barrick gold (abx) earnings report: q4 2015 conference ... · barrick gold (abx) earnings report:...

CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining

EventDescription:Q42015EarningsCallMarketCapasofEventDate:13.85BPriceasofEventDate:12.63

©2014TheStreet,Inc.Al l R ightsReserved Page1of22

BarrickGold(ABX)EarningsReport:Q42015ConferenceCallTranscriptThefollowingBarrickGoldconferencecalltookplaceonFebruary18,2016,11:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

AngelaParr;BarrickGoldCorporation;VPofIRKelvinDushnisky;BarrickGoldCorporation;PresidentShaunUsmar;BarrickGoldCorporation;CFORichardWilliams;BarrickGoldCorporation;COOBasieMaree;BarrickGoldCorporation;CTOMattGili;BarrickGoldCorporation;ExecutiveGeneralManager,CortezAndyCole;BarrickGoldCorporation;ExecutiveDirector,GoldstrikeRickBaker;BarrickGoldCorporation;ExecutiveGeneralManager,Veladero

OtherPart icipants

AndrewQuail;GoldmanSachs;AnalystJohnBridges;JPMorganl;AnalystStephenWalker;RBCCapital;AnalystGregBarnes;TDSecurities;AnalystDavidHaughton;CIBC;AnalystJorgeBeristain;DeutscheBank;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometoBarrick'syear-endandfourth-quarter2015resultsconferencecall.

(OperatorInstructions)

Asareminder,thisconferencecallisbeingrecordedonFebruary18,2016.

IwillnowturntheconferenceovertoAngelaParr,VicePresidentofInvestorRelations.Pleasegoahead.

AngelaParr (VPofIR):

Thankyou,Operator.Goodmorning,everyone.

BeforewebeginIwouldliketobepointoutthatwewillbemakingforward-lookingstatementsduringthecourseofthispresentation.ThisslideincludesasummaryofthesignificantrisksandfactorsthatcouldaffectfutureoutcomesatBarrick.Forcompletediscussionoftheserisksandfactors,pleaserefertoourmostrecentAIFfiling.

Withthat,IwouldliketoturnitovertoourPresident,KelvinDushnisky.

KelvinDushnisky(President):

Thankyou,Angela.Goodmorningtoeveryoneonthecall.Thankyouforjoiningus.




I'mheretodaywithourChiefFinancialOfficer,ShaunUsmar;ourChiefOperatingOfficer,RichardWilliams;andourChiefTechnicalOfficer,BasieMaree.

Youmayrecallthattwoofourminegeneralmanagersjoinedusonourlastquarterlyupdatecall.That'ssomethingyoucanexpectustocontinueinthefuture.However,becausetheywillbepresentatourInvestorDaynextweekwehavethemonthelinetodayratherthanhereinperson.

JoiningusareMattGilifromCortez;AndyColefromGoldstrike;EttieneSmutsfromPuebloViejo;JimWhittakerfromLagunasNorte;andRickBakerfromVeladero.Theywillbeavailabletoansweranyquestionsyoumayhaveattheendofthecallandyou'llgetachancetohearmorefromthemandothersatourupcomingInvestorDay.

2015wasafoundationalyearforBarrick.Webeganbyrefocusingthecompanyaroundoneoverridingobjective:tomaximizepre-cashflowpersharethroughdisciplinedcapitalallocation,operationalexcellence,andadeepfocusontalent.Weidentifiedfourkeystrategicprioritiesfortheyearandwemadeacommitmenttostayfocusedonthemandtodoexactlywhatwesaidwewoulddo.

Ourprioritieswere,numberone,tostreamlinethebusinessbyembeddingalean,decentralizedoperatingmodel;numbertwo,tostrengthenthebalancesheetbyreducingourdebtbyatleast$3billion;numberthree,torefocusthecompanyonmaximizingpre-cashflow;andnumberfour,tooptimizetheportfoliotofocusonourbestassetsinourcoreregions.

Torecaponourprogressonthesepriorities,firstwecompletedtheimplementationofourdecentralizedoperatingmodel,removingmanagementlayersbetweentheheadofficeandourmines.Thishasimprovedinformationflowandthespeedofdecision-makingacrossthecompanyandithashelpedustoreducecosts.Second,weexceededour$3billiondebtreductiontargetandsubstantiallyimprovedourbalancesheetandliquidityposition.Third,throughgreatercapitaldiscipline,operationalefficiencies,andcostmanagement,wewereabletogenerate$471millioninpositivepre-cashflowin2015afterseveralyearsofnegativepre-cashflow.Wedidsodespiteagoldpricethatdroppedabout10%or$125perounceoverthecourseoftheyear.

Atthesametime,weachieveda$33perouncereductioninourall-insustainingcostfortheyearfrom$864perouncein2014to$831perouncein2015,wellbelowouroriginalcostguidancefortheyear.Thesesavingsweredrivenbylowercapitalspendingcombinedwithreductionsincorporateoverheadandoperatingcostreductions.

At6.12millionounceswemetourupdatedgoalproductionguidanceof6millionouncesto6.15millionounces,adjustedfornetassetsales.Wealsometannualproductionandcostguidanceforourcopperportfolio.Andfinally,wedivestedallorpartofsevennon-coreassetslastyear,furtherfocusingourportfolioonourmostprofitableminesintheAmericas.

Thecompanyisinamuchstrongerpositiontodaythanitwasayearago.Soit'snotsurprisingthatmanyofyouwouldask,whatisnext?Iwouldliketogiveyousomeinsightonthatnow.

AsImentioned,ourprimaryobjectivecontinuestobetogenerateandideallygrowfreecashflowinanyforeseeablegoldpriceenvironment.Toaccomplishthis,wearefocusedonmaximizingmarginsateachofouroperationsanddeliveringfreecashflowthroughefficientportfoliomanagement.ThiswillsupportastrongerbalancesheetwhileallowingustoinvestinourBusinessandprovideourshareholderswithasustainabledividend.Ourproductionwillbemeasuredbyquality,notquantity.Whileweareproducingfewerouncestodaythanwehaveinrecentyears,we'regeneratingsignificantlymorecashfromtheseounces,andweintendforthistrendtocontinue.

Basedonourcurrentassetmixandthefullpotentialdivestment,weexpecttomaintainannual




productionofatleast4.5millionouncesofgoldthrough2020.Wehavesignificantoptionswithinourportfoliotomaintainandgrowfreecashflowbeyondthispointandwewillcontinuetoassessalternativeinvestmentsandopportunitieswhichmeetourreturnoninvestedcapitalhurdlerateof15%andalignedwithourstrategicfocus.

Ourgoalsaretolowerourall-insustainingcoststolessthan$700perounceby2019andtoreducetotaldebttolessthan$5billioninthemediumterm.Wearealsoworkinghardtocreateincreasedoptionalitywithinourportfoliothatwillgiveusmoreflexibilitywithrespecttofutureoperatinganddevelopmentchoices.

ForexamplethroughnewtechnologieslikeTCM,andastagedapproachtodevelopingourprojects.Achievingthesegoalswilltakesometime.ButultimatelywearepositioningBarricktodeliverindustry-leadingreturnsthroughthemetalpricecycle.

Aswedidlastyearwesetoutfourprioritiesfor2016.Thefirstpriorityistoensurewecangeneratefreecashflowatagoldpriceof$1000perounce.Tosupportthisobjectiveacrossthebusiness,wehaveimplementedamoreconsistentmethodologyfordeterminingthepricingassumptionsweusedforbudgetingandmineplanning,thecalculationofreserves,impairmenttesting,andassessingprojecteconomics.

Our2016budgethasbeenpreparedusinga$1000goldpriceassumption,whileourlong-termplanningassumesagoldpriceof$1200perounce.Thisensuresafocusonmaximizingfreecashflowinthenear-termwhilepreservingoptionalityforthefuture.Debtreductionalsoremainsatoppriority.Yourecallthatwesaidthe$3billiontargetwesetlastyearwasthefirststep,notthefinalone.Thisyearweintendtoreduceourtotaldebtbyatleast$2billion.Weplantodothisusingthreelevers:existingcashbalances,freecashfromoperations,andnon-coreassetsales,jointventures,andpartnerships.

Ourthirdpriorityrelatestoredoublingourcommitmenttooperationalexcellencewiththelaunchofourbestinclassinitiativewhichweareimplementingacrosstheportfoliothisyear.Ouroperationsarealreadyamongthelowestcostintheindustrybutwebelievewecandoevenbetter.You'llhearmorefromRichardlateraboutthebestinclassprogram,butIcantellyouthatweareenthusiasticaboutthepotentialforimprovementacrossthebusinessandwearealreadyseeingresults.

