Abacus Global Management, Inc. Annual Report 2004

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FY2004 Annual Report · Abacus Global Management, Inc.

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Barrick is one of the world’s largest gold mining companies,

with operating and development properties in the US, Canada,

Australia, Peru, Chile, Argentina and Tanzania.

Our vision is to be the world’s best gold mining company

by ﬁ nding, developing and producing quality reserves

in a proﬁ table and socially responsible manner.

Barrick shares are traded on the Toronto, New York,

London and Swiss stock exchanges and the Paris Bourse.

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

What’s next: Growth.

Building Mines. Building Value.

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Delivering Growth.

Building Mines

Barrick’s pipeline of gold development projects is unrivaled in size,

quality, and immediacy. Three new mines will be in production in 2005,

another in early 2006, with two more to follow in subsequent years.

Building Value

Barrick is targeting a 12% compound annual growth rate in

gold production, 2004-2007 – substantially higher than

any of our peers. Reserves have increased to 89 million ounces,

and with our aggressive exploration strategy and large world-class

gold districts we expect to grow them further.

Our new mines are all high-quality assets with conventional

open-pit technology and are also geopolitically well-diversiﬁ ed.

Their contribution to our bottom line is expected

to be immediate, and signiﬁ cant.

Forward-Looking Statements

Certain information contained or incorporated by reference in this Annual Report 2004, including any information

as to our future financial or operating performance, constitutes “forward-looking statements”. All statements,

other than statements of historical fact, are forward-looking statements. 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 us, are

inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and

unknown factors could cause actual results to differ materially from those projected in the forward-looking

statements. Such factors include, but are not limited to: fluctuations in the currency markets (such as the Canadian

and Australian dollars versus the US dollar); fluctuations in the spot and forward price of gold or certain other

commodities (such as silver, copper, diesel fuel and electricity); changes in US dollar interest rates or gold lease

rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/

receipts under interest rate swaps and variable rate debt obligations; risks arising from holding derivative

instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local

government legislation, taxation, controls, regulations and political or economic developments in Canada, the

United States, Australia, Chile, Peru, Argentina, Tanzania, Russia or Barbados or other countries in which we do

or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; our

ability to successfully integrate acquisitions; operating or technical difficulties in connection with mining or

development activities; the speculative nature of gold exploration and development, including the risks of obtaining

necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating;

and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and

hazards associated with the business of gold exploration, development and mining, including environmental

hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion

losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these

uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from

those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned

that forward-looking statements are not guarantees of future performance. All of the forward-looking statements

made in this Annual Report 2004 are qualified by these cautionary statements. Specific reference is made to

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 for a discussion of some of the factors underlying

forward-looking statements.

We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of

new information, future events or otherwise.

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FINANCIAL HIGHLIGHTS

Barrick Gold Corporation Barrick is one of the world’s largest gold mining companies, with
operating and development properties in the US, Canada, Australia, Peru, Chile, Argentina and Tanzania.

Our vision is to be the world’s best gold mining company by ﬁ nding, developing and producing quality

reserves in a proﬁ table and socially responsible manner.

Barrick shares are traded on the Toronto, New York, London and Swiss stock exchanges and

the Paris Bourse.

Financial Highlights

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

Gold Sales

Net Income for the Year

Operating Cash Flow

Cash and Equivalents

Shareholders’ Equity

Net Income per Share (Diluted)

Operating Cash Flow per Share

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 Ounce

2004

2003

2002

$1,932

$2,035

$1,967

248

506

1,398

3,563

0.46

0.95

0.22

4,958

$391

$212

$298

200

519

970

3,494

0.37

0.97

0.22

5,510

$366

$189

$279

193

588

1,044

3,334

0.36

1.09

0.22

5,695

$339

$177

$268

Reserves: Proven and Probable (thousands of ounces)2

89,056

85,952

86,927

1. See page 67 for a discussion of non-GAAP measures.
2. For the remainder of this report – for a breakdown of reserves and resources by category

in respect of each of Barrick’s mines and development projects, see page 126.

Contents

Financial Highlights
Letter to Shareholders
Responsible Mining
Reserves: Replacement and Growth
Financial Strategy
Operations Review
Management’s Discussion and Analysis

pg. 1
pg. 2
pg. 8
pg. 11
pg. 18
pg. 20
pg. 25

Financial Statements
Notes to Financial Statements
Reserves
Corporate Governance and
Committees of the Board
Board of Directors and Officers
Shareholder Information
Corporate Information

pg. 76
pg. 80
pg. 125

pg. 131
pg. 132
pg. 134
pg. 136

LETTER TO SHAREHOLDERS

Building Mines. Building Value.

We met or surpassed the goals we set for ourselves
in almost every area of our business,
and once again we were able to demonstrate
Barrick’s leadership, both in sustainable development
and in social responsibility.

Dear Shareholders:

By all accounts, 2004 was a successful year
for Barrick and its stakeholders. Our shares
outperformed gold and those of our peer group
in 2004. We met or surpassed the goals we set
for ourselves in almost every area of our business,
and once again we were able to demonstrate
Barrick’s leadership, both in sustainable
development and in social responsibility.

Our share price performance in 2004 reafﬁ rms
what we said in last year’s letter to our
shareholders: Barrick is on track, with the right
people and the right strategies for the challenges
and opportunities that lie ahead.

We said that 2004 would be a year of transition –
a year of building a new generation of mines

targeted to increase our production by 40%
by 2007, and drive the Company’s future
growth and proﬁ tability. In 2004, four of our
development projects moved from the engineering
stage to construction, with three of the four
expected to contribute to our production in 2005,
and the fourth, Cowal, expected to pour gold
in the ﬁ rst quarter of 2006. During the year,
we also announced positive development
decisions for two new projects, Pascua-Lama
and East Archimedes.

In last year’s letter, we also pledged that we
would put new energy into communicating our
exciting future to the investment community –
and we did.

LETTER TO SHAREHOLDERS

Challenges for the industry...

The gold price was up 6% during 2004 in US
dollar terms, which, for the industry as a whole,
should have meant signiﬁ cantly higher proﬁ ts and
cash ﬂ ow. Instead, ﬁ nancial results for the industry
failed to meet expectations due to a number of
challenges that impeded performance.

as demand in developing countries, such as
China, put upward pressure on commodity
prices. These increases, combined with the
currency impacts, were a key factor in the rise
of gold production costs by some 15% on an
industry-wide basis.

The rise in the gold price over the last two years
was tied very closely to the devaluation of the
US dollar. As the dollar fell, the gold price
appreciated. We not only expect this close inverse
correlation between the two to continue,
we believe the combination of soaring US deﬁ cits
and the trend of decreasing mine supply will
provide a strong but volatile US-dollar gold price
environment over the next three to ﬁ ve years.

However, other currencies, notably the South
African Rand and the Canadian and Australian
dollars, appreciated along with the gold price.
This had the effect of negating some or all
of the beneﬁ t of the higher US-dollar gold price,
which meant the proﬁ tability of mines in those
regions may have actually declined.

There were also signiﬁ cant cost increases in
energy, consumables and other commodities,

Although gold prices in US dollars were up in
the last two years, industry production has been
steadily contracting since 2002. Investment in
the gold industry had been limited until 2003,
when the gold price started to climb. The lack
of investment resulted in very few large,
new discoveries, and these require a lead time
of some 7 to 10 years before coming into
production. Existing operating mines are also
maturing, which usually results in lower grade,
lower production and higher costs.

The increase in commodity prices has spurred a
boom in the mining industry. The number of new
projects in the base metals industry has increased
as producers expand to meet the new demand.
We are all members of the same industry, and
compete for the same equipment, manpower and
professional staff. Shortages and higher costs are
a direct result.

2002

2003

2004

2.25

2.00

1.75

1.50

1.25

1.00

South African
Rand

Spot Gold
Australian Dollar

Canadian Dollar

Indexed to US Dollar

ﬁ g. 1 Gold Price and Currency Movements

Several currencies appreciated along with the gold price

affecting proﬁ tability of mines in those regions.

LETTER TO SHAREHOLDERS

In today’s world, there is also a continuing rise in
standards to be met when developing a new mine.
Local communities are naturally interested
in protecting their environment and sharing
in the beneﬁ ts of new mining developments.
The relationship between the mining industry
and the communities in which it operates
is critical to the success of any new project.
Obtaining and maintaining the social license
to proceed with new and existing operations
is more complex and sophisticated than ever.
It is an ongoing challenge, and any successful
mining company must be ready to meet it.

...and Barrick’s response

The ultimate proof of a company’s response
is in its performance. In 2004, we responded
to the challenges with good results and,
more importantly, we positioned ourselves
for future success.

Although our cash costs per ounce were up
approximately 10% over 2003, the increase was
within our target range, and below the industry
average, because we were able to mitigate some
of the inﬂ ationary and currency cost pressures
through our cost management initiatives (outlined
more fully later in this report). Most of the cost
increase was due to a 10% decline in ounces
produced, as both the Pierina and Goldstrike
mines sequenced through lower grade ore during

the year. Production from these two mines is
expected to return to better grades in 2005,
which will have a beneﬁ cial impact on costs.
In spite of the cost increase, Barrick emerged
as the lowest-cost producer of the senior gold
mining companies in 2004 – and we expect
to maintain that ranking.

The inﬂ ationary pressure we experienced in
2004 is unlikely to be as severe in the coming
year, as energy and commodity prices appear
to have stabilized. Our quality portfolio of
operating mines are mining at or near reserve
grade, which means that cost pressure arising
from having mined above reserve grade is not
a signiﬁ cant factor for Barrick. Through our
continuous improvement program, we will
remain focused on managing our costs and
maximizing our operating margins. Currency
ﬂ uctuations remain a concern, as the outlook
for the US dollar remains weak. While this is
favorable for the US-dollar gold price, the beneﬁ t
will only be realized if the cost of production
is also US-dollar denominated. Currently, more
than 70% of Barrick’s cost of production is in
US dollars and this percentage will grow to above
80% as the new mines come onstream.
Barrick, of course, is hedged for most of its
cost of production, through the deployment
of hedging instruments to protect against
currency volatility in our operations whose
costs are not US-dollar based.

“In spite of the cost increase, Barrick
emerged as the lowest-cost producer of the
senior gold mining companies in 2004 –
and we expect to maintain that ranking.”

LETTER TO SHAREHOLDERS

While the industry was retrenching,
Barrick had the ﬁ nancial strength to aggressively
invest in exploration and acquisitions.

The key to Barrick’s reserve growth is its
exploration focus on assets in new prospective
districts. Assets such as Veladero and Lagunas
Norte have a much better chance to grow because
of their unexplored potential and the large land
packages involved. In 2004, our low-cost suite
of development projects increased their reserves
by nearly 15%. Clearly, our focus on strong
land positions in some of the most prospective
gold districts is paying off.

In 2004, we also continued our exploration
success by ﬁ nding new reserves on existing
properties – for example, Goldstrike in Nevada
added 2.3 million ounces to its reserves. In short,
while the gold industry overall worked to ramp
up exploration investment, Barrick was already
reaping the rewards of having maintained its
strong, consistent exploration program during the
years when low gold prices led others to retrench.

These ambitious plans would not be possible
without the ﬁ nancial strength to execute them.
Barrick is able to fund its development projects
without the need to raise additional equity. We
expect to be able to fund a further $1.5 billion
at Pascua-Lama without the need for dilution.

In the long run, the fundamental response to the
challenges we face is to invest in new high-
quality, efﬁ cient, low-cost production. Barrick
has done just that and will soon reap the rewards
of that foresight. While the industry was
retrenching, Barrick had the ﬁ nancial strength
to aggressively invest in exploration and
acquisitions. As a result, we are well along in
the construction of three new mines, which will
require a total investment of about $1.2 billion.
The expected average production from these new
operations over their ﬁ rst three full years is
1.8 million ounces, with operating costs expected
to be much lower than our current cost structure.
We made outstanding headway on these new
projects in 2004, having invested more than half
of the capital required, and we are keen to move
from development to production and
optimization. Not only are we converting some
25 million ounces of reserves from our new
projects into long-lived, cash ﬂ ow generating
assets, we are also delivering them into a
sustained period of strong gold prices.

In addition, and unlike the industry as a whole,
during 2004 we increased our proven and
probable reserves. At year-end they stood at
89.1 million ounces, an increase of 8.6 million
ounces before production depletion of 5.5 million
contained ounces.

LETTER TO SHAREHOLDERS

Barrick’s deﬁ nition of success includes more than
ﬁ nancial metrics. We have always emphasized
the importance of sustainable development,
as this is our social license to operate mines in
communities all around the globe. We strive
to improve the communities in which we operate –
not just through the royalties and various taxes
our workforce and mines generate, but also
through our focus on building strong working
relationships with local communities. We operate
with a high degree of transparency, and provide
these communities with skills training, social
beneﬁ ts, local employment and access to medical
assistance. Some of the highlights in 2004 include
our partnership with World Vision in Peru,
and the strengthening of our relationship with
Habitat for Humanity, an NGO that is
constructing housing in villages surrounding
the Bulyanhulu Mine in Tanzania. Because of this
deep, ongoing commitment to social responsibility,
our social license to operate grows stronger
every year. It is our calling card, and it continues
to facilitate the successful development of our
projects, worldwide.

We also strengthened the organization with
the addition of a number of extraordinary
new people – including, at the Board level,
two additional independent directors. Presently,
8 of our 13 directors are independent.

We shall miss the wise counsel of Jack Thompson
and John Carrington. Jack, the former Chairman
and CEO of Homestake, has made an invaluable
contribution to our organization since the
2001 merger, while John, our former COO,
steered Barrick’s operations on the global stage
for a decade. We are proud of our association
with these two high-quality professionals,
and wish them well in their future endeavors.

Finally, we remained highly focused on our
people during the year, because people execute
the business plan. The successful execution of
that plan in 2004 reﬂ ected our ability to develop
leaders, manage talent, and place the right people
at every level of the organization. More than ever,
Barrick is a dynamic, professional, growth-
oriented organization that challenges, develops
and rewards its people. During the year, we
increased employees’ responsibilities and their
accountability, which led to exceptional results.

6.8-7.0

12%
CAGR

5.0

2004

2005

2006

2007

ﬁ g. 2 Growth Proﬁ le – Target Production 2004-2007

2004 was a year of building a new generation

of mines targeted to drive Barrick’s future growth.

LETTER TO SHAREHOLDERS

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

The Year Ahead

Our objectives for 2005 are straightforward.
> Deliver consistent growth in earnings and cash ﬂ ow.
> Focus on the execution of our development projects:
Lagunas Norte, Veladero, Cowal, East Archimedes,
and Pascua-Lama.

> Build our resource base. Reserves are the

lifeblood of a mining company, and our 2005
objective is to replace and augment both our
reserves and resource base. By increasing our
resource base, we prepare for the growth of
reserves and production in the future.

> Develop employees through an organization-wide

culture of improvement and leadership.

> Continue to grow the business, whether through
success with the drill bit, asset optimization,
or acquisition.

> Ensure our employees’ safety, protect the

environment, and strengthen the communities
in which we operate.

In last year’s letter, we said that 2004 would be
a year of building mines – and it was. We said our
reorganization into regional business units put us on

track to achieve our business plan objective –
and it did. We executed the plan, and our
stakeholders beneﬁ ted.

Finally, we told you that 2004 would position us
for rising production and proﬁ tability in 2005
and beyond. It has.

Three of our new mines are expected to make a
meaningful contribution to production in 2005,
with the fourth coming onstream in ﬁ rst quarter
2006. Barrick will continue to meet the industry’s
challenges and run counter to industry trends,
by delivering strong reserve development,
new low cash-cost mines, a rising production proﬁ le,
and the ﬁ nancial strength needed to execute our
strategies and reward our stakeholders.

We have the strategies, the balance sheet, the social
license and above all the people, to plan well
and then execute. In 2005, all stakeholders will see
a signiﬁ cant return on all the hard work and
perseverance of the last few years.

Peter Munk

Chairman

Gregory C. Wilkins

President and
Chief Executive Officer

March 1, 2005

Corporate Social Responsibility

Responsible Mining

At Barrick, contributing long-term benefits to the communities and countries
where we operate is integral to our vision of building mines and building value.
Our record of outstanding performance, partnership and ethical conduct is our
calling card, creating opportunities to generate shareholder value while fostering
sustainable development. Our shareholders rightly expect high standards
of corporate responsibility as a matter of good business practice.

Community Development
For Barrick, community development
is a priority. We have partnered
with such organizations as
World Vision who are effectively
working on sustainable development
programs and the needs of children.

Environment
Environmental excellence is
a strategic business objective.
Reclamation proceeds concurrently
with mining. At Goldstrike
in Nevada, an environmental
engineer inspects the growth of
native plants seeded on reclaimed
land that has been recontoured
to blend more naturally into the
surrounding landscape.

Safety and Health
Wherever we operate, men
and women have volunteered and
trained to respond to emergencies.
These volunteers have become
skilled at providing medical
attention, ﬁ re ﬁ ghting and other
response techniques. Emergency
preparedness is a key element
of the Barrick Safety System.

RESPONSIBLE MINING

Corporate Social
Responsibility Charter

Community
Development

Barrick’s commitment to Corporate
Social Responsibility (CSR) is realized
through corporate policies and
initiatives that are implemented at sites
worldwide, with regional and local
priorities in mind. During 2004,
Barrick’s Board of Directors approved
a Corporate Social Responsibility
Charter, which codifies the principles
and practices that have long been a
priority at Barrick sites. The Charter
identifies four pillars that guide Barrick
in its business conduct around the
world: Ethics; Employees; Community;

and Environment, Health and Safety.
In all these areas, the Charter sets out
performance expectations that aim to
establish trust with all those with whom
we interact, whether they be our
employees, the communities where we
live and work, or our government hosts.

For more information on Barrick’s
Charter and Corporate Responsibility
policies and programs, please see
Barrick’s 2004 Responsibility Report,
which is available on our website:
www.barrick.com.

Barrick’s mines make significant
contributions to community
development, such as infrastructural
investment, service industry
development, education, small business
development and health service
improvement. Sharing the benefits
associated with our mining operations
is no more clearly exemplified than
in Peru, where 98 percent of our
employees are Peruvian and where
63 percent of the construction
contractors at our Lagunas Norte
development project are from the local
La Libertad Region.

Barrick engages with local and regional
community representatives to
understand their concerns and interests,
and then factors this input into project
design and operations planning.

Whether it involves road or power
system improvements, development
of housing or medical facilities,
or obtaining mine services, Barrick
gives priority to building partnerships
to enhance local capacity and
sustainable community development.
In addition, Barrick provides training
in specific trades to allow local
community members to establish their
own businesses, from which they can
benefit well into the future. Barrick’s
partnership with World Vision in Peru
is one example of the Company’s
commitment to partner with others
to promote community development,
in this particular instance with the
objective of improving the welfare
of area children.

Employee
Development

Environment

Safety and Health

Charitable Giving

RESPONSIBLE MINING

Employee development is a vital part
of Barrick’s efforts to strengthen the
organization and ensure that we have
the right leaders in place at the right
time. Extensive training programs have
been instituted to develop the skills of
employees and to advance their career
potential. Barrick is committed to fair
employment practices and a workplace
in which all individuals are treated with
dignity and respect, and are free from
harassment and discrimination as

codified in the Company’s Code
of Business Conduct and Ethics.

Across Barrick operations, all employees
receive a core group of health care
benefits, such as medical, dental and life
insurance, that can be tailored to meet
local needs. For example, at the
Bulyanhulu Mine in Tanzania, Barrick
provides comprehensive employee
health education, with a focus on
HIV/AIDS, tuberculosis and malaria.

Barrick is committed to protecting
the environment wherever the
Company is exploring, developing,
operating, or closing mines. Extensive
environmental investigations precede
mine planning and design. They are
then followed by ongoing monitoring
and regular independent audits to
ensure standards are upheld and
performance improvement opportunities
are recognized. Throughout a mine’s
lifecycle, Barrick aims to meet or

surpass regulatory requirements
while safeguarding the environment
for local communities and future
generations. Examples of the wide
variety of environmental initiatives
Barrick undertakes include a
conservation area established to
promote wildlife at our Bulyanhulu
mine and a tree planting program to
prevent soil erosion in the communities
surrounding our Pierina mine.

For Barrick, the only acceptable health
and safety goal is to ensure every person
goes home safe and healthy every day.
The Barrick Safety and Health System
draws on best practices inside and
outside the Company and establishes
clear roles, responsibilities and
accountabilities for individuals and

teams, at all levels of the organization.
Personal safety behaviors and
decisions by managers are key to the
establishment of the required safety
culture. To reinforce leadership’s role
in Barrick’s safety culture, ‘Courageous
Safety Leadership’ training was initiated
during 2004.

Barrick’s Heart of Gold Fund is another
way we contribute to the communities
where we work and live. Barrick’s
policy is to give one percent of annual
pre-tax income to charitable causes.
Recipients range from community
outreach programs, to hospitals and
schools, arts and cultural events, and
major research institutions. Whether it
is direct monetary support, in-kind
service, or donation of materials or
equipment, Barrick works closely with

community representatives to identify
needs and priorities. As one of
many examples, in 2004, Barrick
contributed toward the establishment
of a local pediatric medical facility
in one of the communities near our
Veladero project. The Company has
committed to further assist with the
purchase of medical equipment for
the facility in a collaborative effort
with local governments.

RESERVES: REPLACEMENT AND GROWTH

Development Projects

Laying the Groundwork for Growth

Barrick’s pipeline of gold development projects has no rival for size, quality and immediacy.

During 2004 we were focused on building our new mines and laying the groundwork for

growth. In 2005 we will begin to deliver that growth, and the value it creates, even as we bring

the remainder of the development projects onstream.

Tulawaka entered production in early 2005; of the remaining five projects, two more,

Lagunas Norte and Veladero, are slated to come into production in 2005 and Cowal in 2006.

Production from Pascua-Lama and East Archimedes is expected to follow. These first four

high-quality projects are expected to drive Barrick to a targeted 40 percent increase in

gold production by 2007 (from 2004 levels) – while maintaining our position with the lowest

cash costs among the senior producers.

Going forward, we expect more projects in the development pipeline, for as these current

projects leave the development pipeline and begin production, others are rising through

the exploration pipeline – for example, Buzwagi in Tanzania, which is now undergoing

a scoping study.

The following pages will discuss in more detail the three projects which are currently

in construction (Lagunas Norte, Peru; Veladero, Argentina; and Cowal, Australia),

followed by the two projects still in permitting (Pascua-Lama, Chile/Argentina; and East

Archimedes, Nevada).

RESERVES: REPLACEMENT AND GROWTH

Lagunas Norte

Located about 175 kilometers from the Pierina Mine, Lagunas Norte is expected to come onstream in third quarter
2005 and contribute on average about 800,000 ounces per year at about $155 per ounce over the ﬁ rst three full years.

Description

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

Background

> Barrick announced the Lagunas Norte discovery on April 23, 2002

Current
Mineralization Status

> Proven and probable gold reserves of 9.1 million ounces
> 1,350 square kilometer land position with good exploration potential within
a 15 kilometer radius of Lagunas Norte

Activities Underway

> Access road/power line completed
> Site preparation complete
> Pre-mine stripping activities commenced in December 2004
> Leach pad was completed in first quarter 2005
> Crushing facility to be completed in second quarter 2005

Timeline

> Production expected to commence third quarter 2005

Construction Cost
Estimate

Production Proﬁ le

> Approximately $340 million

> Gold production is expected to average approximately 800,000 ounces per year
at an average total cash cost of about $155 per ounce1 for the first three years

1. See page 67 for a discussion of non-GAAP measures.

At Lagunas Norte, a grassroots exploration discovery in 2002, production
is expected to start up in third quarter 2005, contributing an average of
800,000 ounces annually for the ﬁ rst three full years.

One of two 23 cubic meter hydraulic shovels.

RESERVES: REPLACEMENT AND GROWTH

Veladero

Targeted to enter production in fourth quarter 2005, Veladero has gold reserves of 12.8 million ounces and is the
foundation of one of the world’s largest gold districts, Frontera, with over 30 million ounces of gold reserves.

Description

> Located in San Juan Province, Argentina; 6 kilometers from the Pascua-Lama
project in the Frontera District
> Open-pit, 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 12.8 million ounces

> Access road and camp construction completed
> All major mining equipment has been delivered and pre-stripping is underway
> Assay lab was commissioned in October 2004
> Primary and secondary crusher circuit to be completed June 2005
> Pad loading to commence in July 2005
> Plant facilities to be completed September 2005
> Valley-fill heap leach facility to be completed September 2005
> $250 million project financing signed, $198 million drawn down at year-end 2004

Timeline

> Production targeted to commence in fourth quarter 2005

Construction Cost
Estimate

> Approximately $540 million

Production Proﬁ le

> Gold production is expected to average approximately 700,000 ounces per year

at an average total cash cost of about $200 per ounce1, 2 over the first full three years

1. See page 67 for a discussion of non-GAAP measures.
2. Subject to exchange rate fluctuations and applicable export duties.

Mining is well underway at Veladero and production is expected to commence
in the fourth quarter of 2005.

The primary crusher nears completion
with an initial design capacity of
40,000 tons per day.

RESERVES: REPLACEMENT AND GROWTH

Cowal

An important addition to Barrick’s Australian operations,
Cowal is expected to enter production in the ﬁ rst quarter of 2006.

Description

> Located in Central New South Wales, Australia, 350 kilometers northwest of Sydney
> Open-pit, conventional carbon-in-leach circuit

Background

> Acquired as part of Barrick’s merger with Homestake Mining Company

in December 2001

Current
Mineralization Status

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

Activities Underway

> Major equipment has been delivered in first quarter 2005
> SAG and ball mill footings completed in first quarter 2005 – SAG mill components
arrived first quarter 2005
> Mine stripping activities expected to commence in second quarter 2005
> Process plant to be completed by end of 2005

Timeline

> Production targeted to commence first quarter 2006

Construction Cost
Estimate

> Approximately $305 million

Production Proﬁ le

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

total cash cost of about $240 per ounce1, 2 over the first three years

1. See page 67 for a discussion of non-GAAP measures.

2. Subject to exchange rate ﬂ uctuations.

The primary crusher area at Cowal is excavated in preparation for
construction. Production is expected in the ﬁ rst quarter of 2006.

Replanting program begins with
the harvesting of native seeds.

RESERVES: REPLACEMENT AND GROWTH

Pascua-Lama

Pascua-Lama is the second stage of the over 30-million-ounce Frontera District,
and is expected to start construction in 2006.

Description

> Part of the 30-million-ounce Frontera District straddling the border of Chile and Argentina
> Barrick plans to develop Pascua-Lama as part of a unified district, starting with Veladero

in 2005

> Open-pit mine with flotation and Merrill-Crowe

Background

> Barrick acquired the Pascua property through the Lac Minerals Ltd. acquisition 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 17.6 million ounces; measured and indicated gold resource
of 2.8 million ounces
> Silver contained within reported gold reserves of 643 million ounces

Activities Underway

> Received Board of Director approval for development in July 2004
> Awaiting environmental approvals
> Finalizing fiscal and taxation matters
> Implementing Protocol regime
> Developing sustainable development community programs

Timeline

> Expect to receive approvals and finalize other fiscal and taxation matters in late 2005
> Expect to begin three-year construction schedule in 2006
> Production anticipated for 2009

Construction Cost
Estimate

Production Proﬁ le

> Approximately $1.4-$1.5 billion

> Gold production is expected to average 750,000-775,000 ounces per year for the first
decade at an average total cash cost of $130-$140 per ounce1, 2 (silver production

is expected to average approximately 30 million ounces annually for the first ten years).

On a gold equivalent basis, production is expected to be 1,190,000-1,215,000 ounces
per year at $220-$230 per ounce.

1. See page 67 for a discussion of non-GAAP measures.

2. Subject to exchange rate ﬂ uctuations and applicable export duties.

East Archimedes

Part of the Ruby Hill Mine, East Archimedes is now in development, with permits expected
by the end of 2005 and production in mid-2007.

Description

Background

Current
Mineralization Status

Activities Underway

> Part of the Ruby Hill Mine located in Eureka, Nevada
> Open-pit heap leach operation

> Acquired as part of Barrick’s merger with Homestake Mining Company in December 2001
> Adjacent to West Archimedes (Ruby Hill Mine) which was mined out as planned in 2002

> Proven and probable reserves of 1.0 million ounces

> Permits expected by end of 2005
> Mobile equipment purchased
> Site development and refurbishment

Timeline

> Production targeted to start in mid-2007

Capital Cost Estimate

> Approximately $75 million

RESERVES: REPLACEMENT AND GROWTH

Exploration

Growing Our Asset Base

In 2004, Barrick invested a total of $95 million on regional and mine site exploration

(excluding development and business development). Of this total, regional exploration

accounted for $70 million (including Goldstrike) and mine site exploration accounted for

$25 million. In 2005, Barrick’s exploration budget is approximately $120 million (excluding

development and business development), where about $80 million will be spent on regional

exploration and about $40 million on mine site exploration.

Barrick has a motivated, discovery-driven team of over 150 geoscientists exploring on

approximately 100 properties in 16 countries around the world. Reserve development and

replacement of production is a major priority at all our sites. The Company consistently funds

its exploration programs throughout all gold cycles, and has a proven track record of finding

ounces at both the greenfield and brownfield projects. Exploration is focused on highly

gold-endowed districts where we control large land positions, the primary ones being the

Goldstrike District in Nevada, the Frontera District in Chile/Argentina, the Alto Chicama

District in northern Peru, and the Lake Victoria District in Tanzania. In addition, the Company

is exploring earlier stage projects in Australia, Canada, Russia and Central Asia.

Three key factors drive our exploration success: the motivation and technical excellence of

our Exploration team; the policy of consistently investing in exploration; and the robust and

balanced pipeline of exploration projects. The Company’s disciplined exploration strategy

maximizes the chance of near-term discovery by putting the best people on the best projects

and advancing the best projects more quickly up the exploration pipeline.

RESERVES: REPLACEMENT AND GROWTH

2004 Highlights
At Goldstrike, exploration drill programs, focused on targets north and south of the

Open-Pit Mine, were successful in adding both reserves and resources. A total of 2.3 million

contained ounces were added to Goldstrike’s reserves. This ongoing success underlines the

continuing significant contribution that Goldstrike will make to Barrick’s future. In 2005,

Barrick’s single largest exploration expenditure will be in the Goldstrike District and on the

North Carlin Trend. At Storm, the year’s reserve development drill program was successful,

and exploration in 2005 will be focused on continuing to expand the reserve.

In the Frontera District (Chile/Argentina), Barrick reactivated exploration activity in

mid-2004 after a four-year hiatus resulting in the addition of about 1.75 million and

0.75 million contained ounces to reserves at Veladero and Pascua-Lama respectively. Barrick

has designed an integrated program to explore this 3,000 square kilometer land package that

is now under its ownership. Data compilation and ground surveys carried out in the fourth

quarter generated more than 30 untested exploration targets in the area. Some are prioritized

targets for drill testing early in 2005.

Barrick has an extensive land holding in the Alto Chicama District in Peru. First pass

reconnaissance exploration was completed over most of the ground in 2004 and three

properties were drilled. An oxide resource was outlined on the Lagunas Sur property, and

transferred to the Alto Chicama development team. A total of about 2.0 million contained

ounces were added to reserves at Lagunas Norte.

At the Buzwagi project in Tanzania, Barrick successfully extended the known mineralization

along strike and down dip and more than met the objective of doubling the geological

resource, adding 2.0 million contained measured and indicated resource ounces. A scoping

study is planned for 2005. As well, a $5 million exploration program is designed to extend

the mineralization along strike and will test other areas on the property. Over the past few

years, Barrick has reduced its extensive land position to 9,000 square kilometers in the Lake

Victoria Goldfields in order to focus on the prospective areas identified during the regional

work. Drill programs are also planned in the Golden Ridge and Nzega West areas.

Barrick is exploring properties at various stages of exploration in Russia and Central Asia.

Barrick’s own exploration and development programs are complemented by strategic

relationships with Celtic Resources and Highland Gold. These relationships have broadened

our strategy to develop gold assets in Russia and Central Asia. We have an equity position in

Celtic and have back-in rights to participate on an exclusive basis for up to 50% in any assets

acquired in Kazakhstan and to certain other assets including the Nezhdaninskoye project.

Barrick’s investment in Highland gives it the right to participate on an exclusive basis for up

to 50% on any acquisition made by Highland Gold in Russia; it extends similar rights to

Highland for any acquisition made by Barrick in certain regions in Russia, excluding among

others Irkutsk. These relationships are helping Barrick familiarize itself with the region and

refine project development options in a highly prospective region.

FINANCIAL STRATEGY

Financial Strength to Support Growth

“Barrick’s ‘A’ rating reﬂ ects its leading cost proﬁ le,
strong pipeline of development projects, solid reserve base,
conservative ﬁ nancial policy, and low geopolitical risk.”

- Standard & Poor’s Rating Services, November 2004

Our financial strategy is designed to provide the

Being able to finance the project under these

sound foundation and resources needed to bring

conditions is a reflection not only of the quality

our development pipeline into production over the

of the project, but also of the operational and

next five years, fund one of the largest exploration

financial strength of the sponsor. Barrick has the

programs in the industry, and continue to grow

financial capability to get our current projects

our business on a global basis. This strategy,

built and the flexibility to source and develop gold,

coupled with our positive outlook on the gold

even in difficult economic environments.

price, positions us well for the future.

In November, Barrick issued a total of $750 million

The cornerstone of this financial strategy is

of long-term debt in the US capital markets

strength. With the industry’s highest-rated balance

($350 million of 10-year debt and $400 million of

sheet, $1.4 billion of cash, excellent access to

30-year debt). We are building world-class mines

liquidity, and growing operating cash flows,

that will be in production for decades. The issuance

Barrick has the ability to execute the industry’s

of this long-term debt reflects the Company’s

most aggressive growth plan without the need to

ability to raise long-term core capital, at very

issue a single share of new equity.

attractive yields, consistent with the Company’s

Laying the Groundwork in 2004
In 2004, Barrick was focused on

groundwork for our growth program.

laying the

In August, we signed a $250 million, nine-year

project financing for our Veladero project. While this

financing was being negotiated and executed,

Argentina was going through a financial crisis and

facing substantial challenges in attracting new foreign

strategy of building and developing these long-

lived world-class properties.

