Barrick Gold (ABX)

Q4 2011 Earnings Call

February 16, 2012 9:30 am ET

Executives

Deni Nicoski - Vice President of Investor Relations

Aaron W. Regent - Chief Executive Officer, President, Director and Member of Environmental, Health & Safety Committee

Robert Krcmarov - Senior Vice President of Global Exploration

Jamie Sokalsky - Chief Financial Officer and Executive Vice President

Ivan Mullany - Senior Vice President of Capital Projects

Analysts

Jorge M. Beristain - Deutsche Bank AG, Research Division

Stephen D. Walker - RBC Capital Markets, LLC, Research Division

Paretosh Misra - Morgan Stanley, Research Division

Steven Butler - Canaccord Genuity, Research Division

Elizabeth Collins - Morningstar Inc., Research Division

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the Barrick Gold Fourth Quarter 2011 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, February 16, 2012. I would now like to turn the conference over to Deni Nicoski, Vice President, Investor Relations at Barrick Gold. Please go ahead, sir.

Deni Nicoski

Thank you, operator, and good morning, everyone. Before we begin, I will bring to your attention the fact that we will be making forward-looking statements during the course of this presentation. For a complete discussion of the risks, uncertainties and factors which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statements, please refer to our year-end report or our most recent AIF filing.

With that, I'll hand it over to Aaron Regent, President and CEO of Barrick.

Aaron W. Regent

Okay. Good morning, Deni, and thank you for joining us today. I'm joined here by -- with other members of the senior management team, including Jamie Sokalsky, our CFO; Peter Kinver, our COO; Kelvin Dushnisky, who's our Head of -- EVP in Corporate and Legal Affairs; and Rob Krcmarov, who's our Senior Vice President of Global Exploration. We're also joined -- also joining us is Greg Patigos, [ph] who's our new Senior Vice President of Investor Relations and Communications. Greg joined us in early January and will be fulfilling that role. Deni, who has been Head of Investor Relation for some time, is going to be moving on to a senior role in our finance area. So at this point, I would like to thank Deni for his great work that he's done for us in this area and certainly delighted that he's going to be making a contribution in other parts of the company.

So with that, for our call today, what we plan on doing is discussing some of the highlights of 2011. Our fourth quarter results, we'll provide an update on the projects. Then I'll turn the call over to Rob who's going to provide an update on our exploration programs, and then Jamie will provide more details of our financial results and the outlook for 2012.

So looking at 2011, this is the time of year we can reflect back on the total progress in the past year. I think, overall, we've made progress in a number of areas. First, I think we're pleased that we're able to meet our production and cost targets for the year. We produced just under 7.7 million ounces of gold at a cash cost of $460 per ounce. Total cost basis and on a net cash cost basis, our cash cost is around $339 per ounce. And I think that compares very favorably with the other senior gold producers and positions us around the bottom third of the cost curve.

With the rise of the gold price, we've had a significant expansion in our margins, and when you apply that to our production, the result was record financial results. We had adjusted earnings of $4.7 billion for the year, which was around $4.67 per share. We had EBITDA of $8.4 billion, and our return on equity was 22%.

And consistent with our past practices of increasing the dividend on a progressive basis, we increased the dividend last year as well by 25% to an annual dividend of $0.60 per year, and this is a trend that we anticipate will continue.

We continue to advance our 2 world-class mines, Pueblo Viejo and Pascua-Lama. So we're a year closer to getting production from these 2 mines. PV will be producing in the middle of this year and Pascua-Lama in the middle of next year. So it's nice to sort of get closer to those dates. And these mines will produce -- combined, will produce or contribute around 1.5 million ounces of low-cost ounces to the company.

We once again replaced our gold reserves, and we grew our resources. And our exploration program had considerable success this year with the discovery of Red Hill and Goldrush. These are greenfield discoveries in Nevada. And the drill results continue to be very encouraging. And, again, Rob will provide more details shortly.

The other projects in our pipeline continue to move forward. We have a number of projects that either in a feasibility permitting or in the scoping stage, but this is a robust pipeline which I think provides us with a lot of investment choices for the future. We added 2 quality mines to our portfolio, the Lumwana copper mine and the Jabal Sayid copper mine. And with respect to Lumwana, we significantly increased the copper reserves and resources compared to 2010. And then in the area of responsible mining, this is an area that we have put a considerable amount of focus. We have had some challenges, but we've made considerable progress and it's nice to see that our efforts are being recognized by third-party organizations. We were, once again, relisted on the Dow Jones Sustainability World Index and also named to the NASDAQ Worldwide Sustainability Index.

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