TORONTO, ONTARIO -- (Marketwired) -- 08/01/13 -- Barrick Gold Corporation (NYSE: ABX)(TSX: ABX) (Barrick or the "company") today reported a second quarter net loss of $8.56 billion ($8.55 per share), reflecting $8.7 billion in after-tax impairment charges largely driven by significant decreases in long-term metal price assumptions following the sharp declines in spot prices in the second quarter. The total charge is comprised of: $5.1 billion for the Pascua-Lama project, $2.3 billion in goodwill impairments and $1.3 billion in other asset impairment charges.
Second quarter financial highlights include:
-- Adjusted net earnings of $663 million ($0.66 per share)(1)
-- Operating cash flow of $896 million
-- Adjusted operating cash flow of $804 million(1)
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SECOND QUARTER 2013 OPERATING HIGHLIGHTS AND FULL YEAR 2013 GUIDANCE
Current Original
Gold Q2 2013 Guidance Guidance
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Production (000s of ounces) 1,811 7,000-7,400 7,000-7,400
All-in sustaining costs ($ per ounce)(1) 919 900-975 1,000-1,100
Adjusted operating costs ($ per
ounce)(1) 552 575-615 610-660
Copper
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Production (millions of pounds) 134 500-540 480-540
C1 cash costs ($ per pound)(1) 1.75 1.95-2.15 2.10-2.30
C3 fully allocated costs ($ per
pound)(1) 2.27 2.50-2.75 2.60-2.85
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"We are pleased with our second quarter operating performance and our improved 2013 guidance. These results reflect the high quality of Barrick's portfolio of assets and our increasingly effective efforts at controlling costs. We are disappointed with the impairment charges for Pascua-Lama and other assets but are confident that these assets, some with mine lives in excess of 25 years, will generate substantially more economic benefits over time," said Jamie Sokalsky, Barrick's President and CEO.
"Over the past year, we have taken and are continuing to take a series of steps to reduce costs as part of our disciplined capital allocation framework, which allowed us to respond quickly to the new metal price environment. We have reduced 2013 budgeted capital and costs by about $2.0 billion which has offset the cash flow impact of the drop in gold and copper prices that has occurred this year. We have reduced all-in sustaining cost guidance by about $100 per ounce this year from levels which are the lowest of our peers. The bulk of our expected 2013 gold production is at all-in sustaining costs well below current spot levels, and for those operations that are not generating positive cash flow, we will change mine plans, suspend, close or divest them.
"We have sold Barrick Energy and are well advanced in a process to divest certain Australian assets as part of our portfolio optimization strategy. We are progressing the Pascua-Lama project by extending the overall construction schedule over a longer period, which substantially alleviates near-term capital spend, and we are also working to meet regulatory requirements. We also termed out $3.0 billion of debt at attractive rates to reduce near-term maturities. And finally, in light of the current environment, we have also made a decision to lower the quarterly dividend to improve liquidity. We recognize the importance of dividends to our shareholders, and it is our goal to return more capital to investors in the future, but at this time, this is the prudent course of action."
POSITIONING BARRICK IN A LOWER METAL PRICE ENVIRONMENT
High Quality Asset Base and Aggressive Cost Reductions Provide Operational Flexibility
Barrick's strategy prioritizes shareholder value creation by focusing on maximizing risk-adjusted rates of return and free cash flow based on the principle that returns will drive production, production will not drive returns. In today's environment, Barrick has no plans to build new mines.
As part of our increased focus on disciplined capital allocation adopted a year ago, we have reduced costs and improved cash flow, initially cutting or deferring about $4.0 billion of previously budgeted capital expenditures over a four year period, shelving certain major projects and launching a portfolio optimization process.
Barrick's comprehensive cost reductions and high quality asset base provide the company with significant operational flexibility. Its superior group of five key mines - Cortez, Goldstrike, Pueblo Viejo, Veladero and Lagunas Norte - are expected to generate some 60 percent of 2013 production at average all-in sustaining costs (AISC) of $650-$700 per ounce. An additional seven mines have AISC below $1,000 per ounce, bringing the total amount of expected 2013 production with costs below this level to about 75 percent.
Developing Plans to Maximize Cash Flow
For the remaining operations with expected 2013 AISC above $1,000 per ounce, we will either change mine plans, suspend, close or divest these assets to improve cash flow. Actions currently being considered as part of an ongoing process include:
-- Bald Mountain (US) - mine plan changes to reduce the number of pits and
focus on the most profitable ounces, while retaining the option to
access other ore in the future
-- Round Mountain and Marigold (US) - working with our joint venture
partners to optimize mine plans
-- Hemlo (Canada) - defer the open pit expansion and optimize the
underground mine plan
-- Porgera (Papua New Guinea) - evaluate mine plan changes and explore
other alternatives
-- Plutonic, Yilgarn South (Australia) - optimize the mine plans and/or
divest
-- African Barrick Gold (ABG) (Tanzania) - finalizing a detailed
operational review to aggressively optimize mine plans and improve
operations
-- Pierina (Peru) - assessing closure options
Under the direction of the new leadership appointed last year, a turnaround team of functional experts and site management have been working to improve operations and reduce costs at the Lumwana copper mine. Lumwana delivered a substantially improved performance this quarter. We have made changes to the mine plan to decrease costs and maximize cash flow. The changes include a reduction to waste stripping as a result of mine re-sequencing and significant labor reductions, including termination of a major mining contractor. A number of further business improvement initiatives continue to be implemented at site to enhance the productivity of the core mining fleet and build upon the cost reductions achieved so far. We continue to see positive results from these actions, and the improvements at Lumwana have allowed us to significantly improve 2013 copper cost guidance.
