For a f ull explanation of results, the Financial Statements and Management Discussion & Analysis, 2012 outlook, mine statistics and mineral reserves and resources,
FOURTH QUARTER AND YEAR-END REPORT 2011 For a full explanation of results, the Financial Statements FEBRUARY 16, 2012 and Management Discussion & Analysis, 2012 outlook, mine statistics and mineral reserves and resources, Based on IFRS and expressed in US dollars please see the Company’s website, www.barrick.com. Barrick Reports Q4 2011 Financial and Operating Results
| Highlights | |
| Financial and Operating Results • Reported net earnings for Q4 were $959 million ($0.96 per share) compared to $961 million ($0.97 per share) in the prior year period. Adjusted net earnings rose 15% to $1.17 billion ($1.17 per share)1 from $1.02 billion ($1.02 per share) in the prior year period, primarily reflecting higher realized gold prices and higher copper sales volumes. Q4 operating cash flow increased 41% to $1.22 billion and adjusted operating cash flow was $1.30 billion1. Gold cash margins increased 25% to $1,159 per ounce1 in Q4 from $928 per ounce in the prior year period and net cash margins rose 18% to $1,282 per ounce1 from $1,090 per ounce in the prior year period. • Full year adjusted net earnings increased 33% from $3.52 billion in the prior year to $4.67 billion ($4.67 per share), demonstrating the Company’s strong gold price leverage, and translating to a higher return on equity of 22%1 from 20% in 2010. Adjusted operating cash flow rose 8% to $5.68 billion from $5.24 billion in the prior year. Reported net earnings and operating cash flow in 2011 increased 25% and 16% to $4.48 billion ($4.49 per share) and $5.32 billion, respectively, compared to the prior year, and were Company records. • Q4 gold production of 1.81 million ounces at total cash costs of $505 per ounce1 or net cash costs of $382 per ounce1 included a strong performance from the North America region. Full year gold production of 7.68 million ounces at total cash costs of $460 per ounce met original guidance while net cash costs of $339 per ounce were below original guidance. Copper production of 451 million pounds in 2011 also met guidance at total cash costs of $1.75 per pound1, which were slightly above guidance. • 2012 gold production is anticipated to be 7.3-7.8 million ounces at total cash costs of $520-$560 per ounce or net cash costs of $400-$450 per ounce2, positioning Barrick as one of the lowest cost senior gold producers. Copper production for 2012 is expected to be 550-600 million pounds at total cash costs of $1.90-$2.20 per pound. Investing in and Developing High Return Projects • The world-class Pueblo Viejo and Pascua-Lama projects are on track to enter production in mid-2012 and mid-2013, respectively. These two mines are expected to contribute about 1.5 million ounces3 of low cost annual production and provide combined annual average EBITDA of about $2.5 billion4 to Barrick in their first full five years. Replacing Gold Reserves and Increasing Copper Reserves through Exploration and Selective Acquisitions • Barrick replaced proven and probable gold reserves to an industry-leading 139.9 million ounces5 in 2011. Our focused exploration program is yielding excellent results, including the high grade Red Hill/Goldrush greenfield discovery in Nevada. Copper reserves nearly doubled from 6.5 billion pounds to 12.7 billion pounds5, measured and indicated copper resources rose 17% to 15.3 billion pounds and inferred copper resources increased 117% to 19.9 billion pounds5 with the addition of Lumwana and Jabal Sayid. Returning Capital to Shareholders • Consistent with Barrick’s practice of paying a progressive dividend, the Company increased its quarterly dividend by 25% to $0.15 per share during 2011, representing more than a 170%6 increase in capital returned to shareholders in the last five years, or a 22% annual compound growth rate over this period. |
1 Adjusted net earnings, adjusted operating cash flow, EBITDA, return on equity, total cash costs per ounce, total cash costs per pound, net cash costs, total cash margins and net cash margins per ounce/pound are non-GAAP financial measures. See pages 72-79 of Barrick’s Year-End 2011 Report.
2 Based on an assumed realized copper price of $3.50 per pound for 2012.
3 ~1.5 million ounces of production is based on the estimated cumulative average annual production in the first full five years once both mines are at full capacity.
4 Based on a $1,600 per ounce gold price, a $30 per ounce silver price and a $100/bbl oil price and estimated average annual production in the first full five years once both mines are at full capacity.
5 Calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the Securities Exchange Act of 1934), as interpreted by the Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, approximately 2.15 million ounces of reserves at Pueblo Viejo (Barrick’s 60% interest) is classified as mineralized material. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 161-166 of Barrick’s 2011 Year-End Report.
