Barrick Gold Corp

TSX:ABX

Earnings Call Transcript 2023-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick's Results Presentation for the Second Quarter of 2023. [Operator Instructions] As a reminder, this event is being recorded and a replay will be available on Barrick's website later today, August 8, 2023.I would now like to turn you over to Mark Bristow, President and CEO of Barrick. Please go ahead, sir.

[Se-Wook Yoon, executive]

Thank you very much and, welcome, everyone. Good afternoon for those across the Atlantic and good morning for those this side of the Atlantic and a special welcome to all of you who have given up some of the sunny weather outside to join us personally. Thank you for coming. Appreciate it.I think I felt I should start on a good news story. And that is that -- and I'm sure you all know this, certainly, those sitting in the hall here, that we saw the average gold price for the last quarter at an all-time high. And it's interesting, a lot of people are suggesting that the gold price is not performing. It's performing extremely well. And for me, the more interesting part is that some see this is driven by a forecast decline in interest rates. And certainly, having recently traveled right around the world, I really believe it's more about a risk on situation as we wrestle with the global economy and its -- deglobalization of the world as a whole. And the fact that China is not -- I don't believe, going to get back to where it was. It's certainly going to recover, but not back to where it was. And again, our supply chains and general investment in the economy and upliftment into -- of some of those more challenged economies are going to hurt if we don't stop and invest in it.And so otherwise, all we're going to do is create a future where the rich continue to get richer and the poor get even poorer. And so we held a mining summit in Islamabad last weekend. And it was very interesting for me to see the realization from Pakistan that things needed to change. And there were comments about; it's been 70 years of mistakes. And this country has everything that it needs to get on top of things. But -- and what it's got the people by far, but it needs to care about them. And I'm drawing from the leadership that spoke at the opening of the mining summit. It needs to focus on development and not just exploitation. And finally, it needs to attract foreign investments. And in fact, the Minister of Petroleum pointed out that their strategy was to turn red tape into a red carpet for investors and that is very interesting. That's a massive transition, as you know, that country has got many challenges.And I think we've seen West Africa, what happens when we neglect these developing countries. And we've spoken many times to some of the major economies in the world about West Africa and the importance of staying there and engaging in conversation and working on investment instead of just lecturing. And again, the elected governments' right across that region have failed. And we don't seem to want to do anything about it except lecture. And so there's a big need for the world to relook at how it manages its business. And again, as far as the policy towards mining and metals in the United States goes, it has to reflect on how important it is just to exploit other peoples' natural resources rather than develop some of its own and engage and support and build a real mining industry because that's what's required if we're going to have a better world ahead of us.And so I think that -- and there certainly is conversation starting around those topics. And as you know, I've spoken a lot about the importance of partnerships and development across the world. And Barrick is -- hopefully, I'll share with you today what we've done and now the real results that are starting to materialize in our policy of driving partnerships with our host countries around the world. And so -- and I'm also going to spend a little time today on focusing in on exploration, because this ongoing debate of you only grow it through M&A. And we've put a lot of effort in the last 4 years in, one, fixing our assets; and two, building that bench strength in exploration. And we've got some initial pointers now starting to materialize, which we'll share with you. And we're super excited about being able to actually support some of these early results with real borehole results by the end of this current quarter.So that's the sort of outline of my messaging I want to get across today. And I would start first with just a quick look at -- before I'd go further, as usual, presentation is preceded by a cautionary statement. As you see here on the slide, it's also available on our website, should you want to study it in more detail.And then moving on to our KPIs for this past quarter. At the beginning of the year, we guided that our results will be weighted roughly 45:55 in favor of the second half. And certainly, as you can see, the trend is already evident in Q2.The improvements over Q1 was largely due to the completion of scheduled maintenance on Carlin's processing facilities, which boosted NGM's performance, as you see -- we'll see in the number. I'll touch on it just now and the strong contributions from our Tanzanian mines and Kibali in particular.And of course, you would have seen too Veladero had a good quarter, better than planned. As always, I will highlight the key aspects of our operations as I take you through the presentation. And this time, I am, as I said, to point to the progress we're making on all fronts as far as exploration goes.So looking ahead, despite some equipment challenges relating to PV ramp up, we remain on track to meet our gold and copper production guidance for 2023. And they will -- should drive the costs back down towards guidance. And Nevada is expected to build on last quarter's post-maintenance improvement. PV will continue to ramp up throughput as it expands the plant. We have finished the commissioning. But we've got stuck in the ramp-up. And in Zambia, the Lumwana copper mines, new fleet is expected to improve mining productivity and throughput. And we land in better grades in the main pit in the back half of this year. As far as the financial results go, increased production helped by the all-time average quarterly gold price, which I just referred to, delivered a 7% increase in operating cash flow and an increase in adjusted net earnings to $0.19 per share. On the back of this, the quarterly dividend was maintained at $0.10 per share. And it's important that I'll point out the fact that we are managing this company for the long term. And we're not -- we are very diligent about we thought carefully about our dividend policy. We are respecting that policy and not disregarding it. We remain the strongest balance sheet in the industry. And as we build back on the back half of this year, we will build up our cash balance again materially.At the beginning of the year, we launched our new safety drive, as you all know, and we call it Journey to Zero. And it went -- we specifically led it across the entire group. And it certainly started to produce results. If you look at the lagging indicators, which is not what we're using to manage against, we have the injury frequency rate down 38% quarter-on-quarter. But what's key is, for the first time, North America region, the whole North American region reported an injury free April. And so that's a key step in our commitment to getting operations back where we expect them to operate as far as safety goes. And LatAm and the Pacific region also recorded zero lost time injuries for the entire quarter. So those are key more important than the lagging indicator trend. We've methodically tracked our Journey to Zero. And following a full review, we've developed the new fatal risks and associated standards as shown here, along with critical controls of each of the 10 fatal risks. And part of our risk management overview, we also reviewed and updated our field level risk assessment tool that is standard throughout the organization now. And really, the big drivers to get every one of us, particularly the leadership, completely embracing this Journey to Zero.Sustainability, as you all know, is central to Barrick's strategies and practices. And it is what secures our crucially important social license to operate. And there were no significant environmental incidents during the quarter and the year-to-date. And our average water use efficiency for Q2 was 82% and for the half year, 83% and again beating our 80% target. Also, our greenhouse gas emissions were down 5% quarter-on-quarter and 12% against the same period last year. And as you see in this slide, our commitment to biodiversity takes many forms, but was exemplified last quarter by the Barrick reintroduction of white rhinos to the Garamba National Park in North Eastern part of the Democratic