Abacus Global Management, Inc. Annual Report 2003

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FY2003 Annual Report · Abacus Global Management, Inc.

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What we said. What we did. What’s next.

A Progress Report

You can contact us toll-free within
Canada and the United States: 800-720-7415

email us at: investor@barrick.com

visit our investor relations website: www.barrick.com

BARRICK GOLD

2003 Annual Report

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BARRICK AT A GLANCE

Barrick Gold Corporation is among the world’s largest gold producers in terms of market
capitalization, production and reserves. Barrick operates a low-cost portfolio of 12 mines and

four major development projects on four continents. Combined with the industry’s only A-rated

balance sheet and an aggressive exploration program, these assets position Barrick to prosper in

the years ahead.

In 2003 Barrick produced 5.51 million ounces of gold at an average total cash cost of $189 per

ounce1 – the lowest cash cost among senior gold producers. The Company’s development plan

is expected to add four major new mines – Veladero, Alto Chicama, Cowal, and Pascua-Lama –

between 2005 and 2008. Together, these mines are projected to produce approximately 2 million-

plus ounces of gold annually. Their average cost will be well below our current cash cost over

their ﬁ rst decade of operation, augmenting the quality and proﬁ tability of Barrick’s existing

production portfolio.

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.

1. See page 58 for a discussion of non-GAAP measures.

Global Diversiﬁ cation

28%

44%

North America

South America

60%

20%

15%

13%

Australia
East Africa

13%

North America
South America

Australia

East Africa

ﬁ g. 1 2003 Reserves

ﬁ g. 2 2004E Production

Barrick’s diversified portfolio provides a truly
global presence on four continents.

Contents

Financial Highlights

Letter to Shareholders

Operations Review

Reserves: Replacement and Growth

Operational Review

Financial Strategy

pg. 1

pg. 2

pg. 11

pg. 13

pg. 18

pg. 20

Management’s Discussion and Analysis

Financial Statements

Notes to Financial Statements

Reserves

Board of Directors and Officers

Shareholder Information

Corporate Information

pg. 21

pg. 64

pg. 68

pg. 109

pg. 116

pg. 118

pg. 120

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Forward-Looking Statements

Certain statements included herein, including those regarding production and costs and other statements

that express management’s expectations or estimates of our future performance, constitute “forward-

looking statements” within the meaning of the United States Private Securities Litigation Reform Act of

1995. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “intends”,

“continue”, “budget”, “estimate”, “may”, “will”, “schedule”, and similar expressions identify forward-

looking statements. Forward-looking statements are necessarily based upon a number of estimates and

assumptions that, while considered reasonable by management, are inherently subject to significant

business, economic and competitive uncertainties and contingencies. In particular, our Management’s

Discussion and Analysis includes many such forward-looking statements and we caution you that such

forward-looking statements involve known and unknown risks, uncertainties and other factors that may

cause the actual financial results, performance or achievements of Barrick to be materially different from

our estimated future results, performance or achievements expressed or implied by those forward-looking

statements and our forward-looking statements are not guarantees of future performance. These risks,

uncertainties and other factors include, but are not limited to: changes in the worldwide price of gold or

certain other commodities (such as silver, copper and electricity) and currencies; legislative, political or

economic developments in the jurisdictions in which Barrick carries on business; operating or technical

difficulties in connection with mining or development activities; the speculative nature of gold exploration

and development, including the risks of diminishing quantities or grades of reserves; and the risks involved

in the exploration, development and mining business. These factors are discussed in greater detail in

Barrick’s most recent Form 40-F/Annual Information Form on file with the US Securities and Exchange

Commission and Canadian provincial securities regulatory authorities.

Barrick expressly disclaims any intention or obligation to update or revise any forward-looking statements

whether as a result of new information, events or otherwise.

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FINANCIAL HIGHLIGHTS

2003 Year in Review Barrick met its production and total cash cost targets for the year, as it
advanced its development plans to bring four major new mines into production beginning in 2005.

Financial Highlights

(in millions of US dollars, except per share data)

(US GAAP basis)

Gold Sales

Net Income for the Year

Operating Cash Flow

Operating Cash Flow Excluding

Inmet Settlement

Cash and Equivalents

Shareholders’ Equity

Net Income per Share (Diluted)

Operating Cash Flow per Share

Operating Cash Flow per Share
Excluding Inmet Settlement1

Dividends per Share

Operating Highlights

Gold Production (thousands of ounces)

Average Realized Gold Price per Ounce

Total Cash Costs per Ounce1

Total Production Costs per Ounce1

2003

2002

2001

$2,035

$1,967

$1,989

200

521

607

970

3,494

0.37

0.97

1.13

193

589

1,044

3,334

0.36

1.09

588

779

3,192

0.18

1.10

0.22

5,510

$366

$189

$279

5,695

6,124

$339

$177

$268

$317

$162

$247

Reserves: Proven and Probable (thousands of ounces)

85,952

86,927

82,272

Gold Hedge Position (millions of ounces)

15.5

18.1

24.1

Financial Review

> In 2003 gold revenue increased, as rising spot gold prices more than offset lower production
due to the planned closure of five mines in 2002.

> Earnings were slightly higher in 2003 compared to 2002, as higher realized gold prices combined
with a $71 million non-hedge derivative gain, and $39 million in asset sales more than offset
higher total cash costs per ounce, $33 million higher exploration and business development
costs and a $16 million charge related to the settlement of the Inmet litigation.

> In 2003 operating cash flow was slightly lower than 2002. Excluding the impact of the $86 million

Inmet settlement, operating cash flow was higher than 2002, as higher realized gold prices

more than offset increased total cash costs and higher cash payments for income taxes.

> Over the course of the year, the Company bought back 8.75 million common shares
at a total cost of $154 million.

> The year-end gold hedge position declined to 15.5 million ounces, down 2.6 million ounces from the
previous year-end. The position has been reduced by 8.6 million ounces, or 36%, over the past two years.

1. See page 58 for a discussion of non-GAAP measures.

LETTER TO SHAREHOLDERS

A Progress Report

What we’ve accomplished and the
changes we’ve made, as Barrick builds
our next generation of mines.

Dear Shareholders:

Together, we’ve come through a milestone
year, both for Barrick and for the gold
industry. We are encouraged by the strong
gold environment we experienced in 2003,
and are poised to benefit in 2004 and beyond
from the transformation of our Company
that is well underway. That transformation
will continue in 2004 as we build our four
exciting new development projects, and
extend the life and contributions of our
existing properties.

As a company, we are focused on broadening
our leadership position in the industry.
This process has involved implementing
major changes – including a new
organizational design, strengthened
operations and new financial strategies.

To be sure, this past year saw significant
economic and political uncertainty,
leading, in part, to the improved gold price.
With continued pressure on the US dollar and
the war in Iraq, gold played its historic role
as a safe haven and store of value in difficult
times, reaching an almost 14-year high
of $415. Based on our reading of the
fundamentals, we see the rally as sustainable,
with significant upside potential. When you
couple gold’s strengths with those of Barrick,
you can see why we believe strongly that this
is a great time to be building new mines and
bringing new ounces into production.

As you’ll notice from this year’s cover,
our approach in this report is to start with
what we said we’d do, report on what we did
– both in terms of work completed and work

LETTER TO SHAREHOLDERS

underway – and share with you our plan for
what’s next, to restore our company to its
historic position as the investment of choice
in the world gold industry. This, then,
is a progress report in every sense of that
term: Not simply a report on what
we’ve accomplished – but on the changes
we’ve made, and the opportunities we’re
creating as Barrick works to build its future.

What We Said.

Our fundamentals are strong. With the
portfolio of assets Barrick had in place
in 2003, our focus was on execution:
Delivering at our existing mines, advancing
our development projects, and making
new exploration discoveries. We also felt
strongly that we needed to review our

financial strategies and change our corporate
organization to fit the global company
we’ve become. Our view was that if we were
diligent in doing these things, shareholders
would appreciate that Barrick has the assets,
the experience and the strategy to create
value now and in the future.

What We Did.

If 2003 was the year to execute – we did.
We met our targets, producing 5.51 million
ounces at $189 an ounce1, making Barrick
the lowest-cost senior producer in the industry.
We earned $200 million, 37 cents per share,
with operating cash flow of $521 million.
And we delivered that performance during
a period of transition for our company
and our industry.

$ 425

400

375

350

325

300

275

2002

2003

2004

ﬁ g. 3 Gold Price Performance

The current gold rally appears to be sustainable,

with significant upside potential

1. See page 58 for a discussion of non-GAAP measures.

LETTER TO SHAREHOLDERS

New decentralized structure
For over a decade after its founding, Barrick
was essentially a one-mine company,
with no operations outside North America.
Over time, we expanded through acquisition
and exploration – first to South America,
then to Africa and Australia and more recently
to Russia, giving us a truly global presence.
Yet our organizational structure did not
evolve with our operational reach. In response,
in 2003 we reorganized the Company into
three regions – North America, South America
and Australia/Africa to better fit our growing
global footprint, and we’re supporting
those regional operations with financial
management and technical expertise from
our corporate center.

Under this new structure, each region has
responsibility for life-of-mine activities,
from development to closure, reporting
directly to our new Chief Operating Officer,
Peter Kinver, who joined us during the year.

We have been pleased with the smooth
transition as Peter took the reins from John
Carrington effective with the new year,
and we’re equally pleased that John will
stay on through 2004.

Overall mine performance on track
We’re already beginning to see the benefits
of this new structure. Of our 12 mines,
eight met or exceeded our expectations in
2003. Goldstrike in Nevada led with another
2-million-ounce year – its eighth straight –
while Pierina in Peru continued to outperform
expectations, producing over 900,000 ounces.
Our Australian operations, led by Kalgoorlie,
delivered a record year in terms of production
and were on target for costs. At the two
properties that presented our principal
challenges, Meikle in Nevada and Bulyanhulu
at Tanzania, we worked diligently to
overcome our operating issues, ending the
year with Meikle stabilized and Bulyanhulu
ready to improve its performance this year.

“In 2003, Barrick’s total cash costs
were the lowest of any senior producer
in the gold industry.”

LETTER TO SHAREHOLDERS

“We made signiﬁ cant advances on our
development projects as we prepare to bring
four major new mines into production,
beginning in 2005.”

Development projects advanced
Equally important, during 2003 we made
significant advances on all properties in
Barrick’s development pipeline, as we
prepare to bring four major new mines
into production over the next four years.
Veladero in Argentina began construction
in the fourth quarter of 2003. At the adjacent
Pascua project on the Chile/Argentina
border, we are near finalizing our optimization
study, scheduled for completion in mid-2004.
At Alto Chicama in Peru, we submitted
our Environmental Impact Statement and
completed all public hearings, while at Cowal
in Australia, we largely completed the
permitting and engineering phases. As you’ll
see below, even since the close of 2003
we’ve made significant progress moving
our projects toward production.

When fully operational, our four new mines
represent a combined 2 million-plus ounces
of new production annually – the best pipeline
of new projects in the gold mining industry.
In addition, as 2003 closed, we added a fifth
project to our pipeline: Tulawaka – a small,

high-return property in Tanzania, which we
expect will commence production within
a year. Our mix of properties across the
globe speaks to the strength and flexibility
of this Company to take on projects of
different sizes in different areas and still
achieve profitable growth.

Continued investment in exploration
We also continued our aggressive exploration
efforts in 2003, maintaining one of the
industry’s largest exploration budgets. We’ve
sustained our exploration program through
the tough times in the gold business, and
we’ve seen that investment pay off – for
example, with Alto Chicama, the industry’s
biggest grassroots discovery in the past decade.
Our strategy is to have projects at all stages of
the exploration continuum, from grassroots to
predevelopment, to continually feed our
pipeline of projects and replace mines that
mature. In 2003 we also forged new strategic
partnerships in Russia and Mongolia, opening
a window onto some of the world’s most
prospective land positions.

LETTER TO SHAREHOLDERS

“In 2003 we adopted a no-hedge policy.”

In recent years, our large gold reserve base has
given us the option of drilling when and
where it proves most efficient and economic
for the Company. During 2003 Barrick
virtually replaced its production, remaining
at 86 million ounces at year-end1. In addition,
we had 25 million ounces of resources
at year-end. In 2004 our focus will be on
moving resources to reserve status while we
bring additional reserves into production.

Continued financial strength
One of the reasons Barrick has been able
to advance an ambitious exploration and
development program is the financial strength
we’ve built over the years, with the industry’s
only A-rated balance sheet and nearly
$1 billion in cash. We also improved our
capital structure and lowered our cost of
capital through a share buyback in 2003.

By year’s end, we had repurchased
8.8 million common shares at an average
price of $17.56 per share.

New no-hedge gold policy
For most of Barrick’s history, forward sales
were a significant element in providing the

Company the predictable revenue that helped
fuel our growth. Barrick has a solid portfolio
of assets and a very strong financial position,
so as times changed and market sentiment
imposed a penalty on derivatives of all types,
we took a major step in late 2003, adopting
a no-hedge gold policy. This means that we
will not add any new ounces to the program,
and will pursue opportunities to reduce
our position to zero over time. The flexibility
in our hedge contracts enables us to deliver
gold whenever we choose over the ten-year
terms of the contracts, allowing us to exploit
market volatility in reducing the position.

During the year Barrick reduced its hedge
position by 2.6 million ounces to 15.5 million
ounces and has reduced its position by 36%,
or 8.6 million ounces, over the last two years.
At year-end the Company’s hedge position
was just 14% of reserves and measured and
indicated resources.

We’re confident that our strong balance sheet
gives us all the flexibility we need to move our
development projects into production, finance
our world-class exploration program, and
support our corporate development initiatives.

1. For a breakdown of reserves and resources by category and a discussion
of the differences in reported reserves under Canadian and US rules see page 109.

LETTER TO SHAREHOLDERS

What’s Next.

If 2003 was a time of transition, 2004 will
be a Year of Building Mines: A time for getting
shovels in the ground not only at Veladero
and Tulawaka, but at Alto Chicama and
Cowal as well. At Pascua, we expect Board
approval for the project in the first half
of this year, and we anticipate developing a
large-scale district where mine life is measured
not in years but decades. All told, these five
projects represent more than 2 million ounces
annually, beginning with our first pour at
Tulawaka in early 2005, followed later in the
year by production at Veladero and Alto
Chicama, at Cowal in early 2006, and Pascua
as early as 2008. We’ll also be making a
significant investment in exploration in 2004,
with 95 active projects underway in nine
countries, and a team dedicated to making
the world’s next big gold find another
Barrick discovery.

Just as 2003 saw the Company adopt a new
organizational design better suited to our
global footprint, we recognize the need to
manage our capital globally – from project
financing to managing risks associated with
currency and interest rate fluctuations.
Through 2004, you’ll continue to see
reductions in our gold hedge book in keeping
with our new no-hedge policy. Overall,
Barrick’s financial strategy is focused on
combining the strong cash flows from our
current operations with our financial strength
and flexibility to bring four major new mines
into production over the next four years.
Barrick has the financial strength to finance
our projects in a manner that best mitigates
risk, and run our existing operations at the
same time without issuing a single new share.

“Barrick possesses the industry’s only
A-rated balance sheet – evidence that our
ﬁ nancial strength will support the
building of our new mines.”

LETTER TO SHAREHOLDERS

Peter Munk (left) and Gregory C. Wilkins (right).

Social responsibility
Finally, we’ll continue to manage our business
in a manner that best serves our shareholders,
our employees and the interests of the
communities in which we operate. In an effort
to strengthen and broaden the Board, Barrick
welcomed Gustavo Cisneros, head of one of
South America’s largest conglomerates, as an
independent board member in July 2003,
and since year-end we’ve added a second
independent Board member, Peter Godsoe,
Chairman of ScotiaBank.

Amidst this transformation, one thing about
Barrick remains emphatically the same:

Our constant commitment to Social
Responsibility, and to protecting the health
and safety of our employees. It’s our strong
belief that Barrick offers a compelling
investment package: A proven portfolio of
mines producing steady cash flow, the best
suite of new mines coming into production,
an aggressive exploration program promising
reserve growth – with the right people in the
right places at all levels of the Company to
make it all work. That’s why we believe
Barrick stands now at the threshold of a
new era, one that will see significant benefits
delivered to our shareholders.

Peter Munk
Chairman

Gregory C. Wilkins
President and
Chief Executive Officer

March 1, 2004

To succeed as a global leader
in the gold industry
requires ﬁ ve key competencies.

As our performance attests, we excel in many of these areas.
Where we do not, we’re working to strengthen our skill set –
with a passion to succeed.

The ability to develop properties

Barrick’s environmental, permitting, engineering and construction expertise,

backed by our long-standing commitment to Social Responsibility,

is our calling card in the countries in which we operate.

Excellent operational skills

In 2003, our portfolio of 12 operating mines met our overall targets,

producing 5.51 million ounces,

at $189 per ounce – the lowest cash cost of any senior producer.

Pro-active management team

In 2003, Barrick made significant progress getting the right people into the right places
at all levels of the Company, and implementing a new regional Organization Design that fits
our global footprint and positions us to manage our future growth.

Proven ability to find new ounces

Barrick’s experienced exploration team, backed by the Company’s consistent commitment

to exploration, produced the largest grassroots gold discovery in the last decade.

Financial strength, in service of growth

Barrick possesses the industry’s only A-rated balance sheet, with no net debt –
evidence that our financial engine allows us to invest to improve our existing properties,
sustain our exploration effort, and bring new mines online

without having to issue a single new share.

Social Responsibility
the Barrick Way

For Barrick, responsibility is sound business practice that goes to the core of who we are

and what we do. We recognize that responsible behavior is our calling card, opening up opportunities

to create value for our shareholders and generate sustainable development in the communities

and countries where we operate. Responsibility means:

Promoting the safety
and health of our
employees globally.

Barrick undertook a comprehensive
self-examination of its global
operation’s safety and health programs
during 2003. The result: A significantly
revised safety and health system
that will be implemented in 2004.

The process involved critique and
consultation across all operating and
managerial levels to achieve Barrick’s
philosophy that “No job is ever worth
doing in an unsafe way.”

Partnering with
communities to promote
the well-being of
children in Peru.

Barrick built a public school which
provides children living near the
Pierina mine with an education from
kindergarten through high school,
with a commitment to continue to
build and equip new classrooms as

required. To extend our community
work, Barrick has partnered with
WorldVision to bring development
programs, with a special focus on the
needs of children, to the communities
around the Pierina Mine.

Funding health care
initiatives where they
are urgently needed
in Tanzania.

Through our on-site clinic, our health
initiatives at our Bulyanhulu Mine
are affording the greater community
access to state-of-the-art health care
prevention techniques, diagnosis, and
treatment. The Barrick-owned Kahama
Mining Company, operators of the
Bulyanhulu Mine, has also funded
renovations and donated equipment

to nearby government health centers
and the district hospital. Kahama
Mining is also partnering with
AMREF – the African Medical and
Research Foundation – in its health-
education initiatives in Tanzania,
with a special focus on tuberculosis,
malaria and AIDS prevention.

Promoting diversity in the
workplace and partnering
with aboriginal groups
in Canada.

In 2003, Barrick continued its long-
standing support for the Tahltan
First Nation’s communities in the
vicinity of the Eskay Creek Mine in
British Columbia. Mining jobs and
apprenticeship programs for Tahltans
are only the start of our commitment.

Last year, support included a
substantial financial contribution
to assist the Dease Lake Community
in their fundraising efforts toward
construction of a community recreation
center, as well as general assistance for
the Tahltan First Nation people through
the Barrick-Tahltan Legacy fund.

Protecting the environment
through innovative
technology in Australia.

Barrick’s Lawlers operation in Western
Australia received the 2003 Golden
Gecko Award for environmental
excellence for innovative on-site landfill

design. This site was also awarded
the 2003 Golden Gecko Certificate
of Merit for a scientific study on the
uptake of heavy metals by plants.

OPERATIONS REVIEW

Barrick’s Portfolio of Properties

2003 Performance, 2004 Prospects

2003 demonstrated the value of having a diversified portfolio of properties. Overall, Barrick’s

12 operating mines reported a solid year, producing 5.51 million ounces of gold, at an average

total cash cost of $189 an ounce1, in line with our targets. 2003 production was 3% lower

than the prior year, primarily due to the closure of five mines depleted in 2002.

For the year, eight of Barrick’s mines met or exceeded expectations, with significant increases

in production at Betze-Post and Kalgoorlie offsetting a decrease in production at Meikle

and Bulyanhulu, where efforts were improving performance by year’s end.

Total cash costs for 2003 – although the lowest for all senior gold producers – were 7%

higher than 2002. Below-plan performance at Meikle and Bulyanhulu plus increased royalty

and mining tax payments due to rising gold prices more than offset decreased total cash costs

at Round Mountain and Kalgoorlie.

North America

Barrick’s North American region consists of the Betze-Post and Meikle Mines (which

collectively constitute the Goldstrike Property), Round Mountain and Marigold in the US,

plus the Hemlo, Eskay Creek and Holt-McDermott Mines in Canada. North America is

Barrick’s largest producing region, accounting for 60% of overall production. It contains proven
and probable gold reserves representing 28% of our reserve base, or 24.2 million ounces.2

In 2003, North America produced 3.26 million ounces at average cash costs of $209 per ounce.

At the Company’s North American operations, production is projected to decline in 2004,

as increased production and lower costs at Meikle and Hemlo will only partially

offset decreased production at Betze-Post and Eskay Creek. In 2004, the Region is expected

to produce between 2.95 and 3.02 million ounces, at an average total cash cost of $223 to

$232 per ounce.

1. See page 58 for a discussion of non-GAAP measures.

2. For a breakdown of reserves and resources by category and a discussion
of the differences in reported reserves under Canadian and US rules see page 109.

OPERATIONS REVIEW

South America

South America consists of the Pierina Mine and three significant development projects:

Alto Chicama, Veladero and Pascua-Lama. (See “A Year of Building Mines,” page 14.)

In 2003, South America’s Pierina Mine produced 912,000 ounces at an average total cash

cost of $83 per ounce, up from 898,000 ounces in the prior year at $80 per ounce. The

region contains 44% of the Company’s overall proven and probable gold reserves, or

37.9 million ounces.

In South America, 2004 production will be substantially lower than in 2003. While Pierina

was able to sustain production at the 900,000-ounce level for a full three years longer than

originally planned, the mine will step down in 2004 to the 640,000 to 645,000-ounce range,

as mining moves to reserve grade. While it remains one of the lowest-cost gold mines in the

world, Pierina’s total cash costs will rise from $83 per ounce to $95 to $100 per ounce,

primarily as a result of fewer ounces produced.

Australia/Africa

Barrick’s Australia/Africa region consists of the Kalgoorlie, Plutonic, Darlot and Lawlers

Mines in Australia, and the Bulyanhulu Mine in Tanzania. Two development projects –

Tulawaka in Tanzania and Cowal in Australia – are projected to commence production in

early 2005 and 2006, respectively.

In 2003, Australia/Africa production reached 1.34 million ounces of gold at an average

cash cost of $210 per ounce, compared to 1.28 million ounces at $196 per ounce for 2002.

The region contains 28% of the Company’s overall proven and probable gold reserves,

or 23.8 million ounces.

In the Australia/Africa region for 2004, Barrick’s five Australian operations are projecting

collective production to range between 1.31 and 1.34 million ounces, at increased total cash

costs of $219 to $233 per ounce.

2004 Prospects

Overall for 2004, the Company anticipates production of 4.9 to 5.0 million ounces at an average

cash cost of $205 to $215 per ounce, as it continues construction on its pipeline of new mines,

several of which are scheduled to enter production in 2005. At year-end 2003, proven and probable

gold reserves remained virtually unchanged compared to 2002, at 86 million ounces. At a $375

gold price reserves are estimated at 92 million ounces. Two of the Company’s deposits contain

significant silver that materially affect their valuation. Pascua-Lama’s contained silver within

reported gold reserves is one of the largest in the world with 584 million contained ounces1, while

Eskay Creek has 43 million contained ounces.

1. See page 113 for details.

RESERVES: REPLACEMENT AND GROWTH

Exploration

Seeking the Next New Find

Barrick has the lowest finding costs,
at $11 per ounce historically.

Over the past half decade, as other senior producers significantly cut back exploration spending,

Barrick maintained a consistent commitment to finding new ounces. Barrick has already seen

the first fruits of that investment with the Alto Chicama discovery in 2001, the industry’s largest

grassroots gold find in a decade.

Barrick spent $137 million in 2003 on exploration, development and business development,

and we expect to make another $110 million investment in 2004 (see fig. 4). The Company is

exploring more than 95 projects in 9 countries, targeting 2-million-plus ounce deposits. Beyond

our high-priority focus on six countries – Peru, Chile, Argentina, the US, Tanzania and Australia

– we also forged new strategic partnerships in 2003 in Russia and Mongolia to open a window

onto some of the world’s most prospective land positions.

Barrick has a robust and balanced pipeline of regional exploration projects (see fig. 5), building

from grassroots and target delineation through drill testing and advanced exploration to

reserve development. We have a disciplined exploration strategy that aims to maximize our

chance of near-term discovery by having the best people on the best projects and advancing

the best projects up the pipeline faster. Advanced exploration in 2004 will be focused on the

Carlin Trend properties in Nevada, the Alto Chicama district in Peru, the Bulyanhulu district

in Tanzania and Eskay Creek in Canada. Earlier stage exploration carried out in 2003

on properties in Australia, Chile, Argentina and Peru delineated targets for detailed follow-

up in 2004. 2004 will also see a focus on bringing the Company’s inferred and refractory

resources in and around our operating mines and development projects into reserves.

While no company can predict when the next new deposit will be found, we are doing all we can

to ensure that the next big find will be a Barrick discovery.

23%

55%

12%

10%

Minesite

Regional

Business
Development
Alto Chicama

26%

19%

21%

19%

15%

Reserve
Development
Advanced Drilling

Drill Testing

Target Delineation

Grassroots

ﬁ g. 4 % of Exploration and
Business Development Spending 2004E

ﬁ g. 5 Breakdown of Regional
Portion 2004E

RESERVES: REPLACEMENT AND GROWTH

Project Development

A Year of Building Mines

Barrick’s development program moves into high gear in 2004, as the Company accelerates

work to bring five new mines into production from 2005 to 2008: The 28-million-ounce

Veladero/Pascua-Lama District on the Chile/Argentina border, Alto Chicama in Peru, Cowal

in Australia and Tulawaka in Tanzania. In addition to the construction work already

underway at Veladero, Cowal and Tulawaka, the first half of 2004 should see construction

commence at Alto Chicama following the approval of our Environmental Impact Statement (EIS),

with teams on the ground working toward their 2005 start date.

(from left to right) Heavy mining equipment arrives at the site of Veladero’s open pit.
Crews prepare an access road in Peru.
Technicians drill wells that will deliver process water to Cowal.

At the Pascua-Lama property in the Veladero/Pascua-Lama District, we’re near completion of

an optimization study, with the aim of submitting the project for Board approval in the first

half of this year. Each of the new operations will be an open-pit mine, with synergies expected

at several of the properties located near existing Barrick operations. Once fully operational,

the five new mines in Barrick’s pipeline are projected to produce 2 million-plus ounces of gold

a year at an average cash cost well below our current cash costs, with higher production and

lower costs in the early years.

RESERVES: REPLACEMENT AND GROWTH

Veladero

With over 11 million ounces of gold reserves, Veladero will be the foundation of one of the world’s
newest and largest gold districts, totaling 28 million ounces of reserves.

Description

> Located in San Juan Province, Argentina; part of 28-million-ounce Veladero/Pascua-Lama District,
situated at the northern end of the El Indio Belt, straddling the border of Chile and Argentina

> Valley-fill heap leach operation with two-stage crushing, similar to Barrick’s Pierina Mine

Background

> Merger with Homestake Mining Company in December 2001 gave Barrick 100% of Veladero;

formerly a joint venture owned 40% and 60% by Barrick and Homestake, respectively

Current
Mineralization
Status

Activities
Underway

> Proven and probable gold reserves of 11.1 million ounces; gold mineral

resource of 1.5 million ounces

> EIS approval received October 15, 2003
> Access road and camp construction commenced late 2003; completion expected May 2004
> Full project construction commenced November 2003
> Presently under construction: Truck shop, civil work preparation of valley-fill heap leach pad,
primary and secondary crushing facilities and construction of the Merril-Crowe recovery plant
> Prestrip activities will begin second quarter 2004 with the delivery of the initial fleet
of ten 240-ton haul trucks, front-end loaders and a hydraulic shovel

Timeline

> Production targeted to commence late 2005

Capital Cost
Estimate

Production
Proﬁ le

> $460 million

> Gold production is expected to average 525,000 – 550,000 ounces per year at an average
cash cost of $155 – $165 per ounce1, 2 over the first ten years (higher production and lower costs
are expected in the early years)

Pascua-Lama

Situated 6 kilometres from Veladero, Pascua-Lama (current gold reserves 17 million ounces)
expected to contribute low-cost gold production for decades.

Description

> The 28-million-ounce Veladero/Pascua-Lama District is situated at the northern end
of the El Indio Belt, straddling the border of Chile and Argentina
> Barrick plans to develop Pascua as part of a unified district, starting with Veladero

Background

> Barrick acquired the Pascua property through the Lac Minerals Ltd. purchase in 1994,
at which time, the property had proven and probable reserves of 1.8 million ounces

Current
Mineralization
Status

> Proven and probable reserves of 16.9 million ounces; gold mineral resource
of 3.5 million ounces
> Contained silver within reported gold reserves of 584 million ounces

(296 million tons at a grade of 1.97 ounces per ton at an expected recovery rate of 78%)

1. See page 58 for a discussion of non-GAAP measures.

2. Subject to exchange rate fluctuations and applicable export duties.

RESERVES: REPLACEMENT AND GROWTH

Pascua-Lama (cont’d)

Activities
Underway

Timeline

> Optimizing feasibility study by: Evaluating synergies with Veladero and
evaluating the impact of the peso devaluation on the project’s economics

> Complete optimization in first half of 2004
> Production targeted to commence as early as 2008

Capital Cost/
Production

> The optimization study due to be completed in second quarter 2004
will determine the optimal cash cost, production profile and capital required

to bring Pascua-Lama into production in 2008

Alto Chicama

The gold industry’s largest new grassroots discovery in a decade,
Alto Chicama will benefit from design synergies at Barrick’s Pierina Mine.

Description

> Located in North-central Peru, about 175 kilometres from Barrick’s Pierina Mine
> Oxide mineralization similar to Pierina, with high-grade gold surface outcroppings
and good metallurgy
> Open pit – crushing/leaching

Background

> Barrick announced the Alto Chicama discovery on April 23, 2002

Current
Mineralization
Status

> Proven and probable gold reserves of 7.2 million ounces1; gold mineral resource
of 1.7 million ounces
> Excellent exploration potential within a 15 km radius of Lagunas Norte

Activities
Underway

Timeline

Capital Cost
Estimate

Production
Proﬁ le

> EIS submitted in late September 2003; public audiences held mid-November 2003
> All metallurgical work completed
> Basic engineering concluded September 2003; detail engineering 40% progress to date
> Powerline currently initiating construction bidding process
> Condemnation drilling concluded

> Construction to begin following EIS approval, anticipated by mid-2004
> Production targeted to commence third quarter 2005

> $340 million

> Gold production is expected to average 535,000 – 560,000 ounces per year at an average
cash cost of $135 – $145 per ounce over the first decade (higher production and lower costs
are expected in the earlier years, as mining begins on high-grade surface outcroppings)

1. For Canadian purposes only. For US reporting purposes, Industry Guide 7 as interpreted by
the Staff of the US SEC applies different standards in order to classify mineralization as a reserve.
Accordingly, Alto Chicama is classified for US reporting purposes as mineralized material.

RESERVES: REPLACEMENT AND GROWTH

Cowal

Planned as an open-pit mine, Cowal will constitute an important
addition to Barrick’s Australian operations.

Description

> Located in Central New South Wales (NSW), Australia, 350 kilometres west of Sydney

Background

> Acquired as part of Barrick’s merger with Homestake Mining Company on Dec. 14, 2001
> Open-pit

Current
Mineralization
Status

Activities
Underway

Timeline

Capital Cost
Estimate

Production
Proﬁ le

> Proven and probable reserves of 2.5 million ounces; gold mineral resource
of 1.6 million ounces

> Native Title Agreement signed in May 2003; Mining Lease granted in June 2003
> Optimization study completed fourth quarter 2003
> Construction of infrastructure commenced January 2004

> Commencement of construction, first quarter 2004
> Production targeted to commence mid-2006

> $270 million

> Gold production is expected to average 220,000 – 230,000 ounces at an average

cash cost of $235 – $245 per ounce1 over the first decade

1. Subject to exchange rate ﬂ uctuations.

Tulawaka

Tulawaka, Barrick’s second mine in Africa, is a small, high-return property that is part of the Company’s
plans to develop the vast potential of the Lake Victoria Gold District.

Description

> Located in West Tanzania approximately 120 kilometres from the Bulyanhulu Mine

Background

> Barrick acquired 70% of the project through the acquisition of Pangea Minerals Ltd. in 1999
> Open-pit operation, majority of gold recovered using gravity separation technology

Current
Mineralization
Status

Activities
Underway

> Proven and probable reserves (70% share) of 368,000 ounces;
gold mineral resource of 45,000 ounces

> Installation of permanent camp facilities during the March – June period 2004
> Detail design was initiated in December and will continue through April 2004
> Installation of process plant and off-site facilities during the May – November period 2004

Timeline

> Commissioning will proceed in November 2004, with production targeted

Capital Cost
Estimate

Production
Proﬁ le

to commence in early 2005

> $34 million for (70%) project development

> Gold production is expected to average 70,000 – 75,000 ounces (70% share) annually,

for 4 years, at an average cash cost of $170 – $180 per ounce

OPERATIONAL OVERVIEW

North
America

Goldstrike
Property

Goldstrike
Open Pit

Goldstrike
Underground

Round
Mountain
Mine

Eskay Creek
Mine

Operational
Summary

For year ending December 31

Operational Statistics

Tons Mined
(000’s)

Tons Processed
(000’s)

Grade Processed
(ounces per ton)

Recovery Rate
(percent)

Gold Production
(000’s of ounces)

Mineral Reserves*
(000’s of ounces)

2003
2002

143,324
144,533

141,693
142,898

11,663
11,960

10,041
10,322

0.22
0.20

83.6%
85.7%

2,111
2,050

0.19
0.16

82.0%
83.3%

1,559
1,410

19,145
19,939

15,685
16,051

1,631
1,635

1,622
1,638

0.39
0.43

88.3%
91.3%

552
640

3,460
3,888

24,563
31,573

31,470
31,111

0.02
0.02

–
–

393
378

1,583
1,875

Financial Statistics

Production costs per ounce

Cash Operating Costs

Royalties and
Production Taxes

Total Cash Costs

Amortization and
Reclamation

Total Production Costs

Capital Expenditures
(millions)

2003
2002

2003

$220
209

$215
221

$234
184

$150
172

18
9

238
218

72
77

$310
295

$51
46

18
7

233
228

53
58

$286
286

$23
12

19
14

253
198

122
121

$375
319

$28
34

23
15

173
187

54
69

$227
256

$6
8

Barrick’s Total Production (ounces)
Barrick’s Total Cash Costs (per ounce)

5,510,162
$189

Barrick’s Total Mineral Reserves (ounces) 85,952,000

272
254

275
256

1.43
1.50

93.7%
93.7%

352
359

941
1,430

$48
36

4
4

52
40

132
134

$184
174

$5
8

OPERATIONAL OVERVIEW

South
America

Africa

Australia

Hemlo
Mine

Holt-
McDermott
Mine

Pierina
Mine

Bulyanhulu
Mine

Kalgoorlie
Mine

Plutonic
Mine

Darlot
Mine

Lawlers
Mine

4,178
4,114

1,971
1,906

0.14
0.15

95.0%
94.7%

268
269

1,744
2,118

557
520

559
520

0.17
0.17

94.3%
94.6%

90
84

55
154

39,501
32,311

–
–

0.07
0.08

–
–

912
898

945
944

980
1,075

0.36
0.39

88.1%
86.1%

314
356

2,768
3,602

10,907
11,653

48,677
46,324

14,180
14,289

7,171
7,051

0.07
0.06

85.8%
82.6%

436
360

5,894
5,551

3,010
3,532

0.12
0.01

89.9%
89.5%

334
307

2,646
2,533

876
840

879
849

0.18
0.18

96.9%
97.2%

155
145

1,135
1,269

1,152
4,746

806
718

0.13
0.16

95.8%
97.3%

99
113

402
509

$218
216

$239
173

8
8

226
224

40
40

$266
264

$10
6

–
–

239
173

131
96

$370
269

$-
7

$83
80

–
–

83
80

182
191

$265
271

$17
5

$235
190

$201
215

$185
175

$156
160

$241
171

8
9

193
184

31
38

$224
222

$44
20

8
8

164
168

52
47

$216
215

$7
7

8
8

249
179

42
42

$291
221

$14
7

* For reserve table see page 110.