Andfinally,wewillcontinuetohaveasharpfocusoncapitaldiscipline.Wehavesetrigorouscriteriaforcapitalallocationincludingthe15%hurdleratefornewinvestmentsallofwhichareevaluatedbyourrevampedinvestingcommittee.Asyouwillhaveseeninourreleaseweprovidedthree-yearconsolidatedguidanceonproduction,costs,andcapital.Thisreflectsourplansastheyexisttoday.

Overthenextthreeyears,ourproductionisexpectedbeintherangeof4.6to5.5millionouncesofgoldatprogressivelylower,all-insustainingcosts.AsInoted,ourobjectiveistoimproveuponthisovertimewiththeaimofachievinganall-insustainingcostbelow$700perounceby2019.

JustbeforeIturnthingsovertoShaun,IwanttoknowledgetheexceptionaleffortsoftheentireBarrickteamindeliveringour2015results.Theyreflectthetirelesseffortsofthousandsofpeopleacrossthecompany.

Withthat,IwillaskShauntowalkyouthroughourstrongfourth-quarterandfull-yearresults.

ShaunUsmar (CFO):

Thankyou,Kelvin.

2015wasacriticalyearfordrivingchangeanddeliveringonourpromisesatBarrick.Wearereallypleasedwithhowtheentireorganizationralliedaroundourobjectivestotransformthebusiness




financiallyoverthepastyearandthisisevidentbothinour2015resultsandbeyondasyouhaveseenintheguidance.Wepulledeveryleveratourdisposal,includinggreatercapitaldisciplinethroughenhancedcapitalallocation,reducedoverheads,improvedproductivity,andloweredworkingcapital.

Wealsohaveagreatmineralendowmentwhichrepresentsoneofthemostpowerfulleverswithinourcontrolforreducingdebtandfuelingourfuturegrowthpotential.AndBasiewillcoverthislaterinthepresentation.Oureffortsresultedin2015while[in]sustainingcostsof$831anouncecominginwellbeloworiginalguidanceof$860to$895perounceandatthebottomendofourlowerguidanceof$830to$870perounce.

Cashcostsare$596perouncewerewellbelowthebottomendofbothouroriginalandrevisedranges.Whenyoustripoutourfuelandcurrencyhedgesfromboth2014and2015,whichhadayear-over-yearimpactofaround$37aounceandaddabout$15or$20anounceinsupportservicestothesitesin2014.SinceG&Awasn'tallocatedtothesitesthatyear.Ourcashcostsaredownabout$55perounce[sold]year-over-year.

Inadditiontomeetingourgoldproductionguidance,wealsometourcopperproductionguidanceandC1coppercostsof$1.73perpoundwerebelowouroriginalrangeof$1.75to$2perpound.TheteamatLumwanadidagreatjoblastyear,bringingdowntheircashflowbreakevencosts,aidedbytheweak[quarter],andthey'recontinuingtofindopportunitiestodrivedowncosts.

At$1.5billiontotalCapExwassignificantlybelowbothouroriginalguidanceof$1.9billionto$2.2billionandourrevisedguidanceofabout$1.7billion.Theserobustresultsallowedustogeneratefreecashflowof$471millionlastyearafterbackingoutthe$610millioninproceedsfromthePuebloViejostreamthatwassequentiallyusedfordebtreduction.

Ifweweretoput2014and2015onthesamerealizedpriceandgradebasis,theyear-over-yearincreasecomparedwiththecashoutflowof$136millionin2014wouldbe$1.8billionversusthereportedimprovementof$607million.Thenetlossof$2.6billioninthefourthquarterand$2.8billionfortheyearreflects$2.6billionand$3.1billionofpost-taximpairmentsrespectively.

AsKelvinindicated,we'veimplementedamoreconsistentmethodologyfordeterminingthepricingassumptionswe'veusedforimpairmenttesting,mineplanning,calculationofreserves,andourprojecteconomics.We'veexperiencedsignificantvolatilityinthiseconomicenvironmentasevidencedbythe10%and30%dropinthegoldpriceandoursharepricein2015respectively.

Againstthisbackdrop,wethereforeadoptedapricingapproachtounderpinourvaluationswhichisinformedthroughthestatisticalpricemovesoverpastfewyearsandseeitbeyondshort-termspotpricemix.Ourlong-termgoldpriceassumptionrepresentsanassessmentoflong-termconsensuspricing,andwillonlybeadjustedbasedonfundamentalshiftsinthegoldmarket.

Theimpairmentchargeswe'verecordedaremainlyrelatedtoourthoughmetalpriceassumptionsof$1000perouncefor2016anda$1200perouncelong-termprice.Thisisapreviouslong-termassumptionof$1300perounce.

Onanannualbasis,theimpairmentsincludejustover$2billionofgoodwillrelatedtothelowmiddlepriceassumptions.The$1billionrelatedtoassetimpairmentsisprimarilyforPascua-Lamaofabout$400millionduetothereductioninmarketcomparablevaluesusedtovaluethisproject,andPuebloViejo,about$319millionduetothelowmetalpriceassumptions.

Theimpairments'impacttoearningswaspartiallyoffsetby$110milliongainrelatedtothesaleofRubyHillandSpringValley.Whilewecertainlydon'trelyonhigherpricestodriveourbusinessplans,weremainpositiveonlong-termpricefundamentalsforgoldandcopper.Withhigherpricesinthefuturewe




wouldreassessthefairvaluesofourlonglifeassetssuchasPascua-LamaandPuebloViejo,andcouldpotentiallyreversesomeoftheassetimpairmentchargesrecorded.

WewerecarefulatthestartoflastyearthatourcorefocuswouldbeonprioritizingfreecashflowpershareinsteadofchasingouncesandI'mpleasedwithhowthecompanysteppeduptothisshiftinemphasis,generatingsubstantivecashflowforthefirsttimeinfouryearsatthelowestpriceexperienceduringthisperiod.Iwanttonoteherethatwedidthisthroughtwocomplementaryobjectivesandwithoutcompromisingourlongevity.

Weimprovedourcashmarginsintheshort-termwhilefocusingondrivingsustainabilityandlongertermvaluecreationfortheportfolio.Theseobjectivesareindependentbyhigh-quality,well-capitalizedassetbasewiththepotentialforhigher-tonnegrowthinthefuture.Weareenhancingoperatingcashflowboththroughbusinessplanningandongoingactionslikebestinclass,whilecontinuingtodrivedowntheconsumersofthatcashflow,includingbyreducingourholdingcostsatPascua-Lama,loweringourinterestexpense,andcuttingoverhead.

Wearealsooptimizingourgrowthspendonhigherreturn,lowerriskoptionsnearourexistingassetbase,whilemaintainingourotheroptionsforthefutureatthelowestcostpossible.Asresult,despitethe$250dropinourrealizedgoldpricefromtwoyearsago,wegeneratedthreeconsecutivequartersoffreecashflowin2015.

Toputthatincontext,inordertogeneratefreecashflowin2013,wewould'verequiredagoldpriceofmorethan$1600perounce.Atthebeginningof2015,wewould'veneededabreakevenpriceof$1350perouncebeforeimplementingourcashflowimprovementsactions.Bytheendoftheyearwewerefreecashflowpositivebelow$1100perounce.

Thisrepresentsa35%reductioninourbreakevenpriceoverthelasttwoyears.Andthisyearweintendtoreducedfurtherto$1000perouncetoensurewecangeneratepositivefreecashflowatthatprice.We'veachievedtheseresultsbyaggressivelymanagingourcontrollablecostsasyouwillseeonthenextslide.

Clearly,wecan'tcontrolgoldandcopperpricesbuttherearemanyfactorswithinourcontrolthatcontributetoourcostofsalesandusesofcash.Asyoucansee,wedidalotlastyeartomitigatethemorethan$100anouncedropinourrealizedgoldprice,andthe20%dropinourrealizedcopperprice.

Wedidthisthroughacombinationofproductivitygainsdeliveredbythesiteswhichwerereflectedinthecashcostpertonneprocess,andmanagementactionstoreduceoverheadandexpiration,closureandproject-relatedexpenseswhicharegroupedintheothercategory.Theper-timecostsreflectoperatingcostswhichareunderthedirectcontrolofoursiteleaders,andimprovementstheyhadmadelastyearwithrespecttoproductivityandcostreductionoffsetabouthalfofthepricedecline.

