Barrick Gold Corporation (NYSE:GOLD) Q4 2023 Earnings Call Transcript February 14, 2024

Barrick Gold Corporation beats earnings expectations. Reported EPS is $0.27, expectations were $0.21. Barrick Gold Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by. This is the event operator. Welcome to Barrick's Results Presentation for the Fourth Quarter of 2023. Following today's presentation, a question-and-answer session will be conducted. [Operator Instructions] As a reminder, this event is being recorded and a replay will be available on Barrick’s website later today, February 14, 2024. I would now like to turn you over to Mark Bristow, President and CEO of Barrick. Please go ahead, sir.

Mark Bristow: Thank you very much and very good morning and good afternoon to everyone today. I want to start this presentation with some reflection back to the time of the merger where we committed to a clear strategy for building the new Barrick into the world's most valued mining company. And move on now to today, 5 years on, it's clear that we've come a long way in realizing that objective. As I'll show you through my presentation, our focus on Tier 1 assets has delivered a peerless gold portfolio with meaningful potential for further growth, matched only by the significant ramp up of our copper business over the next 4 years. Maintaining Barrick's unique record for replenishing our asset base, we have placed more than -- we have replaced more than 140% of our gold reserves since 2019 and more importantly at the same grade, which is critical.

In Tanzania, our Twiga joint venture success has demonstrated the power of our partnership approach, and we are aiming to replicate that at many of our other operations, including Porgera and Reko Diq. Our belief that combining the best assets with the best people will yield the best returns has produced an industry leading production profile backed by a strong balance sheet and sustainable dividend and capital return policy. Under every heading, asset quality, operational excellence, peerless people and sustainable profitability, we have now ticked virtually every box on our report card. As this presentation includes some forward-looking information, I'll start with the usual cautionary statement, which if you are so inclined, you can read it at your leisure on the website.

Protecting the health and safety of our people is Barrick's top priority, and last year, we made tangible progress in what we call our Journey to Zero, posting the best results since the merger. As you can see here, both lagging indicators, the lost time injury frequency rate and the total recordable injury rate continued to come down. There is, however, a lot more work to do on eliminating fatalities. Clearly a subject where there is no room for complacency. Our focus remains fixed on the Zero goal and the enormous progress made by our Latin America and Asia Pacific region shows that this is well within our global reach. In 2023, we were able to progress our sustainability strategy significantly. Our commitment to real sustainability has long been the bed rock of our business and it's based on a holistic approach, which integrates all aspects of our environmental and community responsibilities as distinct from the siloed ESG model.

The numbers you can see here show the tangible benefits this strategy is delivering. As you all know, we had a slow start to the year with the operational issues at NGM and Kibali. And then towards the end of the year the commissioning setbacks with Pueblo Viejo’s plant expansion impacting on production. Notwithstanding that, we delivered a steady quarter-on-quarter improvement through the year and despite another good fourth quarter, we fell fractionally short of our gold guidance while copper met its guidance. Highlights of the year were our sustained and industry leading gold and copper reserve replacement, which is one of the key differentiators between Barrick and its peers. Another consistent performance from the AME region and a strong financial performance, admittedly with the wind of a record gold price at our back.

Our strong balance sheet reflected by our investment grade rating also stands us in good stead as we navigate these uncertain times. The results for the fourth quarter reflect the improved performances from Cortez, Phoenix, and Pueblo Viejo, where we have now resolved the equipment issues in the flotation circuit. Costs were slightly higher than the previous quarter, mainly due to lower grade stockpile feed processed at Loulo-Gounkoto as a result of a pit wall failure at the Gounkoto open pit. Lower grades processed at Carlin, extra commissioning costs and the impact of the tropical storm event at Pueblo Viejo rather than -- and this is rather than what people jump to a structural shift in inflation. I'll touch on all these as I go through the presentation.

The financial numbers speak for themselves, but it's worth pointing out that year-on-year operating cash flow increased by 7% and free cash flow grew by 50%. Furthermore, an adjusted net earnings per share increased by 12%, and the quarterly dividend was maintained at $0.10 per share in line with our policy. We, as usual, will start with the operational review in North America, which is still a work in progress, but on a much firmer foundation and under new leadership that is aligned with Barrick's DNA. At NGM, the long awaited awaited record of decision enabled Cortez to advance the Goldrush development late in the fourth quarter. In 2024, we are ramping up drilling and the evaluation of Barrick's 100% owned Fourmile project with a view to commencing a prefeasibility study by the end of the year, and I'll cover that in more detail a little later.

And in line with Barrick's continued group wide investment in accessing skills that are in short supply in the industry, NGM has established 3 early learning centers to increase childcare facilities in the region. And we've also progressed our mine education system, our trial mine training centers, as we call them in South Africa to make sure that everyone that joins us go through a proper induction and make sure that we -- they really understand and are skilled enough to do the job. And it's an integral part of our focus on safety because that is a big issue. You know, everyone talks about all sorts of safety procedures, but we've landed on the on the view that operational excellence is really the foundation of a safe environment, when people know what to do and they do it properly.

