and decision making by managers.
"The global data platform road map is built around visibility of business processes and automation of data currently collected in a more manual way," says vice-president, group information technology, Nico West.
"Projects have been prioritized starting with foundational work around the visibility of data, understanding and getting to grips with the complexities of disparate source systems. This allows us to work towards integration, automation and optimization using fit-for-purpose technologies at each step. Our investment approach to the GDP is to pick specific but varied pilot projects to demonstrate the success and value that the projects will deliver to Barrick, and grow the platform incrementally, rather than a big bang approach."
Barrick's approach to delivering digital innovation is to let subject matter experts from within the business functions drive the programs, as opposed to a centralized innovation office. They do this by taking responsibility for identifying opportunities, prioritizing road maps and providing key business sponsorship on selected projects. This has the benefit of ensuring tight ownership by the business and alignment with technology teams.
By using tried and tested technology in the Azure Cloud, which sources data from core applications, the company is creating common data models that allow the business to standardize how applications integrate and share information, including daily, weekly and monthly reporting.
Building a multicultural, multigenerational work force aligned to a changing world
To build a modern mining business at the top of the field, Barrick needs the best people to run its portfolio of best-in-class assets, says group human resources executive Darian Rich.
Barrick's human capital framework sets a clear path for recruiting, developing, assessing and rewarding the company's most valuable resource, its work force. At the same time, the company encourages employees to think and act like owners through its share ownership program.
This framework is anchored by Barrick's operating philosophy of meritocracy, where employees are selected and advance on the basis of their demonstrated abilities and merit. A modern mining business needs people who share its vision and its values and are entrepreneurial, agile, alive to technological and societal changes, and profit oriented. Having the best minds and leadership is crucial to finding innovative and sustainable solutions to business challenges and embedding a high performance culture.
At Barrick, the company is building an effective multicultural and multigenerational work force aligned to a changing world. There are many examples of employees whose first exposure to industry was through their hire and development at Barrick. The company has a long tradition of hiring locally for both operational and managerial roles: Ninety-seven per cent of its work force and over 80 per cent of its management positions are hired locally. This policy leads to greater team effectiveness and work force stability.
Barrick strongly believes that a diverse work force is a better work force. It has operations in 13 countries and is committed to harnessing the talents, skills and perspectives of a diverse work force in each of them. The company has embarked on a drive to recruit more young people and women. Ten per cent of its work force are women. Barrick has concentrated on placing women in its university-sponsored and new graduate programs to increase the pool for future development and advancement.
The company develops its most promising employees to help build their leadership skills and to guide career advancement through tailored executive and management development programs developed in partnership with leading universities in Africa, Europe and the U.S. Barrick recently partnered with the University of Miami in collaboration with Bacardi and Boston Scientific to design and launch a management development curriculum for its respective Latin America and Argentina leaders.
The company offers training programs to develop a foundation of operational knowledge through its Compass development and young professional programs, which provide structured training and mentorship opportunities for early career technical employees. The company has piloted the Barrick greenfields talent program at Nevada Gold Mines which provides new engineering graduates with meaningful direct underground mining experience as a solid foundation for their mining engineer careers. Its finance for business leaders program develops financial acumen across the organization to help its people have an ownership mindset and integrate financial and business needs into their everyday thinking. The company's skills training programs are delivered in modules and updated based on equipment and mining methods used. It is implementing standards for trainers; better tools to evaluate the effectiveness of the training for new workers and assess trainees' competencies once they have completed the training; and opportunities for continuing and refresher training.
This year the company strengthened its application of talent assessments to ensure employees are receiving quality feedback about their performance and demonstration of Barrick values. These talent reviews served as inputs for Barrick's succession planning. The executive team and key senior leaders held succession planning reviews to discuss the company's talent capability critical to drive business priorities across the regions and sites by ensuring it has the right skills in the right jobs. Succession slates were compiled, individual profiles were reviewed and follow-up actions were identified as the company assesses the performance and potential of its employees and builds individual development plans for its leaders and its high-potential talent pools.
Barrick's compensation programs are an integral part of its human capital framework. The company's reward programs are designed to recognize safe production and cost management in its operations and its short- and long-term incentive programs reward individual and collective performance measured against business plan objectives. The performance measures that the company has selected for its incentive plans reflect its accountability for delivering on sustainable value creation. A cornerstone of the company's compensation design is all Barrick senior leaders receive a significant portion of their compensation in shares tied to company performance which are held based on market-leading requirements.
Tanzanian assets deliver on production guidance as Barrick continues to unlock value
The North Mara and Bulyanhulu gold mines both produced near the top end of their production guidance in 2020, their first full year under Barrick's management. Including Buzwagi, the Tanzanian assets delivered a combined output of 462,472 ounces for the year.
