Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2020 First Quarter Results Conference Call [Operator Instructions]. As a reminder, this conference call is being recorded, and a replay will be available on Barrick's Web site later today, May 06, 2020. I would now like to turn you over to the room where Mark Bristow, Chief Executive Officer. Please go ahead, sir.

Thank you very much. And very good morning and good afternoon ladies and gentlemen. Welcome to the this presentation of our 2020 Q1 results. When I spoke to you around this time last year, I was able to report that we had made great progress towards achieving the merger's goals. The structure of the company had been made fit for its purpose of becoming a model of a modern mining business. Strong regional management teams had been installed, orebody ownership transferred back to the mines, get reduced and the balance sheet strengthened. In the past year, we have worked to further improve our operational performance. And amidst all this activity, we concluded formal value creating transactions; the historic Nevada Goldmine’s merger, which added six Tier 1 mine to our portfolio; the disposal of our stake and KCGM and the buyout of the Acacia minorities, which enabled us to settle that company’s dispute with the Tanzanian Government and take over control of its assets. In quarter one, we have combined our Massawa project with Teranga’s nearby Sabadola mine, in a deal which has already delivered significant value to all our stakeholders. The past quarter's results which were published earlier today show that we are actively building on the solid foundation laid in 2019, as we look ahead to the next phase of value creation. Please take note of the cautionary statement. For those who would like to read a little more, it is available on our Web site. The fact that this is a virtual presentation today reflects the grimiest reality of our age. The COVID-19 pandemic, which has locked many of us down, whether in our homes or at our operations or elsewhere. History will judge our governments responded to this black swan event, which dawned without warning, precipitated an…

Thank you. We will now begin the question-and-answer session [Operator Instructions]. Our first question comes from Chris Terry of Deutsche Bank. Please go ahead.

Hi Mark and team, a couple of questions from me. I'll just split them out individually. But just starting with the first one around cash flow and CapEx for the year to come. I guess a number of companies so far have been cutting their CapEx saying that they've got less essential workers on site. And I guess in the context of Porgera and also the power plant, I think you mentioned around Veladero. Just wondered if you could comment a little bit more on where do the CapEx is likely to come in. And then maybe one just in terms of the working capital, as you've stopped up sites ahead of COVID et cetera, whether there's any considerations for 2Q and then the back half of the year on that side. That's my first question. Thanks.

So I'll a start off, I’ll pass on to Graham if I miss anything. There are some rescheduling requirements in Veladero as you pointed out. We all focused on trying to achieve all our capital spend across the group. And although, we’ve delayed both the number six expansion as well as the power line, we still will get a lot of that done if not all of it done this year. On the airstrip, we are as we speak, getting working to try and mobilize that team to ensure that we get that strip in place before the winter starts. And the reason being that, it's got to make us our ability to re-mobilize and get those other capital projects up and running as soon as we can, and make it more efficient once the spring arrives. Nevada is pretty much on track with its key projects. Porgera, there wasn't a big capital spend forecast for Porgera, because everyone was waiting for the SML extension outcome. And the rest of Africa is on track with all its key projects, as I said, the shaft at Turquoise Ridge and the development at Goldrush are all on track. Hemlo, we are busy working at the moment with the authorities to ensure that the new underground contract can be mobilized and takeover the previous contract as agreed to continue. And so we are managing that arrival of some of the core Australian supervisors and skills to be able to affect that transition. So we still see ourselves maintaining our capital guidance. Although, there's probably some scheduling of that expenditure that will bring us closer sort of more to the bottom of the guidance than the top of the guidance. But rest assured, we are all working really hard to ensure that our investments stay on track. Graham, you want to add to that?

I think it's fairly comprehensive. The only point I would make is, in Nevada we have seen a slight increase in our capital. One of those projects being the solar power that Mark talked about in the presentation. So, that's something new that we bought into the mix. But as Mark says, when you look at the overall picture, we're still very comfortable with the guidance that we gave at the start of the year. And as things progress, we'll refine that number throughout the year.