6 Calculated based on converting the 2006 semi-annual dividend of 11 cents per share to a quarterly dividend.
BARRICK FOURTH QUARTER AND YEAR-END 2011 PRESS RELEASE
FINANCIAL AND OPERATING RESULTS realize record earnings and cash flow. We advanced Q4 production was 1.81 million ounces of gold at our world-class projects, Pueblo Viejo and Pascuatotal and net cash costs of $505 per ounce and Lama, which are scheduled to begin contributing $382 per ounce, respectively. Full year production low cost ounces in 2012 and 2013. We replaced our of 7.68 million ounces at total cash costs of $460 reserves, and our growing high grade gold per ounce met original guidance as Barrick’s high discovery in Nevada, Red Hill/Goldrush, clearly quality portfolio and effective cost management demonstrates the value that a focused and programs enabled the Company to deliver on its disciplined exploration program can create. We operating targets for the ninth successive year. Net added two quality copper mines to our portfolio cash costs of $339 per ounce for the year were and significantly expanded the copper reserves and below original guidance. The realized gold price for resources at Lumwana. Finally, we continue to the quarter was $1,664 per ounce 7, 22% higher strengthen and be recognized for our CSR practices than the same prior year period. Q4 cash margins which are a critical component of our success.” increased 25% to $1,159 per ounce from $928 per ounce in the comparable prior year period and net PRODUCTION AND COSTS cash margins rose 18% to $1,282 per ounce from The North America business unit performed above $1,090 per ounce in the same prior year period. plan, producing 0.76 million ounces at total cash Q4 adjusted net earnings rose 15% to $1.17 costs of $498 per ounce in Q4 on strong billion ($1.17 per share), compared to $1.02 billion performances from Cortez and Goldstrike. The ($1.02 per share) in the same prior year period, Cortez property contributed 0.28 million ounces at primarily reflecting higher realized gold prices and total cash costs of $331 per ounce for the quarter higher copper sales volumes. Reported Q4 net on higher tonnage from the open pit. With full year earnings of $0.96 billion ($0.96 per share) include production of 1.42 million ounces at total cash costs the after-tax impact of $153 million in impairment of $245 per ounce, Cortez is one of the world’s charges, mainly related to redundant power assets largest and lowest cost gold mines, and the and investment portfolio write-downs, as well as a property also has excellent upside exploration one-time withholding tax charge of about $75 potential. Production in 2012 is anticipated to be million on repatriation of funds out of the U.S. 1.20-1.25 million ounces at total cash costs of $300- Q4 operating cash flow was up 41% to $1.22 $350 per ounce, reflecting a higher proportion of billion from the same prior year period. Adjusted underground ounces and lower open pit grades as operating cash flow of $1.30 billion in Q4 compares part of planned mine sequencing.
to $1.52 billion in the same prior year period and The Goldstrike operation also performed well, adjusts for the one-time withholding tax payment. producing 0.25 million ounces at total cash costs of Full year adjusted net earnings rose 33% from $570 per ounce in Q4, primarily due to more the same prior year period to $4.67 billion ($4.67 per underground tons and higher open pit grades than share) and translated to a 22% return on equity, up anticipated. Production in 2012 is expected to be from 20% in 2010. Adjusted operating cash flow 1.25-1.30 million ounces as the open pit moves back increased 8% to $5.68 billion from 2010. Full year into a higher ore phase. Full year 2012 production reported net earnings and operating cash flow of for the North America business unit is forecast to $4.48 billion ($4.49 per share) and $5.32 billion, be 3.425-3.600 million ounces at total cash costs of respectively, were Company records. $475-$525 per ounce.
“2011 was an excellent year for Barrick,” said The South America business unit performed on Aaron Regent, President and CEO. “We met our plan, with production of 0.45 million ounces at total production and cost targets, enabling us to cash costs of $357 per ounce in Q4. The Veladero maximize the benefits of higher gold prices and mine contributed 0.23 million ounces at total cash costs of $355 per ounce in Q4 and 0.96 million 7 Realized price per ounce is a non-GAAP financial measure. See pages 72-79 of Barrick’s 2011 Year-End Report.
BARRICK FOURTH QUARTER AND YEAR-END 2011 2 PRESS RELEASE
ounces at total cash costs of $353 per ounce for of total anticipated 2012 copper production at an 2011. Lagunas Norte produced 0.18 million ounces in average floor price of about $3.75 per pound 8 and Q4 at total cash costs of $268 per ounce. can fully participate in copper price upside.
Production from South America in 2012 is expected Approximately 60% of Barrick’s consolidated to be 1.550-1.700 million ounces at total cash costs production costs are denominated in US dollars. The of $430-$480 per ounce, primarily due to lower Company’s largest single currency exposure is the grades at Veladero and lower grades and Australian dollar/US dollar exchange rate. Barrick is recoveries at Lagunas Norte as anticipated in their fully hedged on its Australian operating expenditures mine plans. in 2012 and is about 70% hedged on expected 2013 The Australia Pacific business unit produced Australian operating expenditures at effective 0.49 million ounces at total cash costs of $677 per average rates of $0.81 and $0.74, respectively, and ounce in Q4. The Porgera mine, the region’s largest also has additional coverage for 2014-2016 at levels operation, produced 0.12 million ounces at total substantially below current rates.
