Barrick Gold (ABX) Earnings Report: Q4 2015 Conference ... · Barrick Gold (ABX) Earnings Report:...
Transcript of Barrick Gold (ABX) Earnings Report: Q4 2015 Conference ... · Barrick Gold (ABX) Earnings Report:...
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page1of22
BarrickGold(ABX)EarningsReport:Q42015ConferenceCallTranscriptThefollowingBarrickGoldconferencecalltookplaceonFebruary18,2016,11:00AMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
AngelaParr;BarrickGoldCorporation;VPofIRKelvinDushnisky;BarrickGoldCorporation;PresidentShaunUsmar;BarrickGoldCorporation;CFORichardWilliams;BarrickGoldCorporation;COOBasieMaree;BarrickGoldCorporation;CTOMattGili;BarrickGoldCorporation;ExecutiveGeneralManager,CortezAndyCole;BarrickGoldCorporation;ExecutiveDirector,GoldstrikeRickBaker;BarrickGoldCorporation;ExecutiveGeneralManager,Veladero
OtherPart icipants
AndrewQuail;GoldmanSachs;AnalystJohnBridges;JPMorganl;AnalystStephenWalker;RBCCapital;AnalystGregBarnes;TDSecurities;AnalystDavidHaughton;CIBC;AnalystJorgeBeristain;DeutscheBank;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
WelcometoBarrick'syear-endandfourth-quarter2015resultsconferencecall.
(OperatorInstructions)
Asareminder,thisconferencecallisbeingrecordedonFebruary18,2016.
IwillnowturntheconferenceovertoAngelaParr,VicePresidentofInvestorRelations.Pleasegoahead.
AngelaParr (VPofIR):
Thankyou,Operator.Goodmorning,everyone.
BeforewebeginIwouldliketobepointoutthatwewillbemakingforward-lookingstatementsduringthecourseofthispresentation.ThisslideincludesasummaryofthesignificantrisksandfactorsthatcouldaffectfutureoutcomesatBarrick.Forcompletediscussionoftheserisksandfactors,pleaserefertoourmostrecentAIFfiling.
Withthat,IwouldliketoturnitovertoourPresident,KelvinDushnisky.
KelvinDushnisky(President):
Thankyou,Angela.Goodmorningtoeveryoneonthecall.Thankyouforjoiningus.
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page2of22
I'mheretodaywithourChiefFinancialOfficer,ShaunUsmar;ourChiefOperatingOfficer,RichardWilliams;andourChiefTechnicalOfficer,BasieMaree.
Youmayrecallthattwoofourminegeneralmanagersjoinedusonourlastquarterlyupdatecall.That'ssomethingyoucanexpectustocontinueinthefuture.However,becausetheywillbepresentatourInvestorDaynextweekwehavethemonthelinetodayratherthanhereinperson.
JoiningusareMattGilifromCortez;AndyColefromGoldstrike;EttieneSmutsfromPuebloViejo;JimWhittakerfromLagunasNorte;andRickBakerfromVeladero.Theywillbeavailabletoansweranyquestionsyoumayhaveattheendofthecallandyou'llgetachancetohearmorefromthemandothersatourupcomingInvestorDay.
2015wasafoundationalyearforBarrick.Webeganbyrefocusingthecompanyaroundoneoverridingobjective:tomaximizepre-cashflowpersharethroughdisciplinedcapitalallocation,operationalexcellence,andadeepfocusontalent.Weidentifiedfourkeystrategicprioritiesfortheyearandwemadeacommitmenttostayfocusedonthemandtodoexactlywhatwesaidwewoulddo.
Ourprioritieswere,numberone,tostreamlinethebusinessbyembeddingalean,decentralizedoperatingmodel;numbertwo,tostrengthenthebalancesheetbyreducingourdebtbyatleast$3billion;numberthree,torefocusthecompanyonmaximizingpre-cashflow;andnumberfour,tooptimizetheportfoliotofocusonourbestassetsinourcoreregions.
Torecaponourprogressonthesepriorities,firstwecompletedtheimplementationofourdecentralizedoperatingmodel,removingmanagementlayersbetweentheheadofficeandourmines.Thishasimprovedinformationflowandthespeedofdecision-makingacrossthecompanyandithashelpedustoreducecosts.Second,weexceededour$3billiondebtreductiontargetandsubstantiallyimprovedourbalancesheetandliquidityposition.Third,throughgreatercapitaldiscipline,operationalefficiencies,andcostmanagement,wewereabletogenerate$471millioninpositivepre-cashflowin2015afterseveralyearsofnegativepre-cashflow.Wedidsodespiteagoldpricethatdroppedabout10%or$125perounceoverthecourseoftheyear.
Atthesametime,weachieveda$33perouncereductioninourall-insustainingcostfortheyearfrom$864perouncein2014to$831perouncein2015,wellbelowouroriginalcostguidancefortheyear.Thesesavingsweredrivenbylowercapitalspendingcombinedwithreductionsincorporateoverheadandoperatingcostreductions.
At6.12millionounceswemetourupdatedgoalproductionguidanceof6millionouncesto6.15millionounces,adjustedfornetassetsales.Wealsometannualproductionandcostguidanceforourcopperportfolio.Andfinally,wedivestedallorpartofsevennon-coreassetslastyear,furtherfocusingourportfolioonourmostprofitableminesintheAmericas.
Thecompanyisinamuchstrongerpositiontodaythanitwasayearago.Soit'snotsurprisingthatmanyofyouwouldask,whatisnext?Iwouldliketogiveyousomeinsightonthatnow.
AsImentioned,ourprimaryobjectivecontinuestobetogenerateandideallygrowfreecashflowinanyforeseeablegoldpriceenvironment.Toaccomplishthis,wearefocusedonmaximizingmarginsateachofouroperationsanddeliveringfreecashflowthroughefficientportfoliomanagement.ThiswillsupportastrongerbalancesheetwhileallowingustoinvestinourBusinessandprovideourshareholderswithasustainabledividend.Ourproductionwillbemeasuredbyquality,notquantity.Whileweareproducingfewerouncestodaythanwehaveinrecentyears,we'regeneratingsignificantlymorecashfromtheseounces,andweintendforthistrendtocontinue.
Basedonourcurrentassetmixandthefullpotentialdivestment,weexpecttomaintainannual
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page3of22
productionofatleast4.5millionouncesofgoldthrough2020.Wehavesignificantoptionswithinourportfoliotomaintainandgrowfreecashflowbeyondthispointandwewillcontinuetoassessalternativeinvestmentsandopportunitieswhichmeetourreturnoninvestedcapitalhurdlerateof15%andalignedwithourstrategicfocus.
Ourgoalsaretolowerourall-insustainingcoststolessthan$700perounceby2019andtoreducetotaldebttolessthan$5billioninthemediumterm.Wearealsoworkinghardtocreateincreasedoptionalitywithinourportfoliothatwillgiveusmoreflexibilitywithrespecttofutureoperatinganddevelopmentchoices.
ForexamplethroughnewtechnologieslikeTCM,andastagedapproachtodevelopingourprojects.Achievingthesegoalswilltakesometime.ButultimatelywearepositioningBarricktodeliverindustry-leadingreturnsthroughthemetalpricecycle.
Aswedidlastyearwesetoutfourprioritiesfor2016.Thefirstpriorityistoensurewecangeneratefreecashflowatagoldpriceof$1000perounce.Tosupportthisobjectiveacrossthebusiness,wehaveimplementedamoreconsistentmethodologyfordeterminingthepricingassumptionsweusedforbudgetingandmineplanning,thecalculationofreserves,impairmenttesting,andassessingprojecteconomics.
Our2016budgethasbeenpreparedusinga$1000goldpriceassumption,whileourlong-termplanningassumesagoldpriceof$1200perounce.Thisensuresafocusonmaximizingfreecashflowinthenear-termwhilepreservingoptionalityforthefuture.Debtreductionalsoremainsatoppriority.Yourecallthatwesaidthe$3billiontargetwesetlastyearwasthefirststep,notthefinalone.Thisyearweintendtoreduceourtotaldebtbyatleast$2billion.Weplantodothisusingthreelevers:existingcashbalances,freecashfromoperations,andnon-coreassetsales,jointventures,andpartnerships.
Ourthirdpriorityrelatestoredoublingourcommitmenttooperationalexcellencewiththelaunchofourbestinclassinitiativewhichweareimplementingacrosstheportfoliothisyear.Ouroperationsarealreadyamongthelowestcostintheindustrybutwebelievewecandoevenbetter.You'llhearmorefromRichardlateraboutthebestinclassprogram,butIcantellyouthatweareenthusiasticaboutthepotentialforimprovementacrossthebusinessandwearealreadyseeingresults.
Andfinally,wewillcontinuetohaveasharpfocusoncapitaldiscipline.Wehavesetrigorouscriteriaforcapitalallocationincludingthe15%hurdleratefornewinvestmentsallofwhichareevaluatedbyourrevampedinvestingcommittee.Asyouwillhaveseeninourreleaseweprovidedthree-yearconsolidatedguidanceonproduction,costs,andcapital.Thisreflectsourplansastheyexisttoday.
