Barrick Q3 2026 Results - FRANCO NEVADA CORP

Financial Performance:

• Adjusted net earnings were $0.82 per share, a 41% increase year-over-year.
• Attributed adjusted EBITDA rose over 20% to $3.5 billion.
• Consolidated free cash flow reached $1.2 billion, with year-to-date capital returns totaling $3.2 billion.
• The balance sheet remains strong with $0.9 billion in net cash and a $3 billion undrawn revolving credit facility.
• No significant debt is due until 2033.
• Operating cash flow was in line with the prior year despite increased investment in growth.

Guidance and Future Outlook:

• Full-year 2026 production and cost guidance remain unchanged and are on track to be met.
• Q4 2026 gold production is expected to be slightly higher than Q3, while copper production should increase due to stockpiled material at Lumwana.
• The IPO of North American gold assets is targeted for completion by year-end or early next year, subject to market conditions and SEC feedback on S1 filings.
• 2027 guidance will be provided in the upcoming quarter; management advises against extrapolating the strong Q4 2026 performance into 2027.
• The Lemuana expansion remains on budget ($2 billion) with first copper from the expansion expected in Q1 2028, targeting 240,000 tonnes annually.
• Long-term optimization projects for NGM (Cortez processing, rail infrastructure, Four Mile access) are positioned to drive production changes beyond 2030.

Business Segments and Product Lines:

• North America: Delivered nearly 500,000 ounces of gold; Nevada Gold Mines (NGM) reported 67% EBITDA margin and Pueblo Viejo (PV) 72%. Gold Rush Underground and Turquoise Ridge achieved record throughput. PV ramp-up was impacted by planned autoclave maintenance.
• Barrick International: Produced 319,000 ounces (+6% QoQ), driven by Lulu-Gongo (+16%), Kabaly (+20%), and Bulyanhulu; offset by El Niño disruptions at Veladero and Porga.
• Copper: Produced 50,000 tonnes; Lemuana completed a mill reline, while operations in South America (Zaldivar, Jebalsahid) were impacted by feed grade and currency fluctuations.
• Four Mile Project: Management restructuring with Newmont has generated synergies; engineering is ongoing to access ore bodies via the Gold Rush platform.
• Exploration: Record drilling spend at NGM, specifically targeting the North Crow area between Gold Rush and Four Mile, expected to support future processing capacity.

Market and Competitive Landscape:

• High gold and copper prices are being leveraged to generate strong earnings and cash flow.
• The Andean portfolio review is underway to unlock value from assets like La Alumbrera and Norte albertio amidst a more pro-mining regulatory environment and higher commodity prices.
• North America gold production is outpacing typical seasonal profiles, with management shifting to a steadier state approach rather than a typical Q4 ramp-up.
• Industry-wide talent competition in Nevada for skilled labor is noted, though turnover at NGM remains relatively flat.

Risks and Challenges:

• Cost Pressures: International operations face headwinds from rising diesel prices, foreign exchange volatility, and higher royalties due to stronger commodity prices.
• Weather Events: El Niño impacts continue at Veladero (winter storms causing downtime) and Porga (water shortages), affecting Q4 guidance slightly.
• Project Delays: Permitting for new road construction and bridges at PV is ongoing, though not currently impacting the schedule.
• Exploration Uncertainty: While North Crow shows high-grade intercepts, metallurgy is unconfirmed, and full resource definition requires further drilling.

Management Commentary and Tone:

• Management expressed high confidence in operational execution, noting four consecutive quarters of improved safety and financial results.
• Safety remains the top priority, with recordable injury rates dropping to 0.71 and over 24,000 critical control verifications conducted.
• The tone regarding capital allocation is disciplined, prioritizing balance sheet strength, growth investments, and shareholder returns.
• Management highlighted successful integration of the Four Mile project and synergies realized since the Newmont JV.

Analyst Questions and Answers:

• Daniel Major (UBS): Asked about 2027 guidance extrapolation and next-year CapEx. Management clarified that 2026 Q4 strength should not be extrapolated to 2027 and that CapEx for 2027 will be driven by existing projects (Lemuana, sustaining) with no major NGM expansion CapEx lift expected in that specific year.
• Richard Garchitorena (Barclays): Inquired about the balance of International portfolio performance and the IPO timeline. Management confirmed the S1 filing is imminent and that while Veladero faces challenges, the portfolio approach keeps total guidance on track.
• Anita Soni (CIBC): Asked about PV recovery rates. Management indicated long-term targets remain in the low-to-mid 80% range once the third flotation train is commissioned, with interim fluctuations due to feed blend changes.
• Matthew Murphy (BMO): Questioned capital returns in light of Newmont's potential cash infusion. Management stated buybacks are based on current plans and that any proceeds from future asset sales/IPO will be considered separately by the Board.
• Tanya Yakuskinek (Scotia Bank): Asked about turnover and cost inflation. Turnover is flat despite industry labor competition; cost guidance for 2027 is still being finalized but controllable costs in North America are well-managed.
• Bennett Moore (JPMorgan): Queried Four Mile spend and international portfolio monetization. Four Mile spend was adjusted due to JV integration; Andean assets are being re-evaluated for value unlock.
• Lawson Winder (B of A): Asked about Lemuana CapEx confidence and North Crow exploration. Confirmed $2B budget is locked in due to long-lead equipment procurement; North Crow is a key growth corridor utilizing future Cortez processing capacity.
• Fahad Tariq (Jefferies): Inquired about NGM infrastructure optimization timing. Confirmation given that major processing and rail improvements are expected post-2030 to optimize the entire complex.
• Bob Brackett (Bernstein): Asked about PV tailings dam permitting. Stated that wall construction is underway, and while some permits are pending, they are not impacting the 2029/2030 timeline.

Other Key Points:

• Dividend Policy: New policy includes a base quarterly dividend of 17.5 cents, with a year-end top-up to target 50% of attributable free cash flow; this quarter saw $0.8 billion in buybacks.
• Shareholder Returns: Barrick has returned $10.4 billion to shareholders since 2021, with 2026 on track for record annual returns.
• IPO Details: S1 filing will include technical reports; the process will continue through SEC feedback, with potential completion in January if delayed.
• PV Resettlement: 97% of families have been resettled with 99% of packages accepted.
• Lemuana Expansion: $795 million spent so far, with major equipment procurement complete and mill building construction on critical path.