Republic of Congo. And Garamba National Park, we've been supporting since from Randgold days back in 2009. And it's also -- it's a personal goal of mine to see this happen and it comes with another message. And that is when we arrived in Kibali, then Moto goldmines back in 2009, the Lord Resistance Army was all over the place. And today, the fact that we can put rhino back in that park means we've really got on top of the security. So it's a massive sort of symbol of what mining can bring to these conflict zones. And having just come back from Pakistan, I'm absolutely convinced that if we do the Reko Diq right, we're going to see the same sort of effects, if not better, more tangible in that part -- the part of Balochistan, where Reko Diq is going to be built.Another key point and I'm not sure all of you are aware of this, but staying with sustainability. Also very pleased to announce that we've achieved full conformance with the recently formulated global industry standard on tailings management and you would have seen an announcement on Friday with the disclosure of information on our website as per Principle 15 of the [ Standard IV ] are very high and extreme consequence facilities.And I'll just point out that Barrick has long been a leader in the responsible management of tailings storage facilities. And we welcome the additional disclosure, which is part of the new standard.Over now to the operations and we start as usual with North America, where we continue to build our value foundation in Nevada Gold Mines. Already far more than the sum of the parts that were combined in the merger and NGM is on the cusp of entering a new growth phase, as I hope to show you in some of the exploration slides. The knowledge gained from a better understanding of the orebodies is generating new targets and discoveries as well as new concepts designed to deliver life of mine extensions and potentially the next wave of Tier 1 assets in one of the world's most prolific gold districts.These are the Nevada Gold Mine's operating results with production, as I referred to in the introduction, up 11% quarter-on-quarter. And it remains on track to deliver on its 2023 production plans. The higher production delivered a meaningful drop in all-in sustaining costs, as you can see from the slide. And this is a trend we expect to continue into the second half of the year.Since creating Nevada Gold Mines, it's worth noting that we've replaced 16.5 million reserve ounces depleted by mining. And as you can see, how we still have a wealth of opportunities with the potential to be big value drivers and are confident that exploration or sustained reserve replacement and deliver an inventory that will secure a 15-year planning horizon and beyond. And I'll come back to that replacement strategy because as we had in Randgold, we're now developing a plan to replace our reserves through the advancement from inventory to resources and then to reserves. And in Nevada, we're starting to see that plan as well.There's no better place to start on the slide at the top right this review then at the Carlin trend, which is the gift that keeps on giving. We continue to intersect and this is quite important. You'll see at the bottom that 23001 intersection that we continue -- these are Carlin-type grades and in our quest to expand Carlin and the Greater Leeville complex. And we continue to consolidate the ground around this. And we're talking multi-multimillion ounce opportunities. And we're starting to see that definition. And we're expecting to be able to share some of the holes that we've drilled now, but we're still waiting for the verified assets. But the one thing I've always said, to many of you is that when you hit world-class orebodies, you don't have to send the assays, the logs to the assay lab to work it out. So we're super excited about this potential.At Cortez, the Barrick-owned Fourmile discovery is well on its way to Tier 1 status. We shared some of these results with you last quarter. These are big numbers. Every intersection now we're starting to show more opportunity. And the most recent of these discoveries is the Dorothy breccia, which you see referenced in the slide. But these intersections add significant ounces every time we drill a hole. That's where we are in the orebody today.Strong drilling results staying with Cortez Complex from Robertson, which show its potential to grow into a multimillion ounce asset and this is -- it's very important, Robertson. It's still going to be permitted. We are in the process of permitting it, but it's a multimillion ounce oxide deposit. And that's important for Nevada, because we've got capacity in our oxide mills. And you'll remember that Newmont, we're going to close down the oxide mill even before we did the deal and we've kept them alive. And this is a very key asset. And we're still looking to expand this footprint. It's been a very successful exploration project.And finally, at Turquoise Ridge, we've now opened the main, what we call Turquoise Ridge underground orebody to the North, West and the Southeast and as you see here, and again, significant intersections. And that really and this is the least developed of all the world-class orebodies in the known Nevada operations. And I just pause there for a minute and just point out that the Greater Leeville area and certainly the extension, as you see on the slide. That's a completely parallel world-class target that's running parallel to the Goldstrike Meikle trend, which is what made Carlin so famous. And we are really at a stage of developing a sub-parallel target along really key -- one of the key faults which will parallel that world-class trend that, as I said, has made so many mining companies wealthy. Barrick also, in addition to our Nevada joint venture continues to expand its North American footprint and drilling is confirming significant discovery potential across the multiple targets in Nevada away from Nevada Gold Mines. And framework drilling has started on our Pearl String project as well. And ongoing generative work in ground consolidation is progressing across the Western United States. Again, we've got some developing opportunities, which hopefully we'll be able to share with you in -- during the next quarter.And in Canada, mapping and sampling at the Pic project near Hemlo has identified some interesting mineralized structures. Our geologists have also started work on the new Sturgeon Lake project. And we've signed an agreement to earn up to 75% on the Patris project, which is just Northwest along the same trend as Malartic. So again, we're in the right place and we're super excited. And we tried, as you know, to look at opportunities to go through M&A. But our geologists are starting to point to some real opportunities to expand our business here in Canada.Moving then on to Latin America and Asia Pacific region. The team is doing a great job, particularly the exploration team. We are busy rationalizing a large historical land portfolio now as well as and particularly along the Andean trend. And we also are moving to secure new opportunities. We've expanded our footprint in Chile, the Dominican Republic and Peru, where we've made some exciting early-stage progress, particularly in Southern Peru at our Austral project. This region also covers Porgera and Papua New Guinea and Reko Diq in Pakistan, where there have been some very positive developments during the quarter, which I'll take you through.So starting with PV. Commissioning, as I said in the intro of the expanded plant was impacted by ongoing equipment failures relating to the flotation and mill circuit pumps. And we are working with FLSmidth to address these issues and rectify some design flaws. And I just explained, we've installed the biggest floatation cells ever. We'll certainly have the biggest at FLSmidth supplied. And we've had some issues with some of the shafts and the gearboxes. And we've had to retro-engineer them. And they have also rebuilt some new ones and sent them. And so we are busy working with them. And until we get that settled, we're running all the circuits. But we're going to take some time to ramp it up to full production.We are still expecting a much stronger second half than the first half. And the expansion project, we are confident will achieve its full capacity at the end of this quarter, maybe early next quarter. Once completed, the plant inspection and mine life extension have been designed to support an annual production of above 800,000 ounces to way beyond 2040. And this really does make PV a standout Tier 1 mine. And we've got 6 of those and we've got a couple in the making. And we are very clear about how we define Tier 1 assets. And just to remind you, when we did the merger, PV was if we didn't get a solution on the tailings facility, it was going to close in 2021. So we've now got the permits in place. And we're