Barrick Gold Corp

TSX:ABX

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick 2020 Second Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and a replay will be available on Barrick's website later today, August 10, 2020.I would now like to turn the conference over to Mark Bristow, Chief Executive Officer. Please go ahead, sir.

[Dennis Mark Bristow, President, CEO & Director]

Thank you very much, and a very good morning and afternoon to you, ladies and gentlemen, and thank you for taking the time to be on this call with us for Barrick's quarter 2 results.Who would have expected us to be where we are today? This time last year, no one could have foreseen or even imagined that our world was about to change fundamentally in a way that would impact every country, every institution and every person on the planet. The novel coronavirus descended on us without warning. And as yet, we cannot number the lives it will take or picture the social economic destruction this unprecedented event will leave in its wake.In hindsight, the merger of Barrick and Randgold could not have been more prescient for its creation of a modern fit-for-purpose mining business that is not only continuing to fulfill our promise of sustainable and superior value delivery, but has also provided us with the mindset and the structures to combat the pandemic. This has enabled us to buffer its impact on our people and our operations and as you can see from these results, we have not only continued to meet our targets, but also continued to advance our strategic projects. And in the spirit of partnership, which is at the very heart of the Barrick culture, we have provided much needed support to our host communities and countries in their own battles against COVID-19, and we will continue to do so. I refer you to the cautionary statement up on the screen. And it is also on our website, should you want to review it in more detail. As already mentioned, key to the effectiveness of our COVID-19 response has been the management structure we introduced after the merger. Our flat, agile and decentralized structure across the group allowed us to proactively implement a broad range of preventative measures at all our sites and immediately engaged with our host countries to provide timely assistance to suppress the spread of the virus. Barrick's traditionally strong focus on health and safety ensured that it was well equipped with the comprehensive means and efficient systems to contain the virus. Among many other things, Barrick has, to date, provided more than $20 million to help the hard-pressed health authorities and our communities in our host countries. As we continue to demonstrate, mining companies can be a major force for good in these countries and a true partner to their governments.Within our operations, Barrick's journey to zero harm continues to make steady progress. And in quarter 2, we reduced our Lost Time Injuries frequency rate by 16%, and more importantly, when you look at the slide, it's the trend that matters. And we also have seen a decrease in the number of total injuries. Similarly, we are improving our environmental record to ensure that we are building a business that will be acceptable to future generations. So far this year, there has been no Class I environmental incidents across the group, our CO2 emissions have been reducing and our water reuse and recycling is improving. By the end of this year, all our mines will have achieved the ISO 14001:2015 environmental management certifications. Our commitment to high ESG standards is also evident in our support for community development projects. In addition to the COVID-19 aid we are providing, we have invested almost $9 million in these projects year-to-date. And more importantly, we have spent over $1 billion to support the local economies through the purchase of goods and services. One example of these development projects is a scholarship fund for Native Americans in Nevada, to which Barrick has committed a further $13 million over the next 10 years, bringing our total investment in this project to $26 million, and ensuring that there is bursary funds available for our Native American partners for the next 50 years. Operationally, the quarter has provided many highlights with real delivery on many fronts, endorsing our vision of the new Barrick capabilities as summarized here. I'll talk you through the main points in the course of this presentation. Anchored by a strong performance from our Tier 1 asset portfolio, notably Nevada Gold Mines, Loulo-Gounkoto and Kibali, year-to-date gold production was 2.4 million ounces, which means that at the halfway mark, we are well on track to end the year within our guidance range of 4.6 million to 5 million ounces. The copper portfolio also posted strong results with production in the upper half of the guidance range and costs trending towards the lower end. Capturing the benefit of higher gold prices, free cash flow increased by almost 20% to more than $0.5 billion and adjusted net earnings per share rose to $0.23, well ahead of market consensus. This result is a stellar one, given the Q2 is the quarter when we usually settle a lot of our cash taxes and interest payments. Debt, net of cash, was reduced by nearly 25% to $1.4 billion from the end of the first quarter. And on the back of this strong performance, the quarterly dividend has been increased by 14% to $0.08 per share and has now doubled since the second quarter of 2019. I am also pleased to confirm that to date, our noncore asset disposal program has delivered on our target of $1.5 billion, with $1.25 billion of that $1.5 billion being received in cash and the rest in equity, and this process is continuing.Turning now to the operations. We start in Nevada where the pandemic accelerated the integration of the Nevada Gold Mines operations. Strong management delivered to the bottom line despite the crisis, and the support provided to the communities, counties and the state reinforced the partnership principle and demonstrated mining's key role in balancing Nevada's economy. The combination of Carlin and Goldstrike has provided processing flexibility and geological opportunity. Production for the quarter was down as expected because of plant maintenance at the Goldstrike roaster, partly offset by the increase of higher-grade Cortez ore processed by the Carlin roaster, one of the synergies captured by the Nevada Gold Mines joint venture.Incidentally, the Carlin open pit truck drivers were seconded to shuttle employees across the Nevada Gold Mines, dispensing with the need for buses as part of our social distancing measures during the initial early lockdown period of the pandemic. We are still defining Nevada's full potential through the integration of exploration, mineral resource management and mine planning, but it is already evident that the Carlin trend holds significant promise for resource growth