The mines have been successfully revived, with North Mara delivering significant improvements and underground production restarted at Bulyanhulu. The mines, managed through the Twiga joint venture with the government of Tanzania, paid a maiden dividend of $250-million in October, 2020.
North Mara posted a record throughput in Q4 and Bulyanhulu recommenced processing of underground ore during the quarter. Bulyanhulu is scheduled to be in full production by the second half of 2021, when its ramp-up is completed. Both mines performed creditably on the health, safety and environmental front, with Bulyanhulu gaining ISO 14001 certification for the first time.
Speaking at a briefing for local media at the Bulyanhulu mine, Mr. Bristow said the mines' strong performance was the product of the speed and effectiveness with which the company's Africa and Middle East regional team was unlocking the unrealized value of these assets, despite the challenges presented by the COVID-19 pandemic.
"These mines are now very different businesses. North Mara's life-of-mine production profile has been vastly improved and implementation of its comprehensive water management plan is on track. Bulyanhulu's resurrection was a particularly exceptional achievement, considering that both its shaft and plant had to be refurbished extensively. The new mine plan delivers a sustainable long-term value-driven operation," Mr. Bristow said.
"We're optimizing our 10-year plan to make the combined North Mara and Bulyanhulu mines the seventh Tier 1 complex in the Barrick portfolio by bringing them into the lower half of the industry's cost curve. At the same time, the combined total of mineral resources for North Mara and Bulyanhulu grew, net of depletion, compared to 2019 on the back of fixing the legacy geological models and supporting data. Subsequently, the complete reoptimization of the mine plans for the potential Tier 1 complex is under way and is expected to deliver further growth. Concurrently, we continue to improve relations with our host communities, securing Barrick's social licence to operate in Tanzania. Past grievances have been resolved and the remaining land legacy issues are being addressed. Fully functional community development committees have been established to focus on education, health, water and agribusiness, and 21 agribusiness groups from 11 villages are already being supported at North Mara. Barrick also proved its value as a partner through its tangible support for the government's pandemic containment campaign."
During 2020, Barrick invested $800-million in the Tanzanian economy in the form of taxes, permits, infrastructure development, salaries and payments to local suppliers. In line with its groupwide policy of employing host country nationals, the company continued to recruit locally, with over 600 new workers employed during the year at Bulyanhulu alone. Tanzanian nationals now make up 96 per cent of the mines' total work force.
Capital and exploration expenditures exceeded $180-million for the year, of which half related to growth projects, and this investment is continuing into 2021. Mr. Bristow said Tanzania's large-scale mineralized systems held the potential for world-class discoveries and, in addition to brownfields exploration designed to increase and convert the existing mines' resources, Barrick had also initiated greenfields programs to generate new targets.
Tongon gets it right
Barrick's Tongon mine produced a total of 284,863 ounces of gold in 2020, at the top end of its guidance for the year, driven by strong plant throughput with runtime setting a record of 95.2 per cent in October. This improved throughput, combined with cost-reduction initiatives, had a positive impact on per-ounce costs compared with 2019.
Addressing a group of local media at the mine, Mr. Bristow said Tongon had to overcome enormous obstacles to achieve this exceptional performance. Built and commissioned in the midst of a civil war, it has since operated in a very unstable socio-political environment and has been impacted by a broad range of problems, including a mill fire, recurring technical issues and an erratic grid power supply.
"Despite all these challenges, Tongon has been consistently profitable and in 2020 again paid a $150-million dividend to its shareholders. It provided $1.2-million to the government to support its campaign against COVID-19 while implementing effective prevention measures at the mine to protect its people and the business. And it maintained its commitment to its host community with the installation and start-up of a number of income-generating projects," Mr. Bristow said.
He noted that Tongon had the best safety record in the worldwide Barrick group. Until it suffered one lost-time injury on Oct. 28, 2020, the mine had recorded more than 15 million lost-time injury-free work hours over 1,120 days. There were no Class 1 or 2 environmental incidents during the year and the mine retained its ISO 14001 and ISO 45001 certifications.
Continued exploration and the conversion of resources to reserves have extended the life of the mine to 2023 and further opportunities for replacing reserves are being pursued.
In line with Barrick's policy of supporting local business, Tongon spent $105-million -- 66 per cent of its total procurement budget -- with Ivoirien contractors and suppliers in 2020. Since Tongon poured its first gold in 2010, it has paid more than $1.6-billion into the Ivoirien economy in the form of taxes, infrastructure development, salaries and payments to local suppliers.
Kibali continues to shine
The Barrick-operated Kibali joint venture in the Democratic Republic of the Congo produced 808,134 ounces of gold in 2020, achieving the top end of production guidance for the year.
