Barrick Gold Corporation (GOLD) Q4 2020 Earnings Call Transcript

Barrick Gold Corporation (GOLD 0.71%)
Q4 2020 Earnings Call
Feb 18, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Barrick 2020 fourth-quarter results conference call. [Operator instructions] As a reminder, this conference call is being recorded and a replay will be available on the Barrick's website later today February 18, 2021. I would now like to turn you over to Mark Bristow, chief executive officer. Please go ahead, sir.

Mark Bristow -- Chief Executive Officer

Thank you very much and good morning and good afternoon, ladies and gentlemen. Welcome again to our presentation of Barrick '20 and Q4 results. The past year has been one of delivery undeveloped in the face of unprecedented challenges. We delivered on our production guidance and at the same time, we continued to our key projects among the Pueblo Viejo expansion plan, the Turquoise [Audio gap] the gold rush exploration declines, and the underground mine at Gounkoto.

We have moved our understanding of our own bodies by putting geology front and center and we can now optimize our mine plans on firm foundations. The sale of non-core assets generated the $1.5 billion we promised and by cleaning up our portfolio, we aligned it with our strategic focus of tier one mines. Our world-class business this needs a global present, operate Tier 1 assets in any jurisdiction which means that some of our operations are located in more geopolitical domains. In addition to the coronavirus pandemic, last year, we also had to deal with the Argentina financial crisis, a coup in Mali, the major impact of political power event in the DRC, and the closure of Porgera in Papua New Guinea.

Barrick has clearly demonstrated that it can manage risks across the board -- broad range of assets with a leadership capable not only of running a large and complex business but also of recognizing and realizing new opportunities. Please take note of this cautionary statement. And for those who need more time to review, it is available on our website. Key in the past year's performance was the effectiveness of our ESG strategy which is powered at all levels by a long-established partnership philosophy and our close relationship.

All our stakeholders from investors to host communities. This was evident in very successful COVID-containment programs which buffered the impact of the pandemic on our businesses and our people and also enabled us to provide much needed and welcomed support to our host countries. We in ESG has seen most of the attention recently, but I would argue that its social dimension is as important particularly concerned that the issue of poverty, arguably the greatest problem facing mankind is not more prominently on the agenda. The world's poorest people live in support peace and easing their [Technical difficulty] and not just for science.

This is not to say that we should underestimate the gravity of the environmental challenge. Barrick has a clear road map for the reduction of greenhouse gas estimates which is based on climate size and operational realities rather than wishful thinking or long-dated aspirations. Our land-locked targets listed here are under constant review, all our operations have practical plans for transitioning to cleaner and more efficient energy sources and water management, and we are cognizant of the necessity to innovate new power plants for our future mines. In short, Barrick aspires to -- to be an industry leader ESG as in other things.

This is our health and safety scorecard for 2020. And as you can see, there was a significant improvement with both lost time and total recordable injuries decreasing by big margins. Unfortunately, as previously disclosed, an otherwise impeccable record by a tragic fatality at Kibali in November of 2020. There were no high-severity environmental incidents across the group during the year and the number of medium-severity events declined.

As these numbers show, we continue to reduce our emissions and improve our water usage and recycling rates. [Technical difficulty] water we return is in better shape than the water we received. The photographs on the right show one example of the difference we've made since taking over North Mara. Where one of our priorities was the to purify water management plan.

Our social license to operate requires the goodwill of our host communities and is closely aligned with our partnership philosophy. During 2020, fully functional community development committees were established and all our operational sites and they were in instrumental in deciding how best to invest the more than $26 million we spent on quality of life improvements in the course of the year. Last year, we set ourselves very specific items. As you can see here, we ticked all those boxes.

We met our production target, delivered on our business plans, and fully capitalized on the higher gold price and copper prices. We increased free cash flow to an annual record of $3.4 billion against a 27% rise in the gold price. And we achieved our goal of zero net debt by the end of the year. It's worth calling that as recently as 2013, Barrick was burdened by debt of more than $13 billion.

The quarterly dividend has also tripled since the merger with Randgold. And -- and since it was announced more than two years ago, we've -- as I said, tripled the quarterly dividend. And in addition to the dividend, as you all have read today, we are proposing a capital return to shareholders of $750 million to be paid in three chance -- tranches through this year. This return is sourced from the proceeds of the sale of our stake in Kalgoorlie, as well as other non-core assets since [Technical difficulty] in line with our policy of returning surplus funds to our shareholders.

The solid operating results were driven by another performance from Pueblo Viejo, the Dominican Republic, gold bullion Hulu in Tanzania, and the continued improvement at the Turquoise Ridge complex in Nevada. As I noted earlier, production was at the midpoint of guidance and total cash costs and all-in sustaining costs were within the guide despite higher royalties due to the gold price. Our record-free cash flow and zero net debt are particularly gratifying features of the numbers as are the very significant returns we delivered to our shareholders. It's also noting that Moody's has upgrade our rating to BAA1 which is a lot in the old sector.

It's my view that the consolidation of the gold industry is not yet complete. And as these numbers show, Barrick is well-equipped to play a big part in future developments. Now, to North America and our operations there, we start with the five-year outlook for that region. Going forward, are influencing our all-body knowledge, keep production profile, and managing all-in sustaining costs.

This is consistent with our November Investor Day with some [Technical difficulty] into both 2021 and 2022. Also, some opportunities during [Technical difficulty] will touch on in the next few slides. In Nevada, the best potential for near to medium-term life of mine [Technical difficulty] are at North Leeville, Fourmile, and Goldrush, as well as the Rain project at Goldstrike. The best outfit for significant new discoveries are in the area between Turquoise Ridge and Twin Creeks, between pipeline and Robertson, and at the Cortez Complex in Carlin basin south of Gold Quarry.