cash costs of $679 per ounce. Australia Pacific is The Company has also mitigated the impact of expected to produce 1.800-1.950 million ounces in higher oil prices through the use of financial 2012 at total cash costs of $700-$750 per ounce, contracts and production from Barrick Energy such primarily reflecting higher power costs for Porgera. that a $10 change in WTI crude oil prices would Attributable production from African Barrick impact 2012 total cash costs by less than $1 per Gold plc (ABG) in Q4 was 0.12 million ounces at ounce. The Barrick Energy contribution, along with total cash costs of $779 per ounce. Barrick’s share the financial contracts, provides hedge protection of 2012 production is expected to be 0.500-0.535 for approximately 80% of expected 2012 fuel million ounces at total cash costs of $790-$860 per consumption. Production from Barrick Energy is ounce. expected to continue to provide long term natural Q4 copper production of 143 million pounds at offsets to changes in energy prices.
total cash costs of $1.99 per pound included 60 million pounds from the Lumwana mine at total INCREASING GOLD AND COPPER RESERVES AND cash costs of $2.47 per pound. Lumwana is RESOURCES THROUGH EXPLORATION 9 AND expected to produce 230-260 million pounds of SELECTIVE ACQUISITIONS copper in 2012 at total cash costs of $2.40-$2.75 Barrick replaced proven and probable gold reserves per pound. Cash costs in 2012 reflect mining of to an industry-leading 139.9 million ounces at the lower grade areas of the current Malundwe pit and end of 2011, based on a $1,200 per ounce gold price, as mining transitions to the initial lower grade and also has measured and indicated gold resources benches of the Chimiwungo deposit, which starts to of 80.4 million ounces and inferred gold resources produce during the second half, as well as higher of 40.2 million ounces5, based on a $1,400 per ounce costs related to labor and royalties. The gold price. With the addition of Lumwana and Jabal Chimiwungo deposit has three lodes, one of which Sayid, copper reserves nearly doubled from 6.5 is significantly thicker than Malundwe as shown by billion pounds to 12.7 billion pounds5, measured and recent exploration drill results over the eastern indicated copper resources rose 17% to 15.3 billion shoot, consequently we expect more flexibility in pounds and inferred copper resources increased managing the mined grade going forward. The 117% to 19.9 billion pounds5 based on a $2.75 per Zaldívar mine in Chile produced 83 million pounds pound copper price and a $3.25 per pound copper at total cash costs of $1.65 per pound in Q4 and is price, respectively. At Lumwana, reserves grew 9% expected to produce approximately 285-300 million pounds of copper at total cash costs of 8 The realized price on 2012 production is expected to be reduced by $0.13/lb as a result of the net premium paid on this position.
$1.45-$1.75 per pound in 2012. The Company has 9 Barrick’s exploration programs are designed and conducted under the supervision of Robert Krcmarov, Senior Vice President, Global Exploration of Barrick. For information on the geology, exploration activities put floor protection in place on approximately half generally, and drilling and analysis procedures on Barrick’s material properties, see Barrick’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
BARRICK FOURTH QUARTER AND YEAR-END 2011 3 PRESS RELEASE
to 4.9 billion pounds and inferred resources nearly definition drilling at Chimiwungo to convert doubled from 5.5 billion pounds to 10.7 billion pounds5. inferred resources into the indicated category and In addition, 2.1 billion pounds were added in the step-out drilling to the south and east to extend the measured and indicated category5, and the Chimiwungo mineralization. Drilling to date has confirmed the deposit remains open to the east and south. thickened eastern shoot of Chimiwungo and As a result of exploration success in 2011, the selected highlights include 44 meters grading 2012 exploration budget is $450-$490 million, of 1.00% copper, 44 meters at 1.07%, 41 meters at which approximately 40% will be capitalized. The 0.80%, 37 meters at 0.91% and 20 meters at budget is weighted towards near-term resource 1.60%. In addition to these strong results within the additions and conversion at existing mines while resource area, drilling further to the east is still providing support for earlier stage exploration intersecting shallower than expected mineralization. in operating districts and other emerging areas. A prefeasibility study on an expansion that could North America is expected to be allocated about potentially double processing rates at Lumwana is 45% of the total budget, the majority of which is expected to be completed by year end 2012.
targeted for Nevada. About 20% is expected to be spent in the Australia Pacific business unit and INVESTING IN AND DEVELOPING HIGH RETURN about 20% is targeted for copper in Zambia. PROJECTS IN CONSTRUCTION Approximately 10% will be allocated to the South Barrick has targeted growth in production to America business unit, with the remainder being approximately nine million ounces of gold by 201610, African Barrick Gold.