On cash flow, Chris. Just on the cash flow. I mean, as you know, cash flows got a lot of upward pressures about because of the gold price and that's our big focus. We kept the dividend as it was. We are comfortable where we are. We are very comfortable with our liquidity and our forecasts. And so I think we're in good shape to ensure that we can deliver on our plans. And in addition take any opportunities that we might be able to unlock during this time to further grow our business.

Yes, so just on the working capital. Just to add to that. It is a bit higher than the previous quarter. We do tend to see an increase in working capital in the first quarter. And if you look back to the corresponding quarter last year, you all have see a similar increase in working capital. It is in part due to the timing of payments that we accrued during the year and then make in the first quarter for example, employee incentives. We also made an installment payment to EPRA in Argentina, on the power line. So there were a few unusuals that pushed it a little bit higher but it is normal for this time of the year.

And finally, Chris, on building the inventory, you have so many questions. But on the inventory, as you know, very quickly Riaan and his team across the group move to increase our inventory of consumables and fast moving items to three months and more. But he's equally got a plan to bring that down at the end of the year. So that's a part of our working capital that we'll actively manage.

And just a follow-up if I may, in terms of Pueblo Viejo, you went through some of the different details there with the election, et cetera. Can you just remind us on the current plans in the expansion, sort of timeline you'd envisage potentially for the mill expansion? Thanks.

So, we are progressing with the mill expansion as planned. We are busy with the ordering of the long lead items. And we have completed the feasibility of the actual plant expansion. And as I pointed out that’s now, there's a gap developing between that and the TSF permitting process. But again, we have support, bipartisan support on this project. What we need to do is get into the field and complete the initial work and the consultation, community involvement and engagement, which has been sort of prevented to as at this stage. We've got a little bit more engineering work to do on fatal flaw investigations. We're pretty comfortable of the answer but we need to do that work. But other than that, we're in good shape to be able to ensure that we have that storage facility in place when we require it, which is post 2024, I believe. John Steele, are you on the call?

Current commissioning is planned for early 2022 of the plant expansion. And as Mark mentioned, we've got TSF capacity in El Llagal, take us way up into 2028. So that's not a bottleneck for us before the project can proceed.

And we had intended if feasible on the current program to commission TSF 3 from 2024. But a delay in that program won’t impact the overall expansion.

Our next question comes from Matthew Murphy of Barclays. Please go ahead.

I had some questions just on the sensitivity of your guidance to the oil price primarily, I guess, also 4x, but you've still got $65 oil in there. Just wondering if you have an idea of sensitivity to that, or to diesel prices, or any kind of metrics you can share?

So Matt, again, there's swings and roundabouts. So the way we've looked at it is that this COVID challenge has certainly created some additional expenses in our business. At the same time, we've benefited from a lower oil price. Some of the the impacts are dampened, particularly in Africa where the oil price is much more structured and it doesn't pass through to the consumer as quickly as you see in parts of North America. But as a broad number, $10 on oil is about $8 per ounce, just as a broad number. Remember our utilization of hydrocarbons is quite different, some natural gas, some diesel, some heavy fuel. But as a rule of thumb, that's about the number.

And then also just a quick one on the disclosure on this tax claim. I'm wondering if you see this at all related to the mine needs for new ore is it a totally separate issue?

So Matt, it's very complex situation. I don’t if you've had a chance to read the order from the judge last Friday, but included in that was a very clear instruction for us to refrain from commenting over this process, while we try to focus on finding a mutually acceptable solution on a go forward basis. And so it would be inappropriate for me to sort of comment on that question if you don't mind.

I mean maybe I can just ask on that court. I guess your next hearing is May 8th. Can you make any comment about like, is there a potential to see a resolution at that time, or is it kind of a preliminary hearing to see how things are coming along?

Well, all I can say, as know what I me, I'm very committed to finding solutions and spent my entire career working towards ensuring we have constructive partnerships with our stakeholders. And there's no difference in that commitment when it comes to Papua New Guinea. And the order was very clear for us to engage in a committed way to working to find a solution. And he also indicated that should it not be possible for us to do so he would be minded to a point a court appointed arbitrator to ensure that we do come to a solution.

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Mark, I was going to ask if you've actually engaged with government, but I guess we'll leave that on the side of PNG. In terms of capital allocation, you are generating a lot of free cash flow now, and I expect you will going forward. One of your competitors suggested that in their view on free cash flow, 50% would go back into the business and 50% would be returned to shareholders. Is that a framework that you'd agree with or something that Barrack would pursue?