Long-Term Production Targets Will Be Aligned with Portfolio Optimization and Mine Planning Changes
We are developing mine plans to maximize cash flows at every mine. The outcome of this process could have an impact on our year-end 2013 proven and probable reserves and expected future production levels; however, where possible, we will maintain the option to access the metal in the future. As a result of the schedule delay at Pascua-Lama, expected mine plan changes to maximize cash flow and the likelihood of further asset divestitures, we are no longer targeting eight million ounces of gold production in 2016.
2013 Guidance Improvements Reflect Ongoing Cost Reductions Totalling $2.0 Billion in First Half
Total reductions to budgeted capital and costs for 2013 of about $2.0 billion have offset the cash flow impact of the declines in metal prices that have occurred this year. During the first quarter of 2013, Barrick reduced budgeted 2013 capital and costs by approximately $500 million and lowered 2013 cost guidance for total capex and exploration. In the second quarter, the company has accelerated actions to improve cash flow. Operating cost reductions also reflect the softening of input costs such as steel and tires, as well as the weakening Australian dollar, and we continue to evaluate additional ways to reduce costs.
As a result of the strong measures taken in the second quarter alone, reductions to budgeted 2013 capital expenditures and costs include approximately:
-- $600 million in operating costs; -- $200 million in sustaining, development and mine expansion capital; -- $600 million in project capital, primarily related to Pascua-Lama; and, -- $50 million in exploration and evaluation expenditures.
In addition, the company has reduced its corporate office staff by approximately 30 percent and made other significant job reductions at regional locations. As part of the ongoing company-wide overhead and operational review initiated in the first quarter, Barrick is also evaluating further changes and cost reductions to make the organization more efficient by simplifying the management structure and placing a greater emphasis on clearly defined responsibilities and accountabilities.
FINANCIAL RESULTS DISCUSSION
The second quarter net loss and adjusted net earnings of $8.56 billion ($8.55 per share) and $663 million ($0.66 per share), respectively, compare to net earnings and adjusted net earnings of $787 million ($0.79 per share) and $821 million ($0.82 per share), respectively, in the same prior year period. The net loss reflects after-tax impairment charges of $8.7 billion and a $0.5 billion loss on the sale of Barrick Energy.
The fair values in the impairment assessment were calculated as at June 30 assuming metal prices that were influenced by only recent spot price declines, yet which are then applied and held constant over mine lives that in some instances are in excess of 25 years. As a result of these significant price declines, we have revised our gold, copper and silver price assumptions utilized for impairment testing to $1,300 per ounce, $3.25 per pound and $23 per ounce, respectively. We are confident our assets will generate substantially more economic benefits over time for our shareholders than these current valuation levels imply. Although Barrick does not rely on higher prices to drive its business plans, we remain positive on long term price fundamentals for these metals. With higher prices in the future, we would reassess the fair value of our high quality, long-life assets such as Pascua-Lama, and could potentially reverse some of the impairment charges recorded.
Significant adjusting items (net of tax and non-controlling interest effects) for the quarter include:
-- $5.1 billion in asset impairment charges against the carrying value of
the Pascua-Lama project;
-- $2.3 billion in goodwill impairments to the Global Copper, Australia
Pacific, Capital Projects and ABG segments;
-- $1.3 billion in other asset impairment charges, including $423 million
for Buzwagi, $401 million for Jabal Sayid and $107 million for Kanowna;
and,
-- $0.5 billion loss related to the sale of Barrick Energy.
Second quarter 2013 operating cash flow of $896 million compares to $919 million in the second quarter of 2012. Adjusted operating cash flow of $804 million removes the impact of the settlement of foreign currency and commodity derivative contracts and non-recurring tax payments, and compares to $919 million in the same prior year period. Realized gold and copper prices for the quarter were $1,411 per ounce and $3.28 per pound, respectively, both in line with the spot averages.
LIQUIDITY AND FINANCIAL FLEXIBILITY
At June 30, Barrick had cash and equivalents of $2.4 billion and $4.0 billion available under its five-year credit facility. The company generated strong operating cash flow of $2.0 billion in the first half of 2013 and is on track to meet 2013 production guidance at costs well below original guidance. Barrick's consolidated tangible net worth at June 30 was $6.3 billion. In addition to the reductions to budgeted 2013 capital and costs, Barrick further strengthened its liquidity in the second quarter by terming out $3.0 billion in debt at attractive interest rates to reduce near-term maturities. The company has approximately only $1.8 billion of cumulative debt maturing through to the end of 2015.
Subsequent to the second quarter, the company divested Barrick Energy for total consideration of $442 million, including cash of $394 million plus a royalty on certain assets valued at $48 million. The proceeds will be recorded in the third quarter of 2013. In addition, a process to divest certain Australian assets is well advanced, and the company continues to actively pursue other portfolio optimization opportunities, including the divestiture of other non-core assets. The company's Board of Directors has reduced the quarterly dividend to $0.05 per share as a further prudent step to improve liquidity. The dividend is payable on September 16, 2013 to shareholders of record at the close of business on August 30, 2013(2).
OPERATING RESULTS DISCUSSION
Second quarter 2013 gold production was 1.81 million ounces, benefiting from strong performances at Cortez, Veladero and Lagunas Norte. In June 2013, the World Gold Council (WGC) finalized its definition of adjusted operating costs (previously called total cash costs), all-in sustaining costs and all-in costs. Barrick has revised its disclosure to align with these definitions and is voluntarily adopting the all-in cost measure. The manner in which the adjusted operating cost measure is calculated has not been changed from the total cash cost measure. The revised AISC measure is similar to our prior measure with the exception of the classification of sustaining capital; certain capital expenditures which had previously not been reported as sustaining capital are now included in this category. The all-in cost measure starts with AISC and adds non-sustaining capital expenditures at new operations and existing operations which will significantly increase production. For Barrick this consists primarily of capital for the Pascua-Lama and Goldstrike thiosulphate projects. For the second quarter, Barrick's adjusted operating costs, AISC and all-in costs were $552 per ounce, $919 per ounce and $1,276 per ounce(3), respectively.
