Barrick Gold Corp. Annual Report 2011

Plain-text annual report

A Symbol of Value Barrick Gold Corporation | Annual Report 2011 Record ﬁ nancial s results Investing in high return projects Operational e excellence Exploration success Surfacing ppe value Focus on responsible mining 2011 Highlights Record adjusted net earnings in 2011 Record adjusted operating cash flow in 2011 Record EBITDA in 2011 Increased dividend 25% to 60¢ on an annualized basis 4,666 5,680 5,241 3,517 6,521 8,376 60 48 40 1,810 2,899 3,370 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 0 0 0 0 ADJUSTED NET EARNINGS1 (US dollars millions) ADJUSTED OPERATING CASH FLOW1 (US dollars millions) EBITDA1,4 (US dollars millions) ANNUALIZED DIVIDEND2 (US cents per share) Replaced gold reserves, grew resources in 2011 Increased copper reserves, grew resources in 2011 Record gold total cash and net cash margins in 2011 1,118 1,239 37 76 40 80 32 62 140 140 140 20 15 13 9 13 9 13 6 7 819 935 521 625 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 0 0 300 200 GOLD RESERVES AND RESOURCES3 COPPER RESERVES AND RESOURCES3 TOTAL CASH MARGINS1 NET CASH MARGINS1 (US dollars per ounce) (US dollars per ounce) (Ounces millions) (Pounds billions) Inferred Resources M&I Resources 2P Reserves 2 Barrick Annual Report 2011 | 2011 Highlights Barrick delivered record ﬁ nancial results in 2011, demonstrating exceptional leverage to the gold price. Beyond 2011, Pueblo Viejo and Pascua-Lama are scheduled to begin contributing low cost production in 2012 and 2013, respectively. Barrick’s depth of expertise and high quality asset portfolio continue to create value for shareholders, including the new, highly prospective gold discoveries in Nevada, Red Hill and Goldrush. (In millions of US dollars, except per share data4) 2011 2010 2009 Revenues Net earnings (loss) per share Adjusted net earnings1 per share Operating cash ﬂ ow Adjusted operating cash ﬂ ow1 EBITDA1,4 Cash and equivalents Dividends paid per share Annualized dividend per share2 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 $ $ $ $ $ $ 14,312 4,484 4.49 4,666 4.67 5,315 5,680 8,376 2,745 0.51 0.60 7,676 1,578 460 339 451 3.82 1.75 $ $ $ $ $ $ 11,001 3,582 3.63 3,517 3.56 4,585 5,241 6,521 3,968 0.44 0.48 7,765 1,228 409 293 368 3.41 1.10 1. Non-GAAP ﬁ nancial measure – see pages 94–101 of the 2011 Financial Report. 2. Calculation based on annualizing the last dividend paid in the respective year. 3. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 4. 2010 and 2011 results are based on IFRS; 2009 results are based on US GAAP. 2009 EBITDA is on an adjusted basis. $ $ $ $ $ $ 8,136 (4,274) (4.73) 1,810 2.00 (2,322) 2,899 3,370 2,564 0.40 0.40 7,397 985 464 360 393 3.16 1.17 3 Message from the Founder and Chairman Message from the Founder and Chairman Peter Munk Founder and Chairman Fellow shareholders, It’s been nearly 60 years since I started my ﬁ rst company, and yet 2011 stands out as perhaps the most tumultuous year of my career. Like you, I watched in amazement as the Western world lurched from one crisis to the next and as global currencies, equities and debt markets ebbed and ﬂ owed, often violently and unpredictably. Along the way, in response to the turmoil, the price of gold hit another all-time high just above $1,920 per ounce in September. And once again, pundits proclaimed that gold is vastly overvalued, a fragile bubble just waiting to burst. I’m the ﬁ rst to acknowledge that nothing goes up forever. But in the case of gold, that old adage is an excuse for lazy thinking. The fact is, the underlying factors that have supported a steady rise in gold prices for the past decade remain ﬁ rmly in place. The geopolitical and ﬁ scal problems we face are long-term and structural and they’re not going away anytime soon – arguably, they’re getting worse. In this environment, gold remains one of the few investments that fund managers can be optimistic about. After all, gold is the currency that cannot be debased by printing more of it. It’s the only currency that is the liability of no government. I’ve long been on the record as saying that I am not a gold bug. I’m still not a gold bug. Yet there’s a strong case to be made that the purchasing power of 4 the world’s key currencies will continue to erode in the decade ahead, as indeed it has over the past 50 years. If that is so, the price of gold will maintain its upward trajectory. In what is perhaps the strongest vote of conﬁ dence, a growing number of central banks have been accumulating gold bullion to diversify their foreign currency reserves. In 2011, central banks purchased about 440 tonnes of gold, more than in any year since 1964. Given the strength of gold, you won’t be surprised to learn that 2011 was Barrick’s most proﬁ table year ever. We’re especially proud that we continue to offer increased leverage to the price of gold. In the past seven years, as gold prices have risen 260%, Barrick’s earnings per share have climbed 900%. Compared with the preceding year, our adjusted net earnings increased by 33% in 2011, reaching $4.7 billion. Over the same period, our cash margins expanded by 37%. These strong ﬁ nancial results allowed us to again raise our dividend, by 25% last year. Over the past ﬁ ve years, we have increased our dividend by 170%, returning more capital to shareholders than ever before. Barrick Adjusted EPS* vs Gold US$ Returns 900% 260% 900% 750% 600% 450% 300% 150% 0% 2004 2005 2006 2007 2008 2009 2010 2011 * 2004 EPS based on US GAAP. Barrick Annual Report 2011 | Message from the Founder and Chairman “ We’re especially proud that we continue to offer increased leverage to the price of gold.” For all that, I’m sorry to report that our share price has not performed as well as I think it should. Barrick is the world’s largest gold company. Our track record, our A-rated balance sheet, our performance, and our management team are all exceptional. We have by far the largest gold reserves and the best pipeline in the industry. Since Barrick’s founding in 1983, our number-one objective has been to perform for our shareholders. Only with that single-minded focus could we grow from a small junior to the biggest gold producer in the world. Today, however, our most serious challenge is our stock performance. It’s simply not good enough. Clearly, there could be a variety of reasons for this unacceptable development, but I consider the introduction of the spectacularly successful gold exchange traded funds (ETFs) to be a key factor. As gold ETFs have become ever more popular, a growing number of institutional holders have trimmed their investments in gold mining companies, plowing that money into ETFs. Total gold ETF assets have reached nearly $140 billion, a staggering ﬁ gure that helps to explain why the gold industry’s multiples have compressed signiﬁ cantly, even while our earnings per share have sharply increased, and the prevailing outlook for gold itself is very positive. This trend has been so relentless that we now see equities of so- called “senior” gold producers not only selling at a fraction of their historic price to earnings multiples, but sometimes even below those of diversiﬁ ed metal producers. This would have been unthinkable only a few years ago. Traditionally, gold companies have traded at multiples four to eight times higher than diversiﬁ ed mining companies. While the diagnosis of a problem is a necessary precondition for ﬁ nding a solution, it is by far not the same. There are no doubt differing views on how to make gold equities more valuable and more reﬂ ective of their performance, particularly in light of the market’s universally positive outlook for gold prices. The general consensus of a solution seems to be that Barrick Adjusted EPS* vs Share Price to Earnings Multiple US$6 5 4 3 2 1 0 60 50 40 30 20 10 0 2004 2005 2006 2007 2008 2009 2010 2011 * 2004 EPS based on US GAAP. gold producers, to see their shares trade once again near earlier multiples, need to offer the one thing that investors today crave universally – and what ETFs can’t offer – a meaningful, growing and regular dividend. Considering many gold miners are currently free cash ﬂ ow constrained, pursuing such a strategy may prove difﬁ cult. This suggests that the new name of the game for gold miners will be about maximizing free cash ﬂ ow without compromising the continuous growth in production that shareholders have come to expect. Only by doing both of these things can gold miners expect to attract and expand their constituency of major holders. This solution will clearly advantage Barrick, as a strong cash-ﬂ ow generator with low cash costs, world-class mines and the industry’s largest reserve base. These attributes not only distinguish Barrick from ETFs that pay no dividend but, importantly, they position the Company as an attractive investment opportunity across equity markets generally, many of which continue to struggle in these difﬁ cult times. Yet it must be remembered that most gold mines have a relatively short life. Maintaining production requires not only new, economically viable deposits but also the ability to turn those deposits into 5 Message from the Founder and Chairman producing mines. Doing so today demands ever larger capital commitments over signiﬁ cantly longer timeframes, combined with the challenges of new regulatory requirements and political constraints. The silver lining, and a potential source of signiﬁ cant free cash ﬂ ow, can be found in the copper and other metals present in most large, undeveloped projects today. Mining copper on its own, or in conjunction with gold, requires similar skills and expertise, and as such, many large gold miners have been producing copper for years. Furthermore, mines that primarily produce copper tend to have much longer lives than pure gold mines – meaning billions of dollars that would otherwise have to be reinvested just to maintain – let alone increase – production from pure gold mines, becomes available for distribution to shareholders. Our acquisition of Equinox Minerals this past year offers a clear illustration of this point. Equinox’s two major assets are located on two highly promising copper belts, in Zambia and in Saudi Arabia, and they have only just begun to be explored. Already, in our ﬁ rst year of owning these assets, we have doubled copper resources at the Lumwana Chimiwungo deposit and we expect signiﬁ cant additions to come. We are conﬁ dent that these operations will materially increase our top line revenue and boost our free cash ﬂ ow in the years ahead. This in turn will help us pay higher dividends to shareholders, while continuing to fund the growth and expansion of our primary gold business. Only by so doing can we attract a new shareholder base and, as such, expect our share price to reﬂ ect our record ﬁ nancial performance! Our Company is stronger and more proﬁ table than ever; we were also able to maintain the discipline, the focus, the commitment and the determination of our executives and key decision makers – starting with our Board, our President and CEO, and the many others whose main goal is to ensure that Barrick excels as an outstanding global corporation. On that note, I’d like to extend my sincere gratitude to one of Barrick’s longest-serving directors, Peter Crossgrove, who retires from the Board this year. His wise and constant counsel will be missed. At the same time it is my pleasure to welcome John L. Thornton to the Board of Directors, whose knowledge and experience of global business affairs is truly exceptional and will be a great asset to our Board as well as our Company. In conclusion, I want to assure you that we are – as we always have been – committed to making our investors’ interests our foremost priority! I ﬁ rmly believe that Barrick – after a period of excellent ﬁ nancial and operational performance, yet under- performing share prices – is on the right track to translate its achievements into equally outstanding performance for its shares. Peter Munk Founder and Chairman 6 Barrick Annual Report 2011 | Message from the President and CEO Message from the President and CEO During a year of increased market volatility and persistent concerns about the ﬁ scal and economic challenges that lay ahead of us, gold continued to broaden its appeal as a means to preserve and grow wealth. The metal continued to perform well, setting a new record, underpinned by strong investment demand in traditional markets, surging demand from emerging economies and accelerating central bank purchases. We continue to have a positive outlook on the gold price because the underlying factors driving demand for the metal are structural and long-term in nature. A stubbornly sluggish economic recovery in the United States has led to a period of prolonged monetary and ﬁ scal stimulus, with interest rates expected to remain at historically low levels for the foreseeable future. In Europe, sovereign debt concerns have put further downward pressure on the Euro currency, while austerity measures threaten to slow economic growth. Meanwhile, in emerging markets, the threat of rising inﬂ ation persists. In addition to strong demand, we believe that supply is likely to remain constrained over the long term, which should further support gold prices. Despite a decade of rising gold prices, the gold mining industry has struggled to increase supply as new deposits remain scarce and the permitting and construction environment becomes increasingly complex. Aaron Regent President and Chief Executive Ofﬁ cer Taken all together, we believe the fundamentals supporting gold and copper prices are positive and our focus remains on positioning Barrick to be a prime beneﬁ ciary of rising prices over the long term. Barrick’s production will continue to be dominated by gold, complemented by growing copper production from existing mines and projects. Our strategy to create value for Barrick shareholders is focused on ﬁ ve key areas: ■ maximizing the beneﬁ ts of rising metal prices by meeting operational and ﬁ nancial targets; ■ increasing gold and copper reserves and production through exploration and selective acquisitions; ■ maximizing the value of our existing mines and properties by leveraging Barrick’s expertise and regional infrastructure; Copper has also performed well, even in the face ■ growing production by investing in and developing of continuing uncertainty about the direction of the global economy. Although prices have been volatile, copper has remained at elevated levels, with demand underpinned by strong growth in emerging markets, as these countries, particularly China, industrialize and urbanize. New supply continues to be limited due to many of the same factors affecting gold: production disruptions, low discovery rates and increased hurdles to put new resources into production. This has resulted in a solid underpinning for copper prices, which is expected to continue for the foreseeable future. high return projects; and ■ continuing to improve corporate social responsibility practices to maintain and strengthen our license to operate. By executing on this strategy, we expect to increase earnings and cash ﬂ ow on a per share basis and enhance our shareholders’ leverage to metal prices. In 2011, the Company performed well against this strategy. Barrick met its operating guidance for the ninth consecutive year, producing 7.7 million ounces of gold at total cash costs of $460 per ounce, positioning 7 Message from the President and CEO “ Capturing the beneﬁ ts of margin expansion and strong operating results, Barrick achieved a return on equity of 22% in 2011.” Barrick as one of the lowest cost senior gold producers. Copper production increased by 23% to 451 million pounds at total cash costs of $1.75 per pound, reﬂ ecting six months of production from the Lumwana mine in Zambia. Adjusted net earnings increased by 33% to a record $4.7 billion while adjusted operating cash ﬂ ow increased by 8% to $5.7 billion, also a Company record. Total gold cash margins grew substantially, rising by 37% to nearly $1,120 per ounce, compared to a cost increase of 12% over the same period. Capturing the beneﬁ ts of margin expansion and strong operating results, Barrick achieved a return on equity of 22% in 2011. Strong ﬁ nancial results also allowed us to raise our quarterly dividend by 25%. In fact, the Company has increased its dividend by 170% over the past ﬁ ve years, maintaining our track record of paying a progressive dividend. These results also underscore the leverage to gold that Barrick offers its shareholders. Since the introduc- tion of the largest gold exchange traded fund seven years ago, gold prices have risen by around 260%. Over the same period, Barrick’s earnings per share have grown by nearly 900%1, while operating cash ﬂ ows per share have risen about 500%1. In 2011, we successfully replaced our gold reserves, which now stand at 140 million ounces, with an additional 80 million ounces in measured and indicated gold resources. Barrick also has 1.1 billion ounces of silver contained within gold reserves. We signiﬁ cantly increased copper reserves and resources through the acquisition of Equinox Minerals, complementing our existing copper business. Copper reserves nearly doubled from 6.5 billion pounds to almost 13 billion pounds, measured and indicated copper resources rose 17% to 15 billion pounds and inferred resources increased 117% to 20 billion pounds. Looking ahead, we see signiﬁ cant potential to grow copper reserves and resources at the Lumwana mine in Zambia, which is located in one of the most proliﬁ c copper regions of the world, and at the Jabal Sayid project in Saudi Arabia. Indeed, our investments in exploration are yielding excellent results. In September, we announced two major new gold discoveries, Red Hill and Goldrush, just six kilometers away from our world-class Cortez mine in Nevada. Mineralization at both Red Hill and Goldrush remains open in all directions, and drilling results indicate the two deposits are part of one large mineral- ized system. It is still early days, but results continue to suggest a high likelihood of major resource expansion. The quality of our portfolio and the Company’s ability to add additional value is another key driver of Barrick’s success. When you consider the assets we have acquired from other companies, Barrick has consistently added substantial value, in many cases doubling or even tripling the known reserves and resources. We have also used our technical expertise and the deepest talent pool in the gold industry to grow the value of our projects, improving designs and anticipated recovery rates to improve overall shareholder returns. In 2011, we made signiﬁ cant progress on two long- life, low cost projects. Our Pueblo Viejo project is expected to begin production in 2012, with Barrick’s share of average annual production expected to be 625,000 – 675,000 ounces of gold at total cash costs of $300 – $350 per ounce in its ﬁ rst full ﬁ ve years of operation. Based on a $1,600 gold price, Pueblo Viejo is expected to generate around $800 million in average annual EBITDA for Barrick over the same period. Similarly, we continue to make progress on our Pascua-Lama project on the border of Chile and Argentina. Once in production, Pascua-Lama will be one of the lowest cost gold mines in the world. This project is expected to begin producing in 2013, with average annual gold production of 800,000 – 850,000 ounces at negative total cash costs of $225 – $275 per ounce, assuming a $25 silver price, in its ﬁ rst full ﬁ ve years of operation. Based on a $1,600 gold price and a $30 silver price, this mine is expected to generate approximately $1.65 billion in average annual EBITDA for Barrick over this same period. 8 Barrick Annual Report 2011 | Message from the President and CEO Once Pueblo Viejo and Pascua-Lama are in pro duc tion, these two mines are expected to have a signiﬁ cant positive impact on Barrick’s overall production and cash cost proﬁ le. In 2011, we also advanced the Jabal Sayid project in Saudi Arabia, expected to enter production in the second half of 2012 with average annual production of 100 – 130 million pounds of copper at total cash costs of $1.50 – $1.70 per pound in its ﬁ rst full ﬁ ve years of operation. Looking further ahead, Barrick has a deep pipeline of next generation projects that offer signiﬁ cant development options for the future. Most importantly the Company has demonstrated its ability to success- fully convert its reserves and resources into world-class, producing mines. That expertise will serve our shareholders well, as we expect to increase gold, silver and copper production across the board. Barrick is targeting annual production of 9 million ounces of gold by 2016, along with a signiﬁ cant increase in silver production, from about 3 million ounces in 2011 to nearly 50 million ounces by 2016. Barrick’s copper production also has the potential to more than double by 2017, increasing to about 1 billion pounds. During the year, we also strengthened the Company’s social and environmental performance, as well as our human rights governance framework. Ongoing challenges with respect to security and human rights at the Porgera Joint Venture and the North Mara operation underscored the critical impor- tance of ensuring our practices on the ground live up to our policy commitments. Barrick was the ﬁ rst Canadian mining company to formally join the Voluntary Principles on Security and Human Rights, a leading international forum for governments, private business and non-governmental organizations who share a public commitment to uphold human rights. In 2011, we also laid the groundwork for the Company’s new Corporate Social Responsibility Advisory Board, which will hold its ﬁ rst meeting in 2012. This Board, made up of highly distinguished, leading international experts, will provide advice and guidance on challeng- ing social and environmental issues and encourage further innovation and leadership. Overall, the Company continues to demonstrate a strong track record of social and environmental performance. This is reﬂ ected by our listing on the world-leading Dow Jones Sustainability Index for the fourth consecutive year, as well as our inclusion on the NASDAQ Global Sustainability Index, which tracks the world’s top 100 companies in this area. In conclusion, we expect gold and copper prices will be well supported over the long term, underpinned by strong supply and demand fundamentals. With competitive operating costs and the industry’s largest gold production and reserves, and sizable copper production and reserves, Barrick is well positioned to be a major beneﬁ ciary of rising metal prices. This is reﬂ ected by the Company’s expanding margins and record earnings, which has allowed us to consistently increase our dividend. Looking ahead, we have a growing production base with two world-class projects nearing production, and a deep project pipeline, which provides us with future investment options. The success and the progress that we have achieved is a result of the efforts of the 25,000 people who work for this Company and I want to thank them for what they do for us every day. We truly believe Barrick is a symbol of value, and we intend to continue working every day to realize that value for our shareholders. Aaron Regent President and Chief Executive Ofﬁ cer 1. 2004 to 2011. Net earnings are on an adjusted basis with the exception of 2004. Operating cash ﬂ ow is on a US GAAP basis except 2009 – 2011 which are on an adjusted basis. 9 Operational Excellence results AGAINST A BACKDROP OF RECORD HIGH GOLD PRICES, Barrick recorded its most proﬁ table year ever. Our total cash margins broke through previous all-time highs, expanding by 37% to $1,118 per ounce1 from $819 per ounce in 2010 as we captured the beneﬁ t of rising gold prices and one of the lowest total cash costs among our senior peers. cash ﬂ ow to new Company records of $4.5 billion ($4.49 per share) and $5.3 billion, respec- tively, highlighting the strong leverage to gold prices that Barrick offers investors. The Company’s adjusted net earnings and operating cash ﬂ ow per share growth have signiﬁ cantly outpaced the rise in the gold price over the past seven years. Record cash margins drove 2011 net earnings and operating In 2011, adjusted net earnings rose 33% to $4.7 billion1 ($4.67 per share) from $3.5 billion ($3.56 per share) in 2010 and translated to a return on equity of 22%1, which surpassed the senior gold producer average return on equity of 14%2. The Company generated adjusted operating cash ﬂ ow of $5.7 billion1 and earnings before interest, taxes, depreciation and amortization (EBITDA) of $8.4 billion1. Barrick remained in a strong ﬁ nancial position with the gold “ Barrick’s strong ﬁ nancial results, combined with a positive outlook on the gold price, position the Company extremely well to continue investing in high return projects, pay a progressive dividend and pursue other value-enhancing opportunities.” Jamie Sokalsky, Executive Vice President and Chief Financial Ofﬁ cer 1. Non-GAAP ﬁ nancial measure – see pages 94–101 of the 2011 Financial Report. 2. Senior peers include Newmont, Goldcorp, Kinross, Newcrest, AngloGold and Goldﬁ elds. Based on 2011 adjusted net earnings except for Newcrest which is based on ﬁ scal H1 2012 annualized adjusted earnings. 10 Barrick Annual Report 2011 | Record Financial Results Net Ofﬁ cial Sector Gold Buying (tonnes) 440 There has been a major shift in central bank sentiment toward gold. Purchases in 2011 were more than ﬁ ve times 2010. 0 2004 2005 2006 2007 2008 77 2010 2011 0 2009 -34 -235 -365 -479 -484 -663 Source: GFMS, World Gold Council continue to: invest in high quality projects and other value- enhancing opportunities to grow and improve the quality of our asset portfolio for share- holders; prudently manage the balance sheet, repaying debt and maintaining strong credit ratings; and maintain our track record of paying a progressive dividend to shareholders. industry’s only ‘A’ credit rating, a 2011 year-end cash balance of about $2.7 billion and a ﬁ ve-year, $4.0 billion revolving credit facility, of which $3.0 billion was available as of February 2012. This ﬁ nancial strength, combined with a positive outlook on the gold price, has allowed the Company to raise its quarterly dividend by 25%3 to $0.15 per share in 2011, returning more capital to shareholders than ever before. Barrick has increased the dividend by about 170%4 in the last ﬁ ve years. And at the same time, we have continued to invest in high return projects such as the Cortez Hills expansion, which was completed in 2010, and the Pueblo Viejo and Pascua- Lama projects anticipated to come on stream in 2012 and 2013, respectively. This reﬂ ects our balanced approach to capital allocation. Our strategy is to Barrick’s adjusted net earnings and operating cash ﬂ ow per share growth have signiﬁ cantly outpaced the rise in the gold price over the past seven years 3. The declaration and payment of dividends remains at the discretion of the Board of Directors and will depend on the Company’s ﬁ nancial results, cash requirements, future prospects and other factors deemed relevant by the Board. 4. Calculated based on converting the 2006 semi-annual dividend of $0.11 per share to a quarterly dividend. 11 Operational Excellence excellence BARRICK’S PORTFOLIO OF ASSETS IS GEOGRAPHICALLY DIVERSE with 26 operating mines located in nine countries on ﬁ ve continents, which minimizes the concentration risk to any one country and lowers our overall risk proﬁ le. Our high quality portfolio of mines is a critical element in our consistent track record of meeting and beating operating targets. And we met our production and cash cost gold guidance in 2011 for the ninth straight year. In 2011, Barrick produced 7.7 million ounces of gold at total cash costs of $460 per ounce or net cash costs of $339 per ounce, within our original guidance. These results represent the largest gold production proﬁ le in the industry at the lowest total cash costs of any senior gold producer. The Company maintains a relentless focus on cost management strat- egies such as proactive currency and commodity risk management, continuous improvement and operation review team initiatives and supply chain management. Production from Barrick Energy also provides long-term natural offsets to changes in diesel fuel costs. Importantly, our 2011 overall cost proﬁ le beneﬁ ted from a full year of production from Cortez Hills and the addition of low cost ounces from Pueblo Viejo and Pascua-Lama will have a signiﬁ cant positive impact on total cash costs once these mines come on stream. Barrick continues to invest in new technology like this survey machine that takes thousands of GPS readings simultane- ously to build real-time 3D pit models. 12 Operational Excellence The Cortez mine in Nevada exceeded expectations in 2011 beneﬁ ting from the ﬁ rst full year of production from the Cortez Hills expansion. The North America region continued to be the largest contrib- utor with 3.4 million ounces, or 44% of total 2011 production, at total cash costs of $426 per ounce. Nevada remains the center of the region with two one-million- plus-ounce producers, Cortez and Goldstrike. In 2011, Goldstrike produced 1.1 million ounces at total cash costs of $511 per ounce. Cortez produced 1.4 million ounces at $245 per ounce, making it one of the largest low cost gold mines in the world, and it has excellent exploration upside from the Cortez Hills Underground Lower Zone. In 2011, the South America business unit produced 1.9 million ounces, or 24% of the Company’s production, at total cash costs of $358 per ounce. The Veladero mine in Argentina contributed 957,000 ounces of production at total cash costs of $353 per ounce and Lagunas Norte in Peru pro- duced 763,000 ounces at total cash costs of $269 per ounce. Cortez Hills blast technician Kaycee Williams programs electronic detonators in the open pit to ensure that blast speciﬁ cations are met. 1.4 million ounces produced at $ 245 per ounce makes Cortez one of the largest low cost gold mines in the world 13 Operational Excellence Lagunas Norte has shown an excellent record of reserve replacement with 6.2 M ounces at the end of 2011 after producing 6.9 M ounces Lagunas Norte has shown an excellent record of reserve replace- ment. Original reserves were 9.1 million ounces, and yet it still had reserves of 6.2 million ounces1 at the end of 2011 after producing 6.9 million ounces. Cumulative actual prod uction from both the Lagunas Norte and the Pierina mines has exceeded the cumulative feasibility estimates from their start-up to 2011 by total margins of 50% and 40%, respectively. The Australia Paciﬁ c region pro duced 1.9 million ounces, or 24% of total 2011 production, at total cash costs of $621 per ounce. The Porgera mine, the region’s largest operation, pro duced 500,000 ounces at total cash costs of $562 per ounce. The region hosts a number of established mines with opportu nities for mine life extensions. Barrick’s attributable pro duc tion from African Barrick Gold Plc (ABG) in 2011 was 509,000 ounces at total cash costs of $692 per ounce. Our copper business unit continued to generate signiﬁ cant cash ﬂ ow for reinvestment in our gold business. The acquisition of Equinox Minerals Ltd. (Equinox) in June 2011 added the large, long life Lumwana copper mine in Zambia. Combined with our existing Zaldívar mine in Chile, 2011 total copper production was 451 million pounds at total cash costs of $1.75 per pound. The Veladero mine in Argentina produced 957,000 ounces of gold at total cash costs of $353 per ounce in 2011. Lagunas Norte’s cumulative production through 2011 is 50% higher than the cumulative feasibility estimate at this low cost mine in Peru. 1. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 14 Zaldívar produced 292 million pounds of copper at total costs of $1.50 per pound. From June to December 2011, Lumwana pro- duced 159 million pounds at total cash costs of $2.24 per pound. Since acquiring Lumwana, we have been focused on operational initiatives such as dilution control, higher equipment availability and leveraging Barrick’s supply chain agreements. There are also opportunities for growth at the site, including an expansion that would potentially double process- ing rates. This expansion, combined with the Zaldívar sulﬁ des growth opportunity and production from Jabal Sayid, position Barrick to potentially grow copper production to about 1 billion pounds by 2017. The reclaim conveyor at the leach pad operates around the clock at the Zaldívar copper mine in Chile. Barrick Annual Report 2011 | Operational Excellence Barrick’s Competitive Cash Cost Proﬁ le Gold Industry Cash Cost Curve US $/oz $1,500 $1,000 $500 $0 -$500 0% Senior Peer 2011 Average Cash Costs $655 * Barrick 2011 Total Cash Costs $460 Pueblo Viejo $300 to $350 Pascua-Lama -$225 to -$275 25% 50% Source: GFMS Q4 2011 data; reported total cash costs (oz). Cumulative Production Kinross, Newcrest, AngloGold and Goldﬁ elds (senior peers). 75% * Based on weighted average of 2011 co-product cash costs for Newmont, Goldcorp, 100% Source: GFMS; Q4 2011 data including total cash costs based on information available end-February 2012. *Weighted average includes Newmont, Goldcorp, Kinross, AngloGold and Goldﬁ elds. 15 p j BARRICK’S STRONG CASH FLOW GENERATION has allowed it to continue to invest in high return projects, which will have a signiﬁ cant positive impact on the Company’s overall production and cash cost proﬁ le. Barrick has a rich legacy of adding value to its projects. With our global scale and deep talent pool, we have increased reserves and resources, improved project designs, and solved many technical challenges to realize upside. Our two large gold projects in construction, Pueblo Viejo and Pascua-Lama, possess key attributes of truly superior gold mines. Both have long lives well in excess of the average gold mine and are expected to contribute about 1.5 million ounces1 of low cost annual gold production to Barrick over the ﬁ rst full ﬁ ve years of operation. With these two pro jects as the main drivers, Barrick is tar get ing growth in The autoclave circuit at Pueblo Viejo houses four of the world’s largest vessels for pressure oxidation of sulﬁ de gold ores. This process, pioneered at Goldstrike, is an example of leveraging our technological expertise around the globe. 1. About 1.5 Moz of production is based on the estimated cumulative average annual production once both mines are at full capacity. 16 Barrick Annual Report 2011 | Investing in High Return Projects Dawn of a new mine in the Dominican Republic; Pueblo Viejo is scheduled to pour ﬁ rst gold in mid-2012. gold production to about 9 million ounces2 by 2016. Not only are these mines expected to drive production growth, but they also have tremendous cash ﬂ ow generating potential. At a $1,600 per ounce gold price and a $30 per ounce silver price, Pueblo Viejo and Pascua-Lama are anticipated to generate about $2.5 billion3 of average annual EBITDA for the Company in their ﬁ rst full ﬁ ve years of operation. Barrick’s 60%-owned Pueblo Viejo project in the Dominican Republic is expected to start pro- duction in mid-2012. In its ﬁ rst full ﬁ ve years of operation, Pueblo Viejo is anticipated to contribute average annual gold production of 625,000 – 675,000 ounces to Barrick at total cash costs of $300 – $350 per ounce4, which positions it in the ﬁ rst quartile of the global industry cash cost curve. With reserves of 25.3 million ounces5 (100% basis), of which almost 12 million ounces were added since Barrick acquired it in 2006, Pueblo Viejo has an estimated mine life of more than 25 years. As of January 2012, overall construction was about 90% complete and about 13 million tonnes of ore had been stockpiled. The oxygen plant is expected to undergo pre-commissioning testing in the ﬁ rst quarter of 2012, with pre-commissioning of the ﬁ rst two autoclaves in the second quarter. Construction of the transmission line connecting the site to the national power grid was completed by the end of 2011. As part of a longer-term, optimized power solution for Pueblo Viejo, the Company has started early works to construct a dual fuel power plant at an estimated incremental cost of approximately $300 million (100% basis). The power plant would commence operations utilizing heavy fuel oil, but has the ability to subsequently transi- tion to lower cost liquid natural gas. The new plant is expected to provide lower cost, long-term power to the project. At the Pascua-Lama project, on the border of Argentina and Chile, ﬁ rst production is expected in mid-2013. Average annual gold production is anticipated to be 800,000 – 850,000 ounces in its ﬁ rst full ﬁ ve years of operation at negative total cash costs of $225 – $275 per ounce6, based “ Pueblo Viejo and Pascua-Lama have key attributes of the highest quality gold mines – signiﬁ cant production, low cash costs and 25-year-plus mine lives. We look forward to them making a substantial positive impact on Barrick’s overall production and cash cost proﬁ le, as they near ﬁ rst production in 2012 and 2013.” Peter Kinver, Executive Vice President and Chief Operating Ofﬁ cer 2. The target of 9 Moz of gold production by 2016 reﬂ ects 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 existing mine site opportunities, some of which are sensitive to metal price and various capital and input cost assumptions. 3. Based on an oil price of $100/bbl and estimated cumulative average annual production once both mines are at full capacity. 4. Based on gold and oil price assumptions of $1,300/oz and $100/bbl, respectively. 5. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 6. Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz and $100/bbl, respectively, and assuming a Chilean peso f/x rate of 475:1. 17 Investing in High Return Projects Structural steel rises in Argentina to house the Merrill Crowe portion of the process circuit for Pascua-Lama. on a silver price of $25 per ounce, making it one of the lowest cost gold mines in the world. 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. Average annual silver production in its ﬁ rst full ﬁ ve years of operation is antic i pated to be about 35 million ounces. With gold reserves and silver contained in gold reserves of 17.9 million ounces7 and 676 million ounces7, respectively, Pascua-Lama has an estimated mine life of more than 25 years. As of January 2012, earth- works were about 95% complete in Chile and about 65% complete in Argentina. About 40% of the concrete has been poured at the processing facilities in Argentina and 15% of the structural steel is erected. More than 6,500 beds Earthworks for the crusher platform and truckshop are underway atop the Andes Mountains on the Chilean side of Pascua-Lama. 7. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 18 Barrick Annual Report 2011 | Investing in High Return Projects Overall construction was about 75% complete at the Jabal Sayid copper project in Saudi Arabia as of January 2012. were available at the end of 2011 and occupancy of the construc- tion camps is expected to reach full capacity of 10,000 beds in mid-2012. The acquisition of Equinox added the Jabal Sayid copper project in Saudi Arabia. Average annual copper production from Lodes 2 and 4 is expected to be 100 – 130 million pounds at total cash costs of $1.50 – $1.70 per pound over the ﬁ rst full ﬁ ve years of operation. As of January 2012, overall construction was about 75% complete and the operation is expected to enter production in the second half of 2012, subject to receipt of ﬁ nal approvals. Results from recent drilling beneath Lode 4 demonstrate the width of mineralization towards the base of the current resource model had been underestimated by lack of drilling. This area will be the focus of ongoing drilling and resource/ reserve upgrades and additions in 2012. NEXT GENERATION OF PROJECTS With 11 projects in prospective districts, Barrick has the industry’s deepest project pipeline. Since there have been few major discoveries over the last decade, a deep inventory of long life projects, like our pipeline, is a key strength. We have seven projects in various stages of feasibility, which will provide us substantial development options for the future. At the Cerro Casale gold-copper project in Chile, the Environmental Impact Assessment (EIA) permitting process is antici- pated to be completed by the end of 2012, after which Barrick will consider a construction decision, commencement of detailed engineering and sectoral permit- ting. Consultation with the government, local communities and indigenous groups is con- tinuing in parallel with permitting. Barrick’s 75% share of average annual production is anticipated to be 750,000 – 825,000 ounces of gold and 190 – 210 million pounds of copper in the ﬁ rst full ﬁ ve years of operation at total cash costs of $200 – $250 per ounce8. Our 50%-owned Donlin Gold project in Alaska is one of the largest undeveloped gold deposits in the world with measured and indicated resources of 39.0 million ounces9 (100% basis). Donlin is expected to produce an average of about 1.5 million ounces of gold in its ﬁ rst full ﬁ ve years of operation. The revised feasibility study has been completed and is expected to be accepted by the Board of Donlin Gold LLC in the ﬁ rst half of 2012. Our Kabanga nickel sulﬁ de project in Tanzania, a 50-50 joint venture with Xstrata Plc, has a compelling combination of high tonnage and good grade. Efforts continue to obtain and approve the EIA, Special Mining License and to negotiate a Mineral Development Agreement with the Tanzanian government by the end of 2012, at which point the partners are anticipated to make a construction decision. Our remaining four projects, the Turquoise Ridge open pit gold project, Lagunas Norte gold sulﬁ des, Zaldívar copper sulﬁ des and the Lumwana copper mine expansion are discussed in Surfacing Value. 8. Based on gold, copper and oil price assumptions of $1,300/oz, $3.25/lb and $100/bbl, respectively, and assuming a Chilean peso f/x rate of 475:1. 9. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 19 Operational Excellence value AT BARRICK, OUR STRATEGY IS FOCUSED ON INCREASING NET ASSET VALUE, production, reserves, earnings and cash ﬂ ow – all on a per share basis. Our objectives include: leveraging our competitive strengths to grow and improve the quality of our production base by maximizing the potential of our existing mines and land positions; developing high return projects; and investing in exploration and selective acquisitions. By executing on this strategy, we expect to grow our earnings and cash ﬂ ow per share and generate strong returns on capital. Barrick has a strong track record of surfacing value at its existing mines and projects. Regional and site teams remain incentivized to identify value creation opportunities. This has helped support our increase in gold production to a target of 9 million ounces by 2016, and has uncovered some exciting prospects, including the open pit 20 project at Turquoise Ridge, and a number of other expansions, which have the potential to add incremental production and/ or extend the mine lives at our existing operations. Operations support specialists are also contributing in a multitude of ways to enhance efﬁ ciency, production and recoveries at operating sites across our portfolio. For example, at the Goldstrike operation in Nevada, our metallur- gists have been successful in piloting a thiosulphate leaching process after the autoclave process that enables treatment of mixed carbonaceous material that would otherwise go through the roaster later in the mine life. We expect this proprietary technology to extend the life of the autoclaves and help support production rates at Goldstrike. We have permits for the facility and expect to begin construction in 2012. Start-up is expected in the fourth quarter of 2013. At the 75%-owned Turquoise Ridge mine in Nevada, work advanced in 2011 on the potential to develop a large scale open pit to mine the lower grade halo around the high grade underground ore, which could substantially increase annual production from 2011 levels of approximately 180,000 ounces (100% basis). As of February 2012, 12 drill rigs are active on the property and the focus of the open pit drilling is on upgrading resources. Additionally, surface drilling has intersected new mineralization, particularly in the shallower south area of the planned pit, which could positively impact economics. Underground drilling is also yielding strong results, intersecting higher grades than expected in some areas, and zones are open up-dip and to the northwest. Work in 2012 will focus on resource conversion, mine planning, environmental data collection, geotechnical and hydrologic evaluation, and metallurgical and trade-off studies for processing as part of the prefeasibility study, which Metallurgists have been successful in piloting a thiosulphate leaching process at Goldstrike in Nevada, which is expected to extend the life of the autoclave circuit. Barrick Annual Report 2011 | Surfacing Value is expected to be completed by the end of 2012. One processing option being evaluated is the construction of a rail link to the Goldstrike facilities and we plan to complete rail engineering as part of the prefeasibility study. This option has the potential for a number of resultant beneﬁ ts. For example, the link could lower project capital costs while further leveraging our existing infrastructure at Goldstrike and would also have the beneﬁ t of lowering freight costs on the bulk consumables used at the Goldstrike mine. At the Lagunas Norte mine in Peru, work is advancing on an opportunity to add substantial gold production, which could extend the mine life by treating mineralized material from below the current ﬁ nal pit. The scoping work has been completed and the project is undergoing metallurgical and geotechnical work as part of a prefeasibility study with anticipated completion by the end of 2012. At the Zaldívar copper mine in Chile, a scoping review on the treatment of primary sulﬁ de Ore from Lagunas Norte in Peru will undergo metallurgical test work in this scale pressure oxidation circuit at the Barrick Technology Center as part of the prefeasibility study expected to be completed by the end of 2012. material has been completed, which indicates copper production could potentially increase signiﬁ cantly with the addition of a 140,000 tonnes per day concentrator. A total of 68,000 meters of exploration drilling has been completed on the primary sulﬁ de material, which sits below the current life of mine open pit. There is the potential to add signiﬁ cant resources and extend the life of the operation with deep sulﬁ de potential at depth. We expect to complete a prefeasibility study by the end of 2012. In Zambia, a prefeasibility study on an expansion at the Lumwana mine is expected to be completed by year-end 2012. The expansion could potentially double processing rates to 50 million tonnes per year. potentially double processing rates to50 M tonnes per year Expansion at Lumwana could 21 Operational Excellence success EXPLORATION IS AN INTEGRAL PART OF OUR OVERALL STRATEGY, and has a compelling value propo- sition for us. Barrick’s Exploration team has a measured and disciplined approach to monitoring and exploring for ﬂ agship deposits. Secondly, we explore near our existing assets and also look for new deposits in our Regions which have the potential to materially grow our production proﬁ le. We have consistently funded explo ration1 over the years and our efforts have paid off. Since 1990, we have mined about 118 million ounces of gold, acquired 110 million ounces and we have found 148 million ounces of gold through exploration. In fact, since 1990, we have spent about $2.5 billion on exploration for a low overall ﬁ nding cost of approximately $17 per ounce. One of Barrick’s strengths is our ability to identify and deliver new ounces following any acqui- sition. Through our effective collaboration with the Regions, and the Corporate Development and Evaluations team, we have a remarkable track record in realizing upside. There is not a single acquisition we have made, where “ In 2011, we announced two new major gold discoveries in Nevada, Red Hill and Goldrush, in close proximity to our exceptional Cortez mine. Drilling results continue to expand mineralization and show they merge into a single deposit. Undoubtedly, these discoveries are the most exciting I have seen in my 25-plus-year career and our Exploration team looks forward to providing our shareholders with progress updates and resource expansions as we focus our efforts on this district in 2012.” Rob Krcmarov, Senior Vice President, Global Exploration 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. 22 Since the announcement of the Red Hill and Goldrush discoveries in 2011, drilling has conﬁ rmed that the two deposits merge and also continues to grow the potential at this greenﬁ eld discovery. we have not gone on to subse- quent ly add substantially to reserves and resources, and we expect to do the same at the Lumwana copper mine in Zambia, which was acquired with the Equinox transaction. As a result of exploration success in 2011, which contributed to the reserve and resource devel- opment, as well as opportu nities within our portfolio, the 2012 budget has increased to $450 – $490 million, the highest in the Company’s history. The budget is weighted towards near-term resource additions and conversion at existing mines while still pro- viding support for earlier stage exploration in operating districts and other emerging areas. North America is expected to be allocated Barrick Annual Report 2011 | Exploration Success History of Gold Reserve Growth Proven and probable – millions of ounces 140 Moz 20 Moz 0 0 9 9 1 20 DIVESTED 118 TOTAL MINED 110 TOTAL ACQUIRED 148 TOTAL EXPLORATION 0 1 1 0 2 Acquisition Exploration about 45% of the total budget, the majority of which is targeted for Nevada. Barrick’s Nevada land holdings are strategically located on three well-established and producing gold trends. About 20% is expected to be spent in the Australia Paciﬁ c region and about 20% for copper in Zambia. Approx imately 10% will be targeted for the South America region with the remainder for ABG. In Nevada, recent drilling continues to grow the potential at Red Hill and Goldrush. As of year-end 2011, a resource of approximately 1.3 million ounces2 at Red Hill was calculated in the indicated category and about 3.3 million ounces2 in the inferred category and the resource remains open in multiple directions. Step-out holes have intersected mineralization a further 2,800 feet Members of the Red Hill and Goldrush discovery team from left, Alejandro Ly, Project Geologist; Kevin Creel, Chief Exploration Geologist, Cortez; and Mark Bradley, District Geologist. 2. See pages 181–188 of the 2011 Annual Report for additional information on reserves and resources. 23 At Lumwana, activity has been ramped up with 17 drill rigs on the property focusing on resource deﬁ nition drilling at the Chimiwungo deposit to convert inferred resources into the indicated category and step-out drilling to the south and east to extend the mineralization. Drilling to date has conﬁ rmed the thickened eastern shoot of Chimiwungo and selected highlights include 44 meters grading 1.00% copper, 44 meters at 1.07%, 41 meters at 0.80%, 37 meters at 0.91% and 20 meters at 1.60%. In addition to these strong results within the resource area, drilling further to the east is intersecting shallower than expected mineralization. Exploration Success New Discovery Mineralized Deposit Current Producer Former Producer Gold Acres CORTEZ PIPELINE C R E S C E N T V A L L E Y Cortez Pits C O R T E Z M O U N T A I N S CORTEZ HILLS Horse Canyon RED HILL 0 miles 2 4 6 8 10 GOLDRUSH ET Blue A total of 468,000 feet of drilling is planned at Red Hill and Goldrush in 2012 to test the full extent of the mineralized system and further expand and upgrade the resource base and a scoping study has commenced. A signiﬁ cant drilling program is planned for Red Hill and Goldrush in 2012 to test the full extent of the system and further expand and upgrade the resource base. north beyond the initial 2010 resource as well as extended mineralization at least 1,000 feet to the southwest. Selected high- lights of major step-out drilling include 90 feet at 0.15 ounces per ton (opt), 120 feet at 0.32 opt, 20 feet at 1.18 opt, and 110 feet at 0.12 opt. Inﬁ ll drilling between the deposits has shown that Red Hill and Goldrush merge into a single deposit. A small portion of the Goldrush deposit had sufﬁ cient drill density to report an initial inferred resource of about 2.5 million ounces. The step-out drilling results continue to suggest a high likelihood of major resource expansion. 24 Barrick Annual Report 2011 | Exploration Success At the Lumwana mine in Zambia, the Chimiwungo deposit is undergoing an aggressive drill program, which will focus on resource deﬁ nition to upgrade resources and step-out drilling to the south and east to extend the mineralization. For the sixth year in a row, Barrick replaced proven and probable gold reserves to about 140 million ounces at the end of 2011 and also has measured and indicated gold resources of 80 million ounces and inferred gold resources of 40 million ounces. Copper reserves nearly doubled from 6.5 billion pounds to 12.7 billion pounds, measured and indicated copper resources rose 17% to 15.3 billion pounds, and inferred copper resources increased 117% to almost 20 billion pounds with the addition of Lumwana and Jabal Sayid. Reserves and Resources Summary at December 31, 2011 (Barrick’s equity share) Gold (000s oz) North America South America Australia Paciﬁ c Africa Other Other Metals Copper (M lbs) Nickel (M lbs) Proven and Probable Reserves Measured and Indicated Resources Inferred Resources 139,931 59,041 52,775 15,429 12,633 53 12,693 – 80,399 47,354 10,329 15,810 6,893 13 15,288 1,080 40,183 17,362 6,471 13,141 3,208 1 19,866 596 Other Metals Contained in: Proven and Probable Gold Reserves Measured and Indicated Gold Resources Inferred Gold Resources Silver (000s oz) Copper (M lbs) 1,067,515 5,768 249,974 1,330 64,018 1,652 25 Operational Excellence g AT BARRICK, WE RECOGNIZE THAT EXPECTATIONS of business and the mining industry have changed signiﬁ cantly over the past decade and will continue to evolve. Within this dynamic context, Barrick is well-positioned for success. Responsible mining is a company-wide priority and central to our business strategy. We conduct our activities to high operational, social, environmental and safety standards, implementing per- formance management systems that are aligned with rigorous international standards. We are continually reﬁ ning and strengthening our approach and practices across a wide range of functional areas, and challenging ourselves to further improve. Our goal is to create mutual beneﬁ ts, both for our Company and our host countries and communities. We do this by engaging proactively with our stakeholders and pursuing collaborative partnerships with communities, governments and non-governmental organizations (NGOs). This approach helps ensure we maintain our ability to operate and are a trusted member of the community wherever we operate around the world. “ Barrick is a trusted, responsible partner in the locations where we operate. We collaborate with communities, governments and others to share the opportunities associated with our business and contribute positive beneﬁ ts. We meet high performance standards and address industry issues in a responsible way. This approach helps us maintain our ability to operate on ﬁ ve continents and positions us for continued success.” Kelvin Dushnisky, Executive Vice President, Corporate and Legal Affairs 26 Barrick Annual Report 2011 | Focus on Responsible Mining Barrick’s Pueblo Viejo project in the Dominican Republic practices concurrent reclamation and hired a local women’s coopera- tive to make biodegradable coconut ﬁ ber mats for soil erosion control. For 4 consecutive years, Barrick has been ranked a global leader in corporate social responsibility by the Dow Jones Sustainability World Index Performance Recognized In 2011, the Company made progress in such areas as commu- nity relations, environmental management, security and human rights, and stakeholder engage- ment, and we are pleased these efforts have been recognized. For the fourth consecutive year, Barrick was named as a world leader in Corporate Social Respon- sibility (CSR) by the Dow Jones Sustainability World Index. The Company is also ranked among the top 100 companies worldwide by the NASDAQ Global Sustainability Index. In Canada, Barrick was named a Carbon Disclosure Leader and our Hemlo operation received a special Towards Sustainable Mining leadership award from the Mining Association of Canada. Barrick also received several awards for CSR leadership in such countries as Chile, the Dominican Republic and Peru. Enhancing Expertise and External Input Barrick recently established an external CSR Advisory Board and named ﬁ ve distinguished individuals with broad-ranging expertise to serve as inaugural members. The Advisory Board will provide input and advice on complex social, political and environmental issues affecting the mining industry and Barrick. It will serve as a sounding board to Barrick management, providing insights on best practices and inform Barrick’s programs and future practices. In 2011, the Company also appointed international economist and author Dr. Dambisa Moyo to serve as an Independent Director on the Company’s Board of Directors. Dr. Moyo brings a strong command of emerging markets, particularly in sub-Saharan Africa, and expertise in economic development. Paul Meela of African Barrick Gold visits some of the 700 students sponsored by the Canadian charity CanEducate to attend secondary school in Tanzania. CanEducate was created by corporate ofﬁ ce employees who were inspired by Barrick’s support for educational initiatives. In Zambia, local farmers participate in the Lumwana Agri Food Innovator project. Graduates gain skills to move from subsistence farming to productive commercial agriculture and have access to funds for modern equipment. Respect for Human Rights In 2011, Barrick reafﬁ rmed its global commitment to human rights and enhanced the Company’s global human rights compliance program. Barrick adopted a new corporate human rights policy that sets out clear expectations for all employees, contractors and third-party suppliers. Mandatory human rights training and new reporting procedures are also being implemented. The Company has engaged third-party experts to conduct human rights assessments at all sites and projects over a three-year period, prioritizing higher risk operations. These measures reinforce Barrick’s zero tolerance policy toward human rights violations worldwide. 27 Focus on Responsible Mining Community Investments and Partnerships Barrick’s community investments continue to add signiﬁ cant value by collaborating with local stakeholders to identify their most important needs and priorities. We recognize that by aligning with strategic partners on programs and initiatives our efforts can have a greater impact and create sustainable beneﬁ ts. In 2008, Barrick established the Atacama Commitment, an alliance of Chilean NGOs, the UN Global Compact and government partners, which aims to improve social conditions and alleviate poverty in the Atacama region of Chile. In 2011, the beneﬁ ts of this In Australia, the Company’s long- standing partnership with the Wiradjuri indigenous community recently achieved an important milestone with the opening of the new Wiradjuri Studies Center. alliance continued and included the opening of a new rehabilitation center for children with disabilities, construction of a major housing project and the introduction of computer technology to schools in the region. The Center will provide a range of cultural and training courses to assist this community in achieving its aspirations. In Nevada, Barrick provides ﬁ nancial support to the state’s colleges and universities and partners on skills training. The Company also funds college scholarships and has a special scholarship program for Western Shoshone students in six Native American communities. In Tanzania in 2011, African Barrick Gold (ABG) launched the Maendeleo Fund, with an annual budget of $10 million, to beneﬁ t communities at ABG’s four operations. This includes the communities surrounding the North Mara mine, where ABG is implementing a comprehensive strategy that responds to recent challenges and aims to improve conditions for local residents. 28 A researcher at a tree frog hatchery near Pueblo Viejo; Barrick is funding a $2 million biodiversity project to study and protect several rare tree frog species. Effective Government Relations In every country where Barrick operates, an effective government relations program is essential to our ability to convert discoveries into new projects and operating mines. Barrick dedicates signiﬁ cant resources toward building strong relationships with governments, regulators and public policymakers that underscore the merits of our projects and our role as a partner in responsible mineral develop- ment. These activities help us to secure necessary approvals and stability agreements, negotiate permit requirements and acquire project ﬁ nancing in a timely man- ner. They also allow us to manage risks more effectively throughout the life of our operations. The President of the Dominican Republic, H.E. Leonel Fernández, addresses Pueblo Viejo employees during a recent ofﬁ cial tour of the project. Barrick Annual Report 2011 | Focus on Responsible Mining Barrick Annual Report 2011 | 2011 Highlights Consistent Global Performance When stakeholders engage with Barrick around the world, we want to ensure their experience is consistent, professional and aligned with international best practices. In 2011, the Company approved a new Community Relations Policy and ﬁ nalized a Community Rela- tions Management System (CRMS), which sets out a systematic approach to community relations, outlines minimum performance requirements, and provides sites with tools and procedures to tailor strategies to reﬂ ect the local context. The new CRMS joins existing Company performance management systems, including in environment, and safety and health. In 2012, we will continue the implementation of the CRMS, and conduct audits at higher risk sites to evaluate our perfor- mance and progress. ENVIRONMENTAL STEWARDSHIP Barrick is committed to protecting the environment for present and future generations. From explora- tion to mine closure, responsible environmental management is the basis of our operational approach. Meeting International Standards Barrick’s Environmental Management System (EMS) is aligned with inter - national standards. These include the International Council on Mining and Metals (ICMM) Framework for Sustainable Development, the International Cyanide Management Code and ISO 14001. To date, the EMS has been implemented at 21 mines and full implementation at all sites is expected in 2012. In 2011, the North America region achieved ISO 14001 certiﬁ ca- tion, which, along with our South American operations, is the second of our regional business units to have its operations certiﬁ ed. This internationally recognized standard for environmental management systems is now being pursued in the Australia Paciﬁ c region, where our Porgera mine is expected to be certiﬁ ed in 2012. Barrick is a leading advocate of the International 29 Focus on Responsible Mining Barrick’s $50 million Punta Colorada wind farm in northern Chile is the largest ever built by a mining company in the country. It consists of 10 turbines that generate 20 megawatts of power. 2008, Barrick has made improve- ments to water management at all of its operations, ensuring water is used wisely and managed as a community resource. All Barrick mines engage in recycling and reuse of water. The Water Conservation Standard allows for monitoring of water recycling and reuse and im- provement of these practices across our operations. We have developed expertise in using saline water, maxi- mizing availability of fresh water for other community users. In 2011, approximately 30% of our water intake was brackish or saline. To promote transparency and under- standing of industrial water use, Barrick continued its participation in the Water Disclosure Project. Environmental Leadership from Within We believe that each of our em- ployees can impact the environ ment in a positive way. All employees, whether in a mine site or an ofﬁ ce, are encouraged to ﬁ nd innovative ways to reduce, reuse and recycle, and play leadership roles in envi- ronmental stewardship. Through Barrick’s environmental awards, we recognize employees who do more than is otherwise required in their job responsibilities to protect the environment. Cyanide Management Code and has achieved certiﬁ cation or re- certiﬁ cation at 22 of its 23 mines that use cyanide. Our 23rd opera- tion is expected to be certiﬁ ed in 2012. We continue to address industry-wide issues in areas such as water conservation and climate change, engaging proactively with our stakeholders. We comply with government regulations in these areas and have also developed stringent internal performance standards for water conservation, biodiversity, climate change, closure and incident reporting, as a pre- ventative measure and to meet our goal of consistent performance at all locations. Reducing Carbon Footprint We are motivated to do our part to reduce our carbon footprint. Barrick’s Climate Change Standard focuses on improving energy efﬁ ciency and reductions in greenhouse gas (GHG) intensity. In 2011, Barrick completed more than 40 new projects to reduce its energy and GHG footprint. These projects, combined with existing projects, helped reduce GHG emissions by 231,276 tonnes over business as usual. We recorded a 4.1% improvement in energy efﬁ ciency in 2011 and a 4.7% improvement in GHG efﬁ ciency, exceeding our targets of 3.8% and 4.3%, respectively. Barrick is continuing its efforts to use more renewable energy. In 2011, we inaugurated the Punta Colorada wind farm, the largest wind farm ever built by a mining company in Chile. Its 10 wind turbines generate 20 megawatts of power, enough to supply the energy needs of 10,000 families. Barrick’s renewable energy projects also include a one megawatt solar farm in Nevada and a wind turbine near its Veladero mine in Argentina that supplies up to 10% of the mine’s electricity needs. Sustainable Water Use Water is essential to mining and a scarce resource in many regions of the world. Since establishing a Water Conservation Standard in Veladero’s wind turbine supplies up to of the mine’s electricity needs 10% 30 Barrick Annual Report 2011 | Focus on Responsible Mining SAFETY AND HEALTH Barrick continues its commitment to ensuring that every person goes home safe and healthy every day. The Courageous Leadership train- ing program remains a cornerstone of our safety and health approach. More than 32,000 employees and contractors have taken this course since it was established in 2004. For 2011, the Company achieved a total reportable incident frequency rate of 0.92*, a 1% improvement over the previous year. Throughout the year, safety improvement efforts focused on analyzing potentially serious near- miss incidents to determine and address causes. Driving incidents have typi- cally been the top cause of safety incidents. For several years, Barrick has conducted safe driver training using simulators and online training programs. In 2011, we completed the installation of driver monitors in the cabs of company vehicles on all sites. These devices track and coach operators on their driving behaviors, including speeding, and notify a supervisor if the behavior is not corrected. This program has helped reduce driving incidents by 68% compared to 2010. The second most common risk has been ground falls. In 2011, Participants in the Global Mine Rescue Summit held in Nevada take a break from ﬁ re-ﬁ ghting and rescue simulations. Barrick safety, operations and technical experts collaborated on development of a new Ground Control Standard, which prescribes safety measures to prevent ground falls and avoid injuries. This has now been issued to all sites where implementation and training of personnel is well underway. A highlight for safety staff was the Barrick Global Mine Rescue Summit in September, which brought together mine rescue team members from around the world to receive advanced professional training in ﬁ re-ﬁ ghting, medical aid and team building. While Barrick strives to achieve zero incidents, we also maintain a high degree of emer- gency preparedness. Our rescue teams are among the best trained and best equipped anywhere. They are often called upon to assist with non-Barrick emergen- cies in nearby communities. We are proud to lend our assistance and expertise when needed, and salute the commitment of rescue team members everywhere. * Total reportable incident frequency rate (TRIFR) is a ratio calculated as follows: number of incidents x 200,000 hours divided by the total number of hours worked at that site. Incidents are deﬁ ned as any injury that requires treatment, even if the worker does not lose time from work. 31 Management’s Discussion and Analysis Financial Report Management’s Discussion and Analysis 33 Financial Statements 107 Notes to Consolidated Financial Statements 112 Mineral Reserves and Resources 181 Corporate Governance and Committees of the Board 189 Shareholder Information 190 Board of Directors and Senior Ofﬁcers 192 32 Barrick Financial Report 2011 | 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, ﬁ nancial performance and present and future business environment. This MD&A, which has been prepared as of February 15, 2012, should be read in conjunction with our audited consolidated ﬁ nancial statements for the year ended December 31, 2011. 