Barrick Gold (ABX) Earnings Report: Q3 2015 … · The following Barrick Gold conference call took place on October 29, 2015 ... to use the $1 billion in proceeds from the sale of

CompanyName:BarrickGoldCorpCompanyTicker:ABXSector:BasicMaterialsIndustry:Metals&Mining

EventDescription:Q32015EarningsCallMarketCapasofEventDate:8.79BPriceasofEventDate:7.82

©2014TheStreet,Inc.Al l R ightsReserved Page1of22

BarrickGold(ABX)EarningsReport:Q32015ConferenceCallTranscriptThefollowingBarrickGoldconferencecalltookplaceonOctober29,2015,09:30AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

SusanMuir;BarrickGold;VP-InvestorCommunicationsKelvinDushnisky;BarrickGold;PresidentShaunUsmar;BarrickGold;CFORichardWilliams;BarrickGold;COOAndyCole;BarrickGold;GeneralManager-GoldstrikeMattGili;BarrickGold;GeneralManager-CortezRichardWilliams;BarrickGold;COOBasieMaree;BarrickGold;CTOKelvinDushnisky;BarrickGold;PresidentRobertL.Krcmarov;BarrickGold;SVP-GlobalExplorationKevinThomson;BarrickGold;SeniorExecutiveVicePresident-StrategicMatters

OtherPart icipants

AndrewC.Quail;GoldmanSachs&Co.;AnalystGregBarnes;TDSecurities;AnalystStephenD.Walker;RBCDominionSecurities;AnalystAnitaSoni;CreditSuisseSecurities(Canada);AnalystAndrewKaip;BMOCapitalMarkets;AnalystDavidHaughton;CIBCWorldMarkets;AnalystPatrickT.J.Chidley;HSBCSecuritiesUSA;AnalystChrisTerry;DeutscheBank;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometotheBarrickGoldQ3resultsconferencecall.

(OperatorInstructions)

Asareminder,thisconferenceisbeingrecordedonOctober29,2015.

I'llnowturnthecallovertoMs.SusanMuir,VicePresidentInvestorCommunications.Please,goahead.

SusanMuir (VP-InvestorCommunications):

Thankyou.Goodmorning,everyone.

Beforewebegin,I'dliketopointoutwewillbemakingforward-lookingstatementsduringthecourseofthispresentation.

Thisslideincludesasummaryofthesignificantrisksandfactorsthatcouldaffectfutureoutcomesfor




Barrick.ForacompletediscussionoftheserisksandfactorspleaserefertoourmostrecentAIAFfiling.WiththatIwouldliketoturnitovertoourPresident,KelvinDushnisky.

KelvinDushnisky(President):

Thankyou,Susan,andgoodmorningtoeveryoneonthecall.Thankyouforjoiningus.I'mheretodaywithourChiefOperatingOfficer,RichardWilliams;ourChiefFinancialOfficer,ShaunUsmar;andourChiefTechnicalOfficer,BasieMaree.

ThisisthefirstearningscallforRichardandBasieintheirnewpositions.However,bothofthemhavebeenplayingcriticalrolesattheCompanyforsometime.

Richardhasbeendrivingmanyoftheimportantorganizationalchangeswe'vemadeoverthelastyear,someofwhichhewillelaborateontoday.Basieisourseniortechnicalleaderandplaysakeyroleinadvisingandsupportingouroperationalteams.

Andaspartofourdecentralizedmodel,you'vealsoheardusspeakabouthowweareadvancingtheroleofourminegeneralmanagersandourcountryexecutivedirectorstothatoftruebusinessowners.I'mpleasedtointroduceyoutotwoofthemwhoareherewithustoday:AndyCole,GeneralManagerofGoldstrike,andMattGili,GeneralManagerofCortez.

Barrickhasalwayshadareputationforstrongtechnicalandoperatingtalent,andsotodaywewantedyoutohavetheopportunitytohearfromtwoofourbest.BeforeIgoon,IwouldliketowelcomeAngelaParrtoBarrick.

SheisournewVicePresidentofInvestorRelationsandwillworkcloselywithSusanMuir,whowasrecentlyappointedVicePresidentofInvestorCommunications.AngelahasastrongbackgroundinIRatanumberofUKandCanadian-basedminingcompanies,andwe'reexcitedtohaveheronboard.

Weknowshe'llmakeagreatcontributiontotheCompany.I'mpleasedtoreportthatwehadaverystrongthirdquarter,andwecontinuedtodeliveronourkeycommitmentsfortheyear.

Butbeforewegetintothefinancialandoperatingdetails,Iwouldliketotalkforamomentabouthowwe'redrivingvalueforourowners.Wehaveonesimpleoverridingobjective,tocreateshareholdervaluebygrowingfreecashflowpershare.

Andwe'vereallystartedtodeliver,withtwoconsecutivequartersofpositivefreecashflow.Wearealow-costproducerandwe'renotdoneyet.Youcanexpectustobuildonthecostandproductivityimprovementswe'veachievedthisyear.

Ourcapitalallocationdecisionsaregovernedbystrictdisciplineandclearrequirementsforallinvestments,includinga15%hurdlerate,andwewillnotwaveronthis.WearerunningtheCompanywithfinancialprudence.

Thismeanslivingwithinourmeansandmakingsmartfinancialdecisions,whilepreservingtheentrepreneurialspiritthathasalwaysdefinedBarrick.Ourtechnicalexpertiseissecondtonone,andyoucanseethatintheuseofgroundbreakingtechnologiesthatunlockvalueforourshareholders.

We'realsotalkingaboutbeingobsessedwithtalent.AttractingtoptalenttoBarrickanddevelopingourpeopleisabsolutelycentraltooursuccess.Ourpartnershipculturemeansthatweareownersinthebusiness,withanemphasisontrustandtransparency.

Overthepastyear,we'vereshapedandfocusedourportfolio.Wenowhaveasmaller,higherqualityportfolio,underpinnedbyassetsthatdrivefreecashflowinourcoreregionsintheAmericas;assetswith




significantoptionalityfordeliveringgrowthinthecomingyears.

Andfinally,ourbalancesheetismuchstrongertodaythanwasayearago.OurultimateobjectiveistogetBarrickbackintoapositionoftruefinancialstrength,andwe'remakingsteadyprogress.It'salsobeenveryimportantforustobeclearaboutourprioritiesandtodoexactlywhatwesaidwewoulddo.

Wesetaggressivetargetsandweareseeingstrongexecutionacrossthebusinessasweworktoachievethem.I'mnotgoingtogothrougheverypointontheslide,butitshowshowwe'redeliveringonourcommitments.

Fromfreecashflowgrowthandcostreductionstoastrongerbalancesheetandamoreoptimizeportfolio,weareadvancingonourkeypriorities.Withthat,I'llaskShauntowalkyouthroughourstrongthree-quarterresults.

ShaunUsmar (CFO):

Thankyou,Kelvin,andgoodmorning,everyone.Wereportedadjustednetearningsof$131million,or$0.11pershareinthequarter.

Thenetlossof$264millionlargelyreflectstheimpactsof$476milliongoodwillimpairmentwhichwetookatZaldivar,andlowerrealizedgoldandcopperpricesaswellas$20millionmoreindepreciationcomparedtoayearago.

ThekeypointIwouldliketohighlightherewithourfinancialresultsisthatdespitethehigherdepreciationandlowerrealizedpriceof$1,125perounce,thiswas$160belowourrealizedpriceayearagoand$65lowerthan$1,190perounceinQ2.

Wegeneratedsignificantlyhigheradjustedearningsandfreecashflowcomparedtoboththosepriorperiods.ThisunderscoresthebenefitsofManagementaction,costreductions,andproductivityimprovements.

