(“Barrick’s”) first quarterly results since its merger with Randgold Resources Limited (“Randgold”) show solid results across the board from the new group, which also reported rapid progress with the integration of the two businesses as
Q1Report
BARRICK MAKES STRONG START ROBUST ALL-ROUND PERFORMANCE TOPPED BY NEVADA JV
All amounts expressed in US dollars unless otherwise indicated
| NEVADA JV CLEARS REGULATORY HURDLES GROUP GOLD h8%* PRODUCTION NET CASH h27%* PROVIDED BY OPERATING ACTIVITIES h NET EPS 106%* TO $0.06 h ADJUSTED NET EPS1 83%* TO $0.11 h 12%* DEBT NET OF CASH TO $3.65 BILLION PUEBLO VIEJO PROGRESSES EXPANSION PROJECT KIBALI BREAKING RECORDS QUARTERLY $0.04 DECLARED DIVIDEND PER SHARE * Quarter on quarter | ||
|---|---|---|
| 6 EXPLORATION SUCCESSES | 7 KIBALI MAKES STRONG START TO 2019 |
Toronto, May 8, 2019 — Barrick Gold Corporation’s (“Barrick’s”) first quarterly results since its merger with Randgold Resources Limited (“Randgold”) show solid results across the board from the new group, which also reported rapid progress with the integration of the two businesses as well as with the implementation of key strategic initiatives.
While quarter on quarter comparisons are skewed by the merger, group gold production was up 8% in line with guidance, net cash from the operations rose by 27%, net earnings per share increased by 106% to $0.06, adjusted net earnings per share1 increased by 83% to $0.11, and debt net of cash was down 12% to $3.65 billion. A dividend of $0.04 per share was declared in respect of the first quarter of 2019.
President and Chief Executive Officer Mark Bristow said the key operations had all performed on plan and within guidance. Nevada exceeded plan as the Cortez Hills open pit ramps down, Veladero posted encouraging improvements and Pueblo Viejo progressed its expansion project and benefited from operational efficiencies.
Led by Kibali, the African operations made a good start to the year and the copper operations delivered significant improvements. Key growth projects were on track and greenfields and brownfields exploration were augmenting reserves and identifying new opportunities.
“We have gone a long way towards integrating the organizations, streamlining the processes and ensuring that all the sites have the geological, operational and technical capability to meet their business objectives,” Bristow said.
Continued on page 2
4 5 NEW GEOLOGY:
SUSTAINABILITY MINING’S DRIVE BEDROCK
Financial and Operating Key Performance Highlights Indicators
| Financial Results | Q1 2019 | Q4 2018 Q1 2018 |
|---|---|---|
| Realized gold price2,3 ($ per ounce) Net earnings (loss) ($ millions) Adjusted net earnings1 ($ millions) Net cash provided by operating activities ($ millions) Free cash flow4 ($ millions) Net earnings (loss) per share ($) Adjusted net earnings per share1 ($) Total Attributable Capital Expenditures5 ($ millions) | 1,307 | 1,223 1,332 (1,197) 158 69 170 411 507 37 181 (1.02) 0.14 0.06 0.15 368 320 |
| 111 | ||
| 184 | ||
| 520 | ||
| 146 | ||
| 0.06 | ||
| 0.11 | ||
| 361 | ||
| Operating Results Gold | Q1 2019 | Q4 2018 Q1 2018 |
| Production (000s of ounces) Cost of sales6 (Barrick's share) ($ per ounce) Total cash costs7 ($ per ounce) All-in sustaining costs7 ($ per ounce) Copper | 1,367 | 1,262 1,049 980 878 588 573 788 804 |
| 947 | ||
| 631 | ||
| 825 | ||
| Production (millions of pounds) Cost of sales6 (Barrick's share) ($ per pound) C1 cash costs8 ($ per pound) All-in sustaining costs8 ($ per pound) | 106 | 109 85 2.85 2.07 1.98 1.88 2.95 2.61 |
| 2.21 | ||
| 1.66 | ||
| 2.46 |
Integration and strategic initiatives on track across the group following Barrick-Randgold merger Nevada Joint Venture agreement signed and implementation expected by second quarter-end Group gold production up 8% quarter on quarter and in line with guidance Net cash provided by operating activities up 27% quarter on quarter Net earnings per share increases 106% quarter on quarter to $0.06 Adjusted net earnings per share1 up 83% quarter on quarter to $0.11 Copper operations deliver significant improvements Debt, net of cash down 12% quarter on quarter to $3.65 billion Nevada performs ahead of plan as the Cortez Hills open pit ramps down Veladero posts encouraging operational improvements Pueblo Viejo makes progress with expansion project and benefits from operational efficiencies African operations perform well as Kibali makes a good start to the year Sustainability core to group as team effectiveness workshops are rolled out Greenfields and brownfields exploration make good progress Key growth projects on track Barrick declares $0.04 quarterly dividend per share, up from Q1 2018
Continued from page 1 with the objective of being well advanced by mid-2020. Management was also dealing with some legacy challenges, including the long stand-off between Acacia “We’re also well advanced in establishing our new joint and the Tanzanian government.