Overthenextthreeyears,ourproductionisexpectedbeintherangeof4.6to5.5millionouncesofgoldatprogressivelylower,all-insustainingcosts.AsInoted,ourobjectiveistoimproveuponthisovertimewiththeaimofachievinganall-insustainingcostbelow$700perounceby2019.
JustbeforeIturnthingsovertoShaun,IwanttoknowledgetheexceptionaleffortsoftheentireBarrickteamindeliveringour2015results.Theyreflectthetirelesseffortsofthousandsofpeopleacrossthecompany.
Withthat,IwillaskShauntowalkyouthroughourstrongfourth-quarterandfull-yearresults.
ShaunUsmar (CFO):
Thankyou,Kelvin.
2015wasacriticalyearfordrivingchangeanddeliveringonourpromisesatBarrick.Wearereallypleasedwithhowtheentireorganizationralliedaroundourobjectivestotransformthebusiness
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page4of22
financiallyoverthepastyearandthisisevidentbothinour2015resultsandbeyondasyouhaveseenintheguidance.Wepulledeveryleveratourdisposal,includinggreatercapitaldisciplinethroughenhancedcapitalallocation,reducedoverheads,improvedproductivity,andloweredworkingcapital.
Wealsohaveagreatmineralendowmentwhichrepresentsoneofthemostpowerfulleverswithinourcontrolforreducingdebtandfuelingourfuturegrowthpotential.AndBasiewillcoverthislaterinthepresentation.Oureffortsresultedin2015while[in]sustainingcostsof$831anouncecominginwellbeloworiginalguidanceof$860to$895perounceandatthebottomendofourlowerguidanceof$830to$870perounce.
Cashcostsare$596perouncewerewellbelowthebottomendofbothouroriginalandrevisedranges.Whenyoustripoutourfuelandcurrencyhedgesfromboth2014and2015,whichhadayear-over-yearimpactofaround$37aounceandaddabout$15or$20anounceinsupportservicestothesitesin2014.SinceG&Awasn'tallocatedtothesitesthatyear.Ourcashcostsaredownabout$55perounce[sold]year-over-year.
Inadditiontomeetingourgoldproductionguidance,wealsometourcopperproductionguidanceandC1coppercostsof$1.73perpoundwerebelowouroriginalrangeof$1.75to$2perpound.TheteamatLumwanadidagreatjoblastyear,bringingdowntheircashflowbreakevencosts,aidedbytheweak[quarter],andthey'recontinuingtofindopportunitiestodrivedowncosts.
At$1.5billiontotalCapExwassignificantlybelowbothouroriginalguidanceof$1.9billionto$2.2billionandourrevisedguidanceofabout$1.7billion.Theserobustresultsallowedustogeneratefreecashflowof$471millionlastyearafterbackingoutthe$610millioninproceedsfromthePuebloViejostreamthatwassequentiallyusedfordebtreduction.
Ifweweretoput2014and2015onthesamerealizedpriceandgradebasis,theyear-over-yearincreasecomparedwiththecashoutflowof$136millionin2014wouldbe$1.8billionversusthereportedimprovementof$607million.Thenetlossof$2.6billioninthefourthquarterand$2.8billionfortheyearreflects$2.6billionand$3.1billionofpost-taximpairmentsrespectively.
AsKelvinindicated,we'veimplementedamoreconsistentmethodologyfordeterminingthepricingassumptionswe'veusedforimpairmenttesting,mineplanning,calculationofreserves,andourprojecteconomics.We'veexperiencedsignificantvolatilityinthiseconomicenvironmentasevidencedbythe10%and30%dropinthegoldpriceandoursharepricein2015respectively.
Againstthisbackdrop,wethereforeadoptedapricingapproachtounderpinourvaluationswhichisinformedthroughthestatisticalpricemovesoverpastfewyearsandseeitbeyondshort-termspotpricemix.Ourlong-termgoldpriceassumptionrepresentsanassessmentoflong-termconsensuspricing,andwillonlybeadjustedbasedonfundamentalshiftsinthegoldmarket.
Theimpairmentchargeswe'verecordedaremainlyrelatedtoourthoughmetalpriceassumptionsof$1000perouncefor2016anda$1200perouncelong-termprice.Thisisapreviouslong-termassumptionof$1300perounce.
Onanannualbasis,theimpairmentsincludejustover$2billionofgoodwillrelatedtothelowmiddlepriceassumptions.The$1billionrelatedtoassetimpairmentsisprimarilyforPascua-Lamaofabout$400millionduetothereductioninmarketcomparablevaluesusedtovaluethisproject,andPuebloViejo,about$319millionduetothelowmetalpriceassumptions.
Theimpairments'impacttoearningswaspartiallyoffsetby$110milliongainrelatedtothesaleofRubyHillandSpringValley.Whilewecertainlydon'trelyonhigherpricestodriveourbusinessplans,weremainpositiveonlong-termpricefundamentalsforgoldandcopper.Withhigherpricesinthefuturewe
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page5of22
wouldreassessthefairvaluesofourlonglifeassetssuchasPascua-LamaandPuebloViejo,andcouldpotentiallyreversesomeoftheassetimpairmentchargesrecorded.
WewerecarefulatthestartoflastyearthatourcorefocuswouldbeonprioritizingfreecashflowpershareinsteadofchasingouncesandI'mpleasedwithhowthecompanysteppeduptothisshiftinemphasis,generatingsubstantivecashflowforthefirsttimeinfouryearsatthelowestpriceexperienceduringthisperiod.Iwanttonoteherethatwedidthisthroughtwocomplementaryobjectivesandwithoutcompromisingourlongevity.
Weimprovedourcashmarginsintheshort-termwhilefocusingondrivingsustainabilityandlongertermvaluecreationfortheportfolio.Theseobjectivesareindependentbyhigh-quality,well-capitalizedassetbasewiththepotentialforhigher-tonnegrowthinthefuture.Weareenhancingoperatingcashflowboththroughbusinessplanningandongoingactionslikebestinclass,whilecontinuingtodrivedowntheconsumersofthatcashflow,includingbyreducingourholdingcostsatPascua-Lama,loweringourinterestexpense,andcuttingoverhead.
Wearealsooptimizingourgrowthspendonhigherreturn,lowerriskoptionsnearourexistingassetbase,whilemaintainingourotheroptionsforthefutureatthelowestcostpossible.Asresult,despitethe$250dropinourrealizedgoldpricefromtwoyearsago,wegeneratedthreeconsecutivequartersoffreecashflowin2015.
Toputthatincontext,inordertogeneratefreecashflowin2013,wewould'verequiredagoldpriceofmorethan$1600perounce.Atthebeginningof2015,wewould'veneededabreakevenpriceof$1350perouncebeforeimplementingourcashflowimprovementsactions.Bytheendoftheyearwewerefreecashflowpositivebelow$1100perounce.
Thisrepresentsa35%reductioninourbreakevenpriceoverthelasttwoyears.Andthisyearweintendtoreducedfurtherto$1000perouncetoensurewecangeneratepositivefreecashflowatthatprice.We'veachievedtheseresultsbyaggressivelymanagingourcontrollablecostsasyouwillseeonthenextslide.
Clearly,wecan'tcontrolgoldandcopperpricesbuttherearemanyfactorswithinourcontrolthatcontributetoourcostofsalesandusesofcash.Asyoucansee,wedidalotlastyeartomitigatethemorethan$100anouncedropinourrealizedgoldprice,andthe20%dropinourrealizedcopperprice.
Wedidthisthroughacombinationofproductivitygainsdeliveredbythesiteswhichwerereflectedinthecashcostpertonneprocess,andmanagementactionstoreduceoverheadandexpiration,closureandproject-relatedexpenseswhicharegroupedintheothercategory.Theper-timecostsreflectoperatingcostswhichareunderthedirectcontrolofoursiteleaders,andimprovementstheyhadmadelastyearwithrespecttoproductivityandcostreductionoffsetabouthalfofthepricedecline.
Operatingcostsarewherewestillseethemostopportunitytoreduceourcoststructure,andRichardwillspeaktothisinmoredetailinamoment.We'vealsodonequiteabittooptimizecapitalinthelasttwoyears,whilethemajorityofthe70%reductionsince2013relatestoPascua-Lamaaftertheprojectwassuspendedthatyear.Therewerealsosignificantcutsanddeferralsmadetosustainingandexpansionarycapitalin2013and2014thatwerenecessaryinthelowergoldpriceenvironment.
Thishascreatedsomewhatofa[byway]ofdeferredcapitalinfutureyearswhichwassomethingweneededtodealwithasamanagementteamlastyearandweweresuccessfulindoingso.Weaddressedthisinacoupleofways--firstlybyrevampingourbusinessplanningandbudgetingapproach.Thekeychangehereisthatouroperating,technical,andfinancialteamsarenowfullyandconcurrentlyintegratedintheprocessfromthebeginningcomparedtothedetailedbutmoresequentialapproachofthepast.
