Barrick Gold (GOLD) Q2 2024 Earnings Call Transcript

Barrick Gold (GOLD 9.07%)
Q2 2024 Earnings Call
Aug 12, 2024, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick’s results presentation for the second quarter of 2024. Following today’s presentation, a question-and-answer session will be conducted.

(Operator instructions) We will also be taking questions from those in the room. As a reminder, this event is being recorded, and a replay will be available on Barrick’s website later today, August 12th, 2024. I would now like to turn you over to Mark Bristow, president and CEO of Barrick. Please go ahead, sir.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Thank you very much, and very good morning and good afternoon to those here at the Barrick corporate office and across the globe. Welcome to the Quarter 2 results presentation. So, at the halfway mark of 2024, it’s gratifying to report that our performance has been picking up as we work to meet our production guidance for the year. As important as our operations is the progress we are making in advancing our major growth projects.

As I will show you during this presentation, a new potential Tier 1 gold mine, 100% owned by Barrick, is taking shape in Nevada. Our copper business is on track for a transformation — transformative expansion, and the enlarged and upgraded Pueblo Viejo is getting into its stride for a new 20-year stretch as a world-class producer. These mines will be delivering new golden copper into the market at a highly opportune time, demonstrating the value of Barrick’s long-term planning and investment strategy, as well as the enormous upside optionality embedded in our asset base. This is the customary cautionary notice regarding forward-looking information.

And for those who want to study it further, you’ll find it in full on our website. Starting with the group highlights, the safety, financial, and operational results for the past quarter all point in the right direction, reflecting a business that is delivering across the board. Rising production and increasing margins provide the foundation for a strong second half, while the financials augur well for our ability to fund our growth and so sustain the delivery of value to our shareholders. Here is a closer look at the financials, particularly significant are the increase in attributable EBITDA margin to 48% and the substantial free cash flow growth.

Gold margins were up 39% quarter on quarter, while copper margins rose by 124%. Adjusted net earnings per share were 68% higher quarter on quarter, and debt net of cash was reduced by 12%. And the share buyback program was restarted, and the quarterly dividend maintained at $0.10 per share. Operationally, gold production increased slightly quarter on quarter.

Slightly higher costs were a function of higher royalties, but for all intents and purposes, the costs were flat. And the drivers of the costs were really set with PV as we ramped it up and then the pushbacks in Carlin and Cortez. Copper production increased with costs falling, thanks to higher grades and mining fleet upgrades. And looking ahead, we expect materially higher production from PV, Turquoise Ridge, and Lumwana into the second half of the year.

If you look at our detailed health and safety report, it’s very pleasing to show you how the performance continues to trend positively as we pursue our zero-harm goal. Our approach to sustainability has always been holistic and embedded in our business. It is a differentiated approach, focused on the long term and the understanding that all environmental and social aspects are interconnected and integrated. Our approach is always based on science, and it needs to be measurable.

This is why we developed the industry-first sustainability scorecard to track and disclose our sustainability performance. We also link our targets and reports to the U.N. Global Compact and the U.N. Sustainable Development Goals, or SDGs, which, itself, calls for an approach to sustainability that resonates with our strategy.

And that is why we have developed and launched our own comprehensive biodiversity assessment tool during the past quarter. It is designed to measure our impacts on nature and inform actionable conservation strategies and, in time to come, targets to measure against, while maintaining a human-focused lens for the development of our host communities and our goal to alleviate poverty. Our integrated approach extends to our climate change strategy, and the addition of 200 megawatts of renewable solar energy at the TS Power Plant in Nevada is another contributor. So, we start the operational review as usual in North America, where Nevada Gold Mines hosts three of our Tier 1 mines, with another in the making at the adjacent 100% Barrick-owned Fourmile project.

Fourmile is a particularly exciting prospect. The more we learn about it, the more we learn about it, the more it looks like it could be the largest undeveloped high-grade gold deposit in the world today, directly adjacent to Nevada Gold Mines’ existing infrastructure in one of the world’s best mining jurisdictions. Following the completion of the Sage autoclave maintenance shutdown in the first quarter, Turquoise Ridge increased in production by 16%, while Carlin focused on underground development to improve its operational flexibility to offset the gold quarry pit redesign following the pit wall failure in Q1. And Goldrush continued to ramp up at Cortez.

With that, let’s look — take a closer look at Fourmile, which is adjacent to Goldrush, but, as I said in the previous slide, is 100% owned by Barrick. I’m going to pause here so that you can digest the very significant intersections by the 10 diamond core drill rigs currently on site. If you look at these drill rigs — drill intersections, they really remind one of yesteryear, the gold strikes, the Carlins, the big discoveries. And, you know, many are in the two ounce per tonne category.

Really, Fourmile reminds me of those company-making Carlin deposits of the past, a world-class project in every sense. As we shared with you last quarter, we’re planning to have an updated mineral resource toward the end of the year when you’ll make a decision about the pre-feasibility options. But as I said, this is really one of those assets that geologists dream about. In the fullness of time, I believe this asset has the potential to be as valuable to Barrick as our current stake in Nevada Gold Mines.

And that’s before our geologists find more of those Carlin elephants that I keep talking about. And that takes me to the 14 million ounce Leeville Project, which, like Goldrush, is developing into another major growth driver with the potential to double or triple current reserves, extending Carlin’s life beyond 2045. And I think this is significant just to dwell a little bit further on it. And when you look at what we’re dealing with today, we did a number of transactions in 2019, 2020.

We never paid a premium for any of them, embedded in those transactions are these types of ore bodies. And what we’re doing now is bringing them to the fore and working to get them into our production profile. And you’ll see more of this as you go. But just to — before I leave North America and Nevada, in particular, so we’ve got Goldrush driving Cortez complex.

We’ve got the emerging Leeville expansion driving Carlin. And, of course, Turquoise Ridge stands on its own as a high-grade, low-cost producer. And really, that is the future of Nevada. And then, when you see the sort of quality coming out of Fourmile, you’ve got to believe that there’s more opportunities to make new discoveries in this region, and that’s our focus.

So, leaving the North Americas, we move now to Latin America and the Asia-Pacific region, where our flagship growth project, the Pueblo Viejo plant expansion and mine extension is up and running again. In Papua New Guinea, the recently restarted Porgera mine is ramping up to commercial production, while in Pakistan the Reko Diq feasibility study is on track for completion this year. Work has already started on the construction of what we term early works infrastructure, while a recruitment drive focused on employees from the Balochistan province, which is the very foundation of what we’re going to build Reko Diq. Just a reminder, that the Pueblo Viejo project is designed to increase annual production sustainably above 800,000 ounces for 20-plus years.

After the failure of the Conveyor infrastructure last year, it has now been rebuilt. And the focus over the past three months has been on throughput. For the third quarter, attention is now on grinding, flotation, and recovery, ramping to achieve design output parameters. In the meantime, work on the new El Naranjo tailings storage facility is advancing as planned.

Now, you can see how the project has advanced over the past 12 months and the outlook for the remainder of the year. Now, to Africa and Middle East region, which delivered its usual reliable performance with steady production and well-contained costs. These are the highlights, and I’ll tell you more about them as we go along. Another steady quarter for Loulo-Gounkoto with cash costs well-contained and all-in sustaining costs impacted by additional stripping for the Yalea pit pushback.

