Barrick Mining Corporation 2026 Q2 Earnings Call

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

Okay. Thanks, Emily, and good morning, everyone. For those who don't know Emily, she is our new Vice President of Investor Relations and joins us from U.S. Steel. Before we share our full quarterly results, I want to begin with the agreement with Newmont we announced today. Actually, I want to go off script straight away to make the lawyers nervous here. I want to clarify a few misconceptions here. Firstly, the total value of that package is approximately $4 billion. Obviously it includes the proportion of Fourmile, but it also includes contribution of Newmont's properties, Mike and Fiberline, which add, I think it's around 6.4 million ounces as well. It is also the cost of resolving historical disputes and litigation between the joint venture partners.

It also reduces the friction costs of the planned IPO, which will unlock even greater value for the shareholders beyond the cash proceeds from the transaction. As we've said, they will be largely returned to the shareholders. Moving on, we've reached this agreement after four months of negotiations. It now enables us to focus on delivering value through safely and consistently producing ounces. Our interests now are completely aligned as joint venture partners, which is critical. I did want to actually thank our counterparts at Newmont, Natascha and her team, and of course everyone on the Barrick team for the enormous amount of effort and work that's gone into this over the last four months to reach this agreement.

Now, before I get into the results, there is also a couple of other things I would like to highlight, which I think are the key strengths that have come out of Barrick over the last nine months. First, our leadership team. Over the last 10 months, we have improved the operational performance across the entire business. That is thanks to the strength of our operating site teams, to our GMs and everyone right down through to the mining front. We have also strengthened our relationship with Newmont, as we just said, positioning us well to grow and develop in NGM further, which is also critical. Second, with the IPO, we are building the only major American pure gold company with high quality, long life assets. This is exactly what investors, including some of the world's fastest growing source of capital, are looking for.

Third, outside of North America, the rest of the world portfolio, which has a significant growth profile, also has a distinctive advantage in our ability to work with our Chinese partners, including, as you know, our joint mine ownership and co-investment. This enables us greater efficiency and supply chain strength, which has helped us control our cost and partnership that improve outcome and reduce our risk. With this context, let me turn to our results for the quarter. As I said, we have had our third quarter in a row with excellent operating and financial results. We delivered on all four of our priorities for the year, the same priorities outlined at the start of the year. We continue to improve our safety performance. I will get to that a bit later, but there is obviously still more work to be done there.

We delivered our gold production above guidance and met our cost guidance. We advanced our growth projects, Fourmile, Lumwana, and the Pueblo Viejo expansion, which remain on time and on budget. Not often you hear that in the mining industry. We continue to review Reko Diq and commence the flow-through share donation development on July 1, as previously disclosed. Our delivering on production and meeting our cost guidance also allowed us to deliver strong financial results, which Helen Cai will discuss a bit later. Finally, we achieved major milestones in the preparation of our IPO of our North American gold asset, which is on track to be completed by the end of the year. Let me move to safety, which is still our number one priority. Our goal is that everyone obviously goes home safe and healthy every day.

We saw a reduction quarter-on-quarter in our frequency rate from 0.92 to 0.77. But disappointingly, we still had six LTIs. There is still a lot of work to do. It is completely unacceptable, and we need to focus on our safety until we get to our target of zero harm. All of our leaders, all the way up to the executive committee, including myself, are spending more time in the field and at the mine site. They are doing more critical control verification and fixing more risks on the spot. On top of that, we have also invested over $90 million this year in technology to improve safety. This includes up to our automation of mining equipment and right down to vehicle dash cams, safety reporting software, and AI analytics. We are also working hard to engineer out as many safety hazards as possible.

So turning to our Q2 highlights. Actually, before I start on the Q2 highlights, one other thing I would like to clarify about earnings, which $0.82, adjusted earnings $0.82 per share, is in line with the Bloomberg consensus. There is some media out there this morning says it not, that we missed, but, I am not sure what the source of that is. Barrick produced 796,000 ounces of gold in the quarter, which was 3% above guidance and 11% over Q1. The main drivers of that were we progressed the ramp-up of Loulo-Gounkoto ahead of schedule. Pueblo Viejo ramped up faster than expected after the maintenance shutdown in Q1. And we mined record tons underground at Cortez and continued the ramp-up at Goldrush. On the copper side, we produced 56,000 tonnes. We managed costs well and our gold costs, as I said, were within guide.

Our earnings nearly doubled year-over-year, and we more than doubled quarterly shareholder return to $1.5 billion. The strong performance for Q2 is obviously across all of our regions. North America continued to anchor our world-class portfolio. Nevada Gold Mines and Pueblo Viejo both registered year-over-year revenue growth. Together, they accounted for 53% of our total attributable adjusted EBITDA at a margin of 61%. Our other regions also delivered strong gold production, with meaningful attributable EBITDA at margins of 59%. Copper continued to perform well and delivered comparable margins to our gold business. Moving on to growth. As I said, our growth projects advanced on schedule during the quarter. At Fourmile, we ramped up the drilling to 20 active rigs, and we plan to complete the PFS by the end of 2028.

At Lumwana, we made good progress on the mill expansion, which will double the copper production. We expect the project's 2026 CapEx to come in at the lower end of guidance, and the project remains on budget. We are on track to produce our first copper from the expansion by the end of Q1 in 2028. The Pueblo Viejo expansion also advanced on schedule. We have made progress on permitting and construction across the tailings facility, haul roads, and water treatment plant. We are also very pleased to report that we now have 90% of resettlement packages being accepted. We continue to review Reko Diq, as previously disclosed, and we have decided we will not start building the plant this year. We have reduced our expected 2026 attributable CapEx. It was $600 million-$700 million, and is now $450 million-$500 million.

The lower spend on the Lumwana and Reko Diq has reduced our group guidance for 2026 total attributable CapEx to $3.8 billion-$4.2 billion. Back to the IPO of our North American assets. As I said, this entity will be a high-quality, pure gold play company, which assets are located exclusively in low-risk jurisdiction. What I am pleased to share is that the board has selected me to lead the new company as a CEO on launch. We have completed all operating and separation agreement between Barrick and the new company, and we remain on track to complete the IPO by the end of the year. We expect the vast majority of net proceeds raised to be returned to shareholders. I know several people have asked me in the past.

I will now turn it over to Helen Cai, our CFO, who will review our financial performance.

Thank you, Mark, and good morning, everyone. Q2 marked the third consecutive quarter of strong production, cost performance, and financial results. Net earnings were $1.2 billion, a 50% increase year-over-year. Adjusted net earnings was $1.36 billion, which equates to adjusted EPS of $0.82, in line with Bloomberg consensus. Attributable adjusted EBITDA of $2.5 billion was up 51% year-over-year, with a 59% margin. On a cash flow basis, the second quarter is typically our lowest each year for free cash flow due to the timing of our annual tax and interest payment. This quarter, we also incurred a one-time $200 million payment related to Loulo and Coto. Combined, this led to a 33% decline in year-over-year attributable free cash flow. Excluding this, attributable free cash flow for the quarter would have been over 60% higher year-over-year.