B A R R I C K A N N U A L R E P O R T 2 0 0 1 BARRICK 1983 North America 1994 South America BUILT TO LAST While entrepreneurial verve has provided the spirit, financial discipline has provided the foundation beneath Barrick’s rapid growth… in the form of an A-rated balance sheet, and the $2 billion in added revenues generated by the forward sales program. These lasting strengths have driven Barrick’s expansion from its beginnings in North America… to its South American holdings in Peru, Chile and Argentina… to Bulyanhulu, its first mine in Africa… and to Australia: together, a global platform for profitable growth. 1999 Africa 2001 Australia Profile Barrick Gold Corporation is a leading international gold company with among the largest market capitalizations in the industry. The Company has operating mines and development projects in the United States, Peru, Tanzania, Chile, Argentina, Australia and Canada. Barrick produced 6.1 million ounces of gold in 2001 at a total cash cost of $162 per ounce. With the industry’s only A-rated balance sheet, a portfolio of long-life, low-cost properties on four continents and proven and probable gold reserves of 82.3 million ounces, as well as significant exploration programs currently underway, the Company is well positioned for growth. 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. C O N T E N T S Financial Highlights...................................................4 Financial Statements..............................................58 Chairman’s Message..................................................6 Notes to Financial Statements ............................62 Letter to Shareholders.............................................8 Directors and Officers............................................94 Detailed Financial Table of Contents .................24 Shareholder Information.......................................96 Management’s Discussion and Analysis ...........25 Corporate Information...........................................98 All dollar amounts given in United States dollars unless otherwise indicated. Highlights Significant Events Gold Production (millions of ounces) First Quarter Third Quarter • Joint Operating Agreement • Set integration plans in with Newmont ended, motion (three review teams: allowing greater flexibility financial and administration; within the Betze-Post operations; and Pascua- Pit – increasing the mining Lama/Veladero development) rate and lowering unit • Operations review team mining costs. visited all eight major • Homestake acquired the operating properties on four advanced-stage Cowal continents. project in Australia. • Homestake/Barrick joint Second Quarter capital and operating cost • Production began at parameters for the Veladero venture announced updated 1 6 . 4 2 . 7 3 . 7 3 . 7 3 . 1 3 . 1 3 . 2 3 . 0 3 . 3 2 . . 6 3 1 1 . 92 93 94 95 96 97 98 99 00 01 Barrick Homestake Mineral Reserves - Gold (millions of ounces) . 3 2 8 . 5 4 2 . 8 7 5 . 5 8 5 . 3 9 5 5 1 5 . . 1 1 5 . 3 0 5 . 5 6 3 Bulyanhulu, Barrick’s newest project. mine on an entirely new continent – Africa. Fourth Quarter . 7 5 2 . 6 7 4 3 8 2 . • Announced the largest • Completed Rodeo, part of transaction in Company the Meikle underground mine history – Homestake merger. at Goldstrike. 92 93 94 95 96 97 98 99 00 01 Barrick Homestake • Completed Homestake merger. • Announced new management structure. • Adopted US GAAP for communicating financial results to investment community. Highlights (US GAAP basis) 1999 2000 2001 2000-2001 Financial Highlights (in millions of dollars except per share data) Gold sales $ 2,057 $ 1,936 $ 1,989 +3% change Net income (loss) for the year Operating cash flow Cash and short-term investments Shareholders’ equity Net income (loss) per share (diluted) 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 244 820 766 4,514 0.45 1.55 0.20 5,801 152 247 $ $ Reserves: proven and probable (thousands of ounces) 78,049 (1,189) 940 822 3,190 (2.22) 1.76 0.22 5,950 155 240 $ $ 79,300 96 721 733 3,192 0.18 1.35 0.22 6,124 $ $ 162 247 82,272 -23% -11% -23% +3% +5% +3% +4% Built to Last 6 Some companies enjoy they happen to be in success – briefly – because the right place at the right time. Real, long-term success is another matter. For that to happen, a company needs a clear, consistent and well-articulated mission. At Barrick, we have never wavered from our original mission. Since founding the Company in 1983, we’ve been committed to operating Barrick as a business first and as a mining company second. Our corporate strategy – our vision – E G A S S E M S ’ N A M R I A H C 1 0 0 2 T R O P E R L A U N N A K C I R R A B Peter Munk, Chairman OUR GOAL IS NOT TO BE THE LARGEST GOLD PRODUCER, BUT TO BE THE MOST PROFITABLE GOLD PRODUCER – ONE CAPABLE OF COMPETING WITH THE BEST COMPANIES IN THE WORLD does not alter with every fleeting In 2001, with gold at its purchase of the 125-year-old trend in the gold market; instead, lowest average price since 1978, Homestake Mining Company, our top priorities have always been the strength of our operating took over four mines in Australia. financial performance and philosophy was put to the test. I’m Buying Homestake – one of the discipline, with a commitment happy to report we emerged from world’s larger and lower-cost to corporate responsibility. The 2001 stronger than ever. Barrick gold producers – not only allowed result: despite our brief history, used its financial strength to take us to expand into a new continent, Barrick has the strongest balance advantage of weak industry but also increased Barrick’s sheet in the industry, with conditions to increase our reach gold reserve base by 36 percent a large, low-cost, diverse asset from two continents to four, and unified our neighboring base, and, most importantly, more becoming a truly global company development properties in growth opportunities available in the process. We opened our first Latin America. than any of our peers. mine in Africa and, through the North America Barrick entered gold business Acquired Camflo – and with it, an operating team led by Bob Smith Acquired the Mercur Mine in Utah, the Company’s largest producer at the time Acquired the small heap leach Gold- strike Property, and began drilling its deep potential Announced the $365 million Betze Development Plan Exploration crew discovered the Meikle deposit, on the Goldstrike Property 1983 1984 1985 1986 1987 1988 1989 (cid:2) (cid:2) (cid:2) (cid:2) Our many longtime shareholders revenues over 14 years, and helped peers. After all, Barrick is the only will recall that when Barrick started Barrick achieve the only “A” credit global gold producer today whose with a single mine at Goldstrike, rating in the gold mining industry. founders are still actively in place. 7 Nevada, our goal was to be the What do I see looking out That helps explain why this North American alternative to through 2002? More consolidation, Company adheres to the very South African gold companies. for one thing. I welcome this trend: principles that made it, and As times changed and the Company consolidation not only forces the continues to be driven by grew, we expanded strategically, industry to adopt greater financial entrepreneurial verve, a strong first to South America and now to discipline, it offers tremendous sense of spirit, and a commitment Africa and Australia. Despite this opportunities to companies that to generating sustained value for change in our geographic focus, have the wherewithal to grab them. shareholders. As always, our quest the hallmark of Barrick’s success – Ultimately, I believe there will be to create exceptional returns our keen entrepreneurial approach only a few companies left in the remains unabated. We’re proud to – has remained unchanged, even as business. My goal is to make sure be unlike any other company in our we’ve become one of the largest that Barrick is one of them. industry. and most profitable gold companies Barrick is getting bigger, Thank you all for your continued in the world. We continue to size up certainly, but our goal is not to support. valuable opportunities and seize produce more ounces of gold them quickly. than anyone else – that yardstick We have steadfastly refused is outdated and one-dimensional. to gamble the Company’s financial Instead, we believe that success health on the price of a volatile today is about managing the risks P E T E R M U N K commodity. The results of this inherent in mining a commodity with Chairman fiscal responsibility are clear: year unpredictable price swings – and in March 8, 2002 in and year out, our forward sales so doing, maximizing profitability program has ensured a strong, and returns on capital. predictable cash flow, contributed It is not an accident that Barrick more than $2 billion in additional stands out in so many ways from its E G A S S E M S ’ N A M R I A H C 1 0 0 2 T R O P E R L A U N N A K C I R R A B Entered into the Joint Operating Agreement with Newmont to develop the high-grade Post ore body, expanding the Betze-Post Mine Completed the Betze-Post Mine – produced 1.4 million ounces South America Acquired Lac Minerals Ltd. and a large land package in South America Acquired Arequipa Resources and the Pierina exploration project. Completed the second mine on the Goldstrike Property – the high-grade Meikle Mine 1990 1991 1992 1993 1994 1995 1996 (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) Fellow shareholders, 8 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B 2001 was a year of strong initiatives for our Company, as Barrick transformed itself from a leading mining company in North and South America into a truly global producer, with eight major low-cost mining operations on four continents. We expanded our geographic reach into Africa with the opening of our newest mine – Bulyanhulu – in April, and into Australia through the merger with Homestake. As a result, we now have more options and opportunities for achieving profitable growth and Randall Oliphant, President & Chief Executive Officer …OUR ENTREPRENEURIAL SPIRIT AND FINANCIAL STRENGTH HAVE CREATED WHAT I BELIEVE IS THE STRONGEST ASSET BASE IN THE INDUSTRY, WITH MORE OPPORTUNITIES THAN EVER BEFORE. strong returns for our shareholders In the next few pages, I want to generate the highest free cash flows than ever before in our brief discuss with you our current assets, in Company history. 18-year history. the opportunities we see in today’s On the operational side, we’re In this letter, I’d like to welcome environment, and the value we’re building on a low-cost, long-life former Homestake shareholders to going to create as we bring those reserve base. In fact, we’ve increased Barrick, and introduce all of our assets and opportunities together. our reserves to a record 82 million shareholders, old and new, to today’s With the addition of Homestake, ounces, after 6 million ounces of Barrick – which I believe is stronger we start 2002 as the gold industry’s low-cost production in 2001. While and better-positioned than we were leader in both quality and scale, with this production profile makes us one 12 months ago to grow earnings, cash a $10 billion market capitalization, of the world’s largest gold producers, flow and return on equity, regardless over $700 million in cash and short- our focus is not on producing the of the gold price. My confidence is term investments, virtually no net most ounces, but rather the most based on our tried and true strengths debt and the lowest political risk profitable ounces. Our yardstick – our quality asset base, balance sheet profile of any major producer. We’re for success is strong, consistent and Premium Gold Sales Program – also looking at our lowest capital financial returns. and on the opportunities I see ahead. expenditures in 14 years, on track to Completed the Pierina mine in 31 months from date of discovery – entered production in November Africa Acquired Sutton Resources, including the Bulyanhulu Property and the Kabanga nickel project, expanding Barrick’s presence to a third continent – Africa 1997 1998 1999 (cid:2) (cid:2) (cid:2) (cid:2) In 2001, despite an average gold marginally lower production than 2001 of consolidation and rationalization. price at its lowest level since the late at comparable costs, as we continue As we proceed, our focus is on 1970s, our earnings before merger closing down six of our older, higher- three key financial objectives: and related charges were $245 million, cost mines. But if you “freeze frame” • Increasing earnings and cash flow; and $96 million after the charges. 2002 and look at those numbers in • Improving return on equity; and Our operating cash flows totaled isolation, you won’t see the true • Maintaining a strong balance sheet. a healthy $721 million. While, at value of Barrick going forward. Of course, these objectives are 8 percent, our return on equity In strategic terms, 2001 was what grounded in the disciplined manage- equaled our cost of capital, we I call a “positioning” year. 2002 is ment approach that guides us. should do better, and we’re working the year we begin the task of taking This is exemplified by our focus on now to do just that. our promising new projects forward, acquiring, exploring, developing and For 2002, we are projecting about in South America, Australia and operating the lowest-cost mines; 5.7 million ounces of gold production Africa, and capitalizing on the larger, maintaining and enhancing the at a total cash cost of $167 per ounce, stronger Barrick during this period income-generating power of our Completed the state-of-the-art roaster facility at the Goldstrike Property to increase processing flexibility Acquired Pangea Goldfields, which fit the Company’s district development program in Tanzania Australia Completed the Homestake merger and extended Barrick’s reach to a fourth continent – Australia Completed construction of Rodeo at Goldstrike and Bulyanhulu in Tanzania 2000 2001 (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) (cid:2) “The Homestake merger is what I call an ‘enabler transaction’: one that doesn’t just add attractive assets, but also strengthens our options to carry out other accretive transactions.” 0 1 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B Premium Gold Sales Program; and advantage of every opportunity to the prudent use of debt. All of which improve returns and reduce risk, combine to create the strongest rather than simply being a play on balance sheet in the gold industry. the price of gold. A key component of this strategy, DISCIPLINED MANAGEMENT has always been to maintain Our Premium Gold Sales Program flexibility. This enables us to fine tune has generated about $1.7 billion in our Program to fit prevailing market additional revenues since 1996, which conditions. In light of the Homestake we used to strengthen our balance merger, the current gold price sheet and expand our asset base. and interest rate environment, We deployed $500 million to acquire we announced an adjustment to two companies for cash, a further $1.2 our delivery schedule to reflect billion to build Meikle, Pierina, Rodeo, prevailing market conditions. Bulyanhulu and our Goldstrike roaster, The size of the Program remains and paid nearly a half billion dollars unchanged at about 18 million ounces, in dividends. All this during a period or 22 percent of reserves, thus when gold prices declined from the maintaining its income-generating $400-per-ounce range to an average capacity. But our delivery schedules of $271 last year. It’s fair to say that have been lengthened, thereby this Program truly differentiates extending the benefits of accruing Barrick from other companies. higher income and price protection The Premium Gold Sales Program over a longer period of time. is our unique hedging activity that This year, Barrick will sell increases revenue from our main 50 percent of production at the spot asset – our gold reserves. This price, with the balance being sold at Program has allowed us to maximize $365 an ounce. As always, this will returns, with a 14-year track record provide a minimum floor price, one of generating a premium to the spot that ensures strong earnings and gold price, as well as contributing to provides us with cash flow sufficient our “A” credit rating. While maximizing to cover cash requirements for the returns, it also minimizes downside year, including capital expenditures exposure to volatile gold prices. and dividends. It’s an approach that We believe that in today’s gives us security and predictability, sophisticated markets, management while ensuring that if gold prices of global public companies must strengthen, the benefits should have a business strategy that takes go straight to our bottom line. A vision rooted in North America Barrick’s North American operations establish the Company as the continent’s largest gold producer, contributing over 3.3 million ounces of gold – 55 percent of the Company’s overall 2001 production – at $179 per ounce. 2001 saw record results at Round North American Contribution to Production – 2001 Mountain, Eskay Creek’s second-best year ever, and another solid year at our flagship Goldstrike 55% Property, which produced over 2 million ounces. North American Contribution to Reserves – 2001 Opportunities to create value within the Company’s North American portfolio include continued exploration around existing mines, 34% consolidation of joint ventures and property acquisitions. “In 2001…Barrick transformed itself from a leading mining company in North and South America into a truly global producer, with eight major low-cost mining operations on four continents.” 2 1 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B ASSETS AND OPPORTUNITIES 1.5 million ounces annually The combination of our entrepreneurial at about $125 an ounce. spirit and financial strength has • In Canada, at Eskay Creek, we created what I believe is the see substantial opportunities strongest asset base in the industry, to expand both production and with more opportunities than ever reserves. In the U.S., exploration before. Elsewhere in these pages, at the Meikle Mine, at Banshee you’ll see snapshots of our key and at the Ren Property promises properties in the Americas, Africa to breathe new life into the and Australia – a mix of quality underground – offering the assets that gives Barrick a strong prospect of low-cost production base to build on in 2002 and beyond. close to existing infrastructure. In addition to these proven • Moving from the Americas to performers in our current portfolio, Africa, at Bulyanhulu, our District we’ve got some significant opportuni- Development Program will build ties for organic growth on the horizon. on a base of increased production, They include: as well as on excellent results • Pascua-Lama/Veladero – with its at several exploration projects 25 million-ounce gold reserve, the in the region. In fact, Kabanga, world’s largest undeveloped gold our exciting large nickel deposit – property. With the Homestake acquired with Bulyanhulu in merger, Veladero – previously a the Sutton acquisition – is fast joint venture – is now 100 percent becoming a significant asset in Barrick’s, and the proximity of the its own right, offering us a variety Property to Pascua-Lama allows of options to realize its value. us to take a unified approach to • In Australia, continued exploration developing this district. In 2002, makes us increasingly optimistic we’re putting a plan in place about Cowal and its nearly for a Phase One heap leach 3 million ounces of reserves. operation, followed by full-scale We also think 2002 could be the development of Pascua-Lama year that our commitment to early- as gold and silver prices improve stage exploration within our District or our economies of scale lower Development Program pays off in costs and improve economic a big way. Taken together, we returns. We see this district as have a variety of organic growth being capable of producing opportunities at various stages Meeting the challenges in South America Barrick’s premier South American operation, the Pierina Mine in Peru, was the Company’s second-largest cash flow generator – producing over 900,000 ounces of gold at cash costs of $40 per ounce in 2001 and in the process setting property records. A development plan is underway for our Veladero project, part of the Pascua-Lama/Veladero district, newly unified with the Homestake merger into a single, 25 million-ounce district straddling the Chile/Argentina border. It ranks as one of the largest undeveloped gold districts in the world. The development of Veladero and Pascua- Lama, as well as advanced-stage exploration projects in Peru, have the potential to provide Barrick with the ability to create substantial value through its South American properties. South American Contribution to Production – 2001 South American Contribution to Reserves – 2001 17% 34% “…in today’s time of change, controlling costs is the only constant.” 4 1 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B of development. They offer the reserves averaging over an ounce of potential for significant growth in gold and 55 ounces of silver per ton. earnings and cash flow and improved Homestake also brought Barrick the return on equity, as these projects Hemlo and Round Mountain joint have lower cash and total production ventures in Ontario and Nevada, costs than our current asset base. respectively. Both are good, solid low-cost producers. THE VALUE OF HOMESTAKE In Australia, Homestake’s holdings The organic growth opportunities comprised a group of quality, low- I’ve outlined are just one way we’re cost mines capable of generating building value at Barrick. For another, about a million ounces of gold consider the Homestake merger. at $186 per ounce: half of the To begin with, Homestake was Kalgoorlie Super Pit, Australia’s a strong fit in terms of corporate largest gold mine, and three mines culture. As a company that was both that make up the Yilgarn Properties. value- and values-driven, Homestake On the administration front, we shared Barrick’s commitment to have more than achieved our original corporate responsibility. Our estimate of administration and common emphasis on worker safety, financial synergies, with $60 million environmental responsibility and in after-tax savings built into the community building is a calling card 2002 plan. We foresee achieving this wherever we operate in the world. amount and more on a sustainable And that cultural fit was matched basis going forward – and beyond by the compatibility of our assets that, we see additional benefits on and operations. When we looked at the operational side. Homestake, we saw an opportunity Case in point: with the Homestake to increase production by 50 percent merger, Barrick acquired 20 million at the same low costs by issuing ounces of future production. Our 35 percent more stock, which goal is to create, on a per ounce we believe will lead to growth in basis, about $100 of additional earnings and cash flow per share profit from this asset base. Here’s and improve our return on equity. how we plan to do it: Consider that the merger • Of that $100 per ounce profit, one- brought together Barrick’s three third will come from finance and world-class assets – Goldstrike, administration cost savings. That’s Pierina and Bulyanhulu – with five our $60 million in synergies new Homestake properties. spread across a little less than In North America, they include: 2 million ounces of production, Eskay Creek, a truly premier property or about $33 per ounce. in British Columbia, with high-grade Record speed in Africa African Contribution to Production – 2001 4% In Africa, Barrick’s newest mine is Bulyanhulu in Tanzania, where gold reserves have increased from 3.6 million to 12 million ounces in less than three years. Between April and year’s end, Bulyanhulu produced more than 240,000 ounces of gold at $197 per ounce. In addition, Barrick is pursuing the largest African Contribution to Reserves – 2001 15% early-stage exploration program in Company history in Tanzania. Beyond Bulyanhulu, Barrick holds the largest land position in the Lake Victoria goldfields, one of the top areas of the world for major new discoveries. With reserves expanding at Bulyanhulu, a development plan underway at the Tulawaka property, and ongoing exploration in the region, the Company has many opportunities to create value through its Tanzanian asset base. “Barrick’s edge is an asset you won’t find in a line-item on our balance sheet: the passion we bring to the work we do.” 6 1 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B • Another one-third of that $100 the properties’ proximity to our we expect to achieve from the existing strong management revenue side, through a premium teams and infrastructure. of about $30 to $35 per ounce • Execute asset swaps. As our over spot gold prices – well Chairman Peter Munk notes in his below our historical average of letter, consolidation is a positive $68 per ounce. for this industry. Asset swaps are • We plan to get the remaining one way to put assets back in the third from operational synergies. natural owner’s hands, creating We see opportunities to expand real value for all companies. production, reduce costs, • Enter into larger corporate consolidate joint ventures, leverage transactions – ones that are our existing infrastructure and more easily digested by a larger achieve capital and operating cost company like Barrick, given the savings – particularly at the unified liquidity of our shares and the Pascua-Lama/Veladero district – strength of our balance sheet. to create additional profits, on the order of about $30 per ounce over CONTROLLING COSTS the life of the properties. Now, in addition to the opportunities I’ve outlined, I want to underscore a THE “ENABLER EFFECT” focus common to all our properties. The Homestake merger is what I call And that’s our conviction that when an “enabler transaction”: one that you can’t control where price is going, doesn’t just add attractive assets, but you must concentrate on what you can also strengthens our options to carry control. And in today’s time of change, out other accretive transactions. controlling costs is the only constant. We’re exploring the potential to: Controlling costs creates value. • Consolidate some of the three At Goldstrike, for instance, where joint ventures in which Homestake we’ve reached reserve grade in the was engaged, with a view to normal course of mining, the grade gaining the value-creation benefits being processed today is half what it of having one owner/operator. was five years ago. Yet costs are only • Pursue individual property up $8 per ounce, from $184 to $192 transactions we call “add-ons”, over those five years, excluding power such as acquiring deposits or cost increases, which no company mines close to our existing assets. can control. In fact, across all our These are financially accretive operations, we’ve been able to cut transactions made possible by unit costs by 25 percent over the Making the leap to Australia In Australia, our operations produced over 900,000 ounces at a cash cost of $186 per ounce in 2001. As well as adding Homestake’s Australian assets at Kalgoorlie and the Yilgarn district, the merger gives the Company a significant portfolio of exploration projects, the most advanced of which is the nearly 3 million-ounce Cowal project, where work on an updated development plan is now underway. The Company’s focus in 2002 will be on creating value through increased production and reserves at key Australian assets, and pursuing early-stage exploration programs. Australian Contribution to Production – 2001 Australian Contribution to Reserves – 2001 15% 14% “…our focus is not on producing the most ounces, but rather the most profitable ounces. Our yardstick for success is strong, consistent financial returns.” 8 1 S R E D L O H E R A H S O T R E T T E L 1 0 0 2 T R O P E R L A U N N A K C I R R A B past five years. That’s a tribute to I’m talking about the level of our Chief Operating Officer, John conviction and commitment at Barrick, Carrington, and his team of what the passion we bring to the work we I’d argue are the most talented do. That’s our edge – the real reason mine managers in this industry. Barrick is built to last. Another example: during the And yet the thing that really Homestake integration, we tasked an inspires me isn’t just that we’re Operations Review Team to visit all built to last, but that Barrick’s built eight of our major properties, with an to grow – ready to turn our assets eye toward increasing production and and opportunities into value for lowering costs. The opportunities they our shareholders. uncovered are significant, and we’ll be Looking out through 2002 working with our management teams and beyond, we not only have at each mine throughout 2002 to opportunities for internal growth, build those benefits into our plans. given our strong balance sheet, steady We’ve also streamlined our operating cash flows and diversified asset base, structure, added significant bench but we’re also well positioned to strength, and established some key participate in the continuing industry new positions in the Company. In each consolidation – whether through joint case, I’m confident the steps we’ve ventures, or property or company taken will greatly enhance our ability acquisitions. In short, we’ve got a to take our unit costs even lower. strategy in place that gives us BUILT TO GROW market, plus the flexibility we need to In these few pages, whether it’s turn opportunity to advantage. considerable strength in a changing the strong and predictable revenue generated through our Premium Gold Sales Program, the promise of our property portfolio, or the enabler effect provided by the Homestake R A N D A L L O L I P H A N T merger, I’ve mentioned many of the President and attributes Barrick brings to bear on Chief Executive Officer the opportunities around us. I want March 8, 2002 to close by citing an attribute you won’t find in a line-item on our balance sheet: 2001 Objectives (pre-merger) Results 1 Smooth start-up of Bulyanhulu and Rodeo, which will contribute to • Combined Barrick/Homestake produced 6.1 million ounces, of which Barrick’s operations produced 3.74 million – marginally lower than plan, an estimated 3.8 million ounces due primarily to lower production from El Indio. of total production. 