Risk Mitigation and Cost Control
Another important element of Barrick’s financial

strategy is to work with our operations and supply

chain management teams to identify exposures

and to implement strategies aimed at controlling

risk – and, where possible, to reduce costs.

direct investment. Despite this situation, Barrick was

In 2004, this effort helped Barrick reduce costs in

able to gain the support of key OECD governmental

equipment, currencies, oil, interest rates and a host

and commercial bank investors, and finance the

of other areas. As a result, Barrick maintained its

project on a limited recourse basis. It was the first

position as the lowest cash-cost senior producer

limited recourse project financing executed

in the industry.

Argentina since the crisis.

FINANCIAL STRATEGY

Gold Sales Contracts
Barrick historically entered into fixed price sales

specifically to the Pascua-Lama project in the

fourth quarter of 2004. The allocation of these

contracts as part of a gold hedging program

contracts will reduce gold price risk and provide

designed to manage exposure to market gold prices

an acceptable return on the Pascua-Lama capital,

and protect the earnings and cash flow from

while representing only about one-third of current

declining gold prices. Given the strength of our

Pascua-Lama gold reserves (and

leaving the

balance sheet, we no longer need to add any new

643 million ounces of silver contained in gold

gold sales contracts, and we are opportunistically

reserves unhedged).

reducing the remaining position. Barrick believes

the long-term fundamentals for gold will remain

Our remaining 7.0 million ounces of gold sales

strong, and we will benefit directly in a stronger

contracts (the “Corporate Gold Sales Contracts”)

gold price environment – both immediately, and in

represent just over one year of planned production

the long term.

and about 10% of non-Pascua-Lama reserves.

In July 2004, we announced the decision to proceed

with the Pascua-Lama project (subject to receiving

required permits and clarification of the applicable

fiscal regimes from the governments of Argentina

90%

10%

Corporate Gold
Sales Contracts

Leveraged to
Market Gold Prices

and Chile). We expect to put in place third-party

financing for up to $750 million of the expected

$1.4-$1.5 billion construction cost of Pascua-

Lama. In anticipation of building the mine, and in

support of any related financing, we allocated

6.5 million ounces of existing gold sales contracts

ﬁ g. 3 Corporate Gold Sales Position

With approximately 90% of our non-Pascua-Lama
reserves unhedged, Barrick has signiﬁ cant
leverage to the gold price.

“…although closed for routine ﬁ nancing transactions
in Argentina, Ex-Im Bank is open to consider specially
structured deals [like Veladero] that externalize the risk and
provide reasonable assurance of repayment. It is Ex-Im Bank’s
ﬁ rst project ﬁ nancing in the mining sector since 1997.”

- Washington D.C.-based Export-Import Bank of the

United States (Ex-Im Bank), which provided $80 million
of the Veladero financing, April 2004

OPERATIONS REVIEW

Cost Management

Cost management is a strategic and collaborative process
that goes beyond cost cutting. It is proactive,
focuses on optimizing efﬁ ciency, and is aligned
with Barrick’s long-term business plan.

The Company’s cost management strategy is focused

on these key areas:

Supply chain management
Because scale and scope are so large in mining,

> Development of high-quality, low-cost projects

Barrick’s ability to introduce efﬁ ciencies into

> A culture of continuous improvement

the supply chain signiﬁ cantly affects both its

> Supply chain management

proﬁ tability, and its continuing position as the

> Commodity and currency price protection

lowest cash-cost senior producer in the gold

> Capital investment

Development of high-quality projects
The cost structure of a mining company is largely

industry. We are enhancing our management of

supply chain issues through a shift in focus from

the initial price of procuring materials, services and

equipment, to a focus on their true total cost. In the

dependent on the quality of the assets within that

long run, this approach leads to better strategic

company’s portfolio. Barrick is fortunate to have

purchasing decisions and lower total costs.

12 quality operating mines and enjoys the lowest

cash-cost structure of the senior gold producers.

The Company looks to solidify this position as it

Commodity and currency price protection
Inﬂ ationary pressures and exposures to exchange

brings two large low-cost development projects

rates can signiﬁ cantly affect the Company’s capital

into production in 2005. Barrick also has three

and operating costs. Barrick carefully assesses these

more quality projects in the development pipeline.

exposures as part of its overall cost management

Continuous improvement
In its quest to achieve greater operating efﬁ ciencies

and lower costs, Barrick continues to work towards

exercise, and will proactively implement commodity

and currency hedge positions to provide protection

against adverse movements in these two areas.

a culture of continuous improvement in the

organization. The attitude the workforce brings to

Additional capital investment
As Barrick looks to minimize costs and maximize

each mine will dictate how effective the Company

value, it is continually evaluating capital projects.

is at creating value. Continuous improvement

Because of its long-life asset base, Barrick is

fosters an environment of collaboration and

prepared to make investments today that will result

knowledge-sharing,

in which multidisciplinary

in signiﬁ cant long-term value to the organization.

teams work across time zones and geographic

regions to solve common problems or to develop

signiﬁ cant new opportunities.

OPERATIONS REVIEW

Barrick’s Portfolio of Properties

2004 Performance – 2005 Prospects

2004 Performance
In 2004, Barrick’s portfolio of mines met its originally stated production and cost targets.

Overall, its 12 operating mines had a solid year producing 4.96 million ounces of gold at
an average total cash cost of $212 per ounce1. Production in 2004 was 10% lower than
the prior year as expected, primarily as a result of mining lower-grade ore at Goldstrike Open

Pit, Pierina and Eskay Creek, partly offset by higher production at Bulyanhulu.

For the year, seven of Barrick’s mines met or exceeded our 2004 production forecasts, with

signiﬁ cant increases at Goldstrike Open Pit, Kalgoorlie and Round Mountain offsetting

shortfalls at the Goldstrike Underground, Plutonic and Hemlo mines. Total cash costs

for 2004 – although the lowest for all senior gold producers – were 12% higher than 2003.

This was primarily a result of expected processing of lower-grade ore at Goldstrike Open Pit,

Round Mountain and Pierina, combined with the effect of changes in average currency hedge

rates on total cash costs at our Australian mines.

At year-end 2004, proven and probable gold reserves increased to over 89 million ounces

calculated at a $375 per ounce gold price. The Company’s suite of quality development

projects increased their reserves by about 15%. While the Company’s overall reserves increased

by approximately 4%, there was a decline in reserves at some of the older underground mines

with short remaining mine lives. Silver contained in Barrick’s gold reserves at year end is
911 million ounces2 and is primarily derived from the Pascua-Lama deposit, one of the largest
silver resources in the world, which contains 643 million ounces of silver.

2005 Prospects
Overall for 2005, the Company anticipates producing 5.4 to 5.5 million ounces at an average

total cash cost of $220-$230 per ounce as three new mines come onstream throughout the

year. Tulawaka in Tanzania came into production in the ﬁ rst quarter, Lagunas Norte in Peru

is expected to start contributing to production in the third quarter, followed by Veladero in

Argentina in the fourth quarter. Accordingly, production and total cash costs in the second

half of 2005 are expected to improve signiﬁ cantly. Construction will continue on Cowal in

Australia which is anticipated to come into production in early 2006.

1. See page 67 for a discussion of non-GAAP measures.
2. See page 129 for details.

OPERATIONS REVIEW

Operational
Summary

For year ending December 31

Operational Statistics

Tons Mined
(000s)

Tons Processed
(000s)

Grade Processed
(ounces per ton)

Recovery Rate
(percent)

Gold Production
(000s of ounces)

Mineral Reserves*
(000s of ounces)

2004
2003

Financial Statistics

Production costs per ounce

Cash Operating Costs

Royalties and
Production Taxes

Total Cash Costs

Amortization

Total Production Costs

Capital Expenditures
(millions)

2004
2003

2004

North
America

Goldstrike
Property
Total

135,785
143,324

12,345
11,663

0.18
0.22

86.2
83.6

1,942
2,111

19,158
19,145

$231
220

18
18

$249
238

79
72

$328
310

$72
51

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

4,957,889
$212

Barrick’s Total Mineral Reserves (ounces) 89,056,000

Goldstrike
Open Pit

Goldstrike
Underground

Round
Mountain
Mine

Eskay
Creek
Mine

134,212
141,693

10,779
10,041

0.15
0.19

85.1
82.0

1,381
1,559

16,188
15,685

$231
215

16
18

$247
233

61
53

$308
286

$42
23

1,573
1,631

1,566
1,622

0.40
0.39

89.7
88.3

561
552

2,970
3,460

$234
234

21
19

$255
253

120
122

$375
375

$30
28

19,743
24,563

36,963
31,470

0.02
0.02

–
–

381
393

1,538
1,583

$187
150

34
23

$221
173

46
54

$267
227

$5
6

269
272

263
275

1.18
1.43

93.1
93.7

290
352

513
941

$26
48

5
4

$31
52

176
132

$207
184

$7
5

OPERATIONS REVIEW

South
America

Africa

Australia

Hemlo
Mine

Holt-
McDermott
Mine

Pierina
Mine

Bulyanhulu
Mine

Kalgoorlie
Mine

Plutonic
Mine

Darlot
Mine

Lawlers
Mine

4,715
4,178

2,019
1,971

0.13
0.14

94.0
95.0

247
268

1,260
1,744

$231
218

9
8

$240
226

50
40

$290
266

$8
10

380
557

394
559

0.15
0.17

93.1
94.3

55
90

–
55

$197
239

–
–

$197
239

114
131

$311
370

–
–

40,225
39,501

16,746
15,839

0.03
0.07

–
–

646
912

2,508
2,768

$106
83

–
–

$106
83

165
182

$271
265

$8
17

1,118
945

1,123
980

0.35
0.36

88.4
88.1

350
314

45,459
48,677

7,142
7,171

0.07
0.07

86.6
85.8

444
436

13,722
14,180

2,662
3,010

0.13
0.12

90.0
89.9

304
334

896
876

861
879

0.17
0.18

95.8
96.9

140
155

10,596
10,907

5,181
5,894

2,512
2,646

1,048
1,135

$270
235

13
11

$283
246

99
123

$382
369

$46
36

$223
201

8
8

$231
209

44
48

$275
257

$10
14

$214
185

9
8

$223
193

34
31

$257
224

$15
44

$203
156

7
8

$210
164

53
52

$263
216

$7
7

3,365
1,152

866
806

0.13
0.13

96.1
95.8

110
99

405
402

$238
241

8
8

$246
249

53
42

$299
291

$5
14

* For reserve table see page 126.

OPERATIONS REVIEW

Barrick’s Portfolio of Properties

North America

Barrick’s North America region consists of the Goldstrike, Round Mountain and Marigold mines in
the US, plus the Hemlo and Eskay Creek mines in Canada. East Archimedes in Nevada is a new
development project which is expected to contribute to production in mid-2007. This region contains
proven and probable gold reserves representing 27% of our reserve base, or 24.3 million ounces.

In 2004, North America produced 2.96 million ounces of gold at average total cash costs of
$222 per ounce.

At the Company’s North American operations, production is projected to decline slightly in 2005,
primarily as a result of processing lower-grade ore at Eskay Creek and the depletion of reserves at
Holt-McDermott in 2004. In 2005, the region is expected to produce about 2.8 million ounces at an
average total cash cost of about $245 per ounce.

South America

South America consists of the Pierina Mine and three signiﬁ cant development projects: Lagunas
Norte and Veladero, which are expected to contribute to production in the second half of 2005,
and Pascua-Lama, which is expected to come onstream in 2009. (See “Development Projects”,
page 11.) The region contains 47% of the Company’s overall proven and probable gold reserves,
or 42.1 million ounces.

The Pierina mine produced about 646,000 ounces at an average total cash cost of $106 per ounce.

In 2005, South American production will increase by about 90% to about 1.2 million ounces
of gold, as Lagunas Norte and Veladero commence production in the second half of the year.
Total cash costs are expected to be about $133 per ounce.

Australia/Africa

Barrick’s Australia/Africa region consists of the Kalgoorlie, Plutonic, Darlot and Lawlers mines
in Australia, and Bulyanhulu and the recently producing Tulawaka mine in Tanzania. One new
development project, Cowal in Australia, is projected to commence production in early 2006.
The region contains 26% of the Company’s overall proven and probable gold reserves,
or 22.6 million ounces.

In 2004, Australia/Africa production reached 1.35 million ounces of gold at an average total cash
cost of $241 per ounce.

In the Australia/Africa region for 2005, Barrick’s six operations are expecting collective production
of about 1.4 million ounces of gold, at increased total cash costs of about $257 per ounce.

Management’s Discussion
and Analysis (“MD&A”)

Contents

Core Business

pg. 26

Overview of 2003 versus 2002

Executive Overview and 2005 Outlook

pg. 26

Balance Sheet

Vision and Strategy

Capability to Deliver Results

Impact of Key Economic Trends

Results

Overview of 2004 versus 2003

Consolidated Gold

Production and Sales

Results of Operating Segments

Other Costs and Expenses

Cash Flow

pg. 28

pg. 29

pg. 30

pg. 35

pg. 36

pg. 38

pg. 45

pg. 48

Quarterly Information

Off-Balance Sheet Arrangements

Liquidity

Canadian Supplement

Critical Accounting Policies

and Estimates

Non-GAAP Performance Measures

Cautionary Statement on

Forward-Looking Information

Glossary of Technical Terms

pg. 49

pg. 50

pg. 52

pg. 53

pg. 57

pg. 60

pg. 67

pg. 71

pg. 72

This MD&A has been prepared as of February 9,
2005, and is intended to supplement and comple-
ment our audited financial statements and notes
thereto for the year ended December 31, 2004
prepared in accordance with United States generally
accepted accounting principles, or US GAAP (col-
lectively, our “Financial Statements”). As required
by Canadian Securities Authorities, a reconciliation
of our US GAAP Financial Statements to Canadian
GAAP is included in note 25 to the Financial State-
ments. You are encouraged to review our Financial
Statements in conjunction with your review of this
MD&A. Additional information relating to the
Company, including our Annual Information Form,
is available on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov. For an explanation of
terminology used in this MD&A that is unique
to the mining industry, readers should refer to the

glossary on pages 72 and 73. All dollar amounts in
this MD&A are in US dollars, unless otherwise
specified. Unless otherwise indicated, the financial
information in this MD&A has been prepared in
accordance with US GAAP.

For the purposes of preparing this MD&A, we con-
sider the materiality of information. Information is
considered material if: (i) such information results
in, and would reasonably be expected to result in,
a significant change in the market price or value
of Barrick Gold Corporation’s shares; or (ii) there
is a substantial likelihood that a reasonable investor
would consider it important in making an invest-
ment decision, or if it would significantly alter
the total mix of information available to investors.
Materiality is evaluated by reference to all relevant
circumstances, including potential market sensitivity.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Core Business

Barrick Gold Corporation (“Barrick”) is one of the
world’s largest gold producers in terms of market
capitalization, annual gold production and gold
reserves. Our operations are concentrated in three
regions: North America, Australia/Africa and
South America.

Over the next two years, after production begins at
four of our development projects, we are targeting
our annual gold production to grow to 6.8–7.0 mil-
lion ounces, with South America contributing an
increasing proportion of our production. To grow
our business, we are also exploring for gold in
areas of the world outside of our three regions,
particularly in Russia and Central Asia.

Ounces Produced by Region in 2004

27%

60%

Australia/Africa

North America

13%

South America

We generate revenue and cash flow from the
production and sale of gold in both bullion and
concentrate form. We sell our gold production
through three primary distribution channels: gold
bullion is sold in either the gold spot market or
under gold sales contracts between Barrick and
various third parties, and gold concentrate is sold
to independent smelting companies. Selling prices
reflect the market price for gold at the time an
agreement is reached on pricing.

Executive Overview
and 2005 Outlook

Our share price appreciated by 6.65% in 2004, out-
performing senior gold producers Newmont Mining
Corporation, Placer Dome Inc., Anglogold Ashanti
Limited and Gold Fields Limited, while the spot gold
price appreciated by 5.54% over the same period.

In 2004, we produced 4.96 million ounces of gold
at an average total cash cost of $2121 per ounce,
achieving our original guidance for the year. Higher
gold production at Goldstrike Open Pit, Goldstrike
Underground and Pierina more than offset lower
production at the Plutonic, Round Mountain, Darlot
and Eskay Creek mine sites. Despite an environ-
ment of rising commodity prices, appreciation
of currencies against the US dollar, and increased
royalty and mining tax payments driven by higher
market gold prices, we met our original total cash
costs per ounce guidance. Our currency and com-
modity hedge programs enabled us to mitigate the
impact of commodity prices and currency exchange
rates on total cash costs per ounce and operating
cash flow.

We had earnings of $248 million ($0.46 per share)
and generated operating cash flow of $506 million
($0.95 per share) in 2004. Our 2004 earnings and
operating cash flow included an after-tax oppor-
tunity cost of $89 million ($0.17 per share) due
to the voluntary reduction of our fixed-price gold
sales contracts, with deliveries into contracts at
prices below the prevailing market gold price,
and corresponding lower revenues from gold
sales. Earnings in 2004 also included tax credits
totaling $227 million relating to the resolution of a
Peruvian tax assessment and a change in tax status

1. Total cash costs per ounce is a non-GAAP
performance measure that is used throughout this
MD&A. For more information see pages 67 to 70.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

in Australia; as well as impairment charges recorded
against long-lived assets of $139 million pre-tax. In
2004, we exceeded our target (of 1.5 million ounces)
for reducing our fixed-price gold sales contracts
with a reduction of 2 million ounces.

At year-end, we had proven and probable reserves
of 89.1 million ounces of gold 2, based on a $375
gold price, after producing 5.5 million contained
ounces. Reserve increases in 2004 were due to
exploration projects at operating mines and devel-
opment projects, and a lower cut-off grade as a
result of a higher gold price assumption in 2004.

We continue to effectively support and shape our
growth profile, including a focus on Russia and
Central Asia. We made steady progress on the con-
struction of four new mines, with three of them
planned to enter production in 2005. Construction
is proceeding on schedule for Lagunas Norte in
Peru, Veladero in Argentina, Tulawaka in Tanzania,
and Cowal in Australia. We are making progress in
planning for our Pascua-Lama Project, which strad-
dles the Chilean and Argentine border, our fifth
development project, and East Archimedes which is
located in Nevada, our sixth development project.

We have the capital resources to fund our develop-
ment projects without the need for any equity
dilution. During the year, we entered into a nine-
year commitment in Argentina for $250 million
in Veladero project financing and completed a
$750 million public debenture offering. We also
continued to optimize our capital structure through
a share buyback program. At the same time,
we have the gold mining industry’s only A-rated
balance sheet, as rated by Standard & Poor’s.

During 2004, we implemented a number of
initiatives to strengthen our organization, including
making changes to the composition of our Board of
Directors and governance practices as part of a com-
mitment towards improved corporate governance.
An organizational redesign was fully implemented in
2004. The new organizational design consolidated
life-of-mine accountabilities under our Chief Operat-
ing Officer and established regional business units
to add greater value to the global enterprise.

We expect 2005 gold production to be between
5.4–5.5 million ounces at an average total cash cost
of $220–$230 per ounce, and we remain committed
to our 40% targeted growth plan and gold pro-
duction target for 2007 of 6.8–7.0 million ounces,
at total cash costs slightly above $200 per ounce.3
The first and second quarters of 2005 are expected
to have lower production and higher cash costs,
with the second half of the year improving as
Lagunas Norte and Veladero come on stream.

For the year, amortization is expected to be about
$475–$485 million, and administration expense is
expected to be approximately $90 million, including
an estimated $15 million in costs on adoption of
new accounting rules that require the expensing
of stock options beginning in the second half of
2005. Exploration, development and business devel-
opment expense is expected to be approximately
$150 million, with the possibility that positive results
could lead to additional exploration spending.
Capital expenditures for 2005 are anticipated to
be approximately $743 million for development
excluding capitalized interest of $103 million and
$245 million for sustaining capital.

2. For a breakdown of reserves by category and
additional information relating to reserves, see page 127
of this Annual Report.

3. See page 36 for further information on
forward-looking estimates of gold production
and total cash costs per ounce.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Vision and Strategy

Our vision is to be the world’s best gold company by
finding, developing and producing quality reserves
in a profitable and socially responsible manner.

The overriding goal of our strategy is to create value
for our shareholders. To achieve this, cash flow from
our mines is consistently reinvested in exploration,
development projects and other strategic investments
to work towards sustainable growth in production
and cash flow. It can take a number of years for a
project to move from the exploration stage through

to mine construction and production. Our business
strategy reflects this long lead time, but shorter-term
priorities are also set for current areas of focus.

We use strategic relationships to share risk and exper-
tise. Examples include joint venture arrangements for
the Hemlo, Round Mountain and Kalgoorlie mines,
and also for exploration programs in certain areas.
We have investments in Highland Gold Mining PLC
(“Highland Gold”) and Celtic Resources Holdings
PLC (“Celtic Resources”), as well as strategic
alliances with both companies, as part of our plan to
develop a business unit in Russia and Central Asia.

Long-term
Strategy Elements
Growth in reserves
and production

Focus Areas
> Growth at existing mine sites by finding new

resources and converting to reserves.

Measures
> Additions to reserves

and resources.

> Growth through successful exploration focused

> Consistent investment in

principally in key exploration districts (Goldstrike,
Frontera, Lake Victoria, Alto Chicama) and
in Russia/Central Asia.

> Execute the development and construction

of Veladero, Lagunas Norte, Tulawaka, Cowal,
Pascua-Lama and East Archimedes.

> Develop a business unit in Russia/Central Asia
through investments in, and strategic alliances
with Highland Gold and Celtic Resources.

Operational excellence > Control costs.

• Global supply chain management.
• Continuous improvement initiatives.
• Currency, interest rate and

fuel/propane hedge programs.

> Optimize productivity through

continuous improvement initiatives.

> Effective assessment and management of risk.
> Effective capital allocation and management.
> Sourcing of funding for capital needs.
> Workforce – identify and develop talent.
> Leadership development and succession planning.
> Adopt best practices in corporate governance,

including strengthening internal controls.

> Reinforce health and safety culture.
> Enhance environmental performance, including use
of innovative technology to protect the environment.

> Maintain positive community and

government relations.

Strengthen
the organization

Responsible mining

exploration and development.

> Growth in annual
gold production.
> Size of gold reserves.
> Construction progress

versus schedules.

> Actual construction costs.
> Status of regulatory

requirements.

> Total cash costs per ounce.1
> Amortization per ounce.1
> Ore throughput.
> Equipment utilization

statistics.

> Liquidity – operating cash
flow and credit rating.
> Key balance sheet ratios.

> Talent review and

performance management.

> Compliance with

Sarbanes-Oxley Act.
> Safety leadership and

other training initiatives.
> Medical aid injury frequency.
> Environmental performance.

1. Total cash costs per ounce and amortization per ounce are non-GAAP performance measures. For more
information, see pages 67 to 70.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Capability to Deliver Results

Resources and processes provide us with the capa-
bility to execute our strategy and deliver results.
Our critical resources and processes are as follows:

Critical Non-Capital Resources
and Processes

Experienced Management Team
and Skilled Workforce
We have an experienced management team that
has a proven track record in the mining industry.
Our management team is critical to the achieve-
ment of our strategic goals, and we are focused on
retaining and developing key members. The team
is focused on the execution of our strategy and
business plan. Strong leadership and governance
are critical to the successful implementation of
our core strategy. We are focusing on leadership
development for key members of executive-level
and senior mine management.

A skilled workforce is one of our most significant
non-capital resources. Competition for appropriately
trained and skilled employees is high in the mining
industry. Employee retention, the ability to recruit
skilled employees, and labor relations have a signifi-
cant impact on the effectiveness of our workforce,
and ultimately the efficiency and effectiveness of
our operations. We maintain training programs to
develop the skills that certain employees need to
fulfill their roles and responsibilities. The remote
nature of many mine sites can present a challenge
to us in maintaining an appropriately skilled
workforce. Priorities for our Human Resources
group include strengthening our workforce and
developing leadership and succession capabilities by
focusing on attracting and retaining the best people,
as well as enhancing the process for identifying and
developing the leadership pool. We are implementing
Human Resources systems solutions to enhance our
ability to analyze and compare labor costs, produc-
tivity and other key statistics to better manage the
effect our workforce has on our mining operations.

Health and Safety
As part of our commitment to corporate responsi-
bility, we focus on continuously improving health
and safety programs, systems and resources to help
control workplace hazards. Continuous monitoring
and integration of health and safety into decision-
making enables us to operate effectively, while also
focusing on health and safety. Key areas of focus
include safety leadership through training and risk
management practices; designing and enhancing
processes and programs to ensure safety require-
ments are met; and communicating a safety culture
as part of Company and personal core values.

Environmental
We are subject to extensive laws and regulations
governing the protection of the environment,
endangered and protected species, waste disposal
and worker safety. We incur significant expenditures
each year to comply with such laws and regulations.
We seek to continuously implement operational
improvements to enhance environmental perform-
ance. We also integrate environmental evaluation,
planning, and design into the development stage
of new projects to ensure environmental matters
are identified and managed at an early stage.

Cost Control
Successful cost control depends upon our ability
to obtain and maintain equipment, consumables
and supplies as required by our operations at
competitive prices. Through a culture of continuous
improvement, we are also focusing on identifying
and implementing steps to make our operations
more effective and efficient.

Our Supply Chain group is focusing on improving
long-term cost controls and sourcing strategies for
major consumables and supplies used in our mining
activities through global commodity purchasing
teams. They are also focusing on knowledge shar-
ing across our global business and implementing
best practices in procurement. We are developing
strategies to help us analyze and source consumables
and supplies at the lowest cost over the life of a
mine, as well as long-term alliances with suppliers.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Maintenance is a significant component of our
operating costs. Our Global Maintenance team is
working to reduce maintenance costs and increase
equipment utilization through an internal mainte-
nance community. Key areas of focus include setting
standards for maintenance to optimize usage of mine
equipment and enable cost-effective purchasing of
mine equipment. They are implementing a global
maintenance system to facilitate sharing of best
practices and tracking of capital equipment statistics
such as utilization, availability and useful lives.

Technology
Our Information Technology group monitors signif-
icant risks, such as security, the risk of failure of
critical systems, risks relating to the implementation
of new applications, and the potential impact of a
systems failure. They are implementing strategies to
manage these risks, including ongoing enhancements
to security; monitoring of operating procedures;
the effectiveness of system controls to safeguard
data; evaluating technology resources; and main-
taining disaster recovery plans. Other areas of focus
include reducing technology diversity through
standardizing systems solutions, and ongoing
analysis of business needs and the potential benefits
that can be gained from new applications.

Internal Controls
We maintain a system of internal controls designed
to safeguard assets and ensure financial information
is reliable. We undertake ongoing evaluations of the
effectiveness of internal controls and implement con-
trol enhancements, where appropriate, to improve
the effectiveness of controls. In 2004 and 2003, we
focused on the design, testing and assessment of the
effectiveness of internal controls to enable us to meet
the certification and attestation requirements of
the Sarbanes-Oxley Act. We presently file manage-
ment certifications annually under Section 302 and
Section 906 and expect to comply with the reporting
requirements of Section 404 as required by law.

We also maintain a system of disclosure controls
and procedures designed to ensure the reliability,
completeness and timeliness of the information
we disclose in this MD&A and other public dis-
closure documents.

Critical Capital Resources
and Processes
We expect to fund capital requirements of about
$2.5 billion over the next four years to finish con-
struction activities at our development projects and
for a power plant to supply our Goldstrike mine.
Adequate funding is in place or available for all
our development projects. We plan to put in place
project financing for a portion of the expected
construction cost of Pascua-Lama, however, if we
are unable to do so because of unforeseen political
or other challenges, we expect to be able to fund the
capital required through a combination of existing
capital resources and future operating cash flow.

We may also invest capital in Russia and Central
Asia in 2005 to exercise certain rights we hold
through agreements with Highland Gold and
Celtic Resources to acquire interests in various
mineral properties, and also to acquire future com-
mon shares of Celtic. These rights are described
in note 10 to the Financial Statements. We expect
that any capital required will be funded from a
combination of our existing cash position and
operating cash flow in 2005.

Impact of Key Economic Trends

1. Higher Market Gold Prices

Gold Prices (Dollars per Ounce)

$500

$450

$400

$350

$300

$250

2002
Average Spot Price
Average Barrick Realized Price

2003

2004

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Market gold prices are subject to volatile price
movements over short periods of time, and are
affected by numerous industry and macroeconomic
factors that are beyond our control. The US dollar
gold price has increased over the past few years,
mainly due to the weakening of the US dollar
against most major currencies, a decline in gold
supply and an increase in demand for gold. The
gold price over the last few years has had a high
correlation with the US dollar, and we expect this
correlation to continue.

With global financial markets experiencing signifi-
cant volatility, political and security issues in a state
of uncertainty, and with the US dollar – the “secure
investment of choice” globally – coming under
pressure, the global investment community has re-
awakened to the potential for gold as an alternative
investment vehicle. The past few years have seen a
resurgence in gold as an investment vehicle, and we
believe the prospects for gold to experience further
investment interest are good, particularly in light
of expected global economic/political uncertainties
going forward. We believe that the introduction
of more readily accessible and more liquid gold
investment vehicles (such as gold exchange traded
funds – “ETFs”) will further enhance gold’s appeal
to investors.

Our revenues are significantly impacted by the
market price of gold. We have historically used
fixed-price gold sales contracts to provide pro-
tection in periods of low market gold prices, but
since 2001 we have been focusing on reducing the
level of outstanding fixed-price gold sales contracts.
In 2004, we reduced our fixed-price gold sales
contracts by 2 million ounces. The terms of our
fixed-price gold sales contracts enable us to deliver
gold whenever we choose over the primarily ten-
year term of the contracts. Our fixed-price gold
sales contracts have allowed us to benefit from
higher market gold prices, while the flexibility
implicit in contract terms allows us to reduce the
outstanding sales contracts over time.

Over the last three years, our realized gold sales
prices have largely tracked the rising market gold

price. Periods when our average realized price was
below average market prices were primarily caused
by us voluntarily choosing to deliver into gold sales
contracts at prices lower than prevailing market
prices to reduce outstanding gold sales contracts.
We view the outlook for market gold prices to be
positive due to our view of a declining US dollar
and the present supply/demand fundamentals. In
the future, we expect to be able to benefit from
higher gold prices. The flexibility under our fixed-
price gold sales contracts will enable us to deliver
gold at market prices, however, if we choose to
deliver a portion of our production under gold sales
contracts, the prices for those deliveries may be
below prevailing market prices.

2. Higher Market Silver Prices

Spot Silver Prices (Dollars per Ounce)

8.50
8.00
7.50
7.00
6.50
6.00
5.50
5.00
4.50
4.00

2002

2003

2004

Market silver prices are subject to volatile price
movements over short periods of time, and are
affected by numerous industry and macroeconomic
factors that are beyond our control. Market silver
prices have increased since late 2003 mainly due
to increasing investment and industrial demand,
along with higher world economic growth in 2004.
Market prices fluctuated in 2004 as higher prices
caused demand from jewelry and silverware fabri-
cation to decrease. An expected decline in the use
of silver for photographic film due to increases
in digital photography may negatively impact
market prices, but this trend has been partly offset
by increased demand for photographic film in
developing countries.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Market silver prices impact the value of silver pro-
duced as a by-product at some of our mines. When
the silver price increases, by-product credits increase
and our total cash costs per ounce decrease. In the
past, we have used silver sales contracts to sell a
portion of our annual silver production, which has
helped to mitigate the impact of volatility in market
prices, and we may use such contracts in the future.
The flexibility under our silver sales contracts allows
us to benefit from higher market silver prices by
choosing to deliver silver production into the silver
spot market. If we choose to deliver a portion of
our silver production under silver sales contracts, the
prices for those deliveries may be below prevailing
market prices.

3. Weakening of the US dollar
Against Major Currencies

AUD$ Spot and Average Monthly Hedge Rates
(A$:US$ exchange rate)

0.80

0.75

0.70

0.65

0.60

0.55

0.50

0.45

2002
Spot Rate

2003
Average Hedge Rate

2004

CAD$ Spot and Average Monthly Hedge Rates
(C$:US$ exchange rate)

0.85

0.80

0.75

0.70

0.65

0.60

The US dollar significantly depreciated against
many major currencies in 2003 and 2004. The
weakening of the US dollar was largely due to a
record US trade deficit and low interest rates that,
after taking into account inflation, provided negative
real returns. As these conditions remain, and as the
United States seeks to improve the competitiveness
of its exports, further devaluation of the US dollar
may occur.

Results of our mining operations in Australia and
Canada, reported in US dollars, are affected by
exchange rates between the Australian and Canadian
dollar and the US dollar, because a portion of our
annual expenditures are based in local currencies.
A weaker US dollar causes costs reported in
US dollars to increase, because local currency
denominated expenditures have become more
expensive in US dollars. We have a currency hedge
position as part of our strategy to control costs
by mitigating the impact of a weaker US dollar on
Canadian and Australian dollar-based expendi-
tures. Over the last three years, our currency hedge
position has provided benefits to us in the form
of hedge gains when contract exchange rates are
compared to prevailing market exchange rates as
follows: 2004 – $96 million; 2003 – $58 million;
2002 – $7 million. These gains are included in our
operating costs.