This performance was driven by its underground operation which achieved record monthly and quarterly ore production in December and Q4 2020. Kibali is a world leader in automated underground mining, through systems that allow multiple autonomous machines to operate on the same haulage and production levels, and provide real-time visibility of all operations as well as automated control of the ventilation fans. Leading-edge technology is also being harnessed elsewhere at Kibali and the successful commissioning of an on-line particle size analyzer will optimize fine grinding on its ultrafine grind (UFG) mills.
Kibali has, since commissioning, consistently lowered its carbon emissions thanks to its three hydropower stations and the implementation of predictive maintenance monitoring at these plants will further minimize downtime. Its new battery-based reactive power support system has further reduced the mine's reliance on backup thermal power.
At the same time, Kibali has retained its focus on exploration and resource conversion and replaced the ounces depleted by mining, thus extending the life of the mine. Its open-pit operation is set up for a solid year with development of the access to the Sessenge orebody completed ahead of plan. A robust open-pit component has been included in the mine plan and will provide additional processing flexibility to the plant over the next 10 years.
Kibali retained its ISO 45001 and ISO 14001 safety and environmental accreditations. Effective COVID-19 prevention protocols also remain in place. Having donated more than $2-million to the DRC government in the form of equipment to support the national campaign against the pandemic, Kibali is currently partnering with the National Laboratory Institution in training medical staff to diagnose the disease.
Mr. Bristow says the pandemic response has once again demonstrated the company's value as a partner to its host countries and communities.
"While protecting our people and our business from the impact of COVID-19, we have continued to invest in community improvement projects, skills development programs to deliver more Congolese managers and technicians, and the implementation of the second phase of the Watsa/Durba concrete road construction. Kibali's policy of supporting and mentoring local contractors and suppliers has created a new economic frontier in this remote region. Last year we spent more than $200-million with local businesses on services such as civil construction, roadworks, plant maintenance, trucking and catering," he said.
Over the past 10 years, Kibali has pumped $3.4-billion into the Congolese economy in the form of taxes, permits, infrastructure, salaries and payments to local suppliers.
Loulo-Gounkoto beats guidance, replaced depleted reserves
Barrick's Loulo-Gounkoto mine complex delivered production of 680,215 ounces of gold in 2020, exceeding its full year guidance despite COVID-19 and other challenges.
At the same time, it improved its safety performance, reducing its lost-time injury frequency rate by more than half compared with 2019 and achieving a lost-time injury-free year in its underground operations. The complex retained its ISO 45001 and ISO 14001 health, safety and environmental certifications.
The underground operations have reached a world-class level of automation, hard on the heels of pacesetter Kibali. The two existing underground mines, Yalea and Gara, will shortly be joined by a third when Gounkoto underground delivers its first ore tonnes planned for the second quarter of this year.
In another major technological advance, Loulo commissioned Barrick's first solar power plant in the Africa and Middle East region, delivering 20 megawatts of capacity into the microgrid. Projects scheduled for completion in 2021 include the commissioning of a water treatment plant, an expansion of power generating capacity and a power line upgrade to support the new Gounkoto underground mine.
The complex continued to support and develop local businesses, spending more than $375-million with local contractors and suppliers in 2020. Its accelerator program, designed to equip budding businessmen and women with commercial skills, established 48 entrepreneurs and granted them credit totalling about $390,000. Loulo-Gounkoto's local content program was further improved by the formation of a transport consortium which incorporates most of its existing Malian transport providers.
In a presentation to local media and stakeholders at the Loulo mine, Mr. Bristow said that thanks to continuing successful exploration, the complex's gold reserves were now larger than they had been 15 years ago, and indications were that it would once more have replaced ounces depleted by mining in 2020.
"The Loulo district lies at the heart of one of the world's most prolific gold regions. Over the past 15 years, this has delivered more world-class discoveries than any other, and our extensive exploration programs are designed not only to replenish our reserves but to find our next Tier 1 mine," he said.
Loulo and Gounkoto paid and declared combined dividends of $240-million for 2020. Over the past almost 24 years, Barrick and its legacy company Randgold Resources contributed $7.7-billion to Mali's economy in the form of taxes, royalties, salaries and payments to local suppliers. Its annual contribution amounts to between 5 per cent and 10 per cent of the country's GDP (gross domestic product).
The company hosted Mali's Minister of Mines, Lamine Seydou Traore, and a delegation from his department who visited the mine and toured the operation with the Barrick team.
ESG (environmental, social and corporate governance): a clear road map toward realistic targets
Long before the values now known collectively as ESG were promoted to a prime investment criterion, they were foundational to Randgold Resources and a significant factor in its success. Following the merger with Barrick, these principles were also embedded in the new business.
Barrick's group sustainability executive, Grant Beringer, says the company's commitment to ESG is not a form of virtue signalling but a key component of its strategies and plans, designed to secure its social licence to operate, derisk the business and leverage opportunities.
