Barrick Mining Corporation · TSX:ABX
Barrick Mining — Barrick Gold — Q2 2016 Earnings Presentation
34 slides from Barrick Mining's earnings presentation, Jul 28, 2016
Slide 1: 2016 Second Quarter Results: Progressing well against targets
2016 Second Quarter Results Progressing well against targets July 28, 2016 1
Slide 2: Cautionary Statement on Forward-Looking Information
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain information contained or incorporated by reference in this presentation, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, o
Slide 3: Today's Speakers
Today’s Speakers Kelvin Dushnisky Catherine Raw Richard Williams Bill MacNevin President Chief Financial Officer Chief Operating Officer General Manager Goldstrike 3
Slide 4: Strategic Goals
Strategic Goals Distinctive Partnership Build partnerships of depth and trust Culture Industry Relentless cost management supported $ Leading Margins by operational excellence and innovative technology Superior Focus on quality to identify opportunities Portfolio Management to grow free cash flow pe
Slide 5: 2016 Priorities
2016 Priorities Free Generate free cash flow at a gold price of $ Cash Flow $1,000 per ounce Balance Reduce total debt by a further $2 billion Sheet Operational Implement Best-in-Class program across Excellence all operations $ Capital Allocate capital using long term gold price Discipline of $1,200
Slide 6: Second Quarter 2016 Highlights
Second Quarter 2016 Highlights Operating cash flow1 of $527 M and free cash flow2 of $274 M $ Net earnings of $138 M and adjusted earnings2 of $158 M Repaid $968 M of $2 B debt reduction target Liquidity improved - only $150 M3 of debt due by end 2017 1.34 Moz at total cost of sales4 of $1
Slide 7: Priority: Disciplined Capital Allocation Facilitates Growth
Priority: Disciplined Capital Allocation Facilitates Growth Minex – Orebody additions and extensions, satellite orebodies Reduce Globalex – Greenfields discoveries eg. Alturas Debt Brownfields – Turquoise Ridge third shaft, Invest Lagunas sulfides, Cortez Deep South Free In Development Cash Flow Gro
Slide 8: Priority: Generate Cash Flow Across the Business
Priority: Generate Cash Flow Across the Business Optimize Reduce Sustaining Capex Operating Costs Minimize Manage Holding Costs Free Cash Flow G&A Expenses Drivers Reduce Reduce Working Capital Interest Expense Increase Throughput 8
Slide 9: Priority: Focus on Cash Flow
Priority: Focus on Cash Flow $527 M in OCF, delivering Operating Cash Flow and Free Cash Flow1 ($M) $274 M in FCF1 in Q2 4,239 Fifth consecutive quarter $1,411 of FCF1 2,296 2,1842 $1,266 978 4712 455 -136 $1,221 $1,160 -1,142 Average Spot Gold Price 2013 2014 2015 H1 2016 1. This is a non-GAAP
Slide 10: Priority: Focus on Cash Flow
Priority: Focus on Cash Flow ($M) Operating Operating Cash Flow Cash Flow Interest 525 Cash Sales Other3 Free 527 Volume Au & Cu Cash Costs1 73 94 43 Prices Flow1 Free Capex 106 38 190 61 274 Cash 64 Flow1 Income 171 253 Taxes Working 26 Capital2 2016 Divested Capex Sites4 Q2 499 Q2 Q2 Q2 2015 2015
Slide 11: Priority: Reduce Total Debt by Further $2 Billion
Priority: Reduce Total Debt by Further $2 Billion YTD debt repayment of $968M Total Debt ($ B) Approximately half way to $2 B 13.1 Repaid in H1 debt reduction target 0.0 2106 0.97 Strong liquidity with less than 9.97 Target 9.00 9.00 $150 M1 of debt due by end 2017 8.00 $4.1 B in debt reduct
Slide 12: Priority: Balance Sheet Strength and Flexibility
Priority: Balance Sheet Strength and Flexibility Near and medium term liquidity improved US$ millions Annualized interest savings of ~$50 M from 5,000 start of 2016 4,000 Average public debt maturity of 16 years at average coupon of 5.5% 3,000 2,000 2016 Reductions Current Debt1 <$150M2 1,000