At December 31, 2004, we had hedged local
currency-based expenditures for about the next
three years at average exchange rates that are more
favorable than market rates in early 2005. The
average rates for currency contracts designated
against operating costs over the next three years are
$0.64 for Australian dollar contracts and $0.72 for
Canadian dollar contracts. Further details of our
currency hedge position are included in note 16 to
the Financial Statements. Beyond three years, most
of our local currency denominated costs are subject
to market currency exchange rates. If the trend of
a weakening US dollar continues, we do not expect
that this will significantly impact our results of

2002
Spot Rate

2003
Average Hedge Rate

2004

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

operations over the next three years because of the
protection we have under our currency hedge posi-
tion. Beyond the next three years, our results could
be affected, depending upon whether we add to our
currency hedge positions in the future.

4. Higher Energy Prices

Crude Oil Market Price
(Dollars per Barrel)

$60
$55
$50
$45
$40
$35
$30
$25
$20
$15

2002

2003

2004

Diesel Fuel and Propane
Prices of commodities, such as diesel fuel and
propane, are subject to volatile price movements
over short periods of time and are affected by
factors that are beyond our control. Annually, we
consume about 1.3–1.7 million barrels of diesel
fuel and 20–25 million gallons of propane at our
mines. The cost of these commodities affects our
costs to produce gold.

Crude oil is refined into diesel fuel that is used
by us at our mines. Due mainly to global supply
shortages and a weakening US dollar, crude oil
prices rose in 2004, with a corresponding rise in
diesel fuel prices. To control costs by mitigating the
impact of rising diesel fuel prices, we put in place a
fuel hedge position of 2.4 million barrels, a portion
of estimated future diesel fuel consumption over

the next three years with an average cap price of
$39 per barrel and participation to an average floor
price of $29 per barrel on about half the position.
In 2004, we realized benefits in the form of hedge
gains totaling $4 million when contract prices were
compared to market prices. If the trend of increasing
diesel fuel prices continues, this could impact future
gold production costs, albeit mitigated by our
present fuel hedge position. We also have a propane
hedge position of 29 million gallons at an average
price of $0.79 per gallon, that will help to control
the cost of a portion of propane consumption at
our mining operations over the next two years, and
mitigate the impact of volatility in propane prices.

Electricity
Electricity prices have risen in recent years as a
result of diesel fuel price increases and natural gas
demand, as well as excess demand for electricity.
Annually we consume about 1.3–1.5 billion kilo-
watts of electricity at our mines. Fluctuations in
electricity prices or in electricity supply impact costs
to produce gold. To control electricity costs, we are
building a 115-megawatt natural gas-fired power
plant in Nevada that will supply our Goldstrike
mine, and reduce the mine’s dependence on the
regulated utility in Nevada. The sourcing of elec-
tricity from this power plant is expected to reduce
total cash costs by an average of about $10 per
ounce at Goldstrike over the remaining life of
the mine, compared to recent costs of obtaining
power from the regulated power utility. The plant is
targeted to begin operating in fourth quarter 2005.
We are also entering into long-term power supply
arrangements for some mines; building powerlines
to link into power grids; actively reviewing alter-
native sources of supply of electricity; and looking
at other options across many of our larger mines
and development projects.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

5. Other Inﬂationary Cost Pressures
The mining industry has been experiencing signifi-
cant inflationary cost pressures with increasing
costs of labor and prices of consumables such as
steel, concrete and tires. The cost of consumables
such as steel and concrete mainly impacts mine
construction costs. The costs of tires mainly
impacts cash production costs. For steel in particu-
lar, world demand in excess of supply caused steel
prices to increase significantly in 2004. We
are directly and indirectly impacted by rising steel
prices through the cost of new mine equipment
and grinding media, as well as structural steel used
in mine construction. We are focusing on supply
chain management and continuous improvement
initiatives to mitigate the impact of higher steel
prices, including controlling usage and extending
the life of plant and equipment, where possible.

6. Declining US dollar interest rates

Interest Rate %

6.5

5.5

4.5

3.5

2.5

1.5

0.5

2002

2003

2004

1 Year Interest Rates
2 Year Interest Rates
5 Year Interest Rates

US dollar interest rates have been relatively low
by historic standards over the past three years due
mainly to ongoing weak economic conditions;
easy monetary policies; low inflation expectations;
and increasing demand for low-risk investments.
This lower interest-rate environment has enabled
us to secure new sources of financing in 2004 at
relatively attractive interest rates.

Volatility in interest rates mainly affects interest
receipts on our cash balances ($1,398 million
outstanding at the end of 2004), and interest pay-
ments on variable-rate long-term debt ($411 million
outstanding at the end of 2004). Based on the rela-
tive amounts of variable-rate financial assets and
liabilities at the end of 2004, declining interest rates
would have a negative impact on our results. In the
future we expect these relative amounts to change
as we invest cash in our development projects.
The amount of cash balances may decrease from
levels at December 31, 2004, subject to the amount
of operating cash flow we generate in the future,
as well as other sources of and uses for cash. In
response to the volatility in interest rates, we have
used interest rate swaps to alter the relative amounts
of variable-rate financial assets and liabilities and
to mitigate the overall impact of changes in interest
rates. Management of interest-rate risk takes into
account the term structure of variable-rate financial
assets and liabilities. On $300 million of our cash
balances, we have fixed the interest rate through
2008 at 3.3%. On our Bulyanhulu project financing,
we have fixed the Libor-based rate for the remaining
term of the debt at 4.45%. These interest rate swaps
have provided benefits to us in the form of hedge
gains, when rates under the swaps are compared to
market interest rates, totaling $16 million in 2004,
$13 million in 2003 and $6 million in 2002. In the
future we may alter the notional amounts of interest
rate swaps outstanding, as the relative amounts of
variable-rate assets and liabilities change, to attempt
to manage our exposure to interest rates.

Interest rates have historically been correlated with
forward gold prices compared to current market
prices. In periods of higher interest rates, forward
gold prices have generally been higher. Consequently
in periods of higher interest rates we have been able
to secure more favorable future prices under fixed-
price gold sales contracts.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Results

Selected Annual Information

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

Gold production (’000s oz)
Gold sales

(’000s oz)
$ millions

Market gold price3
Realized gold price3
Total cash costs3,4
Amortization
Net income
Net income per share

Basic
Diluted

Dividends per share
Cash inflow (outflow)
Operating activities
Capital expenditures
Financing activities

Total assets
Total long-term financial liabilities
Gold reserves (millions of contained oz)
Fixed-price gold sales contracts (millions of oz)

1. As disclosed in the 2003 Annual Report.

2. As disclosed in the second quarter 2004 report.

3. Per ounce weighted average.

Targets for 20041

4,900–5,000

$ 205–215
480–490

(900)2

2004

4,958

4,936
$ 1,932
409
391
212
452
248

0.47
0.46
0.22

506
(824)
741
6,274
$ 1,707
89.1
13.5

2003

5,510

5,554
$ 2,035
363
366
189
522
200

0.37
0.37
0.22

519
(322)
(266)
5,358
$ 789
85.9
15.5

2002

5,695

5,805
$ 1,967
310
339
177
519
193

0.36
0.36
0.22

588
(228)
(61)
5,261
$ 819
86.9
18.1

4. For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70 of Management’s
Discussion and Analysis.

Overview of 2004 Versus 2003

Earnings
In 2004, higher cash production costs were offset
by higher gold selling prices, but earnings were
impacted by lower gold sales volumes. Based on
the difference between average realized gold prices
and average total production costs per ounce, the
impact of lower sales volumes was to decrease
pre-tax earnings by about $54 million.

As expected, gold production in 2004 was lower
than 2003, and total cash costs per ounce were
higher, mainly due to the expected mining of lower

ore grades in 2004. Higher spot gold prices enabled
us to realize higher selling prices for our gold
production, and mitigate the impact on revenue of
11% lower sales volumes. We sold about 59% of our
production into the spot market, and 41% into our
gold sales contracts at prices lower than prevailing
market prices. By voluntarily delivering into some
of our gold sales contracts, we reduced our fixed-
price gold sales contracts by 2 million ounces,
and we accepted an $89 million opportunity cost,
compared to delivering all of our production at
market prices, with corresponding lower revenues
from gold sales.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Earnings in 2004 benefited from $25 million lower
pre-tax interest expense, a $203 million income tax
recovery, and pre-tax gains on sale of assets totaling
$34 million, partly offset by pre-tax impairment
charges totaling $139 million on long-lived assets.
Interest expense decreased by $25 million mainly
due to amounts capitalized at development projects
in 2004. The $203 million income tax recovery in
2004 included a credit of $141 million following
the resolution of a tax assessment in Peru, and a

credit of $81 million due to a change in tax status in
Australia following the adoption of certain aspects
of new tax legislation. Earnings in 2003 included
a $60 million post-tax non-hedge derivative gain
(2004 – $9 million post-tax) and deferred tax credits
totaling $62 million, partly offset by post-tax
charges of $11 million on settlement of the Inmet
litigation and $17 million for the cumulative effect
of accounting changes.

Special Items – Effect on earnings increase (decrease) ($ millions)

For the years ended December 31

Pre-tax Post-Tax

2004

2003

2002

Non-hedge derivative gains (losses)
Inmet litigation costs
Gains on asset sales
Impairment charges on long-lived assets
Impairment charges on investments
Changes in asset retirement obligation cost estimates
Cumulative effect of accounting changes
Resolution of Peruvian tax assessment
Outcome of tax uncertainties
Reversal of other accrued costs
Deferred tax credits

Change in Australian tax status
Release of valuation allowances/

outcome of uncertainties

Total

$ 5
–
34
(139)
(5)
(22)
–

–
21

–

–
(106)

$ 9
–
28
(96)
(5)
(17)
–

141
15

5
161

$ 71
(16)
34
(5)
(11)
(10)
(17)

–
–

–

–
46

$ 60
(11)
27
(3)
(11)
(10)
(17)

–
–

–

62
97

$ (6)
–
8
(11)
–
–
–

–
–

–

–
(9)

$ 6
–
5
(11)
–
–
–

–
–

–

22
22

Cash Flow
Our closing cash position at the end of 2004 in-
creased by $428 million to $1,398 million. Operating
cash flow decreased slightly in 2004 mainly due
to the lower gold sales volumes and increases in
supplies inventory at our development projects,
partly offset by lower payments for income taxes.
Capital expenditures increased by $502 million to
$824 million mainly due to construction activity at
our development projects. We received $974 million
from new financing put in place primarily to fund
construction at our development projects; we
paid dividends totaling $118 million and we spent
$95 million on our share buyback program.

Consolidated Gold Production
and Sales

Gold production and production costs
By replacing gold reserves depleted by production
year over year, we can maintain production levels
over the long term. If depletion of reserves exceeded
discoveries over the long term, then we may not
be able to sustain gold production levels. Reserves
can be replaced by expanding known orebodies
or by locating new deposits. Once a site with gold
mineralization is discovered, it may take several
years from the initial phases of drilling until
production is possible, during which time the
economic feasibility of production may change.
Substantial expenditures are required to establish

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

proven and probable reserves and to construct
mining and processing facilities. Given that gold
exploration is speculative in nature, some explo-
ration projects may prove unsuccessful.

Our financial performance is affected by our ability
to achieve targets for production volumes and
total cash costs. We prepare estimates of future
production and total cash costs of production for
our operations. These estimates are based on mine
plans that reflect the expected method by which we
will mine reserves at each mine, and the expected
costs associated with the plans. Actual gold pro-
duction and total cash costs may vary from these
estimates for a number of reasons, including if the
volume of ore mined and ore grade differs from
estimates, which could occur because of changing
mining rates; ore dilution; metallurgical and other
ore characteristics; and short-term mining condi-
tions that require different sequential development
of ore bodies or mining in different areas of the
mine. Mining rates are impacted by various risks and
hazards inherent at each operation, including natural
phenomena, such as inclement weather conditions,
floods, and earthquakes; and unexpected labor
shortages or strikes. Total cash costs per ounce are
also affected by changing waste-to-ore stripping
ratios, ore metallurgy that impacts gold recovery
rates, labor costs, the cost of mining supplies and
services, and foreign currency exchange rates. In the

normal course of our operations, we attempt to man-
age each of these risks to mitigate, where possible,
the effect they have on our operating results.

In 2004, production from our portfolio of mines
was in line with plan. As expected, production in
2004 was 10% lower than in 2003 primarily as
a result of mining lower-grade ore at Goldstrike
Open Pit, Pierina and Eskay Creek, partly offset
by higher production at Bulyanhulu. Ounces sold
decreased by 11% compared to 2003, consistent
with the lower production levels. As our develop-
ment projects commence production beginning in
2005, we are targeting annual gold production to
rise to between 6.8 and 7.0 million ounces by 2007
at total cash costs slightly above $200 per ounce.
In 2005, we expect to produce about 5.4–5.5 million
ounces at total cash costs of between $220 and
$230 per ounce.

Our Pierina and Eskay Creek mines produced about
17 million ounces of silver by-products in 2004. The
incidental revenue from sales of silver is classified as
a component of our reported “total cash costs per
ounce” statistics, which is one of the key perform-
ance measures that we use to manage our business.
At December 31, 2004, the silver content in our gold
reserves was about 911 million ounces. After pro-
duction begins at Pascua-Lama, we expect that our
annual silver production will increase significantly.

Consolidated Total Cash Costs Per Ounce

For the years ended December 31
(in dollars per ounce)

Target for 2004

Cost of sales1
Currency hedge gains
By-product credits
Cash operating costs
Royalties/mining taxes
Total cash costs2

$ 205–215

2004

$ 248
(19)
(30)
199
13
$ 212

2003

$ 210
(12)
(21)
177
12
$ 189

2002

$ 191
(1)
(20)
170
7
$ 177

1. At market currency exchange rates.

2. For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70 of Management’s
Discussion and Analysis.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Total cash costs for 2004 were in line with the orig-
inal full-year guidance. As expected, total cash
costs in 2004 were higher than in 2003, primarily
due to processing lower-grade ore at Goldstrike
Open Pit, Round Mountain and Pierina, combined
with the effect of changes in average currency hedge
rates on total cash costs at our Australian mines.

Revenue from gold sales
We realized an average selling price of $391 per
ounce for our gold production in 2004, compared
to $366 per ounce in 2003, when average market
gold prices were lower. Our average realized price
in 2004 reflects delivery of 59% of ounces sold into
the spot market at market prices, and 41% into gold
sales contracts at selling prices below prevailing
market prices. We exceeded our target for reducing
our fixed-price gold sales contracts by 0.5 million
ounces in 2004, ending the year with a 2 million
ounce reduction. The price realized for gold sales
in 2005 and beyond will depend upon spot market
conditions and the selling prices of any gold sales
contracts into which we voluntarily deliver, which
could be below prevailing spot market prices.

Results of Operating Segments

In our Financial Statements we present a measure
of historical segment income that reflects gold sales
at average consolidated realized gold prices, less
segment operating costs and amortization of seg-
ment property, plant and equipment. Our segments
include: producing mines, development projects
and our corporate exploration group. For each
segment, factors influencing consolidated realized
gold prices apply equally to the segments, and
therefore the factors have not been repeated in
the discussion of individual segment results. We
monitor segment operating costs using “total cash
costs per ounce” statistics that represent segment
operating costs divided by ounces of gold sold
in each period. The discussion of results for each
segment focuses on this statistic in explaining
changes in segment operating costs. We also discuss
significant variances from prior public guidance

for gold production and total cash costs per ounce
statistics for each segment.

Conducting mining activities in countries outside
North America subjects us to various risks and
uncertainties that arise from carrying on business in
foreign countries including: uncertain political and
economic environments; war and civil disturbances;
changes in laws or fiscal policies; interpretation of
foreign taxation legislation; and tax implications on
repatriation of foreign earnings. We monitor these
risks on an ongoing basis and mitigate their effects
where possible, but events or changes in circum-
stances could materially impact our results and
financial condition.

For development projects, we prepare estimates of
capital expenditures; reserves and costs to produce
reserves. We also assess the likelihood of obtaining
key governmental permits, land rights and other
government approvals. Estimates of capital expen-
ditures are based on studies completed for each
project, which also include estimates of annual pro-
duction and production costs. Adverse changes in
any of the key assumptions in these studies or other
factors could affect estimated capital expenditures,
production levels and production costs, and also
the economic feasibility of a project. We take steps
to mitigate potentially adverse effects of changes
in assumptions or other factors. Prior to the com-
mencement of production, the segment results
for development projects reflect expensed mine
development and mine start-up costs.

North America
In 2004, production was at the low end of the
original guidance for the year and total cash costs
were better than the original guidance for the year.
Total cash costs per ounce reflected lower costs than
plan at the Goldstrike Open Pit and Eskay Creek,
partly offset by higher costs at Round Mountain
and Hemlo. Total cash costs for the North America
region in 2004 were not significantly affected
by the impact of a weakening US dollar on our
Canadian mines or by rising fuel prices, because we
mitigated these exposures through our currency

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

and fuel hedge programs as part of our focus on
controlling costs.

The region produced 8% less gold in 2004 com-
pared with 2003 mainly because of the expected
mining of lower-grade ore at the Goldstrike Open
Pit and Eskay Creek. Compared to 2003, total cash
costs per ounce were 6% higher in 2004, as a result
of the processing of lower-grade ore.

In 2005, gold production from the North America
region is expected to decline by 5% to about 2.8 mil-
lion ounces due to the processing of lower-grade
ore at Eskay Creek and following the depletion of
reserves at Holt-McDermott in 2004. Total cash
costs for the region are expected to increase by 10%
to about $245 per ounce, mainly due to the process-
ing of lower-grade ore at Round Mountain and Eskay
Creek, as well as slightly higher costs at Goldstrike.

Goldstrike, United States
Segment income decreased by $1 million in 2004
from 2003 levels, mainly due to 14% lower gold
sales volumes and 5% higher total cash costs per
ounce, partly offset by 7% higher realized gold
prices and 7% lower amortization expense.

Gold production at the open pit was slightly higher
than plan in 2004, and total cash costs per ounce
were slightly lower than plan. With the planned
mining of lower-grade ore in 2004, partly offset by
better gold recovery rates, open-pit production was
11% lower and total cash costs per ounce were 6%
higher than in 2003. Revenues decreased by 8%,
with a 17% decrease in ounces sold, due to the
lower gold production levels in 2004, partly offset
by a 7% increase in realized gold prices.

At the underground mine, production was 5%
below the low end of the original range of guidance
due to lower than expected availability of the Rodeo
backfill raise, changes to mine sequencing, and
higher maintenance costs due to unexpected repairs
to electrical transformers. Total cash costs per
ounce were at the high end of the original range of
guidance for 2004 due to the lower production vol-
umes and higher backfill haulage costs. Production

was slightly higher than 2003 and total cash costs
per ounce were similar to 2003, mainly due to bet-
ter gold recovery rates and processing of slightly
higher-grade ore in 2004.

Amortization expense decreased by $11 million in
2004 mainly due to the effect of lower gold sales
volumes, combined with the impact of reserve
increases at the beginning of 2004 that caused a
$15 million decrease in amortization expense.

In 2004, the Nevada Public Utilities Commission
approved our proposal to build a 115-megawatt
natural gas-fired power plant in Nevada to supply
our Goldstrike mine. The plant is targeted to
commence operations in fourth quarter 2005.
Highlights include:
> The construction permit for the foundation
and buried services was received in fourth
quarter 2004.

> Engineering work for the project is substantially

complete and site preparation commenced
in fourth quarter 2004. Construction of the
power plant was subcontracted to a third-party
contractor, and $18 million was spent on
construction in 2004.

> We expect to file an application for a building
construction permit in first quarter 2005.
> The natural gas supplier to the power plant is

applying for permits to enable the construction
of a short extension from an existing gas pipeline
to the power plant site.

Eskay Creek, Canada
Segment income decreased by $13 million in 2004,
mainly due to 18% lower gold sales volumes and
9% higher amortization expense, partly offset
by 40% lower total cash costs per ounce and
7% higher realized gold prices. Revenues decreased
by 14%, with an 18% decrease in ounces sold, due
to the lower gold production levels in 2004, partly
offset by a 7% increase in realized gold prices.

Production for 2004 was slightly lower than
plan due to lower than expected ore grades and
unscheduled backfill plant maintenance. Total cash
costs per ounce were better than plan, mainly due

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

to higher by-product credits caused by higher silver
prices, partly offset by the impact of processing
lower-grade ore and higher maintenance costs. Com-
pared to 2003, as expected, production decreased
by 18% because of a 4% decline in quantity of ore
processed, and an 18% decline in ore grade. Total
cash costs per ounce were 40% lower than 2003
mainly due to higher by-product credits in 2004
caused by higher silver prices, partly offset by the
impact of lower ore grades.

Amortization expense increased by $4 million
in 2004 mainly due to the impact of downward
revisions to reserve estimates in 2004 that increased
amortization rates, partly offset by the effect of
lower gold sales volumes.

In fourth quarter 2004, the Eskay Creek mine was
tested for impairment effective December 31, 2004.
An impairment charge of $58 million was recorded,
which is not included in the measure of segment
income. For further details see page 64.

Round Mountain (50% owned),
United States
Segment income decreased by $5 million in 2004,
mainly due to 28% higher total cash costs, partly
offset by 7% higher realized gold prices. Revenues
increased by 6% mainly due to 7% higher realized
gold prices.

Production was 4% higher than the high end of the
original range of guidance for 2004, but at slightly
higher total cash costs per ounce. Production was
positively impacted by the continuing recovery
of gold from leach pads where ore was placed in
prior years. Higher total cash costs per ounce were
mainly due to higher royalty costs, caused by higher
market gold prices, as well as higher purchase
costs and consumption of both cyanide and lime.
Compared to 2003, gold production was 3% lower
due to an expected decline in ore grades partly off-
set by an increase in quantities of ore processed.
Total cash costs per ounce increased by 28% over

2003 as a result of mining lower-grade ore in 2004,
higher royalties, and higher purchase costs and
consumption of both cyanide and lime. Higher
recovery rates of gold from leach pads in 2003 also
contributed to the year on year change in total cash
costs per ounce.

Amortization expense decreased by $3 million
mainly due to slightly lower gold sales volumes
combined with the effect of reserve increases at the
beginning of 2004 on amortization rates.

Hemlo (50% owned), Canada
Segment income decreased by $3 million in 2004,
mainly due to 10% lower gold sales volumes,
combined with 6% higher total cash costs per
ounce, partly offset by 7% higher realized gold
prices. Revenues decreased by $5 million as 10%
lower gold sales volumes were partly offset by 7%
higher realized gold prices.

In 2004, production was 10% lower than plan and
total cash costs per ounce were 13% higher than
plan primarily because ground stability issues caused
mining to occur in lower-grade areas of the mine.
A decline in ore grades in 2004 was the primary
reason for the lower gold production and higher
total cash costs per ounce compared with 2003.

East Archimedes, United States
In September 2004, a decision was made to proceed
with the East Archimedes project at the Ruby Hill
mine site in Nevada. The project is an open-pit,
heap leach operation exploiting the East Archimedes
deposit, a deeper continuation of the ore mined
previously at Ruby Hill. Construction capital is
estimated at about $75 million over an expected
two-year construction phase that begins once
permitting is secured. The mining fleet has been
ordered and permitting work is ongoing. The proj-
ect has an expected life-of-mine strip ratio of 9:1
and assumes an average mining rate of 100,000 tons
per day. The first gold pour is targeted for mid-2007.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

South America
In 2004, all production was from the Pierina mine.
Lagunas Norte and Veladero are expected to begin
production and contribute to the South America
region’s results in the second half of 2005. In 2005,
we expect production to increase by about 90% to
about 1.2 million ounces, mainly due to the pro-
duction start-up at Lagunas Norte and Veladero.
Total cash costs are expected to increase by 25% to
about $133 per ounce, mainly due to higher costs at
Pierina following an increase in the stripping ratio
from 60:1 to 86:1 and the impact of new production
from Veladero and Lagunas Norte. The higher
stripping ratio at Pierina mainly reflects the updat-
ing of the mine plan to incorporate additions to
reserves at the end of 2004.

Pierina, Peru
Segment income decreased by $15 million in 2004
mainly due to 29% lower gold sales volumes, com-
bined with 28% higher total cash costs per ounce,
partly offset by 7% higher realized gold prices and
lower amortization rates. Revenues decreased by
$81 million as 29% lower gold sales volumes were
partly offset by 7% higher realized gold prices.

In 2004, production was slightly higher than plan,
however total cash costs per ounce were 6% higher
than the upper end of the range of guidance for the
year. The ability to access higher-grade ore at the
mine was delayed due to a change in the mining plan
to adjust for minor pit slope instability in the west
pit wall. Higher fuel prices and lower by-product
credits, due to lower quantities of silver contained
in the ore processed in 2004, as well as processing
of lower-grade ore, all contributed to higher total
cash costs per ounce. Compared to 2003, produc-
tion was 29% lower and total cash costs per ounce
were 28% higher, due to the expected mining
of lower-grade ore. Higher labor costs in 2004
also contributed to the increase in total cash costs
over 2003.

Amortization expense decreased by $59 million
mainly due to the lower gold sales volumes, com-
bined with the effect of reserve increases at the
beginning of the year that lowered amortization

rates and caused amortization expense to decrease
in 2004 by $9 million.

Lagunas Norte, Peru
In 2004, the segment loss of $12 million represents
expensed mine development costs prior to May 1,
2004 when the project achieved the criteria to
classify mineralization as a reserve for US reporting
purposes, together with $3 million of expensed
mine start-up costs. In 2003, the segment loss of
$29 million represented expensed mine develop-
ment costs for a full year.

The project remains on schedule for its first gold
pour in the third quarter of 2005. The first three
full years of production at Lagunas Norte are now
expected to average approximately 800,000 ounces
of gold annually at total cash costs of about $155
per ounce. The project’s reserves increased by
2.0 million ounces, or 28%, to 9.1 million ounces
at year-end 2004. Higher gold prices have allowed
us to bring more ounces into production in the first
three full years, but due to the lower ore grades
associated with these ounces, our total cash costs
per ounce have also increased. Highlights include:
> The Lagunas Norte/Alto Chicama Legal Stability
Agreement between Barrick and the Peruvian
Government was executed in January 2005. This
agreement will provide greater certainty over the
foreign exchange and fiscal administrative regime
for 15 years, including real estate taxes, custom
duties, VAT and excise taxes.

> Construction of the overall project was about
70% complete at the end of 2004, with about
4,000 workers on-site.

> Construction costs of $182 million were spent
in 2004, of which $40 million relates to the
purchase of the mine fleet, main auxiliary mine
equipment and other mine equipment.

> Approval of the Environmental Impact Statement
and principal construction permit was received
in first quarter 2004.

> Overliner material is being placed on the

leach pad.

> The power line was completed and energized

in January 2005.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Veladero, Argentina
In 2004, the segment loss of $5 million represents
expensed mine start-up costs. In 2003, the segment
loss of $18 million represented expensed mine
development costs prior to October 1, 2003 when
the project achieved the criteria to classify mineral-
ization as a reserve for US reporting purposes.

The project remains on schedule for its first
gold pour in the fourth quarter of 2005. The first
three full years of production at Veladero are
now expected to average approximately 700,000
ounces of gold annually at total cash costs of about
$2001 per ounce. The project’s reserves increased by
1.7 million ounces, or 16%, to 12.8 million ounces
at year-end 2004. Higher gold prices have allowed
us to bring more ounces into production in the
first three full years, but due to the lower ore grades
associated with these ounces, our total cash costs
per ounce have also increased. During 2004, we
revised our construction capital estimate upwards to
about $540 million from our previous estimate of
$475 million due to a number of factors including:
increases in prices for commodities, such as fuel,
concrete and steel; exchange rate variations; higher
labor costs; increased winter operations costs;
and some preliminary changes to the scope of the
project. Estimated future total cash costs are also
being affected by similar cost pressures. We are
evaluating a number of alternatives to control the
cost increases, which may require some additional
capital investment. Highlights include:
> Construction costs of $284 million were spent in
2004 and the project is about 65% complete.
> Internal mine road construction is complete.
> Work on the truck shop facility was complete

in December 2004.

> Steel erection on the secondary crusher is

progressing on schedule and the main crusher
components have been installed. Construction
of the other plant facilities is well advanced.
> The assay lab was commissioned in fourth

quarter 2004.

> Construction of the valley-fill heap leach facility
embankment began in 2004 and was complete
in February 2005.

> Pre-stripping activities have steadily improved
in fourth quarter 2004 due to improvements
in equipment availability, blasting techniques
and the use of experienced shovel operators
brought in to assist with mining activities and
to train others.

Pascua-Lama, Chile/Argentina
In 2004, we made a decision to proceed with the
development of the Pascua-Lama project in Chile/
Argentina. The development is contingent on
obtaining the necessary permits, approvals and fis-
cal regimes. Pascua-Lama is a large, low total cash
cost, long-life asset that is expected to contribute
to our production, cash flow and earnings for
many years. We believe that few undeveloped gold
deposits exist in the world that are of comparable
size and quality to Pascua-Lama. Pascua-Lama
is also expected to increase our leverage to silver.
Furthermore, development of the Pascua-Lama
project, combined with Veladero and the large
associated land holdings with regional exploration
potential, presents an opportunity to develop the
area as one large gold district.

Annual production is estimated between 750,000-
775,000 ounces of gold and about 30 million ounces
of silver over the first ten years at estimated total
cash costs of about $130–1401 per ounce. The proj-
ect’s gold reserves increased by 0.8 million ounces,
or 5%, to 17.6 million ounces at year-end 2004.
Pre-production construction costs are estimated at
about $1.4–1.5 billion, excluding capitalized interest.
A further $0.3 billion of capital is expected to
be spent in the three years after production start-
up for a plant expansion and flotation circuit to
increase capacity from 33,000 to 44,000 metric tons
per day. The permitting phase of the Pascua-Lama
project is expected to be completed by the end of
2005. An expected three-year construction phase will
begin once permitting has been completed and other
fiscal and taxation matters have been finalized, with
production targeted to commence in 2009.

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

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

In 2004, the segment loss of $4 million represents
expensed mine start-up costs. In 2003, all project
costs incurred were capitalized, resulting in no
segment income or loss. We incurred capital expen-
ditures of $35 million in 2004.

Recent focus has been on community/government
relations, permitting, protocol implementation
and tax stability. A mining protocol for the project,
which straddles the border of Chile and Argentina,
was signed by both governments. The protocol
provides the framework for resolving certain issues
such as border crossings by personnel and materials.
Environmental impact assessments were filed by
the end of 2004 and approval is sought by the
end of 2005.

Australia /Africa
Gold production in 2004 was slightly higher than
plan mainly due to the mining of higher-grade ore
at Kalgoorlie, partly offset by slightly lower produc-
tion than plan at Plutonic and Bulyanhulu. Total
cash costs per ounce were 3% higher than the
upper end of the range of original guidance for the
year mainly due to higher costs at Plutonic and
Bulyanhulu. Changes in market currency exchange
rates in 2004 did not significantly impact total cash
costs per ounce because we mitigated this exposure
through our currency hedge program.

In 2004, gold production was 1% higher than 2003
as higher production at Kalgoorlie and Bulyanhulu
was partly offset by lower production at Plutonic.
Total cash costs per ounce were 14% higher than
2003 mainly because of the processing of lower-
grade ore at Plutonic, combined with the effect of
increases in average Australian dollar currency
hedge rates. The average rates of currency hedge
contracts vary year on year, which impacts reported
total cash costs per ounce. The average exchange
rate of hedge contracts in 2004 was $0.58 compared
to $0.55 in 2003, which caused total cash costs per
ounce to increase slightly in 2004.

In 2005, production from the Australia/Africa
region is expected to increase by 7% to about
1.4 million ounces, mainly due to the production
start-up at Tulawaka in first quarter 2005. Total
cash costs per ounce are expected to increase by
7% to about $257 per ounce, mainly due to a 5%
increase in the average exchange rate of Australian
currency hedge contracts designated for 2005, but
the average exchange rate remains significantly
better than current spot exchange rates.

Kalgoorlie (50% owned), Australia
Segment income increased by $10 million in 2004,
mainly due to the combined effect of 12% higher
gold sales volumes and 7% higher realized gold
prices, partly offset by 11% higher total cash costs
per ounce.

Production was higher than plan in 2004 due to
better-than-expected ore grades and gold recovery
rates. Total cash costs per ounce were at the low
end of the range of the guidance for the year as
better ore grades and recovery rates were partly
offset by higher than expected maintenance costs.
Gold production was consistent with 2003 as
ore tons processed and ore grades were similar to
2003. Total cash costs per ounce were 11% higher
than 2003 primarily due to higher maintenance
and labor costs, higher fuel prices, and the year
on year effect of average exchange rates of currency
hedge contracts.

Plutonic, Australia
Segment income decreased by $6 million in 2004 as
4% lower gold sales volumes, combined with 16%
higher total cash costs per ounce, were partly offset
by 7% higher realized gold prices. Revenues were
higher in 2004 as 7% higher realized gold prices
were partly offset by 4% lower gold sales volumes.

Production in 2004 was slightly lower than plan
and total cash costs per ounce were 14% higher
than the upper end of the range of guidance for
the year primarily due to the mining of greater
quantities of lower-grade open-pit ore. Temporary
problems with ground conditions restricted mining

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

of higher-grade ore in the Timor underground
area for part of the year, and consequently the
mine processed more open-pit ore than planned.
Compared with 2003, gold production was 9%
lower mainly due to a 12% decrease in ore tons
processed. In 2003, ore tons processed were higher
because a secondary mill was operating but this
mill ceased operating in mid-2004. Total cash costs
per ounce were 16% higher than 2003 mainly due
to the combined effect of higher fuel, haulage and
maintenance costs and the year on year effect of
average rates of currency hedge contracts.

Bulyanhulu, Tanzania
Segment income was $6 million higher in 2004 as
14% higher gold sales volumes, combined with 7%
higher realized gold prices, were partly offset by
15% higher total cash costs per ounce. Revenues
were 24% higher in 2004 reflecting the higher gold
sales volumes and realized gold prices.

