Financial Highlights >
page 10
page 18
Driven
by Returns
Profitable production.
Focus on Free Cash Flow PAGE 8
World Class Assets PAGE 10
Adding Value Through Exploration PAGE 16
Corporate Responsibility PAGE 20
Ethical Business Practices PAGE 26
Barrick Gold Corporation
Annual Report 2012
www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
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Financial Highlights >
page 10
page 18
Driven
by Returns
Profitable production.
Focus on Free Cash Flow PAGE 8
World Class Assets PAGE 10
Adding Value Through Exploration PAGE 16
Corporate Responsibility PAGE 20
Ethical Business Practices PAGE 26
Barrick Gold Corporation
Annual Report 2012
www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
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FINANCIAL HIGHLIGHTS
REVENUE
(US dollars millions)
OPERATING CASH FLOW
ADJUSTED NET EARNINGS1
(US dollars millions)
(US dollars millions)
14,236 14,547
5,315
5,439
4,585
10,970
4,666
3,827
3,517
Barrick’s strategy is focused on maximizing risk-adjusted
returns and free cash flow to position the company to
return more capital to shareholders over time.
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Barrick reported record revenue and operating cash flow as well as strong adjusted net earnings in 2012
ANNUALIZED DIVIDEND2
(US cents per share)
80
60
48
GOLD RESERVES AND
RESOURCES3
(Ounces millions)
37
76
40
80
36
83
140
140
140
ALL-IN SUSTAINING
CASH COSTS1
(US dollars per ounce)
945
752
649
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Increased dividend 33% to
80 cents on an annualized basis
Replaced gold reserves
in 2012
Inferred Resources
M&I Resources
2P Reserves
A new measure that better
reflects the total costs of
producing gold
0
0
(In millions of US dollars, except per share data)
(Based on IFRS)
Revenues
Net earnings (loss)
per share
Adjusted net earnings1
per share1
Operating cash flow
Adjusted operating cash flow1
Adjusted EBITDA1
Cash and equivalents
Dividends paid per share
Annualized dividend per share2
Gold production (000s oz)
Average realized gold price per ounce1
All-in sustaining cash costs per ounce1
Total cash costs per ounce1
Copper production (M lbs)
Average realized copper price per pound1
C1 cash costs per pound1
C3 fully allocated costs per pound1
2012
2011
2010
$ 14,547
(665)
(0.66)
3,827
3.82
5,439
5,156
7,457
2,093
0.75
0.80
7,421
1,669
945
584
468
3.57
2.17
2.97
$
$
$
$
$
$
$ 14,236
4,484
4.49
4,666
4.67
5,315
5,680
8,611
2,745
0.51
0.60
7,676
1,578
752
460
451
3.82
1.71
2.30
$
$
$
$
$
$
$ 10,970
3,582
3.63
3,517
3.56
4,585
5,241
6,448
3,968
0.44
0.48
7,765
1,228
649
409
368
3.41
1.08
1.40
$
$
$
$
$
$
1. Non-GAAP financial measure – see pages 79–87 of the 2012 Financial Report.
2. Calculation based on annualizing the last dividend paid in the respective year.
3. See pages 163–170 of the 2012 Annual Report for additional information on Barrick’s reserves and resources.
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this Annual Report 2012, including any information as to our
strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements,
other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”,
“contemplate”, “target”, “plan”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions
identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from
those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and
forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); diminishing quantities
or grades of reserves; the impact of inflation; changes in national and local government legislation, taxation, controls, regulations,
expropriation or nationalization of property and political or economic developments in Canada, the United States and other
jurisdictions in which the Company does or may carry on business in the future; the impact of global liquidity and credit
availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; increased
costs, delays and technical challenges associated with the construction of capital projects; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from holding derivative instruments; risk of loss due to acts of war, terrorism,
sabotage and civil disturbances; business opportunities that may be presented to, or pursued by, the Company; our ability
to successfully integrate acquisitions or complete divestitures; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and increased costs associated with mining inputs and labor; litigation;
the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits;
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 mineral exploration, development and mining, including environmental
hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion or copper cathode
losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties
and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied
in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are
not guarantees of future performance. All of the forward-looking statements made in this Annual Report 2012 are qualified
by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file
with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying
forward-looking statements.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
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FINANCIAL HIGHLIGHTS
REVENUE
(US dollars millions)
OPERATING CASH FLOW
ADJUSTED NET EARNINGS1
(US dollars millions)
(US dollars millions)
14,236 14,547
5,315
5,439
4,585
10,970
4,666
3,827
3,517
Barrick’s strategy is focused on maximizing risk-adjusted
returns and free cash flow to position the company to
return more capital to shareholders over time.
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Barrick reported record revenue and operating cash flow as well as strong adjusted net earnings in 2012
ANNUALIZED DIVIDEND2
(US cents per share)
80
60
48
GOLD RESERVES AND
RESOURCES3
(Ounces millions)
37
76
40
80
36
83
140
140
140
ALL-IN SUSTAINING
CASH COSTS1
(US dollars per ounce)
945
752
649
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Increased dividend 33% to
80 cents on an annualized basis
Replaced gold reserves
in 2012
Inferred Resources
M&I Resources
2P Reserves
A new measure that better
reflects the total costs of
producing gold
0
0
(In millions of US dollars, except per share data)
(Based on IFRS)
Revenues
Net earnings (loss)
per share
Adjusted net earnings1
per share1
Operating cash flow
Adjusted operating cash flow1
Adjusted EBITDA1
Cash and equivalents
Dividends paid per share
Annualized dividend per share2
Gold production (000s oz)
Average realized gold price per ounce1
All-in sustaining cash costs per ounce1
Total cash costs per ounce1
Copper production (M lbs)
Average realized copper price per pound1
C1 cash costs per pound1
C3 fully allocated costs per pound1
2012
2011
2010
$ 14,547
(665)
(0.66)
3,827
3.82
5,439
5,156
7,457
2,093
0.75
0.80
7,421
1,669
945
584
468
3.57
2.17
2.97
$
$
$
$
$
$
$ 14,236
4,484
4.49
4,666
4.67
5,315
5,680
8,611
2,745
0.51
0.60
7,676
1,578
752
460
451
3.82
1.71
2.30
$
$
$
$
$
$
$ 10,970
3,582
3.63
3,517
3.56
4,585
5,241
6,448
3,968
0.44
0.48
7,765
1,228
649
409
368
3.41
1.08
1.40
$
$
$
$
$
$
1. Non-GAAP financial measure – see pages 79–87 of the 2012 Financial Report.
2. Calculation based on annualizing the last dividend paid in the respective year.
3. See pages 163–170 of the 2012 Annual Report for additional information on Barrick’s reserves and resources.
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this Annual Report 2012, including any information as to our
strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements,
other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”,
“contemplate”, “target”, “plan”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions
identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from
those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and
forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); diminishing quantities
or grades of reserves; the impact of inflation; changes in national and local government legislation, taxation, controls, regulations,
expropriation or nationalization of property and political or economic developments in Canada, the United States and other
jurisdictions in which the Company does or may carry on business in the future; the impact of global liquidity and credit
availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; increased
costs, delays and technical challenges associated with the construction of capital projects; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from holding derivative instruments; risk of loss due to acts of war, terrorism,
sabotage and civil disturbances; business opportunities that may be presented to, or pursued by, the Company; our ability
to successfully integrate acquisitions or complete divestitures; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and increased costs associated with mining inputs and labor; litigation;
the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits;
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 mineral exploration, development and mining, including environmental
hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion or copper cathode
losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties
and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied
in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are
not guarantees of future performance. All of the forward-looking statements made in this Annual Report 2012 are qualified
by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file
with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying
forward-looking statements.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
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“
Our disciplined capital allocation
framework is designed with the objective
of directing capital to its best use on
behalf of our shareholders.
Returns will drive
production. Production
will not drive returns.”
Jamie C. Sokalsky
President and
Chief Executive Officer
Fellow Shareholders,
2012 was a year of both successes and disappointments for Barrick and our
shareholders, as the company transitioned to new leadership and adopted an
entirely new approach to managing the business.
We recorded adjusted net earnings of $3.8 billion, along with the company’s
highest ever operating cash flows of $5.4 billion.
“ Barrick is leading the change
from a focus on growth, in
favor of maximizing free cash
flow and growing rates of return:
a significant paradigm shift
for our industry.”
Peter Munk
Founder and Chairman
This reflects the quality and potential of our global
portfolio to generate earnings and cash flow on
an unprecedented scale and allowed us to increase
our quarterly dividend by 33 percent last year.
Although this is merely the beginning of our new
and redoubled commitment to maximize the return
of capital to shareholders, it is a start which we
expect to accelerate once our major, new projects
are completed.
In 2012, we also poured first gold at Pueblo
Viejo in the Dominican Republic on schedule,
and completed it – with a construction cost of
nearly $4 billion – within capital guidance. This is
a truly exceptional operation that will be part of
a rare, elite class of mines producing in excess of
one million ounces of gold annually and with a
mine life of more than 25 years. Also, once again,
we replaced our gold reserves, which remain by
far the largest in our industry in absolute terms.
Significantly, we continued to grow our major
Goldrush discovery in Nevada, which has the
potential to become one of the world’s largest
new gold deposits. Importantly, it is also located
in one of the world’s best jurisdictions for mining,
and next door to the huge, existing facilities and
infrastructure at our world-class Cortez mine.
This discovery, like others to come in Nevada, will
benefit from billions of dollars of investment in
mining infrastructure in the state, all of which is
fully operational and available to us today.
Meanwhile, the price of gold remains near
historically high levels and the secular outlook for
the metal remains strong. Despite periodic short-
term optimism, the fundamental and structural
causes for fear and uncertainty over the world
economy remain, and will continue to weigh on
the long-term macroeconomic environment. At
the same time, gold supply from mines will remain
constrained due to a variety of factors, including
significantly higher capital costs and ever-longer
lead times to permit and build new mines, along
with increasingly complex regulatory requirements
in nearly every jurisdiction.
Despite a supportive gold price environment
and our achievements in 2012, we faced a number
of serious challenges last year. We suffered a
significant delay and a major cost overrun at our
flagship Pascua-Lama project on the border of
2
Barrick Gold Corporation | Annual Report 2012 MESSAGE FROM THE FOUNDER AND CHAIRMAN
Chile and Argentina. Since that fact surfaced – so
unexpectedly – the main focus of our company,
at every level, has been directed at ensuring that
this project will meet its new cost and schedule
estimate. At the same time, we made identifying
the root causes of this major setback a priority, so
that we can apply those lessons in the future. Our
other major disappointment in 2012 was related
to the Lumwana copper mine in Zambia, where
we have taken a $3.8 billion after-tax impairment
charge, resulting primarily from our inability to
realize the potential we saw in this asset in the
short term. We are determined to do what it
takes to extract the maximum value we can from
Lumwana, which holds exceptional future potential
with its dominant holdings on one of the world’s
major copper belts. These negative surprises
disappointed our investors, and understandably so.
In some ways, Barrick’s setbacks mirrored similar
challenges across the broader mining industry, and
while that in no way excuses our shortfalls, it does
point to the need for some fundamental changes
in corporate behavior and strategy.
Our dismal share performance last year clearly
reflected these setbacks, yet there are other new
realities in our industry that also played a significant
role. In the years leading up to the global financial
crisis, rising gold prices and booming equity markets
created a mood of euphoria among investors,
rewarding gold producers that delivered aggressive
production growth, no matter what the cost.
The industry as a whole, and Barrick in particular,
delivered. In fact, between 1986 and 2006, as
Barrick expanded its operations around the world,
our shares increased in value by approximately
4,000 percent, or about 20 percent compounded
annually. In order to sustain that kind of growth,
gold mining companies and others began to make
ever-larger, unprecedented capital investments in
new projects to deliver more ounces. Many came
from lower-grade ore bodies, erroneously justified
by expectations of higher gold prices, and yielded
ever more expensive ounces, at ever-growing capital
costs. These growing capital commitments virtually
eliminated free cash flow generation. Yet that
was what investors expected to be available to
them – in direct proportion to increased gold
prices. It didn’t happen – and the disappointment
of investors was severe.
As a result, investor confidence was roiled
and wealth managers began to shun gold shares.
At the same time, most investors looking for full
participation in the rise of gold prices moved vast
sums of money from gold equities, where they
perceived risks but little return, to gold ETFs. These
– of course – offered full participation in gold price
movements, without any operational risks. The
numbers tell the story: since the creation of the gold
ETFs some eight years ago, their value has reached
an incredible $140 billion! Meanwhile, gold mining
company multiples have suffered an unprecedented
contraction, particularly when measured against the
performance of their sole product, gold itself.
Recognizing the above facts, it is clear that a
new approach – indeed a whole paradigm shift – is
required so that an investment in Barrick becomes
desirable, rewarding and viable – a demonstrably
superior alternative to investing in gold itself.
This major shift requires a continuation of asset
rationalization, the exploring and realizing of
available operational and administrative synergies,
a rigorous application of capital discipline, and other
measures enhancing our ability to increase payouts
to our shareholders. These are all clearly options
available to Barrick – with its size and scale – and
will make our shares a realistic alternative to ETFs.
Accordingly, Barrick is leading the change from
a focus on growth, in favor of maximizing free
cash flow and growing rates of return: a significant
paradigm shift for our industry. In June of last year,
following Jamie Sokalsky’s appointment as CEO,
I was proud that his first message to shareholders
was a commitment that has become nearly
universally accepted throughout the industry:
“Returns will drive production, production will not
drive returns.” Each and every CEO has phrased it
differently, but the end result is the same.
We believe this is the right approach for us
and the only one that will deliver results and
rekindle shareholder interest in Barrick and the
industry at large. Yet we must also realize that
repositioning Barrick – a company of considerable
size and operational diversity – to deliver against
this paradigm cannot happen overnight. Large
ships take longer to turn around. I can assure our
shareholders that at all levels within Barrick – be it
at our Board or at the executive management level
– we are united in our commitment to effect the
significant change needed and which our investors
clearly demand.
We have already made good progress. Last
year alone we cut or deferred over $4 billion in
capital spending plans and reduced our long-term
production targets to focus on only the most
3
Barrick Gold Corporation | Annual Report 2012 MESSAGE FROM THE FOUNDER AND CHAIRMAN
profitable ounces. At the same time, we are adding
about 1.5 million ounces of annual production from
Pueblo Viejo and Pascua-Lama at costs significantly
below the company’s current average. Also, as
part of the new paradigm, we put on hold all plans
to build any new mines. In the future, before we
approve any projects and allocate capital, they must
meet the new standards of our disciplined capital
allocation framework and a threshold of exceptional
Barrick Gold Corporation’s Founder and Chairman
Peter Munk and Co-Chairman John L. Thornton.
free cash flow returns. In the same vein, and as
part of this new paradigm shift, we are also actively
pursuing a variety of asset disposals – those that
do not support our objectives in terms of operating
performance, reserve life, free cash flow generation,
or that are otherwise non-core for the company.
These actions are all aimed at positioning
Barrick with an improved and growing capacity for
free cash flow generation from a balanced portfolio
of world-class assets (even if a reduced number),
and the ability to return more value to shareholders
through growing dividends and capital appreciation.
And as always, we are committed to
strengthening our corporate social responsibility
practices. This is not about paying lip service, but
about doing what’s right, reducing our business
risks and maintaining our license to operate around
the world.
As we reposition the company to deliver
against these objectives, it is also appropriate that
we consider a path to new leadership at our Board
level. I have taken great pride in my role over
4
more than a quarter century as the Founder and
Chairman of Barrick, focused throughout on the
various stages of our company’s development with
the primary aim of creating value for our investors.
This approach worked in building the company
from a penny stock to an industry leading position.
Yet while we have achieved much, equally there is
much more to be done. Accordingly, standing still
and perpetuating the status quo is not an option.
A vital prerequisite for the future is a new generation
of qualified and developed leadership.
I, together with my colleagues on the Board,
have been searching for someone with the drive, the
ambition, the ability, the global experience and the
contacts to lead our Board. Most importantly, I have
been looking for someone to share my optimism
about the unlimited opportunities available to Barrick
as we chart our path forward. In 2011, John Thornton
joined our International Advisory Board, and was
subsequently appointed Co-Chairman of our main
Board in 2012. It is indeed our great fortune that
John has reached a point in his spectacular career at
the same time when our need for someone of his
exceptional qualifications, credentials and experience
also reached a decision point.
Over the past year, John and I have been
working in lock-step with the entire Board and
our management team, focused on the singular
and exclusive goal of setting the stage for Barrick’s
long-term success. We remain convinced that
Barrick is on the cusp of a new era, poised to
deliver the shareholder returns that will again define
us – in every aspect of our global activities – as a
highly successful and respected public company.
Finally, on behalf of the Board of Directors,
I would like to extend my sincere gratitude
to Nathaniel Rothschild, who has recently
resigned from our Board. We are grateful for
his many contributions to the company. And
most importantly, I would like to thank Barrick’s
committed workforce of more than 25,000
employees around the world who are putting
our plans to create shareholder value into action
daily. They are the heart of the company, and
without them, we could not succeed.
Sincerely,
Peter Munk, Founder and Chairman
Barrick Gold Corporation | Annual Report 2012
Over the past decade, our industry
has been focused on increasing gold
production, often without regard
for the cost. In essence, this was growth
for growth’s sake, without a focus on
rates of return. Today, we find ourselves
in a very different environment, a new
paradigm for the gold industry.
Jamie C. Sokalsky
President and
Chief Executive Officer
Disciplined
Capital Allocation
The year in review and strategic outlook from our President
and Chief Executive Officer.
Rising capital and operating costs, longer lead times
for projects, increasing resource nationalism and a
lack of large new discoveries have altered investor
perceptions of gold equity risk. In addition, the
industry’s track record on capital allocation has been
poor. As a result, gold mining shares have continued
to under perform gold itself, and equity multiples
across the sector have compressed significantly.
At the same time, exchange traded funds continue
to offer a popular alternative for those seeking
exposure to gold.
While we believe the fundamental factors
supporting the price of gold remain firmly in place,
and our outlook remains bullish, we cannot simply
rely on an ever-rising gold price to generate higher
returns. The message from investors has been
clear: something has to change. It’s a message we
have embraced at Barrick. The past year marked a
significant turning point for the company. We began
to reposition Barrick around a new paradigm of
disciplined capital allocation, one that prioritizes
shareholder value creation through a focus on
maximizing free cash flow and risk-adjusted rates of
return. My overriding objective, and that of everyone
at Barrick today, is to translate our company’s
strengths and results into higher shareholder returns.
We are driving this change guided by a simple
mantra: returns will drive production, production will
not drive returns. This represents a fundamental
shift for our company and our industry, but we are
fully committed to this approach and have already
implemented significant changes. All capital allocation
options, including returns to shareholders, organic
investment, acquisitions and other expenditures, will
be ranked and prioritized against each other. Our
framework includes the following key objectives:
n Returns Driving Production: Production decisions
to be made based on generating appropriate
risk-adjusted rates of return and free cash flow.
n Returns to Shareholders: A commitment to pass
through the benefits of this model to shareholders.
n Aggressive Cost Management: Reducing costs and
an ongoing review of our cost structure is an
integral part of the management of our business.
n Portfolio Optimization: Divesting assets that do not
meet specific criteria, including return thresholds,
free cash flow generation, operating performance
and reserve life, and investing in assets that do
meet these criteria.
n Reduction of Geopolitical Risk: Focusing on high
return, low-cost assets in less risky geopolitical
jurisdictions through portfolio optimization.
5
Barrick Gold Corporation | Annual Report 2012 MESSAGE FROM THE PRESIDENT AND CEO
We made considerable progress on the imple-
mentation of this framework in the second half of
2012. After evaluating our production profile with
the objective of maximizing returns and free cash
flow, we cut or deferred approximately $4 billion in
previously budgeted capital spending. As a result,
we recalibrated our long-term gold production
forecast to a higher quality, more profitable base of
eight million ounces by 2016 and copper production
cash costs of $945 per ounce and total cash costs
of $584 per ounce. The company also produced
468 million pounds of copper at C1 cash costs of
$2.17 per pound and C3 fully allocated costs of
$2.97 per pound.
Adjusted net earnings for the year were the
second highest in Barrick’s history at $3.83 billion
and the company reported record operating cash
flow of $5.44 billion. Our robust financial results
Our Strategic Priorities
Capital
Discipline
Operational
Excellence
Corporate
Responsibility
Shareholder
Returns
Disciplined capital alloca-
tion drives every decision
we make. All investment
alternatives compete
for capital based on
their ability to generate
attractive returns and
free cash flow.
Execution is a key
component of investor
confidence. Barrick
has an excellent track
record in this area
and has met its gold
production guidance
for 10 years in a row.
Our success depends
on our ability to develop
our resources responsibly
and share the benefits
of our business with
local communities,
governments and
other stakeholders.
Our efforts have a
common goal –
ultimately we are
focused on value
creation for our
shareholders through
higher returns and
a strong dividend.
levels to 600 million pounds by 2015. We also
announced that in today’s challenging environment,
we have no plans to build any new mines. The
company has a number of world-class ore bodies
with significant economic potential, but which do
not currently meet our investment criteria. We will
spend the minimum amount of capital required to
maintain their economic potential but we will
continue to advance our opportunities in Nevada,
particularly Goldrush.
Additionally, as part of our broad approach to
cost control, we have cut budgeted overhead for
2013, and expect to make further reductions as a
result of an ongoing company-wide review. We have
also begun reporting costs using an all-in sustaining
cash cost measure that better represents the total
cost of producing gold and is consistent with our
goal of generating higher returns and free cash flow.
Ultimately, the implementation of this framework
is a dynamic and continuous process that will guide
every decision we make going forward.
In 2012, the company performed well against
its key operating objectives. We met our gold
production guidance for the tenth consecutive year,
producing 7.4 million ounces at all-in sustaining
allowed us to increase our quarterly dividend by
33 percent in 2012.
Once again, Barrick successfully replaced gold
reserves, which now stand at 140 million ounces,
with an additional 83 million ounces in measured
and indicated gold resources. Barrick also has one
billion ounces of silver contained within gold reserves
and 14 billion pounds of copper reserves.
Our exploration focus for 2012 was in Nevada,
where we doubled and upgraded the resource
base at our world-class Goldrush discovery near our
Cortez mine. The project is advancing through
prefeasibility and we expect to further expand the
resource base in this highly prospective area.
We poured first gold at our world-class,
60 percent-owned Pueblo Viejo mine in the Dominican
Republic in August, on schedule and within capital
guidance. This long-life, low-cost operation achieved
commercial production in January 2013 and is
expected to ramp up to full capacity in the second
half of the year. Pueblo Viejo is expected to contri-
bute an average of 625,000 – 675,000 ounces
of gold per year to Barrick in its first full five years of
production at all-in sustaining cash costs of $500 –
$600 per ounce. With an estimated mine life of more
6
Barrick Gold Corporation | Annual Report 2012 than 25 years, Pueblo Viejo will be a significant
contributor to Barrick’s earnings and cash flow.
During 2012, we experienced some significant
challenges at Pascua-Lama, our other large develop-
ment project under construction on the border of
Chile and Argentina. These challenges led to a
significant increase in capital costs, which are now
expected to be $8.0 – $8.5 billion, with first gold
targeted for the second half of 2014. This was a
highly disappointing outcome for the company and
our shareholders, and since being appointed CEO,
I have made the successful completion of Pascua-
Lama among my top personal priorities.
In late July, we recognized that the complexity of
this project exceeded the capabilities of the in-house
construction team. We immediately initiated a
comprehensive schedule and cost review, and
subsequently transferred construction management
responsibilities to Fluor, a world leader in engineering,
procurement and construction management.
Although we were disappointed by the increased
capital costs and extended schedule, Pascua-Lama
will be one of the world’s truly great gold mines
with an anticipated mine life of 25 years. Once in
production, it will be a significant free cash flow
generator, with average annual production of
800,000 – 850,000 ounces of gold in its first full
five years of operation, at all-in sustaining cash
costs of $50 – $200 per ounce.
Once at full capacity, Pueblo Viejo and Pascua-
Lama together are expected to contribute about
1.5 million low-cost ounces of gold to Barrick’s
production profile, underpinning our high-quality,
profitable production base for the long term.
The Lumwana copper mine in Zambia represented
our other significant challenge in 2012. During the
year, we completed an updated life-of-mine plan
which reflects new data from the drilling program
that was completed late in 2012. Unfortunately, the
new mine plan indicates mining costs will be higher
than we anticipated, and as a result, we recorded an
after-tax asset and goodwill impairment charge of
$3.8 billion in 2012. This was clearly an unfortunate
result. Our 2013 guidance reflects realistic expecta-
tions for an improvement over 2012; however, we
need to implement a significant change in the mine’s
future performance to realize its potential. Long-term,
Lumwana has an enormous mineral inventory and
tremendous leverage to higher copper prices. As
copper becomes more difficult to find and demand
increases, we stand to benefit substantially from
having this asset in our portfolio.
Maintaining and strengthening our commitment
to corporate responsibility is another critical
component of our strategy to deliver superior returns
to our shareholders. It is also one of my personal
commitments as CEO and one shared by our entire
management team. We must earn support for our
activities by living up to our commitments on safety
and the environment, while ensuring that communities
and society at large see mutual, long-term benefits
from our operations. Improving our social and
environmental performance is a continuous process,
and one we remain fully committed to.
Looking ahead to 2013, we remain focused on
delivering against a number of key priorities to drive
shareholder value. First and foremost, we must meet
our production and cost guidance. With respect
to projects, we are focused on ramping up Pueblo
Viejo to full capacity, advancing Pascua-Lama in line
with our cost and schedule estimates, and advancing
our Goldrush discovery in Nevada. Improving Lum-
wana’s performance is another key goal for the year,
and one that our new copper leadership team is
pursuing aggressively. During 2013, we will also be
actively pursuing opportunities to optimize our
portfolio, along with seeking further cost reductions
across the company. And as always, further
strengthening our corporate social responsibility
performance is a top priority.