Operatingcostsarewherewestillseethemostopportunitytoreduceourcoststructure,andRichardwillspeaktothisinmoredetailinamoment.We'vealsodonequiteabittooptimizecapitalinthelasttwoyears,whilethemajorityofthe70%reductionsince2013relatestoPascua-Lamaaftertheprojectwassuspendedthatyear.Therewerealsosignificantcutsanddeferralsmadetosustainingandexpansionarycapitalin2013and2014thatwerenecessaryinthelowergoldpriceenvironment.

Thishascreatedsomewhatofa[byway]ofdeferredcapitalinfutureyearswhichwassomethingweneededtodealwithasamanagementteamlastyearandweweresuccessfulindoingso.Weaddressedthisinacoupleofways--firstlybyrevampingourbusinessplanningandbudgetingapproach.Thekeychangehereisthatouroperating,technical,andfinancialteamsarenowfullyandconcurrentlyintegratedintheprocessfromthebeginningcomparedtothedetailedbutmoresequentialapproachofthepast.




Thebenefitofthisisthatweharnessthebesttalentineachoftheseareasfromthestartinconjunctionwiththebusinessplansgeneratedbytheminegeneralmanagerswhoultimatelyareaccountableunderourdecentralizedmodelformaximizingvalueandmanagingtherisksfortheirbusinesses.Thisapproach,alongwithsitespecificcashmargins,[bolt]intotheplansfromtheirinception,ensurethatthegeneralmanagersdeveloptheirplansthroughthelensofensuringenhancedcashmarginsatlowerpricesthatwouldcoverourcorporateusesofcash--anytaxes,overheads,fundingourgrowth,payingdividendsandthelike,whilepreservingoptionalityathigherprices.

Someexamplesofthedecisionsmadethroughthisprocess,includingeliminatingcapitalassociatedwiththeopenpitsatGoldenSunlight,focusingmoreonundergroundatCortezandGoldstrike,andremovingcapitalforsubsequentleachfailuresatSouthArturothataren'tcurrentlyeconomic.Byleavingmarginalouncesinthegroundtherequirementforassociateditemsliketailingsliftsandmaintenancedisappear.

IwanttobeclearthatwhatI'vedescribedisnothighgradingorgoingofftopocketsofhighgradematerial.Whatwe'vedonebyleavingthesemarginalouncesinthegroundistoraisetheaveragemininggradeinordertogeneratecashflowandwe'vebeencarefultodothiswithoutsterilizingfutureoptionality.

Secondly,welookedatourprojectsdynamically,andassessedhowwecouldacceleratefundingintheeventthatpricesweretobemateriallyhigherinthenear-term.Weconcludedthatourprojectsequencingwhichisnowsupportedbyamorerobustbusinessplansisappropriateforthecurrentbusinessoutlook,andisnotcapitalconstrained.

Intermsofourspendingoutlook,thisyearweexpecttotalCapExtobeintherangeof$1.35billionto$1.65billion,lowerthan2015onreduceddevelopmentcapitalatVeladeroandKCGM,andalsoreflectingtheassetsales.Projectspendingfor2016hasbeenloweredto$50millionto$100millionfrom$100millionto$150millionlastyear,andweexpectittobeatthelowendofthisrangeforthenexttwoyears.

Projectcapitalthisyearlargelyreflectsongoingpre-strippingoftheSouthArturodepositnearGoldstrikeandcapitalizedcostforpermitting,engineering,andconstructionactivitiesrelatedtothetemporarysolutionforwatermanagementatPascua-Lamaaswetransitiontheprojectintodeepsuspension.Expansioncapitalfor2016isprimarilyforfeasibilityanddevelopmentworkatCortezrelatedtotheundergroundexpansionprojectandalsoforpre-strippingofthecrossroad'sopenpitdepositwhichisexpectedtoreachproductionin2020.

In2017and2018,weexpectexpansioncapitaltoincreaseasthisworkacceleratesanditalsoreflectssomecoststoimprovethroughputwithadditionalventilationatTurquoiseRidge.For2017and2018weexpectsustainingCapExtobeslightlylowerthanthe$1.2billionto$1.4billionthisyear,atabout$1.1billionto$1.3billion.Butin2018itwillincludeabout$175millionindevelopmentcapitalforstrippingatLumwana,relatedtomining[chimneywidth]stagesfourandfivewheretheoreisdeeperandhasahigherstripratio.

Turningtothebalancesheet,weexceededourdebtreductiontargetof$3billionin2015byrepairing$3.1billionthroughacombinationofassetsales,freecashflow,andnewjointventures.Thisreducedourtotaldebtby24%andournetdebtby28%injustoneyear.Includingthe$610millioninproceedsfromthesaleofBaldMountainandRoundMountainreceivedlastmonth,ournetdebtisnowbeingreducedby33%fromthestartoflastyear.

Asaresult,ourannualpre-taxinterestexpensewillbecutbyabout$135millionperyearandsomethisisreflectedinourlowerfinancecostguidanceof$690millionto$730millionthisyear.Inaddition,weextendedthemajorityofourundrawn$4billioncreditfacilityuponeyearto2021andnegotiateda




financialcovenantthatbetterreflectsourongoingdeleveragingmeasures.

Thenetdebttototalcapitalizationcovenantrequiresustomaintainaratiooflessthan0.6.Attheendof2015,thisratiowas0.44,andweexpectittoimproveaswemakeprogressonournew2016totaldebtreductiontargetofatleast$2billion,andourmediumturntargetsbringtotaldebtbelow$5billion.

Ourdeleveragingassetshavesignificantlyimprovedourliquidityparticularlyintheneartomediumtermaswetargetedshorteneddateddebttocleartherunwayforthenextseveralyears.Wenowhavelessthan$250millioninmaturitiesduebefore2018andlessthan$100millionmaturingbetween2024and2032.About$5billion,oraroundhalfofourtotaldebtisveryelongated,maturingonlyafter2032.

Lastmonth,(inaudible)placedourlong-termdebtratingandreviewandinlightofthiswebeenaskedwhetherretaininganinvestment-graderatingisimportantforus.Theanswerisyes(technicaldifficulties).Butofequalimportance,we'refocusedonimprovingourcashflowandcashmarginsthroughproductivityimprovementsandcostreductiondeliveredtoourbestinclassprogramaswellasthecontinuedsharpfocusoncapitaldiscipline.

We'vemadeconsumerprogressonalloftheseexpensescoveredandexpecttomakeevenmoreovertime(technicaldifficulties).Webelievewewillbesuccessfulinoureffortsandifthedowngradeweretooccur(technicaldifficulties)costofborrowingandtheexistingpublicdebtofourcreditfacility.Whileadowngradecouldincreaseourborrowingcostsifweweretoissuenewdebts,weareveryclearwe'refocusedonreducingourdebt.

Turningtoourfinancialguidancefortheyear,IcoveredCapExandtheinterestexpensecomponentsoffinancecostsearlier,butIshouldjustnotethatourfinancecostsalsoincludeaccretion,andthattheinterestexpensesavingsthisyearfromdebtreductionarepartiallyoffsetbyhigheraccretionexpensemainlyrelatedtothePuebloViejostreamingagreement.Theguidancenumbersonthisslidearebasedonour2016budgetassumptionsof$1000perounce;however,thetaxrangeshownhereisbasedonagoldpriceof$1100perounce.

At$1100perounce,ourtaxrateisexpectedtobe50%to55%reflectingthegreatercontributionthisyearfrom[TB]whichistaxedat57%.At$1000perounceincludingnon-deductibleexpensessuchasPascua-Lama,oureffectivetaxraterisesto153%.AsImentionedearlierwereducedouroverheadcostslastyear.Thiswasdownthroughheadcountreductionsanddownsizingorclosingregionalofficesinlinewithimplementingthedecentralizedmodel.

Werealizedapproximately$65millioninreductionstogrossfunctionalG&Aandoverheadcostscomparedto2014,allowingustomeetourcorporateadministrationexpensetargetof$145millionafteradjustingforseveranceandotherone-timecosts.Andweexpecttoreach$100millioninannualizedoverheadsavingsin2016.

Someadditionalcontextonthistohelpwithcomparing2015to2014.Atthebeginningof2015,wetransferredmostofthefunctionalsupportservicestominesitesinordertoholdthemdirectlyaccountableforthecostoftheservicesthey'rerequiredtorunthebusiness,resultingintheallocationofsomeofourgeneralandadministrativecoststoindividualminesites.

ThesecostsnowformpartofminesiteG&Acostswhichareincludedwithindirectminingandcashcosts.We'vealsoreducedourexplorationbudget,butasBasiewillcover,wehaveastrongfocusonopportunitiesaroundourexistingmineswherewecontinuetoidentifyexcellentpotentialforresourceconversionatmanyofouroperations.