I have great expectations for the North Leeville area and the team is currently prioritizing the improvement of the geological model and drilling to accelerate the delivery of answers into the Carlin mining plan. Results to date from five of seven drill holes have confirmed at least two emerging high-grade areas, above the average reserve grade at Leeville. Drilling closer to the existing mine infrastructure continues to extend the turf ore body to the north and the west. The Carlin complex is richly endowed with gold deposits and this flagship asset has some very exciting opportunities not only for resource ore expansion but also for new world-class discoveries.

In 2020, the Carlin complex delivered at the midpoint of its production guidance, and also kept costs well within the guidance range. This year and the next, we'll see substantial investment in the future. In addition to growing answers through exploration at North Leeville, Rita K., and Rim, the introduction of improvements to increase processing options, as well as others costs, will sit on the agenda. Like Carlin, the Cortez complex has a wealth of opportunities for expansion and growth.

The Goldrush and Fourmile discoveries are good examples of our policy of first understanding the geological framework and then building the exploration programs around that. At Fourmile, the improved confidence in our geological understanding is demonstrated by our first declaration of an indicated resource that's under 0.5 million ounces at around 10 times while still growing the inferred resource to 2.3 million ounces and around 11 grams per ton by including Sofia. I have no doubt that this resource will grow once we drive the development from Goldrush and in full drill, the Fourmile project. Still, in the Cortex complex, Pipeline Crossroads is a world-class legacy deposit and we continue to grow the resources at the Robertson deposit.

We are also progressing the feasibility work at Robertson while taking a closer look at what lies between them. Cortez itself exceeded the top end of its production guidance last year. The Goldrush project is on track to expose its first ore in the first half of this year. And the government's record of decision is now expected in the first quarter of 2022 rather than the rest of this year.

This, however, will not impact the mine plan with a focus now on better understanding of the ore body as we opened it up while we finish the underground feasibility study for the stand-alone Goldrush portion. We are exploring the possibility, as I indicated earlier, of reducing the cost and timing of drilling at Fourmile through underground access from Goldrush. Once Goldrush and Fourmile are been running, they will boost the Cortez complex's annual production and ensure its Tier 1 status for years to come. Turquoise Ridge at highest grades in the industry that was developed at a low -- as a low-tonnage high-grade mine, and not based on a proper geological model.

This project and mine represents a significant opportunity for improvement. It has two huge deposits at either end of an eight-kilometer trend, both with a historically poor geological understanding and a lot of potentially prospective ground between them. We've done a great deal of work on this since the formation of Nevada Gold Mines, and we're starting to generate new targets in what was thought to be a maturing district. As shown in the section, the newly discovered midway fault between Turquoise Ridge and Twin Creeks could be an important districts [Inaudible] mineralization control.

The Turquoise Ridge complex has been struggling and production for the year fell short of guidance. There was a marked turnaround, however, in the fourth quarter, and ongoing optimization should deliver further improvements for this year including a ramp-up in underground development. Construction of the third shaft remains on schedule and within budget, with commissioning plan for late 2022. The shaft is designed to be able to increase hoisting capacity, improve ventilation, and shorten haulage distances for that operation.

Still in Nevada, Phoenix and Long Canyon are small but very efficient low-cost operations, both exceeding the top end of production guidance and delivering exceptional margins. North of the border and our home country, Canada, Hemlo has made a remarkable journey from survival mode to a potential two -- Tier 2 mine. At the time of the merger, we doubted whether it was actually a profitable asset. But after unpacking the geology and rebuilding the models, we found many opportunities, not only to turn it to an -- into an efficient underground operation but also to build its reserves and extend its life.

Most notably, recent drilling has indicated the potential for a discrete parallel mineralized structure to the west of the main C zone. Further drilling is planned in [Technical difficulty] to improve the geological understanding of this area. Last year, Hemlo beat the top end of its production guidance. And this year, a separate portal development will access its upper C zone, providing a third mining front and increased flexibility.

Mining is expected to begin in the second half of this year. Latin America is a region with many challenges, mainly legacy issues that impact on our social license to operate, but also an abundance of opportunities. We've put a lot of work into fixing our businesses and relationships there. And last year, I personally visited the region four times with Mark Hill, who leads that region of Barrick, to review progress at our operations and also to meet with governments and community leaders and really invest in our new management teams across that region.

All the products have been or are being addressed, and even the situation in Papua New Guinea is progressing to what I trust will be a reasonable exceptional -- acceptable resolution to Barrick as well as the government. In the meantime, we have left Porgera out of our guidance and intend to edit back once we are able to reach agreement with the various stakeholders in Papua New Guinea including government and the landowners. I would also point to the reduced production forecast at Veladero compared to what we shared with you at our November Investor Day. This is mainly due to the transition plan to the new phase 6 to 10 project from the old valley leaching facility they have only recently finalized with the government.

We have a new exploration and new business team for the region, and as a result, are working to expand our footprint and open up new opportunities across South America. I also refer you to Tuesday's announcement on the sale of Lagunas Norte which is -- this is in Peru, which is part of our continued rationalization of our portfolio, that does not fit with our long-term investment strategy. At Pueblo Viejo, new targets have been identified and a particularly interesting one is being developed south of the Moore pit within the joint venture mining lease. Also, our recently established Pueblo Grande project immediately adjacent to the PV tenements has secured a strategically important parcel of land which is critical for PV's expansion plan.

Pueblo Viejo staged a great second-half recovery, posting a mill throughput record for the second straight year to achieve its production guidance. The expansion project will realize the operation's full potential by unlocking just over 9 million ounces of gold currently excluded from reserves due to the lack of adequate tailings and storage facility. The plant is being upgraded to handle throughput of 14 million tons per annum. And as a consequence, we are planning to process more stock mat -- pile material there this year.