North America Regional Business Unit
North America produced 0.93 million ounces at AISC of $797 per ounce, ahead of expectations. Barrick's 60 percent share of production from the Pueblo Viejo mine was 0.12 million ounces at AISC of $635 per ounce. Production at Pueblo Viejo increased from the first quarter of 2013 primarily due to higher tons processed as the mine ramps up to full capacity, expected in the second half of this year. The new 215 megawatt power plant is expected to be commissioned on schedule in the third quarter. Barrick's share of 2013 production from Pueblo Viejo is anticipated to be 500,000-600,000 ounces at AISC of $525-$575 per ounce. During the quarter, Pueblo Viejo Dominicana Corporation reached an agreement in principle with the Government of the Dominican Republic concerning amendments to the Pueblo Viejo Special Lease Agreement (SLA). Discussions to finalize a Definitive Agreement continue, but to date the parties have not concluded an agreement. The proposed amendments will require the approval of the Boards of Directors of Barrick and Goldcorp, the project lenders, and the Congress of the Dominican Republic. The SLA will remain in effect according to its present terms unless and until the Definitive Agreement is executed and approved. The Government has reaffirmed its support for this world class mine.
The Cortez mine delivered a strong performance, producing 0.42 million ounces at AISC of $376 per ounce on higher grade oxide ore. Goldstrike produced 0.19 million ounces at AISC of $1,226 per ounce, reflecting processing of lower grade ore at the autoclave facility, which is currently undergoing modifications to enable about 3.5 million ounces to be brought forward in the mine plan through the thiosulphate project. The project is on track to enter production in the third quarter of 2014 and contribute average annual production of 350,000-400,000 ounces over its first full five years of operation. We expect production to increase and AISC to significantly decrease at Goldstrike in the second half of 2013.
We continue to expect full year production to be in the range of 3.55-3.70 million ounces and now expect AISC to be in the range of $750-$800 per ounce, lower than our previous range of $820-$870 per ounce.
South America Regional Business Unit
South America produced 0.30 million ounces at better than expected AISC of $821 per ounce. The Veladero mine had a strong quarter, contributing 0.14 million ounces at AISC of $768 per ounce on higher silver recoveries. Lagunas Norte produced 0.13 million ounces at AISC of $663 per ounce, reflecting positive grade reconciliations and a build-up of ounces placed on the leach pad. The new carbon-in-column plant at Lagunas Norte, which is designed to de-bottleneck ore feed from the expanded leach pad to the Merrill Crowe plant, is on track to start up in Q4.
We continue to expect full year production to be in the range of 1.25-1.35 million ounces and AISC to be in the range of $875-$925 per ounce.
Australia Pacific Regional Business Unit
Australia Pacific produced 0.47 million ounces at AISC of $1,033 per ounce. Porgera, the region's largest mine, contributed 0.12 million ounces at AISC of $1,306 per ounce.
We continue to expect full year production to be in the range of 1.70-1.85 million ounces and now expect AISC to be in the range of $1,100-$1,200 per ounce, lower than our previous range of $1,200-$1,300 per ounce.
African Barrick Gold plc
Second quarter attributable production from ABG was 0.12 million ounces at AISC of $1,416 per ounce. We continue to expect Barrick's share of 2013 production from ABG to be 0.40-0.45 million ounces at AISC of $1,550-$1,600 per ounce. Our AISC guidance does not take into account the implementation of ABG's Operational Review.
Global Copper Business Unit
Copper production in Q2 was 134 million pounds at C1 cash costs of $1.75 per pound and C3 fully allocated costs of $2.27 per pound. Performance from the Lumwana mine improved significantly this quarter with production of 65 million pounds at C1 cash costs of $1.96 per pound, primarily due to changes to the mine plan and a number of business improvement initiatives which continue to enhance productivity. The improved costs in the second quarter primarily reflect a major reduction in contract mining costs due to the termination of one of the main mining contractors. The Zaldivar mine produced 69 million pounds at C1 cash costs of $1.60 per pound.
We now expect full year copper production to be 500-540 million pounds, within our original guidance range of 480-540 million pounds, at C1 cash costs of $1.95-$2.15 per pound and C3 fully allocated costs of $2.50-$2.75 per pound, both lower than our previous ranges of $2.10-$2.30 per pound and $2.60-$2.85 per pound, respectively.
Utilizing option collar hedging strategies, the company has protected the downside on approximately half of its remaining 2013 copper production at an average floor price of $3.50 per pound and can participate on the same amount up to an average price of $4.25 per pound(4). As of June 30, 60 million pounds of copper sales were subject to final settlement at an average provisional price of $3.06 per pound.
PASCUA-LAMA PROJECT UPDATE
Pascua-Lama is one of the world's largest gold and silver resources with nearly 18 million ounces of proven and probable gold reserves(5), 676 million ounces of silver contained within the gold reserves(5), and an anticipated mine life of 25 years. It is expected to produce an average of 800,000-850,000 ounces of gold and 35 million ounces of silver in its first full five years of operation at very low costs. While we recorded a significant impairment to this asset in the second quarter, we fully expect this mine to be one of the best in the world when in operation, and to contribute substantial economic value to the company. Pascua-Lama has significant value for Barrick shareholders and the project's host jurisdictions of San Juan Province, Argentina and the Atacama Region of Chile. We continue to work closely with the governments of both countries to ensure Pascua-Lama is on the right path to deliver value for all of our stakeholders.