"This commitment is driven at the operational level, not set in a corporate office as part of a compliance exercise. This ensures that we are making constant improvements on the ground and can measure our progress accurately," he says.
"Our partnership philosophy is central to Barrick's ESG strategy. Our senior corporate and regional executives engage regularly with our host countries' presidents, ministers, governors and community leaders. Each operational site has a fully functional community development committee, where Barrick acts not as an owner but as a participant, and where frank and open communication is encouraged. We also communicate regularly with our investment partners: Last year, we had more than 30 meetings with shareholders where we kept them informed about our ESG progress and plans."
Barrick's sustainably profitable mines enable it to deliver on its promise to share the value they create with all stakeholders. They pay substantial taxes, have a locals-first employment policy, spend billions of dollars on goods and services procured from in-country suppliers, and last year invested more than $30-million in COVID-19 support for their host governments and communities.
On the environmental front, Barrick recognizes that climate change presents both risks and opportunities for the business. The company has a clear road map for the reduction of greenhouse gas emissions (GHG), which is based on climate science and operational realities. It does not rely on mine closures, production cutbacks, or the hopeful expectation of reductions by suppliers or governments. The ultimate aim is net zero emissions but the road map has landmarked targets toward this goal based on practical and available options. The company's target is not static, however, and is constantly reviewed and updated as further reduction opportunities are identified and realized. The rapid development of battery technology looks particularly promising.
"Every one of our operations has an effective energy conversion management plan. During the past year, for example, Pueblo Viejo converted its Quisqueya power plant from heavy fuel oil to natural gas, Kibali added battery energy storage to the grid to offset the cyclical load and reduce dependence on diesel generators in the wet season, and Loulo-Gounkoto commissioned a 20 Mw solar power plant," says Mr. Beringer.
Future projects include Nevada Gold Mines' conversion of its TS power plant to natural gas and the construction of a 200 Mw solar farm. Loulo-Gounkoto is doubling the capacity of its solar plant and Pueblo Viejo is switching its lime kiln from diesel to natural gas. The project to link Veladero in Argentina to the power grid in neighbouring Chile, halted by the pandemic, is under way again. The Chilean grid has the largest renewable power component in the world.
"Transitioning to cleaner, more efficient energy sources is not only the right thing to do environmentally -- power is the biggest cost factor in mining, so this also makes commercial sense," says Mr. Beringer. And so the company's focus is not only about reducing the GHG (greenhouse gas) emissions at its current operations but it is about tracking and embracing new technology and innovation to ensure the new mines the company builds in the future are designed to be industry leading when it comes to power and other ESG measures.
Barrick's fit-for-purpose legal team
A global company with many moving parts needs a legal team with world-class expertise as well as an in-depth knowledge of the business and the jurisdictions in which it operates.
Following the merger, Barrick implemented a lean and fit-for-purpose legal management model capable of ensuring that the company moves forward successfully in an increasingly complex environment.
General counsel Rich Haddock's small office is complemented by strong legal managers in each region. Each manager sources the best external legal advisers and integrates these outside resources into the internal teams. In addition to decades of experience, many of Barrick's lawyers also have training or experience as geologists, mining engineers and environmental professionals.
The legal team is engaged at all levels of the business and at an early stage of all processes. It is deeply involved in corporate transactions such as the completion of the Nevada Gold Mines joint venture and the partnership with the government of Tanzania. It also plays a key part in operational matters, including permitting, human resources and labour relations, title and land management, and compliance.
The team has developed a deep expertise in dealing with resource nationalism, having worked in diverse jurisdictions to achieve successful outcomes, and is currently closely involved in the Porgera special mining lease negotiations. It is also playing a key part in resolving Barrick's remaining legacy issues.
More generally, it follows trends and changes of laws and policies in the mining sector, positioning Barrick as the industry leader in discussions and negotiations with mining authorities.
Resources grow as focus on geology delivers dividends
Attributable mineral reserves reflect a 76-per-cent replacement of depletion, with a consistent reserve grade maintained year on year, after adjustment for the disposal of Massawa. Similarly, excluding the impact of Massawa, the net reduction in reserves year on year is approximately 2 per cent. Attributable group reserves, reported at $1,200 per ounce, stand at 1,300 million tonnes at 1.66 grams per tonne for 68 million ounces
of gold.
Armed with the introduction of on-site mineral resource management and an intensified focus on geology, Barrick has spent the two years since the Randgold merger improving knowledge of its orebodies. At the same time, it has transferred ownership and responsibility for the orebodies to the mines, empowering and integrating the on-site mineral resource, geology and planning teams.
Barrick's mineral resource management and evaluation executive, Rod Quick, says the company has made significant progress in developing life-of-mine optimizations based on high-confidence geological models as well as operating plans, ounce profiles and cost forecasts.
