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Mark Bristow

Mark Bristow


Mark Bristow

This is the first set of full-year results Barrick is publishing since its merger with Randgold Resources, and it is gratifying to report not only that we have delivered a strong, expectation-exceeding performance but also that we have made significant progress towards our goal of becoming the world’s most valued gold company.

It’s been interesting in this regard to note that some analysts measure value by its narrowest metric: that of market capitalization. Barrick’s definition of value is far more wide-ranging. It encompasses the economic benefits we deliver to all our stakeholders; the care with which we treat our people, communities and environments; our creation of opportunities for advancement in countries that lack them; our strategic focus on long-term sustainability; and, of course, the returns we generate for our investors.

The past year has also seen the marked rise of environmental, social and governance (ESG) as a key investment criterion. Cynics have questioned the sincerity of big business’s belated conversion to a kinder form of capitalism, terming it “woke-washing”. Barrick cannot speak for other mining companies but the principles of ESG have for many years been embedded in the DNA of both legacy companies. Our long-term strategy recognizes that we operate in a changing world where business is expected to meet the highest standards of behavior, and where ethical issues have become commercial considerations with serious consequences. We call this our social license and it is a core part of all our operations.


10-Year Plan

Barrick's 10-year gold production profile is based on its current operating asset portfolio, sustaining projects in progress and exploration/mineral resource management initiatives in execution. Additional asset optimization, further exploration growth, new project initiatives and divestitures are not included. This 10-year outlook is subject to change and is based on the same assumptions as the current five-year outlook detailed in endnote (viii) for the initial five years. The subsequent five years is also subject to change and assumes attributable production from Fourmile (starting in 2028) as well as exploration and mineral resource management projects in execution at Nevada Gold Mines, Hemlo and Porgera.

Barrick is closely monitoring the global Covid-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and projects is disrupted due to efforts to slow the spread of the virus.

A year of delivery

In 2019, there was a strong performance across the group, led by Kibali, Veladero and Porgera, with North America, Loulo-Gounkoto and Pueblo Viejo also producing creditable results. Collectively, our copper assets beat their production guidance and costs were at the lower end of the range. The only exceptions were Tongon, which just missed its guidance, Kalgoorlie Consolidated Gold Mines, which we’ve sold, and Lagunas Norte, which is in care and maintenance while we consider its future.

The Nevada Gold Mines joint venture involved the combination and integration of complex assets and was successfully achieved in a remarkably short time. In its first six months of operation, the new business delivered within its production and cost guidances. It also gave Barrick its sixth Tier One gold mine.

In line with our focus on Tier One assets, we continued to rationalize our portfolio, consolidating the Tanzanian mines, selling our stake in Kalgoorlie and agreeing to the sale of the Massawa project which closed in the first quarter of 2020.

These divestments collectively generated gross proceeds of approximately $1.2 billion and, as this strategic process continues, we expect it to have earned Barrick $1.5 billion by the end of this year.

At a time when the global gold industry is at or near peak production, it is worth noting that in 2019 Barrick succeeded in replacing all of our gold reserves depleted by mining, and at a higher grade. This was achieved net of all changes, including the Randgold merger and Nevada joint venture, the minority buyout of Acacia Mining plc, the disposal of our interest in Kalgoorlie, the reclassification of Lagunas Norte to mineral resources and the removal of the Phase 6 pit pushback at Hemlo from our proven and probable gold reserves statement.

Behind the scenes, as John Thornton noted in his message, we have made the business fit for purpose by flattening the corporate structure, reducing general and administrative costs, establishing empowered regional executive management teams and moving responsibility for the orebodies back to the operations. We have also introduced a strong geological and mineral resource management capacity throughout the organization to ensure that we optimize our existing assets.

Overview of the operations

Nevada Gold Mines is the value foundation of Barrick’s business. Already the world’s largest gold mining complex, it holds enormous potential for growth. The Carlin trend is the most significant ore-controlling structural corridor in Nevada, with open mineralization at many points, and it is going to be one of our main hunting grounds in 2020 and beyond. Further afield, we have already identified new areas of interest, ranging from walk-up drill targets to large areas that are known to contain prospective stratigraphy and geological features but are largely unexplored. Our fresh geology-focused approach of integrating exploration and mineral resource management is leading directly to a host of new target areas.