This is the reason for slightly lower production guidance compared to 2020, as an -- and as in line with the forecast disclosed at our November Investor Day. The team is continuing its work with the new government and the community to secure land for the new TSF. The work associated with the TSF geotechnical and feasibility study is expected to be completed this year. In Veladero, Pascua-Lama District, a drilling program to test the link between the underlying deposit, geology, and metallugic -- metallurgical characteristics is under way.

Around Veladero, there are still a number of untested opportunities to expand the resource and reserve base of both Lama and Veladero. Drilling to extend Veladero pit shell was also limited due to the impact of the pandemic, and we expect to catch up with that during this summer in 2021. In the El Indio region, short of a new greenfields discovery, our strategy is to build a critical mass of smaller deposits to create a mining complex capable of meeting our criteria. As we reported earlier, Veladero's production was impacted by the pandemic-related quarantine and movement -- and restrictions imposed by the Argentine government.

This also temporarily delayed the mine's transition to the new Phase 6 heap leach facility which is on track for completion now by the end of the first half of this year. As agreed upon with the government, heap leach processing will be reduced during the transition impacting production. However, the mine's performance is expected to improve in the second half of the year after the new facility has been commissioned. Veladero's connection to Chile's power grid at Pascua-Lama should be completed by the end of this year as well, which will also reduce unit costs for the operation.

In Papua New Guinea, we have been engaging the government in discussions to seek a mutually acceptable way forward for the reopening of the Porgera mine which as you know has been in maintenance since the government refused to renew its special mining lease in April 2020. I am, in fact, speaking to you from the capital Port Moresby today where the discussions are occurring. If all goes well, Porgera should reopen this year. But for the time being, as I said in my introduction, we have excluded it from Barrick's 2021 guidance.

The Africa and Middle East region has largely, as expected, driven the post-merger repositioning and reinvigoration of Barrick. Its five-year plan remains intact and steady while costs and capex coming down. And there are plenty of opportunities to drive this performance beyond the time frame you see here. Our immediate objective for that region is to either extend the life of mine of Tongon or replace its production after 2023.

The Loulo district in Mali is to allow prolific generator of new answers. Loulo-Gounkoto again more than replaced depleted reserves last year, and there are big opportunities for more in both the Loulo and Gounkoto mining leases. Despite the political unrest in Mali, the complex exceeded the top end of its production guidance, highlighting again the importance of our strong in-country partnerships and the agility of its management. Its 10-year outlook is enhanced by the complex's third underground mine below the very profitable Gounkoto pit, which is on track to deliver its for -- first or development tonnes in Quarter 2, and studies for a potential fourth underground mine at Loulo 3 are progressing.

Our exploration group is also making good progress on advancing the targets across Senegal and our Bambadji joint venture. In Côte d'Ivoire, brownfields exploration has added three years to Tongon's life and a recent unified 11 follow-ups targets with its potential to meet our criteria and -- and extend the life of mine further. Situated 15km from Tongon, the Mercator target for resource definition and resource reserve tribes and reverse -- reserve conversion. The Cote d'Ivoire remains an attractive destination because of its prospectivity and relatively sophisticated infrastructure.

And we continue our generative opportunities throughout the country with the aim of increasing our new ground holdings. For reasons beyond its control, Tongon has led a troubled life but it has always managed to be very profitable. And last year, it exceeded its red -- budgeted production for the first time in its history. Its extended life of mine plan is being supported by additional exploration optionality in exchange for a low production profile at slightly higher costs.

Kibali grew its total reserves net of depletion for the successive year. Kabali was initially planned to progress to underground-only mining, but the discovery of a series of significant open pit deposits has allowed us to gain processing flexibility by balancing the old feed over the mine's 10-year plan. The updated plan increases the mine's gold production to more than 750,000 ounces a year sustained throughout the current plan, and given Kibali's strong target pipeline likely beyond that. Kibali produced near the top end of its guidance range in 2020 while total cash cost and all-in sustaining costs were at or below the bottom end of that range.

Kibali is the most highly automated underground mine in the Barrick group and a global leader in this field, which enables it to maximize its opportunities as well as its efficiencies. Its three hydropower stations keep its energy costs down and the recent introduction of a battery-driven power performance system offers a further reduction of diesel generation power. Turning now to Tanzania. We've achieved a great deal in this country since taking over the operations of the Acacia mines there.

On the exploration front, the focus on getting a proper understanding of the geology is delivering exceptional results. With North Mara increasing its mineral reserves net of depletion in 2020 while a substantial growth of resources indicates a significant potential for extending its life of mine. Operationally, North Mara continues to improve in achieving production at the upper end of its guidance. There's still a lot to do to realize this mine's full potential.

Starting with a new oxygen plant and an upgrade of the cyclone cluster to increase its recovery rate. I believe once we've brought North Mara and Bulyanhulu into the lower half of the cost curve, we'll be able to deliver another Tier one complex in Barrick's portfolio. Exploration at Bulyanhulu is producing some very encouraging results, and as our understanding of that orebody improves, it's becoming clear that it's of world-class proportions with a measured and indicated resource of some 4.3 million ounces and then inferred resource of 8.3 million ounces, and still a lot to do to achieve profitable conversion to reserves. The ramp-up of the underground mining and processing at Bulyanhulu is on track and will continue through the first half of the year, reaching steady-state annualized production into 2022.

In the meantime, the feasibility study for an optimized mine plan is being progressed. Our third Tanzanian mine, Buzwagi, is scheduled to enter care and maintenance on its way to closure starting in the third quarter of this year. Armed by the introduction of onsite mineral resource management and an intensified focus on geology, we've spent the two years since the merger improving our knowledge of the legacy Barrick orebodies. We've made significant progress in developing life of mine optimizations based on high confidence geological models as well as new operating plans and profiles and cost forecasts.