venture with Newmont, which has been named Nevada Gold Mines. The organizational structures are being finalized and we’re working together with Newmont to “Given our solid operational performance for the first realize the synergies and cost reduction opportunities quarter, Barrick is on track to deliver against its plans for the year. Considering the shortage of good assets offered by the joint venture, which is scheduled for and the industry's underinvestment in its own future we completion by the end of the second quarter.”
believe we are well positioned as the industry's value Bristow said the assets that did not pass Barrick’s leader. Barrick stands apart from the rest of the industry strategic filters had been identified and once optimized on four counts: the quality of our assets; our significant potential for portfolio optimization; the very real would be brought to account in a way that would synergies that we expect to be delivered by Nevada recognize the importance to the remaining stakeholders
BARRICK FIRST QUARTER 2019 2 PRESS RELEASE
Conference Call and Webcast
Gold Mines; and our superior exploration and pipeline of development efforts,” Bristow said.
Please join us for a conference call and webcast today “This quarter has seen a great start for our first year as at 11:00 EDT/16:00 BST to discuss the results. the 'new and improved' Barrick and I am confident that we are well on the way to achieving our strategic US and Canada, 1-800-319-4610 objective of becoming the world’s most valued gold UK, 0808 101 2791 mining business. It is our commitment to get there by International, +1 416 915-3239 finding, developing, owning and operating the best Webcast assets in our industry, with the best people, to deliver stand out returns for our owners and partners.”
The event will be available for replay online or by telephone at 1-855-669-9658 (US and Canada) and +1 604 674-8052 (international), access code 3107.
Q1 DELIVERS A NEW BARRICK MADE FIT FOR PURPOSE
This process was duplicated in each of Barrick’s three
Since Barrick and Randgold were formally
geographical regions, where senior executive teams
united on the first working day of this year,
have been installed, in line with a new policy of moving
new management has moved swiftly to
people, skills and decision-making out of the corporate engineer a business capable of achieving office and into the operations.
its creators’ vision of being the world’s
“To make sure everyone is focused on the new expected
most valued gold company.
outcomes and their responsibilities, we have held strategy reviews and team effectiveness exercises The process started well before the deal was throughout the organization,” Bristow says.
consummated, with teams from both sides sitting down together to define new Barrick’s goals and plot the best “We’ve also made sure that each site has the geological, routes to achieving them. They emerged from these operational and technical abilities to meet our business meetings with a clear strategy and action plans, as well objectives and have introduced the Randgold system as a shared vision of a business with a leaner of parallel workstreams that are integrated horizontally management structure and a more agile, flexible for optimal efficiency. At the same time, we are management style.
upgrading and integrating the digital and information systems throughout the organization to provide “Getting the right people in the right places was our first managers with real-time data for planning and decisionpriority,” says President and Chief Executive Officer making.”
Mark Bristow. “We started with a new executive leadership team of people with the right skills and The corporate structure has been streamlined with the attitude at the corporate level. Supported by a slimmed Toronto office now occupying a single floor with down technical, financial, commercial, communication approximately 70 people. The process of refining and and administration team, they now exercise full rationalizing the structure of the business is continuing oversight of all the operations.”
at the site offices.
BARRICK FIRST QUARTER 2019 3 PRESS RELEASE
“It’s important to note that this is not a cost-cutting years to come. There is also the potential to work on exercise. It’s been designed to ensure that the best adding life and lifting efficiencies at Veladero as well as people are in the right places,” Bristow says. rebuilding our exploration capabilities across Chile, Argentina and Peru as we address some of the “With Barrick now looking and acting like the modern significant legacy challenges we face. And then there gold business we envisaged, the merger is delivering is Porgera in Papua New Guinea where we are in the all that we expected from it. With our house in order, we process of renewing the mining license and which offers can now start looking at the abundance of opportunities Tier One potential.
that are within our grasp.”
