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Barrick Gold Corporation (NYSE:GOLD)
Q3 2019 Earnings Call
Nov 6, 2019, 9:00 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 Third Quarter Results Conference Call. [Operator Instructions] Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded and a replay will be available on Barrick's website later today, November 6th, 2019.

You will now be connected to the conference room where the presentation will begin momentarily. You may hear silence until it begins.

Mark Bristow -- President and Chief Executive Officer

Good morning, ladies and gentlemen, to everyone particularly who have dialed in here today and of course a very good afternoon to all of you who have made the effort to come out here. I did explain when we announced the potential merger between Randgold and Barrick that we would come back to London and present to you our progress and you'll be pleased to know that yesterday we had the formal Barrick Board meeting here in London as well. So, we did keep our word. So, it's now just over 10 months since the merger between Barrick and Randgold Resources went live. That stated aim of the new Barrick was to create the world's most valued mining company and in the process to set an example of a modern mining business for an industry in need of invigoration. And there's no better time to talk about this because really everyone dislikes mining, but it's an absolute core component of everyday life,

And we as miners have a big challenge to get accepted by the communities and the investment, the investors as well. And we at Barrick are absolutely committed to make sure that we change the way we do business on a day-to-day basis. It's very pleasing today as we report on our results for the first quarter -- the third quarter since the merger, to share with you the progress that we've made and where we're going to achieve exactly that goal. Before we go any further, please take note of the cautionary notice which is also on our website for those slow readers or some -- anybody who wants to sort of delve deeper into the statement. This is our scorecard that we shared with the world back in -- on 23rd of September 2018 when we announced the merger. As you can see, when you compare what we said we would do with what we have done, every box has been ticked.

Most significantly, we've reengineered Barrick's corporate structure and strengthened every team; formed the Nevada joint venture in line with our focus on Tier 1 and strategic assets; reevaluated and optimized our ore bodies by getting back to the geological basics; and improved our operational performance to generate strong cash flows for funding further investment growth and returns to shareholders. Health and safety of our workers is a key concern in all that we do and its management is delivering positive results. Lost time injuries have decreased for the third quarter in a row. The slight increase in total injury frequency rate that you see on the slide is a key leading indicator, which results from our increased focus on recording every single safety incident no matter how small it is. Our ultimate aim of course is to achieve a zero injury work environment. Like safety, care for the environment and the community is a core component of Barrick's business philosophy and certainly for us, not just another governance exercise.

I've often spoken about the need for mining companies to earn a social license to operate and this is becoming more pressing for us as miners as I indicated in my introduction. The recent worldwide Extinction Rebellion protests are a further demonstration that society at large is demanding fundamental changes from our industry. Although everyone wants our products, mining is particularly unloved and if we are to survive in the longer term, as I pointed out, we will have to align our practices with these expectations and that is our intention at Barrick. These are the highlights of our third quarter and as you can see, they show that Barrick has become a very different company.

Our operational performance has improved across the board. Earnings have significantly exceeded the consensus. Debt has been further reduced such that we now boast one of the strongest balance sheets in the industry. And the dividend has been increased by 25%. We are well on track to end the year at the higher end of our production and lower end of our cost guidance ranges for 2019. When you get it right, the results are measurable in the numbers. Driven by a positive contribution from Nevada Gold Mines and with all our assets positioned to take advantage of the higher gold price, adjusted earnings per share increased by 67% quarter-on-quarter and 88% year-on-year.

I should point out that in line with the appropriate accounting treatment for the recent formation of the Nevada joint venture, there has been some fair value adjustments that have impacted the net earnings, as well as a notable write-up at Lumwana, where improved plant availability and significant cost reductions contributed to a $947 million increase in its value. The operating results reflect the progress we've made in driving improvements across the portfolio, with the gold mines in line with or ahead of their production guidance regions and copper production increased by 15% from the second quarter, mainly due to record throughputs and higher grades at Lumwana, driven by the same fundamental and sustainable improvements that have enabled us to write up its value.

Turning now to the specific operations, and starting in Nevada with Cortez. I must first start by paying tribute to the Nevada joint venture leadership who have done an outstanding job in integrating large and complex operations into a single business in a very short time. Looking at these operations, Cortez achieved the top end of its target, and when you look at these results, the apparent drop in production is due to the fact that the Nevada joint venture reduced Barrick's interest in Cortez to 61.5% from 100%.

Costs were contained despite the depletion of the Cortez Hills open pit as we guided at the beginning of the year and the transition to a higher proportion of the double refractory underground ore. The Deep South project has completed its permitting process, has now received its Record of Decision and is scheduled to start contributing to production next year. Production at Carlin, the former Newmont Goldcorp mine, which now also includes Barrick's Goldstrike, was in line with target. A combination of a lower cut-off grade step-outs and the initial optimization of the underground mining operations is expected to add significant additional ounces to reserves at this complex. There's lots more to build on at Carlin. With brownfields potential around both mines, including the greater level underground extensions and the prospect of a significant inventory increase in an under explored Little Boulder Basin prospect.

Turquoise Ridge, now combined with Twin Creeks as an integrated mining and post -- as an integrated mining and processing operation is a stand-out example of the benefits of the Nevada joint venture. Production was up 26% from the second quarter. The cost impact of lower grade open-pit ore from Twin Creeks was partially offset by more tonnes processed from Turquoise Ridge underground and increased throughput rates at the plant. The sinking hoist for the third shaft project is on track for commissioning in the fourth quarter of this year. The shaft will significantly improve the ventilation, and that is the big holdup in expanding the underground production at the moment. The efficiencies and synergies brought about from the combination of the two operations has already allowed the reduction in the cut-off grade, as again we forecast. This is expected to increase reserve significantly, in fact more -- by more than 1 million ounces.

Phoenix and Long Canyon make up the full picture of the mines in the Nevada Gold Mine portfolio, albeit they are smaller contributors to the joint venture. At Phoenix, the timing of copper sales impacted costs, while at Long Canyon, the mine had a strong performance with costs noticeably lower than our guidance, and a review is under way to extend the life of mine with the Phase 2 extension. At the time of announcing the Nevada Gold Mines joint venture, we indicated to the market rather controversially, I might add, that the Nevada joint venture would deliver synergies to the value of $450 million to $500 million per year over the first five years of the full production of the project.

And I'm pleased to say, we are well on track to achieve that. These are the key projects in the synergy pipeline, and so far, we have clipped the coupons for a total value of $311 million and we expect to get to our guidance by the beginning of next year. There are still more opportunities in addition to the synergies that we identified in the longer term. And some of these would include, particularly the boundaries that were sterilized between the two companies, and then the big focus for us is about an 1 million ounces of significant grade ore along the boundary between Carlin and Goldstrike, and in particular, the portions of the mines we refer to as Deep Post, Tara and the North Star Frontier boundary, for those who know Nevada at all.

Some of the key projects we are working on at Nevada Gold Mines include: the Turquoise Ridge Third Shaft that I've already referred to; the Cortez Deep South project, again, we've just received the Record of Decision; Robertson; Ren; [Indecipherable] which is an underground block in Carlin; the [Indecipherable] underground extensions, which we're very excited about; and the exploration potential across the portfolio, which includes, as I referred to earlier, the Little Boulder Basin where we've got two boreholes -- legacy boreholes that are significant in their intersections.