As elsewhere in the group, the transition to renewable energy gathered pace with the commissioning of the substation and the first 100 megawatt solar farm in Nevada with the second 100 megawatts to be switched on later this year. This is a closer look at NGM and the details are in the MD&A for those who want to get into the details. Weather highlights include a near record fourth quarter production from Cortez and the acceleration of the Goldrush development, which is forecast to produce a 130,000 ounces in 2024 growing to around 400,000 ounces by 2028. All-in-all, we see an exciting future for Cortez. And then looking forward to 2024, we are also stepping up our planned underground development and grade control drilling efforts across both open pits and underground, as part of our production delivery assurance program at our Tier 1 operations and that does impact on the cost this year.

Another noteworthy improvement during the year was the step up in performance at Turquoise Ridge following the commissioning of its 3rd shaft and improved performance at the Sage autoclave. We've still got some work to do on the Sage autoclave, but we're now very clear about what we have to do to really return that processing facility back to where we expect it to operate as far as availabilities go. Turquoise Ridge because of that is beginning to live up to its full Tier 1 potential. Costs for the complex were a little higher quarter-on-quarter owing to the mix of production, including higher cost stockpile material as well as some additional maintenance costs. I always refer to our Nevada Gold Mines Complex as our value foundation, and how you can see why.

Far from being a mature destination, it is a world-class goldfield, which we're successfully exploring for both greenfields and brownfields growth opportunities. We now have a 5 year outlook on reserve replacement and that's quite important. We've built that foundation and now we can like we do in AME and LATAM, we can point to what we have to do to continue to convert over the next 5 years. And the other point is that this year we're going to be spending quite a bit more of our budget, same budget, but a little bit more not a little bit, a substantial amount more on greenfields targets, because we've built the models and we're excited about the fact that in our view, this is not a mature gold field. There's lots of upside in it. And one of those is the recent Robertson discovery where step out drilling is confirming upside potential and the importance of Robertson as it comes with the additional advantage of mostly non-refractory oxide ore.

And then, of course, at Carlin, the Greater Leeville hosts multiple opportunities which we expect to continue to support our reserve replacement. As I indicated earlier, I'm just going to focus a little bit on Fourmile and share the fact that we've decided to expand the drilling and other valuation work streams at this 100% Barrick owned project, with a view to starting a prefeasibility study at the end of 2024. And this year, we're actually budgeting $40 million on this project, $25 million for drilling and the rest will be other work streams to ensure that we are at a stage where we can take this towards a prefeasibility study at the end of the year. We believe that this drilling will outline the potential to more than triple the existing mineral resource base with mineralization hosted in rock units that can potentially support large scale long hole open stopping.

Another key aspect of this year's program includes the evaluation of the access portal locations to support development along the strike of the ore body, which would initially be used for conversion drilling and then later be reused for mine haulage in support of a potential Tier 1 production profile. Outside Nevada, Barrick is actively expanding in North America and through generative work and land consolidation, we believe we'll now be able to start sharing with you the detail of our specific targets across the U.S. And the reason we haven't got all the detail in here is we're still working on consolidating some of the ground. As you know, we are also partners in the Donlin part project in Alaska, which we're systematically driving up the value curve.

And as I've said many times before, I also believe we're underinvested in our home country, Canada, where we're examining opportunities in the prospective Sturgeon Lake and Patris projects through grassroots district scale exploration programs. And finally, at our existing Hemlo mine, we continue to advance the open pit project study. We moved now down south to what started as Latin America region but has since expanded to encompass Asia and the Pacific. In Argentina, Veladero, something special -- delivered something special in the shape of a performance that beat its production and cost guidance. We've been struggling with that mine, and last year we said let's stop, cut it back a bit, reestablish it, bring in a fresh set of eyes as far as leadership goes and really the team did an excellent job in beating its guidance both on production and on costs.

And in fact, as a product of that we've added back about 2 years of mining to the pit because we're much more comfortable about our ability to deliver value from that asset. And of course, we're all waiting for the new government to start delivering on their promises to be a lot more business friendly. Elsewhere in the region, you'll have seen the years of negotiation with the government finally delivered a revived Porgera in Papua New Guinea and the mine is scheduled to start pouring gold again this quarter. And in Pakistan, the massive Reko Diq copper gold project continues to advance steadily towards first production in 2028. Our flagship growth project, the expansion of Pueblo Viejo in the Dominican Republic, as I shared with you last time, suffered some setbacks in the form of premature failure of flotation gearboxes and the collapse of the new crushed ore stockpile conveyor structure.