“The new Barrick is off to a strong start but there is a Nevada is the base of Barrick’s business and its wealth long road ahead of us and much still to be done to of possibilities will be expanded by the creation of the achieve our goal of becoming the most valued gold joint venture there with Newmont Goldcorp. But Barrick company by having the best people, employing the best is also looking at other prospects to the north and into skills, systems and structures, to extract sustainable Canada, Bristow said. Africa is a high-risk, high-reward returns for our owners and partners from the best destination which holds two of Barrick’s Tier One9 gold assets,” Bristow says.
mines — Kibali and Loulo-Gounkoto — and the promise of more to come, but those assets which do not fit the portfolio profile are likely to be divested.
The most exciting growth opportunities are in Latin America, where the expansion of Pueblo Viejo is expected to maintain the mine’s Tier One status for
STRONG NEW SUSTAINABILITY DRIVE
Sustainability, a core component of the management philosophy of both Barrick and Randgold, has been given an even higher priority by the merged business.
One of the first appointments post-merger was that of suppliers, and through community investments,” Grant Beringer in the new position of Group Beringer says.
Sustainability Executive. At the same time an Environmental, Social and Health and Safety Oversight “While the two companies achieved much, we Committee (chaired by the President and CEO) was acknowledge that Barrick still faces significant legacy established to monitor, review and update sustainability issues relating to community and tailings disposal policies and practices throughout the organization. issues at Porgera, litigation and environmental challenges relating to Pascua-Lama and a checkered The energetic new sustainability team has embarked environmental past at Veladero, but we are exploring on an extensive stakeholder engagement exercise all options to manage and mitigate these risks.” designed to understand the issues and devise mutuallyacceptable solutions. Site-level leadership has been Adds President and Chief Executive Officer Mark involved in this process and sustainability is now a key Bristow: “We are pledged to deliver long-term benefits reporting line on Barrick’s weekly Executive Committee to our host countries and communities through open call as well as a dedicated agenda item at the monthly and ongoing stakeholder engagement and a management and quarterly Board meetings. commitment to genuine partnership.”
“At the heart of Barrick’s sustainability vision is a commitment to contribute to the social and economic development of our host countries and communities.
Last year, the combined organization generated more Grant Beringer than $8.2 billion in economic value across 16 countries Group Sustainability Executive through payments to governments, employees and
BARRICK FIRST QUARTER 2019 4 PRESS RELEASE
GEOLOGY: MINING’S BEDROCK
Geology is the starting point of all mining ventures, argues Barrick Mineral Resource Management and Evaluation Executive, Rod Quick; and it also plays an integral part at every stage of a project’s life, from discovery through evaluation and development to mine design and operation.
While Barrick was focused on driving down debt, its replacing depleted ounces requires a deep business model was focused on free cash flow. With understanding of the orebodies and the ability to replace the debt situation now stabilized, that model is now the gold we mine through brownfield extensions and driven by the optimal exploitation of the orebodies. This new discoveries.”
shift in strategy has been signaled by the appointment of mineral resource managers at all the mines. The new approach includes reconciliation programs between the orebody models and what we actually “It all starts with an understanding of the mineralization extract as well as operational and financial forecasts. controls of each orebody and using this information in There are also grade control programs, which allow the geological modelling to project the grade, geometry geologists and mining engineers to model the geology, and geotechnical characteristics of the orebody. After geotechnical and metallurgical characteristics ahead of all, this is our revenue base, and it is essential that we the mining areas. This allows us to optimally design the know it well,” he says. ore extraction and develop reliable metallurgical models to optimize ore processing.
“Using this knowledge, the geologists can work with their mining and metallurgical colleagues to develop a “Geology is not a discrete discipline. It needs to be mining plan that will extract the ore with minimum integrated into a multi-skilled team making a dilution and process it with the smallest possible contribution throughout the life of a mine, for that recovery loss. Mining is a consumptive industry, and operation to be sustainably profitable,” says Quick.
BARRICK FIRST QUARTER 2019 5 PRESS RELEASE
Drilling at Fourmile and Goldrush in mid-March.
EXPLORATION SUCCESSES BOOST INVENTORY
Barrick’s exploration programs have two goals: to replace the gold it depletes by mining; and to discover its next Tier One9 mine.