11
8

246
198

123
102

$369
300

$36
56

8
7

209
222

48
57

$257
279

$14
14

Financial Strategy

“Barrick’s rating reﬂ ects its strong production proﬁ le,
favorable cost position, good reserve position,
favorable political risk proﬁ le and strong balance sheet.”

- Moody’s Investor Service

Global strategy to support growth
Our financial strategy is designed to provide

New no-hedge gold policy
In 2003, our financial strength enabled us to

the sound foundation and resources to bring

institute a no-hedge gold policy, a significant

four major mines into production over the next

departure from Barrick’s previous practice. While

four years, fund one of the largest exploration

hedging has helped us sustain predictable revenue

programs in the industry – and continue to grow

flows for most of our history, as a mature, financially

our business on a global basis. Combined with

strong Company with a strong production portfolio

our financial strength and flexibility, $1 billion in

and development pipeline, we simply don’t need

cash, the industry’s only A-rating and no net debt,

gold hedging as we did when we were essentially a

and strong cash flow generation, Barrick is well

one-mine company. Financial risk management has

positioned to seize new opportunities.

given the Company the ability to grow reserves and

Just as we adopted a new operational design to

manage our global footprint in the past year, we are

focused on managing our capital globally – from

production, allowing us to significantly increase our

leverage to the gold price. We have more than four out

of every five ounces of reserves currently unhedged.

project financing to managing risks associated

Our track record in global financial management,

with currency and interest rate fluctuations.

the flexibility to finance new mines, to buy back

Financial flexibility
The key benefit of financial strength is the flexibility

it provides us to achieve our growth objectives.

Specifically:

> Flexibility gives us liquidity – the advantages

that come from having strong operational cash

flow, nearly $1 billion in cash and a $1 billion

undrawn line of credit.

> Flexibility in our forward sales program gives

us the discretion to decide when within about

a ten-year timeframe to deliver production

against hedge contracts.

> Finally, flexibility gives us the ability to finance

the building of four major new mines without

the need to issue a single new share.

shares, to move into new regions with non-recourse

financing and ultimately to grow this Company

at reduced financial risk: These are the true signs

of our ability to manage our capital structure

optimally – and prudently grow the Company to

maximize shareholder returns.

18%

82%

Hedged
Gold Ounces

Unhedged
Gold Ounces

ﬁ g. 6 Gold Reserves Hedge Position

With more than four out of every five ounces
of reserves currently unhedged, Barrick has
significant leverage to the gold price.

Management’s Discussion and
Analysis of Financial
and Operating Results

Contents

Business Overview

Financial Results Overview

pg. 22

pg. 25

Cash Flow Statement

Liquidity and Capital Resources

Factors that May Affect Future Results

pg. 27

Operating Activities

Income Statement

Gold Production and Sales

Cost of Sales and
Other Operating Expenses

Amortization

Exploration, Development and
Business Development

Administration

Interest Expense

Other Income/Expense

Non-Hedge Derivative Gains

Income Taxes

Statement of Comprehensive Income

pg. 30

pg. 31

pg. 38

pg. 39

pg. 40

pg. 41

Investing Activities

Financing Activities

Balance Sheet

Canadian Supplement

Critical Accounting Policies
and Estimates

Off-Balance Sheet Arrangements

Forward Gold Sales Contracts

Contractual Obligations and
Commitments

Quarterly Information

Non-GAAP Performance Measures

Outstanding Share Data

pg. 41

pg. 43

pg. 44

pg. 45

pg. 51

pg. 55

pg. 57

pg. 58

pg. 61

This portion of our Annual Report provides a

financial statements and notes thereto for the

discussion and analysis of our financial condition

year ended December 31, 2003 (collectively, our

and results of operations to enable a reader to

“Financial Statements”), which are included in

assess material changes in financial condition

this Annual Report. You are encouraged to review

and results of operations for the year ended

our Financial Statements in conjunction with

December 31, 2003, compared to those of the

preceding year. This Management’s Discussion

your review of this Management’s Discussion and
Analysis. Certain notes to our financial statements

and Analysis has been prepared as of March 4,

are specifically referred to in this Management’s

2004. The consolidated financial statements pre-

Discussion and Analysis and such notes are incor-

pared in accordance with US generally accepted

porated by reference herein. All dollar amounts in

accounting principles (US GAAP) are on pages 64

this Management’s Discussion and Analysis are in

to 67. This Management’s Discussion and Analysis

millions of US dollars, unless otherwise specified.

is intended to supplement and complement our

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Business Overview

Company Overview
Barrick Gold Corporation is among the world’s

Producing Mines
Our existing portfolio of operating mines mainly

largest gold producers in terms of market capitali-

includes mature properties with stable production

zation, gold production and reserves. Our operating

volumes. Most of the mines are currently processing

mines and development projects are concentrated

in three primary regions: North America, Australia/

Africa, and South America. In 2003, 59% of our

ore at or near the average reserve grade. The mines
produce at relatively low total cash costs per ounce1
compared to other senior gold producers, and they

gold production came from North America. As

are presently generating substantial amounts of

our development projects commence production

operating cash flow, which is available to fund our

over the next several years, we expect that our

development projects and other growth oppor-

South American region will make up an increasing

tunities that may arise. We closed five mines in

proportion of our annual gold production.

2002, on depletion of their reserves, which had

We earn the majority of our revenue and generate

cash flow from the production and sale of gold in

both doré and concentrate form. Certain of our

mines, in particular, Pierina and Eskay Creek,

produce significant quantities of silver as a by-

product, the revenue from which is deducted from

operating costs, and therefore affects our cash
operating costs per ounce. This will also be

the case with two of our development projects –

Pascua-Lama and Veladero.

Key Performance Drivers
The key drivers of financial performance in our

business include realized gold sales prices, gold

production volumes and production costs per

ounce. We focus on optimizing these performance

drivers to maximize the profit contribution and

operating cash flow generated by our mines.

Because we operate in a capital-intensive industry,

we invest significant amounts each year at our

operating mines to maintain our productive

capacity (referred to as “sustaining capital”); and

also for mine expansion and to build new mines.

Consequently, amortization expense forms a large

component of our costs to produce gold.

the effect of lowering our annual gold production

by about 0.3 million ounces in 2003. Overall, our

total gold production decreased by 0.2 million

ounces to 5.51 million ounces as our other mines

produced 0.1 million more ounces of gold in 2003
compared with 2002. Due to the effect of mine

sequencing over the last few years, the ore

processed at Goldstrike, our largest mine, has

been above the average reserve grade. However,

as ore grades at Goldstrike have trended towards

average reserve grades, we have experienced higher

operating costs per ounce and lower annual pro-

duction volumes. To some extent, we have been

successful in mitigating the effects of these trends

through cost management initiatives. In 2004, a

continuation of the trend of declining grades at

Goldstrike, together with Pierina production mov-

ing into lower grade areas, will lead to a further

decline in production and increase in total cash

costs per ounce1. We expect that in 2004, our total
production will fall by about 0.5 to 0.6 million

ounces and our average total cash costs will

increase by about $15 to $25 per ounce1.

1. For an explanation of our use of non-GAAP
performance measures, refer to pages 58 to 61.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Exploration and Mine Development
We also focus on finding new gold reserves. To the

realized gold sales prices in excess of market

prices. The flexibility of our program has also

extent we can add gold reserves at our existing

allowed us to participate in a gold price rally, as

operations, we extend the lives of our mines and

we saw in 2003, when there was a substantial

generate additional cash flow, increasing the rate

upward shift in market gold prices. Our 2003

of return on the capital we have invested. Prior to

earnings benefited from rising gold prices, with an

the recent gold price rally, the industry experi-

average realized price of $366 per ounce, compared

enced an extended period of low gold prices. In

to an average spot gold price of $363 per ounce,

contrast to many producers we have made a sus-

an 8% increase from 2002. During first quarter

tained investment in our exploration program. This

2004, spot gold prices were in the $400 per ounce

program resulted in a major new gold discovery –

range and many industry observers expect this

Alto Chicama in Peru. By the end of 2003, our

gold price rally to be sustained, with the outlook

work at Alto Chicama allowed us to add 7.2 million

for market gold prices generally positive.

ounces to reserves (for Canadian reporting pur-

poses). At the end of 2003, we had proven and

probable reserves of 86 million ounces of gold,

based on a $325 gold price, after producing

5.51 million ounces in 2003 (6.5 million contained

ounces), compared to reserves (for Canadian report-

ing purposes) of 86.9 million ounces in 2002 based

on a $300 gold price. Several of our deposits contain

a significant amount of silver within our reported

gold mineral reserves, which is or will be produced

as a by-product of the gold reserves. For example,

Pascua-Lama contains 584 million ounces of silver.

In recognition of these market realities, we

announced a No-Hedge policy on gold in fourth

quarter 2003, under which we will not add any

new gold hedge contracts and we expect to reduce

our gold hedge position to zero over time. The

unique flexibility in our gold hedge contracts

enables us to deliver gold whenever we choose

over the primarily ten-year terms of the contracts,

allowing us to exploit gold market volatility

in reducing the gold hedge position. In 2003,

we reduced our gold hedge position by 14% or

2.6 million ounces. At the end of 2003, our gold

We have a mine development program that we

hedge position represented 18% of our gold

expect to contribute to production, earnings and

reserves (for Canadian reporting purposes), which

cash flow, beginning with Veladero and Alto

means that 82% of our gold reserves are unhedged

Chicama in 2005. By 2007, we expect this develop-

and exposed to changes in gold prices. One of our

ment pipeline to contribute a significant amount

goals is a further reduction in the size of our gold

of gold production annually to our portfolio.

hedge position; to that end, we have targeted a

Commodity Price Risk
Our revenues are significantly impacted by the

minimum 1.5 million ounce reduction in the posi-

tion during 2004. The actual reduction may be

higher than the target, depending on market con-

market price of gold, and to a lesser extent the

ditions. By choosing to deliver a portion of our

market price of silver. We have historically used an

gold production into our gold hedge position to

extensive gold hedging program to manage our

achieve our target, we may realize less than the

exposure to market gold prices. This program has

market price of gold for this portion of our pro-

provided substantial benefits to us in the form of

duction, depending on market conditions.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

We also consume other commodities at our opera-

ounce higher in 2003. Our currency hedge posi-

tions in the process of producing gold. These com-

tions provide a significant level of protection for

modities include diesel fuel, electricity, propane

our Australian and Canadian dollar costs for the

and consumables such as acid and lime. Changes

equivalent of about three years.

in the cost of these commodities impact our costs

to produce gold. To the extent any such changes

had a significant impact on our cash costs in 2003

compared to 2002, the changes are highlighted in

this Management’s Discussion and Analysis.

At the end of 2003, we had approximately C$1.0 bil-

lion of our Canadian dollar exposures hedged at

$0.68 (88% of expected total local capital and oper-

ating costs over the next three years) and approxi-

mately A$1.4 billion of our Australian dollar

We use forward silver sales contracts to sell a

exposures hedged at $0.57 (73% of expected total

portion of our annual silver production. These

local capital and operating costs over the next three

contracts act as an economic hedge of our expo-

years). Included in other comprehensive income at

sure to changes in market silver prices.

December 31, 2003 were unrealized pre-tax gains

Currency Risk
Although we operate on four continents, all our

on currency hedge contracts totaling $280 million

that will be matched with our operating costs over

primarily the next three years to offset the impact of

revenues and approximately 70% of our cash

the strengthening Australian and Canadian dollar.

expenditures are denominated in US dollars.

We may add to our currency hedge position during

Nearly half of our production comes from our

2004, subject to market conditions and depending

United States mines, while most of our Peruvian

upon the outlook for the US dollar.

and Tanzanian operating and capital expenditures

– such as diesel fuel, reagents and equipment – are

denominated in United States dollars.

Our main foreign currency exposures relate to

cash expenditures at our Canadian and Australian

mines that are denominated in local currencies.

Like many other gold producers, our operations in

Australia and Canada are affected by the perfor-

mance of the Australian and Canadian dollar

against the US dollar as our functional currency is

the US dollar and a portion of our cash operating

costs are denominated in the local currencies.

Over the last two years, the Australian dollar has

strengthened by 48% and the Canadian dollar by

23%. In 2003, our local currency costs were

hedged at rates better than current market rates

and we recorded hedge gains in our cash operat-

ing costs totaling $65 million. If we had not

hedged our exposure to a weakening US dollar,

our total cash costs would have been $12 per

Interest Rate Risk
Our interest rate exposure mainly relates to the

mark-to-market value of derivative instruments,

the fair value and ongoing payments under gold

lease rate and US dollar interest-rate swaps, and

interest receipts on our cash balances. In general,

we are adversely affected by declining interest rates

because we earn interest on our cash balances at

market rates. Through our interest rate hedge pro-

gram, we have been able to mitigate the impact of

falling US dollar interest rates on these cash bal-

ances. On $650 million of our cash balances, we

have fixed the interest return we are earning

through 2006 – 2007 at 3.4%, with the remaining

cash balances generating interest income at vari-

able US dollar interest rates. Low interest rates

also limit the growth in prices that we can expect

to receive for any gold delivered under existing

forward sales contracts in our hedging program.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

A large portion of our $760 million of long-term

debentures where we have converted the interest

debt obligations are at fixed interest rates and are

rate from fixed to floating rates, and our $80 mil-

therefore not affected by changes in market interest

lion of variable-rate bonds.

rates. The exceptions are $350 million of our

Financial Results Overview

For the years ended December 31
(in millions of US dollars, except per share and per ounce data)

2003

2002

2001

Gold sales
Average spot gold price per ounce
Average realized gold price per ounce
Net income
Net income per share – basic and diluted
Operating cash flow
Operating cash flow excluding Inmet settlement1
Total assets
Total long-term debt
Cash dividends per common share

$ 2,035
363
366
200
0.37
521
607
5,362
760
0.22

$ 1,967
310
339
193
0.36
589
589
5,261
781
0.22

$ 1,989
271
317
96
0.18
588
588
5,202
802
0.22

1. For an explanation of our use of non-GAAP performance measures, refer to pages 58 to 61.

Income Statement
Earnings in 2003 were slightly higher than the

At our current mines, cash operating costs per

ounce excluding royalties and production taxes

prior year. We benefited from higher spot gold

were $7 per ounce higher in 2003, mainly due to

prices, which enabled us to realize a $27 per

higher costs at Meikle and Bulyanhulu, which

ounce higher selling price for our gold production

added $39 million to our cash operating costs.

(an increase in revenue of $150 million in compar-

ison to 2002). However, in a higher spot gold price

environment, we pay higher royalties, production

taxes and income taxes. Royalties and production

taxes increased by $5 per ounce, or $23 million,

over the prior year, and our underlying effective

income tax rate increased from 3% in 2002 to

20% in 2003, an increase of $38 million.

We continued to invest heavily in exploration,

mine development and business development in

2003, with a $33 million increase in costs over the

prior year. Under US GAAP, development costs are

expensed until mineralization is classified as

proven and probable reserves for US reporting

purposes. In 2003, we expensed $54 million of

development costs, mainly at Veladero and Alto

As a result of the closure of five mines in 2002 on

Chicama, compared with $52 million in 2002.

depletion of their reserves, we produced and sold

The $24 million increase in exploration costs to

3% fewer ounces in 2003 compared to the prior

$62 million, accounts for most of the increase in

year. These five closed mines generated a profit

exploration, development and business develop-

contribution, before tax, of $42 million in 2002.

ment expense year over year.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Earnings in both years included various items that

there as a proven and probable reserve, $16 mil-

significantly impacted the comparability of our

lion in Australia due to higher levels of taxable

results year on year. In 2003, the major items

income in a higher gold price environment, and

included gains of $71 million on non-hedge

$21 million in North America following a cor-

derivatives and gains totaling $39 million on the

porate reorganization. In 2002, we recorded a

sale of various assets, offset by a $36 million

credit of $22 million due to the outcome of vari-

higher charge for reclamation and closure costs

ous tax uncertainties. These credits were offset by

following a change in accounting policy for these

valuation allowances against unrecognized tax

types of costs. We also recorded tax credits of

losses. The material items are explained in this

$62 million in 2003. We released valuation

Management’s Discussion and Analysis. We have

allowances totaling $15 million in Argentina fol-

summarized these items below to assist a reader in

lowing the decision to begin construction at

understanding the effect of the items on earnings.

Veladero and the classification of mineralization

Effect on earnings increase (decrease) ($ millions)

For the years ended December 31

2003

2002

2001

Pre-tax

Post-tax

Pre-tax

Post-tax

Pre-tax

Post-tax

Non-hedge derivative gains (losses)
Inmet litigation costs
Gains on asset sales
Gains (losses) on investments
Changes in asset retirement

obligation estimates

Severance costs
Cumulative effect of accounting changes
Merger and related costs
Tax credits
Tax losses not recognized
Impact of accounting change

for reclamation costs

$ 71
(16)
39
(12)

$ 60
(11)
31
(12)

(10)
(9)
(17)
–
62
(23)

(36)

(10)
(6)
(17)
–
62
(23)

(25)

$ (6)
–
8
(4)

–
–
–
2
22
(43)

–

$ 6
–
5
(4)

–
–
–
2
22
(43)

–

33
(59)
9
2

–
–
(1)
(117)
–
(45)

21
(41)
6
2

–
–
(1)
(117)
–
(45)

–

Cash Flow Statement
We generated $68 million less operating cash flow

Both our cash expenditures for investing and

financing activities increased in 2003. In part, this

in 2003 compared to the prior year. Excluding the

was as a result of increased capital spending with

$86 million settlement of the Inmet litigation, our

the construction start up at Veladero and $154 mil-

operating cash flow would have been $18 million

lion spent on our share buy-back program.

higher in 2003. Higher realized gold selling prices

in 2003 were partly offset by higher total cash costs

and higher payments of income taxes.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Factors that May Affect
Future Results

There are numerous factors, outside our control,

beyond our control. These include industry factors

that could cause results to differ significantly

such as: industrial and jewelry demand; the level

from our expectations. Some of these factors are

of demand for gold as an investment; central bank

described below. Derivative instrument risks,

lending, sales and purchases of gold; speculative

including credit, market, and liquidity risks, are

trading; and costs of and levels of global gold

described in note 11(g) to our consolidated finan-

production by producers of gold. Gold prices

cial statements.

By their very nature, and as noted under “Forward-
looking statements” on the inside back cover of

this Annual Report, forward-looking statements

involve inherent risks and uncertainties, both

general and specific, and risks that predictions, fore-

casts, and projections and other forward-looking

statements will not be achieved. We caution readers

not to place undue reliance on such statements in

this Management’s Discussion and Analysis as a

number of important factors could cause actual

results to differ materially from the plans, objectives,

goals, targets, expectations, estimates and intentions

expressed in such forward-looking statements.

Industry and non-company factors

As a gold mining company conducting business in

the United States, Canada, Australia, Peru, Chile,

Argentina, Tanzania and other countries, our rev-

enues and earnings are affected by the condition of

the economic and business environments specific to

the geographic regions in which we operate. Factors

such as commodity prices (gold and silver), interest

rates, inflation and exchange rates impact the busi-

ness and economic environment and ultimately the

performance of our business in each region.

Our business is affected by the world market price

of gold and other commodities as described on

page 23. Gold prices are subject to volatile price

movements over short periods of time and are

affected by numerous factors, all of which are

may also be affected by macroeconomic factors,

including: expectations of the future rate of infla-

tion; the strength of, and confidence in, the

US dollar, the currency in which the price of gold

is generally quoted, and other currencies; interest

rates; and global or regional, political or economic

uncertainties. Our business is also affected by the

market prices of other commodities produced as

by-products at our mines, such as silver and cop-

per, as well as commodities which are consumed

or otherwise used in connection with our opera-

tions, such as diesel fuel and electricity. Prices of

such commodities are also subject to volatile price

movements over short periods of time and are

affected by factors that are beyond our control.

We have some protection from falling market gold

prices under our gold hedge position, but if the

world market price of gold were to drop and the

prices realized by us on gold sales were to decrease

significantly and remain at such a level for any

substantial period, or proceeds from the sale of

by-products were to decrease significantly, or the

cost of other commodities consumed were to

increase significantly, our profitability and cash

flow would be negatively affected. In such circum-

stances, we may determine that it is not economi-

cally feasible to continue commercial production

at some or all of our operations or develop some

or all of our projects, which could have an adverse

impact on our financial performance and results

of operations.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

We conduct mining and development activities in

and regulations governing the protection of the

many countries. Mining investments are subject to

environment, waste disposal, worker safety, mine

the risks normally associated with any conduct of

development and protection of endangered and

business in foreign countries including: uncertain

protected species. We have made, and expect to

political and economic environments; war and

make in the future, significant expenditures to

civil disturbances; changes in laws or policies

comply with such laws and regulations. Future

of particular countries; foreign taxation; delays

changes in applicable laws, regulations and per-

in obtaining or the inability to obtain necessary

governmental permits; limitations on the repa-

mits or changes in their enforcement or regulatory
interpretation could have an adverse impact on the

triation of earnings; and increased financing

costs of compliance and therefore adversely impact

costs. These risks may limit or disrupt projects,

our financial condition or results of operations. The

restrict the movement of funds or result in the

costs and delays associated with compliance with

deprivation of contract rights or the taking of

these laws and regulations could stop us from pro-

property by nationalization or expropriation

ceeding with the development of a project or the

without fair compensation.

operation or further development of a mine or

Our earnings are affected by the monetary policies

increase the costs of development of a project.

of the Board of Governors of the Federal Reserve

Although we take what we believe to be reason-

System in the United States. Bond and money

able measures designed to ensure compliance with

market expectations about inflation and central

governing statutes, laws, regulations and regula-

bank monetary policy decisions have an impact on

tory policies in the jurisdictions in which we con-

the level of interest rates, and gold lease rates,

duct business, there is no assurance that we will

which can have an impact on earnings.

always be in compliance or deemed to be in com-

Our business is affected by the levels of market

interest rates and gold lease rates, as described on

page 24. A significant, prolonged decrease in interest

rates could have a material adverse impact on the

interest earned on our cash balances. A significant
prolonged decrease in interest rates and/or increase

pliance. Accordingly, it is possible that we could

receive a judicial or regulatory judgment or deci-

sion that results in fines, damages and other costs

that would have a negative impact on our earnings.

Company-specific factors

Our financial performance will be influenced

in gold lease rates could have a material adverse

by our ability to execute the development of

impact on the difference between the forward gold

our new mines and also the success of our explo-

price over the current spot price (“contango”), and

ration program.

ultimately, the realized price under our fixed-price

forward gold sales contracts.

Our ability to sustain or increase our present levels

of gold production is dependent in part on the

Changes in the statutes, regulations and regulatory

successful development of new ore bodies and/or

policies that govern our business activities in the

expansion of existing mining operations. The eco-

geographic regions where we operate could impact

nomic feasibility of development projects is based

our results.

Our domestic and foreign mining operations and

exploration activities are subject to extensive laws

upon many factors, including: the accuracy of

reserve estimates; estimated metallurgical recov-

eries; estimated capital and operating costs of such

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

projects; foreign currency exchange rates; and

Our actual production may vary from estimates for

future gold and silver prices. Development projects

a variety of reasons, including: actual ore mined

are also subject to the successful completion of fea-

varying from estimates of grade, tonnage, dilution

sibility studies, issuance of necessary governmental

and metallurgical and other characteristics; short-

permits, acquisition of satisfactory surface or other

term operating factors relating to ore reserves,

land rights and availability of adequate financing.

such as the need for sequential development of ore

Development projects have no operating history

upon which to base estimates of future cash flow.

It is possible that actual costs and economic returns

may differ materially from our estimates or that we

could fail to obtain the governmental approvals

necessary for the operation of a project. It is not

unusual in the mining industry for new mining

operations to experience unexpected problems

during the start-up phase and to require more

capital than anticipated.

Gold exploration is highly speculative in nature.

Our exploration projects involve many risks and are

frequently unsuccessful. Once a site with gold min-

eralization is discovered, it may take several years

bodies and the processing of new and different ore

grades; risks and hazards associated with mining;

natural phenomena, such as inclement weather

conditions, floods, and earthquakes; and unex-

pected labour shortages or strikes. Cash costs of

production may be affected by a variety of factors,

including: changing waste-to-ore ratios, ore grade,

metallurgy, labour costs, the cost of supplies and

services, and foreign currency exchange rates.

The accounting policies and methods we utilize

determine how we report our financial condition

and results of operations, and they may require

management to make estimates or rely on assump-

tions about matters that are inherently uncertain.

from the initial phases of drilling until production is

Our financial condition and results of operations

possible. Substantial expenditures are required to

are reported using accounting policies and methods

establish proven and probable reserves and to con-

prescribed by US GAAP. In certain cases, US GAAP

struct mining and processing facilities. As a result

allows accounting policies and methods to be

of these uncertainties, there is no assurance that

selected from two or more alternatives, any of

current or future exploration programs will be suc-

which might be reasonable yet result in our report-

cessful and result in the expansion or replacement

ing materially different amounts. Management

of current production with new reserves.

exercises judgment in selecting and applying our

Our financial performance will be influenced by

our ability to achieve production and operating

cost targets.

We prepare estimates of future production and total

cash costs of production for our operations. No

assurance can be given that such estimates will be

achieved. Failure to achieve production or total cash

cost estimates could have an adverse impact on our

future cash flows, earnings, and financial condition.

accounting policies and methods to ensure that,

while US GAAP compliant, they reflect our best

judgment of the most appropriate manner in

which to record and report our financial condition

and results of operations.

As detailed on pages 45 to 51, certain accounting

policies and estimates have been identified as

being “critical” to the presentation of our finan-

cial condition and results of operations as they

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

(1) require management to make particularly sub-

reserves unprofitable to develop at a particular site

jective and/or complex judgments about matters

or sites for periods of time. This could cause us to

that are inherently uncertain and (2) carry the like-

reduce our reserves, which could have a negative

lihood that materially different amounts could

impact on our financial results. Failure to obtain

be reported under different conditions or using

necessary permits or government approvals could

different assumptions and estimates. The most

also cause us to reduce our reserves. There is no

critical estimate that affects our reporting of

assurance that we will obtain indicated levels of

financial performance is the quantity of gold min-

recovery of gold or the prices assumed in deter-

eral reserves at our mineral properties.

mining gold reserves.

Mineral reserves and mineral resources are esti-

Other factors

mates, and no assurance can be given that the

Other factors that may affect future results include

indicated content of gold will be produced.

changes in tax laws, technological changes,

Fluctuations in the price of gold or by-product

employee relations, the validity of mining claims

minerals, such as silver and copper, may render

and the title to our properties and competition

mineral reserves containing relatively low grades of

with other mining companies.

gold mineralization uneconomic. Moreover, short-

term operating factors relating to the mineral

reserves, such as the need for orderly development

of ore bodies or the processing of new or different

ore grades, may cause mineral reserves to be

reduced or for us to be unprofitable in any partic-

ular accounting period.

We caution that the foregoing discussion of fac-

tors that may affect future results is not exhaus-

tive. When relying on forward-looking statements

to make decisions with respect to Barrick, investors

and others should carefully consider the foregoing

factors, other uncertainties and potential events,

and other external and company-specific factors

Estimated reserves may have to be recalculated

that may adversely affect future results and the

based on actual production experience. Market

market valuation placed on our common shares. We

price fluctuations of gold and silver, as well as

do not undertake to update any forward-looking

increased production costs or reduced recovery

statements, whether written or oral, that may be

rates, may render the present proven and probable

made from time to time by us, or on our behalf.

Income Statement

Gold Production and Sales
In 2003, we produced 0.2 million fewer ounces of

a rising trend again in 2005 as our development

projects begin production. Beginning in 2005

gold than in 2002 following the closure of five

and through 2007, as our development projects

mines in 2002 on depletion of their reserves. We

commence operations, we are targeting a rise in

expect gold production to decline again in 2004

our production profile to between 6.8 and 7.0 mil-

by about 0.5 to 0.6 million ounces, before starting

lion ounces by 2007.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

In 2003, market gold prices rose to their highest

of 1.5 million ounces in our gold hedge position,

level since 1997, averaging $363 per ounce, com-

with the ultimate price realized depending upon

pared to 2002, when spot gold averaged $310 per

market conditions and the actual contracts into

ounce. Through selling a large portion of our gold

which we deliver.

production at spot gold prices, combined with the

delivery of a portion of our production into our

forward sales program, we realized an average price

of $366 per ounce. This compares to an average

realized price of $339 per ounce in 2002, when

gold prices were lower and most of our gold pro-

duction was sold under our higher priced forward

sales contracts.

As spot gold prices increase, the value of our gold

mineral reserves and amount of operating cash

flows rises. The unrealized mark-to-market loss on

our fixed-price forward gold sales contracts also

rises. The unrealized mark-to-market value changed

from an unrealized loss of $639 million at the end

of 2002 to an unrealized loss of $1,725 million at

the end of 2003, primarily due to increasing spot

When spot gold prices are higher than the price

gold prices (year end spot gold prices, 2003 –

under our forward sales contracts, as occurred in

$415 compared to 2002– $347). Mark-to-market

2003, we can choose to sell all of our gold produc-

value represents the replacement value of these

tion into the spot market at the higher price and

contracts based on current market levels, and does

deliver into our forward sales contracts at a future

not represent an economic obligation for payment.

date. We expect to deliver a component of our

For additional detail see “Off-Balance Sheet

gold production into our fixed-price forward sales

Arrangements – Key Contract Terms and Condi-

contracts in 2004 at prices below recent spot

tions – Significance of mark-to-market gains and

market prices to achieve our targeted reduction

losses” on page 54.

Cost of Sales and Other Operating Expenses

For the years ended December 31

Total cash production costs – per US GAAP
Accretion expense and reclamation costs at our operating mines

2003

2002

$ 1,065
(14)

$ 1,065
(37)

Total cash production costs – per Gold Institute Production Cost Standard1

$ 1,051

$ 1,028

Ounces sold (thousands)
Total cash costs per ounce sold – per US GAAP (dollars)
Total cash costs per ounce sold – per

Gold Institute Production Cost Standard1 (dollars)

5,554
$ 192

5,805
$ 183

$ 189

$ 177

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Total Cash Costs per Gold Institute Production Cost Standard1 ($/oz)

For the years ended December 31

Cost of sales at market foreign exchange rates
Gains realized on currency hedge contracts
By-product credits

Cash operating costs

Royalties
Production taxes

Total cash costs

2003

$ 210
(12)
(21)

177
9
3

2002

$ 191
(1)
(20)

170
6
1

$ 189

$ 177

1. We report total cash costs per ounce data calculated in accordance with The Gold Institute Production Cost Standard
(the “Standard”). Adoption of the Standard is voluntary, but we understand that most senior gold producers follow
the Standard when reporting cash cost per ounce data. The data does not have a meaning prescribed by US GAAP
and therefore amounts presented may not be comparable to data presented by gold producers who do not follow
the standard. Total 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. We have also presented a
GAAP measure of cost per ounce as required by securities regulations that govern non-GAAP performance measures.
Within this disclosure document our discussion and analysis is focused on the “total cash cost” measure as defined by
the Standard, but the most directly comparable financial measure calculated and presented in accordance with GAAP
is also provided throughout. See pages 58 to 61 for further information on non-GAAP performance measures.

In 2003, we produced 3% less gold than in 2002.

In 2004, we expect to produce 4.9 to 5.0 million

Most of our mines exceeded their 2002 production

ounces at total cash costs of between $205 and

levels in 2003, particularly Goldstrike Open Pit

$215 per ounce. The decrease in production from

and Kalgoorlie. We experienced lower production

2003 is primarily due to expected lower grades at

at Goldstrike Underground and Bulyanhulu. Both

Pierina and Goldstrike Open Pit. Total cash costs

of these mines had operational difficulties during

are expected to be higher as we expect to mine

2003 which are discussed in more detail in their

and process more lower-grade ore at these mines

respective regional sections. The overall decrease in

in 2004. The achievement of these production and

gold production compared with 2002 is primarily

cost targets is subject to the successful execution

related to the closure of several mines in the sec-

of our mining plan for 2004 at each of our oper-

ond half of 2002 on depletion of their reserves.

ating mines.

These mines produced 0.3 million ounces in 2002.

Our production and cost targets assume current

Total cash costs were 7% higher in 2003 pri-

marily because of the operational difficulties at

levels of plant capacity and performance. They are
dependent on our ability to execute our mine plan,

Goldstrike Underground and Bulyanhulu; mining

which in turn could be affected by variations in

and processing more lower grade ore in 2003 at

modeled versus actual grade, actual processing

some mines; plus higher royalty and mining pro-

plant performance and the cost of consumables and

duction tax expenses due to higher spot gold

other cost inputs such as diesel and energy costs.

prices in 2003.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

North America

For the years
ended December 31

Goldstrike
Open pit
Underground

Goldstrike property total
Eskay Creek
Round Mountain
Hemlo (50% owned)
Holt-McDermott
Marigold (33% owned)

Production
(attributable ounces)

Total Cash Costs – per
Gold Institute Production
Cost Standard1($/oz)

Total Cash
Costs – per
US GAAP ($/oz)

2003

2002

2003

2002

2003

2002

1,559,461
551,664

1,409,985
640,336

2,111,125
352,070
392,649
267,888
89,515
47,396

2,050,321
358,718
377,747
269,057
83,577
27,422

$ 233
253

$ 228
198

$ 234
253

$ 232
199

238
52
173
226
239
171

218
40
187
224
173
187

237
53
177
227
240
172

222
41
202
227
176
194

3,260,643

3,166,842

$ 209

$ 193

$ 211

$ 198

1. For an explanation of our use of non-GAAP performance measures, refer to pages 58 to 61.

In both 2003 and 2002, we hedged substantially

all of our total cash costs that are denominated in

Goldstrike – Open Pit
The increase in production in 2003 compared

Canadian dollars, and therefore our total cash

with 2002 was due to higher ore grades mined

costs were not significantly affected by changes in

from the pit. The mine produced 60,000 ounces

market currency exchange rates in 2003. However,

more than the original plan for 2003, at margin-

our total cash costs are impacted by changes in

ally higher total cash costs. Higher than planned

the average exchange rates under our currency

ore tons and grades were mined from the Northeast

hedge contracts. The average currency exchange

and 8th West laybacks, resulting in 15% higher

rate under our hedge contracts was $0.65 in 2003

grades processed for the year when compared

compared with $0.64 in 2002. The effect of the

with 2002, which was also better than the original

difference in this exchange rate on total cash costs

plan for 2003. The 2% increase in total cash costs

was an increase of about $3 per ounce at our

during 2003 compared to the prior year was

Canadian mines. In 2004, the average currency

mainly due to higher processing costs ($15 million

exchange rate under our currency hedge contracts

or $9 per ounce), and higher royalties and produc-

is $0.67. The change in this average exchange rate

tion taxes ($19 million or $11 per ounce), offset

in 2004 compared with 2003 is expected to cause

by the effect of higher ore grades, which caused a

about a $3 per ounce increase in total cash costs

$7 per ounce decrease in total cash costs. Higher

at our Canadian mines in 2004.

processing costs reflected increased acid consump-

tion ($2 million or $2 per ounce) related to high

carbonate material mined, as well as higher acid

prices ($6 million or $4 per ounce) and propane
prices ($2 million or $2 per ounce), offset by lower

mining costs ($16 million or $10 per ounce), facil-

itated by in-pit dumping and a reduced fleet size.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Production for 2004 is expected to be in the range

of 1,340,000 to 1,360,000 ounces of gold at total

Eskay Creek
Gold production in 2003 decreased by 2%

cash costs in the range of $250 to $260 per ounce.

compared to the prior year, primarily due to an

Expected cost and production changes in 2004

anticipated grade reduction, partially offset by an

are mainly as a result of the plan to mine closer to

increase in the mining rate. Production for 2003

reserve grades. Actual total cash costs in 2004 will

was essentially in line with the original plan for

be affected by changes in the amount of royalty

the year. The increase in costs for the year com-

and production tax expenses, which in turn are

pared to 2002 is mainly attributable to lower pro-

affected by the market price of gold.