Positive results from ongoing brownfields exploration point to further life-of-mine extension opportunities. And as we indicated last quarter, we continue to engage with the government of Mali on their desire to increase their benefits from the mining industry while protecting our rights and the economic viability of the Loulo-Gounkoto complex going forward. In the north of the Loulo permits, drill results from the Baboto target have identified a large-scale, well-endowed system with high-grade intercepts. This, along with other near-mine targets, augurs well for Loulo-Gounkoto to again replace the gold they mine this year.

And across to the DRC, where Kibali picked up speed after a slow start to the year with waste dripping, providing access to higher grade open pit ore. Meanwhile, next year’s planned commissioning of its solar power and battery storage facility will complement the mine’s three hydropower plants, increasing the renewable component of its energy use to 85%. And in fact, for six months of the year, we’ll have 100% renewable energy driving our power delivery. As at Loulo-Gounkoto, brownfields exploration continues to deliver further potential for growth with high-grade results from the Agbarabo-Rhino-Kombokolo targets, pointing to a significant deposit within just four kilometers of the plant.

The prolific KCD trend is also producing new opportunities for reserve additions. And therein lies the quality — what — you know, everyone sort of created a definition of Tier 1 assets. But real Tier 1 assets come with enormous upside opportunity, as you see in Loulo-Gounkoto and at Kibali and significantly in Nevada. In Tanzania, North Mara and Bulyanhulu both increased production while driving down costs.

And the resuscitation of these mines is one of our major success stories, as is the concept of formal benefit-sharing partnerships with host countries, which we successfully pioneered with the Tanzanian government. The Lumwana copper mine in Zambia delivered a higher production at lower costs, in line with the plan, and is set for an even stronger second half of the year. The mine is also on the threshold of its super pit expansion, which will increase production to some 240,000 tonnes of copper and extend the operations life by more than 30 years First production of this project is expected — or from this project is expected in 2028. The Lumwana super pit and Reko Diq are two of the organic growth projects I referred to at the start of the presentation, and which are recapped here.

Together, they will provide powerful support for Barrick’s drive to grow our gold equivalent production, designed to produce 400,000 tonnes of copper on an annual basis and 500,000 ounces of gold per year in phase 2 of its development. Add to that, the ramp-up of basically two new mines, Goldrush and PV, to be followed by a potential brand-new mine in Fourmile, of which Barrick owns 100% and which can utilize the existing Nevada Gold Mines’ infrastructure and processing facilities. Barrick has an unmatched growth portfolio that separates us from the industry with prospects of even more to come from our ongoing exploration initiatives. So, this brings me to a subject I have been flagging for some time, and that is how undervalued Barrick shares are today.

So, to end my presentation, I wanted to take you through some research based on consensus net asset value of our assets. On this slide, we highlight two of our key businesses. On the left of the slide, you have Nevada Gold Mines, which is, by far, the best gold asset in the world’s most mining-friendly jurisdiction. The right side shows our growing copper business is well on track to becoming world-class among peers, some of which have recently attracted international attention.

Moving one step further, this table identifies the unrealized value embedded in Barrick within Barrick’s portfolio. Nevada Gold Mines, on its own, should command the industry’s highest valuation. On that basis, this analysis conservatively assumes the price to NAV multiple equivalent to that of Agnico Eagle. Although, arguably, NGM would be higher rated given its size and quality.

The analysis applies a similarly conservative market multiple to our copper assets, in line with copper peers. Although, again, I would note that the recent BHP-London transaction ascribed significantly higher multiples to those undeveloped copper assets in Argentina. Again, the analysis is based on the current analyst consensus NAVs. But we expect these NAVs to increase as we will be publishing updated feasibility studies on our two key growth projects at the end of the year.

As you can see from the table, on the basis of the analysis, the value of just our interest in the Nevada Gold Mines and our copper portfolio alone exceeds our current market cap. In fact, according to the current market value of our shares, the rest of our business has a negative value of $1.2 billion. This includes our interest in three Tier 1 gold mines outside Nevada, the world class Fourmile project, other gold mines and development projects still in the pipeline, and our exploration teams unparalleled success in uncovering new answers. In short, I would submit that when you buy Barrick today, you get a lot for free.

We set out in 2019 to build a sustainably profitable gold and copper mining company focused on world-class assets. We did not have to buy them at a premium as I indicated in my introduction. They were embedded in the combined portfolio that we put together at market and just required identification, evaluation, development, and delivery, which is where we are today. On top of that, we have replaced all the ounces we have mined and repaired our balance sheet to be industry-leading and capable of supporting our dividend policy and growth plans.

Clearly, Barrick represents an investment opportunity unmatched in our sector. And I hope you’ll leave the presentation with a clearer understanding of why the case for such an investment is so compelling. Thank you all for your attention, and we’ll be happy to take questions as usual. Where do you want to start? Here in the audience? OK.

Lawson Winder — Analyst

Mark, thanks very much for the presentation. It’s Lawson Winder from Bank of America.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Hi, Lawson.

Lawson Winder — Analyst

I wanted to start on copper and just ask about Lumwana. So, two questions on that particular asset. So, one, the power situation in the country, I mean, currently, there’s been a reduction of 20% initially and now 40% for electricity availability. Do you anticipate that will continue to improve going forward? Is there any risk that that could be reduced further? And then, secondly, when you think about the Lumwana project ramping up and in first production in 2028, what is the latest thinking on a power solution for that asset?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So there are — Lawson, there are some plans to put extra infrastructure, power infrastructure into Zambia. We have already been awarded the capacity required to bring in the expansion in Zambia. So, technically, we’re cleared for — to draw off the grid as the country itself looks to expand its infrastructure. At the same time, Barrick has recently completed a study of the entire Zambian power infrastructure and potential.

And, of course, we share that with the authorities. And then, as far as the short-term issues go, we — you’re right, 40% is now the rationing. But we have got a back-to-back agreement with the utility to be able to purchase power, third-party power, from outside Zambia at a discount to the cost that it — of generating diesel power. And we’ve got full backup diesel power on site as well.

So, you know, having said that — and so, we saw this coming, we invested in our own insurance. We then worked with the government to make sure that we can access additional external third-party power at a lower price to what we generate ourselves. But at the same time, we brought in additional infrastructure and generating equipment to be able to support ourselves. And as part of that, we’ve also reached agreement on cogeneration.

So, we can generate power ourselves and feed it through the grid. So, we’ve done pretty much every — I mean, we grew up in West Africa, where you have to rely on your own self to be able to supply power. And so — and the AME team is, you know, very equipped to be able to deal with this stuff. Having said that, there’s, of course, challenges.

You know, we — every now and then, we get the thing — the power delivery un-synced, and we have to pick up on it. We’ve got — but we’re getting much better at being able to do that. And so, at this stage, we don’t believe that in the medium to long term that there’s a risk, but we will continue to look at solutions. And, of course, as you know, we’ve just commissioned the TS solar plant in Nevada.

That’s 200 megawatts. So, you know, if you look back to our experience, going back to Randgold days, you know, we started with generating diesel, then we went into heavy fuel. Now, we — gas turbines, solo. So, we have a very good technical capability of managing power.