"As our understanding of the orebodies increases, the potential for sustainable resource to reserves conversion will grow, but it will take time for the group to reach the replacement levels of the Africa and Middle East region," Mr. Quick said.
Total attributable group gold resources increased in 2020, net of depletion and excluding the impact of the disposal of Massawa. Inclusive of reserves and reported at a gold price of $1,500/oz, attributable measured and indicated resources stood at 3,300 million tonnes at 1.52 g/t for 160 million ounces, with a further 980 million tonnes at 1.4 g/t for 43 million ounces in the inferred category.
Copper mineral reserves for 2020 are calculated using a copper price of $2.75 per pound and mineral resources are calculated at $3.50 per pound, both rates unchanged from 2019. Attributable measured and indicated copper resources were 25 billion pounds at an average grade of 0.36 per cent, and inferred copper resources were 2.2 billion pounds at an average grade of 0.2 per cent. Attributable proven and probable copper reserves were 13 billion pounds at an average grade of 0.39 per cent.
For further details, please refer to the reserves and resources section of the management's discussion and analysis in Barrick's Q4 and year-end 2020 report.
To be great, be global
The COVID-19 pandemic, perhaps more than anything else, has demonstrated that a world-class business has to have a global presence. It has also underlined the importance of real partnerships between a mining company and its stakeholders.
Three factors were key to Barrick's effective management of the pandemic's impact on its business and people. The first is the flat, decentralized and agile management structure introduced after the Randgold merger. The company's managers literally live in its businesses and its senior corporate and regional executives visit them regularly. This meant quick, site-specific decision-making, within the guidance provided by the group's global perspective, and the sharing of experience between operations. The African mines, for example, have dealt with several Ebola outbreaks while the North American ones have not had to contend with a crisis like COVID-19 for generations.
Second is the company's partnership philosophy. Barrick is a trusted ally to its host countries and communities, bonded to them in mutually rewarding relationships built up over years. This enabled Barrick to work closely with them in devising and implementing their own pandemic containment campaigns. This co-operation included financial support as well as the provision of testing facilities and isolation centres, and participation in COVID-19 crises committees.
The third is the company's demographic profile, which is dominated by host country nationals as a consequence of its robust policy of employing, training and promoting them. Their deep identification and familiarity with local conditions, cultures and creeds is always invaluable to the business, but never more so than in a crisis.
"By being global, we diversify our risk and we leverage our experience across a range of jurisdictions to navigate dynamic operational environments," says Catherine Raw, Barrick's chief operating officer for the North America region.
"The depth of our local talent; the independence, agility and innovation of our operational leaders; and our commitment to being a good corporate citizen and a welcome neighbour -- these have combined to ensure that we are delivering on our promises, progressing our strategy and adding value for all our stakeholders. To be great is to be global."
2021 operating and capital expenditure guidance
GOLD PRODUCTION AND COSTS
2021 forecast
attributable 2021 forecast 2021 forecast 2021 forecast
production cost of sales total cash all-in sustaining
(000s oz) ($/oz) costs ($/oz) costs ($/oz)
Carlin (61.5%) 940-1,000 $920-$970 $740-$790 $1,050-$1,100
Cortez (61.5%) 500-550 1,000-1,050 700-750 940-990
Turquoise Ridge (61.5%) 390-440 950-1,000 620-670 810-860
Phoenix (61.5%) 100-120 1,800-1,850 725-775 970-1,020
Long Canyon (61.5%) 140-160 800-850 180-230 240-290
Nevada Gold Mines (61.5%) 2,100-2,250 980-1,030 660-710 910-960