2 Maintain low costs of $156 per ounce. • Combined Barrick/Homestake total cash costs were $162 per ounce, with Barrick’s operations totaling $159 per ounce – higher than plan due to an unbudgeted power increase in Nevada, and higher costs at El Indio, which closed in February 2002. 3 Achieve earnings of $0.70 to $0.75 cents per share. • The parameters for comparing earnings performance against targets changed with the Homestake merger and the subsequent conversion to US GAAP for financial reporting purposes. • Barrick’s reported earnings of $0.46 per share (before merger-related charges) reflect the merger and the conversion to US GAAP. • Barrick’s pre-merger earnings were lower than plan ($0.65 per share under Canadian GAAP) primarily due to higher power and amortization costs at Goldstrike. • 2001 earnings don’t reflect expected merger-driven financial synergies of $60 million after tax and operating improvements. 4 Continue work on phased expansion of Bulyanhulu and expansion of reserves and • Expansion into the East Zone began in the second quarter of 2001, while optimization plans for the current reserves are scheduled for completion in the first half of 2002. Reserves expanded 20% to 12 million resources. ounces after producing 242,000 ounces in the Mine’s first year. 5 Pursue disciplined acquisitions. • Merged with Homestake Mining Company – announced in June and completed in December. • Homestake brings a low-cost reserve base and strong balance sheet, similar to Barrick. • Announced anticipated financial synergies of $60 million annually. • Opportunities to increase production and lower costs were identified at most operations, which the operating group will work to realize in 2002-2003. 2002 Objectives than $170 per ounce. 1 Produce 5.7 million ounces of gold at costs of less 2 Implement opportunities at each of the Company’s 3 Advance development plans at the following mines to maximize operating contributions. • Veladero (Argentina) properties: 4 Increase reserves at development projects, as well as bring advanced-stage exploration projects to reserve status. 5 Pursue disciplined acquisitions and add-on transactions, building off of the larger, global presence of the new Barrick. • Cowal (Australia) • Bulyanhulu (Tanzania) • Tulawaka (Tanzania) 0 2 Y T I L I B I S N O P S E R E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B Corporate Responsibility “Barrick’s reputation rests on responsibility. Good corporate citizenship is a calling card that precedes us wherever opportunities might arise in the world.” – Peter Munk THE BARRICK WAY universities. We not only strengthen Corporate responsibility belongs wherever we begins at home and operate. For Barrick, this is not an communities, we become part of their fabric. You can see this in the Round Mountain employees and their families in Nevada who run the afterthought; it’s a guiding principle local fire and ambulance services on – a single standard of excellence a volunteer basis. You can see this we apply at each of our operations in the Plutonic Mine donation that around the world. helps keep the Royal Flying Doctor Service serving remote communities Millwright Chico Bob was the first COMMUNITY BUILDING in the Australian outback. You graduate of an apprenticeship Our experience has shown that can see it at the Eskay Creek Mine program at the Eskay Creek Mine. community building is most effective in British Columbia, which has when it is tailored to meet local achieved success largely due needs and priorities as defined to strong relationships with all by the communities themselves. stakeholders, including the local It takes both financial and human Tahltan communities. involvement to make a real difference. The Goldstrike model – for more That’s why our policy is to donate than a decade, Barrick’s flagship 1 percent of annual pre-tax income Goldstrike Property in Nevada, home to community causes, like the to the Betze-Post and Meikle mines, donation by Australian operations has been an emblem of the that sent a Western Australian team Company’s commitment to of aboriginal students to attend the community building. Community contributions include national aboriginal student games • Barrick operations have donated support for youth sports teams, last year – where they won the more than $11 million over the last like the Western Australian team team title; or the support that our decade to Nevada communities who won the title at the national operations extend to health care and and charities. aboriginal student games last year. youth programs, sports teams and “…the fact of the matter is, corporate responsibility isn’t all about altruism: good citizenship is good business. It pays dividends – economically and socially, for all concerned.” – Randall Oliphant • Goldstrike maintains a “Buy model at our operations around the Nevada First” policy and every world. Near the Pierina Mine in Peru, year purchases more than which began production in 1998, $200 million worth of goods and Barrick has funded new health care services from Nevada businesses. facilities, built and improved roads, • Barrick’s buying power in constructed new drinking water the state supports more than and irrigation systems, provided 14,000 direct and indirect transportation for schoolchildren jobs, and contributes about as well as desks for them to work $1.5 billion every year to on. The Company also supports Nevada’s Gross State Product. training programs in crop rotation In an extension of best-practices and animal husbandry for farmers, business philosophy to its community as well as training in occupational impact, we have applied the Goldstrike skills for local entrepreneurs. Communities around the Bulyanhulu Mine in Tanzania benefit from new health care facilities which serve both employees and local villagers. Dotto Albinus is a nurse on the medical team at the mine clinic, which treats about 1,500 patients per month. THE BARRICK WAY AT BULYANHULU Barrick embraces its community- Training and Economic It also partnered with the Tanzania building responsibilities at each Development Electric Supply Company, investing new mine it brings on line. At the Barrick’s operating subsidiary has more than $15 million to bring Bulyanhulu Mine in Tanzania, invested more than $6 million in electric power to the region, as which began production in the job training for Tanzanians. The well as investing in the upgrade second quarter of 2001, Barrick’s focus is not solely on preparing of regional roads. impact is already significant. the mining workforce; the Company Employment Impact Barrick’s operating subsidiary at Bulyanhulu employs more than also provides training for local entrepreneurs in sustainable jobs unrelated to mining. Health Care As well as building new medical facilities for community use and refurbishing existing ones, the 1,000 men and women directly Community Infrastructure Company is funding a sustainable and 600 more as contractors, the Barrick’s Bulyanhulu subsidiary program of health promotion, overwhelming majority drawn built a 47 km water pipeline from disease prevention and improved from the Tanzanian community. Lake Victoria to the mine, which community health in cooperation also meets the water needs of with a respected African non- 30,000 villagers along the route. governmental organization. 1 2 Y T I L I B I S N O P S E R E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B “Our sense of environmental responsibility is not just an afterthought – it’s integral to our approach: an extension of Barrick’s ‘built to last’ philosophy to the communities around our sites – as evidence that at Barrick we focus not simply on value, but on values as well.” – Randall Oliphant Our focus is on long-term benefits at Bulyanhulu, Barrick is building for the community – not just 600 homes for employees and Company employees. For example, providing interest-free loans for Barrick has built the Robert M. Smith their purchase. School, named after the Company’s former president, to provide children ENVIRONMENTAL LEADERSHIP living near Pierina access to quality Wherever Barrick is operating or education, from kindergarten developing mines, the Company through secondary school. seeks to meet or surpass all CARING FOR EMPLOYEES guidelines. Barrick’s goal is to AND THEIR FAMILIES minimize the effects of mining, environmental regulations and The Robert M. Smith Scholarship Program This program offers all children of Barrick employees funding for post- secondary education. Since its inception in 1986, the Program has awarded more than 4,600 scholar- Local children receive an education ships worth about $9.6 million. and restore natural ecosystems to a condition that equals or surpasses that which existed prior to project development. Whether it be the Cowal Project in New South Wales, or the Pierina Mine in Peru, the process begins with a comprehensive Environmental Impact Assessment that not only documents the local 2 2 Y T I L I B I S N O P S E R E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B close to home, thanks to the Robert M. Smith School, which Barrick built to serve communities near the Pierina Mine in Peru. Housing and Home Ownership plants, animals and cultural/archeo- Believing that home ownership is a logical resources, but also spells key to community stability, Barrick out how they will be protected provides housing support for and preserved for the mine’s life employees. In the Elko area near and beyond. Goldstrike, Barrick has built nearly 700 homes at a cost of $44 million, providing mortgage guarantees to help many employees buy their first homes. At the Pierina Mine, Barrick has constructed a housing complex with modern amenities and sports facilities for employee families, while Protecting Nature Barrick operations include a number of programs to safeguard plants and animals in the vicinity of minesites. At the newly opened Bulyanhulu Mine, Barrick has developed an Environmental Management System and commenced training in environ- with a combined total of over mental awareness for all employees. 50 environmental awards and Barrick maintains a nursery on-site commendations, including the to grow native trees for landscaping prestigious US President’s Council and revegetative purposes. for Environmental Quality. Land Reclamation Wherever possible, Barrick conducts land reclamation concurrently with mining operations – with the reclamation process continuing after a property’s mine life is over. Site restoration includes contouring the land, replacing topsoil, and seeding to re-establish the native flora. Recent awards include: • 2001 Golden Gecko Award, presented to Australian operations by the West Australian Government for environmental excellence in the resource industry; plus a Certificate of Merit, presented to the Plutonic Mine for excellence in environmental management. Water Management • 2001 Excellence in Mine Barrick has high standards for Reclamation Award, presented maintaining the quality of water to the Bullfrog Mine in Nevada it uses and releases into the by the state environmental and environment. Water waste and wildlife departments for post- conservation measures in use at mining land use. Bulyanhulu sustain that property’s • 2001 Excellence in Mine Recla- “zero-effluent discharge” policy, and mation Award, presented to the are reducing water consumption for Round Mountain, Manhattan some processes by 50 percent. minesite for recontouring and Cultural Preservation Barrick also works to protect cultural and archeological resources. At the Goldstrike Property, Barrick completed a three-year, $2.5 million archeological field investigation of potential cultural resource sites as part of an effort to identify and protect them. In Peru, environmental staff at Pierina have located and protected cultural artifacts, including ceremonial offering pots dating back to 300 A.D. revegetation. • 2000 Excellence in Mine Reclamation Award, presented to Goldstrike by the Nevada Division of Minerals in recognition of an innovative reclamation design. We believe that good citizenship is more than a matter of corporate altruism. In a global environment where companies’ reputations precede them, opening doors for some that remain closed to Environmental Awards others, good citizenship is good Both Barrick and Homestake have business as well. strong environmental records, 3 2 Y T I L I B I S N O P S E R E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B Environmental staff at the Pierina Mine in Peru check surface runoff for quality and flow. Careful monitoring ensures the highest standards for both surface and underground water. Reclamation proceeds concurrently with mining. At the Betze-Post Mine, in Nevada, Environmental Engineer Kevin Kinsella inspects the growth of native plants seeded on reclaimed land that has been recontoured to blend more naturally into the surrounding landscape. C O N T E N T S Management’s Discussion and Analysis.......25 Supplemental Information...........................92 Management’s Responsibility ......................57 Corporate Governance Auditors’ Report..........................................57 and Committees ..........................................93 Financial Statements...................................58 Board of Directors Notes to Financial Statements ....................62 Gold Mineral Reserves and Mineral Resources ................................88 and Officers.................................................94 Shareholder Information .............................96 Corporate Information ................................98 North America South America Africa Australia Management’s Discussion and Analysis of Financial and Operating Results Our financial objectives are to our earnings and cash flow create value by maximizing per share and return on equity while OVERVIEW For the year ended December 31, 2001, we produced 6.1 million ounces of gold at total cash costs of $162(1) per ounce – with maintaining a strong balance sheet. the recently acquired Homestake Mining We use four operating strategies Company (“Homestake”) mines to achieve our objectives: Increasing contributing 2.4 million ounces at cash production and increasing reserves costs of $167 per ounce to the 2001 total – through organic growth and selective compared to 5.95 million ounces of gold acquisitions; lowering unit costs to at $155 per ounce in 2000. We benefited improve operating contribution; and from record production and record low increasing our revenue through our costs at Pierina, Round Mountain and Premium Gold Sales Program. from the Yilgarn operations and strong A discussion and analysis of the contributions from Goldstrike and Eskay factors contributing to the results of Creek, as well as from initial production at operations is presented below. The our newest mine, Bulyanhulu in Tanzania. accompanying consolidated financial Net income, before one-time merger- statements and related notes, which are related costs(1) ($117 million) and a litigation presented in accordance with United charge ($59 million) taken in respect of an States generally accepted accounting adverse judgement received in a litigation principles (“US GAAP”), together with the initiated several years ago against following information, are intended to Homestake, was $245 million ($0.46 per provide investors with a reasonable basis share) compared to $168 million ($0.32 per for assessing our operations, but should share), before provision for mining assets not serve as the only basis for predicting in 2000. After merger-related charges our future performance. and provision for mining assets, net income was $96 million ($0.18 per share), compared to a loss of $1,189 million ($2.22 per share) in 2000. Operating cash flows were $721 million ($1.35 per share) for 2001 versus $940 million ($1.76 per share) for 2000. 1. Refer to pages 55 and 56 for an explanation of non-GAAP performance measures. 5 2 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued We completed the merger with The Financial and Administrative Homestake, an international gold mining Integration Team has estimated the company with operating mines in the annual merger-related cost savings at United States, Canada, Chile, and Australia $60 million in 2002, comprised of on December 14, 2001. Our Company is $27 million in administration, $13 million expected to be one of the world’s largest in exploration and $20 million in taxes, gold producers, with among the lowest and we anticipate further cost savings cash costs of any major producer and with in 2003 and 2004. A second integration the industry’s strongest balance sheet. team, focused on operations, undertook We issued approximately 140 million a comprehensive assessment of the shares to acquire Homestake at a total potential to expand production and cost value of $2.3 billion. savings opportunities at the combined The merger has been accounted for company’s properties on four continents. as a purchase under Canadian generally Some of the opportunities identified in accepted accounting principles, and as a this exercise are reflected in the 2002 pooling-of-interests for US GAAP purposes. mine operating plans, while mine Following the merger, consolidated management looks to implement financial statements have been prepared additional opportunities this year and under US GAAP for communication with next. A third integration team, tasked shareholders and for filing with securities with examining development opportunities, regulatory authorities. As a result, fourth is assessing synergies at the Pascua- quarter and full year 2001 financial Lama/Veladero properties as a unified statements have been prepared under mining district, with an emphasis on US GAAP, showing all prior periods’ greater speed in development, as well earnings, cash flow and financial positions as reduced capital and operating as if the two companies had always been expenditures. combined. All production, operating and balance sheet information referred to below reflects such restatement. 6 2 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Global – Results (US GAAP basis) Gold production – ounces (thousands) 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 Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) 2000 5,950 334 143 14 (11) 146 8 1 155 79 5 239 179 710 79.3 $ $ $ $ $ 2001 6,124 317 158 7 (10) 155 6 1 162 76 9 247 155 586 82.3 $ $ $ $ $ 2002E 5,684 320(1) 175 1 (15) 161 6 - 167 83 4 254 153 351 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. GOLD SALES production delivered into the Program Revenue for 2001 reached $1,989 million during the year. The balance of the on gold sales of 6.3 million ounces, ounces sold – principally Homestake’s compared with $1,936 million on gold production – were sold at an average sales of 5.8 million ounces in 2000. The price of $277 per ounce in 2001. Overall, 154,000-ounce higher gold sales than we realized an average price of $317 per production in 2001 represents the impact ounce, $46 higher than the average of ounces produced in 2000 but not sold spot price for the year, generating an until 2001. The higher revenue resulted additional $289 million in revenue. The from an 8 percent increase in gold sales, decline in our average realized price is partially offset by a $17 per ounce, or due to lower spot gold prices, which have 5 percent, decline in the average realized declined from nearly $400 per ounce in price. For the year, we realized a $70 per the mid-1990s to a 22-year-low average ounce premium over the average spot of $271 in 2001, with a resulting impact price of $271 on the 61 percent of on the realized prices achievable under production delivered into our Premium our forward sales contracts. Gold Sales Program. This compares to a realized price of $360 in 2000 and a premium of $84 on the 63 percent of 7 2 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued The future gold production committed This shift in our delivery schedule under spot deferred contracts in our parallels a shift in the strategic goals Premium Gold Sales Program totaled of our hedging program. Barrick began 18.2 million ounces at December 31, 2001. hedging 14 years ago for two reasons. This represents approximately 22 percent First, the environment allowed producers of proven and probable reserves, deliverable to lock in higher prices and lower risk Contribution to Production by Continent - 2001 12% over the next 15 years at an average price by borrowing gold from central banks. 15% 3% 15% 55% North America South America Other Properties Africa Australia Contribution to Reserves by Continent - 2001 14% 15% 37% of $345 per ounce at the scheduled Second, when we established our forward delivery dates. Fifty percent of planned sales program in 1987, we were a smaller, production in 2002 is committed at an higher cost producer, embarking on average price of $365 per ounce. The what was at the time one of the largest balance of 2002 production is expected development projects in the history of the to be sold at prevailing spot gold prices. gold industry – The Goldstrike Property. If gold prices, interest rates and With the initial development of lease rates remain at current levels Goldstrike and other capital projects ($290 spot gold), we would anticipate behind us, we can now adjust our Program that our realized gold price would be to today’s needs. Our goal going forward in the $330-$340 per ounce range over is to set a minimum floor price to ensure the longer term. sufficient cash flow to cover cash As a result of the Homestake merger, requirements for the year, including the current price environment, and the capital expenditures. Combined with our Company’s overall financial strength, low-cost production, our new forward 34% we have reassessed the approach that sales approach gives us security and guides our Premium Gold Sales Program. predictability, plus benefits that, if gold While we have currently retained the prices strengthen, should go straight to number of ounces in the Program at our bottom line. North America South America Africa Australia roughly 18 million ounces, or 22 per cent of reserves, we will adjust our delivery schedule. Whereas in 2001, as a result of the merger with Homestake, we delivered 61 per cent of our combined production into the Premium Gold Sales Program, we expect to deliver 50 per cent of production into the Program going forward. 8 2 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Review of Operations by Geographic Area North America South America Africa Australia F or the year 2001, we reported reclamation, of $1,080 million, total operating costs, including compared with $950 million for the prior Bulyanhulu have resulted in higher cash costs per ounce compared to the prior year. Our Other Properties include seven mines, six of which are in various stages year. On a per ounce basis, total cash costs of closure. One of the mines was closed in for the year were $162, compared to 2001 (Homestake), with the other five $155 per ounce for 2000. With the scheduled to close in 2002 (El Indio, continued weakness in gold prices, all of Bousquet, McLaughlin, Ruby Hill and our mines have focused on reducing costs Agua de la Falda). With the closure of under their control across all areas of their these six mines and several new projects operation, including unit mining, not expected to contribute to production processing and administrative costs per until late 2004, we anticipate marginally ton. At the same time, higher power costs lower production in 2003, excluding the and lower grades at Goldstrike and lower possibility of adding production through a recovery rates during start-up at property or corporate transaction. North America In 2001, our North American operations produced 3,348,013 ounces of gold, 55 percent of the Company’s total production, at an average cash cost of GOLDSTRIKE PROPERTY (NEVADA) The Goldstrike Property produced 2,262,663 ounces of gold in 2001, an $179 per ounce compared to 3,424,853 8 percent decrease compared to the ounces of gold at cash costs of $157 per Property’s record 2000 production. The ounce in 2000. Round Mountain (Nevada) lower production was largely due to an reported record results, while Eskay Creek anticipated 22 percent reduction in grades (British Columbia) produced its second- processed and marginally lower recovery best results in the mine’s history. The rates, partially offset by higher throughput Goldstrike Property again contributed solid at the process facilities with the results, despite higher power costs and completion of a new ball mill in the lower processed ore grades. autoclave facilities. At $193 per ounce, 9 2 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B NORTH AMERICAN PROPERTIES Goldstrike, Nevada Betze-Post Meikle Round Mountain, Nevada Eskay Creek, British Columbia Hemlo, Ontario Holt-McDermott, Ontario 0 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued North American Contribution to Production – 2001 North America – Results (US GAAP basis) Gold production – ounces (thousands) Gold sales per ounce Production costs per ounce Direct mining costs Applied (deferred stripping) By-product credits Cash operating costs per ounce Royalties 55% Production taxes Total cash costs per ounce Amortization Reclamation Total production costs per ounce Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) North American Contribution to Reserves – 2001 34% 2000 3,425 334 126 30 (11) 145 11 1 157 60 3 220 177 296 32.0 $ $ $ $ $ 2001 3,348 317 162 18 (10) 170 8 1 179 60 5 244 138 289 27.2 $ $ $ $ $ 2002E 3,223 320 (1) 199 (3) (20) 176 7 1 184 74 5 263 136 184 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. total cash costs for 2001 were higher anticipated 15 percent reduction in ore than the prior year’s $169 per ounce, due grades processed. The Property is also largely to the lower grades processed and budgeting a power cost increase – the an $8 per ounce increase in power costs. third in the last two years – totaling The Goldstrike Property has essentially $10 million, or $5 per ounce in 2002. moved to reserve grade in 2002, Overall, power costs have increased increasing throughput to maintain its $27 million or $13 per ounce since the consistent 2 million-ounce production power crisis began in the Western United level. For 2002, the Property is expecting States. With the power crisis subsiding, to produce 2.1 million ounces of gold, we anticipate power costs to decrease 7 percent lower than 2001, while total over the next several years. cash costs are expected to rise 6 percent to $205 per ounce. Through productivity BETZE-POST MINE improvements, which are expected to The Betze-Post Mine produced 1,549,975 lead to lower unit mining, processing and ounces of gold for the year, 6 percent administration costs, the Property expects lower than the previous year, as mining to be able to partially offset the of high-grade ore in the 7th West Layback was completed in the second quarter Griffin and to the earlier than expected of 2001. Total cash costs were $215 per access to Rodeo development ore. ounce, compared to $195 in 2000. Proven and probable reserves Recovery rates were 2.4 percent lower decreased to 3.9 million ounces from than the prior year, due to a significant 6.5 million in 2000, due to production amount of transitional ore (1.5 million tons) during the year, reclassification of certain processed primarily in the third quarter. ounces to resources and the removal of The Mine is expected to experience other ounces. While we carefully prepare lower recovery rates of approximately reserve calculations, such calculations 80 percent on the planned 2 million tons are by their nature estimates. Our mining of transitional ore to be encountered over experience last year caused us to reassess the next two years. Proven and probable the assumptions we used to estimate gold reserves decreased to 16.4 million reserves at the mine. This resulted in ounces from 18 million ounces in 2000 due the reclassification of 745,000 ounces to production during the year. With the of gold from reserves to resources. We Property focus on high-grade underground are confident that this amount of material targets, the Mine does not have an active will be brought back into reserves through exploration program around the pit. ongoing infill drilling and in-mine The Mine is expected to produce about exploration. In addition, because of our 1.4 million ounces of gold in 2002 