And the first thing is to work with the utility to make sure that, one, they understand the opportunities and the infrastructure. Because it’s no good just dumping in power like you saw in Pakistan, where they’ve got lots of power, but they can’t get it anywhere because the infrastructure is unreliable. So, that was our first investment, alongside — or on behalf of the Zambian government. So, you know, we’re very aware of it.

We are not dismissing it. We recognize it as a risk. But once you, you know, the — once you understand it, then you can work to mitigate it.

Josh Wolfson — RBC Capital Markets — Analyst

Josh Wolfson at RBC. Mark, if I can ask you a question on capital allocation. I think, historically, you’ve talked about prioritizing — or wanting to prioritize financial liquidity for some of the copper growth portfolio, you know, development capital. You know, the company now started a little bit of a buyback.

Is it reasonable to assume that this could continue from here? Or is this sort of a one-off thing?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

No, first of all, Josh, just to correct you on your report this morning, we put in the buyback approvals so that we can manage shorts in the market and any softness in the stock. So, our discipline is real, and you’ve seen that through my whole career. I don’t say one thing and do another. And so, managing capital allocation is core to us.

And so, the way the — our model works, which we’ve shared with our investors, is when we get extra cash net off debt, we will pay that as a dividend. As management, we’ve got the flexibility as we go toward that point of using that money to buy back stock, and so then you delay the dividend. And then, that — and we will manage it against how we deem the value of the shares. And right now, there’s no question that the shares are a good buy.

And so, you know, we got through some of our challenges at the earlier part of this year. We had some extra cash. We had a window because, remember, we have closed periods where we can’t buy. And again, what we said in the press releases, we restarted our share purchase.

And we’ll do that within that guidance that we’ve shared with the market. And I would also point out if you look at Barrick and its returns through dividends, share buybacks, return of capital, we’re not out of kilter with our peers. And we still got a very strong balance sheet. And so, if you look at the returns, particularly given the current share price, the returns are quite healthy against the equity.

But our objective will be, first of all, get the share price up. That’s the real focus. And in the long term, we’ll pay the dividends as we did — as I did in Randgold Resources, you know? And we fundamentally believe that dividends should come from the P&L in a mining company like Barrick, and you shouldn’t be borrowing to pay dividends. And that’s the way we’ve always run our businesses, and that’s the way we plan to continue.

And just probably another bit of color. This quarter is good because you see the costs are flat. OK? In the swings and roundabouts, there are a couple of assets that still have a way to go, and there are other assets that are ahead of the curve, like PV’s got some way to go and Turquoise Ridge as well. But largely we’re at that point where we’re now starting to — we’ve caught up with a lot of the development.

We’re starting to transition to our own teams, back to our own teams from the contractors on the development, particularly in Nevada, to catch up and build that flexibility in the underground operations. And a lot of that supporting capital, the sustaining capital, you call it, that starts coming off as we forecast now for a while. And that — and it gets replaced by a growing growth capital as we go into the expansion of Lumwana and the reconstruction of Reko Diq. And then, of course, Fourmile is a brand new asset.

It’s still at that pre-feasibility stage. And we need to get our head around that. But you can see how quickly the geology started to link together. And so, that’s another opportunity.

And then, the remaining capital in Pueblo Viejo is all about the tailings facility. The capital itself for the expansion is largely spent.

Josh Wolfson — RBC Capital Markets — Analyst

One more question on sort of the same train of thinking you were reviewing. I do like the slide you had that demonstrates the value proposition with the stock here and sort of the real core value drivers. I’m wondering, you know, in the event that shareholders or investors don’t recognize that, would the company ever consider, you know, spinning out some assets or divesting some of these noncore positions to try to realize the value on a quicker timeframe?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Well, first of all, have you ever seen that work? Getting rid of noncore assets, absolutely, very logical. But moving high-quality assets out of a portfolio makes no sense. First of all, the mining industry’s got too many companies with not enough management as it is. And, you know, breaking these companies up without a third party acquisition by competent management is a challenge to deliver value.

And that’s a short-term opportunity. It’s like people saying, “So, why don’t you delay the capital development of your assets and give us the dividend?” So, how do we build the company? Because it’s a consumptive industry, you’ve got to replace what you mine. And I will take you back to two examples. We went through the same debate with the market in 2011 in the Randgold.

We ended up at over two times NAV — trading at over two times NAV eventually as we delivered on those assets. Another really good example is Freeport. You know, we try to convince Freeport to merge with us when they were $10 billion market cap. They were resolute about their value of their company and the importance of investing in Grasberg’s underground infrastructure.

It took them years to get there. And they languished around the bottom end of value or under this value. But look where they’re trading today. They delivered on that plan and the markets recognize them, having been very negative to that decision to invest in that country in Indonesia.

So, you know, and if you look at all — if you look at what grew BHP, it was those last-century investments in high-risk developments, Escondida, the oil and gas, that really — the iron ore, that really built that company into what it is today. And that’s what drove Rio to get where it is. And then it had a bad patch, and it’s now reflecting on how does it get back there. But it still made some big decision in Mongolia, it’s now, you know, in West Africa.

And so, this world has moved that way. And if you want to play in the mining industry and we’ve transitioned out of the mid-cap, lower-cap instant gratification model. We’re in there for the long term, we create a lot of value and we know that this value delivers significant value for all our stakeholders. So, that’s the game that we’ve signed up and to take this company back to where — to the individual parts would not make any sense to certainly me.

And I don’t believe — when you look at our register, our main investors are all still very much intact from 2019.

Brian MacArthur — Analyst

Good morning, Brian MacArthur, Raymond James. So, Mark, you’ve highlighted how exciting Fourmile might be, but can you just go over and review, because I expect the devil’s in the details now, how it gets vended in to NGM? And I guess the question really here is I know you have to do a study, but, technically, what type of study does it have to be? Can Newmont force you to do that study? Who controls the time horizon on that? Maybe just how you think about this going forward.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, let me cover the strategy and then Graham, who actually negotiated the deal, I’ll pass the detail to him. But there’s nobody can force anyone to do anything in this life and certainly not under this agreement. The point is, as you know, we have a partnership with Newmont in Nevada. And we have the right to access and utilize Nevada Gold Mines’ infrastructure, as does Newmont.

And so, at the end of the day there’s an opportunity to find a way to develop it for the in the best interests of both sets of shareholders, which is what we should be doing as custodians of these assets. At the same time, our responsibility as all the time that Fourmile remains 100% asset is to maximize the asset for our shareholders. And so, thus, the work we’re doing now is that we’re doing — we’ve got 10 rigs on site, you go there it looks like the old days in Carlin. You got, you know, just seed rigs and trucks everywhere.

And every intersection, as you see, is, you know, multi-ounce intersections. And we’re talking very thick, breccia-style ore bodies. And so our work this year is ready to get a feel of what it is. We don’t make any secret of it.

It’s information we share freely both with the market, our shareholders and, of course, Newmont. And then, once we’ve got that we’ll be able to have a better view on our options. And there is a way to develop Fourmile on a stand-alone basis. There’s definitely a way to do it.

But again, that’s all in the optionality going forward and how we’ll choose it but getting back to the actual legal basis on which we can manage this, I’ll pass it to Graham.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Thanks, Mark. And, yes, so the joint venture agreement has specific provisions that deal with this. First and foremost, in terms of bringing the asset into the joint venture, provided that the joint venture meets a minimum return hurdle rate, it goes into the joint venture. And that would be on the back of a feasibility study.

