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Barrick Gold Corporation (NYSE:GOLD)
Q1 2019 Earnings Call
May. 8, 2019, 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 conference operator. Welcome to the Barrick 2019 First Quarter Results Conference Call. During the presentation, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded and the replay will be available on Barrick's website later today May 8th 2019.

I would now like to turn the conference over to Mark Bristow, CEO for Barrick. Please go ahead.

Mark Bristow -- President and Chief Executive Officer

Thank you very much and I'll start again and good morning ladies and gentlemen. Welcome to this -- our first results presentation as a merged Barrick and Randgold. And as I'm sure you would have already noticed and if you had followed some of the interviews this morning, we've certainly got off to a good start.

The first quarter's performance was both positive and productive with a strong across the Board delivery from all the operations, topped by the transformative and long-overdue creation of the Nevada joint venture.

It's worth noting again that the Barrick-Randgold merger was a very strategic one. I think it's important that I stress this. Designed to produce a company capable of rising above an industry in disarray, to become its most valued gold business.

In the short time, the two companies have been together we've made significant progress toward the goals we set when we shared the deal with you and our investors and other stakeholders.

But I would also stress that speed is not necessarily of the essence when you're playing a long game. Both Barrick and Randgold were built on the solid foundation of discovery, development, and early acquisitions and that future focus vision still directs our strategy today.

So, whether you're a fund manager or a Finance Minister, don't look to us for instant gratification or easy pickings. The stakeholders who will reap our rewards are those who share our long-term vision and invest in or work with us as partners and that's really our commitment. And, in fact, this industry needs that to be able to recover its rightful place and become relevant again as an industry you can invest in.

Please take note of the cautionary statement as presented on the screen and for those who would like to read them, they are in your pack.

I'll start as usual with a look at our health and safety record, which although void of fatalities, remains an area of business which needs improvement and certainly it has my focus.

While Africa held steady, we have more to do in both North and Latin America and this is receiving a lot of attention not only for me, but from the executive team as well as the mine management.

It's an issue that is of fundamental importance to a heavy engineering budget business such as mining and we are committed to creating an injury-free working environment across the group.

Similarly, the cardinal importance we have assigned to sustainability demands that we care for the environment and our communities around our mines. We are reviewing all our community-led investments to ensure that they will create real value for the life of the mine and beyond. We are also addressing the legacy challenges in some countries.

In the meantime, it's pleasing to note that there were no class one environmental incidents in Q1 and that all sites in Africa and in the Middle East have completed their ISO 14001 recertification or surveillance audits and with Latin and North American audits due in Q2 and Q3.

Turning now to the operations, these are the highlights of the quarter. The quarter-on-quarter operational comparisons are obviously skewed by the merger, but it's important to note that all the operations delivered on plan and even on a per share basis, the adjusted earnings were significantly higher.

We have made rapid progress with integrating the organization, streamlining processes, and ensuring that all sites have the geological, operational, and technical capability to meet their business objectives.

As we reported earlier, the group has been divided into three geographical regions; each with a very strong executive and small, but effective, support team. In line with my belief that people should be where they make the most significant contribution to delivering against our strategic objectives, we have reduced the Toronto corporate office to around 70 people.

Each and every one of those people has an important real and focused role in Barrick's business and we will be continuing to refine and rationalize our support structure with a focus now shifting to the non-mine site locations outside Toronto.

We're also making rapid progress with the establishment of the Nevada joint venture. There are a few pronunciations I'm still working on as you all make up when I go through this presentation. But for obvious reasons has been named and today we announced the formal name of this joint venture. As you know we are incorporating the joint venture into an organization into a company and that company will be called Nevada Gold Mines.

And we're going to disclose the logo just now, a little while later. And by the way, we didn't employ anyone to do this. We did it ourselves. And a little bit more as I say about that a little later.

The organizational structures are being finalized and we're working toward realizing the synergies and cost reduction opportunities and those have not changed. I'll talk you through the other highlights -- I will talk you through the other highlights on this slide when we get to their respective operations.

Looking at the operating results. Gold production was up which was great and costs were a little better. That means better than what we thought, which we is down -- or what we planned for.

And copper the copper assets all made a real contribution to the bottom-line and they were in line on production and slightly lower on the costs.

So as I pointed out to some of the journalists I've already interviewed with today is that apart from the closing assets every single other assets in Barrick made a contribution to the bottom-line, which is a fantastic way to start a business like this. And every way you cut the results, it's a solid set of results that came in ahead of market consensus as you would have noticed. And net cash from the operations is up 27% supporting the payment of a dividend and I think it's also critical is that we can afford our dividend.

And when you look at the balance sheet, the $500-odd million that came in from Randgold is still there and it's been -- it's offset on the net cash position. So again, we managed this business. There was cost as you know in this quarter on the transaction, but all-in-all the financial results were at best described as robust. And when you look at the net debt, its -- we now can boast a strong balance sheet relative to the rest of our peer group.

We start our -- review of operations in Nevada where all our operations have been integrated into a single complex under a single Executive General Manager to wheel each operations manager reports. While there were -- there will be further changes as you would imagine within the -- as we roll-out the Nevada joint venture, this principle will be carried over in the new structure and that's quite important. And I think some of you -- some of the analysts have looked for more clarity.

You'll see that we desegregated Cortez and Goldstrike in our numbers today. We'll continue to do that working toward being more transparent and allowing you to really understand our business and manage it. And what Ive always done as you know in my career is my intention is to give you an understanding of our business, so that you get the model right. I'm not intending to let you try and guess what our business plan is. We're going to give it to you and we're going to work on getting more granular as we go along.

At Cortez production is transitioning as we messaged from as far as last year. The open pit -- the high-grade open pit what we call CHOP -- Cortez Hill Open Pit more toward the underground and lower-grade open pits and that has impacted on our results. It was always messaged that way and so it shouldn't be a surprise to anyone. That shift to underground and higher grades will continue all the way out to 2022 and we've already started to see the improvement and the bigger contribution from the underground, which we call CHUG -- Cortez Hills Underground Operations. And again, we've got the Deep South not to be confused with South Deep, which will continue to expand that contribution.

