Barrick Gold (GOLD) Q3 2024 Earnings Call Transcript

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Barrick Gold (NYSE: GOLD)
Q3 2024 Earnings Call
Nov 07, 2024, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. This is the event operator. Welcome to Barrick's results presentation for the third quarter of 2024. Following today's presentation, a question-and-answer session will be conducted.

[Operator instructions] As a reminder, this event is being recorded, and a replay will be available on Barrick's website later today, November the 7th, 2024. I would now like to turn you over to Mark Bristow, president and CEO of Barrick. Please go ahead, sir.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Thank you very much and good morning and good afternoon, ladies and gentlemen, and, in particular, a very warm welcome to all of you who have made the effort to join us in person here in London today. As the gold price continues to be driven up to record highs, it's prudent to reflect on the cyclical nature of markets and the fact that mining, in particular, is a long game. Barrick's continuing investment in its future and its ability to uncover and unlock the value opportunities embedded in its global asset portfolio has positioned us ideally both to capitalize on the current market fundamentals, as well as to continue to thrive throughout the future cycles, which are inevitable. I will also reinforce how we are building a business that will grow profitably without the need for mergers or acquisitions and, therefore, which has the luxury of us looking at external opportunities for the few that may meet our strict value investment criteria.

This is the customary cautionary notice regarding forward-looking information. And for those who want to study it further, it is available on our website. As I'm sure you'll all appreciate, 2024 has been a challenging year in many ways, but we, nevertheless, continue to make good progress across all fronts, as the results for Quarter 3 show. As you can see, the performance arrows point in the right direction, and we believe a foundation has been laid for a strong fourth quarter, which should enable us to end the year within our group gold and copper production guidance ranges, albeit at the lower end of that range.

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Special highlights were the higher margins in our gold operations, driven by the higher gold price and cost discipline. This is in addition to the ongoing investments in infrastructure in Nevada Gold Mines, in particular; ongoing plant ramp-up at our flagship growth project, Pueblo Viejo; and the progress that we are making with the new generation of value creators, notably Lumwana and Reko Diq. Adjusted net earnings per share rose by 33%, the quarterly dividend was maintained at $0.10, and we repurchased $95 million of shares through buybacks. This is a special snapshot of our operating results.

Gold production was in line with that of the previous quarter, while the increase in cost per ounce was a function of planned maintenance and royalties on higher gold prices, partially offset by disciplined sustaining capital spend to get a stable all-in sustaining costs. Copper production was up 12% quarter on quarter, and costs were reduced. Our operations continue to deliver robust cash flows, generating $1.18 billion for the quarter. Free cash flow was up 24% year on year to $444 million, the highest since the first quarter of 2021.

The 33% increase year-on-year net earnings per share and the 25% increase in adjusted net earnings per share compared favorably to the rise in the realized gold price over the same period. Debt net of cash was reduced by 27% quarter on quarter to $500 million, ensuring that our balance sheet retains its sector-leading status and the flexibility, most importantly, to fund our future growth projects. On the safety front, our Journey to Zero, which I am personally leading, was regrettably impacted by a fatality at Kibali. This has reinforced our determination to achieve our goal of zero.

The fact that we otherwise recorded four lost time injury-free months for the first time since the merger and that the injury rates keep coming down are encouraging indicators of progress. We remain committed to operational excellence, with a continuing focus of embedding a strong safety culture across all our operations. Barrick's holistic approach to our business encompasses managing the many mine closure liabilities we have accumulated along the way. We are methodically moving to nonoperating tailings storage facilities, with the largest liabilities to safe closure.

By the end of the year, we will have safely closed seven facilities, with five more planned for next year, and we are rolling out a plan for the remaining 27. It's worth putting this into perspective because we have already reduced the associated closure liabilities for Barrick by more than $1 billion, which represents a 36% reduction in this liability. Barrick's sustainable mine closure is a key part of our plan to create long-lasting value. As the industry's reclamation costs and liabilities are projected to grow significantly in the coming years, our proactive effort to mitigate closure risks is differentiating Barrick from its peers.

On the operational side, we start with our North American operational review at Nevada, where a substantial investment in replacing equipment and restoring infrastructure is effectively recapitalizing the Nevada Gold Mines conflict for the -- complex for the next 10-plus years. New rolling plans for all the mines are keeping development ahead of operational stopes, and brownfields exploration aims to replace this year around 75% of reserves depleted by mining. The second phase of the Gold Quarry roaster expansion was successfully completed, and both roasters are now operating at full capacity. The new Goldrush mine, which was just a concept at the time of the merger, is also continuing to ramp up production.

Barrick's existing Fourmile project deserves a slide to itself, and so I'll talk about that a little later. These are the operating results for Nevada's four operating mines, all tracking for a strong fourth quarter, and Nevada Gold Mines aims to achieve its guidance for the year, albeit, as I said in the introduction, at the lower end. It is worth noting that we are able to optimize the combined gold production from Carlin and Cortez by treating the two entities as a complex. For example, as -- at times, it is possible to increase production with additional high-grade refractory ore from Cortez processed at the newly expanded Gold Quarry roaster, which, in de facto, will replace feed from the lower-grade Carlin stockpiles.