Goldstrike – Underground
During 2003, the mine produced 14% fewer ounces

than the previous year, and 68,000 ounces less

than the original plan for 2003 due to ground con-

ditions, infrastructure completion, and remnant

mining constraints. On a combined basis, these

factors caused total cash costs to be about $49 per

ounce higher than the previous year, combined

with higher royalty and production tax expenses

($4 million or $6 per ounce). The same factors

also caused total cash costs for 2003 to be about

16% higher than the original plan for the year.

Production and costs continue to be affected by

ground conditions at Rodeo and the mining of

remnant blocks at Meikle. Ground support reha-

bilitation efforts are ongoing and have proven suc-

cessful in providing increases to Rodeo production.

Remnant mining at Meikle has been re-sequenced

to maximize ore recovery and ground stability.

Production for 2004 is expected to be in the range

of 590,000 to 610,000 ounces of gold at total cash

costs in the range of $245 to $255 per ounce.

Higher production assumes that we will achieve

higher recoveries and expected cost improvements

assume both higher recoveries and less depend-

ence on mining remnant stopes. Our actual total

cash costs in 2004 will also be affected by the

actual amounts of royalty expenses and pro-

duction taxes, which in turn are affected by the

market price of gold.

duction levels, combined with higher average

smelter costs due to higher penalties for mercury

and other impurities ($10 per ounce higher). Total

cash costs for the year were about 19% better

than the original plan for the year due to the

impact of higher silver by-product credits.

Eskay Creek produces a significant quantity of

silver as a by-product (17 million ounces in 2003).

Total cash costs per ounce are significantly affected

by both the quantity of silver produced and realized

silver sales prices. In 2003, we produced 0.8 million

ounces less silver than the previous year due to

lower silver ore grades, which was partly offset by

an increase in realized silver sales prices from

$4.74 per ounce to $4.84 per ounce, resulting in a

$4 per ounce increase in total cash costs.

Production for 2004 is expected to be in the range

of 300,000 to 310,000 ounces of gold at higher

total cash costs of between $100 and $105 per

ounce. Expected lower production and higher

costs assume that we will be mining lower grade

ores and mining further away from primary facili-

ties. Our actual total cash costs in 2004 will also

be affected by the quantity of silver produced as a

by-product and realized silver selling prices, which
in turn will be affected by silver spot market prices.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Round Mountain (50% owned)
The increase in ounces produced during 2003

compared to 2002 resulted from higher recoveries

from the dedicated leach pad. The mine produced

8% more gold than the original plan for 2003, at

13% lower total cash costs than plan. A draw

down in circulating gold loadings due to a carbon

plant expansion, increased side slope leaching, and

continued production from a non-active leach pad

all contributed to higher recoveries. In 2003 total

cash costs decreased by 7% due to higher produc-

tion levels, which included production of more

low-cost ounces as a result of improved recoveries

from the leach pads.

Our share of production for 2004 is expected to be

in the range of 355,000 to 365,000 ounces of gold

at total cash costs between $205 and $215 per

ounce. Production is expected to decrease in 2004

due to a lower contribution from leach pad recov-

eries. Expected higher total cash costs per ounce

in 2004 are a result of expected lower production

levels and increased processing of stockpiled ore.

South America

For the years ended
December 31

Production
(attributable ounces)

Total Cash Costs – per
Gold Institute Production
Cost Standard1 ($/oz)

Total Cash
Costs – per
US GAAP ($/oz)

2003

2002

2003

2002

2003

2002

Pierina

911,723

898,228

$ 83

$ 80

$ 87

$ 101

1. For an explanation of our use of non-GAAP performance measures, refer to pages 58 to 61.

2003 production was 2% higher than the prior

year due to an 18% increase in productivity.

2002, we produced 0.6 million fewer silver ounces,
partly offset by increased silver prices, which caused

Production and total cash costs in 2003 were essen-

a $2 per ounce increase in total cash costs.

tially in line with the original plan for the year.

The mine successfully implemented improvements

to the crusher system, which has increased tons

placed on the pad. The increased tonnage was off-

set by planned lower grades, which caused a $1 per

ounce increase in total cash costs. Pierina also pro-

duces a quantity of silver as a by-product (1.7 mil-

lion ounces in 2003). Total cash costs per ounce are

affected by both the quantity of silver produced and

realized silver sales prices. In 2003, compared to

2003 was the mine’s last year of production in the

900,000-ounce range. In 2004, the mine is

expected to experience lower production levels as

mining moves to lower grade areas in the open pit.

Due mainly to lower expected ore grades, the

mine is expected to produce between 640,000 and

645,000 ounces of gold with total cash costs

between $95 and $100 per ounce in 2004.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Australia/Africa

For the years ended
December 31

Plutonic
Darlot
Lawlers
Kalgoorlie (50% owned)

Bulyanhulu

Production
(attributable ounces)

Total Cash Costs – per
Gold Institute Production
Cost Standard1 ($/oz)

Total Cash
Costs – per
US GAAP ($/oz)

2003

2002

2003

2002

2003

2002

333,947
154,977
99,223
436,098

1,024,245
313,551

307,377
145,443
113,291
360,025

926,136
356,319

$ 193
164
249
209

200
246

$ 184
168
179
222

196
198

$ 193
165
250
212

203
260

$ 186
170
184
228

200
199

1,337,796

1,282,455

$ 210

$ 196

$ 216

$ 199

1. For an explanation of our use of non-GAAP performance measures, refer to pages 58 to 61.

In both 2003 and 2002, we hedged substantially

pits; additional costs for pumping pit water com-

all of our total cash costs that are denominated in

bined with restricted mining rates from cyclonic

Australian dollars, and therefore our total cash

storms earlier this year; and costs incurred to main-

costs were not significantly affected by changes in

tain pit slope stability. Total cash costs in 2003

market currency exchange rates in 2003. However

were in line with the original plan for the year.

our total cash costs are impacted by changes in

the average exchange rates under our currency

hedge contracts. The average currency exchange

rate under our hedge contracts was $0.55 in 2003

compared with $0.54 in 2002. The effect of the

difference in this exchange rate on total cash costs

was an increase of about $4 per ounce at our

Australian mines. In 2004, the average currency

exchange rate under our currency hedge contracts

is $0.58. The change in this average exchange rate

in 2004 compared with 2003 is expected to cause

about an $11 per ounce increase in total cash costs

at our Australian mines in 2004.

Plutonic
In 2003, production was 9% higher than 2002

and 13% higher than the original plan for the year,

due to an increase in processing of higher-grade

underground ore. In 2002, a substantial low-grade

stockpile was processed. Higher total cash costs

per ounce in 2003 compared with 2002 were

primarily due to mining various lower-grade open

Production for 2004 is expected to be between

315,000 and 320,000 ounces of gold at total cash

costs between $185 and $195 per ounce. The

expected production decrease is due primarily to a

decrease in open pit ore tons mined. Total cash

costs are expected to be 4% lower as a result of

the benefits of a paste fill plant commissioned in

third quarter 2003. Expected benefits from this
plant include improved ore recovery, reduced min-

ing dilution and improved mining flexibility, which

are expected to result in lower total cash costs.

Kalgoorlie (50% owned)
In 2003, the mine produced 21% more gold than

the prior year and 27% higher than the original

plan for the year, due to higher ore grades and bet-

ter gold recovery rates. Kalgoorlie is an open-pit

mine that was historically an underground mine.

As areas of the old underground mine are exca-

vated through open-pit mining, mining captures

high-grade pillars that result in higher processed

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

ore grades. Operating improvements, higher ore

88.1%, with a positive impact on total cash costs

grade and lower sulphur content contributed to

per ounce.

higher gold recoveries. The 6% lower total cash

costs compared to the prior year, 12% lower than

the original plan for the year, was mainly due to

the impact of higher ore grades ($36 per ounce

decrease) and improved recovery rates ($3 per

ounce decrease).

Production for 2004 is expected to be between

360,000 and 365,000 ounces of gold at total

cash costs between $240 and $260 per ounce. The

expected production increase is due to expected

higher grades and increased mining productivity

as a result of the stabilization plan. Total cash

Our share of production for 2004 is expected to

costs are expected to be similar to 2003. Both

be between 395,000 and 400,000 ounces of gold

the production and total cash cost estimates for

at total cash costs of between $230 and $240 per

Bulyanhulu for 2004 are contingent on improve-

ounce. The expected production decrease is due to

ments from the stabilization plan. While the imple-

expected lower grades and planned maintenance

mentation of this plan is underway, we anticipate

on the SAG mill. The expected increase in cash

that it will take until the end of 2004 to complete.

costs is due to lower expected production levels and

marginally higher anticipated costs in the open pit.

Bulyanhulu
2003 production was 12% lower than the prior

year due to higher mining dilution, which resulted

in lower than planned processed ore grades. Total

cash costs for 2003 were higher than the prior

year due to lower production levels and lower

processed ore grades, which caused a $14 per ounce

increase in total cash costs. Higher costs related to

maintenance and supplies also contributed to the

increase in total cash costs. Compared to the orig-

inal plan for 2003, production was 24% lower and

total cash costs were 41% higher than plan for the

same reasons as the year over year variance.

Accretion and Other Reclamation /
Closure Costs
Accretion and other reclamation/closure costs,

which includes certain reclamation costs, accretion

expense and other costs and expenses, increased

by $49 million over 2002 to $83 million in 2003.

Following the adoption of FAS 143 in 2003, our

accounting treatment for these costs changed.

Previously, we accrued these costs over the life of

our mines using the units of production method.

Under FAS 143, we only accrue and amortize legal

obligations to carry out reclamation and closure

activities over the mine lives, while other reclama-

tion costs are expensed as they are incurred. We are

also required to discount legal reclamation obliga-

Late in third quarter 2003, the mine established a

tions and accrue an interest-like cost over the period

stabilization plan following production difficulties

to time of settlement (accretion). In addition to the

in the first part of the year. During the fourth

cumulative effect of the change, as compared to the

quarter, the mining rate averaged 2,790 tons per

prior year, this change in accounting policy resulted

day – a 7% improvement over the stabilization

in a $36 million increase in these costs in 2003. We

plan mining rate. With the successful completion

also revised our cost estimates for asset retirement

of a flotation plant expansion and adjustments

obligations at various closed mines, resulting in a

made through the first half of the year, gold recov-

$10 million charge to earnings in 2003.

ery rates are now averaging 88.5%, up from

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Amortization
Our amortization expense mainly arises on prop-

effort focuses on five major areas where we possess

significant infrastructure: the United States, Peru,

erty, plant and equipment at our operating mines.

Australia, Chile/Argentina and Tanzania.

The majority of these assets are amortized on a

units of production basis. As a result, amortiza-

tion expense is affected by the overall quantity of

gold produced and sold, changes in reserve esti-

mates, and the mix of production across our mines.

We produced 0.2 million fewer ounces in 2003

than in 2002, consisting of a 0.3 million ounce

decline at five mines that closed on depletion of

Exploration, Development and Business
Development Expense

For the years
ended December 31

Exploration costs
North America
Australia/Africa
South America

2003

2002

2001

$ 19
24
19

$ 13
17
8

$ 17
17
25

reserves in 2002, offset by a 0.1 million ounce

Development project costs

increase at our other mines. At the closed mines,

most assets had been fully amortized by 2002, there-

fore the decrease in production from these mines

in 2003 did not lead to a significant reduction in

amortization expense. Conversely, the 0.1 million

ounce increase in production at other mines, com-

bined with the effect of a change in production

mix, led to an overall $3 million increase in our

amortization expense. The overall increase in aver-

age amortization per ounce from $85 per ounce to

$90 per ounce reflects this changing production

mix, as well as the impact of changes in reserve

estimates. For details of the impact of changes in

reserve estimates on amortization expense in 2003

and 2002, refer to page 47. For an explanation of

how we calculate amortization per ounce, refer to

page 61. For 2004, we expect amortization to be

in a range of $480 million to $490 million. Our

actual amortization expense in 2004 will be

affected by actual gold production at each of our

mines in 2004.

Exploration, Development and
Business Development
Our exploration strategy is to maintain a geo-

graphic mix of projects at different stages in the

exploration process. Our early stage exploration

Veladero
Alto Chicama
Other

Other/Business
Development

18
29
7

20
29
3

26
–
–

$ 137

$ 104

$ 103

In 2003, we continued to invest in our exploration

program with costs increasing from 2002 levels in

all three of our regions to support the ongoing

level of activities. During 2003, we incurred devel-

opment expenditures at each of our development

projects. Under US GAAP, development expendi-

tures are not capitalized until after mineralization

is classified as a proven and probable reserve in

accordance with US reporting standards. Our most

significant expensed development expenditures

in 2003 were incurred at our Veladero and Alto

Chicama projects. We expensed development costs

at Veladero until October 1, 2003, when the project

achieved the criteria needed to classify material as a

reserve under SEC rules. For a detailed description

of the nature and status of each of our develop-

ment projects please refer to pages 14 to 17 of this

Annual Report, which are incorporated by refer-

ence in this Management’s Discussion and Analysis.

In 2004, we expect our exploration, development

and business development expense to be about

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

$110 million. We expect to capitalize all develop-

interest at Cowal and Veladero compared to 2002,

ment costs at Veladero in 2004. At Alto Chicama,

when we capitalized $2 million at Cowal. In 2004,

we will continue to expense development costs

we expect to capitalize about an additional

until the mineralization there qualifies as a reserve

$17 million of interest to reflect a full year of

under SEC rules. Our actual development expense

capitalization at Veladero. We may also capitalize

will be affected by the timing of when miner-

further amounts of interest on other development

alization at Alto Chicama qualifies as a reserve

projects after they achieve SEC reserve status or

under SEC rules. If we experience a delay in this

receive internal approval to begin construction

expected timing, this could cause an increase in

activities.

expensed development costs. Our exploration

expense reflects our planned funding of our vari-

ous exploration projects. We may spend more or

less on these projects depending on the results of

ongoing exploration activities, and we may also

fund further exploration projects in addition to

the presently planned projects for 2004.

Administration
Administration costs of $83 million were $19 mil-

lion higher than in the prior year, mainly due to

severance costs ($9 million), as well as higher legal

fees, corporate insurance costs, and regulatory

compliance costs. For 2004 we expect administra-

tion costs to be about $80 million.

Interest Expense
We incurred $49 million in interest costs and

financing charges in 2003, related mainly to our

debentures and our Bulyanhulu project financing.

We use interest rate swaps to manage the effective

rates of interest we pay on our long-term debt. On

$350 million of our $500 million debentures, we

have converted the fixed 7.5% interest rate to a

floating rate through 2007, taking advantage of low

market floating interest rates. On our Bulyanhulu

financing, we have taken advantage of the present

low interest rates to fix the interest rate for the

term of the debt at a rate of about 7%. Our over-

all effective interest rate declined from 7.2% in

2002 to 5.8% in 2003, due to the decline in market

interest rates. In 2003, we capitalized $5 million of

For 2004, we expect to incur interest of about

$49 million on our existing debt obligations.

Interest expense on our existing long-term debt

obligations is expected to decline to about $27

million, after capitalizing about $22 million at

Cowal and Veladero. Our actual interest expense

on existing debt obligations, as well as amounts of

interest capitalized, will be affected by changes in

market interest rates on variable rate debt obliga-

tions, as well as whether other development

projects meet US GAAP criteria for interest

capitalization during 2004.

Other Income/ Expense
In 2003, we earned an effective interest rate on

our cash of 3.4%, unchanged from 2002. Through

interest rate swaps, we earned a fixed rate of 3.4%

in 2003 on most of our cash balances, with any

excess cash balances earning interest at market

interest rates. In 2003, we also realized pre-tax

gains of $39 million on the sale of various land

positions and assets at mines that closed in previ-

ous years. We may sell further assets in 2004. We

also recorded losses of $12 million on various

investments, arising mainly on investments held in

a post-retirement benefit plan.

Non-Hedge Derivative Gains
Non-hedge derivative gains and losses arising

on derivative instruments used in our risk man-

agement strategy that do not qualify for hedge

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

accounting treatment are recorded in earnings.

tax rate in 2002 was mainly because a significant

These gains and losses do not include the unre-

portion of our earnings was generated in a low

alized mark-to-market loss on our fixed-price

tax-rate jurisdiction.

forward gold sales contracts. The gains and losses

occur because of changes in commodity prices,

currency exchange rates and interest rates.

In 2003, we recorded an underlying income tax

expense of $44 million (underlying effective tax

rate of 20%), offset by a net release in deferred

In 2003, non-hedge derivative gains of $17 million

tax valuation allowances of $39 million, including

on non-hedge currency contracts were caused pri-

$15 million in Argentina, $16 million in Australia

marily by the impact of a strengthening Australian

and $21 million in North America. The increase in

dollar. We also recorded gains of $32 million on

our underlying effective tax rate is due primarily

interest-rate and gold lease rate swaps in 2003.

to higher spot gold prices that lead to us generat-

The fair value of these swaps is affected mainly by

ing larger amounts of taxable income in higher

changes in either US dollar interest rates or gold

rate tax jurisdictions. The release of tax valuation

lease rates. A 50-basis point decline in gold lease

allowances in North America reflects a corporate

rates in 2003 was the main driver of these gains.

reorganization that enabled us to utilize certain

Based on historic sensitivities and assuming no

tax assets. We released valuation allowances total-

change in the size of our gold lease rate swap posi-

ing $15 million in Argentina after we approved a

tion, the effect of a 1% decrease in interest rates

construction start up at Veladero in fourth quarter

on the fair value of the swaps would be a $32 mil-

2003 and classified mineralization as a proven

lion gain for a 1% change in gold lease rates and a

and probable reserve under SEC rules. In other

$10 million gain for a 1% change in US dollar

instances, the release of valuation allowances

interest rates. In 2003, we also recorded gains due

reflects higher levels of taxable income due to

to hedge ineffectiveness of $19 million. These gains

higher market gold prices.

mainly arose on currency contracts, where because

of changes in the expected timing of forecasted

expenditures – the contracts no longer qualify for

hedge accounting treatment, with the effect that

gains or losses are recorded immediately in earn-

ings, rather than being matched with the origi-

nally hedged items.

Income Taxes
In 2003, we recorded a tax expense of $5 million

compared to a tax recovery of $16 million in

2002. In 2002, the tax recovery of $16 million

reflected an underlying effective tax expense of

$6 million (effective tax rate of 3%) offset by a

credit of $22 million following the resolution of

certain tax uncertainties. The relatively low effective

Should gold prices remain in the $400 per ounce

range, we expect our underlying effective tax rate,

excluding any further release of deferred tax

valuation allowances, to rise to about 30% as a

larger portion of our earnings would come from

tax jurisdictions with higher tax rates. Our under-

lying income tax expense will also be affected by

the quantity of gold production delivered under

our fixed-price forward sales contracts, and the

actual prices realized for any deliveries under these

contracts, due to the impact of varying levels of

taxation that exist between the various tax juris-

dictions in which we operate.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our income tax expense is also affected by

trend in gold prices may result in further releases

changes in the level of valuation allowances

of valuation allowances with corresponding tax

recorded against deferred tax assets. Valuation

credits recorded in earnings. See also pages 49 and

allowances are recorded where there is substantial

50 for further information on deferred income tax

uncertainty over the realization of a tax asset.

valuation allowances.

Among other things, a further sustained upward

Statement of
Comprehensive Income

Comprehensive income consists of net income or

In 2003, other comprehensive income mainly

loss, together with certain other economic gains

included gains of $349 million arising on our cash

and losses that are collectively described as “other

flow hedge contracts and the transfer of $110 mil-

comprehensive income” and excluded from the

lion of the gains on the cash flow hedges to earn-

income statement.

ings during the year.

Cash Flow Statement

Liquidity and Capital Resources

Liquidity risk
The objective of our liquidity management is to

ensure we have the ability to generate or obtain

sufficient cash or its equivalents on a timely and

cost-effective basis to meet our commitments as

they fall due. The management of liquidity risk is

crucial to protecting our capital, maintaining mar-

ket confidence and ensuring that we can expand

not expected to pose a significant risk to our

liquidity, because, unless we breach the covenants

affecting these financial instruments, which we

believe to be unlikely, the counterparties to out-

standing derivative instruments cannot require

settlement of the derivatives and we are not subject

to any margin calls.

Historic sources of liquidity
In previous years, our main sources of liquidity have

into profitable business opportunities. Liquidity

been our cash inflow from operating activities, our

risk is managed dynamically, and exposures are

large cash position, and our various debt-financing

regularly measured, monitored and mitigated. The

facilities. Currently, our debt facilities include our

primary factors that can potentially adversely

publicly traded debentures, our Bulyanhulu project

affect our liquidity are realized gold sales prices;

financing, and our undrawn $1 billion revolving

cash production costs; capital expenditure require-

credit facility with a syndicate of global banks.

ments at our operating mines and development

projects; and scheduled repayments of long-term

debt obligations. Our past and future non-cash

working capital requirements have not and are

not expected to materially affect our liquidity.

Outstanding derivative financial instruments are

In the last three years, we have generated a total

operating cash inflow of $1.7 billion. We expect to

continue to generate significant operating cash

flow over the next few years, providing we can

maintain our present production levels and also

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

provided that there is no material decline in the

The assessment of our liquidity position reflects

spot price of gold. We expect capital needs of

management estimates and judgments pertaining

over $2 billion during the next four years to build

to our ability to generate operating cash flow, our

our development projects, as well as between

capital needs, our credit capacity and our assess-

$100 and $200 million per year for sustaining

ment of likely future debt market conditions. We

capital at our existing operations. Our alternatives

consider our liquidity profile to be sound as there

for sourcing this capital include our $1 billion

are no known trends, demands, commitments,

cash position, our $1 billion credit facility, our

events or uncertainties that are presently viewed as

future operating cash flow, project financings and

likely to result in a material adverse change in our

public debt financings. We are evaluating these

current liquidity position.

alternatives to determine the optimal mix of capital

resources for the projects. We expect that, absent a

material adverse change in a combination of these

sources of liquidity, our present levels of liquidity

will be adequate to meet our expected capital

needs. If we are unable to access project financing

due to unforeseen political or other problems, we

expect that we will be able to access public debt

markets as an alternative source of financing.

Liquidity management
Our liquidity management approach is designed

to ensure that reliable and cost-effective sources of

cash are available to satisfy current and prospective

commitments. The Corporate Treasury function

has global responsibility for the implementation

of liquidity management policies, strategies and

plans. The Finance Committee provides oversight

for liquidity management and liquidity policies

and receives regular reports on our liquidity.

We manage our liquidity position on a consoli-

dated basis. When managing the flow of liquidity

between different legal entities within our consoli-

dated group, we take into account the tax and

regulatory considerations associated with each

jurisdiction. While such tax and regulatory consid-

erations add a degree of complexity to internal

fund flows, our consolidated liquidity management

approach takes into account the funding demands

associated with intra-group requirements.

Diversification of funding sources is an important

component of our overall liquidity management

strategy since it expands funding flexibility,

minimizes funding concentration and dependency

and generally lowers financing costs. We also seek

to mitigate certain risks through the use of non-

recourse project financing.

Credit ratings
Our ability to access unsecured funding markets

and our financing costs in such markets are pri-

marily dependent upon maintaining an acceptable

credit rating. While our estimates suggest that a

minor downgrade would not materially influence

our funding capacity or costs, we recognize the

importance of avoiding such an event and are

committed to actions that should reinforce exist-

ing external assessments of our financial strength.

A deterioration in our credit rating would not

adversely affect our existing debt obligations or

gold sales contracts. There are a number of factors

that are important to our “A” credit rating, includ-

ing: our market capitalization; the strength of our

balance sheet, including the amount of net debt and

our debt-to-equity ratio; our cash generating ability,

including cash generated by operating activities and

expected capital expenditure requirements; the

quantity of our gold reserves; and our relatively

low geo-political risk profile due to the location

of our mines.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Like most financial contracts, our revolving credit

cost of $154 million. We may continue to execute

facility and our gold sales contracts require us to

this share buyback program in 2004, subject to

comply with certain financial covenants. These

market conditions, and provided that we can

covenants include:

accomplish this without significantly impacting

a) Maintaining a minimum consolidated tangible

our liquidity.

net worth of at least $2.0 billion (our consoli-

dated net worth as at December 31, 2003 was

$3.5 billion); and

Operating Activities
Our operating cash flow is significantly affected

b) Maintaining a maximum long-term debt to con-

by the volume of gold sales, as well as realized

solidated net worth ratio below 1.5:1 (the ratio

gold prices and cash operating costs. In 2003,

as at December 31, 2003 was under 0.25:1).

our average realized gold sales price increased by

The calculation of net worth excludes the unreal-

ized mark-to-market gain or loss on our derivative

instruments and gold sales contracts.

In the unlikely event that we breach one of these

covenants, we would be in default of our forward

gold sales contracts, which could result in the

counterparties requiring settlement of these con-

tracts; the syndicate of banks in our credit facility

could require repayment of amounts outstanding

at that time.

Capital structure
We regularly review our capital structure with an

overall goal of lowering our cost of capital, while

preserving the balance sheet strength and flexibil-

ity that is important due to the cyclical nature of

commodity markets, and to ensure that we have

access to cash for strategic purposes.

Following a review of our capital structure during

2003, we concluded that a share buyback program

would be consistent with these overall goals. In

view of the high levels of operating cash flow we

are generating at current gold prices, the high

levels of liquidity that exist in the capital markets

presently, and because we believe that our current

share price represents an attractive buying oppor-

tunity, we initiated a share buyback program. In

2003, we repurchased 8.75 million shares at a total

$27 per ounce over 2002, although this was offset

by a $12 per ounce increase in total cash costs.

The effect of these changes, combined with a 4%

decrease in ounces sold, was a $54 million increase

in our operating cash flow in 2003 compared

to 2002. Other year on year changes included a

$45 million decrease in payments of reclamation

and closure costs and a $59 million increase in

cash payments for income taxes. Operating cash

flow in the last two years included a payment of

$86 million in 2003 for the Inmet settlement and

$50 million in 2002 for merger-related costs

related to the 2001 merger with Homestake.

Investing Activities
Our most significant ongoing investing activities

are for capital expenditures at our mines. Annually,

we invest in sustaining capital at our mines,

including expenditures relating to underground

development activities. We also incur significant

capital expenditures in the development and con-

struction phases of new mines, although the yearly

level varies depending on the status of our devel-

opment projects.

In 2003, expenditures were mainly for sustaining

capital and underground development at our oper-

ating mines. We spent a total of $217 million on

sustaining capital in 2003, an increase of $18 mil-

lion over 2002. The increase in 2003 mainly relates

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

to investments at Plutonic to support a transition

to owner operated mining from contractor mining.

Financing Activities
Our most significant ongoing financing activities

We also spent $105 million at our development

are repayments/drawdowns of debt obligations;

projects in 2003, an increase of $76 million over

dividend payments; proceeds from issuing capital

the prior year, mainly attributable to the construc-

stock on exercise of stock options; and purchases of

tion start up at Veladero in 2003. For 2004, we

common shares under our share buyback program.

expect to spend a total of about $770 million,

including $191 million for sustaining capital,

which is similar to 2003, and $579 million at our

development projects ($273 million at Veladero,

$49 million at Cowal, $211 million at Alto Chicama,

$35 million at Tulawaka, and $11 million at

Pascua). We may increase capital spending for

Pascua in 2004, depending on the timing of Board

approval to begin construction at the project.

We also realized proceeds of $48 million from var-

ious asset sales in 2003, and spent $55 million on

investments in other mining companies, including

a $40 million investment in Highland Gold.

Balance Sheet

Working Capital
Our working capital position (current assets less

The most significant financing cash flows in 2003

were $29 million received on the exercise of

employee stock options, dividend payments totaling

$118 million, and $154 million spent repurchasing

8.75 million common shares under our share buy-

back program. We also made scheduled payments

under our long-term debt obligations totaling

$23 million in 2003.

For 2004, we will be required to make scheduled

long-term debt repayments of $41 million. The

amount of any dividends will be determined by

the Board of Directors.

hedge contracts that mature in 2004, which

current liabilities) increased by $176 million in

increased by $122 million due to the strength-

2003 as compared to 2002. This increase was

ening of the Australian dollar and Canadian dollar

mainly a result of an increase in other current

against the US dollar. Other current liabilities

assets combined with a decrease in other current

decreased by $165 million mainly due to the settle-

liabilities. Other current assets include the unreal-

ment of the Inmet litigation and payments of

ized mark-to-market gain on certain cash flow

income tax installments during 2003.

Canadian Supplement

In note 23 to our consolidated financial statements

and intangible assets recorded under Canadian

we have provided a reconciliation between Canadian

GAAP. These differences arise due to differences

and US GAAP, including a description of the

in the carrying amounts of assets and of amortiza-

material differences affecting our balance sheet,

tion methods under Canadian GAAP when com-

income statement and statement of cash flow. The

pared to US GAAP, as described in note 23 to our

principal continuing reconciling differences relate to

consolidated financial statements. We also expect

the amortization of property, plant and equipment

to see continuing differences in our accounting for

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

exploration and development expenditures. Some

standard will, to a large extent, conform our

expenditures that qualify for capitalization under

accounting policy for such costs with FAS 143

Canadian GAAP are expensed under US GAAP.

under US GAAP, except that the transitional rules

The major expenditures in 2004 that will be

under this new Canadian standard may result

affected by this GAAP difference are expenditures

in some continuing differences. The other GAAP

on our Alto Chicama project, which will not qualify

differences that affected the reconciliation of earn-

for capitalization under US GAAP until mineraliza-

ings under US GAAP compared with Canadian

tion at the project qualifies as a reserve under SEC

GAAP were primarily due to facts and circum-

rules. We will be required to adopt a new account-

stances related to the years presented and are not

ing standard under Canadian GAAP in 2004 for

necessarily indicative of continuing trends that will

reclamation and closure costs. This accounting

cause material GAAP differences in future years.

Critical Accounting Policies
and Estimates

Accounting Policy Changes
Effective January 1, 2003, we changed our account-

Asset Retirement Obligations. These accounting

changes are described in note 2 to our consolidated

ing policy for the amortization of underground

financial statements.

development costs, and we adopted FAS 143,

Critical Accounting Estimates

Critical accounting estimates represent estimates

Management has discussed the development and

that are highly uncertain and for which changes in

selection of our critical accounting estimates with

those estimates could materially impact our finan-

the Audit Committee of the Board of Directors,

cial statements. The following accounting estimates

and the Audit Committee has reviewed the dis-

are critical:

closure relating to such estimates in conjunction

> amortization of property, plant and equipment

with its review of this Management’s Discussion

and capitalized mining costs;

and Analysis.

> impairment assessments of long-lived assets;
> asset retirement obligations;
> the measurement of deferred income tax assets
and liabilities and assessment of the need to
record valuation allowances against those assets;

> the valuation of derivative instruments and

measurement of gains and losses on cash flow
and fair value hedges that are recorded in other
comprehensive income; and

> contingencies.

Property, Plant and Equipment and
Other Long-Lived Assets
Property, plant and equipment, which totaled

$3.1 billion at December 31, 2003, represents a

significant portion of our assets (58%). The appli-

cation of our accounting policies for these assets

has a material impact on our earnings.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

In particular, under our accounting policies we

As at year end 2003, we estimated reserves assum-

record amortization expense based on the estimated

ing a $325 per ounce gold price. At December 31,

useful economic lives of these assets, and we peri-

2003, we estimated that a $25 per ounce reduction

odically undertake impairment assessments. The

(8%) in the gold price assumption would reduce

most significant estimate that affects these account-

our reserves by about 4 million contained ounces

ing policies is estimated quantities of proven and

(5%), relating primarily to our Kalgoorlie and

probable mineral reserves. The process of estimat-

Goldstrike Open Pit operating mines. Conversely,

ing quantities of gold reserves is complex, requiring

a $25 per ounce increase in gold price would

significant decisions in the evaluation of all available

increase our reserves by about 3.6 million contained

geological, geophysical, engineering and economic

ounces (5%), relating primarily to Kalgoorlie and

data. The data for a given ore body may also

Goldstrike Open Pit.

change substantially over time as a result of numer-

ous factors, including, but not limited to, additional

development activity, evolving production history

Amortization Expense
We amortize a large portion of our property, plant

and the continual reassessment of the viability of

and equipment using the units-of-production

production under various economic conditions.

method based on proven and probable reserves.

A material revision (upward or downward) to

existing reserve estimates could occur because of,

among other things: revisions to geological data or

assumptions; a change in the assumed gold prices

as well as the results of drilling and exploration

activities. Estimates of reserve quantities can also

change due to changes in expected cash produc-

tion costs. We calculate reported reserve estimates

in accordance with rules and regulations governing

these estimates. However, because of the subjective

decisions we have to make, as well as variances in

available data for each ore body, these estimates

are generally uncertain.

Changes in reserve quantities, including changes

resulting from gold and silver price assumptions,

would cause corresponding changes in amortization

expense in periods subsequent to the revision, and

could result in impairment of the carrying amount

of property, plant and equipment as well as other

long-lived assets such as capitalized mining costs.

We estimate that a 5% decrease in reserves would

increase annual amortization by about $28 million

and decrease net income by about $23 million

($0.04 per share); and a 5% increase in reserves

would decrease annual amortization by about

$17 million and increase net income by about

$14 million ($0.03 per share). This sensitivity

analysis assumes that the increase or decrease will

be consistent across all our mines. To the extent

this increase or decrease varies across our portfo-

lio of mines, the actual impact on earnings may be

higher or lower than this estimate.

The mines where amortization charges are most

significantly affected by changes in reserve esti-

mates are Pierina, Goldstrike Underground, Eskay

Creek and Bulyanhulu. These mines generally have

the most significant carrying amounts of property,

plant and equipment subject to amortization using

the units of production method and the highest

per ounce amortization charges. The effect of a

10% change in reserve estimates at these mines on

amortization would be as follows:

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Pierina
Goldstrike Underground
Eskay Creek
Bulyanhulu

1. Based on ounces sold in 2003.

Impact on amortization
rates (per ounce)

Impact on amortization
expense1 (millions)

$ 18
8
5
8

$ 13
5
3
8

Impact of Actual Changes in Reserve Estimates on Amortization

For the years ended December 31

2003

2002

(in millions of dollars, except
reserves which are in millions
of contained ounces)

Goldstrike – Underground
Plutonic
Goldstrike – Open Pit
Eskay Creek
Bulyanhulu

Reserves
increase
(decrease)

Amortization
increase
(decrease)

Reserves
increase
(decrease)

Amortization
increase
(decrease)

0.6
1.3
1.3
–
–

$(10)
(4)
(6)
–
–

(1.7)
0.7
–
(0.2)
2.2

$ 27
(4)
–
6
(7)

Changes in reserve estimates are calculated at the

that there are material changes to proven and prob-

end of the year and affect amortization expense

able mineral reserves. To the extent that the aver-

prospectively. The amounts presented represent

age ratio of tons of waste that are required to be

the effect of reserve changes at the end of 2002

removed for each ounce of gold differs materially

and 2001.

Capitalized Mining Costs
At open-pit mines that have diverse grades and

waste-to-ore ratios over the life of the mine, we

defer and amortize certain costs, normally associ-

ated with the removal of waste rock (capitalized

mining costs). The amortization of capitalized

mining costs is determined using the units of pro-

duction method based on estimated recoverable

ounces from proven and probable mineral reserves,

and using a stripping ratio calculated as the total

tons to be moved over total proven and probable

reserves. Quantities of proven and probable mineral

reserves are subject to material change from period

to period as described above. Consequently strip-

ping ratios are also subject to material change and

the charge to earnings for amortization could differ

materially between reporting periods to the extent

from that which was estimated in the stripping

ratio, the actual amortization charged to operations

could differ materially between reporting periods.

In 2004, we expect to reduce the stripping ratio at

Goldstrike Open Pit from 112:1 to 109:1, and to

increase the stripping ratio at Pierina from 48:1 to

60:1. The effect of this change in estimate for

2004 will be to reduce amortization at Goldstrike

Open Pit by $0.6 million; and to increase amor-

tization at Pierina by $7 million. A further change

in the stripping ratio by a factor of 10:1 at

Goldstrike Open Pit would change amortization

recorded by $2 million; and at Pierina would

change amortization recorded by $6 million.

Changes in stripping ratio estimates did not have

any significant effect on the comparability of

amortization charges between 2003 and 2002.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Impairment Assessments of
Long-Lived Assets
We review and evaluate our long-lived assets for

impairment when events or changes in circum-

stances indicate that the carrying amounts may

not be recoverable. Impairment assessments, which

are conducted in the manner described within

note 15(c) to our consolidated financial statements,

are based on estimates of future cash flows, which

include, among other things, estimates of:
> the quantity of gold reserves at our mines;
> future gold and silver prices; and
> future operating and capital costs to mine and
process our reserves over extended periods of
time (5 to 25 years).

governing the protection of the environment. We

incur expenses on an ongoing basis to discharge

our obligations under these laws and regulations.