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 signiﬁ cant 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) it would signiﬁ cantly alter the total mix of information 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 ﬁ nancial 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 102. Cautionary Statement on Forward-Looking Information Certain information contained or incorporated by reference in this MD&A, including any information as to our strategy, project plans or future ﬁ nancial 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 the Company, are inherently subject to signiﬁ cant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: ﬂ uctuations 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 ﬂ ows and the values of assets and liabilities based on projected future cash ﬂ ows; ﬂ uctuations in the currency markets (such as Canadian and Australian dollars, Chilean and Argentinean peso, British pound, Peruvian sol, Zambian kwacha and 33 Management’s Discussion and Analysis 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 in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Chile, Peru, Argentina, Tanzania, Zambia, Saudi Arabia, 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, the Company; our ability to successfully integrate acquisitions; operating or technical difﬁ culties in connection with mining or development activities; employee relations; availability and increased costs associated with mining inputs and the construction of capital projects; litigation; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or reserve grades; adverse changes in our credit rating; contests over title to properties, particularly title to undeveloped properties; and the organization of our previously held African gold operations and properties under a separate listed company. 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, ﬂ ooding 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 qualiﬁ ed by these cautionary statements. Speciﬁ c reference is made to the most recent Form 40-F/Annual Information Form on ﬁ le with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Changes in Presentation of Non-GAAP Financial Performance Measures We use certain non-GAAP ﬁ nancial 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 94 of our MD&A. Adjusted Operating Cash Flow before Working Capital Changes Starting in this MD&A, we are introducing “Adjusted operating cash ﬂ ow before working capital” as a non- GAAP measure. We present adjusted operating cash ﬂ ow before working capital changes as a measure which excludes working capital changes from adjusted operating cash ﬂ ow. Management uses adjusted operating cash ﬂ ow before working capital as a measure internally to evaluate the Company’s ability to generate cash ﬂ ows from its mining operations. 34 Adjusted Operating Cash Flow We have adjusted our adjusted operating cash ﬂ ow to remove the effect of one time withholding tax payments and acquisition costs and working capital adjustments related to acquisitions. These items are not reﬂ ective of the underlying capacity of our operations to generate operating cash ﬂ ow and therefore this adjustment will result in a more meaningful operating cash ﬂ ow measure for investors and analysts to evaluate our performance in the period and assess our future operating cash ﬂ ow generating capability. Adjusted Net Earnings In 2011, we updated our adjusted net earnings measure to include the removal of the impact of changes in the discount rate on the measurement of the provision for environmental rehabilitation at our closed sites. This adjustment will result in a more meaningful measure of adjusted net earnings for investors and analysts to assess our current operating performance and to predict future operating results. Barrick Financial Report 2011 | Management’s Discussion and Analysis Index 36 Financial and Operating Highlights 36 2011 Fourth Quarter and Year-End Results 38 Business Overview 45 Outlook for 2012 49 Strategy, Key Risk Factors and Market Review 49 Our Strategy 49 Capability to Execute our Strategy 53 Market Review 59 Financial and Operating Results Summary of Financial Performance Summary of Operating Performance 59 61 65 Mineral Reserves and Mineral Resources Update 65 Review of Operating Segments Performance 73 Financial Condition Review 73 Balance Sheet Review 75 77 79 Commitments and Contingencies Liquidity and Cash Flow Financial Instruments 80 Review of Quarterly Results 81 International Financial Reporting Standards (IFRS) 88 IFRS Critical Accounting Policies and Estimates 94 Non-GAAP Financial Performance Measures 102 Glossary of Technical Terms 35 Management’s Discussion and Analysis Financial and Operating Highlights1 2011 Fourth Quarter and Year-End Results ($ millions, except where indicated) 2011 2010 2011 2010 For the three months ended December 31 For the years ended December 31 Financial Data Revenue Net earnings2 Per share (“EPS”)3 Adjusted net earnings4 Per share (“adjusted EPS”)3,4 EBITDA4 Capital expenditures Operating cash ﬂ ow Adjusted operating cash ﬂ ow4 Adjusted operating cash ﬂ ow before working capital changes4 Free cash ﬂ ow4 Cash and equivalents Adjusted debt4 Net debt4 Return on equity4 Operating Data Gold Gold produced (000s ounces)5 Gold sold (000s ounces) Realized price ($ per ounce)4 Net cash costs ($ per ounce)4 Total cash costs ($ per ounce)4 Copper Copper produced (millions of pounds) Copper sold (millions of pounds) Realized price ($ per pound)4 Total cash costs ($ per pound)4 $ 3,789 959 0.96 1,166 1.17 1,998 1,320 1,224 1,299 1,405 68 $ 3,011 961 0.97 1,018 1.02 1,770 1,311 866 1,522 2,044 327 20% 22% 1,814 1,865 $ 1,664 $ 382 $ 505 143 135 $ 3.69 $ 1.99 1,700 1,831 $ 1,368 $ 278 $ 440 82 103 $ 3.99 $ 1.08 $ 14,312 4,484 4.49 4,666 4.67 8,376 4,973 5,315 5,680 5,819 1,082 2,745 13,058 $ 10,320 22% 7,676 7,550 $ 1,578 339 $ 460 $ 451 444 $ 3.82 $ 1.75 $ 11,001 3,582 3.63 3,517 3.56 6,521 3,778 4,585 5,241 5,242 1,870 3,968 6,392 $ 2,427 20% 7,765 7,742 $ 1,228 293 $ 409 $ 368 391 $ 3.41 $ 1.10 1. The amounts presented in this table include the results of discontinued operations. 2. Net earnings represent net income attributable to the equity holders of the Company. 3. Calculated using weighted average number of shares outstanding under the basic method. 4. Adjusted net earnings, adjusted EPS, EBITDA, adjusted operating cash flow, adjusted operating cash flow before working capital changes, 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 definition under IFRS. For further information and a detailed reconciliation, please see pages 94–101 of this MD&A. 5. Production includes our equity share of gold production at Highland Gold. Fourth Quarter Financial and Operating Highlights  Net earnings for the fourth quarter were $959 million, which is in line with net earnings in the prior year period. This reﬂ ects the impact of impairment charges and investment write-downs totaling $187 million, one-time tax charges totaling $75 million, and higher gold and copper cost of sales, partially offset by higher gold and copper sales volumes and higher realized gold prices.  Adjusted net earnings for the fourth quarter were $1,166 million, up 15% over the prior year period. The increase primarily reﬂ ects higher realized gold prices and higher gold and copper sales volumes, partially offset by higher gold and copper cost of sales and higher income tax expense.  EPS and adjusted EPS for the fourth quarter were $0.96 and $1.17, respectively, down 1% and up 15%, respectively, over the prior year period. The changes reﬂ ect the decrease in net earnings and increase in adjusted net earnings, respectively. 36  EBITDA for the fourth quarter was $1,998 million, up 13% over the prior year period, reﬂ ecting the same factors affecting net earnings, except for income tax expense.  Operating cash ﬂ ow for the fourth quarter was $1,224 million, up 41% over the prior year period. The increase in operating cash ﬂ ow primarily reﬂ ects payments related to the settlement of gold sales contracts of $656 million in 2010, partially offset by lower net earnings and a one-time withholding tax payment of $75 million in 2011.  Adjusted operating cash ﬂ ow for the fourth quarter was $1,299 million, down 15% from the prior year period. The decrease in adjusted operating cash ﬂ ow reﬂ ects lower net earnings and higher income taxes paid. Adjusted operating cash ﬂ ow before working capital adjustments was $1,405 million, down $639 million from the prior year period.  Capital expenditures for the fourth quarter were $1,320 million, up 1% over the prior year period. The increases largely reﬂ ect higher project capital and minesite expansion expenditures.  Gold production for the fourth quarter was 1.8 million ounces, up 7% over the prior year period. Gold production increased primarily due to increases in production in North America and South America, partially offset by decreased production in ABG.  The realized gold price for the fourth quarter was $1,664 per ounce, up 22% over the prior year period, principally reﬂ ecting higher market gold prices.  Gold total cash costs for the fourth quarter were $505 per ounce, up 15% over the prior year period. The increase reﬂ ects increased direct mining costs, including higher labor, energy, maintenance and consumable costs.  Net cash costs for the fourth quarter were $382 per ounce, up 37% over the prior year period, primarily due to higher total cash costs and lower copper credits.  Copper production for the fourth quarter was 143 million pounds, up 74% over the prior year period, primarily due to the inclusion of production from Lumwana, which was acquired as part of the acquisition of Equinox on June 1, 2011.  Realized copper prices for the fourth quarter were $3.69 per pound, down 8% from the prior year period, primarily due to lower market copper prices. Barrick Financial Report 2011 | Management’s Discussion and Analysis  Copper total cash costs for the fourth quarter were $1.99 per pound, up 84% over the prior year period. The increase was primarily due to the inclusion of higher cost production from Lumwana in the mix, which was acquired as part of the acquisition of Equinox on June 1, 2011. Total cash costs were also higher due to higher direct production costs and lower production levels at Zaldívar. Full Year Financial and Operating Highlights  Net earnings for 2011 were $4,484 million, up 25% over the prior year. The increase reﬂ ects higher realized gold and copper prices and higher copper sales volumes, partially offset by higher gold and copper cost of sales, lower gold sales volumes, impairment charges and investment write-downs, as well as higher income tax expense.  Adjusted net earnings for 2011 were $4,666 million, up 33% over the prior year. The increase primarily reﬂ ects higher realized gold and copper prices and higher copper sales volumes, partially offset by higher gold and copper cost of sales, lower gold sales volumes and higher income tax expense.  EPS and adjusted EPS for 2011 were $4.49 and $4.67, respectively, up 24% and 31%, respectively, over the prior year. The increases for the year reﬂ ect the increases in both net earnings and adjusted net earnings.  EBITDA for 2011 was $8,376 million, up 28% over the prior year. The increase in EBITDA reﬂ ects the same factors affecting net earnings, except for income tax expense.  Operating cash ﬂ ow for 2011 was $5,315 million, up 16% over the prior year. The increase in operating cash ﬂ ow was primarily due to higher net earnings, partially offset by higher income tax payments, including tax payments totaling about $480 million made in 2011 related to the ﬁ nal 2010 income tax liability.  Adjusted operating cash ﬂ ow for 2011 was $5,680 mil- lion, up 8% over the prior year. Adjusted operating cash ﬂ ow increased for the same reasons as operating cash ﬂ ow. Adjusting items in 2011 include: one-time costs related to the Equinox acquisition of $204 million and withholding tax payments of $161 million. Adjusted operating cash ﬂ ow before changes in working capital was $5,819 million, up 11% over the prior year. 37 Management’s Discussion and Analysis  Capital expenditures were $4,973 million, up 32% over the prior year. Capital expenditures attributable to Barrick for 2011 were $4,598 million, up 36% over the prior year. The increase reﬂ ects higher project capital expenditures and an increase in minesite expansion, minesite sustaining and open pit and underground development expenditures.  Gold production for 2011 was 7.7 million ounces, down slightly from the prior year. Gold production decreased for the year primarily due to decreases in production in South America, Australia Paciﬁ c and ABG, partially offset by increased production in North America.  Realized gold prices for 2011 were $1,578 per ounce, up 29% over the prior year, principally as a result of higher market gold prices.  Gold total cash costs for 2011 were $460 per ounce, up 12% over the prior year. The increase reﬂ ects higher direct mining costs, particularly higher labor, energy, maintenance and consumable costs, as well as the impact of lower production levels in South America, our lowest cost RBU, which resulted in higher consolidated unit production costs, partially offset by an increase in capitalized production phase stripping costs.  Net cash costs for 2011 were $339 per ounce, up 16% over the prior year, primarily due to higher total cash costs.  Copper production for 2011 was 451 million pounds, up 23% over the prior year, primarily due to the inclusion of production from Lumwana which was acquired as a result of the acquisition of Equinox on June 1, 2011, partially offset by lower production in Zaldívar and the impact of the divestiture of Osborne in the third quarter of 2010.  Realized copper prices for 2011 were $3.82 per pound, up 12% over the prior year, primarily reﬂ ecting higher average market copper prices.  Copper total cash costs for 2011 were $1.75 per pound, up 59% over the prior year. The increase reﬂ ects higher direct production costs and lower production levels at Zaldívar and the impact of including higher cost production from Lumwana in the mix. Business Overview Barrick’s vision is to be the world’s best gold mining company by ﬁ nding, acquiring, developing and producing gold in a safe, proﬁ table and socially responsible manner. 38 We sell our production in the world market through the following distribution channels: gold bullion is sold in the gold spot market; gold and copper concentrate is sold to independent smelting companies; and copper cathode is sold to various manufacturers and traders. Barrick’s market capitalization, annual gold production and gold reserves are the largest in the industry. We also produce signiﬁ cant amounts of copper and have signiﬁ cant silver reserves contained within our gold reserves at our Pascua-Lama project. Our large mineral inventory provides signiﬁ cant optionality to metal prices, which supports mine life extension and expansion investment opportunities. MARKET CAPITALIZATION as at December 31, 2011 ($USD billions) 50 40 30 20 10 0 Barrick Goldcorp Newmont Newcrest Anglo Gold Ashanti Kinross Gold Fields 2011 GOLD PRODUCTION1 (millions of ounces) 9 8 7 6 5 4 3 2 1 0 Barrick Newmont Anglo Gold Ashanti Gold Fields Newcrest Kinross Goldcorp 1. Based on Fiscal 2011 results. We are targeting to increase our annual gold production to nine million ounces by 2016. The signiﬁ cant drivers of this production growth include our Pueblo Viejo and Pascua-Lama projects, as well as various expansionary opportunities at our existing operating mines. We are targeting to increase our annual copper production to about 1 billion pounds by 2017 as a result of the start-up of Jabal Sayid and expansion opportunities at Zaldívar and Lumwana. We produced about 3.4 million ounces of silver as a by-product in 2011. We are targeting to increase our annual silver production to about 50 million ounces by 2016. Our targeted production levels do not include production from Cerro Casale, Donlin Gold through 2016/2017, the Turquoise Ridge expansion or Goldrush/ Red Hills gold discoveries due to the extended permitting and construction timelines for these projects. We manage our business through seven primary business units: four regional gold businesses, a global copper business, an oil & gas business and a Capital Projects business. This structure enables each business unit to customize corporate strategies to meet the unique conditions in which they operate. For gold, we manage our operations using a geographical business unit approach, with producing mines concentrated in three regional business units (“RBUs”): North America, South America and Australia Paciﬁ c, each of which is led by its own Regional President. We also hold a 73.9% equity interest in African Barrick Gold (“ABG”), which includes our previously held African gold mines and exploration properties. We established our global copper business unit in the fourth quarter of 2011 to manage our copper business in a manner that maximizes the value of the Company’s copper assets. Our oil & gas business, managed by Barrick Energy, provides an economic hedge against our exposure to oil prices and also provides support for energy-saving initiatives undertaken by our other business units. Our Capital Projects business, distinct from our other business units, focuses on managing feasibility studies and construction of our major capital projects, while our operating business units manage feasibility studies and construction of mine expansion projects at existing operating mines. Our business unit structure adds value by enabling the realization of operational efﬁ ciencies, allocating Barrick Financial Report 2011 | Management’s Discussion and Analysis resources to individual mines/projects more effectively and understanding and better managing the local business environment, including labor, consumable costs and supply and government and community relations. The newly created copper business unit has been given the primary responsibility and accountability for managing our copper business, which includes the Zaldívar and Lumwana mines, and the Jabal Sayid, Reko Diq and Kabanga projects. The copper business unit’s long-term strategy is to maximize the value of these important assets by providing strategic oversight of copper production and marketing, the adoption of best practices in mining throughout the portfolio of mines/ projects, as well advancing value creation opportunities within the copper business, such as the Lumwana and Zaldívar expansion opportunities. We have operating mines or projects in Canada, the United States, the Dominican Republic, Australia, Papua New Guinea, Peru, Chile, Argentina, Zambia, Saudi Arabia, Pakistan and Tanzania. The geographic split of gold production for the year ended December 31, 2011 was as follows: GOLD PRODUCTION BY REGION IN 2011 North America 44% Africa 7% South America 24% Australia Pacific 25% In addition, our gold reserves and resources are situated primarily in geopolitically secure countries, with approx- imately 66% of our gold reserves located in investment grade1 countries, including the United States, Chile, Australia, Peru, and Canada. This provides a lower overall risk proﬁ le. 1. Defined as being rated BBB- or higher by S&P. 39 Management’s Discussion and Analysis PROVEN AND PROBABLE GOLD RESERVES1 (millions of ounces) 160 140 120 100 80 60 40 20 0 Barrick Dec. 31, 2011 Newmont Dec. 31, 2010 Newcrest Dec. 31, 2011 Gold Fields Dec. 31, 2010 Anglo Gold Ashanti Dec. 31, 2011 Goldcorp Dec. 31, 2011 Kinross Dec. 31, 2011 1. Based on the most recent public information as at date noted. GOLD MINERAL RESERVES BY REGION IN 2011 North America 42% Africa 9% Australia Pacific 11% South America 38% 2011 TOTAL GOLD CASH COSTS1 ($USD per ounce) 900 800 700 600 500 400 300 200 Gold Fields Anglo Gold Ashanti Newmont Kinross Goldcorp Newcrest Barrick 1. Based on Fiscal 2011 results. 40 Increasing Gold and Copper Reserves through Exploration and Selective Acquisition Acquisition of Equinox Minerals Limited In April 2011, we announced an offer to acquire all of the issued and outstanding common shares of Equinox Minerals Limited (“Equinox”) for an all-cash offer of C$8.15 per share. This strategic, all-cash transaction was accomplished without issuing equity or diluting our shareholders’ exposure to gold and has added two attractive copper assets to our portfolio. On June 1, 2011, we had acquired 83% of the shares, thus obtaining control. We began consolidating operating results, including cash ﬂ ows, from this date onwards. On July 19, 2011, we acquired 100% of the issued and outstanding common shares for total cash consideration of $7.482 billion. Equinox’s primary asset is the Lumwana copper mine, a high-quality, long-life property in the highly prospective Zambian Copperbelt region. Equinox’s other signiﬁ cant asset is the Jabal Sayid copper project in Saudi Arabia, which is currently in construction and is expected to enter production in 2012. This acquisition was funded through our existing cash balances and $6.5 billion in new debt issued during 2011. The contribution of Equinox operations has been consolidated into Barrick’s results from June 1, 2011 onwards as part of our newly formed copper business unit. Gold discoveries in Nevada In Nevada, recent drilling continues to grow the potential at Red Hill/Goldrush. At Red Hill, a resource of 1.27 million ounces was calculated in the indicated category and 3.30 million ounces in the inferred category2,and the resource remains open in multiple directions. Step-out holes have intersected mineralization a further 2,800 feet north beyond the initial 2010 resource as well as extended mineralization at least 1,000 feet to the southwest. Highlights of major step- out drilling include 90 feet at 0.15 ounces per ton (opt), 120 feet at 0.32 opt, 20 feet at 1.18 opt, and 110 feet at 0.12 opt. Inﬁ ll drilling between the deposits has shown that Red Hill and Goldrush merge into a single deposit. A small portion of the Goldrush deposit had sufﬁ cient drill density to report an initial inferred resource 2. Calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the Securities Exchange Act of 1934), as interpreted by the Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, approximately 2.15 million ounces of reserves at Pueblo Viejo (Barrick’s 60% interest) is classified as mineralized material. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 181–188 of Barrick’s 2011 Year-End Report. Barrick Financial Report 2011 | Management’s Discussion and Analysis of 2.45 million ounces2. The step out drilling continues to suggest a high likelihood of major resource expansion. A total of 468,000 feet of drilling ($64 million) is planned at Red Hill/Goldrush in 2012 to test the full extent of the mineralized system and further expand and upgrade the resource base and a scoping study has commenced. ﬂ ow, Barrick’s Board of Directors authorized an annual dividend increase from $0.48 per common share to $0.60 per common share4 in October, 2011. Over the last ﬁ ve years, Barrick has had a consistent track record of returning capital to shareholders, increasing its dividends by more than 170%5 on a quarterly basis. Gold Copper Reserves and Resources Update3 Barrick replaced proven and probable gold reserves to an industry leading 139.9 million ounces at the end of 2011, based on a $1,200 per ounce gold price, and also has measured and indicated gold resources of 80.4 million ounces and inferred gold resources of 40.2 million ounces, based on a $1,400 per ounce gold price2. With the addition of Lumwana and Jabal Sayid, copper reserves nearly doubled from 6.5 billion pounds to 12.7 billion pounds, measured and indicated copper resources rose 17% to 15.3 billion pounds and inferred copper resources increased 117% to 19.9 billion pounds based on a $2.75 per pound copper price and a $3.25 per pound copper price2, respectively. New Financing and Capital Structure Developments During 2011 we increased our outstanding debt by $6.5 billion to fund the cost of the Equinox acquisition. In May 2011, we entered into a new $2 billion revolving credit facility with an interest rate of LIBOR plus 1.25%. In June 2011, we drew $1 billion on this credit facility. In May 2011, we drew $1.5 billion on our previously existing revolving credit facility and in June 2011, we issued an aggregate of $4.0 billion in debt securities. In January 2012, we entered into a credit facility of $4 billion, which matures in 2017 to replace our $2 billion facility that was scheduled to mature in 2016 and also to augment our overall credit capacity. Coincident with this agreement becoming effective, we terminated our $2 billion facility that was obtained in April 2011 and transferred the $1 billion drawn on the $2 billion facility to the new $4 billion facility. Returning Capital to Shareholders As a result of our positive outlook on the gold price, our strong ﬁ nancial position and robust operating cash Investing in and Developing High Return Projects Projects in Construction Pueblo Viejo At the Pueblo Viejo project in the Dominican Republic, ﬁ rst production continues to be expected in mid-2012 and overall construction is currently about 90% complete. At the end of Q4, approximately 85% of the expected total mine construction capital of $3.6 – $3.8 billion6 (100% basis) or $2.2 – $2.3 billion (Barrick’s 60% share) had been committed. About 13 million tonnes of ore, representing approximately 1.4 million contained gold ounces, has been stockpiled to date. Construction of the tailings facility progressed during Q4 with the receipt of approvals to re-commence construction. The oxygen plant is expected to undergo pre-commissioning testing in Q1 2012, with the ﬁ rst two autoclaves under- going pre-commissioning in Q2 2012. Construction of the transmission line connecting the site to the national power grid was completed during Q4 2011, and the inter-connect to the grid has been achieved. As part of a longer-term, optimized power solution for Pueblo Viejo, the Company has started early works to construct a dual fuel power plant at an estimated incremental cost of approximately $300 million (100% basis). The power plant would commence operations utilizing heavy fuel oil, but have the ability to subsequently transition to lower cost liquid natural gas. The new plant is expected to provide lower-cost, long-term power to the project. Pueblo Viejo is expected to contribute approximately 100,000 – 125,000 ounces to Barrick at total cash costs of $400 – $500 per ounce7 in 2012 as it ramps up to full production in 2013. Barrick’s 60% share of annual gold production in the ﬁ rst full ﬁ ve years of operation is expected to average 625,000 – 675,000 ounces at total cash costs of $300 – $350 per ounce8. 2. Calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the Securities Exchange Act of 1934), as interpreted by the Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting purposes, approximately 2.15 million ounces of reserves at Pueblo Viejo (Barrick’s 60% interest) is classified as mineralized material. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 181–188 of Barrick’s 2011 Year-End Report. 3. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 181–188 of this Financial Report. 4. 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. 5. Calculated based on converting the 2006 semi-annual dividend of 11 cents per share to a quarterly dividend. 6. Based on gold and oil price assumptions of $1,300/oz, and $100/bbl respectively. 7. Based on 2012 gold and oil price assumptions of $1,700/oz and $100/bbl, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate. 8. Based on gold and oil price assumptions of $1,300/oz, and $100/bbl, respectively. 41 Management’s Discussion and Analysis Jabal Sayid Overall construction of the Jabal Sayid copper project in Saudi Arabia was about 75% complete at the end of Q4. Subject to receipt of ﬁ nal approvals, the operation is expected to enter production in the second half of 2012 at total construction capital of approximately $400 million, of which 85% had been committed at the end of Q4. Underground mine development for ﬁ rst ore production and concrete works was completed in Q4 and bulk earthworks were about 90% complete. Jabal Sayid is expected to produce 35 – 45 million pounds of copper in 2012 at total cash costs of $2.15 – $2.50 per pound9. Average annual production from Lodes 2 and 4 is expected to be 100 – 130 million pounds over the ﬁ rst full ﬁ ve years of operation at total cash costs of $1.50 – $1.70 per pound. Results from recent drilling beneath Lode 4 demonstrate that the width of mineralization towards the base of the current resource model had been underestimated by lack of drilling. In addition to the previous intercept of 111 meters grading 2.67% copper, recent drilling has intersected 119 meters at 1.2% copper. This area will be the focus of ongoing drilling and resource/reserve upgrades and additions in 2012. Pascua-Lama At the Pascua-Lama project, approximately 55% of the previously announced pre-production capital of $4.7 – $5.0 billion10 has been committed and ﬁ rst production is expected in mid-2013. The project is being impacted by labor and commodity cost pressures as a result of inﬂ ation, competition for skilled labor, the impact of increased Argentinean customs restrictions on equipment procurement and lower than expected labor productivity. In Chile, earthworks were about 95% complete at the end of Q4, and in Argentina, earthworks construction was approximately 65% complete at year end. Approx- imately 40% of the concrete has been poured at the processing facilities in Argentina and about 15% of the structural steel has been erected to date. Occupancy of the construction camps in Chile and Argentina continues to ramp up with 6,500 beds available by the end of 2011. The camps are expected to reach their full capacity of 10,000 beds in mid-2012. Average annual gold production from Pascua-Lama is expected to be 800,000 – 850,000 ounces in the ﬁ rst full ﬁ ve years of operation 9. Based on 2012 copper and gold price assumptions of $3.50/lb and $1,700/ oz, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate. 10. Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz, and $100/bbl, respectively, and assuming a Chilean peso f/x rate of 475:1. 42 at negative total cash costs of $225 – $275 per ounce10 based on a silver price of $25 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. Projects in Feasibility Cerro Casale At the Cerro Casale project in Chile, basic engineering was completed on schedule in Q4. The EIA permitting process is anticipated to be completed by the end of 2012, after which Barrick will consider a construction decision, commencement of detailed engineering and sectoral permitting. Ongoing consultation with the government, local communities and indigenous groups is continuing in parallel with permitting. Barrick’s 75% share of average annual production is anticipated to be 750,000 – 825,000 ounces of gold and 190-210 million pounds of copper in the ﬁ rst full ﬁ ve years of operation at total cash costs of $200 – $250 per ounce11. Estimated total mine construction capital is approximately $6.0 billion (100% basis)10,12. Donlin Gold At the 50%-owned Donlin Gold project in Alaska, the revised feasibility study, which includes updated costs and the utilization of natural gas, has been completed and acceptance of the study by the Board of Donlin Gold LLC is expected in the ﬁ rst half of 2012. Mine construction capital is expected to be approximately $6.7 billion (100% basis)13, which includes a natural gas pipeline that is anticipated to lower long-term power costs and offer a better environmental and operational solution for power connection to the site. Permitting is expected to commence following approval by the Board of the revised feasibility study. Donlin Gold is anticipated to produce about 1.5 million ounces of gold annually (100% basis) in its ﬁ rst full ﬁ ve years of operation. Lagunas Norte Sulfides Expansion A scoping study was completed on the Lagunas Norte deep sulﬁ de potential in 2011 and the project is undergoing metallurgical and geotechnical work as part of a prefeasibility study, which is anticipated to be completed by year end 2012. This expansion opportunity has the potential to beneﬁ t life of mine production starting as early as 2016. 11. Based on gold, copper, and oil price assumption of $1,300/oz, $3.25/oz and $100/bbl, respectively, and assuming a Chilean peso f/x rate of 475:1. 12. Based on Q2 2011 prices and does not include escalation for inflation. 13. Based on Q2 2011 prices and does not include escalation for inflation. Zaldívar Sulfides Expansion A scoping study has also been completed on the Zaldívar deep sulﬁ des and a prefeasibility study is expected by year end 2012. Although this project is in the early stages, this expansion opportunity has the potential to beneﬁ t life of mine production starting as early as 2017 and signiﬁ cantly extend the mine life. Lumwana Expansion At Lumwana, activity has been ramped up with 17 drill rigs on the property focusing on resource deﬁ nition drilling at Chimiwungo to convert inferred resources into the indicated category and step-out drilling to the south and east to extend the mineralization. Drilling to date has conﬁ rmed the thickened eastern shoot of Chimiwungo and selected highlights include 44 meters grading 1.00% copper, 44 meters at 1.07%, 41 meters at 0.80%, 37 meters at 0.91% and 20 meters at 1.60%. In addition to these strong results within the resource area, drilling further to the east is intersecting shallower than expected mineralization. A prefeasibility study on an expansion that could potentially double processing rates at Lumwana is expected to be completed by year end 2012. Turquoise Ridge Expansion At the 75%-owned Turquoise Ridge mine in Nevada, work is advancing on the potential to develop a large- scale open pit in order to mine the lower grade halo around the high-grade underground ore, which could signiﬁ cantly increase annual production. Work in 2012 will focus on resource conversion, mine planning, environmental data collection, geotechnical and hydrologic evaluation, metallurgical and trade-off studies for processing as part of the prefeasibility study, which is expected to be completed by the end of 2012. Twelve drill rigs are currently active on the property and the focus of open pit drilling is on upgrading resources. Additionally, surface drilling has intersected new miner- alization, particularly in the shallower south area of the planned pit, which could positively impact economics. Underground drilling is also yielding strong results, intersecting higher grades than expected in some areas, and zones are open up-dip and to the northwest. Barrick Financial Report 2011 | Management’s Discussion and Analysis Hemlo Expansion We have identiﬁ ed an opportunity at our Hemlo mine to expand the open pit and extend the mine life by up to 10 years. We are currently working on the feasibility study, which is expected to be completed in early 2012. Adoption of IFRS We adopted IFRS effective January 1, 2011. The ﬁ nancial results discussed in this MD&A were prepared in accordance with IFRS, including the relevant prior year comparative amounts. Under IFRS, certain costs such as production phase waste stripping costs and exploration and evaluation costs can be capitalized where there is probable future economic beneﬁ t. As a result, the conversion to IFRS resulted in a decrease in operating costs, an increase in net assets and an increase in operating cash ﬂ ow and capital expenditures compared to equivalent results if presented in accordance with US GAAP. Certain ﬁ gures within this MD&A are presented under US GAAP and have been labeled accordingly. For a discussion of our signiﬁ cant accounting policies, refer to note 2 of the Consolidated Financial Statements. 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 reﬂ ationary environment that has been generally supportive of higher commodity prices. The long-term fundamentals for gold remain strong and are supported by a number of factors including ongoing risks to the European ﬁ nancial system, central bank buying for reserve diversiﬁ cation purposes and strong investment and retail demand from consumers in developing countries. Gold and copper 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 ﬂ ows for Barrick. During the year, the market prices for these metals were extremely volatile. During 2011, gold prices achieved a series of successive all time nominal highs. Copper prices also reached an all-time high during 2011, but declined signiﬁ cantly in the second half, closing at $3.43 per pound, which was down compared to the 2010 closing price of $4.42 per pound. 43 Management’s Discussion and Analysis The ﬁ scal pressures currently experienced by many governments have resulted in a search for new sources of revenues, and the mining industry, which is generating signiﬁ cant proﬁ ts and cash ﬂ ow in this high metal price environment, is facing the possibility of higher income taxes and royalties. The Australian Mineral Resources Rent Tax (“MRRT”), which if enacted will apply from July 1, 2012 is one example. While the MRRT currently does not apply to our gold operations, there has been a degree of political agitation to extend the legislation to include gold mining. We continue to monitor and consider any developments related to this legislation. In addition, in order to ﬁ nance reconstruction stemming from the devastating 2010 earthquake, the Chilean government enacted a temporary ﬁ rst 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 on the Company of the temporary income tax rate increase and the elective mining royalty on 2011 income tax expense were about $18 million and $8 million, respectively. The Peruvian government enacted new tax legislation, effective October 1, 2011, which will apply speciﬁ cally to mining operations. The tax rates will apply differently depending on whether or not a mining company has a stabilization agreement in effect. The impact to the Company from the new tax legislation has resulted in an increase in income tax expense of $12 million in fourth quarter 2011. On an annualized basis, we expect income tax expense to increase by about $23 million per year over the next couple of years. In September 2011, Zambia elected a new leader, Michael Sata of the Patriotic Front party. Part of Mr. Sata’s campaign platform was to ensure the state receives more economic beneﬁ ts from its mining sector. The new Zambian Government has since announced a change in the mining tax regime to increase the royalty rate from 3% to 6%. The new rate, which has been enacted, will be effective from April 1, 2012. On October 26, 2011, the Argentinean government announced by Decree 1722 the obligation for companies producing crude oil, natural gas, and mining to repatriate and convert into Argentinean pesos, on the Single and Free Foreign Exchange Market, all foreign currencies resulting from export transactions. The Bank Transaction Tax (“BTT”) resulting from the conversion of foreign currencies to pesos is 0.6% and is applicable to all currency transactions that would otherwise have been executed using offshore funds. We do not expect the BTT to have a signiﬁ cant impact on Veladero and Pascua- Lama. Both Veladero and Pascua-Lama acquired stability rights in Argentina before Decree 1722/2011, which we believe should provide protection against changes to our stabilized foreign exchange regimes. The Argentinean Mining Investment Law N°24.196 grants tax and foreign exchange stability for a 30 year term to mining companies that ﬁ le a feasibility study for a mining project. The Australian government has enacted its carbon tax scheme with a commencement date of July 1, 2012. The carbon price will be set at AUD $23 per tonne of carbon until June 30, 2015 and will apply to the top 500 high-emitting companies. We have completed a preliminary assessment and expect the impact of complying with the legislation to be an increase in our total gold cash costs of approximately $3 per ounce on a consolidated basis and approximately $12 per ounce for the regional business unit on an annualized basis. On November 15th, 2011 the Government of Balochistan rejected the mining lease application for our Reko Diq copper-gold project in Pakistan. We believe that we have a sound legal basis to support our entitlement to secure a mining lease and we are actively pursuing the enforcement of our legal rights through both the International Center for Settlement of Investment Disputes and the International Chamber of Commerce, as well as through an administrative appeal under the Balochistan Mineral Rules. The carrying value of our investment in Reko Diq is $121 million. 44 Outlook for 2012 2012 Guidance Summary Gold production and costs Production (millions of ounces)1 Cost of sales2 Gold unit production costs Total cash costs ($ per ounce)3 Net cash costs ($ per ounce)4 Depreciation ($ per ounce)5 Copper production and costs Production (millions of pounds) Cost of sales6 Copper unit production costs Total cash costs ($ per pound) Depreciation ($ per pound) Other depreciation7 Exploration and evaluation expense Exploration8 Evaluation9 Corporate administration Other expense10 Other income11 Finance income Finance costs Capital expenditures: Minesite sustaining Open pit and underground mine development12 Minesite expansion12,13 Capital projects14 Total capital expenditures Effective income tax rate15 Barrick Financial Report 2011 | Management’s Discussion and Analysis 2011 Actual 7.7 5,127 460 339 154 451 949 1.75 0.38 50 352 217 135 166 576 248 13 199 980 842 529 2,247 4,598 33% 2012 Guidance 7.3 – 7.8 5,800 – 6,200 520 – 560 400 – 450 185 – 195 550 – 600 1,400 – 1,600 1.90 – 2.20 0.50 – 0.60 65 – 75 380 – 410 260 – 280 120 – 130 165 – 175 425 – 450 15 – 20 10 – 15 200 – 225 1,200 – 1,300 850 – 925 850 – 925 2,600 – 2,750 5,500 – 5,900 32% 1. Guidance for gold production reflects Barrick’s equity share of production from ABG (73.9%), Pueblo Viejo (60%). 2. 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. 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. Gold total cash costs includes expected proceeds of approximately $140 million (2011: $155 million) from the sale of by-product metals and the net contribution of approximately $156 million from Barrick Energy (2011: $117 million). Copper total cash costs includes expected proceeds of approximately $8 million from the sale of by-product metals (2011: $3 million). 3. 4. Assuming a realized copper price of $3.50 per pound. 5. 6. Includes depreciation expense related to Barrick Energy. Cost of sales applicable to copper includes depreciation expense and excludes the amortization of the Lumwana inventory fair value adjustment at acquisition (2011: $34 million) 7. Represents depreciation for the Corporate and Regional Business Unit offices. 8. Total exploration expenditures in 2012 are expected to be between $450 – $490 million including $260 – $280 million (2011: $217 million) in exploration expense and $190 – $210 million (2011: $133 million) in capitalized exploration costs. The capitalized exploration costs are included in the guidance for open pit and underground mine development and minesite expansion capital expenditures, as appropriate. Represents Barrick’s share of evaluation expenditures. Includes expected costs of $4 million for Kabanga and Donlin Gold (2011: $2 million) that will be classified under “income (loss) from equity investees”. 9. 10. Other expense is expected to be lower in 2012 as 2011 costs include special items of approximately $149 million in other expense, primarily due to acquisition costs, and the effect of discount rate changes on environmental provisions at closed sites. 11. Other income is expected to be lower in 2012 as 2011 income includes approximately $224 million in other income due to the gain on sale of certain assets and investments. 12. Includes capitalized exploration costs. 13. Represents Barrick’s share of minesite expansion capital expenditures. Includes capitalized interest of about $115 to $120 million (2011: $39 million). 14. Represents Barrick’s share of project capital expenditures including capitalized interest of about $375 million in 2012 (2011: $343 million). 15. Excludes the impact of one time dividend withholding tax in 2011 of $87 million. 45 Management’s Discussion and Analysis 2012 Guidance Analysis Production We prepare estimates of future production based on mine plans that reﬂ ect 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 operational 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, ﬂ oods and earthquakes, and unexpected civil disturbances, labor shortages or strikes. We expect 2012 gold production to be about 7.3 to 7.8 million ounces. Our gold production mix is expected to change as a result of higher production in North America that is offset by lower production in South America. The production mix within North America is also expected to change due to the commencement of operations at Pueblo Viejo in the Dominican Republic in the second half of the year and an increase in ore tons mined and processed at Goldstrike as the mine completed a stripping phase towards the end of 2011. This is expected to be partially offset by lower production at Cortez due to a decline in open pit ore grade. South America production is expected to be lower than 2011 levels, primarily due to lower ore grades at Veladero and decreased production at Pierina. Production at Australia Paciﬁ c is expected to be consistent with 2011 levels and production at ABG is expected to be slightly higher than 2011, primarily due to higher ore grades at North Mara. Copper production is expected to increase from 451 million pounds in 2011 to about 550 to 600 million pounds in 2012, as a result of a full year of production from Lumwana and the mid-year start up of Jabal Sayid. Production at Zaldívar is expected to remain at levels similar to 2011. Revenues Revenues include consolidated sales of gold, copper, oil and metal by-products. Revenues from oil and metal by-products are reﬂ ected in our guidance for gold total cash costs. Revenues from gold and copper reported in 2012 will reﬂ ect the sale of production at market gold and copper prices and the impact of copper ﬂ oor price contracts. Barrick does not provide guidance on 2012 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 reﬂ ect 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 $5.8 billion to $6.2 billion, compared to $5.1 billion in 2011. The increase is primarily due to the commencement of operations at Pueblo Viejo, higher total ore tons mined, lower waste tons mined that are eligible for capitalization and inﬂ ationary cost pressures on labor and other input costs. Total cash costs are expected to be in the range of $520 to $560 per ounce, up from $460 per ounce in 2011. The increase in 2012 principally reﬂ ects a change in production mix from lower-cost ore sources to higher- cost ore sources, both between and within mine sites. Additionally, we expect to capitalize less waste stripping costs as a result of Goldstrike and Cortez completing substantial stripping campaigns in 2011. Labor cost is increasing due to a combination of signiﬁ cant inﬂ ation in certain parts of South America, market adjustments for skilled labor in North America, Australia and Africa and planned hiring at some of our operations. Gas and electricity costs are also higher, principally due to signiﬁ cantly higher natural gas prices at Porgera as a result of the expiration of a long-term contract at the end of 2011. Other cost pressures include the changes in our effective currency hedge rates from 2011 to 2012 and higher royalties due to higher realized gold prices. 46 Cost of sales applicable to copper is expected to be in the range of $1,400 to $1,600 million, compared to $949 million in the prior year. Total cash costs are expected to be in the range of $1.90 to $2.20 per pound for copper, up from total cash costs of $1.75 per pound in 2011. The increase in cost of sales and total cash costs is primarily a result of the impact of a full year’s contribution from Lumwana, an increase to the Zambian government royalty rate, the start-up of Jabal Sayid and higher costs at Zaldívar, primarily due to an increase in market prices for sulfuric acid. Net gold cash costs are expected to be in the range of $400 to $450 per ounce, assuming an average market copper price of $3.50 for 2012 and the impact of copper hedge contracts. Exploration and Evaluation Exploration and Evaluation (“E&E”) costs will be classiﬁ ed under both the “exploration and evaluation” line and the “loss from equity investees” line on our consolidated statements 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 $380 to $410 million of E&E expenditures in 2012. Costs primarily reﬂ ect ongoing minesite reserve and resource development programs, principally at Red Hill and Goldrush, Goldstrike, Lumwana, Kanowna, and Veladero. E&E expenses also include our share of non-capitalizable project costs at Pueblo Viejo, Pascua-Lama and Cerro Casale and costs classiﬁ ed under income (loss) from equity investees. Barrick Financial Report 2011 | Management’s Discussion and Analysis Finance Costs Finance costs primarily represent interest expense on long-term debt. We expect higher ﬁ nance costs in 2012, primarily due to higher gross interest costs on debt issued to ﬁ nance the Equinox acquisition in mid- 2011. Capitalized interest for 2012 is similar to 2011 as higher interest capitalized on Pascua-Lama and Cerro Casale is offset by lower capitalized interest at Pueblo Viejo and Jabal Sayid once these mines commence production in 2012. Capital Expenditures Total capital expenditures for 2012 are expected to be in the range of $5.5 to $5.9 billion. The level of spend is higher in 2012, primarily due to construction activity at Pascua-Lama and Jabal Sayid and higher minesite expansion expenditures. We expect the level of spending on capital projects to decline in 2013 to about $1.7 billion following the completion of Pueblo Viejo and Jabal Sayid in 2012 and Pascua-Lama in mid-2013. Minesite Sustaining Sustaining capital expenditures are expected to increase from 2011 expenditure levels of $980 million to about $1,200 to $1,300 million, mainly due a full year of expenditures at Lumwana, and the inclusion of sustaining capital expenditures at Pueblo Viejo. 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 2012, expenditures primarily relate to mine development activities at Goldstrike, Cortez, North Mara, Veladero, Porgera and Granny Smith. Expenditures are expected to increase slightly from 2011 levels, primarily due to higher expenditures in South America from increased mine development activities at Veladero, and in ABG due to higher strip ratios and higher costs at Buzwagi and North Mara. These increases are partly offset by lower expenditures expected in North America, where both Goldstrike and Cortez completed a period of high waste stripping in 2011 as anticipated in their life of mine plans. 47 Management’s Discussion and Analysis Minesite Expansion The expected increase in expansion capital relates to various projects at Pueblo Viejo, Goldstrike, Cortez and Turquoise Ridge in North America, Lagunas Norte in South America and Lumwana. At Pueblo Viejo, $240 million (100% basis) or $144 million (Barrick’s share) of 2012 expenditures relate to the construction of a dual fuel power plant at Pueblo Viejo at an estimated incremental total cost of approximately $300 million (100% basis) or $180 million (Barrick share). The increase also reﬂ ects capitalized exploration costs to advance the expansion project at Turquoise Ridge. Capital Projects The expected increase in our share of capital project capital expenditures from $2,247 million in 2011 to $2,600 to $2,750 million in 2012 is mainly due to the construction activity at Pascua-Lama, partly offset by lower capital project capital expenditures at Pueblo Viejo as this project commences operation in mid-2012. Outlook Assumptions and Economic Sensitivity Analysis Gold revenue Copper revenue2 Gold total cash costs Gold price effect on royalties WTI crude oil price3 Australian dollar exchange rate3 Copper total cash costs WTI crude oil price Chilean peso exchange rate3 Project Capital Expenditures ($ millions) Pueblo Viejo (60% basis) Pascua-Lama Cerro Casale (75% basis) Jabal Sayid Other Capitalized interest 2011 Actual $ 521 1,191 83 105 4 343 2012 Guidance $ 400 – $ 425 $ 1,600 – $ 1,675 $ 50 – $ 75 $ 125 – $ 150 ~$ 50 ~$ 375 $ 2,247 $ 2,600 – $ 2,750 Income Taxes Our underlying expected effective tax rate of 32% excludes the impact of currency translation gains/losses and changes in the recognition of deferred tax assets. Based on our current outlook assumptions, cash tax payments in 2012 are expected to be consistent with 2011. Cash tax payments in 2012 are expected to be the highest in the second quarter due to the settlement of some 2011 liabilities and operating cash ﬂ ow will be reduced accordingly. 2012 Guidance assumption Hypothetical change Impact on total cash costs Impact on EBITDA (millions) $ 1,700/oz1 $ 50/oz $ 3.50/lb1 $ 0.25/lb n/a n/a $ 1,700/oz $ 100/bbl 1 : 1 $ 50/oz $ 10/bbl 10% $ 1.25/oz $ 0.25/oz $ 0/oz $ 100/bbl 500 : 1 $ 10/bbl 10% $ 0.01/lb $ 0/lb $ 375 – $ 400 $ 72 $ 10 $ 2 $ 0 $ 6 $ 0 1. We have assumed a gold price of $1,700 per ounce and copper price of $3.50/lb, which are consistent with current market prices. This assumption does not represent a forecast of what we expect gold or copper prices to average in 2012. 2. We have put in place floor protection on just under half of our expected copper production for 2012 at an average floor price of $3.75 per pound and can fully participate in copper price upside. At prices above $3.75 per pound, the impact on EBITDA of a $0.25/lb change in the copper price is approximately $140 million. 3. Due to hedging activities we are largely protected against changes in these factors. 48 Barrick Financial Report 2011 | Management’s Discussion and Analysis Strategy, Key Risk Factors and Market Review Our Strategy Our core objective is to maximize long-term value for our shareholders by following a balanced approach that emphasizes increasing net asset value, production, reserves, earnings and cash ﬂ ow on a per share basis, while continuing our track record of paying a progressive dividend. In order to deliver on these objectives, our strategic focus in 2012 is on the following priorities:  Meet operational and ﬁ nancial targets to maximize beneﬁ ts of rising metal prices;  Increase gold and copper reserves through exploration and selective acquisitions;  Maximize the value of existing mines and properties, leveraging technical skills and regional infrastructure;  Invest in and develop high return projects; and  Continually improve corporate social responsibility (“CSR”) practices to maintain license to operate. There are additional risks that either individually or collectively may affect our business and ﬁ nancial results in the future. For a more detailed description of the risks facing the Company, please refer to the most recently ﬁ led Annual Information Form. 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. Risk Factor: Our ability to attract and retain staff with critical mining skills affects our ability to deliver on our strategic objectives, move on opportunities and provide resources for our projects. Capability to Execute our Strategy The capability to execute on our strategy comes from the strength of our experienced management team, skilled workforce and organizational structure; a strong emphasis on exploration and a pipeline of projects that facilitates the long-term sustainability of our business; our strong ﬁ nancial position; and our commitment to maintaining our license to operate. We understand that creating shareholder value is the reward for actively managing the risks that could impact our ability to execute our strategy. Consequently, we have established an enterprise risk management (“ERM”) process for identifying, evaluating and managing company-wide risks. Our ERM process ensures that risks are properly identiﬁ ed, assessed, reported and monitored at all levels of the organization. All risks and associated mitigation plans are reported through our business units and corporate functional leaders. These risks are reviewed, consolidated, ranked and prioritized by senior management. An analysis is performed to ensure there is proper assessment of risks that may interfere with achieving our strategic objectives. The following is a summary of our key competitive strengths, as well as certain risk factors impacting our ability to execute our strategy. In order to continue to maintain a skilled work - force, we have a combination of strategies, including partner ships to develop local capabilities, technical and leadership training programs, succession planning, talent management systems, and implementation of a targeted compensation strategy. 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 processes, and enhanced distance learning programs in order to meet this challenge. We have also expanded our technical training and develop ment programs beyond the traditional mining disciplines (mining, metallurgy, maintenance and geology) to include our critical support functions such as environment, health & safety and human resources. This program is now improving the technical and leadership skills of over 1,000 professionals. Leadership development for high potential employees has been and will continue to be an area of focus in the coming year. Exploration Barrick’s exploration strategy is aligned with our business objectives. It is a balanced approach that ensures we can meet both our short-term and long-term growth needs. Risk Factor: We must continually replace reserves depleted by production to maintain production levels over the long term. 49 Management’s Discussion and Analysis Our exploration strategy is three-fold:  Replacing and adding resources at existing operations and development projects, where we can monetize new discoveries in a more timely manner;  Working closely with our corporate development group to identify acquisition opportunities with exploration upside; and  Searching for the next ﬂ agship 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, with a smaller percentage of the budget directed at emerging areas in order to generate quality projects for future years. The 2012 total exploration budget guidance is $450 to $490 million, including expenditures that will meet the criteria for capitalization. This is a ~20% increase from 2011, and is a reﬂ ection of the exceptionally strong and robust exploration pipeline in each of our business units. The increase in budget is mainly the result of major exploration programs at Red Hill/Goldrush, Turquoise Ridge and Lumwana, following on from successful results of our 2011 programs at these sites. These are key projects with large drill programs that are expected to directly add and/or upgrade gold and copper reserves/resources over the next few years, and support the various planned scoping, prefeasibility, feasibility and expansion studies that are underway at these sites. TOTAL EXPLORATION BUDGET BY REGION IN 2012 North America 45% Africa Copper 20% Africa 5% South America 10% Australia Pacific 20% 50 Barrick has been successful at consistently ﬁ nding reserves and resources. With each one of our acquisitions, we have gone on to substantially add to 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 2011 and growing resources. Since 1990, we have spent approximately $2.5 billion on exploration, which has resulted in the discovery of approximately 148 million ounces of reserves, substantially more than the 118 million ounces that we have produced in the same time period. The per ounce cost of reserve additions of approximately $17 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 40.2 80.4 138.5 139.8 139.8 139.9 31.9 50.6 124.6 2007 2008 2009 2010 2011 Inferred Resources M&I Resources P&P Reserves Investing in High Return Projects Building new mines is key to our long-term goal of increasing proﬁ tability and creating long-term share- holder value. Risk Factor: Our signiﬁ cant capital projects represent a key driver to our plans for future growth and 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. It may take years for a project to move from the explo- ration stage through feasibility, permitting and mine construction into production. This development timeframe has increased in recent years as many mines require the development of supporting infrastructure, which complicates the completion of feasibility studies and adds signiﬁ cantly to the capital costs of construction. The development of a new mine requires successful completion of a major permitting process including extensive discussions with government regulatory bodies and communities affected by the new mine. This signiﬁ cant increase in the timeline and cost of developing projects is reﬂ ected in our business strategy by ensuring that we have a deep inventory of projects and internal resources to effectively manage and support each phase of new mine development. Our Capital Projects group utilizes a formal system to govern advancement of our large projects through the development process, up to and including the commissioning of new mines, at which point responsibility for mine operations is handed over to the relevant operating business unit. 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. Over the past eight years, we have built seven new projects on time and near budget, namely Tulawaka, Lagunas Norte, Veladero, Cowal, Ruby Hill, Buzwagi and Cortez Hills. This experience will support commissioning the three projects currently in construction (Pueblo Viejo, Jabal Sayid and Pascua-Lama), over the next two years. Liquidity and Capital Structure We actively manage our liquidity and capital structure by monitoring our balance sheet debt to capitalization and debt coverage ratios such as net debt to equity and net debt-to-total capitalization ratios. We utilize combinations of proceeds from operating cash ﬂ ow and debt ﬁ nancings to fund investments in capital expenditures and acquisitions. We also put in place undrawn credit facilities that provide the ﬂ exibility to manage through periods of volatile commodity prices while ensuring funding is available for major capital projects. Operating cash ﬂ ow is a key driver of our liquidity and is dependent on prices realized from gold and copper sales, production levels, production costs, exploration costs, payments for income taxes and interest and other factors. Our strong operating cash ﬂ ow generation, primarily driven by rising gold and copper prices, has enabled us to fund signiﬁ cant investments during the past two years in capital projects and Barrick Financial Report 2011 | Management’s Discussion and Analysis expansion projects at existing major mines while maintaining our strong ﬁ nancial position. We have the only A-rated balance sheet in the gold mining industry and our credit ratings have remained stable. We were able to obtain low-cost ﬁ nancing in order to partially ﬁ nance the acquisition of Equinox. In January 2012, we secured a credit facility of $4 billion, which matures in 2017 to replace our $2 billion facility that was scheduled to mature in 2016 and also to augment our overall credit capacity. Coincident with this agreement becoming effective, we terminated our $2 billion facility that was obtained in April 2011 and transferred the $1 billion drawn on the $2 billion facility to the new $4 billion facility. Risk Factor: Our revenues are primarily derived from the sale of gold and copper and the market prices of these metals can ﬂ uctuate widely due to macro- economic factors that are beyond our control. Our operating results and ﬁ nancial condition also depend signiﬁ cantly on other commodity prices and foreign exchange rates, which are largely dependent on worldwide economic conditions outside of our control. Our shareholders want full exposure to changes in the gold price, and consequently all of our future gold production is unhedged. Our corporate treasury function implements hedging strategies on an opportunistic basis to protect us from downside price risk on our copper production. We also actively hedge foreign exchange risk for key input commodities such as fuel. Please see pages 56–58 of this MD&A for a description of our exposures and mitigation strategies for these risks. License to Operate Our license to operate is a critical asset and contributes directly to the achievement of our strategic objectives and value creation for our shareholders. Risk Factor: In order to maintain our license to operate, it is essential that we:  Ensure every person goes home safe and healthy every day;  Actively review talent and develop people for the future;  Manage our reputation proactively;  Are a partner welcomed in the communities where we operate;  Protect the environment;  Maintain good relations with governments and other stakeholders;  Comply with all regulatory standards; and  Conduct our business in an ethical manner. 