We'llassessthisdynamicallythroughouttheyeardependingonthequalityofourtargets,thecashavailablethroughourimprovementsefforts,andthegoldpriceenvironmentwherewefeeltheguidance




isappropriateforthecurrentenvironment.

IwillnowturnitovertoRichardtotakeyourthroughourbestinclassprogramandouroperatingresults.

RichardWilliams (COO):

Thanks,Shaun.

(Inaudible)timehascometheindustryleaderforbestinclassinthewaythatweoperateanddevelopourexistingandanyfuturemines.Webelievethatwe'vegotsomeofthebestassetsintheworldbuttobeclear,wejudgethatthetheyarenotyetbeingoperatedattheirmaximumefficiencyasdefinedbywhatispossibleacrosstheindustryandusingallavailableandthelatesttechnologies.

Andthisprovidesuswithasignificantopportunityforimprovement.Toaddressthis,andoverthelastsixmonths,we'vebeenrollingoutabusinessimprovementsystemcalledthebestinclass.Thisisadata-drivenoperatingsystemthatwillmaximizevaluedurationfromouroperationsbydrivingimprovementsinefficienciesandproductivity,aswellassustainablereductionsincostsandimprovementsinsafety,andenvironmentalmanagementacrossourportfolio.

Itbringstogetherintoasingleplaceallofourexistingandfutureimprovementinitiativessuchasthosealreadyidentifiedinwhatwe'vecalledourvaluerealizationstudieslastyearaswellasthoseassociatedwiththe$2billioncashflowimprovementtargetthatyou'llbefamiliarwith.It'snotjustatop-downprocess,it'sbeingbuiltintandemwiththemineleadership,andprovidesboththemanduswithaconstantlyevolvingplantoclosethegapbetweencurrentperformanceandoptimalperformanceateachsite.

Itdoesthisbyexploitingopportunitiestoclosewherewecurrentlyaretothatdefinedbythecurrentsystem'stechnicallimitsinwaysthatarefamiliaracrosstheindustry,andwedoitatallofouroperations.Whileconcurrently,seekinganyopportunitytodeliverstepchangesinperformancebysystemchangesi.e.changingminingmethods,[digitization],orothersuchmeasures.Aswellaspullingforwardinastructuredwayanynewinnovationsthatacrossthespectrumwithaparticularemphasisoninformationmanagement.

Allofthisisdonewhilesimultaneouslyinvestingvitaltimeandeffortinareasthatareoftenforgottenandarethebedrockofanyminingcompany,andthatistheoperatorsandtheirskills,andthefront-lineleadersandtheirskills.Todrivethiswe'vedevelopedascorecardwithconcretetargetstoreduceandoptimizetheintensityoflabor,mining,energy,andcapital,asmeasuresagainstgrowthinrevenue,improvementsinassetefficiency,increasingoperatingmargins,andthesites'annualshort-termincentiveschemes.

Progresstowardsthesetargetsarereviewedanddriveneveryweekatourbusinessplanreview,orBPRmeeting,theweeklyvideoconferencethatlinksallsiteswiththeheadofficeandinmonthlyoptimization,innovation,andtalentdevelopmentreviews.AsKelvinissuretomention,thisprogramisbeingrolledoutacrossourportfolio,andistobemanagedbystandalonebusinessimprovementgroupsthathavestoodupandreportsdirectlytomeandisheadedbyMichelleAsh,formallyof[publication].SheobviouslywillworkwithBasieMaree,theChiefTechnicalOfficer;andPeterSinclair,theChiefSustainabilityOfficer;andteamsfromfinance.It'sthisprocessthatprovidestheconcretesupportforourtargettoreduceourall-insustainingcoststolessthan$700anounceby2019.AndwewillcoverthisinmoredetailinourInvestorDaynextweek.

Movingontoouroperatingguidance,2016goalproductionremainsatfive5millionouncesto5.5millionouncesandreflectsabout1millionouncesinassetdivestitureslastyearaswellaslowandexpectedproductionfromLagunasNortethisyear.We'vereducedourcash[flow]guidanceto$550to$590an




ounce,from$596into2015.

Thisreflectslower-than-expectedcostsofPVonincreasedproductionandhigher[filter]creditsrelatedtolastyear.LowercostsfromAcaciaandthesaleofhighercostounces,butcarriedhigheraveragecostsin2015,aswellasanexpectedpositiveimpactfromcurrencyandfuelhedgesatthisyear'slowerrates.

We'vealsoreducedourall-insustainingcostguidance$775to$825perouncebasedonlowercapitalexpendituresandlowerG&AandexpirationexpensethatShaun'soutlinedalready.Althoughall-insustainingcostwillbedrivendownbythebestinclasseffort,thefirsthalfoftheyearisexpectedtobehigherthanthesecondhalfall-insustainingcosts,forthesecondquarterexpectedtobethehighestcostoftheyear.

Turningnowtothesites.OurCortezmineledbyMattGilihashadanexcellentyear,significantlybeatingouroriginaloperatingguidancefortheproductionof999,000ounces,justshortof1million,andall-insustainingcostsat$603perounce.Anditbenefitedfromimprovedundergroundproductivityandhigheropen-pitgradesandrecoveries.

Theguidancethisyear,we're900,000to1millionounces,andanall-insustainingcostof$640to$710perouncewhichincludesabout$250millionouncesofrefractoryoilthatwillbeprocessedatGoldstrike.Thehigherinspectedcostin2016reflectingincreasedsustainingcapitalrelatedtowatermanagementprojectsandtimingofopenpitwholetruckmaintenance.

BestinclassinitiativesforreferencecurrentlyunderwayatCortezincludeoptimizingshiftingchangesequencing,revampingfleetmaintenance,improvingundergroundcapitalefficiency,installingadvancedprocesscontrols,andstrengtheninggeometalurgicalmodeling.We'llprovideupdatesonplansfortheexpansionofundergroundminingofCortezattheInvestorDayaswellastheresultsoftheprefeasibilitystudyfortheGoldrushprojectlocatedwithintheCortezdistrict.

MovingacrosstoGoldstrike,productionat2015wasinlinewithexpectationsat1.1millionouncesbutall-insustainingcostsof$650perouncecameinwellbelowguidanceonimprovedundergroundminingcosts,optimized[holdage]roots,andlowercontractedcosts.ThroughputandrecoveriesfromournewandinnovativeTCMcircuit,whichdoesn'tusecyanideasyouknow,continuestoimprovewithongoingadjustments,inlinewithexpectationsfortherampupofanewtechnology.Stillworktogoyet,butwe'recontentwiththeprogressatthispoint.

Weexpecttoachievedesignthroughputof11,000tonnesperdaybythethirdquarterof2016.ProductionatGoldstrikethisyearisexpectedbesimilartolastyear,buthigherall-insustainingcostsof$780to$850perounce,reflectingincreasedsustainingcapitalforfailingsexpansion,watermanagement,andtimingofundergroundequipmentreplacements.

Bestinclassinitiativesin2016,ourfocusonsupplychaincostreductions,optimizationofArturopithauling,maintenanceimprovements,andoverallequipmenteffectivenessofshovelsandtrucks.Weexpectinitialproductionofabout140,000ouncesof60%sharefromSouthArturointhesecondhalfofthisyear.

AndmovingacrosstoPV,ourshareoftheproductionin2015was572,000ounces,atall-onsustainingcostsof$597perounce.ProductionwasimpactedinQ4bythefailureoftwooxygenplantmotorsinNovemberwhichaffected[autoplay]andthroughput.Youshouldallbeaware.

Intermsofsolvingthis,we'requiteproudofhowournewdecentralizedmodelworkedwelltoresolveitquickly,withfullproductivecapacityrestoredinlateJanuarywithonerepairedmotorbackinoperationsupportedbyportablecompressors.Thesecondmotorhasnowalsobeenreinstalled.




Ourshareofproductionin2016isforecasttobe600,000to650,000ounces,atall-insustainingcostsof$570to$620perounce.Themine[broughtall]autoclavemaintenanceactivityinDecembertomitigatetheimpactoftheunscheduleddowntime,andiscurrentlytreatinghighergradeoilinthefirstquarterwhichisnotprocessedthatmonth.

Bestinclassinitiativesthisyeararefocusedonimprovingefficiencyandthroughputthroughallblendingoptimization,laborintensitymeasures,increasingautoclaveavailability,andoptimizationofmaintenanceactivity.