So Goldstrike's production was down because of the preferential treatment given to Cortez higher grade underground ore relative to the previous quarter. So again, we are not working quarter-on-quarter, but this is our plan because we have to replace the higher-grade open pit ore and so there was an offset and again that ore that we stockpiled from Goldstrike will go through the rest this quarter. But again, we saw improvements in throughput and in recoveries from the TCM circuit at the autoclave from Goldstrike so that was good.

And then Turquoise Ridge achieved a record production in the month of March mining and hoisting more than 80,000 tons and Turquoise Ridge-Twin Creeks combination is a very important part of the Nevada synergies that we are working toward. And the third shaft, pre-collar construction for the Turquoise Ridge. The third shaft was completed and pre-sink activities have started. And our capital team is fully engaged with the contract that to make sure that we keep that project on track.

Now moving back, voila, there is the logo. It's about as good as we're going to do on the launch. And how the -- look at the Nevada Joint Venture, which we expect to get its final sign-off at the end of this current quarter. In the meantime as I noted earlier, we are making exceptional progress in restructuring this new business. And this is the new logo which we selected in a democratic way, sort of, consulted and democratic way and with our colleagues from Newmont Goldcorp.

And as the map shows the properties Elko comprised of is; Cortez, Goldstrike, Turquoise Ridge and Goldrush from Barrick side; and Carlin, Twin Creeks, Phoenix, Long Canyon and Lone Tree from Newmont Goldcorp side. And as also has been reported Barrick will operate and own 61.5% of the business. And it's worth noting that the mines making up the joint venture produced in excess of 4 million ounces of gold in 2018 making it the single largest producer of gold as a complex in the world and significantly more than the next biggest contributor. And I think that's and then the Olympiad Complex at Prokopyevsk in Siberia.

I must say that the Nevada mines is being structured in a great spirit of cooperation between Barrick and Newmont Goldcorp and excitement as well not only about the new business, but also the opportunities that this business is going to unlock. Somebody said the other day that -- this is a deal that was tried so many times and but one thing that was always consistent that everyone always recognized the logic of it although it didn't happen. And so it's very pleasing for us to be part of ultimately getting to that point.

In this regard I'd also like to draw your attention to the first new opportunity even before weve closed the transaction and that is the Cove McCoy joint venture bullet hole intersection that we announced recently with our partners and our partners at Premier.

And as you can see, the -- as I'm sure you noted, that's been a very significant intersection. Our geologists are quite excited about exactly that bullet hole. And what's important about it, is it's in a different part. It's not in the traditional sort of Carlin-style trends that post the other big deposits in Nevada. And it's also, definitely, highlights the significance and opportunity that we believe that this joint venture will continue to unlock in Nevada.

I mean, I'm a geologist and it's really an amazing place. It's like the [indiscernible] was in the sort of 80s, 70s and 80s. There's some very significant -- I mean, you draw intersections there that I've never seen before. So -- and I think, this just reinforces the potential of Nevada and ready -- reinforces my and Barrick's commitment and determination to increase and maintain a dominant presence in this geological address.

At the Goldrush project the twin exploration decline development accelerated during the quarter and each has now advanced some 680 meters out of the planned 4,000 meters. A dedicated manager -- we've restructured all the management across the Barrick Group, but specifically for Goldrush we now have a dedicated manager on the feasibility side of Goldrush and we put the decline responsibility under the underground manager at the Cortez mine.

We will also continue to coordinate the Goldrush-Fourmile exploration efforts, consolidating the geological models to further understanding of the mineralized corridor between the two and I'm going to show you a slide just now. But there's -- we've got eight drill rigs at Fourmile with those eight yellow circles on the slide.

As you know Fourmile has initially been excluded from the Nevada joint venture until the full extent of the mineralization has been determined and the feasibility work has been completed. And then under the agreement, we have, on certain conditions, of course, the ability to roll it back into the joint venture.

We are also been reviewing the existing geotechnical data on all of Barrick's mines, but with a particular emphasis on the operations in Nevada and Goldrush. In the case of Goldrush-Fourmile and all of the Nevada underground mines, we believe this will help us to optimize final mining layups and also the mining methods and we're quite excited about the opportunity.

What's happened in Nevada is, because of the ground conditions and they're very variable is that, both on the Newmont Goldcorp side and on the Barrick side, we tended to go to the worst possible rock integrity and design accordingly, but that's quite variable and there's some very competent parts of Nevada, which definitely support that long-haul open skirting with [indiscernible] and with that comes very significant deficiencies. So we're expecting to change a lot of the mining methodology, both within the Barrick assets and particularly Goldrush, as well as in some of the Newmont Goldcorp assets.

And there's an example and I thought you'd appreciate this. This is the Goldrush-Fourmile plot of the drilling results to-date with the hot colors being -- sorry, red above 5 grams a tonne. Average grade for total resource about 15 million ounces now, including inferred for Goldrush and we've just started declaring the initial resources out of Fourmile, as you would see in the documentation.

But you can see the extent of this mineralization is continuous and it's really is a world-class occurrence. In drilling, as you saw in the previous slide, is ongoing. And as far as Goldrush goes, we are now starting to extend the drilling on the edges of the ore body and the big focus in Fourmile is to continue to build out of the geological model. And then, once we start getting that quoting together we will start working toward infilling it in. And then, I think, you'll start seeing some consistent contributions to the growth in the declared inventories whether it's in resources or reserves.

Moving then on to Canada. Hemlo finished pretty much on target for the quarter, despite the challenging start to the year and with the aim of making Hemlo a Tier 2 asset, its team is currently optimizing the mine design and schedule, based on quite different geological modeling and updating, which we've been doing and we've done a lot of geotechnical work again at Hemlo.

And while it's still early days in that project, the potential to bring cash flow forward and add reserves to Hemlo is very encouraging. And so, whatever happens going forward, Hemlo is going to be a different asset and the challenge to the team is, can we make it into a Tier 1 asset, which then we would be -- it would be a keeper in our portfolio.

So where we've had normally, what we have in our portfolio is Tier 1, Tier 2 and then we have assets that we are looking to realize and give to somebody else to run. Hemlo is a strategic asset, and that it benefits more because of the tax shield that we have in this country. So it always will provided, we can create positive cash flow, it always delivers more value than an asset that doesn't have that sort of tax protection.

So now we come to the biggest challenge of all and that is for me to try and pronounce Pueblo Viejo. How did I go? In the Dominican Republic, everyone's been sort of trying to get me to practice this and my assistant actually wrote the phonetics down. Yes. We need -- well, we've got some Spanish people. That doesn't help much either.

But anyway, Pueblo Viejo posted another good performance, despite lower grades, which were offset by improvements in recovery and throughput, enabling the mine to beat its production plans, which was very pleasing. As with other Latin American operations, there's been an increase in focus on mineral resource management. Now all our assets have mineral resource managers already. They also almost all of them have different management. So we've done a lot of change in the organization, not necessarily a change out, but changed around and we've moved people around and given people a different focus and it's brought a lot of energy to our team.

And all indications so far is that there's significant potential to convert some 7 million ounces in the short term of measured and indicated resources to probable reserve with still a lot more to come. And PV has rarely been an exciting discovery for us. We knew it was a good asset and we did the due diligence, but certainly the more we look at it as a team, the more opportunity we've seen.

And a lot of it driven by the scoping studies to support a plant expansion. Again, as you know the Barrick team has been talking about expansion at PV for some time. And we've now firmly set on a flow sheet where we believe we can deliver a plan that meets all our investment criteria and we will be able to support plus 800,000 ounce production profile way out after 2022.

And it'll be a big project costing some $1.3 billion and we are very excited about this. And the other next step of course is we expect to complete the pre-feasibility study this year in fact in quarter three and then the full feasibility study during next year. So again an exciting growth project for us.

Despite operational and management concerns as I shared with you last time we chatted, Veladero in Argentina also had a satisfactory quarter after a poor start in the year. And there's been a big focus on efficiencies and cost have come down considerably on the back of business improvement initiatives. And again, the gap in Veladero is that we've got a lot of work to do to catch up and infill the drill spacing. The drill spacing is a bit wide still and so you end up with surprises both good and bad.

And as you know and those people who know me, the one thing I'm fully committed to is we take the risks out of grade by drilling the orebodies properly. So we've got a big program in Veladero to weve redone, weve reloged all the core. We've now got the drill programs running together shorten up the drill spacings and that will give us a lot more confidence in our plan. We've got about six years of life there. And then the big focus has shifted to looking for more, because we'd like to extend that and we haven't got a lot to deliver to be able to take that asset to a Tier 1 category.

As I pointed out, there's been a strong drive on brownfields and new mine greenfields exploration to add ounces and extend the mine plan and the drilling programs have been ongoing. And we put some of our really top people down into South America to drive those. Exploration teams are also evaluating targets across the Frontera District around Veladero and also further south at Del Carmen we've -- and Rojo Grande we've got some really good intersections. And again, it's Veladero look-alike target slightly lower grade, but still significant and better infrastructure than what Veladero had when we first discovered it.

In Papua New Guinea, Porgera had a good quarter despite again challenges rolling out after the earthquake of last year and Porgera also has the potential to be a Tier 1 asset. But it really needs additional investment for more drilling programs as well as infrastructure and equipment capital to enable it to reduce its operating cost. It's really been quite a neglected asset. It's a real geological Tier 1 opportunity. Yes, this mine has been operating for 28 years. And from our assessment of it, it certainly has got another at least 22 year. So it's not an insignificant asset in our portfolio.

As you know Porgera operate in a difficult jurisdiction and like our African mines has to work hard to secure its social license. And those people who were at the AGM yesterday would have experienced what has become quite sort of a repeated thing. Again, I believe we have the skills to be able to work and change that risk profile at least with our relationships with the communities.

Big focus for Porgera is the renewal of the special mining license and we are fully engaged successfully on this. We've had the first round of public consultation which went very well. We are engaged with the Prime Minister and his administrators. As you know there's a lot of dynamic politics in PNG at the moment, so we are managing the situation and working to continue the process of renewing that license.

We cross now to Africa where our Loulo-Gounkoto complex in Mali met its guidance as its other operations. We're paying a lot of attention to replacing the reserves that are depleted by mining and that's with those assets are both Loulo-Gounkoto and Kibali as they had a really good run. And so far, we've been able to extend the life of the mine and there's still significant opportunity in the immediate vicinity of Loulo and Gounkoto.

Loulo and Gounkoto are located on part of a very significant geological province, which we refer to as the Kedougou-Kenieba Inlier. And in fact the structure that hosts that mineralization including of course the Sadiola Enga assets in the north and [Indiscernible] gold assets in the south. It's a very long structure to call the Senegal mining and share and we control 70 kilometers of this truck of that share just within the Loulo-Gounkoto mining licenses.

And additionally, we also have Bambadji on the western side of the border in Senegal and Bakolobi projects on the same structure. The Damarco (ph) belt which hosts Massawa and the Tigrinya assets are on the other side of that inlier as you can see on that slide.

At Gounkoto specifically exploration is highlighted the potential for a material contribution to the underground project below the super pit and we're working now on drilling that out and designing the interface between the open pit, the super pit and the higher-grade underground resources below that pit.

The Yalea structure is also delivering significant extensions to the high grade deeper orebodies and are drilling and we've taken a step back as well and looked just it's worth remembering that Loulo or Yalea was this initial pit, it was about 1.5 million ounces and there's no way -- and we didn't appreciate what we would discover below that pit, slightly removed. This is slightly different orebody.

And so, we've gone back to that structure, that's the orebody that you call the purple patch which really made the Loulo-Gounkoto project. And we've taken a step back. As you see there's about a 7 kilometers stripe. Outside the Yalea drilling there's not much information below 100 meters below surface, so we've been modeling the geology and looking to extend our search below the current drilling dips. And again we think that there's opportunity to make additional discoveries.

Back then to Senegal and Massawa, as you know Massawa is currently in the process of applying for its mining license and the related permitting to be able to start to the development of the mine. And at the same time we're still exploring at Massawa. We've got drill rigs running, looking to add to the reserve base. Currently the reserves are just shy of 3 million-ounce hurdle rate to make it a Tier II asset in our portfolio.

And back in the Central Africa and the Democratic Republic of Congo, Kibali made another strong start to the year as you would've seen in our press releases, achieving a record for tonnes hoisted from the underground shaft in March which is very significant for us and also being able to maintain recovery at the nameplate rate which is important. Lower river levels during the dry season impacted on the availability of hydropower and that drove the costs up slightly.

Like Loulo-Gounkoto, Kibali's lease exploration program continues to deliver sustained mineral resource and reserve growth and latest results show for instance up in the top left hand of the diagram, the opportunity to coalesce Sessenge open pit and Gorumbwa open pit with the up depth extensions of the 9,000 lode and to potentially a super pit like we've got in Gounkoto.

And definition drilling recently on the 11,000 lode, which you see is the down dip extension that has really highlighted a significant potential for that orebody. And what's more is it really encourages one because we keep finding new -- so Kibali is like a bundle of cigars and we keep finding these new cigars on the way down and we -- there's a mine that still has a lot of legs in. And again -- it's already a 10-year life and $1000 gold price and we have every expectation for that to continue to be replaced.

And then on the greater sort of host structure which we refer to as KZ structure, we have many more targets and potential to continue to add reserves and then in particular open the pitiable resources and reserves and that really brings -- keeps the flexibility of Kibali, its mining flexibility if we can continue to ensure that we've got some open pit material that will support the high-grade underground reserves.

Zooming out ,now a little further we feel see a vast gold district which we will refer to as the Congo Craton which extends from the Northeastern part of the DRC down into Tanzania. And that brings me to the subject of Tanzania and Acacia and we continue to engage with the governments and the Board of Acacia regarding the standoff that they've got themselves into.

And the long impasse has already destroyed a great deal of value and getting the conflicted parties to see that at this stage almost any solution is better than none. And that's proving difficult, I might add.

Nevertheless as you know we are full of commitment and tenacity and then I've got no doubt that we will eventually get there. And as I've said before just about any solution is a good one for all stakeholders.

We are engaged and somebody -- there was a rumour that we have stepped back. We are still engaged and seeking to settle key documents and move this process is forward in a manner which is acceptable to all the stakeholders.

Just briefly, this is a snapshot of our other mines. Tongon was again challenged by mechanical mishaps and power supply issues and just missed its production target although, it's still within its guidance and we're comfortable with that.

At Kalgoorlie, attributable gold production was 5% lower at 55,000 ounces and compared to that previous quarter and primarily due to combination of lower grade and more throughput being a result of some weather issues during the quarter.

Lagunas Norte's production declined in line with expectations as the mine ages and it will be put on care and maintenance toward the end of this year with the objective that we'll continue to explore.

And there's a lot of sulfide and carboniferous material reserves potential and the idea is -- the question is can we delineate enough for Lagunas to become a asset within our portfolio? Or will we only get to a point where it's actually -- we're able to realize that asset? And that's really the focus for Lagunas Norte going forward. And then Morila is moving toward closure and Golden Sunlight is largely ceased mining with its last mall run scheduled for later this month.

Elsewhere across the Barrick portfolio, the copper mines holded reasonably well with Lumwana and Jabal Sayid both exceeding our expectations and all the mines making a contribution to the bottom line. In fact, all the assets, as I said earlier, except for the rightsizing assets made a contribution to the bottom line.

As highlighted here, gold mining is all about owning high quality ounces. Both Barrick and Randgold have a history of making world-class grassroots exploration discoveries as well as major reserve and resource additions to acquire assets as shown here. And maybe because of the recent past you forget this, but Barrick made some very, very significant discoveries in its time, and the geological exploration D&A is still very much alive in the country, and we've certainly contributed to that and contributing our team.

And this long life high grade reserve base is supported by an intense company focus on mineral resource management, which we've now embedded across the organization. And as I indicated, when we announced the merger is we are shifting from a focus on cash flow or high grading assets to really -- and so when that happens we tend to end -- it was the last thing to do, as I've said before, but now that we've got the balance sheet that's very manageable, we need a shift back to being driven by our orebodies, the optimal orebody management.

And because when you just focus on grade, you neglect the discipline of efficiency and cost. And so that's what we're doing now. As we are shifting that back to focusing on efficiencies and cost, of course, the orebody modeling itself. And that doesn't mean to say that we're not focused and cash flow like somebody picked up incorrectly this morning. We want to have the same cash flow as in the past, but just offer lower grade base.

In other words we want to focus on bringing our cut-off grades down, and a good example is Turquoise Ridge where we currently are running at over 9 grams a tonne cutoff grade. That's more than double Randgold's reserve rate, and we are absolutely clear that we will get that done significantly. First target is two dots down, so that's 7 and then we believe we can get it down to five and below that. And that really opens up a whole new set of ounces in the reserve and a great tonnage curve. And again, in Nevada has many of those opportunities and they're driven by the synergies that the joint venture will bring.

Everything we do in Barrick is designed to create value and to properly evaluate our assets, we have flexed them across the curve you see here. At the base, our exploration programs and the projects that will deliver future value. In the middle are our Tier 1 and Tier 2 assets, and those which have the potential to acquire that status, as I've discussed in my presentation. And the flag that at the top holds those assets, which in terms of our strategic criteria could do better with different owners as we do not necessarily have the leverage left in them to add value, but they don't have the leverage and that's what mining business is all about is. Can we -- where do we -- where can we best allocate our time to lever that assets to exploit the optionality of the market pricing as well as the geological potential.

That does not mean that any of those assets do not offer a value, and in fact apart from the closure size of us as I already said, we have no leaders in our portfolio. Every one of them made a contribution to the bottom line. Preparations to bring some of these assets to account have already started, and I believe we will be able to deliver a substantial part of the process by next year as indicated when we presented the merger transaction initially. So given our solid operational performance for the first quarter, Barrick I'm absolutely convinced is back and on track. And it's on track to deliver against its plans for the year and beyond.

However, when one looks at mine plans and replacement rates, it is clear that the industry as a whole is not in good shape, and I've been saying that for some time. And again, we see the industry touring with survival style merges and acquisitions, and again neglecting the requirement to continue to invest in the future of our industry. And so, one thing I'm sure of is that we are good to go, and I must say it's been an absolute privilege to work with the team in Barrick and to see the response and the agility out of those three teams as we deal with and we've certainly still got challenges, but also you've seen the results of that effort. And there are very few people left in Barrick, who you have to tell twice to do anything and so I'm really looking forward to continuing to build on what we've started in this company.

This quarter has seen a great start, and I'm confident that we are absolutely well on our way to achieving our strategic objective of becoming the world's most valued gold-mining business, and I say that with a focus on valued, value or valuable and that gets back again to that conversation we had with Catherine, not this Catherine but the other Catherine yesterday at the AGM. Because valued means that everyone looks at Barrick and says that's the company you want to be part. That's the company you want to stop and that's the company would like to work for, and we already believe that people that run it act like owners and are absolutely committed to delivering a sustainable returns not only for its shareholders, but all other stakeholders associated with this.

So, thank you very much for your attention, and we'd be delighted to take any questions you might have.

And Jenny, I'm not sure how you want to manage this.

Operator -- President and Chief Executive Officer

Start with the room.

Mark Bristow -- President and Chief Executive Officer

Start with the room. Okay. All right. Well, there we are.

Questions and Answers:

Operator

We will begin the question-and-answer session. (Operator Instructions) As callers join the queue, we will take questions from the room first.

Mark Bristow -- President and Chief Executive Officer

We also ask that before asking your question, please introduce yourself.

Greg Barnes -- TD. Mark or Catherine -- Analyst

It's Greg Barnes from TD. Mark or Catherine, there was no discussion in this presentation about the synergies in Nevada. You've had more time to look at that. You promised extremely large numbers, $500 million right out of the gate. Has your thinking changed? Could you -- are you prepared to give us more thoughts on where you think that can go on, how the numbers would evolve over the next several years?

Mark Bristow -- President and Chief Executive Officer

The short answer is it hasn't changed, and the second point is we'll tell you when we close. We'll give you more color. I mean, we are working on it. So what we've got is work streams on that, but there's a lot of work to do. I mean, the whole combination -- it's been exciting to see the consensus among both teams about being able to deliver on those synergies. There have been some synergies that are not going to be as good as what we thought as we get into the reeds around some of the operational -- underground operations, but at the same time we discovered new opportunities, which will be able to offset that. So we're comfortable with our target of getting to that $4.7 billion NPV of the synergies.

Catherine Raw -- Executive Managing Director

To give you some color, subpar management is one that is coming out better than we anticipated and being able to look at what their feeds are versus ours and being able to maximize, so those are the sort of things that we--re focusing on now.

Mark Bristow -- President and Chief Executive Officer

And again I think we only get the full value of this combined team once we close, right now there's been a massive amount of work on permitting and being prepared to put the permit applications in to be able to transport and change the way, there's been an enormous amount of work on the whole supply chain procurement, effectiveness and efficiencies and just the people.

So we've now got a management team sorted out. Everyone's got a place and the leader is Greg Walker, our Head of Operations for Catherine's division. He will take on the role as Executive Managing Director, and underneath him, we again managed to balance the leadership between the Barrick and the Newmont Goldcorp people.

Very well and what's even more encouraging for me is some of the Newmont Goldcorp senior general managers are retiring and we've been able to go past them collectively and find really quality younger people who want to make this their career and they've been operating in those assets for some time. So it's a really an exciting human capital opportunity as well as the actual physical mining synergies and I'm sure that we'll bring either more innovative synergies out of the business as we go along.

Greg Barnes -- TD. Mark or Catherine -- Analyst

I just want to follow-up your comments about the ground conditions in Nevada and the changes you're making. Is that going to speed things up underground or slow it down, or is it going to?

Mark Bristow -- President and Chief Executive Officer

It's a little bit of both. It's a good question. Very good. So the first thing is we need to do a lot more geotech work. So we've had the full team dedicated. We started with Goldrush. We've done Turquoise Ridge, and we've got a lot to do in the Newmont assets, but equally Newmont has come to the same conclusion. And they've recently employed some very high quality geotech engineer's, people who we know well and who will be joining our team.

So it's -- collectively both sides have recognized the importance of geotech work. Where we grew up, where I grew up that's like falling off a bus. They're running deeply and South African mines the whole geotech side of mine planning, whereas, traditionally Nevada has really focused on just the lowest common denominator effectively and designing everything high cost, very conservative mine plans, and we've already in CHUG, Cortez Hills underground we've already initiated a long-haul open stopping with backfill and where our efficiencies are a whole lot better. So there's a lot of opportunity.

Goldstrike as well, a lot of the parts of Goldstrike, again we feel that having done the first bit of geotech work and we're catching up with the drilling, we've redirected some of the underground drill rigs to actually drill geotech holes because it's going to be critical in the mine design.

And again we feel that it might delays things a little bit initially, but that's why we're putting in those declines. Is it really exploration and evaluation? But in the long-term, it will speed things up. And I'll just give you another example. The work -- the intersections and the rock net (ph) work that we're doing on Fourmile that's a whole solidified radiated, classic radiated, Colin radiated mineral deposit, which stands up very well.

So we are very encouraged by what we see from the initial intersections and definitely that mass mining, underground mining will be -- definitely be possible in the Fourmile area.

And I can wrap it on before we can go to the work that has been done at Carlin underground as well, and there's a lot of work to be done there, because you know again that's technically quite a challenging underground mine. And again our work that we're doing and the design and planning we're doing, I think will come up with some opportunities.

We are replanning all of Barrick's mines and we expect to do the same on the other side of the Nevada JV as well.

Stephen Walker -- RBC Capital Markets. -- Analyst

Mark, Stephen Walker here with RBC Capital Markets. You talked about Cortez Hills underground and the potential to take the cutoff grade from nine to seven to five grams.

Mark Bristow -- President and Chief Executive Officer

That's Turquoise Ridge.

Stephen Walker -- RBC Capital Markets -- Analyst

Turquoise Ridge, sorry. And if you look at the several analysis for underground at Goldstrike and at Cortez Hills, does the geometry of the ore deposits allow you to increase the volume, and secondly does the mining cost decline -- decline in mining cost that you're starting to look at allow you to maintain the margins, as you drop, the cutoff grade for both at Turquoise Ridge and at Goldstrike?

Mark Bristow -- President and Chief Executive Officer

Yeah. I think that's I mean look in Turquoise Ridge is a spectacular example of right now we've been mining and I mean the margin -- the costs that Newmont Gold Corp were charging us, to process that ore set the cutoff grade.

And so, effectively a bit like in the old days in South Africa, we were mining through, 5-gram ore and leaving it behind. Ultimately, that becomes viable because you've now got it developed in the long run.

But what the combination with Twin Creeks is going to do is we now are only paying for the real cost of the processing facility. And so, that drops the cost significantly. I want to say, $45. That's 1.5 gram just there.

So that brings a whole lot of what we call wide areas, or areas that are developed and below the cutoff grades, suddenly become above the cutoff grades without any capital requirements as an example.

So, there's an opportunity to that. And of course, you can't -- you can't apply long-haul as in stepping to narrow orebodies, but you can through a big wide orebodies and there are lots of those in Nevada.

And again, so, when you look at the CHUG underground, the old CHUG underground which is flatter ore body and it was narrow. And you can't go and do that. But on the Deep South and the upper levels of that is that's quite a complicate. I'm just getting used to the terminology.

But that trend which we already are mining and we just developed the declines down. And so that and the reason we call Deep South is below the water table, all of the water table. So yeah OK. So it's the middle of that's why I understand that.

So we are really mining the middle there. And all that is bulk mining. And that brings significant improvements in costs. And that will continue to happen. And again that design and Goldrush we believe that it will change that mine.

And our focus in Goldrush is to really make it very modern new world style, type of mine, with the knowledge that we've got. And we should be able to do that. Turquoise Ridge is going to be halfway.

And right now we just have been Trailing Road hitters so, self-manner and again we believe that, there's enormous opportunity with that. Because you know Turquoise Ridge is -- part of Turquoise Ridge traditionally very bad ground.

And so, not to blast it very changes the risk profile of support et cetera. And then again just to add to that, our automation initiative. So what we did is we now people thought throughout the sort of digital and automation initiatives.

But again we just transferred investing to the mines, where and so right now we brought some really exciting pockets of automation, whether it's open pit, drilling or haulage. And we are actually, at the point now where we trailing the automatic trucks with alongside men trucks.

Now that artificial intelligence is important to be able to manage that space around the truck. And again, Kibali, is the leader in proper automation, where you'd have one operator, on surface. And he are she and its important part is that she part, is able to run three different operating sections on their own because it's automated.

So again -- and again what we've done in the automation side is we've said, we challenged the team to say we want to do this efficiencies. We just don't want to automate for the sake of automation. And so, again I think over the next couple of years you'll see that the benefits of that effort.

Josh Wolfson -- Analyst

Josh Wolfson at Desjardins, Mark you mentioned a pretty sizable capital member for the Pueblo Viejo projects. When I think about that, bigger picture there's one aspect which is the major tailings expansion, unlocks a lot of ounces.

And then the second part which allows you to process a lot of that or a lot earlier. But there's not the margin opportunity there. So, in the past you talked about that project providing very good returns and easily surpassing threshold hurdles. So, what are we missing with that kind of capital number? How does it work?

Mark Bristow -- President and Chief Executive Officer

So looking at -- so conceptually imagine 27 million ounces conceptually with a $1.3 billion investment, 800,000-plus ounces a year, at sort of the costs that you see now, we don't have to -- you could do it your own and so it makes real returns significant returns.

So and part of that -- so you're right, that we needed a tailings disposal, site that will support that sort of size of mine, and we are working on that. We've got a number of targets that we're evaluating or potential sites that we're evaluating.

And then the process side is very simple. Originally, the team was looking at a concentrate part, so you have a high-grade zone, direct fee, a high-grade ore. You have the lower grade ore and some very big stockpiles at around three-grams. Josh, are you got that? And so the idea then is to take part of that floater so you concentrate the gold.

And then part of it that you oxidize, through a dump each base process, just putting water through a dump and you partially oxidized the sulfide. Yeah. So what we're doing now, is we're looking at -- so -- and that's all quite risky and it's rehandled.

So what John and the team have done is that, we have true-tried and full-scale confirmation of being able to concentrate, and do ultrafine brand, both in Tongon and Kibali. And then the idea is you take that concentrate, ultrafine brand and it just starts the oxidation process and finish it in case.

And so that you can control the partial -- because all you want to do is take the sulfide down, the energy down and they said they can put it through the autoclave. So you're taking a large amount of the lower-grade ore concentrating it producing the sulfur content and putting it through the process.

And so -- and so the back end of the mine is the same and the opportunities that we're now modeling are quite exciting, because 800,000 ounces is the bottom-end of a profile that we're doing a trade-off on and as you increase that efficiency of that concentration, so you drop the costs. And as you drop the costs, you unlock the reserves. And so that's the model that we're doing now. And by quarter three, you will have a good handle on the actual -- the scope. We've got a scoping study which works, and we will have a sort of pre-feasibility type project by the back half of this year. By next year we'll have -- finished that. I don't know, John, do you want to add anything to that?

John Steele -- METALLURGY, ENGINEERING AND CAPITAL PROJECTS EXECUTIVE

Yeah. The essence is the tank oxidation with ultrafine grind as an engineer that gives us controllability, because we can vary the grind to get the oxidation it require. On the pad, we get what we get, in terms of oxidation but now that we've got a process that we can control we've got a really viable project on our hands.

Steven Howard Butler

Thank you, Mark. Steve Butler, GMP. Mark as the previous slide before this one Tier 2 assets can you remind us again what you define as the lowest parameters for a Tier 2 asset in the portfolio?

Mark Bristow -- President and Chief Executive Officer

3 million ounces returns of $1000 dollar long-term gold price.

Steven Howard Butler

And Massawa is beneath that you said when resource?

Mark Bristow -- President and Chief Executive Officer

Yeah. Just short of that. I mean, Massawa is a particularly interesting example. It's one of the best by far undeveloped gold deposits in Africa. And again, there is couple of junior companies around it that have installed infrastructure. And so -- and again, this is a project that we would be prepared to support and realizing its value and we've engaged with the Senegalese government because again the Senegalese government haven't really benefited from gold-mining.

There's been gold mining in Senegal, but they've all been marginal. And so how do you -- can you exploit the installed infrastructure already in that region and not pulled in another mine. And you know, I mean, that's the difference between our focus always is how do you make money? Not how do you produce answers? So there's an opportunity to work on that. Right now, we've got a focus on completing the process with the Senegalese on getting this project across the land.

Ralph Profiti -- Eight Capital -- Analyst

Thanks, Mark. Ralph Profiti from Eight Capital. We have Fourmile currently excluded from the Nevada joint venture. Is that due to the 43-101 disclosure? Or is there potential that the economics maybe different inside and outside the joint venture depending on what you have on what comes out of the feasibility study?

Mark Bristow -- President and Chief Executive Officer

So as you will recall, when we did this joint venture it was negotiated under quite a lot of pressure and the principles of the deal was based on market consensus of the assets the net asset value. And very clearly Fourmile wasn't in the market models. And so -- and we know how valuable Fourmile is. So we felt that we would -- we didn't want to put it in because there was no value. There was no market value on it. What we have agreed is -- and Newmont kept out a couple of long-dated assets as well, where there is no value and then because they were not -- they were marginal in the current markets.

For Fourmile and for the other assets, either party has an ability to bring it into a joint venture at the feasibility NPV provided it delivers 15% IRR at $1200 gold. Am I correct? And it will be also brought in not only at the NPV of $1200 gold with an IRR of 15%, but it will attract the same premium multiple as the vending partners. So if Barrick was trading at 1.3 times, you would pay it and also the joint venture will pay for the cost of the feasibility, so you'll recoup the feasibility. And it will come into the joint venture and the other party can elect to maintain its shareholding by making good on the cash flows to the vending partner or can take the dilution. That's the way it is--that's the way it is structure. Am I correct in that? Thanks. We're done. Nicky -- I mean, Jenny? So we are going to --we will have them, they can talk.

Operator

We will now take questions from the phone line. Our question comes from Chris Terry of Deutsche Bank.

Chris Terry -- Deutsche Bank. -- Analyst

Hi. Hello, Mark and team. Few questions for me. I understand you haven't got the medium to long-term guidance out yet and you're still working through that. I just wondered if there was an update on the timing for that and maybe just conceptually whether you could step through excluding the Nevada opportunity obviously on the JV which is stepped through some of the other things you found in the last three months and how that sizes up for the medium term. And then I was just also interested on the comments around divestments overall. I know you're taking a longer-term approach to that, but assets like Porgera I think it was interesting you talked about that with the Tier 1 opportunities, so I was just wondering whether you could make some high-level comments on some of the assets and the time line maybe on the divestments. Thank you.

Mark Bristow -- President and Chief Executive Officer

Okay. So on the divestments I've said that our target is about -- is around $1.5 billion of realized value as part of that program. And I won't be adding any more color to that process. I think that's good enough for you to measure me against. Right now, I don't want to start the public negotiation on these assets that all as I pointed out valuable. There's some that still needs some additional work to really get our head around the true value and we're busy with that. And also we are mindful that any transaction we do, we're clear about maintaining our relationship with our host countries because there's no country in which we will be realizing assets that isn't an important destination for our ongoing exploration. So that's the reason behind that.

On the guidance, I have this ongoing negotiation with my team, so we have to reach a compromise and that is that we will definitely have it to you this year, but we have given you very clear guidance, 5.1 million to 5.7 million ounces and that's a five year horizon before 5.1 million to 5.6 million ounces and for the next five years that range before any disposals. And the cost profile, all-in sustaining cost is sitting at 8.70 to 9.20. But at the back end of that five years, it will be below all -- I mean at the bottom end or below that number. It's in the guidance we're giving you.

And because you've consistently seen that guidance right from Randgold and Barrick, it's just that we've got a bit more work to be able to be comfortable with it, but that we're comfortable that we'll meet that guidance evenly. And by the way, there's nobody else that has that sort of guidance over five years. And the one thing I would add is we will meet our five-year guidance when we give it to you unlike most other people in this industry.

Chris Terry -- Deutsche Bank. -- Analyst

Okay, thanks, Mark. And just one follow-up, just on copper specifically, you've got a slide there in your pack, the last three months or so most investors have gone a little bit more bullish in copper. I just wonder whether you could talk about the role that copper assets and how you think about that within the mix? Thanks.

Mark Bristow -- President and Chief Executive Officer

Yes. So copper is an absolutely strategic metal for us. Why? Because with the merger, we moved into much younger geological provinces, particularly the whole western seaboard of the Americas both south and north. And with that comes an association between gold and copper. And copper has many similarities on process -- in the process and also geologically apart from the fact that in many cases it co-habits with gold. So that's the reason and we're very clear when we launched this merger that we have specific criteria and for copper, it's going to meet our investment criteria and that's hard for a copper mine.

And secondly, we would certainly invest in anything that grows copper and gold and we would also invest in pure copper, if there was an opportunity where our presence at an address gave us a competitive advantage over the traditional copper mines. So that's really the guidance in which we will operate and I've got the reason that we're going to change the plan.

I'll give you a simple example. Jabal Sayid is in an area which is part of the -- what we think the Arabian Shield which we all know as geologists, but we think that that's the same geology as the Nubian Shield, so we call it the Nubian Arabian shield. There's a Zakaria in there which is technically a Tier 1 asset, but there is going to be no other sort of big discoveries like that because no one is really look for it. And our relationship with in Ma'aden in Saudi Arabia gives us that opportunity to explore that whole Arabian shield and across the Red Sea into the Nubian shield with a partner that knows how to operate in those jurisdictions.

