Abacus Global Management, Inc. Annual Report 2011

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FY2011 Annual Report · Abacus Global Management, Inc.

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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

1,810

2,899

3,370

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

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

140

819

935

521

625

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

300

200

GOLD RESERVES AND
RESOURCES3

COPPER RESERVES AND
RESOURCES3

TOTAL CASH MARGINS1

NET CASH MARGINS1

(US dollars per ounce)

(Ounces millions)

(Pounds billions)

Inferred Resources

M&I Resources

2P Reserves

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

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

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%

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

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

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

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

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.

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.

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.

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.

2004

2005

2006

2007

2008

2010

2011

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.

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.

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

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.

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

-$500

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.

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.

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.

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.

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.

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

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

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.

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
9
9
1

DIVESTED

118

TOTAL
MINED

110

TOTAL
ACQUIRED

148

TOTAL
EXPLORATION

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.

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

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.

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

Operational Excellence

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

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.

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.

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

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%

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.

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

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

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.

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

International Financial Reporting Standards (IFRS)

IFRS Critical Accounting Policies and Estimates

94 Non-GAAP Financial Performance Measures

102 Glossary of Technical Terms

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.

 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.

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.

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)

Barrick

Goldcorp

Newmont Newcrest

Anglo
Gold
Ashanti

Kinross

Gold
Fields

2011 GOLD PRODUCTION1
(millions of ounces)

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.

Management’s Discussion and Analysis

PROVEN AND PROBABLE GOLD RESERVES1
(millions of ounces)

160

140

120

100

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.

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

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.

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

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.

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.

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.

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).

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”.

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.

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.

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.

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

$ 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.

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.

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%

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

139.9

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.

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.

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

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

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)

0
07

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.

600

400

200

-200

-400

-600

440

(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

74.2

73.9

73.7

A
S
U

y
n
a
m
r
e
G

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

a
d
n

a
i
s
s
u
R

1.8

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.

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

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%

% of
expected
operating
cost
exposure
hedged

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

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

$ 96

46%

41%

24%

40%

2007

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.

$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

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

4,666

2,644

600

3,517

t
e
n

d
e
t
s
u
d
A

0
1
0
2
s
g
n
n
r
a
e

e
c
i
r
p
d
e
z
i
l

a
e
r

d
o
G

e
s
n
e
p
x
e

x
a
t

e
m
o
c
n

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

s
e
a
s
d
o
G

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

d
n
a

n
o
i
t
a
r
o
p
x
E

r
e
h
t
O

t
e
n
d
e
t
s
u
d
A

1
1
0
2

s
g
n
n
r
a
e

2,644

5,241

1,236

545

5,680

327

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

e
c
i
r
p

d
e
z
i
l

a
e
r
d
o
G

d
a
p

s
e
x
a
t

e
m
o
c
n

s
t
s
o
c
h
s
a
c

d
n
a

e
m
u
o
v

s
e
a
s
d
o
G

y
r
o
t
n
e
v
n

e
g
n
a
h
C

g
n
k
r
o
w
n

r
e
h
t
o
d
n
a

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

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.

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

$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

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.

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

Tons Processed

250,000

200,000

150,000

100,000

50,000

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.

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

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.

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

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

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.

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

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

(165)
(155)

1,191
521
83
–

(18)
(15)

724
592
50
19

(82%)

72%

142

817%
933%

(109)
(106)

65%
(12%)
66%
(100%)

202
433
–
–
52

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.

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.

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

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.

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.

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.

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)

176

–

656

(partner’s share), net of cash

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

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.

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.

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

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

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.

Management’s Discussion and Analysis

Review of Quarterly Results

Quarterly Information1

($ millions, except where indicated)

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,

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.

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)

$ 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

(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
–

(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

522

1,669

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

1. Certain US GAAP figures have been reclassified to conform to our IFRS financial statement presentation.

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

$ 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

(11)

485

(82)

(2)
22

476

(188)
2
(104)
(8)
(80)

(378)
(8)
17
69

533

–
(12)

521
(191)

330
3

333

–

(6)

–
(8)

5,162
156
229
455
(73)

5,929
116
(24)
69

5,233

14
(180)

5,067
(1,561)

3,506
124

3,630

(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.

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)

(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

$ (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.

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

95
(159)

$ 272
235
(74)
4

(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)

$ (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.

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.

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

36
(56)
(14)
–

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)

$ (80)

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.

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

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.

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.

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,

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

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.

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.

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)

259
(85)
(95)
15
–
–
30

959
–

153
(6)
21
–
(18)
32
(61)

961
–

(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.

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

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.

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

$ 156
97

$ 114
47

$ 69 $ 6,316 $ 5,162 $ 4,787
980

1,419

1,212

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.

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.

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)

(208)

$ 2,317
1,996
1,096
429

697

(15)

(46)

$ 1,259
1,245
597
236

646

(106)

(6,449)

$ 804
657
450
120

183

(103)

(22)

(91)

$ 627
466
331
141

230

(7)

(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.

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)

(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)

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
–
–

–
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.

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 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

17
18

128

132

136

138

139

140

141

143

144

145

146

147
148

150

151

160

162

163

166

168

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

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)

OCI – As reported under IFRS

(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

$ 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

–

$ 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)

$ 22

$ 16

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

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,

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.

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

$ 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

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)

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

$ 828
(1)
12
–
(839)

–
–
–

–

$ 67
(10)
22
–
–

$ 79
(2)
22

$ 99

$ 2
(6)
5
–
–

$ 1
–
10

$ 1,124
(24)
51
84
(839)

$ 396
8
36

$ 11

$ 440

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

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
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
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

–
–

179

–
–

809

–
–

743

3,506
–

4,249

64
4

26
(2)

86
813

6,096

3,532
(2)

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
–

6
(7)
(1)

39
(16)

126
–
–

335

413

413
–

208
(7)
(1)

475

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

As at December 31, 2011

Carrying value

Lumwana

Jabal Sayid

Buzwagi

Barrick Energy CGUs

Pierina

$ 3,538

1,160

634

231

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

Amortization

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

$ 103

$ 6,624

$ 754

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.

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.

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

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

552

–

(2)

(41)

$ 1

$ (20)

$ 51

$ 716

(145)

(33)

$ 42

(13)

–

649

(110)

$ 65

$ (27)

$ 828

128

200

(7)

411

(3)

–

(22)

(4)

(48)

(344)

–

(24)

–

(64)

(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)

Foreign exchange

contracts

218

661

Cost of sales/corporate
administration

432

191

Commodity contracts

200

(12)

Revenue/cost of sales

(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

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)

(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

$ 3,968
370
623
171
1,126

$ 2,564
259
472
62
504

$ 5,037

$ 6,258

$ 3,861

$ 2,083
13,369
64
202

$ 2,083
14,374
64
202

–
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

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

(44)
(3)
52

(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

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

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

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

Average
price

Average
life (years)

Intrinsic
value1
($ millions)

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
4
3
5

$ 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

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

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