At Turquoise Ridge, the team is targeting higher production on the back of Quarter 3 productivity gains and improved reliability of the backfill infrastructure and the autoclave. Nevada, as I've often said, is Barrick's value foundation. And here, you can see why. Near-mine exploration continues to identify and grow exciting expansion opportunities close to existing infrastructure, as well as larger step-outs, with the potential to yield the next generation of Tier 1 discoveries.

The 14 million-ounce Greater Leeville project is developing into a major growth driver that could double or triple Carlin's reserves, extending its life well beyond 2045. New growth prospects defined in the Greater Leeville area will be followed by -- followed up by aggressive drilling next year. And recent drilling at Hanson within the Cortez district has confirmed along-strike potential over 1.2 kilometers from the well-defined Heart of Hanson's ore body. And deposit model upgrades at Turquoise Ridge have led to the definition of several new mine targets, with the potential to add to the 11 years of mine reserves.

Notably, since it was created five years ago, Nevada Gold Mines has replaced all the gold that it has mined during that period, and our current reserve grade is higher than when we started, and largely because we've recut the Gold Quarry pit and left out some of the lower-grade reserves. Turning now to Barrick's 100%-owned Fourmile project. We kept -- as you know, we kept it out of the Nevada merger because it was clear, at the time, that the market didn't recognize our view of its value. Since then, our work on the project has confirmed that it is a world-class asset, with grades more than double those of Goldrush.

And potentially, this project has this value which is bigger than our entire 61.5% holding in the Nevada Gold Mines joint venture. As you can see here, there's potential to significantly increase the extent of the current ore body model. We are now drill testing potential access development to the main ore bodies, and this is all designed to be able to help us with the scoping work for how we proceed with the pre-feasibility study, which is scheduled -- the scoping work will finish this year, and then we'll move toward a feasibility study program starting next year. Leaving North America and back -- down to Latin America and Asia-Pacific.

Over now to this region where the ramp-up of the Pueblo Viejo plant expansion delivered a 23% increase in quarterly production and reduced unit costs, while Veladero continued its steady performance. That's important as -- when you look at that because -- and I'll show you that just now -- because that's really the driver of value for that part of the world. The Porgera team also deserves a special mention for revitalizing the long mothballed mine and achieving a 64% quarter-on-quarter production increase in Q3 in the face of enormous challenges, including national -- natural disasters and ongoing tribal conflicts in Papua New Guinea. Just as a reminder that Pueblo Viejo, which had an uncertain future at the time of the merger, has been completely reinvented and is now in -- on track to sustain gold production at an annual average of more than 800,000 ounces to 2024 -- 2040 and beyond.

Clearly, significant improvements in production, recovery, and costs, as you can see here. This 2 billion-plus project is still a work in progress as we are fine-tuning the plant and advancing the new tailings storage facility. As we show you every quarter, here, you can see a timeline of what's been done and what remains to be done to achieve our target of an 80% recovery rate for this year. Had the commissioning not been plagued by major equipment failures and, in particular, the collapse of the new crushing conveyor structure, we would have reached that goal much sooner.

In Latin America, we have also rationalized our historical portfolio, with a focus on quality prospects, with Tier 1 potential, which is being progressed rapidly by drill testing. We've effectively wiped the slate clean and started afresh in South America. Two large systems, one gold and one copper, have been defined in Peru, where drilling permitting is progressing. And an excellent set of opportunities are emerging in Ecuador.

In the Dominican Republic, drill-ready targets have been defined around Pueblo Viejo and regional greenfields programs are progressing in the district. Whilst, in Argentina, our focus remains around Veladero, looking for high-grade targets, and in particular, a standout target right now is defined as the Ortiga Trend. Over in Pakistan, the Reko Diq copper-gold project, another hidden gem we uncovered in the Barrick portfolio, is on track for delivery of its feasibility study by the end of this year. In the meantime, the project management and construction teams are being recruited, long-lead items are being ordered, and the infrastructure is being prepared for the transition from the study phase to the execution of the early works.

When it goes into production in 2028, this multigenerational mine will be one of the largest of its kind in the world, and it remains a mystery to me why the market still doesn't recognize the enormous value it will bring to both Barrick, as well as the Balochistan and Pakistan economies. We move now to the African and Middle East region, which delivered its usual reliable performance. How to? It was only after the merger that the potential value of the closed mines in Tanzania were unlocked. Lumwana in Zambia, which hadn't made a profit since its acquisition in 2012, was also recognized as a new value creator.

They now rank among our greatest success stories and largest cash generators of the group. In Mali, the Loulo-Gounkoto complex increased production by 5% quarter on quarter, and we expect that full year production will be at the top end of its guidance range. You will all be aware that we are engaged with the country's transitional government about ways of giving the country more of a share of the economic benefits generated by the complex while ensuring its sustainability. For more than 30 years, Barrick and, before it, Randgold have had productive partnerships with the Malian state, which weathered many changes of government, including previous coup d'etats, and a range of differences which had to be overcome from time to time.

We are committed partners, and we are working hard to produce a mutually acceptable outcome. We return now to Kibali, Africa's largest gold mine and Barrick's leader in renewable energy, thanks to its three hydropower stations. Its new solar and battery storage plant designed to complement the hydropower supply will be commissioned next year. And when it will -- and when it is in commission, it will increase the renewable component of Kibali's energy requirements from 81% to 85%.