In the second quarter, the company received a resolution from Chile's Superintendence of the Environment (Superintendencia del Medio Ambiente or "SMA") that required completion of the project's water management system in accordance with previously granted environmental permits before other construction activities in Chile could resume. Barrick is committed to operating at the highest environmental standards at all of its operations around the world, including at Pascua-Lama, and is working to meet all regulatory requirements at the project. The company has submitted a compliance plan for approval by Chilean regulatory authorities to complete the water management system by the end of 2014, subject to regulatory approval of specific permit applications. Following completion of the water management system to the satisfaction of the SMA, we expect to be in a position to resume construction in Chile, including pre-stripping. Under this scenario, ore from Chile is expected to be available for processing by mid-2016. In line with this timeframe and in light of materially lower metal prices, the company has decided to re-sequence construction of the process plant and other facilities in Argentina to target production by this date.
The decision to re-sequence the project, which entails a major reduction in project staffing levels over the extended schedule, will result in a significant deferral of planned capital spending in 2013-2014. Capital expenditures at Pascua-Lama over this period are expected to be reduced by a total of $1.5-$1.8 billion(6). For 2013, capital expenditures are expected to be reduced by approximately $0.7-$0.8 billion (including $300 million in previously announced deferrals) to approximately $1.8-$2.0 billion. Capital expenditures in 2014 are expected to be reduced by approximately $0.8-$1.0 billion to approximately $1.0-$1.2 billion. The company is targeting to provide an updated total capital cost estimate for the project with third quarter 2013 results which is expected to reflect an increase from the latest capital cost estimate. This is subject to obtaining greater clarity on timing of regulatory approvals and completing the re-sequenced construction schedule. As of June 30, 2013, approximately $5.4 billion had been spent on the project.
Subsequent to the quarter end, the Copiapo Court of Appeals in Chile issued its ruling on a constitutional rights protection action filed in September 2012 on behalf of four indigenous communities, on the basis of which a preliminary injunction suspending construction activities had been granted in April 2013. In its ruling, the Court stated that Barrick must complete construction of the water management system in compliance with applicable environmental permits to the satisfaction of the SMA before resuming construction activities in Chile. The Court's ruling is consistent with the earlier SMA resolution which Barrick has been implementing. The water management design and construction scope has been awarded to Fluor, who has already mobilized a team of industry experts to the site.
Our Chief Operating Officer, Igor Gonzales, retired in the second quarter and the company is in the process of a global search to fill this position. In the interim, the Regional Presidents are reporting directly to the CEO. Barrick thanks Igor for his significant contributions to Barrick over the past 15 years.
Key Statistics
Barrick Gold
Corporation Three months ended Six months ended
(in United States
dollars) June 30, June 30,
------------------------------------------------------
2012 2012
(Unaudited) 2013 (restated)(7) 2013 (restated)(7)
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Operating Results
Gold production
(thousands of
ounces)(1) 1,811 1,742 3,608 3,623
Gold sold (thousands
of ounces) 1,815 1,690 3,562 3,473
Per ounce data
Average spot gold
price $ 1,415 $ 1,609 $ 1,523 $ 1,651
Average realized gold
price(2) 1,411 1,608 1,518 1,651
Adjusted operating
costs(2) 552 591 558 568
All-in sustaining
costs(2) 919 1,061 931 1,000
All-in costs(2) 1,276 1,549 1,323 1,387
Adjusted operating
costs (on a co-
product basis)(2) 580 610 587 587
All-in sustaining
costs (on a co-
product basis)(2) 947 1,080 960 1,019
All-in costs (on a
co-product basis)(2) 1,304 1,568 1,352 1,406
Copper production
(millions of pounds) 134 109 261 226
Copper sold (millions
of pounds) 135 116 250 234
Per pound data
Average spot copper
price $ 3.24 $ 3.57 $ 3.42 $ 3.67
Average realized
copper price(2) 3.28 3.45 3.41 3.62
C1 cash costs(2) 1.75 2.21 2.08 2.13
Depreciation(3) 0.42 0.59 0.38 0.51
Other(4) 0.10 (0.02) 0.15 0.09
C3 fully allocated
costs(2) 2.27 2.78 2.61 2.73
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Financial Results
(millions)
Revenues $ 3,201 $ 3,244 $ 6,600 $ 6,846
Net earnings (loss)(5) (8,555) 787 (7,708) 1,826
Adjusted net
earnings(2) 663 821 1,586 1,917
Operating cash flow 896 919 1,992 2,293
Adjusted operating
cash flow(2) 804 919 1,974 2,395
Per Share Data
(dollars)
Net earnings (loss)
(basic) (8.55) 0.79 (7.70) 1.83
Adjusted net earnings
(basic)(2) 0.66 0.82 1.58 1.92
Net earnings (loss)
(diluted) (8.55) 0.79 (7.70) 1.83
Weighted average basic
common shares
(millions) 1,001 1,000 1,001 1,000
Weighted average
diluted common shares
(millions)(6) 1,001 1,001 1,001 1,001
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As at As at
June 30, December 31,
---------------------------
2012
2013 (restated)(7)
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Financial Position
(millions)
Cash and equivalents $ 2,422 $ 2,097
Non-cash working
capital 3,415 2,884
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(1) Production includes our equity share of gold production at Highland Gold
up to April 26, 2012, the effective date of our sale of Highland Gold.