In conclusion, I would like to express my
gratitude to our Founder and Chairman Peter Munk,
Co-Chairman John Thornton and the rest of the
Board of Directors for entrusting me with the role
of Chief Executive Officer at this critical juncture in
Barrick’s history. I would also like to thank Peter
Kinver and Igor Gonzales for their many years of
service with the company.
Delivering returns for our shareholders is my
number one objective, and it’s something I intend
to keep in laser-sharp focus as we move forward.
Through our disciplined and rigorous approach to
capital allocation, I believe we have the industry’s
best platform to deliver profitable production while
positioning Barrick as a significant generator of free
cash flow. This should enable us to return more
capital to shareholders, and ultimately drive superior
shareholder returns over the long term.
Jamie C. Sokalsky, President and Chief Executive Officer
7
Barrick Gold Corporation | Annual Report 2012 Focus on Free Cash Flow
Our disciplined approach to cost control is designed to
maximize free cash flow for every ounce we produce.
First gold pour at Pueblo Viejo in August 2012
As the gold price recorded its 12th straight year of
increases, Barrick reported record operating cash
flow of $5.44 billion and the second highest
adjusted net earnings in its history of $3.83 billion or
$3.82 per share. Barrick continues to demonstrate
exceptional leverage to the gold price on a per
share basis. Since the launch of the gold exchange
traded fund in 2004, the company’s adjusted net
earnings and adjusted operating cash flow per
share have increased about 700 percent1 and
450 percent1, respectively, compared to a 280
percent1 rise in the gold price over the same period.
The 2012 net loss of $0.7 billion primarily reflects
after-tax impairment charges of $3.8 billion for
Lumwana. While we increased reserves and defined
significant new mineralization at Lumwana in 2012,
the mining costs in the new life-of-mine plan were
higher than anticipated. Lumwana has tremendous
leverage to higher copper prices, but our focus is on
reducing mining costs to unlock its potential.
TRACK RECORD OF DIVIDEND GROWTH
Our robust cash flow generation and positive
gold price outlook enabled the company to raise
the quarterly dividend in 2012 by 33 percent to
1. 2004–2012. All EPS are adjusted except 2004 is on a US GAAP basis and all CFPS are on
a US GAAP basis except 2009–2012 are adjusted. 2004–2009 are on a US GAAP basis
and 2010–2012 are on an IFRS basis.
8
Barrick Gold Corporation | Annual Report 2012 “ We can’t rely on stronger gold prices to deliver
higher returns and free cash flow. We are
managing our costs on an all-in sustaining
cash cost basis and have significantly reduced
budgeted company-wide overhead costs.”
Ammar Al-Joundi, Executive Vice President and Chief Financial Officer
$0.20 per share, or $0.80 per share on an annu-
alized basis. Over the last six years, Barrick has
had a consistent track record of returning more
capital to shareholders, increasing its dividend
by approximately 260 percent2 during this period,
or a 24 percent compound annual growth rate.
DISCIPLINED APPROACH
TO COST CONTROL
Costs are a key driver of Barrick’s financial perfor-
mance and an integral part of our disciplined capital
allocation strategy. Barrick continues to utilize risk
management strategies, including currency and
commodity hedging, to help manage our cost
exposures. The company has also adopted a new
cost measure – all-in sustaining cash costs per
ounce – that is a more meaningful metric and
better reflects the total costs of producing gold.
This measure also reflects how we manage our
business and is consistent with our goal of
generating higher returns and increased free
ANNUALIZED DIVIDEND
US cents per share
40
40
30
22
80
2 4 % C A G R
60
48
2006
2007
2008
2009
2010
2011
2012
2. Calculation based on converting the 2006 semi-annual dividend of $0.11 per share
to a quarterly dividend.
3. Non-GAAP financial measure, see pages 79–87 of the 2012 Financial Report.
cash flow. While our expected 2013 all-in sustain-
ing cash costs of $1,000 – $1,100 per ounce3 are
competitive, we continue to evaluate a broad
spectrum of ways to meaningfully reduce them.
In 2012, we initiated a review of company-wide
overhead costs and an ongoing portfolio review
that ranked our assets on their ability to meet our
two primary investment metrics – free cash flow
and risk-adjusted returns. As a result of these steps,
we have reduced budgeted 2013 company-wide
overhead by more than $100 million and we also
identified approximately $4 billion of previously
planned capital expenditures that do not meet
our investment criteria. This capital was cut or
deferred from our future plans.
Although we can’t rely on higher gold prices to
deliver free cash flow growth, supportive supply/
demand fundamentals appear to be in place for
the foreseeable future. We expect gold to remain
attractive as a de facto currency and a store of value
as many developed nations continue to struggle
with elevated debt levels and respond with accom-
modative monetary policies.
Central banks continue to purchase gold to diversify
their portfolios, and recorded net purchases for the
third year in a row. The growing middle class in
emerging economies such as China and India is
providing a further backstop to gold prices, and is
also anticipated to benefit copper prices through
infrastructure and consumer demand. Mine supply
for both gold and copper is expected to be limited
by the scarcity of new discoveries, which should
positively impact prices.
9
Barrick Gold Corporation | Annual Report 2012 World Class Assets
Our ongoing portfolio review process is designed to further
optimize Barrick’s high quality asset portfolio and provide
higher returns and free cash flow.
GLOBAL PORTFOLIO OF PREMIER ASSETS
Barrick’s portfolio of 27 operating mines, advanced
exploration and development projects and extensive
land positions on five continents around the globe
includes some of the world’s premier gold assets.
Once Pueblo Viejo is at full capacity, Barrick will
oper ate three of the world’s six mines that are one
million ounce or more per year producers. Our top
four mines – Cortez, Goldstrike, Lagunas Norte and
Veladero – together produced 4.1 million ounces in
2012 at an average total cash cost of $406 per ounce.
These mines, plus Pueblo Viejo and Pascua-Lama,
form an unmatched core group of six high quality
assets with long lives and low costs, that alone
would be the world’s largest gold producer. The
goal of our ongoing portfolio review process,
launched in mid-2012, is to further optimize the
quality of our entire portfolio. Assets that do not
generate acceptable risk-adjusted returns or free
cash flow will be deferred, shelved or divested.
Barrick met its gold production guidance in 2012
for the tenth year in a row with an industry-leading
10
Barrick Gold Corporation | Annual Report 2012 “ Bringing Pueblo Viejo into production within
guidance and with an excellent safety record is
an outstanding achievement for the company.
This large, low-cost mine represents the type of
high quality asset in which we want to invest
our shareholders’ capital.”
Igor Gonzales, Executive Vice President and Chief Operating Officer
7.4
Barrick produced
an industry-leading
7.4 million ounces
of gold in 2012.
945
All-in sustaining
cash costs were
$945 per ounce.
GOLD PRODUCTION BY REGION IN 2012
North America 47%
South America 22%
Australia Pacific 25%
African Barrick Gold 6%
7.4 million ounces of gold. All-in sustaining cash
costs were $945 per ounce and total cash costs of
$584 per ounce were the lowest among the senior
gold producers. These strong results reflect the high
quality of our assets. Going forward, Barrick’s cost
structure is expected to benefit from combined
average annual production of about 1.5 million1
new ounces from Pueblo Viejo and Pascua-Lama
at average all-in sustaining cash costs of $250 –
$350 per ounce2 and average total cash costs of
$100 – $200 per ounce2.
GOLD BUSINESS
Our North America unit is the company’s largest
producing region and generated 3.5 million ounces,
or 47 percent of total 2012 production, at total
cash costs of $500 per ounce. Nevada is home to
seven of the region’s nine mines and contributed
3.1 million ounces or 42 percent of total production
in 2012. Cortez remains our lowest cost mine and
exceeded expectations for the third straight year
with production of 1.37 million ounces at total cash
costs of $282 per ounce. Significant exploration
1. About 1.5 million ounces is based on the estimated cumulative annual average
production in the first full five years once both mines are at full capacity.
2. Based on first full five year averages once both mines are at full capacity.
11
Barrick Gold Corporation | Annual Report 2012 WORLD CLASS ASSETS
1.37
3.1
The Cortez mine
produced 1.37 million
ounces at total cash
costs of $282 per
ounce in 2012.
Our Nevada mines
produced 3.1 million
ounces or 42% of
total production
in 2012.
success at the nearby Goldrush discovery has
further demonstrated the potential of this truly
world-class district.
At Goldstrike, construction advanced on the
thiosulfate project to enable continued production
from the autoclaves, which were originally expected
to cease operations in 2012. Modifications to the
autoclave circuit will accelerate about 3.5 million
ounces in the mine plan and contribute an average
of about 350,000 – 400,000 ounces annually in
The Cortez mine in Nevada exceeded expectations
for the third straight year. The processing facilities are
shown in the foreground.
12
Lagunas Norte has
produced more than
50 percent above
feasibility expecta-
tions and has done
so in every year since
it entered production.
the first full five years. First gold production is
expected in mid-2014. The North America region
contains a number of excellent prospects for future
production, including Goldrush and the Lower Zone
underground expansion at Cortez.
The three mines in South America produced
1.6 million ounces, or 22 percent of the company’s
total 2012 production, at total cash costs of
$467 per ounce. The Lagunas Norte mine had
another strong year, contributing 754,000 ounces
at low total cash costs of $318 per ounce, while
Veladero produced 766,000 ounces at total cash
costs of $510 per ounce. Both mines have signifi-
cantly exceeded feasibility study expectations for
production since they began operations in 2005.
Lagunas Norte has outperformed original estimates
for the last seven years and, on a cumulative basis,
has produced more than 50 percent above expecta-
tions. Veladero has outpaced feasibility estimates
for the last four years and cumulatively has produced
about 20 percent more than anticipated.
Australia Pacific’s eight mines produced 1.8 million
ounces in 2012, or 25 percent of total production,
at total cash costs of $803 per ounce. The
Porgera mine in Papua New Guinea continued to
lead production in the region with production
of 436,000 ounces at total cash costs of
$955 per ounce.
Barrick’s 73.9 percent share of production from
the four mines within African Barrick Gold Plc (ABG)
was 0.5 million ounces, or 6 percent of total
production, at total cash costs of $949 per ounce.
Barrick Gold Corporation | Annual Report 2012 Lab technician Maria
Louise Rodriguez
works with ionic
chromatography
equipment at
Pueblo Viejo.
0.50 – 0.65
Barrick’s share of 2013 production
from Pueblo Viejo is expected to be
0.50 – 0.65 million ounces.
INVESTING IN
HIGH RETURN PROJECTS
Barrick added another world-class operation to its
portfolio in 2012 with the successful completion
of its 60 percent-owned Pueblo Viejo mine in the
Dominican Republic. Pueblo Viejo is one of only
a handful of mines globally that will produce more
than one million ounces of gold per year and its
state-of-the-art processing facility houses four of the
largest autoclaves in the world. Based on reserves of
25.0 million ounces3 (100 percent basis), this mine
is anticipated to be a major contributor of low-cost
production to Barrick for many years to come.
Completed at a capital cost of $3.7 billion, Pueblo
Viejo is expected to provide 1,900 jobs and 10,000
indirect jobs over its anticipated 25+ year mine life.
Pueblo Viejo poured its first gold in August 2012
and is scheduled to ramp up to full capacity in the
second half of 2013 with expected production
of 500,000 – 650,000 ounces4 in 2013. In the first
3. See pages 163–170 of the 2012 Annual Report for additional information
on reserves and resources.
4. Actual production may vary depending on the progress of the ramp-up.
Pueblo Viejo’s state-of-the-art processing facility
houses four of the largest autoclaves in the world.
13
Barrick Gold Corporation | Annual Report 2012 WORLD CLASS ASSETS
A collar for one
of the ball mills
at Pascua-Lama is
inspected prior to
installation.
3 of 6
Barrick operates half
of the world’s mines
that can produce
more than one million
ounces a year.
25
Pueblo Viejo and
Pascua-Lama each
have a mine life
of at least 25 years.
full five years of operation, Barrick’s share of
annual production is anticipated to be 625,000 –
675,000 ounces at all-in sustaining cash costs of
$500 – $600 per ounce5 and total cash costs
of $300 – $350 per ounce5.
The Pascua-Lama project on the border of Chile and
Argentina is expected to be one of the world’s
Assembly of the grinding building at Pascua-Lama
is well advanced; the covered ore stockpile building
is shown in the background.
lowest operating cost gold mines and will generate
significant free cash flow for Barrick once it ramps
up to full production. First production is targeted
for the second half of 2014 and mine construction
capital is estimated at $8.0 – $8.5 billion. The
project is expected to generate 1,600 direct jobs
and 4,000 indirect jobs over its 25 year mine life
and Barrick is providing skills training programs,
opportunities for local businesses and investing in
14
Barrick Gold Corporation | Annual Report 2012 Copper cathodes
from Zaldívar are
prepared for rail
shipment to the port
at Antofagasta
in Chile.
468
Barrick produced
468 million pounds
of copper in 2012
from its two
copper mines.
communities around the project. The project hosts
a large gold reserve of nearly 18 million ounces
and 676 million ounces of silver contained within
the gold reserves.
In its first full five years of operation, Pascua-Lama is
expected to produce an annual average of 800,000 –
850,000 ounces of gold at all-in sustaining cash costs
of $50 – $200 per ounce6 and total cash costs of $0
to negative $150 per ounce6. The mine will also be
one of the world’s top silver producers, with average
annual production of about 35 million ounces over
the same period. At the end of 2012, construction
was approximately 40 percent complete.
COPPER BUSINESS UNIT
Barrick strengthened the management of its Global
Copper Business Unit (CBU) in 2012 to exclusively
focus on optimizing this business, which includes
the Zaldívar mine in Chile, the Lumwana mine in
Zambia, and the Jabal Sayid project in Saudi Arabia.
Total 2012 copper production was 468 million
pounds at C1 cash costs of $2.17 per pound and
C3 fully allocated costs of $2.97 per pound. The
Zaldívar mine produced 289 million pounds at
C1 cash costs of $1.62 per pound and Lumwana
contributed 179 million pounds at C1 cash costs
of $3.07 per pound.
Our focus at Lumwana is on significant cost reduction
in order to realize its potential. With an enhanced
understanding based on drilling completed in 2012
5. Based on first full five year averages and gold and oil price assumptions of $1,700/oz
and $90/bbl, respectively. Does not include escalation for future inflation.
6. Based on first full five year averages and gold, silver and oil price assumptions
of $1,700/oz, $30/oz and $90/bbl, respectively, and assuming a Chilean peso f/x
rate of 475:1. Does not include escalation for future inflation.
7. Does not include escalation for future inflation.
The leach pad at Zaldívar is refreshed with ore
in a constant cycle of delivery and reclaim.
and an updated mine plan, the company is in a
better position to identify necessary changes that
will improve free cash flow over the life of the mine.
Higher utilization and productivity of the mining
fleet and a full transition to owner maintenance
have been identified as major opportunities to
improve value.
At Jabal Sayid, production is expected to commence
in 2014 once the mine is compliant with Saudi
Arabia standards for safety and security. Average
annual production from Jabal Sayid is anticipated
to be 100 – 130 million pounds at C1 cash costs
of $1.50 – $1.70 per pound7 in its first full five
years of operation.
15
Barrick Gold Corporation | Annual Report 2012 Adding Value
Through Exploration
Our consistent, disciplined exploration strategy
continues to yield an excellent return on investment.
Barrick replaced proven and probable gold reserves
in 2012 for the seventh year in a row, ending the
year with an industry-leading 140 million ounces. In
addition, the company has measured and indicated
resources of 83 million ounces and inferred resources
of 36 million ounces.
The company has an excellent track record of finding
new gold reserves dating back nearly to its incep-
tion. Since 1990, we have spent about $2.9 billion
on exploration1 with an overall finding cost of about
$18 per ounce. During that time, we have mined
127 million ounces of gold, acquired 110 million
ounces and found 157 million ounces of gold
through exploration.
Copper reserves grew by 1.2 million pounds to
13.9 million pounds in 2012 following the comple-
tion of an extensive 18-month drill program at
Lumwana. The company also had measured and
indicated copper resources of 10.3 million pounds
at the end of 2012.
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.
16
Barrick Gold Corporation | Annual Report 2012 “ Barrick’s exploration pipeline has generated exceptional
value for the company based on the discovery of
over 157 million ounces since 1990 at below industry
average finding costs. Goldstrike, Lagunas Norte,
Pascua-Lama and Goldrush are flagship assets that have
all been discovered by Barrick’s exploration team.”
Rob Krcmarov, Senior Vice President, Global Exploration
140
83
Proven and
probable reserves
totaled 140 million
ounces in 2012.
Measured and
indicated resources
grew to 83 million
ounces.
2012 RESERVES BY REGION
North America 42%
South America 37%
Australia Pacific 12%
Africa 9%
The 2012 exploration program was focused largely
in Nevada, which received about 40 percent of the
exploration budget. Extensive drill programs were
conducted at Goldrush to upgrade resources and
test the limits and regional potential of this large
discovery near the Cortez mine.
Infill drilling joined the Red Hill and Goldrush deposits
(renamed Goldrush), doubled and upgraded the
resource base and more than doubled the footprint
of the mineralized corridor to over seven kilometers
in length. Measured and indicated resources grew
by more than 500 percent from 2011 to 8.4 million
ounces. In addition, there are 5.7 million ounces in
the inferred category. Goldrush remains open in
multiple directions to the north, east and south.
Stepping out from Goldrush, the greater Cortez
camp contains a wealth of long-term, district-scale
exploration opportunities. The purchase of the Mill
Canyon property in 2012 brought the entire Cortez
camp under Barrick management and will permit
17
Barrick Gold Corporation | Annual Report 2012 ADDING VALUE THROUGH EXPLORATION
Future drilling will focus
on expanding the defined
resource and testing high
quality targets in the
Goldrush camp.
+500
Measured and
indicated resources
grew by over 500
percent at Goldrush.
18
Finding costs
since 1990
have averaged
$18 per ounce.
CORTEZ DISTRICT POTENTIAL
The Cortez district contains substantial
exploration opportunities, including a
new parallel trend west of Goldrush.
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a systematic exploration of high quality targets
that will be drill tested. These include a parallel
trend identified to the west of Goldrush, and the
northern, eastern and southern extensions of
the Goldrush system. A scoping study has been
completed, and a prefeasibility study is underway
in parallel with continuing exploration work and
technical studies. A number of development
options are being considered, including open pit
mining, underground mining, or a combination
of both.
At the 75 percent-owned Turquoise Ridge mine,
drilling in 2012 added 0.7 million ounces to
reserves, 2.6 million ounces to measured and
indicated resources and 1.9 million ounces to
inferred resources (all 100 percent basis).
The 2013 exploration budget of $400 – $440 million
will focus on quality priority projects aligned with
our objective of “returns driving production.”
About half of the 2013 budget is allocated to North
America, primarily Nevada, while Australia Pacific
will receive about 18 percent of the budget, copper
will be allocated about 16 percent and South
America about 14 percent, with the balance being
for African Barrick Gold.
0 km 1
2
3
4
5
18
Barrick Gold Corporation | Annual Report 2012
1/2
About half of the
2013 exploration
budget will be spent
in Nevada.
Over 300 kilometers
of drill core was
processed through
Lumwana’s new
core facility in under
18 months.
HISTORY OF GOLD RESERVE | RESOURCE GROWTH
Ounces Added Since Discovery or Acquisition (millions)
Cortez
Pascua-Lama
Pueblo Viejo
Donlin Gold
Turquoise Ridge
Veladero
Lagunas Norte
Goldrush
Goldstrike 59 Moz
Acquired
Added
Pierina
Bald Mtn.
Ruby Hill
S. Arturo
0
5
10
15
20
25
30
35
40
45
Reserves and Resources Summary
at December 31, 2012
(Barrick’s equity share)
Gold (000s oz)
North America
South America
Australia Pacific
Africa
Other
Other Metals
Copper (M lbs)
Nickel (M lbs)
Proven and
Probable Reserves
Measured and
Indicated Resources
Inferred
Resources
140,248
59,478
51,689
16,609
12,271
201
13,881
–
83,008
59,139
10,338
6,150
7,379
2
10,308
1,080
35,591
19,064
6,447
6,772
3,291
17
506
596
Other Metals Contained in:
Silver (000s oz)
Copper (M lbs)
1,051,680
5,761
255,633
1,335
60,162
1,639
Proven and Probable
Gold Reserves
Measured and Indicated
Gold Resources
Inferred
Gold Resources
19
Barrick Gold Corporation | Annual Report 2012
Corporate
Responsibility
At Barrick, corporate responsibility is fundamental to our
business strategy and defines who we are as a company.
We believe our commitment to responsible mining
is the right way to operate and vital to achieving
our business objectives. Our priority is to deliver
superior returns to our shareholders and at the
same time create value for the communities and
countries where we operate.
Around the world, the economic, social and political
context of the mining industry continues to evolve
at a rapid pace, bringing with it changing risks
and heightened expectations. Barrick’s approach to
corporate responsibility helps us identify and
manage emerging risks to ensure we can continue
to create value for our investors and stakeholders.
We do this by conducting our activities to high
operational, social, environmental and safety
standards and by developing respectful and collabor-
ative relationships with communities, governments,
civil society and others, wherever we operate.
We recognize that our ongoing success is tied to
the success and stability of our host communities,
and to our reputation as a responsible partner in
resource development. In all locations, we work
diligently to manage the impacts of our operations,
provide a safe workplace for our employees,
and ensure that communities and society derive
long-term benefits from our mining activities.
20
Barrick Gold Corporation | Annual Report 2012 “ Corporate responsibility is an integral part of
our global business strategy. We create value for
our shareholders by operating to high standards
and earning broad support from our host
communities, governments and stakeholders. This
approach helps to manage emerging risks and
maintain our position as an industry leader.”
Kelvin Dushnisky, Senior Executive Vice President
12 13
For the fifth consecutive year, Barrick was named a global leader in corporate responsibility
by the Dow Jones Sustainability World Index. Barrick was also ranked among the top
100 companies in the world by the NASDAQ Global Sustainability Index. In Canada, Barrick
was named a Carbon Disclosure Leader and ranked first in a sustainability ranking of
the Canadian mining industry by Corporate Knights magazine. More recently, Corporate
Knights included Barrick in its Global 100 listing of the world’s most sustainable companies.
This approach helps us sustain broad support for
our operations. As a result, we are able to develop
a quality portfolio of assets that generates strong
returns for our shareholders.
ECONOMIC AND COMMUNITy DEVELOPMENT
Barrick’s operations are a powerful engine of
economic development and can drive positive social
change. Our operations contribute billions of dollars
annually to local and national economies in the
form of wages, taxes and royalties, procurement of
goods and services and community investments. In
2011 alone (the most recent year for which figures
are available) these contributions totaled
approximately $13 billion. Through local hiring
and purchasing, we seek to maximize the
benefits of our operations in ways that are good
for the community and good for our business.
The issues facing our host communities are diverse
and often complex. In developing countries,
where many new deposits are located, poverty,
limited infrastructure and services, and a lack of
educa tional opportunities are a reality. To help our
host communities address these challenges, we
work with them to invest in the right development
initiatives that reflect local priorities. These initiatives
21
Barrick Gold Corporation | Annual Report 2012 CORPORATE RESPONSIBILITy
125 families
have moved out of slum
dwellings and into new
homes in Chile.
Barrick is partnering with
Communities in Schools
to fund programming
at two Nevada middle
schools that will help
at-risk students succeed
in the classroom and stay
in school.
help to foster longer-term socio-economic
development and contribute to greater stability
where we operate.
in the program were “A Roof for Chile,” a non-
governmental organization (NGO) dedicated to eradi-
cating slums, and the Chilean Ministry of Housing.
Investing in Communities
Barrick invests in every community where we
operate. Some examples of the numerous initiatives
we are supporting are highlighted below:
IN CHILE | Barrick helped 125 families move into new
homes as part of an initiative aimed at alleviating
poverty in Chile’s Atacama Region. Barrick’s partners
Barrick partnered with A Roof for Chile and the Chilean
government to enable 125 Chilean families living in
poverty to become homeowners. Pictured above, the
families outside their new homes.
22
IN THE DOMINICAN REPUBLIC | The company has
invested in numerous community projects around
the Pueblo Viejo mine to improve health care,
housing, infrastructure and literacy. Additional
funding has been allocated to conduct the clean-up
of a former mining operation and remediate its
impacts outside the current Pueblo Viejo mine site,
helping to improve the local living environment.
IN ZAMBIA | Barrick invested in a wide range of
sustainable development initiatives in 2012. These
included funding for infra structure, such as schools
and health centers, literacy and agricultural
programs, community sports and recreation, and
an initiative to provide microcredit and small
business loans to women.
IN ARGENTINA | At the end of 2012, Barrick’s
operations in Argentina generated employment for
a total of 15,800 people, including direct employees
and third-party contractors. The company is provid-
ing skills training programs, purchasing from local
suppliers and investing in host communities. These
investments in agribusinesses, health, tourism, and
internet connectivity further leverage the positive
socio-economic impact of our business.
IN THE UNITED STATES | A long-time supporter
of education at all levels in Nevada, Barrick recently
signed a four-year sponsorship agreement with
the NGO Communities in Schools that is helping
at-risk students at two Nevada middle schools stay
in school and succeed academically.
Barrick Gold Corporation | Annual Report 2012 The Alto Chicama
Commitment is an
initiative involving
NGOs and governments
working with Barrick
on sustainable develop-
ment projects in rural
northern Peru.
100%
Barrick sites that have
a working grievance
mechanism in place.
Relationship-Building
Our goal is to build strong relationships with a
broad range of stakeholders, including govern-
ments, NGOs, civil society and others. By working
together, we are better able to address the
issues facing our host communities and countries
and achieve more sustainable outcomes, while
continuously improving our performance. Some
examples of our efforts in 2012 are provided below:
CSR ADVISORy BOARD: Barrick established an
external CSR Advisory Board in 2012 to provide
advice and guidance to the company’s senior
leadership team on our social and environmental
performance. The inaugural Board met twice over
the course of the year and included five highly
distinguished individuals – Aron Cramer, Elizabeth
Dowdeswell, Robert Fowler, Edward Liebow, and
Gare Smith – as well as Professor John Ruggie,
who served as a Special Consultant to the Advisory
Board. This third-party feedback and counsel is
one of the many ways we are working to improve
our performance and deliver on our commitment
to mining responsibly.