Gold production in 2004 was slightly lower than
plan and total cash costs per ounce were 9% higher
than the upper end of the range of guidance for
the year. Both production and total cash costs per
ounce were impacted by higher ore dilution, which
caused an 8% decline in the grade of ore processed
compared with plan. Compared with 2003, gold
production was 12% higher mainly due to a
15% increase in the tons of ore processed due to
improved mill performance. Total cash costs per
ounce were 15% higher than 2003 due to higher
costs of mine site administration and underground
maintenance, partly offset by higher copper by-
product credits due to higher market copper prices.

Cowal, Australia
In 2004, the segment loss of $1 million represents
expensed mine start-up costs. In 2003, all project
costs incurred were capitalized, resulting in no seg-
ment income or loss.

The Cowal project in Australia is progressing well
and production is expected to commence in first
quarter 2006. The first full three years of produc-
tion at Cowal are expected to be approximately
230,000 ounces of gold annually at total cash

costs of about $2401 per ounce. During 2004,
we revised our construction capital estimate up
to approximately $305 million due to factors
including increases in commodity and consumable
prices, and the very competitive construction
labor market in Australia. Expected total cash costs
per ounce are also being affected by similar cost
pressures. Highlights include:
> Capital expenditures were $73 million, slightly
higher than plan as expenditures, originally
expected to occur in 2006, were brought forward
to 2005 to realize construction efficiencies.
> The pipeline for water supply is complete.
> Bulk excavation for the primary crusher is

substantially complete.

> Drilling of pit dewatering bores is complete
and the design of additional bores for water
supply is underway.

> Purchase orders have been placed for major

mining equipment items.

> The construction contract for the electricity

transmission line was awarded to a contractor.
The contractor started construction on
permitted sections in early 2005 and the timing
of completion of the entire line is dependent
upon receipt of the remaining permits.

> Earthworks is progressing with the northern
tailings facility 80% complete and the tailings
return pipeline substantially complete.
> The principal authorizations necessary for
construction of Cowal have been obtained
or are in process, with the additional required
sectoral permits expected in due course.

Tulawaka (70% owned), Tanzania
In 2004, development costs were capitalized from
January 1, 2004, when the project achieved the
criteria to classify mineralization as a reserve for US
reporting purposes, resulting in no segment income
or loss. In 2003, all mine development costs were
expensed as incurred.

The Tulawaka project is on schedule for its first
gold pour in first quarter 2005. Our economic
share under the terms of the joint venture of the

1. Subject to exchange rate ﬂuctuations.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

first full three years of production at Tulawaka
is expected to average about 90,000 ounces of
gold annually at total cash costs of approximately
$180 per ounce. Highlights include:
> Construction capital of $48 million (100% basis)

was spent in 2004.

> Earthworks and site preparation were near

completion at the end of 2004.

> The mining contract has been awarded to an

external contractor.

> Process plant construction is well underway

with the completion of power plant
installation and commissioning, substantial
completion of the SAG mill, concrete and
structured steel installation and other site
infrastructure buildings.

> Plant handover is expected in first quarter 2005.

Other Costs and Expenses

Exploration, Development
and Business Development Expense

For the years ended
December 31 ($ millions)

2004

2003

2002

Exploration costs
North America
Australia/Africa
South America
Russia/Central Asia
Other countries

Mine development costs

Veladero
Lagunas Norte
Other projects

Mine start-up costs

Veladero
Lagunas Norte
Cowal
Pascua-Lama

Business development/other

$ 30
40
20
5
1
96

–
9
5
14

5
3
1
4
13
18
$ 141

$ 22
22
19
4
–
67

18
29
6
53

–
–
–
–
–
17
$ 137

$ 16
15
7
4
–
42

20
29
3
52

–
–
–
–
–
10
$ 104

In 2004, we spent more than both plan and the
prior year on our exploration program as part of
our strategy to grow our reserves. Higher activity
at Goldstrike, Eskay Creek and Round Mountain
led to an increase in expenditures for North
America. Higher activity in Tanzania, primarily
at the Buzwagi project, led to the increase in
Australia/Africa.

Development costs are expensed until mineraliza-
tion is classified as proven and probable reserves
for US reporting purposes. At Lagunas Norte, we
expensed development costs until May 1, 2004,
and at Veladero, we expensed development costs
until October 1, 2003, which are the dates when
the projects achieved the criteria to classify mineral-
ization as a reserve for US reporting purposes.

In 2005, we expect to spend $150 million on explo-
ration, development and business development. Our
exploration expense reflects our planned funding of
our various 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 addi-
tion to the presently planned projects for 2005.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Other Income Statement Variances

For the years ended December 31
($ millions, except per ounce
data and percentages) 2004

2003

%
change

Comments

Amortization

Absolute amount $ 452

$ 522

(13)% 11% lower sales volumes, combined with lower amortization

Per ounce (dollars)1 86

rates per ounce. For 2005, amortization expense will reflect
an expected 8–10% increase in gold sales volumes and a
further expected decline in rates per ounce.

(4)% Reserve increases effective January 1, 2004 caused rates per
ounce to decrease. For 2005, rates per ounce are expected to
decrease to between $80 and $85 due to reserve additions at
the end of 2004 and the effect of an impairment charge recorded
at Eskay Creek in 2004.

Administration

(3)% Severance costs of $9 million were incurred in 2003. Higher

regulatory compliance costs impacted 2004. Costs in 2005 will
increase due to the expensing of stock options in the second half
of the year, which is estimated to add about $15 million to costs.

Interest income

(19)% The decrease in 2004 is due to lower average cash balances

in 2004 compared to 2003. In 2005, interest income is expected
to increase due to higher expected average cash balances.

Interest costs
Incurred

22% The impact of new financings in second half of 2004 caused

Capitalized

(41)

(5)

an increase over 2003. Interest incurred is expected to increase
to between $115 to $120 million in 2005 due to new financing
put in place in 2004.

720% Higher amounts were capitalized at development projects due
to construction costs capitalized in 2004, and capitalization at
Pascua-Lama from July 1, 2004. In 2005, we expect to capitalize
about $103 million at our development projects.

Expensed

(57)%

1. For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70 of Management’s
Discussion and Analysis.

Other (Income) Expense

For the years ended December 31
($ millions)

2004

2003

Comments

Non-hedge derivative gains

$ (5)

$(71)

Gains in 2003 included $32 million on gold lease rate swaps
(2004 – $16 million); and $18 million on currency hedge
contracts that became ineffective for hedge accounting purposes.

Impairment charge

Eskay Creek
Peruvian exploration

properties
Gains on asset sales
Environmental

remediation costs

Litigation costs
(Gains) losses

on investments

Other items

–

See page 64.

67
(34)

43
–
(1)

–
(34)

55
16
7

30
$ 158

23
$ (4)

See page 64.

Costs in 2003 relate to the settlement of the Inmet litigation.
Losses in 2003 mainly related to investments under
a deferred compensation plan.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Income Taxes

For the years ended December 31
($ millions, except percentages)

Effective income tax rates on
elements of income

Net income excluding elements below
Deliveries into gold sales contracts1
Non-hedge derivative gains (losses)
Other items

Tax only items:
Change in Australian tax status
Outcome of tax uncertainties
Release of deferred tax valuation allowances

recorded in prior years

Other items

2004

Effective
tax rate
28%

(80%)
30%
78%

(180%)
(313%)

(11%)
(25%)
(451%)

Income tax
expense
(recovery)
$ 33
–
(4)
6
35

(81)
(141)

(5)
(11)
$(203)

Pre-tax
income
$ 118
(89)
(5)
21
45

–
–

–
–
$ 45

2003

Effective
tax rate
20%

15%
34%
21%

–
–

(17%)
(2%)
2%

Income tax
expense
(recovery)
$ 23
–
11
12
46

–
–

(36)
(5)
$ 5

Pre-tax
income
$ 116
–
71
35
222

–
–

–
–
$ 222

1. Impact of deliveries in a low tax-rate jurisdiction at contract prices below prevailing market prices.

Our income tax expense or recovery is a function
of an underlying effective tax rate applied to
income plus the effect of other items that we track
separately. The underlying effective rate increased
to 28% in 2004 reflecting the higher market gold
price environment, with an average market gold
price of $409 per ounce. In 2005, we expect our
underlying effective tax rate to decrease to about
22% due to a change in the geographic mix of gold
production and therefore taxable income by juris-
diction. As gold prices increase, this underlying tax
rate also increases, reaching a high of about 25%
with market gold prices at or above $475 per ounce.
The underlying rate excludes deferred tax credits
from changes in valuation allowances; taxes on
non-hedge derivative gains and losses; and the
impact of deliveries into gold sales contracts in a
low tax rate jurisdiction. Deliveries into gold sales
contracts in a low tax rate jurisdiction can distort
the overall effective tax rate if market gold prices
differ from the contract prices, but do not affect
the absolute amount of income tax expense.

We record deferred tax charges or credits if changes
in facts or circumstances affect the estimated tax

basis of assets and therefore the amount of deferred
tax assets or liabilities or because of changes in val-
uation allowances reflecting changing expectations
in our ability to realize deferred tax assets. In 2004,
we recorded a credit of $141 million on final resolu-
tion of a Peruvian tax assessment in our favor. We
also recorded credits of $81 million due to a change
in tax status in Australia following an election that
resulted in a revaluation of assets for tax purposes;
and also an election to file tax returns from 2004
onwards in US dollars, rather than Australian
dollars. As well, $5 million of valuation allowance
was released in Australia in 2004.

The interpretation of tax regulations and legislation
and their application to our business is complex
and subject to change. We have significant amounts
of deferred tax assets, including tax loss carry
forwards, and also deferred tax liabilities. Potential
changes to any of these amounts, as well as our
ability to realize deferred tax assets, could signif-
icantly affect net income or cash flow in future
periods. For more information on tax valuation
allowances, see page 66.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Cash Flow

Cash Flow Components
($ millions)

900
700
500
300
100
–100
–300
–500
–700
–900

2004

Operating

Investing

Financing

Cash
Inflow

Cash
Outflow

2003

2002

Operating Activities
Operating cash flow decreased by $13 million in 2004 to $506 million. The key factors that contributed to the
year over year decrease are summarized in the table below.

Key Factors Affecting Operating Cash Flow

For the years ended December 31
($ millions, except
per ounce data)

2004

Impact on
operating
cash flow Comments

2003

Gold sales volumes (’000s oz) 4,936 5,554
$ 391 $ 366
Realized gold prices ($/oz)
Total cash costs ($/oz)1
189
Sub-total

212

$ (109)
123
(114)
(100) Refer to pages 36 to 38 for explanations of changes

Income tax payments
Non-cash working capital

45
141

111
34

66
(107)

Cost of Inmet settlement
Interest expense

–
19

86
44

Effect of other factors
Total

86
25

17
$ (13)

in gold production and sales.
Payments in 2005 are expected to be similar to 2004.
Increases in inventory primarily reflect supplies required
to support construction at development projects.
Inventory is expected to increase again in 2005 at
development projects reflecting higher ore in process
and in stockpiles. Tax recoverable increased in 2004
for goods and services tax on supplies and material
used in construction at development projects. Amounts
are expected to be recovered after production begins.
Settlement reached in 2003.
Increase in amounts capitalized to development
projects in 2004.

1. Total cash costs per ounce is a non-GAAP performance measure. For more information, see pages 67 to 70.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Investing Activities

For the years
ended December 31
($ millions)

2005E 2004

2003 $ change Comments

Growth capital expenditures1
Veladero
Lagunas Norte
Tulawaka
Cowal
Pascua-Lama

$ 208 $ 284 $ 68
4
1
24
9

147
3
268
93

182
48
73
35

Nevada Power Plant
East Archimedes
Sub-total
Sustaining capital expenditures
North America
Australia/Africa

84
43
846

South America
Other
Sub-total

245

18
–
640

86
83

8
7
184

–
–
106

80
115

17
4
216

$ 216

Full year of construction activity in 2004.

178 Construction started in Q2, 2004.
47 Construction started in Q1, 2004.
49 Construction started in Q1, 2004.
26

Increased development activity and
capitalization of interest from Q3, 2004.

18 Construction started in Q4, 2004.

– Construction expected to start in 2005.

534

(32) 2003 was higher due to a transition to

owner mining at Plutonic that resulted in
equipment purchases.

(9)
3

(32) The increase in 2005 mainly reflects capital

planned for 2004 at Goldstrike that was deferred
into 2005, and sustaining capital at Lagunas
Norte after production begins.

Total

$ 1,091 $ 824 $ 322

$ 502

1. Includes construction costs and capitalized interest.

We plan to fund the expected capital expenditures
for 2005 from a combination of our $1,398 million
cash position at the end of 2004, and operating cash
flow that we expect to generate in 2005.

Financing Activities
The most significant financing cash flows in 2004
were $974 million on issue of new long-term debt
obligations, $49 million received on the exercise of
employee stock options, dividend payments totaling
$118 million, and $95 million spent repurchasing
4 million common shares under our share buyback
program. We also made scheduled payments under
our long-term debt obligations totaling $41 million
in 2004.

Overview of 2003 Versus 2002

Earnings
Earnings in 2003 were slightly higher than in 2002.
We benefited from higher spot gold prices, which
enabled us to realize a $27 per ounce higher selling
price for our gold production (an increase in revenue
of $150 million in comparison to 2002). In a higher
spot gold price environment, we pay higher royal-
ties, 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, or an increase of $38 million.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

As a result of the closure of five mines in 2002 on
depletion of their reserves, we produced and sold
3% fewer ounces in 2003 compared to the prior
year. These five closed mines generated a profit
contribution, before tax, of $42 million in 2002.

Excluding the closed mines, cash operating costs
per ounce excluding royalties and production taxes
were $7 per ounce higher in 2003, mainly due to
higher costs at Goldstrike Open Pit and Bulyanhulu,
which added $39 million to our cash operating costs.

We invested $33 million more in exploration, mine
development and business development in 2003
compared to 2002. Development costs are expensed
until mineralization is classified as proven and
probable reserves for US reporting purposes. In
2003, we expensed $53 million of development
costs, mainly at Veladero and Lagunas Norte,
compared with $52 million in 2002. A $25 million
increase in exploration costs to $67 million
accounts for most of the increase in exploration,
development and business development expense
year over year.

Earnings in both 2003 and 2002 included various
items that significantly impacted the comparability
of our results year on year. In 2003, the major
items included gains of $71 million on non-hedge
derivatives and gains totaling $34 million on the
sale of various assets, offset by a $19 million higher
charge for reclamation and closure costs following a
change in accounting policy for these types of costs.

We recorded tax credits of $62 million in 2003. We
released valuation allowances totaling $15 million
in Argentina following the decision to begin
construction at Veladero and the classification of
mineralization there as a proven and probable
reserve, $16 million in Australia due to higher levels
of taxable income in a higher gold price environ-
ment, and $21 million in North America following
a corporate reorganization. In 2002, we recorded a
credit of $22 million due to the outcome of various
tax uncertainties. These credits were offset by valu-
ation allowances against unrecognized tax losses.

Cash Flow
We generated $69 million less operating cash flow in
2003 compared to 2002. Excluding the $86 million
settlement of the Inmet litigation, our operating
cash flow would have been $17 million higher in
2003 than 2002. Higher realized gold selling prices
in 2003 were partly offset by higher total cash costs
per ounce and higher payments of income taxes.

Both our cash expenditures for investing and
financing activities increased in 2003 compared
to 2002. In part, this was a result of increased
capital spending with the construction start up
at Veladero, as well as $154 million spent on our
share buyback program.

Balance Sheet

Key Balance Sheet Ratios

Year ended December 31

2004

2003

Non-cash working

capital ($ millions)1

Net debt (cash) ($ millions)2
Net debt:equity ratio3
Current ratio4

$ 34
$ 141
$ 288
$(210)
0.08:1 (0.06:1)
3.75:1
4.68:1

1. Represents current assets, excluding cash and
equivalents, less current liabilities.

2. Represents long-term debt less cash and equivalents.

3. Represents net debt divided by shareholders’ equity.

4. Represents current assets divided by current liabilities.

We regularly review our capital structure with an
overall goal of lowering our cost of capital, while
preserving the balance sheet strength and flexibility
that is important due to the cyclical nature of com-
modity markets, and ensuring 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 was consistent with

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

this goal. In 2004, we repurchased 4 million shares
at a total cost of $95 million which was in addition
to repurchasing 9 million shares at a total cost of
$154 million in 2003. The combined impact of new
financing secured in 2004 to fund our development
projects, and activity under the share buyback
program in 2004, caused an increase in our net
debt:equity ratio at the end of 2004.

Non-cash working capital increased in 2004 mainly
due to a build-up of supplies inventory at our
development projects to support normal operating
activities, combined with an increase in tax recover-
able that relates to goods and services taxes on
various elements of mine construction costs that
will be recoverable after production begins.

Our net cash position at the end of 2003 changed
to net debt at the end of 2004 mainly because our
investment in capital expenditures in 2004 exceeded
operating cash flow.

Shareholders’ Equity

Outstanding Share Data
As at February 9, 2005, 532.9 million of our com-
mon shares, one special voting share and 1.4 million
Exchangeable Shares not owned by Barrick (ex-
changeable into 0.7 million of our common shares)
were issued and outstanding. As at February 9, 2005,
options to purchase 24.1 million common shares
were outstanding under our option plans, as well
as options to purchase 1.3 million common shares
under certain option plans inherited by us in
connection with prior acquisitions. For further
information regarding the outstanding shares and
stock options, please refer to the Financial State-
ments and our 2005 Management Information
Circular and Proxy Statement.

Dividend Policy
In each of the last three years, we paid a total cash
dividend of $0.22 per share – $0.11 in mid-June and
$0.11 in mid-December. The amount and timing of
any dividends is within the discretion of our Board
of Directors. The Board of Directors reviews the
dividend policy semi-annually based on the cash
requirements of our operating assets, exploration
and development activities, as well as potential
acquisitions, combined with our current and
projected financial position.

Comprehensive Income
Comprehensive income consists of net income or
loss, together with certain other economic gains
and losses that collectively are described as “other
comprehensive income”, and excluded from the
income statement.

In 2004, the other comprehensive loss of $15 million
mainly included gains of $147 million on hedge
contracts designated for future periods caused
primarily by changes in currency exchange rates
and fuel prices; offset by reclassification adjust-
ments totaling $132 million for gains on hedge
contracts designated for 2004 that were transferred
to earnings in 2004; and a $32 million decrease in
the fair value of investments.

Included in other comprehensive income at Decem-
ber 31, 2004 were unrealized pre-tax gains on
currency hedge contracts totaling $321 million,
based on December 31, 2004 market foreign
exchange rates. The related hedge contracts are
designated against operating costs and capital
expenditures primarily over the next three years,
and are expected to help protect against the impact
of strengthening of the Australian and Canadian
dollar against the US dollar. The hedge gains are
expected to be recorded in earnings at the same
time as the corresponding hedged operating costs
and amortization of capital expenditures are also
recorded in earnings.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Quarterly Information

($ millions,
except where indicated)

2004

2003

Gold production (’000s oz)
Gold sales (’000s oz)
Gold sales
Income (loss) before taxes
Income tax recovery (expense)
Net income
Net income per share –

1,169
1,200
$ 501
(47)
203
156

1,232
1,267
$ 500
37
(5)
32

1,279
1,222
$ 454
15
19
34

1,278
1,247
$ 477
40
(14)
26

1,301
1,362
$ 536
73
4
77

1,479
1,505
$ 549
57
(22)
35

1,467
1,395
$ 491
44
15
59

1,263
1,292
$ 459
48
(2)
29

basic (dollars)

0.30

0.06

0.05

0.14

0.07

0.11

0.05

Per ounce statistics (dollars)
Average spot gold price
Average realized gold price
Total cash costs per ounce 1

Cash inflow (outflow) from

Operating activities
Investing activities
Financing activities

434
417
221

120
(242)
742

401
395
218

152
(219)
154

393
372
209

108
(194)
(73)

408
382
199

126
(164)
(82)

392
394
199

140
(156)
(54)

364
365
180

187
(58)
(83)

347
352
185

62
(59)
(130)

352
355
194

130
(61)
1

1. For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70.

Our financial results for the last eight quarters
reflect the following general trends: rising spot
gold prices with a corresponding rise in prices
realized from gold sales; and declining gold pro-
duction, sales volumes, and rising total cash costs
per ounce as a number of our mines were pro-
cessing lower grade ore. These historic trends are
discussed elsewhere in this MD&A. The quarterly
trends are consistent with explanations for annual
trends over the last two years. Beginning in the
second half of 2005, we expect that the historic
trend in gold production, sales volumes, and total
cash costs per ounce will reverse as our lower
cost mines in development begin production. Net
income in each quarter also reflects the timing
of various special items that are presented in the
table on page 36.

Fourth Quarter Results
Revenue for fourth quarter 2004 was $501 million
on gold sales of 1.2 million ounces, compared to
$536 million in revenue on gold sales of 1.36 million

ounces for the prior-year quarter. During the quarter,
spot gold prices averaged $434 per ounce. We real-
ized an average price of $417 per ounce during
the quarter compared to $394 per ounce in the
prior-year quarter.

For the quarter, we produced 1.17 million ounces
at total cash costs of $221 per ounce compared to
1.30 million ounces at total cash costs of $199 per
ounce in the prior-year quarter.

Earnings for fourth quarter 2004 were $156 million
($0.29 per share) as compared to earnings of
$77 million ($0.14 per share) in the prior-year
quarter. This increase in earnings over the prior-year
quarter reflects a $23 per ounce higher realized gold
price, a $141 million tax recovery on final resolution
of the Peruvian tax assessment and a $48 million
deferred tax credit due to a change in tax status
in Australia. These increases were partly offset by
higher total cash costs, and an impairment charge
for certain long-lived assets of $131 million pre-tax.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Effect on earnings increase (decrease)

Three months ended December 31
($ millions)

Non-hedge derivative gains
Gains on asset sales
Litigation costs
Impairment charges on long-lived assets
Impairment charges on investments
Change in asset retirement obligation estimates
Resolution of Peruvian tax assessment

Outcome of tax uncertainties
Reversal of other accrued costs

Deferred tax credits

Change in Australian tax status
Other

Total

2004

2003

Pre-tax

Post-tax

Pre-tax

Post-tax

6
29
–
(131)
(4)
(19)

–
21

–
–
$ (98)

$ 6
24
–
(91)
(4)
(15)

141
15

48
–
$ 124

$ 46
5
(16)
(5)
(4)
(6)

–
–

–
–
$ 20

$ 37
3
(11)
(3)
(4)
(6)

–
–

–
41
$ 57

In the quarter, we generated operating cash flow of
$120 million as compared to operating cash flow of
$134 million in the prior-year period. Lower oper-
ating cash flow in the quarter primarily relates to

the combined effect of lower gold sales volumes
and higher total cash costs per ounce, partly offset
by higher realized gold prices.

Off-Balance Sheet Arrangements

Gold Sales Contracts
We have historically used gold sales contracts as
a means of selling a portion of our annual gold
production. The contracting parties are bullion-
banking counterparties whose business includes
entering into contracts to purchase gold from gold
mining companies. Since 2001, we have been
focusing on reducing the level of outstanding gold
sales contracts. In 2004, spot market sales made
up the majority of our consolidated gold sales.

Allocation of Gold Sales Contracts to Support
Pascua-Lama Financing and Construction
In July 2004, we announced a decision to proceed
with the Pascua-Lama project (“Pascua-Lama”)
subject to receiving required permits and clarifi-
cation of the applicable fiscal regimes from the
governments of Argentina and Chile.

We currently expect to put in place third-party
financing for up to $750 million of the expected
$1.4–$1.5 billion initial construction cost of Pascua-
Lama. In anticipation of building Pascua-Lama and
in support of any related financing, we allocated
6.5 million ounces of existing fixed-price gold
sales contracts specifically to Pascua-Lama (the
“Pascua-Lama Gold Sales Contracts”) in fourth
quarter 2004. The allocation of these contracts will
help reduce gold price risk at Pascua-Lama and
will help secure the financing for its construction.
We expect the allocation of these contracts to
eliminate any requirement by lenders to add any
incremental gold sales contracts in the future to
support the financing of Pascua-Lama.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Key Aspects of Pascua-Lama Gold Sales Contracts

(as of December 31, 2004)

Expected delivery dates.1
Future estimated average realizable selling price.
Mark-to-market value at December 31, 2004.

2009–2017, the term of the expected financing.
$372/oz.2
($966) million.3

1. The contract termination dates are 2014–2017 in most cases, but we expect to deliver Pascua-Lama production
against these contracts starting in 2009.

2. Upon delivery of production from 2009–2017, the term of expected financing. Approximate estimated value
based on current market US dollar interest rates and an average lease rate assumption of 1%.

3. At a spot gold price of $436 per ounce and market interest rates.

The allocation of 6.5 million ounces of gold sales
contracts to Pascua-Lama involves: i) the identifica-
tion of contracts, in quantities, and for terms that
mitigate gold price risk for Pascua-Lama during
the term of the expected financing (contracts were
chosen where the existing termination dates are
spread between 2009, the targeted first year of
production, and 2017, the expected retirement of
financing for the project); ii) the segregation of
these contracts from the remaining non-Pascua-
Lama gold sales contracts (the “Corporate Gold
Sales contracts”); iii) the eventual settlement of
proceeds from these contracts for the benefit of
Pascua-Lama production.

Barrick will continue to guarantee the Pascua-Lama
Gold Sales Contracts, and the remaining Corporate
Gold Sales Contracts. The Barrick guarantee is a
critical component in allocating long-term contracts
with termination dates out to 2009–2017 to support
the future Pascua-Lama financing.

Through allocation of these gold sales contracts to
Pascua-Lama, we significantly reduce capital risk.
It protects the gold price during the term of the
forecasted financing, while leaving the remaining

reserves fully levered to spot gold prices. The con-
tracts represent just over 35% of the 17.6 million
ounces of gold reserves at Pascua-Lama, and do
not impact any of the 643 million ounces of silver
contained in gold reserves at Pascua-Lama.

These Pascua-Lama Gold Sales Contracts, while
allocated to Pascua production, retain all the bene-
fits of our gold sales Master Trading Agreements
(MTAs) and are not subject to margining, down-
grade or unilateral and discretionary “right to
break” provisions. Furthermore, as part of our
MTAs, these Pascua-Lama Gold Sales Contracts
are not subject to any provisions regarding any
final go-ahead decisions with Pascua-Lama con-
struction, or any possible delay or change in the
Pascua-Lama project.

Corporate Gold Sales Contracts
In addition to the gold sales contracts allocated
against Pascua-Lama, we have Corporate Gold Sales
Contracts, which at December 31, 2004 totaled
7.0 million ounces of fixed-price gold sales contracts.
This represents slightly over one year of expected
future gold production and approximately 10%
of our proven and probable reserves, excluding
Pascua-Lama.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Key Aspects of Corporate Gold Sales Contracts

(as of December 31, 2004)

Current termination date of contracts.
Average estimated realizable selling price in 2014.
Mark-to-market value at December 31, 2004.

2014 in most cases.
$426/oz.1
($949) million.2

1. Approximate estimated value based on current market US dollar interest rates and an average lease rate
assumption of 1%. Accelerating gold deliveries would likely lead to reduced contango that would otherwise have
built up over time. 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.

2. At a spot gold price of $436 per ounce, and market interest rates.

We have an obligation to deliver gold by the termi-
nation date (currently 2014 in most cases). However,
because we typically fix the price of gold under our
gold sales contracts to a date that is earlier than the
termination date of the contract (referred to as the
“interim price-setting date”), the actual realized
price on the contract termination date depends
upon the actual gold market forward premium
(“contango”) between the interim price-setting date
and the termination date. Therefore, the $426/oz
price estimate could change over time due to a
number of factors, including but not limited to:
US dollar interest rates, gold lease rates, spot gold
prices, and extensions of the termination date. This
price, which is an average for the total Corporate
Gold Sales Contract position, is not necessarily rep-
resentative of the prices that may be realized each
quarter for actual deliveries into gold sales contracts,
in particular if we choose to settle any gold sales
contract in advance of the termination date (which
we have the right to do at our discretion). If we chose
to accelerate gold deliveries, this would likely lead to
reduced contango that would otherwise have built
up over time (and therefore a lower realized price).

The gold market forward premium, or contango,
is typically closely correlated with the difference
between US dollar interest rates and gold lease rates.
An increase or decrease in US dollar interest rates
would generally lead to a corresponding increase or

decrease in contango, and therefore an increase or
decrease in the estimated future price of the contract
at the termination date. Furthermore, the greater the
time period between the interim price-setting date
and the termination date, the greater the sensitivity
of the final realized price to US dollar interest rates.

A short-term spike in gold lease rates would not
have a material negative impact on us because we
are not significantly exposed under our fixed-price
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”). Gold lease rates have
historically tended to be low, and any spikes short-
lived, because of the large amount of gold available
for lending relative to demand.

In addition to the Corporate Gold Sales Contracts,
we also have floating spot-price gold sales contracts
under which we are committed to deliver 0.5 mil-
lion ounces of gold over the next ten years at spot
prices, less an average fixed-price adjustment of
$52 per ounce. These floating spot-price contracts
were previously fixed-price contracts, for which,
under the price-setting mechanisms of the MTAs,
we elected to receive a price based on the market
gold spot price at the time of delivery adjusted
by the difference between the spot price and the
contract price at the time of such election.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Fixed-price Silver Sales Contracts

(as of December 31, 2004)

Millions of silver ounces
Current termination date of silver sales contracts
Average estimated realizable selling price at 2014 termination date
Mark-to-market value at December 31, 2004

12.4
2014 in most cases.
$8.50/oz.1
($14) million.2

1. Approximate estimated value based on current market US dollar interest rates and an average lease rate
assumption of 1%. Accelerating silver deliveries could potentially lead to reduced contango that would otherwise
have built up over time. Barrick may choose to settle any silver 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.

2. At a spot silver price of $6.82 per ounce.

We also have floating spot-price silver sales contracts
under which we are committed to deliver 12 million
ounces of silver over the next ten years at spot
prices, less an average fixed-price adjustment of
$0.96 per ounce. These floating spot-price contracts
were previously fixed-price contracts, for which,
under the price-setting mechanisms of the MTAs,
we elected to receive a price based on the market
silver spot price at the time of delivery adjusted
by the difference between the spot price and the
contract price at the time of such election.

Key terms of Gold and Silver Sales Contracts
In all of our MTAs, which govern the terms of gold
and silver sales contracts with our 19 counterparties,
the following applies:
> The counterparties do not have unilateral and
discretionary “right to break” provisions.
> There are no credit downgrade provisions.
> We are not subject to any margin calls –
regardless of the price of gold or silver.

> We have the right to settle our gold and silver
sales contracts on two days notice at any
time during the life of the contracts, or keep
these forward gold and silver sales contracts
outstanding for up to 15 years.

> At our option, we can sell gold or silver at

the market price or the contract price, whichever
is higher, up to the termination date of the
contracts (currently 2014 in most cases).

The MTAs with our counterparties do provide for
early close out of certain transactions in the event
of a material adverse change in our ability or that
of our principal hedging subsidiary’s ability to
perform our or its gold and silver delivery and
other obligations under the trading agreements and
related parent guarantees or a lack of gold or silver
market, and for customary events of default such
as covenant breaches, insolvency or bankruptcy.
The principal financial covenants are:
> We must maintain a minimum consolidated

net worth of at least $2 billion; currently, it is
$3.6 billion. The MTAs exclude unrealized
mark-to-market valuations in the calculation
of consolidated net worth.

> We must maintain a maximum long-term debt
to consolidated net worth ratio of 2:1; currently
it is 0.51:1.

In most cases, under the terms of the MTAs, the
period over which we are required to deliver gold is
extended annually by one year, or kept “evergreen”,
regardless of the intended delivery dates, unless
otherwise notified by the counterparty. This means
that, with each year that passes, the termination
date of most MTAs is extended into the future
by one year.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

As spot gold prices increase or decrease, the value
of our gold mineral reserves and amount of poten-
tial operating cash inflows generally increases or
decreases. The unrealized mark-to-market loss on
our fixed-price forward gold sales contracts also
increases or decreases. The mark-to-market value
represents the cancellation value of these contracts
based on current market levels, and does not
represent an immediate economic obligation for
payment by us. Our obligations under the gold
forward sales contracts are to deliver an agreed
upon quantity of gold at a contracted price by the
termination date of the contracts (currently 2014 in
most cases). Gold sales contracts are not recorded
on our balance sheet. The economic impact of
these contracts is reflected in our Financial State-
ments within gold sales based on selling prices
under the contracts at the time we record revenue
from the physical delivery of gold and silver under
the contracts.

Change in the Fair Value of
Gold and Silver Sales Contracts

($ millions)

Unrealized loss

Gold1

Silver

at January 1, 2004

$ 1,725
Impact of change in spot price2
288
(119)
Contango earned in the period
Impact of change in valuation inputs3 136
Mark-to-market impact of
deliveries into contracts

(89)

$ 20
11
(1)
2

(6)

Unrealized loss at

December 31, 2004

$ 1,941

$ 26

1. Includes both the Pascua-Lama Gold Sales Contracts
and the Corporate Gold Sales Contracts.

2. From $415 per ounce to $436 per ounce for gold,
and $5.92 per ounce to $6.82 per ounce for silver.

3. Other than spot metal prices (i.e. interest rates and
gold and silver lease rates).

Fair Value of Derivative Positions

At December 31, 2004
($ millions)

Corporate Gold Sales Contracts
Pascua-Lama Gold Sales Contracts
Floating Spot-Price Gold Sales Contracts
Silver Sales Contracts
Floating Spot-Price Silver Sales Contracts
Foreign currency contracts
Interest rate contracts
Fuel contracts

Unrealized
Gain/(Loss)

$ (949)
(966)
(26)
(14)
(12)
298
45
4
$(1,620)

Liquidity

Liquidity Management
Liquidity is managed dynamically, and factors that
could impact liquidity are regularly monitored. The
primary factors that affect liquidity include gold
production levels, realized gold sales prices, cash
production costs, future capital expenditure require-
ments, scheduled repayments of long-term debt
obligations, our credit capacity and expected future
debt market conditions. Working capital require-
ments have not historically had a material effect on
liquidity. Counterparties to the financial instruments
and gold sales contracts that we hold do not have
unilateral and discretionary rights to accelerate
settlement of financial instruments or gold sales
contracts, and we are not subject to any margin calls.