as well as new discoveries.A number of high priority targets are being tested with the North Leeville project recently delivering the best intercept to date of 21 meters at 35 grams a tonne, that's more than an ounce per tonne. The exploration team is really making good progress in advancing the programs and revising the models and priorities.Over now to Cortez, which did particularly well, topping the previous quarter's already solid production numbers. Cortez Hills underground continues to outperform with improved efficiencies supporting mining at a higher rate. The Goldrush team has also now been integrated into the Cortez organization. The construction of Goldrush's twin exploration declines is also now ahead of schedule, and the transition from a contractor-to-owner operation has been brought forward to the fourth quarter of this year. That's about a 6-month forward -- bringing forward. The project is scheduled to intersect first ore in the first half of 2021, with permitting expected later that year. And so 2021, we'll focus on validating the assumptions in the feasibility study, which is due to be completed in the early part of next year. Though it's early days, testing the geological extension at Cortez Hills underground, notably the footwall of the Hanson Fault, as shown now in the right-hand diagram as a section across A, A prime in the left-hand plan. And this has certainly indicated the potential for life-of-mine extensions that will allow Cortez Mine to maintain its Tier 1 status even before the contribution of Goldrush.In the meantime, Barrick's nearby Fourmile project, which has not yet been integrated into the Nevada Goldmine portfolio, continues to report very significant drill results, confirming the high-grade of the mineralization as well as Fourmile's exciting potential. The model update is underway with updated resources expected at year-end.At Turquoise Ridge, construction of the third shaft remains on schedule and within budget. Commissioning is expected in late 2022. The current focus is on continuing to improve underground efficiencies, getting a better understanding of the ore body and the geological model as well as driving the optimization of the mine plans and processing facilities. Of all the operations, the Turquoise Ridge complex, which includes the legacy Twin Creeks, has been one we have had to put extra effort into. And consequently, there has been further leadership changes to accelerate this process. This complex offers the most significant additional near and medium-term opportunities to Nevada Gold Mines. Elsewhere in Nevada, Phoenix and Long Canyon both operated within plan and are trending towards the higher end of the guidance. On the subject of Nevada, the state has been hit hard by the pandemic, given its reliance on gaming and tourism. We have recently worked with the governor and the legislature to deliver advanced taxes to support some of the state's needs in the medium term, and we continue to engage to help with longer-term solutions to the state's funding challenges. In Canada, at Hemlo, after teetering on the verge of closure for 10 years now, you will recall that the mine was subject to a rigorous review, which was used to introduce our new approach to mineral resource management and mine planning. The tailings, plant and underground are being debottlenecked and the mine has transitioned to an underground contractor mining model under an energetic and motivated new management. Production from the restricted and revitalized Hemlo is on track to achieve this year's guidance, although costs are trending higher, impacted primarily by higher gold prices and the higher net profit royalty. One more challenging year lies ahead of us at Hemlo, but beyond that, the mine should be looking at a 10-year runway with potential upside. And this potential upside at Hemlo is significant. We are growing our geological knowledge of the area, revising the models, defining new targets with the potential to open up new mining fronts and acquiring additional rights. Our aim is not only to extend the known ore bodies but to find new ones. District scale exploration well beyond the current known limits of the ore bodies has started at Hemlo after years of inactivity. Follow-up fieldwork is underway on areas of interest known to coincide with gold mineralization in and around the existing operation as well.In the Dominican Republic, Pueblo Viejo's production was impacted as expected by a total plant maintenance shutdown. And as at our other operations, higher royalties from the higher gold prices also took their toll on costs. With major scheduled maintenance now complete for the year, production should return to normal levels, and the mine is working to get back to plan in the second half of the year. One of Barrick's key strategic projects is the expansion of the plant and tailing facilities at the Pueblo Viejo's joint venture, which is designed to extend the life of the mine into the 2040s. The environmental impact assessment for the plant has been submitted to the authorities and orders have now been placed for the long lead items. Field work for the baseline environmental assessment of the additional tailings capacity essential to support the mine's life extension has started and constructive discussions with the authorities regarding the permitting are well underway. The project's implementation strategy is based on committing 75% of the actual construction subcontracts to Dominican-controlled contractors. Following the recent elections, the political uncertainty in the democratic -- Dominican Republic has dissipated, and the new president will be installed next week. His government is business and mining-friendly, and when I visited him recently, he assured me we could rely on their support for the project and together, we are looking to grow the mining industry based on responsible mining. In the meantime, we are also exploring exciting new opportunities both within the joint venture lease and outside the lease area.Veladero in Argentina was the only one of our mines where operations were directly hit by the pandemic. The mandatory nationwide quarantine imposed by the government was followed by a particularly severe winter that impacted stacking and irrigation activities. Consequently, production for 2020 is trending below guidance at slightly higher per-ounce costs. Open pit operations were halted for 17 days and then resumed at 30% of capacity for a further 23 days. With personnel restrictions expected to remain until September, the pit is currently operating at around 85% of capacity. Construction of the leach pad expansion project also stopped at the start of the quarantine and the onset of winter delayed further work for some 6 months. Additional resources will be mobilized at the start of the construction season to accelerate the progress of these projects.Construction of the power line from