MovingtoLagunas,LagunasNortemineproduced560,000ounces,astheall-insustainingcostof$509perouncein2015.Costswerelowerthanexpectedprimarilyonlowersustainingcapitalspending,fuelandlaborcostsavings,anddecreaseinroyaltyexpenses.Productionin2016isexpectedtobe410,000ouncesto450,000ounces,anall-insustainingcostof$570to$640perounce.Lowerproductionandhighercostslargelyreflectthetransitiontosulfideoilandlowerexpectedrecoveryrates.

Bestinclassinitiativestherearefocusedonstrengtheningfront-linemanagement,increasinglaborproductivity,andcapitalefficiency,outsourcingopportunities,increasedcarbonand[columnplant]performance,andreducingcostsassociatedwithexternalservicesandconsumables.AtourInvestorDayonFebruary26,we'llprovideanupdateonplansfortheadditionatrefractoryoilprocessingcircuitatLagunasNortewhichcouldsignificantlyextendthelifeofthemine.

NowmovingtoVeladero,ifperformedinlinewithexpectationsin2015butbetterthanallexpectedall-insustainingcostsof$946perounce.It'sexpectedtocontribute630,000to690,000ouncesinto2016,atalowerall-insustainingcostof$830to$900anounceonhigher-than-expectedproductionandsalesvolumes.

Theincreasedproductionofthisyear--goodnews--reflectsminingofhighergrades,improvedminingproductivity,andimprovedinventory,drawndownrelativeto2015throughbetteroperationalmanagementoftheleachpad.Alsoexpectedtobenefitfromthegovernment'sdecisiontoliftimportrestrictionsandeliminatethe5%exportduty,bothofwhichwereannouncedinthelate2015.BestinclassworkatVeladeroin2016isfocusedoncostreductionsrelatedtosupplychainandinventorymanagement,bettermaintenancepractices,miningproductivity,andenergyefficiency.

AcrosstoTurquoiseRidge,thatminesignificantlyoutperformedourexpectationsin2015,withourshareofproductionup270,000ouncesatanall-insustainingcostof$742perounce.Theminebenefitedfromincreasedproductivityandthroughput,drivenbyimprovedequipmentavailabilityandchangeinminingmethodstofullymechanizethetopcuts.Theseproductivityimprovementsandothersareexpectedtocontinuein2016allowingforgreaterminingflexibilityandreliability.

Productionthisyearisexpectedbeinlinewith2015levelsandslightlyhigherall-insustainingcostof$770to$850perouncerelatedtoincreasedsustainingcapitalfromthewatertreatmentplantandtimingofequipmentreplacements.Bestinclassinitiativesfor2016willfocusonoperationalefficiencies,economicoptimizationofminedesign,andavaluationofpotentialalternativerockbreakingmethods.Aswithourotherprojects,wewillprovideanupdateonplanstoexpandundergroundminingatTurquoiseRidgeatourInvestorDay.

Nowturningtocopper.Productionguidancefor370millionpoundsto410millionpoundsreflectsourreduced50%ownershipatZaldivar,butdoesn'tincludeproductionfromJabalSayidmine,whichstartedupaheadofscheduleinDecemberoflastyear.Astheminewillstillbeinthemillcommissioningphaseforpartoftheyear.Our2016all-insustainingcostguidancehasbeenreducedto$205to$235perpoundtoreflectcurrencybenefitsandimprovecostsatLumwana.

IwillnowturnitovertoBasietocoverourexplorationandreserveupdate.




BasieMaree (CTO):

ThanksRichard.

Our(inaudible)wasprofitableandsustainableinlong-termproduction.Thiswe'llachievethrougharenewedfocusinourmineearningsprogramsaimedattimelyresourceconversiontoenhanceourlong-termmineplanswhilemaintainingour[minimum]pastnumberofyearsinourexcitingglobalexplorationprograms.

Wealsohaveveryactiveprojectsstudyandexecutionprogramsunderwaytoensurenewprojectsidentifiedforourdrillingcampaignsonlineasperourdisciplineprojectcapitalguidelines.OureffortscontinuetofocusonourgoalregionsofNevadaandtheAndeanregionofSouthAmerica.

Approximately80%ofthe2016totalexplorationbudgetofbetween$125millionand$155millionwasallocatedtotheseregionsandstrikesabalancebetweennearminedrillingandglobalexplorationprograms.WithrespecttonearmineexplorationorMinEx,andinlinewithourrigorousapproachtocapitalallocationweareapplyingincreasedfocustohigherreturnsandlowerriskfor[onfield]opportunities.

OurMinExprogramswillalsobenefitfromstandardizingitsapproachwithourveryeffectivegloballinkssystemcalledBXXthathasyieldeddiscoverieslikeLagunasNorte,Goldrush,andAlturas.WeseestrongpotentialtoaddreservesatHemlo,on[receptiveplans],atTurquoiseRidgeand[Pobre],andatotheroperatingsiteswhich(inaudible)inmoredetailattheInvestorDay.AbouthalfoftheglobalXbudgetisallocatedtoemergingdiscoverieslikeAlturas.Thereisalsoexcellentpotentialtodiscovernewdepositsin[imported]districts.ForexamplewearecurrentlyinstallingatargetknownasFourMilelocated1kilometernorthofGoldrush.

Thisareaisgeologicallysimilartothehighgrade[depots]anddeepstardepositsintheGoldstrikearea.EarlydrillinghasintersectedutilizationwellabovetheaveragegradeoftenmeasuredandintegratedresourceatGoldrush.AttheAlturasdiscoveryinChile,wehavereportedaninitialinferredresourceof5.5millionouncesofgold.

Ourfocusin2016willbetocontinueinfilldrillingandstepoutdrillingtoexpandtheresource.[Drill]to-datecontinuestoindicatethatthisdepositisgeologicallysimilartotheoxidemineralizationatVeladero.It'satanaveragegradeofabout1.25gramspertonne,and[tobeableto]reachthiswereveryfavorableaswell.

Respectedprojectstudies,weplantospendabout$50millionthisyeartoadvancethe[forming]projectwe'vebeenstudyingandwillnowalsoaddAlturasasa[firstkey]projectandwillcontinuetoconvertresourcestoreserveattheseprojectssuchaswe'vedoneatCortezandLagunasNorte.Thecurrentmetalpriceenvironmentalsopresentsnewopportunitiestogainaccesstoeffectiveexplorationprojectsthroughearningsandpartnerships.Evaluatingthesethird-partyopportunitieswillbeourfocusin2016.

Turningtoourreserves,wehaveestimatedthesefor2015yearendandbasedonatwotierpricingapproachusinggoldpriceassumptionsof$1000perounceuntil2020,and$1200perouncefrom2021onwards.Thiscomparesto2014whenweusedtheflatprice--thegoldpriceof$1100perounce.

Thetwo-tierapproachaspartofouroverallfocusonannouncingmineralresourcemanagementtocreateaveryshort-termandlong-termvalueforallofourmines,whichisreflected--reflectionofouremphasisonproducingprofitableounces.Thisreflectsourcommitmentthatanynewinvestmentwemakemustbecapableofgeneratinga15%returnoninvestedcapital.

Asofyear-end2015,ourprovenandprobablereservesmodeledatnearly92millionounces.After




depletion,weadded8.8millionouncesthroughdrillingandcostreductionsandthechangeinprice.

After5.1millionouncesaddedfromdrillingandcostreductions,thelargestadditionswere3.5millionouncesatVeladero,mainlyatthe[QuatrosEscas]area,2.5millionouncesconvertedtoreservesinDeepSouthzoneatCortez,and1.6millionouncesconvertedtoreservesintheDeepSouthzonesatLagunasNorte.WealsoaddedouncesatKCGM,[Ochre],Hemlo,andPV.

Forourresourceestimation,weusedaslightlymoreconservativepriceassumptionof$1300perouncecomparedto$1400perouncein2014.Asofyear-end2015,our[measured]indicatedresourcewas79.1millionounces.Ofthis,9millionouncesisattributabletothesaleofnon-coreassetsin2015.Wereplacednearlyallofthe8.8millionouncesconvertedtoreservesfordrillingandcostreductionsmostnotablyfromadditionsatLagunasNorte,PV,andCortez.

WealsoaddedouncesatVeladero,GoldenSunlight,and[Pobre].The[unfit]resourceof[22.4]millionouncesincludes5.5millionouncesatAlturasasmentionedearlier.

Ourprojectpipelinehassignificantnumberofopportunitiesforthefutureasyoucanseehere.Andwe'reprogressinganumberofprojectsthroughpre-feasibilityandfeasibilitystudies.Wehavesubstantiallychangedourapproachtoprojectdevelopmentinthelastyearandarenowfocusingonwhatwecallstartermineconcepts,wheretheprojectistocommenceasasmaller,low-riskoperationrequiringlowerinitialcapital,allowingforearlyprojectoptimizationwhichcanthenleadtoself-fundedexpansionsifjustified.