COMMUNITIES: In 2012, Barrick began implement-
ing its Community Relations Management System
(CRMS) at all of its mines worldwide. The CRMS
sets minimum performance requirements that
are aligned with international best practice to
ensure community relations activities are carried
out in a systematic and professional manner.
Grievance mechanisms were one of the priorities
for implementation in 2012, which provide local
stakeholders with an accessible, transparent
mechanism to voice their concerns to the company.
In 2012, Barrick’s inaugural CSR Advisory Board
included, from left to right, Ed Liebow, Gare Smith,
Aron Cramer, Elizabeth Dowdeswell, John Ruggie
(Special Consultant to the Advisory Board) and
Robert Fowler.
NGOs: Barrick unveiled the Alto Chicama
Commitment, an initiative involving NGOs and
governments working together with Barrick
on sustainable development projects in northern
Peru. This collaborative model, which follows
on the success of the Atacama Commitment in
Chile, features alliances with such respected
NGOs as CARE and World Vision.
Government Relations
Barrick’s government relations program is critical
to achieving our business goals and is a significant
strength for the company in managing our opera-
tions and the political risk inherent in complex
jurisdictions. We ensure that we are trusted partners
with all levels of government where we have
23
Barrick Gold Corporation | Annual Report 2012 CORPORATE RESPONSIBILITy
projects and operations. We build and maintain
productive relationships with regulators and public
policy makers that underscore our role as a respon-
sible operator. We conduct our activities in a
transparent way and commit to rigorous implemen-
tation of the standards set out by our home and host
countries. Our collaborative approach to working
with governments helps us to secure necessary
approvals and stability agreements, negotiate permit
requirements and supports project financing.
As a Canadian multinational company, we endeavor
to ensure our investments are protected through
multilateral and bilateral investment and free trade
agreements and advocate for the creation of such
The First Lady of Zambia, Dr. Christine Kaseba (center),
celebrates International Women’s Day at the
Lumwana mine.
24
Barrick’s $50 million
Punta Colorada wind
farm in Chile.
19 mines
are now zero discharge,
with all water recycled
and reused for mining
purposes on site.
where none exists. Finally, we work closely with
our international and domestic peers through
the World Gold Council, the Inter national Council
on Mining and Metals, the Mining Association
of Canada, the National Mining Association of
the United States, and other national associations
in countries where we operate. Through these
associations, we advocate for best practices,
participate in the creation of industry standards,
communicate and document the economic
and social benefits of resource development to
host countries, and collaborate on managing
collective risks.
ENVIRONMENTAL RESPONSIBILITy
In the mining industry today, there is a stronger
focus on environmental responsibility than ever
before. From exploration to reclamation, we are
working to identify, control and mitigate the
impacts of our activities on land, air and water.
Our programs that lead to energy savings and
reduce water consumption and emissions keep us
competitive and protect our ability to operate.
In 2012, Barrick completed implementation of
its Environmental Management System (EMS)
at all operations, which is designed to improve
environmental performance across the company.
Barrick’s EMS is aligned with high international
standards, including ISO 14001 and the Inter-
national Council on Mining and Metals Framework
for Sustainable Development. All North American
operations and business units and South American
operations are now ISO 14001 certified, with
further certifications achieved or underway in
Barrick Gold Corporation | Annual Report 2012 18%
Reduction in Total
Reportable Injury
Frequency Rate.
14001
Barrick’s Environ-
mental Management
System is aligned
with ISO 14001.
management standard to prevent fatigue-related
incidents, which is now being piloted at several sites.
Barrick will continue to increase management
presence in the field, focusing on compliance with
standards related to critical risks. In addition, the
company has implemented a rigorous approach to
investigate “near miss” incidents, engaging in
specialized training and analysis. The involvement
of leaders in these processes promotes quality
investigations and leads to better corrective actions
and more diligent follow up. Through these actions,
we continue to create a safety culture at Barrick
that is fundamental to how we work every day.
Barrick maintains emergency response teams at all its
sites around the world. These highly trained profession als
are the first responders to any mine emergency, and
often assist communities in times of need.
25
Australia Pacific. Our most recent operation to
achieve certification is the Porgera Joint Venture
in Papua New Guinea.
We recognize the risk that climate change poses to
society and to our long-term success. To mitigate
these risks, we set energy efficiency and greenhouse
gas emissions targets that lead to improvements
against business as usual. Our focus is to improve
processes across the organization – at mine sites
and in office settings. Barrick is also continuing
its efforts to use more renewable energy, building
on the success of our Punta Colorada wind farm in
Chile and our solar farm in Nevada. All Barrick mines
reuse water, and we continually seek new ways to
reduce the amount of water used for mining activities.
MEETING OUR RESPONSIBILITy
TO OUR EMPLOyEES
Barrick’s reputation as a safe operator reflects our
values and makes us an employer of choice. Our
Safety and Health Policy outlines the company’s
goal of a zero-incident work environment to
achieve our safety vision, which is “Every person
going home safe and healthy every day.” The
Barrick Safety and Health Management System is
our framework to reach that objective.
During 2012, Barrick reduced its Total Reportable
Injury Frequency Rate to 0.76, an 18 percent
reduction from 0.92 achieved in 2011. Across the
company, more diligent implementation of safety
standards is making a difference on the front line.
Ongoing installation of in-vehicle driver mentoring
systems is helping us coach drivers and reduce light
vehicle incidents. Barrick has also developed a
Barrick Gold Corporation | Annual Report 2012 Ethical Business
Practices
Our global policies and processes guide our business practices
and help ensure compliance with our core values.
Barrick employees worldwide participate in ethics training,
including at the Pascua-Lama project in Argentina.
Our company is built on a foundation of doing the
right thing in every situation. We guide our conduct
by the highest standards of honesty, integrity, and
ethical behavior. Nothing is more important to our
success as a company than these values, which are
vital to securing and maintaining respect from our
employees, the communities and governments where
we operate, and our shareholders.
We have several global policies and processes
in place to guide our employees and help
ensure compliance with our core values. These
values, policies and processes, combined with
our commitment to comply with all applicable
national and international laws, help guide
our day-to-day work as a responsible and
honest company.
CODE OF BUSINESS CONDUCT AND ETHICS
Barrick’s Code of Business Conduct and Ethics
embodies our commitment to conduct our business
in accordance with all applicable laws, rules and
regulations and to the highest ethical standards
throughout our worldwide organization. Adopted
by Barrick’s Board of Directors, the Code of Con-
duct applies to every Barrick employee. We ensure
that all employees are aware of and follow the
obligations contained in the Code through training,
certifications, communications, and other methods.
We also maintain an anonymous hotline where
26
Barrick Gold Corporation | Annual Report 2012 “ Barrick’s conduct is guided by the highest standards
of honesty, integrity, and ethical behavior. These
values are critical to our success and vital to securing
and maintaining the respect and trust of our
employees, the communities where we operate,
and our shareholders.”
Sybil Veenman, Senior Vice President and General Counsel
concerns about adherence to the Code can be
reported and we investigate all reports that are made.
for business and further enhance Barrick’s human
rights performance globally.
HUMAN RIGHTS
Barrick recognizes the equality and dignity of all
people, and respects human rights in every location
in which we operate. We believe that responsible
resource development can and should improve
human rights. In 2012, we continued to implement
a global cross-functional human rights compliance
program aligned with the UN Guiding Principles
on Business and Human Rights. As part of that
program, in 2012 we provided human rights
training in some capacity to more than 10,000
employees. We began conducting human rights risk
and impact assessments at key sites and projects.
We strengthened human rights due diligence in
our hiring practices and instituted human rights
requirements in agreements with third parties.
We also initiated a human rights remediation
framework at the Porgera Joint Venture in Papua
New Guinea to address claims of sexual violence
committed by employees. In late 2012, after
18 months of designing the remedy framework,
including consultations with leading human rights
experts, experts in violence against women, and
prominent local stakeholders, the program – which
is administered independently of the company –
began to accept claims. In 2012, Barrick also
assisted its affiliate African Barrick Gold in seeking
to remediate past human rights violations at the
North Mara mine in Tanzania.
Barrick also engages broadly in human rights
initiatives and partnerships. We serve on the Board
of Directors of the Voluntary Principles on Security
and Human Rights and, in 2012, entered into
new partnerships with leading human rights
organizations, including:
n A two-year partnership with the Danish Institute
for Human Rights to develop human rights tools
n Assisted in founding a Human Rights Working
Group with Business for Social Responsibility,
which now involves some two dozen
leading companies.
n Helping to lead the effort to establish a UN Global
Compact Network within Canada, serving as one
of the network’s core member companies.
ANTI-CORRUPTION AND FRAUD
As part of ensuring we operate ethically at all times,
Barrick maintains a cross-functional global anti-
corruption compliance program. In 2012, we
continued to enhance this program, which includes
training and due diligence on prospective employees
and third-party contractors. Barrick also seeks
to engage with leading entities and experts and
promote global anti-corruption efforts. Barrick
is a member of Transparency International and the
Extractive Industries Transparency Initiative. In
2012, we became a member of the World Economic
Forum’s Partnership Against Corruption Initiative
and became a lead member of Trace International
Inc.’s TRAC program, a global supply chain due
diligence and transparency tool.
COMPLIANCE
Maintaining Barrick’s license to operate requires
adherence to consistent standards and policies that
are applied on a global basis. We actively seek to
ensure that our policies and procedures are followed
through training, communication, reporting, investi-
gations, and other means. We conduct regular audits
to ensure our operations are adequately identifying
social, safety, security, environmental and other risks
and have appropriate plans in place to address them.
These assessments ensure appropriate compliance
with our requirements and identify areas where our
processes can be strengthened.
27
Barrick Gold Corporation | Annual Report 2012 Financial Report
Management’s Discussion and Analysis 29
Financial Statements 93
Notes to Consolidated Financial Statements 98
Mineral Reserves and Mineral Resources 163
Corporate Governance and Committees of the Board 171
Shareholder Information 172
Board of Directors and Senior Officers 174
Management’s Discussion
and Analysis (“MD&A”)
Management’s Discussion and Analysis (“MD&A”)
is intended to help the reader understand Barrick Gold
Corporation (“Barrick”, “we”, “our” or the “Company”),
our operations, financial performance and present and
future business environment. This MD&A, which has
been prepared as of February 13, 2013, should be read
in conjunction with our audited consolidated financial
statements for the year ended December 31, 2012.
Unless otherwise indicated, all amounts are presented
in US dollars.
For the purposes of preparing our MD&A, we
consider the materiality of information. Information is
considered material if: (i) such information results in, or
would reasonably be expected to result in, a significant
change in the market price or value of our shares; or
(ii) there is a substantial likelihood that a reasonable
investor would consider it important in making an
investment decision; or (iii) it would significantly 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 financial statements,
and Notice of Annual Meeting of Shareholders and
Proxy Circular will be available on our website at
www.barrick.com, on SEDAR at www.sedar.com and
on EDGAR at www.sec.gov. For an explanation of
terminology unique to the mining industry, readers
should refer to the glossary on page 88.
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by
reference in this MD&A, including any information as
to our strategy, projects, plans or future financial or
operating performance, constitutes “forward-looking
statements”. All statements, other than statements of
historical fact, are forward-looking statements. The
words “believe”, “expect”, “anticipate”, “contemplate”,
“target”, “plan”, “intend”, “continue”, “budget”,
“estimate”, “may”, “will”, “schedule” and similar
expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon
a number of estimates and assumptions that, while
considered reasonable by the Company, are inherently
subject to significant business, economic and competitive
uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from
those projected in the forward-looking statements. Such
factors include, but are not limited to: fluctuations in the
spot and forward price of gold and copper or certain
other commodities (such as silver, diesel fuel and
electricity); diminishing quantities or grades of reserves;
the impact of inflation; changes in national and local
government legislation, taxation, controls, regulations,
expropriation or nationalization of property 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;
the impact of global liquidity and credit availability on
the timing of cash flows and the values of assets and
liabilities based on projected future cash flows; increased
costs, delays and technical challenges associated with
the construction of capital projects; fluctuations in the
currency markets (such as Canadian and Australian
dollars, Chilean and Argentinean peso, British pound,
Peruvian sol, Zambian kwacha, South African rand,
Tanzanian shilling, and Papua New Guinean kina versus
the 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
29
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS obligations; risks arising from holding derivative
instruments (such as credit risk, market liquidity risk
and mark-to-market risk); risk of loss due to acts of
war, terrorism, sabotage and civil disturbances; business
opportunities that may be presented to, or pursued
by, the Company; our ability to successfully integrate
acquisitions or complete divestitures; operating or
technical difficulties in connection with mining or
development activities; employee relations; availability
and increased costs associated with mining inputs and
labor; litigation; the speculative nature of mineral
exploration and development, including the risks of
obtaining necessary licenses and permits; 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 mineral exploration,
development and mining, including environmental
hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion
or copper cathode losses (and the risk of inadequate
insurance, or inability to obtain insurance, to cover these
risks). Many of these uncertainties and contingencies
can affect our actual results and could cause actual
results to differ materially from those expressed or
implied in any forward-looking statements made by, or
on behalf of, us. Readers are cautioned that forward-
looking statements are not guarantees of future
performance. All of the forward-looking statements
made in this MD&A are qualified by these cautionary
statements. Specific reference is made to the most
recent Form 40-F/Annual Information Form on file with
the SEC and Canadian provincial securities regulatory
authorities for a discussion of some of the factors
underlying forward-looking 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 as
required by applicable law.
Changes in Presentation of Non-GAAP Financial
Performance Measures
We use certain non-GAAP financial performance
measures in our MD&A. These new measures are
intended to provide additional information only and
do not have any standardized meaning prescribed by
IFRS and should not be considered in isolation or as
substitutes for measures of performance prepared in
accordance with IFRS. Other companies may calculate
30
these measures differently. 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 79 of our
MD&A. In 2012, we added or made changes to the
following non-GAAP performance measures:
Total Cash Costs per pound, C1 Cash Costs per pound
and C3 Fully Allocated Costs per pound
In 2012, we replaced the non-GAAP measure “total
cash costs per pound” for our copper business with
“C1 cash costs per pound”. We believe that this
change will enable investors to better understand the
performance of our global copper segment in
comparison to other copper producers who present
results on a similar basis. As part of this change, we also
introduced “C3 fully allocated costs per pound”. The
primary difference between total cash costs and C1
cash costs is that royalties and non-routine charges are
excluded from C1 cash costs as they are not direct
production costs. C3 fully allocated costs per pound
include C1 cash costs, depreciation, royalties, exploration
and evaluation expense, administration expense and
non-routine charges.
Adjusted Operating Cash Flow
In 2012, we have adjusted our operating cash flow to
remove the effect of the “settlement of currency
contracts”. This settlement activity is not reflective of
the underlying capacity of our operations to generate
operating cash flow on a recurring basis, and therefore
this adjustment will result in a more meaningful
operating cash flow measure for investors and analysts
to evaluate our performance in the period and assess
our future operating cash flow generating capability.
Adjusted EBITDA
Starting in this MD&A, we are introducing “Adjusted
EBITDA” as a non-GAAP measure. We have adjusted our
EBITDA to remove the effect of “impairment charges”.
These charges are not reflective of our ability to generate
liquidity by producing operating cash flow and therefore
this adjustment will result in a more meaningful valuation
measure for investors and analysts to evaluate our
performance in the period and assess our future ability
to generate liquidity.
All-in Sustaining Cash Costs per ounce
Beginning in 2013, we are adopting an all-in sustaining
cash costs measure. The Company believes that current
operating measures commonly used in the gold industry
do not capture all of the sustaining expenditures incurred
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS in order to produce gold, and therefore they do not
present a complete picture of a company’s operating
performance or its ability to generate free cash flow from
its current operations. Similarly, they do not reflect all of
the expenditures that would be included in the valuation
of a gold mining company. For these reasons, the
Company is working with the members of the World
Gold Council (“WGC”) to define an all-in sustaining cash
costs measure that better represents the total costs
associated with producing gold. We believe this measure
will better meet the needs of analysts, investors and
other stakeholders of the Company in assessing its
operating performance, its ability to generate free cash
flow from current operations and its overall value.
The WGC project to define all-in sustaining cash
costs is ongoing and a final standard is expected in the
middle of 2013. We expect to conform our disclosure
of all-in sustaining cash costs to the measure that is
ultimately approved by the WGC. Our current definition
of all-in sustaining cash costs commences with total
cash costs and then adds sustaining capital expenditures,
corporate general and administrative costs, mine site
exploration and evaluation costs and environmental
rehabilitation costs. This measure seeks to represent
the total costs of producing gold from current
operations, and therefore it does not include capital
expenditures attributable to projects or mine expansions,
exploration and evaluation costs attributable to
growth projects, income tax payments, interest costs or
dividend payments. Consequently, this measure is not
representative of all of the Company’s cash expenditures.
In addition, our calculation of all-in sustaining cash costs
does not include depreciation expense as it does not
reflect the impact of expenditures incurred in prior
periods. Therefore, it is not indicative of the Company’s
overall profitability. All-in sustaining cash costs for 2012
are outlined in the table below:
($ per ounce)
For the year ended December 31
Total cash costs
Minesite sustaining capital expenditures
Mine development expenditures
Corporate administration applicable to gold segments
Exploration and evaluation
Environmental rehabilitation costs
All-in sustaining cash costs
2012
$ 584
155
114
51
21
20
$ 945
Please refer to pages 81 to 84 of this MD&A for a
detailed reconciliation of all-in sustaining cash costs.
Index
32 Overview
32 Our Business and Strategy
34 Review of 2012 Results
36 Key Business Developments
39 Outlook for 2013
43
Exploration and Mineral Reserves and
Mineral Resources Update
Enterprise Risk Management Approach
45
45 Market Overview
52 Review of Annual Financial Results
Production Costs
Exploration and Evaluation
52 Revenues
52
53 Corporate Administration
53 Other Expense/Other Income
53
53 Capital Expenditures
54
54
54
56 Operational Overview
57 Review of Operating Segments Performance
Finance Cost/Finance Income
Impairment Charges
Income Tax
63 Financial Condition Review
63 Balance Sheet Review
64
67
69 Commitments and Contingencies
Financial Position and Liquidity
Financial Instruments
70 Review of Quarterly Results
71
IFRS Critical Accounting Policies and Estimates
79 Non-GAAP Financial Performance Measures
88 Glossary of Technical Terms
31
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Overview
Our Business and Strategy
Our Business
Barrick’s vision is to be the world’s best gold mining
company by operating in a safe, profitable and
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 significant amounts of
copper and have significant silver reserves contained
within our gold reserves at our Pascua-Lama project.
Our large mineral inventory provides significant
optionality to metal prices, which supports mine life
extension and expansion investment opportunities
where the risk-adjusted returns are appropriate.
MARKET CAPITALIZATION as at December 31, 2012
(USD billions)
2012 GOLD PRODUCTION1
(millions of ounces)
8
7
6
5
4
3
2
1
0
Barrick
Newmont
Anglo
Gold
Ashanti
Gold
Fields
Kinross
Goldcorp
Newcrest
1. Based on fiscal 2012 results publicly available as of February 13, 2013.
10
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.
8
4
6
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
Pacific, each of which is led by its own Regional
President. We also hold a 73.9% equity interest in
African Barrick Gold plc (“ABG”), a publicly traded
company, which includes our previously held African
gold mines and exploration properties.
0
2
Barrick
Goldcorp
Newmont Newcrest
Anglo
Gold
Ashanti
Kinross
Gold
Fields
Our Global Copper business unit manages our
copper business with a view towards maximizing the
value of our copper and non-gold assets. The global
copper business unit manages the Zaldívar and
Lumwana mines and Jabal Sayid project.
60
50
40
30
20
10
0
40
30
20
10
0
60
50
40
30
20
10
32
0
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS 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. In
January 2013, we confirmed that we have commenced a
process to potentially divest Barrick Energy as part of our
ongoing global portfolio optimization in accordance with
our disciplined capital allocation framework.
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 efficiencies, allocating
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.
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, 2012
was as follows:
GOLD PRODUCTION BY REGION IN 2012
Our Strategy
Our actions are driven by our core values reflecting the
guiding principles used to run the Company and these
values provide the foundation for our strategy. Our core
values are:
n Integrity
n Respect and open communication
n Responsibility and accountability
n Teamwork
n Create shareholder value
In 2012, we renewed our focus on maximizing
shareholder value and reemphasized our commitment
to a disciplined capital allocation framework to guide
our decision making. Under this approach, all capital
allocation options, which include organic investment in
exploration and projects, and acquisitions or divestitures
to improve the quality of our portfolio, will be assessed
on the basis of maximizing risk-adjusted returns. Our
increased emphasis on free cash flow should position
the Company, in the future, with the potential to return
more capital to shareholders, repay debt, and make
additional attractive return investments to upgrade our
portfolio. We will seek to optimize the overall returns
from our portfolio of assets and projects. Consequently,
investments in existing assets that do not generate target
returns or long-term free cash flow will be deferred,
shelved or divested to improve the overall quality of our
portfolio. Our strategy and approach to capital allocation
has been summed up as follows:
RETURNS WILL DRIVE PRODUCTION;
PRODUCTION WILL NOT DRIVE RETURNS.
North America 47%
Africa 6%
South America 22%
Australia Pacific 25%
33
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Review of 2012 Results
2012 Fourth Quarter and Year-End Results
($ millions, except where indicated)
2012
2011
2012
2011
For the three months ended
December 31
For the years ended
December 31
Financial Data
Revenue
Net earnings/(loss)1
Per share (“EPS”)2
Adjusted net earnings3
Per share (“adjusted EPS”)2,3
EBITDA3
Adjusted EBITDA3
Total consolidated project capital expenditures
Total capital expenditures – expansion, sustaining and mine development
Operating cash flow
Adjusted operating cash flow3
Adjusted operating cash flow before working capital changes3
Free cash flow3
Adjusted return on equity3
Operating Data
Gold
Gold produced (000s ounces)4
Gold sold (000s ounces)
Realized price ($ per ounce)3
Total cash costs ($ per ounce)3
All-in sustaining cash costs ($ per ounce)3
Copper
Copper produced (millions of pounds)
Copper sold (millions of pounds)
Realized price ($ per pound)3
C1 cash costs ($ per pound)3
$ 4,189
(3,062)
(3.06)
1,108
1.11
(4,023)
2,173
697
1,000
1,672
1,752
1,696
(66)
$
19%
2,019
2,027
$ 1,714
$ 584
$ 972
130
154
$ 3.54
$ 2.07
$ 3,761
959
0.96
1,166
1.17
1,998
2,210
663
652
1,224
1,299
1,405
68
$
20%
1,814
1,865
$ 1,664
$ 505
$ 826
143
135
$ 3.69
$ 1.96
$ 14,547
(665)
(0.66)
3,827
3.82
987
7,457
2,616
3,206
5,439
5,156
5,392
(838)
$
17%
7,421
7,292
$ 1,669
584
$
945
$
468
472
$ 3.57
$ 2.17
$ 14,236
4,484
4.49
4,666
4.67
8,376
8,611
2,275
2,316
5,315
5,680
5,819
$ 1,082
22%
7,676
7,550
$ 1,578
460
$
752
$
451
444
$ 3.82
$ 1.71
1. Net earnings represent net income attributable to the equity holders of the Company.
2. Calculated using weighted average number of shares outstanding under the basic method.
3. Adjusted net earnings, adjusted EPS, EBITDA, adjusted EBITDA, adjusted operating cash flow, adjusted operating cash flow before working capital changes, free
cash flow, adjusted return on equity, realized price, total cash costs, all-in sustaining cash costs and C1 cash costs are non-GAAP financial performance measures
with no standardized definition under IFRS. For further information and a detailed reconciliation, please see pages 79–87 of this MD&A.
4. We sold our 20.4% investment in Highland Gold with an effective date of April 26, 2012. Production includes our equity share of gold production at Highland
Gold up to that date.
Key Highlights:
n Net losses for 2012 were $665 million, compared
to net earnings in the prior year of $4.5 billion.
The decrease reflects the impact of impairment
charges of $4.4 billion (net of tax effects), which
includes $3.8 billion in after-tax impairment charges
attributable to our copper business, primarily due to
asset impairment charges at Lumwana, higher gold
and copper cost of sales, lower gold sales volumes
and lower realized copper prices, partially offset
by higher realized gold prices and higher copper
sales volumes as well as lower income tax expense.
Adjusted net earnings for 2012 were $3,827 million,
down 18% over the prior year. The decrease primarily
reflects higher gold and copper cost of sales, lower
gold sales volumes and lower realized copper prices,
partially offset by higher realized gold prices, higher
copper sales volumes and lower income tax expense.
34
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
n Gold production for 2012 was 7.4 million ounces,
down slightly from the prior year, due to lower
production in South America, Australia Pacific and
ABG, partially offset by increased production in North
America. Total cash costs for 2012 were $584 per
ounce, up 27% over the prior year. The increase
reflects 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 producer, which resulted
in higher consolidated unit production costs.
n Copper production for 2012 was 468 million pounds,
up 4% over the prior year, primarily due to the
inclusion of a full year production from Lumwana,
compared to only seven months in the comparable
prior year period, partially offset by lower production
at Zaldívar. Copper C1 cash costs for 2012 were
$2.17 per pound, up 27% over the prior year.