When excluding the impact of the disposal of Massawa, our total resources grew in 2020 as expected of the back of increasing inferred resources while 76% of reserves were placed near top depletion. This was also done while maintaining our above industry average resource and reserve grade and is a testament to our focus on orebody quality which differentiates us from the rest of our industry. As our understanding of the orebodies increases and as our drilling coverage improves, the potential for resource conversion to reserves will grow, but it will take some time for the group to reach the replacement levels of Africa and the Middle East region. It's also worth noting that we have continued to clean up our portfolio with a focus on assets and opportunities that meet our specific strategic objectives and investment falters.

This is in line with our commitment to look to attract the best people to work with us to develop and mine the best assets in order to deliver long-term, sustainably profitable results. Our 10-year guidance is an important tool to manage our sustainable profitability strategy. This year's production, as I've indicated, will be impacted by the continued closure of Porgera and the heap leach transition at Veladero. But there are significant opportunities ahead for improvement and as I noted earlier, we have reason to believe that the Pogra -- Porgera issue could still be resolved positively.

The five-year outlook for copper is also positive, with all the trains as you see in this slide heading in the right direction. Our copper portfolio made another significant contribution to the group's bottom line last year though the advancement of Zaldivar's chloride leach project was impacted by COVID-19 restrictions in Chile. Lumawana in Zambia produced near the top end of its guidance and Jabal Sayid exceeded its guidance. Costs for the overall copper portfolio were better or at the bottom of their guidance ranges.

The change of copper reserves year on year principally reflect depletion through mining. With Lumawana now operationally stable, there is significant exploration potential to grow resources and reserves on the property while extensions on load one at Jabal Sayid are progressing through pre-feasibility and should soon add to its reserves. As many of you know, Lumawana has a colorful history, starting with its acquisition as part of the Equinox deal, and followed by years of operational disappointments. What the African and Middle East team has done with this asset is quite remarkable and summarized on this slide.

Through diligent operational stewardship focused on people, efficiencies, cost discipline, and sound geological and grade control practices, this mine now boasts a long life and significant future cash flow generation potential. Over the space of just two years, production is increased by 23%, costs have been reduced by 25%, and at around $3.50 copper price, just a little below what it is today, the mine could produce in excess of $250 million in free cash flow per annum for many years to come. A real testimony to the Barrick operating philosophy. The new Barrick's foundational objective was to build a business capable of delivering the industry's best returns.

Two years on we've made considerable progress toward that goal. The dividend has tripled, cash flows have increased to a record-level and a once crippling debt burden has been lifted. These achievements were produced on the foundation of a great asset base, a fit-for-purpose corporate structure, and a lean and agile leadership we have more than lived up to our best people mantra. We've had our fair share of challenges of course and then some but we've overcome them.

We've found or created new opportunities to support our sustainable profitability strategy and we've more than -- we're more than ready to exploit the openings that will be offered by the dynamics of the gold industry. And finally, as is customary, I want to look back on our performance since the merger. While I firmly believe there is significant value left in our share price before any further improvements or growth prospects, we have already demonstrated clear outperformance. As can be seen from this chart, Barrick's share prices outperformed for the past 13 months.

A shareholder in either Randgold or Barrick at the time of the merger would now be some 30% ahead of the GDX. Importantly, we are just at the beginning of an exciting and value-creating journey. Thank you everyone for listening and thank you for your attention. I've got a good spread of executives on the call to assist me.

Any questions so we'd be happy to pass back to the operator and take every -- questions.

Questions & Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator instructions] Our first question comes from Josh Wolfson of RBC Capital Markets. Please go ahead.

Josh Wolfson -- RBC Capital Markets -- Analyst

Good morning. You know, Mark, I noticed there are a couple of headlines today on the topic of -- of M&A and consolidation and -- and the company sort of reiterating its interests in being part of those discussions as well as some views on -- on copper, you know. Could you serve -- I guess update us with what the views are, more specifically, I guess, in terms of Barrick's own copper portfolio and then maybe how you look at these opportunities in, you know, the context of a market today with there being a pretty material difference in how copper prices are performing versus -- versus gold.

Mark Bristow -- Chief Executive Officer

Hi, Josh. So, I think, the best way for me to answer that question which is pretty broad is to take you back to 2008, 2009, 2010, 2011. We're in a very similar place today and you know it was a -- it was a transformational period for Randgold Resources at that time, an increasing gold price. Notwithstanding that we did do a very critical deal right in the middle of a big bull market in acquiring Moto and ultimately led to the Kibali mine of today.

And at the same time, we -- we had a big capital program. We were building out on Tongon as well and -- and it -- and so we used that opportunity not only to expand our business but also to pay down our debt. And you know, you've seen the same focus this time around. You know, we've brought the debt down, we have no net debt now.

And we've -- we've started a dividend policy already before the gold price started moving. This has allowed us to return more to our shareholders as we did in -- in -- 2019. In fact, it started in 2008, a 13- year successive increase in -- in the dividend we paid despite the ups and downs of the gold price. And Barrick is at that point.

We've got, you know, we -- we -- we have committed to returning about 3.6% yield on the share price of a couple of days ago with the seven -- proposed 750 capital return that we shared with you today. And at the same time, we're not putting the company into any sort of debt and net debt. We've got lots of liquidity. We've built our exploration teams in all three regions, very solid leadership.

I think we've demonstrated that our mineral resource management and our planning capabilities are now well entrenched. And how executive teams, you know, led by Catherine, Mark, and Willem, you know, certainly can all take on an extra asset or in -- in the case of Latin and the Asia Pacific probably more than one, Mark would say. So, we're well-positioned. We've got the strongest balance sheet in the -- in the industry, it's still growing.

