Barrick Gold Corp.
Annual Report 2000

Plain-text annual report

•BARR cover 3/28/01 12:42 PM Page 1 (1,1) You can contact us toll-free within Canada and the United States at 1-800-720-7415 E-mail us at investor@barrick.com Visit our investor relations Web site at www.barrick.com Barrick S&P 500 1991 2000 OPERATING CASH FLOW B A R R I C K A N N U A L R E P O R T 2 0 0 0 B A R R I C K A N N U A L R E P O R T 2 0 0 0 •BARR cover 3/28/01 12:42 PM Page 1 (2,1) Barrick S&P 500 B A R R I C K A N N U A L R E P O R T 2 0 0 0 1991 2000 OPERATING CASH FLOW B A R R I C K A N N U A L R E P O R T 2 0 0 0 PROFILE Barrick Gold Corporation is a leading international gold company with operating mines and development projects in the United States, Peru, Tanzania, Chile, Argentina and Canada. The Company produced 3.7 million ounces of gold in 2000 at $145 per ounce, the lowest cash costs in the industry. Barrick is positioned to prosper, with competitive advantages that include the industry’s only ‘A’-rated balance sheet, the highest margins, a unique Premium Gold Sales Program, and rising free cash flows. Barrick’s shares trade under the ticker symbol ABX on the Toronto, New York, London and Swiss stock exchanges, as well as the Paris Bourse. CONTENTS Highlights .....................................................................2 Chairman’s Message ................................................4 Gold Mineral Reserves and Mineral Resources...........................................67 Letter to Shareholders ............................................6 Premium Gold Sales Program Schedules ..........71 Objectives ..................................................................19 Supplemental Information ....................................74 Premium Gold Sales Program..............................20 Corporate Governance & Committees ...............77 Corporate Responsibility ......................................22 Board of Directors and Officers ..........................78 Management’s Discussion and Analysis ...........25 Shareholder Information ......................................80 Financial Statements ............................................44 Corporate Information...........................................82 All dollar amounts given in United States dollars unless otherwise indicated. •BARR cover 3/28/01 12:42 PM Page 2 (1,1) BARRICK. BUILT TO LAST. In the ebb and flow of the capital markets, it’s the innovative companies that stand the test of time. Anchored in rock solid values, these companies are driven to change and improve everything except their guiding principles. Looking out to the horizon, innovative companies anticipate change, and act decisively – prospering over longer periods of time than their contemporaries. Furthermore, while not impervious to market turbulence, innovative companies possess the determination to address economic realities head on – creating value, even in times of adversity. Finally, more than being just enduring or successful, innovative companies are the leaders across industries and have been so – seamlessly – through multiple generations. From the beginning, Barrick set out to be such a company. And, if financial strength, management, discipline and superior long-term business performance are any indication, we are right on target. l y a e S n y e c o J l , a r d n a x e O a i s e L l : I N O T C U D O R P l r o y a T e s i u o L : I N O T C E R D T R A I n g i s e D g g E : I N G S E D . c n I l s n o i t a e R r o t s e v n I d e t a r g e t n I y g o l i r T : T N E M E G A N A M T C E J O R P D N A E V T A E R C I COMPARISON OF OPERATING CASH FLOWS PER SHARE Barrick S&P 500 % 300 250 200 150 100 50 1991 2000 Over the past 10 years, the average annual operating cash flow per share of S&P 500 companies has more than doubled. In that same period, Barrick’s annual operating cash flow per share has tripled. B A R R I C K A N N U A L R E P O R T 2 0 0 0 B U I L T T O L A S T 1 H I G H L I G H T S OPERATING EARNINGS * millions of dollars OPE RAT ING CASH F LOW millions of dollars 334 331 Operating earnings have grown by more than 10% over the 301 past two years. Operating cash flow has increased by more than 30% since 1998. 705 702 539 250 98 99 00 450 98 99 00 *Net income excluding non-cash provision CASH BALANCE millions of dollars MINERAL RESERVES - GOLD millions of ounces Barrick’s cash 623 Calculated at $300 59.3 58.5 balance has increased by 33% since 1998. 500 416 per ounce, $25 less 51.5 than last year, mineral reserves remain virtually unchanged. 0 98 99 00 20 98 99 00 GOLD PRODUCTION millions of ounces TOTAL CASH COSTS dollars per ounce Gold production rose to a record level. 3.74 3.66 3.20 180 145 134 Cash costs remain the lowest of any major producer in the industry. 2.00 98 99 00 0 98 99 00 2 H I G H L I G H T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 H I G H L I G H T S Financial Highlights (in millions of dollars except per share data) 1998 1999 2000 change 1999-2000 Revenue from gold sales Net income (loss) for the year Before provision After provision Operating cash flow Cash Shareholders’ equity Net income (loss) per share Before provision After provision Operating cash flow per share Dividends per share Operating Highlights Gold production (thousands of ounces) Total cash costs per ounce* Total production costs per ounce – net** $ 1,287 $ 1,421 $ 1,330 301 301 539 416 331 331 702 500 334 (766) 705 623 3,592 4,154 3,023 0.79 0.79 1.43 0.18 0.83 0.83 1.80 0.20 0.84 (1.93) 1.78 0.22 3,205 $ $ 180 223 3,660 $ $ 134 205 3,744 $ $ 145 204 Gold Mineral Reserves and Mineral Resources (thousands of ounces)*** Mineral reserves: proven and probable Mineral resources (including inferred) 51,456 16,789 59,283 21,959 58,510 26,082 * Calculated in accordance with the Gold Institute Standard. ** Not including amortization related to acquisition costs. *** For a detailed breakdown of mineral reserves and resources by category, see pages 67-70. -6% +1% +25% -27% +1% -1% +10% +2% +8% -1% +19% B A R R I C K A N N U A L R E P O R T 2 0 0 0 H I G H L I G H T S 3 B U I LT T O L A S T r e d n u o F d n a n a m r i a h C , k n u M r e t e P “Barrick competes with the best, not just the best gold companies, but the and a refusal to be driven by the price of a volatile commodity. From the start, I wanted Barrick to be a business first; a mining house second. I envisioned a company that would combine an aggressive operating style with a conservative business approach – entre- best companies, preneurial verve tempered by fiscal discipline. period.” Today, this discipline is apparent throughout There is a simple chart on the cover of this annual report. It shows vividly how much faster Barrick’s cash flow has grown than that of the other S&P 500 companies as a Barrick, from the strength of our balance sheet and the quality of our reserves, to our no-nonsense style of operating. We don’t shrink from making tough decisions, which is why we decided this year to adjust the book value of our mines to reflect current gold prices. In the process, we have group. It speaks volumes about Barrick’s compar- maintained our ‘A’ credit rating. ative performance in one of the most important Barrick has been built on the principles drivers of a company’s value: cash flow. mentioned here, but it continues to excel because it As the founder of this Company, I am gratified is managed and run by an extraordinary team by this simple chart because it demonstrates that of talented and dedicated men and women. Barrick can prosper in any environment, even a On behalf of our entire team, I thank you, my hostile one in which the price of gold sinks to fellow shareholders, for your ongoing support. twenty-year lows. It proves that Barrick competes We continue to devote ourselves to increasing effectively with the world’s best, not just the best the long-term value of Barrick. gold companies, but the best companies, period. Barrick is built to last. You have our word. Our success is not an accident. We have achieved this performance by sticking to our five guiding prin- ciples, listed on the opposite page. These principles grew out of my vision for Barrick at its founding in 1983. Peter Munk I wanted to create a different kind of gold company, Chairman characterized by a commitment to shareholder value March 9, 2001 4 C H A I R M A N ’ S M E S S A G E B A R R I C K A N N U A L R E P O R T 2 0 0 0 G U I D I N G P R I N C I P L E S 1 . E N T R E P R E N E U R I A L M A N A G E M E N T 2 . F I N A N C I A L D I S C I P L I N E 3 . C O N S I S T E N T L Y H I G H M A R G I N S / H I G H R E T U R N S 4 . C O R P O R A T E R E S P O N S I B I L I T Y 5 . V A L U E C R E A T I O N I N A N Y E C O N O M I C E N V I R O N M E N T B A R R I C K A N N U A L R E P O R T 2 0 0 0 F I N A N C I A L H I G H L I G H T S 5 F E L L O W S H A R E H O L D E R S, t n e d i s e r P , t n a h p i l O l l a d n a R r e c i f f O e v i t u c e x E f e i h C d n a “We have the financial strength, the flexibility and discipline required to prosper in any gold A company that has the resources and strategies to build this business – your business – in any environment, even at a 20-year-low gold price. All in all, an innovative company that is built environment. And I am to last . . . and built to grow. confident that we will.” The principles that Peter talks about in the strength at Barrick. You can see it in our preceding pages have created lasting rising operating cash flows and operating earnings, First, I’d like to give you an overview of the year, highlighting the most salient features. After that, I will take a look at the year from the perspective of our guiding principles, which will put our activities and achievements in a proper context. It was a year of gathering strength, in which we and in the quality of our balance sheet and assets. launched value-building initiatives for the future You can also see it, I believe, in the caliber of our and made tough decisions in line with the market people and the optimism we share for the future. realities of the present. We improved the ability of Barrick has arrived at a position of strength, our mines to spin off cash flow, one of the main even as our industry has grown weaker, because drivers of value for the future. And we exercised we have stuck to unchanging principles while discipline in assessing how best to deploy that adapting our tactics to changing circumstances. cash flow, or more to the point, preserve that cash In the process, we have created a company that in an environment where cash is king. is grounded in market realities, yet charged with a Our shareholders’ interests are always foremost sense of the opportunities before us. in our thinking. We are confident that we are A company that has the ability to size up those serving those interests by building economic value opportunities and the flexibility, the discipline and that we believe will be recognized by the market. the will to act on them decisively in the best interests of our shareholders. 6 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 A Y E A R O F G AT H E R I N G S T R E N G T H “Our Premium Gold Sales Program During 2000, we produced more gold than ever – at the lowest cost among the majors in the earned $300 million in additional industry – and consolidated our financial strength. revenues in 2000 alone.” • Our production rose to a new level, 3.7 million ounces at a cash cost of $145 an ounce. A Y E A R O F VA L U E - B U I L D I N G I N I T I AT I V E S • Operating earnings rose to $334 million In 2000, we continued our focused approach to ($0.84 per share) and operating cash flow was building value and pursuing the highest possible $705 million ($1.78 per share), both new levels return on capital. On the acquisitions front, we in our history. After a non-cash provision to acquired Pangea Goldfields Inc., complementing adjust our balance sheet to reflect low gold our extensive land position in Tanzania, where prices, a prudent thing to do, we recorded a our new Bulyanhulu Mine is situated. loss of $766 million. On the development front, construction of • Our Premium Gold Sales Program maintained Bulyanhulu proceeded smoothly, as did work on its 52-quarter winning streak – that’s 13 straight Rodeo at the Goldstrike Property in Nevada – years of exceeding the spot price. The program two low-cost, long-life producers scheduled to earned $300 million in additional revenues in come on-line this year. 2000 alone. We also completed the new roaster at our • Barrick’s operating mines generated $530 mil- Goldstrike Property. The new facility had a lion of free cash flow, some of which we used smooth start-up, and since then has exceeded to acquire, explore and develop new projects our expectations for both throughput and costs. that will add earnings and free cash flow, not The roaster success is one reason Goldstrike just this year, but for years to come. We paid set a production record last year, at one of the $87 million in dividends last year and increased lowest cash costs in its history. our cash balance by 25% to $623 million. • We achieved high cash margins of $215 A Y E A R O F R E A L I T Y- B A S E D D E C I S I O N S an ounce. The Provision: At Barrick we deal with market • We maintained our ‘A’-rated balance sheet, realities as they are – not as we might wish them the strongest in the industry. to be. In light of the low gold price environment, Barrick conducted a comprehensive review of both the asset values carried on its books and its gold reserves. The review resulted in a non-cash B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 7 provision of $1.1 billion, taken in the fourth quarter, to adjust the carrying value of gold-related assets. There are two key points to keep in mind about this provision: 1. It is non-cash and has no impact on Barrick’s cash flows, reserves, production profile or employment levels. 2. It reflects the reduced value of assets that were acquired prior to 1997 with higher-valued shares when gold prices were nearly $400 an ounce. EAR N IN GS (millions of dollars) 213 175 92 334 292 251 256 262 331 301 218* -123* To put this decision in proper perspective, over 91 92 93 94 95 96 97 98 99 00 -766* the past four years, we’ve cut our costs by *includes non-cash provision one-third. We’ve dropped our mineral reserve calculation price from $400 per ounce in 1996 ounces for 2000, as compared to 59.3 million to $300 this year. Now we’ve brought our ounces in 1999. Even at $275 per ounce, our Results-oriented: further demonstrates the quality of our asset base. mineral reserves are only reduced by 3%. This John Carrington and his team have reduced cash costs at a rate that is second to none in the industry. The decision to delay Pascua-Lama: In December of 2000, we made another decision that reflected the realities of a weak gold and silver price environment – we deferred the start-up of construction at our Pascua-Lama Project in Chile and Argentina. In so doing, we retained balance sheet up to date. The markets have recog- complete financial flexibility without diminishing nized lower values for gold producers’ assets. Pascua-Lama’s potential. In other words, the vast Our balance sheet now reflects these lower values Pascua-Lama gold and silver deposit isn’t going as well. anywhere. We are continuing with engineering Our decision to calculate our gold mineral work and enhancing the project’s development reserves on a gold price of $300 per ounce, as plan. Pascua-Lama remains a long-life, quality compared to $325 an ounce in 1999, has minimal asset that should be a significant contributor to impact on mineral reserves. This can be seen in the our production, earnings and cash flow in a more fact that Barrick’s mineral reserves remain virtually favorable gold and silver price environment. unchanged, on the same asset base, at 58.5 million 8 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 n a m r i a h C e c i V , n o t g n i r r a C n h o J r e c i f f O g n i t a r e p O f e i h C d n a B U I L T T O L A S T 1E N T R E P R E N E U R I A L M A N A G E M E N T people whose expertise and dedication built your company into an industry leader. For example, the same people who brought the Betze-Post, E N T R E P R E N E U R I A L M A N A G E M E N T I think our willingness to take the tough decisions, to do what is right for shareholders, not just what Holt-McDermott, Meikle and Pierina mines into is easy or convenient, is an ingrained ability within production in years past are bringing Bulyanhulu our management. There are others. And we believe they work to your benefit. “Barrick still has the key people whose We like to say that the qualities that have made expertise and dedication built your Peter Munk so successful are encoded in our DNA – the focus on shareholders, the ability to identify company into an industry leader.” an opportunity and seize it, the discipline to make and Rodeo into production in 2001. I’m proud of the tough decisions, the courage to act decisively them, and of the team that did a wonderful job of when the time is right. bringing the roaster on-stream at Goldstrike last Experience helps. While we have reinforced year without a hitch. We have the same kind of our ranks over the years with some of the best accumulated expertise in financial management. talent in the industry, Barrick still has the key B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 9 t n e d i s e r P e c i V r o i n e S , y k s l a k o S i e m a J r e c i f f O l a i c n a n i F f e i h C d n a Continuity in leadership has led to continuity F I N A N C I A L D I S C I P L I N E in the key traits I’m talking about. The single At Barrick, we have always combined a disciplined premise around which all our thinking revolves financial approach with an aggressive operating at Barrick is this: we are shareholder-focused. style. The key elements of that conservative How do we ensure a shareholder focus? It starts financial approach are the Premium Gold Sales with leadership. When a meaningful part of our Program, our strong, conservative balance sheet, managers’ compensation is tied to our share price, and the prudent use of our capital. you get a shareholder mentality quite naturally. Disciplined: Jamie Sokalsky’s disciplined approach to financial management is evident in our ‘A’-rated balance sheet. T H E P R E M I U M G O L D S A L E S P R O G R A M During 2000, our program realized an average price of $360 per ounce, an $81 premium to the average spot price, which translated into $300 million in additional revenues. The benefits flow to our shareholders. Our Premium Gold Sales Program enables us to set a minimum selling price for our product for a number of years in advance. This not only From our executives to our miners working at the increases our revenues, it makes them more drift face, all our employees have incentive-based predictable and lowers risk. Few other lines pay, which is tied to individual and company of business have a comparable capacity to predict performance. You have entrusted us with your the prices they will receive for their product. capital and we take that trust seriously. We are in a business where we continually make This keeps our culture performance-oriented. more money for our product simply by selling Throughout the Company, teamwork and quick it in advance. It’s like getting paid a premium to decision-making are prevalent. We act decisively take out insurance. to seize opportunities that are right for us. Our acquisition last year of Pangea Goldfields, which added to our extensive land position in Tanzania, is an example. We assess acquisitions with the same disciplined approach that led us to take the provision last PRE MIUM G OLD SALES PROGRAM POSITION (millions of ounces) 14.9 year, and to delay Pascua-Lama. Every acquisition 43.6 Uncommitted Mineral Reserves Committed Mineral Reserves must not only be accretive to earnings and cash flow but also exceed our cost of capital – generating at least a double-digit rate of return. 10 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 B U I L T T O L A S T 2F I N A N C I A L D I S C I P L I N E PR EM IU M GOLD SALES R EV EN UE VS. SPOT G OLD PRIC E (dollars per ounce) As with all aspects of our business, we manage our Premium Gold Sales Program with market realities in mind. For 2001, we re-designated certain contracts, which had the effect of lowering our realized price by $20 to $340 an ounce. This value will be realized in future years, ensuring strong realized prices for a longer period of time. We now have two years’ pro- duction protected at a minimum price of $340 per ounce – and the remaining 7.3 million ounces in the program at an average price of $360 per ounce. While reducing our realized price will lower 2001 revenues, we expect to make up more than half of the reduction through higher production, lower amortization, lower exploration, and lower income taxes. This will reduce the impact on our bottom line, with earnings in 2001 expected to be in the 70-75 cent per share range. 438 76 422 77 362 345 402 18 384 406 22 384 415 27 388 409 49 360 420 88 332 400 106 385 106 360 81 294 279 279 91 92 93 94 95 96 97 98 99 00 Premium Gold Sales Revenue Spot Gold Price B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 11 , t n e d i s e r P e c i V e v i t u c e x E , l l i H n a l A t n e m p o l e v e D S T R O N G , C O N S E R VAT I V E B A L A N C E S H E E T C O N S I S T E N T LY H I G H M A R G I N S / H I G H R E T U R N S At a time when many companies in our industry The realized prices we achieve with our Premium are faced with declining cash balances and rising Gold Sales Program help us to excel in another key debts, Barrick’s balance sheet remains solid. At measure of corporate performance: our consistently year-end we had cash of $623 million, virtually no high cash margins, which lead the industry. net debt, and shareholders’ equity of $3 billion – and During 2000, we achieved cash margins of $215 per ounce. And we’ve been achieving margins Experienced: Alan Hill, of about $200 an ounce for 13 consecutive years. who oversaw the deve- High margins begin with high quality assets. lopment of Goldstrike and Pierina, is now leading the team developing our Bulyanhulu mine. Our focus is on large, high-yield properties with long lives and low costs. They must be capable of significant cash flow, offer attractive returns and hold potential for growth in mineral reserves, production and cash generation. We build our asset base through acquisitions and our District an ‘A’ credit rating. The potential for growth created Development Programs. These development by this robust financial position is augmented by a programs are focused on and around all our major $1-billion line of credit at our disposal. properties. You’ve seen over the years how our T H E B U LYA N H U L U F I N A N C I N G Now, we have another growing success on our We aim to maintain this balance sheet strength as hands at Bulyanhulu, where mineral reserve strategy has paid off at Goldstrike and Pierina. well as the flexibility it provides. A case in point is the Bulyanhulu Project financing. While we had plenty of cash to go it alone, we chose instead to put in place a $200-million project financing, for two reasons: • First, it was prudent to partner with some of the largest banks and government agencies in the world. The success of this financing is a testament to our financial strength and the quality of the Bulyanhulu project. • Second, cash is king in today’s environment – and all things being equal, we liked the idea of CASH M ARG INS (dollars per ounce) 243 222 223 208 208 198 251 214 220 215 keeping ours. 91 92 93 94 95 96 97 98 99 00 12 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 B U I L T T O L A S T 3C O N S I S T E N T LY H I G H M A R G I N S / H I G H R E T U R N S High quality assets go hand in hand with the increases have already led us to consider major future expansions. other ingredient of high margins, which is low TOTAL CASH COSTS production costs. We strive continually to lower (dollars per ounce) costs and increase productivity at our mines, with the aim of remaining the lowest cost producer of gold globally. In 2000, all our mines reduced their unit costs, as they have each year since 1996. In that period, we have decreased our cash costs by fully one-third to $145 an ounce, giving us the lowest cost of any major gold producer in the industry. That is a rate of improvement that I’m sure is second to none in this industry. All of our operations have contributed to this success. 