The increase reflects higher unit production costs
at Lumwana.
n Significant adjusting items (net of tax effects) in 2012
include: impairment charges of $4.4 billion, which
includes $3.8 billion in after-tax impairment charges
attributable to our copper business, primarily due
to asset impairment charges at Lumwana – refer
to discussion about Lumwana in the Key Business
Developments section of this MD&A on page 36 for
further details; asset impairment charges on various
properties in our oil & gas business unit ($155 million);
asset impairment charges on an exploration property
in Papua New Guinea ($141 million); write-down
of our investment in Reko Diq ($120 million – refer
to the discussion regarding Reko Diq on page 38 of
this MD&A for more information); and a write-down
of our investment in Highland Gold ($84 million),
partially offset by $83 million in tax adjustments not
related to current period earnings and $37 million in
unrealized gains on non-hedge derivative instruments.
n Operating cash flow for 2012 was $5,439 million,
up 2% over the prior year. The increase in operating
cash flow primarily reflects a decrease in income
tax payments of $509 million, $385 million in net
proceeds related to the settlement of a portion of our
Australian dollar hedge positions and a decrease in net
working capital outflows, partially offset by lower net
earnings. Adjusted operating cash flow for 2012 was
$5,156 million, down 9% over the prior year. Adjusted
operating cash flow was affected by the same factors
as operating cash flow and removes the impact of the
Australian dollar hedge settlement and non-recurring
tax payments of $52 million.
n Capital expenditures were $6,369 million, up 28%
over the prior year. Capital expenditures attributable
to Barrick for 2012 were $5,994 million, up 30% over
the prior year. The increase reflects higher project
capital expenditures and an increase in minesite
expansion and mine development expenditures.
n Free cash flow for 2012 decreased by $1,920 million
over the prior year, primarily reflecting lower adjusted
operating cash flow and higher capital expenditures.
n In first quarter 2012, our Board of Directors
authorized a quarterly dividend of 20 cents per share,
which equates to 80 cents per share on an annualized
basis and represents a 33% increase from the previous
quarterly dividend of 15 cents per share. Over the last
six years, Barrick has had a consistent track record
of returning capital to shareholders, increasing its
dividends by more than 260%. 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 profile.
35
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS completed, the ore body did not meet our economic
expectations. While the drilling increased reserves and
defined significant additional mineralization, some
at higher grades, much of it was deep and would require
a significant amount of waste stripping, which makes
it uneconomic based on our expected operating costs
and current market copper prices. At higher copper
prices, however, much of this copper will be economic
and come into reserves and resources.
The new LOM plan also reflects revised operating
and sustaining capital costs after results of the drill
program were incorporated into a new block model for
the life-of-mine plan. The revised LOM cost estimates
– under present copper price assumptions – reduced
expected copper production and, in turn, profitability
over the mine life. As a result, we have recorded an
after-tax asset impairment charge of $3.0 billion for
Lumwana in the fourth quarter. We also recorded a
goodwill impairment of $0.8 billion for the copper
business unit for a total charge of $3.8 billion. We
continue to progress a number of key initiatives to lower
costs, including improvements to operating systems
and processes, and a full transition to an owner
maintained operation. A focus on higher utilization and
productivity of the mining fleet has also been identified
as one of the major opportunities to improve value.
Until we can improve mining costs, and/or copper prices
increase, the expansion opportunity to increase the
throughput capacity of the processing plant does not
meet our investment criteria. The Company will only
invest capital if it generates acceptable rates of return
suitable to the size of the capital investment. We will
not invest capital simply to increase production.
Pascua-Lama
Pascua-Lama is a world-class resource with nearly
18 million ounces of proven and probable gold reserves,
676 million ounces of silver contained within the gold
reserves, and a mine life of 25 years. It is expected to
produce an average of 800,000 – 850,000 ounces of
gold and 35 million ounces of silver in its first full
five years of operation at all-in sustaining cash costs of
$50 – $200 per ounce1 and total cash costs of $0 to
negative $150 per ounce1. Including depreciation
of mine construction capital, costs are expected to be
$550 – $700 per ounce2.
1. Based on first full five year average gold, silver and WTI oil price assumptions
of $1,700/oz, $30/oz and $90/bbl, respectively, and assuming a Chilean peso
assumption of 475:1. Does not include escalation for future inflation.
2. Based on first full five year average and includes mine construction capital
of $8 – $8.5 billion.
FACTORS AFFECTING ADJUSTED OPERATING CASH FLOW
400
664
5,680
904
288
5,156
275
121
1
1
0
2
w
o
l
f
h
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FACTORS AFFECTING ADJUSTED NET EARNINGS
5000
4,666
664
4000
3000
2000
1000
t
e
n
d
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t
s
0
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d
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j
1
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288
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36
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Key Business Developments
Lumwana
We have prepared a new life-of-mine (LOM) plan for
Lumwana, which reflects information obtained from
the exploration and infill drilling program that was
completed late in the fourth quarter of 2012. The
purpose of the drilling program was to better define
the limits of mineralization and develop an updated,
more comprehensive block model of the ore body
for mine planning purposes. After this drilling was
36
5000
4000
3000
2000
1000
0
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
During the fourth quarter, the cost estimate and
schedule for the project was finalized. Expected total
mine construction capital remains unchanged in the
range of $8.0 to $8.5 billion, and includes a contingency
of 15 – 20 percent of remaining capital. First gold
production continues to be targeted for the second
half of 2014. Incentives for both Fluor and Techint,
our Engineering, Procurement, and Construction
Management (“EPCM”) partners, are based on the
completion of the project in line with this estimate
and schedule.
As of December 31, 2012, approximately $4.2 billion
had been spent and construction was approximately
40 percent complete, largely in line with plan. The four
kilometer long tunnel which conveys the ore from Chile
to Argentina was approximately 70 percent complete.
Construction of the primary crusher in Chile commenced
in January 2013 and in Argentina, construction of the
process plant facility advanced with approximately
60 percent of structural steel erected.
In September and October 2012, two constitutional
rights protection actions were filed in Chile by
representatives of an indigenous community and certain
other individuals, seeking the suspension of construction
of the Chilean portion of the Pascua-Lama project due
to alleged non-compliance with the requirements of the
project’s Chilean environmental approval. Both cases
have been admitted for review by the Court, with the
first action proceeding towards a hearing. We intend to
vigorously defend these actions.
During the fourth quarter of 2012, considerably
stronger than normal winds contributed to increased
dust in the open pit area. We immediately voluntarily
halted pre-stripping activities in order to implement
additional dust mitigation and control measures.
Subsequently, regulatory authorities in Chile issued an
order to suspend pre-stripping until such dust-related
concerns are addressed. The project is strengthening dust
mitigation and control measures, including enhanced
tunnel ventilation, revised blasting fragmentation, use of
more robust protective equipment and a dust monitoring
system. Restrictions may also be placed on the project
due to the need to repair and improve certain aspects of
the water management system in Chile.
Pre-stripping is unlikely to recommence until matters
related to dust and water management are resolved. To
date, the suspension of pre-stripping has not altered
our target of first production in the second half of 2014.
However, the outcomes of the regulatory processes, and
of constitutional rights protection actions, are uncertain.
We will continue to assess the potential for impacts on
the timing of first gold production.
Pueblo Viejo
In the fourth quarter, pre-commercial production from
the new Pueblo Viejo mine was 65,000 ounces (Barrick’s
60 percent share), while plant commissioning advanced.
In January 2013, the mine achieved commercial
production. Modifications to one of the four autoclaves
were carried out in December 2012 to implement design
improvements and allow for higher throughputs, and are
expected to be completed on the remaining three
autoclaves in the first half of 2013. For 2013, Barrick’s
share of production from Pueblo Viejo is anticipated to
be 500,000 – 650,000 ounces at all-in sustaining cash
costs of $525 – $575 per ounce3 and total cash cost of
$375 – $425 per ounce3. The mine is expected to ramp
up to full capacity in the second half of the year. Barrick’s
share of average annual gold production in the first full
five years of operation is anticipated to be 625,000 –
675,000 ounces at all-in sustaining cash costs of $500 –
$600 per ounce4, total cash costs of $300 – $350 per
ounce3. Including depreciation of mine construction
capital, costs are expected to be $650 – $750 per
ounce5. A 215 MW dual fuel power plant at an
estimated cost of approximately $180 million (Barrick’s
60 percent share) is expected to commence operations in
2013 utilizing heavy fuel oil, but has the ability to
subsequently transition to lower cost liquid natural gas.
Certain members of the Dominican Republic (“DR”)
congress, including the President of the Chamber of
Deputies have expressed a desire to amend the Special
Lease Agreement (“SLA”) to accelerate and increase the
benefits that the DR will derive from the Pueblo Viejo
mine. The SLA, which provides for substantial benefits
to the DR, including royalties and taxes, in addition to
the other benefits such as employment and purchasing
of goods and services, was approved by Congress in
2009 and cannot be unilaterally altered. However, the
3. Actual results will vary depending on how the ramp-up progresses.
4. Based on first full five year average and gold and WTI oil price assumptions
of $1,700/oz and $90/bbl, respectively. Does not include escalation for
future inflation.
5. Based on first full five year average and includes mine construction capital
of $3.7 billion.
37
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Company, while reserving its rights under the SLA,
has engaged in dialogue with representatives of the
government with a view to achieving a mutually
acceptable outcome. At this time, the outcome of the
dialogue is uncertain, but any amendments to the
SLA could impact the overall economics.
Jabal Sayid
Construction of the processing infrastructure for the
Jabal Sayid copper mine in Saudi Arabia was completed
in third quarter 2012, but commissioning was delayed
when the company received notification from the HCIS
ministry that the mine site was not in compliance with
the recently introduced safety and security standards.
Following receipt of the notification, all explosives were
removed from the site and a dedicated EPCM team has
been working towards, and making progress towards,
achieving full compliance with these standards in a
process that is expected to take until 2014 and cost
approximately $100 million. In the meantime, the
number of employees at site has been reduced to
minimize holding costs and management is using 2013
to complete a hauling/hoisting optimization study with
the goal of improving LOM cash flow from the mine
when it comes into production in 2014.
Once Jabal Sayid comes into production, the average
annual copper output in concentrate is expected to be
100 – 130 million pounds at C1 cash costs of $1.50 –
$1.70 per pound6 in its first full five years of operation.
Since the Company acquired its interest in the Jabal
Sayid project through its acquisition of Equinox Minerals
in 2011, the Deputy Ministry for Mineral Resources
(DMMR), which oversees the mining license, has
questioned whether such change in the indirect
ownership of the project, as well as previous changes
in ownership, required the prior consent of DMMR. In
December 2012, DMMR required the project to cease
commissioning of the plant using stockpiled ore, citing
alleged noncompliances with the mining investment law
and the mining license, and in January 2013 required
related companies to cease exploration activities, citing
noncompliance with the law and the exploration licenses
related to the ownership changes. The Company does
not believe that such consent was required as a matter
of law, but has responded to requests of DMMR,
including through the provision of additional guarantees
and undertakings, and stated its firm desire to fully
satisfy any related requirements of DMMR.
Reko Diq
In fourth quarter 2012, we recorded a write-down of
$120 million related to our investment in Tethyan Copper
Company (“TCC”), which holds our interest in the Reko
Diq project, due to political, legal, and regulatory
uncertainties, particularly in regard to Pakistan and the
Province of Balochistan. This write-down has been taken
without prejudice to the legal remedies that may be
obtained through the ongoing arbitration proceedings
brought by TCC against the Government of Pakistan
with the International Centre for Settlement of
Investment Disputes asserting breaches of the Bilateral
Investment Treaty between Australia (where TCC is
incorporated) and Pakistan, and another against the
Province of Balochistan with the International Chamber
of Commerce asserting breaches of the joint venture
agreement between TCC and Balochistan.
Other developments
In January 2013, we confirmed that we have commenced
a process to potentially divest Barrick Energy as part of
our ongoing global portfolio optimization in accordance
with our disciplined capital allocation framework.
In January 2013, we also announced that we are no
longer in discussions with China National Gold regarding
the possible sale of our 73.9% equity interest in ABG.
6. Does not include escalation for future inflation.
38
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook for 2013
2013 Guidance Summary
Gold production and costs
Production (millions of ounces)1
Cost of sales2
Gold unit production costs
All-in sustaining cash costs ($ per ounce)3
Total cash costs ($ per ounce)4
Depreciation ($ per ounce)5
Copper production and costs
Production (millions of pounds)
Cost of sales6
Copper unit production costs
C1 cash costs ($ per pound)
Depreciation ($ per pound)
C3 fully allocated costs ($ per pound)
Exploration and evaluation expense
Exploration
Evaluation
Corporate administration
Other Expense7
Finance costs
Capitalized interest
Capital expenditures:
Minesite sustaining
Mine development
Minesite expansion
Projects – initial capital
Projects – infrastructure
Total capital expenditures
Effective income tax rate
Key Assumptions
Gold Price ($/ounce)
Copper Price ($/pound)
Silver Price ($/ounce)
Oil Price ($/barrel)
AUD Exchange Rate
CLP Exchange Rate
2012
Actual
2013
Guidance
7.4
6,210
945
584
191
468
1,279
2.17
0.46
2.97
429
293
136
195
633
177
547
1,281
1,071
612
2,353
130
5,447
32%
7.0 – 7.4
6,700 – 7,000
1,000 – 1,100
610 – 660
210 – 220
480 – 540
1,200 – 1,400
2.10 – 2.30
0.30 – 0.40
2.60 – 2.85
280 – 300
220 – 230
60 – 70
160 – 180
420 – 440
425 – 450
380 – 400
1,000 – 1,100
1,200 – 1,300
800 – 900
2,400 – 2,600
300 – 400
5,700 – 6,300
30%
$ 1,700
$ 3.50
32
$
$
90
$ 1.00
475
1. Guidance for gold production reflects Barrick’s equity share of production from ABG (73.9%) and Pueblo Viejo (60%).
2 Cost of sales applicable to gold includes depreciation expense and cost of sales applicable to the non-controlling equity interests in ABG and Pueblo Viejo. Cost
of sales guidance does not include proceeds from by-product metal sales or the net contribution from Barrick Energy, whereas guidance for total cash costs does
reflect these items.
3. Beginning in 2013, we are adopting an all-in sustaining cash costs measure that better reflects the full cost of producing gold from our current operations
(see page 81 of this MD&A for further details).
4. 2013E total cash costs reflects an amendment to our accounting policy on production phase stripping costs as a result of the implementation of IFRIC 20
(see page 72 of this MD&A for further details.) The implementation of IFRIC 20 will result in an increase in the amount of stripping costs that are capitalized
(as mine development) and a corresponding decrease in total cash costs. Our 2012 total cash costs, restated for the change in accounting policy, are estimated
to be about $560 per ounce and mine development expenditures were higher by about $430 million. Total cash costs includes expected proceeds of
approximately $306 million (2012: $140 million) from the sale of by-product metals and the net contribution of approximately $105 million from Barrick Energy
(2012: $90 million).
5. Includes depreciation expense related to Barrick Energy.
6. Cost of sales applicable to copper includes depreciation expense.
7. Other expense includes RBU segment administration costs of $180 – $200 million (2012: $222 million). Other expense is expected to be lower in 2013 as 2012 costs
include adjusted items of approximately $118 million in adjusting items that we excluded from our definition of adjusted net earnings, primarily due to amounts
attributable to foreign currency translation losses on working capital balances and the effect of discount rate changes on environmental provisions at closed sites.
39
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
2013 Guidance Analysis
Production
We prepare estimates of future production based on
mine plans that reflect the expected method by which
we will mine reserves at each site. Actual gold and
copper production may vary from these estimates due
to a number of 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,
regulatory and political risk, the regulatory environment
and the impact of global economic conditions. Mining
rates are also impacted by various risks and hazards
inherent at each operation, including natural
phenomena, such as inclement weather conditions,
floods and earthquakes, geotechnical and unexpected
civil disturbances, labor shortages or strikes.
We expect 2013 gold production to be about 7.0 to
7.4 million ounces. Our gold production mix is expected
to change as a result of higher production in North
America, which is offset by lower production in South
America. The production mix within North America is
also expected to change due to the ramp-up of Pueblo
Viejo to full production in the second half of 2013,
partially offset by reduced production from Goldstrike
and Cortez. At Goldstrike, lower production is
attributable to lower grade and lower tons processed,
primarily due to reduced autoclave capacity due to
construction activity related to the thiosulfate project
(refer to page 57 for further details regarding this
project). At Cortez, lower production is expected due
to lower average head grades and a change in the mix
of ore processed to more heap leach tons, which have
lower recovery rates.
South American production is expected to be lower
than 2012 levels, primarily due to lower production
at Veladero and Lagunas Norte. At Veladero, lower
production is a result of mining less ore tons at lower
average grades and an increase in waste tons mined as
a result of a higher stripping ratio in 2013. At Lagunas
Norte, lower production is due to lower average ore
grades and lower expected recovery rates as a result
of the mining of a higher percentage of sulfide ore.
Production at Australia Pacific is expected to be
consistent with 2012 levels and production at ABG is
expected to be slightly lower than 2012, primarily due
to lower than expected ore tons mined at Bulyanhulu
combined with the expected closure of Tulawaka in the
second quarter.
Copper production is expected to increase from
468 million pounds in 2012 to about 480 to 540 million
pounds in 2013, due to higher production from
Lumwana. Higher production at Lumwana is expected
as a result of the processing of more tons at higher
average ore grades. The increase in tons processed
reflects higher plant throughput in 2013 as a result
of a larger fleet and improved utilization and availability
of equipment. Production at Zaldívar is expected to
remain at levels similar to 2012.
Revenues
Revenues include consolidated sales of gold, copper, oil
and metal by-products. Revenues from oil and metal
by-products are reflected in our guidance for total cash
costs. Revenues from gold and copper reported in 2013
will reflect the sale of production at market gold and
copper prices and the impact of our copper collar
contracts, where we have put in place floor protection
on approximately 50% of our expected copper
production in 2013 at an average floor price of $3.50 per
pound. In addition, we have sold an equal amount of
call options at an average price of $4.25 per pound.
Barrick does not provide guidance on 2013 gold and
copper prices, but we have assumed a gold price of
$1,700 per ounce and a copper price of $3.50 per
pound for the purpose of preparing our internal plans.
Cost of Sales, Total Cash Costs and All-in
Sustaining Cash Costs
We prepare estimates of cost of sales, total cash costs
and all-in sustaining cash costs based on expected costs
associated with mine plans that reflect the expected
method by which we will mine reserves at each site. Cost
of sales, total cash costs and all-in sustaining 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.
40
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Cost of sales applicable to gold is expected to be
in the range of $6.7 to $7.0 billion, compared to
$6.2 billion in 2012. The increase is primarily due to
the commencement of operations at Pueblo Viejo,
combined with higher direct mining costs, particularly
higher labor, power, energy, maintenance and
consumable costs, due to an increase in total tons mined
and processed in 2013 compared to the prior year.
Total cash costs are expected to be in the range of
$610 to $660 per ounce, up from $584 per ounce in
2012. The increase in total cash costs is primarily due to
the impact of an increase in tons mined and processed
in order to offset the impact of lower ore grades
on production levels, particularly in North America and
South America. Higher tonnage production in 2013
requires increased amounts of labor, power, energy and
maintenance and consumables compared to the prior
year. Other cost pressures include the increase in
our effective Australian dollar hedge rates from 2012
to 2013.
Beginning in 2013, we are adopting an all-in
sustaining cash costs measure that better reflects the full
cost of producing gold from our current operations.
All-in sustaining cash costs are expected to be in the
range of $1,000 – $1,100 per ounce for gold, up from
$945 per ounce in 2012. The increase principally reflects
the increase in total cash costs per ounce sold from
$584 per ounce to our expected range of $610 – $660
per ounce. For comparison purposes, we have provided
our all-in sustaining cash costs figure for 2012 in the
table below:
($ per ounce)
For the year ended December 31
Total cash costs
Minesite sustaining capital expenditures
Mine development expenditures
Corporate administration applicable to gold segments
Exploration and evaluation
Environmental rehabilitation costs
All-in sustaining cash costs
2012
$ 584
155
114
51
21
20
$ 945
Cost of sales applicable to copper is expected to be in
the range of $1,200 to $1,400 million, compared to
$1,279 million in the prior year. The increase primarily
reflects the increase in expected production levels.
C1 cash costs are expected to be in the range of $2.10
to $2.30 per pound for copper, as compared to C1 cash
costs of $2.17 per pound in 2012. C3 cash costs are
expected to be in the range of $2.60 – $2.85 as
compared to C3 costs of $2.97 per pound in 2012.
Exploration and Evaluation
We expect to expense approximately $280 to $300
million of Exploration and Evaluation (E&E) expenditures
in 2013. Costs primarily reflect ongoing programs at
Cortez, Cerro Casale, Veladero, and Jabal Sayid.
Finance Costs
Finance costs primarily represent interest expense on
long-term debt. We expect higher finance costs in 2013,
primarily due to lower capitalized interest at Pueblo Viejo
following commencement of commercial production in
2013, and at Lumwana as a result of the deferral of the
expansion plan.
Capital Expenditures
Total capital expenditures for 2013 are expected to be
in the range of $5.7 to $6.3 billion, compared to
$5.4 billion in 2012. The expected increase is primarily
related to an amendment to our accounting policy on
production phase stripping costs as a result of the
implementation of IFRIC 20 in 2013. The adoption of
IFRIC 20 will result in an increase in capitalized stripping
costs (2012: estimated to be about $430 million). In
addition, capital expenditures were about $300 million
less than expected in 2012 due to timing delays with
respect to the completion of certain projects and
initiatives, which have resulted in a shift in the outlays
into 2013. Excluding the impact of the change in
accounting policy and the timing impact of the deferral
of some 2012 expenditures, expected capital
expenditures in 2013 are in line with our budgeted 2012
levels. Increases in project expenditures and mine
expansion expenditures are expected to be offset by a
decrease in sustaining expenditures, which reflects our
ongoing cost reduction efforts.
Minesite Sustaining
Sustaining capital expenditures are expected to decrease
from 2012 expenditure levels of $1,281 million to about
$1,000 to $1,100 million, mainly due to the completion
of various projects in North America in 2012 related to
infrastructure and tailings facility construction, mainly at
Cortez, partially offset by the inclusion of a full year of
sustaining capital expenditures at Pueblo Viejo.
41
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Mine development
Mine development capital expenditures include
capitalized waste stripping costs at our open pit mines,
underground mine development and exploration and
evaluation expenditures that meet our criteria for
capitalization. In 2013, mine development expenditures
are expected to be in the range of $1,200 million to
$1,300 million, up from $1,071 million in 2012. This
increase is primarily due to the change in our accounting
policy on production phase stripping costs. Capitalized
stripping and underground development expenditures
in 2013 are largely attributable to significant waste
stripping activity at Bald Mountain, Cortez, Goldstrike,
Porgera, Veladero and Cowal.
Minesite Expansion
The expected increase in expansion capital relates to
various projects to increase production compared to
current LOM levels at Goldstrike and Turquoise Ridge in
North America, Lagunas Norte in South America and at
ABG’s Bulyanhulu mine. Minesite expansion expenditures
also include capitalized expenditures related to the
Goldrush project that were expensed in 2012.
Project Capital Expenditures
($ millions)
Projects – initial capital
Pascua-Lama
Pueblo Viejo (60% basis)
Cerro Casale (75% basis)
Jabal Sayid
Projects – infrastructure
Pascua-Lama
Pueblo Viejo (60% basis)
2012
Actual
2013
Guidance
$ 1,809
367
32
145
$ 2,200 – $ 2,400
~$ 40
~$ 20
~$ 100
$ 2,353
$ 2,400 – $ 2,600
$
8
122
$ 250 – $ 325
$ 50 – $ 75
$ 130
$ 300 – $ 400
Projects – Initial Capital
Projects – initial capital expenditures reflect capital
expenditures related to the initial construction of the
project. The initial capital reflects the amounts included
in our estimate of initial construction costs that we
provide external guidance on. It reflects all of the
expenditures required to bring the project into operation
and achieve commercial production levels. In 2013 we
expect our share of initial capital costs on our projects
to be in the range of $2,400 to $2,600 million, in line
with capital costs of $2,353 million in 2012. This reflects
an increase in the construction activity at Pascua-Lama,
partly offset by lower project capital expenditures at
Pueblo Viejo following the commencement of
commercial production in early 2013.
Projects – Infrastructure
Projects – infrastructure capital expenditures reflect
expenditures on mine site infrastructure that were not
included in the initial construction budget of the project.
These expenditures are not necessary to achieve initial
commercial production but are required to support the
long-term sustainability of the operation. In 2013, these
expenditures include the completion of the dual fuel
power plant at Pueblo Viejo, as well as expenditures at
Pascua-Lama related to the second primary crusher and
other site infrastructure. The Pascua-Lama expenditures
were originally expected to be incurred after the start-up
of commercial production, but have now been advanced
in order to take advantage of construction synergies.
Income Taxes
Our underlying expected effective tax rate of 30%
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 2013 are expected to be consistent with
2012. Cash tax payments in 2013 are expected to be
the highest in the second quarter due to the settlement
of some 2012 liabilities and operating cash flow will
be reduced accordingly.
42
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
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 C1 cash costs
WTI crude oil price3
Chilean peso exchange rate3
2013 Guidance
assumption
Hypothetical
change
Impact on
total cash costs
Impact on EBITDA
(millions)
$ 1,700/oz1
$ 50/oz
$ 3.50/lb1
$ 3.50/lb1
+$ 0.25/lb
– $ 0.25/lb
n/a
n/a
n/a
$ 350 – $ 370
$ 120 – $ 130
$ 60 – $ 70
$ 1,700/oz
$ 90/bbl
1:1
$ 50/oz
$ 10/bbl
10%
$ 1.30/oz
$ 1.25/oz
$ 11/oz
$ 90/bbl
475 :1
$ 10/bbl
10%
$ –
$ –
$ 10
$ 9
$ 80
$ 1
$ –
1. We have assumed a gold price of $1,700 per ounce and copper price of $3.50/lb, which are in line with current market prices.
2. Utilizing option collar strategies, the Company has protected the downside on approximately 50 percent of its expected 2013 copper production at an average price
of $3.50 per pound and can participate on the same amount up to an average price of $4.25 per pound.
3. Due to hedging activities we are largely protected against changes in these factors.
Exploration and Mineral Reserves and
Mineral Resources Update7
Exploration
Barrick’s exploration strategy is aligned with its business
objectives. It involves having a balanced approach to
increasing profitable production through acquisitions,
project development and new discoveries. It employs
a three-fold approach:
1. Looking for the next flagship deposit – we have a
measured and disciplined approach to monitoring and
exploring for flagship deposits with the potential to
materially grow our production profile;
2. Replacing and adding resources at existing operations
and development projects – we add value by
aggressively exploring around our existing operations
where we can quickly monetize the ounces we
find; and
3. Working closely with Corporate Development – to
help identify the best assets with early opportunity
and upside potential.