Weareonatightandrigorousreviewoftheeconomicsofeachsiteguideandarepreparedtoredirectoreventerminatetheprojectthroughasteadylifecycleshoulditnotmeetourtechnicalorfinancialrequirements.I[won'ttalktoused]projectontheslide,butsomehavereasontohavebeenimprovedby(inaudible)progresstothenextstage.ThegoalforusintheLagunasNortesulfidesprojectshavemovedintofeasibilityandCortezSouthwillgobeforethecommitteeveryshortly.

Alturasisintheexplorationphaseandisexpectedtohavethescopeandstudycompletedbytheendofthisyear.We'llprovidemoredetailonallofourprojectsnextweekattheInvestorDay.

OnPascua-Lama,our[tenpiece]suspensionplanwasapprovedbythegovernmentsofChileandArgentinalastyearandwillmovingtheprojectintodeepsuspension.Thishasenabledustosignificantlyreducecostsfor2016tobetween$18millionand$100millionfromabout$190millionthepreviousyear.Thesecostsaremainlyforwatermanagementaswellastheclose(inaudible)ontheArgentinaside.

Beyond2016,wewanttodecreasetheholdingcostsevenfurther.TheteamatPascua-Lamawillbefocusedondevelopinganoptimizedplanin2016andwillassessthespendwhenit'scomplete.Butwe'vebeenclearthattheprojectmustultimatelymeetour15%returnoninvestedcapitalhurdleratebeforewewillconsideranynewprojectorprogram.

IwillnowturnitovertoKelvinforhisconcludingremarks.


Thanks,Basie.

Inclosing,we'vetransformedBarrickoverthelastyearintoacompanythatisdistinguishedbyastrongpartnershipcultureandadecentralizedstructurewithownermanagerswhoaredeeplyinvestedinthesuccessofthecompany.Wecontinuetobesharplyfocusedoneffectivecapitalmanagementandapplyrigorousinvestmentcriteria.

We'llmaintainstrongliquiditygoingforwardbyensuringwehaveaprudentcashpositionandby




continuingtoreduceourdebt.We'refortunatetohavesomeofthebestassetsintheindustryandwewillmanagethemtodeliversuperiorreturnsthroughthecyclebycontinuingtodrivedowncostsandbyactiveportfoliomanagementthatretainsthebestassetsandthebestnoncoreassetsattherighttime.

Ourportfoliohasexcellentoptionalitywithabout140millionouncesinresourcesandundevelopedprojects,muchofwhichcanbeleveragedbyexistinginfrastructure.Weexpecttoaddtothisovertimegivenourtrackrecordofdiscoverieswhichwehavesuccessfullyconvertedintocashflow.Thisprovidesourshareholderswithexcitingupsideexposure.

There'sstillalotofheavyliftingtobedonebutwehavetherightfoundationandtherightteaminplacetodoit.Welookforwardtoprovidingmoredetailonourplansfor2016andbeyondatourInvestorDayonFebruary22.

Beforeclosing,Iwanttothankthemanyinvestors,somelong-standing,somenewertotheBarrickstory,whoprovideduswithvaluablefeedbackin2015.We'regratefulforyoursupport,andweintendtoearnitevenmore.

Thatconcludesourpresentationfortoday.Operator,wewouldnowbehappytotakequestions.Thankyou.

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

AndrewQuailfromGoldmanSachs.

AndrewQuail(Analyst-GoldmanSachs):

Morning,Kelvinandteam.Congratulationsonaverystrongquarterandaverysolid2015.Acoupleofquestions.FirstoneisonCapEx.

Youguyshavegivenguidancein2016of1.35to1.65.Takingamid-point,it'sprettymuchinlinewith2015,givenyour--Iwouldcallrobustandsolidthree-yearguidance,ofproductioncosts,what--canwesortofmodel,whatwouldweexpectforsayCapExpost2016?


Thanks,Andrew.Thanksforyournicecommentsregardingtheyear.RegardingCapExbeenbeyond,guidancewegave-IwillturntoShaunsohecangivedirectioninwherehethinkswe'llbe.

ShaunUsmar (CFO):

Hi.We'llbecoveringsomeofthismoreonourInvestorDay.Andofcoursenextweek,butdirectionallywhenyoustartlookingatparticularlyoursustainingcapitalandthedollarbalancespaces,particularlywithintherangethatyouwouldseeoverthosefewyearsiswhatwewouldbeexpecting.ButletmehanditovertoRichardwhoIthinkcancommentalsoonsomeoftheseparts.


Hi,Andrew.Nicetohearfromyou.Onthecapitalgoingforward,we'vegotaplan,whichShaun'soutlinedcomingupintheInvestorDay.Thebestinclassprocesswillalso--itwillbescrubbingallthesethingsaswegoforward.

Someoftheplanswe'vegotinplacetoday--thegeneralmanagersareworkingonandtheyare




reviewingwe'lladjustaswe'regoingfor.It'snotjustthecostofwhatwe'redoing,becausethat'sobviouslyallbeingpusheddownaswenegotiatewithnewsuppliers,contractorsandwhatnot.

Butit'salsogoingtobetheplantodothe[investment]itself.ExpectalittlebitofDarwinism,andIwouldsayatthispointexpectitonthedownsideratherthantheupside.


Right.


Okay.


Youhadasecondquestion,Andrew?


Yes.AndIsupposemysecondoneisoncashanddebt.Imeanyouguysaredoingreallygoodjoboverthelast12monthsandnearly$2billiontarget.Istherealevelofcashthatyouguysarecomfortablewithonthebalancesheet?Orisit$2billion,orisitmoreorisitless?

Istheresomethingthatyouguyssortofwon'tgopast?Becauseyoutalkaboutpayingdowndebt.I'mtryingtoget--isitnetdebt?Orisitdebt?Again,justtryingtodecipherbetweencashandnetdebt.


Sure.Thanks,Andrew.$1.5billionto$2billionisprobablyanumberwe'recomfortablewith.Shaun,doyouwanttoaddalittlemoredetail?

ShaunUsmar (CFO):

Icanappreciatelastyearandgiventhevolatilityandpricing.Wearefocusingonthethingsthatweknowcontrolandwecandeliver.Sothinkofthat$2billionasaminimumtargetoftotaldebtreductionfortheyearahead.

Butthathastobeseenincomplementwiththeimprovementstocontinuetogeneratecashflow.Youknowwetalkedaboutitwithyoubefore,butasyouseewe'veproducedthefewest[answers]Iguessinmanyayear,butmorecashthanwehave,aswellandthatwillcontinue.


That'sitforme.Thanksverymuchguys.


Thanks,Andrew.

Operator :

JohnBridgesfromJPMorgan.

JohnBridges (Analyst-JPMorganl):

Hi.Andgoodmorning,everybody.Congratulationsontheresultsfromyourcurrentoperations.You've




gotthesefourreportswhicharecomingthrough.Butwhenarewegoingtoseethosethings?Becauseweneedtoknowwhatsortofcapitalyou'regoingtobespendinglaterinthisdecadetocontinuethisperformance.


John,thethreeprefeasibilitystudiesandthe(inaudible)onTurquoise--wearegoingtobepresentingthosedetailsnextweekattheInvestorDay.


Okay.Andthedetailedstudies,willtheycomeoutconcurrentlyorafterwards?


Following.


Following.Okay.AndthenItakeyourpointaboutleavinglowergradematerialintheundergroundminesandthat'shelpingyouwithyourcoststructure,butthenaboutathirdofyourreservesissittingatopenpitmineswherethat'snotsoeasy.

Whenyouarepushingyour--thegoldpriceto$1000foryourreservecalculationfor2016,thatpresumablyispushingupyourstripratiosandhowisthatbeingshowninyouraccounting?


Basie?

BasieMaree (CTO):

For2016we'renotreleasingamajorincreaseinstrippingratiosonourmines.Theguidancetoalowerreservepriceandminingguidance,asyousay,isreallyfocusedonbringingthebestratesforward.Ithinkit'sbeenfocusedonthisforquiteafewyearsanditreallyhasn'tshownupinourreserves(inaudible)andourminingstripping.Soatthispointintimeit'snotanissueforus.

ShaunUsmar (CFO):

AndJohnyouwon'treallyseethatinouraccountingforthefuture.


Okay.MaybewecanaskaboutthatonMonday.Thanksalot,guys.Goodluck.


Yes,thanksJohn.

Operator :

StephenWalkerfromRBCCapital.