Chile was similarly halted, and we are now replanning the project. But at the same time, we intend to give priority to the Phase 6 leach pad construction. We expect the commissioning of the power line by the end of 2021. The remobilization of the project teams is also dependent on the easing of government restrictions relating to COVID 19.Remaining in the Andes, we continue to explore along the prospective El Indio belts. At Alturas-Del Carmen, the controls to the high-grade mineralization are being investigated in an effort to identify more. At the same time, the scoping level economics are being updated to determine how best to bring this project to account. As far as Pascua-Lama is concerned, we are working towards a new geological model with resource updates expected in 2021.In Papua New Guinea, as you -- I'm sure all of you are aware, we placed Porgera on care and maintenance after the government decided not to renew our special mining lease license. We believe the government's decision was taken without due process and in violation of the law, and the matter is now before the court. We continue to argue the merits of the benefit-sharing scheme we proposed in 2019 and revised recently, and we continue to have the support of the landowners, the communities and civil society. And given the uncertainty of the situation, as previously announced, I would just remind you, we have withdrawn guidance for this operation.Now over to Africa where Loulo-Gounkoto delivered its usual solid performance and is trending above plan. Here again, higher royalties impacted the cost per ounce. The Gounkoto underground project, which will provide the complex with its third underground mine, is on track to start development towards the end of this year and further extend its life by continuing to replace its depletion from mining. Exploration across the Loulo district has confirmed extensions to the transfer zone at Yalea and shown that the Loulo 3 system remains open down to 2 prospective new corridors, 1 to the south of Gounkoto and a second within the Bambadji joint venture in Senegal have also been further defined this quarter with encouraging results from drilling. And this will be a focus for the team in the new field season following the current rainy season. In Côte D'Ivoire, Tongon was on plan for the quarter and is on plan year-to-date. The focus there is all about extending the mine's life through the discovery of extensions and satellites. And as a result, we are considering a plan to trade a lower production profile for a longer life-of-mine and with significant added value and optionality, especially given the current higher gold price. Tongon is also located in the Nielle permit and how you can see where we are exploring new corridors for opportunities to further extend the life-of-mine by defining some new and exciting targets within the hauling distance of the processing facilities.Across to the eastern part of Africa, Kibali in the Democratic Republic of Congo continued to deliver consistent results and is also tracking ahead of plan. The mine is well positioned to replace its depleted reserves this year and still boasts a wealth of resource growth opportunities. And then further east to Tanzania, where Tanzania is still a work in progress as we rebuild the assets and relationships destroyed by Acacia. But I must add, the team has made significant process with this endeavor. North Mara is fully operational again with production above plan, but costs slightly elevated as we work to address the issues we inherited, which I have no doubt, we will correct. Recent drill results at Gokona have exceeded grade expectations, indicating an extensive upside potential beyond the existing drilling limits of the underground development. We estimate that current targets have the capacity to replace depletion this year and the next. There is also a further potential to add an additional cutback to the Gena pits and this is also open at depth below the pit.If you look at the slide on the left, you will see a green square with a couple of dots, and that's the new Kofia target and initial scout drilling at this new target to the -- which is located to the West of Gokona pit as shown here aims to extend the Gokona system by approximately 500 meters west of the current known mineralization systems. At Bulyanhulu underground, which has been on care and maintenance for some time now, the team is doing a great job of recommissioning the mine. Shaft refurbishment is due to start later this month and we are on track to resume processing underground ore by the end of this year. Buzwagi's focus, on the other hand, is all about optimizing throughput and managing the stockpile processing grade. I'm also pleased to confirm that following the signing of our framework agreement with the Government of Tanzania, as of today, all the stockpiled concentrate has now been shipped, with around 30% having been shipped during the second quarter. Also, the first $100 million payment towards the settlement of the legacy disputes has been paid to the government, as you would have seen in the press.Overall, Central and East Africa are a happy hunting ground for our exploration teams, offering many opportunities for resource replenishment as well as new discoveries. Our teams are active, both in Eastern DRC and throughout the Tanzanian gold fields, building on our knowledge and expanding our portfolio. As I mentioned in the intro part of this presentation, our copper mines all had a very good quarter with Lumwana posting its best production and cost profile in years, Jabal Sayid trending at the top end of its guidance and Zaldivar, although impacted by COVID-19, still delivering a very respectable performance.In conclusion, ladies and gentlemen, looking back over the past 1.5 years, I can report that all the opportunities created by the merger and subsequent transactions have been seized and more have been identified. Our existing asset portfolio supports a 10-year organic production profile, which distinguishes us from the rest of the industry. Our exploration teams, recently strengthened by the newly created positions of Vice Presidents Exploration for Latin America and Africa and the Middle East, continue to scale the globe for the new opportunities that will sustain us and build our business into the future.And finally, as shown on this slide, Barrick's share price performance reflects our ability to successfully deliver on our mission statement, both from the time of the Randgold merger announcement and the current year-to-date, outpacing both the gold price and our industry peers. Again, ladies and gentlemen, thank you for your attention, and I'm happy to take questions. And as you would have heard in the start of this presentation, I have the Barrick team on the line as well should we need to call on them to expand on any of your questions.So operator, back over to you.