216 12 204 198 18 180 194 29 165 186 18 168 179 17 162 217 24 193 206 24 180 182 20 160 145 9 136 134 10 124 91 92 93 94 95 96 97 98 99 00 Royalties and Production Taxes Cash Operating Costs B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 13 Pierina is a striking example of the attention to Our aim is to continuously improve our return costs. That property already had our lowest cash on shareholders’ equity, which last year (before costs – but the team wasn’t satisfied. By reworking provision) stood at 8%, or roughly our cost the mine plan and seeking operating improvements, of capital. We are confident we can. With our they have reduced average cash costs of the full mine life from $100 per ounce . . . to less than $90. “Over the past few years, the Betze- Goldstrike remained a leader on this front. Over Post Pit has cut some $400 million the past few years, the Betze-Post pit has cut some $400 million from its mine life cost structure. In from its cost structure.” addition, the new roaster at Goldstrike will reduce high quality assets, low production costs, our processing costs over the life of the property by Premium Gold Sales Program and disciplined roughly $350 million, net of investment. Longer approach to investment, we are well positioned term, we expect roaster throughput to be higher to generate the rates of return that investors than design – and costs to be 10% lower. expect in today’s marketplace. , t n e d i s e r P e c i V r o i n e S , n o s d i v a D x e l A n o i t a r o l p x E Value-added: Alex Davidson oversees our C O R P O R AT E R E S P O N S I B I L I T Y At Barrick, we believe that we cannot achieve these returns in isolation. As a leading international District Development gold company, Barrick’s ability to achieve success Programs to add high- for our shareholders is tied to our record as quality mineral reserves. corporate citizens. Quite simply, good corporate citizenship is good business. It is the cement that makes for long-lasting relationships with the H I G H R E T U R N S countries wherever we operate. And it is a calling High returns are another priority. Every project card that precedes us wherever opportunities at Barrick must compete for capital, and must earn might arise in the world. a return that exceeds the cost of that capital. We seek double-digit returns on invested capital, based on the current spot price of gold. For example, both the new roaster and the develop- ment of the Rodeo underground deposit at Goldstrike are expected to generate rates of return exceeding 20%. And that is before the benefit of the Premium Gold Sales Program. 14 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 B U I L T T O L A S T 4C O R P O R A T E Peru: Barrick has applied the same model to the Pierina Mine in Peru. Since 1998, Barrick has built roads, houses, and water reservoirs, funded new R E S P O N S I B I L I T Y T H E G O L D S T R I K E M O D E L The touchstone for excellence in corporate responsibility is our Goldstrike Property in Nevada, where Barrick pioneered the high standards health care facilities, and provided educational that have become our trademark. It has played support for school children. a seminal role in the development of the infra- structure of local communities, from roads to houses, and schools to hospitals. Community cohesion benefits everyone, including Barrick employees, their families and the Company itself. Care that counts: A Barrick-financed medical facility near So, too, does Goldstrike’s outstanding track the Pierina Mine is record of environmental protection, which has a lasting benefit to been widely recognized by a number of awards people in the region. and citations, and has set the standard for Barrick worldwide. B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 15 I’m proud to report that in the Goldstrike VA L U E C R E AT I O N I N A N Y tradition, Pierina received the Mining Development E C O N O M I C E N V I R O N M E N T of the Year Award last year. This award recognized At Barrick, we are relentlessly looking for the Pierina’s contribution to mining in Peru and best way to create economic value that should its leadership in promoting social and economic ultimately translate into a higher share price. development, not only in the region but also During 2000, we completed a comprehensive throughout the country. assessment to determine whether our capital and core skills could be better directed elsewhere. Next stop Tanzania: Around the Bulyanhulu Mine in While there are clearly good opportunities Tanzania, Barrick has already made significant head- available for a company like Barrick, at this time way in developing a mutually beneficial relationship. we concluded that the best business for Barrick to We have brought in water and power lines, roads be in . . . is the business we’re in. We’re sticking with and medical facilities that benefit tens of thousands gold – not just as the business to be in, but as a of villagers; we have trained Tanzanian miners and base to build on. It is the business where we are begun education and training programs for local ideally placed to thrive, with a single goal in mind – entrepreneurs and crafts people. We also are build- growing economic value. Let me explain. ing hundreds of houses for our employees, and offer- Unfortunately, most companies in this industry ing financing arrangements to make them affordable. find themselves in a difficult spot. They’re The net effect, I believe, is a win-win situation rapidly depleting their high-quality reserve base – for us and our hosts. Don’t take my word for it, just and it is tougher to fill the pipeline with new ask our neighbors in the communities in which projects because of declining exploration we operate. spending across the industry. Many players OPERATING CASH FLOW OPE RAT ING E AR NINGS (millions of dollars) (millions of dollars) 702 705 539 502 463 470 376 317 283 160 331 334* 292 256* 262* 301 251 213 175 92 91 92 93 94 95 96 97 98 99 00 91 92 93 94 95 96 97 98 99 00 *before non-cash provision 16 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 B U I L T T O L A S T 5V A L U E C R E AT I O N I N A N Y E C O N O M I C E N V I R O N M E N T some much-needed discipline – something this circumstances. As a result, we’re going to see face deteriorating operating and financial CONTRIB UTION TO GOLD MINE RA L R ESERVES (%) 1 industry has lacked for decades. That can only be positive for the gold industry. I know it will be positive for Barrick. The beauty is that given our focus on discipline, financial strength and market capitalization, Barrick benefits even if others do the consolidating. The fewer the hands, the 17 30 Goldstrike 42 10 Pierina Pascua-Lama Bulyanhulu Other healthier the industry. We can achieve these objectives through four Going forward, our financial objectives are operating strategies. We will continue our drive to: threefold. We aim to: • Increase profitable production, • • Increase earnings and cash flow, • Expand high quality mineral reserves, Improve our return on equity, and • Lower costs, and • Maintain our strong balance sheet. • Maximize revenues through our Premium Gold Sales Program. B A R R I C K A N N U A L R E P O R T 2 0 0 0 L E T T E R T O S H A R E H O L D E R S 17 “The picture I am painting for you If gold prices move higher, we can open the is one of a company in control of its destiny.” throttle on assets under our control, like Pascua- Lama. If the present gold prices persist or soften further, we’ll still generate strong earnings and cash flow – and explore options for growth from Note the distinctions. Not just more production, a position of strength. but more profitable production; not just more mineral reserves, but more high quality mineral T H E O U T L O O K reserves; and always lower costs. We can accomplish The picture I am painting for you is one of a this through internal growth alone – by investing company in control of its destiny. A company in our large, high-yield properties capable of generating strong and steady free cash flow. significant cash flow, returns and growth. A company with an achievable plan for growth This year we’re looking at: through its current asset base, and a credible • An April start-up of Bulyanhulu, a major new plan for growth through disciplined acquisitions. mine with capacity for expansion, Barrick is strong and getting stronger, quarter • The underground potential at Goldstrike, by quarter, through a combination of financial beyond this year’s Rodeo start-up, strength, flexibility and discipline. We have an • The potential of Pascua-Lama and the adjacent ‘A’-rated balance sheet, high-quality assets and Veladero project, and the possible synergies of plenty of free cash flow. We have more flexibility the two projects down the road, and than ever before, more options open to us – • District Development Programs, which are and the discipline to choose among them with underway around our key assets – with all the the best interests of our shareholders in mind. efficiencies that flow from the existing Most significantly of all, I think, we have a infrastructure. talented team of the right people to accomplish But this is only our base case for growth. our goals on your behalf. It does not take into account the potential for growth through acquisitions or joint ventures. With the strategies Barrick has in place, we have the ability to grow our asset base, generate strong earnings and cash flow – and Randall Oliphant more importantly free cash flow – not just President and Chief Executive Officer in an advantageous environment, but even in March 9, 2001 the current weak gold price environment. 18 L E T T E R T O S H A R E H O L D E R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 O B J E C T I V E S 2 0 0 0 O B J E C T I V E S R E S U LT S 1 Produce 3.7 million ounces of gold, including 2.45 million ounces • Achieved record production of 3.7 million ounces. from the Goldstrike Property and more • The Goldstrike Property produced than 800,000 ounces from Pierina. 2.45 million ounces while Pierina contributed 821,614 ounces. 2 Maintain low cash costs of $145 per ounce, with Meikle and Pierina contributing 1.65 million ounces • Met cash cost target of $145 per ounce, with Meikle and Pierina contributing 1.63 million ounces at $80 per ounce, reflecting higher at $75 per ounce. costs at Meikle. 3 Achieve operating earnings and cash flow to match 1999 record levels. • Operating earnings of $334 million exceeded the 1999 record of $331 million. • Operating cash flow was $705 million vs. the 1999 record of $702 million. • Free cash flow from operating assets totaled $530 million. 4 Begin construction at Pascua-Lama. At Bulyanhulu and Rodeo, keep mine • Pascua-Lama construction deferred pending a more favorable gold and construction on schedule and on budget silver price environment. for 2001 start-up. • Bulyanhulu and Rodeo on budget and on schedule for second and fourth quarter start-up, respectively. 2 0 0 1 O B J E C T I V E S 1 Smooth start-ups of Bulyanhulu and Rodeo, which will contribute to an estimated 3.8 million ounces of 4 Achieve operating cash flow of over $600 million and free cash flow of more than $400 million from operating assets. total production. ounce. 2 Maintain low cash costs of $156 per 3 Achieve earnings in the 70-75 cent per share range. 5 Continue work on phased expansion of Bulyanhulu and expansion of mineral reserves and mineral resources. 6 Pursue disciplined acquisitions. B A R R I C K A N N U A L R E P O R T 2 0 0 0 O B J E C T I V E S 19 P R E M I U M G O L D S A L E S P R O G R A M Barrick’s high quality, low-cost asset base and the Premium Gold Sales Program generate greater value together than separately. The strategy of revenue maximization and minimization of gold price risk over time is based on two funda- mental principles: earning a premium on gold mineral reserves in the ground and providing predictable revenues. The hedging program’s strength and reliability are derived from its unique flexibility, which is a reflection of the financial and operating attributes of the Company. A N I N T E G R AT E D S U C C E S S The financial strength the program builds allows the Company to invest in and expand its low-cost asset base – further adding value to the Company – which in turn enhances the Premium Gold Sales Program. The acquisition of Sutton Resources in March of 1999 is an example of the Company’s financial strength, allowing it to build a much stronger asset R EAL IZE D VS. SPOT PR ICE (dollars per ounce) 350 325 300 2000 2001 2002 2003 2004 2005 Realized price Spot price Spot deferred price This graph illustrates the complete flexibility Barrick has to sell its gold at the spot price or its locked-in minimum spot deferred price, whichever is higher. base in the current weak gold price environment. in Tanzania. A portion of the premiums earned “Reducing gold price risk and generating in 2000 were used to further expand Barrick’s dominant land position in Tanzania, with the higher revenues makes good sense to us.” acquisition of Pangea Goldfields for $115 million. – Randall Oliphant Hedging allows the Company to expand its asset base at a time when others are retreating, The additional premiums earned on the increase its mineral reserves and production and, Company’s gold sales in 1999 more than paid more importantly, provide predictable earnings for the acquisition of Sutton Resources, bringing and cash flow. Barrick the world-class Bulyanhulu Mine Project 20 P R E M I U M G O L D S A L E S P R O G R A M B A R R I C K A N N U A L R E P O R T 2 0 0 0 T H E B A R R I C K A D VA N TA G E T H E PA S T 1 9 8 8 – 2 0 0 0 Three key factors allow this program to benefit • Gold production of 27.4 million ounces from high returns: • Average premium of $66 per ounce – 1. Consistency: While the Company is selective 52 consecutive quarters earning a premium about the timing of its gold sales, it adds to to the spot gold price the program on a regular and disciplined basis. • Additional revenue of $1.8 billion 2. Favorable Terms: Because of the size and quality of its mineral reserves and balance T H E P R E S E N T sheet, Barrick enjoys the most flexible terms • Spot deferred ounces of 14.9 million in the industry. • Minimum guaranteed prices of $340 per ounce 3. Active Management: The program represents a for 2001 and 2002 and $360 on the remaining $4.5 billion off-balance sheet asset of gold sales 7.3 million ounces contracts. Barrick manages this asset as closely • No margin at any gold price as it does its mines to generate the highest • Complete flexibility to sell gold at the higher returns at the lowest risk. of contract price or spot price and defer delivery for up to 15 years H O W T H E T R A N S A C T I O N W O R K S - E X A M P L E BARRICK BULLION DEALER CENTRAL BANK BARRICK BULLION DEALER CENTRAL BANK SPOT GOLD MARKET INTEREST EARNED 6% 1.5% LEASE RATE + 1. The bullion dealer borrows gold from a central bank 2. The $275 is placed on deposit and earns interest of 6%. and sells it onto the spot market at a price of $275 A fee of 1.5% (gold lease rate) is paid by the bullion dealer to per ounce. the central bank. The difference of 4.5% is called “contango”. + CONTANGO 4.5% + SPOT + CONTANGO 4. The bullion dealer returns the borrowed gold to the central bank. Barrick receives the original proceeds from 3. Barrick delivers the gold from mine production the spot sale ($275) plus the five years of accrued against the spot deferred contract. contango ($65) for a total amount of $340 per ounce. B A R R I C K A N N U A L R E P O R T 2 0 0 0 P R E M I U M G O L D S A L E S P R O G R A M 21 C O R P O R A T E R E S P O N S I B I L I T Y Barrick believes that corporate responsibility begins at home and belongs wherever we operate. This serves our shareholders’ interests, just as it benefits the people and countries that host us. It starts at the corporate level. Barrick’s policy is C O M M U N I T Y- B U I L D I N G to give 1% of annual pre-tax income to charitable Barrick applies a good-neighbor policy wherever endeavors. That’s the beginning of our commit- it operates. For over a decade, our Goldstrike ment to corporate responsibility and to society at Property in Nevada has not only been the biggest large but it is not the sum total. Barrick ensures gold producing property in North America, it has that its operations are models of modern mining been an engine of prosperity for local communities at its best – in every sense, everywhere. This and the state. means extending the same level of excellence The Pierina Mine is following that example. Since Self-reliance: Furniture-making 1998, Barrick has worked with the local community to improve standards of living, meet health and educational needs and, above all, develop self- sufficiency for an ever-growing number of people. classes for Peruvians The focus is on long-term benefits for the are part of Barrick’s community – not just for Barrick employees. For community-building efforts near Pierina. example, Barrick has built the Robert M. Smith School, named after the Company’s former president, to provide children in the area with first- class education, from kindergarten through to to anywhere we mine. Our programs are designed secondary graduation, in facilities previously to create lasting economic benefits, build stronger unavailable in the region. Barrick is also helping communities, motivate our employees, and protect local residents develop occupational skills. the environment. Equally, our new Bulyanhulu Mine, which begins In each country where we operate, our production this spring, is already having a signif- business is only as strong as the ties we forge icant impact on the people and economies of with our hosts, through common goals, shared Tanzania and of the region. In the past two years, knowledge, and the lasting prosperity that we Barrick has: are sure to create. • Built a 47-km water pipeline from Lake Victoria to the mine that is also meeting the water needs 22 C O R P O R A T E R E S P O N S I B I L I T Y B A R R I C K A N N U A L R E P O R T 2 0 0 0 of 30,000 villagers along the route, Excellence in Mine Reclamation Award from the • Built a new medical center to serve miners, Nevada Division of Minerals in recognition of an as well as the local population as a whole, innovative reclamation design. • Provided education and training for aspiring We’re taking the high environmental standards entrepreneurs in the area, and of our North American operations worldwide. • Created a Social Development Plan that will From day one, environmental protection has construct 600 houses for employees and pro- been integral to all aspects of the Pierina operation. vide interest-free loans to purchase them. And at Bulyanhulu, our Tanzanian mine, we are taking a similar rigorous approach. Under our C A R I N G F O R E M P L O Y E E S comprehensive Environmental Management Barrick is only as strong as the talents and the System, we are already providing environmental commitment of its employees. Our policy is to awareness training for our employees. We have attract and keep the best people in the industry. We established a nursery on site to propagate native offer attractive wages, benefits and incentive plans. Their families are equally important. Under the Robert M. Smith Scholarship Program, all children of Barrick employees are entitled to receive funding for post-secondary education. During 2000 alone, Barrick awarded $1.4 million in scholarships to 600 students under the program. Over 4,000 scholarships worth about $8.4 million have been awarded since the program began in 1986. High grades: We apply our high environmental standards wherever we operate. O U R E N V I R O N M E N TA L P H I L O S O P H Y trees for landscaping and revegetation purposes. Barrick applies stringent environmental standards And we have created a vegetated area within wherever it operates, through every stage of the the mine boundaries as a wildlife refuge for mining life cycle. The Company’s goal is to meet monkeys, mongooses, Nile monitor lizards or surpass all environmental regulations and and small antelopes. guidelines, minimize the impact of development, and restore natural ecosystems to their original For Barrick, excellence in corporate responsibility condition, or better. is not an afterthought – it’s a guiding principle. Our track record on the environmental front Wherever we operate, efforts to strengthen the goes hand in hand with a commitment never to fabric of communities, create lasting economic rest on our laurels. In the past four years, Barrick benefits and protect the environment come with has won eight major environmental awards. In the territory of building a business to last. 2000, for example, Goldstrike received an B A R R I C K A N N U A L R E P O R T 2 0 0 0 C O R P O R A T E R E S P O N S I B I L I T Y 23 OPERATING CASH FLOW VS. SPOT GOLD PRICE (dollars per ounce) (millions of dollars) 400 350 300 250 200 1991 800 600 400 200 100 Spot Price Cash Flow 2000 Over the past 10 years, the gold price has dropped by more than 25%. During that same period, Barrick’s annual operating cash flow has increased by more than 400%. B U I L T T O L A S T M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S O F F I N A N C I A L A N D O P E R A T I N G R E S U LT S O V E R V I E W O F 2 0 0 0 mineral reserves. Based on this review, the Company Barrick’s operating earnings in 2000 increased to adjusted the book value of certain assets with a $334 million, or 84 cents per share (before a non-cash $1.1 billion (after tax) non-cash provision to reflect the provision of $1.1 billion), from $331 million, or 83 cents lower gold price environment (see table on page 26). per share, in 1999. Operating cash flow increased Of this total, 75% relates to non-operating assets. The to $705 million, or $1.78 per share, compared to provision largely represents the premium over book $702 million, or $1.80 per share recorded in 1999. value recorded on acquisitions in 1994 and 1996. This The Company’s operating assets generated $530 million provision has no impact on cash flows, mineral reserves, in free cash flow compared to $380 million in 1999. The production profiles or employees. As a result of the year 2000 marks the fourth consecutive year the provision, the Company recorded a loss of $766 million Company has increased operating earnings and operating or $1.93 per share for the year. cash flow in an environment of declining gold prices. In 2000, Barrick’s low-cost production, combined Over the past four years, the price of gold has with the $81 premium over spot gold prices earned declined by more than $100 per ounce and 2000 was through the Company’s Premium Gold Sales Program, the third consecutive year that gold prices averaged resulted in cash margins of $215 per ounce. This gives less than $300 per ounce. As a result, management Barrick 13 consecutive years of cash margins in the undertook a comprehensive review of both the asset $200 per ounce range. The combination of high cash values carried on its books – primarily those assets margins and record production led to the Company’s acquired prior to 1997 with higher-valued shares when highest operating earnings, operating cash flow and gold prices averaged nearly $400 per ounce – and gold free cash flow from operating assets. The Company OPERATING EARNINGS (BEFORE PROV ISION) AND CASH FLOW (millions of dollars) 702 705 539 OPERATING E ARNIN GS (BEFORE PROVISION ) AND CASH F LOW PER SH ARE (dollars per share) 1.43 1.80 1.78 301 331 334* 0.79 0.83 0.84* 98 99 00 98 99 00 Operating Cash Flow Operating Earnings *before non-cash provision Operating Cash Flow Operating Earnings *before non-cash provision B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 25 C O M P O N E N T S O F N O N - C A S H P R O V I S I O N A N D A D J U S T E D C A R R Y I N G V A L U E S (millions of dollars) Asset Pascua-Lama Pierina Goldstrike Other Total Remaining Carrying Value Provision (After Tax) Explanation $ 350 $ 790 • Premium over book value recorded on Lac acquisition in 1994 753 1,673 82 for Pascua-Lama and the El Indio Belt, when gold price was $390/oz. 132 • Premium over book value assigned to the property in the 1996 Arequipa acquisition, when gold was $375/oz. 107 • Adjusted carrying value of low-grade stockpiles and royalty acquired in the 1994 Lac acquisition. 