And in fact, six months of the year, the renewable portion of our power generation will be 100%. Despite the lower grades in Quarter 3, Kibali's cost profile is still one of the lowest in the industry, and this will improve further with the higher grades and production ramp-up forecast for Quarter 4. In our ongoing quest to uncover new open pit and underground opportunities around the mine, brownfields exploration work continues to develop the arc target area, where drilling is identifying additional mineralized lodes, further confirming its potential to host a high-grade deposit less than four kilometers from the Kibali plant, as well as returning significant intercepts along Kibali's foundational KCD ore body. As I've already pointed out, Tanzania has also been a real value contributor to Barrick, as well as the Tanzanian government.

Two mines that weren't operational at the time of the merger have now been transformed into significant contributors to our bottom line, showing what the right people with the right strategy can achieve. It was here that we first formalized our partnership with the government through the establishment of Twiga, a benefit-sharing joint venture, which we have since replicated at Porgera. The Lumwana copper mine in Zambia is another asset that was first restored to profitability and is now being groomed as a world-class operation through its Super Pit expansion project. Its feasibility study is scheduled for completion by the end of the year, and it is expected to go into production in 2028, the same year as Reko Diq, achieving our strategic objective of becoming a significant copper producer.

The project was launched with a groundbreaking ceremony recently attended by the Zambian president. And meanwhile, there are lots of preparatory activities, as listed on this slide. As I already shared with you, Barrick is projecting a 30% growth in the production of gold equivalent ounces from its existing assets as we continue to advance our growth projects and unlock the many other value-adding opportunities still embedded in our portfolio. In addition, Barrick continues to lead the industry in ore body expansion and has more than replaced the reserves that mined over the past five years and is forecasting to substantially grow both its gold reserves and copper reserves again this year.

Significantly, the ounces that we have been avid were at the same or better grade than the reserves that we mined. Since the merger in 2019, Barrick has organically built an industry-leading balance sheet through reducing debt by $3.5 billion while, at the same time, investing $11.2 billion in developing long-life mine plans and return more than $5 billion to shareholders. Despite the multiple increases in the gold price over this period, the global gold demand is again projected to reach record levels for this year on the back of the return of Western investors into the metal via the gold ETFs. Gold equities, on the other hand, continue to underperform the gold price, and that is the opportunity for both us and our investors.

With our disciplined business approach and solid growth prospects, Barrick is a stock that offers real upside in both value and returns. And as importantly, we have the world-class teams to be able to deliver on our ambitions. Thank you, ladies and gentlemen, for your attention, and we will stand by for questions. And we've got pretty much the whole team here today to be able to support the questions.

And we'll start here in this room. So, any questions from the room? Yup, there we are.

Daniel Major -- UBS -- Analyst

Hi. Dan Major from UBS. Yeah, a couple of questions. First one, so it's high level, you've indicated you would be tracking toward the lower end of production guidance.

And in your materials, you highlight the spot gold price implies about $25 delta on the costs. If we think about the outlook into next year and with a focus on NGM and PV, in particular, is it fair to assume the exit rate from this year from a production perspective and a cost perspective implies some moderate downside to the previous guidance you gave for 2025?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Yeah. So, Dan, if you look at our report, our MD&A, the guidance is that PV is still ramping up into next year, and we went through that last quarter with -- particularly on the recovery side. And the big work stream we've got going at the moment is the Gold Quarry pit, which I touched on in the introduction, which is -- you know, we had the big sidewall failure on the Gold Quarry pit. And what we've done there is we're replanning that pit, and we don't have a good understanding of exactly what that profile is going to be.

But what we have done with the team -- and we have a new team in Nevada, a new executive team -- is that we've really guided them to leave some of the low-grade material that was always in that plan out, and we're doing it. And my -- you know, our guidance to the operating team in Nevada is, you know, we'd rather people focus on margins and profit -- long-term profitability than gold production. But we will update the market in some detail at our Investor Day presentations on the 22nd of November, and we hope to have our two plans on that together. I think the other drivers, and really that you saw that with PV, you get the production up, you get the cost down.

The cost control in LatAm is very good. I mean, we -- we're going to make guidance on costs and not on production, but that's how tight the cost control is. And Veladero has done much better. It's going to be above its guidance.

But that really shows you the leverage on the costs in PV, which is one of our low-cost producers. On the other side, Turquoise Ridge now is again making progress, and it has the same dynamic as PV. So, that -- again, Turquoise Ridge will come in at the bottom of its guidance, maybe a little bit below. But if you do the math, it's still a significant growth for Quarter 4.

And so, we'll see the benefit of that, and you'll start to really see -- I mean, you can see it already. It's a high-grade mine. You get the production right. And we had this -- we stopped that in Quarter 2 and had to really catch up on the backfill infrastructure.

And we've had ongoing challenges in the Sage mill. Autoclave, we've rebuilt the entire CIL circuit. You know, we've had to do a lot of backfill investment. And we carry that in all-in sustaining costs because the production is not increasing.

So, that's our protocol. We don't sort of try and bluff its growth capital. And you'll see, at the end of the day, we have -- we've had the same conversation, and you were around 2011, when everyone got confused what cash costs were -- remember that -- and they've made their own definitions. Well, at the end of the day, we're very disciplined in the way we define our costs.