Hemlo 200-220 1,200-1,250 950-1,000 1,280-1,330
North America 2,300-2,450 990-1,040 690-740 940-990
Pueblo Viejo (60%) 470-510 880-930 520-570 760-810
Veladero (50%) 130-150 1,510-1,560 820-870 1,720-1,770
Porgera (47.5%) - - - -
Latin America & Asia Pacific 600-660 1,050-1,100 600-650 1,000-1,050
Loulo-Gounkoto (80%) 510-560 980-1,030 630-680 930-980
Kibali (45%) 350-380 990-1,040 590-640 800-850
North Mara 240-270 970-1,020 740-790 960-1,010
Tongon (89.7%) 180-200 1,470-1,520 1,000-1,050 1,140-1,190
Bulyanhulu 170-200 980-1,030 580-630 810-860
Buzwagi 30-40 1,360-1,410 1,250-1,300 1,230-1,280
Africa & Middle East 1,500-1,600 1,050-1,100 690-740 920-970
Total attributable to Barrick 4,400-4,700 1,020-1,070 680-730 970-1,020
COPPER PRODUCTION AND COSTS
2021 forecast 2021 forecast 2021 forecast 2021 forecast
attributable cost of C1 cash all-in
production sales costs sustaining
(M lb) ($/lb) ($/lb) costs ($/lb)
Lumwana 250-280 $1.85-$2.05 $1.45-$1.65 $2.25-$2.45
Zaldivar (50%) 90-110 2.30-2.50 1.65-1.85 1.90-2.10
Jabal Sayid (50%) 70-80 1.40-1.60 1.10-1.30 1.30-1.50
Total copper 410-460 1.90-2.10 1.40-1.60 2.00-2.20
ATTRIBUTABLE CAPITAL EXPENDITURES
(millions)
Attributable mine site sustaining $1,250-$1,450
Attributable project 550-650
Total attributable capital expenditures 1,800-2,100
2021 OUTLOOK ASSUMPTIONS AND ECONOMIC SENSITIVITY ANALYSIS
Impact on Impact on
2021 guidance Hypothetical EBITDA TCC, C1 cash
assumption change (millions) costs and AISC
Gold price sensitivity $1,700/oz +/- $100/oz +/- $620 +/- $4/oz
Copper price sensitivity $2.75/lb +/- $0.25/lb +/- $60 +/- $0.01/lb
PRODUCTION AND COST SUMMARY -- GOLD
For the three months ended For the years ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2020 2020 2019 2019
Nevada Gold Mines (61.5%) (1)
Gold produced (000s oz attributable basis) 546 538 2,131 2,218
Gold produced (000s oz 100% basis) 885 875 3,467 2,967
Cost of sales ($/oz) 1,007 1,060 1,029 924
Total cash costs ($/oz) 667 723 702 634
All-in sustaining costs ($/oz) 873 956 941 828
Carlin (61.5%) (2)
Gold produced (000s oz attributable basis) 260 276 1,024 968
Gold produced (000s oz 100% basis) 422 448 1,665 1,315
Cost of sales ($/oz) 917 985 976 1,004
Total cash costs ($/oz) 740 800 790 746
All-in sustaining costs ($/oz) 1,005 1,036 1,041 984
Cortez (61.5%) (3)
Gold produced (000s oz attributable basis) 118 113 491 801
Gold produced (000s oz 100% basis) 191 184 799 963
Cost of sales ($/oz) 1,043 1,060 957 762
Total cash costs ($/oz) 738 763 678 515
All-in sustaining costs ($/oz) 906 1,133 998 651
Turquoise Ridge (61.5%) (4)
Gold produced (000s oz attributable basis) 91 76 330 335
Gold produced (000s oz 100% basis) 147 124 537 504
Cost of sales ($/oz) 1,064 1,097 1,064 846
Total cash costs ($/oz) 687 745 711 585
All-in sustaining costs ($/oz) 757 805 798 732
Phoenix (61.5%) (5)
Gold produced (000s oz attributable basis) 26 30 126 56
Gold produced (000s oz 100% basis) 42 49 205 91
Cost of sales ($/oz) 2,054 1,773 1,772 2,093
Total cash costs ($/oz) 590 520 649 947
All-in sustaining costs ($/oz) 670 659 814 1,282
Long Canyon (61.5%) (5)
Gold produced (000s oz attributable basis) 51 43 160 58
Gold produced (000s oz 100% basis) 83 70 261 94
Cost of sales ($/oz) 674 877 869 1,088
Total cash costs ($/oz) 145 212 236 333
All-in sustaining costs ($/oz) 324 384 405 681
Pueblo Viejo (60%)
Gold produced (000s oz attributable basis) 159 129 542 590
Gold produced (000s oz 100% basis) 265 215 903 983
Cost of sales ($/oz) 803 791 819 747
Total cash costs ($/oz) 493 450 504 471
All-in sustaining costs ($/oz) 689 609 660 592
Loulo-Gounkoto (80%)
Gold produced (000s oz attributable basis) 123 139 544 572
Gold produced (000s oz 100% basis) 153 174 680 715
Cost of sales ($/oz) 1,149 1,088 1,060 1,044
Total cash costs ($/oz) 734 682 666 634
All-in sustaining costs ($/oz) 923 1,161 1,006 886
Kibali (45%)
Gold produced (000s oz attributable basis) 92 91 364 366
Gold produced (000s oz 100% basis) 205 203 808 813
Cost of sales ($/oz) 1,163 1,088 1,091 1,111
Total cash costs ($/oz) 616 617 608 568
All-in sustaining costs ($/oz) 783 817 778 693
Veladero (50%)
Gold produced (000s oz attributable basis) 58 44 226 274
Gold produced (000s oz 100% basis) 116 89 452 548