In terms of determining the value of the asset for the purposes of going into the joint venture, that is determined based on market valuation. So, effectively, it would be consensus gold prices, a combination of consensus spot, and recent history gold prices. And then, importantly, market multiples for the appropriate asset. So, it’s very much a market-based valuation.

And then, on top of that, in terms of determining its value, it gets the benefit of all of the infrastructure that’s already embedded. So, effectively, the feasibility study doesn’t carry any of the existing infrastructure. It simply looks at what the cost would be on a go-forward basis for that asset. So, effectively in the case of Fourmile, it would benefit from all of the Goldrush infrastructure that’s already pre-developed.

And then, the cost of the feasibility study itself is also something that is part of the compensation, so in other words, on top of that market valuation. So, that’s the key aspects of it.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, just to clarify, there’s not much that’s left behind in how everyone — you pay full value for bringing it to feasibility and then the value on the basis of the feasibility.

Anita Soni — Analyst

Hi, Mark. Anita Soni at CIBC.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Hello, Anita.

Anita Soni — Analyst

Good morning. My question is with regards to Pueblo Viejo. So, you’ve got — thanks for the slide where it shows the recovery rates into the end of the year. I think you have a rebound of 79% and then 80% in Q3 and Q4 respectively.

Could you just talk about how that evolves over 2025 as well? I think the targeted rates are around 92%, if I’m correct?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

No, I think it’s all just above 80. Is that correct? The final targeted recovery. Simon, are you on the call?

Simon Bottoms — Mineral Resource Management and Evaluation Executive

Yeah, I’m here.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

What’s the targeted recovery rate for PV ultimately, Mark Hill?

Simon Bottoms — Mineral Resource Management and Evaluation Executive

So, with — it’s an incremental over the next couple of years, we lifted to 79 and then stepped up there to the 80s.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Yeah, I don’t think it’s 92%. But, Mark, are you — Mark Hill, are you on the call? Not on the call. John Steele? John Steele?

John Steele — Metallurgy, Engineering, and Capital Projects Executive

Hi, Mark. I don’t have the exact number in my head, but going up through mid-80s, 85 next year. I’m not sure of the exact number, but I’ll have to look that up and get back to you.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, that’s the number I have in my head, the sort of mid-80s. And we’re targeting, as you see, end of this year at 80, then 82, and the sort of 85, 86. And, Anita, the focus at the moment is like — I’m sure you’ve listened to this sort of line before many times in the mining industry. This is a single sag mill, and then the original sag mill or the ball mill, and getting those mills to optimize the grind, to optimize the float, to optimize the recovery.

That’s the focus that we’re in right now is balancing that. We’ve got — we’re comfortable with the throughput, we’re comfortable with the front end of the plant. It’s now making sure that we — and we’ve got the process control into the flow sheet and, Now, it’s really teaching the process control to be able to optimize that balance between grind and not gritting up the circuit and the flotation. And I was there just the other day and all the float cells are working.

Everything’s working now, just optimizing that balance. So, the big focus was get the throughput to a point where we are comfortable with the ability to make that throughput. And now we’re working on the optimization of the actual design criteria, which is recovery and flow and grant size, or grand — the grand bracket and not over-grinding it or under-grinding it.

Anita Soni — Analyst

Second question, both for Carlin and Cortez. The stripping rates picked up at Cortez. And I noticed in the MD&A it said it would be largely complete in mid-2025. So, the rates that you’re at, at about I think it’s 13 to 1, is that going to continue until Q2 of 2025? Is that the case or —

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Yeah, it’ll come down. We — so look, Cortez’s former Crossroads and Arturo. And that’s the big focus on getting, particularly Crossroads, sorted out. And then, in — and we’re on top of that.

You know, the team has done an excellent job on getting their head around the crossroads challenges, which were largely variations in the actual ore body between oxide and sulphide or refractory ore. And so, yes, it’ll come off a little bit. But, you know, Cortez’s in my mind is in good shape. The 7C failure in Gold Quarry pit is the one that we’re wrestling with at the moment.

And, you know, that’s a pit with a history of failures. And you remember, I think the 2009 failure, which was the sort of clay white spot of the pit which they used to call. I think Phase 6. So, right now, we’ve got a pile of geotechs.

And really, you’ve got to go to the geotechs from Arizona and around there, not the geotechs from here because it’s, you know, completely different rocks, young a lot of clay, a lot of water in the pit sidewalls, higher hydrostatic pressure. So, we’re busy working with that now to redesign that pit. Short term is to be able to get back into the pit at the 7C position. And longer term is how does that pit look in the longer term life of mine? And how much do you have to lay it back, or can you design those sidewalls differently by dewatering the pit? And that’s what we’re looking at the moment.

And so, that will update you more on when we get to the end of the year.

Anita Soni — Analyst

So, to round out the top five, Turquoise Ridge, could you just give us a little bit more color on how the rest of the year evolves there? I did notice that the grades in the autoclave dropped. And I’m just not sure why that happened with the grades in the underground ramping up?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, Turquoise Ridge is all about backfill and putting in that infrastructure. So, we made a conscious decision to slow down the mining and processing, right? We’ve got lots of stockpiles, so that’s what you see. And getting on top of the backfill infrastructure, which we’ve done now. And now, it’s a case of catching up on the backfill so that we build full flexibility in the Turquoise Ridge mine plan.

And the plan is that we will improve all the way up to the end of the year. That infrastructure catch-up plan is working, and we measure it weekly. And so, you know, I’m confident that we’ll get back there by the end of the year. We’ll have caught up the plan.

And that’s really the big — and Turquoise Ridge is a very high-grade ore body. It’s got some upside opportunities in it. But if you don’t keep your backfill up to speed right on the face, you have problems geotechnically. So — and that brings safety issues, as well as flexibility in mining.

So, that’s really the driver behind Turquoise Ridge.

Ralph M. Profiti — Analyst

Good morning. Thanks Mark. This is Ralph Profiti from Eight Capital. I have two questions.

Firstly, can you bring us up to date on your discussions with the Mali government? It seems like some of the peers are inching closer toward something that’s more definitive in a positive way? Can you bring us up to date on that? And then, secondly, you talked about utilizing Nevada infrastructure on Fourmile. And can you specifically address labor? How have you done in sort of the near-term on addressing some of those constraints? And then, eventually when Fourmile does come into production, how does your long-term studies look on the labor constraints?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

OK. So, Mali, you know, in the disclosure it’s pretty well where it is. As you know, we believe in sharing the economic benefits of a nation’s asset that is mine as we mine. No matter how you own it, my belief is that it’s all national assets.

And so, when the Junta took over, there was a view that Mali should benefit more from its mining industry. And as you know, there’s no other industry that makes bigger contribution to the Mali economy than the mining industry. I’ve been in it since the very beginning. And, of course, we saying it’s fine.

We would be very happy to do that. We need to get down to the nitty gritty and look at the models. We are still paying dividends, we paid a dividend two weeks ago, 10 days ago. And we are the biggest contributor into the Mali treasury.

So, the question that we have is we’re happy to do that on a percentage basis. So, slightly more than 50%, for example, that’s a good place to be for a government. And also, it has to be affordable by the company, that’s Loulo-Gounkoto as a company. And what we are anxious about is we don’t see any merit in paying huge amounts of future cash.