The 2013 exploration budget guidance is $400 to
$4408 million, of which approximately 45 percent will be
capitalized. While this represents a reduction from 2012,
it is focused on quality, priority projects and is in line with
our disciplined capital allocation approach. It is still a
substantial budget and supports a strong pipeline
of projects and is weighted towards near-term resource
7. For a breakdown of reserves and resources by category and additional
information relating to reserves and resources, see pages 163 to 170 of this
Financial Report.
8. Barrick’s exploration programs are designed and conducted under the
supervision of Robert Krcmarov, Senior Vice President, Global Exploration
of Barrick.
additions and conversion at our existing mines where
we believe there is excellent potential to make new
discoveries and to expand reserves and resources. The
budget also provides support for earlier stage exploration
in our operating districts and a smaller percentage of
the budget is directed at emerging areas in order to
generate quality projects for future years. North America
will be allocated approximately 50 percent of the budget,
the majority of which is targeted for Nevada. Australia
Pacific will receive about 18 percent of the budget,
copper will be allocated about 16 percent and South
America about 14 percent, with the balance going
to ABG.
TOTAL EXPLORATION 2013 BUDGET BY REGION
North America 47%
Copper 16%
Africa 5%
South America 14%
Australia Pacific 18%
Our key exploration efforts in 2013 are focused on
Goldrush and the Cortez District, which are described
below in further detail.
43
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Goldrush and Cortez District
In Nevada, drilling in 2012 doubled and upgraded the
resource base at Goldrush. The updated measured and
indicated resource of 8.4 million ounces represents more
than a 500 percent increase from 2011. Additionally,
there are 5.7 million ounces in the inferred category. The
footprint of the deposit has more than doubled to
greater than seven kilometers, and the system still
remains open in multiple directions. As this project
advances through prefeasibility, a number of
development options are being considered, including
open pit mining, underground mining, or a combination
of both. In addition, shallow mineralization has been
encountered to the west, and high grade mineralization
has been encountered to the north, which provides
flexibility on mining and development options.
The greater Cortez area contains substantial district-
scale opportunities, including a new parallel exploration
trend identified to the west of Goldrush, and the
northern, eastern and southern extensions of the
Goldrush system. Exploration drilling programs will be
focused on growing and upgrading the resource base,
delineating the extent of the system and exploring the
potential for extensions to the north and south. In
addition, the potential of the newly identified parallel
trend to the west will be assessed. A scoping study has
been recently completed, and a prefeasibility study is
underway parallel with continuing exploration work and
technical studies. This district is a cornerstone of Barrick’s
current and future success and is located in a mining
area well provided with significant infrastructure
and expertise.
Mineral Reserves and Mineral Resources Update9
We replaced proven and probable gold reserves for the
seventh straight year to an industry-leading 140.2 million
ounces10 at the end of 2012, based on a $1,50011 per
ounce gold price. The increase primarily reflects reserve
additions at Cortez, Granny Smith, Goldstrike, Cowal
9. For a breakdown of reserves and resources by category and additional
information relating to reserves and resources, see pages 163 to 170 of this
Financial Report.
10. 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 1.98 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 163 to 170 of this Financial Report.
11. Reserves at Round Mountain have been calculated using a long-term average
gold price of $1,200 per ounce.
44
and Turquoise Ridge partially offset by a decrease in Ruby
Hill, North Mara and Pierina. Contained silver within
reported gold reserves is 1 billion ounces.
Measured and indicated gold mineral resources
increased by 3% to 83.0 million ounces and inferred
gold mineral resources decreased by 11% to
35.6 million ounces based on an assumed gold price
of $1,650 per ounce.
Proven and probable copper reserves increased by
1.2 billion pounds to 13.9 billion pounds, based on a
$3.00 per pound copper price. Measured and indicated
copper resources decreased by 33% to 10.3 billion
pounds and inferred copper resources decreased by 97%
to 0.5 billion pounds based on a $3.50 per pound
copper price, due to the exclusion of Reko Diq from our
2012 resources.
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.
GOLD RESERVES AND RESOURCES (millions of ounces)
34.8
65.0
31.6
61.8
37.2
76.3
40.2
80.4
35.6
83.0
138.5
139.8
139.8
139.9
140.2
2008
2009
2010
2011
2012
Inferred Resources
M&I Resources
P&P Reserves
GOLD RESERVES AND RESOURCES (millions of ounces)
34.8
65.0
31.6
61.8
37.2
76.3
40.2
80.4
138.5
139.8
139.8
139.9
31.9
50.6
124.6
2008
2009
2010
2011
2012
Inferred Resources
M&I Resources
P&P Reserves
150
120
90
60
30
0
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Enterprise Risk Management Approach
We believe that an enterprise-wide approach to risk
management allows us to efficiently and effectively
consolidate risks so that they can be prioritized and
addressed at the appropriate level with optimal
resources. Consequently, we have established an
enterprise risk management (“ERM”) process for
identifying, evaluating and managing company-wide
risks. While risk is an inherent component of our
business, we believe that effective risk management can
enhance our ability to deliver on our overall vision and
meet our strategic objectives. The key objectives of our
ERM program are:
n Adopt appropriate processes to identify and effectively
manage risk company-wide;
n Ensure that leadership at all levels of the organization
understand their risks;
n Facilitate the integration of mitigation strategies for
the top priority risks into the company strategy and
business plans; and
n Provide regular updates on the mitigation strategies
for the top priority enterprise risks to the senior
leadership team (“SLT”).
We have provided a description of some of the key risks
facing the Company throughout this MD&A. For a
complete discussion of the most significant risks, see
“Risk Factors” in our most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian
provincial securities regulatory authorities.
80
75
90
USD
$/oz
continued to attract investor interest through its role
as a safe haven investment, store of value and alternative
to fiat currency due to concerns over global economic
AVERAGE MONTHLY SPOT GOLD PRICES
AVERAGE MONTHLY SPOT GOLD PRICES
growth, geopolitical issues, sovereign debt and deficit
levels, bank stability, future inflation prospects, and
continuing accommodative monetary policies put in
place by many of the world’s central banks. In particular,
2,000
the current monetary policies of the US Federal Reserve
85
1,750
have a significant impact on the price of gold. In 2012, it
1,300
announced that it would purchase $40 billion per month
1,200
of agency mortgage-backed securities and $45 billion
per month of longer-term Treasury securities in order to
70
1,100
support a stronger economic recovery until the outlook
65
1,000
for the labor market improves substantially. The
60
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 2012,
2010
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
10 million ounces to a total of 89 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 significant driver of the
overall gold market. A continuation of these trends is
supportive of higher gold prices.
Average Spot Price
USD Index
2011
2009
800
900
700
50
55
AVERAGE MONTHLY SPOT GOLD PRICES
(dollars per ounce)
Market Overview
Gold and Copper
The market prices of gold and copper are the primary
drivers of our profitability and our ability to generate free
cash flow 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 high in 2012, with the
price ranging from $1,527 per ounce to $1,796 per
ounce. The average market price for the year of
$1,669 per ounce was an all-time record high and
represented an increase of 6% over 2011. Gold has
2,000
1,750
1,500
1,250
1,000
750
500
2008
2009
2010
2011
2012
90
85
80
75
70
65
60
55
50
45
90
85
80
75
70
65
60
55
50
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS GOLD ETF HOLDINGS as at December 31
(millions of ounces)
88.7
79.4
72.9
100
90
80
70
60
50
40
30
20
10
0
60.3
38.4
2008
2009
2010
2011
2012
Source: UBS
INDUSTRY GOLD PRODUCTION
(millions of ounces)
90
80
70
60
50
40
30
20
10
0
08
80
70
60
50
40
30
20
10
09
10
11
12E
Source: Thomson Reuters GFMS
0
Gold prices also continue to be influenced 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.
46
100
90
80
70
60
50
40
30
20
10
0
In the third year of the Central Bank Gold
Agreement (“CBGA”), which ended in September 2012,
the signatory members sold 6 tonnes of gold, or less
than 2% of the maximum agreed amount. In addition,
for the third consecutive year, global central banks were
net buyers of gold in 2012, with the central banks of
Turkey, Russia, the Philippines, Kazakhstan, Brazil,
Mexico and South Korea, among others, adding to their
gold reserves.
OFFICIAL SECTOR GOLD PURCHASES
(tonnes)
600
500
400
300
200
100
0
-100
-200
-300
536
457
77
(34)
(235)
2008
2009
2010
2011
2012E
Source: World Gold Council and Thomson Reuters GFMS
600
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
significantly lower than other developed countries.
The central banks of these developing economies hold
a significant 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
beneficiaries. 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
-200
and a de facto currency.
200
400
0
-400
-600
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
OFFICIAL GOLD HOLDINGS as at December 31, 2012
(% of reserves)
AVERAGE MONTHLY SPOT
COPPER PRICES (dollars per pound)
76.1
80
73.2
72.5
72.0
60
40
20
0
A
S
U
y
n
a
m
r
e
G
y
l
a
t
I
e
c
n
a
r
F
d
n
a
l
r
e
z
t
i
w
S
Source: World Gold Council
11.0
10.3
9.8
1.7
i
a
n
h
C
0.8
l
i
z
a
r
B
i
a
d
n
I
a
i
s
s
u
R
During 2012, London Metals Exchange (“LME”) copper
prices traded in a range of $3.27 to $3.98 per pound,
averaged $3.61 per pound, and closed the year at
$3.59 per pound. Copper’s strength lies mainly in strong
physical demand from emerging markets, especially
90
China, which has resulted in a physical deficit in recent
81
years. In addition, there has been significant investor
72
interest in base metals with strong forward-looking
63
supply/demand fundamentals. Copper prices should
continue to be influenced by demand from Asia, global
54
economic growth, the limited availability of scrap
45
metal and production levels of mines and smelters in
36
the future.
27
Utilizing option collar strategies, including positions
18
added subsequent to year end, the Company has
9
protected the downside on approximately 50% of our
0
expected 2013 copper production at an average floor
price of $3.50 per pound and can participate on the
same amount up to an average price of $4.25 per
pound. Our realized price on all 2013 copper production
is expected to be reduced by approximately $0.04 per
pound as a result of the net premium paid on option
hedging strategies. Our remaining copper production
is subject to market prices.
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
2008
2009
2010
2011
2012
Silver
Silver traded in a wide range of $26.16 per ounce
to $37.48 per ounce in 2012, averaged $31.15 per
ounce and closed the year at $29.95 per ounce. The
physical silver market is currently in surplus, but investor
interest continues to be price supportive and continuing
global economic growth is expected to improve
industrial demand.
Silver prices do not significantly impact our current
operating earnings, cash flows or gold total cash costs.
AVERAGE MONTHLY SPOT
COPPER PRICES (dollars per pound)
Silver prices do have a significant impact on the
estimated fair value and the overall economics (including
the estimated rate of return we expect to earn on our
2,000
invested capital) for our Pascua-Lama project, which is
currently in the construction phase. In the first five full
1,750
years of production, Pascua-Lama is expected to produce
1,500
an average of 35 million ounces of silver per annum.
750
In 2009, we entered into a transaction with Silver
1,250
Wheaton Corp. (“Silver Wheaton”) whereby we sold
25% of the life of mine Pascua-Lama silver production
1,000
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 has made up-front payments
totaling $625 million. Silver Wheaton will also make
ongoing payments of $3.90 per ounce in cash (subject
to a 1% annual inflation adjustment starting three years
after completing construction at Pascua-Lama) for each
ounce of silver delivered under the agreement.
2011
2009
2010
2007
2008
500
47
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Utilizing option collar strategies, we have hedge
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 2012, the Australian dollar traded in a range of
$0.96 to $1.09 against the US dollar, while the US dollar
against the Canadian dollar and Chilean peso yielded
ranges of $0.96 to $1.04 and CLP467 to CLP523,
respectively.
About 60% of our consolidated production costs
are denominated in US dollars and are not exposed to
fluctuations in US dollar exchange rates. For the
remaining portion, our currency hedge position allows
for more accurate forecasting of our anticipated
expenditures in US dollar terms and mitigates our
exposure to volatility in the US dollar. Our currency
hedge position has provided benefits to us in the form
of hedge gains recorded within our operating costs when
contract exchange rates are compared to prevailing
market exchange rates as follows: 2012 – $336 million;
2011 – $344 million; and 2010 – $145 million. As a
result of the gains from our currency hedging program,
total cash costs were reduced by $46 per ounce in 2012.
Also for 2012, we recorded currency hedge gains in our
corporate administration costs of $20 million (2011 –
$24 million and 2010 – $33 million) and capitalized
additional currency hedge gains of $13 million (2011 –
$64 million and 2010 – $13 million).
Our average hedge rates vary depending on when
the contracts were put in place. We have hedged
AUD $340 million, CAD $424 million and CLP 356 billion
in 2013 for expected Australian, Canadian and Chilean
operating costs, including sustaining and eligible
protection on a total of 65 million ounces of expected
silver production from 2013 to 2018, inclusive, with
an average floor price of $23 per ounce and an average
ceiling price of $53 per ounce. We have paid a net
premium of approximately $0.60 per ounce for
these strategies.
AVERAGE MONTHLY SPOT
SILVER PRICES (dollars per ounce)
45.00
35.00
25.00
15.00
5.00
2008
2009
2010
2011
2012
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, Tanzanian shilling and Argentinean
peso through mine operating and capital costs.
AVERAGE MONTHLY SPOT
SILVER PRICES (dollars per ounces)
675
625
575
525
475
48
425
2009
2010
2011
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS project capital expenditures and Canadian corporate
administrative costs at average rates of $0.96, $1.02
and 514, respectively. During 2012, with the Australian
dollar trading at historically elevated levels against the
US dollar, and based on our currency outlook, the
Company opportunistically unwound approximately
AUD $2.6 billion of our Australian dollar hedges at an
average spot rate of 1.05. We realized net cash proceeds
of approximately $0.5 billion upon the settlement of
these contracts. The corresponding accounting gains are
recognized in the consolidated statement of income
based on the original hedge contract maturity dates,
which range until 2014, with remaining locked-in gains
of approximately $280 million and $109 million,
positively impacting our total reported cash costs in 2013
and 2014, respectively. However, we now have greater
exposure to fluctuations in the price of the Australian
dollar, which will have a negative impact on our reported
total cash costs should the Australian dollar strengthen
and a positive impact should the Australian dollar
weaken. For 2013, every $0.01 movement in the
Australian dollar will have an impact of approximately
$2 per ounce on our consolidated total cash costs.
Assuming December 31, 2012 market exchange rate
curves and year-end spot price levels of AUD
$1.04 against the US dollar and $0.99 and CLP479 for
the US dollar against the Canadian dollar and Chilean
peso, respectively, we expect to record gains of
approximately $270 million against operating costs in
2013, primarily related to previously unwound Australian
dollar hedges, or about $37 per ounce based on total
forecasted 2013 production. Additionally, we expect
to record gains of approximately $15 million against
administrative costs, $25 million against capital
expenditures and a further $30 million of non-hedge
gains. Beyond 2013, we have hedge protection in place
for about AUD $1.5 billion at an average rate of
$0.92 and about CLP 356 billion at an average rate of
510 between 2014 and 2016. Further information
on our currency hedge positions is included in note 23
to the consolidated financial statements.
AUD Currency Contracts
Contracts
Effective
average
(AUD hedge rate
(AUDUSD)
millions)
% of total
expected
AUD
exposure2
hedged
2013
2014
2015
2016
340
338
707
480
0.96
0.92
0.92
0.90
19%
18%
42%
30%
CAD Currency Contracts
% of
expected
operating
cost
exposure
hedged
24%
23%
51%
37%
Effective
average
Contracts hedge rate
(USDCAD)
(CAD millions)3
% of total
expected
CAD
exposure2
hedged
Crystallized
OCI1 (USD
millions)
280
109
–
–
% of
expected
operating
cost
exposure
hedged
2013
2014
424
96
1.02
1.00
89%
19%
100%
22%
CLP Currency Contracts
Effective
average
Contracts hedge rate
(USDCLP)
(CLP millions)4
% of total
expected
CLP
exposure2
hedged
2013
2014
2015
356,175
287,016
78,000
514
509
513
100%
84%
29%
% of
expected
operating
cost
exposure
hedged
100%
100%
43%
1. $280 million will be recognized in earnings in 2013 and $109 million in 2014.
2. Includes all forecasted operating, administrative, sustaining and eligible
project capital expenditures.
3. Includes $208 million CAD contracts with a cap and floor of $1.00 and
$1.08, respectively.
4. Includes CLP 383,558 million collar contracts that are an economic hedge
of operating, administrative and capital expenditures at various South
American sites and at our Pascua-Lama project with a cap and floor of
514 and 572, respectively.
49
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
AVERAGE MONTHLY AUD SPOT AND HEDGE RATES
AVERAGE MONTHLY CLP SPOT AND HEDGE RATES
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
1.00
700
0.95
0.90
0.85
600
0.80
0.75
0.70
0.65
500
0.60
0.55
0.50
400
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Spot Rate
Average Hedge Rate
Spot Rate
Average Hedge Rate
AVERAGE MONTHLY CAD SPOT AND HEDGE RATES
2008
2009
2010
2011
2012
Spot Rate
Average Hedge Rate
1.40
1.35
1.30
1.25
1.20
1.15
1.10
1.05
1.00
0.95
0.90
50
1.35
1.30
1.25
1.20
1.15
1.10
1.05
1.00
0.95
0.90
Fuel
For 2012, the price of West Texas Intermediate (“WTI”)
crude oil traded between $77 and $111 per barrel,
averaged $94 per barrel and closed the year at $92 per
barrel. Concerns over global economic growth, supply
and transportation issues and geopolitical tensions in
certain oil producing regions combined to create volatility
in the price of oil during the year.
On average we consume approximately 5 million
barrels of diesel fuel annually across all our operating
mines. Diesel fuel is refined from crude oil and is
therefore subject to the same price volatility affecting
crude oil prices. Therefore, volatility in crude prices has a
significant direct and indirect impact on our production
costs. To mitigate this volatility, we employ a strategy
of combining the use of financial contracts and our
production from Barrick Energy to effectively hedge our
exposure to oil prices. We currently have financial
contracts in place totaling 4.8 million barrels over the
next three years, representing approximately 30% of
our total estimated direct consumption. In 2012, we
recorded hedge gains in earnings of $24 million on
our fuel hedge positions (2011: $48 million gain and
2010: $26 million loss). Assuming market rates at the
December 31, 2012 level of $92 per barrel, we expect
to realize hedge gains of approximately $20 million in
2013 from our financial fuel contracts.
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
700
600
500
400
700
600
500
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
400
1.35
1.30
1.25
1.20
1.15
1.10
1.05
1.00
0.95
0.90
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Fuel Hedge Summary
2013
2014
2015
Barrels1
(thousands)
Average % of expected
exposure
price
2,354
1,500
960
4,814
$ 91
95
92
$ 93
41%
28%
21%
31%
1. Refers to contracts for a combination of WTI, BRENT and WTI-to-BRENT
swaps. As a result, our average price on hedged barrels for 2013 – 2015 is
$89 per barrel on a WTI-equivalent basis.
CRUDE OIL MARKET PRICE (WTI) (dollars per barrel)
$150
$120
$90
$60
$30
use monetary policy initiatives, such as purchases of
agency-backed mortgage securities and longer-term
Treasury securities, 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 ($2.1 billion
at December 31, 2012); 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 ($2.3 billion
at December 31, 2012). Currently, the amount of interest
expense recorded in our consolidated statement of
income is not materially impacted by changes in interest
rates, because the majority of debt was issued at fixed
interest rates. The relative amounts of variable-rate
financial assets and liabilities may change in the future,
depending on the amount of operating cash flow we
generate, as well as the level of capital expenditures and
our ability to borrow on favorable terms using fixed rate
debt instruments.
2008
2009
2010
2011
2012
US DOLLAR INTEREST RATES (%)
US Dollar Interest Rates
Beginning in 2008, in response to the contraction of
global credit markets and in an effort to spur economic
activity and avoid potential deflation, the US Federal
Reserve reduced its benchmark rate to between 0%
and 0.25%. The benchmark was kept at this level
150
through 2012. In December 2012, the Federal Open
Market Committee of the US Federal Reserve released
120
a statement on monetary policy noting that the current
0% to 0.25% range for the benchmark rate would
remain appropriate at least as long as the US
unemployment rate remains above 6.5%, projected
inflation remains below 2.5% and longer-term inflation
expectations continue to be well anchored. In addition,
we expect the US Federal Reserve to continue to
60
90
30
5.0
4.0
3.0
2.0
1.0
0.0
6
5
4
3
2
1
0
2008
2009
2010
2011
2012
5 Year Interest Rates
10 Year Interest Rates
30 Year Interest Rates
3 Month LIBOR
51
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Review of Annual Financial Results
Revenue1
Production Costs1
($ millions, except per ounce/pound data in dollars)
For the years ended December 31
2012
2011
2010
($ millions, except per ounce/pound data in dollars)
For the years ended December 31
2012
2011
2010
Cost of sales
Direct mining cost
Depreciation
Royalty expense
Cost of sales – gold
Total cash costs2,3
All-in sustaining cash costs2,3
Cost of sales – copper
C1 cash costs2,3
$ 5,558 $ 4,486 $ 3,643
1,212
1,419
1,722
276
335
374
4,610
5,169
6,210
409
460
584
649
752
945
1,279
407
915
$ 2.17 $ 1.71 $ 1.08
1. The amounts presented in this table include the results of discontinued
operations.
2. Per ounce/pound weighted average.
3. Total cash costs, all-in sustaining cash costs, C1 cash costs are non-GAAP
financial performance measures with no standard meaning under IFRS.
For further information and a detailed reconciliation, please see
pages 81–84 of this MD&A.
Cost of sales applicable to gold was $6.2 billion in 2012,
up 20%, compared to the prior year. The increase
reflects higher direct mining costs, particularly higher
labor, energy, maintenance and consumable costs.
Total cash costs were $584 per ounce in 2012, up
27% compared to the $460 per ounce recorded in the
prior year. The increase reflects 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 high end of our revised 2012
guidance range of $575 to $585 per ounce, mainly as
a result of changes in our production mix.
Cost of sales applicable to copper was $1,279
million, including depreciation expense of $231 million in
2012, up 40% compared to the $915 million, including
depreciation expense of $170 million, recorded in the
prior year. The increase reflects 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.
Gold
Revenue
000s oz sold
$ millions sold2
Market price3
Realized price3,4
Copper
Revenue
millions lbs sold
$ millions sold2
Market price3
Realized price3,4
Oil & gas sales
Other metal sales
7,550
7,742
7,292
$ 12,564 $ 12,255 $ 9,722
1,225
1,669
$ 1,669 $ 1,578 $ 1,228
1,572
444
472
391
$ 1,689 $ 1,646 $ 1,277
3.42
3.41
123
4.00
3.82
177
158 $ 135
3.61
3.57
153
141 $
$
1. The amounts presented in this table include the results of discontinued
operations.
2. Represents revenues on a 100% consolidated basis.
3. Per ounce/pound weighted average.
4. 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 86 of this MD&A.
In 2012, gold and copper revenues totaled
$12,564 million and $1,689 million, respectively, both
up 3% compared to the prior year, primarily due to
higher realized gold prices and higher copper sales
volumes, partially offset by lower gold sales volumes
and lower realized copper prices.
Realized gold prices of $1,669 per ounce in 2012
were up $91 per ounce, or 6%, compared to the prior
year, reflecting the increase in market gold prices, which
averaged $1,669 per ounce in 2012, compared to
$1,572 per ounce in 2011. Realized copper prices were
7% lower than the prior year, primarily due a to 10%
decrease in market copper prices.
52
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Copper C1 cash costs were $2.17 per pound in
2012, up 27% compared to $1.71 per pound in 2011
and within our most recent 2012 guidance range of
$2.10 to $2.30 per pound. The increase reflects the
higher direct production costs and the impact of
including higher cost production from Lumwana for
a full year in 2012.
Exploration and Evaluation
($ millions)
For the years ended December 31
Exploration:
Minesite programs
Global programs
Evaluation costs
2012
2011
2010
$ 82
211
136
$ 72
145
129
$ 51
103
75
Corporate Administration
($ millions)
For the years ended December 31
2012
2011
2010
Corporate administration expense
$ 195
$ 166
$ 156
Corporate administration costs were $195 million in
2012, up 17%, compared to the prior year.
Other Expense/Other Income
($ millions)
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
benefit expense
Severance and other restructuring costs
Equinox acquisition costs
Other expensed items
Total other expense
Total other income
2012
2011
2010
$ 222
83
$ 201
55
$ 183
25
39
14
73
–
19
–
183
79
9
22
4
6
39
161
41
16
26
6
16
–
142
$ 633
$ 576
$ 455
$ 69
$ 248
$ 116
1. Relates to general and administrative costs incurred at business unit offices.
2. Amounts attributable to currency translation losses on working capital balances.
Other expense was $633 million in 2012, up 10%,
compared to the $576 million recorded in the prior year.
The increase is primarily due to higher RBU general and
administrative costs, higher corporate social responsibility
costs, higher severance costs, partially offset by
$39 million in acquisition-related costs for the Equinox
transaction incurred in 2011.
Exploration and evaluation expense
$ 429
$ 346
$ 229
Exploration and evaluation expense was $429 million
in 2012, up 24% compared to $346 million in 2011.
The increase is primarily due to increased minesite and
global exploration costs and an increase in evaluation
expenditures. Minesite exploration expenditures
increased primarily due to increased exploration
activities at Cowal, Kanowna, Zaldívar and Granny Smith.
Exploration expenditures for the global programs
increased due to programs at Goldrush, Lumwana and
Cerro Casale. The evaluation expenditures increase
relates to the preparation of scoping studies at Goldrush.