Slide 13: Priority: Operational Excellence
Priority: Operational Excellence Maximizing returns Production (koz) Cost of Sales ($M) AISC1 ($/oz) requires a 2,835 2,838 918 maximization of 2,620 2,430 margins and not 744 production Operational excellence driving a downward cost curve H1 H1 H1 H1 H1 H1 2015 2016 2015 2016 2015 2016 1. This
Slide 14: Cortez – Continues to Exceed Expectations
Cortez – Continues to Exceed Expectations Strong performance of 248 koz at COS $239 M and AISC1 $558/oz Steady Q2 production from higher grade BiC continues to deliver increased UG production and oxide mill performance BiC success with planned maintenance of ore conveyor Full year guidance
Slide 15: Pueblo Viejo – Lower Costs and Stable Production
Pueblo Viejo – Lower Costs and Stable Production Process Plant Q2 produced 150 koz1 at COS $173 M and AISC2 $634/oz Improved gold recoveries due to a more favorable ore type processed Silver recoveries improved to 60% with processing refinements H2 production expected to benefit from enhance
Slide 16: Lagunas Norte – Safety Record Improving
Lagunas Norte – Safety Record Improving Solid Q2 production of 124 koz at COS $77 M and low AISC1 of $585/oz Quarter over quarter benefitting from improved leach pad irrigation and CiC circuit efficiency H2 costs expected to increase with lower capitalized stripping and fewer silver by-product
Slide 17: Veladero – Challenging Weather Impacts Production
Veladero – Challenging Weather Impacts Production Production impacted by unexpected severe weather conditions during Q2 - 119 koz at COS $100 M and AISC1 $744/oz 29 weather days vs (1 in Q2 15) – 8k oz unsold due to site access limitations FY 16 production guidance revised ~8% down to 580-640
Slide 18: Turquoise Ridge – Delivering at Higher Volumes
Turquoise Ridge – Delivering at Higher Volumes Higher tonnes processed at similar grade resulted in strong Q2 production of 79 koz1 COS $34 M and AISC2 $621/oz Toll milling agreement allows 163 k tonnes per quarter (Q2: 148 k tonnes) Productivity improvements prompt guidance revision – 240-2
Slide 19: Goldstrike – Producing in Line
Goldstrike – Producing in Line Production tracking to guidance Mill Maintenance – 975-1,075 koz1 with COS $219 M at AISC2 $780-850/oz1 Improved weather facilitated increased mining tonnage Operating costs in line with Q1 despite increased tonnage - lower open pit mining and reduced underground
Slide 20: Goldstrike – TCM Demonstrating Improvements
Goldstrike – TCM Demonstrating Improvements Focus in Q2 on addressing physical TCM Circuit rather than chemical constraints: – Screen and maintenance upgrades resulted in strong June performance Recoveries improved to 64% – High grade ore prioritized to roaster, lower grade to TCM/autoclave Pr
Slide 21: Goldstrike – BiC Increasing Equipment Availability
Goldstrike – BiC Increasing Equipment Availability Large fleet of 29 Komatsu 930 haul trucks in use in open pit – Technical limit for availability previously defined as 79% BiC initiative over six months to increase fleet availability – To reduce truck downtime over driver breaks – Hotseating wi
Slide 22: Lumwana – Delivering on Stretch Targets
Lumwana – Delivering on Stretch Targets 67 Mlbs produced at COS of $79 M and AISC1 of $2.15/lb Increased mining tonnage with higher stripping increasing total mining costs Scheduled mill reline undertaken in Q2 increases cost of sales, C1 and AISC costs – Lower tonnes processed – Increased sus
Slide 23: Jabal Sayid – Successful Partnership in Action