And so, now, it's about making sure that we deliver it -- deliver that value to our shareholders in a proper and considered basis. And again, you know, the question I would ask is in this bull market that we find, and everyone's begging for more and more money to be returned to the shareholders, very few people investing in their own future, everyone harvesting. And this is, you know, this is a cyclical business. We're out there near the top of the cycle.

And -- and it, you know, managing this is -- it requires some conservatism and -- and considered, you know, decisions. And -- and we think that we -- we've certainly experienced this. We've got good memories, particularly, Graham and I and the other executives in my team. And so, now and -- and, you know, there are lots and lots -- as you know, Josh, there are lots and lots of businesses, whether it's copper or gold, they're just three years ago certainly were on the watch list and suddenly they are, you know, there's no risk and -- and stress anymore.

And so, with that, comes opportunity. As you know, the discussions between Barrick and Randgold started in late 2015 and took some time to find a -- a deal which really delivered real benefits for all the owners of both companies. And -- and so, we're not, you know, everyone as you see in the market today, everyone -- every time you wake up there's a different opinion that's considered to be the only opinion on where the markets are going to go and what's going to happen to gold and you know where you should be putting your money. And we back in the great financial process as well.

We believe that the -- the -- the short or near-term to mid-term outlook on -- on global markets are not clear. We believe that the -- the -- the technical support for a stronger gold price is still very well embedded in the market and -- and we certainly haven't seen the consequence of this unprecedented quantitative easing that we've witnessed in the last nine months. You know orders of magnitude of what we saw over the five-year plan. So, that's -- that's first of all the way we -- we -- we frame our -- our business.

Now you look at how you grow. The best way to grow in times like this of course is organically. And one of the things that I hope I shared with you through this presentation is every single core asset in Barrick has a real upside that you can demonstrate both and in particular, most of the new discoveries as well as brownfield extensions. So that's -- that's the core component of our business, and of course, they are -- and going to be further consolidation opportunities and -- and we believe that you know the -- the challenge of doing those transactions is -- is going to not only be commercial but also the ability to be able to deliver a more aligned, more modern comfort to the owners -- the long-term owners of these companies.

And -- and so, again, I started out with the sharing of our ESG strategy, which I believe that ultimately is going to become a key driver in, you know, one's ability to transact going forward. Having to your -- as our debts, that's gold side, and that's our core business. On the copper side, you know, again, we've demonstrated that we were capable of managing and delivering real value in the -- in the copper space. Lumwana is The miner is got a long history of poor performance.

We've been able to rebuild it and position at it. And -- and we've always said, you know, our focus on copper is first prize. The copper comes with gold and younger gold-copper geological terrains. And secondly, that we would pursue copper assets where they are located in countries where we have and can demonstrate a competitive advantage over the traditional copper miners.

And we believe that -- that sort of central African copper province offers that opportunity for us. At the same time, that down in South America there's lots of copper potential that comes with gold and the gold-copper Paul Frees. And it allows exploration teams out into the Asia Pacific College of pursuing opportunities where again that is so -- that geological association is clear. So, we're not, I mean, I think, the market responds, you know, is though just because we talk about growth and we talk about the importance and significance of -- of -- for Barrick to remain relevant in the industry it needs to broaden into copper as being that we're going to sort of go out there and just buy the first copper asset or company regardless of the opportunity to deliver value to both the target owners as well as our own.

So, you know, we're not going to do that. You've walked this path with me for a long time, Josh. We've got too many checks and balances in my executive team to go out there and do something stupid. So, watch this space give us time.

We'll keep building our business in a considered way.

Josh Wolfson -- RBC Capital Markets -- Analyst

Thank you very much.

Operator

Our next question comes from Mike Parkin of National Bank. Please go ahead

Mike Parkin -- National Bank -- Analyst

Hi, guys. Thanks for taking my question. What I had was, you know, we're seeing quite a core cold snap come down through the U.S., and I was wondering if there's been any negative impact to the Nevada Gold Mines operation to do that coal? there is it anything that you would expect to maybe drive a bit of a soft Q1 or something that would, you know, probably bounce back with the resumption of kind of normal temperatures?

Mark Bristow -- Chief Executive Officer

You know, Mark, I would just say that you know where our operations are located in Nevada it's left in the cold this time of year regardless of whether they cold snap. So, we don't know, just the cold snap is just cold. You know, we look forward to the sunny day. So it's a bit like West Africa when you have three months of rain where you get one metre dumped on you.

You know, we don't see it appropriate to use where that to explain why we can't run our mine. So, our team is well equipped to manage weather in Northern Nevada just like we are in -- in the Andes and South America. So, you know, then you definitely won't see anyone using it as an excuse but getting better.

Mike Parkin -- National Bank -- Analyst

And one last question on COVID. Do you see any potential to implement a company -- kind of sponsored vaccine clinic to get vaccines to your employees at a faster rate than government programs? Or are you looking at it to just leave it with the governments of your respective host countries and go that route?

Mark Bristow -- Chief Executive Officer

Well, you know, we want them to do is partner with our host countries and -- and in the case of Nevada, our host state, on combating COVID and its impact. And both two operations -- we now have COVID partnership-led PCR laboratories which support our protocols and that we can turn around accurate tests in a couple of hours. And that's been very helpful. We've got two more to really roll out on our laboratory in Tanzania which we're working on, and one in Zambia.

We've just put one end to Hemlo as well. So -- and through the town of Maryton. So that, you know, that -- and -- and again in all our countries, we are very much part of the COVID and task force. And -- and our senior executives are now been included in the vaccine logistics and sort of management structures in our various regions and -- and host counties or -- or provinces.

Catherine is very much part of -- of that initiative in Canada, as well as in Nevada, as is Greg in the media part of our Elko and [Inaudible] region in -- in Northern Nevada. And in Africa, we're part of the whole African Union initiative to source and -- and support the in -- the rollout of vaccines. It's a little more complicated there. But there's been some movement recently and we've seen the first Johnson and Johnson vaccines coming into South Africa, and we look forward to be able to manage that into the -- across the nations -- across the countries in which we operate in Africa.