So, that's another driver. And then Cortez is also going to be -- in fact, it's looking like it's going to be above its guidance, but that's because of what I explained to you. Cortez, as we ramp up, we have access to higher-grade refractory ore, and a lot of the feed in our plan at the moment is stockpiles out of Carlin. And so, we offset that, and we're managing that.

And that's the -- that is the -- you know, that's what we said right in the beginning. And remember, we didn't have the Long Canyon out of our portfolio then. You know, it was prematurely closed given what we expected it to be. And so, we are moving underground.

We are moving to more and more refractory ore, and that's why the Gold Quarry expansion was important, and that's also sustaining capital because it's part of that transition to higher-grade underground ore. So, those are the drivers. And Kibali, as I mentioned, is another high -- it's got a much better grade profile for Quarter 4. So, that's also going to drive our production.

Daniel Major -- UBS -- Analyst

Thanks. Just a follow-up on that and the subject of sustaining capex, I see it's coming down in NGM sequentially and quarter on quarter, but could you just walk us through the profile, the key projects? And then when we look out in the next couple of years, what's the delta on sustaining capex in NGM as you attack some of these issues?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Well, we're going to spend a bit of time on the Investor Day detail because if you look at the underinvestment in capital both in Barrick and in -- particularly in Newmont, it was material, and we'll show you that through a graph. The driver was Barrick was, you know, single-mindedly focused on paying down its debt. So, it was high grading the asset. And so, when we got there, there was no developed reserves ahead.

And the Newmont assets had effectively -- and I'm sure, if you guys had spoken to some of the Newmont people, certainly the ones that were there at the time, they would have told you that, you know, they weren't investing in Nevada. And so, when we got there, the mine plans were 18 -- 12 to 18 months behind. That's what we've been catching up. And the investments we've made are Sage mill, that's the whole mill.

So, from retrofitting most of the components of -- around the autoclave, the GEHO pumps, and every -- all the big valves, you know, it was -- and Barrick runs the biggest portfolio of autoclaves in the world. And so, you know, we definitely didn't have an autoclave setup that was best practice. And the same with the Gold Quarry roaster, it was ineffective, it was high cost, and it was -- you know, we needed to do that. And the way we upgraded that was that we did it in two shutdowns.

So, we've just finished the second shutdown to be able to get it. And now, it's up at its name -- its new nameplate. And the same with Goldstrike. We had to do some catch-up and new -- in Goldstrike because, again, that's a world-class roaster.

It's the lowest-cost roaster in the gold mining industry. But it -- you know, people had neglected things like process controls, etc., and we've been retrofitting or bringing those back up to speed. We're still busy with that. And then it's mobile fleet, both open-cast mobile fleet and also underground fleet.

And so, we've done -- we've got a program. It's still ongoing, and it'll -- you know, we are scheduling them out. We're also scheduling rebuilds. And we have been doing this for the last couple of years as well.

And there are some -- you know, there's a number of -- I think 71 trucks are the first sort of tranche of replacement. And so, those are the drivers -- the primary drivers. And then the other component is the development, in other words, catching up to make sure -- because as we go underground, we become money-constrained. We are process-constrained now.

But as we move underground -- and the way to keep the flexibility in Nevada is to build that flexibility underground because the cost of extra roasters, we're not there yet where we can motivate an extra roaster. So, we need the flexibility so that we can sit with options so when the roaster goes down, we have access to higher-grade feed so that we can catch up, and we'll get back into the forecast. And so, that's really the focus. And those are -- that's really -- and then on top of that, it's people.

And, you know, again, you will appreciate, I have always invested in people [Audio gap] more turnover rates. The big focus now is automation because of the cost of labor in the U.S. And so, we've got a big focus on that across the board. And that's where we will start those, particularly on automated vehicles.

And then -- and at the same time, it's worth pointing out that we've beefed up the skill base in PV to be able to support this expanded project, and we're building the tailings dam, which is a plus-billion dollar investment on its own. And then we've got -- we've staffed up for Lumwana, and we're largely finished with the staffing up on the leadership of Lumwana. The labor will still come, but we've -- we are already building those accommodation units. And we're close to complete on the leadership on the Reko Diq construction team.

There's a lot of work to do in Reko Diq as far as training the labor, and we've got all that in place now, and we're training, you know, from junior school to technical training colleges to universities. And then we're building an international -- what we call our international student group, which is all Balochistan graduates out of various universities, which will become the leadership in Reko Diq when we start the commissioning. So, a lot of people investment, a lot of foundational investment on building that next foundation. And it's on that basis that, when we forecast, we'll bring the all-in sustaining costs down.

And right now, we've got -- you know, all-in sustaining costs, depending on the mine, is somewhere between just under 1,000 to 1,150. And then on top of that, the -- a normal sustaining number is about $250 an ounce. I'm talking about per ounce now. And we've got another 200 on top of that, which is really rebuilding some of the infrastructure.

And I'm speaking broadly. Each mine is slightly different because of its overall base costs.

Daniel Major -- UBS -- Analyst

OK. So, medium term, there'll be about a $200 delta reduction in sustaining capex once you've finished?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Yeah, that's -- we're forecasting that by '27. We'll work it through. And again, in our Investor Day, we'll unpack that and show you it.

Daniel Major -- UBS -- Analyst

Thanks. I'll let someone else have a go.

Alan Spence -- Analyst

Hi, Mark. Alan Spence, BNP Paribas Exane. A few from mine. Just first one on capex guidance.

