2016 Year-End Report and Fourth Quarter Results
2016 YEAR-END REPORT AND FOURTH QUARTER RESULTS
All amounts expressed in U.S. dollars
Barrick Reports 2016 Full Year and Fourth Quarter Results
Record free cash flow driven by industry-leading margins and disciplined capital allocation
For 2016, Barrick reported net earnings attributable to equity holders of Barrick ( “net
earnings”) of $655 million ($0.56 per share), and adjusted net earnings1 of $818 million ($0.70
per share).
The Company reported annual revenues of $ 8.56 billion, net cash provided by operating
activities (“operating cash flow”) of $2.64 billion, and free cash flow2 of $1.51 billion.
Full year g old production was 5.52 million ounces. Cost of sales applicable to gold was $ 798
per ounce, and all-in sustaining costs3 were $730 per ounce.
Barrick reported fourth quarter net earnings of $ 425 million ($0.36 per share), and adjusted
net earnings1 of $255 million ($0.22 per share).
Fourth quarter revenue was $2.32 billion; operating cash flow was $ 711 million, and free cash
flow2 was $385 million.
Gold production in the fourth quarter was 1. 52 million ounces, at a cost of sales applicable to
gold of $784 per ounce, and all-in sustaining costs3 of $732 per ounce.
Proven and probable gold reserves were 85.9 million ounces4 as of December 31, 2016.
For 2017, production guidance is 5.60-5.90 million ounces of gold, at a cost of sales applicable
to gold of $780-$820 per ounce, and all-in sustaining costs3 of $720-$770 per ounce.
We intend to reduce our total debt by $2.9 billion, to $5 billion, by the end of 2018 —half of
which we are targeting in 2017.
The Board of Directors has approved an increase in our quarterly dividend from $0.02 per
share to $0.03 per share.
Operations and Technical Update will be webcast on February 22 at www.barrick.com. Please
join us for additional technical insights on our operations, projects, and other priorities.
TORONTO, February 15, 2017 — Barrick Gold Corporation (NYSE:ABX)( TSX:ABX) (“Barrick” or the
”Company“) reported annual results that exceeded the Company’s key targets for the year. In 2016,
our mines generated operating cash flow of $2.64 billion , and free cash flow 2 of $1.51 billion —a
record level of annual free cash flow for the Company . We reduced our cost of sales applicable to
gold to $798 per ounce , and our all -in sustaining costs 3 fell by 12 percent , to $730 per ounce. We
continued to strengthen our balance sheet, cutting our total debt by $2.04 billion, or 20 percent. And
we brought greater discipline and rigor to our capital allocation process with the appointment of the
Company’s first-ever Chief Investment Officer.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 2 PRESS RELEASE
STRATEGIC FRAMEWORK
Our vision is the generation of wealth through responsible mining —wealth for our owners, our
people, and the countries and communities with which we partner. In support of this vision, our
overarching objective is to grow our free cash flow per share.
We are cultivating a high-performance culture defined by the following principles: a deep
commitment to partnership, consistent execution, operational excellence, disciplined capital
allocation, and continual self-improvement. We are obsessed with talent, and seek out fresh
perspectives from other industries, challenging ourselves to think differently as we aim to transform
Barrick into a leading 21st century company.
We will grow free cash flow per share over the long term by: maintaining and growing industry-
leading margins, increasingly driven by innovation and our digital transformation; by managing our
portfolio and allocating capital with discipline and rigor; and by leveraging our distinctive partnership
culture as a competitive advantage.
Our prospects for growing free cash flow per share build o n a foundation of core mines that are
among the longest -life, lowest-cost gold operations in the world. We have the largest gold reserves
and resources in the industry 5, including a deep pipeline of projects that provide extraordinary
optionality and leverage to gold prices. Our exploration programs have a demonstrated track record
of value creation. And we are evaluating acquisitions and partnerships with the potential to improve
the overall quality of our portfolio over the long term.