Cost of sales ($/oz) 1,074 1,136 1,151 1,188
Total cash costs ($/oz) 698 708 748 734
All-in sustaining costs ($/oz) 1,428 1,159 1,308 1,105
Porgera (47.5%) (6)
Gold produced (000s oz attributable basis) - - 86 284
Gold produced (000s oz 100% basis) - - 181 597
Cost of sales ($/oz) - - 1,225 994
Total cash costs ($/oz) - - 928 838
All-in sustaining costs ($/oz) - - 1,115 1,003
Tongon (89.7%)
Gold produced (000s oz attributable basis) 66 64 255 245
Gold produced (000s oz 100% basis) 73 71 284 273
Cost of sales ($/oz) 1,371 1,329 1,334 1,469
Total cash costs ($/oz) 810 731 747 787
All-in sustaining costs ($/oz) 853 777 791 844
Hemlo
Gold produced (000s oz) 57 55 223 213
Cost of sales ($/oz) 1,379 1,257 1,256 1,137
Total cash costs ($/oz) 1,104 1,099 1,056 904
All-in sustaining costs ($/oz) 1,464 1,497 1,423 1,140
North Mara (7)
Gold produced (000s oz attributable basis) 61 67 261 251
Gold produced (000s oz 100% basis) 73 80 311 334
Cost of sales ($/oz) 1,073 903 992 953
Total cash costs ($/oz) 799 649 702 646
All-in sustaining costs ($/oz) 989 758 929 802
Buzwagi (7)
Gold produced (000s oz attributable basis) 21 21 84 83
Gold produced (000s oz 100% basis) 25 25 100 115
Cost of sales ($/oz) 1,314 907 1,021 1,240
Total cash costs ($/oz) 1,267 687 859 1,156
All-in sustaining costs ($/oz) 1,283 693 871 1,178
Bulyanhulu (7)
Gold produced (000s oz attributable basis) 23 7 44 27
Gold produced (000s oz 100% basis) 27 8 52 37
Cost of sales ($/oz) 1,181 1,502 1,499 1,207
Total cash costs ($/oz) 610 874 832 676
All-in sustaining costs ($/oz) 664 913 895 773
Kalgoorlie (50%) (8)
Gold produced (000s oz attributable basis) 206
Gold produced (000s oz 100% basis) 413
Cost of sales ($/oz) 1,062
Total cash costs ($/oz) 873
All-in sustaining costs ($/oz) 1,183
Total attributable to Barrick (9)
Gold produced (000s oz) 1,206 1,155 4,760 5,465
Cost of sales ($/oz) (10) 1,065 1,065 1,056 1,005
Total cash costs ($/oz) 692 696 699 671
All-in sustaining costs ($/oz) 929 966 967 894
(1) Represents the combined results of Cortez, Goldstrike (including the company's 60-per-cent share of
South Arturo) and Barrick's 75-per-cent interest in Turquoise Ridge until June 30, 2019. Commencing
July 1, 2019, the date Nevada Gold Mines was established, the results represent the company's
61.5-per-cent interest in Cortez, Carlin (including Goldstrike and 60 per cent of South Arturo),
Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.
(2) On July 1, 2019, Barrick's Goldstrike and Newmont's Carlin were contributed to Nevada Gold Mines and
are now referred to as Carlin. As a result, the amounts presented represent Goldstrike on a 100-per-cent
basis (including the company's 60-per-cent share of South Arturo) up until June 30, 2019, and the
combined results of Carlin and Goldstrike (including Barrick's 60-per-cent share of South Arturo) on
a 61.5-per-cent basis thereafter.
(3) On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a
result, the amounts presented are on a 100-per-cent basis up until June 30, 2019, and on a 61.5-per-cent
basis thereafter.
(4) Barrick owned 75 per cent of Turquoise Ridge through to the end of the second quarter of 2019, with
its joint venture partner, Newmont, owning the remaining 25 per cent. Turquoise Ridge was proportionately
consolidated on the basis that the joint venture partners that have joint control have rights to the
assets and obligations for the liabilities relating to the arrangement. The figures presented in this
table are based on the company's 75-per-cent interest in Turquoise Ridge until June 30, 2019. On July
1, 2019, Barrick's 75-per-cent interest in Turquoise Ridge and Newmont's Twin Creeks and 25-per-cent
interest in Turquoise Ridge were contributed to Nevada Gold Mines. Starting July 1, 2019, the results
represent the company's 61.5-per-cent share of Turquoise Ridge and Twin Creeks, now referred to as
Turquoise Ridge.
(5) A 61.5-per-cent interest in these sites was acquired as a result of the formation of Nevada Gold Mines
on July 1, 2019.
(6) As Porgera was placed on care and maintenance on April 25, 2020, no operating data or per-ounce data have
been provided starting the third quarter of 2020.