[Operator]

[Operator Instructions] Our first question comes from Chris Terry of Deutsche Bank.

[Christopher Michael Terry, Research Analyst]

Well done on a very solid quarter in the context of COVID-19, in particular. My first question is just around COVID-19. You've done a great job in restocking, having raw materials on hand, et cetera. If you could talk through the second half of the year, which operations keep you up at night? Which operations you're most concerned about from a COVID point of view? And is that a continued focus? It's all about having the right raw materials, separation of workforces? Just if you could talk through a bit more granular detail about how you head into the second half to mitigate the COVID risk.

[Dennis Mark Bristow, President, CEO & Director]

Yes. Chris, the big thing now is settling down our operations and also our biggest challenge is constantly reminding the communities and our host countries and state governments that COVID is still there. It's no different to when we started this pandemic back in February and that we need to maintain proper disciplined protocols. And so the real risk is, as we've seen in North America particularly and in Europe and recently in China, is the spikes that are bound to come from time to time. And so it's making sure that we are obsessed about our protocols, and we are now -- we now have testing capacity right through our different organization, our different operations. We have sponsored PCR facilities, plus rapid tests through all of the countries we operate, except North America, which is U.S. and Canada are still mulling over the approvals for those very rapid tests. So that is -- and again, the response to any spark is always a risk to our operations. I think we've demonstrated -- I mean the other risk, Chris, is Argentina. It remains a risk because we haven't had a positive case up in Veladero and what we are working with our state government and the national government is you've got to get your head around the fact that you are going to have infections. It's how you're managing that's important. And the fact that you can limit the [ R factor ] effectively. Africa came in a little later. But again, we're very proud of the responses from the host countries. And as you know, we're very well connected to the health authorities right through Africa because of the Ebola challenges we've had in the past and our ongoing fight against malaria and other tropical diseases. So -- and really, Barrick's community management teams plus our health authorities are really an extension of the regional health authorities. And so we've been able to really support the ability to test quickly. And we've been able to really deal with a few sparks recently. Just the other week, we did a complete test of our entire workforce in Kibali, for example.And the other thing that is important, a lot of people ask me, so Mark, what sort of response are you getting from the communities about you continuing to operate. And what we have demonstrated is that it's a very dangerous thing to lock this virus away, particularly in the developing world where you don't have capacity and people go back to small dwellings. And so I take Kibali the same as with Loulo-Gounkoto or Tongon, we're able to monitor our workforce. Our workforce goes back into the community every night. We can and we do have the capacity and we do actually do it is we can test the entire workforce. And so therefore, we've got absolute visibility to the community around our mines.And so that concept is something that has really been accepted by our host countries. And so far, I am very encouraged about the responsiveness across Africa and the way the virus is being managed, sometimes even better than some of the more developed countries we operate in. But that's what it is. This virus is the same virus as in February when it first arrived. It requires real paranoia to manage it. We have a concept, treat everyone as though they've got the virus and then work around it, and that's how we do it. And again, I think every one of our management teams have excelled and proved the effectiveness of our flat corporate structure and our agility we've created by ensuring that we have executive authority on the operations. But yes, this virus is unprecedented, and we have to manage it every day. On the logistics, I mean, we've -- our logistics team has done an amazing job. We were -- in February already, we started increasing our stores, particularly on consumables and strategic items. And we've got a 3-month inventory. We have managed a couple of motor breakdowns in there during this last period. You don't see the result of it because we have the capacity to -- and the strategic space to manage these process interruptions as we do all the time. So we haven't been impacted at all. We did build in alternate supply routes. We've shifted, for instance, the purchase of steel bores from China to Europe and then back to China again. And so our team is very nimble, and it's an integral part of our business. So -- and all our projects are on track, except for the Argentinian projects, which I shared with you earlier.But -- and the other thing I would leave with you, Chris, this -- is our strategic objectives are on track as well. Things like our commitment to change the demographics of our employment to seek a much bigger growth of -- I mean a much bigger focus on employing younger people. And there's an article in our report, which really expands on that human capital strategy to ensure that our commitment to build the most valued mining business is not just cheap talk. It's a genuine strategic plan, which we measure against.

[Christopher Michael Terry, Research Analyst]

Great. And then the other question I wanted to follow-up, just want to make sure I've read this correctly. But basically, from a strategic point of view, where you stand today, you may be able to extend Tongon. Everything else remains as is despite the higher gold price and the discipline you've always talked about keeping the reserve price the same. And from a copper-gold perspective, given you've done the $1.5 billion of divestments, you're comfortable where that is. I'm just wondering if you could just talk broadly about your latest thoughts on strategy, commodity mix, pricing, et cetera. I think nothing's changed, but I just wanted to get your voice on that.

[Dennis Mark Bristow, President, CEO & Director]

Sure. Tongon is a good example. The team, again, has done a really good job of adding more resources. We are busy with the final feasibility studies, but everything looks like us being able to extend Tongon's life. Originally, it was going to produce a big year next year and then close. But that's not the case anymore. And we are looking to have a slightly lower production profile next year and then run for another 4 years -- or 3 years at about 180,000 ounces. And then we've still got, as I pointed out, all these other opportunities. We've really started to crack the control around Tongon as far as mineralization goes. We're still managing on a $1,200 gold price. So we need the business to make money at $1,200 and this profile. And so we end up with more ounces, slightly lower production rate, but for longer. And I must say that the African Middle East team has done an excellent job in beefing up its profile going forward. And Tongon is the classic opportunity where we can benefit from the margin that the gold price offers because we were going to close it in 2022 and now it's open until post-2024. And we've got more that we can add to that process plant, which is now no longer at full capacity. It generates more revenue at $1,200 gold and it creates an additional optionality. The other opportunity we have with the gold price is in Nevada as we -- but again, the team has continued to find resources and convert them into reserves to keep our processing facilities full. But as we move more and more underground, we do free up some capacity in our oxide mills. And of course, we've got the heap leach opportunities where we can also increase the stacking of slightly lower grade, but -- as long as it's got good metallurgy.And so those -- we don't -- and we have a little bit of capacity at Kibali, but we keep filling it with full grade ore. So the only way we can benefit from this gold price, other than the gold price itself, is we don't get to change our reserve grade gold price so as to be able to accept lower-grade material to full available capacity. And although we don't have much today, we have some in Tongon and there's some that could materialize in the future. As far as M&A goes, we are very clear, and I mean we've proved this back in -- you were around back in 2009 when the last big run-up in gold post, the great financial crisis. We are very -- we intend to remain very disciplined on -- the $1,200 is the new $1,000 for me. And M&A, of course, we will pursue M&A. Our strategy to M&A doesn't change. It's about the quality of the assets, the target assets. We are not going to increase any M&A activity on the back of bigger gold prices that we ignore the revenue side of our models when it comes to M&A. We want to see whether the -- any opportunity delivers assets that can survive the full cyclicality of the gold price. And on copper, I think we've demonstrated our team's ability to turn around a massive copper, very low-grade copper mine in Lumwana. It's doing extremely well at the moment. And our strategy, as we shared with the market at our Investor Day last year really, is that we recognize that to remain relevant in this growing global market, we need to continue to at least replace what we've mined and more importantly, grow that opportunity with quality. And our view is that in that endeavor, we are bound to find porphyries, gold-copper porphyries that will deliver on our -- pass our filters, and it would increase the amount of copper that we mine. And we've also said that we would operate -- take on a copper portfolio should we be able to exploit benefits from it strategically. And the other thing I'd say, Chris, is the importance -- this world's -- the mining industry in this world needs to reinvent itself. I think you've seen the gold industry take the lead post the Barrick merger with Randgold and then the Newmont consolidation of Goldcorp and then the subsequent transactions in Nevada and then us taking Acacia private, our Massawa-Teranga merger. And we've really -- this industry looks a lot better and is definitely delivering back to its shareholders with the higher gold price. I hope that we will continue with that discipline and actually deliver value back to our shareholders in this sort of economic global crisis that we find ourselves in.