at total inability to economically mine some of cash costs of $220 per ounce. The lower the smaller more difficult areas of the ore production and higher costs relate to body, we removed 945,000 ounces from 20 percent lower grades processed, reserves. These reserve reclassifications partially offset by lower unit mining costs, in no way reduce the potential for adding with shorter haulage costs as backfilling of ounces to the underground, where we the eastern portion of the pit continues. still see potential. Our 2001 exploration MEIKLE MINE program identified new deep targets in areas not drilled in the past, some of which The Meikle Mine produced 712,688 ounces we have begun drilling with favorable of gold for the year, 7 percent higher than results, particularly just north of Meikle plan compared to production of 805,718 at Banshee. ounces in 2000. Total cash costs were Production for 2002 is expected to $147 per ounce, compared to $117 per ounce total 700,000 ounces. Total cash costs in 2000, with higher costs attributable are expected to be $173 per ounce, with to planned mining of lower grade ore the higher costs related to a decrease of in Meikle, more low-grade development 14 percent in ore grades processed, an ore and higher training costs. Tons mined increase of 18 percent in tons processed surpassed plan by 13 percent in 2001, due and higher mining costs. to an increase in development ore from 1 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 2 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Mine Betze Post Meikle Goldstrike Total Round Mountain* Eskay Creek Hemlo* Holt-McDermott 2002E 2001 2000 *Barrick’s share. ROUND MOUNTAIN (NEVADA) total cash cost of $202 per ounce in 2000. Round Mountain joint venture contributed The record production and costs were due record production of 373,475 ounces of to higher gold grades through the mill, gold to our 50 percent account in 2001, as well as to the leach pad. In addition, at a total cash cost of $187 per ounce, the run-of-mine leach pad contributed compared to 243,734 ounces of gold at 5 percent more gold than in 2000. Proven Year 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 Production (OOOs oz) Total cash costs (US$/oz) Total production costs (US$/oz) Capital spending (US$ millions) Mineral reserves (000s oz) 1,400 1,550 1,646 700 713 806 2,100 2,263 2,452 363 373 244 366 321 333 304 307 305 90 84 91 220 215 195 173 147 117 205 193 169 198 187 202 51 49 19 192 196 190 148 165 148 270 267 247 308 221 181 283 253 225 263 249 272 176 176 146 232 232 225 259 258 254 129 161 196 29 90 80 158 251 276 7 15 3 5 10 6 8 6 5 6 7 6 - 16,433 18,000 - 3,946 6,451 - 20,379 24,451 - 2,245 2,609 - 1,775 2,118 - 2,517 2,397 - 293 406 and probable reserves decreased from For 2002, production is expected to rise 2.6 million to 2.2 million ounces, as only a to 366,000 ounces of gold and 16 million small portion of production was replaced ounces of silver, at total cash costs of during the year. $51 per ounce, despite marginally lower For 2002, the Mine is expected to gold and silver grades. The Mine has an contribute 363,000 ounces of gold to our extensive exploration program set to begin account at total cash costs of $198 per in 2002 to follow up on encouraging drill ounce. The marginally lower production results from the fourth quarter of 2001. and higher costs are primarily due to lower production from the run-of-mine HEMLO (ONTARIO) leach pad, which produces about half of Hemlo is a joint venture of the David Bell the Mine’s production. The Mine has a and Williams underground mines and $2.5 million exploration program planned the Williams open pit, of which we own to follow up on the Gold Hill target, where a 50 percent interest. In 2001, Hemlo wide space drilling identified prospective produced 307,514 ounces of gold to our opportunities in 2000. account, at total cash costs of $196 per ESKAY CREEK (BRITISH COLUMBIA) ounce. In 2000, the joint venture produced 304,882 ounces of gold to our account, at total cash costs of $190 per ounce. The Eskay Creek produced 320,784 ounces of lower costs in 2000 were due to fewer gold and 15.5 million ounces of silver in and higher-grade tons of ore processed 2001 at a total cash cost of $49 per ounce to produce essentially the same number of gold. The low cash costs are attributable of ounces as in 2001. Increased production to the richness of the ore body. 2001 was from the Williams pit also contributed the second best year in the Mine’s seven- to Hemlo’s strong results. Exploration year history. Productivity improvement in 2001 added 900,000 ounces – before in the underground, new equipment production (450,000 ounces to our purchases and relaxing of ore blending account) to proven and probable reserves, constraints, which impact mine sequencing, primarily from the expansion of reserves led to an 8 percent improvement in tons in the Williams pit. mined in 2001. Eskay Creek’s mining and For 2002, production to our account processing rates are expected to increase is expected to total 304,000 ounces of an additional 12 percent in 2002, benefiting gold at a total cash cost of $192 per ounce. from a full year under the operating The lower cash costs are due to improved changes instituted in the second half recovery rates and throughput from the of 2001. Proven and probable reserves new grinding mill which was completed decreased from 2.1 million to 1.8 million in the first quarter of 2002, offsetting a ounces due to production during the year. marginal decrease in grades processed Exploration of the down dip potential is and the additional cost of operating the scheduled to begin in the second half new grinding mill. of 2002. 3 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B SOUTH AMERICAN PROPERTIES Pierina, Peru Pascua-Lama, Chile Veladero, Argentina 4 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B South America Our South American operations consist of our second-largest cash flow generator, the low- cost Pierina Mine, which set property PIERINA PROPERTY (PERU) The Pierina Mine reported record production of 911,076 ounces of gold in 2001, at the lowest costs in the Mine’s records for production and costs in 2001, history of $40 per ounce. In 2000, Pierina’s and our largest development project, the production totaled 821,614 ounces at a total Pascua-Lama and Veladero district, which cash cost of $43 per ounce. Unit operating straddles the Chilean and Argentinean costs – particularly administration, labor border. We also have significant exploration and reagent costs – continue to decrease programs in Peru, and to a lesser extent, from earlier life-of-mine estimates. In 2001, in Chile and Argentina, where we believe 220,000 ounces were added to proven and prospects for discovery of large gold probable reserves through an infill-drilling deposits are good. program. At year-end 2001, proven and probable reserves stood at 4.7 million ounces compared to 5.7 million ounces in 2000. The 2002 exploration program will South America – Results (US GAAP basis) Gold production – ounces (thousands) 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 Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) 2000 822 334 76 (22) (11) 43 - - 43 207 7 257 291 156 26.4 $ $ $ $ $ 2001 911 317 65 (13) (12) 40 - - 40 187 8 235 277 96 30.1 $ $ $ $ $ 2002E 820 320 (1) 70 17 (10) 77 - - 77 180 11 268 243 63 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. follow up on targets located near surface PASCUA-LAMA AND VELADERO at the north end of the pit, as well as one PROJECT (CHILE/ARGENTINA) adjacent to the final wall of the south end Current work on the Pascua-Lama Project of the pit. In addition, in 2002, the Mine will is directed at investigating improvements finalize the optimization plan that began to infrastructure and process costs. On in 2001. The optimization plan consists of the process front, initial studies indicate revising mine plans, lowering waste haulage opportunities to lower the anticipated cycles, increasing processing rates and capital cost of developing the project. lowering administration costs with a goal We made the decision to postpone of increasing annual production by bringing construction start-up, based on current production forward, shortening the mine low gold and silver prices; however, life and lowering costs. optimization work on the development Pierina expects to produce 820,000 plan, as well as permitting, continues. ounces of gold in 2002, at a total cash cost The Company is evaluating unified of $77 per ounce. The higher costs reflect development opportunities made possible a 22 percent reduction in grades processed, by the merger with Homestake. Early a 23 percent increase in tons processed work suggests that both Pascua-Lama and higher applied stripping costs. We and Veladero will benefit in a variety of anticipate that production at the Mine will ways, in terms of capital and operating continue to decline in 2003 and beyond as cost savings. Immediate synergies processed ore grades, which are currently include the sharing of infrastructure, running 50 percent higher than reserve administration costs and background grade are set to decrease. Partially environmental work, as well as the offsetting the decline in ore grades is incorporation of our Filo Norte reserves the optimization plan designed to bring into the Veladero mine plan. production forward by increasing the The Veladero Project is currently half processing rate. In addition, the Mine has way through its 2001/2002 field season. been able to partially replace production Activities in 2001 consisted of over over the past two years and the 2002 50,000 meters of definition drilling to exploration program will follow up on expand proven and probable reserves targets identified in 2001. from 3.9 million to 8.4 million ounces for Canadian reporting purposes. Extensive metallurgical test work is underway, 5 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued South American Contribution to Production – 2001 17% South American Contribution to Reserves – 2001 6 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B 34% Mine Pierina which includes tunneling into the ore The attraction of the Veladero Project body for approximately 825 tons of ore is that with the lower capital cost and for test heap leaching on site, as well easier metallurgy than Pascua-Lama, as work for the environmental permits. the project appears to be capable of An updated feasibility study is currently generating solid rates of return at a gold underway with a view of bringing the price of $300 per ounce. Beyond that, project into proven and probable reserves we are now beginning to factor in the for US reporting purposes, which requires Argentinean currency devaluation to the more advanced feasibility work than is project economics for both Veladero and the case for Canadian reporting purposes. Pascua-Lama, which are costed in United The feasibility study envisions an open States dollars. pit mining operation with a two-stage In the right gold and silver price crushing circuit and conventional environment the Pascua-Lama/Veladero valley-fill heap leach, very similar to District has the capability to be a low- our Pierina Mine. Veladero could be cash-cost, long-life gold producing district the first phase of development of the that could provide us with significant consolidated district that extends along growth in production, earnings, and cash the Chilean/Argentinean border. flow in the future. Year 2002E 2001 2000 Production (OOOs oz) Total cash costs (US$/oz) Total production costs (US$/oz) Capital spending (US$ millions) Mineral reserves (000s oz) 820 911 822 77 40 43 268 235 257 24 27 49 - 4,748 5,655 AFRICAN PROPERTIES Bulyanhulu Tulawaka Kabanga Africa Tanzania (East Africa) represents our newest frontier, with the opening of our first African mine at Bulyanhulu in April 2001, as well as our of taking the resource to the 1 million- tonne-level. BULYANHULU PROPERTY large and active early stage exploration Our newest mine enjoyed an on-time program. We hold over 6,000 square start-up in April 2001, working at, or kilometers in the Lake Victoria goldfields better than, expectation in most areas. of northern Tanzania, one of the best Gold recovery rates provided the only exploration areas for major new discoveries. exception, running at 82 percent, In 2001, six areas underwent initial drill 7 percent below plan for most of the testing with promising results at a total year. Improvements during the second cost of $9 million. One of the factors half of the year led to recovery rates that makes Tanzania attractive from rising to 86 percent in December. The an exploration perspective is the lower Mine produced 241,575 ounces of gold exploration cost as a result of the at total cash costs of $197 per ounce. region’s flat, arid conditions. The 2002 Proven and probable reserves increased program will follow up drilling on targets for the third year in a row, rising initially tested last year, while completing 20 percent to 12 million ounces. a feasibility study for the Tulawaka Mining rates averaged almost 1,700 tons Property in the second half of 2002. per day, and unit-mining costs were on At the Kabanga nickel property, we plan. The shaft should reach its planned increased the resource by 50 percent depth and be fully equipped early in 2003, in 2001 to 600,000 tonnes of contained well ahead of the originally scheduled nickel, with the discovery of a new ore fourth quarter 2003 completion date. body. The 2002 program will follow up on last year’s program with the goal Mine* Bulyanhulu *Operations began in April 2001. Year 2002E 2001 2000 Production (OOOs oz) Total cash costs (US$/oz) Total production costs (US$/oz) Capital spending (US$ millions) Mineral reserves (000s oz) 362 242 - 173 197 - 265 295 - 56 153 203 - 12,009 10,015 7 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B 8 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued African Contribution to Production – 2001 4% Bulyanhulu’s process facilities operated completed in the second quarter of 2002, at 13 percent above forecast throughput at a cost of $7 million, and should provide levels for the year, while unit-processing a platform for additional reserve costs were lower than plan, due to the development to begin in mid-2002. higher throughput levels. The mill Preliminary engineering continues on the processed lower grade ore during the west and deep extensions of the ore body. second half of the year while the process As the ore body expands at depth and group worked on improving recovery along strike, Bulyanhulu’s development rates. Modifications to the gravity circuit team is focused on how best to develop were completed in December and this expanding reserve base. modifications to the flotation plant to For 2002, production is expected to increase the recovery rate to the design increase to 362,000 ounces of gold at rate of 89 percent are expected to be total cash costs of $173 per ounce, implemented in the first half of 2002 at benefiting from expected higher grades a cost of about $5 million. and recovery rates, particularly in the Development of an incline to access second half of the year. African Contribution to Reserves – 2001 the east ore zone is expected to be 15% Africa – Results (US GAAP basis) 2000 Gold production – ounces (thousands) 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 Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) $ $ $ $ $ - - - - - - - - - - - - - 203 10.0 2001 242 317 214 - (28) 186 11 - 197 97 1 295 120 153 12.0 $ $ $ $ $ 2002E 362 320(1) 182 - (17) 165 8 - 173 91 1 265 147 56 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. Australia W ith the Homestake merger providing two key assets – a 50 percent interest in the Kalgoorlie Super Pit, Australia’s largest PLUTONIC (WESTERN AUSTRALIA) Plutonic, the largest of the three Yilgarn District mines, consisting of both open pit and underground operations, produced gold mine, and three mines comprising 288,360 ounces of gold, a 14 percent the Yilgarn District – we now rank as the increase over 2000, at total cash costs second-largest gold producer in Australia. 16 percent lower than last year’s $166 per In addition, the merger adds a portfolio ounce. A higher open pit mining rate, of exploration properties in Australia, the higher gold grades from the underground most advanced of which is the Cowal and improved recovery rates – combined project, with 2.8 million ounces of proven with a favorable exchange rate – led to the and probable reserves and an updated higher production at lower cost. Proven and development plan underway. probable reserves increased 28 percent to 1.6 million ounces at 42 percent higher grades than the prior year, enhancing the Australia – Results (US GAAP basis) Gold production – ounces (thousands) 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 Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) 2000 876 334 190 1 (1) 190 5 - 195 42 5 242 139 49 9.3 $ $ $ $ $ 2001 902 317 181 (2) - 179 7 - 186 44 4 234 131 46 11.9 $ $ $ $ $ 2002E 939 320(1) 169 1 - 170 8 - 178 43 4 225 142 40 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. AUSTRALIAN PROPERTIES Yilgarn District Plutonic Darlot Lawlers Kalgoorlie Cowal 9 3 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 0 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B low-cost nature of the production profile DARLOT AND LAWLERS going forward. We view the exploration (WESTERN AUSTRALIA) potential of this Mine as high and will The Darlot Mine produced 125,024 ounces continue with a significant exploration of gold in 2001, similar to prior year program around the Mine in 2002. production, while total cash costs declined For 2002, production is expected to 10 percent to $173 per ounce. The Lawlers increase an additional 13 percent to Mine produced 103,915 ounces of gold at 325,000 ounces of gold, at total cash $191 per ounce, with production marginally costs of $156 per ounce. The higher higher and costs 11 percent lower than production and lower costs are primarily in 2000. Both mines lowered costs due due to the expanding higher-grade to the favorable exchange rates in 2001. underground operations. Proven and probable reserves at the two mines increased marginally to 1.85 million ounces, more than replacing production during the year. Mine Plutonic Darlot Lawlers Yilgarn District Total Kalgoorlie* *Barrick’s share. Year 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 2002E 2001 2000 Production (OOOs oz) Total cash costs (US$/oz) Total production costs (US$/oz) Capital spending (US$ millions) Mineral reserves (000s oz) 325 288 254 139 125 127 108 104 101 572 517 482 367 385 394 156 166 198 154 173 192 178 191 214 160 173 200 205 203 189 195 211 246 199 219 236 222 243 262 200 219 247 266 252 237 19 11 12 7 11 12 4 5 10 30 27 34 10 19 15 - 1,588 1,240 - 1,341 1,405 - 505 378 3,434 3,023 - 5,724 6,270 For 2002, Darlot expects to increase program increased the mineral production to 139,000 ounces at total cash resource by 60 percent. The 2002 costs of $154 per ounce, while Lawlers program will target conversion of the expects to increase production to 108,000 larger mineral resource to proven and ounces at total cash costs of $178 per probable reserves. ounce. The higher production and lower For 2002, we expect the Mine to cost are due to higher processing rates produce 734,000 ounces of gold, 367,000 and grades and lower unit cash costs at to the Company’s account, at total cash both of the mines. costs of $205 per ounce with marginally lower overall gold grades after the closing KALGOORLIE – SUPER PIT of the higher-grade underground (WESTERN AUSTRALIA) operation in 2001. The Kalgoorlie Super Pit produced Australian Contribution to Production – 2001 15% 768,725 ounces of gold, of which COWAL PROJECT 50 percent or 384,362 ounces were (NEW SOUTH WALES) Australian Contribution to Reserves – 2001 on our account, at total cash costs of We acquired the Cowal project through $203 per ounce. Production was the merger with Homestake, which had 14% marginally lower than in the prior year, acquired Cowal in the first quarter of while total cash costs were 7 percent 2001. In the latter part of 2001, we began higher. These results were due to a technical program, including drilling marginally lower grades in both the open and engineering studies to update the pit and underground, and higher unit feasibility study. At year-end, 2.8 million mining, processing and administration ounces were added to proven and costs than the previous year. Higher open probable reserves. The current mine plan pit costs were due to higher fuel costs and and process facilities have been designed lower productivity in areas around to produce approximately 250,000 ounces historical underground working voids. of gold per year. In 2002, we will continue Higher processing costs were due to with the program, including further higher maintenance costs and higher drilling, and test work to optimize the power and reagent costs. Proven and scope and economics of the project. probable reserves declined by more than 2001 production, while the exploration 1 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Other Properties O ther Properties include six mines in various stages of closure, as well as the small Marigold Mine. One of the mines was For 2002, the plan calls for Other Properties to produce 340,000 ounces of gold, 6 percent of total production, at an average total cash cost of $193 per 2 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B closed in 2001 (Homestake), with the ounce. By year-end 2002, all of the mines other five scheduled to close in 2002 in this group other than Marigold, which (El Indio, Bousquet, McLaughlin, Ruby Hill contributes about 30,000 ounces and Agua de la Falda). In 2001, Other per year, are expected to have ceased Properties produced 721,771 ounces of operations due to the depletion of gold, 12 percent of our production, at an reserves. As a result, our production average total cash cost of $198 per ounce, profile in 2003 should be lower by this compared to 827,524 ounces at total cash amount unless we expand production costs of $212 per ounce in the prior year. at our other properties or acquire a producing mine during the year. Other Properties – Results (US GAAP basis) Gold production – ounces (thousands) 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 Cash margin per ounce Capital expenditures (millions) Mineral reserves (millions of ounces) 2000 827 334 233 (1) (24) 208 3 1 212 66 18 296 122 6 1.6 $ $ $ $ $ 2001 721 317 214 (1) (18) 195 2 1 198 48 36 282 119 2 1.1 $ $ $ $ $ 2002E 340 320(1) 206 1 (20) 187 4 2 193 43 14 250 127 8 - $ $ $ $ $ 1. $365 per ounce on 50% of production and assumed spot gold price of $275 per ounce on 50% of production. Expenses EXPLORATION AND purposes in the first half of 2002, and BUSINESS DEVELOPMENT $13 million (after-tax) in synergies Total exploration and business from combining regional exploration development expenditures were offices and projects as a result of the $103 million in 2001, compared to Homestake merger. Assuming Veladero $149 million in 2000. About half of the is brought into reserves, ongoing expensed exploration and business development work in the order of an development costs came in South estimated $30 million, at the property is America, with the balance spent in expected to be capitalized. North America (17 percent), Tanzania (9 percent), Australia (8 percent) and AMORTIZATION the remainder on business development Amortization totaled $501 million, or activities, which include evaluation and $76 per ounce in 2001, compared to due diligence of corporate transactions. $493 million, or $79 per ounce in 2000. Our exploration strategy is to maintain The increase in amortization is due in a geographic mix of projects at different large part to 7 percent higher gold sales, stages in the exploration sequence. The partially offset by lower per ounce world’s changing economic conditions amortization at Other Properties. demand that major mining companies For 2002, amortization is expected to undertake more early stage exploration decrease to $492 million due to a than in the past because junior 10 percent decrease in ounces sold, exploration companies are no longer partially offset by higher amortization at active, and there are fewer new certain properties. On a per ounce basis, discoveries to buy or joint ventures to amortization is expected to increase to fund. Accordingly, we are engaged in $83 per ounce, due to higher amortization significant early stage exploration in at Goldstrike with the completion of four major areas where we possess construction of Rodeo at Meikle in 2001, significant infrastructure: Peru, Tanzania, the reduction of reserves at Meikle and Australia and Chile/Argentina. higher amortization at the Canadian For 2002, exploration and business Properties. Longer term, we expect development expenditures are expected amortization to remain in the $75 to to total $52 million, of which 32 percent $85 per ounce range depending on is expected to be spent in South America, exploration success at our operating 23 percent in North America, with mines. Our new development projects are 15 percent spent in Tanzania and Australia. expected to have per ounce amortization The lower exploration expense reflects rates of between $50 and $75 per ounce, our intent to convert Veladero to proven which could bring our overall per ounce and probable reserves for US reporting amortization charge down over time. 3 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 4 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B ADMINISTRATION MERGER AND RELATED COSTS In 2001, administration costs increased Under US GAAP, the cost of the $11 million, or 15 percent over the prior Homestake merger ($117 million) – year. For 2002, administration costs including severance payments, advisory, are expected to decline $31 million to legal, accounting, and other costs $55 million, reflecting the first year of associated with combining the two integrating the two companies and the companies – was charged to income in associated administrative synergies. the fourth quarter, upon completion of The costs for 2002 include the cost of the merger. As the integration unfolded, certain Homestake offices through the the mandate of the operational review first quarter of the year, following which team expanded to involve site visits to closures are scheduled. our eight key assets on four continents during the five months between the date INTEREST EXPENSE of the announcement and the completion We incurred $67 million in interest costs of the merger. While this expanded in 2001, related primarily to the Company’s mandate also contributed to higher $500 million of debentures, the $200 merger-related costs, the review team million Bulyanhulu project financing and identified opportunities for improvements Homestake’s $140 million line of credit. at each of our properties with potential Of the amount incurred, $25 million was for increased cost savings and production, expensed, with the balance of $42 million and management intends to work with capitalized to development and construction its mine managers to implement changes activities at Bulyanhulu, Rodeo and this year and next. Pascua-Lama. For 2002, interest costs are expected LITIGATION to decline to $55 million, $12 million lower On January 15, 2002 the Supreme Court than 2001, as a result of declining interest of British Columbia ruled in favor of rates and the repayment in December Inmet Mining Corporation and against of Homestake’s $140 million line of credit. Homestake Canada (“HCI”) in connection With the completion of Bulyanhulu and with litigation relating to the proposed Rodeo, the near term focus of development sale of the Troilus gold mine to HCI in at Veladero and the suspension of 1997. The judgement, which we have significant activities at Pascua-Lama, the appealed, was for C$88 million. We Company expects to expense virtually all recorded a provision for this judgement of the interest incurred in 2002. of US$59 million in the fourth quarter of 2001 (see note 17C of the notes to consolidated financial statements). INTEREST AND OTHER INCOME this asset by investing approximately Interest and other income increased to $1 billion or 17 percent of the overall $32 million from $14 million in 2000. Program into an off-balance sheet fixed- Lower losses incurred for foreign currency income portfolio of corporate securities translation of intercompany debt and with a number of top fund managers, closure costs associated with certain with changes in fair value being reflected operations more than offset the lower in the income statement and on the interest income earned on cash and short- balance sheet. term investments resulting from lower We have locked in gold borrowing costs interest rates. With $733 million in cash on approximately two-thirds of the overall and short-term investments combined Program while maintaining floating lease with the free cash flows expected in 2002, rates on the balance to maximize the assuming additional cash is not utilized forward premium earned. While the fixed for an acquisition or the development of lease rates are normal sale contracts and a project earlier than expected, interest are off-balance sheet, the floating lease income should increase. rate contracts are