Nevada Gold Mines also has a future growth opportunity at the Goldrush Complex where twin exploration declines are being developed to improve access to the ore body and enable further drilling for resource conversion. Notably, we successfully submitted a plan of operations during the quarter to commence permitting for the project, and we expect approval for that project in two years' time. This follows the successful receipt, as I pointed out, of the Record of Decision for the Deep South project in September of this year.

Fourmile and Goldrush are now being treated as a single project, although Fourmile has not yet been included in the Nevada Gold Mines joint venture. Drilling in the southern part of Fourmile has recently returned the best yet intercepts. In fact, in literally three quarters, we've had best yet intercepts in the Fourmile project. And the boundary between Goldrush and Fourmile has reduced to just 100 meters. And you'll see the intercept there that FM19-46D as a significant intercept, remnants of the original Goldstrike intercepts if some of you sort of more bleached hair people will remember that make that. And also about a kilometer to the north of the Fourmile resource, we announced at Denver, a new discovery borehole and that is very significant. You'll see it on the inset down on the bottom left of the screen and we expect that we will continue to add to the resources and we are guiding to a significant increase in resources when we come out with our annual reserve and resource statements next year.

Moving north to Canada and to Hemlo which as you would have seen from the recent press releases is being reengineered and refocused as a modern underground operation blocked Barrick's African mines. At the time of the Barrick Randgold merger, there was some debate about Hemlo's viability, but the anticipated performance improvements are now expected to secure its future.

In Latin America, Pueblo Viejo which locked the Nevada Gold Mines is a joint venture between Barrick and Newmont Goldcorp. It had a very good quarter with production trending to the top end of its guidance and costs down. The plant expansion project at Pueblo Viejo is one of Barrick's most exciting growth prospects. The project is designed to improve throughput significantly allowing the mine to maintain annual gold production of some 800,000 ounces well beyond the next decade.

The pre-feasibility study of the plant expansion project is scheduled for completion by the end of this year and the combined feasibility study for the plant expansion and the new TSF site is forecast for next year. Pueblo Viejo is enormous resource base is in a class of its own and just able -- just being able to demonstrate the viability of the expansion project and secure the permitting for the new TSF facility. We estimate we will add an additional 11 million ounces of resources to its mineable reserves with still more likely to come from the ongoing drilling programs at that project.

The Dominican Republic is one of Barrick's go to destinations and the dedicated exploration team is also building a portfolio of opportunities there outside the joint venture. For the South and at -- in Argentina, Veladero was one of our biggest initial challenges on the closure of the transaction. And the team there has done a really good job in driving down costs, improving efficiencies, addressing some mainly environmental legacy issues and rebuilding the relationships with the community, the province and the country.

In conjunction with our partners at Shandong, we are working toward restoring that mine to its prior Tier 1 status. In the meantime, connecting Veladero to the cheaper power available from Pascua across the border in Chile will also reduce operating costs further as well as reduce our carbon footprint materially. Staying in the region, we have identified lots of opportunities in and around Veladero, but outside the current mine plan.

Latest results indicate the potential to extend the mines life to the end of next decade. We're also relooking at the Pascua-Lama project as well as advancing the Rojo Grande and Alturas targets along the highly prospective El Indio Belt. We now have dedicated exploration groups in Argentina, Peru and Chile. All focused on evaluating our current portfolio, which is not unsubstantial as well as securing more opportunities along the Andean trend.

Moving now across the Pacific and then to Papua New Guinea. Porgera represents both an opportunity and the challenge. In a different operating -- in a difficult operating environment, the mine increased gold production by 23% quarter-on-quarter on the back of higher throughput and slightly better grades. At the same time Porgera has been negotiating with the government for a 20-year extension to its recently expired special mining license.

Although, our negotiations are directly with the government, there are many interest groups in this process, not least of which are the local landowners and provincial government. So you can imagine the environment is quite dynamic and it's probably going to increase until we get final resolution on the terms of the renewal. Barricks new geological focus at Porgera has identified a multi-million ounce potential based on extensions to the known ore bodies and associated structures. This has the potential to extend Porgera's life of mine significantly. Across the Africa then where the Loulo-Gounkoto complex delivered its usual solid performance with gold production up 4% on the previous quarter.

Loulo is currently in the process of commissioning the Group's first major solar power plant, which will help to curb costs as well as to reduce its carbon footprint. This is in line with Barrick's policy of switching to lower emission energy sources wherever it can. Borwnfields exploration at Loulo and Gounkoto continue to replenish the asset base, ensuring that we will stay the complex 10-year production plan. Across the border in Senegal Barrick's Massawa project is currently being permitted. The Mali, Senegal border region for those who are not aware already host a large number of gold mining operations with the district mineral inventory estimated at a plus 6 million ounces. And it remains highly prospective and we continue to hold a big position in that region and our geologists are always on the hunt for that next world-class discovery.

Having delivered Massawa, our geologist focus has shifted to the Bambadji joint venture. Three very interesting corridors have already been defined there and some significant targets have been scheduled for drilling when the dry season starts. Barrick's new emphasis on exploration is expanding its African footprint. From its original base in West Africa, Randgold moved into the DRC with Kibali and following that Acacia buyout Barrick is now expanding its portfolio across the Congolese and Tanzanian cratons, which we believe hold the potential for more Tier 1 discoveries.

Operationally, Kibali is trending well and like Loulo has a solid mine plan for producing plus 600,000 ounces per year for at least 10 years. The lower income for the quarter, I would just point out on this slide is attributable to the higher depreciation following the merger of fair value adjustments is not really particular for the actual performances last quarter. As at Loulo, brownfields exploration continues to deliver good results identifying multiple open pit opportunities along the KZ zone as well as extending the underground reserve base. We are also working on a project to evaluate the potential for more underground ore bodies similar to the current KCD underground ore bodies that made Kibali, the joint it is today.

Tanzania's Lake Victoria Gold district has long been in our thoughts and the roll-up of Acacia has opened up the country for us. You are familiar with the Acacia's story and I don't want to dwell on it again, but it would be remiss of me not to say that the way the business and operations were previously managed left a lot to be desired. After agreeing with the government on a settlement of its disputes with the company, our focus now is on fixing the operations and managing out the legacy liabilities.

I believe the agreement we reached with the Tanzanian government is a ground breaking model for partnerships between mining companies and their hosts in Africa. At a time, when the industry is facing a rising tide of resource nationalization. It provides for the 50-50 sharing of the economic benefits created by our operations in Tanzania, which will be managed by our company jointly owned by the government in a fully transparent manner known as Twiga, the Swahili name for Tanzania's national animal the giraffe. This company recently had its inaugural meeting, which was attended by all parties. We expect the transaction to formally close during this current quarter. Operationally, Tanzania struggled during the quarter with the suspension of mining operations at North Mara for most of the quarter and the results reflect this disruption. As you know, operations resumed near the end of quarter three and we expect a more normal quarter during four -- quarter four.

This is a quick look at the rest of our gold mines, which did not did -- all did reasonably well with the exception of Kalgoorlie. As previously highlighted, the sales process for Kalgoorlie has been initiated in line with our policy of disposing of non-core assets, which we expect to advance in quarter four. We continue to expect to realize in excess of $1.5 billion in value from our asset disposals by the end of next year. As I noted earlier, the Lumwana was the stand-out achiever in our copper portfolio, achieving record throughput and increasing production by 33% quarter-on-quarter. Sales were impacted at Lumwana by the refurbishment of one of the smelters that process the mines concentrate, and we expect the situation to be resolved by the end of this year.