Anditreallytellsthestoryofhowwe'repositioningBarricktobecomeincreasinglycashflowgenerativeevenattheselowerprices.Withouttheseimprovements,ourpretaxadjustedearningswouldhavebeenabout$390millionlowerthanayearago,andabout$175millionlowerthanthesecondquarterbasedonthelowgoldandcopperprices.

AdjustedEBITDAof$942millionreflectsthesamefactorsimpactingthenetloss,partiallyoffsetbyanincreaseingoldsalesdespitethedivestitureofCowalandPorgerainQ3.Freecashflowof$866millionincludedthe$610millioninproceedsfromthesaleofPuebloViejosteam,whichwereceivedattheendofthequarter.

However,excludingthisamount,freecashflowimproveddramaticallyfrom$26millioninQ2to$256millionthisquarter,ornearlyninefold.Operationallyweproduced1.7millionounces,inlinewithourplan,andabetter-than-expectedall-insustainingcostof$771anounce,drivenmainlybylowercashcostsof$570perounceversus$589justayearago,andlowerminesitesustainingCapExof$342millioncomparedto$410millionayearago.

Copperproductionwas140millionpoundsatC1cashcostsof$1.53perpound,reflectingimprovedoperatingperformanceatLumwanaandtheaffectoftheweakerZambiankwacha.Inadditiontocostreductionsandproductivityimprovements,webenefitedfromlowerorepricesandfavorablecurrencymovementscomparedto2014.

Thiswasreflectedinourinitialguidancefortheyear,andwecontinuetoseeapositiveimpactflowingthroughourcosts.OurdirectminingcostsinQ3wereabout$30anouncelowerthaninthesamequarter




lastyearbeforetheeffectofourcurrencyandfuelhedgepositions.

Theyalsoreflectabout$15perounceofoverheadcostswhichwerenotpreviouslyincludedincashcosts,sowhicharenowallocatedtothesites.Soonanapples-to-applesbasis,excludingtheeffectofthechangeinourG&Areporting,directminingcostswouldhavebeenabout$65anounce,or$10lower.

Theselowerdirectminingcostsreflectthebenefitoflowercurrencyandlowerratesaswellasproductivityandcostimprovements.However,wedohavesomelegacyhedgesathigherrates,andfactoringthesein,thenetdecreaseyearoveryearisabout$45anounce,or8%.

WehavenoCanadiandollarhedgesafterthisyearandonly20%hedgedontheAustraliadollarnextyearwithnothinginplacebeyond.Ourorehedgeswilldeclinesignificantlystartingin2017anddropfurtherin2018.

Turningtoourbalancesheet,we'vemadestrongprogressagainstourtargettoreducedebtby$3billionin2015,andweexpecttomeetit.Subsequenttoquarterend,weused$1.1billionofour$3.3billioncashpositiontorepurchasesomeof2016notesandtocompletethetenderforsomemedium-termdebt.

Andasoftoday,werepaidatotalofabout$1.9billionthisyear.Buildingontheserepayments,weintendtousethe$1billioninproceedsfromthesaleof50%ofZaldivarandfreecashflowtowardsdebtreduction.

Wecontinuetoexpecttheresultofourtransactiontocloseinthefourthquarter.Wereducedtotaldebtby15%sofarthisyeartojustover$11billiononcompletionofthedebttenderyesterday.Andthishasconsiderablystrengthenedourliquidityposition.

Wenowhavelessthan$250millioninmaturitiesduebefore2018andabout$5.5billionforthe2018to2023period,andonly$100millionbetween2024and2032.About$5billionofourtotaldebtisverylongdated,maturingafter2032.

Overall,theassetsalesincurredapositiveandalongwithourstrongercashflowaredrivingimprovementsinourtotaldebt-to-EBITDAratio.Overtimeourobjectiveistoreduceittoalevelwhichwouldbeconsistentwithastronginvestment-graderating,2to2.5times.

Afterrepaying$3billiontotaldebtwillhavebeenreducedby23%tojustover$10billionasyousawinthepreviousslide.Weexpectannualpretaxinterestexpensetobereducedbyabout$140million.

Our$4billioncreditfacilityremainsfullyundrawn,andourconsolidatedtangiblenetworthhasimprovedto$6billionfrom$5.7billionlastquarter.Iwouldliketoprovidetheprogressupdatesonthe$2billionincashflowimprovementswearecommittingtoachievebytheendof2016.

Thisisrelativetoouroriginalinternalplansfor2015and2016,anditexcludesthedividendreductions.Theseimprovementsarecomingfromproductivitygainsandreductionsinoperatingexpense,capitalspending,corporatecosts,andworkingcapital.

Wehavenowbooked$1.8billion,or90%ofthistargetintoourplansforthebenefitofourrevampedandmorerobustlifeofmineplans:$400millionin2015and$1.4billionin2016.Ourfocusin2016willbeoncontinuingtodriveproductivityandsustainablecashflowimprovementswhilestrikingabalancewithidentifyingvalueaccretiveinvestmentsandgrowthoptionsfortheCompany.

We'veaddedtheworkingcapitalcomponentfornextyear,aswehavegivenourGMsspecifictargetstoreducesupplyinventoryandincreaseturnrates.Andtheyarealreadystartingtodeliveragainstthosetargets.




Thisworkisstrengtheningtheresilienceofourbusinessinalowergoldpriceenvironmentandpositioningustodeliversignificantlystrongermarginwhengoldpricesrecover.Hereistheproofofouractionsthisyear,andthepictureisprettycompelling.

Despitethemorethan$500dropinthegoldpricefromthreeyearsagoincludingthe$100declinejustinthelastyear,we'veturnedthecorneronfreecashflow.Tobreakevenin2012wewould'verequiredagoldpriceofmorethan$1,800perounce,morethan$1,500in2013,andnearly$1,300perouncefor2014.

Butwe'renowgeneratingfreecashflowat$1,100perounceandarefocusedonimprovingourbreakevenpricefurther.Atthesametime,ourall-insustainingcosthascomedownby16%overthisperiod.

I'dliketoacknowledgethetrulyexceptionaleffortsfromouroperating,finance,technicalsupport,andourlicensetooperateteamstomakethesenumbersareality,andtoreturnBarricktoamoreflexiblepositionthatsupportsourkeyobjectiveofgrowingfreecashflowpershare.Turningnowtoour2015guidance,wetightenedourproductionguidanceto6.1millionto6.3millionouncestoreflectlowerexpectedproductionfromAcacia.

AlthoughwehadabriefshutdownatthemomentatPorgeraduetolowwaterlevels,operationsareresumedandthiswillnotimpactourguidance.Wereducedourall-insustainingcostguidanceto$830to$870perouncefrom$840to$880andbroughtdownthetopendofourcashcostrangeto$625from$640perounce.

Ourcopperproductionguidanceisunchangedat480millionto520millionpounds,andC1costshavebeenreducedto$1.60to$1.85perpoundtoreflectcurrencybenefitsandimprovedcostsatLumwana.Aspartofourimprovedall-insustainingcostguidance,wehavenarrowedourminesitesustainingandoverallcapitalexpenditureguidancefortheyear,andnowexpecttotalCapExofabout$1.7billionversusouroriginalguidanceof$1.9billionto$2.2billion.

Weexpectabout30%higherdepreciationinthefourthquartercomparedtothethirdquarterprimarilyrelatedtoadrawdownininventorystockpilesatCortez,LagunasNorte,andGoldstrike,andhighexpectedsalesvolumesatPuebloViejo.Thiswasanticipatedandwillbringthefull-yeartotalinlinewithouroriginalguidancerangeof$240to$260perounce.Tocoverouroperatingresults,IwillturnitovertoRichard,ourChiefOperatingOfficer.