71 • Consists of the amount allocated to Bousquet, acquired in 1994 when gold was $390/oz, and certain exploration properties. $ 1,100 expects to continue to generate strong earnings, are expected to make more significant contributions operating cash flow and free cash flow in 2001. to production, earnings and cash flow in the future as However, they will be lower than in 2000 because of they ramp up to full production over the next few years. the re-designation of certain 2001 hedging contracts, As well, the Company will continue to focus on lowering reducing the Company’s realized price by $20 per unit costs at all its operations while exploring around ounce. Barrick’s financial performance in 2001 will these operations for additional mineral reserves. benefit from the addition of the Bulyanhulu Mine (Tanzania) and the Rodeo deposit on the Goldstrike Gold Sales Property (Nevada), both of which are scheduled to Barrick’s Premium Gold Sales Program is a management come into production in 2001. Both of these assets tool designed to maximize revenue and minimize 2000 CASH MARGIN S (dollars per ounce) 317 215 190 160 Pierina Property Other Properties Goldstrike Property Barrick Total gold price risk over time in order to provide more predictable earnings and cash flow. For 2000, this program contributed $300 million ($391 million in 1999) in additional revenue with a real- ized gold price of $360 per ounce, a premium of $81 GOLD SALES BY GEOGRAPH IC AR EA (millions of dollars) 78 92 296 United States Peru Canada Chile 864 Total = $1,330 million 26 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 CONTR IBUTION TO PRODUCTION BY MINE – 2000 (%) 22 13 21 44 Betze-Post Meikle Pierina Other PRE MIUM G OLD SALES VS. SPOT (dollars per ounce) 400 106 294 385 106 360 81 279 279 over the $279 average spot price of gold for 2000. Over the past three years, Barrick has realized an average premium of $97 per ounce above the average spot price, generating an additional $1.0 billion in rev- 98 99 00 Premium Gold Sales Revenue Spot Gold Price enue. To the end of 2000, Barrick recorded 13 years of 2000, the Company increased its position by 10% to earning a premium to the spot gold price. The Company 14.9 million ounces of gold in its Premium Gold Sales earned an average premium of $66 per ounce over Program, representing 25% of its mineral reserves. that time period, for a total of $1.8 billion. At the close of The Company re-designated certain 2001 spot O P E R A T I N G P R O P E R T I E S F I N A N C I A L S 99 00 01E deferred contracts in the program to future years. With these adjustments, Barrick expects to receive a minimum realized gold price of $340 per ounce for 100% of its expected production in 2001 and 2002, Gold production – ounces (thousands) 3,660 3,744 3,831 and an average of $360 per ounce for the remaining Gold sales per ounce $ 385 $ 360 $ 340 7.3 million ounces in the program designated beyond Production costs per ounce 2002. The $20 per ounce reduction in the 2001 real- Direct mining costs $ 153 $ 124 $ 148 ized price does not represent a loss of value, but a Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties Production taxes Total cash costs per ounce Amortization Reclamation Total production costs per ounce Amortization – acquisition costs (18) (11) 124 7 3 134 104 6 244 (39) 22 (10) 136 8 1 13 (13) 148 7 1 145 156 88 4 237 (33) 81 5 242 (29) Total production costs – net $ 205 $ 204 $ 213 Cash margin per ounce $ 251 $ 215 $ 184 deferral to future years of benefits that were expected to be derived in 2001. If gold prices increase above the Company’s minimum floor price, the Company would have the option to sell all of its gold at the higher spot price and defer delivery against the contracts. (Barrick’s Premium Gold Sales Program is described on page 20.) B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 27 R E V I E W O F O P E R A T I O N S The Company has operating mines and develop- Tanzania, Canada, Chile and Argentina. The ment projects in the United States, Peru, Bulyanhulu Mine (Tanzania) is scheduled to begin Production and Operating Costs Operating costs were $550 million in 2000 compared to $516 million for 1999. On a per ounce basis, cash costs for 2000 were in line with plan at $145 per ounce production in the second quarter of 2001, followed compared to $134 in 1999. Cash costs increased primarily in the fourth quarter by start-up at Rodeo on the because of higher costs at the Goldstrike Property. Goldstrike Property (Nevada). TOTAL CASH COSTS (dollars per ounce) 180 145 134 98 99 00 TOTAL CASH COSTS BY PROPE RTY (dollars per ounce) 170 154 200 180 42 43 99 00 99 00 99 00 Goldstrike Pierina Other G o l d s t r i k e P r o p e r t y In 2000, Goldstrike generated $300 million pit mine and the Meikle underground mine. In 2000, in free cash flow – net of capital and explo- the Goldstrike Property generated its best financial results with free cash flow of $300 million from pro- ration expenditures and taxes. duction of 2.45 million ounces of gold, at a cash cost With mineral reserves of 24.5 million ounces (42% of the Company’s total mineral reserves) and production of two million plus ounces per year expected for at least the next seven of $170 per ounce. This is compared to production of 2.1 million ounces in 1999, at a cash cost of $154 per ounce. The 10% increase in cash costs was due to a 20% reduction in the ore grades processed, which was partially offset by lower processing costs with the addi- years under the current mine plan, Goldstrike is tion of the new roaster. Barrick’s most significant generator of free cash flow. Goldstrike is expected to produce 2.3 million ounces of The Goldstrike Property contains the Betze-Post open gold in 2001 – its seventh consecutive year of production 28 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 over two million ounces – at a cash cost of $195 per ounce. The higher cash cost is due to ore grades moving closer to reserve grade at both Betze-Post and Meikle, Goldstrike’s new roaster, commissioned in the second quarter, expanded throughput by 70%. the impact of higher power costs, and start-up costs at Rodeo. These are partially compensated for by lower pro- cessing costs with a full year’s operation of the roaster. Cash costs reflect a power cost increase of $4 per ounce based on an agreed price increase last fall. The Company was notified in February 2001 that a further power cost increase is being contemplated, which would add an additional $5 per ounce to Goldstrike cash costs. Goldstrike Property Dee L T Banshee Banshee Siphon Fault SOB Hill East North Block Meikle East of Post Fault Roaster Process Rodeo North Screamer Golden April North Post Siphon Fault West Screamer End of the World Fault Betze-Post Skarn Hill Autoclave Process 1 mile OREBODY EXPLORATION TARGETS The Goldstrike Property in Nevada includes the Betze-Post open pit mine and Meikle underground mine, with mineral reserves of 24.5 million ounces and annual production of over two million ounces per year. The roaster, the new Rodeo deposit at the Meikle three key factors in the continuing strength of the Mine, and the underground exploration potential are property. The roaster, commissioned in 2000 on time G O L D S T R I K E F I N A N C I A L S and on budget, has exceeded planned throughput at lower than expected operating costs of $12.46 per 99 00 01E ton – 40% lower than the autoclave cost per ton. The Gold production – ounces (thousands) 2,108 2,452 2,281 Gold sales per ounce $ 385 $ 360 $ 340 Production costs per ounce Direct mining costs $ 168 $ 114 $ 155 Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties Production taxes Total cash costs per ounce Amortization Reclamation Total production costs per ounce Amortization – acquisition costs (29) (1) 138 11 5 154 60 2 216 (4) 42 (1) 155 13 2 170 48 2 220 (6) 28 (1) 182 11 2 195 49 3 247 (6) Rodeo deposit is expected to enter production in the fourth quarter of 2001. Development work to date indicates better than expected ground conditions, which could result in lower mining costs. An extensive underground and surface drilling program carried out in 2000 on the Goldstrike Property focused on high-grade underground targets. A total of $10 million was spent on exploration during the year. The program replaced underground production at Meikle for the fourth consecutive year and identified several new follow-up targets. Betze-Post mineral reserves declined at year end as the mine did not replace 2000 Total production costs – net $ 212 $ 214 $ 241 production and the lower gold price used to calculate Cash margin per ounce $ 231 $ 190 $ 145 mineral reserves reduced mineral reserves by approxi- Capital expenditures (millions) $ 337 $ 176 $ 120 mately 800,000 ounces. Barrick will continue its explo- Deferred stripping/stockpile (millions) $ 60 $ (50) $ (24) ration program on the Property in 2001 with a planned B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 29 expenditure of $7 million, beginning with a property- expenditures in 2001 are estimated at $96 million wide geophysical survey early in the year. Based on the (net of applied stripping costs of $24 million) for the results of this survey, additional drilling could augment purchase of six 330-ton haul-trucks for the Betze-Post the drilling program already planned for 2001. Mine (completing the fleet replacement that began In 2000, capital expenditures for the Goldstrike three years ago), final construction and development Property were $126 million (net of applied stripping work at Rodeo, and mill expansion to increase process- costs of $50 million) including the purchase of ten ing capacity of the autoclaves. Sustaining capital going 330-ton haul-trucks at the Betze-Post Mine, construction forward for the Goldstrike Property is estimated at of Rodeo, and completion of the roaster. Capital $18 million per year. G O L D S T R I K E O P E R A T I N G S T A T I S T I C S Tons mined (millions) Tons milled (thousands) 99 156 00 144 01E 150 Outlook for 2001 • Higher mining rate reflects higher density of ore in open pit 5,798 8,677 10,266 • 19% increase in processing capacity with a full year’s benefit Grade processed (ounces per ton) Recovery rate (%) 0.40 90.8 0.32 89.2 0.25 88.4 from the roaster • Lower ore grades mined at Betze-Post and Meikle Gold production (thousands of ounces) 2,108 2,452 2,281 • Lower production reflects lower grades, partially offset Mineral reserves (thousands of ounces) 27,251 24,451 Mineral resources (including inferred) (thousands of ounces) 7,306 7,248 — — by higher throughput B e t z e - P o s t M i n e Betze-Post is a conventional open pit mine with of 2000. Production increased 46% to 1.65 mil- mineral reserves of 18 million ounces at the end lion ounces of gold at cash costs of $195 per ounce Betze-Post Mine Meikle Roaster Rodeo compared to 1.13 million ounces in 1999 at cash costs of orebody $203 per ounce, generating $200 million in free cash flow. The increase in production is attributable to the mid-year start-up of the roaster facility. Cash costs for 2000 were $10 per ounce lower than planned with lower processing costs at the roaster and higher than expected grades, which were partially offset by higher fuel and power costs. Autoclave The Betze-Post Mine, a conventional open pit operation located in the southern portion of the Goldstrike Property, is expected to produce 1.61 million ounces of gold in 2001. 30 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 (53) – 190 9 4 203 60 3 266 (6) 62 – 184 10 1 195 48 3 246 (8) 39 – 207 10 1 218 49 3 270 (7) Production increased 46% to 1.65 million B E T Z E - P O S T F I N A N C I A L S ounces of gold at cash costs of $195 per ounce . . . generating $200 million in free Gold production – ounces (thousands) 1,130 1,646 1,612 Gold sales per ounce $ 385 $ 360 $ 340 99 00 01E cash flow. Production costs per ounce Direct mining costs $ 243 $ 122 $ 168 For 2001, the mine is expected to maintain free cash flow at close to $200 million, with production of 1.61 million ounces of gold at cash costs of $218 per ounce and capital expenditures of $23 million. The Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties Production taxes higher cash costs reflect the impact of a full year of Total cash costs per ounce higher power costs, amortization of deferred mining costs of $15 per ounce, and the processing of ore that is moving toward the average mineral reserve grade of 0.155 ounces per ton. The effect of lower ore grades in the future is expected to be partially offset by lower roaster processing costs and lower Amortization Reclamation Total production costs per ounce Amortization – acquisition costs Total production costs – net $ 260 $ 238 $ 263 Cash margin per ounce $ 182 $ 165 $ 122 Capital expenditures (millions) $ 291 $ 96 $ 47 mining costs because of the mine truck fleet replace- Deferred stripping/stockpile (millions) $ 60 $ (50) $ (24) ment. As well, planned backfilling of the eastern portion of the pit beginning in 2003 is expected to lower mining costs because of the shorter haulage distance for waste material. B E T Z E - P O S T O P E R A T I N G S T A T I S T I C S Tons mined (millions) Tons milled (thousands) 99 155 00 143 01E 149 Outlook for 2001 • The mining rate is expected to rise due to the increase in hauling 4,763 7,438 9,046 capacity of the new 330-ton haul-trucks purchased in the past Grade processed (ounces per ton) Recovery rate (%) 0.27 88.2 0.25 87.5 0.21 86.9 15 months and increased ore density • Unit mining costs are expected to decline 5% because of the new Gold production (thousands of ounces) 1,130 1,646 1,612 larger haul-trucks Mineral reserves (thousands of ounces) 20,709 18,000 Mineral resources (including inferred) (thousands of ounces) 2,293 3,509 — — • Tons processed is expected to increase 22% with a full year’s operation of the roaster and the new ball mill in the autoclaves • The average grade is expected to decline as lower-grade areas of the pit are mined • The lower production reflects the lower grades processed partially offset by higher throughput B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 31 M e i k l e M i n e The Meikle Mine, located one mile north of the Betze-Post Mine, is a high-grade underground operation incorporating the Rodeo deposit scheduled for production in the fourth quarter of 2001. At the close of 2000, mineral reserves at Meikle stood at 6.5 million ounces. The mine replaced production for the fourth consecutive year in 2000. Production was 36,000 ounces less than plan at Meikle Mine Betze-Post Pit Roaster Rodeo 805,718 ounces of gold and cash costs were higher Meikle than plan by $11 at $119 per ounce. The lower produc- tion and higher costs reflect the mining of more lower-grade development ore than expected and Meikle is an underground mine, north of Betze-Post on the Goldstrike Property. The Rodeo deposit of the Meikle Mine is scheduled for a fourth quarter 2001 start-up. M E I K L E F I N A N C I A L S lower recoveries in the autoclaves. Despite the short- Gold production – ounces (thousands) 99 978 00 806 01E 669 Gold sales per ounce $ 385 $ 360 $ 340 Production costs per ounce fall, the mine generated $100 million in free cash flow after $80 million in capital expenditures for the development of Rodeo. For 2001, Meikle is expected to produce 669,000 ounces of gold at cash Direct mining costs $ 76 $ 99 $ 121 costs of $137 per ounce. The lower production and Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties Production taxes Total cash costs per ounce Amortization Reclamation Total production costs per ounce Amortization – acquisition costs – (1) 75 13 8 96 59 2 157 (1) – (1) 98 17 4 119 47 2 168 (2) – (1) 120 13 4 137 49 2 188 (2) higher costs reflect mining grades moving to the aver- age mineral reserve grade of 0.458 ounces per ton, an increase in development ore from new ore zones, and start-up costs at Rodeo. In 2001, exploration will focus on the Banshee area (located 1,500 feet north of Meikle). A 1,500-foot explo- ration drift scheduled to begin in the second half of 2001 will follow up on high-grade intercepts from the 2000 surface exploration program. In addition, drilling Total production costs – net $ 156 $ 166 $ 186 will continue at Meikle and Rodeo (see diagram above). Cash margin per ounce $ 289 $ 241 $ 203 Capital expenditures (millions) $ 46 $ 80 $ 73 32 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 M E I K L E O P E R A T I N G S T A T I S T I C S Tons mined (thousands) Tons milled (thousands) Grade processed (ounces per ton) Recovery rate (%) Gold production (thousands of ounces) 99 998 1,035 1.00 94.0 978 00 1,257 1,239 0.70 92.9 806 Mineral reserves (thousands of ounces) 6,542 6,451 Mineral resources (including inferred) (thousands of ounces) 5,013 3,739 01E 1,218 1,220 0.59 92.7 669 — — Outlook for 2001 • The lower mining rate reflects a higher percentage of mining activity in areas requiring lower-volume mining methods, which offset the increase in tons from Rodeo • The lower grade mined reflects an increase in development ore mined from new ore zones and mining activity in lower-grade areas of Main Meikle • Unit mining costs are expected to increase 7% due to start-up costs at Rodeo • The lower production estimate is due to a 16% reduction in ore grades mined and the lower mining rate P i e r i n a P r o p e r t y Located north of Lima, Peru, the Pierina Mine of 5.7 million ounces at the end of 2000. The is an open pit operation with mineral reserves Pierina Mine was Barrick’s lowest cash cost operation and second-largest generator of free cash flow during 2000. Pierina produced 821,614 ounces of gold at a cash cost of $43 per ounce, generating $206 million in free cash flow (equal to $250 per ounce). The mine replaced half of the mineral reserves depleted by 2000 production through the combination of a suc- Royalties cessful exploration program and a reworking of the Production taxes mineral reserve model. This represents a significant Total cash costs per ounce addition due to the low-cost nature of the mineral reserves. A reworking of the mine plan based on detailed drilling increased production estimates for the next three years, and lowered estimated costs to $90 per ounce from the original life-of-mine estimate of $100 per ounce. P I E R I N A F I N A N C I A L S Gold production – ounces (thousands) 99 837 00 822 01E 870 Gold sales per ounce $ 385 $ 360 $ 340 Production costs per ounce Direct mining costs $ 63 $ 78 $ 68 Applied (deferred stripping) By-product credits Cash operating costs per ounce Amortization Reclamation Total production costs per ounce (6) (15) 42 – – 42 205 5 252 (22) (13) 43 – – 43 202 7 252 (16) (12) 40 – – 40 190 10 240 Amortization – acquisition costs (121) (115) (112) Total production costs – net $ 131 $ 137 $ 128 Cash margin per ounce Capital expenditures (millions) Deferred stripping (millions) $ 343 $ 317 $ 300 $ $ 26 6 $ $ 31 18 $ $ 11 14 B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 33 The Pierina Mine is expected to have its best year to date in 2001 with production of 870,000 ounces of gold at a cash cost of $40 per ounce. It is again Pierina Mine Valley Fill Heap Leach expected to generate free cash flow in the $200 mil- Processing lion range. In 2000, the first exploration program was carried out at Pierina since mine construction began in 1997. This program identified an area of mineralization at the north end of the pit. In 2001, exploration drilling will focus on this area, as well as on targets at depth and areas to the south of the pit. Conveyor Crushing ultimate pit limit The Pierina Mine, a conventional open pit operation located in Peru, In 2000, capital expenditures at Pierina were is expected to have its best year to date in 2001 with production of $49 million, including deferred stripping, additional 870,000 ounces of gold at a cash cost of $40 per ounce. mine equipment, expansion of the leach dam and the waste dump, and continuing the expansion of the construction of housing and community facilities for leach pad dam. The processing rate is expected to employees and their families. In 2001, $25 million increase due to improvements in the crushing and is planned mainly for deferred stripping, expansion of grinding circuit and better control of ore feed. P I E R I N A O P E R A T I N G S T A T I S T I C S 99 00 01E Outlook for 2001 Tons mined (thousands) 21,591 30,712 30,356 • Mining rate should remain at current levels for the next several years Tons placed on pad (thousands) 8,140 9,654 10,017 • The 4% increase in tons placed on the pad is due to improvements in Grade processed (ounces per ton) Gold production (thousands of ounces) 0.12 837 0.10 822 Mineral reserves (thousands of ounces) 6,146 5,655 Mineral resources (including inferred) (thousands of ounces) 782 586 0.11 870 — — the crushing plant and improved quality control of ore feed blends • Lower unit operating costs are expected from operating improvements made in 2000 • The higher production reflects the combination of more tons placed on the pad and better grade 34 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 O t h e r P r o p e r t i e s Other Properties consist of the Bousquet Mine in northwestern Quebec, Holt-McDermott Mine