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page6of22
Thebenefitofthisisthatweharnessthebesttalentineachoftheseareasfromthestartinconjunctionwiththebusinessplansgeneratedbytheminegeneralmanagerswhoultimatelyareaccountableunderourdecentralizedmodelformaximizingvalueandmanagingtherisksfortheirbusinesses.Thisapproach,alongwithsitespecificcashmargins,[bolt]intotheplansfromtheirinception,ensurethatthegeneralmanagersdeveloptheirplansthroughthelensofensuringenhancedcashmarginsatlowerpricesthatwouldcoverourcorporateusesofcash--anytaxes,overheads,fundingourgrowth,payingdividendsandthelike,whilepreservingoptionalityathigherprices.
Someexamplesofthedecisionsmadethroughthisprocess,includingeliminatingcapitalassociatedwiththeopenpitsatGoldenSunlight,focusingmoreonundergroundatCortezandGoldstrike,andremovingcapitalforsubsequentleachfailuresatSouthArturothataren'tcurrentlyeconomic.Byleavingmarginalouncesinthegroundtherequirementforassociateditemsliketailingsliftsandmaintenancedisappear.
IwanttobeclearthatwhatI'vedescribedisnothighgradingorgoingofftopocketsofhighgradematerial.Whatwe'vedonebyleavingthesemarginalouncesinthegroundistoraisetheaveragemininggradeinordertogeneratecashflowandwe'vebeencarefultodothiswithoutsterilizingfutureoptionality.
Secondly,welookedatourprojectsdynamically,andassessedhowwecouldacceleratefundingintheeventthatpricesweretobemateriallyhigherinthenear-term.Weconcludedthatourprojectsequencingwhichisnowsupportedbyamorerobustbusinessplansisappropriateforthecurrentbusinessoutlook,andisnotcapitalconstrained.
Intermsofourspendingoutlook,thisyearweexpecttotalCapExtobeintherangeof$1.35billionto$1.65billion,lowerthan2015onreduceddevelopmentcapitalatVeladeroandKCGM,andalsoreflectingtheassetsales.Projectspendingfor2016hasbeenloweredto$50millionto$100millionfrom$100millionto$150millionlastyear,andweexpectittobeatthelowendofthisrangeforthenexttwoyears.
Projectcapitalthisyearlargelyreflectsongoingpre-strippingoftheSouthArturodepositnearGoldstrikeandcapitalizedcostforpermitting,engineering,andconstructionactivitiesrelatedtothetemporarysolutionforwatermanagementatPascua-Lamaaswetransitiontheprojectintodeepsuspension.Expansioncapitalfor2016isprimarilyforfeasibilityanddevelopmentworkatCortezrelatedtotheundergroundexpansionprojectandalsoforpre-strippingofthecrossroad'sopenpitdepositwhichisexpectedtoreachproductionin2020.
In2017and2018,weexpectexpansioncapitaltoincreaseasthisworkacceleratesanditalsoreflectssomecoststoimprovethroughputwithadditionalventilationatTurquoiseRidge.For2017and2018weexpectsustainingCapExtobeslightlylowerthanthe$1.2billionto$1.4billionthisyear,atabout$1.1billionto$1.3billion.Butin2018itwillincludeabout$175millionindevelopmentcapitalforstrippingatLumwana,relatedtomining[chimneywidth]stagesfourandfivewheretheoreisdeeperandhasahigherstripratio.
Turningtothebalancesheet,weexceededourdebtreductiontargetof$3billionin2015byrepairing$3.1billionthroughacombinationofassetsales,freecashflow,andnewjointventures.Thisreducedourtotaldebtby24%andournetdebtby28%injustoneyear.Includingthe$610millioninproceedsfromthesaleofBaldMountainandRoundMountainreceivedlastmonth,ournetdebtisnowbeingreducedby33%fromthestartoflastyear.
Asaresult,ourannualpre-taxinterestexpensewillbecutbyabout$135millionperyearandsomethisisreflectedinourlowerfinancecostguidanceof$690millionto$730millionthisyear.Inaddition,weextendedthemajorityofourundrawn$4billioncreditfacilityuponeyearto2021andnegotiateda
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page7of22
financialcovenantthatbetterreflectsourongoingdeleveragingmeasures.
Thenetdebttototalcapitalizationcovenantrequiresustomaintainaratiooflessthan0.6.Attheendof2015,thisratiowas0.44,andweexpectittoimproveaswemakeprogressonournew2016totaldebtreductiontargetofatleast$2billion,andourmediumturntargetsbringtotaldebtbelow$5billion.
Ourdeleveragingassetshavesignificantlyimprovedourliquidityparticularlyintheneartomediumtermaswetargetedshorteneddateddebttocleartherunwayforthenextseveralyears.Wenowhavelessthan$250millioninmaturitiesduebefore2018andlessthan$100millionmaturingbetween2024and2032.About$5billion,oraroundhalfofourtotaldebtisveryelongated,maturingonlyafter2032.
Lastmonth,(inaudible)placedourlong-termdebtratingandreviewandinlightofthiswebeenaskedwhetherretaininganinvestment-graderatingisimportantforus.Theanswerisyes(technicaldifficulties).Butofequalimportance,we'refocusedonimprovingourcashflowandcashmarginsthroughproductivityimprovementsandcostreductiondeliveredtoourbestinclassprogramaswellasthecontinuedsharpfocusoncapitaldiscipline.
We'vemadeconsumerprogressonalloftheseexpensescoveredandexpecttomakeevenmoreovertime(technicaldifficulties).Webelievewewillbesuccessfulinoureffortsandifthedowngradeweretooccur(technicaldifficulties)costofborrowingandtheexistingpublicdebtofourcreditfacility.Whileadowngradecouldincreaseourborrowingcostsifweweretoissuenewdebts,weareveryclearwe'refocusedonreducingourdebt.
Turningtoourfinancialguidancefortheyear,IcoveredCapExandtheinterestexpensecomponentsoffinancecostsearlier,butIshouldjustnotethatourfinancecostsalsoincludeaccretion,andthattheinterestexpensesavingsthisyearfromdebtreductionarepartiallyoffsetbyhigheraccretionexpensemainlyrelatedtothePuebloViejostreamingagreement.Theguidancenumbersonthisslidearebasedonour2016budgetassumptionsof$1000perounce;however,thetaxrangeshownhereisbasedonagoldpriceof$1100perounce.
At$1100perounce,ourtaxrateisexpectedtobe50%to55%reflectingthegreatercontributionthisyearfrom[TB]whichistaxedat57%.At$1000perounceincludingnon-deductibleexpensessuchasPascua-Lama,oureffectivetaxraterisesto153%.AsImentionedearlierwereducedouroverheadcostslastyear.Thiswasdownthroughheadcountreductionsanddownsizingorclosingregionalofficesinlinewithimplementingthedecentralizedmodel.
Werealizedapproximately$65millioninreductionstogrossfunctionalG&Aandoverheadcostscomparedto2014,allowingustomeetourcorporateadministrationexpensetargetof$145millionafteradjustingforseveranceandotherone-timecosts.Andweexpecttoreach$100millioninannualizedoverheadsavingsin2016.
Someadditionalcontextonthistohelpwithcomparing2015to2014.Atthebeginningof2015,wetransferredmostofthefunctionalsupportservicestominesitesinordertoholdthemdirectlyaccountableforthecostoftheservicesthey'rerequiredtorunthebusiness,resultingintheallocationofsomeofourgeneralandadministrativecoststoindividualminesites.
ThesecostsnowformpartofminesiteG&Acostswhichareincludedwithindirectminingandcashcosts.We'vealsoreducedourexplorationbudget,butasBasiewillcover,wehaveastrongfocusonopportunitiesaroundourexistingmineswherewecontinuetoidentifyexcellentpotentialforresourceconversionatmanyofouroperations.
We'llassessthisdynamicallythroughouttheyeardependingonthequalityofourtargets,thecashavailablethroughourimprovementsefforts,andthegoldpriceenvironmentwherewefeeltheguidance
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page8of22
isappropriateforthecurrentenvironment.
IwillnowturnitovertoRichardtotakeyourthroughourbestinclassprogramandouroperatingresults.
RichardWilliams (COO):
Thanks,Shaun.
(Inaudible)timehascometheindustryleaderforbestinclassinthewaythatweoperateanddevelopourexistingandanyfuturemines.Webelievethatwe'vegotsomeofthebestassetsintheworldbuttobeclear,wejudgethatthetheyarenotyetbeingoperatedattheirmaximumefficiencyasdefinedbywhatispossibleacrosstheindustryandusingallavailableandthelatesttechnologies.
Andthisprovidesuswithasignificantopportunityforimprovement.Toaddressthis,andoverthelastsixmonths,we'vebeenrollingoutabusinessimprovementsystemcalledthebestinclass.Thisisadata-drivenoperatingsystemthatwillmaximizevaluedurationfromouroperationsbydrivingimprovementsinefficienciesandproductivity,aswellassustainablereductionsincostsandimprovementsinsafety,andenvironmentalmanagementacrossourportfolio.