[Christopher Michael Terry, Research Analyst]

Okay. That's all clear. And then just the last one for me, Mark, and I'll hand it over. The -- there's an update out on Donlin a week or so ago. Just wondering if you could comment on where that fits within the portfolio overall? Or where do you see that?

[Dennis Mark Bristow, President, CEO & Director]

So as I pointed out, we've already met our $1.5 billion value delivery by bringing to account noncore assets. We will continue to do that. But Donlin is a nice, clean gold opportunity. It's definitely a very large resource. We have a -- we understand the economics of it. When -- with the changes in Barrick, we got much more involved. And we -- it's sitting -- at $1,200 gold, our review last year gave about a 9% IRR. When we look at the project, it's got 3 sort of risk baskets: Construction risk because of its location; the capital risk, just because it's a very large asset, and it's moderate grade, but in a challenging environment; and then -- which is always the case, it's the geology risk, and that's something we can derisk. And so our engagement with NovaGold was, let's really get down, put the best of our geologists both sides into this project, employ some really quality skills into Donlin and then take out the geological risk. Because once we have a clear definition of the reserves and, more importantly, the shapes of the ore bodies, we can then set with confidence the mining plan and, more importantly, the rate at which we can mine, which of course will set the amount of gold that we can produce on an annualized basis. And then all the rest is able to be measured against that. And so that sets your return. Once you get the amount of gold you can produce and at what cost, then it's -- that's the basis to determine the returns you can deliver for stakeholders and the next variable is the actual gold price. At these gold prices, it's a very valuable asset. We're still adding value to it. And you would have seen the first announcement out of Donlin as Donlin, because I believe that's where NovaGold and Barrick should be focusing on is Donlin as a stand-alone business. We happen to be shareholders of it. And we will continue to drive that. It's the biggest drilling project that we've -- that Donlin has seen for some time. As you know, we in Barrick are geocentric. We're obsessed about taking out the geology risk and we've got probably another follow-up early next year to test the models that we will develop out of this drilling program, which we will finish this year and before the winter sets in. And so -- and then we'll take it from there. And we -- definitely, right now, it's a key project for Barrick and very valuable today.

[Operator]

Our next question comes from Jackie Przybylowski of BMO Capital Markets.

[Jackie Przybylowski, Analyst]

I'm just going to follow-up on something you alluded to in that last comment, Mark. In the MD&A, you did talk about how you have achieved the $1.5 billion value realization, but you did say there's more to come. And I was wondering if you could comment on that. Are you still looking at noncore asset sales in the near term, I guess, will be the first question.

[Dennis Mark Bristow, President, CEO & Director]

So Jackie, yes. The answer is yes, yes and yes. So I mean, I think, what you're seeing now is that we set this $1.5 billion target, people sort of raised their eyebrows a bit. But the 2 big drivers on that is the $750 million cash payment we received for our share of Kalgoorlie. Today, the value of the Massawa transaction is just on a $500 million. We then cleaned up a whole lot of non -- sorry, equity positions, ownership of small projects. Barrick, one stage, was investing in juniors and so on, so we've tidied that up. And I think what it shows is that every dollar is important for this Barrick team. There were lots of transactions we've done, sort of $5 million, $10 million, $15 million tidying up the portfolio. As you would have seen, we've recently entered into a definitive agreement over Eskay Creek. And again, we believe that, that deal will continue to add value. We are a big shareholder in that project, and we'll manage our way out of it over time.And we've still got others to do. There's a lot of work being done on our closure sites. We've changed our closure strategy to close -- to work engineer our sites to closure rather than trying to kick the ball down the road or the can down the road just to remain in compliance. So -- and as we do that, we convert a liability into an asset, and we are able to bring it to account. As you would imagine, the higher gold price turn some of our smaller assets within our portfolio into something that's quite attractive. And we have a number of those. And so again, they might well prove to be the sort of foundation for start-up initiatives. And I would just point out, that's how I started Randgold some 30 years ago.And so -- and we are always supportive as far as entrepreneurial developments and opportunities. So we'll continue to do that. We have other assets in our portfolio that, again, we would want to bring to account and at the appropriate time. And the gold-dominant assets have a much bigger value today than they had even at the beginning of last year. So you can look forward to more of these sort of transactions.

[Jackie Przybylowski, Analyst]

That's really helpful color. And I'm sure the closure reclamation is very attractive from an ESG perspective, too, for the communities. If I could ask on the sale of the Shandong Gold equity that you held. I know you have 10 million shares approximately remaining. Is that a position you plan to keep? And conversely, have you talked to Shandong? Are they planning to still hold the Barrick shares that they own?

[Dennis Mark Bristow, President, CEO & Director]

So we worked -- that investment was -- had many reasons for it. There was the IPO, which we supported and Shandong coming -- moving into the international arena, which we were able to support. And also, they were supportive of us in a time when we were working towards the merger between Barrick and Randgold. And at the same time, as you know, we're in partnership down in Argentina, which is really now started to really show merit. For us, we believe we had fulfilled our role in that process, we have retained a core investment with them, and we have no intention of selling those shares certainly in the short term or even medium term. But at the end of the day, our business is about deploying our owners' capital to make returns. We are not passive investors by nature or through strategy.Again, they have -- for their investment in Barrick, they are -- they have kept on it. They've done very well by staying with it. And our liquidity is such that they can sell it or buy anytime they like. Whereas for us, we had fulfilled a specific role and we worked with them to create some more liquidity through their sort of offshore -- the Chinese offshore structures, and we were able to bring in other shareholders. And again, those shareholders have done very well out of that transaction. So I think, again, our partnership and the way we work together to realize value for our respective owners is -- really underpins the partnership that we have with Shandong.

[Jackie Przybylowski, Analyst]

Got it. I have one more question, then I'll hop off. Can you give us an update? I think you talked previously in the media about Kibali and the negotiations you're having with the DRC in terms of cash repatriation. Is it possible to update us on how those discussions are going?