It implies a -- quite a big pickup in the Q4 spend. Is that all allocated or have you been maybe a bit more efficient year to date and that could be a bit lighter than what we're seeing?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Let me ask you. This is an annual question.

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

Yes. Is this on? Is this on?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Yeah.

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

It's -- well, as you can tell, we are guiding to be within guidance. As always with capital, there are some swings and roundabouts. So, there are some -- there's going to be some expenditure in there which is slightly different to what we would have planned in 2024, and there's going to be some expenditure that was planned in 2024 which will inevitably roll over into 2025. But invariably, that just means we kind of, yeah, manage that longer-term capital profile over the life of those assets.

So, yeah, we're comfortable with that guidance as it stands at the moment. And obviously, that will reflect in our guidance on our all-in sustaining costs as well, where we've indicated we still believe we'll be within the range that we provided at the start of the year, albeit adjusted for that higher gold price impact.

Alan Spence -- Analyst

OK. On reserve replenishment, in the release this morning, it notes confidence in a strong replenishment, net of depletion, including big contributions from Lumwana and Reko Diq. If you just looked at the operating assets, would it be a similar view, you're looking at net increases, and maybe which mines are you seeing the best opportunity?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Are you ready for this?

Unknown speaker -- -- Analyst

Yeah.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

OK.

Unknown speaker -- -- Analyst

Yeah. So, as Mark said earlier, for North America, we're currently tracking at about 75% replacement of all of the net depletion. Africa, overall, is looking at a net positive at the moment. And then LatAm, different -- between the different assets, there are some potential positive metrics being unlocked at PV through the ongoing TSF expansion work.

Whereas, Porgera, we're -- we've got some quite significant updates in the mine plan, particularly on the open pit, which will be as we're bringing -- unlocking some of that Wangima pushback that we've been talking about for quite some time. We've started that drilling. We've been drilling through the course of the year. And so, the first portions of those open pits will be starting to come into our reserves.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

And then just on the Reko Diq and Lumwana, those are big step-ups, and those are the additions. So, copper both and about -- how many million ounces of gold in Reko Diq for our account?

Unknown speaker -- -- Analyst

For our account, about 13.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Thirteen million ounces.

Unknown speaker -- -- Analyst

But again, we'll be giving a lot more detail at the Investor Day coming up, so --

Alan Spence -- Analyst

OK. Last one from me, just a quick one. The environmental rehab provisions, it's been impressive, how much the reduction has been there. Is it all kind of what you would consider best in class now or is there maybe more opportunity to further reduce?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, according to the international tailings standards, of which we're a founding member, we have a safe closure definition, which is the sign-off of a facility by independent experts. And Barrick has always had a -- you know, it's a -- it's an industry leader in its oversight of tailings dams. It has an independent tailings board that oversees our tailings rehab and our designs and our continued in compliance of our -- of all our tailings dams. And so -- and when I got to Barrick, you know, Barrick did -- you know, people always miss the liabilities you buy when you do M&A.

No one ever does that work. And so, we ended up with significant number of tailings dams, sometimes with having bought assets that we never ever mined. I've got the most expensive hat in the world called Homestake. But maybe Grant, who leads that, our sustainability side, can just comment on our philosophy.

Grant Beringer -- Group Sustainability Executive

Yeah. I mean, I think you talk about being industry-leading. I think we certainly are. I think the approach that we took after the merger was that we weren't going to kick the can down the road in terms of closure.

We're going to proactively manage it. And I think you've seen it in the numbers. I think one of the biggest focuses for me and the team has been long-term water management. We don't believe that, you know, water treatment in perpetuity is a closure option.

So, we've really looked at those, seen what alternatives we have in terms of passive water treatment or eliminating the need for water treatment so that we can safely close those sites. There's still work to be done. But as you can see, we've made a lot of headway. And I think it is that proactive management of those closed sites, but then also our concurrent rehabilitation of those operational sites.

We've got targets that we've set for each of the sites roll up into a regional level and then group. And, you know, we review those on a monthly basis, and we're tracking well ahead of those. And that's also key to reducing our liabilities while we mine.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

And one of the big drivers of our margin is managing that nonproduction cost, which is related largely to this. We've got sort of a bundle called interest and then -- and we get some interest back on that because we've got a cash position, and then the closure liabilities, and we've brought that down substantially. And this year, we -- we've -- we will take Pierina to a place where there's a big step down in ongoing costs, and then we start heading toward closure. And the same with the Pascua Lama.

You know, we've brought that cost down because the challenge that I gave the team is we're going to engineer the closure. So, instead of just maintaining the sites, we're going to engineer the closure. So, we've got a full closure team. And so, that nonoperating cost component of our closure teams have -- is reducing all the time, and that hits the bottom line as we progress.

And we'll get out of that quite quickly. I mean, we've got lots of older dams, but they are not at risk, and it's a matter of just closing them properly.

Alan Spence -- Analyst

Thank you.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Anybody else? Shall we move to the people on the call?

Questions & Answers:

Operator

Certainly. [Operator instructions] Our first question is from Lawson Winder with Bank of America Securities. Please go ahead.

Lawson Winder -- Analyst

Thanks very much, operator, and hello, Mark and team. Thank you for today's update. Can I get an idea from you guys? I suspect we'll get some of this at the Investor Day, but I thought just maybe an early hint as to what you're thinking about for 2025 capex directionally. So, 2025 total capex versus 2024.

And then any thoughts on which direction sustaining would be going and growth separately?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, Lawson, you know, I think the -- as I said, there's a lot of work in progress at the moment. We are -- we have some specific projects that materially impact those numbers. We've given you some guidance in the MD&A. A heads-up, we gave you guidance last quarter.

We need to finish the work. And so, the intention is to give you that directional steer at the Investor Day, and that'll be ahead of our final guidance, which we'll give you at the Quarter 4 meeting. So, I think I'll stick with that. Do you want to say something?

Lawson Winder -- Analyst

Yeah. OK.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Graham is going to say something.

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

The only thing I would add, Lawson, is, you know, as we've guided, we've got two big projects that are scheduled to start next year. So, directionally, capex is going to be up.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

But that's growth capex.

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

But that's all -- yeah.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

That's growth capex. I mean, Lawson, was asking for the sustaining capital. And again, you know, we -- you know, the big thing here is, is this industry making real money out of mining its own reserves? And, you know, that's where we're driving Barrick. That's our absolute focus is -- and so, you know, moving -- allocating sustaining capital to growth capital is like it defeats that object.

Lawson Winder -- Analyst

Oh, yeah, very fair point, and thank you for that color, both of you. I also wanted to touch back on the reserve and resource update. So, you discussed Fourmile, that the -- you know, you are in the progress of -- process of updating the model and looking to revise the current Fourmile resource estimate from last year, including a disclosure on an updated PEA. Is that something we can expect to be complete for the year-end 2024 R&R update?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Yes. The answer is yes.

Lawson Winder -- Analyst

I like short answers. Thank you. And then just on the R&R update, is the plan right now to stick with the $1,300 per ounce gold price assumption? And then how does that then correlate with your ultimate budgeting gold price assumption for next year? I mean, certainly looking at spot pricing versus the $1,300 per ounce, that is a really yawning gap, and it would seem that that probably needs to narrow at some point. I'd just love to get your thoughts on that.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, we are forecasting around $1,400. The inflation is -- you know, basic inflation CPI over the last three years is substantial in the 20s. And mining has been higher. So -- and we've -- and on top of that, we've dropped the grade from the grades that were mined in a lot of the Barrick mines when we took over.

So, we've squeezed that margin and delivered more efficiency, and that's the optimum way to manage ore bodies. And so, for us -- and when you look at it -- and I'll pass it on to Simon to explain briefly. But again, we're going to spend a lot of time on this in the Investor Day. But at 1,400, we deal on all our major deposits.

We can manage it. And it delivers real returns over the whole life of those reserves. And that's the way we test it. So, you mustn't confuse -- so we have always stuck to the reserve price that delivers our ore bodies, our world-class ore bodies.

If you go higher in all our major ore bodies, so Nevada, PV, Kibali, Loulo-Gounkoto, Porgera, all the big deposits, Veladero, we would move out of the ore body and you dilute the grade. And so, you -- when you do that, you dilute the NPV, the value of the asset. And so, we manage that. And when we run our budgets, we always use the reserve grade, and -- because why? It highlights the gaps and the issues.

Whereas, if you run our mines at 1,900, you can't see what's good and bad. And then we lift that price, the commodity price, whether it's gold or copper, to -- closer to the spot for the next year. That's the way we run it. And we use consensus on the long term on the valuations.

So, that's how we manage our business. There's a lot more to it, and we'll -- and copper is slightly different because both feasibility studies are being run at $3 and all our mines work at $3. In a year's time, we might well adjust that because we know that that will still keep the ore bodies intact and it won't push us outside the ore body. And if you do -- if you follow the strict science and you overstate the gold price, what you do is you need to put in extra capital to be able to deliver the same production profile.

So, that -- as a high level, that's just explains where we are. I think the rest, I'll leave to Simon to take you through in some detail at our Investor Day.

Lawson Winder -- Analyst

OK. Thank you very much, Mark.

Operator

Next question is from Anita Soni with CIBC World Markets. Please go ahead.

Anita Soni -- Analyst

Hi. Good morning, Mark and team. I -- my question was around Nevada Gold Mines. I think 2024 was a bit of a dip year on grades.

Are you still expecting an uptick into 2025 on the grade front, and specifically which assets? I'm assuming it was Carlin because Carlin was down this year.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, you know, Anita, the -- certainly, Turquoise Ridge is going to drive grade, and Cortez as well as we ramp up. The big sort of variance is what we do with Gold Quarry open pit and the other open pits. And that's the focus of Simon and the team as we finalize our guidance going forward. And again, you know, that will change to, you know, the overall feed grade, but -- and that's our focus.

We want to build a profitable business in Nevada, and that's our -- and then -- and we'll share that with you on the Investor Day. The key is Turquoise Ridge is a world-class -- you know, it's one of the highest-grade deposits in the world. And so, we need to get that right, and getting that right does lots of things. It brings down the costs, and it delivers production growth.

And likewise with the ramp-up in Cortez. And then we've got the other opportunities that we -- you know, we're looking at both in the Goldrush and I mentioned Hanson and the work that we're doing there. And that's going to also impact the flexibility of Cortez. And Carlin is the one that we really have to spend more time on.

We've got the Crossroads open pit, I think, clearly understood. We're busy still scheduling the mine plans, but we now really understand that deposit. And we -- we've got a big focus on the open pit mines for the next life of mine updates.

Anita Soni -- Analyst

OK. And then could you just clarify again to me what your -- the struggles you're having at Turquoise? I assumed it was pace backfill as the issue or are there other --

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, it's just backfill infrastructure. And I mean, to be frank, it was backfill infrastructure process reliability and some management issues. We've fixed the management issues. We are pretty much on top of the backfill.

And we're close to getting -- I mean, the reliability of that processing plant is now totally different to what it was, and I'll give you an example. You know, three years ago, we were worried whether we would lose part of the CIL tanks. They had worn so thin. And so, we've now at a position where we know we're through that.

I think we got one more tank to go. I think one more tank to go. And we've upgraded all the tanks. So -- and then the GEHO and the autoclaves, we've got a bit more to do on upgrading some of the pumps in the sequence.

But again, I think we're out of the woods there. The other final thing is the electrical infrastructure that we've been working on. And again, we've made a lot of progress there, and we'll -- you know, we're pretty comfortable that we'll be on top of that out to the back of this year.

Anita Soni -- Analyst

My last -- all right. Last question is with respect to inflationary pressures you're seeing. Obviously, with Newmont's results, people are a little focused on cost. On just outside of the grade changes, what kind of headwinds and tailwinds are you seeing on the cost side going into 2025?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, our job is to manage costs, and I'm not sure where the sort of singling out of contract cost comes from. It's not from us. I mean, the cost pressure in labor is there. Everyone knows it.

And if you're in the United States, we didn't have the luxury of having to offset it with softer currencies. So, we've managed that. And again, you know, the big focus is on -- and we're still not as efficient in Nevada as we are in some of our African mines, but we're getting there. And then, as I touched on, it's about managing down those costs because they're there, and the way to do that is, one, more -- better efficiency, which means more skills, better skills, invest in skills; and the other is automation and more machine control, electronic IT sort of type machine control.

And so, you know, we are -- again, we don't -- you know, I find it quite strange that people -- you know, the inflation is real. When you look at the average total cash costs of the mining companies in, you know, four years ago or three years ago and then you look now, something is different. Most of the time, it's grade, higher grade. And higher grade means shorter lives, unless you find more ounces.

And so, that's our focus. And, you know, I -- you know, the inflation is what we've explained. We are managing it, and we've adjusted our mine plans to use $1,400 gold because we see that's embedded in cost increase after everything we've done. And then some of the higher costs in our all-in sustaining costs is not inflation-driven.

It's capital-driven, it's infrastructure-driven, and we'll get over that. So, that's why we don't use higher costs for those short years because we get through it. And that's the -- that's very useful with the gold price as it is today.

Anita Soni -- Analyst

All right. Thanks. That's it for my questions.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Thank you.

Operator

The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

Tanya Jakusconek -- Analyst

Oh, great. Good morning, everyone. Thank you for taking my questions. Just maybe wanted to come back to Pueblo Viejo, if I could.

Mark, you gave us the recovery. Thank you for that. Looking forward to getting to that higher recovery. When do you think you will be in -- when do you think you will get to your nameplate capacity now? You know, when do we look for 14 million tonnes per annum?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, you know, we have this debate last time, Tanya, which you led. So, we're going to make our 80% recovery by this year, and we're targeting 85 next year. And the following year, we'll be -- at the end of the following year -- at this stage. But, you know, we've -- we -- on days and over couples of days, even today, now, we are getting runs that exceed our nameplate and get up in the recoveries, and that's part of this commissioning.

You know, we've got two SAG mills, one single SAG mill, one ball mill, and a very complex flotation process, and that's what we're busy managing. And so, you know, I -- we -- you know, the target, Graham, is real -- 2026 is when we go into above 800,000 ounces. That's what I -- that's the best I can do for guidance now. And in 22nd of November, we'll give you a little bit more color.

Tanya Jakusconek -- Analyst

OK. And that would be when you're assuming that 14 million tonnes?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

No, we'll get -- that'll come out over the part of the -- yeah, 2026 is when we will get to that throughput, yes.

Tanya Jakusconek -- Analyst

OK. Helpful. Thank you. And then just maybe a higher-level question for Nevada Gold Mines.

With all of these changes, and I appreciate, you know, you're, you know, getting Turquoise Ridge fixed, you're changing mine plans at Carlin, you've got Fourmile growing, but, you know, we'll leave that one out for now. I think previous guidance had been that this complex could get on 100% basis up to about that 3.5 million ounces. I think we're just under 3-, 2.8-ish, or whatever we are for 2024. Long term, do you -- have you changed your view on what this complex can deliver, excluding Fourmile?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

No. Long term, no. But remember, there's -- these -- this is a massive operation. It's the biggest gold mining producer in the world by a long -- bigger than, you know -- it's certainly the third biggest gold producer in the world, by the way, if you put Barrick and Newmont aside.

So, for us, absolutely, long term. The question is how do we get there? And then the opportunity is still immense, you know, because we're now on top of our development ahead of the phase. And now, we're starting to look at opportunities, and I just touched on some in my presentation, you know, which have, you know -- and so -- and the bottom line here, which I think people should appreciate, is that both the two previous owners, that if they had continued, we wouldn't have Nevada Gold Mines. I mean, that's a fact.