In Nevada the combination of the Fourmile discovery, confirmation of the down-plunge extensions to the which is expected to eventually be consolidated with geology and mineralization at Gorumbwa, is not only the Goldrush project, is shaping up as the portfolio’s supporting Kibali’s high production profile but is also next mega-mine. Since the high-grade maiden resource expected to extend the life of the mine. Like Nevada, was reported, widely-spaced drilling beyond the deposit the Democratic Republic of Congo is mineral-rich but footprint has intersected high grades in multiple largely unexplored, and it too has a great potential for directions, signaling significant growth potential. new mines. In addition to the gold-prolific West African Birimian and its counterpart, the Guyana Shield in Latin Drilling resumed in January and funding may be America along with our presence and growing increased to continue scoping extensions. In the exploration focus along the Andean trend in Chile, meantime, exploration and project teams are working Argentina and Peru.
together to maximize the value from a consolidated and optimized Fourmile-Goldrush. “Barrick and Randgold have a history of building shareholder value through discovery and development “Fourmile and Goldrush are classic Carlin-style of world-class gold mines. The combination under orebodies of the kind that has made this region one of Barrick brings two industry-leading exploration teams the world’s most prospective. Another is Turquoise together and given our presence in some of the best Ridge, adjacent to the Twin Creeks mine and included gold belts in the world we are uniquely positioned to in the Nevada joint venture, which we anticipate is also continue that legacy,” says President and Chief on the way to becoming a Tier One9 asset. We feel Executive Officer Mark Bristow.
strongly that Nevada still holds enormous potential for more major discoveries,” says Rob Krcmarov, Executive Vice President, Exploration and Growth.
Over in Africa, the extensions to the recently-discovered 11000 lode at Kibali, and the increasing continuity and
BARRICK FIRST QUARTER 2019 6 PRESS RELEASE
KIBALI MAKES STRONG START TO 2019
Kibali, ranked among the world’s Top 10 gold mines, has made a strong start to 2019 after setting a new production record last year, says Barrick President and Chief Executive Officer Mark Bristow.
Barrick operates Kibali, which is a joint venture with recently-initiated Durba road upgrade project is being AngloGold Ashanti and the Congolese parastatal undertaken by 100% Congolese owned and operated SOKIMO. contractors which Kibali developed.”
Speaking at a briefing for local media and stakeholders, Bristow noted that, at their meeting in Washington DC Bristow said Kibali was continuing to break records en earlier this month, the Congolese president, his route to its 2019 guidance of 750,000 ounces, the latest excellency Felix Tshisekedi, and Barrick Executive being the 285,000 tonnes of ore hoisted through the Chairman John Thornton had confirmed their joint shaft in March. Throughput and recovery remained at commitment to a partnership designed to develop the or above nameplate levels and Kibali continued to add country’s gold mining industry. Follow-up meetings held new technology to its autonomous mining operation, a in-country between President Felix Tshisekedi, Bristow field in which it is already an industry leader. and their respective executive teams focused on partnership initiatives and strategies to support the “With Kibali producing at this rate, we are intensifying continued growth of the mining industry for the benefit our focus on reserve and resource replacement.” of investors, the Congolese nation and other stakeholders.
“Drilling is targeting the extensions of the KCD and Gorumbwa complex of orebodies, along the 30km gold “The DRC government is one of our most important bearing KZ structure, and the western extensions of the partners and we look forward to working with them to Kibali Graben. This has confirmed that there is a create an economic climate capable of attracting large substantial potential for replenishing the reserve and and long-term investments such as the one we made resource base,” Bristow said. in Kibali. This requires a mining code which equitably balances the interests of the State and the capital “Kibali is one of five Tier One9 gold mines in the Barrick providers and allows both to participate fairly in the stable and it is an outstanding example of Barrick’s value creation that the mining industry offers. We are commitment to partnerships. This is demonstrated by and will continue to engage with the government and the constructive relationship between its three administration on the issues around the code shareholders as well as by its continuing investment in introduced last year,” he said.