recorded on the balance sheet at fair value. NON-HEDGE DERIVATIVE Third, we sell gold call options to GAINS (LOSS) generate additional revenue. The calls For 2001, we chose not to elect hedge are written at prices at which we would accounting on any contracts outside of be comfortable adding to our forward our normal gold sales contracts. The total sales program if we are exercised. We market gain on these derivative positions have the ability to convert the call options was $33 million in 2001, related primarily exercised, at our discretion, including to option premiums earned and to the related premium income, into spot deferred decline in US dollar interest rates. contracts, which accrue contango We make use of a number of strategies (US$ Interest Rate – Gold Lease Rate) to reduce risk and improve returns in our the new delivery date. The call options Premium Gold Sales Program, which result and the premiums from expired options in recognizing the instruments on the are recorded on the balance sheet and balance sheet at fair value and recording the fair value adjusted through earnings. changes in fair value through the income Outside of the gold program, we statement. make use of other hedges to manage our Our Premium Gold Sales Program cash flows, specifically: foreign currency represents a “AA-” rated off-balance hedges on Canadian dollars and Australian sheet asset worth a notional amount of dollars to cover approximately one or $5.5 billion, on which we earn interest two years of operating costs; by-product at fixed rates with a diversified group of revenues, primarily silver, to reduce counterparties with strong credit ratings. volatility on our operating costs and To improve returns, we have diversified other interest rate hedging through 5 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 6 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B which we have locked in the rates on LIQUIDITY AND our $200 million Bulyanhulu project CAPITAL RESOURCES financing, for the full nine-year term at We believe our ability to generate cash an all in rate of approximately 8 percent. flow from operations to reinvest in our We also lock in interest rates on our cash business is one of our fundamental deposits. All of these derivative instruments financial strengths. Combined with our are recognized on the balance sheet and large cash and short-term investment changes in the fair value are recorded in balance of $733 million at the end of 2001, Non-hedge derivative gain (loss) on the and our $1 billion undrawn bank facility, income statement. which we are in the process of renewing, INCOME TAXES we have sufficient access to capital resources if required. We anticipate that The Company’s effective tax rate for 2001 our operating activities in 2002 will was 5 percent, compared to 27 percent in continue to provide us with cash flows 2000, before merger costs, litigation and necessary for us to continue developing mining asset provisions. The 22 percent our internal projects and to provide decline in the effective tax rate is primarily financing for potential acquisitions. attributable to a higher portion of earnings However, reduced gold prices could reduce being realized in lower tax rate jurisdictions. our cash flow from operations. We expect the tax rate to remain below We generated operating cash flow of 10 percent in 2002, with the benefit of $721 million in 2001, compared to $20 million of tax synergies associated $940 million in 2000. The lower cash flow with the Homestake merger, primarily in 2001 is due in large part to the change related to integrating our North American in working capital of approximately operations. If gold prices were to rise to $74 million with the completion of $400 per ounce, we would expect the construction at Bulyanhulu and Rodeo, tax rate to rise to the 25 to 30 percent as well as merger-related charges of range with a higher portion of earnings $52 million paid during the year. Higher being earned in the United States, cash costs ($7 per ounce) and lower Canada, Australia and Peru where tax average realized prices for our gold sales rates are higher. ($17 per ounce) compared to the prior year contributed to the decline in operating cash flows by $42 million. With 50 percent of our gold expected to be sold in the spot market in 2002, the volatility of gold prices could affect the amount of our operating cash flow. OFF-BALANCE SHEET ITEMS Our Premium Gold Sales Program has The Company does not engage in off- no leveraged options – and no margin calls balance sheet financing activities. We at any gold price. do not have any off-balance sheet debt obligations, special purpose entities or unconsolidated affiliates. The most significant off balance sheet items are our spot deferred sales contracts, unaccrued future reclamation obligations and our mineral gold reserves, each of which is discussed below. Future Reclamation Liability The unaccrued portion of our future reclamation liability is an off-balance sheet obligation (see note 8 to the consolidated financial statements). Having gained experience closing a number of mines over the past five years, we have been able to improve operating procedures at Spot deferred contracts our mines to reduce this ultimate liability. The objective of our hedging program We believe that our annual review of our is to optimize the price we receive on future obligations is conservative. our gold sales, while reducing risk. As discussed in note 16 to our consolidated financial statements, we use Over-the- Counter (OTC) contracts. Our spot deferred sales contracts that meet the FASB 138 exemption for Normal Purchase and Sale do not appear on our balance sheet as they simply represent agreements to sell gold that we produce at pre-defined quantities and prices. We carefully manage this off-balance sheet item, which currently has a notional value of $5.5 billion (present value of 18.2 million ounces in spot deferred contracts at an average future delivery price of Mineral Gold Reserves Our largest off-balance sheet item is actually our mineral reserves. At more than four times the size of the Company’s forward sales program, our mineral reserves provide a sufficient means to meet commitments under our forward sales program. INVESTING ACTIVITIES Our principal investing activities are for sustaining capital at our existing operating properties, new mine development and property and company acquisitions. approximately $345 per ounce). These Capital Expenditures funds are on deposit with a diversified Capital expenditures for 2001 totaled group of counterparties with a strong $607 million, compared to $710 million average credit rating of "AA-". All other in 2000. Principal expenditures included derivative instruments are recognized on $312 million in North America, comprised the balance sheet at fair value and primarily of: Betze-Post deferred stripping described in note 16. costs ($129 million), underground development of Meikle and Rodeo at 7 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 8 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B the Goldstrike Property ($90 million), sustaining capital; and $63 million in South and underground development at the America, primarily for metallurgical Canadian Mines ($23 million). In Tanzania, test work and feasibility and capital expenditures included construction environmental work at Veladero and and development work at the Bulyanhulu Pascua-Lama. For existing operating Mine ($153 million). In Australia, capital mines, longer-term sustaining capital expenditures were $46 million to cover for the existing production base is underground development and new mining estimated at $150 million annually. equipment, while in South America capital expenditures were $96 million, primarily for Pierina ($27 million) and engineering and development work and capitalized interest at Pascua-Lama ($69 million). For 2002, capital expenditures are expected to decline to $354 million, including $126 million of deferred stripping costs, which would be the lowest level in 14 years. The principal expenditures include $195 million in North America, primarily due to deferred stripping costs at Betze- Post ($110 million) and underground development at Meikle and the Canadian Mines; in Tanzania, underground development and processing upgrades at the Bulyanhulu Mine ($56 million); in Australia ($40 million), primarily to expand underground operations at Plutonic and Repayment Schedule Short-term Investments Short-term investments consist of cash invested in highly-rated, liquid, government and corporate securities with maturities of greater than 90 days and less than one year. These investments are classified as available-for-sale. We extended the term of the investments to improve the interest earned, thereby moving these investments from cash to short-term investments in 2001. FINANCING ACTIVITIES Our financing activities include borrowings for new project development such as the Bulyanhulu project financing, dividend payments and share issuances. (in millions of US dollars) Long-term debt Reclamation and closure obligations Total 2002 $ 9 80 $ 89 2003 $ 23 45 $ 68 2004 $ 45 40 $ 85 2005 $ 35 25 $ 60 2006+ Total $ 690 $ 802 380 570 $ 1,070 $ 1,372 We used the cash generated by retirement benefits, increased to operations to reduce our long-term debt $443 million in 2001, compared by $97 million, repaying the $140 million to $401 million in 2000. We have Homestake line of credit in December 2001, accrued $347 million of an estimated partially offset by the final drawdown $570 million of total reclamation liability of the Bulyanhulu project financing of to the end of 2001. The balance of the $49 million. Total borrowings under this reclamation liability is expected to be facility are $200 million, which averaged accrued at an average of $4 per ounce an interest rate of 7.3 percent in 2001. over each of the mines’ remaining Debt repayments due over the next five production lives. Of this amount we years total $150 million. Of the total debt, anticipate spending $190 million on these 87 percent is fixed at interest rates activities through 2005. between 7.5 and 8 percent for the term For 2002, cash provided by operating of the debt with the balance of debt, activities should be similar to 2001, with primarily variable-rate bonds, subject to lower production and marginally higher rate fluctuations, in which the average cash costs offset by the financial and rate was 1.9 percent in 2001, down from administration synergies of $60 million 4.9 percent in 2000. after tax. Capital spending is expected to We have an undrawn, unsecured credit decline to $354 million, including deferred agreement for a maximum of $1 billion stripping costs of $126 million, resulting which has a drawn interest rate of Libor in substantial free cash flows in 2002. plus 22.5 basis points. We are currently As a result, we anticipate cash and short- negotiating with a group of lenders to term investments balances rising in 2002, extend the term of the undrawn facility, unless we acquire mining properties or which expires in December 2002. Based on companies using cash. If the development our strong balance sheet, large, low-cost projects currently underway prove able asset base and strong free cash flows, we to generate a return sufficiently in excess anticipate the renewal of the agreement of our cost of capital at current gold during the first half of 2002 for a further prices, we may begin constructing several five-year term. If the credit facility were of these projects over the 2003 to 2006 not renewed, it would not impact our period, using a portion of the cash balance ability to manage our operations in 2002 in combination with project financing. or beyond. However, it may impact the amount of cash available for use in either LIQUIDITY RISKS property or company acquisitions and cause We have a large, diversified asset base on us to seek to finance future transactions four continents with a portfolio of mines utilizing equity rather than debt. that have an established track record of Other long-term obligations, which meeting production and cost targets. consist primarily of reclamation and As a result we do not view operating risk closure costs and pension and other post- as a significant exposure to our liquidity. 9 4 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 0 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B We have several potential new projects of our accounting treatment for derivative at various stages of development, with instruments, and a summary of derivative those closest to possible construction instruments outstanding at December 31, in Chile, Argentina, and Australia. We 2001 you should refer to notes 2H and 16 anticipate that we would seek third-party in our consolidated financial statements. financing for a portion of the development While we make extensive use of OTC cost for each of these projects, similar contracts (rather than exchange-traded to the financing of Bulyanhulu, where we contracts), these contracts are highly obtained $200 million in project financing liquid instruments where pricing inputs out of a total development cost of are readily available from independent $280 million. We expect that in the sources. Changes in the value of derivative current environment, project financing is instruments are affected by changes in available for Chile and Australia. We are interest rates, gold lease rates, currency currently working to determine exchange rates and commodity prices. the availability of project financing on Our hedging activities employ well economic terms for Veladero in Argentina. established practices which are subject If project financing were not available to the oversight of the Finance Committee for this project, we would have to decide of the Board of Directors as discussed in either to use our own cash resources, more detail in note 16B to our consolidated corporate debt or defer the project until financial statements. In addition, we suitable financing was available. maintain a separate compliance function to independently monitor and verify FINANCIAL RISK MANAGEMENT hedging activities and segregate duties In the normal course of business, we are of personnel responsible for entering exposed to commodity price risk, interest into transactions from those responsible rate risk, foreign currency exchange risk for recording transactions. and credit risk. On January 1, 2001, we adopted SFAS No. 133, “Accounting for COMMODITY PRICE RISK Derivative Instruments and Hedging Our earnings and cash flows from Activities” (“SFAS 133”), which establishes operations depend on the margin above accounting and reporting standards for fixed and variable expenses at which derivative instruments and for hedging we are able to sell gold. Currently, activities. It requires enterprises to approximately half of our annual gold recognize all derivatives as either assets production will be sold under fixed-price or liabilities on the balance sheet and spot deferred contracts, with the measure those instruments at fair value. remainder sold on the spot market. The requisite accounting for changes in The spot price of gold has fluctuated the fair value of a derivative depends on substantially in recent years and depends the intended use of the derivative and the on many factors, including worldwide resulting designation. For an explanation demand for gold bullion, changes in economic conditions, political conditions, producer, our liquidity exposure due level of gold production and levels of to outstanding derivative instruments central bank sales of gold. tends to increase when commodity prices We enter into spot deferred contracts to increase. Consequently, we are most likely establish prices for future gold production to have our largest unfavorable mark-to- and to hedge against future volatility in gold market position in a high commodity price prices. The key terms of these contracts and environment when it is least likely for a the contracts outstanding at December 31, credit support requirement to occur. 2001 are disclosed in note 16 to the We have run sensitivity tests on the consolidated financial statements. These impact on our liquidity if spot gold prices contracts are accounted for as normal fell to $200 per ounce. Based on that sales contracts and consequently are analysis, if nothing else changed other not recorded on the balance sheet. than gold price, we would expect to have The contracts are subject to the sufficient cash flow from operations to provisions of our master trading cover our cash operating costs, sustaining agreements with counterparties, which capital spending programs, existing debt define the key terms and conditions. In repayments and dividends. particular, we are able to select a delivery date acceptable to us at any time over a INTEREST RATE RISK period of up to 15 years, enabling us to Our interest rate risk exposure primarily sell our production at the higher of the relates to changes in fair value of fixed rate sale price under the contract and the debt obligations and borrowing costs on spot price of gold at the time the gold is variable-rate obligations. Additionally, we produced. We are not subject to margin have entered into interest rate swaps and requirements should increases in the spot total return swaps to manage the contango gold price result in a large unfavorable yield implicit in our spot deferred contracts, mark-to-market position. which result in increased sensitivity to The master trading agreements changes in interest rates. Contrary to most impose various restrictions and covenants businesses, we are adversely affected by on us including: the maintenance of lower interest rates rather than higher a consolidated net worth of at least rates. In higher interest rate environments, $1.75 billion; outstanding commitments we earn higher premiums for our spot under gold contracts cannot exceed deferred sales program because the two-thirds of our proven and probable forward price is primarily a function of US reserves; we must produce at least interest rates, as well as higher interest 1.5 million ounces of gold annually; and income on our cash balance. Of our current we are subject to restrictions related to debt outstanding, 87 percent of the interest the sale of certain assets. is fixed for the term of the debt, while While the mark-to-market positions that balance is primarily variable-rate under our commodity hedging contracts bonds which bear lower interest rates. will fluctuate with commodity prices, as a 1 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 2 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B FOREIGN CURRENCY EXCHANGE RISK We manage and control counterparty credit risk through established internal While we operate on four continents, control procedures which are reviewed on we do not view currency fluctuations as an ongoing basis. We attempt to mitigate a significant risk because our revenues credit risk exposure to counterparties and most of our cost base is denominated through formal credit policies and in United States dollars. Over half of the monitoring procedures. We diversify Company’s production is based in North across approximately 20 counterparties America, while most of our Peruvian and having an average credit rating of “AA”, Tanzanian costs other than labor, such which are well established bullion banks as diesel fuel, reagents and equipment or large commercial banks. In the normal are denominated in United States dollars. course of business, collateral is not Australian production costs are primarily required for financial instruments with denominated in Australian dollars and credit risk. Historically, we have suffered therefore we have hedged approximately minimal credit risk related losses. two years of local cash costs. CREDIT RISK CRITICAL ACCOUNTING POLICIES Our accounting policies are described in In the normal course of business, we note 2 to our consolidated financial have performance obligations, which statements. We prepare our consolidated are supported by surety bonds or letters financial statements in conformity with of credit. These obligations are primarily US GAAP, which requires us to make site restoration and dismantlement, royalty estimates and assumptions that affect the payments and exploration programs reported amounts of assets and liabilities where governmental organizations and disclosures of contingent assets and require such support. liabilities at the date of the financial We believe that the factors given most statements and the reported amounts of weight in our “A” credit rating are: our revenues and expenses during the year. market capitalization; the strength of our Actual results could differ from those balance sheet, including the amount of net estimates. We consider the following debt; our historical and future ability to policies to be most critical in understanding generate free cash flow; the protection the judgements that are involved in afforded to us by our hedging program; the preparing our financial statements and quality and quantity of our gold reserves; the uncertainties that could impact our and the geographic location of our assets. results of operations, financial condition Changes in our credit rating would not and cash flows. affect our existing debt obligations or hedging contracts, but could impact the ACCOUNTING FOR cost of borrowing under new financing DERIVATIVE INSTRUMENTS agreements, as well as the length of our In accordance with the provisions of trading lines for new contracts. SFAS 133, we have elected to treat our spot deferred contracts as normal sales assessments possible, the subjective contracts, and we have documented decisions and variances in available data compliance with the criteria in paragraph for each ore body make these estimates 10(b) of SFAS 133. Alternatively, we could generally less precise than other have elected not to designate these estimates used in the preparation of contracts as normal sales with the effect the financial statements. that in accordance with SFAS 133 they Changes in reserve quantities would be recorded on our balance sheet would cause corresponding changes at their fair value with changes in fair in amortization expense in periods value recorded in either other compre- subsequent to the quantity revision, and hensive income or current-period earnings could result in impairment of the carrying depending on effects of application of the amount of property, plant and equipment. hedge accounting rules under SFAS 133. Changes in gold and silver prices from those assumed in preparing projections PROPERTY, PLANT AND and forward-looking statements could EQUIPMENT cause our actual financial results to differ In accordance with our accounting policy materially from projected financial results for property, plant and equipment, we and can also impact our determination of capitalize costs incurred on properties reserves. In addition, periods of sharply after proven and probable reserves have lower commodity prices could affect been identified. Upon commencement of our production levels and/or result in gold production, we amortize capitalized the impairment of property, plant and property acquisition and mine development equipment. Additionally, low commodity costs under the units of production method. prices could cause us to curtail capital The process of estimating quantities spending projects and delay or defer of gold reserves is complex, requiring exploration or development projects. significant decisions in the evaluation of all available geological, geophysical, CONTINGENCIES engineering and economic data. The data We account for contingencies in for a given ore body may also change accordance with SFAS No. 5, “Accounting substantially over time as a result of for Contingencies”. SFAS No. 5 requires numerous factors, including, but not that we record an estimated loss from limited to, additional development activity, a loss contingency when information evolving production history and continual available prior to issuance of our financial reassessment of the viability of production statements indicates that it is probable under varying economic conditions. As that an asset has been impaired or a a result, material revisions to existing liability has been incurred at the date of reserve estimates may occur from time the financial statements, and the amount to time. Although every reasonable effort of the loss can be reasonably estimated. is made to ensure that reserve estimates reported represent the most accurate 3 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 4 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Accounting for contingencies such as • our ability to (1) successfully integrate environmental, legal and income tax acquisitions, including the Homestake matters requires us to use our judgement merger, and (2) identify and complete to determine the amount to be recorded future strategic acquisitions; on our financial statements in connection • adverse changes in our credit rating; with those contingencies. • changes in interest rates, gold lease rates and the condition of the capital RISK FACTORS markets; This management’s discussion and analysis • political developments in foreign includes forward looking statements, countries; relating to among other things, production, • risks associated with foreign cash flows, costs, capital expenditures or investments and operations; other financial items. These statements • risks associated with mining, including also relate to our business strategy, goals unusual or unexpected formations, and expectations concerning our market pressures, cave-ins or environmental position, future operations, margins, hazards; profitability, liquidity and capital resources. • federal, state and provincial We have used the words “anticipate”, environmental, economic, safety and “believe”, “could”, “estimate”, “expect”, other policies and regulations, any “intend”, “may”, “will” and similar terms changes therein, and any legal or and phrases to identify forward looking regulatory delays or other factors statements. beyond our control; Although we believe the assumptions • adverse rulings, judgements, or upon which these forward looking settlements in litigation or other legal statements are based are reasonable, or tax matters, including unexpected any of these assumptions could prove environmental remediation costs in to be inaccurate and the forward-looking excess of any reserves; statements based on these assumptions • continued exploration or development could be incorrect. Our operations involve of projects may not be justified because risks and uncertainties, many of which are of the commodity price environment outside our control, and any one of which, at the time or because of the results or a combination of which, could materially of work completed and the amount affect the results of our operations and of future development costs for whether the forward looking statements such projects. ultimately prove to be correct. Actual Many of these factors are described results and trends in the future may differ in greater detail in our Annual Information materially depending on a variety of Form which is filed with the US Securities factors including, but not limited to: and Exchange Commission and Canadian • changes in the prices of commodities provincial securities regulatory which we produce or which we consume authorities. in connection with our operations; Outlook While we cannot predict future We enter 2002 with the strongest performance, we believe considerable balance sheet in the gold mining industry, opportunities exist within our existing high-quality assets, a cash and short-term asset base for profitable growth, not investment position of $733 million and only from our new projects but from virtually no net debt. our operating mines as well. We believe consolidation and rationalization of the NON-GAAP MEASURES gold industry will continue and with our We have included a measure of earnings strong balance sheet and substantial cash before unusual items because we believe flows, we believe we are well positioned to that this information will assist investors’ participate if it adds value to our company. understanding of the level of our core For 2002, half of our production of earnings and to assess our performance 5.7 million ounces of gold is expected in 2001 compared to the prior year. We to be sold at $365 per ounce, with the believe that conventional measures of balance at spot gold prices. With total performance prepared in accordance with cash costs of $167 per ounce, total generally accepted accounting principles production costs are expected to be (“GAAP”) do not fully illustrate our core $254 per ounce. In addition, the Company earnings. These non-GAAP performance expects administration and exploration measures do not have any standardized expenses to decline to $55 million and meaning prescribed by GAAP and therefore $52 million respectively, benefiting from are unlikely to be comparable to similar the synergies from the Homestake measures presented by other companies. merger. Interest expense is expected to They are furnished to provide additional be $55 million, as the Company will no information and should not be considered longer be capitalizing interest, with the in isolation or as a substitute for measures completion of Bulyanhulu and Rodeo and of performance prepared in accordance the deferral of Pascua-Lama. Capital with GAAP. Below is a reconciliation spending is expected to decrease to of net income to these non-GAAP $228 million (excluding deferred stripping performance measures. costs of $126 million). This would be the lowest level in 14 years, which, based on current gold prices, would result in the highest free cash flows in our history. 