And our highly committed and tenacious team overcame the challenges to deliver an improved performance in quarter four, notwithstanding in addition to these two events, a one in 500 year tropical storm. And I think it's important that when we back in 2019, we had some focus on managing the water and particularly ensuring that it stays within the footprint of the mine. And we were able to manage this massive storm event and not have any major environmental incidents, so a real tribute to the management. Just to remind you, this project is designed to sustain average annual production in excess of 800,000 ounces of a life of mine beyond 2040 and we will have as I said earlier, we expect to have this conveyor structure reinstalled later this quarter, at the end of this quarter in fact, and then we'll ramp up.

We are currently working on the ramp up and I thought I'd show you this slide, which is, you can see the progress following the repetitive failures of the new flotation gearboxes, which had to be redesigned, manufactured and reinstalled and this I can confirm, as I indicated last quarter, has been completed and was completed at the end of December. And then the replacement of the crushed ore stockpile conveyor is underway, and we are busy operating under temporary installations and feeding the SAG mill, the second SAG mill, albeit at a reduced throughput. And that ramp up will accelerate, as I said, after we install the replacement conveyor infrastructure at the end of this quarter. Elsewhere in the region, we continue to expand the Barrick footprint.

And again, in LATAM, we've really cleaned up our portfolio, really refocused the exploration efforts on potential targets that have potential to meet our Tier 1 ambitions. And as part of that we've opened a new frontier in Ecuador and secured a high quality portfolio together with an exciting advanced project in Peru. And in the Veladero district, field work is defining drill ready targets and up in Dominican Republic, exploration continues both within the Pueblo Viejo joint venture lease area as well as across the country. And again, I'm excited that we'll be able to show you some good results in the next couple of quarters arising from that work. For the 5th consecutive year, as I said in my introduction, in fact ever since the merger, the Africa and Middle East region delivered on its guidance and replaced its mined reserves.

It has also become host to some of Barrick's most exciting organic growth prospects, notably the Lumwana copper mines expansion. We start at Loulo-Gounkoto, where the results speak for themselves. Production was a little low, as I indicated earlier, and costs higher quarter-on-quarter on the back of lower grades in line with the revised plan following the Gounkoto pit wall failure. As elsewhere at Barrick, the complex is transitioning to renewable energy and its second solar project, a 40-megawatt solar farm with a 36-megawatt battery energy storage system commissioned ahead of time and below the original capital cost estimates this last quarter. Kibali is Africa's largest gold mine and a leader in automation and clean energy. Much of the energy that drives Kibali is already supplied by its 3 hydropower stations.

And when the mine's new 16-megawatt solar power plant and battery storage system are commissioned in 2025, it'll increase its overall renewable energy penetration from 79% to 88%. And for 6 months of the year, its electricity demand will be met entirely from renewables. And in Tanzania, our transformative Twiga partnership with the government continues to deliver exceptional results with North Mara and Bulyanhulu achieving the high-end of their production gardens for the year, and we're also expanding our footprint in the country in the hunt for new world class discoveries. Our strategic decision to invest in the expansion of our copper portfolio has led to the super pit expansion project at Lumwana in Zambia and this will transform Lumwana into one of the world's major copper mines with projected annual production of 240,000 tons per year over a 30 plus year life of mine.

And it is a key component of the Zambian government's drive to revive the country's copper industry over the next 10 years. The estimated cost of the project, as I've already indicated before is around $1.9 billion and construction is scheduled to start early next year with 2028 targeted for first production. The project has been fast tracked with the completion of the prefeasibility study, and we project to start ordering long lead items towards the end of this year. And here you can see our many brownfields and greenfields growth opportunities across the region. Of particular interest is our growing presence in Egypt and Saudi Arabia, where our partners at the Jabal Sayid copper mine, we're with our partners at the Jabal Sayid copper mine.

We are rapidly progressing exploration on the very promising Umm ad Damar permit, and we've already intersected significant VMS style mineralization at 4 prospects within this property. I've always said, ladies and gentlemen, to be world class, you have to be global. And Barrick's presence now extends across all the world's major gold and copper districts outside Russia and China. And we've also, as I said, also rationalized our exploration portfolio. So we really have what's left is targets that have the potential to meet our investment criteria. This is a solid foundation on which we can grow our production and our value and is directed by our proven strategy and supported by the broad spectrum of skills we have developed to build a modern mining business.

One of the key qualities that differentiates Barrick from its peers, as I noted earlier, is our ability to replace our reserves organically. And since 2019, we've replaced 140% of the gold we've mined, adding on a 100% basis 44 million ounces of proven and probable reserves across our managed assets. And in last year, we did it again. And I think people underestimate that. You know how I talk about M&A. And when you do the same thing all the time over and over again and expect a different outcome, there's a definition for that. And paying 50% premiums for assets and not realizing the only way you can deliver is either find more will wait for the commodity price to lift your revenue line. Finding, particularly brownfields reserves, really does swift the assets, swift your capital.

