Barrick Mining Corporation (ABX) Earnings Call Transcript & Summary

Welcome to Barrick's Second Quarter 2026 Results Presentation. At this time, all participants are in listen-only mode. As a reminder, this event is being recorded, and a replay will be available on Barrick's website later today. I will now turn the call over to Emily Chang Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. We hope you've had an opportunity to review the press releases issued before the market opened this morning. The presentation deck will review is also available to download on our website. Presenting our results today are Mark Hill, Barrick's President and CEO; and Helen Kai, Senior EVP and CFO. Other members of Barrick's management team will be available after our prepared remarks for Q&A. Before we begin, please note that there will be forward-looking statements. This slide includes a summary of the significant risks and factors that could affect Barrick's future performance and our ability to deliver on those forward-looking statements. This material is also available on our website. With that, I'll turn it over to Mark.

Okay. Thanks, Emily, and good morning, everyone. So for those who don't know, I'm Leap, she is our new Vice President of Investor Relations and joined us from U.S. Steel. So before we share our full quarterly results, I want to begin with the agreement with Newmont we announced today. And actually, I want to go off script straight away to make the lawyers nervous here. So I want to clarify a few misconceptions here. So firstly, the total value of that package is approximately $4 billion. So obviously, includes the proportion of formal, but it also includes contribution to Newmont's properties, Mark and fiber line, which add I think it's around 6.4 million ounces as well. It is also the cost of resolving historical disputes and litigation between the joint venture partners. And it also reduces the friction costs of the planned IPO, which will unlock even greater for the shareholders beyond the cash proceeds from the transaction. And as we have said, they will be largely returned to the shareholders. So moving on, we have reached this agreement after 4 months of negotiations, so it now enables us to focus on delivering value through safely and consistently producing ounces. And our interest now are completely aligned this joint venture part, which is Cree. And I then want to actually thank our counterparts at Newmont, Akash and our team and, of course, everyone on the Barrick team. For the enormous amount of effort and work that's gone this over the last 4 months ever. Now so before I get into the results, there's also a couple of other things I would like to pilot. I think are the key strengths that have come out with Barrick over the last months. So first, our leadership team. So over the last 10 months, we've improved the operational performance across the entire business. And that's the thanks to the strength of our operating sighter GMs everyone write down through to the mining front. So we've also strengthened our relationship with Newmont, as we just said, position us well to grow and develop NdPr, which is also critical. Second, with the IPO, we're building the only major American pure gold company with high-quality, long-life assets. So this is exactly what invested including some of the world's fastest-growing source of capital looking and third, outside of North America, the rest of the world portfolio which has a significant growth profile, also has a distinctive advantage and our ability to work with our Chinese partners, including, as you know, a joint line ownership and co-investment. And this enables us greater efficiency and supply chain strength, which has helped us control our bot and partnerships that improve outcomes and reduce our -- so with this context, let me turn to our results for the quarter. As we've had our third quarter in a row with excellent operating and financial do. We delivered on all 4 of our priorities for the year the game priorities outlined at the start of the year. We continue to improve our safety performance. I'll go to that a bit later, but there's obviously still more work to be done there. We've delivered our gold production above guidance and met our cost guidance, we advanced our growth projects, Formal with Warner and the PV expansion, which remains on time and on budget. Not often you hear that in the mining industry. We continue to review record deck and commence a slowdown in development on the first of July, as previously disclosed. And our delivery on production and meeting our cost guidance also allowed us to deliver strong financial results with Colin will discuss a bit later. And finally, we achieved major milestones in the preparation of it of our North America gold assets, which are on track, which is on track to be completed by the end of the -- so let me move to safety, which is still our #1 priority, and our goal is that everyone oxy goes home safe and healthy every day. So we saw a reduction quarter-on-quarter in our frequency rate. We've been at a 0.92 to 0.77. But disappointingly, we still had 6 LTRs. So there's still a lot of work to do to completely unacceptable, and we need to focus on our safety until we get the target here. So all of our leaders, all the way up to the executive committee, including myself spending more time in the field and at the mine site. They're doing more critical control verification and fixing more risks on the spot. On top of that, we've also invested over $90 million this year in technology to improve safety. This includes our automation of mining equipment, write-down to vehicle dash cams, safety reporting software and AI analytics. And we're also working hard to enter now out as many safety hazard possible. So turning to our Q2 highlights. Actually, before I start on the Pitolisant clarify our earnings with $0.82, adjusted earnings $0.83 per share. in mind with the Bloomberg consensus, I'm not there's some media out there this morning is it not that we missed, but I'm not sure what the source of that is. Barrick produced 96,000 ounces of gold in the quarter, which was 3% above guidance and 11% over Q1. The main drivers of that were we progressed the ramp-up of Blue lean CovaHead of schedule. PB ramped up faster than than expected after the maintenance shutdown in Q1 and we mined record tonnes underground at cores and continued the ramp up at Goldrush. On the copper side, we produced 56,000 tonnes. We managed costs well and our gold cost, as I said, were within G. Our earnings nearly doubled year-over-year, and we more than doubled quarterly shareholder return to $1.5 billion. And the strong performance were booked as Optiacross all of our regions, though North America continued to anchor our world-class portfolio. NGMPBgos registered year-over-year revenue growth Together, they accounted for 53% of our total attributable adjusted EBITDA at a margin of 61%. Our other regions also delivered strong gold production with meaningful attributable EBITDA at margin Copper continued to perform well and delivered comparable margin for the whole business. So moving on to growth. As I said, our growth project has an on February during the quarter. So 4 miles we ramped up to ramped up the drilling to 20 active rigs, and we plan to complete the PFS by the end of 2020 -- at Lamina, made good progress on the mill expansion, which will double the copper production. We expect the project's 2026 CapEx to come in at the lower end of guidance, and the project remains on budget. We're on track to produce our first copper from the expansion by the end of Q1 in 2020. We -- the PV expansion also advanced on to schedule. We've made progress on permitting and construction across the tailings facility, all roads and mortar treatment plan. And we're also very pleased to report that we now have 90% of resettlement packages being accepted. And we continue to review record debt as previously disclosed, and we've decided we won't start building the plant this year. So we've reduced our expected 2026 attributable CapEx, it was $600 million to $700 million and is now $450 million to $500 million. So the lower spend on the mine and reordered group guidance for 2020 total attributable CapEx, $3.8 billion to $4.3 billion. So back to the IPO of our North American assets. So as I said, this entity will be a high-quality your gold play company, which assets are located exclusively in low-risk jurisdiction. And what I'm pleased to share that the Board has selected me to lead the new company as a CEO on launch. We've completed all operating and separation agreement Ben Barrick and a new company, and we remain on track to complete the IPO by the end of the year. And we expect the vast majority of net proceeds raised to be returned to shareholders. I know several people have asked me in the past. So I'll now turn it over to Helen Kay, our CFO, who will review our financial performance.