Certain expenses meet the definition of an asset

retirement obligation as defined in FAS 143, and

we began accounting for them in accordance with

the principles of FAS 143 from 2003 onwards.

Other expenses that do not meet the definition of

an asset retirement obligation have been expensed

as incurred from 2003 onwards. Prior to 2003, we

accounted for all such expenses by accruing the

total estimated costs over the life of a mine using

the units of production method based on proven

and probable mineral reserves.

On adoption of FAS 143 in 2003, we recorded

Estimates of future cash flows are inherently

liabilities totaling $334 million for asset retirement

uncertain, and are subject to material change over

obligations at fair value on our balance sheet, with

time. In particular, cash flow estimates are

a corresponding adjustment to the carrying amount

affected by external factors such as gold and silver

of the related assets that give rise to these obliga-

prices and also foreign currency exchange rates.

tions. Our financial statements will continue to be

These cash flow estimates and external factors

materially affected by our estimates of future

are subject to material change and therefore it is

reclamation and closure costs that are part of our

reasonably likely that the results of impairment

asset retirement obligations.

assessments conducted from period to period

could have a material impact on our consolidated

financial statements.

Significant judgments and estimates are made

when estimating the nature and costs associated

with asset retirement obligations. Cash outflows

Based on a long-term gold price of $375 per ounce

relating to the obligations are incurred, in some

and our gold mineral reserves at December 31, 2003,

cases, over periods from 2 to 25 years. When consid-

we have completed a sensitivity analysis that indi-

ering the effect of the extended time period over

cates that a 10% decrease in net cash flows, result-

which costs are expected to be incurred, combined

ing from a combination of a lower spot gold price

with the estimated discount factors, the fair value

and an increase in operating and capital costs at

of asset retirement obligations could materially

each of our properties, would not result in the total

change from period to period due to changes in

estimated undiscounted future net cash flows at any

the underlying assumptions. Also changes in

of our mines or development projects being less than

environmental laws and regulations could cause

the carrying amount of the related long-lived assets.

Asset Retirement Obligations
Our mining, development and exploration activi-

material changes in the expected costs and the fair
value of asset retirement obligations. During 2003,
we recorded various changes in estimates of asset

retirement obligations at closed mines that resulted

ties are subject to various laws and regulations

in a $10 million pre-tax charge to earnings.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Derivative Instruments
All financial instruments that meet the definition of

operating costs and capital expenditures at our

Australian and Canadian mines. Because of the

a derivative in FAS 133 are recorded on our balance

large amount of unrealized gains included in other

sheet at fair value, with the exception of contracts

comprehensive income, hedge ineffectiveness aris-

that qualify for the normal sales exemption.

ing from a relatively small change in the timing or

Changes in the fair value of derivatives recorded on

amount of the hedged items could have a significant

our balance sheet are recorded in earnings except

impact on earnings. Estimates of these forecasted

for the effective portion of the change in fair value

transactions are developed in our annual mine

of derivatives that are designated and qualify as a

planning process, and updated periodically when

cash flow hedge or a fair value hedge. We apply

events or circumstances indicate that the timing or

judgment in estimating the fair value of derivative

amounts of the forecasted transactions have changed

instruments, which are highly sensitive to assump-

significantly. In recognition of the fact that this

tions regarding gold and other commodity prices,

uncertainty increases as the time to the forecasted

gold lease rates, market volatilities, foreign currency

transaction increases, our hedging strategy is to

exchange rates and interest rates. Variations in these

hedge a proportion of the forecasted expenditures

factors could materially affect amounts credited or

that declines in successive time intervals into the

charged to earnings to reflect the changes in fair

future. During 2003, following changes in the

value of derivatives. The derivative instruments

expected timing of forecasted Australian dollar

whose past changes in fair value have most signifi-

capital expenditures, we recorded gains totaling

cantly impacted earnings are our gold lease rate

$18 million in earnings after we concluded that

swaps. Certain derivative instruments are accounted

the conditions for continued use of hedge account-

for as cash flow hedges. The effective portion of

ing treatment for certain derivative instruments

changes in fair value of these instruments is deferred

was no longer appropriate.

in other comprehensive income and will be recog-

nized in earnings when the underlying hedged items

occur and are also recorded in earnings. All deriva-

tives qualifying for hedge accounting are designated

Deferred Tax Assets and Liabilities
and Related Valuation Allowances
In measuring the amount of deferred income tax

against hedged items where we believe that the fore-

assets and liabilities we are periodically required

casted transaction is probable of occurring. To the

to develop estimates of the tax basis of assets and

extent that we determine that the hedged items are

liabilities. In circumstances where the applicable

no longer probable of occurring within the time-

tax laws and regulations are either unclear or

frame designated or within a two month period

subject to ongoing varying interpretations, it is

thereafter, due to changes in the factors affecting

reasonably possible that changes in these estimates

the amounts and timing of the forecasted transac-

could occur that materially affect the amounts of

tions designated as the hedged items, gains and

deferred income tax assets and liabilities recorded

losses deferred in other comprehensive income are

in our consolidated financial statements. The most

reclassified to earnings immediately.

The most significant hedged items that are uncer-

tain and subject to possible change from period to

period are forecasted local currency denominated

significant such estimate affecting our consolidated

financial statements is the tax basis of our Pierina

mining concession, which is described in note 21(c)

to our consolidated financial statements. It is

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

reasonably possible that we may be successful in

In Chile, valuation allowances relate to tax assets

appealing the revaluation of the Pierina mining

in subsidiaries that do not have any present sources

concession, resulting in the de-recognition of

of income against which to utilize the assets. In

deferred income tax liabilities totaling $141 million,

the event these subsidiaries are expected to have

which would be reflected as a tax credit in earn-

sources of income in the future, we may be able to

ings in the period such a determination is made.

reduce the level of valuation allowances recorded.

For every deferred tax asset, we evaluate the likeli-

hood of whether some portion or all of the asset

will not be realized. This evaluation is based on,

In particular, we may be able to release a portion

of the valuation allowances when a construction

decision is made on the Pascua-Lama project.

among other things, expected levels of future tax-

In Canada, substantially all of the valuation

able income and the pattern and timing of reversals

allowances relate to capital losses that will only be

of temporary timing differences that give rise to

utilized if we realize any capital gains in the future.

deferred tax assets and liabilities. If, based on the

weight of available evidence, we determine that it

is more likely than not (a likelihood of more than

50 percent) that all or some portion of a deferred

tax asset will not be realized, then we record a val-

uation allowance against it. As of December 31,

2003, we have recorded a valuation allowance of

$394 million on a portion of our net deferred tax

assets totaling $682 million.

In Tanzania, after considering the fiscal regime

applicable to mining companies, and the expected

levels of future taxable income at the Bulyanhulu

mine, we recorded a valuation allowance against a

portion of the deferred tax assets. In the event that

levels of future taxable income at Bulyanhulu are

higher than we presently expect, which could

be because of a number of factors, including a

sustained upward movement in gold prices, oper-

Valuation Allowance at December 31

ating improvements or the discovery of additional

(millions)

United States
Chile/Argentina
Canada
Tanzania
Australia
Other

2003

2002

$ 142
122
72
44
8
6

$ 173
120
67
43
24
6

$ 394

$ 433

In the United States, most of the valuation

allowances relate to alternative minimum tax

credit carry forwards (AMT credits). These AMT

credits will only be utilized if there is a significant

further increase in the market price of gold above

$400 per ounce or if we secure a source of addi-

tional taxable income in addition to the present

income generated by our operating mines.

reserves, we may reduce the level of valuation

allowances against these assets.

During 2003, we released net valuation allowances

totaling $39 million as previously described on

page 39.

In future years, levels of taxable income will be

affected by, among other things, changes in gold

prices, cash operating costs, proven and probable

gold reserves, interest rates and foreign currency

exchange rates. In particular, if the recent trend of

higher spot gold prices continues, we may conclude

that a portion of valuation allowances recorded

at December 31, 2003 are no longer necessary.

Significant changes in these and other factors could

have a material impact on the amount of valuation

allowances recorded and on income tax expense.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Contingencies
We regularly assess contingent liabilities, which

As described in note 25 to our consolidated finan-

inherently involve the exercise of significant man-

cial statements, we are involved in claims and legal

agement judgment and estimates of the outcome

proceedings, the resolution of which could have

of future events. By their nature, contingencies

a material effect on our financial condition or

will only be resolved when one or more future

future results of operations. In assessing these

events occur or fail to occur – and typically those

contingencies, we evaluated the perceived merits

events may occur a number of years in the future.

of the legal proceedings or unasserted claims, as

well as the perceived merits of the amount of relief

sought or that we expect to seek.

Off-Balance Sheet Arrangements

We do not enter into off-balance sheet arrange-

in addition to us. We do not have any relation-

ments with special purpose entities in the normal

ships with special purpose entities whose sole

course of our business, nor do we have any uncon-

business purpose is to enter into derivative trans-

solidated affiliates. In the case of joint ventures,

actions with us.

our proportionate interest for consolidation pur-

poses is equivalent to the economic returns to

which we are entitled as a joint venture partner.

Our only significant off-balance sheet arrange-

ments are our forward gold sales contracts.

Forward Gold Sales Contracts
Prior to the adoption of a no-hedge policy in fourth

quarter 2003, we historically entered into fixed-

price forward sales contracts in a gold hedging

program to manage our exposure to market gold

prices. Following the adoption of our no-hedge

policy, we will not add any new gold hedge con-

tracts, and we expect to reduce our gold hedge

position to zero over time.

We have historically entered into forward gold

sales contracts with about 19 high quality banking

counterparties. The banking counterparties with

whom we entered into these contracts engage in

hedging transactions with numerous third parties

We have used fixed-price forward gold sales con-

tracts to protect our earnings and cash flow from

declining gold prices. These contracts permit us to

sell our gold production in the gold spot market.

In a rising gold price environment, we have the

ability to deliver our gold at the higher spot price,

or deliver under the contract at the contract price.

We expect to reduce our gold hedge position to zero

over time; in 2003, we reduced our position by

2.6 million ounces to 15.5 million ounces.

Through the use of these fixed-price contracts, in

periods when the spot price has been stable or

declining, we have been able to realize higher rev-

enues than if we had sold our gold production in

the spot gold market. The impact of selling our

gold production under these contracts, compared

to the price that would have been realized in the

spot market, can be illustrated as follows:

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Revenues from Forward Gold Sales Contracts

For the years ended December 31

Total revenues from contract sales
Average contract selling price ($/oz)
Average spot price ($/oz)
Incremental revenues from contracts in excess of average

spot gold prices

2003

2002

2001

$ 1,397
364
363

$ 1,401
352
310

$ 1,307
347
271

168

289

Fixed-price Forward Gold Sales Contracts (“The Gold Hedge Position”)

As of December 31, 2003

Gold ounces hedged

15.5 million ounces (or slightly less than three years of
expected future production)

Current termination date of gold

sales contracts

2013 in most cases

Average estimated realizable gold sales contract

price at 2013 termination date

$ 400/oz1

Delivery obligations

Barrick will deliver gold production from operations
against gold sales contracts by the termination date
(which is currently 2013 in most cases). However,
Barrick may choose to settle any gold sales contract
in advance of this termination date at any time, at
its discretion. Historically, delivery has occurred
in advance of the contractual termination date. This
means Barrick can deliver gold at spot prices, or
prices under the hedge contracts, until the termination
date of these contracts.

Average estimated minimum realizable contract

gold sales price for delivery of 100% of
expected future production into existing
sales contracts over the next three years

Unrealized mark-to-market loss at

December 31, 2003

$ 309/oz1, 2, 3

$ 1,725 million4

1. Approximate estimated value based on current market US dollar interest rates and an average lease rate
assumption of 1.5%.

2. Accelerating gold deliveries could potentially lead to reduced contango that would otherwise have built up
over time.

3. Assumes delivery of 100% of expected future production against current gold sales contracts which would
exhaust all remaining gold hedge positions.

4. At a spot gold price of $415 per ounce.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Key Contract Terms and Conditions
A forward gold sales contract is an agreement that

Since we have the flexibility to deliver gold under

our fixed-price forward gold sales contracts at any

we will sell a fixed number of ounces of gold to

time, primarily over the next 10 years, we can sell

the contract counterparty on a delivery date in the

our gold at the higher of the spot price or the

future at an agreed price. We have the flexibility to

contract price well into the future. In the event spot

choose the delivery date at any time over a period

prices consistently exceed the contract price for

up to about 10 years and we have the ability to

this period, we would eventually deliver gold at a

choose a fixed price or a floating price. Our rights

price of about $400 per ounce under our existing

and obligations under these contracts are defined

contracts (assuming market contango rates of

by Master Trading Agreements (“MTAs”) that

2.5%) for each ounce that we did not sell at spot

we have executed with our counterparties. The

prices. Although we may choose to deliver our

price-setting mechanism found in these MTAs

gold production at higher spot prices, it remains

is described in note 5 to our consolidated finan-

probable that we will physically deliver gold over

cial statements.

The selling price under a fixed-price forward gold

sales contract is based on the forward price of

gold at the future delivery date, which is essen-

tially a function of the spot gold price on the

date the contract is entered into plus a premium

(commonly referred to as “contango”) through

the future delivery date. The amount of contango

the term of the contract, rather than cash settling

the contracts. As discussed elsewhere in this dis-

cussion and analysis, we have targeted a 1.5 mil-

lion ounce reduction in our gold hedge position in

2004. In order to achieve this reduction, we may

deliver gold into fixed-price forward sales con-

tracts at sales prices that are lower than the then

prevailing spot price of gold.

is often quoted as a percentage return that reflects

In most cases, under the terms of our MTAs,

the spread between market LIBOR interest rates

the period over which we are required to deliver

(i.e. US dollar interest rates) and gold lease rates.

gold is extended annually by one year, or kept

Generally, US dollar interest rates are higher than

“evergreen”, regardless of our intended delivery

the gold lease rate, which means that the future

dates, unless otherwise notified by the counter-

price is higher than the current price under the

party. This means that, with each year that passes,

contract. In general, the longer the period of time

the termination date of most MTAs is extended

from the start of a contract until delivery, the

into the future by one year. In all of our MTAs

higher the contract price will be compared to the

with our 19 counterparties, the following applies:

spot price at the start of the contract. The final

the counterparties do not have unilateral and dis-

contract selling price increases over time due to

cretionary “right to break” provisions; there are

the amount of the forward premium or contango

no credit downgrade provisions; and we are not

implicit in forward gold prices, as long as US dollar

subject to any margin calls – regardless of the

interest rates are higher than gold lease rates.

price of gold.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

We have the right to settle at any time during the

life of the contracts. This flexibility is demon-

strated by the terms that allow us to deliver into

Significance of mark-to-market gains
and losses
At the end of 2003, the unrealized mark-to-market

contracts at any time on two days notice, or keep

(fair value) on the derivative instruments position,

these contracts outstanding for as long as pri-

including gold and silver forward sales contracts, as

marily 10 years. This feature means that we can

well as currency and interest rate hedge programs,

sell our gold at the market price or the hedge

was negative $1.4 billion. This mark-to-market value

price at our discretion, to the termination date of

represents the replacement value of these contracts

our contracts (2013 in most cases).

based on current market levels, and, subject to us

Our trading agreements with our counterparties

do provide for early close out of certain transac-

tions in the event of a material negative change

in our ability to produce gold for delivery under

our forward gold sales contracts, or a lack of gold

market, and for customary events of default such

continuing to meet the significant covenants under

our MTAs, does not represent an economic obliga-

tion for payment by us. Our obligations under our

gold sales contracts are to deliver an agreed-upon

quantity of gold at an agreed price by the termina-

tion date of the contracts (2013 in most cases).

as covenant breaches, insolvency or bankruptcy.

In accordance with hedge accounting rules, the

The significant financial covenants are: we must

positive mark-to-market value of $326 million

maintain a minimum consolidated net worth of

relating to our currency and interest rate hedge

at least $2 billion – currently, it is $3.5 billion;

programs is recorded as an asset on our balance

and we must maintain a maximum long-term

sheet. The mark-to-market value of our gold and

debt to consolidated net worth ratio of 1.5:1

silver sales contracts is not recorded on the bal-

– currently, it is under 0.25:1. The covenants under

ance sheet as accounting rules that govern these

our MTAs exclude unrealized mark-to-market

contracts do not require balance sheet recognition.

gains or losses on our derivative instruments and

Instead, in accordance with US GAAP, the eco-

forward gold sales contracts in the calculation of

nomic impact of these sales contracts is reflected

consolidated net worth.

in the financial statements as we physically deliver

gold and silver under the contracts.

The terms of our forward gold sales contracts

with our 19 counterparties provide flexibility and

benefits that we believe are unique to us. These

advantageous terms reflect, among other things,

our strong credit rating and our high quality, long-

life, low-cost asset base.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

A short-term spike in gold lease rates would not

have a material negative impact on us because we

are not exposed under our fixed-price forward

gold sales contracts to short-term gold lease rate

variations. A prolonged rise in gold lease rates

could result in lower contango (or negative con-

tango i.e. “backwardation”) and therefore a smaller

Change in the Fair Value of
Forward Gold Sales Contracts

Unrealized Gain (Loss)

At December 31, 2002
Impact of change in spot price1
Contango earned in the year
Impact of change in valuation inputs2

$ (639)
(1,088)
138
(136)

$ (1,725)

forward premium (or backwardation) under the

At December 31, 2003

contract. However, because of the large amount of

Central Bank gold available for lending relative to

demand, gold lease rates have historically tended

to be low and any spikes short-lived.

At December 31, 2003

Fair Value

Forward gold sales contracts
Forward silver sales contracts
Foreign currency contracts
Interest rate contracts

$ (1,725)
(20)
288
38

$ (1,419)

1. From $347 per ounce to $415 per ounce.

2. Other than spot metal prices (e.g. interest rates and
gold lease rates).

The mark-to-market value of the gold contracts is

based on a spot gold price of $415 per ounce and

market rates for LIBOR and gold lease rates. The

mark-to-market value of the contracts would

approach zero (breakeven) at a spot gold price of

approximately $303 per ounce, assuming all other

variables are constant.

Contractual Obligations and Commitments

Payments due in

At December 31, 2003

2004

2005 – 2006

2007 – 2008

2009+

Total

Contractual obligations

Long-term debt
Asset retirement obligations
Capital leases
Operating leases
Purchase obligations

Supplies inventory and consumables
Power contracts
Capital expenditures

Other

Total

$ 41
41
–
4

12
19
163
10

$ 65
76
2
6

11
15
6
11

$ 569
59
3
5

–
17
–
1

$ 80
337
–
8

$ 755
513
5
23

–
2
–
4

23
53
169
26

$ 290

$ 192

$ 654

$ 431

$ 1,567

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Long-term debt
Our debt obligations do not include any subjective

Capital expenditures
Purchase obligations for capital expenditures

acceleration clauses or other clauses that enable

include only those items where binding commit-

the holder of the debt to call for early repayment,

ments have been entered into. They do not include

except in the event that we breach any of the terms

the full amount of future expenditures relating to

and conditions of the debt. We are not required to

our development pipeline over the next 5 years,

post any collateral under any debt obligations and

because commitments have yet to be made for a

the terms of the obligations would not be affected

large portion of the estimated future capital costs

by a deterioration in our credit rating.

related to these projects.

Asset retirement obligations
Amounts presented in the table represent the

Commitments

undiscounted future estimated cost of asset retire-

ment obligations that are recorded in our financial

Royalties
Virtually all of our royalty commitments give rise

statements. The most significant contingent liability

to obligations at the time we produce gold. In the

relating to reclamation and closure activities which

event that we do not produce gold at our mining

is not recorded on our balance sheet, or presented

properties, we have no payment obligation to the

in the above table, relates to potential obligations

royalty holders. The amounts that we expect

to monitor water quality and treat ground water on

to pay in the future are: 2004 – $45 million;

an ongoing basis. We will record a liability for these

2005 to 2006 – $115 million; 2007 to 2008 –

activities if environmental laws and regulations

$107 million; and 2009 and beyond – $375 mil-

require us to conduct these activities in the future.

lion. These amounts are estimated based on our

Power purchase agreements
We enter into contracts to purchase power at each

of our operating mines. The contracts provide for

fixed prices, which in certain circumstances, are

adjusted for inflation. Some agreements obligate

us to purchase fixed quantities per hour, seven

days a week, while others are based on a percent-
age of actual consumption. These contracts extend

through various dates in 2004 to 2007.

In addition to the purchase obligations set out in

the table on the previous page, we purchase about

0.9 billion kilowatt-hours annually at market rates.

Under the terms of one contract, we purchase

power based on actual consumption; this contract

has an exit fee of $12 million should we decide to

switch to an alternate power supplier.

expected gold production from proven and proba-

ble reserves (under Canadian reporting standards)

for the periods indicated, and assuming a $350 gold

price. The most significant royalty arrangements

are disclosed in note 6 to our consolidated finan-

cial statements.

Payments to maintain land tenure and
mineral property rights
In the normal course of business, we are committed

to making annual payments to maintain title to

certain of our properties and to maintain our rights

to mine gold at certain of our properties. In the

event we choose to abandon a property or discon-

tinue mining operations, the payments relating to

that property can be suspended, resulting in our

rights to the property lapsing.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Quarterly Information

(in millions,
except per share data)

March 31,

June 30,

2003

2002

2003

2002

September 30,
2002
2003

December 31,
2002
2003

Gold sales
Average spot gold price
Average realized gold price
Net income
Net income per share1
Operating cash flow

$ 459 $ 478
290
329
46
0.09
124

352
355
29
0.05
131

$ 491 $ 490
313
341
59
0.11
148

347
352
59
0.11
66

$ 549 $ 473
314
342
34
0.06
126

364
365
35
0.07
188

$ 536 $ 526
323
343
54
0.10
195

392
394
77
0.14
134

1. Basic and diluted

Our financial results for the last eight quarters

realized a $51 per ounce (15%) increase in the

reflect the following general trends: rising spot

gold price compared to the year earlier period,

gold prices and prices realized from gold sales;

which more than offset the lower sales volumes.

declining gold production and sales volumes; and

rising total cash costs. These trends are discussed

elsewhere in this Management’s Discussion and

Analysis, and the quarterly trends are consistent

with explanations for annual trends over the last

two years.

Fourth Quarter Results
Revenue for fourth quarter 2003 was $536 mil-

lion on gold sales of 1.36 million ounces, com-

pared to $526 million in revenue on gold sales of

1.54 million ounces for the year earlier period.

During the quarter, spot gold prices ranged from a

high of $416 to a low of $369 per ounce, averag-

ing $392 per ounce. We realized an average price

of $394 per ounce during the quarter, delivering

600,000 ounces against gold hedge contracts, with

the remainder at spot gold prices. Due to the

higher spot gold prices during the quarter, we

For the quarter, we produced 1.3 million ounces at
total cash costs of $1991 per ounce compared to
1.6 million ounces at total cash costs of $1741 per
ounce. Both production and total cash costs for

the quarter were in line with plan.

Earnings for the fourth quarter 2003 were $77 mil-

lion ($0.14 per share) as compared to earnings of

$54 million ($0.10 per share) in the year earlier

period. This increase in earnings over the year

earlier period reflect a $51 per ounce higher realized

gold price and a $60 million increase in non-hedge

derivative gains (2003 – $46 million gain versus

2002 $14 million loss). These factors were partly

offset by higher cash operating costs, provisions of

$14 million for the Inmet settlement and $10 mil-

lion for reclamation costs, and an $18 million lower

income tax recovery.

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

In the quarter, we generated operating cash flow

of $134 million ($220 million prior to the Inmet
settlement of $86 million1) as compared to operat-
ing cash flow of $195 million in the prior year

period. Lower operating cash flow in the quarter

primarily relates to the payment of $86 million on

the Inmet settlement. Excluding the Inmet settle-

ment, fourth quarter and full year cash flow from
operations was slightly higher in 2003 than 2002.

1. For an explanation of our use of non-GAAP
performance measures, please refer to pages 58 to 61.

Non-GAAP Performance Measures

We have included total cash costs per ounce data

comparable basis for assessing the Company’s

because we understand that certain investors use

cash flow performance in 2003 compared with

this information to assess our performance. The

2002. Non-GAAP measures do not have any stan-

inclusion of total cash costs per ounce statistics

dardized meaning prescribed by US GAAP, and

enables investors to better understand year-on-

therefore they may not be comparable to similar

year changes in production costs, which in turn

measures prescribed by other companies. The data

affect our profitability and ability to generate

are intended to provide additional information

operating cash flow for use in investing and other

and should not be considered in isolation or as a

activities. We have also included a measure of

substitute for measures of performance prepared

operating cash flow excluding the settlement of

in accordance with GAAP. The measures are not

litigation. Litigation settlements are infrequent

necessarily indicative of operating profit or cash

in occurrence, and therefore including this non-

flow from operations as determined under GAAP.

GAAP measure of performance provides a more

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Reconciliation of Total Cash Costs per Ounce to Financial Statements

For the years
ended December 31

Total cash production
costs per US GAAP1
Accretion expense and
reclamation costs at
operating mines

Total cash production

costs per Gold
Institute Production
Cost Standard

Ounces sold (thousands)
Total cash costs per
ounce sold per US
GAAP (dollars)

Total cash costs per

ounce sold per Gold
Institute Production
Cost Standard (dollars)

For the years ended
December 31

Total cash production
costs per US GAAP1
Accretion expense and
reclamation costs at
operating mines

Total cash production

costs per Gold
Institute Production
Cost Standard

Ounces sold (thousands)
Total cash costs per
ounce sold per US
GAAP (dollars)

Total cash costs per

ounce sold per Gold
Institute Production
Cost Standard (dollars)

Goldstrike –
Open pit

Goldstrike –
Underground

Eskay
Creek

Round
Mountain

2003

2002

2003

2002

2003

2002

2003

2002

$ 380.6 $ 320.2

$ 152.1 $ 123.0

$ 18.6

$ 14.7

$ 67.2

$ 78.7

(2.5)

(5.5)

–

(1.2)

(0.3)

(0.5)

(1.6)

(6.0)

$ 378.1 $ 314.7

$ 152.1 $ 121.8

$ 18.3

$ 14.2

$ 65.6

$ 72.7

1,625

1,383

600

617

354

358

379

389

$ 234 $ 232

$ 253 $ 199

$ 53

$ 41

$ 177

$ 202

$ 233 $ 228

$ 253 $ 198

$ 52 $ 40

$ 173

$ 187

Hemlo

Holt-McDermott

Marigold

Total
North America

2003

2002

2003

2002

2003

2002

2003

2002

$ 60.4 $ 65.0

$ 20.9 $ 16.6

$ 8.1

$ 5.4

$ 707.9 $ 623.6

(0.2)

(1.0)

(0.1)

(0.3)

(0.1)

(0.2)

(4.8)

(14.7)

$ 60.2 $ 64.0

$ 20.8 $ 16.3

$ 8.0

$ 5.2

$ 703.1 $ 608.9

266

286

3,358 3,155

$ 227 $ 227

$ 240 $ 176

$ 172

$ 194

$ 211 $ 198

$ 226 $ 224

$ 239 $ 173

$ 171

$ 187

$ 209 $ 193

1. Represents cost of sales and other operating costs (excluding amortization).

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the years ended
December 31

Total cash production
costs per US GAAP1
Accretion expense and
reclamation costs at
operating mines

Total cash production

costs per Gold
Institute Production
Cost Standard

Ounces sold (thousands)
Total cash costs per
ounce sold per US
GAAP (dollars)

Total cash costs per

ounce sold per Gold
Institute Production
Cost Standard (dollars)

For the years ended
December 31

Total cash production
costs per US GAAP1
Accretion expense and
reclamation costs at
operating mines

Total cash production

costs per Gold
Institute Production
Cost Standard

Ounces sold (thousands)
Total cash costs per
ounce sold per US
GAAP (dollars)

Total cash costs per

ounce sold per Gold
Institute Production
Cost Standard (dollars)

Pierina

Total
South America

Plutonic

Darlot

2003

2002

2003

2002

2003

2002

2003

2002

$ 78.9 $ 90.2

$ 62.6 $ 58.0

$ 25.4 $ 24.8

(3.2)

(18.4)

(3.2)

(18.4)

(0.2)

(0.8)

(0.1)

(0.3)

$ 75.7 $ 71.8

$ 62.4 $ 57.2

$ 25.3 $ 24.5

911

895

911

895

324

311

154

146

$ 87 $ 101

$ 193 $ 186

$ 165 $ 170

$ 83 $ 80

$ 193 $ 184

$ 164 $ 168

Lawlers

Kalgoorlie

Bulyanhulu

Total
Australia/Africa

2003

2002

2003

2002

2003

2002

2003

2002

$ 23.8 $ 21.3

$ 88.1 $ 83.6

$ 77.1 $ 78.4

$ 277.0 $ 266.1

(0.1)

(0.5)

(1.5)

(2.0)

(4.1)

(0.4)

(6.0)

(4.0)

$ 23.7 $ 20.8

$ 86.6 $ 81.6

$ 73.0 $ 78.0

$ 271.0 $ 262.1

116

415

367

297

395

1,285

1,335

$ 250 $ 184

$ 212 $ 228

$ 260 $ 199

$ 216 $ 199

$ 249 $ 179

$ 209 $ 222

$ 246 $ 198

$ 210 $ 196

1. Represents cost of sales and other operating costs (excluding amortization).

BARRICK Annual Report 2003

MANAGEMENT’S DISCUSSION AND ANALYSIS

Reconciliation of Amortization Costs per Ounce to Financial Statements

For the years ended December 31

Amortization expense per consolidated financial statements
Amortization expense recorded on property,

2003

$ 522

2002

$ 519

2001

$ 501

plant and equipment not at operating mine sites

(25)

(26)

(24)

Amortization expense for per ounce calculation

Ounces sold (thousands)
Amortization per ounce (dollars)

$ 497

5,554
$ 90

Reconciliation of Operating Cash Flow Excluding the Inmet Settlement

For the years ended December 31

Operating cash flow per financial statements
Inmet settlement

Operating cash flow excluding Inmet settlement

Per share data:

Operating cash flow
Operating cash flow excluding Inmet settlement

2003

$ 521
86

$ 607

$ 0.97
$ 1.13

$ 493

5,805
$ 85

2002

$ 589
–

$ 589

$ 1.09
$ 1.09

$ 477

6,278
$ 76

2001

$ 588
–

$ 588

$ 1.09
$ 1.09

Outstanding Share Data
As at March 4, 2004, 534.6 million common shares

a Common Share. Generally, a holder of a BGI

(“Common Shares”) and one special voting share

Exchangeable Share may exercise his or her voting

(“Special Voting Share”) in the capital of Barrick

right by either providing voting instructions to

were issued and outstanding. Computershare Trust

Computershare or attending a meeting of holders of

Company of Canada (“Computershare”), the holder

Common Shares and voting in person. As at

of the Special Voting Share, is entitled to cast the num-

March 4, 2004, there were 1.5 million BGI Exchange-

ber of votes equal to the number of BGI Exchangeable
Shares (as defined below) outstanding (excluding

able Shares outstanding that were not owned by

Barrick, which would entitle the holders of the BGI

those owned by Barrick and its subsidiaries), multi-

Exchangeable Shares to cast 0.8 million votes at a

plied by 0.53, for which it receives voting instructions

meeting of holders of Common Shares. For further

from holders of such BGI Exchangeable Shares.

information regarding the BGI Exchangeable Shares,

In connection with Barrick’s acquisition of Home-

stake Mining Company effective December 14,

please refer to the Company’s current Management

Information Circular and Proxy Statement.

2001, Barrick Gold Inc. (formerly Homestake

As at March 4, 2004, options to purchase 24 million

Canada Inc.) issued securities (“BGI Exchangeable

Common Shares were outstanding under Barrick’s

Shares”), which, by their terms, are each exchange-

option plan. In addition, as at March 4, 2004,

able at any time for 0.53 of a Common Share. Each

options to purchase 0.5 million Common Shares

BGI Exchangeable Share entitles the holder to exercise

were outstanding under certain option plans inher-

the same voting rights as a holder of 0.53 of

ited by Barrick in connection with prior acquisitions.

BARRICK Annual Report 2003

Management’s
Responsibility

Management’s Responsibility for Financial Statements

The accompanying consolidated financial statements have been prepared by and are the responsibility of

the Board of Directors and Management of the Company.

The consolidated financial statements have been prepared in accordance with United States generally

accepted accounting principles and reflect Management’s best estimates and judgements based on currently

available information. The Company has developed and maintains a system of internal accounting controls

in order to ensure, on a reasonable and cost effective basis, the reliability of its financial information.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered

Accountants. Their report outlines the scope of their examination and opinion on the consolidated

financial statements.

Jamie C. Sokalsky

Senior Vice President

and Chief Financial Officer

Toronto, Canada

February 11, 2004

BARRICK Annual Report 2003

Auditors’
Report

To the Shareholders of Barrick Gold Corporation

We have audited the consolidated balance sheets of Barrick Gold Corporation as at December 31, 2003

and 2002 and the consolidated statements of income, cash flows, and shareholders’ equity and com-

prehensive income for each of the three years in the period ended December 31, 2003. These financial

statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in both Canada and

the United States. Those standards require that we plan and perform an audit to obtain reasonable

assurance whether the financial statements are free of material misstatement. An audit includes examin-

ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation. We believe that our audits provide a

reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial

position of the Company as at December 31, 2003 and 2002 and the results of its operations and its cash

flows for each of the three years in the period ended December 31, 2003 in accordance with United States

generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, during 2003 the Company changed

its policy on accounting for amortization of underground development costs and for asset retirement

obligations, during 2002 the Company changed its policy on deferred stripping costs, and during 2001

the Company changed its policy on accounting for derivative instruments.

On February 11, 2004 we reported separately to the shareholders of Barrick Gold Corporation on the

consolidated financial statements for the same periods, prepared in accordance with Canadian generally

accepted accounting principles.

Chartered Accountants

Toronto, Canada

February 11, 2004

BARRICK Annual Report 2003

Financial
Statements

Consolidated Statements of Income

Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars,
except per share data)

2003

2002

2001

Gold Sales (notes 4 and 5)

$ 2,035

$ 1,967

$ 1,989

Costs and expenses
Cost of sales and other operating expenses1 (note 6)
Amortization (note 4)
Administration
Merger and related costs (notes 3 and 18)
Exploration and business development

Other income/expense (note 7)
Litigation (note 25)
Interest expense (note 19)
Non-hedge derivative gains (losses) (note 11)

Income before income taxes and other items
Income tax (expense) recovery (note 8)

Income before cumulative effect

of changes in accounting principles

Cumulative effect of changes in accounting principles (note 2)

1,134
522
83
–
137

1,876

52
(16)
(44)
71

222
(5)

217
(17)

1,071
519
64
(2)
104

1,756

29
–
(57)
(6)

177
16

193
–

Net income for the year

200

193

1,080
501
86
117
103

1,887

32
(59)
(25)
33

83
14

97
(1)

Earnings per share data (note 9):
Income before cumulative effect

of changes in accounting principles
Basic and diluted

Net income

Basic and diluted

1. Exclusive of amortization (note 6)

$ 0.40

$ 0.36

$ 0.18

$ 0.37

$ 0.36

$ 0.18

The accompanying notes are an integral part of these consolidated financial statements.

BARRICK Annual Report 2003

FINANCIAL STATEMENTS

Consolidated Statements of Cash Flows

Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)

Operating Activities
Net income for the year
Amortization
Changes in capitalized mining costs
Deferred income taxes (note 8)
Inmet litigation settlement (note 25)
Gains on sale of long-lived assets (note 7)
Other items (note 12)

Net cash provided by operating activities

Investing Activities
Property, plant and equipment

Capital expenditures (note 4)
Sales proceeds

Purchase of investments (note 13)
Increase in restricted cash
Change in short-term cash deposits

Net cash used in investing activities

Financing Activities
Capital stock

Proceeds from shares issued on exercise of stock options
Repurchased for cash (note 22b)

Long-term debt
Proceeds
Repayments (note 19)

Dividends (note 22d)

Net cash used in ﬁnancing activities

Effect of exchange rate changes on cash and equivalents
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year (note 12)

2003

2002

2001

200
522
37
(49)
(86)
(39)
(64)

521

(322)
48
(55)
–
–

(329)

29
(154)

–
(23)
(118)

(266)

–
(74)
1,044

193
519
29
(75)
–
(8)
(69)

589

(228)
11
–
–
159

(58)

83
–

–
(25)
(119)

(61)

–
470
574

96
501
17
(50)
–
(9)
33

588

(474)
5
–
(24)
(153)

(646)

7
–

55
(152)
(93)

(183)

(1)
(241)
816

Cash and equivalents at end of year (note 12)

970

$ 1,044

$ 574

The accompanying notes are an integral part of these consolidated financial statements.