RichardWilliams (COO):

Thanks,Shaun.Goodmorning,everybody.Beforewegotooperatingresults,I'mjustgoingtotakeaminutetotellyouabouthowwearenowoperatingasacompanyandhowwe'redevelopingouroperations.Thedecentralizedmodelthatyou'veheardaboutiskeytoourimprovedperformancethisyear,butnotjustasacost-cuttingtool.

It'sakeypartoftransformingthelongway--thelong-termwayinwhichwe'reoperating.Whatyouseeontheleftontheslideinfrontofyouistheoldhierarchicalcommandandcontrolmodel,withoperationsrunbyregionalbusinessunitsreportingtoacentralchiefoperationalofficer.

Inthismodel,thisoldmodel,operationaldecisions,includedbusinessplans,happenedinofficesawayfromthemines.Informationandideaswerecontainedwithinfunctionaloroperationstovepipes,andtherewaslimitedsharingofideasbetweenthoseminesitesandthoseoperationalleaders.

Adaptabilitywassacrificedfororder,andtheabilitytodealwithvolatilityandchangewashighlyrestricted.Oneofthemajordrawbacksofthismodelisthatbadnewstooktolongtoarriveatthehead




office,bywhichtimethingshadbecomeworseorbecomedifficulttofix.

AnotheristhatresponsibilityforcreatingsolutionsrestedwithonlyafewpeopleatthetopoftheorganizationasopposedtousingthewholenetworkoftalentoftheCompany.Soinournewmodelweremovedtheregionalcorporatelayersofcommand,pusheddecision-makingandtechnicalexpertisedowntothesiteleaderswhereitisasclosetothesourceoftheproblemaspossible.

Theroleoftheheadofficeisreducedtofocusingonsettingstrategyandallocatingcapital,humanandfinancial,inwaysthatmaximizereturns.Butthistypicalofdecentralization,orwhatotherscallthedevolvedmodeleverywhere,isonlyhalfthestoryforwe'vedonemorethanthat.

We'vedonetwoothercriticalthingstoimproveouradaptabilityandoureffectiveness.Firstly,we'veimprovedthewaysthattheoperationsareled.

Idon'tmeanjustbyupgradingtalent,whichisobviouslywhatwe'relookingat,butbuildingoperationalleadershipteamsateachofthesitescomprisedoftheminegeneralmanagers,twoofwhomyouaregoingtohearoffromhere,executiveorinothercompaniesiscalledcountrydirectors,andfinanceleadersallworkingtogethertoensurethatdecisionsaremadetotakedueaccountoflicensedtooperateminingandfinancestraightcommercialneeds.Theyoperateasindependentbusinessleaders,withtheauthoritythatcomeswiththatandtheresponsibilitytoo.

Secondlyandcritically,we'vereplacetheoldhierarchywithatechnology-enablednetworktherebycreatingoneteamacrosstheCompany.Information,suchasprogressagainstplan,problemdescription,andsoonplusideasaresharedbyandwitheveryleadershipteamintheCompanyviatheweeklybusinessplanreview.

AvideoconferencethatlinkseveryoneintheCompanyandallthoseleadershipteamstogetherintoasingleinterconnectedmind,improvingideaflowacrosstheCompanyinwaysthatfaroutmatchtheoldsystem.Intermsofaccesstodebtswenowknowmorebyaccessingthewholeteam.

500brainsifyoulikearebetterthan10.Andspeed,wesolveproblemsandinnovatefaster;nobureaucracy.

Inthismodel,andjustasaslightreferencetomyself,I'mtheneighborofthatsystem,policinganddevelopingthecriticalprocessesandthebehaviorsthatensureinformationandresourcesareplacedwiththosethatneedthemostintherighttimeframe,ensuringthatweavoidthesilosorthebureaucracythatkillsefficiencyandadaptability,andjustasimportantly,ensuresthatwehavetherighttalenttomeetourstandardsoftransparency,collaboration,anddetermination.

Supportingthisprocessandmewithitaretwocriticaladvisoryteams,andtheybothreporttome.OneledbyBasieastheChiefTechnicalOfficer,describedwellbyKelvinearlier,andtheothernothere,PeterSinclair,istheChiefSustainabilityOfficeronthelicenseoperateside.

Bothprovidecriticaldecision-makingsupporttotheExecutiveswithcapitalallocationandtalentdecisions,andtotheoperationswiththeirproblem-solvingandplanningissuesattheirlevel.Alloftheseteams,includingthefinanceteamsclearlywithShaunandallofthoseinvolvedthere,operational,advisory,andexecutive,worktogethertomaximizethecommercialreturnsfromtheCompany'sportfolioofassetsinachangingandhighlyvolatilemarket.

Mining,licensetooperate,finance,operations,headoffice,andadvisorsalloperatingasoneteamwithonepurpose,growingfreecashflow.Wellthat'sthemodel,let'sturntooperations.

WeexpectourcoreminesintheAmericastocontribute60%to65%ofour2015productionand75%oftheoverallminesitefreecashflowfromourportfolio.Theaverage2015all-insustainingcostshavebeen




reducedfrom$700to$725perounce,downfrom$725to$775atthestartoftheyearbasedonallthatthatShaunhasjustdescribed.

It'smygreatpleasuretohandovernowtooneofourbusinessleadersupfromthegroundAndyCole,theGeneralManagerofourGoldstrikeminetogiveyouanupdateonhisoperationandtherampupoftheTCMprocess.

AndyCole (GeneralManager-Goldstrike):

Thanks,Richard.Ourthird-quarterproductionwasinlinewithplanatbetterAISConlowercashcostandsustainingcapital.Asaresultwe'veloweredour2015cashcostandall-insustainingcostsguidance.

Fourth-quarterproductionisexpectedtobesimilartothethirdquarteratslightlyhighercosts.IampleasedtoreportthatournewTCMcircuitreachedcommercialproductioninthethirdquarter.

Weexpectthecompleterampupinthefirsthalfof2016.TheTCMcircuitprovidesincredibleprocessingflexibilityforourNevadaoperations.

Forexample,we'vehadgreatcoordinationwithCortezandGoldstrikeinoptimizingoreroutingsfromavalueperspective.NowforBarrickratherthanjustGoldstrikeweareseeingthebenefitstocashflowbyprocessingmoreCortexorethroughtheroaster.

TheremaybeopportunitiestoexpandthisinthefuturetootheroperationssuchasTurquoiseRidge.Theprojectcameinatacapitalcostof$610millioncomparedtoourlatestguidanceof$620million.Andwearenowreportingonacostofsalesbasis.

Throughputhasaveragedover9,000tonsperdaysinceJuly,approximately75%ofthedesignedcapacityof12,000tonsperday,andthroughputistrendingupward.Ourrecoveryrateshavebeenabitmorechallenging,andthisiswhereourfocusisrightnow.

Recoveriesaremorevariablethananticipated,primarilyduetohighercarbonfromsomeoretypeswhichmaybebettersuitedforroasting.Weareworkingtobettercharacterizeouroresources.Aswellwearemodifyingtheresintoimproveoverallrecoveryrates.

Weexpectrecoveriestoaveragearoundthehigh60%sdependingupongrade.Thisisnotunusualwiththeintroductionofanewtechnology,andwillnotaffectour2015guidance.