GROWING FREE CASH FLOW PER SHARE THROUGH INDUSTRY-LEADING MARGINS
Through our Best -in-Class approach, we pursue industry -leading margins by continuously improving
the productivity and efficiency of existing systems and operations . Equally, we pursue step changes
in performance by re-designing those systems and introducing new technologies; and we innovate to
redefine what is possible.
As one example, we are pursuing step changes in performance in Nevada by fully integrating the
Cortez and Goldstrike operations. Over the past two years, these mines have benefited from
increasing collaboration, including joint metal planning to optimize ore processing. By fully
integrating the management of their assets, infrastructure, and expertise, we expect to further
accelerate improvements in efficiency and productivity. For example, we will fully integrate
processing operations and create an integrated digital operations management center that will serve
both mines—all under a single, site-based leadership structure. We will also develop an integrated
strategic plan for the combined operation that optimizes site resources and capital spending to
maximize long-term value creation.
Our digital transformation will be another Best -in-Class priority for 2017. Since announcing our
partnership with Cisco in September, we have completed proofs of concept for digital projects at
Cortez, our pilot digital operation, and we are now impleme nting them in the field. This work is
supported from our digital innovation center in Elko, Nevada, where frontline operators are working
with software programmers and other external partners to develop customized digital solutions.
The integration of Cor tez and Goldstrike will also allow us to further accelerate the implementation
and impact of digital transformation in Nevada. As we continue to demonstrate value in the field, we
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 3 PRESS RELEASE
intend to expand digital solutions to other Barrick operations , starting at Veladero, with a focus on
digital environmental management systems . We will provide further updates on digital projects
during our Operations and Technical Update on February 22.
While today’s digital technologies are already helping to improve the productivity and efficiency of
our operations, in 2017 we will develop a long-term innovation strategy to redefine what is possible in
mining, including an innovation road map for the Company.
GROWING FREE CASH FLOW PER SHARE THROUGH SUPERIOR PORTFOLIO MANAGEMENT
In 2016, we continued to strengthen our investment review and capital allocation process with the
appointment of Mark Hill as the Company’s first Chief Investment Officer. Mr. Hill was Head of Mining
and led the Evaluations group at Waterton Global Resource Management, a private investement firm
with an outstanding track record of capital allocation—expertise he combines with earlier experience
at Barrick. The Chief Investment Officer is responsible for ensuring that a high degree of consistency
and rigor is applied to all capital allocation decisions at the Company—whether at existing
operations, development projects, exploration (both near -mine and greenfields), or potential
acquisitions and divestments. As part of our revamped capital allocation system, all proposals go
through a rigorous, independent peer review process led by our Evaluations team, before they go to
the Investment Committee. They are then ranked, p rioritized, and sequenced to optimize capital
spending over time on a strategic basis, allowing us to anticipate and plan for funding requirements.
We expect our portfolio to deliver a 10 -15 percent return on invested capital through metal price
cycles and, as such, all new capital spending is measured against a hurdle rate of 15 percent based on
the Company’s long -term gold price assumption of $1,200 per ounce. Over time, a ssets that are
unable to meet our return expectations will be divested. We are also continuously evaluating external
opportunities to increase the l ong-term value of our portfolio through acquisitions, joint ventures ,
and other partnerships.
GROWING FREE CASH FLOW PER SHARE THROUGH PARTNERSHIPS
We believe a n authentic partnership culture is our most distinctive and sustainable competitive
advantage. For Barrick, partnership means a trust -based culture, and the currency of trust is
transparency. It is a culture of peers. Those who are part of Barrick recognize that in g eneral, the
collective is stronger than the aggregation of individuals . By embracing these values, we aim to be
the preferred partner of host governments and communities, the most sought-after employer among
the world’s best talent, and the natural choice for long-term investors.