[Dennis Mark Bristow, President, CEO & Director]

Yes. They're going extremely well. So just some background. The 2018 mining code is sort of shoved upon everyone and then there was a change in government. And we've engaged with that government, and it's a complex engagement because of the coalition that is -- they're sort of underpinning that government with the Kabila faction having more ministers than the Tshisekedi faction. But in the fullness of time, there's -- we've -- it took a long time to form the cabinet. There have been some changes on both sides. But it's a better working government today than it was even a quarter ago. And again, we've -- as you know, we were very engaged and vocal around the 2018 mining code. And there's been different ways to interpret our repatriation of excess cash.And Kibali really -- it makes it -- Barrick makes it its business to comply with legislation. And so that one of the changes was you had to repatriate 60% of your gold revenues back into the country. Of course, into a U.S. dollar account, which is important. And even after repatriating that 60%, we weren't able to spend all 60% of the repatriated funds. So we grew our cash balance in-country. And we still are paying off the capital in Kibali. And also, we have settled on a dividend strategy before capital -- the full capital amount is redeemed, which will benefit both our partner, SOKIMO, and of course, the government through withholding taxes. And so we've sat down the government and pointed out, it's useless keeping this money in DRC. It doesn't draw a lot of interest, it doesn't help anyone, whereas the sooner we can pay our capital off, the quicker we can revert to full dividend repayments. And we take away a cost on the income statement as well. And everyone understands that. We didn't want to do it in any sort of purchase process. We wanted to do it under the proper regulations, which we believe are embedded in the mining code. And so we've had to work to tidy up some of the wordage. We have approval now from the government and the Central Bank to repatriate. It's really now just with the paperwork.And at the same time, we have been working with the parliamentary subcommittee, just tidying up the legislation so that these sort of transactions can happen in the normal course of business. And I just would point out to everyone, the dollars are in a U.S. dollar bank account and there's no question about -- they belong to Barrick and [ Randgold ], of course, and we are -- it's taken some time because we were prevented from doing much because of the delays in finalizing the cabinet. But now that -- once the government was properly settled, we were able to get to work. And we're right at the cusp of this happening.

[Operator]

Our next question comes from Josh Wolfson of RBC Capital Markets.

[Joshua Mark Wolfson, Analyst]

When you're taking a look at the gold price today, it was something like $700 above your $1,350 budget and over $800 above your long-term price assumption. Company is positioned to be in a net cash position in and around year-end, generating more than $3 billion of free cash flow. When you look at the company's long-term outlook and I guess M&A aside, how do you leverage this kind of upside that you're currently experiencing today from the gold price without compromising the company's discipline, which it seems very, very clear that the company is doing right now?

[Dennis Mark Bristow, President, CEO & Director]

So Josh, first of all, the way you do it is if you don't blow your brains out, like what happened to the industry in 2010 to 2015. So that's the first point. Secondly, we've always said that we would adjust our dividends on a sustainable basis as and when it was required, and you'll see that we've added another $0.01 to the quarterly dividend already. And we will reconsider that. Because if I can try and explain to you our objective, we haven't changed our strategy. And by the way, we are managing now at $1,500 gold. So our budget was -- the plan is that always at $1,200. It's measuring the performance of the teams. We got to keep rising the gold price, and we try and keep it as close to spot as possible. The challenge we've had is that spot has been moving faster than we can. But I must just reinforce. We still allocate capital at $1,200. The budget number is only for us to forecast revenues. And your prediction is correct. If you take the various gold prices, and we do run our models now, we've got them up to $1,900 gold, and we look at them so that we -- the objective is not to waste any money and retain the dividend -- I mean the discipline of protecting our margins. So that's -- so then step back and say, what are we going to do about it? First of all, what this is -- what is happening today is effectively fast forwarding the Barrick strategy of 1 July or 23rd of September, 2018, when we shared with the market our vision for the Barrick-Randgold combination. And this gold price has done 2 things. It's fast forwarded that whole strategy and it's also allowed us to work through some of the riskier assets. For instance, Argentina, when -- at the beginning of last year was not in good shape. Veladero and the due diligence couldn't make money at $1,200 long-term gold price. Today, we've got a 10-year plan that does make money at $1,200 gold price. And with the crisis in Argentina, the higher gold price is helping us iron out the last of the wrinkles in that asset, which is a very valuable asset going forward. And it gives -- and then, of course, we've got all the other opportunity. And so the same with Nevada is that we changed some of the open pit schedules at the beginning of the year and then changed them again with COVID. But it's given us some flexibility to manage that combination and also settle everything in the right place, if that makes sense to you. So Nevada is now going forward. You haven't seen some of the gaps that we've closed because the gold price has eased us over those gaps. The same with Tongon. It's going to give us some breathing space. Again, we haven't changed the $1,200 test, but it's given us some breathing space. And suddenly, our geologists are starting to deliver additional opportunities there. So -- and again, if you go to North Mara, which is the biggest sort of workload right now in Barrick. Again, this raised gold prices just helped us get away on the back of our promises that we made to the market and the Tanzanian government. And so the concentrate was sold at a much higher price at which it was produced. And so we were able to settle that $100 million first payment to Tanzania. We've got a bigger, stronger Tanzanian balance sheet because of the better revenues we got from the remainder of the concentrate. And we've got a capital profile there that we can manage. So we're able to manage that business on -- as an entity, with itself already generating the cash that we require to invest in the rehabilitation, for instance of the Bulyanhulu underground. So that's what we're using this price at the moment. Just as we did with Randgold Resources, you recall in 2010, '11, we had our biggest sort of capital demand. We were growing some debt, and it really helped us out of that position and settled us into a foundation that really allowed us to keep growing. Already in the report, if you look at the dividend strategy, you've already got a nice steady increased profile. And so again, already today, because of our delivery, we have a better business base on which to predict our long-term profitability on a cyclical basis. And I've got every confidence that we'll continue to improve our dividend returns in the -- going forward, as we demonstrate that our businesses are solid and can support the dividend strategy. And then at a point, we promised the market we would get to a point of a -- some sort of change in dividend policy, more along our ratio line or maybe something we had like we had in Randgold Resources. But right now, we're still building that business and delivering on the promise -- on the strategy, but it's going to happen a lot quicker on the back of this gold price.