driven largely by Pueblo Viejo and Pascua-Lama. In Nevada, recent drilling continues to grow the Total cash costs per ounce are expected to benefit potential at Red Hill/Goldrush. At Red Hill, a from these two large, low cost projects as they resource of 1.27 million ounces was calculated in come on stream in 2012 and 2013, respectively. the indicated category and 3.30 million ounces in These two high quality mines are expected to the inferred category5, and the resource remains contribute about 1.5 million ounces11 of average open in multiple directions. Step-out holes have annual production and have a significant positive intersected mineralization a further 2,800 feet impact on Barrick’s overall total cash costs. north beyond the initial 2010 resource as well as At the Pueblo Viejo project in the Dominican extended mineralization at least 1,000 feet to the Republic, first production continues to be expected southwest. Highlights of major step-out drilling in mid-2012 and overall construction is currently include 90 feet at 0.15 ounces per ton (opt), 120 about 90% complete. At the end of Q4, feet at 0.32 opt, 20 feet at 1.18 opt, and 110 feet at approximately 85% of the expected total mine 0.12 opt. Infill drilling between the deposits has 12 construction capital of $3.6-$3.8 billion (100% shown that Red Hill and Goldrush merge into a basis) or $2.2-$2.3 billion (Barrick’s 60% share) single deposit. A small portion of the Goldrush had been committed. About 13 million tonnes of ore, deposit had sufficient drill density to report an representing approximately 1.4 million contained initial inferred resource of 2.45 million ounces5.
gold ounces, has been stockpiled to date. The step-out drilling continues to suggest a high Construction of the tailings facility progressed likelihood of major resource expansion. A total of during Q4 with the receipt of approvals to re- 468,000 feet of drilling ($64 million) is planned at commence construction. The oxygen plant is Red Hill/Goldrush in 2012 to test the full extent of expected to undergo pre-commissioning testing in the mineralized system and further expand and Q1 2012, with the first two autoclaves undergoing upgrade the resource base and a scoping study has commenced. 10 The target of 9 Moz of annual production by 2016 reflects a current assessment of the expected production and timeline to complete and commission Barrick’s projects currently in construction (Pueblo Viejo and At Lumwana, activity has been ramped up with Pascua-Lama) and the Company’s current assessment of existing mine site opportunities, some of which are sensitive to metal price and various capital and input cost assumptions.
17 drill rigs on the property focusing on resource 11 Based on the estimated cumulative average annual production in the first full five years once both are at full capacity.
12 Based on gold and oil price assumptions of $1,300/oz and $100/bbl, respectively.
BARRICK FOURTH QUARTER AND YEAR-END 2011 4 PRESS RELEASE
pre-commissioning in Q2 2012. Construction of the of operation at negative total cash costs of $225transmission line connecting the site to the national $275 per ounce14 based on a silver price of $25 per power grid was completed during Q4 2011, and the ounce. For every $1 per ounce increase in the silver inter-connect to the grid has been achieved. As part price, total cash costs are expected to decrease by of a longer-term, optimized power solution for about $35 per ounce over this period.
Pueblo Viejo, the Company has started early works Overall construction of the Jabal Sayid copper to construct a dual fuel power plant at an estimated project in Saudi Arabia was about 75% complete at incremental cost of approximately $300 million the end of Q4. Subject to receipt of final approvals, (100% basis). The power plant would commence the operation is expected to enter production in the operations utilizing heavy fuel oil, but have the second half of 2012 at total construction capital of ability to subsequently transition to lower cost approximately $400 million, of which 85% had liquid natural gas. The new plant is expected to been committed at the end of Q4. Underground provide lower cost, long term power to the project.
mine development for first ore production and Pueblo Viejo is expected to contribute concrete works was completed in Q4 and bulk approximately 100,000-125,000 ounces to Barrick earthworks were about 90% complete. Jabal Sayid at total cash costs of $400-$500 per ounce13 in is expected to produce 35-45 million pounds of 2012 as it ramps up to full production in 2013.
copper in 2012 at total cash costs of $2.15-$2.50 Barrick’s 60% share of annual gold production in per pound 15. Average annual production from Lodes the first full five years of operation is expected to 2 and 4 is expected to be 100-130 million pounds average 625,000-675,000 ounces at total cash over the first full five years of operation at total costs of $300-$350 per ounce12.
cash costs of $1.50-$1.70 per pound. Results from At the Pascua-Lama project, approximately 55% recent drilling beneath Lode 4 demonstrate that of the previously announced pre-production capital the width of mineralization towards the base of the of $4.7-$5.0 billion has been committed and first current resource model had been underestimated production is expected in mid-2013. The project is by lack of drilling. In addition to the previous being impacted by labor and commodity cost intercept of 111 meters grading 2.67% copper, recent pressures as a result of inflation, competition for drilling has intersected 119 meters at 1.2% copper. This skilled labor, the impact of increased Argentinean area will be the focus of ongoing drilling and customs restrictions on equipment procurement resource/reserve upgrades and additions in 2012. and lower than expected labor productivity.