South America, we're -- we were early partners with the Dominican Republic in setting up structures to purchase and order vaccines and get them into the country. We've got a very strong relationship and -- and worked extremely well. It's one of our most responsive COVID initiatives has been the -- as you know, Dominican Republic is being a holiday destination, but hit very hard in the early days of COVID. And then we are working again with the Argentinean government on sourcing vaccines.

Again, all the emerging and developing world are slacking behind the -- the developed economies as far as rolling out that vaccine. It's absolutely critical for the -- the [Audio gap] to manage a global solution on the vaccine rollout. And so, no, we are part of it. At this stage, it is not possible for private enterprises to purchase vaccines themselves.

But we -- we are partnering with the -- with our host countries. And already, for instance, in Nevada, we are talking about rolling out some of the vaccines to the -- the critical support staff within the mining industry, as well as other industries. So it's a very collaborative initiative, and we're -- we're -- I mean -- I mean it's been an impressive partnership across all 13 of our host countries and -- and I'm optimistic about bringing this pandemic under control in the -- in the medium term. It's definitely not going to happen as quickly as everyone would have liked.

And so it's -- it's very important we all continue to exercise discipline and -- and re -- and respect the protocols of social distancing, etc. until such time as we get a herd immunity entrenched in our populations.

Mike Parkin -- National Bank -- Analyst

Thanks, Mark, and all the best in the negotiations with Porgera.

Mark Bristow -- Chief Executive Officer

Thanks, Mike.

Operator

Our next question comes from Danielle Chigumira of Bernstein. Please go ahead.

Danielle Chigumira -- Sanford C. Bernstein -- Analyst

Right. Thank you. My first question is on your climate targets. So they seem significantly more ambitious than those set at the Investor Day.

And so could you give us any color on specific projects or specific actions that you're planning which will lead to those higher reductions in greenhouse gases?

Mark Bristow -- Chief Executive Officer

So, Danielle, we are ambitious. I mean we are very clear that our target is to achieve a 30% reduction by 2030. And I think the -- the net zero target out to 2050 is a bit academic at the moment because I don't think it's -- well, I know there's no gold mining company that goes to 2050 in the current plans. But the important is that we, I and my team, my enlarged team now, have always been absolutely clear that we manage our business on tangible plans.

So there is a target. Everyone's been under pressure to accept that they are targeting X, Y, and Z. That doesn't mean a thing if you don't have a real plan against which you can measure yourself. And so we started out with a plan to deliver a 10% reduction last year -- last year in our 2019 sustainability report.

We've now increased that to 15% reduction. We've got a serious plan. Every single one of our operations has got a very specific greenhouse gas strategy, whether it's Veladero where we're rolling out the connection with the -- to the -- the Chilean power grid, which is the -- has more sustainable power component to any other power utility [Technical difficulty] And so that -- that really does take away significant emissions and also drops our costs materially in -- in Veladero. In the Dominican Republic, we are the leader in that country with a conversion from heavy fuel to natural gas driving big turbines, very efficient, very low emissions.

And -- and not only for our [Audio gap] and PV but also for the nation. In Nevada, which we bought with the joint venture, the Newmont coal power station. And we have already well down the road on converting that to natural gas. And also, we are busy permitting a 200-megawatt solar power station, which will be linked to that natural gas power facility.

And we've got another -- a second one as well. In -- in Kibali, which is our youngest mine in the group that we built on the back of hydropower installations. And recently, as I mentioned in my speech, we've added a big battery to that. And we've learned so much about how to form a grid, many grid in remote -- in a remote place like the jungle in DRC.

And that battery technology has proved to be invaluable, and we're now looking at changing around the -- the whole construction of our grid and using the battery as the formation -- to form the grid and -- and the power -- the hydropower to actually keep the batteries charged. And -- and Kibali is unique in that it's got a big hoist and it's constantly drawing large amounts of power from the grid. But what we've learned there, we've just commissioned a 20-megawatt solar power station in Morila in Western Mali. And we know that there's an opportunity to install similar battery technology in, sorry, not Morila, in Loulo-Gounkoto, and -- and be able to form the grid and use the solar to keep those batteries powered, and therefore do away with a lot more of the -- the diesel and heavy fuel powered component of our power station there.

So -- and then the opportunities in Porgera has natural gas power and there's more and more opportunities now as people start investing in hydro in -- in Papua New Guinea, which has got some very exciting potential sites for hydropower, particularly in -- up in the highlands. So when you walk through our portfolio, I've just given you a quick rush of what. And -- and -- and, of course, you can't just say I'm going to reduce power, you got to about a plan to do it. And -- and one of the things that Barrick is investing in is that technology to ensure that the next geo mine we build has even more efficiency built into it as far as generation goes compared to, for instance, Kibali.

So we're learning every day. And -- and I believe that if we continue with that focus, and every single general manager, the senior executive in Barrick is an owner of this commitment to our stakeholders. Hope that answers your question.

Danielle Chigumira -- Sanford C. Bernstein -- Analyst

That's very useful color. Thank you. Just one more for me. On -- on Tanzania, you talked about making North Mara possibly a Tier 1 mine, and I'm trying to conceptualize how that happens.

Is -- is it the case that some of the geological upside results in a different way of operating those mines like in a border complex? How should I be thinking about that?

Mark Bristow -- Chief Executive Officer

The 300,000 ounces out of North Mara and more than about 250,000 ounces out of Bulyanhulu. You add them together, there's 550,000 [Inaudible]. The North Mara is a moderate-grade mine. Bulyan is a high-grade mine.