good to go as far as the expansion goes.And that's -- when you try and put a value on that, it's like a very big discovery. There's a 22 million ounce prospect as ---. As I mentioned, Argentina, Veladero exceeded its planned production, which is particularly commendable considering the very difficult operating environment. Argentina's ongoing currency crisis has created strong drilling results from the Morro Escondido target pointed -- point to its potential as a satellite to Veladero. We're busy doing that modeling right now. And exploration is also focused on those other targets immediately around Veladero. I think the team is now fully motivated having achieved some success with Morro Escondido. And again, you would recall we cut back on Veladero, delayed some of the capital into end of next year. This is a very dynamic year in addition to the currency crisis and election year. It's an election year that's been spread over the whole year. And so we know now who our governor is in San Juan. But we've still got to go through that rock and roll process to get the federal government in place and elected President. So as I noted again earlier, we're rationalizing our exploration portfolio in Latin America and prioritizing our portfolio.So getting our resource triangle, people know me -- know exactly what means in order. And we continue to secure more ground in that area. There is a quick snapshot of where we are looking. And we've certainly are excited about the prospects and we've got a completely new team. It's taken a couple of years now to get that team to start really understanding what we want and where to go and we're now starting to get those results.And then flipping across to Pakistan, the feasibility study at Reko Diq made material progress this last quarter and is still scheduled for completion by the end of next year with 2028 targeted for first production of concentrate. Infrastructure development is underway. And the refurbishment, which is a key thing of the airstrip, has been approved for flights with a weekly charter now going to flat to site. And in line with our commitment, as you see in this inset to early benefit sharing with the people of Balochistan, we've already established 2 primary schools as part of our community investment as proposed by the newly formed community development committees. So this is something that's in partnership with our communities. And by the way, I personally, along with the Senior Executive, Barrick, have been to all those communities.And it's worth noting -- when you look at the African story and you look at this story and the Baloch people are across in Afghanistan and in Balochistan of Pakistan. And you see the school and you see that there are more or less 50-50 boys and girls. It's quite an achievement. And I'll tell you a little bit about Balochistan, particularly around Reko Diq. There is no economic activity. And so when you give people a chance to earn money, it's amazing what happens. And it's the only place in the world where I've seen more schools than kids. In fact, all the schools are empty and so why, because there's such poverty that the children have to work to survive. And so us coming there and supporting the children, giving them square meal, getting them to school is the only way they can get educated. And this is part of a program that we did very well in Kibali. And that is educating the future operators of the mine ahead of the mine. So we've done it. We started with -- this is a multi-generational mine. So we've started with junior school.We've also looked at vocational training of those young teens. And then we've got a broad and looked across the universities for Baloch people who are -- have already finished or about to finish their degrees and particularly in engineering, but engineering some economics and processing. And so the first bunch we've now contracted. And they will be moved to our operations around the world. And they'll start working with us with intention that they will be the leaders of the operation when we turn it on in a few years' time.So and again, that's -- we commissioned Kibali with local people. So every day, most of our workers go home into the villages around the mine. And so the community is, are our workers, and that's our intention in Reko Diq as well. You would have seen some announcements on Porgera recently. We're at last nearing the end of the long road towards the mines reopening. And the key one is we've applied for the special mining lease, which is the one that was removed as you recall, at the end of the last lease period. And for that process to close, we needed to have a number of regulatory procedures. First one is what they call warden's hearing. That's happened in all the different selected regions. And we've had a security forum led by the key ministers and the Prime Minister himself. And during that forum, the Minister of Mines formally opened the development forum, which is the critical process where everyone has a chance to engage and discuss and share what they want. And it will ultimately culminate in the -- it might not culminate in a full mutual agreement across every aspect because the negotiating tactics in Papua New Guinea has started 120% and see where you land. But it is a serious engagement. And it will; during this process, the government will get to a point where it will finalize its own review of our applications for the SML and then we'll get that awarded.On the back of that, we've started the preparation of the mobile fleet. As after all this time, we've had to upgrade some of the tanks, tankage in the processing facility. We have a new crusher on order and we're getting ready to start up. And our expectation is that we should be able to start and get pour our first bar of gold this year. And every time I say that, people say, don't you have, any more granularity; on that and I say no. But in the fullness of time, we will. And all I can say is that everyone wants the mine started now. So you will see the updates as we get closer to that day.So with that, we move across to Africa and the Middle East. And this -- remind you is by far the most consistent performer in our portfolio. And it's not only a reliable contributor to the bottom line, but also a host to a wealth of gold and copper opportunities. The Loulo-Gounkoto complex delivered its usual strong performance and is on track to achieve its 2023 guidance as it continues to invest in greening its power supply grid as well as replenishing its reserves and looking for more. And again, this has been a spectacular asset. It would be remiss of me not to point out that Mali is not without its challenges. And I would add it has never been without these challenges. We have been operating there for 26 years. And in that time, Loulo, we built Loulo-Gounkoto and into one of the world's 10 largest gold mining complexes as well as the country's largest taxpayer and employer, certainly largest employer outside government.We've had a constructive relationship with successive governments through some very turbulent times. And in recent weeks, I've personally engaged with the key members of the current leadership about their proposed new mining code. And I'm very optimistic that as in the past, we'll find a mutually acceptable way to keep gold shining for Mali.In West Africa, there's, a lot of opportunities I pointed out. It's a very dynamic place right now, as you would have read in the newspaper with the latest --. And but staying with Loulo, we continue to define wide high-grade intersections on the extensions along the big structures that host the multiple world-class assets around and within the Loulo-Gounkoto leases. While also across the border in Senegal, we continue to evaluate the Dalema joint venture, in particular. And we've got the Bambadji joint venture. And we are continuing to expand our footprint in Eastern Senegal. And in Cote d'Ivoire, we're assessing the Fonondara satellite deposits and other high priority targets. The team has been extremely successful in adding to the life of mine of Tongon.Moving across to the Democratic Republic of Congo and Kibali; again, Kibali overcame its first quarter challenges to deliver a substantial improvement, as you can see here, in production for Q2. And it's -- that has its back on it's -- this has really set it back on course to achieve its full year guidance. And we're also really focusing on our underground development to build additional flexibility and be able to support the new 10-year mine plan. And ongoing exploration really as highlighted immediately to the West of the KCD main series of deposits, the potential for more of the same. And we're quite excited about this recent development. And in Tanzania, which is a real success story, our Twiga joint venture with the Tanzanian government is a poster child for my thesis that mining can be the force that