BARRICK Annual Report 2003

FINANCIAL STATEMENTS

Consolidated Balance Sheets

Barrick Gold Corporation
At December 31 (in millions of United States dollars)

Assets
Current assets

Cash and equivalents (note 12)
Accounts receivable (note 14)
Inventories (note 14)
Other current assets (note 14)

Investments (note 13)
Property, plant and equipment (note 15)
Capitalized mining costs (note 16)
Unrealized fair value of derivative contracts (note 11d)
Other assets (note 17)

2003

2002

970
69
157
169

1,365
127
3,131
235
256
248

$ 1,044
72
159
47

1,322
41
3,311
272
78
237

Total assets

$ 5,362

$ 5,261

Liabilities and Shareholders’ Equity
Current liabilities

Accounts payable
Other current liabilities (note 18)

Long-term debt (note 19)
Other long-term obligations (note 20)
Deferred income tax liabilities (note 21)

Total liabilities

Shareholders’ equity

Capital stock (note 22)
Deficit
Accumulated other comprehensive income (loss) (note 10)

Total shareholders’ equity

Contingencies and commitments (note 25)

245
105

350
719
569
230

213
270

483
761
528
155

1,868

1,927

4,115
(694)
73

3,494

4,148
(689)
(125)

3,334

Total liabilities and shareholders’ equity

$ 5,362

$ 5,261

The accompanying notes are an integral part of these consolidated financial statements.

Signed on behalf of the Board

Gregory C. Wilkins

Howard L. Beck

Director

BARRICK Annual Report 2003

FINANCIAL STATEMENTS

Consolidated Statements of Shareholders’ Equity

Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)

Common shares (number in millions)
At January 1

Issued for cash/on exercise of stock options
Repurchased for cash (note 22b)

At December 31

Common shares
At January 1

Issued for cash/on exercise of stock options
Repurchased for cash (note 22b)

At December 31

Deﬁcit
At January 1

Net income
Repurchase of common shares (note 22b)
Dividends (note 22d)

At December 31

2003

2002

2001

542
2
(9)

535

536
6
–

542

536
–
–

536

$ 4,148
34
(67)

$ 4,062
86
–

$ 4,051
11
–

$ 4,115

$ 4,148

$ 4,062

$ (689)
200
(87)
(118)

$ (763)
193
–
(119)

$ (766)
96
–
(93)

$ (694)

$ (689)

$ (763)

Accumulated other comprehensive income (loss) (note 10)

$ (125)

$ (107)

Total shareholders’ equity at December 31

$ 3,494

$ 3,334

$ 3,192

Consolidated Statements of Comprehensive Income

Net income
Foreign currency translation adjustments
Transfers of realized (gains) losses on cash flow hedges

to earnings (note 10)

Hedge ineffectiveness transferred to earnings (note 10)
Change in gains accumulated in OCI for

cash flow hedges (note 10)

Additional minimum pension liability
Transfers of realized (gains) losses on available-for-sale

securities to earnings

Unrealized gains (losses) on available for sale securities

2003

2002

2001

200
(3)

(61)
(12)

230
–

12
32

193
(21)

(21)
–

28
(2)

4
(6)

96
(26)

25
–

–
(5)

(2)
(4)

Comprehensive income

398

175

The accompanying notes are an integral part of these consolidated financial statements.

BARRICK Annual Report 2003

Notes to Consolidated
Financial Statements

Barrick Gold Corporation. Tabular dollar amounts in
millions of United States dollars, unless otherwise
shown. References to C$ and A$ are to Canadian and
Australian dollars, respectively.

1. Nature of Operations

with Canadian and US regulatory authorities. We also

include consolidated financial statements prepared

under Canadian GAAP (in United States dollars) in our

Proxy Statement that we file with various Canadian reg-

ulatory authorities. Summarized below are the account-

ing policies we that have adopted under US GAAP and

that we consider particularly significant. References to

Barrick Gold Corporation (“Barrick” or the “Company”)

the Company in these financial statements relate to

engages in the production and sale of gold, including

Barrick and its consolidated subsidiaries. We have

related mining activities such as exploration, devel-

reclassified certain prior-year amounts to conform with

opment, mining and processing. Our operations are

the current year presentation.

mainly located in the United States, Canada, Australia,

Peru, Tanzania, Chile and Argentina. They require

specialized facilities and technology, and we rely on

those facilities to support our production levels. The

market price of gold, quantities of gold mineral reserves

and future gold production levels, future cash operating

costs, foreign currency exchange rates, market interest

rates and the level of exploration expenditures are some

of the things that could materially affect our operating

cash flow and profitability. Due to the global nature of

our operations we are also affected by government regu-

lations, political risk and the interpretation of taxation

laws and regulations. We seek to mitigate these risks,

and in particular we use derivative instruments as part

These consolidated financial statements include the

accounts of Barrick and its subsidiaries. Intercompany

transactions and balances are eliminated upon consoli-

dation. We control our subsidiaries through existing

majority voting interests. Our ownership interests in the

Round Mountain, Hemlo and Kalgoorlie Mines are

held through unincorporated joint venture agreements,

under which we share joint control with our joint

venture partners. Under long-standing practice for

extractive industries, we include the assets, liabilities,

revenues, expenses and cash flows of unincorporated

joint ventures in our financial statements using the

proportionate consolidation method.

of a risk management program that seeks to mitigate the

The preparation of

financial statements under US

effect of volatility in commodity prices, interest rates

GAAP requires us to make estimates and assumptions

and foreign currency exchange rates (refer to note 11).

Many of the factors affecting these risks are beyond our

control and their effects could materially impact our

consolidated financial statements.

that affect:
> the reported amounts of assets and liabilities;
> disclosures of contingent assets and liabilities; and
> revenues and expenses recorded in each

reporting period.

2. Significant Accounting Policies

a) Basis of presentation
The United States dollar is the principal currency of our

The most significant estimates and assumptions that

affect our financial position and results of operations

are those that use estimates of proven and probable gold

reserves; future estimates of costs and expenses; and/or

operations. We prepare our primary consolidated finan-

assumptions of future commodity prices, interest rates

cial statements in United States dollars and under

and foreign currency exchange rates. Such estimates and

United States generally accepted accounting principles

(“US GAAP”). These financial statements are filed

assumptions include:
> decisions as to whether exploration and mine

development costs should be capitalized or expensed;

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

> assessments of whether property, plant and equip-

ment, ore in stockpiles and capitalized mining costs
may be impaired;

> assessments of our ability to realize the benefits of

deferred income tax assets;

> the useful lives of long-lived assets and the rate at

which we record amortization in earnings;

> the estimated fair value of asset retirement obligations;
> the timing and amounts of forecasted future
expenditures that represent the hedged items
underlying hedging relationships for our cash flow
hedge contracts;

> the estimated fair values of derivative instruments;
> the value of slow-moving and obsolete inventories

(which are stated at the lower of average cost and
net realizable value); and

> assessments of the likelihood and amounts

of contingencies.

Amortization of underground
development costs
On January 1, 2003, we changed our accounting policy

for amortization of underground mine development

costs to exclude estimates of future underground devel-

opment costs (as described in note 15a).

On adoption of this change on January 1, 2003, we

decreased property, plant and equipment by $19 mil-

lion, and increased deferred income tax liabilities

by $2 million. We recorded in our income statement

a $21 million charge for the cumulative effect of

this accounting change.

FAS 133, Accounting for derivative instruments
We adopted FAS 133 on January 1, 2001. On adoption,

we recorded the fair value of derivative instruments

We regularly review the estimates and assumptions

that affect our financial statements; however, what

actually happens could differ from those estimates

as follows:

At January 1, 2001

and assumptions.

Carrying
amount

Fair

value Adjustment

Asset (liability)

Loss

b) Accounting changes
FAS 143, Accounting for asset
retirement obligations
On January 1, 2003, we adopted FAS 143 and changed

our accounting policy for recording obligations relating

to the retirement of long-lived assets (as described in

note 20a).

On adoption of FAS 143 in first quarter 2003, we

recorded on our balance sheet an increase in property,

plant and equipment by $39 million; an increase in

other long-term obligations by $32 million; and an

increase in deferred income tax liabilities by $3 million.

We recorded in our income statement a $4 million

credit for the cumulative effect of this accounting

change. On the adoption of FAS 143, the total amount

of recorded asset retirement obligations was $334 mil-

lion, and the comparative amount would have been

$353 million at December 31, 2001.

Hedge derivatives
Purchased gold
call options

Non-hedge derivatives
Written gold call
options and total
return swaps

Other derivatives

$ 44

$ (39)1

$ (42) $ (42)

–

$ (3)

$ –
$ (3)2

1. Recorded in Other Comprehensive Income (OCI), net of
tax benefits of $4 million. We also reclassified into OCI
deferred gains on hedge contracts that had been closed out in
previous years that totaled $35 million.

2. Recorded as a cumulative effect accounting change in
earnings, net of tax benefits of $2 million.

The following table identifies certain changes in account-

ing principles and accounting estimates that we have

made in each year and the effect such changes had on

earnings for that year.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effect of various accounting changes on earnings

For the years ended December 31 ($ millions except per share amounts)

2003

2002

2001

Pro-forma effect of changes in accounting policies

(excluding related tax effects)1

Adoption of FAS 143

Earnings increase (decrease)
Per share

Amortization of underground development costs

Earnings increase (decrease)
Per share

Total effect

Earnings increase (decrease)
Per share

Changes in estimates recorded in earnings (excluding related tax effects

for non-tax items)

Pension costs actuarial assumptions (note 24e)

Earnings (decrease)
Per share

Deferred tax valuation allowances and

outcome of tax uncertainties (note 8)2
Earnings increase (decrease)
Per share

Asset retirement obligations (note 20a)

Earnings (decrease)
Per share

Hedge ineffectiveness arising due to changes in the expected timing

and amounts of forecasted transactions (note 11e)
Earnings increase
Per share

Total effect

Earnings increase (decrease)
Per share

Cumulative effect of changes in accounting principles (net of tax effects)

Adoption of FAS 133
Per share
Adoption of FAS 143
Per share
Amortization of underground development costs
Per share

Total effect

Earnings (decrease)
Per share

$ (36)
$ (0.07)

$
(4)
$ (0.01)

$
4
$ 0.01

–
–

$ (36)
$ (0.07)

$
(4)
$ (0.01)

$
4
$ 0.01

$
$

(2)
nil

$
39
$ 0.07

$ (10)
$ (0.02)

$
18
$ 0.03

$
45
$ 0.08

–
–
$
4
$ 0.01
$ (21)
$ (0.04)

$ (17)
$ (0.03)

–
–

$ (21)
$ (0.04)

$ (45)
$ (0.09)

–
–

$ (21)
$ (0.04)

$ (45)
$ (0.09)

–
–
–
–
–
–

–
–

$
$

(1)
nil
–
–
–
–

(1)
nil

1. Represents the impact of the revised accounting policy. For 2003, earnings increased or decreased by the amount disclosed.
For 2002 and 2001, because prior years were not restated, the amount disclosed is a pro forma amount only and has
not been recorded in these financial statements.

2. Includes both reversals of prior year allowances and allowances recorded against current-year tax losses.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

d) Other significant accounting policies

Note

Page

p. 72

p. 74

p. 75

p. 76

p. 77

p. 78

p. 79

p. 83

p. 84

p. 85

p. 86

p. 87

p. 88

p. 89

p. 90

p. 92

p. 93

p. 94

p. 95

p. 97

p. 100

p. 101

c) Foreign currency translation
The functional currency of all our operations is the

United States dollar (“the US dollar”). We re-measure

balances into US dollars as follows:
> non-monetary assets and liabilities using

historical rates;

> monetary assets and liabilities using period-end

exchange rates; and

> income and expenses using average exchange rates,
except for expenses related to assets and liabilities
re-measured at historical exchange rates.

Gains and losses arising from re-measurement of foreign

currency financial statements into US dollars, and from

foreign currency transactions, are recorded in earnings.

Business combinations

Segment information

Revenue recognition and

sales contracts

Cost of sales and

other operating expenses

Other income/expense

Income taxes

Earnings per share

Comprehensive income

Derivative instruments

In 2003, various changes in economic facts and circum-

Cash and equivalents

stances led us to conclude that the functional currency

Investments

of our Argentinean operations was the United States

Accounts receivable, inventories and

dollar and not the Argentinean Peso. These changes

other current assets

included the completion of the Veladero mine feasibility

Property, plant and equipment

study, the denomination of selling prices for gold

Capitalized Mining Costs

production and US dollar based expenditures.

Other assets

After the merger with Homestake in 2001, various

changes in economic facts and circumstances led us to

conclude that the functional currency of certain of its

Other current liabilities

Long-term debt

Asset retirement obligations

Other post-retirement benefits

operations was the United States dollar and not the

Deferred income taxes

local currency. These changes included the denomina-

tion of selling prices for gold production, and more use

Capital stock

Stock options

of United States dollar financing.

For periods before January 1, 2002, the financial state-

ments of those operations were translated as follows:

assets and liabilities using period-end exchange rates;

and revenues and expenses at average rates. Translation

adjustments were included in OCI.

Restricted stock units

Pension plans

Contingencies and commitments

Fair value of financial instruments

Joint ventures

Differences from Canadian GAAP

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Business Combinations

4. Segment Information

Homestake Mining Company
On December 14, 2001, a wholly-owned subsidiary of

We operate in the gold mining industry and our oper-

ations are managed on a regional basis. Our three

Barrick merged with Homestake Mining Company

primary regions are North America, Australia/Africa,

(“Homestake”). Under the terms of the merger agree-

and South America, which includes Peru, Chile and

ment, we issued 139.5 million Barrick common shares in

Argentina. In 2003, we changed the composition of our

exchange for all the outstanding common shares of

reportable segments by the addition of our development

Homestake, using an exchange ratio of 0.53:1. The

projects. We also changed our determination of which

merger was accounted for as a pooling-of-interests. The

costs are charged to segments. Prior periods have been

consolidated financial statements give retroactive effect

restated to conform to the current presentation. Financial

to the merger, with all periods presented as if Barrick

information on all our individual mines and develop-

and Homestake had always been combined.

ment projects is reviewed regularly by our chief operating

In 2001, we recorded charges for merger-related costs

totaling $117 million ($107 million after tax). These

costs included transaction costs of $32 million for

investment banking, legal, accounting and other costs

directly related to the merger. They also include integra-

tion and restructuring costs of $85 million, mainly for

employee termination costs.

decision maker, and accordingly our definition of a

business segment includes each of our operating mines

and development projects. Our development projects

are not presently generating revenue and therefore the

measure of segment loss represents expensed explo-

ration and development costs. Our “other operating

mines” segment includes mainly operations which have

been, or are being, closed.

Income statement information

For the years ended December 31

2003

2002

2001

2003

2002

2001

2003

2002

2001

Gold sales

Total cash
production costs1

Segment income (loss)
before income taxes

Operating mines:
Goldstrike
Pierina
Bulyanhulu
Kalgoorlie
Eskay Creek
Hemlo
Plutonic
Round Mountain
Other operating mines

Development projects:

Veladero
Cowal
Pascua-Lama
Alto Chicama

$ 813 $ 678 $ 774
299
56
118
99
94
90
117
342

332
109
153
130
98
120
139
141

303
134
124
121
97
105
132
273

$ 531 $ 437 $ 467
38
35
78
16
60
48
71
207

71
78
82
16
64
57
73
150

76
73
87
18
60
62
66
78

–
–
–
–

$ 122
90
(1)
46
65
27
48
53
37

(18)
–
–
(29)

$ 94
71
16
23
57
23
37
38
87

$ 169
86
4
23
43
24
30
28
85

(20)
–
–
(29)

(26)
–
–
–

Segment total

$ 2,035 $ 1,967 $ 1,989

$1,051 $ 1,028 $ 1,020

$ 440

$ 397

$ 466

1. Includes cost of sales, by-product revenues, royalty expenses and production taxes (note 6). Excludes accretion expense,
other reclamation and closure costs, and amortization.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset information

For the years ended December 31

2003

2002

2003

2002

2001

2003

2002

2001

Segment assets

Amortization

Segment capital
expenditures

Operating mines:
Goldstrike
Pierina
Bulyanhulu
Kalgoorlie
Eskay Creek
Hemlo
Plutonic
Round Mountain
Other operating mines

Development projects:

Veladero
Cowal
Pascua-Lama
Alto Chicama

Segment total
Cash and equivalents
Other items outside operating segments

$ 1,372 $ 1,496
546
661
240
258
60
59
79
234

434
670
250
215
55
84
75
113

85
49
239
9

3,650
970
742

7
25
223
5

3,893
1,044
324

$ 160
166
37
20
47
11
10
20
26

–
–
–
–

497
–
25

$ 147
161
40
19
48
10
11
21
36

–
–
–
–

493
–
26

$ 138
175
17
17
40
10
12
18
50

–
–
–
–

477
–
24

$ 51
17
36
14
5
10
44
6
29

68
24
9
4

317
–
5

$ 46
5
56
14
8
6
20
8
33

–
13
11
5

225
–
3

$ 122
12
153
6
10
6
11
15
54

–
–
69
–

458
–
16

Enterprise total

$ 5,362 $ 5,261

$ 522

$ 519

$ 501

$ 322

$ 228

$ 474

Geographic information

For the years ended December 31

2003

2002

2003

2002

2001

Assets

Gold sales

United States
Peru
Australia
Canada
Tanzania
Chile/Argentina
Other

$ 1,835
757
556
480
707
309
718

$ 1,834
733
480
533
695
173
813

$ 970
332
364
260
109
–
–

$ 905
303
316
299
134
4
6

$ 1,041
297
288
269
56
38
–

$ 5,362

$ 5,261

$ 2,035

$ 1,967

$ 1,989

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciliation of segment income to enterprise net income

For the years ended December 31

Segment income
Accretion expense, reclamation, closure and other costs
Amortization outside operating segments
Exploration and business development costs,

excluding development projects

Merger and related costs
Administration
Other income/expense
Interest expense
Non-hedge derivative gains (losses)
Income tax (expense) recovery
Cumulative effect of changes in accounting principles
Inmet litigation

2003

$ 440
(83)
(25)

(90)
–
(83)
52
(44)
71
(5)
(17)
(16)

2002

$ 397
(43)
(26)

(55)
2
(64)
29
(57)
(6)
16
–
–

2001

$ 466
(60)
(24)

(77)
(117)
(86)
32
(25)
33
14
(1)
(59)

Net income

$ 200

$ 193

$ 96

5. Revenue Recognition
and Sales Contracts

We recognize revenue from the sale of gold and by-

title to concentrate passes to the third-party smelters.

products when the following conditions are met:

The terms of the contracts result in embedded deriva-

> persuasive evidence of an arrangement exists;
> delivery has occurred under the terms of

the arrangement;

> the price is fixed or determinable; and
> collectability is reasonably assured.

For gold and silver bullion sold under forward sales

contracts or in the spot market, we consider that deliv-

ery has occurred on transfer of title to the gold or silver

to counterparties. Revenue from the sale of by-products

such as silver is credited against cost of sales and other

operating expenses.

Concentrate sales contracts
Our Eskay Creek and Bulyanhulu mines produce ore

and concentrate containing both gold and silver. Under

the terms of our sales contracts with third-party

smelters final gold and silver prices are set on a speci-

fied future date after the shipment date based on spot

market metal prices. We record revenues under these

contracts based on the forward gold and silver prices at

the time of shipment, which is when transfer of legal

tives, because of the difference between the recorded

one-month forward price and the final settlement price.

These embedded derivatives are adjusted to fair value

through revenue each period until the date of final gold

and silver pricing.

Forward gold sales contracts
We have fixed-price forward gold sales contracts with

various counterparties for 15.5 million ounces of future

gold production. The terms of the contracts are gov-

erned by master trading agreements that we have in

place with the counterparties to the contracts. The con-

tracts have final delivery dates primarily over the next

10 years, but we have the right to settle these contracts

at any time over these periods. Contract prices are

established at inception through to an interim date.

Based on the contractual terms of the fixed-price con-

tracts and current spot and forward gold market prices,

the average price that would be realized if all produc-

tion in the next three years was used to deliver into

these contracts would be $309 per ounce. If we do not

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

deliver at this interim date, a new interim date is set.

gold lease rate, and pay a floating gold lease rate, on a

The price for the new interim date is determined in

notional 3.3 million ounces of gold spread from 2004 to

accordance with the master trading agreements which

2013. The swaps are associated with forward gold sales

have contractually agreed price adjustment mechanisms

contracts with expected delivery dates beyond 2006.

based on the market gold price. The master trading

These lease rate swap contracts are accounted for as

agreements have both fixed and floating price mecha-

non-hedge derivatives (note 11).

nisms. The fixed price mechanism represents the market

price at the start date (or previous interim date) of

the contract plus a premium based on the difference

between the forward price of gold and the current

market price of gold. For the majority of fixed-price

forward gold sales contracts, selling prices are fixed

through 2006. If at an interim date we opt for a floating

price, the floating price represents the spot market price

of gold plus or minus the difference between the pre-

viously fixed price and the market gold price at that

interim date. In addition to the fixed-price forward gold

sales contracts, we have floating-price forward gold

sales contracts under which we are committed to deliver

0.5 million ounces of gold over the next 10 years at prices

that will be based on the then prevailing spot price.

Forward gold market prices are principally influenced

by the current market price of gold, gold lease rates and

US dollar interest rates. The final realized selling price

under a contract will depend on the timing of the actual

future delivery date, the market price of gold at the start

of the contract and the actual amount of the premium

of the forward price of gold over the spot price of gold

for the periods that fixed selling prices are set.

We use gold lease rate swap contracts to manage our

gold lease rate exposure. Based on the fact that histori-

cal short-term gold lease rates have been lower than

longer-term gold lease rates, and because fixed price

forward gold sales contracts have fixed gold lease rates,

we have used these gold lease rate swap contracts to

economically achieve a more optimal term structure for

gold lease costs. Under these swaps we receive a fixed

Major customers
The largest single counterparty as of December 31,

2003 made up 12% of the ounces of outstanding for-

ward gold sales contracts.

Forward silver sales contracts
Forward silver sales contracts have similar delivery

terms and pricing mechanisms as forward gold sales

contracts. At December 31, 2003, we had fixed-price

commitments to deliver 22.3 million ounces of silver

over periods primarily of up to 10 years at an average

price of $5.24 per ounce.

6. Cost of Sales and Other
Operating Expenses

For the years ended
December 31

Cost of sales1
By-product

2003

2002

2001

$ 1,100 $ 1,114 $ 1,088

revenues (note 5)

Royalty expenses
Production taxes
Accretion expense (note 20)
Other reclamation and

(114)
50
15
17

(119)
37
5
–

(112)
39
5
–

closure costs

$ 1,134 $ 1,071 $ 1,080

1. Cost of sales includes all costs that are capitalized to
inventory, except for amortization of property, plant and
equipment. The amount of amortization capitalized to
inventory, but excluded from cost of sales was $497 million
in 2003; $493 million in 2002; and $477 million in 2001.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Other Income/ Expense

a) Royalty expenses
Certain of our properties are subject to royalty obliga-

tions based on mineral production at the properties.

The most significant royalties are at the Goldstrike and

Bulyanhulu mines and the Pascua-Lama and Veladero

projects. The primary type of royalty obligation is a net

For the years ended
December 31

Interest income
Gains on sale of

long-lived assets1

smelter return (NSR) royalty. Under this type of royalty

Foreign currency translation

we pay the holder an amount calculated as the royalty

gains (losses)

percentage multiplied by the value of gold production

at market gold prices less third-party smelting, refining

and transportation costs. Most Goldstrike production is

subject to an NSR or net profits interest (NPI) royalty.

The highest Goldstrike royalties are a 5% NSR and a

6% NPI royalty. Bulyanhulu is subject to an NSR-type

royalty of 3%. Pascua-Lama gold production from the

areas located in Chile is subject to a gross proceeds

sliding scale royalty, ranging from 1.5% to 10%, and a

2% NSR on copper production. For areas located in

Argentina, Pascua-Lama is subject to a 3% NSR on

extraction of all gold, silver, and other ores. Production

at Veladero is subject to a 3.75% NSR on extraction of

all gold, silver and other ores.

b) Other reclamation and closure costs
Various types of costs associated with the reclamation

and closure of our mining properties do not meet the

definition of “asset retirement obligations” as set out in

FAS 143 (see note 20). We expense these costs as they

are incurred. For comparative periods, the amounts

represent our reclamation and closure costs expense

under our accounting policy prior to the adoption of

FAS 143 (see note 20).

2003

2002

2001

$ 34

$ 30

$ 36

(12)
(11)

(4)
(6)

(10)

2
(5)

$ 52

$ 29

$ 32

Gains (losses) on available

for sale securities (note 13)

Other items

1. In 2003 we sold various assets, including: several land
positions around inactive mine sites in the United States, as
well as the East Malartic Mill and Bousquet mine in Canada.
We may continue to sell further land positions around our
inactive mine sites in the United States. These land positions
have been fully amortized, and therefore any proceeds would
likely generate gains on sale, before selling costs and taxes.

8. Income Taxes

Income tax (expense) recovery

For the years ended
December 31

2003

2002

2001

Current

Canada
Foreign

Deferred
Canada
Foreign

$ (40)
(14)

$ (44)
(15)

$ (14)
(22)

$ (54)

$ (59)

$ (36)

32
17

$ 49

$ (5)

45
30

$ 75

$ 16

74
(24)

$ 50

$ 14

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciliation to the Canadian federal statutory rate

For the years ended December 31

Income tax expense based on statutory rate of 38%
(Increase) decrease resulting from:

Resource and depletion allowances1
Earnings in foreign jurisdictions at different tax rates1
Non-deductible expenses
Release of deferred tax valuation allowances recorded in prior years2
Valuation allowances recorded against current year tax losses
Outcome of income tax uncertainties3
Other items

2003

$ (84)

17
42
(11)
62
(23)
–
(8)

2002

$ (67)

12
67
(9)
–
(43)
22
34

2001

$ (32)

11
84
(56)
–
(45)
–
52

Income tax (expense) recovery

$ (5)

$ 16

$ 14

1. We operate in a specialized industry and in several tax jurisdictions. Our income is subject to varying rates of taxation, and
we are able to claim certain allowances and deductions unique to extractive industries that result in a lower effective tax rate.

2. In 2003, we released valuation allowances totaling $62 million, which mainly included: $21 million in North America
following a corporate reorganization of certain subsidiaries that enabled us to utilize certain previously unrecognized tax assets;
$16 million in Australia realized in 2003 due to an increase in taxable income from higher gold prices; and $15 million in
Argentina after the approval to begin construction of our new Veladero mine and classification of mineralization as a proven and
probable reserve.

3. In 2002, we recorded a credit of $22 million reflecting the net impact of tax planning completed in the period and the
outcome of certain tax uncertainties.

Temporary differences and their tax effects

For the years ended December 31

2003

2002

2001

Amortization
Reclamation costs
Net operating losses
Other

9. Earnings per Share

For the years ended December 31
($ millions, except shares in millions and per share amounts)

Income available to common stockholders
Effect of dilutive stock options

Income available to common stockholders and

on assumed conversions

Weighted average shares outstanding – basic
Effect of dilutive stock options

Weighted average shares outstanding and on

assumed conversions

Earnings per share

Basic
Diluted

$ 13
2
36
(2)

$ 49

$ 52
(4)
22
5

$ 75

$ 21
(8)
37
–

$ 50

2003

$ 200
–

2002

$ 193
–

2001

$ 96
–

$ 200

$ 193

$ 96

539
–

539

541
–

541

536
2

538

$ 0.37
$ 0.37

$ 0.36
$ 0.36

$ 0.18
$ 0.18

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We compute basic earnings per share by dividing net

(the denominator). In computing diluted earnings per

income or loss (the numerator) by the weighted-average

share, an adjustment is made for the dilutive effect of

number of outstanding common shares for the period

outstanding stock options.

10. Comprehensive Income

Comprehensive income consists of net income and other

on derivative instruments accounted for as cash flow

gains and losses that are excluded from net income. These

hedges; unrealized gains and losses on available for sale

other gains and losses consist mainly of gains and losses

securities; and foreign currency translation adjustments.

Parts of comprehensive income (loss)

For the years ended December 31

2003

2002

2001

Foreign currency translation adjustments
Transfers of realized (gains) losses on

cash flow hedges to earnings (note 11e)

Hedge ineffectiveness transferred to

earnings (note 11e)

Change in gains accumulated in OCI for

cash flow hedges (note 11e)

FAS 133 transition adjustment (note 2)
Additional minimum pension liability
Transfers of (gains) losses on available

for sale securities to earnings (note 7)

Change in gains (losses) on available

for sale securities (note 13)

Pre-tax
amount

Post-tax
amount

Pre-tax
amount

Post-tax
amount

Pre-tax
amount

Post-tax
amount

$ (3)

$ (21)

$ (26)

(91)

(19)

349
–
–

(61)

(12)

230
–
–

(25)

(21)

–

49
–
(2)

(6)

–

28
–
(2)

(6)

–

–
(4)
(5)

(2)

(4)

–

–
–
(5)

(2)

(4)

$ 280

$ 198

$ (1)

$ (18)

$ (12)

Accumulated other comprehensive income (loss) (OCI)

At December 31

Foreign currency translation adjustments
Accumulated gains on cash flow

hedges (note 11e)

Additional minimum pension

liability (note 24d)

Unrealized gains (losses) on available

for sale securities (note 13)

2003

Tax
credit

–

Pre-tax
amount

$ (147)

Total

$ (147)

2002

Tax
credit

–

Pre-tax
amount

$ (144)

Total

$ (144)

288

(99)

189

(17)

(7)

–

$ 172

$ (99)

(7)

(6)

–

(7)

(6)

$ (108)

$ (17)

$ (125)

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Derivative Instruments

a) Use of derivative instruments
We use derivative instruments to mitigate the effects of

certain risks that are inherent in our business, and also

to take advantage of opportunities to secure attractive

Foreign currency contracts: These instruments are

used for the cash flows at our operating mines and

development projects from forecasted expenditures

denominated in Canadian and Australian dollars to

insulate them from currency fluctuations.

pricing for commodities, currencies and interest rates.

Gold lease rate swap contracts: These contracts are

The inherent risks that we most often attempt to miti-

used to manage the fixed gold lease rate element of

gate by the use of derivative instruments occur from

fixed-price forward gold sales contracts and to take

changes in commodity prices (gold and silver), interest

advantage of lower short-term gold lease rates (refer

rates and foreign currency exchange rates. Because we

to note 5).

produce gold and silver, incur costs in foreign cur-

rencies, and invest and borrow in US dollars and are

therefore subject to US interest rates, our derivative

instruments cover natural underlying asset or liability

positions. The purpose of the hedging elements of our

derivative program is so that changes in the values of

cash flows from hedged items are offset by equivalent

changes in the values of derivative instruments.

We do not hold derivatives for the purpose of specula-

tion; our risk management programs are designed to

enable us to plan our business effectively and, where

possible, mitigate adverse effects of future movements

in gold and silver prices, interest rates and foreign

currency exchange rates.

The main types of derivatives we use are:

We mainly use over-the-counter (“OTC”) derivative

contracts. Using privately negotiated master trading

agreements with our counterparties, we are, in many

cases, able to secure more favorable terms than if we

used exchange-traded derivative instruments. We have

been able to negotiate these master trading agreements

due to our credit standing and the quality and long-life

nature of our mines and gold mineral reserves.

We value derivative instruments using pricing inputs

that are readily available from independent sources.

The fair value of the contracts is mainly affected by,

among other things, changes in commodity prices,

interest rates, gold lease rates and foreign currency

exchange rates.

Our use of these contracts is based on established prac-

Forward gold and silver sales contracts: These contracts

tices and parameters, which are subject to the oversight

provide for the sale of future gold production in fixed

of the Finance Committee of the Board of Directors.

quantities with delivery dates at our discretion over a

We also maintain a separate compliance function to

period of up to 15 years (refer to note 5 for more infor-

independently monitor our hedging and financial risk

mation relating to our sales contracts).

management activities and segregate the duties of per-

sonnel responsible for entering into transactions from

those responsible for recording transactions.

Interest rate swaps: These instruments are used to coun-

teract the volatility of variable short-term interest rates

by substituting fixed interest rates over longer terms on

cash and short-term investments. We also use interest

rate swaps to swap our interest due on long-term debt

obligations from fixed to floating, to take advantage of

the present low interest-rate environment.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

b) Accounting for derivative instruments
and hedging activities
Under US GAAP, companies are required to include on

their balance sheet the fair value of derivative instru-

ments, which are defined under FAS 133. This accounting

Non-hedge derivatives: Changes in the fair value are

recorded in earnings as they occur.

All cash flows relating to derivative instruments are

included under operating cash flows.

standard excludes certain derivative instruments from

We formally document all relationships between hedge

its scope, including instruments that meet the definition

derivative instruments and the items they are hedging,

of “normal sales contracts”. Such contracts include those

as well as the risk-management goals and strategy for

whose obligations will be met by physical delivery of a

entering into hedge transactions. This documentation

company’s production and that meet other requirements

includes linking all derivatives designated as fair value,

set out in paragraph 10(b) of FAS 133. Our forward gold

cash flow, or foreign currency hedges to either specific

and silver sales contracts have contractual terms that are

assets and liabilities in the balance sheet, specific firm

consistent with the FAS 133 definition of a normal sales

commitments or specific forecasted transactions.

contract. In addition, our past sales practices, produc-

tive capacity and delivery intentions are also consistent

with that definition. Accordingly, we have elected to

designate these instruments as normal sales contracts

with the result that the fair value recognition provisions

of FAS 133 are not applied to them. Instead we apply

our normal revenue recognition principles to our nor-

mal sales contracts as described in note 5, which results

in recognition of proceeds from the contracts as revenue

at the date of physical delivery. All other derivatives are

recognized on our balance sheet at their fair value as

either an asset or a liability. On the date we enter into a

derivative contract, we designate the derivative as either:
> a fair value hedge of a recognized asset or liability;
> a cash flow hedge of either a forecasted transaction
or the variability of cash flows associated with a
recognized asset or liability;

For these documented relationships, we formally assess

(both at the start of the hedge and on an ongoing basis)

whether the derivatives used in hedging transactions are

highly effective in offsetting changes in the fair value or

cash flows of hedged items, and whether those derivatives

are expected to remain highly effective in the future. If

it is clear that a derivative is not highly effective as a

hedge, we stop hedge accounting prospectively.

Other circumstances under which we stop hedge

accounting prospectively include:
> a derivative expires or is sold, terminated, or exercised;
> it is no longer probable that the forecasted transaction

will occur; or

> if we decide to remove the designation as a hedge

from a derivative.

> a foreign currency cash flow hedge of forecasted

If it is clear that a forecasted transaction will not occur

transactions; or

> an instrument that does not qualify for hedge

accounting treatment (“non-hedge derivatives”).

Fair value hedges: We record in earnings any changes in

the fair value of the derivatives as they occur, along with

changes in the fair value of the hedged asset or liability.

Cash flow hedges: We record changes in the fair value

of the derivatives in Other Comprehensive Income

(OCI) until earnings are affected by the forecasted

transaction or variability in future cash flows.

in the originally specified time frame, or within a further

two-month period, gains and losses accumulated in OCI

are recognized at once in earnings as “hedge ineffective-

ness”. In all situations in which hedge accounting stops

and a derivative remains outstanding, future changes in

its fair value are recognized in earnings as they occur.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

c) Derivative instruments outstanding as at December 31, 2003

Maturity

2004

2005

2006

2007

2008+

Total

5,000
$ 6.04

2,000
$ 5.00

–
–

7,000
$ 5.74

–
–

–

$ 100
3.0%

$ 575
3.5%

–
–

$ 275
4.0%

$ 324
5.7%

$ 1,000
3.6%

$ 324
5.7%

$ 100

$ 575

$ (49)

$ 676

Written silver call options
Ounces (thousands)
Average exercise price per ounce

Interest rate contracts
Receive-fixed swaps

Notional amount (millions)
Fixed rate (%)
Pay-fixed swaps

Notional amount (millions)
Fixed rate (%)

Net notional position

Foreign currency contracts
Canadian dollar forwards

C$ (millions)
Average price (US$)
Australian dollar forwards

A$ (millions)
Average price (US$)

Australian dollar

min-max contracts
A$ (millions)
Average cap price (US$)
Average floor price (US$)

Fuel contracts

Barrels WTI (thousands)
Cap
Floor

$ 50
3.6%

–
–

$ 50

$ 442
0.68

$ 591
0.57

$ 20
0.53
0.52

360
$ 30
$ 23

$ 329
0.67

$ 440
0.58

$ 10
0.52
0.51

180
$ 30
$ 22

$ 145
0.72

$ 193
0.55

$ 10
0.52
0.51

–
–
–

Classification of interest rate and foreign currency contracts

At December 31, 2003

Interest rate contracts
Receive-fixed swaps on cash balances
Receive-fixed swaps on debentures
Pay-fixed swaps on Bulyanhulu project financing
Pay-fixed swaps on lease rate swaps
Foreign currency contracts
Canadian dollar contracts
Australian dollar contracts

Cash flow
hedge

Fair value
hedge

$ 650
–
$ 174
–

$ 1,012
$ 1,279

–
$ 350
–
–

–
–

We also held gold lease rate swaps at December 31,

ounces of gold spread from 2004 to 2013 (see note 5).