Itbringstogetherintoasingleplaceallofourexistingandfutureimprovementinitiativessuchasthosealreadyidentifiedinwhatwe'vecalledourvaluerealizationstudieslastyearaswellasthoseassociatedwiththe$2billioncashflowimprovementtargetthatyou'llbefamiliarwith.It'snotjustatop-downprocess,it'sbeingbuiltintandemwiththemineleadership,andprovidesboththemanduswithaconstantlyevolvingplantoclosethegapbetweencurrentperformanceandoptimalperformanceateachsite.
Itdoesthisbyexploitingopportunitiestoclosewherewecurrentlyaretothatdefinedbythecurrentsystem'stechnicallimitsinwaysthatarefamiliaracrosstheindustry,andwedoitatallofouroperations.Whileconcurrently,seekinganyopportunitytodeliverstepchangesinperformancebysystemchangesi.e.changingminingmethods,[digitization],orothersuchmeasures.Aswellaspullingforwardinastructuredwayanynewinnovationsthatacrossthespectrumwithaparticularemphasisoninformationmanagement.
Allofthisisdonewhilesimultaneouslyinvestingvitaltimeandeffortinareasthatareoftenforgottenandarethebedrockofanyminingcompany,andthatistheoperatorsandtheirskills,andthefront-lineleadersandtheirskills.Todrivethiswe'vedevelopedascorecardwithconcretetargetstoreduceandoptimizetheintensityoflabor,mining,energy,andcapital,asmeasuresagainstgrowthinrevenue,improvementsinassetefficiency,increasingoperatingmargins,andthesites'annualshort-termincentiveschemes.
Progresstowardsthesetargetsarereviewedanddriveneveryweekatourbusinessplanreview,orBPRmeeting,theweeklyvideoconferencethatlinksallsiteswiththeheadofficeandinmonthlyoptimization,innovation,andtalentdevelopmentreviews.AsKelvinissuretomention,thisprogramisbeingrolledoutacrossourportfolio,andistobemanagedbystandalonebusinessimprovementgroupsthathavestoodupandreportsdirectlytomeandisheadedbyMichelleAsh,formallyof[publication].SheobviouslywillworkwithBasieMaree,theChiefTechnicalOfficer;andPeterSinclair,theChiefSustainabilityOfficer;andteamsfromfinance.It'sthisprocessthatprovidestheconcretesupportforourtargettoreduceourall-insustainingcoststolessthan$700anounceby2019.AndwewillcoverthisinmoredetailinourInvestorDaynextweek.
Movingontoouroperatingguidance,2016goalproductionremainsatfive5millionouncesto5.5millionouncesandreflectsabout1millionouncesinassetdivestitureslastyearaswellaslowandexpectedproductionfromLagunasNortethisyear.We'vereducedourcash[flow]guidanceto$550to$590an
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page9of22
ounce,from$596into2015.
Thisreflectslower-than-expectedcostsofPVonincreasedproductionandhigher[filter]creditsrelatedtolastyear.LowercostsfromAcaciaandthesaleofhighercostounces,butcarriedhigheraveragecostsin2015,aswellasanexpectedpositiveimpactfromcurrencyandfuelhedgesatthisyear'slowerrates.
We'vealsoreducedourall-insustainingcostguidance$775to$825perouncebasedonlowercapitalexpendituresandlowerG&AandexpirationexpensethatShaun'soutlinedalready.Althoughall-insustainingcostwillbedrivendownbythebestinclasseffort,thefirsthalfoftheyearisexpectedtobehigherthanthesecondhalfall-insustainingcosts,forthesecondquarterexpectedtobethehighestcostoftheyear.
Turningnowtothesites.OurCortezmineledbyMattGilihashadanexcellentyear,significantlybeatingouroriginaloperatingguidancefortheproductionof999,000ounces,justshortof1million,andall-insustainingcostsat$603perounce.Anditbenefitedfromimprovedundergroundproductivityandhigheropen-pitgradesandrecoveries.
Theguidancethisyear,we're900,000to1millionounces,andanall-insustainingcostof$640to$710perouncewhichincludesabout$250millionouncesofrefractoryoilthatwillbeprocessedatGoldstrike.Thehigherinspectedcostin2016reflectingincreasedsustainingcapitalrelatedtowatermanagementprojectsandtimingofopenpitwholetruckmaintenance.
BestinclassinitiativesforreferencecurrentlyunderwayatCortezincludeoptimizingshiftingchangesequencing,revampingfleetmaintenance,improvingundergroundcapitalefficiency,installingadvancedprocesscontrols,andstrengtheninggeometalurgicalmodeling.We'llprovideupdatesonplansfortheexpansionofundergroundminingofCortezattheInvestorDayaswellastheresultsoftheprefeasibilitystudyfortheGoldrushprojectlocatedwithintheCortezdistrict.
MovingacrosstoGoldstrike,productionat2015wasinlinewithexpectationsat1.1millionouncesbutall-insustainingcostsof$650perouncecameinwellbelowguidanceonimprovedundergroundminingcosts,optimized[holdage]roots,andlowercontractedcosts.ThroughputandrecoveriesfromournewandinnovativeTCMcircuit,whichdoesn'tusecyanideasyouknow,continuestoimprovewithongoingadjustments,inlinewithexpectationsfortherampupofanewtechnology.Stillworktogoyet,butwe'recontentwiththeprogressatthispoint.
Weexpecttoachievedesignthroughputof11,000tonnesperdaybythethirdquarterof2016.ProductionatGoldstrikethisyearisexpectedbesimilartolastyear,buthigherall-insustainingcostsof$780to$850perounce,reflectingincreasedsustainingcapitalforfailingsexpansion,watermanagement,andtimingofundergroundequipmentreplacements.
Bestinclassinitiativesin2016,ourfocusonsupplychaincostreductions,optimizationofArturopithauling,maintenanceimprovements,andoverallequipmenteffectivenessofshovelsandtrucks.Weexpectinitialproductionofabout140,000ouncesof60%sharefromSouthArturointhesecondhalfofthisyear.
AndmovingacrosstoPV,ourshareoftheproductionin2015was572,000ounces,atall-onsustainingcostsof$597perounce.ProductionwasimpactedinQ4bythefailureoftwooxygenplantmotorsinNovemberwhichaffected[autoplay]andthroughput.Youshouldallbeaware.
Intermsofsolvingthis,we'requiteproudofhowournewdecentralizedmodelworkedwelltoresolveitquickly,withfullproductivecapacityrestoredinlateJanuarywithonerepairedmotorbackinoperationsupportedbyportablecompressors.Thesecondmotorhasnowalsobeenreinstalled.
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page10of22
Ourshareofproductionin2016isforecasttobe600,000to650,000ounces,atall-insustainingcostsof$570to$620perounce.Themine[broughtall]autoclavemaintenanceactivityinDecembertomitigatetheimpactoftheunscheduleddowntime,andiscurrentlytreatinghighergradeoilinthefirstquarterwhichisnotprocessedthatmonth.
Bestinclassinitiativesthisyeararefocusedonimprovingefficiencyandthroughputthroughallblendingoptimization,laborintensitymeasures,increasingautoclaveavailability,andoptimizationofmaintenanceactivity.
MovingtoLagunas,LagunasNortemineproduced560,000ounces,astheall-insustainingcostof$509perouncein2015.Costswerelowerthanexpectedprimarilyonlowersustainingcapitalspending,fuelandlaborcostsavings,anddecreaseinroyaltyexpenses.Productionin2016isexpectedtobe410,000ouncesto450,000ounces,anall-insustainingcostof$570to$640perounce.Lowerproductionandhighercostslargelyreflectthetransitiontosulfideoilandlowerexpectedrecoveryrates.
Bestinclassinitiativestherearefocusedonstrengtheningfront-linemanagement,increasinglaborproductivity,andcapitalefficiency,outsourcingopportunities,increasedcarbonand[columnplant]performance,andreducingcostsassociatedwithexternalservicesandconsumables.AtourInvestorDayonFebruary26,we'llprovideanupdateonplansfortheadditionatrefractoryoilprocessingcircuitatLagunasNortewhichcouldsignificantlyextendthelifeofthemine.
NowmovingtoVeladero,ifperformedinlinewithexpectationsin2015butbetterthanallexpectedall-insustainingcostsof$946perounce.It'sexpectedtocontribute630,000to690,000ouncesinto2016,atalowerall-insustainingcostof$830to$900anounceonhigher-than-expectedproductionandsalesvolumes.
Theincreasedproductionofthisyear--goodnews--reflectsminingofhighergrades,improvedminingproductivity,andimprovedinventory,drawndownrelativeto2015throughbetteroperationalmanagementoftheleachpad.Alsoexpectedtobenefitfromthegovernment'sdecisiontoliftimportrestrictionsandeliminatethe5%exportduty,bothofwhichwereannouncedinthelate2015.BestinclassworkatVeladeroin2016isfocusedoncostreductionsrelatedtosupplychainandinventorymanagement,bettermaintenancepractices,miningproductivity,andenergyefficiency.