And today, we've got a serious asset. And I would point out that neither Newmont or Barrick issued a single share for their holding in this business. And it's certainly a whole lot better than it was, and it's going to continue to improve, both -- and the big focus for us is cost, is getting those costs out.

Tanya Jakusconek -- Analyst

So, one of them is obviously getting the volume up to help you get those costs down. But OK --

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

We -- just -- let me just set you right there. We're constrained on amount of refractory ore we can process. And so, the linkage -- and we told this to the market. The -- there's another issue about the open cost, which is a great flexible add-on, which is Long Canyon.

But there wasn't the reserves that people thought and there wasn't the reserves that analysts had modeled. And we bought this asset, remember, based on analysts' consensus. We didn't do any due diligence if you recall. So, we are constrained by production.

And the way that we can manage it, as I pointed out, is how do we manage underground in a more flexible way. How do we -- how are we smarter because, right now -- well, last year, in particular, we didn't have the flexibility -- less of the flexibility of the open pits. This year, we've got even less flexibility from open pits and a lot more feed, and the roasters we've expanded now, and that's it. That's it.

So, when we have a roaster go down, the way to catch up the guide -- to guidance is to be able to access higher-grade ore. And so, to be able to do that, we've got to have flexibility with available higher-grade ore to make up the difference. And I'll give you an example. You know, both Loulo-Gounkoto and Kibali are now at that stage, where the way we maintain our guidance is the flexibility in mining.

And we need to get Nevada to that point. And we're a whole lot better, as you'll see this Quarter 4. You'll see some of those results.

Tanya Jakusconek -- Analyst

So, how -- when do you think -- when do you think, Mark, you'll get there, to where you put all that time and energy into the other mines and you got there? Do you think we're a year away, two years away?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Well, I think we're probably -- well, we've told you, we're two years away on the costs, but we'll see the costs starting to come down. And the only way we can increase throughput is to build another roaster or find some oxide material that we can feed into our leach pads or into the oxide mills. And we've got plenty of capacity in oxide mills. At this stage, we're transitioning in the autoclaves, but we've still got capacity there as well.

Tanya Jakusconek -- Analyst

All right. Maybe one other question for you, and then I do have one confirmation question just for Graham. Just, for myself, you know, Mali, lots of information and press releases on yourself and the government. I'm just confused as to where we are on this.

I thought an agreement had been put in place. You paid -- made a payment. And then we have a press release saying that, you know, the government may not renew the contract or contract of work. Mark, where are we on that?

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

So, you're referring to the press release the government made, and then there was a subsequent press release that we made, which was very clear about where we are. And, Tanya, you would understand, it's not my intention to debate this issue publicly. We are engaged with the transitional government of Mali, and we have indicated that we are committed to finding a way to share the benefits, as we've done in Tanzania and Papua New Guinea and as we do everywhere. And we're prepared to give more to the Malian government than 50%.

And that's the negotiation. And at the end of the day, we are very clear that, you know, we are the major flywheel in the economy of Mali. There's no other entity that makes a bigger contribution to the Treasury. At the same time, we're also mindful that our job is to ensure that the national assets are properly unlocked for the benefit of all stakeholders.

And again, you know, just not having this conversation, if you're a partner with a host country, you should have this conversation because, otherwise, you allow a situation where the costs are increased abnormally and all the -- the only remedies we have as miners is to increase the grade and shorten the life of the mine. And we've been very clear about that in all our public statements. And so -- and that's our intention. And we have absolute confidence that we can demonstrate that.

The value benefit to Mali and its people are best done around a model, around a table, understanding exactly what Loulo-Gounkoto look like. And we are engaged and we will continue to engage until we work out a plan because we are definitely the right people to deliver that value for the benefit of Mali, as we have done for the past 30 years.

Tanya Jakusconek -- Analyst

Look forward to concluding something on that soon. Maybe my final question for you, Graham, I just need to confirm, 40% of your costs, I think, is labor. Just on the inflation -- wage inflation that's going on globally, would it be fair to assume that you're within that 3% to 5% on wage inflation as we look into 2025?

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

Yeah, Tanya, that's a reasonable range to say we're in. Obviously, in different areas, you've got different pressures, but that's a reasonable range.

Tanya Jakusconek -- Analyst

OK. Thank you so much for taking my --

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Pleasure.

Operator

Mr. Bristow, there are no further questions from the conference call.

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Any questions back in this room? OK. Well, thank you, everyone. It's nice to be back in London. I wish you a good Christmas and a Happy New Year and look forward to catching up.

We are on a road show now. We'll be meeting some of you again this evening. And as I always say, for you here in the room and those on the call, we're always available. If you have any questions that you've forgot to answer now, if you want to reach out to the team, we're always available.

So, again, thanks for coming and see you all soon.

Duration: 0 minutes

Call participants:

Dennis Mark Bristow -- President, Chief Executive Officer, and Director

Daniel Major -- UBS -- Analyst

Mark Bristow -- President, Chief Executive Officer, and Director

Alan Spence -- Analyst

Graham P. Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

Graham Shuttleworth -- Senior Executive Vice President, Chief Financial Officer

Unknown speaker -- -- Analyst

Grant Beringer -- Group Sustainability Executive

Lawson Winder -- Analyst

Anita Soni -- Analyst

Tanya Jakusconek -- Analyst

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