[Joshua Mark Wolfson, Analyst]

Good. One more question, just looking at managing the business through the cycle and recognizing we're probably not below here. Something that hasn't been discussed much in the sector but might be emerging is the concept of hedging and maybe hedging in a method to reduce earnings volatility or an improved visibility. Is that something that the company would consider ex sort of project development, just looking at that?

[Dennis Mark Bristow, President, CEO & Director]

So you guys amaze me, Josh. You're always -- one minute, you're asking for discipline and making sure that we don't hedge and the next minute, you're wanting us to sort of throw away the discipline, do some more stuff because the gold price is higher, pay it all out and then hedge. So I'm confused. But to un-confuse you, Barrick's strategy on hedging, we are not anti-hedging. We believe that the 2x that you hedge, when you build mines, because it's an option available that no other miner has to be able to manage your capital profile and I and -- Graham and I have done this many times in our career, and we've done it well, and we've never had to buy back our hedge. At the same time, we do it when we're closing a mine to ensure that we cover the risk of revenues in a cyclical industry. But -- so those are the 2 situations. Of course, in transactions where you've got short term risk -- and one of the things I'm obsessed about is exposing Barrick to market dictation. And so I always want a balance sheet that we can manage our business irrespective of the capital markets. Today, we've got some $6.7 billion of liquidity. So I'm pretty sure we're good to go. But this is an unprecedented crisis and to manage a business, any business, in this situation recklessly is not advised, in my mind. So that's -- we'll continue to be conservative. There are times when we will hedge, but certainly not now.

[Operator]

Our next question comes from Greg Barnes of TD Securities.

[Greg Barnes, Managing Director and Head of Mining Research]

Mark, from your comments earlier on about Donlin and some of the other big projects, it sounds like you're more of a seller of those projects than a builder in this kind of environment.

[Dennis Mark Bristow, President, CEO & Director]

So Greg, you know that famous saying, "everything's got a price." We'll sell anything as long as we feel that we're getting more than -- or what it's worth or more. As I said earlier, our view is that we're -- our activities in Donlin are still adding value. It's a very substantial gold resource. The thing that intrigues me about it is geologically. So it's -- geostatistically, it's well north of 30 million ounces. We understand the metallurgy. It's moderate grade. The big question is, the actual ore body geometry, the deportment of the gold within the ore body. And so far, we've done -- we've made a huge progress in understanding the controls. And recently, we're about 10% into our next phase of drilling. And so far, we've been encouraged by the slightly higher grade that we've got against the model. But it's still early days. We have another 90% of that drill program to finish.But if you look at Donlin compared to some of the other assets in our portfolio, it's a pure gold play. It fits -- it's in a mining-friendly jurisdiction. It's just in a very challenging geographical setting. That's the thing that carries the risk. So the way to deal with that is to take the risk out of -- the revenue risk, which is focused on the ore body.

[Greg Barnes, Managing Director and Head of Mining Research]

Okay. Just on your comments during the presentation, you did say Turquoise Ridge that you had. That's been a big focus for you in Nevada. And there have been some challenges, you've changed out the leadership team, but also it has some near-term upside. Can you just explain to us what's going on at Turquoise?

[Dennis Mark Bristow, President, CEO & Director]

Sure. So Turquoise is a combination of a low -- sort of medium-grade underground mine in Twin Creeks and then a low-grade pit and then the high-grade Turquoise Ridge underground. And as you'll recall, Turquoise Ridge was always restricted by a toll milling agreement with Twin Creeks because Twin Creeks owned the autoclave facility and all the processing facilities, by the way. So now -- and so the focus in Turquoise Ridge on geology, geological control and the ability to mine at a high rate has never been there. And so we've -- and at the same time, the focus on the legacy Newmont side was also not about throughput. And so when we consolidated those 2 operations, we had a culture there, not only the 2 different cultures from the 2 different companies, but also a culture that wasn't obsessive about efficiencies.And so we leaned on the processing facility in Twin Creeks, the autoclave, and we certainly pushed it hard, and we exposed some very real bottlenecks. At the same time, in Turquoise Ridge underground, that's a legacy Barrick, it had some hoisting capacity restrictions. We've identified them, and we've largely addressed them. The big challenge we have there is ventilation. And that's -- the #3 shaft will really deal with 2 things: add more flexibility and hoisting capacity, but more importantly, address the ventilation restrictions. And at the same time, Turquoise Ridge was being high graded. And so as Rod always says, we run our businesses optimized to the ore body. So we've reoptimized that ore body, and that gives lower grades, of course, but it calls on that to be offset with bigger mining rates.And again, of all the complexes within the Nevada Gold Mines, Turquoise Ridge geological -- geology is least understood and the complication between Turquoise Ridge and Twin Creeks, because the stratigraphy and the controls changed substantially across that period. So we've got the drill rigs and working on it. We've changed the geology. We still -- and now you've got to try and build a new planning system, and Greg has just put in a completely new planning facility philosophy across the Nevada Gold Mines. And this asset, look, it's certainly progressing, but the whole model of Turquoise Ridge complex is to increase the feed through the autoclaves and immediately you get an impact of a higher grade. And you can see that in these results, but it's not where we want it to be. And so as you unlock those bottlenecks, you deliver a relatively higher grade, not a -- you're not high-grading the asset, but a relatively higher grade and immediately a lower cost. And so we're not -- what I'm saying to the market, we're not there yet. And this is -- the other sort of -- we've had many challenges as you do in managing such -- 2 such large organizations. But this one is the one that's taken a little bit more. It's been a little more challenging to get everyone aligned and acting as one team with one mission. And so we have beefed up the management there. We've moved the general -- a very competent GM, an ex-legacy executive to help us there. We've moved some of our best underground leadership out of Carlin underground to give it extra. And we've brought in some external expertise on the processing side. And we've really -- I mean I was there with the geology leads from Barrick just a couple of weeks ago, and we've really -- we made a lot of progress on geology.And Twin Creeks, Turquoise Ridge had a big gap in its models. And those are rapidly improving as well. So nothing that's not fixable. And what I'm saying in the results presentation and in our published results is that this is still a very exciting upside opportunity at Turquoise Ridge. Whereas the others are more -- now we've taken out the big synergy or delivered on the big synergies, now it's the bump and grind and hard work.