in northeastern Ontario, and the El Indio and Tambo Mines in Chile. Together, these In 2001, Other Properties are expected to produce 417,000 ounces of gold at an average cash cost of $187 per ounce. The decline in production from 2000 is due to the closure of the Tambo Mine as well as the properties contributed 469,621 ounces of gold in decline in ore grades at Bousquet as it approaches 2000 at an average cash cost of $200 per ounce. The the end of its mine life, scheduled for 2003. Tambo Mine ceased operations in the second quarter of 2000. At the end of 2000, mineral reserves for Other Properties stood at 907,000 ounces of gold. O T H E R P R O P E R T I E S F I N A N C I A L S O T H E R P R O P E R T I E S O P E R AT I N G S TAT I S T I C S Gold production – ounces (thousands) 99 715 00 470 01E 417 Tons milled (thousands) 6,709 2,991 2,671 99 00 01E Gold sales per ounce Production costs per ounce Direct mining costs Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties Production taxes Total cash costs per ounce Amortization Reclamation Total production costs per ounce Amortization – acquisition costs $ 385 $ 360 $ 340 Grade processed (ounces per ton) Recovery rate (%) $ 215 $ 248 $ 267 Gold production (thousands of ounces) 0.12 92.8 715 Mineral reserves (thousands of ounces) 1,266 Mineral resources (including inferred) (thousands of ounces) 4,380 5,768 0.17 91.6 470 907 0.17 92.3 417 — — – (39) 176 4 – 180 119 16 315 (49) – (52) 196 4 – 200 93 2 295 (27) – (84) 183 4 – 187 25 6 218 – Total production costs – net $ 266 $ 268 $ 218 Cash margin per ounce $ 205 $ 160 $ 153 Capital expenditures (millions) $ 13 $ 9 $ 10 B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 35 B u l y a n h u l u P r o p e r t y The Bulyanhulu Property is located south of in Tanzania, East Africa. Bulyanhulu mineral Lake Victoria on the Victorian Greenstone Belt reserves have increased to 10 million ounces from On the development front, construction is proceed- ing smoothly for a planned second quarter 2001 start- up. Capital expenditures were $177 million in 2000, including construction of surface facilities, underground 3.6 million ounces at the time of acquisition in March development, and related infrastructure. In 2001, of 1999. Bulyanhulu is the focus of Barrick’s most $114 million is planned for mine completion prior significant exploration program. The 2000 program to start-up, as well as to continue shaft sinking and was expanded from the original $6 million budget to underground development. $26 million because of the exploration success. The ore body has excellent continuity of mineralization, which Bulyanhulu mineral reserves expanded 33% has doubled the Company’s initial estimate of its size. to 10 million ounces. The Company is looking To date at Bulyanhulu, nearly 100% of mineral resources have been converted to mineral reserves. The average to translate the expanding mineral reserve grade is 0.43 ounces per ton and, in today’s gold price base into increased production. environment, grade is an important factor in determining the profitability of mineral reserves. A further $10 million Bulyanhulu is expected to contribute 263,000 is planned for the 2001 exploration program. The ounces of gold at a cash cost of $166 per ounce in Company is targeting further increases to mineral 2001, ramping up to approximately 400,000 ounces in reserves, which have the potential to translate into 2002. The Company is working to increase the life-of- a higher rate of production. mine annual production rate from 400,000 to Bulyanhulu Mine – Longitudinal Section 500,000 ounces of gold. In 2001, the mining rate is expected to average 1,800 tons per day and increase to design capacity of 2,750 tons per day in 2003 with Main Zone West Zone 0 1 kilometer 400 600 200 800 Upper East Zone the completion of the shaft sinking. During 2001 and Lower East Zone 1000 2002, mill feed will be supplemented by 385,000 tons of stockpiled ore. Cash costs are expected to decline meters to $130 per ounce with the completion of the shaft MINERAL RESOURCES DEVELOPMENT COMPLETED DEVELOPMENT PLANNED because hauling ore up the shaft is more efficient than the current method of trucking to surface. The Bulyanhulu orebody has more than doubled in size since acquisi- tion (March 1999), extending 2 km at depth and 5 km along strike. 36 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 The Company has established a significant land Plans include the expenditure of $11 million in 2001 position in one of the most prospective gold regions at Tulawaka in an effort to increase both mineral in the world with the July 2000 acquisition of Pangea reserves and mineral resources. As well, the Company Goldfields for $115 million. has acquired or entered into joint ventures on several As a part of that acquisition, the Company acquired other properties within trucking distance of the a 70% interest in the Tulawaka property, located 200 Bulyanhulu processing facility. Any discoveries made on road kilometers from Bulyanhulu. Tulawaka contains these other properties would benefit from the existing 1 million ounces of high-grade inferred mineral infrastructure at Bulyanhulu. resources and a portfolio of exploration properties. P a s c u a - L a m a P r o p e r t y The Pascua-Lama Property is located at the Chile/Argentina border in South America. At northern end of the El Indio Belt, straddling the the end of 2000, total mineral reserves increased to 17.5 million ounces of gold and 594 million ounces of silver, the largest silver reserve in the world. Construction on this mine project, scheduled to begin in December 2000, was deferred due to the less-than- favorable gold and silver price environment. The Company continues to review the construction cost estimate, the development plan and permitting. Recent construction cost estimates are approximately 25-30% higher than the original estimate of $950 mil- lion. Pascua-Lama has the potential to be a long-life, low-cost, quality producer and, in the right gold and silver price environment, an important contributor to Barrick’s production, earnings and cash flow. Pascua-Lama Property Pascua-Lama Morro Norte Porfiada Porfiada 2 kilometers Tunnels Lama Central Pascua Extension Proposed Process Plant Lama Central speranza Sur MINERAL RESERVES MINERAL RESOURCES PLANNED OPEN PIT EXPLORATION TARGETS Penelope Penelope Sur 405000 406000 407000 408000 409000 410000 6753000 6752000 Pan de Azucar Filo Federico Filo Federico Norte Veladero (40% JV) 6751000 C H I L E A R G E N T I N A 6750000 The Pascua-Lama Property contains 17.5 million ounces of gold mineral reserves and 594 million ounces of silver mineral reserves. As well, the adjacent Veladero project has an expanding mineral resource base. 405000 406000 407000 408000 409000 410000 6753000 6752000 6751000 6750000 Capital expenditures for Pascua-Lama in 2000 Adjacent to Pascua-Lama, Barrick holds a 40% joint were $107 million, largely for the development plan, venture interest in the Veladero project. During 2000, road construction and capitalized interest. In 2001, an exploration program expanded Veladero’s measured $67 million is planned for continued work on the and indicated mineral resources and continued development plan, continuation of permitting, road metallurgical test work and technical studies toward construction, and capitalized interest. optimizing the scope and economics of the project. B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 37 E X P E N S E S AMORTI ZATION BY PROPERTY (dollars per ounce) 205 202 119 93 60 48 (Pascua-Lama, Bulyanhulu, Rodeo). For the year, the Company drew down $151 million of the $200 million limited recourse project financing for the Bulyanhulu Mine project. This is repayable in 14 semi-annual installments beginning in 2002. For 2001, the Company estimates interest costs to be $60 million, with $17 million expected to be expensed and $43 million capitalized to Bulyanhulu, Pascua-Lama and Rodeo. The higher interest costs 99 00 99 00 99 00 relate to the complete draw down of the $200 million Goldstrike Pierina Other Bulyanhulu project financing. With respect to Pascua- Lama, if the gold and silver markets do not recover A M O R T I Z AT I O N sufficiently for construction to begin, interest As planned, amortization declined to $339 million, expensed would be higher than plan. or $88 per ounce, in 2000 from $385 million in 1999 primarily due to the 1999 closure of the Bullfrog Mine C O R P O R AT E and 2000 closure of the Tambo Mine. As well, the 1999 In 2000, administration costs were $35 million, sale of the El Coco property lowered the amortization unchanged from 1999. For 2001, administration costs basis for the Bousquet Mine. Amortization is expected are expected to increase to $36 million due to an to decline slightly in 2001 to $321 million, or $81 per increase in membership fees for the World Gold ounce, due primarily to the impact of the 2000 provision Council. Barrick has been able to maintain low adminis- as it applied to Bousquet. Amortization includes an trative costs over the past five years despite the additional charge for the application of the new increasing size and geographic scope of its operations. accounting Standard for Future Income Taxes, which Reference is drawn to note 12 to the consolidated amounted to $14 million in 2000 and an estimated financial statements for a discussion of the impact of $9 million in 2001 (See Income Taxes section). I N T E R E S T E X P E N S E In 2000, the Company incurred $50 million in interest costs, related primarily to the Company’s $500 million debentures and the Bulyanhulu project financing. Of this amount, $6 million was expensed and the remaining $44 million was capitalized to projects in development 200 0 INTEREST COST (millions of dollars) 6 Capitalized Expensed 44 Total = $50 million 38 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 recently issued accounting pronouncements and the in 2000, before production. At Bulyanhulu, exploration difference in accounting for the provision for mining work resulted in 2.5 million ounces being added to assets under United States accounting principles. mineral reserves. In addition, work continued on targets not yet classified as mineral resources. At Meikle, explo- I N C O M E TA X E S ration replaced underground production for the fourth The Company’s effective tax rate for 2000 was 13%. year in a row. Exploration and reworking of the mine The decline from 25% in 1999 was primarily due to a reserve model added 500,000 ounces to mineral higher portion of earnings being earned in a lower tax reserves at Pierina. At Pascua-Lama, in-pit drilling jurisdiction and the implementation of the new accounting increased the Company’s understanding of the geology Standard for Future Income Taxes in the first quarter of and structural controls and facilitated the refinement of 2000. The application of the Standard, which changes the mine plan. In addition, drilling began on exploration the method of reporting for Future Income Taxes, did targets at Filo Federico Norte, Lama Central, Porfiada not have an effect on net income since the decrease in and Penelope. At Veladero, located adjacent to Pascua- income taxes of $14 million was offset by a corresponding Lama, the 2000 exploration program expanded Barrick’s increase in amortization as required by the Standard. share of measured and indicated mineral resources In 2001, the tax rate is expected to decline to 11% with to 3.9 million ounces. a higher percentage of earnings being earned in a lower tax jurisdiction. E X P L O R AT I O N 200 0 EXPLORATION E XPE NSE Barrick’s District Development Programs focus explo- (millions of dollars) ration around its existing properties which together had 58.5 million ounces of mineral reserves at the end of 2000. (For a detailed breakdown of mineral reserves and mineral resources by category, see pages 67-70.) Barrick believes there is a higher probability of finding mineral reserves around existing mines, where they can be developed more quickly and profitably due to existing infrastructure. 16 8 17 North America South America Business development and other Total = $41 million 200 0 MINERAL RESERV E DEVE LOPMEN T BY DISTRICT Total exploration expenditures were $123 million in (millions of dollars) 2000 (of which $41 million was expensed), $32 million above plan, primarily due to additional development drilling at Bulyanhulu, Pascua-Lama and Veladero, compared to $112 million in 1999. The exploration programs added 3.4 million ounces to mineral reserves 10 30 Goldstrike Pascua-Lama Bulyanhulu 42 Total = $82 million B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 39 2001 EXPLORATION EXPE NSE (millions of dollars) 12 5 10 North America South America Business development and other on a development plan for Pascua-Lama, to purchase Pangea Goldfields, to augment the Company’s land position in Tanzania, and to distribute higher dividends. At the close of 2000, the Company’s cash position had increased by $123 million to $623 million. Operating cash flow and free cash flow for 2001 are expected to remain strong with production of 3.8 million Total = $27 million ounces of gold and continued low cash costs of 2001 MI NERAL RESERVE DE VELOPMEN T BY DIST RICT (millions of dollars) 21 7 17 Goldstrike Pascua-Lama Bulyanhulu $156 per ounce and lower capital and exploration expenditures of $357 million. The Company expects to benefit from its Premium Gold Sales Program, receiving a minimum realized gold price of $340 per ounce for 100% of its expected production in 2001. (Barrick’s Premium Gold Sales Program is described on page 20.) Total = $45 million D I V I D E N D S During 2000, the Company paid dividends of $0.22 In 2001, exploration expenditures are expected to per share compared to $0.20 per share in 1999 and be $72 million (of which $27 million is expected to be $0.18 per share in 1998. Barrick has increased divi- expensed) with $25 million allocated to programs at dends for 13 consecutive years. The Company’s payout the Bulyanhulu Property and other areas in Tanzania. ratio of 26% is in line with the average payout ratio An additional $27 million will be directed to programs of S&P 500 companies. in South America and the remainder will be spent in North America and on corporate development activity. R I S K M A N A G E M E N T The level of expenditure in any given year is a function Financial Risk of programs on existing properties and new opportunities Barrick actively manages its risks with respect to or initiatives that present themselves during the year. gold prices, currencies, interest rates and by-product C A S H F L O W commodity prices. The Company uses a variety of products to mitigate these risks. These products are In 2000, operating cash flow was $705 million, used only for hedging purposes related to the Company’s compared with $702 million in 1999 ($539 million specific risk exposures and not for trading purposes. in 1998). The Company’s operating mines generated Reference is drawn to note 11(A) to the consolidated $530 million in free cash flow in 2000. The free cash financial statements for a discussion of the Company’s flow was used to develop Bulyanhulu (with additional use of financial instruments, outstanding commodity funds from the Bulyanhulu project financing), to work contracts and credit and market risks. 40 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 Operational Risk Competitive Environment Barrick continually assesses the mining risks at each Barrick competes with other mining companies for of its operations. The Company works to reduce both exploration properties, for joint-venture agreements the likelihood and the potential severity of such risks and for the acquisition of attractive gold companies. through its high operational standards, emphasis on There is a risk that this competition could increase the employee training, and the risk management and loss- difficulty of concluding a negotiation on terms that the control programs in place at each mine site. To the Company considers acceptable. However, there are a extent practical, the Company also maintains adequate number of factors that strengthen Barrick’s competi- insurance at all times to cover normal business risks. tive position – it is an entrepreneurial company, with As well, operational risk is minimized through both the financial and operational strength required to asset and mineral reserve diversification. At the close move quickly and effectively. of 2000, approximately 47% of the Company’s assets Barrick also operates from a position of strength and 43% of its mineral reserves were in North America through the quality of its people. The Company looks with the balance in South America and Tanzania. At for the best people from around the world, and keeps Goldstrike, increasing processing efficiency reduces them through high corporate standards of operation, the risk of rising power and fuel costs, prevalent in the professional opportunities that it provides, and this region of the United States. excellent compensation. The political risks of operating in various countries have been assessed and, where appropriate, political risk insurance has been acquired. In each country where it has operations, Barrick is subject to various levels of government controls, taxation and regulation. This exposes Barrick to the risk of potentially adverse changes. The Company attempts to ensure that it complies with current laws at all times and, through direct and industry-wide contact with appropriate regulatory bodies, it attempts to maintain a climate of open communications. Barrick draws on the expertise of its management team, Board of Directors and International Advisory Board, along with a broad range of financial advisors to help assess risks before making an investment in a particular country. 200 0 CAPITAL E XPE NDITURES BY DISTRICT (millions of dollars) 82 9 126 177 49 107 Goldstrike Pierina Pascua-Lama Bulyanhulu Other Reserve development Total = $550 million 2001 CAPITAL EXPENDITURES BY DISTR ICT (millions of dollars) 10 45 114 96 25 67 Goldstrike Pierina Pascua-Lama Bulyanhulu Other Reserve development Total = $357 million B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 41 O U T L O O K H I G H L I G H T S Gold production (millions of ounces) Realized gold price Total cash costs per ounce Amortization per ounce Total production costs per ounce Exploration expense (millions) Income tax rate 2000 3.74 $ 360 $ 145 $ 88 $ 237 $ 41 13% 2001E Change Comment on 2001 3.83 $ 340 $ 156 $ 81 $ 242 +2% -6% +8% -8% +2% • The April start-up of Bulyanhulu and higher production at Pierina • Re-designation of contracts in 2001 to future years • Lower grades and higher fuel and power costs primarily at Goldstrike • Lower amortization primarily at Bousquet • Lower grades and higher power costs offset by lower amortization $ 27 -34% • Lower planned exploration in North and South America 11% -2% • A higher portion of earnings expected to be generated in a lower tax jurisdiction O U T L O O K In 2001, Barrick expects to continue to perform While the gold industry has experienced a prolonged strongly, although several metrics will not match the period of low prices, Barrick is working to protect levels achieved in 2000. The Company expects modest its shareholders from current adversity and to build increases in production to 3.8 million ounces and in economic value for the future. cash costs to $156 per ounce. Operating cash flow, In pursuing these objectives, Barrick relies on while lower than in 2000, is expected to be more than clearly defined operating and financial strategies, and $600 million, translating into more than $400 million its established financial strength. The Company has in free cash flow from existing operations. an ‘A’-rated balance sheet, the largest cash position The Company expects earnings of 70 cents to in the industry and strong free cash flow. As a result, 75 cents per share, a reduction from 2000 (before Barrick has the flexibility to assess opportunities that provision). This reflects Barrick’s decision to extend arise in the gold industry, applying the disciplined the benefits of the Premium Gold Sales Program approach that characterizes its financial management. into the future, resulting in a $20 per ounce reduction In 2000, Barrick had a strong year, with higher in the realized gold price for 2001. production at low costs, and benefited from high real- Going forward, Barrick will remain focused on build- ized prices achieved under its Premium Gold Sales ing economic value for shareholders. Program. While the Company set new levels for operat- Barrick is driven by three key financial objectives: ing earnings and cash flow during the year, its decision • To increase earnings and cash flow per share, to adjust the carrying values of certain assets to • To improve return on equity, and reflect low gold prices resulted in a loss of $766 million • To maintain a strong balance sheet. after a non-cash provision of $1.1 billion (after tax). 42 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S B A R R I C K A N N U A L R E P O R T 2 0 0 0 To achieve these financial objectives, Barrick will Finally, Barrick will continue its Premium Gold Sales continue to be guided by four operating strategies – Program with a view to maximizing revenue and mini- to increase profitable production, lower costs, expand mizing gold price risk. This program, in combination high quality mineral reserves, and continue the with continued high production and low costs, is Premium Gold Sales Program. intended to allow the Company to plan its future with In 2001, Barrick expects to increase profitable pro- a higher degree of certainty by establishing a minimum duction to 3.8 million ounces, reflecting another strong price it can expect to receive for its production. year from Pierina in particular, and production start- Barrick has 100% of 2001 and 2002 production ups at Bulyanhulu and Rodeo. Bulyanhulu is on track to protected at a minimum price of $340 per ounce begin production during the second quarter, in the first and a portion of the production thereafter covered phase of what could be a multiple-phase development. at an average price of $360 per ounce. The Company will assess anticipated increases in the In this period of low gold prices and possible indus- mineral resource base at Bulyanhulu with a view to try consolidation, Barrick has the flexibility to take increasing production at a rate that optimizes the advantage of opportunities as they present them- value of the asset. Production at the Rodeo deposit selves. If gold prices increase, Barrick is in a position of the Meikle Mine is expected to add to Meikle’s pro- to expand production organically with the potential duction beginning in the fourth quarter of 2001. offered by Pascua-Lama and the further development While Barrick’s estimated cash costs are expected of Bulyanhulu. Should gold prices decline, Barrick has to increase this year to $156 per ounce, the Company the financial strength to add to its asset base through will continue its efforts to reduce costs and improve disciplined acquisitions, which are both accretive to productivity, which have already reduced unit costs at earnings and cash flow and offer an attractive rate of the Company’s operations for four consecutive years. return. Each acquisition opportunity will be assessed In 2001 and beyond, Barrick will endeavor to expand using a realistic gold price assumption, which, at the its mineral reserves. At Pierina, the exploration end of 2000, was $275 per ounce. program will follow up on 2000 exploration results. All of the activities of Barrick are designed to At Goldstrike, the Company plans to drive an explo- build economic value for shareholders. While the ration drift through to Banshee to follow up on promis- results achieved may vary from year to year, the ing targets. At Pascua-Lama, exploration is scheduled goal remains constant. to focus on three satellite targets in an effort to expand the district mineral reserves and work is sched- uled to continue on the adjacent Veladero project. At Bulyanhulu, Barrick plans to continue to concen- trate efforts on expanding mineral resources as well as on converting existing mineral resources to mineral reserves. B A R R I C K A N N U A L R E P O R T 2 0 0 0 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 43 C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E Barrick Gold Corporation for the years ended December 31, 2000, 1999 and 1998 (in millions of United States dollars except per share data) Revenues Gold sales Interest and other income Costs and expenses Operating Amortization Administration Exploration Interest on long-term debt (note 4) Provision for (gain on sale of) mining assets (notes 3 and 9) Income (loss) before income taxes Income taxes (note 7) Net income (loss) for the year Net income (loss) per share (note 6) Basic Fully diluted 2000 1999 1998 $ 1,330 $ 1,421 $ 1,287 27 1,357 550 339 35 41 6 1,330 2,301 (944) 178 (766) (1.93) (1.93) $ $ $ 11 1,432 516 385 35 44 11 – 991 441 (110) 331 0.85 0.83 $ $ $ 11 1,298 595 216 36 50 – (42) 855 443 (142) 301 0.80 0.79 $ $ $ C O N S O L I D A T E D S T A T E M E N T S O F R E T A I N E D E A R N I N G S Barrick Gold Corporation for the years ended December 31, 2000, 1999 and 1998 (in millions of United States dollars) Retained earnings at beginning of year Change in accounting for income taxes (note 1K) Net income (loss) Dividends (note 6) 2000 $ 1,445 (284) (766) (87) 1999 $ 1,193 – 331 (79) 1998 $ 960 – 301 (68) Retained earnings at end of year $ 308 $ 1,445 $ 1,193 See accompanying notes to consolidated financial statements. 