Cortez was one of the stand-out performers of the last quarter of 2019 as it continued its transition to a mainly underground operation. Its Deep South project is on track to start contributing later in 2020. The feasibility study on the Goldrush project is expected in 2021 and, together with the Fourmile project, it will eventually be included in the Cortez complex, securing Cortez’s future as a Tier One asset.

Turquoise Ridge was another big driver of Nevada Gold Mines’ performance and also delivered more than $100 million in synergy savings in the first six months of operations following the establishment of the joint venture. Construction of a third shaft at Turquoise Ridge is on schedule and within budget.

Hemlo has been upgraded to the strategic category by modernizing and refocusing the operation, phasing out the open pit and transitioning to underground contract mining. There has been an encouraging turnaround in its performance and there are indications that its Life of Mine could be extended.

Pueblo Viejo had a very good year but the main excitement there is a plant and tailings expansion project which will turn what is already one of the world’s largest gold mines into an operation capable of maintaining an annual production of more than 800,000 ounces on a 100% basis well into the future. A long-life Pueblo Viejo is obviously good for Barrick and it’s even more beneficial for the Dominican Republic — the mine provides more than 20% of the country’s corporate tax revenue.

Veladero also did well after struggling for years, thanks to the work we put into redesigning and replanning the operation. Its Life of Mine has been extended beyond 2030 by a pit pushback, and a project to link the mine to clean grid power across the border in Chile is scheduled for commissioning in the second half of 2020.

The El Indio Belt extends from Veladero in the north to Alturas in the south and straddles the border between Argentina and Chile. The El Indio Belt is in a particularly well-endowed gold province which has already yielded 50 million ounces and holds the potential for much more. Barrick controls permits over a distance of 100 kilometres with significant known targets, including the giant Pascua-Lama project in the north as well as almost nine million ounces of inferred resources in the Alturas/Del Carmen complex in the south.

Porgera in Papua New Guinea has Tier One potential but faces many challenges in the form of legacy issues and an unruly neighborhood. Despite these, Porgera exceeded its production guidance for the year on the back of a particularly strong fourth quarter of 2019, and brownfields exploration has identified a significant potential upside to the Life of Mine. We are negotiating a 20-year extension to Porgera’s lease with the government.

Kibali continued to shine with a record-breaking performance for the third consecutive year. Gold production was well above the top end of guidance and costs were in the lower half of the range. The successful Kalimva-Ikamva prefeasibility study prepares the way for an open pit project which will enhance production flexibility and potentially extend Kibali’s life well beyond 10 years.

Twiga Joint Venture is a new company jointly owned by Barrick and the Tanzanian government formed as part of an agreement to settle Acacia Mining plc’s dispute with the authorities and to manage our assets in Tanzania. This included a benefits-sharing deal designed to secure a genuine partnership between Barrick and the state. Since consolidating the Tanzanian mines after the minority buy-out of Acacia Mining plc, we have restarted normal operations at North Mara, where there is a lot of potential and we are focused on identifying opportunities for performance enhancement as well as resource growth. Elsewhere in the Lake Victoria goldfields, Bulyanhulu is running on tailings while we plan its restart. Buzwagi is expected to enter care and maintenance in 2021.

Loulo-Gounkoto performed very well and exceeded its production guidance. Its solar power project — Barrick’s first — is on track to add 20 megawatts to its power grid, reducing operating costs and cutting carbon emissions by 40,000 tonnes per year. Development of the complex’s third underground mine is scheduled to start in the fourth quarter of 2020, while ongoing drilling points to further growth in thecomplex’s asset base.

Tongon has about two-and-a-half years of life left but remains a strong cash producer and we continue to look for additional resources that could extend its life of mine.

The copper mines had a very good year and collectively exceeded their production guidance. Their performance was led by Lumwana, where cost-reduction initiatives in conjunction with improvements in plant availability and mining efficiency drove a big turnaround.

Taking tech to the next level

Barrick is intent on being at the leading edge of digitalization and automation in the mining industry, and trials and projects designed to make our operations more efficient as well as safer are driving the increased use of technology across the group.

Centres of excellence have been established to advance autonomous applications for both surface and underground operations and to eliminate the need for a range of sites trialing different systems. In Nevada, the first stage of a project designed to enable the retrofitting of an autonomous system for Carlin’s fleet has been completed successfully. At Kibali, which remains a world leader in underground automation, multiple autonomous machines can operate on the same haulage level. A trial to utilize this technology on the production levels has been completed successfully and a single operator can now control up to three machines acting semi-autonomously in different zones. An additional system which will provide real-time visibility of the underground operations, including personnel and equipment tracking, is currently being commissioned.