AcrosstoTurquoiseRidge,thatminesignificantlyoutperformedourexpectationsin2015,withourshareofproductionup270,000ouncesatanall-insustainingcostof$742perounce.Theminebenefitedfromincreasedproductivityandthroughput,drivenbyimprovedequipmentavailabilityandchangeinminingmethodstofullymechanizethetopcuts.Theseproductivityimprovementsandothersareexpectedtocontinuein2016allowingforgreaterminingflexibilityandreliability.
Productionthisyearisexpectedbeinlinewith2015levelsandslightlyhigherall-insustainingcostof$770to$850perouncerelatedtoincreasedsustainingcapitalfromthewatertreatmentplantandtimingofequipmentreplacements.Bestinclassinitiativesfor2016willfocusonoperationalefficiencies,economicoptimizationofminedesign,andavaluationofpotentialalternativerockbreakingmethods.Aswithourotherprojects,wewillprovideanupdateonplanstoexpandundergroundminingatTurquoiseRidgeatourInvestorDay.
Nowturningtocopper.Productionguidancefor370millionpoundsto410millionpoundsreflectsourreduced50%ownershipatZaldivar,butdoesn'tincludeproductionfromJabalSayidmine,whichstartedupaheadofscheduleinDecemberoflastyear.Astheminewillstillbeinthemillcommissioningphaseforpartoftheyear.Our2016all-insustainingcostguidancehasbeenreducedto$205to$235perpoundtoreflectcurrencybenefitsandimprovecostsatLumwana.
IwillnowturnitovertoBasietocoverourexplorationandreserveupdate.
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page11of22
BasieMaree (CTO):
ThanksRichard.
Our(inaudible)wasprofitableandsustainableinlong-termproduction.Thiswe'llachievethrougharenewedfocusinourmineearningsprogramsaimedattimelyresourceconversiontoenhanceourlong-termmineplanswhilemaintainingour[minimum]pastnumberofyearsinourexcitingglobalexplorationprograms.
Wealsohaveveryactiveprojectsstudyandexecutionprogramsunderwaytoensurenewprojectsidentifiedforourdrillingcampaignsonlineasperourdisciplineprojectcapitalguidelines.OureffortscontinuetofocusonourgoalregionsofNevadaandtheAndeanregionofSouthAmerica.
Approximately80%ofthe2016totalexplorationbudgetofbetween$125millionand$155millionwasallocatedtotheseregionsandstrikesabalancebetweennearminedrillingandglobalexplorationprograms.WithrespecttonearmineexplorationorMinEx,andinlinewithourrigorousapproachtocapitalallocationweareapplyingincreasedfocustohigherreturnsandlowerriskfor[onfield]opportunities.
OurMinExprogramswillalsobenefitfromstandardizingitsapproachwithourveryeffectivegloballinkssystemcalledBXXthathasyieldeddiscoverieslikeLagunasNorte,Goldrush,andAlturas.WeseestrongpotentialtoaddreservesatHemlo,on[receptiveplans],atTurquoiseRidgeand[Pobre],andatotheroperatingsiteswhich(inaudible)inmoredetailattheInvestorDay.AbouthalfoftheglobalXbudgetisallocatedtoemergingdiscoverieslikeAlturas.Thereisalsoexcellentpotentialtodiscovernewdepositsin[imported]districts.ForexamplewearecurrentlyinstallingatargetknownasFourMilelocated1kilometernorthofGoldrush.
Thisareaisgeologicallysimilartothehighgrade[depots]anddeepstardepositsintheGoldstrikearea.EarlydrillinghasintersectedutilizationwellabovetheaveragegradeoftenmeasuredandintegratedresourceatGoldrush.AttheAlturasdiscoveryinChile,wehavereportedaninitialinferredresourceof5.5millionouncesofgold.
Ourfocusin2016willbetocontinueinfilldrillingandstepoutdrillingtoexpandtheresource.[Drill]to-datecontinuestoindicatethatthisdepositisgeologicallysimilartotheoxidemineralizationatVeladero.It'satanaveragegradeofabout1.25gramspertonne,and[tobeableto]reachthiswereveryfavorableaswell.
Respectedprojectstudies,weplantospendabout$50millionthisyeartoadvancethe[forming]projectwe'vebeenstudyingandwillnowalsoaddAlturasasa[firstkey]projectandwillcontinuetoconvertresourcestoreserveattheseprojectssuchaswe'vedoneatCortezandLagunasNorte.Thecurrentmetalpriceenvironmentalsopresentsnewopportunitiestogainaccesstoeffectiveexplorationprojectsthroughearningsandpartnerships.Evaluatingthesethird-partyopportunitieswillbeourfocusin2016.
Turningtoourreserves,wehaveestimatedthesefor2015yearendandbasedonatwotierpricingapproachusinggoldpriceassumptionsof$1000perounceuntil2020,and$1200perouncefrom2021onwards.Thiscomparesto2014whenweusedtheflatprice--thegoldpriceof$1100perounce.
Thetwo-tierapproachaspartofouroverallfocusonannouncingmineralresourcemanagementtocreateaveryshort-termandlong-termvalueforallofourmines,whichisreflected--reflectionofouremphasisonproducingprofitableounces.Thisreflectsourcommitmentthatanynewinvestmentwemakemustbecapableofgeneratinga15%returnoninvestedcapital.
Asofyear-end2015,ourprovenandprobablereservesmodeledatnearly92millionounces.After
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page12of22
depletion,weadded8.8millionouncesthroughdrillingandcostreductionsandthechangeinprice.
After5.1millionouncesaddedfromdrillingandcostreductions,thelargestadditionswere3.5millionouncesatVeladero,mainlyatthe[QuatrosEscas]area,2.5millionouncesconvertedtoreservesinDeepSouthzoneatCortez,and1.6millionouncesconvertedtoreservesintheDeepSouthzonesatLagunasNorte.WealsoaddedouncesatKCGM,[Ochre],Hemlo,andPV.
Forourresourceestimation,weusedaslightlymoreconservativepriceassumptionof$1300perouncecomparedto$1400perouncein2014.Asofyear-end2015,our[measured]indicatedresourcewas79.1millionounces.Ofthis,9millionouncesisattributabletothesaleofnon-coreassetsin2015.Wereplacednearlyallofthe8.8millionouncesconvertedtoreservesfordrillingandcostreductionsmostnotablyfromadditionsatLagunasNorte,PV,andCortez.
WealsoaddedouncesatVeladero,GoldenSunlight,and[Pobre].The[unfit]resourceof[22.4]millionouncesincludes5.5millionouncesatAlturasasmentionedearlier.
Ourprojectpipelinehassignificantnumberofopportunitiesforthefutureasyoucanseehere.Andwe'reprogressinganumberofprojectsthroughpre-feasibilityandfeasibilitystudies.Wehavesubstantiallychangedourapproachtoprojectdevelopmentinthelastyearandarenowfocusingonwhatwecallstartermineconcepts,wheretheprojectistocommenceasasmaller,low-riskoperationrequiringlowerinitialcapital,allowingforearlyprojectoptimizationwhichcanthenleadtoself-fundedexpansionsifjustified.
Weareonatightandrigorousreviewoftheeconomicsofeachsiteguideandarepreparedtoredirectoreventerminatetheprojectthroughasteadylifecycleshoulditnotmeetourtechnicalorfinancialrequirements.I[won'ttalktoused]projectontheslide,butsomehavereasontohavebeenimprovedby(inaudible)progresstothenextstage.ThegoalforusintheLagunasNortesulfidesprojectshavemovedintofeasibilityandCortezSouthwillgobeforethecommitteeveryshortly.
Alturasisintheexplorationphaseandisexpectedtohavethescopeandstudycompletedbytheendofthisyear.We'llprovidemoredetailonallofourprojectsnextweekattheInvestorDay.
OnPascua-Lama,our[tenpiece]suspensionplanwasapprovedbythegovernmentsofChileandArgentinalastyearandwillmovingtheprojectintodeepsuspension.Thishasenabledustosignificantlyreducecostsfor2016tobetween$18millionand$100millionfromabout$190millionthepreviousyear.Thesecostsaremainlyforwatermanagementaswellastheclose(inaudible)ontheArgentinaside.
Beyond2016,wewanttodecreasetheholdingcostsevenfurther.TheteamatPascua-Lamawillbefocusedondevelopinganoptimizedplanin2016andwillassessthespendwhenit'scomplete.Butwe'vebeenclearthattheprojectmustultimatelymeetour15%returnoninvestedcapitalhurdleratebeforewewillconsideranynewprojectorprogram.
IwillnowturnitovertoKelvinforhisconcludingremarks.
KelvinDushnisky(President):
Thanks,Basie.
Inclosing,we'vetransformedBarrickoverthelastyearintoacompanythatisdistinguishedbyastrongpartnershipcultureandadecentralizedstructurewithownermanagerswhoaredeeplyinvestedinthesuccessofthecompany.Wecontinuetobesharplyfocusedoneffectivecapitalmanagementandapplyrigorousinvestmentcriteria.