Thank you, Mark, and good morning, everyone. Q2 marked the third consecutive quarter of strong production, house performance and financial results. Net earnings were $1.2 billion, a 50% increase year-over-year. Adjusted net earnings was $1.36 billion, which equates to adjusted EPS of $0.82, in line with Bloomberg consensus. Attributable adjusted EBITDA of $2.5 billion was up 51% year-over-year with a 59% margin. On a cash flow basis, the second quarter is typically our lowest each year for free cash flow due to the timing of our annual tax and interest payments. This quarter, we also incurred a onetime $400 million payment related to LuloGoncoto. Combined, this led to a 33% decline in year-over-year attributable free cash flow. . Excluding this, attributable free cash flow for the quarter would have been over 60% higher year-over-year. Year-to-date, attributable free cash flow has been $1.4 billion, more than double the same period last year. Turning to the operations. Gold production increased 11% quarter-over-quarter and exceeded guidance. We continue to operate within our cost guidance, reflecting an acute focus on operational efficiencies to offset new client pressures. We closed Q2 with a healthy $1.2 billion of net cash on the balance sheet, giving us flexibility to continue investing in our highest return opportunities and returning capital to shareholders. Turning to our capital allocation framework. We have 3 priorities. First, managing the balance sheet with discipline. Second, investing in our assets to drive earnings accretive growth; and third, returning capital to shareholders. Our fee work is designed to be sustainable through the cycle. On the balance sheet, we ended the quarter with meaningful access to liquidity, an undrawn $3 billion revolving credit facility and no meaningful debt due until 2033. Turning to our portfolio. Revana and Fourmile are 2 clear examples where we are strategically deploying capital into organic opportunities that we believe will generate superior returns. More broadly, we intend to identify similar earnings accretive opportunities to strengthen our growth profile while remaining disciplined in how and when we deploy capital. This is not about growth for the sake of it. It is about creating value over time with a suite of assets that has extraordinary growth potential. And finally, we are executing against our capital return policy. Our dividend policy provides for a quarterly base dividend of $0.175 per share with an additional performance top up at year-end, to target a total payout of 50% of attributable free cash flow. We also completed $1.2 billion of share repurchases this quarter. of the $3 billion authorization that was announced last quarter. In the 3 quarters since new leadership began in October 2025. Barry has returned $3 billion in dividends and buybacks to shareholders more than doubled the prior corresponding period. We expect the careful execution of our capital allocation strategy to drive further shareholder returns. In summary, our capital allocation feedwork is disciplined, flexible and designed to work throughout the cycle. It supports reinvestment in the business, advances growth, protect the balance sheet and create a clear pathway for returning excess cash to shareholders. With that, I will turn the call back over to Mark.