Now, because it just makes the future more difficult to manage, so we need to work it in a transparent way. Our team is engaged with the president’s office, plus the Ministry of Finance and Ministry of Mines. And we’re working constructively to find a way forward. That’s really all I can say at this stage, and we have been doing so for quite a while now.

On the question around Fourmile, just remind me — oh, yeah, so we’ve put a lot of effort into labor. Labor is critical everywhere today in mining. And we again, we’ve just been through a restructuring, we took a whole level of management out of Nevada. We are looking at further automation, reposition.

And the other thing is, you know, you saw us buy, invest in a whole lot of new equipment, mobile equipment particularly. We are running a trial on automation, which will then roll out into the across the complex. And we’ve also challenged the management on parking up equipment. Because every time you have — you don’t use the equipment efficiently, you end up with two operators.

And that means two operators. It means six operators. And so you take out a piece of equipment, and suddenly you have that requirement. And you can reallocate those people to different positions.

So, we have a training mine now for underground miners, for open pit miners, and for processes — processing. And we are still — we could do with a little more capacity, which we are investing and we’re expanding that capability. Because in the U.S., the concept of technical skills is not the same as in Europe and the colonies — or ex-colonies, like South Africa and Australia. And so, what we’re doing is building that skill into the workforce.

And during COVID, we got to a 25% turnover rate. We’re way back down now. And again, as we’ve rotated out, people — the people — our retention of workers that go through the training mines are very high in the 90s. Because as you can imagine you’re going to a big operation like Nevada and you don’t — you’re not fully trained to operate in these big underground mines or these huge open pits, it’s hard to do, you know.

But when you know what to do and you’re well-trained, then the job is so much easier. So. our investment in people has been — you know, and the other thing, I mean, it’s with the lithium market now collapsed, because we — remember, we’re also the source of all highly qualified miners in the USA because we are the biggest miner in the USA. So, that pressure has come off and I think as you see.

And as you see — as we have got Nevada to perform, of course, you keep people in, too. People don’t leave when you’re starting to perform. So, all around Nevada is in a very different place. And it has been changing all the time as we work to make it an owner-led style of business rather than a corporation, which it used to be.

Steven Green — Analyst

Hi, Mark. Steve Green, TD Securities. Just to stay on Fourmile, you mentioned that you intend to be in a position to give pre-fees options by year-end — or have pre-fees options. Does that mean you intend to update the market with pre-fees level numbers like capex and size, therefore?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Sure. More options now — right now is access because, you know, the one thing about Goldrush is the accessibility the twin declines were expiration declines which you made into operational declines now. And that — they daylight halfway up a hill. And what you want is if you’re going to put in access to ore bodies that are underneath a mountain, you should try and get it at the valley level.

And so, you know, we’re looking at different options. Can we access from Cortez itself? Is there option there? Can we access it from the north where the metallurgical infrastructure is? And what is it — what’s the most optimum way to integrate Fourmile’s infrastructure with Goldrush’s infrastructure, because it’s a continuation of the same ore body. What makes Fourmile is that it’s in a big metamorphic halo, so it’s brittle. And so, the style of mineralization has changed to a breccia, the classic Carlin breccia, which, you know, is bigger, bulkier, higher grade.

It’s interesting, we’re also getting some of these flatter plainer ore bodies occurring as well, which is what we didn’t expect. But it’s very interesting. For me even watching it evolve, when you look at that section, that section really does tell you how connected the geology has become as we’ve drilled these holes. So, it’s a really exciting or body, not to be underestimated at all.

Steven Green — Analyst

So, presumably, you’ll want to let this play out for a while before making a decision on vending it in?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

You know, I mean, I’ve always — as you know, I’m a very open, transparent person. So, you know, we own it, as Graham says. It makes sense for, you know, to — and it has the right to Nevada infrastructure. And the conversation will continue in a transparent way.

And when we feel that we get to something, if we do, that’s of value, proper value, we’ll make that decision. But to your point, we’ve got a way to go before we get there. And the first thing is to try and get a grip of exactly how big this prospect is.

Steven Green — Analyst

Thanks.

Anita Soni — Analyst

Hi, Mark. Anita again. You made a comment when you were talking about the Fourmile vend-in that as long as a joint venture meets a return on invested capital, did you mean the Fourmile meeting the return on invested capital, or the joint venture itself, the whole Nevada Gold Mines?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

No, no, it’s just a Fourmile, and it’s a specific number. It’s a blended number. I can’t remember the actual number. What is it?

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

The IRR is a 15% IRR.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Fifteen percent, but —

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Effectively using —

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Gold prices are backward looking.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

It’s a combination of two-year history spot and consensus.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

It will not struggle to meet that hurdle, I promise you. OK, can we leave this room and move to the call? OK, operator, over to you.

Questions & Answers:

Operator

(Operator instructions) Daniel Major with UBS, please go ahead.

Daniel Major — UBS — Analyst

Hi, Mark. Hi, Graham. Can you hear me OK?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Hello, Daniel. I can hear you.

Daniel Major — UBS — Analyst

Hi, yes, thanks for the questions. Yeah, a couple of questions, the first one on the cost profile in Nevada, I’ve seen a number of questions on it already. But just to be clear, is the main delta in Turquoise Ridge? It looks like that unit cost needs to come down a lot, but is that the main delta to get toward, you know, back into the guidance range as you’ve completed the autoclave maintenance and the backfill infrastructure? Is that the main moving part?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Yes, I think we’ve — I mean, Turquoise Ridge, the autoclave maintenance is in good shape now. The process is good. I think the all-in sustaining cost drivers are still the extra infrastructure and backfill that we’re putting in right now, sustaining capital. And so, that’ll come off.

And you’re right, once we get that mining rate done, and that’s — you know, Turquoise Ridge got a big — you just do the math. The numbers that need to — the production increase is quite high, and that will definitely drive the unit costs down. So, that’s really the big driver in Turquoise Ridge. Graham?

Daniel Major — UBS — Analyst

OK, thanks.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Just — Dan, Graham’s going to add something.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Yeah, just to confirm, yes. So, the key assets are Carlin and Turquoise Ridge, and, then of course, Pueblo Viejo. That’s also another key driver on costs for the year.

Daniel Major — UBS — Analyst

Cool, thanks. And the second question I had on tax. You recognize the 137 million tax adjustment around proposed settlements in Chile? Are they expected to convert into a cash payment at some point? Can you just give us any cash implications around that tax charge you recognized?

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Yeah, thanks, Dan. Yeah, that’s correct, yeah. So, these are just relates to the sale of the Zaldivar asset in 2015 as we’ve disclosed for some time now we have been in discussions with the government there on the interpretation that they had, which was for a claim that was significantly higher. We’ve now reached a — in-principle agreement to settle that.

We’re busy finalizing that agreement, which we expect to get done in the third quarter. So, yes, that should translate into a cash payment this year.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

And, Dan, I think it’s a very good point you make. If you go back to 2019, when we looked at this business, it had lots of challenges to it. Tanzania wasn’t operating. Argentina was under threat.

Papua New Guinea was, you know, trying to get its renewals, Reko Diq was in arbitration. We had Chile, and then we had a pile of closure assets as well that were just being kicked down the road. And where we are today is that, you know, we’ve — as I’ve always done in my career, deal with the liabilities and then you free up. And there’s no better time to deal with the liabilities when you’ve got big commodity prices.