51 Management’s Discussion and Analysis In order to mitigate risks associated with our license to operate, Barrick places a strong focus on CSR and safety and environmental performance, a summary of which is provided below. Corporate Social Responsibility At Barrick, we approach CSR as an opportunity to create mutual beneﬁ t and value for our diverse stake- holders, including the communities where we operate, our shareholders and our employees. Doing so helps ensure we continue to be partners welcomed in these communities. In 2011, for the fourth straight year, Barrick was named to the Dow Jones Sustainability World Index, and for the ﬁ fth year, to the North American Index. The renewed listing on the index reinforces Barrick’s position among the most sustainability-driven companies in the world. Our work in CSR is one of continuous improvement, and in 2012 we will maintain our focus on this key strategic objective. We have completed the development of our Community Relations Management System (“CRMS”), which aims to ensure our community relations activities and initiatives are carried out in a systematic manner across the Company, consistent with international best practice. Securing and maintaining our social license to operate depends on our ability to listen actively and respond in a timely manner to issues of material importance to our key stakeholders. To this end, one of our top priorities in implementing the CRMS has been to ensure that all operations have an effective grievance mechanism process. By the end of 2012, all communities where we operate will have access to a simple and culturally sensitive process through which they can provide feedback and seek resolution to legitimate concerns. Barrick was the ﬁ rst Canadian mining company to become a member of the Voluntary Principles on Security and Human Rights (“Voluntary Principles”). The Voluntary Principles were developed by a group comprised of national governments, non-governmental organizations and companies in the extractive and energy sector. They guide and dictate our engagement with host nation military and police representatives that provide external security and response assistance, ensuring that human rights principles are reinforced in contractual requirements, guidelines on the use of force, relevant training, and other relevant areas. In geopolitically complex regions, Barrick’s security personnel receive mandatory human rights training and training in the requirements of the Voluntary Principles. 52 We are also in the process of developing our formal human rights compliance program. This program is designed to take into account best practices across all industries, including the extractive sector. It will be designed to cover all operations, employees, and third party service providers, on a global basis. Our active role in these programs ensure we are part of the evolving effort on improving the industry’s performance on human rights and security. Safety and Environmental Performance Responsible environmental management is central to our success as a leading gold mining company. Our Environmental Management System has been fully implemented at twenty of our mines, with full implementation at the remaining six mines to be completed in 2012. By the end of 2011, Barrick had achieved International Cyanide Management Code certiﬁ cation at 22 of the 23 of our mines which use cyanide, and we expect to achieve full certiﬁ cation in 2012. We recognize the risks that climate change poses to society and to our long-term success. To address these risks, our Climate Change Standard has been implemented in all our regions. The Standard focuses on energy efﬁ ciency and the greater use of renewable energy to reduce our carbon footprint and allow us to remain competitive in a carbon-constrained world. We are continuing our efforts to use more renewable energy. In 2011, we inaugurated the Punta Colorada wind farm in Chile, joining our solar farm in Nevada, and our wind turbine, located at the Veladero mine in Argentina, as alternative energy sources built and operated by Barrick. Water is essential for all of our operations, as well as for the communities where we operate, and therefore water availability is a critical concern. We are focused on using water wisely and managing it as a community resource, respecting the rights of other water users. We have implemented our Water Conservation Standard at all of our operations. In 2011, approximately 30 percent of our water intake was brackish or saline rather than fresh water. We also recycle water through the processing systems at most of our operations, reusing it many times over. Nineteen of our mines are zero water discharge operations, with all water recycled and reused on site and we continue to look for more ways to reduce water consumption. Barrick Financial Report 2011 | Management’s Discussion and Analysis sovereign debt concerns and very accommodative monetary policies by some of the world’s most prominent central banks, resulting in gold performing its traditional role as a store of value and an alternative to ﬁ at currency. The continuing uncertain macroeconomic environment and loose monetary policies, together with the limited choice of alternative safe haven investments, is supportive of continued strong investment demand. Throughout 2011, we have continued to see increased interest in holding gold as an investment. This was evidenced by the growth in Exchange Traded Funds (“ETFs”), which increased by 5 million ounces to a total of 77 million ounces, as well as the worldwide demand for physical gold in forms such as bars and coins. Physical demand for gold for jewelry and other uses also remains a signiﬁ cant driver of the overall gold market. A continuation of these trends is supportive of higher gold prices. AVERAGE MONTHLY SPOT GOLD PRICES $/oz 2,000 1,750 1,500 1,250 1,000 750 500 2007 2008 2009 2010 2011 Managing land effectively is an essential component of our commitment to responsible mining. Effective land management involves exercising good land stewardship at our operations throughout their life cycle, providing erosion control, practicing concurrent reclamation, protecting land with high conservation value, mitigating impacts where avoiding them is not possible, and planning for mine closure during mine development. This approach reduces our impact on the land during the life of a mine and helps achieve a successful closure once mining has ceased. At Barrick we believe that the safety, health and well-being of our workers and their families is of para- mount importance. Our safety and health vision is: “Every person going home safe and healthy every day”. For us to succeed in fulﬁ lling this vision, we:  Provide the expertise and resources needed to maintain safe and healthy working environments;  Establish clearly deﬁ ned 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. Market Review Gold and Copper The market prices of gold and copper are the primary drivers of our proﬁ tability and our ability to generate free cash ﬂ ow for our shareholders. The prices of gold and copper are subject to volatile price movements over short periods of time and are affected by numerous industry and macroeconomic factors that are beyond our control. Gold price volatility remained historically high in 2011, with the price ranging from $1,319 per ounce to an all-time nominal high of $1,921 per ounce. The average market price for the year of $1,572 per ounce was also a record and represented a 28% increase over 2010. Gold has continued to attract investor interest due to 53 Management’s Discussion and Analysis GOLD ETF HOLDINGS as at December 31 (millions of ounces) 77.2 72.3 60.1 38.4 28.1 80 70 60 50 40 30 20 10 0 The International Monetary Fund (“IMF”) completed its previously announced and approved sale of gold in late 2010. No other signiﬁ cant seller of gold has emerged from the ofﬁ cial sector since that time. In the second year of the Central Bank Gold Agreement (“CBGA”), which ended in September 2011, the signatory members sold 1 tonne of gold, or less than 1% of the maximum agreed amount. In addition, for the second consecutive year, global central banks were net buyers of gold in 2011, with the central banks of Mexico, Russia, Turkey, Thailand and South Korea, among others, adding to their gold reserves. 2007 2008 2009 2010 2011 OFFICIAL SECTOR GOLD PURCHASES (tonnes) Source: UBS INDUSTRY GOLD PRODUCTION (millions of ounces) 90 80 70 60 50 40 30 20 10 0 07 08 09 10 11E Source: Thomson Reuters GFMS Gold prices also continue to be inﬂ uenced by long-term trends in global gold mine production and the impact of central bank gold activities. Gold production has increased in recent years with the extension of the lives of older mines due to the rising gold price. The time requirement to bring projects to the production stage and the increasing costs and risks of building a mine, including concerns of resource nationalism and lengthened permitting processes, are expected to slow the pace of new production in future years. 54 600 400 200 0 -200 -400 -600 440 77 (34) (235) (484) 2007 2008 2009 2010 2011E Source: World Gold Council and Thomson Reuters GFMS The reserve gold holdings as a percentage of total reserves of emerging market countries, such as the BRIC countries (Brazil, Russia, India, and China), are signiﬁ cantly lower than other developed countries. The central banks of these developing economies hold a signiﬁ cant portion of their reserves in US dollar government assets and, as they identify a need to diversify their portfolio and reduce their exposure to the US dollar, we believe that gold will be one of the main beneﬁ ciaries. In conjunction with the very low amount of gold sold under the CBGA quota, which is expected to continue in the current year of the agreement, the net purchases of gold by global central banks provide a strong indication that gold is viewed as a reserve asset and a de facto currency. OFFICIAL GOLD HOLDINGS as at December 31, 2011 (% of reserves) AVERAGE MONTHLY SPOT COPPER PRICES (dollars per pound) Barrick Financial Report 2011 | Management’s Discussion and Analysis 76.9 80 74.2 73.9 73.7 60 40 20 0 A S U y n a m r e G l y a t I e c n a r F Source: World Gold Council 16.8 d n a l r e z t i w S 10.0 9.6 i a d n I a i s s u R 1.8 i a n h C 0.5 l i z a r B Copper prices experienced a volatile year, as London Metals Exchange (“LME”) copper prices traded in a wide range of $3.01 per pound to an all-time high of $4.62 per pound, averaged $4.00 per pound, and closed the year at $3.43 per pound. Copper’s rise to an all-time high occurred mainly as a result of strong demand from emerging markets, especially China, a physical deﬁ cit and continually increasing investor interest in base metals with strong forward-looking supply/demand fundamentals. Copper prices should continue to be positively inﬂ uenced by demand from Asia, global economic growth, the limited availability of scrap metal and lower production levels of mines and smelters in the future. We have put in place ﬂ oor protection on approxi- mately half of our expected copper production for 2012 at an average price of $3.75 per pound and have full participation to any upside in copper prices. Our realized price on all 2012 copper production is expected to be reduced by approximately $0.13 per pound as a result of the net premium paid on option hedging strategies. Our remaining copper production is subject to market prices. 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 2007 2008 2009 2010 2011 Silver Silver traded in a wide range of $26.07 per ounce to $49.79 per ounce in 2011, averaged an all-time high of $35.12 per ounce and closed the year at $28.18 per ounce. Despite weak industrial demand, silver managed to rise during the year to a 31-year high due to similar factors inﬂ uencing investment demand for gold. The physical silver market is currently in surplus and with the continuing global economic growth expected to improve industrial demand, investor interest continues to be price supportive. Silver prices do not signiﬁ cantly impact our current operating earnings, cash ﬂ ows or gold total cash costs. Silver prices, however, will have a signiﬁ cant impact on the overall economics for our Pascua-Lama project, which is currently in the construction phase. In the ﬁ rst ﬁ ve full years of production, Pascua-Lama is expected to produce an average of 35 million ounces of silver per annum. Utilizing option collar strategies, we have hedge protection on a total of 45 million ounces of expected silver production from 2013 to 2018, inclusive, with an average ﬂ oor price of $23 per ounce and an average ceiling price of $57 per ounce. 55 Management’s Discussion and Analysis 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 ($488 million received as at December 31, 2011). Silver Wheaton will also make ongoing payments of $3.90 per ounce in cash (subject to a 1% annual inﬂ ation adjustment starting three years after completing construction at Pascua-Lama) for each ounce of silver delivered under the agreement. AVERAGE MONTHLY SPOT SILVER PRICES (dollars per ounce) 45.00 35.00 25.00 15.00 5.00 2007 2008 2009 2010 2011 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 and corporate administration costs and exposure to the Chilean peso as a result of the construction of our Pascua-Lama project and Chilean mine operating costs. In addition, we have exposure to the Papua New Guinea kina, Peruvian sol, Zambian kwacha and Argentinean peso through mine operating and capital costs. 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. Australia, Canada and Chile each continue to emerge from the global economic crisis better than many other OECD countries. As a result, the Australian dollar, Canadian dollar and Chilean peso traded at historically 56 strong levels during the year against the currencies of larger developed economies, including the US dollar and Euro. In 2011, the Australian dollar traded in a range of $0.94 to $1.11 against the US dollar, while the US dollar against the Canadian dollar and Chilean peso yielded ranges of $0.94 to $1.07 and CLP455 to CLP536, respectively. About 60% of our consolidated production costs are denominated in US dollars and are not exposed to ﬂ uctuations 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 beneﬁ ts 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: 2011 – $344 million; 2010 – $145 million; and 2009 – $27 million (US GAAP). As a result of the gains from our currency hedging program, total cash costs were reduced by $46 per ounce in 2011. Also for 2011, we recorded currency hedge gains in our corporate administration costs of $24 million (2010 – $33 million gain and 2009 – $7 million loss (US GAAP)) and capitalized additional currency hedge gains of $64 million (2010 – $13 million and 2009 – $3 million (US GAAP)). Our average hedge rates vary depending on when the contracts were put in place. We have hedged approximately AUD $1.7 billion, CAD $500 million and CLP 300 billion in 2012 for expected Australian, Canadian and Chilean operating costs including Canadian corporate administrative costs and sustaining and eligible project capital expenditures at average rates of $0.81, $1.01 and 516, respectively. As a result, for 2012, we are almost fully hedged for each of our expected Australian dollar, Canadian dollar and Chilean peso expenditures. Assuming market exchange rates at the December 31, 2011 levels of AUD $1.02 against the US dollar and $1.02 and CLP520 for the US dollar against the Canadian dollar and Chilean peso, respectively, we expect to record gains on our operating expenditures of approximately $300 million in 2012, primarily related to our Australian dollar hedges, or about $40 per ounce based on total forecasted 2012 production. Beyond 2012, we have hedge protection in place for about 40% of our Australian dollar operating exposures through 2016. Further information on our currency hedge positions is included in note 22 to the consolidated ﬁ nancial statements. AUD Currency Contracts AVERAGE MONTHLY AUD$ SPOT AND HEDGE RATES Barrick Financial Report 2011 | Management’s Discussion and Analysis Effective average Contracts hedge rate (AUDUSD) (AUD millions) % of total expected AUD exposure1 hedged 2012 2013 2014 2015 2016 1,657 967 673 487 287 0.81 0.74 0.80 0.92 0.90 93% 54% 43% 37% 27% CAD Currency Contracts Effective average Contracts hedge rate (USDCAD) (CAD millions)2 % of total expected CAD exposure1 hedged 2012 2013 463 304 1.01 1.02 93% 58% CLP Currency Contracts Effective average Contracts hedge rate (USDCLP) (CLP millions)3 % of total expected CLP exposure1 hedged 2012 2013 2014 289,789 223,325 287,016 516 513 509 96% 69% 78% % of expected operating cost exposure hedged 100% 69% 54% 41% 31% % of expected operating cost exposure hedged 100% 100% % of expected operating cost exposure hedged 100% 100% 100% 1.10 1.05 1.00 0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 2007 2008 2009 2010 2011 Spot Rate Average Hedge Rate AVERAGE MONTHLY CAD$ SPOT AND HEDGE RATES 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 1. Includes all forecasted operating, administrative sustainable and eligible project capital expenditures. 2. Includes $266 million CAD contracts with a cap and floor of $0.98 and $1.07, respectively. 3. Includes CLP 638,460 million collar contracts that are an economic hedge of operating and administrative and capital expenditures at various South American sites and at our Pascua-Lama project with a cap and floor of 505 and 581, respectively. 2007 2008 2009 2010 2011 Spot Rate Average Hedge Rate 57 Management’s Discussion and Analysis AVERAGE MONTHLY CLP SPOT AND HEDGE RATES 700 600 500 400 The Barrick Energy contribution, along with our ﬁ nancial hedges, provide hedge protection for approximately 80% of our estimated fuel consumption for 2012. Financial Fuel Hedge Summary 2012 2013 2014 Barrels1 (thousands) Average % of expected exposure price 2,052 1,910 1,020 4,982 $ 105 87 96 $ 96 46% 41% 24% 40% 2007 2008 2008 2010 2011 1. Refers to contracts for a combination of WTI, BRENT, ULSD, WTB, MOPS and JET. Products other than WTI and BRENT have market prices in excess of crude due to refining and location premiums. As a result, our average price on hedged barrels for 2012 – 2014 is $89 per barrel on a WTI-equivalent basis. Spot Rate Average Hedge Rate CRUDE OIL MARKET PRICE (WTI) (dollars per barrel) Fuel For 2011, the price of West Texas Intermediate (“WTI”) crude oil traded between $75 and $115 per barrel, averaged $95 per barrel and closed the year at $99 per barrel. Geopolitical tensions in certain oil-producing nations, emerging market demand, concerns over global economic growth and the release of oil by the member countries of the International Energy Agency combined to create a volatile environment for the price of oil during the year. On average we consume approximately 4.5 million barrels of diesel fuel annually across all our operating mines. Diesel fuel is reﬁ ned from crude oil and is therefore subject to the same price volatility affecting crude oil prices. Therefore, volatility in crude prices has a signiﬁ cant direct and indirect impact on our production costs. To mitigate this volatility, we employ a strategy of combining the use of ﬁ nancial contracts and our production from Barrick Energy to effectively hedge our exposure to oil prices. We currently have ﬁ nancial contracts in place totaling 5.0 million barrels over the next three years. In 2011, we recorded hedge gains in earnings of approximately $48 million on our fuel hedge positions (2010: $26 million loss and 2009: $97 million (US GAAP) loss). Assuming market rates at the December 31, 2011 level of $99 per barrel, we expect to realize hedge gains of approximately $20 million in 2012 from our ﬁ nancial fuel contracts. In 2012, we expect Barrick Energy to produce about 3.7 million boe. The net contribution from Barrick Energy’s production is expected to provide a natural offset equivalent to about 1.8 million barrels of fuel. 58 $150 $120 $90 $60 $30 2007 2008 2009 2010 2011 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 deﬂ ation, the US Federal Reserve reduced its benchmark rate to between 0% and 0.25%. The benchmark was kept at this level through 2011. We expect that short-term rates will remain at low levels into 2014, 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 ($2.7 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 ($3.6 billion at December 31, 2011). Currently, the amount of interest expense recorded in our consolidated statement of income is not materially impacted by changes in interest rates, because the majority of debt was issued at ﬁ xed interest rates. The relative amounts of variable-rate ﬁ nancial assets and liabilities may change in the future, depending on the amount of operating cash ﬂ ow we generate, as well as the level of capital expenditures and our ability to borrow on favorable terms using ﬁ xed rate debt instruments. The upward-sloping US yield curve has a signiﬁ cant impact on the net amount of interest expense since our debt issuances were set at predominantly 5-year to 30-year interest rates, while our cash and equivalent balances are generating interest income at much lower rates in the 1 to 90 day range. Barrick Financial Report 2011 | Management’s Discussion and Analysis US DOLLAR INTEREST RATES (%) 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2007 2008 2009 2010 2011 5 Year Interest Rates 10 Year Interest Rates 30 Year Interest Rates 3 Month LIBOR Financial and Operating Results Summary of Financial Performance1 ($ millions, except per share data in dollars) For the years ended December 31 Revenues Net earnings Per share2 Adjusted net earnings3 Per share2,3 EBITDA3 Operating cash ﬂ ow Adjusted operating cash ﬂ ow3 Free cash ﬂ ow3 IFRS 2011 2010 $ Change % Change $ 14,312 4,484 4.49 4,666 4.67 8,376 5,315 5,680 $ 1,082 $ 11,001 3,582 3.63 3,517 3.56 6,521 4,585 5,241 $ 1,870 $ 3,311 902 0.86 1,149 1.11 1,855 730 439 $ (788) 30% 25% 24% 33% 31% 28% 16% 8% (42%) US GAAP 2009 $ 8,404 (4,274) (4.73) 1,810 2.00 (2,563) (2,322) 2,899 $ 833 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 earnings, adjusted EPS, EBITDA, adjusted operating cash flow and free cash flow are non-GAAP financial performance measures with no standard meaning under IFRS. For further information and a detailed reconciliation, please see pages 94–101 of this MD&A. In 2011, we recorded net earnings of $4,484 million compared to net earnings of $3,582 million in the prior year. Adjusted net earnings were $4,666 million, compared to $3,517 million in 2010. The increases in net earnings and adjusted net earnings were primarily driven by higher realized gold and copper prices, higher copper sales volumes, partially offset by lower gold sales volumes, higher income tax expense and higher cost of sales applicable to gold and copper. The signiﬁ cant post-tax adjusting items in 2011 include: $97 million in acquisition-related costs, including inventory purchase accounting adjustments attributable 59 Management’s Discussion and Analysis to the Equinox acquisition; $165 million in impairment charges, which include write-downs on our available- for-sale investments ($85 million), asset impairment charges in our oil & gas business ($37 million) and on certain power related assets at our Pueblo Viejo project ($47 million); $122 million in non-recurring tax expense; and a $23 million charge for the recognition of a liability for contingent consideration related to the acquisition of an additional 40% interest in the Cortez property in 2008 that was previously held by Kennecott Explorations (Australia) Ltd, a subsidiary of Rio Tinto plc. These charges were partially offset by $188 million in gains from the sale of assets and $66 million in unrealized gains on non-hedge derivative instruments. FACTORS AFFECTING ADJUSTED NET EARNINGS 545 207 117 26 4,666 2,644 600 3,517 t e n d e t s u d A j 0 1 0 2 s g n n r a e i e c i r p d e z i l a e r l d o G e s n e p x e x a t e m o c n I Summary of Cash Flow Performance ($ millions) For the years ended December 31 Operating cash ﬂ ow Adjusted operating cash ﬂ ow Adjusted operating cash ﬂ ow before working capital changes 2011 2010 $ 5,315 $ 4,585 $ 5,680 $ 5,241 $ 5,819 $ 5,242 Operating cash ﬂ ow was $5,315 million in 2011 compared to $4,585 million in the prior year. 2010 operating cash ﬂ ow reﬂ ects payments related to the settlement of gold sales contracts of $656 million. In 2011, signiﬁ cant items that impact operating cash ﬂ ow include non- recurring payments related to the Equinox acquisition of $204 million, and non-recurring withholding tax payments of $161 million. Adjusted operating cash ﬂ ow, which excludes the impact of these payments, totaled $5,680 million in 2011 compared to $5,241 million in the prior year. The increases in operating cash ﬂ ow and adjusted operating cash ﬂ ow were primarily due to higher net earnings levels, partially offset by higher income tax payments, including tax payments totaling about $480 million made in 2011 related to the ﬁ nal 2010 income tax liability, and the impact of working capital changes. Adjusted operating cash ﬂ ow before changes in working capital was $5,819 million, up 11% from the prior year. FACTORS AFFECTING ADJUSTED OPERATING CASH FLOW s t s o c h s a c d n a e m u o v l l s e a s d o G l e s n e p x e n o i t a z i t r o m A n o i t a u a v e l d n a n o i t a r o p x E l r e h t O t e n d e t s u d A j 1 1 0 2 i s g n n r a e 2,644 5,241 1,236 545 5,680 327 97 EBITDA was $8,376 million in 2011, compared to EBITDA of $6,521 million in the prior year. The signiﬁ cant increase in EBITDA primarily reﬂ ects the increase in pre- tax earnings. EPS and adjusted EPS for the year ended December 31, 2011 were $4.49 and $4.67, up 24% and 31%, respectively, compared to the same prior year period due to higher net earnings and adjusted net earnings. 0 1 0 2 w o l f h s a c g n i t a r e p o d e t s u d A j 60 e c i r p d e z i l a e r d o G l i d a p s e x a t e m o c n I s t s o c h s a c d n a e m u o v l l s e a s d o G l y r o t n e v n i n i e g n a h C i g n k r o w n r e h t o d n a i l a t i p a c e g n a h C 1 1 0 2 w o l f h s a c g n i t a r e p o d e t s u d A j Summary of Operating Performance1 ($ millions, except per ounce/pound data in dollars) Gold Barrick Financial Report 2011 | Management’s Discussion and Analysis IFRS 2011 2010 US GAAP 2009 Copper IFRS 2011 2010 US GAAP 2009 7,676 7,765 7,397 451 368 393 7,550 $ 12,263 1,572 1,578 5,177 7,742 $ 9,730 1,225 1,228 4,618 7,279 $ 7,191 972 985 3,431 444 $ 1,714 4.00 3.82 983 391 $ 1,300 3.42 3.41 430 380 $ 1,155 2.34 3.16 444 460 409 464 $ 1.75 $ 1.10 $ 1.17 $ 339 $ 293 $ 360 For the years ended December 31 Production (000s oz/millions of lbs)2 Revenues 000s oz/millions lbs $ millions3 Market price4 Realized price4,5 Cost of sales ($ millions) Total cash costs ($ millions)2,4,5 Net cash costs ($ millions)2,4,5 1. The amounts presented in this table include the results of discontinued operations. 2. Reflects our equity share of production. 3. Represents revenues 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 IFRS. For further information and a detailed reconciliation, please see pages 94–101 of this MD&A. Revenues In 2011, gold and copper revenues totaled $12,263 million and $1,714 million, respectively, up 26% and 32% compared to the prior year, primarily due to higher realized gold and copper prices and higher copper sales volumes; partially offset by lower gold sales volumes. The increase in copper sales volumes for the year ended December 31, 2011 reﬂ ects production from Lumwana, which was acquired as part of the Equinox transaction on June 1, 2011; partially offset by lower production from Zaldívar and the divestiture of Osborne in third quarter 2010. Realized gold prices of $1,578 per ounce in 2011 were up $350 per ounce, or 29%, compared to the prior year, reﬂ ecting the increase in market gold prices, which averaged $1,572 per ounce in 2011, compared to $1,225 per ounce in 2010. Realized copper prices were 12% higher than the prior year, primarily due to the 17% increase in market copper prices. Cost of sales Cost of sales applicable to gold was $5.2 billion in 2011, up 12%, compared to the prior year. This included depreciation expense of $1,152 million in 2011 as compared to depreciation expense of $1,077 million in 2010. The increase reﬂ ects higher direct mining costs, particularly higher labor, energy, maintenance and consumable costs, partially offset by an increase in capitalized production phase stripping costs. Cost of sales applicable to copper was $983 million, including depreciation expense of $170 million in 2011, up 129% compared to the $430 million, including depreciation expense of $88 million, recorded in the prior year. The increase reﬂ ects the impact of including production from Lumwana beginning on June 1, 2011, and higher direct mining costs at Zaldívar, primarily due to higher power and sulfuric acid prices; partially offset by lower copper sales volumes at Zaldívar and the impact of the divestiture of Osborne at the end of third quarter 2010. Total cash costs and net cash costs Gold total cash costs were $460 per ounce in 2011, up 12% compared to the $409 per ounce recorded in the prior year. The increase reﬂ ects the same factors impacting cost of sales applicable to gold, as well as the impact of lower production levels in South America, our lowest cost RBU, which resulted in higher consolidated unit production costs. For the year, total cash costs per ounce were at the low end of our 2011 guidance range of $460 to $475 per ounce, mainly as a result of changes in our production mix, with lower cost mine sites contributing a greater share of total company production in fourth quarter 2011. Copper total cash costs were $1.75 per pound in 2011, up 59% compared to $1.10 per pound in 2010 and slightly higher than our most recent 2011 guidance range of $1.60 to $1.70 per pound. The increase reﬂ ects the higher unit production costs at Lumwana, as well as the higher costs at Zaldívar due to the impact of lower average grades on production levels. 61 Management’s Discussion and Analysis Net cash costs were $339 per ounce in 2011, up 16% compared to the $293 per ounce recorded in the prior year. The increase reﬂ ects higher gold total cash costs per ounce, which was partially offset by higher copper credits due to higher realized copper prices and higher copper sales volumes. Net cash margins Net cash margins per ounce illustrate the trends in proﬁ tability and the impact of ﬂ uctuations in realized prices and net cash costs on our ability to generate earnings and operating cash ﬂ ow. Net cash margins per ounce increased 33% in 2011, largely due to the rise in gold prices partially offset by the increase in net cash costs. TOTAL AND NET CASH MARGINS PER OUNCE1 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $1,578 $1,118 $1,239 $1,7002 $1,140 to $1,180 $1,250 to $1,300 $1,228 $819 $935 $409 $293 $460 $339 $520 to $560 $400 to $450 2010 2011 2012E Total Cash Costs Net Cash Costs Total Cash Margin Net Cash Margin 1. Total cash costs, total cash margin, net cash costs and net cash margin are non-GAAP financial performance measures with no standard definition under IFRS. For further information and a detailed reconciliation, please see pages 94–101 of this MD&A. 2. We have assumed a gold price of $1,700 per ounce, which is consistent with current market prices. This assumption does not represent a forecast of what we expect gold prices to be in 2012. Other operating expenses Other expense was $576 million in 2011, up 27% compared to the $455 million recorded in the prior year. The increase is primarily due to higher RBU costs; higher corporate social responsibility costs; an increase in the provision for environmental rehabilitation due to changes in discount rates at some of our closed mines; a $39 million charge for the recognition of a liability for contingent consideration related to the acquisition of the additional 40% of the Cortez property in 2008; and 62 acquisition related costs for the Equinox transaction, partially offset by lower currency translation losses and lower severance and other restructuring costs. Exploration and Evaluation ($ millions) For the years ended December 31 Exploration: Minesite programs Global programs Evaluation costs Exploration and evaluation expense 2011 2010 $ 72 145 129 $ 51 103 75 $ 346 $ 229 Exploration and evaluation expense was $346 million in 2011, up 51% compared to $229 million in 2010. The increase is primarily due to increased minesite and global exploration and an increase in evaluation expenditures. Minesite exploration expenditures increased primarily due to increased exploration activities at Cowal and Granny Smith as well as at ABG. Exploration expenditures for the global programs increased due to increased expenditures at Cortez, Jabal Sayid and Lumwana. The evaluation expenditures increase relates to mine expansion studies at Bald Mountain, Hemlo, Cowal, Pueblo Viejo and Porgera. Interest Expense ($ millions) For the years ended December 31 Interest costs Incurred Capitalized Interest expensed 2011 2010 $ 555 $ 425 (285) (408) $ 147 $ 140 Finance costs incurred in 2011 were $199 million, compared to $180 million in the prior year. Interest costs incurred were $555 million, up 31% compared to the $425 million in the prior year. The increase in interest costs incurred primarily relates to the Pueblo Viejo project ﬁ nancing, for which drawdowns began at the end of second quarter 2010, as well as interest incurred on debt issued and credit facilities drawn on to ﬁ nance the Equinox acquisition in the second quarter of 2011. Interest capitalized increased in 2011 compared to the prior year primarily due to increased construction activity at our Pueblo Viejo and Pascua-Lama projects. Impairment Charges Impairment charges were $235 million, compared to impairment reversals of $73 million in 2010. The amount for 2011 included write-downs on our available-for-sale investments ($97 million); asset impairment charges on various properties in our oil & gas business ($49 million); and a write-down on certain power-related assets at our Pueblo Viejo project as a result of our decision to proceed with a new long term power solution ($62 million) that is expected to provide lower long-term power costs. In 2010, the impairment reversal related to our equity investment in Highland Gold. Income Tax (Percentages) For the years ended December 31 Effective tax rate on ordinary income Impact of legislative amendment in Australia Dividend withholding tax Actual effective tax rate 2011 2010 33% – 1% 34% 31% (1%) 1% 31% Our effective tax rate on ordinary income increased from 31% to 34% in 2011 primarily due to the impact of changes in the mix of production and in the mix of taxable income in the various tax jurisdictions where we operate. The more signiﬁ cant items impacting income tax expense in 2011 and 2010 include the following: Currency Translation Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most signiﬁ cant balances are Papua New Guinea deferred tax liabilities with a carrying amount of approximately $40 million, and Argentinean deferred tax liabilities with a carrying amount of approximately $257 million. In 2011 and 2010, the appreciation of the Papua New Guinea kina against the US dollar, and the weakening of the Argentinean peso against the US dollar resulted in net translation gains totaling $32 million and $19 million, respectively. These gains are included within deferred tax expense/recovery. Dividend Withholding Tax In 2011, we recorded an $87 million dollar dividend withholding current tax expense in respect of funds repatriated from foreign subsidiaries. In 2010, we recorded a $74 million dollar dividend withholding current tax expense in respect of funds available to be repatriated from a foreign subsidiary. Peruvian Tax Court Decision 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 Barrick Financial Report 2011 | Management’s Discussion and Analysis $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 totalling $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 conﬁ rmation 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 conﬁ rmation 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, The Tax Administration in Peru (SUNAT) has reassessed us on the same issue for tax years 2001 to 2003. On October 19, 2007, SUNAT conﬁ rmed their reassessment. We ﬁ led an appeal to the Tax Court of Peru within the statutory period. The Tax Court decision was rendered on August 15, 2011. The Tax Court ruled in our favor on substantially all material issues. However, based on the Tax Court decision, the timing of certain deductions would differ from the position taken on ﬁ ling. As a result, we would incur interest and penalties in some years and earn refund interest income in other years. The Tax Administration in Peru (SUNAT) has since assessed us $100 million for this matter. However, we believe that the SUNAT amount is incorrect, and have appealed the assessment. After recomputing the liability, to reﬂ ect what we believe is the probable amount, we have recorded a current tax expense of $39 million in 2011 in respect of this matter. On November 15, 2011 we appealed the Tax Court decision to the Judicial Court with respect to the timing of certain deductions for the Pierina mining concession. The Tax Administration SUNAT also appealed the Tax Court decision to the Judicial Court. Australian Functional Currency Election In 2011, we ﬁ led an election in Australia to prepare certain of our Australian tax returns using US dollar functional currency effective January 1, 2011. This election resulted in a one-time deferred tax beneﬁ t of $4 million. Going forward, all material Australian tax returns will now be ﬁ led using a US dollar functional currency. 63 Management’s Discussion and Analysis 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 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 2010. TONS MINED AND TONS PROCESSED1 Tons Mined 800,000 600,000 400,000 200,000 0 Tons Processed 250,000 200,000 150,000 100,000 50,000 0 Mining Overview1 2010 2011 For the years ended December 31 2011 2010 % Change IFRS US GAAP 2009 Tons Mined Tons Processed 1. All amounts presented are based on equity production. Tons Mined and Tons Processed – Gold Total tons mined increased in 2011 by 4%, and tons processed increased by 12%, compared to the prior year. The increases were primarily due to increased mining activity at Bald Mountain, Lagunas Norte, Veladero, Yilgarn South and Kalgoorlie; partially offset by decreased mining activity at Goldstrike, Cortez, Golden Sunlight, Ruby Hill, Pierina, Porgera, Cowal and Buzwagi. The increase in ore tons processed was primarily due to increases at Bald Mountain, Golden Sunlight, Cortez, Veladero and Pierina. Higher tons were processed at Bald Mountain due to an ongoing mine expansion. At Golden Sunlight, higher tons were processed as it recommenced production in 2011 after an extended re-development phase. At Cortez, higher tons were processed in 2011 due to a drawdown of stockpiled ore. Average Mill Head Grades – Gold Average mill head grades decreased by approximately 11% in 2011 compared to the prior year, primarily due to lower ore grades from Cortez, Goldstrike, Cowal, North Mara and Veladero, partially offset by higher grades processed at Yilgarn South. In general, reserve grades have been trending downwards in recent years, partly as a result of rising gold prices which make it economic to process lower grade material. 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) 151 155 569 539 720 694 162 145 0.056 0.063 84.6% 85.0% 7,765 7,676 Copper (3%) 6% 4% 12% (11%) 174 555 729 171 0.052 – 83.2% 7,397 (1%) Ore tons mined (millions) Waste tons mined (millions) Total tons mined (millions) Ore tons processed (millions) Average grade (percent) Copper produced (millions of lbs) 50 90 140 63 0.54 451 48 24 72 46 0.60 368 4% 275% 94% 37% (10%) 23% 50 30 80 49 0.60 393 1. The amounts presented in this table include the results of discontinued operations. Production – Gold Gold production in 2011 was slightly lower than the prior year, due to lower production in South America, Australia and ABG, partially offset by higher production in North America. Production of 7.676 million ounces was in line with our most recent guidance range of 7.6 to 7.8 million ounces, and within our original guidance range of 7.6 to 8.0 million ounces. 64 AVERAGE MILL HEAD GRADES1 (ounces/ton) 0.08 0.06 0.04 0.02 0.00 2010 2011 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. Production – Copper Copper production in 2011 was 23% higher than the prior year, primarily due to production from Lumwana which was acquired as part of the Equinox transaction, partially offset by decreased production from Zaldívar and the impact of the Osborne divestiture in third quarter 2010. Production of 451 million pounds was in line with the lower end of our most recent guidance of approximately 450 – 460 million pounds. Tons Mined and Tons Processed – Copper Total tons mined increased in 2011 by 94%, and tons processed increased by 37%, compared to the prior year. The increases are primarily due to the acquisition of Lumwana on June 1, 2011, partially offset by a decrease in tons mined and processed at Zaldívar and the impact of the divestiture of Osborne in third quarter 2010. Mineral Reserves and Mineral Resources Update14 At year-end 2011, we added 9 million ounces of proven and probable gold reserves. After depletion of 9 million ounces, proven and probable gold reserves was at 139.9 million ounces, still the largest in the industry, based on an assumed $1,20015 per ounce gold price. 14. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 181–188 of this Financial Report. 15. Reserves at Plutonic have been calculated using an assumed price of $1,250 per ounce. Barrick Financial Report 2011 | Management’s Discussion and Analysis The increase primarily reﬂ ects reserve additions at Goldstrike, Cortez, Turquoise Ridge, Kalgoorlie, partially offset by a decrease in Porgera and Bulyanhulu. Contained silver within reported gold reserves is 1 billion ounces. Measured and indicated gold mineral resources increased by 5% to 80.4 million ounces and inferred gold mineral resources increased 8% to 40.2 million ounces based on an assumed gold price of $1,400 per ounce. Proven and probable copper reserves nearly doubled from 6.5 billion pounds to 12.7 billion pounds, measured and indicated copper resources rose 17% to 15.3 billion pounds and inferred copper resources increased 117% to 19.9 billion pounds based on a $2.75 per pound copper price and a $3.25 per pound copper price, respectively. The increases primarily reﬂ ect incremental reserves and resources due to the addition of Lumwana and Jabal Sayid, acquired as part of acquisition of Equinox on June 1, 2011. Replacing gold and copper reserves depleted by production year over year is necessary in order to maintain production levels over the long-term. If depletion of reserves 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 Barrick’s business is organized into seven primary business units: four regional gold businesses, a global copper business, an oil and gas business, and a Capital Projects business. Barrick’s Chief Operating Decision Maker reviews the operating results, assesses performance and makes capital allocation decisions for each of these business operations at a business unit level. Therefore, these business units are operating segments for ﬁ nancial reporting purposes. In the fourth quarter 2011, Barrick established a global copper unit in order to maximize the value of the Company’s copper assets. This unit will be 65 Management’s Discussion and Analysis responsible for providing strategic direction and oversight of the copper business and ensuring that the Company realizes the business and operational synergies arising from the acquisition of Equinox. Our internal reporting structure has been revised to reﬂ ect this organizational change. Segment information for the years ended December 31, 2011 and 2010 has also been revised to reﬂ ect this organizational change. Segment performance is evaluated based on a number of measures including operating income before tax, production levels and unit production costs. Income tax, corporate administration, ﬁ nance income and costs, impairment charges and reversals, investment write-downs and gains/losses on non-hedge derivatives are managed on a consolidated basis and are therefore not reﬂ ected in segment income. North America Summary of Financial and Operating Data IFRS For the years ended December 31 2011 2010 % Change US GAAP 2009 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)1 Segment EBITDA ($ millions)2 Capital expenditures ($ millions)3 $ 410 61 0.065 3,382 396 44 0.084 3,110 $ 1,924 $ 1,812 426 $ 429 $ $ 3,094 $ 1,837 $ 3,585 $ 2,317 854 $ 603 397 4% 64 39% 0.053 (23%) 2,810 9% 6% $ 1,421 (1%) $ 504 68% $ 897 55% $ 1,259 42% $ 207 1. Segment income excludes income taxes. 2. EBITDA is a non-GAAP financial performance measure with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see page 98 of this MD&A. 3. Amounts presented represent expenditures for minesite expansion, minesite sustaining as well as open pit and underground mine development on a cash basis excluding capitalized interest. Segment EBITDA and segment income for 2011 were $3,585 million and $3,094 million, an increase of 55% and 68%, respectively, over the prior year. The increases were primarily the result of higher realized gold prices and higher sales volume. Gold production of 3.38 million ounces for 2011 was 9% higher than the prior year, and in line with the high end of our most recent regional guidance range of 3.30 to 3.40 million ounces. Higher production was mainly due to increased production at Cortez, Bald Mountain, Ruby Hill and Golden Sunlight, which recommenced producing gold in 2011 after an extended redevelopment phase. This increase was partially offset by lower production at Goldstrike. 66 Production at Cortez increased by 25% over 2010, mainly as a result of higher volumes processed; partially offset by lower head grades due to the impact of a full year production at the Cortez Hills open pit. Production at Bald Mountain increased by 58% mainly due to higher tons mined and processed as a result of an ongoing mine expansion. At Ruby Hill, production for year was up by 57% due to increase in refractory ore processed, which resulted in higher average head grades. At Goldstrike, production for the year was down by 12% primarily as a result of lower average head grades due to mine sequencing and lower throughput at the autoclave. Cost of sales for 2011 increased by 6% over the prior year, primarily as a result of higher direct mining costs, particularly for labor and energy. The increase in direct mining costs was partially offset by an increase in capitalized production phase stripping costs at Goldstrike and Cortez. Total cash costs per ounce were $426, as compared to $429 in the prior year, and were in line with our most recent regional guidance range of $425 to $450 per ounce. Total cash costs were lower in 2011 due to the impact of higher production levels, particularly at Cortez, which was partially offset by the increase in direct mining costs. In 2012, we expect gold production to be in the range of 3.425 to 3.60 million ounces. Production mix within North America is expected to change due to the commencement of operations at Pueblo Viejo in the Dominican Republic in the second half of the year and an increase in ore tons mined and processed at Goldstrike as the mine completed a substantial stripping phase towards the end of 2011. Production is also expected to be higher due to higher tons mined and processed at Bald Mountain due to the completion of a recent expansion in 2011, and higher ore grades at Golden Sunlight following the completion of an extended development period early in 2011. This is expected to be partially offset by lower production at Cortez due to a decline in open pit ore grade. Total cash costs are expected to be $475 to $525 per ounce, higher than 2011 levels of $426 per ounce primarily due to a change in production mix. Additionally, we expect to capitalize less operating costs for waste stripping as a result of Goldstrike and Cortez completing substantial stripping campaigns in 2011. Labor cost is increasing due to market adjustments for skilled labor and additional hiring at some sites. Gas and electricity costs are slightly higher at Cortez and royalties are increasing due to higher realized gold prices. Beyond 2012, we have identiﬁ ed various opportunities to add production within North America, including the potential expansion of our current Turquoise Ridge underground operation into a large scale open pit to mine low-grade mineralization; the recent discoveries known as Red Hill/Goldrush in Nevada, together with possibilities for extension at the Cortez Hills Lower Zone and other satellite deposits; the use of thiosulphate technology at Goldstrike to extend the life of the autoclaves; and the expansion of the open pit mine life at Hemlo. We continue to progress evaluation of these opportunities to create value at our existing operations. South America Summary of Financial and Operating Data IFRS For the years ended December 31 2011 2010 % Change US GAAP 2009 Total tons mined (millions) Ore tons processed (millions) Average grade (ozs/ton) Gold produced (000s/oz) Cost of sales ($ millions) Total cash costs (per oz) Segment income ($ millions)1 Segment EBITDA ($ millions)2 Capital expenditures ($ millions)3 $ 162 69 0.035 1,872 145 67 0.039 2,120 905 $ 702 $ 358 $ 208 $ $ 1,887 $ 1,782 $ 2,102 $ 1,996 298 $ 293 158 12% 70 3% 0.036 (10%) (12%) 1,889 29% $ 499 72% $ 265 6% $ 1,111 5% $ 1,245 2% $ 171 1. Segment income excludes income taxes. 2. EBITDA is a non-GAAP financial performance measure with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see page 98 of this MD&A. 3. Amounts presented represent expenditures for minesite expansion, minesite sustaining as well as open pit and underground mine development on a cash basis excluding capitalized interest. Segment EBITDA and segment income for 2011 were $2,102 million and $1,887 million, an increase of 5% and 6%, respectively, over the prior year. These increases were primarily as a result of higher realized gold prices, which were partially offset by lower sales volumes and higher total cash costs. Gold production for 2011 was 12% lower than in the prior year, and was within our regional guidance range of 1.85 to 1.90 million ounces. The decrease in production reﬂ ects lower production levels across all of our mines. In 2011, cost of sales increased by 29% over the prior year, primarily due to higher direct mining costs, largely due to inﬂ ationary pressures in Argentina, an increase in consumable costs, and lower capitalized production phase stripping costs at Veladero. Total cash costs of $358 per ounce were slightly lower than our Barrick Financial Report 2011 | Management’s Discussion and Analysis most recent regional guidance range of $360 to $380 per ounce. The increase in total cash costs was mainly due to higher direct mining costs along with the impact of lower production levels, particularly from the lower-cost Lagunas Norte and Veladero mines. In 2012, we expect gold production to be in the range of 1.55 to 1.70 million ounces. Production is expected to be lower than 2011, primarily due to lower Veladero and Pierina production and, to a lesser extent, Lagunas Norte. 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. Total gold cash costs are expected to be $430 to $480 per ounce compared to $358 per ounce in 2011. Total cash costs per ounce are expected to be higher in 2012 primarily due to the production mix impact of lower grades at Veladero and higher labor and contractor costs due to inﬂ ation in Argentina. Beyond 2012, we have identiﬁ ed various opportunities to add production within South America, including extending mining at Lagunas Norte as a result of incremental sulphide mineralization, which has the potential to beneﬁ t life of mine production, and an optimized leach pad solution at Veladero, which would accelerate the processing of inventory. We continue to make progress in our evaluation of these opportunities to create value at our existing operations. Australia Pacific Summary of Financial and Operating Data1 IFRS For the years ended December 31 2011 2010 % Change US GAAP 2009 Total tons mined (millions) Ore tons processed (millions) Average grade (ozs/ton) Gold produced (000s/oz) Cost of sales ($ millions) Total cash costs (per oz) Segment income ($ millions)2 Segment EBITDA ($ millions)3 Capital expenditures ($ millions)4 $ 112 26 0.083 1,879 118 27 0.082 1,939 $ 1,611 $ 1,480 621 $ 576 $ $ 1,330 $ 831 $ 1,648 $ 1,096 463 $ 381 (5%) 133 (4%) 30 1% 0.075 1,950 (3%) 9% $ 1,134 8% $ 581 60% $ 315 50% $ 597 22% $ 239 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 IFRS. For further information and a detailed reconciliation, please see page 98 of this MD&A. 4. Amounts presented represent expenditures for minesite expansion, minesite sustaining as well as open pit and underground mine development on a cash basis excluding capitalized interest. 67 Management’s Discussion and Analysis Segment EBITDA and segment income for 2011 were $1,648 million and $1,330 million, an increase of 50% and 60%, respectively, over the prior year. The increases were primarily as a result of higher realized gold prices, which was partially offset by lower sales volumes and higher total cash costs. Gold production of 1.9 million ounces for 2011 was slightly lower than the prior year and was in line with our original and most recent guidance of 1.9 million ounces. Higher production at Yilgarn South was offset by lower production at Cowal, Kanowna, Plutonic and Porgera. Production at Yilgarn South increased by 18% over 2010 due to better average head grades at Lawlers, improved production rates at Darlot and higher tons mined and processed at Granny Smith, primarily as a result of the mine expansion. Production at Cowal decreased by 10%, due to mine sequencing, which resulted in the mining of lower grade zones of the pit. Production at Kanowna decreased by 10% from 2010 as a result of lower average head grades and lower tons processed due to mining and processing of harder ore which is more difﬁ cult to treat and results in lower recoveries. Production at Plutonic decreased by 15% from 2010 due to lower average head grades. Production at Porgera decreased by 4%, mainly due to lower average head grades as a higher portion of the mill feed was sourced from stockpiles. In 2011, cost of sales increased by 9% over the prior year, reﬂ ecting higher direct mining costs, particularly for labor and energy, a decrease in capitalized production phase stripping costs at Porgera, Cowal and Kalgoorlie and higher costs as a result of a mine expansion at Granny Smith. Total cash costs per ounce were up 8% to $621 over the prior year, due to the same factors that affected cost of sales, as well as the impact of slightly lower production levels. Total cash costs were within our original guidance range of $610 to $635 per ounce. In 2012, we expect gold production to be in the range of 1.80 to 1.95 million ounces, which is consistent with 2011. Higher production is expected at Porgera due to improved underground production primarily due to equipment availability issues and unplanned maintenance in 2011. This is expected to be offset by lower production at Kalgoorlie due to fewer tons mined in lower grade areas. Total gold cash costs are expected to be $700 to $750 per ounce compared to $621 per ounce in 2011. Total cash costs per ounce are expected 68 to be higher primarily due to the changes in our effective hedge rates from 2011 to 2012, higher gas and electricity costs and higher labor due to inﬂ ation and hiring at some sites. Gas and electricity costs are higher principally due to signiﬁ cantly higher natural gas prices at Porgera, where it is used to generate power, as a result of the expiration of a long-term contract at the end of 2011. Beyond 2012, we have identiﬁ ed various opportunities to add gold production within Australia Paciﬁ c, including a potential expansion at Cowal that could extend the mine life by about 5 years and an expansion at Granny Smith below the current underground mine. We continue to progress our evaluation of these opportunities to create value at our existing operations. African Barrick Gold Summary of Financial and Operating Data For the years ended December 31 IFRS 100% basis 2011 2010 % Change Total tons mined (millions) Ore tons processed (millions) Average grade (ozs/ton) Gold produced (000s/oz) Cost of sales ($ millions) Total cash costs (per oz) Segment income ($ millions)2 Segment EBITDA ($ millions)3 Capital expenditures ($ millions)4 50 8 0.096 689 $ 708 $ 692 $ 397 $ 538 $ 284 For the years ended December 31 44 8 0.094 701 $ 598 $ 570 $ 315 $ 429 $ 225 IFRS 14% – 2% (2%) 18% 21% 26% 25% 26% 73.9% basis1 2011 2010 % Change 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)2 Segment EBITDA ($ millions)3 Capital expenditures ($ millions)4 37 6 0.096 509 $ 523 $ 692 $ 293 $ 398 $ 210 35 7 0.094 564 $ 480 $ 570 $ 250 $ 342 $ 176 6% (14%) 2% (10%) 9% 21% 17% 16% 19% US GAAP 2009 41 7 0.114 716 $ 377 $ 545 $ 143 $ 236 $ 134 US GAAP 2009 41 7 0.114 716 $ 377 $ 545 $ 143 $ 236 $ 134 1. 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. 2. Segment income excludes income taxes. 3. EBITDA is a non-GAAP financial performance measure with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see page 98 of this MD&A. 4. Amounts presented represent expenditures for minesite expansion, minesite sustaining as well as open pit and underground mine development on a cash basis excluding capitalized interest. Segment EBITDA and segment income for 2011, on a 100% basis, were $538 million and $397 million, an increase of 25% and 26%, respectively, over the prior year. The increases were primarily as a result of higher realized gold prices, which was partially offset by lower sales volume and higher total cash costs. Barrick’s equity interest in 2011 production was 0.509 million ounces, slightly lower than the most recent regional guidance of 0.515 to 0.560 million ounces. Lower than originally expected production in 2011 was mainly due to a decrease in production at North Mara, partially offset by higher production at Tulawaka. The decrease at North Mara was due to mine sequencing, which resulted in the processing of lower grade stockpiles as a result of its ongoing waste stripping program. The increase at Tulawaka was due to higher average head grades from underground operations. In 2011, cost of sales, on a 100% basis, increased by 18% over 2010 primarily due to higher direct mining costs, which is largely due to inﬂ ationary pressures and increases in commodity inputs for key operating consumables. Compared to 2010, 2011 total cash costs per ounce were $692, up 21% and were within our regional guidance range of $675 to $700 per ounce. The increase in total cash costs was primarily due to higher costs across our operations. In 2012, we expect equity gold production, reﬂ ecting our 73.9% ownership of ABG, to be in the range of 0.500 to 0.535 million ounces, which is consistent with 2011. North Mara production is expected to be higher due to higher ore grades mined and milled from slightly fewer tons processed. Buzwagi production is lower due to a shift to mining lower grade areas. Total gold cash costs are expected to be $790 to $860 per ounce compared to $692 per ounce in 2011. Total cash costs per ounce are expected to be higher due to the production mix impact of lower Buzwagi grades and an increase in labor, gas and electricity costs at several sites. Beyond 2012, ABG has identiﬁ ed various opportunities to add production, including the Gokona/Nyabigena underground zones at North Mara; a process plant expansion and the Upper East Zone at Bulyanhulu; and at the Golden Ridge exploration property. ABG continues to make progress in its evaluation of these opportunities to create value at its existing operations and to develop acquired exploration properties. Barrick Financial Report 2011 | Management’s Discussion and Analysis Capital Projects Summary of Financial and Operating Data ($ millions) For the years ended December 31 E&E expense1 E&E expenses incurred by equity investees2 Total E&E expenses Segment income (loss) Segment EBITDA Capital expenditures3 Pascua-Lama Pueblo Viejo Cerro Casale Cortez Hills Buzwagi Equity investees IFRS 2011 2010 % Change $ 53 $ 21 152% US GAAP 2009 49 93 2 55 (165) (155) 1,191 521 83 – 11 32 (18) (15) 724 592 50 19 (82%) 72% 142 817% 933% (109) (106) 65% (12%) 66% (100%) 202 433 – – 52 39 25 56% Subtotal 1,834 1,410 30% 687 Capital commitments4 $ 1,338 $ 1,253 31% 1,018 1. Amounts presented represent our share of E&E expense. 2. Amounts presented represent our share of project development expense from projects for which we use the equity accounting method managed by Capital Projects, including Donlin Gold 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 $53 million in E&E expenses (our share) in capital expenditures in 2011 as compared to prior year E&E expense of $21 million. The increase in E&E compared to 2010 primarily relates to increased E&E expenses at our capital projects, partially offset by decreased E&E expenditures incurred by our equity investees. The increase in capital expenditures primarily relates to increased construction activities at our Pascua-Lama project. Projects in construction Barrick has targeted growth in production to approximately nine million ounces of gold by 201616, driven largely by Pueblo Viejo and Pascua-Lama. Total cash costs per ounce are expected to beneﬁ t from these two large, low-cost projects as they come on stream in 16. The target of 9 M oz of annual production by 2016 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. 69 Management’s Discussion and Analysis 2012 and 2013, respectively. These two high quality mines are expected to contribute 1.5 million ounces17 of average annual production and have a signiﬁ cant positive impact on Barrick’s overall total cash costs. Pueblo Viejo At the Pueblo Viejo project in the Dominican Republic, ﬁ rst production continues to be expected in mid-2012 and overall construction is currently about 90% complete. At the end of Q4, approximately 85% of the expected total mine construction capital of $3.6 – $3.8 billion18 (100% basis) or $2.2 – $2.3 billion (Barrick’s 60% share) had been committed. About 13 million tonnes of ore, representing approximately 1.4 million contained gold ounces, has been stockpiled to date. Construction of the tailings facility progressed during Q4 with the receipt of approvals to re-commence construction. The oxygen plant is expected to undergo pre-commissioning testing in Q1 2012, with the ﬁ rst two autoclaves undergoing pre-commissioning in Q2 2012. Construction of the transmission line connecting the site to the national power grid was completed during Q4 2011, and the inter-connect to the grid has been achieved. As part of a longer-term, optimized power solution for Pueblo Viejo, the Company has started early works to construct a dual fuel power plant at an estimated incremental cost of approximately $300 million (100% basis). The power plant would commence operations utilizing heavy fuel oil, but have the ability to subsequently transition to lower cost liquid natural gas. The new plant is expected to provide lower cost, long-term power to the project. Pueblo Viejo is expected to contribute approximately 100,000 – 125,000 ounces to Barrick at total cash costs of $400 – $500 per ounce19 in 2012 as it ramps up to full production in 2013. Barrick’s 60% share of annual gold production in the ﬁ rst full ﬁ ve years of operation is expected to average 625,000-675,000 ounces at total cash costs of $300 – $350 per ounce20. 17. Based on the estimated cumulative average annual production in the first full five years once both are at full capacity. 18. Based on gold and oil price assumptions of $1,300/oz, and $100/bbl, respectively. 19. Based on 2012 gold and oil price assumptions of $1,700/oz and $100/bbl, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate. 20. Based on gold and oil price assumptions of $1,300/oz, and $100/bbl, respectively. 70 Pascua-Lama At the Pascua-Lama project, approximately 55% of the previously announced pre-production capital of $4.7 – $5.0 billion21 has been committed and ﬁ rst production is expected in mid-2013. The project is being impacted by labor and commodity cost pressures as a result of inﬂ ation, competition for skilled labor, the impact of increased Argentinean customs restrictions on equipment procurement and lower than expected labor productivity. In Chile, earthworks were about 95% complete at the end of Q4, and in Argentina, earthworks construction was approximately 65% complete at year end. Approximately 40% of the concrete has been poured at the processing facilities in Argentina and about 15% of the structural steel has been erected to date. Occupancy of the construction camps in Chile and Argentina continues to ramp up with 6,500 beds available by the end of 2011. The camps are expected to reach their full capacity of 10,000 beds in mid-2012. Average annual gold production from Pascua-Lama is expected to be 800,000 – 850,000 ounces in the ﬁ rst full ﬁ ve years of operation at negative total cash costs of $225 – $275 per ounce21 based on a silver price of $25 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. Projects in feasibility Cerro Casale At the Cerro Casale project in Chile, basic engineering was completed on schedule in Q4. The EIA permitting process is anticipated to be completed by the end of 2012, after which Barrick will consider a construction decision, commencement of detailed engineering and sectoral permitting. Ongoing consultation with the government, local communities and indigenous groups is continuing in parallel with permitting. Barrick’s 75% share of average annual production is anticipated to be 750,000 – 825,000 ounces of gold and 190 – 210 million pounds of copper in the ﬁ rst full ﬁ ve years of operation at total cash costs of $200 – $250 per ounce22. Estimated total mine construction capital is approximately $6.0 billion (100% basis)22,23. 21. Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz, and $100/bbl, respectively and assuming a Chilean peso f/x rate of 475:1. 22. Based on gold, copper, and oil price assumption of $1,300/oz, $3.25/oz and $100/bbl, respectively and assuming a Chilean peso f/x rate of 475:1. 