Capital Expenditures1
($ millions)
For the years ended December 31
Total project capital expenditures2
minesite expansion
minesite sustaining
mine development
Capitalized interest
Total consolidated capital expenditures
Capital expenditures attributable
to non-controlling interests3
Total capital expenditures attributable
2012
2011
2010
$ 2,616 $ 2,275 $ 1,792
251
865
595
275
3,778
816
1,319
1,071
547
6,369
494
980
842
382
4,973
375
375
407
to Barrick
$ 5,994 $ 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 $2,885 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.
Capital expenditures were $6,369 million in 2012, an
increase of $1,396 million or 28%, compared to 2011.
The increase is primarily due to an increase in project
capital expenditures at Pascua-Lama and Jabal Sayid,
partially offset by lower spend at Pueblo Viejo, and an
increase in minesite expansion, minesite sustaining and
mine development expenditures.
53
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Finance Cost/Finance Income
($ millions)
For the years ended December 31
Interest incurred
Interest capitalized
Finance charges1
Accretion
Finance cost
Finance income
2012
2011
2010
$ 690
(567)
–
54
$ 555
(408)
–
52
$ 425
(285)
19
21
$ 177
$ 199
$ 180
$ 11
$ 13
$ 14
1. These amounts represent accrued financing charges on the remaining
settlement obligation to close out gold sales contracts.
Finance costs incurred in 2012 were $177 million,
compared to $199 million in the prior year. Interest costs
incurred were $690 million, up 24% compared to the
$555 million in the prior year. The increase in interest
costs incurred primarily relates to interest incurred on
debt issued and credit facilities drawn on to finance the
Equinox acquisition in the second quarter 2011. Interest
capitalized increased in 2012 compared to the prior year,
primarily due to the increase in the carrying value of our
Pueblo Viejo and Pascua-Lama projects due to ongoing
construction activity. Interest capitalization at Pueblo
Viejo ceased in January 2013 as the mine has achieved
commercial production.
Impairment Charges
($ millions)
For the years ended December 31
Lumwana
Copper goodwill
Barrick Energy
Reko Diq
PV power assets
Saudi exploration
Kainantu
Highland
Available for sale investments
Miscellaneous
2012
2011
2010
$ 3,016
798
155
120
21
23
141
84
40
27
–
–
37
–
39
–
–
–
85
4
–
–
–
–
–
–
–
(84)
–
11
Total after-tax impairment charges
$ 4,425
$ 165
$ (73)
Related income tax effects and NCI
$ 2,045
$ 70
–
Total impairment charges/(reversals)
$ 6,470
$ 235
$ (73)
After-tax impairment charges were $4.4 billion,
compared to $165 million in 2011. The amount for 2012
primarily includes asset impairment charges at Lumwana
($3.0 billion), impairment charges relating to goodwill of
our global copper business unit ($798 million), asset
impairment charges on various properties in our oil &
gas business ($155 million), asset impairment charges
on an exploration property in Papua New Guinea
54
($141 million), the write-down of our investment in
TCC, which holds our interest in the Reko Diq project
($120 million), a write-down of our investment in
Highland Gold ($84 million) and write-downs on our
available-for-sale investments ($40 million). In 2011,
the impairment charges related to write-downs on our
available-for-sale investments ($85 million), asset
impairment charges on various properties in our oil &
gas business ($37 million) and a write-down on certain
power-related assets at our Pueblo Viejo project
($39 million).
Income Tax
(Percentages)
For the years ended December 31
Effective (tax recovery) tax expense
rate on ordinary (loss) income
Impact of:
Net currency translation losses on
deferred tax balances
Tax rate changes
Amendment in Australia
Foreign income tax assessment
Functional currency changes
Dividend withholding tax
Adjustments in respect of prior years
Impairments
Actual effective (tax recovery)
tax expense rate
2012
2011
2010
(32%)
33%
31%
5%
(2%)
(6%)
(2%)
2%
–
2%
7%
–
–
–
–
–
1%
–
–
–
–
(1%)
–
–
1%
–
–
(26%)
34%
31%
Our effective tax rate on ordinary loss or income
decreased from 33% to 32% in 2012 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 significant
items impacting income tax expense in 2012 and
2011 include the following:
Currency Translation
Deferred tax balances are subject to remeasurement for
changes in currency exchange rates each period. The
most significant balances are Argentinean deferred
tax liabilities with a carrying amount of approximately
$300 million. In 2012, tax expense of $46 million
primarily arose from translation losses due to the
weakening of the Argentinean peso against the US
dollar. In 2011 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. These
losses and gains are included within deferred tax
expense/recovery.
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Tax Rate Changes
In second quarter 2012, a tax rate change was enacted
in the province of Ontario, Canada, resulting in a deferred
tax recovery of $11 million.
In third quarter 2012, a tax rate change was enacted
in Chile, resulting in current tax expense of $4 million
and deferred tax recovery of $15 million.
Amendment in Australia
In fourth quarter 2012, amendments were made to
prior year tax returns for one of our Australian
consolidated tax groups, based on updated tax pool
amounts from the time of the consolidation election.
These amendments resulted in a current tax recovery of
$44 million, and a deferred tax recovery of $14 million.
Foreign Income Tax Assessment
In second quarter 2012, a foreign income tax assessment
was received which resulted in a current tax recovery
of $19 million.
Functional Currency Changes
In fourth quarter 2012, we received approval to prepare
certain of our Papua New Guinea tax returns using
US dollar functional currency effective January 1, 2012.
This approval resulted in a one-time deferred tax expense
of $16 million. Going forward, the material Papua New
Guinea tax return will now be filed using a US dollar
functional currency.
In 2011, we filed 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 benefit
of $4 million. Going forward, all material Australian
tax returns will now be filed using a US dollar
functional currency.
Dividend Withholding Tax
In 2011, we recorded an $87 million dollar dividend
withholding current tax expense in respect of funds
repatriated from foreign subsidiaries.
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 confirmation
that there would be no appeal of the September 30,
2004 Tax Court of Peru decision. In December 2004, we
recorded a $141 million reduction in current and
deferred income tax liabilities and a $21 million reduction
in other accrued costs. The confirmation concluded the
administrative and judicial appeals process with
resolution in Barrick’s favor.
Notwithstanding the favorable Tax Court decision
we received in 2004 on the 1999 to 2000 revaluation
matter, in an audit concluded in 2005, The Tax
Administration in Peru (“SUNAT”) reassessed us on
the same issue for tax years 2001 to 2003. On
October 19, 2007, SUNAT confirmed their reassessment.
We filed 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 filing. As a result, we would
incur interest and penalties in some years and earn
refund interest income in other years. SUNAT initially
assessed us $100 million for this matter. However,
after appeal, on February 27, 2012 an agreed amount
of $52 million was paid in respect of the 2001 and
2003 taxation years. In addition, we have claimed or will
claim tax refunds for the 2006 to 2009 taxation years.
Reflecting what we believe is the probable amount, we
recorded a current tax expense of $39 million in 2011
in respect of this matter.
On November 15, 2011, we appealed the Tax Court
decision to the Judicial Court with respect to the timing
of certain deductions for the Pierina mining concession.
SUNAT also appealed the Tax Court decision to the
Judicial Court.
55
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Operational Overview1
For the years ended December 31
Production (000s oz/millions lbs)2
Ore tons mined (millions)
Waste tons mined (millions)
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs per ton/percent)
2012
7,421
163
526
689
150
0.057
Gold
2011 % Change
7,676
151
569
720
162
0.056
(3%)
8%
(8%)
(4%)
(7%)
2%
2010
7,765
155
539
694
145
0.063
Copper
2012
2011 % Change
2010
468
63
139
202
71
0.52
451
50
90
140
63
0.54
4%
26%
54%
44%
13%
(4%)
368
48
24
72
46
0.60
1. The amounts presented in this table include the results of discontinued operations.
2. Reflects our equity share of production.
Gold production in 2012 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 7.4 million ounces was
in line with our most recent guidance range of 7.3 to
7.5 million ounces, and within our original guidance
range of 7.3 to 7.8 million ounces.
Copper production in 2012 was 4% higher than the
prior year, primarily due to the inclusion of production
from Lumwana which was acquired as part of the Equinox
transaction on June 1, 2011. Production of 468 million
pounds was above our most recent guidance of
approximately 450 million pounds, primarily due to
higher than expected ore grades at Lumwana in fourth
quarter 2012.
Tons Mined and Tons Processed – Gold
Total tons mined decreased in 2012 by 4%, and tons
processed decreased by 7%, compared to the prior year.
The decreases in tons mined were primarily due to
decreased mining activity at Pierina, Golden Sunlight,
and Goldstrike, partially offset by increased mining
activity at Pueblo Viejo, Round Mountain and Buzwagi.
The decrease in ore tons processed was primarily due to
decreases at Pierina, Veladero and Round Mountain,
partially offset by an increase at Bald Mountain and Ruby
Hill. Higher tons were mined and processed at Bald
Mountain as a result of a mine expansion which was
completed towards the end of 2011.
56
Average Mill Head Grades – Gold
Average mill head grades increased by approximately
2% in 2012 compared to the prior year, primarily due
to higher ore grades from Golden Sunlight, Cortez
and Turquoise Ridge, partially offset by lower grades
processed at Ruby Hill, Tulawaka and Buzwagi. 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.
Tons Mined and Tons Processed – Copper
Total tons mined increased in 2012 by 44%, and tons
processed increased by 13%, compared to the prior year.
The increases are primarily due to an increase in tons
mined and tons processed at Lumwana.
TONS MINED AND TONS PROCESSED1
Tons Mined
800,000
600,000
400,000
200,000
0
2011
2012
Tons Mined
Tons Processed
1. All amounts presented are based on equity production.
800000
600000
400000
200000
0
250000
200000
150000
100000
50000
0
Tons Processed
250,000
200,000
150,000
100,000
50,000
0
800000
600000
400000
200000
0
250000
200000
150000
100000
50000
0
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
AVERAGE MILL HEAD GRADES1 (ounces/ton)
North America
0.06
0.04
0.02
0.00
2011
2012
Average Head Grade
Reserve Grade
1. All amounts presented based on equity production. Average
mill head grades are expressed as the number of ounces of gold
contained in a ton of ore processed. Reserve grade represents
expected grade over the life of the mine and is calculated based
on reserves reported at the end of the immediately preceding year.
0.08
0.06
0.04
0.02
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 & gas business, and a
Capital Projects business. Barrick’s Chief Operating
0.08
Decision Maker reviews the operating results, assesses
performance and makes capital allocation decisions
0.06
for each of these business operations at a business unit
level. Therefore, these business units are operating
segments for financial reporting purposes. Segment
performance is evaluated based on a number of
measures including operating income before tax,
production levels and unit production costs. Our business
unit structure adds value by enabling the realization of
operational efficiencies, allocating resources to individual
mines/projects more effectively and understanding and
250000
managing the local business environment, including
labor, consumable costs and supply and government and
200000
200000
community relations. Income tax, corporate
administration, finance income and costs, impairment
150000
charges and reversals, investment write-downs and
gains/losses on non-hedge derivatives are managed
100000
on a consolidated basis and are therefore not reflected
in segment income.
50000
50000
100000
250000
150000
0.00
0.00
0.02
0.04
0
0
Summary of Financial and Operating Data
For the years ended December 31
2012
2011 % Change
2010
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)1
Segment income ($ millions)2
Segment EBITDA ($ millions)1
Capital expenditures
408
60
410
61
0.067 0.065
3,493 3,382
$ 2,335 $ 1,924
$ 500 $
426
$ 3,250 $ 3,157
$ 3,862 $ 3,648
396
–
44
(2%)
0.084
3%
3%
3,110
21% $ 1,812
17% $ 429
3% $ 1,837
6% $ 2,317
($ millions)3
$ 1,251 $
854
46% $ 603
1. Total cash costs and EBITDA are non-GAAP financial performance measures
with no standardized meaning under IFRS. For further information and
a detailed reconciliation, please see pages 81–85 of this MD&A.
2. Segment income excludes income taxes.
3. Amounts presented represent our share of expenditures for minesite
expansion, minesite sustaining as well as mine development on a cash basis
excluding capitalized interest.
Segment income for 2012 was $3,250 million, an
increase of 3% over the prior year. The increase was
primarily the result of a higher realized gold price and
increased gold sales volume.
Gold production of 3.49 million ounces for 2012
was 3% higher than the prior year, and was within our
most recent regional guidance range of 3.425 to
3.55 million ounces. Higher production was mainly due
to increased production at Goldstrike, Bald Mountain
and Golden Sunlight, as well as the start of production
at Pueblo Viejo. These increases were partially offset
by lower production at Ruby Hill, Cortez, and Hemlo.
Production at Goldstrike increased by 8% over 2011,
mainly as a result of higher process throughput with
an additional mill running at the autoclave facility.
Construction of the thiosulfate technology project,
including the retrofitting of the existing plant, as well
as new installations, continued during the quarter.
This project allows for continued production from the
autoclaves, which were originally expected to cease
operations in 2012, and brings forward production of
about 3.5 million ounces in the mine plan. First gold
production is expected mid-2014, with an average
annual contribution of about 350 to 400 thousand
ounces over the first full five years. Re-estimation of
the project costs now that detailed engineering has
advanced has changed the expected project cost to
about $450 million compared to our previous expected
project cost of about $350 million. The cost increases are
primarily in the piping, structural, mechanical and
electrical areas.
57
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
At Bald Mountain, production for the year was up
by 73%, mainly as a result of a higher ratio of ore tons
to total tons mined due to mine sequencing, as well as
higher gold recovery from the leach pad. Production at
Golden Sunlight increased by 58% over 2011, primarily
due to the processing of higher grade ore compared
to the prior year. Production at Pueblo Viejo commenced
with first gold in August and added 67,000 ounces
to the North America Region in 2012. Pueblo Viejo
achieved commercial production in first quarter 2013
and all pre-commercial production revenue will be offset
against initial capital. At Ruby Hill, production was down
by 68%, primarily as a result of the processing mix,
with more lower grade, run of mine heap leach ore and
less refractory ore processed in 2012 compared to the
prior year. At Cortez, production for the year was down
4% from 2011 primarily due to a change in the mix of
ore types processed, partially offset by a slightly higher
overall head grade. Production at Hemlo decreased
by 9%, primarily as a result of lower average head
grades as the mine matures.
Cost of sales for 2012 increased by 21% over the
prior year, primarily as a result of higher direct mining
costs at Goldstrike, Cortez, and Bald Mountain, which
was driven primarily by higher labor costs due to staff
increases and higher average wage rates, and higher
depreciation expense due to new capital assets put
into service. In addition to the increase in direct mining
costs, cost of sales was negatively impacted by a
decrease in capitalized production phase stripping costs
at Goldstrike, Cortez, Bald Mountain, and Ruby Hill.
Total cash costs per ounce were $500, as compared to
$426 in 2011, and were in line with our most recent
regional guidance range of $475 to $525 per ounce.
Total cash costs were higher in 2012 due to the increase
in cost of sales, partially offset by the impact of the
increase in production on unit costs.
In 2012, capital expenditures increased by 46% over
the prior year, reflecting higher expansionary capital
expenditures at Goldstrike, haul truck purchases and
tailings expansion work at Cortez, purchase of a shovel
and drill at Bald Mountain, and miscellaneous other
sustaining capital expenditures across the region. These
increases were partially offset by decreased capitalized
stripping expenditures at Goldstrike, Cortez, Bald
Mountain, and Ruby Hill.
In 2013, we expect gold production to be in the
range of 3.55 to 3.70 million ounces. Production mix
within North America is expected to change due to
the ramp up of Pueblo Viejo to full production by the
second half of 2013 and increased production at Ruby
58
Hill as it moves from waste stripping to ore production.
These increases will be partially offset by reduced
production from Goldstrike, Cortez, and Bald Mountain.
At Goldstrike, less material will be processed through
the autoclaves until the thiosulfate project is completed.
At Cortez, lower production is expected due to lower
grades and a change in the mix of ore processed to more
heap leach tons with lower recoveries. Bald Mountain
production will decrease due to the impact of increased
waste stripping on the availability of ore. All-in sustaining
cash costs are expected to be $820 – $870 per ounce
and total cash costs are expected to be $495 to $545 per
ounce. Cash costs will be positively impacted by lower
cost ounces from Pueblo Viejo, offset by the impact of
higher labor, energy and consumable costs due to an
expected increase in mining activity.
South America
Summary of Financial and Operating Data
For the years ended December 31
2012
2011 % Change
2010
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Gold produced (000s/oz)
Cost of sales ($ millions)
Total cash costs (per oz)1
Segment income ($ millions)2
Segment EBITDA ($ millions)1
Capital expenditures
138
57
162
69
0.033 0.035
1,631 1,872
905
$ 1,088 $
$ 467 $
358
$ 1,464 $ 1,906
$ 1,771 $ 2,121
145
(15%)
67
(17%)
0.039
(6%)
(13%)
2,120
20% $ 702
30% $ 208
(23%) $ 1,782
(17%) $ 1,996
($ millions)3
$ 359 $
298
20% $ 293
1. Total cash costs and EBITDA are non-GAAP financial performance measures
with no standardized meaning under IFRS. For further information and a
detailed reconciliation, please see pages 81–85 of this MD&A.
2. Segment income excludes income taxes.
3. Amounts presented represent expenditures for minesite expansion,
minesite sustaining as well as mine development on a cash basis excluding
capitalized interest.
Segment income for 2012 was $1,464 million, a
decrease of 23% over the prior year. The decrease was
primarily as a result of lower sales volumes and higher
total cash costs, partially offset by a higher realized
gold price.
Gold production of 1.63 million ounces for 2012
was 13% lower than in the prior year, but was at the
upper end of our regional guidance range of 1.55 to
1.65 million ounces. The decrease in production
compared to the prior year reflects lower production
levels across all of our mines, particularly at Veladero.
Production at Veladero decreased by 20% over 2011,
primarily as a result of lower grade and fewer tons
mined and crushed due to equipment availability issues.
In 2012, cost of sales increased by 20% over the
prior year, primarily due to inflationary pressures on
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
direct mining costs, with higher prices of consumables,
general inflation in Argentina, particularly for labor and
locally sourced purchases, and a strengthening Peruvian
sol, partially offset by increased capitalized stripping costs
at Veladero and the impact of lower sales volume.
Segment income for 2012 was $1,121 million, a
decrease of 18% over the prior year. The decrease was
primarily the result of higher total cash costs, lower
sales volumes, partially offset by higher average realized
gold prices.
Total cash costs of $467 per ounce were within our
original regional guidance range of $430 to $480 per
ounce. The increase in total cash costs over the prior year
was mainly due to increases in cost of sales and the
impact of lower production levels on unit costs.
In 2012, capital expenditures increased by 20% over
the prior year, reflecting increased expansion capital at
Lagunas Norte for the new leach pad and CIC plant, and
increased capitalized stripping costs at Veladero; partially
offset by reduced sustaining capital expenditures at
Veladero and Lagunas Norte.
In 2013, we expect gold production to be in the
range of 1.25 to 1.35 million ounces. Production is
expected to be lower than 2012 with an increase in tons
placed on the leach pads at all mines offset by the
impact of lower average head grades. All-in sustaining
cash costs are expected to be $875 – $925 per ounce.
Total gold cash costs are expected to be in the range
of $550 to $600 per ounce compared to $467 per ounce
in 2012. Total cash costs per ounce are expected to
be higher in 2013 due to the impact of higher tonnage
production, which requires increased usage of
equipment and consumables. Additionally, we expect
a strengthening currency in Peru and continued
inflation in Argentina to be only partially offset by
currency devaluation.
Australia Pacific
Summary of Financial and Operating Data1
For the years ended December 31
2012
2011 % Change
2010
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Gold produced (000s/oz)
Cost of sales ($ millions)
Total cash costs (per oz)2
Segment income ($ millions)3
Segment EBITDA ($ millions)2
Capital expenditures
104
27
112
26
0.078 0.083
1,822 1,879
$ 1,964 $ 1,611
$ 803 $
621
$ 1,121 $ 1,369
$ 1,446 $ 1,687
(7%)
118
4%
27
(6%)
0.082
1,939
(3%)
22% $ 1,480
29% $ 576
(18%) $ 831
(14%) $ 1,096
($ millions)4
$ 524 $
463
13% $ 381
1. The amounts presented in this table include the results of discontinued
operations.
2. Total cash costs and EBITDA are non-GAAP financial performance measures
with no standardized meaning under IFRS. For further information and a
detailed reconciliation, please see pages 81–85 of this MD&A.
3. Segment income excludes income taxes.
4. Amounts presented represent expenditures for minesite expansion,
minesite sustaining as well as mine development on a cash basis excluding
capitalized interest.
Gold production of 1.82 million ounces for 2012
was 3% lower than the prior year, and was in line with
our most recent guidance of about 1.8 million ounces.
Lower production was mainly due to decreased
production at Kalgoorlie and Porgera, partially offset
by higher production at our Yilgarn South sites.
Production at Kalgoorlie decreased by 18% over
2011, as a result of lower grade ore from the open pit.
At Porgera, production for the year was down by 13%
due to pit wall remediation activities, which prevented
us from mining in higher grade zones of the pit, power
supply interruptions, labor issues and a decrease in
underground mining activity. Production at Yilgarn South
increased by 22% over 2011, due to increased tons
mined and processed at Lawlers and Granny Smith,
higher head grade at Lawlers and improved throughput
rates at Darlot.
In 2012, cost of sales increased by 22% over the
prior year, reflecting higher direct mining costs,
particularly for labor, freight, Porgera power costs and
diesel. The increase in direct mining costs was partially
offset by an increase in capitalized stripping at Kalgoorlie
and Porgera.
Total cash costs per ounce were up 29% to
$803 per ounce over the prior year, due to higher cost
of sales combined with the impact of lower production
levels on unit production costs. Total cash costs were
slightly above our recent guidance range of about
$800 per ounce.
In 2012, capital expenditures increased by 13% over
the prior year, reflecting an increase in capitalized
stripping costs at Kalgoorlie and Porgera, and an increase
in sustaining capital at Granny Smith and Cowal, partially
offset by lower underground development expenditures
at Granny Smith, Kanowna and Plutonic, and lower
capitalized stripping costs at Cowal.
In 2013, we expect gold production to be in the
range of 1.7 to 1.85 million ounces. Higher production
is expected at Porgera following the completion of
remediation activities that will allow full access to the
underground. This is expected to be offset by lower
production at Kanowna due to a change in mine
sequencing and seismicity issues. All-in sustaining cash
costs are expected to be $1,200 – $1,300 per ounce.
Total gold cash costs are expected to be $880 to
59
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
$950 per ounce compared to $803 per ounce in 2012.
This increase is primarily due to lower production at
Kanowna due to a change in mine sequencing, higher
costs at Porgera as well as higher labor costs in general
and the impact of an increase in our effective Australian
dollar hedge rates from 2012 to 2013.
African Barrick Gold
100% basis
For the years ended December 31
2012
2011 % Change
2010
Total tons mined (millions)
Ore tons processed (millions)
Average grade (ozs/ton)
Gold produced (000s/oz)
Cost of sales ($ millions)
Total cash costs (per oz)2
Segment income ($ millions)3
Segment EBITDA ($ millions)2
Capital expenditures
627
53
50
8
8
0.081 0.096
689
$ 799 $ 700
$ 949 $ 692
$ 164 $ 397
$ 330 $ 538
6%
–
(16%)
(9%)
14%
37%
(59%)
(39%)
44
8
0.094
701
$ 590
$ 570
$ 315
$ 429
($ millions)4
$ 305 $ 284
7%
$ 225
73.9% basis1
For the years ended December 31
2012
2011 % Change
2010
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)2
Segment income ($ millions)3
Segment EBITDA ($ millions)2
Capital expenditures
39
6
37
6
0.081 0.096
463
509
$ 590 $ 517
$ 949 $ 692
$ 121 $ 293
$ 244 $ 398
5%
–
(16%)
(9%)
14%
37%
(59%)
(39%)
35
7
0.094
564
$ 474
$ 570
$ 250
$ 342
($ millions)4
$ 225 $ 210
7%
$ 176
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 Total cash costs and EBITDA are non-GAAP financial performance measures
with no standardized meaning under IFRS. For further information and a
detailed reconciliation, please see pages 81–85 of this MD&A.
3 Segment income excludes income taxes.
4 Amounts presented represent expenditures for minesite expansion,
minesite sustaining as well as mine development on a cash basis excluding
capitalized interest.
Segment income for 2012, on a 100% basis, was
$164 million, a decrease of 59% over the prior year. The
decrease was primarily a result of higher cost of sales,
lower sales volumes, partially offset by higher realized
gold prices.
Barrick’s equity interest in 2012 production was
0.463 million ounces, slightly lower than the most recent
regional guidance of 0.500 to 0.535 million ounces.
Lower than originally expected production in 2012 was
due to decreases in production at Buzwagi, Tulawaka
and Bulyanhulu, partially offset by higher production at
North Mara. The decrease at Buzwagi was due to a
significant waste stripping campaign, which resulted in
the processing of an increased quantity of lower grade
stockpiles. The decrease at Tulawaka was mainly as a
result of lower mill throughput due to a switch to batch
milling due to the decline in mining rates and ore
stockpile levels, as Tulawaka nears the end of its
economic life. At Bulyanhulu, production for the year
was down by 10%, primarily as a result of mining
equipment availability and labor issues which had a
negative impact on tons mined compared to the prior
year. Production at North Mara increased by 13% over
2011 mainly as a result of the processing of higher
grade ore.
In 2012, cost of sales, on a 100% basis, increased
by 14% over 2011, primarily due to higher direct mining
costs, which is largely due to inflationary pressures
reflected in increased labor, consumables, general
administration and maintenance costs, as well as
increased energy costs due to the requirement to self-
generate more power in 2012, which is higher cost than
the power drawn from the grid. Compared to 2011,
2012 total cash costs per ounce were $949, up 37%,
and within our regional guidance range of $900 to
$950 per ounce. The increase in total cash costs reflects
the increase in direct mining costs and the impact of
lower production levels on unit production costs.
In 2012, capital expenditures, on a 100% basis,
were higher by 7% over 2011 primarily due to higher
underground development expenditures at Bulyanhulu
primarily due to increased sustaining capital and
capitalized development.