So, we’ve really focused on those liabilities, and we’re on top of them. We’ve done our first two safe closure tailings facilities or closure sites. We’re going to do another eight this year, or that’s the target, six to eight closure sites, safe closure. And Pierina comes to full closure early next year, and we’ve engineered that.

And so, one of my focuses is the nonoperating costs within the organization, and we’re driving those costs down. And that really drives the margin. And we have — and I took a position that we’re not going to kick that can down the road. And when you stack up Barrick to its peers, we are on the road, on the trajectory to have very little liabilities associated with nonoperating assets.

And that’s a focus that we’ve always had. So, again in the mix, let me just remind you, we didn’t pay a premium for any of the assets we’ve talked about today. We’ve got very significant assets, which I’ve shared with you again. We’ve got operating assets on top of that which are significant with life-of-mine and margin opportunity.

We have dealt with the challenges. We’ve got all the mines up and running. Porgera is — you know, we turned on the last of the autoclaves last week. So, all the autoclaves are operating in Porgera.

And we’ve got a couple of noncore assets that you know we might or might not bring to account over the next short while. And then, we have been dealing with these liabilities. Chile, of course — and Chile is rapidly becoming an opportunity as we deal with those legacy issues, both in the form of Pascua-Lama and Zaldivar. And then Peru, Pierina, that’s a big chunk of nonoperating costs that’ll come out of our cash flow or our cost flow.

And so, you know, my view is that, you know, into next year we are a different company again as we were from ’23 to ’24. And very quickly, you’ve got — and that’s why this quarter is so significant because you got a flat cost. And we caught all the margin in the commodity price, which is what — that’s the first step in our future strategy and that is to sweat these assets. And as soon as you get on top of that, you can manage the investment in those closure sites.

So, you can — you know, we are compliant with GISTM. We’ve got nothing that’s, you know, dangerous in our portfolio. And so, we can start managing nonoperating costs as we go forward. So, that’s where the company is today.

Daniel Major — UBS — Analyst

Great, thanks. And just one more, if I could. And it’s just coming back to the discussion on the buyback and the dividend. I totally understand the opportunistic logic of the 50 million.

But if we look at go-forward basis, should we just assume that you’re going to be opportunistic, but from a modeling standpoint that you run the balance sheet down toward in that cash position before factoring any kind of meaningful additional buybacks in the second half?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

No, we are going to be buying back on a considered fashion, building on what we did last quarter. And so, we’ll manage it, Graham and I’ll manage it. We share the strategy with our board. Everyone’s happy with what our plans are.

And at the same time, we’re mindful of a demand as we go into a capital intense phase. And, again, we can manage all that within our balance sheet, so we don’t want to get to — and the one thing, Dan, that we’ve always done is stuck to our own rules. Some of our peers don’t do that. They say one thing, do another.

But we are very clear about how we allocate capital. As a management team, we reflect on it every week. We look at ways to be able to intervene. And, you know, through my career, I’ve had to deal with a number of short positions in a stock, and I don’t think — there are not too many people who would take a big short position in Barrick today.

Do you want to add to that, Graham?

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Yeah. I mean just, Dan, to reiterate, you know, we have an exceptionally strong balance sheet notwithstanding that we’ve got these big capital growth projects ahead of us, and that’s the position we like to maintain. But even if we do continue to buy back shares, as Mark says, on a measured basis, we’ll continue to have very low, you know, debt to EBITDA ratios by any metrics. So, we afforded the opportunity to take advantage of what we see as exceptionally good value in the stock but still on a very measured basis.

Daniel Major — UBS — Analyst

Very clear. Thanks a lot.

Operator

The next question comes from Bob Brackett with Bernstein Research. Please go ahead.

Bob Brackett — Analyst

Good morning. Just a couple questions related to the feasibility studies that we’re looking forward to seeing by the end of the year. Anything you can tease on those feasibility studies? In the MD&A, you talked about the approximately $2 billion of capex around Lumwana at 50 million tonnes of processing? Anything to say around Reko Diq? And what are the things that would worry you between now and the release of feasibility studies in terms of moving these projects forward?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, I would say if you don’t worry about capital projects, they always go wrong, so — and many times if you worry about it and do nothing, then they also go wrong, so — but Lumwana is in a good place. And Lumwana washes its face at the expansion at $3 a pound, so it’s — you know, they’re not many copper assets that do that. And as you know, the copper industry has been saying jack the copper price up and we’ll develop your assets. And so — and that’s an expansion.

You know we’ve got the one circuit, we’re effectively duplicating that circuit. And so, we don’t see the big focus on the miner is the fleet and the efficiency of mining and the cost of mining. That’s our focus. And we’ve got a new fleet.

We’ll be expanding that fleet. And everything that we’re monitoring at the moment, we’re comfortable with our assumptions. And then on Reko Diq, right now, we are in the final negotiations of long lead items, looking at numbers. And there’s no material change in our original estimate.

And by the way, we’re going to do a webinar on Lumwana in 11th of September to share sort of some color on Lumwana as we did with Reko Diq. And that’ll free us up to spend a little bit more time on Reko Diq at the investor day in November. So — but on Reko Diq, too, is — you know, there’s been swings and roundabouts. We’ve made very good progress with our water strategy, our infrastructural strategy.

Graham’s, you know, progressing the financing options. You know, I think everything is, there’s nothing there that’s not in line with our original assumptions that we shared with you going forward. Do you want to add to that?

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

No, I think that’s a good summary. I mean, there are some, what I would call, design changes that have come through the feasibility, as you would expect. So, for example, you know, we are — compared to the original feasibility, we’re anticipating using rail, and so there’s infrastructure associated with that, but there are also benefits of that coming through in the financial model. So, all of that will be will be showcased at the end of the year when we complete the feasibility study.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

But we’re going to do a good update in September. You’ll get some color on it.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Yeah, so —

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Sorry that’s in Lumwana.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Lumwana will be September. And then, obviously, with the investor day in November, there’ll be some more color there. And the final feasibility will come out in the beginning of the new year. We have a —

Anita Soni — Analyst

I just wanted to ask a follow-up on Fourmile. What kind of drill density are you looking for to get to the indicated in the inferred categories by your end?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

I know we’re not going to be there by your end. So, we’ll be some of the way there, but not for — I’m not sure we can answer that question yet. Simon, do you want to add to that? What drill density, I think we know where we’ve got to get to, but that’s still some time off, that’s a pre-fuse.

Simon Bottoms — Mineral Resource Management and Evaluation Executive

We know what we’re targeting so indicated we’d be targeting in the region of 70 to 75 meters based on the current geological models, but that’s being reviewed through the course of the preliminary economic assessment at the moment. The update we’re targeting for the year end will really be an inferred resource update and a view on the larger potential of the project, as well as narrowing down, as Mark was alluding to earlier, some of the different options that we will focus on within a feasibility study.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Anybody else on the telephone? Two more.

Operator

The next question comes from Mike Parkin with National Bank. Please go ahead.

Mike Parkin — National Bank Financial — Analyst

Hi, guys. Thanks for taking my question. Congrats on the good quarter. Question on the Pueblo Viejo relocation work.