the local economy. During the past quarter the mine spent $38 million with Congolese contractors and the
BARRICK FIRST QUARTER 2019 7 PRESS RELEASE
Appendix 1 2019 Operating and Capital Expenditure Guidance
GOLD PRODUCTION AND COSTS
All-in sustaining Production Cost of sales Cash costs costs (000s ounces) ($ per ounce) ($ per ounce) ($ per ounce) Cortez 850 - 920 810 - 850 530 - 580 750 - 800 Goldstrike10 900 - 980 1,020 - 1,080 740 - 790 950 - 990
Turquoise Ridge (75%) 270 - 310 655 - 705 550 - 600 680 - 730
Pueblo Viejo (60%) 550 - 600 780 - 830 465 - 510 610 - 650
Loulo-Gounkoto (80%) 520 - 570 880 - 930 575 - 625 810 - 850
Kibali (45%) 330 - 350 1,150 - 1,200 555 - 605 670 - 730
Kalgoorlie (50%) 280 - 300 920 - 970 740 - 790 920 - 960
Tongon (89.7%) 250 - 270 1,300 - 1,350 710 - 760 780 - 820
Porgera (47.5%) 240 - 260 980 - 1,030 800 - 850 985 - 1,025
Veladero (50%) 230 - 250 1,250 - 1,350 770 - 820 1,150 - 1,250
Hemlo 200 - 220 890 - 940 765 - 815 1,100 - 1,200
Acacia (63.9%) 320 - 350 920 - 970 665 - 710 860 - 920 Other Sites11 190 - 250 1,155 - 1,240 895 - 945 1,055 - 1,115 Total Gold12,13 5,100 - 5,600 910 - 970 650 - 700 870 - 920
COPPER PRODUCTION AND COSTS
All-in sustaining Production Cost of sales C1 cash costs costs (millions of pounds) ($ per pound) ($ per pound) ($ per pound) Lumwana 210 - 240 2.25 - 2.50 1.80 - 2.10 2.75 - 3.15
Zaldívar (50%) 120 - 130 2.40 - 2.70 1.65 - 1.85 2.00 - 2.20
Jabal Sayid (50%) 45 - 60 2.00 - 2.30 1.60 - 1.90 1.60 - 1.90 Total Copper13 375 - 430 2.30 - 2.70 1.70 - 2.00 2.40 - 2.90
CAPITAL EXPENDITURES
($ millions)
Mine site sustaining 1,100 - 1,300
Project 300 - 400 Total Attributable Capital Expenditures5 1,400 - 1,700
BARRICK FIRST QUARTER 2019 8 PRESS RELEASE
Appendix 2 2019 Outlook Assumptions and Economic Sensitivity Analysis14
Impact on 2019 Guidance Hypothetical Impact on EBITDA Assumption Change AISC7,8 (millions)
Gold revenue, net of royalties $1,250/oz +/- $100/oz +/- $385 +/- $2/oz
Copper revenue, net of royalties $2.75/lb +/- $0.50/lb +/- $135 +/- $0.03/lb
Gold all-in sustaining costs7
WTI crude oil price15 $65/bbl +/- $10/bbl +/- $30 +/- $6/oz
Australian dollar exchange rate 0.75:1 +/- 10% +/- $19 +/- $4/oz
Argentine peso exchange rate 46:1 +/- 10% +/- $5 +/- $1/oz
Canadian dollar exchange rate 1.30:1 +/- 10% +/- $21 +/- $4/oz
European euro exchange rate 1.15:1 +/- 10% +/- $2 +/- $0/oz
Copper all-in sustaining costs8
WTI crude oil price $65/bbl +/- $10/bbl +/- $5 +/- $0.01/lb
Chilean peso exchange rate 650:1 +/- 10% +/- $8 +/- $0.02/lb
Technical Information
The scientific and technical information contained in this press release has been reviewed and approved by Steven Yopps, MMSA, Director - Metallurgy, North America; Chad Yuhasz, P.Geo, Mineral Resource Manager, Latin America and Australia Pacific; Simon Bottoms, CGeol, MGeol, FGS, MAusIMM, Mineral Resources Manager, Africa and Middle East; Rodney Quick, MSc, Pr. Sci.Nat, Mineral Resource Management and Evaluation Executive; John Steele, CIM, Metallurgy, Engineering and Capital Projects Executive; and Rob Krcmarov, FAusIMM, Executive Vice President, Exploration and Growth — each a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Endnotes
Endnote 1
“Adjusted net earnings” and “adjusted net earnings per share” are non-GAAP financial performance measures. Adjusted net earnings excludes the following from net earnings: certain impairment charges (reversals) related to intangibles, goodwill, property, plant and equipment, and investments; gains (losses) and other one-time costs relating to acquisitions or dispositions; foreign currency translation gains (losses); significant tax adjustments not related to current period earnings; unrealized gains (losses) on non-hedge derivative instruments; and the tax effect and non-controlling interest of these items. The Company uses this measure internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Barrick believes that adjusted net earnings is a useful measure of our performance because these adjusting items do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Adjusted net earnings and adjusted net earnings per share are intended to provide additional information only and do not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
BARRICK FIRST QUARTER 2019 9 PRESS RELEASE
Reconciliation of Net Earnings to Net Earnings per Share, Adjusted Net Earnings and Adjusted Net Earnings per Share