Last year, we created a program to make every Barrick employee—from the rock face to the head
office—an owner of the Company, with an initial allocation of 25 common shares per person . We
expect this to grow over time, in line with Barrick’s performance. Our goal is not simply to be aligned
with our owners, we want our people to be owners.
We also created a new partnership with Cisco to drive Barrick’s digital transformation. Working with
Cisco and other technology partners, we have begun to develop our flagship digital operation at the
Cortez mine in Nevada —embedding digital technology in every dimension of the mine to deliver
better, faster, and safer mining. This transformation will improve not only productivity and efficiency,
but also environmental and safety performance —which will allow Barrick to build and maintain
greater trust with communities, governments, NGOs, and other partners.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 4 PRESS RELEASE
We continue to strengthen our relationships with other external partners, including Zijin Mining,
Ma’aden, and Antofagasta Plc—our joint venture partners at the Porgera, Jabal Sayid , and Zaldívar
mines. And we are working to develop new partnerships with the potential to unlock value across our
business, and grow free cash flow per share over the long term.
OUTLOOK 2017-2019
In 2017, we expect to produce 5.60-5.90 million ounces of gold, at a cost of sales applicable to gold of
$780-$820 per ounce , and all -in sustaining costs 3 of $720 -$770 per ounce. This represents an
improvement over our previous 2017 guidance of 5.0 -5.5 million ounces of gold , at all-in sustaining
costs3 of $740-$790 per ounce. As we did last year, our intention is to improve upon our plans as we
advance our digital transformation, and other Best-in-Class initiatives.
For 2017, we are once again targeting a free cash flow breakeven gold price of $1,000 per ounce,
which should ensure that we can generate cash in periods of lower gold prices , while generating a
windfall when gold prices rise.
For 2018, we expect to produce 4.80-5.30 million ounces of gold, at a cost of sales applicable to gold
of $790-$840 per ounce, and all-in sustaining costs3 of $710-$770 per ounce.
In 2019, we expect to produce 4.60-5.10 million ounces of gold, at a cost of sales applicable to gold of
$800-$870 per ounce, and all-in sustaining costs3 of $700-$770 per ounce.
Based on our current asset mix and subject to potential divestments, we expect to maintain annual
production of at least 4.5 million ounces of gold through 2021.
Please see page 11 for detailed operating and capital expenditure guidance. The table found in the
appendix at the end of this press release outlines the material assumptions used to develop the
forward-looking statements in our ou tlook and guidance, and provides an economic sensitivity
analysis of those assumptions. For certain related risk factors, please see the cautionary statement
on forward-looking information at the end of this press release.
FINANCIAL HIGHLIGHTS
Full-year net earnings were $ 655 million ($0.56 per share), compared to a net loss of $2.84 billion
($2.44 per share) in 2015. In 2016, a djusted net earnings 1 were $ 818 million ($0.70 per share),
compared to $344 million ($0.30 per share) in 2015.
This significant improvement in earnings was largely due to $3.9 billion of impairment charges
recorded in 2015, compared to net impairment reversals of $250 million recorded in 2016 . Higher
earnings were also driven by higher gold and copper prices , combined w ith higher sales volumes
(excluding the impact of divested sites), lower operating costs, and lower expenses for exploration,
evaluation, and projects.
After adjusting for items that are not indicative of future operating earnings, adjusted net earnings 1
of $818 million in 2016 were 138 percent higher than in 2015. This improvement was primarily due to
higher gold and copper prices , higher gold and copper sales volumes (excluding the impact of
divested sites), and lower operating costs.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 5 PRESS RELEASE
Significant adjusting items to net earnings (pre -tax and non -controlling interest effects) in 2016
include:
$199 million in foreign currency translation losses, including deferred currency translation
losses released as a result of the disposal and reorganization of c ertain Australian entities in
the first quarter of 2016, and unrealized foreign currency translation losses related to the
devaluation of the Argentine Peso on VAT receivables;
$114 million in other expense adjustments primarily relating to losses on debt extinguishment,
partly offset by insurance proceeds relating to the 2015 oxygen plant motor failure at Pueblo
Viejo;
$43 million in significant tax adjustments primarily relating to a tax provision in Acacia in the
first quarter of 2016;
$42 million in disposition losses primarily relating to the divestment of 50 percent of Zaldívar;
The above are p artially offset by $250 million in net impairment reversals at Veladero and
Lagunas Norte in the fourth quarter of 2016, net of an impairment charge relating to the write
down of our retained equity method investment in Zaldívar.
Full-year revenues were $8.56 billion, compared to $9.03 billion in 2015. Operating cash flow in 2016
was $2.64 billion, compared to $2.79 billion in 2015. Free cash flow 2 for 2016 was $ 1.51 billion,
compared to $471 million6 in 2015.
Excluding the proceeds of the Pueblo Viejo streaming transaction in 2015, operating cash flow for
2016 was $456 million higher than the prior year, despite a $355 million reduction in operating cash
flow associated with the divestment of non -core assets. Strong operating cash flow was driven by
higher gold prices and lower direct mining costs, as a result of lower energy and fuel costs (despite
being hedged on a significant portion of our fuel consumption) , combined with lower labor,
consumable, and contrac tor costs , and improved operating efficiencies driven by Best -in-Class
initiatives, as well as lower cash interest paid.
Fourth quarter net earnings were $ 425 million ($0.36 per share), compared to a net loss of $2.62
billion ($2.25 per share) in the pr ior-year period. Adjusted net earnings 1 for the fourth quarter were
$255 million ($0.22 per share), compared to $91 million ($0.08 per share) in the prior-year period.
Net earnings in the fourth quarter reflect an increase in realized gold and copper pri ces, and lower
cost of sales, in addition to $1 46 million (net of tax effects and non -controlling interests) in net
impairment reversals, compared to impairment charges of $2.6 billion (net of tax effects and non -
controlling interests) recorded in the fourth quarter of 2015.
Fourth quarter revenues were $2.32 billion, compared to $2.24 billion in the prior -year period.
Operating cash flow in the fourth quarter was $711 million, compared to $698 million in the fourth
quarter of 2015. Free cash flow 2 for the fourth quarter was $385 million, compared to $387 million in
the prior year period.
RESTORING A STRONG BALANCE SHEET
Achieving and maintaining a strong balance sheet remains a top priority. In 2016, w e reduced our
total debt by $2.04 billion, or 20 percent, slightly exceeding our $2 billion target for the year.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 6 PRESS RELEASE
At the end of the fourth quarter, Barrick had a consolidated cash balance of approximately $2. 4
billion.7 Barrick has less than $200 million in debt due before 2019.8 About $5 billion, or 63 percent of
our outstanding total debt of $7.9 billion, does not mature until after 2032.
We intend to reduce our total debt by $2.9 billion , to $5 billion, by the end of 2018 —half of which we
are targeting in 2017. We will achieve this by using cash flow from operations, selling additional non-
core assets, and creating new joint ventures and partnerships.
OPERATING HIGHLIGHTS
Barrick’s operations delivered progressively -stronger performance over the course of 2016, with
three consecutive quarters o f improved all -in sustaining cost guidance and gold production at the
high end of our annual production forecast. These results reflect our ongoing focus on capital
discipline, and Best-in-Class improvements that are driving greater productivity and efficiency.
We also improved our safety performance, achieving a total reportable injury frequency rate (TRIFR)9
of 0.40 —the best result in the Company’s history. Since 2009, we have reduced our TRIFR by 67
percent. Despite these improvements, Meckson Makompe, an employee at our Lumwana mine, lost
his life in a workplace accident last year . Subsequently, Williams Garrido, a contractor working at the
Pascua-Lama project, was involved in a fatal accident this month. Every person at Barrick must go
home safe and healthy every single day, and we will never be satisfied with our performance until we
achieve this paramount goal.
In 2016, our mines produced 5.52 million ounces of gold, at a cost of sales applicable to gold of $798
per ounce. All-in sustaining costs3 were $730 per ounce, a reduction of 12 percent compared to 2015.
We also reduced our cash costs3 by eight percent, from $596 per ounce in 2015, to $546 per ounce in
2016.
Gold production in the fourth quarter was 1.52 million ounces, at a cost of sales a pplicable to gold of
$784 per ounce, and all-in sustaining costs 3 of $732 per ounce, compared to 1.62 million ounces at a
cost of sales of $ 848 per ounce , and all -in sustaining costs 3 of $733 per ounce in the prior -year
period.
Copper production in 2016 was 415 million pounds, at a cost of sales attribute to copper of $1.43 per
pound, and all-in sustaining costs10 of $2.05 per pound, in line with our guidance for the year. This
compares to 511 million pounds, at a cost of sales attributable to copper of $1.65 per pound, and all-in
sustaining costs10 of $2.33 per pound in 2015.
The Jabal Sayid project, a 50 -50 joint venture with Saudi Arabian Mining Company (Ma ’aden),
commenced commercial production on July 1, 2016. Barrick’s 50 percent share of productio n in 2017
is expected to be 30-40 million pounds.
In 2016, capital expenditures on a cash basis were $1 .12 billion , compared to $1. 71 billion in 2015.
A decrease of $327 million, excluding the impact of $260 million in capital expenditures
associated with divested sites, was primarily due to lower capitalized stripping costs at Veladero,
a decrease in leach pad expansion costs at Veladero and Lagunas Norte , and our ongoing focus
on capital discipline acr oss the Company. Lower capital costs also reflected lower project
spending compared to 2015 , mainly relating to the completion of the thiosulfate leaching circuit
at Goldstrike , and decreased capital expenditures at Pascua -Lama.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 7 PRESS RELEASE
Gold
Fourth Quarter
2016
Full Year
2016
2017
Guidance
Production (000s of ounces) 1,516 5,517 5,600-5,900
Cost of sales applicable to gold ($ per ounce) 784 798 780-820
All-in sustaining costs ($ per ounce)3 732 730 720-770
Copper
Production (millions of pounds) 101 415 400-450
Cost of sales applicable to copper ($ per pound) 1.45 1.43 1.50-1.70
All-in sustaining costs ($ per pound)10 2.04 2.05 2.10-2.40
Total Attributable Capital Expenditures ($ millions) 357 1,122 1,300-1,500
MINERAL RESOURCE MANAGEMENT
Barrick manages the industry’s largest inventory of gold reserves and resources 5, with a strong track
record of adding reserves and resources at our operations and projects through exploration.
The Company’s five core mines, which are expected to account for approximately 70 percent of our
production in 2017, have an average reserve grade of 1.84 grams per tonne—more than double that
of our peer group average.5 The majority of our reserves and resources are situated in regions where
we have proven operating experience, a critical mass of infrastructure, technical and exploration
expertise, and established partnerships with suppliers, host governments, and communities.
To calculate our 2016 reserves, we have applied a short-term gold price assumption of $1,000 per
ounce for the next four years, and a long -term gold price of $1,2 00 per ounce from 2021 onwards,
consistent with our approach in 2015.
As of December 31, 2016, B arrick’s proven and probable gold reserves were 85.9 million ounces 4,
compared to 91.9 million ounces at the end of 2015. Approximately 1. 9 million ounces were divested
last year, and 6.8 million ounces were depleted through mining and processing. We replaced
approximately 60 percent of the ounces we depleted through drilling and cost improvements at our
operating mines. Significant additions included 1.1 million ounces at Lagunas Norte, 92 0,000 ounces
at Hemlo, and 640,000 ounces at the Goldstrike underground mine. Reserves at Pascua -Lama
declined by 1.3 million ounces as a result of design modifications to enhance safety and
environmental mitigation at the project . Reserves at Acacia’s Bulyanhulu mine also declined by
430,000 ounces.