I mean culturally, we've got the geological expertise and they have the geopolitical key. And so by the way Jabal Sayid has got some significant upside which we are already working on. When we got people who are worrying about whether it could actually deliver on its design and we think it can and certainly geologically it can. And again there's been very little geological modeling or mineral resource manager, no geology-driven business because it's high-grade copper.

And so it makes sense for us. And so what we're doing is putting together a dedicated exploration team to evaluate that region and at the same time, we will expand and deliver the full potential on Jabal Sayid and then will make the decisions in the fullest of time, but that asset really does make significant cash flow. And if we can jack it up and its throughput than it's going to make even better cash flow.

Chris Terry -- Deutsche Bank. -- Analyst

Thanks Mark.

Operator

Our next question comes from John Bridges of JPMorgan.

John Bridges -- JP Morgan -- Analyst

Good afternoon Mark. Congratulations on the progress. Keep up the good work with the Spanish. I still struggle with it on occasions within Africans which creates all sorts of problems. Just wondering you've been talking this morning about Acacia and forcing the issue. Does that mean buying out minorities? Is that -- how do you see the way forward with that issue?

Mark Bristow -- President and Chief Executive Officer

So I think all options are on the table whether it's taking out the minorities or encouraging the Acacia Board to run a strategic program or something in between. The problem is that we are not prepared to overpay for these assets. Right now, it's really in a bad space and we need a lot of work to get that back on an even keel and that requires -- and again, I think everyone understands that it's very difficult for Acacia Board to actually run that company.

And I'm a bit concerned that all the effort we've made, we don't seem be to be able to get through to anyone. We certainly are making progress with the Tanzanian government, but again there's a standoff of the two parties and we're in the middle trying to facilitate it. And also we have an argument over whether we can exercise our assets as the major shareholder and so it's a very complex situation. And so when you get into that environment, as our mediator, it's difficult because both parties are still trying to keep all options open and it makes a difficult negotiation.

So as you see we've been -- we go a few steps forward and a couple of steps back and -- but as I've said before, there is no doubt in my mind when we get to the solution whatever it is, it's going to be good for stakeholders, because right now, it's not good for anyone.

John Bridges -- JP Morgan -- Analyst

Understood. Understood. I'm a little bit confused because my understanding was Tanzanian wanted to talk to you and they want to be involved, but they weren't able to.

Mark Bristow -- President and Chief Executive Officer

Well, yes, to a degree. I mean, that's the lip service. The Tanzanian government are very committed to try to find the solution. The problem is, is there a commitment on both sides and enough courage to be able to close out? And we can't sign anything that we're not prepared to because we're not in a position to legally. So our only role is to be able to play a messenger and end up in which we are well advanced and getting to is try and get an agreement -- the basic detailed agreement that we can deliver to the Acacia Board and its independent community. And then it's up to them to make that decision. It would be a lot easier if Acacia was more engaging in their discussion, but again I think you're seeing everyone protecting a bit of their own turf, because it's a complex situation. There's not a lot of trust left on either side.

So we're going to continue working with it. And again, we've assured Acacia that we're working to get this thing done and we will present it to them, but at the same time they've also questioned our right to be able to buy out shares. So in itself it doesn't make -- then you've got to ask the question so why we are here, why doesn't Acacia go do the deal? And the answer is, they can't. So they will eventually get somebody to see reason, I hope. Not from the lack of trying on Acacia, I must say for a long time now.

John Bridges -- JP Morgan -- Analyst

Okay. Appreciate the color.

Mark Bristow -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from John Tumazos from John Tumazos Very Independent Research.

John Steele -- METALLURGY, ENGINEERING AND CAPITAL PROJECTS EXECUTIVE

Thank you. [Foreign Language] So in the quarter Barrick had about a 2% return on equity. Assuming constant gold prices Mark when you got things calming in a couple of years, what's a reasonable target, 6%, 8% for ROE?

John Bridges -- JP Morgan -- Analyst

[Foreign Language]

Mark Bristow -- President and Chief Executive Officer

So if you look at -- that's a tough question to answer and I think our legal people are going to be cringing about exactly what I'm going to say now. I see it in this audience. So, if you look at our dividend policy -- I mean the dividend we just paid, we can afford it, very much afford it. That's a 1.2% yield. That's significant in the gold industry, making it out of real money. And we just started. So I've said and John said this too our focus is to drive this business to be able to deliver real value for its stakeholders.

In Randgold, we've got the dividend yield up significantly and I've got no doubt that we've got -- on balance we're -- we've got a better portfolio of assets and there's no better way than with the best people and the best assets to produce leading returns. And so it's my objective to be able to become the go-to-gold company when it comes to returns and that's our focus and every reason we have to be able to continue to deliver on that.

John Bridges -- JP Morgan -- Analyst

[Foreign Language]

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mark Bristow for closing remarks.

Mark Bristow -- President and Chief Executive Officer

Again, well, thank you very much again for your patience and your questions and do we have -- I mean traditionally we serve a glass of wine or anything, yeah, can we, so you can have a cup of tea or coffee with the team, I think next door. There's refreshments over there. Traditionally in Randgold we use to offer you a glass of wine, but we'll work on that. I think we've got to get a liquor license or something. Thanks very much for your attention. Cheers.

Operator

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

Duration: 85 minutes

Call participants:

Mark Bristow -- President and Chief Executive Officer

Catherine Raw -- Executive Managing Director

John Steele -- METALLURGY, ENGINEERING AND CAPITAL PROJECTS EXECUTIVE

Greg Barnes -- TD. Mark or Catherine -- Analyst

Stephen Walker -- RBC Capital Markets. -- Analyst

Stephen Walker -- RBC Capital Markets -- Analyst

Josh Wolfson -- Analyst

Steven Howard Butler

Ralph Profiti -- Eight Capital -- Analyst

Chris Terry -- Deutsche Bank. -- Analyst

John Bridges -- JP Morgan -- Analyst

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