makes undeveloped countries investable. And there's no better example than Tanzania. And it's great to see BHP putting its toe in the water in Tanzania on the nickel project.After Barrick took control of North Mara and Bulyanhulu in 2019, it transformed them into operations capable of producing a combined 0.5 million ounces annually, other words, a Tier 1 production profile. And we have also shown that we can achieve this and what you can achieve when a mining company and its host country work together to develop its natural resource endowment. And last quarter, conversion drilling at North Mara replaced all the reserves depleted from mining. And we mined the first ore from the Gena pit and additional opportunities for resource conversion. Buly has got a very long life nearly and well into the 20s. North Mara is just over 10 years, so a big, focus there. And it's worth having a look at this slide. And that is we have 3 Tier 1 terrains in our Central and East African holdings. The Kibali I very covered a new exploration footprint south of Bulyanhulu and higher priority permits along the Gokona corridor, which I've just referred to. And again, this Gokona corridor is an exciting opportunity. When we were in Randgold Resources, we're always trying to get out hands on those extensions. And it's taken us a while to secure the permits, because they were lapsed. They lapsed under the Acacia time. And so we've now got them. And we're starting to evaluate them. And we're super excited about the opportunity to extend North Mara's life of mine on the back of that. We also have a very significant intersection beneath the Nyabigena pit, as you see here and it's really got everyone's attention. We're not sure about how it actually fits into the orebodies at the moment, but it's a recently confirmed intersection.Moving across into Zambia. And generally, our copper operations, as I pointed out; Lumwana is well set to achieve its guidance for the year. It really is going to have a strong second half and with the implementation of its owner miner strategy and the commissioning of the rival and commissioning of the new fleet where we replaced a contractor, which was very expensive.We've already seen a reduction in costs, as you can see here on the slide and excited about the prospects of Lumwana. Lumwana has the potential based on our preliminary economic assessment to be equivalent to our share of the Reko Diq investment. That's how significant it is.So I'd point out that at the time of the merger, no one believed in Lumwana. It was a high-cost producer, making no money. And its subsequent transformation into a potential Tier 1 asset in our copper portfolio is another one of Barrick's big success stories. And we're talking about significant reserve conversion on the back of the feasibility study we're busy with. And the projected expansion on the back of this new super pit, as I pointed out, will add significantly to its production and take the mine life to beyond 2060. And so we're on track to complete that next year. And we've scheduled preconstruction starting in 2025. And our forecast at the moment would bring that expansion from Lumwana ahead of the Reko Diq delivery on its first concentrate. We've got some and we'll be detailing this on the back of the final studies on both projects.In Saudi Arabia, Jabal Sayid maintained its consistent production and kept its cost below the guidance ranges and early results from our new property, Umm Ad Damar are exciting. And really, it's a start of something I believe that's significant. And what's more, it's been the foundation of us growing our relationship with the Kingdom of Saudi Arabia.Before I just touch on -- and the last one is Chile and Zaldivar, which is largely more of the same. I would just point out that really, it's Lumwana and Kibali that are key for the second half delivery for AME as a whole. But all the AME operations are on track, on target to meet their guidance.And then 2 more slides, the one that I referred to right in my introduction and that is if there's one thing more than any other that sets Barrick apart. And I know it's not snazzy and it doesn't require M&A and all that other stuff. It's been our ability to deliver sustained and significant growth in reserves since the merger. And remember, we were all in the same boat before that in 2019. And we've replaced 125% of the gold that we've mined or the gold equivalent that we mined, including the copper since the time we started out on our new venture. And again, we will be sharing with the market our strategy of a 3-year rolling replacement model because we do have some very big assets. So you'll see the inventory build and then you'll get a big kick in the resources and they'll get the conversions. And over 3 years, we're very comfortable. And slowly, we will build it into a shorter-term cycle. Of course, it goes without saying that the contributions we're going to make to our copper reserves and resources are significant on the back of the work that we are doing both in Pakistan and also Lumwana and Zambia.We continue our work not only to hunt those world-class gold deposits but also copper in all the big copper terrains in the world today, apart from Russia. But otherwise, we're very knowledgeable about what's going on in the copper, big copper fields of the world as we are with the gold. And again, our view is growth for Barrick going forward is based on asset quality. And I think that's really -- when you look at our portfolio today, we've got 6 Tier 1 proper Tier 1 assets. We've got a whole pile, 5 world-class assets. Porgera is one of them. It's a 500,000-plus ounce going to 800,000, it close to 1 million in some years. We shared the economics on just about a 50-50 basis with P&G Inc. So it's a significant share of value for Barrick. We've got, of course, the Veladero which is no small asset in partnership with San Juan. Right now, we're managing the situation politically. We've got Lumwana coming on and that's without -- if we can prove it, which we have no doubt we will, is definitely a Tier 1 copper asset.And of course, Reko Diq, once we get through the start and convince everyone this is a real value asset that's right up there with the top 5 in the world. So when you look at our portfolio, Tongon is the one that's the least as far as when you look at it. But it's a very good cash producer, because it's built so well that our sustaining capital is so small. And you'll see the cost relative to its total cash cost that's all-in sustaining costs, so not as high as other mines. And it's just about can we find more. And at the end of the day, to close it will cost us around $30 million. So it's not a big risk in our portfolio.And so Zaldivar is a partnership, as you know, with Antofagasta, and then, the last asset in our portfolio. So we don't have a long tail in our portfolio. We sold the tail at every time we did a transaction. And the only one that we have to deal with is Hemlo. And we've got some real plans to do that. We're looking at pushing back that pit again with the higher gold price. And we've done a lot of work and picked the peak projects just up the road. That's important for us.So I'm actually there for the weekend with the team looking at strategies as far as Hemlo goes. So another differentiator in this sort of haul of M&A is the fact that we have a clear path to increasing our gold equivalent ounces by 25% towards the end of '29. And that is a very significant and a standout point because, as you know, many of our peers have been forced into M&A because they just haven't been able to replace the ounces that they've mined. And I would finish, ladies and gentlemen, with the fact that we certainly celebrate for the first time that on a consensus basis, the analysts are showing that Barrick has more value than Newmont. The challenges were still at a discount to that valuation. So our focus now that we've got our business clear, we've got our teams in good shape is that we're going to be working really hard to get us up there where I certainly come from and that is a good premium to our underlying value. And we've got some big things to work on. Of course, there's a big delta with Reko Diq. There's another delta with Lumwana. There's another big delta with Porgera as we bring that on. So -- and again, there's a big delta in Nevada Gold Mines. And as we not only within the whole joint venture, but when you add in the prospects of Fourmile, it's a significant asset for us, and as I'm sure it is for our partners.So with that, thank you for listening. We'll be happy to take questions. We do have some of our team members online and we're going to take a first. And Graham, of course, is here and a couple of other executives are in the audience here in Canada. So over to you, operator, to manage, no, we'll take questions here. So we'll manage this process going forward.