I'mextremelyproudoftheteamforthisachievementinlightofthefactit'sabrand-new,Barrick-developedtechnologyandit'stheonlycommercialuseofthisinnovativecyanide-freeprocessingtechniqueintheworld.IwillturnitovertomycolleagueMattGilitotalkaboutCortez.

MattGili(GeneralManager-Cortez):

Thanks,Andy.Cortezhadstrongproductioninthethirdquarterlargelyduetobetterthanexpectedoretonnagesfromtheopenpitoperations.Ourall-insustainingcostsof$501perouncealsoreflectedimprovedundergroundproductivityfollowingtheimplementationofshortintegralcontrols,aninitiativeidentifiedaspartofourvaluerealizationreview.

2015productionguidancehasbeenimprovedto900,000to950,000ouncesatlowerall-insustainingcostsof$675to$725perounce.Wepassedaverysignificantmilestonethismonthwhenwepouredour20millionthounce,andthisishalfofwhatGoldstrikehasproduced,butweareayoungerminewithalotofpotentialaheadofus.

Thepre-feasibilitystudyfortheCortezHillsDeepSouthundergroundexpansionisontrackforcompletionbyyearend.Herewearelookingatthepotentialtodevelopapproximately2millionounces




inlargelyoxideresourcesbelowthe3,800footlevel.

Thisispendingreceiptoftherequiredpermits.Thiszoneaveragesahighergoldgradethanthesulfitereservesabove,andtherearedeepertargetsalongthetrendthathavenotyetbeendrilled.

Wewillaccesstheseresourcesbytwindeclines,whichhavejustreceivedpermittingapproval.Developmentonthesedeclinesisexpectedtostartinthefirstquarterof2016.

Inaddition,thereisverygoodexplorationpotentialforthefuturewithinour382squaremilelandpackage.Sooverall,Cortezremainsaveryprospectivedistrictforus.Andwiththat,IwillturnitbackovertoRichard.


Thanks,Matt.Obviouslywecan'thaveeverybodyheretodayandI'mspeakingonbehalfofEttieneSmutsandhisteamdownatPV.OkaythePVthirdquarterproductionwasslightlybelowplanastheirmineprocessedalargerportionofcombinationore.

All-insustainingcostswereimpactedbylowersilverrecoveriesassociatedwithautoclavemaintenanceandlimeboillimitations.TheadvisoryteamsandtheteamsonthegroundareaddingtwolimeoiltankswhichwillbeoperationalinNovember.

Andthisisexpectedtoimproverecoveriesatthetargeted80%levelthataround60%current.Wecontinuethereforetoforecastattributableproductionof625,000to675,000ouncesatanall-insustainingcostof$540to$590perouncein2015.

Productionisexpectedtobehigherandcostslowerinthefourthquarteronhighergrades,improvedrecoveries,andbetterautoclaveavailability.Wehighlightedlastquarterthepotentialtoconvertasignificantportionofthe6millionouncesofthoseresourcestoreservesbyremovingtailingstorageconstraints,andweintendtocommissionapre-feasibilitystudyinthesecondhalfof2016toconfirmthis.

NowontoLagunasNorteandJimWhittaker'soperationdownthere,whichproduced108,000ouncesatall-insustainingcostsof$581perounceinthethirdquarter,whichwasinlinewithexpectations.Productionin2015isnowanticipatedtobe550,000to590,000ouncesatalowerall-insustainingcostof$550to$600perounce,withstrongerproductionexpectedinthefourthquarterdrivenbyimprovedperformanceatthePhase5leachpad.

ThelowerproductionguidancereflectslowerrecoverieswithsomeleachpadirrigationissueswhichareintheprocessofbeingresolvedbyJimandhisteam.Fourth-quarterall-insustainingcostsareexpectedtobehigherthanthethirdquarterontheexpectedsaleofhighercostinventoryaswellasincreasedsustainingcapitalforPhase6leachpadconstruction.

Apre-feasibilitystudyonaplantoextendtheminelifebyupto12yearsbyminingnearly2millionouncesofsulfideorebelowtheexistingopenpitisonscheduleforcompletionin2015.AndnowontoVeladero.

Veladeroproductioninthequarterwasbelowplanduetolowergradesandadverseweather,whichimpactedleachoperations.All-insustainingcostswerehigherthanplannedonlowerouncessold,timingofsustainingcapital,andlowersilvercredits.

Productionguidancefor2015isunchanged,andall-insustainingcostguidancehasbeennarrowedto$950to$1,000anounce,andcashflowguidancehasbeenloweredto$550to$600perouncefrom$580to$630.Fourth-quarterproductionisexpectedtobehigherthanQ3atlowerall-insustainingcosts.




TheVeladeroleadershipteamhasoptimizedpitdesignthisyeartofocusonhighergradematerial,whichisexpectedtomorethandoubletheannualcashflowoverthenextfouryearswhileretainingtheoptiontoexpandthepitinthefuture.Justashortupdateontherecentandunfortunateenvironmentalinstancewhichledtoadischargeofprocessingsolutiontotheenvironmentfollowingavalvefailureandadiversiongatethatwasopenatthattime.

Thirdpartywatermonitoring,includedthatbytheUnitedNations,hasconfirmedtherearenoriskstodownstreamcommunities.Restrictiononleachingactivitieswereliftedfollowingtheimplementationofadditionalmonitoringandcorrectiveactions,andthereisnoimpacttoourguidance.Withthat,itwillbeapleasuretohanditoverBasietotalkabouttheoptionalitywithinourportfolio.

BasieMaree (CTO):

Thanks,Richard,andgoodmorningtoall.Attheendof2014wehad93millionouncesofprovenandprobablegoldreserves.Thesearehighqualityreserves.

At1.37gramsperton,ourreservegradeismorethan50%higherthantheseniorpeeraverage,andthegradeofouroperatingminesisevenhigherat2gramsperton,whichismorethandoubletheindustryaverage.Wehaveastrongpotentialinourportfoliotoconvertthe19.4millionouncesofmeasuredauthenticatedgoldresourcesintoreservesatthevarioussites,projects,andearlysiteopportunitiesyouseelistedhere,andtoaddnewreservesandresourcesintothepipeline.

AfeasibilitystudyatTurquoiseRidgeandpre-feasibilitystudiesatCortezDeepSouth,Goldrush,andLagunasNorteSulfidesareallontrackforcompletionbytheendofthisyear.Togiveyouabitmorecontextfortheopportunityofourassets,wehavemaintainedaminelifeof10to20yearsformorethan20yearsthroughastrongtrackrecordofaddingreservestoourexistingoperations,andbydiscoveringandbringingnewprojectsintoproduction.

Wehaveanunparalleledtrackrecordinexploration,havingfound150millionouncesofgoldinthelast25yearsattheverylowaveragefindingcostof$25perounce,whichisroughlyhalftheindustryaverage.Thetotalattributablevalueofthe10majordiscoveriesmadeoverthisperiodisabout$107billionaccordingtotheSNLFinancial,andthisexcludestherecentGoldrushandAlturasdiscoveries.

WhatalsodistinguishesBarrickisthevalueaddnotjustfromneworganicdiscoveries,butofadditionalounceswefoundpostacquisition.Minelifeandproductionatthemajorityofouroperationshasfarsurpassedinitialestimates,onenotableexamplebeingGoldstrike.

Theoriginalmineplanexpectedproductiontoendintheyear2000,andcurrentlyextendswellintothenextdecade.Ourexplorationbudgetistwo-thirdsweightedtomineexandopportunitiesaroundourexistingoperations,andwecontinuetoidentifyexcellentpotentialforresourceconversionatmanyoftheoperations.