23. Based on Q2 2011 prices and does not include escalation for inflation. Donlin Gold At the 50%-owned Donlin Gold project in Alaska, the revised feasibility study, which includes updated costs and the utilization of natural gas, has been completed and acceptance of the study by the Board of Donlin Gold LLC is expected in the ﬁ rst half of 2012. Mine construction capital is expected to be approximately $6.7 billion (100% basis)24, which includes a natural gas pipeline that is anticipated to lower long-term power costs and offer a better environmental and operational solution for power connection to the site. Permitting is expected to commence following approval by the Board of the revised feasibility study. Donlin Gold is anticipated to produce about 1.5 million ounces of gold annually (100% basis) in its ﬁ rst full ﬁ ve years of operation. Copper Summary of Financial and Operating Data IFRS For the years ended December 31 2011 2010 % Change Copper produced (millions of lbs) Cost of sales ($ millions) Total cash costs (per lb) Segment income ($ millions)1 Segment EBITDA ($ millions)2 Capital expenditures ($ millions)3 451 368 $ 983 $ 430 $ 1.75 $ 1.10 $ 644 $ 607 $ 817 $ 697 $ 333 $ 55 23% 129% 59% 6% 17% 505% US GAAP 2009 393 $ 444 $ 1.17 $ 570 $ 646 $ 39 1. Segment income excludes income taxes. 2. EBITDA is a non-GAAP financial performance measure with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see page 98 of this MD&A. 3. Amounts presented represent expenditures for minesite expansion, minesite sustaining as well as open pit and underground mine development on a cash basis excluding capitalized interest. Segment EBITDA and segment income for 2011 were $817 million and $644 million, an increase of 17% and 6%, respectively, over the prior year. Segment income for 2011 was $644 million, up $37 million as compared to the prior year. The increases were primarily as a result of higher realized copper prices and sales volumes, which were partially offset by higher total cash costs. Barrick Financial Report 2011 | Management’s Discussion and Analysis Segment EBITDA was negatively affected by $34 million in inventory purchase accounting adjustments related to mineral inventory that was acquired as part of the Equinox acquisition. Segment income was also affected by depreciation of fair value increments arising from the allocation of the purchase price. Copper production in 2011 was 451 million pounds, which was 23% higher than the prior year, and was in line with the low end of our regional guidance range of 450 to 460 million pounds. The increase in production level was mainly due to production from Lumwana, which was acquired as part of the Equinox transaction, partially offset by lower production in Zaldívar due to lower average head grades and the impact of the divestiture of Osborne in the third quarter of 2010. In 2011, cost of sales increased by 129% over the prior year, primarily due to the inclusion of Lumwana production and the impact of higher input prices for fuel, power and sulfuric acid costs at Zaldívar. Total cash costs per pound increased by 59% over the prior year, reﬂ ecting higher direct production costs and lower production levels at Zaldívar and the impact of higher cost production from Lumwana. Total cash costs were slightly above the high end of our recent guidance range of $1.60 to $1.70 per pound. In 2012, we expect copper production in the range of about 550 to 600 million pounds, resulting from a full year of production from Lumwana and the mid-year start-up of Jabal Sayid. Production at Zaldívar is expected to remain at levels similar to 2011. Total cash costs for copper are expected to be in the range of $1.90 to $2.20 per pound, approximately $0.30 higher than 2011 and mainly the result of the impact of a full year’s contribution from Lumwana, an increase to the Zambian government royalty rate, start-up of Jabal Sayid at higher average cash costs per pound and an increase in market prices for sulfuric acid at Zaldívar. 24. Based on Q2 2011 prices and does not include escalation for inflation. 71 Lumwana Expansion At Lumwana, activity has been ramped up with 17 drill rigs on the property focusing on resource deﬁ nition drilling at Chimiwungo to convert inferred resources into the indicated category and step-out drilling to the south and east to extend the mineralization. Drilling to date has conﬁ rmed the thickened eastern shoot of Chimiwungo and selected highlights include 44 meters grading 1.00% copper, 44 meters at 1.07%, 41 meters at 0.80%, 37 meters at 0.91% and 20 meters at 1.60%. In addition to these strong results within the resource area, drilling further to the east is intersecting shallower than expected mineralization. A prefeasibility study on an expansion that could potentially double processing rates at Lumwana is expected to be completed by year end 2012. Kabanga At the 50%-owned Kabanga nickel project in Tanzania, preliminary engineering continues along with efforts to obtain an approved Environmental Impact Assessment and a Special Mining License and negotiate a Mineral Development Agreement with the Tanzanian government by the end of 2012, at which point the partners expect to make a construction decision. Management’s Discussion and Analysis Projects in construction Jabal Sayid Overall construction of the Jabal Sayid copper project in Saudi Arabia was about 75% complete at the end of Q4. Subject to receipt of ﬁ nal approvals, the operation is expected to enter production in the second half of 2012 at total construction capital of approximately $400 million, of which 85% had been committed at the end of Q4. Underground mine development for ﬁ rst ore production and concrete works was completed in Q4 and bulk earthworks were about 90% complete. Jabal Sayid is expected to produce 35 – 45 million pounds of copper in 2012 at total cash costs of $2.15 – $2.50 per pound25. Average annual production from Lodes 2 and 4 is expected to be 100 – 130 million pounds over the ﬁ rst full ﬁ ve years of operation at total cash costs of $1.50 – $1.70 per pound. Results from recent drilling beneath Lode 4 demonstrate that the width of mineral- ization towards the base of the current resource model had been underestimated by lack of drilling. In addition to the previous intercept of 111 meters grading 2.67% copper, recent drilling has intersected 119 meters at 1.2% copper. This area will be the focus of ongoing drilling and resource/reserve upgrades and additions in 2012. Projects in Feasibility Zaldívar Sulfides Expansion A scoping study has also been completed on the Zaldívar deep sulﬁ des and a prefeasibility study by year end 2012. Although this project is in the early stages, this expansion opportunity has the potential to beneﬁ t life of mine production starting as early as 2017 and signiﬁ cantly extend the mine life. 25. Based on 2012 copper and gold price assumptions of $3.50/lb and $1,700/ oz, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate. 72 Financial Condition Review Summary Balance Sheet and Key Financial Ratios ($ 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 Net debt-to-total capitalization6 Return on equity7 Barrick Financial Report 2011 | Management’s Discussion and Analysis 2011 2010 $ 2,745 2,335 42,339 1,465 48,884 7,361 13,058 2,911 23,330 23,363 2,191 $ 3,968 1,695 27,566 1,408 34,637 4,537 6,392 2,491 13,420 19,472 1,745 $ 25,554 $ 21,217 $ 509 $ 10,320 1,000 $ 436 $ 2,427 999 2.25:1 0.56:1 0.44:1 0.33:1 22% 2.84:1 0.33:1 0.12:1 0.10:1 20% 1. Adjusted debt and net debt are non-GAAP financial performance measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, please see page 101 of this MD&A. 2. Total common shares outstanding do not include 6.9 million stock options. The increase from December 31, 2010 is due to the exercise of stock options and the conversion of debentures. 3. Represents current assets divided by current liabilities as at December 31, 2011 and December 31, 2010. 4. Represents adjusted debt divided by total shareholders’ equity as at December 31, 2011 and December 31, 2010. 5. Represents net debt divided by total shareholders’ equity as at December 31, 2011 and December 31, 2010. 6. Represents net debt divided by capital stock and long term debt at December 31, 2011 and December 31, 2010. 7. Represents adjusted net earnings divided by average shareholders’ equity as at December 31, 2011 and December 31, 2010. Balance Sheet Review Total assets were $49 billion in 2011, an increase of $14.2 billion or 41% compared to 2010. The increase primarily reﬂ ects an increase in property, plant and equipment and goodwill, which were partially offset by a decrease in cash and equivalents. This reﬂ ects the impact of our acquisition of Equinox in the second quarter of 2011 as well as the signiﬁ cant capital expenditures primarily related to our projects in construction. Our asset base is primarily comprised of non-current assets such as property, plant and equipment and goodwill, reﬂ ecting the capital intensive nature of the mining business and our history of growing through acquisitions. Other signiﬁ cant assets include production 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. Total liabilities increased by $10 billion or 74% compared to 2010, largely due to the issuance of $6.5 billion of new debt in connection with the acquisition of Equinox. 73 Management’s Discussion and Analysis Sources and Uses of Net Debt (in $ millions) For the years ended December 31 Operating Activities Adjusted operating cash ﬂ ow Settlement of gold sales contracts Acquisition costs expensed and related working capital movements Withholding tax payment 2011 2010 $ 5,680 $ 5,241 – (656) (204) (161) – Operating inflows $ 5,315 $ 4,585 Investing activities Capital expenditures – minesite sustaining Capital expenditures – open pit and underground mine development Capital expenditures – minesite expansion1 Capital expenditures – projects1 Acquisitions Other investing activities (980) (865) (842) (533) (2,618) (7,677) (177) (595) (257) (2,061) (813) (39) Total investing outflows (12,827) (4,630) Financing activities (excluding debt) Proceeds from public issuance of common shares by a subsidiary Dividends Funding from non-controlling interests Repayments of debt related to the acquisitions Deposit on silver sales agreement Other ﬁ nancing activities – (509) 403 (347) 138 (9) 884 (436) 114 – 137 102 Total financing (outflows) inflows (324) 801 Other movements Conversion of convertible debt Settlement (recognition) of obligation to close out gold sales contracts Adjustment for Pueblo Viejo financing (116) 30 176 – 656 (partner’s share), net of cash 59 310 Net (decrease) increase in net debt 7,893 (1,928) Net debt at beginning of period2 2,427 4,355 Net debt at end of period2 $ 10,320 $ 2,427 1. The amounts include capitalized interest of $382 million (2010: $275 million). 2. Net debt is a non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see page 101 of this MD&A. As at December 31, 2011 net debt was $10.3 billion, and our net debt-to-equity ratio and net debt-to-total capitalization ratios were 0.44:1 and 0.33:1, respectively. This compares to net debt as at December 30, 2010 of $2.4 billion, and net debt-to-equity and net debt-to-total capitalization ratios of 0.12:1 and 0.10:1, respectively. The increase in net debt, net debt-to-equity and net debt-to-total capitalization ratios are largely due to the additional debt issued in connection with our acquisition of Equinox. The majority of our outstanding long-term 74 debt matures at various dates beyond 2013. In January 2012, we entered into a new credit facility of $4 billion with an interest rate of LIBOR plus 1.00%, which matures in 2017. Coincident with this agreement becoming effective, we terminated our $2 billion facility that was secured in May 2011 and transferred the $1 billion drawn on the $2 billion facility to the new $4 billion facility. As a result, our total scheduled debt repayments in the next couple of years is $2,287 million. Counterparties to debt and derivative instruments do not have unilateral discretionary rights to accelerate repayment at earlier dates, and therefore we are largely protected from short-term liquidity ﬂ uctuations. Shareholders’ Equity Outstanding Share Data As at January 27, 2012 Common shares Stock options Number of shares 1,000,422,260 6,845,296 Dividend Policy In 2011, we increased our annual dividend from $0.48 per common share to $0.60 per common share. This 25% increase in dividends reﬂ ects our ability to generate substantial cash ﬂ ows from our operations in a high gold price environment. 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 liquidity proﬁ le, 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 2011, other comprehensive income was a loss of $156 million on an after-tax basis consisting primarily of gains of $411 million on hedge contracts designated for future periods, caused primarily by changes in currency exchange rates, copper prices, and fuel prices, offset by reclassiﬁ cation adjustments totaling $506 million for gains on hedge contracts designated for 2011 that were transferred to earnings in 2011 in conjunction with the recognition in expense of the related hedge exposure; $41 million loss transferred to earnings related to gains recorded on the sale of shares in various investments and losses for impaired investments; $100 million of losses recorded as a result of changes in the fair value of investments held during the year; $36 million in losses for currency translation adjustments on Barrick Energy; $35 million actuarial loss on pension liability and a $69 million gain due to tax recoveries on the overall decrease in OCI. Included in accumulated other comprehensive income at December 31, 2011 were unrealized pre-tax gains on currency, commodity and interest rate hedge contracts totaling $733 million. The balance primarily relates to currency hedge contracts that are designated against operating costs and capital expenditures, primarily over the next three years and are expected to help protect against the impact of the strengthening in the Australian and Canadian dollar exchange rates 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/depreciation are recorded in earnings. Financial Position We have maintained a strong ﬁ nancial position despite the market turbulence that has been experienced over the past four years. Our strong earnings and operating cash ﬂ ow growth have enabled us to make high return investments in our project pipeline and also consistently increase our dividends. This is illustrated by our signiﬁ cant cash and working capital balances which remain strong after the use of approximately $2 billion in cash for the acquisition of Equinox in 2011. Our debt-to-equity and debt-to-total capitalization ratios as at December 31, 2011 have also increased reﬂ ecting the additional debt issued in connection with our acquisition of Equinox. Our strong ﬁ nancial position enabled us to fund the acquisition of Equinox through a combination of our existing cash balances and new debt, which helped us maintain the only A-rated balance sheet in the gold mining industry as measured by S&P. Our credit ratings, as established by S&P and Moody’s, have remained stable throughout this period of ﬁ nancial uncertainty. Our ability to access unsecured debt markets and the related cost of debt ﬁ nancing 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 ﬁ nancing. Credit Rating from Major Rating Agencies As at January 28, 2012 Standard and Poor’s (“S&P”) Moody’s A– Baa1 Barrick Financial Report 2011 | Management’s Discussion and Analysis The key factors impacting our ﬁ nancial 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 the balance sheet review section of this MD&A for a discussion of key factors impacting these measures in 2011);  Our net cash ﬂ ow, including cash generated by operating activities (refer to the liquidity and cash ﬂ ow section of this MD&A for a discussion of key factors impacting these measures in 2011);  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 and copper reserves (refer to page 184 for more information); and  Our geo-political risk proﬁ le. Liquidity and Cash Flow Total cash and cash equivalents at the end of 2011 were $2.7 billion26. At year end, our cash position consisted of a mix of term deposits, treasury bills and money market investments. Our cash position is primarily denominated in US dollars. The decrease in cash and cash equivalents at December 31, 2011 compared to the end of the prior year is largely due to the use of approximately $2 billion for the acquisition of Equinox. To fund the remaining cost of the acquisition, we issued $4.0 billion of debt securities and we drew down $2.5 billion from our credit facilities. Upon completion of the renegotiation of one of our credit facilities in January 2012, we have a total of $5.5 billion under our credit facilities, with $3.0 billion available for drawdown as a source of ﬁ nancing. One of our primary ongoing sources of liquidity is operating cash ﬂ ow. In 2011, we generated $5.3 billion in operating cash ﬂ ow, which was net of tax payments of about $2 billion, of which about $0.5 billion related to ﬁ nal 2010 income tax payments, compared to $4.6 billion of operating cash ﬂ ow in 2010. Adjusted operating cash ﬂ ow, which excludes the impact of payment of the settlement of gold sales contracts, transaction costs and working capital inputs related to acquisition totaled $5.7 billion in 2011, an increase of 8% compared to 2010. The increase in adjusted operating cash ﬂ ow was primarily due to growing cash margins with the rise in realized gold and copper prices and higher copper sales volumes, partially offset by 26. Includes $584 million cash held at ABG, which may not be readily deployed outside ABG. 75 Management’s Discussion and Analysis higher income taxes paid and lower gold sales volumes. The most signiﬁ cant driver of the change in operating cash ﬂ ow is market gold and copper prices. Future changes in those market prices, either favorable or unfavorable, will continue to have a material impact on our cash ﬂ ow and liquidity. The table below illustrates the sensitivity impact of changes in gold and copper prices on our 2011 production levels. Gold Copper Working Capital (in $ millions) As at December 31 Inventories1 Other current assets Accounts receivable VAT and fuel tax receivables2 Accounts payable and other current liabilities Change in price Impact on EBITDA 100/oz $ 0.50/lb $ 0.8 billion $ 0.2 billion 2011 2010 $ 3,651 $ 2,838 507 615 426 370 466 349 (2,715) (2,477) Non-cash working capital $ 2,335 $ 1,695 1. Includes long-term stockpiles of $1,153 million (2010: $1,040 million). 2. Includes long-term VAT and fuel tax receivables of $272 million (2010: $138 million). Operating cash ﬂ ow and adjusted operating cash ﬂ ow were also impacted by a $640 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 an increase in ore in stockpiles of approximately $114 million, principally at Porgera and Goldstrike. These increases were partially offset by a decrease at Cortez as a result of the processing of ore stockpiles in the second half of the year. The principal uses of operating cash ﬂ ow are to fund our capital expenditures, including construction activities at our advanced projects; acquisitions; dividend payments; and repayments of our outstanding debt. Assuming we are able to sustain our current level of cash generation, continue to pay dividends at current rates totaling about $0.6 billion per year and incur minesite sustaining capital expenditures of about $2 billion per year, $3 billion per year of free cash ﬂ ow would be available for investment in capital projects, minesite expansion opportunities and acquisitions. We expect to complete construction at Pueblo Viejo in mid-2012 and Jabal Sayid in the second half of 2012, with Pascua-Lama in construction throughout 2012. Therefore, we expect 2012 to be a peak year of capital expenditure and anticipate the amount of capital expenditures to begin declining in 2013 and beyond. However, capital expenditures will be signiﬁ cantly impacted by the timing and expenditure levels relating to other major new mine projects and mine expansions, which are subject to permitting approvals and ﬁ nal construction decisions. A material adverse decline in the market price of gold and/or copper could impact the timing of ﬁ nal construction decisions on these other major new mine projects that are not yet in construction. We take a balanced approach to capital allocation and subject all investment decisions to a rigorous and disciplined internal capital allocation review. This review entails an assessment of our overall liquidity, the overall level of investment required, and the prioritization of investments based on the merits of each opportunity relative to the portfolio of investment choices we have. This review may result in good opportunities being held back in favor of higher return projects and should allow us to generate the best return on investment decisions when we are faced with a multitude of prospects. The assessment also takes into account expected levels of future operating cash ﬂ ow and the cost and availability of new ﬁ nancing. Future changes in market gold prices and/or copper prices could impact the timing and amount of cash available for future investment in capital projects, acquisitions, dividends, debt repayments and/or other uses of capital. Alternatives for sourcing our future capital or other liquidity needs include $3.0 billion of availability under our credit facilities, future operating cash ﬂ ow, project ﬁ nancings and further debt or equity ﬁ nancings. These alternatives should provide us with the ﬂ exibility to fund any cash ﬂ ow shortfall and are continually evaluated to determine the optimal mix of capital resources for our capital needs. Cash used in investing activities amounted to $12,827 million in 2011, an increase of $8,197 million compared to 2010, primarily due to the $7,482 million acquisition of Equinox in the second quarter of 2011. 76 Capital Expenditures1 (in $ millions) For the years ended December 31 Capital expenditures – gold projects Pascua-Lama Pueblo Viejo Cerro Casale Cortez Hills Subtotal2 Copper projects Jabal Sayid Subtotal Capital expenditures attributable to non-controlling interests3 Total consolidated project capital expenditures Capital expenditures – minesite expansion Gold North America South America African Barrick Gold Copper Total capital expenditures – minesite expansion Capital expenditures – minesite sustaining Gold North America South America Australia Paciﬁ c African Barrick Gold Copper Other4 Total capital expenditures – minesite sustaining Capital expenditures – open pit and underground mine development Gold North America South America Australia Paciﬁ c African Barrick Gold Copper Total capital expenditures – open pit and underground mine development Capitalized interest Total consolidated capital expenditures Capital expenditures attributable to non- controlling interests3 Total capital expenditures attributable 2011 2010 $ 1,191 $ 724 521 592 83 50 – 19 $ 1,795 $ 1,385 $ 105 – $ 1,900 $ 1,385 375 407 $ 2,275 $ 1,792 $ 255 $ 228 96 23 50 – 93 – $ 494 $ 251 $ 254 $ 198 140 172 192 190 136 96 69 55 189 154 $ 980 $ 865 $ 345 $ 177 62 98 271 191 98 129 66 – $ 842 $ 595 382 275 $ 4,973 $ 3,778 375 407 to Barrick $ 4,598 $ 3,371 Total capital expenditures – copper Total capital expenditures – gold Capital expenditures – other 385 55 4,024 3,162 154 189 Total capital expenditures attributable to Barrick $ 4,598 $ 3,371 1. These amounts are presented on a cash basis consistent with the amounts presented on the consolidated statement of cash flows. 2. On an accrual basis, our share of project capital expenditures is $2,501 million including capitalized interest. 3. Amount reflects our partner’s share of expenditures at the Pueblo Viejo and Cerro Casale project on a cash basis. 4. These amounts include $162 million of capital expenditures at Barrick Energy (2010: $86 million). Barrick Financial Report 2011 | Management’s Discussion and Analysis Our ability to access low-cost borrowing allowed us to generate ﬁ nancing cash inﬂ ow of $6,291 million in 2011. The signiﬁ cant ﬁ nancing activities in 2011 include ﬁ nancing inﬂ ows of $4 billion in debt securities and $2.5 billion in proceeds from the drawdown of our line of credit. These amounts were partially offset by dividend payments of $509 million and debt repayments of $380 million. This compares to ﬁ nancing inﬂ ows in 2010 of $1,434 million, which primarily includes $884 million in proceeds from public issuance of common shares by ABG in the ﬁ rst quarter 2010 and the draw- down of $782 million of Pueblo Viejo project ﬁ nancing in second quarter 2010 partially offset by debt repayments of $149 million and dividend payments of $436 million. Financial Instruments We use a mixture of cash, long-term debt and share- holders’ equity to maintain an efﬁ cient 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 accounting treatment. These non-hedge derivatives are described in note 22 to our consolidated ﬁ nancial statements. For a discussion of certain risks and assumptions that relate to the use of derivatives, including market risk, liquidity risk and credit risk, refer to notes 2 and 25 to our consolidated ﬁ nancial statements. For a discussion of the methods used to value ﬁ nancial instruments, as well as any signiﬁ cant assumptions, refer also to note 2 to our consolidated ﬁ nancial statements. Counterparty Risk Our ﬁ nancial 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 fulﬁ ll its performance obligations under the terms of a ﬁ nancial 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 77 Management’s Discussion and Analysis 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 counter- party, 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 ﬁ nancial condition of counterparties. Summary of Financial Instruments As at December 31, 2011 Financial Instrument Cash and equivalents Accounts receivable Available-for-sale securities Accounts payable Debt Restricted share units Deferred share units Derivative instruments – currency contracts Derivative instruments – silver contracts Derivative instruments – copper contracts Derivative instruments – energy contracts As of December 31, 2011, we had 24 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 with which we hold a net asset position (total balance attributable to the counterparties is $899 million), four hold greater than 10% of our mark-to-market asset position, with the largest counterparty holding 14%. We have two counterparties with which we are in a net liability position, for a total net liability of 1 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. Principal/ Notional Amount Associated Risks $ 2,745 million  Interest rate  Credit $ 426 million $ 161 million  Credit  Market  Market  Liquidity $ 2,083 million  Interest rate $ 13,434 million  Interest rate $ 48 million  Market $ 8 million  Market  Credit  Market/liquidity CAD CLP AUD EUR PGK ZAR 1,239 million 800,130 million 4,471 million 35 million 40 million 510 million 45 million oz 289 million lbs  Market/liquidity  Credit Diesel Propane 5.0 million bbls 4 million gallons  Market/liquidity  Credit Derivative instruments – interest rate contracts Receive ﬁ xed interest rate swaps $200 million  Market/liquidity Non-hedge derivatives various  Market/liquidity  Credit 78 Barrick Financial Report 2011 | Management’s Discussion and Analysis Commitments and Contingencies Capital Expenditures Not Yet Committed We expect to incur capital expenditures during the next ﬁ ve years for both projects and producing mines. The projects are at various stages of development, from preliminary exploration or scoping study stage through to the construction execution stage. The ultimate decision to incur capital expenditures at each potential site is subject to positive results which allow the project to advance past decision hurdles. Three projects were at an advanced stage at December 31, 2011, namely Pueblo Viejo, Pascua-Lama and Jabal Sayid (refer to pages 69–72 for further details). Contractual Obligations and Commitments ($ millions) As at December 31 Debt1 Repayment of principal Capital leases Interest Provisions for environmental rehabilitation2 Operating leases Restricted share units Pension beneﬁ ts and other post-retirement beneﬁ ts Derivative liabilities3 Purchase obligations for supplies and consumables4 Capital commitments5 Social development costs Payments due 2012 2013 2014 2015 2016 2017 and thereafter Total $ 168 28 562 151 25 27 37 22 872 1,740 16 $ 2,061 30 544 126 22 19 28 10 215 15 16 $ 1,140 26 506 72 15 2 28 20 149 1 6 $ 190 24 480 79 14 – 28 9 114 1 6 $ 2,590 16 442 111 11 – 28 3 192 7 6 $ 7,142 19 5,096 1,791 68 – 141 – 206 – 64 $ 13,291 143 7,630 2,330 155 48 290 64 1,748 1,764 114 Total $ 3,648 $ 3,086 $ 1,965 $ 945 $ 3,406 $ 14,527 $ 27,577 1. 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, 2011, Interest is calculated on our long-term debt obligations using both fixed and variable rates. 2. Provisions for Environmental Rehabilitation – Amounts presented in the table represent the undiscounted future payments for the expected cost of provisions for environmental rehabilitation. 3. Derivative Liabilities – Amounts presented in the table relate to derivative contracts disclosed under note 22 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 2011 mainly relate to construction capital at Pueblo Viejo, Pascua-Lama and Jabal Sayid. Litigation and Claims We are currently subject to various litigation as disclosed in note 33 to the consolidated ﬁ nancial 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 ﬁ nancial condition, cash ﬂ ow and results of operations. 79 Management’s Discussion and Analysis Review of Quarterly Results Quarterly Information1 ($ millions, except where indicated) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2011 2010 Revenues Realized price – gold2 Realized price – copper2 Cost of sales Net earnings4 Per share (dollars)3,4 Adjusted net earnings5 Per share (dollars)3,4 EBITDA5 Operating cash ﬂ ow Adjusted operating cash ﬂ ow5 $ 3,789 $ 4,007 $ 3,426 $ 3,090 1,389 4.25 1,357 1,001 1.00 1,004 1.01 1,828 1,439 $ 1,299 $ 2,004 $ 938 $ 1,439 1,664 3.69 1,733 959 0.96 1,166 1.17 1,998 1,224 1,743 3.54 1,730 1,365 1.37 1,379 1.38 2,460 1,902 1,513 4.07 1,496 1,159 1.16 1,117 1.12 2,090 750 $ 3,011 $ 2,788 $ 2,621 $ 2,581 1,114 3.29 1,268 820 0.83 763 0.78 1,593 1,151 $ 1,522 $ 1,441 $ 1,127 $ 1,151 1,237 3.43 1,301 942 0.96 912 0.93 1,669 1,441 1,205 2.93 1,262 859 0.87 824 0.84 1,489 1,127 1,368 3.99 1,331 961 0.97 1,018 1.02 1,770 866 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 IFRS. For further information and a detailed reconciliation, please see page 99 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 earnings, EBITDA and adjusted operating cash flow are non-GAAP financial performance measures with no standard meaning under IFRS. For further information and a detailed reconciliation, please see pages 94–99 of this MD&A. Our ﬁ nancial results for the last eight quarters reﬂ ect a trend of increasing spot gold and copper prices that have translated into increasing revenues, net earnings, EBITDA and adjusted operating cash ﬂ ow partially offset by higher gold and copper production costs mainly caused by inﬂ ationary pressures. These ﬁ nancial results were driven by tremendous gold margins. Our results have shown signiﬁ cant margin expansion over the past several years as we continue to beneﬁ t from rising gold prices and held the line on our cash cost. Fourth Quarter Results In fourth quarter 2011, we reported net earnings and adjusted net earnings of $959 million and $1,166 million, respectively, compared to $961 million and $1,018 million, respectively, in fourth quarter 2010. The decrease in both net earnings and adjusted net earnings were largely driven by higher market gold and copper prices along with higher gold and copper sales volumes, which were partially offset by higher cost of sales applicable to gold and copper and higher total cash costs for gold and copper. In fourth quarter 2011, we sold 1.87 million ounces of gold and 135 million pounds of copper, compared to 1.83 million ounces of gold and 103 million pounds of copper in fourth quarter 2010. Revenues in fourth quarter 2011 were higher than the same prior year period reﬂ ecting higher market prices for both copper and gold and higher gold and copper sales volumes. In fourth quarter 2011, cost of sales was $1,733 million, 80 total cash costs of gold was $505 per ounce and total cash cost of $1.99 per pound for copper, an increase of $402 million, $65 per ounce, and $0.91 per pound respectively, from fourth quarter 2010. Cost of sales was higher, reﬂ ecting higher direct mining costs, including higher labor, energy, maintenance and consumable costs, the impact of including production from Lumwana, beginning on June 1, 2011, partially offset by an increase in capitalized production phase stripping costs for gold. Total gold cash costs were higher as a result of increasing direct mining costs, including higher labor, energy, maintenance and consumables costs. Total copper cash costs increased due to inclusion of Lumwana production in the sales mix. In fourth quarter 2011, net cash costs increased by $104 per ounce to $382 per ounce, compared to $278 per ounce in fourth quarter 2010, reﬂ ecting higher total gold cash costs. Operating cash ﬂ ow in fourth quarter 2011 was $1,224 million, a signiﬁ cant increase from fourth quarter 2010. Fourth quarter operating cash ﬂ ow of 2010 reﬂ ected the cost of settling the gold sales contracts of $656 million. Adjusted operating cash ﬂ ow for the fourth quarter was $1,299 million, down 15% from the prior year period. The decrease in adjusted operating cash ﬂ ow reﬂ ects lower net earnings and higher income taxes paid. Adjusted operating cash ﬂ ow before working capital adjustments was $1,405 million, down $639 million from the prior year period. Barrick Financial Report 2011 | Management’s Discussion and Analysis (iii) Asset related to Provision for Environmental Rehabilitation We have elected to take a simpliﬁ ed approach to calculate and record the asset related to the environmental rehabilitation provision on our opening IFRS consolidated balance sheet. The environmental rehabilitation provision calculated on the transition date in accordance with International Accounting Standard 37 Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”) was discounted back to the date when the provision ﬁ rst arose on the mineral property, at which date the corresponding asset was set up and then depreciated to its carrying amount as at the transition date. (iv) Employee benefits We have elected to recognize all cumulative actuarial gains and losses as at January 1, 2010 in opening retained earnings for the company’s employee beneﬁ t plans. (v) Cumulative translation differences We have elected to set the previously accumulated cumulative translation account, which was included in accumulated other comprehensive income (“AOCI”), to zero as at January 1, 2010 and absorbed the balance into retained earnings. International Financial Reporting Standards (IFRS) We have adopted IFRS effective January 1, 2011. Our transition date is January 1, 2010 (the “transition date”) and the Company has prepared its opening IFRS balance sheet as at that date. Our IFRS accounting policies are described in note 2 of the Financial Statements. Elected exemptions from full retrospective application In preparing the accompanying Financial Statements in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards (“IFRS 1”), the Company has applied certain of the optional exemptions from full retrospective application of IFRS. The optional exemptions applied are described below. (i) Business combinations We have applied the business combinations exemption in IFRS 1 to not apply International Financial Reporting Standard 3 Business Combinations (“IFRS 3”) retro- spectively to past business combinations. Accordingly, the Company has not restated business combinations that took place prior to the transition date. (ii) Fair value or revaluation as deemed cost We have elected to measure certain items of Property, Plant and Equipment (“PP&E”) at fair value as at January 1, 2010 or revaluation amounts previously determined under US GAAP and use those amounts as deemed cost as at January 1, 2010. We have made this election at the following properties: Pascua-Lama, Goldstrike, Plutonic, Marigold, Pierina, Sedibelo and Osborne. We have also elected to adopt this election for certain assets at Barrick Energy, which were adjusted by $166 million to their fair value of $342 million on the transition date to IFRS, due to a decline in oil prices. 81 Management’s Discussion and Analysis Reconciliation of Consolidated Balance Sheets as Reported Under US GAAP and IFRS Assets Current assets Cash and equivalents Accounts receivable Inventories Other current assets Total current assets (excluding assets classiﬁ ed as held for sale) Assets classiﬁ ed as held for sale Total current assets 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 Debt Current income tax liabilities Other current liabilities Total current liabilities (excluding liabilities classiﬁ ed as held for sale) Liabilities classiﬁ ed as held for sale Total current liabilities Non-current liabilities Debt Provisions Deferred income tax liabilities Other liabilities Liabilities of discontinued operations Total liabilities Equity Capital stock Other Retained earnings (deﬁ cit) Accumulated other comprehensive income Total equity attributable to Barrick Gold Corporation shareholders Non-controlling interests Total equity Total liabilities and equity January 1, 2010 December 31, 2010 Ref US GAAP1 Adj IFRS US GAAP1 Adj IFRS $ 2,564 $ 251 1,540 524 – $ 2,564 8 259 1,488 (52) 518 (6) A $ 3,968 $ 346 1,852 947 – $ 3,968 370 1,798 935 24 (54) (12) 4,879 59 (50) 41 4,829 100 7,113 – (42) – 7,071 – 4,938 (9) 4,929 7,113 (42) 7,071 B E C C C D A, E 1,136 92 13,125 5,197 66 949 1,531 41 (12) (30) 253 – 209 (348) (173) (41) 1,124 62 13,378 5,197 275 601 1,358 – 291 203 17,751 5,287 140 467 2,070 – 105 (32) 139 809 335 158 (157) – 396 171 17,890 6,096 475 625 1,913 – $ 27,075 $ (151) $ 26,924 $ 33,322 $ 1,315 $ 34,637 $ 1,221 $ 54 94 381 1,750 23 1,773 6,281 1,122 1,184 1,145 23 – $ 1,221 54 – 104 10 366 (15) (5) 26 21 (157) 286 (224) (261) (23) 1,745 49 1,794 6,124 1,408 960 884 – $ 1,511 $ 14 535 429 2,489 – 2,489 6,678 1,439 1,114 868 – – $ 1,511 14 – 550 15 416 (13) 2 – 2 (54) 329 857 (302) – 2,491 – 2,491 6,624 1,768 1,971 566 – 11,528 (358) 11,170 12,588 832 13,420 17,390 – (2,382) 55 2 143 (153) 177 17,392 143 (2,535) 232 17,790 288 456 531 30 26 153 198 17,820 314 609 729 15,063 169 15,232 19,065 407 19,472 484 38 522 1,669 76 1,745 15,547 207 15,754 20,734 483 21,217 $ 27,075 $ (151) $ 26,924 $ 33,322 $ 1,315 $ 34,637 F G D H I J 1. Certain US GAAP figures have been reclassified to conform to our IFRS financial statement presentation. 82 Consolidated Statements of Comprehensive Income Revenues Costs and expenses Cost of sales Corporate administration Exploration and evaluation Other expense Impairment charges (reversals) Other 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 income Unrealized gains (losses) on available-for-sale (AFS) ﬁ nancial securities, net of tax Realized (gains) losses and impairments (recoveries) on AFS ﬁ nancial securities, net of tax Unrealized gains (losses) on derivatives designated as cash ﬂ ow hedges, net of tax Realized (gains) losses on derivatives designated as cash ﬂ ow hedges, net of tax Actuarial gains (losses) on post employment beneﬁ t obligations, net of tax Currency translation adjustments, net of tax Other comprehensive income Total comprehensive income Attributable to: Equity holders of Barrick Gold Corporation Non-controlling interests Barrick Financial Report 2011 | Management’s Discussion and Analysis For the year December 31, 2010 Ref US GAAP1 Adj IFRS K L M N O P $ 10,924 $ 77 $ 11,001 5,350 154 333 463 7 6,307 124 (41) – 4,700 14 (168) 4,546 (1,370) 3,176 121 3,297 64 (11) 485 (82) (2) 22 476 (188) 2 (104) (8) (80) (378) (8) 17 69 533 – (12) 521 (191) 330 3 333 – – 33 (6) – (8) 19 5,162 156 229 455 (73) 5,929 116 (24) 69 5,233 14 (180) 5,067 (1,561) 3,506 124 3,630 64 (11) 518 (88) (2) 14 495 $ 3,773 $ 352 $ 4,125 $ 3,750 23 $ $ 327 $ 25 $ 4,077 48 $ 1. Certain US GAAP figures have been reclassified to conform to our IFRS financial statement presentation. 83 Management’s Discussion and Analysis Consolidated Statements of Cash Flow Under IFRS, as a result of capitalized production phase stripping costs and capitalized E&E costs, operating cash inﬂ ows for the year ended December 31, 2010 increased by $458 million to $4,585 million and investing cash outﬂ ows increased by $458 million to $4,630 million, compared to the equivalent US GAAP amounts for the same periods. References Consolidated Balance Sheets A. Inventories Description Jan.1, 2010 Dec. 31, 2010 Capitalized production phase stripping1 Other2 Short-term inventories Long-term inventories $ (142) 3 (139) (52) (87) $ (116) (4) (120) (54) (66) C. Property, Plant and Equipment Description Jan.1, 2010 Dec. 31, 2010 Increase (decrease) as at Land, Building and Equipment: Deemed cost election for oil & gas properties1 Accumulated hedge gains reclassiﬁ ed from AOCI2 Mining Interest – Depreciable: Capitalized production phase stripping3 Asset retirement cost adjustments4 Mining Interest – Non-Depreciable: Capitalized E&E5 Acquired exploration properties reclassiﬁ ed to intangible assets6 Cerro Casale acquisition7 $ (166) $ (166) (56) (222) 550 (41) 509 188 (209) – (21) (13) (62) (228) 736 (19) 717 292 (335) (313) (356) 6 $ (139) $ (120) Other adjustments $ 253 $ 139 1. As permitted in IFRS 1, we took a deemed cost election for Barrick Energy, which resulted in an adjustment to the carrying amount of certain assets with an offset to retained earnings. For more information on IFRS 1 elections, refer to note 3a of the Financial Statements. 2. IFRS requires that hedge gains or losses on capital expenditures be recorded with the related asset. Accordingly, hedge gains on our capital expenditures at capital projects and certain operating mines were reclassified from AOCI to the related asset. 3. Under IFRS, production phase stripping costs that generate a future economic benefit are capitalized as open pit mine development costs within PP&E. On transition and in subsequent quarters, this resulted in a net increase in PP&E. 4. As permitted in 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. For more information on IFRS 1 elections available to first-time adopters, refer to note 3a of the Financial Statements. Subsequent to January 1, 2010, asset retirement costs increased or decreased based on movements in foreign exchange and discount rates. 5. Under US GAAP, E&E costs can only be capitalized when Barrick has declared US 2P reserves in accordance with Industry Guide 7 issued by the US SEC. IFRS allows capitalization of E&E costs when management assesses that it is probable that the expenditures will result in future economic benefits. At January 1, 2010, the difference resulted from additional E&E costs capitalized under IFRS for the Pueblo Viejo, Buzwagi, Veladero and Lagunas Norte properties. Capitalized costs are net of accumulated depreciation. 6. Under IFRS, 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. This fair value is recorded as an intangible asset (acquired exploration potential) as at the date of acquisition. This change resulted in the reclassification of PP&E related to acquired exploration potential primarily for our Kainantu property, to Intangible Assets. 7. Under IFRS, Cerro Casale met the definition of a business when we acquired an additional 25% ownership, obtaining control, in first quarter 2010. Under US GAAP, Cerro Casale was accounted for as an acquisition of an asset. This accounting difference resulted in the recognition of goodwill of $809 million. 1. The most significant IFRS impact on inventory was the change in the accounting treatment of production phase stripping costs for open pit mines, which we capitalize to PP&E when management assesses that it is probable that the stripping costs will result in future economic benefits. Under US GAAP, these costs were treated as production costs. Capitalized production phase stripping costs also resulted in an increase in depreciation. Refer to note C below for more information on capitalized production phase stripping costs. 2. Includes asset retirement cost adjustments. Refer to note C. B. Equity in Investees Description Jan.1, 2010 Dec. 31, 2010 Highland Gold impairment reversal1 Elimination of interest capitalization on equity investees2 Capitalized E&E3 Accumulated hedge losses relating to capital expenditures reclassiﬁ ed4 $ 55 $ 139 (125) 22 36 $ (12) (46) 12 – $ 105 1. Under IFRS, past impairments of equity investments must be reversed in the future if there is a recovery in the fair 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 the transition date and in subsequent quarters. 2. Under IFRS, our investment in equity investees 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 on our equity investees where the primary activities are the development of mining projects, which principally impacted the carrying amount of our investment in Cerro Casale. 3. Under US GAAP, E&E costs can only be capitalized when Barrick has declared US 2P reserves in accordance with Industry Guide 7 issued by the US SEC. Under IFRS, we capitalize E&E costs when management assesses that it is probable that the expenditures will result in future economic benefits. This resulted in the capitalization of previously expensed E&E costs for the Cerro Casale project. 4. IFRS requires that hedge gains or losses on capital expenditures be recorded against the related asset. Accordingly, hedge losses on our capital expenditures incurred for equity method investments were reclassified from AOCI to Equity in Investees. 84 Adjustments to PP&E by Segment E. Other Assets Barrick Financial Report 2011 | Management’s Discussion and Analysis Description Gold North America South America Australia Paciﬁ c African Barrick Gold Copper Capital Projects Barrick Energy Increase (decrease) as at Jan.1, 2010 Dec. 31, 2010 Description $ 248 196 (154) 21 6 95 (159) $ 272 235 (74) 4 14 (161) (151) $ 253 $ 139 D. Deferred Income Tax Assets and Liabilities Increase (decrease) as at Description Jan.1, 2010 Dec. 31, 2010 Deferred income tax assets1 Deferred income tax liabilities1 $ (348) $ (224) $ 158 $ 857 1. Deferred tax asset and liability balances changed primarily due to the tax effects of the IFRS adjustments. In addition, for December 31, 2010, the IFRS deferred tax liability includes $523 million related to the finalization of the Cerro Casale purchase price allocation which is adjusted retroactively under IFRS. The US GAAP deferred tax amount did not include amounts related to the Cerro Casale purchase price allocation. Sources of Deferred Income Tax Assets and Liabilities At December 31, 2010 US GAAP IFRS Deferred tax assets Tax loss carry forwards Capital tax loss carry forwards Alternative minimum tax (“AMT”) credits PER Property, plant and equipment Post-retirement beneﬁ t obligations Accrued interest payable Other Valuation allowances Deferred tax liabilities Property, plant and equipment Derivative instruments Inventory Other Classiﬁ cation: Non-current assets Non-current liabilities $ 553 101 318 494 177 14 63 53 1,773 (425) 1,348 (1,725) (168) (102) – $ 337 – 318 469 – 25 63 – 1,212 – 1,212 (2,177) (160) (212) (9) $ (647) $ (1,346) $ 467 (1,114) $ 625 (1,971) $ (647) $ (1,346) Capitalized production phase stripping costs related to long-term inventory1 Debt issuance costs reclassiﬁ ed to debt2 Reversal of the RSU long-term asset Investment in Yokohama reclassiﬁ ed Other adjustments 1. Refer to note A. 2. Refer to note F. F. Debt Description Bifurcation of senior convertible debt1 Debt issue costs reclassiﬁ ed2 Previously amortized debt premium reversed from retained earnings2 Increase (decrease) as at Jan.1, 2010 Dec. 31, 2010 $ (87) (45) (68) 30 (3) $ (173) $ (66) (54) (70) 32 1 $ (157) Increase (decrease) as at Jan.1, 2010 Dec. 31, 2010 $ (143) (45) 31 $ (157) $ – (54) – $ (54) 1. Under IFRS, compound financial instruments are required to be split into a debt and an equity component. On transition to IFRS, our senior convertible debentures were bifurcated into debt and equity components. We calculated the liability component by discounting the cash flows associated with the liability at a market rate for a similar debt instrument (without the conversion option). The equity component was measured as the residual amount. 2. IFRS requires debt issuance costs to be deducted from the carrying amount of the related financial liability. At January 1, 2010, this resulted in the reclassification of debt issuance costs from other assets to debt. This was partially offset by reversal of previously amortized debt premium from retained earnings. 85 Management’s Discussion and Analysis G. Provisions H. Opening Retained Earnings1 Increase (decrease) as at Description Jan.1, 2010 Dec. 31, 2010 US GAAP, as reported Jan. 1, 2010 $ (2,382) PER adjustments1,2,3 Reclassiﬁ cation of employee beneﬁ ts and stock based compensation from other liabilities4 Additional provision recognized under IFRS5 Reversal of the RSU long-term asset6 Other adjustments $ 72 $ 80 269 11 (68) 2 302 11 (70) 6 $ 286 $ 329 1. IFRS requires that provisions for PER be adjusted to fair value at each reporting period by applying the current foreign exchange and discount rates. The adjustments to PER are added (or deducted) from the cost of the related asset. At January 1, 2010, the effect of applying the current foreign exchange and discount rates was an increase in the PER balance. In subsequent quarters, the PER increased or decreased based on the movements in foreign exchange and discount rates. 2. IFRS requires that constructive obligations be recognized as provisions if it is probable that the obligation will result in an outflow of economic resources. At January 1, 2010, we recognized certain constructive obligations that were previously expensed as incurred under US GAAP. 3. IFRS requires that environmental obligations be measured using management’s best estimate of the expenditure required to settle the obligation. Under US GAAP, environmental obligations are recorded based on the cost of a third- party performing the work, irrespective of management’s intention to perform the work internally. At January 1, 2010, we eliminated contractor margins for those obligations where Barrick intends to perform the work. 4. Under IFRS, we reclassified employee benefits and stock-based compensation from other liabilities to provisions. 5. IFRS requires recognition of a contingent liability if it is probable that the obligation will result in an outflow of economic resources. At January 1, 2010, this resulted in the recognition of a contingent financial liability of $11 million relating to the additional 40% Cortez acquisition in 2008. 6. Refer to note E. 86 IFRS 1 Exemptions Reset of actuarial gains and losses relating to pension plans2 Reset of cumulative translation account2 Adjustment due to deemed cost election for oil & gas properties2 IFRS Policy choices Capitalized production phase stripping3 Capitalized E&E3 Highland Gold impairment reversal4 Elimination of interest capitalization on equity investees4 Increase in PERs and related asset5 Bifurcation of senior convertible debt6 Time value changes in fair value of options designated as hedging instrument7 Tax effect of adjustments, net Other adjustments (37) (141) (166) 408 160 55 (125) (101) (31) (33) (119) (23) IFRS, as reported Jan. 1, 2010 $ (2,535) 1. Retained earnings changes for the quarters are due to the IFRS adjustments in the consolidated statement of income. 2. Refer to note 3a of the Financial Statements. 3. Refer to note C. 4. Refer to note B. 5. Refer to note G. 6. Refer to note F. 7. Under IFRS, Barrick is required to separate the intrinsic value and the time value of our purchased copper options and designate as the hedging instrument only the changes in the intrinsic value of the option. As a result, for hedge relationships where the critical terms of the purchased option match the hedged risk, the change in intrinsic value is deferred in equity while the change in time value is reclassified from AOCI to opening retained earnings. This change resulted in an amount recorded in retained earnings on transition and gains/losses attributable to time value changes in subsequent quarters were recognized on a separate line item ‘gains (losses) on non-hedge derivatives’ in the income statement. I. Accumulated Other Comprehensive Income Increase (decrease) as at Description Jan.1, 2010 Dec. 31, 2010 Reset of actuarial gains and losses relating to pension plans1 Reset of cumulative translation account1 Time value changes in fair value of options designated as hedging instrument2 Accumulated hedge losses relating to capital expenditures reclassiﬁ ed3 Accumulated hedge gains reclassiﬁ ed4 Tax effect of adjustments Other adjustments 1. Refer to note 3a of the Financial Statements. 2. Refer to note H. 3. Refer to note B. 4. Refer to note C. $ 37 141 $ 37 141 33 36 (56) (14) – 72 36 (62) (20) (6) $ 177 $ 198 $ (292) (101) 63 131 21 (10) $ (188) Barrick Financial Report 2011 | Management’s Discussion and Analysis J. Non-Controlling Interests (NCI) L. Cost of Sales Increase (decrease) as at Increase (decrease) for the period Description Jan.1, 2010 Dec. 31, 2010 Description Year ended Dec. 31, 2010 Capitalized E&E attributable to NCI related to Pueblo Viejo1 Sale of 26.1% ownership of ABG2 Other adjustments $ 50 – (12) $ 38 Capitalized production phase stripping1 Reclassiﬁ cation to income tax2 Depreciation expense3 Other metal sales4 Gain on non-hedge derivatives Other adjustments $ 50 25 1 $ 76 1. Refer to note C. 2. On February 17, 2010, our Board of Directors approved a plan to create ABG and to offer about 26.1% of its equity (including the overallotment option) in an initial public offering on the London Stock Exchange. ABG holds Barrick’s previously held African gold mines and most of Barrick’s previously held exploration properties. The carrying amounts of the net assets are different under IFRS as compared to US GAAP, which resulted in an adjustment to Additional Paid In Capital (“APIC”), and a corresponding adjustment to the NCI. For more information on this transaction, refer to note 4 of the Financial Statements. Consolidated Statements of Comprehensive Income K. Revenues Increase (decrease) for the period Description Year ended Dec. 31, 2010 1. Cost of sales were lower primarily due to capitalized production phase stripping costs. 2. Under IFRS, royalties and mining taxes that are payable to government bodies and are calculated based on net profit are classified as income taxes. We reclassified the following to income tax expense: Nevada Net Proceeds Tax and Cowal royalty. 3. Depreciation expense increased under IFRS due to higher book values resulting from capitalization of production phase stripping costs and E&E costs, and the impact of the calculation of the asset related to the environmental rehabilitation provisions under IFRS 1 for opening balance sheet as at January 1, 2010. 4. Refer to note K. M. Exploration and Evaluation Other metal sales reclassiﬁ ed from cost of sales1 Gain on non-hedge derivatives2 Revenue recognition3 Others Under IFRS, the criteria to determine costs that qualify for capitalization differs from US GAAP. We capitalized additional E&E costs at certain properties, mainly Cerro Casale, where management assessed under IFRS that it is probable that these expenditures will result in future economic beneﬁ ts. $ 131 (68) 14 – $ 77 1. Recognition of incidental other metal sales previously recorded as a credit to costs of sales will be presented as part of revenues 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 was most closely related. N. Impairment Charges (Reversals) Description Year ended Dec. 31, 2010 Increase (decrease) for the period Highland Gold impairment reversal1 3. Revenues increased on transition due to earlier recognition of revenue for Other our concentrate 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. 1. Refer to note B. $ (84) 4 $ (80) 87 Management’s Discussion and Analysis O. Gain (Loss) on Non-Hedge Derivatives Description Year ended Dec. 31, 2010 Increase (decrease) for the period Impact of conversion to IFRS Total Cash Costs per ounce on gold and per pound on copper Gains on non-hedge derivative positions1 Unrealized gains due to hedge ineffectiveness Time value changes in fair value of options designated as hedging instrument1 $ 94 14 (39) $ 69 (Per ounce/pound information in dollars) Cash costs – US GAAP Capitalized production phase stripping costs1 Cost of sales reclassiﬁ ed to income 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 was most closely related. P. Income Tax Expense Description Year ended Dec. 31, 2010 (Increase) decrease for the period tax expense2 Other adjustments Cash costs – IFRS 1. Refer to footnote L1. 2. Refer to footnote L2. Tax effect of changes in income Reclassiﬁ cation from cost of sales1 Other adjustments 1. Refer to note L. $ (98) (108) 15 $ (191) IFRS Critical Accounting Policies and Accounting Estimates For the year ended December 31, 2010 Gold 457 (36) (13) 1 409 Copper 1.11 – – (0.01) 1.10 Management has discussed the development and selection of our critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the disclosure relating to such estimates in conjunction with its review of this MD&A. The accounting policies and methods we utilize determine how we report our ﬁ nancial condition and results of operations, and they may require management to make estimates or rely on assumptions about matters that are inherently uncertain. Our signiﬁ cant accounting policies are disclosed in note 2 of the Financial Statements. Future Accounting Policy Changes These consolidated ﬁ nancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) under the historical cost convention, as modiﬁ ed by revaluation of certain ﬁ nancial assets, derivative contracts and post-retirement assets. The policies applied in these ﬁ nancial statements are based on IFRS’s in effect as at February 15, 2012, the date the Board of Directors approved these consolidated ﬁ nancial statements for issue. Financial Instruments IFRS 9 Financial Instruments In November 2009, the IASB issued IFRS 9 Financial Instruments as the ﬁ rst step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simpliﬁ es the mixed measurement model and establishes two primary measurement categories for ﬁ nancial assets: amortized cost and fair value. The basis of classiﬁ cation depends on an entity’s business model and the contractual cash ﬂ ow of the ﬁ nancial asset. Classiﬁ cation is made at the time the ﬁ nancial asset is initially recognized, namely when the entity becomes a party to the contractual provisions of the instrument. IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures including added disclosures about investments in equity instruments measured at fair value in OCI, and guidance on ﬁ nancial liabilities and de-recognition of ﬁ nancial instruments. In December 2011, the IASB issued an amendment that adjusted the mandatory effective date of IFRS 9 from January 1, 2013 to January 1, 2015. We are currently assessing the impact of adopting IFRS 9 on our consolidated ﬁ nancial statements, including the impact of early adoption. 88 IFRS 10 Consolidated Financial Statements In May 2011, the IASB issued IFRS 10 Consolidated Financial Statements to replace IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. The new consolidation standard changes the deﬁ nition of control so that the same criteria apply to all entities, both operating and special purpose entities, to determine control. The revised deﬁ nition focuses on the need to have both power and variable returns before control is present. IFRS 10 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 10 on our consolidated ﬁ nancial statements. IFRS 11 Joint Arrangements In May 2011, the IASB issued IFRS 11 Joint Arrangements to replace IAS 31, Interests in Joint Ventures. The new standard deﬁ nes two types of arrangements: Joint Operations and Joint Ventures. Focus is on the rights and obligations of the parties involved to reﬂ ect the joint arrangement, thereby requiring parties to recognize the individual assets and liabilities to which they have rights or for which they are responsible, even if the joint arrangement operates in a separate legal entity. IFRS 11 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 11 on our consolidated ﬁ nancial statements. IFRS 12 Disclosure of Interests in Other Entities In May 2011, the IASB issued IFRS 12 Disclosure of Interests in Other Entities to create a comprehensive disclosure standard to address the requirements for subsidiaries, joint arrangements and associates including the reporting entity’s involvement with other entities. It also includes the requirements for unconsolidated structured entities (i.e. special purpose entities). IFRS 12 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 12 on our consolidated ﬁ nancial statements. Barrick Financial Report 2011 | Management’s Discussion and Analysis IFRS 13 Fair Value Measurement In May 2011, the IASB issued IFRS 13 Fair Value Measurement as a single source of guidance for all fair value measurements required by IFRS to reduce the complexity and improve consistency across its application. The standard provides a deﬁ nition of fair value and guidance on how to measure fair value as well as a requirement for enhanced disclosures. Enhanced disclosures about fair value are required to enable ﬁ nancial statement users to understand how the fair values were derived. IFRS 13 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 13 on our consolidated ﬁ nancial statements. IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine In October 2011, the IASB issued IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. IFRIC 20 provides guidance on the accounting for the costs of stripping activity in the production phase of surface mining when two beneﬁ ts accrue to the entity from the stripping activity: useable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods. IFRIC 20 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRIC 20 on our consolidated ﬁ nancial statements. Internal Control over Financial Reporting and Disclosure Controls and Procedures Management is responsible for establishing and maintaining adequate internal control over ﬁ nancial reporting and disclosure controls and procedures. Internal control over ﬁ nancial reporting is a framework designed to provide reasonable assurance regarding the reliability of ﬁ nancial reporting and the preparation of ﬁ nancial statements in accordance with IFRS. The Company’s internal control over ﬁ nancial reporting framework includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reﬂ ect the transactions and dispositions of the assets of the 89 Management’s Discussion and Analysis Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of ﬁ nancial statements in accordance with IFRS, 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 Company’s consolidated ﬁ nancial statements. Disclosure controls and procedures form a broader framework designed to ensure that other ﬁ nancial information disclosed publicly fairly presents in all material respects the ﬁ nancial condition, results of operations and cash ﬂ ows of the Company for the periods presented in this MD&A and Barrick’s Annual Report. The Company’s disclosure controls 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 ﬁ nancial reporting and disclosure controls and procedures frameworks provide internal control over ﬁ nancial reporting and disclosure. Due to its inherent limitations, internal control over ﬁ nancial 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 inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change. The changes related to our new Copper reporting segment described on page 39 will not signiﬁ cantly impact the design of internal control over ﬁ nancial reporting and disclosure. Management will continue to monitor the effectiveness of its internal control over ﬁ nancial reporting and disclosure and may make modiﬁ cations from time to time as considered necessary or desirable. The management of Barrick, at the direction of our chief executive and ﬁ nancial ofﬁ cers, have evaluated the effectiveness of the design and operation of the internal controls over ﬁ nancial 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 ﬁ nancial reporting and the integrated audit report of Barrick’s auditors for the year ended December 31, 2011 will be included in Barrick’s 2011 Annual Report and its 2011 Form 40-F/Annual Information Form on ﬁ le with the US Securities and Exchange Commission (“SEC”) and Canadian provincial securities regulatory authorities. Critical Accounting Estimates and Judgments Certain accounting estimates have been identiﬁ ed as being “critical” to the presentation of our ﬁ nancial 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 different conditions or using different assumptions and estimates. Accounting Estimates Life of mine (“LOM”) Estimates Used to Measure Depreciation of Property, Plant and Equipment We depreciate our assets over their useful life, or over the remaining life of the mine (if shorter). We use the units-of-production basis (“UOP”) to depreciate the mining interest component of PP&E whereby the denominator is the expected mineral production based on our LOM plans. LOM plans are prepared based on estimates of ounces of gold/pounds of copper in proven and probable reserves and a portion of resources at the mine where there is a high probability of economic extraction. At the end of each ﬁ scal year, as part of our business cycle, we update our LOM 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 based on these updated LOM plans. The table below illustrates the impact of historic changes in LOM estimates on depreciation for each of our operating segments. 90 Barrick Financial Report 2011 | Management’s Discussion and Analysis Impact of Historic Changes in LOM Estimates on Depreciation For the years ended 2011 2010 ($ millions, except LOM in millions of contained oz/pounds) Gold North America Australia Paciﬁ c African Barrick Gold South America Total Gold Total Copper2 LOM increase (decrease)1 Depreciation increase (decrease) LOM increase (decrease)1 Depreciation increase (decrease) 7.1 1.7 (0.1) 1.3 10.0 734 $ (64) (39) 5 (13) $ (111) $ (8) 5.7 1.5 (0.8) 0.8 7.2 308 $ (30) (11) 5 (6) $ (42) $ 2 1. Each year we update our LOM estimates as at the end of the year as part of our normal business cycle. We then use those updated LOM estimates to calculate depreciation expense in the following fiscal year on assets which use the units-of-production method of depreciation. LOM changes presented were calculated as at the end of 2010 and 2009 and are in millions of contained ounces/pounds. 2. The copper segment includes the reserve amounts of Zaldívar. Results of Lumwana are not included in the copper segment as it was acquired in the second quarter of 2011. Provisions for Environmental Rehabilitations (“PERs”) We have an obligation to reclaim our mining properties after the minerals have been mined from the site, and have estimated the costs necessary to comply with existing reclamation standards. We recognize the fair value of a liability for a PER such as site closure and reclamation costs, in the period in which it is incurred if a reasonable estimate of fair value can be made. PER 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. 