In Chile, earthworks were about 95% complete PROJECTS IN FEASIBILITY at the end of Q4, and in Argentina, earthworks At the Cerro Casale project in Chile, basic construction was approximately 65% complete at engineering was completed on schedule in Q4. The year end. Approximately 40% of the concrete has EIA permitting process is anticipated to be been poured at the processing facilities in Argentina completed by the end of 2012, after which Barrick and about 15% of the structural steel has been will consider a construction decision, erected to date. Occupancy of the construction commencement of detailed engineering and camps in Chile and Argentina continues to ramp up sectoral permitting. Ongoing consultation with the with 6,500 beds available by the end of 2011. The government, local communities and indigenous camps are expected to reach their full capacity of groups is continuing in parallel with permitting. 10,000 beds in mid-2012. Average annual gold Barrick’s 75% share of average annual production from Pascua-Lama is expected to be production is anticipated to be 750,000-825,000 800,000–850,000 ounces in the first full five years ounces of gold and 190-210 million pounds of copper in the first full five years of operation at 13 Based on 2012 gold and oil price assumptions of $1,700/oz and $100/bbl, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production 15 Based on 2012 copper and gold price assumptions of $3.50/lb and $1,700/oz, respectively. The 2012 total are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate. cash cost estimate is dependent on the rate at which production ramps up after commercial levels of 14 Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz, and $100/bbl, respectively and production are achieved. A change in the efficiency of the ramp up could have a significant impact on this assuming a Chilean peso f/x rate of 475:1. estimate.
BARRICK FOURTH QUARTER AND YEAR-END 2011 5 PRESS RELEASE
total cash costs of $200-$250 per ounce 16. also been completed on the Zaldívar deep sulfides Estimated total mine construction capital is and a prefeasibility study is expected by year end 2012. approximately $6.0 billion (100% basis)16, 17.
At the 50%-owned Donlin Gold project in FINANCIAL STRENGTH Alaska, the revised feasibility study, which includes At December 31, 2011, Barrick remained in a strong updated costs and the utilization of natural gas, has financial position with the gold industry’s only ‘A’ been completed and acceptance of the study by the credit rating, a quarter-end cash balance of $2.7 Board of Donlin Gold LLC is expected in the first billion, and 2011 adjusted operating cash flow of $5.7 half of 2012. Mine construction capital is expected billion. The Company’s existing $2.0 billion revolving to be approximately $6.7 billion (100% basis) , credit facility was replaced with a new five-year, which includes a natural gas pipeline that is $4.0 billion revolving credit facility in January, anticipated to lower long term power costs and 2012, of which $3.0 billion remains available. offer a better environmental and operational Barrick’s financial strength positions the Company solution for power connection to the site. well to continue investing in its project pipeline, Permitting is expected to commence following maintain a progressive dividend and pursue other approval by the Board of the revised feasibility value-enhancing opportunities. Consistent with study. Donlin Gold is anticipated to produce about Barrick’s practice of paying a progressive dividend, the Company increased its quarterly dividend by 1.5 million ounces of gold annually (100% basis) in its first full five years of operation. 25% to $0.15 per share during 2011, representing a At the 75%-owned Turquoise Ridge mine in 170% increase in capital returned to shareholders Nevada, work is advancing on the potential to in the last five years, or a 22% annual compound develop a large scale open pit in order to mine the growth rate over this period.
lower grade halo around the high grade underground ore, which could significantly increase CORPORATE SOCIAL RESPONSIBILITY annual production. Work in 2012 will focus on Barrick continues to be recognized for its strong resource conversion, mine planning, environmental Corporate Social Responsibility culture and was data collection, geotechnical and hydrologic awarded the Best Practice of CSR Award for 2011 by evaluation, metallurgical and trade-off studies for IR Magazine. In 2011, the Company was listed for the processing as part of the prefeasibility study which fourth consecutive year on the Dow Jones Sustainability is expected to be completed by the end of 2012. World Index and is also the only Canadian mining Twelve drill rigs are currently active on the company to be ranked as one of the world’s top 100 property and the focus of open pit drilling is on sustainable companies by NASDAQ.
upgrading resources. Additionally, surface drilling has intersected new mineralization, particularly in BOARD APPOINTMENT the shallower south area of the planned pit, which Barrick’s Board of Directors has appointed a new could positively impact economics. Underground board member, John Thornton. Mr. Thornton is a drilling is also yielding strong results, intersecting Professor and Director of the Global Leadership higher grades than expected in some areas, and Program and Chairman of the Advisory Board at zones are open up-dip and to the northwest. the Tsinghua University School of Economics and Scoping work has been completed on the Management in Beijing. He is also Chairman of the Lagunas Norte deep sulfide potential and the project Board of Trustees of the Brookings Institution, a is undergoing metallurgical and geotechnical work as director of HSBC Holdings plc and a director and part of a prefeasibility study which is anticipated to non-executive Chairman of HSBC North America be completed by year end 2012. A scoping study has Holdings Inc., as well as past President and board member of the Goldman Sachs Group.
16 Based on gold, copper and oil price assumptions of $1,300/oz, $3.25/lb and $100/bbl, respectively and assuming a Chilean peso f/x rate of 475:1.
17 Based on Q2 2011 prices and does not include escalation for inflation.
18 Based on Q2 2011 prices and does not include escalation for inflation.
BARRICK FOURTH QUARTER AND YEAR-END 2011 6 PRESS RELEASE
OUTLOOK AND GUIDANCE Capital project expenditures for 2012 are The Company expects 2012 gold production to be in expected to be in the range of $2.60-$2.75 billion 19 the range of 7.3-7.8 million ounces on lower primarily related to construction activities at expected grades and production at Cortez and Pueblo Viejo and Pascua-Lama. Open pit and Veladero. Total cash costs of $520-$560 per ounce underground mine development, which includes or net cash costs of $400-$450 per ounce for 2012 capitalized waste stripping, is anticipated to be principally reflect a change in the production mix, $850-$925 million and mine site expansion capital smaller amounts of capitalized waste stripping and is expected to be $850-$925 million, including higher labor and other inflationary costs. Barrick expenditures on development projects at Lagunas continues to be well positioned in the lower third of Norte, Cortez, Turquoise Ridge, Pueblo Viejo, the global gold cost curve based on the high quality Goldstrike and Lumwana. Mine site sustaining of its reserves, its active input cost management, capital expenditures are expected to be $1.20-$1.30 focus on best practices and supply chain initiatives.
billion, reflecting a full year of expenditures at Copper production is expected to increase to Lumwana and the inclusion of sustaining capital for 550–600 million pounds in 2012. Total cash costs of Pueblo Viejo.
$1.90-$2.20 per pound anticipated for 2012 reflect a
- * * *
full year of production from Lumwana, higher Barrick’s vision is to be the world’s best gold company sulfuric acid costs in Chile, higher royalties in Zambia by finding, acquiring, developing and producing and the second half start up of Jabal Sayid.
quality reserves in a safe, profitable and socially responsible manner. Barrick’s shares are traded on the Toronto and New York stock exchanges.
Outlook Assumptions and Economic Sensitivity Analysis
| 2012 Guidance | Hypothetical | Impact on | Impact on EBITDA | |
| Assumption | Change | Total Cash Costs | (millions) | |
| Gold revenue | $1,700/oz1 | $50/oz | n/a | $375 - $400 |
| Copper revenue2 | $3.50/lb1 | $0.25/lb | n/a | $72 |
Gold total cash costs
| Gold price effect on royalties | $1,700/oz | $50/oz | $1.25/oz | $10 |
| WTI crude oil price3 | $100/bbl | $10/bbl | $0.25/oz | $2 |
| Australian dollar exchange rate3 | 1 : 1 | 10% | $0/oz | $0 |
Copper total cash costs WTI crude oil price3 $100/bbl $10/bbl $0.02/lb $11 Chilean peso exchange rate3 500 : 1 10% $0/lb $0 1 Barrick has assumed a gold price of $1,700 per ounce and copper price of $3.50/lb, which are consistent with current market prices. This assumption does not represent a forecast of what we expect gold or copper prices to average in 2012.
2 Barrick has put in place floor protection on approximately half of its expected copper production for 2012 at an average floor price of $3.75 per pound and can fully participate in copper price upside. At prices above $3.75 per pound, the impact on EBITDA of a $0.25/lb change in the copper price is approximately $140 million.
3 Due to hedging activities we are largely protected against changes in these factors.
19 Represents Barrick’s share of expenditures and includes capitalized interest of about $350-$375 million.
BARRICK FOURTH QUARTER AND YEAR-END 2011 7 PRESS RELEASE
Key Statistics
Barrick Gold Corporation Three months ended Twelve months ended (in United States dollars) December 31, December 31, (Unaudited) 2011 2010 2011 2010 Operating Results Gold production (thousands of ounces)1 1,814 1,700 7,676 7,765 Gold sold (thousands of ounces) 1,865 1,831 7,550 7,742 Per ounce data Average spot gold price $ 1,688 $ 1,367 $ 1,572 $ 1,225 Average realized gold price2 1,664 1,368 1,578 1,228 Net cash costs2 382 278 339 293 Total cash costs2 505 440 460 409 Depreciation3 168 127 154 136 Other4 17 11 16 7
| Total production costs | 690 | 578 | 630 | 552 | |
| Copper credits | 123 | 162 | 121 | 116 | |
| Copper production (millions of pounds) | 143 | 82 | 451 | 368 | |
| Copper sold (millions of pounds) | 135 | 103 | 444 | 391 |
Per pound data
| Average spot copper price | $3.40 | $3.92 | $4.00 | $3.42 |
| Average realized copper price2 | 3.69 | 3.99 | 3.82 | 3.41 |
| 1.99 | 1.08 | 1.75 | 1.10 |
Total cash costs2 Depreciation3 0.48 0.23 0.38 0.23 Total production costs 2.47 1.31 2.13 1.33 Financial Results (millions)
Revenues $ 3,789 $ 3,011 $ 14,312 $ 11,001 Net earnings5 959 961 4,484 3,582 Adjusted net earnings2 1,166 1,018 4,666 3,517 EBITDA2 1,998 1,770 8,376 6,521 Operating cash flow 1,224 866 5,315 4,585 Adjusted operating cash flow2 1,299 1,522 5,680 5,241
Net earnings (basic) 0.96 0.97 4.49 3.63 Adjusted net earnings (basic)2 1.17 1.02 4.67 3.56
| Net earnings (diluted) | 0.96 | 0.96 | 4.48 | 3.59 |
| Weighted average basic common shares (millions) | 1,000 | 995 | 999 | 987 |
| Weighted average diluted common shares (millions)6 | 1,002 | 1,000 | 1,001 | 997 |
| 20% | 22% | 22% | 20% |
Return on equity2 As at As at December 31, December 31, 2011 2010 Financial Position (millions)
| Cash and equivalents | $2,745 | $3,968 |
| Non-cash working capital | 2,335 | 1,695 |
| Adjusted debt2 | 13,058 | 6,392 |
Net debt2 10,320 2,427 Average shareholders' equity 21,418 17,352 1 Production includes our equity share of gold production at Highland Gold.