Okay. Thank you, Helen. So just on guidance, our 2026 production cost because I remain unchanged. So for the third quarter, we expect gold production to be higher than Q2, consistent with our plan, and we expect even higher production in the fourth quarter. Copper production should also increase in the second half of the year relative to the first half. So since to start again, since October 25, we have consistently delivered against our strategic priorities and to a new standard of operational performance. And again, I'd like to congratulate GMs and our people on the site. We continue to focus on controlling costs, capital intensity and productivity. And based on what we see today, -- we remain confident in our ability to deliver on our full year commitment for 2020. So just a couple of things to conclude. So obviously, again, I'm going to finish with the most important thing that is safety. And as I said, even though we've seen significant improvement, everyone is still focused on making sure every employee goes home safe every day. We have improved our operational consistency, which is what I said, and we've delivered on our guidance again. And as I said before, we've delivered on all our projects, they are on time and on budget, and I'll say again, I'm not sure how many comments do that in the morning. And we have advanced our North American RPO on table. So we're basically on track to execute against all the 4 priorities that we set at the start of the year. And so again, I'm going to say, and of course, we have transformed this relationship with Newmont, which allows us to get full value and expand MGM. So with that, I'll hand it back to the moderator for and I think.

[Operator Instructions] Our first question comes from Josh Wolfson with RBC.

Yes. Thank you very much, operator. Thank you, Mark, for those introductory comments, and some of the numbers that were provided. I wonder if you can maybe break down more of information behind the different values would have been attributed to the agreement components. So I guess what would have been Mike and fiber line within that $1.95 billion and then perhaps with the adjustment sort of been in the prior disputes. .

8 Okay. So the -- just to be clear, I'm not going to break it down to. On the prior dispute, so I mean I can't give a number on that, we would have had to go through a process to actually get to that number. So we just got to where we are. And then on the structural changes, I mean, now that we have this agreement done, we're actually going to go away and optimize this structure for the IPO. So as you can imagine, that's a bit of a work in process -- so -- but the overall value that we had on the table and we have ended this discussion with about $4 million as a highlight.

And just 1 other thing, Josh. The thing I want to highlight is -- since we started this job, NGM has a lot of opportunity. I mean, you know the assets well and I'm sure you'll agree with that. There's been no increase in processing capacity there for years. I mean we're dealing with 25-year-old infrastructure. And then we have something like Fourmile that comes in, which is a world-class asset. And the answer is that we're just going to feed that through the current infrastructure and delay the other route, which anywhere else in the world, if you found out number of ounces, you would be wanting to bring that in early. So my discussions with Natasha and Newmont right from where it go was how do we get this together so we can optimize MGM. And by optimize, I want to look at increasing processing capacity I want to stop trucking ore all over the state. And the only way I can do that is if we combine all these assets now and work together to see if we can justify the roaster or autoplay what we need to build, what infrastructure we need a cores to process formal and Goldrush, get our cost structure in place and increase our overall ounces. So where we've landed now, at least we're in a position in Marketo add a lot of value very quickly without getting into these disputes, about allocation of resources, and obviously, just there will be a lot of synergies as well because we're just going to use the same team were going to combine them all together, all the same often, and we can advance this a lot. And that was obviously my ultimate goal.

Great. Thank you for that detail. Just a follow-up question. With this resolution now completed, is the company considering a different structure in the IPO versus the 10%, 15% minority that was historically reviewed and could you go larger? And if the company went larger under what circumstances would there be a shareholder vote? Josh, it will still stay at 10%. I don't see any faces the way the company is structured. Anyone, correct?

Sorry, is George speaking. Resi back in. I think it's just a matter of looking at the structures that we started looking at right at the beginning paring it to the current structure because that market is friction costs, but then the older to look at where it's domicile, et cetera. So there's all these things that we need to go back and look at now that we have the in few months. And again, as Mark said, that's where the value comes as well. We have this flexibility in optionality. Great. Thank you very much. .

Our next question comes from Tania Yakusho. Your line is open, please meet and go ahead.