Production also includes African Barrick Gold on a 73.9% basis and
Pueblo Viejo on a 60% basis, both of which reflect our equity share of
production.
(2) Realized price, adjusted operating costs, all-in sustaining costs, all-
in costs, C1 cash costs, C3 fully allocated costs, adjusted net earnings
and adjusted operating cash flow are non-gaap financial performance
measures with no standard definition under IFRS. Refer to the Non-Gaap
Financial Performance Measures section of the Company's MD&A.
(3) Represents equity depreciation expense divided by equity ounces of gold
sold or pounds of copper sold.
(4) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound in the Non-Gaap Financial
Performance Measures section of the Company's MD&A.
(5) Net earnings represents net income attributable to the equity holders of
the Company.
(6) Fully diluted includes dilutive effect of stock options.
(7) Balances related to 2012 have been restated to reflect the impact of the
adoption of new accounting pronouncements. See note 2B of the interim
consolidated financial statements.
Production and Cost Summary
Gold Production
(attributable ounces)
(000's) All-in sustaining costs(4)($/oz)
------------------------- --------------------------------------
Three months Six months
ended ended Three months ended Six months ended
June 30, June 30, June 30, June 30,
------------ ------------ ------------------- ------------------
(Unaudited) 2013 2012 2013 2012 2013 2012 2013 2012
----------------------- ------------ ------------------- ------------------
Gold
North
America 928 854 1,800 1,742 $ 797 $ 894 $ 789 $ 850
South
America 296 327 666 778 821 929 765 773
Australia
Pacific 465 445 912 871 1,033 1,201 1,065 1,154
African
Barrick
Gold(1) 122 113 230 220 1,416 1,536 1,507 1,465
Other(2) - 3 - 12 - - - -
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Total 1,811 1,742 3,608 3,623 $ 919 $ 1,061 $ 931 $ 1,000
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Copper Production
(attributable pounds)
(millions) C1 Cash Costs ($/lb)
------------------------ ---------------------------------------
Three months Six months
ended ended Three months ended Six months ended
June 30, June 30, June 30, June 30,
------------ ----------- ------------------- -------------------
2012 2012
(restated) (restated)
(Unaudited) 2013 2012 2013 2012 2013 (6) 2013 (6)
---------------------------------------------------------------------------
Total 134 109 261 226 $ 1.75 $ 2.21 $ 2.08 $ 2.13
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Total Gold Production Costs ($/oz)
---------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2012 2012
(Unaudited) (restated) (restated)
2013 (6) 2013 (6)
------------------------------------------------------- -------------------
Direct mining costs at market
foreign exchange rates $ 602 $ 620 $ 608 $ 607
Gains realized on currency hedge
and commodity hedge/economic
hedge contracts (42) (40) (46) (49)
Other(3) (14) (12) (14) (13)
By-product credits (27) (18) (28) (17)
Royalties 33 41 38 40
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Adjusted operating costs(4) 552 591 558 568
Depreciation 210 188 203 185
Other(3) 14 12 14 13
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Total production costs $ 776 $ 791 $ 775 $ 766
---------------------------------------------------------------------------
Adjusted operating costs(4) $ 552 $ 591 $ 558 $ 568
General & administrative costs 37 59 44 59
Rehabilitation - accretion and
amortization 19 21 22 20
Mine on-site exploration and
evaluation costs 9 17 8 14
Mine development expenditures 173 173 164 166
Sustaining capital expenditures 129 200 135 173
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All-in sustaining costs(4) $ 919 $ 1,061 $ 931 $ 1,000
---------------------------------------------------------------------------
All-in costs(4) $ 1,276 $ 1,549 $ 1,323 $ 1,387
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Total Copper Production Costs ($/lb)
---------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2012 2012
(restated) (restated)
(Unaudited) 2013 (6) 2013 (6)
------------------------------------------------------- -------------------
C1 cash costs(4) $ 1.75 $ 2.21 $ 2.08 $ 2.13
Depreciation 0.42 0.59 0.38 0.51
Other(5) 0.10 (0.02) 0.15 0.09
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C3 fully allocated costs(4) $ 2.27 $ 2.78 $ 2.61 $ 2.73
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(1) Figures relating to African Barrick Gold are presented on a 73.9% basis,
which reflects our equity share of production.
(2) Includes our equity share of gold production at Highland Gold up to
April 26, 2012, the effective date of our sale of Highland Gold.
(3) Represents the Barrick Energy gross margin divided by equity ounces of
gold sold.
(4) Adjusted operating costs, all-in sustaining costs, all-in costs, C1 cash
costs and C3 fully allocated costs are non-gaap financial performance
measures with no standard meaning under IFRS. Refer to the Non-Gaap
Financial Performance Measures section of the Company's MD&A.
(5) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound in the Non-Gaap Financial
Performance Measures section of the Company's MD&A.
(6) Balances related to 2012 have been restated to reflect the impact of the
adoption of new accounting pronouncements. See note 2B of the interim
consolidated financial statements.