With the integration of geology and grade control into our mine planning and our first bash [Phonetic] had optimized life of mine plans as promised carries a five-year outlook for the group. We have transfered responsibility for ore body or reserve and resource modeling as well as mine planning back to the operations, as we said we would at the time of the merger. We are also working on a 10-year plan to serve as the Group's foundation for capital allocation, budgeting and forecasting. This will be supported by the rollout of new information management systems designed to drive real-time decision making through the availability of real-time data. We expect to share the 10-year production plan with the market in our 2019 Annual Report next year. As you can see here, the group five-year plan is very consistent with our previous five-year guidance of 5.1 million to 5.6 million ounces, showing a steady and slightly increasing production profile with costs declining over the period.

Looking at the underlying regions in more detail, the North American region now includes our interest in the newly formed Nevada Gold Mine joint venture, which has had a significant impact on the Group's profile. Higher cost assets contributed from Newmont combined with the significant synergies we have identified and its effect on lowering cut-off grades have all impacted the blended cost profile of the business. As I mentioned earlier, this is our very first effort of putting this complex business together. So I have no doubt the team will further refine this profile as we go forward.

The LatAm and Asia-Pacific profile includes our first estimates for the expansion of Pueblo Viejo in Dominican Republic, which has had a significant impact on capital and all-in sustaining costs, albeit the real benefits from this project will materialize beyond the five-year window. We are also making further investments at our Veladero Mine to access prospective ground as we strive to return this asset back to Tier 1 status.

And then, Africa and the Middle East region the profile remains relatively consistent with previous guidance given with the exception of costs of Tanzania, where we have included our bid model as the base case. You remember the argument we had with Acacia and we presented our bid model. In particular this includes, as of today, about $200 million of capital for Valley in 2020, which in all reality is likely to be smooth over this next year and the year thereafter. And there is still dependent on the feasibility work we are undertaking as we aim at the restart of underground operations by quarter four 2020. The copper profile shows the improvement that the improvements that are ongoing and the improvement as well in efficiencies and cost reduction initiatives at Lumwana specifically. And really, this has kept our production profile relatively steady and certainly a viable business even at these lower copper prices that we're experiencing at the moment.

I started with our scorecard for the nine months to September and pointed out that we had ticked all the boxes. And so here is our to do list going forward and I have no doubt that our team will be able to deliver on these and again, this time next year, I'll be ticking those boxes as well. And I'm sure we'll find a few more to add as we go through this in year-end into next year. I end this presentation as usual with a look at how our Barrick stacks up in the market against the gold equities and the gold price. As you can see from the chart, we have been clear outperformers versus both the GDX and the gold price since the announcement of the value creating merger with Randgold. While much has been achieved, there is no doubt in my mind that much remains to be done. I hope, today's presentation, ladies and gentlemen has given you an insight into the many internal and external opportunities for sustainable profit and profitable growth that all within our reach at Barrick.

I thank you for your attention and we'll be happy to take questions. We've actually got quite a big contingent of Barrick people here in the audience. Sure we can take pretty much deal with any questions you could come up with. We are going to start with the call people first and then we'll come into -- back to you people here in London.

Questions and Answers:

Operator

We will now begin the question-and-answer session along the phone. [Operator Instructions] Our first question comes from Chris Terry of Deutsche Bank.

Chris Terry -- Deutsche Bank -- Analyst

Hi, Mark and team, and thanks for taking my questions. I have a few. Just wonder if you could start with the five-year guidance, if you could make some comments on the conservatism or what you've actually baked into it. For example, the Nevada synergies that you still -- still going through and made great progress on. I just wondered whether you're putting the full number in for that, for example, just other areas of improvement and whether you've just adjusted at this point putting projects that are fully approved. I'm just getting an idea given you've been toward the top end in 2019 as that guidance, if it's potentially conservative or a mid case? Thanks.

Mark Bristow -- President and Chief Executive Officer

As you've known, I'm never one who is sort of under promises to over deliver, so this is our best business case based on what we believe we can deliver. There are opportunities some of them that I'll point to, are for instance, how we can bring PV expansion on and whether we can improve efficiencies but as we stand this is our first dash at a scoping study. We've got the pre-fees running now with the processing plant. We haven't quite finalized the detail in the flow sheet. So there is -- I would say there is some option upside opportunity there. Of course, there is ongoing drilling between the two current pits and that has some opportunity. But as far as our current reserves and our current ore body models are we've included all that. Veladero had some opportunities that we don't -- we are not -- we don't have sort of visibility on yet because there is still quite a bit of drilling to be done to be able to lift the life of mine. We know that it looks very prospective, but again, that will come out in the 10-year plan rather than the current five-year plan.

Nevada, we have baked in the synergies that we can see and that we've identified. We've got no doubt that there will be improvements. Those improvements are largely expected to come from the continued optimization of our ore bodies. And also there is -- we need to do some work on the call and processing facilities in particular the, Mill 6, the roaster, which at the moment is quite expensive. Its operating costs are high. It's a single bed roaster and we are going to be expanding that because it's an important facility for Goldrush. And we will be improving both its ability to scrub mercury out of the ore and also to take a bigger throughput so it will drop the cost. Goldstrike roaster is one of the most efficient roasters on this planet, when it comes to running at just over $20 an ounce -- and $20 a tonne, sorry, John corrected me there. And Carlin is running in the upper 30s, so we've got some opportunity in that process.

And then, it's just what we can find, and I'd remind you, why do we do this and we -- there is no other company that does this. And we did it in Randgold, is that this is, it's always fascinated me that the mining industry allocates capital on the long-term, tells you about the development and the life of mines and they will give you the detail. And when you have a detailed plan, you can see the road -- the speed humps, you can identify the opportunities and we've always shared that with our stakeholders in a transparent manner and that hold us accountable to deliver against that. And if you go back in the 23 years of Randgold, we delivered long-term deliverable s even out to our first big dividend. We said we do it on this at the end of that particular year, and we did. And so it's an important part of being a modern company is to tell people where you are going. And so can we improve on that? I'm confident, we will. Exactly what it is that we're going to improve on, that's a spread of opportunities that we will disclose as and when we bank them.

Chris Terry -- Deutsche Bank -- Analyst

Thanks a lot for the color. And just in terms of the balance sheet, you're obviously now below $3.5 billion net debt. Just wondering if you comment a little bit on potential use of proceeds from the $1.5 billion of asset sales you flagged, you've obviously increased the dividend a little bit on this quarter versus last quarter. So just wondering way you are thinking about the use of proceeds? Thanks.

Mark Bristow -- President and Chief Executive Officer

So if your definition of a little bit is 25% and I wonder what you think is a lot? So we've got many opportunities to create value for our stakeholders. We said we were doing this because we saw the value in being the stand-out gold company with the dominant ownership of Tier 1 assets. And as you've seen almost surprisingly, it's now three quarters into our project and we've been able to wind down the debt, increase the cash positions. We've rolled over our revolver facility and dropped it to $3 billion because we're comfortable about where we are. We came out with an early dividend because again as you point out. And when you look at our five-year plan, what's clear is, there is some investment we need to make in 2022 to sort of tidy up the organization. But then if you look at the five-year plan the costs are coming down, capital is coming down. We've got a real focus on sustaining capital. And of course, when cost come down and capital comes down, cash flows go up. So that's the whole objective of doing business.