We'llmaintainstrongliquiditygoingforwardbyensuringwehaveaprudentcashpositionandby
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page13of22
continuingtoreduceourdebt.We'refortunatetohavesomeofthebestassetsintheindustryandwewillmanagethemtodeliversuperiorreturnsthroughthecyclebycontinuingtodrivedowncostsandbyactiveportfoliomanagementthatretainsthebestassetsandthebestnoncoreassetsattherighttime.
Ourportfoliohasexcellentoptionalitywithabout140millionouncesinresourcesandundevelopedprojects,muchofwhichcanbeleveragedbyexistinginfrastructure.Weexpecttoaddtothisovertimegivenourtrackrecordofdiscoverieswhichwehavesuccessfullyconvertedintocashflow.Thisprovidesourshareholderswithexcitingupsideexposure.
There'sstillalotofheavyliftingtobedonebutwehavetherightfoundationandtherightteaminplacetodoit.Welookforwardtoprovidingmoredetailonourplansfor2016andbeyondatourInvestorDayonFebruary22.
Beforeclosing,Iwanttothankthemanyinvestors,somelong-standing,somenewertotheBarrickstory,whoprovideduswithvaluablefeedbackin2015.We'regratefulforyoursupport,andweintendtoearnitevenmore.
Thatconcludesourpresentationfortoday.Operator,wewouldnowbehappytotakequestions.Thankyou.
QUESTIONS&ANSWERS
Operator :
(OperatorInstructions)
AndrewQuailfromGoldmanSachs.
AndrewQuail(Analyst-GoldmanSachs):
Morning,Kelvinandteam.Congratulationsonaverystrongquarterandaverysolid2015.Acoupleofquestions.FirstoneisonCapEx.
Youguyshavegivenguidancein2016of1.35to1.65.Takingamid-point,it'sprettymuchinlinewith2015,givenyour--Iwouldcallrobustandsolidthree-yearguidance,ofproductioncosts,what--canwesortofmodel,whatwouldweexpectforsayCapExpost2016?
KelvinDushnisky(President):
Thanks,Andrew.Thanksforyournicecommentsregardingtheyear.RegardingCapExbeenbeyond,guidancewegave-IwillturntoShaunsohecangivedirectioninwherehethinkswe'llbe.
ShaunUsmar (CFO):
Hi.We'llbecoveringsomeofthismoreonourInvestorDay.Andofcoursenextweek,butdirectionallywhenyoustartlookingatparticularlyoursustainingcapitalandthedollarbalancespaces,particularlywithintherangethatyouwouldseeoverthosefewyearsiswhatwewouldbeexpecting.ButletmehanditovertoRichardwhoIthinkcancommentalsoonsomeoftheseparts.
RichardWilliams (COO):
Hi,Andrew.Nicetohearfromyou.Onthecapitalgoingforward,we'vegotaplan,whichShaun'soutlinedcomingupintheInvestorDay.Thebestinclassprocesswillalso--itwillbescrubbingallthesethingsaswegoforward.
Someoftheplanswe'vegotinplacetoday--thegeneralmanagersareworkingonandtheyare
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page14of22
reviewingwe'lladjustaswe'regoingfor.It'snotjustthecostofwhatwe'redoing,becausethat'sobviouslyallbeingpusheddownaswenegotiatewithnewsuppliers,contractorsandwhatnot.
Butit'salsogoingtobetheplantodothe[investment]itself.ExpectalittlebitofDarwinism,andIwouldsayatthispointexpectitonthedownsideratherthantheupside.
AndrewQuail(Analyst-GoldmanSachs):
Right.
RichardWilliams (COO):
Okay.
KelvinDushnisky(President):
Youhadasecondquestion,Andrew?
AndrewQuail(Analyst-GoldmanSachs):
Yes.AndIsupposemysecondoneisoncashanddebt.Imeanyouguysaredoingreallygoodjoboverthelast12monthsandnearly$2billiontarget.Istherealevelofcashthatyouguysarecomfortablewithonthebalancesheet?Orisit$2billion,orisitmoreorisitless?
Istheresomethingthatyouguyssortofwon'tgopast?Becauseyoutalkaboutpayingdowndebt.I'mtryingtoget--isitnetdebt?Orisitdebt?Again,justtryingtodecipherbetweencashandnetdebt.
KelvinDushnisky(President):
Sure.Thanks,Andrew.$1.5billionto$2billionisprobablyanumberwe'recomfortablewith.Shaun,doyouwanttoaddalittlemoredetail?
ShaunUsmar (CFO):
Icanappreciatelastyearandgiventhevolatilityandpricing.Wearefocusingonthethingsthatweknowcontrolandwecandeliver.Sothinkofthat$2billionasaminimumtargetoftotaldebtreductionfortheyearahead.
Butthathastobeseenincomplementwiththeimprovementstocontinuetogeneratecashflow.Youknowwetalkedaboutitwithyoubefore,butasyouseewe'veproducedthefewest[answers]Iguessinmanyayear,butmorecashthanwehave,aswellandthatwillcontinue.
AndrewQuail(Analyst-GoldmanSachs):
That'sitforme.Thanksverymuchguys.
KelvinDushnisky(President):
Thanks,Andrew.
Operator :
JohnBridgesfromJPMorgan.
JohnBridges (Analyst-JPMorganl):
Hi.Andgoodmorning,everybody.Congratulationsontheresultsfromyourcurrentoperations.You've
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page15of22
gotthesefourreportswhicharecomingthrough.Butwhenarewegoingtoseethosethings?Becauseweneedtoknowwhatsortofcapitalyou'regoingtobespendinglaterinthisdecadetocontinuethisperformance.
KelvinDushnisky(President):
John,thethreeprefeasibilitystudiesandthe(inaudible)onTurquoise--wearegoingtobepresentingthosedetailsnextweekattheInvestorDay.
JohnBridges (Analyst-JPMorganl):
Okay.Andthedetailedstudies,willtheycomeoutconcurrentlyorafterwards?
KelvinDushnisky(President):
Following.
JohnBridges (Analyst-JPMorganl):
Following.Okay.AndthenItakeyourpointaboutleavinglowergradematerialintheundergroundminesandthat'shelpingyouwithyourcoststructure,butthenaboutathirdofyourreservesissittingatopenpitmineswherethat'snotsoeasy.
Whenyouarepushingyour--thegoldpriceto$1000foryourreservecalculationfor2016,thatpresumablyispushingupyourstripratiosandhowisthatbeingshowninyouraccounting?
KelvinDushnisky(President):
Basie?
BasieMaree (CTO):
For2016we'renotreleasingamajorincreaseinstrippingratiosonourmines.Theguidancetoalowerreservepriceandminingguidance,asyousay,isreallyfocusedonbringingthebestratesforward.Ithinkit'sbeenfocusedonthisforquiteafewyearsanditreallyhasn'tshownupinourreserves(inaudible)andourminingstripping.Soatthispointintimeit'snotanissueforus.
ShaunUsmar (CFO):
AndJohnyouwon'treallyseethatinouraccountingforthefuture.
JohnBridges (Analyst-JPMorganl):
Okay.MaybewecanaskaboutthatonMonday.Thanksalot,guys.Goodluck.
KelvinDushnisky(President):
Yes,thanksJohn.
Operator :
StephenWalkerfromRBCCapital.
StephenWalker (Analyst-RBCCapital):
Great.Thankyouandgoodmorning.Justtwoquestions,firstforShaun.Wetalkedinthepastaboutfreeingupworkingcapitalwiththesaleofnon-coreassetsandthenjustyouknowhighermanagementof
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page16of22
capitalallocationtotheminingassets.
Canyougiveusanideaofwhatwassqueezedinthewayofcashoutofworkingcapitalin2015andisthereanymoretobegainedthroughworkingcapitalmanagementin2016?
ShaunUsmar (CFO):
Stephen,yes,it'salwaysanimportantthemeasyoupointout,andforusforlastyear,wesetabouta40%reductioninworkingcapitalandabigreductionin[source]andspaceinventoryinparticular,andwe'llcontinuetofocusonthis.
I'dliketogetRichardtocommentonsomeworkthatwedoparticularlyonthesupplyside.JustonethingwhichIthinkyou'll--maybeI'lltouchonaswegothroughthisis--withourlifeofmineplanning,we'velookedexplicitlyatthestockpilesandasyouknowthere'sreallyonlytwolargesourcesofstockpilesinourbalancesheetandthat'sprimarily,obviouslyinGoldstrike,andatPV.Sothosewillbeandareincludedintheplansthatweworkedout.Richard,anythingyouwanttoadd?
RichardWilliams (COO):
ItkindofdependsonwhatShaunwassaying.AgainImayhandoverthistoAndyandMatttotalkalittlebitaboutNevadaandthosestockpilesandthensupplychainmanagement.ButtohighlightwhatShaunhasoutlinedwe'vegotournewsupplychainboss,MelMiller,basedoutofHendersoninNevadathat'sbeendrivingdownShaun'soutlineanyunnecessarilysuppliesorobsoleteinventory.
There'sbeenverygoodworkdoneinVeladeroinArgentina,obviouslyRickBakerisonthecall,andhecantalktothat.Returntostockpilemanagement,thereissomelimitationsinNevadacourtesyofthenatureoftheoil,whichmeansit'saroundabout$1billionworth.IsthatrightShaun?StockpilessittinginNevada?