($ millions, except per share amounts in dollars) For the three months ended March 31, 2019 December 31, 2018 March 31, 2018 Net earnings (loss) attributable to equity holders of the Company $111 ($1,197) $158 Impairment charges related to intangibles, goodwill, property, plant and
| equipment, and investmentsa | 3 | 408 | 2 |
| Acquisition/disposition (gains) lossesb | — | (19) | (46) |
| Foreign currency translation losses (gains) | 22 | (16) | 15 |
| Significant tax adjustmentsc | 8 | 719 | 46 |
| Other expense (income) adjustmentsd | 47 | 261 | (6) |
| Unrealized (gains) losses on non-hedge derivative instruments | (1) | 1 | — |
| Tax effect and non-controlling interest | (6) | (88) | 1 |
| Adjusted net earnings | $184 | $69 | $170 |
| Net earnings per sharee | 0.06 | (1.02) | 0.14 |
| Adjusted net earnings per sharee | 0.11 | 0.06 | 0.15 |
a.
Net impairment charges for the three months ended December 31, 2018 primarily relate to non-current asset and goodwill impairments at Veladero.
b.
Disposition gains primarily relate to the gain on the sale of a non-core royalty asset at Acacia for the three months ended March 31, 2018.
c.
Significant tax adjustments for the three months ended December 31, 2018 primarily relate to the de-recognition of our Canadian and Peruvian deferred tax assets. d.
Other expense adjustments for the three months ended March 31, 2019 primarily relate to severance costs as a result of the implementation of a number of organizational reductions and the impact of changes in the discount rate assumptions on our closed mine rehabilitation provision. For the three months ended December 31, 2018, other expense adjustments mainly relate to the inventory impairment charge at Lagunas Norte, the write-off of a Western Australia long-term stamp duty receivable and costs associated with the merger with Randgold.
e.
Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
Endnote 2
Includes Acacia on a 63.9% basis, Pueblo Viejo on a 60% basis, South Arturo on a 60% basis and Veladero on a 50% basis, which reflects our equity share of production and sales. Also includes Loulo-Gounkoto on an 80% basis, Kibali on a 45% basis, Tongon on an 89.7% basis and Morila on an 40% basis, which reflects our equity share of production and sales, commencing January 1, 2019, the effective date of the merger with Randgold.
Endnote 3
Realized price is a non-GAAP financial measure which excludes from sales: unrealized gains and losses on non-hedge derivative contracts; unrealized mark-to-market gains and losses on provisional pricing from copper and gold sales contracts; sales attributable to ore purchase arrangements; treatment and refining charges; and export duties. This measure is intended to enable Management to better understand the price realized in each reporting period for gold and copper sales because unrealized mark-to-market values of non-hedge gold and copper derivatives are subject to change each period due to changes in market factors such as market and forward gold and copper prices, so that prices ultimately realized may differ from those recorded. The exclusion of such unrealized mark-to-market gains and losses from the presentation of this performance measure enables investors to understand performance based on the realized proceeds of selling gold and copper production. The realized price measure is intended to provide additional information and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
BARRICK FIRST QUARTER 2019 10 PRESS RELEASE
Reconciliation of Sales to Realized Price per ounce/pound
($ millions, except per ounce/pound information in dollars) Gold Copper For the three months ended
| March 31, December 31, | March 31, | March 31, December 31, | March 31, | |||
|---|---|---|---|---|---|---|
| 2019 | 2018 | 2018 | 2019 | 2018 | 2018 | |
| Sales | $1,906 | $1,734 | $1,643 | $163 | $144 | $111 |
| Sales applicable to non-controlling interests | (224) | (197) | (187) | — | — | — |
| Sales applicable to equity method investmentsa,b | 129 | — | — | 121 | 116 | 113 |
Realized non-hedge gold/copper derivative (losses)
| gains | — | — | — | — | — | — |
| Sales applicable to Pierinac | (26) | (28) | (29) | — | — | — |
| Treatment and refinement charges | — | — | — | 31 | 41 | 31 |
| Export duties | — | (4) | — | — | — | — |
| Revenues – as adjusted | $1,785 | $1,505 | $1,427 | $315 | $301 | $255 |
Ounces/pounds sold (000s ounces/millions pounds)c 1,365 1,232 1,071 103 109 85 Realized gold/copper price per ounce/poundd $1,307 $1,223 $1,332 $3.07 $2.76 $2.98
a.
