SECOND QUARTER REPORT 2013 Barrick Reports Second Quarter 2013 Results $8.7 billion in after-tax impairment charges, largely driven by recent declines in metal prices Strong operating results from gold and copper mines; 2013 production guidance maintained, cost guidance for
- Strong operating results from gold and copper mines; 2013 production guidance maintained, cost guidance for both gold and copper lowered Reduced 2013 budgeted capital and costs by about $1.5 billion during the second quarter and by about $2.0
billion in H1 2013
- 2013 capital guidance reduced to $4.5-$5.0 billion from $5.7-$6.3 billion; cost of sales guidance reduced to $7.2-$7.8 billion from $7.9-$8.4 billion
- Lowered quarterly dividend to $0.05 per share
TORONTO, August 1, 2013 – 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 $804 million1
SECOND QUARTER 2013 OPERATING HIGHLIGHTS AND FULL YEAR 2013 GUIDANCE
Gold Q2 2013 Current Guidance Original Guidance Production (000s of ounces) 1,811 7,000-7,400 7,000-7,400 All-in sustaining costs ($ per ounce)1 919 900-975 1,000-1,100 Adjusted operating costs ($ per ounce)1 552 575-615 610-660 Copper
| 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 |
“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.
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.
Financial results are based on IFRS and expressed in US dollars. For a full explanation of results, the Financial Statements and Management Discussion & Analysis, please see the company’s website, www.barrick.com.
BARRICK SECOND QUARTER 2013 1 PRESS RELEASE
“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
BARRICK SECOND QUARTER 2013 2 PRESS RELEASE
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
BARRICK SECOND QUARTER 2013 3 PRESS RELEASE
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, 20132.
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
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.
BARRICK SECOND QUARTER 2013 4 PRESS RELEASE
quarter, Barrick’s adjusted operating costs, AISC and all-in costs were $552 per ounce, $919 per ounce and $1,276 per ounce3, 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.
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.
BARRICK SECOND QUARTER 2013 5 PRESS RELEASE
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 Zaldívar 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 pound4. 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 reserves5, 676 million ounces of silver contained within the gold reserves5, 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.
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.
BARRICK SECOND QUARTER 2013 6 PRESS RELEASE
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 billion6. 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.
6 Includes Pascua-Lama initial project capital plus infrastructure capital.
BARRICK SECOND QUARTER 2013 7 PRESS RELEASE
Key Statistics
Barrick Gold Corporation Three months ended Six months ended (in United States dollars) June 30, June 30, (Unaudited) 2013 2012 (restated)7 2013 2012 (restated)7 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 price2 | 1,411 | 1,608 | 1,518 | 1,651 |
| Adjusted operating costs2 | 552 | 591 | 558 | 568 |
| All-in sustaining costs2 | 919 | 1,061 | 931 | 1,000 |
| All-in costs2 | 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 |
| 1,304 | 1,568 | 1,352 | 1,406 |
All-in costs (on a co-product basis)2
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 price2 | 3.28 | 3.45 | 3.41 | 3.62 |
| C1 cash costs2 | 1.75 | 2.21 | 2.08 | 2.13 |
| Depreciation3 | 0.42 | 0.59 | 0.38 | 0.51 |
| 0.10 | (0.02) | 0.15 | 0.09 |
Other4 C3 fully allocated costs2 2.27 2.78 2.61 2.73 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 earnings2 | 663 | 821 | 1,586 | 1,917 |
| Operating cash flow | 896 | 919 | 1,992 | 2,293 |
| Adjusted operating cash flow2 | 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 |
As at As at June 30, December 31, 2013 2012 (restated)7 Financial Position (millions)
Cash and equivalents $ 2,422 $ 2,097 Non-cash working capital 3,415 2,884 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.