StephenWalker (Analyst-RBCCapital):

Great.Thankyouandgoodmorning.Justtwoquestions,firstforShaun.Wetalkedinthepastaboutfreeingupworkingcapitalwiththesaleofnon-coreassetsandthenjustyouknowhighermanagementof




capitalallocationtotheminingassets.

Canyougiveusanideaofwhatwassqueezedinthewayofcashoutofworkingcapitalin2015andisthereanymoretobegainedthroughworkingcapitalmanagementin2016?

ShaunUsmar (CFO):

Stephen,yes,it'salwaysanimportantthemeasyoupointout,andforusforlastyear,wesetabouta40%reductioninworkingcapitalandabigreductionin[source]andspaceinventoryinparticular,andwe'llcontinuetofocusonthis.

I'dliketogetRichardtocommentonsomeworkthatwedoparticularlyonthesupplyside.JustonethingwhichIthinkyou'll--maybeI'lltouchonaswegothroughthisis--withourlifeofmineplanning,we'velookedexplicitlyatthestockpilesandasyouknowthere'sreallyonlytwolargesourcesofstockpilesinourbalancesheetandthat'sprimarily,obviouslyinGoldstrike,andatPV.Sothosewillbeandareincludedintheplansthatweworkedout.Richard,anythingyouwanttoadd?


ItkindofdependsonwhatShaunwassaying.AgainImayhandoverthistoAndyandMatttotalkalittlebitaboutNevadaandthosestockpilesandthensupplychainmanagement.ButtohighlightwhatShaunhasoutlinedwe'vegotournewsupplychainboss,MelMiller,basedoutofHendersoninNevadathat'sbeendrivingdownShaun'soutlineanyunnecessarilysuppliesorobsoleteinventory.

There'sbeenverygoodworkdoneinVeladeroinArgentina,obviouslyRickBakerisonthecall,andhecantalktothat.Returntostockpilemanagement,thereissomelimitationsinNevadacourtesyofthenatureoftheoil,whichmeansit'saroundabout$1billionworth.IsthatrightShaun?StockpilessittinginNevada?

Andforthat,actually,IwillhandovertoMattGiliandAndyColetotalkalittlebitaboutwhatthey'redoingforthatdownthere.Matt,overtoyou.

MattGili(ExecutiveGeneralManager,Cortez):

Allright.ThankyouRichard,andthankyouStephen.Sowe'retalkingaboutthestockpilesthatexistatGoldstrikeandremembering,too,thatthere'sthosedepositsatGoldstrikeinCortezarebothre-factoryinnature.

ThefromtheCortezstandpoint,2016we'llseeanoverallreductioninstockpilesbecauseoftheincreasedamountofoxidematerialandincreasingthethroughputthroughtheoxideplant.Andy,regardingGoldstrike?

AndyCole (ExecutiveDirector,Goldstrike):

AsfarasGoldstrikestockpiles,thosearethoselong-term,lower-gradestockpilesarereallythereasonwhywepushforwardwiththenewtechnologyofTCM.AndasTCMcomesupandreachesfullcapacityoverthelifeofmineproject,wewillcontinuetoworkdownthosestockpiles.


ThanksAndy,thanksMatt.Andjustforoneotherguyonthecall,RickBaker,couldyoutalkalittleaboutyourworkingcapitalmanagementdownthereatVeladero?Iknowyoudoingalotonthataswell.

RickBaker (ExecutiveGeneralManager,Veladero):




Yes,thanksRichard.Asfarassupplychainmanagement,wemadesignificantimprovementsinthatin2015,andwe'retargetingfurtherreductionsin2016,bothininventoryandonoursupply-side.


SoStephen,hopefullythatanswersyourquestion.Youhadanotherquestionaswell?


Yes,thankyouforthecomprehensiveanswer.JustonPuebloViejo,theeffectivetaxratethisyearis57%Ibelievewasmentioned,andifI'mnotmistaken,thedealwiththegovernmentoftheDominicanRepublicforPVhadagreateramountofcashin2013to2016period.

Twoquestions,whatisexpectedtaxratein2017,andpresumablyitwillbelowerforthenextcoupleofyears?Andsecondly,hastherebeenanydiscussionswiththegovernmentoftheDominicanRepublicwithrespecttotheexpiryoftheexistingagreementandpotentiallychangingofanyoftheterms?


Iwilltakethefirstpartandthesecondpartofthequestion,Stephen.Intermsoftheactualagreement,itdoesn'texpirein2017or2018.2017istheopportunitytorevisittheMRTcalculationforthepresentschedule.Thatagreementstaysinplace.

Wedohavetheabilityagainintermsoflookingatthe--afterthefirstfouryears,whattheMRTpaymentsarebasedonthepastpriorperiod.Intermsoftheeffectiverate,Shaun?

ShaunUsmar (CFO):

Yes,Stephenforguidancepurposeskeepingasimilarsortofrangethatwehavebeenexperiencingistheappropriatethingatthistime--forthistimebeing.Whatwe've--asIsaidinmypresentation,wedoseeagreaterimpactbecauseofthoseearnings,particularlyatlowprices.Wecontinuetolookatopportunitiesforthistaxrateingeneralintheportfolio.Forthetimebeingthat'swhatIwouldbeusing.


ThankyouKelvin,andthankyouShaun.


Thanks.

Operator :

GregBarnesfromTDSecurities.

GregBarnes (Analyst-TDSecurities):

Yes,thankyou.Richard,the$700perounceonsustainingtarget,that'saveryaggressivenumber.Isthatcomingmorefromsustainingcapitalcomingdownoroperatingcostscomingdown?Canyoukindofgiveussomesenseofthat?


Yes,hiGreg.Thanksforthequestion.Andyes,itisanaggressivetarget.We'reveryconfidentwe'regoingtohit.MichelleAsh,who'scomeonintoreviewwhatwe'vebeendoinguptonowintermsofthebestinclass,asI'veoutlinedinthebriefearlyonwe'vedoneinconjunctionwiththeminesandbeenasortof




teameffortacrossthewayhere.

We'veidentifiedthisyearalreadyacouple$100millionworthofsavingsthatweregoingoff,andthat'sactuallynotintermsofcapitaldeferment.That'sactuallystrippingoutrealsustainablecosts.Andaswelookforwardthroughtonextyear,Iknowacoupleprogramsintheveryearlydaysthatwe'relookingat,howwe'regoingtobeadjustingthingsthroughthatnextsortof48monthperiod,identifyanadditional$300million.Thisisbeingdonewiththeminemanagers.

SowecangiveyousortoftextureontheIRDayonspecificsofeachofthese.Buttherehasbeenquitearemarkableamountofopportunityidentifiedthroughthisprocess.Andallifit'scomefrombottomup.YougottorememberGreg,ayearandabitagowehadtheregionsittingontopoftheseminesandthingswererunslightlydifferently.

AndsoasresultofgettingAndy,Matt,andtheothers,wecansitandsayright--let'shaveareallygoodlookathowwecanstripoutanywastethatwe'vegotintermsofoperatingefficiencies.Adjusthowwe'reorganized,bringinnewsystems,andthenhaveatit.

They'veactuallycomeupwithsomeprettyremarkableopportunitiesthemselves,andastheresultsofcentraladviceaswellassupportfromMichelle,Basie,andotherareprovidingthatfromtopdown.Weareactuallyseeingsomereallyremarkablechangesalreadythisyear,alotofwhichwillcomeoutontheIRDay.

Fundamentally,Greg,myviewisit'saggressivebutI'mlookingatawholeseriesofthingsthatareachievable,andtheonlythingthatwillstopithappening,really,tobeblunt,isafailureofleadershipeitherattheminesiteleveloratourlevelwhichclearlywe'renotreallythatinterestedintolerating.Sofrankly,it'slookingprettygood.


Okay.It'sallonyouthen,Richard.(laughter)Justafollow-up.YouhadareallystrongQ4,andlostsomemomentumontheproductionside.Lastyearforecastingtoa45,55[awaiting]secondhalf.Arewegoingtoseeareverseofthatthisyearsoyouwillseestrongerproductionthefirsthalfandweakerinthesecondhalf?


It'sreasonablybalanced,infact,Greg,throughoutthequartersIthinkwe'reaboutmaybe100,000ouncesorsohigherinQ4butthisyearasopposedtolastyearit'sroughlysmooththroughthequarters.


Okay.

ShaunUsmar (CFO):

Ithinkyouwouldseeabouthalfofthevolumeeffectbeingsortofmoreback-endweighted.Butit'salotsmoother.


WhatwasthatShaun?Sorry.

ShaunUsmar (CFO):

Isaidit'salotsmootherbutit'sabouthalfofvolumeeffectsweightedtowardsthesecondhalfoftheyear.