What we do with those proceeds. We've again -- something that as I really believe in is that in mining, you should deliver returns to your shareholders, and in particular, the best way as dividends. There are other mechanisms that we can consider and we'll consider like buying back shares as we change our asset portfolio, sort of color. But at the same time, I believe that we're going to replace some of the assets that we're going to sell with better looking assets, not that the ones we selling are bad. They just don't fit our specific investment filters.

So -- and we have not really much -- very much depleted our debt -- our short-term debt pay-out, so we got a little bit more to do, but not much. And the remaining debt in the organization is long dated debt, it's very expensive to settle. We will look at ways to do that on an opportunistic basis. But you know that means our cash will build up and we -- Randgold moved to a position where it's sought to have an available cash of a certain amount and then it would pay the rest out. So that's something we look forward to being able to debate with our Board going forward. Right now, we are cleaning up the balance sheet and we've done it consecutively every quarter. We expect to continue to attain to that.

And dividends, we said is going to be a driver of this business. And again, we're mindful. We're not one for special dividends or fancy ways to return cash to shareholders. We will do it in a structured way. We've debated share buybacks many times in my career with my respective Board colleagues that I'm sure that debate will continue to be had going forward. The positive message is, we're going to have all those debates because we generate cash and then a good debates to have.

Chris Terry -- Deutsche Bank -- Analyst

Thanks. Thanks a lot. Just a last one from me. What's the timing you're thinking for the potential inclusion of Fourmile into the JV? Thanks. That's it.

Mark Bristow -- President and Chief Executive Officer

Yeah. That's -- we want to thank that property. Right now, with that new discovery whole way out a kilometer from any of our resource estimates, it really does open that opportunity substantially. And we've got lot of comfort that Goldrush is, at a stage where it's a matter of process to bank at. And then it's about access to the Fourmile deposit whether we do it by our Goldrush infrastructure, we bring -- we come in with an opportunity to come in from an old pits on the other side of the trend.

There is a couple of things that we still want to do and I think first of all, let's build the portfolio. We've only got couple of hundred thousand ounces. They are now 250 -- 700,000 ounces. So we are expecting a substantial increase in inventory with our annual declarations early next year. But I would say, it's a couple of years before we are comfortable that we've got the critical mass to warrant moving that to a feasibility stage project.

What I would add and it's something that we've had great debates over is Rod as the Head of Projects and Evaluation is starting to take a much bigger focus on this project now because it's reasonably well framed. And so a lot of process rather than exploration endeavor. And we've encouraged, Rod as -- I mean, Rob Krcmarov and his team to move away and find the next one and not get bogged down by ongoing drilling in this project. Rod, do you want to add anything to that?

Rod Quick -- Mineral Resource Management and Evaluation Executive

Yeah. Sorry. I'll just repeat that with the mic. That best hole that we are in -- that we reported this quarter. This is some of the best obviously, the best result there. So there is opportunity on the western side as well. And within Fourmile as well, the western most edge of that current Fourmile resources very much open. But there is quite a bunch of drilling to be done this coming next 12 months to actually decide how big and full month current resource is.

Mark Bristow -- President and Chief Executive Officer

So just to for those, yeah -- I don't know if you can see my point, but what Rod is talking about is that this trend, which is, there is the greater Goldrush Fourmile trend. What we're seeing is on the western side, that's the side, there tends to be a plunge to the ore body there and there and there and so on in Goldrush. And so we haven't drilled that western edge of the mineralization and we are expecting to -- extend the mineralization to the west. So we've still got quite a bit of work to do to close off those trends.

The big thing for me is, there is more to fund. We've got [Indecipherable] trend which is sub parallel to the Goldrush Fourmile trend to the west of the trend as you see on that slide. And then, we've got another couple of outlier intersections -- positive intersections to the east and so are they sub paralleled trends to this main mineralized trend going forward. Next question?

Operator

Our next question comes from Matthew Murphy of Barclays.

Matthew Murphy -- Barclays -- Analyst

Hi. Just chewing through some of the five-year guidance here and looking at North America, the Turquoise Ridge production looks fairly steady through 2024, despite that Third Shaft coming on. So I guess should we be reading from that cut-off grades are going to get dropped further in the 2020 to 2023 timeframe?

Mark Bristow -- President and Chief Executive Officer

Absolutely. So that's I mean that's one of our big issues is that when we took over Barrick, Barrick was absolutely obsessed with high grading it's ore bodies. And it was appropriate for that phase and its life because it was dealing with some massive debt coming from $12 billion of debt. But we said at the time, we would reoptimize the ore body and allow the ore bodies to manage the life of mine. And that's critical because when you have Tier 1 assets, this two components of value that you have for your shareholders.

One is the margin and the gold price. The other is the cyclicality of the gold industry. And with a Tier one asset plus 10 years, you get that cycle. And so you don't want to go over mine your ore body, you want to optimize it for the long term, and that's what we've done and we will continue to do. I mean Turquoise Ridge has got significant upside opportunity in the brownfields extensions of the known reserves.

Remember the reserves are significant at Turquoise Ridge and we've still got more. We've got the old [Indecipherable] extensions, the open pit opportunities and the trade-off of whether we go underground or come back and take a bigger lower grade cut. But right now, we've brought the cut-off grades down from over 12 grams a tonne and our target is to get down to about 6.5 is the target. Do you want to add to that?

Rod Quick -- Mineral Resource Management and Evaluation Executive

Yeah. The only thing I'd add is, Turquoise Ridge is very much work in progress. We've just obviously debottleneck business from a administration point of view of right, TMA point of view. So that's out of the way in that. We are pushing obviously the plant, you would have seen the initial increases coming through this quarter, but obviously that's work in progress, we got to see how hard we can push that plant with the various speeds. And then units into that as Mark was saying how big is the ore body and then reoptimize the whole underground mine, and an open pits et cetera to fill that plant with the best grade we can with a long-term view. So, there's a lot of work still to come from the whole TRTC complex.

Matthew Murphy -- Barclays -- Analyst

Got you. Okay. And then just as it relates to that, the near-term synergies shows you've already done $73 million executed or advancing there, do you see upside to that near term synergy number?

Mark Bristow -- President and Chief Executive Officer

Sure. Of course, we do. So, one of them is, as Rod says the plant expansion. And again, one would -- just bear in mind, we've just changed the whole management structure at Turquoise Ridge. In fact for the Barrick Group, I think there are only two people in senior management in the operations that were there when we arrived. The rest is all new. And we've just changed the leadership on the processing plant at Twin Creeks. And we've jacked up the throughput, so there is a lot more work to do on efficiencies.

I think John and his team have got already showing that just even in the approach the standard operating procedures, when it comes to autoclaves, how we manage the fuel and the autoclaves and the temperature and the ability to treat higher energy -- a higher fuel ore. We've got a lot of work to do right across the group but Turquoise Ridge in particular. Rob, do you want to add something to that, you've got to push the button over there it will go red.

Rob Krcmarov -- Executive Vice President, Exploration and Growth

Okay. Got it . Yeah, I think the first phase at Twin Creeks was really just raising the densities in the feed to the autoclaves to give us an additional 15% to 20%, but we're trialing that note, it's going well. It's really a trade-off slight trade off against recovery, but the key is maximizing the ounce production and the cost per ounce and that's what we're chasing there.