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 accordingly. We record a PER in our ﬁ nancial 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 a PER is recorded as an adjustment to the corresponding asset carrying amount and results in a prospective increase in depreciation expense. At closed mines, any adjustment to a PER is recognized as an expense in the consolidated statement of income. PERs are measured at the expected value of the future cash ﬂ ows, discounted to their present value using a current, US dollar real risk-free pre-tax discount rate. The expected future cash ﬂ ows exclude the effect of inﬂ ation. The unwinding of the discount, referred to as accretion expense, is included in ﬁ nance costs 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 when applicable, and the change in estimate is added or deducted from the related asset and depreciated prospec tively over the asset’s useful life. 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 ﬁ nes or injunctions or delays in projects, or any unforeseen environmental contamination at, or related to, our mining properties, could result in us suffering signiﬁ cant 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 ﬂ ows 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, 91 Management’s Discussion and Analysis as the end of the mine life nears, the reliability of expected cash ﬂ ows increases, but earlier in the mine life, the estimation of a PER is inherently more subjective. Signiﬁ cant judgments and estimates are made when estimating the fair value of PERs. Expected cash ﬂ ows relating to PERs could occur over periods of 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 a PER, the fair value of PERs can materially change over time. The amount of PERs recorded reﬂ ects 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 signiﬁ cant, and consequently changes in these assumptions could have a material effect on the fair value of PERs and future earnings in a period of change. During year ended December 31, 2011, our PER balance increased by $538 million primarily due to a change in the discount rate used to calculate PER. The offset was recorded as an increase in PP&E for our operations and other expense at our closed sites. PERs (in $ millions) As at December 31 Operating mines Closed mines Development projects Other Total 2011 2010 $ 1,608 $ 1,230 302 42 47 373 97 81 $ 2,159 $ 1,621 Accounting for impairment of non-current assets Goodwill was tested for impairment in the fourth quarter. The recoverable amount of each operating segment has been determined using a FVLCS approach. For the year ended December 31, 2011, we did not record any impairment to goodwill (2010: nil). FVLCS for each gold operating segment was determined by considering the net present value (“NPV”) of the future cash ﬂ ows expected to be generated by the segment. Net future cash ﬂ ows were derived from the most recent life of mine (“LOM”) plans, with mine lives ranging from 2 to 35 years, aggregated to the segment level. We have used an estimated long-term gold price of $1,600 per ounce (2010: $1,250 per ounce) to estimate future revenues. The net future cash ﬂ ows were discounted using a segment real weighted average cost for a gold business of 5% (2010: 5%). Gold companies consistently trade at a market capitalization greater than 92 the NPV of their expected cash ﬂ ows. Market participants describe this as a “NAV multiple”, whereby the NAV represents the multiple applied to the NPV to arrive at the trading price. As a result, we applied a NAV multiple to the NPV of each gold operating segment based on the observable NAV multiples of comparable companies as at the test date. In 2011, the average NAV multiple was about 1.2 (2010: 1.4). For our copper segment, the FVLCS was determined based on the NPV of future cash ﬂ ows expected to be generated using the most recent LOM plans, with mine lives ranging from 11 to 31 years, aggregated to the segment level. We utilized a long-term risk-adjusted copper price of $3.44 per pound to estimate future revenues. The risk adjustment to the average long-term copper price was approximately 4.5%. The expected net future cash ﬂ ow was additionally discounted using rates from 4.5% to 5.5% to reﬂ ect the time value of money and a residual risk factor for cash ﬂ ow uncertainties not related to metal price. This results in an effective weighted average cost of capital for the copper segment of approximately 7%. For our oil and gas segment, the FVLCS was determined based on the NPV of future cash ﬂ ows expected to be generated from our oil and gas properties, aggregated to the segment level. We have estimated future oil prices using the forward curve provided by an independent reserve evaluation ﬁ rm, with prices starting at $97 per barrel (WTI) (2010: $88 per barrel). The net future cash ﬂ ows were discounted using a real weighted average cost of capital for long life oil and gas assets of 8.5% (2010: 8.5%). Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. The recoverable amount is calculated using the same FVLCS approach as described above for goodwill. However, the assessment is done at the CGU level, which is the lowest level for which identiﬁ able cash ﬂ ows are largely independent of the cash ﬂ ows of other assets. For the year ended December 31, 2011, we recorded impairment charges of $138 million for non-current assets. The impairment included a $49 million charge at our Barrick Energy segment, primarily due to recovery issues at one of our properties. Impairment charges also included an $83 million write-down of certain power related assets at our Pueblo Viejo project as a result of a decision to proceed with an alternative long-term power solution. Expected future cash ﬂ ows used to determine the FVLCS used in the impairment testing of goodwill and non-current assets are inherently uncertain and could materially change over time. The cash ﬂ ows are signiﬁ cantly affected by a number of factors including estimates of production levels, operating costs and capital expenditures reﬂ ected in our LOM plans; as well as economic factors beyond management’s control, such as gold, copper and oil prices; discount rates; and observable NAV multiples. Should management’s estimate of the future not reﬂ ect actual events, further impairments may be identiﬁ ed. For purposes of testing for impairment of non-current assets of our gold, copper and oil and gas segments, a reasonably possible change in the key assumptions used to estimate the FVLCS could result in an impairment charge at one or more of our CGUs. The carrying value of the net assets of CGUs that are most sensitive to changes in the key assumptions are: As at December 31, 2011 Carrying value Lumwana Jabal Sayid Buzwagi Barrick Energy CGUs Pierina $ 3,538 1,160 634 231 51 $ 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 regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in our consolidated ﬁ nancial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period of changes. Recognition of Deferred Tax Assets 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 Barrick Financial Report 2011 | Management’s Discussion and Analysis costs, quantities of proven and probable gold and copper reserves, interest rates and foreign currency exchange rates. If we determine that it is probable (a likelihood of more than 50%) that all or some portion of a deferred tax asset will not be realized, we do not recognize it in our ﬁ nancial statements. Changes in recognition of deferred tax assets are recorded as a component of income tax expense or recovery for each period. The most signiﬁ cant recent trend impacting expected levels of future taxable income and the amount of recognition of deferred tax assets, has been rising market gold prices. A decline in market gold prices could lead to derecognition of deferred tax assets and a corresponding increase in income tax expense. In 2010, we recognized $129 million of previously nonrecognized deferred tax assets primarily because sources of income became available that enabled tax losses and US Alternative Minimum Tax (“AMT”) credits to be realized. Deferred Tax Assets Not Recognized Australia Canada Argentina Barbados Tanzania Other 2011 2010 $ 122 76 35 73 31 23 $ 104 52 61 73 63 39 $ 360 $ 392 Chile, Argentina, Tanzania and Other: the unrecognized deferred tax assets 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 recognize some or all of the deferred tax assets. Canada: most of the unrecognized deferred tax assets relate to tax pools which can only be utilized by income from speciﬁ c sources. Australia: most of the unrecognized deferred tax assets relate to capital losses that can only be utilized if capital gains are realized. 93 Starting in Q4 2011, we have also begun adjusting for changes in PER discount rates relating to our closed sites as they are not related to our day to day operations and not indicative of under lying results. As noted, the Company uses this measure for its own internal purposes. Management’s internal budgets and forecasts and public guidance do not reﬂ ect potential impairment charges, potential gains/losses on the acquisition/disposition of assets, foreign currency translation gains/losses, or unrealized gains/losses on non-hedge derivatives. Consequently, the presentation of adjusted net earnings 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 earnings 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 earnings by average shareholders’ equity. Management believes this to be a useful indicator of the Company’s performance. Adjusted net earnings and return on equity are intended to provide additional information only and do not have any standardized deﬁ nition under IFRS and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating proﬁ t or cash ﬂ ow from operations as determined under IFRS. Other companies may calculate these measures differently. The following table reconciles these non-GAAP measures to the most directly comparable IFRS measure. Management’s Discussion and Analysis Non-Gaap Financial Performance Measures27 Adjusted Net Earnings (Adjusted Net Earnings per Share) and Return on Equity Adjusted net earnings is a non-GAAP ﬁ nancial measure which excludes the following from net earnings:  Elimination of gold sales contracts;  Signiﬁ cant tax adjustments not related to current period earnings;  Impairment charges (reversals) related to intangibles, goodwill, property, plant and equipment, and investments;  Gains/losses and other one-time costs relating to acquisitions/dispositions;  Foreign currency translation gains/losses;  Non-recurring restructuring costs;  Unrealized gains/losses on non-hedge derivative instruments; and  Change in the measurement of the PER as a result of changes in the discount rates for closed sites. 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 earnings allows investors and analysts to better evaluate the results of the underlying business of the Company. While the adjustments to net earnings in this measure include items that are recurring, management believes that adjusted net earnings is a useful measure of the Company’s performance because non-recurring tax adjustments; impairment charges, gains/losses and other one-time costs relating to asset acquisitions/dispositions and business combinations; and non-recurring restruc- turing charges do not reﬂ ect 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 derivatives are not necessarily reﬂ ective of the underlying operating results for the reporting periods presented. 27. The amounts presented in the non-GAAP financial performance measure tables include the results of discontinued operations. 94 Barrick Financial Report 2011 | Management’s Discussion and Analysis Reconciliation of Net Earnings to Adjusted Net Earnings and Return on Equity1 ($ millions, except per share amounts in dollars) 2011 2010 For the years ended Dec. 31 IFRS US GAAP 2009 For the three months ended Dec. 31 2011 2010 Net earnings/(losses)attributable to equity holders of the Company Elimination of gold sales contracts Signiﬁ cant tax adjustments not related to current period earnings Impairment charges (reversals) related to intangibles, property, plant and equipment, and investments Acquisition/disposition adjustments2 Foreign currency translation (gains)/losses Restructuring costs Acquisition related costs3 Changes in PER discount rate for closed sites Unrealized (gains)/losses on non-hedge derivative instruments $ 4,484 – $ 3,582 – $ (4,274) 5,901 $ 122 165 (165) (5) 2 97 32 (66) (4) (65) (62) 32 43 – – (9) 59 259 (85) (95) 15 – – 30 959 – 86 153 (6) 21 – (18) 32 (61) $ 961 – 74 (17) (20) (5) 3 – – 22 Adjusted net earnings Net earnings/(losses) per share4 Adjusted net earnings per share4 Average Shareholders’ Equity Return on equity5 $ 4,666 $ 3,517 $ 1,810 $ 1,166 $ 1,018 $ 4.49 $ 4.67 $ 21,418 22% $ 3.63 $ 3.56 $ 17,352 20% $ (4.73) $ 2.00 $ 15,170 12% $ 0.96 $ 1.17 $ 22,869 20% $ 0.97 $ 1.02 $ 18,805 22% 1. Amounts presented in this table are post-tax. 2. For the three month period ended December 31, 2011, includes gains on sale of assets. For the year ended December 31, 2011 includes gain on sale assets of $188 million, partially offset by a $23 million charge for the recognition of a liability for contingent consideration related to the acquisition of the additional 40% interest in Cortez property. 3. Represents expensed transaction costs, fair value inventory purchase adjustments and realized foreign exchange losses relating to our economic hedge of the purchase price related to the Equinox acquisition. 4. Calculated using weighted average number of shares outstanding under the basic method of earnings per share. 5. Calculated as annualized adjusted net earnings divided by average shareholders’ equity. Adjusted Operating Cash Flow, Adjusted Operating Cash Flow before Working Capital Changes and Free Cash Flow Adjusted operating cash ﬂ ow is a non-GAAP ﬁ nancial measure which excludes the effect of elimination of gold sales contracts, the impact of one-time costs and working capital adjustments relating to business combinations. Management uses adjusted operating cash ﬂ ow as a measure internally to evaluate the underlying operating cash ﬂ ow performance of the Company as a whole for the reporting periods presented, and to assist with the planning and forecasting of future operating cash ﬂ ow. The elimination of gold sales contracts and one-time costs and working capital adjustments relating to business combinations are activities that are not reﬂ ective of the underlying capacity of our operations to generate operating cash ﬂ ow and therefore this adjustment will result in a more meaningful operating cash ﬂ ow measure for investors and analysts to evaluate our performance in the period and assess our future operating cash ﬂ ow- generating capability. We also present adjusted operating cash ﬂ ow before working capital changes as a measure which excludes working capital changes from adjusted operating cash ﬂ ow. Management uses operating cash ﬂ ow before working capital changes as a measure internally to evaluate the Company’s ability to generate cash ﬂ ows from its mining operations, before the impact of working capital movements. Free cash ﬂ ow is a measure which excludes capital expenditures from adjusted operating cash ﬂ ow. 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. 95 Management’s Discussion and Analysis Adjusted operating cash ﬂ ow, adjusted operating cash ﬂ ow before working capital changes and free cash ﬂ ow are intended to provide additional information only and do not have any standardized deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating proﬁ t or cash ﬂ ow from operations as determined under IFRS. Other companies may calculate these measures differently. The following table reconciles these non-GAAP measure to the most directly comparable IFRS measures. Reconciliation of Adjusted Operating Cash Flow ($ millions) Operating cash ﬂ ow Elimination of gold sales contracts Acquisition costs expensed and related working capital movements Withholding tax payment Adjusted operating cash ﬂ ow Changes in working capital Adjusted operating cash ﬂ ow before working capital changes For the years ended Dec. 31 IFRS 2011 2010 US GAAP 2009 For the three months ended Dec. 31 2011 2010 $ 5,315 $ 4,585 $ (2,322) $ 1,224 $ 866 – 204 161 656 5,221 – – – – – – 75 656 – – $ 5,680 139 $ 5,241 1 $ 2,899 (412) $ 1,299 106 $ 1,522 522 $ 5,819 $ 5,242 $ 2,487 $ 1,405 $ 2,044 Adjusted operating cash ﬂ ow Capital expenditures – Barrick’s share $ 5,680 (4,598) $ 5,241 (3,371) $ 2,899 (2,066) $ 1,299 (1,231) $ 1,522 (1,195) Free cash ﬂ ow $ 1,082 $ 1,870 $ 833 $ 68 $ 327 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 ﬁ nancial measures. Both measures include all costs absorbed into inventory, as well as royalties, and by-product credits, and exclude inventory purchase accounting adjustments, unrealized gains/losses from non-hedge currency and commodity contracts, and depreciation 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 arrangement. 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 reﬂ ect our equity share of production. 96 Barrick Financial Report 2011 | Management’s Discussion and Analysis Total cash cost and net cash cost statistics are intended to provide additional information only and do not have any standardized deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of operating proﬁ t or cash ﬂ ow from operations as determined under IFRS. Other companies may calculate these measures differently. The following tables reconcile these non-GAAP measures to the most directly comparable IFRS measure. 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 performance 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. Reconciliation of Cost of Sales to Total Cash Costs per ounce/pound Gold Copper Oil and Gas Total IFRS US GAAP IFRS US GAAP IFRS US GAAP IFRS US GAAP 2011 2010 2009 2011 2010 2009 2011 2010 2009 2011 2010 2009 $ 5,177 $ 4,618 $ 4,281 874 1,152 1,077 $ 983 170 $ 430 $ 437 76 88 $ 156 97 $ 114 47 $ 69 $ 6,316 $ 5,162 $ 4,787 980 1,419 1,212 30 For the years ended December 31 Cost of sales Less: Depreciation $ 4,025 $ 3,541 $ 3,407 $ 813 $ 342 $ 361 $ 59 $ 67 $ 39 $ 4,897 $ 3,950 $ 3,807 ($ millions, except per ounce/pound information in dollars) 2011 2010 2009 2011 2010 2009 Gold Copper IFRS US GAAP IFRS US GAAP 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 Other metal sales Inventory purchase accounting adjustments Realized non-hedge gains/losses on fuel hedges Impact of Barrick Energy Total cash costs 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) $ 4,025 $ 3,541 $ 3,407 24 (12) (29) – – 7 (20) – (171) (126) (137) – (5) (118) 10 (97) (104) (120) – 3 (56) $ 813 – – – (3) (34) – – $ 342 $ 361 83 – – – – – – 91 – – (6) – – – $ 3,468 $ 3,177 $ 3,377 $ 776 $ 427 $ 444 7,758 (208) 7,550 7,902 (160) 7,742 7,307 (28) 7,279 444 – 444 391 – 391 380 – 380 Total cash costs per ounce/per pound2 $ 460 $ 409 $ 464 $ 1.75 $ 1.10 $ 1.17 1. Relates to interest in ABG held by outside shareholders. 2. Total cash costs per ounce/pound may not calculate based on amounts presented in this table due to rounding. 97 Management’s Discussion and Analysis Net Cash Costs per ounce ($ millions, except per ounce/pound data in dollars) 2011 2010 For the years ended Dec. 31 IFRS 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 Inventory purchase accounting adjustments Realized non-hedge gold/copper derivative (losses) gains Net revenues from copper excluding realized 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 ounce1 Net cash costs per ounce US GAAP 2009 7,279 $ 464 $ 943 212 49 (4) – – For the three months ended Dec. 31 2011 1,865 $ 505 $ 504 – – – (29) (5) 2010 1,831 $ 440 $ 323 74 – – – 11 7,550 $ 460 $ 1,714 – – – 34 (21) 7,742 $ 409 $ 1,056 244 – – – 30 $ 1,727 $ 1,330 $ 1,200 $ 470 $ 408 813 – 914 121 342 91 897 116 361 83 756 104 239 – 231 123 88 23 297 162 $ 339 $ 293 $ 360 $ 382 $ 278 1. Copper credits per ounce for three month period and year ended December 31, 2011 and December 31, 2010 may not calculate based on amounts presented in this table due to rounding. EBITDA EBITDA is a non-GAAP ﬁ nancial measure, which excludes the following from net earnings:  Income tax expense;  Finance costs;  Finance income; and  Depreciation. Management believes that EBITDA is a valuable indicator of the Company’s ability to generate liquidity by producing operating cash ﬂ ow 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 determine the approximate total enterprise value of a company. EBITDA is intended to provide additional information to investors and analysts and does not have any standard ized deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA excludes the impact of cash costs of ﬁ nancing activities and taxes, and the effects of changes in operating working capital balances, and therefore is not necessarily indicative of operating proﬁ t or cash ﬂ ow from operations as determined under IFRS. Other companies may calculate EBITDA differently. The following table provides a reconciliation of EBITDA to net earnings. 98 Reconciliation of Net Earnings to EBITDA ($ millions, except per share amounts in dollars) 2011 2010 For the years ended Dec. 31 IFRS Barrick Financial Report 2011 | Management’s Discussion and Analysis US GAAP 2009 $ (4,274) 648 57 (10) 1,016 For the three months ended Dec. 31 2011 2010 $ 959 589 51 (3) 402 $ 961 509 27 (3) 276 $ 4,484 2,287 199 (13) 1,419 $ 3,582 1,561 180 (14) 1,212 $ 8,376 $ 6,521 $ (2,563) $ 1,998 $ 1,770 $ 3,585 2,102 1,648 538 817 (155) 49 (208) $ 2,317 1,996 1,096 429 697 (15) 47 (46) $ 1,259 1,245 597 236 646 (106) 9 (6,449) $ 804 657 450 120 183 (103) (22) (91) $ 627 466 331 141 230 (7) 16 (34) $ 8,376 $ 6,521 $ (2,563) $ 1,998 $ 1,770 Net earnings Income tax expense Finance costs Finance income Depreciation EBITDA Reported as: Gold North America South America Australia Paciﬁ c African Barrick Gold Copper Capital Projects Barrick Energy Other EBITDA Realized Prices Realized price is a non-GAAP ﬁ nancial 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 are subject 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 reﬂ ect 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 reﬂ ection of our past performance and is a better indicator of its expected performance in future periods. 99 Management’s Discussion and Analysis The realized price measure is intended to provide additional information, and does not have any stan- dardized deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of sales as determined under IFRS. Other companies may calculate this measure differently. The following table reconciles realized prices to the most directly comparable IFRS measure. Reconciliation of Sales to Realized Price per ounce/per pound1 ($ millions, except per ounce/pound information in dollars) Gold Copper For the years ended December 31 Sales Sales attributable to discontinued operations Sales applicable to non-controlling interests Sales attributable to ore purchase agreement Unrealized non-hedge gold/copper derivates (gains) losses Unrealized mark-to-market provisional price adjustment Realized non-hedge gold/copper derivative (losses) gains Export duties Revenues – as adjusted Ounces/pounds sold (000s ounces/millions pounds) IFRS US GAAP IFRS US GAAP 2011 2010 2009 2011 2010 2009 $ 12,263 $ 9,687 $ 7,135 56 (27) (26) – _ – 30 – (329) (137) – – 43 73 43 (206) (111) – (1) 26 68 $ 1,714 $ 1,056 $ 943 212 – – 49 (4) – – – – – – – (21) – 244 – – – – 30 – $ 11,913 $ 9,506 $ 7,168 $ 1,693 $ 1,330 $ 1,200 380 7,279 7,550 7,742 444 391 Realized gold/copper price per ounce/pound1 $ 1,578 $ 1,228 $ 985 $ 3.82 $ 3.41 $ 3.16 1. Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding. Net Cash Margin Management uses a non-GAAP ﬁ nancial measure, net cash margin, which represents realized price per ounce less net cash costs per ounce. This measure is used by management to analyze proﬁ tability 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 perfor- mance of our business on a consolidated 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. Net cash margin is intended to provide additional information, does not have any standardized deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of operating proﬁ t or cash ﬂ ow from operations as determined under IFRS. Other companies may calculate cash margin differently. The following table derives this non-GAAP measure from previously deﬁ ned 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. 100 Barrick Financial Report 2011 | Management’s Discussion and Analysis Reconciliation of Net Cash Margin per Ounce For the years ended Dec. 31 (Per ounce data in dollars) 2011 2010 Gold IFRS Copper For the three months ended Dec. 31 US GAAP 2009 IFRS 2011 2010 US GAAP 2009 Gold Copper 2011 2010 2011 2010 Realized gold/copper price per ounce/pound Total cash costs per ounce/per pound Total cash margin per ounce/per pound Copper credit per ounce1 $ 1,578 $ 1,228 $ 985 $ 3.82 $ 3.41 $ 3.16 $ 1,664 $ 1,368 $ 3.69 $ 3.99 460 409 464 1.75 1.10 1.17 505 440 1.99 1.08 Net cash margin per ounce $ 1,239 $ 935 $ 625 $ 1,118 $ 819 116 121 $ 521 104 $ 2.07 $ 2.31 $ 1.99 $ 1.70 $ 2.91 $ 1,159 $ 123 928 162 $ 1,282 $ 1,090 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 96. Adjusted Debt and Net Debt Management uses non-GAAP ﬁ nancial measures “adjusted debt” and “net debt” since they are more indicative of how we manage our debt levels internally than the IFRS 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 deﬁ nition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. We have adjusted our long-term debt to exclude fair value and other adjustments and our partner’s share of project ﬁ nancing to arrive at adjusted debt. We have excluded the impact of fair value and other adjustments in order to reﬂ ect the actual settlement obligation in relation to the debt instrument. We have excluded our partners’ shares of project ﬁ nancing, where Barrick has provided a guarantee only for its proportionate share of the debt. We then deduct our cash and equivalents (net of our partner’s share of cash held at Pueblo Viejo) to arrive at net debt. Adjusted Debt and Net Debt Summary (in $ millions) As at December 31 Debt per ﬁ nancial statements Fair value and other adjustments1 Pueblo Viejo ﬁ nancing – partner’s share2 Adjusted debt Cash and equivalents Cash and equivalents – partner’s share at Pueblo Viejo2 Net debt 2011 2010 $ 13,369 $ 6,638 65 (376) 67 (313) $ 13,058 $ 6,392 (2,745) 7 (3,968) 3 $ 10,320 $ 2,427 1. Other adjustment primarily related 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 $940 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. 101 Management’s Discussion and Analysis Glossary of Technical Terms AUTOCLAVE: Oxidation process in which high temperatures and pressures are applied to convert refractory sulﬁ de 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. 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 ﬁ nely ground and thereafter undergoes physical or chemical treatment to extract the valuable metals. BY-PRODUCT: A secondary metal or mineral product recovered in the milling process such as silver. MINERAL RESERVE: See pages 181–188 – Summary Gold/Copper Mineral Reserves and Mineral Resources. CONCENTRATE: A very ﬁ ne, 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: Unreﬁ ned gold and silver bullion bars usually consisting of approximately 90 percent precious metals that will be further reﬁ ned to almost pure metal. MINERAL RESOURCE: See pages 181–188 – Summary Gold/ Copper 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 speciﬁ ed 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 proﬁ t. ORE BODY: A sufﬁ ciently large amount of ore that can be mined economically. OUNCES: Troy ounces of a ﬁ neness of 999.9 parts per 1,000 parts. 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-ﬁ ll: any method of drilling intervals between existing holes, used to provide greater geological detail and to help establish reserve estimates. RECLAMATION: The process by which lands disturbed as a result of mining activity are modiﬁ ed to support beneﬁ cial 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. 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. RECOVERY RATE: A term used in process metallurgy to indicate the proportion of valuable material physically recovered in the processing of ore. It is generally stated as a percentage of the material recovered compared to the total material originally present. REFINING: The ﬁ nal 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 or pound of copper. TAILINGS: The material that remains after all economically and technically recoverable precious metals have been removed from the ore during processing. 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. HEAP LEACHING: A process whereby gold/copper 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/copper. The gold/copper- laden solution is then collected for gold/copper recovery. 102 Barrick Financial Report 2011 | Management’s Responsibility Management’s Responsibility Management’s Responsibility for Financial Statements The accompanying consolidated ﬁ nancial statements have been prepared by and are the responsibility of the Board of Directors and management of the company. The consolidated ﬁ nancial statements have been prepared in accordance with International Financial Reporting Standards and reﬂ ect management’s best estimates and judgments based on currently available information. The company has developed and maintains a system of internal controls in order to ensure, on a reasonable and cost effective basis, the reliability of its ﬁ nancial information. The consolidated ﬁ nancial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated ﬁ nancial statements. Jamie C. Sokalsky Executive Vice President and Chief Financial Ofﬁcer Toronto, Canada February 15, 2012 103 Management’s Report on Internal Control Over Financial Reporting Management’s Report on Internal Control Over Financial Reporting Barrick’s management is responsible for establishing and maintaining adequate internal control over ﬁ nancial reporting. Barrick’s management assessed the effectiveness of the company’s internal control over ﬁ nancial reporting as at December 31, 2011. 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 ﬁ nancial reporting. Based on Barrick management’s assessment, Barrick’s internal control over ﬁ nancial reporting is effective as at December 31, 2011. The effectiveness of the company’s internal control over ﬁ nancial reporting as at December 31, 2011 has been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on pages 105–106 of Barrick’s 2011 Annual Financial Statements. 104 Barrick Financial Report 2011 | Independent Auditor’s Report Independent Auditor’s Report Independent Auditor’s Report February 15, 2012 To the Shareholders of Barrick Gold Corporation We have completed an integrated audit of Barrick Gold Corporation’s 2011 consolidated ﬁ nancial statements and its internal control over ﬁ nancial reporting as at December 31, 2011 and an audit of its 2010 consolidated ﬁ nancial statements. Our opinions, based on our audits, are presented below. Report on the consolidated ﬁnancial statements We have audited the accompanying consolidated ﬁ nancial statements of Barrick Gold Corporation, which comprise the consolidated balance sheets as at December 31, 2011, December 31, 2010 and January 1, 2010 and the consolidated statements of income, cash ﬂ ow, changes in equity and comprehensive income for the years ended December 31, 2011 and December 31, 2010, and the related notes, which include a summary of signiﬁ cant accounting policies. Management’s responsibility for the consolidated ﬁnancial statements Management is responsible for the preparation and fair presentation of these consolidated ﬁ nancial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and for such internal control as management determines is necessary to enable the preparation of consolidated ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial statements are free from material misstatement. Canadian generally accepted auditing standards 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 ﬁ nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial statements. We believe that the audit evidence we have obtained in our audits is sufﬁ cient and appropriate to provide a basis for our audit opinion on the consolidated ﬁ nancial statements. Opinion In our opinion, the consolidated ﬁ nancial statements present fairly, in all material respects, the ﬁ nancial position of Barrick Gold Corporation as at December 31, 2011, December 31, 2010 and January 1, 2010 and its ﬁ nancial performance and its cash ﬂ ows for the years ended December 31, 2011 and December 31, 2010 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. 105 Independent Auditor’s Report Report on internal control over ﬁnancial reporting We have also audited Barrick Gold Corporation’s internal control over ﬁ nancial reporting as at December 31, 2011, 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 ﬁ nancial reporting and for its assessment of the effectiveness of internal control over ﬁ nancial 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 ﬁ nancial reporting based on our audit. We conducted our audit of internal control over ﬁ nancial 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 ﬁ nancial reporting was maintained in all material respects. An audit of internal control over ﬁ nancial reporting includes obtaining an understanding of internal control over ﬁ nancial 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 ﬁ nancial reporting. Deﬁnition of internal control over ﬁnancial reporting A company’s internal control over ﬁ nancial reporting is a process designed to provide reasonable assurance regarding the reliability of ﬁ nancial reporting and the preparation of ﬁ nancial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over ﬁ nancial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reﬂ ect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of ﬁ nancial 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 ﬁ nancial statements. Inherent limitations Because of its inherent limitations, internal control over ﬁ nancial 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 ﬁ nancial reporting as at December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by COSO. Chartered Accountants, Licensed Public Accountants Toronto, Canada 106 Barrick Financial Report 2011 | 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) Revenue (notes 5 and 6) Costs and expenses Cost of sales (notes 5 and 7) Corporate administration Exploration and evaluation (notes 5 and 8) Other expense (note 9a) Impairment charges (reversals) (note 9b) Other income (note 9c) Income (loss) from equity investees (note 14a) Gain on non-hedge derivatives (note 22e) Income before finance items and income taxes Finance items (note 12) Finance income Finance costs Income before income taxes Income tax expense (note 10) Income from continuing operations Income from discontinued operations (note 4g) Net income Attributable to: Equity holders of Barrick Gold Corporation Non-controlling interests (note 29) Earnings per share data attributable to the equity holders of Barrick Gold Corporation (note 11) Income from continuing operations Basic Diluted Income from discontinued operations Basic Diluted Net income Basic Diluted The accompanying notes are an integral part of these consolidated ﬁnancial statements. 2011 2010 $ 14,312 $ 11,001 6,316 166 346 576 235 7,639 248 8 81 5,162 156 229 455 (73) 5,929 116 (24) 69 7,010 5,233 13 (199) 14 (180) 6,824 (2,287) 5,067 (1,561) 4,537 – 3,506 124 $ 4,537 $ 3,630 $ 4,484 53 $ $ 3,582 48 $ 4,537 3,630 $ 4.49 $ 4.48 $ 3.50 $ 3.47 $ $ – – $ 0.13 $ 0.12 $ 4.49 $ 4.48 $ 3.63 $ 3.59 107 Financial Statements Consolidated Statements of Comprehensive Income Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars, except per share data) Net income Other comprehensive income, net of taxes Unrealized gains (losses) on available-for-sale (“AFS”) ﬁ nancial securities, net of tax $9, $5 Realized (gains) losses and impairments on AFS ﬁ nancial securities, net of tax $5, $1 Unrealized gains on derivative investments designated as cash ﬂ ow hedges, net of tax $41, $131 Realized (gains) on derivative investments designated as cash ﬂ ow hedges, net of tax $93, $22 Actuarial (losses) on post employment beneﬁ t obligations, net of tax $13, $nil Currency translation adjustments gain (loss), net of tax $nil, $nil Total other comprehensive income (loss) Total comprehensive income Attributable to: Equity holders of Barrick Gold Corporation Non-controlling interests The accompanying notes are an integral part of these consolidated financial statements. 2011 2010 $ 4,537 $ 3,630 (91) 36 370 (413) (22) (36) 64 (11) 518 (88) (2) 14 (156) 495 $ 4,381 $ 4,125 $ 4,328 53 $ $ 4,077 48 $ 108 Consolidated Statements of Cash Flow Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars) Operating Activities Net income Adjustments for the following items: Depreciation Accretion Impairment charges (reversals) (note 9b) Income tax expense (note 10) Increase in inventory Gain on sale/acquisition of long-lived assets/investments Other operating activities (note 13a) Operating cash ﬂ ows before interest and income taxes Gross interest paid Income taxes paid Net cash provided by operating activities Investing Activities Property, plant and equipment Capital expenditures (note 5) Sales proceeds Acquisitions (note 4) Investments Purchases Sales Other investing activities (note 13b) Net cash used in investing activities Financing Activities Proceeds on exercise of stock options Proceeds from public issuance of common shares by a subsidiary (note 4e) Long-term debt Proceeds Repayments Dividends Funding from non-controlling interests Deposit on silver sale agreement (note 26) Other ﬁ nancing activities (note 13c) 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 year (note 22a) Cash and equivalents at the end of year (note 22a) The accompanying notes are an integral part of these consolidated financial statements. Barrick Financial Report 2011 | Financial Statements 2011 2010 $ 4,537 $ 3,630 1,419 52 235 2,287 (708) (229) (173) 7,420 (137) (1,968) 1,212 21 (73) 1,561 (381) (79) (421) 5,470 (153) (732) 5,315 4,585 (4,973) 48 (7,677) (3,778) 61 (813) (72) 80 (233) (61) 15 (54) (12,827) (4,630) 57 – 6,648 (380) (509) 403 138 (66) 127 884 782 (149) (436) 114 137 (25) 6,291 1,434 (2) 15 (1,223) 3,968 1,404 2,564 $ 2,745 $ 3,968 109 Financial Statements Consolidated Balance Sheets Barrick Gold Corporation (in millions of United States dollars) Assets Current assets Cash and equivalents (note 22a) Accounts receivable (note 16) Inventories (note 15) Other current assets (note 16) Total current assets (excluding assets classiﬁ ed as held for sale) Assets classiﬁ ed as held for sale Total current assets Non-current assets Equity in investees (note 14a) Other investments (note 14b) Property, plant and equipment (note 17) Goodwill (note 18a) Intangible assets (note 18b) Deferred income tax assets (note 27) Non-current portion of inventory (note 15) Other assets (note 19) Total assets Liabilities and Equity Current liabilities Accounts payable (note 20) Debt (note 22b) Current income tax liabilities Other current liabilities (note 21) Total current liabilities (excluding liabilities classiﬁ ed as held for sale) Liabilities classiﬁ ed as held for sale Total current liabilities Non-current liabilities Debt (note 22b) Provisions (note 24) Deferred income tax liabilities (note 27) Other liabilities (note 26) Total liabilities Equity Capital stock (note 28) Retained earnings (deﬁ cit) Accumulated other comprehensive income Other Total equity attributable to Barrick Gold Corporation shareholders Non-controlling interests (note 29) Total equity Contingencies and commitments (notes 17 and 33) 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 110 As at As at December 31, December 31, 2010 2011 As at January 1, 2010 $ 2,745 426 2,498 876 $ 3,968 370 1,798 935 $ 2,564 259 1,488 518 6,545 – 7,071 – 6,545 7,071 440 161 28,979 9,626 569 409 1,153 1,002 396 171 17,890 6,096 475 625 1,040 873 4,829 100 4,929 1,124 62 13,378 5,197 275 601 709 649 $ 48,884 $ 34,637 $ 26,924 2,083 196 306 326 2,911 – 1,511 14 550 416 2,491 – 1,221 54 104 366 1,745 49 2,911 2,491 1,794 13,173 2,326 4,231 689 6,624 1,768 1,971 566 6,124 1,408 960 884 23,330 13,420 11,170 17,892 4,562 595 314 23,363 2,191 17,820 609 729 314 19,472 1,745 17,392 (2,535) 232 143 15,232 522 25,554 21,217 15,754 $ 48,884 $ 34,637 $ 26,924 Barrick Financial Report 2011 | Financial Statements Consolidated Statements of Changes in Equity Attributable to equity holders of the company Barrick Gold Corporation (in millions of United States dollars) Common shares (in thousands) Capital stock Retained earnings (deﬁ cit) Accumulated other comprehensive income (loss) Other1 Total equity attributable to shareholders Non- controlling interests Total equity At January 1, 2011 998,500 $ 17,820 $ 609 $ 729 $ 314 $ 19,472 $ 1,745 $ 21,217 Net income Total other comprehensive income (loss) – – – – 4,484 (22) – (134) – – 4,484 (156) 53 – 4,537 (156) Total comprehensive income 998,500 $ – $ 4,462 $ (134) $ – $ 4,328 $ 53 $ 4,381 Transactions with owners Dividends Issued on exercise of stock options Recognition of stock option expense Funding from non-controlling interests Other decrease in – 1,923 – – – 57 15 – (509) – – – non-controlling interests – – – – – – – – – – – – – (509) 57 15 – – – – 403 (509) 57 15 403 – (10) (10) Total transactions with owners 1,923 $ 72 $ (509) $ – $ – $ (437) $ 393 $ (44) At December 31, 2011 1,000,423 $ 17,892 $ 4,562 $ 595 $ 314 $ 23,363 $ 2,191 $ 25,554 At January 1, 2010 984,328 $ 17,392 $ (2,535) $ 232 $ 143 $ 15,232 $ 522 $ 15,754 Net income Total other comprehensive income (loss) – – – – 3,582 (2) – 497 – – 3,582 495 48 – 3,630 495 Total comprehensive income 984,328 $ – $ 3,580 $ 497 $ – $ 4,077 $ 48 $ 4,125 Transactions with owners Dividends Issued on conversion of debentures Issued on exercise of stock options Recognition of stock option expense Recognized on initial public offering of African Barrick Gold (note 4e) Funding from non-controlling interests Other increase in non-controlling interests – 9,381 4,791 – – 294 127 7 (436) – – – – – – – – – – – – – – – – – – – – – – – (436) 294 127 7 – – – – (436) 294 127 7 171 – – 171 – – – 114 1,061 171 114 1,061 Total transactions with owners 14,172 $ 428 $ (436) $ – $ 171 $ 163 $ 1,175 $ 1,338 At December 31, 2010 998,500 $ 17,820 $ 609 $ 729 $ 314 $ 19,472 $ 1,745 $ 21,217 1. Includes additional paid-in capital as at December 31, 2011: $276 million (December 31, 2010: $276 million; January 1, 2010: $nil) and convertible borrowings – equity component as at December 31, 2011: $38 million (December 31, 2010: $38 million; January 1, 2010: $143 million). The accompanying notes are an integral part of these consolidated financial statements. 111 Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$, ZAR, CLP, PGK, TZS, JPY, ARS, GBP, EUR and ZMK are to Canadian dollars, Australian dollars, South African rand, Chilean pesos, Papua New Guinea kina, Tanzanian schillings, Japanese yen, Argentinean pesos, British Pound Sterling, Euros and Zambian Kwacha, respectively. 1  Corporate Information Barrick Gold Corporation (“Barrick” or the “Company”) is a corporation governed by the Business Corporation Act (Ontario). The Company’s head and registered ofﬁ ce is located at Brookﬁ eld Place, TD Canada Trust Tower, 161 Bay Street, Suite 3700, Toronto, Ontario, M5J 2S1. We are principally engaged in the production and sale of gold and copper, as well as related activities such as exploration and mine development. We also hold interests in oil and gas properties located in Canada. Our producing gold mines are concentrated in three regional business units (“RBU”): North America, South America, and Australia Paciﬁ c. We also hold a 73.9% equity interest in African Barrick Gold plc (“ABG”), a company listed on the London Stock Exchange that owns gold mines and exploration properties in Africa. Our Copper business unit contains producing copper mines located in Chile and Zambia and a mine under construction located in Saudi Arabia. We sell our gold and copper production into the world market. 2  Signiﬁcant Accounting Policies a) Statement of Compliance These consolidated ﬁ nancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) under the historical cost convention, as modiﬁ ed by revaluation of derivative contracts and certain ﬁ nancial assets. The policies applied in these ﬁ nancial statements are based on IFRSs in effect as at February 15, 2012, the date the Board of Directors approved these consolidated ﬁ nancial statements for issue. Prior to the adoption of IFRS, our primary ﬁ nancial statements were prepared in accordance with United States generally accepted accounting principles (“US GAAP”). Disclosure of our elected transition exemptions and reconciliation and explanation of accounting policy differences compared to US GAAP have been provided in Note 3 to these consolidated ﬁ nancial statements. b) Basis of Preparation Subsidiaries These consolidated ﬁ nancial statements include the accounts of Barrick and its subsidiaries. All intercompany balances, transactions, income and expenses, and proﬁ ts or losses have been eliminated on consolidation. We consolidate subsidiaries where we have the ability to exercise control. Control is achieved when we have the power to govern the ﬁ nancial and operating policies of the entity. Control is normally achieved through ownership, directly or indirectly, of more than 50 percent of the voting power. Control can also be achieved through power over more than half of the voting rights by virtue of an agreement with other investors or through the exercise of de facto control. For non wholly- owned subsidiaries, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated balance sheet. Proﬁ t for the period that is attributable to non-controlling interests is calculated based on the ownership of the minority shareholders in the subsidiary. Joint Ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control such that signiﬁ cant operating and ﬁ nancial decisions require the unanimous consent of the parties sharing control. Our joint ventures consist of jointly controlled assets (“JCAs”) and jointly controlled entities (“JCEs”). A JCA is a joint venture in which the venturers have control over the assets contributed to or acquired for the purposes of the joint venture. JCAs do not involve the establishment of a corporation, partnership or other entity. The participants in a JCA derive beneﬁ t from the joint activity through a share of production, rather than by receiving a share of the net operating results. Our proportionate interest in the assets, liabilities, revenues, expenses, and cash ﬂ ows of JCAs are incorporated into the consolidated ﬁ nancial statements under the appropriate headings. 112 A JCE is a joint venture that involves the establishment of a corporation, partnership or other entity in which each venturer has a long-term interest. We account for our interests in JCEs using the equity method of accounting. On acquisition, an equity method investment is initially recognized at cost. The carrying amount of equity method investments includes goodwill identiﬁ ed on acquisition, net of any accumulated impairment losses. The carrying amount is adjusted by our share of post- acquisition net income or loss, depreciation, amortization or impairment of the fair value adjustments made at the date of acquisition, dividends and our share of post-acquisition movements in Other Comprehensive Income (“OCI”). Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Associates An associate is an entity over which the investor has signiﬁ cant inﬂ uence but not control and that is neither a subsidiary nor an interest in a joint venture. Signiﬁ cant inﬂ uence is presumed to exist where the Company has between 20 percent and 50 percent of the voting rights, but can also arise where the Company has less than 20 percent if we have the power to be actively involved and inﬂ uential in policy decisions affecting the entity. Our share of the net assets and net income or loss are accounted for in the consolidated ﬁ nancial statements using the equity method of accounting. Consolidation Method at December 31, 2011 Outlined below are the accounting methods used for entities other than 100% owned Barrick subsidiaries: Marigold Mine Round Mountain Mine Turquoise Ridge Mine Kalgoorlie Mine Porgera Mine African Barrick Gold plc2,3 Pueblo Viejo Project3 Cerro Casale Project3 Donlin Gold Project5 Reko Diq Project4,5 Kabanga Project5 Highland Gold Plc Entity type at December 31, 2011 Economic interest at December 31, 20111 JCA JCA JCA JCA JCA Subsidiary, publicly traded Subsidiary Subsidiary JCE JCE JCE Associate, publicly traded 33% 50% 75% 50% 95% 73.9% 60% 75% 50% 37.5% 50% 20.4% Method Proportional Proportional Proportional Proportional Proportional Consolidation Consolidation Consolidation Equity Method 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 was reduced from 70% to 51.7%. 3. We consolidate our interests in Pueblo Viejo, Cerro Casale and ABG and record a non-controlling interest for the 40%, 25% and 26.1%, respectively, that we do not own. 4. We hold a 50% interest in Atacama Copper, which has a 75% interest in the Reko Diq project. 5. Our jointly controlled entities are all early stage exploration projects and, as such, do not have any significant assets, liabilities, income, contractual commitments or contingencies. Expenses are recognized through our equity pick-up (loss). Refer to note 14 for further details. c) Business Combinations On the acquisition of a business, the acquisition method of accounting is used, whereby the purchase consideration is allocated to the identiﬁ able assets and liabilities on the basis of fair value at the date of acquisition. Provisional fair values allocated at a reporting date are ﬁ nalized as soon as the relevant information is available, within a period not to exceed twelve months from the acquisition date with retroactive restatement of the impact of adjustments to those provisional fair values effective as at the acquisition date. Incremental costs related to acquisitions are expensed as incurred. When purchase consideration is contingent on future events, the initial cost of the acquisition recorded includes an estimate of the fair value of the contingent amounts expected to be payable in the future. When the fair value of contingent consideration as at the date of acquisition is ﬁ nalized before the end of the twelve month measurement period, the adjustment is allocated to the identiﬁ able assets and liabilities acquired. Subsequent changes to the estimated fair value of contingent consideration are recorded in the consolidated statement of income. 113 Notes to Consolidated Financial Statements When the cost of the acquisition exceeds the fair values of the identiﬁ able net assets acquired, the difference is recorded as goodwill. If the fair value attributable to Barrick’s share of the identiﬁ able net assets exceeds the cost of acquisition, the difference is recognized as a gain in the consolidated statement of income. Non-controlling interests represent the fair value of net assets in subsidiaries, as at the date of acquisition, that are not held by Barrick and are presented in the equity section of the consolidated balance sheet. When control of a subsidiary is acquired in stages, its carrying value prior to the change in control is compared with the fair value of the identiﬁ able net assets at the date of the change of control. If fair value is greater than/less than carrying value, a gain/loss is recorded in the consolidated statement of income. d) Discontinued Operations A discontinued operation is a component of the Company that can be clearly distinguished from the rest of the Company, both operationally and for ﬁ nancial reporting purposes, and is expected to be recovered primarily through sale rather than continuing use. The assets and liabilities are presented as held for sale in the consolidated balance sheet when the sale is highly probable, the asset or disposal group is available for immediate sale in its present condition and management is committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classiﬁ cation. Results of operations and any gain or loss from disposal are excluded from earnings before ﬁ nance items and tax and are reported separately as Income from discontinued operations. e) Foreign Currency Translation The functional currency of the Company, for each subsidiary of the Company, and for joint ventures and associates, is the currency of the primary economic environment in which it operates. 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 (“PP&E”), intangible assets and equity method investments using historical rates;  Available-for-sale securities using the closing exchange rate as at the balance sheet date with translation gains and losses recorded in OCI;  Deferred tax assets and liabilities using the closing exchange rate as at the balance sheet date with translation gains and losses recorded in income tax expense;  Other assets and liabilities using the closing exchange rate as at the balance sheet date with translation gains and losses recorded in other income/expense; and  Income and expenses using the average exchange rate for the period, 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. The functional currency of our Canadian oil and gas operations is the Canadian dollar. We translate non-US dollar balances related to these operations into US dollars as follows:  Assets and liabilities using the closing exchange rate as at the balance sheet date with translation gains and losses recorded in OCI; and  Income and expense using the average exchange rate for the period with translation gains and losses recorded in OCI. f) Revenue Recognition We record revenue when evidence exists that all of the following criteria are met:  The signiﬁ cant risks and rewards of ownership of the product have been transferred to the buyer;  Neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold, has been retained;  The amount of revenue can be reliably measured;  It is probable that the economic beneﬁ ts associated with the sale will ﬂ ow to us; and  The costs incurred or to be incurred in respect of the sale can be reliably measured. These conditions are generally satisﬁ ed when title passes to the customer. Gold Bullion Sales Gold bullion is sold primarily in the London spot market. The sales price is ﬁ xed at the delivery date based on the gold spot price. Generally, we record revenue from gold bullion sales at the time of physical delivery, which is also the date that title to the gold passes. 114 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Concentrate Sales Under the terms of concentrate sales contracts with independent smelting companies, gold and copper sales prices are provisionally set on a speciﬁ ed future date after shipment based on market prices. We record revenues under these contracts at the time of shipment, which is also when the risk and rewards of ownership pass to the smelting companies, using forward market gold and copper prices on the expected date that ﬁ nal sales prices will be ﬁ xed. Variations between the price recorded at the shipment date and the actual ﬁ nal price set under the smelting contracts are caused by changes in market gold and copper prices, and result in an embedded derivative in accounts receivable. The embedded derivative is recorded at fair value each period until ﬁ nal settlement occurs, with changes in fair value classiﬁ ed as provisional price adjustments and included in revenue in the consolidated statement of income. Copper Cathode Sales Under the terms of copper cathode sales contracts, copper sales prices are provisionally set on a speciﬁ ed future date based upon market commodity prices plus certain price adjustments. Revenue is recognized at the time of shipment, which is also when the risks and rewards of ownership pass to the customer. Revenue is provisionally measured using forward market prices on the expected date that ﬁ nal selling prices will be ﬁ xed. Variations occur between the price recorded on the date of revenue recognition and the actual ﬁ nal price under the terms of the contracts due to changes in market copper prices, which result in the existence of an embedded derivative in accounts receivable. This embedded derivative is recorded at fair value each period until ﬁ nal settlement occurs, with changes in fair value classiﬁ ed as provisional price adjustments and included in revenue in the consolidated statement of income. 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 risks and rewards of ownership are transferred. At the time of delivery of oil and gas, revenues are determined based upon contracts by reference to monthly market commodity prices plus certain price adjustments. Price adjustments include product quality and transportation adjustments and market differentials. g) Exploration and Evaluation Exploration expenditures are the costs incurred in the initial search for mineral deposits with economic potential or in the process of 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. Evaluation expenditures are the costs incurred to establish the technical and commercial viability of devel- oping mineral deposits identiﬁ ed through exploration activities or by acquisition. Evaluation 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 classiﬁ ed 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 justiﬁ ed, including scoping, prefeasibility and ﬁ nal feasibility studies. Exploration and evaluation expenditures are capitalized if management determines that probable future economic beneﬁ ts will be generated as a result of the expenditures. Cash ﬂ ows attributable to capitalized exploration and evaluation expenditures are classiﬁ ed as investing activities in the consolidated statement of cash ﬂ ow. For our oil and 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 recorded as exploration expense in the consolidated statement of income. Only costs that relate directly to the discovery and development of speciﬁ c commercial oil and gas reserves are capitalized as development costs. h) Earnings per Share 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 reﬂ ect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitle their holders to obtain common shares in the future. For stock 115 Notes to Consolidated Financial Statements 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 convertible debentures is excluded from the calculation of income. i) Taxation Current tax for each taxable entity is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the balance sheet date and includes adjustments to tax payable or recoverable in respect of previous periods. Deferred tax is recognized using the balance sheet method in respect of all temporary differences between the tax bases of assets and liabilities, and their carrying amounts for ﬁ nancial reporting purposes, except as indicated below. Deferred income tax liabilities are recognized for all taxable temporary differences, except:  Where the deferred income tax liability arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in an acquisition that is not a business combination and, at the time of the acquisition, affects neither the accounting proﬁ t nor taxable proﬁ t or loss; and  In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable proﬁ t will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilized, except: 116  Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in an acquisition that is not a business combination and, at the time of the acquisition, affects neither the accounting proﬁ t nor taxable proﬁ t or loss; and  In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable proﬁ t will be available against which the temporary differences can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufﬁ cient taxable proﬁ t will be available to allow all or part of the deferred income tax asset to be utilized. To the extent that an asset not previously recognized fulﬁ lls the criteria for recognition, a deferred income tax asset is recorded. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realized or the liability is settled, based on tax rates and tax laws enacted or substantively enacted at the balance sheet date. Current and deferred tax relating to items recognized directly in equity are recognized in equity and not in the income statement. Royalties and Special Mining Taxes Income tax expense includes the cost of royalty and special mining taxes payable to governments that are calculated based on a percentage of taxable proﬁ t whereby taxable proﬁ t represents net income adjusted for certain items deﬁ ned in the applicable legislation. j) Other Investments Investments in publically quoted equity securities that are neither subsidiaries nor associates are categorized as available-for-sale. Available-for-sale equity investments are recorded at fair value with unrealized gains and losses recorded in OCI. Realized gains and losses are recorded in earnings when investments are sold and are calculated using the average carrying amount of securities sold. If the fair value of an investment declines below the carrying amount, we undertake qualitative and quantitative assessments of whether the impairment is either signiﬁ cant or prolonged. We consider all relevant facts and circumstances in this assessment, particularly the length of time and extent to which fair value has been less than the carrying amount. If an unrealized loss on an available-for-sale investment has been recognized in OCI and it is deemed to be either signiﬁ cant or prolonged, any cumulative loss that had been recognized in OCI is reclassiﬁ ed as an impairment loss in the consolidated statement of income. The reclassiﬁ cation adjustment is calculated as the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that ﬁ nancial asset previously recognized. If the value of a previously impaired available for sale equity investment subsequently recovers, additional unrealized gains are recorded in OCI and the previously recorded impairment losses are not subject to reversal through the consolidated statement of income. k) Inventory Material extracted from our mines is classiﬁ ed 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 proﬁ t. Raw materials are comprised of both ore in stockpiles and ore on leach pads as processing is required to extract beneﬁ t from the ore. Ore is accumulated in stockpiles that are subsequently processed into gold/copper in a saleable form. The recovery of gold and copper from certain oxide ores is achieved through the heap leaching process. Work in process represents gold/copper in the processing circuit that has not completed the production process, and is not yet in a saleable form. Finished goods inventory represents gold/copper in saleable form that has not yet been sold. Mine operating supplies represent commodity consumables and other raw materials used in the production process, as well as spare parts and other maintenance supplies that are not classiﬁ ed as capital items. Inventories are valued at the lower of cost and net realizable value. Cost is determined on a weighted average basis and includes all costs incurred, based on a normal production capacity, in bringing each product to its present location and condition. Cost of inventories comprises direct labor, materials and contractor expenses, including non-capitalized stripping costs; depreciation on PP&E including capitalized stripping costs; and an allocation of mine site overhead costs. As ore is removed for processing, costs are removed based on the average cost per ounce/pound in the stockpile. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements We record provisions to reduce inventory to net realizable value to reﬂ ect changes in economic factors that impact inventory value and to reﬂ ect present intentions for the use of slow moving and obsolete supplies inventory. Net realizable value is determined with reference to relevant market prices less applicable variable selling expenses. Provisions recorded also reﬂ ect an estimate of the remaining costs of completion to bring the inventory into its saleable form. Provisions are also recorded to reduce mine operating supplies to net realizable value, which is generally calculated by reference to its salvage or scrap value, when it is determined that the supplies are obsolete. Provisions are reversed to reﬂ ect subsequent recoveries in net realizable value where the inventory is still on hand. l) 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 complexity 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 production 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 speciﬁ cations); and (4) the ability to sustain ongoing production of minerals. When a mine construction project moves into the production stage, the capitalization of certain mine construction costs ceases and costs are either capitalized to inventory or expensed, except for capitalizable costs related to property, plant and equipment additions or improvements, open pit stripping activities that provide a future beneﬁ t, underground mine development or E&E expenditures that meet the criteria for capitalization. Pre-production stripping costs are capitalized until an “other than de minimis” level of mineral is produced, after which time such costs are either capitalized to inventory or expensed as incurred. We consider various relevant criteria to assess when an “other than de minimis” level of mineral is produced. Some of the criteria considered would include, but are not limited to, the following: (1) the amount of minerals mined versus total ounces in LOM ore; (2) the amount of ore tons mined versus 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. 117 Notes to Consolidated Financial Statements m) Property, Plant and Equipment Buildings, Plant and Equipment At acquisition, we record buildings, plant and equipment at cost, including all expenditures incurred to prepare an asset for its intended use. These expenditures consist of: 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. We capitalize costs that meet the asset recognition criteria. Costs incurred that do not extend the productive capacity or useful economic life of an asset are considered repairs and maintenance expense and are accounted for as a cost of the inventory produced in the period. Depreciation commences when buildings, plant and equipment are considered available for use. Once buildings, plant and equipment are considered available for use they are measured as cost less accumulated depreciation and applicable impairment losses. Depreciation on equipment utilized in the devel- opment of assets, including open pit and underground mine development, is depreciated and recapitalized as development costs attributable to the related asset. Annual Depreciation Rates of Major Asset Categories Buildings, plant and equipment Underground mobile equipment Light vehicles and other mobile equipment Furniture, computer and ofﬁ ce equipment 5 – 25 years 5 – 7 years 2 – 3 years 2 – 3 years Leasing Arrangements We enter into leasing arrangements and arrange- ments that are in substance leasing arrangements. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, including whether the fulﬁ llment of the arrangement is dependent on the use of a speciﬁ c asset or assets or whether the arrangement conveys a right to use the asset. Leasing arrangements that transfer substantially all the risks and rewards of ownership of the asset to Barrick are classiﬁ ed as ﬁ nance 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 of the minimum lease payment. Each lease payment is allocated between the liability and ﬁ nance costs using the effective interest method, whereby a constant rate of interest expense is recognized on the balance of the liability outstanding. 118 The interest element of the lease is charged to the consolidated statement of income as a ﬁ nance cost. PP&E assets acquired under ﬁ nance leases are depreciated, once the asset becomes available for use, over the shorter of the useful life of the asset and the lease term. All other leases are classiﬁ ed as operating leases. Operating lease payments are recognized as an operating cost in the consolidated statement of income on a straight-line basis over the lease term. Mineral Properties Mineral properties consist of: the fair value attributable to mineral reserves and resources acquired in a business combination or asset acquisition; underground mine development costs; open pit mine development costs; capitalized exploration and evaluation costs; and capitalized interest. i) Acquired Mining Properties On acquisition of a mining property we prepare an estimate of the fair value attributable to the proven and probable mineral reserves, mineral resources and exploration potential attributable to the property. The estimated fair value attributable to the mineral reserves and the portion of mineral resources considered to be probable of economic extraction at the time of the acquisition is depreciated on a units of production (“UOP”) basis whereby the denominator is the proven and probable reserves and the portion of resources expected to be extracted economically. The estimated fair value attributable to mineral resources that are not considered to be probable of economic extraction at the time of the acquisition is not subject to depreciation, until the resources become probable of economic extraction in the future. The estimated fair value attributable to exploration licenses is recorded as an intangible asset and is not subject to depreciation until the property enters production. 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. Capitalized underground development costs incurred to enable access to speciﬁ c ore blocks or areas of the underground mine, and which only provide an economic beneﬁ t over the period of mining that ore block or area, are depreciated on a UOP basis, whereby the denominator is estimated ounces/pounds of gold/ copper 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 beneﬁ t 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. iii) Open Pit Mining 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 in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as open pit mine development costs. Stripping costs incurred during the production stage of a pit are accounted for as costs of the inventory produced during the period that the stripping costs were incurred, unless these costs are expected to provide a future economic beneﬁ t. Production phase stripping costs generate a future economic beneﬁ t 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; and (iii) increases the productive capacity or extends the productive life of the mine (or pit). For production phase stripping costs that are expected to generate a future economic beneﬁ t, the current period stripping costs are capitalized as open pit mine development costs. Capitalized open pit mine development costs are depreciated on a UOP basis whereby the denominator is the estimated ounces/pounds of gold/copper in the associated open pit in proven and probable reserves and the portion of resources considered probable of being extracted economically. Capitalized open pit mine development costs are depreciated once the open pit has entered production and the future economic beneﬁ t is being derived. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements iv) Oil and Gas Properties On acquiring an oil and gas property, we estimate the fair value of reserves and resources and we record this amount as an asset at the date of acquisition, which is subject to depreciation, on a UOP basis over proved reserves, when the asset is available for its intended use. Construction-in-Progress Assets under construction at operating mines are capitalized as construction-in-progress. The cost of construction-in-progress comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. 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 PP&E. Construction-in-progress also includes deposits on long lead items. Construction-in-progress is not depreciated. Once the asset is complete and available for use, depreciation is commenced. Capitalized Interest We capitalize interest costs for qualifying assets. Qualifying assets are assets that require a signiﬁ cant amount of time to prepare for their intended use, including projects that are in the exploration and evaluation, development or construction stages. Qualifying assets also include signiﬁ cant expansion projects at our operating mines. Capitalized interest costs are considered an element of the historical cost of the qualifying asset. Capitalization ceases when the asset is substantially complete or if construction is interrupted for an extended period. Where the funds used to ﬁ nance a qualifying asset form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period. Where funds borrowed are directly attributable to a qualifying asset, the amount capitalized represents the borrowing costs speciﬁ c to those borrowings. Where surplus funds available out of money borrowed speciﬁ cally to ﬁ nance a project are temporarily invested, the total capitalized interest is reduced by income generated from short-term investments of such funds. 119 Notes to Consolidated Financial Statements Insurance We record losses relating to insurable events as they occur. Proceeds receivable from insurance coverage are recorded at such time as receipt is virtually certain and the amount receivable is ﬁ xed or determinable. For business interruption the amount is only recognized when it is virtually certain as supported by receipt of notiﬁ cation of a minimum or proposed settlement amount from the insurance adjuster. n) Goodwill Under the acquisition method of accounting, the costs of business combinations are allocated to the assets acquired and liabilities assumed based on the estimated fair value at the date of acquisition. The excess of the fair value of consideration paid over the fair value of the identiﬁ able net assets acquired is recorded as goodwill. Goodwill is not amortized; instead it is tested annually for impairment at the beginning of the fourth quarter for gold operating segments and the end of the fourth quarter for the copper operating segment. In addition, at each reporting period we assess whether there is an indication that goodwill is impaired and, if there is such an indication, we would test for goodwill impairment at that time. Goodwill is allocated to the group of cash generating units (“CGU”) that comprise an operating segment since each CGU in a segment is expected to derive beneﬁ ts from a business combination that results in the recognition of goodwill. This consideration is based on the following: (i) We manage our business using a business unit structure, and each business unit is an operating segment for reporting purposes. (ii) Each business unit is responsible for the management of the operations in the unit. The Chief Operating Decision Maker (“CODM”) assesses the performance and makes capital allocation decisions for each business unit on this basis. (iii) Each CGU in a segment is expected to beneﬁ t from the synergies arising as a result of business combinations, including: shared resources and infrastructure; administration and overhead; and access to low-cost ﬁ nancing. (iv) The CODM monitors goodwill at this level. The recoverable amount of an operating segment is the higher of Value in Use (“VIU”) and Fair Value Less Costs to Sell (“FVLCS”). A goodwill impairment is recognized for any excess of the carrying amount of the segment over its recoverable amount. Any goodwill impairment is recognized in the consolidated statement of income in the reporting period in which it occurs. Goodwill impairment charges are not reversible. 120 o) 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 licenses acquired, including the fair value attributable to mineral resources, if any, of that property. The fair value of the exploration license is recorded as an intangible asset (acquired exploration potential) as at the date of acquisition. When an exploration stage property moves into development, the acquired exploration potential attributable to that property is transferred to mining interests within PP&E. p) Impairment of Non-Current Assets We review and test the carrying amounts of PP&E and intangible assets with deﬁ nite lives when an indicator of impairment is considered to exist. Impairment assessments on PP&E and intangible assets are conducted at the level of CGUs, which is the lowest level for which identiﬁ able cash ﬂ ows are largely independent of the cash ﬂ ows of other assets. For operating mines, projects and oil and gas properties, the individual mine/project/ property represents a CGU for impairment testing. The recoverable amount of a CGU is the higher of VIU and FVLCS. An impairment loss is recognized for any excess of the carrying amount of a CGU over its recoverable amount. Any impairment is recognized as an expense in the consolidated statement of income in the reporting period in which the impairment occurs. Where it is not appropriate to allocate the loss to a separate asset, an impairment loss related to a CGU is allocated to the carrying amount of the assets of the CGU on a pro rata basis based on the carrying amount of its non-monetary assets. Impairment Reversal Impairment losses for PP&E and intangible assets are reversed if the conditions that gave rise to the impairment are no longer present and it has been determined that the asset is no longer impaired as a result. This reversal is recognized in the consolidated statement of income and is limited to the carrying value that would have been determined, net of any depreciation where applicable, had no impairment charge been recognized in prior years. When an impairment reversal is undertaken, the recoverable amount is assessed by reference to the higher of VIU and FVLCS. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements q) Debt Debt is recognized initially at fair value, net of ﬁ nancing costs incurred, and subsequently measured at amortized cost. Any difference between the amounts originally received and the redemption value of the debt is recognized in the consolidated statement of income over the period to maturity using the effective interest method. r) Derivative Instruments and Hedge Accounting Derivative Instruments Derivative instruments are recorded at fair value on the consolidated balance sheet, classiﬁ ed based on contractual maturity. Derivative instruments are classiﬁ ed as either hedges of the fair value of recognized assets or liabilities or of ﬁ rm commitments (“fair value hedges”), hedges of highly probable forecast transactions (“cash ﬂ ow hedges”) or non-hedge derivatives. Derivatives designated as either a fair value or cash ﬂ ow hedge that are expected to be highly effective in achieving offsetting changes in fair value or cash ﬂ ows are assessed on an ongoing basis to determine that they actually have been highly effective throughout the ﬁ nancial reporting periods for which they were designated. Derivative assets and derivative liabilities are shown separately in the balance sheet unless there is a legal right to offset and the intent to settle on a net basis. Fair Value Hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the consolidated statement of income, together with any changes in the fair value of the hedged asset or liability or ﬁ rm commitment that is attributable to the hedged risk. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of income. Cash Flow Hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash ﬂ ow hedges is recognized in equity. The gain or loss relating to the ineffective portion is recognized in the consolidated statement of income. Amounts accumulated in equity are transferred to the consolidated statement of income in the period when the forecasted transaction impacts earnings. When the forecasted transaction that is hedged results in the recognition of a non-ﬁ nancial asset or a non-ﬁ nancial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial carrying amount of the asset or liability. When a derivative designated as a cash ﬂ ow hedge expires or is sold and the forecasted transaction is still expected to occur, any cumulative gain or loss relating to the derivative that is recorded in equity at that time remains in equity and is recognized in the consolidated statement of income when the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was recorded in equity is immediately transferred to the consolidated statement of income. Non-Hedge Derivatives Derivative instruments that do not qualify as either fair value or cash ﬂ ow hedges are recorded at their fair value at the balance sheet date, with changes in fair value recognized in the consolidated statement of income. s) Embedded Derivatives Derivatives embedded in other ﬁ nancial instruments or other executory contracts are accounted for as separate derivatives when their risks and characteristics are not closely related to their host ﬁ nancial instrument or contract. In some cases, the embedded derivatives may be designated as hedges and are accounted for as described above. t) Fair Value Measurement 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. u) Environment Rehabilitation Provision Mining, extraction and processing activities normally give rise to obligations for environmental rehabilitation. Rehabilitation work can include facility decommission- ing 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 121 Notes to Consolidated Financial Statements caused 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 accordingly. 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 connection with disturbances as at the reporting date. Estimated costs included in the determination of the provision reﬂ ect the risks and probabilities of alternative estimates of cash ﬂ ows required to settle the obligation at each particular operation. The expected rehabilitation costs are estimated based on the cost of external contractors performing the work or the cost of performing the work internally 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. Expenditures 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 ﬂ ows, discounted to their present value using a current US dollar real risk-free pre-tax discount rate. The expected future cash ﬂ ows exclude the effect of inﬂ ation. The unwinding of the discount, referred to as accretion expense, is included in ﬁ nance costs and results in an increase in the amount of the provision. Provisions are updated each reporting period for changes to expected cash ﬂ ows and for the effect of changes in the discount rate, and the change in estimate is added or deducted from the related asset and depreciated over the expected economic life of the operation to which it relates. Signiﬁ cant judgments and estimates are involved in forming expectations of future activities and the amount and timing of the associated cash ﬂ ows. 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. 122 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 beneﬁ ts of the operation. The capitalized cost of closure and rehabilitation activities is recognized in PP&E and depreciated over the expected economic life of the operation to which it relates. Adjustments to the estimated amount and timing of future closure and rehabilitation cash ﬂ ows are a normal occurrence in light of the signiﬁ cant judgments and estimates involved. The principal factors that can cause expected cash ﬂ ows 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 and assumptions. 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 statement of income. In the case of closed sites, changes in estimates and assumptions are recognized immediately in the consolidated statement of income. For an operating mine, the adjusted carrying amount of the related asset is depreciated prospectively. Adjustments also result in changes to future ﬁ nance costs. v) Litigation and Other Provisions Provisions are recognized when a present obligation exists (legal or constructive), as a result of a past event, for which it is probable that an outﬂ ow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are discounted to their present value using a current US dollar risk-free pre-tax discount rate and the accretion expense is included in ﬁ nance costs. Certain conditions may exist as of the date the ﬁ nancial statements 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 cannot 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. Contingent gains are only recognized when the inﬂ ow of economic beneﬁ ts are virtually certain. w) Stock-Based Compensation Barrick offers equity-settled (Employee Stock Option Plan (“ESOP”), Employee Share Purchase Plan (“ESPP”)) and cash-settled (Restricted Share Units (“RSU”), Deferred Share Units (“DSU”), Performance Restricted Share Units (“PRSU”)) awards to certain employees and ofﬁ cers of the Company. Equity-settled awards are measured at fair value using the Lattice model with market related inputs as of the date of the grant. The cost is recorded over the vesting period of the award to the same expense category of the award recipient’s payroll costs (i.e. cost of sales, RBU costs, corporate administration) and the corresponding entry is recorded in equity. Equity-settled awards are not re-measured subsequent to the initial grant date. Cash-settled awards are measured at fair value initially using the market value of the underlying shares at the date of the grant of the award and are required to be re-measured to fair value at each reporting date until settlement. The cost is then recorded over the vesting period of the award. This expense, and any changes in the fair value of the award, is recorded to the same expense category of the award recipient’s payroll costs. The cost of a cash-settled award is recorded within liabilities until settled. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements We use the accelerated method (also referred to as ‘graded’ vesting) 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. Employee Stock Option Plan Under Barrick’s ESOP, certain ofﬁ cers 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 to the individual and the exercise price, are approved. Stock options vest over four years, beginning in the year after granting. The ESOP arrangement has graded vesting terms, and therefore, multiple vesting periods must be valued and accounted for separately over their respective vesting periods. The compensation expense of the instruments issued for each grant under the ESOP is calculated using the Lattice model. The compensation expense is adjusted by the estimated forfeiture rate which 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. Restricted Share Units 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 two and a half years and are settled in cash upon vesting. Additional RSUs are credited to reﬂ ect dividends paid on Barrick common shares over the vesting period. A liability for RSUs is measured at fair value on the grant date and is subsequently adjusted for changes in fair value. The liability is recognized on a straight-line basis over the vesting period, with a corresponding charge to compensation expense as a component of corporate administration and other expenses. Compensation expenses for RSUs incorporate an estimate for expected forfeiture rates based on which the fair value is adjusted. 123 Notes to Consolidated Financial Statements African Barrick Gold RSUs Historically, Barrick maintained a cash-settled RSU plan for select employees who now work for ABG. This plan operates in the identical manner as the Barrick RSU plan. The existing legacy RSUs will continue to be administered and accounted for based on the movement of the fair value of Barrick common shares for recording liabilities and compensation expense. Deferred Share Units Under our DSU plan, Directors must receive a speciﬁ ed 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 is paid out. Additional DSUs are credited to reﬂ ect dividends paid on Barrick common shares. The initial fair value of the liability is calculated as of the grant date and is recognized immediately. Subsequently, at each reporting date and on settlement the liability is re-measured, with any change in fair value recorded as Directors compensation expense in the period. Performance Restricted Share Units 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 reﬂ ect dividends paid on Barrick common shares over the vesting period. The amount of PRSUs that vest is based on the achievement of performance goals and the target settlement ranges from 0% to 200% of the original grant, in units. The value of a PRSU reﬂ ects the value of a Barrick common share adjusted for its relative performance against certain competitors. Therefore, the fair value of the PRSUs is determined with reference to the closing stock price at each remeasurement date. The initial fair value of the liability is calculated as of the grant date and is recognized within compensation expense using the straight-line method over the vesting period. Subsequently, at each reporting date and on settlement, the liability is remeasured, with any changes in fair value recorded as compensation expense. The fair value is adjusted for the revised estimated forfeiture rate. Employee Share Purchase Plan In 2008, Barrick launched an ESPP. 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. Both Barrick and the employee make the contributions on a bi-monthly basis with the funds being transferred to a custodian who purchases Barrick Common Shares in the open market. Shares purchased with employee contributions have no vesting requirement; however, shares purchased with Barrick’s contributions vest annually on December 1. All dividend income is used to purchase additional Barrick shares. Barrick records an expense equal to its bi-monthly cash contribution. No forfeiture rate is applied to the amounts accrued. Where an employee leaves prior to December 1, any accrual for contributions by Barrick during the year related to that employee is reversed. x) Post-Retirement Benefits Defined Contribution Pension Plans Certain employees take part in deﬁ ned contribution employee beneﬁ t plans whereby we contribute up to 6% of the employees’ annual salary and bonus. We also have a retirement plan for certain ofﬁ cers of Barrick under which we contribute 15% of the ofﬁ cer’s annual salary and bonus. The contributions are recognized as compensation expense as incurred. The Company has no further payment obligations once the contributions have been paid. Defined Benefit Pension Plans We have qualiﬁ ed deﬁ ned beneﬁ t pension plans that cover certain of our United States and Canadian employees and provide beneﬁ ts 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 beneﬁ ts payable to plan members. Independent trustees administer assets of the plans, which are invested mainly in ﬁ xed income and equity securities. As well as the qualiﬁ ed plans, we have non-qualiﬁ ed deﬁ ned beneﬁ t pension plans covering certain employees and former directors of Barrick. 124 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 beneﬁ t obligations differ at the end of the year. We record actuarial gains and losses in other comprehensive income and retained earnings. Our valuations are carried out using the projected unit credit method and the expected rate of return on pension plan assets is determined as management’s best estimate of the long-term return on major asset classes. We record the difference between the fair value of the plan assets (if any) of post-retirement plans and the present value of the plan obligations as an asset or liability on the consolidated balance sheets. Pension Plan Assets and Liabilities Pension plan assets, which consist primarily of ﬁ xed- income and equity securities, are valued using current market quotations. 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 signiﬁ cant impact on our pension cost and obligation. 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 ﬁ xed-income investments reﬂ ect the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inﬂ ation and interest rates are evaluated before long-term capital market assumptions are ﬁ nalized. Wage increases reﬂ ect the best estimate of merit increases to be provided, consistent with assumed inﬂ ation rates. Other Post-Retirement Benefits We provide post-retirement medical, dental, and life insurance beneﬁ ts to certain employees. Actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions are recorded in OCI. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements y) New Accounting Standards IFRS 9 Financial Instruments In November 2009, the IASB issued IFRS 9 Financial Instruments as the ﬁ rst step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simpliﬁ es the mixed measurement model and establishes two primary measurement categories for ﬁ nancial assets: amortized cost and fair value. The basis of classiﬁ cation depends on an entity’s business model and the contractual cash ﬂ ow of the ﬁ nancial asset. Classiﬁ cation is made at the time the ﬁ nancial asset is initially recognized, namely when the entity becomes a party to the contractual provisions of the instrument. IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures, including added disclosures about investments in equity instruments measured at fair value in OCI, and guidance on ﬁ nancial liabilities and derecognition of ﬁ nancial instruments. In December 2011, the IASB issued an amendment that adjusted the mandatory effective date of IFRS 9 from January 1, 2013 to January 1, 2015. We are currently assessing the impact of adopting IFRS 9 on our consolidated ﬁ nancial statements, including the impact of early adoption. IFRS 10 Consolidated Financial Statements In May 2011, the IASB issued IFRS 10 Consolidated Financial Statements to replace IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. The new consolidation standard changes the deﬁ nition of control so that the same criteria apply to all entities, both operating and special purpose entities, to determine control. The revised deﬁ nition focuses on the need to have both power and variable returns before control is present. IFRS 10 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 10 on our consolidated ﬁ nancial statements. IFRS 11 Joint Arrangements In May 2011, the IASB issued IFRS 11 Joint Arrangements to replace IAS 31, Interests in Joint Ventures. The new standard deﬁ nes two types of arrangements: Joint Operations and Joint Ventures. Focus is on the rights and obligations of the parties involved to reﬂ ect the joint arrangement, thereby requiring parties to recognize 125 z) Significant Judgments in Applying Accounting Policies and Key Sources of Estimation Uncertainty Many of the amounts included in the consolidated balance sheet require management to make judgments and/or estimates. These judgments and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. Actual results may differ from the amounts included in the consolidated balance sheet. Information about such judgments and estimation is contained in the accounting policies and/or the Notes to the ﬁ nancial statements, and the key areas are summarized below. Areas of signiﬁ cant judgment that have the most signiﬁ cant effect on the amounts recognized in the consolidated ﬁ nancial statements are:  Estimates of the quantities of proven and probable reserves and the portion of resources considered to be probable of economic extraction, which are used in: the calculation of depreciation expense; the capitalization of production phase stripping costs; and, forecasting the timing of the payments related to the environmental rehabilitation provision. We estimate our ore reserves and mineral resources based on information compiled by qualiﬁ ed persons as deﬁ ned in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects requirements;  Provisional and ﬁ nal fair value allocations recorded as a result of business combinations – note 2(c) and note 4;  The future economic beneﬁ t of exploration and evaluation costs – note 2(g);  The determination of when a mine enters production stage since capitalization of certain costs ceases upon entering production – note 2(l);  The determination of operating segments, which has an impact on the level at which goodwill is tested for impairment – note 5; and  The estimated useful lives of tangible and long-lived assets and the measurement of depreciation expense – note 2(m); Notes to Consolidated Financial Statements the individual assets and liabilities to which they have rights or for which they are responsible, even if the joint arrangement operates in a separate legal entity. IFRS 11 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 11 on our consolidated ﬁ nancial statements. IFRS 12 Disclosure of Interests in Other Entities In May 2011, the IASB issued IFRS 12 Disclosure of Interests in Other Entities to create a comprehensive disclosure standard to address the requirements for subsidiaries, joint arrangements and associates including the reporting entity’s involvement with other entities. It also includes the requirements for unconsolidated structured entities (i.e. special purpose entities). IFRS 12 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 12 on our consolidated ﬁ nancial statements. IFRS 13 Fair Value Measurement In May 2011, the IASB issued IFRS 13 Fair Value Measurement as a single source of guidance for all fair value measurements required by IFRS to reduce the complexity and improve consistency across its application. The standard provides a deﬁ nition of fair value and guidance on how to measure fair value as well as a requirement for enhanced disclosures. IFRS 13 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRS 13 on our consolidated ﬁ nancial statements. IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine In October 2011, the IASB issued IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. IFRIC 20 provides guidance on the accounting for the costs of stripping activity in the production phase of surface mining when two beneﬁ ts accrue to the entity from the stripping activity: useable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods. IFRIC 20 must be applied starting January 1, 2013 with early adoption permitted. We are currently assessing the impact of adopting IFRIC 20 on our consolidated ﬁ nancial statements. 126 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Other Notes to the Financial Statements Note Page Transition to IFRS Acquisitions and divestitures Segment information Revenue Cost of sales Exploration and evaluation Other charges Income tax expense Earnings per share Finance Income and ﬁ nance cost Cash ﬂ ow – other items Investments Inventories Accounts receivable and other current assets Property, plant and equipment Goodwill and other intangible assets Other assets Accounts payable Other current liabilities Financial instruments Fair value measurements Provisions and environmental rehabilitation Financial risk management Other non-current liabilities Deferred income taxes Capital stock Non-controlling interests Remuneration of key management personnel Stock-based compensation Post-retirement beneﬁ ts 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 31 32 33 128 132 136 138 139 140 140 141 143 143 143 144 145 146 147 148 150 150 150 151 160 162 163 166 166 168 168 169 169 171 175 Key sources of estimation uncertainty that have a signiﬁ cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next ﬁ nancial year are:  The estimation of the tax basis of assets and liabilities and related deferred income tax assets and liabilities, amounts recorded for uncertain tax positions, the measurement of income tax expense and indirect taxes, and estimates of the repatriation of earnings, which would impact the recognition of withholding taxes and also have an effect on the disclosure of the outside basis on subsidiaries/associates (note 2(i), note 10 and note 27;  Estimates of ounces/pounds of gold/copper ore in stockpiles and on leach pads that are estimated based on the number of tons added and removed, the gold/copper contained therein and the metallurgical recovery rate (note 2k and note 15);  The estimated fair values of cash generating units for non-current asset impairment tests and groups of CGUs for goodwill impairment tests, including estimates of future production levels and operating and capital costs as included in our life of mine (“LOM”) plans, future commodity prices and discount rates – note 2(n), note 2(p) and note 18(a);  The determination of the fair value of derivative instruments – note 2(r) and note 22(d);  Recognition of a provision for environmental rehabilitation including the estimation of the rehabilitation costs, timing of expenditures, the impact of changes in discount rates, and changes in environmental and regulatory requirements – note 2(u); and  Whether to recognize a liability for loss contingencies and the amount of any such provision note 2(v) and note 33. 127 iii) Asset related to provisions for environmental rehabilitation We have elected to take a simpliﬁ ed approach to calculate and record the asset related to the environmental rehabilitation provision on our opening IFRS consolidated balance sheet. The environmental rehabilitation provision calculated on the transition date in accordance with International Accounting Standard 37 Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”) was discounted back to the date when the provision ﬁ rst arose on the mineral property, at which date the corresponding asset was set up and then depreciated to its carrying amount as at the transition date. iv) Employee benefits We have elected to recognize all cumulative actuarial gains and losses as at January 1, 2010 in opening retained earnings for the company’s employee beneﬁ t plans. v) Cumulative translation differences We have elected to set the previously accumulated cumulative translation account, which was included in accumulated other comprehensive income (“AOCI”), to zero as at January 1, 2010 and absorbed the balance into retained earnings. Notes to Consolidated Financial Statements 3  Transition to IFRS We adopted IFRS effective January 1, 2011. Our transition date is January 1, 2010 (the “transition date”) and the Company has prepared its opening IFRS balance sheet as at that date. These consolidated ﬁ nancial statements have been prepared in accordance with the accounting policies described in note 2, except for the modiﬁ cations described below. a) Elected exemptions from full retrospective application In preparing these consolidated ﬁ nancial statements in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards (“IFRS 1”), the Company has applied certain of the optional exemptions from full retrospective application of IFRS. The optional exemptions applied are described below. i) Business combinations We have elected the business combinations exemption in IFRS 1 to not apply IFRS 3 retrospectively to past business combinations. Accordingly, the Company has not restated business combinations that took place prior to the transition date. ii) Fair value or revaluation as deemed cost We have elected to measure certain items of PP&E at fair value as at January 1, 2010 or revaluation amounts previously determined under US GAAP and use those amounts as deemed cost as at January 1, 2010. We have made this election at the following properties: Pascua-Lama, Goldstrike, Plutonic, Marigold, Pierina, Sedibelo and Osborne. We have also elected to adopt this election for certain assets at Barrick Energy, which were adjusted by $166 million to their fair value of $342 million on the transition date to IFRS, due to a decline in oil prices. 128 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements b) Reconciliation of equity as reported under US GAAP to IFRS The following is a reconciliation of the company’s total equity reported in accordance with US GAAP to its total equity under IFRS at the transition date January 1, 2010: (millions of US$) Ref Capital stock Retained earnings (deﬁ cit) AOCI Other Non-controlling interests Total Equity As reported under US GAAP $ 17,390 $ (2,382) $ 55 $ – $ 484 $ 15,547 IFRS 1 Exemptions Deemed cost election for Barrick Energy Reset of pension plan actuarial losses Reset of cumulative translation losses IFRS Policy Impacts Capitalized production phase stripping costs Capitalized exploration and evaluation costs Reversal of past impairments Changes in capitalized interest Changes in PER (note 3a iii) Bifurcation of senior convertible debt Exclusion of time value changes in fair value of options designated as hedging instruments Reclassiﬁ cation of hedge gains to related asset Tax effect of IFRS changes Others, net Note 3a (ii) Note 3a (iv) Note 3a (v) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) – – – – – – – – – – – (6) 8 (166) (37) (141) 408 160 55 (125) (101) (31) (33) – (119) (23) – 37 141 – – – – – – 33 (20) (14) – – – – – – – – – 143 – – – – – – – – 50 – – – – – – (12) – (166) – – 408 210 55 (125) (101) 112 – (20) (151) (15) As reported under IFRS $ 17,392 $ (2,535) $ 232 $ 143 $ 522 $ 15,754 The following is a reconciliation of the company’s total equity reported in accordance with US GAAP to its total equity under IFRS at December 31, 2010: (millions of US$) Ref Capital stock Retained earnings (deﬁ cit) AOCI Other Non-controlling interests Total Equity As reported under US GAAP $ 17,790 $ 456 $ 531 $ 288 $ 1,669 $ 20,734 IFRS 1 Exemptions Deemed cost election for Barrick Energy Reset of pension plan actuarial losses Reset of cumulative translation losses IFRS Policy Impacts Capitalized production phase stripping costs Capitalized exploration and evaluation costs Reversal of past impairments Changes in capitalized interest Changes in PER (note 3a iii) Bifurcation of senior convertible debt Exclusion of time value changes in fair value of options designated as hedging instruments Reclassiﬁ cation of hedge gains to related asset IPO of ABG Gain on acquisition of additional 25% interest in Cerro Casale Tax effect of IFRS changes Others, net Note 3a (ii) Note 3a (iv) Note 3a (v) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) – – – – – – – – – – – – – 20 10 (166) (37) (141) 632 270 139 (130) (100) (31) (72) – – 13 (202) (22) – 37 141 – – – – – – 72 (26) – – (20) (6) – – – – – – – – 38 – – (12) – – – – – – – 50 – – – – – – 25 – 1 – (166) – – 632 320 139 (130) (100) 7 – (26) 13 13 (201) (18) As reported under IFRS $ 17,820 $ 609 $ 729 $ 314 $ 1,745 $ 21,217 129 Notes to Consolidated Financial Statements c) Reconciliation of net income attributable e) Reconciliation of net cash provided by operating to equity holders of Barrick Gold Corporation as reported under US GAAP to IFRS activities and net cash used in investing activities as reported under US GAAP to IFRS The following is a reconciliation showing material adjustments to the company’s consolidated statement of cash ﬂ ow as reported under US GAAP to its consolidated cash ﬂ ow statement under IFRS for the year ended December 31, 2010: Operating Activities (millions of US$) Year ended Ref December 31, 2010 Net cash provided by operating activities – As reported under US GAAP $ 4,127 IFRS Policy Impacts Capitalized development costs1 (i), (ii) 458 Net cash provided by operating activities – As reported under IFRS $ 4,585 Investing Activities (millions of US$) Year ended Ref December 31, 2010 Net cash used in investing activities – As reported under US GAAP IFRS Policy Impacts Capitalized development costs1 Net cash used in investing activities – As reported under IFRS $ (4,172) (i), (ii) (458) $ (4,630) 1. The net cash provided by operating activities and the net cash used in investing activities increased due to the increased capitalization of development costs including production phase stripping costs and exploration and evaluation costs under IFRS compared to US GAAP. The change in net cash provided by financing activities was the same under US GAAP and IFRS. The following is a reconciliation of the company’s net income reported in accordance with US GAAP to its net income under IFRS for the year ended December 31, 2010: (millions of US$) Year ended Ref December 31, 2010 Net Income – As reported under US GAAP $ 3,274 IFRS Policy Impacts Capitalized production phase stripping costs Capitalized exploration and evaluation costs Reversal of past impairments Changes in capitalized interest Changes in PER (note 3a iii) Exclusion of time value changes in fair value of options designated as hedging instruments Gain on acquisition of additional 25% interest in Cerro Casale Tax effect of IFRS changes Non-controlling interest share of income Others, net (i) (ii) (iii) (iv) (v) (vii) (x) 224 110 84 (5) 1 (39) 13 (83) (25) 28 Net Income – As reported under IFRS $ 3,582 d) Reconciliation of OCI as reported under US GAAP to IFRS The following is a reconciliation of the company’s OCI reported in accordance with US GAAP to its OCI under IFRS for the year ended December 31, 2010: (millions of US$) Year ended Ref December 31, 2010 OCI – As reported under US GAAP $ 476 IFRS Policy Impacts Exclusion of gains/(losses) on time value changes in fair value of options designated as hedging instruments, net of tax Realized capital hedges gains/(losses) transferred to PP&E, net of tax Currency translation adjustments on deemed cost election for Barrick Energy, net of tax (vii) (vii) OCI – As reported under IFRS 33 (6) (8) $ 495 130 References (i) Under IFRS, production phase stripping costs for open pit mines are capitalized to PP&E if the stripping activities provide a probable future economic beneﬁ t. Under US GAAP, these costs are treated as current production costs. Capitalized stripping costs also resulted in an increase in depreciation expense. (ii) Under IFRS, exploration and evaluation expenditures are capitalized if management determines that probable future economic beneﬁ ts will be generated as a result of the expenditures. We capitalized additional exploration and evaluation costs at certain properties, mainly Cerro Casale, where management assessed under IFRS that it was probable that these expenditures would result in future economic beneﬁ ts. (iii) Under IFRS, past impairments of equity investments can be reversed if there is a recovery in the realizable value of the investment. In 2008, we recorded an impairment of $139 million on our investment in Highland Gold. In our opening IFRS balance sheet and throughout 2010, we have recorded reversals of this impairment charge as the fair value of our investment increased due to a recovery in the quoted share price. (iv) Investments accounted for using the equity method of accounting are not qualifying assets under IFRS for the purpose of capitalizing interest. On transition and in subsequent quarters, this resulted in the reversal of previously capitalized interest primarily related to Cerro Casale. This was partially offset by higher capitalization of interest due to capitalization of production phase stripping and exploration and evaluation costs. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements (v) Under IFRS, Provisions for Environmental Rehabilitation (PER) are updated each reporting period for changes in discount rates and exchange rates. (vi) IFRS requires bifurcation of convertible debt instruments, with the debt and equity portions to be recognized separately. This change also resulted in reversal of previously amortized debt premium from retained earnings. vii) Under IFRS, all realized and unrealized non-hedge derivative gains or losses, gains or losses related to hedge ineffectiveness and changes in fair value of option derivatives designated as accounting hedges due to changes in time value, which are excluded from the hedge effectiveness assessment, are presented as a separate line item on the consolidated statement of income. Under US GAAP these amounts were presented in the respective income statement line item most closely related to the risk exposure expected to be offset by the derivative, and changes in fair value due to changes in time value were recognized in equity. (viii) The capitalization of production phase stripping costs resulted in the reclassiﬁ cation of the related currency hedge gains realized on such expenditures from retained earnings to PP&E. (ix) The difference in the carrying amount of ABG under IFRS compared to its carrying amount under US GAAP resulted in an adjustment to paid-in capital in the equity section of the balance sheet, with a corresponding adjustment in the non- controlling interest. (x) In the ﬁ rst quarter of 2010, Barrick acquired an additional 25% ownership interest in the Cerro Casale project. Due to the elimination of capitalized interest on investments accounted for using the equity method of accounting, the carrying amount was lower under IFRS, which resulted in a higher gain on acquisition (see note 4f). 131 Notes to Consolidated Financial Statements 4  Acquisitions and Divestitures For the years ended December 31 2011 2010 Cash paid on acquisition1 Equinox Cerro Casale Oil and Gas acquisitions Tusker Gold Limited REN Less: cash acquired Cash proceeds on divestiture1 Sedibelo IPO of African Barrick Gold Plc2 Osborne Pinson $ 7,482 $ – – 454 278 264 – 74 – 36 $ 7,760 $ 828 (83) (15) $ 7,677 $ 813 $ 44 $ – 884 17 – – – 15 $ 59 $ 901 1. All amounts represent gross cash paid on acquisition or received on divestiture. 2. There was no change in control as a result of the IPO of ABG, and consequently the net proceeds received were recorded as a financing cash inflow on the consolidated statement of cash flows. a) Acquisition of Equinox Minerals Limited On June 1, 2011, we acquired 83% of the recorded voting shares of Equinox Minerals Limited (“Equinox”), thus obtaining control. Throughout June we obtained a further 13% of the voting shares and obtained the ﬁ nal 4% on July 19, 2011. Cash consideration paid in second quarter 2011 was $7,213 million, with a further $269 million paid in third quarter 2011, for total cash consideration of $7,482 million. We have determined that this transaction represents a business combination with Barrick identiﬁ ed as the acquirer. We began consolidating the operating results, cash ﬂ ows and net assets of Equinox from June 1, 2011. Equinox was a publicly traded mining company that owns the Lumwana copper mine in Zambia and the Jabal Sayid copper project in Saudi Arabia. These operations form part of Barrick’s copper business unit which was established in the fourth quarter. The tables below present the purchase cost and our ﬁ nal allocation of the purchase price to the assets and liabilities acquired. This allocation was ﬁ nalized in fourth quarter 2011 to reﬂ ect the ﬁ nal determination of the fair values of the assets and liabilities acquired. The signiﬁ cant adjustments were to increase property, plant and equipment by $819 million and deferred income taxes by $769 million, with a corresponding net increase to goodwill of $79 million. There were no signiﬁ cant 132 adjustments made to the consolidated statements of income after applying these adjustments retroactively to the acquisition date. Purchase Cost Cash paid to Equinox shareholders in June 2011 Cash paid to Equinox shareholders in July 2011 Cost of Equinox shares previously acquired Payouts to Equinox employees on change of control Total Acquisition Cost Cash acquired with Equinox Net Cash Consideration $ 6,957 2 69 131 125 $ 7,482 (83) $ 7,399 The purchase cost was funded from our existing cash balances and from proceeds from the issuance of long- term debt of $6.5 billion. Summary of Final Purchase Price Allocation Fair value at acquisition Assets Current assets Buildings, plant and equipment Lumwana depreciable mining interest Lumwana non-depreciable mining interest Jabal Sayid non-depreciable mining interest Intangible assets Goodwill Total assets Liabilities Current liabilities Deferred income tax liabilities Provisions Debt Total liabilities Net assets $ 366 1,526 1,792 2,258 902 66 3,506 $ 10,416 $ 359 2,108 59 408 $ 2,934 $ 7,482 In accordance with the acquisition method of accounting, the acquisition cost has been allocated to the under- lying assets acquired and liabilities assumed, based primarily upon their estimated fair values at the date of acquisition. We primarily used a static discounted cash ﬂ ow model (being the net present value of expected future cash ﬂ ows) to determine the fair value of the mining interests, and used a replacement cost approach in determining the fair value of buildings, plant and equipment. Expected future cash ﬂ ows are based on estimates of projected future revenues, expected conversions of resources to reserves, expected future production costs and capital expenditures based on the life of mine plan as at the acquisition date. The excess of acquisition cost over the net identiﬁ able assets acquired represents goodwill. Goodwill arose on this acquisition principally because of the following factors: (1) the scarcity of large, long-life copper deposits; (2) the ability to capture ﬁ nancing, tax and operational synergies by managing these properties within a copper business unit in Barrick; (3) the potential to expand production through operational improvements and increases to reserves through exploration at the Lumwana property, which is located in one of the most prospective copper regions in the world; and (4) the recognition of a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed at amounts that do not reﬂ ect fair value. The goodwill is not deductible for income tax purposes. Since it has been consolidated from June 1, 2011, Equinox contributed revenue of $569 million and segment income of $46 million. Revenues and net income of the combined Equinox and Barrick entities would have been approximately $14.7 billion and approximately $4.4 billion, respectively, for the twelve months ended December 31, 2011 had the acquisition and related debt issuances occurred on January 1, 2011. Acquisition related costs of approximately $85 million have been expensed, with approximately $39 million presented in other expense and $45 million in realized foreign exchange losses relating to our economic hedge of the purchase price presented in gain (loss) on non-hedge derivatives. b) Oil and Gas Acquisitions In 2011, our oil and gas subsidiary Barrick Energy completed three acquisitions. On January 14, 2011, Barrick Energy acquired a 50% interest in the Valhalla North property from Penn West (“Valhalla North”), for approximately $25 million. On June 30, 2011, Barrick Energy acquired all of the outstanding shares of Venturion Natural Resources Limited (“Venturion”), a privately held corporation, for approximately $185 million. On July 28, 2011, Barrick Energy acquired all of the outstanding shares of Culane Energy Corporation (“Culane”) for approximately $68 million. These acquisitions were made to acquire additional producing assets, proved and probable reserves, as well as facilities to allow us to grow and expand our energy business. We have determined that these transactions Barrick Financial Report 2011 | Notes to Consolidated Financial Statements represent business combinations, with Barrick Energy identiﬁ ed as the acquirer. The tables below present the combined purchase cost and the ﬁ nal purchase price allocation for these transactions. We have recorded goodwill on these transactions as a result of the potential to increase current reserves through enhanced oil recoveries and the recognition of a deferred tax liability for the difference between the carrying values and the tax bases of assets acquired and liabilities assumed. The goodwill is not deductible for tax purposes. Barrick Energy began consolidating the operating results, cash ﬂ ows, and net assets of Valhalla North, Venturion and Culane from January 14, 2011, June 30, 2011 and July 28, 2011, respectively. Total Costs to Allocate Purchase cost Final Allocation of Fair Values to Valhalla North, Venturion and Culane’s Net Assets Current assets Property, plant and equipment Goodwill Total assets Current liabilities Provisions Bank debt Deferred income tax liabilities Total liabilities Net assets acquired $ 278 $ 8 342 26 $ 376 $ 4 13 44 37 $ 98 $ 278 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 and 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. These acquisitions were made to acquire additional producing assets, proved and probable reserves as well as facilities to allow us to grow and expand our energy business. We have determined that these transactions represent business combinations, with Barrick Energy identiﬁ ed as the acquirer. The tables below present the combined purchase cost and the ﬁ nal purchase price allocation for these 2010 transactions. We have recorded goodwill on these transactions as a 133 Notes to Consolidated Financial Statements result of the potential to increase current reserves through enhanced oil recoveries and the recognition of a deferred tax liability for the difference between the carrying values and the tax bases of assets acquired and liabilities assumed. The goodwill is not deductible for tax purposes. Barrick Energy began consolidating the operating results, cash ﬂ ows, and net assets of Bountiful, Puskwa, and Dolomite, from May 17, 2010, June 25, 2010, and September 17, 2010, respectively. Total Costs to Allocate Purchase cost Allocation of Fair Values to Bountiful, Puskwa, and Dolomite’s Net Assets Current assets Property, plant and equipment Goodwill Total assets Current liabilities Provisions Bank debt Deferred income tax liabilities Total liabilities Net assets acquired $ 264 $ 8 252 64 $ 324 $ 2 8 13 37 $ 60 $ 264 c) Acquisition of Tusker Gold Limited On April 27, 2010, ABG acquired 100% of the issued and outstanding shares of Tusker Gold Limited (“Tusker”) for aggregate net consideration of approximately $74 million. As a result of this acquisition, ABG increased its interest in the Nyanzaga joint venture from 51% to 100%. We have determined that this transaction represents a business combination, with ABG identiﬁ ed as the acquirer. The purchase price allocation was ﬁ nalized in second quarter 2011 and there were no adjustments to the preliminary allocations. The goodwill is attributable to a deferred tax liability generated due to the difference between the fair value of the exploration and evaluation assets and the book value of these assets. The goodwill is not deductible for income tax purposes. The tables below present the purchase cost and our ﬁ nal purchase price allocation. ABG began consolidating the operating results, cash ﬂ ows and net assets of Tusker from April 30, 2010. Total Costs to Allocate Purchase cost Less: cash acquired Cash consideration paid 134 $ 74 (8) $ 66 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 $ 80 22 $ 102 $ 10 4 22 $ 36 $ 66 d) Disposition of 10% Interest in Sedibelo On March 23, 2011, we disposed of our 10% interest in the Sedibelo platinum project (“Sedibelo”) with a carrying amount of nil, to the Bakgatla-Ba-Kgafela Tribe (“BBK”), owner of the remaining 90% interest in Sedibelo; and transferred certain long lead items and associated liabilities with carrying amounts of nil and $23 million respectively, to Newshelf 1101 (Proprietary) Limited for consideration of $44 million. We also settled various outstanding matters between Barrick and the BBK regarding Sedibelo and their respective interests. We recorded a pre-tax gain of $66 million upon the closing of this transaction. e) IPO of African Gold Mining Operations On March 24, 2010, the IPO for ABG closed and its approximately 404 million ordinary shares were admitted to the Ofﬁ cial 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 $834 million and $50 million respectively. As Barrick has retained a controlling ﬁ nancial interest in ABG, we continue to consolidate ABG and accounted for the disposition of ABG shares as an equity transaction. Accordingly, the difference between the proceeds received and the carrying amount has been recorded as additional paid-in capital in equity, and we have set up a non-controlling interest to reﬂ ect the change in our ownership interest in ABG. f) Acquisition of the Additional 25% Interest Summary of Purchase Price Allocation Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 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. The acquisition of the additional 25% interest has been accounted for as a business combination. Our interest in the project is now 75% and, as a result of obtaining control, we have re-measured our previously held 50% ownership interest to fair value and recorded a corresponding post-tax gain of $42 million in other income (see note 9c). We primarily used an income approach (being the net present value of expected future cash ﬂ ows) to determine the fair values of the depreciable and non- depreciable mining interest. Estimates of expected future cash ﬂ ows reﬂ ect estimates of projected future revenues, conversion of resources to reserves, production costs and capital expenditures contained in our life of mine plan. We recorded goodwill on this acquisition principally because of the following factors: (1) the going concern value implicit in our ability to sustain and grow this project by increasing reserves and resources through new discoveries; (2) the ability to capture unique synergies that can be realized from managing this project within our South America regional business unit; and (3) the recognition of a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed at amounts that do not reﬂ ect fair value. The goodwill is not deductible for income tax purposes. Beginning in second quarter 2010, we consolidated 100% of the operating results, cash ﬂ ows, assets and liabilities of Cerro Casale, with an offsetting non- controlling interest of 25% measured at fair value as at March 31, 2010. The tables below present the purchase cost, the ﬁ nal purchase price allocation and the remeasurement gain recorded in other income (note 9c). Purchase Cost Cash Less: cash acquired Cash consideration paid Carrying amount of equity method investment Remeasurement gain Net assets $ 454 (7) $ 447 839 42 $ 1,328 Current assets VAT receivables Depreciable mining interest Non-depreciable mining interest Water rights Goodwill Total assets Current liabilities Deferred income tax liabilities Total liabilities Non-controlling interest Net assets Fair value at acquisition $ 1 12 1,155 263 75 809 $ 2,315 $ 10 523 $ 533 454 $ 1,328 g) Discontinued Operations Results of Discontinued Operations For the years ended December 31 2011 2010 Gold sales Osborne Copper sales Osborne Other metals sales Osborne Income before tax Osborne Net income Osborne $ – $ 43 – $ 244 $ – $ 287 $ – $ 2 $ – $ 2 $ – $ 175 $ – $ 175 $ – $ 124 $ – $ 124 Osborne On September 30, 2010, we divested our Osborne copper mine for $17 million cash, as well as a royalty receivable 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 the settlement of severance obligations, was recorded and recognized in discontinued operations. The results of operations and the assets and liabilities of Osborne have been presented as discontinued operations in the consolidated statement of income, the consolidated statement of cash ﬂ ow and the consolidated balance sheet. 135 Notes to Consolidated Financial Statements 5  Segment Information Barrick’s business is organized into seven primary business units: four regional gold businesses, a global copper business, an oil and gas business, and a capital projects business. Barrick’s Chief Operating Decision Maker reviews the operating results, assesses performance and makes capital allocation decisions at a business unit level. Therefore, these business units are operating segments for ﬁ nancial reporting purposes. In fourth quarter 2011, Barrick established the global copper business unit in order to maximize the value of the Company’s copper and other non-gold mining assets following the acquisition of Equinox in June, 2011. This unit is responsible for providing strategic direction and oversight of the copper business and ensuring that the Company realizes the business and operational synergies arising from the acquisition. Segment information for the years ended December 31, 2011 and 2010 has been revised to reﬂ ect this organizational change. Segment performance is evaluated based on a number of measures including operating income before tax, production levels and unit production costs. Income tax, corporate administration, ﬁ nance income and costs, impairment charges and reversals, investment write- downs and gains/losses on non-hedge derivatives are managed on a consolidated basis and are therefore not reﬂ ected in segment income. Consolidated Statements of Income Information Cost of Sales Direct mining For the year ended December 31, 2011 Revenue & royalties Depreciation Exploration & evaluation Operating segment administration Other expenses1 Segment income (loss)2 Gold North America South America Australia Paciﬁ c ABG Copper Capital Projects3 Barrick Energy $ 5,263 2,864 3,073 1,218 1,717 – 177 $ 1,453 698 1,304 570 813 – 59 $ 471 207 307 138 170 8 97 $ 98 26 90 30 23 44 – $ 14,312 $ 4,897 $ 1,398 $ 311 $ 45 30 42 48 22 2 12 $ 201 $ 102 16 – 35 45 111 58 $ 3,094 1,887 1,330 397 644 (165) (49) $ 367 $ 7,138 Consolidated Statements of Income Information Cost of Sales Direct mining For the year ended December 31, 2010 Revenue & royalties Depreciation Exploration & evaluation Operating segment administration Other expenses (income)1 Segment income (loss)2 Gold North America South America Australia Paciﬁ c ABG Copper Capital Projects3 Barrick Energy $ 3,827 2,567 2,438 985 1,061 – 123 $ 1,347 491 1,218 485 342 – 67 $ 465 211 262 113 88 4 47 $ 11,001 $ 3,950 $ 1,190 $ 80 17 54 15 – 54 – $ 220 $ 39 41 51 37 5 3 7 $ 183 $ 59 25 22 20 19 (43) 3 $ 1,837 1,782 831 315 607 (18) (1) $ 105 $ 5,353 1. Other expenses include accretion expense. For the year ended December 31, 2011, accretion expense was $52 million (2010: $21 million). See note 17 for further details. 2. We manage the performance of our business units using a measure of income before interest and taxes, consequently interest income, interest expense and income taxes are not allocated to our business units. 3. The Capital Projects segment relates to our interests in our significant gold projects under construction. 136 Reconciliation of Segment Income to Income (Loss) from Continuing Operations Before Income Taxes Barrick Financial Report 2011 | Notes to Consolidated Financial Statements For the years ended December 31 Segment income Depreciation of corporate assets Exploration not attributable to segments Evaluation not attributable to segments Corporate administration Other expenses Impairment (charges) reversals Finance income Finance costs (excludes accretion) Gain on non-hedge derivatives Gain from equity investees not attributable to segments Income before income taxes 2011 2010 $ 7,138 (21) (9) (40) (166) 49 (96) 13 (147) 81 22 $ 5,353 (22) (9) (36) (156) (76) 77 14 (159) 69 12 $ 6,824 $ 5,067 Geographic Information Non-current assets1 Sales2 United States Zambia Chile Dominican Republic Argentina Tanzania Canada Saudi Arabia Australia Papua New Guinea Peru Other Unallocated assets1 Total 1. Unallocated assets include goodwill, deferred tax assets and other financial assets. 2. Presented based on the location in which the sale originated. As at Dec. 31, 2011 $ 5,675 5,153 5,111 3,638 2,893 2,099 1,432 1,611 1,485 1,017 602 94 11,529 As at Dec. 31, 2010 $ 4,966 – 4,168 2,624 1,954 1,864 1,014 – 1,367 924 439 97 8,149 As at Jan. 1, 2010 $ 4,782 – 2,189 1,450 1,382 1,652 670 – 1,293 711 310 139 7,417 2011 2010 $ 4,914 $ 3,524 – 1,062 – 1,352 985 426 – 1,828 609 1,215 – – 543 1,148 – 1,397 1,218 525 – 2,330 769 1,468 – – $ 42,339 $ 27,566 $ 21,995 $ 14,312 $ 11,001 137 Notes to Consolidated Financial Statements Asset Information1 Gold North America South America Australia Paciﬁ c ABG Copper Capital Projects3 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 Other items not allocated to segments Total assets Segment capital expenditures2 As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 For the year ended For the year ended Dec. 31, 2011 Dec. 31, 2010 $ 8,200 2,925 3,982 2,258 12,398 9,385 1,104 $ 40,252 2,745 3,800 308 161 569 409 – 640 $ 7,472 2,789 3,911 2,031 2,114 6,465 726 $ 25,508 3,968 3,103 271 171 475 625 – 516 $ 7,311 1,803 3,624 1,798 2,126 2,781 342 $ 19,785 2,564 2,265 991 62 275 601 100 281 $ 1,056 491 465 309 433 2,563 163 $ 5,480 – – – – – – – 27 $ 657 294 385 194 63 2,250 86 $ 3,929 – – – – – – – 67 Total $ 48,884 $ 34,637 $ 26,924 $ 5,507 $ 3,996 1. Liabilities are not managed on a segment basis and have therefore been excluded from segment disclosures. 2. 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 2011, cash expenditures were $4,973 million (2010: $3,778 million) and the increase in accrued expenditures was $534 million (2010: $218 million increase). 3. The carrying amount of the long-lived assets in the Capital Projects segment is transferred to the relevant operating segment on commissioning of the mine. 6  Revenue For the years ended December 31 2011 2010 Gold bullion sales1 Spot market sales Concentrate sales Copper sales1 Copper cathode sales Concentrate sales Oil and gas sales Other metal sales2 Total $ 11,819 $ 9,349 338 444 $ 12,263 $ 9,687 1,141 1,052 4 573 $ 1,714 $ 1,056 177 123 158 135 $ 14,312 $ 11,001 1. Revenues include amounts transferred from OCI to earnings for commodity cash flow hedges (see note 22d). 2. Revenues include the sale of by-products for our gold and copper mines. 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 unreﬁ ned gold bullion bars usually consisting of 90% gold that is reﬁ ned to pure gold bullion prior to sale to our customers. Concentrate is a processing product containing the valuable ore mineral from which most of the waste mineral has been eliminated. Our Lumwana mine produces a concentrate that primarily contains copper. At our Zaldívar mine we produce copper cathode, which consists of 99.9% copper. Revenue Revenue is presented net of direct sales taxes of $50 million (2010: $30 million). Incidental revenues from the sale of by-products, primarily copper and silver, are classiﬁ ed within other metal sales. 138 Provisional Copper and Gold Sales We have provisionally priced sales for which price ﬁ nalization, referenced to the relevant copper and gold index, is outstanding at the balance sheet date. Our exposure at December 31, 2011 to the impact of movements in market commodity prices for provisionally priced sales is set out in the following table: Impact on net income before taxation of 10% movement in market price US$M Volumes subject to ﬁ nal pricing As at December 31 2011 2010 2011 2010 Copper pounds (millions) Gold ounces (000s) 63 29 37 31 $ 22 $ 16 5 4 For the year ended December 31, 2011, our provisionally priced copper sales included provisional pricing losses of $63 million (2010: $32 million gain) and our provisionally priced gold sales included provisional pricing gains of $9 million (2010: $4 million gain). At December 31, 2011, our provisionally priced copper and gold sales subject to ﬁ nal settlement were recorded at average prices of $3.45/lb (2010: $4.42/lb) and $1,653/oz (2010: $1,392/oz), respectively. The sensitivities in the above tables have been determined as the impact of a 10 percent change in commodity prices at each reporting date, while holding all other variables, including foreign currency exchange rates, constant. 