We consider our liquidity profile to be sound, as
there are no reasonably foreseeable trends, demands,
commitments, events or circumstances expected
to prevent us from funding the capital needed to
implement our strategy.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Capital Resources1

Credit rating

($ millions)

2004

2003

2002

Opening capital resource $ 1,970 $ 2,044 $ 1,733
New sources

506
Operating cash flow
New financing facilities2 1,056
3,532

519
–
2,563

588
–
2,321

Allocations

Growth capital3
(640)
Sustaining capital4
(184)
Dividends/share buyback (213)
(19)
Other

(29)
(199)
(119)
70
Closing capital resources $ 2,476 $ 1,970 $ 2,044
Components of closing
capital resources

(106)
(216)
(272)
1

Cash and equivalents
Unutilized

credit facilities

Total

$ 1,398 $ 970 $ 1,044

1,078

1,000
1,000
$ 2,476 $ 1,970 $ 2,044

1. Capital resources include cash balances and sources
of financing that have been arranged but not utilized.

2. Includes the $250 million Veladero financing,
$750 million bond offering, and $56 million lease
facility for Lagunas Norte.

3. Growth capital represents capital invested in new
projects to bring new mines into production.

4. Sustaining capital represents capital required at
existing mining operations.

Credit ratings at December 31, 2004,
from major rating agencies

Standard and Poor’s
Moody’s
DBRS

A
Baa1
A

Our ability to access unsecured debt markets and
the related cost of debt financing is, in part,
dependent upon maintaining an acceptable credit
rating. A deterioration in our credit rating would
not adversely affect existing debt securities or the
terms of gold sales contracts, but could impact
funding costs for any new debt financing. The key
factors that are important to our credit rating
include the following: our market capitalization;
the strength of our balance sheet, including the
amount of net debt and our debt-to-equity ratio;
our net cash flow, including cash generated by oper-
ating activities and expected capital expenditure
requirements; the quantity of our gold reserves; and
our geo-political risk profile.

Contractual Obligations and Commitments

Payments due

At December 31, 2004
($ millions)

Contractual obligations
Long-term debt (1)
Asset retirement obligations (2)
Capital leases A
Operating leases
Post-retirement benefits
Other post-retirement benefits

Royalty arrangements (3)
Purchase obligations for

supplies and consumables

Power contracts (4)
Capital commitments (5)
Total

2005

2006

2007

2008

2009

31
35
12
16
16
2
61

11
6
314
504

$ 58
28
15
16
15
2
66

3
5
8
216

$ 580
19
12
16
16
2
66

1
1
–
713

72
42
11
17
16
2
67

1
5
–
233

$ 17
35
11
5
16
2
67

–
2
–
155

2010 and
thereafter

$ 903
208
–
6
89
9
510

–
–
–
1,725

Total

$ 1,661
367
61
76
168
19
837

16
19
322
3,546

A. Includes the $56 million build to suit lease facility.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Contractual Obligations
and Commitments

(1) Long-term debt
Our debt obligations do not include any subjective
acceleration clauses or other clauses that enable
the holder of the debt to call for early repayment,
except in the event that we breach any of the terms
and conditions of the debt or for other customary
events of default. The Bulyanhulu and Veladero
project financings are secured by assets at the
Bulyanhulu Mine and Veladero project respectively.
Other than this security, we are not required to post
any collateral under any debt obligations. The terms
of our debt obligations would not be affected by a
deterioration in our credit rating.

(2) Asset retirement obligations
Amounts presented in the table represent the
discounted future payments for the expected cost
of asset retirement obligations.

(3) Royalties
Virtually all of the royalty arrangements give rise to
obligations as we produce gold. In the event that we
do not produce gold at our mining properties, we
have no payment obligation to the royalty holders.
The amounts disclosed are based on expected future
gold production, using a $425 gold price assump-
tion. The most significant royalty agreements are
disclosed in note 5 to our Financial Statements.

(4) Power contracts
We enter into contracts to purchase power at each
of our operating mines. These 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 percentage of
actual consumption. These contracts extend through
various dates in 2005 to 2009.

In addition to the purchase obligations set out in
the table, we purchase about 1 billion kilowatt-
hours annually at market rates. Under the terms of
the Goldstrike Power contract, we purchase power
based on actual consumption; this contract has an

exit fee that we will pay when we commence com-
mercial operation of our Nevada Power Plant and
leave the utility.

(5) Capital commitments
Purchase obligations for capital expenditures include
only those items where binding commitments have
been entered into. Commitments at the end of 2004
mainly related to construction at our development
projects and also the power plant in Nevada.

Capital expenditures not yet committed
We expect to incur about $2.5 billion to complete
the development/construction of our present devel-
opment projects over the next five years (Veladero,
Lagunas Norte, Tulawaka, Cowal, Pascua-Lama and
East Archimedes) and the Nevada Power Plant, as
well as an average of approximately $175 million per
year in sustaining capital at our producing mines
over the same time period. A total of $322 million
of these amounts had been committed at the end
of 2004, with the remainder not yet committed.

Payments to maintain land tenure
and mineral property rights
In the normal course of business, we are required to
make annual payments to maintain title to certain
of our properties and to maintain our rights to
mine gold at certain of our properties. If we choose
to abandon a property or discontinue mining oper-
ations, the payments relating to that property can
be suspended, resulting in our rights to the prop-
erty lapsing. The validity of mining claims can be
uncertain and may be contested. Although we have
attempted to acquire satisfactory title to our prop-
erties, some risk exists that some titles, particularly
title to undeveloped properties, may be defective.

Contingencies – Litigation
We are currently subject to various litigation as
disclosed in note 23 to the Financial Statements,
and we may be involved in disputes with other
parties in the future that may result in litigation. If
we are unable to resolve these disputes favorably,
it may have a material adverse impact on our finan-
cial condition, cash flow and results of operations.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Canadian Supplement

In note 25 to our Financial Statements we have
provided a reconciliation between Canadian and
US GAAP, including a description of the significant
measurement differences affecting our balance
sheet, income statement and statement of cash flow.

Under Canadian GAAP we incurred a loss of
$102 million ($0.19 per share) compared to
income of $248 million ($0.46 per share). The
principal continuing reconciling differences that
affect earnings relate to the amortization of
property, plant and equipment under Canadian
GAAP, as well as the outcome of impairment
assessments for property, plant and equipment and
goodwill and the measurement of gains on sale of
long-lived assets. These differences primarily arise
due to differences in the carrying amounts of the
assets due to differences in historic accounting for
business combinations. In addition, the measure-
ment of amortization under Canadian GAAP
includes certain mineralization not classified as a
reserve under SEC rules. We expect to see continu-
ing differences in the measurement of amortization
and impairment of property, plant and equipment
and goodwill.

In 2004, we adopted new accounting rules that
require the expensing of stock options under
Canadian GAAP, with retroactive restatement of
prior periods. Similar rules will become effective for
US GAAP in 2005, but we expect to see continuing
differences due to different transition methods for
these new rules between US and Canadian GAAP.

Certain mine development costs are expensed
under US GAAP, but capitalized for Canadian
GAAP purposes. These differences exist at devel-
opment projects where mineralization has not yet
been classified as a reserve under SEC rules. We
expect to see continuing differences in our
accounting for exploration and development expen-
ditures, where some expenditures qualify for
capitalization under Canadian GAAP, but are
expensed under US GAAP. The major expenditures
in 2005 that will be affected by this difference in

accounting are expenditures on our Buzwagi project,
which will not qualify for capitalization under US
GAAP until mineralization at the project qualifies
as a reserve for US reporting purposes.

Critical Accounting
Policies and Estimates

Management has discussed the development and
selection of our critical accounting estimates with
the Audit Committee of the Board of Directors, and
the Audit Committee has reviewed the disclosure
relating to such estimates in conjunction with its
review of this MD&A. 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 assumptions about matters that are
inherently uncertain.

Our financial condition and results of operations
are reported using accounting policies and methods
prescribed by US GAAP. In certain cases, US GAAP
allows accounting policies and methods to be
selected from two or more alternatives, any of
which might be reasonable yet result in our report-
ing materially different amounts. Management
exercises judgment in selecting and applying
our accounting policies and methods to ensure
that, while US GAAP compliant, they reflect our
judgment of an appropriate manner in which to
record and report our financial condition and
results of operations.

Accounting Policy Changes
There were no changes in accounting policies in
2004 that significantly impacted our financial state-
ments. As disclosed in note 2c to the Financial
Statements, in 2005 we are required to adopt
FAS 123R, Accounting for Stock-based Com-
pensation, and we may be required to change
our accounting policy for stripping costs once
the Emerging Issues Task Force has completed its
deliberations on EITF 04-6.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Critical Accounting Estimates
Certain accounting estimates have been identified as
being “critical” to the presentation of our financial
condition and results of operations because they
require management to make particularly subjective
and/or complex judgments about matters that
are inherently uncertain; and there is a reasonable
likelihood that materially different amounts could
be reported under different conditions or using
different assumptions and estimates. Critical
accounting estimates include:
> Reserve estimates used to measure amortization

of property, plant and equipment;

> Stripping ratios used to measure amortization of

capitalized mining costs;

> Impairment assessments of long-lived assets;
> The fair value of asset retirement obligations; and
> The measurement of deferred income tax assets
and liabilities and assessments of the amounts of
valuation allowances recorded.

Reserve Estimates Used to
Measure Amortization of Property,
Plant and Equipment
We record amortization expense based on the
estimated useful economic lives of long-lived
assets. The estimate that most significantly affects
the measurement of amortization is quantities of
proven and probable gold reserves, because we
amortize a large portion of property, plant and
equipment using the units-of-production method.
Reserves are estimated in accordance with the prin-
ciples in Industry Guide No. 7, issued by the SEC.
The estimation of quantities of gold reserves is
complex, requiring significant subjective assump-
tions that arise from the evaluation of geological,
geophysical, engineering and economic data for
a given ore body. This data could change over
time as a result of numerous factors, including new
information gained from development activities,
evolving production history and a reassessment of
the viability of production under different economic
conditions. Changes in data and/or assumptions
could cause reserve estimates to substantially
change from period to period. Because mineral

reserves are estimates, there is a risk that actual
gold production could differ from expected gold
production from our reserves. Factors that could
cause actual gold production to differ include
adverse changes in gold or silver prices, which
could make the reserve uneconomic to mine; and
variations in actual ore grade and gold and silver
recovery rates from estimates.

A key trend that could reasonably impact reserve
estimates is rising market gold prices. As market
gold prices rise, the gold price assumption used
in reserve estimation also rises. This assumption
is closely related to the trailing three-year average
market price. As this assumption rises, this could
result in an upward revision to reserve estimates
as material not previously classified as a reserve
becomes economic at higher gold prices. Changes
in reserve estimates are generally calculated at the
end of each year and cause amortization expense
to increase or decrease prospectively.

In general, amortization expense is more signifi-
cantly impacted by changes in reserve estimates at
underground mines than open-pit mines due to the
following factors:
> Underground development costs incurred to

access ore at underground mines are significant
and amortized using the units-of-production
method; and

> Reserves at underground mines are often

more sensitive to gold price assumptions and
changes in production costs. Production costs
at underground mines are impacted by factors
such as dilution, which can significantly impact
mining and processing costs per ounce.

The mines where amortization expense is most
sensitive to changes in reserve estimates are:
Pierina, Goldstrike Underground, Eskay Creek and
Bulyanhulu. These mines have significant carrying
amounts of property, plant and equipment that are
amortized using the units-of-production method
and make up a significant proportion of property,
plant and equipment at our operating mines.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Impact of Historic Changes in Reserve Estimates on Amortization

For the years ended December 31
($ millions, except reserves
in millions of contained oz)

2004

2003

Goldstrike

Underground
Open Pit

Plutonic
Eskay Creek
Kalgoorlie
Pierina

Reserves
increase (decrease)1

Amortization
increase (decrease)

Reserves
increase (decrease)1

Amortization
increase (decrease)

0.2
1.5
0.5
(0.1)
0.9
0.3

$(8)
(7)
(2)
4
(3)
(9)

0.6
1.3
1.3
–
–
–

$(10)
(6)
(4)
–
–
–

1. Each year we updated our reserve estimates as at the end of the year as part of our normal business cycle. Reserve
changes presented were calculated at the beginning of the applicable fiscal year and are in millions of contained ounces.

Stripping Ratios Used to Measure
Amortization of Capitalized Mining Costs
Amortization of capitalized mining costs is
recorded in the cost of inventory produced using
a “stripping ratio”. The stripping ratio is calculated
as the total tons of ore and waste that must be
mined compared to recoverable proven and prob-
able gold reserves.

Estimates Used to Measure Amortization of
Property, Plant and Equipment”. The estimated
tons of ore and waste that must be mined to pro-
duce reserves are calculated based on a mine plan
that contemplates a design for the open pit relating
to the mining of reserves. As reserve estimates
change, the design of the open pit also changes, and
both of these factors impact the stripping ratio.

Both reserve estimates and the estimated tons
of ore and waste that must be mined to produce
reserves are estimates that are highly uncertain.
The assumptions and uncertainty relating to reserve
estimates are described on page 61 under “Reserve

Changes in this ratio affect the amortization of cap-
italized mining costs to inventory, and ultimately
cost of sales when the inventory is sold. In general,
stripping ratios are higher at open-pit mines where
the ore body is deep below the surface of the earth.

Impact of Historic Changes in Stripping Ratios

($ millions, except ratios)

Stripping ratio used in

Amortization increase (decrease)1

2005

2004

2003

2005

2004

2003

Goldstrike
Open Pit

Pierina

127:1
89:1

109:1
60:1

112:1
48:1

$ 5
20

$(1)
7

$ –
–

1. Impact of the year on year change in the stripping ratio used to amortize capitalized mining costs.

Stripping ratios are updated annually at the same
time as reserve estimates are updated. At the end of
2004, the stripping ratios for Goldstrike Open-Pit
and Pierina were updated to reflect the updated

reserves at the end of 2004. The amount presented
represents the estimated impact on annual amortiza-
tion caused by these changes, based on production
levels and sales volumes in 2004.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Impairment Assessments of Operating
Mines, Development Projects and
Exploration Stage Properties
We review and test the carrying amounts of assets
when events or changes in circumstances suggest
that the carrying amount may not be recoverable.
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
operating mines and development projects, all assets
are included in one group. If there are indications
that an impairment may have occurred, we prepare
estimates of expected future cash flows for each
group of assets. Expected future cash flows are
based on a probability-weighted approach applied
to potential outcomes.

Estimates of expected future cash flow reflect:
> Estimated sales proceeds from the production

and sale of recoverable ounces of gold contained
in proven and probable reserves;

> Expected future commodity prices and currency

exchange rates (considering historical and
current prices, price trends and related factors).
In impairment assessments conducted in 2004
we used an expected future market gold price of
$400 per ounce, and an expected future market
US$:A$ exchange rate of $0.70 and US$:C$
exchange rate of $0.82;

> Expected future operating costs and capital

expenditures to produce proven and probable
gold reserves based on mine plans that assume
current plant capacity, but exclude the impact
of inflation;

> Expected cash flows associated with value beyond
proven and probable reserves, which includes
the expected cash outflows required to develop
and extract the value beyond proven and
probable reserves; and

> Environmental remediation costs excluded from
the measurement of asset retirement obligations.

We record a reduction of a group of assets to fair
value as a charge to earnings if expected future
cash flows are less than the carrying amount.

We estimated fair value by discounting the expected
future cash flows using a discount factor that
reflects the risk-free rate of interest for a term
consistent with the period of expected cash flows.

Expected future cash flows are inherently uncer-
tain, and could materially change over time. They
are significantly affected by reserve estimates,
together with economic factors such as gold and
silver prices, and currency exchange rates, estimates
of costs to produce reserves and future sustaining
capital. The assessment and measurement of
impairment excludes the impact of derivatives
designated in a cash flow hedge relationship for
future cash flows arising from operating mines
and development projects.

Because of the significant capital investment that is
required at many mines, if an impairment occurs, it
could materially impact earnings. Due to the long-
life nature of many mines, the difference between
total estimated undiscounted net cash flows and
fair value can be substantial. An impairment is
generally only recorded when the carrying amount
of a long-lived asset exceeds the total estimated
undiscounted net cash flows. Therefore, although
the value of a mine may decline gradually over
multiple reporting periods, the application of
impairment accounting rules could lead to recogni-
tion of the full amount of the decline in value in
one period. Due to the highly uncertain nature
of future cash flows, the determination of when to
record an impairment charge can be very subjective.
Management makes this determination using avail-
able evidence taking into account current expecta-
tions for each mining property.

For acquired exploration-stage properties, the
purchase price is capitalized, but post-acquisition
exploration expenditures are expensed. The future
economic viability of exploration stage properties
largely depends upon the outcome of exploration
activity, which can take a number of years to com-
plete for large properties. Management monitors
the results of exploration activity over time to
assess whether an impairment may have occurred.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

The measurement of any impairment is made more
difficult because there is not an active market for
exploration properties, and because it is not possi-
ble to use discounted cash flow techniques due to
the very limited information that is available to
accurately model future cash flows. In general, if an
impairment occurs at an exploration stage property,
it would probably have minimal value and most of
the acquisition cost may have to be written down.

Impairment charges are recorded in other income/
expense and impact earnings in the year they are
recorded. Prospectively, the impairment could also
impact the calculation of amortization of an asset.
In fourth quarter 2004, we performed detailed
impairment assessments for three groups of assets:
the Eskay Creek mine in North America; various
exploration-stage properties in Peru; and the Cowal
mine in Australia.

For the Eskay Creek mine, the requirement to com-
plete an impairment test was due to the following
combination of factors: downward revisions to
reserves in 2004; the continued weakening of the
US dollar that impacts Canadian dollar operating
costs measured at market rates; and upward revi-
sions in asset retirement obligations at the end of
2004. On completion of this test, we concluded that
the mine was impaired at the end of 2004, and we
recorded a pre-tax impairment charge of $58 million.

For a group of Peruvian exploration-stage proper-
ties acquired as part of the Arequipa acquisition
in 1996, we completed an impairment test in fourth
quarter 2004 following the finalization of the
exploration program for the year and based on
an updated assessment of future plans for the
properties. On completion of this test, we con-
cluded that the properties were impaired at the end
of 2004 and we recorded a pre-tax impairment
charge of $67 million.

For the Cowal development project, an impairment
test was completed following upward revisions to
estimated capital and operating costs for the project;
and the continued weakening of the US dollar that

impacts the amounts reported in US dollars for
Australian dollar expenditures, measured at market
prices. On completion of this test we concluded
that the mine was not impaired at the end of 2004.

We completed these impairment tests using a $400
average future gold price assumption. If a significant
adverse change in the market gold price occurred
that caused us to revise this price assumption down-
wards, the amount by which the Eskay Creek mine
is impaired could increase and the conclusion on the
Cowal impairment test could change, subject to the
effect of changes in other factors and assumptions.
The revised gold price assumption would have no
impact on the Peruvian exploration-stage properties
because the properties were fully written down at
the end of 2004.

Fair Value of Asset Retirement
Obligations (AROs)
AROs arise from the acquisition, development,
construction and normal operation of mining
property, plant and equipment, due to government
controls and regulations that protect the environ-
ment on the closure and reclamation of mining
properties. We record the fair value of an ARO in
our Financial Statements when it is incurred and
capitalize this amount as an increase in the carrying
amount of the related asset. At operating mines,
the effect is recorded as an adjustment to the cor-
responding asset carrying amount and results in
a prospective increase or decrease in amortization
expense. At closed mines, the adjustment is charged
directly to earnings.

The fair values of AROs are measured by discount-
ing the expected cash flows using a discount
factor that reflects the risk-free rate of interest.
We prepare estimates of the timing and amounts of
expected cash flows when an ARO is incurred,
which are updated to reflect changes in facts and
circumstances, or if we are required to submit up-
dated mine closure plans to regulatory authorities.
In the future, changes in regulations or laws or
enforcement could adversely affect our operations;

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

and any instances of noncompliance with laws or
regulations that result in fines or injunctions or
delays in projects, or any unforeseen environmental
contamination at, or related to, our mining proper-
ties could result in us suffering significant costs.
We mitigate these risks through environmental and
health and safety programs under which we monitor
compliance with laws and regulations and take
steps to reduce the risk of environmental contam-
ination occurring. We maintain insurance for
some environmental risks, however, for some risks
coverage cannot be purchased at a reasonable cost.
Our coverage may not provide full recovery for all
possible causes of loss. The principal factors that
can cause expected cash flows to change are: the
construction of new processing facilities; changes
in the quantities of material in reserves and a corre-
sponding change in the life of mine plan; changing
ore characteristics that ultimately impact the envi-
ronment; changes in water quality that impact the
extent of water treatment required; and changes in
laws and regulations governing the protection of
the environment. In general, as the end of the mine
life becomes nearer, the reliability of expected cash
flows increases, but earlier in the mine life, the
estimation of an ARO is inherently more subjective.
Significant judgments and estimates are made when
estimating the fair value of AROs. Expected cash
flows relating to AROs could occur over periods
up to 40 years and the assessment of the extent of
environmental remediation work is highly subjective.
Considering all of these factors, the fair value of
AROs can materially change over time.

In 2004, we recorded charges in AROs totaling
$54 million, of which $32 million was recorded
as an adjustment to the corresponding asset and
$22 million was recorded as a charge to earnings.
The $22 million charge to earnings mainly reflects
increases in the expected cost of water treatment
at certain closed mines. In 2003, we recorded
revisions to AROs totaling $10 million for various
closed mines that were charged to earnings
and mainly reflect increases in the expected cost
of water treatment.

AROs at December 31, 2004

($ millions)

Operating mines
Closed mines
Development projects
Total

$ 204
148
15
$ 367

At our operating mines, it is reasonably possible
that circumstances could arise by the end of the
mine life that will require material revisions to
AROs. In particular, the extent of water treatment
can have a material effect on the fair value of
AROs, and the expected water quality at the end
of the mine life, which is the primary driver of the
extent of water treatment, can change significantly.
We periodically prepare updated studies for certain
mines, following which it may be necessary to adjust
the fair value of AROs.

At one closed mine, the principal uncertainty that
could impact the fair value of an ARO is the manner
in which a tailings facility will need to be remediated.
In measuring the ARO, we have concluded that
there are two possible methods that could be used.
We have recorded the ARO using the more costly
method, which we believe to be the most probable,
but it is reasonably possible that a less costly method
may ultimately prove to be technically feasible, in
which case the ARO may decrease and any revision
to the ARO would be recorded in earnings in the
period of change.

The period of time over which we have assumed
that water quality monitoring and treatment will
be required also have a significant impact on AROs
at closed mines. The amount of AROs recorded
reflects the expected cost taking into account the
probability of particular scenarios. The difference
between the upper end of the range of these assump-
tions and the lower end of the range is significant,
and consequently changes in these assumptions
could have a material effect on the fair value of
AROs and future earnings in a period of change.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Deferred Tax Assets and Liabilities

Measurement of Timing Differences
We are periodically required to estimate the tax basis
of assets and liabilities. Where applicable tax laws
and regulations are either unclear or subject to
varying interpretations, it is possible that changes
in these estimates could occur that materially affect
the amounts of deferred income tax assets and
liabilities recorded in our Financial Statements.
Changes in deferred tax assets and liabilities gener-
ally have a direct impact on earnings in the period
of changes. The most significant such estimate is
the tax basis of certain Australian assets following
elections in 2004 under new tax regimes in Australia.
These elections resulted in the revaluation of certain
assets in Australia for income tax purposes. Part of
the revalued tax basis of these assets was estimated
based on a valuation completed for tax purposes.
This valuation is under review by the Australian
Tax Office (“ATO”) and the amount finally accepted
by the ATO may differ from the assumption used to
measure deferred tax balances at the end of 2004.

Valuation Allowances
Each period, we evaluate the likelihood of whether
some portion or all of each deferred tax asset will
not be realized. This evaluation is based on historic
and future expected levels of taxable income, the
pattern and timing of reversals of taxable tempo-
rary timing differences that give rise to deferred tax
liabilities, and tax planning initiatives. Levels of
future taxable income are affected by, among other
things, market gold prices, production costs, quan-
tities of proven and probable gold reserves, interest
rates and foreign currency exchange rates. If we
determine that it is more likely than not (a likeli-
hood of more than 50%) that all or some portion
of a deferred tax asset will not be realized, then we
record a valuation allowance against the amount
we do not expect to realize. Changes in valuation
allowances are recorded as a component of income
tax expense or recovery for each period. The most
significant recent trend impacting expected levels of
future taxable income and valuation allowances has
been rising gold prices. A continuation of this trend

could lead to the release of some of the valuation
allowances recorded, with a corresponding effect
on earnings in the period of release.

We released valuation allowances totaling $5 million
in 2004 and $62 million in 2003. In 2004, the
release was as a consequence of an election to
consolidate our Australian operations into one tax
group. The $62 million release in 2003 was mainly
a result of a corporate reorganization for tax pur-
poses in North America and the impact of higher
expected levels of taxable income in Australia and
Argentina caused by rising market gold prices.

A further continuation of the recent trend of rising
gold prices could lead to the release of some portion
or all of the valuation allowances in the United
States and Argentina.

Valuation allowances at December 31

($ millions)

United States
Chile
Argentina
Canada
Tanzania
Australia
Other

2004

2003

$ 189
141
75
73
89
3
8
$ 578

$ 181
146
73
72
68
8
6
$ 554

United States: most of the valuation allowances
relate to the full amount of Alternative Minimum
Tax credits, which have an unlimited carry-forward
period. Increasing levels of future taxable income
due to gold selling prices and other factors and
circumstances may result in an adjustment to these
valuation allowances.

Chile: valuation allowances relate to the full amount
of tax assets in subsidiaries that do not have any
present sources of income. In the event that these
subsidiaries have sources of income in the future,
we may release some or all of the allowances.

Argentina: a valuation allowance of $75 million
has been set up against certain deferred tax assets
in Argentina. Historically, we have had no income

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

generating operations in Argentina, but following
the production start-up at Veladero in 2005, various
factors will affect future levels of taxable income in
Argentina, including the volume of gold produced
and sold, gold selling prices and costs incurred
to produce gold. It is reasonably possible that an
adjustment to a $34 million portion of this valuation
allowance that relates to Veladero will be made in
the near term.

Canada: substantially all of the valuation allowances
relate to capital losses that will only be utilized if
any capital gains arise.

Tanzania: considering the local fiscal regime appli-
cable to mining companies and expected levels of
future taxable income from the Bulyanhulu mine, a
valuation allowance exists against a portion of the
deferred tax assets. If we conclude that expected
levels of future taxable income from Bulyanhulu
will be higher, we may release some or all of the
valuation allowance.

Non-GAAP Performance
Measures

For the years ended December 31
($ millions, except
per ounce information)

Total cash costs – per US GAAP 1
Accretion expense and reclamation

2004

2003

$ 1,062 $ 1,065

costs at the operating mines

(18)

(14)

Total cash costs – per Gold Institute

Production Cost Standard

Ounces sold (thousands)
Total cash costs per ounce
– per US GAAP (dollars)2
Total cash costs per ounce –

$ 1,044 $ 1,051
5,554

4,936

$ 215 $ 192

per Gold Institute Production
Cost Standard (dollars)2

$ 212 $ 189

1. Equal to cost of sales and other operating expenses
less accretion expense and reclamation costs at
non-operating mines.

2. Per ounce weighted average.

We have included total cash costs per ounce data
because these statistics are a key performance mea-
sure that management uses to monitor performance.

We use these statistics to assess how well our pro-
ducing mines are performing compared to plan and
also to assess the overall effectiveness and efficiency
of our mining operations. We believe that the inclu-
sion of these statistics in MD&A helps an investor to
assess performance “through the eyes of manage-
ment”. We understand that certain investors also
use these statistics to assess our performance. The
inclusion of total cash costs per ounce statistics
enables investors to better understand year on year
changes in production costs, which in turn affect
profitability and the ability to generate operating
cash flow for use in investing and other activities.
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 State-
ments of Income and 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. A US GAAP
measure of costs per ounce has also been presented
as required by securities regulations that govern
non-GAAP performance measures. Commentary
within this Management’s Discussion and Analysis
is focused on the “total cash costs” measure as
defined by the Standard.

The data is intended to provide additional informa-
tion and should not be considered in isolation or as
a substitute for measures of performance prepared
in accordance with GAAP. The measures are not
necessarily indicative of operating profit or cash
flow from operations as determined under GAAP.
As can be seen from the tables on pages 68 to 70
reconciling the GAAP and non-GAAP measures,
the GAAP and non-GAAP measures are not signifi-
cantly different.

BARRICK Annual Report 2004

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)3

Goldstrike –
Open pit

Goldstrike –
Underground

Eskay
Creek2

Round
Mountain

2004

2003

2004

2003

2004

2003

2004

2003

$336.5

$380.6

$141.2

$152.1

$ 9.3

$ 18.6

$ 84.5

$ 67.2

(2.5)

(0.2)

–

(0.2)

(0.3)

(1.6)

$334.0
1,352

$378.1
1,625

$141.0
554

$152.1
600

$ 9.1
290

$ 18.3
354

$ 82.9
375

$ 65.6
379

$ 249

$ 234

$ 256

$ 253

$ 32

$ 53

$ 225

$ 177

Total cash costs per ounce sold –
per Gold Institute Production
Cost Standard (dollars)4

$ 247

$ 233

$ 255

$ 253

$ 31

$ 52

$ 221

$ 173

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)3

Hemlo

Holt-McDermott

Marigold

Total
North America

2004

2003

2004

2003

2004

2003

2004

2003

$ 57.6

$ 60.4

$ 12.3

$ 20.9

$ 9.1

$ 8.1

$650.5

$707.9

(0.2)

(0.1)

(4.9)

(4.8)

$ 57.4
239

$ 60.2
266

$ 12.2
62

$ 20.8
87

$ 9.0
46

$ 8.0
47

$645.6
2,918

$703.1
3,358

$ 241

$ 227

$ 198

$ 240

$ 198

$ 172

$ 223

$ 211

Total cash costs per ounce sold –
per Gold Institute Production
Cost Standard (dollars)4

$ 240

$ 226

$ 197

$ 239

$ 197

$ 171

$ 221

$ 209

1. Represents cost of sales and other operating costs (excluding amortization and accretion expense and reclamation
costs for non-operating mines).

2. Eskay Creek’s total cash costs in 2004 are impacted by higher silver prices which the Company treats as
a by-product. Total cash costs on a co-product basis are: 2004 – gold $202 per ounce, silver $3.36 per ounce
(2003 – gold $175 per ounce, silver $2.37 per ounce).

3. Represents total cash production costs per US GAAP divided by ounces sold.

4. Represents total cash production costs per Gold Institute Production Cost Standard divided by ounces sold.

BARRICK Annual Report 2004

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)2

Total cash costs per ounce sold –
per Gold Institute Production
Cost Standard (dollars)3

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)2

Total cash costs per ounce sold –
per Gold Institute Production
Cost Standard (dollars)3

Pierina

Total
South America

Plutonic

Darlot

2004

2003

2004

2003

2004

2003

2004

2003

$72.2

$78.9

$ 72.2

$78.9

$ 69.2

$62.6

$ 30.0 $ 25.4

(3.5)

(3.2)

(3.5)

(3.2)

(0.1)

(0.2)

(0.1)

$68.7
649

$75.7
911

$ 68.7
649

$75.7
911

$ 69.1
310

$62.4
324

$ 29.9 $ 25.3
154

142

$ 111

$ 87

$ 111

$ 87

$ 223

$ 193

$ 211 $ 165

$ 106

$ 83

$ 106

$ 83

$ 223

$ 193

$ 210 $ 164

Lawlers

Kalgoorlie

Bulyanhulu

Total
Australia/Africa

2004

2003

2004

2003

2004

2003

2004

2003

$28.3

$23.8

$108.5

$88.1

$103.2

$77.1

$339.2

$277.0

(0.1)

(1.5)

(7.5)

(4.1)

(9.3)

(6.0)

$28.2
115

$23.7
95

$107.0
463

$86.6
415

$ 95.7
339

$73.0
297

$329.9
1,369

$271.0
1,285

$ 247

$ 250

$ 234

$ 212

$ 304

$ 260

$ 248 $ 216

$ 246

$ 249

$ 231

$ 209

$ 283

$ 246

$ 241 $ 210

1. Represents cost of sales and other operating costs (excluding amortization and accretion expense and reclamation
costs for non-operating mines).

2. Represents total cash production costs per US GAAP divided by ounces sold.

3. Represents total cash production costs per Gold Institute Production Cost Standard divided by ounces sold.

BARRICK Annual Report 2004

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,

plant and equipment not at operating mine sites

Amortization expense for per ounce calculation

Ounces sold (thousands)

Amortization per ounce (dollars)

2004

$ 452

(27)

$ 425

4,936

$ 86

2003

$ 522

(25)

$ 497

5,554

$ 90

2002

$ 519

(26)

$ 493

5,805

$ 85

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Cautionary Statement on
Forward-Looking Information

“expect”,

“believe”,

which we do or may carry on business in the future;
business opportunities that may be presented to, or
pursued by, us; our ability to successfully integrate
acquisitions; operating or technical difficulties in
connection with mining or development activities;
the speculative nature of gold exploration and
development, including the risks of obtaining
necessary licenses and permits; diminishing quan-
tities or grades of reserves; adverse changes in our
credit rating; and contests over title to properties,
particularly title to undeveloped properties. In
addition, there are risks and hazards associated
with the business of gold exploration, development
and mining, including environmental hazards,
industrial accidents, unusual or unexpected forma-
tions, pressures, cave-ins, flooding and gold bullion
losses (and the risk of inadequate insurance, or
inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can
affect our actual results and could cause actual
results to differ materially from those expressed or
implied in any forward-looking statements made
by, or on behalf of, us. Readers are cautioned that
forward-looking statements are not guarantees
of future performance. All of the forward-looking
statements made in this Annual Report 2004
are qualified by these cautionary statements.
Specific reference is made to 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 for a discussion of some of the factors
underlying forward-looking statements.