Rod Quick -- Mineral Resource Management and Evaluation Executive

And Matt, we've also got a lot of work to do. I know, right now we are constrained through the environment. Now that's why that the shaft is so critical, because it changes our entire ventilation protocol. And that will -- and in the meantime, we are working hard at fully automating the mining in Turquoise Ridge. It's geo-tech conditions are challenging. So automated -- self miners, which we've got an second one in the steps now is important. We have already got back fill process fully automated and that's our focus. And of course, electric underground vehicles will also help in managing the environment. We've got a lot of stuff to do to be able to pick up the efficiencies there, but this is based on what we can do today.

Matthew Murphy -- Barclays -- Analyst

Interesting. Okay. Great. Thank you.

Operator

Our next question comes from Tanya Jakusconek of Scotiabank.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Great. Good afternoon everybody and thanks for taking my question. I have two questions. The first one has to do with the five-year guidance. Just a bit more clarity, I know you have some footnotes at the end of the presentation, but just wanted to ask first, is Long Canyon Phase II included in your forecasts?

Rod Quick -- Mineral Resource Management and Evaluation Executive

No.

Tanya M. Jakusconek -- Scotiabank -- Analyst

All right. And then maybe, Mark, why has something changed at Massawa that you've included into your forecast side. I was under the impression it didn't meet our hurdle rate. Maybe something has changed there?

Mark Bristow -- President and Chief Executive Officer

No. The seller -- if it wasn't Randgold we would have developed it. It is busy -- we've got a business plan for it. We are applying for the permits and we will deal with it as and when we have secured the permits. Graham wants to say something.

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

Well, just going to say that at $1,200 gold, which is the gold price that we used in our investment decisions now, it does meet our hurdles.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. So you have moved, I thought we were still at a $1,000 hurdle rate of 20%. So it's been moved to $1,200?

Mark Bristow -- President and Chief Executive Officer

You've clearly haven't read the footnotes.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. Well, I think I did, but maybe just coming back to Kibali and I think Mark you mentioned, plus 600,000 ounces over the next 10 years from that asset. Just a little bit more clarity, is some of that coming from the open pit -- additional open pit material from the drilling that you've been encountering lately.

Mark Bristow -- President and Chief Executive Officer

So we've got a whole lot of new opportunities, we have got the new Sessenge pit. We've got the -- and it will change as we go at Cumba, Columbia [Phonetic] as a pit that's already in the mine plan, which is open pit. We've got a number of targets, we are evaluating, as I've said in the presentation along the KZ zone. There is a prospect of a super pit and joining the Sessenge and KCD pits. But right now, what that plan entails is only the reserves. We haven't added resources or soon to be discovered ounces. Simon, It's great.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. And then just Loulo-Gounkoto also.

Mark Bristow -- President and Chief Executive Officer

Just wait Simon is going to --

Simon Jimenez -- Senior Director-Corporate Social Responsibility

10-year mine life profile of open cost runs for the entirety of the 10-year profile.

Mark Bristow -- President and Chief Executive Officer

So that Simon says the 10-year plan has open cost material for the entire 10-year.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. I think it was a bit different than...

Mark Bristow -- President and Chief Executive Officer

And Tanya, we've got visibility of some significant millions of ounces of potential resources that are -- have every reason for us to consider them to be converted to reserves. So both at Loulo-Gounkoto and at Kibali, and I'd point out that that's where we want to get the full group to. That's where we are going. These are legacy Randgold assets, that were rolling 10-year plan and that's where our objective is for the rest of the group.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. And similarly with Loulo-Gounkoto a bit longer on the Gounkoto side?

Mark Bristow -- President and Chief Executive Officer

The Gounkoto, there's two things. One is the pit has produced more ounces than our original feasibility, I think the point I would always make on behalf of our team is that our feasibility studies have all been delivered against and some. And so the Gounkoto pit is certainly going to beat its plan as original super pit plan. And then we've got a new underground section at Gounkoto, so another phase of investments for Gounkoto. And again that 10-year plan doesn't include every -- all the potential that we see in extending the high grade zone of earlier which we referred to in today's results, which again has delivered some significant step-out results. And so -- and we still got Loulo III that we've got a lot of work to do. And so we're not short of potential in the Loulo-Gounkoto district.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. And then maybe just on the copper guidance. You have the chloride leach and for Zaldivar in that plan. Can you remind me Graham what the capital is for that?

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

Yes. So the approximate amount is about $170 million.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay.

Mark Bristow -- President and Chief Executive Officer

And we haven't finished that feasibility study, Tanya, we're busy with it, so.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Yeah. Okay. And then maybe just my second question is actually for both Rob or Rod, is got to do with the reserves and resources that are coming out and I guess it's February. And I think you have talked about doing reserves at 1,200 and resources at 1,500. And I think, Mark, you talked a lot also on the call about areas where you see reserves increasing and resource increasing. So I wanted to circle back with Rob and Rod, on a couple of these assets. I think, Leeville, I think you said the multi-ounce potential there. Will that be in the resource category?

Rod Quick -- Mineral Resource Management and Evaluation Executive

Yeah. At Leeville, Tanya, it will still take some time to get into the resource, but there's a lot of inventory potential there that will be coming. Just looking at sort of reserves Goldstrike underground and the Carlin underground mines in total will more than replenish depletion. Kibali, we'd mentioned is going to -- is going to do well. Little [Phonetic] and Cortez is doing pretty well, so those are -- obviously, some of the key assets.

Mark Bristow -- President and Chief Executive Officer

The Veladero will, PV will?

Rod Quick -- Mineral Resource Management and Evaluation Executive

Yeah. PV not yet. Until the feasibility comes, there is a lot of potential there sitting outside reserve and resource and just waiting for that feasibility to come, but that won't come this year. So yeah, there is some good news, obviously from a Barrick perspective, there will be increases because of acquisitions and obviously the merger with Randgold so that coming through the JV helps us in Nevada, obviously, there's quite a big uptick there in ounces coming through in that JV or that 61%, but it's a lot more.

Tanya M. Jakusconek -- Scotiabank -- Analyst

And Turquoise Ridge, Rob, I think you're going to be changing the cut-off grade there. So there is multi-million ounces adding to reserves there.

Rob Krcmarov -- Executive Vice President, Exploration and Growth

Yeah. We will be obviously -- we're going from 75 down to 61 at Turquoise Ridge in particular, but it's the whole complex that you're looking at and obviously dropping the cut-off immediately because of that TMAs out of it increases -- increases ounces.

Mark Bristow -- President and Chief Executive Officer

So the cut-off grade, if you look and do the math, it's about, it's a north of 1 million ounces that it adds. And you look at the depletion for that asset even with a 61%. The math said it should be better. I think, Tanya one thing I would point out to you is, we have used $1,200 on estimating our life of mines. We will be using $1,200 -- filters $1,200 long-term gold price flat and the 15% IRR in sort of filters. On PV, you need to know that the conversion Rod refers to is from measured and indicated, so those ounces are there and the economic at $1,200. All we need is to prove that we can put the tailings somewhere and they become reserves. So it's important for you to appreciate that there is no extra drilling. On the additional 11 million ounces we referred to in the report, there is no extra drilling to be able to convert that into reserves. It's really as just the permitting of the TSF.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Yeah. But we're not expecting that at year-end, I think Rob said that.

We will, as Rod says it's and we've said it. It's through next year.