It seems like everything’s off to a good start but quite a few things going on. Could you just remind us what is the critical path there? Is it finishing the town and relocating the people or is there something else that’s kind of the main item to stay two eyes on?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, of course, the preference is to relocate the key communities upfront so that you don’t end up trying to do heavy earthworks and have communities moving through or around the footprint. And so, I was there just the other day. We’ve got a couple of hundred houses now in construction, and we’re adding to them all the time. We are working with the communities, and we’ll relocate the communities on a priority basis.

And that’s really moving people from sort of rural areas into an urban situation and with it comes food security. And so, it’s quite a complex and it comes with schools and community centers and everything else that goes in a integrated community. The geotech — the next step in this process is the completion of the feasibility of the dam itself, and that’s due this quarter. So, that’ll be the next big step.

Right now, we’re expecting to bring the dam into production at the back end of 2027, early 2028. So, that’s — we’re still well within our plans. And right now, there’s no emerging critical path. I think everything is — as in this phase of a capital project, everything’s assumed critical.

Mike Parkin — National Bank Financial — Analyst

Are you having any issues with suddenly new regional residents trying to capitalize on getting a new house? Like we’ve heard in the past in other certain situations, mostly in Africa. Any kind of activity there, yes, have a pretty good sense of like do some sort of paperwork to know who you have to deal with versus some of the people trying to be strategically advantageous of the situation?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, Mike, we always have that. You know, you have people who exploit the opportunity. Nowadays, satellite imagery is very helpful in that, in managing who was there and who wasn’t. It’s pretty hard to lie with, you know, to deny a picture.

I think — but it’s part of the whole social engagement is dealing with, you know, people who exploit the situation, who take the opportunity to sort of claim things and we work with that all the time. This is a community we’re going to live with for a very long time. So, we manage that. The positive side of where we are today is, you know, we went through a very extensive process to select the site with government, with civil society, with the Catholic Church, you know, the whole (Inaudible) and under the lease agreement that we operate Pueblo Viejo in is the government has a responsibility to participate in the relocation and payment thereof.

So, it’s a joint process. But right now, it’s our community people that are working with the relocation committees that are set up for each community and then various other authorities and, from time to time, as you point out other people who are wanting to participate in the benefits.

Mike Parkin — National Bank Financial — Analyst

All right. Thanks very much, Mark.

Operator

The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Tanya Jakusconek — Analyst

Oh, goody, thank you for taking my question. Good afternoon, everyone.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Hello, Tanya.

Tanya Jakusconek — Analyst

I just wanted to come back to just how the rest of the year, you know, evolves, and I just wanted to make sure I understood correctly. So, just on the Nevada Gold Mines, which is going to be driven by Carlin, you know, better grades, and Turquoise Ridge as well with better grades, am I to assume that the volume is going to come by you processing those higher-grade soft tiles at Turquoise Ridge as you’ve worked on the case bill in the underground, and then the cost reduction also comes in not only volume, but due to the elimination of the contract workers as you go into soft mining? Is that a correct understanding?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Broadly, yes. Yes, broadly. The throughput is not — you know, it gets tempered because what drives the grade is underground and less open pit ore. So, that impacts the throughput numbers as well.

But broadly, you’re right. It’s really a grade — I mean, talking about Carlin and Turquoise Ridge in particular.

Tanya Jakusconek — Analyst

OK, and have you seen the pickup? Because it’s a month and a half now into the quarter, into Q3, have you seen the pickup in the gray?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Sure.

Tanya Jakusconek — Analyst

OK, Thank you for that. And just, similarly, at Pueblo Viejo, I just want to make sure I understand — and thank you so much for that slide with the 78% recovery. I’m just looking at it right now — sorry, 79% into Q3 and then 80% into Q4. Have you said you’ve got the throughput where you need it to be and you’re just working on the grind portion and the recovery, again, a month and a half into the quarter? Are you seeing that recovery?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Yes, I think I would say that. Tanya, as you know, we’re seeing it more than we’re not seeing it. So, it’s still very much part of — this is a refinement. I think that’s what we’ve got to get across.

This is not a magic box. This is, you know — this is SAG milling at its most challenging. We’ve got a very big single sag mill that’s joined a SAG ball mill flow sheet. And we’ve just settled with the construction of the new conveyor belt, so we’ve got the extra crushing capacity.

And now, it’s about making sure that we get the grind parameters right. And when we get the grind right, we get the float right, when we get the float right we can feed the autoclaves appropriately. And the whole flow sheet logic of PV is to increase the sulfur content of the feed into the autoclaves, which really drives the fuel content. And that drives the oxidation.

And what we have done in the interim, which I shared last time, is we did create a variance to that, so we can still feed run of mine ore into some of the autoclaves. We can reconfigure them to take run of mine ore. But it’s really about the ground size that we’ve got to work harder on. And that’s all about the control — the processing control that we’ve put into the milling and screening side of the flow sheet.

So, it’s really technical, bedding down the operation. But what we can tell you is that we’ve certainly had runs where everything works, and we get right up there on a unit-per-hour basis that we need to get on a consistent basis, and then we’ll meet our objectives. And without a doubt, my whole career, I’ve been through these processes. They’re frustrating and stressful.

But at the end of the day, we get to where we want to get to.

Tanya Jakusconek — Analyst

Yes. And just on something that Anita has mentioned, the 92% recovery, and I know that you corrected us on the 86%, but I was under the assumption as well that we were getting to 92%. I’m just wondering if it’s just our recollection from the mine tour or something has changed. Just some clarity on that would be great.

Thank you.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Hi, Tanya. It’s Graham. You are correct that in the feasibility 40,103 — 43,101, we do go up to the 90s. It’s a graduated process.

So, you know, it takes us a while to get up there.

Tanya Jakusconek — Analyst

OK, so the aim, Graham, is still to get there it’s just not really over the next few years. Is that correct?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Yeah, definitely not this year, as we pointed out.

Tanya Jakusconek — Analyst

Do we get there next year?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

No, the following year.

Tanya Jakusconek — Analyst

Following year. OK, thank you on that as well. And if I could ask about, Mark, I always ask about reserve replacement. I always like to know what — you know, how we look going forward.

So, as you, you know, you’re eight months into the year, how does reserve replacement look for you this year both from a — you know, from a mine site perspective versus resource? And then, that, you know, the critical question of, you know, with this gold price at 2,400 plus, is there the thought of having to change your reserve and resource pricing?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, I’ll answer the easy part of that question and then pass on to Simon Bottoms to do the detail. Where we are at the moment is with the two big feasibility studies, we more than replace our reserves and resources. These are big numbers both in gold and in copper coming out of Reko Diq and the Lumwana super pit. Having said that, the, you know, Kibali, Loulo and Gounkoto are also in good shape to replace.

PV is slightly — PV we added that — we took the reserves to 21 million ounces last year, so that’s a big number. And although the geologists are pointing to additional opportunities, it’s not going to come in. And the big focus right now in Papua New Guinea is really getting the mine up and running. We’ve got a 10-year life of mine.

There’s work to do to be able to add additional reserves to that life of mine. And so those — just on a broad level, that’s the sort of the way we look at it. Simon, do you want to pick up on that?

Simon Bottoms — Mineral Resource Management and Evaluation Executive

Yes, sure. So, as Mark said, so for the year, Africa, Middle East is looking positive to replace its overall regional depletion. Again, as we’ve already pointed out in some of the releases, it’s really driven by those core Tier 1 assets, Loulo, Kibali. But we’re still seeing strong indications that we will be able to continue that fate in Tanzania as well.