We disclaim any intention or obligation to update or
revise any forward-looking statements whether as a
result of new information, future events or otherwise.

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

Glossary of Technical Terms

AUTOCLAVE: Oxidation process in which high
temperatures and pressures are applied to convert
refractory sulphide mineralization into amenable
oxide ore.

BACKFILL: Primarily waste sand or rock used to
support the roof or walls after removal of ore from
a stope.

BY-PRODUCT: A secondary metal or mineral
product recovered in the milling process such as
copper and silver.

CONCENTRATE: A very fine, powder-like product
containing the valuable ore mineral from which
most of the waste mineral has been eliminated.

CONTAINED OUNCES: Represents ounces in the
ground before reduction of ounces not able to be
recovered by the applicable metallurgical process.

CONTANGO: The positive difference between the
spot market gold price and the forward market
gold price. It is often expressed as an interest rate
quoted with reference to the difference between
inter-bank deposit rates and gold lease rates.

DEVELOPMENT: Work carried out for the purpose
of opening up a mineral deposit. In an underground
mine this includes shaft sinking, crosscutting, drift-
ing and raising. In an open pit mine, development
includes the removal of overburden.

DILUTION: The effect of waste or low-grade ore
which is unavoidably included in the mined ore,
lowering the recovered grade.

DORÉ: Unrefined gold and silver bullion bars
usually consisting of approximately 90 percent
precious metals that will be further refined to
almost pure metal.

EXPLORATION: Prospecting, sampling, mapping,
diamond-drilling and other work involved in search-
ing for ore.

GRADE: The amount of metal in each ton of ore,
expressed as troy ounces per ton or grams per
tonne for precious metals and as a percentage for
most other metals.

Cut-off grade: the minimum metal grade at which
an orebody can be economically mined (used in the
calculation of ore reserves).

Mill-head grade: metal content of mined ore going
into a mill for processing.

Recovered grade: actual metal content of ore deter-
mined after processing.

Reserve grade: estimated metal content of an ore-
body, based on reserve calculations.

HEAP LEACHING: A process whereby gold is
extracted by “heaping” broken ore on sloping
impermeable pads and continually applying to the
heaps a weak cyanide solution which dissolves the
contained gold. The gold-laden solution is then
collected for gold recovery.

HEAP LEACH PAD: A large impermeable foun-
dation or pad used as a base for ore during heap
leaching.

LIBOR: The London Inter-Bank Offered Rate for
deposits.

MILL: A processing facility where ore is finely
ground and thereafter undergoes physical or
chemical treatment to extract the valuable metals.

MINERAL RESERVE: See page 125 – “Gold Mineral
Reserves and Mineral Resources.”

BARRICK Annual Report 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

MINERAL RESOURCE: See page 125 – “Gold
Mineral Reserves and Mineral Resources.”

MINING CLAIM: That portion of applicable
mineral lands that a party has staked or marked
out in accordance with applicable mining laws to
acquire the right to explore for and exploit the
minerals under the surface.

MINING RATE: Tons of ore mined per day or even
specified time period.

MINING SEQUENCE: Sequence by which ore is
extracted from the mine is based on the mine plan.

OPEN PIT: A mine where the minerals are mined
entirely from the surface.

ORE: Rock, generally containing metallic or non-
metallic minerals, which can be mined and processed
at a profit.

OREBODY: A sufficiently large amount of ore that
can be mined economically.

OUNCES: Troy ounces of a ﬁneness of 999.9 parts
per 1,000 parts.

RECLAMATION: The process by which lands
disturbed as a result of mining activity are modi-
fied to support beneficial land use. Reclamation
activity may include the removal of buildings,
equipment, machinery and other physical remnants
of mining, closure of tailings storage facilities, leach
pads and other mine features, and contouring,
covering and re-vegetation of waste rock and other
disturbed areas.

RECLAMATION AND CLOSURE COSTS: The cost
of reclamation plus other costs, including without
limitation certain personnel costs, insurance, prop-
erty holding costs such as taxes, rental and claim
fees, and community programs associated with
closing an operating mine.

RECOVERY RATE: A term used in process
metallurgy to indicate the proportion of valuable
material physically recovered in the processing of
ore. It is generally stated as a percentage of the
material recovered compared to the total material
originally present.

REFINING: The final stage of metal production
in which impurities are removed from the molten
metal.

ROASTING: The treatment of ore by heat and air,
or oxygen enriched air, in order to remove sulphur,
carbon, antimony or arsenic.

STRIPPING: Removal of overburden or waste rock
overlying an ore body in preparation for mining by
open pit methods. Expressed as the total number of
tons mined or to be mined for each ounce of gold.

TAILINGS: The material that remains after all
economically and technically recoverable precious
metals have been removed from the ore during
processing.

BARRICK Annual Report 2004

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

Executive Vice President

and Chief Financial Officer

Toronto, Canada

March 15, 2005

BARRICK Annual Report 2004

Auditors’
Report

To the Shareholders of Barrick Gold Corporation

We have audited the consolidated balance sheets of Barrick Gold Corporation as at December 31, 2004

and 2003 and the consolidated statements of income, cash flows, shareholders’ equity and comprehensive

income for each of the years in the three-year period ended December 31, 2004. 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 Canadian generally accepted auditing standards and the

standards of the Public Company Accounting Oversight Board (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 examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by Management, as well as evaluating the overall financial

statement presentation. We believe 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, 2004 and 2003 and the results of its operations and its cash

flows for each of the years in the three-year period ended December 31, 2004 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, and during 2002 the Company changed its policy on deferred stripping costs.

On March 15, 2005 we reported separately to the shareholders of Barrick Gold Corporation on the

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

accounting principles.

Chartered Accountants

Toronto, Canada

March 15, 2005

BARRICK Annual Report 2004

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)

2004

2003

2002

Gold sales (notes 3 and 4)

$ 1,932

$ 2,035

$ 1,967

Costs and expenses
Cost of sales1 (note 5)
Amortization (note 3)
Administration
Exploration, development and business development
Other (income) expense (note 6)

Interest income
Interest expense (note 16b)

Income before income taxes and other items
Income tax recovery (expense) (note 7)

Income before cumulative effect

of changes in accounting principles

Cumulative effect of changes in accounting principles (note 2b)

1,071
452
71
141
158

1,893

25
(19)

45
203

248
–

1,072
522
73
137
(4)

1,800

31
(44)

222
(5)

217
(17)

1,070
519
50
104
16

1,759

26
(57)

177
16

193
–

Net income for the year

$ 248

$ 200

$ 193

Earnings per share data (note 8)
Income before cumulative effect

of changes in accounting principles
Basic
Diluted
Net income
Basic
Diluted

1. Exclusive of amortization (note 5).

$ 0.47
$ 0.46

$ 0.40
$ 0.40

$ 0.37
$ 0.37

$ 0.36
$ 0.36

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

BARRICK Annual Report 2004

FINANCIAL STATEMENTS

Consolidated Statements of Cash Flow

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

Operating Activities
Net income
Amortization
Deferred income taxes (note 18)
Inmet litigation settlement (note 6)
Gains on sale of long-lived assets (note 6)
Other items (note 9)

2004

2003

2002

$ 248
452
(225)
–
(34)
65

$ 200
522
(49)
(86)
(34)
(34)

$ 193
519
(75)
–
(4)
(45)

Net cash provided by operating activities

506

519

588

Investing Activities
Property, plant and equipment

Capital expenditures (note 3)
Sales proceeds
Investments (note 10)

Purchases
Sales proceeds

Proceeds on maturity of term deposits

Net cash used in investing activities

Financing Activities
Capital stock

Proceeds from shares issued on exercise of stock options
Repurchased for cash (note 19a)

Long-term debt (note 16b)

Proceeds
Repayments

Dividends (note 19a)
Other items

Net cash provided by (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 16a)

(824)
43

(47)
9
–

(819)

49
(95)

974
(41)
(118)
(28)

741

–
428
970

(322)
40

(60)
8
–

(334)

29
(154)

–
(23)
(118)
–

(266)

7
(81)
1,044

(228)
8

–
3
159

(58)

83
–

–
(25)
(119)
–

(61)

1
469
574

Cash and equivalents at end of year (note 16a)

$ 1,398

$ 970

$ 1,044

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

BARRICK Annual Report 2004

FINANCIAL STATEMENTS

Consolidated Balance Sheets

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

Assets
Current assets

Cash and equivalents (note 16a)
Accounts receivable (note 11)
Inventories (note 11)
Other current assets (note 11)

Investments (note 10)
Property, plant and equipment (note 12)
Capitalized mining costs (note 13)
Other assets (note 14)

2004

2003

$ 1,398
58
215
286

1,957
134
3,391
226
566

$ 970
56
164
178

1,368
130
3,128
235
497

Total assets

$ 6,274

$ 5,358

Liabilities and Shareholders’ Equity
Current liabilities

Accounts payable
Other current liabilities (note 15)

Long-term debt (note 16b)
Other long-term obligations (note 17)
Deferred income tax liabilities (note 18)

Total liabilities

Shareholders’ equity

Capital stock (note 19)
Deficit
Accumulated other comprehensive income (note 20)

Total shareholders’ equity

Contingencies and commitments (notes 12d, 16 and 23)

$ 335
83

$ 245
119

418
1,655
499
139

2,711

4,129
(624)
58

3,563

364
719
464
317

1,864

4,115
(694)
73

3,494

Total liabilities and shareholders’ equity

$ 6,274

$ 5,358

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 2004

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 on exercise of stock options (note 21a)
Repurchased (note 19a)

At December 31

Common shares
At January 1

Issued on exercise of stock options (note 21a)
Repurchased (note 19a)

At December 31

Deﬁcit
At January 1

Net income
Adjustment on repurchase of common shares (note 19a)
Dividends (note 19a)

At December 31

2004

2003

2002

535
3
(4)

534

542
2
(9)

535

536
6
–

542

$ 4,115
49
(35)

$ 4,148
34
(67)

$ 4,062
86
–

$ 4,129

$ 4,115

$ 4,148

$ (694)
248
(60)
(118)

$ (689)
200
(87)
(118)

$ (763)
193
–
(119)

$ (624)

$ (694)

$ (689)

Accumulated other comprehensive income (loss) (note 20)

$ (125)

Total shareholders’ equity at December 31

$ 3,563

$ 3,494

$ 3,334

Consolidated Statements of Comprehensive Income

Net income
Other comprehensive income (loss), net of tax (note 20)

Comprehensive income

2004

2003

2002

248
(15)

233

200
198

398

193
(18)

175

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

BARRICK Annual Report 2004

Notes to Consolidated
Financial Statements

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

1. Nature of Operations

A VIE is defined as an entity that by design either lacks

enough equity investment at risk to permit the entity

to finance its activities without additional subordinated

financial support from other parties; has equity owners

who are unable to make decisions about the entity; or

has equity owners that do not have the obligation to

absorb the entity’s expected losses or the right to receive

Barrick Gold Corporation

(“Barrick” or

the

the entity’s expected residual returns. VIEs can arise

“Company”) engages in the production and sale of gold

from a variety of entities or legal structures.

from underground and open-pit mines, including

related activities such as exploration and mine develop-

ment. Our operations are mainly located in North

America, South America, Australia and Africa.

2. Signiﬁcant Accounting Policies

a) Basis of presentation
These financial statements are prepared under United

States generally accepted accounting principles (“US

GAAP”). We also include financial statements prepared

under Canadian GAAP in our Proxy Statement that we

file with various Canadian regulatory authorities. To

ensure comparability of financial information, certain

prior-year amounts have been reclassified to conform

with the current year presentation.

Consolidation policy
These financial statements reflect consolidation of

the accounts of Barrick and other entities in which

we have a controlling financial interest. The usual

condition for a controlling financial interest is owner-

ship of a majority of the voting interests of an entity.

However, a controlling financial interest may also exist

in entities through arrangements that do not involve

voting interests, where the entities are variable interest

entities (VIEs) under the principles of FIN 46R. Inter-

company balances and transactions are eliminated

on consolidation.

FIN 46R requires a variable interest holder (i.e. a coun-

terparty to a VIE) to consolidate the VIE if that party

will absorb a majority of the expected losses of the VIE,

receive a majority of the residual returns of the VIE, or

both. This party is considered the primary beneficiary

of the entity. The determination of whether a variable

interest holder meets the criteria to be considered the

primary beneficiary of a VIE requires an evaluation of

all transactions by the entity. The foundation for this

evaluation is a calculation prescribed by FIN 46R.

We hold our interests in the Round Mountain, Hemlo,

Marigold and Kalgoorlie mines through unincorporated

joint ventures. Under long-standing practice for extrac-

tive industries, we use the proportionate consolidation

method to account for our interests in these unincorpo-

rated joint ventures.

Our 70% interest in the Tulawaka development project

is held through an unincorporated joint venture. In years

prior to 2004 we used the proportionate consolidation

method to account for our interest. In 2004, we entered

into an agreement to finance the other joint venture

partner’s share of mine construction costs, which caused

us to reconsider whether this joint venture is a VIE. We

concluded that the joint venture is in fact a VIE, and

that Barrick is the primary beneficiary. From June 2004

onwards, we consolidated this joint venture using the

principles of FIN 46R. The creditors of this VIE have

no recourse to the general credit of Barrick.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign currency translation
In 2003, various changes in economic facts and circum-

stances led us to conclude that the functional currency

of our Argentinean operations is the United States

dollar rather than the Argentinean Peso. These changes

included the completion of the Veladero mine feasibility

study, the expected denomination of selling prices for

future gold production and the occurrence of higher

amounts of US dollar expenditures.

Following this change the functional currency of all our

operations is the US dollar. We re-measure non-US dollar

balances 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.

> the useful lives of long-lived assets and the measure-
ment of amortization recorded in earnings; and

> the fair value of asset retirement obligations.

We regularly review estimates and assumptions that

affect our financial statements; however, actual outcomes

could differ from estimates and assumptions.

b) Accounting changes
Effect of accounting changes on earnings

Earnings increase (decrease)

For the years ended
December 31

2004

2003

2002

Changes in accounting policies
Cumulative effect

Adoption of FAS 1431

(note 17a)
Amortization of

underground development
costs2 (note 12a)

$ –

$ 4

$ –

–

(21)

(17)

–

(4)

Gains and losses arising from re-measurement of for-

eign currency balances and transactions are recorded

in earnings.

Pro forma effect

(excluding tax effects)
Adoption of FAS 1433

Use of estimates
The preparation of these financial statements requires

us to make estimates and assumptions. The most signifi-

cant estimates and assumptions are quantities of proven

and probable gold reserves; expected value of mineral

resources not considered proven and probable reserves;

expected future costs and expenses to produce proven

and probable reserves; expected future commodity

prices and foreign currency exchange rates; and

expected costs to meet asset retirement obligations.

Critical estimates and assumptions include:
> decisions as to whether mine development costs

should be capitalized or expensed;

> assessments of whether groups of long-lived assets
are impaired and the fair value of those groups
of assets that are the basis for measuring
impairment charges;

> assessments of our ability to realize the benefits of

deferred income tax assets;

Total

$ –

$(17)

$ (4)

1. On adoption of FAS 143 in first quarter 2003 (see note 17a),
we recorded on our balance sheet an increase in property,
plant and equipment of $39 million; an increase in other long-
term obligations of $32 million; and an increase in deferred
income tax liabilities of $3 million; as well as a $4 million
credit in earnings for the cumulative effect of this change.

2. On January 1, 2003, we changed our accounting policy
for amortization of underground mine development costs
to exclude estimates of future underground development costs
(see note 12a). On adoption of this change, we decreased
property, plant and equipment by $19 million, 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.

3. FAS 143 was followed in the preparation of financial
results for 2004 and 2003. For 2002, because prior years were
not restated, the amount disclosed is the pro forma effect of
following FAS 143.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Emerging Issues Task Force (“EITF”)
Issue No. 04-2: Whether Mineral Rights are
Tangible or Intangible Assets (EITF 04-2)
EITF 04-2 was issued in 2004 and concludes that

impairment and requires certain disclosures about

impairment losses included in other comprehensive

income that have not been recorded in earnings. The

measurement requirements of EITF 03-1 were effective

mineral rights, which are defined as the legal right to

for the fiscal quarter ended September 30, 2004, but the

explore, extract and retain at least a portion of the

disclosure requirements are not effective until fiscal 2005.

benefits from mineral deposits, are tangible assets.

EITF 04-2 was effective in third quarter 2004, and

had no impact on the classification of such assets in

our financial statements.

EITF Issue No. 04-6, Accounting for
Stripping Costs Incurred during Production
in the Mining Industry (EITF 04-6)
In the mining industry, companies may be required to

EITF Issue No. 04-3, Mining Assets: Impairment
and Business Combinations (EITF 04-3)
EITF 04-3 was issued in 2004 and establishes guidance

remove overburden and other mine waste materials to

access mineral deposits. The costs of removing over-

burden and waste materials are often referred to as

for the inclusion of the expected value of mineralization

“stripping costs.” During the development of a mine

not considered proven and probable reserves when

(before production begins), it is generally accepted in

allocating the purchase price in a business combination

practice that stripping costs are capitalized as part of

and also when testing a mining asset for impairment.

the depreciable cost of building, developing, and con-

The principles of EITF 04-3 are required to be adopted

structing the mine. Those capitalized costs are typically

prospectively and were effective in second quarter 2004.

amortized over the productive life of the mine using the

c) Accounting developments
EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its
Application to Certain Investments (EITF 03-1)
EITF 03-1 was issued in 2004 and establishes guidance

to be used in determining when an investment is consid-

ered impaired, whether that impairment is other than

temporary, and the measurement of an impairment

loss. Under the application of our previous accounting

policy for impairment of investments, an impairment

on a specific investment was recorded in earnings on

determination that the impairment was other than

temporary or after an investment had been impaired for

six months, whichever is the earlier. Under EITF 03-1,

there is no requirement to automatically record an

impairment loss in earnings after a six-month period;

instead the recognition of impairment losses in earnings

is based on the assessment of whether the loss is other

than temporary. The adoption of the measurement

requirements of EITF 03-1 in third quarter 2004 had

no effect on impairment charges recorded in earnings.

EITF 03-1 also provides the guidance on accounting sub-

sequent to the recognition of an other-than-temporary

units-of-production method. A mining company may

continue to remove overburden and waste materials,

and therefore incur stripping costs, during the produc-

tion phase of the mine. Questions have been raised

about the appropriate accounting for stripping costs

incurred during the production phase, and diversity

in practice exists. In response to these questions, the

EITF has undertaken a project to develop an Abstract

to address the questions and clarify the appropriate

accounting treatment for stripping costs under US GAAP.

The EITF is in the process of deliberating these ques-

tions and upon completion of their deliberations they

are expected to issue EITF 04-6, which will represent

an authorative US GAAP pronouncement for stripping

costs. Our accounting policy for stripping costs is

disclosed in note 13. EITF 04-6 may require us to

change our accounting policy for stripping costs in

future periods.

FAS 123R, Accounting for Stock-Based
Compensation (FAS 123R)
In December 2004, the FASB issued FAS 123R. FAS

123R is applicable to transactions in which an entity

exchanges its equity instruments for goods and services.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

It focuses primarily on transactions in which an entity

exchange has commercial substance if, as a result of the

obtains employee services in share-based payment trans-

exchange, the future cash flows of an entity are expected

actions. FAS 123R requires that the fair value of such

to change significantly.

equity instruments is recorded as an expense as services

are performed. Prior to FAS 123R, only certain pro

forma disclosures of accounting for these transactions

at fair value were required. FAS 123R will be effective

for our third quarter 2005 financial statements, and

permits varying transition methods including: retroac-

tive adjustment of prior periods as far back as 1995 to

give effect to the fair value based method of accounting

for awards granted in those prior periods; retrospective

application to all interim periods in 2005; or prospective

application to future periods beginning in third quarter

2005. We are presently evaluating the effect of the

varying methods of adopting FAS 123R. We expect to

adopt FAS 123R using the modified prospective method

effective July 1, 2005. Under this method we will begin

recording stock option expense based on a similar

method to the one used for pro forma purposes that is

disclosed in note 21, starting in the third quarter of 2005.

FAS 151, Inventory Costs (FAS 151)
FAS 151 was issued in November 2004 as an amendment

Under FAS 153, a non-monetary exchange is measured

based on the fair values of the assets exchanged. If fair

value is not determinable, the exchange lacks commer-

cial substance or the exchange is to facilitate sales to

customers, a non-monetary exchange is measured based

on the recorded amount of the non-monetary asset

relinquished. FAS 153 will be effective for non-monetary

exchanges that occur in fiscal periods beginning after

June 15, 2005.

d) Other signiﬁcant accounting policies

Segment information

Revenue and gold sales contracts

Cost of sales

Other (income) expense

Income tax (recovery) expense

Earnings per share

Supplemental cash flow information

to ARB No. 43. FAS 151 specifies the general principles

Investments

applicable to the pricing and allocation of certain costs

to inventory. Under FAS 151, abnormal amounts of idle

facility expense, freight, handling costs and wasted

materials are recognized as current period charges

rather than capitalized to inventory. FAS 151 also

requires that the allocation of fixed production over-

head to the cost of inventory be based on the normal

capacity of production facilities. FAS 151 will be

effective for inventory costs incurred beginning in our

2006 fiscal year. We are presently evaluating the impact

of FAS 151 on our financial statements.

FAS 153, Exchanges of
Non-Monetary Assets (FAS 153)
FAS 153 was issued in December 2004 as an amendment

Accounts receivable, inventories

and other current assets

Property, plant and equipment

Capitalized mining costs

Other assets

Other current liabilities

Financial instruments

Other long-term obligations

Deferred income taxes

Capital stock

Other comprehensive income (loss)

Stock-based compensation

Post-retirement benefits

Contingencies, litigation and claims

Joint ventures

to APB Opinion No. 29. FAS 153 provides guidance on

Differences from Canadian GAAP

the measurement of exchanges of non-monetary assets,

with exceptions for exchanges that do not have com-

mercial substance. Under FAS 153, a non-monetary

BARRICK Annual Report 2004

Note

Page

p. 84

p. 86

p. 88

p. 89

p. 90

p. 92

p. 93

p. 94

p. 95

p. 97

p. 107

p. 109

p. 110

p. 111

p. 113

p. 115

p. 117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Segment Information

Our operations are managed on a regional basis.

Our three regional business units are North America,

Australia/Africa and South America. Financial infor-

mation for each of our operating mines, development

projects and our exploration group is reviewed regularly

by our chief operating decision maker.

Segment income for operating segments comprises seg-

ment revenues less segment operating costs and segment

amortization in the format that internal management

reporting is presented to the chief operating decision

maker. For internal management reporting purposes, we

measure segment revenues and income using the average

consolidated realized gold selling price for each period.

Segment operating costs represent our internal presenta-

tion of costs incurred to produce gold at each operating

mine, and exclude the following costs that we do not

allocate to operating segments: accretion expense;

environmental remediation costs at closed mines;

regional business unit overhead; amortization of corpo-

rate assets; business development costs; administration

costs; other income/expense; and the costs of financing

their activities. Segment operating costs for development

projects and the exploration group represent expensed

exploration, mine development and mine start-up costs.

Income statement information

For the years ended December 31

2004

2003

2002

2004

2003

2002

2004

2003

2002

Gold sales

Segment operating costs

Segment income (loss)

Goldstrike
Round Mountain
Eskay Creek
Hemlo
Other operating segments

$ 745 $ 813 $ 678
132
121
97
177

148
112
93
42

139
130
98
50

North America

1,140

1,230

1,205

$ 475 $ 531 $ 436
73
14
64
96

83
9
57
21

66
18
60
29

$121
48
52
24
11

$122
53
65
27
7

$ 95
38
59
23
56

645

69
107
1
96
–
60

333

69
5
4
12
3

704

683

256

274

271

62
87
–
73
2
53

57
82
–
78
3
45

42
56
(1)
5
–
27

48
46
–
(1)
(2)
26

37
23
–
16
(3)
33

277

265

129

117

106

76
18
–
29
–

123

72
20
–
29
5

126

75
(5)
(4)
(12)
(3)

(96)

90
(18)
–
(29)
–

(67)

70
(20)
–
(29)
2

(42)

122
183
–
135
–
101

541

251
–
–
–
–

251

–

120
153
–
109
–
91

473

332
–
–
–
–

332

–

105
124
–
134
–
89

452

303
–
–
–
7

310

–

$1,932 $2,035 $1,967

$1,167 $1,171 $1,116

$340

$367

$358

BARRICK Annual Report 2004

Plutonic
Kalgoorlie
Cowal
Bulyanhulu
Tulawaka
Other operating segments

Australia/Africa

Pierina
Veladero
Pascua-Lama
Lagunas Norte
Other operating segments

South America

Exploration group

Segment total

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Geographic information

For the years ended December 31

2004

2003

2004

2003

2002

Assets

Gold sales

United States
Canada

North America

Australia
Tanzania

Australia/Africa

Peru
Argentina
Chile

South America

Other

Reconciliation of segment income

For the years ended December 31

Segment income
Accretion expense at producing mines
Environmental remediation costs
Other expenses at producing mines
Amortization of corporate assets
Business development costs
Administration
Interest income
Interest expense
Other income (expense)

Income before income taxes and other items

$ 1,976
492

$ 1,835
480

$ 911
229

$ 970
260

$ 906
299

2,468

2,315

1,140

1,230

1,205

838
774

552
707

1,612

1,259

811
645
120

757
219
90

1,576

1,066

618

718

406
135

541

251
–
–

251

–

364
109

473

332
–
–

332

–

318
134

452

303
–
–

303

$ 6,274

$ 5,358

$ 1,932

$ 2,035

$ 1,967

2004

$ 340
(11)
–
(16)
(27)
(18)
(71)
25
(19)
(158)

$ 45

2003

$ 367
(10)
–
(11)
(25)
(17)
(73)
31
(44)
4

$ 222

2002

$ 358
–
(34)
(14)
(26)
(10)
(50)
26
(57)
(16)

$ 177

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset information

Segment assets

Amortization

Segment capital
expenditures

For the years ended December 31

2004

2003

2004

2003

2002

2004

2003

2002

Goldstrike
Round Mountain
Eskay Creek
Hemlo
Other operating segments

$ 1,290 $ 1,372
75
203
65
29

67
91
63
28

$ 149
17
51
12
10

$ 160
20
47
11
14

$ 147
21
48
10
25

North America

1,539

1,744

239

252

251

Plutonic
Kalgoorlie
Cowal
Bulyanhulu
Tulawaka
Other operating segments

92
277
130
566
70
89

84
250
49
539
22
84

Australia/Africa

1,224

1,028

Pierina
Veladero
Pascua-Lama
Lagunas Norte

South America

Segment total
Cash and equivalents
Other items not allocated to segments

269
456
273
220

1,218

3,981
1,398
895

434
88
236
9

767

3,539
970
849

11
20
–
34
–
14

107
–
–
–

107

425
–
27

10
20
–
37
–
12

166
–
–
–

166

497
–
25

11
19
–
40
–
11

161
–
–
–

161

493
–
26

$ 72
5
7
8
12

104

15
10
73
46
48
12

204

8
284
35
182

509

817
–
7

$ 51
6
5
10
8

$ 46
8
8
6
19

44
14
24
36
1
21

20
14
13
56
–
14

140

117

17
68
9
4

318
–
4

5
–
11
5

225
–
3

Enterprise total

$ 6,274 $ 5,358

$ 452

$ 522

$ 519

$ 824

$ 322

$ 228

4. Revenue and

Gold Sales Contracts

For the years ended
December 31

Gold bullion sales
Gold sales contracts
Spot market sales

Concentrate sales

2004

2003

2002

$ 709 $ 1,504 $ 1,401
460

1,111

426

1,820
112

1,930
105

1,861
106

$ 1,932 $ 2,035 $ 1,967

We record revenue when the following conditions

are met: 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.

Bullion sales
We record revenue from gold and silver bullion sales at

the time of delivery and transfer of title to the gold or

silver to counterparties. Incidental revenues from the

sale of by-products such as silver are classified within

cost of sales.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2004, we had fixed-price gold sales

that fixed selling prices are set. The mark-to-market on

contracts with various counterparties for a total of

the fixed-price gold sales contracts (at December 31,

13.5 million ounces of future gold production and

2004) was negative $966 million for the Pascua-Lama

floating-price forward gold sales contracts for 0.5 million

Gold Sales Contracts and negative $949 million for the

ounces. In 2004, we allocated 6.5 million ounces of

Corporate Gold Sales Contracts.

fixed-price gold sales contracts specifically to Pascua-

Lama. The allocation of these contracts will help reduce

gold price risk at Pascua-Lama and will help secure

financing for its construction. In addition to the gold

sales contracts allocated to Pascua-Lama, we have

7.0 million ounces of corporate gold sales contracts

that we intend to settle through delivery of future gold

production from our operating mines and development

projects, excluding Pascua-Lama. The terms of the

contracts are governed by master trading agreements

(MTAs) that we have in place with the counterparties

to the contracts. The contracts have final delivery dates

primarily over the next 10 years, but we have the right

to settle these contracts at any time over this period.

Contract prices are established at inception through to

The difference between the forward price of gold and

the current market price, referred to as contango, can

be expressed as a percentage that is closely correlated

to the difference between US dollar interest rates and

gold lease rates. Historically short-term gold lease rates

have been lower than longer-term rates. We use gold

lease rate swaps to achieve a more economically optimal

term structure for gold lease rates implicit in contango.

Under the swaps we receive a fixed gold lease rate, and

pay a floating gold lease rate, on a notional 2.1 million

ounces of gold spread from 2005 to 2013. The swaps

are associated with fixed-price gold sales contracts with

expected delivery dates beyond 2006. Lease rate swaps

are classified as non-hedge derivatives (note 16c).

an interim date. If we do not deliver at this interim date,

Floating spot price sales contracts were previously

a new interim date is set. The price for the new interim

fixed-price forward sales contracts for which, in accor-

date is determined in accordance with the MTAs which

dance with the terms of our MTAs, we have elected to

have contractually agreed price adjustment mechanisms

receive floating spot gold and silver prices, adjusted by

based on the market gold price. The MTAs have both

the difference between the spot price and the contract

fixed and floating price mechanisms. The fixed-price

price at the time of such election. Floating prices

mechanism represents the market price at the start date

were elected for these contracts so that we could

(or previous interim date) of the contract plus a premium

economically regain spot gold price leverage under

based on the difference between the forward price of

the terms of delivery into these contracts. Furthermore,

gold and the current market price. If at an interim date

floating price mechanisms were elected for these con-

we opt for a floating price, the floating price represents

tracts at a time when the then current market price

the spot market price at the time of delivery of gold plus

was higher than the fixed price in the contract. The

or minus the difference between the previously fixed

mark-to-market on these contracts (at December 31,

price and the market gold price at that interim date. The

2004) was negative $25 million, which equates to

final realized selling price under a contract primarily

an average reduction to the future spot sales price of

depends upon the timing of the actual future delivery

approximately $52 per ounce, when we deliver gold

date, the market price of gold at the start of the contract

at spot prices against these contracts.

and the actual amount of the premium of the forward

price of gold over the spot price of gold for the periods

At December 31, 2004, one counterparty made up

11% of the ounces committed under gold bullion

sales contracts.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrate sales
Our Eskay Creek and Bulyanhulu mines produce gold

in concentrate form. Our Pascua-Lama mine will also

produce gold in concentrate form. Under the terms

of our concentrate sales contracts with independent

smelting companies, gold sales prices are set on a

specified future date after shipment based on market

prices. We record revenues under these contracts at

the time of shipment, which is when title passes to

the smelting companies, using forward market gold

prices on the expected date that final sales prices will

be set. Variations between the price recorded at the

shipment date and the actual final price set under the

smelting contracts are caused by changes in market

gold prices, and result in an embedded derivative in

the accounts receivable. The embedded derivative is

is classified in the income statement under “amortization”.
Some companies present this amount under “cost of sales”.
The amount presented in amortization rather than cost
of sales is $425 million in 2004; $497 million in 2003
and $493 million in 2002.

2. We use silver sales contracts to sell a portion of silver
produced as a by-product. Silver sales contracts have similar
delivery terms and pricing mechanisms as gold sales contracts.
At December 31, 2004, we had fixed-price commitments
to deliver 12.4 million ounces of silver at an average price
of $5.50 per ounce and floating spot price sales contracts for
12 million ounces over periods primarily of up to 10 years.

3. Cost of goods sold includes environmental remediation
costs of $34 million in 2002.

4. Includes the reversal of $15 million of accrued costs on
resolution of the Peruvian tax assessment (see note 7).

Royalties
Certain of our properties are subject to royalty arrange-

recorded at fair value each period until final settlement

ments based on mineral production at the properties.

occurs, with changes in fair value classified as a compo-

The most significant royalties are at the Goldstrike and

2004

2003

2002

percentage multiplied by the value of gold production

nent of revenue.

Impact of derivative embedded in
concentrate sales receivables

For the years ended
December 31

Gains included in revenue

$ –

$ 1

5. Cost of Sales

For the years ended
December 31

Cost of goods sold1,3
By-product revenues2
Royalty expense
Mining taxes
Other expenses at
producing mines4

2004

2003

2002

$ 1,136 $ 1,110 $ 1,133
(119)
37
5

(146)
53
12

(114)
50
15

Bulyanhulu mines and the Pascua-Lama and Veladero

projects. The primary type of royalty is a net smelter

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

pay the holder an amount calculated as the royalty

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

$ 1,071 $ 1,072 $ 1,070

all gold, silver and other ores.