How are you, Houston, we've made contact with a congratulations on your new role, has 2 questions is like it. The first 1 is just coming back to as question. Should we be thinking, Mark, that it was $4 billion of the new loan assets plus it plus the $2 billion that is a top-up for a total billion. Is that how I should be thinking about the price pace? Cana, it's $4 billion total in Okay. . All right. And should I be thinking about the cash that Newmont is paying for this? Is this going to be part of the cash coming into the or would this $2 billion cash that is going to be potentially used for share buyback and/or the top dividend at the end of 2022 or sorry. .

Okay. Sorry, you very hard here. But and I think if I got the question right, so the cash we get back would be the majority of the return to shareholders, Creat

And then my final question, Mark, just for some of the processes for this IPO still -- you mentioned that you've done your separation agreement. I think everything has been filed with the SEC, the technical report -- what are we still waiting for? Is it just approval from the SEC filing the 3.5 year financials completing the new board? Maybe just the process of what we need to go for this to go live. Thank.

Actually, Tanya, let me hand it over to Ari Maroone. I would say we're actually very close. But like I said, now that we have this agreement with Newmont and their consent. One of the things we want to do is go back and look at how biverstructures and compare what we have today. So -- we just want to go do that and make sure we do our diligence and understand the impact of that because we think there are big savings there. So that's where we are at the moment.

Our next question comes from Lawson Winder with BofA Securities. Your line is open, please met,and go ahead.

Thank you very much, operator. And I'm Art. Good morning to you and the team, very nice operational -- congratulations on that. Just a couple of questions. So to follow up on file, I noted that the PFS is still on track for completion in 2020. However, with it now vended into NGM, is there any scope to speed up development and potentially have the asset and production earlier than what the initial PEA had indicated around sort of early 20s and then that's the first question. .

Thanks, Lisa. Look, obviously, my intention is to accelerate this as fast as possible. And now that I sort of go through this process, I think that allows us to accelerate it or short out. We're still going to be limited by permit time lines and things like that. But where I think we can really advance it will is on the processing side as well, right? Because I'm going to advance that, and I've already talked to Natasha. We're going to advance that all in parallel, that's why we're driving those declines and doing this drilling. So it may not come on earlier, but hopefully, when it comes on, we'll be able to ramp it up a lot quicker and to actually a higher production target. That would be my target.

Okay. Very helpful. And then maybe I could jump to the IPO. So after the initial minority interest is spun out, I mean at this point, have you changed your thinking on what could come after. So I think you had indicated previously that you just be an initial minority interest IPO, and that would be. Is there any thought to eventually IPO 100% of D&A at this point?

No. So Lars, not at this point. I think we're still on track to do and just show the value and highlight the value of the dedicated management team. And just by the way, we have already pretty much split the management team, and hopefully have noticed the change in production and safety and things like that with just having that dedicated focus. So anyway, to answer your question, though, there's no update, we're going to go past 10% .

Okay. Very helpful. And then in terms of the process, will there be a marketing process that will kick off in the relatively near future? There will be, but I don't know what the date is, Joe. .

Again, we just have to go back and look at that. But also activity, there will be a marketing process. .

Our next question comes from Anita Soni with CIBC Go ahead.

And Mark, congratulations on your new role and on the -- on improving operations at GM, my first question was with respect to the capital that you were talking about. I think you just talked about sort of declining infrastructure. And I'm just wondering what the capital would look like for a new roaster or a facility of that sort? And then what can we also expect in terms of NGM capital going forward? .

Okay. That's a good question, Nate. So on the roster, I want to reoptimize the whole the whole process flow. I mean you've been there several times. So you've seen what it's like. So the roaster we've actually got has looking at it prevent now, I would have said it's billion. I don't really know it to be around that number. But that will offset a lot of things as we try and stuff all over the company side as well, and it would reduce some other infrastructure requirements. And then as far as other capital, and best will help me out this, there's nothing else is what else is material that's coming up in an -- it's true -- so I'll just go development of 4 months as we provided the market the conceptual PAs in the range of $1.5 billion to $1.7 billion at weeding the next few years, on 4 miles and apart from that, that's really the item that we've got our capital portfolio. We are planning on the pull some capital forward or the expense that we have on replacing our truck feeds at Purple Switch and actually a few project prices also by time it was holding. If we have a commented the success of those projects but we still also expect to nano capital in line with 55 years for North America. So those are the Thanks, is. Does that answer...