2 Realized price, net cash costs, total cash costs, adjusted net earnings, EBITDA, adjusted operating cash flow, adjusted debt, net debt and return on equity are non-GAAP financial performance measures with no standard definition under IFRS. See pages 72 - 79 of the Company's MD&A.
3 Represents equity amortization expense divided by equity ounces of gold sold or pounds of copper sold.
4 Represents the Barrick Energy gross margin divided by equity ounces of gold sold.
5 Net earnings represents net income attributable to the equity holders of the Company.
6 Fully diluted includes dilutive effect of stock options and convertible debt.
BARRICK YEAR-END 2011 8 8 SUMMARY INFORMATION
Production and Cost Summary Gold Production (attributable ounces) (000's) Total Cash Costs ($/oz)
| Three months ended | Year ended | Three months ended | Year ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | December 31, | December 31, | |||||||
| (Unaudited) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||
| North America | 761 | 697 | 3,382 | 3,110 | $498 $437 | $426 $429 | ||||
| South America | 446 | 377 | 1,872 | 2,120 | 357 | 251 | 358 | 208 | ||
| Australia Pacific | 485 | 485 | 1,879 | 1,939 | 677 | 602 | 621 | 576 | ||
| 118 | 133 | 509 | 564 | 779 | 622 | 692 | 570 |
African Barrick Gold3 Other 4 8 34 32 475 494 475 494 Total 1,814 1,700 7,676 7,765 $ 505 $ 440 $ 460 $ 409
Copper Production (attributable pounds) (Millions) Total Cash Costs ($/lb)
| Three months ended | Year ended | Three months ended | Year ended | ||||
|---|---|---|---|---|---|---|---|
| December 31, | December 31, | December 31, | December 31, | ||||
| (Unaudited) | 2011 | 2010 | 2011 | 2010 | 2011 2010 | 2011 2010 | |
| Total | 143 | 82 | 451 | 368 | $ |
1.99 $ 1.08 $ 1.75 $ 1.10
Total Gold Production Costs ($/oz) Three months ended Year ended December 31, December 31, (Unaudited) 2011 2010 2011 2010 Direct mining costs at market foreign exchange rates $ 549 $ 464 $ 506 $ Gains realized on currency hedge and commodity hedge/economic hedge contracts (53) (34) (53) (16) Other2
(17) (11) (16) (7)
| By-product credits | (18) | (20) | (18) | (15) | |
| Copper credits | (123) | (162) | (121) | (116) | |
| Cash operating costs, net basis | 338 | 237 | 298 | 258 | |
| Royalties | 44 | 41 | 41 | 35 | |
| Net cash costs1 | 382 | 278 | 339 | 293 | |
| Copper credits | 123 | 162 | 121 | 116 | |
| Total cash costs1 | 505 | 440 | 460 | 409 |
Depreciation Depreciation 168 168 127 127 154 154 136 Other2 17 11 16 7 690 $ 578 $ 630 $ 552 Total production costs $
Total Copper Production Costs ($/lb) Three months ended Year ended December 31, December 31, (Unaudited) 2011 2010 2011 2010 1.97 $ 1.06 $ 1.71 $ 1.08 Cash operating costs $ Royalties 0.02 0.02 0.04 0.02 Total cash costs1 1.99 1.08 1.75 1.10 Depreciation 0.48 0.23 0.38 0.23 Total production costs $ 2.47 $ 1.31 $ 2.13 $ 1.33
1 Total cash costs and net cash costs are non-GAAP financial performance measures with no standard meaning under IFRS.
See page 74 of the Company's MD&A.
2 Represents the Barrick Energy gross margin divided by equity ounces of gold sold.
3 Figures relating to African Barrick Gold are presented on a 100% basis up to March 31, 2010 and a 73.9% basis thereafter, which reflects our equity share of production.