So Greg, as you know, I've never been one to try and copy somebody else, and I have no intention of starting. We avoid work to present something that's different and trustworthy. Where Barrick has come from, it's been an amazing voyage. If you look back 2015 at $12 billion today, we can boast as having the strongest balance sheet in the industry, the mining industry. And so we've guided our dividend policy against the 1,200 long-term gold process. Given the situation that we face today and the unprecedented scenario that is ahead of us, it's good practice. We believe, our Board believes as well that we maintain our dividends, and because we know we can afford them. We also ensure that we have the financial muscle to get through this challenge and also pursue other opportunities, value opportunities should they arise in this very dynamic environment. And then as I've indicated before, it's very clearly our objective to get to a point where we will move away from a dividend policy that's supported by the robustness of our P&L to a more standard style dividend policy, maybe along the lines that we used in Randgold where we agree to pay out certain of our cash flow falling provisions for our long-term business investment, and balancing always whether we are able to at perform the market on value creation. And certainly, everything points to a stronger gold price, certainly more upside than downside. And adding to that, the sort of full cost reduction and new gold supply, every indication is that maybe we have to review that policy earlier rather than later going forward. But I think right now we're all clear that a strong balance sheet independence of capital markets financially is a good place to be in the situation we find ourselves today.

Our next question comes from Josh Wolfson of RBC Capital Markets. Please go ahead.

Just a question on Tanzania, with regards to sort of final resolution to sell the inventory and pay the outstanding payments. What deliverables are still required, what's the timelines should add? And then from an accounting perspective, however you’re going to see that flow through the statements?

So Josh, all has done and dusted as we speak, the shipments are happening, where we've got a lot of concentrate to ship. We've already received some of the payments. So that's how far it is. We've indicated that you'll see most of that revenue come through, in quarter two. Depending on the actual final logistics, some of it might come out in early quarter three. But there's nothing left to do except to ensure that that concentrate arrives at the port and is delivered to the processing facilities through our agents. So that's really where we are and there's nothing else left. It's all done.

So just to add to that, Josh, on the accounting side. The ounces were obviously produced back in 2017. so when you look at it as it comes through in the second quarter, there will obviously be a disconnect between sales and production because there will be higher sales than production. The cost of that inventory again is sitting on our balance sheet, so as we sell that gold we’ll bring to that cost. And the proceeds of that sales will obviously go to the individual operations. And then those proceeds will be shared amongst the shareholders in the 84%, 16% split. That said, of course we have our 50-50 sharing arrangement. So at the end of the day, everything will be trued up based on that 50-50 sharing going forward.

And I’d just add to that. Josh, the first $100 million will be the first payment in the $300 million settlement agreement.

And again just to remind you that that $300 million has already been accrued for. So it won't impact our earnings, it'll only impact our cash flow.

And that’s in operating related item, just to clarify.

What's in operating related option?

Just cash flow from operations item for the payment for the tax payment to the government?

It's a tax payment.

Our next question comes from Carrie Smith of Haywood Securities. Please go ahead.

Mark, could you just tell me how you're dealing with testing for COVID at the sites for asymptomatic employees who don't show any signs?

So, we are not at this stage. Right now what we've done, Carrie, is I think the most important thing and something that people didn't get right I think right in the beginning is education, preparedness and screening. Screening being temperature screening, making sure that everybody falls in a self-assessment form before leaving for work in the morning. And then immediately responding to any risk factors, whether it's high temperature or any type of symptoms through isolation and immediate tracing and further isolation and then testing. And that's the way we've managed it. And so far we haven't had any confirmed transmissions within our operations. We certainly had staff that have been tested positive. At the same time, we have embarked on a big program of rapid test kits. The first country to work with us in partnership was the Dominican Republic. And we've certainly developed and are constantly refining our protocol of how we use that. And ultimately, that kit is going to be an important test to measure the sort of immunity, the herd immunity going forward. We have we have also done with in partnership with the rest of the industry, a big project that's being rolled out at the moment in Argentina. The test kits in Peru have also started to be rolled out. We are in Africa, Riaan and the team are working with our host countries on that. We have North America plentiful supply of proper DMA or PMR tests. And again, I think we'll keep refining the way we we manage our employees on the sites. But that's the approach we've taken. I think we've been a lot more effective in managing the pandemic and keeping our people visible and the disease visible, rather than this temptation to lock it all away and then you don't see the actual impacts of it. And the team, I must say, the Barrick teams have done an amazingly good job. And maybe I can ask Catherine just to explain to you some of the steps and the way her and the team managed the situation in Nevada, which is really a good example in a large scale of how the rest of Barrick has approached this crisis. Catherine?

So if I just Carrie’s questions directly, the way we've used the screening that we've been doing, has been to minimize risk whether people are symptomatic or not to. So to give you a sense of the scale of this, there are 7,000 employees within Nevada gold mines and significantly more if you include contractors, anyone coming to site. First of all, there's a single point of entry now and they’re screened. They’re screened with a questionnaire that asks whether they're experiencing symptoms, whether they've been in contact with anyone with symptoms, or whether they've been to anywhere. As a start, whether they’ve traveled to any location where COVID was significant risk. What that allowed us to do was then to isolate people that were flagging on the questionnaire, whether they had symptoms or not. And so what we saw is that over the last sort of month and a half or eight weeks now, we've had a total of 593 employees off work for an average of seven days, either because they've been sent home based on the screening with the 113 of those they've self selected, because they have recognized their own risk, either because they are immunodeficient or for some other reason, or they've had symptoms or they've been caring for someone with symptoms. So in total and the other one, of course, is a very small minority who've been affected by the fact that their kids are not in school. So in total, 593 or for an average of seven days. But what's more important and I think this is significant, of those 593, 495 are now back at work 83% have returned to work. So what we've seen is the real impact of this was in the first sort of three or four weeks, really over the end of March and in April. And we're beginning now to move into a more, I wouldn't say normal environment but normalized environment. That means that when we do have a positive case, we've had seven confirmed positive cases to-date in NGM. We're able to contact trace all of the people that they have been in contact with. We've minimized batches to the extent as possible to minimize risk. We then self isolate those people. They are then either tested or stay in quarantine until 14 days are up or tested and they’re negative, and then they're able to return to work. So that's the process that has allowed us to take into account those asymptomatic individuals as well as those with symptoms.

Our next question comes from Carrie Macquarie of Canaccord Genuity. Please go ahead.

Maybe just a bigger picture question, looking at your 10 year plan. It's 5 million ounces for 10 years. I think you're peer has a similar flat production profile for 10 years. Just wondering your thoughts on why this business isn't scalable? Like is it possible to grow production accretively or is flat sort of the new normal once it gets in their size?

So Carrie, if you looking at that graph, there's a couple of glaringly obvious points. One is for the first five years, we bring down the costs that increase the cash flow and I assume you've modeled that, both in the form of capital to proper sustainable capital, because what you’re referring to is a sustaining business, not a growing business and then the costs are coming down. And then within margin, we expect that to continue on the back five. And again, if you want to compare us, there is no comparison, because we don't have to bold out to anything. So there's no massive peak in capital. In fact, the capital that we referred to in the presentation today really sets us up for the rest of the 10 years. And the big ones are PV and Dominican Republic, the shaft and a turquoise Ridge. But the others are all genuine sustaining capital, even Goldrush is just a continuation of development to deliver more ounces. And I think that's the standout in the Barrick 10 year plan, built on of course tier one assets, which mean that you've got significant production for more than 10 years in your business plan based on $1,200 long-term gold price. And so when you look at this business, it's a genuine business where the growth is then in financial delivery, in profits depending on the gold price that you received. Now over and above that, we spending $170 odd million a year in exploration. And as you've seen just in the last 15 months, we not shy on creating M&A opportunities that deliver real value. And so that's the difference is this is not a sustaining business or a business that you refer to as a consistent production. It's a solid foundation on which to continue to go of value creating opportunities for our owners. And I think that’s -- hopefully you get it now, because you’re definitely missing something. And again, there's nothing in this plan that we can’t take you to and show you. So there's no soon to be discovered ounces. There might be some ounces that we need to change the definition, take out some of the risks. But it's already in the plan and accessible from current infrastructure or infrastructure that we all committed to invest during the next four or five years.

I guess what I'm saying is Randgold, you were able to grow production over a long period of time. There seems to be a view in the industry that once you hit 5 million ounces, 5 million ounces is what it's going to be. It can't be a 6 or 7. I know it's not about just production, it's about [Multiple Speakers] possible to grow…

This is based on what we've got today. It's not based on any. So there's no recognized benefit for the $1.6 billion we got invest in exploration in the next 10 years. And so as a basis to build a business, this is a standout business. This is exactly where we got to in Randgold, where you and other, when we plateaued and we said now we are in a stage where we are able to throw out returns and replace the gold we are mining in a long-term sustainable fashion, everyone said where's your growth. Until we did the deal with Barrick and then suddenly everyone realized when you look back at how Randgold delivered that value, the first part was of course increase in reserves and increase in production, but at the same time that came with a capital spend to deliver that. And then you get to a point where you start really delivering real value for the shareholders, and Randgold in a time where the industry destroyed value continued to grow it's dividends for 13 years in a raw and performed in the market despite the ups and downs of the gold price at a level of total shareholder return that ranked it in the top 100 value creators of all listed stocks globally. So that's what we are doing as rebuilding a world class business, capable of competing in the public markets and delivering the returns and value that one would expect, plus offering the insurance that we've all witnessed in the last nine, 10 weeks. And I might add since 2008, it's just that some of the management teams didn't deliver that big opportunity back to the shareholders post the 2012 peak. But certainly, now we have an industry that's a lot more disciplined and we've seen that industry ready to live up to it to that gold insurance that mine is in times of crisis like we're experiencing.

Our next question comes from Tanya Jakusconek of ScotiaBank. Please go ahead.

Mark, Graham, maybe can you just talk about some of the cost impacts that you're seeing in the business, because of this COVID and maybe some of the opportunities on the other side?

So Tanya, I'll kick off. Of course you heard earlier, one of the biggest opportunities is the oil price. At the same time, our costs really are -- some of the costs are working capital costs, because we've expanded our inventory to ensure that we have the ability to manage any supply chain interruptions. We've definitely got opportunities on tightening up on our contracts as some of this supply, because the mining industry has common consumables and not all the mining industry, global mine industry, is in the same place at the moment as far as robust performance goes. And so there's a lot of things which for us at Barrick is a normal course of business. We're always focusing on tightening our costs, making sure our contracts are fair and appropriate given the market conditions. We've still got significant opportunities to continue to improve our operational efficiency just because we started with a fairly lazy organization back last year. And we've shown a lot of progress but we still got more to go. The work that Graham and his team are doing on making sure that we have a fully integrated data system, financial business system that enables our managers to make real time decisions within the shift. Those are things that are all going to continue to help us become more and more competitive in driving our EBITDA margin. And even if you look at today's results compared to our quarter one results last year, our EBITDA margin is significantly higher than it was just 12 months ago. So we're obsessed about efficiency, cost focus, making sure that we are businesses focused on profitability and cash flow. And so, the COVID situation what it has offered to us is that, as you know, there was some apprehension on whether we could introduce the Randgold flat integrated management model. We did that. We've worked hard at it with the regional executive teams. And this corona challenge has definitely honed our management skills and forced and fast tracked our ability to be agile and integrated in the way we run things. And it's proved that this model, this modern model of making that you don't have this corporate tower of authority, sitting somewhere far away from your operations, is the right way to go. And so if there is anything that I would say, this has helped us or taught us is really that honing our ability to manage in a more modern and agile way. And on top of that, our HR team is really focused on making sure that our employment strategy is shifted to younger people, more diverse employees coming from the countries in which we operate in. And again, in the fullness of time, you'll see the impact of that.

But if I understand it correctly, when you said that you improve on your productivity is one aspect of it, and the second maybe cutting costs on the contractor side. Would that be a fair statement?

Yes, exactly. I mean, there's lots of opportunities. We've already taken out I think Riaan and his team have just in Nevada taken out about $115 million just in contract efficiencies, just renegotiating contracts. And there's a lot more that we can do. South America, we've done a lot but there's still more to do. And I think as we build relationships with our contractors, I mean that's another big thing about this COVID challenge is you already see who your partners are. And we will definitely work on strengthening those positive partnerships and changing those less committed partnerships that we have in our organization.

And maybe just for Graham. Is it fair to assume that any additional cost from this COVID from the social distancing and things that may take longer to do and additional cost there are more than offset by the $25 per ounce improvement from your fuel price?

Well, I think Tanya, as you heard Mark say, right at the beginning of their conversation, and we were reluctant to get into promising that big reduction, because we are mindful that we're also dealing with the inefficiencies associated with COVID and those inefficiencies are not insignificant. As you say, social distancing and not being able to move staff around you used to. So possibly having inefficiency in your staffing, not being able to transport goods the way you used to do it, so having to contract different types of freight. There's many multiple touch points which impact your efficiency. So whilst we've been able to overcome the restrictions that have been put in place, they do come with a cost. And that's why we are reluctant to sort of put that number out there and say, this is what you should expect. I mean, that number is a theoretical calculation. And again, as Mark indicated quite often when you see such a sharp drop in the dollar oil price, it doesn't always pull through to the litre of diesel price. So trying to get too theoretical about it isn't that useful. What we rather try to point to is that we've had some swings and roundabouts. And on the whole, we're comfortable with the guidance that we set out with at the start of the year.

And is it difficult to say to assume, just from a currency standpoint, Graham, that about 70% of your costs are U.S. dollar denominated, so only 30% without exposure to Canadian, euro and others, and it would have less of an impact on $1 per ounce than your fuel?

I wouldn't say it was even as much as 30%, we really are predominantly a dollar-based organization. And even in places where we incur costs in local currency, for example, fuel. The underlying driver that is a dollar based, it's a dollar-base underlying product. So you know, I wouldn't put it as much as that I would say it would be lower than that probably less than 20% would be FX.

Our next question comes from Kip Keen of S&P Global . Please go ahead. Our next question comes from Helen Reid of Reuters News. Please go ahead.

Mark, I just have a question about Grasberg. Is that mine something that you're still actively looking at? How does COVID-19 change the M&A picture? And secondly, I'm not sure whether you saw, but the Trump administration is drafting a legal blueprint for mining on the moon. Is that something that's on the cards for Barrick?

Helen, we don’t plan to go to the Moon right now, not as a gold miners and copper miners really. On Grasberg, I think it's very clear what I've said before. And I would just add that, this world today, our mining industry needs reshaping, reinvention, revitalization and definitely modernization. And so you know, I would say that this is a great opportunity to reposition ourselves as miners. I think what we've seen in these COVID challenge is the real contribution that mining gives to its host countries. And across the board, it's been absolutely impressive at the work and the outreach that mining has brought to an otherwise -- miners are, it's our business we manage prices and challenges every day. And I've seen and witnessed the impact that miners have made across the globe, particularly in the emerging markets. And so I think it's time for us as a mining industry to stand up and share and advertise the partnerships that we do bold, and the difference that we make and the value we create across the world and I think it can be done better. And so, we've seen the first -- I mean, since the Barrack brand gold deal, there's been a number of deals that have really consolidated the industry, particularly in the gold space. We've seen recent deals, at the beginning part of this COVID and which are closing now that are sort of necessity driven deals. And I've got no doubt that we will continue to see transactions that make sense in this environment, because the impact of this scenario is real. And out of these sort of black swan events, you always have a paradigm shift. And so in my view, what you've seen is a sudden drive towards the E part…

There are no further questions from the conference call. I would like to hand the call back over to Mr. Bristow for closing remarks.

Well, ladies and gentlemen, thank you very much for making the time to join us today. I look forward, you don't know how much I forward to seeing all of you again, and we're working hard at that. In the meantime, you can be rest assured that we are all very focused on continuing to deliver on that very strong foundation we built in 2019. I urge you all to be safe and practice that social distancing. And look forward to the next time we meet. Thank you very much.

This concludes today's conference. Should you have additional questions, please contact the Barrick Investor Relations department. You may now disconnect your lines. Thank you for participating and have a pleasant day.