44 F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W Barrick Gold Corporation for the years ended December 31, 2000, 1999 and 1998 (in millions of United States dollars) Cash provided by operating activities (note 10) Cash provided by (used in) development activities Property, plant and equipment Purchase and sale of mining properties (notes 8 and 9) Other Cash (used in) development activities Cash provided by (used in) financing activities Capital stock (note 6) Long-term obligations Proceeds Repayments Dividends Cash provided by (used in) financing activities Increase in cash and equivalents Cash and equivalents at beginning of year Cash and equivalents at end of year Cash and equivalents comprise: Cash Short-term deposits See accompanying notes to consolidated financial statements. 2000 $ 705 1999 $ 702 1998 $ 539 (550) (115) 28 (637) 6 151 (15) (87) 55 123 500 623 24 599 $ $ $ 623 (620) 30 (8) (598) 29 25 5 (79) (20) 84 416 $ 500 $ 12 488 $ 500 $ $ $ (507) 170 (25) (362) 35 – (20) (68) (53) 124 292 416 21 395 416 B A R R I C K A N N U A L R E P O R T 2 0 0 0 F I N A N C I A L S T A T E M E N T S 45 C O N S O L I D A T E D B A L A N C E S H E E T S Barrick Gold Corporation As at December 31, 2000 and 1999 (in millions of United States dollars) Assets Current assets Cash and equivalents Bullion settlements and other receivables Inventories and deferred expenses (note 2) Property, plant and equipment (note 3) Other assets Liabilities Accounts payable and accrued liabilities – current Long-term debt (note 4) Reclamation and closure liabilities (note 5) Future income taxes (note 7) Shareholders’ equity Capital stock (note 6) Retained earnings Commitments and contingencies (note 11) See accompanying notes to consolidated financial statements. Signed on behalf of the Board Randall Oliphant Director C. William D. Birchall Director 2000 1999 $ 623 70 172 865 3,565 105 $ 500 133 111 744 4,488 121 $ 4,535 $ 5,353 $ 354 676 147 335 1,512 2,715 308 3,023 $ 304 525 133 237 1,199 2,709 1,445 4,154 $ 4,535 $ 5,353 46 F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Barrick Gold Corporation (tabular dollar amounts in millions of United States dollars) 1 ACCOUNTING POLICIES These consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada. As described in note 12, these principles differ in certain respects from principles and practices generally accepted in the United States. Summarized below are those policies considered particularly significant for the Company. References to the Company included herein mean the Company and its consolidated subsidiaries. The United States dollar is the principal currency of the Company’s business; accordingly, these consolidated financial statements are expressed in United States dollars. A Nature of operations The Company is engaged in the production of gold and related activities including exploration, development, mining and processing. The activities are conducted principally in the United States, Peru, Chile, Argentina, Canada and Tanzania. B Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. C Basis of consolidation These consolidated financial statements include the accounts of the Company and its subsidiaries. D Translation of foreign currencies The United States dollar is the functional currency of all of the Company’s operations which are classified as integrated for foreign currency translation purposes. Under the temporal method, translation gains or losses are included in the determination of net income. E Cash and equivalents Cash and equivalents comprise cash, term deposits and treasury bills, with original maturity dates of less than 90 days. F Inventories Gold in process and mine operating supplies are valued at the lower of average cost and net realizable value. G Property, plant and equipment (i) Property acquisition and mine development costs Property acquisition and mine development costs are recorded at cost and amortized by the units of production method based on estimated recoverable ounces of gold. Estimated recoverable ounces include proven and probable mineral reserves and a component of mineral resources. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 47 (ii) Buildings and equipment Buildings and equipment are recorded at cost and amortized, net of residual value, using the straight-line method based on the estimated useful lives of the assets. The maximum estimated useful life of buildings and mill equipment is 25 years and of mine equipment is 15 years. Repairs and maintenance expenditures are charged to operations; major improvements and replacements which increase productive capacity or extend the useful life of an asset are capitalized and amortized over the remaining estimated useful life of that asset. (iii) Deferred stripping costs Mining costs associated with waste rock removal are initially deferred and subsequently charged to operating costs over the estimated life of the mine based on estimated recoverable ounces of gold. (iv) Properties in development Costs incurred on properties in development and major capital projects are capitalized until the assets are put in service, at which time the capitalized costs are amortized in accordance with the policies described above. Financing costs, including interest, are capitalized on the basis of expenditures incurred for the acquisition and development of projects, without restriction to specific borrowings for these projects, while the projects are actively being prepared for production. Capitalization is discontinued when the asset is ready for its intended use. (v) Exploration properties Mineral exploration expenditures are expensed as incurred. Property acquisition costs relating to exploration properties and expenditures incurred on properties identified as having development potential are capitalized on a project basis. Costs associated with economically viable projects are amortized in accordance with the policies described above upon commencement of production. (vi) Property evaluations The Company reviews and evaluates the recoverability of the carrying amounts of all its mineral properties and related buildings and equipment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Estimated future net cash flows, on an undiscounted basis, are calculated using estimated recoverable ounces of gold (considering current proven and probable mineral reserves and mineral resources expected to be converted into mineral reserves); estimated future commodity price realization (considering historical and current prices, price trends and related factors); and operating costs, future capital expenditures, project financing costs, reclamation costs and income taxes. Reductions in the carrying amount of property, plant and equipment, with a corresponding charge to earnings, are recorded to the extent that the estimated future net cash flows are less than the carrying amount. Estimates of future net cash flows are subject to risks and uncertainties. It is reasonably possible that changes in circumstances may occur which could affect those future net cash flows and consequently the recoverability of the Company’s property, plant and equipment. H Commodity contracts The Company enters into commodity contracts in the normal course of its business to establish future sales prices and manage the future cash flow risk associated with price volatility of the commodities produced at its operating mines. The contracts used are described in note 11 and include spot deferred contracts and commodity options. Commodity contracts may be designated as hedges of financial risk exposures of anticipated transactions if, both at the inception of the hedge and throughout the hedge period, the changes in fair value of the contract substantially offset the effect of commodity price changes on the anticipated transactions and if it is probable that the 48 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 transactions will occur. The Company regularly monitors its commodity exposures and ensures that contracted amounts do not exceed the amounts of underlying exposures. Realized prices under spot deferred contracts are recognized in gold sales and by-product credits as the designated production is delivered to meet commitments. Purchased call options that are matched with spot deferred contracts, which combined mimic the terms, cash flows, risks and rewards of real put options, are accounted for in the same manner as the real instruments. The option premium paid is deferred and recognized in gold sales, together with any realized gains, at expiry of the options. On October 24, 2000 the Canadian Institute of Chartered Accountants (CICA) Emerging Issues Committee issued EIC-113, “Accounting By Commodity Producers For Written Call Options”. Accordingly, written call options entered into on or after that date are recognized on the balance sheet as a liability measured at fair value with changes in the fair value of the liability recognized in earnings in the period of the change. Written call options entered into prior to October 24, 2000 are treated as possible future sales commitments. Providing that uncommitted production exists to meet these commitments, no mark-to-market gain or loss is accrued prior to their expiry date and premiums received are recognized in earnings at their expiry date. In the event of early settlement or redesignation of hedging transactions, gains or losses are deferred and brought into income at the delivery dates originally designated. Where the anticipated transactions are no longer expected to occur, with the effect that the risk that was hedged no longer exists, unrealized gains or losses are recognized in income at the time such a determination is made. Cash flows arising in respect of these contracts are recognized under cash flow from operating activities. I Derivative financial instruments The Company enters into derivative financial instruments to manage the interest return component of its Premium Gold Sales Program. The instruments, which primarily comprise a portfolio of total return swaps, are accounted for in a manner similar to long-term portfolio investments, and accordingly, are carried at cost less any provisions for other than temporary impairment. Gains and losses are recognized in the income statement upon realization or at the maturity of the instrument. J Revenue recognition Gold in circuit, poured, in transit and at refineries is recorded at net realizable value and included in bullion settlements and other receivables and gold sales. Revenue from the sale of by-products such as silver and copper is credited against operating costs. K Income taxes During the year, the Company adopted the provisions of CICA Handbook Section 3465, “Income Taxes”. The provisions require the use of the liability approach for accounting for future income taxes based on differences between the carrying amounts of assets and liabilities for tax and accounting purposes. Among other things, the new standard requires that acquisitions be accounted for gross of underlying tax effects of treating non-deductible acquisition costs as temporary differences, with an offsetting credit to future income taxes. In accordance with CICA Emerging Issues Committee Abstract No. 108, the Company has chosen not to restate prior period comparative carrying amounts of assets acquired whose tax bases, at acquisition date, differed from the assigned values for accounting purposes. Initial implementation of the new provisions had the effect of: increasing property, plant and equipment by $69 million; increasing future income taxes by $353 million; and reducing retained earnings by $284 million. The adoption of the new standard had no effect on net income for the year. Provisions are made for withholding taxes payable on anticipated repatriation of unremitted earnings of the Company’s foreign subsidiaries. No provision is made for unremitted earnings which have been indefinitely reinvested. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 49 L Reclamation and closure costs Estimated reclamation and closure costs are accrued and charged to income over the estimated life of a mine by the units of production method based on estimated recoverable ounces of gold. M Stock-based compensation plan The Company has a stock-based compensation plan, which is described in note 6. No compensation expense is recognized for this plan when stock or stock options are issued to employees. Any consideration paid by employees on exercise of stock options or purchase of stock is credited to capital stock. If stock or stock options are repurchased from employees, the excess of the consideration paid over the carrying amount of the stock or stock option cancelled is charged to retained earnings. N Employee benefit plans The Company accrues its obligations and related costs under defined contribution employee benefit plans as the benefits are earned by the employees. The Company does not have any defined benefit plans. 2 INVENTORIES AND DEFERRED EXPENSES Gold in process Mine operating supplies Purchased call options premium (notes 1H and 11A(i)) $ 2000 85 43 44 $ 172 Gold in process excludes $138 million (1999 – $172 million) of stockpiled ore which is not expected to be processed in the following 12 months. This amount is included in property, plant and equipment. 3 PROPERTY, PLANT AND EQUIPMENT Property acquisition and mine development costs Buildings and equipment Properties in development Deferred stripping costs and ore in stockpiles Exploration properties Accumulated Amortization Cost 2000 Net Accumulated Amortization Cost $ 2,213 $ 1,572 985 202 141 986 562 – – – $ 1,227 $ 2,413 $ 1,010 985 202 141 1,351 1,237 346 241 650 450 – – – $ 1999 56 32 23 $ 111 1999 Net $ 1,763 901 1,237 346 241 $ 5,113 $ 1,548 $ 3,565 $ 5,588 $ 1,100 $ 4,488 50 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 In 2000, the Company performed a comprehensive evaluation of its property, plant and equipment, on the basis set out in note 1G(vi). This evaluation resulted in the reduction of carrying values of certain assets, which was triggered by a number of events. These events include: the continued weakness in the spot gold price and the downward reassessment of the long-term realized price of gold; and a re-evaluation of certain exploration properties to reflect the current gold price environment. The Company took a $1.1 billion non-cash provision to earnings, net of income taxes of $230 million, to cover the writedown of the carrying amounts of various assets. These assets include: the Pascua-Lama Project in Chile and Argentina; the Pierina Property in Peru and exploration properties; various assets including low-grade stockpile inventories at the Betze-Post Mine in the United States; and the Bousquet Mine in Canada. 4 LONG-TERM DEBT 71⁄2% debentures Project financing – Bulyanhulu Variable rate bonds A 71⁄2% debentures $ 2000 500 151 25 $ 676 1999 $ 500 – 25 $ 525 On April 22, 1997, the Company issued $500 million of redeemable, non-convertible debentures. The debentures bear interest at 71⁄2% per annum, payable semi-annually, and mature on May 1, 2007. B Project financing – Bulyanhulu On May 8, 2000, a wholly-owned subsidiary of the Company commenced the drawdown of a limited recourse amortizing loan of up to $200 million, provided by a syndication of international banks, to partially finance the construction, development, start-up and ongoing operation of the Bulyanhulu underground gold mining project in Tanzania. The Company expects to draw on the remainder of the facility in 2001. Repayment will consist of 14 equal consecutive semi-annual installments falling due on June 15 and December 15 of each year, with the first due no later than December 15, 2002 and as early as the first repayment date following completion. Completion is defined under the terms of the agreement as the satisfaction of certain physical, operational, financial, marketing, legal and environmental tests. The Company expects completion to occur in 2002. The Company has guaranteed the loan, except in the case of a political risk event occurring, until the completion date, at which point the loan will become non-recourse to the Company. This facility is insured for political risks equally by branches of the Canadian government and World Bank. The average interest rate, inclusive of political risk insurance premiums, is LIBOR plus 2.60% pre-completion, and increases following completion, rising in a number of steps to average approximately LIBOR plus 3.40%. The effective interest rate for 2000 was 9.2%. C Variable rate bonds On June 9, 1999, a wholly-owned subsidiary of the Company issued $25 million of variable rate, tax-exempt bonds which mature June 1, 2029. During 2000, the rate of interest on the bonds, payable weekly, varied from 3.36% to 5.12% with a weighted average rate of 4.25%. The Company has the option to convert the bonds to a fixed rate and to redeem them early. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 51 D Revolving credit facility The Company has a credit and guarantee agreement (the “Credit Agreement”) with a group of international banks (the “Lenders”). The Credit Agreement provides for the Lenders to make available to the Company and subsidiaries designated by it from time to time a credit facility in the maximum amount of $1 billion or the equivalent amount in Canadian currency. The Credit Agreement, which is unsecured, has a remaining term of two years. The facility has an interest rate of LIBOR plus 0.15% when utilized, and an annual fee of 0.075%. As at December 31, 2000 and December 31, 1999, no amounts were drawn under the Credit Agreement. E Interest Interest of $50 million was incurred during the year (1999 – $41 million, 1998 – $43 million). Of this amount $44 million was capitalized to properties in development and construction projects (1999 – $30 million, 1998 – $43 million). 5 RECLAMATION AND CLOSURE LIABILITIES The Company has estimated future site reclamation obligations, which it believes will meet current regulatory requirements, to be $262 million, $144 million of which has been accrued to December 31, 2000 (1999 – $143 million). Closure costs are estimated at $42 million, $23 million of which has been accrued to December 31, 2000 (1999 – $20 million). A total of $20 million of these accrued amounts is included in accounts payable and accrued liabilities at December 31, 2000 (1999 – $30 million). The Company expects to spend $20 million in 2001, and approximately $15 million in each of the following four years on these activities. Future changes, if any, in regulations and cost estimates may be significant and will be recognized when applicable. 