7  Cost of Sales For the years ended December 31 2011 2010 Direct mining cost1,2 Depreciation Royalty expense $ 4,562 $ 3,674 1,212 276 1,419 335 $ 6,316 $ 5,162 1. Direct mining cost includes charges to reduce the cost of inventory to net realizable value as follows: $nil for the year ended December 31, 2011 (2010: $3 million). 2. Direct mining cost includes the costs of extracting co-products. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Cost of Sales Cost of sales consists of direct mining costs (which include personnel costs, general and administrative costs, energy costs (principally diesel fuel and electricity), maintenance and repair costs, operating supplies, external services, third party smelting, reﬁ ning and transport fees), and depreciation related to sales and royalty expenses for the period. Cost of sales is based on the weighted average cost of contained or recoverable ounces sold and royalty expense for the period. All costs include any impairment to reduce inventory to its net realizable value. 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, reﬁ ning and transportation costs. Other types of royalties include:  Net proﬁ ts interest (NPI) royalty,  Modiﬁ ed 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,  Land tenement (LT) royalty, and a  Gold revenue royalty. Royalty expense is recorded on completion of the production process. Royalties applicable to our oil and gas properties include:  Crown royalties,  Net proﬁ ts interest (NPI) royalty,  Overriding royalty (ORR), and a  Freehold royalty (FH). 139 8  Exploration and Evaluation For the years ended December 31 2011 2010 Exploration: Minesite exploration Global programs Evaluation costs Exploration and evaluation expense1 1. Approximates the impact on Operating Cash Flow. 9  Other Charges a) Other Expense For the years ended December 31 Operating segment administration1 Corporate social responsibility Changes in estimate of rehabilitation costs at closed mines World Gold Council fees Currency translation losses2 Pension and other post-retirement beneﬁ t expense (note 32) Severance and other restructuring costs Equinox acquisition costs Other expensed items Total $ 72 145 $ 217 129 $ 51 103 $ 154 75 $ 346 $ 229 2011 2010 $ 201 55 $ 183 25 79 9 22 4 6 39 161 41 16 26 6 16 – 142 $ 576 $ 455 1. Relates to costs incurred at business unit offices. 2. Amounts attributable to currency translation losses on working capital balances. b) Impairment Charges and Reversals For the years ended December 31 2011 2010 Impairment of long-lived assets1 Impairment (reversal) of investment in associates2 Impairment of available for sale investments $ 138 – 97 $ 11 (84) – Total $ 235 $ (73) 1. In 2011, an impairment charge of $83 million was recorded to reduce the carrying amount to the estimated fair value for certain power assets and tailings dam assets at Pueblo Viejo. In 2011, the carrying amount of certain properties at Barrick Energy were tested for impairment on update of reserves following completion of the annual long range planning process. An impairment charge of $49 million was recorded to reduce the carrying amount to the estimated fair value for these properties. Refer to note 17. 2. 2010 amount reflects an impairment reversal on our investment in Highland Gold. Refer to note 3. Notes to Consolidated Financial Statements Producing mines & capital projects North America Goldstrike Williams David Bell Hemlo – Interlake property Round Mountain Bald Mountain Ruby Hill Cortez Cortez – Pipeline/South Type of royalty 0%–5% NSR, 0%–6% NPI 1.5% NSR, 0.75%–1% NV 3%–3.5% NSR 50% NPI, 3% NSR 3.53%–6.35% NSRSS 3.5%–7% NSRSS, 2.9%–4% NSR, 10% NPI 3% modiﬁ ed NSR 1.5% GSR Pipeline deposit 0.4%–9% GSR Cortez – portion of Pipeline/ South Pipeline deposit 5% NV South America Veladero Lagunas Norte Australia Pacific Porgera Queensland & Western Australia production1 Cowal African Barrick Gold Bulyanhulu Tulawaka North Mara – Nyabirama and Nyabigena pit North Mara – Gokona pit Buzwagi Capital Projects Donlin Gold Project 3.75% gross proceeds 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 (ﬁ rst 5 years), 4.5% NSR (thereafter), 8.0% NPI3 Pascua-Lama Project – Chile gold production 1.5%–9.8% GPSS Pascua-Lama Project – Chile copper production 2% NSR Pascua-Lama Project – Argentina production Pueblo Viejo Cerro Casale Copper Lumwana Reko Diq Kabanga Other Barrick Energy 3% modiﬁ ed NSR 3.2% NSR (for gold & silver), 28.75% NPI3 3% NSR (capped at $3 million cumulative) 3% GSR4 2% NSR 3% NSR 0.22% NPI, 1.69% FH&ORR, 20.4% Crown Royalty 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. 4. The GSR will increase to 6% effective April 1, 2012. 140 c) Other Income For the years ended December 31 2011 2010 Gain on sale/acquisition of long-lived assets/investments1 Royalty income Other Total $ 229 3 16 $ 79 7 30 $ 248 $ 116 1. 2011 amounts include the sale of our interest in Sedibelo ($66 million), Fronteer Gold ($46 million), Fenn Gibb ($34 million), Metminco ($32 million) and Pinson ($28 million). 2010 amounts include $42 million related to the acquisition of an additional 25% interest in Cerro Casale. See note 4f for further details. 10  Income Tax Expense For the years ended December 31 2011 2010 Tax on proﬁ t Current tax Charge for the year Adjustment in respect of prior years Discontinued operations Continuing operations Deferred tax Origination and reversal of temporary differences in the current year Adjustment in respect of prior years Continuing operations Tax expense related to continuing operations Current Canada International Deferred Canada International $ 1,861 $ 1,317 24 (8) $ 1,885 $ 1,309 – (52) $ 1,885 $ 1,257 $ 405 $ 336 (3) (32) $ 402 $ 304 $ 2,287 $ 1,561 $ 23 $ 15 1,736 1,246 $ 1,759 $ 1,261 $ (15) $ 453 (2) 325 $ 438 $ 323 Income tax expense before elements below which relate to international jurisdictions Net currency translation (gains) losses on deferred tax balances Dividend withholding tax Impact of Peruvian Tax Court decision Impact of legislative amendments in Australia Impact of Australian functional currency election $ 2,197 $ 1,584 (32) 87 39 – (4) (19) 74 – (78) – Total expense $ 2,287 $ 1,561 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Currency Translation Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most signiﬁ cant balances are Papua New Guinea deferred tax liabilities with a carrying amount of approximately $40 million, and Argentinean deferred tax liabilities with a carrying amount of approximately $257 million. In 2011 and 2010, the appreciation of the Papua New Guinea Kina against the US dollar, and the weakening of the Argentine peso against the US dollar resulted in net translation gains totaling $32 million and $19 million, respectively. These gains are included within deferred tax expense/recovery. Dividend Withholding Tax In 2011, we recorded an $87 million dollar dividend withholding current tax expense in respect of funds repatriated from foreign subsidiaries. In 2010, we recorded a $74 million dollar dividend withholding current tax expense in respect of funds available to be repatriated from a foreign subsidiary. Peruvian Tax Court Decision 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 conﬁ rmation 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 conﬁ rmation 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, The Tax Administration in Peru (SUNAT) has reassessed us on the same issue for tax years 2001 to 2003. On October 19, 2007, SUNAT conﬁ rmed their reassessment. We ﬁ led an appeal to the Tax Court of Peru within the statutory period. 141 Notes to Consolidated Financial Statements The Tax Court decision was rendered on August 15, 2011. The Tax Court ruled in our favor on substantially all material issues. However, based on the Tax Court decision, the timing of certain deductions would differ from the position taken on ﬁ ling. As a result, we would incur interest and penalties in some years and earn refund interest income in other years. SUNAT has since assessed us $100 million for this matter. However, we believe that the SUNAT amount is incorrect, and have appealed the assessment. After recomputing the liability, to reﬂ ect what we believe is the probable amount, we have recorded a current tax expense of $39 million in 2011 in respect of this matter. On November 15, 2011, we appealed the Tax Court decision to the Judicial Court with respect to the timing of certain deductions for the Pierina mining concession. SUNAT also appealed the Tax Court decision to the Judicial Court. Australian Functional Currency Election In 2011, we ﬁ led an election in Australia to prepare certain of our Australian tax returns using US dollar functional currency effective January 1, 2011. This election resulted in a one-time deferred tax beneﬁ t of $4 million. Going forward, all material Australian tax returns will now be ﬁ led using a US dollar functional currency. 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 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 2010. Reconciliation to Canadian Statutory Rate For the years ended December 31 At 28% (2010: 31%) statutory rate Increase (decrease) due to: Allowances and special tax deductions1 Impact of foreign tax rates2 Expenses not tax deductible Net currency translation (gains)/losses on deferred tax balances Recognition of previously unrecognized deferred tax assets Current year tax losses not recognized in deferred tax assets Adjustments in respect of prior years Impact of Peruvian Tax Court decision Impact of Australian functional currency election Impact of legislative amendments in Australia Dividend withholding tax Other withholding taxes Mining taxes Other items 2011 2010 $ 1,911 $ 1,571 (243) 270 22 (168) 86 43 (32) (19) – (129) 17 21 39 16 (40) – (4) – – 87 31 167 1 (78) 74 21 108 76 Income tax expense $ 2,287 $ 1,561 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. 142 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 11  Earnings per Share For the years ended December 31 ($ millions, except shares in millions and per share amounts in dollars) Income from continuing operations Net income attributable to non-controlling interests Net income from continuing operations after assumed conversions Income from discontinued operations Net income attributable to equity holders of Barrick Gold Corporation after assumed conversions Weighted average shares outstanding Effect of dilutive securities Stock options Convertible debentures Earnings per share data attributable to the equity holders of Barrick Gold Corporation Income from continuing operations Income from discontinued operations Net income 2011 2010 Basic Diluted Basic Diluted $ 4,537 $ 4,537 (53) (53) $ 3,506 $ 3,506 (48) (48) $ 4,484 $ 4,484 – – $ 3,458 $ 3,458 124 124 $ 4,484 $ 4,484 $ 3,582 $ 3,582 999 999 987 987 – – 2 – – – 2 8 999 1,001 987 997 $ 4.49 $ 4.48 – $ – $ $ 4.49 $ 4.48 $ 3.50 $ 3.47 $ 0.13 $ 0.12 $ 3.63 $ 3.59 12  Finance Income and Finance Cost 13  Cash Flow – Other Items a) Operating Cash Flows – Other Items 2011 2010 For the years ended December 31 2011 2010 a) Finance Income For the years ended December 31 Interest income Other Total b) Finance Costs For the years ended December 31 Interest Amortization of debt issue costs Amortization of premium (discount) Interest capitalized1 Finance charges2 Accretion Total $ 13 – $ 13 1 $ 13 $ 14 2011 2010 $ 541 $ 419 4 2 (285) 19 21 17 (3) (408) – 52 $ 199 $ 180 1. Interest has been capitalized at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalization rate representing the average interest rate on such borrowings. For the year ended December 31, 2011, the general capitalization rate was 5.43% (2010: 6.42%). 2. Represents accrued financing charges on the remaining settlement obligation to close out gold sales contracts. Adjustments for non-cash income statement items: Currency translation losses (note 9a) Amortization of debt issue costs RSU expense Stock option expense Gain on non-hedge derivatives (Gain) loss from investment in associates and JCEs (note 14) Change in estimate of rehabilitation provisions at closed mines Inventory impairment charges (reversals) (note 15) Cash ﬂ ow arising from changes in: Derivative assets and liabilities Other current assets Value added tax recoverable Accounts receivable Other current liabilities Prepaid assets Accounts payable and accrued liabilities Other assets and liabilities Income from discontinued operations Payment of settlement of gold sales contracts Operating cash ﬂ ows of discontinued operations Settlement of rehabilitation obligations $ 22 $ 26 4 48 16 (69) 17 30 15 (81) (8) 79 – (78) (32) (68) 49 (81) (35) 66 (24) – – – (44) 24 41 3 (42) (101) (81) (57) 68 90 311 130 (124) (656) (8) (44) Other net operating activities (173) (421) Operating cash ﬂ ow includes payments for: Cash interest paid (note 22) $ 137 $ 153 143 Notes to Consolidated Financial Statements b) Investing Cash Flows – Other Items c) Financing Cash Flows – Other Items For the years ended December 31 2011 2010 For the years ended December 31 Funding of investments in associates and JCEs (note 14) Other Other net investing activities $ (36) $ (51) (3) (197) $ (233) $ (54) Financing fees on long-term debt Derivative settlements Other net ﬁ nancing activities Investing cash ﬂ ow includes payments for: Capitalized interest (note 22) $ 382 $ 275 2011 2010 $ (59) (7) $ (37) 12 $ (66) $ (25) 14  Investments a) Equity Accounting Method Investment Continuity Highland Gold2 Reko Diq3 Cerro Casale Donlin Gold Kabanga Total At January 1, 2010 Equity pick-up (loss) from equity investees Funds invested (dividends received) Impairment (charges) reversals Derecognition on acquisition of controlling interest1 At December 31, 2010 Equity pick-up (loss) from equity investees Funds invested (dividends received) At December 31, 2011 Publicly traded $ 96 12 – 84 – $ 192 22 (5) $ 209 Yes $ 131 (19) 12 – – $ 124 (12) 9 $ 121 No $ 828 (1) 12 – (839) $ – – – $ – No $ 67 (10) 22 – – $ 79 (2) 22 $ 99 No $ 2 (6) 5 – – $ 1 – 10 $ 1,124 (24) 51 84 (839) $ 396 8 36 $ 11 $ 440 No No 1. The carrying amount of the Cerro Casale investment has been derecognized as an equity method investee as a result of our obtaining control over the entity as a result of the acquisition of an additional 25% interest in Q1 2010. See note 4f for further details. 2. Based on the December 30, 2011 trading price of $1.88 GBP per share, the market value of our investment in Highland Gold is $193 million. We performed a qualitative and quantitative assessment on the decline in fair value and determined that the decline was not significant or prolonged. 3. Refer to note 33 for further details. In February 2012, we determined that our investment in Highland Gold Mining Limited (“Highland”) was non-core to our business operations and strategy. As a result, we intend to divest our shareholding in an orderly process which delivers proper value to Barrick and supports the interests and aims of Highland and its shareholders. Based on the trading price of Highland as at February 14, 2012, the market value of our investment in Highland is $169 million. b) Other Investments Available-for-sale securities $ 161 $ 25 $ 171 $ 85 $ 62 $ 27 As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 Fair value1 Gains in OCI Fair value Gains in OCI Fair value Gains in OCI 1. Refer to note 23 for further information on the measurement of fair value. Gains on Investments Recorded in Earnings For the years ended December 31 Gains realized on sales1 Cash proceeds from sales 1. 2011 amounts include gains realized on sale of our investment in Fronteer Gold of $46 million. 2011 $ 55 80 2010 $ 12 15 144 15  Inventories Raw materials Ore in stockpiles Ore on leach pads Mine operating supplies Work in process Finished products Gold doré Copper cathode Copper concentrate Gold concentrate Non-current ore in stockpiles1 Gold Copper As at Dec. 31, 2011 Dec. 31, 2010 As at As at As at Jan. 1, 2010 Dec. 31, 2011 Dec. 31, 2010 As at $ 1,401 335 757 371 111 – – 3 $ 1,364 223 558 255 $ 932 184 485 237 88 – – – 74 – – 5 $ 2,978 (980) $ 2,488 (884) $ 1,917 (589) $ 1,998 $ 1,604 $ 1,328 $ 189 247 128 6 – 14 89 – $ 673 (173) $ 500 $ 112 157 25 48 – 8 – – $ 350 (156) $ 194 As at Jan. 1, 2010 $ 79 130 19 47 – 5 – – $ 280 (120) $ 160 1. Ore that we do not expect to process in the next 12 months is classified within other assets. For the years ended December 31 Inventory impairment charges Inventory impairment charges reversed 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). 2011 2010 $ 1 (1) $ 3 – 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 monitor 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, 2011, the weighted average cost per recoverable ounce of gold and recoverable pound of copper on leach pads was $653 per ounce and $1.03 per pound, respectively (2010: $427 per ounce of gold and $0.69 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. 145 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 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 2012 to 2030 and for copper ranging from 2012 to 2028. 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. Ore in Stockpiles Ore on Leachpads As at As at Dec. 31, Dec. 31, 2010 2011 As at Jan. 1, 2010 $ 525 $ 507 $ 407 97 105 79 77 56 25 – 5 26 8 15 32 192 149 99 90 75 59 55 47 30 22 15 43 366 111 89 81 59 41 6 4 20 24 14 42 Year1 2027 2024 2025 2022 2020 2020 2024 2047 2019 2014 2012 2039 Gold Veladero Cortez Ruby Hill Bald Mountain Lagunas Norte Round Mountain Pierina Marigold Copper Zaldívar As at As at Dec. 31, Dec. 31, 2010 2011 $ 128 12 9 61 15 17 71 22 $ 71 16 10 12 17 26 52 19 As at Jan. 1, 2010 $ 46 24 23 24 23 17 14 13 Year1 2012 2012 2012 2012 2012 2012 2012 2012 247 157 130 2014 $ 582 $ 380 $ 314 Gold Goldstrike Cortez Porgera Kalgoorlie Cowal North Mara Buzwagi Pueblo Viejo Round Mountain Veladero Lagunas Norte Turquoise Ridge Other Copper Zaldívar Lumwana 175 14 112 – 79 – 2028 2037 $ 1,590 $ 1,476 $ 1,011 1. Year in which we expect to complete full processing of the ore in stockpiles. 146 1. Year in which we expect to complete full processing of the ore on leachpads. Purchase Commitments At December 31, 2011, we had purchase obligations for supplies and consumables of approximately $1,748 million (2010: $1,449 million). 16  Accounts Receivable and Other Current Assets As at As at Dec. 31, Dec. 31, 2010 2011 As at Jan. 1, 2010 Accounts receivable Amounts due from concentrate sales Amounts due from copper cathode sales Other receivables Other current assets Derivative assets (note 22f) Goods and services taxes recoverable1 Prepaid expenses Other $ 99 $ 46 $ 16 107 220 159 165 109 134 $ 426 $ 370 $ 259 $ 507 194 123 52 $ 615 211 95 14 $ 214 201 92 11 $ 876 $ 935 $ 518 1. Includes $131 million and $22 million in VAT and fuel tax receivables in South America and Africa, respectively (2010: $132 million and $59 million, respectively). Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 17  Property, Plant and Equipment At January 1, 2010 Net of accumulated depreciation Adjustment on currency translation Additions Capitalized interest Disposals Acquisitions Depreciation Impairments (charges) Transfers between categories4 Mining Properties1 Buildings, plant and equipment Assets subject to depreciation3 Assets not subject to depreciation2 Oil and gas properties $ 2,081 – 202 – (5) – (392) – 568 $ 7,070 – 471 – (2) – (1,035) – 695 $ 3,886 – 3,152 284 (17) 1,535 – – (1,263) $ 341 28 90 – – 252 (44) (7) – Total $ 13,378 28 3,915 284 (24) 1,787 (1,471) (7) – At December 31, 2010 $ 2,454 $ 7,199 $ 7,577 $ 660 $ 17,890 At January 1, 2010 Cost Accumulated depreciation Net carrying amount – January 1, 2010 At December 31, 2010 Cost Accumulated depreciation Net carrying amount – December 31, 2010 At December 31, 2010 Net of accumulated depreciation Adjustment on currency translation Additions Capitalized interest Disposals Acquisitions Depreciation Impairments (charges) Transfers between categories4 $ 6,058 (3,977) $ 2,081 $ 6,808 (4,354) $ 2,454 $ 13,141 (6,071) $ 7,070 $ 14,278 (7,079) $ 7,199 $ 3,886 – $ 3,886 $ 7,577 – $ 7,577 Mining Properties1 $ 391 (50) $ 341 $ 754 (94) $ 660 $ 23,476 (10,098) $ 13,378 $ 29,417 (11,527) $ 17,890 Buildings, plant and equipment Assets subject to Assets not subject to depreciation3 depreciation2 Oil and gas properties $ 2,454 – 180 – (20) – (389) – 417 $ 7,199 – 219 – (4) 3,078 (910) – 1,468 $ 7,577 – 4,874 396 – 3,400 – (89) (1,885) $ 660 (22) 178 – – 342 (95) (49) – Total $ 17,890 (22) 5,451 396 (24) 6,820 (1,394) (138) – At December 31, 2011 $ 2,642 $ 11,050 $ 14,273 $ 1,014 $ 28,979 At December 31, 2011 Cost Accumulated depreciation Net carrying amount – December 31, 2011 $ 7,352 (4,710) $ 2,642 $ 19,200 (8,150) $ 11,050 $ 14,273 – $ 14,273 $ 1,225 (211) $ 1,014 $ 42,050 (13,071) $ 28,979 1. Includes capitalized reserve acquisition costs, capitalized development costs and exploration and evaluation costs. 2. Assets not subject to depreciation include construction-in-progress, capital projects and acquired mineral resources and exploration potential. 3. Assets subject to depreciation include the following items for production stage properties: acquired mineral reserves and resources, capitalized mine development costs, capitalized stripping and capitalized exploration and evaluation costs. 4. The carrying amount of the long-lived assets in the Capital Projects segment is transferred to the relevant operating segment on commissioning of the mine. 147 Notes to Consolidated Financial Statements a) Assets Not Subject to Depreciation b) Depreciation and Accretion Carrying Carrying Carrying amount at amount at amount at Jan. 1, 2010 Dec. 31, 2011 Dec. 31, 2010 Construction-in-progress3 Acquired mineral resources and exploration potential Projects Pascua-Lama Pueblo Viejo2 Cerro Casale1,2 Jabal Sayid Other $ 1,314 $ 913 $ 853 2,278 359 423 3,749 3,554 1,732 1,605 41 2,156 2,590 1,544 – 15 1,185 1,425 – – $ 14,273 $ 7,577 $ 3,886 1. The carrying amount of the Cerro Casale investment has been transferred to PP&E as a result of our obtaining control over the entity due to the acquisition of an additional 25% interest. See note 4f for further details. 2. Amounts are presented on a 100% basis and include our partner’s non- controlling interest. 3. Represents assets under construction at our operating mine sites. Depreciation (note 5) Accretion (note 24) 2011 2010 $ 1,419 $ 1,212 52 21 $ 1,471 $ 1,233 Changes in Gold and Copper Mineral Reserves At the end of each ﬁ scal 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 prospectively 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 2011 was a $119 million decrease (2010: $40 million decrease). c) Capital Commitments In addition to entering into various operational commitments in the normal course of business, we had commitments of approximately $1,338 million at December 31, 2011 (2010: $1,254 million) for construction activities at our capital projects. 18  Goodwill and Other Intangible Assets a) Goodwill We allocate goodwill to the group of CGUs that comprise an operating segment, since each CGU in a segment is expected to derive beneﬁ ts from a business combination that results in the recognition of goodwill. At December 31, 2011, goodwill has been allocated to each operating segment as follows: Opening balance January 1, 2010 Additions1 Other3 Closing balance December 31, 2010 Additions2 Other3 Closing balance December 31, 2011 Cost Gold North America Australia South America ABG Capital Projects Copper4 Barrick Energy Total $ 2,376 $ 1,480 $ 441 $ 157 $ – $ 743 $ – $ 5,197 – – – – – – 22 – – 809 2,376 1,480 441 179 809 – – – – 2,376 1,480 2,376 1,480 – – 441 441 – – 179 179 – – 809 809 – – 743 3,506 – 4,249 4,249 64 4 68 26 (2) 92 92 86 813 6,096 3,532 (2) 9,626 9,626 Net carrying amount $ 2,376 $ 1,480 $ 441 $ 179 $ 809 $ 4,249 $ 92 $ 9,626 1. Represents goodwill acquired as a result of the acquisition of Tusker ($22 million) (note 4c) and Bountiful, Puskwa and Dolomite ($64 million) (note 4b). 2. Represents goodwill acquired as a result of the acquisition of Equinox ($3,506 million) (note 4a) and Venturion and Culane ($26 million) (note 4b). 3. Represents remeasured goodwill as a result of the adoption of the consolidation method of accounting following acquisition of an additional 25% interest in Cerro Casale (note 4f) and the impact of foreign exchange rate changes on the translation of Barrick Energy from C $ to US $. 4. In fourth quarter 2011, we established a global copper business unit. As a result, all of our copper assets now form part of this operating segment. The comparatives have been restated to reflect this reorganization. 148 b) Intangible Assets Opening balance January 1, 2010 Additions Disposals Amortization Closing balance December 31, 2010 Additions Closing balance December 31, 2011 Cost Accumulated amortization and impairment losses Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Water rights1 $ 40 76 – – 116 – 116 116 – Technology2 Supply contracts3 Exploration potential4 Total $ 17 $ 9 $ 209 $ 275 – – – 17 – 17 17 – 6 (7) (1) 7 16 23 39 (16) 126 – – 335 78 413 413 – 208 (7) (1) 475 94 569 585 (16) Net carrying amount December 31, 2011 $ 116 $ 17 $ 23 $ 413 $ 569 1. Water rights in South America ($116 million) are subject to annual impairment testing and will be amortized through cost of sales when used in the future. In 2010, we recorded a $75 million increase as a result of adoption of the consolidation method of accounting for Cerro Casale. Refer to note 4f. 2. The amount will be amortized through cost of sales 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 over the effective term of the contract through cost of sales. 4. Exploration potential consists of the estimated fair value attributable to exploration licenses acquired as a result of a business combination or asset acquisition. The carrying value of the licenses will be transferred to PP&E when the development of attributable mineral resources commences (note 2m(i)). c) Impairment of Goodwill and Non-current Assets Goodwill was tested for impairment in the fourth quarter. The recoverable amount of each operating segment has been determined using a FVLCS approach. For the year ended December 31, 2011, we did not record any impairment to goodwill (2010: nil). FVLCS for each gold operating segment was determined by considering the net present value (“NPV”) of the future cash ﬂ ows expected to be generated by the segment. Net future cash ﬂ ows were derived from the most recent life of mine (“LOM”) plans, with mine lives ranging from 2 to 35 years, aggregated to the segment level. We have used an estimated long-term gold price of $1,600 per ounce (2010: $1,250 per ounce) to estimate future revenues. The net future cash ﬂ ows were discounted using a segment real weighted average cost for a gold business of 5% (2010: 5%). Gold companies consistently trade at a market capitalization greater than the NPV of their expected cash ﬂ ows. Market participants describe this as a “NAV multiple”, whereby the NAV represents the multiple applied to the NPV to arrive at the trading price. As a result, we applied a NAV multiple to the NPV of each gold operating segment based on the observable NAV multiples of comparable companies as at the test date. In 2011, the average NAV multiple was about 1.2 (2010: 1.4). For our copper segment, the FVLCS was determined based on the NPV of future cash ﬂ ows expected to be generated using the most recent LOM plans, with mine lives ranging from 11 to 31 years, aggregated to the segment level. We utilized a long-term risk-adjusted copper price of $3.44 per pound to estimate future revenues. The risk adjustment to the average long-term copper price was approximately 4.5%. The expected net future cash ﬂ ow was additionally discounted using rates from 4.5% to 5.5% to reﬂ ect the time value of money and a residual risk factor for cash ﬂ ow uncertainties not related to metal price. This results in an effective weighted average cost of capital for the copper segment of approximately 7%. For our oil and gas segment, the FVLCS was determined based on the NPV of future cash ﬂ ows expected to be generated from our oil and gas properties, aggregated to the segment level. We have estimated future oil prices using the forward curve provided by an independent reserve evaluation ﬁ rm, with prices starting at $97 per barrel (WTI) (2010: $88 per barrel). The net future cash ﬂ ows were discounted using a real weighted average cost of capital for long life oil and gas assets of 8.5% (2010: 8.5%). 149 Notes to Consolidated Financial Statements Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. The recoverable amount is calculated using the same FVLCS approach as described above for goodwill. However, the assessment is done at the CGU level, which is the lowest level for which identiﬁ able cash ﬂ ows are largely independent of the cash ﬂ ows of other assets. For the year ended December 31, 2011, we recorded impairment charges of $138 million for non-current assets. The impairment included a $49 million charge at our Barrick Energy segment, primarily due to recovery issues at one of our properties. Impairment charges also included an $83 million write-down of certain power related assets at our Pueblo Viejo project as a result of a decision to proceed with an alternative long-term power solution. Expected future cash ﬂ ows used to determine the FVLCS used in the impairment testing of goodwill and non-current assets are inherently uncertain and could materially change over time. The cash ﬂ ows are signiﬁ cantly affected by a number of factors including estimates of production levels, operating costs and capital expenditures reﬂ ected in our LOM plans; as well as economic factors beyond management’s control, such as gold, copper and oil prices; discount rates; and observable NAV multiples. Should management’s estimate of the future not reﬂ ect actual events, further impairments may be identiﬁ ed. For purposes of testing for impairment of non-current assets of our gold, copper and oil and gas segments, a reasonably possible change in the key assumptions used to estimate the FVLCS could result in an impairment charge at one or more of our CGUs. The carrying value of the net assets of CGUs that are most sensitive to changes in the key assumptions are: As at December 31, 2011 Carrying value Lumwana Jabal Sayid Buzwagi Barrick Energy CGUs Pierina $ 3,538 1,160 634 231 51 19  Other Assets Derivative assets (note 22f) Goods and services taxes recoverable1 Notes receivable Other As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 $ 455 $ 511 $ 290 272 121 154 138 90 134 121 94 144 $ 1,002 $ 873 $ 649 1. Includes $209 million and $63 million in VAT and fuel tax receivables in South America and Africa, respectively (2010: $75 million and $63 million, respectively). 20  Accounts Payable Accounts Payable Accruals As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 $ 963 1,120 $ 790 721 $ 612 609 $ 2,083 $ 1,511 $ 1,221 21  Other Current Liabilities As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 Provision for environmental rehabilitation (note 24) Derivative liabilities (note 22f) Post-retirement beneﬁ ts (note 32b) Restricted stock units (note 31b) Contingent purchase consideration1 Other $ 79 22 14 27 50 134 $ 88 173 10 51 – 94 $ 85 180 16 26 – 59 $ 326 $ 416 $ 366 1. Represents the contingent purchase consideration arising on our acquisition of the additional 40% interest in our Cortez property in 2008. Consideration of $1,695 million was recognized on acquisition in 2008. 150 22  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 ﬁ nancial instrument. Information on certain types of ﬁ nancial instruments is included elsewhere in these consolidated ﬁ nancial statements as follows: accounts receivable – note 16; investments – note 14; restricted share units – note 31b. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements a) Cash and Equivalents Cash and equivalents include cash, term deposits, treasury bills and money markets with original maturities of less than 90 days. Cash deposits Term deposits Treasury bills Money market investments As at Dec. 31, 2011 As at Dec. 31, 2010 $ 1,009 278 – 1,458 $ 1,345 1,236 – 1,387 As at Jan. 1, 2010 $ 509 298 125 1,632 $ 2,745 $ 3,968 $ 2,564 b) Long-Term Debt1 1.75%/2.9%/4.4%/5.7% notes3 5.80%/4.875% notes4 5.75%/6.35% notes5 Other ﬁ xed rate notes Convertible senior debentures6 Project ﬁ nancing Capital leases Other debt obligations7 First credit facility8 Second credit facility9 2011 2010 At Amortization At Dec. 31 Proceeds Repayments and Other2 Dec. 31 Proceeds Repayments Amortization and Other2 At Jan. 1 $ $ 3,972 750 988 3,190 $ 4,000 – – – – 873 203 899 1,500 994 – 148 – – 1,500 1,000 – – – – – – 20 – – – $ (28) $ – – – – 750 988 3,190 – (16) 151 2 – (6) – 741 72 897 – – $ – – – – – 754 – – – – $ – – – – 176 62 24 63 – – $ 325 – $ 325 $ – $ 4 1 6 – 746 987 3,184 3 (8) 34 (9) – – 173 57 62 969 – – $ 31 $ 6,178 (54) – $ 31 $ 6,124 Less: current portion10 $ 13,369 (196) $ 6,648 – $ 20 – $ 103 – $ 6,638 (14) $ 754 – $ 13,173 $ 6,648 $ 20 $ 103 $ 6,624 $ 754 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 and increases in capital leases. 3. In June 2011, we issued an aggregate of $4 billion of debentures to finance a portion of the acquisition of Equinox. They are comprised of: $700 million at a $1 million discount that matures on May 30, 2014, $1.1 billion at a $1 million discount that matures on May 30, 2016, $1.35 billion at a $1 million discount that matures on May 30, 2021, and $850 million at a $4 million discount that matures on May 30, 2041. 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. 5. $400 million of US dollar notes with a coupon rate of 5.75% mature in 2016 and $600 million of US dollar notes with a coupon rate of 6.35% mature in 2036. 6. On October 20, 2010 we redeemed all of our entire outstanding Placer Dome 2.75% Convertible Senior Debentures due 2023. 7. The obligations have an aggregate amount of $899 million, of which $100 million is subject to floating interest rates and $799 million is subject to fixed interest rates ranging from 4.75% to 8.05%. The obligations mature at various times between 2012 and 2035. 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. We have a credit and guarantee agreement with a group of banks which requires the Lenders to make available to us a credit facility of up to $2 billion or the equivalent amount in Canadian currency. The credit facility, which is unsecured, has an interest rate of LIBOR plus 1.25% on drawn down amounts, and a commitment rate of 0.20% on undrawn amounts. In January 2012, the $2 billion facility was terminated and the $1 billion drawn was transferred to the new $4 billion facility. 8. 9. 10. The current portion of long-term debt consists of capital leases ($78 million, 2010: $14 million), other debt obligations ($68 million, 2010: $nil) and the first credit facility ($50 million, 2010: $nil). 151 Notes to Consolidated Financial Statements Equinox Acquisition Financing In May 2011, we entered into a credit and guarantee agreement (the “second credit facility”) with the Lenders, which required the Lenders to make available to us a credit facility of $2 billion or the equivalent amount in Canadian dollars. The second credit facility, which is unsecured, has an interest rate of LIBOR plus 1.25% on drawn down amounts, and a commitment rate of 0.20% on undrawn amounts. The second credit facility matures in 2016. In June 2011, we drew $1 billion on the second credit facility to ﬁ nance a portion of the acquisition of Equinox, including the payment of related fees and expenses. At December 31, 2011, the undrawn amount on the second credit facility was $1 billion. In June 2011, Barrick, and our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”), issued an aggregate of $4.0 billion in debt securities comprised of: $700 million of 1.75% notes due 2014 and $1.1 billion of 2.90% notes due 2016 issued by Barrick (collectively, the “Barrick Notes”) as well as $1.35 billion of 4.40% notes due 2021 and $850 million of 5.70% notes due 2041 issued by BNAF (collectively, the “BNAF Notes”). Barrick provides an unconditional and irrevocable guarantee of the BNAF Notes. The Barrick Notes and the guarantee in respect of the BNAF Notes will rank equally with Barrick’s other unsecured and unsubordinated obligations. The net proceeds from this offering were used in June 2011 to ﬁ nance a portion of the acquisition of Equinox, including the payment of related fees and expenses. First Credit Facility We also have a credit and guarantee agreement (the “ﬁ rst credit facility”) with 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 dollars. The ﬁ rst 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. In May 2011, we drew $1.5 billion on the ﬁ rst credit facility to ﬁ nance a portion of the acquisition of Equinox Minerals Limited, including the payment of related fees and expenses. Pueblo Viejo Project Financing Agreement In April 2010, Barrick and Goldcorp ﬁ nalized terms for $1.035 billion (100% basis) in non-recourse project ﬁ nancing for Pueblo Viejo. The lending syndicate is comprised of international ﬁ nancial 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 ﬁ xed 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 million (100% basis), less ﬁ nancing fees of $28 million on this ﬁ nancing agreement by fully drawing on the $400 million and $260 million tranches and a portion of the $375 million tranche. In March 2011, we received $159 million (100% basis) less ﬁ nancing fees of $15 million on this ﬁ nancing agreement. 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. 152 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Refinancing of Second Credit Facility In January 2012, we ﬁ nalized a credit and guarantee agreement with the Lenders, which required the Lenders to make available to us a credit facility of $4 billion or the equivalent amount of Canadian dollars. The credit facility, which is unsecured, has an interest rate of LIBOR plus 1.00% on drawn amounts, and a commitment rate of 0.15% on undrawn amounts. The $4 billion facility matures in 2017. Coincident with this agreement becoming effective, we terminated the $2 billion facility that was set to mature in 2016 and transferred the $1 billion drawn on the $2 billion facility to the new $4 billion facility. Debt Issue Costs In 2011, a total of $34 million of debt issue costs arose from the Equinox acquisition ﬁ nancing. In 2010, a total of $9 million of debt issue costs arose from the non- recourse project ﬁ nancing for Pueblo Viejo. Amortization of debt issue costs is calculated using the interest method over the term of each debt obligation and is classiﬁ ed as a component of interest cost. 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. Other 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 sufﬁ cient funds to BPDAF to meet the principal and interest obligations on the notes. We also provided an uncon- ditional and irrevocable guarantee of these payments, which will rank equally with our other unsecured and unsubordinated obligations. 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 $1.25 billion 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 provide loans to us. We provide sufﬁ cient 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. 153 Notes to Consolidated Financial Statements Interest For the years ended December 31 1.75%/2.9%/4.4%/5.7% notes 5.80%/4.875% notes 5.75%/6.35% notes Other ﬁ xed rate notes Convertible senior debentures Project ﬁ nancing Capital leases Other debt obligations First credit facility Second credit facility Deposit on silver sale agreement (note 26) Accretion Other interest Less: interest capitalized Cash interest paid Amortization of debt issue costs Amortization of premium (discount) Increase in interest accruals Accretion Interest cost 2011 2010 Interest cost Effective rate1 Interest cost Effective rate1 3.77% 5.63% 6.22% 6.27% – 4.22% 5.03% 5.30% 0.56% 1.62% 8.59% $ 88 42 62 212 – 36 7 48 5 10 33 52 12 $ 607 (408) $ 199 $ 519 17 (3) 22 52 $ 607 0.00% 5.48% 6.22% 6.49% 1.30% 3.65% 4.30% 4.94% – – 8.59% $ – 41 62 211 2 16 3 47 – – 19 21 43 $ 465 (285) $ 180 $ 428 4 2 10 21 $ 465 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. Scheduled Debt Repayments 1.75%/2.9%/4.4%/5.7% notes 5.80%/4.875% notes 5.75%/6.35% notes Other ﬁ xed rate notes Project ﬁ nancing Other debt obligations First credit facility Second credit facility1 2012 $ – – – – – 118 50 – $ 2013 – – – 500 45 66 1,450 – 2014 2015 2016 $ 700 350 – – 90 – – – $ – – – – 90 100 – – $ 1,100 – 400 – 90 – – 1,000 2017 and thereafter $ 2,200 400 600 2,750 626 566 – – $ 168 $ 2,061 $ 1,140 $ 190 $ 2,590 $ 7,142 Minimum annual payments under capital leases $ 28 $ 30 $ 26 $ 24 $ 16 $ 19 1. In January 2012 we finalized a credit and guarantee agreement with a group of banks which required the Lenders to make available to us a credit facility of up to $4 billion or the equivalent amount of Canadian dollars. Coincident with this agreement becoming effective, we terminated the $2 billion facility that was set to mature in 2016 and transferred the $1 billion drawn on the $2 billion facility to the new $4 billion facility. As a result, there are no scheduled repayments on this new facility prior to 2017 and have enough undrawn debt capacity to replace debt coming due in 2012 and 2013. 154 c) Derivative Instruments (“Derivatives”) In the normal course of business, our assets, liabilities and forecasted transactions, as reported in US dollars, are impacted by various market risks including, but not limited to: Item Sales Cost of sales Impacted by Prices of gold, copper, oil and natural gas Consumption of diesel fuel, propane, natural gas and electricity Prices of diesel fuel, propane, natural gas and electricity Non-US dollar expenditures Currency exchange rates – US dollar versus A$, ARS, C$, CLP, JPY, PGK, TZS, ZAR and ZMK By-product credits Prices of silver and copper Corporate and regional administration, exploration and evaluation costs  Currency exchange rates – US dollar versus A$, ARS, C$, CLP, JPY, PGK, TZS, ZAR and ZMK Capital expenditures Non-US dollar capital expenditures  Currency exchange rates – US dollar versus A$, 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 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements The time frame and manner in which we manage those risks varies for each item based upon our assessment of the risk and available alternatives for mitigating risk. For these particular risks, we believe that derivatives are an appropriate way of managing the risk. We use derivatives as part of our risk management program 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. Certain derivatives are designated as either hedges of the fair value of recognized assets or liabilities or of ﬁ rm commitments (“fair value hedges”) or hedges of highly probable forecasted transactions (“cash ﬂ ow hedges”), collectively known as “accounting hedges”. Hedges that are expected to be highly effective in achieving offsetting changes in fair value or cash ﬂ ows are assessed on an ongoing basis to determine that they actually have been highly effective throughout the ﬁ nancial reporting periods for which they were designated. Some of the derivative instruments we use are effective in achieving our risk management objectives, but they do not meet the strict hedge effectiveness criteria. These derivatives are considered to be “non-hedge derivatives”. We also enter into derivative instruments with the objective of realizing trading gains to increase our reported net income. These derivatives are also considered to be “non- hedge derivatives”. 155 Notes to Consolidated Financial Statements d) Summary of Derivatives at December 31, 2011 Notional amount by term to maturity Accounting classiﬁ cation by notional amount Within 1 year 2 to 3 years 4 to 5 years Cash ﬂ ow hedge Total Fair value hedge Non- hedge Fair value (USD) $ – $ 200 $ – $ 200 $ – $ 200 $ – $ 7 US dollar interest rate contracts Total receive – ﬁ xed swap 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) ZAR:US$ contracts (ZAR millions) 2,057 935 1,640 304 289,789 510,341 – – 94 35 40 416 Commodity contracts Copper collar sell contracts (millions of pounds) Copper bought ﬂ oor contracts (millions of pounds) Copper bought call contracts (millions of pounds) Silver collar sell contracts (millions of ounces) Diesel contracts (thousands of barrels)2 Propane contracts (millions of gallons) Electricity contracts (thousands of megawatt hours) 249 40 238 – 1,939 4 35 – – – 15 3,043 – 22 774 – – – – – – – – 30 – – – 4,471 1,239 4,071 767 800,130 161,670 35 – – 35 40 510 249 40 238 45 4,982 4 57 238 40 – 45 3,552 4 – – – – – – – – – – – – – – 400 472 638,460 – 40 510 11 – 238 – 1,430 – 57 610 2 (29) (3) – 1 129 21 5 115 37 2 1 1. Non-hedge contracts economically hedge pre-production capital expenditures at our Pascua-Lama project and operating/administration costs at various South American locations. 2. Diesel commodity contracts represent a combination of WTI, BRENT, ULSD and BRENT/WTI 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, BRENT represents Brent Crude Oil, 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 as at Balance sheet Dec. 31, 2011 classiﬁ cation Fair Value Fair Value as at Dec. 31, 2010 Fair Value as at Jan. 1, 2010 as at Balance sheet Dec. 31, 2011 classiﬁ cation Fair Value Fair Value as at Dec. 31, 2010 Fair Value as at Jan. 1, 2010 Derivatives designated as hedging instruments US dollar interest rate contracts Currency contracts Commodity contracts Total derivatives classiﬁ ed 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 Other assets Other assets Other assets $ 7 629 312 $ 6 831 112 $ – Other liabilities 374 Other liabilities 53 Other liabilities $ – 26 6 $ – 1 192 $ – 9 131 $ 948 $ 949 $ 427 $ 32 $ 193 $ 140 Other assets Other assets Other assets $ – 4 10 $ – 30 147 $ 1 Other liabilities 15 Other liabilities 61 Other liabilities $ – 26 6 $ 5 7 73 $ 7 9 43 $ 14 $ 177 $ 77 $ 32 $ 85 $ 59 Total derivatives $ 962 $ 1,126 $ 504 $ 64 $ 278 $ 199 156 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements US Dollar Interest Rate Contracts Fair Value Hedges We have a $200 million receive ﬁ xed swap position outstanding that is used to hedge changes in the fair value of a portion of our long-term ﬁ xed-rate debt. The effective portion of changes in the fair value of the swap contracts is recorded in interest expense. Gains and losses from hedge ineffectiveness are recognized in current earnings, classiﬁ ed in the consolidated statement of income as gains/(losses) on non-hedge derivatives. Currency Contracts Cash Flow Hedges During the year, currency contracts totaling A$ 1,693 million, CAD$ 522 million, EUR 25 million, and CLP 162 billion have been designated against forecasted non-US dollar denominated expenditures, some of which are hedges which matured within the year. In total, we have AUD$ 4,071 million, CAD$ 767 million, EUR 35 million, and CLP 162 billion designated as cash ﬂ ow hedges of our anticipated operating, administrative, sustaining capital and project capital spend. The outstanding contracts hedge the variability of the US dollar amount of those expenditures caused by changes in currency exchange rates over the next ﬁ ve years. The effective portion of changes in fair value of the currency contracts is recorded in OCI until the forecasted expenditure impacts earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings classiﬁ ed in the consolidated statement of income as gains (losses) on non-hedge derivatives. Non-hedge Derivatives We concluded that CLP 638 billion of derivatives contracts do not meet the strict hedge effectiveness criteria. These contracts represent an economic hedge of operating and administrative expenses at various South America locations, and pre-production capital expenditures at our Pascua Lama and Cerro Casale projects. Also, ZAR 510 million represents an economic hedge of our anticipated operating and administrative spending at various locations in Africa. Although not qualifying as accounting hedges, the contracts protect us against the variability of CLP and ZAR to the US dollar. The remaining 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 the non-hedge currency contracts are recorded in the consolidated statement of income as gains (losses) on non-hedge derivatives. During the year, we wrote a combination of AUD put and call options with an outstanding notional amount of AUD $400 million at December 31, 2011. We also wrote CAD put option contracts with an outstanding notional amount of CAD $445 million at December 31, 2011. As a result of these activities we earned $30 million in premium income, recognized in the consolidated statement of income as gains on non-hedge derivatives. Commodity Contracts Diesel/Propane/Electricity/Natural Gas Cash Flow Hedges In total, we have fuel contracts totaling 2,793 thousand barrels of diesel, 759 thousand barrels of Brent crude, and 4 million gallons of propane designated as cash ﬂ ow hedges of our anticipated usage of fuels in our operations. The designated contracts act as a hedge against the variability in market prices. The effective portion of changes in the fair value of the commodity contracts is recorded in OCI until the forecasted transaction impacts earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings, classiﬁ ed in the consolidated statement of income as gains (losses) on non-hedge derivatives. Non-hedge Derivatives As a result of de-designating all existing WTI contracts on January 1, 2011 due to a change in our diesel fuel supply contract, we currently have $26 million of crystallized gains in OCI as at December 31, 2011, remaining from the original total of $35 million. The hedged item is still expected to occur and therefore amounts crystallized in OCI will be recorded in cost of sales when the originally designated exposures occur over the next 24 months. During the year, we entered into 1,340 thousand barrels of WTI, and 480 thousand barrels of Brent-WTI swaps to economically hedge our exposure to forecasted fuel purchases for expected consumption at our mines. 157 Notes to Consolidated Financial Statements Non-hedge electricity contracts of 57 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 Barrick to a signiﬁ cant extent from the effects of changes in electricity prices. Changes in the unrealized and realized fair value of non-hedge electricity contracts are recognized in the consolidated statement of income as gains (losses) on non-hedge derivatives. During the year, we wrote two million barrels of WTI put options all of which have expired. As a result of this activity, we recorded $4 million in realized gains on premiums recognized in the consolidated statement of income as gains (losses) on non-hedge derivatives. Metals Contracts Cash Flow Hedges During the year, we purchased 238 million pounds of copper collar contracts to designate as hedges against copper cathode sales at our Zaldívar mine in 2012. These contracts contain purchased put and sold call options with weighted average strike prices of $3.75/lb and $5.50/lb, respectively. In addition, we purchased 40 million pounds of copper ﬂ oors with a weighted average strike price of $3.74/lb. We paid premiums of $71 million to purchase these contracts. These contracts were designated as cash ﬂ ow hedges, with the effective portion of the hedge recognized in AOCI and the ineffective portion, together with the changes in time value, recognized in non-hedge derivative gains (losses). These contracts mature evenly throughout 2012. Silver collar contracts totaling 45 million ounces have been designated as hedges against silver bullion sales from our silver producing mines. These contracts contain purchased put and sold call options with weighted average strike prices of $23/oz and $57/oz respectively. Our copper and silver collar contracts have been designated as accounting hedges and the effective portion of changes in fair value of these contracts is recorded in OCI until the forecasted sale impacts earnings. Any changes in the fair value of collar contracts due to changes in time value are excluded from hedge effectiveness assessment and are consequently recognized in the consolidated statement of income. Provided that spot copper and silver prices remain within the collar band, any unrealized gain (loss) on the collar will be attributable to time value. During the year, we recorded unrealized gains on our copper collars and silver collars of $94 million and $64 million, respectively, due to changes in time value. This was included in current period earnings as gains on non-hedge derivative activities. Gains and losses from hedge ineffectiveness and the excluded time value of options are recognized in the consolidated statement of income as gains on non-hedge derivatives. Non-Hedge Derivatives We have purchased call options outstanding to economically remove the cap of $5.50/lb on the entire 238 million pounds of copper collars. Premiums of $6 million were paid to purchase these contracts. These contracts mature evenly throughout 2012. Changes in the unrealized and realized fair value of these copper positions are recognized in the consolidated statement of income as gains (losses) on non-hedge derivatives. We enter into purchased and written contracts with the primary objective of increasing the realized price on our gold sales. During the year, we held net purchased gold long forward positions with an average outstanding notional of 0.3 million ounces. We also wrote gold put and call options with an average outstanding notional of 0.1 million and 0.1 million ounces, respectively. As a result of these activities, we recorded realized gains of $43 million in the consolidated statement of income as gains on non-hedge derivatives. There are no outstanding gold positions at December 31, 2011. 158 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Cash Flow Hedge Gains (Losses) in AOCI Commodity price hedges Currency hedges Interest rate hedges At January 1, 2010 Effective portion of change in fair value of hedging instruments Transfers to earnings: On recording hedged items in earnings At December 31, 2010 Effective portion of change in fair value of hedging instruments Transfers to earnings: On recording hedged items in earnings/PP&E1 Hedge ineffectiveness due to changes in original forecasted transaction Gold/Silver1 Copper Operating Administration/ other costs costs Fuel Capital expenditures Long-term debt Total $ 3 $ (33) $ (4) $ 309 $ 19 $ 25 $ (30) $ 289 29 552 56 – (2) (41) 54 $ 1 $ (20) $ 51 $ 716 26 (145) (33) $ 42 53 (13) – 3 649 (110) $ 65 $ (27) $ 828 46 128 26 200 1 17 (7) 411 (3) – (22) (4) (48) (344) – – (24) – (64) 3 (502) – – (4) At December 31, 2011 $ 44 $ 82 $ 29 $ 572 $ 19 $ 18 $ (31) $ 733 Hedge gains/losses classiﬁ ed within Portion of hedge gain (loss) expected to affect 2012 earnings2 Cost of sales Copper sales Cost of sales Cost of Administration/ other expense sales Property, plant, and equipment Interest expense $ – $ 82 $ 20 $ 278 $ 19 $ 7 $ (3) $ 403 1. Realized gains (losses) on qualifying currency hedges of capital expenditures are transferred from OCI to PP&E on settlement. 2. Based on the fair value of hedge contracts at December 31, 2011. Cash Flow Hedge Gains (Losses) at December 31 Derivatives in cash flow hedging relationships Amount of gain (loss) recognized in OCI 2011 2010 Location of gain (loss) transferred from OCI into income/PP&E (effective portion) Amount of gain (loss) transferred from OCI into income (effective portion) 2011 2010 Interest rate contracts $ (7) $ – Finance income/ﬁ nance costs $ (3) $ (3) Foreign exchange contracts 218 661 Cost of sales/corporate administration 432 191 Commodity contracts 200 (12) Revenue/cost of sales 73 (78) Total $ 411 $ 649 $ 502 $ 110 Location of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain (loss) on non- hedge derivatives Gain (loss) on non- hedge derivatives Gain (loss) on non- hedge derivatives Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing) 2011 2010 $ – $ 3 (2) – 168 (25) $ 166 $ (22) Fair Value Hedge Gains at December 31 Derivatives in fair value hedging relationships Location of gain (loss) recognized in income on derivatives Amount of gain (loss) recognized in income on derivatives Interest rate contracts Interest income/expense 2011 $ 2 2010 $ 5 159 Notes to Consolidated Financial Statements e) Gains (Losses) on Non-hedge Derivatives f) Derivative Assets and Liabilities For the years ended December 31 2011 2010 Gains (losses) on non-hedge derivatives Commodity contracts Gold Copper Fuel Currency contracts Interest rate contracts Gains (losses) attributable to silver option collar hedges1 Gains (losses) attributable to copper option collar hedges1 Gains (losses) attributable to currency option collar hedges1 Hedge ineffectiveness At January 1 Derivatives cash (inﬂ ow) outﬂ ow Operating activities Financing activities Change in fair value of: Non-hedge derivatives Cash ﬂ ow hedges: Effective portion Ineffective portion Fair value hedges Excluded from effectiveness changes At December 31 Classiﬁ cation: Other current assets Other long-term assets Other current liabilities Other long-term obligations $ 43 (85) (1) (48) 6 $ 26 41 – 29 (2) $ (85) $ 94 $ 64 $ (15) 94 (19) (2) 10 (4) 13 $ 166 $ (25) $ 81 $ 69 2011 2010 $ 848 $ 305 (428) 7 (168) (12) (85) 103 411 – (21) 166 635 14 5 (34) $ 898 $ 848 $ 507 $ 615 511 (173) (105) 455 (22) (42) $ 898 $ 848 1. Represents unrealized gains (losses) attributable to changes in time value of the collars, which are excluded from the hedge effectiveness assessment. 23  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 corroborated 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 Fair Value Measurements At December 31, 2011 Cash and equivalents Available-for-sale securities Derivatives Receivables from provisional copper and gold sales Quoted prices in active markets for identical assets (Level 1) $ 2,745 161 – – $ 2,906 Signiﬁ cant other observable inputs (Level 2) $ – – 898 206 $ 1,104 Signiﬁ cant unobservable inputs (Level 3) $ – – – – $ – Aggregate fair value $ 2,745 161 898 206 $ 4,010 160 b) Fair Values of Financial Assets and Liabilities Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Financial assets Cash and equivalents1 Accounts receivable1 Other receivables Available-for-sale securities2 Derivative assets Financial liabilities Accounts payable1 Long-term debt3 Derivative liabilities Other liabilities Settlement obligation to close out gold sales contracts Pension liabilities Stock based payments4 At Dec. 31, 2011 At Dec. 31, 2010 At Jan. 1, 2010 Carrying amount Estimated fair value Carrying amount Estimated fair value Carrying amount Estimated fair value $ 2,745 426 743 161 962 $ 2,745 426 743 161 962 $ 3,968 370 623 171 1,126 $ 3,968 370 623 171 1,126 $ 2,564 259 472 62 504 $ 2,564 259 472 62 504 $ 5,037 $ 5,037 $ 6,258 $ 6,258 $ 3,861 $ 3,861 $ 2,083 13,369 64 202 $ 2,083 14,374 64 202 – 136 57 – 136 57 $ 1,511 6,638 278 111 – 111 80 $ 1,511 7,070 278 111 – 111 80 $ 1,221 6,178 199 8 647 109 56 $ 1,221 6,723 199 8 647 109 56 $ 15,911 $ 16,916 $ 8,729 $ 9,161 $ 8,418 $ 8,963 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 amortized cost except for obligations that are designated in a fair-value hedge relationship, in which case the carrying amount is adjusted for changes in fair value of the hedging instrument 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) Assets Measured at Fair Value on a Non-Recurring Basis Quoted prices in active markets for identical assets (Level 1) Signiﬁ cant other observable inputs (Level 2) Signiﬁ cant unobservable inputs (Level 3) Aggregate fair value Property, plant and equipment1 $ – $ – $ 430 $ 430 1. Property, plant and equipment with a carrying amount of $562 million were written down to their fair value of $430 million, resulting in an impairment of $132 million, which was included in earnings this period. Valuation Techniques Cash Equivalents The fair value of our cash equivalents is classiﬁ ed 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 reﬂ ecting 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 classiﬁ ed within Level 1 of the fair value hierarchy. 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 161 b) Environmental Rehabilitation At January 1 PERs acquired (divested) during the year PERs arising in the year Impact of revisions to expected cash ﬂ ows recorded in earnings Settlements Cash payments Settlement gains Accretion At December 31 Current portion (note 21) 2011 2010 $ 1,621 67 391 $ 1,301 (25) 332 75 (44) (3) 52 39 (44) (3) 21 2,159 (79) 1,621 (88) $ 2,080 $ 1,533 The eventual settlement of all PERs is expected to take place between 2012 and 2052. The PER has increased from the third quarter 2011 by $223 million primarily due to changes in discount rates and PERs acquired in acquisitions. At December 31 2011 2010 Operating mines and development properties PER increase1 Closed mines PER increase2 Barrick Energy PER increase1 $ 434 $ 295 79 33 41 15 1. 2011 increase includes discount rate adjustments of $205 million, accretion of $89 million, an increase due to the acquisition of the Lumwana mine of $53 million, and accretion of $38 million. 2. For closed mines, any change in the fair value of PER results in a corresponding charge or credit to other expense or other income, respectively. Notes to Consolidated Financial Statements 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 ﬂ ows 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 ﬂ ows into US dollars using an exchange rate derived from currency swap curves and CDS rates. The fair value of commodity forward contracts is determined by discounting contractual cash ﬂ ows using a discount rate derived from observed LIBOR and swap rate curves and CDS rates. Contractual cash ﬂ ows are calculated using a forward pricing curve derived from observed forward prices for each commodity. Derivative instruments are classiﬁ ed 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 determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As such, these receivables are classiﬁ ed within Level 2 of the fair value hierarchy. Property, Plant and Equipment The fair value of property, plant and equipment is determined primarily using an income approach based on unobservable cash ﬂ ows and, as a result are classiﬁ ed within Level 3 of the fair value hierarchy. Refer to note 17. 24  Provisions and Environmental Rehabilitation a) Provisions As at Dec. 31, 2011 As at Dec. 31, 2010 Environmental rehabilitation Pension beneﬁ ts Other post-retirement beneﬁ ts RSUs Other $ 2,080 124 22 22 78 $ 1,533 103 25 20 87 As at Jan. 1, 2010 $ 1,191 96 26 23 72 $ 2,326 $ 1,768 $ 1,408 162 25  Financial Risk Management Our ﬁ nancial instruments are comprised of ﬁ nancial liabilities and ﬁ nancial assets. Our principal ﬁ nancial liabilities, other than derivatives, comprise accounts payable and debt. The main purpose of these ﬁ nancial instruments is to manage short-term cash ﬂ ow and raise funds for our capital expenditure program. Our principal ﬁ nancial assets, other than derivative instruments are cash and equivalents and accounts receivable, which arise directly from our operations. In the normal course of business, we use derivative instruments to mitigate exposure to various ﬁ nancial risks. We manage our exposure to key ﬁ nancial risks in accordance with our ﬁ nancial risk management policy. The objective of the policy is to support the delivery of our ﬁ nancial targets while protecting future ﬁ nancial security. The main risks that could adversely affect our ﬁ nancial assets, liabilities or future cash ﬂ ows are as follows: a) Market risk, including commodity price risk, foreign currency and interest rate risk; b) Credit risk; c) Liquidity risk; and d) Capital risk management. Management designs strategies for managing each of these risks which are summarized below. Our senior management oversees the management of ﬁ nancial risks. Our senior management ensures that our ﬁ nancial risk-taking activities are governed by appropriate policies and procedures and that ﬁ nancial risks are identiﬁ ed, measured and managed in accordance with our policies and our risk appetite. All derivative activities for risk management purposes are carried out by functions that have the appropriate skills, experience and supervision. a) Market Risk Market risk is the risk that changes in market factors, such as commodity prices, foreign exchange rates or interest rates will affect the value of our ﬁ nancial instruments. We manage market risk by either accepting it or mitigating it through the use of derivatives and other economic hedging strategies. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Commodity Price Risk Gold and Copper We sell our gold and copper production in the world market. The market prices of gold and copper are the primary drivers of our proﬁ tability and ability to generate free cash ﬂ ow. All of our future gold production is unhedged in order to provide our shareholders with full exposure to changes in the market gold price. Our corporate treasury function implements hedging strategies on an opportunistic basis to protect us from downside price risk on our copper production. We have put in place ﬂ oor protection on approximately half of our expected copper production for 2012 at an average price of $3.75 per pound and have full participation to any upside in copper prices. Our remaining copper production is subject to market prices. Silver We expect to produce signiﬁ cant amounts of silver as Pascua-Lama enters production in 2013. We utilize option collar strategies, whereby we have hedge protection on a total of 45 million ounces of expected silver production from 2013 to 2018, inclusive, to provide downside price risk protection on a portion of this future silver production. Currently, changes in the market silver price only have a signiﬁ cant impact on the fair value of these collars. Fuel On average we consume approximately 4.5 million barrels of diesel fuel annually across all our mines. Diesel fuel is reﬁ ned from crude oil and is therefore subject to the same price volatility affecting crude oil prices. Therefore, volatility in crude oil prices has a signiﬁ cant direct and indirect impact on our production costs. To mitigate this volatility, we employ a strategy of combining the use of ﬁ nancial contracts and our production from Barrick Energy to effectively hedge our exposure to oil prices. The table below summarizes the impact of changes in the market price on gold, copper, silver and oil. The impact is expressed in terms of the resulting change in our proﬁ t after tax for the year or, where applicable, the change in equity. The sensitivities are based on the assumption that the market price changes by ten per cent with all other variables held constant. 