Q2isgoingtobeprobablyourweakestquarter.


Okay.Thankyou.

Operator :

DavidHaughtonfromCIBC.

DavidHaughton (Analyst-CIBC):

Goodmorning,Kelvin,Shaun,Richard,andBasie.Acouplequestions.Firstlyalittlebitofclarityonyourexpectationof10%,15%returnoninvestedcapitalthroughthe[metal]cycle.Isthatapplicabletonewprojectsorisityourambitiontoputthatmeasureagainstyourexistingoperations?


The15%hurdleisonnewinvestments,David,andeventuallytheintentisitwillbe10%to15%throughthecycle.


OkayandthroughthecycleIpresumeyoumeanscenariotestingup-and-downfromwherewearetoday?Isthatareasonablewaytothinkaboutit?

ShaunUsmar (CFO):

David,Ithinkitis.Ifyoualsolookatourscorecard,it'sreinforcedthroughthat.Ithinkit'sweteston[pricefalls]there'snotalotwecandoperhapsaboutsomeofthesamecapital.

Wecertainlymakesurewegoforinvestment,ormeetthosehurdlerates,andit'srisk-appropriateforourneeds.Andthenwithdrivingdowncostsandthethingswe'vebeenfocusingonandcontinuetodo,obviouslywe'relookingonago-forwardbasisgeneratethosesortsofreturnsthroughthecycle.


Rightagain.Shiftingtooperationalquestions.First(inaudible)Richardwassayingit'sinproductionnow.Ididn'tseethenumbersontheguidance.What'srequiredforittoberunningthroughtheP&Lforyouguys?


Icancomment.WearegoingthroughtherampupphasenowatJStargetingthe100millionpoundsproductionin2017.Butaswe'regoingthroughtherampupstagethisyear,wedidn'tguidespecificallyonJS,David.Anythingtoadd,Richard?


No,andatthemomenttoactuallygetitsortof[registered],there'sacouplemoreagreementsrequiredwithourpartnerinMa'adenandthelocalgovernmenttoactuallyensurethatallthepermitsareinplacetodeclarethatproductionisvalid.Soatthemomentwe'rebasicallyattheendofoursortofcommissioningphase,really.Andthenacoupleofmoresortofpermittinglegallyagreementsareinplaceanditwillgostraightto--asyousaidintothe--

ShaunUsmar (CFO):




AndattheendofQ1,maybeQ2commercialproduction,butwe'llbeclearonlater.


Allright.Sowemayseeitcomingthroughatleastinthesecondhalfoftheyear,butjustwithsomeuncertaintyoftimeyou'vejustgivenyourselfsomebreathingspace.

ShaunUsmar (CFO):

Yes.You'reonit.


OkayovertoTCM,sothisisoneofyournewerprojectscomingupandrunning,I'mwonderingifyoucouldgivealittlebitacommentaryastowhatyouareseeingthere?Richardyousaidit'sgoingtogetuptocapacity11,000tonnesadaybythethirdquarter.Ijustwonderwhatyou'reseeingsofar?

Isitextractingthegoldtothelevelofrecoverythatyou'veanticipated?Andwhatsortoftrajectorycanweseeitonthroughtofullproduction?


Davidwe'vegotAndyColeonthelineatGoldstrike.Andy,doyouwanttofieldthatplease?


Yes.Thankyou,Kelvin.David,andwe'llbecoveringmoreofthisonInvestorDayaswell.Butyouknow,firstaswithanynewconstruction,youdoseesomedesigndefectsandengineeringchallenges.Sowe'vebeenworkingthroughthatoverthecourseoftheyeartoeliminatesomeofthosemechanicalanddesigndefects.

Asfarasoverall,sothat'shelpingusrampupthetonnageandgettingthetonnageupthere.Becauseitisanewtechnologyandeventhoughweranlotsofpilotplantworkandhadaprettygoodunderstandingofthechemistryfromthelabandfromthosepilotplantdemonstrations,weareseeingsomedifferences,youknowinthefull-scalecommercialoperation.

Sowe'relearningsomeofthosenuances.Soourfocusrightnowisreallyunderstandingandoptimizing.Andourexpectation,asRichardmentionedearlier,isyouknow,we'vehadaprettysteadyincrease,wehitcommercialproductioninthethirdquarterlastyear.

We'reuptoover80%capacitybyyear-end.Wecontinuetoexpectthatgoup--continuetogoupthroughthesecondquarterofthisyear.We'reatfullcapacitythisyearorbythethirdquarterofthisyear.

Recoveryisfollowingalittlebit.Butweexpecttherecoveriesaredownabout8%or10%wherewearepredicting,hadpredicted,andhopetobeagainbythesecondhalfofthisyearmoreinlinewithourpredictedexpectations.


Andmyrecollectionofthoseexpectationswas85%metallurgyrecovery?Isthatcorrect?


It'sreallydependentuponthegradethat'srunningthroughthefacility.Youknow,atthispointintimewe'rerunningthelowergrade,longertermstockpilesasIreferencedearlier,andsothosegradesarea




littlebitlower.

Onthematerialthat'sgoingthroughtheplantrightnow,wepredictitshouldbearound70%inthatneighborhood.Sowe'reabitlowerthanthat.


Righty-oh.Thanks,Andy.


ThanksDavid.

Operator :

JorgeBeristainfromDeutscheBank.

JorgeBeristain (Analyst-DeutscheBank):

Hi,guys.JorgefromDB.IguessmyfirstquestionisforShaun.I'mnotsureifImisheardyou,butdidyousaythatyourcorporateeffectivetaxratecouldbeashighas133%undera$1200goldassumption,andwasthatfortheentirecorporateorjustforPV?Ijustwantedtoclarifythat.

ShaunUsmar (CFO):

Thanks,andJorge,youdidmishearme.Iwasn'tveryclearonthat.Luckily,notat$1200--it'sgoingtobeover$1100anounce,sothat50%to55%rangewouldbeappropriate.Whatwestartseeingatabout$1000anounce,asImentionedinthepresentation,isthat133%orsothatyoureferenced.

That'sapointwherethe--you'vegotaverylow-costoperationwithPVatahigheffectiveratesoithasagreaterweighting,we'vegotlossesintheotherpartoftheportfolio.Thenyou'vegotnon-deductibleexpensesfromPascua-Lamaandotherareasthatcontributetothatsortofcalculation.


Sogotit.It'skindofaregressivetax,notaprogressivetax.Ijustwantedtomakesurethatifwedostarttomodelspotgoldwe'renotnippedinthebudbyahigherthanexpectedtaxrate.

ShaunUsmar (CFO):

Smart.


TheotherquestionIhadwasjustmaybeonhowyouguysthinkaboutyourapplication--aconsistentapplicationofyourmetalsmethodology?Obviously,theworldisbecomingveryconfusingwitheverygoldcompanychoosingdifferentshort-andlong-termgoldassumptions,andIgetthatyouguysarebeingconservativeatadiscounttospot.

ButthenIlookacrosstoyourcopperoperationswhereyou'restillholdingfastatabout275coppershort-termand$3long-term,significantpremiumtospot.Socouldyoujustwalkmethroughwhyyou'retreatingcopperdifferentlythangold?Andcouldyousortofupdateusastoarewegoingtoexpectmorewrite-downsatyearend2016ifwe'restillina$2copperworldbythen?

ShaunUsmar (CFO):

Justtobeclear.We'renotusing$2.75.We'reusing$2.00.Ifyoulookthroughourmaterial,youshould




findthatitdoesrampuptoaround$3overafive-yearperiod.

Butwe'renot--we'reusingasimilarapproachwhichwethinkisappropriate,notconservativebutappropriateinthisenvironment.


I'msorry.Imusthavemisreadsomewhereinallthefootnotes.IthoughtIsawaround$2.75foryourreserves.That'swhatIwastalkingabout,reserves.

ShaunUsmar (CFO):

We'llcontinuetoreviseandtolookatthis.Westresstestourportfolios,weworkthroughthe74planningandevaluationpurposes,theprice(inaudible).


Okay.IguessIwillseeyouguysnextweekinNewYork.Thankyou.


Thankyouverymuch.Atthispoint,Operator,I'dliketothankeverybodyforjoiningusonthecall.

Iappreciateeverybody'sparticipationandwelookreallyforwardtospeakingwithmanyofyouagainatourInvestorDaynextweek.Andofcourseupdatingeverybodyonourprogressagainstourtargetsaswemovethroughtheyear.So,thankyouverymuchagainforjoiningthecall.

Operator :

Thisconcludestoday'sconferencecall.

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