Represents sales of $117 million for the three months ended March 31, 2019 (December 31, 2018: $nil and March 31, 2018: $nil) applicable to our 45% equity method investment in Kibali and $12 million (December 31, 2018: $nil and March 31, 2018: $nil) applicable to our 40% equity method investment in Morila for gold. Represents sales of $81 million for the three months ended March 31, 2019 (December 31, 2018: $84 million and March 31, 2018: $72 million) applicable to our 50% equity method investment in Zaldívar and $44 million (December 31, 2018: $37 million and March 31, 2018: $41 million) applicable to our 50% equity method investment in Jabal Sayid for copper.
b.
Sales applicable to equity method investments are net of treatment and refinement charges.
c.
Figures exclude Pierina from the calculation of realized price per ounce as the mine is mining incidental ounces as it enters closure.
d.
Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.
Endnote 4
“Free cash flow” is a non-GAAP financial performance measure which deducts capital expenditures from net cash provided by operating activities. Barrick believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. Free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on this non-GAAP measure are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
($ millions) For the three months ended
| March 31, 2019 December 31, 2018 | March 31, 2018 | ||
|---|---|---|---|
| Net cash provided by operating activities | $520 | $411 | $507 |
| Capital expenditures | (374) | (374) | (326) |
| Free cash flow | $146 | $37 | $181 |
Endnote 5
These amounts are presented on the same basis as our guidance and include our 60% share of Pueblo Viejo and South Arturo, our 63.9% share of Acacia and our 50% share of Zaldívar and Jabal Sayid. Also includes our 80% share of Loulo-Gounkoto, 89.7% share of Tongon, 45% share of Kibali and 40% share of Morila, commencing January 1, 2019, the effective date of the Merger.
Endnote 6
Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest of 40% Pueblo Viejo, 36.1% Acacia and 40% South Arturo from cost of sales), divided by attributable gold ounces sold. The non-controlling interest of 20% Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of sales and our proportionate share of cost of sales attributable to equity method investments (Kibali and Morila) is included commencing January 1, 2019, the effective date of the Merger. Cost of sales applicable to copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of
BARRICK FIRST QUARTER 2019 11 PRESS RELEASE
sales attributable to equity method investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity method investments).
Endnote 7
“Total cash costs” per ounce and “All-in sustaining costs” per ounce are non-GAAP financial performance measures. “Total cash costs” per ounce starts with cost of sales applicable to gold production, but excludes the impact of depreciation, the non-controlling interest of cost of sales, and includes by-product credits. “All-in sustaining costs” per ounce begin with “Total cash costs” per ounce and add further costs which reflect the additional costs of operating a mine, primarily sustaining capital expenditures, sustaining leases, general & administrative costs, minesite exploration and evaluation costs, and reclamation cost accretion and amortization. Barrick believes that the use of “total cash costs” per ounce and “all-in sustaining costs” per ounce will assist investors, analysts and other stakeholders in understanding the costs associated with producing gold, understanding the economics of gold mining, assessing our operating performance and also our ability to generate free cash flow from current operations and to generate free cash flow on an overall Company basis. “Total cash costs” per ounce and “All-in sustaining costs” per ounce are intended to provide additional information only and do not have any standardized meaning under IFRS. Although a standardized definition of all-in sustaining costs was published in 2013 by the World Gold Council (a market development organization for the gold industry comprised of and funded by 27 gold mining companies from around the world, including Barrick), it is not a regulatory organization, and other companies may calculate this measure differently. Starting in the first quarter of 2019, we have renamed "cash costs" to "total cash costs" when referring to our gold production. The calculation of total cash costs is identical to our previous calculation of cash costs with only a change in the naming convention of this non-GAAP measure. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
BARRICK FIRST QUARTER 2019 12 PRESS RELEASE