[Jackie Przybylowski, analyst]

It's Jackie Przybylowski from BMO. Mark, can you talk a little bit about your plans at Zaldivar. I know you've mentioned in the MD&A that it's now classified as noncore. Do you have plans to divest that at some point?

[Se-Wook Yoon, executive]

I think at some point, maybe. Right now, we've just applied for the -- with Antofagasta with the -- an extension of the life of mine and the permitting, which we're dealing with at the moment, which shows a much bigger, longer life of mine than we currently have. The reason we say that is that just in reporting, it's a steady, small operation. It's managed by Anto. We have an active role in that management as a joint venture partner. As you can imagine, we're not very good at standing back. But that's the basis on which we've put it in that category. And again, you know, better than me. Despite the fact that the copper market is in absolute short supply and you just have to go a little away and then there's nothing. There's softness in the price. So at the end of the day, we'll manage that strategically.

[Jackie Przybylowski, analyst]

Can I ask one follow-up as well on Porgera. Can you talk a little bit about the process from here and what needs to be done for you restart?

[Se-Wook Yoon, executive]

So really, it's the special mining license, which we are waiting for, which will -- we've done all the other regulatory work. We've got everything in place. We need that special mining license, which means that we have all the communities signed off. And once we can do that, and I had a very good town hall with all our key landowners when I was last there 2 weeks ago. And so there's no doubt everyone wants this mine opened. And it's a very significant deal, because never have the landowners, had the potential to earn so much from a gold mine or any mine in Papua New Guinea. So I think there's, lots of drivers. Of course, there's the -- also the obsession with being able to negotiate the terms, which we've already settled. But that's the good thing about Papa New Guinea is frustrating as it is a full consultation before that special mining license is issued. And we know Barrick Plaza and then Barrick had 30 years of no issue, because they got that process right. And we're very mindful that it is a litigious society. And you've got to do this thing to the book to make sure that we can mine for another 30 years.

[Joshua Wolfson, analyst]

Mark, you made a couple of comments about the fundamental outlook of the company being very constructive based on the gold price, based on the growth outlook and then the valuation of the stock where it is. I'm wondering what your thoughts are on using some capital towards the buyback going forward.

[Se-Wook Yoon, executive]

Yes. Josh, that is entertains us, Graham and I, almost every day. We have bought back in the past. And we -- I think we -- again, we don't want to risk our balance sheet right now. We are very well positioned. We have an extremely strong balance sheet. We are forecasting a growth in cash. And that will trigger a net cash position. And as we approach that, the one option, which is the preferred option is to buy your stock back because we absolutely -- we are completely in agreement with consensus. And that is we're trading below what we should be trading and it makes sense to buy. So there's no risk in buying our stock back. It's just how we manage our balance sheet towards that.

[Joshua Wolfson, analyst]

One more question. You made a statement about Porgera being a world-class Tier 1 asset and with some comments about bringing up analyst expectations. Could you maybe remind us what you think the potential economics of this asset look like? Meaning, what's the initial capital to get this to Tier 1 status and then what the production and cost structure would be.

[Se-Wook Yoon, executive]

So the -- it's a low-cost producer, because it's relatively high grade. It's single refractory or also autoclave, mill, crusher mill, simple process, know it well. If you look at consensus, the valuation is around $6 billion to $7 billion on consensus' prices. 5% discount, Graham?

[Graham Shuttleworth, executive]

Yes.

[Se-Wook Yoon, executive]

And so -- and it's about $1 billion of capital over the next 10 years, slightly front-end loaded. But again, we've got a bit of work to do on that. A lot of it depends on how we treat the Wangima pit, which is not in reserve yet. So I'm talking about total resource now. 10 years, we've got banked. And that's important for us, because we get to the 50-50 sharing of economics. And our intention is that we will create so much value for everyone. No one else will want to -- the government and Barrick will be partners forever. That's the intention. So -- and there's a big push-back on the western wall of the main pit that we've got to address. And that's what we're busy with at the moment is designing, doing that, as I say, in the press release. We are designing that pushback at the moment. I think that I can say the underground is in better condition than we expected. So we're happy with that. We've had this constant sloughing of the western wall, which has always been a challenge at Porgera. And we need to cut it back and put some remedial work into that wall. The traction is that there's quite a lot of ore on that pushback. And what we hope is that we'll be able to pay for that pushback. And then, you've got the Wangima pit, which is really brings a whole lot of additional resources into the mine plan and potentially takes it to 20 years, which gives you that big number if you look at it. And we're using just -- that's a broad rough valuation on using consensus prices. But the key for us is, but in 10 years, we more than get to the so 53-47 split economic split. And remember, we sweep all our costs that we've incurred to date from the government equity to equalize and once we get there, then everyone else benefits. What's important is that the landowners and the province benefit preferentially. So it's carried equity. Just to explain. Graham, do you want to add to that?

[Graham Shuttleworth, executive]

I think you've done a good job there. I mean the key point, Josh, really is that when you look at our economic interest there and you contrast it to the equity interest, the economic interest is almost double the equity interest because of the way that the cash flow split works. If you compare it to what you would get in a normal situation, if you were paying corporate taxes in a 3% royalty. So the combination of that economic splitting of the cash flows, combined with what Mark just referred to, which is the sweep of the cash that we've already spent means that our economic interest is considerably effectively double the value of what the equity interest would imply.

[Se-Wook Yoon, executive]

And Josh, is this goes back to the Tanzanian deal that we made. And the point that I've been making all along, is the problem of the mining industry is they go and invest and promise the world. And then they don't make the money because they don't deliver on the plan. So the government gets nothing because all they rely on its taxes. So what we did in Tanzania is we took the economic interest and split it down the middle. We true it up every year. That's a bit complicated, but we do. So the government gets the tax amount. But if we do not pay tax, they still get 50%. So it's a much fairer way of doing it. And again, Papua New Guinea hasn't -- Porgera was a special example. And ironically, it paid the foreign currency crisis in Papua New Guinea is directly because we're not expecting importing gold from Porgera, because it's the biggest producer and the biggest -- the most profitable company in Papua New Guinea. So that's the same thesis is that the Prime Minister wanted 51%, which I was very happy to give. I mean after 30 years, he wanted a different deal. He wanted to make sure that he could get all his legal taxes. And he wanted to participate in the equity if we delivered on what we planned. And if we didn't, he wanted still half of the production. So that's what we've agreed to do. And it's a great way of doing business, I believe. And one thing -- the only risk is you have to be absolutely convinced you can deliver on your mine and the models that you shared. And we've done a very similar model in Reko Diq as well, slightly more skewed than Reko Diq is a much bigger asset. But -- and also, the government are taking a lot of risk themselves through their state-owned enterprises. And we're gearing it with equity with the global funding package.

[Graham Shuttleworth, executive]

With debt.

[Se-Wook Yoon, executive]

With debt, sorry, we are gearing it with debt. Sorry, not equity with the global funding package.

[Lawson Winder, analyst]

Mark, Lawson Winder from Bank of America. Thank you for the presentation and nice to see you today and the team. I wanted to touch on reserve replacement. So you spoke to the importance of reserve replacement to the value of Barrick. What is the outlook for this year? And which assets do you see driving that outlook?

[Se-Wook Yoon, executive]

So Africa will replace all of its gold and copper that it's mining. The one that won't, will be LatAm, but it's going to bring a whole lot in with Porgera and Reko Diq that fits in that region. And we've got this new series of projects in around Veladero. And we've got some super exciting projects, Southern Peru, in particular, and other parts of South America, which we'll share with you in the next quarter or 2. Nevada Gold Mines will add about between 50% and 60% of its current -- it's in this year's production. But then it has a big year next year and the following year. And so that's why what we've said is there's -- on a 3-year rolling average, we'll continue to replace ounces. And we'll get Nevada. We're just about there with Nevada, like we have in Africa. And again, Lawson, so much so that we're engaged in conversation because in Randgold, we used to -- some of our incentives were based on reserve replacement, at least to serve resource replacement. And I believe that's a very good metric in any mining company to remunerate management on. So that's how significant we believe in the importance of organic growth, because it makes -- particularly when you look at -- because we've got really big assets. And we've now closed to have completed the recapitalization because the Barrick side of our assets were run down and both sides of Nevada Gold Mine were run down. Barrick side was high -graded. The Newmont side was just run down. And we've recapitalized that. We've now got a resource base on the top of that. And so if you add to it, your returns are significant. They become infinite because you're adding ounces on a capital base. And that's the game. That's the game about big mining assets is if you've got big orebodies and you've built the mine properly, it produces a long -- the copper miners are good at that. That's what makes them so valuable.

[Lawson Winder, analyst]

I wanted to follow up on a comment you made about the value of Barrick's assets, but then the multiple discount in the market. And I mean, I think you make a case here for why the assets are strong, why the asset should be strong going forward with the reserve growth. What is the market missing? Or has market missed over the last 2 years in your view, that's led to that discount?

[Se-Wook Yoon, executive]

Well, I would start with the fact that perhaps it starts with the analysts and the management and that we haven't had that conversation. And so it's pleasing to see that valuation coming through on a blended consensus basis. So that's a good thing. And we are very mindful. And I said this right in 2019. We had a job to do. And you don't build great mining companies easily today, particularly not gold companies. They're tough things to build. I've built one myself, and now this is the second. And so it's -- and again, we are mindful that we have to be able to -- I mean, we've always -- I've always been that sort of person. I'd like to support -- I'd like to have that argument as just a firm. But I'd like to do it on the back of something that's tangible. And I think we really are there today. And the first step is it's very helpful when the analysts' group are recognizing value. And it's even more exciting when there's still headroom, which I've just pointed to. And by far, if you look at our performance, what we say, what we do, how we manage our balance sheet, what we've promised the market? We've been consistent, like we always are. So I don't think there's any doubt in the minds of anyone. Of course, there's -- some people are a little nervous about where we've gone. They were the same when we went into the DRC. But today, when you look at the portfolio of assets, around the world, the risks are very similar, different, but similar or the same. And what we've shown is big assets work if you pay rent. If they're big enough and they're valuable enough to deliver value to our host country, it's a -- I'm sure, Lawson, you followed United States mining law and the debate in Rosemont and all that. Our work is hard with the team in the U.S. as I do in Pakistan and West Africa. It's -- and gone are the days where you can run mining companies from a 16-floor office block in the developed world. You have to be out there. And again, getting back to how we manage our reserve resource replacement and that is we moved that ownership out to the mines. We've changed the management to be real business people who lead our minds. And they own those assets. They've got quality scientists, processing engineers. It's not -- we don't remote control our business from a central corporate office. We do hold them accountable. And we're always there. I always say to the team, if you go off pissed, you start seeing us. If you really get off pissed, you see us all the time until we get you back on track, and that's the way we run Barrick.Okay. So operator, can we move this?

[Brian MacArthur, analyst]

Sorry, so maybe to follow up, sorry, Brian MacArthur at Raymond James. I mean probably one of your hidden values that you're starting to highlight is the super pit. I mean this thing could be you on its own, one of the better copper mines out there in the world, plus you have a gold credit. Does it make sense to be -- have all the copper and Barrick going forward, given how big a good a copper company you're going to have? Second thing, without -- you probably can't give me everything on the PFS. But through to 2060, is that a pretty stable production profile out of the super pit. So again, it's basically duration forever.

[Se-Wook Yoon, executive]

It's a big low-grade pit. And what happened is the Chimi pit it got segregated because people -- Barrick was in a position trying to make money. So it dived down and it chased the grade. And it's a challenge to chase grade in a low-grade blended sedimentary-hosted copper deposit. And what we've done is just go back to geology. And there are a couple of satellite pits that are genuinely higher grade and lower strip ratio. And the exciting thing about Lumwana is that we run the risk of doing the whole pushback for the super pit without going negative cash flow, because we have these satellite pits that can -- so we mine the same strip ratio on a copper waste basis. And so that really -- and that's our team. That's what they -- once we got the cost down, so we got the cost down right in the beginning. We understood, got to know those orebodies and that. And then we looked at the other satellites.Again, a bit like West Africa, they were known in the form of anomalies, but no one ever stuck a hole in them. So that's what we've been doing. And we're far down the road on that process. So we're confident enough that we've got enough copper in those satellite pits that will support. Right now, we are mining and we're going to hit some higher grade zones in Lumwana pit, Chimi pit now. And at the same time, we've replaced the contract miner with a new fleet of Komatsu 100-ton trucks. And we've dropped the cost by $2 a ton. And that is really changing. And you can see it's in the numbers already in this quarter, this last quarter.And so that -- so we will manage that pit to a point where we've got it open on strike and then that big push-back to create the super pit, we will use the satellite pits to do that. We are right in the middle of permitting the new tailings facility. It's largely a negotiation with the tribal system of the region, which we've had a long-standing relationship with. As far as the authorities go, we've got support on that.

[Unknown Analyst]

So if I look at the slide there, 2029, I mean you've got Jabal Sayid in there, and you've got Zaldivar in there, but you don't have Reko Diq 2, right? So you're going to have like, a 5-year thing at that slide.

[Se-Wook Yoon, executive]

And we're actively hunting in the main copper belts. We're in all the copper belts of the United States. And let me tell you, there's, some significant opportunities still within the U.S. as I showed in that slide broadly. And so we're -- and again, we believe that if you believe in the numbers which I've always worked on. The U.S. is going to have to change the way it manages mining. And we have taken that bet to get out there ahead of the -- and again, we're the biggest miners in the United States already. And we're probably the biggest explorer, sorry, I stepped out of the box. We're probably the biggest explorer right now in the U.S. as well.Anyone else? Okay. Operator, we pass it back to you for any questions from the callers.

[Operator]

[Operator Instructions] The first question comes from Cleve Rueckert with UBS.

[Cleve Rueckert, analyst]

Can you hear me okay?

[Se-Wook Yoon, executive]

Yes, perfectly, Steve.

[Cleve Rueckert, analyst]

We've got a little bit of technical difficulties on the line. So I apologize if the question is redundant. But I think in the prepared materials, you called that Cortez, PV and Turquoise Ridge as some of the assets where there was some maintenance. There was some investment done in the first half. And then you expect that increased production run rate into the second half. I asked a similar question last quarter. Do you expect that second half run rate to continue into 2024? Like have you done the bulk of the kind of bigger work that you need to do with those mines in order to sustain production at that second half run rate?

[Se-Wook Yoon, executive]

Yes, absolutely. And look, let me just take one at a time. So the Cortez maintenance is really development. And the main -- it's not really, actual like processing maintenance. Turquoise Ridge was a premature hotspot on one of the outer players. And we brought it forward. It was going to be in Q3 normal planned maintenance. Again, we brought it forward. We changed a lot. We used the opportunity to change a whole lot of gear pumps and tied it up. We've got quite a bit of work to do to get Turquoise Ridge to where we want it to be. The roaster maintenance was a big maintenance, scheduled maintenance on the Goldstrike roaster. More importantly, it was the shutdown on the gold quarry roaster and also we used that shutdown to tie in the -- on the expansion project. So we've got one more shutdown to do next year. I think its second quarter scheduled. And we'll finish the expansion of the gold quarry roaster. So not only do we maintain the run rate, we lift our throughput capacity in the gold quarry roaster by between 15% and 20%. And so we bring down the costs. And so we add production capacity, because right now, Nevada Gold Mines is constrained on double refractory ore processing capacity. And we've spent a lot of time on planned maintenance to the point that a lot of the planned maintenance was planned because it was neglected. And so we are getting back to a proper plan maintenance, which is scheduled maintenance, which is a normal course of business, which is baked into our forecast anyway. But to answer your question in simple words, yes. You'll see the throughput maintained at a higher rate, largely because we add more capacity next year.

[Cleve Rueckert, analyst]

That's very, very clear. And then one just quick follow-up. The Goldrush record of decision is something that continues to come up in sort of our conversations. And I see that you're expecting it now I think, in Q4. But there was also a little bit of discussion around some modifications to BLM. I'm wondering if that record of decision is restricting development there at all or if these small modifications are allowing sort of timely development to continue?

[Se-Wook Yoon, executive]

So on the development side, we're continuing. It does start impeding production because we need to get ventilation up ahead of where we are. And so if it carries on much further, it will impact production. We've guided that we are looking at the specific impacts. At this stage, this is all about Rosemont and Department of Ontario and we've been engaged with them all the time and again, this issue about permitting un-mineralized claims. And the fact of them there's, 2 things. Goldrush doesn't need a tailings dam. It doesn't -- it's mineralized everywhere underneath in where we are working. It's got a very small footprint because we're using already permitted infrastructure. So it doesn't fit in even if you wanted to, you can't put it into a sort of Rosemont argument. And it's taken a little while for us to get BLM, the state and particularly the federal part of it to clear it. So they have cleared it now. So that's why we are pointing to a specific period. But it's a little bit like Porgera. We are talking all the time. And we're working towards it. We have got permission to extend the development under the exploration permit in Goldrush. So we can run into next year and still get the flexibility in place. But we need -- sooner we start having to put the raise bars up to get the ventilation cleared to be able to ramp up the ore production. So that's really where we are.And every indication is now that it's been cleared to finalize the EIS, the first step. And then that goes to the -- once that's finalized, the record of decision follow shortly. And so that's why we've got -- and we make these forecasts in conversation with our local BLM team.

[Operator]

The next question comes from Alan Spence with BNP Paribas Exane.

[Alan Spence, analyst]

I've got 2 and I'll just take them one at the time. The first one on Turquoise Ridge, there's some unplanned maintenance events in the underground. Can you just expand on what that was and if that's carried into the third quarter?

[Se-Wook Yoon, executive]

Yes. So we had a fall of ground and part of the development in Turquoise Ridge. Again, it's part of our design and changing the design, which we had to step back and deal with. We had a further shutdown on the shaft on some of the safety arrangements in the shaft that we needed to fix and we did that. The main impact was really the autoclave hotspot, which we had to take the autoclave down and fix it. We were scheduled to do that, as I said, in Q3. We brought it forward. So on balance across the year, it doesn't impact on our production. That's really the most important of the unplanned maintenance. It was planned, but not then.

[Alan Spence, analyst]

And then one probably for Graham. Just could you talk a little bit about cost expectations into the second half? How you've seen the development of labor, consumables?

[Se-Wook Yoon, executive]

Yes. So you wanted to know about inflation and our outlook on that.

[Alan Spence, analyst]

Yes, into the second half, please?

[Se-Wook Yoon, executive]

So I'll answer, Graham has got a technical challenge here. So we certainly see costs flattening off some sort of softening a little bit. We're forecasting a sticky sort of inflation around where it is today. We have some higher costs, which are still Ukraine-related ammonium and cyanide and things like that. The big driver is in the second half is increased production or bring down our costs, as I pointed out in our guidance. And we do believe that the costs will come down, but not all the way down in the short term. And that's the way we're managing. But there's -- as you, I will tell you from years of experience, hit your numbers on the production costs always look better. We're certainly not facing inflationary costs right now. We've got a couple. But we've got some plans like we're much more able to manage the cost and logistics and AME. The U.S. has got restrictions on imports and other tariffs and so on, so that -- we manage that differently. But Yes, I think -- I don't know, Graham, now that you've got the mark.

[Graham Shuttleworth, executive]

I think you've got it covered there, Mark. I mean in terms of the inputs, we're comfortable with the assumptions that we were using for 2023. There's, some swings and roundabouts, but generally, we're in line. So the costs are expected to come down in the second half as the production ramps up. And that's how we get down there. The other point, just to reiterate is that our cost guidance is obviously based on a gold price assumption. In 2023, we were using $1,650. And we've also guided that for every $100 change in the gold price that has about a $5 impact on our cost per ounce. So based on where we are at the moment, that's about $15 of additional costs compared to the base case assumption. So I think that's important to take into consideration as well.

[Alan Spence, analyst]

The audio managed to come back at the end. I missed most of that, but I'll read the transcript for your full description.

[Operator]

The next question comes from Yiu with Haitong International Securities.

[Unknown Analyst]

Mark, I'm Lisa from Haitong International Securities. And I have 2 more questions. The first one is about the Porgera project. How well is the tax issues are taken by Barrick or jointly with the Mining?

[Se-Wook Yoon, executive]

So jointly with Shinjin Mining. So we split at 60-40. So there was some -- it was a negotiated settlement. So it was quite a tough thing to sort of a sign. But we worked very closely with Shinjin and Chairman Chen and myself sat down and worked through and allocated some to Barrick passed because the settlement included all the way to the new Porgera start-up. So we didn't leave any residual tax assessments behind. We cleared the whole thing. And so there was some tax that was future based, some tax that was specific to the assessment, which was done just before they closed the mine and then some related to the past before Shinjin was part of the project. So we worked through that and basically settled as per the ounces on a 60-40 basis. So we shared the tax.

[Unknown Analyst]

And my second question is, I noticed that our future focus will be on copper. And currently, many copper mining companies has encountered many problems such as declining grade and water shortage, where we encountered the problem of increasing copper costs in the future?

[Se-Wook Yoon, executive]

So the one thing -- that's a very important point you make. And that is a lot of the copper produced today is from old mines, which started out as new mines decades ago, like 50 years ago. And so that is a challenge. And of course, if you're talking Chile, water has become a big issue in Chile and the copper mining. On the assets that we've got -- we are in a better league, because of grades generally. Reko Diq comes with gold, which makes it more attractive and blends the risk of it. And on the water aspect on Reko Diq, that's one of the critical deliverables on our feasibility study. And we're very focused on that. As I said, we're going to be doing the first real in-depth water study for that whole part of Pakistan/Balochistan. But the work that we've already done, we're comfortable that certainly for the first 10 years, there's -- we can draw water without impacting those aquifers. And there's a lot more that we've sort of certainly can point to at this stage, but it needs a lot of work. Ultimately, there are further options. I mean, as that area that whole then -- belt gets developed, this is going to be a region where infrastructure and particularly desalination is going to have to be part of the bigger developments going forward.

[Operator]

The next question comes from Anita Soni with CIBC World Markets.