The Latin America region, the assets aren’t all forecast to fully replace their depletion this year, but with the addition of Reko Diq, as Mark already said, that is forecast to make a substantial growth for that region. Within North America for Nevada Gold Mines, again, we’re currently working through the models, but we are forecasting to replace our depletion within NGM, particularly with updates to the open fit studies, particularly in Hamburg. Then, the reserve pricing, we are seeing some cost pressures. We’re looking at the pricing at the moment.

We’re doing the studies, and we will be looking to announce later in the year where we stand with that. Our intention, as has always been, is to maintain the quality of our mine plans and because a lot of our mine plans are more geologically constrained whereby we actually — even with the current reserve price, we actually mine the majority of the high-quality, high-grade material. So, when you lift that reserve price, you inherently just add marginal material and so therefore we evaluate it on an asset by asset basis and to ensure that any increases in — or change in reserve price would add material that would actually drive value and not just bring extra capital requirements through additional plant, process plant expansion requirements. Resource pricing, I think we reviewed our resource price for copper last year, and that’s still very much in line with long-term consensus at the moment.

I’d expect we’ll be looking at our long-term resource pricing this year.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Thanks, Simon.

Tanya Jakusconek — Analyst

I really appreciate it. Thank you very much for taking my question.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Pleasure. Anita?

Operator

The last question comes from Daniel Major with UBS. Please go ahead.

Daniel Major — UBS — Analyst

Hi. Thanks for the follow-up. Just a couple of quick ones, more modeling dynamics. It looks like G&A, perhaps, expiration is running a little bit below your guidance.

Obviously, a good result if you’re pulling the G&A down. How should we be thinking about that? Should we expect a big step-up in the second half, or are you undershooting the 180 million, particularly on the G&A, and similar question on the exploration and project?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, we pride ourselves in being the most efficient operators of a mining company on this planet when it comes to G&A and we continue to look at making our corporate oversight as efficient as possible, and we will continue to do that. So, that trend is a good trend. And it’s interesting when you see what we do with twice the size of the company and with less people, but super-efficient systems, that’s what we stand for. So, that trend is right.

And then, Dan, I’ve tightened up on the expiration a bit this year. Just we had got to a stage where, you know, my resource triangle, we were getting sloppy with the resource triangle. We needed to tighten up people’s priorities and not just lump more and more targets into the resource triangle and needed to be properly tested. And so, we tightened up on the budget and said, you know, the budget’s available, but you’ve got to pass some filters to get more.

And it just needed that discipline and that’s what we did. So, again, you’ve picked up, very smartly, a little tightening in the way we’re allocating exploration dollars. We’ve got a lot of opportunities. We’ve got to get the geologists and the evaluators to be a little bit more focused on moving the portfolio up through toward feasibility study and that’s the reason that we’ve just tightened up.

Daniel Major — UBS — Analyst

Thanks very much.

Anita Soni — Analyst

Mark —

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Anita, you got —

Anita Soni — Analyst

Yes, it was the follow-up on the reserve gold price question. So, you — I recognize that you don’t want to, you know, erode your margins on the one side. But on the other side of the equation, I think you can — you know, inflation is obviously persistent, one of the reasons why we have a gold price that’s at $2,400 gold. So, I mean, would you consider raising it to make sure that you’re capturing all the value given the current costs?

Dennis Mark Bristow — President, Chief Executive Officer, and Director

So, this is a very interesting topic. I’ll try and keep it short. So, first of all, the gold price is up because the world’s in a mess, not because of inflation. Inflation is part of that mess.

So — and so, we worry about long term, that’s why we keep discipline on the reserve price. And there is a time when you start eroding your ore bodies with the gold price because of the cost issue. And that’s when we — when we moved to $1,300, that was the reason. We found the right balance between Barrick and Randgold assets.

And to Simon’s point, we looked at the ore body shapes. When you take a higher gold price into an — and we mine quality ore bodies, so when you take Turquoise Ridge, you go in and you jack the gold price up, you start mining waste. You start mining very marginal or putting it into the mill. That means to keep the same production, you’ve got to enlarge your mill.

And so — and thereby, you increase your costs and your value of your asset goes down. So, all the mine management every year have to deliver an NAV equation on their business and why they think they should be doing something different if it detracts from the inherent value of the operation. And we have very few assets that are higher. There is a logic for a small increase in the gold price, which effectively keeps your grade, so it keeps your or bodies intact, because the last thing you want to do is start slicing a piece of your natural boundary of your ore body off.

And the other side of it is for instance, Tongon, you’ll see we change that goal price that we look at Tongon because it’s a closing mine and we don’t want to leave value behind. And the ore bodies are such that we’ve started building capacity in the processing facility so it can take that marginal or and still make money out of it. So, each one of our operations we assess independently, and Simon’s absolutely right. What we did do on the $1,700 gold price is we looked at, again, at the ore bodies particularly the low-grade pits in that and we said we don’t want to compromise our shareholders future potential by putting infrastructure on the ore bodies.

So, we used 1,700, 1,700 pretty well mined out our resource. And so, that’s the logic for a big gap. It’s quite interesting. Now, at $2,400, the $1,700 actually looks quite attractive.

But the capital to take that forward is high. Certainly the oxides, we are taking already, we will take oxides on the margin, particularly in Nevada because we’ve got capacity. So, just to give you a feel of how we manage our portfolio. (Inaudible) wants to say something.

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

No, I was just going to add that effectively, Anita, we do take cognizant of that inflationary impact. And obviously, if we see it as a sustained increase in costs and as Mark says it’s going to erode the core value of those ore bodies, then we would adjust for it. So, it’s something we look at, we keep it under review. The teams are busy with that work, as you would expect now.

And we’ll see whether it’s necessary or not. But right now, we’re pretty close to where we need to be.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Anything else? All right, ladies and gentlemen —

Operator

No more questions.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

OK. Operator, you’re good on your side?

Operator

Yes, there are no more questions.

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Thank you very much. Thank you, operator, for managing this and thank you everyone for coming. There’s some snacks next door for those who want to hang around. And I would just say, there were some detailed questions coming out we sort of did a bit of a modeling session here you are always welcome to reach out to our team, whoever you feel comfortable reaching out to.

We’re always there to share the detail with you and get you on the right track. So, please feel free to reach out after this. Thank you again for making the time.

Operator

This concludes today’s event. Should you have additional questions, please contact the Barrick investor relations department. (Operator signoff)

Duration: 0 minutes

Call participants:

Dennis Mark Bristow — President, Chief Executive Officer, and Director

Lawson Winder — Analyst

Mark Bristow — President, Chief Executive Officer, and Director

Josh Wolfson — RBC Capital Markets — Analyst

Brian MacArthur — Analyst

Graham P. Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Anita Soni — Analyst

Simon Bottoms — Mineral Resource Management and Evaluation Executive

John Steele — Metallurgy, Engineering, and Capital Projects Executive

Ralph M. Profiti — Analyst

Steven Green — Analyst

Graham Shuttleworth — Senior Executive Vice President, Chief Financial Officer

Daniel Major — UBS — Analyst

Bob Brackett — Analyst

Mike Parkin — National Bank Financial — Analyst

Tanya Jakusconek — Analyst

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