Andforthat,actually,IwillhandovertoMattGiliandAndyColetotalkalittlebitaboutwhatthey'redoingforthatdownthere.Matt,overtoyou.
MattGili(ExecutiveGeneralManager,Cortez):
Allright.ThankyouRichard,andthankyouStephen.Sowe'retalkingaboutthestockpilesthatexistatGoldstrikeandremembering,too,thatthere'sthosedepositsatGoldstrikeinCortezarebothre-factoryinnature.
ThefromtheCortezstandpoint,2016we'llseeanoverallreductioninstockpilesbecauseoftheincreasedamountofoxidematerialandincreasingthethroughputthroughtheoxideplant.Andy,regardingGoldstrike?
AndyCole (ExecutiveDirector,Goldstrike):
AsfarasGoldstrikestockpiles,thosearethoselong-term,lower-gradestockpilesarereallythereasonwhywepushforwardwiththenewtechnologyofTCM.AndasTCMcomesupandreachesfullcapacityoverthelifeofmineproject,wewillcontinuetoworkdownthosestockpiles.
RichardWilliams (COO):
ThanksAndy,thanksMatt.Andjustforoneotherguyonthecall,RickBaker,couldyoutalkalittleaboutyourworkingcapitalmanagementdownthereatVeladero?Iknowyoudoingalotonthataswell.
RickBaker (ExecutiveGeneralManager,Veladero):
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page17of22
Yes,thanksRichard.Asfarassupplychainmanagement,wemadesignificantimprovementsinthatin2015,andwe'retargetingfurtherreductionsin2016,bothininventoryandonoursupply-side.
KelvinDushnisky(President):
SoStephen,hopefullythatanswersyourquestion.Youhadanotherquestionaswell?
StephenWalker (Analyst-RBCCapital):
Yes,thankyouforthecomprehensiveanswer.JustonPuebloViejo,theeffectivetaxratethisyearis57%Ibelievewasmentioned,andifI'mnotmistaken,thedealwiththegovernmentoftheDominicanRepublicforPVhadagreateramountofcashin2013to2016period.
Twoquestions,whatisexpectedtaxratein2017,andpresumablyitwillbelowerforthenextcoupleofyears?Andsecondly,hastherebeenanydiscussionswiththegovernmentoftheDominicanRepublicwithrespecttotheexpiryoftheexistingagreementandpotentiallychangingofanyoftheterms?
KelvinDushnisky(President):
Iwilltakethefirstpartandthesecondpartofthequestion,Stephen.Intermsoftheactualagreement,itdoesn'texpirein2017or2018.2017istheopportunitytorevisittheMRTcalculationforthepresentschedule.Thatagreementstaysinplace.
Wedohavetheabilityagainintermsoflookingatthe--afterthefirstfouryears,whattheMRTpaymentsarebasedonthepastpriorperiod.Intermsoftheeffectiverate,Shaun?
ShaunUsmar (CFO):
Yes,Stephenforguidancepurposeskeepingasimilarsortofrangethatwehavebeenexperiencingistheappropriatethingatthistime--forthistimebeing.Whatwe've--asIsaidinmypresentation,wedoseeagreaterimpactbecauseofthoseearnings,particularlyatlowprices.Wecontinuetolookatopportunitiesforthistaxrateingeneralintheportfolio.Forthetimebeingthat'swhatIwouldbeusing.
StephenWalker (Analyst-RBCCapital):
ThankyouKelvin,andthankyouShaun.
KelvinDushnisky(President):
Thanks.
Operator :
GregBarnesfromTDSecurities.
GregBarnes (Analyst-TDSecurities):
Yes,thankyou.Richard,the$700perounceonsustainingtarget,that'saveryaggressivenumber.Isthatcomingmorefromsustainingcapitalcomingdownoroperatingcostscomingdown?Canyoukindofgiveussomesenseofthat?
RichardWilliams (COO):
Yes,hiGreg.Thanksforthequestion.Andyes,itisanaggressivetarget.We'reveryconfidentwe'regoingtohit.MichelleAsh,who'scomeonintoreviewwhatwe'vebeendoinguptonowintermsofthebestinclass,asI'veoutlinedinthebriefearlyonwe'vedoneinconjunctionwiththeminesandbeenasortof
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page18of22
teameffortacrossthewayhere.
We'veidentifiedthisyearalreadyacouple$100millionworthofsavingsthatweregoingoff,andthat'sactuallynotintermsofcapitaldeferment.That'sactuallystrippingoutrealsustainablecosts.Andaswelookforwardthroughtonextyear,Iknowacoupleprogramsintheveryearlydaysthatwe'relookingat,howwe'regoingtobeadjustingthingsthroughthatnextsortof48monthperiod,identifyanadditional$300million.Thisisbeingdonewiththeminemanagers.
SowecangiveyousortoftextureontheIRDayonspecificsofeachofthese.Buttherehasbeenquitearemarkableamountofopportunityidentifiedthroughthisprocess.Andallifit'scomefrombottomup.YougottorememberGreg,ayearandabitagowehadtheregionsittingontopoftheseminesandthingswererunslightlydifferently.
AndsoasresultofgettingAndy,Matt,andtheothers,wecansitandsayright--let'shaveareallygoodlookathowwecanstripoutanywastethatwe'vegotintermsofoperatingefficiencies.Adjusthowwe'reorganized,bringinnewsystems,andthenhaveatit.
They'veactuallycomeupwithsomeprettyremarkableopportunitiesthemselves,andastheresultsofcentraladviceaswellassupportfromMichelle,Basie,andotherareprovidingthatfromtopdown.Weareactuallyseeingsomereallyremarkablechangesalreadythisyear,alotofwhichwillcomeoutontheIRDay.
Fundamentally,Greg,myviewisit'saggressivebutI'mlookingatawholeseriesofthingsthatareachievable,andtheonlythingthatwillstopithappening,really,tobeblunt,isafailureofleadershipeitherattheminesiteleveloratourlevelwhichclearlywe'renotreallythatinterestedintolerating.Sofrankly,it'slookingprettygood.
GregBarnes (Analyst-TDSecurities):
Okay.It'sallonyouthen,Richard.(laughter)Justafollow-up.YouhadareallystrongQ4,andlostsomemomentumontheproductionside.Lastyearforecastingtoa45,55[awaiting]secondhalf.Arewegoingtoseeareverseofthatthisyearsoyouwillseestrongerproductionthefirsthalfandweakerinthesecondhalf?
KelvinDushnisky(President):
It'sreasonablybalanced,infact,Greg,throughoutthequartersIthinkwe'reaboutmaybe100,000ouncesorsohigherinQ4butthisyearasopposedtolastyearit'sroughlysmooththroughthequarters.
GregBarnes (Analyst-TDSecurities):
Okay.
ShaunUsmar (CFO):
Ithinkyouwouldseeabouthalfofthevolumeeffectbeingsortofmoreback-endweighted.Butit'salotsmoother.
GregBarnes (Analyst-TDSecurities):
WhatwasthatShaun?Sorry.
ShaunUsmar (CFO):
Isaidit'salotsmootherbutit'sabouthalfofvolumeeffectsweightedtowardsthesecondhalfoftheyear.
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page19of22
Q2isgoingtobeprobablyourweakestquarter.
GregBarnes (Analyst-TDSecurities):
Okay.Thankyou.
Operator :
DavidHaughtonfromCIBC.
DavidHaughton (Analyst-CIBC):
Goodmorning,Kelvin,Shaun,Richard,andBasie.Acouplequestions.Firstlyalittlebitofclarityonyourexpectationof10%,15%returnoninvestedcapitalthroughthe[metal]cycle.Isthatapplicabletonewprojectsorisityourambitiontoputthatmeasureagainstyourexistingoperations?
KelvinDushnisky(President):
The15%hurdleisonnewinvestments,David,andeventuallytheintentisitwillbe10%to15%throughthecycle.
DavidHaughton (Analyst-CIBC):
OkayandthroughthecycleIpresumeyoumeanscenariotestingup-and-downfromwherewearetoday?Isthatareasonablewaytothinkaboutit?
ShaunUsmar (CFO):
David,Ithinkitis.Ifyoualsolookatourscorecard,it'sreinforcedthroughthat.Ithinkit'sweteston[pricefalls]there'snotalotwecandoperhapsaboutsomeofthesamecapital.
Wecertainlymakesurewegoforinvestment,ormeetthosehurdlerates,andit'srisk-appropriateforourneeds.Andthenwithdrivingdowncostsandthethingswe'vebeenfocusingonandcontinuetodo,obviouslywe'relookingonago-forwardbasisgeneratethosesortsofreturnsthroughthecycle.
DavidHaughton (Analyst-CIBC):
Rightagain.Shiftingtooperationalquestions.First(inaudible)Richardwassayingit'sinproductionnow.Ididn'tseethenumbersontheguidance.What'srequiredforittoberunningthroughtheP&Lforyouguys?