We drive the cost down to the bottom half of the cost curve and you've got a Tier 1 complex combined in the country. And they both have more than 10 years life, substantially more than 10 years life. So that's really our focus. And -- and what -- what's left -- North Mara has got a bit of a way to get to that low end of the cost curve, but we'll get it there because it's got so much upside.

We still got to lift the production. Bulyan has helped significantly by the grade of that [Inaudible].

Danielle Chigumira -- Sanford C. Bernstein -- Analyst

Great, that's useful. Thank you.

Operator

Our next question comes from Mike Jalonen of Bank of America. Please go ahead.

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Hi, Mark. I hope all is well and you're not facing a cold snap in Port Moresby. Just moving to -- I have a question on Hemlo, the -- intrigued by the steady-state, 1.9 million tonnes per annum production. What are the -- were -- how much tonnes will come from each of the mining fronts to get to that production level? And what would that mean to the mine production? Thanks.

Mark Bristow -- Chief Executive Officer

Right now, Mike, how's the [Inaudible], no chance of a cold snap here out in Port -- Port Moresby. I can assure you. Buckets of water, yes. About the coldest you get is when you turn the air conditioner down to about 16 Centigrade.

The Hemlo is -- outlook this year is about 210,000 ounces. And the plan is to get it up to about 250,000 ounces from underground. And that's why we need that extra access in the upper C Zone, which we're developing now. And I mean you can do the math, just work it back.

But it's -- it's really -- it's a two -- I mean our -- our first prize would be to get -- get it up to 250,000 ounces. As we improve the infrastructure, the hoisting, the ventilation, one of the big challenges is getting a lot of the waste out of the mine to improve our logistics and all movement. Right now, all that is constraining. We're still going to develop more long -- long-haul open stope opportunities.

We've got to improve our backfill, and we've still got quite a bit of a -- of remnant mining that we're doing in this next year and perhaps the year -- follow to 2022. But -- and -- and at the same time, we're drilling and -- and building that reserve base to support a plus 10-year, plus 250,000-ounce producer, which makes it a substantial Canadian gold mine.

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

OK. I can live with that.

Mark Bristow -- Chief Executive Officer

You know that mine well, don't you, Mike?

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Started in 1980 -- no, 1988 with Corona.

Mark Bristow -- Chief Executive Officer

That's it. So -- and it's still got Mitch.

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Yes, it does.

Operator

Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.

Anita Soni -- CIBC World Markets -- Analyst

Good morning. So my question is with -- with regards to reserve replacement. So I saw some strong reserve replacement at -- at pretty good grades, but I'm going to ask you about the question -- the areas that lagged a little bit, particularly at Nevada Gold Mines. And you guys have mentioned that it's going to take a few years to -- to -- to fully see the results, to get it up to where you are in Africa in terms of reserve replacement.

So can you give us a little bit of color on the plan forward in the next year or two in terms of getting that -- those grades down to as back up?

Mark Bristow -- Chief Executive Officer

Yeah. So, Anita, just try and explain, I am not sure about what you're talking about there because the -- if you look at North America, we went from 31 million ounces in '20 and '19. This has reserves now at 2.68 grams a tonne to 29 million ounces at 2.8 grams a tonne. So -- I -- I -- the -- the -- the -- the -- if you look at Africa, of course, we've grown certainly on the back of the Loulo-Gounkoto, and -- and Kibali, and North Mara replacements.

Tongon is a tougher nut to crack because it is in decline. And Bulyanhulu, the big growth will come as we complete the underground feasibility study. So -- and North Mara -- North America is in good shape. It -- it's -- it's -- first of all, you've got to build up resource profile, and -- and we're very disciplined on the grade.

And so we've done that and -- and hopefully, Anita, you would have seen in my presentation me pointing to further resource expansion. And you've got to build that front ahead of the mining faces in this -- in -- in inventory first, then in inferred, ultimately, it gets into measured and indicated, which results in reserve. And it's going to take some time. Seventy-six percent replacement right now with -- with more than 100% replacement on the resource category bodes well for us to -- to -- to get all our assets delivering reserve replacement over time.

And -- and now I'll just take you through it. As I pointed out, PV is a -- is a -- is a simple case of significant re -- reserve growth. Veladero, we didn't get the drilling done we wanted to in 2020 because of the restrictions of COVID. So a lot of that drilling is being rolled over to this year.

And -- and -- and again, we expect to -- to -- to make significant pro -- progress in the Cuatro Esquinas, the four quarters expansion of the current Veladero pit. And then we've pointed to North Leeville some significant upside potential. Rita K, we're busy drilling out. We've got the lower part of Rita K now coming into the mine plan and reserve conversion.

The upper part, we're still dealing with the water table and making sure that it's accessible, which means you can bank it. Ren, we've got some into our mine plan and reserves, but still pulls quite a lot more outstanding. The -- there's still work to do in both Turquoise Ridge underground, as well as Twin Creeks. And then Cortez, the -- as we develop and deliver on the feasibility study for Goldrush, you'll see some significant ounces flowing into that complex.

So I'm really very comfortable about where we are as far as understanding our geology and being able to with some -- when I go to the mines now, it's like I go -- I get in -- in Kibali and Loulo, the MRM team have a plan to convert. So it's part of our business. And -- I mean we even added ounces in Porgera just before this close. And that brought some significant upside.

And that's what comes with Tier 1 assets. So I hope that gives you some comfort. That -- that -- and -- and the most important thing is that the quality of our resource stroke reserve is -- is still intact. We haven't allowed anything to deteriorate on the back of a higher gold price.

We've kept the 1,200 discipline.

Anita Soni -- CIBC World Markets -- Analyst

Yeah, I know. I did notice the grades were maintained or if not improved. That must be an asset. So I was just drilling into some of the Long Canyon, Phoenix, Carlin, and Turquoise that didn't quite keep pace with the rest of the assets.