Yes, that's a good answer. I think I also wanted to ask about the 4-mile PEA. I understand you are moving forward with the PFS with a different type of structure, I guess, in terms of what you're looking for infrastructure. But would this PH -- like should that not have been filed 45 days after you announced the PEA? And I would venture to say that that's probably part of the reason why you're seeing your share price move because we don't really have a barometer right now outside of a slide deck that will give you like bare essentials in terms of how to model this. And so you're seeing wide degrees of variance in terms of what people are modeling for Fourmile. So would you be able to file the PEA that was put out last year, so at least we have something to go with while this PFS comes out? To Anita's a fair question in Europe, and that's why our share price is down centers. Well, I mean if you're -- if everyone's debating whether or not there's what the $2 billion is and it's -- and people are backing out something lower, which is something that you said on the call, then it's because they're not certain of what the 4-mile value is. .

Okay. I haven't got a good answer to that. I mean when we filed the issued the PEA, it was conceptual in nature and still have technical Okay. But you're saying you haven't got enough information basically .

Yes. I mean, yes, it's -- there's a lot -- there were a lot of things that are unknown in terms of mining methodology, unit costs, right? There was -- we didn't know about this NPI, right? That was 1 major thing that was embedded in there, but nobody knew about it. So Anyway, I'll leave it there. I also just wanted to ask in terms of fiber -- let me just SP47135678 We will take that away right and see how we can do a better job at. And I understand what Trac I'll work something on to come back to. Okay. And I wanted to try 1 last time on the fiber line and Mike. Can you give us some round numbers in terms of what that would add to the equation. I'm assuming and by the math, I would assume that you're so Newmont is paying in for Fomile, but they're also exchanging their -- you guys are reciprocally paying for their 38.5% of Fourmile and Mike. And like -- and so it's a net -- it's like, I guess, at 61.5% that they're vending in of those specific assets to get to the -- to get to a collective $4 billion? Is that the right way to look at it? .

Yes. So the way we're paying for 61.5% of market fiberline and those others and that other settlement amount, which we're certainly not going to get into Look, Anita, we agree, we're just going to go out with a number and that was what it out I can't give you that right on. . Okay. All right. I guess with the IPO coming up, people are trying to understand what that significant component of Fourmile is. So any additional information would be helpful. .

Our next question comes from Daniel Major with UBS.

Team, and thanks for the questions. Sorry, just to clarification on the EUR 4 billion, just to be clear, is that the combined transaction value of 61.5% of Byline and Mike and 38.5% of Fourmile -- or is it just the 4-mile component. Can you just -- sorry if that's already been stated. Sorry. So when you net everything together and anyone jump in here if I get this wrong, to get to the $4 billion number, it is the value of former, the 38%. Then you have to net off the value of 61.5% of fiber line in mine. There is some money in there for to settle some legacy disputes for another word, right, as well. And then if you want to understand the full value, there's obviously some to benefit to Barrick by getting that consent and reducing the friction cost on the IPO, probably make it very complicated, Daniel, but.

No, that's okay. Just being clear. Okay, that's fine. And then, I mean, you've alluded to some of this already, but if I look at the high-level parameters of the 2025 PEA 60,000 to 70,000 ounces, $1.5 billion to $1.7 billion of CapEx and $650 million to $700 million all-in sustaining cost. You suggested this EUR 2.5 billion more CapEx maybe on downstream processing and maybe some upside to the production, would it still be fair to assume that the all-in sustaining cost would be comparable to the $650 million to $700 million? Yes. I would say it's comparable. And hopefully, if we -- depending where we locate that grocery, you could actually expect did you want to say something? There is 1 point that we would raise and so special and speaking as ranges that we put out as part of the conceptual PA, we're naturally based at the consensus gold prices at the time, which, from memory, was around about $2,500 a is in excess so if you do apply today's long-term ones consensus prices of $3,600 a house, it's about $100 sensitivity for every $1,000 of the gold price mood. The right way would be to look at is to say we put out previously plus 100 doors to take into account the fact that the gold price has been 5,000.

Okay. Daniel, just to go back, though, just to the engineering side, obviously, the ideas that we increase the overall production capacity in Nevada or reduced tracking. So yes, I would be -- there'll be more capital that it will increase the production profile and lower the cost. That would be the target.

And sorry, the line wasn't totally clear. So yes, so the 3,600, you add $100 to the 650 to 700. Was that what you alluded to, just to be clear. That's correct. Yes. SP585821372 And then incorporates the tech NPI sensitivity there? Correct. includes all of, that's good. And then, sorry, just final question on this. In terms of the if we're looking at the valuation of the stand-alone project or relative to what's implied in the EUR 4 billion and the various elements, is there any -- or can you provide some more detail on whether Newmont benefited from any assumptions around their 38.5% share of the infrastructure in that calculation that was imputed in the value of today's transaction?

I'm not sure I understand that question, Daniel. What do you There is a -- okay, so there's a net off against displacing other material from the process plants. How is that adjustment made?