In 2013, we expect equity gold production,
reflecting our 73.9% ownership of ABG, to be in the
range of .400 to .450 million ounces, which is slightly
lower than 2012. The decrease in production is primarily
due to lower production at Bulyanhulu as a result of
lower ore tons mined due to labor issues and Tulawaka
due to its expected closure in the first half of 2013.
All-in sustaining cash costs are expected to be $1,550 –
$1,600 per ounce and total gold cash costs are expected
to be $925 to $975 per ounce.
60
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Projects
Summary of Financial and Operating Data
($ millions)
For the years ended December 31
2012
2011 % Change
2010
Total E&E expenses1
$
27 $
40
(33%) $
32
Segment income (loss)
Segment EBITDA2
Capital expenditures3
Pascua-Lama
Pueblo Viejo
Cerro Casale
Cortez Hills
Equity investees
(119)
(113)
(161)
(151)
(26%)
(25%)
1,817 1,191
521
83
–
20
367
32
–
15
53%
(30%)
(61%)
–
(25%)
(18)
(15)
724
592
50
19
13
Total capital expenditures
$ 2,231 $ 1,815
23% $ 1,410
Currency hedge impact
(gain)/loss4
Adjusted capital expenditures
(23)
(11)
2,208 1,804
109%
22%
(4)
1,406
Capital commitments5
$ 1,800 $ 1,338
35% $ 1,253
1. Amounts presented represent our share of E&E expense.
2. EBITDA is a non-GAAP financial performance measure with no standardized
definition under IFRS. For further information and a detailed reconciliation,
please see page 85 of this MD&A.
3. Amounts presented represent our share of capital expenditures on a
cash basis.
4. Amounts presented include impacts of our hedge and non-hedge contracts
for pre-production capital at our Pascua-Lama and Cerro Casale projects.
5. 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 $27 million in E&E expenses (our share) in
2012 as compared to prior year E&E expenses of
$40 million primarily due to lower E&E expenses at our
Pueblo Viejo project. The increase in capital expenditures
primarily relates to increased construction activities at
our Pascua-Lama project.
An update on our Pascua-Lama, Jabal Sayid and
Pueblo Viejo (which achieved commercial production in
January 2013 and is now managed by the North
America business unit) projects is provided on pages 36
to 38 of this MD&A. Please find an update on our other
significant projects below.
Cerro Casale
At the Cerro Casale project in Chile, approval of the
Environmental Impact Assessment (“EIA”) was received
in January 2013 from the SEA (Servicio de Evaluacion
Ambiental), the environmental authorities of northern
Chile. Notification of the permit grant on substantially
the same terms as the application follows an 18-month
permitting evaluation period by the SEA. As we have
previously communicated, we are continuing to evaluate
options to improve the project’s economics and
reviewing the project’s initial capital outlay. Project
scenarios are being prepared as a series of cases for
evaluation. Options being evaluated include staged and
simplified processing options as well as alternative
sources of power supply. Evaluation of further district
opportunities will be assessed based on the results of
exploration drilling on satellite ore bodies that could
potentially be included in the project plan, and pursuing
potential synergies relating to infrastructure requirements.
We expect to have preliminary exploration drill results
completed by the second half of 2013, at which point
we will re-evaluate whether the project meets our
investment criteria. Further exploration to determine the
extended district resource base and studies to define
selected project cases would follow this determination.
Cerro Casale, on a 100 percent basis, has total proven
and probable gold and copper mineral reserves of
23 million ounces of gold and 5.8 billion pounds
of copper.
Donlin Gold
At the 50 percent-owned Donlin Gold project in
Alaska, the permitting process continued following the
submission of the draft Plan of Operations and permit
application in third quarter 2012. Formal confirmation
was also received that the permit application package
was sufficient to initiate the Environmental Impact
Statement (“EIS”) process and the EIS Notice of Intent
was filed in the Federal Register in the fourth quarter by
the Army Corps of Engineers, which is the lead agency
for the NEPA (National Environmental Policy Act) process.
Donlin Gold contains a large, long life mineral resource
in a stable jurisdiction and is significantly leveraged to
the price of gold, and therefore represents a valuable
long-term opportunity for the Company. We will
maintain and enhance the option value of this project
by advancing the permitting process, at reasonable
costs, which will take a number of years. During this
time, we will monitor the attractiveness of the project
and evaluate alternatives to improve the economics
with the objective of defining a project that satisfies our
investment criteria. This will provide the Company
with the option to make a construction decision in the
future should investment conditions warrant.
61
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Kabanga
At the 50 percent-owned Kabanga nickel project in
Tanzania, the EIS was submitted to the National
Environment Management Council (“NEMC”) in first
quarter 2012, and a response was provided in fourth
quarter 2012 to the comments received from the NEMC.
The draft Mine Development Agreement (“MDA”) has
been lodged with the Ministry of Energy and Minerals,
and additional supporting documentation was delivered
ahead of planned discussions in the first half of 2013.
Applications for mineral rights on seven regional
properties were granted, with prospecting licenses to
be issued. The resettlement working group completed
a census survey in the fourth quarter as part of the
resettlement action plan to engage those families that
will need to relocate. A detailed resettlement execution
plan is being developed. Efforts will continue to be
focused on obtaining approval of the EIS and granting
of the Environmental Certificate, negotiating the MDA
with the Tanzanian government, pursuing the receipt
of a Special Mining License, and finalization and
approval of the feasibility study.
Kabanga has a total estimated measured and
indicated resource of 37.2 million tonnes grading 2.63%
nickel and an inferred resource of 21 million tonnes
grading 2.6% nickel. Contingent upon the results of the
feasibility study and government infrastructure
improvement projects, it is expected that the operation
may be capable of producing more than 40,000 tonnes
per year of nickel-in-concentrate at full production.
Global Copper
Summary of Financial and Operating Data
For the years ended December 31
2012
2011 % Change
2010
Copper produced
(millions of lbs)
Cost of sales ($ millions)
C1 cash costs (per lb)1
C3 fully allocated
costs (per lb)1
Segment income ($ millions)2
Segment EBITDA ($ millions)1
Capital expenditures
468
$ 1,279
$ 2.17
451
$ 915
$ 1.71
4%
40%
27%
368
$ 407
$ 1.08
$ 2.97
$ 330
$ 564
$ 2.30
$ 655
$ 827
29%
(50%)
(32%)
$ 1.38
$ 607
$ 697
($ millions)3
$ 631
$ 333
89%
$ 55
1. C1 cash costs, C3 fully allocated costs and EBITDA are non-GAAP financial
performance measures with no standardized definition under IFRS. For further
information and a detailed reconciliation, please see pages 81–85 of
this MD&A.
2. Segment income excludes income taxes.
3. Amounts presented represent expenditures for minesite expansion,
minesite sustaining as well mine development on a cash basis excluding
capitalized interest.
Segment income for 2012 was $330 million, a decrease
of 50% over the prior year. The decrease was the result
of lower realized copper prices in 2012 combined with
significantly higher costs at Lumwana, partially offset by
higher copper sales volumes.
Copper production in 2012 was 468 million pounds,
which was 4% higher than the prior year and 4% above
our most recent 2012 guidance of about 450 million
pounds. The increase in copper production was primarily
due to a full year of production from Lumwana in 2012
compared to a partial year in 2011 when it was acquired
from Equinox.
In 2012, cost of sales increased by 40% over the
prior year, primarily due to the inclusion of Lumwana’s
cost of sales for the full year in 2012. C1 cash costs in
2012 of $2.17 per pound were in line with our most
recent guidance range of $2.10 to $2.30 per pound, and
were 27% higher than the prior year due to the impact
of the higher unit production costs at Lumwana.
In 2012, capital expenditures increased by 89%
as the result of the inclusion of a full year of capital
expenditures at Lumwana for the construction of the
Chimiwungo crushing and conveying system and the
pre-stripping of the Chimiwungo deposit, as well as
capital expenditures for the construction of process
infrastructure at the new Jabal Sayid mine, which was
completed in September 2012.
During the third quarter, Barrick strengthened its
Global Copper Business Unit (“GCBU”) organization by
appointing a new President and senior leadership team
to further the corporate objective of maximizing returns
and free cash flow from its assets. The changes will
further assist in efforts to address the challenges at
Lumwana and Jabal Sayid and to evaluate the sulfide
expansion opportunity at Zaldívar.
In 2013, we expect copper production in the range
of 480 to 540 million pounds at a C1 cash costs of
$2.10 – 2.30 per pound compared with actual
production of 468 million pounds at a C1 cash cost of
$2.17 per pound in 2012. C3 cash costs are expected to
be in the range of $2.60 – $2.85 as compared to C3
costs of $2.97 per pound in 2012. Production at Zaldívar
in 2013 is expected to be approximately the same as it
was in 2012 at slightly lower C1 cash costs primarily due
to a decline in the price of sulphuric acid. Lumwana
copper production is expected to increase due to the
impact of higher ore grades and higher mill throughput
and C1 cash costs are expected to decrease slightly
compared to 2012.
62
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition Review
Summary Balance Sheet and Key Financial Ratios
($ 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
Adjusted return on equity7
2012
2011
$ 2,093
3,132
41,419
638
$ 2,745
2,335
42,339
1,465
$ 47,282
$ 48,884
6,527
13,680
2,567
7,557
13,058
2,715
$ 22,774
$ 23,330
21,845
2,663
23,363
2,191
$ 24,508
$ 25,554
750
$
$ 11,599
1,001
509
$
$ 10,320
1,000
1.33:1
0.63:1
0.53:1
0.39:1
17%
2.25:1
0.56:1
0.44:1
0.33:1
22%
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 87 of this MD&A.
2. Total common shares outstanding do not include 6.9 million stock options. The increase from December 31, 2011 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, 2012 and December 31, 2011.
4. Represents adjusted debt divided by total shareholders’ equity as at December 31, 2012 and December 31, 2011.
5. Represents net debt divided by total shareholders’ equity as at December 31, 2012 and December 31, 2011.
6. Represents net debt divided by capital stock and long-term debt at December 31, 2012 and December 31, 2011.
7. Represents adjusted net earnings divided by average shareholders’ equity as at December 31, 2012 and December 31, 2011.
Balance Sheet Review
Total assets were $47 billion in 2012, a decrease of
$1.6 billion, or 3%, compared to 2011. The decrease
primarily reflects asset impairment charges attributable
to our copper business unit, partially offset by increases
in property, plant and equipment, due to the impact of
the significant capital expenditures related to our projects
in construction. Our asset base is primarily comprised of
non-current assets such as property, plant and equipment
and goodwill, reflecting the capital intensive nature of
the mining business and our history of growing through
acquisitions. Other significant 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 decreased by $0.6 billion, or 2%,
compared to 2011, largely due to a decrease in
deferred tax liabilities, partially offset by a net increase
in debt of $0.55 billion and an increase in our provision
for environmental rehabilitation costs, due to higher
estimated costs at a number of our sites and the impact
of lower real interest rates on the measurement of
the liability.
Shareholders’ Equity
As at January 25, 2013
Common shares
Stock options
Number of shares
1,001,108,303
6,934,067
63
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Dividend Policy
In 2012, we increased our annual dividend from
$0.60 per common share to $0.80 per common share.
This 33% increase in dividends reflects our ability to
generate substantial cash flows 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 profile.
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 2012, other comprehensive income was a loss of
$137 million on an after-tax basis consisting primarily of
gains of $187 million on hedge contracts designated for
future periods, caused primarily by changes in currency
exchange rates, copper prices, and fuel prices, offset
by reclassification adjustments totaling $427 million for
gains on hedge contracts designated for 2012 that
were transferred to earnings in 2012 in conjunction
with the recognition in expense of the related hedge
exposure; $40 million of losses transferred to earnings
related to losses recorded on the sale of shares in
various investments and losses for impaired investments;
$43 million of losses recorded as a result of changes
in the fair value of investments held during the year;
$35 million in gains for currency translation adjustments
on Barrick Energy; $8 million actuarial loss on pension
liability and a $79 million gain due to tax recoveries
on the overall decrease in OCI.
Included in accumulated other comprehensive
income at December 31, 2012 were unrealized pre-tax
gains on currency, commodity and interest rate hedge
contracts totaling $493 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 and Liquidity
Our capital structure is comprised of a mix of debt and
shareholders’ equity. Since the beginning of 2009, we
have issued about $9 billion in new debt securities,
primarily to finance acquisitions, the buyout of our gold
hedge book and capital expenditures for our Pueblo
Viejo and Pascua-Lama projects. As a result, our net debt
and debt-to-equity ratios have increased significantly
over that period.
As at December 31, 2012, net debt was $11.6 billion
and our net debt-to-equity ratio and net debt-to-total
capitalization ratios were 0.53:1 and 0.39:1, respectively.
This compares to net debt as at December 30, 2011
of $10.3 billion, and net debt-to-equity and net debt-
to-total capitalization ratios of 0.44:1 and 0.33:1,
respectively. The majority of our outstanding long-term
debt matures at various dates beyond 2013. (Please see
page 69 of this MD&A for a schedule of principal
repayments.) In January 2012, we entered into a credit
facility of $4 billion, which matures in 2018 (the “Third
Credit Facility”) to replace our $2 billion facility that was
scheduled to mature in 2016 (the “Second Credit
Facility”) and also to augment our overall credit capacity.
Coincident with this agreement becoming effective, we
drew $1 billion on the Third Credit Facility, paid down
the $1 billion outstanding under the Second Credit
Facility and then terminated the Second Credit Facility.
In April 2012, we issued an aggregate of $2.0 billion in
debt securities comprised of $1.25 billion of 3.85%
notes due in 2022 and $750 million of 5.25% notes due
in 2042. $1.0 billion of the net proceeds from this
offering were used to repay existing indebtedness under
the Third Credit facility, which was originally drawn upon
to partially fund the cost of the Equinox acquisition, with
the balance of the proceeds being used to finance the
project capital expenditures and for general corporate
purposes. Our total scheduled debt repayments through
2014 are $3,027 million.
64
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Sources and Uses of Net Debt1
($ millions)
For the years ended December 31
Operating inflows
Investing activities
Capex – minesite sustaining
Capex – mine development
Capex – minesite expansion1
Capex – projects1
Acquisitions
Other
Total investing outflows
2012
2011
$ 5,439 $ 5,315
$ (1,319) $ (980)
(842)
(544)
(2,607)
(7,677)
(177)
(1,071)
(907)
(3,072)
(37)
(115)
n Our ability to generate free cash flow from operating
activities (refer to the cash flow section on page 66 of
this MD&A for a discussion of key factors impacting
our cash flow in 2012), including cash generated
by operating activities;
n 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);
n The price of gold and copper (refer to page 45 for
$ (6,521) $ (12,827)
more information); and
Financing activities (excluding debt)
Dividends
Funding from non-controlling interests
Repayment of debt related to acquisitions
Deposit on silver sales agreement
Other
$
(750) $
505
–
137
(7)
(509)
403
(347)
138
(9)
Total financing (outflows) inflows
$
(115) $
(324)
Other movements
$
(77) $
(116)
Adjustment for Pueblo Viejo financing
(partner’s share), net of cash
$
(5) $
59
Net (decrease) increase in net debt
$ 1,279 $ 7,893
Net debt at beginning of period2
$ 10,320 $ 2,427
Net debt at end of period2
$ 11,599 $ 10,320
1. The amounts include capitalized interest of $547 million (2011: $382 million).
2. Net debt is a non-GAAP financial performance measure with no standardized
definition under IFRS. For further information and a detailed reconciliation,
please see page 87 of this MD&A.
In third quarter 2012, our credit rating was downgraded
to BBB+ from A- by S&P, with a negative outlook,
following our announcement of a capital cost increase
and delay to production start-up at our Pascua-Lama
project. Our credit rating, as established by Moody’s, has
remained stable throughout this period. Our ability to
access unsecured debt markets and the related cost of
debt financing is, in part, dependent upon maintaining
an acceptable credit rating. We do not expect the
change in our credit rating by S&P to adversely affect our
ability to access the debt markets, but it could impact
funding costs for any new debt financing.
The key factors impacting our financial position, and
therefore our credit rating, include the following:
n Our market capitalization and the strength of our
balance sheet, including the amount of net debt and
our net debt-to-equity ratio;
n The quantity of our gold and copper reserves (refer
to page 43 for more information); and
n Our geo-political risk profile.
At current market gold and copper prices, we expect
to generate negative free cash flow in 2013. This is
primarily due to expected capital expenditures of about
$2.6 billion at our Pascua-Lama project. In addition, we
have approximately $1.8 billion in debt maturing in
2013. We expect to meet our financing needs related to
these developments by utilizing a number of different
options, including the $4.25 billion available under our
credit facilities (subject to compliance with covenants
and the making of certain representations and
warranties, these facilities are available for drawdown as
a source of financing), operating cash flow, asset sales
and future debt or equity issuances, should the need
arise. These alternatives should provide us with the
flexibility to fund any potential cash flow shortfall and
are continually evaluated to determine the optimal
capital structure.
The table below illustrates the impact of changes in
gold and copper prices on our earnings and cash flow on
an annualized basis, assuming the mid-point of our
expected 2013 production levels.
Gold
Copper
Copper
Change in price
+/- 100/oz
+ $0.50/lb
- $0.50/lb1
Annualized approximate impact
on adjusted net earnings and
operating cash flow
+/- $500 million
+ $180 million
- $100 million
1. Using copper collars, approximately 50% of our expected 2013
production is hedged at a range of $3.50/lb to $4.25/lb.
65
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Cash and equivalents and cash flow
Total cash and cash equivalents at the end of 2012 were
$2.1 billion12. 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.
One of our primary ongoing sources of liquidity is
operating cash flow. In 2012, we generated $5.4 billion
in operating cash flow, compared to $5.3 billion of
operating cash flow in 2011. The increase in operating
cash flow primarily reflects a decrease in income tax
payments of $509 million and a decrease in net
working capital outflows, partially offset by lower net
earnings. Adjusted operating cash flow for 2012 was
$5,156 million, down 9% over the prior year. Adjusted
operating cash flow was affected by the same factors
as operating cash flow and removes the impact of the
$385 million in net proceeds related to the settlement of
a portion of our Australian dollar hedge positions and
non-recurring tax payments of $52 million. The most
significant driver of the change in operating cash flow
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 flow
and liquidity. The increase in non-cash working capital
primarily relates to an increase in inventories and a
decrease in accounts payable and other current liabilities.
The increase in inventory is related to an increase in ore
in stockpiles of approximately $570 million, principally
at Porgera, Cortez and Buzwagi. These increases were
partially offset by a decrease at North Mara (refer to the
table below for a summary of changes in our non-cash
working capital balances).
Non-Cash Working Capital
($ millions)
As at December 31
Raw materials
Ore in stockpiles1
Ore on leach pads
Mine operating supplies
Work in process
Finished products
Other current assets
Accounts receivable
VAT and fuel tax receivables2
Accounts payable and other current liabilities
2012
2011
$ 2,160
628
1,096
351
152
124
449
739
(2,567)
$ 1,590
582
885
377
217
507
426
466
(2,715)
Non-cash working capital
$ 3,132
$ 2,335
1. Includes long-term stockpiles of $1,692 million (2011: $1,153 million).
2. Includes long-term VAT and fuel tax receivables of $513 million (2011:
$272 million).
The principal uses of operating cash flow are to fund
our capital expenditures, including construction activities
at our advanced projects; acquisitions and dividend
payments. However, capital expenditures will be
significantly impacted by the timing and expenditure
levels relating to other major new mine projects and
mine expansions, which are subject to permitting
approvals and final construction decisions. A material
adverse decline in the market price of gold and/or copper
could impact the timing of final construction decisions
on these other major new mine projects that are not
yet in construction.
In 2012, cash used in investing activities amounted
to $6,521 million, a decrease of $6,306 million
compared to the prior year, primarily due to the impact
of the $7.5 billion acquisition of Equinox in the second
quarter of 2011. Capital expenditures were $6,369
million in 2012, an increase of $1,396 million or 28%
compared to 2011. The increase is primarily due to an
increase in project capital expenditures, primarily due to
increased construction activities at Pascua-Lama and
Jabal Sayid, partially offset by a decrease at Pueblo
Viejo, and an increase in minesite expansion, minesite
sustaining and mine development expenditures.
12. Includes $401 million cash held at ABG, which may not be readily deployed
outside ABG.
66
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Minesite expansion increased primarily due to higher
capital expenditures related to expansion projects at
Goldstrike, Lumwana and Lagunas Norte. Minesite
sustaining capital expenditures were higher, reflecting
haul truck purchases and tailings facility construction at
Cortez and an increase in sustaining capital at Bald
Mountain, Granny Smith and Cowal and at Lumwana.
Mine development expenditures were higher, primarily
due to increased open pit and underground activities at
Kalgoorlie, Bulyanhulu and Lumwana.
Capital Expenditures1
($ millions)
For the years ended December 31
Capex – gold projects
Pascua-Lama
Pueblo Viejo
Cerro Casale
Capex – copper projects
Jabal Sayid
2012
2011
$ 1,817
$ 612
42
$
$ 1,191
$ 868
$ 111
$ 145
$ 105
Total consolidated project capex2
$ 2,616
$ 2,275
Total capex – minesite expansion
$ 816
$ 494
Total capex – minesite sustaining
$ 1,319
$ 980
Total capex – mine development
$ 1,071
$ 842
Capitalized interest
Total consolidated capex
Capital expenditures attributable to NCI3
Total capex attributable to Barrick
Total capex – copper
Total capex – gold
Total capex – copper projects2
Total capex – gold projects2
Total capex – other4
547
$ 6,369
382
$ 4,973
375
$ 5,994
375
$ 4,598
567
2,449
178
2,640
160
263
1,914
123
2,109
189
Total capex attributable to Barrick
$ 5,994
$ 4,598
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 $2,885 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 $130 million of capital expenditures at Barrick Energy
(2011: $162 million).
Our ability to access low-cost borrowing allowed us to
generate financing cash inflow of $423 million in 2012.
Financing activities in 2012 include financing inflows
of $2 billion related to the issuance of new debt. These
amounts were partially offset by dividend payments of
$750 million and debt repayments of $1,462 million.
This compares to financing inflows in 2011 of
$6,291 million, which primarily includes financing
inflows of $4 billion in debt securities and $2.5 billion
in proceeds from the drawdown of our lines of credit
related to the financing of the acquisition of Equinox.
These amounts were partially offset by dividend
payments of $509 million and debt repayment of
$380 million.
Financial Instruments
We use a mixture of cash, long-term debt and
shareholders’ equity to maintain an efficient capital
structure and ensure adequate liquidity exists to meet
the cash needs of our business. We use interest rate
contracts to mitigate interest rate risk that is implicit in
our cash balances and outstanding long-term debt. In
the normal course of business, we are inherently exposed
to currency and commodity price risk. We use currency
and commodity hedging instruments to mitigate these
inherent business risks. We also hold certain derivative
instruments that do not qualify for hedge accounting
treatment. These non-hedge derivatives are described in
note 23d to our consolidated financial 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 23 and 26
to our consolidated financial statements. For a discussion
of the methods used to value financial instruments, as
well as any significant assumptions, refer also to note 23
to our consolidated financial statements.
67
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Counterparty Risk
Our financial position is also dependent, in part, on
our exposure to the risk of counterparty defaults
related to the net fair value of our derivative contracts.
Counterparty risk is the risk that a third party might
fail to fulfill its performance obligations under the terms
of a financial instrument. Counterparty risk can be
assessed both in terms of credit risk and liquidity risk. For
cash and equivalents and accounts receivable, credit risk
represents the carrying amount on the balance sheet,
net of any overdraft positions.
For derivatives, when the fair value is positive, this
creates credit risk. When the fair value of a derivative is
negative, we assume no credit risk. However, liquidity
risk exists to the extent a counterparty is no longer able
to perform in accordance with the terms of the contract
due to insolvency. In cases where we have a legally
enforceable master netting agreement with a
counterparty, credit risk exposure represents the net
amount of the positive and negative fair values for
similar types of derivatives. For a net negative amount,
we regard credit risk as being zero. For a net positive
amount, this is a reasonable basis to measure credit risk
when there is a legally enforceable master netting
agreement. We mitigate credit and liquidity risk by:
n Entering into derivatives with high credit-quality
counterparties;
n Limiting the amount of exposure to each counterparty;
and
n Monitoring the financial condition of counterparties.
As of December 31, 2012, we had 25 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 $278 million), three
hold greater than 10% of our mark-to-market asset
position, with the largest counterparty holding 20%. We
have two counterparties with which we are in a net
liability position, for a total net liability of $0.2 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.
Summary of Financial Instruments
As at December 31, 2012
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
Principal/
Notional Amount
Associated
Risks
n Interest rate
$ 2,093 million
$ 449 million
n Credit
n Credit
n Market
n Market
$ 76 million
$ 2,265 million
n Liquidity
n Interest rate
$ 14,056 million
n Interest rate
$ 49 million
n Market
$ 7 million
n Market
CAD
CLP
AUD
PGK
ZAR
520 million
721,191 million
2,065 million
50 million
949 million
65 million oz
99 million lbs
n Credit
n Market/liquidity
n Interest rate
n Market/liquidity
n Credit
n Interest rate
n Market/liquidity
n Credit
n Interest rate
n Market/liquidity
Derivative instruments – energy contracts
Diesel
6 million bbls
Derivative instruments – interest rate contracts
Receive fixed interest rate swaps $ 200 million
68
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Commitments and Contingencies
Capital Expenditures Not Yet Committed
We expect to incur capital expenditures during the next
five years for both projects and producing mines. The
projects are at various stages of development, from
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, 2012, namely
Pueblo Viejo, Pascua-Lama and Jabal Sayid (refer to
pages 36–38 for further details), with Pueblo Viejo
reaching commercial production in January 2013.