163 Notes to Consolidated Financial Statements Impact of a 10% change from year-end price Effect on earnings Effect on equity Products 2011 2010 2011 2010 10% increase in gold price 10% increase in copper price 10% increase in silver price1 10% increase in oil price $ 776 143 (42) 10 $ 650 101 (21) 8 $ 776 46 (21) (1) $ 650 53 1 (2) Effect on earnings Effect on equity interest rates. Currently, our interest rate exposure mainly relates to interest receipts on our cash balances ($2.7 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 ($3.6 billion at December 31, 2011). The following table shows the approximate interest rate sensitivities of our ﬁ nancial assets and liabilities as at December 31: Products 2011 2010 2011 2010 Impact of a 1% change in interest rate Effect on net earnings Effect on equity 2011 2010 2011 2010 $ 16 (16) $ 30 (30) $ 16 (16) $ 30 (30) 1% increase 1% decrease b) Credit Risk Credit risk is the risk that a third party might fail to fulﬁ ll its performance obligations under the terms of a ﬁ nancial instrument. Credit risk arises from cash and equivalents, trade and other receivables as well as derivative assets. For cash and equivalents and trade and other receivables, credit risk exposure equals the carrying amount on the balance sheet, net of any overdraft positions. To mitigate our inherent 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. We also invest our cash and equivalents in highly rated ﬁ nancial institutions, primarily within the United States and other investment grade countries1. Furthermore, we sell our gold and copper production into the world market and to private customers with strong credit ratings. Historically customer defaults have not had a signiﬁ cant impact on our operating results or ﬁ nancial position. For derivatives with a positive fair value, we are exposed to credit risk equal to the carrying value. When the fair value of a derivative is negative, we assume no credit risk. We mitigate credit risk on derivatives by:  Entering into derivatives with high credit-quality counterparties;  Limiting the amount of net exposure with each counterparty; and  Monitoring the ﬁ nancial condition of counterparties on a regular basis. 10% decrease in gold price 10% decrease in copper price 10% decrease in silver price1 10% decrease in oil price $ (776) $ (650) $ (776) $ (650) (80) (1) 2 (130) 32 (10) (47) 30 1 (84) 20 (8) 1. Represents unrealized gains (losses) attributable to changes in fair value of the silver collars. Foreign Currency Risk The functional and reporting currency for our gold and copper segments and capital projects is the US dollar, while the functional currency of our oil and gas segment is the Canadian dollar. We report our results using the US dollar. The majority of our operating and capital expenditures are denominated and settled in US dollars. The largest single exposure we have is to the Australian dollar. We also have exposure to the Canadian dollar through a combination of Canadian mine operating costs and corporate administration costs; and the Papua New Guinea kina, Peruvian sol, Chilean peso, Argentinean peso and Zambian Kwacha through mine operating costs. Consequently, ﬂ uctuations in the US dollar exchange rate against these currencies increase the volatility of cost of sales, corporate administration costs and overall net earnings, when translated into US dollars. To mitigate these inherent risks and provide greater certainty over our costs, we have foreign currency hedges in place for substantially all of our Australian and Canadian dollar exposures as well as a signiﬁ cant portion of our Chilean peso exposures. Consequently, the residual risk of foreign exchange ﬂ uctuations on our net earnings and ﬁ nancial position is not signiﬁ cant. Interest Rate Risk Interest rate risk refers to the risk that the value of a ﬁ nancial instrument or cash ﬂ ows associated with the instruments will ﬂ uctuate due to changes in market 164 The company’s maximum exposure to credit risk at the reporting date is the carrying value of each of the ﬁ nancial assets disclosed as follows: At December 31 Cash and equivalents Accounts receivable Net derivative assets by counterparty 2011 2010 $ 2,745 $ 3,968 426 370 901 899 $ 4,072 $ 5,237 1. Investment grade countries include Canada, Chile, Australia, and Peru. Investment grade countries are defined as being rated BBB- or higher by S&P. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements c) Liquidity Risk Liquidity risk is the risk of loss from not having access to sufﬁ cient funds to meet both expected and unexpected cash demands. We manage our exposure to liquidity risk through prudent management of our balance sheet, including maintaining sufﬁ cient cash balances and access to undrawn credit facilities. Details of the undrawn credit facility are included in Note 22 of the consolidated ﬁ nancial statements. We also ensure we have access to public debt markets by maintaining a strong credit rating. The following table outlines the expected maturity of our signiﬁ cant ﬁ nancial assets and liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. As the amounts disclosed in the table are the contractual undiscounted cash ﬂ ows, these balances may not agree with the amounts disclosed in the balance sheet. As at December 31, 2011 Cash and equivalents Accounts receivable Other receivables Derivative assets Trade and other payables Debt Derivative liabilities Other liabilities Stock-based payments Total As at December 31, 2010 Cash and cash equivalents Accounts receivable Other receivables Derivative assets Trade and other payables Debt Derivative liabilities Other liabilities Stock-based payments Total Less than 1 year 1 to 3 years 3 to 5 years Over 5 years Total $ 2,745 426 213 504 2,083 196 22 12 27 $ – – 308 369 – 3,257 30 140 21 $ – – 98 56 – 2,820 12 18 – $ – – 124 33 – 7,161 – 32 – $ 2,745 426 743 962 2,083 13,434 64 202 48 $ 6,228 $ 4,125 $ 3,004 $ 7,350 $ 20,707 Less than 1 year 1 to 3 years 3 to 5 years Over 5 years Total $ 3,968 370 228 560 1,511 14 175 35 53 $ – – 218 466 – 756 49 32 19 $ – – 67 80 – 1,620 22 16 – $ – – 110 20 – 4,315 32 28 – $ 3,968 370 623 1,126 1,511 6,705 278 111 72 $ 6,914 $ 1,540 $ 1,805 $ 4,505 $ 14,764 165 Notes to Consolidated Financial Statements d) Capital Risk Management Our objective when managing capital is to provide value for shareholders by maintaining an optimal short-term and long-term capital structure in order to reduce the overall cost of capital while preserving our ability to continue as a going concern. Our capital management objectives are to safeguard our ability to support our operating requirements on an ongoing basis, continue the development and exploration of our mineral properties and support any expansionary plans. Our objectives are also to ensure that we maintain a strong balance sheet and optimize the use of debt and equity to support our business and provide ﬁ nancial ﬂ exibility in order to maximize shareholder value. We deﬁ ne capital as total debt less cash and equivalents and it is managed by management subject to approved policies and limits by the Board of Directors. We are not subject to any signiﬁ cant ﬁ nancial covenants or capital requirements with our lenders or other parties. 26  Other Non-Current Liabilities Deposit on silver sale agreement Settlement obligation to close out gold sales contracts Derivative liabilities (note 22f) Provision for supply contract restructuring costs Provision for offsite remediation Other As at Dec. 31, 2011 As at Dec. 31, 2010 As at Jan. 1, 2010 $ 453 $ 312 $ 196 – 42 25 61 108 – 105 31 66 52 647 19 – – 22 $ 689 $ 566 $ 884 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 inﬂ ation 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. 166 During 2011 we received cash payments of $137.5 million (2010: $137.5 million). Providing that construction continues to progress at Pascua-Lama, we are entitled to receive an additional cash payment totaling $137.5 million in aggregate on the next anniversary date 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. 27  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: substantively enacted rates that will apply when temporary differences reverse; interpretations of relevant tax legislation; estimates of the tax bases of assets and liabilities; and the deductibility of expenditures for income tax purposes. In addition the measurement and recognition of deferred tax assets takes into account tax planning strategies. We recognize the effect of changes in our assessment of these estimates and factors when they occur. Changes in deferred income tax assets and liabilities are allocated between net income, other comprehensive income, and goodwill based on the source of the change. Current income taxes of $15 million and deferred income taxes of $31 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 for which we are able to control the timing of the remittance, and it is probable that there will be no remittance in the foreseeable future. These undistributed earnings amounted to $7,892 million as at December 31, 2011. The majority of the $87 million dividend withholding tax expensed in 2011 related to a one-time dividend. Sources of Deferred Income Tax Assets and Liabilities At December 31 2011 2010 Deferred tax assets Tax loss carry forwards Alternative minimum tax (“AMT”) credits Environmental rehabilitation Property, plant and equipment Post-retirement beneﬁ t obligations Derivative instruments Accrued interest payable Other Deferred tax liabilities Property, plant and equipment Derivative instruments Inventory Other Classiﬁ cation: Non-current assets Non-current liabilities $ 624 $ 165 683 26 16 – 45 41 337 318 469 – 25 – 63 – $ 1,600 $ 1,212 (5,067) (138) (217) – (2,177) (160) (212) (9) $ (3,822) $ (1,346) 409 $ $ (4,231) 625 (1,971) $ (3,822) $ (1,346) The deferred tax asset of $409 million includes $300 million receivable in more than one year. The deferred tax liability of $4,231 million includes $4,207 million due in more than one year. Expiry Dates of Tax Losses and AMT Credits 2012 2013 2014 2015 No expiry date 2016+ Total Non-capital tax losses1 Canada Dominican Republic Barbados Chile Tanzania Zambia Other – 333 $ – $ – $ 4 $ 5 $ 1,513 $ – – – – – – – – 7,281 – – – 2 – – – – – – – – – – – – 494 – – 130 – 115 – 24 – $ 1,522 333 – 7,281 130 115 494 26 $ – $ – $ 4 $ 7 $ 9,288 $ 602 $ 9,901 AMT credits2 $ 165 $ 165 1. Represents the gross amount of tax loss carry forwards translated at closing exchange rates at December 31, 2011. 2. Represents the amounts deductible against future taxes payable in years when taxes payable exceed “minimum tax” as defined by United States tax legislation. The non-capital tax losses include $7,568 million of losses which are not recognized in deferred tax assets. Of these, $4 million expire in 2014, $7 million expire in 2015, $7,317 in 2016 or later, and $240 million have no expiry date. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Recognition of Deferred Tax Assets We recognize deferred tax assets taking into account the effects of local tax law. Deferred tax assets are fully recognized when we conclude that sufﬁ cient positive evidence exists to demonstrate that it is probable 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 income are mainly affected by: market gold, copper and silver prices; forecasted future costs and expenses to produce gold and copper reserves; quantities of proven and probable gold and copper reserves; market interest rates; and foreign currency exchange rates. If these factors or other circumstances change, we record an adjustment to the recognition of deferred assets to reﬂ ect our latest assessment of the amount of deferred tax assets that is probable will be realized. A deferred income tax asset totaling $310 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 recognized on the acquisition in 2006. Projections of various sources of income support the conclusion that the realizability of this deferred tax asset is probable and consequently we have fully recognized this deferred tax asset. Deferred Tax Assets Not Recognized Australia Canada Argentina Barbados Tanzania Other 2011 2010 $ 122 76 35 73 31 23 $ 104 52 61 73 63 39 $ 360 $ 392 Deferred Tax Assets Not Recognized relate to: non-capital loss carry forwards of $170 million (2010: $175 million), capital loss carry forwards with no expiry date of $120 million (2010: $102 million), and other deductible temporary differences with no expiry date of $70 million (2010: $115 million). 167 Notes to Consolidated Financial Statements Source of Changes in Deferred Tax Balances For the years ended December 31 2011 2010 Temporary differences Property, plant and equipment Environmental rehabilitation Tax loss carry forwards AMT credits Derivatives Other $ (2,865) $ (877) 214 34 287 (169) (152) 167 21 (78) (17) (83) (2,512) (1,006) Net currency translation gains/(losses) on deferred tax balances Impact of Australian functional currency election 32 4 19 – We anticipate the amount of income tax related contingent liabilities to decrease within 12 months of the reporting date by approximately $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 income tax related contingent liabilities 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. Intraperiod allocation to: Income (loss) from continuing operations before income taxes Equinox acquisition Barrick Energy acquisitions Cerro Casale acquisition Tusker acquisition OCI Other $ (2,476) $ (987) Tax Years Still Under Examination $ (402) $ (304) – (37) (523) (22) (113) 12 (2,108) (37) – – 69 2 $ (2,476) $ (987) Canada United States Peru Chile Argentina Australia Papua New Guinea Tanzania Zambia 28  Capital Stock 2006–2011 2011 2007–2011 2008–2011 2005–2011 All years open 2004–2011 All years open All years open Income Tax Related Contingent Liabilities At January 1 Additions based on tax positions related to the current year Reductions for tax positions of prior years Settlements At December 311 2011 2010 $ 64 $ 67 1 (1) – – – (3) $ 64 $ 64 1. If reversed, 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. Common Shares Our authorized capital stock includes an unlimited number of common shares (issued 1,000,422,260 common shares); 10,000,000 First preferred shares Series A (issued nil); 10,000,000 Series B (issued nil); and 15,000,000 Second preferred shares Series A (issued nil). Our common shares have no par value. Dividends In 2011, we declared and paid dividends in US dollars totaling $0.51 per share ($509 million) (2010: $0.44 per share, $436 million). 29  Non-Controlling Interests At January 1, 2010 Share of income (loss) Cash contributed Recognition of non-controlling interest At December 31, 2010 Share of income (loss) Cash contributed Decrease in non-controlling interest3 At December 31, 2011 Pueblo Viejo ABG1 Cerro Casale2 Total $ 500 (3) 101 – $ 598 (26) 365 – $ 937 $ 22 51 – 607 $ 680 82 – (10) $ 752 $ – – 13 454 $ 467 (3) 38 – $ 522 48 114 1,061 $ 1,745 53 403 (10) $ 502 $ 2,191 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 4f. 3. Represents dividends received from African Barrick Gold. 168 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 30  Remuneration of Key Management Personnel Key management personnel include the members of the Board of Directors and the Senior leadership team. Compensation for key management personnel (including Directors) was as follows: For the years ended December 31 Salaries and short-term employee beneﬁ ts1 Post-employment beneﬁ ts2 Share-based payments and other3 2011 $ 20 3 28 $ 51 2010 $ 18 3 22 $ 43 1. Includes annual salary as at December 31 and annual short-term incentives/other bonuses earned in the year. 2. Represents company contributions to retirement savings plans. 3. Represents year-end stock option, RSU, and PRSU grants and other compensation. 31  Stock-Based Compensation a) Stock Options Under Barrick’s stock option plan, certain ofﬁ cers 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 exercisable over 10 years, whereas options granted since December 2004 are exercisable over seven years. At December 31, 2011, 6.9 million (2010: 8.4 million) common shares were available for granting options. Stock options when exercised result in an increase to the number of common shares issued by Barrick. Compensation expense for stock options was $15 million in 2011 (2010: $16 million), and is presented as a component of corporate administration and other expense, consistent with the classiﬁ cation of other elements of compensation expense for those employees who had stock options. The recognition of compensation expense for stock options reduced earnings per share for 2011 by $0.01 per share (2010: $0.01 per share). Total intrinsic value relating to options exercised in 2011 was $40 million (2010: $96 million). Employee Stock Option Activity (Number of Shares in Millions) 2011 2010 Shares Average price Shares Average price C$ options At January 1 Exercised Forfeited Cancelled/expired At December 31 US$ options At January 1 Granted Exercised Forfeited Cancelled/expired At December 31 1.4 (0.2) – (0.1) 1.1 7.0 0.5 (1.6) – (0.1) 5.8 $ 26 25 – 23 $ 27 $ 38 50 30 – 34 $ 41 3.3 (1.9) – – 1.4 9.1 0.9 (2.9) (0.1) – 7.0 $ 27 27 – – $ 26 $ 33 55 28 38 – $ 38 169 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) 0.6 0.5 1.1 0.1 0.9 1.4 3.4 5.8 $ 24 30 $ 27 $ 13 26 38 47 $ 41 1 2 1 1 4 3 5 4 $ 12 9 $ 21 $ 2 17 10 (6) $ 23 0.6 0.5 1.1 0.1 0.7 1.1 1.5 3.4 $ 24 30 $ 26 $ 13 26 38 44 $ 38 $ 12 9 $ 21 $ 2 14 8 1 $ 25 1. Based on the closing market share price on December 31, 2011 of C$46.15 and US$45.25. Option Information For the years ended (per share and per option amounts in dollars) Valuation assumptions Expected term (years) Expected volatility2 Expected dividend yield Risk-free interest rate2 Options granted (in millions) Weighted average fair value per option Dec. 31, 2011 Dec. 31, 2010 Jan. 1, 2010 Lattice1,2 5.3 33%–38% 1.22% 0.04%–2.04% Lattice1,2 5.0 33%–60% 1.13% 0.19%–2.88% Lattice1,2 5.0 35%–60% 1.10% 0.16%–3.44% 0.5 $ 14 0.9 $ 16 1.6 $ 13 1. Different assumptions were used for the multiple stock option grants during the year. 2. The volatility and risk-free interest rate assumptions 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. 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, 2011, there was $25 million (2010: $29 million) of total unrecognized compensation cost relating to unvested stock options. We expect to recognize this cost over a weighted average period of 2 years (2010: 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 year period and are settled in cash on the two-and-a-half year anniversary of the grant date. Additional RSUs are credited to reﬂ ect dividends paid on Barrick common shares over the vesting period. 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, 2011, the weighted average remaining contractual life of RSUs was 1.55 years. 170 Compensation expense for RSUs was $30 million in 2011 (2010: $48 million) and is presented as a component of corporate administration and other expense, consistent with the classiﬁ cation of other elements of compensation expense for those employees who had RSUs. Under our DSU plan, Directors must receive a speciﬁ ed portion of their basic annual retainer in the form of DSUs, with the option to elect to receive 100% of such retainer in DSUs. Each DSU has the same value as one Barrick common share. DSUs must be retained until the Director leaves the Board, at which time the cash value of the DSUs will be paid out. Additional DSUs are credited to reﬂ ect dividends paid on Barrick common shares. DSUs are recorded at fair value on the grant date and are adjusted for changes in fair value. The fair value of amounts granted each period together with changes in fair value are expensed. DSU and RSU Activity At January 1, 2010 Settled for cash Forfeited Granted Credits for dividends Change in value At December 31, 2010 Settled for cash Forfeited Granted Credits for dividends Change in value DSUs (thousands) Fair value RSUs ($ millions) (thousands) Fair value ($ millions) 167 (20) – 33 – – 180 (29) – 36 – – $ 6.6 3,150 $ 49.0 (42.8) (0.6) (17.0) – 49.3 1.5 1.3 – 30.9 1.9 (824) (326) 918 29 – $ 9.4 2,947 $ 70.7 (60.8) (1,242) (0.8) (2.3) (69) – 56.8 1.7 1,153 1.2 26 (16.4) – – (1.9) At December 31, 2011 187 $ 8.4 2,815 $ 49.2 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 reﬂ ect 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, 2011, 201 thousand units were outstanding (2010: 335 thousand units). Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 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 2011, Barrick contributed and expensed $0.8 million to this plan (2010: $0.6 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 Ofﬁ cial List) for the three dealing days immediately preceding the date of grant. All options outstanding at the end of the year expire in 2017 and 2018. There were 0.3 million ABG options granted which were exercisable at December 31, 2011. Stock option expense of $1.4 million (2010: $0.6 million) is included as a component of other expense. 32  Post-Retirement Beneﬁ ts a) Description of Plans Defined Contribution Pension Plans Certain employees take part in deﬁ ned contribution employee beneﬁ t plans. We also have a retirement plan for certain ofﬁ cers of the Company, under which we contribute 15% of the ofﬁ cer’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 $58 million in 2011, and $56 million in 2010. Defined Benefit Pension Plans We have qualiﬁ ed deﬁ ned beneﬁ t pension plans that cover certain of our United States and Canadian employees and provide beneﬁ ts based on employees’ years of service. Through the acquisition of Placer Dome, we acquired pension plans in the United States, Canada and Australia. Our policy is to fund the amounts necessary on an actuarial basis to provide enough assets to meet the beneﬁ ts payable to plan members. Independent trustees administer assets of the plans, which are invested mainly in ﬁ xed income and equity securities. 171 Notes to Consolidated Financial Statements 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 beneﬁ t obligations differ at the end of the year. We record actuarial gains and losses in the Statement of Comprehensive Income. b) Post-Retirement Plan Information Actuarial Assumptions Post-Retirement Healthcare Plans We provide post-retirement medical, dental, and life insurance beneﬁ ts to certain employees. As at December 31 Discount rate Beneﬁ t obligation Pension cost Expected return on plan assets Wage increases Pension plans 2011 Other post- retirement beneﬁ ts 2011 Pension plans 2010 Other post- retirement beneﬁ ts 2010 2.80–5.21% 4.60–4.90% 4.50–7.00% n/a 3.80–4.10% 3.50–5.77% n/a 5.00% 3.50–5.30% 4.25–5.95% 4.50–7.00% n/a 4.60–4.90% 5.25–5.50% n/a 5.00% Pension plan assets, which consist primarily of ﬁ xed- income and equity securities, are valued using current market quotations. 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 signiﬁ cant impact on our pension cost and obligation. The discount rate for beneﬁ t obligation and pension cost purposes is the rate at which the pension obligation could be effectively settled. This rate was developed by matching the cash ﬂ ows 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 resulting discount rate from this analysis was rounded to the nearest ﬁ ve basis points. 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 ﬁ xed-income investments reﬂ ect the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inﬂ ation and interest rates are evaluated before long-term capital market assumptions are ﬁ nalized. Wage increases reﬂ ect the best estimate of merit increases to be provided, consistent with assumed inﬂ ation rates. We have assumed a health care cost trend of 8% in 2012 (2010: 8%), decreasing ratably to 4.75% in 2019 and thereafter (2010: 4.75%). 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, 2011 would have had no signiﬁ cant effect on the post-retirement obligation and would have had no signiﬁ cant effect on the beneﬁ t expense for 2011. 172 Expense Recognized in the Income Statement As at December 31 Expected return on plan assets Past service cost Interest cost Plan amendment Total expense Plan Assets/Liabilities As at December 31 Non-current assets Current liabilities1 Non-current liabilities Other comprehensive income (loss)2 Accumulated actuarial gains (losses) recognized in OCI (before taxes) 1. Expected recovery or settlement within 12 months from the reporting date. 2. Amounts represent actuarial (gains) losses. Barrick Financial Report 2011 | Notes to Consolidated Financial Statements Pension plans 2011 Other post- retirement beneﬁ ts 2011 Pension plans 2010 Other post- retirement beneﬁ ts 2010 $ (15) 1 16 1 $ 3 $ – – 1 – $ 1 $ (14) – 17 2 $ 5 $ – – 1 – $ 1 Pension plans 2011 Other post- retirement beneﬁ ts 2011 Pension plans 2010 Other post- retirement beneﬁ ts 2010 $ 2 12 124 (38) $ 100 $ – 2 22 4 $ 28 $ 2 8 103 (2) $ 111 $ (40) $ 4 $ (2) $ – 2 25 – $ 27 $ – Defined Benefit Obligation The movement in the deﬁ ned beneﬁ t obligation over the year is as follows: As at December 31 Balance at January 1 Service cost Interest cost Actuarial (gains) losses Beneﬁ ts paid Foreign currency adjustments Amendments Balance at December 31 Funded status1 Pension plans 2011 Other post- retirement beneﬁ ts 2011 Pension plans 2010 Other post- retirement beneﬁ ts 2010 $ 336 1 16 29 (21) – – $ 361 $ (134) $ 27 – 1 (3) (1) – – $ 24 $ (24) $ 321 – 17 20 (25) 2 1 $ 336 $ (109) $ 29 – 1 (1) (2) – – $ 27 $ (27) 1. Represents the fair value of plan assets less projected benefit obligations. Expected contributions to the pension plans and post-employment beneﬁ t plans for the year ended December 31, 2012 are $16 million and $2 million respectively. 173 Notes to Consolidated Financial Statements Fair Value of Plan Assets The movement in the fair value of plan assets over the year is as follows: Balance at January 1 Expected return on plan assets Actuarial gains and losses Company contributions Beneﬁ ts Paid Balance at December 31 As at December 31, 2011 Composition of plan assets2 Equity securities Fixed income securities Pension plans 2011 Other post- retirement beneﬁ ts 2011 Pension plans 2010 Other post- retirement beneﬁ ts 2010 $ 227 16 (3) 9 (22) $ 227 $ – – – 1 (1) $ – $ 215 25 – 12 (25) $ 227 $ – – – 2 (2) $ – Target1 Actual Actual 53% 47% 100% 52% 48% 100% $ 118 109 $ 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. Expected Future Beneﬁ t Payments For the years ending December 31 2012 2013 2014 2015 2016 2017 – 2021 Pension plans $ 35 26 26 26 26 $ 133 Other post- retirement beneﬁ ts $ 2 2 2 2 2 $ 8 174 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements 33  Litigation And Claims Certain conditions may exist as of the date the ﬁ nancial statements 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. Cortez Hills Complaint On November 12, 2008, the United States Bureau of Land Management (the “BLM”) 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 ﬁ led a lawsuit against the United States seeking to enjoin the majority of the activities comprising the Project on the 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 ﬁ led 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 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 the Plaintiffs were likely to succeed on two of their NEPA claims and ordered that a supplemental EIS be prepared by Barrick that speciﬁ cally 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 ﬁ ne 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 supplemental 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 ﬁ nal supplemental EIS was published on January 14, 2011. On March 15, 2011, the BLM issued its record of decision that approved the supplemental EIS, which had the effect of terminating the tailored injunction, thereby enabling the Cortez mine to revert to its original operating scope. All parties ﬁ led their motions for summary judgment on all remaining issues. On January 3, 2012, the Court issued a decision granting summary judgment in favor of Barrick and the BLM on all remaining issues. Marinduque Complaint Placer Dome Inc. was named the sole defendant in a Complaint ﬁ led 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. indirectly 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 175 Notes to Consolidated Financial Statements 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 1993 Maguila-guila dam breach, the 1996 Boac river tailings spill, and alleged past and continuing damage from acid rock drainage. 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 grounds 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 ﬁ led 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. On March 11, 2011, the Province ﬁ led a motion to reconsider the Court’s order, which the Company opposed on March 28, 2011. The Court denied the motion to reconsider on May 25, 2011. The Province has appealed the Court’s dismissal order to the Nevada Supreme Court. The Company intends to continue to defend the action vigorously. No amounts have been accrued for any potential loss under this complaint. Calancan Bay (Philippines) Complaint In July 2004, a complaint was ﬁ led 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 ﬁ shermen who reside in the communities around Calancan Bay, in northern Marinduque. The complaint alleges injuries to health and economic damages to the local ﬁ sheries 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 ﬁ ling 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 ﬁ led a motion challenging Placer Dome Inc.’s legal capacity to participate in the proceedings in light of its alleged “acquisition” by the Company. Placer Dome Inc. opposed this motion. The motion has been briefed and is currently pending. 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 ﬁ led in November 2008 in the Regional Trial Court of Boac, on the Philippine island of Marinduque, on behalf of two named individuals and purportedly 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 ﬁ le any comment or opposition to the motion. Motions to dismiss the complaint on a variety of grounds have also been ﬁ led in 176 Barrick Financial Report 2011 | Notes to Consolidated Financial Statements the name of Placer Dome Inc. In May 2010, the plaintiffs ﬁ led 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. ﬁ led 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 ﬁ led 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. Writ of Kalikasan On February 25, 2011 a Petition for the Issuance of a Writ of Kalikasan with Prayer for Temporary Environmental Protection Order was ﬁ led in the Supreme Court of the Republic of the Philippines in Eliza M. Hernandez, Mamerto M. Lanete and Godofredo L. Manoy versus Placer Dome Inc. and Barrick Gold Corporation, SC G.R. No. 195482 (the “Petition”). On March 8, 2011, the Supreme Court issued an En Banc Resolution and Writ of Kalikasan and directed service of summons on Placer Dome Inc. and the Company, ordered Placer Dome Inc. and the Company to make a veriﬁ ed return of the Writ with ten (10) days of service and referred the case to the Court of Appeal for hearing. The Petition alleges that Placer Dome Inc. violated the petitioners’ constitutional right to a balanced and healthful ecology as a result of, amongst other things, the discharge of tailings into Calancan Bay, the 1993 Maguila-Guila dam break, the 1996 Boac river tailings spill and failure of Marcopper to properly decommission the Marcopper mine. The petitioners have pleaded that the Company is liable for the alleged actions and omissions of Placer Dome Inc. which was a minority indirect shareholder of Marcopper at all relevant times and is seeking orders requiring the Company to environmentally remediate the areas in and around the mine site that are alleged to have sustained environmental impacts. The petitioners purported to serve the Company on March 25, 2011. On March 31, 2011, the Company ﬁ led an Urgent Motion For Ruling on Jurisdiction with the Supreme Court challenging the constitutionality of the Rules of Procedure in Environmental Cases (the “Environmental Rules”) pursuant to which the Petition was ﬁ led, as well as the jurisdiction of the Court over the Company. As required by the Environmental Rules, by special appearance and without submitting to the jurisdiction of the Court, on April 4, 2011, the Company ﬁ led its Return Ad Cautelam to the Writ seeking the dismissal of the Petition with prejudice. On April 12, 2011, the Supreme Court issued a Resolution requiring the petitioners to submit a Comment on the Company’s Urgent Motion for Ruling on Jurisdiction within ten days of receiving notice of the Resolution. On or around April 27, 2011, the petitioners purported to make discovery requests of the Company and Placer Dome Inc. (collectively, the “Discovery Requests”). On May 4, 2011, the Court of Appeals issued a Resolution: (i) directing the petitioners to submit a Comment on the Company’s Urgent Motion for Ruling on Jurisdiction; and (ii) putting the petitioners’ Discovery Requests in abeyance pending resolution of the Company’s Urgent Motion for Ruling on Jurisdiction. On May 16, 2011, the Company, appearing specially and without submitting to the Supreme Court’s jurisdiction, ﬁ led with the Supreme Court a Clariﬁ catory Manifestation seeking clariﬁ cation as to whether the Court of Appeals or the Supreme Court has jurisdiction over the matter. On June 2, 2011, the petitioners served an Opposition to the Company’s Urgent Motion for Ruling on Jurisdiction. On June 6, 2011, a mail package addressed to Placer Dome Inc. from the Philippines Ofﬁ ce of the Solicitor General purported to serve summons and other materials on Placer Dome Inc. On or about June 6, 2011, the Company, appearing specially and without submitting to the Supreme Court’s jurisdiction, ﬁ led a Manifestation drawing to the Court’s attention the fact that each of the Court of Appeals and the Supreme Court had issued (inconsistent) Resolutions indicating that they would each resolve the Company’s Urgent Motion for Ruling on Jurisdiction. The Company requested that all further proceedings in the case, both before the Supreme Court and the Court of Appeals, be suspended pending issuance of the clariﬁ cation sought in the Company’s Clarifactory Manifestation. By Manifestation dated 177 Notes to Consolidated Financial Statements June 10, 2011, Placer Dome Inc., by special appearance and without submitting itself to the Supreme Court’s jurisdiction: (i) adopted the Company’s Urgent Motion for Ruling on Jurisdiction and reserved the right to ﬁ le a supplement thereto; and (ii) joined the Company in seeking clariﬁ cation as to which court has jurisdiction over this matter. By Manifestation dated June 16, 2011, Placer Dome Inc., by special appearance and without submitting itself to the Supreme Court’s jurisdiction: (i) adopted as its own the Company’s Return Ad Cautelam; and (ii) reserved the right to supplement this Return after the Supreme Court has clariﬁ ed which court has jurisdiction. The Supreme Court issued a Resolution dated June 21, 2011 in which it referred the records of the case to the Court of Appeals for appropriate action on the various pending motions. In June 2011, the Petitioners ﬁ led their Opposition to the Urgent Motion for Ruling on Jurisdiction. On July 1, 2011, Placer Dome Inc., by special appearance and without submitting themselves to the court’s jurisdiction, ﬁ led a Supplement to the pending Urgent Motion for Ruling on Jurisdiction. On July 8, 2011, the Company and Placer Dome Inc., by special appearance and without submitting themselves to the jurisdiction of the Court of Appeals, ﬁ led a Manifestation: (i) indicating their understanding that the Supreme Court Resolution dated June 21, 2011 resolves the issues raised in the Clariﬁ catory Manifestation and effectively rules that the Supreme Court has lost or relinquished subject matter jurisdiction over the case effective June 21, 2011 and has transferred jurisdiction to the Court of Appeals; (ii) manifesting their intention to ﬁ le a Second Supplement to the Urgent Motion for Ruling on Jurisdiction. On July 12, 2011, the Company and Placer Dome Inc. ﬁ led, under special and limited appearance and without submitting themselves to the Court of Appeal’s jurisdiction, a Second Supplement to their Urgent Motion for Ruling on Jurisdiction. On July 14, 2011, the Company and Placer Dome Inc., by special appearance and without submitting themselves to the jurisdiction of the Court, ﬁ led a Manifestation submitting that they are entitled to be heard on the Petitioners’ Urgent Motion dated April 12, 2011 (regarding service related issues) and Manifestation with Reiterated Motion dated May 11, 2011 (also regarding service related issues), neither of which had been served on the Company and Placer Dome Inc. On September 8, 2011, in response to learning that the Supreme Court had granted the Petitioners’ Urgent Motion dated April 12, 2011 and Manifestation with Reiterated Motion dated May 11, 2011 in its Resolution dated May 31, 2011, without the Company or Placer Dome Inc. being aware of such motions or having an opportunity to respond to them, the Company and Placer Dome Inc., by special appearance and without submitting themselves to the jurisdiction of the Court, ﬁ led a Manifestation submitting that the Supreme Court’s May 31, 2011 Resolution is functus ofﬁ cio and moot and, in any event, is void and legally ineffective. On or about August 8, 2011, the Petitioners ﬁ led a Comment (to the Supplement and Second Supplement to the Urgent Motion for Ruling on Jurisdiction). On September 1, 2011, the Company and Placer Dome Inc. Inc., by special appearance and without submitting themselves to the jurisdiction of the Court, ﬁ led a Consolidated Reply to the Petitioners’ June, 2011 Opposition and August 8, 2011 Comment. The Urgent Motion for Ruling on Jurisdiction is now fully briefed. No decision has as yet been issued with respect to either the Urgent Motion for Ruling on Jurisdiction or the Manifestations dated July 14, 2011 and September 8, 2011. On November 23, 2011, the Company’s counsel received a Motion for Intervention, dated November 18, 2011, ﬁ led with the Supreme Court. In this Motion for Intervention, two local governments, or “baranguays” (Baranguay San Antonio and Baranguay Lobo), seek intervenor status in the proceedings with the intention of seeking a dismissal of the proceedings. No decision has been issued with respect to this motion. No amounts have been accrued for any potential loss under this matter. Reko Diq Arbitration On February 15, 2011, Tethyan Copper Company Pakistan (Private) Limited (“TCCP”) (the local operating subsidiary of Tethyan Copper Company (“TCC”)) submitted to the Government of the Province of Balochistan (the “GOB”) an application for a mining lease in respect of the Reko Diq project in Pakistan. Barrick currently indirectly holds 50% of the shares of TCC, with Antofagasta Plc (“Antofagasta”) indirectly holding the other 50%. 178 TCC believes that, under the Chagai Hills Joint Venture Agreement (the “CHEJVA”) between TCC and the GOB, as well as under the 2002 Balochistan Mineral Rules, TCCP was legally entitled to the mining lease subject only to “routine” government requirements. On September 21, 2011, the GOB delivered a notice to TCC advising that it considered TCCP’s application to be incomplete and unsatisfactory and giving TCC 30 days in which to respond. On October 19, 2011, TCCP delivered a response to the GOB’s notice. In addition, TCCP delivered a notice of dispute in accordance with the arbitration agreement between TCC and the GOB. On November 15, 2011, the GOB notiﬁ ed TCCP of the rejection of TCCP’s application for the mining lease. On November 28, 2011, TCCP ﬁ led an administrative appeal under the 2002 Balochistan Mineral Rules, calling on the GOB to perform its obligations. On the same day, TCC ﬁ led two requests for international arbitration: one against the Government of Pakistan with the International Centre for Settlement of Investment Disputes (“ICSID”) asserting breaches of the Bilateral Investment Treaty between Australia (where TCC is incorporated) and Pakistan, and another against the GOB with the International Chamber of Commerce (“ICC”), asserting breaches of the CHEJVA. Constitution of the ICC arbi tra- tion panel is in process. The GOB has ﬁ led jurisdictional objections in that proceeding. The ICSID has registered the arbitration request against Pakistan, but Pakistan has not yet taken any action in that proceeding. Pakistani Constitutional Litigation In November 2006, a Constitutional Petition was ﬁ led in the High Court of Balochistan by three Pakistani citizens against: Barrick, the Governments of Balochistan and Pakistan, the Balochistan Development Authority (“BDA”), TCCP, Antofagasta, Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”). Barrick Financial Report 2011 | 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. 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 ﬁ led 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 ﬁ led against TCC or its related parties. The related petitions primarily related to whether it would be in the public interest for TCCP to receive a mining lease. On May 25, 2011, the Supreme Court ruled, among other things, that the GOB should proceed to expeditiously decide TCCP’s application for the grant of a mining lease, transparently and fairly in accordance with laws and applicable rules. The Supreme Court also ruled that the petitions before the Court would remain pending. On November 15, 2011, the GOB notiﬁ ed TCCP of the rejection of TCCP’s application for the mining lease. As noted above, on November 28, 2011, TCC ﬁ led the requests for international arbitration with ICSID and the ICC. Subsequently, the Supreme Court has resumed hearing various petitions relating to TCC and the Reko Diq project, including applications seeking an order staying the ICSID and ICC arbitrations. On February 7, 2012, the Supreme Court issued an order directing the GOB and Pakistan to request to the ICC and ICSID to refrain from taking further steps in respect of the arbitration proceedings and to extend the deadline for nomination of an arbitrator, pending disposition of the constitutional petitions by the Supreme Court. TCC continues to pursue its rights under international arbitration, and Barrick, and TCCP continue to vigorously defend the above actions. No amounts have been accrued for any potential loss under these complaints. 179 Notes to Consolidated Financial Statements Pueblo Viejo In April 2010, Pueblo Viejo Dominicana Corporation (“PVDC”) received a copy of an action ﬁ led 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 trafﬁ cking, and bribery of government ofﬁ cials. 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. No amounts have been accrued for any potential loss under this matter. 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 identiﬁ es signiﬁ cant 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 were removed to the National Supreme Court of Justice of Argentina to determine the constitutionality of the legislation. The National Supreme Court of Justice of Argentina issued a decision determining that this case falls within its jurisdiction. The National State has ﬁ led a remedy for revocation of the decision of the Federal Court in the Province of San Juan to grant injunctions suspending the application of the federal law in the Province of San Juan. BEASA and MAGSA answered this remedy on June 29, 2011. No amounts have been accrued for any potential loss under this matter. 180 Barrick Financial Report 2011 | 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 182 to 188. The Company has carefully prepared and veriﬁ ed the mineral reserve and mineral resource ﬁ gures and believes that its method of estimating mineral reserves has been veriﬁ ed by mining experience. These ﬁ gures are estimates, however, and no assurance can be given that the indicated quantities of metal will be produced. Metal price ﬂ uctuations 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 proﬁ tability in any particular accounting period. Deﬁ nitions 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 speciﬁ c geological evidence and knowledge. Mineral resources are sub- divided, in order of increasing geological conﬁ dence, 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 veriﬁ ed, 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 conﬁ dence sufﬁ cient 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 characteristics are so well established that they can be estimated with conﬁ dence sufﬁ cient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable explo ration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to conﬁ rm 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 justiﬁ ed. 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 conﬁ dence 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 justiﬁ ed. 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 justiﬁ ed. 181 Mineral Reserves and Mineral Resources Summary Gold Mineral Reserves and Mineral Resources1,2,3 For the years ended December 31 2011 2010 Tons (000s) Grade Ounces (000s) (oz/ton) Tons (000s) Grade (oz/ton) Ounces (000s) 97,325 4,612 11,895 6,077 109,220 10,689 188,729 120,194 306,879 54,391 – 11,221 307,162 123,191 11,986 62,394 82,688 83,420 28,237 21,482 16,778 107,626 16,620 4,735 77,285 10,977 8,932 716 – 298,358 990,088 245,990 424,117 269,930 481,153 44,029 214,418 35,164 67,865 10,243 0.096 9,342 0.032 147 0.255 3,035 1,828 0.301 0.113 12,377 0.185 1,975 0.080 15,173 6,597 0.055 0.047 14,488 3,757 0.069 – – 1,273 0.113 5,102 0.017 1,623 0.013 5,294 0.442 7,641 0.122 1,411 0.017 1,338 0.016 1,398 0.050 828 0.039 0.058 978 2,245 0.021 1,139 0.069 410 0.087 1,194 0.015 135 0.012 487 0.055 29 0.041 – – 0.065 19,503 0.018 17,434 0.010 2,494 0.042 17,861 0.025 6,734 0.022 10,558 464 0.011 6,151 0.029 505 0.014 771 0.011 132 0.013 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 0.101 9,656 0.037 173 0.272 2,958 2,020 0.298 0.118 12,614 0.191 2,193 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 0.012 2,376 0.042 17,845 0.027 6,260 0.023 11,291 600 0.012 6,618 0.031 756 0.019 791 0.013 273 0.015 Based on attributable ounces North America Goldstrike Open Pit Goldstrike Underground Goldstrike Property Total Pueblo Viejo (60.00%) Cortez Red Hill – Goldrush Bald Mountain Turquoise Ridge (75.00%) Round Mountain (50.00%) South Arturo (60.00%) Ruby Hill Hemlo Marigold Mine (33.33%) Golden Sunlight Donlin Gold (50.00%) South America Cerro Casale (75.00%) 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) (proven and probable) (mineral resource) 1. Resources which are not reserves do not have demonstrated economic viability. 2. See accompanying footnote #1. 3. Measured plus indicated resources. 182 Barrick Financial Report 2011 | Mineral Reserves and Mineral Resources Summary Gold Mineral Reserves and Mineral Resources1,2,3 For the years ended December 31 2011 2010 Based on attributable ounces Australia Pacific Porgera (95.00%) Kalgoorlie (50.00%) Cowal Plutonic Kanowna Belle Darlot Granny Smith Lawlers Reko Diq (37.50%)4 Africa Bulyanhulu (73.90%) North Mara (73.90%) Buzwagi (73.90%) Nyanzaga (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. Measured plus indicated resources. 4. See accompanying footnote #2. Tons (000s) Grade Ounces (000s) (oz/ton) Tons (000s) Grade (oz/ton) Ounces (000s) 75,372 27,369 108,843 23,211 65,280 37,191 2,987 2,451 5,861 6,326 2,805 1,345 4,034 2,507 1,669 977 – 1,232,986 22,963 14,472 28,997 13,025 50,036 28,910 – 60,186 135 500 0.084 0.071 0.040 0.033 0.034 0.032 0.135 0.275 0.142 0.124 0.127 0.192 0.157 0.166 0.140 0.289 – 0.008 0.342 0.154 0.089 0.082 0.043 0.033 – 0.043 0.348 0.160 6,366 1,933 4,394 766 2,209 1,187 402 675 832 786 357 258 635 417 234 282 – 9,506 7,857 2,230 2,575 1,064 2,154 947 – 2,572 47 80 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 67 173 37 0.306 0.351 53 13 210 163 0.400 0.307 84 50 3,701,312 2,966,243 0.038 139,931 0.027 80,399 3,557,470 2,812,282 0.039 139,786 0.027 76,319 183 Mineral Reserves and Mineral Resources Gold Mineral Reserves1 As at December 31, 2011 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%) Pascua-Lama Veladero Lagunas Norte Pierina Australia Pacific Porgera (95.00%) Kalgoorlie (50.00%) Cowal Plutonic Kanowna Belle Darlot Granny Smith Lawlers Henty Africa 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) 58,885 4,071 62,956 23,925 30,714 86,914 5,000 27,521 – 965 3,661 13,232 2,689 0.092 0.330 0.108 0.098 0.070 0.019 0.444 0.020 – 0.060 0.102 0.017 0.057 5,427 1,344 6,771 2,342 2,153 1,614 2,222 562 – 58 375 221 153 38,440 7,824 46,264 164,804 276,165 220,248 6,986 55,167 28,237 15,813 12,959 64,053 6,243 3,915 0.102 1,691 0.216 5,606 0.121 0.078 12,831 0.045 12,335 3,488 0.016 3,072 0.440 849 0.015 1,398 0.050 920 0.058 764 0.059 973 0.015 334 0.053 97,325 11,895 109,220 188,729 306,879 307,162 11,986 82,688 28,237 16,778 16,620 77,285 8,932 9,342 0.096 0.255 3,035 0.113 12,377 0.080 15,173 0.047 14,488 5,102 0.017 5,294 0.442 1,411 0.017 1,398 0.050 978 0.058 1,139 0.069 1,194 0.015 487 0.055 189,900 43,514 36,931 17,132 6,813 0.019 0.050 0.022 0.036 0.015 3,586 2,167 828 625 103 800,188 380,603 444,222 197,286 61,052 0.017 13,848 0.041 15,694 9,730 0.022 5,526 0.028 668 0.011 990,088 424,117 481,153 214,418 67,865 0.018 17,434 0.042 17,861 0.022 10,558 6,151 0.029 771 0.011 18,267 67,193 14,774 1,015 3,403 1,627 1,060 859 – 0.117 0.030 0.024 0.025 0.146 0.126 0.158 0.157 – 2,138 2,047 353 25 497 205 168 135 – 57,105 41,650 50,506 1,972 2,458 1,178 2,974 810 – 0.074 0.056 0.037 0.191 0.136 0.129 0.157 0.122 – 4,228 2,347 1,856 377 335 152 467 99 – 75,372 108,843 65,280 2,987 5,861 2,805 4,034 1,669 – 0.084 0.040 0.034 0.135 0.142 0.127 0.157 0.140 – 6,366 4,394 2,209 402 832 357 635 234 – 1,002 9,367 4,039 36 0.314 0.081 0.032 0.111 315 761 129 4 21,961 19,630 45,997 99 0.343 0.092 0.044 0.434 7,542 1,814 2,025 43 22,963 28,997 50,036 135 0.342 0.089 0.043 0.348 7,857 2,575 2,154 47 131 0.344 45 42 0.190 8 173 0.306 53 674,640 0.045 30,602 3,026,672 0.036 109,329 3,701,312 0.038 139,931 Copper Mineral Reserves1 As at December 31, 2011 Proven Probable Total Tons (000s) Contained lbs (millions) Grade (%) Tons (000s) Contained lbs (millions) Grade (%) Tons (000s) Contained lbs (millions) Grade (%) 425,791 147,415 16,500 0.528 0.587 2.206 4,496 1,731 728 211,304 322,535 10,315 0.498 0.493 2.201 2,106 3,178 454 637,095 469,950 26,815 0.518 0.522 2.204 6,602 4,909 1,182 589,706 0.590 6,955 544,154 0.527 5,738 1,133,860 0.560 12,693 Based on attributable pounds Zaldívar Lumwana Jabal Sayid Total 1. See accompanying footnote #1. 184 Barrick Financial Report 2011 | Mineral Reserves and Mineral Resources Gold Mineral Resources1,2 As at December 31, 2011 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 Red Hill – Goldrush Bald Mountain Turquoise Ridge (75.00%) Round Mountain (50.00%) South Arturo (60.00%) Ruby Hill Hemlo Marigold Mine (33.33%) Golden Sunlight Donlin Gold (50.00%) South America Cerro Casale (75.00%) 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%)3 Africa Bulyanhulu (73.90%) North Mara (73.90%) Buzwagi (73.90%) Nyanzaga (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 Grade (oz/ton) (000s) Contained ounces (000s) 886 985 1,871 2,296 3,159 – 34,428 7,995 17,795 – 1,331 2,000 683 121 4,261 0.032 0.341 0.195 0.062 0.038 – 0.014 0.128 0.022 – 0.024 0.110 0.012 0.041 0.073 28 336 364 143 121 – 480 1,024 400 – 32 220 8 5 313 3,726 5,092 8,818 117,898 51,232 11,221 88,763 54,399 65,625 21,482 106,295 2,735 10,294 595 294,097 119 0.032 1,492 0.293 1,611 0.183 6,454 0.055 3,636 0.071 1,273 0.113 1,143 0.013 6,617 0.122 938 0.014 828 0.039 2,213 0.021 190 0.069 127 0.012 0.040 24 0.065 19,190 147 1,828 1,975 6,597 3,757 1,273 1,623 7,641 1,338 828 2,245 410 135 29 19,503 564 0.055 2,698 0.298 3,262 0.256 14,970 0.047 21,881 0.074 41,290 0.139 72,491 0.011 25,494 0.130 38,847 0.012 10,458 0.023 5,779 0.034 2,937 0.127 3,674 0.013 1,605 0.036 50,825 0.059 19,356 23,420 3,800 884 581 0.008 0.031 0.009 0.014 0.012 164 722 36 12 7 226,634 246,510 40,229 34,280 9,662 0.010 0.024 0.011 0.014 0.013 2,330 6,012 428 493 125 2,494 6,734 464 505 132 413,013 0.011 35,590 0.034 74,600 0.008 7,920 0.014 9,474 0.006 9,065 6,054 – 240 2,776 766 403 – 718,521 0.080 0.035 – 0.117 0.128 0.187 0.159 – 0.009 724 212 – 28 354 143 64 – 6,466 18,304 17,157 37,191 2,211 3,550 579 2,104 977 514,465 0.066 0.032 0.032 0.293 0.122 0.199 0.168 0.289 0.006 1,209 554 1,187 647 432 115 353 282 3,040 1,933 766 1,187 675 786 258 417 282 22,671 0.130 348 0.078 12,418 0.030 3,975 0.298 5,631 0.104 1,043 0.215 5,316 0.237 472 0.316 9,506 1,192,569 0.005 – 2,222 110 – – – 0.061 0.036 – – – 136 4 – – 14,472 10,803 28,800 60,186 500 0.154 0.086 0.033 0.043 0.160 2,230 928 943 2,572 80 2,230 1,064 947 2,572 80 6,776 0.350 1,269 0.075 8,390 0.034 7,381 0.060 95 0.168 31 805 836 701 1,615 5,748 787 3,303 464 236 196 374 48 57 2,997 4,513 1,215 573 109 61 2,936 27 374 1,183 588 224 1,261 149 6,399 2,372 95 283 442 16 34 0.353 12 3 0.333 1 13 4 0.250 1 864,172 0.014 12,194 2,102,071 0.032 68,205 80,399 2,102,468 0.019 40,183 Copper Mineral Resources1,2 As at December 31, 2011 Measured (M) Indicated (I) (M) + (I) Inferred Based on attributable pounds Zaldívar Lumwana Jabal Sayid Reko Diq (37.50%)3 Total Tons (000s) Contained lbs (millions) Grade (%) Tons (000s) Contained lbs (millions) Grade (%) Contained lbs (millions) 78,576 4,698 1,984 718,521 0.433 0.713 1.890 0.536 680 67 75 7,697 59,006 162,737 4,212 514,465 0.462 0.619 2.077 0.392 545 2,015 175 4,034 1,225 2,082 250 11,731 Tons Grade (%) (000s) Contained lbs (millions) 40,439 0.543 439 882,479 0.604 10,660 374 8,393 19,436 0.962 1,192,569 0.352 803,779 0.530 8,519 740,420 0.457 6,769 15,288 2,134,923 0.465 19,866 1. Resources which are not reserves do not have demonstrated economic viability. 2. See accompanying footnote #1. 3. See accompanying footnote #2. 185 Mineral Reserves and Mineral Resources Contained Silver Within Reported Gold Reserves1 For the year ended December 31, 2011 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%) Pascua-Lama Lagunas Norte Veladero Pierina Africa Bulyanhulu (73.90%) Tons Grade (oz/ton) (000s) Contained ounces (000s) Tons Grade (oz/ton) (000s) Contained ounces (000s) Tons Grade (oz/ton) (000s) Contained Process ounces recovery % (000s) 23,925 0.76 18,144 164,804 0.47 77,956 188,729 0.51 96,100 87.1% 189,900 43,514 17,132 26,689 6,813 0.06 1.73 0.12 0.38 0.58 10,565 75,454 2,021 10,259 3,945 800,188 380,603 197,286 444,222 61,052 0.04 33,451 1.58 600,795 0.11 21,884 0.42 187,436 19,319 0.32 990,088 424,117 214,418 470,911 67,865 0.04 44,016 69.0% 1.59 676,249 81.6% 0.11 23,905 21.6% 0.42 197,695 6.2% 23,264 37.0% 0.34 1,002 0.21 207 21,961 0.28 6,079 22,963 0.27 6,286 75.0% Total 308,975 0.39 120,595 2,070,116 0.46 946,920 2,379,091 0.45 1,067,515 65.3% 1. Silver is accounted for as a by-product credit against reported or projected gold production costs. Contained Copper Within Reported Gold Reserves1 For the year ended December 31, 2011 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%) Pascua-Lama Africa Bulyanhulu (73.90%) Buzwagi (73.90%) Tons Grade (%) (000s) Contained lbs (millions) Tons Grade (%) (000s) Contained lbs (millions) Tons Grade (%) (000s) Contained lbs (millions) Process recovery % 23,925 0.080 38.3 164,804 0.096 316.0 188,729 0.094 354.3 79.5% 189,900 0.190 43,514 0.096 721.3 83.7 800,188 0.226 380,603 0.075 3,613.3 574.4 990,088 0.219 4,334.6 658.1 424,117 0.078 87.4% 63.0% 1,002 0.369 4,039 0.068 7.4 5.5 21,961 0.683 45,997 0.118 299.9 108.3 22,963 0.669 50,036 0.114 307.3 113.8 95.0% 70.0% Total 262,380 0.163 856.2 1,413,553 0.174 4,911.9 1,675,933 0.172 5,768.1 84.2% 1. Copper is accounted for as a by-product credit against reported or projected gold production costs. 186 Barrick Financial Report 2011 | Mineral Reserves and Mineral Resources Contained Silver Within Reported Gold Resources1 For the year ended December 31, 2011 Measured (M) Indicated (I) (M) + (I) Inferred Based on attributable ounces North America Pueblo Viejo (60.00%) South America Cerro Casale (75.00%) Pascua-Lama Lagunas Norte Veladero Pierina Africa 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) 2,296 0.37 839 117,898 0.30 35,723 36,562 14,970 0.37 5,572 19,356 23,420 884 3,800 581 0.04 720 226,634 0.71 16,708 246,510 34,280 50 0.06 40,229 614 0.16 9,662 128 0.22 0.03 7,257 0.68 168,459 0.05 1,778 0.35 14,049 1,820 0.19 7,977 413,013 185,167 35,590 7,920 14,663 74,600 9,474 1,828 1,948 0.03 12,594 0.45 16,055 0.05 397 0.33 24,523 0.31 2,928 – – – 14,472 0.13 1,829 1,829 6,529 0.30 1,949 Total 50,337 0.38 19,059 689,685 0.33 230,915 249,974 562,096 0.11 64,018 1. Resources which are not reserves do not have demonstrated economic viability. Contained Copper Within Reported Gold Resources1 For the year ended December 31, 2011 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%) Pascua-Lama Africa Buzwagi (73.90%) Tons (000s) Contained lbs (millions) Grade (%) Tons (000s) Contained lbs (millions) Grade (%) Contained lbs (millions) Tons (000s) Grade Contained lbs (%) (millions) 2,296 0.12 5.5 117,898 0.084 198.3 203.8 14,970 0.077 23.0 19,356 23,420 0.126 0.061 48.7 28.7 226,634 246,510 0.161 0.053 730.5 261.0 779.2 413,013 35,590 289.7 0.191 1,580.1 33.7 0.047 110 0.09 0.2 28,800 0.098 56.7 56.9 8,390 0.089 14.9 Total 45,182 0.092 83.1 619,842 0.101 1,246.5 1,329.6 471,963 0.175 1,651.7 1. Resources which are not reserves do not have demonstrated economic viability. Nickel Mineral Resources1 For the year ended December 31, 2011 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) Grade Contained lbs (%) (millions) 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. 187 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, 2011 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, approximately 2.15 million ounces of reserves at Pueblo Viejo (Barrick’s 60% interest) 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 $US 1,200 ($Aus.1,330) per ounce, a silver price of $US 22.00 per ounce, a copper price of $US 2.75 per pound and exchange rates of 1.0 $Can/$US and 0.90 $US/$Aus. Reserves at Plutonic have been calculated using an assumed long-term average gold price of $US 1,250. 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, 2011 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. In November 2011, the Government of the Province of Balochistan rejected the application for a mining lease in respect of the Reko Diq project. Tethyan Copper Company (“TCC”) has commenced international arbitration proceedings asserting, among other things, that its local operating subsidiary is legally entitled to the mining lease subject only to “routine” government requirements. For additional information regarding this matter, see pages 44 and 178 to 179 of this Annual Report 2011. 188 Barrick Financial Report 2011 | 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 gover- nance 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 signiﬁ cant 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 Committees of the Board Audit Committee (S.J. Shapiro, D.J. Carty, P.A. Crossgrove, R.M. Franklin) Reviews the Company’s ﬁ nancial statements and management’s discussion and analysis of ﬁ nancial and operating results, and assists the Board in its oversight of the integrity of Barrick’s ﬁ nancial reporting process and the quality, transparency, and integrity of Barrick’s ﬁ nancial statements and other relevant public disclosure, the Company’s compliance with legal and regulatory requirements relating to ﬁ nancial reporting, the external auditors’ qualiﬁ cations and independence, and the performance of the internal and external auditors. Compensation Committee (D.J. Carty, G. Cisneros, 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. responsibilities. Barrick has also adopted a Code of Business Conduct and Ethics that is applicable to all directors, ofﬁ cers 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. Corporate Governance and Nominating Committee (R.M. Franklin, H.L. Beck, D. Moyo) Assists the Board in establishing Barrick’s corporate governance policies and practices. The Committee also identiﬁ es individuals qualiﬁ ed to become members of the Board and reviews the composition and functioning of the Board and its Committees. Corporate Responsibility Committee (P.A. Crossgrove, C.W.D. Birchall, J.B. Harvey, D. Moyo, A.W. Regent) Formerly called the Environmental, Health and Safety Committee. Reviews corporate social responsi bility, environmental and health and safety policies and programs, oversees the Company’s corporate social responsibility, environmental and health and safety 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. 189 Shareholder Information Shareholder Information Common shares are traded on two stock exchanges New York Toronto Ticker Symbol ABX Number of Registered Shareholders at December 31, 2011 18,042 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) – North America Dow Jones Sustainability Index (DJSI) – World NASDAQ OMX CRD Global Sustainability Index Common Shares (millions) Outstanding at December 31, 2011 Weighted average 2011 Basic Fully diluted 1,000 999 1,001 The common 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, 2011 NYSE TSX 2011 2010 1,064 781 810 870 US$45.25 C$46.15 2011 Dividend per Share US$0.51 Share Trading Information New York Stock Exchange Quarter First Second Third Fourth Toronto Stock Exchange Quarter First Second Third Fourth 190 Share Volume (millions) High Low 2011 2010 2011 2010 2011 2010 198 200 226 440 1,064 227 228 180 175 810 Share Volume (millions) US$54.26 55.74 55.94 53.26 US$42.63 47.25 47.55 55.65 US$45.60 42.50 44.25 42.89 US$33.65 38.15 39.68 44.87 High Low 2011 2010 2011 2010 2011 2010 187 190 216 188 781 233 255 198 184 870 C$52.85 53.11 55.36 54.05 C$44.00 48.89 50.65 55.99 C$45.57 42.06 43.25 44.09 C$36.01 38.86 41.07 46.06 Dividend Policy The Board of Directors reviews the dividend policy quarterly based on the cash requirements of the Company’s operating assets, exploration and develop- ment activities, as well as potential acquisitions, combined with the current and projected ﬁ nancial position of the Company. Dividend Payments In 2011, the Company paid a cash dividend of $0.51 per share – $0.12 on March 15, $0.12 on June 15, $0.12 on September 15 and $0.15 on December 15. A cash dividend of $0.44 per share was paid in 2010 – $0.20 on June 15, $0.12 on September 15 and $0.12 on December 15. Form 40-F The Company’s Annual Report on Form 40-F is ﬁ led with the United States Securities and Exchange Commission. This report is available at www.barrick.com and will be made available to shareholders, without charge, upon written request to the Secretary of the Company at the Corporate Ofﬁ ce. Other Language Reports French and Spanish versions of this annual report are available from Investor Relations at the Corporate Ofﬁ ce and at www.barrick.com. Shareholder Contacts Shareholders are welcome to contact the Investor Relations Department for general information on the Company: Gregory S. Panagos Senior Vice President, Investor Relations and Communications Telephone: 416-309-2943 Email: gpanagos@barrick.com Amy Schwalm Senior Director, Investor Relations Telephone: 416-307-7422 Email: aschwalm@barrick.com Susan Muir Senior Director, Investor Relations Telephone: 416-307-5107 Email: s.muir@barrick.com Barrick Financial Report 2011 | Shareholder Information 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 c/o Canadian Stock Transfer Company Inc., as administrative agent P.O. Box 700, Postal Station B Montreal, Quebec, Canada H3B 3K3 or American Stock Transfer & Trust Company, LLC 6201 – 15th Avenue Brooklyn, NY, USA 11219 Tel: 416-682-3860 Fax: 514-985-8843 Toll-free throughout North America Tel: 1-800-387-0825 Fax: 1-888-249-6189 Email: inquiries@canstockta.com Website: www.canstockta.com Auditors PricewaterhouseCoopers LLP Toronto, Canada Annual Meeting The Annual Meeting of Shareholders will be held on Wednesday, May 2, 2012 at 10:00 a.m. (Toronto time) in the Metro Toronto Convention Centre, John Bassett Theatre, 255 Front Street West, Toronto, Ontario. 191 Board of Directors and Senior Ofﬁ cers Board of Directors and Senior Ofﬁ cers 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 Ofﬁ cers Peter Munk Chairman C. William D. Birchall Vice Chairman Aaron W. Regent President and Chief Executive Ofﬁcer Peter A. Crossgrove, O.C. Toronto, Ontario Executive Chairman, Excellon Resources Inc. Robert M. Franklin Toronto, Ontario President, Signalta Capital Corporation J. Brett Harvey Canonsburg, Pennsylvania Chairman and Chief Executive Ofﬁcer, CONSOL Energy Inc. Dambisa Moyo London, United Kingdom International Economist and Commentator The Right Honourable Brian Mulroney, P.C. Montreal, Quebec Senior Advisor, Global Affairs, Barrick Gold Corporation Chairman, Barrick International Advisory Board Senior Partner, Norton Rose Canada LLP 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 Co-Chairman, Bumi plc Chairman, JNR Limited Steven J. Shapiro Houston, Texas Corporate Director John L. Thornton Palm Beach, Florida Professor and Director of the Global Leadership Program, Tsinghua University School of Economics and Management Kelvin P.M. Dushnisky Executive Vice President, Corporate and Legal Affairs Robert L. Krcmarov Senior Vice President, Global Exploration Donald D. Ritz Senior Vice President, Safety and Leadership Peter J. Kinver Executive Vice President and Chief Operating Ofﬁcer Richard G. McCreary Senior Vice President, Corporate Development Sybil E. Veenman Senior Vice President and General Counsel Jamie C. Sokalsky Executive Vice President and Chief Financial Ofﬁcer Ivan J. Mullany Senior Vice President, Capital Projects 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. Chairman The Right Honourable Brian Mulroney Former Prime Minister of Canada Members His Excellency José María Aznar Spain The Honorable John Ellis Bush United States Gustavo A. Cisneros Dominican Republic Secretary William S. Cohen United States Vernon E. Jordan, Jr. United States Andrónico Luksic Chile Lord Charles Powell of Bayswater KCMG United Kingdom 192 Cautionary Statement on Forward-Looking Information Certain information contained in this Annual Report 2011, including any information as to our strategy, projects, plans or future ﬁ nancial 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 signiﬁ cant 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 ﬁ nancial 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 ﬂ ows and the values of assets and liabilities based on projected future cash ﬂ ows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity); ﬂ uctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; the ability of the Company to complete or successfully integrate an announced acquisition proposal; legislative, political or economic developments in the jurisdictions in which the Company carries on business, including Zambia and Saudi Arabia; operating or technical difﬁ culties 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 organization of our previously held African gold operations under a separate listed entity; 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 ﬁ le with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. 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. r e h p o t s i r h C r e t e P y h p a r g o t o h P n o i t a c o L / a d a n a C n o i t a r o p r o C l l i r r e M / . c n I e l b a e v o M / n g i s e D | d n a r B e v O Barrick Gold Corporation Corporate Ofﬁ ce: Brookﬁ eld 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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