BARRICK YEAR-END 2011 9 9 SUMMARY INFORMATION
Consolidated Statements of Income
Barrick Gold Corporation 2010 For the years ended December 31 (in millions of United States dollars, except per share data) 2011 Revenue (notes 5 and 6)
14,312 $ 11,001
| Cost of sales (notes 5 and 7) | 6,316 | 5,162 |
| Corporate administration | 166 | 156 |
| Exploration and evaluation (notes 5 and 8) | 346 | 229 |
| Other expense (note 9a) | 576 | 455 |
| Impairment charges (reversals) (note 9b) | 235 | (73) |
7,639 5,929
| Other income (note 9c) | 248 | 116 |
| Income (loss) from equity investees (note 14a) | 8 | (24) |
| Gain on non-hedge derivatives (note 22e) | 81 | 69 |
Income before finance items and income taxes 7,010 5,233
Finance income 13 14 Finance costs (199) (180) Income before income taxes 6,824 5,067 Income tax expense (note 10) (2,287) (1,561) Income from continuing operations 4,537 3,506 Income from discontinued operations (note 4g) - 124 Net income $ 4,537 $ 3,630
Equity holders of Barrick Gold Corporation $ 4,484 $ 3,582 Non-controlling interests (note 29) $ 53 $ 4,537 3,630
Income from continuing operations Basic $ 4.49 $ 3.50 Diluted $ 4.48 $ 3.47 Income from discontinued operations Basic $ - $ 0.13 Diluted $ - $ 0.12 Net income Basic $ 4.49 $ 3.63 Diluted $ 4.48 $ 3.59
The notes to these unaudited consolidated financial statements, which are contained in the Fourth quarter and Year-end report, available on our website, are an integral part of these consolidated financial statements.
BARRICK YEAR-END 2011 10 FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars, except per share data) 2011 2010 Net income $ 4,537 $ 3,630 Other comprehensive income, net of taxes
| Unrealized gains (losses) on available-for-sale ("AFS") financial securities, net of tax $9, $5 | (91) | 64 |
| Realized (gains) losses and impairments on AFS financial securities, net of tax $5, $1 | 36 | (11) |
| Unrealized gains on derivative investments designated as cash flow hedges, net of tax $41, $131 | 370 | 518 |
| Realized (gains) on derivative investments designated as cash flow hedges, net of tax $93, $22 | (413) | (88) |
| Actuarial (losses) on post employment benefit obligations, net of tax $13, $nil | (22) | (2) |
| Currency translation adjustments gain (loss), net of tax $nil, $nil | (36) | 14 |
| Total other comprehensive income (loss) | (156) | 495 |
| Total comprehensive income | $4,381 | $ |
4,125 Attributable to:
Equity holders of Barrick Gold Corporation $ 4,328 $ 4,077 Non-controlling interests $ 53 $
The notes to these unaudited consolidated financial statements, which are contained in the Fourth quarter and Year-end report, available on our website, are an integral part of these consolidated financial statements.
BARRICK YEAR-END 2011 11 FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Cash Flow
Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars) 2011 2010 OPERATING ACTIVITIES Net income $ 4,537 $ 3,630 Adjustments for the following items:
| Depreciation | 1,419 | 1,212 |
| Accretion | 52 | 21 |
| Impairment charges (reversals) (note 9b) | 235 | (73) |
| Income tax expense (note 10) | 2,287 | 1,561 |
| Increase in inventory | (708) | (381) |
| Gain on sale/acquisition of long-lived assets/investments | (229) | (79) |
| Other operating activities (note 13a) | (173) | (421) |
| Operating cash flows before interest and income taxes | 7,420 | 5,470 |
| Gross interest paid | (137) | (153) |
| Income taxes paid | (1,968) | (732) |
| Net cash provided by operating activities | 5,315 | 4,585 |
INVESTING ACTIVITIES Property, plant and equipment
| Capital expenditures (note 5) | (4,973) | (3,778) |
| Sales proceeds | 48 | 61 |
| Acquisitions (note 4) | (7,677) | (813) |
Investments
| Purchases | (72) | (61) |
| Sales | 80 | 15 |
| Other investing activities (note 13b) | (233) | (54) |
| Net cash used in investing activities | (12,827) | (4,630) |
Proceeds on exercise of stock options 57 127 Proceeds from public issuance of common shares by a subsidiary (note 4e) - 884 Long-term debt
| Proceeds | 6,648 | 782 |
| Repayments | (380) | (149) |
| Dividends | (509) | (436) |
| Funding from non-controlling interests | 403 | 114 |
| Deposit on silver sale agreement (note 26) | 138 | 137 |
| Other financing activities (note 13c) | (66) | (25) |
| Net cash provided by financing activities | 6,291 | 1,434 |
| Effect of exchange rate changes on cash and equivalents | (2) | 15 |
| Net increase (decrease) in cash and equivalents | (1,223) | 1,404 |
| Cash and equivalents at beginning of year (note 22a) | 3,968 | 2,564 |
| Cash and equivalents at the end of year (note 22a) | $2,745 | $3,968 |
The notes to these unaudited consolidated financial statements, which are contained in the Fourth quarter and Year-end report, available on our website, are an integral part of these consolidated financial statements.
BARRICK YEAR-END 2011 12 12 FINANCIAL STATEMENTS (UNAUDITED) FINANCIAL STATEMENTS (UNAUDITED)