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

I think Tanya, I'd add is that the 1,200 moving from 1,000 to 1,200, I mean it's really only affecting the legacy Randgold assets. And both those ore bodies, so the Loulo-Gounkoto ore bodies and the Kibali ore body is very geologically constrained. So there is actually and as increases we're talking about are coming from the land Kibali are not -- are not driven by that $200 increase. They real actual ore body expansions that we're bringing in. We've actually brought in very little of that adjustment.

Tanya M. Jakusconek -- Scotiabank -- Analyst

Okay. I'll leave someone else to ask questions. Thanks a lot guys.

Operator

Our next question comes from Anita Soni of CIBC.

Anita Soni -- CIBC -- Analyst

Good morning, guys. My question is a little bit more high level. Could you give me a sort of a break out in 2020 and 2021, what the difference between the sustaining and the project capital expenditure is?

Mark Bristow -- President and Chief Executive Officer

I could, but I won't.

Rob Krcmarov -- Executive Vice President, Exploration and Growth

Well, that won't help me modeling, but I'll move to my next question. Can you highlight to me then the major drivers for the difference between the current sustaining or total capital expenditures this year at $1.4 billion to $1.7 billion? And then you're moving up toward like a $1.9 billion or $2 billion for the next couple of years. What are the -- if you had to pinpoint three big things...

Mark Bristow -- President and Chief Executive Officer

It's just the next year 2020 and you can see it on the chart. So as I said to you, $200 million on Valley [Phonetic], which is quite sort of variable at the moment because that's what we used in our pit model and we don't have the ability to schedule that in any detail that will come with the feasibility study. We've got the additional capital in PV. Again, that's a long-term capital commitment and there is some extra capital in Loulo-Gounkoto on development. And the rest is pretty much as per the schedule. There is a bit more capital in Veladero as well.

Anita Soni -- CIBC -- Analyst

All right. So you just --

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

How much do you say the capital was?

Anita Soni -- CIBC -- Analyst

I'm looking at this chart and I'm like maybe my ruler is incorrect or I need better glasses, but do you -- the blue line you have here basically shows that it sort of pretty flat from 2020 to 2021 for the total capital number at $2 billion.

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

As Mark says, a lot of that is to do with the investment that's going in for the development of Veladero, for the development of PV, some extra capital of Loulo to ensure that we've got a 10-year plan there. So a lot of this capital is really as Mark mentioned in his speech, going to give us benefits in the 10-year plan, not too much in the five-year plan, but of course, we are working toward a long-term business here.

Mark Bristow -- President and Chief Executive Officer

And I think, I need to just too soften Graham's undiplomatic response to the split in sustaining and capital is that, it's an absolute obsession of mine to bring the sustaining capital down and we've got a lot of focus in that part of our business. And once we get some granularity on that, we'll start sharing it to you.

Anita Soni -- CIBC -- Analyst

Thank you very much.

Operator

Our next question comes from Greg Barnes of TD Securities.

Greg Barnes -- TD Securities -- Analyst

Thank you. Mark, given the free cash flow this company should generate and I know we've debate about the dividend in the past, but do you see a model where Barrick could commit to doing something like the major diversify which is paying out 30% to 50% of net profits on an ongoing basis as a dividend?

Mark Bristow -- President and Chief Executive Officer

Greg, all I can say is I refer you back to our Randgold business. We paid 13 years of increasing dividends on the back of a long-term plan despite what the gold price, did -- it went up and down not necessarily a net order through that period. So I'm more of the view that there is -- in any business, there is a sort of requirement of cash reserves to ensure that you can deliver the business and the one thing, I've been in this industry longer than most people on this call or in this room and the one thing you never want to be is beholding on the market for money.

And so that's our business, it's a long-term business. Everyone says it, but very few people manage their business on a long-term basis, we do and so we will -- we're -- as a gold business, our job is to give our owners maximum exposure to the gold price, which we and I have done so in my entire career and I expect to be able to continue to do that. So we have no doubt that we can deliver that five-year plan and the 10-year plan that we are working on and the life of mine plan at any conceivable gold price without having to beg any money from anyone.

And I have no intention of putting that strength at risk. So we've seen through my career as you have Greg, people's trying to link dividends to gold price, dividends do this, everyone has a fad. My job is to convert reserves into cash flow, make sure we've got enough to be able to invest in our own future and give the rest to our shareholders and a substantial part of that to our stakeholders like our host countries in the form of profits tax.

Greg Barnes -- TD Securities -- Analyst

All right. Thanks, Mark.

Operator

Our next question come from Andrew Kaip of BMO.

Andrew Kaip -- BMO -- Analyst

Hi. Good morning, gentlemen and congratulations on a good quarter. I've got just three quick questions. One of them is, just looking at Nevada Gold Mine, near-term synergies. It looks like you reclassified buckets between Turquoise Ridge and regional and site based indirects, I'm wondering if you can just confirm that.

Mark Bristow -- President and Chief Executive Officer

Yeah. Andrew, let me answer that first, if you go back to our published presentation on our website for the Nevada analyst visit, you would have seen that we shifted the shape of the pie a little bit and we will continue to do that. So there is some swings and roundabouts in this and that's what we effectively doing so what you observing is correct.

Andrew Kaip -- BMO -- Analyst

Okay. Thanks. And then, look, I'm wondering if somebody can help me understand the scope of the metallurgical test work that's being done at Pueblo Viejo. I notice in the discussion, you're starting to look at flash oxidation and I'm just wondering what the opportunities and the risks are relative to fine grinding and flotation as a means to expand the operation?

Mark Bristow -- President and Chief Executive Officer

So I think we've gone past that and it's not flash oxidation, it's using flash vessels to cool down and allow the autoclave to process higher energy feed. So the original if you remember before I pass it on to the expert. The original flow sheet was a combination of flotation and then partial leach upper of oxidation using water and heap. And then it was, when John got there. We looked at vessel oxidation so flotation -- more flotation, floating most of the feet apart from the high grade fleet and then ultra fine grinding it. And then with oxygen doing partial oxidation of the sulfides and vessels. This way is a much more effective way. It's proven technology in the platinum industry. So it's not new technology at all, it just hasn't been applied in the gold industry because the gold industry doesn't have lots of ore with piles of sulfide, so how did I do, John?

John Steele -- Metallurgy, Engineering and Capital Projects Executive

Yeah. Pretty good. Yeah. That's exactly. We've gone done -- of testing the ultra-fine grind and the tank oxidation where we get about 40% of the sulfide oxidized, but we are very familiar and the operators are very familiar with pressure oxidation. So this proposal to adopt flash recycle or flash that can recycle is extremely attractive to the operation, because it's known technology. And in our application to oxidize and relieve the heat from a higher sulfide feet, it's ideal for us. So that's the opportunity for us. It's lower capital, its lower opex in terms of our approach. So that's the number one priority for us at the moment and it now replaces the ultra-fine grind tank oxidation as our priority flow sheet. So it will be flash that can recycle is the optimum that we'll be pursuing going forward into the pre-feasibility.

Mark Bristow -- President and Chief Executive Officer

And it also reduces the footprint on the -- as far as the operating footprint, guys, because you don't have so much infrastructure and space is quite critical at PV for us.

Andrew Kaip -- BMO -- Analyst

All right. It sounded like that, that you were moving in that route. So thanks very much. And then one final question, just quickly on Lagunas, it's on care and maintenance, but are you going to continue residual leaching at that operation or you or are you shutting that down?