KelvinDushnisky(President):
Icancomment.WearegoingthroughtherampupphasenowatJStargetingthe100millionpoundsproductionin2017.Butaswe'regoingthroughtherampupstagethisyear,wedidn'tguidespecificallyonJS,David.Anythingtoadd,Richard?
RichardWilliams (COO):
No,andatthemomenttoactuallygetitsortof[registered],there'sacouplemoreagreementsrequiredwithourpartnerinMa'adenandthelocalgovernmenttoactuallyensurethatallthepermitsareinplacetodeclarethatproductionisvalid.Soatthemomentwe'rebasicallyattheendofoursortofcommissioningphase,really.Andthenacoupleofmoresortofpermittinglegallyagreementsareinplaceanditwillgostraightto--asyousaidintothe--
ShaunUsmar (CFO):
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page20of22
AndattheendofQ1,maybeQ2commercialproduction,butwe'llbeclearonlater.
DavidHaughton (Analyst-CIBC):
Allright.Sowemayseeitcomingthroughatleastinthesecondhalfoftheyear,butjustwithsomeuncertaintyoftimeyou'vejustgivenyourselfsomebreathingspace.
ShaunUsmar (CFO):
Yes.You'reonit.
DavidHaughton (Analyst-CIBC):
OkayovertoTCM,sothisisoneofyournewerprojectscomingupandrunning,I'mwonderingifyoucouldgivealittlebitacommentaryastowhatyouareseeingthere?Richardyousaidit'sgoingtogetuptocapacity11,000tonnesadaybythethirdquarter.Ijustwonderwhatyou'reseeingsofar?
Isitextractingthegoldtothelevelofrecoverythatyou'veanticipated?Andwhatsortoftrajectorycanweseeitonthroughtofullproduction?
KelvinDushnisky(President):
Davidwe'vegotAndyColeonthelineatGoldstrike.Andy,doyouwanttofieldthatplease?
AndyCole (ExecutiveDirector,Goldstrike):
Yes.Thankyou,Kelvin.David,andwe'llbecoveringmoreofthisonInvestorDayaswell.Butyouknow,firstaswithanynewconstruction,youdoseesomedesigndefectsandengineeringchallenges.Sowe'vebeenworkingthroughthatoverthecourseoftheyeartoeliminatesomeofthosemechanicalanddesigndefects.
Asfarasoverall,sothat'shelpingusrampupthetonnageandgettingthetonnageupthere.Becauseitisanewtechnologyandeventhoughweranlotsofpilotplantworkandhadaprettygoodunderstandingofthechemistryfromthelabandfromthosepilotplantdemonstrations,weareseeingsomedifferences,youknowinthefull-scalecommercialoperation.
Sowe'relearningsomeofthosenuances.Soourfocusrightnowisreallyunderstandingandoptimizing.Andourexpectation,asRichardmentionedearlier,isyouknow,we'vehadaprettysteadyincrease,wehitcommercialproductioninthethirdquarterlastyear.
We'reuptoover80%capacitybyyear-end.Wecontinuetoexpectthatgoup--continuetogoupthroughthesecondquarterofthisyear.We'reatfullcapacitythisyearorbythethirdquarterofthisyear.
Recoveryisfollowingalittlebit.Butweexpecttherecoveriesaredownabout8%or10%wherewearepredicting,hadpredicted,andhopetobeagainbythesecondhalfofthisyearmoreinlinewithourpredictedexpectations.
DavidHaughton (Analyst-CIBC):
Andmyrecollectionofthoseexpectationswas85%metallurgyrecovery?Isthatcorrect?
AndyCole (ExecutiveDirector,Goldstrike):
It'sreallydependentuponthegradethat'srunningthroughthefacility.Youknow,atthispointintimewe'rerunningthelowergrade,longertermstockpilesasIreferencedearlier,andsothosegradesarea
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page21of22
littlebitlower.
Onthematerialthat'sgoingthroughtheplantrightnow,wepredictitshouldbearound70%inthatneighborhood.Sowe'reabitlowerthanthat.
DavidHaughton (Analyst-CIBC):
Righty-oh.Thanks,Andy.
AndyCole (ExecutiveDirector,Goldstrike):
ThanksDavid.
Operator :
JorgeBeristainfromDeutscheBank.
JorgeBeristain (Analyst-DeutscheBank):
Hi,guys.JorgefromDB.IguessmyfirstquestionisforShaun.I'mnotsureifImisheardyou,butdidyousaythatyourcorporateeffectivetaxratecouldbeashighas133%undera$1200goldassumption,andwasthatfortheentirecorporateorjustforPV?Ijustwantedtoclarifythat.
ShaunUsmar (CFO):
Thanks,andJorge,youdidmishearme.Iwasn'tveryclearonthat.Luckily,notat$1200--it'sgoingtobeover$1100anounce,sothat50%to55%rangewouldbeappropriate.Whatwestartseeingatabout$1000anounce,asImentionedinthepresentation,isthat133%orsothatyoureferenced.
That'sapointwherethe--you'vegotaverylow-costoperationwithPVatahigheffectiveratesoithasagreaterweighting,we'vegotlossesintheotherpartoftheportfolio.Thenyou'vegotnon-deductibleexpensesfromPascua-Lamaandotherareasthatcontributetothatsortofcalculation.
JorgeBeristain (Analyst-DeutscheBank):
Sogotit.It'skindofaregressivetax,notaprogressivetax.Ijustwantedtomakesurethatifwedostarttomodelspotgoldwe'renotnippedinthebudbyahigherthanexpectedtaxrate.
ShaunUsmar (CFO):
Smart.
JorgeBeristain (Analyst-DeutscheBank):
TheotherquestionIhadwasjustmaybeonhowyouguysthinkaboutyourapplication--aconsistentapplicationofyourmetalsmethodology?Obviously,theworldisbecomingveryconfusingwitheverygoldcompanychoosingdifferentshort-andlong-termgoldassumptions,andIgetthatyouguysarebeingconservativeatadiscounttospot.
ButthenIlookacrosstoyourcopperoperationswhereyou'restillholdingfastatabout275coppershort-termand$3long-term,significantpremiumtospot.Socouldyoujustwalkmethroughwhyyou'retreatingcopperdifferentlythangold?Andcouldyousortofupdateusastoarewegoingtoexpectmorewrite-downsatyearend2016ifwe'restillina$2copperworldbythen?
ShaunUsmar (CFO):
Justtobeclear.We'renotusing$2.75.We'reusing$2.00.Ifyoulookthroughourmaterial,youshould
CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining
EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63
©2014TheStreet,Inc.Al l R ightsReserved Page22of22
findthatitdoesrampuptoaround$3overafive-yearperiod.
Butwe'renot--we'reusingasimilarapproachwhichwethinkisappropriate,notconservativebutappropriateinthisenvironment.
JorgeBeristain (Analyst-DeutscheBank):
I'msorry.Imusthavemisreadsomewhereinallthefootnotes.IthoughtIsawaround$2.75foryourreserves.That'swhatIwastalkingabout,reserves.
ShaunUsmar (CFO):
We'llcontinuetoreviseandtolookatthis.Westresstestourportfolios,weworkthroughthe74planningandevaluationpurposes,theprice(inaudible).
JorgeBeristain (Analyst-DeutscheBank):
Okay.IguessIwillseeyouguysnextweekinNewYork.Thankyou.
KelvinDushnisky(President):
Thankyouverymuch.Atthispoint,Operator,I'dliketothankeverybodyforjoiningusonthecall.
Iappreciateeverybody'sparticipationandwelookreallyforwardtospeakingwithmanyofyouagainatourInvestorDaynextweek.Andofcourseupdatingeverybodyonourprogressagainstourtargetsaswemovethroughtheyear.So,thankyouverymuchagainforjoiningthecall.
Operator :
Thisconcludestoday'sconferencecall.
Allrightsreserved(c)2014TheStreet,Inc.
Pleasefeelfreetoquoteupto200wordspertranscript.Anyquoteshouldbeaccompaniedby"ProvidedbyTheStreet"andalinktothecompletetranscriptandwww.thestreet.com.Anyotheruseormethodofdistributionisstrictlyprohibited.
THEINFORMATIONCONTAINEDINEACHWRITTENORAUDIOTRANSCRIPT(the"TRANSCRIPT")ISAREPRODUCTIONOFAPARTICULARCOMPANY'SCONFERENCECALL,CONFERENCEPRESENTATIONOROTHERAUDIOPRESENTATION.THETRANSCRIPTSAREPROVIDED"ASIS"AND"ASAVAILABLE"ANDTHESTREETISNOTRESPONSIBLEINANYWAYNORDOESITMAKEANYREPRESENTATIONORWARRANTYREGARDINGTHEACCURACYORCOMPLETENESSOFTHETRANSCRIPTSASPRODUCED,NORTHESUBSTANCEOFAPARTICULARCOMPANY'SINFORMATION.
THETRANSCRIPTSAREPROVIDEDFORINFORMATIONALPURPOSESONLY.THESTREETISNOTPROVIDINGANYINVESTMENTADVICEORENDORSINGANYPARTICULARCOMPANY.