But thanks for the explanation. And then --

Mark Bristow -- Chief Executive Officer

If you're worried about Long Canyon, remember, we've stalled Long Canyon as we -- as we recut-off permitting. And so that -- that's looking for the second phase expansion of the Lafleur mine and that would also impact our reserves. At the moment, we don't have a permit, so it's not coming into the reserve for part of Long Canyon.

Anita Soni -- CIBC World Markets -- Analyst

OK. And then my second and final question I guess is a long one. But you've talked about industry consolidation in the gold space. And I just wanted to understand what exactly it is that -- that -- that catches your eye so much with the -- with the assets that are out there? And if you could give us some parameters on what exactly you're looking for and how that competes with your internal projects?

Mark Bristow -- Chief Executive Officer

OK. So I -- I guess the best way is to wind back everything to 2017 and in 2018, and you and your portfolio of companies you're covering, a lot of them were very stressed. And then suddenly, everything is utopic with a higher gold price. That doesn't change the long-term profitability of our industry.

And then we've got a couple of single-asset companies that have struggled to deliver against their feasibility study but being kept alive by a higher gold price. And our -- our industry is right now in a place where it's not worried about its future. And -- and I -- and I point this to both the fund managers, who are keeping -- demanding cash returns, not worrying about how you package, use this higher gold price to package -- repackage our industry, which is required to -- to create a relevant industry as allocation of capital becomes more sort of larger and more -- more clumsy going forward because the funds are just getting bigger and bigger and they need the dollar to be moved more. And so -- and at the same time, we've got management teams that are just hanging on to this opportunity, using the COVID and the higher gold price to -- to prevent the conversation around consolidation.

So -- but it's not going to be like that forever. We've seen the market respond on softening gold price, albeit that it's way above the sort of average. And -- and that's why it's important for Barrick to be -- to have the strength, financial and management bench strength, to be able to force some of these opportunities. On the criteria, we've been very clear.

We look at two categories of opportunities: Tier 1, which is plus 500,000 ounces at the bottom half of the cost curve or within the bottom half of the cost curve; and Tier 2, which is sort of above 250,000 ounces at -- at the bottom half of the cost curve. And -- and both having at least 10-year life of mine potential. So that -- and -- and in -- and in times like this, as I touched on in my presentation, is motto acquisition we made in 2009 in the middle of the crisis, very -- it's a world-class acquisition. We read a draft and it -- and it has delivered an enormous value to our business.

And so there's -- the -- the key here is not to buy. And I would -- and it's -- and it's a conversation that should be had because just sucking money out of the gold industry doesn't do anyone any favors. But this industry is -- was very precarious in 2017 and in 2018. It hasn't changed.

It's just you can't see it because of the higher margins. And so I think it's important that we -- and then -- and that's why I keep bashing that drum or beating the drum. And in that, I think we -- we -- we -- we need to do it. And notwithstanding that, as you've seen, Barrick has rarely invested in its organic opportunities, both brown and greenfields, and we'll continue to do that as well.

Anita Soni -- CIBC World Markets -- Analyst

OK. Thank you. Just want to close that by congratulating you on your cost control [Inaudible]. That's a pretty good result considering that past year and -- and the year going forward.

Thank you.

Mark Bristow -- Chief Executive Officer

Thank you, Anita. Appreciate that coming from you.

Operator

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

Matthew Murphy -- Barclays -- Analyst

Hi there. Just wondering if you're still expecting to formalize a dividend payout policy this year? I thought it might have come with this quarter. Is that something you're looking to do early this year?

Mark Bristow -- Chief Executive Officer

Matt, yeah, yeah. I think it's important I did touch on this in -- on another answer that a lot of debate at the board and among our executive team on how we manage this. Again, if you wind back to 2008, '09, and '10, the way we manage that return of capital to shareholders and -- and our dividend strategy, they are very similar this time around. We -- we have no visibility of how the short to medium-term economy or our market looks like.

And I think we -- we definitely -- I mean we -- we realized noncore assets. We believe it's important to return, makes logical sense to return that part of that to our shareholders, which I've always done my whole career. We've used the cash generated by our business to bring down our net debt and cover ourselves. And so that we are completely independent of the capital markets and are able to run our -- our business without interference.

So that's done, and I'm very happy with that. We will continue to build the cash portion of our balance sheet through this year if the gold price stays above 1,700. And so -- and -- and -- and -- and we believe that this whole and present tainted sce -- scenario is -- is unclear and extremely dynamic, and I'm pretty confident to be able to bet you that the current analyst outlook on -- on what it's going to look like in 12 months time is all wrong. And so our board and in debate with our management team have landed on the fact that it's better to return this.

It's a significant return, added to our nonsense quart -- quarter, delivers about a 3.6% yield at current gold share prices, actually a bit higher than today. And then we'll reassess things next year where I'm sure things will be a lot clearer to everyone.

Matthew Murphy -- Barclays -- Analyst

OK. Thank you.

Operator

There are no more questions from the conference call. This concludes today's conference.

Mark Bristow -- Chief Executive Officer

Sorry. Thank you. I'd just like to say to everyone, thank you very much for making the time today, and very pleased that we got through this presentation. A lot of people put an enormous amount of effort into the communications and everyone was really concerned that we might break our communication through this process.

So thanks to everyone that put effort in there. And again, thank you for making the time to join us and we'll speak to you soon.

Operator

[Operator signoff]

Duration: 89 minutes

Call participants:

Mark Bristow -- Chief Executive Officer

Josh Wolfson -- RBC Capital Markets -- Analyst

Mike Parkin -- National Bank -- Analyst

Danielle Chigumira -- Sanford C. Bernstein -- Analyst

Mike Jalonen -- Bank of America Merrill Lynch -- Analyst

Anita Soni -- CIBC World Markets -- Analyst

Matthew Murphy -- Barclays -- Analyst

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