Mark Bristow -- President and Chief Executive Officer

No. So again this is important about having proper plans. It's still got significant potential reserves in the form of sulfide ore -- refractory ore. I got to your point where the oxide was running out, it was very complicated process to try and do it on the heap. And our view is that put it on care and maintenance and make sure that we use the cash flow from the residual ongoing leaching to invest in the high exploration endeavor around Lagunas.

And we have three significant oxide targets. One quite well defined, which we're busy permitting. And then we've also got three -- in addition to the ongoing drilling we're doing in the current pit to expand the reserve base, we have three additional satellite sulphide satellites that we will also be evaluating. The objective is to lift the reserves to a level where it would warrant -- it would support the investment in a refractory style process, which for us would probably have to be roasting, John?

John Steele -- Metallurgy, Engineering and Capital Projects Executive

Yes. Given the description the geologist have of extremely carbonaceous material we'd be supporting our roasting route.

Mark Bristow -- President and Chief Executive Officer

Do you want to add anything, Rod? Rod agrees.

Andrew Kaip -- BMO -- Analyst

All right. Thank you very much.

Operator

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

John Tumazos -- John Tumazos Very Independent Research -- Analyst

Thank you for taking my call and congratulations on all the good work. Could you refresh us, as to the reallocation procedure, the 61.5%, 38.5% Nevada Gold breakdown. Does it change, if the origin of production is one company or the other, or is it reserves? And as an example, if Fourmile plus the 1 kilometer north of Fourmile turned out to be 10 million ounces of reserves would the new JVs the XP. [Phonetic]

Mark Bristow -- President and Chief Executive Officer

Okay. John, that's easy to answer. So let me answer it. So the joint venture of interest, that's what we put in and Newmont put it that's goes to the 61.5%, 38.5 split. Fourmile is outside the joint venture, if you -- what we have to do is, there is a set formula where we have to demonstrate again sort of a set equation, a project that delivers more than 13% IRR assuming a gold price, which is estimated on a formula a spot first look back formula on the gold price. Once that's done, we have the right to force that into the joint venture and it will be introduced or included in the joint venture at fair market value and included -- and in addition to the fair market value, we would also add the cost of the feasibility study. And Newmont has two options, it either pays us out in cash to keep the 38.5% ratio or it dilutes, that's how it works.

John Tumazos -- John Tumazos Very Independent Research -- Analyst

Thank you for that explanation. Thank you very much.

Mark Bristow -- President and Chief Executive Officer

So I'm going to move to London now, it's -- is there one more? One more, OK.

Operator

Our final question from the phone comes from Adam Graf of B Riley Financial.

Adam Graf -- B. Riley Financial -- Analyst

Hey, guys. Thanks for taking my question. I just have a couple of quick questions about Nevada. What something you said Mark peaked my interest about the sterilized ore that you guys are now examining at Carlin. And I was just curious about that and how that came about because I was under the -- I had the understanding that previously Newmont and Barrick had a lay back agreements. So I'm curious where the sterilized ore is coming from?

Mark Bristow -- President and Chief Executive Officer

So, I can assure you that Newmont and Barrick had very few agreements. They might have had the intention to reach an agreement, but there is always -- there has been a lot of -- I mean just at Turquoise Ridge, Twin Creeks as well. There was opportunities to rationalize the resources across the boundary where it was accessible from one and not the other. And the same goes for Carlin and Goldstrike.

And the three projects that I referred to in my presentation all along that Carlin Goldstrike trend. And it's about 1 million ounces, small amount is from the pits and others are from underground with easily accessible from Goldstrike but it's in the Carlin side and vice versa. So it's -- so those sort of things. I mean there's lots -- there is ability to use now that we own all the surface, building roads, which again was always made difficult because of the sort of bureaucratic imports between the corporate's. And there is a number of other opportunities for us to unlock synergies because we no longer have a line or offense that demand some sort of settlement or agreement.

Adam Graf -- B. Riley Financial -- Analyst

And then just you mentioned the deep drill holes that hits the high grade ore at Little Boulder Basin, that's 2 kilometers down, and I was curious conceptually with current technology is that something that's actually -- you believe it's actually accessible at this point?

Mark Bristow -- President and Chief Executive Officer

So I come from South Africa, so 2 kilometers down is not grassroots. These are massive intersections. The debate there and you can look at it to the section, but the debates is they've drilled through the intrusive and hit the sort of target packages below the intrusive. The question is, is that intrusive stoked out to large potential resource or where we find it if every carry on drilling, and that's -- so right now, we are drilling a single hole to check it out and we'll let you know decide once we pulled that the net hole.

John Steele -- Metallurgy, Engineering and Capital Projects Executive

And I thought they were waste dumps that we're sitting above it, are you drilling through the waste dumps to get under there, are you able to drill directionally [Technical Issues] now?

Mark Bristow -- President and Chief Executive Officer

No. We just drilled through from surface. It's a big area and we just want to get through the intrusive and check the stratigraphy. And as you know, you don't have to get down there underground so waste dumps are not an important prospect. We are not planning to do an open pit down to 2 kilometers.

Adam Graf -- B. Riley Financial -- Analyst

No, certainly not. And then finally at Leeville multi -- you guys believe that there is a multi-million ounce expansion potential there with -- that you guys can define with over time with additional definition drilling?

Mark Bristow -- President and Chief Executive Officer

Yeah. There is a pattern drilling in Leeville. Again the approach to Nevada both in -- even in Barrick but certainly in Newmont was more driven by density and pattern and we are much more geo-centric in the way we do things. And we've looked at the core and we see continuity of the ore body from one borehole to the other. And it's about -- part of that is down to a 150 meters for 500 foot spacing. And so as an inventory it's definitely very attractive and its multi, multi-million ounces potential there, but we've got some work to do before we can specifically frame it.

Adam Graf -- B. Riley Financial -- Analyst

Do you believe that continues north pass the old fence line or if they are pretty...

Mark Bristow -- President and Chief Executive Officer

The continuation is north. It's North and then the southwest, so it's on either side of the main infrastructure mining infrastructure and actually in the middle of that infrastructure is [Indecipherable] which is largely evaluated through drilling, which again wasn't in the mine plan, which we are now moving into our reserve and planning schedule.

Adam Graf -- B. Riley Financial -- Analyst

Fantastic. Thank you for answering all my questions.

Mark Bristow -- President and Chief Executive Officer

Yeah. London. I think the guys in the phone done a good job. . Just switch your mic on. Yeah. Okay.

Unidentified Participant

Firstly, thank you for giving me the entire presentation without mentioning the World Cup Rugby once, much appreciated.

Mark Bristow -- President and Chief Executive Officer

You haven't heard my finishing remarks yet.

Unidentified Participant

You mentioned at the start of your presentation, the importance of ESG, which is -- again, it's another battle ground that you're going to have to win on relative to your paper [Phonetic]. And we get currently some safety quarterly data that you present. I mean, is there an opportunity for you to publish some environmental quarterly data, CO2 emissions, water withdrawal, something like that on a quarterly basis?

Mark Bristow -- President and Chief Executive Officer

Sure.

Unidentified Participant

And then also a [Indecipherable]?

Operator

Yeah. So that's a good question, but the point that I'll make here is that, this is a battlefield when it comes to CSR because for us, it's not compliance. It's a way of doing business. It's deepen our DNA. I can tell you right now that our emissions are down and our carbon footprint is down quarter-on-quarter. And what my challenge to everyone is, fund managers, they get these sort of compliance demands, and then they throw it at the mining industry without even thinking about it. And again, we as an industry, all it does is it puts everything at risk. It's about how do we actually work differently, how do we actually allocate long-term capital? And one of the CSG and not only community, but ESR issues, is -- and it's a pet subject of mine, which I have the conversation many times -- fund managers almost force the industry to go to the US and mine, North America, somewhere safe where it commence.