Jabal Sayid – Successful Partnership in Action Declared commercial production on July 1, 2016 20-40 Mlb1 production at AISC2 of 2.80-3.10/lb1 and C12 of $1.90-2.20 expected in H2 2016 – 50% attributable to Barrick Ramp up to run rate of 100 mlbs per year in H2 2017 1. See Endnote #2 2. These a
Slide 24: Updated Guidance Demonstrates Progress
Updated Guidance1 Demonstrates Progress Q2 Updated Q1 Revised Original Cost of Sales - Gold2 $M 5,200-5,500 N/A N/A Cost of Sales - Copper3 $M 275-320 N/A N/A Gold Cash Costs4 $/oz 540-570 540-580 550-590 Reduced input costs combined with improved production at Cortez and Turquoise Ridge Gold AISC
Slide 25: Q2 2016 – Progressing Well Against Targets
Q2 2016 – Progressing Well Against Targets Guidance improved as costs and sustaining capital reduce with BiC progress On track to deliver 2016 debt reduction target Strong free cash flow year to date and improving outlook for remainder of year Debt reduction and strong free cash flow positio
Slide 26: Question Period
Question Period Kelvin Dushnisky Catherine Raw Richard Williams Kevin Thomson Rob Krcmarov Rick Sims President Chief Financial Officer Chief Operating Officer SEVP Strategic Matters EVP Exploration & Growth Senior Director Reserves and Resources Bill MacNevin Matt Gili Nigel Bain Tim Dimock Jim Whit
Slide 27: Technical Information and Endnotes
Technical Information The following qualified persons, as that term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects, have reviewed and approved the relevant scientific and technical information contained in this presentation: Rick Sims, Registered Member SME,
Slide 28: Appendices
BARRICK Appendices 28
Slide 29: Jabal Sayid – Successful Partnership in Action
APPENDIX A Jabal Sayid – Successful Partnership in Action Location: 400km Northeast of Jeddah, Saudi Arabia Ownership: 50% Barrick / 50% Ma’aden (state owned mining company) Mine Type: Underground copper mine 2015 Reserves1 (Barrick’s share): 698.1Mlb Copper (12.5 Mt at an average grade of 2
Slide 30: Updated Gold Guidance
APPENDIX B Updated Gold Guidance1 Production (koz) Cost of Sales ($M) Cash Costs2 ($/oz) AISC2 ($/oz) 2016 Updated 2016 Q1 2016 Updated 2016 Q1 2016 Updated 2016 Q1 2016 Updated 2016 Q1 Guidance Guidance Guidance Guidance Guidance Guidance Guidance Guidance Goldstrike 975-1,075 975-1,075 560-610 560
Slide 31: Appendix C — Non GAAP Financial Performance Measures
APPENDIX C — Non GAAP Financial Performance Measures 1 "Free cash flow" is a non-GAAP financial performance measure which excludes capital expenditures from Net cash provided by operating activities. Barrick believes this to be a useful indicator of our ability to operate without reliance on additio
Slide 32: Cash costs and all-in sustaining costs per ounce
3 "Cash costs" per ounce and "All-in sustaining costs" per ounce are non-GAAP financial performance measures. "Cash costs" per ounce is based on cost of sales but excludes, among other items, the impact of depreciation. "All-in sustaining costs" per ounce begins with "Cash costs" per ounce and adds
Slide 33: C1 cash costs and all-in sustaining costs per pound
1 Other sales Revenues include the sale of by-products for our gold and copper mines for the three months ended June 30, 2016, of $32 million (2015: $33 million) and the six months ended June 30, 2016 of $60 million (2015: $74 million); energy sales from the Monte Rio power plant at our Pueblo Viejo
Slide 34: Reconciliation of Copper Cost of Sales to C1 and AISC per Pound
Reconciliation of Copper Cost of Sales to C1 cash costs per pound and All-in sustaining costs per pound ($ millions, except per pound information in dollars) For the three months ended June 30 For the six months ended June 30 2016 2015 2016 2015 Cost of sales $ 79 $ 238 $ 169 $ 489 Depreciation/amor