5 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B MD+A continued 6 5 S I S Y L A N A D N A N O I S S U C S I D S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Reconciliation of Net Income Before Unusual Items to GAAP Net Income (Loss) Twelve months ended December 31, 2001, 2000, 1999 (in millions of United States dollars) Net income before unusual items Unusual items (net of tax effects): Merger and related charges Litigation Provision for mining assets Net income (loss) for the year 2001 $ 245 (107) (42) - 96 $ 2000 $ 168 1999 $ 259 - - (1,357) (3) - (12) $ (1,189) $ 244 We have included cash costs per ounce a substitute for measures of performance data because we understand that certain prepared in accordance with GAAP. The investors use this information to determine measures are not necessarily indicative the Company’s ability to generate cash of operating profit or cash flow from flow for use in investing and other operations as determined under GAAP. activities. We believe that conventional We also make reference to the term measures of performance prepared “free cash flow”, which we define as cash in accordance with GAAP do not fully flow from operations less cash used in illustrate the ability of the operating mines investing activities. This cash is available to generate cash flow. The data is furnished to reinvest in our business or to return to to provide additional information and shareholders, either through dividends or should not be considered in isolation or as share repurchases. Reconciliation of Total Cash Costs Per Ounce to Financial Statements Twelve months ended December 31, 2001, 2000, 1999 (in millions of United States dollars except per ounce amounts) Operating costs per financial statements Reclamation and closure costs Operating costs for per ounce calculation Ounces sold (thousands) Total cash costs per ounce 2001 $ 1,080 (60) $ 1,020 6,278 $ 162 2000 950 (50) 900 5,794 155 $ $ $ 1999 936 (45) 891 5,861 152 $ $ $ Total cash costs per ounce data is calculated in accordance with The Gold Institute Production Cost Standard (the “Standard”). The Gold Institute is a worldwide association of suppliers of gold and gold products and includes leading North American gold producers. Adoption of the Standard is voluntary, and the data presented may not be comparable to data presented by other gold producers. Cash costs per ounce are derived from amounts included in the Statements of Income and include mine site operating costs such as mining, processing, administration, royalties and production taxes, but exclude amortization, reclamation costs, financing costs, and capital, development and exploration costs. Management’s Responsibility for Financial Statements The accompanying consolidated financial statements The consolidated financial statements have been audited have been prepared by and are the responsibility of the by PricewaterhouseCoopers LLP, Chartered Accountants. Board of Directors and Management of the Company. Their report outlines the scope of their examination and The consolidated financial statements have been opinion on the consolidated financial statements. prepared in accordance with United States generally accepted accounting principles and reflect Management’s best estimates and judgements based on currently available information. The Company has developed and JAMIE C. SOKALSKY maintains a system of internal accounting controls in Senior Vice President order to ensure, on a reasonable and cost effective basis, and Chief Financial Officer the reliability of its financial information. Toronto, Canada February 8, 2002 Auditors’ Report to the Shareholders of Barrick Gold Corporation We have audited the consolidated balance sheets of In our opinion, these consolidated financial statements Barrick Gold Corporation as at December 31, 2001 and present fairly, in all material respects, the financial 2000 and the consolidated statements of income, cash position of the Company as at December 31, 2001 and flow and changes in shareholders’ equity for each of the 2000 and the results of its operations and its cash flows three years in the period ended December 31, 2001. These for each of the three years in the period ended financial statements are the responsibility of the Company’s December 31, 2001 in accordance with United States Management. Our responsibility is to express an opinion generally accepted accounting principles. on these financial statements based on our audits. As discussed in Note 2 to the consolidated financial We conducted our audits in accordance with generally statements, during 2001 the Company changed its policy accepted auditing standards in both Canada and the on accounting for derivative instruments, and during United States. Those standards require that we plan and 2000 the Company changed the policy on revenue recog- perform an audit to obtain reasonable assurance whether nition for gold sales. the financial statements are free of material misstate- On February 8, 2002, we reported separately to the ment. An audit includes examining, on a test basis, shareholders of Barrick Gold Corporation on the financial evidence supporting the amounts and disclosures in the statements for the same periods, prepared in accordance financial statements. An audit also includes assessing with Canadian generally accepted accounting principles. the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. Chartered Accountants Toronto, Canada February 8, 2002 7 5 T R O P E R ’ S R O T I D U A / Y T I L I B I S N O P S E R S ’ T N E M E G A N A M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Consolidated Statements of Income Barrick Gold Corporation for the years ended December 31, 2001, 2000 and 1999 (in millions of United States dollars, except per share data, US GAAP basis) Gold sales Costs and expenses Operating Amortization Administration Exploration and business development Merger and related costs (note 12) Provision for mining assets and other unusual charges (note 13) Interest and other income Interest on long-term debt (note 7F) Non-hedge derivative gains (loss) (note 16E) Income (loss) before income taxes and other items Income taxes (note 10) Income (loss) before changes in accounting principles Cumulative effect of changes in accounting principles (notes 2H(i) and 2I) Net income (loss) for the year Comprehensive income (loss) for the year (note 18) Per share data (note 11) Net income (loss) before changes in accounting principles Basic Diluted Net income (loss) Basic Diluted See accompanying notes to consolidated financial statements. 8 5 S T N E M E T A T S L A I C N A N I F 1 0 0 2 T R O P E R L A U N N A K C I R R A B 2001 2000 (note 1) 1999 (note 1) $ 1,989 $ 1,936 $ 2,057 1,080 501 86 103 117 59 1,946 32 (25) 33 83 14 97 (1) 96 84 0.18 0.18 0.18 0.18 $ $ $ 950 493 75 149 - 1,627 3,294 14 (26) (5) (1,375) 209 (1,166) (23) (1,189) (1,256) (2.18) (2.18) (2.22) (2.22) $ $ $ 936 543 81 139 5 15 1,719 46 (29) 4 359 (115) 244 - 244 276) 0.46 0.45 0.46 0.45 $ $ $ Consolidated Statements of Cash Flow Barrick Gold Corporation for the years ended December 31, 2001, 2000 and 1999 (in millions of United States dollars, US GAAP basis) Cash provided by operating activities (note 15) $ 721 $ 940 $ 820 2001 2000 (note 1) 1999 (note 1) Cash provided by (used in) investing activities Property, plant and equipment Short-term investments Restricted cash Purchase and sale of mining properties (note 12) Other Cash (used in) investing activities Cash provided by (used in) financing activities Capital stock (note 11) Long-term debt Proceeds Repayments Dividends Cash (used in) financing activities Effect of exchange rate changes on cash and equivalents Increase (decrease) in cash and equivalents Cash and equivalents at beginning of year Cash and equivalents at end of year See accompanying notes to consolidated financial statements. (607) (153) (24) - 5 (779) 7 55 (152) (93) (183) (1) (242) 816 574 $ (710) 130 2 (141) 10 (709) 6 236 (187) (94) (39) (6) 186 630 $ 816 $ (787) 19 12 59 17 (680) 36 124 (174) (98) (112) (4) 24 606 630 9 5 S T N E M E T A T S L A I C N A N I F 1 0 0 2 T R O P E R L A U N N A K C I R R A B Consolidated Balance Sheets Barrick Gold Corporation as at December 31, 2001 and 2000 (in millions of United States dollars, US GAAP basis) Assets Current assets Cash and equivalents Short-term investments Accounts receivable Inventories and deferred expenses (note 3) Property, plant and equipment (note 4) Other assets (note 5) Liabilities Current liabilities Accounts payable and accrued liabilities (note 6) Current portion of long-term debt (note 7) Long-term debt (note 7) Other long-term obligations (note 8) Deferred income taxes (note 10) Shareholders’ equity Capital stock (note 11) Deficit Accumulated other comprehensive loss 0 6 S T N E M E T A T S L A I C N A N I F 1 0 0 2 T R O P E R L A U N N A K C I R R A B Commitments and contingencies (note 17) See accompanying notes to consolidated financial statements. Signed on behalf of the Board Randall Oliphant Director C. William D. Birchall Director $ 2001) 574 159 58 223 1,014 3,912 276 2000 (note 1))) $ 816 6 59 285 1,166 3,994 233 $ 5,202 $ 5,393 $ 521 $ 9 530 793 443 244 2,010 4,062 (763) (107) 3,192 587 3 590 901 401 311 2,203 4,051 (766) (95) 3,190 $ 5,202 $ 5,393 Consolidated Statements of Changes in Shareholders’ Equity Barrick Gold Corporation for the years ended December 31, 2001, 2000 and 1999 (in millions of United States dollars, US GAAP basis) Capital stock Accumulated other comprehensive income (loss) Shares (millions) (note 11) 531 3 Balance December 31, 1998 Issued for cash Net income Dividends paid Other comprehensive income (note 18) Retained earnings (deficit) Cumulative foreign currency translation adjustments Derivative instruments Total shareholders’ equity Other Amount $ 3,989 $ 371 $ (66) $ - $ 6 $ 4,300 36 244 (98) 1 6 S T N E M E T A T S L A I C N A N I F 1 0 0 2 T R O P E R L A U N N A K C I R R A B 36 244 (98) 32 4,514 9 17 (1,189) (94) (67) 3,190 11 96 (93) (12) 3 9 (7) 2 (10) $ (8) $ 3,192 - - 24 24 29 (37) (60) (97) (26) Balance December 31, 1999 534 4,025 517 Issued for cash Issued on purchase of mining property (note 12C) 1 1 Net loss Dividends paid Other comprehensive loss (note 18) Balance December 31, 2000 536 - Issued for cash Net income Dividends paid Other comprehensive income (loss) (note 18) 9 17 4,051 11 (1,189) (94) (766) 96 (93) Balance December 31, 2001 536 $ 4,062 $ (763) $ (123) $ See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements Barrick Gold Corporation Tabular dollar amounts in millions of United States dollars, unless otherwise indicated, US GAAP basis. References to C$ and A$ are Canadian and Australian dollars, respectively. 1 N AT U R E O F T H E C O M PA N Y Barrick Gold Corporation (“Barrick” or the “Company”) is engaged in the production of gold and related activities including exploration, development, mining and processing. These activities are conducted principally in the United States, Canada, Australia, Peru, Tanzania, Chile and Argentina. They require the use of specialized facilities and technology. The Company relies on such facilities to maintain its production levels. Also, the cash flow and profitability of the Company is affected by the market price of gold, operating costs, interest rates and exploration expenditures. The Company operates internationally, and accordingly, is exposed to fluctuations in currency exchange rates, political risk and varying levels of taxation. While the Company seeks to manage these risks, many of them are beyond its control. On December 14, 2001, a wholly-owned subsidiary of Barrick merged with Homestake Mining Company (“Homestake”). The merger was accounted for as a pooling-of-interests. The consolidated financial statements give retroactive effect to the merger, with all periods presented as if Barrick and Homestake had always been combined. Certain reclassifications have been made to conform the presentation of Barrick and Homestake (see note 12A). 2 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B 2 S I G N I F I C A N T ACCO U N T I N G P O L I C I E S The United States dollar is the principal currency of measure of the Company’s operations. The Company prepares and files its primary consolidated financial statements in United States dollars and in accordance with generally accepted accounting principles (“GAAP”) in the United States. Consolidated financial statements prepared in accordance with Canadian GAAP (in United States dollars) have been mailed to shareholders and filed with various regulatory authorities. Summarized below are those policies under United States GAAP considered particularly significant for the Company. References to the Company included herein mean the Company and its consolidated subsidiaries. A Use of estimates The preparation of financial statements in conformity with United States 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 these estimates. B Basis of consolidation These consolidated financial statements include the accounts of Barrick and the more-than-50%- owned subsidiaries that it controls. All material intercompany transactions and balances have been eliminated upon consolidation. Barrick controls its subsidiaries through existing majority voting interests in accordance with long-standing practice in extractive industries. The Company presents its proportionate share of assets, liabilities, revenues and expenses of unincorporated joint ventures in which it has an interest under each of the respective major captions in the balance sheets and statements of income. C Translation of foreign currencies G Property, plant and equipment Following the merger with Homestake, the functional (i) Property acquisition and mine development costs currency of all of the Company’s operations has been Mine development costs are capitalized on properties determined to be the United States dollar. Historically, after proven and probable reserves have been Homestake had considered that for certain non-United identified. Prior to identifying proven and probable States subsidiaries the local currency was the functional reserves, development costs are expensed as currency. However, following the merger various changes incurred. Amortization is calculated using the units in economic facts and circumstances, including a of production method over the expected operating change in the denomination of selling prices for gold lives of the mines based on the estimated recoverable production and also for financing transactions from ounces of gold in proven and probable reserves. the local currency to the United States dollar, caused Financing costs, including interest, are capitalized Barrick to determine that from 2002 onwards the on the basis of expenditures incurred for the United States dollar was the appropriate functional acquisition of assets and mineral properties and/or currency. For periods in which the local currency related development activities, without restriction was considered the functional currency the financial to specific borrowings, while activities necessary to statements of non-United States subsidiaries have prepare the asset or property for its intended use are been translated as follows: assets and liabilities in progress. Capitalization is discontinued when the using period-end exchange rates; and revenues asset or property is substantially complete and ready and expenses at average rates for the period. for its intended use. Resulting translation adjustments are included in accumulated other comprehensive income in shareholders’ equity. Transaction gains and losses are included in the statements of income under interest and other income. D Cash and equivalents (ii) Buildings, plant and equipment Buildings, plant 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 Cash and equivalents comprise cash, term deposits and of mine equipment is 15 years. Repairs and and treasury bills, with original maturity dates of maintenance expenditures are charged to operations; less than 90 days. The Company believes that no major improvements and replacements which increase concentrations of credit risk exist with respect to productive capacity or extend the useful life of cash and equivalents. E Inventories an asset are capitalized and amortized over the remaining estimated useful life of that asset. Gold in process, ore in stockpiles and mine operating (iii) Deferred stripping costs supplies are valued at the lower of average production Mining costs incurred on development activities cost and net realizable value. F Short-term investments Short-term investments principally consist of highly rated and liquid government and corporate securities with original maturities in excess of three months and current maturities of less than twelve months from the balance sheet date. The Company classifies all short- term investments as available-for-sale. Unrealized gains and losses on these investments are recorded in accumulated other comprehensive income, a separate component of shareholders’ equity, except that declines in market value judged to be other than temporary are recognized in determining net income. comprising the removal of waste rock at open-pit mines, commonly referred to as “deferred stripping costs”, are capitalized under property, plant and equipment. Amortization, which is calculated using the units of production method based on estimated recoverable ounces of proven and probable gold reserves, is charged to operating costs as gold is produced and sold, using a stripping ratio calculated as the ratio of total tons to be moved to total gold ounces to be recovered over the life of mine, and results in the recognition of the cost of these mining activities evenly over the life of mine as gold is produced and sold. The application of the accounting 3 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued 4 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B for deferred stripping costs and resulting differences H Accounting for derivative instruments in timing between costs capitalized and amortization The Company adopted Statement of Financial generally results in an asset on the balance sheet, although it is possible that a liability could arise if amortization exceeds costs capitalized for an Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by Statement of Financial Accounting Standards No. 137, Accounting for extended period of time. Deferred stripping costs are included in the carrying amount of the Company’s mining properties for the purpose of assessing whether any impairment has occurred and is evaluated in accordance with the criteria described in note 2G(v). (iv) Exploration expenditures Derivative Instruments and Hedging Activities – Deferral of the Effective Date of FASB Statement No. 133, an amendment of FASB Statement No. 133, and Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, also an amendment of FASB Statement No. 133 (collectively referred to hereafter as “SFAS 133”), on January 1, 2001. Exploration expenditures are expensed as incurred. (i) Implementation adjustments (v) Property evaluations The Company reviews and evaluates the carrying amounts of its mineral properties and related buildings, plant and equipment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If the Company has reason to suspect an impairment may exist, estimated future net cash flows are prepared using estimated recoverable ounces of gold (considering current proven and probable mineral reserves); estimated future commodity price realization (considering historical and current prices, price trends and related factors); and operating costs, future capital expenditures and reclamation expenditures. Reductions in the carrying amount of property, plant and equipment to its fair value, with a corresponding charge to earnings, are recorded where the estimated future net cash flows are less than the carrying amount. Fair value is determined by discounting the estimated future net cash flows using a discount factor that represents the Company’s view of the risk-adjusted rate that would be used to determine the fair value of its mining properties in a transaction between willing buyers and sellers. 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 evaluation of the Company’s property, plant and equipment for impairment purposes. As at January 1, 2001, the Company recorded the fair value of derivative instrument assets of $15 million in other assets, and derivative instrument liabilities of $57 million in accounts payable and accrued liabilities. Included in derivative instrument liabilities are written gold call options and total return swaps with a fair value of $45 million that were already recorded at fair value prior to the implementation of SFAS 133. Included in derivative assets are purchased gold call options that were recorded at their historic cost of $44 million prior to the implementation of SFAS 133. The adjustments to the carrying amounts of derivative assets and liabilities were recorded as at January 1, 2001 in accordance with the transition provisions of SFAS 133 as follows: a cumulative-effect loss of $1 million (net of tax of $1 million) was reflected in current period earnings, representing the fair value of previously unrecognized derivative instruments that had not historically been given hedge accounting treatment; and a cumulative- effect loss of $35 million (net of tax of $4 million) was recorded in other comprehensive income, representing the adjustment to fair value of purchased gold call options, which, together with associated spot deferred contracts, qualified for hedge accounting treatment as synthetic purchased put options prior to the implementation of SFAS 133. In addition, deferred gains of $35 million relating to gold and silver hedging contracts were reclassified on adoption of SFAS 133 from other long-term obligations to accumulated other comprehensive income. (ii) Accounting for derivative instruments (iii) Impact of derivatives on impairment assessments and hedging activities Assets and liabilities designated as hedged items are In accordance with SFAS 133, all derivatives are assessed for impairment or for the need to recognize an recognized on the balance sheet at their fair value. increased obligation, respectively, according to generally On the date that the Company enters into a derivative accepted accounting principles that apply to those contract, it designates the derivative as either assets or liabilities. Such assessments are made (1) a hedge of (a) the fair value of a recognized asset after hedge accounting has been applied to the or liability or (b) an unrecognized firm commitment asset or liability and exclude a consideration of (a “fair value” hedge); (2) a hedge of (a) a forecasted (1) any anticipated effects of hedge accounting and transaction or (b) the variability of cash flows that are (2) the fair value of any related hedging instrument to be received or paid in connection with a recognized that is recognized as a separate asset or liability. The asset or liability (a “cash flow” hedge); (3) a foreign- assessment for an impairment of an asset, however, currency fair-value or cash flow hedge (a “foreign includes a consideration of the gains and/or losses currency” hedge); (4) a hedge of a net investment in that have been deferred in other comprehensive a foreign operation; or (5) an instrument that is held income as a result of a cash flow hedge of that asset. for trading or non-hedging purposes (a “trading” or “non-hedging” instrument). Changes in the fair value of a derivative that is highly effective as, and that is designated and qualifies as, a fair-value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (including changes that reflect losses or gains on firm commitments), are recorded in current-period earnings. A derivative is highly effective when the fair values or cash flows offset changes in the fair values or cash flows of a designated hedged item. Changes in the fair value of a derivative that is highly effective as, and that is designated and qualifies as, a cash flow hedge, to the extent that the hedge is effective, are recorded in other comprehensive income, until earnings are affected by the variability of cash flows of the hedged transaction. Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is recorded in current- period earnings. Changes in the fair value of a derivative that is highly effective as, and that is designated and qualifies as, a foreign-currency hedge are recorded in either current-period earnings or other comprehensive income, depending on whether the hedging relationship satisfies the criteria for a fair value or cash flow hedge. Changes in the fair value of non-hedging derivative instruments are reported in current-period earnings. The Company has not elected to apply hedge accounting under SFAS 133 for any of the derivative instruments outstanding during 2001. I Revenue recognition Revenue from the sale of gold and by-products is recognized when the following conditions are met: persuasive evidence of an arrangement exists; delivery has occurred in accordance with the terms of the arrangement; the price is fixed or determinable and collectibility is reasonably assured. For gold bullion sold under spot deferred contracts or in the spot market, revenue is recognized on transfer of title to the gold to counterparties. For gold concentrate, revenue is recognized on transfer of legal title to the concentrate to third party smelters based on the estimated gold and silver content of the concentrate at market spot prices. Adjustments to accounts receivable between the date of recognition and the settlement date, caused by changes in the market prices for gold and silver, are adjusted through revenue at each balance sheet date. Effective October 1, 2000, the Company implemented Staff Accounting Bulletin (“SAB”) 101, Revenue Recognition. In accordance with SAB 101, revenue is recognized at the time of delivery of gold bullion to counterparties and as described above. This represented 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 2000 was an increase in net loss of $25 million, as well as an increase in basic net loss per share of $0.04 including a cumulative amount of $23 million. 5 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued Revenue from the sale of by-products such as silver L Comprehensive income and copper is credited against operating costs. Revenue In addition to net income, comprehensive income from the sale of by-products was $110 million in 2001 includes other changes in equity during a period, such (2000 – $115 million, 1999 – $113 million). as foreign currency translation adjustments and the J Income taxes The Company uses the liability method of accounting effective portion of changes in fair value of derivative instruments that qualify as cash flow hedges. for income taxes whereby deferred income taxes are M Reclamation and closure costs recognized for the tax consequences of temporary Estimated future reclamation and closure costs, relating differences by applying statutory tax rates applicable to active mines, are accrued and charged to expense to future years to differences between the financial as revenue is recognized over the expected operating statement carrying amounts and the tax bases of lives of the mines, using the units-of-production method certain assets and liabilities. The Company records based on the estimated recoverable ounces of gold a valuation allowance against any portion of those contained in proven and probable reserves. Changes deferred income tax assets it believes will, more likely in the estimate of future costs for inactive mines are than not, fail to be realized. Changes in deferred tax reflected in earnings in the period an estimate is revised. assets and liabilities include the impact of any tax rate Assumptions used to estimate closure costs are changes enacted during the year. Mining income taxes based on the work that is required under currently represent Canadian provincial taxes levied on defined applicable laws and regulations as well as the profits from mining operations. Provisions are made obligations under existing permits for the property for withholding taxes payable on anticipated repatriation in question or, where applicable, use government of unremitted earnings of the Company’s foreign mandated assumptions and methodologies. subsidiaries. No provision is made for unremitted earnings which have been indefinitely reinvested. N Stock-based compensation plan The Company has a stock-based compensation plan, K Earnings per common share which is described in note 11. The Company elected to Earnings or loss per share are presented for basic use the pro forma disclosure provisions of SFAS 123, and diluted net income (loss) and, if applicable, for net income or (loss) before the cumulative effect of Accounting for Stock-Based Compensation and has applied Accounting Principles Board Opinion No. 25 and related a change in accounting principle. Basic earnings Interpretations in accounting for its stock options. In per share is computed by dividing net income or loss accordance with the above provisions, no compensation (the numerator) by the weighted average number of cost has been recognized for the Company’s stock outstanding common shares (the denominator) for the options whose exercise price was equal to the market period. The computation of diluted earnings per share price on the date of grant. Compensation cost relating includes the same numerator, but the denominator is to the Company’s restricted stock unit plan is being increased to include the number of additional common recognized based on the fair value of the Company’s shares that would have been outstanding if potentially stock over the period that the performance dilutive common shares had been issued (such as the measurement and vesting criteria are estimated to be common share equivalents for employee stock options). met. Any consideration paid by employees on exercise of stock options or purchase of stock is credited to capital stock. 6 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B O Employee benefit plans (resulting from a transitional impairment test) are to Pension costs related to defined benefit plans for be reported as resulting from a change in accounting certain United States employees are determined principle. Under an exception to the date at which this using the projected unit credit actuarial method. The Statement becomes effective, goodwill and intangible Company’s funding policy for defined benefit pension assets acquired after June 30, 2001 will be subject plans is to fund the plans annually to the extent allowed immediately to the non-amortization and amortization by the applicable regulations. In addition, the Company provisions of the Statement. The Company has not yet provides medical and life insurance benefits for certain determined the impact, if any, of this Statement on its retired employees. The estimated cost of such benefits financial statements. is accrued and expensed over the period in which In June 2001, the FASB issued Statement No. 143, active employees become eligible for the benefits. Post-retirement medical and life insurance benefits Accounting for Asset Retirement Obligations (SFAS 143), which addresses financial accounting and reporting for are paid at the time such benefits are provided. obligations associated with the retirement of tangible P Recent accounting pronouncements In June 2001, the Financial Accounting Standards Board issued Statement No. 141, Business Combinations (SFAS 141), which supersedes APB Opinion No. 16, Business Combinations, and SFAS 38, Accounting for Preacquisition Contingencies of Purchased Enterprises. This Statement will change the accounting for business combinations and goodwill. SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method is no longer permitted. This Statement also establishes criteria for separate recognition of intangible assets acquired in a purchase business combination. This Statement also applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. The merger with Homestake was initiated prior to June 30, 2001, the effective date of SFAS 141, and is accounted for as a pooling-of-interests. In June 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible Assets (SFAS 142), which supersedes APB Opinion No. 17, Intangible Assets. The Statement requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. The Statement is effective for fiscal years beginning after December 15, 2001, and is required to be applied at the beginning of an entity’s fiscal year and to be applied to all goodwill and other intangible assets recognized in its financial statements at that date. Impairment losses for goodwill and indefinite-lived intangible assets that arise due to the initial application of these Statements long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS 143 amends SFAS 19, Financial Accounting and Reporting by Oil and Gas Producing Companies, and requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, an entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is amortized over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 with earlier application encouraged. The Company has not yet determined the impact of this Statement on its financial statements. In October 2001, the FASB issued Statement No. 144, Accounting for the Impairment on Disposal of Long-lived Assets (SFAS 144), which supersedes SFAS 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of. SFAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends APB Opinion No. 30, Reporting Results of Operations – Reporting the Effects of Disposal of a Segment of a Business. SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book 7 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued value or fair value less cost to sell. That requirement are expected to be fully processed by 2009 and 2016 eliminates APB 30’s requirement that discontinued respectively. The processing of ore in stockpiles operations be measured at net realizable value or that occurs in accordance with the life of mine processing entities include under “discontinued operations” in the plan that has been optimized based on the known financial statements amounts for operating losses that mineral reserves, current plant capacity and pit have not yet occurred. Additionally, SFAS 144 expands design. The timing of processing of ore in stockpiles the scope of discontinued operations to include all has not been significantly affected by the historic components of an entity with operations that (1) can price of gold. be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity 4 P R O P E R T Y, P L A N T A N D E Q U I P M E N T in a disposal transaction. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and, generally, its provisions 2001 2000 are to be applied prospectively. The Company has not Property acquisition and yet determined the impact of this Statement on its mine development costs $ 4,433 $ 4,402 financial statements. 3 I N V E N T O R I E S A N D D E F E R R E D E X P E N S E S 2001 Gold in process and ore in stockpiles $ 134 Mine operating supplies Derivative instruments (note 16E) Purchased call options premium 72 17 - 2000 $ 170 71 - 44 Buildings, plant and equipment Deferred stripping costs Accumulated amortization 2,824 306 7,563 (3,651) 2,621 315 7,338 (3,344) $ 3,912 $ 3,994 The deferred stripping costs relate primarily to the Betze-Post Mine at the Goldstrike Property where the stripping ratio in 2001 was 104 tons to a recovered ounce of gold (2000 – 101 tons, 1999 – 93 tons). $ 223 $ 285 5 O T H E R A S S E T S Gold in process and ore in stockpiles excludes $46 million (2000 – $38 million) of stockpiled ore which is not expected to be processed in the following 12 months. This amount is included in other assets. The Goldstrike Property is the only operation that Assets held in trust Ore in stockpiles Taxes recoverable has significant stockpiled ore. These stockpiles arose Derivative instruments (note 16E) from the optimization of the mining and processing plan for the Property. Stockpiles at the Property consist of two types of ore: ore that will require autoclaving, and ore that will require roasting. The Note receivable Restricted cash Deferred financing fees Prepaid pension assets processing of roaster ore commenced on start-up of Other the roaster facility in 2000, and both autoclave and roaster stockpiles are currently being processed and 2001 2000 $ 51 46 36 40 17 12 11 5 58 $ 56 38 56 - 19 - 17 7 40 $ 276 $ 233 8 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B 6 A C C O U N T S PAYA B L E A N D A C C R U E D B Project financing – Bulyanhulu L I A B I L I T I E S 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, Trade accounts payable and to partially finance the construction, development, miscellaneous accrued liabilities $ 307 $ 535 start-up and ongoing operation of the Bulyanhulu 2001 2000 provided by a syndication of international banks, Current portion of reclamation and closure obligations (note 8) Merger and related costs (note 12A) Litigation (note 17C) Derivative instruments (note 16E) 80 65 56 13 52 - - - $ 521 $ 587 7 L O N G -T E R M D E B T 71⁄2% debentures Project financing – Bulyanhulu Variable-rate bonds Capital leases Cross-border credit facility Current portion 2001 $ 500 2000 $ 500 200 80 22 - 802 9 151 80 24 149 904 3 $ 793 $ 901 A 71⁄2% debentures On April 22, 1997, Barrick Gold Finance Inc., a wholly owned subsidiary of the Company, issued $500 million of redeemable, non-convertible debentures. The debentures, which are guaranteed by the Company, bear interest at 71⁄2% per annum, payable semi- annually, and mature on May 1, 2007. underground gold mining project in Tanzania. 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 2.6% pre-completion, and increases following completion, rising in a number of steps to average approximately Libor plus 3.6%. The effective interest rate for 2001 was 7.3% (2000 – 9.2%). C Variable-rate bonds Wholly-owned subsidiaries of the Company have issued variable-rate, tax-exempt bonds of $17 million (due 2004), $25 million (due 2029) and $38 million (due 2032) for a total of $80 million. The Company pays interest monthly on the bonds based on variable short-term, tax-exempt obligation rates. The average interest rate at December 31, 2001 was 1.9% (2000 – 4.9%). No principal payments are required until cancellation, redemption or maturity. 9 6 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued D Credit facilities The Company has estimated future site reclamation The Company has a credit and guarantee agreement and closure obligations, which it believes will meet (the “Credit Agreement”) with a group of international current regulatory requirements, to be $570 million, banks (the “Lenders”). The Credit Agreement provides $347 million of which has been accrued to December 31, for the Lenders to make available to the Company and 2001 (2000 – $341 million). A total of $80 million subsidiaries designated by it from time to time a credit of these accrued amounts is included in accounts facility in the maximum amount of $1 billion or the payable and accrued liabilities at December 31, 2001 equivalent amount in Canadian currency. The Credit (2000 – $52 million). Agreement, which is unsecured, matures December The Company expects to spend approximately 2002. The facility has an interest rate of Libor plus $80 million in 2002, $45 million in 2003, $40 million 0.15% when utilized, and an annual fee of 0.075%. in 2004 and $25 million in 2005 on these activities. As at December 31, 2001 and December 31, 2000, no Future changes, if any, in regulations and cost amounts were drawn under the Credit Agreement. estimates may be significant and will be recognized Homestake had a cross-border credit facility when applicable. providing a total borrowing availability of $430 million. The Comprehensive Environmental Response, The amount drawn under the facility of $149 million Compensation and Liability Act imposes heavy liabilities was repaid in 2001 and the credit facility cancelled on persons who discharge hazardous substances. upon the merger with Barrick. E Scheduled payments Scheduled minimum repayments for each of the next five years are: 2002 – $9 million, 2003 – $23 million, 2004 – $45 million, 2005 – $35 million, 2006 – The United States Environmental Protection Agency publishes a National Priorities List (“NPL”) of known or threatened releases of such substances. Homestake’s former uranium millsite near Grants, New Mexico is listed on the NPL. $38 million. F Interest 9 E M P L OY E E B E N E F I T P L A N S Interest of $67 million was incurred during the year A Defined benefit plans (2000 – $ 70 million, 1999 – $59 million). Of this The Company has pension plans covering certain amount, $42 million was capitalized to property, United States employees. Pension plans covering plant and equipment (2000 – $44 million, 1999 – salaried and other non-union employees provide $30 million). benefits based on the employee’s years of service and highest compensation for a period prior to 8 O T H E R L O N G -T E R M O B L I G AT I O N S retirement. Pension plans covering union employees Reclamation and closure costs Pension and other post-retirement benefits (note 9) Derivative instruments and deferred gains (note 16E) Other 2001 $ 267 2000 $ 289 89 60 27 63 22 27 $ 443 $ 401 provide defined benefits based on each year of service. The Company also has other post-retirement plans, which provide medical and life insurance benefits for certain retired employees. The following table provides a reconciliation of benefit obligations, plan assets and the funded status of the plans: 0 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Change in benefit obligations Benefit obligation beginning of year Service cost Interest cost Plan amendments and special terminations Actuarial losses (gains) Benefits paid Curtailments Benefit obligation end of year Change in plan assets Fair value of plan assets beginning of year Actual return on plan assets Company contributions Benefits paid Fair value of plan assets end of year Plan assets in excess of (less than) projected benefit obligations Unrecognized net actuarial gains Unrecognized prior service cost Unrecognized net transition asset Pension benefits Other post-retirement benefits 2001 2000 2001 2000 $ 238 $ 226 $ 27 $ 28 4 16 39 17 (24) (11) 279 255 2 1 (24) 234 (44) (9) - - $ $ $ $ 3 16 11 4 (19) (3) 238 249 24 1 (19) 255 18 (47) 9 (1) $ $ $ $ - 2 - - (2) - 27 - - 2 (2) - (27) (4) (1) - $ $ $ $ - 2 1 (2) (2) - $ 27 $ $ $ - - 2 (2) - (27) (5) (4) - Accrued pension and post-retirement benefit obligations $ (53) $ (21) $ (32) $ (36) Amounts for pension and post-retirement benefits in the consolidated balance sheets consist of the following: Prepaid pension asset Accrued benefit liability – current Accrued benefit liability – long-term Pension benefits Other post-retirement benefits 2001 2000 2001 2000 $ $ 5 (1) (57) (53) $ $ 7 (1) (27) (21) $ $ - - (32) (32) $ $ - - (36) (36) 1 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued As at December 31, the weighted average actuarial assumptions were as follows: Discount rate Expected return on plan assets Rate of compensation increase 2001 6.75% 8.50% 5.00% 2000 7.25% 8.50% 5.00% 1999 7.75% 8.50% 5.00% 2001 6.75% 2000 7.25% 1999 7.75% Pension benefits Other post-retirement benefits The Company has assumed a health care cost trend rate of 7.5% for 2001, decreasing ratability to 5.0% in 2006 and thereafter. Net periodic pension and other post-retirement benefit costs include the following components: Pension benefits 2001 2000 1999 Service cost Interest cost Expected return on assets Amortization of: Prior service costs Actuarial gains Net periodic benefit cost (credit) Additional charges (credits): Special termination charges Curtailments Settlement credits $ 4 16 (21) 1 (2) (2) 39 (3) (1) $ 3 $ 17 (21) 1 (1) (1) 10 2 - Total net benefit cost $ 33 $ 11 $ 5 16 (21) 1 - 1 - - - 1 Special termination charges in 2001 are primarily for additional pension entitlements due under the change of control clauses for Homestake employees, triggered by the merger with Barrick. These amounts are included in merger and related costs. The comparative amount in 2000 related to the closure of the Interest cost Amortization of: Prior service costs Actuarial gains Net periodic benefit cost Additional charges (credits): Special termination charges Total net benefit cost (credit) $ Other post-retirement benefits 2001 2000 1999 $ 2 $ 2 $ 2 (1) (1) - (2) (2) (1) (1) - 1 1 (1) - 1 - 1 $ $ The projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets were both $48 million at December 31, 2001, and $39 million and $32 million, respectively, at December 31, 2000. These amounts pertain to a nonqualified supplemental pension plan covering certain employees and a nonqualified pension plan covering directors of the Company. These plans are unfunded. The Company has established a grantor trust, consisting of money funds, mutual funds and corporate-owned life insurance policies, to provide funding for the benefits payable under these nonqualified plans and certain other deferred compensation plans. The grantor trust, which is included in other assets, amounted to $51 million and $56 million at December 31, 2001 Homestake mine and was included in provisions for and 2000, respectively. mining assets and other unusual charges. 2 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B The Company announced the closure of several 10 I N C O M E TA X E S mines during 2001 resulting in termination costs. Health care benefits are contributory and were A Income tax expense (benefit) restricted to employees at the Homestake mine whose combined years of age and years of service exceeded 65 as of January 1, 2001. Termination benefits and certain curtailment costs were recognized during 2001 to reflect the planned closure of the mines. The assumed health care cost trend rate has a minimal effect on the amounts reported. A one percentage point change in the assumed health care cost trend rate would have increased or decreased the accumulated post-retirement benefit obligation at December 31, 2001 by $2 million and had no effect on service and interest components of net periodic costs. B Defined contribution plans Certain of the Company’s other operations participate in defined contribution employee benefit plans. In addition, the Company has an unfunded retirement plan for certain officers. Pursuant to the plan, 15% of the officer’s salary and bonus for the year are accrued and accumulated with interest until retirement. The Company’s share of contributions to these plans was $12 million in 2001, $11 million in 2000 and $11 million in 1999. In 2001, the Company put in place a restricted stock unit incentive plan (“RSU Plan”). In accordance with the RSU Plan, a participant is granted a number of RSUs, where each unit will have a value equal to one Barrick common share at the time of grant. Each RSU, which vests and will be paid out on the third anniversary of the date of grant, will have a value equivalent to the then market price of a Barrick share. As at December 31, 2001 the 3 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Current Canada United States Peru Other Total Deferred Canada United States Australia Chile Peru Other Total 2001 2000 1999 $ 14 $ (7) 17 12 36 (74) 33 4 - (12) (1) (50) 23 43 7 5 78 (68) (68) 3 (88) (52) (14) (287) $ 21 78 - 1 100 (7) 34 (5) - - (7) 15 Total income tax (benefit) expense $ (14) $ (209) $ 115 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 federal statutory rate of 38% were as follows: Income tax expense (benefit) based on statutory rate Increase (decrease) resulting from: Resource and depletion 2001 2000 1999 $ 32 $ (523) $ 136 (11) (84) - 56 - (6) (1) (29) (49) (76) 331 35 1 36 16 (38) - 50 4 - 12 Income tax (benefit) expense $ (14) $ (209) $ 115 value of the RSUs granted was $7 million. This amount allowances has been accrued in other long-term obligations. Earnings in foreign jurisdiction taxed at different rates Provision for mining assets Non-deductible expenses (i.e. items not tax effected) Benefits of tax credits utilized Changes to deferred tax assets and liabilities Other Notes continued 4 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B The principal temporary timing differences and their The amount of unrecognized future tax liabilities for tax effect are: Deferred mining and exploration costs Amortization Reclamation and closure costs Net operating losses Provision for mining assets Other Total 2001 2000 1999 investment in the United States, which is essentially temporary differences related to the Company’s $ - $ (21) 8 (37) - - (3) (8) (8) (19) (267) 18 $ 32 (33) 2 6 - 8 permanent in duration, is $75 million (2000 – $81 million). Tax assets include operating loss carry- forwards and temporary timing differences that relate to property, plant and equipment and reclamation and closure liabilities. Net future tax assets include $76 million relating to operating loss carry-forwards, the recognition of which is based on the Company’s $ (50) $ (287) $ 15 judgement regarding its ability to utilize the related B Deferred income tax assets and liabilities 2001 2000 1999 Deferred income tax assets Tax loss carry-forwards $ 312 $ 286 $ 280 Reclamation and closure costs Property, plant and equipment Employee benefit liabilities Alternative minimum tax credit carry-forwards Foreign tax credit carry-forwards Unrealized foreign exchange losses Deferred gains on close-out of cash flow hedge contracts Inventory Other Gross deferred tax assets Valuation allowance Net deferred tax assets Deferred income tax liabilities Property, plant and equipment Other Gross deferred tax liabilities 81 32 48 111 - 6 8 6 41 645 433 212 397 59 456 76 48 30 80 6 21 13 6 14 580 388 192 428 75 503 73 37 23 71 111 - 13 9 26 643 417 226 783 76 859 tax losses against future income. Operating loss carry-forwards amount to $1,364 million, of which $1,068 million do not expire and $296 million expire at various times over the next 20 years. Alternative minimum tax credits amount to $110 million and do not expire. The measurement and recognition of income tax assets and liabilities is based on the Company’s interpretation of relevant tax legislation; known tax planning strategies; estimates of the tax bases of individual assets and liabilities; and the deductibility of costs incurred for income tax purposes. Future changes in the recognized amounts of income tax assets and liabilities, if any, may be significant and will be recognized when applicable. 11 C A P I TA L S T O C K A Authorized and issued capital Authorized capital stock of the Company is comprised of an unlimited number of common shares (issued 534 million), 9,764,929 First preferred shares, Series A (issued nil), 9,047,619 Series B (issued nil), and 1 Series C special voting share (issued 1) and 14,726,854 Second preferred shares Series A Net deferred tax liabilities $ 244 $ 311 $ 633 (issued nil). Net deferred tax liabilities include: Current deferred tax assets (6) - Long-term deferred tax assets (150) (126) (15) (132) Long-term deferred tax liabilities Total 400 437 780 $ 244 $ 311 $ 633 B Exchangeable shares In connection with a 1998 acquisition, Homestake Canada Inc. (“HCI”) issued 11.1 million HCI exchangeable shares. Each HCI exchangeable share is exchangeable for 0.53 of a Barrick common share at any time at the option of the holder and has essentially the same voting, dividend (payable in Canadian dollars), and other rights as 0.53 of a Barrick common share. outstanding for 0.53 of a Barrick common share for A share of special voting stock, which was issued to each HCI exchangeable share. the transfer agent in trust for the holders of the HCI exchangeable shares, provides the mechanism for holders of the HCI exchangeable shares to receive their voting rights. As at December 31, 2001, 3 million (2000 – 3.3 million) HCI exchangeable shares were outstanding and are equivalent to 1.6 million (2000 - 1.8 million) Barrick common shares. As at December 31, 2001 the Company had reserved 1.6 million Barrick common shares for issuance on exchange of the HCI exchangeable shares outstanding. At any time on or after December 31, 2008, or at such time that there are fewer than 1.4 million HCI exchangeable shares outstanding, the Company will have the right, but not the obligation, to require the exchange of all HCI exchangeable shares then 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 2001 activity Granted Exercised Cancelled or expired Outstanding as at December 31, 2001 C Common share purchase options As at December 31, 2001 there were 25 million common share purchase options outstanding, expiring at various dates to December 2, 2011. 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, 2001, 9 million (2000 – 6 million, 1999 – 7 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: Common shares (millions) Weighted average price (C$) Common shares (millions) Weighted average price (US$) 20 3 (1) (1) 21 5 - (4) 22 1 - (4) 19 $ $ $ $ $ $ 26.32 25.71 31.72 24.24 22.95 32.77 $ $ $ 24.32 22.77 29.66 2 1 - - 3 1 - - 4 2 - - 6 $ $ $ $ $ $ $ $ 17.74 1.40 30.69 13.72 - 29.45 9.03 13.44 26.10 5 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued The following is a summary of common share purchase options outstanding as at December 31, 2001: Range of exercise prices C$ options $ 22.55 - $ 31.05 $ 34.00 - $ 44.25 US$ options $ 8.96 - $ 17.68 $ 17.75 - $ 28.73 $ 29.00 - $ 40.66 Options outstanding Options exercisable Common shares (millions) Average remaining life (years) Weighted average price Common shares (millions) 15 4 19 4 1 1 6 8 4 7 8 6 3 7 $ $ $ $ $ $ $ 25.69 38.90 28.29 12.02 21.82 33.58 16.67 7 4 11 1 1 1 3 Weighted average price $ 26.18 $ 38.90 $ 30.32 $ 15.92 $ 23.12 $ 33.58 $ 22.99 In addition to the above common share purchase December 31, 2001 is $65 million and $0.12, options, the Company is obligated to issue respectively (2000 – net loss and loss per share of approximately 0.7 million shares (2000 – 0.7 million $(1,219) million and $(2.28) respectively, and 1999 – shares) of its common stock in connection with net income and income per share of $214 million outstanding Sutton stock options that were assumed and $0.40, respectively). by the Company as part of the acquisition. The options have an average exercise price of C$19.34 (2000 – C$19.12) and an average remaining term of 4 years (2000 – 5 years). SFAS 123 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, on the date the award is granted. The fair value of the Company’s options that were granted in 2001 was $18 million (2000 – $37 million). This fair value was estimated using the Black-Scholes model with assumptions of a 41⁄2- to 10-year expected term, 30% to 41% volatility, interest rates ranging from 4.8% to 6.7% and an expected dividend yield D 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 536 million shares (2000 – 535 million shares, 1999 – 528 million shares). 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 per share in 2000 was not reflected, as to do so would be anti-dilutive. The number of shares for the diluted net income per share calculation for 2001 and 1999 were 538 million shares and 548 million shares, respectively. ranging from 0.44% to 1.4%. Under SFAS 123 the cost E Dividends of stock compensation for the year ended December In 2001, the Company declared and paid dividends 31, 2001 would be $31 million (2000 – $30 million, in United States dollars totalling $0.22 per share 1999 – $30 million). The resulting pro forma net (2000 – $0.22 per share, 1999 – $0.20 per share). income and income per share for the year ended 6 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B 12 B U S I N E S S C O M B I N AT I O N S A N D costs, $3 million related to the closure of Homestake P R O P E R T Y A C Q U I S I T I O N S A Homestake Mining Company corporate office and certain other facilities, and $10 million related to other miscellaneous items. Through December 31, 2001, the charge for On December 14, 2001, a wholly-owned subsidiary employee termination costs represents the approved of Barrick merged with Homestake Mining Company. reduction of the work force by 177 people, mainly Under the terms of the agreement, approximately comprising administrative functions at the Homestake 139.5 million shares of Barrick common stock were corporate office. We notified these people as of issued in exchange for all the outstanding shares of December 17, 2001. Terminations of the employees will Homestake common shares based upon an exchange take place within one year of notification. Employee ratio of 0.53:1. The merger was accounted for as a termination costs included accrued severance benefits pooling-of-interests. Accordingly, the consolidated and costs associated with change-in-control provisions financial statements give retroactive effect to the of certain Homestake executives’ employment contracts. merger, with all periods presented as if Barrick and Accrued restructuring and termination costs that Homestake had always been combined. Certain remained unpaid at December 31, 2001 of $65 million reclassifications have been made to conform the are included in accounts payable and accrued presentation of Barrick and Homestake. liabilities (see note 6). The following table sets forth summary data for the separate companies and the combined amounts for the periods prior to the merger. Net income for 2001 excludes merger and related costs of $107 million (net of tax of $10 million). For the year ended December 31 2001 2000 1999 $ 1,324 $ 1,307 $ 1,421 665 1,989 629 1,936 636 2,057 Gold sales Barrick Homestake Combined Net income (loss) Barrick Homestake B 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. C Round Mountain Mine 256 (53) (1,065) (124) 260 (16) Pomeroy & Company Inc.’s (“Case”) 25% interest in the Round Mountain mine for $43 million, increasing Effective July 1, 2000, the Company acquired Case Combined $ 203 $ (1,189) $ 244 the Company’s ownership in the mine from 25% to 50%. The transaction was effected by the Company Merger and related costs totalled $117 million before purchasing 100% of the shares of Bargold Corporation, tax effects ($107 million after tax) and include a wholly-owned subsidiary of Case. Purchase transaction costs of $32 million and integration and consideration consisted of 1.4 million newly issued restructuring costs of $85 million. Transaction costs common shares of the Company and $26 million in include investment banking, legal, accounting and cash. The transaction was accounted for as a purchase other costs directly related to the merger. Integration with the purchase price allocated $3 million for net costs represent external, incremental costs directly working capital and $45 million for property, plant and related to the merger. Integration and restructuring equipment, less $5 million for reclamation obligations. costs include: $72 million of employee termination 7 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued D Agua de la Falda In October 1999, the Company and Corporacion Nacional del Cobre Chile (“Codelco”) contributed additional capital of $15 million in Agua de la Falda (“ADLF”) in proportion to their ownership interests 13 P R OV I S I O N F O R M I N I N G A S S E T S A N D O T H E R U N U S U A L C H A R G E S (Barrick 51% and Codelco 49%). The Company’s Provision for mining assets $ subscribed capital contribution primarily was in the Troilus litigation (note 17C) form of cash. Codelco contributed property, subject Other 2001 2000 1999 - 59 - 59 $ 1,600 $ - 27 $ 1,627 $ 12 - 3 15 $ to a retained royalty. E Argentina Gold Corp. In April 1999, the Company issued 11 million common shares to acquire Argentina Gold Corp. (“Argentina Gold”), a publicly-traded Canadian gold exploration company whose principal asset is its 60% interest in the Veladero property in northern Argentina. The business combination was accounted for as a pooling-of-interests, and accordingly, the Company’s consolidated financial statements include the results of Argentina Gold for all periods presented. In 1999, the Company recorded business combination expenses of $5 million related to this transaction. F Sutton Resources Ltd. In 2000, the Company performed a comprehensive evaluation of its property, plant and equipment, on the basis set out in note 2G(v). This evaluation resulted in the reduction of carrying values of certain assets to their estimated fair values, which was triggered by a number of events. These events included: 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 $1.6 billion non-cash provision to earnings to cover the writedown of the carrying amounts of various assets. These assets included: On March 26, 1999, the Company acquired the Pascua-Lama Project in Chile and Argentina; the Sutton Resources Ltd. (“Sutton”), a publicly-traded Pierina Property in Peru and exploration properties; exploration company whose principal asset was various assets including low-grade stockpile inventories the Bulyanhulu mine in Tanzania. Each outstanding at the Betze-Post Mine in the United States; the common share of Sutton was exchanged for 0.463 Homestake Mine in the United States and the of a common share of the Company, resulting in Bousquet Mine in Canada. 17 million common shares being issued. On September 11, 2000, the Company announced The business combination was accounted for as a restructuring of the operations at the Homestake Mine a pooling-of-interests, and accordingly the assets, in South Dakota. The Mine is expected to complete liabilities and shareholders’ equity of Sutton were operations by the second quarter of 2002. In combined with the Company’s recorded values. connection with the restructuring, the Company Comparative figures were restated for all periods recorded a $23 million provision for employee presented prior to the acquisition to include the termination benefits and other exit costs. This combined statements of income and balance sheets amount is included in other of $27 million. of the merged entities, adjusted to conform to the In 1999, the Company recorded charges of Company’s accounting policies. $12 million to write off a property acquired as part of the Plutonic acquisition and to write down certain redundant equipment at the Kalgoorlie Mine. 8 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B 14 S E G M E N T I N F O R M AT I O N The Company operates in the gold mining industry and its operations are evaluated and managed on a district basis. Gold sales Goldstrike Pierina Bulyanhulu Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other Operating costs Goldstrike Pierina Bulyanhulu Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other 2001 2000 1999 $ 823 319 60 104 87 83 79 103 331 1,989 $ $ 850 295 - 111 88 80 71 63 822 322 - 100 87 82 69 36 378 1,936 539 2,057 473 401 335 45 35 80 16 61 49 77 244 1,080 41 - 76 7 56 54 50 265 950 40 - 85 5 60 53 29 329 936 2001 2000 1999 Amortization Goldstrike Pierina Bulyanhulu Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other 138 175 17 17 40 10 12 18 74 128 176 - 18 58 10 10 12 81 Segment income (loss) before 501 493 income taxes Goldstrike Pierina Bulyanhulu Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other Provision for mining assets and other unusual charges Pascua-Lama Goldstrike Pierina Other Exploration and business development Merger and related costs Corporate expenses, net Income taxes 212 99 8 7 31 12 18 8 13 408 - - - (59) (59) (103) (117) (46) 14 321 78 - 17 24 14 7 1 31 493 (1,036) (300) (184) (107) (1,627) (149) - (92) 209 133 172 - 16 54 9 23 7 129 543 354 110 - (1) 28 13 (7) - 81 578 - - - (15) (15) (139) (5) (60) (115) Net income (loss) before changes in accounting principles 97 (1,166) 244 Cumulative effect of changes in accounting principles Net income (loss) $ (1) 96 (23) - $ (1,189) $ 244 9 7 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued 2001 2000 1999 15 S U P P L E M E N TA L C A S H F L O W Gold sales by geographic area I N F O R M AT I O N United States $ 1,064 $ 1,045 $ 1,043 0 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Peru Canada Australia Tanzania Chile Segment capital expenditures Goldstrike Pierina Bulyanhulu Pascua-Lama Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other 319 262 244 60 40 295 252 249 - 95 322 308 244 - 140 $ 1,989 $ 1,936 $ 2,057 $ 251 27 153 69 19 10 6 11 15 46 $ $ 276 49 203 107 15 6 5 12 3 34 481 32 115 40 34 3 4 11 4 63 $ 607 $ 710 $ 787 Identifiable assets by geographic area United States $ 1,873 $ 2,028 $ 2,451 Peru Tanzania Canada Australia Chile/Argentina Other Segment assets Goldstrike Pierina Bulyanhulu Pascua-Lama Kalgoorlie Eskay Creek Hemlo Plutonic Round Mountain Other 731 666 525 470 257 680 891 514 594 489 217 660 1,181 148 772 583 1,183 473 $ 5,202 $ 5,393 $ 6,791 $ 1,617 $ 1,678 $ 1,952 726 659 218 247 313 69 51 95 147 886 511 146 281 376 81 44 98 187 1,177 145 1,099 326 445 85 61 51 298 Total assets for reportable segments 4,142 4,288 5,639 Cash and equivalents and short-term investments Other 733 327 822 283 766 386 $ 5,202 $ 5,393 $ 6,791 2001 2000 1999 Cash provided by operating activities includes the following cash payments: Interest, net of amounts capitalized Income taxes $ $ 24 37 22 39 $ 29 143 Components of cash provided by operating activities are as follows: Net income (loss) $ 96 $ (1,189) $ 244 Adjustments to reconcile net income (loss) to cash provided by operating activities: Amortization 501 493 543 Amortization of deferred stripping costs Deferred income taxes Provision for mining assets Reclamation and closure costs (net) Deferred gains on closeout of forward sales contracts Unrealized foreign currency exchange (gains) losses on intercompany debt Change in fair value of derivative instruments Recovery (payment) of taxes on development costs Cumulative effect of changes in accounting principles Other items Change in operating assets and liabilities: Accounts receivable Inventories and deferred expenses Accounts payable and accrued liabilities Cash provided by 150 (50) - 19 (11) 10 16 (6) 1 - (2) 67 (70) 137 (287) 1,627 (4) 4 16 13 27 23 11 21 (33) 81 83 15 15 3 35 (10) 10 (13) - (13) (31) (58) (3) operating activities $ 721 $ 940 $ 820 16 D E R I VAT I V E I N S T R U M E N T S The Company maintains an interest-rate risk- A Derivative instruments management strategy that uses derivative instruments to mitigate significant unplanned fluctuations in The Company utilizes over-the-counter (“OTC”) earnings or cash flows that arise from volatility in contracts as the primary basis for entering into interest rates. The Company’s goals are to (1) manage derivative transactions. These privately negotiated interest rate sensitivity on its short-term investments, agreements, compared to exchange traded contracts, debt obligations and total return swaps; (2) lower the allow the Company to incorporate credit, tenor and cost of its borrowed funds, including gold borrowing flexibility into the contracts. The underlyings in the costs implicit in spot deferred contracts; and (3) manage contracts include commodities, interest rates, foreign the interest return component implicit in the spot exchange rates or bond indices with diversified credit deferred contracts. The Company uses interest-rate exposure. The Company does not enter into derivative swaps and swaptions to manage interest-rate instruments which it would consider to be leveraged. sensitivity, and to manage borrowing costs. The B Objectives and strategies for using derivative instruments The Company has operations in six principal countries to produce and sell its primary product, gold, as well as by-products such as silver and copper. The Company’s activities expose it to a variety of market risks, including risks related to the effects of changes in commodity prices, foreign-currency exchange rates and interest rates. These financial exposures are monitored and managed by the Company as an integral part of its overall risk-management program. The Company’s risk-management program focuses on the unpredictability of commodity and financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company maintains a commodity-price risk-management strategy that uses derivative instruments to mitigate significant, unanticipated earnings and cash flow fluctuations that may arise from volatility in commodity prices. Price fluctuations in gold and silver commodities cause actual cash inflows from the sale of gold and silver to differ from anticipated cash inflows. The Company uses spot deferred sales contracts and options contracts to manage these risks. Company uses total return swaps to modify the interest return component of spot deferred contracts. The Company maintains a foreign-currency risk-management strategy that uses derivative instruments to mitigate unanticipated fluctuations in earnings and cash flows that may arise from volatility in currency exchange rates. The Company uses foreign-currency forward exchange contracts, swaps and options to manage these risks. The Company’s derivatives activities are subject to the management, direction, and control of its Finance Committee as part of that Committee’s oversight of the Company’s investment activities and treasury function. The Finance Committee, which is comprised of five members of the Company’s Board of Directors, including the Company’s Chief Executive Officer, reports to the Board of Directors on the scope of the Company’s risk-management strategy and on its derivatives activities. The Finance Committee approves corporate policy that defines the Company’s risk-management objectives and philosophy relating to derivatives activities; provides guidance for derivative-instrument usage; and reviews internal procedures relating to derivative instruments in the areas of internal control and valuation, as well as monitoring and reporting of derivative activity. The Finance Committee also approves hedging strategies that are developed by management through its analysis of risk exposures to which the Company is subject, and commodity, foreign exchange and interest rate market 1 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B 2 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued analysis from internal and industry sources. The D Transfers to/from other comprehensive income resulting hedging strategies are then incorporated For cash flow hedges, gains and losses on derivative into the Company’s overall risk-management strategies. contracts that are reclassified from accumulated Responsibility for the implementation of hedging other comprehensive income to current-period and risk-management strategies is delegated to earnings are included in the line item in which the Company’s treasury function. the hedged item is recorded, in the same period C Derivative instruments excluded from the scope of SFAS 133 The Company has entered into spot deferred sales contracts that establish selling prices for future gold and silver production with various counterparties and which act as a hedge against possible price fluctuations in gold and silver. While these contracts the forecasted transaction affects earnings. In 2001, the Company transferred a net loss of $24 million (net of tax of $3 million) from other comprehensive income to earnings. In 2002, gains of $11 million (net of tax of $1 million) accumulated in other comprehensive income are expected to be transferred to earnings. meet the definition of a derivative under SFAS 133, E Fair value of derivative instruments the Company has determined and documented that the normal purchases/normal sales exception included Fair value of derivative financial instruments in paragraph 10(b) of SFAS 133 applies to such at January 1, 2001 contracts. Accordingly, the Company’s spot deferred Cash receipts at inception of derivative instruments sales contracts are not accounted for as derivatives Derivative instruments realized or otherwise $ (42) (23) 16 33 settled during the year Change in fair value of derivative instruments during the year Fair value of derivative financial instruments at December 31, 2001 $ (16) The fair value of derivative instruments at December 31, 2001 includes: Derivative assets Current Non-current Derivative liabilities Current Non-current Derivative liabilities – net $ $ 17 40 57 (13) (60) (73) (16) Fair value by maturity of derivative instruments (millions) 2002 $ 5 2003 $ (11) 2004 $ 1 2005 $ (18) 2006+ $ 7 Total $ (16) pursuant to SFAS 133. At December 31, 2001, the Company had outstanding commitments to deliver 18.2 million ounces of its future gold production at pre- determined prices under spot deferred sales contracts. Under the terms of the contracts, the Company has the ability, at its sole discretion, to reschedule the delivery date under the contracts. At the time a delivery date is rescheduled, the contract price is adjusted based on the difference between the prevailing forward gold market price at the revised delivery date and the contract price at the original and revised delivery dates. The favorable fair value of the contracts at December 31, 2001 was $356 million, and is estimated based on the net present value of cash flows under the contracts, based on a gold spot price of $279 and market rates for Libor and gold lease rates. The outstanding gold sales commitments at December 31, 2001 were: Scheduled for delivery in Ounces 2002 2003 2004 2005 2006+ Total (thousands) 2,800 2,600 2,800 1,400 8,600 18,200 Average price per ounce $ 365 $ 340 $ 340 $ 340 $ 344 $ 345 The fair values of derivative assets and liabilities sheet. Current derivative liabilities are included in reflect the netting of the fair values of individual accounts payable and accrued liabilities, and non- derivative instruments, and amounts due to/from current derivative instruments are included in other counterparties that arise from derivative instruments, long-term obligations. when the conditions on FIN No. 39, Offsetting Of Amounts Related To Certain Contracts, have been met. Accounts receivable from counterparties that have been offset The fair values of the Company’s derivative instruments are determined using models and other valuation techniques based on market rates against derivative liabilities totalled $131 million as at at December 31, 2001. December 31, 2001. Fair value estimates for commodity and currency The Company classifies derivative assets and options are calculated using option pricing models, liabilities as either current or non-current based on reflecting the following assumptions: spot prices the maturity date of the derivative instruments, with for gold and silver of $279 and $4.61 per ounce, the following exceptions. For derivative instruments respectively, the remaining term of the options; with cash flows both within year end and beyond, the market gold, silver and currency volatilities and Company has chosen not to bifurcate the derivative the risk-free interest rate. instrument into its current and non-current positions. Fair value estimates for Libor, gold lease rate For those derivative instruments, a derivative instrument swaps and foreign exchange contracts are calculated whose fair value is a net liability is classified in total as based on the net present value of future cash flows current, and a derivative instrument whose fair value arising under the contracts based on market interest is a net asset is classified in total as non-current, except and currency exchange rates. if the current portion is a liability, in which case the Fair value estimates for total return swaps are current portion has been presented as a current liability. calculated based on the difference between the fair The Company includes current derivative assets value of the underlying reference asset compared to in inventories and deferred expenses and non-current the net present value of the Libor-based borrowing derivative assets in other assets in the balance costs using market interest rates. F Derivative instruments outstanding at December 31, 2001 Maturity 2002 2003 2004 2005 2006+ Total Written gold call options (i) Ounces (thousands) Average strike price Min-max gold call options (ii) Ounces (thousands) Average floor price per ounce Average cap price per ounce Written silver call options (i) Ounces (thousands) 1,330 $ 303 1,600 272 297 $ $ 12,000 Average exercise price per ounce $ 4.88 Silver forward sales contracts Ounces (thousands) Average price per ounce 11,000 $ 5.00 425 363 $ 570 328 $ 550 336 $ 1,460 $ 362 3,750 $ 5.25 7,000 $ 5.10 2,000 $ 5.50 3,000 $ 5.10 2,000 $ 5.00 2,000 $ 5.10 1,000 $ 5.10 4,335 $ 336 1,600 272 297 $ $ 19,750 $ 5.03 24,000 $ 5.05 3 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued Maturity 2002 2003 2004 2005 2006+ Total Cash flow interest rate hedges Receive fixed for short-term investments and gold sales contracts – swaps and swaptions (iii) Notional amount (millions) Fixed rate (%) $ 61 4.4% $ 403 4.3% $ 150 3.6% $ 100 4.9% $ 193 5.4% $ 200 4.50% $ 907 5.3% $ 200 4.50% $ 100 5.6% $ 100 5.6% Pay fixed for Bulyanhulu financing (iii) Notional amount (millions) Fixed rate (%) Fair value interest rate hedges Receive fixed against debentures (iii) Notional amount (millions) Fixed rate (%) Gold lease rate swaps (iii) Receive fixed, pay floating Notional (thousands of ounces) Fixed rate (%) Total return swaps (iii) 340 1.2% 451 2.0% 440 2.1% 891 2.2% 4,033 2.6% 6,155 2.4% Notional amount (millions) $ 20 $ 115 $ 530 $ 100 $ 176 $ 941 Cash flow interest rate hedges Pay fixed on total return swaps – swaps and swaptions Notional amount (millions) Fixed rate (%) Foreign exchange contracts C$ forward and min-max currency contracts Notional amount (C$ millions) Average price (US$) A$ forward and min-max currency contracts Notional amount (A$ millions) Average price (US$) $ 25 5.3% $ $ $ $ 96 0.64 30 0.51 $ $ $ $ 88 0.64 30 0.51 $ 50 7.4% $ 200 6.0% $ 275 6.0% $ $ 30 0.51 $ $ 30 0.51 $ $ 30 0.51 $ $ $ $ 184 0.64 150 0.51 4 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B (i) Written call options are contracts in which the an offsetting amount included in other comprehensive writer, for a fee (premium), sells the purchaser the income. Changes in the fair value of the swaps right, but not the obligation, to buy on a specified subsequent to January 1, 2001 have been reflected future date a stipulated quantity of gold or silver in current-period earnings, together with any transfers at a stated price. Prior to the adoption of SFAS 133, out of other comprehensive income where the these derivative instruments were recorded at their originally hedged transactions have occurred. fair value on the balance sheet, with subsequent Interest rate options represent contracts that changes in fair value reflected in current-period allow the holder of the option to enter into interest earnings. The adoption of SFAS 133 did not result in rate swaps and cap and floor agreements with the any change in the accounting treatment for these writer of the option. The Company enters into forward derivative instruments. (ii) The Company has entered into combination, otherwise known as “min-max”, options that act as a hedge against possible price fluctuations in gold, silver and foreign currencies. The options give the holder the right to buy and the Company the right to sell stipulated amounts of the commodities or start interest rate swaps to lock in interest rates implicit in the contango that will be earned on spot deferred contracts to be entered into in the future. The Company uses this strategy to minimize its exposure to volatility in Libor. The adoption of SFAS 133 did not result in any change in the accounting treatment of these derivative instruments. currencies at the upper and lower exercise prices, (iv) Total return swaps represent the exchange of respectively. Prior to the adoption of SFAS 133, the variable Libor-based interest payments and the total combination options were accounted for as a cash return (fixed coupons plus capital gains and losses) flow hedge of future gold sales. On adoption of or a fixed amount paid in the future on a specific SFAS 133, the Company elected not to treat these reference asset, based on a common notional principal contracts as hedges for accounting purposes, with and maturity date. In the case of the Company, the the effect that the contracts were recognized at their specific reference assets are various highly diversified fair value on January 1, 2001 with an offsetting amount corporate bond funds. At December 31, 2001, the in other comprehensive income. Changes in the fair weighted average credit rating of the underlying bond value of combination options subsequent to January 1, funds for the outstanding total return swaps was “A-”. 2001 have been reflected in current-period earnings. Prior to the adoption of SFAS 133, these derivative (iii) Interest rate swaps and swaptions and gold lease rate swaps generally involve the exchange of fixed and variable-rate interest payments between two parties, based on a common notional principal amount and maturity date. Prior to the adoption of SFAS 133, the instruments were recorded on the balance sheet at their fair value with subsequent changes in fair value reflected in current-period earnings. The adoption of SFAS 133 did not result in any change in the accounting treatment of these derivative instruments. interest rate and gold lease rate swaps, which are G Credit and market risks associated with spot deferred contracts, were By using derivative instruments, the Company accounted for as synthetic hedging instruments, exposes itself to credit and market risk. Market risk is whereby the interest rate swap modified the interest the risk that the value of a financial instrument might return or gold lease rate cost in the spot deferred be adversely affected by a change in commodity contracts from fixed to floating rates or vice versa. prices, interest rates, gold lease rates, or currency On adoption of SFAS 133, these swaps were no longer exchange rates. The Company manages the market designated for hedge accounting treatment and were risk associated with commodity-price, interest recorded on the balance sheet at their fair value, with rate, gold lease rate, and foreign-exchange contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. 5 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Notes continued 6 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Credit risk is the risk that a counterparty might fail 1 7 C O M M I T M E N T S A N D C O N T I N G E N C I E S to fulfill its performance obligations under the terms of a derivative contract, or in the case of total return A Royalties swaps, the risk that a deterioration in credit quality Substantially all of the Company’s properties are subject of the underlying reference asset, or a credit default to royalty obligations based on the valuable minerals event, will give rise to a loss under the derivative produced from the properties and various methods of instrument. If a counterparty fails to fulfill its calculation. The most significant royalties are at the performance obligations under a derivative contract, Goldstrike, Bulyanhulu and Pascua-Lama properties. the Company’s credit risk will equal the fair-value gain Most of the property comprising Goldstrike is in a derivative. For the Company’s total return swaps, subject to a net smelter return (“NSR”) and net profits the maximum amount of credit risk is limited to the interest (“NPI”) royalities payable on the value of notional amount of the contract, plus or minus minerals produced from the property. The maximum unrealized gains or losses. Generally, when the fair royalties payable are a 5% NSR and a 6% NPI. The value of a derivative contract is positive, this indicates Bulyanhulu Property is subject to a NSR-type royalty that the counterparty owes the Company, thus creating of 3% on the valuable minerals produced from the a repayment risk for the Company. When the fair value Property. A portion of the Pascua-Lama Property of a derivative contract is negative, the Company owes is subject to a gross proceeds sliding scale royalty the counterparty and, therefore, assumes no repayment on gold produced from the Property ranging from risk. The Company minimizes its credit (or repayment) 1.5% to 10% and a 2% NSR royalty on copper produced. risk in derivative instruments by (1) entering into Another portion of the Property is subject to a 3% transactions with high-quality counterparties whose NSR on all gold and silver among other minerals, credit ratings are generally “AA” or higher, (2) limiting extracted. Royalty expense, which is included the amount of its exposure to each counterparty, in operating costs, was $41 million in 2001 (3) monitoring the financial condition of its (2000 – $42 million, 1999 – $35 million). counterparties, and (4) by ensuring that the reference assets in total return swaps are highly diversified such that concentrations of credit risk do not arise. The Company also maintains a policy of requiring that an International Swaps and Derivatives Association Master Agreement govern all derivative contracts. When the Company is engaged in more than one outstanding derivative transaction with the same counterparty and also has a legally enforceable master netting agreement with that counterparty, the “net” credit exposure represents the netting of the positive and negative exposures with that counterparty. When there is a net negative exposure, B 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. the Company regards its credit exposure to the C Litigation and claims counterparty as being zero. The net mark-to-market In October 1997, Homestake Canada Inc., (“HCI”) position with a particular counterparty represents a wholly-owned subsidiary of the Company entered a reasonable measure of credit risk when there is a into an agreement with Inmet Mining Corporation legally enforceable master netting agreement (i.e., (“Inmet”) to purchase the Troilus mine in Quebec for a legal right of a setoff of receivable and payable $110 million plus working capital. In December 1997, derivative contracts) between the Company and that HCI terminated the agreement after determining counterparty. The Company’s policy is to use master that, on the basis of due diligence studies, conditions netting agreements with all counterparties. to closing the arrangement would not be satisfied. On February 23, 1998, Inmet filed suit against HCI in has been set for July 9, 2002 in Texarkana, Texas, it the British Columbia Supreme Court, disputing the presently appears unlikely that the trial will commence termination of the agreement and alleging that HCI at that time. Discovery in the case has been stayed had breached the agreement. On Janaury 15, 2002, by the Court pending the Court’s decision on whether the Supreme Court of British Columbia released its or not to certify the case as a class action. The decision in the matter and found in favor of Inmet amount of potential loss, if any, which the Company and against HCI. Specifically, the Court held that may incur arising out of the plaintiffs claims is not Inmet should be awarded equitable damages in the currently determinable. amount of C$88.2 million. The Court did not award The Company is from time to time involved in Inmet prejudgement interest. Inmet has requested various claims, legal proceedings and complaints the Court to re-open the trial to permit Inmet to make arising in the ordinary course of business. The submissions on its claim for prejudgement interest Company is also subject to reassessment for income from the date of the breach by HCI. The Court has and mining taxes for certain years. It does not believe not yet ruled on Inmet’s request. On February 7, 2002, that adverse decisions in any pending or threatened HCI filed a Notice of Appeal of the decision with the proceedings related to any potential tax assessments British Columbia Court of Appeal. or other matters, or any amount which it may be On April 30, 1998, the Company was added as a required to pay by reason thereof, will have a material defendant in a class action lawsuit initiated against adverse effect on the financial condition or future Bre-X Minerals Ltd., certain of its directors and officers results of operations of the Company. 