2003 that are based on a notional amount of 3.3 million

These contracts are classified as non-hedge derivatives.

BARRICK Annual Report 2003

$ 96
0.67

$ 139
0.58

$ 22
0.68

$ 19
0.53

–
–
–

Non-
hedge

–
–
–
$ 150

$ 22
$ 143

$ 1,034
0.68

$ 1,382
0.57

$
$

40
0.53
0.52

540
30
23

Total

$ 650
$ 350
$ 174
$ 150

$ 1,034
$ 1,422

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

d) Unrealized fair value of
derivative instruments (excluding
normal sales contracts)

The fair values of recorded derivative assets and liabili-

ties reflect the netting of the fair values of individual

derivative instruments, and amounts due to/from counter-

At January 1
Derivative instruments settled
Change in fair value of

derivative instruments:
Non-hedge derivatives
Cash flow hedges
Fair value hedges

At December 31

2003

2002

parties that arise from derivative instruments, when the

$ 29
(91)

$ (16)
(2)

conditions of FIN No. 39, Offsetting of Amounts

Related to Certain Contracts, have been met. Amounts

receivable from counterparties that have been offset

against derivative liabilities totaled $16 million at

December 31, 2003.

52
349
(2)

(6)
49
4

$ 3371

$ 29

1. Included on the balance sheet as follows: $154 million
in other current assets; $256 million in non-current assets
as unrealized fair value of derivative contracts; $3 million
in other current liabilities; and $70 million in other long-
term obligations.

e) Change in gains (losses) accumulated in OCI for cash flow hedge contracts

At January 1, 2001
Hedge losses transferred to earnings

At December 31, 2001
Change in fair value
Hedge gains transferred to earnings

At December 31, 2002
Change in fair value
Hedge gains transferred to earnings
Hedge ineffectiveness transferred to earnings

Commodity
contracts

Foreign currency
contracts

Interest rate
contracts

$ (4)
291

25
(4)
(12)1

9
3
(13)1
–

–
–

–
33
(7)2

26
337
(65)2
(18)4

–
–

–
20
(6)3

14
9
(13)3
(1)4

Total

$ (4)
29

25
49
(25)

49
349
(91)
(19)

At December 31, 2003

$ (1)

$ 280

$ 288

1. Included under revenues and by-product credits

2. Included under operating expenses

3. Included under interest income

4. During 2003, we determined that certain Australian dollar hedge contracts designated as hedges of forecasted capital
expenditures no longer met the FAS 133 qualifying hedge criteria due to changes in the expected timing of the forecasted
expenditures. On determining that these hedges were no longer effective for accounting purposes, gains totaling $18 million
on these contracts were transferred out of OCI to earnings in 2003. For 2003 the total amount of hedge ineffectiveness,
including the gains on ineffective capital expenditure hedges, recorded and recognized in non-hedge derivative gains was
$19 million (2002 – $nil; 2001 – $nil).

Based on the fair value of cash flow hedge contracts at

matched with the related hedged items. These gains will

December 31, 2003, in fiscal 2004 we expect to transfer

be reflected as a reduction in cash operating costs, and

hedge gains of $134 million from OCI to earnings, to be

as a component of interest income.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

f) Non-hedge derivative gains (losses)
For the years ended
December 31

2003

2002

Commodity contracts
Currency contracts
Interest and lease
rate contracts

Hedge ineffectiveness
recorded in earnings

$ 3
17

$ (2)
8

(12)

–

2001

$ 57
(15)

(9)

–

$ 71

$ (6)

$ 33

g) Derivative instrument risks
By using derivative instruments, we expose ourselves to

various financial risks. Market risk is the risk that the

fair value of a derivative instrument might be adversely

affected by a change in commodity prices, interest rates,

gold lease rates, or currency exchange rates, and that

this in turn affects our financial condition. We manage

market risk by establishing and monitoring parameters

that limit the types and degree of market risk that may

be undertaken. We mitigate this risk by establishing

trading agreements with counterparties under which we

are not required to post any collateral or make any

margin calls on our derivative instruments. Our coun-

terparties cannot require settlement solely because of an

adverse change in the fair value of a derivative.

Credit risk is the risk that a counterparty might fail to

fulfill its performance obligations under the terms of a

derivative contract. When the fair value of a derivative

contract is positive, this indicates that the counterparty

owes us, thus creating a repayment risk for us. When

the fair value of a derivative contract is negative, we owe

the counterparty and, therefore, we assume no repay-

ment risk. We minimize our credit (or repayment) risk

in derivative instruments by:
> entering into transactions with high-quality

counterparties whose credit ratings are generally
“AA” or higher;

> limiting the amount of exposure to each

counterparty; and

have a legally enforceable master netting agreement

with that counterparty, the net credit exposure repre-

sents the net of the positive and negative exposures

between the applicable Barrick entity and that counter-

party for similar types of derivative instruments. When

there is a net negative exposure, we regard the credit

exposure of a Barrick entity to the counterparty as

being zero. The net mark-to-market position with a par-

ticular counterparty represents a reasonable measure of

credit risk when there is a legally enforceable master

netting agreement (i.e. a legal right to a setoff of receiv-

able and payable derivative contracts) between ourselves

and that counterparty. Our policy is to use master net-

ting agreements with all counterparties.

Market liquidity risk is the risk that a derivative posi-

tion cannot be eliminated quickly, by either liquidating

derivative instruments or by establishing an offsetting

position. Under the terms of our trading agreements

with counterparties, the counterparties cannot require

us to immediately settle outstanding contracts, except

upon the occurrence of customary events of defaults

such as covenant breaches, including financial covenants,

insolvency or bankruptcy. We mitigate market liquidity

risk by spreading out the maturity of our derivative

instruments over time. This ensures that the size of posi-

tions maturing is such that for commodity contracts

we are able to physically deliver gold and silver against

the contracts, and for other contracts the relevant

markets for currencies and interest rates will be able to

absorb the contracts.

12. Cash and Equivalents

Cash and equivalents include cash, term deposits and

treasury bills with original maturities of less than 90

days. We anticipate holding these cash balances for an

extended period of time. We have entered into receive-

fixed interest rate swaps with a total notional amount

> monitoring the financial condition of counterparties.

of $650 million that have been designated, and are

When we have more than one outstanding derivative

transaction with the same counterparty, and we also

effective, as cash flow hedges of expected future floating

rate interest receipts. These swaps mature at various

times from 2004 to 2007 (refer to note 11c).

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information

For the years ended December 31

Components of other net operating activities

Add (deduct):
Merger and related costs
Reclamation cost accruals
Foreign currency translation gains (losses) (note 7)
(Gains) losses on available for sale securities (note 7)
Amortization of deferred stock-based compensation (note 23b)
Cumulative effect of changes in accounting policies (note 2)
Accretion expense (note 6)
Non-hedge derivative (gains) losses (note 11)
Inmet litigation expense (note 25)

Changes in operating assets and liabilities:

Accounts receivable
Inventories
Accounts payable and accrued liabilities
Current income taxes accrued
Other assets and liabilities

Cash payments:

Merger and related costs
Reclamation and closure costs
Income taxes

Other net operating activities

Cash payments included in operating activities:

Interest, net of amounts capitalized

2003

2002

2001

–
–
(2)
12
4
17
17
(71)
16

3
2
13
54
7

–
(25)
(111)

$ (2)
34
(1)
4
3
–
–
6
–

(12)
32
(9)
59
(11)

(50)
(70)
(52)

$ (64)

$ (69)

$ 57

$ 117
54
10
(2)
–
1
–
(33)
59

(2)
67
(135)
36
(44)

(13)
(35)
(47)

13. Investments

Available for sale securities

At December 31

Pension and other defined plans:1
Fixed-income debt securities
Equity securities
Other investments:
Equity securities2

Total

2003

2002

Unrealized
Gains (losses)
in OCI

Fair value

6
26

$ 127

$ –
8

$ 38

$ 7
23

$ 41

$ –
(6)

–

$ (6)

1. Under various benefit plans for certain former Homestake executives, a portfolio of marketable fixed-income and equity
securities are held in a rabbi trust that is used to fund obligations under the plans.

2. Other investments mainly include an investment in Highland Gold that had a fair value of $57 million at December 31, 2003.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments, which are all classified as available for sale,

are recorded at fair value, with unrealized gains and

Inventories
We record gold in process, ore in stockpiles and mine

losses recorded in OCI. The fair value of investments is

operating supplies at average cost, less provisions required

determined by quoted market prices. We record realized

to reduce any obsolete or slow-moving inventory to its

gains and losses in earnings as investments mature or

net realizable value. For gold in process and ore in

on sale. For purposes of calculating realized gains and

stockpiles costs capitalized to inventory include: direct

losses, we use the average cost of securities sold. We

and indirect materials and consumables; direct labor;

recognize in earnings all unrealized declines in fair value

repairs and maintenance; utilities; amortization of capi-

judged to be other than temporary which included

talized mining costs; and local mine administrative

losses of $11 million in 2003 (2002 – $nil; 2001

expenses. By-product revenues, royalty expenses and

– $nil). During the three years ended December 31, total

production taxes are included in cost of sales and other

proceeds from the sale of investments were: 2003 –

operating expenses, but we do not capitalize these items

$7 million; 2002 – $64 million; and 2001 – $24 million.

into inventory. We capitalize amortization of mine prop-

Gains and losses on investments recorded in earnings

For the years ended
December 31

2003

2002

2001

Realized
Gains
Losses
Unrealized

Other than

temporary losses

$
–
$ (1)

$ –
$ (4)

$ (11)

$ (12)

$ –

$ (4)

$ 2
$ –

$ –

$ 2

14. Accounts Receivable, Inventories

and Other Current Assets

erty, plant and equipment into inventory, but we present

this expense separately on the face of our income state-

ment outside of cost of sales. The amount of mine

amortization that is capitalized to inventory, but

excluded from cost of sales, was $497 million in 2003;

$493 million in 2002; and $477 million in 2001.

We classify material as ore in stockpiles when its grade

exceeds the cut-off grade used in the determination of

quantities of proven and probable reserves. We process

ore in stockpiles under a life of mine plan that is

intended to optimize use of our known mineral reserves,

present plant capacity and pit design. Gold in process

and ore in stockpiles excludes $64 million (2002 –

$61 million) of stockpiled ore that we do not expect to

At December 31

Accounts receivable

Amounts due from customers
Taxes recoverable
Other

Inventories

Gold in process and
ore in stockpiles

Mine operating supplies

Other current assets

Derivative assets (note 11d)
Prepaid expenses

2003

2002

process in the next 12 months. This amount is included

in other assets. The market price of gold can affect the

$ 26
10
33

$ 69

$ 99
58

$ 157

$ 154
15

$ 169

$ 30
12
30

$ 72

$ 100
59

$ 159

$ 37
10

$ 47

timing of processing of ore in stockpiles.

Our Goldstrike property is the only one that has signifi-

cant stockpiled ore. The stockpiles consist of two ore

types: ore that will require autoclaving, and ore that will

require roasting. Stockpiled ore is exposed to the ele-

ments, but we do not expect its condition to deteriorate

significantly. Processing of roaster ore commenced on

start up of the roaster facility in 2000. We are now

processing ore from both the autoclave and roaster

stockpiles. We expect to fully process the autoclave

stockpile by 2009 and the roaster stockpile by 2016.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Property, Plant and Equipment

At December 31

2003

2002

Property acquisition and
mine development costs

Buildings, plant and equipment

Accumulated amortization

$ 4,245 $ 4,222
2,812

2,831

7,076
(3,945)

7,034
(3,723)

$ 3,131 $ 3,311

a) Property acquisition and
mine development costs
We capitalize payments for the acquisition of land and

mineral rights. After acquisition, a number of factors

affect the recoverability of the cost of land and mineral

rights, particularly the results of exploration drilling.

The length of time between the acquisition of land and

mineral rights and when we undertake exploration

work varies based on the prioritization of our explo-

ration projects and the size of our exploration budget.

When we establish the existence of proven and probable

reserves, we allocate a portion of property acquisition

costs to those reserves.

We capitalize mine development costs on our properties

after proven and probable reserves have been found.

Before finding proven and probable reserves, develop-

ment costs are considered exploration costs, which are

expensed as incurred. For the year ended December 31,

2003, we expensed development costs totaling $18 mil-

lion at our Veladero Project in Argentina because in

accordance with our accounting policy for these costs,

we do not capitalize costs incurred until after proven and

probable reserves, as defined by United States reporting

standards, have been found. Effective October 1, 2003,

we determined that the project’s mineral reserves met

the definition of proven and probable reserves for

United States reporting purposes. Following this deter-

mination we began capitalizing mine development costs

being amortized. Details of the carrying amounts for

major properties and the years when we expect to

put these properties into production and begin amor-

tization are:

Property

Carrying amount
at December 31
2003

Expected timing
of production
start up

Veladero
Cowal
Alto Chicama
Pascua-Lama
Exploration properties

Total

$ 68
49
9
200
213

$ 539

2005
2006
2005
2008
–

We capitalize financing costs, including interest, relating

to mine development costs while development or

construction activities at the properties are in progress.

Capitalization occurs without restriction to specific

borrowings. We stop capitalizing financing costs when

the asset or mine is substantially complete and ready for

its intended use.

We start amortizing capitalized acquisition and mine

development costs when production begins. Amortization

is calculated using the units-of-production method

based on the estimated recoverable ounces of gold in

proven and probable reserves.

Future underground development costs, which are sig-

nificant, are necessary to enable us to physically gain

access to our underground ore bodies, expected to be

mined in some cases over the next 25 years. In years prior

to 2003 we amortized the aggregate total of historical

capitalized costs and estimated future costs using the

units of production method over total proven and prob-

able gold mineral reserves. In 2003, we changed our

accounting for these costs. This change was made to

better match amortization with ounces of gold sold and

to remove the inherent uncertainty in estimating future

development costs from amortization calculations.

at the Veladero project prospectively for future periods.

Under our revised accounting policy, costs incurred to

At December 31, 2003, property acquisition and mine

development costs included various properties in the

exploration or development stage that are not presently

access specific ore blocks or areas, and that only pro-

vide benefit over the life of that area, are amortized over

the gold mineral proven and probable reserves within

the specific ore block or area. Infrastructure and other

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

common costs which have a useful life over the entire

> estimated future commodity prices (considering

mine life continue to be amortized over total accessible

proven and probable gold mineral reserves of the mine.

b) Buildings, plant and equipment
We record buildings, plant and equipment at purchase or

historical and current prices, price trends and related
factors); and

> expected future operating costs, capital expenditures

and unrecorded reclamation and closure expenditures.

Our estimates of production levels and operating costs

construction cost, including any capitalized financing

are based on life of mine plans that are developed to

costs. We amortize them, net of their residual value, using

model the expected cash flows from processing our

the straight-line method over their estimated useful lives.

known gold reserves, assuming current plant capacity

The longest estimated useful life for buildings and mill

and current operating costs, but excluding the impact

equipment is 25 years and for mine equipment is 15 years.

of inflation.

We expense repairs and maintenance expenditures as

In our most recent impairment assessments we used a

incurred. We capitalize major improvements and

future average gold price assumption of $375 per ounce.

replacements that increase productive capacity or

We also assumed a US dollar foreign exchange rate of

extend the useful life of an asset, and amortize them over

$0.67 against the Australian dollar, based on recent

the remaining estimated useful life of the related asset.

market forward currency exchange rates over the peri-

c) Impairment evaluations
We review and test the carrying amounts of our mineral

ods for which we are estimating future cash flows.

We record a reduction of the assets or group of assets to

properties and related buildings, plant and equipment

their estimated fair value as a charge to earnings, if the

when events or changes in circumstances suggest that

estimated future net cash flows are less than the carry-

the carrying amount may not be recoverable. If we have

ing amount. We calculate fair value by discounting the

reason to suspect an impairment may exist, we prepare

estimated future net cash flows using a discount factor.

estimates of future net cash flows that we expect to

The discount factor is our estimate of the risk-adjusted

generate for the related asset or group of assets. Where

rate used to determine the fair value of our mining

there is a range of potential outcomes, we use a proba-

properties in a transaction between willing buyers

bility-weighted approach in the estimation of future net

and sellers.

cash flows. We group assets at the lowest level for which

identifiable cash flows are largely independent of

the cash flows of other assets and liabilities. For our

operating mines, we include all mine property, plant

and equipment in one group at each mine for impair-

ment testing purposes. For our development projects

and exploration properties, we assess the carrying

amount of each property separately on a property-by-

property basis.

For our operating mines and development projects, the

cash flow estimates are based on:
> estimated recoverable ounces of gold mainly repre-
senting proven and probable mineral reserves. We
consider possible reserves where all economic and
geo-technical studies are complete and support eco-
nomic recovery of gold, but where we are awaiting
government approvals to allow mining of the material;

16. Capitalized Mining Costs

We charge most mine operating costs to inventory as

incurred. However, we capitalize and amortize certain

mining costs associated with open-pit deposits that have

diverse ore grades and waste-to-ore ton ratios over the

mine life. These mining costs arise from the removal of

waste rock at our open-pit mines, and we commonly

refer to them as “deferred stripping costs.” We charge to

inventory amortization of amounts capitalized based on

a “stripping ratio” using the units-of-production method.

This accounting method results in the smoothing of

these costs over the life of a mine. Instead of capitalizing

these costs, some mining companies expense them as

incurred, which may result in the reporting of greater

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

volatility in period-to-period results of operations. If we

followed a policy of expensing these costs as incurred,

then using this alternative policy, our reported cost

of sales would have been $37 million lower in 2003

(2002 – $29 million lower, 2001 – $17 million lower).

Capitalized mining costs represent the excess of costs

capitalized over amortization recorded, although it is

possible that a liability could arise if cumulative amorti-

zation exceeds costs capitalized. The carrying amount

of capitalized mining costs is grouped with related

mining property, plant and equipment for impairment

testing purposes.

Average stripping ratios1

For the years ended
December 31

2003

2002

2001

Betze-Post (Goldstrike)
Pierina

112:1
48:1

98:1
21:1

1. The stripping ratio is calculated as the ratio of total tons
(ore and waste) of material to be moved compared to total
recoverable proven and probable gold reserves.

The average remaining life of open-pit mine operations

where we capitalize these types of mining costs is

8 years. The full amount of costs incurred will be

expensed by the end of the mine lives.

17. Other Assets

At December 31

Ore in stockpiles (note 14)
Taxes recoverable
Deferred income tax assets (note 21)
Debt issue costs
Deferred stock-based

compensation (note 23b)

Prepaid pension asset (note 24d)
Other

2003

2002

$ 64
52
59
11

$ 61
35
45
11

6
–
56

5
7
73

$ 248

$ 237

18. Other Current Liabilities

At December 31

2003

2002

Asset retirement obligations (note 20a) $ 36
Merger and related costs1
1
–
Inmet litigation (note 25)
3
Derivative liabilities (note 11d)
–
Income taxes payable
Pension and other post-retirement

benefits (notes 20 and 24)
Current part of long-term debt

(note 19)

Deferred revenue
Other

41
17
2

$ 53
3
58
28
52

20
35
12

$ 105

$ 270

1. In 2002, cash payments of merger and related costs
totaled $50 million. Other amounts totaling $10 million were
settled through pension plan benefit enhancements. Excess
accruals totaling $2 million were recorded in 2002 earnings.

19. Long-Term Debt

At December 31

Debentures
Project financing – Bulyanhulu
Variable rate bonds
Capital leases

Current part

2003

2002

$ 501
174
80
5

$ 504
194
80
3

760
(41)

781
(20)

$ 719

$ 761

Interest expense

For the years ended
December 31

Interest incurred
Less: capitalized

Interest expense

2003

2002

2001

$ 49
(5)

$ 44

$ 59
(2)

$ 57

$ 67
(42)

$ 25

a) Debentures
On April 22, 1997, we issued $500 million of redeem-

able, non-convertible debentures. The debentures bear

interest at 7.5% per annum, payable semi-annually, and

mature on May 1, 2007. We entered into interest-rate

swap contracts as a fair value hedge of our interest

rate risk exposure on $350 million of the debentures,

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effectively converting them to floating-rate debt instru-

one year from April 2007 to April 2008. The Credit

ments (note 11). Under the swaps, we receive fixed-rate

Agreement, which is unsecured, matures in April 2008

interest receipts at 7.5% in exchange for floating-rate

and has an interest rate of LIBOR plus 0.27% to 0.35%

interest payments of LIBOR plus a credit spread of 4.0%,

when used, and an annual fee of 0.08%. We have not

which, in 2003, resulted in an effective rate of 6.1%.

drawn any amounts under the Credit Agreement.

b) Project ﬁnancing – Bulyanhulu
One of our wholly-owned subsidiaries, Kahama Mining

Corporation Ltd. in Tanzania, has a limited-recourse

amortizing loan for $174 million. We guaranteed the

loan until completion, which occurred in March 2003.

After completion, the loan became non-recourse. The

loan is insured for political risks equally by branches of

the Canadian government and the World Bank. The

interest rate, inclusive of political risk insurance premi-

ums, is LIBOR plus 2.6% before completion, and

increased after completion to about LIBOR plus 3.6%.

The effective interest rate for 2003, including amortiza-

tion of debt-issue costs and political risk insurance, was

7.7% (2002 – 7.2%, 2001 – 7.3%). The effective interest

rate includes payments made under a receive-floating,

pay-fixed interest-rate swap which matches the loan

principal over the term to repayment.

Scheduled repayments for each of the next five years

are: 2004 – $24 million, 2005 – $31 million, 2006 –

$34 million, 2007 – $34 million, 2008 – $34 million,

and 2009 – $17 million.

c) Variable rate bonds
Certain of our wholly-owned subsidiaries have issued

20. Other Long-Term Obligations

At December 31

2003

2002

Asset retirement obligations
Pension benefits1 (note 24d)
Other post-retirement benefits
Derivative liabilities (note 11d)
Restricted stock units (note 23b)
Other

$ 282
48
26
70
10
133

$ 569

$ 249
55
28
58
7
131

$ 528

1. Includes additional minimum liability of $7 million
(see note 24d)

a) Asset retirement obligations

At January 1
Changes in cash flow estimates (note 2b)
Settlements
Accretion expense

At December 31
Current part

2003

$ 334
10
(43)
17

318
(36)

$ 282

Our mining, processing, exploration and development

variable-rate, tax-exempt bonds of $17 million (due

activities are subject to various government controls and

2004), $25 million (due 2029) and $38 million (due

regulations relating to protection of the environment,

2032) for a total of $80 million. We pay interest

including requirements for the closure and reclamation

monthly on the bonds based on variable short-term,

of mining properties.

tax-exempt obligation rates. The average interest rate

for 2003 was 1.1% (2002 – 1.4%). No principal repay-

ments are due until cancellation, redemption or maturity.

Effective January 1, 2003, we adopted FAS 143 and

changed our accounting policy for reclamation and

closure costs. Prior to the adoption of FAS 143, we

d) Credit facilities
We have a credit and guarantee agreement with a group

accrued estimated reclamation and closure costs over

the life of our mines using the units of production

of banks (the “Lenders”), which requires the Lenders to

method based on recoverable ounces of gold contained

make available to us a credit facility of up to $1 billion

in proven and probable reserves. Under FAS 143, if a

or the equivalent amount in Canadian currency. We

liability meets the definition of an asset retirement

extended the Credit Agreement on March 28, 2003 for

obligation, then it is accounted for in accordance with

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the principles of FAS 143. Other reclamation and

cost trend had a minimal effect on the amounts reported.

closure costs that are not asset retirement obligations

A one percentage point change in the assumed health

are expensed as incurred (see note 6).

care cost trend rate at December 31, 2003 would have

Through the construction and normal operation of our

mining property, plant and equipment, asset retirement

obligations are incurred. We record the fair value of a

liability for an asset retirement obligation when it is

incurred. When the liability is initially recorded, we

capitalize the cost by increasing the carrying amount of

the related long-lived asset. Over time, the liability is

increased to reflect an interest element (accretion

expense) considered in the initial measurement at fair

value. The capitalized cost is amortized over the useful

life of the related asset. Upon settlement of the liability,

we record a gain or loss if the actual cost incurred is

different than the liability recorded.

We estimate that the present value of asset retirement

obligations under present environmental regulations

was $318 million at December 31, 2003. The major

parts of this $318 million estimate are for: tailing and

heap leach pad closure/ rehabilitation – $105 million;

demolition of buildings/mine facilities – $30 million;

ongoing water treatment – $76 million; ongoing moni-

toring and care and maintenance – $28 million; and

other costs – $79 million.

b) Other post-retirement beneﬁts
We provide post-retirement medical, dental, and life

insurance benefits to certain employees. We use the

corridor approach in the accounting for post-retire-

ment benefits, under which all actuarial gains and

losses resulting from variances between actual results

and economic estimates or actuarial assumptions are

deferred. We amortize the deferred amounts when the

net gains or losses exceed 10% of the accumulated

post-retirement benefit obligation at the beginning of

the year. The amortization period is the average

remaining life expectancy of participants. For 2003, we

recorded a benefit expense of $nil (2002 – $nil, 2001 –

$2 million credit).

We have assumed a health care cost trend of 6.5% in

2003, 7% in 2002 and 7.5% in 2001, decreasing ratability

to 5% in 2006 and thereafter. The assumed health care

increased the post-retirement obligation by $3 million

or decreased the post-retirement benefit obligation by

$2 million and would have had no significant effect on

the benefit expense for 2003.

Expected future benefit payments

For the year ending December 31

2004
2005
2006
2007
2008
2009 – 2013

$2
2
2
2
2
8

21. Deferred Income Taxes

Net deferred income tax liabilities

At December 31

Assets

Operating loss carry forwards
Reclamation and closure costs
Property, plant and equipment
Post-retirement benefit

plan obligations

Alternative minimum tax
credit carry forwards

Other

Gross deferred tax assets
Valuation allowances

Net deferred tax assets
Liabilities

Property, plant and equipment
Other

Net deferred income tax
liabilities consist of:
Non-current assets (note 17)
Non-current liabilities

2003

20021

$ 398
82
3

$ 389
82
50

120
58

682
(394)

288

(361)
(98)

110
43

720
(433)

287

(381)
(16)

$ (171) $ (110)

59
(230)

45
(155)

$ (171) $ (110)

1. Reclassified to conform with current presentation.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

a) Recognition and measurement
We recognize deferred income tax assets and liabilities for

b) Valuation allowances
Because we operate in multiple tax jurisdictions, we

the future tax consequences of temporary differences

consider the need for a valuation allowance on a country-

between the carrying amounts of assets and liabilities in

by-country basis, taking into account the effects of local

our balance sheet and their tax bases. We measure

tax law. When a valuation allowance is not recorded, we

deferred income tax assets and liabilities using enacted

believe that there is sufficient positive evidence to support

rates that apply to the years when we expect to recover

a conclusion that it is more likely than not that the asset

or settle the temporary differences. Our income tax

will be realized. When facts or circumstances change,

expense or recovery includes the effects of changes in

we record an adjustment to a valuation allowance to

our deferred income tax assets and liabilities. We reduce

reflect the effects of the change. The main factors that

deferred income tax assets by a valuation allowance if

we decide it is more likely than not that some or all of

the assets will not be realized.

affect the amount of a valuation allowance are:
> expected levels of future taxable income;
> opportunities to implement tax plans that affect

whether tax assets can be realized; and

We measure and recognize deferred income tax assets

> the nature and amount of taxable temporary

and liabilities based on: our interpretation of relevant

differences.

tax legislation; our tax planning strategies; estimates of

the tax bases of individual assets and liabilities; and the

deductibility of expenditures for income tax purposes.

We will recognize the effects of changes in our assess-

ment of these estimates and factors when they occur.

Levels of future taxable income are affected by, among

other things, prevailing gold prices; cash operating

costs; changes in proven and probable gold reserves;

and changes in interest rates and foreign currency

exchange rates. It is reasonably possible that circum-

Deferred income taxes have not been provided on the

stances could occur resulting in a material change in the

undistributed earnings of foreign subsidiaries, which are

valuation allowances.

considered to be reinvested indefinitely outside Canada.

The determination of the unrecorded deferred income

tax liability is not considered practicable.

c) Peruvian tax assessment
One of our Peruvian subsidiaries received a revised

income tax assessment of $32 million, excluding interest

Operating loss carry forwards amount to $1,535 mil-

and penalties, from the Peruvian tax authority, SUNAT.

lion, of which $973 million do not expire and $562 mil-

The tax assessment related to a tax audit of our Pierina

lion expire at various times over the next 20 years.

Mine for the 1999 and 2000 fiscal years. The assessment

Alternative minimum tax credit carry forwards amount

mainly relates to the revaluation of the Pierina mining

to $120 million and do not expire.

Our income tax returns for the major jurisdictions

where we operate have been fully examined through the

following years: Canada – 1999, United States – 2001

and Peru – 2000. Other than the matter of interest and

penalties associated with the Peruvian tax assessment,

we are not aware of any tax matters outstanding in any

country in which we operate that could potentially have

a material adverse effect on our financial position or

results of operations.

concession for the purpose of determining its tax basis.

Under the valuation proposed by SUNAT, the tax basis

of the Pierina assets would change from what we previ-

ously assumed with a resulting increase in current and

deferred income taxes. We believe that the tax assess-

ment is incorrect and we are appealing the decision. The

full life of mine effect on our current and deferred

income tax liabilities was fully recorded at December 31,

2002, as well as other payments of about $21 million

due for periods through 2003. The case is pending

before Peru’s Tax Court. If the case is not resolved in our

favor, we intend to pursue all available remedies, includ-

ing judicial appeals. If we are successful and our original

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

valuation is confirmed as the appropriate tax basis of

reduction of common share capital by $67 million, and

the Pierina assets, we would benefit from a $141 million

an $87 million charge (being the difference between the

reduction in current and deferred tax liabilities. The

repurchase cost and the average historic book value of

effect of this contingent gain, if any, will be recorded in

shares repurchased) to retained earnings.

the period the contingency is resolved.

In the event of an unfavorable Tax Court ruling,

Peruvian law is unclear with respect to whether it is nec-

essary to make payment of the disputed current taxes

for the years covered by the tax assessment, pending the

outcome of an appeal process, a process which can take

several years. The amount of current income taxes that

is potentially payable is $80 million. In the event of an

unfavorable Tax Court ruling, we will consider taking

all available action to prevent payment of the amount in

dispute until the appeal process is complete.

We have not provided for $57 million of potential inter-

est and penalties on the income tax assessed in the

audit. Even if the tax assessment is upheld, we believe

that we will prevail on the interest and penalties part,

because the assessment runs counter to applicable law

and previous Peruvian tax audits. The potential amount

of interest and penalties will continue to increase over

time while we contest the tax assessment. A liability

for interest and penalties will only be recorded should

it become probable that SUNAT’s position on interest

and penalties will be upheld, or if we exhaust our

available remedies.

22. Capital Stock

a) Authorized capital
Our authorized capital stock includes an unlimited

number of common shares (issued 535,250,227 shares),

9,764,929 First preferred shares, Series A (issued nil);

9,047,619 Series B (issued nil); 1 Series C special voting

c) Barrick Gold Inc. (“BGI”)
Exchangeable Shares
In connection with a 1998 acquisition, BGI, formerly

Homestake Canada Inc., issued 11.1 million BGI

exchangeable shares. Each BGI 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.

BGI is a subsidiary that holds our interest in the Hemlo

and Eskay Creek Mines.

At December 31, 2003, 1.5 million (2002 – 1.6 million)

BGI exchangeable shares were outstanding, which are

equivalent to 0.8 million Barrick common shares (2002

– 0.8 million common shares). The equivalent common

share amounts are reflected in the number of common

shares outstanding.

At any time on or after December 31, 2008, or when

fewer than 1.4 million BGI exchangeable shares are out-

standing, we have the right to require the exchange of

each outstanding BGI exchangeable share for 0.53 of a

Barrick common share. While there are exchangeable

shares outstanding, we are required to present summary

consolidated financial information relating to BGI for

holders of exchangeable shares.

Summarized ﬁnancial information for BGI

For the years ended
December 31

Total revenues and
other income

2003

2002

2001

$ 226
245

$ 203
191

$ 175
281

share (issued 1); and 14,726,854 Second preferred shares

Less: costs and expenses

Series A (issued nil).

b) Share repurchase program
During the year ended December 31, 2003, we repur-

chased 8.75 million common shares for $154 million, at

an average cost of $17.56 per share. This resulted in a

Income (loss) before taxes

$ (19)

$ 12

$ (106)

Net loss

$ (38)

$ (1) $ (84)

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2003

2002

23. Employee Stock-Based

Compensation

At December 31

Assets

Current assets
Non-current assets

Liabilities and shareholders’ equity

Other current liabilities
Intercompany notes payable
Other long-term liabilities
Deferred income taxes
Shareholders’ equity

$ 72
233

$ 305

$ 91
236

$ 327

20
546
11
67
(339)

75
407
18
122
(295)

$ 305

$ 327

d) Dividends
In 2003, we declared and paid dividends in US dollars

totaling $0.22 per share (2002 – $0.22 per share, 2001 –

$0.22 per share).

a) Common stock options
We have a stock option plan for selected employees.

At December 31, 2003, 24 million common stock

options were outstanding, expiring at various dates to

December 7, 2013. The exercise price of the options is

set at our closing share price on the day before the grant

date. They vest over four years at a rate of one quarter

each year, beginning in the year after granting, and are

exercisable over 10 years. At December 31, 2003, 1 mil-

lion (2002 – 5 million, 2001 – 9 million) common

shares, in addition to those currently outstanding, were

available for granting options.

Besides the common stock options in the table below,

we are obliged to issue about 0.5 million common

shares (2002 – 0.5 million common shares) in connec-

tion with outstanding stock options assumed as part of

a business combination in 1999. These options have an

average exercise price of C$19.70 (2002 – C$19.68) and

an average remaining term of two years.

Stock option activity (shares in millions)

2003

2002

2001

Shares
(number)

Average
price

Shares
(number)

Average
price

Shares
(number)

Average
price

C$ options
At January 1
Granted
Exercised
Cancelled or expired

At December 31

US$ options
At January 1
Granted
Exercised
Cancelled or expired

At December 31

$ 28.61
$ 23.99
$ 27.95

$ 13.07

19
5
(1)
(1)

3
–
(1)
–

19
6
(4)
(2)

6
–
(2)
(1)

$ 24.71
$ 24.79
$ 33.99

$ 11.99
$ 25.10

$ 24.32

$ 29.66

$ 9.03

22
1
–
(4)

4
2
–
–

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock options outstanding (shares in millions)

Range of
exercise prices

C$ options
$ 22.08 – $ 31.05
$ 32.32 – $ 43.20

US$ options
$ 8.96 – $ 17.68
$ 17.75 – $ 40.66

Outstanding

Shares
(number)

Average
price

Average life
(years)

Exercisable

Shares
(number)

Average
price

$ 26.29
$ 39.26

$ 12.40
$ 26.30

20
2

1
1

8
3

6
3

$ 26.11
$ 39.55

$ 13.57
$ 26.30

9
2

1
1

Under APB 25, we recognize compensation cost for

Option value information

stock options in earnings based on the excess, if any, of

the quoted market price of the stock at the grant date of

the award over the option exercise price. Generally, the

exercise price for stock options granted to employees

equals the fair market value of our common stock at the

date of grant, resulting in no compensation cost.