Consolidated Statements of Income
Barrick Gold Corporation Three months ended Six months ended
(in millions of United
States dollars, except
per share data)
(Unaudited) June 30, June 30,
----------------------------------------------------------------------------
2013 2012 2013 2012
(restated - (restated -
note 2B) note 2B)
----------------------------------------------------------------------------
Revenue (notes 5 and 6) $ 3,201 $ 3,244 $ 6,600 $ 6,846
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Costs and expenses
(income)
Cost of sales (notes 5
and 7) 1,832 1,729 3,642 3,439
Corporate administration 43 57 88 105
Exploration and
evaluation (note 8) 58 85 106 156
Other expense (income)
(note 10A) 204 124 346 198
Impairment charges (note
10B) 9,327 28 9,332 122
Loss from equity
investees - 2 - 6
Loss (gain) on non-hedge
derivatives (note 18D) (13) 34 (55) -
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Income (loss) before
finance items and
income taxes (8,250) 1,185 (6,859) 2,820
Finance items
Finance income 2 3 5 6
Finance costs (note 11) (161) (51) (269) (97)
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Income (loss) from
continuing operations
before income taxes (8,409) 1,137 (7,123) 2,729
Income tax recovery
(expense) (note 12) 213 (336) (220) (873)
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Income (loss) from
continuing operations (8,196) 801 (7,343) 1,856
Loss from discontinued
operations (note 4A) (505) (9) (497) (14)
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Net income (loss) $ (8,701) $ 792 $ (7,840) $ 1,842
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Attributable to:
Equity holders of
Barrick Gold
Corporation $ (8,555) $ 787 $ (7,708) $ 1,826
Non-controlling
interests (note 21) $ (146) $ 5 $ (132) $ 16
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Earnings per share data
attributable to the
equity holders of
Barrick Gold
Corporation (note 9)
Income (loss) from
continuing operations
Basic $ (8.04) $ 0.80 $ (7.20) $ 1.84
Diluted $ (8.04) $ 0.80 $ (7.20) $ 1.84
----------------------------------------------------------------------------
Loss from discontinued
operations
Basic $ (0.51) $ (0.01) $ (0.50) $ (0.01)
Diluted $ (0.51) $ (0.01) $ (0.50) $ (0.01)
----------------------------------------------------------------------------
Net income (loss)
Basic $ (8.55) $ 0.79 $ (7.70) $ 1.83
Diluted $ (8.55) $ 0.79 $ (7.70) $ 1.83
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Second Quarter Report 2013 available on our website are an
integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation Three months ended Six months ended
(in millions of United
States dollars)
(Unaudited) June 30, June 30,
----------------------------------------------------------------------------
2013 2012 2013 2012
(restated - (restated -
note 2B) note 2B)
----------------------------------------------------------------------------
Net income (loss) $ (8,701) $ 792 $ (7,840) $ 1,842
Other comprehensive
income (loss), net of
taxes
Items that may be
reclassified
subsequently to profit
or loss:
Unrealized gains
(losses) on available-
for-sale ("AFS")
financial securities,
net of tax $2, $4, $4
and $3 (18) (38) (26) (37)
Realized (gains) losses
and impairments on AFS
financial securities,
net of tax $2, $3, $2
and $2 13 27 11 28
Unrealized gains
(losses) on derivatives
designated as cash flow
hedges, net of tax $12,
$1, $15 and $2 (85) 73 (55) 59
Realized (gains) on
derivatives designated
as cash flow hedges,
net of tax $23, $17,
$41 and $45 (107) (78) (182) (159)
Currency translation
adjustments, net of tax
$nil, $nil, $nil and
$nil (77) (13) (98) 1
----------------------------------------------------------------------------
Total other
comprehensive loss (274) (29) (350) (108)
----------------------------------------------------------------------------
Total comprehensive
income (loss) $ (8,975) $ 763 $ (8,190) $ 1,734
----------------------------------------------------------------------------
Attributable to:
Equity holders of
Barrick Gold
Corporation
Continuing operations $ (8,292) $ 785 $ (7,510) $ 1,721
Discontinued operations $ (537) $ (27) $ (548) $ (3)
Non-controlling
interests $ (146) $ 5 $ (132) $ 16
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Second Quarter Report 2013 available on our website are an
integral part of these consolidated financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation Three months ended Six months ended
(in millions of United
States dollars)
(Unaudited) June 30, June 30,
----------------------------------------------------------------------------
2013 2012 2013 2012
(restated - (restated -
note 2B) note 2B)
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) from
continuing operations $ (8,196) $ 801 $ (7,343) $ 1,856
Adjusted for the
following items:
Depreciation 453 388 849 761
Finance costs (excludes
accretion) 145 34 236 68
Impairment charges
(note 10B) 9,327 28 9,332 122
Income tax expense
(recovery) (note 12) (213) 336 220 873
Increase in inventory (69) (100) (233) (182)
Proceeds from
settlement of hedge
contracts 219 - 219 -
(Gain) loss on non-
hedge derivatives (13) 34 (55) -
(Gain) on sale of long-
lived
assets/investments (1) (10) (9) (20)
Other operating
activities (note 13A) (295) (26) (432) (291)
----------------------------------------------------------------------------
Operating cash flows
before interest and
income taxes 1,357 1,485 2,784 3,187
Interest paid (170) (46) (217) (67)
Income taxes paid (306) (606) (626) (967)
----------------------------------------------------------------------------
Net cash provided by
operating activities
from continuing
operations 881 833 1,941 2,153
Net cash provided by
operating activities
from discontinued
operations 15 86 51 140
----------------------------------------------------------------------------
Net cash provided by
operating activities 896 919 1,992 2,293
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and
equipment
Capital expenditures
(note 5) (1,556) (1,716) (2,941) (3,075)
Sales proceeds 1 9 3 9
Acquisitions - (15) - (15)
Investments
Sales - 130 18 167
Other investing
activities (note 13B) (23) (107) (121) (165)
----------------------------------------------------------------------------
Net cash used in
investing activities
from continuing
operations (1,578) (1,699) (3,041) (3,079)
Net cash used in
investing activities
from discontinued
operations (12) (17) (57) (73)
----------------------------------------------------------------------------
Net cash used in
investing activities (1,590) (1,716) (3,098) (3,152)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds on exercise of
stock options - 1 1 5
Long-term debt
Proceeds 3,060 2,000 5,110 2,000
Repayments (2,066) (1,370) (3,271) (1,377)
Dividends (200) (200) (400) (350)
Funding from non-
controlling interests 19 118 32 258
Other financing
activities (note 13C) (22) (11) (22) (25)
----------------------------------------------------------------------------
Net cash provided by
financing activities
from continuing
operations 791 538 1,450 511
Net cash used in
financing activities
from discontinued
operations - (69) - (69)
----------------------------------------------------------------------------
Net cash provided by
financing activities 791 469 1,450 442
----------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
equivalents (9) (4) (11) 4
----------------------------------------------------------------------------
Net increase (decrease)
in cash and equivalents 88 (332) 333 (413)
Cash and equivalents at
beginning of period
(note 18A) 2,342 2,668 2,097 2,749
----------------------------------------------------------------------------
Cash and equivalents at
end of period (note
18A) 2,430 2,336 2,430 2,336
----------------------------------------------------------------------------
Less cash and
equivalents of
discontinued operations
at end of period 8 - 8 -
----------------------------------------------------------------------------
Cash and equivalents of
continuing operations
at end of period $ 2,422 $ 2,336 $ 2,422 $ 2,336
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Second Quarter Report 2013 available on our website are an
integral part of these consolidated financial statements.