And our biggest single challenge in this world is poverty. It's a bigger -- in my mind, it's a bigger challenge than everything else because it's the biggest driver to our global, what you call, warming or pollution, the impact of our ability to survive on our planet. And we neglect that, and I've had this debate going for a long time, is, when you look at the pools of capital that invest in mining, we should be encouraging investing in the emerging markets and ensuring that we participate in the upliftment of the people that are left behind by society. And that's one of our, as miners, biggest contributions we can make to the whole CSR, ESR challenge. And again, as you can see, we've done it. You want us to structure or pay, you want us to do this, you want us to do that. The mining industry does it, all it does is it strains [Phonetic] the mining industry. It makes people more compliant. You get it -- you get rid of the entrepreneurs and you get -- you start attracting janitors to our industry, who merely look after the assets as best they can and make sure it's compliant.

And mining is a massive engineering endeavor. But it's also able to employ people, train people, give people a new lease of life. And on top of that, it has a responsibility to be modern in its approach, to be more than responsible in the way it manages its environment. And it's something that we have -- it's a -- we're the only company, if not the only one of very few mining companies, that have a full executive person in our executive team who is responsible for sustainability and who has the executive authority to be able to effect that, alongside our Head of Operations, Head of Project and Evaluations, Head of Capital Allocation, CFO and so on. So, Barrick, I can tell you we see that as a very critical component of doing business, again, to -- if you want to be world-class and pursue world-class assets, you've got to be prepared to and capable of developing world-class assets in complex jurisdictions.

And in a first world -- and not even first world, but in a way that is acceptable for the Generation X and Zs of this world. And that's -- and again, you only have to go to a mining conference, and you can see it's like an old age home gathering. And it's our responsibility, along with our responsible approach to CSR and ESR, is to attract the young folk into our organization and to give them what they want. And that's dynamism, ability to participate in business decisions, a responsibility to the greater good and not just the income statement performance. And so again, we've started out on that. We've spent a lot of time in this last nine months about human capital, about how do we get to the front of the queue at universities, rather than employing the back of the queue, which we're really good at, and making sure that we become -- and young people don't want to come to a head office every morning. They want to be much more in the game. And so, we've debated that at length, and I'm absolutely excited about the fact that, before I get to that old age home status, we will have a lot more young people in our organization.

Got it? One more.

Unidentified Participant

Hi, Mark. One thing, when you talk about kind of replacement of assets, how far down would you think about kind of this call [Phonetic] to quality spectrum? Would you look beyond the Tier 1 assets where you state you have to target of having the majority of them? Would you look at Tier 2 assets you think that could become Tier 1? Will you look at anything below that?

Mark Bristow -- President and Chief Executive Officer

So Tier 2 for us is 3 million ounces plus, makes 20% return, $1,200. But why? Because it's smaller, so your ability to make returns on a longer cycle, so you lose one aspect of making money in the gold industry. So we would look at that smaller assets. You want a bigger return because there is higher risk and less time to fix it when there are problems. Yeah, I think for us, copper is an important component of our business, 15% at the moment. You've seen it make real money, even the ones that we've got which are not necessarily Tier 1, in copper sales. And so, that's our focus, and I don't think you want to try and get caught up in second rate being what we would like to be a Tier 1 business.

And again, I think this industry needs to focus on something that actually can make returns in good times and in bad. And I've said it before, I'll say it again. If you look at the gold industry, there are too many managers and too few quality assets. And the two top companies in the industry have led the way in consolidation, and this industry needs a lot more of that to be able to bulk up and ensure that we have enough agile competitive managements stewarding the limited assets we've got and then spend time on finding more, which is becoming more and more challenging.

Unidentified Participant

Just one other one. You made a lot of comments earlier about providing investors the greatest exposure to gold, which I would say, closely -- very closely aligns to the Randgold strategy of no debt or cash to a certain point. You seem to have soften on that policy around your views around debt. So how do you, in the next two to three years, think about higher dividends right now versus faster repayments of the net debt down?

Mark Bristow -- President and Chief Executive Officer

So the debt is, as I've said, long term, so we can go and blow it out. This is going to cost us twice as much. And it doesn't make -- it's how you make use of the money you make. And again, we're a massive organization where this debt is imminently manageable. We will on an opportunistic basis chew away at it. But at the same time, for us to go and pay off to expensive debt, which we can manage comfortably at the expense of returning dividends to our shareholders, doesn't make a whole lot of sense to us. Our CFO might have something to add.

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

I would agree to you. I mean, a company of this size with the diversification that we have can certainly sustain debt as part of its capital structure. And I think both Mark and I are probably going to be on the conservative end of what that debt looks like, but it's appropriate to have debt in the capital structure.

Unidentified Participant

Okay. Thanks guys.

Mark Bristow -- President and Chief Executive Officer

Any more?

Unidentified Participant

I was just wondering a quick update, anything else [Technical Issues]

Mark Bristow -- President and Chief Executive Officer

So the question was, any more comment on consolidation. Yeah. West Africa has been the most prolific producer of New Gold Mines. And it's growing some very interesting companies there. So, and as they sense that consolidation or bring more optimal management costs, absolutely. I think we still, if you had to add up the corporate costs of the industry and you just consolidated it, I mean, just look at the Randgold Barrick deal.

This -- in this modern world, there is no real logic to have big corporate offices. We've proved that possible but, et cetera. Randgold, we've proved its possible very quickly and not just nine months at Barrick. And so I think I'm a great believer and the requirement to -- for our industry to consolidate. West Africa is a good place where to start. And we've always said that in our rationalization of our assets, we are committed to playing a role in that ongoing consolidation which we will do.

So, ladies and gentlemen, it brings me to the end of this very interesting debate and I look forward to -- I'm not sure when we will be back here, but we will be through here often and all you guys who are in the breaking business, you will see us, and of course, our shareholders. It just remains for me to point out that on your way out there are tickets available for rugby lessons, for those English folk who would like to aspire to being in the somewhere around the finals in four years time. And I would end finally by saying thank you very much for beating the All Blacks.

Again, thanks for coming, and I look forward to catching up with you. And again, anyone who is not so quick off the mark and comes up with a few questions that you haven't managed to ask this afternoon, please feel free to reach out to us, you know the team, we are all available to take your questions. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 98 minutes

Call participants:

Mark Bristow -- President and Chief Executive Officer

Rod Quick -- Mineral Resource Management and Evaluation Executive

Rob Krcmarov -- Executive Vice President, Exploration and Growth

Graham Shuttleworth -- Senior Executive Vice President and Chief Financial Officer

Simon Jimenez -- Senior Director-Corporate Social Responsibility

John Steele -- Metallurgy, Engineering and Capital Projects Executive

Chris Terry -- Deutsche Bank -- Analyst

Matthew Murphy -- Barclays -- Analyst

Tanya M. Jakusconek -- Scotiabank -- Analyst

Anita Soni -- CIBC -- Analyst

Greg Barnes -- TD Securities -- Analyst

Andrew Kaip -- BMO -- Analyst

John Tumazos -- John Tumazos Very Independent Research -- Analyst

Adam Graf -- B. Riley Financial -- Analyst

Unidentified Participant

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