6 CAPITAL STOCK A Issued and outstanding shares Details of issued and outstanding shares are as follows: Common Shares (millions) Outstanding at December 31, 1997 Issued during 1998 For cash Outstanding at December 31, 1998 Issued during 1999 In full consideration for all the outstanding shares of Sutton Resources Ltd. (note 8) For cash Outstanding at December 31, 1999 Issued during 2000 For cash Outstanding at December 31, 2000 Issued 373 4 377 17 2 396 – 396 Amount $ 2,364 35 2,399 281 29 2,709 6 $ 2,715 52 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 B Authorized capital Authorized capital stock of the Company is comprised of an unlimited number of common shares, 9,764,929 First preferred shares, Series A and 9,047,619 Series B, and 14,726,854 Second preferred shares, Series A. C Shareholder rights plan In 1998, the Company adopted a Shareholder Rights Plan (the “Plan”) which will be in effect until the 2001 shareholders’ meeting. The rights issued under the Plan become exercisable only when a person, including any party related to them, acquires, or announces their intention to acquire, 20% or more of Barrick’s outstanding common shares without complying with the “Permitted Bid” provisions or without approval of the Board of Directors. Should such an acquisition occur, each right would entitle a holder, other than the acquiring person and persons related to them, to purchase common shares of Barrick at a 50% discount to the market price. A Permitted Bid is a bid made to all shareholders that is open for at least 60 days. If at the end of 60 days, at least 50% of the outstanding shares, other than those owned by the offeror and certain related parties, have been tendered, the offeror may take up and pay for the shares, but must extend the bid for a further 10 days to allow other shareholders to tender. D Common share purchase options There are common share purchase options outstanding, expiring at various dates to December 4, 2010. The options have an exercise price of the Company’s market closing share price on the day prior to the date of grant. They vest over the first four years at a rate of one quarter each year, beginning in the year subsequent to granting, and are exercisable over 7 to 10 years. As at December 31, 2000, 6 million (1999 – 7 million, 1998 – 9 million) common shares, beyond those outstanding at year end, were available for granting of options. The following is a summary of common share purchase option activity: Outstanding as at December 31, 1997 1998 activity Granted Exercised Cancelled or expired Outstanding as at December 31, 1998 1999 activity Granted Exercised Cancelled or expired Outstanding as at December 31, 1999 2000 activity Granted Exercised Cancelled or expired Outstanding as at December 31, 2000 Common Shares (millions) Range of Exercise Prices Weighted Average Price 20 5 (4) (1) 20 3 (1) (1) 21 5 - (4) 22 C$27.35 – C$32.35 C$11.88 – C$28.75 C$18.19 – C$44.25 C$25.95 – C$30.70 C$18.19 – C$30.13 C$22.55 – C$43.20 C$23.60 – C$27.30 C$22.55 – C$27.88 C$22.55 – C$43.20 C$29.34 C$13.98 C$34.58 C$26.32 C$25.71 C$31.72 C$24.24 C$22.95 C$32.77 B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 53 The following is a summary of common share purchase options outstanding as at December 31, 2000: Range of exercise prices C$22.55 – C$33.88 C$34.00 – C$44.25 Options Outstanding Options Exercisable Common Shares (millions) Average Remaining Life (years) 18 4 22 7 5 7 Weighted Average Price C$26.49 C$38.92 C$28.73 Common Shares (millions) 8 4 12 Weighted Average Price C$27.68 C$39.00 C$31.29 In addition to the above common share purchase options, the Company is obligated to issue approximately 0.7 million shares (1999 – 1.1 million shares) of its common stock in connection with outstanding Sutton stock options that were assumed by the Company as part of the acquisition. The options have an average exercise price of C$19.12 (1999 – C$19.57) and an average remaining term of 5 years (1999 – 6 years). E Net income (loss) per share Net income (loss) per share was calculated on the basis of the weighted average number of common shares outstanding for the year, which amounted to 396 million shares (1999 – 390 million shares, 1998 – 376 million shares). For prior years, fully diluted net income per share reflects the dilutive effect of the exercise of the common share purchase options outstanding as at year end. The effect of common share purchase options on the net loss in 2000 is not reflected, as to do so would be anti-dilutive. The number of shares for the fully diluted net income per share calculation for 1999 and 1998 were 410 million shares and 390 million shares, respectively. In December 2000, the CICA issued a revised CICA Handbook Section 3500, “Earnings Per Share”. The revised statement, which is effective for the Company’s 2001 fiscal year, is not expected to have a significant impact on previously reported earnings per share amounts. The standard, among other things, formalizes concepts such as anti-dilution sequencing, requires enhanced earnings per share disclosures and is similar in many respects to the equivalent U.S. pronouncements. F Dividends In 2000, the Company declared and paid dividends in United States dollars totaling $0.22 per share (1999 – $0.20 per share, 1998 – $0.18 per share). 54 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 7 INCOME TAXES As the Company operates in a specialized industry and in several tax jurisdictions, its income is subject to varying rates of taxation. Major items causing the Company’s income tax rate to differ from the Canadian federal income tax rate of 38% are set out below: At the Canadian federal income tax rate Increase (decrease) resulting from: Resource and depletion allowances Tax rates of other jurisdictions Provision and sale of mining assets Operating losses and exploration expenditures not tax effected Non-deductible costs arising from acquisitions Miscellaneous Income tax (credit) expense The principal timing differences and their tax effect are: Deferred mining and exploration costs Amortization Reclamation Net operating loss Provision for mining assets Details of income tax (credit) expense by jurisdiction are: Current United States Canada Peru Other Future United States Canada Peru Chile Other 2000 $ (358) 1999 $ 168 1998 $ 168 (28) (76) 276 4 – 4 (178) (3) (1) 1 (2) $ $ (230) $ (235) $ 42 3 7 5 57 (31) (49) (52) (93) (10) (235) $ (178) $ $ $ $ (47) (35) – 10 13 1 110 33 4 (1) (1) – 35 72 2 – 1 75 36 6 (6) – (1) 35 $ 110 $ $ $ $ (54) (47) 30 38 9 (2) 142 33 33 7 (16) – 57 78 6 – 1 85 8 54 (9) – 4 57 142 $ The amount of unrecognized future tax liability for temporary differences related to the Company’s investment in the United States, which is essentially permanent in duration, is $81 million (1999 – $84 million). Tax assets include operating loss carryforwards and temporary timing differences that relate to property, plant and equipment and reclamation and closure liabilities. Net future tax assets include $79 million relating to operating loss carryforwards, the recognition of which is based on the Company’s judgment regarding its ability to utilize the related tax losses against future income. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 55 Operating loss carryforwards amount to $728 million, of which $487 million do not expire and $241 million expire at various times over the next 20 years. Following are the components of the Company’s future tax liability at December 31, 2000 and 1999. The 1999 comparative amounts have been presented after reflecting the $353 million effect of the implementation adjustments described in note 1K. Tax assets United States Canada Chile Peru and other Total Valuation allowances Canada Chile Peru and other Total Property, plant and equipment United States Canada Chile Peru and other Total $ $ 2000 79 72 70 10 231 (49) (62) (3) (114) (206) (115) (5) (126) (452) Total future income tax liability $ (335) $ 1999 75 43 66 22 206 (28) (58) (3) (89) (278) (171) (97) (161) (707) (590) 8 PROPERTY ACQUISITIONS A Pangea Goldfields Inc. On July 27, 2000, the Company acquired Pangea Goldfields Inc. (“Pangea”), an exploration company, at a cost of $131 million. Each outstanding common share of Pangea was purchased for C$7.00. The acquisition has been accounted for as a purchase. The assigned values of total assets and liabilities acquired, including $16 million in cash, amounted to $140 million and $9 million, respectively. B Sutton Resources Ltd. On March 26, 1999, the Company acquired Sutton Resources Ltd. (“Sutton”), an exploration company, at a cost of $281 million. Each outstanding common share of Sutton was exchanged for 0.463 of a common share of the Company, resulting in 17 million common shares being issued. The Company has assigned a value of $281 million to the common shares issued as required by generally accepted accounting principles, based upon the quoted market price for the shares less a 5% discount which represents the issue costs that would otherwise have been incurred. The acquisition has been accounted for as a purchase. The assigned values of total assets and liabilities acquired, including $30 million in cash, amounted to $307 million and $26 million, respectively. 56 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 9 SEGMENT INFORMATION The Company operates in the gold mining industry. The operations are evaluated and managed on a district basis. The Goldstrike District includes the Betze-Post and Meikle Mines in the United States. Other includes the Bousquet and Holt-McDermott Mines in Canada, the El Indio Mine in Chile and operations which have been closed or sold. The Company’s interest in the Doyon Mine was sold in January 1998. The pre-tax gain of $42 million was offset by a future tax provision, resulting in no gain or loss after tax. Revenues Gold sales Goldstrike Pierina Other Operating costs Goldstrike Pierina Other Amortization Goldstrike Pierina Other Segment income before income taxes Goldstrike Pierina Other Provision for and gain on sale of mining assets Chile United States Peru Other assets Exploration Interest Corporate expenses, net Income taxes Net income (loss) 2000 1999 1998 $ 864 296 170 1,330 $ 822 322 277 1,421 $ 941 23 323 1,287 413 41 96 550 117 173 49 339 334 82 25 441 (883) (170) (184) (93) (1,330) (41) (6) (8) 178 335 40 141 516 127 172 86 385 360 110 50 520 – – – – – (44) (11) (24) (110) 399 3 193 595 117 11 88 216 425 9 84 518 – – – 42 42 (50) – (25) (142) $ (766) $ 331 $ 301 B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 57 Gold sales by geographic area United States Peru Canada Chile Segment capital expenditures Goldstrike Pierina Pascua-Lama Bulyanhulu Other Identifiable assets by geographic area United States Peru Chile/Argentina Tanzania Canada Other countries Segment assets Goldstrike Pierina Pascua-Lama Bulyanhulu Other Total assets for reportable segments Cash and equivalents Other $ 2000 864 296 92 78 $ 1,330 $ $ 136 49 149 203 13 550 $ 1,985 805 416 729 149 451 $ 4,535 $ 1,804 800 394 726 53 3,777 623 135 $ $ $ $ $ $ $ 1999 852 322 120 127 1,421 405 32 85 77 21 620 2,282 1,093 1,169 366 236 290 5,353 1,937 1,089 1,113 363 151 4,653 500 200 1998 $ 1,032 $ $ $ $ $ $ 23 124 108 1,287 158 248 79 – 22 507 2,013 1,217 1,085 – 270 70 4,655 1,615 1,215 1,030 – 285 4,145 416 94 $ 4,535 $ 5,353 $ 4,655 58 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 10 SUPPLEMENTAL CASH FLOW INFORMATION Cash provided by operating activities includes the following cash payments: Interest, net of amounts capitalized Income taxes A reconciliation of net income (loss) to cash provided by operating 2000 $ 4 30 1999 1998 $ 11 95 $ – 62 activities is as follows: Net income (loss) Non-cash items: Amortization Future income taxes Provision for (gain on sale of) mining assets Other Cash provided by (reinvested in) working capital Bullion settlements and other receivables Inventories and deferred expenses Accounts payable and accrued liabilities Cash provided by operating activities $ (766) $ 331 $ 301 339 (235) 1,330 4 672 (20) (10) 63 705 $ 385 35 – 5 756 (30) (54) 30 702 $ 216 57 (42) 5 537 (10) (14) 26 539 $ 11 COMMITMENTS AND CONTINGENCIES A Derivative financial instruments The Company utilizes privately negotiated over-the-counter (“OTC”) contracts. OTC contracts are executed between two counterparties who negotiate specific agreement terms, including the underlying instrument, notional amount, exercise price, maturity and premium to be paid. In this context, the underlying instrument may include commodities, interest rates, foreign exchange rates or bond indices with diversified credit exposure. The Company does not enter into derivatives which it would consider to be leveraged. The principal types of contracts used by the Company are described below. (i) Commodity and foreign exchange contracts Gold As part of its Premium Gold Sales Program, the Company has entered into forward sales commitments collectively referred to as “spot deferred contracts” with several major financial institutions, under which it has commitments to deliver 14.9 million ounces of gold. A spot deferred contract represents a forward sale based on the spot gold price at inception plus a return “contango” that accrues until the future delivery date under the contract. The rate at which contango accrues is determined by reference to a LIBOR-based interest return less the gold lease rate. The extent to which the LIBOR-based return and gold lease rates are at fixed or floating rates varies by contract, at the discretion of the Company. The Company has fixed the gold lease rates for all of the contracts scheduled for delivery in 2001 and 2002 and a portion thereafter. The weighted average lease rate on the total spot deferred position was 1.68% at December 31, 2000. The spot deferred contracts had an average accumulated value of $304 per ounce at December 31, 2000. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 59 In 1999 the Company purchased a series of gold call options for $67 million, under which it had the right, but not the obligation, to buy 3.1 million ounces of gold in 2000 and 3.7 million ounces in 2001. The 2000 options expired unexercised. The 2001 options have an average strike price of $335 per ounce. The options are matched with spot deferred contracts designated for 2001, such that the combination of the two instruments creates a synthetic put option that closely mimics the terms, cash flows, risks and rewards of a real purchased put option. In addition to the minimum prices to be realized through the delivery against the spot deferred contracts, these options provide the Company with the ability to fully participate in gold prices above $335 per ounce for 97% of 2001 anticipated production. Written call options are contracts in which the writer, for a fee (premium), sells the purchaser the right, but not the obligation, to buy on a specified future date a stipulated quantity of gold at a stated price. The Company had written long-term gold call options in respect of 2.7 million ounces at December 31, 2000. The options, which have an average strike price of $354 per ounce, expire on various dates over the period from 2003 to 2010. In addition, short-term written call options in respect of 475,000 ounces of gold were outstanding at December 31, 2000 with an average strike price of $285 and expiring in 2001. In the event that they are exercised at their expiry dates, the Company has the ability to deliver production to meet the commitment and has the intent and ability to convert them into spot deferred contracts at the strike price. Silver The Company has entered into spot deferred contracts to deliver 20 million ounces of silver over the next five years, which had an average value of $4.92 per ounce at December 31, 2000. Copper As at December 31, 2000, the Company had purchased put options on 42 million pounds of copper at an average strike price of $0.77 per pound with various expiry dates in 2001. To partially pay for the cost of these put options, the Company has written call options on 12 million pounds of copper with various expiry dates in 2001 at an average strike price of $0.87 per pound. Canadian Dollars The Company has purchased Canadian dollar call options at an average price of $0.68 and has sold an equal number of Canadian dollar put options at an average strike price of $0.64. The options, which expire over the next two years, give the Company the ability to purchase C$161 million at a maximum price of $0.64 for each C$1 and a minimum price of $0.68 for each C$1. These contracts are used to manage currency exposures, as a portion of the Company’s operating costs and development expenditures are denominated in Canadian dollars. (ii) Other derivative financial instruments In connection with the management of the interest return component of its gold spot deferred contracts, the Company has entered into total return swaps with a total notional amount of $900 million or approximately 20% of the value of the notional amount of the spot deferred contract position of $4.5 billion. Total return swaps represent the contractual exchange of LIBOR-based interest payments for a return equivalent to the future performance of a specified investment instrument calculated on a fixed notional amount and for a predetermined period. The underlying investments are bond indices with diversified credit exposure. The Company has an investment-grade weighted average rating on its total return swaps of A-. 60 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 (iii) Fair value of derivative financial instruments Fair values of financial instruments and OTC contracts are determined based on estimates using net present value, Black-Scholes and other valuation techniques. The estimates are significantly affected by the assumptions used, including current market and contractual prices of the underlying instruments, as well as time value, and by yield curve and volatility factors underlying the positions. The carrying amounts for cash, bullion settlements and other receivables, accounts payable and accrued liabilities and long-term debt on the balance sheets approximate fair value. The aggregate favourable fair value of the Company’s commodity and foreign exchange contracts as at December 31, 2000 at a spot gold price of $272 per ounce amounted to approximately $386 million (1999 – $165 million). The fair value of the Company’s portfolio of total return swaps was $13 million (unfavourable) at December 31, 2000 (1999 – $10 million). (iv) Credit and market risks The Company is not subject to margin requirements on its Premium Gold Sales Program. While notional principal is the most commonly used volume measure in the derivative financial instrument markets, it is not a useful measure of credit or market risk. The notional principal typically does not change hands, but is simply a quantity upon which interest and other payments are calculated. The possible credit and market loss associated with the Company’s derivative financial instruments is significantly less than the notional principal amounts. Credit risk represents the maximum potential loss due to non-performance by obligors and counterparties under the terms of their contracts. Derivative financial instruments expose the Company to credit loss if changes in market rates affect a counterparty’s position unfavourably and the counterparty defaults on payment. Accordingly, credit risk of derivative financial instruments is represented by the positive fair value of the instruments. The Company manages credit risk by dealing only with financial institutions that meet its credit rating standards; by limiting arrangements with individual counterparties; and by entering into master netting arrangements which incorporate the right of set-off and provide for the simultaneous close-out and net settlement of contracts with the same counterparty in the event of default or other cancellation under the agreement. Under these master netting arrangements, the credit risk associated with favourable contracts is eliminated to the extent that unfavourable contracts with the same counterparty are not settled before favourable contracts. The Company’s overall exposure to credit risk on derivative financial instruments subject to a master netting arrangement can change substantially within a short period since it is affected by each transaction subject to the arrangement. The aggregate credit risk amounted to $390 million at December 31, 2000. The weighted average rating of the counterparties, based on the total notional value of the spot deferred contracts and total return swap position, equates to AA-. Concentrations of credit risk exist if a number of counterparties are engaged in similar activities, are located in the same geographic region or have comparable economic characteristics such that their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry or geographic region. Based on the location of the ultimate counterparty, 83% of this credit risk amount relates to the United States and 17% to Europe. Management believes that the concentrations described are appropriate for the Company. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 61 Derivative financial instruments, in the absence of any compensating upfront payments, generally have no market value at inception. They obtain value, positive or negative, as relevant commodity prices, interest rates, bond indices or exchange rates change such that the previously contracted transactions have become more or less favourable than what can be negotiated under current market conditions for contracts with the same remaining period to maturity or expiry. The potential for derivatives to increase or decrease in value as a result of the foregoing factors is generally referred to as market risk. Market risk associated with the Company’s derivative financial instruments principally arises in connection with fluctuations in gold and silver spot prices, LIBOR-based interest rates, gold lease rates, bond indices values and the exchange rate existing between the United States and Canadian dollars. B Royalties The Goldstrike, Pascua-Lama and Bulyanhulu Properties are subject to royalty obligations based on the valuable minerals produced from the properties and various methods of calculation. C Environmental The Company’s mining and exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. D Claims On April 30, 1998, the Company was added as a defendant in a class action lawsuit initiated against Bre-X Minerals Ltd., certain of its directors and officers or former directors and officers and others in the United States District Court for the Eastern District of Texas, Texarkana Division. The class action alleges, among other things, that statements made by the Company in connection with its efforts to secure the right to develop and operate the Busang gold deposit in East Kalimantan, Indonesia were materially false and misleading and omitted to state material facts relating to the preliminary due diligence investigation undertaken by the Company in late 1996. The Company believes that the claims are without merit. On July 13, 1999, the Court dismissed the claims against the Company and several other defendants on the grounds that the plaintiffs had failed to state a claim under United States securities laws. On August 19, 1999, the plaintiffs filed an amended complaint restating their claims against the Company and certain other defendants and on June 14, 2000 filed a further amended complaint. The Company has filed motions to dismiss the amended complaints on the basis that the plaintiffs have once again failed to state a claim. The motions to dismiss are pending before the Court. The amount of potential loss, if any, from these claims is not currently determinable. The Company is from time to time involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company is also subject to reassessment for income and mining taxes for certain years. It does not believe that adverse decisions in any pending or threatened proceedings related to any potential tax assessments or other matters, or any amount which it may be required to pay by reason thereof, will have a material adverse effect on the financial condition or future results of operations of the Company. 