1. The presentation of cost of goods sold includes accretion
expense at producing mines of $11 million (2003 – $10 million;
2002 – $nil). The cost of inventory sold in the period
reflects the components described in note 11, except that
for presentation purposes the component of inventory
cost relating to amortization of property, plant and equipment

Royalty expense is recorded at the time of sale of gold

production, measured using the applicable royalty per-

centage for NSR royalties or estimates of NPI amounts.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Other (Income) Expense

For the years ended
December 31

Non-hedge derivative

2004

2003

2002

(gains) losses (note 16c)

$ (5)

$(71)

$ 6

circumstances, costs to acquire and install plant and

equipment are capitalized during the production phase

of a mine if the costs are expected to mitigate risk

or prevent future environmental contamination from

normal operations.

Gains realized on
sale of assets
Environmental

remediation costs2

Impairment of long-lived assets

Eskay Creek
Peruvian exploration

properties

Other

Impairment charges on
investments (note 10)
World Gold Council fees
Litigation costs
Currency translation

(gains) losses

Pension expense (note 22b)
Other items1

(34)

(4)

an asset, a loss accrual is recorded if the loss is probable

When a contingent loss arises from the improper use of

67
14

5
9
–

1
–
–

–

–
5

11
10
16

(2)
4
2

–

–
11

–
12
–

(1)
2
(10)

and reasonably estimable. Amounts recorded are

measured on an undiscounted basis, and adjusted

as further information develops or if circumstances

change. Recoveries of environmental remediation costs

from other parties are recorded as assets when receipt

is deemed probable.

Impairment of long-lived assets
Eskay Creek
The asset group that comprises the Eskay Creek mine

was tested for impairment effective December 31, 2004.

The principal factors that caused us to test this asset

group for impairment included: downward revisions

$ 158

$ (4)

$ 16

to proven and probable reserves; the impact of the

1. In 2004, includes the reversal of $6 million of accrued
costs on resolution of the Peruvian tax assessment (see note 7)
and $4 million in severance costs related to the sale of
the Holt McDermott mine.

2. Includes costs at development projects and closed mines.

Gains realized on sale of assets
In 2004 we sold various assets, including the Holt-

McDermott mine in Canada and certain land positions

around our inactive mine sites in the United States.

These land positions were fully amortized in prior

years and therefore any proceeds generate gains on

sale, before selling costs and taxes.

Environmental remediation costs
at closed mines
During the production phases of a mine, we incur and

expense the cost of various activities connected with

environmental aspects of normal operations, including

compliance with and monitoring of environmental

regulations; disposal of hazardous waste produced from

normal operations; and operation of equipment designed

to reduce or eliminate environmental effects. In limited

continued strengthening of the C$ against the US$ and

upward revisions to expected asset retirement costs

in the fourth quarter of 2004. An impairment charge

of $58 million was recorded, which represents the

amount by which the carrying amount of the asset

group exceeds its estimated fair value. Fair value was

estimated using the method described in note 12c.

Peruvian exploration properties
At the end of 2004, upon completion of the exploration

program for the year, we assessed the results and updated

our future plans for various exploration properties in

Peru that were originally acquired through the Arequipa

acquisition in 1996. We concluded that the results

and future potential did not merit any further invest-

ment for these properties. The assets were tested for

impairment, and an impairment charge of $67 million

was recorded that reflects the amounts by which their

carrying amounts exceed their estimated fair values.

The fair value of this group of assets was judged to be

minimal due to the unfavorable results of exploration

work in the properties.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Litigation costs
In November 2003, we paid Inmet C$111 million

assets; $16 million in Australia realized in 2003 due to

an increase in taxable income from higher gold prices;

(US$86 million), in full settlement of

the Inmet

and $15 million in Argentina after the approval to begin

litigation. The settlement resulted in an expense of

construction of our new Veladero mine and classification

US$14 million in fourth quarter 2003, combined with

of mineralization as a proven and probable reserve.

post-judgment interest of $2 million in the first nine

months of 2003.

7. Income Tax (Recovery) Expense

For the years ended
December 31

Current

Canada
International

Deferred

Canada
International

Income tax expense

before elements below1
Release of beginning of year

2004

2003

2002

$ 19
24

$ 43

$ 40
14

$ 54

$ (26)
7

$(32)
45

$ (19)

$ 13

$ 44
15

$ 59

$(45)
(8)

$(53)

$ 24

$ 67

$ 6

valuation allowances

(5)

(62)

–

Outcome of

tax uncertainties
Change in tax status

in Australia

(141)

(81)

–

(22)

–

Total (recovery) expense

$(203)

$ 5

$(16)

1. All amounts are deferred tax items except for a $21 million
portion of the $141 million recovery on resolution of
the Peruvian tax assessment in 2004, which is a current
tax item.

Release of beginning of year
valuation allowances
In 2004, we released valuation allowances totaling

Outcome of tax uncertainties
Peruvian tax assessment
On September 30, 2004, the Tax Court of Peru issued

a decision in our favor in the matter of our appeal of a

2002 income tax assessment of $32 million, excluding

interest and penalties. The Peruvian tax agency, SUNAT,

had until mid-January 2005 to appeal the decision.

The 2002 income tax assessment related to a tax audit

of our Pierina Mine for the 1999 and 2000 fiscal years.

The assessment mainly related to the validity of a reval-

uation of the Pierina mining concession, which affects

its tax basis. Under the valuation proposed by SUNAT,

the tax basis of the Pierina mining concession would

have changed from what we previously assumed with a

resulting increase in current and deferred income taxes.

The full life of mine effect on our current and deferred

income tax liabilities, totaling $141 million, was

recorded at December 31, 2002, as were other related

costs of about $21 million for periods through 2003.

In January 2005, we received confirmation in writing

that there would be no appeal of the September 30, 2004

Tax Court of Peru decision. The confirmation concluded

the administrative and judicial appeals process with

resolution in Barrick’s favor. As a result, we recorded a

$141 million reduction in current and deferred income

tax liabilities and a $21 million reduction in other

accrued costs in 2004; $15 million of which is classified

in “other expenses at producing mines” within cost

of sales and $6 million of which is classified in other

$5 million in Australia following the consolidated tax

(income) expense.

return election described above. 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

Other uncertainties
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.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in tax status in Australia
A new tax law has been enacted in Australia that allows

In 2004, we filed an election to use US dollars as the

functional currency for Australian tax calculations and

wholly owned groups of companies resident in Australia

tax returns, whereas previously Australian dollars were

to elect to be treated as a single entity and to file consol-

used. Prior to this election, the favorable impact of

idated tax returns. This new regime is elective and the

changes in the tax basis of non-monetary assets caused

election is irrevocable. Under certain circumstances, the

by changes in the US$:A$ exchange rate were not

rules governing the election allow for a choice to reset

recorded, as their realization was not certain. The elec-

the tax cost basis of certain assets within a consolidated

tion in 2004 created certainty about the realization of

group. This election will be effective for us for the 2004

these favorable tax temporary differences and resulted

fiscal year. This election results in an estimated upward

in our recognition of these as deferred tax assets

revaluation of the tax basis of our assets in Australia, by

amounting to $48 million. The impact of the change

$110 million, with a corresponding $33 million adjust-

in tax status was to increase the amount of deductible

ment to deferred taxes.

temporary differences relating to non-monetary assets

by $160 million.

Reconciliation to Canadian federal rate

For the years ended December 31

At 38% statutory federal rate
Increase (decrease) due to:

Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax-deductible
Release of beginning of year valuation allowances
Recognition of deferred tax assets3
Valuation allowances set up against current year tax losses
Outcome of tax uncertainties
Withholding taxes on intercompany interest
Mining taxes
Other items

2004

$ 17

(34)
(5)
10
(5)
(81)
29
(141)
1
5
1

2003

$ 84

2002

$ 67

(17)
(42)
11
(62)
–
23
–
1
8
(1)

(12)
(67)
9
–
–
3
(22)
11
3
(8)

Income tax expense (recovery)

$(203)

$ 5

$(16)

1. We are able to claim certain allowances and tax deductions unique to extractive industries that result in a lower effective tax rate.

2. We operate in multiple foreign tax jurisdictions that have different tax rates than the Canadian federal rate.

3. In 2004, we recognized a $81 million deferred tax asset in Australia due to a change in tax status.

Income tax returns
Our income tax returns for the major jurisdictions

repatriate accumulated earnings from controlled foreign

corporations. The repatriation incentive is only avail-

where we operate have been fully examined through the

able for 2004 or 2005. We are currently evaluating the

following years: Canada – 2000, United States – 2001,

application of the repatriation incentive; however, we

and Peru – 2000.

American Jobs Creation Act of 2004
The American Jobs Creation Act of 2004 (“the Act”)

was signed into law on October 22, 2004. The Act

creates an elective incentive for U.S. multinationals to

cannot complete our analysis until additional legislation

and/or IRS guidance is provided to clarify key elements

of the legislation.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Earnings per Share

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

2004

2003

2002

Income available to common stockholders

Basic
Effect of dilutive stock options

Diluted

Weighted average shares outstanding

Basic
Effect of dilutive stock options

Diluted

Earnings per share

Basic
Diluted

9. Supplemental Cash Flow Information

For the years ended December 31

Income statement items:

Currency translation losses
(Gains) losses on investments (note 10)
Accounting changes (note 2b)
Accretion expense (note 17a)
Non-hedge derivative (gains) losses (note 16c)
Inmet litigation
Current income tax expense (note 7)
Impairment charges on long-lived assets (note 6)
Revisions to expected cost of AROs at closed mines (note 17a)
Amortization of debt issue costs
Losses on write-down of inventory to market value (note 11)

Changes in:

Accounts receivable
Inventories
Accounts payable
Capitalized mining costs
Other assets and liabilities

Cash payments:

Merger and related costs
Asset retirement obligations
Current income taxes

Other items

Other net operating activities

Interest paid, net of amounts capitalized

$ 248
–

$ 248

533
1

534

$0.47
$0.46

$ 200
–

$ 200

539
–

539

$0.37
$0.37

$ 193
–

$ 193

541
–

541

$0.36
$0.36

2004

2003

2002

$ 1
(1)
–
18
(5)
–
22
139
22
3
9

(2)
(51)
4
9
(25)

–
(33)
(45)
–

$ 65

$ 19

$ 5
7
17
17
(71)
16
54
5
10
1
3

3
(1)
4
37
6

–
(40)
(111)
4

$(34)

$ 44

$ –
3
–
–
6
–
59
11
–
1
6

(12)
26
(25)
29
(12)

(50)
(70)
(52)
35

$(45)

$ 57

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Investments

Available-for-sale securities

At December 31

Benefit plans:1

Fixed-income securities
Equity securities
Strategic investments:
Equity securities2

Total

2004

2003

Fair value

Gains
in OCI

Fair value

Gains
in OCI

$ 11
19

104

$ 134

$ –
10

–

$ 10

$ 6
26

$ 130

$ –
8

$ 38

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 with a fair value of $75 million at December 31, 2004.

Available-for-sale securities are recorded at fair value

We have also formed a strategic partnership with

with unrealized gains and losses recorded in OCI.

Realized gains and losses are recorded in earnings when

investments mature or on sale, calculated using the

average cost of securities sold. We recognize in earnings

any unrealized declines in fair value judged to be other

Highland under which:
> We have the right to participate on an exclusive basis
for up to 50% on any acquisition made by Highland
in Russia; and a similar right extends to Highland
for any acquisition made by us in certain regions in
Russia, excluding Irkutsk.

than temporary (2004 – $5 million; 2003 – $11 million;

> We have a right of first refusal with respect to

2002 – $nil). Total proceeds from the sale of invest-

ments were $9 million in 2004 (2003 – $8 million; 2002

– $3 million).

third-party investment in Highland’s Mayskoye
property in the Chutotka region, Russia, and
plan to pursue discussions with Highland on
establishing a joint venture at Mayskoye.

Gains (losses) on investments recorded in earnings

For the years ended
December 31

Realized on sale

Gains
Losses

Impairment charges

2004

2003

2002

$ 6
–
(5)

$ 1

$ 5
(1)
(11)

–
(3)
–

$ (7)

$ (3)

Investment in Highland Gold Mining PLC
(“Highland”)
In 2004, we acquired a further 9.3 million common

shares of Highland for $40 million in cash. Combined

with the purchase of 11.1 million common shares for

$46 million in October 2003, we held a 14% interest

in Highland common shares at December 31, 2004.

Investment in Celtic Resources Holdings PLC
(“Celtic”)
On December 2, 2004, Barrick and Celtic entered into a

subscription agreement under which we agreed to sub-

scribe for 3,688,191 units of Celtic for $7.562 per unit.

Each unit consists of one ordinary share of Celtic and

one-half of one share purchase warrant. Each whole

warrant entitles us to acquire one ordinary share of

Celtic for $7.562, expiring on December 31, 2005. In the

event that Celtic does not acquire 100% of the license

to the Nezhdaninskoye deposit before June 1, 2005, the

number of warrants will automatically increase by 50%.

Completion of the subscription occurred on January 5,

2005 upon which we held a 9% interest in Celtic’s out-

standing ordinary shares.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the completion of the subscription,

Barrick and Celtic entered into the following agreements:
> We have the pre-emptive right to subscribe for up
to $75 million of Celtic shares at $7.562 per share.
> Nezhdaninskoye Right of First Refusal. Celtic has

granted us the right of first refusal on any
proposed sale of its direct or indirect interest
in Nezhdaninskoye.

> Nezhdaninskoye Purchase Option. Celtic has granted
us the right to indirectly purchase 51% of its interest
in Nezhdaninskoye for $195 million, exercisable
for a period of six months starting if and when Celtic
indirectly acquires 100% of Nezhdaninskoye.
> Kazakhstan Participation. Celtic has granted to
us the right to acquire 50% of any interest in any
mineral property in Kazakhstan that Celtic acquires.
We have 12 months to elect to participate in any
such acquisitions by Celtic. To participate, we must
pay Celtic 50% of the cost to Celtic of its interest
in the mineral property.

11. Accounts Receivable, Inventories

and Other Current Assets

Inventories
Material extracted from our mines is classified as either

ore or waste. Ore represents material that can be mined,

processed into a saleable form and sold at a profit.

Ore, which represents material included in proven and

probable reserves, is recorded as an asset that is classified

within inventory at the point it is extracted from the

mine. Ore is accumulated in stockpiles that are sub-

sequently processed into gold in a saleable form under

a mine plan that takes into consideration optimal

scheduling of production of our reserves, present plant

capacity, and the market price of gold.

We record gold in process and ore in stockpiles at cost,

less provisions required to reduce inventory to market

value. Costs capitalized to inventory include direct and

indirect materials and consumables; direct labor; repairs

and maintenance; utilities; amortization of property,

plant and equipment; amortization of capitalized

mining costs; and local mine administrative expenses.

Costs are removed from inventory and recorded in cost

of sales based on the average cost per ounce of gold in

2004

2003

inventory. Average cost is calculated based on the cost

of inventory at the beginning of a period, plus the cost

of inventory produced in a period.

At December 31

Accounts receivable

Amounts due from
concentrate sales

Other

Inventories

Gold in process and
ore in stockpiles

Mine operating supplies

Non-current ore in stockpiles1

Other current assets

Derivative assets (note 16c)
Taxes recoverable
Prepaid expenses

1. Ore that we do not expect to process in the next 12 months
is classified in other assets (note 14).

$ 29
29

$ 58

$ 26
30

$ 56

$ 198
82

$ 163
58

280
(65)

221
(57)

$ 215

$ 164

$ 165
104
17

$ 286

$ 154
9
15

$ 178

Signiﬁcant ore in stockpiles

At December 31

Goldstrike

Ore that requires roasting
Ore that requires autoclaving

Kalgoorlie

2004

2003

$ 23
17
46

$ 22
19
32

At Goldstrike, we expect to fully process the autoclave

stockpile by 2009 and the roaster stockpile by 2016. At

Kalgoorlie, we expect to process the stockpile by 2017.

Mine operating supplies are recorded at purchase cost,

less provisions to reduce slow-moving and obsolete

supplies to market value.

Cost of sales includes losses recorded to reduce inventory

cost to market value as follows: 2004 – $9 million;

2003 – $3 million; 2002 – $6 million.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Property, Plant and Equipment

costs that meet the definition of an asset at Lagunas

Norte prospectively for future periods. The cost of

At December 31

2004

2003

start-up activities at new mines such as recruiting and

Acquired mineral properties

and capitalized mine
development costs

Buildings, plant and equipment

Accumulated amortization

$ 4,489 $ 4,242
2,831

3,289

7,778
(4,387)

7,073
(3,945)

$ 3,391 $ 3,128

training is expensed as incurred.

At December 31, 2004 the following assets were in an

exploration, development or construction stage and

amortization of the capitalized costs had not yet begun.

Carrying amount
at December 31,
2004

Targeted timing
of production
start-up

a) Acquired mineral properties and
capitalized mine development costs
Exploration and development stage properties
We capitalize the cost of acquisition of land and mineral

rights. The cost is allocated between proven and

probable reserves and mineralization not considered

Development stage projects

Veladero
Lagunas Norte
Tulawaka
Cowal
Pascua-Lama
Buzwagi

proven and probable reserves at the date of acquisition,

Nevada Power Plant

based on relative fair values. If we later establish that

Total

some mineralization meets the definition of proven

$ 362
196
70
128
230
102
18

$ 1,106

2005
2005
2005
2006
2009
–
2005

and probable gold reserves, we classify a portion of

Interest cost is considered an element of the historical

the capitalized acquisition cost as relating to reserves.

cost of an asset when a period of time is necessary to

After acquisition, various factors can affect the recover-

ability of the capitalized 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 exploration projects

and the size of our exploration budget. If we conclude

that the carrying amount of land and mineral rights is

impaired, we reduce this carrying amount to estimated

fair value through an impairment charge.

We capitalize costs incurred at development projects

that meet the definition of an asset after mineralization

is classified as proven and probable gold reserves (as

defined by United States reporting standards). Before

classifying mineralization as proven and probable gold

reserves, costs incurred at development projects are con-

sidered exploration costs, and are expensed as incurred.

prepare it for its intended use. We capitalize interest

costs to assets under development or construction

while activities are in progress. We stop capitalizing

interest costs when construction of an asset is sub-

stantially complete and it is ready for its intended use.

We measure the amount capitalized based on cumula-

tive capitalized costs, exclusive of the impact, if any, of

impairment charges on the carrying amount of an asset.

Producing mines
We start amortizing capitalized mineral property acqui-

sition and mine development costs when production

begins. Amortization is capitalized as a component

of the cost of inventory. Amortization is calculated

using the “units-of-production” method, where the

numerator is the number of ounces produced and the

denominator is the estimated recoverable ounces of

gold contained in proven and probable reserves.

Effective May 1, 2004, we determined that mineraliza-

During production at underground mines, we incur

tion at Lagunas Norte met the definition of proven and

development costs to build new shafts, drifts and ramps

probable reserves for United States reporting purposes.

that will enable us to physically access ore underground.

Following this determination, we began capitalizing

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The time over which we will continue to incur these

costs depends on the mine life, and in some cases could

be up to 25 years. These underground development costs

are capitalized as incurred. In years prior to 2003 we

amortized the aggregate total of historically capitalized

costs, and estimated costs that will be incurred to enable

access to the ore body over the remaining mine life,

using the units-of-production method. In 2003, we

changed the method of amortizing these costs to better

attribute these costs to ounces of gold produced, as well

as to remove the uncertainty inherent in using estimates

of future underground development costs in the mea-

surement of amortization.

Under our revised method of measuring amortization

for underground development costs, the cost incurred

to access specific ore blocks or areas of the mine, which

only provides an economic benefit over the period of

mining that ore block or area, is attributed to earnings

using the units-of-production method where the

denominator is estimated recoverable ounces of gold

contained in proven and probable reserves within that

ore block or area. If capitalized costs provide an eco-

nomic benefit over the entire mine life, the costs are

attributed to earnings using the units-of-production

method, where the denominator is the estimated recov-

erable ounces of gold contained in total accessible

proven and probable reserves.

b) Buildings, plant and equipment
We record buildings, plant and equipment at cost. We

capitalize costs that extend the productive capacity

or useful economic life of an asset. Repairs and main-

tenance expenditures are expensed as incurred. We

amortize the cost less estimated residual value, using the

straight-line method over the estimated useful economic

life of the asset. The longest estimated useful economic

life for buildings and equipment at ore processing facili-

ties is 25 years and for mining equipment is 15 years.

c) Impairment evaluations – operating mines
and development projects
We review and test the carrying amounts of assets when

events or changes in circumstances suggest that the

carrying amount may not be recoverable. 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 operating mines and

development projects, all assets are included in one

group. If there are indications that an impairment

may have occurred, we prepare estimates of expected

future cash flows for each group of assets. Expected

future cash flows are based on a probability-weighted

approach applied to potential outcomes.

Estimates of expected future cash flow reflect:
> Estimated sales proceeds from the production

and sale of recoverable ounces of gold contained
in proven and probable reserves;

> Expected future commodity prices and currency

exchange rates (considering historical and current
prices, price trends and related factors). In impair-
ment assessments conducted in 2004 we used an
expected future market gold price of $400 per ounce,
and an expected future market A$:US$ exchange
rate of $0.70 and C$:US$ exchange rate of $0.82;

> Expected future operating costs and capital

expenditures to produce proven and probable gold
reserves based on mine plans that assume current
plant capacity, but exclude the impact of inflation;
> Expected cash flows associated with value beyond
proven and probable reserves, which includes
the expected cash outflows required to develop
and extract the value beyond proven and probable
reserves; and

> Environmental remediation costs excluded from
the measurement of asset retirement obligations.

We record a reduction of a group of assets to fair value

as a charge to earnings if expected future cash flows are

less than the carrying amount. We estimate fair value by

discounting the expected future cash flows using a dis-

count factor that reflects the risk-free rate of interest for

a term consistent with the period of expected cash flows.

d) Capital commitments
At December 31, 2004, we had capital commitments

of $322 million for 2005/2006 in connection with con-

struction at our development projects and of a power

plant in Nevada for the Goldstrike mine.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Capitalized Mining Costs

We capitalize and amortize certain costs relating to the

removal of waste rock at open-pit mines, commonly

referred to as “stripping costs”. We include in inventory,

amortization of amounts capitalized based on a “strip-

ping 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

and amortizing these costs, some mining companies

Debt issue costs
Additions to debt issue costs in 2004 principally relate

to new debt financings put in place during the year.

Amortization of debt issue costs is calculated on a

straight-line basis or using the interest method over

the term of each debt obligation, and classified as a

component of interest cost.

15. Other Current Liabilities

capitalize them to inventory as incurred, which may

At December 31

2004

2003

result in the reporting of greater volatility in period-to-

Asset retirement

period results. If we followed a policy of capitalizing

obligations (note 17a)

$ 33

$ 36

these costs to inventory as incurred, rather than using

Current part of

long-term debt (note 16b)
Derivative liabilities (note 16c)
Post-retirement benefits (note 22)
Deferred revenue
Other

31
11
2
5
1

41
3
5
17
17

$ 83

$ 119

16. Financial Instruments

Financial instruments include cash; evidence of owner-

ship in an entity; or a contract that imposes an obligation

on one party and conveys a right to a second entity to

deliver/receive cash or another financial instrument.

Information on certain types of financial instruments

is included in these financial statements as follows:

accounts receivable – note 11; investments – note 10;

restricted stock units – note 21.

a) Cash and equivalents
Cash and equivalents include cash, term deposits

and treasury bills with original maturities of less than

90 days.

our present policy, our reported cost of sales would

have been $9 million lower in 2004 (2003 – $37 million

lower, 2002 – $29 million lower).

Stripping ratios1

For the
years ended
December 31

Mine life

(years)2

2004

2003

2002

Goldstrike Open Pit 14
4
Pierina

109:1
60:1

112:1
48:1

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.

2. Costs capitalized will be fully amortized by the end of the
mine lives. The carrying amount of capitalized mining costs
is grouped with property, plant and equipment for impairment
evaluation purposes.

14. Other Assets

At December 31

2004

2003

Derivative assets (note 16c)
Ore in stockpiles (note 11)
Taxes recoverable
Deferred income tax assets (note 18)
Debt issue costs
Deferred stock-based

compensation (note 21b)

Other

$ 257
65
50
97
38

$ 256
57
52
59
11

5
54

6
56

$ 566

$ 497

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

b) Long-term debt

7 1⁄2% debentures2
5 4⁄5% notes3
4 7⁄8% notes4
Veladero financing5
Bulyanhulu financing6
Variable-rate bonds7
Capital leases
Construction debt under
build to suit lease8

Other interest

Less: current part/

interest capitalized

For the years ended December 31

At December 31

2004

2003

2002

2004

2003

Interest
cost

Effective
rate1

Interest
cost

Effective
rate1

Interest
cost

Effective
rate1

$ 495
397
348
198
150
63
5

30
–

$ 501
–
–
–
174
80
5

–
–

1,686

760

$ 31
3
2
4
14
1
–

–
5

6.1%
6.0%
5.0%
7.5%
8.0%
1.2%
7.8%

–
–

6.1%

(31)

(41)

$ 1,655

$ 719

(41)

$ 19

6.1%
–
–
–
7.7%
1.1%
8.2%

–
–

6.3%

$ 31
–
–
–
15
1
–

–
2

(5)

$ 44

5.7%
–
–
–
7.2%
1.4%
7.9%

–
–

6.8%

$ 38
–
–
–
15
1
1

–
4

(2)

$ 57

1. The effective rate includes the stated interest rate under the debt agreement, amortization of debt issue costs, and the impact
of interest rate contracts designated in a hedging relationship with long-term debt.

2. On April 22, 1997, we issued $500 million of debentures that mature on May 1, 2007.

3. On November 12, 2004, we issued $400 million of debentures that mature on November 15, 2034. The debentures were issued
at a $3 million discount.

4. On November 12, 2004, we issued $350 million of debentures that mature on November 15, 2014. The debentures were issued
at a $2 million discount.

5. One of our wholly owned subsidiaries, Minera Argentina Gold S.A. in Argentina has a variable-rate limited recourse amortizing
loan facility for $250 million. At December 31, 2004, a total of $198 million had been drawn down under this facility. We have
guaranteed the loan until completion occurs, after which it will become non-recourse. The loan is insured for political risks by
branches of the Canadian and German governments.

6. One of our wholly owned subsidiaries, Kahama Mining Corporation Ltd. in Tanzania, has a variable-rate non-recourse amortizing
loan for $150 million. The loan is insured for political risks equally by branches of the Canadian government and the World Bank.

7. Certain of our wholly owned subsidiaries have issued variable-rate, tax-exempt bonds of $25 million (due 2029) and $38 million
(due 2032) for a total of $63 million.

8. One of our wholly owned subsidiaries, Minera Barrick Misquichilca, has entered into a $56 million build to suit lease facility
to finance the construction of the leach pad and process facilities at the Lagunas Norte project. The five year lease term begins on
October 1, 2005. Amounts reimbursed for construction costs at December 31, 2004 have been presented as “construction debt”
until the lease term begins. Obligations under the lease will be repayable in 20 equal quarterly installments over the term of the lease.

We also have a credit and guarantee agreement with a group of banks (the “Lenders”), which requires the Lenders to make
available to us a credit facility of up to $1 billion or the equivalent amount in Canadian currency. The credit facility, which is
unsecured, matures in April 2008 and has an interest rate of LIBOR plus 0.27% to 0.35% when used, and an annual fee of 0.08%.
We have not drawn any amounts under the credit facility.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled debt repayments1

7 1⁄2% debentures
5 4⁄5% notes
4 7⁄8% notes
Veladero financing
Bulyanhulu financing
Variable-rate bonds

1. Excludes capital leases and build to suit lease facility.

Minimum payments under capital leases1

Years ending December 31

2005
2006
2007
2008
2009

Capital lease obligations

1. Includes the $56 million build to suit lease facility.

2005

2006

2007

2008

$ –
–
–
–
31
–

$ 31

$ –
–
–
24
34
–

$ 58

$ 500
–
–
46
34
–

$ 580

$ –
–
–
38
34
–

$ 72

2009 and
thereafter

–
400
350
90
17
63

$ 920

$ 12
15
12
11
11

$ 61

c) Use of derivative instruments (“derivatives”) in risk management
In the normal course of business, our assets, liabilities and forecasted transactions are impacted by various market

risks including:

Item

> Cost of sales

Impacted by

• Consumption of oil and propane
• Local currency denominated expenditures

> Administration costs in local currencies
> Capital expenditures in local currencies
> Interest earned on cash
> Interest payments on variable-rate debt
> Fair value of fixed-rate debt

> Prices of oil and propane
> Currency exchange rates – US dollar versus A$ and C$
> Currency exchange rates – US dollar versus A$ and C$
> Currency exchange rates – US dollar versus A$, C$ and €
> US dollar interest rates
> US dollar interest rates
> US dollar interest rates

Under our risk management policy we seek to mitigate

The primary objective of the hedging elements of

the impact of these market risks to control costs and

our derivative positions is that changes in the values

enable us to plan our business with greater certainty.

of hedged items are offset by changes in the values of

The timeframe and manner in which we manage these

derivatives. Most of the derivatives we use meet the

risks varies for each item based upon our assessment of

FAS 133 hedge effectiveness criteria and are designated

the risk and available alternatives for mitigating risk.

in a hedge accounting relationship. Some of the

For these particular risks, we believe that derivatives are

derivative positions are effective in achieving our risk

an effective means of managing risk.

management objectives but they do not meet the strict

FAS 133 hedge effectiveness criteria, and they are

classified as “non-hedge derivatives”.

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our use of derivatives is based on established practices

use regression analysis to assess prospective effective-

and parameters, which are subject to the oversight

ness, we consider regression outputs for the coefficient

of the Finance Committee of the Board of Directors.

of determination (R-squared), the slope coefficient and

A Compliance Function independent of the Corporate

the t-statistic to assess whether a hedge is expected to

Treasury Group monitors derivative transactions

be highly effective. Each period, using a dollar offset

and has responsibility for recording and accounting

approach, we retrospectively assess whether hedging

for derivatives.

Accounting policy for derivatives
We record derivatives on the balance sheet at fair value

except for gold and silver sales contracts, which are

excluded from the scope of FAS 133, because the obli-

gations will be met by physical delivery of our gold and

silver production and they meet the other requirements

set out in paragraph 10(b) of FAS 133. In addition, our

past sales practices, productive capacity and delivery

intentions are consistent with the definition of a normal

sales contract. Accordingly, we have elected to designate

instruments have been highly effective in offsetting

changes in the fair value of hedged items and we mea-

sure the amount of any hedge ineffectiveness. We also

assess each period whether hedging instruments are

expected to be highly effective in the future. If a hedging

instrument is not expected to be highly effective, we stop

hedge accounting prospectively. In this case accumu-

lated gains or losses remain in other comprehensive

income (“OCI”) until the hedged item affects earnings.

We also stop hedge accounting prospectively if:
> a derivative is settled;
> it is no longer highly probable that a forecasted

our gold and silver sales contracts as “normal sales

transaction will occur; or

contracts” with the result that the principles of FAS 133

> we de-designate a hedging relationship.

are not applied to them. Instead we apply revenue

recognition accounting principles as described in note 4.

If we conclude that it is probable that a forecasted

transaction will not occur in the originally specified

On the date we enter into a derivative that is accounted

time frame, or within a further two-month period,

for under FAS 133, we designate it as either a hedging

gains and losses accumulated in OCI are immediately

instrument or a non-hedge derivative. A hedging instru-

transferred to earnings. In all situations when hedge

ment is designated in either:
> a fair value hedge relationship with a recognized

asset or liability; or

> a cash flow hedge relationship with either

a forecasted transaction or the variable future cash
flows arising from a recognized asset or liability.

At the inception of a hedge, we formally document all

relationships between hedging instruments and hedged

items, including the related risk-management strategy.

This documentation includes linking all hedging instru-

ments to either specific assets and liabilities, specific

forecasted transactions or variable future cash flows.

It also includes the method of assessing retrospective

and prospective hedge effectiveness. In cases where we

accounting stops, a derivative is classified as a non-hedge

derivative prospectively. Cash flows from derivative

transactions are included under operating activities,

except for derivatives designated as a cash flow hedge

of forecasted capital expenditures, which are included

under investing activities.

Changes in the fair value of derivatives each period are

recorded as follows:
> Fair value hedges: recorded in earnings as well as

changes in fair value of the hedged item.

> Cash flow hedges: recorded in OCI until earnings
are affected by the hedged item, except for any
hedge ineffectiveness which is recorded in earnings
immediately.

> Non-hedge derivatives: recorded in earnings.

100

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of derivatives at December 31, 20041

Notional amount
by term to maturity

Accounting classification
by notional amount

Fair
value

Within
1 year

2 to 5
years

Over 5
years

Total

Cash flow Fair value
hedge

hedge

Non-
hedge

$ 75
–

$ 75

$ 725
150

$ 575

–
125

$ 800
275

$(125)

$ 525

$ 300
150

$ 150

$ 500
–

$ 500

–
125

$ (5)
(24)

$(125) $ (29)

C$ 350 C$ 600

C$ – C$ 950

C$ 935

C$ –

C$ 15

$ 99

A$ 844 A$1,291
–

€ 26

€

A$ – A$ 2,135
26

€ – €

A$ 2,125
26

€

A$ –
€ –

A$ 10
€ –

$ 198
$ 1

US dollar interest rate contracts
Receive-fixed swaps (millions)
Pay-fixed swaps (millions)

Net notional position

Currency contracts
C$:US$ contracts
(C$ millions)
A$:US$ contracts
(A$ millions)

€:US$ contracts (€ millions)

Commodity contracts
Fuel (WTI)

(thousands of barrels)

738

1,618

Propane contracts

(millions of gallons)

–

2,356

1,946

–

410

$ 7

–

$ (3)

1. Excludes normal sales contracts.

US dollar interest rate contracts
Cash ﬂow hedges – cash balances

the new method, prospective and retrospective hedge

effectiveness is assessed using the change in variable

Receive-fixed swaps have been designated against the

cash flows method. This involves a comparison of the

first $300 million of our cash balances as a hedge

floating-rate leg of the swap to the variable-rate cash

of the variability of forecasted interest receipts on the

flows from interest receipts on cash.

balances caused by changes in Libor.