And again, I've demonstrated this many times throughout my career. And I have no doubt that our focus will deliver again. And we, I think, have some examples developing on which we can prove our strategy. So that's why Barrick is not forced to buy its growth. And this growth is organically embedded in our business. And our 10-year plan, which very few mining companies present is not there to brag about our profile, but it's to give the market a clear understanding that our focus goes beyond next year and that we are able to see challenges way ahead of down in our runway and address them. And that's always been our model. And again, I think the key here is that we're still working on the back end, as I indicated, of this profile to fill in the gaps.

And based on our long track record, I have no doubt we will do it in the fullness of and Nevada is a very good example because, we're starting to get to a point where we are able to look, as I said, forward a few years and know where the transition is the replacement is coming from. And again, we've got a long tail in Nevada and the big challenges how we bring it forward. And one of the big focuses this year is going to be how we schedule the development of the Greater Leeville area, all those different mining sections in Northern Carlin. And to support this 10-year plan, here is our detailed 5 year production and cost outlook. Looking at the next 5 years, there are a few aspects to note and increasing production profile, which always brings the cost down an increase in capital expenditure over the next 3 years as we have now included the capital estimates for the Reko Diq and Lumwana super pit projects, after which capital starts to decline.

And gold per ounce costs are flat year-on-year in 2024 and then start declining in line with the increasing production. Also, as previously flagged, production in 2024 is a little lower than our previous estimate, primarily due to the delay in the record of decision at Goldrush and the slower ramp up of the expansion project at Pueblo Viejo. And NGM was always going to be a softer year in 2024, so the delay in the record of decision for Goldrush has exacerbated this. Our track record of replacing reserves gives us the confidence to know we can deliver on this outlook without the need for dilutionary or delusionary acquisitions. And importantly, we have the balance sheet strength and operating cash flows to fund this growth, while still maintaining our industry leading credit rating.

As I've often said, mining is a long game and that should not be measured by quarters. I have no doubt that our strategy and partnership approach, together with the quality of our assets and most importantly our people will deliver real and sustainable long-term value for our shareholders and our stakeholders. Thank you, ladies and gentlemen, for your attention, and we'll be happy to take questions. Operator over to you. What are we going to do? We're going to do the room first. Okay. There's Greg's hands up.

Q - Greg Barnes: Just a couple of questions. One, there's been some political turmoil in Pakistan over the past week. Do you see that having any impact on your schedule on Reko Diq with the sort of change in government, I'm not quite sure what's going on?

Mark Bristow: So let me try and explain the situation. When we initiated the recommencement of Reko Diq following the arbitration award, it was with Imran Khan. And he's the person who actually brought it back into play along with us. And then the government changed to the Sharif government. And so but we signed the framework agreement with Imran's government. And we've signed the final agreement with Sharif's government, which was no different. There's no change on the principles that were captured in the framework agreement. And then we had that whole process endorsed by the Supreme Court. So those are the three sort of legs of government. And a lot of people, it's an interesting political situation in Pakistan because, there was a lot of speculation about what would happen at elections.

And unlike many other emerging markets, everyone was encouraged to go and vote, and they did. So no one tried to boycott the elections. And the outcome was interesting in that. It was almost perfectly balanced amongst the three big, political entities for want of a better word. So, now as you can imagine, there's lots of energy being put into trying to form a government. And the key is that whichever coalition forms and it has to be a coalition, whatever happens and whichever government is arises from this process, any government that's formed will have a very strong opposition. As far as Reko Diq goes, there's a bipartisan support for that project, and we've never been partisan in anything we do. It's a bad strategy in emerging markets. So, we're working.

We're continuing as usual. I mean, what -- some of the best progress that we've shown, and it's across the board, but has been with our local social programs and investment and working with the community. So right now as it stands. And not only is it the federal government, but also the provinces of voting, and there's new -- expected new chief ministers, which is essentially the provincial head of government, which is important for mining, because a lot of the legislation is within the province rather than at the center. Right now, we'll continue as we do in most other countries.

Greg Barnes: Second question is around Nevada, and you can see in the final chart, there is a pickup in '25. Is there a broader turnaround happening there, Mark, or is that just Goldrush finally kicking in?

Mark Bristow: No. There's the Nevada team is now really starting to make progress and we've put a lot of effort in there. It was a big merger with two very distinct cultures. And then we had COVID, and then you have this big turnover, that we saw right across the United States economy where an effectively, what people refer to as skill shortage. And we really had to invest in and then you have the lithium miners or promoters and we're the biggest miner in the U.S., so we're a supplier of people to any promotional effort. But we've brought that turnover down materially in Nevada. We've got a new management team. It's much more caring, because that's the way we are. We might be tough on standards, but we're soft on people. And I'll just give you some examples.