With the rapid development of electric vehicles, we have introduced a battery-powered development drill at Hemlo as a first step towards establishing the potential of this new technology. We are doing the same with a similar trial of an underground haul truck at Turquoise Ridge.

Investing in our future

While exploration creates value, embedding our unique mineral resource management model as a core part of our operating culture ensures the responsible and sustainable stewardship of our orebodies to optimize and deliver their value. In the first year following the merger, our focus has been on the fundamentals: optimizing and augmenting our geology teams, enhancing our mines’ geological databases, increasing our orebody knowledge through extensive relogging campaigns, improving grade control and reconciliation practices, and generating significantly more robust resource models.

Following the establishment of our Nevada Gold Mines joint venture, our Nevada exploration is well underway and early versions of unified geological models have already identified new areas of interest, from walk-up drill targets to vast tracts of land that are known to contain prospective stratigraphy and geological features but have had little to no drilling. While it’s early days, we are excited about the potential for further orebody extensions as well as new discoveries.

Likewise, we also have extensive land positions in many of the world’s most prolific gold districts outside Nevada such as the Andean trend in South America, the West African Birimian goldfields, the East African Congo Craton and the Pacific Rim. Our global footprint has expanded with the addition of exploration programs in Tanzania, the Guiana Shield and more recently in Japan, and we continue to search for opportunities to enhance our pipeline of quality prospects. We won’t rest in our relentless pursuit of Tier One discoveries, wherever they may be, confident in our ability to continue to make discoveries and generate value for our investors and stakeholders.

While 2019 was a year of building the foundations, I believe that we are now well placed to resume investing in our future through focused greenfields exploration driven by the clear understanding that it is exploration that ultimately drives our value train.

Health, safety and the environment

During the past year, ESG management has become an increasingly important factor in investment decisions, as it is a critical measure of the sustainability of a business.

I have long argued that a good business should also be a good citizen. Particularly in emerging countries, mining companies have a moral obligation as well as a commercial motivation to minimize their impact on the environment, help develop economies and uplift communities through opportunity creation, skills transfer and quality of life improvement. If the mining industry is to survive in a changing world, it has to recognize society’s new value priorities and adapt to behavioral expectations that go beyond profitability. Acknowledging that the value mining creates should be shared with all stakeholders is an important step in that direction.

Caring for the well-being of our employees is a top priority and a key component of Barrick’s ESG programs. We are currently engaged in managing the impacts of the coronavirus pandemic on our people and our business. Our financial strength, established prevention practices and procedures, and the experience we gained from dealing with two Ebola pandemics around our African operations, have placed us in a very strong position to cope with this new challenge.

We constantly strive for the improvement of our health and safety record and have made some progress, but still have some distance to go. At the time of the merger, all the Randgold sites held the ISO 45001 health and safety certification but all the Barrick operations did not. We are addressing this and by the end of 2021, all our sites will be certified under ISO 45001.

There were no major environmental incidents at our sites in 2019. All but four of our mines have the ISO 14001 environmental certification and by the end of 2020, all of our mines will have that certification. All the operations, apart from the recently consolidated Tanzanian mines, have community development programs and these will be implemented in Tanzania in the course of this year. In addition, biodiversity action plans are being rolled out at those sites that do not already have them. There are some environmental legacy issues that remain to be addressed, notably in Latin America, but on this front, too, we are making steady progress.

Building the world’s most valued gold company

We started 2019 with a long and challenging to-do list and I am happy to report that by the end of 2019 we had ticked all the boxes, and then some. This achievement would not have been possible without the support and guidance of John Thornton and the Board of Directors; the many people from both legacy companies who created a new Barrick by uniting in one team with one mission; our host countries and communities who grant us our social license and value us as a partner; our business associates across the globe; and, of course, our investors. You are all stakeholders in Barrick, and the reason we go to work each day is to create sustainable value for you.

While much has been achieved, much remains to be done, and 2020 will be another busy year. The work we did in 2019 has equipped us well to take Barrick to the next level.

We stand on the strong foundation of our enormous organic growth potential, which will support a positive production profile and a very robust business, capable of generating a substantial cash flow for at least the next decade. There are also opportunities for growth outside our current ambit which we continue to explore. All in all, I am confident that we are more than capable of delivering on our promise: to build the world’s most valued gold company.

Mark Bristow
President and Chief Executive Officer