Consolidated Balance Sheets
Barrick Gold
Corporation
(in millions of
United States
dollars)
(Unaudited) As at June 30, As at December 31, As at January 1,
----------------------------------------------------------------------------
2012 (restated - 2012 (restated -
2013 note 2B) note 2B)
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and
equivalents (note
18A) $ 2,422 $ 2,097 $ 2,749
Accounts receivable 424 449 426
Inventories (note
14) 2,823 2,585 2,498
Other current
assets 533 626 876
----------------------------------------------------------------------------
Total current assets
(excluding assets
classified as held
for sale) 6,202 5,757 6,549
Assets classified
as held for sale 551 - -
----------------------------------------------------------------------------
Total current assets 6,753 5,757 6,549
Non-current assets
Equity in investees 24 20 341
Other investments 30 78 161
Property, plant and
equipment (note
15) 23,082 29,277 29,076
Goodwill (note 16) 6,478 8,837 9,626
Intangible assets 323 453 569
Deferred income tax
assets 483 437 409
Non-current portion
of inventory (note
14) 1,542 1,555 1,153
Other assets 1,180 1,064 1,002
----------------------------------------------------------------------------
Total assets $ 39,895 $ 47,478 $ 48,886
----------------------------------------------------------------------------
LIABILITIES AND
EQUITY
Current liabilities
Accounts payable $ 1,840 $ 2,267 $ 2,085
Debt (note 18B) 1,370 1,848 196
Current income tax
liabilities 117 41 306
Other current
liabilities 367 261 326
----------------------------------------------------------------------------
Total current
liabilities
(excluding
liabilities
classified as held
for sale) 3,694 4,417 2,913
Liabilities
classified as held
for sale 129 - -
----------------------------------------------------------------------------
Total current
liabilities 3,823 4,417 2,913
Non-current
liabilities
Debt (note 18B) 14,423 12,095 13,173
Provisions 2,255 2,812 2,326
Deferred income tax
liabilities 2,378 2,668 4,231
Other liabilities 945 850 689
----------------------------------------------------------------------------
Total liabilities 23,824 22,842 23,332
----------------------------------------------------------------------------
Equity
Capital stock (note
20) 17,933 17,926 17,892
Retained earnings
(deficit) (4,839) 3,269 4,562
Accumulated other
comprehensive
income 113 463 595
Other 314 314 314
----------------------------------------------------------------------------
Total equity
attributable to
Barrick Gold
Corporation
shareholders 13,521 21,972 23,363
Non-controlling
interests (note
21) 2,550 2,664 2,191
----------------------------------------------------------------------------
Total equity 16,071 24,636 25,554
----------------------------------------------------------------------------
Contingencies and
commitments (notes
14, 15 and 22)
----------------------------------------------------------------------------
Total liabilities
and equity $ 39,895 $ 47,478 $ 48,886
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Second Quarter Report 2013 available on our website are an
integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity
----------------------------------------------------
Barrick Gold Corporation Attributable to equity holders of the company
----------------------------------------------------------------------------
Accumulated
(in millions of United Common other
States dollars) Shares (in Capital Retained comprehensive
(Unaudited) thousands) stock earnings income(1)
----------------------------------------------------------------------------
At January 1, 2013
(restated - note 2B) 1,001,108 $ 17,926 $ 3,269 $ 463
----------------------------------------------------------------------------
Net income - - (7,708) -
Total other
comprehensive income
(loss) - - - (350)
----------------------------------------------------------------------------
Total comprehensive
income - - (7,708) (350)
----------------------------------------------------------------------------
Transactions with
owners
Dividends - - (400) -
Issued on exercise of
stock options 44 1 - -
Recognition of stock
option expense - 6 - -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 44 7 (400) -
----------------------------------------------------------------------------
At June 30, 2013 1,001,152 $ 17,933 $ (4,839) $ 113
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2012
(restated - note 2B) 1,000,423 $ 17,892 $ 4,562 $ 595
----------------------------------------------------------------------------
Net income - - 1,826 -
Total other
comprehensive income - - - (108)
----------------------------------------------------------------------------
Total comprehensive
income - - 1,826 (108)
----------------------------------------------------------------------------
Transactions with
owners
Dividends - - (350) -
Issued on exercise of
stock options 168 5 - -
Recognition of stock
option expense - 10 - -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 168 15 (350) -
----------------------------------------------------------------------------
At June 30, 2012
(restated - note 2B) 1,000,591 $ 17,907 $ 6,038 $ 487
----------------------------------------------------------------------------
Consolidated Statements of Changes in Equity
----------------------------------------------------
Barrick Gold Corporation Attributable to equity holders of the company
----------------------------------------------------------------------------
Total equity
(in millions of United attributable Non-
States dollars) to controlling Total
(Unaudited) Other(2) shareholders interests equity
----------------------------------------------------------------------------
At January 1, 2013
(restated - note 2B) $ 314 $ 21,972 $ 2,664 $ 24,636
----------------------------------------------------------------------------
Net income - (7,708) (132) (7,840)