Each period the effective portion of changes in the

Prior to December 2004, prospective and retrospective

fair value of the swaps, which relates to future interest

hedge effectiveness was assessed using the hypothetical

receipts, is recorded in OCI. Also, as interest is received

derivative method under FAS 133. The prospective test

and recorded in earnings, an amount equal to the dif-

involves comparing the effect of a theoretical shift in the

ference between the fixed-rate interest earned on the

forward interest rate curve on the fair value of both the

swaps and the variable-rate interest earned on cash is

actual and hypothetical derivative. The retrospective

recorded in earnings as a component of interest income.

test involves comparing the effect of actual changes in

interest rates in each period on the fair value of both the

actual and hypothetical derivative using a dollar offset

approach. In December 2004, we de-designated these

swaps and immediately re-designated them in a new

hedging relationship in order to adopt a new method

of assessing prospective and retrospective effectiveness.

At the time of the redesignation these swaps had a fair

value near zero. From December 2004 onwards, under

Cash ﬂow hedges – Bulyanhulu ﬁnancing

Pay-fixed swaps totaling $150 million have been desig-

nated against the Bulyanhulu financing, as a hedge of

the variability in forecasted interest payments caused by

changes in Libor. We have concluded that the hedges are

100% effective under FAS 133, because the conditions

of FAS 133 for the assumption of no hedge ineffective-

ness have been met. Changes in fair value of the swaps,

which relate to future interest payments, are recorded

101

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in OCI. Also, as interest payments on the financing are

hedges are 100% effective under FAS 133 because the

recorded in earnings, an amount equal to the difference

critical terms (including: notional amount and maturity

between the fixed-rate interest paid on the swap and the

date) of the hedged items and currency contracts are the

variable-rate interest paid on the financing is recorded

same. For € 26 million, and the remaining C$205 million

in earnings as a component of interest costs.

and A$454 million portions, prospective and retrospec-

Fair value hedges

Receive-fixed swaps totaling $500 million have been

designated against the 7 1⁄2% debentures as a hedge of

the variability in the fair value of the debentures caused

by changes in Libor. We have concluded that the hedges

are 100% effective under FAS 133, because the critical

terms (including: notional amount, maturity date, inter-

est payment and underlying interest rate – i.e. Libor) of

the swaps and the debentures are the same. Changes in

fair value of the swaps, together with an equal corre-

sponding change in fair value of the debentures, caused

by changes in Libor, are recorded in earnings each

period. Also, as interest payments on the debentures are

recorded in earnings, an amount equal to the difference

between the fixed-rate interest received under the swap

less the variable-rate interest paid under the swap is

recorded in earnings as a component of interest costs.

Non-hedge contracts

tive hedge effectiveness is assessed using the hypothetical

derivative method under FAS 133. The prospective test

involves comparing the effect of a theoretical shift in

forward exchange rates on the fair value of both the

actual and hypothetical derivative. The retrospective

test involves comparing the effect of historic changes

in exchange rates each period on the fair value of both

the actual and hypothetical derivative using a dollar

offset approach. The effective portion of changes in

fair value of the currency contracts is recorded in OCI

until the forecasted expenditure impacts earnings.

For expenditures capitalized to the cost of inventory,

this is upon sale of inventory, and for capital expendi-

tures, this is when amortization of the capital assets

is recorded in earnings.

If it is probable that a hedged item will no longer occur,

the accumulated gains or losses in OCI for the associated

currency contract are reclassified to earnings immedi-

We use gold lease rate swaps as described in note 4. The

ately. The identification of which currency contracts

valuation of gold lease rate swaps is impacted by market

are associated with these hedged items uses a last-in,

US dollar interest rates. Our non-hedge pay-fixed swap

first-out (“LIFO”) approach, based on the order in

position mitigates the impact of changes in US dollar

which currency contracts were originally designated

interest rates on the valuation of gold lease rate swaps.

in a hedging relationship.

Currency contracts
Cash flow hedges

Commodity contracts
Cash flow hedges

Currency contracts totaling C$935 million, A$2,125

Commodity contracts totaling 1,946 thousand barrels

million and € 26 million have been designated against

of diesel fuel and 29 million gallons of propane have

forecasted local currency denominated expenditures

been designated against forecasted purchases of the

as a hedge of the variability of the US dollar amount

commodities for expected consumption at our mining

of those expenditures caused by changes in currency

operations. The contracts act as a hedge of the impact

exchange rates. Hedged items are identified as the first

of variability in market prices on the cost of future

stated quantity of dollars of forecasted expenditures in a

commodity purchases. Hedged items are identified as

future month. For a C$730 million and A$1,671 million

the first stated quantity in millions of barrels/gallons

portion of the contracts, we have concluded that the

of forecasted purchases in a future month. Prospective

102

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and retrospective hedge effectiveness is assessed using

Derivative assets and liabilities

the hypothetical derivative method under FAS 133. The

prospective test is based on regression analysis of the

month-on-month change in fair value of both the actual

derivative and a hypothetical derivative caused by actual

historic changes in commodity prices over the last three

years. The retrospective test involves comparing the

effect of historic changes in commodity prices each

period on the fair value of both the actual and hypo-

thetical derivative using a dollar offset approach.

The effective portion of changes in fair value of the com-

modity contracts is recorded in OCI until the forecasted

transaction impacts earnings. The cost of commodity

consumption is capitalized to the cost of inventory, and

therefore this is upon the sale of inventory.

If it is probable that a hedged item will no longer

occur, the accumulated gains or losses in OCI for

the associated commodity contract are reclassified

to earnings immediately. The identification of which

commodity contracts are associated with these hedged

items uses a LIFO approach, based on the order in

which commodity contracts were originally designated

in a hedging relationship.

Non-hedge contracts

Non-hedge fuel contracts are used to mitigate the risk of

oil price changes on consumption at the Pierina, Eskay

Creek and Lagunas Norte mines. On completion of

regression analysis, we concluded that the contracts do

not meet the “highly effective” criterion in FAS 133 due

to currency and basis differences between contract prices

and the prices charged to the mines by oil suppliers.

Despite not qualifying as an accounting hedge, the

contracts protect the Company to a significant extent

from the effects of oil price changes.

At January 1
Derivatives settled
Change in fair value of:
Non-hedge derivatives
Cash flow hedges

Effective portion
Ineffective portion

Fair value hedges

At December 31

Classification:

Other current assets
Other assets
Other current liabilities
Other long-term obligations

2004

2003

$ 337
(120)

$ 29
(91)

147
–
(8)

348
1
(2)

$ 3591

$ 337 1

$ 165
257
(11)
(52)

$ 154
256
(3)
(70)

$ 359

$ 337

1. Derivative assets and liabilities are presented net and
related amounts due to/from counterparties if the conditions
of FIN No. 39, Offsetting of Amounts Related to Certain
Contracts, are met. Amounts receivable from counterparties
netted against derivative liabilities totaled $16 million at
December 31, 2004.

Non-hedge derivative gains (losses)1

For the years ended
December 31

Non-hedge derivatives

Commodity contracts
Currency contracts
Interest rate contracts

Hedge ineffectiveness

Ongoing hedge inefficiency
Due to changes in timing of

hedged items

2004

2003

2002

$ (9)
(4)
16

–

$ 5

$ 3
17
32

$ 71

$ (2)
8
(12)

(6)

–

$ (6)

1. Non-hedge derivative gains (losses) are classified as a
component of other (income) expense.

103

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedge Gains (losses) in OCI

Commodity
price hedges

Currency hedges

Interest rate
hedges

Gold/
Silver

Fuel

Oper- Admin-
istration
ating
costs
costs

Capital
expen-
Cash
ditures balances

Long-
term
debt

Total

$ 25

$ –

–

$ –

$ 25

At December 31, 2001
Effective portion of change in

fair value of hedging instruments

(4)

Transfers to earnings:

On recording hedged
items in earnings

At December 31, 2002
Effective portion of change in

fair value of hedging instruments

Transfers to earnings:

On recording hedged
items in earnings

Hedge ineffectiveness due to

changes in timing of hedged items

At December 31, 2003
Effective portion of change in

fair value of hedging instruments

Transfers to earnings:

On recording hedged
items in earnings

Hedge ineffectiveness due to

changes in timing of hedged items

(12)

(13)

–

At December 31, 2004

$ –

–

(7)

–

(17)

(11)

(12)

(25)

(1)

251

(1)

348

–

(1)

–

219

117

(58)

(7)

–

(18)

–

(18)1

–

(4)

(96)

(11)

(5)

(19)

–

$ 2

–

(2)1

$ 240

$ 33

$ 48

–

$ 3

–

(8)

(91)

(18)

288

(20)

147

–

(132)

(2)

$(25)

$ 3012

Hedge gains/losses classified within

Portion of hedge gain (loss)

Gold Cost of
sales
sales

Cost of Admin- Amorti-
zation
istration

sales

Interest
income

Interest
cost

expected to affect 2005 earnings2

$ –

$ 3

$ 110

$ 18

$ 2

$ 7

$ (4)

$ 136

1. On determining that certain forecasted capital expenditures were no longer likely to occur within two months of the originally
specified time frame.

2. Based on the fair value of hedge contracts at December 31, 2004.

104

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

d) Fair Value of Financial Instruments
Fair value is the value at which a financial instrument

prices, where available. If market quotes are not avail-

able, fair value is based on internally developed models

could be closed out or sold in a transaction with a will-

that use market-based or independent information as

ing and knowledgeable counterparty over a period of

inputs. These models could produce a fair value that

time consistent with our risk management or invest-

may not be reflective of future fair value.

ment strategy. Fair value is based on quoted market

Fair value information

At December 31

Financial assets

Cash and equivalents1
Accounts receivable1
Investments2
Derivative assets3

Financial liabilities

Accounts payable1
Long-term debt4
Derivative liabilities3
Restricted stock units5

2004

2003

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

$ 1,398
58
134
422

$ 2,012

$ 335
1,686
63
6

$ 2,090

$ 1,398
58
134
422

$ 2,012

$ 335
1,731
63
6

$ 2,135

$ 970
56
130
410

$ 1,566

$ 245
760
73
10

$ 1,088

$ 970
56
130
410

$ 1,566

$ 245
841
73
10

$ 1,169

1. Recorded at cost. Fair value approximates the carrying amounts due to the short-term nature and generally negligible
credit losses.

2. Recorded at 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. Recorded at fair value using liquid market pricing based on exchange traded prices, broker-dealer quotations or related input
factors which assume all counterparties have the same credit rating.

4. Long-term debt is generally recorded at cost except for obligations that are designated in a fair value hedge relationship, which
are recorded at fair value in periods where a hedge relationship exists. The fair value of long-term debt is based on current market
interest rates, adjusted for our credit quality.

5. Recorded at fair value based on the period end market stock price.

e) Credit risk
Credit risk is the risk that a third party might fail to ful-

For derivatives, when the fair value is positive, this cre-

ates credit risk. When the fair value of a derivative is

fill its performance obligations under the terms of a

negative, we assume no credit risk. In cases where we

financial instrument. For cash and equivalents and

have a legally enforceable master netting agreement

accounts receivable, credit risk represents the carrying

with a counterparty, credit risk exposure represents the

amount on the balance sheet.

net amount of the positive and negative fair values for

105

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

similar types of derivatives. For a net negative amount,

> entering into derivatives with high credit-quality

we regard credit risk as being zero. A net positive

amount for a counterparty is a reasonable measure of

credit risk when there is a legally enforceable master

netting agreement. We mitigate credit risk by:

counterparties;

> limiting the amount of exposure to each counter-

party; and

> monitoring the financial condition of counterparties.

Credit quality of ﬁnancial assets

At December 31, 2004

Cash and equivalents
Derivatives1
Accounts receivable

Number of counterparties2

Largest counterparty (%)

Concentrations of credit risk

At December 31, 2004

Cash and equivalents
Derivatives1
Accounts receivable

AA– or higher

A– or higher

B to BBB

S&P credit rating

$ 744
303
–

$ 1,047

31.5

$ 654
71
–

$ 725

35.1

$ –
–
58

$ 58

–

United States

Canada

Other international

$ 1,172
145
7

$ 1,324

$ 69
193
22

$ 284

$ 157
36
29

$ 222

Total

$ 1,398
374
58

$ 1,830

Total

$ 1,398
374
58

$ 1,830

1. The amounts presented reflect the net credit exposure after considering the effect of master netting agreements.

2. For cash and equivalents and derivatives combined.

f ) Risks relating to the use of derivatives
By using derivatives, in addition to credit risk, we

our derivatives. Our counterparties cannot require

settlement solely because of an adverse change in the

are affected by market risk and market liquidity risk.

fair value of a derivative.

Market risk is the risk that the fair value of a derivative

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 finan-

cial 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

Market liquidity risk is the risk that a derivative cannot

be eliminated quickly, by either liquidating it or by

establishing an offsetting position. Under the terms of

our trading agreements, counterparties cannot require

us to immediately settle outstanding derivatives, except

upon the occurrence of customary events of default

such as covenant breaches, including financial covenants,

insolvency or bankruptcy. We generally mitigate market

liquidity risk by spreading out the maturity of our deriv-

atives over time.

106

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Other Long-Term Obligations

reflects the risk-free rate of interest. We prepare esti-

mates of timing and amount of expected cash flows

At December 31

2004

2003

when an ARO is incurred, which are updated to reflect

Asset retirement obligations
Pension benefits (note 22)
Post-retirement benefits (note 22)
Derivative liabilities (note 16c)
Restricted stock units (note 21b)
Other

$ 334
49
26
52
6
32

$ 499

$ 282
48
26
70
10
28

$ 464

a) Asset retirement obligations (AROs)

2004

2003

At January 1
AROs incurred in the period
Impact of revisions to expected cash flows

$ 318
14

$ 334
–

Adjustments to carrying

amount of assets
Charged to earnings

Settlements

Cash payments
Settlement gains

Accretion

At December 31
Current part

32
22

(33)
(4)
18

367
(33)

–
10

(40)
(3)
17

318
(36)

$ 334

$ 282

In 2003 we adopted FAS 143 and changed our account-

ing policy for reclamation and closure costs. Previously

we accrued estimated reclamation and closure costs

over the life of our mines using the units-of-production

method based on the estimated recoverable ounces of

gold in proven and probable reserves.

AROs arise from the acquisition, development, construc-

tion and normal operation of mining property, plant and

equipment, due to government controls and regulations

that protect the environment on the closure and recla-

mation of mining properties. Under FAS 143 we record

the fair value of an ARO when it is incurred. At operat-

ing mines the effect is recorded as an adjustment to

the corresponding asset carrying amount. At closed

mines, the adjustment is charged directly to earnings.

The fair value of AROs are measured by discounting

the expected cash flows using a discount factor that

changes in facts and circumstances, or if we are required

to submit updated mine closure plans to regulatory

authorities. The principal factors that can cause expected

cash flows to change are: the construction of new pro-

cessing facilities; changes in the quantities of material

in reserves and a corresponding change in the life of

mine plan; changing ore characteristics can impact

required environmental protection measures and related

costs; changes in water quality that impact the extent

of water treatment required; and changes in laws and

regulations governing the protection of the environment.

In general, as the end of the mine life becomes nearer,

the reliability of expected cash flows increases. AROs

are adjusted to reflect the passage of time (accretion)

calculated by applying the discount factor implicit in

the initial fair value measurement to the beginning

of period carrying amount of the AROs. Accretion is

recorded in earnings as an operating expense. Upon

settlement of an ARO we record a gain or loss if the

actual cost differs from the carrying amount of the

ARO. Settlement gains are classified in other (income)

expense. Other environmental remediation costs that

are not AROs as defined by FAS 143 are expensed as

incurred (see note 6).

The major parts of the carrying amount of AROs

at the end of 2004 relate to: tailing and heap leach pad

closure/rehabilitation – $69 million; demolition of

buildings/mine facilities – $29 million; ongoing water

treatment – $93 million; ongoing care and maintenance

– $89 million; and other activities – $87 million.

18. Deferred Income Taxes

Recognition and measurement
We record deferred income tax assets and liabilities

where temporary differences exist between the carrying

amounts of assets and liabilities in our balance sheet

and their tax bases. The measurement and recognition

of deferred income tax assets and liabilities takes into

107

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

account: enacted rates that will apply when temporary

Expiry dates of tax losses and AMT credits

differences reverse; interpretations of relevant tax legis-

lation; tax planning strategies; estimates of the tax

bases of assets and liabilities; and the deductibility of

expenditures for income tax purposes. We recognize the

effect of changes in our assessment of these estimates

and factors when they occur. Changes in deferred

income tax assets, liabilities and valuation allowances

are allocated between net income and other comprehen-

sive income based on the source of the change.

Deferred income taxes have not been provided on the

undistributed earnings of foreign subsidiaries, which are

considered to be reinvested indefinitely outside Canada.

The determination of the unrecorded deferred income

tax liability is not considered practicable.

Sources of deferred income tax assets and liabilities

2004

20031

$ 295
48

$ 388
52

121
3
106
158
18
9

758
(578)

180

(127)
(95)

120
3
85
129
21
40

838
(554)

284

(443)
(99)

At December 31

Deferred tax assets

Tax loss carry forwards
Capital tax loss carry forwards
Alternative minimum tax

(“AMT”) credits
Foreign tax credits
Asset retirement obligations
Property, plant and equipment
Post-retirement benefit obligations
Other

Gross deferred tax assets
Valuation allowances

Net deferred tax assets
Deferred tax liabilities

Property, plant and equipment
Derivatives

Classification:

Non-current assets (note 14)
Non-current liabilities

’05 ’06

’07 ’08

’09+

No
expiry
date

Total

Tax losses1
Chile
Tanzania
U.S.
Other

$ – $ –
–
–
23

–
–
28

$ – $ – $

–
–
6

–
–
14

– $670 $ 670
152
–
224
224
204
109

152
–
24

$28 $23

$6 $14 $333 $846 $1,250

AMT credits2 –

–

– $121 $ 121

1. Represents the gross amount of tax loss carry forwards
translated at closing exchange rates at December 31, 2004.

2. Represents the amounts deductible against future taxes
payable in years when taxes payable exceeds “minimum tax”
as defined by United States tax legislation.

Valuation allowances
We consider the need to record a valuation allowance

against deferred tax assets on a country-by-country

basis, taking into account the effects of local tax law. A

valuation allowance is not recorded when we conclude

that sufficient positive evidence exists to demonstrate

that it is more likely than not that a deferred tax asset

will be realized. The main factors considered are:
> historic and expected future levels of future taxable

income;

> opportunities to implement tax plans that affect

whether tax assets can be realized; and

> the nature, amount and expected timing of reversal

of taxable temporary differences.

Levels of future taxable income are mainly affected by:

market gold and silver prices; forecasted future costs

and expenses to produce gold reserves; quantities of

$ (42)

$(258)

proven and probable gold reserves; market interest rates

$ 97
(139)

$ 59
(317)

$ (42)

$(258)

and foreign currency exchange rates. If these factors or

other circumstances change, we record an adjustment to

the valuation allowances to reflect our latest assessment

of the amount of deferred tax assets that will more likely

1. 2003 deferred tax asset balances for property, plant and
equipment and other have been restated with a corresponding
restatement of valuation allowances.

than not be realized.

A valuation allowance of $34 million has been set

up against certain deferred tax assets in Argentina.

Historically, we have had no income generating

108

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operations in Argentina, but following the production

start-up at Veladero in 2005, various factors will affect

future levels of taxable income in Argentina, including

the volume of gold produced and sold, gold selling prices

19. Capital Stock

a) Common shares
Our authorized capital stock includes an unlimited

and costs incurred to produce gold. It is reasonably pos-

number of common shares (issued 533,575,185 shares);

sible that an adjustment will be made to this valuation

9,764,929 First preferred shares, Series A (issued nil);

allowance in the near term. A valuation allowance of

9,047,619 Series B (issued nil); 1 Series C special voting

$189 million has been set up against certain deferred

share (issued 1); and 14,726,854 Second preferred shares

tax assets in the United States. A majority of this valua-

Series A (issued nil).

tion allowance relates to AMT credits which have

an unlimited carry forward period. Increasing levels

of future taxable income due to gold selling prices

and other factors and circumstances may result in an

adjustment to this valuation allowance.

Source of changes in deferred tax balances

For the years ended
December 31

Temporary differences
Property, plant

and equipment

Asset retirement obligations
Tax loss carry forwards
Derivatives
Other

Adjustment to deferred
tax balances due to
change in tax status1

Release of beginning of year

2004

2003

2002

$ (86)
(21)
93
(4)
(5)

$ 26
(2)
(10)
82
4

$ (23)

$ 100

$(30)
4
(22)
13
(5)

$(40)

(81)

–

valuation allowances

(5)
Outcome of tax uncertainties (120)

(62)
–

–
(22)

$(229)

$ 38

$(62)

Intraperiod allocation to:

Income before
income taxes

Cumulative

$(225)

$ (49)

$(75)

accounting changes

OCI

Balance sheet reclassifications

–
(4)
13

5
82
23

–
17
(17)

During 2004, we repurchased 4.47 million common

shares (2003: 8.75 million) for $95 million (2003:

$154 million), at an average cost of $21.20 per share

(2003: $17.56). This resulted in a reduction of common

share capital by $35 million (2003: $67 million) and

a $60 million charge (being the difference between

the repurchase cost and the average historic book

value of shares repurchased) to retained earnings (2003:

$87 million).

In 2004, we declared and paid dividends in US dollars

totaling $0.22 per share (2003 – $0.22 per share, 2002 –

$0.22 per share).

b) Exchangeable Shares
In connection with a 1998 acquisition, Barrick Gold Inc.

(“BGI”), issued 11.1 million BGI exchangeable shares,

which are each exchangeable for 0.53 of a Barrick

common share at any time at the option of the holder,

and have 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, 2004, 1.4 million (2003 – 1.5 million)

BGI exchangeable shares were outstanding, which are

equivalent to 0.7 million Barrick common shares (2003

– 0.8 million common shares). The equivalent common

share amounts are reflected in the number of common

$(216)

$ 61

$(75)

shares outstanding.

1. Relates to change in tax status in Australia (note 7).

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

109

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Barrick common share. While there are exchangeable

At December 31

2004

2003

shares outstanding, we are required to present summary

consolidated financial information relating to BGI.

Summarized ﬁnancial information for BGI

Assets

Current assets
Non-current assets

For the years ended
December 31

Total revenues

2004

2003

2002

and other income
Less: costs and expenses

$ 216
287

$ 226
238

$ 203
191

Income (loss) before taxes

$ (71)

$ (12)

$ 12

Net loss

$ (41)

$ (31)

$ (1)

Liabilities and shareholders’ equity

Other current liabilities
Intercompany notes payable
Other long-term liabilities
Deferred income taxes
Shareholders’ equity

$ 67
119

$ 186

$ 81
236

$ 317

24
395
36
20
(289)

20
545
9
67
(324)

$ 186

$ 317

20. Other Comprehensive Income (Loss) (“OCI”)

Accumulated OCI at January 1

Cash flow hedge gains, net of tax of $99, $17, $nil
Investments, net of tax of $nil, $nil, $nil
Currency translation adjustments, net of tax of $nil, $nil, $nil
Additional pension liability, net of tax of $nil, $nil, $nil

OCI for the year:

Changes in fair value of cash flow hedges
Changes in fair value of investments
Currency translation adjustments
Adjustments to pension liability

Less: reclassification adjustments for gains/losses recorded in earnings
Transfers of cash flow hedge gains to earnings:

On recording hedged items in earnings
Hedge ineffectiveness due to changes in timing of hedged items

Investments:

(Gains) losses realized on sale
Other than temporary impairment charges

OCI, before tax

Income tax recovery (expense) related to OCI

2004

2003

2002

$ 189
38
(147)
(7)

$ 73

147
(27)
1
(5)

(132)
(2)

(6)
5

(19)
4

$ 32
(6)
(144)
(7)

$(125)

348
37
(3)
–

(91)
(18)

(4)
11

280
(82)

$ 25
(4)
(123)
(5)

$(107)

49
(5)
(21)
(2)

(25)
–

3
–

(1)
(17)

Other comprehensive income (loss), net of tax

$ (15)

$ 198

$ (18)

Accumulated OCI at December 31

Cash flow hedge gains, net of tax of $95, $99, $17
Investments, net of tax of $nil, $nil, $nil
Currency translation adjustments, net of tax of $nil, $nil, $nil
Additional pension liability, net of tax of $nil, $nil, $nil

206
10
(146)
(12)

189
38
(147)
(7)

32
(6)
(144)
(7)

$ 58

$ 73

$(125)

110

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Stock-Based Compensation

a) Stock options

Employee stock option activity (number of shares in millions)2

2004

2003

2002

Average
price

22
1
(2)
(2)

2
5
(1)
–

$ 28
$ 25
$ 28

$ 24
$ 15
–

19
5
(1)
(1)

3
–
(1)
–

$ 29
$ 24
$ 28

–
$ 13
–

19
6
(4)
(2)

6
–
(2)
(1)

$ 25
$ 25
$ 34

$ 12
$ 25

C$ options
At January 1
Granted
Exercised1
Cancelled/expired

At December 31

US$ options
At January 1
Granted
Exercised1
Cancelled/expired

At December 31

1. The exercise price of the options is the closing share price on the day before the grant date. They vest evenly over four years,
beginning in the year after granting, and are exercisable over 7–10 years. At December 31, 2004, 13 million (2003 – 1 million,
2002 – 5 million) common shares, in addition to those currently outstanding, were available for granting options.

2. We are also obliged to issue about 0.3 million common shares (2003 – 0.5 million common shares) in connection with out-
standing stock options assumed as part of a business combination in 1999. These options have an average exercise price of C$20
(2003 – C$20) and an average remaining term of one year.

Stock options outstanding (number of shares in millions)

Range of
exercise prices

C$ options
$ 22 – $ 31
$ 32 – $ 43

US$ options
$ 9 – $ 18
$ 22 – $ 37

Outstanding

Average
price

Average life
(years)

Exercisable

Average
price

17
2

1
5

$ 27
$ 39

$ 12
$ 24

7
2

5
6

10
2

–
1

$ 26
$ 39

–
$ 30

We record compensation cost for stock options based

Historically, the exercise price for stock options has

on the excess of the market price of the stock at the

equaled the market price of stock at the grant date,

grant date of an award over the exercise price.

resulting in no compensation cost.

111

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Option information

For the years ended December 31
(per share and option
amounts in dollars)

2004

2003

2002

$ 6.87

$ 8.50

$ 6.40

6
6
5
30%
40%
40%
1.0% 1.0% 1.4%
3.8% 4.5%
5.0%

Fair value per option
Valuation assumptions:
Expected term (years)
Volatility
Dividend yield
Risk-free interest rate

Pro forma effects
Net income, as reported
Stock-option expense

third anniversary of the grant date. Additional RSUs are

credited to reflect dividends paid on Barrick common

shares. RSUs are recorded at fair value on the grant

date, with a corresponding amount recorded as deferred

compensation that is amortized on a straight-line basis

over the vesting period. Changes in the fair value of the

RSUs are recorded, with a corresponding adjustment to

deferred compensation. Compensation expense for 2004

was $4 million (2003 – $4 million). At December 31,

2004, the weighted average remaining contractual life

$ 248
(29)

$ 200
(24)

$ 193
(21)

of RSUs was 2 years.

Pro forma net income

$ 219

$ 176

$ 172

Net income per share:
As reported – Basic
As reported – Diluted

Pro forma1

1. Basic and diluted.

$ 0.47
$ 0.46

$ 0.37
$ 0.37

$ 0.36
$ 0.36

$ 0.41

$ 0.33

$ 0.32

b) Restricted Stock Units (RSUs) and
Deferred Share Units (DSUs)
Under our RSU Plan, selected employees are granted

RSUs, where each RSU has a value equal to one Barrick

common share. RSUs vest and will be settled on the

Under our DSU plan, Directors receive 50% of their

basic annual retainer in the form of DSUs, with the

option to elect to receive 100% of such retainer in DSUs.

Each DSU has the same value as one Barrick common

share. DSUs must be retained until the Director leaves

the Board, at which time the cash value of the DSUs

will be paid out. Additional DSUs are credited to reflect

dividends paid on Barrick common shares. DSUs are

recorded at fair value on the grant date and are adjusted

for changes in fair value. Director’s fee expense for DSUs

for 2004 was $0.6 million (2003: $0.2 million).

DSU and RSU activity

At December 31, 2001

Canceled
Dividends

At December 31, 2002

Canceled
Granted
Dividends

At December 31, 2003

Canceled
Settled
Granted
Dividends

At December 31, 2004

DSUs
(in thousands)

Fair value
per unit
(in dollars)

RSUs
(in thousands)

Fair value
per unit
(in dollars)

–
–
–

–
–
8
–

8
–
–
23
–

$ –
–
–

$ –
–
21
–

$ 23
–
–
22
–

$ 24

515
(30)
4

489
(171)
130
4

452
(58)
(293)
131
3

235

$ 16
20
17

$ 15
17
22
20

$ 23
23
25
24
20

$ 24

112

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension expense

For the years ended
December 31

Return on plan assets
Service cost
Interest cost
Actuarial gains (losses)
Gain (loss) on

curtailment/settlement

2004

2003

2002

$ (11)
–
12
1

$ (11)
–
14
–

$ (17)
3
16
(1)

(2)

$ –

$ 4

$ 2

c) Pension plan 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

2004

2003

$ 166
14
6
(16)

$ 170
19
8
(31)

Balance at December 31

$ 170

$ 166

At December 31

2004

2003

Target Actual Actual

Actual

Composition of
plan assets:

Equity securities 50% 46% $ 78
92
Debt securities

50% 54%

100% 100% $ 170

$ 66
100

$ 166

22. Post-Retirement Beneﬁts

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

contribute 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

$19 million in 2004, $16 million in 2003 and $13 mil-

lion in 2002.

b) Deﬁned beneﬁt pension plans
We have one qualified defined benefit pension plan

that covers certain of our United States employees and

provides benefits based on employees’ years of service.

Our policy is to fund the amounts necessary on an

actuarial basis to provide enough assets to meet the

benefits payable to plan members under the Employee

Retirement Income Security Act of 1974. Independent

trustees administer assets of the plans, which are

invested mainly in fixed-income and equity securities.

On December 31, 2004, the qualified defined benefit

plan was amended to freeze benefit accruals for all

employees, resulting in a curtailment gain of $2 million.

As well as the qualified plan, we have nonqualified

defined benefit pension plans covering certain employees

and former directors of the Company. An irrevocable

trust (“rabbi trust”) was set up to fund these plans.

The fair value of assets held in this trust was $31 million

in 2004 (2003 – $32 million), and is recorded in our

consolidated balance sheet under Investments.

Actuarial gains and losses arise when the actual return

on plan assets differs from the expected return on plan

assets for a period, or when the expected and actuarial

accrued benefit obligations differ at the end of the year.

We amortize actuarial gains and losses over the average

remaining life expectancy of plan participants, in excess

of a 10% corridor.

113

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Projected beneﬁt obligation (PBO)

For the years ended
December 31

Balance at January 1

Interest cost
Actuarial losses
Benefits paid
Curtailments/settlements

Balance at December 31

Funded status1
Unrecognized actuarial losses

2004

2003

$ 221
12
3
(16)
(2)

$ 227
14
11
(31)
–

$ 218

$ 221

$ (48)
11

$ (55)
11

Net benefit liability recorded

$ (37)

$ (44)

ABO2,3

$ 217

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 $31 million at December 31, 2004).
In the year ending December 31, 2005, we do not expect to
make any further contributions.

2. For 2004 we used a measurement date of December 31,
2004 to calculate accumulated benefit obligations.

3. Represents the ABO for all plans. The ABO for plans where
the PBO exceeds the fair value of plan assets was $49 million
(2003: $217 million).

Investment strategy
We employ a total return investment approach, whereby

a mix of equities and fixed-income investments is used

to maximize the long-term return of plan assets. Risk is

diversified through a blend of equity and fixed-income

investments, and also across geography and market

capitalization in US large cap stocks, US small cap

stocks, and international securities. Investment risk is

measured and monitored on an ongoing basis through

annual liability measurements, periodic asset/liability

studies, and quarterly investment portfolio reviews.

Expected future beneﬁt payments

For the years ending December 31

2005
2006
2007
2008
2009
2010 – 2014

$ 16
15
16
16
16
$ 89

Total recorded beneﬁt liability

At December 31

Current
Non-current

Benefit plan liability
Additional minimum liability (note 20)

2004

2003

$ –
37

$ 37
12

$ 49

$ 3
41

$ 44
7

$ 51

d) Actuarial assumptions

For the years ended
December 31

Discount rate1

Benefit obligation
Pension cost

Return on plan assets1
Wage increases

2004

2003

2002

5.50% 6.25% 6.50%
6.25% 6.50% 6.75%
7.00% 7.00% 8.50%
5.00% 5.00% 5.00%

1. Effect of a one-percent change: Discount rate: $22 million
change in ABO and change in pension cost; Return on plan
assets: $2 million change in pension cost.

e) 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-retirement

benefits. Actuarial gains and losses resulting from vari-

ances between actual results and economic estimates or

actuarial assumptions are deferred and amortized over

Rate of return on plan assets
In estimating the long-term rate of return for plan assets,

the average remaining life expectancy of participants

when the net gains or losses exceed 10% of the accumu-

historical markets are studied and long-term historical

lated post-retirement benefit obligation. In 2004, we

returns on equities and fixed-income investments reflect

recorded a benefit expense of $2 million (2003 – $nil,

the widely accepted capital market principle that assets

2002 – $nil).

with higher volatility generate a greater return over the

long run. Current market factors such as inflation and

interest rates are evaluated before long-term capital

market assumptions are finalized.

114

BARRICK Annual Report 2004

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS