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1
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Building Value in
Everything We Do
Annual Report 2010
Focus on Value Creation
Strategy of Increasing Net Asset Value, Production,
Reserves and Earnings – All on a Per Share Basis
Exceptional Gold Price Leverage
Generating Record Earnings and Cash Flow
Nine Million Ounce Production Target within Five Years
Financial Strength and Flexibility
‘A’ Credit Rating and Strong Balance Sheet to
Support Our Objectives
Operational Excellence
Consistent Track Record of Achieving Targets
Project Development Expertise
Cortez Hills Built on Time and Budget World-Class
Pueblo Viejo and Pascua-Lama Projects in Construction
Surfacing Hidden Value
Optimizing Our High Quality, Diversified Portfolio
of Assets
Industry’s Largest Gold Reserves
Replaced or Grown for the Last Five Straight Years
Strong Focus on
Responsible Mining
Relisted on Dow Jones World Sustainability Index
Added to NASDAQ Global Sustainability Index
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
910111215192123
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2
0
1
0
Building Value in
Everything We Do
Annual Report 2010
Focus on Value Creation
Strategy of Increasing Net Asset Value, Production,
Reserves and Earnings – All on a Per Share Basis
Exceptional Gold Price Leverage
Generating Record Earnings and Cash Flow
Nine Million Ounce Production Target within Five Years
Financial Strength and Flexibility
‘A’ Credit Rating and Strong Balance Sheet to
Support Our Objectives
Operational Excellence
Consistent Track Record of Achieving Targets
Project Development Expertise
Cortez Hills Built on Time and Budget World-Class
Pueblo Viejo and Pascua-Lama Projects in Construction
Surfacing Hidden Value
Optimizing Our High Quality, Diversified Portfolio
of Assets
Industry’s Largest Gold Reserves
Replaced or Grown for the Last Five Straight Years
Strong Focus on
Responsible Mining
Relisted on Dow Jones World Sustainability Index
Added to NASDAQ Global Sustainability Index
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
910111215192123
Barrick’s strategy is
focused on maximizing
shareholder value
by building gold
and copper reserves
through exploration,
investing in high return
development projects,
realizing the potential
of existing mines,
pursuing disciplined
acquisitions and
strengthening our social
and environmental
performance.
Financial Highlights
Record adjusted
net income in 2010
Record adjusted operating
cash flow in 2010
Increased dividends by 20%
in 20102
Replaced reserves,
grew resources in 2010
3,279
4,783
0.44
0.40
0.40
1,810
1,661
2,899
2,254
35
65
32
62
37
76
139
140
140
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
0
0
0
ADJUSTED NET INCOME1
(US dollars millions)
ADJUSTED OPERATING
CASH FLOW1
(US dollars millions)
DIVIDENDS PAID
(US dollars per share)
RESERVES AND RESOURCES3
(Ounces millions)
Inferred Resources
M&I Resources
P&P Reserves
Record realized price
in 2010
Grew production
in 2010
Lower total cash costs
in 2010
Lower net cash costs
in 2010
1,228
7,765
7,657
7,397
464
457
443
985
872
360
341
337
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
5,000
300
200
REALIZED GOLD PRICES1
GOLD PRODUCTION
(US dollars per ounce)
(000s of ounces)
TOTAL CASH COSTS1
(US dollars per ounce)
NET CASH COSTS1
(US dollars per ounce)
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O
Cautionary Statement on Forward-Looking Information
Certain information contained in this Annual Report 2010, including any information as to our strategy, projects, plans or
future financial or operating performance and other statements that express management’s expectations or estimates of future
performance, constitute “forward-looking statements”. All statements, other than statements of historical fact, are forward-
looking statements. The words “believe”, “expect”, “will”, “anticipate”, “contemplate”, “target”, “plan”, “continue”, “budget”,
“may”, “intend”, “estimate” and similar expressions identify forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently
subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that
such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual
financial results, performance or achievements of Barrick to be materially different from the Company’s estimated future results,
performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are
not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: the impact of
global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future
cash flows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity);
fluctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; ability
to successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in
the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature
of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or
grades of reserves; changes in costs and estimates associated with our projects; adverse changes in our credit rating, level of
indebtedness and liquidity, contests over title to properties, particularly title to undeveloped properties; the risks involved in the
exploration, development and mining business. Certain of these factors are discussed in greater detail in the Company’s most
recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial
securities regulatory authorities.
1
2
3
4
5
6
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
0
Barrick’s strategy is
focused on maximizing
shareholder value
by building gold
and copper reserves
through exploration,
investing in high return
development projects,
realizing the potential
of existing mines,
pursuing disciplined
acquisitions and
strengthening our social
and environmental
performance.
Financial Highlights
Record adjusted
net income in 2010
Record adjusted operating
cash flow in 2010
Increased dividends by 20%
in 20102
Replaced reserves,
grew resources in 2010
3,279
4,783
0.44
0.40
0.40
1,810
1,661
2,899
2,254
35
65
32
62
37
76
139
140
140
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
0
0
0
ADJUSTED NET INCOME1
(US dollars millions)
ADJUSTED OPERATING
CASH FLOW1
(US dollars millions)
DIVIDENDS PAID
(US dollars per share)
RESERVES AND RESOURCES3
(Ounces millions)
Inferred Resources
M&I Resources
P&P Reserves
Record realized price
in 2010
Grew production
in 2010
Lower total cash costs
in 2010
Lower net cash costs
in 2010
1,228
7,765
7,657
7,397
464
457
443
985
872
360
341
337
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
5,000
300
200
REALIZED GOLD PRICES1
GOLD PRODUCTION
(US dollars per ounce)
(000s of ounces)
TOTAL CASH COSTS1
(US dollars per ounce)
NET CASH COSTS1
(US dollars per ounce)
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O
Cautionary Statement on Forward-Looking Information
Certain information contained in this Annual Report 2010, including any information as to our strategy, projects, plans or
future financial or operating performance and other statements that express management’s expectations or estimates of future
performance, constitute “forward-looking statements”. All statements, other than statements of historical fact, are forward-
looking statements. The words “believe”, “expect”, “will”, “anticipate”, “contemplate”, “target”, “plan”, “continue”, “budget”,
“may”, “intend”, “estimate” and similar expressions identify forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently
subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that
such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual
financial results, performance or achievements of Barrick to be materially different from the Company’s estimated future results,
performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are
not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: the impact of
global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future
cash flows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity);
fluctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; ability
to successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in
the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature
of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or
grades of reserves; changes in costs and estimates associated with our projects; adverse changes in our credit rating, level of
indebtedness and liquidity, contests over title to properties, particularly title to undeveloped properties; the risks involved in the
exploration, development and mining business. Certain of these factors are discussed in greater detail in the Company’s most
recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial
securities regulatory authorities.
1
2
3
4
5
6
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
0
Barrick delivered a strong operating
performance in 2010 with higher gold
production and lower total cash costs,
and achieved record financial results as
the gold price reached new highs.
(in millions of US dollars, except per share data)
(US GAAP basis)
Sales
Net income (loss)
per share
Adjusted net income1
per share
Operating cash flow
Adjusted operating cash flow1
Cash and equivalents
Dividends paid per share2
Operating Highlights
Gold production (000s oz)
Average realized gold price per ounce1
Total cash costs per ounce1
Net cash costs per ounce1
Copper production (M lbs)
Average realized copper price per pound1
Total cash costs per pound1
2010
2009
$ 10,924
3,274
3.32
3,279
3.32
4,127
4,783
3,968
0.44
7,765
1,228
457
341
368
3.41
1.11
$
$
$
$
$
$
$
$
$
$
$
8,136
(4,274)
(4.73)
1,810
2.00
(2,322)
2,899
2,564
0.40
7,397
985
464
360
393
3.16
1.17
2008
7,613
785
0.90
1,661
1.90
2,254
2,254
1,437
0.40
7,657
872
443
337
370
3.39
1.19
$
$
$
$
$
$
1. Non-GAAP financial measure – see pages 78–85 of the 2010 Financial Report.
2. In July 2010, Barrick increased its dividend by 20% to $0.12 per share on a quarterly basis; based on converting the previous semi-annual dividend of $0.20 per share to a
quarterly equivalent.
3. See page 22 of the 2010 Annual Report for additional information on Barrick’s reserves and resources.
Message from the Chairman
Message from
the Chairman
Peter Munk
Founder and Chairman
Fellow shareholders,
There are countless theories that attempt to explain why
gold prices behave the way they do. At its core, however,
the gold market is not all that complicated: generally
speaking, when people feel secure, gold prices fall; when
people feel insecure, prices rise.
There was a time not that long ago – for about a
decade, between 1988 and 2000 – that most of us in the
West felt not just secure, but exuberant. The Berlin Wall
came down. The Cold War ended. American power was
at its zenith. In short, our confidence was unsurpassed.
In his best-selling book of 1992, The End of History and
the Last Man, Francis Fukuyama declared that in the long
struggle between political ideologies, liberal democracy
and market capitalism had clearly won the day. What was
there to be worried about?
During this period of euphoria, gold prices dropped
in half, from about $500 per ounce to a low of around
$250 per ounce by 1999. You know what happened next.
First, in 2000, the “dot-com” bubble burst and the stock
market collapsed. One year later, on September 11, 2001,
the whole world changed. We were not so secure, after all.
lost faith in the world’s two most powerful currencies – the
U.S. dollar and the new Euro. Then came fears of sovereign
default in Europe, where governments, desperate to restore
confidence in their rattled markets, were forced to intervene.
As I write this letter, amid spreading chaos and
violence in the Mideast and North Africa, there continues
to be little news to stir the confidence of investors. Our
world is uncertain. More and more people are afraid
of the future. The optimism of the 1990s has faded into an
era of global pessimism.
With their confidence shaken, an ever-growing
number of investors are moving into gold, and have been
now for some 10 years. As a result, of course, the price
of gold has climbed continually, increasing more than
400% in a decade. This, even while the S&P 500 Index has
fallen by 5%.
Given how strongly gold has performed, it’s not
surprising that some people now wonder if we’re in a
bubble. They suggest we’re at a moment not unlike 1980,
when gold prices, having reached unprecedented and
historic highs, suddenly plummeted.
What has followed would have been unthinkable only
a few years earlier: two intractable wars in the Middle East;
a massive global economic recession; the collapse of the
U.S. housing market; the bankruptcy of Lehman Brothers
and the demise of Bear Stearns; and on and on. Investors
I don’t think we are in a bubble today; not at all.
For one thing, the situation today could not be more
different than it was in the late 1970s and early 1980s.
What happened 30 years ago was clearly a kind of
mania: in a single year, the price of gold shot up by more
2
Barrick Annual Report 2010 | Message from the Chairman
GOLD’S 1980 PEAK VS CURRENT CYCLE
Gold 1972 – 1981
Gold 2001 – 2010
1980 Bubble
($850/oz)
2,000
1,500
1,000
500
P
e
r
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n
t
c
h
a
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g
e
0
1
2
3
5
4
6
Number of years
7
8
9
10
Current Cycle’s Gradual Rise
0
than 250%, hitting an all-time record of $850 per ounce
in January 1980. It was madness! People around the world
lined up outside banks to buy a few ounces of the metal, as
prices rose daily. Then, almost as quickly as it had soared,
gold collapsed.
By contrast, the past decade’s rise in gold prices
has displayed neither extreme volatility nor irrationality;
instead, the ascent of gold since 2001 has been steady,
measured, and rational. What’s more, when compared to
other commodities such as copper and oil, gold prices have
not appreciated disproportionately. A simple glance at a
chart comparing gold’s frenzied rise in 1979 to the gradual
build-up of the past 10 years tells the story graphically: to
me, it clearly suggests that the behavior of gold today has
none of the attributes of a “bubble.”
If the last decade, fraught with insecurity, has driven
up demand for gold, the question is, what happens next?
None of us has a crystal ball, but all of us are determined
to protect the assets we own or manage – and for the
moment at least there is little doubt that gold is one of the
best ways to protect the value of those assets.
While equities, debt markets, property and curren-
cies – to name some of the more obvious forms of
investment alternatives – have begun to recover in the past
18 months or so, there remain many ominous clouds on
the geopolitical front. New risks continue to emerge, from
growing political instability in the Middle East to the
continued threat of terrorism. Meanwhile, excessive
sovereign debt, huge unfunded government entitlement
programs, an ever-greater use of quantitative easing,
stalled economic growth in developed countries, stubbornly
high unemployment, and an aging population are just
some of the problems we have yet to resolve.
As we embark on a new decade, I can only conclude
that the world is a long way from feeling secure. In fact,
I believe we in the developed world have more reason
today to be concerned and pessimistic than at any time in
recent history – and with the outlook gloomy, there is, in
my mind, no doubt that investors will continue to turn to
gold as a rare safe haven.
Having made the case for gold generally, I’d like to
comment on the past year at our Company, the world’s
biggest gold producer. In 2010, Barrick recorded the most
profitable year in its 27-year history, earning just under
$3.3 billion. We increased production to 7.8 million
ounces last year – and, despite the fact that currencies in
most countries where we operate have appreciated against
the U.S. dollar, our cash costs decreased to $457 per ounce.
Barrick’s remarkable performance led not only to
record earnings, but also to record margins and cash
flow. Thanks to the strength of our balance sheet, we were
able to increase our dividend by 20%. Barrick’s share
3
Message from the Chairman
price, up 35% in 2010, outperformed both the price of
gold and our peer group.
Meanwhile, our gold reserves now total 140 million
ounces. And as the price of gold climbs, those reserves
become increasingly valuable. Our new Cortez Hills mine
in Nevada, for example, produced over 1.1 million ounces
of gold in its first full year of operation – at a total cash
cost of only $312 per ounce. Our Pueblo Viejo and Pascua-
Lama projects, both of which we inherited through past
acquisitions, will soon be contributing significant quantities
of gold to our total production, again at low cash costs.
Looking further ahead, our next generation of projects,
including Cerro Casale and Donlin Creek, represent some
of the most valuable gold assets in the world.
Whether it’s a question of financial strength or
fiscal responsibility, basic operations or long-term strategic
execution, Barrick’s track record is unmatched. For eight
years in a row we have met or surpassed our annual targets.
I’m also proud that we have achieved these extraordinary
results while maintaining the highest commitment to
corporate responsibility and integrity. We believe firmly
in supporting the communities in which we operate,
respecting the environment, and treating our employees
and their families with dignity. From our senior
management team to the individuals who work in our
mines, from our directors to our support staff, Barrick’s
team is composed of the most motivated and passionate
people I have ever known. I am grateful to them all.
The newest member of our Board of Directors,
Nathaniel Rothschild, represents yet another invaluable
addition to Barrick’s brain trust. Nat is not only a member
of one of Europe’s most prominent banking families,
he is also an enormously successful financier and entre-
preneur in his own right. Already, Nat’s knowledge of and
experience in mining and resources have proven to be
great assets to Barrick.
I noted earlier that I, unfortunately, don’t have a
crystal ball. For one thing, I can’t promise that gold prices
will keep rising. However, I can, with confidence, assure
you that whatever happens in the world, Barrick will
continue to lead the industry, always acting in the best
interest of its shareholders. For nearly 30 years now,
regardless of the price of gold, we’ve done just that.
Peter Munk
Founder and Chairman
4
Barrick Annual Report 2010 | Message from the President and CEO
Message from
the President and CEO
2010 was a record-breaking year for the gold industry.
The appeal of gold as an investment grew significantly,
reflecting persistent concerns about the global economy,
geopolitical uncertainties and the outlook for global
currencies. In many respects, the factors that have
propelled gold prices to new highs intensified, pushing
the metal to a new record of $1,431 per ounce.
The macroeconomic environment continues to be
price supportive for gold. Expansionary monetary policies
and quantitative easing programs have continued in
order to stimulate economic growth and address high
unemployment. In 2010, new sovereign debt concerns also
emerged. The European Union announced bailouts for
Greece and Ireland, while Spain and Portugal were also
subject to credit concerns. The response to the bailouts
has also led to a continued bias towards expansionary
monetary policies. Global trade imbalances continue and
a rebalancing will have an impact on the value of global
currencies. As a monetary asset, gold’s value is determined
relative to the value of other currencies. With downward
pressure on currencies, gold’s relative value should continue
to perform well. Meanwhile, geopolitical concerns have
intensified with civil unrest and the potential for regime
change throughout the Middle East, creating an increased
environment of uncertainty and unpredictability.
Against this backdrop, investment demand for gold
reached new records in 2010 and physical buying was
strong. Central banks became net purchasers of gold after
21 years of selling. Physical demand, particularly from
India and China, has also been very strong and is expected
to continue. All of these factors underpin our positive
outlook for gold prices going forward.
Our efforts to position Barrick as a prime beneficiary
of a rising gold price, including the elimination of the
Company’s gold hedges in 2009, helped to deliver record
results for shareholders in 2010.
Aaron Regent
President and
Chief Executive Officer
Operating results for the year met expectations, with
higher gold production at lower cash costs compared to
2009. Gold production increased to 7.8 million ounces at
total cash costs of $457 per ounce, or $341 per ounce on
a net cash cost basis. Barrick also produced 368 million
pounds of copper at total cash costs of $1.11 per pound.
Strong operational results and consistent execution reflect
the quality of the Company’s diversified portfolio, with
25 mines on four continents.
Our solid operational performance, combined with
the increase in the gold price, resulted in record financial
results. Adjusted net income for the year was $3.3 billion,
an increase of 81% over 2009. This resulted in a return on
equity of 19%. Adjusted cash flow from operations was
$4.8 billion, up 65% from 2009.
Our leverage to the gold price was reflected in our
financial results. While the gold price increased by 26%
last year, Barrick realized record cash margins, which rose
48% to $771 per ounce, or $887 per ounce on a net cash
cost basis. The Company’s earnings and cash flows per
share have also significantly outpaced gold prices over
the last six years, demonstrating the leverage we offer
investors. While gold was up just over 200% in this period,
Barrick’s cash flows per share have increased by over 400%,
and earnings per share are up over 600%.
With record operating cash flows and expanding
margins, Barrick continues to have the financial strength
5
Message from the President and CEO
to continue to invest in the business and meet our capital
requirements while at the same time maintaining a strong
balance sheet and returning capital back to shareholders.
At year-end, the Company had about $4.0 billion in cash
and a further $1.5 billion available through an undrawn
line of credit, and we continue to have the gold industry’s
only ‘A’ rated balance sheet. Given our financial position
and the positive outlook for the Company, the Board of
Directors authorized a 20% increase in the common share
dividend in 2010. Over the past five years, the dividend
has increased by about 120%.
Underpinning our annual production is a high quality
and growing resource base. Targeted global exploration
programs delivered excellent results, allowing Barrick to
replace gold reserves in 2010 and grow gold resources.
The Company has consistently replaced its reserves in each
of the last five years, and we did so again in 2010. Gold
reserves now stand at about 140 million ounces, the
largest in the industry. In addition, measured and indicated
gold resources grew 24% to 76 million ounces and
inferred gold resources increased by 18% to 37 million
ounces. Complementing our gold reserves and resources
are 6.5 billion pounds of copper reserves, 13.0 billion
pounds of measured and indicated copper resources and
9.1 billion pounds of inferred copper resources, plus
1.1 billion ounces of silver contained within gold reserves.
We continued to turn our resources into producing
ounces with the advancement of our project pipeline.
The Cortez Hills project in Nevada exceeded expectations
in its first full year of production, boosting output at the
Cortez property to 1.14 million ounces of gold in 2010.
We continued to make significant progress on our
60%-owned Pueblo Viejo project, located in the Dominican
Republic. On a 100% basis, the project has gold reserves
of over 23 million ounces. Barrick’s share of annual gold
production in the first full five years of production is
expected to average 625,000–675,000 ounces at total cash
costs of $275–$300 per ounce. Work continues toward
achieving key milestones.
What We Did in 2010
- Generated record net income and cash flow
- Maintained license to operate:
- Return on equity increased to 19% from 12%
• Achieved 22% improvement in total reportable injury
- Met targets to increase production at lower cash costs
- Completed Cortez Hills project on time and budget; ramp-up
exceeded expectations
- Significantly advanced high return Pueblo Viejo and Pascua-
Lama projects
frequency rate to 0.93
• Retained listings on the Dow Jones World and North
America Sustainability Indexes and named to NASDAQ
Global Sustainability Index
• First Canadian mining company to join the Voluntary
Principles on Security and Human Rights
- Acquired additional 25% ownership of Cerro Casale, a high
• Implemented Environmental Management System
quality, long life asset in a key region
at all sites
- Identified significant new organic growth opportunities such
as the potential to transform Turquoise Ridge into a large
open pit operation
- Increased dividend by 20%
- Maintained strong financial position and the industry’s
only ‘A’ credit rating
- Replaced reserves and grew resources
- Completed IPO of African Barrick Gold
6
Barrick Annual Report 2010 | Message from the President and CEO
Construction at the Pascua-Lama project in Chile
and Argentina is also progressing well, with initial produc-
tion expected in 2013. This large, world-class project has
approximately 18 million ounces of gold in reserves and
671 million ounces of contained silver. Once in operation,
average annual production in the first full five years is
expected to be 750,000–800,000 ounces of gold at total
cash costs of $20–$50 per ounce, making Pascua-Lama
one of the lowest cost gold mines in the world.
Looking further into the future, we continue to
advance our next-generation projects, including Cerro
Casale, Donlin Creek, Reko Diq and Kabanga. We have
completed bankable feasibility studies for both Cerro
Casale and Reko Diq, and we continue to work on improv-
ing the Donlin Creek feasibility study with the evaluation
of a natural gas pipeline option for the project. In 2010,
we also completed the acquisition of an additional 25% of
Cerro Casale in Chile, which enabled us to gain control
over this project and increase our metal exposure on a per
share basis at attractive rates of return.
A greater emphasis on internal value creation has
also surfaced some excellent opportunities within the
Company’s existing portfolio. Combined with the produc-
tion from our new mines under construction, this has
positioned us to increase our production target to nine
million ounces within five years. Beyond that horizon,
we are currently evaluating an opportunity to transform
the Turquoise Ridge Joint Venture in Nevada from a small
underground mine to a large open pit operation. This
would add another world-class asset to our portfolio.
The progress we made last year and the current posi-
tion of the Company have been recognized by the market,
as reflected by our strong share price performance in 2010.
Barrick shares appreciated 35% last year, outperforming
our peer group, and importantly, the gold price.
Our ability to meet our operating targets and advance
our project pipeline is dependent upon maintaining a strong
social license to operate. This means maintaining a strong
safety culture, respecting the environment and achieving
high standards of corporate and social responsibility.
What We Plan to Do in 2011
- Continue focus on increasing shareholder returns
• advancing our pipeline of low cost, high quality projects
- Meet production and cash cost targets
• pursuing selective acquisitions which are accretive to
- Advance construction of Pueblo Viejo and Pascua-Lama
shareholder value
and progress Cerro Casale towards a construction decision
- Advance plans to achieve nine million ounce production
- Continue to grow the net asset value of the Company
target within five years
and increase metal exposure per share by:
- Ensure license to operate through expanded CSR initiatives
• maximizing free cash flow from existing operations
- Preserve financial strength and the industry’s highest-rated
• growing reserves and resources
balance sheet
- Continue trend of strong earnings and cash flow generation
7
Message from the President and CEO
As such, we continue to focus our efforts on enhancing
and improving our performance in these areas.
At Barrick, we announced several initiatives in 2010
to further strengthen the Company’s corporate social
responsibility (CSR) performance. We became the first
Canadian mining company to join the Voluntary Prin-
ciples on Security and Human Rights, a set of guidelines
by which companies in the extractive sector can maintain
the safety and security of their operations while ensuring
respect for human rights and fundamental freedoms.
We also announced a plan to establish an external
CSR Advisory Board that will provide advice and guidance
to Barrick on challenging social and environmental issues
and encourage further innovation and leadership in
CSR. Consistent with these objectives, Barrick will also
appoint an independent Director to its Board of Directors
to support our commitment to CSR.
Our efforts in this area continue to be recognized.
Barrick was once again listed on the Dow Jones World
Sustainability Index, and the Company was added to the
NASDAQ Global Sustainability Index, which tracks the
world’s top 100 companies in this area.
Improving our safety performance will continue to
be a priority in 2011. We achieved a significant reduction
in total reportable injuries in 2010, however, the success
we achieved was overshadowed by six fatalities during the
year. This is unacceptable to me, and to everyone at Barrick.
We will not rest in our efforts to improve until every person
goes home safe and healthy every day. We have redoubled
our efforts and have intensified our focus on critical risks,
Visible Felt Leadership and incident investigation.
Looking ahead, the outlook for Barrick and our
industry continues to be very bright. We expect the gold
price will continue to be well supported. Our production
levels in 2011 should be comparable to 2010 and will
8
continue to trend higher as we make progress towards
reaching our nine million ounce target. We have made
considerable progress in controlling our operating costs
but they will be higher in 2011 as we mine lower grade
material, however, the impact is expected to be more than
offset by higher gold prices. As a result, we should have
another strong year of financial performance. Looking
beyond 2011, Barrick’s cost profile should be stable as we
benefit from the contribution of our new, low cost projects,
including Pueblo Viejo and Pascua-Lama. In addition
to these, we have a deep pipeline of other projects which
will be augmented over time as a result of exploration
success and the acquisition of new properties. Our focus
on value creation, leveraging Barrick’s expertise and capa-
bilities, has yielded significant results and I am confident
that more can be done in this area to create further value
for our shareholders.
In conclusion, I want to finish by recognizing the
more than 20,000 employees around the world who work
tirelessly to achieve the results that drive our performance.
When I joined Barrick, I visited the Company’s mines
and offices on four continents, and one thing struck me
everywhere I went: the exceptional quality of our people.
Two years later, my initial impressions have only intensified,
and I want to thank the entire Barrick team for making
this a great Company. Finally, I would also like to extend
my gratitude to our Founder and Chairman, Peter Munk,
and to the Board of Directors and our shareholders for
their continued support and advice over the past year.
Aaron Regent
President and Chief Executive Officer
Barrick Annual Report 2010 | Focus on Value Creation
Focus on Value Creation
At Barrick, our primary goal is to
maximize the value of the Company
in a socially responsible way for the
benefit of all our stakeholders. Our
strategy is focused on increasing net
asset value, production, reserves and
earnings – all on a per share basis.
Barrick has a strong track record
of creating value at its existing mines
and projects. In 2010, our regional busi-
ness units were given a clear mandate
to unlock the full potential of our assets
and took a fresh look at their portfolios
to identify value creation opportunities
and maximize free cash flow. This has
resulted in our target to profitably in-
crease production to nine million ounces
within five years1, and has uncovered
some exciting prospects, including the
open pit potential at Turquoise Ridge
and other options to surface hidden
value at our existing mines.
In support of this sharpened
focus on value creation, our strategy
is centered on investing in high return
development projects such as Pueblo
Viejo and Pascua-Lama, increasing
our gold and copper reserves through
both exploration and selective, ac-
cretive acquisitions, maximizing the
value of our existing mines and lever-
aging our technical skills and regional
infrastructure to commercialize new
deposits. We recognize that our ability
to be successful in the long run depends
on a high standard of corporate social
responsibility, and while Barrick has
a strong social license, we continually
strive to improve our social and
environmental performance.
Our efforts are supported by
our ‘A’ rated balance sheet, our man-
agement bench strength and the high
quality of our employees, all of which
position us to meet our goals. Barrick
is focused on building long life,
high return projects and is one of the
few companies with the expertise and
broad set of resources to develop
large scale mines that are expected
to provide lower cost ounces to the
Company for the next several decades.
The quality of these projects also
enables us to be highly disciplined
with respect to external opportunities,
which are consistently benchmarked
against our existing pipeline.
Our commitment to creating
value should not only help us achieve
our targeted production growth in
what we expect to be a strong gold
price environment, but also enable the
Company to continue returning
additional value to our shareholders.
From left: Jamie Sokalsky, Kelvin Dushnisky, Peter Kinver and Aaron Regent.
1. The target of nine million ounces of annual production within five years reflects a current assessment of the expected production and timeline to complete and commission Barrick’s projects currently in construction (Pueblo Viejo and Pascua-Lama); and the
Company’s current assessment of existing mine site opportunities, some of which are sensitive to metal price and various capital and input cost assumptions.
9
Exceptional Gold Price Leverage
Exceptional Gold Price Leverage
Barrick offers investors
exceptional leverage to
record high gold prices
This leverage is backed by the world’s
largest production and reserves within
a diversified portfolio largely situated in
investment grade countries.
Gold surged to record-breaking highs
in 2010 above $1,430 per ounce,
recording its tenth straight year of
price gains. Bullion continues to ben-
efit from a myriad of price supportive
factors which have driven robust
investment demand, including a
macroeconomic environment reflect-
ing accommodative fiscal policies
and ongoing monetary reflation,
persistent sovereign debt issues in
Europe and significant global trade
and current account imbalances.
The global fiscal and monetary
policies designed to stimulate
economic recovery have had the dual
effect of reducing the value of the
world’s major currencies and affirming
gold’s role in global portfolios. Central
banks became net buyers of gold in
2010 for the first time in 21 years
in an effort to diversify their holdings
and address excessive foreign
exchange reserves. Investor demand
in the emerging economies of China
and India is just beginning to ramp
up, particularly following further
measures to liberalize the Chinese
gold market in 2010. We expect
these trends to continue, along with
a longer term contraction in mine
supply as new discoveries become
scarcer and as permitting timelines
and requirements to bring new
production on line have lengthened
and become more complex.
Against this positive backdrop,
Barrick offers investors a compelling
combination of exceptional leverage
through the benefits of active
management relative to the gold ETF
and lower risk compared to less
diversified gold producers through
our global portfolio of operations,
as well as a competitive dividend
yield. This leverage is backed by the
industry’s largest gold reserves and
production, a disciplined focus on
value creation, and a strong balance
sheet that enables us to pursue our
strategy and goals.
10
Barrick Annual Report 2010 | Financial Strength and Flexibility
Financial Strength and Flexibility
In 2010, Barrick successfully grew its production and lowered
its cash costs, bucking the industry trend to higher costs.
The Company achieved its fifth straight year of margin
expansion with record cash margins of $771 per ounce1 or
$887 per ounce1 on a net cash cost basis, reflecting cash
margin growth of 48% versus gold’s 26% rise. Combined
with higher production of 7.8 million ounces, this resulted in
record 2010 adjusted earnings and adjusted operating cash
flow of $3.3 billion and $4.8 billion, respectively, as well as
significant free cash flow of $1.5 billion1, despite making
substantial investments in our projects. Our ‘A’ credit rating
and robust financial position – including cash of $4.0 billion,
a $1.5 billion undrawn line of credit and strong operating
cash flow – position us to continue executing on our project
development plans and give us the flexibility to pursue other
high return value creation opportunities within our portfolio.
Our excellent financial results have driven growth in
our return on equity to 19% and enabled us to return ad-
ditional capital to shareholders, while continuing to invest
in our high return projects. Barrick has raised its dividend
by nearly 120% in the past five years as gold prices have
appreciated, including a 20% increase in 2010. This steady
dividend growth reflects both the Company’s continued
financial strength and our favorable outlook for gold.
1. Non-GAAP financial measure – see pages 78–85 of the 2010 Financial Report.
CASH MARGINS1
NET CASH MARGINS1
(US dollars per ounce)
(US dollars per ounce)
771
887
521
429
625
535
2008
2009
2010
2008
2009
2010
Cash margins grew
48% in 2010
Net cash margins rose
42% in 2010
Going forward, we expect to increase Barrick’s superior
leverage to gold as our long life, high quality projects in
construction – Pueblo Viejo and Pascua-Lama – begin con-
tributing substantial new low cost production in the coming
years. Beyond this, we see tremendous potential in our
feasibility stage projects such as Cerro Casale, Donlin Creek
and Reko Diq and in value creation opportunities underway
at operating mines such as Turquoise Ridge and Zaldívar.
“Barrick generated record earnings and cash flow in 2010
as we increased production at lower cash costs, while
continuing to invest in our high return projects. We were
also able to return more capital to shareholders, raising
the dividend by 20%.”
Jamie Sokalsky, Executive Vice President and Chief Financial Officer
11
Operational Excellence
Operational Excellence
The Cortez Hills
open pit was
successfully
commissioned
in Q1 2010
Barrick’s newest mine in Nevada was built
on schedule and budget. The expanded
Cortez operation exceeded its original
guidance for the year.
The Cortez Hills underground operation
had a smooth ramp-up.
Our high quality, diversified asset
base is a key driver that enables us to
consistently meet targets and expec-
tations. Barrick produced 7.8 million
ounces of gold in 2010 at total cash
costs of $457 per ounce or net cash
costs of $341 per ounce, remaining
the industry production leader at
competitive cash costs. The Company
delivered on its production target
and, despite higher royalties and
taxes associated with a year of
record gold prices, was able to
maintain cash costs in line with
guidance, illustrating the flexibility
of our 25-mine portfolio, the active
management of our input costs
and another year of strong operating
performance from our regional
business units.
Our largest operating region,
North America, contributed 3.11 mil-
lion ounces of gold in 2010, primar-
ily from its cluster of seven mines in
Nevada. The expanded Cortez mine
had an excellent year, producing
1.14 million ounces of gold at total
cash costs of $312 per ounce with
nearly a full year of production from
Cortez Hills, which had a smooth
ramp-up from both the open pit and
underground operations. We expect
to receive a Record of Decision in
early 2011, allowing the mine to
revert to its original scope. Barrick has
added significant value to the Cortez
12
Barrick Annual Report 2010 | Operational Excellence
Cortez Case Study – Value Added Since Acquisition
2006
2010
Future Value Creation Opportunities
6.3 M oz of reserves1
60% interest
Pipeline: declining,
higher cost mine
14.5 M oz of reserves1
100% interest
Cortez: 1.1 M oz low cost
mine generating significant
cash flow
Cortez Hills Middle and Lower
Zone extensions
Significant regional opportunities
on underexplored 1,080 square
mile property
1. 2006 and 2010 reserves reflect Barrick’s 60% and 100% interest, respectively. See page 22 of the 2010 Annual Report for additional information on Barrick’s reserves.
property since its acquisition in 2006
(see case study) by consolidating 100%
ownership, expanding reserves and
resources and bringing the world-class
Cortez Hills deposit into production.
We expect to create additional value
through exploration success on this
highly prospective property.
Our low cost South America
region contributed 2.12 million ounces
in 2010. The Veladero mine in Argen-
tina had an outstanding year, producing
more than 1.1 million ounces at total
cash costs of $256 per ounce on higher
grades and expanded throughput,
while the Lagunas Norte mine in Peru
contributed over 0.8 million ounces
at total cash costs of $182 per ounce
after producing more than one million
ounces for four straight years. As a
result of higher gold prices, the Pierina
mine in Peru is now expected to con-
tinue operations until the end of 2014.
Led by the Porgera mine in Papua
New Guinea, which celebrated its
20th year of production, our Australia
Pacific business unit produced 1.94
million ounces in 2010. As of year-end
2010, the Company is 92% hedged
on all of its Australian operating and
capital expenditures for 2011 at an
average rate of $0.79, 84% hedged for
2012 at an average rate of $0.75, and
has substantial coverage for the follow-
ing two years at rates at or below $0.75.
African Barrick Gold produced
0.56 million equity ounces to Barrick
as issues with transitional oxide ore
and the impact of actions taken in
“ Our diverse portfolio of operations enabled us to meet
guidance for the eighth straight year in 2010. We also made
excellent progress advancing our high quality projects –
Cortez Hills had a successful ramp-up and we expect Pueblo
Viejo and Pascua-Lama to contribute significant new low
cost ounces in the coming years.”
Peter Kinver, Executive Vice President and Chief Operating Officer
13
Operational Excellence
response to the fuel theft at Buzwagi
resulted in lower than expected
production for the year. The Company
was admitted to the benchmark FTSE
100 Index during the year, signaling
its stature among the most highly
capitalized London-listed companies.
Barrick’s core gold business
continued to profit from the reinvest-
ment of strong cash flow from our two
copper operations in 2010 as copper
prices strengthened. Production from
the large Zaldívar operation in Chile
and the smaller Osborne mine in
Australia, which was sold during the
year, was 368 million pounds at total
cash costs of $1.11 per pound, gener-
ating cash margins of 67%.
For 2011, Barrick forecasts
equity production comparable to
2010 in the range of 7.6–8.0 million
ounces at total cash costs and net cash
costs of $450–$480 per ounce and
$340–$380 per ounce1, respectively.
The Cortez Hills and Goldstrike mines
in Nevada, the Veladero mine in
Argentina and Porgera in Papua New
Guinea are anticipated to make strong
contributions.
Beyond 2011, the Company is
targeting organic production growth
to nine million ounces within five
years and total cash costs to benefit
from the start-up of its low cost Pueblo
Viejo and Pascua-Lama projects.
2010 PRODUCTION
7.8
MILLION
OUNCES
(thousands of ounces)
North America 3,110
South America 2,120
Australia Pacific 1,939
Africa 564
Other 32
A strong year at
Veladero
Higher grades and increased throughput
from a crusher expansion (left foreground)
contributed to an excellent year for the
Veladero mine in Argentina. The future
processing area for Pascua-Lama is visible
in the center of the photo.
1. Net cash costs assume a realized copper price of $3.75 per pound for 2011.
14
Barrick Annual Report 2010 | Project Development Expertise
Project Development Expertise
Pueblo Viejo – a low
cost, long life mine
Construction of the large Pueblo Viejo
project was nearly 50% complete
as of February 2011. The mine is
expected to contribute an average
of 625,000–675,000 ounces a year
to Barrick in the first full five years
of a +25 year mine life.
One of Barrick’s distinctive hallmarks
is its industry-leading technical
expertise and strong track record of
commercializing deposits from its
pipeline of world-class development
projects. Having delivered seven new
mines in the past five years, Barrick
has a reputation for successful mine
development and a history of extract-
ing further value from its assets post
discovery or acquisition. This tradition
of excellence and value creation is
built on decades of experience
acquired in building and operating
a diverse set of mines in remote
and often challenging operating
environments around the globe.
The Cortez Hills project in
Nevada is Barrick’s newest achieve-
ment, completed on time and budget
in early 2010.
Our two world-class projects in
construction, Pueblo Viejo in the
Dominican Republic and Pascua-
Lama on the border of Chile and
Argentina, are forecast to contribute
an average annual total of 1.4 million
ounces1 at low total cash costs when
in full production, illustrating the
significant impact these mega projects
will have in strengthening the quality
of Barrick’s portfolio.
As of February 2011, the 24,000
tonne per day Pueblo Viejo project
was about 50% complete, with approx-
imately 75% of its pre-production
capital budget of about $3.3–$3.5 bil-
lion (100% basis) committed and first
production expected in Q1 2012.
All four autoclaves, the gold industry’s
largest, have been installed and are
in the process of being bricklined,
and the main columns for the
4,000 tonne per day oxygen plant
have been erected. In December
1. Based on average production for both projects in their first full five years once both are at full capacity.
15
Project Development Expertise
2010, the Environmental Impact
Assessment for the 240 kV power
transmission line was approved,
allowing associated construction
activities to commence. Barrick’s
60% share of gold production from
Pueblo Viejo in the first full five years
of operation is expected to average
625,000–675,000 ounces at total cash
costs of $275–$300 per ounce2.
Barrick has added considerable value
to Pueblo Viejo since acquiring it in
the 2006 Placer Dome transaction
(see case study), expanding reserves
by more than 75% and transforming
this asset into a high return project
with a mine life of more than 25 years.
Applying in-house expertise, Barrick’s
metallurgists dramatically improved
silver and copper recoveries and the
overall flowsheet, creating a signifi-
cantly more robust project. A circuit
to recover about three billion pounds
of contained zinc is under evaluation,
and the Company continues to
explore options for longer term,
lower cost power options.
Major progress was made in
2010 on advancing construction of the
world-class Pascua-Lama gold-silver
project on the border of Chile and
Argentina, which is expected to enter
production in the first half of 2013. As
of February 2011, approximately 40%
of the pre-production budget of about
$3.3–$3.6 billion had been committed.
Anticipated average annual produc-
tion of 750,000–800,000 ounces at
High purity oxygen from the plant will be
injected into the Pueblo Viejo autoclaves
to release the gold.
Pueblo Viejo Case Study – Value Added Since Acquisition
2006
2010
Future Value Creation Opportunities
13.4 M oz of reserves3
Modest economics
Technical challenges,
low recoveries
Au: 92%
Ag: 5%
Cu: 0%
23.7 M oz of reserves3
Robust economics
Improved flowsheet,
increased recoveries
Au: 92%
Ag: 87%
Cu: 79%
Circuit to recover ~three billion
pounds of contained zinc
Longer term, lower cost
power options
Reserve/resource upside
2. Based on gold and oil price assumptions of $1,100 per ounce and $85 per barrel, respectively.
3. 100% basis. Barrick has a 60% interest in Pueblo Viejo. See page 22 of the 2010 Annual Report for additional information on Barrick’s reserves.
16
Barrick Annual Report 2010 | Project Development Expertise
World-class
Pascua-Lama project
in construction
Work is underway to construct
the mill building on the Argentina
side of the project.
An excavator preparing the pebble crusher
platform frames the tunnel portal in Argentina.
17
total cash costs of $20–$50 per ounce4
in the first full five years illustrates the
positive impact this mega project
will have on the Company’s overall
portfolio. Each $1 per ounce increase
in the price of silver is expected to
reduce total cash costs by about
$35 per ounce over this period.
As of February 2011, detailed
engineering had been advanced to
more than 90% completion. The four
kilometer long ore tunnel connecting
the mine in Chile with the processing
plant in Argentina has been collared
from both sides and is expected to
be completed in the second half of
2012. Construction of the power
transmission line is underway and
the new access road is about 75%
complete. With 17.8 million ounces of
gold reserves and 671 million ounces
of silver contained within the gold
reserves, Pascua-Lama is expected
to contribute very low cost ounces to
Barrick over a mine life in excess of
25 years.
At the large Cerro Casale gold-
copper project in Chile’s Maricunga
district, detailed engineering was about
30% complete as of February 2011.
4. Based on gold and oil price assumptions of $1,100 per ounce and $85 per barrel, respectively, and applying silver credits assuming a by-product silver price of
$16 per ounce and assuming a Chilean peso f/x rate of 500:1.
Project Development Expertise
The review and timing of additional
permitting requirements to accommo-
date changes to project design before
considering a construction decision
are being assessed alongside consulta-
tion with local communities and
indigenous peoples.
A review is currently underway
to determine the impact of a
stronger Chilean peso and higher
labor costs in Chile on expected
capital and operating costs. An update
will be provided by the end of the
second quarter.
Next Generation of Projects
Barrick’s next tier of projects includes
the Donlin Creek gold project
in Alaska, the Reko Diq project in
Pakistan and the Kabanga nickel
project in Tanzania, all of which have
progressed to the feasibility stage and
represent significant option value
within our portfolio.
The Donlin Creek 50-50 joint
venture is one of the largest undevel-
oped gold projects in the world, with
nearly 39 million ounces of measured
and indicated gold resources and the
potential to produce more than one
Barrick’s 75%-owned Cerro Casale project in Chile is one of the world’s largest undeveloped
gold-copper deposits and is located in a core region for the Company.
million ounces per year (100% basis).
Additional optimization work to
evaluate the use of natural gas to reduce
operating costs is expected to be
completed in the third quarter of 2011.
At the 37.5%-owned Reko Diq
copper-gold project in Pakistan, the
initial mine development feasibility
study and the environmental and
social impact assessment are both
complete. A copy of the feasibility
study has been delivered to the
government of Balochistan in accor -
dance with the terms of the joint
venture agreement with the govern-
ment. The project company, Tethyan
Copper, made an application for a
mining lease on February 15, 20111.
A feasibility study and environ-
mental and social impact assessment
for the Kabanga nickel project in
Tanzania, one of the world’s largest
undeveloped nickel sulfide deposits,
is expected to be completed in the
first half of 2011. Acquired through
an earlier gold acquisition, the project
is a 50-50 joint venture with opera-
tor Xstrata Plc and hosts a measured
and indicated resource of 2.2 billion
pounds of nickel (100% basis). Barrick
will consider how to extract the best
value from this high quality asset for
its shareholders.
1. As of February 2011, the Supreme Court of Pakistan was hearing several constitutional petitions relating to the Reko Diq project, which, among other things, challenge the government’s right to grant a mining lease to Tethyan Copper.
18
Barrick Annual Report 2010 | Surfacing Hidden Value
Surfacing Hidden Value
In addition to the world-class Pueblo
Viejo and Pascua-Lama projects,
which are expected to contribute
significant new ounces at costs
substantially lower than our current
profile, we are focused on maximizing
the value of our existing mines where
we see new potential to organically
grow production and extend mine life.
With a strong mandate to create value,
our regions carried out a rigorous re-
evaluation of their portfolios in 2010
and identified a number of exciting
options to surface hidden value.
The most significant of these
came to light with a fresh look at
our 75%-owned Turquoise Ridge
mine in Nevada, which unearthed
the potential to develop a large scale
open pit to mine the lower grade halo
around the high grade core. An open
pit operation could conceptually
quadruple total annual production
to up to about 800,000 ounces a year
from current annual production of
150,000–200,000 ounces based on
2010 reserves of 5.6 million ounces,
measured and indicated resources
of 11.2 million ounces and inferred
resources of 6.9 million ounces1. A
scoping study and Phase 2 infill drill
program is currently underway in
support of a prefeasibility study which
is expected to be completed in 2012,
followed by a feasibility study in 2013.
Early metallurgical testing indicates
strong recoveries using acid autoclav-
ing. While this project is beyond our
nine million ounce target production
timeframe, it provides excellent
potential to make substantial contri-
butions to production in the future.
At the Goldstrike Complex in
Nevada, our metallurgists have been
successful in piloting a thiosulphate
leaching flow sheet after the auto-
clave process that enables treatment
of mixed carbonaceous material
previously routed to the roaster. We
expect this will extend the life of the
autoclaves and help support produc-
tion rates at Goldstrike. There is good
potential to apply this process and
enhance efficiencies at other mines.
1. 100% basis. Assumes a gold price of $975 per ounce. Feasibility, permitting and construction are estimated to take ~8 years. Key permits and approvals needed include: Environmental Impact Statement, Plan of Operations Approval, Clean Water Act
Section 404 Permitting, Mercury Control Permits, Water Pollution Control Permit.
5.6 M oz UG reserve orebody
Conceptual open pit orebody
Significant open
pit potential at
Turquoise Ridge
A scoping study is underway to evaluate
the potential to transform this small,
high grade underground operation into
a large open pit mine by mining the
lower grade halo.
19
Surfacing Hidden Value
New technology
expected to
extend autoclave
life at Goldstrike
Barrick has leveraged its metallurgical
expertise to adapt the Goldstrike
autoclaves to treat a wider variety of
ore. Thiosulphate leaching was tested
in this pilot plant.
With the receipt of permits in
2010, a significant expansion com-
menced at the Bald Mountain mine in
Nevada and is expected to be complete
by late 2011, increasing annual produc-
tion from 100,000 ounces to 150,000–
200,000 ounces per year and extending
the mine life by 10 years. The unified
plan includes expanded process facili-
ties, the merger of the North pits and
the inclusion of several satellite pits. A
proposed layback at the Hemlo mine in
Ontario may also significantly extend
the mine life at this operation.
The Lagunas Norte mine in
Peru is one of the Company’s lowest
cost producers, and has consistently
outperformed our expectations since
its start-up in 2005. We have defined
some viable targets around the mine
site, including the deeper sulfide ore,
which have good potential to extend
the mine life by four years with an
additional two million ounces.
At Zaldívar, our large copper
producer in Chile, where there are
existing reserves of 6.5 billion pounds
of copper plus a measured and indi-
cated resource of 1.3 billion pounds,
the deeper primary sulfides under-
neath the current open pit potentially
offer an additional six billion pounds
of copper containing about 2.4 mil-
lion ounces of gold. The sulfides
potentially represent an additional
one billion tonnes that could overlap
with the existing operation and
extend the mine life by about 16 years2.
A prefeasibility study is expected
to commence in the second quarter
of 2011.
Our 2010 review also identified
other brownfield opportunities which
could increase production or extend
the mine lives at the Kalgoorlie, Cowal,
Granny Smith, and Porgera mines in
our Australia Pacific region.
2. Additional exploration and engineering is required to define the deep sulfide potential and it is uncertain whether Barrick will be able to define this potential resource. Development of Zaldívar deep sulfides assumes copper and gold prices of $2.50 per pound
and $900 per ounce, respectively.
20
Barrick Annual Report 2010 | Industry’s Largest Gold Reserves
Industry’s Largest Gold Reserves
Barrick has a strong history of
finding new ounces to replenish its
gold reserves and resources, and we
continued this tradition in 2010
by replacing our industry leading
reserves of about 140 million ounces,
despite reducing our equity interest
in African Barrick Gold. Just as
importantly, we strengthened our
underlying resources, growing mea-
sured and indicated ounces by 24% to
over 76 million ounces and increasing
inferred resources by 18% to over
37 million ounces.
Our success at maintaining the
industry’s largest reserve base can
be largely attributed to our sustained
approach to funding exploration, our
deep technical expertise and disciplined
approach to pipeline management,
and an integrated alignment with
corporate development. This strategy1
has resulted in Barrick’s significant
land positions on many of the world’s
most prospective gold and copper
trends, including the underexplored
El Indio belt in Chile and Argentina
and the Cortez Trend in Nevada.
Barrick’s reserves continue to be largely
situated in lower risk areas, with about
65% located in investment grade
countries2 including Chile, Australia,
the United States and Canada.
As a result of exploration success
in 2010, our 2011 exploration budget
is expected to increase by over 50%
to $320–$340 million. Of the total,
about 43% will be allocated to North
America, with the majority targeted
for Nevada to upgrade resources at
Turquoise Ridge, where drilling con-
tinues in support of the scoping study,
and to outline additional resources at
Cortez. The Cortez property remains
highly prospective, with excellent
potential to add new ounces to the
current 14.5 million ounce reserve
from the Cortez Hills Middle and
Lower Zones and from regional
targets on our 1,080 square mile land
position. The 2011 budget continues
to be heavily weighted towards brown-
field exploration around our existing
operations, while still supporting
substantial generative efforts to
explore for large deposits, particularly
in highly endowed, under explored
areas such as Papua New Guinea and
El Indio. Activities in the El Indio
area have been refocused to explore
for gold-copper porphyry targets and
have outlined 19 high priority targets,
several of which will be drilled in 2011.
Over the past 20 years, Barrick’s
exploration group has had excellent
success at finding high quality, lower
1. Barrick’s exploration programs are designed and conducted under the supervision of Robert Krcmarov, Senior Vice President, Global Exploration of Barrick. For information on the geology, exploration activities generally, and drilling and analysis procedures
on Barrick’s material properties, see Barrick’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
2. BBB- or higher as rated by Standard and Poor’s.
“Our exploration group is aligned with Barrick’s business needs
and understands how to maximize the chances of success.
In 2010, Barrick successfully replaced its reserves, marking the
fifth straight year we have done so, and substantially grew
resources. It’s a testament to the depth and quality of our
project pipeline and people.”
Rob Krcmarov, Senior Vice President, Global Exploration
21
Industry’s Largest Gold Reserves
cost ounces, identifying and
delivering notable increases at
Pascua-Lama, Lagunas Norte,
Veladero, Pueblo Viejo, Cortez,
Turquoise Ridge, and Donlin Creek.
Our key mines and projects
continue to demonstrate strong
exploration potential, positioning
the Company to extract further
value from its high quality portfolio
through the drill bit.
Night drilling tests regional targets on Barrick’s highly prospective Nevada land package.
Reserves and Resources Summary1,2,3
at December 31, 2010
(Barrick’s equity share)
Proven and
Probable Reserves
Measured and
Indicated Resources
Inferred
Resources
Gold (000s oz)
North America
South America
Australia Pacific
Africa
Other
Other Metals
Copper (M lbs)
Nickel (M lbs)
Other Metals Contained in:
139,786
56,783
53,922
16,568
12,429
84
6,514
–
76,319
45,573
10,265
16,464
3,967
50
13,014
1,080
37,202
16,772
6,284
11,331
2,748
67
9,149
596
Proven and
Probable Gold Reserves
Measured and
Indicated Gold Resources
Inferred
Gold Resources
Silver (000s oz)
Copper (M lbs)
1,066,332
5,735
232,890
1,164
61,647
1,563
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2010 in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting
purposes, Industry Guide 7, (under the Securities and Exchange Act of 1934), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, Cerro Casale is classified
as mineralized material. In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the U.S. Securities and Exchange Commission does not recognize such terms. Canadian
standards differ significantly from the requirements of the U.S. Securities and Exchange Commission, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the
requirements of the U.S. Securities and Exchange Commission. U.S. investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility.
In addition, U.S. investors are cautioned not to assume that any part or all of Barrick’s mineral resources constitute or will be converted into reserves. Calculations have been prepared by employees of Barrick, its joint venture partners or its joint venture
operating companies, as applicable, under the supervision of Rick Sims, Senior Director, Resources and Reserves of Barrick, Chris Woodall, Senior Director, Mining of Barrick and John Lindsay, Senior Director Metallurgy, of Barrick. Except as noted below,
reserves have been calculated using an assumed long-term average gold price of $US 1,000 ($Aus. 1,180) per ounce, a silver price of $US 16.00 per ounce, a copper price of $US 2.00 per pound and exchange rates of $1.05 $Can/$US and $0.85
$US/$Aus. Reserves at Round Mountain have been calculated using an assumed long-term average gold price of $US 900. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have
been used depending on the mine and type of ore contained in the reserves. Barrick’s normal data verification procedures have been employed in connection with the calculations. Resources as at December 31, 2010 have been estimated using varying
cut-off grades, depending on both the type of mine or project, its maturity and ore types at each property. For a breakdown of reserves and resources by category and for a more detailed description of the key assumptions, parameters and methods used
in calculating Barrick’s reserves and resources, see Barrick’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
2. 2009 reserves and resources for the Cerro Casale project reflect Barrick’s then 50% interest. In March 2010, Barrick acquired an additional 25% of Cerro Casale. 2010 reserves and resources reflect Barrick’s 75% interest.
3. In March 2010, Barrick created African Barrick Gold plc to hold its African gold mines, gold projects and gold exploration properties. As of April 2010, Barrick owns approximately 73.9% of African Barrick Gold plc.
22
Barrick Annual Report 2010 | Strong Focus on Responsible Mining
Strong Focus on Responsible Mining
Corporate Social Responsibility
As public expectations of the mining
industry continue to rise, corporate
social responsibility has never been
more important. Barrick renewed
and increased its focus on CSR in
2010. Efforts were aimed at further
strengthening Barrick’s global perfor-
mance in such areas as community
relations, environmental manage-
ment, security and human rights,
and corporate governance.
Barrick’s CSR performance and
alignment with international standards
continue to be recognized. We are
proud to be listed for the third
consecutive year as a world leader in
social and environmental responsibil-
ity by the Dow Jones World Sustain-
ability Index. This also marks the first
year that the Company has earned
a place on the NASDAQ Global
Sustainability Index of the top 100
companies worldwide. In addition,
the Carbon Disclosure Project named
Barrick a climate disclosure leader
for the Company’s climate change
strategy and reporting practices.
Strengthening Corporate
Governance
To enhance expertise in CSR at the
most senior level of the Company,
Barrick announced a plan to establish
an external CSR Advisory Board that
will provide advice and guidance to
Barrick on challenging social and
environmental issues and encourage
further innovation and leadership.
Barrick will also appoint an indepen-
dent Director to its Board of Directors
to support our commitment to CSR.
A search is underway to fill this
position in 2011.
Commitment to Human Rights
Barrick works with governments and NGOs to
ensure the provision of basic health services
and improve community health.
Barrick is committed to protecting
human rights and dignity at its
Since 2005, Barrick has invested more than
$33 million to build schools and improve
education around the world.
operations around the world. In 2010,
Barrick became the first Canadian
mining company to be admitted to
formally join the Voluntary Principles
on Security and Human Rights, a set
of guidelines by which companies in
the extractive sector can maintain the
safety and security of their operations
while ensuring respect for human
rights. We are advancing the imple-
mentation of the Voluntary Principles,
engaging in the tripartite process with
NGOs, extractive sector companies
and government members, while
working closely with local communi-
ties. This is particularly important
in the complex environments in
23
Strong Focus on Responsible Mining
which Barrick operates and faces
ongoing challenges, and where it is
further strengthening its policies
and compliance with these human
rights principles.
Effective Engagement with
our Stakeholders
At Barrick, we understand the value of
relationships. Our ability to be success-
ful as a company depends on being able
to engage effectively with governments,
civil society and our host communities.
By being responsive to the issues and
expectations of our stakeholders, we
build trust and reduce business risks
over the long term.
In 2010, Barrick completed a
third-party assurance process of our
performance and alignment with
the International Council on Mining
and Metals Sustainable Development
24
More than 5,000 people have participated
in Barrick’s adult literacy program in Papua
New Guinea.
Framework. While the overall results
of this evaluation were positive, we also
received constructive feedback and
recommendations for improvements.
For example, based on the input
received, we have enhanced commu-
nications on issues of concern to our
external stakeholders. Going forward,
this assurance process will be con-
ducted on an annual basis. We are also
further strengthening our grievance
mechanisms at all sites to ensure com-
munities have a voice and a system-
atic way to resolve complaints, while
building the capacity of the Company’s
community relations function.
Creating a Positive Legacy
Barrick continues to make significant
investments in community programs
that take into account local develop-
ment needs and priorities. As the
Company has grown, our investments
in such areas as health and education
continue to expand. Our community
programs are wide-ranging: from
Earthquake Relief
Over 250 Barrick volunteers rallied to
construct 200 emergency homes after
a devastating earthquake struck Chile.
Barrick donated $5 million towards
reconstruction efforts. The Company also
sent an emergency response team and
donated to aid organizations for Haiti.
Barrick Annual Report 2010 | Strong Focus on Responsible Mining
fighting HIV/AIDS and bringing
electricity to towns in Tanzania to im-
proving child nutrition and maternal
health in Peru, assisting local farmers
and suppliers in Chile and Argentina
and providing adult literacy programs
in Papua New Guinea and the
Dominican Republic.
Globally, our operations are a
catalyst for social and economic de-
velopment and contribute to a higher
standard of living. A study of the
impact of the Pierina mine in Peru
documented a decline in the poverty
rate from 80% to 31% in one local
district from 1993–2007. In develop-
ing regions, large-scale skills training
programs are conducted to enable
thousands of local people to join
our workforce, while entrepreneurs
can receive training to become
suppliers to our operations. These
are just some of the ways Barrick is
maximizing the positive benefits
of our operations and improving our
CSR performance globally.
Environmental Stewardship
Around the world, Barrick operates
to high environmental standards
and is committed to continuous
improvement. Consistent with this
commitment, Barrick’s Environmental
Management System (EMS) was
implemented at all sites in 2010 and
underwent a third-party review to
identify possible areas of improve-
ment. The Company also completed
a three-year risk assessment to review
the safety of tailings impoundments
at all operations and closed sites.
A tailings guidance manual was
developed to ensure the Company is
meeting or exceeding industry best
practice in this area.
Pursuing Industry Leadership
In 2010, the Company also set its
sights on industry-wide issues, such
as addressing water use, safeguarding
biodiversity, and reducing energy use
and greenhouse gas (GHG) emissions.
Water conservation is an area
where Barrick is demonstrating
leadership, reflected in improved,
more systematic management and
monitoring of water use at our opera-
tions. Three industry-leading water
conservation pilot projects are
now underway at sites in Australia,
Tanzania and North America.
Eighteen Barrick mines are zero water
discharge operations, with all water
recycled and reused for mining
processes on site. In 2011, Barrick will
participate in the Water Disclosure
Project to contribute to greater under-
standing of global industrial water use.
“Barrick made significant strides in its approach to responsible
mining in 2010. We recognize the importance of proactively
engaging with communities, governments and other
stakeholders to ensure we maintain strong support for our
operations. By challenging ourselves to improve, we have
become a stronger and better company, positioned for even
greater success in the future.”
Kelvin Dushnisky, Executive Vice President, Corporate and Legal Affairs
25
Strong Focus on Responsible Mining
Water Management
Leadership
Barrick’s water conservation standard
is an industry best practice, employing
the latest engineering and water
management techniques to enhance
conservation and the efficient use of
water at all operations.
In the area of biodiversity, Barrick
is pursuing new territory for the in-
dustry. The Company is engaging with
leading experts to put our biodiversity
standard into practice and better man-
age, mitigate and offset biodiversity
impacts. At the Kanowna Belle mine in
Australia, Barrick is piloting the Nature
Conservancy’s Development by Design
strategy, a science-based approach to
conservation planning and mitigation.
In the Dominican Republic, a second
pilot project to protect local species
near the Pueblo Viejo project is also
underway.
For the second year, the Company
has established regional targets to
improve energy and carbon efficiency
at all operations. Overall, Barrick has
improved ore processes, resulting
in less GHG emissions per tonne of
ore processed. Using this measure,
Barrick’s emissions decreased 15%
from 2006 to 2009. Barrick is also
now completing a mercury abatement
program which aims to control and
reduce mercury emissions from
processing facilities at our operations.
Barrick has long been a leading
advocate of the International Cyanide
Management Code, having achieved
Code certification at 20 operations –
more than any other gold producer.
Code recertification of six opera-
tions has already been completed.
In collaboration with the Mining
Association of Canada, the Company
is taking this commitment one step
further by publicly advocating that
Code safety standards and certifica-
tion become standard practice within
the gold mining industry.
Environmental Leadership
from Within
Looking ahead, Barrick also plans to
participate in an Earthwatch Institute
internship program that will provide
future company leaders with an un-
paralleled opportunity to participate
in the environmental programs of
this respected organization around
the world. Participants will work
with Earthwatch’s world-class scien-
tists to gain a greater appreciation
of the need to manage environmental
impacts as well as the significance
of company decision-making on the
environment. This internship program
complements new employee awards
to acknowledge environmental
leadership. Finally, in 2011, Barrick
will begin a process to make annual
26
Barrick Annual Report 2010 | Strong Focus on Responsible Mining
environmental data at each operation
publicly available.
Safety and Health
Barrick’s safety vision is every person
going home safe and healthy every
day. During 2010, Barrick continued
to implement initiatives to reinforce a
zero incident culture.
Barrick’s Courageous Leadership
for Safety and Health training con-
tinues to be the catalyst for improved
performance. During 2010, more than
8,000 employees and contractors par-
ticipated in Courageous Leader ship
safety training. Through its concerted
safety systems and implementation
of standards in 2010, the Company’s
overall reportable injury frequency
rate decreased from 1.02 to 0.93. The
Australia Pacific region improved
significantly, with a 70% reduction in
its lost-time injury frequency rate. A
notable achievement was reached at
the Pueblo Viejo project, when it
exceeded 22 million hours without a
lost-time incident. Three additional
sites accumulating over 16 million
hours also worked through 2010
without a lost-time injury. Sadly, our
2010 progress was overshadowed by
six fatalities – which is unacceptable.
Nearly half of all high potential
incidents are related to driving and
mobile equipment. In recent years,
Barrick has introduced a Mobile
Equipment Operating Policy, Drive
First education modules and the
use of training simulators. In 2010,
Barrick began installing WaySmart™
driver monitors in all vehicles. These
devices monitor driver behavior and
alert drivers if they are speeding,
driving aggressively, or not wearing
a seatbelt. If the driver does not
correct the undesired behavior, the
unit records the data and alerts the
supervisor. By the end of 2010, more
than 2,200 of these units had been
North Mara’s Josephine Mkono receives the
new CSR Champion Award.
installed and further installations will
ensue in 2011.
In addition to these initiatives,
Barrick continues to be an active
member of the Earth Moving Equip-
ment Safety Round Table (EMESRT).
Since 2006, Barrick has been one of
10 major mining companies working
directly with original equipment
manufacturers to develop safe design
“At Barrick, the values that define us as a company include
a commitment to upholding human rights wherever we
operate. That means respecting people – respecting our
fellow employees and respecting those in the communities
in which we work.”
Sybil Veenman, Senior Vice President and General Counsel
27
Strong Focus on Responsible Mining
Skills Development
Barrick employs sophisticated simulators
at Pueblo Viejo and other mines to
train staff on heavy equipment such as
hydraulic shovels.
philosophies for heavy equipment.
In September 2010, EMESRT met
again with major equipment manu-
facturers to review progress to
mitigate risks defined by the EMESRT
design philosophies.
Barrick’s efforts in 2011 will
focus on three key areas: risk manage-
ment of high potential risks, Visible
Felt Leadership, and incident investiga-
tion. The Safety group has conducted
an assessment of incidents to define
the highest priority risks. Standards
exist to mitigate each of these risks,
and efforts will focus on ensuring
effective implementation and compli-
ance at every site. Barrick continues
to invest in training to maintain a
pool of Barrick Certified Investigators
who conduct thorough investigations
to determine the root cause of any
failure of these existing controls and
recommend mitigating actions. In
2011, efforts will focus on ensuring
that final recommended mitigating
actions from these investigations be
implemented company-wide.
“Achieving zero incidents requires people to stop and think
before undertaking any task to determine what risks are
involved and how to eliminate or mitigate them. We reinforce
this field level risk assessment process to make it part of
our safety culture.”
Don Ritz, Senior Vice President, Safety and Leadership
28
Financial Report
Management’s Discussion and Analysis 30
Financial Statements 104
Notes to Consolidated Financial Statements 108
Mineral Reserves and Resources 163
Corporate Governance and Committees of the Board 171
Shareholder Information 172
Board of Directors and Senior Officers 174
Management’s Discussion and Analysis
Management’s Discussion
and Analysis (“MD&A”)
Management’s Discussion and Analysis (“MD&A”) is
intended to help the reader understand Barrick Gold
Corporation (“Barrick”, “we”, “our” or the “Company”), our
operations, financial performance and present and future
business environment. This MD&A, which has been pre-
pared as of February 16, 2011, should be read in conjunction
with our audited consolidated financial statements for the
year ended December 31, 2010. Unless otherwise indicated,
all amounts are presented in US dollars.
For the purposes of preparing our MD&A, we consider
the materiality of information. Information is considered
material if: (i) such information results in, or would
reasonably be expected to result in, a significant change in
the market price or value of our shares; or (ii) there is a
substantial likelihood that a reasonable investor would
consider it important in making an investment decision;
or (iii) if it would significantly alter the total mix of infor-
mation available to investors. We evaluate materiality with
reference to all relevant circumstances, including potential
market sensitivity.
Continuous disclosure materials, including our most
recent Form 40-F/Annual Information Form, annual MD&A,
audited consolidated financial statements, and Notice of
Annual Meeting of Shareholders and Proxy Circular will be
available on our website at www.barrick.com, on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov. For an
explanation of terminology unique to the mining industry,
readers should refer to the glossary on page 99.
Cautionary Statement On Forward-Looking Information
Certain information contained or incorporated by reference
in this MD&A, including any information as to our strategy,
plans or 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”, “intend”, “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 materi-
ally from those projected in the forward-looking statements.
Such factors include, but are not limited to: fluctuations in
the market and forward price of gold and copper or certain
other commodities (such as silver, diesel fuel and electricity);
the impact of global liquidity and credit availability on the
timing of cash flows and the values of assets and liabilities
based on projected future cash flows; fluctuations in the
currency markets (such as Canadian and Australian dollars,
South African rand, Chilean peso, Argentinean peso,
British pound, Peruvian sol and Papua New Guinean kina
versus US dollar); changes in US dollar interest 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
30
in Canada, the United States, Dominican Republic, Australia,
Papua New Guinea, Chile, Peru, Argentina, South Africa,
Tanzania, United Kingdom, Pakistan 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 acqui-
sitions; operating or technical difficulties in connection
with mining or development activities; employee relations;
availability and increased costs associated with mining
inputs and labor; litigation; the speculative nature of explo-
ration and development, including the risks of obtaining
necessary licenses and permits; diminishing quantities or
reserve grades; adverse changes in our credit rating; and
contests over title to properties, particularly title to unde-
veloped properties. In addition, there are risks and hazards
associated with the business of exploration, development
and mining, including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion or copper cathode 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 MD&A
are qualified by these cautionary statements. Specific refer-
ence is made to Barrick’s most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian
provincial securities regulatory authorities for a discussion
of some of the factors underlying forward-looking state-
ments. 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, except to the
extent required by applicable law.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Changes in Presentation of Non-GAAP Financial
Performance Measures
We use certain non-GAAP financial performance measures
in our MD&A. For a detailed description of each of the
non-GAAP measures used in this MD&A, please see
the discussion under “Non-GAAP Financial Performance
Measures” beginning on page 78 of our MD&A.
Adjusted Debt and Net Debt
Starting in 2010, we introduced adjusted debt and net debt as
new non-GAAP measures. We have adjusted our long-term
debt to exclude fair value adjustments and our partner’s
share of project financing and to include the settlement
obligation to close out the gold sales contracts and issue
costs. We have excluded the impact of fair value adjustments
in order to reflect the actual settlement obligation in relation
to the debt instrument. We have excluded our partner’s share
of project financing, in situations where we report 100%
of the debt on a consolidated basis but have only provided
a guarantee for our proportionate share of the debt. We
have included the settlement obligation related to gold sales
contracts because they have terms similar to long-term debt
instruments and have been settled in cash. Our cash and
equivalents (net of our partner’s share of cash where we have
excluded their proportionate share of the project financing
from our adjusted debt calculation) is deducted from the
adjusted total to arrive at net debt.
These adjusted debt and net debt figures are more
indicative of how we manage our debt levels internally than
the equivalent US GAAP measures and provide a meaningful
measure for investors and analysts to evaluate our overall debt
capacity, liquidity and capital structure. They are intended
to provide additional information only and do not have any
standardized meaning prescribed by US GAAP and should
not be considered in isolation or as substitutes for measures
of performance prepared in accordance with US GAAP.
Other companies may calculate these measures differently.
Adjustment to Cash Costs
Also starting in 2010, we adjusted our gold total cash costs
to remove the impact of ore purchase agreements that have
economic characteristics similar to toll milling arrange-
ments. The cost of producing these ounces is not indicative
of our normal production costs. Hence, we have removed
such costs from total cash costs.
31
Management’s Discussion and Analysis
Free Cash Flow
Starting in 2010, we introduced free cash flow as a new
non-GAAP measure. We have deducted capital expenditures
from adjusted operating cash flow to arrive at free cash flow.
Free cash flow is a measure that management believes
to be a useful indicator of the Company’s ability to operate
without reliance on additional borrowing or usage of exist-
ing cash. It is intended to provide additional information
only and does not have any standardized meaning prescribed
by US GAAP and should not be considered in isolation or
as a substitute for measures of performance prepared in
accordance with US GAAP. The measure is not necessarily
indicative of operating profit or cash flow from operations as
determined under US GAAP. Other companies may calculate
this measure differently.
Return on Equity
Starting in 2010, we introduced return on equity as a new
non-GAAP measure. Return on equity has been defined as
adjusted net income divided by average shareholders’ equity.
Return on equity is a measure that management believes
to be a useful indicator of the Company’s performance.
It is intended to provide additional information only and
does not have any standardized meaning prescribed by
US GAAP and should not be considered in isolation or as
a substitute for measures of performance prepared in
accordance with US GAAP. Other companies may calculate
this measure differently.
Index
33 Financial and Operating Highlights
33 2010 Fourth Quarter and Year-End Results
35 2010 Business Developments
38 Outlook for 2011
42 Business Overview
42 Our Business
43 Our Strategy
43 Capability to Execute our Strategy
Enterprise Risk Management
46
47 Market Review
54 Financial and Operating Results
Summary of Financial Performance
Summary of Operating Performance
54
55
59 Mineral Reserves and Mineral Resources Update
59 Review of Operating Segment Performance
65 Financial Condition Review
65 Balance Sheet Review
67
69
70 Commitments and Contingencies
Liquidity and Cash Flow
Financial Instruments
72 Review of Quarterly Results
73 US GAAP Critical Accounting Policies and Estimates
78 Non-GAAP Financial Performance Measures
85 International Financial Reporting Standards (IFRS)
99 Glossary of Technical Terms
32
Financial and Operating Highlights1
2010 Fourth Quarter and Year-End Results
Summary of Financial and Operating Data
($ millions, except where indicated)
Financial Data
Sales
Net income/(loss)
Per share (“EPS”)2
Adjusted net income3
Per share (“adjusted EPS”)2,3
EBITDA3
Adjusted EBITDA3
Capital expenditures
Operating cash flow
Adjusted operating cash flow3
Free Cash Flow3
Cash and equivalents
Adjusted debt3
Net debt3
Return on equity3
Operating Data
Gold
Gold produced (000s ounces)4
Gold sold (000s ounces)
Realized price ($ per ounce)3
Net cash costs ($ per ounce)3
Total cash costs ($ per ounce)3
Copper
Copper produced (millions of pounds)
Copper sold (millions of pounds)
Realized price ($ per pound)3
Total cash costs ($ per pound)3
Barrick Financial Report 2010 | Management’s Discussion and Analysis
For the three months ended
December 31
For the years ended
December 31
2010
2009
2010
2009
$ 3,033
896
0.90
947
0.95
1,635
1,635
1,145
781
1,437
292
$
1,700
1,825
$ 1,368
$ 326
$ 486
82
103
$ 3.99
$ 1.12
$ 2,452
215
0.22
604
0.61
794
1,035
748
(4,300)
921
$ 173
1,871
1,797
$ 1,119
$ 310
$ 465
98
118
$ 3.44
$ 1.08
$ 11,211
3,274
3.32
3,279
3.32
5,900
5,900
3,323
4,127
4,783
1,460
3,968
6,392
$ 2,542
19%
7,765
7,734
$ 1,228
$ 341
$ 457
368
391
$ 3.41
$ 1.11
$ 8,404
(4,274)
(4.73)
1,810
2.00
(2,563)
3,370
2,358
(2,322)
2,899
541
2,564
6,919
$ 4,355
12%
7,397
7,279
$ 985
$ 360
$ 464
393
380
$ 3.16
$ 1.17
1. The amounts presented in this table include the results of discontinued operations.
2. Calculated using weighted average number of shares outstanding under the basic method.
3. Adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, adjusted operating cash flow, free cash flow, adjusted debt, net debt, return on equity, realized price,
net cash costs and total cash costs are non-GAAP financial performance measures with no standardized meaning under US GAAP. For further information and a detailed
reconciliation, please see pages 78 – 85 of this MD&A.
4. Production includes our equity share of gold production at Highland Gold.
33
Management’s Discussion and Analysis
Fourth Quarter and Full Year Financial
and Operating Highlights
Net income and adjusted net income for the fourth quarter
2010 were $896 million and $947 million, respectively,
compared to net income of $215 million and adjusted net
income of $604 million for fourth quarter 2009. Net income
for the year 2010 was $3,274 million, compared to a net loss
of $4,274 million in 2009, which included a $5,901 million
charge related to the elimination of our gold sales contracts.
Adjusted net income for the year 2010 was $3,279 million,
compared to $1,810 million for full year 2009.
EPS and adjusted EPS for the fourth quarter 2010 were
$0.90 and $0.95, respectively, compared to EPS of $0.22 and
adjusted EPS of $0.61 for the fourth quarter 2009. EPS for
the year 2010 was $3.32, compared to the loss of $4.73 for
full year 2009. Adjusted EPS for the year 2010 was $3.32,
compared to $2.00 for full year 2009. The significant increase
in adjusted EPS in 2010 largely reflects the increase of gold
production and realized gold prices. EPS and adjusted EPS
reflect the impact of the issuance of 109 million common
shares in third quarter 2009, which represented a 12%
increase in common shares then outstanding with a corre-
sponding dilutive impact on both EPS and adjusted EPS.
EBITDA and adjusted EBITDA for the fourth quarter
2010 were both $1,635 million, compared to EBITDA of
$794 million and adjusted EBITDA of $1,035 million for
the fourth quarter 2009. EBITDA and adjusted EBITDA
for the year 2010 was $5,900 million, compared to EBITDA
of $(2,563) million and adjusted EBITDA of $3,370 million
for full year 2009.
Operating cash flow and adjusted operating cash flow
for the fourth quarter 2010 were $781 million and
$1,437 million, respectively, compared to operating cash
outflow of $4,300 million and adjusted operating cash flow
of $921 million for the fourth quarter 2009. Operating
cash flow for the year 2010 was $4,127 million, compared
to operating cash outflow of $2,322 million in 2009.
Operating cash flow reflects payments related to the settle-
ment of gold sales contracts of $5,221 million in 2009 and
$656 million in 2010. Adjusted operating cash flow,
which excludes the impact of these payments, totaled
$4,783 million in 2010 compared to $2,899 million in 2009.
Free cash flow for the fourth quarter 2010 was $292 million,
compared to $173 million for the fourth quarter 2009.
Free cash flow for the year 2010 was $1,460 million, com-
pared to $541 million for full year 2009. The increases
reflect higher adjusted operating cash flow, partially offset
by higher capital expenditures.
34
Primary factors driving the increase in net income,
adjusted net income, EPS, adjusted EPS, EBITDA, adjusted
EBITDA, operating cash flow, adjusted operating cash
flow and free cash flow were higher realized gold and
copper prices and higher gold sales volume. Net income
and adjusted net income were impacted by higher amor-
tization, higher income tax expense, and higher interest
expense as a result of debt issuance in fourth quarter 2009.
Net income, EPS, EBITDA and operating cash flow were
also impacted by the elimination of the gold sales contracts.
Gold production and total cash costs for the fourth quarter
2010 were 1.7 million ounces and $486 per ounce, respec-
tively, compared to production of 1.9 million ounces and
total cash costs of $465 per ounce for fourth quarter 2009.
Gold production and total cash costs for the year 2010
were 7.8 million ounces and $457 per ounce, respectively,
compared to production of 7.4 million and total cash costs
of $464 per ounce for full year 2009. Gold sales totaled
1.8 million ounces for the fourth quarter 2010 and 7.7 mil-
lion ounces for the year 2010, compared to 1.8 million
ounces and 7.3 million ounces, respectively, for the com-
parable prior year periods. Gold production increased for
the year primarily due to increased production at Cortez,
Veladero, Kalgoorlie and Cowal, partially offset by decreases
in production at Goldstrike, Pierina and Lagunas Norte.
Copper production and total cash costs for the fourth
quarter 2010 were 82 million pounds and $1.12 per pound,
respectively, compared to production of 98 million pounds
and total cash costs of $1.08 per pound for fourth quarter
2009. Copper production and total cash costs for the
year 2010 were 368 million pounds and $1.11 per pound,
respectively, compared to production of 393 million
pounds and $1.17 per pound for full year 2009. Copper
sales totaled 103 million pounds for the fourth quarter
2010 and 391 million pounds for the year 2010, compared
to 118 million pounds and 380 million pounds, respec-
tively, for the comparable prior year periods. Copper sales
were higher than copper produced in 2010 primarily due
to higher sales volume in Osborne, where shipping delays
moved part of 2009 production into 2010 sales. Copper
production decreased for the year 2010 primarily due to a
decrease in copper production as a result of the divestiture
of Osborne in third quarter 2010.
Realized gold price for the fourth quarter 2010 was $1,368
per ounce, compared to $1,119 per ounce for fourth quarter
2009. Realized gold price for the year 2010 was $1,228
per ounce, compared to $985 per ounce for full year 2009.
The increases principally reflect higher market gold prices.
Realized copper price for the fourth quarter 2010 was $3.99
per pound, compared to $3.44 per pound for fourth quar-
ter 2009. Realized copper price for the year 2010 was $3.41
per pound, compared to $3.16 per pound for full year
2009. The increases reflect higher market copper prices.
Net cash costs for the fourth quarter 2010 were $326 per
ounce, compared to $310 per ounce for the fourth quarter
2009. Net cash costs for the year were $341 per ounce,
compared to $360 per ounce for the full year 2009. Net
cash costs decreased in 2010, primarily due to higher
copper credits as a result of higher market copper prices.
Capital expenditures totaled $1,145 million for fourth
quarter 2010 and $3,323 million for the year 2010, com-
pared to $748 million and $2,358 million, respectively, for
the comparable prior year periods. The increases largely
reflect higher project capital expenditures and higher
minesite sustaining capital expenditures.
At December 31, 2010, cash and equivalents totaled
$3,968 million, adjusted debt totaled $6,392 million and
net debt totaled $2,542 million, compared to the equivalent
December 31, 2009 totals of $2,564 million, $6,919 million
and $4,355 million, respectively. During 2010, we
received $469 million in project financing for Pueblo Viejo
($782 million on a 100% basis) and repaid $805 million
in debt, including $656 million to settle the remaining
obligation for the gold sales contracts.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
2010 Business Developments
Economic, Fiscal and Legislative Developments
The current global economic situation has impacted Barrick
in a number of ways. The response from many governments
to the ongoing economic crisis has led to continuing low
interest rates and a reflationary environment that has
supported higher commodity prices. The increase in gold,
copper and silver market prices in particular (refer to Market
Review section of this MD&A for more details) have been
key drivers of higher income and operating cash flows for
Barrick. The fiscal pressures currently experienced by many
governments have resulted in a search for new sources of
revenues, and the mining industry, which is generating
significant profits and cash flow in this high metal price
environment, is facing the possibility of higher income taxes
and royalties. The proposed Australian Mineral Resources
Rent Tax (“MRRT”) is one example. While the MRRT
has been greatly revised to its current form, and is no longer
expected to apply to our gold operations, we continue to
monitor developments related to this proposal. In addition,
in order to finance reconstruction stemming from the dev-
astating 2010 earthquake, the Chilean government recently
enacted a temporary first tier income tax increase from 17%
to 20% in 2011 and 18.5% in 2012 as well as a new elective
mining royalty. In January 2011 we adopted the new royalty.
The impact of adoption was a $26 million increase in 2010
income tax expense and an expected increase of about
$15 million in 2011 income tax expense. The impact of the
temporary income tax rate increase on 2011 income tax
expense is expected to be about $20 million.
On the legislative front, Argentina recently passed a
federal glacier protection law that restricts mining in areas
on or near the nation’s glaciers. Our activities do not take
place on glaciers, and are undertaken pursuant to existing
environmental approvals issued on the basis of compre-
hensive environmental impact studies that fully considered
potential impacts on water resources, glaciers and other
sensitive environmental areas around Veladero and Pascua-
Lama. We have a comprehensive range of measures in place
to protect such areas and resources. Further, we believe that
35
Management’s Discussion and Analysis
the new federal law is unconstitutional, as it seeks to legislate
matters that are within the constitutional domain of the
provinces. The Province of San Juan, where our operations
are located, previously enacted glacier protection legislation
with which we comply. We believe we are legally entitled
to continue our current activities on the basis of existing
approvals. In this regard, the Federal Court in San Juan
has granted injunctions, based on the unconstitutionality of
the federal law, suspending its application in the Province
and in particular to Veladero and Pascua-Lama pending
consideration of the constitutionality of the law by the
Supreme Court of Argentina. It is possible that others may
attempt to bring legal challenges seeking to restrict our
activities based on the new federal law. We will vigorously
oppose any such challenges.
Financing Developments
IPO of African Gold Mining Operations
In March 2010, the initial public offering (“IPO”) for African
Barrick Gold plc (“ABG”) closed and its approximately
404 million ordinary shares were admitted to the Official
List of the UK Listing Authority and to trading on the
London Stock Exchange’s main market for listed securities.
ABG sold approximately 101 million ordinary shares in the
offering, or about 25% of its equity and Barrick retained
an interest in approximately 303 million ordinary shares,
or about 75% of the equity of ABG. In April 2010, the over-
allotment option was partially exercised, resulting in a 1.1%
dilution of our interest in ABG to 73.9%.
The net proceeds from the IPO and the exercise of the
over-allotment option were approximately $884 million.
As Barrick retained a controlling financial interest in ABG,
we have consolidated ABG and accounted for the disposition
of ABG shares as an equity transaction. Accordingly, the
difference between the proceeds received and the carrying
value has been recorded as additional paid-in capital
in equity, and we have set up a non-controlling interest to
reflect the change in our ownership interest in ABG.
36
Pueblo Viejo Project Financing Agreement
In April 2010, Barrick and Goldcorp finalized terms for
$1.035 billion (100% basis) in non-recourse project financing
for our Pueblo Viejo project. The lending syndicate is
comprised of international financial institutions, including
two export credit agencies, and a syndicate of commercial
banks. The financing is divided into three tranches of
$400 million, $375 million and $260 million with terms of
15, 15 and 12 years, respectively. Barrick and Goldcorp have
each provided a guarantee for their proportionate share,
which will terminate upon Pueblo Viejo meeting certain
operating completion tests, and which is subject to a carve
out for certain political risk events. In June 2010, we received
$782 million (100% basis) in the first draw on this financing
arrangement and these funds are being used to fund ongoing
construction at the project.
Increased Dividend
As a result of our positive outlook on the gold price, our
strong financial position and robust operating cash flows,
Barrick’s Board of Directors authorized an annual dividend
increase from $0.40 per common share to $0.48 per
common share. The Board also approved moving from a
semi-annual dividend to a quarterly dividend1.
Acquisitions and Divestitures
Acquisition of Additional 25% Interest in Cerro Casale
In March 2010, we completed the acquisition of an additional
25% interest in Cerro Casale from Kinross Gold Corporation
(“Kinross”) for cash consideration of $454 million and the
elimination of a $20 million contingent obligation that was
payable by Kinross to Barrick on a construction decision.
Our interest in the project is now 75% and we have obtained
control over the project. As a result, we began consolidating
100% of the operating results, cash flows and net assets
of Cerro Casale, with an offsetting non-controlling inter-
est of 25%, prospectively as at March 31, 2010. As a result of
becoming the primary beneficiary of the Variable Interest
Entity (“VIE”), we have remeasured our previously held 50%
ownership interest to fair value and recorded a correspond-
ing gain of $29 million.
1. The declaration and payment of dividends remains at the discretion of the Board
of Directors and will depend on our financial results, cash requirements, future
prospects and other factors deemed relevant by the Board.
Barrick Energy Acquisitions
In 2010, Barrick Energy completed three acquisitions.
In May 2010, Barrick Energy acquired all of the outstanding
shares of Bountiful Resources (“Bountiful”), a privately
held corporation, for approximately $109 million. In June
2010, Barrick Energy acquired the Puskwa property
from Galleon Energy Inc. (“Puskwa”) for approximately
$130 million. In September 2010, Barrick Energy acquired
the assets of Dolomite Resources (“Dolomite”) for approxi-
mately $25 million. We have determined that all of these
transactions represent business combinations, with Barrick
Energy identified as the acquirer. Barrick Energy began
consolidating the operating results, cash flows, and net assets
of Bountiful, Puskwa, and Dolomite from their respective
acquisition dates. The properties acquired in these transac-
tions are in close proximity to our existing operations and
we expect to realize operational synergies once they have
been integrated. Barrick Energy provides a natural economic
hedge against our fuel price exposure and with the benefit
of these acquisitions, total production for 2010 increased to
approximately 2.1 million barrels of oil equivalent (“boe”).
Sedibelo
In February 2011, we entered into agreements to dispose of
our 10% interest in the Sedibelo platinum project (“Sedibelo”)
and certain assets to the Bakgatla-Ba-Kgafela Tribe (“BBK”),
owner of the remaining 90% interest in Sedibelo, as well as
the transfer of certain long lead items required for the devel-
opment of Sedibelo to Newshelf 1101 (Proprietary) Limited,
for total consideration of approximately $44 million; and
to settle various outstanding matters between Barrick and
the BBK regarding Sedibelo and their respective interests.
The agreements are subject to certain customary conditions.
We expect to realize a gain of approximately $65 million
upon closing of these transactions, which is expected by the
end of first quarter 2011.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Project Development Progress
Pueblo Viejo Construction
At our Pueblo Viejo project, construction is progressing
with first production expected in first quarter 2012.
Preproduction capital is expected to increase by 10 – 15%
from the previous estimate to $3.3 – $3.5 billion (100%
basis). The increased capital cost estimate is largely due to
higher labor, power supply, freight and steel product related
costs as well as general inflation. Once in production, this
project will begin to contribute to Barrick’s annual gold
production at lower cash costs than the Company average.
The project is a long life asset with an expected mine life
of over 25 years.
Pascua-Lama Construction
In 2009, we began construction of the Pascua-Lama project
on the border between Chile and Argentina, which is
on track to commence production in the first half of 2013.
Pre-production capital is expected to increase by 10 – 20%
to $3.3 – $3.6 billion as a result of a stronger Chilean peso
and labor, commodity and other input cost increases in both
countries and higher inflation, particularly in Argentina.
When complete, it is expected to be one of the lowest operat-
ing cost gold producing mines in the world. The project is a
long life asset with an expected mine life of over 20 years.
Cerro Casale Advancement
At the Cerro Casale project in Chile, the review of additional
permitting requirements before considering a construction
decision is progressing. A review is currently underway to
determine the impact of a stronger Chilean peso and higher
labor costs in Chile on costs. Early indications suggest
that the capital cost may be higher by about 20 – 25% from
the previous estimate of $4.2 billion, which is based on the
feasibility study completed in 2009 and reflects the impact
of a stronger Chilean peso, higher labor, commodity and
other input costs. An update will be provided by the end of
the second quarter. Cerro Casale is one of the world’s largest
undeveloped gold-copper deposits.
37
Management’s Discussion and Analysis
Outlook for 2011
2011 Guidance Summary
Gold production and costs
Production (millions of ounces)2
Cost of sales3
Gold unit production costs
Total cash costs ($ per ounce)4
Net cash costs ($ per ounce)5
Depreciation ($ per ounce)6
Copper production and costs
Production (millions of pounds)
Cost of sales7
Copper unit production costs
Total cash costs ($ per pound)
Depreciation ($ per pound)
Other depreciation8
Exploration and evaluation expense9
Exploration10
Evaluation
Corporate administration
Other expense11
Other income11
Finance income
Finance costs12
Capital expenditures:
Minesite sustaining
Open pit and underground mine development13
Minesite expansion13
Capital projects14
Effective income tax rate15
Actual IFRS basis (unaudited)1
2010
2011
Guidance IFRS basis1
7.8
4,566
7.6 – 8.0
5,100 – 5,300
409
292
136
368
430
1.10
0.23
50
234
152
82
157
473
142
14
158
863
571
251
1,691
TBD
450 – 480
340 – 380
150 – 160
~300
500 – 520
1.35 – 1.45
0.25 – 0.30
35 – 45
330 – 350
210 – 220
120 – 130
160 – 170
325 – 350
25 – 30
20 – 25
60 – 80
900 – 1,000
750 – 850
450 – 500
2,100 – 2,300
33%
1. The preliminary 2010 IFRS results are unaudited. Final 2010 IFRS results are subject to management’s final review as well as audit by the Company’s independent registered
accounting firm and may vary significantly from these preliminary results because of a number of factors, including, without limitation, additional or revised information
and changes in accounting standards or policies or in how these standards are applied.
2. Guidance for gold production reflects Barrick’s equity share of ABG (73.9%) and Highland Gold (20%).
3. Cost of sales applicable to gold includes depreciation expense and cost of sales applicable to the outside equity interests in ABG. Guidance for cost of sales reflects the
full 100% consolidation of ABG gold sales. Under IFRS, the outside equity interest in ABG’s share of cost of sales is reflected as a reduction in income attributable to non-
controlling interests, which we do not provide guidance for. Cost of sales guidance does not include proceeds from by-product metal sales or the net contribution from
Barrick Energy, whereas guidance for gold total cash costs and gold net cash costs do reflect these items. See page 91 of this MD&A for a reconciliation of 2010 cost of
sales reported in accordance with US GAAP to cost of sales reported in accordance with IFRS.
4. Gold total cash costs includes expected proceeds of approximately $150 million (2010: $120 million) from the sale of by-product metals and the net contribution of
approximately $95 million from Barrick Energy (2010: $56 million). See page 92 of this MD&A for a reconciliation of 2010 total cash costs reported in accordance with
US GAAP to total cash costs reported in accordance with IFRS.
5. Assuming a realized copper price of $3.75 per pound.
6. Includes depreciation expense related to Barrick Energy.
7. Cost of sales applicable to copper includes depreciation expense. See page 91 of this MD&A for a reconciliation of cost of sales reported in accordance with US GAAP to
cost of sales reported in accordance with IFRS.
8. Represents depreciation for the Corporate office and Regional Business Unit offices. Excludes accretion expense since it is now classified as part of finance costs under IFRS.
9. Represents Barrick’s share of expenditures for 2011 after deducting $8 million for non-controlling interests (2010: $18 million) and includes expected costs of $13 million
for Reko Diq and Donlin Creek that will be classified under “income (loss) from equity investees” (2010: $23 million).
10. Total exploration expenditures in 2011 are expected to be about $320 – $340 million including $210 – $220 million (2010: $152 million) in exploration expense and
$110 – $120 million (2010: $60 million) in capitalized exploration costs. The capitalized exploration costs are included in the guidance for open pit and underground mine
development and minesite expansion. See page 91 of this MD&A for a reconciliation of 2010 exploration and project development expenses reported in accordance with
US GAAP to exploration and project development expenses reported in accordance with IFRS.
11. Other expense and other income are expected to be lower in 2011 as 2010 costs include special items of approximately $100 million in other expense, primarily due to
severance and restructuring costs, and approximately $120 million in other income, primarily due to the gain recorded on the acquisition of the additional 25% interest in
Cerro Casale. Other income guidance for 2011 excludes gain of $65 million expected from sale of Sedibelo.
12. See page 92 of this MD&A for a reconciliation of 2010 interest expense reported in accordance with US GAAP to finance costs reported in accordance with IFRS.
13. Includes capitalized exploration costs.
14. Represents Barrick’s share of project capital expenditures including capitalized interest of about $350 million in 2011 (2010: $309 million).
15. Effective income tax rate has not been presented since final IFRS assessment has not been completed.
38
Barrick Financial Report 2010 | Management’s Discussion and Analysis
In 2011, Barrick will move to reporting its results on an
International Financial Reporting Standards (“IFRS”) basis
from US GAAP. This change will bring our basis of reporting
in line with the other large international mining companies
that already report their results in accordance with IFRS,
and therefore the conversion to IFRS will improve the
comparability of our financial performance to these com-
panies. There are significant accounting policy differences
between IFRS and US GAAP, particularly the accounting
for production phase waste stripping costs and exploration
and evaluation costs. IFRS allows greater flexibility in deter-
mining whether these costs are eligible for capitalization.
As a result, the conversion to IFRS will result in a decrease
in operating costs, an increase in net assets and an increase in
operating cash flow and capital expenditures compared
to our equivalent results presented in accordance with
US GAAP. Guidance for 2011 has been prepared on an IFRS
basis with comparative information based on our preliminary
calculation of the results under IFRS for 2010. For a
reconciliation of results for 2010 prepared under US GAAP
compared to the preliminary results prepared under IFRS,
please refer to page 87 of this MD&A.
2011 Guidance Analysis
Production
We prepare estimates of future production based on mine
plans that reflect the expected method by which we will
mine reserves at each site. Actual gold and copper production
may vary from these estimates due to a number of opera-
tional factors, including whether the volume and/or grade of
ore mined differs from estimates, which could occur because
of changing mining rates, ore dilution, varying metallurgical
and other ore characteristics, and/or short-term mining
conditions that require different sequential development of
ore bodies or mining in different areas of the mine. Certain
non-operating factors may also cause actual production to
vary from guidance, including litigation risk, the regulatory
environment and the impact of global economic conditions.
Mining rates are also impacted by various risks and hazards
inherent at each operation, including natural phenomena,
such as inclement weather conditions, floods and earth-
quakes, and unexpected civil disturbances, labor shortages
or strikes.
We expect 2011 gold production to be about 7.6 to
8.0 million ounces, which is consistent with the 2010 level
of 7.8 million ounces. Gold production in North America
is expected to increase due to an increase in tons processed
and higher average head grades at Cortez Hills and the
recommencement of production at Golden Sunlight after a
two-year mine development period. The increase in North
America is offset by lower production in South America,
primarily due to lower ore grades at Veladero. Production
in Australia Pacific and our share of ABG production are
expected to be similar to 2010 production levels.
Copper production is expected to decrease from
368 million pounds in 2010 to about 300 million pounds,
largely due to the divestiture of the Osborne mine in third
quarter 2010.
Beyond 2010, we are targeting to increase our gold
production to 9 million ounces within the next five years.
The significant drivers of this production growth include our
Pueblo Viejo and Pascua-Lama projects, as well as various
expansionary opportunities at our existing operating mines.
Revenues
Revenues include consolidated sales of gold, copper, oil
and metal by-products. Revenues from oil and metal by-
products are reflected in our guidance for gold total cash
costs. Revenues from gold and copper reported in 2011 will
reflect the sale of production at market gold and copper
prices and the impact of copper hedge contracts. Barrick
does not provide guidance on 2011 gold and copper prices.
Cost of Sales, Net Cash Costs and Total Cash Costs
We prepare estimates of cost of sales, net cash costs and
total cash costs based on expected costs associated with
mine plans that reflect the expected method by which we
will mine reserves at each site. Cost of sales, net cash costs
and total cash costs per ounce/pound are also affected by
ore metallurgy that impacts gold and copper recovery rates,
labor costs, the cost of mining supplies and services, foreign
currency exchange rates and stripping costs incurred during
the production phase of the mine. In the normal course
of our operations, we attempt to manage each of these
risks to mitigate, where possible, the effect they have on our
operating results.
Cost of sales applicable to gold is expected to be in
the range of $5.1 to $5.3 billion, compared to $4.6 billion
in 2010. The increase is primarily due to an increase in tons
mined and tons processed compared to 2010 levels, and
higher labor costs and inflationary cost pressures, particularly
in South America and Australia Pacific.
39
Management’s Discussion and Analysis
Total cash costs are expected to be in the range of $450
to $480 per ounce compared to $409 per ounce in 2010.
The increase in 2011 principally reflects the impact of lower
ore grades, particularly in South America, which is expected
to be partially offset by an increase in production levels due
to higher tons processed and the impact of higher labor
costs in South America and Australia. These increases are
expected to be partially offset by higher by-product credits
due to expected higher copper and silver prices.
TOTAL CASH COSTS PER OUNCE1
41
21
1
$450–
$480
$409
l
a
u
t
c
A
S
R
F
I
0
1
0
2
d
e
s
s
e
c
o
r
p
s
n
o
t
/
e
d
a
r
G
&
r
u
o
b
a
L
s
r
o
t
c
a
r
t
n
o
c
y
g
r
e
n
e
&
l
e
u
F
4
s
t
c
u
d
o
r
p
-
y
B
1. Chart depicts approximate impacts of each category on total cash costs
per ounce.
Exploration and Evaluation
Exploration and Evaluation (“E&E”) costs will be classified
under both the “exploration and evaluation” line and the
“loss from equity investees” line on our consolidated state-
ments of income. The timing of the funding provided to
equity investees for E&E expenditures and the recognition
of the related income or expense as loss from equity
investees in our consolidated statement of income may
vary. The funding is initially recorded as an increase in the
carrying amount of our investment. Our share of expenses
is recognized when the expenditures are incurred by the
equity investee.
We expect to expense approximately $330 to $350 mil-
lion for our share of E&E expenditures in 2011, up from
$234 million in 2010. Higher costs primarily reflect ongoing
minesite reserve and resource development programs,
principally at Cortez, Porgera, Lagunas Norte, Granny
Smith and Goldstrike. E&E expenses also includes non-
capitalizable project costs at Pueblo Viejo, Pascua-Lama and
Cerro Casale and costs classified under income (loss) from
equity investees.
i
e
c
n
a
d
u
G
1
1
0
2
Finance Costs
Finance costs primarily represent interest expense on
long-term debt. We expect lower finance costs in 2011
primarily due to higher capitalized interest as a result
of the continuation of construction at Pueblo Viejo and
Pascua-Lama.
Cost of sales applicable to copper is expected to be in the
range of $500 to $520 million compared to $430 million
500
in 2010. Total cash costs are expected to be in the range of
$1.35 to $1.45 per pound for copper. The increase in total
400
cash costs of approximately $0.30 per pound is primarily as
a result of the increase in the price of sulfuric acid and the
300
processing of lower ore grades at Zaldívar.
200
Net gold cash costs are expected to be in the range of
$340 to $380 per ounce, assuming an average market copper
100
price of $3.75 for 2011.
Capital Expenditures
Total capital expenditures for 2011 are expected to be in the
range of $4.20 billion to $4.65 billion. The level of spend is
particularly high in 2011 primarily due to the intensity of
construction activity at both our Pueblo Viejo and Pascua-
Lama projects, and significant open pit mine development
activity, particularly at Goldstrike and Cortez. Based on our
current portfolio of development projects, we expect total
capital expenditures to decrease in 2012.
0
3500
2800
2100
1400
40
700
0
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Minesite Sustaining
Sustaining capital expenditures are expected to slightly
increase from 2010 expenditure levels of $863 million to
about $900 to $1,000 million.
Open Pit and Underground Mine Development
Open pit and underground mine development capital
includes capitalized waste stripping, underground mine
development and exploration drilling expenditures that
meet our criteria for capitalization. In 2011, expenditures
primarily relate to mine development activities at Goldstrike,
Cortez, North Mara, Veladero, Porgera and Granny Smith.
Expenditures are expected to increase from 2010 levels
primarily due to North America, where both Goldstrike and
Cortez are scheduled to commence a period of high waste
stripping as anticipated in their life of mine plans. The high
levels of waste stripping activity at both mines are expected
to be substantially complete by the end of 2011.
Minesite Expansion
The expected increase in expansion capital relates to various
projects at Goldstrike, Bald Mountain, Golden Sunlight,
Cortez and Turquoise Ridge in North America, Lagunas
Norte in South America; and ABG’s North Mara mine. The
increase also reflects capitalized exploration costs to advance
the expansion projects at Turquoise Ridge and North Mara;
as well various expansion projects at our Cortez property.
Capital Projects
The expected increase in our share of capital project capital
expenditures from $1,691 million in 2010 to about $2,100
to $2,300 million in 2011 is mainly due to the continuing
construction activity at Pueblo Viejo and increased levels of
construction activity at Pascua-Lama. Guidance for 2011 also
includes early stage capital expenditures at Cerro Casale.
($ millions)
Pueblo Viejo
(60% basis)
Pascua-Lama
Cerro Casale
(75% basis) and other
Capitalized interest
2010
Actual IFRS
basis (unaudited)
2011
Guidance IFRS
basis
$ 592
724
$475 to $525
$1,110 to $1,200
66
309
$175 to $225
~$350
$ 1,691
$2,100 to $2,300
Income Taxes
Our underlying expected effective tax rate excludes the
impact of currency translation gains/losses and changes in
tax valuation allowances.
At the end of 2010, income taxes payable amounted to
$535 million due to the significant increase in income gener-
ated in the year. Operating cash flow in 2011 will be reduced
by the settlement of this liability in the second quarter as
well as higher income tax installments based on the income
levels for 2010.
Outlook Assumptions and Economic Sensitivity Analysis
Gold revenue
Copper revenue
Gold total cash costs
Gold price effect on royalties and production taxes
WTI crude oil price1
Australian dollar exchange rate1
Copper total cash costs
WTI crude oil price1
Chilean peso exchange rate1
1. Due to hedging activities we are largely protected against changes in these factors.
2011 Guidance
Assumption
Hypothetical
Change
Impact on Impact on EBITDA
(millions)
Total Cash Costs
$1,300/oz
$50/oz
n/a
$380 – $400
$3.75/lb
$0.25/lb
n/a
$75
$1,300/oz
$85/bbl
0.95 : 1
$85/bbl
500 : 1
$50/oz
$10/bbl
10%
$10/bbl
10%
$1.25/oz
$0.20/oz
–
$0.01/lb
$0.01/lb
$9
$2
–
$3
$5
41
Management’s Discussion and Analysis
Business Overview
Our Business
Barrick’s vision is to be the world’s best gold mining com-
pany by finding, acquiring, developing and producing gold
in a safe, profitable and socially responsible manner. Guided
by our five core values – behave like an owner, act with a
sense of urgency, be a team player, continually improve, and
deliver results – we have become the world’s preeminent
gold mining company.
Barrick’s market capitalization, annual gold production
and gold reserves are also the largest in the industry. We also
produce significant amounts of copper and have significant
silver reserves contained within our gold reserves at our
Pascua-Lama project. We sell our production in the world
market through the following distribution channels: gold
bullion is sold in the gold spot market; gold and copper
concentrate is sold to independent smelting companies; and
copper cathode is sold to various manufacturers and traders.
MARKET CAPITALIZATION as at December 31, 2010
($USD billions)
PROVEN AND PROBABLE GOLD RESERVES1
(millions of ounces)
150
120
90
60
30
0
Barrick
Dec. 31,
2010
Newmont
Dec. 31,
2009
Gold
Fields
June 30,
2010
AngloGold
Ashanti
Dec. 31,
2009
Kinross
Dec. 31,
2010
Goldcorp
Dec. 31,
2010
1. Based on the most recent public information as at date noted.
150
Our large mineral inventory is well situated primarily in
geopolitically secure countries. Approximately 65% of
our reserves are located in investment grade2 countries,
including the United States, Chile, Australia, Peru and
Canada, which provides a lower overall risk profile.
120
90
60
50
40
30
20
10
0
42
600
500
400
300
200
100
0
GOLD MINERAL RESERVES BY REGION IN 2010
60
North America 41%
Africa 9%
Australia Pacific 12%
South America 38%
30
0
600
500
400
300
200
2. Defined as being rated BBB- or higher by S&P.
Barrick
Goldcorp
Newmont
Kinross
AngloGold
Ashanti
Gold
Fields
60
50
40
30
20
10
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Barrick Financial Report 2010 | Management’s Discussion and Analysis
2010 TOTAL CASH COSTS1
($USD per ounce)
GOLD PRODUCTION BY REGION IN 2010
North America 40%
Africa 7%
Australia Pacific 25%
South America 28%
Our Strategy
Our core objective is to maximize long-term value for our
shareholders by following a strategy that emphasizes return
on capital, as well as earnings and cash flow growth, while
providing full leverage of production and reserves/resources
to market gold prices. To deliver on this objective, we focus
on the following strategic priorities:
Financial Strength
Optimize realized gold and copper prices;
Contain and/or reduce production costs;
Optimize return on capital expenditures;
Maintain a strong financial position and good liquidity;
Gold Leverage
Meet annual production targets;
Grow reserve/resource base;
Unhedged on all future gold production;
Growth
Develop advanced projects on time and on budget;
Identify and develop growth opportunities at
operating mines;
Selectively acquire future accretive growth opportunities;
Responsible Mining
Improve safety and environmental performance; and
Maintain our social license to operate.
Capability to Execute our Strategy
Our capability to execute our strategy comes from the
strength of our experienced management team, skilled
workforce and organizational structure, a strong pipeline of
projects that facilitates the long-term sustainability of our
business, our strong financial position, and our commitment
to corporate social responsibility.
43
700
600
500
400
300
200
100
0
Gold
Fields
AngloGold
Ashanti
Kinross
Newmont
Barrick
Goldcorp
1. Based on actual results for Barrick, Gold Fields and Kinross. All others are
based on the most recent public guidance issued as at February 16, 2011.
2010 GOLD PRODUCTION1
(millions of ounces)
700
600
500
10
400
8
300
200
6
100
4
0
2
0
Barrick
Newmont
AngloGold
Ashanti
Gold
Fields
(F2010)
Goldcorp
Kinross
1. Based on actual results for Barrick, Gold Fields, Goldcorp and Kinross. All others
are based on the most recent public guidance issued as at February 16, 2011.
We, along with our subsidiaries, have operating mines or
projects in Canada, the United States, Dominican Republic,
600
Australia, Papua New Guinea, Peru, Chile, Argentina,
10
500
Pakistan and Tanzania. The geographic split of gold produc-
tion for the year ended December 31, 2010 was as follows:
8
400
6
300
200
4
100
2
0
0
600
500
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Management’s Discussion and Analysis
Experienced Management Team, Skilled Workforce
and Organizational Structure
We have an experienced board of directors and senior
management team with a proven track record at Barrick
and within the mining industry. Strong leadership and
governance are critical to the successful implementation of
our core business strategies.
Our senior management is complemented by a skilled
workforce that enhances the efficiency and effectiveness
of our operations, particularly our ability to meet our annual
production targets and contain costs. The remote nature
of many of our mine sites presents some challenges in main-
taining a well-trained and skilled workforce. We continue
to focus on training and development for key members
of our senior mine management, technical professionals
and frontline workers through our talent management pro-
cesses, enhanced distance learning programs and e-learning
technologies in order to meet this challenge. We have also
expanded our technical training and development programs
beyond our technical mining disciplines (mining, metal-
lurgy, maintenance and geology) to include our critical sup-
port functions. This program is now improving the technical
and leadership skills of over 1,000 professionals. Leadership
development for key leadership positions and high potential
employees will be an area of focus in the coming year in
order to support our continued growth plans by maintaining
a robust leadership pipeline.
We manage our business using a Regional Business
Unit (“RBU”) structure to ensure that each region is able to
customize corporate strategies to meet the unique condi-
tions in which they operate. We have three RBUs, each of
which is led by its own Regional President: North America,
South America and Australia Pacific. We also hold a 73.9%
equity interest in ABG, which is listed on the London Stock
Exchange (“LSE”) and comprises our African gold mining
business. In addition, Barrick Energy manages our oil & gas
business and provides support for energy savings initiatives
undertaken by our RBUs. Since their inception, the RBUs
have added value to our business by realizing operational
efficiencies in the region, allocating resources more effec-
tively and understanding and better managing the local
business environment, including labor, consumable costs
and supply and government and community relations.
44
Exploration and Development of New Mines
Barrick’s exploration strategy is aligned with our business
objectives. It is a three-pronged, balanced approach that
ensures we can meet both our short and long-term growth
needs. The annual exploration program is focused on
replacing and adding reserves and resources at our mines
and projects. Our exploration group works closely with our
corporate development group to identify acquisition oppor-
tunities with exploration upside. Finally, the exploration
group looks for the next flagship deposit that will sustain
Barrick for decades.
The exploration budget supports a strong pipeline of
projects and is weighted towards near-term resource additions
and conversion at our existing mines where we believe there
is excellent potential to make new discoveries and to expand
reserves and resources. The budget also provides support
for earlier stage exploration in our operating districts and
a smaller percentage of the budget is directed at emerging
areas in order to generate quality projects for future years.
Total exploration expenditure in 2011 is budgeted to be
about $320 – $340 million and includes expenditures that
will meet the criteria for capitalization. These expenditures
will support exploration activity across all regions, with the
largest share in North America where 43% of the total budget
is allocated. This split is largely consistent in comparison
to previous years.
BUDGETED EXPLORATION SPENDING BY REGION IN 2011
North America 43%
Africa and Other 18%
South America 15%
Australia Pacific 24%
Barrick has been successful at consistently finding reserves
and resources. We have extensive land positions on many
of the world’s most prospective trends and, due in large
part to our consistent funding and disciplined approach to
exploration, we were successful at replacing reserves in 2010
and growing resources. Since 1990, we have spent approxi-
mately $2.2 billion on exploration, which has resulted in the
discovery of approximately 139 million ounces of reserves,
substantially more than the 109 million ounces that we have
produced in the same time period. The per ounce cost of
reserve additions of approximately $16 has added substantial
value to the Company.
RESERVES AND RESOURCES (millions of ounces)
34.8
65.0
31.6
61.8
37.2
76.3
138.5
139.8
139.8
24.9
35.0
123.1
31.9
50.6
124.6
2006
2007
2008
2009
2010
Inferred Resources
M&I Resources
P&P Reserves
Building new mines is key to our long-term goal of increas-
ing profitability and creating long-term shareholder value.
250
It can take a number of years for a project to move from
the exploration stage through to mine construction and
200
into production and this time frame has increased in recent
years as considerable opposition to new mining projects can
150
develop from influential NGOs or unstable political climates.
The development of a new mine requires successful
100
permitting and government relations, community dialogue
and engagement, and significant financial and human
50
capital. This significant increase in the timeline and cost
of developing projects is reflected in our business strategy
by ensuring that we have an inventory of projects combined
with effective management of current operating mines.
0
The projects in our portfolio are at various stages of
development, ranging from scoping to feasibility to
construction. We have a dedicated Capital Projects group to
focus on managing our large projects through this process,
up to and including the commissioning of new mines, at
600
which point responsibility for mine operations is handed
over to the relevant RBUs. Over the past seven years, we have
500
built seven new projects on time and near budget, namely
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Tulawaka, Lagunas Norte, Veladero, Cowal, Ruby Hill,
Buzwagi and Cortez Hills. We expect that this experience will
allow us to successfully commission the two projects cur-
rently in construction (Pueblo Viejo and Pascua-Lama), over
the next three years. These projects are expected to contrib-
ute substantial low cost production and support a growing
production profile for the Company over the next five years.
Financial Strength
The recent global economic crisis has underlined the impor-
tance of maintaining adequate levels of liquidity and a strong
balance sheet. We actively manage our liquidity by focusing
on maintaining and growing operating cash flows. Our cash
flows are dependent on prices realized from gold and copper
sales, our production levels, production costs, exploration
spend, cash payments for income taxes, interest and other
factors. Although weak global economic conditions have
persisted, our strong operating performance, along with
rising gold and copper prices, has enabled us to enhance our
financial position. In 2010, we reduced net debt and increased
dividends, while funding capital expenditure requirements
for projects in construction and maintaining our financial
flexibility to pursue future growth opportunities.
Corporate Responsibility
Operating in a socially responsible manner is critical in
maintaining a license to operate in our industry. We are
committed to making a positive difference in the communi-
ties in which we live and work. We recognize that responsible
behavior is our calling card, creating opportunities to gener-
ate greater value for our shareholders, while at the same time
fostering sustainable development in the communities and
countries where we operate. In 2010, we were named to the
Dow Jones Sustainability World Index (“DJSI”), ranking the
Company as a top performer in corporate social responsibility
worldwide for the third consecutive year. The renewed listing
on the index reinforces Barrick’s position among the most
sustainability-driven companies in the world.
Responsible environmental management is central to
our success as the gold mining leader. To accomplish this
goal across our 25 mines and four regions (including ABG)
we have implemented an Environmental Management
System which guides all of our sites. We have also developed,
and are continuing to develop, specific performance stan-
dards. Our global Water Conservation Standard, completed
in 2008, has been implemented as a company-wide priority.
45
Management’s Discussion and Analysis
In 2009, we drafted four additional Standards, including a
Biodiversity Standard, a Climate Change Standard, a Mine
Closure Standard and an Incident Reporting Standard,
which were all implemented in 2010. In certain respects,
these Standards exceed regulatory requirements and repre-
sent industry best practices.
Barrick was a leading participant in the development
of the International Cyanide Management Code and, by the
end of 2010, we had achieved Cyanide Code certification at
20 of the 23 operations where cyanide is used. Of the
balance, two are pursuing certification, which they expect to
achieve before 2012, and one will certify once an additional
ore body is developed and processing resumes.
Barrick recognizes the risks that climate change
represents to society and to our long-term success. Our
Climate Change Standard focuses on energy efficiency and
the use of renewable energy to reduce the Company’s
carbon footprint. The program builds on energy efficiency
programs and renewable energy projects already underway
at our operations and embeds climate change considerations
into business management processes and investment
decision-making. All 25 Barrick mines have conducted
energy self-assessments and are working toward greater
energy efficiency and conservation. One such example is a
small hydroelectric project in Chile’s Atacama Desert that
was brought on line in 2009. This end-of-pipe power
generator produces power from water pumped 90 km to the
minesite from the Negrillar aquifer at the base of the Andes.
Also, the underground mines in Nevada have successfully
implemented bio-diesel use, which has the combined benefit
of reducing GHG emissions and diesel particulate matter in
engine exhaust.
We believe that the health and safety of our workers is
fundamental to our business. Our vision is: “Every person
going home safe and healthy every day”. We are committed
to the identification and elimination or control of workplace
hazards for the protection of ourselves and others. Our
long-term goal is to be a zero incident company.
For us to succeed in fulfilling this goal, we:
Provide the expertise and resources needed to maintain
safe and healthy working environments;
Established clearly defined safety and occupational health
programs and measure safety and health performance,
making improvements as warranted;
Operate in accordance with recognized industry standards,
while complying with applicable regulations;
Investigate the causes of accidents and incidents and
develop effective preventative and remedial action;
Train employees to carry out their jobs safely and
productively;
Maintain a high degree of emergency preparedness; and
Require that vendors and contractors comply with our
applicable safety and health standards.
Enterprise Risk Management
As our Board recognizes that creating shareholder value is
the reward for taking and accepting risk, our primary objec-
tive is to maximize long-term value for our shareholders.
Our enterprise risk management vision is to implement a
company-wide culture of risk management where risks
are promptly identified, assessed, reported, and monitored at
all levels of the organization through the use of simple
and effective risk management processes. Actively managing
risks improves our ability to effectively execute on our
business strategy and thereby create shareholder value
by finding, acquiring, developing and producing quality
reserves in a safe, profitable and socially responsible manner.
Consequently, we have established a process for identifying,
evaluating and managing company-wide risks. All risks are
reported through our RBU and corporate leaders. These
risks are ranked and prioritized and effective and efficient
action plans are developed as necessary. Analysis is also
performed to ensure there is proper assessment of risks that
may interfere with achieving the strategic objectives of the
Company as a whole.
The following is a summary of what management has
determined to be the most significant risk factors affecting
Barrick. There may be additional risks, currently believed
to be less significant, that either individually or collectively,
may significantly affect our business and financial results in
the future. For a more detailed description of risks facing
the Company, please refer to the most recently filed Annual
Information Form. A description of some of the risks
currently viewed as significant follows:
Exposure to gold price
Barrick’s revenues are primarily derived from the sale of
gold and the market price of gold can fluctuate widely due
to macroeconomic factors that are beyond our control.
Consequently, the market price of gold is one of the most
significant factors in determining the profitability of our
operations. All of our future gold production is unhedged,
providing full leverage to changes in the market gold price.
46
Barrick Financial Report 2010 | Management’s Discussion and Analysis
To maximize our realized gold price, we have a corporate
treasury function which monitors the gold market and is
responsible for our gold sales.
License to operate
Maintaining our social license to operate is critical for
Barrick to operate our existing mines and develop our
projects around the world. Some of the risks to our social
license include: compliance with environmental laws and
regulations; community relations and human rights issues;
and the health and safety of our employees. To manage these
risks and maintain our social license, we have developed
global environmental standards which, in many cases, exceed
regulatory requirements and represent industry best prac-
tice. We have a globally coordinated community relations
strategy that utilizes our corporate and local expertise to
improve relations in the communities in which we operate.
We have recently joined the Voluntary Principles on Security
and Human Rights and are undertaking two new corporate
social responsibility (“CSR”) initiatives to further strengthen
our CSR performance. We will appoint an independent
Director to its Board of Directors to support its commitment
to CSR. The search is underway to fill this position in 2011.
We will also establish an external CSR Advisory Board that
will provide advice and guidance on challenging social and
environmental issues and encourage further innovation and
leadership in CSR. Additionally, we have an extensive Safety
and Health program, committed to the protection of our
employees and the residents of communities in proximity to
our operations.
Project development
The development of our significant capital projects repre-
sents a key driver to our plans for future growth. The process
to bring these projects into operation may be subject to
unexpected delays that could increase the cost of development
and the ultimate operating cost of the relevant project. Our
Capital Projects group is responsible for completing relevant
studies, obtaining the necessary approvals and managing
construction. We utilize a formal system to govern advance-
ment of projects as they progress from scoping through
the execution and commissioning stages. This disciplined
system of standards and procedures, which includes the
involvement of multiple functional groups, enhances the
study quality and consistency; and enables the development
of mitigation plans where necessary, thereby improving
the overall certainty of project delivery on schedule and
on budget.
Global economic conditions
Barrick’s operating results and financial condition depend
significantly on commodity prices and foreign exchange
rates, which are largely dependent on worldwide economic
conditions. Changes in general economic conditions could
result in: adverse changes in key input commodity prices;
adverse changes in foreign exchange rates, disruption in
financial and credit markets; and negative impacts on our
supply chain. To manage these risks, we actively hedge
foreign exchange economic risks and key input commodities,
including the fuel hedge provided by Barrick Energy.
We continuously monitor the credit markets as part of our
capital allocation function and will seek to minimize disrup-
tion to our liquidity or our supply chain to ensure the
optimal operation of the Company.
Market Review
Gold
The market price of gold is the most significant factor in
determining the earnings and cash flow-generating capacity
of Barrick’s operations. The price of gold is subject to volatile
price movements over short periods of time and is affected
by numerous industry and macroeconomic factors that are
beyond our control. Gold price volatility remained high in
2010, with the price ranging from $1,045 to $1,431 per
ounce during the year. The average market price for the
year of $1,225 per ounce was an all-time high. The financial
crisis of 2008, the subsequent slow pace of the economic
recovery and government stimulus measures adopted in
response by the largest developed economies, including the
United States, the Eurozone and Japan, has resulted in large
fiscal deficits in these jurisdictions. These deficits have
triggered concerns of sovereign debt defaults, particularly
in the Eurozone. Further, the monetary policies put in place
by the world’s most prominent central banks remain
very accommodative in an attempt to increase the rate of
economic growth and reduce unemployment levels, with
short-term US interest rates at historic lows. Gold has
historically played an important role as a constant measure
of value. The continuing uncertain macroeconomic envi-
ronment and loose monetary policies have resulted in gold
performing its traditional role as a store of value and an
alternative to fiat currency. Consequently, gold continues to
be viewed as a safe haven investment, which has resulted in a
strong increase in investment demand. Throughout 2010, we
have continued to see increased interest in holding gold as
an investment. This was evidenced by the increased volumes
47
Management’s Discussion and Analysis
held by Exchange Traded Funds (ETFs) and global exchanges,
as well as the worldwide demand for physical gold in forms
such as bars and coins as investors seek a safe haven against
the uncertain global economic outlook. A continuation
of these trends is supportive of high long-term gold prices.
AVERAGE MONTHLY SPOT GOLD PRICES VS. USD INDEX
$/oz
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
2008
2009
2010
Average Spot Price
USD Index
GOLD ETF HOLDINGS1 as at December 31
(millions of ounces)
1500
1400
1300
80
1200
70
1100
60
1000
50
900
40
800
30
700
20
10
0
57.7
28.0
38.2
800
20.1
11.7
USD
90
85
80
75
70
65
60
55
50
1500
1400
1300
68.7
1200
1100
1000
900
700
90
85
80
75
70
65
60
55
50
2005
2006
2007
2008
2009
2010
90
1. Includes the holdings of GBS (ASX), GBS (LSE), NewGold (JSE), GLD (NYSE),
85
IAU (Amex), ZKB (Swiss), ETFS (London), XETRA (DAX), Julius Baer (SWX),
80
ETFS (NYSE), CS-XMTCH (SIX), UBS-IS (USD).
75
70
65
60
55
50
80
70
60
50
48
40
30
20
10
0
600
500
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
We believe that the outlook for global gold mine production
will be one of declining supply in the years to come. While
modest increases in production have occurred in recent
years primarily as a result of the increase in gold prices, we
continue to expect a decline over the long term. The primary
drivers for the global decline are a trend of lower grade
production by many producers; increasing time require-
ments and impediments in bringing projects – especially
large-scale projects – to the production stage; a lack of global
exploration success in recent years; and a scarcity of new,
promising regions for gold exploration and production.
A decrease in global industry production raises the potential
for a higher sustainable long-term gold price.
INDUSTRY GOLD PRODUCTION
(millions of ounces)
90
85
80
75
70
65
60
55
50
45
40
95 96 97 98 99
00
01
02
03 04
05 06 07 08
09 10E
Source: GFMS
Gold sales from the official sector under the Central Bank
Gold Agreement (CBGA) also have a significant impact on
90
gold prices. Sales for the year ended in September 2010 were
85
less than 2% of the full-year quota of 400 tonnes, excluding
80
sales from the International Monetary Fund (“IMF”).
75
We are now in the second year of the current CBGA which
70
runs to September 2014 and allows for the sale of up to
65
400 tonnes per year. In 2010, the IMF completed its previ-
60
ously announced sale of 403 tonnes of gold, with no future
55
sales anticipated at this time. Net official sector sales have
50
been declining in recent years and, in fact, central banks
45
were net buyers of gold in 2010 for the first time since 1988.
40
600
500
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Copper
Copper prices generally rose throughout 2010, particularly
in the second half, as London Metals Exchange (LME)
copper prices traded in a wide range of $2.74 to $4.42 per
pound, averaging $3.42 per pound, and closing the year at an
all-time high of $4.42 per pound. Copper’s rise to all-time
highs occurred mainly as a result of strong demand from
emerging markets, especially China, decreasing exchange
stockpiles and increasing investor interest in base metals
with strong forward-looking supply/demand fundamentals.
Copper prices should continue to be positively influenced
by demand from Asia, global economic growth, the limited
availability of scrap metal and production levels of mines
and smelters in the future.
Utilizing option collar strategies, we have put in place
floor protection on approximately 60% of our expected
copper production for 2011 at an average floor price of
$3.00 per pound. In addition, we have sold net call options
on approximately 70% of our 2011 production at an average
price of approximately $4.85 per pound. Our realized
price on all 2011 production is expected to be reduced by
approximately $0.12 per pound in 2011 as a result of the net
premium paid on option hedging strategies. Our remaining
copper production is subject to market prices.
AVERAGE MONTHLY SPOT
COPPER PRICES (dollars per pound)
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
2008
2009
2010
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
49
OFFICIAL SECTOR GOLD SALES
(tonnes)
800
600
400
200
0
–200
663
484
365
236
30
2005
2006
2007
2008
2009
–87
2010
Source: World Gold Council and GFMS
The reserve gold holdings of emerging market countries,
800
such as the BRIC countries (Brazil, Russia, India, and China)
are significantly lower than the reserve holdings of more
600
developed countries. The central banks of these developing
economies hold a significant portion of their reserves in
400
US dollars and as they identify a need to diversify their
portfolio and reduce their exposure to the US dollar, we
200
believe that gold will be one of the main beneficiaries. In
conjunction with the below quota selling of gold under the
CBGA, which is expected to continue in the current year of
the agreement, the net purchases of gold by global central
-200
banks provide a strong indication that gold is viewed as a
reserve asset and a de-facto currency.
0
OFFICIAL GOLD HOLDINGS as at December 31, 2010
(% of reserves)
80
73.9
70.3
68.6
67.2
60
600
40
500
400
20
300
0
200
100
16.4
d
n
a
l
r
e
z
t
i
w
S
8.1
6.7
i
a
d
n
I
a
i
s
s
u
R
1.7
i
a
n
h
C
0.5
l
i
z
a
r
B
A
S
U
y
n
a
m
r
e
G
y
l
a
t
I
e
c
n
a
r
F
Source: World Gold Council
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
80
60
40
20
0
600
500
400
300
200
100
0
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Management’s Discussion and Analysis
Silver
Silver traded in a wide range of $14.64 to $30.94 per ounce
in 2010, averaged $20.19 per ounce and closed the year at
$30.63 per ounce. Despite weak industrial demand, silver
managed to rise during the year to a 30-year high due to very
strong investment demand, which is driven by the similar
factors influencing investment demand for gold. The ounces
held by major global silver ETFs increased by 91 million
ounces during the year, with holdings totaling 487 million
ounces at the end of 2010. The physical silver market is
currently in surplus and, while continuing global economic
growth is expected to improve industrial demand, the
primary influence of prices should continue to be invest-
ment demand in the near term.
Silver prices have a significant impact on the overall
economics and expected gold total cash costs for our
Pascua-Lama project, which is currently in the construction
phase. Silver prices do not significantly impact our current
operating earnings, cash flows or gold total cash costs.
In the fourth quarter, utilizing zero-cost option collar
strategies, we took advantage of high spot silver prices and
attractive option pricing by adding hedge protection on
three million ounces per year of expected silver production
from 2013 to 2017, inclusive, with a floor price of $20 per
ounce and an average ceiling price of $55 per ounce.
In 2009, we entered into a transaction with Silver
Wheaton Corp. (“Silver Wheaton”) whereby we sold 25% of
the life-of-mine Pascua-Lama silver production from the later
of January 1, 2014 or completion of project construction, and
100% of silver production from the Lagunas Norte, Pierina
and Veladero mines until that time. Silver Wheaton will
make up front payments totaling $625 million ($350 million
received as at December 31, 2010). Silver Wheaton will also
make ongoing payments of $3.90 per ounce in cash (subject
to a 1% annual inflation adjustment starting three years after
completing construction at Pascua-Lama) for each ounce of
silver delivered under the agreement.
Currency Exchange Rates
The results of our mining operations outside of the United
States are affected by US dollar exchange rates. The largest
single exposure we have is to the Australian dollar/US dollar
exchange rate. We also have exposure to the Canadian dollar
through a combination of Canadian mine operating costs
50
and corporate administration costs and increasing exposure
to the Chilean peso as a result of the construction of our
Pascua-Lama project. In addition, we have exposure to the
Papua New Guinea kina, Peruvian sol, and Argentinean peso
through mine operating and capital costs.
In 2010, the US dollar generally declined against our
currency exposures, primarily as a result of the low interest
rates offered on US dollars, concerns about the level of US
government borrowing and deficits, and increasing investor
appetite for riskier assets.
Fluctuations in the US dollar increase the volatility of
our costs reported in US dollars, subject to protection that
we have put in place through our currency hedging program.
Canada and Australia have emerged from the global eco-
nomic crisis better than most OECD countries. The Bank
of Canada and the Reserve Bank of Australia raised bench-
mark interest rates by 75 basis points and 100 basis points,
respectively, during the year, while the US Federal Reserve
held rates constant. In 2010, the Canadian dollar traded in
a range of $0.92 to $1.01 and closed at $1.00. The Australian
dollar experienced higher volatility, trading in a range
of $0.81 to $1.03 and closed at $1.02, with the strengthening
occurring towards the end of the year due in part to higher
commodity prices and economic growth in Asia-Pacific.
About 60% of our consolidated production costs are
denominated in US dollars and are not exposed to
fluctuations in US dollar exchange rates. For the remaining
portion, our currency hedge position allows for more
accurate forecasting of our anticipated expenditures in
US dollar terms and mitigates our exposure to volatility in
the US dollar. Our currency hedge position has provided
benefits to us in the form of hedge gains recorded within our
operating costs when contract exchange rates are compared
to prevailing market exchange rates as follows: 2010 –
$146 million; 2009 – $27 million; and 2008 – $106 million.
For 2010, we also recorded currency hedge gains in our cor-
porate administration costs of $33 million (2009 – $7 million
loss and 2008 – $11 million gain).
For 2011, our average Australian and Canadian dollar
hedge rates are favorable when compared to the year-end
market rates for these currencies. The average hedge rates
vary depending on when the contracts were put in place.
We have hedged approximately AUD $1,638 million and
CAD $353 million in 2011 for expected Australian and
Canadian operating costs and sustainable and eligible
project capital expenditures at average rates of $0.79 and
$1.02, respectively. Total expected Australian and Canadian
operating and capital expenditures in 2011 are expected to be
AUD $1,776 million and CAD $477 million, and as a result
AVERAGE MONTHLY AUD$ SPOT AND HEDGE RATES
we are approximately 92% and 74% hedged, respectively.
In addition, we have hedged approximately 84%, 72%, and
46% of our total expected 2012, 2013, and 2014 Australian
1.00
dollar expenditures at average rates of $0.75, $0.72, and
0.95
$0.75, respectively. Assuming market exchange rates at the
0.90
December 31, 2010 levels of $1.02 for AUD and $1.00 for
0.85
CAD, we expect to record gains on our operating expendi-
0.80
tures of approximately $360 million in 2011 ($340 million
0.75
for the Australian dollar; $10 million for the Canadian dollar;
0.70
and $10 million for the Chilean peso), or about $45 – $47
0.65
per ounce based on total forecast 2011 production. We also
0.60
expect to record gains on our capital expenditures of approx-
0.55
imately $30 million in 2011. In addition, we have Chilean
0.50
2009
peso contracts in place to hedge a portion of our operating
expenditures, primarily at Zaldívar, and our capital
expenditures, primarily at the Pascua-Lama project. Further
information on our currency hedge positions is included in
note 20 to the consolidated financial statements.
Average Hedge Rate
Spot Rate
2008
2010
2011
2012
2013
2014
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
2011
2012
Barrick Financial Report 2010 | Management’s Discussion and Analysis
AUD Currency Contracts
Effective Average
Contracts
(AUD millions)
Hedge % of Expected
AUD Exposure1
Rate (AUDUSD)
CAD Currency Contracts
Contracts2
(CAD millions)
Average Hedge % of Expected
CAD Exposure1
Rate (USDCAD)
1,638
1,182
882
515
0.79
0.75
0.72
0.75
Effective
353
19
1.02
1.02
Effective
92%
84%
72%
46%
1.00
0.95
0.90
0.85
0.80
0.75
0.70
5%
0.65
0.60
0.55
0.50
74%
CLP Currency Contracts
AVERAGE MONTHLY CAD$ SPOT AND HEDGE RATES
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
2008
2009
2010
Spot Rate
Average Hedge Rate
2011
2012
Contracts
(CLP millions)3
Average Hedge % of Expected
CLP Exposure4
Rate (USDCLP)
172,595
71,800
507
513
57%
27%
1. Includes all forecasted operating, sustainable and eligible project capital
expenditures.
respectively.
expenditures.
capital expenditures, primarily at our Pascua-Lama project with a cap and floor of
509 and 575, respectively.
2. Includes $301 million CAD contracts with a cap and floor of $1.01 and $1.11,
1.10
3. Includes CLP 146,100 million collar contracts that are an economic hedge of
1.05
1.00
4. Includes all forecasted operating, sustainable and forecasted project capital
0.95
0.90
0.85
AVERAGE MONTHLY AUD$ SPOT AND HEDGE RATES
0.80
0.75
1.00
0.70
0.95
0.65
0.90
0.60
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
2008
2009
2010
Spot Rate
Average Hedge Rate
AVERAGE MONTHLY CAD$ SPOT AND HEDGE RATES
51
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
2008
2009
2010
Spot Rate
Average Hedge Rate
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
1.00
0.60
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
Management’s Discussion and Analysis
AVERAGE MONTHLY CLP SPOT
Financial Fuel Hedge Summary
675
625
575
525
475
425
2008
Spot Rate
2009
2010
Fuel
For 2010, oil prices traded between $63 and $92 per barrel,
675
averaged $80 per barrel and closed the year at $91 per barrel
as the global economy returned to growth.
625
On average we consume approximately 3.8 million
barrels of diesel fuel annually across all our mines. Diesel
575
fuel is refined from crude oil and is therefore subject to the
same price volatility affecting crude oil prices. Volatility
525
in crude prices has a significant direct and indirect impact
on our production costs. To mitigate this volatility, we
475
employ a strategy of combining the use of financial contracts
and our production from Barrick Energy to effectively
425
hedge our exposure to high oil prices. We currently have
financial contracts in place totaling 4.7 million barrels,
which represents 56% of our total estimated direct
consumption in 2011 and 34% of our total estimated direct
consumption over the following two years. Those contracts
are primarily designated for our Nevada-based mines, and
have average prices below current forward prices. In 2010,
we recorded hedge losses in earnings of approximately
$28 million on our fuel hedge positions (2009: $97 million
loss; 2008: $33 million gain). Assuming market rates at the
December 31, 2010 level of $91 per barrel, we expect to
realize hedge gains of approximately $20 million in 2011
from our financial fuel contracts.
52
2011
2012
2013
Barrels1
(thousands)
Average Price
% of Expected
Exposure
2,394
1,273
1,068
4,735
$ 94
83
78
$ 88
56%
38%
30%
42%
1. Refers to contracts for a combination of WTI, ULSD, WTB, MOPS and JET. Products
other than WTI have market prices in excess of WTI due to refining and location
premiums. As a result, our average price on hedged barrels for 2011 – 2013 is
$81 per barrel on a WTI-equivalent basis.
In 2011, we expect Barrick Energy to produce about
2.9 million boe. The net contribution from the Barrick
Energy production is expected to provide a natural offset
equivalent to about 1.0 million boe. The Barrick Energy
contribution, along with our financial fuel hedges, provides
hedge protection for approximately 92% of our estimated
fuel consumption for 2011.
CRUDE OIL MARKET PRICE (WTI) (dollars per barrel)
2008
2009
2010
$150
$120
$90
$60
$30
150
120
90
60
30
US Dollar Interest Rates
Beginning in 2008, in response to the contraction of global
credit markets and in an effort to spur economic activity
and avoid potential deflation, the US Federal Reserve
reduced its benchmark rate to between 0% and 0.25%. The
benchmark was kept at this level through 2010. We expect
that short-term rates will remain at low levels through 2011
and into 2012, with the US Federal Reserve continuing to use
monetary policy initiatives in an effort to keep long-term
interest rates low and increase employment. We expect
such initiatives to be followed by incremental increases
to short-term rates once economic conditions and credit
markets normalize.
At present, our interest rate exposure mainly relates to
interest receipts on our cash balances ($4.0 billion at the
end of the year); the mark-to-market value of derivative
instruments; the fair value and ongoing payments under
US dollar interest-rate swaps; and to the interest payments
on our variable-rate debt ($1.0 billion at December 31, 2010).
Currently, the amount of interest expense recorded in our
consolidated statement of income is not materially impacted
by changes in interest rates, because the majority of debt
was issued at fixed interest rates. The relative amounts
of variable-rate financial assets and liabilities may change in
the future, depending on the amount of operating cash
flow we generate, as well as the level of capital expenditures
and our ability to borrow on favorable terms using fixed
rate debt instruments.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
US DOLLAR INTEREST RATES (%)
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2008
2009
2010
5 Year Interest Rates
10 Year Interest Rates
30 Year Interest Rates
3 Month LIBOR
6
The steep US yield curve has a significant impact on the net
amount of interest expense since our debt issuances were
5
set at predominantly 10-year and 30-year interest rates, while
our cash and equivalents balances are generating interest
4
income at much lower rates in the 1 to 90 day range.
3
If shorter term interest rates rise, this should result in us
generating higher amounts of interest income on our cash
2
balances, while our interest expense is largely at fixed rates
and is therefore insensitive to increasing interest rates.
1
0
53
Management’s Discussion and Analysis
Financial and Operational Results
Summary of Financial Performance1
($ millions, except per share data in dollars)
For the years ended December 31
Sales
Net income/(loss)
Per share2
Adjusted net income3
Per share2
EBITDA3
Adjusted EBITDA3
Operating cash flow
Adjusted operating cash flow3
Free cash flow3
2010
2009
$ Change
% Change
2008
$ 11,211
3,274
3.32
3,279
3.32
5,900
5,900
4,127
4,783
$ 1,460
$ 8,404
(4,274)
(4.73)
1,810
2.00
(2,563)
3,370
(2,322)
2,899
$ 541
$ 2,807
7,548
8.05
1,469
1.32
8,463
2,530
6,449
1,884
$ 919
33%
–
–
81%
66%
–
75%
–
65%
170%
$ 7,913
785
0.90
1,661
1.90
2,273
2,273
2,254
2,254
$ 478
1. The amounts presented in this table include the results of discontinued operations.
2. Calculated using weighted average number of shares outstanding under the basic method.
3. Adjusted net income, EBITDA, adjusted EBITDA, adjusted operating cash flow and free cash flow are non-GAAP financial performance measure with no standardized
meaning under US GAAP. For further information and a detailed reconciliation, please see pages 78 – 85 of this MD&A.
FACTORS AFFECTING ADJUSTED NET INCOME
144
237
54
12
1,879
627
123
107
3,279
1,810
t
e
N
d
e
t
s
u
d
A
j
9
0
0
2
e
m
o
c
n
I
e
c
i
r
P
d
e
z
i
l
a
e
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l
d
o
G
l
d
o
G
–
l
s
e
m
u
o
V
s
e
a
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l
r
e
h
t
O
i
n
g
r
a
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r
e
p
p
o
C
l
d
o
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–
s
t
s
o
C
h
s
a
C
e
s
n
e
p
x
E
x
a
T
e
m
o
c
n
I
n
o
i
t
a
z
i
t
r
o
m
A
n
o
i
t
e
r
c
c
A
d
n
a
n
o
i
t
a
r
o
p
x
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l
d
n
a
t
n
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m
p
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v
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l
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t
c
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1
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I
EBITDA was $5,900 million in 2010, compared to a loss of
3500
$2,563 million in 2009. The significant increase is primarily
attributable to the $5,933 million pre-tax charge relating to
2800
the gold sales contracts recorded in 2009. Adjusted EBITDA
was impacted by the same factors affecting net income
2100
and adjusted net income with the exception of income tax
expense. Adjusted EBITDA, which excludes the impact
1400
of the gold sales contracts, was $5,900 million in 2010, a 75%
increase compared to the total of $3,370 million in 2009.
700
0
In 2010, we recorded net income of $3,274 million compared
to a net loss of $4,274 million in 2009, which included a
$5,901 million charge related to the elimination of the gold
sales contracts.
Adjusted net income was $3,279 million in 2010, com-
pared to $1,810 million in 2009. The increases in net income
and adjusted net income compared to 2009 were primarily
driven by higher gold sales volumes and higher realized gold
and copper prices. The increase in net income also reflects
the $5,901 million charge related to the gold sales contracts
recorded in 2009. The significant adjusting items in 2010
include: a $29 million gain related to the re-measurement of
our 50% interest in Cerro Casale on closing the acquisition
of an additional 25% interest in 2010; $32 million of
unrealized non-hedge gains primarily relating to Chilean
peso contracts; partially offset by $43 million in restructuring
charges relating to costs for a long-term tire supply contract
and severance arrangements and $34 million in unrealized
foreign currency translation losses related to deferred
income tax and working capital balances in our regional
business units.
54
3500
2800
2100
1400
700
0
Operating cash flow was an inflow of $4,127 million in 2010
compared to a cash outflow of $2,322 million in 2009.
Operating cash flow reflects payments related to the settle-
ment of gold sales contracts of $5,221 million in 2009 and
$656 million in 2010. Adjusted operating cash flow, which
excludes the impact of these payments, totaled $4,783 million
in 2010 compared to $2,899 million in 2009. Adjusted
operating cash flow in 2010 was positively affected by higher
realized gold and copper prices and higher gold sales,
partially offset by lower copper sales volumes.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
FACTORS AFFECTING ADJUSTED OPERATING CASH FLOW
291
144
1,879
271
159
4,783
2,899
9
0
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j
Summary of Operating Performance1
($ millions, except per ounce/pound data in dollars)
For the years ended December 31
Production (000s oz/millions of lbs)2
Sales
000s oz/millions lbs
$ millions3
Market price4
Realized price4,5
Cost of sales ($ millions)
Total cash costs2,4,5
Net cash costs2,4,5
5000
2010
4000
7,765
3000
7,734
$ 9,742
1,225
2000
1,228
3,799
1000
457
0
$ 341
Gold
2009
Copper
2008
2010
2009
2008
7,397
7,657
368
393
370
7,279
$ 7,191
972
985
3,431
7,595
$ 6,656
872
872
3,426
391
$ 1,346
3.42
3.41
433
380
$ 1,155
2.34
3.16
444
367
$ 1,228
3.15
3.39
436
464
443
$ 1.11
$ 1.17
$ 1.19
$ 360
$ 337
1. The amounts presented in this table include the results of discontinued operations.
2. Reflects our equity share of production.
3. Represents sales on a 100% consolidated basis.
4. Per ounce/pound weighted average.
5. Realized price, total cash costs and net cash costs are non-GAAP financial performance measures with no standard meaning under US GAAP. For further information and a
detailed reconciliation, please see pages 78 – 85 of this MD&A.
Sales
In 2010, sales totaled $11.2 billion, up 33% compared to the
2009 total of $8.4 billion, primarily due to higher realized
gold and copper prices and higher gold and copper sales
volumes. Realized gold prices of $1,228 per ounce in 2010
were up $243 per ounce compared to 2009, reflecting an
increase in market gold prices, which averaged $1,225 per
ounce in 2010, compared to $972 per ounce in 2009. Realized
copper prices in 2010 were 8% higher than in 2009 as copper
traded at record levels in 2010.
Cost of sales
Cost of sales applicable to gold was $3.8 billion in 2010, up
11%, compared to $3.4 billion in 2009. The increase reflects
the impact of higher production and sales, partly offset by
lower total cash costs. In 2010, cost of sales applicable to gold
was outside our most recent guidance range of $3.5 billion
to $3.6 billion due to higher gold sales volumes at our
North American region in the fourth quarter.
55
Management’s Discussion and Analysis
Cost of sales applicable to copper was $433 million in 2010,
down 2% compared to $444 million in 2009. The decrease
reflects lower costs at Osborne in 2010, due to the divestiture
at the end of third quarter 2010.
Total cash costs and net cash costs3
Gold total cash costs were $457 per ounce in 2010, down 2%
compared to $464 per ounce in 2009. Higher royalties and
production taxes, energy, consumables and maintenance
costs were more than offset by higher mill grades, gold
production and sales volumes which resulted in lower unit
production costs. For the year, total cash costs per ounce
were in line with the 2010 guidance range of $425 to $455
per ounce, and also in line with the most recent guidance of
about $455 per ounce.
Copper total cash costs were $1.11 per pound in 2010,
down 5% compared to $1.17 per pound in 2009. The decrease
principally reflects lower direct operating costs at Zaldívar
primarily due to lower sulfuric acid prices. In 2010, total cash
costs per pound were within our most recent 2010 guidance
range of $1.10 to $1.15 per pound.
Gold net cash costs were $341 per ounce in 2010, down
5% compared to $360 per ounce in 2009. The decrease
reflects lower gold total cash costs per ounce and higher
copper credits from Zaldívar and Osborne, mainly due to
higher realized copper prices. In 2010, net cash costs per
ounce were lower than our most recent guidance range of
$350 to $360 per ounce, primarily due to higher realized
copper prices.
Net cash margins
Net cash margins per ounce illustrate the trends in
profitability and the impact of fluctuations in realized
prices and net cash costs on our ability to generate earnings
and operating cash flow.
Net cash margins per ounce increased 42% in 2010,
largely due to the rise in gold prices in conjunction with the
decrease in net cash costs.
TOTAL AND NET CASH MARGINS PER OUNCE
$1,400
$1,200
$1,000
$985
$872
$521
$625
$800
$429
$535
$600
$1,228
$771
$887
$1,300
$820
to
$850
$920
to
$960
$400
$443
$464
$457
$337
$360
$341
$450
to
$480
$340
to
$380
$200
$0
2008
2009
2010
2011E
Total Cash Costs
Net Cash Costs
Total Cash Margin
Net Cash Margin
1200
1400
1400
1200
Other operating expenses
Amortization expense was $1,149 million in 2010, up 13%
compared to $1,016 million in 2009. The increase is primarily
due to increased amortization charges in North America
as Cortez Hills entered production in 2010 and in South
America, where production and sales almost doubled at
Veladero. Amortization expense per ounce was $127, up 4%
compared to $122 in 2009.
1000
1000
800
600
800
600
400
0
0
200
200
Exploration expense was $180 million in 2010, up 28%
400
compared to $141 million in 2009. The increase is primarily
due to increased minesite and projects exploration. Project
development expense was $153 million in 2010, up 80%
compared to $85 million in 2009. The increase is primarily
due to $63 million spent to update the feasibility study for
Cerro Casale.
Other expense was $463 million in 2010, up 35%
compared to $343 million in 2009. The increase is primarily
due to $46 million in charges related to restructuring a long-
term tire supply contract, $22 million in finance charges
related to the remaining floating gold sales contracts, and
$21 million in incremental community relations costs,
partially offset by $25 million in reduced severance costs.
600
500
400
300
200
100
0
3. Total cash costs and net cash costs are non-GAAP financial performance measures
with no standardized meaning under US GAAP. For further information and a
detailed reconciliation, please see page 81 of this MD&A.
56
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
2008E
Interest expense
(in $ millions)
For the years ended December 31
Interest costs
Incurred
Capitalized
Interest expensed
2010
2009
410
(289)
326
(269)
121
57
Interest expense was $121 million in 2010, up 112% compared
to $57 million in 2009. The increase is primarily due to
additional debt issued in Q4 2009 and imputed interest
on deposits received for the silver sale agreement with
Silver Wheaton.
Impairment Charges
Impairment charges were $7 million, compared to $277 mil-
lion in 2009. The amount for 2009 included write-downs
for Plutonic ($106 million) and Sedibelo ($158 million).
Income Tax
(Percentages)
For the years ended December 31
2010
2009
2008
Effective tax rate on ordinary income
Elimination of gold sales contracts
Non-taxable goodwill impairment charges
Net currency translation (gains)/losses
on deferred tax balances
Canadian functional currency election
Impact of legislative amendment in Australia
Dividend withholding tax
Canadian tax rate changes
Release of deferred tax valuation allowances
30%
–
–
29%
(48%)
2%
30%
–
10%
–
–
(2%)
2%
–
–
(1%)
(2%)
–
–
2%
–
5%
–
–
–
–
(7%)
Actual effective tax rate
30%
(18%)
38%
Our effective tax rate on ordinary income increased from
29% to 30% in 2010 primarily due to the impact of changes
in the mix of production and on the mix of taxable income
in the various tax jurisdictions where we operate. The more
significant items impacting income tax expense in 2010 and
2009 include the following:
Currency Translation
Deferred tax balances are subject to remeasurement for
changes in currency exchange rates each period. The most
significant balances are Canadian deferred tax liabilities
with a carrying amount of approximately $25 million,
Argentinean deferred tax liabilities with a carrying amount
of approximately $106 million, and Australian and Papua
New Guinea deferred tax liabilities with a carrying amount
Barrick Financial Report 2010 | Management’s Discussion and Analysis
of approximately $144 million. In 2010 and 2009, the
appreciation of the Canadian and Australian dollar against
the US dollar, and the weakening of the Argentine peso
against the US dollar resulted in net translation gains
totaling $2 million and $40 million, respectively. These gains
are included within deferred tax expense/recovery.
Impact of Legislative Amendments in Australia
In Australia, we elected to enter into the consolidated tax
regime in 2004 (in 2002 for the former Placer Dome Inc.
subsidiaries). At the time the elections were made, there
were certain accrued gains that were required to be included
in taxable income upon subsequent realization. In second
quarter 2010, clarifying legislative amendments to the
Australian consolidation tax rules were enacted. These
amendments enabled us to reduce the inclusion of certain
of these accrued gains, resulting in a permanent decrease in
taxable income. The impact of the amendment is a current
tax recovery of $78 million recorded in second quarter 2010.
Dividend Withholding Tax
In fourth quarter 2010, we recorded a $74 million dollar
dividend withholding current tax expense in respect of
funds available to be repatriated from a foreign subsidiary.
Canadian Functional Currency Election
In fourth quarter 2008, we filed an election under Canadian
draft legislation to prepare some of our Canadian tax returns
using US dollar functional currency effective January 1,
2008. The legislation was enacted in first quarter 2009 which
resulted in a one-time benefit of $70 million.
Canadian Tax Rate Changes
In fourth quarter 2009, a provincial rate change was enacted
in Canada that lowered the applicable tax rate. The impact of
this tax rate change was to reduce net deferred tax assets in
Canada by $59 million, recorded as a component of deferred
tax expense.
Chilean Income Tax
Following the earthquake in Chile in first quarter 2010, the
government presented a package of certain tax increases to
Congress for approval. With respect to corporate income
taxes, a temporary first tier income tax increase from 17%
to 20% in 2011, and 18.5% in 2012 was presented to and
approved by Congress. The income tax changes were enacted
in third quarter 2010, but do not result in any changes to
income tax expense for the current year. We anticipate that
the corporate income tax changes will result in an increase
to income tax expense in 2011 of about $20 million.
57
Management’s Discussion and Analysis
Chilean Royalty
In October 2010, the Chilean government enacted legislation
for a specific mining tax (“royalty”). Under this royalty, for
new projects, the royalty rates would change from 5% of
operating margin after depreciation to a range of 5% – 14%
based on the level of operating margin. For those companies
currently operating under a stabilized regime (at 4%
until 2017), the law contemplates an option to voluntarily,
(i) apply a rate of 4% – 9% for 2010–2012, then (ii) return
the current stabilized rate of 0% or 4% until the current
stability period ends, and (iii) obtain an extension of the
stability period at rates in the range of 5% – 14% for an
additional 6 years. In January 2011, Barrick adopted the new
royalty. The impact of adoption was a $26 million increase in
2010 income tax expense and an expected increase of about
$15 million in 2011 income tax expense.
Mining Overview1
Tons Mined and Tons Processed – Gold
Total tons mined decreased in 2010 by 5% and tons
processed decreased by 15% when compared to 2009.
The decreases were primarily due to decreased mining
activity at Goldstrike, Ruby Hill, Veladero, Kalgoorlie and
Buzwagi, partially offset by increased mining activity
at Bald Mountain and Pierina. The decrease in ore tons
processed was primarily due to fewer ore tons processed at
Cortez and Bald Mountain. At Cortez, higher grade ore
from both the underground and the open pit was processed
in 2010, whereas in 2009, the ore was of lower grade and
contained significant amounts of heap leach material.
At Bald Mountain, mine sequencing resulted in less leach
material being mined and more mine development waste
stripping activities being undertaken. The decreased tons
processed did not have any impact on overall production
due to the increase in average head grades.
For the years ended December 31
2010
2009 % Change
2008
TONS MINED AND TONS PROCESSED1
Gold
Ore tons mined (millions)
Waste tons mined (millions)
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Recovery rate
Gold produced (000s/oz)
Copper
155
539
694
145
0.063
85.0%
7,765
174
555
729
171
0.052
83.2%
7,397
(11%)
(3%)
(5%)
(15%)
23%
2%
5%
182
498
680
191
0.047
84.4%
7,657
Ore tons mined (millions)
Waste tons mined (millions)
Total tons mined (millions)
Ore tons processed (millions)
Average grade (percent)
Copper produced (millions of lbs)
48
24
72
46
0.6
368
50
30
80
49
0.6
393
(4%)
(20%)
(10%)
(6%)
–
(6%)
45
38
83
44
0.6
370
1. The amounts presented in this table include the results of discontinued operations.
Production
Gold production in 2010 was 0.4 million ounces or 5%
higher than in 2009, reflecting higher production in South
America and North America, partially offset by lower
production in Africa. Production of 7.8 million ounces was
within our most recent guidance range of 7.6 to 7.8 million
ounces. Copper production in 2010 was 6% lower than in
2009 due to lower production from Osborne as mining
ceased in the third quarter, partially offset by higher
production at Zaldívar. Production of 368 million pounds
was slightly higher than our most recent guidance of approx-
imately 360 million pounds.
58
Tons Mined
800,000
600,000
400,000
200,000
0
2008
2009
2010
Tons Mined
Tons Processed
1. All amounts presented are based on equity production.
Tons Processed
250,000
200,000
150,000
100,000
50,000
0
800000
700000
600000
700000
500000
800000
Average Mill Head Grades – Gold
Average mill head grades increased by approximately 23% in
2010 compared to 2009, primarily due to mine sequencing
that resulted in higher ore grades from Cortez, Cowal and
Veladero, partially offset by lower grades processed at
Tulawaka and at Buzwagi, where suspension of a number
400000
of employees led to a period of processing lower grade
300000
stockpiles while replacement personnel were being hired.
In general, reserve grades have been trending downwards
in recent years, partly as a result of rising gold prices which
0
make it economic to process lower grade material.
200000
300000
100000
400000
500000
600000
200000
100000
0
250000
200000
150000
100000
50000
0
250000
200000
150000
100000
50000
0
AVERAGE MILL HEAD GRADES1 (ounces/ton)
0.08
0.06
0.04
0.02
0
2008
2009
2010
Average Head Grade
Reserve Grade
1. All amounts presented based on equity production. Average mill head grades are
expressed as the number of ounces of gold contained in a ton of ore processed.
Reserve grade represents expected grade over the life of the mine and is calculated
based on reserves reported at the end of the immediately preceding year.
0.08
0.06
0.04
Mineral Reserves and Mineral Resources Update4
At year-end 2010, we added 9 million ounces of proven
and probable reserves. After depletion of 9 million ounces,
proven and probable gold reserves remained unchanged at
139.8 million ounces, still the largest in the industry, based
on an assumed $1,0005 per ounce gold price. The increase
primarily reflects incremental reserves due to the acquisition
of an additional 25% interest in Cerro Casale and reserve
additions at Goldstrike, Cortez, Veladero and Ruby Hill,
partially offset by a decrease as a result of disposition of our
26.1% interest in ABG.
Measured and indicated gold mineral resources
increased by 24% to 76.3 million ounces and inferred gold
mineral resources increased 18% to 37.2 million ounces
0.08
based on a $1,200 per ounce gold price.
0.00
0.02
Copper reserves increased 7% to 6.5 billion pounds and
measured and indicated resources increased 1% to 13.0 bil-
0.06
lion pounds, based on an assumed $2.00 per pound copper
price. Contained silver within reported gold reserves is over
0.04
one billion ounces.
Replacing gold and copper reserves depleted by pro-
duction year over year is necessary in order to maintain
0.02
production levels over the long term. If depletion of reserves
0.00
Barrick Financial Report 2010 | Management’s Discussion and Analysis
exceeds discoveries over the long term, then we may not be
able to sustain gold and copper production levels. Reserves
can be replaced by expanding known ore bodies, acquiring
mines or properties or discovering new deposits. Once a site
with gold or copper mineralization is discovered, it takes
many 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 proven and probable reserves and to
permit and construct mining and processing facilities.
Review of Operating Segments Performance
We report our results of operations using a geographical
business unit approach, with producing mines concentrated
in three regional business units: North America, South
America and Australia Pacific. We also hold a 73.9% equity
interest in ABG, which includes our previously held African
gold mines and exploration properties. In addition, we have a
Capital Projects segment, distinct from our regional business
units, to focus on managing projects. This structure reflects
how we manage our business and how we classify our
operations for business planning and measuring performance.
In 2010, we revised the format of information provided
to the Chief Operating Decision Maker to better reflect
management’s view of the operations. The primary change
involves the presentation of minesite exploration and project
development, RBU costs and other expenses (income) as
a component of Segment Income. Previously, these expen-
ditures were monitored separately. Accordingly, we have
revised our operating segment review to be consistent with
those reporting changes, with restatement of comparative
information to conform to the current period presentation.
North America
Summary of Financial and Operating Data
For the years ended December 31
2010
2009 % Change
2008
397
396
Total tons mined (millions)
64
44
Ore tons processed (millions)
0.084 0.053
Average grade (ozs/ton)
3,110 2,810
Gold produced (000s/oz)
$ 1,511 $ 1,421
Cost of sales ($ millions)
$ 489 $ 504
Total cash costs (per oz)
Segment income ($ millions)1
$ 1,670 $ 897
$ 444 $ 362
Amortization ($ millions)
Segment EBITDA ($ millions)2
$ 2,114 $ 1,259
Capital expenditures ($ millions) $ 489 $ 207
–
(31%)
58%
11%
360
92
0.041
3,028
6% $ 1,517
(3%) $ 493
86% $ 618
23% $ 354
68% $ 972
136% $ 161
4. For a breakdown of reserves and resources by category and additional information
relating to reserves and resources, see pages 163 – 170 of this Financial Report.
1. Segment income excludes income taxes.
2. EBITDA is a non-GAAP financial performance measure with no standardized
5. Reserves at Round Mountain have been calculated using an assumed price of
$900 per ounce.
meaning under US GAAP. For further information and a detailed reconciliation,
please see page 82 of this MD&A.
59
Management’s Discussion and Analysis
Segment EBITDA and segment income for 2010 were
$2,114 million and $1,670 million, an increase of 68% and
86%, respectively, over 2009. The increases were primarily
the result of higher realized gold prices and higher sales
volume at lower total cash costs. Segment income was also
impacted by higher amortization expense as a result of
the Cortez Hills open pit entering production in early 2010.
Gold production for 2010 was 11% higher than 2009,
and in line with the top end of our original regional guidance
range of 2.95 to 3.10 million ounces. Higher production at
Cortez was partially offset by lower production at Goldstrike,
Hemlo, Ruby Hill and Golden Sunlight.
Production at Cortez increased by 120% over 2009,
mainly as a result of the commencement of production at
the Cortez Hills open pit operations in the first quarter of
2010. At Goldstrike, production for the year was down by
13% compared to 2009, primarily as a result of the planned
partial shutdown of the autoclave facility which occurred
during the second half of 2009 due to a decrease in ore suit-
able for acidic autoclaving, as well as mine sequencing that
resulted in lower grade areas being mined in the first half of
2010. Hemlo’s production for the year decreased by 12% over
the prior year due to the processing of lower grade ore. Ruby
Hill’s production for the year decreased by 21% over the
prior year due to increased waste stripping, which resulted in
a decrease in ore tons available to process. Golden Sunlight
was not in production in 2010 as it entered an extended
redevelopment phase during 2009, but is expected to start
production of gold again during the first quarter of 2011.
Cost of sales for 2010 increased by 6% over 2009,
primarily as a result of higher royalties and production taxes,
labor, consumables and energy costs. Over the same period,
total cash costs per ounce were down 3% to $489, and were
within our most recent regional guidance range of $480 to
$500 per ounce. The increase in cost of sales was more than
offset by higher production and sales volumes, particularly
from the lower cost Cortez Hills operations, resulting in
decreased total cash costs per ounce.
In 2011, we expect gold production to be in the range
of 3.30 to 3.46 million ounces. Production is expected to be
higher than 2010 primarily due to an increase in tons pro-
cessed and higher average head grades from the Cortez Hills
open pit mine and the recommencement of production at
Golden Sunlight after a two-year period of mine development.
This is expected to be partly offset by lower production at
Goldstrike due to a significant waste stripping campaign and
the processing of lower grade stockpile ore. Total gold cash
60
costs are expected to be $425 to $450 per ounce and similar
to the 2010 level of $429 per ounce on an IFRS basis.
Beyond 2010, we have identified various opportunities
to add production within North America, including
the potential of expanding our current Turquoise Ridge
underground operation into a large scale open pit to
mine low-grade mineralization; the Bald Mountain North
Area expansion; and the use of thiosulphate technology at
Goldstrike to extend the life of the autoclaves. We continue
to progress evaluation of these opportunities to create value
at our existing operations.
South America
Summary of Financial and Operating Data
For the years ended December 31
2010
2009 % Change
2008
Gold
145
67
158
Total tons mined (millions)
70
Ore tons processed (millions)
0.039 0.036
Average grade (ozs/ton)
2,120 1,889
Gold produced (000s/oz)
$ 515 $ 499
Cost of sales ($ millions)
$ 243 $
265
Total cash costs (per oz)
Segment income ($ millions)1
$ 1,749 $ 1,111
$ 165 $ 134
Amortization ($ millions)
Segment EBITDA ($ millions)2
$ 1,914 $ 1,245
Capital expenditures ($ millions) $ 199 $ 171
(8%)
(4%)
8%
12%
151
65
0.037
2,111
3% $ 531
(8%) $ 251
57% $ 1,031
23% $ 163
54% $ 1,194
92
16% $
Copper
Copper produced
318
(millions of lbs)
Cost of sales ($ millions)
Total cash costs (per lb)
Segment income ($ millions)1
Amortization ($ millions)
Segment EBITDA ($ millions)2
Capital expenditures ($ millions) $
302
$ 345 $ 361
$ 1.09 $ 1.17
$ 648 $ 488
76
84 $
$
$ 732 $ 564
33
55 $
5%
295
(4%) $ 315
(7%) $ 1.08
33% $ 607
11% $
66
30% $ 673
62
67% $
1. Segment income excludes income taxes.
2. EBITDA is a non-GAAP financial performance measure with no standardized
meaning under US GAAP. For further information and a detailed reconciliation,
please see page 82 of this MD&A.
Segment EBITDA and segment income for the gold segment
for 2010 were $1,914 million and $1,749 million, an increase
of 54% and 57%, respectively, over 2009. These increases
were primarily as a result of higher realized gold prices and
sales volumes at lower total cash costs.
Gold production for 2010 was 12% higher than 2009,
and was within our regional guidance range of 2.11 to
2.25 million ounces. Production increased at Veladero, due
to higher grade ore mined at both the Amable and Federico
pits, as well as an increase in tons processed as a result of the
start-up of the crusher circuit expansion in the second half
of 2009 and the overland conveyor in the first half of 2010.
The increase at Veladero was partly offset by lower produc-
tion at Pierina and Lagunas Norte. Production at Lagunas
Norte decreased in the second half of 2010, as expected, due
to a change in the mine plan, which resulted in the mining of
lower grade ore in the second half of 2010.
As a result of rising gold prices, Pierina’s mine life has
been extended to the end of 2014. Previously, Pierina was
expected to stop producing in mid-2013.
In 2010, cost of sales attributable to the gold segment
increased by 3% over 2009, primarily due to higher produc-
tion and sales taxes and higher energy and maintenance
costs. Total cash costs of $243 per ounce were within our
most recent regional guidance range of $240 to $260
per ounce. The increase in cost of sales was more than off-
set by significantly higher production and sales volumes
at Veladero due to the increase in average head grade and
in tons processed and resulted in an 8% decrease from the
prior year cash cost per ounce.
In 2011, we expect gold production to be in the range
of 1.8 to 1.935 million ounces. Production is expected to be
lower than 2010 primarily due to Veladero and, to a lesser
extent, Lagunas Norte and Pierina. Mining activity at
Veladero is expected to shift away from the higher grade areas
of the Filo Federico pit to lower grade areas as anticipated
in the life-of-mine plan. At Lagunas Norte, higher ore grades
are expected to be more than offset by lower recoveries due
to leaching of more carbonaceous materials as well as
longer leach cycles compared to 2010. Total gold cash costs
are expected to be $350 to $380 per ounce compared to
$208 per ounce in 2010 on an IFRS basis. Total cash costs per
ounce are expected to be higher in 2011 due to lower grades
and inflation in Argentina.
Segment EBITDA and segment income for the copper
segment for 2010 were $732 million and $648 million,
an increase of 30% and 33%, respectively, over 2009. The
increases were primarily as a result of higher realized copper
prices, and sales volumes at lower total cash costs.
Copper production in 2010 was 5% higher than 2009,
and was within our original guidance range of 305 to
325 million pounds, mainly due to increased tons processed
and higher grades as a result of mining higher grade areas of
the open pit and improved recoveries from the leach pad.
Total cash costs per pound decreased by 7%, compared
to 2009 due to lower cost of sales and higher production
and sales volumes. Total cash costs were within our original
guidance range of $1.05 to $1.20 per pound.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
We expect 2011 copper production to be around
300 million pounds and cash costs per pound to be in the
range of $1.35 to $1.45 per pound. We expect cash costs
to increase in 2011 due to the increase in the price of sulfuric
acid and lower grades at Zaldívar.
Beyond 2010, we have identified various opportunities
to add production within South America, including
extending mining at Lagunas Norte as a result of incremental
mineralization, which would improve output in future
years and also extend the mine life by approximately 6 years.
We have also identified the potential of mining primary
sulfide mineralization at Zaldívar, which is situated below
the current reserves and could extend the mine life by as
much as 16 years. We continue to progress our evaluation of
these opportunities to create value at our existing operations.
Australia Pacific
Summary of Financial and Operating Data1
For the years ended December 31
2010
2009 % Change
2008
Gold
118
27
133
Total tons mined (millions)
30
Ore tons processed (millions)
0.082 0.075
Average grade (ozs/ton)
1,939 1,950
Gold produced (000s/oz)
$ 1,286 $ 1,134
Cost of sales ($ millions)
$ 613 $ 581
Total cash costs (per oz)
Segment income ($ millions)2
$ 776 $ 315
$ 251 $ 282
Amortization ($ millions)
Segment EBITDA ($ millions)3
$ 1,027 $ 597
Capital expenditures ($ millions) $ 289 $ 239
(11%)
(10%)
9%
(1%)
147
29
0.077
1,942
13% $ 1,051
6% $ 550
146% $ 267
(11%) $ 240
72% $ 507
21% $ 191
Copper
Copper produced
(millions of lbs)
Cost of sales ($ millions)
Total cash costs (per lb)
Segment income (loss)
($ millions)2
91
50
83
88 $
$
$ 1.18 $ 1.15
(45%)
75
6% $ 121
3% $ 1.64
Amortization ($ millions)
Segment EBITDA ($ millions)3
Capital expenditures ($ millions) $
$ 104 $
– $
$
$ 104 $
– $
82
–
82
6
27% $
– $
27% $
– $
(35)
–
(35)
24
1. The amounts presented in this table include the results of discontinued operations.
2. Segment income includes income taxes related to Osborne only.
3. EBITDA is a non-GAAP financial performance measure with no standardized
meaning under US GAAP. For further information and a detailed reconciliation,
please see page 82 of this MD&A.
Segment EBITDA and segment income for the gold segment
for 2010 were $1,027 million and $776 million, an increase of
72% and 146%, respectively, over 2009. The increases were
primarily as a result of higher realized gold prices.
61
Management’s Discussion and Analysis
Gold production for 2010 was slightly lower than 2009,
and was within our regional guidance range of 1.85 to 2.0 mil-
lion ounces. Higher production at Cowal and Kalgoorlie
was offset by lower production at Kanowna, Porgera and
Yilgarn. The divestiture of Henty in the second quarter of
2009 and cessation of mining at Osborne in July 2010 also
contributed to the slightly lower year over year production.
Production at Cowal increased by 28% over 2009 due
to the mining of higher grade ore. At Kalgoorlie, production
increased 14% over 2009, due to mining in higher grade
areas of the pit and higher mill throughput. Production at
Kanowna decreased by 12% from 2009 as a result of lower
underground tons mined as mining at Bullant was com-
pleted at the end of 2009, and as fewer open pit tons were
mined in 2010. Production at Porgera decreased 6% from
2009 due to a water shortage from lack of adequate rainfall
which impacted mill throughput and wall stability issues
which restricted mining in higher grade zones. At Yilgarn,
production decreased 11% due to lower ore grades processed
and lower throughput due to a decrease in ore tons mined.
In 2010, cost of sales attributable to gold has increased
by 13% over 2009, reflecting higher royalties and production
taxes as gold prices traded at higher levels than in 2009, an
increase in our effective Australian dollar currency hedge
rates and higher labor and maintenance costs. Cost of sales
also includes $104 million related to ore purchases processed
at Granny Smith, compared to $29 million in 2009. These
increases were partially offset by lower costs as a result of
the disposal of the Henty mine in the first half of 2009. Total
cash costs per ounce were up 6% to $613 over 2009, due to
the same factors that affected cost of sales with the exception
of the costs related to the ore purchases at Granny Smith,
which are excluded from our calculation of total cash cost
per ounce as the cost of producing these ounces is not
indicative of our normal production costs. Total cash costs
were within our most recent 2010 regional guidance range
of $610 to $625 per ounce.
In 2011, we expect gold production to be in the range
of 1.85 to 2.0 million ounces, which is consistent with 2010.
Higher production is expected at Porgera due to the afore-
mentioned pit wall stability issues and lack of adequate
rainfalls that negatively impacted the process plant in 2010.
Kalgoorlie and Cowal production is expected to decrease
due to mining lower grade areas. Total gold cash costs are
expected to be $610 to $635 per ounce compared to $576 per
ounce in 2010 on an IFRS basis. Total cash costs per ounce
are expected to be higher primarily due to labor inflation.
Both segment EBITDA and segment income for the
copper segment for the year were $104 million, an increase
of 27% over the prior year as a result of higher copper sales
volume, due to the continued clearing of copper concentrate
stockpiles, as well as shipping delays that moved the timing
of 2009 production into 2010 sales.
Copper production for 2010 was down 45% compared to
2009 largely due to the cessation of operations in July 2010.
In 2010, cost of sales attributable to copper increased
by 6% compared to 2009 as a result of higher sales volume,
while total cash costs per pound were up 3%.
Beyond 2010, we have identified various opportunities
to add gold production within Australia Pacific, including
a potential expansion at Cowal that could extend the mine
life by about 4 years and an expansion at Granny Smith.
We continue to progress our evaluation of these opportunities
to create value at our existing operations.
African Barrick Gold1
Summary Financial and Operating Data
For the years ended December 31
2010
2009 % Change
2008
100% basis
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Gold produced (000s/oz)
Cost of sales ($ millions)
Total cash costs (per oz)
Segment income ($ millions)3
Amortization ($ millions)
Segment EBITDA ($ millions)4
Capital expenditures ($ millions)
73.9% equity basis2
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Gold produced (000s/oz)
Cost of sales ($ millions)
Total cash costs (per oz)
Segment income ($ millions)3
Amortization ($ millions)
Segment EBITDA ($ millions)4
Capital expenditures ($ millions)
44
8
0.094
701
$ 487
$ 646
$ 226
$ 119
$ 345
$ 131
35
7
0.094
564
$ 390
$ 646
$ 180
$ 95
$ 275
$ 104
41
7
0.114
716
$ 377
$ 545
$ 143
$ 93
$ 236
$ 134
41
7
0.114
716
$ 377
$ 545
$ 143
$ 93
$ 236
$ 134
7%
14%
(18%)
(2%)
29%
19%
58%
28%
46%
(2%)
(15%)
–
(18%)
(21%)
3%
19%
26%
2%
17%
(22%)
22
4
0.154
545
$ 327
$ 560
$ 94
$ 63
$ 157
$ 172
22
4
0.154
545
$ 327
$ 560
$ 94
$ 63
$ 157
$ 172
1. ABG reports its results under IFRS while we report our results under US GAAP.
All figures represented in this table are prepared in accordance with US GAAP.
2. These amounts represent our equity share of results. The dilution of our ownership
interest in ABG to approximately 73.9% impacts our operating statistics from
second quarter 2010 onwards.
3. Segment income excludes income taxes.
4. EBITDA is a non-GAAP financial performance measure with no standardized
meaning under US GAAP. For further information and a detailed reconciliation,
please see page 82 of this MD&A.
62
Barrick Financial Report 2010 | Management’s Discussion and Analysis
progress its evaluation of these opportunities to create
value at its existing operations and to develop acquired
exploration properties.
Segment EBITDA and segment income for 2010, on a 100%
basis, were $345 million and $226 million, an increase
of 46% and 58%, respectively, over 2009. The increases were
primarily as a result of higher realized gold prices, partially
offset by higher total cash costs. Segment income was
also affected by higher amortization expense as a result of
Buzwagi entering production in second quarter 2009.
Barrick’s equity interest in 2010 production came in
slightly lower than the most recent regional guidance of
0.575 million ounces. The original guidance range was 0.65
to 0.69 million ounces (based on Barrick’s equity interest).
Lower than originally expected production in 2010 was
mainly due to mining equipment availability issues at
Tulawaka and issues at Buzwagi, including the mining of
lower grade transitional oxide ore and the impact of the
actions taken in response to the discovery of widespread fuel
theft at the mine site.
Capital Projects
Summary Financial Data
($ millions)
For the years ended December 31
Project expenses1
Project expenses incurred
by equity investees2
Total project expenses
Capital expenditures3
Buzwagi
Pascua-Lama
Pueblo Viejo
Subtotal
2010
2009
2008
$ 100 $
49
$ 140
53
93
69
153
142
209
–
724
592
52
202
433
273
112
157
1,316
687
542
$ 1,253 $ 1,018
$ 552
In 2010, cost of sales, on a 100% basis, increased by 29%
Capital commitments4
over 2009, reflecting higher royalties and production taxes
as gold prices traded at higher levels than 2009 along with
higher labor, energy and maintenance costs. Compared to
2009, 2010 total cash costs per ounce were up 19% and was
outside our regional guidance range of $620 to $640 per
ounce. The increase in total cash costs was primarily due to
higher costs at Buzwagi due to plant and equipment repair
costs and higher total cash costs at North Mara due to higher
drilling costs and higher waste tons mined.
In 2011, we expect equity gold production, reflecting our
73.9% ownership of ABG, to be in the range of 0.515 to
0.560 million ounces. Production is expected to be lower
than 2010 as our effective full year share of production in
2010 was about 80%, due to the recognition of 100% owner-
ship in the first quarter 2010 and 73.9% ownership for the
remainder of the year. Buzwagi production is expected to
be higher in 2011 due to successfully addressing production
difficulties that arose in 2010 due to fuel theft. North Mara is
expected to have lower production as the mine plan focuses
on waste stripping at the Gokona pit, with production
coming from lower grade stockpiles. Total gold cash costs are
expected to be $590 to $650 per ounce compared to $570
per ounce in 2010 on an IFRS basis. Total cash costs per
ounce are expected to be higher due to lower North Mara
grades and an increase in energy, labor and contractor costs
across most sites.
Beyond 2010, ABG has identified various opportunities
to add production, including a potential underground
zone at North Mara, the Bulyanhulu Upper East Zone; and at
the Golden Ridge exploration property. ABG continues to
1. Amounts presented represent our share of project development expense.
2. Amounts presented represent our share of project development expense from
projects for which we use the equity accounting method, including Reko Diq,
Kabanga, Donlin Creek and Cerro Casale (until March 31, 2010).
3. Amounts presented represent our share of capital expenditures on a cash basis.
4. Capital commitments represent purchase obligations as at December 31 where
binding commitments have been entered into for long lead capital items related to
construction activities at our projects.
We spent $153 million in project expenses and $1,316 million
(our share) in capital expenditures in 2010. The increase
in project expenses compared to 2009 primarily relates
to increased spending at Cerro Casale, partially offset by
decreased expenses at Reko Diq and Kabanga. Increases in
capital expenditures compared to 2009 are primarily due
to increased expenditures at our Pueblo Viejo and Pascua-
Lama projects, partially offset by decreased expenditures at
Buzwagi, as it entered production in 2009. Our 2011 expendi-
tures are expected to increase due to continued construction
activities at both the Pascua-Lama and Pueblo Viejo projects.
Project Updates
Pueblo Viejo
At the Pueblo Viejo project in the Dominican Republic,
preproduction capital is expected to increase by 10–15%
from the previous estimate to $3.3–$3.5 billion (100% basis).
The increased capital cost estimate is largely due to higher
labor, power supply, freight and steel product related costs
as well as general inflation. In December, the Environmental
Impact Assessment for the 240 kV power transmission line
was approved allowing associated construction activities to
commence. Alternative temporary power sources are being
63
Management’s Discussion and Analysis
secured which will allow project commissioning in the
fourth quarter of 2011. First production is expected in the
first quarter of 2012. Overall construction is about 50% com-
plete, approximately 75% of the capital has been committed
and all four of the autoclaves are on site and have been
placed on their footings. About 80% of the planned concrete
has been poured, 55% of the steel has been erected and
more than 600,000 tons of ore have been stockpiled. Work
continues toward achieving key milestones including the
connection of power to the site. Barrick’s 60% share of
annual gold production in the first full five years of opera-
tion is expected to average 625,000–675,000 ounces at total
cash costs of $275–$300 per ounce.6
Pascua-Lama
At the Pascua-Lama project on the border of Chile and
Argentina, pre-production capital is expected to increase by
10–20% to $3.3–$3.6 billion. Pressure on capital costs are
primarily as a result of a stronger Chilean peso, labor, com-
modity and other input cost increases in both countries and
higher inflation particularly in Argentina. First production is
expected in the first half of 2013. Approximately 40% of the
capital has been committed, detailed engineering and pro-
curement are more than 90% complete and about 60% of
the earthworks necessary for the process plant and mining
support facilities have been moved. Construction of the
power transmission line has commenced and the new access
road is almost 75% complete. Development of the tunnel,
which connects the mine in Chile and the process plant
in Argentina, is progressing on both sides. Occupancy of
the construction camps in Chile and Argentina continues
to ramp up with more than 2,000 housed on site. Average
annual gold production from Pascua-Lama is expected to be
750,000–800,000 ounces in the first full five years of opera-
tion at total cash costs of $20–$50 per ounce7 based on a
silver price of $16 per ounce. For every $1 per ounce increase
in the silver price, total cash costs are expected to decrease by
about $35 per ounce over this period.
Cerro Casale
At the Cerro Casale project in Chile, the review of additional
permitting requirements before considering a construction
decision is progressing alongside discussions with the govern-
ment and meetings with local communities and indigenous
6. Based on gold price and oil price assumptions of $1,100 per ounce and $85 per
barrel, respectively.
groups. Given the changed operating environment in Chile
and the Company’s experience at Pascua-Lama, a review of
the capital cost of the project has been initiated. Early
indications suggest that the capital cost may be higher by
about 20–25% from the previous estimate of $4.2 billion,
which is based on the feasibility study completed in 2009
and reflects the impact of a stronger Chilean peso, higher
labor, commodity and other input costs. An update will be
provided by the end of the second quarter. Barrick’s 75%
share of average annual production is anticipated to be
about 750,000–825,000 ounces of gold and 170–190 million
pounds of copper in the first full five years of operation at
total cash costs of about $240–$260 per ounce8 also based on
the feasibility study completed in 2009. A $0.25 per pound
change in the copper price would result in an approximate
$50 per ounce impact on the expected total cash costs per
ounce over the first full five years of operation.
Donlin Creek
At Donlin Creek, a large, undeveloped, refractory gold
deposit in Alaska, a feasibility study on this 50% owned
project was approved by the Board of Donlin Creek LLC
in second quarter 2009. Further optimization studies are
underway, primarily focused on the potential to utilize
natural gas to reduce operating costs. The feasibility study
revisions, inclusive of updated costs are expected to be
completed in the third quarter of 2011 for consideration
by the Board of Donlin Creek LLC.
Reko Diq
Reko Diq is a large copper-gold porphyry mineral deposit
on the Tethyan belt, located in southwest Pakistan in the
province of Balochistan, in which we hold a 37.5% interest.
The initial mine development feasibility study and the envi-
ronmental and social impact assessment are both complete.
The feasibility study indicates pre-production capital of
approximately $3.3 billion (100% basis) based on a 120,000
ton-per-day processing plant, which is capable of future
expansions. Barrick’s share of average annual production for
the first five full years is expected to be about 100,000 ounces
of gold at total cash costs of $420–$450 per ounce and 150–
160 million pounds of copper at total cash costs of about
$1.00–$1.10 per pound. A copy of the feasibility study has
been delivered to the Government of Balochistan (“GOB”)
in accordance with the terms of the joint venture agreement
to which the GOB is a party. Currently, the Supreme Court
7. In addition to silver price assumption, based on a gold price and oil price
8. Based on a gold price, copper price and oil price assumptions of $1,100 per ounce,
assumption of $1,100 per ounce and $85 per barrel, respectively, and assuming a
Chilean peso foreign exchange rate of 500:1
$2.75 per pound and $85 per barrel, respectively, and a Chilean peso foreign
exchange rate of 500:1.
64
Barrick Financial Report 2010 | Management’s Discussion and Analysis
of Pakistan is hearing several constitutional petitions which,
among other things, challenge the GOB’s right to grant a
mining lease to the project company. On February 3, 2011,
the Supreme Court issued an interim order providing,
among other things, that the GOB may not take any decision
in respect of the grant or otherwise of a mining lease to the
project company until the matters before the Supreme Court
are decided. The project company filed its application for the
mining lease on February 15, 2011.
Kabanga
Barrick holds a 50% interest in the Kabanga project located
in Tanzania, which is one of the world’s largest undeveloped
nickel sulfide deposits. Xstrata Nickel is currently the
operator of this project. Expenditures are funded equally by
Xstrata Nickel and Barrick. A peer review of the draft Social,
Environmental Impact Assessment report was completed
and the report is being revised concurrently with the draft
feasibility study report. Both reports are now expected to be
submitted in the first half of 2011.
Financial Condition Review
Summary Balance Sheet and Key Financial Ratios
($ millions, except ratios and share amounts)
As at December 31
Total cash and equivalents
Non-cash working capital
Non-current assets
Other assets
Total Assets
Non-current liabilities excluding adjusted debt
Adjusted debt1
Other liabilities
Total Liabilities
Total shareholders’ equity
Non-controlling interests
Total Equity
Dividends
Net debt1
Total common shares outstanding (millions of shares)2
Key Financial Ratios:
Current ratio3
Adjusted debt-to-equity4
Net debt-to-equity5
Return on equity6
2010
2009
$ 3,968
1,806
26,209
1,339
$ 2,564
1,473
22,137
901
33,322
27,075
3,421
6,392
2,775
2,827
6,919
1,782
12,588
11,528
19,065
1,669
15,063
484
$ 20,734
$ 15,547
436
$ 2,542
999
2.86:1
0.34:1
0.13:1
19%
369
$ 4,355
984
2.79:1
0.46:1
0.29:1
12%
1. Adjusted debt and net debt are non-GAAP financial performance measures with no standardized meaning under US GAAP. For further information and a detailed
reconciliation, please see page 84 of this MD&A.
2. Total common shares outstanding do not include 8,432,418 stock options. The increase from December 31, 2009 is due to exercise of stock options and the conversion
of debentures.
3. Represents current assets divided by current liabilities as at December 31, 2010 and December 31, 2009.
4. Represents adjusted debt divided by total shareholders’ equity as at December 31, 2010 and December 31, 2009.
5. Represents net debt divided by total shareholders’ equity as at December 31, 2010 and December 31, 2009.
6. Represents adjusted net income divided by average shareholders’ equity as at December 31, 2010 and December 31, 2009.
Balance Sheet Review
Total assets were $33.3 billion in 2010, an increase of $6.2 bil-
lion or 23% compared to 2009. The increase primarily reflects
an increase in property, plant and equipment, largely due to
the impact of acquisitions and capital expenditures, and cash
and equivalents. Our asset base is primarily comprised of
non-current assets such as property, plant and equipment and
goodwill, reflecting the capital intensive nature of the mining
business and our history of growing through acquisitions, pro-
duction inventories and cash and equivalents. We typically do
not carry a material accounts receivable balance, since only sales
of concentrate and copper cathode have a settlement period.
65
Management’s Discussion and Analysis
Total liabilities increased by $1.1 billion or 9% compared
to 2009, as an increase in asset retirement obligations and
derivative liabilities was partially offset by a reduction in
adjusted debt, due to the repayment of the remaining settle-
ment obligation in gold sales contracts and the conversion
of convertible debentures into common shares in fourth
quarter 2010.
Sources and Uses of Net Debt
($ millions)
For the years ended December 31
Operating activities
Adjusted operating cash flow
Settlement of gold sales contracts
2010
2009
$ 4,783 $ 2,899
(5,221)
(656)
Total operating inflows (outflows)
4,127
(2,322)
Investing activities
Capital expenditures – minesite sustaining
Capital expenditures – minesite expansionary1
Capital expenditures – projects1
Acquisitions
Other investing activities
Total investing outflows
Financing activities (excluding debt)
Proceeds from public issuance of
common shares by a subsidiary
Common share offering
Dividends
Funding from non-controlling interests
Deposit on silver sale agreement
Other financing activities
Total financing inflows
Repayment with restricted cash
Other non-cash movements
Conversion of convertible debt
Settlement (recognition) of obligation
to close out gold sales contracts
Adjustment for Pueblo Viejo financing
(partner’s share), net of cash
(1,077)
(242)
(2,004)
(813)
(36)
(784)
(60)
(1,514)
(101)
44
(4,172)
(2,415)
884
–
(436)
114
137
102
–
3,885
(369)
304
213
39
801 4,072
–
(113)
(75)
(33)
281
–
656
(655)
195
–
Net decrease (increase) in net debt
1,813
(1,466)
Net debt at beginning of period
(4,355)
(2,889)
Net debt at end of period
$ (2,542) $ (4,355)
1. The amounts include capitalized interest of $281 million (2009: $257 million).
Net debt decreased to $2.5 billion, and our net debt-to-equity
ratio decreased to 0.13:1 during the year. The majority of our
outstanding long-term debt matures at various dates beyond
2013, with approximately $774 million repayable in the period
2011 to 2013. In addition, counterparties to debt and derivative
66
instruments do not have unilateral discretionary rights to
accelerate repayment at earlier dates; therefore we are largely
protected from short-term liquidity fluctuations.
Shareholders’ Equity
Outstanding Share Data
As at January 28, 2011
Common shares
Stock options
Number of shares
998,546,376
8,432,418
Dividend Policy
In 2010, we increased our annual dividend from $0.40 per
common share to $0.48 per common share and we also
moved from a semi-annual dividend to a quarterly dividend.
This 20% increase in dividends reflects our ability to generate
substantial cash flows from our operations in a high gold
price environment. With strong cash flow and the industry’s
only A-rated balance sheet, we determined that we have the
financial resources to return additional value to shareholders
while still investing in advanced projects. The amount and
timing of any dividends is within the discretion of our Board
of Directors. The Board of Directors reviews the dividend
policy quarterly based on our current and projected liquid-
ity profile, and capital requirements for capital projects and
potential acquisitions.
Comprehensive Income
Comprehensive income consists of net income or loss,
together with certain other economic gains and losses,
which, collectively, are described as “other comprehensive
income” or “OCI”, and excluded from the income statement.
In 2010, other comprehensive income was $476 million
on an after-tax basis consisting primarily of gains of
$612 million on hedge contracts designated for future periods,
caused primarily by changes in currency exchange rates,
copper prices, and fuel prices; reclassification adjustments
totaling $104 million for gains on hedge contracts designated
for 2010 that were transferred to earnings in 2010; $12 million
transferred to earnings related to gains recorded on the sale
of shares in various investments in junior mining companies;
$69 million of gains recorded as a result of changes
in the fair value of investments held during the year; and
$22 million in gains for currency translation adjustments
on Barrick Energy.
Included in accumulated other comprehensive income
at December 31, 2010 were unrealized pre-tax gains on cur-
rency, commodity and interest rate hedge contracts totaling
$784 million. The balance primarily relates to currency
hedge contracts which are designated against operating costs
and capital expenditures mostly over the next three years
and are expected to help protect against the impact of the
strengthening of the Australian and Canadian dollar against
the US dollar. These hedge gains/losses are expected to be
recorded in earnings at the same time as the corresponding
hedged operating costs and amortization of capital expendi-
tures are also recorded in earnings.
Financial Position
We maintained a sound financial position in 2010 despite the
market turbulence that has been experienced over the past
three years. This is illustrated by our significant cash and
working capital balances and our relatively low debt-to-equity
and debt to total capitalization ratios as at December 31, 2010.
Our sound financial position is reflected in the fact that
we have the only A-rated balance sheet in the gold mining
industry as measured by S&P. Our credit ratings, as estab-
lished by S&P and Moody’s, have remained stable. Our ability
to access unsecured debt markets and the related cost of
debt financing is, in part, dependent upon maintaining an
acceptable credit rating. Deterioration in our credit rating
would not adversely affect existing debt securities, but could
impact funding costs for any new debt financing.
Credit Rating from Major Rating Agencies
At January 28, 2011:
Standard and Poor’s (“S&P”)
Moody’s
A–
Baa1
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Liquidity and Cash Flow
Total cash and cash equivalents at the end of 2010 were
$4.0 billion9. At year end, our cash position consisted
of a mix of term deposits, treasury bills and money market
investments. We also have a $1.5 billion credit facility
available as a source of financing and we may raise new
financing for projects, acquisitions, or for other purposes
on an as needed basis.
Cash Summary
As at December 31
US dollars
Canadian dollars
Australian dollars
Other
2010
2009
$ 3,692 $ 2,392
71
36
57
29
44
211
$ 3,968 $ 2,564
One of our primary ongoing sources of liquidity is operating
cash flow. In 2010, we generated $4.1 billion in operating
cash flow, compared to a $2.3 billion operating cash outflow
in 2009. Operating cash flow reflects payments related to
the settlement of gold sales contracts of $5.2 billion in 2009
and $656 million in 2010. Adjusted operating cash flow,
which excludes the impact of these payments, totaled
$4.8 billion in 2010, an increase of 65% compared to 2009.
The increase in adjusted operating cash flow was primarily
due to growing cash margins with the rise in realized gold
and copper prices and higher gold sales, partially offset by
higher income taxes paid.
The key factors impacting our financial position, and
therefore our credit rating, include the following:
Our market capitalization and the strength of our balance
sheet, including the amount of net debt and our net
debt-to-equity ratio (refer to balance sheet review section
of this MD&A for discussion of key factors impacting these
measures in 2010);
Non-cash Working Capital
($ millions)
For the years ended December 31
Inventories1
Other current assets
Accounts receivable
VAT and fuel tax receivables2
Accounts payable and other current liabilities
Our net cash flow, including cash generated by operating
Non-cash working capital
2010
2009
$ 2,958 $ 2,336
320
648
251
346
285
329
(2,475) (1,719)
$ 1,806 $ 1,473
activities (refer to liquidity and cash flow section of
this MD&A for discussion of key factors impacting these
measures in 2010);
Expected capital expenditure requirements (refer to the
outlook section of this MD&A for a discussion of key
factors impacting these measures in future periods);
The quantity of our gold reserves (refer to page 166 for
more information); and
Our geo-political risk profile.
1. Includes long-term stockpiles of $1,106 million (2009: $796 million).
2. Includes long-term VAT and fuel tax receivables of $138 million (2009:
$124 million).
9. Includes $401 million cash held at ABG, which may not be readily deployed
outside ABG. It also includes $296 million held at Pueblo Viejo as a result of
the first draw on the project financing. These funds are to be used to fund the
further construction of the project and are not readily deployable by Barrick for
other purposes.
67
Management’s Discussion and Analysis
Adjusted operating cash flow was also impacted by a
$333 million increase in non-cash working capital. The
increase in non-cash working capital primarily relates to
an increase in inventories, partially offset by an increase in
accounts payable and other current liabilities. The increase in
inventory related to approximately $400 million increase in
ore in stockpiles, primarily at Cortez, Goldstrike and Porgera.
The principal uses of 2010 adjusted operating cash flow
were settlement of gold sales contracts, sustaining capital
expenditures, construction activities at capital projects,
acquisitions, and dividend payments.
In 2010, our adjusted operating cash flow was $4.8 billion.
Assuming we are able to sustain this level of cash generation,
dividends at current rates totaling about $0.5 billion per
year and minesite sustaining capital expenditures of about
$1.0 billion, $3.3 billion per year would be available for
investment in capital projects, minesite expansion opportu-
nities and acquisitions. The most significant factor impacting
whether this level of cash generation is sustainable is
market gold and copper prices. Over the next three years,
we expect to spend an average of $0.5 billion per year
on minesite expansion projects and a total of $2.8 billion to
fund the remaining construction activities at Pueblo Viejo
and Pascua-Lama. For Pueblo Viejo, we expect to fund
about $250 million of the remaining spend from the future
proceeds of the project financing. At Pascua-Lama, we expect
to fund remaining construction activities with up to
$1.25 billion from new project financing and $275 million
from future proceeds of the Silver Wheaton Agreement.
Investments in capital projects and acquisitions are
subject to an internal capital allocation review prior to
proceeding with new expenditures. This review entails an
assessment of our overall liquidity, the overall level of invest-
ment required, and the prioritization of investments. The
assessment also takes into account expected levels of future
operating cash flow and the cost and availability of new
financing. A decline in market gold prices and/or copper
prices could impact the timing and amount of future
investment in capital projects and/or other uses of capital.
Alternatives for sourcing our future capital or other
liquidity needs include other credit facilities, future operat-
ing cash flow, sale of non-core assets, project financings and
debt or equity financings. These alternatives are continually
evaluated to determine the optimal mix of capital resources
for our capital needs.
Cash used in investing activities amounted to $4,172 mil-
lion in 2010, an increase of $1,757 million compared to 2009,
primarily due to total capital expenditures of $3,323 million,
68
which includes capitalized interest, the $447 million related
to the acquisition of an additional 25% interest in Cerro
Casale in the first quarter and $264 million related to the
acquisitions by Barrick Energy in the second and third quarter.
Capital Expenditures1,2
($ millions)
For the years ended December 31
Capital expenditures – projects
Buzwagi3
Pascua-Lama
Pueblo Viejo
Cortez Hills
Kainantu
Sedibelo
2010
2009
2008
$
– $
724
592
19
–
–
52 $ 273
112
157
155
4
38
202
433
278
–
–
Subtotal4
$ 1,335 $ 965 $ 739
Capital expenditures attributable
to non-controlling interests5
394
292
104
Total project capital expenditures
$ 1,729 $ 1,257 $ 843
Minesite expansionary capital expenditures
Golden Sunlight
$
Goldstrike
Veladero6
Cortez
Bald Mountain
South Arturo
49 $
37 $
3
23
20
139
2
–
23
–
–
–
–
–
–
–
–
–
Total capital expenditures –
minesite expansionary
Sustaining capital expenditures
North America
South America
Australia Pacific
African Barrick Gold
Other7
Subtotal
Total capital expenditures –
minesite sustaining
$ 236 $
60 $
–
$ 270 $ 170 $ 161
154
215
172
40
181
245
134
54
231
289
131
156
$ 1,077 $ 784 $ 742
Capitalized interest
281
257
191
Total
$ 3,323 $ 2,358 $ 1,776
1. The amounts presented in this table include the results of discontinued operations.
2. These amounts are presented on a cash basis consistent with the amounts
presented on the consolidated statement of cash flows.
3. Buzwagi entered into production as of May 1, 2009. Capital expenditures from
May onwards have been reflected in minesite sustaining, although construction
continued until third quarter 2009.
4. On an accrual basis, our share of project capital expenditures is $1,791 million
including capitalized interest.
5. Amount reflects our partner’s share of expenditures at the Pueblo Viejo project on
a cash basis.
6. These amounts include capital expenditures related to the development of a new
pit at our Veladero mine.
7. These amounts include $86 million of capital expenditures at Barrick Energy
(2009: $32 million and 2008: $15 million).
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Cash provided by financing activities for 2010 was $1,434 mil-
lion. The significant financing activities in 2010 included
$884 million in proceeds from public issuance of common
shares by ABG in the first quarter 2010 and the drawdown
of $782 million of Pueblo Viejo project financing in second
quarter 2010. These amounts were partially offset by
dividend payments of $436 million and debt repayments
of $149 million. This compares to financing inflows in
2009 of $5,829 million largely from the proceeds from the
Common Share offering of $3,885 million and debt proceeds
of $2,154 million, partially offset by debt repayments of
$397 million and dividend payments of $369 million.
Financial Instruments
We use a mixture of cash, long-term debt and shareholders’
equity to maintain an efficient capital structure and ensure
adequate liquidity exists to meet the cash needs of our
business. We use interest rate contracts to mitigate interest
rate risk that is implicit in our cash balances and outstanding
long-term debt. In the normal course of business, we are
inherently exposed to currency and commodity price risk.
We use currency and commodity hedging instruments to
mitigate these inherent business risks. We also hold certain
derivative instruments that do not qualify for hedge account-
ing treatment. These non-hedge derivatives are described
in note 20 to our consolidated financial statements. For a
discussion of certain risks and assumptions that relate to
the use of derivatives, including market risk, market liquidity
risk and credit risk, refer to notes 2 and 20 to our consoli-
dated financial statements. For a discussion of the methods
used to value financial instruments, as well as any significant
assumptions, refer to note 21 to our consolidated financial
statements.
Counterparty Risk
Our financial position is also dependent, in part, on our
exposure to the risk of counterparty defaults related to the
net fair value of our derivative contracts. Counterparty
risk is the risk that a third party might fail to fulfill its
performance obligations under the terms of a financial
instrument. Counterparty risk can be assessed both in terms
of credit risk and liquidity risk. For cash and equivalents
and accounts receivable, credit risk represents the carrying
amount on the balance sheet, net of any overdraft positions.
For derivatives, when the fair value is positive, this
creates credit risk. When the fair value of a derivative is
negative, we assume no credit risk. However, liquidity risk
exists to the extent a counterparty is no longer able to
perform in accordance with the terms of the contract due to
insolvency. In cases where we have a legally enforceable
master netting agreement with a counterparty, credit risk
exposure represents the net amount of the positive and
negative fair values for similar types of derivatives. For a net
negative amount, we regard credit risk as being zero. For a
net positive amount, this is a reasonable basis to measure
credit risk when there is a legally enforceable master netting
agreement. We mitigate credit and liquidity risk by:
Entering into derivatives with high credit-quality
counterparties;
Limiting the amount of exposure to each counterparty;
and
Monitoring the financial condition of counterparties.
As of December 31, 2010, we had 23 counterparties to our
derivative positions. We proactively manage our exposure
to individual counterparties in order to mitigate both credit
and liquidity risks. For those counterparties in a net asset
position (total balance attributable to the counterparties
is $899 million), two hold greater than 10% of our mark-
to-market asset position, with the largest counterparty
holding 17% (or $154 million). For those counterparties
in a net liability position (total balance attributable to the
counterparties is $52 million), one holds greater than 10%
of our mark-to-market liability position, with the largest
counterparty holding 93% (or $49 million). On an ongoing
basis, we monitor our exposures and ensure that none of
the counterparties with which we hold outstanding contracts
has declared insolvency.
69
Management’s Discussion and Analysis
Summary of Financial Instruments
As at and for the year ended December 31, 2010
Financial
Instrument
Cash and equivalents
Accounts receivable
Available-for-sale securities
Accounts payable
Long-term debt
Restricted share units
Deferred share units
Performance restricted share units
Derivative instruments – currency contracts
Derivative instruments – copper contracts
Derivative instruments – energy contracts
Derivative instruments – interest rate contracts
Non-hedge derivatives
Principal/
Notional Amount
Associated
Risks
$ 3,968 million
Interest rate
Credit
$ 346 million
Credit
$ 171 million
Market
$ 1,511 million
Interest rate
$ 6,705 million
Interest rate
$ 153 million
Market
$ 9 million
Market
$ 11 million
Market
CAD 372 million
CLP 244,395 million
AUD 4,217 million
207 million lbs
Credit
Market/liquidity
Market/liquidity
Credit
Fuel 4.7 million bbls
Propane 19 million gallons
Market/liquidity
Credit
Pay float interest rate swaps ($200) million
Receive float interest rate swaps $ 100 million
Receive float interest rate swaptions $ 200 million
various
Credit
Market/liquidity
Market/liquidity
Credit
Commitments and Contingencies
Capital Expenditures Not Yet Committed
We expect to incur capital expenditures during the next
five years for both projects and producing mines. The
projects are at various stages of development, from pre-
liminary exploration or scoping study stage through to the
construction execution stage. The ultimate decision to incur
capital expenditures at each potential site is subject to
positive results which allow the project to advance past
decision hurdles. Two projects were at an advanced stage at
December 31, 2010, namely Pueblo Viejo and Pascua-Lama
(refer to pages 63–64 for further details).
70
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Contractual Obligations and Commitments
($ millions)
As at December 31
Long-term debt1
Repayment of principal
Capital leases
Interest
Asset retirement obligations2
Operating leases
Restricted share units
Pension benefits and other post-retirement benefits
Derivative liabilities3
Purchase obligations for supplies and consumables4
Capital commitments5
Social development costs
Payments due
2011
2012
2013
2014
2015
2016 and
thereafter
Total
$
–
18
373
89
12
60
26
215
595
1,333
11
$ 120
17
372
100
10
93
26
2
185
69
3
$ 603
16
363
70
8
–
34
7
134
1
16
$ 426
10
337
48
7
–
26
10
105
–
3
$ 176
8
309
83
7
–
25
12
93
–
6
$ 5,308
3
3,838
1,456
35
–
119
32
337
–
72
$ 6,633
72
5,592
1,846
79
153
256
278
1,449
1,403
111
Total
$ 2,732
$ 997
$ 1,252
$ 972
$ 719
$ 11,200
$ 17,872
1. Long-term Debt and Interest – 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 debt and interest amounts include
100% of the Pueblo Viejo financing, even though we have only guaranteed our 60% share. We are not required to post any collateral under any debt obligations. The terms
of our debt obligations would not be affected by deterioration in our credit rating. Projected interest payments on variable rate debt were based on interest rates in effect at
December 31, 2010. Interest is calculated on our long-term debt obligations using both fixed and variable rates.
2. Asset Retirement Obligations – Amounts presented in the table represent the undiscounted future payments for the expected cost of asset retirement obligations.
3. Derivative Liabilities – Amounts presented in the table relate to derivative contracts disclosed under notes 2 and 20 to the consolidated financial statements. Payments related
to derivative contracts cannot be reasonably estimated given variable market conditions.
4. Purchase Obligations for Supplies and Consumables – Includes commitments related to new purchase obligations to secure a supply of acid, tires and cyanide for our
production process.
5. Capital Commitments – Purchase obligations for capital expenditures include only those items where binding commitments have been entered into. Commitments at the end
of 2010 mainly relate to construction capital at Pueblo Viejo and Pascua-Lama.
Litigation and Claims
We are currently subject to various litigation as disclosed in
note 30 to the consolidated 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 financial condition, cash flow and results of operations.
71
Management’s Discussion and Analysis
Review of Quarterly Results
Quarterly Information1
($ millions, except where indicated)
Sales
Realized price – gold2
Realized price – copper2
Cost of sales
Net income/(loss)4
Per share (dollars)3,4
Adjusted net income5
Per share (dollars)3,4
EBITDA5
Operating cash flow
Adjusted operating cash flow5
2010
2009
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
$ 3,033 $ 2,811 $ 2,731 $ 2,636
1,114
3.29
1,041
758
0.77
741
0.75
1,395
1,051
$ 1,437 $ 1,276 $ 1,019 $ 1,051
1,368
3.99
1,110
896
0.90
947
0.95
1,635
781
1,237
3.39
1,076
837
0.85
829
0.84
1,542
1,276
1,205
2.93
1,072
783
0.79
759
0.77
1,328
1,019
$ 2,452 $ 2,096 $ 2,029 $ 1,827
915
2.93
955
371
0.42
298
0.34
648
349
$ 921 $ 911 $ 718 $ 349
1,119
3.44
1,013
215
0.22
604
0.61
794
(4,300)
971
2.90
971
(5,350)
(6.07)
473
0.54
(4,946)
911
931
3.18
975
492
0.56
431
0.49
943
718
1. The amounts presented in this table include the results of discontinued operations.
2. Per ounce/pound weighted average. Realized price is a non-GAAP financial performance measure with no standard meaning under US GAAP. For further information and a
detailed reconciliation, please see page 83 of this MD&A.
3. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
4. Sum of all the quarters may not add up to the yearly total due to rounding.
5. Adjusted net income, EBITDA and adjusted operating cash flow are non-GAAP financial performance measures with no standard meaning under US GAAP. For further
information and a detailed reconciliation, please see pages 78 – 82 of this MD&A.
Our financial results for the last eight quarters reflect:
volatile spot gold and copper prices that impact realized
sales price and generally higher gold and copper production
costs mainly caused by inflationary pressures. The net loss
realized in third quarter 2009 includes a $5.9 billion charge
relating to a decision to eliminate our gold sales contracts.
Fourth Quarter Results
In fourth quarter 2010, we reported net income and adjusted
net income of $896 million and $947 million, respectively,
compared to $215 million and $604 million, respectively, in
fourth quarter 2009.
The increases in both net income and adjusted net
income were as a result of record high gold and copper
prices and higher gold sales volume, partially offset by lower
copper sales volume and higher total cash costs for gold
and copper.
market prices for both copper and gold and higher gold sales
volumes. In fourth quarter 2010, cost of sales was $1,110 mil-
lion or $486 per ounce on a total cash cost basis, an increase
of $97 million and $21 per ounce, respectively, from fourth
quarter 2009. Cost of sales was impacted by higher sales
volume in fourth quarter 2010, compared to fourth quarter
2009. Total gold cash costs were slightly higher, as the
regional production mix shifted to our higher cost regions
in fourth quarter 2010. In fourth quarter 2010, net cash costs
increased by $16 per ounce to $326 per ounce, compared to
$310 per ounce in fourth quarter 2009, reflecting higher cash
costs, partially offset by higher copper credits.
Operating cash flow in fourth quarter 2010 was $781 mil-
lion, a significant increase from fourth quarter 2009. Fourth
quarter operating cash flow reflected the cost of settling the
gold sales contracts of $656 million and $5,221 million in
2010 and 2009, respectively.
In fourth quarter 2010, we sold 1.83 million ounces
of gold and 103 million pounds of copper, compared to
1.8 million ounces of gold and 118 million pounds of copper
in fourth quarter 2009. Sales in fourth quarter 2010 were
higher than the same prior year period reflecting higher
Adjusted operating cash flow in fourth quarter 2010,
which excludes the cost of settling the gold sales contracts,
was $1,437 million, a 56% increase over fourth quarter 2009,
reflecting higher market prices for gold and copper and an
increase in gold sales volumes.
72
US GAAP 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 con-
junction 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 reporting materially different amounts. We exercise
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 Changes Implemented in 2010
Amendments to Accounting for
Variable Interest Entities (“VIEs”)
In second quarter 2009, the FASB issued an amendment
to its guidance on VIEs which makes significant changes to
the model for determining which entity should consolidate
a VIE and how often this assessment should be performed.
Based on our assessment, these changes do not have an
impact on the accounting for our existing VIEs. We have
updated our financial statement notes to reflect the increased
disclosure requirements (note 2b).
Future Accounting Policy Changes
We have not identified any changes in US GAAP that may
have a significant impact on our future financial statements.
With the transition to reporting under IFRS in 2011, new US
GAAP pronouncements effective from 2011 onwards do not
impact our 2010 financial statements prepared in accordance
with US GAAP.
Internal Control over Financial Reporting and Disclosure
Controls and Procedures
Management is responsible for establishing and maintaining
adequate internal control over financial reporting and
disclosure controls and procedures. Internal control over
Barrick Financial Report 2010 | Management’s Discussion and Analysis
financial reporting is a framework designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in
accordance with US GAAP. The Company’s internal control
over financial reporting framework includes those policies
and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with US GAAP, and that receipts
and expenditures of the Company are being made only in
accordance with authorizations of management and direc-
tors of the Company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that
could have a material effect on the Company’s consolidated
financial statements.
Disclosure controls and procedures form a broader
framework designed to ensure that other financial informa-
tion disclosed publicly fairly presents in all material respects
the financial condition, results of operations and cash flows
of the company for the periods presented in this MD&A
and Barrick’s Annual Report. The Company’s disclosure con-
trols and procedures framework includes processes designed
to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to
management by others within those entities to allow timely
decisions regarding required disclosure.
Together, the internal control over financial reporting
and disclosure controls and procedures frameworks provide
internal control over financial reporting and disclosure.
Due to its inherent limitations, internal control over
financial reporting and disclosure may not prevent or detect
all misstatements. Further, the effectiveness of internal
control is subject to the risk that controls may become inad-
equate because of changes in conditions, or that the degree
of compliance with policies or procedures may change.
Management will continue to monitor the effectiveness of its
internal control over financial reporting and disclosure and
may make modifications from time to time as considered
necessary or desirable. It is not expected that the 2011
conversion to IFRS described on page 85 will impact the
effectiveness of the internal control over financial reporting
and disclosure in the upcoming year.
73
Management’s Discussion and Analysis
The management of Barrick, at the direction of our
chief executive and financial officers, have evaluated the
effectiveness of the design and operation of the internal
controls over financial reporting and disclosure controls and
procedures as of the end of the period covered by this report
and have concluded that they were effective at a reasonable
assurance level.
Barrick’s annual management report on internal control
over financial reporting and the integrated audit report of
Barrick’s auditors for the year ended December 31, 2010
will be included in Barrick’s 2010 Annual Report and its 2010
Form 40-F/Annual Information Form on file with the US
Securities and Exchange Commission (“SEC”) and Canadian
provincial securities regulatory authorities.
Critical Accounting Estimates and Judgments
Certain accounting estimates have been identified as being
“critical” to the presentation of our financial condition
and results of operations because they require us to make
subjective and/or complex judgments about matters that are
inherently uncertain; or there is a reasonable likelihood that
materially different amounts could be reported under differ-
ent conditions or using different assumptions and estimates.
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. Changes in reserve
estimates are generally calculated at the end of each year
and cause amortization expense to increase or decrease
prospectively. The estimate that most significantly affects
the measurement of amortization is quantities of proven
and probable gold and copper reserves, because we amortize
a large portion of property, plant and equipment using the
units-of-production method. The estimation of quantities of
gold and copper reserves, in accordance with the principles
in Industry Guide No. 7, issued by the SEC is complex,
requiring significant subjective assumptions 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. Actual gold and
copper production could differ from expected gold and
copper production based on reserves, and an adverse change
in gold or copper prices could make a reserve uneconomic
to mine. Variations could also occur in actual ore grades and
gold, silver and copper recovery rates from estimates.
A key trend that could reasonably impact reserve
estimates is rising market mineral prices, because the min-
eral price assumption used in preparing reserve estimates is
calculated based on the trailing three-year average market
price. As this assumption rises, it could result in an upward
revision to reserve estimates as material not previously
classified as a reserve becomes economic at higher gold
prices. Following the recent trend in market gold prices over
the last three years, the mineral price assumption used to
measure reserves has also been rising.
The gold price assumption was $1,00010 per ounce in
2010 (2009: $825 per ounce; 2008: $725 per ounce). The
copper price assumption was $2.00 per pound in 2010 (2009:
$2.00 per pound; 2008: $2.00 per pound).
The impact of a change in reserve estimates is generally
more significant for mines near the end of the mine life
because the overall impact on amortization is spread over
a shorter time period. Also, amortization expense is more
significantly impacted by changes in reserve estimates at
underground mines than open-pit mines due to the follow-
ing factors:
(i)
Underground development costs incurred to access ore
at underground mines are significant and amortized
using the units-of-production method; and
(ii) Reserves at underground mines are often more
sensitive to mineral 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.
74
10. Reserves at Round Mountain have been calculated using an assumed price of
$900 per ounce.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Impact of Historic Changes in Reserve Estimates on Amortization for the years ended December 31
($ millions, except reserves in millions of contained oz/pounds)
Gold
North America
Australia Pacific
African Barrick Gold
South America
Total Gold
Copper
Australia Pacific
South America
Total Copper
2010
2009
Reserves
increase
(decrease)1
Amortization
increase
(decrease)
Reserves
increase
(decrease)1
Amortization
increase
(decrease)
5.7
1.6
(0.8)
0.8
7.3
30
308
338
$ (13)
3
–
4
$ (6)
$
–
6
$ 6
9.6
0.3
(0.5)
13.5
22.9
(153)
1,023
870
$ (32)
(11)
(2)
(9)
$ (54)
$
(3)
(13)
$ (16)
1. Each year we update our reserve estimates as at the end of the year as part of our normal business cycle. We then use those updated reserve estimates to calculate
amortization expense in the following fiscal year on assets which use the units-of-production method of amortization. Reserve changes presented were calculated as at the
end of 2009 and 2008 and are in millions of contained ounces/pounds.
Long- Lived Asset and Goodwill Impairment Evaluations
Producing Mines and Development Projects
On an annual basis, as at October 1, and at any other time
if events or changes in circumstances indicate that the fair
value of a reporting unit has been reduced below its carrying
amount, we evaluate the carrying amount of goodwill for
potential impairment by comparing its fair value to its
carrying amount. We also evaluate the long-lived assets
of a reporting unit for potential impairment when events
or changes in circumstances indicate that its fair value has
been reduced below its carrying amount by comparing
that reporting unit’s undiscounted cash flows to its carry-
ing amount (referred to as a “screen test”). When a potential
long-lived asset impairment is identified as a result of
the screen test, the amount of impairment is calculated by
comparing its fair value to its carrying amount.
There is no active market for our reporting units.
Consequently, when assessing a reporting unit for impair-
ment, we use an income approach (being the net present
value of expected future cash flows from our LOM plans, or
net asset value (“NAV”) of the relevant reporting unit) to
determine the fair value we could receive for the reporting
unit in an arm’s length transaction at the measurement date.
For our gold reporting units, we apply a market multiple to
the NAV in order to assess their estimated fair value. Gold
companies typically trade at a market capitalization that is
based on a multiple of their underlying NAV. Consequently,
a market participant would generally apply a NAV multiple
when estimating the fair value of an operating gold mine.
Included in these forecasts is the production of mineral
resources that do not currently qualify for inclusion in
proven and probable ore reserves where there is a high
degree of confidence in its economic extraction. This is
consistent with the methodology we use to measure value
beyond proven and probable reserves when allocating the
purchase price of a business combination to acquired mining
assets. Other significant estimates employed in our assess-
ment of fair value include short-term and long-term metal
prices, foreign exchange rates, the price of oil, weighted
average cost of capital used in discounting and the NAV
multiple. For further information on these estimates refer to
note 17 of our consolidated financial statements.
In fourth quarter 2010, we conducted our annual
goodwill impairment test on all of our reporting units to
which goodwill has been assigned, by comparing their
estimated fair value to their carrying amounts. We did not
record any goodwill impairments at any of our mine sites.
75
Management’s Discussion and Analysis
Exploration Property
After acquisition, various factors can affect the recoverability
of the capitalized cost of land and mineral rights, particu-
larly 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 determine that a potential
impairment condition may exist, we compare the sum of the
undiscounted cash flows expected to be generated from the
project to its carrying amount. If the sum of undiscounted
cash flows is less than the carrying amount, an impairment
charge is recognized if the carrying amount of the individual
long-lived assets within the group exceeds their fair value.
For projects that do not have reliable cash flow projections,
a market approach is applied.
Intangible Asset
Intangible assets having indefinite lives and intangible assets
that are not yet ready for use are not amortized and are
reviewed annually for impairment. We also review and test
the carrying amounts of all intangible assets when events or
changes in circumstances suggest that their carrying amount
may not be recoverable. Based on the review, we noted that
there were no indications of impairment in 2010.
Production Stage
We assess each mine construction project to determine
when a mine moves into production stage. The criteria used
to assess the start date are determined based on the unique
nature of each mine construction project, such as the com-
plexity of a plant or its location. We consider various relevant
criteria to assess when the mine is substantially complete
and ready for its intended use and moved into the produc-
tion stage. Some of the criteria considered would include,
but are not limited to, the following: (1) the level of capital
expenditures compared to construction cost estimates;
(2) the completion of a reasonable period of testing of mine
plant and equipment; (3) the ability to produce minerals in
saleable form (within specifications); and (4) the ability to
sustain ongoing production of minerals.
When a mine construction project moves into the pro-
duction stage, the capitalization of certain mine construction
costs ceases and costs are either capitalized to inventory
or expensed, except for capitalizable costs related to prop-
erty, plant and equipment additions or improvements,
underground mine development or reserve development.
Pre-production stripping costs are capitalized until an
“other than de minimis” level of mineral is produced, after
76
which time such costs are either capitalized to inventory
or expensed. We consider various relevant criteria to assess
when an “other than de minimis” level of mineral is pro-
duced. Some of the criteria considered would include, but
are not limited to, the following: (1) the amount of ounces
mined versus total ounces in reserves; (2) the amount of ore
tons mined vs. total LOM expected ore tons mined;
(3) the current stripping ratio versus the LOM strip ratio;
and (4) the ore grade versus the LOM grade.
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 environment and public safety on the closure and
reclamation of mining properties. We record the fair value
of an ARO in our consolidated 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 increase in an ARO is recorded as an adjustment to the
corresponding asset carrying amount and results in a pro-
spective increase in amortization expense. At closed mines,
any adjustment to an ARO is charged directly to earnings.
The fair values of AROs are measured by discounting
the expected cash flows using a discount factor that reflects
the credit-adjusted 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 updated mine closure plans to regulatory authorities.
In the future, changes in regulations or laws or enforcement
could adversely affect our operations; and any instances
of non-compliance 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
properties, 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 contamination 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 corresponding change in the life-of-mine
plan; changing ore characteristics that ultimately impact
the environment; 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 nears, 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 esti-
mating 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 that go
into the determination of an ARO, the fair value of AROs can
materially change over time.
At our operating mines, we continue to record AROs
based on disturbance of the environment over time. It is
reasonably possible that circumstances could arise during
or by the end of the mine life that will require material
revisions to AROs. In particular, the extent of water treat-
ment 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 our mines, following which it may be necessary
to adjust the fair value of AROs. The period of time over
which we have assumed that water quality monitoring and
treatment will be required has 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 assumptions and the lower end of the
range can be 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.
AROs
($ millions)
As at December 31
Operating mines
Closed mines
Development projects
Other
Total
2010
2009
$ 1,186 $
210
95
36
958
208
40
24
$ 1,527 $ 1,230
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Deferred Tax Assets and Liabilities
Measurement of Temporary Differences
We are periodically required to estimate the tax basis of
assets and liabilities. Where applicable tax laws and regula-
tions 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 consolidated financial state-
ments. Changes in deferred tax assets and liabilities generally
have a direct impact on earnings in the period of changes.
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 temporary timing differences that give rise to
deferred tax liabilities, and tax planning activities. Levels of
future taxable income are affected by, among other things,
market gold prices, and production costs, quantities of
proven and probable gold and copper reserves, interest rates
and foreign currency exchange rates. If we determine that
it is more likely than not (a likelihood of more than 50%)
that all or some portion of a deferred tax asset will not be
realized, 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 the
amount of valuation allowances, has been rising market
gold prices. A continuation of a trend of higher gold prices
could lead to the release of some of the valuation allowances
recorded, with a corresponding effect on earnings in the
period of release. Conversely, a decline in market gold prices
could lead to an increase in valuation allowances and a
corresponding increase in income tax expense.
In 2010, we released $129 million of valuation allow-
ances primarily because sources of income became available
that enabled tax losses and US Alternative Minimum Tax
(“AMT”) credits to be realized.
77
Management’s Discussion and Analysis
Valuation Allowances
($ millions)
As at December 31
Australia
Argentina
Barbados
Canada
Tanzania
Chile
United States
Other
Total
2010
2009
$ 104
97
73
52
30
20
7
42
$ 11
119
69
45
30
22
136
49
$ 425
$ 481
Chile, Argentina, Tanzania and Other: the valuation allow-
ances relate to the full amount of tax assets in subsidiaries
that do not have any present sources of gold production or
taxable income. In the event that these subsidiaries have
sources of taxable income in the future, we may release some
or all of the valuation allowances.
Canada: most of the valuation allowances relate to tax pools
which can only be utilized by income from specific sources.
Australia: most of the valuation allowances relate to capital
losses that can only be utilized if any capital gains are realized.
Non-GAAP Financial Performance Measures11
Adjusted Net Income (Adjusted Net Income per Share)
and Return on Equity
Adjusted net income is a non-GAAP financial measure
which excludes the following from net income:
Elimination of gold sales contracts;
Non-recurring tax adjustments;
Impairment charges related to goodwill, property, plant
and equipment, and investments;
Gains/losses on acquisitions/dispositions;
Foreign currency translation gains/losses;
Non-recurring restructuring costs; and
Unrealized gains/losses on non-hedge derivative instruments
Management uses this measure internally to evaluate the
underlying operating performance of the Company as a
whole for the reporting periods presented, and to assist
with the planning and forecasting of future operating results.
We believe that adjusted net income allows investors and
analysts to better evaluate the results of the underlying
business of the Company. While the adjustments to net
income in this measure include items that are recurring,
management believes that adjusted net income is a useful
measure of the Company’s performance because the
elimination of gold sales contracts, non-recurring tax
adjustments, impairment charges, gains/losses on asset
acquisitions/dispositions and non-recurring restructuring
charges do not reflect the underlying operating performance
of our core mining business and are not necessarily
indicative of future operating results. Furthermore, foreign
currency translation gains/losses and unrealized gains/losses
from non-hedge derivative contracts are not necessarily
11. The amounts presented in the non-GAAP financial performance measure tables
include the results of discontinued operations.
78
reflective of the underlying operating results for the report-
ing periods presented.
As noted, the Company uses this measure for its own
internal purposes. Management’s internal budgets and fore-
casts and public guidance do not reflect potential impairment
charges, potential gains/losses on the acquisition/disposition
of assets, foreign currency translation gains/losses, or
unrealized gains/losses on non-hedge derivative contracts.
Consequently, the presentation of adjusted net income
enables investors and analysts to better understand the
underlying operating performance of our core mining
business through the eyes of Management. Management
periodically evaluates the components of adjusted net
income based on an internal assessment of performance
measures that are useful for evaluating the operating
performance of our business segments and a review of the
non-GAAP measures used by mining industry analysts and
other mining companies.
We also present return on equity as a measure which is
calculated by dividing adjusted net income by average
shareholders’ equity. Management believes this to be a useful
indicator of the Company’s performance.
Adjusted net income and return on equity are intended
to provide additional information only and do not have any
standardized meaning prescribed by US GAAP and should
not be considered in isolation or as substitutes for measures
of performance prepared in accordance with US GAAP. The
measures are not necessarily indicative of operating profit
or cash flow from operations as determined under US GAAP.
Other companies may calculate these measures differently.
The following table reconciles these non-GAAP measures to
the most directly comparable US GAAP measure.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Reconciliation of Net Income to Adjusted Net Income and Return on Equity1
($ millions, except per share amounts in dollars)
For the years ended December 31
For the three months
ended December 31
Net income (loss)
Elimination of gold sales contracts
Non-recurring tax adjustments
Impairment charges related to intangibles, property,
plant and equipment, and investments
Gains on acquisitions/dispositions2
Foreign currency translation (gains)/losses3
Restructuring costs
Unrealized (gains)/losses on non-hedge derivative instruments
Adjusted net income
Net income per share4
Adjusted net income per share4
Average Shareholders’ Equity
Return on equity5
2010
2009
2008
2010
2009
$ 3,274
–
(4)
$ (4,274)
5,901
59
$
5
(41)
34
43
(32)
259
(85)
(95)
15
30
785
–
–
899
(178)
135
–
20
$ 896
–
74
–
(10)
(11)
3
(5)
$ 215
241
59
102
(1)
(22)
6
4
$ 3,279
$ 1,810
$ 1,661
$ 947
$ 604
3.32
3.32
$ 17,064
19%
(4.73)
2.00
$ 15,170
12%
0.90
1.90
0.90
$ 0.95
0.22
$ 0.61
$ 15,267
11%
1. Amounts presented in this table are post-tax.
2. Includes gains recorded on the Cerro Casale acquisition of $29 million. Refer to page 36 of this MD&A for further information.
3. Includes a currency translation gain of $70 million recorded in first quarter 2009 relating to Canadian deferred tax assets due to an election to adopt a US dollar functional
currency for Canadian tax purposes.
4. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
5. Calculated as adjusted net income divided by average shareholders’ equity.
Adjusted Operating Cash Flow and Free Cash Flow
Adjusted operating cash flow is a non-GAAP financial
measure which excludes the effect of elimination of gold
sales contracts.
Management uses adjusted operating cash flow as a
measure internally to evaluate the underlying operating cash
flow performance of the Company as a whole for the report-
ing periods presented, and to assist with the planning and
forecasting of future operating cash flow. The elimination of
gold sales contracts is an activity that is not reflective of the
underlying capacity of our operations to generate operating
cash flow and therefore this adjustment will result in a more
meaningful operating cash flow measure for investors and
analysts to evaluate our performance in the period and
assess our future operating cash flow generating capability.
We also present free cash flow as a measure which
excludes capital expenditures from adjusted operating cash
flow. Management believes this to be a useful indicator of the
Company’s ability to operate without reliance on additional
borrowing or usage of existing cash.
Adjusted operating cash flow and free cash flow are
intended to provide additional information only and do not
have any standardized meaning prescribed by US GAAP and
should not be considered in isolation or as substitutes for
measures of performance prepared in accordance with
US GAAP. The measures are not necessarily indicative of
operating profit or cash flow from operations as determined
under US GAAP. Other companies may calculate these
measures differently. The following table reconciles
these non-GAAP measures to the most directly comparable
US GAAP measures.
79
Management’s Discussion and Analysis
Reconciliation of Adjusted Operating Cash Flow and Free Cash Flow
($ millions)
Operating cash flow
Elimination of gold sales contracts
Adjusted operating cash flow
Capital expenditures
Free Cash Flow
For the years ended December 31
For the three months
ended December 31
2010
2009
2008
2010
2009
$ 4,127
656
$ (2,322)
5,221
$ 2,254
–
$ 781
656
$ (4,300)
5,221
$ 4,783
$ 2,899
$ 2,254
$ 1,437
$
921
(3,323)
(2,358)
(1,776)
(1,145)
(748)
$ 1,460
$
541
$ 478
$ 292
$
173
Total Cash Costs per ounce and
Net Cash Costs per ounce
Total cash costs per ounce/pound and net cash costs per
ounce are non-GAAP financial measures. Both measures
include all costs absorbed into inventory, as well as royalties,
by-product credits, and production taxes, and exclude
inventory purchase accounting adjustments, unrealized
gains/losses from non-hedge currency and commodity
contracts, and amortization and accretion. These measures
also include the gross margin generated by our Barrick
Energy business unit, which was acquired to mitigate our
exposure to oil prices as a credit against gold production
costs. The presentation of these statistics in this manner
allows us to monitor and manage those factors that impact
production costs on a monthly basis. These measures are
calculated by dividing the aggregate of the applicable costs
by gold ounces or copper pounds sold. These measures are
calculated on a consistent basis for the periods presented.
We have also adjusted our gold total cash costs to
remove the impact of ore purchase agreements that have
economic characteristics similar to a toll milling arrange-
ment. The cost of producing these ounces is not indicative of
our normal production costs. Hence, we have removed such
costs from total cash costs.
We calculate total cash costs and net cash costs based on
our equity interest in production from our mines. We believe
that using an equity interest presentation is a fairer, more
accurate way to measure economic performance than using
a consolidated basis. For mines where we hold less than a
100% share in the production, we exclude the economic
share of gold production attributable to the non-controlling
interest. Consequently, our production and total cash costs
and net cash costs statistics only reflect our equity share of
production.
Net cash costs measures the gross margin from all
non-gold sales, whether or not these non-gold metals are
produced in conjunction with gold, as a credit against the
cost of producing gold. A number of other gold producers
present their costs net of the contribution from non-gold
sales. We believe that including a measure of net cash costs
per ounce on this basis provides investors and analysts with
information with which to compare our performance to
other gold producers, and to better assess the overall perfor-
mance of our business. In addition, this measure provides
information to enable investors and analysts to understand
the importance of non-gold revenues to our cost structure.
Total cash cost and net cash cost statistics are intended
to provide additional information only and do not have any
standardized meaning prescribed by US GAAP and should
not be considered in isolation or as a substitute for measures
of performance prepared in accordance with US GAAP. The
measures are not necessarily indicative of operating profit or
cash flow from operations as determined under US GAAP.
Other companies may calculate these measures differently.
The following tables reconcile these non-GAAP measures to
the most directly comparable US GAAP measure.
80
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Reconciliation of Cost of Sales to Total Cash Costs per Ounce/Pound
($ millions, except per ounce/pound information in dollars)
For the years ended December 31
Cost of sales
Cost of sales applicable to discontinued operations
Cost of sales applicable to non-controlling interests1
Cost of sales applicable to ore purchase arrangement
Inventory purchase accounting adjustments
Unrealized non-hedge gains/(losses) on currency
and commodity contracts
Impact of Barrick Energy
Total cash costs
Copper
2008
2010
2009
2008
Gold
2009
$ 3,407
24
(12)
(29)
–
2010
$ 3,789
10
(107)
(104)
–
$ 3,377
49
(14)
–
(16)
$ 345
88
–
–
–
5
(56)
7
(20)
(14)
(14)
–
–
$ 361
83
–
–
–
–
–
$ 315
121
–
–
–
–
–
$ 3,537
$ 3,377
$ 3,368
$ 433
$ 444
$ 436
Ounces/pounds sold – consolidated basis (000s ounces/millions pounds)
Ounces/pounds sold – non-controlling interest (000s ounces)1
Ounces/pounds sold – equity basis (000s ounces/millions pounds)
7,963
(229)
7,734
7,307
(28)
7,279
7,658
(63)
7,595
391
–
391
380
–
380
367
–
367
Total cash costs per ounce/per pound
$ 457
$ 464
$ 443
$ 1.11
$ 1.17
$ 1.19
1. Relates to ABG’s partner’s 30% interest in Tulawaka.
Net Cash Costs per Ounce
($ millions, except per ounce/pound data in dollars)
For the years ended December 31
For the three months
ended December 31
Ounces gold sold – equity basis (000s)
Total cash costs per ounce – equity basis
Revenues from copper sales
Revenues from copper sales of discontinued operations
Unrealized non-hedge gold/copper derivative (gains) losses
Unrealized mark-to-market provisional price adjustments
Net revenues from copper excluding unrealized non-hedge
gains/losses from copper contracts
Copper cost of sales per consolidated statement of income
Copper cost of sales from discontinued operations
Copper credits
Copper credits per ounce
2010
2009
2008
2010
2009
7,734
$ 457
$ 1,102
244
(14)
–
7,279
$ 464
$ 943
212
49
(4)
7,595
$ 443
$ 1,007
221
(23)
38
1,825
$ 486
$ 333
74
2
–
1,797
$ 465
$ 398
–
13
(4)
$ 1,332
$ 1,200
$ 1,243
$ 409
$ 407
345
88
899
116
361
83
756
104
315
121
807
106
93
23
293
160
128
–
279
155
Net cash costs per ounce
$ 341
$ 360
$ 337
$ 326
$ 310
EBITDA and Adjusted EBITDA
EBITDA is a non-GAAP financial measure, which excludes
the following from net income:
Income tax expense;
Interest expense;
Interest income; and
Depreciation and amortization.
Management believes that EBITDA is a valuable indicator
of the Company’s ability to generate liquidity by producing
operating cash flow to: fund working capital needs,
service debt obligations, and fund capital expenditures.
Management uses EBITDA for this purpose. EBITDA is also
frequently used by investors and analysts for valuation
purposes whereby EBITDA is multiplied by a factor or
“EBITDA multiple” that is based on observed or inferred
relationship between EBITDA and market values to deter-
mine the approximate total enterprise value of a company.
81
Management’s Discussion and Analysis
EBITDA is intended to provide additional information to
investors and analysts, does not have any standardized mean-
ing prescribed by US GAAP and should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with US GAAP. EBITDA excludes
the impact of cash costs of financing activities and taxes, and
the effects of changes in operating working capital balances,
and therefore is not necessarily indicative of operating profit
or cash flow from operations as determined under US GAAP.
Other companies may calculate EBITDA differently.
We also present adjusted EBITDA as a non-GAAP
measure, which removes the effect of the elimination of gold
sales contracts. The elimination of gold sales contracts is an
activity that is not reflective of the underlying capacity of our
operations to generate earnings and therefore this adjustment
will result in a more meaningful earnings measure for
investors and analysts to evaluate our performance in the
period and assess our future earnings generating capability.
The following table provides a reconciliation of EBITDA
and adjusted EBITDA to net income.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
($ millions, except per share amounts in dollars)
For the years ended December 31
For the three months
ended December 31
2010
2009
2008
2010
2009
$ 3,274
1,370
121
(14)
1,149
$ (4,274)
648
57
(10)
1,016
$ 785
594
21
(39)
912
$ 896
472
6
(3)
264
$ 215
295
29
(3)
258
$ 5,900
$ (2,563)
$ 2,273
$ 1,635
$ 794
–
5,933
–
–
241
$ 5,900
$ 3,370
$ 2,273
$ 1,635
$ 1,035
$ 2,114
1,914
1,027
345
$ 1,259
1,245
597
236
$ 972
1,194
507
157
$ 588
441
312
110
$ 317
428
174
59
732
104
(88)
45
564
82
(106)
9
673
(35)
(176)
12
(293)
(6,449)
(1,031)
231
35
(32)
15
(65)
210
33
(16)
5
(416)
$ 5,900
$ (2,563)
$ 2,273
$ 1,635
$ 794
–
5,933
–
–
241
$ 5,900
$ 3,370
$ 2,273
$ 1,635
$ 1,035
Net income
Income tax expense
Interest expense
Interest income
Depreciation and amortization
EBITDA
Elimination of gold sales contracts
Adjusted EBITDA
Reported as:
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
South America
Australia Pacific
Capital Projects
Barrick Energy
Other
EBITDA
Elimination of gold sales contracts
Adjusted EBITDA
82
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Realized Prices
Realized price is a non-GAAP financial measure which
excludes from sales:
Unrealized gains and losses on non-hedge derivative
contracts;
Unrealized mark-to-market gains and losses on provisional
pricing from copper and gold sales contracts;
Sales attributable to ore purchase arrangement; and
Export duties.
This measure is intended to enable management to better
understand the price realized in each reporting period for
gold and copper sales because unrealized mark-to-market
value of non-hedge gold and copper derivatives and
unrealized mark-to-market gains and losses on outstanding
receivables from copper and gold sales contracts are sub-
ject to change each period due to changes in market factors
such as market and forward gold and copper prices so that
prices ultimately realized may differ from those recorded.
The exclusion of such unrealized mark-to-market gains and
losses from the presentation of this performance measure
enables investors to understand performance based on the
realized proceeds of selling gold and copper production.
The gains and losses on non-hedge derivatives and
receivable balances relate to instruments/balances that
mature in future periods, at which time the gains and losses
will become realized. The amounts of these gains and losses
reflect fair values based on market valuation assumptions
at the end of each period and do not necessarily represent
the amounts that will become realized on maturity. We also
exclude export duties that are paid upon sale and netted
against revenues. We believe this provides investors
and analysts with a more accurate measure with which to
compare to market gold prices and to assess our gold sales
performance. For those reasons, management believes that
this measure provides a more accurate reflection of the
Company’s past performance and is a better indicator of its
expected performance in future periods.
The realized price measure is intended to provide
additional information, and does not have any standardized
meaning prescribed by US GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with US GAAP. The
measure is not necessarily indicative of sales as determined
under US GAAP. Other companies may calculate this
measure differently. The following table reconciles realized
prices to the most directly comparable US GAAP measure.
Reconciliation of Sales to Realized Price per Ounce/per Pound
($ millions, except per ounce/pound information in dollars)
For the years ended December 31
Sales
Sales applicable to discontinued operations
Sales applicable to non-controlling interests
Sales attributable to ore purchase agreement
Unrealized non-hedge gold/copper derivative (gains) losses
Unrealized mark-to-market provisional price adjustments
Export duties
Gold
2009
$ 7,135
56
(27)
(26)
–
–
30
2010
$ 9,699
43
(204)
(111)
–
(1)
68
Copper
2008
2010
2009
2008
$ 6,577
79
(56)
–
2
(1)
23
$ 1,102
244
–
–
(14)
–
–
$ 943
212
–
–
49
(4)
–
$ 1,007
221
–
–
(23)
38
–
Sales – as adjusted
$ 9,494
$ 7,168
$ 6,624
$ 1,332
$ 1,200
$ 1,243
Ounces/pounds sold (000s ounces/millions pounds)
7,734
7,279
7,595
391
380
367
Realized gold/copper price per ounce/pound
$ 1,228
$ 985
$ 872
$ 3.41
$ 3.16
$ 3.39
83
Management’s Discussion and Analysis
Net Cash Margin
Management uses a non-GAAP financial measure, net cash
margin, which represents realized price per ounce less net
cash costs per ounce. This measure is used by management to
analyze profitability trends and to assess the cash-generating
capability from the sale of gold on a consolidated basis in
each reporting period, expressed on a unit basis. We believe
that it illustrates the performance of our business on a con-
solidated basis and enables investors to better understand
our performance in comparison to other gold producers
who present results on a similar basis and is an important
indicator of expected performance in future periods.
Our net cash margin is intended to provide additional
information, does not have any standardized meaning
prescribed by US GAAP and should not be considered in
isolation or as a substitute for measures of performance
prepared in accordance with US GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under US GAAP. Other companies
may calculate cash margin differently. The following table
derives this non-GAAP measure from previously defined
non-GAAP measures of realized gold price per ounce, total
cash costs per ounce, and copper credit per ounce, as
determined in the net cash cost reconciliation. Net cash
margin could also be derived from realized price per ounce
and net cash costs per ounce.
Reconciliation of Net Cash Margin per Ounce
(per ounce data in dollars)
Realized gold price per ounce
Total cash costs per ounce
Total cash margin per ounce
Copper credit per ounce1
Net cash margin per ounce
For the years ended December 31
For the three months
ended December 31
2010
2009
2008
2010
2009
$ 1,228
$ 985
$ 872
$ 1,368
$ 1,119
457
464
443
486
465
$ 771
$ 521
$ 429
$ 882
$ 654
116
104
106
160
155
$ 887
$ 625
$ 535
$ 1,042
$ 809
1. Copper credit per ounce is calculated as the margin from copper sales divided by gold ounces sold. Refer to the calculation in the net cash costs reconciliation on page 81.
Adjusted Debt and Net Debt
Management uses non-GAAP financial measures “adjusted
debt” and “net debt” since they are more indicative of how
we manage our debt levels internally than the US GAAP
measure. We believe these measures provide a meaningful
measure for investors and analysts to evaluate our overall
debt capacity, liquidity and capital structure. Adjusted debt
and net debt are intended to provide additional information,
do not have any standardized meaning prescribed by
US GAAP and should not be considered in isolation or
as a substitute for measures of performance prepared in
accordance with US GAAP.
We have adjusted our long-term debt to exclude fair
value on other adjustments and our partner’s share of project
financing and to include the remaining settlement obligation
to close out the gold sales contracts to arrive at adjusted
debt. We have excluded the impact of fair value and other
adjustments in order to reflect the actual settlement obliga-
tion in relation to the debt instrument. We have excluded
our partner’s share of project financing, where Barrick has
provided a guarantee only for its proportionate share of the
debt. We have included the settlement obligation related to
gold sales contracts because they have terms similar to long-
term debt instruments and have been settled in cash. We
then deduct our cash and equivalents (net of our partner’s
share of cash held at Pueblo Viejo) to arrive at net debt.
84
Adjusted Debt and Net Debt Summary
As at December 31
(in $ millions)
Debt per financial statements
Fair value and other adjustments1
Pueblo Viejo financing – partner’s share2
Settlement obligation to close out gold sales contracts3
Adjusted debt
Cash and equivalents
Cash and equivalents – partner’s share at Pueblo Viejo2
Net debt
Barrick Financial Report 2010 | Management’s Discussion and Analysis
2010
2009
$ 6,692
$ 6,335
13
(313)
–
(71)
–
655
$ 6,392
$ 6,919
(3,968)
118
(2,564)
–
$ 2,542
$ 4,355
1. Other adjustments primarily relate to issue costs which have been netted against the debts.
2. We consolidate 100% of Pueblo Viejo in our financial statements; however we have guaranteed only our 60% share of the $782 million financing received to this point.
Therefore, we have removed our partner’s share of both the financing and cash and equivalents to ensure comparability.
3. Based on the final settlement value of these contracts.
International Financial Reporting Standards (IFRS)
We are in the process of converting our basis of accounting
from US GAAP to IFRS effective for our first quarter report in
2011. The transition date of January 1, 2010 requires the con-
version, for comparative purposes, of our previously reported
balance sheets as at December 31, 2009 and December 31,
2010 and our interim and annual consolidated statements of
income and cash flows for 2010 from US GAAP to IFRS.
In this MD&A, we are providing an update on our con-
version project; a preliminary consolidated balance sheet as
at January 1, 2010 prepared under IFRS with reconciliations
to our December 31, 2009 unaudited balance sheet prepared
in accordance with US GAAP; a summary of the IFRS 1,
First-time Adoption of International Financial Reporting
Standards, (IFRS 1) elections we expect to apply on our
transition to IFRS; a preliminary impact assessment of the
IFRS conversion on our operating results for the year ended
December 31, 2010; and a summary of our IFRS policies
where there are significant changes from our US GAAP
policies. IFRS accounting standards, and the interpretation
thereof, are constantly evolving; accordingly, there may be
additional new or revised IFRS accounting standards prior
to the issuance of our first IFRS financial statements that
could affect the opening IFRS balance sheet, 2010 operating
results and related policies presented herein.
IFRS Project Update
The following chart provides an update of the key activities
contained in our conversion plan, the estimated completion
date for each of these activities as well as a current status
update. The following information will allow investors and
others to obtain a better understanding of our IFRS conver-
sion plan and its impacts on the Company.
85
Management’s Discussion and Analysis
Key Activities
Timing
Current Status
Financial Statement Preparation:
Analyze and select ongoing policies where
alternatives are permitted including IFRS 1
exemptions
Quantify key differences between IFRS and the
Company’s application of US GAAP
Revise Accounting Policy Manual
Prepare IFRS consolidated financial statements
including first-time adoption reconciliations
Training:
Provide technical training to key finance and
accounting personnel in each of our RBUs
Provide specialized training to selected employees
involved with the conversion to IFRS
Business Activities:
Identify conversion impacts on financial
covenants, executive compensation and contracts
Assess impact on budgeting and
long-range plans
Identify impact on taxation
Financial Information Systems:
Identify required changes to financial information
systems and implement solutions
Determine and implement solution for capturing
financial information under US GAAP and IFRS in
2010 (for comparative information)
Control Environment:
Maintain effective Disclosure Controls &
Procedures (DC&P) and Internal Control over
Financial Reporting (ICFR) throughout the
IFRS project
Design and implement new IFRS processes
and controls
Revised Accounting Policy Manual in place
by January 1, 2011
Quantification of impact of key differences
on opening balance sheet to be completed
in draft in Q2 2010
Quantification of impact of key differences
on Q1 and Q2 to be completed in draft in
Q3 2010; Q3 to be completed in draft
in Q4 2010; Q4 to be completed in draft
in Q1 2011
Skeleton IFRS consolidated financial
statements to be prepared for senior
management review in Q3 2010
Audit Committee review of the skeleton
consolidated financial statements in
Q4 2010
Finalization of key accounting policy
differences completed in Q4 2009
Senior management approval and Audit
Committee review of accounting/policy
changes and IFRS 1 elections completed in
Q4 2009
Development of IFRS Accounting Policy
Manual completed
Quantification of preliminary opening
balance sheet completed in Q3 2010
Quantification of impact of key differences
on Q1, Q2, Q3 and Q4 completed in draft
Development and review of preliminary
Q1 skeleton consolidated financial
statements completed in Q4 2010
Ongoing training to key personnel as
Technical training provided to key personnel
needed
Financial covenant, executive compensation
and contract analysis to be completed by
Q4 2010
Budgeting and long-range planning impact
to be completed by Q4 2010
Taxation analysis to be completed in
Q2 2010
in each of our RBUs and Corporate in
Q4 2009
Specific and refresher training provided to
selected groups throughout 2010
Financial covenant and contract analysis
completed
Budgeting and long-range planning
completed in Q4 2010 and Q1 2011
Identification of potential significant taxation
differences completed in Q2 2010 with final
assessments completed in Q3 2010
Solution for capturing financial information
IFRS reporting application has been
under US GAAP and IFRS in Q1 2010
Necessary changes to financial information
systems implemented by transition date
implemented to enable the capturing of
consolidated financial information under both
US GAAP and IFRS
Necessary changes to general ledger and
financial information systems are complete
and regularly updated
Incremental controls to be developed in
Completed an impact assessment of
Q2 2010 for the review of IFRS
comparative financial information
Redesigned processes and controls to be in
place by Q1 2011
IFRS technical accounting differences on
financial reporting risks, procedures,
systems and controls
Incremental controls implemented for
development of Opening Balance Sheet and
2010 comparative financial information
Completed an impact assessment of 2011
steady state processes and controls
Amendments to specific business processes
and controls are being finalized during
Q1 2011
Preliminary IFRS Consolidated Opening Balance Sheet
In third quarter of 2010, we completed our preliminary
opening consolidated IFRS balance sheet as at January 1,
2010. Our preliminary opening consolidated IFRS balance
sheet reflects the impact of the applicable IFRS 1 elections
that we expect to apply on transition to IFRS. The opening
consolidated IFRS balance sheet also reflects the impact
of accounting policy differences arising from the transition
86
Barrick Financial Report 2010 | Management’s Discussion and Analysis
from US GAAP to IFRS. The opening consolidated IFRS
balance sheet presented in this MD&A is preliminary and the
final opening consolidated IFRS balance sheet may reflect
adjustments relating to any new IFRS pronouncements
or other adjustments identified through fiscal year 2011.
Reconciliation of Consolidated Balance Sheets as Reported Under US GAAP and IFRS
(Unaudited)
(millions of US $)
Assets
Current assets
Cash and equivalents
Accounts receivable
Inventories
Other current assets
Assets held for sale
Non-current assets
Equity in investees
Other investments
Property, plant and equipment
Goodwill
Intangible assets
Deferred income tax assets
Other assets
Assets of discontinued operations
Total assets
Liabilities and Equity
Current liabilities
Accounts payable
Short-term debt
Current income tax liabilities
Other current liabilities
Liabilities held for sale
Non-current liabilities
Long-term debt
Provisions
Deferred income tax liabilities
Other liabilities
Liabilities of discontinued operations
Total liabilities
Equity
Capital stock
Convertible borrowings – equity component
Retained earnings
Accumulated other comprehensive income (“AOCI”)
Total equity attributable to Barrick Gold Corporation shareholders
Non-controlling interests
Total equity
Total liabilities and equity
As at December 31,
2009
US GAAP basis
Ref
Effect of
conversion to IFRS
As at January 1,
2010
IFRS basis
A
B
C
C2
D
E
F
G
D
G
F
J
H
I
$ 2,564
251
1,540
524
59
4,938
1,136
92
13,125
5,197
66
949
1,531
41
$
–
8
(52)
(6)
41
(9)
(12)
–
254
–
209
(348)
(203)
(41)
$ 2,564
259
1,488
518
100
4,929
1,124
92
13,379
5,197
275
601
1,328
–
$ 27,075
$ (150)
$ 26,925
$ 1,221
54
93
382
23
1,773
6,281
1,122
1,184
1,145
23
11,528
17,390
–
(2,382)
55
$
–
–
–
(16)
26
10
(157)
286
(224)
(261)
(23)
$ 1,221
54
93
366
49
1,783
6,124
1,408
960
884
–
(369)
11,159
2
143
(142)
178
17,392
143
(2,524)
233
15,063
181
15,244
484
15,547
$ 27,075
38
522
219
15,766
$ (150)
$ 26,925
87
Management’s Discussion and Analysis
References
A. Inventories (millions of US $)
Incr./(Decr.)
Capitalization of production phase stripping1
Other adjustments
Short-term inventories
Long-term inventories (included in other assets)
1. Refer to footnote C1.
$ (142)
3
$ (139)
$
(52)
(87)
$ (139)
E. Other Assets (millions of US $)
Reclassification of debt issue costs1
Long-term inventory adjustments (refer to A)
Adjustments relating to restricted stock units2
Other adjustments
Incr./(Decr.)
$ (45)
(87)
(68)
(3)
$ (203)
1. Under IFRS, direct and incremental costs incurred to issue debt securities are
recorded as a reduction in the carrying amount of the related debt instrument and
are unwound as a finance cost over the term of the debt.
2. Under IFRS, for restricted stock units, the long-term asset and corresponding
liability are not recognized and were therefore reversed.
B. Equity In Investees (millions of US $)
Incr./(Decr.)
F. Long-Term Debt (millions of US $)
Reversal of Highland Gold impairment
Elimination of interest capitalized on equity investees1
Capitalization of exploration and evaluation costs
within equity investees
Reclassification of hedge losses relating to capital
expenditures within equity investees
$ 55
(125)
22
36
$ (12)
1. Under IFRS, our investment in equity investees, where the activities are
development of mining projects, are not qualifying assets that are eligible for
interest capitalization.
C. Property, Plant and Equipment (millions of US $)
Incr./(Decr.)
Capitalization of production phase stripping
(net of accumulated depreciation of $275 million)1
Reclassification of acquired exploration properties
to intangible assets2
Capitalization of exploration and evaluation costs3
Adjustment due to deemed cost election for
oil & gas properties4
Reclassification of hedge gains relating to capital
expenditures from AOCI5
Adjustments to asset retirement costs
Other adjustments
$ 560
(209)
188
(166)
(56)
(41)
(22)
$ 254
1. Under IFRS, certain waste stripping costs qualify for capitalization, which were
previously expensed under US GAAP. Refer to page 94 for an explanation of the
policy under IFRS.
2. Under IFRS, acquired exploration properties meet the definition of an intangible
asset and consequently were reclassified.
3. Under IFRS, the criteria to determine costs that qualify for capitalization differ from
US GAAP. Refer to page 93 for an explanation of the policy under IFRS.
4. Under IFRS 1 exemptions, we elected to take fair value as deemed cost for certain
properties. For our oil and gas properties this election resulted in an adjustment
to the carrying value of some assets. Refer to page 89 for an explanation of the
IFRS 1 exemptions.
5. Under IFRS, accumulated hedge gains relating to capital expenditures are
presented as a reduction of the cost of the asset.
D. Deferred Income Taxes
The adjustments to deferred income tax assets and liabilities
principally reflect the tax effects of other IFRS adjustments.
88
Bifurcation of equity portion of senior convertible debt1
Reclassification of debt issue costs
Reversal to retained earnings of previously
amortized debt premium
Incr./(Decr.)
$ (143)
(45)
31
$ (157)
1. Under IFRS, the convertible debt instruments were bifurcated, and the debt and
equity portions were separately recognized.
G. Provisions (millions of US $)
Incr./(Decr.)
Reclassification of employee benefits and stock-based
compensation from other liabilities
Adjustments to Provisions for Environmental Rehabilitation
(PER) relating to discount rates and foreign exchange rates
Recognition of constructive obligations under IFRS
De-recognition of a provision that does not meet
IFRS recognition criteria
Adjustments to account for restricted stock units
Other adjustments
$ 261
73
39
(30)
(68)
11
$ 286
H. AOCI (millions of US $)
Incr./(Decr.)
Reset of cumulative translation losses1
Reset of actuarial losses relating to pension plans1
Reclassifications of accumulated hedge gains relating
to capital expenditures
Adjustments to hedge accounting to exclude
the time value of options
Other adjustments
$ 141
37
(20)
33
(13)
$ 178
1. Under IFRS 1 exemptions we chose to reset the balance within AOCI relating to
cumulative translation losses and actuarial losses on pension plans. Refer to
page 89 for an explanation of the IFRS 1 exemptions.
I. Non-Controlling Interests
The impact on non-controlling interests of capitalization
of exploration and evaluation costs was an increase of
$38 million, principally relating to Pueblo Viejo.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
J. Retained Earnings Reconciliation (millions of US $)
ii) Employee Future Benefits
As at January 1, 2010
US GAAP, as reported
IFRS 1 Exemptions
Reset of actuarial gains and losses relating to pension plans
Reset of cumulative translation account
IFRS Policy choices
Capitalized production phase stripping
Capitalized exploration & evaluation costs
Reversal of Highland Gold impairment
Adjustment due to deemed cost election for
oil & gas properties
Elimination of capitalized interest on equity investees
Increase in PERs1
Decrease in asset relating to the rehabilitation provision2
Bifurcation of senior convertible debt
Adjustments to hedge accounting to exclude
time value of options
Tax effect of adjustments, net
Other adjustments
$ (2,382)
(37)
(141)
408
160
55
(166)
(125)
(69)
(32)
(31)
(33)
(108)
(23)
IFRS basis
$ (2,524)
1. Under IFRS, increase in PERS resulted from changes due to using current vs.
historical discount and foreign exchange rates, and changes in cash flows due to
additional constructive obligations.
2. Calculated using the IFRS 1 simplified approach (see (iii) on page 89).
Elected IFRS 1 Exemptions from Full
Retrospective Application
Our transition to IFRS follows IFRS 1, which offers the pos-
sibility to utilize certain exemptions from full retrospective
implementation of IFRS. We evaluated the options available
in IFRS 1 and elected to adopt transitional implementation
policies in the areas of business combinations, employee
benefits, rehabilitation provisions, cumulative translation
differences and fair value as a deemed cost election.
A summary of these transitional accounting policies is
given below.
i) Business Combinations
We elected to utilize the option in IFRS 1 to not apply
IFRS 3 retrospectively to business combinations
completed prior to January 1, 2010. The impact of this
policy decision is that all prior business combinations
will continue to be accounted for as they originally were
under US GAAP, including recognition of any goodwill
identified in these transactions.
IFRS 1 allows for all cumulative actuarial gains and
losses at the date of transition to be reset to zero within
AOCI as of the date of transition as an alternative to full
retrospective application of IAS 19 Employee Benefits.
We chose to adopt this transition policy.
iii) Rehabilitation Provision
Under IFRS, when a rehabilitation provision is
established, we are required to set up a corresponding
asset and depreciate it over the remaining useful life of
the asset. Any changes in the rehabilitation provision are
added or deducted from the cost of the asset to which
the obligation relates. Under IFRS 1, we elected to take
a simplified approach to calculate and record the asset
related to the rehabilitation provision on our opening
IFRS consolidated balance sheet. As permitted under
IFRS, the rehabilitation provision calculated on the
transition date in accordance with IAS 37 is discounted
back to the date when the provision first arose, at which
date the corresponding asset is set up. This asset is then
depreciated to its carrying amount at the transition date.
iv) Cumulative Translation Differences
We elected to utilize the option under IFRS 1 to reset
the cumulative translation account within AOCI to
zero as of the date of transition to IFRS as an alternative
to establishing a retrospective cumulative translation
difference under the principles of IAS 21.
v) Fair Value as Deemed Cost
IFRS 1 provides the option to record certain assets at
fair value on transition or at an earlier date as an
alternate to full retrospective application of IFRS in
accounting for the asset. The option is available on an
individual asset by asset basis. We chose to adopt this
transition election on selected assets at the following
properties: Pascua-Lama, Goldstrike, Plutonic, Marigold,
Pierina, Osborne and Barrick Energy.
89
Management’s Discussion and Analysis
Preliminary Impact of the IFRS Conversion
on our Statement of Income for the year ended
December 31, 2010
During 2010 and in the first quarter of 2011, we continued to
perform preliminary calculations of the quantitative differ-
ences arising from our conversion from US GAAP to IFRS
on the operating results for the year ended December 31,
2010. Presented in the tables below are the preliminary
impacts identified to date of our conversion to IFRS on
our consolidated statement of income for the year ended
December 31, 2010. The actual impact of our conversion to
IFRS is subject to management’s final review as well as audit
by the Company’s independent registered accounting firm
and may vary significantly from the preliminary impacts
identified below because of a number of factors including
without limitation, additional or revised information and
changes in accounting standards or policies or in how these
standards are applied.
(Unaudited)
(millions of US $)
Sales
Costs and expenses
Cost of sales
Corporate administration
Exploration and evaluation
Other expense
Impairment charges (reversals)
Other income
Income (loss) from equity investees
Gain (loss) on non-hedge derivatives
Income before finance items and income taxes
Finance items
Finance income
Finance costs
Income before income taxes
Income tax expense
Income from continuing operations
Income from discontinued operations
Net income3
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests
Ref
K
L
M
N
O
P
Q
R
S
TBD2
For the year ended December 31, 2010
US GAAP
measurement
basis1
Effect of IFRS
measurement
differences
IFRS basis
$ 10,991
$ 14
$ 11,005
5,390
154
333
459
7
6,343
100
(41)
103
4,810
14
(168)
4,656
(1,480)
3,176
121
$ 3,297
$ 3,274
23
$
(228)
3
(104)
14
(80)
(395)
42
18
(38)
431
–
10
441
TBD
TBD
–
$ TBD
$ TBD
$ TBD
5,162
157
229
473
(73)
5,948
142
(23)
65
5,241
14
(158)
5,097
TBD
TBD
121
$
TBD
$
$
TBD
TBD
1. Certain US GAAP figures have been reclassified to conform to our expected IFRS financial statement presentation.
2. TBD = to be determined.
3. Net income under IFRS has not been presented since final assessment of differences has not been completed.
90
References
K. Sales
(millions of US $)
US GAAP, as reported
By-product revenue reclassified from cost of sales1
Gain on non-hedge derivatives2
US GAAP, as adjusted for IFRS format
Revenue recognition3
IFRS basis
Barrick Financial Report 2010 | Management’s Discussion and Analysis
M. Exploration and Evaluation
(millions of US $)
For the year ended
Dec. 31, 2010
For the year ended
Dec. 31, 2010
$ 10,924
US GAAP Exploration, as reported
US GAAP Project Development Costs, as reported
131
(64)
US GAAP, as adjusted for IFRS format1
Capitalized exploration expenditures2
Capitalized project development costs2
10,991
14
$ 11,005
IFRS basis
$ 180
153
333
(26)
(78)
$ 229
1. Recognition of incidental by-product sales previously recorded as a credit to costs
of sales will be presented as part of sales commencing January 1, 2010.
2. Under IFRS, all realized and unrealized non-hedge derivative gains or losses, hedge
ineffectiveness and amounts not qualifying for hedge accounting are presented
as a separate line on the consolidated income statement. Under US GAAP these
amounts were presented in the respective income statement line item to which the
gain or loss is related.
3. Sales increased on transition due to earlier recognition of revenue for our concen-
trate sales at Bulyanhulu mine. Under IFRS, revenue is recognized on transfer of
risk and rewards as compared to recognition on transfer of title under US GAAP.
L. Cost of Sales
(millions of US $)
US GAAP cost of sales, as reported
US GAAP amortization and accretion, as reported
By-product revenue reclassified from cost of sales1
Reclassification of certain royalty payments to income tax2
Reclassification of accretion expense to finance costs3
Gain on non-hedge derivatives4
US GAAP, as adjusted for IFRS format
Capitalization of production phase stripping5
Depreciation expense6
Other adjustments
For the year ended
Dec. 31, 2010
$ 4,201
1,196
131
(101)
(47)
10
5,390
(292)
63
1
1. For IFRS purposes, exploration costs and project development costs are combined
and presented as “Exploration and Evaluation Costs”.
2. Under IFRS the criteria to determine costs that qualify for capitalization differs
from US GAAP. We capitalized additional exploration and evaluation costs at
certain properties, mainly Cerro Casale, where management assessed under IFRS
that it is probable that these expenditures will result in future economic benefits.
N. Other Expense
(millions of US $)
US GAAP, as reported
Reclassification of certain payments to income tax1
Gain on non-hedge derivatives2
US GAAP, as adjusted for IFRS format
PER adjustments for closed mines3
Others
IFRS basis
For the year ended
Dec. 31, 2010
$ 463
(9)
5
459
19
(5)
$ 473
1. Under IFRS certain payments that are made to government bodies and are
calculated based on net profit are classified as taxes. We reclassified the Peru
voluntary payments to income tax expense.
2. Refer to footnote K2.
3. Under IFRS, PERs are updated each reporting period based on the current discount
and foreign exchange rates.
O. Impairment Charges (Reversals)
IFRS basis
IFRS cost of sales applicable to:
Gold
Copper
Oil & Gas
Others
Total
1. Refer to footnote K1.
2. Under IFRS, certain payments that are made to government bodies and are
calculated based on net profit are classified as taxes. We reclassified the following
to income tax expense: Nevada Net Proceeds Tax and Cowal royalty.
3. For IFRS purposes, accretion expense is presented as part of “Finance Costs”.
4. Refer to footnote K2.
5. Costs of sales were lower primarily due to capitalized production phase
stripping costs.
6. Depreciation expense increased under IFRS due to higher book values resulting
from capitalization of production phase stripping costs and exploration and
evaluation costs, and the impact of the calculation on the asset related to the
environmental rehabilitation provisions under IFRS 1 for opening balance sheet
as at January 1, 2010.
$ 5,162
(millions of US $)
US GAAP, as reported
Reversal of Highland Gold impairment1
Others
IFRS basis
$ 4,566
430
115
51
$ 5,162
For the year ended
Dec. 31, 2010
$ 7
(84)
4
$ (73)
1. Under IFRS past impairments of equity investments can be reversed in the future if
there is a recovery in the realizable value of the investment. In 2008, we recorded
an impairment of $140 million on our investment in Highland Gold. The fair value
of the investment has increased since the write down; therefore, partial reversals
were recorded under IFRS at transition date and in subsequent quarters.
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Management’s Discussion and Analysis
P. Other Income
(millions of US $)
US GAAP, as reported
Gain on non-hedge derivatives1
US GAAP, as adjusted for IFRS format
Gain on Cerro Casale acquisition2
Other adjustments
IFRS basis
For the year ended
Dec. 31, 2010
S. Finance Costs
(millions of US $)
$ 124
(24)
100
40
2
$ 142
US GAAP interest expense, as reported
Reclassification of accretion expense1
US GAAP, as adjusted for IFRS format
Elimination of interest capitalized on equity investees2
Interest capitalized to Property Plant and Equipment3
Changes in accretion expense4
Other adjustments
1. Refer to footnote K2.
2. In the first quarter of 2010, Barrick acquired an additional 25% ownership interest
in the Cerro Casale project. Due to the elimination of capitalized interest under
IFRS, the assets had a lower book value on equity investments which resulted in a
higher gain on acquisition recorded as other income.
IFRS basis
For the year ended
Dec. 31, 2010
$ (121)
(47)
(168)
(25)
20
26
(11)
$ (158)
1. For IFRS purposes, interest expense and accretion are combined and presented
as “Finance Costs”.
2. Under IFRS, our investment in equity investees where the activities are
development of mining projects are not qualifying assets that are eligible for
interest capitalization. On transition and in subsequent quarters, this resulted in
the reversal of previously capitalized interest primarily related to Cerro Casale.
3. Under IFRS, capitalization of production phase stripping and capitalized
exploration and evaluation costs resulted in an increase in capitalized interest
relating to those expenditures.
4. Under IFRS, accretion expense changed due to changes in discount and foreign
exchange rates on PER.
Preliminary impact of conversion to IFRS on
2010 Total Cash Costs per ounce,
Depreciation per ounce and Capital Expenditures
Total Cash Costs – Gold
($ per ounce)
US GAAP, as reported
Capitalized stripping costs1
Reclassification of certain payments to income tax2
Other adjustments
IFRS basis
1. Refer to footnote L5.
2. Refer to footnote L2.
Depreciation – Gold
($ per ounce)
US GAAP, as reported
Depreciation of capitalized stripping costs1
Depreciation of capitalized exploration and evaluation costs1
Other adjustments
IFRS basis
1. Refer to footnote L6.
For the year ended
Dec. 31, 2010
$ 457
(36)
(13)
1
$ 409
For the year ended
Dec. 31, 2010
$ 127
8
2
(1)
$ 136
Q. Income (Loss) from Equity Investees
(millions of US $)
US GAAP, as reported
Capitalization of exploration and evaluation costs
within equity investees1
IFRS basis
1. Refer to footnote M2.
R. Gain (Loss) on Non-Hedge Derivatives1
(millions of US $)
US GAAP, as reported
Net realized and unrealized gains on non-hedge
derivative positions
Unrealized gains due to hedge ineffectiveness
US GAAP, as adjusted for IFRS format
Reclassification of loss on time value of options from AOCI
IFRS basis
For the year ended
Dec. 31, 2010
$ (41)
18
$ (23)
For the year ended
Dec. 31, 2010
$ Nil
93
10
103
(38)
$ 65
1. Under IFRS, all realized and unrealized non-hedge derivative gains or losses, hedge
ineffectiveness and amounts not qualifying for hedge accounting are presented
as a separate line on the consolidated income statement. Under US GAAP these
amounts were presented in the respective income statement line item to which the
gain or loss is related.
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
Capital Expenditures
(millions of US $)
For the year ended
Dec. 31, 2010
IFRS
100% basis
Adj
US GAAP
100% basis
Sustaining capital
Open pit and underground
mine development1
Expansion capital1
Capital projects1,2
Capitalized interest
$ 863
$
–
$ 863
214
236
1,729
281
357
15
63
28
571
251
1,792
309
Total
$ 3,323
$ 463
$ 3,786
1. Capital expenditures increased due to the capitalization of production phase
stripping costs and exploration and evaluation expenditures.
2. Represents total project expenditures on a consolidated basis. Under IFRS, our part-
ner’s share of project capital expenditures is $410 million (US GAAP: $394 million).
Key IFRS Accounting Policies
The following is a summary of key IFRS accounting policies
which differ significantly from the comparable US GAAP
policies and which were applied in preparing the preliminary
consolidated IFRS balance sheet as at January 1, 2010 and
the preliminary IFRS operating results for the year ended
December 31, 2010.
Exploration and Evaluation Expenditures
Exploration expenditures reflect the costs related to the
initial search for mineral deposits with economic potential
or obtaining more information about existing mineral
deposits. Exploration expenditures typically include costs
associated with prospecting, sampling, mapping, diamond
drilling and other work involved in searching for ore.
Generally, expenditures relating to exploration activities
are expensed as incurred. Capitalization of exploration
expenditure commences when it is probable that future
economic benefits will flow to the Company. The assessment
of probability is based on factors such as whether the drilling
is performed in a resource that is contiguous or adjacent
to an existing reserve.
Evaluation expenditures reflect costs incurred at
development projects related to establishing the technical
and commercial viability of developing mineral deposits
identified through exploration or acquired through a
business combination or asset acquisition. Evaluation expen-
ditures include the cost of (i) establishing the volume and
grade of deposits through drilling of core samples, trenching
and sampling activities in an ore body that is classified as
either a mineral resource or a proven and probable reserve,
(ii) determining the optimal methods of extraction and
metallurgical and treatment processes, (iii) studies related to
surveying, transportation and infrastructure requirements,
(iv) permitting activities, and (v) economic evaluations to
determine whether development of the mineralized material
is commercially justified, including scoping, prefeasibility
and final feasibility studies. Evaluation expenditures and
the subsequent mine development costs are capitalized if
management determines that there is sufficient evidence to
support probability of generating positive economic returns
in the future.
If an exploration and evaluation activity does not prove
viable, all irrecoverable costs with the project are written off.
Cash flows attributable to capitalized exploration
and evaluation costs are classified as investing activities in
the consolidated statements of cash flow.
For our petroleum and natural gas properties, we follow
the successful efforts method of accounting, whereby
exploration expenditures that are either general in nature
or related to an unsuccessful drilling program are written
off. Only costs that relate directly to the discovery and
development of specific commercial oil and gas reserves are
capitalized as development costs.
Property, Plant and Equipment
Land, Buildings, Plant and Equipment
We record buildings, plant and equipment at cost, less
accumulated depreciation and applicable impairment losses.
Cost includes all expenditures incurred to prepare an asset
for its intended use, including the purchase price; brokers’
commissions; and installation costs including architectural,
design and engineering fees, legal fees, survey costs, site
preparation costs, freight charges, transportation insurance
costs, duties, testing and preparation charges. Depreciation
commences when buildings, plant and equipment are
considered available for use. Land is not depreciated and is
measured at historical cost less impairments.
We capitalize costs that extend the productive capacity
or useful economic life of an asset. Costs incurred that do
not extend the productive capacity or useful economic life of
an asset are considered repairs and maintenance that may be
part of production cost and capitalized to inventory.
We enter into leasing arrangements and arrangements
that are in substance leasing arrangements. The determina-
tion of whether an arrangement is, or contains, a lease is
based on the substance of the arrangement at inception
date, including whether the fulfillment of the arrangement
is dependent on the use of a specific asset or assets or
whether the arrangement conveys a right to use the asset.
A reassessment after inception is only made in specific
93
Management’s Discussion and Analysis
circumstances. Leasing arrangements that transfer
substantially all the risks and rewards of ownership of the
asset to Barrick are classified as finance leases.
Finance leases are recorded as an asset with a
corresponding liability at an amount equal to the lower of
the fair value of the leased property and the present value
at the beginning of the lease term of the minimum lease
payments over the term of the lease. Each lease payment is
allocated between the liability and finance costs using the
effective interest method, whereby a constant rate of interest
expense is recognized on the balance of the liability
outstanding. The interest element of the lease is charged to
the consolidated statements of income as a finance cost.
All other leases are classified as operating leases.
Operating lease payments are recognized as an operating
cost in the consolidated statements of income on a straight-
line basis over the lease term.
Mining Interests
Mining interests consist of capitalized costs that include:
(i) Acquired mineral reserves and resources,
(ii) Underground mine development costs,
(iii) Open pit mine development costs,
(iv) Capitalized exploration and evaluation cost, and
(v) Capitalized interest.
Depreciation commences when assets are available for their
intended use.
(i) Acquired Mineral Reserves and Resources
Acquired Mining Properties
On acquisition of a mining property in the development
or production stage, we prepare an estimate of the fair value
attributable to the proven and probable mineral reserves,
mineral resources and exploration potential that manage-
ment has determined to be probable for future economic
extraction over the life of mine. The estimated fair value
of these reserves, resources and exploration potential is
recorded as an asset as at the date of acquisition at cost,
less accumulated depreciation and applicable accumulated
impairment losses.
Acquired Petroleum and Natural Gas Properties
On acquiring petroleum and natural gas property, we
estimate the fair value of reserves and resources and we
record this amount as an asset at the date of acquisition.
Capitalized reserve acquisition costs are depreciated when
the asset is available for its intended use.
94
(ii) Underground Mine Development Costs
At our underground mines, we incur development costs
to build new shafts, drifts and ramps that will enable us
to physically access ore underground. The time over which
we will continue to incur these costs depends on the mine
life. These underground development costs are capitalized
as incurred.
(iii) Open Pit Development Costs
In open pit mining operations, it is necessary to remove
overburden and other waste materials to access ore from
which minerals can be extracted economically. The process
of mining overburden and waste materials is referred to
as stripping.
Stripping costs incurred during the development stage
of a mine in order to provide initial access to the ore body
(referred to as pre-production stripping) are capitalized as
mine development costs. Stripping costs incurred during the
production stage (referred to as production phase stripping)
are accounted for as current period production costs unless
these costs result in a future economic benefit. Production
phase stripping costs generate a future economic benefit
when the related stripping activity: (i) provides access to ore
to be mined in the future; (ii) increases the fair value of the
mine (or pit) as access to future mineral reserves becomes
less costly; (iii) increases the productive capacity or extends
the productive life of the pit. Such production phase
stripping costs are capitalized as mine development costs.
For periods where production phase stripping activity
generates a future economic benefit, the life-of-pit waste
tons to ore tons ratio (the “strip ratio”) is considered, along
with other factors such as the length and intensity of the
stripping campaign, to determine the amount of production
stripping costs incurred that is related to current production
versus the amount that relates to the future economic benefit.
Where a mine operates several open pits that are
regarded as separate operations for the purpose of mine
planning, stripping costs are accounted for separately by
reference to the ore reserves from each separate pit (i.e. the
initial stripping of the second and subsequent pits is
considered to be pre-production stripping). If, however, the
pits are highly integrated for the purpose of mine planning,
the second and subsequent pits are regarded as extensions of
the first pit in accounting for stripping costs. In such cases,
the initial stripping of the second and subsequent pits is
considered to be production phase stripping relating to the
combined operation.
(iv) Capitalized Exploration and Evaluation Costs
Exploration and evaluation expenditures that result in a
probable future economic benefit are capitalized (refer to
page 93).
(v) Capitalized Interest
Interest cost is considered an element of the historical cost
of an asset when a period of time is necessary to prepare it
for its intended use. We capitalize interest costs for qualifying
assets including our exploration properties and capital
projects prior to when production begins while exploration,
development or construction activities are in progress and
borrowings have been incurred. Capitalization ceases
when construction is interrupted for an extended period
or when the asset is substantially complete. Where funds
are borrowed specifically to finance a project, the amount
capitalized represents the actual borrowing costs incurred.
Where surplus funds available out of money borrowed
specifically to finance a project are temporarily invested,
the total capitalized interest is reduced by income generated
from short-term investments of such funds. Where the
funds used to finance a project form part of general borrow-
ings, the amount capitalized is calculated using a weighted
average of rates applicable to the relevant borrowings during
the period.
Other Assets Not Subject to Depreciation
Non-Depreciable Mining Interest
On acquisition of a mining property in the development or
production stage, we prepare an estimate of the fair value
attributable to the mineral resources that management has
determined not to be probable of future economic extrac-
tion, as well as the fair value attributable to the exploration
potential of the property. The estimated fair value of these
acquired resources and exploration potential is recorded
as an asset (non-depreciable mining interest) as at the acqui-
sition date. As part of our annual business cycle, we prepare
estimates of gold and copper mineral reserves and resources
for each mineral property. The changes in reserves and
resources are, among other things, used to determine
the amount to be converted from non-depreciable mining
interests to depreciable mining interests.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Construction-in-Progress
Assets under construction at both our development
projects and operating mines are capitalized as construction-
in-progress. Construction-in-progress amounts related to
development projects are included in the carrying amount
of the development project. Construction-in-progress
amounts incurred at operating mines are presented as a
separate asset within Property Plant & Equipment (“PP&E”).
The cost of PP&E comprises its purchase price and any costs
directly attributable to bringing it into working condition
for its intended use, at which point, it is transferred to PP&E
and depreciation commences. Construction-in-progress
also contains deposits on long lead items. Construction-in-
progress is not depreciated.
Depreciation
Property, plant and equipment are depreciated over their
useful life, or over the remaining life of the mine if shorter.
The property, plant and equipment assets acquired under
finance leases are depreciated over the shorter of the useful
life of the asset and the lease term. The residual value of
the asset is considered when determining the amount to be
depreciated. Land is not depreciated and is measured at
historical cost less impairments.
For mining interests, the economic benefits of the assets
are consumed in a pattern which is linked to the production
level. Such assets are depreciated on a units-of-production
basis (“UOP”).
Capitalized costs associated with acquired mining
properties and capitalized exploration and evaluation costs
are depreciated on a UOP basis, whereby the denominator
is the estimated ounces of gold/pounds of copper in proven
and probable reserves and a portion of resources at the
mine where it is considered probable that those resources
will be extracted economically. The depreciation is included
as a component of inventory cost as the applicable ore is
extracted.
Acquired petroleum and natural gas reserves and
resources and capitalized exploration costs are depreciated
on a UOP basis, whereby the denominator is the estimated
barrels of oil equivalent in proven reserves.
Capitalized underground development costs incurred
and capitalized to enable access to specific ore blocks or
areas of the underground mine, and which only provide
an economic benefit over the period of mining that ore
block or area, are depreciated on a UOP basis, whereby the
denominator is estimated ounces of gold/pounds of copper
95
Management’s Discussion and Analysis
in proven and probable reserves and a portion of resources
within that ore block or area where it is considered probable
that those resources will be extracted economically.
If capitalized underground development costs provide
an economic benefit over the entire mine life, the costs
are depreciated on a UOP basis, whereby the denominator
is the estimated ounces of gold/pounds of copper in total
accessible proven and probable reserves and a portion
of resources where it is considered probable that those
resources will be extracted economically.
Production phase stripping costs that generate a future
economic benefit to Barrick are capitalized as mine devel-
opment costs and depreciated on a UOP basis whereby the
denominator is the estimated ounces of gold/pounds of
copper in the associated open pit in proven and probable
reserves and a portion of resources where it is considered
probable that those resources will be extracted economically.
The depreciation is included as a component of inventory
cost as the applicable ore is extracted.
Depreciation on equipment utilized in the development
of assets, including open pit and underground mine devel-
opment, is depreciated and recapitalized as development
costs attributable to the related asset.
Annual Depreciation Rates of Major Assets Categories
Land
Mining Interests
Plant and equipment
Underground mobile equipment
Light vehicles and other mobile equipment
Furniture, computer and office equipment
Oil and gas plants and related facilities
Not depreciated
UOP
5 – 25 years
5 – 7 years
2 – 3 years
2 – 3 years
3 – 15 years
Each asset’s estimated residual value and useful life is
reviewed, and adjusted if appropriate, on an annual basis.
The estimate of residual value and useful life is based on the
physical condition and life limitations of buildings, plant
and equipment and the present assessment of economically
recoverable ounces of the mine for the mining property and
development cost asset. Changes to the estimated residual
values or useful lives are accounted for prospectively.
Update of Gold and Copper Mineral Reserves and Resources
At the end of each fiscal year, as part of our annual business
cycle, we update our life-of mine plans and prepare estimates
of Proven and Probable gold and copper mineral reserves
as well as measured, indicated and inferred mineral
resources for each mineral property. We prospectively
revise calculations of depreciation of property, plant and
equipment based on these updated life-of-mine plans.
Impairment Evaluations
We review and test the carrying amounts of long-lived
assets when events or changes in circumstances suggest that
the carrying amount may not be recoverable. Impairment
assessments are conducted at the level of cash-generating
units (“CGUs”), which is the lowest level for which
identifiable cash flows are largely independent of the cash
flows of other assets. For operating mines, capital projects
and petroleum and natural gas properties, the individual
mine/project/property represents a CGU for impairment
testing of long-lived assets.
The recoverable amount of a CGU is the higher of Value
In Use (“VIU”) and Fair Value Less Cost to Sell (“FVLCS”).
An impairment loss is recognized for any excess of carrying
amount of a CGU over its recoverable amount. Impairment
losses are allocated pro-rata based on relative carrying
values. Any impairment is recognized as an expense in the
consolidated statements of income in the reporting period
in which the write-down occurs.
Long-lived assets subject to potential impairment at
mine sites/capital projects/petroleum and natural gas
properties include land, buildings, plant and equipment,
mineral properties and capitalized development costs,
construction-in-progress and development projects.
Impairment Reversals
An impairment loss recognized in prior years for long-lived
assets shall be reversed if, and only if, there has been a
change in the estimates used to determine the asset’s recov-
erable amount since the last impairment loss was recognized.
This reversal is recognized in the consolidated statements
of income and is limited to the carrying amount that would
have been determined, net of any depreciation, had no
impairment been recognized in prior years. After such a
reversal, any depreciation charge is adjusted prospectively.
96
Barrick Financial Report 2010 | Management’s Discussion and Analysis
Goodwill and Intangible Assets
Goodwill
Under the acquisition method, the costs of business
acquisitions are allocated to the assets acquired and liabilities
assumed based on the estimated fair values at the date of
acquisition. The excess of acquisition cost over the net fair
value of identified tangible and intangible assets acquired
and liabilities and contingent liabilities assumed represents
goodwill that is allocated to CGUs.
Impairment Evaluations
Goodwill is not amortized; rather it is evaluated for
impairment annually as of October 1 or at any time during
the year if an indicator of impairment is considered to exist.
We test goodwill at the operating segment level, since each
CGU in a segment derives synergy benefits from the business
combinations within that segment that give rise to goodwill,
and management does not internally monitor goodwill at a
lower level. An impairment loss is recognized for the amount
by which the operating segment’s carrying amount exceeds
its recoverable amount.
The recoverable amount of an operating segment is the
higher of Value In Use (“VIU”) and Fair Value Less Cost to
Sell (“FVLCS”). An impairment loss is recognized for any
excess of carrying amount of an operating segment over
its recoverable amount. Any impairment is recognized as
an expense in the consolidated statements of income in
the reporting period in which the write-down occurs. The
impairment loss is allocated to reduce the carrying amount
of the assets of the operating segment in the following order:
(a) first, to reduce the carrying amount of goodwill allocated
to the operating segment, (b) then, to the other assets of
the operating segment pro rata on the basis of the carrying
amount of each asset.
Impairment Reversals
An impairment loss recognized for goodwill shall not be
reversed in a subsequent period.
Intangible Assets
Intangible assets acquired by way of an asset acquisition or
business combination are recognized if the asset is separable
or arises from contractual or legal rights and the fair value
can be measured reliably on initial recognition. On
acquisition of a mineral property in the exploration stage,
we prepare an estimate of the fair value attributable to the
exploration potential, including mineral resources, if any, of
that property. The fair value of the exploration potential
is recorded as an intangible asset (acquired exploration
potential) as at the date of acquisition. When an exploration
stage property moves into development, any acquired
exploration intangible asset balance attributable to that
property is transferred to non-depreciable mining interests
within property, plant and equipment.
Impairment Evaluations
We review and test the carrying amounts of intangible assets
when events or changes in circumstances suggest that the
carrying amount may not be recoverable. Intangible assets
that are currently in use and subject to amortization are
included in the carrying amount of the appropriate CGU
and tested for impairment together with the other long lived
assets of that CGU. Intangible assets that are not subject to
amortization are tested at an individual asset level.
Impairment Reversals
An impairment loss recognized in prior years for intangible
assets is reversed if there has been a change in the circum-
stances that led to the impairment loss and it has been
determined that the asset is no longer impaired as a result.
This reversal is recognized in the consolidated statements
of income and is limited to the carrying amount that would
have been determined, net of any depreciation where
applicable, had no impairment been recognized in prior
years. After such a reversal, any depreciation charge where
applicable is adjusted prospectively.
Provision for Environmental Rehabilitation
Mining, extraction and processing activities normally give
rise to obligations for environmental rehabilitation.
Rehabilitation work can include facility decommissioning
and dismantling; removal or treatment of waste materials;
site and land rehabilitation, including compliance with
and monitoring of environmental regulations; security and
other site-related costs required to perform the rehabilitation
work; and operation of equipment designed to reduce or
eliminate environmental effects. The extent of work required
and the associated costs are dependent on the requirements
of relevant authorities and our environmental policies.
Routine operating costs that may impact the ultimate closure
and rehabilitation activities, such as waste material handling
conducted as an integral part of a mining or production
process, are not included in the provision. Costs arising from
unforeseen circumstances, such as the contamination caused
97
Management’s Discussion and Analysis
by unplanned discharges, are recognized as an expense and
liability when the event occurs that gives rise to an obligation
and reliable estimates of the required rehabilitation costs
can be made.
Provisions for the cost of each rehabilitation program
are normally recognized at the time that an environmental
disturbance occurs or a constructive obligation is
determined. When the extent of disturbance increases over
the life of an operation, the provision is increased accord-
ingly. The major parts of the carrying amount of provisions
relate to tailings pond closure/rehabilitation; demolition
of buildings/mine facilities; ongoing water treatment; and
ongoing care and maintenance of closed mines. Costs
included in the provision encompass all closure and
rehabilitation activity expected to occur progressively over
the life of the operation and at the time of closure in con-
nection with disturbances as at the reporting date. Estimated
costs included in the determination of the provision reflect
the risks and probabilities of alternative estimates of cash
flows required to settle the obligation at each particular
operation. The costs are estimated using either the work
of external consultants or internal experts depending on
management’s intention.
The timing of the actual rehabilitation expenditure is
dependent upon a number of factors such as the life and
nature of the asset, the operating license conditions and the
environment in which the mine operates. Expenditure
may occur before and after closure and can continue for an
extended period of time depending on rehabilitation
requirements. Rehabilitation provisions are measured at the
expected value of future cash flows, discounted to their
present value using a current, US dollar real risk-free pre-tax
discount rate. The unwinding of the discount is included
in finance expense and results in an increase in the amount
of the provision. Provisions are updated each reporting
period for the effect of a change in the discount rate
and foreign exchange rate, and the change in estimate is
added or deducted from the related asset and depreciated
prospectively over the asset’s useful life.
Significant judgments and estimates are involved in
forming expectations of future activities and the amount and
timing of the associated cash flows. Those expectations are
formed based on existing environmental and regulatory
requirements or, if more stringent, our environmental
policies which give rise to a constructive obligation. When
expected cash flows change, the revised cash flows are
discounted using the current US dollar real risk-free pre-tax
discount rate and an adjustment is made to the provision.
When provisions for closure and rehabilitation are
initially recognized, the corresponding cost is capitalized as
an asset, representing part of the cost of acquiring the future
economic benefits of the operation. The capitalized cost of
closure and rehabilitation activities is recognized in property,
plant and equipment and depreciated over the future
production from the operations to which it relates.
Adjustments to the estimated amount and timing of
future closure and rehabilitation cash flows are a normal
occurrence in light of the significant judgments and
estimates involved. 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 resources with a corresponding change
in the life-of-mine plan; changing ore characteristics that
impact required environmental protection measures and
related costs; changes in water quality that impact the extent
of water treatment required; foreign exchange rates and
changes in laws and regulations governing the protection of
the environment.
Rehabilitation provisions are adjusted as a result of
changes in estimates. Those adjustments are accounted for
as a change in the corresponding value of the related assets
including the related mineral property, except where a
reduction in the provision is greater than the remaining net
book value of the related assets, in which case the value is
reduced to nil and the remaining adjustment is recognized in
the consolidated statements of income. In the case of closed
sites, changes to estimated costs are recognized immediately
in the consolidated statements of income. The adjusted cost
of the asset is depreciated prospectively. Changes also result
in an adjustment to future finance costs.
98
Glossary of Technical Terms
AUTOCLAVE: Oxidation process in which high temperatures and
pressures are applied to convert refractory sulfide 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.
DEVELOPMENT: Work carried out for the purpose of opening up
a mineral deposit. In an underground mine this includes shaft
sinking, crosscutting, drifting 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.
DRILLING:
Core: drilling with a hollow bit with a diamond cutting rim to
produce a cylindrical core that is used for geological study and
assays. Used in mineral exploration.
In-fill: any method of drilling intervals between existing holes,
used to provide greater geological detail and to help establish
reserve estimates.
EXPLORATION: Prospecting, sampling, mapping, diamond-drilling
and other work involved in searching 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 ore body 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 determined after
processing.
Reserve grade: estimated metal content of an ore body, based on
reserve calculations.
Barrick Financial Report 2010 | Management’s Discussion and Analysis
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 foundation or pad used as a
base for ore during heap leaching.
MILL: A processing facility where ore is finely ground and
thereafter undergoes physical or chemical treatment to extract
the valuable metals.
MINERAL RESERVE: See pages 164–165 – “Summary Gold Mineral
Reserves and Mineral Resources.”
MINERAL RESOURCE: See pages 164–165 – “Summary 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.
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.
ORE BODY: 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 modified 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.
RECOVERY RATE: A term used in process metallurgy to indicate the
proportion of valuable material physically recovered in the pro-
cessing 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.
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.
99
Management’s Responsibility
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 judgments based on currently available information. The Company has
developed and maintains a system of internal accounting controls in order to ensure, on a reasonable and cost effective basis, the
reliability of its financial information.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report
outlines the scope of their examination and opinion on the consolidated financial statements.
Jamie C. Sokalsky
Executive Vice President
and Chief Financial Officer
Toronto, Canada
February 16, 2011
100
Barrick Financial Report 2010 | Management’s Report on Internal Controls Over Financial Reporting
Management’s Report on Internal
Controls Over Financial Reporting
Barrick’s Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Barrick’s Management assessed the effectiveness of the Company’s internal control over financial reporting as at December 31,
2010. Barrick’s Management used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework to
evaluate the effectiveness of Barrick’s internal control over financial reporting. Based on Barrick Management’s assessment,
Barrick’s internal control over financial reporting is effective as at December 31, 2010.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2010 has been audited by
PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on pages 102–103 of Barrick’s 2010
Annual Financial Statements.
101
Independent Auditor’s Report
Independent
Auditor’s Report
Independent Auditor’s Report
February 16, 2011
To the Shareholders of
Barrick Gold Corporation
We have completed integrated audits of Barrick Gold Corporation’s (the Company) 2010, 2009 and 2008 consolidated financial
statements and of its internal control over financial reporting as at December 31, 2010. Our opinions, based on our audits,
are presented below.
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Barrick Gold Corporation, which comprise the consolidated
balance sheets as at December 31, 2010 and December 31, 2009 and the consolidated statements of income, cash flow, equity
and comprehensive income for each of the years in the three-year period ended December 31, 2010 and the related notes.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated 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 about whether the
consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards also require
that we comply with ethical requirements.
An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit
opinion on the consolidated financial statements.
102
Barrick Financial Report 2010 | Independent Auditor’s Report
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Barrick Gold
Corporation as at December 31, 2010 and December 31, 2009 and the results of its operations and its cash flows for each of
the years in the three-year period ended December 31, 2010 in accordance with accounting principles generally accepted in the
United States of America.
Report on internal control over financial reporting
We have also audited Barrick Gold Corporation’s internal control over financial reporting as at December 31, 2010, based on criteria
established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
Management’s responsibility for internal control over financial reporting
Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effective-
ness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects.
An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances. We believe
that our audit provides a reasonable basis for our audit opinion on the Company’s internal control over financial reporting.
Definition of internal control over financial reporting
A Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have
a material effect on the financial statements.
Inherent limitations
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, Barrick Gold Corporation maintained, in all material respects, effective internal control over financial reporting as
at December 31, 2010 based on criteria established in Internal Control – Integrated Framework issued by COSO.
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
103
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)
Sales (notes 4 and 5)
Costs and expenses
Cost of sales (notes 4 and 6)1
Amortization and accretion (notes 4 and 15b)
Corporate administration
Exploration (notes 4 and 7)
Project development expense (notes 4 and 7)
Elimination of gold sales contracts
Other expense (note 8a)
Impairment charges (note 8b)
Interest income
Interest expense (note 20b)
Other income (note 8c)
Write-down of investments (note 8b)
Income (loss) from continuing operations before income taxes and other items
Income tax expense (note 9)
Loss from equity investees (note 12)
Income (loss) from continuing operations before non-controlling interests
Income (loss) from discontinued operations (note 3i)
Income (loss) before non-controlling interests
Non-controlling interests (note 27)
Net income (loss)
Earnings (loss) per share data (note 10)
Income (loss) from continuing operations
Basic
Diluted
Income (loss) from discontinued operations
Basic
Diluted
Net income (loss)
Basic
Diluted
1. Exclusive of amortization.
The accompanying notes are an integral part of these consolidated financial statements.
104
2010
2009
2008
$ 10,924
$ 8,136
$ 7,613
4,201
1,196
154
180
153
–
463
7
3,807
1,073
171
141
85
5,933
343
277
3,706
957
155
198
242
–
302
598
6,354
11,830
6,158
14
(121)
124
–
17
4,587
(1,370)
(41)
3,176
121
3,297
(23)
10
(57)
112
(1)
64
(3,630)
(648)
(87)
(4,365)
97
(4,268)
(6)
39
(21)
291
(205)
104
1,559
(594)
(64)
901
(104)
797
(12)
$ 3,274
$ (4,274)
$ 785
$ 3.19
$ 3.16
$
$
(4.84)
(4.84)
$ 1.02
$ 1.01
$ 0.13
$ 0.12
$ 0.11
$ 0.11
$ (0.12)
$ (0.12)
$ 3.32
$ 3.28
$
$
(4.73)
(4.73)
$ 0.90
$ 0.89
Barrick Financial Report 2010 | 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 (loss)
Amortization and accretion (notes 4 and 15b)
Impairment charges and write-down of investments (note 8b)
Income tax expense (note 9)
Income taxes paid
Net proceeds taxes paid
Increase in inventory
Elimination of gold sales contracts
Payment on settlement for gold sales contracts
Gain on sale/acquisition of long-lived assets (note 8c)
(Income) loss from discontinued operations (note 3i)
Operating cash flows of discontinued operations (note 3i)
Other operating activities (note 11a)
2010
2009
2008
$ 3,274
1,196
7
1,370
(647)
(85)
(403)
–
(656)
(50)
(121)
(8)
250
$ (4,274)
1,073
278
648
(376)
(66)
(372)
5,933
(5,221)
(85)
(97)
7
230
$ 785
957
803
594
(575)
–
(370)
–
–
(187)
104
26
117
Net cash provided by (used in) operating activities
4,127
(2,322)
2,254
Investing Activities
Property, plant and equipment
Capital expenditures (note 4)
Sales proceeds
Acquisitions (note 3)
Investments (note 12)
Purchases
Sales
Decrease in restricted cash
Investing cash flows of discontinued operations (note 3i)
Other investing activities (note 11b)
Net cash used in investing activities
Financing Activities
Capital stock
Proceeds on exercise of stock options
Proceeds on common share offering (note 25)
Proceeds from public issuance of common shares by a subsidiary (note 3e)
Long-term debt (note 20b)
Proceeds
Repayments
Dividends (note 25)
Funding from non-controlling interests
Deposit on silver sale agreement
Financing cash flows of discontinued operations (note 3i)
Other financing activities (note 11c)
Net cash provided by financing activities
Effect of exchange rate changes on cash and equivalents
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of period (note 20a)
Cash and equivalents at end of period (note 20a)
The accompanying notes are an integral part of these consolidated financial statements.
(3,323)
61
(813)
(2,351)
10
(101)
(1,749)
185
(2,174)
(61)
15
–
–
(51)
(3)
7
113
(3)
(87)
(18)
76
18
(27)
(231)
(4,172)
(2,415)
(3,920)
127
–
884
782
(149)
(436)
114
137
–
(25)
65
3,885
–
2,154
(397)
(369)
304
213
–
(26)
1,434
5,829
15
35
74
–
–
2,717
(1,603)
(349)
88
–
–
(34)
893
3
1,404
2,564
1,127
1,437
(770)
2,207
$ 3,968
$ 2,564
$ 1,437
105
Financial Statements
Consolidated
Balance Sheets
Barrick Gold Corporation
At December 31 (in millions of United States dollars)
Assets
Current assets
Cash and equivalents (note 20a)
Accounts receivable (note 14)
Inventories (note 13)
Other current assets (note 14)
Assets of discontinued operations (note 3i)
Non-current assets
Equity in investees (note 12a)
Other investments (note 12b)
Property, plant and equipment (note 15)
Goodwill (note 17)
Intangible assets (note 16)
Deferred income tax assets (note 24)
Other assets (note 18)
Assets of discontinued operations (note 3i)
Total assets
Liabilities and Equity
Current liabilities
Accounts payable
Current portion of long-term debt (note 20b)
Other current liabilities (note 19)
Liabilities of discontinued operations (note 3i)
Non-current liabilities
Long-term debt (note 20b)
Asset retirement obligations (note 22)
Deferred income tax liabilities (note 24)
Other liabilities (note 23)
Liabilities of discontinued operations (note 3i)
Total liabilities
Equity
Capital stock (note 25)
Additional paid-in capital
Retained earnings (deficit)
Accumulated other comprehensive income (note 26)
Total shareholders’ equity
Non-controlling interests (note 27)
Total equity
Contingencies and commitments (notes 15 and 30)
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
Signed on behalf of the Board,
Aaron Regent, Director
Steven J. Shapiro, Director
106
2010
2009
$ 3,968
346
1,852
947
–
$ 2,564
251
1,540
524
59
7,113
4,938
291
203
17,751
5,287
140
467
2,070
–
1,136
92
13,125
5,197
66
949
1,531
41
$ 33,322
$ 27,075
$ 1,511
14
964
–
$ 1,221
54
475
23
2,489
1,773
6,678
1,439
1,114
868
–
6,281
1,122
1,184
1,145
23
12,588
11,528
17,790
288
456
531
19,065
1,669
17,390
–
(2,382)
55
15,063
484
20,734
15,547
$ 33,322
$ 27,075
Barrick Financial Report 2010 | Financial Statements
Consolidated Statements
of Equity
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Common shares (number in thousands)
At January 1
Issued on public equity offering (note 25)
Issued on exercise of stock options
Issued on conversion of debentures (note 20b)
Issued on redemption of exchangeable shares (note 25b)
At December 31
Common shares
At January 1
Issued on public equity offering (note 25)
Issued on conversion of debentures (note 20b)
Issued on exercise of stock options
Recognition of stock option expense
Other adjustments
At December 31
Additional paid-in capital
At January 1
Recognized on initial public offering of African Barrick Gold (note 3e)
At December 31
Retained earnings (deficit)
At January 1
Net income (loss)
Dividends (note 25)
Repurchase of preferred shares of a subsidiary
At December 31
Accumulated other comprehensive income (loss) (note 26)
Total shareholders’ equity
Non-controlling interests (note 27)
At January 1
Net income attributable to non-controlling interests
Funding from non-controlling interests
Other increase (decrease) in non-controlling interests
At December 31
Total equity at December 31
Consolidated Statements
of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Net income (loss)
Other comprehensive income (loss), net of tax (note 26)
Comprehensive income (loss)
The accompanying notes are an integral part of these consolidated financial statements.
2010
2009
2008
984,328
–
4,760
9,412
–
872,739
108,973
2,349
–
267
869,887
–
2,383
–
469
998,500
984,328
872,739
$ 17,390
–
268
127
14
(9)
$ 13,372
3,926
–
65
20
7
$ 13,273
–
–
74
25
–
17,790
17,390
13,372
–
288
288
(2,382)
3,274
(436)
–
456
531
–
–
–
2,261
(4,274)
(369)
–
(2,382)
55
–
–
–
1,832
785
(349)
(7)
2,261
(356)
19,065
15,063
15,277
484
23
114
1,048
1,669
182
6
299
(3)
484
82
12
90
(2)
182
$ 20,734
$ 15,547
$ 15,459
2010
2009
$ 3,274
476
$ (4,274)
411
$ 3,750
$ (3,863)
2008
$ 785
(507)
$ 278
107
Notes to Consolidated Financial Statements
Notes to Consolidated
Financial Statements
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$, ZAR, CLP, PGK,
TZS, JPY, ARS, GBP and EUR are to Canadian dollars, Australian dollars, South African rand, Chilean pesos, Papua New Guinea kina, Tanzanian schillings,
Japanese yen, Argentinean pesos, British Pound Sterling and Euros, respectively.
1 Nature of Operations
Barrick Gold Corporation (“Barrick” or the “Company”)
principally engages in the production and sale of gold, as well
as related activities such as exploration and mine development.
We also produce significant amounts of copper and hold
interests in oil and gas properties located in Canada through
our oil and gas subsidiary, Barrick Energy. Our producing mines
are concentrated in three regional business units: North
America, South America, and Australia Pacific. We also hold a
73.9% equity interest in a listed company, African Barrick Gold
plc (“ABG”), which includes our African gold mines and
exploration properties. We sell our gold production into the
world market and we sell our copper production into the world
market and to private customers.
2 Significant Accounting Policies
a) Basis of Preparation
These consolidated financial statements have been prepared
under United States generally accepted accounting principles
(“US GAAP”). To ensure comparability of financial information,
certain prior year amounts have been reclassified to reflect
current financial statement presentation.
b) Principles of Consolidation
These consolidated financial statements include the accounts
of Barrick Gold Corporation and those entities that we have
the ability to control either through voting rights or means
other than voting rights. For these entities, we record 100% of
the revenues, expenses, cash flows, assets and liabilities in our
consolidated financial statements. For entities that we control
but hold less than a 100% ownership interest, a non-controlling
interest is recorded in the consolidated income statement to
reflect the non-controlling interest’s share of the net income
(loss), and a non-controlling interest is recorded in the consoli-
dated balance sheet to reflect the non-controlling interest’s
share of the net assets of the entity. For entities that are subject
to joint control (“joint ventures” or “JVs”) we account for
our interest using the equity method of accounting where our
interest is held through a corporate structure.
For unincorporated JVs in which we hold an undivided
interest in the assets and liabilities and receive our share of
production from the joint venture, we include our pro rata share
of the assets, liabilities, revenues, expenses and cash flows in
our financial statements.
We have assessed all entities including those entities that
hold economic interests in projects that are in the exploration
or development stage, in which we hold an economic interest,
to determine if they are variable interest entities (“VIEs”).
If they are determined to be VIEs, we assess on an ongoing basis
who the primary beneficiary is based on who has the power
to direct matters that most significantly impact the activities
of the VIE and who has the obligation to absorb losses or the
right to receive benefits of the VIE that could potentially
be significant to the VIE. Matters that may have a significant
impact on the activities of VIEs include, but are not limited to,
approval of budgets and programs, construction decisions
and delegation of certain responsibilities to the operator of the
project. For VIEs where we are the primary beneficiary, we
consolidate the entity and record a non-controlling interest,
measured initially at its estimated fair value, for the interest
held by other equity owners. For VIEs where we have shared
power with unrelated parties over the aforementioned matters
that most significantly impact the activities of the VIE, we use
the equity method of accounting to report their results (note 12).
For all VIEs, our risk is limited to our investment in the entity.
The following table illustrates our policy used to account
for significant operating mines/projects where we hold less
than a 100% economic interest. We consolidate all operating
mines/projects where we hold a 100% economic interest.
108
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Consolidation Method at December 31, 2010
African Barrick Gold2
Australia
Kalgoorlie Mine
Porgera Mine3
North America
Round Mountain Mine
Marigold Mine
Turquoise Ridge Mine
Capital Projects
Pueblo Viejo Project4
Cerro Casale Project5
Donlin Creek Project6
Reko Diq Project6,7
Kabanga Project6,8
Entity type at December 31, 2010
Economic interest at
December 31, 20101
Non-Wholly Owned Subsidiary
73.9%
Unincorporated JV
Unincorporated JV
Unincorporated JV
Unincorporated JV
Unincorporated JV
VIE
VIE
VIE
VIE
VIE
50%
95%
50%
33%
75%
60%
75%
50%
37.5%
50%
Method
Consolidation
Pro Rata
Pro Rata
Pro Rata
Pro Rata
Pro Rata
Consolidation
Consolidation
Equity Method
Equity Method
Equity Method
1. Unless otherwise noted, all of our joint ventures are funded by contributions made by their partners in proportion to their economic interest.
2. In 2010, we completed an initial public offering (“IPO”) for a non-controlling interest in our African gold mining operations. As a result of this transaction, our economic
interest in the North Mara, Bulyanhulu and Buzwagi gold mines was reduced from 100% to 73.9% and our economic interest in the Tulawaka gold mine (an unincorporated
JV held through ABG) was reduced from 70% to 51.7% (note 3e).
3. We hold an undivided interest in our share of assets and liabilities at the Porgera mine.
4. In accordance with the terms of the agreement with our partner, Barrick is responsible for 60% of the funding requirements for the Pueblo Viejo project. We consolidate
Pueblo Viejo and record a non-controlling interest for the 40% interest held by our partner. In 2009, we determined that the mineralization at Pueblo Viejo met the definition
of proven and probable reserves for United States reporting purposes and began capitalizing development costs attributable to the project. At December 31, 2010, the
consolidated carrying amounts (100%) of the Pueblo Viejo project were: assets of $2,889 million (2009: $1,385 million) and liabilities of $1,392 million (2009: $182 million).
The maximum exposure to loss related to this VIE is $898 million (2009: $722 million), calculated as 60% of the shareholder’s equity of the entity.
5. On March 31, 2010, we obtained control over the Cerro Casale project by acquiring an additional 25% interest, which increased our ownership interest to 75%. As a result,
we began to consolidate Cerro Casale and record a non-controlling interest for the 25% interest held by our partner, prospectively from March 31, 2010. Previously, we had
joint control over Cerro Casale and accounted for our ownership interest using the equity method of accounting. At December 31, 2010, the consolidated carrying amounts
(100%) of the Cerro Casale project were: assets of $1,883 million (2009: $861 million) and of liabilities $22 million (2009: $nil). The maximum exposure to loss related to this
VIE is $1,396 million (2009: $861 million), calculated as 75% of the shareholder’s equity of the entity.
6. Our Donlin Creek, Reko Diq and Kabanga projects are VIEs that we account for ownership interests using the equity method of accounting. Our maximum exposure to loss is
limited to the carrying amount of the investment (note 12).
7. We hold a 50% interest in Atacama Copper, which has a 75% interest in the Reko Diq project. We use the equity method to account for our interest in Atacama Copper
(note 12).
8. In accordance with an agreement with our partner, from 2006 until the third quarter of 2008, our partner was responsible for funding 100% of exploration and project
expenditures and we did not incur any costs attributable to our economic interest in this period. During the third quarter of 2008, our partner reached the $145 million
funding cap for these expenditures, and thereafter we began funding 50% of the exploration and project expenditures (note 12).
c) Foreign Currency Translation
The functional currency of our gold and copper operations is
the US dollar. We translate non-US dollar balances for these
operations into US dollars as follows:
Property, plant and equipment, intangible assets and equity
method investments using historical rates;
The functional currency of our oil and gas operations, (“Barrick
Energy”) is the Canadian dollar. We translate balances related to
Barrick Energy into US dollars as follows:
Assets and liabilities using closing exchange rates with
translation gains and losses recorded in other comprehensive
income; and
Available-for-sale securities using closing rates with translation
Income and expense using average exchange rates with
gains and losses recorded in other comprehensive income;
Asset retirement obligations using historical rates;
Deferred tax assets and liabilities using closing rates with
translation gains and losses recorded in income tax expense;
Other assets and liabilities using closing rates with translation
gains and losses recorded in other income/expense; and
Income and expenses using average exchange rates, except
for expenses that relate to non-monetary assets and liabilities
measured at historical rates, which are translated using the
same historical rate as the associated non-monetary assets
and liabilities.
translation gains and losses recorded in other comprehensive
income.
d) Use of Estimates
The preparation of these financial statements requires us to
make estimates and assumptions. The most significant ones are:
classification of mineralization as either reserves or non-
reserves; quantities of proven and probable mineral reserves;
fair values of acquired assets and liabilities under business
combinations, including the value of mineralized material
beyond proven and probable mineral reserves; future costs and
109
Notes to Consolidated Financial Statements
expenses to produce proven and probable mineral reserves;
future commodity prices for gold, copper, silver and other
products; future costs of oil and other consumables; future
currency exchange rates; the future cost of asset retirement
obligations; amounts and likelihood of contingencies; the fair
values of reporting units that include goodwill; uncertain tax
positions; and credit risk adjustments to discount rates. Using
these and other estimates and assumptions, we make various
decisions in preparing the financial statements including:
The treatment of expenditures at mineral properties prior
to when production begins as either an asset or an expense
(note 15);
Whether tangible, intangible long-lived assets and equity
investments are impaired, and if so, estimates of the fair value
of those assets and any corresponding impairment charge
(note 15);
Our ability to realize deferred income tax assets and amounts
recorded for any corresponding valuation allowances and
amounts recorded for uncertain tax positions (note 24);
The useful lives of tangible and intangible long-lived assets
and the measurement of amortization (note 15);
The fair value of asset retirement obligations (note 22);
Whether to record a liability for loss contingencies and the
amount of any such liability (notes 15 and 30);
The amount of income tax expense (note 9);
Allocations of the purchase price in business combinations to
assets and liabilities acquired (notes 3 and 17);
Whether any impairments of goodwill have occurred and if
so the amounts of impairment charges (note 17);
Transfers of value beyond proven and probable reserves to
assets subject to amortization (note 15); and
Fair value of derivative instruments including credit risk
adjustments to the discount rates in determining fair value
(notes 20 and 21).
As the estimation process is inherently uncertain, actual
future outcomes could differ from our present estimates and
assumptions, potentially having material future effects on our
financial statements.
e) Accounting Changes
Future Accounting Policy Changes
Barrick has made the decision to convert our basis of accounting
from US GAAP to International Financial Reporting Standards
(“IFRS”) for periods beginning January 1, 2011, preparing
its first interim financial statements in accordance with IFRS
for the three-month period ending March 31, 2011. As a result
of our transition to reporting under IFRS, new US GAAP
pronouncements effective from 2011 onwards will not have an
impact on our consolidated financial statements.
Accounting Pronouncements Implemented in 2010
Variable Interest Entities (“VIEs”)
As a result of recently issued ASU 2009-17 guidance, we
reassessed our VIEs in first quarter 2010, and determined that
these changes did not have an impact on our classification of
VIEs. We have also increased our disclosures in respect of VIEs
(note 2b).
Accounting Pronouncements Implemented in 2009
Measuring Fair Value of Liabilities
In August 2009, the FASB issued Accounting Standards Update
(“ASU 2009-05”), Measuring Fair Value of Liabilities which
is effective prospectively for interim periods beginning after
August 1, 2009, with early adoption permitted. Previous
guidance required that the fair value of liabilities be measured
under the assumption that the liability is transferred to a
market participant. ASU 2009-05 provides further clarification
that the fair value measurement of a liability should assume
transfer to a market participant as of the measurement date
without settlement with the counterparty. Therefore, the fair
value of the liability shall reflect non-performance risk,
including but not limited to a reporting entity’s own credit risk.
The application of ASU 2009-05 in fourth quarter 2009 did not
have a material impact on the measurement of our liabilities.
Business Combinations
In first quarter 2009, we began applying the new FASB guidance
for business combinations consummated after December 31,
2008. Under the new guidance, business combinations are
accounted for under the “acquisition method”, as opposed to
the “purchase method”.
The more significant changes to our accounting for
business combinations resulting from the application of the
acquisition method include: (i) the definition of a business is
broadened to include some development stage entities, and
therefore more acquisitions may be accounted for as business
combinations rather than asset acquisitions; (ii) the measure-
ment date for equity interests issued by the acquirer is the
acquisition date instead of a few days before and after terms are
agreed to and announced, which may significantly change the
amount recorded for the acquired business if share prices differ
from the agreement and announcement date to the acquisition
date; (iii) all future adjustments to income tax estimates will be
recorded as a component of income tax expense, whereas under
the previous guidance, certain changes in income tax estimates
were recorded to goodwill; (iv) acquisition-related costs of the
acquirer, including investment banking fees, legal fees, account-
ing fees, valuation fees, and other professional or consulting
fees will be expensed as incurred, whereas under the previous
guidance these costs were capitalized as part of the cost of the
110
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
f) Other Notes to the Financial Statements
Note
Page
Acquisitions and divestitures
Segment information
Sales
Cost of sales
Exploration and project development expense
Other expense and income
Income tax expense
Earnings (loss) per share
Cash flow – other items
Equity in investees and other investments
Inventories
Accounts receivable and other current assets
Property, plant and equipment
Intangible assets
Goodwill
Other assets
Other current liabilities
Financial instruments
Fair value measurements
Asset retirement obligations
Other non-current liabilities
Deferred income taxes
Capital stock
Other comprehensive income (loss) (“OCI”)
Non-controlling interests
Stock-based compensation
Post-retirement benefits
Litigation and claims
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
112
115
118
119
120
121
122
124
125
126
127
129
130
134
135
137
137
137
147
148
149
150
152
153
153
154
157
160
business combination; (v) the assets acquired and liabilities
assumed as part of a business combination, whether full, partial
or step acquisition, result in the recording of assets and liabilities
at 100% of their fair value, whereas under the previous guidance
only the controlling interest’s portion was recorded at fair
value; (vi) recognition of a bargain purchase gain when the fair
value of the identifiable assets exceeds the purchase price,
whereas under the previous guidance, the net book value of the
identifiable assets would have been adjusted downward; and
(vii) the non-controlling interest will be recorded at its share
of fair value of net assets acquired, including its share of
goodwill, whereas under previous guidance the non-controlling
interest is recorded at its share of the carrying value of net assets
acquired with no goodwill being allocated. See note 3 for our
disclosure of the accounting impact of business combinations
and asset acquisitions.
Non-controlling Interests in
Consolidated Financial Statements
In first quarter 2009, we adopted the new FASB guidance
for non-controlling interests. Under the new guidance, non-
controlling interests are measured at 100% of the fair value of
assets acquired and liabilities assumed. Prior to the effective
date of the new guidance, non-controlling interests were
measured at book value. For presentation and disclosure pur-
poses, non-controlling interests are now classified as a separate
component of equity. In addition, the new guidance changes the
manner in which increases/decreases in ownership percentages
are accounted for. Changes in ownership percentages are
recorded as equity transactions and no gain or loss is recognized
as long as the parent retains control of the subsidiary. When a
parent company deconsolidates a subsidiary but retains a non-
controlling interest, the non-controlling interest is remeasured
at fair value on the date control is lost and a gain or loss is
recognized at that time. Further, accumulated losses attributable
to the non-controlling interests are no longer limited to the
original carrying amount, and therefore non-controlling
interests could have a negative carrying balance.
The new provisions have been applied prospectively with
the exception of the presentation and disclosure provisions,
which have been applied for all prior periods presented in the
financial statements. The presentation and disclosure provisions
resulted in the reclassification of non-controlling interests to
the Equity section of the Balance Sheet totaling $484 million as
at December 31, 2009 (December 31, 2008: $182 million).
111
Notes to Consolidated Financial Statements
3 Acquisitions and Divestitures
For the years ended December 31
2010
2009
Total Costs to Allocate
Cash paid on acquisition1
Cerro Casale
Barrick Energy acquisitions
Tusker Gold Limited
REN joint venture
Hemlo
Less: cash acquired
Cash proceeds on divestiture1
ABG
Osborne
Purchase cost
$ 264
$ 454 $ –
53
–
–
50
264
74
36
–
$ 828 $ 103
(2)
(15)
Allocation of Fair Values to Bountiful, Puskwa,
and Dolomite’s Net Assets
Current assets
Property, plant and equipment
Goodwill
$ 813 $ 101
Total assets
$ 884 $ –
–
17
$ 901 $ –
Current liabilities
Asset retirement obligations
Bank debt
Deferred income tax liabilities
Total liabilities
Net assets acquired
$ 8
252
64
324
2
8
13
37
60
$ 264
1. All amounts represent gross cash paid or received on acquisition or divestiture.
a) Barrick Energy Acquisitions
In 2010, Barrick Energy completed three acquisitions. On
May 17, 2010, Barrick Energy acquired all of the outstanding
shares of Bountiful Resources (“Bountiful”), a privately held
corporation, for approximately $109 million. On June 25, 2010,
Barrick Energy acquired the Puskwa property from Galleon
Energy Inc. (“Puskwa”) for approximately $130 million. On
September 17, 2010, Barrick Energy acquired the assets of
Dolomite Resources (“Dolomite”) for approximately $25 million.
We have determined that all of these transactions represent
business combinations, with Barrick Energy identified as the
acquirer. We have recognized goodwill on these acquisitions due
to expected synergies and the deferred tax impact. The tables
below present the combined purchase cost and purchase
price allocation for these transactions. Barrick Energy began
consolidating the operating results, cash flows, and net assets
of Bountiful, Puskwa, and Dolomite, from the respective
acquisition dates.
112
b) Acquisition of Tusker Gold Limited
On April 27, 2010, ABG acquired 100% of the issued and out-
standing shares of Tusker Gold Limited (“Tusker”) for aggregate
net consideration of approximately $74 million. As a result of
this acquisition, ABG has increased its interest in the Nyanzaga
joint venture from 51% to 100%. We have determined that this
transaction represents a business combination, with ABG
identified as the acquirer. The tables below present the purchase
cost and our preliminary purchase price allocation. The pur-
chase price allocation will be finalized upon the determination
of the deferred tax impact. Any adjustments to deferred tax
impact will have a corresponding impact on goodwill.
ABG began consolidating the operating results, cash flows
and net assets of Tusker from the date of acquisition.
Total Costs to Allocate
Purchase cost
Less: cash acquired
Cash consideration paid
Preliminary Allocation of Fair Values to Tusker’s Net Assets
Property, plant and equipment
Goodwill
Total assets
Current liabilities
Other non-current liabilities
Deferred income tax liabilities
Total liabilities
Net assets acquired
$ 74
(8)
$ 66
$ 80
22
102
10
4
22
36
$ 66
c) Disposition of Sedibelo
On February 4, 2011, we entered into agreements to dispose of
our 10% interest in the Sedibelo platinum project (“Sedibelo”)
and certain assets to the Bakgatla-Ba-Kgafela Tribe (“BBK”),
owner of the remaining 90% interest in Sedibelo, as well as the
transfer of certain long lead items required for the development
of Sedibelo to Newshelf 1101 (Proprietary) Limited, for total
consideration of approximately $44 million; and to settle various
outstanding matters between Barrick and the BBK regarding
Sedibelo and their respective interests. The agreements are
subject to certain customary conditions and the transactions
are expected to close by the end of first quarter 2011.
d) Acquisition of 64% Interest in REN Joint Venture
On April 8, 2010, we entered into an agreement to acquire
the remaining 64% interest in the REN joint venture from
Centerra Gold Inc. for $36 million. The REN property is located
next to the Goldstrike operations in Nevada. The transaction
closed on July 2, 2010. The acquisition was accounted for as an
asset purchase.
e) IPO of African Gold Mining Operations
On March 24, 2010, the initial public offering (“IPO”) for ABG
closed and its approximately 404 million ordinary shares were
admitted to the Official List of the UK Listing Authority and
to trading on the London Stock Exchange’s main market for
listed securities. ABG sold approximately 101 million ordinary
shares in the offering, or about 25% of its equity and Barrick
retained an interest in approximately 303 million ordinary
shares, or about 75% of the equity of ABG. In April 2010, the
over-allotment option was partially exercised resulting in a 1.1%
dilution of our interest in ABG to 73.9%.
The net proceeds from the IPO and the exercise of the
over-allotment option were approximately $884 million.
As Barrick has retained a controlling financial interest in ABG,
we will continue to consolidate ABG and we accounted for the
disposition of ABG shares as an equity transaction. Accordingly,
the difference between the proceeds received and the carrying
value of $596 million has been recorded as $288 million of
additional paid-in capital in shareholders’ equity, and we set
up a non-controlling interest to reflect our ownership interest
in ABG.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
f) Acquisition of Additional 25% Interest in Cerro Casale
On March 31, 2010, we completed the acquisition of the
additional 25% interest in Cerro Casale from Kinross Gold
Corporation (“Kinross”) for cash consideration of $454 million
and the elimination of a $20 million contingent obligation,
which was payable by Kinross to Barrick on a construction
decision. Our interest in the project is now 75% and we have
obtained control over the project. As a result, we began consoli-
dating 100% of the operating results, cash flows and net assets
of Cerro Casale, and we recorded a non-controlling interest for
the 25% ownership interest held by Kinross, prospectively from
March 31, 2010. We have remeasured our previously held 50%
ownership interest to fair value and recorded a corresponding
gain of $29 million.
The tables below present the purchase cost and preliminary
purchase price allocation.
Total Costs to Allocate
Purchase cost (25% interest)
Purchase price adjustment
Less: cash acquired
Cash consideration paid
Equity method investment
Non-controlling interest
Subtotal
Fair value of net assets
Gain on acquisition
$ 455
(1)
(7)
447
879
454
1,780
1,809
$ 29
Preliminary Allocation of Purchase Price to Cerro Casale’s Net Assets
(100% basis)
Current assets
Water rights
VAT receivables
Property, plant and equipment
Total assets
Current liabilities
Net assets acquired
$
1
75
11
1,732
1,819
10
$ 1,809
g) Acquisition of 50% Interest in Valhalla
On September 17, 2009, Barrick Energy completed the
acquisition of 50% interest in the Valhalla oil and gas field,
which is close to our existing Sturgeon Lake field, for total cash
consideration of $53 million. This transaction was considered
an asset purchase.
113
i) Discontinued Operations
Results of Discontinued Operations
For the years ended December 31
2010
2009
2008
Gold sales
Osborne
Henty
Copper sales
Osborne
Income before tax
Osborne
Henty
Net income
Osborne
Henty
$ 43 $ 31 $ 27
52
25
–
244
212
221
$ 287 $ 268 $ 300
$ 173 $ 129
–
9
$ (85)
(23)
$ 173 $ 138 $ (108)
$ 121 $ 91 $ (81)
(23)
6
–
$ 65
(15)
(2)
$ 48
$ 10
25
21
81
137
8
32
21
61
$ 76
$ 121 $ 97 $ (104)
Osborne
On September 30, 2010, we divested our Osborne copper mine
to Ivanhoe Australia Limited (“Ivanhoe”), for consideration of
approximately $17 million cash and a royalty payable from any
future production, capped at approximately $14 million.
Ivanhoe has agreed to assume all site environmental obligations.
A loss of approximately $7 million, primarily due to severance
obligations, was recognized in the third quarter of 2010. The
results of operations, including the loss on disposition, and the
assets and liabilities of Osborne have been presented as discon-
tinued operations in these consolidated financial statements.
Henty
On July 6, 2009, we finalized an agreement with Bendigo
Mining Limited (“Bendigo”) to divest our Henty mine in our
Australia Pacific segment for cash consideration of $4 million
and Bendigo shares with a fair value of $2 million as at the
closing date. We are also entitled to receive a royalty payable on
production from future exploration discoveries, capped at
approximately $17 million. A gain of $4 million was recognized
in the third quarter. The results of operations and the assets
and liabilities of Henty have been presented as discontinued
operations in these consolidated financial statements.
Notes to Consolidated Financial Statements
h) Acquisition of 50% Interest in Hemlo
On April 22, 2009, we completed the acquisition of the
remaining 50% interest in the Williams and David Bell gold
mines (“Hemlo”) in Canada from Teck Resources Ltd. for cash
consideration of $50 million, thereby increasing our interest to
100%. We recognized a bargain purchase gain of $43 million,
resulting from the excess fair value of the net assets acquired
over the cash consideration paid. Following this transaction,
we remeasured our existing 50% interest in the assets and
liabilities of Hemlo held prior to this transaction to their fair
values, recognizing a gain of approximately $29 million. The
total gain of $72 million was recorded in other income (note 8c).
The tables below represent the purchase cost, purchase
price allocation and the bargain purchase gain recorded in other
income in 2009 (note 8c).
Total Costs to Allocate
Purchase cost
Purchase price adjustment
Less: cash acquired
Preliminary Allocation of Fair Values to Hemlo’s Net Assets
Current assets
Property, plant and equipment
Buildings, plant and equipment
Capitalized development costs
Capitalized reserve acquisition costs
Total assets
Current liabilities
Asset retirement obligations
Deferred income tax liabilities
Total liabilities
Net assets acquired
114
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
4 Segment Information
In first quarter 2010 we revised the format of information
provided to the Chief Operating Decision Maker to better
reflect management’s view of the operations. The primary
change involves the presentation of Exploration and Project
Development, RBU Costs and Other Expenses (Income) as a
component of Segment Income. Previously, these expenditures
were monitored separately. Accordingly, we have revised our
operating segment disclosure to be consistent with the reporting
changes, with adjustments to comparative information to
conform to the current period presentation.
Income Statement Information
For the year ended December 31, 2010
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
South America
Capital Projects3
Barrick Energy
Income Statement Information
For the year ended December 31, 2009
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
South America
Capital Projects3
Barrick Energy
Exploration &
Project
Sales Cost of Sales Development
Other
Expenses
RBU Costs
(Income)1 Amortization
$ 3,823
2,523
2,434
919
$ 1,511
515
1,276
487
1,102
–
123
345
–
67
$ 106
17
61
23
–
134
–
$ 39
41
51
38
5
3
7
$ 53
36
36
26
20
(49)
4
$ 444
165
251
119
84
4
60
Segment
Income
(Loss)2
$ 1,670
1,749
759
226
648
(92)
(15)
$ 10,924
$ 4,201
$ 341
$ 184
$ 126
$ 1,127
$ 4,945
Exploration &
Project
Sales Cost of Sales Development
Other
Expenses
RBU Costs
(Income)1 Amortization
$ 2,780
1,831
1,836
688
943
–
58
$ 1,421
499
1,110
377
361
–
39
$ 66
30
38
8
1
107
–
$ 43
24
50
32
3
5
6
$ (9)
33
56
35
14
(6)
4
$ 362
134
282
93
76
3
30
Segment
Income
(Loss)2
$ 897
1,111
300
143
488
(109)
(21)
$ 8,136
$ 3,807
$ 250
$ 163
$ 127
$ 980
$ 2,809
115
Notes to Consolidated Financial Statements
Income Statement Information
For the year ended December 31, 2008
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
South America
Capital Projects3
Barrick Energy
Exploration &
Project
Sales Cost of Sales Development
Other
Expenses
RBU Costs
(Income)1 Amortization
$ 2,627
1,833
1,579
538
1,007
–
29
$ 1,517
531
1,002
327
315
–
14
$ 108
55
47
16
11
162
1
$ 46
20
48
24
4
5
2
$ (16)
33
–
14
4
9
–
$ 354
163
240
63
66
–
13
Segment
Income
(Loss)2
$ 618
1,031
242
94
607
(176)
(1)
$ 7,613
$ 3,706
$ 400
$ 149
$ 44
$ 899
$ 2,415
1. Other expenses include accretion expense. For the year ended December 31, 2010, accretion expense was $47 million (2009: $57 million; 2008: $45 million). See note 15 for
further details.
2. We manage the performance of our regional business units using a measure of income before interest and taxes, consequently interest income, interest expense and income
taxes are not allocated to our regional business units.
3. Segment loss for the Capital Projects segment includes project development expense and losses from equity investees that hold capital projects. See notes 7 and 12 for
further details. For the year ended December 31, 2010, Capital Projects other expenses (income) includes a $29 million pre-tax gain on the acquisition of the 25% interest in
Cerro Casale (note 3f).
Reconciliation of Segment Income to Income (Loss) from Continuing Operations Before Income Taxes and Other Items
For the years ended December 31
Segment income
Amortization of corporate assets
Exploration not attributable to segments
Project development not attributable to segments
Corporate administration
Other expense not attributable to segments
Elimination of gold sales contracts
Impairment charges
Interest income
Interest expense
Write-down of investments
Loss from capital projects held through equity investees
2010
2009
2008
$ 4,945
(22)
(9)
(36)
(154)
(76)
–
(7)
14
(121)
–
53
$ 2,809
(36)
(11)
(58)
(171)
2
(5,933)
(277)
10
(57)
(1)
93
$ 2,415
(13)
(12)
(97)
(155)
137
–
(598)
39
(21)
(205)
69
Income (loss) from continuing operations before income taxes and other items
$ 4,587
$ (3,630)
$ 1,559
116
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Geographic Information
Long-lived assets1
Sales2
For the years ended December 31
2010
2009
2008
2010
2009
2008
North America
United States
Canada
Dominican Republic
South America
Peru
Chile
Argentina
Australia Pacific
Australia
Papua New Guinea
Africa
Tanzania
Other
Segment total
1. Long-lived assets include property, plant and equipment and other assets.
2. Presented based on the location in which the sale originated.
Asset Information
$ 4,746 $ 4,618 $ 4,322
643
446
1,040
1,352
1,528
2,550
$ 3,520 $ 2,552 $ 2,501
155
–
286
–
426
–
415
4,395
1,758
283
2,181
1,214
318
1,930
1,104
1,200
1,102
1,323
1,291
943
540
1,367
1,007
466
1,680
868
1,646
682
1,536
677
1,823
611
1,306
530
1,040
539
1,864
17
1,628
12
1,645
17
919
–
688
–
538
–
$ 19,821 $ 14,656 $ 12,638
$ 10,924 $ 8,136 $ 7,613
Segment
assets
Segment
capital expenditures1
For the years ended December 31
2010
2009
2008
2010
2009
2008
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
South America
Capital projects
Barrick Energy
Segment total
Cash and equivalents
Other current assets
Equity in investees
Other investments
Intangible assets
Deferred income tax assets
Assets of discontinued operations
Goodwill
Other items not allocated to segments
Enterprise total
$ 4,877 $ 4,779 $ 4,304
1,183
2,212
1,024
1,166
2,328
1,621
1,311
2,548
1,855
$ 523 $ 553 $ 434
84
207
138
161
221
126
202
295
137
1,231
6,643
808
1,242
2,686
501
1,267
1,904
382
63
2,187
86
37
1,317
31
57
919
15
19,273 14,323 12,276
2,564
2,315
1,136
92
66
949
100
5,197
333
3,968
3,145
291
203
140
467
–
5,287
548
1,437
2,642
1,085
60
74
869
76
5,280
362
3,493
2,446
1,854
67
21
62
$ 33,322 $ 27,075 $ 24,161
$ 3,560 $ 2,467 $ 1,916
1. Segment capital expenditures are presented for internal management reporting purposes on an accrual basis. Capital expenditures in the Consolidated Statements of Cash
Flow are presented on a cash basis. In 2010, cash expenditures were $3,323 million (2009: $2,351 million; 2008: $1,749 million) and the increase in accrued expenditures
was $237 million in 2010 (2009: $116 million increase; 2008: $167 million increase).
117
Notes to Consolidated Financial Statements
5 Sales
For the years ended December 31
2010
2009
2008
Gold bullion sales1,2
Spot market sales
Concentrate sales3
Copper sales1,4
Copper cathode sales
Concentrate sales
$ 9,374 $ 6,991 $ 6,455
122
144
325
9,699 7,135 6,577
1,098
4
943 1,007
–
–
1,102
943
1,007
Oil and gas sales
123
58
29
$ 10,924 $ 8,136 $ 7,613
1. Revenues include amounts transferred from OCI to earnings for commodity cash
flow hedges (see notes 20e and 26).
2. Gold sales include gains and losses on non-hedge derivative contracts: For the year
ended December 31, 2010: $26 million gain (2009: $56 million gain; 2008:
$19 million gain).
3. Concentrate sales include gains and losses on the mark-to-market receivable
balances arising from smelting contracts, which are accounted for as embedded
derivatives: For the year ended December 31, 2010: $3 million gain (2009:
$1 million gain; 2008: $3 million loss).
4. Copper sales include gains and losses on economic copper hedges that do not
qualify for hedge accounting treatment: For the year ended December 31, 2010:
$40 million gain (2009: $55 million loss; 2008: $67 million gain). Sales also include
gains and losses on the mark-to-market receivable balances arising from copper
smelting contracts, which are accounted for as embedded derivatives: For the year
ended December 31, 2010: $10 million gain (2009: $4 million gain; 2008: $nil).
Principal Products
All of our gold mining operations produce gold in doré form,
except Bulyanhulu and Buzwagi which produce both gold doré
and gold concentrate. Gold doré is unrefined gold bullion
bars usually consisting of 90% gold that is refined to pure gold
bullion prior to sale to our customers. Gold concentrate is a
processing product containing the valuable ore mineral (gold)
from which most of the waste mineral has been eliminated.
This concentrate undergoes a smelting process to convert it into
gold bullion. Gold bullion is sold primarily in the London spot
market. Gold concentrate is sold to third-party smelters. At our
Zaldívar mine we produce copper cathode, which consists of
99.9% copper. Copper cathodes are sold directly under copper
cathode sales contracts with various third-party buyers.
Revenue Recognition
We record revenue when the following conditions are met:
persuasive evidence of an arrangement exists; delivery and
transfer of title (gold revenue only) have occurred under the
terms of the arrangement; the price is fixed or determinable;
118
and collectability is reasonably assured. Revenue is presented
net of direct sales taxes of $68 million (2009: $30 million; 2008:
$23 million). Incidental revenues from the sale of by-products,
primarily copper and silver, are classified within cost of sales.
Bullion Sales
We record revenue from gold and silver bullion sales at the time
of physical delivery, which is also the date that title to the gold
or silver passes. The sales price is fixed at the delivery date based
on either the terms of gold sales contracts or the gold spot price.
Concentrate Sales
Under the terms of concentrate sales contracts with independent
smelting companies, gold and copper sales prices are provision-
ally 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 also when title passes to the smelting
companies, using forward market gold and copper prices on
the expected date that final sales prices will be determined.
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 and copper prices and result in an
embedded derivative in the accounts receivable. The embedded
derivative is recorded at fair value each period until final
settlement occurs, with changes in fair value included as a
component of revenue.
Copper Cathode Sales
Under the terms of copper cathode sales contracts, copper sales
prices are provisionally set on a specified future date based
upon market commodity prices plus certain price adjustments.
Revenue is recognized at the time of shipment when risk of loss
passes to the customer, and collectability is reasonably assured.
Revenue is provisionally measured using forward market prices
on the expected date that final selling prices will be determined.
Variations occur between the price recorded on the date of
revenue recognition and the actual final price under the terms
of the contracts due to changes in market copper prices and
result in an embedded derivative in the accounts receivable.
The embedded derivative is recorded at fair value each period
until final settlement occurs, with changes in fair value included
as a component of revenue.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Provisional Copper and Gold Sales
Revenues before treatment and refining charges subject to final
price adjustments as at December 31 and final provisional price
adjustments recorded within the year were as follows:
At December 31
Copper
Gold
2010
2009
2008
$ 143
66
$ 88
8
$ 45
15
Final price adjustments recorded during the year:
For the years ended December 31
2010
2009
2008
Oil and Gas Sales
Revenue from the sale of crude oil, natural gas and natural gas
liquids is recorded at the time it enters the pipeline system,
which is also when title transfers and there is reasonable
assurance of collectability. At the time of delivery of oil and gas,
prices are fixed and determinable based upon contracts
referenced to monthly market commodity prices plus certain
price adjustments. Price adjustments include product quality
and transportation adjustments and market differentials.
Gain (loss)
Copper
Gold
6 Cost of Sales
$ 21
–
$ 45 $ (36)
–
–
For the years ended December 31
2010
2009
2008
2010
2009
2008
2010
2009
2008
Gold
Copper
Oil & Gas
Cost of goods sold1
Unrealized (gains) losses on
non-hedge contracts
By-product revenues
Royalty expense
Mining production taxes
$ 3,542 $ 3,230 $ 3,211
$ 349
$ 362
$ 315
$ 39
$ 29
$ 8
(6)
(124)
287
90
(7)
(73)
218
39
14
(92)
202
42
–
(4)
–
–
–
(1)
–
–
–
–
–
–
–
–
28
–
–
–
10
–
–
–
6
–
$ 3,789 $ 3,407 $ 3,377
$ 345
$ 361
$ 315
$ 67
$ 39
$ 14
1. Cost of goods sold includes charges to reduce the cost of inventory to net realizable value as follows: $3 million for the year ended December 31, 2010 (2009: $6 million;
2008: $62 million). The cost of inventory sold in the period reflects all components capitalized to inventory, except that, for presentation purposes, the component of inventory
cost relating to amortization of property, plant and equipment 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 was $1,097 million in the year ended December 31, 2010 (2009: $964 million; 2008: $893 million).
Royalty expense is recorded on completion of the production
process.
Royalties applicable to our oil and gas properties include:
Crown royalties,
Net profits interest (NPI) royalty, and
Overriding royalty (ORR).
Royalties
Certain of our properties are subject to royalty arrangements
based on mineral production at the properties. 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 percentage multiplied by the value of gold production
at market gold prices less third-party smelting, refining and
transportation costs. Other types of royalties include:
Net profits interest (NPI) royalty,
Modified net smelter return (NSR) royalty,
Net smelter return sliding scale (NSRSS) royalty,
Gross proceeds sliding scale (GPSS) royalty,
Gross smelter return (GSR) royalty,
Net value (NV) royalty, and a
Land tenement (LT) royalty.
119
Notes to Consolidated Financial Statements
Producing mines &
development projects
North America
Goldstrike
Williams
David Bell
Round Mountain
Bald Mountain
Ruby Hill
Cortez
Cortez – Pipeline/South
Pipeline deposit
Cortez – portion of Pipeline/
Type of royalty
0%–5% NSR, 0%–6% NPI
1.5% NSR, 0.75% NV,
1% NV
3%–3.5% NSR
3.53%–6.35% NSRSS
3.5%–7% NSRSS,
2.9%–4% NSR,
10% NPI
3% modified NSR
1.5% GSR
0.4%–9% GSR
South Pipeline deposit
5% NV
South America
Veladero
Lagunas Norte
Australia Pacific
Porgera
Queensland & Western Australia
production1
Cowal
Africa
Bulyanhulu
Tulawaka
North Mara – Nyabirama and
Nyabigena pit
North Mara – Gokona pit
Buzwagi
Capital Projects
Donlin Creek Project
Pascua-Lama Project –
Chile gold production
Pascua-Lama Project –
3.75% modified NSR
2.51% NSR
2% NSR, 0.25% other
2.5%–2.7% of gold revenue
4% of net gold revenue
3% NSR
3% NSR
3% NSR, 1% LT
3% NSR, 1.1% LT
3% NSR, 30% NPI2
1.5% NSR (first 5 years),
4.5% NSR (thereafter),
8.0% NPI3
1.5%–9.8% GPSS
Chile copper production
2% NSR
Pascua-Lama Project –
Argentina production
Pueblo Viejo
Cerro Casale
Reko Diq
Kabanga
Other
Barrick Energy
3% modified NSR
3.2% NSR (for gold & silver),
28.75% NPI3
3% NSR (capped at
$3 million cumulative)
2% NSR
3% NSR
0.40% NPI, 0.54% ORR,
22.1% Crown royalty, net
1. Includes the Kalgoorlie, Kanowna, Granny Smith, Plutonic, Darlot and Lawlers mines.
2. The NPI is calculated as a percentage of profits realized from the Buzwagi mine
after all capital, exploration, and development costs and interest incurred in
relation to the Buzwagi mine have been recouped and all operating costs relating
to the Buzwagi mine have been paid. No amount is currently payable.
3. The NPI is calculated as a percentage of profits realized from the mine until all
funds invested to date with interest at an agreed upon rate are recovered.
No amount is currently payable.
120
7 Exploration and Project Development Expense
For the years ended December 31
2010
2009
2008
Exploration:
Minesite exploration
Projects
Project development expense:
Pueblo Viejo1
Sedibelo
Fedorova
Pascua-Lama
Kainantu
Cerro Casale
Other
$ 66 $ 42 $ 62
136
114
99
$ 180
$ 141
$ 198
$ 3 $ (3) $ 62
17
24
21
28
–
33
2
1
12
3
63
19
8
2
17
10
–
27
103
61
185
Other project expenses2
50
24
57
$ 153
$ 85 $ 242
1. We record a non-controlling interest balance for our partner’s share of expendi-
tures within “non-controlling interests” in the income statement. In 2009, the
costs include a reimbursement of historical remediation expenditures.
2. Includes costs related to corporate development activities, research and
development costs, and other corporate project expenditures.
Accounting Policy for Exploration and
Project Expenditures
Exploration Expenditures
Exploration activities relate to the initial search for deposits
with economic potential and the evaluation and assessment of
deposits that have been identified as having economic potential.
Exploration activity is undertaken at both greenfield sites (sites
where we do not have any mineral deposits that are already
being mined or developed) and brownfield sites (sites that are
adjacent or in close proximity to a mineral deposit that is
classified within proven and probable reserves as defined by
United States reporting standards and is already being mined or
developed). Exploration expenditures reflect the costs of such
activities, including exploratory drilling costs.
Expenditures on exploration activity conducted at
greenfield sites are expensed as incurred. Exploration expendi-
tures are capitalized when incurred at brownfield sites where
the activities are directed at obtaining additional information
on an ore body that is classified within proven and probable
reserves or for the purpose of converting a mineral resource
into a proven and probable reserve and, prior to the commence-
ment of the exploration program, we can conclude that it is
probable that such a conversion will take place. Our assessment
of probability is based on the following factors: results from
previous exploration programs; results from geological models;
results from a mine scoping study confirming economic
viability of the resource; and preliminary estimates of mine
inventory, ore grade, cash flow and mine life. Costs incurred at
brownfield sites that meet the above criteria are capitalized as
mine development costs. All other exploration expenditures
incurred at these sites are expensed as mine site exploration.
Project Expenditures
Project expenditures reflect costs incurred at development
projects related to establishing the technical and commercial
viability of developing mineral deposits identified through
exploration or acquired through a business combination or
asset acquisition. Project expenditures include the cost of:
i) establishing the volume and grade of deposits through
drilling of core samples, trenching and sampling activities in
an ore body that is classified as either a mineral resource or a
proven and probable reserve; ii) determining the optimal
methods of extraction and metallurgical and treatment
processes; iii) studies related to surveying, transportation and
infrastructure requirements; iv) permitting activities; and
v) economic evaluations to determine whether development of
the mineralized material is commercially justified, including
scoping, prefeasibility and final feasibility studies.
We capitalize the costs of activities at projects after
mineralization is classified as proven and probable reserves.
Before classifying mineralization as proven and probable
reserves, the costs of project activities are expensed as incurred,
except for costs incurred to construct tangible assets that are
capitalized within property, plant and equipment. The costs of
start-up activities at mines and projects, such as recruiting and
training costs, are also expensed as incurred within project
development expense.
The Cerro Casale, Donlin Creek, Reko Diq and Kabanga
projects are in various stages of development; however, none
of these projects had met the criteria for cost capitalization at
December 31, 2010. We account for our interests in the Reko Diq
and Kabanga projects using the equity method of accounting
and project expenses are included in “equity investees” in
the Consolidated Income Statement (see note 12). Effective
January 1, 2009, we determined that mineralization of
Pueblo Viejo met the definition of proven and probable reserves
for United States reporting purposes. Following this determina-
tion, we began capitalizing the cost of project activities at
Pueblo Viejo.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
8 Other Expense and Income
a) Other Expense
For the years ended December 31
Regional business unit costs1
Severance costs2
Currency translation losses3
Changes in estimate of AROs
at closed mines
Finance charges4
Community relations5
Environmental costs
World Gold Council fees
Non-hedge derivative losses
Provision for supply contract
restructuring costs6
Pension and other post-retirement
benefit expense
Other items
2010
2009
2008
$ 184
$ 163
$ 149
1
37
41
8
16
26
14
22
35
8
16
–
8
–
14
13
14
1
46
–
6
90
9
72
9
–
21
7
11
17
–
5
45
$ 463
$ 343
$ 302
1. Relates to costs incurred at regional business unit offices.
2. In 2009, includes $21 million in restructuring costs related to an organizational
review, and other termination and restructuring costs.
3. Amounts attributable to currency translation losses on working capital balances.
4. Represents financing charges on the settlement obligation to close out gold sales
contracts. Those contracts were settled in fourth quarter 2010 (note 23).
5. Amounts mainly related to community programs and other related expenses.
6. Amount relates to the present value of required payments to restructure a tire
supply contract.
Environmental Costs
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 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.
When a contingent loss arises from the improper use of
an asset, a loss accrual is recorded if the loss is probable and
reasonably estimable. Amounts recorded are 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.
121
2010
2009
2008
9 Income Tax Expense
For the years ended December 31
2010
2009
2008
2010
2009
2008
Total expense
Current (2010) and deferred income tax
(expense) recovery (2009 and 2008) –
1,422
689
590
Current
Canada
International
Deferred
Canada
International
Income tax expense before
elements below
Net currency translation (gains)
losses on deferred tax balances
Impact of legislative amendments in Australia
Dividend withholding tax
Canadian functional currency election
Canadian tax rate changes
15 $ (21)
$
1,180
562
$ 22
613
$ 1,195 $ 541 $ 635
$ 54 $ (11)
210
179
$ 3
(146)
$ 233 $ 199 $ (143)
$ 1,428 $ 740 $ 492
(2)
(78)
74
–
–
(40)
–
–
(70)
59
98
–
–
–
–
discontinued operations
(52)
(41)
4
Income tax expense – continuing
operations
$ 1,370 $ 648 $ 594
Currency Translation
Deferred tax balances are subject to remeasurement for changes
in currency exchange rates each period. The most significant
balances are Canadian deferred tax liabilities with a carrying
amount of approximately $25 million, Argentinean deferred tax
liabilities with a carrying amount of approximately $106 million,
and Australian and Papua New Guinea deferred tax liabilities
with a carrying amount of approximately $144 million. In 2010
and 2009, the appreciation of the Canadian and Australian
dollar against the US dollar, and the weakening of the Argentine
peso against the US dollar resulted in net translation gains
totaling $2 million and $40 million, respectively. These gains are
included within deferred tax expense/recovery.
Notes to Consolidated Financial Statements
b) Impairment Charges
For the years ended December 31
Impairment of goodwill (note 17)1
Impairment of long-lived assets2
Write-down of investments (note 12)3
$ –
$ 63
$ 584
14
214
7
7
–
277
1
598
205
$ 7
$ 278
$ 803
1. In 2009, we recorded an impairment charge of $63 million for Plutonic.
Impairment charges for Osborne ($64 million) and Henty ($30 million) in 2008 are
reflected in the results of discontinued operations. Impairment charges recorded in
2008 related to Kanowna ($272 million), North Mara ($216 million), Barrick Energy
($88 million) and Marigold ($8 million).
2. In 2010, an impairment charge of $7 million was recorded to write off the
remaining carrying amount of an intangible asset relating to a tire supply contract.
In 2009, impairment charges of $43 million and $158 million were recorded to
reduce the carrying amount of long-lived assets for Plutonic and Sedibelo to their
estimated fair values, respectively. In 2008, impairment charges primarily relate to
a $12 million charge recorded to reduce the carrying amount of long-lived assets
at Marigold to their estimated fair value.
3. In 2008, we recorded impairment charges on our investments in Highland Gold
($140 million), on Asset-Backed Commercial Paper ($39 million) and various other
investments in junior gold mining companies ($26 million).
c) Other Income
For the years ended December 31
Gains on sale of assets1
Gain on sale of investments2
Gain on acquisition of assets3
Royalty income
Sale of water rights
Non-hedge derivative gains
Other
$ 21
$ 13
12
29
7
3
24
28
$ 187
59
–
25
4
–
16
6
72
5
4
–
12
$ 124
$ 112
$ 291
1. In 2008, we recorded a gain of $167 million on the disposition of royalties to
Royal Gold and a gain of $9 million on the sale of the Doyon royalty.
2. In 2008, we recorded a gain of $12 million on the sale of available-for-sale
investments. We also sold Asset-Backed Commercial Paper for cash proceeds of
$49 million and recorded a gain on sale of $42 million.
3. Relates to a $29 million gain recorded on gaining control of Cerro Casale follow-
ing the acquisition of an additional 25% interest (note 3f). In 2009, we recorded
a gain of $72 million on the acquisition of the remaining 50% interest in Hemlo
(note 3h).
122
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Impact of Legislative Amendments in Australia
In Australia, we elected to enter into the consolidated tax
regime in 2004 (in 2002 for the former Placer Dome Inc.
subsidiaries). At the time the elections were made, there were
certain accrued gains that were required to be included in taxable
income upon subsequent realization. In second quarter 2010,
clarifying legislative amendments to the Australian consolida-
tion tax rules were enacted. These amendments enable us to
reduce the inclusion of certain of these accrued gains, resulting
in a permanent decrease in taxable income. The impact of the
amendment is a current tax recovery of $78 million recorded in
second quarter 2010.
Dividend Withholding Tax
In fourth quarter 2010, we recorded a $74 million dollar
dividend withholding current tax expense in respect of funds
available to be repatriated from a foreign subsidiary.
Canadian Functional Currency Election
In fourth quarter 2008, we filed an election under Canadian
draft legislation to prepare some of our Canadian tax returns
using US dollar functional currency effective January 1, 2008.
The legislation was enacted in first quarter 2009 which resulted
in a one-time benefit of $70 million.
Canadian Tax Rate Changes
In fourth quarter 2009, a provincial rate change was enacted
in Canada that lowered the applicable tax rate. The impact of
this tax rate change was to reduce net deferred tax assets in
Canada by $59 million, recorded as a component of deferred
tax expense.
Reconciliation to Canadian Statutory Rate
For the years ended December 31
2010
2009
2008
At 31% (2009: 33%; 2008: 33.50%)
statutory rate
$ 1,422 $ (1,198) $ 522
Increase (decrease) due to:
Allowances and special tax
deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Impairment charges not
tax deductible
Gain on acquisition of assets
not taxable
Net currency translation (gains)/losses
on deferred tax balances
Canadian functional currency election
Impact of legislative amendments
in Australia
Release of valuation allowances
Valuation allowances set up
against current year tax losses
Canadian tax rate changes
Dividend withholding tax
Other withholding taxes
Mining taxes3
Other items
(168) (110)
73 1,786
16
25
(100)
(86)
13
–
21
199
–
(18)
(2)
–
(40)
(70)
–
98
–
(78)
(129)
–
–
– (175)
73
–
74
21
48
11
163
59
–
16
21
2
74
–
–
21
19
9
Income tax expense
$ 1,370
$ 648 $ 594
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 tax rates different than
the Canadian statutory rate. Additionally, we have reinvested earnings and cash
flow generated by the Zaldívar mine in Chile to fund a portion of the construction
cost of Pascua-Lama. The reinvestment of these earnings and cash flow resulted in
a lower tax rate applied for the period. Amounts in 2009 include the impact of the
elimination of gold sales contracts in a low tax jurisdiction.
3. For 2010, this includes the impact of adopting the new Chilean specific mining
tax (royalty).
123
Notes to Consolidated Financial Statements
10 Earnings (loss) per share
For the years ended December 31
($ millions, except shares in millions
and per share amounts in dollars)
Income (loss) from continuing operations
Plus: interest on convertible debentures
Income (loss) available to common shareholders and
after assumed conversions
Income (loss) from discontinued operations
2010
2009
2008
Basic Diluted
Basic Diluted
Basic Diluted
$ 3,153 $ 3,153
–
–
$ (4,371) $ (4,371)
–
–
$ 889
–
$ 889
3
3,153
121
3,153
121
(4,371)
97
(4,371)
97
889
(104)
892
(104)
Net income (loss)
$ 3,274 $ 3,274
$ (4,274) $ (4,274)
$ 785
$ 788
Weighted average shares outstanding
Effect of dilutive securities
Stock options
Convertible debentures
Earnings (loss) per share
Income (loss) from continuing operations
Net income (loss)
987
987
903
903
872
872
–
–
2
8
–
–
–
–
–
–
4
9
987
997
903
903
872
885
$ 3.19 $ 3.16
$ 3.32 $ 3.28
$ (4.84) $ (4.84)
$ (4.73) $ (4.73)
$ 1.02 $ 1.01
$ 0.90 $ 0.89
Earnings per share is computed by dividing net income available
to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution that could occur if addi-
tional common shares are assumed to be issued under securities
that entitle their holders to obtain common shares in the future.
For stock options, the number of additional shares for inclusion
in diluted earnings per share calculations is determined using
the treasury stock method. Under this method, stock options,
whose exercise price is less than the average market price of our
common shares, are assumed to be exercised and the proceeds
are used to repurchase common shares at the average market
price for the period. The incremental number of common
shares issued under stock options and repurchased from
proceeds is included in the calculation of diluted earnings per
share. For convertible debentures, the number of additional
shares for inclusion in diluted earnings per share calculations is
determined using the as if converted method. The incremental
number of common shares issued is included in the number of
weighted average shares outstanding and interest on the con-
vertible debentures is excluded from the calculation of income.
124
11 Cash Flow – Other Items
a) Operating Cash Flows – Other Items
For the years ended December 31
Adjustments for non-cash income statement items:
Currency translation losses (note 8a)
Amortization of premium on debt securities (note 20b)
Amortization of debt issue costs (note 20b)
Stock option expense (note 28a)
Loss from equity in investees (note 12)
Gain on sale of investments (note 8c)
Losses on write-down of inventory (note 13)
Non-controlling interests (notes 2b and 27)
Net change in current operating assets and liabilities, excluding inventory
Revisions to AROs (note 22)
Settlement of AROs (note 22)
Amortization of hedge gains/losses on acquired gold hedge position
Other net operating activities
Operating cash flow includes payments for:
Pension plan contributions (note 29a)
Cash interest paid
b) Investing Cash Flows – Other Items
For the years ended December 31
Funding for equity investees (note 12)
Loans to joint venture partners
Purchase of land and water rights
Purchases of royalties
Long-term supply contract
Other
Other net investing activities
c) Financing Cash Flows – Other Items
For the years ended December 31
Financing fees on long-term debt
Derivative settlements
Other net financing activities
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
2010
2009
2008
$ 26
(6)
4
14
41
(12)
3
23
195
8
(44)
(2)
$ 250
$ 56
400
2010
$ (51)
–
–
–
–
–
$ (51)
2010
$ (37)
12
$ (25)
$ 8
(6)
6
20
87
(6)
6
6
148
10
(39)
(10)
$ 230
$ 50
311
2009
$ (80)
–
–
–
–
(7)
$ (87)
2009
$ (16)
(10)
$ (26)
$ 37
(7)
7
25
64
(59)
62
12
7
9
(38)
(2)
$ 117
$ 47
213
2008
$ (107)
(4)
(16)
(42)
(35)
(27)
$ (231)
2008
$ (11)
(23)
$ (34)
125
Notes to Consolidated Financial Statements
12 Equity in Investees and Other Investments
a) Equity Method Investment Continuity
At January 1, 2008
Purchases
Equity pick-up (loss) from equity investees
Capitalized interest
Funding
Impairment charges
At January 1, 2009
Equity pick-up (loss) from equity investees
Capitalized interest
Funding
At January 1, 2010
Equity pick-up (loss) from equity investees
Capitalized interest
Funding
Transfer to property, plant and equipment2
At December 31, 2010
Publicly traded
Highland
Atacama1 Cerro Casale Donlin Creek
Kabanga
Total
$ 169
1
5
–
–
(140)
35
6
–
–
41
12
–
–
–
$ 118
–
(32)
9
62
–
157
(39)
8
31
157
(19)
8
12
–
$ 53
$ 158
Yes
No
$ 734
41
(11)
42
9
–
815
(21)
46
21
861
(6)
12
12
(879)
$ –
No
$ 64
–
(17)
4
27
–
78
(18)
4
11
75
(22)
4
22
–
$ 79
No
$ 1,085
42
(64)
55
107
(140)
1,085
(87)
58
80
1,136
(41)
24
51
(879)
$ 291
$ –
–
(9)
–
9
–
–
(15)
–
17
2
(6)
–
5
–
$ 1
No
1. Represents our investment in Reko Diq.
2. The carrying amount of the Cerro Casale investment has been transferred to property, plant and equipment as a result of our obtaining control over the entity due to the
acquisition of an additional 25% interest. See note 3f for further details.
Accounting Policy for Equity Method Investments
Under the equity method, we record our equity share of the
income or loss of equity investees each period. On acquisition
of an equity investment, the underlying identifiable assets and
liabilities of an equity investee are recorded at fair value and the
income or loss of equity investees is based on these fair values.
For an investment in a company that represents a business,
if the cost of any equity investment exceeds the total amount of
the fair value of identifiable assets and liabilities, any excess
is accounted for in a manner similar to goodwill, with the
exception that an annual goodwill impairment test is not
required. Additional funding into an investee is recorded as an
increase in the carrying value of the investment. The carrying
amount of each investment in a publicly traded equity investee
is evaluated for impairment using the same method as an
available-for-sale security.
Our investments in non-publicly traded equity investees
are exploration and development projects; therefore, we assess
if there has been a potential impairment triggering event for an
other-than-temporary impairment by: testing the underlying
assets of the equity investee for recoverability; and assessing if
there has been a change in the mining plan or strategy for the
project. If we determine underlying assets are recoverable and
no other potential impairment conditions were identified, then
our investment in the non-publicly traded equity investee is
carried at cost. If the other underlying assets are not recoverable,
we record an impairment charge equal to the difference
between the carrying amount of the investee and its fair value.
Where reliable information is available, we determine fair
value based on the present value of cash flows expected to be
generated by the investee. Where reliable cash flow information
is not available, we determine fair value using a market
comparable approach.
126
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
b) Other Investments
At December 31
Available-for-sale securities
Other investments
2010
2009
$ 171
32
$ 61
31
$ 203
$ 92
Available-for-sale Securities
At December 31
2010
2009
has been less than the carrying amount; the financial condition
and near-term prospects of the investee, including any specific
events that have impacted its fair value; both positive and
negative evidence that the carrying amount is recoverable
within a reasonable period of time; and our ability and intent to
hold the investment for a reasonable period of time sufficient
for an expected recovery of the fair value up to or beyond the
carrying amount. We record in earnings any unrealized declines
in fair value judged to be other than temporary.
Fair
value1
Gains
in OCI
Fair
value
Gains
in OCI
13 Inventories
Securities in an unrealized
gain position
Equity securities
Benefit plans2
Fixed-income
Equity
Securities in an unrealized
loss position
Other equity securities3
Other investments
Long-term loan receivable4
$ 169
$ 85
$ 54
$ 27
–
–
–
–
1
5
–
–
169
85
60
27
2
–
1
–
171
85
61
27
32
–
31
–
$ 203
$ 85
$ 92
$ 27
1. Refer to note 21 for further information on the measurement of fair value.
2. 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.
3. Other equity securities in a loss position consist of investments in various junior
mining companies.
4. The long-term loan receivable is measured at amortized cost. The principal amount
is $35 million.
Gains on Investments Recorded in Earnings
Gains realized on sales
Cash proceeds from sales
2010
2009
2008
$ 12
$ 15
$ 6
$ 7
$ 59
$ 76
Accounting Policy for Available-for-Sale Securities
Available-for-sale securities are recorded at fair value with
unrealized gains and losses recorded in other comprehensive
income (“OCI”). Realized gains and losses are recorded in earn-
ings when investments mature or on sale, calculated using the
average cost of securities sold. If the fair value of an investment
declines below its carrying amount, we undertake an assessment
of whether the impairment is other than temporary. We
consider all relevant facts and circumstances in this assessment,
particularly: the length of time and extent to which fair value
At December 31
2010
2009
2010
2009
Gold
Copper
Raw materials
Ore in stockpiles
Ore on leach pads
Mine operating supplies
Work in process
Finished products
Gold doré
Copper cathode
Gold concentrate
Non-current ore in stockpiles1
$ 1,440 $ 1,052
215
488
215
242
563
265
$ 110
156
25
48
$ 77
172
19
5
75
–
19
69
–
20
–
15
–
–
4
–
2,604
(958)
2,059
(679)
354
(148)
277
(117)
$ 1,646 $ 1,380
$ 206
$ 160
1. Ore that we do not expect to process in the next 12 months is classified within
other assets.
Accounting Policy for Inventory
Material extracted from our mines is classified as either ore or
waste. Ore represents material that, at the time of extraction,
we expect to process into a saleable form, and sell at a profit.
Ore is recorded as an asset that is classified within inventory as
material is extracted from the open pit or underground mine.
Ore is accumulated in stockpiles that are subsequently
processed into gold/copper 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/copper. Gold/copper work in process
represents gold/copper in the processing circuit that we count
as production but is not yet in a saleable form.
Gold and copper ore contained in stockpiles is measured
by estimating the number of tons added and removed from the
stockpile, and the associated estimate of gold and copper
contained therein (based on assay data) and applying estimated
metallurgical recovery rates (based on the expected processing
method). Stockpile ore tonnages are verified by periodic
surveys. Costs are allocated to ore stockpiles based on quantities
127
Notes to Consolidated Financial Statements
of material stockpiled using current mining costs incurred up
to the point of stockpiling the ore and including allocations
of waste mining costs, overheads, depreciation, depletion and
amortization relating to mining operations. As ore is processed,
costs are removed based on recoverable quantities of gold
and/or copper and each stockpile’s average cost per unit.
Ore stockpiles are reduced by provisions required to reduce
inventory to net realizable value.
We record gold in process, gold doré and gold in concen-
trate form at average cost, less provisions required to reduce
inventory to market value. 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. Costs capitalized to in
process and finished goods inventory include the cost of stock-
piles processed; direct and indirect materials and consumables;
direct labor; repairs and maintenance; utilities; amortization of
property, plant and equipment; and local mine administrative
expenses. Costs are removed from inventory and recorded in
cost of sales and amortization expense based on the average cost
per ounce of gold in inventory. Mine operating supplies are
recorded at the lower of purchase cost and market value.
We record provisions to reduce inventory to net realizable
value, to reflect changes in economic factors that impact
inventory value or to reflect present intentions for the use of
slow moving and obsolete supplies inventory.
For the years ended December 31
2010
2009
2008
Inventory impairment charges
$ 3
$ 6
$ 62
Ore on leach pads
The recovery of gold and copper from certain oxide ores is
achieved through the heap leaching process. Our Pierina,
Lagunas Norte, Veladero, Cortez, Bald Mountain, Round
Mountain, Ruby Hill and Marigold mines all use a heap leaching
process for gold and our Zaldívar mine uses a heap leaching
process for copper. Under this method, ore is placed on leach
pads where it is treated with a chemical solution, which
dissolves the gold or copper contained in the ore. The resulting
“pregnant” solution is further processed in a plant where the
gold or copper is recovered. For accounting purposes, costs are
added to ore on leach pads based on current mining and
leaching costs, including applicable depreciation, depletion and
amortization relating to mining operations. Costs are removed
from ore on leach pads as ounces or pounds are recovered based
on the average cost per recoverable ounce of gold or pound of
copper on the leach pad.
Estimates of recoverable gold or copper on the leach pads
are calculated from the quantities of ore placed on the leach
pads (measured tons added to the leach pads), the grade of ore
placed on the leach pads (based on assay data) and a recovery
percentage (based on ore type).
Although the quantities of recoverable gold or copper
placed on the leach pads are reconciled by comparing the
grades of ore placed on pads to the quantities of gold or copper
actually recovered (metallurgical balancing), the nature of the
leaching process inherently limits the ability to precisely moni-
tor inventory levels. As a result, the metallurgical balancing
process is regularly monitored and estimates are refined based
on actual results over time. Historically, our operating results
have not been materially impacted by variations between the
estimated and actual recoverable quantities of gold or copper
on our leach pads. At December 31, 2010, the weighted average
cost per recoverable ounce of gold and recoverable pound of
copper on leach pads was $547 per ounce and $1.10 per pound,
respectively (2009: $383 per ounce of gold and $1.01 per pound
of copper). Variations between actual and estimated quantities
resulting from changes in assumptions and estimates that do
not result in write-downs to net realizable value are accounted
for on a prospective basis.
The ultimate recovery of gold or copper from a leach pad
will not be known until the leaching process is concluded.
Based on current mine plans, we expect to place the last ton of
ore on our current leach pads at dates for gold ranging from
2011 to 2027 and for copper ranging from 2011 to 2027.
Including the estimated time required for residual leaching,
rinsing and reclamation activities, we expect that our leaching
operations will terminate within a period of up to six years
following the date that the last ton of ore is placed on the
leach pad.
The current portion of ore inventory on leach pads is
determined based on estimates of the quantities of gold or
copper at each balance sheet date that we expect to recover
during the next 12 months.
128
Ore in Stockpiles
At December 31
Gold
Goldstrike
Ore that requires roasting
Ore that requires autoclaving
Kalgoorlie
Porgera
Cowal
Veladero
Cortez
Turquoise Ridge
Other
Copper
Zaldívar
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
2010
2009
Year1
14 Accounts Receivable and Other Current Assets
At December 31
2010
2009
$ 499 $ 452 2025
46 2024
80 2021
117 2024
88 2019
26 2024
98 2027
15 2036
42
89
140
93
21
365
14
177
130
110
77 2026
$ 1,550 $ 1,129
Accounts receivable
Amounts due from concentrate sales
Amounts due from copper cathode sales
Other receivables
Other current assets
Derivative assets (note 20e)
Goods and services taxes recoverable1
Deferred share-based compensation (note 28b)
Prepaid expenses
Other
$ 22 $ 9
109
133
159
165
$ 346 $ 251
$ 615 $ 214
201
7
92
10
211
13
95
13
$ 947 $ 524
1. Year in which we expect to complete full processing of the ore in stockpiles.
1. 2010 includes $59 million and $132 million in VAT and fuel tax receivables in
Africa and South America, respectively (2009: $50 million and $111 million,
respectively).
Ore on Leachpads
At December 31
Gold
Veladero
Cortez
Ruby Hill
Bald Mountain
Lagunas Norte
Round Mountain
Pierina
Marigold
Copper
Zaldívar
2010
2009
Year1
$ 87 $ 75 2011
25 2011
24 2011
24 2011
22 2011
18 2011
14 2011
13 2011
16
10
15
17
25
53
19
156
172 2011
$ 398 $ 387
1. Year in which we expect to complete full processing of the ore on leachpads.
Purchase Commitments
At December 31, 2010, we had purchase obligations for supplies
and consumables of approximately $1,449 million.
129
Notes to Consolidated Financial Statements
15 Property, Plant and Equipment
At January 1, 2008
Additions
Acquisitions
Capitalized interest5
Amortization
Impairments
Transfers between categories4
At January 1, 2009
Additions
Acquisitions
Capitalized interest5
Amortization
Impairments
Currency translation adjustment
Transfers between categories4
At January 1, 2010
Additions
Acquisitions
Capitalized interest5
Amortization
Currency translation adjustment
Transfers between categories4
Assets
subject to
amortization1,2
Accumulated
amortization
$ 14,073
584
1,609
57
–
(14)
481
16,790
445
276
71
–
(56)
60
1,130
18,716
533
252
14
–
28
1,263
$ (7,598)
(155)
–
–
(912)
–
–
(8,665)
21
–
–
(1,033)
–
–
–
(9,677)
43
–
–
(1,331)
–
–
Capital
Projects6
$ 1,089
756
–
102
–
–
(31)
1,916
1,207
–
132
–
(122)
–
(616)
2,517
1,957
1,732
241
–
–
5
At December 31, 2010
$ 20,806
$ (10,965)
$ 6,452
Exploration
properties
& VBPP
Construction
in progress3
$ 474
–
409
8
–
–
(178)
713
3
–
8
–
–
–
(92)
632
(1)
116
10
–
–
(64)
$ 693
$ 397
626
–
–
–
–
(272)
751
608
–
–
–
–
–
(422)
937
1,032
–
–
–
–
(1,204)
Total
$ 8,435
1,811
2,018
167
(912)
(14)
–
11,505
2,284
276
211
(1,033)
(178)
60
–
13,125
3,564
2,100
265
(1,331)
28
–
$ 765
$ 17,751
1. Represents capitalized reserve acquisition and development costs and buildings, plant and equipment.
2. Includes assets under capital leases, leach pads and tailings dams.
3. Includes construction in process for tangible assets at operating mines, as well as deposits on long lead capital items. Once an asset is available for use, it is transferred to
assets subject to amortization and amortized over its estimated useful life.
4. Includes construction in process that is transferred to buildings, plant and equipment as the asset is available for use and value beyond proven and probable reserves
(“VBPP”) that is transferred to capitalized reserve acquisition and development costs, once mineralized material is converted into proven and probable reserves. In 2009,
Buzwagi transitioned from a development project to an operating mine and its property, plant, and equipment balance was transferred from exploration properties, capital
projects & VBPP to assets subject to amortization and construction in progress.
5. Capitalized interest for assets subject to amortization primarily reflects capitalized interest at Cortez Hills.
6. Includes construction in process for tangible assets at capital projects.
a) Accounting Policy for Property, Plant and Equipment
Capitalized Reserve Acquisition Costs
We capitalize the cost of acquisition of land and mineral rights.
On acquiring a mineral or petroleum and natural gas property,
we estimate the fair value of proven and probable reserves, and
we record these amounts as assets at the date of acquisition.
When production begins, capitalized reserve acquisition costs
are amortized using the units-of-production (“UOP”) method,
whereby the numerator is the number of ounces of gold/pounds
of copper/barrels of oil equivalent (boe) produced and the
denominator is the estimated recoverable ounces of gold/pounds
of copper/boe contained in proven and probable reserves.
Value Beyond Proven and Probable Reserves (“VBPP”)
On acquisition of mineral property, we prepare an estimate
of the fair value of the resources and exploration potential of
that property and record this amount as an asset (VBPP) as at
the date of acquisition. As part of our annual business cycle,
we prepare estimates of proven and probable gold and copper
mineral reserves for each mineral property. The change in
reserves, net of production is used to determine the amount to
be converted from VBPP to proven and probable reserves
subject to amortization. For 2010 the effect on amortization
expense of transfers from VBPP to proven and probable
reserves is an increase of $3 million (2009: $3 million increase;
2008: $5 million increase).
130
At January 1, 2008
VBPP conversion to reserves
Acquisitions1
At January 1, 2009
VBPP conversion to reserves
At January 1, 2010
VBPP conversion to reserves
At December 31, 2010
VBPP
$ 313
(178)
381
516
(93)
$ 423
(64)
$ 359
1. Represents VBPP acquired on acquisition of the additional 40% interest in Cortez.
Capitalized Development Costs
Capitalized development costs include the costs of removing
overburden and waste materials at our open pit mining opera-
tions prior to the commencement of production; costs incurred
to access reserves at our underground mining operations;
exploration expenditures incurred that meet the definition of
an asset (refer to note 7 for capitalization criteria for drilling
and related costs), and qualifying development costs incurred
at our petroleum and natural gas properties.
The costs of removing overburden and waste materials to
access the ore body at an open pit mine prior to the production
phase are referred to as “pre-stripping costs”. Pre-stripping costs
are capitalized during the development of an open pit mine.
Where a mine operates several open pits that utilize common
processing facilities, we capitalize the pre-stripping costs
associated with each pit. The production phase of an open pit
mine commences when saleable materials, beyond a de minimus
amount, are produced. Stripping costs incurred during the
production phase of a mine are variable production costs that
are included as a component of inventory to be recognized as a
component of cost of sales in the same period as the revenue
from the sale of inventory. Capitalized pre-stripping costs are
amortized using the UOP method, whereby the denominator is
the estimated recoverable ounces of gold/pounds of copper in
proven and probable reserves in the associated open pit.
At our underground mines, we incur development costs
to build new shafts, drifts and ramps that will enable us to
physically access ore underground. The time over which we will
continue to incur these costs depends on the mine life, which
could in some cases be greater than 25 years. These underground
development costs are capitalized as incurred. Costs incurred
and capitalized to enable access to specific ore blocks or areas of
the mine, and which only provide an economic benefit over the
period of mining that ore block or area, are amortized using the
UOP method, whereby the denominator is estimated recover-
able ounces of gold/pounds of copper contained in proven and
probable reserves within that ore block or area. If capitalized
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
underground development costs provide an economic benefit
over the entire mine life, the costs are amortized using the UOP
method, whereby the denominator is the estimated recoverable
ounces of gold/pounds of copper contained in total accessible
proven and probable reserves.
For our petroleum and natural gas properties, we follow the
successful efforts method of accounting, whereby exploration
expenditures which are either general in nature or related to an
unsuccessful drilling program are expensed. Only costs which
relate directly to the discovery and development of specific
commercial oil and gas reserves are capitalized as development
costs and amortized using the UOP method, whereby the
denominator is the estimated recoverable amount of boe in
proven developed reserves.
Buildings, Plant and Equipment
We record buildings, plant and equipment at cost, which
includes all expenditures incurred to prepare an asset for its
intended use. Cost includes the purchase price; brokers’ com-
missions; and installation costs including architectural, design
and engineering fees, legal fees, survey costs, site preparation
costs, freight charges, transportation insurance costs, duties,
testing and preparation charges. In addition, if the cost of an
asset acquired other than through a business combination is
different from its tax basis on acquisition, the cost is adjusted to
reflect the related future income tax consequences.
We capitalize costs that extend the productive capacity
or useful economic life of an asset. Costs incurred that do not
extend the productive capacity or useful economic life of an
asset are considered repairs and maintenance and expensed
as incurred. We amortize the capitalized cost of assets less any
estimated residual value, using the straight-line method over
the estimated useful economic life of the asset based on their
expected use in our business. The longest estimated useful
economic life for buildings and equipment at ore processing
facilities is 25 years and for mining equipment is 15 years.
Depreciation of oil and gas plants and related facilities is
calculated using the UOP method.
In the normal course of our business, we have entered
into certain leasing arrangements whose conditions meet the
criteria for the leases to be classified as capital leases. For capital
leases, we record an asset and an obligation at an amount equal
to the present value at the beginning of the lease term of
minimum lease payments over the lease term. In the case of our
capital leasing arrangements, there is transfer of ownership of
the leased assets to us at the end of the lease term and therefore
we amortize these assets on a basis consistent with our other
owned assets. As at December 31, 2010, the carrying value of our
capital leases is $72 million.
131
Notes to Consolidated Financial Statements
Exploration Properties and Development Projects
The amounts capitalized to exploration and development
projects comprise the cost of mineral interests acquired either as
individual asset purchases or as part of a business combination.
The amount capitalized to development projects with proven
and probable reserves also includes the capitalization cost asso-
ciated with developing and constructing the mine. The value of
such assets is primarily driven by the nature and amount of
mineralized material contained in such properties. Exploration
and development stage mineral interests represent interests in
properties that contain proven and probable reserves or are
believed to potentially contain mineralized material consisting
of (i) other mineralized material such as measured, indicated
and inferred material; (ii) other mine exploration potential such
as inferred material not immediately adjacent to existing
reserves and mineralization but located within the immediate
mine area; (iii) other mine-related exploration potential that is
not part of measured, indicated or inferred material greenfield
exploration potential; and (iv) any acquired right to explore and
develop a potential mineral deposit.
Amounts capitalized to capital projects include costs
associated with the construction of tangible assets, such as pro-
cessing plants, permanent housing facilities and other tangible
infrastructure associated with the project.
Capitalized Interest
Interest cost is considered an element of the historical cost of
an asset when a period of time is necessary to prepare it for its
intended use. We capitalize interest costs to exploration
properties and development projects prior to when production
begins while exploration, development or construction activities
are in progress. We also capitalize interest costs on the cost of
certain equity method investments, wherein the only significant
assets are exploration properties or capital projects, and while
exploration, development or construction activities are in
progress. For 2010, we capitalized $289 million of interest costs
(2009: $269 million).
Gold and Copper Mineral Reserves
At the end of each fiscal year, as part of our annual business
cycle, we prepare estimates of proven and probable gold and
copper mineral reserves for each mineral property. We prospec-
tively revise calculations of amortization expense for property,
plant and equipment amortized using the UOP method,
whereby the denominator is estimated recoverable ounces
of gold/pounds of copper. The effect of changes in reserve
estimates on amortization expense for 2010 was $nil (2009:
$70 million decrease; 2008: $57 million decrease).
Exploration Properties, Capital Projects and VBPP
2010
2009
2008
b) Amortization and Accretion
Carrying amount
at December 31,
2010
Carrying amount
at December 31,
2009
Amortization
Accretion (note 22)
$ 1,149 $ 1,016 $ 912
45
47
57
Exploration projects and other
land positions
Papua New Guinea land positions
Tanzanian exploration properties1
REN joint venture
Other
Value beyond proven and probable
$ 194
82
36
22
$ 187
–
–
22
reserves at producing mines
359
423
Capital projects2
Pascua-Lama
Pueblo Viejo
Cerro Casale3
2,164
2,502
1,786
1,196
1,321
–
$ 7,145
$ 3,149
1. Represents amounts allocated to exploration properties as a result of the Tusker
acquisition. See note 3b for further details.
2. The carrying amounts for the Donlin Creek, Reko Diq, and Kabanga projects are
reflected in the carrying amounts of the equity investments through which they
are owned. Refer to note 12.
3. The carrying amount for the Cerro Casale investment has been transferred to
property, plant and equipment in 2010 as a result of our obtaining control of the
entity due to the acquisition of an additional 25% interest. Refer to note 3f.
$ 1,196 $ 1,073 $ 957
c) Impairment Evaluations
Producing Mines, Development Projects and
Petroleum & Natural Gas 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,
capital projects and petroleum and natural gas properties, the
individual mine/project/property is a single reporting unit for
impairment testing purposes. A potential impairment is
identified if the sum of the reporting unit’s undiscounted cash
flows is less than its carrying amount. When a potential long-
lived asset impairment is identified, the amount of impairment
is calculated by comparing its fair value to its carrying amount.
132
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Long-lived assets subject to potential impairment at mine
sites/capital projects/petroleum and natural gas properties
include buildings, plant and equipment, capitalized reserve
acquisition and development costs and VBPP. For impairment
assessment purposes, the estimated fair value of buildings,
plant and equipment is based on a combination of current
depreciated replacement cost and current market value. The
estimated fair value of capitalized reserve acquisition, develop-
ment costs and VBPP is determined using an income approach
which measures the present value of the related cash flows
expected to be derived from the asset.
Exploration Properties
After acquisition, various factors can affect the recoverability 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 determine that a potential impairment condition may exist,
we compare the sum of the undiscounted cash flows expected to
be generated from the project to its carrying amount. If the sum
of undiscounted cash flows is less than the carrying amount,
an impairment charge is recognized if the carrying amount of
the individual long-lived assets within the group exceeds
their fair value. For projects that do not have reliable cash flow
projections, a market approach is applied.
In 2010, we did not record any impairment charge related
to our exploration properties. In 2008, we completed a bankable
feasibility study (“BFS”) for our Sedibelo platinum project
in South Africa meeting the conditions for a 10% interest in the
property. We also held the right to increase our interest to
65% in return for a decision to develop Sedibelo and payment
of approximately $106 million in fourth quarter 2009. In third
quarter 2009, after conducting a thorough review of develop-
ment alternatives to maximize the project’s potential, we
decided not to proceed with this payment to increase our owner-
ship interest in Sedibelo. As a consequence of this decision, we
recorded an impairment charge of $158 million in third quarter
2009, reducing the carrying amount of our investment in the
project and related assets to their estimated fair values.
d) Capital Commitments
In addition to entering into various operational commitments
in the normal course of business, we had commitments
of approximately $1,254 million at December 31, 2010 for con-
struction activities at our capital projects.
e) Insurance
We purchase insurance coverage for certain insurable losses,
subject to varying deductibles, at our mineral properties and
corporate locations including losses such as property damage
and business interruption. We record losses relating to insurable
events as they occur. Proceeds receivable from insurance
coverage are recorded at such time as receipt is probable and
the amount receivable is fixed or determinable.
Insurance Proceeds
Cost of sales
Other income
2010
2009
2008
$ 2
6
$ 18
26
$ 30
2
$ 8
$ 44
$ 32
133
Notes to Consolidated Financial Statements
16 Intangible Assets
For the years ended December 31
Water rights1
Technology2
Supply contracts3
Aggregate period amortization expense
For the years ended December 31
Estimated aggregate amortization expense
2010
2009
Gross carrying Accumulated Net carrying Gross carrying Accumulated
amortization
amount amortization
amount
amount
$ 116
17
23
$ 156
$ –
–
16
$ 16
$ 1
2011
$ –
$ 116
17
7
$ 140
$ 40
17
24
$ 81
2012
$ 2
2013
$ 2
$ –
–
15
$ 15
$ –
2014
$ 2
Net carrying
amount
$ 40
17
9
$ 66
2015
$ 2
1. Water rights in South America ($116 million) are subject to annual impairment testing and will be amortized when used in the future. In 2010, we recorded a $75 million
increase as a result of gaining control of Cerro Casale. Refer to note 3f. In 2009, we increased our investment in water rights for our Sedibelo project by $26 million.
We subsequently recorded an impairment charge for water rights related to Sedibelo ($34 million) in third quarter 2009 (note 15c).
2. The amount will be amortized using the UOP method over the estimated proven and probable reserves of the Pueblo Viejo mine, with no assumed residual value.
3. Relates to a supply agreement with Michelin North America Inc. to secure a supply of tires and will be amortized upon the commencement of the supply of tires in the future.
Accounting Policy for Intangible Assets
Intangible assets acquired as part of an acquisition of a business
are recognized separately from goodwill if the asset is separable
or arises from contractual or legal rights. Intangible assets are
also recognized when acquired individually or with a group of
other assets.
Intangible assets are initially recorded at their estimated
fair value. Intangible assets with a finite life are amortized
over their useful economic lives on a straight-line or UOP basis,
as appropriate. Intangible assets having indefinite lives and
intangible assets that are not yet ready for use are not amortized
and are reviewed annually for impairment. We also review and
test the carrying amounts of all intangible assets when events or
changes in circumstances suggest that their carrying amount
may not be recoverable.
In second quarter 2010, after restructuring a tire supply
agreement, we recorded an impairment charge of $7 million.
In third quarter 2009, after making a decision not to continue
developing the Sedibleo project, we recorded an impairment
charge of $34 million related to water rights at the project.
134
17 Goodwill
At January 1, 2008
Additions1
Other2
Impairments3
At December 31, 2008
Other4
Impairments5
At December 31, 2009
Additions6
Other2
At December 31, 2010
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Gold
Australia
South
America
$ 1,815
–
–
(272)
1,543
–
(63)
1,480
–
–
$ 441
–
–
–
441
–
–
441
–
–
North
America
$ 2,381
23
–
(8)
2,396
(20)
–
2,376
–
–
Copper
Other
South
America
Barrick
Energy
$ 743
–
–
–
743
–
–
743
–
–
$ –
96
(8)
(88)
–
–
–
–
64
4
Africa
$ 373
–
–
(216)
157
–
–
157
22
–
Total
$ 5,753
119
(8)
(584)
5,280
(20)
(63)
5,197
86
4
$ 2,376
$ 1,480
$ 441
$ 179
$ 743
$ 68
$ 5,287
1. Represents goodwill acquired as a result of the acquisitions of an additional 40% interest in Cortez ($20 million), an additional 40% interest in Storm ($3 million) and Barrick
Energy ($96 million).
2. Represents the impact of foreign exchange rate changes on the translation of Barrick Energy from C$ to US$.
3. Impairment charges recorded in 2008 related to Kanowna ($272 million), North Mara ($216 million), Barrick Energy ($88 million), and Marigold ($8 million).
4. Represents a reduction of goodwill as a result of the acquisition of an additional 50% interest in the Hemlo mine (note 3h).
5. Impairment charge recorded in 2009 related to Plutonic ($63 million).
6. Represents goodwill acquired as a result of the acquisition of Tusker ($22 million) (note 3b) and Bountiful, Puskwa and Dolomite ($64 million) (note 3a).
Accounting Policy for Goodwill and Goodwill Impairment
Under the purchase method, the costs of business acquisitions
are allocated to the assets acquired and liabilities assumed based
on the estimated fair value at the date of acquisition. The excess
of purchase cost over the net fair value of identified tangible
and intangible assets and liabilities acquired represents goodwill
that is allocated to reporting units. We believe that goodwill
arises principally because of the following factors: 1) The going
concern value implicit in our ability to sustain and/or grow
our business by increasing reserves and resources through new
discoveries; 2) The ability to capture unique synergies that can
be realized from managing a portfolio of both acquired and
existing mines and mineral properties in our regional business
units; and 3) the requirement to record a deferred tax liability
for the difference between the assigned values and the tax bases
of assets acquired and liabilities assumed in a business combi-
nation at amounts that do not reflect fair value.
Each individual mineral property that is an operating mine
is a reporting unit for goodwill impairment testing purposes.
On an annual basis, as at October 1, and at any other time if
events or changes in circumstances indicate that the fair value
of a reporting unit has been reduced below its carrying amount,
we evaluate the carrying amount of goodwill for potential
impairment.
There is no active market for our reporting units.
Consequently, when assessing a reporting unit for potential
goodwill impairment, we use an income approach (being the
net present value of expected future cash flows or net asset
value (“NAV”) of the relevant reporting unit) to determine the
fair value we could receive for the reporting unit in an arm’s
length transaction at the measurement date. Expected future
cash flows are based on a probability-weighted approach
applied to potential outcomes. Estimates of expected future
cash flows reflect estimates of projected future revenues, cash
costs of production and capital expenditures contained in our
long-term life of mine (“LOM”) plans, which are updated for
each reporting unit in the fourth quarter of each fiscal year.
135
Notes to Consolidated Financial Statements
Our LOM plans are based on detailed research, analysis
and modeling to optimize the internal rate of return generated
from each reporting unit. As such, these plans consider the
optimal level of investment, overall production levels and
sequence of extraction taking into account all relevant
characteristics of the ore body, including waste to ore ratios,
ore grades, haul distances, chemical and metallurgical proper-
ties impacting process recoveries and capacities of available
extraction, haulage and processing equipment. Therefore, the
LOM plan is the appropriate basis for forecasting production
output in each future year and the related production costs and
capital expenditures.
Projected future revenues reflect the forecasted future
production levels at each of our reporting units as detailed in
our LOM plans. Included in these forecasts is the production of
mineral resources that do not currently qualify for inclusion in
proven and probable ore reserves where there is a high degree
of confidence in its economic extraction. This is consistent
with the methodology we use to measure value beyond proven
and probable reserves when allocating the purchase price of a
business combination to acquired mining assets.
Projected future revenues also reflect our estimated long-
term metals prices, which are determined based on current
prices, an analysis of the expected total production costs of the
producers, forward pricing curves of the particular metal and
forecasts of expected long-term metals prices prepared by
analysts. These estimates often differ from current price
levels, but our methodology is consistent with how a market
participant would assess future long-term metals prices. In
2010, we have used estimated 2011, 2012 and long-term gold
prices of $1,250, $1,250 and $1,150 per ounce, respectively
(2009: short-term $1,050, long-term $950), and estimated 2011,
2012 and long-term copper prices of $3.25, $3.25 and $2.75 per
pound, respectively (2009: short-term $2.50, long-term $2.25).
Our estimates of future cash costs of production and
capital expenditures are based on the LOM plans for each
reporting unit. Costs incurred in currencies other than the
US dollar are translated to US dollars using expected long-term
exchange rates based on the relevant forward pricing curve.
Oil prices are a significant component, both directly and indi-
rectly, of our expected cash costs of production. We have used
an estimated average oil price of $75 per barrel (2009: $75),
which is based on the spot price, forward pricing curve, and
long-term oil price forecasts prepared by analysts.
The discount rate applied to present value the net future
cash flows is based upon our real weighted average cost of
capital with an appropriate adjustment for the remaining life of
a mine and risks associated with the relevant cash flows based
on the geographic location of the reporting unit. These risk
adjustments were based on observed historical country risk pre-
miums and the average credit default swap spreads for the
period. In 2010, we used the following real discount rates for
our gold mines with goodwill: United States 2.31% – 3.87%
(2009: 3.03% – 4.61% ); Australia 3.05% – 3.83% (2009:
3.53% – 4.45%); Argentina 10.25% (2009: 12.52%); Tanzania
7.12% – 8.67% (2009: 8.79% – 10.37%); Papua New Guinea
8.67% (2009: 8.46%); and Peru 3.76% – 4.53% (2009: 4.87% –
5.78%).The decrease in discount rates compared to the prior
year primarily reflects lower risk free borrowing rates. Discount
rates for Papua New Guinea increased due to higher country
risk premiums. For our copper mine, we used the following real
discount rate in 2010: Chile 8.94% (2009: 8.82%). The increase
in discount rates compared to the prior year primarily reflects a
higher country risk premium.
For our gold reporting units, we apply a market multiple to
the NAV computed using the present value of future cash flows
approach in order to assess their estimated fair value. Gold
companies typically trade at a market capitalization that is
based on a multiple of their underlying NAV. Consequently, a
market participant would generally apply a NAV multiple when
estimating the fair value of an operating gold mine.
136
When selecting NAV multiples to arrive at fair value, we
considered trading prices of comparable gold mining companies
on October 1, 2010. The selected ranges of multiples for all
operating gold mines were also based on mine life. The range of
selected multiples in respect of operating gold mines with lives
of five years or less were based on the lower end of the observed
multiples. Mines with lives greater than five years were generally
based on median and/or average observation. Mines with lives
of twenty years or greater were based on a 20% increase on the
median and/or average observations. In 2010, we have used the
following multiples in our assessment of the fair value of our
gold reporting units: North America 1.0 – 1.9 (2009: 1.2 – 2.2);
Australia 1.0 – 1.6 (2009: 1.3 – 1.8); South America 1.0 – 1.5
(2009: 1.1 – 1.6); and Africa 1.0 – 1.7 (2009: 1.2 – 2.0).
In 2010 there were no goodwill impairment charges (2009:
$63 million Plutonic; 2008: Kanowna $272 million; North Mara
$216 million; Osborne, included in discontinued operations,
$64 million; Henty, included in discontinued operations,
$30 million; Marigold $8 million; and Barrick Energy $88 mil-
lion). In second quarter 2009, we acquired the remaining 50%
interest in our Hemlo mine, which resulted in a $20 million
reduction of goodwill.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
19 Other Current Liabilities
At December 31
Asset retirement obligations (note 22)
Derivative liabilities (note 20e)
Post-retirement benefits (note 29)
Income taxes payable (note 9)
Restricted stock units (note 28b)
Other
2010
2009
$ 88
173
10
535
64
94
$ 85
180
16
94
33
67
$ 964
$ 475
20 Financial Instruments
Financial instruments include cash; evidence of ownership 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 elsewhere in these
financial statements as follows: accounts receivable – note 14;
investments – note 12; restricted share units – note 28b.
a) Cash and Equivalents
Cash and equivalents include cash, term deposits, treasury
bills and money markets with original maturities of less than
90 days.
18 Other Assets
At December 31
Non-current ore in stockpiles (note 13)
Derivative assets (note 20e)
Goods and services taxes recoverable1
Debt issue costs
Unamortized share-based compensation (note 28b)
Notes receivable
Deposits receivable
Other
2010
2009
At December 31
Cash deposits
Term deposits
Treasury bills
Money market investments
$ 1,106 $ 796
290
511
124
138
42
54
67
70
94
90
11
–
107
101
$ 2,070 $ 1,531
2010
2009
$ 1,345 $ 509
298
1,236
–
125
1,387 1,632
$ 3,968 $ 2,564
1. Includes $75 million and $63 in VAT and fuel tax receivables in South America and
Africa, respectively (2009: $94 million and $30 million, respectively).
Debt Issue Costs
In 2010, a total of $9 million of debt issue costs arose from the
non-recourse project financing for Pueblo Viejo.
Amortization of debt issue costs is calculated using the
interest method over the term of each debt obligation, and
classified as a component of interest cost (see note 20b).
In 2009, a total of $16 million of debt issue costs arose on
debenture issuances of $1.25 billion and $750 million.
137
Notes to Consolidated Financial Statements
b) Long-Term Debt1
2010
2009
At
Dec. 31 Proceeds
Repay- Amorti-
zation
and
ments/
Redemp-
tions7
At
Other2 Dec. 31
Repay-
ments/
Redemp-
tions
Amorti-
zation
and
Other2
Proceeds
At
Dec. 31
Proceeds
2008
Repay-
ments/
Redemp-
tions
Amorti-
zation
and
Other2
At
Jan. 1
$ 3,217
$ –
$ –
$ 3 $ 3,214
$ 1,964
$ –
$ – $ 1,250 $ 1,250 $ –
$ –
$ –
Fixed rate notes
5.80%/4.875% notes3
Copper-linked notes
US dollar notes8
Convertible senior debentures
Project financing
Capital leases
Other debt obligations4
First credit facility5
752
–
996
–
754
72
901
–
–
–
–
–
754
–
–
–
–
–
–
281
62
24
63
–
4
–
–
(4)
–
34
(4)
–
748
–
996
285
62
62
968
–
–
–
190
–
–
–
–
–
Less: current portion6
(14)
–
–
–
(54)
–
6,692
754
430
33
6,335
2,154
–
190
–
–
53
25
16
–
284
–
1
–
1
(4)
–
17
7
–
22
–
747
190
805
289
115
70
977
–
–
–
325
–
–
–
152
990
–
325
–
–
99
21
150
990
4,443
2,717
1,585
(93)
–
–
2
–
–
(4)
–
6
745
515
480
293
214
85
52
923
–
56
–
–
3,255
(102)
$ 6,678
$ 754
$ 430
$ 33 $ 6,281
$ 2,154
$ 284
$ 22 $ 4,350 $ 2,717 $ 1,585
$ 56 $ 3,153
Short-term debt
Demand financing facility
–
–
–
–
–
–
113
–
113
–
18
–
131
$ –
$ –
$ –
$ – $ –
$ –
$ 113
$ –
$ 113
$ –
$ 18
$ –
$ 131
1. The agreements that govern our long-term debt each contain various provisions which are not summarized herein. In certain cases, these provisions allow Barrick to, at
its option, redeem indebtedness prior to maturity at specified prices and also may permit redemption of debt by Barrick upon the occurrence of certain specified changes
in tax legislation.
2. Amortization of debt premium/discount.
3. During third quarter 2004, we issued $400 million of debentures at a $3 million discount that mature on November 15, 2034 and $350 million of debentures at a $2 million
discount that mature on November 15, 2014.
4. The obligations have an aggregate amount of $901 million, of which $100 million is subject to floating interest rates and $801 million is subject to fixed interest rates
ranging from 4.75% to 8.05%. The obligations mature at various times between 2012 and 2035.
5. We 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 $1.5 billion
or the equivalent amount in Canadian currency. The credit facility, which is unsecured, has an interest rate of LIBOR plus 0.25% to 0.35% on drawn down amounts, and a
commitment rate of 0.07% to 0.08% on undrawn amounts. $50 million matures in 2012 and the remaining $1.45 billion matures in 2013.
6. The current portion of long-term debt consists of capital leases ($14 million).
7. On October 20, 2010 we redeemed all of our entire outstanding Placer Dome 2.75% Convertible Senior Debentures due 2023.
8. $400 million of US dollar notes with a coupon of 5.75% mature in 2016 and $600 million of US dollar notes with a coupon of 6.35% mature in 2036.
Redemption of Convertible Senior Debentures
On October 20, 2010 (the “Redemption Date”) we redeemed
our entire outstanding Placer Dome 2.75% Convertible Senior
Debentures due 2023 (the “Debentures”). The registered holders
of the Debentures were to receive a redemption price of
100.825% of the principal amount outstanding, plus accrued
and unpaid interest to the Redemption Date, for a total of
$1,008.63 per $1,000.00 principal amount of Debentures if the
conversion option was not exercised.
Effective September 1, 2010 to October 19, 2010, the
conversion rate per each $1,000 principal amount of Securities
was 40.9378 common shares. Substantially all the holders
of these debentures exercised their right to convert these
Securities into common shares. No gain or loss was recognized
in the income statement on conversion.
138
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
On March 19, 2009, we issued an aggregate of $750 million
of 10-year notes with a coupon rate of 6.95% for general
corporate purposes. The notes are unsecured, unsubordinated
obligations and will rank equally with our other unsecured,
unsubordinated obligations.
In September, 2008, we issued an aggregate of $1,250 million
of notes through our wholly-owned indirect subsidiaries
Barrick North America Finance LLC and Barrick Gold
Financeco LLC (collectively the “LLCs”) consisting of
$500 million of 5-year notes with a coupon rate of 6.125%,
$500 million of 10-year notes with a coupon rate of 6.8%, and
$250 million of 30-year notes with a coupon rate of 7.5%
(collectively the “Notes”). The LLCs used the proceeds to pro-
vide loans to us. We provide sufficient funds to the LLCs to
meet the principal and interest obligations on the notes. We also
provided an unconditional and irrevocable guarantee of these
payments, which will rank equally with our other unsecured
and unsubordinated obligations.
We provide an unconditional and irrevocable guarantee on
debentures totaling $1.25 billion through our wholly-owned
indirect subsidiary Barrick (PD) Australia Finance Pty Ltd. and
$1.25 billion of notes through our wholly-owned indirect
subsidiaries Barrick North America Finance LLC and Barrick
Gold Financeco LLC. These payments will rank equally with
our other unsecured and unsubordinated obligations.
Project Financing
One of our wholly-owned subsidiaries, Minera Argentina
Gold S.A. in Argentina, had a limited recourse amortizing loan
of $62 million outstanding at December 31, 2009, the majority
of which had a variable interest rate. During the year this loan
was fully repaid.
Pueblo Viejo Project Financing Agreement
In April 2010, Barrick and Goldcorp finalized terms for
$1.035 billion (100% basis) in non-recourse project financing
for Pueblo Viejo. The lending syndicate is comprised of interna-
tional financial institutions including export development
agencies and commercial banks. The amount is divided into
three tranches of $400 million, $375 million and $260 million
with tenors of 15, 15 and 12 years, respectively. The $400 million
tranche bears a coupon of LIBOR+3.25% pre-completion and
scales gradually to LIBOR+5.10% (inclusive of political risk
insurance premium) for years 13–15. The $375 million tranche
bears a fixed coupon of 4.02% for the entire 15 years. The
$260 million tranche bears a coupon of LIBOR+3.25% pre-
completion and scales gradually to LIBOR+4.85% (inclusive of
political risk insurance premium) for years 11–12. Barrick and
Goldcorp each provided a guarantee for their proportionate
share which will terminate upon Pueblo Viejo meeting certain
operating completion tests and are subject to an exclusion for
certain political risk events. In June 2010 we received $782 mil-
lion (100% basis), less financing fees of $28 million on this
financing agreement by fully drawing on the $400 million and
$260 million tranches and a portion of the $375 million tranche.
Fixed Rate Notes
On October 16, 2009, we issued two tranches of debentures
totaling $1.25 billion through our wholly-owned indirect
subsidiary Barrick (PD) Australia Finance Pty Ltd. (“BPDAF”)
consisting of $850 million of 30-year notes with a coupon rate
of 5.95%, and $400 million of 10-year notes with a coupon rate
of 4.95% (collectively the “Notes”). BPDAF used the proceeds
to provide loans to us for settling the Gold Hedges and some of
the Floating Contracts. In exchange, we provide sufficient funds
to BPDAF to meet the principal and interest obligations on
the notes. We also provided an unconditional and irrevocable
guarantee of these payments, which will rank equally with our
other unsecured and unsubordinated obligations.
139
Notes to Consolidated Financial Statements
Interest
Fixed rate notes
5.80%/4.875% notes
US dollar notes
Convertible senior debentures
Project financing
Capital leases
Other debt obligations
Deposit on silver sale agreement (note 23)
First credit facility
Demand financing facility
Other interest
Less: interest capitalized
Cash interest paid
Amortization of debt issue costs
Amortization of premium
Losses on interest rate hedges
Increase in interest accruals
Interest cost
For the years ended December 31
2010
2009
2008
Interest Effective
rate1
cost
Interest Effective
rate1
cost
Interest Effective
rate1
cost
$ 211
41
6.49%
5.48%
62 6.22%
2 0.80%
16 3.65%
3 4.30%
47 4.94%
21 8.59%
–
–
–
–
7
410
(289)
$ 121
$ 400
4
(6)
2
10
$ 410
$ 142
44
62
6.40%
5.80%
6.20%
3 0.80%
8 8.20%
2 5.60%
49 5.10%
6 8.59%
–
–
5
8.70%
5
326
(269)
$ 57
$ 311
6
(6)
3
12
$ 326
$ 26 7.00%
42 5.70%
62 6.20%
4 1.50%
19 11.00%
4 5.00%
50 5.30%
–
–
17 3.30%
11 8.90%
8
243
(222)
$ 21
$ 213
7
(7)
1
29
$ 243
1. The effective rate includes the stated interest rate under the debt agreement, amortization of debt issue costs and debt discount/premium and the impact of interest rate
contracts designated in a hedging relationship with long-term debt.
2013
2014
2015
$
–
350
76
–
–
$
–
–
76
1,000
100
2016 and
thereafter
$ 2,750
400
592
–
566
$ 426
$ 1,176
$ 4,308
$ 10
$
8
$
7
$ 500
–
38
–
65
$ 603
$ 16
Scheduled Debt Repayments
Fixed rate notes
5.80%/4.875% notes
Project financing
US dollar notes
Other debt obligations
Minimum annual payments under capital leases
2011
$ –
–
–
–
–
$ –
$ 14
2012
$
–
–
–
–
120
$ 120
$ 17
140
c) Use of Derivative Instruments (“Derivatives”)
in Risk Management
In the normal course of business, our assets, liabilities and
forecasted transactions, as reported in US dollars, are impacted
by various market risks including, but not limited to:
Item
Sales
Cost of sales
Impacted by
Prices of gold, copper,
oil and natural gas
Consumption of diesel fuel,
propane, natural gas and
electricity
Prices of diesel fuel, propane,
natural gas and electricity
Non-US dollar expenditures
Currency exchange rates –
US dollar versus A$, ARS, C$,
CLP, JPY, PGK, TZS and ZAR
By-product credits
Prices of silver and copper
Corporate and regional
Currency exchange rates –
administration, exploration and
business development costs
US dollar versus A$, ARS, C$,
CLP, JPY, PGK, TZS and ZAR
Capital expenditures
Non-US dollar capital
Currency exchange rates –
expenditures
US dollar versus A$, ARS, C$,
CLP, EUR and PGK
Consumption of steel
Price of steel
Interest earned on cash
US dollar interest rates
and equivalents
Interest paid on fixed-rate
US dollar interest rates
borrowings
The timeframe and manner in which we manage risks varies
for each item based upon our assessment of the risk and avail-
able alternatives for mitigating risk. For these particular risks,
we believe that derivatives are an appropriate way of managing
the risk.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
The primary objective of our risk management program is
to mitigate variability associated with changing market values
related to the hedged item. Many of the derivatives we use meet
the hedge effectiveness criteria and are designated in a hedge
accounting relationship. Some of the derivative instruments are
effective in achieving our risk management objectives, but they
do not meet the strict hedge effectiveness criteria, and they are
classified as “economic hedges”. The change in fair value of
these economic hedges is recorded in current period earnings,
classified with the income statement line item that is consistent
with the derivative instruments’ intended risk objective.
d) Other Use of Derivative Instruments
We also enter into derivative instruments with the objective of
realizing trading gains to increase our reported net income.
During the year, we wrote $100 million net USD pay-fixed
swaptions giving the buyer the right, but not the obligation,
to enter into an interest rate swap at a specific date in the future,
at a particular fixed rate, for a specified term. Changes in the
fair value of the swaptions and the premiums earned were
recognized in current period earnings through interest expense.
For the year, we recognized a gain on premiums of $2 million
and a loss on position value of $1 million in current period
earnings. There were $200 million USD pay-fixed swaptions
outstanding at December 31, 2010.
We enter into purchased and written contracts with the pri-
mary objective of increasing the realized price on our gold and
copper sales. During 2010, we wrote gold put and call options
with an average outstanding notional volume of 0.3 million
and 0.3 million ounces, respectively, on a net basis. We also held
other net purchased gold long positions during the year with
an average outstanding notional of 0.1 million ounces. During
the year, we wrote copper call options averaging 5 million
pounds and purchased other net long copper positions averag-
ing 7 million pounds.
As a result of these activities, we recorded realized gains
in revenue of $26 million on gold contracts and realized gains
of $7 million on copper contracts in 2010. There are no out-
standing gold or copper positions at December 31, 2010.
141
Notes to Consolidated Financial Statements
e) Summary of Derivatives at December 31, 2010
US dollar interest rate contracts
Total receive – fixed swap positions
Total pay – fixed swap positions
Total pay – fixed swaption positions
Currency contracts
A$:US$ contracts (A$ millions)
C$:US$ contracts (C$ millions)
CLP:US$ contracts (CLP millions)1
EUR:US$ contracts (EUR millions)
PGK:US$ contracts (PGK millions)
Commodity contracts
Copper collar sell contracts (millions of pounds)
Copper net call spread contracts (millions of pounds)
Copper net collar buy contracts (millions of pounds)
Silver collar sell contracts (millions of ozs)
Diesel contracts (thousands of barrels)2
Propane contracts (millions of gallons)
Electricity contracts (thousands of megawatt hours)
Notional amount by term to maturity
Accounting
classification by
notional amount
Fair value
(USD)
Within
1 year
2 to 3
years
4 to 5
years
Cash flow
hedge
Total
Fair value
hedge
Non-
hedge
$ –
–
–
$ 100
–
–
$ 100
(100)
(200)
$ 200
(100)
(200)
$ –
–
–
$ 200
–
–
$ –
(100)
(200)
1,638
353
172,595
10
54
2,064
19
71,800
10
–
515
–
–
–
–
4,217
372
244,395
20
54
4,217
372
98,295
20
–
278
132
79
–
2,316
13
53
8
–
–
–
2,341
6
35
–
–
–
15
50
–
–
286
132
79
15
4,707
19
88
185
–
–
15
4,707
19
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
146,100
–
54
101
132
79
–
–
–
88
$ 6
(3)
(2)
804
12
37
(1)
1
(128)
23
56
(15)
55
3
–
1. Non-hedge contracts economically hedge pre-production capital expenditures at our Pascua-Lama project.
2. Diesel commodity contracts represent a combination of WTI, ULSD and ULSD/WTI Crack spread swaps, WTB, MOPS and JET hedge contracts. These derivatives hedge
physical supply contracts based on the price of ULSD, WTB, MOPS and JET respectively, plus a spread. WTI represents West Texas Intermediate, WTB represents Waterborne,
MOPS represents Mean of Platts Singapore, JET represents Jet Fuel, ULSD represents Ultra Low Sulfur Diesel US Gulf Coast.
Fair Values of Derivative Instruments
Asset Derivatives
Liability Derivatives
At Dec. 31, 2010
At Dec. 31, 2009
At Dec. 31, 2010
At Dec. 31, 2009
Fair
Balance sheet
classification value
Balance sheet
classification
Fair
value
Fair
Balance sheet
classification value
Balance sheet
classification
Fair
value
Other assets $ 6
831
Other assets
112
Other assets
Other assets
Other assets
Other assets
$ – Other liabilities $ – Other liabilities
1 Other liabilities
192 Other liabilities
374 Other liabilities
53 Other liabilities
$ –
9
131
$ 949
$ 427
$ 193
$ 140
Other assets $ –
30
Other assets
147
Other assets
Other assets
Other assets
Other assets
$ 1 Other liabilities
15 Other liabilities
61 Other liabilities
$ 5 Other liabilities
7 Other liabilities
73 Other liabilities
$ 7
9
43
$ 177
$1,126
$ 77
$ 504
$ 85
$ 278
$ 59
$ 199
Derivatives designated
as hedging instruments
US dollar interest rate contracts
Currency contracts
Commodity contracts
Total derivatives classified
as hedging instruments
Derivatives not designated
as hedging instruments
US dollar interest rate contracts
Currency contracts
Commodity contracts
Total derivatives not designated
as hedging instruments
Total derivatives
142
US Dollar Interest Rate Contracts
Non-hedge Contracts
We have a $300 million US dollar receive-fixed interest rate
swap outstanding that is used to economically hedge US dollar
interest rate risk on our outstanding cash balance.
Currency Contracts
Cash Flow Hedges
During the year, currency contracts totaling A$1,449 million,
C$370 million, EUR 13 million, PGK 42 million, and
CLP 145,885 million have been designated against forecasted
non-US dollar denominated expenditures, some of which are
hedges that matured within the year. The outstanding contracts
hedge the variability of the US dollar amount of those expendi-
tures caused by changes in currency exchange rates over the
next four years.
Hedged items that relate to operating and/or sustaining
capital expense are identified as the first stated quantity
of dollars of forecasted expenditures in a future month. For
A$110 million, C$295 million, and CLP 30,780 million of collar
contracts, we have concluded that the hedges are 100% effective
because the critical terms (including notional amount and
maturity date) of the hedged items and the currency contracts
are the same. For all remaining currency hedges, prospective
and retrospective hedge effectiveness is assessed using the
hypothetical derivative method. 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 forward exchange rates over
the last three years. 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,
and ineffectiveness is measured 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.
Hedged items that relate to pre-production expenditures at
our development projects are identified as the stated quantity of
dollars of the forecasted expenditures associated with a specific
transaction in a pre-defined time period. For AUD 55 million,
EUR 20 million and CLP 54,900 million, hedge effectiveness is
assessed using the dual spot method, where changes in fair
value attributable to changes in spot prices are calculated on a
discounted basis for the actual derivative and an undiscounted
basis for the hypothetical derivative. The effectiveness testing
excludes time value of the hedging instrument. Prospective and
retrospective hedge effectiveness uses a dollar offset method.
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Non-hedge Contracts
We concluded that CLP 146,100 million of collar contracts do
not meet the effectiveness criteria of the dual spot method.
These contracts represent an economic hedge of pre-production
capital expenditures at our Pascua-Lama and Cerro Casale
projects. Although not qualifying as an accounting hedge,
the contracts protect us against variability of the CLP to the
US dollar on pre-production expenditures at our Pascua-Lama
and Cerro Casale projects. Changes in the fair value of the
non-hedge CLP contracts are recorded in current period project
expense. In 2010, we recorded an unrealized gain of $24 million
on the outstanding collar contracts. Non-hedge currency
contracts are used to mitigate the variability of the US dollar
amount of non-US dollar denominated exposures that do not
meet the strict hedge effectiveness criteria. Changes in the fair
value of non-hedge currency contracts are recorded in current
period cost of sales, corporate administration, other income,
other expense or income tax expense according to the intention
of the hedging instrument.
Commodity Contracts
Diesel/Propane/Electricity/Natural Gas
Cash Flow Hedges
During the year, we entered into 480 thousand barrels of WTI/
ULSD crack spread swaps, 1,222 thousand barrels of MOPS
forwards, 228 thousand barrels of WTB forwards, 228 thousand
barrels of JET forwards, and 19 million gallons of propane
designated against forecasted fuel purchases for expected con-
sumption at our mines. The designated contracts act as a hedge
against variability in market prices on the cost of future fuel
purchases over the next four years. Hedged items are identified
as the first stated quantity of forecasted consumption purchased
in a future month. Prospective and retrospective hedge effective-
ness is assessed using the hypothetical derivative method. 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 com-
modity prices each period on the fair value of both the actual
and hypothetical derivative, and ineffectiveness is measured
using a dollar offset approach. The effective portion of changes
in fair value of the commodity contracts is recorded in OCI
until the forecasted transaction impacts earnings.
143
Notes to Consolidated Financial Statements
In 2009, we entered into a diesel fuel supply contract.
Under the terms of the contract, fuel purchased for consumption
at our Nevada based mines is priced based on the ULSD index.
We have continued to hedge our exposure to diesel using
our existing WTI forward contracts. Retrospective hedge effec-
tiveness testing shows a strong correlation between ULSD and
WTI and thus we expect that these hedges will continue to be
effective. The prospective and retrospective testing is assessed
using the hypothetical derivative method.
Non-hedge Contracts
Non-hedge electricity contracts of 88 thousand megawatt hours
are used to mitigate the risk of price changes on electricity
consumption at Barrick Energy. Although not qualifying as an
accounting hedge, the contracts protect the Company to a
significant extent from the effects of changes in electricity
prices. Changes in the fair value of non-hedge electricity
contracts are recorded in current period cost of sales.
Copper
Cash Flow Hedges
Copper collar contracts totaling 185 million pounds have been
designated as hedges against copper cathode sales at our
Zaldívar mine. The contracts contain purchased put and sold
call options with weighted average strike prices of $3.00/lb and
$4.35/lb, respectively.
For collars designated against copper cathode production,
the hedged items are identified as the first stated quantity of
pounds of forecasted sales in a future month. Prospective hedge
effectiveness is assessed on these hedges using a dollar offset
method. The dollar offset assessment involves comparing the
effect of theoretical shifts in forward copper prices on the fair
value of both the actual hedging derivative and a hypothetical
hedging derivative. The retrospective assessment involves
comparing the effect of historic changes in copper prices 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 copper contracts is recorded in
OCI until the forecasted copper sale impacts earnings.
Non-hedge Contracts
Copper sell collar contracts totaling 22 million pounds were
entered into during the year containing purchased puts and
sold calls with an average strike price of $3.25/lb and $4.77/lb,
respectively. The options mature over a period of two years,
with 14 million pounds maturing in 2011 and the remaining
8 million pounds maturing in 2012. During 2010, we also
de-designated collar sell contracts for 79 million pounds and
crystallized $12 million of losses in OCI. These hedges were
originally designated against future copper production at our
Zaldívar mine. The exposure is still expected to occur and
therefore amounts crystallized in OCI will be recorded in cop-
per revenue when the sales occur. We continue to hold these
collars as non-hedge contracts. The contracts contain purchased
put and sold call options with an average strike of $3.00/lb and
$4.02/lb, respectively.
During 2010, we purchased 79 million pounds of collar
buy contracts containing sold put and purchased call options
with an average strike of $3.00/lb and $3.99/lb, respectively, for
a net premium of $11 million. Premiums paid have been
recorded as a reduction of current period revenue. The options
mature evenly throughout 2011.
During 2010, we purchased 132 million pounds of call
options at an average strike of $4.26/lb and sold 132 million
pounds of call options at $4.72/lb for a net premium of
$13 million. Premiums paid have been recorded as a reduction
of current period revenue. The options mature evenly through-
out 2011. These contracts are not designated as cash flow
hedges. Changes in the fair value of these copper options are
recorded in current period revenue.
Silver
Cash Flow Hedges
During the year we designated silver collar contracts totaling
15 million ounces as hedges against silver bullion sales from our
silver producing mines. The contracts contain purchased put
and sold call options with weighted average strike prices of
$20/oz and $55/oz respectively. For collars designated against
silver bullion sales, the hedged items are identified as the first
stated quantity of ounces of forecasted sales in a future month.
Prospective hedge effectiveness is assessed using a regression
method. The regression method involves comparing week-by-
week changes in the fair value of both the actual hedging
derivative and a hypothetical derivative caused by actual
historical changes in commodity prices over the last fifty-two
weeks. The retrospective assessment involves comparing the
effect of historic changes in silver prices each period on the fair
value of both the actual and hypothetical derivative using a
regression approach. The effective portion of changes in fair
value of the silver contracts is recorded in OCI until the fore-
casted silver sale impacts earnings.
144
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
2010
2009
2008
Income statement classification
$ 33
–
–
30
$ (53)
1
–
(4)
$ 73
(30)
(3)
(8)
(2)
61
(7)
(4)
(63)
28
Revenue/cost of sales
Cost of sales
Project development expense
Cost of sales/corporate administration/
other income/expense/
Interest income/expense
26
7
–
33
13
11
3
56
(2)
3
19
–
–
Revenue
Revenue
Interest income/expense
57
19
5
(3)
–
(3)
(6)
–
Revenue
Cost of sales/revenue/other income
Other income/expense
$ 27
$ 2
$ (9)
$ 121
$
(4)
$ 38
Non-hedge Gains (Losses)
For the years ended December 31
Risk management activities
Commodity contracts
Copper
Fuel
Steel
Currency contracts
Interest rate contracts
Other use of derivative instruments
Commodity contracts
Gold
Copper
Interest rate swaptions
Other gains (losses)
Embedded derivatives1
Hedge ineffectiveness
Ineffective portion of fair value hedge
1. Includes embedded derivatives on gold concentrate sales and copper cathode sales.
Derivative Assets and Liabilities
At January 1
Derivatives cash (inflow) outflow
Operating activities
Financing activities
Change in fair value of:
Non-hedge derivatives
Cash flow hedges
Effective portion
Ineffective portion
Fair value hedges
Ineffective portion of fair value hedge
At December 31
Classification:
Other current assets
Other long-term assets
Other current liabilities
Other long-term obligations
2010
2009
$ 305
$ (43)
(168)
(12)
(328)
10
103
(39)
601
11
5
3
708
(3)
–
–
$ 848
$ 305
$ 615
511
(173)
(105)
$ 214
290
(180)
(19)
$ 848
$ 305
145
Notes to Consolidated Financial Statements
Cash Flow Hedge Gains (Losses) in OCI
At January 1, 2008
Effective portion of change in
fair value of hedging instruments
Transfers to earnings:
On recording hedged items in earnings
At December 31, 2008
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
original forecasted transaction
At December 31, 2009
Effective portion of change in fair value
of hedging instruments
Transfers to earnings:
On recording hedged items in earnings
Commodity
price hedges
Currency hedges
Operating Administration/
Interest rate
hedges
Silver1 Copper
Fuel
costs
other costs expenditures
Capital Long-term
debt
Total
$ 15
$ 14
$ 79
$ 238
$ 27
$ (1)
$ (17)
$ 355
–
582
(215)
(610)
(46)
5
(17)
(301)
(2)
(112)
(33)
(106)
13
484
(169)
(478)
(11)
(30)
(4)
1
(267)
–
(33)
(213)
–
(273)
68
820
42
48
–
705
(10)
(283)
95
(22)
–
3
–
(72)
2
(4)
(5)
7
–
(3)
3
(213)
–
–
(3)
315
19
45
(30)
276
(15)
(60)
29
549
56
53
–
612
At December 31, 2010
$ (14) $ (78)
$ 51
$ 718
(2)
54
26
(146)
(33)
$ 42
(6)
3
(104)
$ 92
$ (27)
$ 784
Hedge gains/losses classified within
Portion of hedge gain (loss) expected
to affect 2011 earnings2
Cost of Copper
sales
sales
Cost of
sales
Cost of Administration/
sales
Other expense Amortization
Interest
expense
$ 2
$ (78)
$ 22
$ 273
$ 39
$ –
$ (3)
$ 255
1. Amounts prior to 2010 reflect amortization of crystallized gold positions.
2. Based on the fair value of hedge contracts at December 31, 2010.
Cash Flow Hedge Gains (Losses) at December 31
Derivatives in cash flow
hedging relationships
Amount of gain
(loss) recognized
in OCI
2010
2009
Location of gain (loss)
transferred from OCI into
income (effective portion)
Amount of gain (loss)
transferred from
OCI into income
(effective portion)
2010
2009
Location of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
Amount of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
2010
2009
Interest rate contracts
$ –
$ –
Interest income/expense
$ (3)
$ (3)
Interest income/expense
$ –
$ –
Foreign exchange
contracts
658
910
Cost of sales/corporate
administration/amortization
185
Cost of sales/corporate
21 administration/amortization
Commodity contracts
(46)
(205)
Revenue/cost of sales
(78)
198
Revenue/cost of sales
Total
$ 612
$ 705
$ 104
$ 216
Fair Value Hedge Gains at December 31
Derivatives in fair value hedging relationships
Location of gain
recognized in income
on derivative
14
–
2
(2)
$ 14
$ –
Amount of gain
recognized in income
on derivative
2010
2009
Interest rate contracts
Interest income/expense
$ 8
$ –
146
f) Credit Risk
Credit risk is the risk that the counterparty to a financial instru-
ment will cause a financial loss to us by failing to discharge its
obligations. Credit risk arises and is associated with our overall
position in cash and cash equivalents, derivative assets and
accounts receivables. To mitigate our exposure to credit risk we
maintain policies to limit the concentration of credit risk,
review counterparty creditworthiness on a monthly basis, and
ensure liquidity of available funds.
Specifically, we invest our cash and cash equivalents
in highly rated financial institutions primarily within the
United States and other investment grade countries.1
We sell our gold and copper production into the world
market and to private customers with strong credit ratings.
Historically the level of customer defaults has not had a
significant impact on our operating results or financial position.
The fair value of our derivative contracts is adjusted for
credit risk based on observed credit default swap spreads.
In cases where we have a legally enforceable master netting
agreement with a counterparty, credit risk exposure represents
the net amount of the positive and negative fair values by
counterparty. For derivatives in a net asset position, credit risk
is measured using credit default swap spreads for each particu-
lar counterparty, as appropriate. For derivatives in a net liability
position, credit risk is measured using Barrick’s credit default
swap spreads. We specifically mitigate credit risk on derivatives
in a net asset position by:
entering into derivatives with high credit-quality counterparties
(investment grade);
limiting the amount of exposure to each counterparty; and
monitoring the financial condition of counterparties on a
regular basis.
The company’s maximum exposure to credit risk is as follows:
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
g) Risks Relating to the Use of Derivatives
By using derivatives, in addition to credit risk, we are affected
by market risk. Market risk is the risk that the fair value of a
derivative might be adversely affected by a change in commodity
prices, interest rates, or currency exchange rates, and that this in
turn affects our financial condition. We manage market risk by
establishing and monitoring parameters that limit the types and
degree of market risk that may be undertaken.
21 Fair Value Measurements
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
hierarchy establishes three levels to classify the inputs to
valuation techniques used to measure fair value. Level 1 inputs
are quoted prices (unadjusted) in active markets for identical
assets or liabilities. Level 2 inputs are quoted prices in markets
that are not active, quoted prices for similar assets or liabilities
in active markets, inputs other than quoted prices that are
observable for the asset or liability (for example, interest rate
and yield curves observable at commonly quoted intervals,
forward pricing curves used to value currency and commodity
contracts and volatility measurements used to value option
contracts), or inputs that are derived principally from or cor-
roborated by observable market data or other means. Level 3
inputs are unobservable (supported by little or no market
activity). The fair value hierarchy gives the highest priority to
Level 1 inputs and the lowest priority to Level 3 inputs.
a) Assets and Liabilities Measured at Fair Value
on a Recurring Basis
At December 31
Cash and equivalents
Accounts receivable
Net derivative assets by counterparty
2010
2009
$ 3,968 $ 2,564
251
346
235
901
$ 5,215 $ 3,050
Cash equivalents
Available-for-sale
securities
Derivatives
Receivables from
provisional copper
and gold sales
1. Investment grade countries include Canada, Chile, Australia, and Peru. Investment
grade countries are defined as being rated BBB- or higher by S&P.
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable Aggregate
fair
value
inputs
(Level 3)
$ 2,781
$
–
$ –
$ 2,781
171
–
–
848
–
–
171
848
–
159
–
159
$ 2,952
$ 1,007
$ –
$ 3,959
147
Notes to Consolidated Financial Statements
b) Fair Values of Financial Instruments
At December 31
2010
2009
Carrying
amount
Estimated
fair
value
Carrying
amount
Estimated
fair
value
Financial assets
Cash and equivalents1
Accounts receivable1
Available-for-sale securities2
Derivative assets
$ 3,968
346
171
1,126
$ 3,968
346
171
1,126
$ 2,564
251
61
504
$ 2,564
251
61
504
Financial liabilities
Accounts payable1
Long-term debt3
Settlement obligation
to close out gold
sales contracts
Derivative liabilities
Restricted share units4
Deferred share units4
$ 5,611
$ 5,611
$ 3,380
$ 3,380
$ 1,511
6,692
$ 1,511
7,070
$ 1,221
6,335
$ 1,221
6,723
–
278
153
9
–
278
153
9
647
199
124
6
647
199
124
6
$ 8,643
$ 9,021
$ 8,532
$ 8,920
1. Fair value approximates the carrying amounts due to the short-term nature and
historically negligible credit losses.
2. Recorded at fair value. Quoted market prices are used to determine fair value.
3. 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 when a hedge relationship exists. The fair value of long-term debt is
primarily determined using quoted market prices. Balance includes current
portion of long-term debt.
4. Recorded at fair value based on our period-end closing market share price.
c) Valuation Techniques
Cash Equivalents
The fair value of our cash equivalents is classified within Level 1
of the fair value hierarchy because they are valued using quoted
market prices in active markets. Our cash equivalents are
comprised of U.S. Treasury bills and money market securities
that are invested primarily in U.S. Treasury bills.
Available-for-Sale Securities
The fair value of available-for-sale securities is determined
based on a market approach reflecting the closing price of each
particular security at the balance sheet date. The closing price is
a quoted market price obtained from the exchange that is the
principal active market for the particular security, and therefore
available-for-sale securities are classified within Level 1 of the
fair value hierarchy.
148
Derivative Instruments
The fair value of derivative instruments is determined using
either present value techniques or option pricing models that
utilize a variety of inputs that are a combination of quoted
prices and market-corroborated inputs. The fair values of all
our derivative contracts include an adjustment for credit risk.
For counterparties in a net asset position credit risk is based
upon the observed credit default swap spread for each
particular counterparty, as appropriate. For counterparties in a
net liability position credit risk is based upon Barrick’s
observed credit default swap spread. The fair value of US dollar
interest rate and currency swap contracts is determined by
discounting contracted cash flows using a discount rate derived
from observed LIBOR and swap rate curves and CDS rates. In
the case of currency contracts, we convert non-US dollar cash
flows into US dollars using an exchange rate derived from cur-
rency swap curves and CDS rates. The fair value of commodity
forward contracts is determined by discounting contractual
cash flows using a discount rate derived from observed LIBOR
and swap rate curves and CDS rates. Contractual cash flows are
calculated using a forward pricing curve derived from observed
forward prices for each commodity. Derivative instruments
are classified within Level 2 of the fair value hierarchy.
Receivables from Provisional Copper and Gold Sales
The fair value of receivables rising from copper and gold sales
contracts that contain provisional pricing mechanisms is deter-
mined using the appropriate quoted forward price from the
exchange that is the principal active market for the particular
metal. As such, these receivables are classified within Level 2 of
the fair value hierarchy.
22 Asset Retirement Obligations
Asset Retirement Obligations (AROs)
At January 1
AROs acquired during the year
AROs arising in the year
Impact of revisions to expected cash flows
recorded in earnings
Settlements
Cash payments
Settlement gains
Accretion
At December 31
Current portion (note 19)
2010
2009
$ 1,207 $ 1,036
30
9
119
305
8
10
(44)
(5)
47
(39)
(6)
57
1,527 1,207
(85)
(88)
$ 1,439 $ 1,122
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Each period we assess cost estimates and other assumptions
used in the valuation of AROs at each of our mineral properties
to reflect events, changes in circumstances and new information
available. Changes in these cost estimates and assumptions
have a corresponding impact on the fair value of the ARO. For
closed mines, any change in the fair value of AROs results in a
corresponding charge or credit within other expense, whereas
at operating mines the charge is recorded as an adjustment
to the carrying amount of the corresponding asset. In 2010,
adjustments of $27 million were recorded to reflect changes in
cost estimates for AROs at closed mines and Barrick Energy
(2009: $10 million; 2008: $9 million).
At December 31
2010
2009
Operating mines and development properties
ARO increase1
ARO decrease2
Closed mines
ARO increase3
Barrick Energy
ARO increase1
$ 301
(8)
$ 119
(1)
14
13
8
2
1. These adjustments were recorded with a corresponding adjustment to property,
plant and equipment. 2010 balance includes revisions to mine closure plans at
Porgera ($118 million) and Pierina ($90 million).
2. Represents a decrease in AROs at a mine where the corresponding ARO asset had
been fully amortized and was therefore recorded as a recovery in other income.
3. For closed mines, any change in the fair value of AROs results in a corresponding
charge or credit to other expense or other income, respectively.
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
environment on the closure and reclamation of mining proper-
ties. The major parts of the carrying amount of AROs relate to
tailings and heap leach pad closure/rehabilitation; demolition
of buildings/mine facilities; ongoing water treatment; and
ongoing care and maintenance of closed mines. The fair values
of AROs are measured by discounting the expected cash flows
using a discount factor that reflects the credit-adjusted risk-free
rate of interest. We prepare estimates of the timing and amount
of expected cash flows when an ARO is incurred. We update
expected cash flows to reflect changes in facts and circumstances.
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 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.
When expected cash flows increase, the revised cash flows are
discounted using a current discount factor whereas when
expected cash flows decrease the reduced cash flows are
discounted using a historic discount factor, and then in both
cases any change in the fair value of the ARO is recorded.
We record the fair value of an ARO when it is incurred. At pro-
ducing mines AROs incurred and changes in the fair value of
AROs are recorded as an adjustment to the corresponding asset
carrying amounts. At closed mines, any adjustment to the fair
value of an ARO is charged directly to earnings. 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. For producing mines, development projects and
closed mines, accretion is recorded in amortization and
accretion. 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/losses are recorded in other (income) expense.
Other environmental remediation costs that are not AROs are
expensed as incurred (see note 8a).
23 Other Non-current Liabilities
At December 31
Deposit on silver sale agreement
Settlement obligation to close out
gold sales contracts
Pension benefits (note 29c)
Other post-retirement benefits (note 29e)
Derivative liabilities (note 20e)
Restricted share units (note 28b)
Provision for supply contract restructuring costs
Provision for offsite remediation
Other
2010
2009
$ 312 $ 196
–
103
25
105
89
31
61
142
647
96
26
19
91
–
–
70
$ 868 $ 1,145
Silver Sale Agreement
On September 22, 2009, we entered into an agreement with
Silver Wheaton Corp. to sell the equivalent of 25% of the
life-of-mine silver production from the Pascua-Lama project
and 100% of silver production from the Lagunas Norte, Pierina
and Veladero mines until project completion at Pascua-Lama.
In return, we were entitled to an upfront cash payment of
$625 million payable over three years from the date of the
agreement, as well as ongoing payments in cash of the lesser of
$3.90 (subject to an annual inflation adjustment of 1% starting
three years after project completion at Pascua-Lama) and the
prevailing market price for each ounce of silver delivered under
the agreement.
149
Notes to Consolidated Financial Statements
During 2010 we received cash payments of $137.5 million
(2009: $213 million). Providing that construction continues to
progress at Pascua-Lama, we are entitled to receive additional
cash payments totaling $275 million in aggregate over the next
two anniversary dates of the agreement. An imputed interest
expense is being recorded on the liability at the rate implicit
in the agreement. The liability plus imputed interest will be
amortized based on the difference between the effective
contract price for silver and the amount of the ongoing cash
payment per ounce of silver delivered under the agreement.
Sources of Deferred Income Tax Assets and Liabilities
At December 31
2010
2009
Deferred tax assets
Tax loss carry forwards
Capital tax loss carry forwards
Alternative minimum tax (“AMT”) credits
Asset retirement obligations
Property, plant and equipment
Post-retirement benefit obligations
Accrued interest payable
Other
Settlement Obligation to Close Out Gold Sales Contracts
In September 2009, we announced a plan to eliminate our
“Gold Hedges” and a significant portion of our “Floating
Contracts”. Our “Gold Hedges” were fixed price contracts which
did not participate in gold price movements. Our “Floating
Contracts” were essentially Gold Hedges that had been offset
against future movements in the gold price but not yet settled.
As at December 31, 2009, the obligation relating to the Floating
Contracts had been reduced to $0.6 billion. During 2010
the $0.6 billion obligation relating to the Floating Contracts
was repaid.
Valuation allowances
Deferred tax liabilities
Property, plant and equipment
Derivative instruments
Inventory
Other
Classification:
Non-current assets
Non-current liabilities
$ 553 $ 659
–
287
413
268
16
108
–
101
318
494
177
14
63
53
1,773 1,751
(481)
(425)
1,348 1,270
(1,725) (1,328)
(81)
(70)
(26)
(168)
(102)
–
$ (647) $
(235)
$ 467 $ 949
(1,114) (1,184)
$ (647) $
(235)
Expiry Dates of Tax Losses and AMT Credits
2011 2012 2013 2014
2015+
No
expiry
date
Total
Tax losses1
Canada
Barbados
–
Chile
–
–
Tanzania
Dominican Republic –
–
Other
$ 7 $ –
–
–
–
–
–
$ 2 $ – $ 1,290 $ – $ 1,299
– $ 7,280
202 $ 202
97
247 $ 247
100 $ 106
– 7,280
–
–
–
–
–
–
6
–
–
–
–
–
–
97 $
$ 7 $ –
$ 2 $ – $ 8,576 $ 646 $ 9,231
AMT credits2
$ 318 $ 318
1. Represents the gross amount of tax loss carry forwards translated at closing
exchange rates at December 31, 2010.
2. Represents the amounts deductible against future taxes payable in years when
taxes payable exceed “minimum tax” as defined by United States tax legislation.
24 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 account: enacted rates that will
apply when temporary differences reverse; interpretations of
relevant tax legislation; tax planning strategies; estimates of the
tax bases of assets and liabilities; and the deductibility of expen-
ditures 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 comprehensive income based on the source of the change.
Current income taxes of $74 million and deferred income
taxes of $48 million have been provided on the undistributed
earnings of certain foreign subsidiaries. Deferred income
taxes have not been provided on the undistributed earnings
of all other foreign subsidiaries which are considered to be
reinvested indefinitely outside Canada. The determination
of the unrecorded deferred income tax liability is not consid-
ered practicable.
150
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
2010
2009
Due to the impact of higher market gold prices in third
quarter 2010 the remaining valuation allowance relating to
AMT credits in the United States was released.
Net Deferred Tax Assets
Gross deferred tax assets
Canada
Chile
Argentina
Australia
Tanzania
United States
Barbados
Other
Valuation allowances
Canada
Chile
Argentina
Australia
Tanzania
United States
Barbados
Other
Net
$ 350
20
97
104
56
136
73
56
$ 366
44
119
109
122
542
69
59
892
1,430
(52)
(20)
(97)
(104)
(30)
(7)
(73)
(42)
(45)
(22)
(119)
(11)
(30)
(136)
(69)
(49)
(425)
(481)
$ 467
$ 949
Valuation Allowances
We consider the need to record a valuation allowance against
deferred tax assets, 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 taxable income;
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 proven and probable gold
reserves; market interest rates; and foreign currency exchange
rates. If these factors or other circumstances change, we record
an adjustment to valuation allowances to reflect our latest
assessment of the amount of deferred tax assets that will more
likely than not be realized.
A deferred income tax asset totaling $298 million has been
recorded in Canada. This deferred tax asset primarily arose due
to mark-to-market losses realized for acquired Placer Dome
derivative instruments. Projections of various sources of income
support the conclusion that the realizability of this deferred tax
asset is more likely than not, and consequently no valuation
allowance has been set up for this deferred tax asset.
Source of Changes in Deferred Tax Balances
For the years ended December 31
2010
2009
2008
Temporary differences
Property, plant and equipment
Asset retirement obligations
Tax loss carry forwards
Capital tax loss carry forwards
Derivatives
Other
Net currency translation gains/
(losses) on deferred tax balances
Canadian tax rate changes
Canadian functional currency election
Release of other valuation allowances
Intraperiod allocation to:
$ (402) $ (279)
47
2
–
(171)
8
81
(106)
101
(86)
(1)
$
(3)
24
(72)
–
212
(2)
(413)
(393)
159
2
–
–
–
40
(59)
70
–
(98)
–
–
175
$ (411) $ (342)
$ 236
$ (231) $ (107)
Income (loss) from continuing
operations before income taxes
Income (loss) from discontinued
operations
Tusker acquisition
Acquisition of Hemlo
Share issue costs
Redemption of convertible senior debentures
Cortez acquisition
Barrick Energy Inc. acquisitions
Kainantu acquisition
Other acquisition
OCI (note 26)
Other
–
(22)
–
–
(12)
–
(37)
–
–
(109)
(1)
(41)
–
(56)
40
–
–
–
–
–
(178)
(8)
$ 41
4
–
–
–
–
11
(22)
(19)
2
219
(2)
$ (412) $ (350)
$ 234
Unrecognized Tax Benefits
At January 1
Additions based on tax positions related
to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
At December 311
2010
2009
$ 67
$ 46
–
–
–
(3)
–
38
–
(17)
$ 64
$ 67
1. If recognized, the total amount of $64 million would be recognized as a benefit to
income taxes on the income statement, and therefore would impact the reported
effective tax rate.
151
25 Capital Stock
a) Common Shares
Our authorized capital stock includes an unlimited number of
common shares (issued 998,499,673 common shares); 9,764,929
First preferred shares Series A (issued nil); 9,047,619 Series B
(issued nil); and 14,726,854 Second preferred shares Series A
(issued nil).
Common Share Offering
On September 23, 2009, we issued 109 million common shares
of Barrick at a price of $36.95 per share, for net proceeds of
$3,885 million.
In 2010, we declared and paid dividends in US dollars
totaling $0.44 per share ($436 million) (2009: $0.40 per share,
$369 million; 2008: $0.40 per share, $349 million).
b) Exchangeable Shares
In connection with a 1998 acquisition, Barrick Gold Inc.
(“BGI”) issued 11.1 million BGI exchangeable shares, which
were each exchangeable for 0.53 of a Barrick common share at
any time at the option of the holder, and had 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.
We had the right to require the exchange of each outstanding
BGI exchangeable share for 0.53 of a Barrick common share. In
first quarter 2009, the remaining 0.5 million BGI exchangeable
shares were redeemed for 0.3 million Barrick common shares.
Notes to Consolidated Financial Statements
We anticipate the amount of unrecognized tax benefits to
decrease within 12 months of the reporting date by approxi-
mately $2 million to $3 million, related primarily to the
expected settlement of income tax and mining tax assessments.
We further anticipate that it is reasonably possible for the
amount of unrecognized tax benefits to decrease within
12 months of the reporting date by approximately $37 million
through a potential settlement with tax authorities that may
result in a reduction of available tax pools.
Tax Years Still Under Examination
Canada
United States
Peru
Chile1
Argentina
Australia
Papua New Guinea
Tanzania
2006–2010
2010
2007–2010
2007–2010
2004–2010
All years open
2004–2010
All years open
1. In addition, operating loss carry forwards from earlier periods are still open for
examination.
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 for an amount of $32 million, excluding interest and
penalties. The assessment mainly related to the validity of a
revaluation of the Pierina mining concession, which affected its
tax basis for the years 1999 and 2000. The full life-of-mine
effect on current and deferred income tax liabilities totaling
$141 million was fully recorded at December 31, 2002, as well as
other related costs of about $21 million.
In January 2005, we received written confirmation that
there would be no appeal of the September 30, 2004 Tax Court
of Peru decision. In December 2004, we recorded a $141 million
reduction in current and deferred income tax liabilities and a
$21 million reduction in other accrued costs. The confirmation
concluded the administrative and judicial appeals process with
resolution in Barrick’s favor.
Notwithstanding the favorable Tax Court decision we
received in 2004 on the 1999 to 2000 revaluation matter, in an
audit concluded in 2005, SUNAT has reassessed us on the same
issue for tax years 2001 to 2003. On October 19, 2007, SUNAT
confirmed their reassessment. The tax assessment is for
$53 million of tax, plus interest and penalties of $209 million
updated as of December 31, 2010. We filed an appeal to the
Tax Court of Peru within the statutory period. We believe that
the audit reassessment has no merit, that we will prevail in
court again, and accordingly no liability has been recorded for
this reassessment.
152
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
26 Other Comprehensive Income (Loss) (“OCI”)
Accumulated OCI at beginning of period
Cash flow hedge gains, net of tax of $81, $89, $105
Investments, net of tax of $3, $nil, $4
Currency translation adjustments, net of tax of $nil, $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $14, $19, $2
Other comprehensive income (loss) for the period:
Changes in fair value of cash flow hedges
Changes in fair value of investments
Currency translation adjustments1
Pension plan and other post-retirement benefit adjustments (note 29):
Net actuarial gain (loss)
Transition obligation (asset)
Less: reclassification adjustments for (gains) losses recorded in earnings:
Transfers of cash flow hedge gains to earnings on recording hedged items in earnings
Investments:
Other than temporary impairment charges
Gains realized on sale
Other comprehensive income (loss), before tax
Income tax recovery (expense) related to OCI
Other comprehensive income (loss), net of tax
Accumulated OCI at December 31
Cash flow hedge gains, net of tax of $186, $81, $89
Investment, net of tax of $7, $3, $nil
Currency translation adjustments, net of tax of $nil, $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $14, $14, $19
1. Represents currency translation adjustments for Barrick Energy.
27 Non-controlling Interests
2010
2009
2008
$ 195 $ (124) $ 250
37
(143)
7
24
(141)
(23)
(2)
(197)
(33)
55
(356)
151
612
69
22
705
34
56
(2)
–
15
–
(301)
(52)
(54)
(62)
1
(104)
(216)
(267)
–
(12)
1
(6)
26
(17)
585
(109)
589
(178)
(726)
219
$ 476 $ 411 $ (507)
$ 598 $ 195 $ (124)
(2)
(197)
(33)
77
(119)
(25)
24
(141)
(23)
$ 531 $ 55 $ (356)
Pueblo Viejo project African Barrick Gold1
Cerro Casale2
Other
At January 1, 2008
Share of net earnings (loss)
Cash contributed
Other increase in non-controlling interest
At December 31, 2008
Share of net earnings (loss)
Cash contributed
Other increase in non-controlling interest
At December 31, 2009
Share of net earnings (loss)
Cash contributed
Other increase in non-controlling interest
$ 60
(26)
120
–
154
1
307
–
462
(3)
101
–
$ 17
38
(30)
–
25
5
(8)
–
22
41
–
594
$ –
–
–
–
–
–
–
–
–
(15)
13
454
$ 5
–
–
(2)
3
–
–
(3)
–
–
–
–
Total
$ 82
12
90
(2)
182
6
299
(3)
484
23
114
1,048
At December 31, 2010
$ 560
$ 657
$ 452
$ –
$ 1,669
1. Represents non-controlling interest in ABG. The balance at January 1, 2010 includes the non-controlling interest of 30% in our Tulawaka mine.
2. Represents non-controlling interest in Cerro Casale. Refer to note 3f.
153
Compensation expense for stock options was $14 million
in 2010 (2009: $20 million; 2008: $25 million), and is presented
as a component of corporate administration and other expense,
consistent with the classification of other elements of compen-
sation expense for those employees who had stock options.
In 2009, we recognized an additional $7 million of stock option
expense as a result of accelerating the vesting conditions of
certain plan participants on their departure from the Company.
The recognition of compensation expense for stock options
reduced earnings per share for 2010 by $0.01 per share (2009:
$0.03 per share; 2008: $0.03 per share).
Total intrinsic value relating to options exercised in 2010
was $96 million (2009: $38 million; 2008: $61 million).
2010
2009
2008
Average
price
Shares
Average
price
Shares
Average
price
Shares
3.3
(1.9)
–
–
$ 27
27
–
–
4.8
(1.4)
–
(0.1)
$ 27
26
–
23
7.1
(2.1)
–
(0.2)
$ 27
28
–
28
1.4
$ 26
3.3
$ 27
4.8
$ 27
9.1
0.9
(2.9)
(0.1)
–
$ 33
55
28
38
–
8.9
1.6
(1.3)
(0.1)
–
$ 28
41
24
35
–
7
2.8
(0.8)
(0.1)
–
$ 28
34
24
31
–
7.0
$ 38
9.1
$ 33
8.9
$ 28
Notes to Consolidated Financial Statements
28 Stock-based Compensation
a) Stock Options
Under Barrick’s stock option plan, certain officers and key
employees of the Corporation may purchase common shares at
an exercise price that is equal to the closing share price on the
day before the grant of the option. The grant date is the date
when the details of the award, including the number of options
granted by individual and the exercise price, are approved.
Stock options vest evenly over four years, beginning in the year
after granting. Options granted in July 2004 and prior are exer-
cisable over 10 years, whereas options granted since December
2004 are exercisable over seven years. At December 31, 2010,
6.7 million (2009: 6.9 million; 2008: 7.4 million) common shares,
in addition to those currently outstanding, were available for
granting options. Stock options when exercised result in an
increase to the number of common shares issued by Barrick.
Employee Stock Option Activity (Number of Shares in Millions)
C$ options
At January 1
Exercised
Forfeited
Cancelled/expired
At December 31
US$ options
At January 1
Granted
Exercised
Forfeited
Cancelled/expired
At December 31
154
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Stock Options Outstanding (Number of Shares in Millions)
Range of exercise prices
C$ options
$ 22 – $ 27
$ 28 – $ 31
US$ options
$ 9 – $ 19
$ 20 – $ 27
$ 28 – $ 41
$ 42 – $ 55
Outstanding
Exercisable
Shares
Average
price
Average
life (years)
Intrinsic
value1
($ millions)
Shares
Average
price
Intrinsic
value1
($ millions)
0.8
0.6
1.4
0.1
1.9
1.4
3.6
7.0
$ 24
29
$ 26
$ 13
26
37
46
$ 38
2
3
2
2
3
5
6
5
$ 24
15
$ 39
$ 3
53
32
21
$ 109
0.8
0.6
1.4
0.1
1.4
1.3
0.8
3.6
$ 24
29
$ 26
$ 13
25
37
43
$ 33
$ 24
15
$ 39
$ 3
40
22
9
$ 74
1. Based on the closing market share price on December 31, 2010 of C$53.12 and US$53.18.
Option Information
For the years ended December 31
(per share and per option amounts in dollars)
Valuation assumptions
Expected term (years)
Expected volatility2
Weighted average expected volatility2
Expected dividend yield
Risk-free interest rate2
Options granted (in millions)
Weighted average fair value per option
2010
2009
2008
Lattice1,2
5.0–5.1
33%–60%
36%
1%–1.13%
0.19%–2.88%
Lattice1,2
5.0–5.1
35%–60%
51%
1%–1.1%
0.16%–3.44%
Lattice1,2
4.5–5.2
30%–70%
43%
0.7%–1.5%
0.25%–5.1%
0.9
$ 16
1.6
$ 13
2.8
$ 12
1. Different assumptions were used for the multiple stock option grants during the year.
2. The volatility and risk-free interest rate assumption varied over the expected term of these stock option grants.
The expected volatility assumptions have been developed taking
into consideration both historical and implied volatility of our
US dollar share price. The risk-free rate for periods within the
contractual life of the option is based on the US Treasury yield
curve in effect at the time of the grant.
We use the straight-line method for attributing stock
option expense over the vesting period. Stock option expense
incorporates an expected forfeiture rate. The expected forfeiture
rate is estimated based on historical forfeiture rates and
expectations of future forfeiture rates. We make adjustments
if the actual forfeiture rate differs from the expected rate.
The expected term assumption is derived from the
option valuation model and is in part based on historical data
regarding the exercise behavior of option holders based on
multiple share-price paths. The Lattice model also takes
into consideration employee turnover and voluntary exercise
patterns of option holders.
As at December 31, 2010, there was $37 million (2009:
$58 million; 2008: $42 million) of total unrecognized compen-
sation cost relating to unvested stock options. We expect to
recognize this cost over a weighted average period of 2 years
(2009: 2 years; 2008: 2 years).
b) Restricted Share 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 at the end of a two-and-a-half or three-year
period and are settled in cash on the third anniversary of the
grant date. Additional RSUs are credited to reflect dividends
paid on Barrick common shares over the vesting period.
A liability for RSUs is recorded at fair value on the grant
date, with a corresponding amount recorded as a deferred com-
pensation asset that is amortized on a straight-line basis over
the vesting period. Changes in the fair value of the RSU liability
155
c) Performance Restricted Share Units (PRSUs)
In 2008, Barrick launched a PRSU plan. Under this plan,
selected employees are granted PRSUs, where each PRSU has a
value equal to one Barrick common share. PRSUs vest at
the end of a three-year period and are settled in cash on the
third anniversary of the grant date. Additional PRSUs are
credited to reflect dividends paid on Barrick common shares
over the vesting period. Vesting, and therefore, the liability
is based on the achievement of performance goals and the
target settlement will range from 0% to 200% of the value.
At December 31, 2010, 335 thousand units were outstanding
(2009: 250 thousand units).
d) Employee Share Purchase Plan (ESPP)
In 2008, Barrick launched an Employee Share Purchase Plan.
This plan enables Barrick employees to purchase Company
shares through payroll deduction. Each year, employees may
contribute 1%–6% of their combined base salary and annual
bonus, and Barrick will match 50% of the contribution, up to a
maximum of $5,000 per year. During 2010, Barrick contributed
$0.6 million to this plan (2009: $0.8 million).
e) ABG Stock Options
African Barrick Gold has a stock option plan for its directors
and selected employees. The exercise price of the granted
options is determined by the ABG Remuneration Committee
before the grant of an option provided that this price cannot be
less than the average of the middle-market quotation of ABG’s
shares (as derived from the London Stock Exchange Daily
Official List) for the three dealing days immediately preceding
the date of grant. All options outstanding at the end of the
year expire in 2017. None of the ABG options granted were
exercisable at December 31, 2010. Stock option expense of
$1 million (2009: $nil; 2008: $nil) is included as a component
of other expense.
Notes to Consolidated Financial Statements
are recorded each period, with a corresponding adjustment to
the deferred compensation asset.
Compensation expense for RSUs incorporates an expected
forfeiture rate. The expected forfeiture rate is estimated based
on historical forfeiture rates and expectations of future forfeiture
rates. We make adjustments if the actual forfeiture rate differs
from the expected rate. At December 31, 2010, the weighted
average remaining contractual life of RSUs was 1.22 years.
Compensation expense for RSUs was $48 million in 2010
(2009: $40 million; 2008: $33 million) and is presented as a
component of corporate administration and other expense,
consistent with the classification of other elements of compen-
sation expense for those employees who had RSUs. As at
December 31, 2010 there was $83 million of total unamortized
compensation cost relating to unvested RSUs (2009: $74 million;
2008: $84 million).
Under our DSU plan, Directors must receive a specified
portion of their basic annual retainer in the form of DSUs,
with the option to elect to receive 100% of such retainer in
DSUs. Each DSU has the same value as one Barrick common
share. DSUs must be retained until the Director leaves the
Board, at which time the cash value of the DSUs will be paid
out. Additional DSUs are credited to reflect dividends paid on
Barrick common shares. DSUs are recorded at fair value on the
grant date and are adjusted for changes in fair value. The fair
value of amounts granted each period together with changes in
fair value are expensed.
DSU and RSU Activity
At January 1, 2008
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2008
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2009
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
DSUs
(thousands)
Fair
value
RSUs
($ millions) (thousands)
Fair
value
($ millions)
100
(4)
–
34
–
–
130
–
–
37
–
–
167
(20)
–
33
–
–
–
$ 4 2,383
(348)
(0.1)
(262)
1,493
20
–
1.2
–
(0.5)
$ 5 3,286
(897)
–
– (279)
1,013
27
–
1.2
–
0.7
$ 7 3,150
(824)
(0.6)
(326)
918
30
–
–
1.5
–
1.9
$ 100
(10.3)
(10.6)
42
0.7
(1.7)
$ 120
(35.7)
(11.1)
42.1
1
7.4
$ 124
(42.8)
(17.0)
49.3
1.3
37.9
At December 31, 2010
180
$ 9 2,948
$ 153
156
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
29 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 $56 million in 2010, $50 million in 2009 and
$47 million in 2008.
b) Defined Benefit Pension Plans
We have qualified defined benefit pension plans that cover
certain of our United States and Canadian employees and pro-
vide 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.
Independent trustees administer assets of the plans, which are
invested mainly in fixed income and equity securities. In 2009,
two of our qualified defined benefit plans in Canada were
wound up. No curtailment gain or loss resulted and the
obligations of the plans were settled in 2009. In 2007, one of
our qualified defined benefit plans in Canada was wound up.
No curtailment gain or loss resulted and the obligations of the
plans were settled in 2009.
As well as the qualified plans, we have non-qualified
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 $nil in 2010 (2009: $6 million).
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.
Pension Expense (Credit)
For the years ended December 31
Expected return on plan assets
Service cost
Interest cost
Actuarial losses
2010
2009
2008
$ (14)
–
17
2
$ (14)
–
19
2
$ (19)
–
21
1
$ 5
$
7
$ 3
c) Pension Plan Information
Fair Value of Plan Assets
For the years ended December 31
Balance at January 1
Increase for plans assumed
on acquisitions1
Actual return on plan assets
Company contributions
Settlements
Benefits paid
Foreign currency adjustments
2010
2009
2008
$ 215
$ 237
$ 293
–
25
12
–
(25)
–
8
36
9
(24)
(52)
1
9
(41)
12
–
(33)
(3)
Balance at December 31
$ 227
$ 215
$ 237
1. In 2009, represents plan acquired on acquisition of additional 50% in Hemlo.
In 2008, represents plan acquired on acquisition of additional 40% in Cortez.
At December 31
Composition of plan assets2
Equity securities
Fixed income securities
2010
2010
Target1
Actual
Actual
54%
46%
54%
46%
$ 122
105
100%
100%
$ 227
1. Based on the weighted average target for all defined benefit plans
2. Holdings in Equity and Fixed income securities consist of Level 1 and Level 2 assets
within the fair value hierarchy.
Projected Benefit Obligation (PBO)
For the years ended December 31
Balance at January 1
Increase for plans assumed on acquisitions
Amendments
Service cost
Interest cost
Actuarial losses
Benefits paid
Foreign currency adjustments
Settlements
Balance at December 31
Funded status1
ABO2
2010
2009
$ 321 $ 357
6
–
–
19
6
(52)
8
(23)
–
1
–
17
20
(25)
2
–
$ 336 $ 321
$ (109) $ (106)
$ 335 $ 321
1. Represents the fair value of plan assets less projected benefit obligations.
2. Represents the accumulated benefit obligation (“ABO”) for all plans. The ABO for
plans where the PBO exceeds the fair value of plan assets was $326 million (2009:
$314 million). Based on actuarial reports at December 31, 2010, our funding
requirements for 2011 are $nil.
157
Pension plan assets, which consist primarily of fixed-income
and equity securities, are valued using current market quota-
tions. Plan obligations and the annual pension expense are
determined on an actuarial basis and are affected by numerous
assumptions and estimates including the market value of plan
assets, estimates of the expected return on plan assets, discount
rates, future wage increases and other assumptions. The
discount rate, assumed rate of return on plan assets and wage
increases are the assumptions that generally have the most
significant impact on our pension cost and obligation.
The discount rate used to calculate the benefit obligation
and pension cost is the rate at which the pension obligation
could be effectively settled. This rate was developed by matching
the cash flows underlying the pension obligation with a spot
rate curve based on the actual returns available on high-grade
(Moody’s Aa) US corporate bonds. Bonds included in this
analysis were restricted to those with a minimum outstanding
balance of $50 million. Only non-callable bonds, or bonds
with a make-whole provision, were included. Finally, outlying
bonds (highest and lowest 10%) were discarded as being non-
representative and likely to be subject to a change in investment
grade. The procedure was applied separately for pension and
post-retirement plan purposes, and produced the same rate in
each case.
The assumed rate of return on assets for pension cost
purposes is the weighted average of expected long-term asset
return assumptions. In estimating the long-term rate of return
for plan assets, historical markets are studied and long-term
historical returns on equities and fixed-income investments
reflect the widely accepted capital market principle that assets
with higher volatility generate a greater return over the long
run. Current market factors such as inflation and interest
rates are evaluated before long-term capital market assumptions
are finalized.
Wage increases reflect the best estimate of merit increases
to be provided, consistent with assumed inflation rates.
Notes to Consolidated Financial Statements
Pension Plan Assets/Liabilities
For the years ended December 31
Non-current assets
Current liabilities
Non-current liabilities
Other comprehensive loss
2010
2009
$
2
(8)
(103)
43
$ 3
(13)
(96)
34
$ (66)
$ (72)
The projected benefit obligation and fair value of plan assets
for pension plans with a projected benefit obligation in excess
of plan assets at December 31, 2010 and 2009 were as follows:
For the years ended December 31
Projected benefit obligation, end of year
Fair value of plan assets, end of year
2010
2009
$ 328
$ 217
$ 314
$ 206
The projected benefit obligation and fair value of plan assets for
pension plans with an accumulated benefit obligation in excess
of plan assets at December 31, 2010 and 2009 were as follows:
For the years ended December 31
Projected benefit obligation, end of year
Accumulated benefit obligation, end of year
Fair value of plan assets, end of year
2010
2009
$ 328
$ 326
$ 217
$ 314
$ 314
$ 206
Expected Future Benefit Payments
For the years ending December 31
2011
2012
2013
2014
2015
2016 – 2020
$ 24
23
31
23
23
$ 114
d) Actuarial Assumptions
For the years ended December 31
2010
2009
2008
Discount rate1
Benefit obligation
Pension cost
Return on plan assets1
Wage increases
4.95%–5.77% 5.55–6.87% 4.50–6.25%
4.82%–6.87% 6.00–6.25% 4.50–6.25%
4.50%–7.00% 4.50–7.00% 3.75–7.00%
5.00% 3.50–5.00%
5.00%
1. Effect of a one-percent change: Discount rate: $32 million increase in ABO and
$1.5 million decrease in pension cost; Return on plan assets: $2 million decrease in
pension cost.
158
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 variances between actual results
and economic estimates or actuarial assumptions are deferred
and amortized over the average remaining life expectancy
of participants when the net gains or losses exceed 10% of the
accumulated post-retirement benefit obligation.
Other Post-retirement Benefits Expense
For the years ended December 31
Interest cost
2010
2009
2008
$ 1
$ 2
$ 2
Fair Value of Plan Assets
For the years ended December 31
Balance at January 1
Contributions
Benefits paid
Balance at December 31
2010
2009
2008
$ –
2
(2)
$ –
1
(1)
$ –
$ –
$ –
2
(2)
$ –
Accumulated Post-retirement Benefit Obligation (APBO)
For the years ended December 31
2010
2009
2008
Balance at January 1
Interest cost
Actuarial (gains) losses
Benefits paid
$ 29
1
(1)
(2)
$ 32
2
(3)
(2)
$ 30
2
2
(2)
Balance at December 31
$ 27
$ 29
$ 32
Funded status
Unrecognized net transition obligation
Unrecognized actuarial losses
Net benefit liability recorded
(27)
n/a
n/a
(29)
n/a
n/a
n/a
n/a
(32)
n/a
n/a
n/a
Other Post-retirement Liabilities
For the years ended December 31
Current liability
Non-current liability
2010
2009
$ 2
25
$ 3
26
$ 27
$ 29
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
Amounts recognized in accumulated other comprehensive
income consist of:1
For the years ended December 31
2010
2009
Net actuarial loss (gain)
Transition obligation (asset)
$ (4)
–
$ (4)
1
$ (4)
$ (3)
1. The estimated amounts that will be amortized into net periodic benefit cost
in 2011.
We have assumed a health care cost trend of 8% in 2011,
decreasing ratably to 4.75% in 2019 and thereafter. The assumed
health care cost trend had a minimal effect on the amounts
reported. A one percentage point change in the assumed health
care cost trend rate at December 31, 2010 would have had no
significant effect on the post-retirement obligation and would
have had no significant effect on the benefit expense for 2010.
Expected Future Benefit Payments
For the years ending December 31
2011
2012
2013
2014
2015
2016 – 2020
$ 2
2
3
3
2
$ 5
159
Notes to Consolidated Financial Statements
30 Litigation and Claims
Certain conditions may exist as of the date the financial state-
ments are issued, which may result in a loss to the Company but
which will only be resolved when one or more future events
occur or fail to occur. In assessing loss contingencies related to
legal proceedings that are pending against us or unasserted
claims that may result in such proceedings, the Company and
its legal counsel evaluate the perceived merits of any legal
proceedings or unasserted claims as well as the perceived merits
of the amount of relief sought or expected to be sought.
If the assessment of a contingency suggests that a loss is
probable, and the amount can be reliably estimated, then a loss
is recorded. When a contingent loss is not probable but is
reasonably possible, or is probable but the amount of loss can-
not be reliably estimated, then details of the contingent loss are
disclosed. Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case
we disclose the nature of the guarantee. Legal fees incurred in
connection with pending legal proceedings are expensed as
incurred.
Cortez Hills Complaint
On November 12, 2008, the United States Bureau of Land
Management issued a Record of Decision approving the Cortez
Hills Expansion Project. On November 20, 2008, the TeMoak
Shoshone Tribe, the East Fork Band Council of the TeMoak
Shoshone Tribe and the Timbisha Shoshone Tribe, the Western
Shoshone Defense Project, and Great Basin Resource Watch
filed a lawsuit against the United States seeking to enjoin the
majority of the activities comprising the Project on grounds
that it violated the Western Shoshone rights under the Religious
Freedom Restoration Act (“RFRA”), that it violated the Federal
Land Policy and Management Act’s (“FLPMA”) prohibition on
“unnecessary and undue degradation,” and that the Project’s
Environment Impact Statement (“EIS”) did not meet the
requirements of the National Environmental Policy Act
(“NEPA”). The Plaintiffs subsequently dismissed their RFRA
claim, with prejudice, conceding that it was without merit, in
light of a decision in another case.
On November 24, 2008, the Plaintiffs filed a Motion for a
Temporary Restraining Order and a Preliminary Injunction
barring work on the Project until after a trial on the merits. In
January 2009, the Court denied the Plaintiffs’ Motion for a
Preliminary Injunction, concluding that the Plaintiffs had failed
to demonstrate a likelihood of success on the merits and that
the Plaintiffs had otherwise failed to satisfy the necessary
elements for a preliminary injunction. The Plaintiffs appealed
that decision to the United States Court of Appeals for the
160
Ninth Circuit. In December 2009, the Ninth Circuit issued an
opinion in which it held that the Plaintiffs had failed to show
that they were likely to succeed on the merits of their FLPMA
claims, and thus were not entitled to an injunction based on
those claims. The Ninth Circuit, however, held that Plaintiffs
were likely to succeed on two of their NEPA claims and ordered
that a supplemental EIS be prepared by Barrick that specifically
provided more information on (i) the effectiveness of proposed
mitigation measures for seeps and springs that might be
affected by groundwater pumping, and (ii) the air quality impact
of the shipment of refractory ore to Goldstrike for processing
and that additional air quality modeling for fine particulate
matter using updated EPA procedures should be performed and
included in the supplemental EIS. The Ninth Circuit decision
directed the District Court to enter an injunction consistent
with the decision. In April 2010, the District Court granted
Barrick’s motion seeking a tailored preliminary injunction,
which allows mining operations to continue while the supple-
mental EIS is being completed.
In August 2010, the District Court issued an order granting
summary judgment for Cortez except, generally for those issues
covered by the supplemental EIS, on which it reserved ruling
until the completion of that document. The final supplemental
EIS was published on January 14, 2011. BLM’s record of decision
on the final supplemental EIS is expected sometime after
February 14, 2011.
Marinduque Complaint
Placer Dome Inc. was named the sole defendant in a Complaint
filed in October 2005, by the Provincial Government of
Marinduque, an island province of the Philippines (“Province”),
with the District Court in Clark County, Nevada. The
Complaint asserted that Placer Dome Inc. was responsible for
alleged environmental degradation with consequent economic
damages and impacts to the environment in the vicinity of the
Marcopper mine that was owned and operated by Marcopper
Mining Corporation (“Marcopper”). Placer Dome Inc. indi-
rectly owned a minority shareholding of 39.9% in Marcopper
until the divestiture of its shareholding in 1997. The Province
sought “to recover damages for injuries to the natural, ecological
and wildlife resources within its territory”. In addition, the
Province sought compensation for the costs of restoring the
environment, an order directing Placer Dome Inc. to undertake
and complete “the remediation, environmental cleanup, and
balancing of the ecology of the affected areas,” and payment of
the costs of environmental monitoring. The Complaint
addressed the discharge of mine tailings into Calancan Bay, the
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
1993 Maguila-guila dam breach, the 1996 Boac river tailings spill,
and alleged past and continuing damage from acid rock drainage.
Placer Dome Inc. opposed this motion. The motion has been
briefed and is currently pending.
The action was removed to the U.S. District Court for the
District of Nevada on motion of Placer Dome Inc. After the
amalgamation of Placer Dome Inc. and the Company, the Court
granted the Province’s motion to join the Company as an
additional named Defendant. In June 2007, the Court issued
an order granting the Company’s motion to dismiss on grounds
of forum non conveniens (improper choice of forum). In
September 2009, the U.S. Court of Appeals for the Ninth Circuit
reversed the decision of the District Court on the ground that
the U.S. District Court lacked subject matter jurisdiction over
the case and removal from the Nevada state court was improper.
In April 2010, the Company filed a motion to dismiss the
claims in the Nevada state court on the grounds of forum non
conveniens and on October 12, 2010, the court issued an order
granting the Company’s motion to dismiss the action. On
February 11, 2011, the Court issued its written reasons for the
dismissal order and the Province now has 30 days in which to
determine whether or not to appeal the order.
No amounts have been accrued for any potential loss under
this complaint.
Calancan Bay (Philippines) Complaint
In July 2004, a complaint was filed against Marcopper and
Placer Dome Inc. in the Regional Trial Court of Boac, on the
Philippine island of Marinduque, on behalf of a putative class
of fishermen who reside in the communities around Calancan
Bay, in northern Marinduque. The complaint alleges injuries
to health and economic damages to the local fisheries resulting
from the disposal of mine tailings from the Marcopper mine.
The total amount of damages claimed is approximately
US$1 billion.
In October 2006, the court granted the plaintiffs’ application
for indigent status, allowing the case to proceed without
payment of filing fees. In March 2008, an attempt was made to
serve Placer Dome Inc. by serving the summons and complaint
on Placer Dome Technical Services (Philippines) Inc. (“PDTS”).
PDTS has returned the summons and complaint stating that
PDTS is not an agent of Placer Dome Inc. for any purpose and
is not authorized to accept service or to take any other action on
behalf of Placer Dome Inc. In April 2008, Placer Dome Inc.
made a special appearance by counsel to move to dismiss the
complaint for lack of personal jurisdiction and on other
grounds. The plaintiffs have opposed the motion to dismiss.
The motion has been briefed and is currently pending.
In October 2008, the plaintiffs filed a motion challenging
Placer Dome Inc.’s legal capacity to participate in the proceed-
ings in light of its alleged “acquisition” by the Company.
The Company intends to defend the action vigorously.
No amounts have been accrued for any potential loss under
this complaint.
Perilla Complaint
In August 2009, Barrick Gold Inc. was purportedly served in
Ontario with a complaint filed in November 2008 in the
Regional Trial Court of Boac, on the Philippine island of
Marinduque, on behalf of two named individuals and purport-
edly on behalf of the approximately 200,000 residents of
Marinduque. In December 2009, the complaint was also
purportedly served in Ontario in the name of Placer Dome Inc.
The complaint alleges injury to the economy and the ecology
of Marinduque as a result of the discharge of mine tailings from
the Marcopper mine into the Calancan Bay, the Boac River, and
the Mogpog River. The plaintiffs are claiming for abatement
of a public nuisance allegedly caused by the tailings discharge
and for nominal damages for an alleged violation of their
constitutional right to a balanced and healthful ecology. Barrick
Gold Inc. has moved to dismiss the complaint on a variety of
grounds, which motion is now pending a decision of the Court
following the failure of plaintiffs’ counsel to appear at the
hearing in February 2010 or to timely file any comment or
opposition to the motion. Motions to dismiss the complaint on
a variety of grounds have also been filed in the name of Placer
Dome Inc. In May 2010, the plaintiffs filed a motion for an
order to admit an amended complaint in which they are seeking
additional remedies including temporary and permanent
environmental protection orders. In June 2010, Barrick Gold
Inc. and Placer Dome Inc. filed a motion to have the Court
resolve their unresolved motions to dismiss before considering
the plaintiffs’ motion to admit the amended complaint. An
opposition to the plaintiffs’ motion to admit was also filed by
Barrick Gold Inc. and Placer Dome Inc. on the same basis. This
motion is now fully briefed and awaiting determination by the
Court. It is not known when these motions or the outstanding
motions to dismiss will be decided by the Court. The Company
intends to defend the action vigorously. No amounts have been
accrued for any potential loss under this complaint.
Pakistani Constitutional Litigation
In November 2006, a Constitutional Petition was filed in the
High Court of Balochistan by three Pakistani citizens against:
Barrick, the governments of Balochistan and Pakistan, the
Balochistan Development Authority (“BDA”), Tethyan Copper
Company (“TCC”), Antofagasta Plc (“Antofagasta”), Muslim
Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
161
Notes to Consolidated Financial Statements
The Petition alleged, among other things, that the entry
by the BDA into the 1993 Joint Venture Agreement (“JVA”) with
BHP to facilitate the exploration of the Reko Diq area and the
grant of related exploration licenses were illegal and that the
subsequent transfer of the interests of BHP in the JVA and the
licenses to TCC was also illegal and should therefore be set
aside. Barrick currently indirectly holds 50% of the shares of
TCC, with Antofagasta indirectly holding the other 50%.
In June 2007, the High Court of Balochistan dismissed the
Petition against Barrick and the other respondents in its
entirety. In August 2007, the petitioners filed a Civil Petition for
Leave to Appeal in the Supreme Court of Pakistan. In late 2010,
the Supreme Court of Pakistan began hearing this matter,
together with several other related petitions filed against TCC
or its related parties. The related petitions primarily relate to
whether it is in the public interest for TCC to receive a mining
lease. On February 3, 2011, the Supreme Court issued an interim
order providing, among other things, that the Government of
Balochistan may not take any decision in respect of the grant or
otherwise of a mining lease to TCC until matters before the
Supreme Court are decided. As of February 16, 2011, no decision
has been reached by the Supreme Court. Barrick and TCC
continue to defend these actions vigorously. No amounts have
been accrued for any potential loss under these complaints.
Pueblo Viejo
In April, 2010, Pueblo Viejo Dominicana Corporation (“PVDC”)
received a copy of an action filed in the Dominican Republic
by Fundacion Amigo de Maimon Inc., Fundacion Miguel L. de
Pena Garcia Inc., and a number of individuals. The action
alleges a variety of matters couched as violations of fundamental
rights, including taking of private property, violations of mining
and environmental and other laws, slavery, human trafficking,
and bribery of government officials. The complaint does not
describe the relief sought, but the action is styled as an “Amparo”
remedy, which typically includes some form of injunctive relief.
PVDC intends to vigorously defend the action.
Argentine Glacier Legislation
On September 30, 2010, the National Law on Minimum
Requirements for the Protection of Glaciers was enacted in
Argentina, and came into force in early November 2010. The
federal law bans new mining exploration and exploitation
activities on glaciers and in the “peri-glacial” environment, and
subjects ongoing mining activities to an environmental audit.
If such audit identifies significant impacts on glaciers and
peri-glacial environment, the relevant authority is empowered
to take action, which according to the legislation could include
the suspension or relocation of the activity. In the case of the
Veladero mine and the Pascua-Lama project, the competent
authority is the Province of San Juan. The Province of San Juan
had previously adopted glacier protection legislation, with
which Veladero and Pascua-Lama comply.
In November 2010, in response to legal actions brought
against the National State by local unions and San Juan based
mining and construction chambers, as well as by Barrick’s
subsidiaries, Barrick Exploraciones Argentina S.A. and Minera
Argentina Gold S.A., which own the Veladero mine and the
Argentine portion of the Pascua-Lama project, respectively, the
Federal Court in the Province of San Juan, granted injunctions,
based on the unconstitutionality of the federal law, suspending
its application in the Province and, in particular to Veladero
and Pascua-Lama. In December 2010, the Province of San Juan
became a party to the actions, joining the challenge to the
constitutionality of the new federal legislation. As a result of the
intervention of the Province, the actions have been removed to
the National Supreme Court of Justice of Argentina to deter-
mine the constitutionality of the legislation.
162
Barrick Financial Report 2010 | Mineral Reserves and Mineral Resources
Mineral Reserves
and Mineral Resources
The tables on the next seven pages set forth Barrick’s interest in the total proven and probable gold and copper reserves and in the
total measured and indicated gold, copper and nickel resources and certain related information at each property. For further details
of proven and probable mineral reserves and measured, indicated and inferred mineral resources by category, metal and property,
see pages 166 to 170.
The Company has carefully prepared and verified the mineral reserve and mineral resource figures and believes that its method
of estimating mineral reserves has been verified by mining experience. These figures are estimates, however, and no assurance can
be given that the indicated quantities of metal will be produced. Metal price fluctuations may render mineral reserves containing
relatively lower grades of mineralization uneconomic. Moreover, short-term operating factors relating to the mineral reserves,
such as the need for orderly development of ore bodies or the processing of new or different ore grades, could affect the Company’s
profitability in any particular accounting period.
Definitions
A mineral resource is a concentration or occurrence of diamonds,
natural solid inorganic material, or natural solid fossilized organic
material including base and precious metals, coal, and industrial
minerals in or on the Earth’s crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge.
Mineral resources are sub-divided, in order of increasing geological
confidence, into inferred, indicated and measured categories.
An inferred mineral resource is that part of a mineral resource for
which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably
assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered
through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
An indicated mineral resource is that part of a mineral resource
for which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.
A measured mineral resource is that part of a mineral resource for
which quantity, grade or quality, densities, shape and physical char-
acteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical
and economic parameters, to support production planning and eval-
uation of the economic viability of the deposit. The estimate is based
on detailed and reliable exploration, sampling and testing informa-
tion gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability.
A mineral reserve is the economically mineable part of a measured
or indicated mineral resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information
on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction can be justified.
A mineral reserve includes diluting materials and allowances for
losses that may occur when the material is mined. Mineral reserves
are sub-divided in order of increasing confidence into probable
mineral reserves and proven mineral reserves. A probable mineral
reserve is the economically mineable part of an indicated and, in
some circumstances, a measured mineral resource demonstrated
by at least a preliminary feasibility study. This study must include
adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time
of reporting, that economic extraction can be justified.
A proven mineral reserve is the economically mineable part of a
measured mineral resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information
on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction is justified.
163
Mineral Reserves and Mineral Resources
Summary Gold Mineral Reserves and Mineral Resources1,2
For the years ended December 31
2010
2009
Tons
(000s)
Grade Ounces
(000s)
(oz/ton)
Tons
(000s)
Grade
(oz/ton)
Ounces
(000s)
95,865
4,694
10,872
6,771
106,737
11,465
168,417
96,807
317,081
60,463
246,711
151,944
9,254
64,219
73,017
50,865
27,358
16,041
17,182
61,530
18,388
4,184
47,843
26,842
9,649
1,231
–
322,485
9,656
0.101
173
0.037
2,958
0.272
2,020
0.298
0.118 12,614
2,193
0.191
0.084 14,195
5,675
0.059
0.046 14,494
4,320
0.071
4,748
0.019
1,680
0.011
4,224
0.456
8,415
0.131
1,319
0.018
1,107
0.022
1,391
0.051
692
0.043
1,122
0.065
1,390
0.023
1,362
0.074
299
0.071
775
0.016
387
0.014
539
0.056
58
0.047
–
–
0.060 19,357
1,002,722
199,842
423,931
231,590
483,181
51,130
210,104
40,529
59,947
18,288
0.017 17,377
2,376
0.012
0.042 17,845
6,260
0.027
0.023 11,291
600
0.012
6,618
0.031
756
0.019
791
0.013
273
0.015
82,902
16,687
8,998
4,436
91,900
21,123
166,638
70,834
243,669
46,622
227,346
99,338
8,030
1,730
78,807
43,912
26,314
3,377
13,933
8,960
17,500
2,545
49,997
14,064
8,239
282
–
270,022
668,481
119,855
423,858
153,371
503,787
65,253
234,423
39,419
43,595
6,366
9,296
0.112
870
0.052
2,860
0.318
0.334
1,483
0.132 12,156
0.111
2,353
0.085 14,244
0.061
4,287
0.058 14,100
3,467
0.074
4,489
0.020
1,178
0.012
4,072
0.507
0.431
745
1,466
0.019
0.021
939
1,350
0.051
162
0.048
702
0.050
0.057
514
1,325
0.076
179
0.070
807
0.016
218
0.016
508
0.062
19
0.067
–
–
0.068 18,449
0.017 11,585
1,365
0.011
0.042 17,839
0.031
4,821
0.024 12,008
0.014
884
7,501
0.032
678
0.017
648
0.015
108
0.017
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
Donlin Creek (50.00%)
South America
Cerro Casale (75.00%)3
Pascua-Lama
Veladero
Lagunas Norte
Pierina
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
3. See accompanying footnote #2.
164
Barrick Financial Report 2010 | Mineral Reserves and Mineral Resources
Summary Gold Mineral Reserves and Mineral Resources1,2
For the years ended December 31
2010
2009
Based on attributable ounces
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Osborne
Reko Diq (37.50%)
Africa3
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Tulawaka (51.73%)
Other
Total
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
3. See accompanying footnote #3.
Tons
(000s)
Grade Ounces
(000s)
(oz/ton)
Tons
(000s)
Grade
(oz/ton)
Ounces
(000s)
83,611
19,535
70,860
46,907
71,050
47,349
2,078
3,130
6,813
7,201
3,241
1,676
4,018
3,419
2,124
1,118
–
–
–
1,232,986
23,903
9,011
22,502
15,183
45,277
14,727
261
422
0.089
0.074
0.053
0.025
0.035
0.032
0.202
0.262
0.159
0.125
0.124
0.153
0.154
0.175
0.166
0.249
–
–
–
0.008
0.341
0.236
0.093
0.089
0.047
0.028
0.188
0.159
7,432
1,449
3,780
1,152
2,478
1,503
420
820
1,086
901
403
256
617
599
352
278
–
–
–
9,506
8,147
2,128
2,096
1,355
2,137
417
49
67
77,534
23,960
75,080
6,479
76,928
25,705
4,225
10,257
7,337
5,649
3,305
2,856
3,024
1,505
3,108
1,883
813
4,379
–
1,232,986
0.099
0.067
0.056
0.056
0.035
0.034
0.182
0.195
0.168
0.141
0.134
0.126
0.169
0.150
0.156
0.204
0.023
0.026
–
0.008
7,683
1,602
4,205
362
2,697
881
771
1,995
1,233
798
444
359
510
226
486
384
19
115
–
9,506
27,630
11,350
31,905
8,810
72,611
20,573
406
192
0.374 10,320
3,585
0.316
2,949
0.092
861
0.098
3,401
0.047
692
0.034
93
0.229
32
0.167
210
163
0.400
0.307
84
50
325
65
0.431
0.369
140
24
3,557,470
2,812,282
0.039 139,786
0.027 76,319
3,190,748
2,323,722
0.044 139,751
0.027 61,788
165
Mineral Reserves and Mineral Resources
Gold Mineral Reserves1
As at December 31, 2010
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
South America
Cerro Casale (75.00%)2
Pascua-Lama
Veladero
Lagunas Norte
Pierina
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Henty
Africa3
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Tulawaka (51.73%)
Other
Total
Proven
Probable
Total
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
60,555
4,543
65,098
8,864
38,350
76,886
4,182
26,909
–
1,273
5,397
9,348
2,355
0.097
0.346
0.114
0.097
0.081
0.021
0.458
0.021
–
0.082
0.107
0.019
0.065
5,874
1,571
7,445
857
3,104
1,604
1,914
563
–
104
580
175
154
35,310
6,329
41,639
159,553
278,731
169,825
5,072
46,108
27,358
15,909
12,991
38,495
7,294
3,782
0.107
1,387
0.219
0.124
5,169
0.084 13,338
0.041 11,390
3,144
0.019
2,310
0.455
756
0.016
1,391
0.051
1,018
0.064
782
0.060
600
0.016
385
0.053
95,865
10,872
106,737
168,417
317,081
246,711
9,254
73,017
27,358
17,182
18,388
47,843
9,649
9,656
0.101
2,958
0.272
0.118 12,614
0.084 14,195
0.046 14,494
4,748
0.019
4,224
0.456
1,319
0.018
1,391
0.051
1,122
0.065
1,362
0.074
775
0.016
539
0.056
191,429
43,395
27,785
16,498
37,163
0.019
0.050
0.031
0.038
0.014
3,575
2,160
875
635
533
811,293
380,536
455,396
193,606
22,784
0.017 13,802
0.041 15,685
0.023 10,416
5,983
0.031
258
0.011
1,002,722
423,931
483,181
210,104
59,947
0.017 17,377
0.042 17,845
0.023 11,291
6,618
0.031
791
0.013
46,963
30,173
13,851
110
3,630
1,860
805
387
–
0.086
0.046
0.024
0.227
0.176
0.112
0.160
0.163
–
4,047
1,387
339
25
640
209
129
63
–
36,648
40,687
57,199
1,968
3,183
1,381
3,213
1,737
–
0.092
0.059
0.037
0.201
0.140
0.140
0.152
0.166
–
3,385
2,393
2,139
395
446
194
488
289
–
83,611
70,860
71,050
2,078
6,813
3,241
4,018
2,124
–
0.089
0.053
0.035
0.202
0.159
0.124
0.154
0.166
–
7,432
3,780
2,478
420
1,086
403
617
352
–
976
6,949
3,425
163
0.322
0.076
0.033
0.123
314
531
112
20
22,927
15,553
41,852
98
0.342
0.101
0.048
0.296
7,833
1,565
2,025
29
23,903
22,502
45,277
261
0.341
0.093
0.047
0.188
8,147
2,096
2,137
49
147
0.395
58
63
0.413
26
210
0.400
84
664,371
0.048 32,152
2,893,099
0.037 107,634
3,557,470
0.039 139,786
Copper Mineral Reserves1
As at December 31, 2010
Proven
Probable
Total
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
403,813
0.544
4,394
209,024
0.507
2,120
612,837
0.531
6,514
403,813
0.544
4,394
209,024
0.507
2,120
612,837
0.531
6,514
Based on attributable pounds
Zaldívar
Total
1. See accompanying footnote #1.
2. See accompanying footnote #2.
3. See accompanying footnote #3.
166
Barrick Financial Report 2010 | Mineral Reserves and Mineral Resources
Gold Mineral Resources1,2
As at December 31, 2010
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
Donlin Creek (50.00%)
South America
Cerro Casale (75.00%)3
Pascua-Lama
Veladero
Lagunas Norte
Pierina
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Reko Diq (37.50%)
Africa4
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Tulawaka (51.73%)
Other
Total
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
793
1,613
2,406
2,692
3,844
43,133
2,847
12,990
–
705
1,601
1,351
306
4,692
0.037
0.347
0.245
0.059
0.055
0.012
0.234
0.028
–
0.026
0.117
0.016
0.056
0.067
3,901
29
5,158
560
9,059
589
94,115
160
210
56,619
514 108,811
61,372
666
37,875
366
16,041
–
60,825
18
2,583
187
25,491
22
925
17
316 317,793
144
0.037
1,460
0.283
1,604
0.177
5,515
0.059
4,110
0.073
1,166
0.011
7,749
0.126
741
0.020
692
0.043
1,372
0.023
112
0.043
365
0.014
0.044
41
0.060 19,041
173
2,020
2,193
5,675
4,320
1,680
8,415
1,107
692
1,390
299
387
58
19,357
1,344 0.065
3,047 0.298
4,391 0.227
5,191 0.064
50,337 0.103
60,636 0.011
32,570 0.160
24,870 0.018
6,974 0.018
12,885 0.024
1,362 0.156
15,546 0.014
2,494 0.035
43,499 0.069
87
908
995
332
5,174
686
5,200
441
126
307
212
217
87
2,995
14,643
19,956
4,053
1,185
10,333
0.011
0.033
0.010
0.020
0.017
164 185,199
666 211,634
47,077
39,344
7,955
42
24
172
0.012
0.026
0.012
0.019
0.013
2,212
5,594
558
732
101
2,376 384,355 0.011
32,290 0.036
6,260
75,183 0.008
600
7,951 0.015
756
19,934 0.003
273
4,350
1,178
581
117
58
6,119
1,934
–
564
4,022
290
830
–
718,521
0.057
0.064
–
0.121
0.115
0.152
0.161
–
0.009
351
124
–
68
462
44
134
–
13,416
44,973
47,349
2,566
3,179
1,386
2,589
1,118
6,466 514,465
0.082
0.023
0.032
0.293
0.138
0.153
0.180
0.249
0.006
1,098
1,028
1,503
752
439
212
465
278
3,040
1,449
1,152
1,503
820
901
256
599
278
13,840 0.090
1,109 0.146
12,686 0.031
4,049 0.307
4,133 0.101
555 0.162
4,855 0.239
687 0.319
9,506 1,192,569 0.005
1,243
162
395
1,242
419
90
1,162
219
6,399
–
2,055
61
–
–
0.071
0.033
–
–
146
2
–
9,011
13,128
14,666
422
0.236
0.092
0.028
0.159
2,128
1,209
415
67
2,128
1,355
417
67
7,180 0.344
1,515 0.055
5,119 0.035
76 0.145
2,472
84
181
11
–
–
–
163
0.307
50
50
192 0.349
67
861,133
0.014 11,930 1,951,149
0.033 64,389
76,319 2,029,033 0.018 37,202
Copper Mineral Resources1,2
As at December 31, 2010
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Zaldívar
Reko Diq (37.50%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
80,445
718,521
0.433
0.536
697
66,148
7,697 514,465
0.443
0.392
586
4,034
1,283
69,308 0.545
11,731 1,192,569 0.352
756
8,393
Total
798,966
0.525
8,394 580,613
0.398
4,620
13,014 1,261,877 0.363
9,149
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
3. See accompanying footnote #2.
4. See accompanying footnote #3.
167
Mineral Reserves and Mineral Resources
Contained Silver Within Reported Gold Reserves1
For the year ended December 31, 2010
In proven
gold reserves
In probable
gold reserves
Total
Based on attributable ounces
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)2
Pascua-Lama
Lagunas Norte
Veladero
Pierina
Africa3
Bulyanhulu (73.90%)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Tons
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Process
recovery
%
8,864
0.64
5,664
159,553
0.52
82,714
168,417
0.52
88,378 86.9%
191,429
43,395
16,498
27,785
37,163
0.05
1.72
0.13
0.39
0.37
10,482
74,563
2,149
10,814
13,678
811,293
380,536
193,606
455,396
22,784
0.04
33,564
1.57 596,932
21,034
0.11
0.44 199,857
8,369
0.37
1,002,722
423,931
210,104
483,181
59,947
0.04
44,046
1.58 671,495 81.6%
23,183 21.2%
0.11
0.44 210,671 6.4%
22,047 36.8%
0.37
976
0.23
220
22,927
0.27
6,292
23,903
0.27
6,512 75.0%
Total
326,110
0.36 117,570
2,046,095
0.46
948,762
2,372,205
0.45 1,066,332 61.5%
1. Silver is accounted for as a by-product credit against reported or projected gold production costs.
2. See accompanying footnote #2.
3. See accompanying footnote #3.
Contained Copper Within Reported Gold Reserves1
For the year ended December 31, 2010
In proven
gold reserves
In probable
gold reserves
Total
Based on attributable pounds
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)2
Pascua-Lama
Africa3
Bulyanhulu (73.90%)
Buzwagi (73.90%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Process
recovery
%
8,864 0.120
21.3
159,553 0.093
297.9
168,417 0.095
319.2 79.5%
191,429 0.189
43,395 0.096
722.0
83.2
811,293 0.223
380,536 0.075
3,614.4
574.4
1,002,722 0.216 4,336.4 81.2%
657.6 62.9%
423,931 0.078
976 0.415
3,425 0.006
8.1
0.4
22,927 0.673
41,852 0.125
308.5
104.3
23,903 0.662
45,277 0.116
316.6 95.0%
104.7 76.5%
Total
248,089 0.168
835.0
1,416,161 0.173
4,899.5
1,664,250 0.172 5,734.5 79.6%
1. Copper is accounted for as a by-product credit against reported or projected gold production costs.
2. See accompanying footnote #2.
3. See accompanying footnote #3.
168
Barrick Financial Report 2010 | Mineral Reserves and Mineral Resources
Contained Silver Within Reported Gold Resources1
For the year ended December 31, 2010
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable ounces
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)2
Pascua-Lama
Lagunas Norte
Veladero
Pierina
Africa3
Bulyanhulu (73.90%)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
2,692
0.39
1,058
94,115
0.34 32,217
33,275
5,191
0.53
2,746
14,643
19,956
1,185
4,053
10,333
0.04
637 185,199
0.74 14,865 211,634
39,344
96
0.08
47,077
750
0.19
7,955
3,515
0.34
0.03
5,848
0.71 150,720
0.07
2,751
0.33 15,703
2,824
0.35
6,485 384,355
165,585 32,290
7,951
16,453 75,183
6,339 19,934
2,847
0.03 11,636
0.45 14,676
0.06
473
0.31 23,663
6,320
0.32
–
–
–
9,011
0.21
1,906
1,906
7,180
0.30
2,133
Total
52,862
0.40 20,921
594,335
0.36 211,969
232,890 532,084
0.12 61,647
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #2.
3. See accompanying footnote #3.
Contained Copper Within Reported Gold Resources1
For the year ended December 31, 2010
In measured (M)
gold resources
In indicated (I)
gold resources
(M) + (I)
Inferred
Based on attributable pounds
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)2
Pascua-Lama
Africa3
Buzwagi (73.90%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
2,692
0.10
5.4
94,115
0.082
154.2
159.6
5,191
0.098
10.2
14,643
19,956
0.152
0.067
44.6
26.9
185,199
211,634
0.181
0.056
670.6
237.8
715.2 384,355
32,290
264.7
0.197 1,514.4
30.0
0.046
61
0.08
0.1
14,666
0.082
24.1
24.2
5,119
0.079
8.1
Total
37,352
0.103
77.0
505,614
0.107 1,086.7
1,163.7 426,955
0.183 1,562.7
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #2.
3. See accompanying footnote #3.
Nickel Mineral Resources1
For the year ended December 31, 2010
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Africa
Kabanga (50.00%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
7,606
2.490
378.8
12,897
2.720
701.6
1,080.4
11,464
2.600
596.1
1. Resources which are not reserves do not have demonstrated economic viability.
169
Mineral Reserves and Mineral Resources
Mineral Reserves and Resources Notes
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2010 in accordance with National Instrument 43-101
as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7, (under the Securities and Exchange Act of 1934),
as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, Cerro Casale is
classified as mineralized material. In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument
43-101, the U.S. Securities and Exchange Commission does not recognize such terms. Canadian standards differ significantly from the requirements of the U.S.
Securities and Exchange Commission, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed
in accordance with the requirements of the U.S. Securities and Exchange Commission. U.S. investors should understand that “inferred” mineral resources have a great
amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, U.S. investors are cautioned not to assume
that any part or all of Barrick’s mineral resources constitute or will be converted into reserves. Calculations have been prepared by employees of Barrick, its joint venture
partners or its joint venture operating companies, as applicable, under the supervision of Rick Sims, Senior Director, Resources and Reserves of Barrick, Chris Woodall,
Senior Director, Mining of Barrick and John Lindsay, Senior Director Metallurgy, of Barrick. Except as noted below, reserves have been calculated using an assumed
long-term average gold price of $US 1,000 ($Aus. 1,180) per ounce, a silver price of $US 16.00 per ounce, a copper price of $US 2.00 per pound and exchange rates
of $1.05 $Can/$US and $0.85 $US/$Aus. Reserves at Round Mountain have been calculated using an assumed long-term average gold price of $US 900. Reserve
calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type
of ore contained in the reserves. Barrick’s normal data verification procedures have been employed in connection with the calculations. Resources as at December 31,
2010 have been estimated using varying cut-off grades, depending on both the type of mine or project, its maturity and ore types at each property. For a breakdown
of reserves and resources by category and for a more detailed description of the key assumptions, parameters and methods used in calculating Barrick’s reserves
and resources, see Barrick’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities
and Exchange Commission.
2. 2009 reserves and resources for the Cerro Casale project reflect Barrick’s then 50% interest. In March 2010, Barrick acquired an additional 25% of Cerro Casale.
2010 reserves and resources reflect Barrick’s 75% interest.
3. In March 2010, Barrick created African Barrick Gold plc to hold its African gold mines, gold projects and gold exploration properties. As of April 2010, Barrick owns
approximately 73.9% of African Barrick Gold plc.
170
Barrick Financial Report 2010 | Corporate Governance and Committees of the Board
Corporate Governance and
Committees of the Board
Corporate Governance
Over the past several years, there has been an increased focus
on corporate governance in both the United States and Canada.
Among other regulatory initiatives, the New York Stock
Exchange added corporate governance standards to its listing
rules. Although, as a regulatory matter, the vast majority
of the NYSE corporate governance standards are not directly
applicable to Barrick as a Canadian company, Barrick has
implemented a number of structures and procedures to comply
with the NYSE standards. There are no significant differences
between Barrick’s corporate governance practices and the
NYSE standards applicable to U.S. companies.
The Board of Directors has approved a set of Corporate
Governance Guidelines to promote the effective functioning
of the Board of Directors and its Committees and to set forth
a common set of expectations as to how the Board should
manage its affairs and perform its responsibilities. Barrick has
also adopted a Code of Business Conduct and Ethics that is
applicable to all directors, officers and employees of Barrick. In
conjunction with the adoption of the Code, Barrick established
a toll-free compliance hotline to allow for anonymous reporting
of any suspected Code violations, including concerns regarding
accounting, internal accounting controls or other auditing
matters. A copy of the Corporate Governance Guidelines,
the Code of Business Conduct and Ethics and the mandates
of the Board of Directors and each of the Committees of the
Board, including the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating
Committee, is posted on Barrick’s website at www.barrick.com
and is available in print from the Company to any shareholder
upon request.
Committees of the Board
Audit Committee
(S.J. Shapiro, D.J. Carty, P.A. Crossgrove, R.M. Franklin)
Reviews the Company’s financial statements and management’s
discussion and analysis of financial and operating results, and
assists the Board in its oversight of the integrity of Barrick’s
financial reporting process and the quality, transparency, and
integrity of Barrick’s financial statements and other relevant
public disclosures, the Company’s compliance with legal
and regulatory requirements relating to financial reporting,
the external auditors’ qualifications and independence,
and the performance of the internal and external auditors.
Compensation Committee
(D.J. Carty, M.A. Cohen, J.B. Harvey, S.J. Shapiro)
Assists the Board in monitoring, reviewing and approving
Barrick’s compensation policies and practices, and administering
Barrick’s share compensation plans. The Committee is
responsible for reviewing and recommending director and
senior management compensation and for succession planning
with respect to senior executives.
Corporate Governance and Nominating Committee
(M.A. Cohen, R.M. Franklin, J.B. Harvey)
Assists the Board in establishing Barrick’s corporate governance
policies and practices. The Committee also identifies individuals
qualified to become members of the Board and reviews the
composition and functioning of the Board and its Committees.
Environmental, Health and Safety Committee
(P.A. Crossgrove, C.W.D. Birchall, J.B. Harvey, A.W. Regent)
Reviews environmental, health and safety, and corporate
social responsibility policies and programs, oversees the
Company’s environmental, health and safety, and corporate
social responsibility performance, and monitors current and
future regulatory issues.
Finance Committee
(C.W.D. Birchall, H.L. Beck, A. Munk, N. Rothschild)
Reviews the Company’s financial structure and investment and
financial risk management programs.
171
Shareholder Information
Shareholder
Information
Barrick shares are traded on two stock exchanges:
New York
Toronto
Ticker Symbol
ABX
Number of Registered Shareholders at December 31, 2010
18,547
Index Listings
S&P/TSX Composite Index
S&P/TSX 60 Index
S&P Global 1200 Index
Philadelphia Gold/Silver Index
NYSE Arca Gold Miners Index
Dow Jones Sustainability Index (DJSI) – World
Dow Jones Sustainability Index (DJSI) – North America
NASDAQ Global Sustainability Index
2010 Dividend per Share
US$0.44
Share Trading Information
New York Stock Exchange
Quarter
First
Second
Third
Fourth
Toronto Stock Exchange
Quarter
First
Second
Third
Fourth
172
Common Shares
(millions)
Outstanding at December 31, 2010
Weighted average 2010
Basic
Fully diluted
998
987
997
The Company’s shares were split on a two-for-one basis in 1987,
1989 and 1993.
Volume of Shares Traded
(millions)
NYSE
TSX
Closing Price of Shares
December 31, 2010
NYSE
TSX
2010
2009
810
870
1,203
1,078
US$53.18
C$53.12
Share Volume
(millions)
High
Low
2010
2009
2010
2009
2010
2009
227
228
180
175
810
361
246
258
338
1,203
US$42.63
47.25
47.55
55.65
US$40.90
38.96
41.98
48.02
US$33.65
38.15
39.68
44.87
US$25.54
27.09
30.67
34.50
Share Volume
(millions)
High
Low
2010
2009
2010
2009
2010
2009
233
255
198
184
870
331
251
237
259
1,078
C$44.00
48.89
50.65
55.99
C$49.87
43.24
43.97
50.53
C$36.01
38.86
41.07
46.06
C$32.69
33.01
35.50
37.04
Barrick Financial Report 2010 | Shareholder Information
Dividend Policy
The Board of Directors reviews the dividend policy quarterly
based on the cash requirements of the Company’s operating
assets, exploration and development activities, as well as potential
acquisitions, combined with the current and projected financial
position of the Company.
Dividend Payments
In 2010, the Company paid a cash dividend of $0.44 per share –
$0.20 on June 15, $0.12 on September 15 and $0.12 on December 15.
A cash dividend of $0.40 per share was paid in 2009 – $0.20 on
June 15 and $0.20 on December 15.
Form 40-F
The Company’s Annual Report on Form 40-F is filed with the
United States Securities and Exchange Commission. This report is
available on Barrick’s website www.barrick.com and will be made
available to shareholders, without charge, upon written request to
the Secretary of the Company at the Corporate Office.
Other Language Reports
French and Spanish versions of this annual report are available
from Investor Relations at the Corporate Office and on Barrick’s
website www.barrick.com.
Shareholder Contacts
Shareholders are welcome to contact the Investor Relations
Department for general information on the Company:
Deni Nicoski
Vice President, Investor Relations
Telephone: 416-307-7410
Email: dnicoski@barrick.com
Susan Muir
Senior Director, Investor Relations
Telephone: 416-307-5107
Email: s.muir@barrick.com
Amy Schwalm
Senior Director, Investor Relations
Telephone: 416-307-7422
Email: aschwalm@barrick.com
For information on such matters as share transfers, dividend
cheques and change of address, inquiries should be directed to
the Company’s Transfer Agents.
Transfer Agents and Registrars
CIBC Mellon Trust Company*
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario M5C 2W9
Telephone: 416-643-5500
Toll-free within the United States and Canada: 1-800-387-0825
Fax: 416-643-5501
Email: inquiries@cibcmellon.com
Website: www.cibcmellon.com
BNY Mellon Shareowner Services, L.L.C.
480 Washington Boulevard – 27th Floor
Jersey City, NJ 07310
Telephone: 1-800-589-9836
Fax: 201-680-4665
Email: shrrelations@mellon.com
Website: www.melloninvestor.com
* Effective November 2010, shareholder records are
maintained by Canadian Stock Transfer (“CST”) as
administrative agent for CIBC Mellon Trust Company.
Auditors
PricewaterhouseCoopers LLP
Toronto, Canada
Annual Meeting
The Annual Meeting of Shareholders will be held on
Wednesday, April 27, 2011 at 10:00 a.m. (Toronto time)
in the Metro Toronto Convention Centre, John Bassett Theatre,
255 Front Street West, Toronto, Ontario.
173
Board of Directors and Senior Officers
Board of Directors and
Senior Officers
Board of Directors
Howard L. Beck, Q.C.
Toronto, Ontario
Corporate Director
C. William D. Birchall
Toronto, Ontario
Vice Chairman,
Barrick Gold Corporation
Donald J. Carty, O.C.
Dallas, Texas
Chairman,
Porter Airlines Inc. and
Virgin America Airlines
Gustavo A. Cisneros
Santo Domingo,
Dominican Republic
Chairman,
Cisneros Group of Companies
Senior Officers
Peter Munk
Chairman
C. William D. Birchall
Vice Chairman
Aaron W. Regent
President and
Chief Executive Officer
Marshall A. Cohen, O.C.
Toronto, Ontario
Counsel,
Cassels, Brock & Blackwell LLP
Peter A. Crossgrove, O.C.
Toronto, Ontario
Corporate Director
Robert M. Franklin
Toronto, Ontario
President, Signalta Capital
Corporation
J. Brett Harvey
Canonsburg, Pennsylvania
Chairman, President and
Chief Executive Officer,
CONSOL Energy Inc.
The Right Honourable
Brian Mulroney, P.C.
Montreal, Quebec
Chairman, Barrick International
Advisory Board
Senior Partner, Ogilvy Renault
Anthony Munk
Toronto, Ontario
Managing Director,
Onex Corporation
Peter Munk, C.C.
Toronto, Ontario
Founder and Chairman,
Barrick Gold Corporation
Aaron W. Regent
Toronto, Ontario
President and
Chief Executive Officer,
Barrick Gold Corporation
The Honourable
Nathaniel P. Rothschild
Klosters, Switzerland
Founder and Co-Chairman,
Vallar PLC
Co-Chairman,
EN+ Group Limited
Steven J. Shapiro
Houston, Texas
Corporate Director
Kelvin P.M. Dushnisky
Executive Vice President,
Corporate and Legal Affairs
Peter J. Kinver
Executive Vice President
and Chief Operating Officer
Jamie C. Sokalsky
Executive Vice President
and Chief Financial Officer
Rob Krcmarov
Senior Vice President,
Global Exploration
Donald D. Ritz
Senior Vice President,
Safety and Leadership
Sybil Veenman
Senior Vice President and
General Counsel
International Advisory Board
The International Advisory Board was established to provide advice to Barrick’s Board of Directors and management on geo-political and other
strategic issues affecting the Company.
Members
Gustavo A. Cisneros
Dominican Republic
Secretary William S. Cohen
United States
Vernon E. Jordan, Jr.
United States
Andrónico Luksic
Chile
Angus A. MacNaughton
United States
Karl Otto Pöhl
Germany
Lord Charles Powell of Bayswater
KCMG
United Kingdom
The Honourable
Nathaniel P. Rothschild
Switzerland
The Honorable
Andrew Young
United States
Chairman
The Right Honourable
Brian Mulroney
Former Prime Minister
of Canada
174
Barrick’s strategy is
focused on maximizing
shareholder value
by building gold
and copper reserves
through exploration,
investing in high return
development projects,
realizing the potential
of existing mines,
pursuing disciplined
acquisitions and
strengthening our social
and environmental
performance.
Financial Highlights
Record adjusted
net income in 2010
Record adjusted operating
cash flow in 2010
Increased dividends by 20%
in 20102
Replaced reserves,
grew resources in 2010
3,279
4,783
0.44
0.40
0.40
1,810
1,661
2,899
2,254
35
65
32
62
37
76
139
140
140
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
0
0
0
ADJUSTED NET INCOME1
(US dollars millions)
ADJUSTED OPERATING
CASH FLOW1
(US dollars millions)
DIVIDENDS PAID
(US dollars per share)
RESERVES AND RESOURCES3
(Ounces millions)
Inferred Resources
M&I Resources
P&P Reserves
Record realized price
in 2010
Grew production
in 2010
Lower total cash costs
in 2010
Lower net cash costs
in 2010
1,228
7,765
7,657
7,397
464
457
443
985
872
360
341
337
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
0
5,000
300
200
REALIZED GOLD PRICES1
GOLD PRODUCTION
(US dollars per ounce)
(000s of ounces)
TOTAL CASH COSTS1
(US dollars per ounce)
NET CASH COSTS1
(US dollars per ounce)
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Cautionary Statement on Forward-Looking Information
Certain information contained in this Annual Report 2010, including any information as to our strategy, projects, plans or
future financial or operating performance and other statements that express management’s expectations or estimates of future
performance, constitute “forward-looking statements”. All statements, other than statements of historical fact, are forward-
looking statements. The words “believe”, “expect”, “will”, “anticipate”, “contemplate”, “target”, “plan”, “continue”, “budget”,
“may”, “intend”, “estimate” and similar expressions identify forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently
subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that
such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual
financial results, performance or achievements of Barrick to be materially different from the Company’s estimated future results,
performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are
not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: the impact of
global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future
cash flows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity);
fluctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; ability
to successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in
the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature
of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or
grades of reserves; changes in costs and estimates associated with our projects; adverse changes in our credit rating, level of
indebtedness and liquidity, contests over title to properties, particularly title to undeveloped properties; the risks involved in the
exploration, development and mining business. Certain of these factors are discussed in greater detail in the Company’s most
recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial
securities regulatory authorities.
6
2
5
1
3
4
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
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0
Building Value in
Everything We Do
Annual Report 2010
Focus on Value Creation
Strategy of Increasing Net Asset Value, Production,
Reserves and Earnings – All on a Per Share Basis
Exceptional Gold Price Leverage
Generating Record Earnings and Cash Flow
Nine Million Ounce Production Target within Five Years
Financial Strength and Flexibility
‘A’ Credit Rating and Strong Balance Sheet to
Support Our Objectives
Operational Excellence
Consistent Track Record of Achieving Targets
Project Development Expertise
Cortez Hills Built on Time and Budget World-Class
Pueblo Viejo and Pascua-Lama Projects in Construction
Surfacing Hidden Value
Optimizing Our High Quality, Diversified Portfolio
of Assets
Industry’s Largest Gold Reserves
Replaced or Grown for the Last Five Straight Years
Strong Focus on
Responsible Mining
Relisted on Dow Jones World Sustainability Index
Added to NASDAQ Global Sustainability Index
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
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