FASB Statement No. 123 (Accounting for Stock-Based

Compensation) (FAS 123) encourages, but does not

require, companies to record compensation cost for

stock-based employee compensation plans based on the

fair value of options granted. We have elected to con-

For the years ended December 31
(per share and option
amounts in dollars)

2003

2002

2001

Fair value per option
Valuation assumptions:
Expected option
term (years)
Expected volatility
Expected dividend yield
Risk-free interest rate

Pro forma effects
Net income, as reported
Stock-option expense

$ 8.50

$ 6.40

$ 5.10

6
10
6
40%
30%
40%
1.0% 1.4% 1.4%
4.5% 5.0% 5.5%

$ 200
(24)

$ 193
(21)

$ 96
(31)

tinue to account for stock-based compensation using

Pro forma net income

$ 176

$ 172

$ 65

the intrinsic value method prescribed in Accounting

Principles Board Opinion No. 25 (Accounting for Stock

Issued to Employees) (APB 25) and its related interpre-

tations, and to provide disclosures of the pro forma

effects of adoption had we recorded compensation

expense under the fair value method.

Net income per share:

As reported1
Pro forma1

1. Basic and diluted.

$ 0.37
$ 0.33

$ 0.36
$ 0.32

$ 0.18
$ 0.12

b) Restricted stock units
In 2001, we put in place a restricted stock unit incentive

plan (RSU Plan) for selected employees. Under the RSU

Plan, a participant is granted a number of RSUs, where

each unit has 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

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

grant, has a value equivalent to the market price of a

amounts necessary on an actuarial basis to provide

Barrick common share. RSUs are recorded at their fair

enough assets to meet the benefits payable to plan mem-

value on the grant date, with a corresponding amount

bers under the Employee Retirement Income Security

recorded as deferred compensation that is amortized on

Act of 1974. Independent trustees administer assets of

a straight-line basis over the vesting period. Changes in

the plans, which are invested mainly in fixed-income

the fair market value of the units during the vesting

securities and equity securities.

period are recorded, with a corresponding adjustment

to the carrying amount of deferred compensation.

Compensation expense for the year ended December 31,

2003 was $4 million (2002 – $3 million). At December

31, 2003, the weighted average remaining contractual life

was 1.6 years, and the fair value of outstanding RSUs

was $10 million (included in other long-term obligations).

RSU activity

RSUs
(in thousands)

Fair value
per unit
(in dollars)

Balance at December 31, 2000

Granted

Balance at December 31, 2001

Cancelled
Dividends

Balance at December 31, 2002

Cancelled
Granted
Dividends

Balance at December 31, 2003

–
515

515
(30)
4

489
(171)
130
4

452

–
15.49

$ 15.95
19.74
17.45

$ 15.41
16.62
21.92
19.82

$ 22.71

24. Pension Plans

a) Deﬁned contribution pension plans
Certain employees take part in defined contribution

employee benefit plans. We also have a retirement plan

for certain officers of the Company, under which we con-

tribute 15% of the officer’s annual salary and bonus. Our

share of contributions to these plans, which is expensed

in the year it is earned by the employee, was $15 million

in 2003, $12 million in 2002 and $12 million in 2001.

b) Deﬁned beneﬁt pension plans
We have various qualified defined benefit pension plans

that cover certain of our United States employees and

provide benefits based on employees’ years of service.

Our policy for these plans is to fund, at a minimum, the

As well as the qualified plans, we have nonqualified

defined benefit pension plans covering certain employ-

ees and a director of the Company. An irrevocable trust

(“rabbi trust”) was set up to fund these plans. The fair

value of assets held in this trust, which mainly includes

investments, was $32 million (2002 – $31 million), are

recorded in our consolidated balance sheet and accounted

for under our accounting policies for such assets.

Actuarial gains and losses arise when the actual return

on plan assets for a period differs from the expected

return on plan assets for that period, and when actual

experience causes the expected and actuarial accrued

benefit obligations to differ at the end of the year. We

amortize actuarial gains and losses over the average

remaining life expectancy of participants.

Pension expense

For the years ended
December 31

Expected return on

plan assets
Service cost for

benefits earned

Interest cost on

benefit obligation

Prior service cost
Actuarial gains
Special termination charges1
Effect of curtailments/

settlements

2003

2002

2001

$ (11)

$ (17)

$ (21)

–

14
–
–
–

16
–
(1)
–

16
1
(2)
39

(4)

$ 33

1. In 2001, the planned closure of certain mine sites caused
some terminated employees at the sites to receive extra pension
entitlements. As well, certain employees with change of control
clauses in their employment agreements became entitled
to enhanced pension benefits on the closing of the merger. We
recorded a charge of $39 million included in merger and
related costs to reflect the impact of these events.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

c) Pension plan asset information

Fair value of plan assets

For the years ended
December 31

Balance at January 1
Actual return on plan assets
Company contributions
Benefits paid

Balance at December 31

Funded status1
Unrecognized net actuarial losses

2003

2002

$ 170
19
8
(31)

$ 235
(2)
7
(70)

166

170

$ (55)
11

$ (57)
9

Net benefit liability recognized

$ (44)

$ (48)

securities. Investment risk is measured and monitored

on an ongoing basis through annual liability measure-

ments, periodic asset/liability studies, and quarterly

investment portfolio reviews.

Assumed rate of return on plan assets
We employ a building block approach in determining

the long-term rate of return for plan assets. Historical

markets are studied and long-term historical relationships

between equities and fixed income investments are pre-

served congruent with the widely accepted capital market

principle that assets with higher volatility generate a

greater return over the long run. Current market factors

such as inflation and interest rates are evaluated before

As of December 31

2003

2002

long-term capital market assumptions are determined.

Composition of plan assets:
Equity securities
Debt securities

$ 66
100

$ 166

$ 41
129

$ 170

1. Represents the fair value of plan assets less projected benefit
obligations. Plan assets exclude investments held in a rabbi
trust that are recorded separately on our balance sheet under
Investments (fair value $32 million at December 31, 2003). In
the year ending December 31, 2004 we expect to make further
contributions totaling about $3 million to our defined benefit
pension plans to address the funding status of the plans.

Investment strategy
We employ a total return investment approach, whereby

a mix of equities and fixed-income investments are used

to maximize the long-term return of plan assets. The

intent of this strategy is to minimize plan expenses by

outperforming plan liabilities over the long run. Our

overall expected long-term rate of return on assets is the

actuarial assumption rate of 7%. Risk is diversified

through a blend of equity and fixed income invest-

ments. Furthermore, equity investments are diversified

across geography and market capitalization in US large

cap stocks, US small cap stocks, and international

d) Beneﬁt obligations

Projected beneﬁt obligation (PBO)

For the years ended
December 31

Balance at January 1

Service cost for benefits earned
Interest cost on benefit obligation
Actuarial (gains) losses
Benefits paid

2003

2002

$ 227
–
14
11
(31)

$ 279
3
16
(1)
(70)

Balance at December 31

$ 221

$ 227

For the year ended December 31, 2003 we used a mea-

surement date of December 31, 2003 to calculate the

accumulated benefit obligations.

Expected future beneﬁt payments

For the year ending December 31

2004
2005
2006
2007
2008
2009 – 2013

$ 15
16
16
18
18
$ 94

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension plans where accumulated beneﬁt obligation
(ABO) exceeds the fair value of plan assets

At December 31

Projected benefit obligation
ABO
Fair value of plan assets

2003

2002

$ 221
$ 217
$ 166

$ 193
$ 193
$ 132

Total recorded beneﬁt asset (liability)

At December 31

Prepaid pension asset
Accrued benefit plan liability

Current
Non-current

Net benefit plan liability
Additional minimum liability –

non-current (note 10)

2003

2002

–

(3)
(41)

(7)
(48)

$ (44)

$ (48)

(7)

$ (51)

$ (55)

e) Actuarial assumptions

For the years ended December 31

2003

2002

2001

Sensitivity analysis1

Effect on
ABO

Effect on
earnings

Discount rate

For benefit obligations
For net pension cost

Expected return on plan assets
Compensation increases

1. Effect of a one-percent decrease

6.25%
6.50%
7.00%
5.00%

6.50%
6.75%
8.50%
5.00%

6.75%
7.25%
8.50%
5.00%

$ 23
N/A
N/A
N/A

N/A
$ –
$ 2
N/A

In 2003, we reduced the assumed rate of return on pen-

experience and considering the mix of plan assets and

sion plan assets from 8.5% to 7% to reflect our revised

our investment strategy.

expectations for long-term returns based on recent

25. Contingencies and Commitments

a) Contingencies, litigation and claims
Certain conditions may exist as of the date the financial

If the assessment of a contingency suggests that it is

probable that a material loss has been incurred and the

statements are issued, which may result in a loss to the

amount of the liability can be estimated, then the esti-

Company but which will only be resolved when one or

mated liability is accrued in the financial statements. If

more future events occur or fail to occur. Management

the assessment suggests that a potentially material loss

and, where appropriate, legal counsel, assess such con-

contingency is not probable but is reasonably possible,

tingent liabilities, which inherently involves an exercise

or is probable but cannot be estimated, then the nature

of judgment.

In assessing loss contingencies related to legal proceed-

ings that are pending against us or unasserted claims

that may result in such proceedings, the Company and

its legal counsel evaluate the perceived merits of any

legal proceedings or unasserted claims as well as the

perceived merits of the amount of relief sought or

of the contingent loss, together with an estimate of the

range of possible loss, if determinable, are disclosed.

Loss contingencies considered remote are generally not

disclosed unless they involve guarantees, in which case

we disclose the nature of the guarantee.

expected to be sought.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inmet litigation
In October 1997, Barrick Gold Inc. (“BGI”), a wholly-

On July 13, 1999, the Court dismissed the claims against

us and several other defendants on the grounds that

owned subsidiary of Barrick, entered into an agreement

the plaintiffs had failed to state a claim under United

with Inmet Mining Corporation (“Inmet”) to purchase

States securities laws. On August 19, 1999, the plaintiffs

the Troilus mine in Quebec for $110 million plus working

filed an amended complaint restating their claims

capital. In December 1997, BGI terminated the agreement

against us and certain other defendants and on June 14,

after deciding that, on the basis of due diligence studies,

2000 filed a further amended complaint, the Fourth

conditions to closing the arrangement would not be

Amended Complaint.

satisfied. In February 1998, Inmet filed suit against BGI

in the British Columbia (“B.C.”) Supreme Court disput-

ing the termination of the agreement and alleging that

BGI had breached the agreement. In January 2002, the

Court released its decision in the matter and found in

favor of Inmet. The Court awarded Inmet equitable

damages of C$88.2 (US$59) million, which was recorded

as an expense in 2001. The Court did not award Inmet

pre-judgment interest. Inmet made a request to the

Court to re-open the trial to make submissions on its

claim for pre-judgment interest, which was denied in

May 2002. In February 2002, BGI filed a Notice of

Appeal with the B.C. Court of Appeal, and Inmet filed

On March 31, 2001, the Court granted in part and

denied in part our Motion to Dismiss the Fourth

Amended Complaint. As a result, we remain a defen-

dant in the case. We believe that the remaining claims

against us are without merit. We filed our formal

answer to the Fourth Amended Complaint on April 27,

2001 denying all relevant allegations of the plaintiffs

against us. Discovery in the case has been stayed by the

Court pending the Court’s decision on whether or not

to certify the case as a class action. The amount of

potential loss, if any, which we may incur arising out of

the plaintiffs’ claims is not presently determinable.

a Cross-Appeal of the decision regarding pre-judgment

On March 31, 2003, the Court denied all of

the

interest. In November 2003, the B.C. Court of Appeal

Plaintiffs’ motions to certify the case as a class action.

dismissed the appeal made by BGI, and also awarded

Plaintiffs have not filed an interlocutory appeal of

Inmet pre-judgment interest. In November 2003, BGI

the Court’s decision denying class certification to the

paid Inmet C$111 million (US$86 million), in full

Fifth Circuit Court of Appeals. On June 2, 2003,

settlement of the lawsuit. The settlement resulted in a

the Plaintiffs submitted a proposed Trial and Case

further expense of US$14 million in fourth quarter 2003,

Management Plan, suggesting that the Plan would cure

combined with post-judgment interest of $2 million in

the defects in the Plaintiffs’ motions to certify the class.

the first nine months of 2003.

Bre-X Minerals
On April 30, 1998, we were added as a defendant in a

class action lawsuit initiated against Bre-X Minerals

Ltd., certain of its directors and officers or former direc-

tors 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 us in connection with our

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 us in late 1996.

The Court has taken no action with respect to the pro-

posed Trial and Case Management Plan. The Plaintiffs’

case against the Defendants may now proceed in due

course, but not on behalf of a class of Plaintiffs but only

with respect to the specific claims of the Plaintiffs

named in the lawsuit. Having failed to certify the case

as a class action, we believe that the likelihood of any of

the named Defendants succeeding against Barrick with

respect to their claims for securities fraud is remote.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Blanchard complaint
On January 7, 2003, we were served with a Complaint

by other parties on behalf of the same proposed class of

Barrick shareholders. In September the cases were consol-

for Injunctive Relief by Blanchard and Company, Inc.

idated into a single action in the Southern District of New

(“Blanchard”), and Herbert Davies (“Davies”). The

York. The plaintiffs filed a Consolidated and/or Amended

complaint, which is pending in the US District Court

Complaint on November 5, 2003. On January 14, 2004

for the Eastern District of Louisiana, also names

Barrick filed a motion to dismiss the Wagner complaint.

J.P. Morgan Chase & Company (“J.P. Morgan”) as a

We intend to defend the action vigorously.

defendant, along with an unspecified number of addi-

tional defendants to be named later. The complaint,

which has been amended several times, alleges that we

and bullion banks with which we entered into spot

deferred contracts have manipulated the price of gold,

in violation of US antitrust laws and the Louisiana

Unfair Trade Practices and Consumer Protection Law.

Blanchard alleges that it has been injured as a seller of

gold due to reduced interest in gold as an investment.

Davies, a customer of Blanchard, alleges injury due to

the reduced value of his gold investments. The com-

plaint seeks damages and an injunction terminating

certain of our trading agreements with J.P. Morgan and

other bullion banks. In September 2003 the Court

issued an Order granting in part and denying in part

Barrick’s motions to dismiss this action. Discovery has

commenced in the case and a trial date has been tenta-

tively set for February 2005. We intend to defend the

action vigorously.

Wagner complaint
On June 12, 2003, a complaint was filed against Barrick

and several of its current or former officers in the US

District Court for the Southern District of New York.

The complaint is on behalf of Barrick shareholders

who purchased Barrick shares between February 14,

2002 and September 26, 2002. It alleges that Barrick

and the individual defendants violated US securities

laws by making false and misleading statements concern-

ing Barrick’s projected operating results and earnings in

2002. The complaint seeks an unspecified amount of

damages. Several other complaints, making the same

basic allegations against the same defendants, were filed

Other
From time to time, we are involved in various claims,

legal proceedings and complaints arising in the ordinary

course of business. We are also subject to reassessment

for income and mining taxes for certain years. We do

not believe that adverse decisions in any pending or

threatened proceedings related to any potential tax

assessments or other matters, or any amount which we

may be required to pay by reason thereof, will have a

material adverse effect on our financial condition or

future results of operations.

b) Commitments
Our mining and exploration activities are subject to var-

ious 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. We conduct our

operations so as to protect public health and the

environment, and we believe that our operations are

materially in compliance with all applicable laws and

regulations. We have made, and expect to make in the

future, expenditures to meet such laws and regulations.

We have entered into various commitments in the ordi-

nary course of business, including commitments to

perform assessment work and other obligations necessary

to maintain or protect our interests in mining proper-

ties, financing and other obligations to joint ventures

and partners under venture and partnership agreements,

and commitments under federal and state/provincial

environmental, health and safety permits.

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

26. Fair Value of

Financial Instruments

Fair value is defined as the value at which positions could

be closed out or sold in a transaction with a willing and

knowledgeable counterparty over a period of time con-

sistent with our risk management or investment strategy.

> recorded at cost (less other-than-temporary
impairments) with changes in fair value not
recorded in the financial statements but disclosed
in the notes thereto; or

> recorded at the lower of cost or market.

The accounting for an asset or liability may differ based

on the type of instrument and/or its use in a risk manage-

ment or investing strategy. The measurement approaches

used in financial statements include the following:
> recorded at fair value on the balance sheet

with changes in fair value recorded each period
in earnings;

> recorded at fair value on the balance sheet with
changes in fair value recorded each period in a
separate component of shareholders’ equity and as
part of other comprehensive income;

Fair value is based on quoted market prices, where

available. If listed prices or quotes are not available, fair

value is based on internally developed models that

primarily use market-based or independent information

as inputs. These methods may produce a fair value cal-

culation that may not be indicative of net realizable

value or reflective of future fair values.

Fair value information

At December 31

Financial assets

Cash and equivalents1
Accounts receivable1
Available for sale securities2
Derivative assets3

Financial liabilities

Accounts payable1
Long-term debt4
Derivative liabilities3

2003

2002

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

$ 970
69
127
410

$ 1,576

$ 245
760
73

$ 1,078

$ 970
69
127
410

$ 1,576

$ 245
841
73

$ 1,159

$ 1,044
72
41
115

$ 1,272

$ 213
781
86

$ 1,080

$ 1,044
72
41
115

$ 1,272

$ 213
858
86

$ 1,157

1. Fair values of cash and equivalents, accounts receivable and accounts payable approximate their carrying amounts due to
their short-term nature and generally negligible credit losses.

2. Our investment in debt and equity securities are recorded at their estimated fair value. Quoted market prices, when available,
are used to determine fair value. If quoted market prices are not available, then fair values are estimated by using quoted
prices of instruments with similar characteristics or discounted cash flows.

3. The fair value for derivative instruments is determined based on liquid market pricing as evidenced by exchange traded prices,
broker-dealer quotations or related input factors which assume all counterparties have the same credit rating.

4. The fair value of long-term debt is based on current market interest rates, adjusted for our credit quality.

100

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

27. Joint Ventures

Our major interests in joint ventures are our 50% interest

in the Kalgoorlie Mine in Australia; our 50% interest in

the Round Mountain Mine in the United States; and

our 50% interest in the Hemlo Mine in Canada.

Summary financial information for
joint ventures (100%)

Income statement and cash flow information

For the years ended
December 31

Revenues
Costs and expenses

Net income

Operating activities1
Investing activities1
Financing activities1

2003

2002

2001

$ 775
638

$ 137

$ 127
$ (60)
–
$

$ 650
582

$ 68

$ 175
$ (54)
–
$

$ 578
522

$ 56

$ 163
$ (78)
–
$

1. Net cash inflow (outflow)

Balance sheet information

At December 31

Assets

Inventories
Property, plant and equipment
Other assets

Liabilities

Current liabilities
Long-term obligations

2003

2002

$ 99
543
64

$ 706

$ 77
104

$ 181

$ 46
553
79

$ 678

$ 116
67

$ 183

28. Differences from Canadian
Generally Accepted
Accounting Principles

a) Business combinations
The acquisitions of Sutton Resources (“Sutton”) and

Homestake Mining Company (“Homestake”), which

were accounted for using the pooling-of-interests

method under US GAAP, were accounted for as a pur-

chase under Canadian GAAP. Under US GAAP, the

assets, liabilities and shareholders’ equity of Sutton and

Homestake were combined with the Company’s own

recorded amounts. Comparative figures were restated

for all periods presented prior to the acquisitions to

include the combined statements of income and balance

sheets of the merged entities adjusted to conform to our

US GAAP accounting policies. Under Canadian GAAP,

rules which existed at the time of the Sutton and

Homestake acquisitions prior to the effective date

of CICA 1581 Business Combinations, allowed for two

possible accounting methods, the purchase method or

the pooling-of-interests method. The selection of the

method of accounting used for business combinations

under the previous rules depended upon whether or not

one of the combining companies could be identified as

an acquirer. In situations where voting shares were

issued or exchanged to effect the combination, factors

relating to control over the resultant combined company

were considered. Under those previous rules, due to the

fact that the Barrick shareholders (as a group) held

more than 50% of the voting shares of the combined

company after the acquisitions of Sutton and Homestake,

Barrick was identified as the acquirer, thereby requiring

the purchase method to be used under Canadian GAAP.

The application of the purchase method under Canadian

GAAP required that identifiable assets and liabilities of

the acquired entity be recorded at fair values at the date

of acquisition, with any excess purchase price allocated

to goodwill. This resulted in certain assets and liabilities

being recorded at different carrying amounts under

These consolidated financial statements have been pre-

Canadian GAAP compared with US GAAP. These differ-

pared in accordance with US GAAP. A reconciliation

ences arise because the fair values at the date of acquisi-

of our income statement and balance sheet between

tion differed from historic cost, which is the basis of

US GAAP and Canadian GAAP is presented below

accounting under the pooling-of-interests method under

together with a description of the significant measure-

US GAAP. The assets and liabilities most significantly

ment differences affecting these financial statements.

affected are: property, plant and equipment, intangible

assets, inventories, goodwill and obligations recorded

for reclamation and closure costs.

101

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

b) Exploration and development expenditures
For Canadian GAAP purposes we capitalize mine

the entire mine are amortized over total accessible

proven and probable reserves of the mine. These differ-

development costs on our properties after proven and

ent methods result in a different rate of amortization for

probable reserves have been found. We also capitalize

Canadian GAAP. In addition, where differences exist in

costs on properties where we have found non-reserve

the carrying amounts of property, plant and equipment

material that does not meet all the criteria required for

between US GAAP and Canadian GAAP, due to the

classification as proven or probable reserves. Manage-

historic effects of the application of GAAP to these

ment’s determination as to whether the existence of non-

items (for example, arising from differences in business

reserve material should result in the capitalization of costs

combinations accounting, capitalization of exploration

or the material should be included in the amortization

expenditures, and accounting for asset retirement obli-

and recoverability calculations is based on various

gations), this also results in a difference in the amount

factors, including, but not limited to: the existence and

of amortization expense.

nature of known mineralization; the location of the

property (for example, whether the presence of existing

mines and ore bodies in the immediate vicinity increases

the likelihood of development of a mine on the property);

the existence of proven and probable reserves on the

property; whether the ore body is an extension of an

existing producing ore body on an adjacent property;

the results of recent drilling on the property; and the

existence of a feasibility study or other analysis to

demonstrate that the ore is commercially recoverable.

Under US GAAP, exploration and development expendi-

tures incurred on properties where mineralization has

not been classified as a proven and probable reserve

under SEC rules are expensed as incurred. Accordingly,

certain expenditures are capitalized for Canadian

GAAP purposes but expensed under US GAAP.

c) Amortization of property,
plant and equipment
Under Canadian GAAP, amortization of property, plant

and equipment using the units-of-production method is

calculated using historical capitalized costs plus future

underground mine development costs for a whole mine

and proven and probable mineral reserves and non-

d) Amortization of intangible assets
In our Canadian GAAP financial statements we have

certain intangible assets that arose from the application

of purchase accounting. These assets are not present in

our US GAAP financial statements. Under Canadian

GAAP, we amortize the carrying amounts of mining

rights for proven and probable reserves as gold is

produced using the units of production method based

on the estimated recoverable ounces in proven and

probable reserves. Amortization of the carrying amounts

of mining rights for mineralized material commences

when the mineralized material is converted into proven

and probable reserves. Intangible assets recorded under

Canadian GAAP are tested for impairment using the

same method that is applied to property, plant and

equipment under Canadian GAAP.

e) Goodwill
Under Canadian GAAP, on the acquisition of Homestake,

goodwill was identified and was allocated to reporting

units by preparing estimates of the fair value of each

reporting unit and comparing this amount to the fair

value of assets and liabilities (including intangibles) in

reserve material for the whole mine (when sufficient

the reporting unit.

objective evidence exists to support a conclusion that it

is probable the non-reserve material will be produced).

For US GAAP purposes, amortization is calculated

using historical capitalized costs incurred to access spe-

cific ore blocks or areas and only proven and probable

reserves within the specific block or area; infrastructure

and other common costs which have a useful life over

We test goodwill for impairment annually in the fourth

quarter of our fiscal year. This impairment assessment

involves estimating the fair value of each reporting unit

that includes goodwill. We compare this fair value to the

total carrying amount of the reporting unit (including

goodwill). If the fair value exceeds this carrying amount,

we consider that goodwill is not impaired. If the fair

102

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

value is less than this carrying amount, then we estimate

costs are included, but where an asset is impaired, the

the fair values of all identifiable assets and liabilities

asset is reduced to its net recoverable amount, calcu-

in the reporting unit, and compare this net fair value of

lated as the future estimated undiscounted net cash flow

assets less liabilities to the estimated fair value of the

expected to be generated by the asset. Under US GAAP,

entire reporting unit. The difference represents the fair

if assets are impaired, a reduction in the carrying

value of goodwill, and if necessary, we reduce the carry-

amount to estimated fair value is required. Fair value is

ing amount of goodwill to this fair value.

f) Future income taxes
In accordance with Canadian GAAP, we implemented

CICA Handbook Section 3465, (Future income taxes) in

2000. Prior to the adoption of this standard, Canadian

GAAP did not require recognition of the tax effects

of temporary timing differences arising from acquisi-

tions. Under US GAAP, acquisitions occurring prior to

January 1, 2000 have been accounted for by grossing up

assets and deferred tax liabilities for the underlying tax

effect of treating the purchase consideration allocated to

assets acquired that is not tax deductible as a temporary

taxable timing difference.

Under the transition provisions of CICA 3465, the

recorded amounts of assets acquired were not restated

to reflect differences in their carrying amounts at acqui-

sition for tax and accounting purposes. Consequently,

under Canadian GAAP, property, plant and equipment

was $190 million lower and future income tax liabilities

were $94 million higher than the amounts recorded

under US GAAP.

calculated by discounting the estimated future net cash

flows using a discount factor. The discount factor is our

estimate of the risk-adjusted rate used to determine the

fair value of our mining properties in a transaction

between willing buyers and sellers.

h) Investments
Under US GAAP, investments which are considered

to be “available for sale” securities are recorded at fair

value, with unrealized gains or losses included in

Comprehensive Income. Under Canadian GAAP, the

concept of Comprehensive Income does not exist and

these investments are recorded at cost.

i) Derivative financial instruments
Under Canadian GAAP, derivative financial instruments

that qualify for hedge accounting treatment are recog-

nized on the balance sheet only to the extent that cash

has been paid or received together with adjustments

necessary to offset recognized gains or losses arising

on the hedged items. Under US GAAP, such derivative

financial instruments are recognized on the balance

sheet at fair value with a corresponding charge or credit

Where assets and liabilities are recorded at different

recorded in Other Comprehensive Income.

carrying amounts for US GAAP and Canadian GAAP,

due to differences in the accounting policies that affect

these assets and liabilities, a difference also arises in the

amount of temporary timing differences that give rise

to deferred tax assets and liabilities. Consequently, the

amounts of deferred tax assets and liabilities recorded

under US GAAP differ from the amounts of future

income taxes recorded under Canadian GAAP.

g) Impairment evaluations for
long-lived assets
In accordance with US GAAP, financing costs are

j) Minimum pension liability
Under US GAAP, if the accumulated pension plan benefit

obligation exceeds the market value of plan assets, a

minimum pension liability for the excess is recognized

to the extent that the liability recorded in the balance

sheet is less than the minimum liability. Any portion

of this additional liability that relates to unrecognized

prior service cost is recognized as an intangible asset

while the remainder is charged to Comprehensive

Income. Canadian GAAP does not require us to record

a minimum liability and does not have the concept of

excluded from the evaluation of long-lived assets for

Comprehensive Income.

impairment purposes. Under Canadian GAAP, financing

103

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

k) Asset retirement obligations
Under US GAAP, new policies were adopted effective

l) Foreign currency
Under US GAAP, translation adjustments that arise on

January 1, 2003 based on new standards published by the

the translation of financial statements of entities whose

FASB. These standards are established for the recogni-

functional currency is not the US dollar are reported as

tion and measurement of liabilities for legal obligations

a component of Comprehensive Income. Under Canadian

associated with the retirement of a long-lived asset that

GAAP, the concept of Comprehensive Income does not

result from its acquisition, construction, development or

exist and these translation adjustments are reported as

normal operation. A liability is recorded for such an

a separate component of shareholders’ equity, called

obligation at its fair value when incurred and a corre-

“cumulative translation adjustments”.

sponding asset retirement cost is added to the carrying

amount of the related asset. In subsequent periods, the

carrying amount of the liability is adjusted to reflect the

passage of time and any changes in the timing or amount

of the underlying future cash flows. The asset retire-

ment cost is amortized to expense over the asset’s useful

life. Under Canadian GAAP, a similar standard will be

effective for the Company’s fiscal year beginning on

January 1, 2004. Under current Canadian standards, and

US standards prior to 2003, total expected reclamation

and closure costs (including legal and non-legal obliga-

tions) are recorded and charged to earnings over the life

of a mine using the units of production method based on

m) Revenue
Under Canadian GAAP purchase accounting rules,

Homestake sales contracts existing at the date of acqui-

sition were recorded at fair value and any previous

deferred revenue balances eliminated. As these contracts

are delivered into, the revenue recorded under Canadian

GAAP is reduced to the extent of the original fair

value adjustment. Under US GAAP pooling rules,

existing Homestake deferred revenue balances were

carried forward and recorded in the period of delivery.

Differences between Canadian and US GAAP revenue

arise from these different business combination account-

proven and probable reserves, and, for Canadian GAAP,

ing practices.

non-reserve material expected to be converted into

reserves. As a result of these different policies, our 2003

US GAAP income statement includes charges for the

cumulative effect of the adoption of the new policy,

amortization of the asset, accretion of the liability, and

non-legal reclamation costs whereas our Canadian

GAAP income statement includes a single charge for

reclamation expense.

n) Other Comprehensive Income
Under US GAAP, certain assets and liabilities are remea-

sured at fair value, with changes in fair value recorded

in Other Comprehensive Income. Under Canadian

GAAP, these assets and liabilities are recorded at cost

and they are not remeasured to fair value prior to the

date they are realized or settled. The assets and liabili-

ties affected are: investments, and derivative assets and

liabilities that qualify for hedge accounting treatment.

104

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

o) Consolidated Balance Sheets

At December 31

2003

2002

Notes US GAAP Adjustments

Canadian
GAAP

US GAAP Adjustments

Canadian
GAAP

Assets
Current assets
Cash and equivalents
Accounts receivable
Inventories
Other current assets

Investments
Property, plant and

equipment

Capitalized mining costs, net
Intangible assets
Goodwill
Unrealized fair value of
derivative contracts

Other assets

Total assets

$ 970
69
157
169

1,365
127

3,131
235
–
–

256
248

a
i, m

a, b, c, f, k

a, d
a, e

i
a, i, m

– $ 970
–
69
160
3
57
(112)

(109)
(38)

1,256
89

612
–
683
1,081

3,743
235
683
1,081

(256)
31

–
279

$ 1,044
72
159
47

1,322
41

3,311
272
–
–

78
237

–
–
5
(35)

(30)
6

559
–
724
1,247

$ 1,044
72
164
12

1,292
47

3,870
272
724
1,247

(78)
7

–
244

$ 5,362

$ 2,004 $ 7,366

$ 5,261

$ 2,435

$ 7,696

Liabilities and Shareholders’ Equity
Accounts payable
Other current liabilities

i, k

Long-term debt
Other long-term obligations
Deferred income tax liabilities

i
i, j, k
f

Total liabilities

Capital stock
Retained earnings (deficit)
Accumulated other comprehensive

income (loss)

Cumulative translation adjustments

a, p
a, p

n, p
l, p

$ 245
105

– $ 245
119

$ 213
270

350
719
569
230

1,868

4,115
(694)

73
–

14
(1)
(147)
136

873
1,226

364
718
422
366

1,870

4,988
532

(73)
(24)

–
(24)

483
761
528
155

1,927

4,148
(689)

(125)
–

–
(45)

(45)
(4)
(69)
291

173

892
1,266

$ 213
225

438
757
459
446

2,100

5,040
577

125
(21)

–
(21)

Total shareholders’ equity

3,494

2,002

5,496

3,334

2,262

5,596

Total liabilities and

shareholders’ equity

$ 5,362

$ 2,004 $ 7,366

$ 5,261

$ 2,435

$ 7,696

105

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

p) Reconciliation of shareholders’ equity

At December 31, 2003

Capital
stock

Retained
Other
earnings Comprehensive
Income
(deficit)

Cumulative
translation
adjustments

Notes

Balance per US GAAP
Adjustments (net of tax effects):
Valuation of equity issued in business combinations1
Cumulative effect of difference in accounting policies

Accounting changes in 2003
Amortization of property, plant and equipment
Exploration and development costs
Provisions for mining assets in 2000 and 19972
Investments
Derivatives accounted for as cash flow hedges
Non-hedge derivative adjustments
Minimum pension liability
Asset retirement obligations
Interest capitalization
Merger related costs
Other

Cumulative effect of differences in accounting for
business combinations under the pooling-of-
interests versus the purchase method

Excess of fair value of shareholders’ equity over

historic book value

Deficit of Sutton and Homestake at acquisition
Amortization of intangible assets
Deferred revenue
Gains on asset sales
Homestake inventory

Effect of different book values of capital stock on

common share repurchases

Deferred income taxes

Effect of historic differences in accounting policies

under CICA 3465 versus FAS 109

Effect on deferred tax assets and liabilities of

timing differences for US GAAP and
Canadian GAAP purposes

Tax valuation allowances
Impairment charge on goodwill
Reclassification of translation adjustments

c, k
c
b

h
i

j
k
q2
q7

a
a
d
m
a
a

f
q3
e
l

$ 4,115

$ (694)

$ 73

(293)

–

–
–
–
–
–
–
–
–
–
–
–
(5)

1,185
–
–
–
–
–

17
134
137
683
–
–
(25)
–
51
4
19
(5)

–
749
(74)
(23)
(11)
(22)

(14)

–

–
–
–
–

(284)

16
(106)
(48)
–

–

–
–
–
–
(38)
(189)
–
7
–
–
–
–

123
–
–
–
–
–

–

–
–
–
24

–

–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–

–

–
–
–
(24)

Balance per Canadian GAAP

$ 4,988

$ 532

$ –

$ (24)

1. In determining the value of the shares exchanged in acquisitions, for accounting purposes under US GAAP we used the
unadjusted quoted market prices of our shares. For Canadian GAAP purposes, the value was adjusted by a 5% to 20% discount
reflecting the fact that the market value for a large block of common shares is less than our quoted share price. The recognition
of this discount to the value of common shares issued for Canadian GAAP purposes resulted in a reduction in the value of the shares
for accounting purposes and cost of acquisitions by $293 million.

2. The impact of applying US GAAP in calculating the provisions for mining assets in 2000 and 1997 was to reduce property,
plant and equipment by $780 million offset by future income taxes of $97 million for a net reduction in shareholders’ equity
of $683 million.

106

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

q) Reconciliation of consolidated net income

For the years ended December 31

Notes

Net income – US GAAP
Amortization of property, plant and equipment
Exploration and development expenditures
Amortization of intangible assets
Asset retirement obligations
Cumulative effect of accounting changes under US GAAP
Gains on asset sales1
Interest capitalized 2
Deferred income tax valuation allowances3
Future income tax expense4
Deferred revenue
Non-hedge derivative adjustments5
Homestake inventory6
Merger related costs7
Pre-acquisition net loss of Homestake
Impairment charge on goodwill
Other items

Net income – Canadian GAAP

Net income per share (dollars)

Basic and fully diluted

c
b
d
k
c, k
a

a, f
f
m

a
e

2003

$ 200
53
53
(41)
26
17
(10)
9
(87)
3
(29)
–
(2)
–
–
(48)
2

$ 146

2002

$ 193
69
52
(33)
19
–
–
–
–
(15)
(20)
(26)
(21)
–
–
–
11

$ 229

2001

$ 96
24
23
–
–
1
–
–
(12)
–
–
(8)
–
25
138
–
(16)

$ 271

$ 0.27

$ 0.42

$ 0.68

1. The gain on sale under Canadian GAAP is different from US GAAP due to the fact that the carrying amount of assets sold
was higher under Canadian GAAP.

2. Under Canadian GAAP, the Veladero and Alto Chicama projects met the criteria for interest capitalization for the whole of 2003.

3. Under Canadian GAAP, differences in the carrying amount of certain assets recorded at fair value at the acquisition of Homestake
resulted in valuation allowances totaling $23 million not being historically required under Canadian GAAP. The remaining
amount relates to a release of valuation allowances under US GAAP totaling $118 million that has been recorded as a reduction
of goodwill under Canadian GAAP, offset by the release of certain valuation allowances to earnings under Canadian GAAP
totaling $54 million.