TurninginfeasibilitystudytoconvertresourcestoreservesoverthenextfiveyearsatCortez,Goldstrike,LagunasNorte,PV,andTurquoiseRidgeisprogressingwell.Inaddition,weexpecttoconvertpartofthe16millionouncesofresourcesatourGoldrushprojectinNevadaoncewehavefermentedanddevelopedtheundergroundexpirationdiglinesasthereisadditionalundergroundaccessandcompletedfulldrilling.

TurningtomorefullydefinethelimitsofmineralizationattheAlturasprojectinChile,isexpectedtoresumeshortlyfollowingaharshSouthAmericanwinter.AgoodillustrationoftheoptionalityinourportfolioisthenewdrillingprogramatHemlo.

InthefirstquarterofthisyearwecompletedtheacquisitionofsomegroundadjacenttoHemlofroma




subsidiaryofNewmont,whichincludedanareaofgeologicalpotentialadjacenttoourexistingundergroundworkings.Wearecurrentlyconductingundergrounddiamonddrillinginthisareatoevaluateitspotential.

Drillinghasencounteredseveralhigh-gradeintercepts,whichdemonstratetheongoingpotentialofprolificmineraldistricts,suchastheHemlocamp,evenastheybecomemoremature.TurningtoourPascua-LamaProject.

AtemporarysuspensionplanhasbeenapprovedbytheminingauthorityinChile.Thiswillenableustofullycompletethetransitiontocareandmaintenanceandshouldallowustosignificantlyreducecostattheprojectin2016from$170millionto$190millionestimatedspendthisyear.

TheteamatPascua-Lamawillbefocusedondevelopinganoptimizedplanfor2016,andwe'llassessthisplanwhenitiscomplete.Butwe'vebeenclearthattheprojectmustultimatelymeetourminimum15%ROIChurdleratebeforeweconsiderrestartingit.IwillnowturnitbackovertoKelvinwithhisconcludingremarks.


Thanks,Basie.Sotofinishoffwherewestarted,we'vemadegreatstridesthisyeartoreshapeBarrickintoaleaner,morenimblecompany.We'vegrownfreecashflowfortwoconsecutivequarters,ourbalancesheetisstrongerandsteadilyimproving,we'realreadyinaverycompetitivecostposition,andweintendtodrivedowncostsevenfurtherthroughimprovedproductivityandefficiency.

Wewillmaintainstrictcapitaldiscipline.Regardlessofwhetherthegoldpriceis$1,100ormuchhigher,allinvestmentsmustmeetourminimuminvestmenthurdleof15%.Wehaveafantasticlow-costasset-basethatincludeshighqualityreservesandresources,withsignificantoptionalityforgrowthatourexistingoperationsandatourprojects,whichincludesomeofthelargestundevelopedgolddepositsintheworld.

Andyoucancountonustostaysharplyfocusedondeliveringresultsaswefinishtheyearandmoveinto2016.Thatconcludesourpresentation,we'dnowbehappytotakeanyquestions.Thankyou.

QUESTIONS&ANSWERS

Operator :

Thankyou.Wewillnowtakequestionsfromthetelephonelines.ThefirstquestionisfromAndrewQuailfromGoldmanSachs.Pleasegoahead.

AndrewC.Quail(Analyst-GoldmanSachs&Co.):

Goodmorning,KelvinandTim.Congratulationsonaverystrongquarter,veryencouraging.Justacouplequestions.Justontheflaggedassetsalesthatyouguyshavementioned.Canyoujustgiveusabriefupdateonwhereweareinthatprocess?


Thanks,Andrew.Iappreciateyourcomment.Processismovingreallywell.Look,I'vegotKevinThomsonherewho'sactuallyrunningtheprocess.Kevindoyouwanttogivealittlemorebackground?

KevinT homson (SeniorExecutiveVicePresident-StrategicMatters):

Wehavejuststartedroundtwoofthatprocess.Theseassetsarehighlysoughtafterat,say,verycompetitiverobustprocess,andourexpectationistosignoneormorebindingagreementsbeforethe




endoftheyear.


Great.Secondquestionis,actuallyonCortez,obviously,agreatquarter.Matt,you'reobviouslyintheroom.Gradealsowentup,andyou'vegivensomesortofguidancethatwe'rehavinggoodproduction,butdoyouthinkthatasweheadintosortof2016,andwesortofkindcomebacktosortofamoreofaQ2sortofgradeof1.7?


Well,Andrew.Imean,wehaven'tyetproducedguidancefor2016.AndsoIwillhesitatetotalkabout2016,butIwillsay,Andrew,aswe'vediscussedearlier,thefirsttwoquarterswereshowingaswewerecomingdownonthatorebodygoingthroughwhatwaslargelystripping.Inthethirdquarter,wehitsolidoreontheCortezhillsopenpit,andthatorewillcontinueforthenextseveralyears.


Great.Andthroughput,ImeansomethingÐobviously,thatwentuptoo,soit'sagreatquarter.Isthatsomethingyouguysareaimingtosortofmaintain?


Yeah.Thegreatquarterortheimprovementoverthegreatquarter,wasreallyattributabletotwothings.OnewasweweregettingaslightlypositiveouncereconciliationontheCortezHillsdepositandthesecondhalfofthatwasreallyduetoincreasedundergroundproduction,justnotagradereconciliation,butjustmoretonnesbeingproducedbythesameteams.


Andlastquestion,justquickly.IthinkIjustmissedabit.You'retalkingaboutPascua-Lamaand,obviously,theholdingcostiscomingdown.Canyoujustgiveuswhatyouexpectittobesortoffrom2016onwardswithcareandmaintenance?


It'sKelvin,Andrew.We'llgivethatguidanceattheendoftheyear,morespecifically.Look,we'reworkinghard.Nowthatwehavethetemporarysuspensionplanapproved,itallowsustoreallyratchetdowncostsonagoingforwardbasis.Sowe'llgiveyoualittlemoredetailonthatattheendoftheyear,ifyoudon'tmind.


Great.Thanksverymuch,guys.


Thanks,Andrew.

Operator :

Thankyou.ThenextquestionisfromGregBarnesfromTDSecurities.Pleasegoahead.

GregBarnes (Analyst-TDSecurities):

Thankyou,operator.Kelvin,you'vegotthebalancesheetinmuchbettershapeandyou'vebeen




playingdefenseforthelastthreeyearsorfouryears.AreyounowstartingtothinkaboutgettingabitÐlittlemoreontheoffensivesideofthings,todothingstoimproveyourproductionprofile,longerterm,andmovesomeoftheseprojectsforwardmorequickly?


Thanks,Greg.Look,we'restayingverysharplyfocusedonourcommitmentsandprioritiesfortheyear.Asweindicatedearlier,the$3billioncommitmentforthisyear,we'repleasedwithitandÐbutthatwasfirststep.

We'regoingtocontinuetostrengthenthebalancesheet.We'llweighotheropportunitiesonagoingforwardbasis.Wealwaysevaluatethelandscape.Ifthereareopportunitiestomakereallygoodsenseandwouldgeneratevalue,thenobviouslywe'llconsiderthat,butatthispoint,we'restayingprettysharplyfocusedonwhatwesetouttodo.


So,whataregoingtobeyourprincipalprioritiesfor2016?


Well,we'llalignthosewithourÐattheendoftheyear,Greg.Butwe'regoingtocontinueÐonethingisforsure,thefocusongeneratingfreecashflowpershareisreallydrivingthebusinessandyou'rehearingthatthrougheverythingwepresentedthismorning.Sowhenwecomebacktoyouandoutlinenextyearaswedidthisyear,whatourobjectivesare,youcancountonthatasbeingtheÐwhat'sunderpinningeverything.


Okay.Thanks.


ThanksGreg.

Operator :

Thankyou.ThenextquestionisfromStephenWalkerfromRBCCapitalMarkets.Pleasegoahead.

StephenD.Walker (Analyst-RBCDominionSecurities):

Thankyou.Justacoupleofquestions,justwiththefocusthatyouhaveonconvertingresourcestoreservesandgrowingreserves.Iguessitbegsthequestionwhetherwe'regoingtoseePascua-LamaandCerroCasale,they'llbeCortezreservesatyear-end,canyoucommentonthat?

AndalsocommentIguessonthecarryingvalueoftheassets,thegoldassets,inparticular,you'veobviouslyadjustedthecarryingvalueofthecopperassets,butwhetherit'sgoldorcopperassets,whatassumptionsaregoingtobemadeatyear-endasfarasthosecarryingvaluesandwhatwecouldexpectorwhatweshouldstartthinkingaboutascarryingvalueforassetsgoinginto2016?


Thanks,Stephen.LookI'lltouchonPascua-LamaandCerroCasaleand[inaudible]andperhapsRichardtocommentontheotheraspect.PascuaandCerroCasaleboth,we'llgiveourreserveestimateattheendoftheyear.




BothprojectsatthispointqualifyandeventhoughtheeconomicsofbothCerroCasaleandPascua-Lamaaren'tsuchthatwegoforthasprojectstoday,wecertainlybelievethere'sÐtherewillbeapointintimeinthefuturewhenwewould.Butasfarasmakingthedecision,we'lldothatwiththeyear-endreservecalculationandreportbackthen.Intermsoftheotheraspect,Basie,doyouwanttostart??


Apologies,Kelvin.Stephencanyourepeatit,itwasverydifficulttohearwhatyousaid,you'reveryfaint,thesecondpartofyourquestion?


Sure.Justtheassumptionsthatyouwouldlikelybeusingforthecarryingvalueofthegoldandcopperassets,aretheygoingtochangesignificantlyyear-over-year?Atthisstage,Iknowit'searlyintheprocess,butgiveusasenseonwhatwecouldexpectasfarascarryingvaluesforthegoodwillandthebookvaluesforthegoldassetsinparticular,butalsothecopperassets?

ShaunUsmar (CFO):

Yeah.Steven,it'sShaunhere.Look,weare,asyousay,goingthroughthataswegointoQ4,whichisthenormforus.I'dsay,we'rewelladvancedinnotjustwerevampedourlifeofmineplanningprocess,butwe'refeedingthatthroughintoourmodels.

Andwe'vetalkedonpriorcalls,asyoumayrecall,abouttheworkthatwasdoneaspartoftheassetsalesprices,aroundvaluerealization.We'refactoringthoseintothemodelsaswell.Andso,ontheonehand,wemayseesomechangesinmacroassumptions,butIthinkwewillseesomeoffsetsintheworkthat'sbeendonethisyear.


Okay.Thanks,Shaun.Thankyou,Kelvin.


Thanks,Stephen.

Operator :

Thankyou.ThenextquestionisfromAnitaSonifromCreditSuisse.Pleasegoahead.

AnitaSoni(Analyst-CreditSuisseSecurities(Canada)):

Hi,goodmorning,guys.MyquestioniswithregardstothereductionatVeladero.Couldyouprovidealittlebitmorecoloronhowyouseethattranspiringoverthecourseoftheyearandperhapsintonext?


Sure.


Sorry,[inaudible]IthoughtitwasLagunasNorte,sorry.


Sorry.Matt.





Forgiveme,Kelvin.IthinkwithrespecttoLagunasNorte,Basie,whydon'tyouhaveaviewonLagunasNortegoingforward?

BasieMaree (CTO):

So,asweknow,LagunasNorteisnearingtheendofitslifeonthecurrentorebody.Hence,theproject,pre-feasibilitystudytolookatthedeepersulfideorebodythere.

Theguysaremovingintoabitofatransitionzonetherebetweentheoxidesandthesulfidesandwe'reforecastingforthenextquartertohavealittlebitmorerefractoryorescanningintotheoperations.TheguysclassifiedwhattheycallM1toM3typematerial.We'reseeingalittlebitmoreoftherefractoryM3scominginwhichlowertherecoveries.

Theyarelookingatoptionalityinthemineplanandthedesigntoseeiftheycanbringabitmoreoxidesforward.Butit'sgoingtobecomedifficultbetweennowandthetransitiontothenewprojectbecauseoftheÐtheorebodyisnearingitsendofitslife.


Okay.Andjustafollow-upquestionwithregardstocapital.IthinkIcalculatedthatthetotalCapExfromthe$1.7billionfromwhatyouhavepresentedtodatewouldrequireabout$400millioninthefourthquarter.Isthatcorrect?

ShaunUsmar (CFO):

Itsounds,yeah.Yes,it'sslightlymorethanthat.We'vedonealottosortofpreventanybellwethercapitalinthisbusiness,andwithourrevamp[inaudible]planning,we'reseeingthatactuallyabigimprovementthroughthefiveyears.So,we'reprettycomfortablewiththatbutyes,justover$400million,andthat'sbeingconsistentwithourrunrateoverthelastcoupleofquarters.


Sorry.Isthereanyspecificprojectsorminesthatwillseealittlebitmorespendingthantherestinthefourthquarter?

ShaunUsmar (CFO):

Notreally.We'rejustfinishingoffthestudiesthatwe'vetalkedaboutinthepresentationandmuchofthisissustaininganddevelopmentcapitalinourproforma.


Allright.Andthenlast,couldyoujusttalkaboutsomeoftheimprovementsthatyou'veseenatLaMona?


Well,Iguessacouplethings,firstofall,theteam'sworkedveryhardtodrivedowncostsasyoucanseefromthenumbers.It'sbenefitedfromthekwachadevaluationcertainly.Ithinkthekwacha'sdown50%roughlyfortheyear.Andthatrepresentsabout30%ofourcostsatLaMona.So,webenefitedfromthat.Buttheteam'sbeenconsistentacrosstheoperationindrivingdownminingcostsandthey'vedoneaverygoodjobfromyear-over-year.





Allright.Thankyouverymuch.


Thankyou.

Operator :

Thankyou.ThenextquestionisfromDavidHaughtonfromCIBC.Pleasegoahead.

DavidHaughton (Analyst-CIBCWorldMarkets):

Goodmorning,Kelvinandteam.Thankyoufortakingourquestions.Well,thefirstoneI'vegotis,tryingtounderstandalittlebitofaconflictifyoulikebetweenShaun'sslidenineandBasie'sslide20.So,fromShaun'sdiscussionofcostsavingorcashflowsaving,aboutone-thirdofthat'scomingoutofcapital.

AndIthenhavealookatBasie'sslide20,andyou'vegotalotofreallyinterestingopportunitiesthere.SoI'mjustwondering,wherearethoseCapExsavingscomingfrom,andtowhatextentdotheprojectsthatBasie'sbeentalkingaboutgetsacrificedasaconsequence?


Shaun,doyouwant?

ShaunUsmar (CFO):

David,hi.Look,actuallyaswe'vegonethroughfirstlyrevampingourcapitalallocation,whatwe'vefocusedonthereisnotjusttherobustnessoftheplans,butreallythesequencingofsomeofthesebecausewe'vegotanumberofprojects,whichclearlyexceedourhurdlerateandreallyrepresentlowriskandthosearetheonesthatwe'reprioritizing.

Andyou'llseeinthepresentationtherewasabigemphasisonthe94millionouncesofresourceshere,whichrepresentthebestnear-termgrowthoptionsgiventheskillsetsandwhatwehave.

So,withourlife-of-mineplanning,you'llseethiscomeupintheguidancenextquarter,abigfocusonupgradingthecapabilityandthebenefitsoverareasonableperiodoftime.Andthenthesequencingofthehighreturn,betterÐnear-termandbetterreturnprojectsthatwe'vegot.

I'llmakeonelastpointtothisthough,I'dsaythattherewasalotofparallelspendthatwefoundwhenwestartedimprovingourcapitalallocation.Wereducedtheburnintheareasthatyouwouldexpect,whicharethingsthatwillcomeoffinadifferentpriceenvironmentwillneedwork,butwe'vegotaverystrongfocusonimprovingnotjustourbalancesheetbutobviouslytryingtoreplacethereservesthatwe'redepletingwithmining.SostaytunedforQ4.


Okay.It'squiteabalancingact,Icanseethat.

ShaunUsmar (CFO):

Itis.


Andbasedonyourcommentsthere,I'mjustwonderingtowhatextentwouldthosecapitalreductionsthrough2016besimplydeferralofexpenditureforprojectsthatdolookpromising?




ShaunUsmar (CFO):

We'vegotsomedeferrals,butwhatI'mseeinginourlatestrevisedorimprovedlife-of-mineplansisactuallyreimaginingofsomeoftheprojectsthatwe'vegottheretobelesscapitalintenseandhigherreturn.Sothisisn'taboutjustmovingthingsdowntheroad.

Imean,wearehavingtotryandbalancethosealternativesofcontinuingtoimprovethebalancesheet,butobviouslyfocusingongrowthandagain,we'llgivemoreguidanceonthatinQ4.Butweareseeingagoodeffortfromnotjusttheguysattheminesites,buttheprojectteamstoembracethedifferentapproachwe'vegotnow.


Okay.ThankyouforinvitingAndyandMattonthecall.IdohaveaquestionforAndy.I'lljuststaywithone,givenwe'vegottimeissues.LookingattheTCMproject,you'dspoken,Andy,abouttheramp-upofboththethroughputandalsotherecoveries.Canyougiveusanideawhatkindoftimelineyou'vegottogetultimatelytothe12,000tonneperdaykindoflimitandwhatyourgoalswouldbeofthoserecoveriesthroughtime?


Thequestionasfarasthroughput,wehopetobenear12,000tonnesperdayveryshortly.AsImentioned,wearecontinuingtoseeimprovedthroughputeverymonth,sohopefully,bytheendoftheyear.

Asfarasrecoveries,David,there'safewsurprisesrelatedtosomeoftheworkcharacteristicsthatwe'reworkingthrough.So,asImentioned,wewillcontinuetoworkonthoseandhopefullyhavethemworkedoutbytheendofthefirsthalf.


Myrecollectionwastherewasagoalforittobeinthe80%kindoflevel.Isthatstillatarget?


Yeahandthat'sfair.It'sreallydependentuponthegradefeedingtheplant.Atthispointintime,asImentioned,wehavewiththeflexibilityofhavingtheautoclavesasaviableoptionforprocessing,we'reabletooptimizeourrouting.

So,rightnow,thehighergradeisgoingthroughtheroaster,thelowergradeisgoingthroughtheautoclavefacility.So,wehavethegradeversusrecoverycurves,andsothatthelowergrades,it'sgoingthroughthere.Rightnow,we'reinthe60%s.Ideally,we'dliketoseeitcomeupabithigherthanthat.


Andwe'retalkinghereaboutideallyplus3gramkindofmaterial,Ipresume.


Rightnow,we'rerunningintheneighborhoodof1.5grams,somewhereinthatneighborhood.


Okay.Allright.Andjustlastquestion.Didyourecordanythroughputinthethirdquarter?Orwasitconsideredpre-commercialthen?





No,itwas...yeah.

ShaunUsmar (CFO):

David,wedid.Wetransitionedfrompre-commercialtocommercialIthinkitwasinJuly.


Okay.Allright.Thankyouverymuchforyourhelp,guys.


Thanks,David.

Operator :

Thankyou.ThenextquestionisfromAndrewKaipfromBMOCapitalMarkets.Pleasegoahead.

AndrewKaip(Analyst-BMOCapitalMarkets):

Hi,goodmorning.Look,I'vegotjustafollow-upquestionwithAndyandtheTCMcircuit.Youindicatedthatproductionforthefourthquarterisgoingtobecomparabletothethirdquarterbutthatcostsweregoingtobeslightlyhigher.

Canyouprovideanyadditionalinformationonwhycostswillescalateslightlyinthefourthquarter?Andthenwilltheslightlyhighercostsbesomethingthatweshouldbelookingatfor2016?


TheslightlyhighercostsareprimarilyrelatedtothefactthatwearebringingTCMonlinefully,andsowe'rereportingonacostofsalesbasis,Andrew.So,thecostsareslightlyhigheratthispointintime.Oncewegettonnagefullyrampedup,we'llexpectthecoststocomebackmoreinline.


Okay.No,that'suseful.AndthenjustregardingVeladeroandtheoptimizedpitdesign.You'veoptimizedforgradeoverthenextfouryears.I'mjustwondering,ifwelookoutbeyondthatfour-yeartimeframe.Areweexpectingtheretobeanincreasedstrippingrequirementtogetbackintohighergradesoveraperiodoftime?CanyougiveussomemoreinsightonhowVeladerowilllookbeyondthatfour-yeartimeframe?


Thanks,Andrew.BasiehasbeenaspendingalotoftimewithVeladero.Basie?

BasieMaree (CTO):

Yes,Andrew.Welookattwomineblendshere,whatwecallPit20andPit24.ThemostoptimizedpitdesignforusatthisstageistogowiththereducedlifeofmineforVeladeroattheoptimizedpit,whichmeansthelifeoftheminemightbeshortenedwhenthefinalplanscomeout.Ihavecashflowgoingforwardinthenearterm.

Thereistheopportunitystillforusinthenextplanningcycle,andtheguysarealreadystartingtoworkonthattolookatwhatneedstobedonetogetthatpitstraightbackintoplaceagain.Itwillrequire




additionalcapitalspendinlateryears,andthat'sthetrade-offstudiestheguysneedtodobetweennowandthenextplanningcycle.


Canyougiveusasenseofhowmuchtheminelifeispotentiallyshortened?

BasieMaree (CTO):

Yeah,thosearethestudiestheguysaredoingthetrade-offsonatthemoment.


Okay.

BasieMaree (CTO):

Butitwillbetwoorsoyears.


Allright.So,thisissomethingthatwe'llexpecttogetmoreinformationfromatyear-end.

BasieMaree (CTO):

Yeah,absolutely.


Allright.Thankyouverymuch.


Thanks,Andrew.

Operator :

Thankyou.ThenextquestionisfromJorgeBeristainfromDeutscheBank.Pleasegoahead.

ChrisT erry(Analyst-DeutscheBank):

Hi,guys.It'sactuallyChrisTerryhere.Ihadacoupleofquestions,justrelatingtoslidenineonthecostouttarget.Thanksforgivingsomemoreclarityonthebreakdownofthepiethere.Justwantedtocheckthatthelike-for-likeisdoneposttheassetsalesthatyoucompletedin2015.Imeanobviouslycorporatecostshavecomedownfromsomeofficerestructuresprobablyrelatedtothosedeals,buteverythingelseisdonenowlike-for-like.

Andthen,justfollowingonfromthat,intermsofthegreatjobyou'vedoneatreducingthedebtandnearingthetargetfortheyear,nowthatyouaregeneratingfreecashflow,isitfairtosaythatinto2016wewouldn'texpectanotheraggressivetarget?

You'reprettymuchatalevelwhereyou'renowcomfortablethattheoperationswilldomostofthedeleveragingofthebalancesheetforyou?


Shaun.




ShaunUsmar (CFO):

Chris,look,IthinkI'llstartwiththesecondofyourquestions.Andtheshortansweristhat,we'vebeenabletoidentifyimprovementsingeneratingcashnotjustattheoperatinglevelbutobviouslyatthecorporatelevel,andwe'vetriedtocapturethatjustinthesummary.We'veactuallygotinternalplans,whichwe'reat[inaudible]focusingmoreintenselyaswegoforwardonproductivityandefficiency.

AndIexpectfrom2016andbeyond,you'regoingtoseethesesortofverydata-drivenimprovementsatthesitelevelstartingtoseepthrough.RichardandBasiearealreadyspearheadingthisandthatwillbethenextincarnationbecausethereisopportunity.You'veseenthesectorasawhole,Ithinkweseethedeterioratingproductivitiesinafairlylongperiodoftimeandthat'sthenextfrontierwe'dseektoaddress.

Onthefirstquestion,theanswerisyes.We'relookingatthisonalike-for-likebasis.Andultimatelyjustbecauseyou'resellingasset,you'resellingthecashflowwiththataswell.We'refocusingongeneratingcashtocovertheoverheadsinthecoststhatthisbusinesscarries.Sowe'renottryingtogainitbysellinganassetandsellingthecostwiththis.Thisisawindowintotheimprovementsthatwearedrivingwithinthisbusiness.

ChrisT erry(Analyst-DeutscheBank):

Thanksverymuch.

Operator :

Thankyou.ThenextquestionisfromPatrickChidleyfromHSBC.Pleasegoahead.

PatrickT .J.Chidley(Analyst-HSBCSecuritiesUSA):

Yeah.Goodmorning,everybody.Justacoupleofquestions.First,abitofanexplorationquestionjustonHemlo.You'vepointedoutthatthisisabitofadrillingsuccessstoryamongstÐacrossthewholeportfolio.Canyougiveussomemoredetailonwhat'sbeinggoingonthere,andistheÐwhatkindofintersectionsareyoutalkingabout,andhowclosearetheytothecurrentoperations?


Patrick,Kelvin.I'mgoingtoaskRobKrcmaroviswithustocommentonthat.


Thanks.

RobertL.Krcmarov(SVP-GlobalExploration):

Thanks.Hi,Patrick.Asyouknow,wecompletedtheacquisitionofsurfaceandmineralrightsnexttoHemlo,andthatextendsforabout4kilometerstothewestoftheproperty.

AtHemlo,intheDavid-Williamsarea,undergrounddevelopment,stopeminingandvisiblegoldmineralization.TheyextendrightuptotheformerpropertylimitsinwhatwecalltheCzone.Andsowehaveahighlevelofconfidencethatcontinuityandextendingthemineralizationbeyondthepropertyboundarieswasgoingtobethere.

Andmorerecently,we'vereviewedthecoreonthedatathatwe'veacquiredwiththepropertyanditconcernsthepotential.Andreallymostoftheexistingviscosity[inaudible]spacedrillingonthepropertyisbroadlyconsistentwiththosethatwe'veencounteredinareasthatwe'vebeenminingattheWilliams




portionoftheHemlomine.

Andsoourinitialdrillinghasbeenveryencouraging.AndIthinkthekeypointisthatthemineralizationisveryclosetothedevelopment,anditcanbeminedfairlyshortly.SoIthinkwe'llcontinuetoaddreservesthereformanyyearstocome.


Right.Soit'ssortofastrikeextensionontoaneighboringproperty.


That'sright.Andthere'saboutsixotherareaswhereweexpecttoseeextensionsbothunderneaththeBzone,underneaththeCzone,upclosertothesurfaceplentyofpotentialthere.


Okay.Thanks.Andanywhereelseintheportfoliothatyou'rehighlightingforgeologicalincreasesinreservesite[inaudible]notjusteconomicallydefined,butgeologicallydefined?


Yep.Sosomeofourkeyexplorationprojects,forexample,startinguparoundthemines.Ithinkmanyofthemreallystillhavegoodpotentialforminingreservesandresourceadditions.

ButifIhadtohighlightsome,intermsoforganicgrowth,we'vegotoptionstoincreasetheproductionfromtheTRshaftandCortezundergroundexpansion.LagunasNortesulfidesthatcouldextendtheminelifebyabout12yearsalbeitatalowerlevelthantoday.We'vealsogotgoodpotentialtoconvertresourcestoreservesinthenextfiveyearsinmanyofouroperatingsites.

Butlookingfurtheraheadandfartherafieldinwhatwecallglobalexploration,Ithinkthere'sstilltremendousupsideelsewhereontheCortezproperty.AndthatincludestheextensionsofhighgrademineralizationandGoldrushandthe[inaudible]projectandthat'sroughlyabout1kilometerto3kilometersfurthernorthofGoldrush.

That'sinageologicalpositionthat'ssomewhatanalogoustothehighgradeDeepPostandDeepStardeposits,whicharenearGoldstrike.Andalso,likeatGoldstrike,adjacenttoanintrusion,someveryrecentwidespaceddrillingintersectedmineralizationwellaboveGoldrush'saverageM&Iresourcegrade.

AndtheninChile,whiledrillingwillresumeanydaynowatAlturasafterthespringthaw.We'velearnedalotatAlturasandwe'llbeapplyingthattoongoingexplorationonbothsidesoftheborder.Ithinkthekeypointtohighlightisthatournon-mineexplorationisreallyseekingtofindbetterdepositsfrombothinourexistingandalreadystrongprojectportfolio.


Great.Thanks.WellthenthatextensionatGoldrush,isthatclosetotheareawhereyou'replanningtostartthatdecline?


Itis.Itwouldbeclosertowhat'scurrentlyplannedasthedeclineborder.





Okay.So,you'vefoundsimilarmineralizationuptherereally?


It'sactuallyhighergradethanwhatwe'veencounteredintheaverageM&Igrade.Wedon'treallyknowthisÐifyoupredictdirectlyalongStrikefromGoldrush,itlookslikeitmaybeturningalittlebit.


Right.Okay.Andthatwasasurpriseorwasthatwassomethingthatyoukindofknewaboutfrompreviousexploration?


No,itwasasurprise.Thiswasverywidespaceddrilling.Thisisasignificantextension,wellnorthofGoldrushandthedrillingwasspaced200metersapart.So,verywidelyspaced.


Great.Excellent.Thanks,Rob.JustonemorequestionifImayjustonÐtoShaunmaybe.Intermsofyourinventory,obviouslydecreasingyourinventory,canweexpectthattrendtocontinueatsimilarratesorwasthisquarterspecial?

ShaunUsmar (CFO):

I'mreallyhopingwe'llcontinuetoseeimprovementsthroughnextyear,ifnotatsimilarrates,perhapseveninbetter.We'relookingatopportunitiesnotjustatthesitelevel,butImeanthroughout.So,theshortanswerisyes,we'retargetingthisandthereareareasformoreopportunity.

Operator :

Thankyou.Therearenofurtherquestionsatthistime.IwouldliketoturnitbackovertoMr.Dushnisky.


Thankyou,Patrick,bringingustotheendofthecall.Iwouldliketothankeverybodyforjoiningustoday,andwelookforwardtospeakingtoyouagainwhenwereportouryear-endresults.Thankyouverymuch.

Operator :

Thankyou.Theconferencecallhasnowended.

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