If you look at the roasters performance in the last two quarters of last year back to where we had them right in the beginning. And the Gold Quarry roaster, which we've had to spend a lot of time and money on, really, starting to live up to better efficiencies. We've got the final leg in its expansion now in the middle of this year, and then we'll have that 20% increase in throughput. And we've spent a lot of time on the SAG mills, the whole SAG infrastructure, we're now getting that back to where we want it to be and that is very core to our to Turquoise Ridge, which is one of the major high grade deposits, long life deposits within the complex. And, actually, I was down there, last week, Saturday this last Saturday. And for me, it was really encouraging how we're managing the rock mechanics and the way we're mining.

And we're doing now in Turquoise Ridge open stopping, backfill and also, cut and full and but on a much larger scale than they used to do it. And we're doing it safely, and very efficiently. So, I'm very confident that you'll start seeing those costs come down because it's an 11 gram ore body. And so, you know, it's got a lot going for it. And if we can get that the autoclaves working and we've got one more big change to do in the flow sheet of the autoclaves in SAG. And what we've done, Greg, is we've put we've formed a team of autoclave experts. Barrick is the biggest operator of autoclaves in the world. And what we've done is we've got them all around the world and we've put a group of process engineers together to look at all our autoclave installations and see how we can really learn from each other and lift the game to best practice.

And we've really uncovered some bottlenecks in the SAG mill that we've been depressurizing the autoclaves too frequently largely around valves, the longevity of valves. And the reason is that we haven't got -- we're missing a component of being able to normalize the pressure across the valve when we turn it off and on. And so that's a big step forward, which we just it's not a large expense. We've just about finished the design because we've got many examples and we'll put that in place. And for me, that's a key step forward and we've done a lot in the SAG. And we've got a team now working on process optimization and automation as far as process controls go. And so we're really at the stage where the operators and the management are now up to speed and the next step is you can use the automation because putting in automation without a competent operating team, it's not an efficient way to get to increase throughputs and so the same in the -- we've got a completely new team in the roasters at Carlin and again, we are now performing above our KPIs, which has been a long time since we've done that.

So all around, I mean, your commentary is real and I'm excited about improvements on that. What is dampening our costs at the moment is that we made a decision to bring in some contractors to get ahead of our development because on the double refractory ore, which comes from our big high grade deposits. We're process constrained as far as the roaster or nearly processed, not quite because we've improved the efficiency. And so the flexibility in your mine, this is a big mine. It should have flexibility. It's a big mining complex. When you're producing 3.3 million ounces a year, you shouldn't be worried about catching up a 1,000 ounces or 2,000 ounces here and there. And so -- what we found is that we were, through lack of flexibility underground because we're moving the whole business underground is that our development and you know this better than anyone you get behind on development, you constrain your mining flexibility and then you've got problems because you can't deal with a fall of ground or a sort of operational issue.

In all our underground mines, we've brought in contractors to just help the team get ahead and it'll be a 12 to 18 month program, and that does impact the costs because it's an extra cost. And then we'll take it back, from the contractors in the fullness of time. So all around, Nevada's in a better spot. And I think you'll see and last year, we had a bad start, but we increased our performance every quarter. We didn't quite catch up, but we did and that will continue in this year. You'll see the performance improve through the year and I believe that we are building. And as I said last year, we're largely complete with the merger challenges, it's now about focusing on efficiencies and delivery.

Lawson Winder: Lawson Winder from Bank of America. Thank you very much for the presentation today. I love this chart that you have up of the 5 year production and gold cost forecast, and in particularly the cash cost. Effectively, this chart is showing here all in sustaining cost declining from the $1,300 range down to the $1,200 range. And my question would be, I mean, is Barrick's objective over the next 5 years to move from the $1,300 per ounce that you use today for reserves and for planning to $1,200 per ounce in 5 years. And then as a follow-up, I would ask, what inflation assumptions are built in here for '24 and then and then '25 to '28?

Mark Bristow: So all sustaining cost come down to a thousand, just to correct you. And so you can see the flat year-on-year. I'll let Graham comment on the way we manage our inputs on this model. But that's exactly right. And the point here is that, there's and not to tell you how to do your work, but no one ever looks at grade. Some I think some analysts do, but a lot of people don't. They just look at the cost. And this industry is high grading. And when you look at Barrick's grade, it's not high grading at all. Our grades in the next 5 years are almost flat. And so we manage optimization of our ore bodies. And sure, there are times when we sort of look a little different to the market. But that's why we put these charts up, and we're not different to the market.

We have some cost drivers, and let me tell you what they are on there. The first one is PV, and PV is a low cost operator. So even with its current challenges, it's 2024 is going to be one of our lowest cost mines, but it's going to come down even further, as we steady out at above 800,000 ounces. Goldrush, we're now focused on development, which we haven't been able to do for the last 3 years, and that comes with costs. So the Goldrush cost profile is higher in these next 2 years as we ramp up the and put the infrastructure in and get the ventilation up to standard and things like that, which is that's the big challenge there. And then Porgera sits at $1,900 an ounce in this model, because it's a ramp up. And so, that's not what it's long it's also a low cost producer.

So those are the drivers and Carlin has -- we had the crossroads challenge where we had a large chunk of what we had modeled as high grade that was faulted out. So we need to work that through and get those costs down because the way that Carlin was structured, and it's a big ship, so it takes a bit of time to turn. But again, we're on it. And you'll see Carlin grades are sort of 4.3, 4.4, so high grade. And it's got open pits embedded in that. So, there's nothing here that and well, let me rephrase it. There's -- we can explain these costs, and they're not systemic in our operating cost. They're driven by specific decisions and events. Do you want to explain the assumptions?

Graham Shuttleworth: Yes, sure. So the key thing here, Lawson is the -- as always with cost is energy. We always say that around 20% of our cost is energy directly. But indirectly, when you look at energy in terms of the way it impacts our reagents and other consumables in terms of the way it impacts the supply chain and knock on costs on just our suppliers and their input costs, it's probably more like 50% when you look at the real impact of energy across the group. So that's always going to be a key driver. We're using $85 Brent as our assumption for this year. So that's pretty close to spot. I think spots at about $82 at the moment. And that's a little higher than what the average was for 2023. But we're looking at where it is today.

Long term, we bring that down to about $75 for our long-term planning beyond 2024. The other key area of input price pressure is on labor. So labor makes up around 35% to 40% of our direct costs. And there, we're seeing an inflationary pressure year-on-year of around 4%. So that has a small impact on costs. Other than that most of the other input costs are relatively similar to 2023, and we were able to bring down a lot of the costs in 2023 compared to 2022. There are some areas where it's still sticky, particularly regionally in North America, things like cement, lime, explosives, steel. There's still a little bit of an inflationary pressure in those areas, which we're working on to bring down. But we've made a lot of progress. So it's really -- those are the key drivers.

Just in terms of your first question, which was really about, are we planning to reduce our long-term planning price? Answer to that is no. The $1,300 is where we'll continue to plan. As we've said in the past, we always look at input costs and that's what we use for determining our long-term planning prices, and those are certainly not going lower. So $1,300 is where we'll be. It's just we'll make a lot more money, and we'll lock in that profitability.

Ralph Profiti: This is Ralph Profiti from Eight Capital. You spent some time talking about Nevada Gold Mines. I wanted to address the reserve replacement where you've done a lot of work on this sort of 5 year plan. Do you think you're in a position to have enough data and outlook that year-over-year reserve replacement will be consistent at the similar grade? Or is the profile going to look a little bit more latent where operating mines diminish and some of these more, towards the later end of that guidance period, we see the pickup?

Mark Bristow: So we're now modeling it. We had a budgeted 50% replacement in Nevada this year North America and we beat that replacement just because we were more efficient with our drilling. But when we -- as we go into the next 5 years, it is still lumpy because Nevada, a lot of our reserves are underground. So we build a resource inventory and then there's a conversion behind that. But we now, as I pointed out able to point to you a 5 year program over those 5 years in Nevada, we'll replace all the gold we mine. So it's -- the inventory is a lot more reliable. And then we move it through inferred, indicated and measured. And that model is -- and a large -- like Leeville has been a work in process. And the key here is the reason we can shift some of our capital to more greenfields targets as we now that systematic we've caught up with the drilling.

And well, we are catching up because this year is quite a big expense on drilling. And with the development getting ahead, we can cover the reserves and the grade control confidence because that's all a part of good underground mining practice. But we've been able to reallocate some of that budget to more greenfields targets. And we've got a lot. We have a number of greenfields targets. And this is -- when you look at Fourmile and you look at the way we've managed that, that is exactly 1 mile away from Cortez. And it's a multimillion ounce -- it's 14 million ounces in Goldrush and there's substantially more and it's higher grade, because we go into breaches from more flatter sort of planar ore bodies because we go into a big brittle halo around and intrusive.

So the rock is behaving differently, and it gives us really chunky grades breaches shaped ore bodies. So -- and the question is how many more of those are there? And I'll give you an example, we shared with you a drill hole last quarter in the Mega Pit in Turquoise Ridge, the old Twin Creeks. We drilled a hole down there. The Mega Pit is the only Tier 1 ore body in the Carlin area, the whole Carl region, where no one's ever found the feeder. And we know the feeders are the ones that really deliver the value in the Carlin system. And so we drilled that hole. It was significant, 70 meters at ore grade. And so we are slowly getting enough data to vector in just to really test that concept. So we got that -- we got the whole a little bolder basin.

We've got the north and southern extensions now of the Turquoise Ridge underground mine. We're back in looking at Getchell because our confidence in being able to manage the rock mechanics. We now have rock mechanics everywhere. When we got there, there were none. And so our underground controls and being able to mine safely without really getting impacted by poor ground conditions, gives us much more confidence to go back into Getchell. And then we've got -- there's an extension further Northern Leeville, what we call the Greater Leeville. The geologists have come up with 4 different names. But in my mind, it's the Greater Leeville area. And then north of that, we've got another new target that we've shared, it's on the map. And then trying to model the Goldrush 4 mile trend because it's another Carlin trend and look for duplications, structural duplications is the big focus on our team now.

So I had said to the geology team. And again, when we got the -- there were no exploration was like its own silo and there was no MRM. And today, we've got an integrated team that really understands what it's doing. And I challenged them to drill, I said like 15% of your budget needs to be drill holes where there's no other drill holes within 3 miles. And they said, look, we've got like 40% of that. We're already there ahead of what I was pushing.. So I think there's real opportunity. And then there's more opportunity outside the joint venture area as well in Nevada that we're chasing.

Anita Soni : It's Anita from CIBC. Just a couple of quick questions. The first one, just on Kibali. I think you said you guys -- sorry, it was Loulo that had a pit wall failure. Is that cleaned up now? Or is that -- so it shouldn't impact grades going into this year?

Mark Bristow: No, no. I mean it's impacting the profile because we're still putting the ramp down, but it's -- we knew it was slide. We just didn't expect it to go all the way to the bottom. I mean we -- as you know, in open pit mining, we monitor put walls all the time and from time to time, they do fail and it's best that you know about it so that no one gets injured. And we've got very focused controls on pit wall stability. So we see it coming.

Anita Soni : And then secondly, I was going to ask about Fourmile and you went into that a little bit. But could you just give us an idea of how much of Fourmile is in the resource? And what would be expect -- what would we expect to be included in the PFS in terms of like the base that you'd be working with?

Mark Bristow: So let me just answer the first one differently, and that is Fourmile is now just starting to come into our 10-year plan because we've rolled it forward a year. So just for your information. And as you know, under the deal, we can put Fourmile to Newmont as our partner if we get a feasibility study and it meets certain criteria. And Newmont needs to pay up or dilute. That's the agreement we have. I mean, we have a good relationship with Newmont at the Nevada joint venture level. And our view is that we need to continue to show prospectivity. And I think, currently, the reserves, I can't recall about 3 million ounces. Simon, do you want to take a need to through that?

Simon Jimenez: Yes. So currently, we've got 2.7 million ounces in inferred, and we've got a small amount in indicator. So the resource base that we are expecting to define by the end of this year will support the initial prefeasibility study. That prefeasibility study, we see being the first of several incremental studies as we continue to expand the ore body, because through the course of this year as well as defining the resource base, we'll still be defining significant additional inventory, which we expect to outline the growth of Fourmile through the next 10 years.

Anita Soni : Follow-up on that. So 2.7 million ounces of inferred will be the base. And what grades up that are?

Simon Jimenez: No, that's our current resources. By the end of this year.

Mark Bristow: Yes, what's the grade?

Simon Jimenez: 10 grams.

Jackie Przybylowski : It's Jackie Przybylowski from BMO. Thanks very much Mark. I just had another question about Fourmile. So I hope you don't mind. You mentioned in the MD&A that you're considering a service portal to decouple the project from Goldrush. And then you -- and then I think the wording you used is, but to ultimately complement the Goldrush development. Can you talk a little bit about what that means? Would you consider keeping it outside of the joint venture? Or is it still within the joint venture just operating separately, but processed through the same mill and infrastructure is that so what you mean?

Graham Shuttleworth: Well, I'll answer that first.

Mark Bristow: So Graham is clearly scared of what I'm going to say. There's a process that I've just touched on Twiga into the joint venture. And we've got to demonstrate viability. At the same time, there's always negotiable options as we do it. But the key is when you look at Goldrush, it's not the optimal access because we access it on the 20 clients and they come out on the hill and then you've got to get the ore to the processing facility. So what we're looking at is there's two other accesses. The one that's the most attractive is the Northern Access, which is a 6 kilometer drive, but it brings out the ore in the valley close to the processing facility. So that makes good sense on just logistics. At the same time, if you drive a drive through that strike, you open up the entire area for infill drilling, and it will be easy to move it from because trying to bank these all these ore bodies from the surface is a very expensive exercise.

Just to give you an idea, if you just take the section from Rose to Sofia, and we can access that through the twin drives from Goldrush and the intention is to do that. Under our agreement, we can use Nevada joint venture infrastructure. So we can access that. If you drill out that area, we would save about $500 million. So that's how the difference in trying to drill close base holes from surface. So that -- so where we're going with Simon is what we want to do is show the viability and the prefeasibility. And then the question that we've got to decide is, do we take part of this or all of this or to feasibility and pass the test? Or do we sit down with Newmont and structure a more reasonable way of bringing this asset, which is absolutely critical for the long-term profile of Nevada Gold Mines in some form?

But we've had very high level conversations about the concept, but we're not -- we haven't engaged in any formal discussions. But from our point of view, it's very important for us to demonstrate to our shareholders the value of this world-class asset. And so we -- and we've allocated part of our global exploration budget to doing this work this year. And it's a 3-year program to get this done.

Graham Shuttleworth: And just to be crystal clear, Jackie, the intention would always be that it would come into the joint venture. So that's not what we're saying. We're just saying we could access it from a separate access.

Jackie Przybylowski : No, I appreciate that. And one other question on a different topic. If you don't mind walking us through maybe the process of restarting Porgera. Just some modeling help. I would expect as the year goes on, they'll be more and more ramped up. But if you could maybe give us some color in terms of like what Q1 might look like would be helpful.

Mark Bristow: This is Papua New Guinea, Jackie. So we've got 60,000 ounces in our guidance attributable this year. I think we've spent a bit of time with all of you on explaining to you that. We -- what we do start doing as soon as we start generating revenues, even at these high costs, we start paying back our care and maintenance costs. So we sweep all the non-land owner equity that we don't own to start repaying. So the cash flows start moving fairly quickly. I'll give you the hurdles. And by the end of this quarter, we'll have a better sort of better granularity for you. But -- so the -- we've commissioned the plant now, and we've run non-gold material through it. And we're now starting to gear up to put gold contained material into the process broader.

It won't be our best. And we can do that and produce gold with certain so oxide material, but we need the power supply to switch on the autoclaves. So that's the next step. And right now, we've just deployed a -- we just secured a helicopter, which can work with our team to erect the -- I think there's 3 or 4 pylons that have been toppled to put them back in place. And we are working with the community and the Hela Governor, which is a different province to where we operate to make sure we secure the gas-fired power supply to the mine because we need that to be able to run the mine properly. And that's all built into this year's ramp-up. So I think by the end of the quarter, we'll have a much better outlook for you on the granularity of where we're going.

Graham Shuttleworth: Yes, I'd just say it's very much a second half of the year profile, Jackie. We will produce some gold in the first half, but it's really about the second half where we expect to produce the majority of that guidance that Mark spoke about.

Mark Bristow: And we -- I mean, we're well on track. We've done better than we expected on employing people and ramping up the employment. We've still got security issues that we're dealing with. As you -- I mean, I don't know how close you follow Papua New Guinea, but they had those rights in Port Moresby the other day and the security -- capacity of the government is under pressure. But we are working. And the one thing is everyone appreciates, I mean, after all these couple of years, there's no doubt about the importance of Porgera to the economy of Papua New Guinea because it is a very profitable business. So it does deliver real value to the economy.

Martin Pradier : It's Martin Pradier from Veritas Investment Research. Just a question here on Lumwana. We were expecting some cost reduction going forward. I know that cost has been increasing a lot this year. Can you give us more detail on that?

Mark Bristow: So most definitely, you'll see a short -- some reduction in costs for the year and our guidance, you'll see it. The big focus at the moment is we're still pre-stripping the -- what we call the 2042 plan, which is the plan before the Super Pit. But Martin to your point, the mining costs are critical. The mining efficiencies and mining costs are the real driver on this expansion. So you will see those costs come down as we mobilize those machines and make sure that we start mining because the big thing first was to establish the pit so that we can mine efficiently.

Graham Shuttleworth: Yes, I would just say you're right, from 2025, there's a big step down in costs as we get those efficiencies.

Mark Bristow: Simon, do you want to comment?

Simon Jimenez: Yes. So I mean, obviously, those efficiencies also come with scale as we expand. So with the expansion, we're currently mining at an annual run rate of about 130 million tons will be move incrementally over the course of about 4 to 5 years and stepping up to 250 million tones per annum. So with that step up, obviously, with scale of economy, we'll also be shifting to a much larger fleet in line with the new fleet that we've been gradually bringing into Lumwana and just started to come online at the end of last year.

Mark Bristow: So there's your answer. So you're right.

Martin Pradier : So 2025, should I be thinking that you'd be like 10% or 20% lower in cost? Or is that too much to us?

Mark Bristow: I'm not sure. Simon, do you have that number in your head?

Martin Pradier : That's not unreasonable.

Simon Jimenez: Yes, it's in the range.

Mark Bristow: Okay. All Right. Do you want to move to -- operator, can we move to the people online, please?

Operator: [Operator Instructions] The first question comes from Daniel Major with UBS.

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