4. The adjustment to future tax expense reflects the reversal of temporary timing differences under Canadian GAAP caused by
other adjustments that were made to reconcile US GAAP net income to Canadian GAAP income. The adjustment also reflects
other differences in accounting for income taxes as described in note 28f.

5. Certain derivative instruments classified as “non-hedge derivatives” under US GAAP were accounted for under Canadian GAAP
as either hedge derivatives; or recorded at cost with gains and losses recorded either at maturity or when losses were determined to
be other than temporary.

6. Certain ore in stockpile and in process inventory held by Homestake, which was adjusted to fair value at the date of acquisition,
caused an adjustment to cost of sales when the inventory was processed and sold.

7. Various costs totaling $25 million that were incurred in connection with the Homestake merger in 2001 were expensed under
US GAAP. Under Canadian GAAP, these costs were included as part of the purchase consideration.

107

BARRICK Annual Report 2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

r) Consolidated statements of cash flow under Canadian GAAP

For the years ended December 31

2003

2002

2001

Operating Activities
Net income
Add (deduct):

Amortization
Change in capitalized mining costs
Future income taxes
Inmet litigation settlement
(Gains) losses on sale of long-lived assets
Impairment charge on goodwill
Reclamation costs
(Gains) losses on investments
Amortization of deferred stock-based compensation
Foreign currency translation adjustments
Non-hedge derivative (gains) losses
Inmet litigation expense

Changes in operating assets and liabilities:

Accounts receivable
Inventories
Accounts payable and accrued liabilities
Current income taxes accrued
Other assets and liabilities

Cash payments:

Merger related costs
Reclamation and closure costs
Income taxes

Cash provided by operating activities1

Investing Activities
Property, plant and equipment

Capital expenditures
Sales proceeds

Purchase of investments
Increase in restricted cash
Business combinations and property acquisitions
Short-term cash deposits
Cash used in investing activities1

Financing Activities
Capital stock
Proceeds from shares issued on exercise of stock options
Repurchased for cash
Long-term debt

Proceeds
Repayments

Dividends

Cash used in financing activities

Increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year

Cash and equivalents at end of year

$ 146

$ 229

$ 271

510
37
35
(86)
(29)
48
28
12
4
(2)
(71)
16

3
4
13
54
31

–
(59)
(111)

583

(384)
48
(55)
–
–
–

(391)

29
(154)

–
(23)
(118)

(266)

(74)
1,044

483
29
(60)
–
(8)
–
15
4
3
(1)
32
–

(16)
45
(7)
59
17

(50)
(70)
(52)

652

(291)
11
–
–
–
159

(121)

83
–

–
(25)
(119)

(61)

470
574

343
17
(9)
–
4
–
17
(2)
–
8
(27)
–

(14)
34
117
36
(61)

(13)
(35)
(7)

679

(549)
15
–
(24)
18
(157)

(697)

7
–

49
–
(87)

(31)

(49)
623

$ 970

$ 1,044

$ 574

1. Exploration and development expenditures that were capitalized under Canadian GAAP, but expensed under US GAAP, were
$53 million in 2003 (2002 – $52 million; 2001 – $23 million). This represents the differences in cash flows from operating and
investing activities between US GAAP and Canadian GAAP.

108

BARRICK Annual Report 2003

Gold Mineral Reserves
and Mineral Resources

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 measured, indicated and inferred mineral
resources by category, see pages 110 and 111.

The Company has carefully prepared and verified the mineral reserve and mineral resource figures and believes that
its method of estimating mineral reserves has been verified by mining experience. These figures are estimates, however,
and no assurance can be given that the indicated quantities of gold will be produced. Gold price fluctuations may render
mineral reserves containing relatively lower grades of gold mineralization uneconomic. Moreover, short-term operating
factors relating to the mineral reserves, such as the need for orderly development of ore bodies or the processing of
new or different ore grades, could affect the Company’s profitability in any particular accounting period.

Deﬁnitions

A mineral resource is a concentration or occurrence of
natural, solid, inorganic or fossilized 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
economic extraction. The location, quantity, grade, geo-
logical characteristics and continuity of a mineral resource
are known, estimated or interpreted 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, limited sam-
pling and reasonably assumed but not verified geological
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 characteristics can be estimated with a
level of confidence sufficient to allow the appropriate appli-
cation of technical and economic parameters, 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 characteristics are so well established
that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic

parameters, to support production 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 tech-
niques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough to
confirm both geological and grade continuity.

Mineral resources, which are not mineral reserves, do not
have demonstrated economic viability.

A mineral reserve is the economically mineable part of a
measured or indicated mineral resource demonstrated by at
least a preliminary feasibility study. This study must include
adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at
the time of reporting, that economic extraction can be jus-
tified. 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 increas-
ing confidence into probable mineral reserves and proven
mineral reserves.

A probable mineral reserve is the economically mineable
part of an indicated and, in some circumstances, a measured
mineral resource demonstrated by at least a preliminary
feasibility study. This study must include adequate infor-
mation on mining, processing, 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 feasibility study. This study must include ade-
quate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified.

109

BARRICK Annual Report 2003

MINERAL RESERVES AND MINERAL RESOURCES

Summary Gold Mineral Reserves
and Mineral Resources
For the year ended December 31

Based on attributable ounces

North America
Betze-Post

Meikle

Goldstrike Property Total

Round Mountain (50%)

Marigold (33%)

Eskay Creek

Hemlo (50%)

Holt-McDermott

South America
Pascua-Lama

Veladero

Pierina

Alto Chicama

Australia/Africa

Plutonic

Lawlers

Darlot

Kalgoorlie (50%)

Cowal

Bulyanhulu

Tulawaka (70%)

Other

Total

2003

2002

Tons Grade Ounces
(000s)

(000s) (oz/ton)

Tons Grade Ounces
(000s)

(000s) (oz/ton)

(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)

109,742
37,403
9,177
5,841
118,919
43,244
89,852
37,770
31,089
13,334
927
422
17,557
3,017
340
452

296,411
115,845
317,187
67,715
61,393
25,421
159,250
25,751

20,635
13,395
3,234
8,777
7,627
4,194
97,047
44,584
63,600
47,534
27,882
4,300
1,093
680

–
20,404

0.143 15,685
2,264
0.061
3,460
0.377
0.426
2,489
0.161 19,145
4,753
0.110
1,583
0.018
645
0.017
737
0.024
268
0.020
941
1.015
121
0.287
1,744
0.099
271
0.090
55
0.162
88
0.195

0.057 16,862
0.030
3,487
0.035 11,115
1,540
0.023
2,768
0.045
419
0.016
7,155
0.045
1,735
0.067

2,646
0.128
1,967
0.147
402
0.124
1,136
0.129
1,135
0.149
546
0.130
5,894
0.061
2,580
0.058
2,495
0.039
0.034
1,596
0.391 10,907
1,894
0.440
368
0.337
45
0.066

–
0.078

–
1,598

107,130
46,400
9,770
5,107
116,900
51,507
96,057
17,455
26,351
13,665
1,433
384
19,726
2,677
847
246

296,411
115,845
254,311
135,760
70,343
39,938
120,948
56,352

13,976
19,349
3,407
8,379
8,202
4,169
96,898
41,911
75,922
35,211
27,420
4,765
–
–

0.150 16,051
3,231
0.070
3,888
0.398
0.466
2,378
0.171 19,939
5,609
0.109
1,875
0.020
176
0.010
678
0.026
219
0.016
1,430
0.998
153
0.398
2,118
0.107
248
0.093
154
0.182
61
0.248

0.057 16,862
3,487
0.030
9,384
0.037
3,260
0.024
3,602
0.051
626
0.016
6,535
0.054
1,998
0.035

2,533
0.181
2,287
0.118
509
0.149
1,115
0.133
1,269
0.155
540
0.130
5,551
0.057
2,279
0.054
2,835
0.037
0.036
1,255
0.425 11,653
1,678
0.352
–
–
–
–

–
1,085

–
0.335

–
364

(proven and probable)
(mineral resource)

1,314,043
476,839

0.065 85,952
0.052 24,689

1,229,152
548,698

0.071 86,927
0.046 25,355

110

BARRICK Annual Report 2003

MINERAL RESERVES AND MINERAL RESOURCES

Gold Mineral Reserves1
As at December 31, 2003

Based on
attributable ounces

North America
Betze-Post
Meikle

Goldstrike Property Total
Round Mountain (50%)
Marigold (33%)
Eskay Creek
Hemlo (50%)
Holt-McDermott

South America

Pierina
Pascua-Lama
Veladero
Alto Chicama

Australia/Africa

Plutonic
Lawlers
Darlot
Kalgoorlie (50%)
Cowal
Bulyanhulu
Tulawaka (70%)

Proven

Probable

Total

Tons Grade Ounces
(000s)

(000s) (oz/ton)

Tons Grade Ounces
(000s)

(000s) (oz/ton)

Tons Grade Ounces
(000s)

(000s) (oz/ton)

61,551
3,316
64,867
64,933
3,122
387
10,766
31

26,112
37,738
19,037
4,443

403
790
3,181
37,799
5,191
1,784
–

0.128
0.467
0.145
0.017
0.031
1.398
0.113
0.161

0.060
0.062
0.042
0.051

0.057
0.133
0.119
0.054
0.046
0.407
–

7,856
1,547
9,403
1,081
98
541
1,213
5

1,560
2,355
801
225

23
105
379
2,042
238
726
–

48,191
5,862
54,053
24,919
27,967
540
6,791
309

0.162
0.326
0.180
0.020
0.023
0.741
0.078
0.162

7,829
1,913
9,742
502
638
400
531
50

109,742
9,177
118,919
89,852
31,089
927
17,557
340

0.143 15,685
3,460
0.377
0.161 19,145
1,583
0.018
737
0.024
941
1.015
1,744
0.099
55
0.162

35,281
258,673
298,150
154,807

1,208
0.034
0.056 14,507
0.035 10,314
6,930
0.045

61,393
296,411
317,187
159,250

2,768
0.045
0.057 16,862
0.035 11,115
7,155
0.045

20,232
2,444
4,446
59,248
58,409
26,098
1,093

2,623
0.130
297
0.122
756
0.170
3,852
0.065
0.039
2,257
0.390 10,181
368
0.337

20,635
3,234
7,627
97,047
63,600
27,882
1,093

2,646
0.128
402
0.124
1,135
0.149
5,894
0.061
0.039
2,495
0.391 10,907
368
0.337

Total

280,584

0.074 20,795 1,033,460

0.063 65,156 1,314,043

0.065 85,952

1. Mineral reserves (“reserves”) have been calculated as at December 31, 2003 in accordance with National Instrument 43-101,
as required by Canadian securities regulatory authorities. For the 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), applies different
standards in order to classify mineralization as a reserve. Accordingly, Alto Chicama is classified for U.S. reporting purposes as
mineralized material. Calculations have been prepared by employees of Barrick under the supervision of René M. Marion, P.Eng.,
Vice-President, Technical Services of Barrick and/or Alexander J. Davidson, P.Geol., Executive Vice-President, Exploration of
Barrick. Reserves have been calculated using an assumed long-term average gold price of US$325, a silver price of US$4.75 and
exchange rates of $1.50 $Can/$US and $0.57 $US/$Aus. Reserves at the KCGM property assumed an exchange rate of $0.59
$US/$A. Reserves at the Hemlo property assumed an exchange rate of $1.53 $Can/$US. (In 2002, except with respect to the
Australian properties, reserves have been calculated using an assumed long-term average gold price of US$300 and a silver price
of US$4.75. Reserves at Kalgoorlie in 2002 assumed a gold price of US$297.) Reserve 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.

111

BARRICK Annual Report 2003

MINERAL RESERVES AND MINERAL RESOURCES

Gold Mineral Resources1
As at December 31, 2003

Measured (M)

Indicated (I)

(M) + (I)

Inferred

Based on
attributable ounces

Tons Grade Ounces
(000s)

(000s) (oz/ton)

Tons Grade Ounces Ounces
(000s)

(000s) (oz/ton)

(000s)

Tons Grade Ounces
(000s)

(000s) (oz/ton)

North America
Betze-Post
Meikle
Goldstrike

14,077
1,580

0.059
0.435

831
687

23,326
4,261

0.061
0.423

1,433
1,802

2,264
2,489

323
7,725

0.065
0.366

21
2,827

Property Total

15,657
Round Mountain (50%) 10,050
6,645
Marigold (33%)
93
Eskay Creek
1,171
Hemlo (50%)
–
Holt-McDermott

South America

Pierina
Pascua-Lama
Veladero
Alto Chicama

Australia/Africa

Plutonic
Lawlers
Darlot
Kalgoorlie (50%)
Cowal
Bulyanhulu
Tulawaka (70%)

Other

Total

0.097
0.013
0.020
0.290
0.112
–

0.017
0.055
0.021
0.063

0.216
0.153
0.142
0.055
0.038
0.222
–

1,518
133
134
27
131
–

27,587
27,720
6,689
329
1,846
452

103
19,404
216 111,883
64,292
24,127

72
103

41
307
156
794
98
12
–

13,205
6,768
3,096
30,137
44,940
4,246
680

0.117
0.018
0.020
0.286
0.076
0.195

0.016
0.029
0.023
0.068

0.146
0.122
0.126
0.059
0.033
0.443
0.066

3,235
512
134
94
140
88

316
3,271
1,468
1,632

1,926
829
390
1,786
1,498
1,882
45

8,048
4,753
645
9,790
268 59,144
277
121
3,952
271
133
88

0.354
0.018
0.014
0.513
0.142
0.271

419

154
3,487 126,841
1,540 73,462
1,735 10,233

8,624
1,967
1,745
1,136
144
546
2,580
4,621
1,596 31,053
5,268
1,894
161
45

0.013
0.027
0.023
0.060

0.175
0.122
0.194
0.043
0.033
0.512
0.075

2,848
180
826
142
562
36

2
3,475
1,704
617

1,508
213
28
197
1,011
2,697
12

6,017
3,962
3,423
1,624

190
2,009
1,098
14,447
2,594
54
–

–

20,404

0.078

1,598

1,598 11,768

0.118

1,387

69,034

0.056

3,845 407,805

0.051 20,844

24,689 355,418

0.049 17,445

1. Resources which are not reserves do not have demonstrated economic viability.

112

BARRICK Annual Report 2003

MINERAL RESERVES AND MINERAL RESOURCES

Contained Silver Within Reported Gold Reserves1
December 31, 2003

Metal Prices

Exchange Rates

Imperial Units

Gold ($US/oz)

$325 $Can/$US 1.50

Proven

Probable

Total

Silver ($US/oz)

$4.75

$US/$Aus 0.57

Copper ($US/lb) $0.80

Tons Grade Ounces
(000s)
(oz/t)
(000s)

Tons
(000s)

Grade Ounces
(000s)
(oz/t)

Tons
(000s)

Grade Ounces
(000s)
(oz/t)

Process
Recovery
%

Africa
Bulyanhulu

North America
Eskay Creek

South America
Alto Chicama
Pascua-Lama
Pierina
Veladero

Total

100% 1,784

0.25

446

26,098

0.31

8,207

27,882

0.31

8,653

65.0%

100%

387 70.60 27,324

540 29.70

16,037

927 46.78

43,361

94.0%

100% 4,443
100% 37,738
100% 26,112
100% 19,037

0.12
554 154,807
2.16 81,625 258,673
0.27
35,281
7,038
0.58 11,066 298,150

0.11
16,684 159,250
1.94 502,797 296,411
0.16
61,393
5,684
0.53 157,699 317,187

0.11
17,238
1.97 584,422
0.21
12,722
0.53 168,765

20.0%
78.0%
37.2%
6.2%

89,501

1.43 128,053 773,549

0.91 707,108 863,050

0.97 835,161

62.4%

1. Silver is accounted for as a by-product credit against reported or projected gold production costs.

Contained Silver Within Reported Gold Resources
December 31, 2003

Africa
Bulyanhulu

North America
Eskay Creek

South America
Alto Chicama
Pascua-Lama
Pierina
Veladero

Total

Imperial Units

Measured (M)

Indicated (I)

Total (M) + (I)

Tons
(000s)

Grade Ounces
(000s)
(oz/t)

Tons
(000s)

Grade Ounces
(000s)
(oz/t)

Tons
(000s)

Grade Ounces
(000s)
(oz/t)

100%

54 0.167

4,246 0.308

1,308

4,300 0.306

1,317

100%

93 10.097

939

329 9.389

3,089

422 9.545

4,028

100% 1,624 0.163
100% 3,962 0.930
100% 6,017 0.201
100% 3,423 0.342

264

24,127 0.128

3,364
3,100
3,685 111,883 1.545 172,847 115,845 1.524 176,532
4,478
3,266
1,212
24,342
23,172
1,170

19,404 0.168
64,292 0.360

25,421 0.176
67,715 0.359

25,751 0.131

15,173 0.480

7,279 224,281 0.922 206,782 239,454 0.894 214,061

113

BARRICK Annual Report 2003

Supplemental Information

5-Year Historical Review 1

(US GAAP basis, unless otherwise indicated)

2003

2002

2001

2000

1999

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 equivalents
Total assets
Working capital
Long-term debt2
Shareholders’ equity

Operational statistics (unaudited)
Gold production (thousands of ounces)
Total cash costs per ounce
Average realized gold price per ounce
Average spot gold price per ounce
Gold reserves (proven and probable)

(thousands of ounces)3

Other
Net debt to total capitalization4
Shares outstanding (millions)

$ 2,035
200
521
322

$ 0.37
0.22
0.97
6.53

$ 970
5,362
1,015
719
3,494

5,510
$ 189
$ 366
$ 363

$ 1,967
193
589
228

$ 0.36
0.22
1.09
6.15

1,044
5,261
839
761
3,334

5,695
$ 177
$ 339
$ 310

$ 1,989
96
588
474

$ 0.18
0.22
1.10
5.96

$ 779
5,202
579
793
3,192

6,124
$ 162
$ 317
$ 271

$ 1,936
(1,189)
842
612

$ (2.22)
0.22
1.57
5.95

$ 822
5,393
576
901
3,190

5,950
$ 155
$ 334
$ 279

$ 2,057
244
676
643

$ 0.45
0.20
1.28
8.45

$ 766
6,791
646
803
4,514

5,801
$ 152
$ 351
$ 279

85,952

86,927

82,272

79,300

78,049

(6%)
535

(7%)
542

1%
536

2%
536

1%
534

1. Information for all years has been derived from audited financial statements, except as indicated.

2. Long-term debt excludes current portion of $41 million in 2003, $20 million in 2002, $9 million in 2001, $3 million in 2000
and $37 million in 1999.

3. Reserves calculated in accordance with National Instrument 43-101, as required by Canadian securities regulatory authorities.

4. Net debt to total capitalization is the ratio of debt less cash and equivalents to debt plus shareholders’ equity.

114

BARRICK Annual Report 2003

Corporate Governance and
Committees of the Board

Corporate Governance

During 2003, there was a continued focus on corporate
governance in both the United States and Canada. In
November 2003, the US Securities and Exchange
Commission approved the New York Stock Exchange’s
proposal to add corporate governance standards to its
listing rules. During late 2002 and 2003, Barrick under-
took a review of its corporate governance practices in
light of the various regulatory initiatives. Although, as a
regulatory matter, the vast majority of the new NYSE
standards are not directly applicable to Barrick as a
Canadian company, Barrick has already implemented a
number of the structures and procedures to comply with
the NYSE standards. At the close of the 2004 Annual
Meeting of Shareholders, assuming that all of the pro-
posed nominees are elected as directors, Barrick will have
a majority of independent directors and will be in material
compliance with the requirements of the NYSE standards.

The Board of Directors has approved a set of Corporate
Governance Guidelines to promote the effective func-
tioning of the Board of Directors and its Committees

Committees of the Board
Corporate Governance and
Nominating Committee
(M.A. Cohen, P.C. Godsoe, A.A. MacNaughton)
Assists the Board in establishing Barrick’s corporate gover-
nance policies and practices. The Committee also identifies
individuals qualified to become members of the Board, and
reviews the composition and functioning of the Board and
its Committees.

Audit Committee
(H.L. Beck, P.A. Crossgrove, P.C. Godsoe)
Reviews the Company’s financial statements and manage-
ment’s discussion and analysis of financial and operating
results, and assists the Board in its oversight of the integrity
of Barrick’s financial statements and other relevant public
disclosures, the Company’s compliance with legal and
regulatory requirements relating to financial reporting, the
external auditors’ qualifications and independence, and the
performance of the internal and external auditors.

Compensation Committee
(A.A. MacNaughton, M.A. Cohen, P.A. Crossgrove,
J.L. Rotman)
Assists the Board in monitoring, reviewing and approv-
ing Barrick’s compensation policies and practices, and
administering Barrick’s share compensation plans. The

and to set forth a common set of expectations as to
how the Board should manage its affairs and perform
its responsibilities. Barrick has also adopted a Code of
Business Conduct and Ethics that is applicable to all
directors, officers and employees of Barrick. In conjunc-
tion with the adoption of the Code, Barrick established
a toll-free compliance hotline to allow for anonymous
reporting of any suspected Code violations, including
concerns regarding accounting, internal accounting
controls or other auditing matters.

A copy of the Corporate Governance Guidelines, the
Code of Business Conduct and Ethics and the mandates
of each of the Committees of the Board, including the
Audit Committee, the Compensation Committee and the
Corporate Governance and Nominating Committee, is
posted on Barrick’s website at www.barrick.com and is
available in print from the Company to any shareholder
upon request.

Committee is responsible for reviewing and recommending
director and senior management compensation and for
succession planning with respect to senior executives.

Executive Committee
(G.C. Wilkins, A.A. MacNaughton, B. Mulroney, P. Munk)
Exercises all the powers of the Board (except those powers
specifically reserved by law to the Board of Directors) in
the management and direction of business during intervals
between meetings of the Board of Directors.

Environmental, Occupational, Health and
Safety Committee
(P.A. Crossgrove, J.K. Carrington, M.A. Cohen,
J.E. Thompson)
Reviews environmental and occupational health and safety
policies and programs, oversees the Company’s environ-
mental and occupational health and safety performance,
and monitors current and future regulatory issues.

Finance Committee
(C.W.D. Birchall, A.A. MacNaughton, A. Munk,
G.C. Wilkins)
Reviews the Company’s investment strategies, hedging
program and general debt and equity structure.

115

BARRICK Annual Report 2003

Howard L. Beck, Q.C.
Toronto, Ontario
Corporate Director
Mr. Beck was a founding Partner
of the law firm Davies, Ward & Beck.
He has been on the Barrick Board
since 1984.

C. William D. Birchall
Nassau, Bahamas
Chief Executive Ofﬁcer,
ABX Financeco Inc.
Mr. Birchall has had a long association
with Barrick as one of the original
Board members of the Company.

Tye W. Burt
Toronto, Ontario
Vice Chairman and
Executive Director,
Corporate Development,
Barrick Gold Corporation
Mr. Burt was appointed a Vice
Chairman of the Company in
February 2004, in addition to his
role as Executive Director, Corporate
Development, which he assumed
in December 2002. Previously he has
served as Chairman of Deutsche
Bank Canada and Managing Director
of Deutsche Bank’s Global Metals
and Mining Group.

John K. Carrington
Thornhill, Ontario
Vice Chairman,
Barrick Gold Corporation
Mr. Carrington was appointed a
Vice Chairman of the Company in
March 1999. From 1996 to 2003,
Mr. Carrington was the Chief
Operating Officer of Barrick. He
has been a member of the Barrick
Board since 1996.

Gustavo Cisneros
Caracas, Venezuela
Chairman and Chief Executive Ofﬁcer,
Cisneros Group of Companies
Mr. Cisneros became a Director of
Barrick in September 2003.

Board of
Directors

Marshall A. Cohen, O.C.
Toronto, Ontario
Counsel,
Cassels Brock & Blackwell LLP
Mr. Cohen served the Government
of Canada for 15 years in a number
of senior positions including Deputy
Minister of Finance. He has been
a Director of Barrick since 1988.

Peter A. Crossgrove
Toronto, Ontario
Chairman, Masonite
International Corporation
Mr. Crossgrove has been involved
in a number of mining companies.
He has been a Director of Barrick
since 1993.

Peter C. Godsoe, O.C.
Toronto, Ontario
Corporate Director
Mr. Godsoe was the Chairman and
Chief Executive Officer of The Bank
of Nova Scotia from 1995 to 2003.
Mr. Godsoe became a Director of
Barrick in February 2004.

Angus A. MacNaughton
Danville, California
President, Genstar
Investment Corporation
Mr. MacNaughton has been a
member of the Board since 1986.

The Right Honourable
Brian Mulroney, P.C., LL.D.
Montreal, Quebec
Senior Partner,
Ogilvy Renault
Mr. Mulroney was Prime Minister
of Canada from 1984 to 1993. He
joined the Barrick Board in 1993
and is Chairman of the Company’s
International Advisory Board.

116

BARRICK Annual Report 2003

Anthony Munk
Toronto, Ontario
Managing Director,
Onex Investment Corp.
Mr. Munk became a member of
the Board of Directors in 1996. He
is a Partner of Onex Corporation,
a diversified manufacturing and
service company.

Peter Munk, O.C.
Toronto, Ontario
Chairman,
Barrick Gold Corporation
Mr. Munk is the founder and
Chairman of the Board of Barrick
Gold Corporation. He is also
the founder and Chairman of Trizec
Properties, Inc.

Joseph L. Rotman, O.C.
Toronto, Ontario
Chairman and
Chief Executive Officer,
Roy-L Capital Corporation
Mr. Rotman has been a director of
Barrick since its inception.

Jack E. Thompson
Alamo, California
Vice Chairman,
Barrick Gold Corporation
Mr. Thompson was appointed to
the Board in December 2001 upon
the completion of the merger with
Homestake Mining Company. Prior
to that time, Mr. Thompson was
Chairman and Chief Executive
Officer of Homestake.

Gregory C. Wilkins
Toronto, Ontario
President and Chief Executive Ofﬁcer,
Barrick Gold Corporation
Mr. Wilkins was Executive Vice
President and Chief Financial Officer
of Barrick until his appointment at
Horsham (subsequently TrizecHahn
Corporation) in September 1993.
He has been a member of the Board
since 1991.

Ofﬁcers and International
Advisory Board

Ofﬁcers

Peter Munk
Chairman

Jack E. Thompson
Vice Chairman

Gregory C. Wilkins
President and Chief
Executive Officer

Tye W. Burt
Vice Chairman and
Executive Director,
Corporate Development

John K. Carrington
Vice Chairman

Alexander J. Davidson
Executive Vice President,
Exploration

Patrick J. Garver
Executive Vice President
and General Counsel

Peter J. Kinver
Executive Vice President
and Chief Operating
Officer

Gordon F. Fife
Senior Vice President,
Organizational
Effectiveness

Lawrence J. Parnell
Senior Vice President,
Corporate Relations

Jamie C. Sokalsky
Senior Vice President
and Chief Financial
Officer

Ammar Al-Joundi
Vice President
and Treasurer

Darren J. Blasutti
Vice President,
Investor Relations

M. Vincent Borg
Vice President,
Corporate
Communications

Michael J. Brown
Vice President,
United States Public
Affairs

Kelvin Dushnisky
Vice President,
Regulatory Affairs

André R. Falzon
Vice President
and Controller

Igor Gonzales
Vice President,
Peru

Gregory A. Lang
Vice President,
North America

René Marion
Vice President,
Technical Services

John T. McDonough
Vice President,
Environment

Stephen A. Orr
Vice President,
Australia/Africa

Calvin F. Pon
Vice President, Tax

Raymond W. Threlkeld
Vice President,
Chile/Argentina

John R. Turney
Vice President,
Capital Projects

David D. Young
Vice President,
Supply Chain
Management

Sybil E. Veenman
Associate General
Counsel and Secretary

James W. Mavor
Assistant Treasurer –
Risk Management

Jeffrey A. Swinoga
Assistant Treasurer –
Finance

International Advisory Board

The International Advisory Board
was established to provide advice
to Barrick’s Board of Directors and
management as the Company
expands internationally.

Chairman
The Right Honourable
Brian Mulroney
Former Prime Minister of Canada

Members
Gustavo Cisneros
Venezuela
Chairman and Chief Executive
Officer, Cisneros Group of Companies

Secretary William S. Cohen
United States
Chairman and Chief Executive
Officer, The Cohen Group

The Honourable
Paul G. Desmarais, Sr.
Canada
Director and Chairman of
Executive Committee,
Power Corporation of Canada

Vernon E. Jordan, Jr.
United States
Senior Managing Director,
Lazard Freres & Co., LLC and
Of Counsel to Akin, Gump,
Strauss, Hauer & Feld, LLP

Peter Munk
Canada
Chairman, Barrick Gold
Corporation and Chairman,
Trizec Properties, Inc.

117

BARRICK Annual Report 2003

Lord Charles Powell of
Bayswater KCMG
United Kingdom
Chairman, Sagitta Asset
Management Limited

Karl Otto Pöhl
Germany
Senior Partner,
Sal. Oppenheim Jr. & Cie.

The Honorable Andrew Young
United States
Chairman,
GoodWorks International

Shareholder
Information

Shares traded on ﬁve major international
stock exchanges
> New York
> Toronto
> London
> Paris
> Swiss

Ticker Symbol
ABX

Number of Registered Shareholders
21,932

Index Listings
> S&P Global 1200 Index
> S&P/TSX 60 Index
> S&P/TSX Composite Index
> S&P/TSX Capped Materials Index
> S&P/TSX Capped Gold Index
> FT of London Gold Index
> Philadelphia Gold/Silver Index

2003 Dividend Per Share
US$0.22

Share Trading Information

Toronto Stock Exchange

Quarter

First
Second
Third
Fourth

New York Stock Exchange

Quarter

First
Second
Third
Fourth

Common Shares (millions)
Outstanding at
December 31, 2003

Weighted average – 2003
Basic and fully diluted

535*

539*

The Company’s shares were split on a
two-for-one basis in 1987, 1989 and 1993.

* Includes shares issuable upon conversion of Barrick Gold
Inc. (formerly, Homestake Canada Inc.) exchangeable
shares.

Volume of Shares Traded

(millions)

TSE
NYSE

Closing Price of Shares

December 31, 2003

TSE
NYSE

2003

2002

495
521

698
762

C$29.31
US$22.71

Share Volume
(millions)

High

Low

2003

2002

2003

2002

2003

2002

147
111
119
118

495

148
188
199
163

698

Share Volume
(millions)

C$26.48 C$31.20
36.05
28.92
26.09

25.43
28.95
30.29

C$20.90 C$25.35
27.30
22.52
21.85

21.34
23.31
24.39

High

Low

2003

2002

2003

2002

2003

2002

US$17.43 US$19.50
23.49
19.61
16.74

18.97
21.13
23.15

US$14.11 US$15.90
17.18
13.46
13.82

14.61
16.67
18.35

143
115
135
128

521

155
190
273
144

762

118

BARRICK Annual Report 2003

SHAREHOLDER INFORMATION

Dividend Payments
In 2003, the Company paid a cash dividend of $0.22
per share – $0.11 on June 16 and $0.11 on December 15.
A cash dividend of $0.22 per share was paid in 2002 –
$0.11 on June 14 and $0.11 on December 20.

Dividend Policy
The Board of Directors reviews the dividend policy
semi-annually based on the cash requirements of the
Company’s operating assets, exploration and devel-
opment activities, as well as potential acquisitions,
combined with the current and projected financial
position of the Company.

Form 40-F
Annual Report on Form 40-F is filed with the United
States Securities and Exchange Commission. This
report will be made available to shareholders, without
charge, upon written request to the Secretary of the
Company at the Corporate Office.

Other Language Reports
French and Spanish versions of this annual report
are available from Investor Relations at the
Corporate Office.

Shareholder Contacts
Shareholders are welcome to contact the Company for
information or questions concerning their shares. For
general information on the Company, contact the
Investor Relations Department.

For information on such matters as share transfers,
dividend cheques and change of address, inquiries
should be directed to the Transfer Agents.

Transfer Agents
and Registrars
CIBC Mellon Trust Company
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario M5C 2W9
Telephone: (416) 643-5500
Toll-free throughout North America:
1-800-387-0825
Fax: (416) 643-5660
Email: inquiries@cibcmellon.com
Web site: www.cibcmellon.com

Mellon Investor Services, L.L.C.
P.O. Box 3315
South Hackensack, New Jersey 07606
Telephone: (201) 329-8660
Toll-free within the United States and Canada:
1-888-835-2788
Email: shrrelations@mellon.com
Web site: www.mellon-investor.com

Annual Meeting
The Annual and Special Meeting of Shareholders will
be held on Thursday, April 22, 2004 at 10:00 a.m.
in the Canadian Room, Fairmont Royal York Hotel,
Toronto, Ontario.

119

BARRICK Annual Report 2003

Corporate
Information

Holt-McDermott Mine
P.O. Box 278
Kirkland Lake, Ontario
Canada P2N 3H7
Brian Grebenc
General Manager
Telephone: (705) 567-9251
Fax: (705) 567-6867

South America Operations
Chile/Argentina Operations
Raymond Threlkeld
Vice President
Av. Ricardo Lyon 222
Piso 11. Providencia
Santiago, Chile
Telephone: (56-2) 340-2022
Fax: (56-2) 233-0188

Peru Operations
Igor Gonzales
Vice President
Pasaje Los Delfines, 159
3do Piso
Urb. Las Gardenias
Lima 33, Peru
Telephone: (51-1) 275-0600
Fax: (51-1) 275-0249

Australia/Africa Operations
Steve Orr
Vice President
10th Floor
2 Mill Street
Perth, WA 6000 Australia
Telephone: (61-8) 9212-5777
Fax: (61-8) 9322 5700

Australia Operations
Kalgoorlie Consolidated
Gold Mines (KCGM)
Russell Cole
Acting General Manager
Black Street
Kalgoorlie WA 6430 Australia
Telephone: (61-8) 9022 1100
Fax: (61-8) 9022 1119

Plutonic Gold Mine
Michael Hulmes
Resident Manager
PMB 46
Meekatharra WA 6642 Australia
Telephone: (61-8) 9981 0100
Fax: (61-8) 9981 0101

120

BARRICK Annual Report 2003

Darlot Gold Mine
Richard Hay
Resident Manager
P.O. Box 127
Leonora WA 6438 Australia
Telephone: (61-8) 9080 3400
Fax: (61-8) 9080 3440

Lawlers Gold Mine
Mark Le Messurier
Resident Manager
PMB 47
Leinster WA 6437 Australia
Telephone: (61-8) 9088 3300
Fax: (61-8) 9037 8899

East Africa Operations
Bulyanhulu Mine
Mrikao Street, Plot No. 847
Msasani Peninsula
P.O. Box 1081
Dar es Salaam, Tanzania
Neil Whitaker
General Manager
Telephone: (255-22) 2600 508
Fax: (255-22) 260 0222

Corporate Data

Auditors
PricewaterhouseCoopers LLP
Toronto, Canada

Corporate Relations
Lawrence Parnell
Senior Vice President
Telephone: (416) 307-7489
Fax: (416) 861-0727
Email: lparnell@barrick.com
Investor Relations
Contacts:
Darren Blasutti
Vice President, Investor Relations
Telephone: (416) 307-7341
Fax: (416) 861-0727
Email: dblasutti@barrick.com
Kathy Sipos
Director, Investor Relations
Telephone: (416) 307-7441
Fax: (416) 861-0727
Email: ksipos@barrick.com
Toll-free number within
Canada and United States:
1-800-720-7415
Email: investor@barrick.com
Web site: www.barrick.com

Corporate Ofﬁce

Barrick Gold Corporation
BCE Place
Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Telephone: (416) 861-9911
Fax: (416) 861-2492

Mining Operations

North America Operations
Gregory Lang
Vice President
136 East South Temple, Suite 1050
Salt Lake City, Utah
USA 84111-1180
Telephone: (801) 741-4664
Fax: (801) 359-0875

United States Operations
Goldstrike Property
P.O. Box 29
Elko, Nevada U.S.A. 89803
Mike Feehan
General Manager
Telephone: (775) 778-8380
Fax: (775) 738-7685

Round Mountain Gold
P.O. Box 480
Round Mountain
Nevada U.S.A. 89045
Mike Iannacchione
General Manager
Telephone: (775) 377-2366
Fax: (775) 377-3240

Canada Operations
Eskay Creek
No. 1 Airport Way
P.O. Box 3908
Smithers, B.C.
Canada V0J 2N0
Steve Job
General Manager
Telephone: (604) 522-9877
Fax: (604) 515-5241

Hemlo Operations
P.O. Bag 500
Marathon, Ontario
Canada P0T 2E0
Vern Baker
General Manager
Telephone: (807) 238-1100
Fax: (807) 238-1050