62 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 12 DIFFERENCES FROM UNITED STATES ACCOUNTING PRINCIPLES These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada. The Company monitors differences between Canadian and US GAAP, none of which have a material effect on the financial statements except as noted below. A Acquisitions In determining the value of the shares exchanged in acquisitions, for accounting purposes under US GAAP the Company used the unadjusted quoted market price of its shares. The Sutton acquisition in 1999 (see note 8), which was accounted for as a purchase under Canadian GAAP, represents a pooling of interests for US GAAP purposes. Accordingly, the assets and liabilities and shareholders’ equity of Sutton were combined with the Company’s US GAAP recorded values. Comparative figures were restated for all periods presented prior to the acquisition to include the combined statements of income and balance sheets of the merged entities, adjusted to conform with the Company’s accounting policies. B Stock-based compensation US GAAP encourages but does not require companies to include in compensation cost the fair value of stock options granted to employees. A company that does not adopt the fair-value method must disclose the cost of stock compensation awards, at their fair value, at the date the award is granted. The fair value of the Company’s options that were granted in 2000 was $30 million (1999 – $16 million). This fair value was estimated using the Black-Scholes model with assumptions of a 41⁄2- to 6-year expected term, 30% volatility, interest rates ranging from 4.8% to 7.4% and an expected dividend yield ranging from 0.44% to 1.4%. Under US GAAP the cost of stock compensation for the year ended December 31, 2000 would be $26 million (1999 – $26 million). The resulting pro forma net loss and loss per share for the year ended December 31, 2000 is $1,152 million and $2.91 respectively (1999 – net income and income per share of $300 million and $0.76 per share, respectively). C Written call options In accordance with Canadian GAAP, for options written before October 24, 2000, providing that uncommitted production exists to meet these commitments, no mark-to-market gain or loss is accrued prior to their expiry. For US GAAP purposes, the Company includes in the income statement the change in the fair value of its written call option position. The fair value is included in other assets on the balance sheet. D Income taxes In accordance with Canadian GAAP, the Company implemented CICA Handbook Section 3465 in 2000 (see note 1K). Under US GAAP, acquisitions would have been accounted for gross of underlying tax effects of treating non- deductible acquisition costs as temporary differences, as required by SFAS No. 109, with an offsetting credit to deferred income taxes. E Provision for mining assets In accordance with Financial Accounting Standards Board (“FASB”) SFAS No. 121, project financing costs are excluded from the evaluation of property, plant and equipment for impairment purposes. In addition, under US GAAP, if assets are determined to be impaired, a reduction in the carrying amount to estimated fair value is required in accordance with SFAS No. 121. Fair value has been estimated using discounted expected future cash flows. The resulting impact was an increase in the provision for mining assets by $343 million, net of income tax effects of $37 million. B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 63 F Comprehensive income There are no significant differences between the Company’s US GAAP net income as reported and its comprehensive income; accordingly, a separate statement of comprehensive income has not been presented. G Recent accounting pronouncements In June 1998, the FASB issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” which will be effective for the Company’s 2001 fiscal year. SFAS No. 133 requires the recognition of the fair value of all derivative instruments on the balance sheet. Subsequent to the issuance of SFAS No. 133, the FASB received many requests to clarify certain issues causing difficulties in implementation. In June 2000, the FASB issued SFAS No. 138, which responds to those requests by amending certain provisions of SFAS No. 133. The Company is adopting SFAS No. 133 and the corresponding amendments under SFAS No. 138 effective January 1, 2001. The Company has determined that its gold and silver forward contracts represent normal sales contracts, as defined by the criteria in SFAS No. 138, and therefore are excluded from the scope of SFAS No. 133. All transition adjustments resulting from the adoption of SFAS No. 133 will be reported in net income as the effect of a change in accounting principle. The Company estimates that on January 1, 2001 it will record, for US GAAP purposes, an adjustment of $6 million to recognize at fair value all derivative instruments in its statement of financial position as a liability and measure them at fair value. A corresponding $6 million cumulative-effect type adjustment will be recorded in the statement of income. A number of SFAS No. 133 and SFAS No. 138 implementation issues are being considered by the Derivatives Implementation Group (“DIG”). It is reasonably possible that future conclusions reached by the DIG on implementation issues could affect the method of accounting for the Company’s derivative financial instruments for US GAAP purposes. For US GAAP purposes, effective October 1, 2000, the Company implemented Staff Accounting Bulletin (“SAB”) Note 101, Revenue Recognition. In accordance with SAB No. 101, revenue is recognized at the time of delivery of gold bullion to customers. This represents a change from the previous accounting policy whereby revenue was recognized at the time gold was in doré form, in accordance with long-standing industry practice. The impact of this change in the year ended December 31, 2000 was an increase in net loss by $25 million, as well as an increase in basic net loss per share by $0.06 including a cumulative amount of $23 million. The proforma effects of retroactive application of SAB No. 101 were an increase in net loss of $2 million in 2000, an increase in net income in 1999 of $11 million and a decrease of $3 million in 1998. H Balance sheets The following summarizes the balance sheet amounts in accordance with US GAAP where different from the amounts reported under Canadian GAAP: 2000 Canadian GAAP United States GAAP 1999 Canadian GAAP United States GAAP Bullion settlements and other receivables $ Inventories and deferred expenses Property, plant and equipment Other assets Accounts payable and accrued liabilities Future income taxes Shareholders’ equity 70 172 3,565 105 354 335 3,023 $ 20 244 3,076 112 406 148 2,698 $ 133 111 4,488 121 304 237 4,154 $ 133 111 4,447 120 304 444 3,905 64 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S B A R R I C K A N N U A L R E P O R T 2 0 0 0 I Income statements The following summary sets out the adjustment to the Company’s reported net income (loss) in order to conform to accounting principles generally accepted in the United States: 1999 $ 331 1998 $ 301 Net income (loss) for the year – Canadian GAAP Provision for mining assets Revenue recognition policy Sutton pre-acquisition costs and expenses Change in fair value of written calls Net income (loss) based on US GAAP before accounting change Cumulative effect of change in revenue recognition policy Net income (loss) for the year – US GAAP Net income (loss) per share for the year before accounting change (dollars) Basic Fully diluted Net income (loss) per share for the year (dollars) Basic Fully diluted J Cash flow statements 2000 $ (766) (343) (2) – 8 (1,103) (23) $ (1,126) $ $ $ $ (2.79) (2.79) (2.84) (2.84) – – (4) (1) 326 – 326 0.83 0.82 0.83 0.82 $ $ $ $ $ The following summarizes the cash flow amounts in accordance with US GAAP where different from the amounts reported under Canadian GAAP: Operating activities Development activities Financing activities Opening cash Closing cash 2000 $ 705 (637) 55 500 623 1999 $ 699 (637) (20) 458 500 – – (8) – 293 – 293 0.75 0.74 0.75 0.74 $ $ $ $ $ 1998 $ 534 (399) (10) 333 458 B A R R I C K A N N U A L R E P O R T 2 0 0 0 N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 65 MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS The accompanying consolidated financial statements and all of the data included in this annual report have been prepared by and are the responsibility of the Board of Directors and Management of the Company. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada and reflect Management’s best estimates and judgments based on currently available information. The Company has developed and maintains a system of internal accounting controls in order to ensure, on a reasonable and cost effective basis, the reliability of its financial information. The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements. Jamie C. Sokalsky Senior Vice President and Chief Financial Officer Toronto, Canada March 9, 2001 AU D I TO R S ’ R E P O RT TO T H E S H A R E H O L D E R S O F B A R R I C K G O L D C O R P O R AT I O N We have audited the consolidated balance sheets of Barrick Gold Corporation as at December 31, 2000 and 1999 and the consolidated statements of income, retained earnings and cash flow for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2000 and 1999 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in accordance with accounting principles generally accepted in Canada. Chartered Accountants Toronto, Canada January 26, 2001 66 M A N A G E M E N T R E S P O N S I B I L I T Y / A U D I T O R S ’ R E P O R T B A R R I C K A N N U A L R E P O R T 2 0 0 0 G O L D M I N E R A L R E S E R V E S A N D M I N E R A L R E S O U R C E S The table on the next page sets forth Barrick’s interest in the total proven and probable gold mineral reserves at each property, based on a gold price of $300 per ounce (1999 – $325 per ounce). verified by mining experience. These figures are estimates, however, and no assurance can be given that the indicated quantities of gold will be produced. Gold price fluctuations may render mineral reserves containing For further details of proven and probable mineral relatively lower grades of gold mineralization uneconomic. reserves and measured, indicated and inferred mineral Moreover, short-term operating factors relating to the resources by category, see pages 69 and 70. mineral reserves, such as the need for orderly The Company has carefully prepared and verified the development of ore bodies or the processing of new or mineral reserve and mineral resource figures and believes different ore grades, could affect the Company’s profit- that its method of estimating mineral reserves has been ability in any particular accounting period. D E F I N I T I O N S A MINERAL RESOURCE is a concentration or occurrence of natural, solid, allow the appropriate application of technical and economic parameters, to inorganic or fossilized organic material in or on the Earth’s crust in such form support production planning and evaluation of the economic viability of the and quantity and of such a grade or quality that it has reasonable prospects for deposit. The estimate is based on detailed and reliable exploration, sampling economic extraction. The location, quantity, grade, geological characteristics and testing information gathered through appropriate techniques from and continuity of a mineral resource are known, estimated or interpreted from locations such as outcrops, trenches, pits, workings and drill holes that are specific geological evidence and knowledge. Mineral resources are sub-divided, spaced closely enough to confirm both geological and grade continuity. in order of increasing geological confidence, into inferred, indicated and measured categories: A MINERAL RESERVE is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility An inferred mineral resource is that part of a mineral resource for which study. This study must include adequate information on mining, processing, quantity and grade or quality can be estimated on the basis of geological metallurgical, economic and other relevant factors that demonstrate, at the evidence and limited sampling and reasonably assumed, but not verified, time of reporting, that economic extraction can be justified. A mineral reserve geological and grade continuity. The estimate is based on limited includes diluting materials and allowances for losses that may occur when the information and sampling gathered through appropriate techniques from material is mined. Mineral reserves are sub-divided in order of increasing locations such as outcrops, trenches, pits, workings and drill holes. confidence into probable mineral reserves and proven mineral reserves: An indicated mineral resource is that part of a mineral resource for which A probable mineral reserve is the economically mineable part of an quantity, grade or quality, densities, shape and physical characteristics can indicated, and in some circumstances, a measured mineral resource be estimated with a level of confidence sufficient to allow the appropriate demonstrated by at least a preliminary feasibility study. This study application of technical and economic parameters, to support mine planning must include adequate information on mining, processing, metallurgical, and evaluation of the economic viability of the deposit. The estimate is economic and other relevant factors that demonstrate, at the time of based on detailed and reliable exploration and testing information gathered reporting, that economic extraction can be justified. through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, A measured mineral resource is that part of a mineral resource for which metallurgical, economic and other relevant factors that demonstrate, quantity, grade or quality, densities, shape and physical characteristics are at the time of reporting, that economic extraction can be justified. so well established that they can be estimated with confidence sufficient to B A R R I C K A N N U A L R E P O R T 2 0 0 0 M I N E R A L R E S E R V E S 67 M I N E R A L R E S E R V E S A N D M I N E R A L R E S O U R C E S S U M M A R Y – G O L D December 31, 2000(1) December 31, 1999(1) Contained Contained Tons (000s) Grade(2) Ounces(3) (oz/ton) (000s) Tons (000s) Grade(2) Ounces(3) (oz/ton) (000s) 116,449 55,892 14,100 10,234 92,925 17,753 0.155 0.063 0.458 0.365 0.061 0.033 18,000 3,509 6,451 3,739 5,655 586 314,274 309,089 0.056 0.026 17,482 7,914 23,373 7,383 0.428 0.618 10,015 4,566 5,261 98,963 0.172 0.058 907 5,768 58,510 26,082 135,619 23,279 11,745 16,313 104,926 61,020 289,456 195,478 17,049 3,261 6,627 83,064 0.153 0.099 0.557 0.307 0.059 0.013 0.059 0.034 0.439 0.885 0.191 0.053 20,709 2,293 6,542 5,013 6,146 782 17,136 6,606 7,484 2,885 1,266 4,380 59,283 21,959 GOLDSTRIKE PROPERTY Betze-Post Mine Proven and probable Mineral resource Meikle Mine Proven and probable Mineral resource PIERINA PROPERTY Proven and probable Mineral resource PASCUA-LAMA PROPERTY Proven and probable Mineral resource BULYANHULU PROPERTY Proven and probable Mineral resource OTHER PROPERTIES Proven and probable Mineral resource TOTAL Proven and probable mineral reserves Mineral resources (including inferred) 1. Mineral reserves are based on a gold price of $300 per ounce (1999 — $325 per ounce). Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. 2. Grade represents an average, weighted by reference to tons of ore type where several recovery processes apply. Varying “cut-off grades” are reflected in the above table depending on the mine and type of ore contained in reserves. 3. Ounces estimated to be present in the tons of ore which would be mined and processed. Mill recovery rates have not been applied in calculating the contained ounces. 68 M I N E R A L R E S E R V E S B A R R I C K A N N U A L R E P O R T 2 0 0 0 M I N E R A L R E S E R V E S – G O L D As at December 31, 2000 PROVEN Contained PROBABLE Contained TOTAL Contained Tons (000s) Grade Ounces Tons Grade Ounces Ton Grade Ounces (oz/ton) (000s) (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) GOLDSTRIKE PROPERTY Betze-Post Mine Meikle Mine 107,511 2,709 0.153 0.646 16,500 1,751 8,938 11,391 0.168 0.413 1,500 4,700 116,449 14,100 0.155 0.458 18,000 6,451 PIERINA PROPERTY 55,755 0.062 3,443 37,170 0.059 2,212 92,925 0.061 5,655 PASCUA-LAMA PROPERTY 41,092 0.060 2,469 273,182 0.055 15,013 314,274 0.056 17,482 BULYANHULU PROPERTY 1,037 0.452 469 22,336 0.427 9,546 23,373 0.428 10,015 OTHER PROPERTIES Bousquet Mine Holt-McDermott Mine El Indio Mine 364 361 1,105 0.175 0.184 0.094 Sub-total other properties 1,830 0.128 64 66 104 234 1,455 1,727 249 0.175 0.197 0.318 3,431 0.196 254 340 79 673 1,819 2,088 1,354 0.175 0.194 0.135 5,261 0.172 TOTAL 24,866 33,644 318 406 183 907 58,510 B A R R I C K A N N U A L R E P O R T 2 0 0 0 M I N E R A L R E S E R V E S 69 M I N E R A L R E S O U R C E S – G O L D As at December 31, 2000 MEASURED (M) INDICATED (I) M & I TOTAL Contained Contained Contained INFERRED Contained TOTAL Contained Tons Grade Ounces Tons Grade Ounces Ounces Tons Grade Ounces Tons Grade Ounces (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) (000s) (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) GOLDSTRIKE PROPERTY Betze-Post Mine 11,531 0.065 754 40,551 0.063 2,556 Meikle Mine - - PIERINA PROPERTY 254 0.025 - 6 4,077 0.374 1,526 3,310 1,526 3,810 0.052 199 55,892 0.063 3,509 6,157 0.359 2,213 10,234 0.365 3,739 11,600 0.025 295 301 5,899 0.048 285 17,753 0.033 586 PASCUA-LAMA PROPERTY 5,300 0.042 225 136,132 0.027 3,683 3,908 167,657 0.024 4,006 309,089 0.026 7,914 1,824 0.470 857 857 5,559 0.067 3,709 7,383 0.618 4,566 BULYANHULU PROPERTY OTHER PROPERTIES Bousquet Mine Holt-McDermott Mine Tulawaka Project (70%) Veladero Project (40%) - - - - - - - - - - - - - - - 251 996 - 0.187 0.209 - 47 208 - 89,772 0.044 3,920 47 208 - 3,920 110 1,917 0.142 1,833 0.125 1,509 0.467 - - 271 230 705 - 2,168 0.147 2,829 0.155 1,509 0.467 318 438 705 89,772 0.044 3,920 1,134 0.244 277 2,685 0.144 387 El Indio Mine 919 0.084 77 632 0.052 33 Sub-total other properties 919 0.084 77 91,651 0.046 4,208 4,285 6,393 0.232 1,483 98,963 0.058 5,768 TOTAL 1,062 13,125 14,187 11,895 26,082 Mineral Reserves and Mineral Resources – Notes 1. Mineral reserves (‘’reserves’’) and mineral resources (‘’resources’’) have been calculated as at December 31, 2000 in accordance with definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum on August 20, 2000. Except as otherwise noted, calculations have been prepared by employees of Barrick under the supervision of Alan R. Hill, P. Eng., Executive Vice President, Development of Barrick and/or Alexander J. Davidson, P. Geol., Senior Vice President, Exploration of Barrick. Such calculations use an assumed long- term average gold price of $300 per ounce and a silver price of $5.00 per ounce and incorporate current and/or expected mine plans and cost levels at each property. Barrick’s normal data verification procedures have been employed in connection with the calculations. Reserves at the Betze-Post, Meikle, Pierina, Pascua-Lama and Bulyanhulu Mines have been calculated using average cut-off grades of 0.065 oz/ton, 0.228 oz/ton, 0.010 oz/ton, 0.031 oz/ton and 0.204 oz/ton, respectively. Reserves at the Goldstrike Property, which represent 42% of Barrick’s estimated total proven and probable mineral reserves, have undergone an independent audit. Total proven and probable mineral reserves at the Pascua-Lama Property, as at December 31, 1999, and at Pierina, as at December 31, 1998, were independently audited by the same firm in 2000 and 1999, respectively. In each case an assumed average long-term gold price of $325 per ounce and a silver price of $5.00 per ounce was used. In addition, in connection with Barrick’s project financing arrangements, 7.4 million ounces of proven and probable mineral reserves at Bulyanhulu, as at December 31, 1999, were independently audited by the same firm during 2000, based on a gold price of $325 per ounce. 2. Mineral resources which are not mineral reserves do not have demonstrated economic viability. 3. The estimates of mineral resources at the Veladero Property have been made based on information provided by Barrick’s joint venture partner, Minera Argentina Gold S.A., a subsidiary of Homestake Mining Company. 70 M I N E R A L R E S E R V E S B A R R I C K A N N U A L R E P O R T 2 0 0 0 P R E M I U M G O L D S A L E S P R O G R A M S C H E D U L E S As at December 31, 2000 is made up as follows: Spot Deferred Contracts Ounces (000s) Average Price ($/oz.) Min-Max Contracts Ounces (000s) Average Floor Price ($/oz.) Average Cap Price ($/oz.) Call Options (Purchased) Ounces (000s) Average Strike ($/oz.) Long-Term Call Options Sold Ounces (000s) Average Strike ($/oz.) Short-Term Call Options Sold Ounces (000s) Average Strike ($/oz.) Total Net Committed Ounces (000s) 2001 2002 2003 2004 2005 2006 2007+ Totals 3,800 340 3,800 340 2,100 362 1,600 364 700 355 600 357 2,300 360 14,900 350 500 270 290 (3,700) 335 475 285 500 270 290 (3,700) 335 475 340 450 344 400 349 250 362 1,125 364 2,700 354 475 285 14,875 In 2000, the Premium Gold Sales Program generated At December 31, 2000, the mark-to-market gain on $300 million of additional revenue, or $81 per ounce over Barrick’s Premium Gold Sales Program was $381 million the average spot price. calculated at a spot price of $272 per ounce, prevailing As at December 31, 2000, Barrick’s spot deferred market interest rates and volatilities. position stood at 14.9 million ounces. The purchased call option position declined to 3.7 million ounces with the S P O T D E F E R R E D I N V E S T M E N T S expiry of 3.1 million ounces during the year. The average Barrick’s total spot deferred position has an asset value price of the spot deferred contracts reflects the expected of approximately $4.5 billion on which it earns a return. future value incorporating an average lease rate assump- The Company achieves a return on this asset based on tion of 1.75%. Lease rates are fixed on 100% of the LIBOR and the credit rating associated with this return position in 2001 and 2002, and on a portion beyond 2002. is that of its hedging counterparties (average ‘AA’). The The weighted average lease rate on the total spot Company has conservatively diversified this investment deferred position is 1.68%. by exchanging a portion of its LIBOR return for a return B A R R I C K A N N U A L R E P O R T 2 0 0 0 P R E M I U M G O L D S A L E S P R O G R A M S C H E D U L E S 71 based on a professionally managed diversified basket of C A L L O P T I O N S S O L D bond funds/indices. The sold options can only be exercised by the At December 31, 2000, 80% of the position was counterparties on the expiry date and can be converted, invested with ‘AA’ hedging counterparties and the balance at Barrick’s option, into spot deferred contracts and rolled of 20% was invested in a basket of bond funds/indices forward for up to 15 years. There is no requirement for with an average credit rating of ‘A-’. This basket is Barrick to cash settle these transactions. The premiums managed to ensure that there is minimal interest rate generated from the sales of the contracts that expire exposure. The credit quality on the entire hedge position unexercised are recognized at the expiry date. asset of $4.5 billion is ‘AA-’. T R A D I N G C R E D I T L I N E S C A L L O P T I O N S P U R C H A S E D Barrick’s Premium Gold Sales Program is not subject At December 31, 2000, Barrick’s purchased call option to margin requirements at any gold price. position was 3.7 million ounces. These calls provide Barrick with the right but not the obligation to purchase gold, S E N S I T I V I T Y A N A LY S I S resulting in increased leverage to higher gold prices, while The following tables show the cash flow sensitivity of the still enabling the Company to maintain the security of a Company’s forecasted realized gold price over the next ten floor price. Barrick can therefore sell its production at a years to 1) changes in gold spot prices, 2) changes in gold minimum floor price of $340 per ounce through its spot lease rates, and 3) changes in US$ interest rates assuming a deferred program, but can now also realize further gains constant hedge position. The tables incorporate the impact on any rise in the spot price above $335 per ounce in 2001. of the call options purchased and sold. In addition, these call options mitigate the impact of higher gold prices on Barrick’s mark-to-market position. Realized Prices(1) Gold Spot 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 250 300 350 400 450 500 340 340 355 405 455 505 340 340 360 415 467 517 332 354 364 429 505 535 326 359 384 435 515 561 317 359 392 452 519 578 307 358 402 461 522 578 307 359 411 466 522 578 307 359 411 466 522 578 307 359 411 466 522 578 307 359 411 466 522 578 1. At 1.75% lease and 6.0% interest rates ($ per ounce) Realized Prices(2) Lease Rate 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1% 2% 3% 4% 340 340 340 340 340 340 340 340 359 353 346 340 367 356 345 335 371 357 343 330 366 352 338 324 367 353 339 325 367 353 339 325 367 353 339 325 367 353 339 325 2. At $300 spot and 6.0% interest rates ($ per ounce) 72 P R E M I U M G O L D S A L E S P R O G R A M S C H E D U L E S B A R R I C K A N N U A L R E P O R T 2 0 0 0 Realized Prices (3) Interest Rate 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 6.0% 7.0% 8.0% 9.0% 340 340 340 340 340 340 340 340 354 358 362 366 359 366 374 382 359 370 382 394 358 367 379 391 359 368 379 391 359 368 379 391 359 368 379 391 359 368 379 391 3. At $300 spot and 1.75% lease rates ($ per ounce) O T H E R H E D G E D I T E M S The Company hedges silver, copper, and Canadian dollars to cover operating and development expenditures. SILVER Spot Deferred Contracts Ounces (000s) Average Price ($/oz) COPPER Min-Max Contracts Pounds (millions) Average Floor Price ($/lb) Average Cap Price ($/lb) Purchased Put Options Pounds (millions) Average Floor Price ($/lb) CANADIAN DOLLAR Min-Max Contracts C$ (millions) Average Floor Price (US$/C$) Average Cap Price (US$/C$) 2001 2002 2003 2004+ Totals 3,000 5.25 3,000 5.30 3,000 5.30 11,000 20,000 5.35 5.32 12 0.79 0.87 30 0.76 141 0.64 0.68 20 0.65 0.68 12 0.79 0.87 30 0.76 161 0.64 0.68 B A R R I C K A N N U A L R E P O R T 2 0 0 0 P R E M I U M G O L D S A L E S P R O G R A M S C H E D U L E S 73 S U P P L E M E N T A L I N F O R M A T I O N 1 1 - Y E A R H I S T O R I C A L R E V I E W * 2000 1999 1998 1997 Operating results (in millions) Revenues Net income (loss) Operating cash flow Capital expenditures Per share data Net income (loss) Cash dividends Operating cash flow Financial position (in millions) Cash and equivalents Total assets Working capital Long-term debt Shareholders’ equity Operational statistics (unaudited) Gold production (thousands of ounces) Total cash costs per ounce Average price realized per ounce of gold sold Average spot price of gold per ounce Mineral reserves (proven and probable) (thousands of ounces) Other Net debt to total capitalization Shares outstanding (millions) $ 1,357 (766) 705 550 $ (1.93) 0.22 1.78 $ 623 4,535 511 676 3,023 3,744 $ $ $ 145 360 279 58,510 2% 396 $ 1,432 $ 1,298 $ 1,294 331 702 620 $ 0.83 0.20 1.80 $ 500 5,353 440 525 4,154 3,660 $ 134 $ 385 $ 279 59,283 1% 396 301 539 507 $ 0.79 0.18 1.43 $ 416 4,655 378 500 3,592 3,205 $ 180 $ 400 $ 294 51,456 2% 377 (123) 470 372 $ (0.33) 0.16 1.26 $ 292 4,306 253 500 3,324 3,048 $ 206 $ 420 $ 332 50,318 6% 373 *Information has been derived from audited financial statements, except as indicated. 74 S U P P L E M E N T A L I N F O R M A T I O N B A R R I C K A N N U A L R E P O R T 2 0 0 0 1996 1995 1994 1993 1992 1991 1990 $ 1,318 $ 1,307 $ 954 $ 681 $ 554 $ 369 $ 283 218 463 374 $ 0.60 0.14 1.28 $ 245 4,515 291 500 3,501 3,149 $ 217 $ 415 $ 388 51,117 7% 373 292 502 385 $ 0.82 0.12 1.42 $ 284 3,556 285 100 2,948 3,141 $ 198 $ 406 $ 384 36,539 (7)% 357 251 376 272 $ 0.80 0.10 1.22 $ 387 3,472 367 283 2,617 2,326 $ 194 $ 402 $ 384 37,589 (4)% 353 213 317 165 $ 0.74 0.08 1.11 $ 281 1,635 270 211 1,191 1,632 $ 186 $ 409 $ 360 28,439 (6)% 286 175 283 256 $ 0.61 0.065 1.00 $ 226 1,499 210 260 984 1,325 $ 179 $ 422 $ 345 25,719 3% 284 92 160 246 $ 0.34 0.055 0.59 $ 197 1,301 211 263 832 790 $ 216 $ 438 $ 362 24,377 7% 282 58 94 174 $ 0.23 0.04 0.36 $ 312 1,143 274 331 636 596 $ 229 $ 437 $ 384 19,510 3% 268 B A R R I C K A N N U A L R E P O R T 2 0 0 0 S U P P L E M E N T A L I N F O R M A T I O N 75 S U P P L E M E N T A L I N F O R M A T I O N Q U A R T E R LY D A T A Unaudited (in millions except per share data) March 2000 1999 2000 June 1999 September December 2000 1999 2000 1999 Revenues Gold sales Interest and other income Costs and expenses Operating Amortization Administration Exploration Interest Provision for mining assets Income (loss) before income taxes Income taxes $ 318 $ 390 $ 323 $ 373 $ 312 $ 326 $ 377 $ 332 5 323 120 98 8 11 2 – 239 84 (12) 2 392 133 117 8 14 3 – 275 117 (30) 7 330 133 93 10 9 2 – 247 83 (11) 3 376 139 104 9 10 3 – 265 111 (27) 9 321 131 75 7 8 1 – 222 99 (13) 5 331 120 88 8 6 3 – 225 106 (27) 6 383 166 73 10 13 1 1,330 1,593 (1,210) 214 1 333 124 76 10 14 2 – 226 107 (26) Net income (loss) for the period $ 72 $ 87 $ 72 Net income (loss) per share $ 0.18 $ 0.23 $ 0.18 $ 84 $ 0.20 $ 86 $ 0.22 $ 79 $ (996) $ 81 $ 0.20 $ (2.51) $ 0.20 Operating activities Net income (loss) Amortization and other non-cash items Working capital changes Development activities Property, plant and equipment Purchase and sale of mining properties Other Financing activities Capital stock Long-term obligations Dividends Increase (decrease) in cash Cash beginning of period $ 72 $ 87 $ 127 (4) 210 72 96 – 168 (103) (151) 30 (1) (74) 1 1 – 2 138 416 – – (151) 2 89 (44) 47 64 526 $ 84 $ 113 (23) 174 (142) – (17) (159) 7 28 (39) (4) 11 554 86 77 10 173 (111) (115) (2) (228) 1 26 – 27 (28) 590 $ 79 96 25 200 $ (996) $ 1,167 16 187 (166) (153) – 23 – 44 (143) (109) 20 (2) – 18 75 565 2 24 (43) (17) 61 562 81 89 (52) 118 (209) – (13) (222) 1 3 (40) (36) (140) 640 98 7 177 (135) – (14) (149) 1 (3) – (2) 26 500 Cash at end of period $ 526 $ 554 $ 590 $ 565 $ 562 $ 640 $ 623 $ 500 76 S U P P L E M E N T A L I N F O R M A T I O N B A R R I C K A N N U A L R E P O R T 2 0 0 0 C O R P O R A T E G O V E R N A N C E The Company, the Board of Directors business, are subject to approval by the Environmental, Occupational Health and and management of Barrick emphasize Board of Directors. Safety Committees are comprised of a effective corporate governance. Accordingly, majority of unrelated directors. they have developed systems and B O A R D C O N S T I T U T I O N The Board of Directors believes that procedures that are appropriate to the Barrick’s Board of Directors is currently it is desirable for the majority of the Company and its business. The Board comprised of 12 directors, five of whom Executive Committee to be related to of Directors is continuing to monitor are unrelated to the Company. The the Company since its mandate requires its governance practices to ensure they composition of the Board reflects a members to be available on very short remain appropriate and responsive to breadth of background and experience notice to deal with significant issues. changing circumstances. that is important for effective governance All actions approved by the Executive of a company in the mining industry. Committee are subsequently brought B O A R D M A N D AT E to the attention of the full Board of Barrick’s management is responsible B O A R D O P E R AT I O N S Directors. The fact that a majority of for the Company’s day-to-day operations, The Board of Directors has established the members of the Finance Committee for proposing its strategic direction and five committees, comprised of the Audit, are related to the Company is balanced presenting budget and business plans Executive, Compensation and Corporate by the fact that the recommendations to the Board of Directors for approval. Governance, Environmental, Occupational of the Committee are considered by the All major acquisitions, dispositions and Health and Safety and Finance Committees. full Board of Directors. investments, as well as significant The mandates of these Committees are A detailed Statement of Corporate financings and other significant matters described below. The Audit, Compensation Governance Practices appears in the outside the ordinary course of Barrick’s and Corporate Governance and Company’s Information Circular. C O M M I T T E E S O F T H E B O A R D A U D I T C O M M I T T E E C O M P E N S AT I O N A N D C O R P O R AT E E N V I R O N M E N TA L , O C C U PAT I O N A L (H.L. Beck, C.W.D. Birchall, P.A. Crossgrove) G O V E R N A N C E C O M M I T T E E H E A LT H A N D S A F E T Y C O M M I T T E E Responsible for reviewing the Company’s (A.A. MacNaughton, P.A. Crossgrove, (P.A. Crossgrove, J.K. Carrington, financial statements with management J.L. Rotman) M.A. Cohen) and the external auditors. The Committee Reviews and approves compensation Reviews the Company’s environmental also reviews the external audit plan, the policies and practices and reviews and occupational health and safety adequacy of internal control systems and and recommends to the Board the policies and programs, oversees its meets with the external auditors to discuss remuneration for directors and senior environmental and occupational health financial issues relevant to the Company. management of the Company. The and safety performance, and monitors Committee also administers the current and future regulatory issues. E X E C U T I V E C O M M I T T E E Company’s stock option plan. (P. Munk, A.A. MacNaughton, In addition, the Committee reviews F I N A N C E C O M M I T T E E B. Mulroney, R. Oliphant, G.C. Wilkins) corporate governance policies and (C.W.D. Birchall, A.A. MacNaughton, Exercises all the powers of the Board of practices. It also considers candidates for A. Munk, R. Oliphant, G.C. Wilkins) Directors (except those powers specifically election as directors, annually recommends Reviews the Company’s investment reserved by law to the Board of Directors) to the Board the slate of nominees for strategies, Premium Gold Sales Program in the management and direction of election to the Board by the shareholders and debt and equity structure. business during intervals between and recommends to the Board nominees Board meetings. to fill vacancies on the Board. B A R R I C K A N N U A L R E P O R T 2 0 0 0 C O R P O R A T E G O V E R N A N C E & C O M M I T T E E S 77 JOSEPH L. ROTMAN, O.C. Toronto, Ontario Executive Chairman, Clairvest Group Inc. Mr. Rotman is also chairman of several private companies including Roy-L Capital Corporation. He has been a director of Barrick since its inception. GREGORY C. WILKINS Toronto, Ontario Vice Chairman, TrizecHahn Corporation Mr. Wilkins was Executive Vice President and Chief Financial Officer of Barrick until his appointment at Horsham (now TrizecHahn Corporation) in September 1993. He has been a member of the Board since 1991. HOWARD L. BECK, Q.C. Toronto, Ontario Chairman, Wescam Inc. Mr. Beck was a founding Partner of the law firm Davies, Ward & Beck. He has been on the Barrick Board since 1984. C. WILLIAM D. BIRCHALL Nassau, Bahamas Vice Chairman, TrizecHahn Corporation Mr. Birchall has had a long association with Barrick, being one of the original Board members of the Company. JOHN K. CARRINGTON Thornhill, Ontario Vice Chairman and Chief Operating Officer, Barrick Gold Corporation Mr. Carrington was appointed a Vice Chairman of the Company in March 1999 in addition to his role as Chief Operating Officer, which he assumed at the end of 1996. He has been a member of the Barrick Board since 1996. B O A R D O F D I R E C T O R S ANTHONY MUNK Toronto, Ontario Vice President, Onex Corporation Mr. Munk became a member of the Board of Directors in 1996. He is a Partner of Onex Corporation, a diversified manufacturing and service company. PETER MUNK, O.C. Toronto, Ontario Chairman, Barrick Gold Corporation Mr. Munk is the founder and Chairman of the Board of Barrick Gold Corporation. He is also the founder and Chairman of TrizecHahn Corporation. RANDALL OLIPHANT Unionville, Ontario President and Chief Executive Officer, Barrick Gold Corporation Mr. Oliphant was appointed President and Chief Executive Officer of Barrick in March 1999. Previously he was Executive Vice President and Chief Financial Officer. He has been on the Board since 1997. Mr. Oliphant joined Barrick in 1987. MARSHALL A. COHEN, O.C. Toronto, Ontario Counsel, Cassels Brock & Blackwell Mr. Cohen served the Government of Canada for 15 years in a number of senior positions including Deputy Minister of Finance. He has been a Director of Barrick since 1988. PETER A. CROSSGROVE Toronto, Ontario Chairman, Premdor Inc. Mr. Crossgrove has been and is currently involved in a number of mining companies. He has been a director of Barrick since 1993. ANGUS A. MACNAUGHTON Danville, California President, Genstar Investment Corporation Mr. MacNaughton is a Vice Chairman of Barrick. He has been a member of the Board since 1986. THE RIGHT HONOURABLE BRIAN MULRONEY, P.C., LL.D. Montreal, Quebec Senior Partner, Ogilvy Renault Mr. Mulroney was Prime Minister of Canada from 1984 to 1993. He joined the Barrick Board in 1993 and is Chairman of the Company’s International Advisory Board. 78 B O A R D O F D I R E C T O R S B A R R I C K A N N U A L R E P O R T 2 0 0 0 O F F I C E R S PETER MUNK Chairman ANGUS A. MACNAUGHTON Vice Chairman RANDALL OLIPHANT President and Chief Executive Officer JOHN K. CARRINGTON Vice Chairman and Chief Operating Officer PATRICK J. GARVER Executive Vice President and General Counsel ALAN R. HILL Executive Vice President, Development JAMIE C. SOKALSKY Senior Vice President and Chief Financial Officer JAMES FLEMING Vice President, Communications JOHN BUTLER Senior Vice President, Corporate Development AMMAR AL-JOUNDI Vice President and Treasurer JOHN T. MCDONOUGH Vice President, Environment ALEXANDER J. DAVIDSON Senior Vice President, Exploration LOUIS DIONNE Senior Vice President, Underground Operations GREGORY P. FAUQUIER Senior Vice President, United States Operations M. VINCENT BORG Vice President, Corporate Communications MICHAEL J. BROWN Vice President, United States Public Affairs ANDRÉ R. FALZON Vice President and Controller DAVID W. WELLES Vice President and Tax Counsel RICHARD S. YOUNG Vice President, Investor Relations SYBIL E. VEENMAN Associate General Counsel and Secretary I N T E R N A T I O N A L A D V I S O R Y B O A R D The International Advisory Board was established to provide advice to Barrick’s Board of Directors and management as the Company expands internationally. CHAIRMAN THE RIGHT HONOURABLE BRIAN MULRONEY Former Prime Minister of Canada MEMBERS THE HONORABLE HOWARD H. BAKER, JR. United States Partner, Baker, Donelson, Bearman & Caldwell HONOURABLE PAUL G. DESMARAIS, SR. Canada Director and Chairman of Executive Committee, Power Corporation of Canada VERNON E. JORDAN, JR. United States Senior Managing Director, Lazard Freres & Co., LLC and Of Counsel to Akin, Gump, Strauss, Hauer & Feld, LLP PETER MUNK Canada Chairman Barrick Gold Corporation and Chairman TrizecHahn Corporation LORD POWELL OF BAYSWATER KCMG United Kingdom Chairman, Sagitta Asset Management Limited KARL OTTO PÖHL Germany Senior Partner, Sal. Oppenheim Jr. & Cie. JOSÉ E. ROHM Argentina Managing Director, Banco General de Negocios THE HONORABLE ANDREW YOUNG United States Chairman, GoodWorks International B A R R I C K A N N U A L R E P O R T 2 0 0 0 O F F I C E R S & I N T E R N A T I O N A L A D V I S O R Y B O A R D 79 S H A R E H O L D E R I N F O R M A T I O N S H A R E S T R A D E D O N F I V E M A J O R I N T E R N A T I O N A L I N D E X L I S T I N G S S&P 500 Index VO LU M E O F S H A R E S T R A D E D S T O C K E X C H A N G E S New York Toronto London Paris Swiss S&P/TSE 60 S&P Global 1200 TSE 100 TSE 300 TSE Gold & Precious Minerals Index FT of London Gold Index (millions) 2000 1999 NYSE TSE 318 282 381 413 Philadelphia Gold/Silver Index C L O S I N G P R I C E O F S H A R E S T I C K E R S Y M B O L ABX N U M B E R O F S H A R E H O L D E R S 13,615 2 0 0 0 D I V I D E N D P E R S H A R E US$0.22 C O M M O N S H A R E S (millions) Outstanding at December 31, 2000 Weighted average – 2000 396 396 The Company’s shares were split on a two-for-one basis in 1987, 1989 and 1993. December 31, 2000 NYSE TSE US$16.38 C$24.61 S H A R E T R A D I N G I N F O R M A T I O N TORONTO STOCK EXCHANGE Quarter First Second Third Fourth NEW YORK STOCK EXCHANGE Quarter First Second Third Fourth Share Volume (millions) 2000 1999 2000 High 1999 Low 1999 2000 C$25.25 C$32.85 C$23.17 C$24.80 124 98 89 102 81 72 50 79 282 28.10 25.95 24.12 Share Volume (millions) 2000 1999 2000 34.20 38.20 35.90 High 1999 24.18 23.00 20.53 2000 24.00 25.00 24.90 Low 1999 79 102 93 107 US$19.75 US$21.81 US$15.63 US$19.25 20.00 18.38 17.26 23.44 25.81 24.44 15.50 14.81 12.31 17.19 16.75 16.94 88 89 59 82 318 80 S H A R E H O L D E R I N F O R M A T I O N B A R R I C K A N N U A L R E P O R T 2 0 0 0 D I V I D E N D P AY M E N T S In 2000, the Company paid a cash O T H E R L A N G U A G E R E P O R T S French and Spanish versions dividend of $0.22 per share – $0.11 of this annual report are available T R A N S F E R A G E N T S A N D R E G I S T R A R S Mellon Investor Services on June 15 and $0.11 on December 15. from Investor Relations at the P.O. Box 7010 A cash dividend of $0.20 per share Corporate Office. was paid in 1999 – $0.10 on June 15 Adelaide Street Postal Station Toronto, Ontario M5C 2W9 and $0.10 on December 15. D I V I D E N D R E I N V E S T M E N T Telephone: (416) 643-5500 D I V I D E N D P O L I C Y The Company has increased cash P R O G R A M The Canadian Shareowners Toll-free throughout North America: 1-800-387-0825 Association, a non-profit educational Fax: (416) 643-5501 dividends as earnings and cash flow organization of retail investors, has Email: inquiries@cibcmellon.ca have risen over the past 13 years. selected Barrick to be a part of its Web site: www.cibcmellon.ca The Board of Directors reviews dividend reinvestment program for the dividend policy semi-annually Canadian investors. Barrick Mellon Investor Services, L.L.C. based on the cash requirements shareholders interested in this 85 Challenger Road of the Company’s operating assets, program should contact the Overpeck Center exploration and development Association at: Ridgefield Park, New Jersey 07660 activities, as well as potential Telephone: (416) 595-9600 Telephone: (201) 329-8660 acquisitions, combined with the Fax: (416) 595-0400 Toll-free within the United States: current and projected financial Email: questions@shareowner.ca 1-800-589-9836 position of the Company. Web site: www.shareowner.ca Web site: www.chasemellon.com F O R M 4 0 - F Annual Report on Form 40-F is filed S H A R E H O L D E R C O N T A C T S Shareholders are welcome to contact A N N U A L M E E T I N G The Annual General Meeting of with the United States Securities and the Company for information or Shareholders will be held on Tuesday, Exchange Commission. This report questions concerning their shares. May 8, 2001 at 10:00 a.m. in the will be made available to shareholders, For general information on the Canadian Room, Fairmont Royal York without charge, upon written request Company, contact the Investor Hotel, Toronto, Ontario. to the Secretary of the Company at Relations Department. See page 82 the Corporate Office. for contact information. For information on such matters as share transfers, dividend cheques and change of address, inquiries should be directed to the Secretary of Barrick or the Transfer Agents. Addresses and telephone numbers of the Transfer Agents follow. B A R R I C K A N N U A L R E P O R T 2 0 0 0 S H A R E H O L D E R I N F O R M A T I O N 81 C O R P O R A T E I N F O R M A T I O N CORPORATE OFFICE Barrick Gold Corporation Royal Bank Plaza, South Tower 200 Bay Street, Suite 2700 P.O. Box 119 Toronto, Canada M5J 2J3 Telephone: (416) 861-9911 Fax: (416) 861-2492 MINING OPERATIONS North America Goldstrike Property: Betze-Post Mine and Meikle Mine P.O. Box 29 Elko, Nevada 89803 Donald R. Prahl Vice President and General Manager Telephone: (775) 738-8043 Fax: (775) 738-7685 Holt-McDermott Mine P.O. Box 278 Kirkland Lake, Ontario P2N 3H7 Brian Grebenc Mine Manager Bousquet Mine 2 Bousquet Road Route 395 Preissac, Quebec J0Y 2E0 Christian Pichette Mine Manager Telephone: (819) 759-3681 Fax: (819) 759-3663 South America Chilean Operations Av. Pedro de Valdivia 100 Piso II, Providencia Santiago, Chile Sergio Jarpa Vice President, Operations CORPORATE DATA Auditors PricewaterhouseCoopers LLP Toronto, Canada Investor Relations Contact: Richard S. Young Vice President, Investor Relations Telephone: (416) 307-7431 Fax: (416) 861-0727 Email: ryoung@barrick.com Kathy Sipos Manager, Investor Relations Telephone: (56-2) 340-2022 Telephone: (416) 307-7441 Fax: (56-2) 233-0188 Pierina Mine Pasaje Los Delfines, 159 3er Piso Urb. Las Gardenias Lima 33, Peru Igor Gonzales Vice President and General Manager Telephone: (51-1) 275-0600 Fax: (51-1) 275-3733 East Africa Bulyanhulu Mine International House, Level 2 Fax: (416) 861-0727 Email: ksipos@barrick.com Sandra Grabell Investor Relations Officer Telephone: (416) 307-7440 Fax: (416) 861-0727 Email: sgrabell@barrick.com Toll-free number within Canada and United States: 1-800-720-7415 Email: investor@barrick.com Web site: www.barrick.com Telephone: (705) 567-9251 Shaaban Robert Street/ Fax: (705) 567-6867 Garden Avenue P.O. Box 108 Dar es Salaam, Tanzania Roy Meade Vice President and General Manager Telephone: (255-51) 123-181 Fax: (255-51) 123-180 82 C O R P O R A T E I N F O R M A T I O N B A R R I C K A N N U A L R E P O R T 2 0 0 0 •BARR cover 3/28/01 12:42 PM Page 2 (2,1) UILT TO LAST. In the ebb and flow of the capital markets, it’s the innovative companies that stand the test of time. Anchored in rock solid values, these companies are driven to change and improve everything except their guiding principles. Looking out to the horizon, innovative companies anticipate change, and act decisively – prospering over longer periods of time than their contemporaries. Furthermore, while not impervious to market turbulence, innovative companies possess the determination to address economic realities head on – creating value, even in times of adversity. Finally, more than being just enduring or successful, innovative companies are the leaders across industries and have been so – seamlessly – through multiple generations. From the beginning, Barrick set out to be such a company. And, if financial strength, management, discipline and superior long-term business performance are any indication, we are right on target. l y a e S n y e c o J l , a r d n a x e O a i s e L l : I N O T C U D O R P l r o y a T e s i u o L : I N O T C E R D T R A I n g i s e D g g E : I N G S E D . c n I l s n o i t a e R r o t s e v n I d e t a r g e t n I y g o l i r T : T N E M E G A N A M T C E J O R P D N A E V T A E R C I FORWARD LOOKING STATEMENTS Certain statements herein, including those regarding production, realized gold prices, costs and margins, constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Barrick or of the gold mining industry to be materially different from future results, performance or achievements expressed or implied by those forward looking statements. These risks, uncertainties and other factors include, but are not limited to, changes in the worldwide price of gold or certain other commodities and currencies and the risks involved in the exploration, development and mining business. These factors are discussed in greater detail in the “Management’s Discussion and Analysis of Financial and Operating Results” section as well as in Barrick’s Annual Information Form filed with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. Printed in Canada on recycled paper. •BARR cover 3/28/01 12:42 PM Page 1 (1,1) You can contact us toll-free within Canada and the United States at 1-800-720-7415 E-mail us at investor@barrick.com Visit our investor relations Web site at www.barrick.com Barrick S&P 500 1991 2000 OPERATING CASH FLOW B A R R I C K A N N U A L R E P O R T 2 0 0 0 B A R R I C K A N N U A L R E P O R T 2 0 0 0 

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