[Operator]

Our next question comes from Tanya Jakusconek of Scotiabank.

[Tanya M. Jakusconek, Analyst]

Just wanted to come back to Nevada, if I could. Just on Long Canyon, looks like the permitting has paused there and you're sort of reviewing the water management situation. What's happening there, Mark?

[Dennis Mark Bristow, President, CEO & Director]

So Tanya, when we got our head around Long Canyon, the Phase 2 underground and then -- I mean open pit extension and the Phase 3 underground model. Long Canyon has got a short life. It had some -- the then feasibility study and the associated environmental impact process. We didn't like what we saw. And there was resistance over it. And that the plan was to really attempt to dewater the whole compartment. And again, something that the new Barrick has brought into Nevada is, you don't have to dewater the entire compartments on every project. And many projects, as we go underground, we've really put our head around understanding the aquifers and the whole water table geometry. And so there is a wetland down the valley from Long Canyon. There are open aquifers. We believe that you can do a better job to ensure that we impact on -- and it's only a short-term impact on the -- those particular -- and particularly the water balance is manageable. And again, to -- as we do and as I've always done, and as Grant believes, we reached out to some of the critics -- or all of the critics actually, engaged with them, shared with them that we feel we can do it better. We've been working hand-in-glove with the authorities and various federal and state institutions that are responsible for oversight on the environment and our impact on it. And so we felt it wise to review and we finished that review and the outcome of that review is that we can do this differently. And there are a number of options around whether you mine it -- you limit the mining to a pit and no underground or you replace some of the pit with a smaller underground. Long Canyon is a very profitable business. There are many -- there's a big community that's supported by that operation in the area. And so that's what we've done. As we've said, it doesn't change our guidance and our long-term outlook. It's a relatively small contributor, but it's a very profitable contributor, and it also makes sense to be able to manage out and deliver on our closure plans properly. So that's really, in a nutshell, where we are with Long Canyon.

[Tanya M. Jakusconek, Analyst]

Okay. And then just maybe the last one for me. You recently made comments in the press on a New York listing. Can you give us your thoughts on that? And what a redomicile would cost?

[Dennis Mark Bristow, President, CEO & Director]

So this reporter overstepped his sort of reporting license. He called me and talked to me for half an hour about many things. And at the end, asked me about a listing. And if you look at that Wall Street Journal report, in the second sentence, it very clearly says that I said we are not considering it or planning it or doing anything about it today. We talked philosophically about the London Stock Exchange listing, the importance of being in the resource markets. Canada and New York Stock Exchange are the 2 largest public markets for companies like Barrick. We are very comfortable in Ontario. We have restructured our business in Canada. It doesn't mean to say that we are not committed to the Canadian mining industry. Hemlo has really delivered some exciting opportunities, and we continue to hunt for new opportunities in Canada.The New York Stock Exchange -- the debate again with this reporter was around the S&P and how important is it. And again, as I pointed out, our performance of our stock is extremely efficient in the market. And -- but the S&P does bring other additions. It helps us grow our base. It is possible to get on to the S&P without redomiciling. And to redomicile in the U.S., just to be able to get on the S&P, that's a questionable decision because the cost of moving domiciles is high. So that's the background to the conversation. I think he desperately needed a headline, which was not necessarily in line with our conversation.

[Tanya M. Jakusconek, Analyst]

Yes. No, I figured that. My last time looking at redomiciling Barrick when I did the [ access live ] I think the cost was in excess of $300 million. Is that a fair assumption?

[Dennis Mark Bristow, President, CEO & Director]

Yes, at least, Tanya. Graham, do you want to comment on that? I mean we've looked at the merger, we looked at it, but I think you're pretty close to the number. Graham?

[Graham Patrick Shuttleworth, Senior EVP & CFO]

Yes. I mean it's that sort of order of magnitude, let's put it that way. It's a complicated question. It depends on many factors, many assumptions, not least of all your gold price assumption in terms of what your valuations are relative to your tax base. So that's not a -- it's not a simple answer to a simple question, but it's potentially significant.

[Tanya M. Jakusconek, Analyst]

Yes. No. As I said, when I did it, it was -- gold was much lower and it was in sort of like -- it was in excess of $300 million at a lower gold price.

[Dennis Mark Bristow, President, CEO & Director]

I mean Tanya, we've got a lot better things to do right now than consider doing that. We'd like to...

[Tanya M. Jakusconek, Analyst]

No, I appreciate -- $300 million is a lot of money.

[Operator]

There are no more questions from the conference call.

[Dennis Mark Bristow, President, CEO & Director]

All right. Well, ladies and gentlemen, again, thank you very much for making the time to share with us our results. Again, myself and Graham and the team are available to take calls should you want to ask specifics that you don't really want to share publicly. We're all available, as we always are. It's a -- Barrick is in such a good position now. We're excited about being able to continue to deliver on that promise we made you back on the 23rd of September, 2018. And again, we're certainly not short of opportunities, both organic, and we are keeping a beady eye on opportunities outside our current portfolio and exploration undertakings. I hope that next time we do this, it will be face-to-face. But having said that, what we would like to leave you with is that we are absolutely driven about delivering on our strategic objectives, COVID or no COVID. So thanks again, and I look forward to catching up.

[Operator]

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