[Anita Soni, analyst]

So I just have one left and I think it's about PV. And my apologies to background noise here. But I had the opportunity to visit the asset 3 months ago and it's definitely an impressive asset. But you were just talking about some issues that you were having with some of the FLSmidth pieces of equipment. Can you talk about how you see that evolving in Q3? And did -- I know you said you would be ramped up in Q4, but can you tell us how it's going this quarter and what we should be expecting in terms of throughput for this quarter.

[Se-Wook Yoon, executive]

So Anita, you would imagine everyone's in PV, John Steele, all our engineers from other parts of the world. We are commissioning experts FLSmidth subject matter experts. This is a new piece of equipment. And we've had challenges with the shafts and the gearboxes. We have replaced them already. We are reengineering some of the design issues out as we speak and manufacturing some additional pieces of equipment, so we've got back up. So we're working on it. I mean, for me, I don't have a feel right now because these sorts of start-ups that can happen in a flash. Well, they can -- you can work them out over a couple of weeks. But we are waiting for a final plan, actual schedule of how we're going to get them back to. So we've got -- we're able to engineer and replaced parts and engineered a little pieces and that will get them running. But we need to get this thing to full capacity. And it would be remiss of me to not point out that this is a big asset that's going to run for 20 -plus years. We are dealing with it. Certainly, when I sat with the team, and I've just come from there, we're still going to have a substantially better second half than first half at PV.And that's that -- and as of today, we are still planning to be within the guidance.

[Operator]

The next question comes from Tanya Jakusconek with Scotiabank.

[Tanya Jakusconek, analyst]

I apologize if this has already been said that there's a lot of technical issues on this call today. Just wanted to circle back to Porgera, if I could. Just want to confirm that, Mark, what you said was that we're just waiting for the special mining license, that's on the critical path for us to start up. And I just wanted to confirm that you said that local communities have all signed off. Are those 2 comments correct?

[Se-Wook Yoon, executive]

So we are waiting for the special mining lease which is the same thing, effectively. But that's what it's termed. And the landowners' agreement, as you know, we disclosed that way back when there was this conflict between us and government. The landowners are aligned with us and reinforcing the importance of Porgera and getting it back online. So that's -- so the equity split is 10% to landowners, of which 2.5% go to what we call the LMP landowners and 7.5% to the SML landowners, the main owners of the land on which the mine operates and 5% goes to the Enga province. And that's the split. Of course, the conversation in the development forum evolved around that and also other contracts that are always in place. People like -- the people living down the river, people on other concessions like dollar made concessions and other various concessions that we work with and all of that is part of that. And of course, the government is also committed to investing back into Porgera and the Porgera Valley like schooling. And we have been talking about some tax offsets even because there's a real realization how significant Porgera is to the economy of Papua New Guinea.So the answer is yes and no, because this is a process. Of course, there's always a fall-back because we have agreements. But this is a process of consultation which is prescribed by the law. The first one is the wardens powering. And that is really defined for the government through the warden in the MRA to Mineral Resource Authority or the Mining Department to sit and listen to all interested and affected parties and how their issues, proposals, whatever and record them. And that is an obligation. And then, following that, the development forum, which is more of a proper engagement. And it doesn't have to be completed straight away. But once it's -- the process is far enough advanced, the government will make the decision at a point in time on issuing the SML.

[Tanya Jakusconek, analyst]

And when we get this SML, can we still assume a 6-month rampup? Is that still the case for this mine to get to full capacity?

[Se-Wook Yoon, executive]

Yes. I think that once we move on to the site, 6 months is a good target, yes. We'll, of course, produce gold before that, but getting it ramped up, that's a good assumption.

[Tanya Jakusconek, analyst]

And should I still be envisioning this mine to produce on a 100% basis about 500,000 ounces. Total cash cost of $900 million and all-in sustaining costs of $1,200. Is that still a reasonable number?

[Se-Wook Yoon, executive]

That's a fair guess at this stage. We'll update it as we go.

[Graham Shuttleworth, executive]

I think, Tanya, once we're up and running, we'll share some updated numbers with you.

[Se-Wook Yoon, executive]

And we'll get -- once we get the start-up plan, which is what we're working on, we will guide you. But we've got this guidance out. And they will stick until we change them. And the ramp-up is -- goes ahead of that. So working on 500,000 ounces as a first crack is reasonable on a 100% basis. Of course, it goes a lot higher than that within a couple of years.

[Tanya Jakusconek, analyst]

I'll wait for that new mine plan, which would that be coming -- once we get this up, would it be reasonable to assume, hopefully, like with your guidance and?

[Se-Wook Yoon, executive]

Yes, we'll give it to you when we announce that we're actually properly starting up the mine. I've got Graham here trying to sort of dodge the bullet.

[Graham Shuttleworth, executive]

I think Tanya, all things going according to plan in February when we do our normal annual guidance is probably the best guess.

[Tanya Jakusconek, analyst]

And just on the reserve replacement because, again, of technical issues, I just wanted to understand as a company overall, did I correctly understand that this year, we would likely see more increases to resources and not necessarily reserves. Was that a fair statement?

[Se-Wook Yoon, executive]

That is correct. Yes.

[Tanya Jakusconek, analyst]

And that reserve replacement, you can see occurring in Africa on both gold and copper and not in LatAm. Was that also not --

[Se-Wook Yoon, executive]

That's correct. And -- but you'll see that rolling up next year.

[Tanya Jakusconek, analyst]

So that's helpful. And then just lastly, just on the overall resources for the company. Would that has been an increase in gold and copper for both?

[Se-Wook Yoon, executive]

Yes. Yes, it's mined copper and gold. You're talking about the last -- second to last slide?

[Tanya Jakusconek, analyst]

Yes.

[Se-Wook Yoon, executive]

Yes.

[Operator]

Our final question comes from Martin Pradier with Veritas Investment Research.

[Martin Pradier, analyst]

I have 2 questions. The first one on Lumwana. Can you maintain -- are you talking about much high grade in second half compared to Q2. Can you give us some idea of what you mean in terms of higher grade in the second half?

[Se-Wook Yoon, executive]

Look, higher grade in Lumwana is low grade anywhere else. So it's not a lot. But it's more consistent and slightly higher grade. I mean I can actually...

[Martin Pradier, analyst]

Compared to Q2, are we talking 10% or 15% higher in the second half?

[Se-Wook Yoon, executive]

Sort of 10% is a good number.

[Martin Pradier, analyst]

That's fair. That's fair. And in Kibali, you had a good recovery. Can you maintain or improve production in second half compared to Q2?

[Se-Wook Yoon, executive]

We've got a good second half for Kibali. It's good overall. The second half…

[Graham Shuttleworth, executive]

Yes, it's really consistent with Q2. So that's the kind of run rate that we expect for the rest of the year.

[Operator]

There are no more questions from the conference call.

[Se-Wook Yoon, executive]

Thank you very much. Thanks, ladies and gentlemen, those of you who are here. I think we're -- and would like to invite you for a snack and a glass of wine we thought. We'd break the tradition here, New Barrick. So join us. Thank you, everyone.

[Operator]

That concludes today's event. Thank you, and have a pleasant day.