Total other
comprehensive income
(loss) - (350) - (350)
----------------------------------------------------------------------------
Total comprehensive
income - (8,058) (132) (8,190)
----------------------------------------------------------------------------
Transactions with
owners
Dividends - (400) - (400)
Issued on exercise of
stock options - 1 - 1
Recognition of stock
option expense - 6 - 6
Funding from non-
controlling interests - - 32 32
Other decrease in non-
controlling interests - - (14) (14)
----------------------------------------------------------------------------
Total transactions with
owners - (393) 18 (375)
----------------------------------------------------------------------------
At June 30, 2013 $ 314 $ 13,521 $ 2,550 $ 16,071
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2012
(restated - note 2B) $ 314 $ 23,363 $ 2,191 $ 25,554
----------------------------------------------------------------------------
Net income - 1,826 16 1,842
Total other
comprehensive income - (108) - (108)
----------------------------------------------------------------------------
Total comprehensive
income - 1,718 16 1,734
----------------------------------------------------------------------------
Transactions with
owners
Dividends - (350) - (350)
Issued on exercise of
stock options - 5 - 5
Recognition of stock
option expense - 10 - 10
Funding from non-
controlling interests - - 258 258
Other decrease in non-
controlling interests - - (17) (17)
----------------------------------------------------------------------------
Total transactions with
owners - (335) 241 (94)
----------------------------------------------------------------------------
At June 30, 2012
(restated - note 2B) $ 314 $ 24,746 $ 2,448 $ 27,194
----------------------------------------------------------------------------
(1) Includes cumulative translation losses at June 30, 2013: $85 million
(June 30, 2012: $21 million).
(2) Includes additional paid-in capital as at June 30, 2013: $276 million
(December 31, 2012: $276 million; June 30, 2012: $276 million) and
convertible borrowings - equity component as at June 30, 2013: $38
million (December 31, 2012: $38 million; June 30, 2012: $38 million).
The notes to these unaudited interim financial statements, which are
contained in the Second Quarter Report 2013 available on our website are an
integral part of these consolidated financial statements.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
Brookfield Place, TD Canada Trust c/o Canadian Stock Transfer Company
Tower Inc.,
Suite 3700 as administrative agent
161 Bay Street, P.O. Box 212 P.O. Box 700, Postal Station B
Toronto, Canada M5J 2S1 Montreal, Quebec, Canada H3B 3K3
Tel: (416) 861-9911 Fax: (416) 861- or
0727
Toll-free throughout North America: American Stock Transfer & Trust
1-800-720-7415 Company, LLC
Email: investor@barrick.com 6201 - 15 Avenue
Website: www.barrick.com Brooklyn, NY 11219
Tel: 1-800-387-0825
SHARES LISTED Toll-free throughout North America
ABX - The New York Stock Exchange Fax: 1-888-249-6189
The Toronto Stock Exchange Email: inquiries@canstockta.com
Website: www.canstockta.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Second Quarter Report 2013, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "anticipate", "contemplate", "target", "plan", "intend", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the company does or may carry on business in the future; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit rating; the impact of inflation; fluctuations in the currency markets; operating or technical difficulties in connection with mining or development activities; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; contests over title to properties, particularly title to undeveloped properties; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; litigation; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; employee relations; availability and increased costs associated with mining inputs and labor; and, the organization of our African gold operations and properties under a separate listed company.
In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold/copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Second Quarter Report 2013 are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements.
The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
(1) Adjusted net earnings, adjusted net earnings per share, adjusted
operating cash flow, all-in sustaining costs per ounce, adjusted
operating costs per ounce, C1 cash costs per pound and C3 fully
allocated costs per pound are non-GAAP financial performance measures
with no standardized definition under IFRS. The World Gold Council's
adjusted operating cost measure was previously described as total cash
costs. See pages 45-48 of Barrick's Second Quarter 2013 Report.
(2) The declaration and payment of dividends is at the discretion of the
Board of Directors and will depend on the company's financial results,
cash requirements, future prospects and other factors deemed relevant
by the Board.
(3) All-in costs are a non-GAAP financial performance measure with no
standardized definition under IFRS. See pages 45-48 of Barrick's Second
Quarter 2013 Report.
(4) The realized price on all 2013 copper production is expected to be
reduced by approximately $0.04 per pound as a result of the net premium
paid on option hedging strategies. Our remaining copper production is
subject to market prices.
(5) For a breakdown of reserves and resources by category and additional
information relating to reserves and resources, see pages 25-35 of
Barrick's Form 40-F.
(6) Includes Pascua-Lama initial project capital plus infrastructure
capital.
Contacts:
INVESTOR CONTACT: Amy Schwalm
Vice President, Investor Relations
(416) 307-7422
aschwalm@barrick.com
MEDIA CONTACT: Andy Lloyd
Vice President, Communications
(416) 307-7414
alloyd@barrick.com