In 2016, measured, indicated, and inferred resources were calculated using a gold price assumption of
$1,500 per ounce. This compares to $1,300 per ounce in 2015.
Measured and indicated gold resources decreased to 75. 2 million ounces 4 at the end of 201 6,
compared to 79.1 million ounces at the end of 201 5. Approximately 4.3 million ounces of measured
and indicated gold resources were divested in 2016, and 2.7 million ounces were upgraded to proven
and probable gold reserves. Approximately 5.3 million ounces were added to measured and indicated
resources as a result of using a $1,500 per ounce gold price assumption.
BARRICK 2016 FULL YEAR AND FOURTH QUARTER 8 PRESS RELEASE
Inferred gold resources increased to 30. 7 million ou nces4 at the end of 2016, compared to 27.4
million ounces at the end of 2015 . Approximately 3.2 million ounces were upgraded to measured and
indicated resources. Approximately 5. 3 million ounces were added through drilling, including 2. 0
million ounces at Veladero, 1.3 million ounces at Hemlo and 1.1 million ounces at Alturas.
Approximately 1.7 million ounces were adde d to inferred resources as a result of using a $1,500 per
ounce gold price assumption. The addition of 5. 3 million ounces of inferred gold resources through
drilling underscores the value of our investments in near -mine exploration, and sets the stage for
replenishing and upgrading our reserve and resource portfolio in future years.
Proven and probable c opper reserves were calculated using a short -term copper price of $2.25 per
pound, and a long -term price of $2.75 per pound. This compares to a short -term copper price of
$2.75 per pound, and a long-term price of $3.00 per pound, in 2015.
Copper reserves, including copper within gold reserves, were 11.1 billion pounds 4 at the end of 2 016,
compared to 11.7 billion pounds , at the end of 2015. Measured and indicated copper resources ,
including copper within measured and indicated gold resources, increased slightly to 9.7 billion
pounds4, compared to 9.6 billion pounds, at the end of 2016.
EXPLORATION AND PROJECTS
Barrick has the largest gold reserves and resources in the industry5, including some of the largest
undeveloped gold projects in the world, which gives us significant optionality and leverage to gold
prices. We have a demonstrated track record of creating value through exploration. Since 1990, we
have found 143 million ounces of gold for an overall discovery cost of $25 per ounce, or roughly half
the average finding cost across the industry.
After several years of exploration focused primarily on existing core districts and projects, we are
increasing our budget and broadening our focus to include new greenfield opportunities.
Approximately 80 percent of our total ex ploration budget of $185 -$225 million is allocated to the
Americas. The majority of the remaining budget is allocated to Acacia. Our exploration programs
balance high-quality brownfield projects, greenfield exploration, and emerging discoveries that have
the potential to become profitable mines.
In the short term, every one of our operating mines has the potential to identify new reserves and
resources through near -mine exploration (MINEX) . In many cases, these ounces can be quickly
incorporated into mine plans, driving improvements in production, cash flow, and earnings.
Over the medium term, we are advancing a pipeline of high -confidence projects at or near our
existing operations. These projects remain on track , with the potential to begin contributing new
production to our portfolio beginning in 2021. This includes three significant projects in Nevada: the
Cortez Deep South underground expansion ; the potential development of an underground mine at
Goldrush; and a significant expan sion of throughput at the Turquoise Ridge mine. At the Lagunas
Norte mine in Peru, we are advancing a project to extend the life of the mine by mining the refractory
material below the oxide ore body in the current open pit.
At the Alturas project in Chi le, we have added an additional 1.1 million ounces of inferred gold
resources, bringing the total inferred resource to 6.8 million ounces. 4 We expect to complete a
scoping study for Alturas in 2017. We have also initiated a prefeasibility study to evaluate the