BARRICK SECOND QUARTER 2013 8 8 SUMMARY INFORMATION
Production and Cost Summary Gold Production (attributable ounces) (000's) All-in sustaining costs4 ($/oz)
| Three months ended | Six months 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 Gold1 | 122 | 113 | 230 | 220 | 1,416 | 1,536 | 1,507 | 1,465 |
| - | 3 | - | 12 | - | - | - | - |
Other2 Total 1,811 1,742 3,608 3,623 $ 919 $ 1,061 $ 931 $ 1,000
Copper Production (attributable pounds) (millions) C1 Cash Costs ($/lb)
Six months ended Six months ended Three months ended Three months ended
| June 30, | June 30, June 30, June 30, | |||
|---|---|---|---|---|
| (Unaudited) | 2013 | 2012 | 2013 | 2012 2013 2012 (restated)6 2013 2012 (restated)6 |
| Total | 134 | 109 | 261 | 226 $ |
1.75 $ 2.21 $ 2.08 $ 2.13
Total Gold Production Costs ($/oz)
Three months ended Six months ended June 30, June 30, (Unaudited) 2013 2012 (restated) 6 2013 2012 (restated) 6 Direct mining costs at market foreign exchange rates $ 602 $ 620 $ 608 $
| Gains realized on currency hedge and commodity hedge/economic hedge contracts | (42) | (40) | (46) | (49) |
| Other3 | (14) | (12) | (14) | (13) |
| By-product credits | (27) | (18) | (28) | (17) |
| Royalties | 33 | 41 | 38 | 40 |
| Adjusted operating costs4 | 552 | 591 | 558 | 568 |
| Depreciation | 210 | 188 | 203 | 185 |
| 14 | 12 | 14 | 13 |
Other3 Total production costs $ 776 $ 791 $ 775 $ Adjusted operating costs4 $ 552 $ 591 $ 558 $ General & administrative costs 37 59 44 59 19 21 22 20 Rehabilitation - accretion and amortization Mine on-site exploration and evaluation costs 9 17 8 14 173 173 173 164 164 166 d l t dit 173 Mi Mine development expenditures Sustaining capital expenditures 129 200 135 173 All-in sustaining costs4 $ 919 $ 1,061 $ 931 $ 1,000 All-in costs4 $ 1,276 $ 1,549 $ 1,323 $ 1,387
Total Copper Production Costs ($/lb)
Three months ended Six months ended June 30, June 30, (Unaudited) 2013 2012 (restated) 6 2013 2012 (restated) 6 C1 cash costs4 1.75 $ 2.21 $ 2.08 $ 2.13 $ Depreciation 0.42 0.59 0.38 0.51 Other5 0.10 (0.02) 0.15 0.09 C3 fully allocated costs4 2.27 $ 2.78 $ 2.61 $ 2.73 $
Figures relating to African Barrick Gold are presented on a 73.9% basis, which reflects our equity share of 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.
Represents the Barrick Energy gross margin divided by equity ounces of gold sold.
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.
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.
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.
BARRICK SECOND QUARTER 2013 9 9 SUMMARY INFORMATION
Consolidated Statements of Income
Three months ended Six months ended Barrick Gold Corporation (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 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) | - |
| 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) |
| 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) |
| Income (loss) from continuing operations | (8,196) | 801 | (7,343) | 1,856 |
| Loss from discontinued operations (note 4A) | (505) | (9) | (497) | (14) |
(8,701) $ 792 $ (7,840) $ 1,842 Net income (loss) $ Attributable to:
Equity holders of Barrick Gold Corporation $ (8,555) $ 787 $ (7,708) $ 1,826
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.
BARRICK SECOND QUARTER 2013 10 10 FINANCIAL STATEMENTS (UNAUDITED)
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.
BARRICK SECOND QUARTER 2013 11 11 FINANCIAL STATEMENTS (UNAUDITED)
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 (restated - 2013 2012 (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) |
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.
BARRICK SECOND QUARTER 2013 12 12 FINANCIAL STATEMENTS (UNAUDITED)