(7) Formerly part of Acacia Mining PLC. On Sept. 17, 2019, Barrick acquired all of the shares of Acacia it did
not own. Operating results are included at 63.9 per cent until Sept. 30, 2019 (notwithstanding the completion
of the Acacia transaction on Sept. 17, 2019, the company consolidated its interest in Acacia and recorded
a non-controlling interest of 36.1 per cent in the income statement for the entirety of the third quarter
of 2019 as a matter of convenience), on a 100-per-cent basis from Oct. 1, 2019, to Dec. 31, 2019, and on
an 84-per-cent basis thereafter as the government of Tanzania's 16-per-cent free-carried interest was made
effective from Jan. 1, 2020.
(8) On Nov. 28, 2019, the company completed the sale of its 50-per-cent interest in Kalgoorlie in Western Australia
to Saracen Mineral Holdings Ltd. for total cash consideration of $750-million. Accordingly, the amounts
presented represent the company's 50-per-cent interest until Nov. 28, 2019.
(9) Excludes Pierina, Golden Sunlight starting in the third quarter of 2019, Morila (40 per cent) starting in
the third quarter of 2019 up until its divestiture in November, 2020, and Lagunas Norte starting in the
fourth quarter of 2019. These assets are producing incidental ounces as they reach the end of their mine lives.
(10) Cost of sales per ounce (Barrick's share) is calculated as cost of sales -- gold on an attributable basis
(excluding sites in care and maintenance) divided by gold equity ounces sold.
PRODUCTION AND COST SUMMARY -- COPPER
For the three months ended For the years ended
Dec. 31, Sept. 30, Dec. 31, Sept. 30,
2020 2020 2019 2019
Lumwana
Copper production (millions lb) 78 62 276 238
Cost of sales ($/lb) 1.96 2.06 2.01 2.13
C1 cash costs ($/lb) 1.58 1.49 1.56 1.79
All-in sustaining costs ($/lb) 2.60 2.58 2.43 3.04
Zaldivar (50%)
Copper production (millions lb attributable basis) 23 24 106 128
Copper produced (millions lb 100% basis) 46 48 212 256
Cost of sales ($/lb) 2.68 2.20 2.46 2.46
C1 cash costs ($/lb) 2.01 1.64 1.79 1.77
All-in sustaining costs ($/lb) 2.70 2.27 2.25 2.15
Jabal Sayid (50%)
Copper production (millions lb attributable basis) 18 17 75 66
Copper produced (millions lb 100% basis) 36 34 150 132
Cost of sales ($/lb) 1.53 1.43 1.42 1.53
C1 cash costs ($/lb) 1.15 1.14 1.11 1.26
All-in sustaining costs ($/lb) 1.27 1.17 1.24 1.51
Total copper
Copper production (millions lb) 119 103 457 432
Cost of sales ($/lb) (1) 2.06 1.97 2.02 2.14
C1 cash costs ($/lb) 1.61 1.45 1.54 1.69
All-in sustaining costs ($/lb) 2.42 2.31 2.23 2.52
(1) Cost of sales per pound (Barrick's share) is calculated as cost of sales minus copper plus the company's
equity share of cost of sales attributable to Zaldivar and Jabal Sayid divided by copper pounds sold.
Technical information
The scientific and technical information contained in this press release has been reviewed and approved by Steven Yopps, MMSA, manager of growth projects, Nevada Gold Mines; Craig Fiddes, SME-RM, manager -- resource modelling, Nevada Gold Mines; Chad Yuhasz, PGeo, mineral resource manager, Latin America and Asia Pacific; Simon Bottoms, CGeol, MGeol, FGS, FAusIMM, mineral resources manager: Africa and Middle East; Rodney Quick, MSc, PrSciNat, mineral resource management and evaluation executive; John Steele, CIM, metallurgy, engineering and capital projects executive; and Rob Krcmarov, FAusIMM, executive vice-president, exploration and growth -- each a qualified person as defined in National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
All mineral reserve and mineral resource estimates are estimated in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. Unless otherwise noted, such mineral reserve and mineral resource estimates are as of Dec. 31, 2020.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of United States dollars, except per-share data)
Years ended
Dec. 31,
2020 2019
Revenue $12,595 $9,717
Costs and expenses
Cost of sales 7,417 6,911
General and administrative expenses 185 212
Exploration, evaluation and project expenses 295 342
Impairment reversals (269) (1,423)
Loss on currency translation 50 109
Closed mine rehabilitation 90 5
Income from equity investees (288) (165)
Other (income) expense (178) (3,100)
Income before finance items and income taxes 5,293 6,826
Finance costs, net (347) (469)
Income before income taxes 4,946 6,357
Income tax expense (1,332) (1,783)
Net income $3,614 $4,574
Attributable to
Equity holders of Barrick Gold $2,324 $3,969
Non-controlling interests $1,290 $605
Earnings (loss) per share data attributable to the
equity holders of Barrick Gold
Net income
Basic $1.31 $2.26
Diluted $1.31 $2.26
We seek Safe Harbor.
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