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. 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 Fourth Amended Complaint. On March 31, 2001, the Court granted in part and denied in part the Company’s Motion to Dismiss the Fourth Amended Complaint. As a result, D Commitments The Company has entered into various commitments during the ordinary course of business including commitments to perform assessment work and other obligations necessary to maintain or protect its interests in mining properties, financing and other obligations to joint ventures and partners under venture and partnership agreements, and commitments under federal and state environmental health and safety permits. 18 C O M P R E H E N S I V E I N C O M E ( L O S S ) 2001 2000 1999 Net income (loss) $ 96 $ (1,189) $ 244 Foreign currency translation adjustments (26) (60) 29 Transfer of losses on derivative instruments to earnings (note 16D) the Company remains a defendant in the case. Other The Company believes that the remaining claims against it are without merit. The Company filed its formal answer to the Fourth Amended Complaint on April 27, 2001 denying all relevant allegations of the plaintiffs against the Company. Although a trial date Comprehensive income (loss) $ 84 $ (1,256) $ 276 24 (10) - (7) - 3 7 8 S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C O T S E T O N 1 0 0 2 T R O P E R L A U N N A K C I R R A B Gold Mineral Reserves and Mineral Resources 8 8 S E C R U O S E R L A R E N I M D N A S E V R E S E R L A R E N I M 1 0 0 2 T R O P E R L A U N N A K C I R R A B The table on the next page sets forth Barrick’s interest in the total proven and probable gold mineral reserves at each property. For further details of proven and probable mineral reserves and estimates, however, and no assurance can be given that the indicated quantities of gold will be produced. Gold price fluctuations may render mineral reserves contain- ing relatively lower grades of gold mineralization measured, indicated and inferred mineral resources by uneconomic. Moreover, short-term operating factors category, see pages 89 to 91. relating to the mineral reserves, such as the need for The Company has carefully prepared and verified the orderly development of ore bodies or the processing of mineral reserve and mineral resource figures and new or different ore grades, could affect the Company’s believes that its method of estimating mineral reserves profitability in any particular accounting period. has been verified by mining experience. These figures are DEFINITIONS A MINERAL RESOURCE is a concentration or occurrence of natural, solid, inorganic or fos- silized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for eco- nomic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or inter- preted from specific geological evidence and knowledge. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories: An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geologi- cal and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical char- acteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic param- eters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered 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 measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical charac- teristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support produc- tion planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to con- firm both geological and grade continuity. A MINERAL RESERVE is the economically mine- able part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include ade- quate information on mining, processing, metal- lurgical, economic and other relevant factors that demonstrate, at the time of reporting, that eco- nomic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral reserves are sub- divided in order of increasing confidence into probable mineral reserves and proven mineral reserves: A probable mineral reserve is the economi- cally mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a prelimi- nary feasibility study. This study must include adequate information on mining, pro- cessing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasi- bility study. This study must include adequate information on mining, processing, metallurgi- cal, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. Summary Gold Mineral Reserves and Mineral Resources December 31, 2001 December 31, 2000 Tons (000s) Grade (oz/ton) Ounces (000s) Tons (000s) Grade (oz/ton) Ounces (000s) UNITED STATES Betze-Post Meikle Goldstrike Property Total Round Mountain (50%) Marigold (33%) CANADA Eskay Creek Hemlo (50%) Holt-McDermott SOUTH AMERICA Pascua-Lama Veladero Pierina AUSTRALIA Plutonic Lawlers Darlot Yilgarn District Total Kalgoorlie (50%) Cowal AFRICA Bulyanhulu OTHER TOTAL (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) (proven and probable) (mineral resource) 108,854 49,861 8,992 13,512 117,846 63,373 118,489 32,857 25,177 44,115 1,426 575 21,788 17,823 1,371 2,188 296,411 242,686 196,573 133,003 89,233 89,056 8,526 19,991 3,539 4,386 8,062 4,654 20,127 29,031 93,641 118,443 56,395 68,413 28,026 9,255 3,795 12,555 (proven and probable) (mineral resource) 1,070,298 863,373 0.151 0.069 0.439 0.433 0.173 0.147 0.019 0.015 0.027 0.014 1.245 0.504 0.116 0.067 0.214 0.237 0.057 0.030 0.043 0.030 0.053 0.015 0.186 0.134 0.143 0.195 0.166 0.118 0.171 0.141 0.061 0.079 0.049 0.031 0.428 0.465 0.111 0.141 0.077 0.054 16,433 3,450 3,946 5,847 20,379 9,297 2,245 493 680 632 1,775 290 2,517 1,203 293 518 16,862 7,166 8,416 3,954 4,748 1,332 1,588 2,686 505 854 1,341 549 3,434 4,089 5,724 9,303 2,770 2,133 12,009 4,308 420 1,773 82,272 46,491 116,449 55,892 14,100 10,234 130,549 66,126 136,600 9,353 10,085 6,880 1,617 456 14,610 442 2,088 2,829 296,411 242,685 88,843 135,558 92,925 17,753 9,501 9,272 2,605 2,638 8,921 3,904 21,027 15,814 104,555 81,020 - - 23,373 7,383 10,763 17,208 933,446 603,507 0.155 0.063 0.458 0.365 0.187 0.110 0.019 0.022 0.035 0.029 1.310 0.387 0.164 0.141 0.194 0.155 0.057 0.030 0.044 0.044 0.061 0.033 0.131 0.163 0.145 0.188 0.157 0.111 0.144 0.154 0.060 0.072 - - 0.428 0.618 0.113 0.146 0.085 0.062 18,000 3,509 6,451 3,739 24,451 7,248 2,609 206 355 200 2,118 176 2,397 62 406 438 16,862 7,166 3,920 5,930 5,655 586 1,240 1,511 378 496 1,405 433 3,023 2,440 6,270 5,833 - - 10,015 4,566 1,219 2,507 79,300 37,358 9 8 S E C R U O S E R L A R E N I M D N A S E V R E S E R L A R E N I M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Gold Mineral Reserves As at December 31, 2001 PROVEN PROBABLE TOTAL Based on attributable ounces (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) Tons Grade Ounces Tons Grade Ounces Ton Grade Ounces UNITED STATES Betze-Post Meikle Goldstrike Property Total Round Mountain (50%) Marigold (33%) CANADA Eskay Creek Hemlo (50%) Holt-McDermott SOUTH AMERICA Pascua-Lama Veladero Pierina AUSTRALIA Plutonic Lawlers Darlot Yilgarn District Total Kalgoorlie (50%) Cowal AFRICA Bulyanhulu OTHER TOTAL 0 9 S E C R U O S E R L A R E N I M D N A S E V R E S E R L A R E N I M 1 0 0 2 T R O P E R L A U N N A K C I R R A B 54,445 2,288 56,733 87,983 5,047 0.135 0.549 0.152 0.018 0.030 7,340 1,256 8,596 1,587 154 756 15,756 127 1.697 0.116 0.196 1,283 1,835 25 54,409 6,704 61,113 30,506 20,130 670 6,032 1,244 0.167 0.401 0.193 0.022 0.026 0.734 0.113 0.215 9,093 2,690 11,783 658 526 108,854 8,992 117,846 118,489 25,177 0.151 0.439 0.173 0.019 0.027 16,433 3,946 20,379 2,245 680 492 682 268 1,426 21,788 1,371 1.245 0.116 0.214 1,775 2,517 293 37,738 14,781 53,540 0.062 0.053 0.054 2,355 787 2,891 258,673 181,792 35,693 0.056 0.042 0.052 14,507 7,629 1,857 296,411 196,573 89,233 0.057 0.043 0.053 16,862 8,416 4,748 2,112 1,036 5,218 8,366 42,108 3,058 0.045 0.141 0.156 0.126 0.057 0.055 96 146 815 1,057 2,417 169 6,414 2,503 2,844 11,761 51,533 53,337 0.233 0.143 0.185 0.202 0.064 0.049 1,492 359 526 2,377 3,307 2,601 8,526 3,539 8,062 20,127 93,641 56,395 0.186 0.143 0.166 0.171 0.061 0.049 1,588 505 1,341 3,434 5,724 2,770 1,463 0.412 3,652 0.110 603 401 26,563 0.429 11,406 28,026 0.428 12,009 143 0.133 19 3,795 0.111 420 331,108 0.073 24,160 739,190 0.079 58,112 1,070,298 0.077 82,272 MINERAL RESERVES AND MINERAL RESOURCES NOTES 1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2001 in accordance with National Instrument 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the Securities Exchange Act of 1934) as interpreted by the Staff of the U.S. Securities and Exchange Commission requires completion of a full feasibility study in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, the mineralization at Veladero is classified as indicated resources. 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. Except with respect to the Australian properties, reserves and resources have been calculated using an assumed long-term average gold price of $300 and a silver price of $5.00. Reserves and resources at the Australian properties have been calculated using an assumed gold price of A$475 (for Kalgoorlie, Plutonic and Cowal) or A$500 (for Lawlers and Darlot). Such calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type of ore contained in the reserves. Barrick’s normal data verification procedures have been employed in connection with the calculations. For a more detailed description of the key assumptions, parameters and methods used in calculating Barrick’s reserves and resources, see Barrick’s most recent Annual Information Form on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission. 2. Resources which are not reserves do not have demonstrated economic viability. Gold Mineral Resources As at December 31, 2001 MEASURED (M) INDICATED (I) (M) + (I) INFERRED Based on attributable ounces (000s) (oz/ton) (000s) (000s) (oz/ton) (000s) Tons Grade Ounces Tons Grade Ounces Ounces (000s) Tons Grade Ounces (000s) (oz/ton) (000s) UNITED STATES Betze-Post Meikle Goldstrike Property Total Round Mountain (50%) Marigold (33%) CANADA Eskay Creek Hemlo (50%) Holt-McDermott SOUTH AMERICA Pascua-Lama Veladero Pierina AUSTRALIA Plutonic Lawlers Darlot Yilgarn District Total Kalgoorlie (50%) Cowal AFRICA Bulyanhulu OTHER TOTAL 14,497 2,784 17,281 1,479 4,922 - 3,845 115 3,962 3,951 10,061 1,499 1,491 2,100 5,090 26,125 1,480 0.067 0.756 0.178 0.023 0.017 - 0.047 0.200 0.055 0.034 0.011 0.057 0.172 0.132 0.121 0.069 0.019 2,104 3,072 34 84 - 181 23 216 133 112 85 256 277 618 1,791 28 968 34,626 4,912 39,538 2,434 31,707 426 3,884 1,247 0.070 0.370 0.107 0.024 0.014 0.460 0.050 0.236 2,429 1,819 4,248 58 432 196 196 295 3,397 3,923 7,320 92 516 196 377 318 738 5,816 6,554 28,944 7,486 149 10,094 826 111,883 60,731 73,281 0.031 0.030 0.015 3,475 1,831 1,130 3,691 1,964 1,242 126,841 68,321 5,714 12,994 1,972 2,526 17,492 50,265 30,024 0.136 0.210 0.105 0.139 0.081 0.019 1,761 1,846 5,498 413 264 2,438 4,090 567 669 541 3,056 5,881 595 923 28 6,449 42,053 36,909 0.071 0.331 0.302 0.014 0.016 0.629 0.082 0.243 0.027 0.029 0.016 0.153 0.200 0.286 0.160 0.081 0.042 53 1,924 1,977 401 116 94 826 200 3,475 1,990 90 840 185 8 1,033 3,422 1,538 - - - 5,429 0.402 2,184 2,184 3,826 0.555 2,124 1,236 0.121 150 9,264 0.087 805 955 2,055 0.398 818 79,547 0.081 6,442 437,605 0.050 21,945 28,387 346,221 0.052 18,104 1 9 S E C R U O S E R L A R E N I M D N A S E V R E S E R L A R E N I M 1 0 0 2 T R O P E R L A U N N A K C I R R A B Supplemental Information 3-Year Historical Review (1) (US GAAP basis) Operating results (in millions) Gold sales Net income (loss) Operating cash flow Capital expenditures Per share data Net income (loss) Cash dividends Operating cash flow Book value Financial position (in millions) Cash and short-term investments Total assets Working capital Long-term debt(2) Shareholders’ equity Operational statistics (unaudited) Gold production (thousands of ounces) Total cash operating costs per ounce Average price realized per ounce of gold sold Average spot price of gold per ounce Reserves (proven and probable) (thousands of ounces) Other Net debt to total capitalization(3) Shares outstanding (millions) 2 9 N O I T A M R O F N I L A T N E M E L P P U S 1 0 0 2 T R O P E R L A U N N A K C I R R A B 2001 2000 1999 $ 1,989 $ 1,936 $ 2,057 $ $ $ $ $ 96 721 607 0.18 0.22 1.35 5.96 733 5,202 484 793 3,192 6,124 162 317 271 82,272 2% 536 (1,189) 940 710 $ (2.22) $ $ $ $ 0.22 1.76 5.95 822 5,393 576 901 3,190 5,950 155 334 279 79,300 2% 536 $ $ $ $ $ 244 820 787 0.45 0.20 1.55 8.45 766 6,791 646 803 4,514 5,801 152 351 279 78,049 1% 534 1. All amounts prior to 2001 have been restated to reflect the merger with Homestake as a pooling-of-interests (see note 1 to notes to consolidated financial statements). Information for all years has been derived from audited financial statements, except as indicated. 2. Long-term debt excludes current portion of $9 million in 2001, $3 million in 2000 and $37 million in 1999. 3. Net debt to total capitalization is the ratio of debt less cash and short-term investments to debt plus shareholders’ equity. Corporate Governance The Company, the Board of Directors business, are subject to approval by the Governance Committee are comprised of and management of Barrick emphasize Board of Directors. effective corporate governance. Accordingly, they have developed systems BOARD CONSTITUTION a majority of unrelated directors. Half of the Environmental, Occupational Health and Safety Committee is comprised of and procedures that are appropriate to Barrick’s Board of Directors is currently unrelated directors. the Company and its business. The Board comprised of 13 directors, five of whom The Board of Directors believes that it is of Directors is continuing to monitor its are unrelated to the Company. The desirable for the majority of the Executive governance practices to ensure they composition of the Board reflects a Committee to be related to the Company remain appropriate and responsive to breadth of background and experience since its mandate requires members to be changing circumstances. that is important for effective governance available on very short notice to deal with of a company in the mining industry. significant issues. All actions approved by BOARD MANDATE Barrick’s management is responsible BOARD OPERATIONS the Executive Committee are subsequently brought to the attention of the full Board of for the Company’s day-to-day operations, The Board of Directors has established Directors. The fact that a majority of the for proposing its strategic direction and five committees, comprised of the Audit, members of the Finance Committee are relat- presenting budget and business plans Executive, Compensation and Corporate ed to the Company is balanced by the fact to the Board of Directors for approval. Governance, Environmental, Occupational that the recommendations of the Committee All major acquisitions, dispositions and Health and Safety and Finance Committees. are considered by the full Board of Directors. investments, as well as significant The mandates of these Committees A detailed Statement of Corporate financings and other significant matters are described below. The Audit Committee Governance Practices appears in the outside the ordinary course of Barrick’s and the Compensation and Corporate Company’s Information Circular. Committees of the Board AUDIT COMMITTEE COMPENSATION AND CORPORATE ENVIRONMENTAL, OCCUPATIONAL (H.L. Beck, C.W.D. Birchall, P.A. Crossgrove) GOVERNANCE COMMITTEE HEALTH AND SAFETY COMMITTEE Responsible for reviewing the Company’s (A.A. MacNaughton, P.A. Crossgrove, (P.A. Crossgrove, J.K. Carrington, financial statements and Management’s J.L. Rotman) M.A. Cohen, J.E. Thompson) Discussion and Analysis with Reviews and approves compensation Reviews the Company’s environmental management and the external auditors. policies and practices and reviews and occupational health and safety The Committee also reviews the external and recommends to the Board the policies and programs, oversees its audit plan, the adequacy of internal remuneration for directors and senior environmental and occupational health control systems and meets with the management of the Company. and safety performance, and monitors external auditors to discuss financial The Committee also administers current and future regulatory issues. reporting issues relevant to the Company. the Company’s stock option plan. In addition, the Committee reviews FINANCE COMMITTEE EXECUTIVE COMMITTEE corporate governance policies and (C.W.D. Birchall, A.A. MacNaughton, (P. Munk, A.A. MacNaughton, B. practices. It also considers candidates A. Munk, R. Oliphant, G.C. Wilkins) Mulroney, R. Oliphant, G.C. Wilkins) for election as directors, annually Reviews the Company’s investment Exercises all the powers of the Board recommends to the Board the slate strategies, Premium Gold Sales of Directors (except those powers of nominees for election to the Board Program and debt and equity specifically reserved by law to the by the shareholders and recommends structure. Board of Directors) in the management to the Board nominees to fill vacancies and direction of business during on the Board. intervals between Board meetings. 3 9 D R A O B E H T F O S E E T T I M M O C D N A E C N A N R E V O G E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B 4 9 S R O T C E R I D F O D R A O B 1 0 0 2 T R O P E R L A U N N A K C I R R A B Board of Directors HOWARD L. BECK, Q.C. PETER A. CROSSGROVE ANTHONY MUNK JOSEPH L. ROTMAN, O.C. Chairman, Wescam Inc. Toronto, Ontario Mr. Beck was a founding Chairman, Masonite Toronto, Ontario Vice President, Partner of the law firm International Corporation Onex Corporation Toronto, Ontario Chairman and Chief Executive Officer, Davies, Ward & Beck. Mr. Crossgrove has been Mr. Munk became a member Roy-L Capital Corporation He has been on the involved in a number of of the Board of Directors Mr. Rotman has been Barrick Board since 1984. mining companies. He has in 1996. He is a Partner a director of Barrick since C. WILLIAM D. BIRCHALL since 1993. diversified manufacturing been a director of Barrick of Onex Corporation, a its inception. Nassau, Bahamas Corporate Director ANGUS A. MACNAUGHTON and service company. JACK E. THOMPSON Mr. Birchall has had a long Danville, California PETER MUNK, O.C. Alamo, California Vice Chairman, association with Barrick, President, Genstar Toronto, Ontario Barrick Gold Corporation being one of the original Investment Corporation Chairman, Barrick Mr. Thompson was appointed Board members of the Mr. MacNaughton is a Gold Corporation to the Board on December 14, Company. Vice Chairman of Barrick. Mr. Munk is the founder 2001 upon the completion of He has been a member of and Chairman of the Board the merger with Homestake JOHN K. CARRINGTON the Board since 1986. of Barrick Gold Corporation. Mining Company. Prior to that Thornhill, Ontario Vice Chairman and THE RIGHT and Chairman of TrizecHahn Chairman and Chief Executive He is also the founder time, Mr. Thompson was Chief Operating Officer, HONOURABLE BRIAN Corporation. Officer of Homestake. Barrick Gold Corporation MULRONEY, P.C., LL.D. Mr. Carrington was appointed Montreal, Quebec RANDALL OLIPHANT GREGORY C. WILKINS a Vice Chairman of the Senior Partner, Company in March 1999 in Ogilvy Renault Toronto, Ontario President and Chief Toronto, Ontario Vice Chairman, addition to his role as Chief Mr. Mulroney was Prime Executive Officer, TrizecHahn Corporation Operating Officer, which he Minister of Canada from Barrick Gold Corporation Mr. Wilkins was Executive assumed at the end of 1996. 1984 to 1993. He joined Mr. Oliphant was appointed Vice President and Chief He has been a member of the the Barrick Board in 1993 President and Chief Executive Financial Officer of Barrick Barrick Board since 1996. and is Chairman of the Officer of Barrick in March until his appointment at MARSHALL A. COHEN, O.C. Advisory Board. Executive Vice President Corporation) in September Company’s International 1999. Previously he was Horsham (now TrizecHahn 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. and Chief Financial Officer. 1993. He has been a member He has been on the Board of the Board since 1991. since 1997. Mr. Oliphant joined Barrick in 1987. Officers PETER MUNK Chairman ALAN R. HILL MICHAEL J. BROWN Executive Vice President, Vice President, JOHN T. MCDONOUGH Vice President, Environment Development United States Public Affairs ANGUS A. MACNAUGHTON Vice Chairman JOHN BUTLER ANDRÉ R. FALZON STEPHEN A. ORR Vice President, Senior Vice President, Vice President and Controller North American Operations JACK E. THOMPSON Corporate Development Vice Chairman GORDON FIFE ALEXANDER J. DAVIDSON Vice President, DAVID W. WELLES Vice President and RANDALL OLIPHANT Senior Vice President, Organizational Effectiveness Tax Counsel President and Chief Executive Officer Exploration JAMES FLEMING RICHARD S. YOUNG JOHN K. CARRINGTON Senior Vice President and Communications JAMIE C. SOKALSKY Vice President, Vice President, Investor Relations Vice Chairman and Chief Operating Officer Chief Financial Officer GREGORY A. LANG SYBIL E. VEENMAN PATRICK J. GARVER Vice President and Treasurer Australian Operations and Secretary AMMAR AL-JOUNDI Vice President, Associate General Counsel Executive Vice President and General Counsel M. VINCENT BORG Vice President, Corporate Communications International Advisory Board The International Advisory HONOURABLE PAUL PETER MUNK Board was established to G. DESMARAIS, SR. provide advice to Barrick’s Canada Canada Chairman, JOSÉ E. ROHM Argentina Managing Director, Board of Directors and management as the Company expands internationally. CHAIRMAN Director and Chairman Barrick Gold Corporation Banco General de Negocios of Executive Committee, and Chairman, Power Corporation TrizecHahn Corporation of Canada VERNON E. JORDAN, JR. BAYSWATER KCMG LORD POWELL OF THE HONORABLE ANDREW YOUNG United States Chairman, THE RIGHT HONOURABLE United States United Kingdom GoodWorks International BRIAN MULRONEY Former Prime Minister Senior Managing Director, Chairman, Sagitta Asset Lazard Freres & Co., LLC Management Limited and Of Counsel to Akin, Gump, Strauss, Hauer & KARL OTTO PÖHL Feld, LLP Germany Senior Partner, Sal. Oppenheim Jr. & Cie. of Canada MEMBERS SECRETARY WILLIAM S. COHEN United States Chairman and Chief Executive Officer, The Cohen Group 5 9 D R A O B Y R O S I V D A L A N O I T A N R E T N I D N A S R E C I F F O 1 0 0 2 T R O P E R L A U N N A K C I R R A B 6 9 N O I T A M R O F N I R E D L O H E R A H S 1 0 0 2 T R O P E R L A U N N A K C I R R A B Shareholder Information SHARES TRADED ON FIVE S&P/TSE Composite VOLUME OF SHARES TRADED MAJOR INTERNATIONAL TSE Gold & Precious Minerals Index STOCK EXCHANGES S&P/TSE Canadian Materials New York Toronto London Paris Swiss TICKER SYMBOL ABX Sector Index FT of London Gold Index Philadelphia Gold/Silver Index (millions) 2001 2000 TSE NYSE 388 428 282 318 CLOSING PRICE OF SHARES 2001 DIVIDEND PER SHARE US$ 0.22 December 31, 2001 COMMON SHARES (millions) Outstanding at TSE NYSE C$ 25.45 US$ 15.95 NUMBER OF SHAREHOLDERS December 31, 2001 536* 27,238 Weighted average – 2001 INDEX LISTINGS S&P 500 S&P/TSE 60 S&P Global 1200 TSE 100 Basic Diluted 536* 538* *Includes shares issuable upon exchange of HCI (Homestake Canada Inc.) exchangeable shares. Share Trading Information Toronto Stock Exchange Share Volume (millions) High Low Quarter First Second Third Fourth 2001 2000 2001 2000 2001 2000 74 109 100 105 388 81 72 50 79 282 C$27.48 C$25.25 C$21.10 C$23.17 29.65 28.59 28.25 28.10 25.95 24.12 21.65 21.95 22.15 24.18 23.00 20.53 New York Stock Exchange Share Volume (millions) High Low Quarter First Second Third Fourth 2001 2000 2001 2000 2001 2000 90 118 108 112 428 88 89 59 82 318 US$17.59 US$19.75 US$13.70 US$15.63 19.37 17.98 17.95 20.00 18.38 17.26 13.72 14.20 13.96 15.50 14.81 12.31 DIVIDEND PAYMENTS OTHER LANGUAGE REPORTS TRANSFER AGENTS In 2001, the Company paid a cash French and Spanish versions of AND REGISTRARS dividend of $0.22 per share – $0.11 on this annual report are available CIBC Mellon Trust Company June 15 and $0.11 on December 14. from Investor Relations at the P.O. Box 7010 A cash dividend of $0.22 per share Corporate Office. Adelaide Street Postal Station was paid in 2000 – $0.11 on June 15 Toronto, Ontario M5C 2W9 and $0.11 on December 15. DIVIDEND REINVESTMENT Telephone: (416) 643-5500 PROGRAM Toll-free throughout North America: DIVIDEND POLICY The Canadian Shareowners 1-800-387-0825 The amount and timing of any Association, a non-profit educational Fax: (416) 643-5501 dividend is determined by the organization of retail investors, has Email: inquiries@cibcmellon.com Board of Directors. The Board of selected Barrick to be a part of its Web site: www.cibcmellon.com Directors reviews the dividend policy dividend reinvestment program for semi-annually based on the cash Canadian investors. Barrick share- Mellon Investor Services, L.L.C. requirements of the Company’s holders interested in this program 85 Challenger Road operating assets, exploration and should contact the Association at: Overpeck Center development activities, as well as Telephone: (416) 595-9600 Ridgefield Park, New Jersey 07660 potential acquisitions, combined Fax: (416) 595-0400 Telephone: (201) 329-8660 with the current and projected Email: questions@shareowner.ca Toll-free within the United States: financial position of the Company. Web site: www.shareowner.ca 1-800-589-9836 Web site: www.mellon-investor.com FORM 40-F SHAREHOLDER CONTACTS Annual Report on Form 40-F Shareholders are welcome ANNUAL MEETING is filed with the United States to contact the Company for The Annual General Meeting of Securities and Exchange information or questions Shareholders will be held on Commission. This report will be concerning their shares. For Wednesday, May 8, 2002 at made available to shareholders, general information on the 10:00 a.m. in the Canadian Room, without charge, upon written Company, contact the Investor Fairmont Royal York Hotel, request to the Secretary of the Relations Department. Toronto, Ontario Company at the Corporate Office. For information on such 7 9 N O I T A M R O F N I R E D L O H E R A H S 1 0 0 2 T R O P E R L A U N N A K C I R R A B matters as share transfers, dividend cheques and change of address, inquiries should be directed to the Secretary of Barrick or the Transfer Agents. 8 9 N O I T A M R O F N I E T A R O P R O C 1 0 0 2 T R O P E R L A U N N A K C I R R A B Corporate Information CORPORATE OFFICE Eskay Creek Pierina Mine CORPORATE DATA 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 No. 1 Airport Way Smithers, B.C. Canada V0J 2N0 Gary Biles General Manager Pasaje Los Delfines, 159 3er Piso Urb. Las Gardenias Lima 33, Peru Igor Gonzales Telephone: (604) 522-9877 Vice President and Fax: (604) 515-5241 General Manager Telephone: (51-1) 275-0600 Hemlo Operations Fax: (51-1) 275-3733 P.O. Bag 500 MINING OPERATIONS Marathon, Ontario East Africa North America Goldstrike Property: Betze-Post Mine and Meikle Mine P.O. Box 29 Elko, Nevada U.S.A. 89803 Stephen Lang Vice President and General Manager Telephone: (775) 738-8043 Fax: (775) 738-7685 Round Mountain Gold P.O. Box 480 Round Mountain Nevada U.S.A. 89045 Mike Doyle General Manager Telephone: (775) 377-2366 Fax: (775) 377-3240 Canada P0T 2E0 Peter Rowlandson Area General Manager Telephone: (807) 238-1100 Fax: (807) 238-1050 Holt-McDermott Mine P.O. Box 278 Kirkland Lake, Ontario Canada P2N 3H7 Brian Grebenc Mine Manager Bulyanhulu Mine International House, Level 2 Shaaban Robert Street/ Garden Avenue P.O. Box 108 Dar es Salaam, Tanzania Roy Meade Vice President and General Manager Telephone: (705) 567-9251 Fax: (705) 567-6867 Australia Australian Operations 2 Mill Street 10th Floor Perth, WA 6000 Australia Gregory Lang Vice President, Australian Operations Telephone: (61-8) 9212-5777 Fax: (61-8) 9322-5700 South America Chilean Operations Av. Pedro de Valdivia 100 Piso II. Providencia Santiago, Chile Raymond Threlkeld Vice President, Operations and Development, Chile/Argentina Telephone: (56-2) 340-2022 Fax: (56-2) 233-0188 Telephone: (255-51) 123-181 Investor Relations Officer Fax: (255-51) 123-180 Telephone: (416) 307-7440 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: (416) 307-7441 Fax: (416) 861-0727 Email: ksipos@barrick.com Sandra Grabell 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 e n w o B : I T N R P 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 , l i y a n K c a M h t i d e r e M : 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 FO R WA R D L O O K I N G S TAT E M E N T S Certain statements included herein, including those regarding, production, realized gold prices and costs 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 Barrick’s most recent Annual Information Form and “Management’s Discussion and Analysis of Financial and Operating Results” on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. 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 website at www.barrick.com