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 benefits and other post-retirement benefits
Derivative liabilities3
Purchase obligations for supplies and consumables4
Capital commitments5
Social development costs
Payments due
2013
2014
2015
2016
2017
2018 and
thereafter
Total
$ 1,810
38
629
51
29
28
24
10
701
2,063
58
$ 1,140
39
582
153
21
21
23
8
303
108
25
$ 190
32
562
109
19
–
22
5
246
–
23
$ 1,590
26
537
75
14
–
22
2
121
–
23
$ 90
21
501
80
13
–
22
4
119
–
6
$ 9,051
29
5,904
2,168
77
–
104
–
369
–
60
$ 13,871
185
8,715
2,636
173
49
217
29
1,859
2,171
195
Total
$ 5,441
$ 2,423
$ 1,208
$ 2,410
$ 856
$ 17,762
$ 30,100
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. Projected interest payments on variable rate debt were based on interest rates in effect at December 31, 2012. 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 23 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 2012 mainly relate to construction capital at Pascua-Lama.
Litigation and Claims
We are currently subject to various litigation as disclosed
in note 34 to the consolidated financial statements,
and we may be involved in disputes with other parties in
the future that may result in litigation. If we are unable
to resolve these disputes favorably, it may have a material
adverse impact on our financial condition, cash flow
and results of operations.
69
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Review of Quarterly Results
Quarterly Information
($ millions, except where indicated)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2012
2011
Revenues
Realized price – gold1
Realized price – copper1
Cost of sales
Net earnings2
Per share (dollars)2,3
Adjusted net earnings3,4
Per share (dollars)2,3,4
EBITDA4
Operating cash flow
Adjusted operating cash flow4
$ 4,189 $ 3,436 $ 3,278 $ 3,644
1,691
3.78
1,770
1,029
1.03
1,086
1.09
1,997
1,272
$ 1,752 $ 1,267 $ 763 $ 1,374
1,608
3.45
1,830
750
0.75
784
0.78
1,514
763
1,714
3.54
2,229
(3,062)
(3.06)
1,108
1.11
(4,023)
1,672
1,655
3.52
1,825
618
0.62
849
0.85
1,499
1,732
$ 3,761 $ 3,971 $ 3,416 $ 3,087
1,389
4.25
1,354
1,001
1.00
1,004
1.01
1,828
1,439
$ 1,299 $ 2,004 $ 938 $ 1,439
1,513
4.07
1,486
1,159
1.16
1,117
1.12
2,090
750
1,743
3.54
1,694
1,365
1.37
1,379
1.38
2,460
1,902
1,664
3.69
1,705
959
0.96
1,166
1.17
1,998
1,224
1. 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 86 of this MD&A.
2. Sum of all the quarters may not add up to the yearly total due to rounding.
3. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
4. Adjusted net earnings, adjusted EPS, 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 79–85 of this MD&A.
Our financial results for the past several quarters reflect
a trend of spot gold prices that have fluctuated around
historically high levels and increasing gold and copper
production costs, mainly caused by inflationary pressures.
This has translated into fluctuating net earnings and
adjusted operating cash flow levels depending on the
gold and copper realized prices and production levels
each quarter. The net loss in fourth quarter 2012
reflected impairment charges at Lumwana ($3.0 billion
net of tax effects) and impairment charges related to
goodwill of our global copper unit ($798 million).
Fourth Quarter Results
In fourth quarter 2012, we reported net loss and
adjusted net earnings of $3,062 million and
$1,108 million, respectively, compared to net earnings
and adjusted net earnings of $959 million and
$1,166 million, respectively, in fourth quarter 2011.
The decrease in net earnings was largely driven by
the impact of impairment charges of $4.2 (net of tax
effects) billion including impairment charges of about
$3.8 billion attributable to our copper business unit
(comprised of $3.0 billion in asset impairment charges at
Lumwana and a $798 million goodwill impairment
charge – refer to the discussion about Lumwana in the
Key Business Developments section of this MD&A on
page 36 for further details); asset impairment charges
on various properties in our oil & gas business unit
($155 million); write-down of our investment in Reko Diq
($120 million – refer to the discussion regarding Reko
Diq on page 38 of this MD&A for more information). It
also reflects higher cost of sales applicable to gold and
copper and lower realized copper prices, which were
partially offset by higher gold and copper sales volumes
and higher realized gold prices and lower income tax
expense. The decrease in adjusted net earnings reflects
the same factors affecting net earnings with the
exception of impairment charges.
In fourth quarter 2012, we sold 2.03 million ounces
of gold and 154 million pounds of copper, compared to
1.87 million ounces of gold and 135 million pounds of
copper in fourth quarter 2011. Revenues in fourth
quarter 2012 were higher than the same prior year
period reflecting higher market prices for gold and
70
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
higher gold and copper sales volumes. In fourth quarter
2012, cost of sales was $2,229 million, total cash costs
were $584 per ounce and C1 cash costs of $2.07 per
pound for copper, an increase of $79 per ounce and
$0.11 per pound, respectively, from fourth quarter 2011.
Cost of sales was higher, reflecting higher direct mining
costs, including higher labor, energy, maintenance and
consumable costs. Total cash costs were higher as a
result of increased direct mining costs, including higher
labor, energy, maintenance and consumable costs.
C1 cash costs increased due to higher direct mining
costs at Lumwana.
Operating cash flow in fourth quarter 2012 was
$1,672 million, up 37% from the prior year period.
Adjusted operating cash flow for the fourth quarter
was $1,752 million, up 35% from the prior year period.
The increase in operating cash flow and adjusted
operating cash flow primarily reflects higher realized
gold prices, a decrease in income tax payments of
$232 million and a decrease in net working capital
outflow of $312 million, partially offset by lower net
earnings. Adjusted operating cash flow before working
capital adjustments was $1,696 million, up $291 million
from the prior year period.
IFRS Critical Accounting Policies and Accounting Estimates
Management has discussed the development and
selection of our critical accounting estimates with the
Audit Committee of the Board of Directors, and the
Audit Committee has reviewed the disclosure relating
to such estimates in conjunction with its review of
this MD&A. The accounting policies and methods we
utilize determine how we report our financial condition
and results of operations, and they may require
management to make estimates or rely on assumptions
about matters that are inherently uncertain. Our
significant accounting policies are disclosed in note 2
of the Financial Statements.
Future Accounting Policy Changes
The consolidated financial 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 modified
by revaluation of certain financial assets, derivative
contracts and post-retirement assets. The policies
applied in the Financial Statements are based on IFRSs
in effect as at December 31, 2012. The consolidated
financial statements were approved by the Board of
Directors on February 13, 2013.
Financial Instruments
IFRS 9 Financial Instruments
In November 2009, the IASB issued IFRS 9 Financial
Instruments as the first step in its project to replace
IAS 39 Financial Instruments: Recognition and
Measurement. IFRS 9 retains but simplifies the mixed
measurement model and establishes two primary
measurement categories for financial assets: amortized
cost and fair value. The basis of classification depends on
an entity’s business model and the contractual cash flows
of the financial asset. Classification is made at the time
the financial 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 the
measurement of financial liabilities and derecognition of
financial 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 financial statements, including the
possibility 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 definition of control so that the
same criteria apply to all entities, both operating and
special purpose entities, to determine control. The
revised definition focuses on the need to have both
71
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS power over the investee to direct relevant activities
and exposure to variable returns before control is
present. IFRS 10 will be applied starting January 1,
2013. We are currently finalizing our assessment of
the impact of adopting IFRS 10 on our consolidated
financial 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 defines two types of arrangements: Joint
Operations and Joint Ventures. Focus is on the rights
and obligations of the parties to 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 will be
applied starting January 1, 2013. We are currently
finalizing our assessment of the impact of adopting
IFRS 11 on our consolidated financial 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 and the
reporting entity’s involvement with other entities. It also
includes the requirements for unconsolidated structured
entities (i.e. special purpose entities). IFRS 12 will be
applied starting January 1, 2013. We have completed
our assessment and note that additional disclosures will
be required in our 2013 annual consolidated financial
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 definition of fair
value and guidance on how to measure fair value as well
as a requirement for enhanced disclosures. IFRS 13 will
be applied starting January 1, 2013. We are currently
finalizing our assessment of the impact of adopting
IFRS 13 on our consolidated financial 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
72
stripping activity in the production phase of surface
mining when two benefits 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 will be applied starting January 1,
2013. We will amend our accounting policy on
production phase stripping costs to require our open
pit mines to consider components of the pit in their
assessment of whether or not a future benefit has
been created by the mining activities in the period.
We expect that this will lead to an increase in the
amount of stripping costs that are capitalized over the
life of an open pit mine. Based on our analysis, we
expect that our restated 2012 financial statements
will show an increase in PP&E, a decrease in inventory
and an increase in net income. The quantum of these
changes is currently under review in preparation of
our first quarter 2013 reporting.
Internal Control over Financial Reporting and
Disclosure Controls and Procedures
Management is responsible for establishing and
maintaining adequate internal control over financial
reporting and disclosure controls and procedures.
Internal control over financial reporting is a framework
designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation
of financial statements in accordance with IFRS. The
Company’s internal control over financial reporting
framework includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements
in accordance with 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 financial statements.
Disclosure controls and procedures form a broader
framework designed to ensure that other financial
information disclosed publicly fairly presents in all
material respects the financial condition, results of
operations and cash flows of the Company for the
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS 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 financial reporting
and disclosure controls and procedures frameworks
provide internal control over financial reporting and
disclosure. Due to its inherent limitations, internal control
over financial reporting and disclosure may not prevent
or detect all misstatements. Further, the effectiveness
of internal control is subject to the risk that controls may
become inadequate because of changes in conditions,
or that the degree of compliance with policies or
procedures may change.
As described on pages 36–37 of this report, we have
finalized the cost estimate and schedule for the Pascua-
Lama project and have strengthened the construction
management and owners team oversight on the project.
Management will continue to monitor the effectiveness
of its internal control over financial reporting and
disclosure and may make modifications from time to
time as considered necessary or desirable.
The management of Barrick, at the direction of our
chief executive officer and chief financial officer, have
evaluated the effectiveness of the design and operation
of the internal control over financial reporting and
disclosure controls and procedures as of the end of the
period covered by this report and have concluded that
they were effective at a reasonable assurance level.
Barrick’s annual management report on internal
control over financial reporting and the integrated
audit report of Barrick’s auditors for the year ended
December 31, 2012 will be included in Barrick’s 2012
Annual Report and its 2012 Form 40-F/Annual
Information Form on file with the US Securities and
Exchange Commission (“SEC”) and Canadian provincial
securities regulatory authorities.
Critical Accounting Estimates and Judgments
Certain accounting estimates have been identified as
being “critical” to the presentation of our financial
condition and results of operations because they require
us to make subjective and/or complex judgments about
matters that are inherently uncertain; or there is a
reasonable likelihood that materially different amounts
could be reported under different conditions or using
different assumptions and 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 the portion of resources
considered probable of economic extraction. At the end
of each fiscal 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.
Provisions for Environmental Rehabilitations (“PERs”)
We have an obligation to reclaim our mining properties
after the minerals have been mined from the site, and
have estimated the costs necessary to comply with
existing reclamation standards. We recognize the fair
value of a liability for a PER such as site closure and
reclamation costs in the period in which it is incurred
if a reasonable estimate of fair value can be made. PER
can include facility decommissioning and dismantling;
removal or treatment of waste materials; site and land
rehabilitation, including compliance with and monitoring
of environmental regulations; security and other site-
related costs required to perform the rehabilitation work;
and operation of equipment designed to reduce or
eliminate environmental effects.
Provisions for the cost of each rehabilitation program
are recognized at the time that an environmental
disturbance occurs or a constructive obligation is
determined. When the extent of disturbance increases
over the life of an operation, the provision is increased
accordingly. We record a PER in our financial statements
when it is incurred and capitalize this amount as an
increase in the carrying amount of the related asset. At
operating mines, the increase in a PER is recorded as an
adjustment to the corresponding asset carrying amount
and results in a prospective increase in depreciation
expense. At closed mines, any adjustment to a PER is
recognized as an expense in the consolidated statement
of income.
73
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS PERs are measured at the expected value of the
future cash flows, discounted to their present value using
a current, US dollar real risk-free pre-tax discount rate.
The expected future cash flows exclude the effect of
inflation. The unwinding of the discount, referred to as
accretion expense, is included in finance 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
prospectively 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 fines or injunctions or delays in projects,
or any unforeseen environmental contamination at, or
related to, our mining properties, could result in us
suffering significant costs. We mitigate these risks
through environmental and health and safety programs
under which we monitor compliance with laws and
regulations and take steps to reduce the risk of
environmental contamination occurring. We maintain
insurance for some environmental risks; however, for
some risks, coverage cannot be purchased at a
reasonable cost. Our coverage may not provide full
recovery for all possible causes of loss. The principal
factors that can cause expected cash flows to change
are: the construction of new processing facilities;
changes in the quantities of material in reserves and
a corresponding change in the life of mine plan;
changing ore characteristics that ultimately impact the
environment; changes in water quality that impact
the extent of water treatment required; and changes in
laws and regulations governing the protection of the
environment. In general, as the end of the mine life
nears, the reliability of expected cash flows increases,
but earlier in the mine life, the estimation of a PER is
inherently more subjective. Significant judgments and
estimates are made when estimating the fair value of
PERs. Expected cash flows 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 reflects the expected
cost, taking into account the probability of particular
scenarios. The difference between the upper end of
the range of these assumptions and the lower end of
the range can be significant, and consequently changes
in these assumptions could have a material effect on
the fair value of PERs and future earnings in a period
of change.
During the year ended December 31, 2012, our PER
balance increased by $504 million, primarily due to
a decrease in the discount rate used to calculate PER
and due to an increase in cost estimates. The offset
was recorded as an increase in PP&E for our operations
and other expense at our closed sites.
PERs
($ millions)
As at December 31
Operating mines
Closed mines
Development projects
Other
Total
2012
2011
$ 1,968
386
211
98
$ 1,608
373
97
81
$ 2,663
$ 2,159
Accounting for impairment of non-current assets
Goodwill impairment test
In accordance with our accounting policy, goodwill was
tested for impairment in the fourth quarter, with our
gold segments and capital projects segment being tested
at the beginning of the quarter, and our copper and
Barrick Energy segments at the end of the quarter. When
there is an indicator of impairment of non-current assets
within an operating segment containing goodwill, we
test the non-current assets for impairment first and
recognize any impairment loss on the non-current assets
before testing the operating segment containing the
goodwill for impairment. The recoverable amount of
each operating segment has been determined based on
its fair value less cost to sell (“FVLCS”), which has been
determined to be greater than the value in use (“VIU”)
model. For the year ended December 31, 2012, we
recorded an impairment of goodwill related to our
copper segment of $798 million (2011: nil).
74
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Gold and Capital Projects
FVLCS for each of the gold segments and the capital
projects segment was determined by calculating the net
present value (“NPV”) of the future cash flows expected
to be generated by the segments. The estimates of
future cash flows were derived from the most recent life
of mine (“LOM”) plans, with mine lives ranging from
2 to 34 years and an average mine life of 14 years,
aggregated to the segment level, the level at which
goodwill is tested. We have used an estimated long-term
gold price of $1,700 per ounce (2011: $1,600 per
ounce) to estimate future revenues. The future cash
flows for each gold mine/capital project were discounted
using a real weighted average cost of capital ranging
from 3% to 8% depending on the location and market
risk factors for each mine/project, which results in an
average weighted cost of capital for the gold segments
and capital projects segments of 5% (2011 average real
weighted cost of capital of 5%). Gold companies
consistently trade at a market capitalization greater than
the NPV of their expected cash flows. Market
participants describe this as a “NAV multiple”, whereby
the NAV multiple represents the multiple applied to the
NPV to arrive at the trading price. The NAV multiple
represents the value of the exploration potential of the
mineral property, namely the ability to find and produce
more metal than what is currently included in the LOM
plan, and the benefit of gold price optionality. As a
result, we applied a NAV multiple to the NPV of each
CGU within each gold segment and the capital projects
segment based on the observable NAV multiples of
comparable companies as at the test date. In 2012, the
average NAV multiple was approximately 1.2 (2011: 1.2).
Copper
For our copper segment, the FVLCS was determined
based on the NPV of future cash flows expected to be
generated using the most recent LOM plans, with mine
lives ranging from 13 to 33 years, aggregated to the
segment level. We utilized a long-term risk-adjusted
copper price of $3.43 per pound (2011: $3.44 per
pound) to estimate future revenues. The risk adjustment
to the average long-term copper price was approximately
5.8% (2011: 4.5%). The expected future cash flows
were additionally discounted using rates from 4.5% to
6.5% (2011: 4.5% to 5.5%) to reflect the time value
of money and a residual risk factor for cash flow
uncertainties not related to metal price. This results in
an effective weighted average cost of capital for the
copper segment of approximately 7% (2011: 7%.)
We recorded a non-current asset impairment charge
of $3.0 billion (after related income tax effects) for
the Lumwana CGU in fourth quarter 2012 (see the
Non-current asset impairment test section below for
further details). After reflecting this charge, we
conducted our goodwill impairment test and determined
that the carrying value of our copper segment exceeded
its FVLCS, and therefore we recorded a goodwill
impairment charge of $798 million. The FVLCS of our
copper segment was impacted in the current year by
increasing unit mining costs, increased operating costs
and increased future capital costs.
Oil & gas
For our oil and gas segment, the FVLCS was determined
based on the NPV of future cash flows expected to be
generated from our oil & gas CGUs, aggregated to the
segment level. We have estimated future oil prices using
the forward curve provided by an independent reserve
evaluation firm, with prices starting at $90 per barrel
(WTI) (2011: $97 per barrel). The future cash flows were
discounted using a real weighted average cost of capital
for long life oil & gas assets of 8.5% (2011: 8.5%).
In fourth quarter 2012, we recorded a non-current
asset impairment charge of $155 million (after related
income tax effects) for certain CGUs in this segment
(see the Non-current asset impairment test section below
for further details). After reflecting these charges, the
FVLCS of Barrick Energy exceeds its carrying amount
by about $40 million and therefore segment goodwill
was recoverable (see the Key assumptions and
sensitivities section for further details).
Non-current asset impairment test
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 identifiable cash flows are largely
independent of the cash flows of other assets.
75
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended December 31, 2012, we recorded
impairment charges of $5.6 billion (pre-tax) (2011:
$0.1 billion) for non-current assets, as summarized in the
table below:
($ millions)
For the years ended December 31
Lumwana
Barrick Energy CGUs
Exploration properties
Reko Diq
Highland Gold
PV power assets
Tulawaka
Other
Total after-tax non-current asset
impairment charges
Related income tax effects and NCI
Total impairment charges
2012
2011
$ 3,016
155
164
120
84
21
16
11
$
–
37
–
–
–
39
–
4
$ 3,587
2,039
$ 80
58
$ 5,626
$ 138
We have prepared a new life-of-mine (LOM) plan for
Lumwana, which reflects information obtained from
the exploration and infill drilling program that was
completed late in fourth quarter 2012. The purpose
of the drilling program was to better define the limits
of mineralization and develop an updated, more
comprehensive block model of the ore body for mine
planning purposes. After this drilling was completed,
the ore body did not meet our economic expectations.
While the drilling increased reserves and defined
significant additional mineralization, some at higher
grades, much of it was deep and would require a
significant amount of waste stripping, which makes it
uneconomic based on our expected operating costs and
current market copper prices. At higher copper prices,
however, much of this copper will be economic and
come into reserves and resources.
The new LOM plan also reflects revised operating
and sustaining capital costs after results of the drill
program were incorporated into a new block model for
the life-of-mine plan. The revised LOM cost estimates
– under present copper price assumptions – reduced
expected copper production and, in turn, profitability
over the mine life. As a result, we have recorded an
after-tax asset impairment charge of $3.0 billion for
Lumwana in the fourth quarter. We also recorded
a goodwill impairment of $0.8 billion for the copper
business unit for a total charge of $3.8 billion. We
continue to progress a number of key initiatives to lower
costs, including improvements to operating systems
and processes, and a full transition to an owner
maintained operation. A focus on higher utilization and
productivity of the mining fleet has also been identified
as one of the major opportunities to improve value.
Until we can improve mining costs, and/or copper prices
increase, the expansion opportunity to increase the
throughput capacity of the processing plant does not
meet our investment criteria. The Company will only
invest capital if it generates acceptable rates of return
suitable to the size of the capital investment.
The significant changes in the LOM plan were
considered an indicator of impairment, and, accordingly,
we performed an impairment assessment for Lumwana
as at the end of the year. As a result of this assessment,
we have recorded an impairment charge of $3.0 billion,
after tax, related to the carrying value of the PP&E at
Lumwana in fourth quarter 2012.
In fourth quarter 2012, we recorded an after-tax
impairment charge of $155 million (2011: $37 million)
related to PP&E in certain of our CGUs in our Barrick
Energy segment. The impairment charges were primarily
as a result of lower WTI prices and a significant increase
in the discount of Edmonton par prices, from which
Barrick Energy’s realized prices are derived, compared to
the WTI equivalent prices in the prior year.
In fourth quarter 2012, we also recorded the
following after-tax impairment charges: $16 million
in PP&E impairment charges related to Tulawaka in
our ABG segment, primarily as a result of a decrease in
the expected remaining mine life in its most recent
LOM plan; $120 million related to our equity method
investment in TCC, which holds our interest in the Reko
Diq project; and a further $21 million write-down of
power-related assets at our Pueblo Viejo project, above
the impairment charge recorded in 2011, based on new
information with respect to the recoverable amount of
these assets received in fourth quarter 2012.
76
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Other after-tax impairment charges recorded in 2012
included: $164 million related to exploration properties,
included in intangible assets, in Papua New Guinea
and Saudi Arabia as a result of our decision to cease
exploration activities $141 million in Papua New Guinea
in third quarter 2012 and $23 million in Saudi Arabia
in fourth quarter 2012); and $84 million related to our
equity method investment in Highland Gold as a result of
the disposition of our equity interest in first quarter 2012.
For the year ended December 31, 2011, we recorded
after-tax impairment charges of $80 million for non-
current assets. The impairment included a $37 million
charge at our Barrick Energy segment, primarily due to
oil recovery issues at one of our properties. Impairment
charges also included a $39 million write-down of
power-related assets at our Pueblo Viejo project as a
result of a decision to proceed with an alternative
long-term power solution.
Key assumptions and sensitivities
The key assumptions used in determining the recoverable
amount (FVLCS) are related to commodity prices,
discount rates, NAV multiples for gold assets, operating
costs, exchange rates and capital expenditures. The
Company performed a sensitivity analysis on all key
assumptions that assumed a negative 10% change for
each individual assumption while holding the other
assumptions constant and determined that, other than
as discussed below, no reasonably possible change in any
of the key assumptions would cause the carrying value of
our business segments to exceed its recoverable amount
for the purposes of the goodwill impairment test or
the carrying value of any of our CGUs to exceed its
recoverable amount for the purposes of the non-current
asset impairment test where an indicator of potential
impairment for the non-current asset was noted.
As at December 31, after reflecting the impairments
of Lumwana’s long-lived assets and the copper segment’s
goodwill, the recoverable amount of the copper
segment is equal to its carrying amount, including
goodwill. Therefore any significant negative change in
the key assumptions could result in an additional
impairment charge to non-current assets of Lumwana
and/or copper segment goodwill. As at December 31,
2012, the carrying amount of goodwill for the copper
segment is $3.5 billion.
In second quarter 2012 we identified a potential
indicator of impairment at our Pascua-Lama project
based on the significant increase in the expected
construction costs and delay in the expected completion
date. We conducted an impairment assessment at that
time and determined that the fair value of the project
exceeded its carrying value. In fourth quarter 2012, upon
completion of the cost estimate, schedule and the
associated LOM plan, we updated our assessment and
determined that the fair value of the project exceeds its
carrying value as at December 31, 2012 by about
$1.5 billion. A decrease of about 7% in long-term gold
prices, a decrease of about 12% in silver prices, an
increase of about 10% in operating costs or an increase
of about 15% in the total LOM capital expenditures,
would in isolation, cause the estimated recoverable
amount to be equal to the carrying value. As at
December 31, 2012, the carrying value of Pascua-Lama
is $5.24 billion (2011: $3.06 billion).
We also conducted an internal assessment of our
Buzwagi mine, in our ABG segment, in fourth quarter
2012 and determined that the fair value of the project
exceeds its carrying value by about $165 million. A
decrease of about 5% in gold prices or an increase of
about 10% in cash operating costs, would in isolation,
cause the estimated recoverable amount to be equal to
the carrying value. The current carrying value of Buzwagi
is $747 million (2011: $634 million). In addition, the
recoverable amount of Tulawaka is approximately equal
to its carrying amount, and therefore any significant
change in the key assumptions could result in additional
impairment charges. The current carrying value of
Tulawaka is $8 million (2011: $28 million).
As at December 31, an indicator of potential
impairment was noted for our Darlot mine, in our
Australia Pacific operating segment, in relation to a
significant increase in operating costs in its most recent
LOM plan. Accordingly, we conducted an impairment
assessment and determined that the fair value of the
77
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS mine exceeds its carrying value as at December 31,
2012 by about $50 million. A decrease of about 15%
in gold prices, an increase of about 20% in cash
operating costs or an increase of about 15% in the
Australian dollar compared to the US dollar would,
in isolation, cause the estimated recoverable amount to
be equal to the carrying value. The current carrying
value of Darlot is $66 million (2011: $90 million). In
addition, the recoverable amount of our Kanowna mine
is approximately equal to its carrying amount, and
therefore any significant change in the key assumptions
could result in an impairment charge. The current
carrying value of Kanowna is $162 million (2011:
$197 million).
As at December 31, the recoverable amounts of
certain CGUs within Barrick Energy are approximately
equal to their carrying amounts and therefore any
significant change in the key assumptions could result in
additional impairment charges. The current carrying
value of these CGUs is $589 million (2011: $231 million).
Deferred Tax Assets and Liabilities
Measurement of Temporary Differences
We are periodically required to estimate the tax basis
of assets and liabilities. Where applicable tax laws
and regulations are either unclear or subject to varying
interpretations, it is possible that changes in these
estimates could occur that materially affect the amounts
of deferred income tax assets and liabilities recorded in
our consolidated financial statements. Changes in
deferred tax assets and liabilities generally have a direct
impact on earnings in the period of changes.
Recognition of Deferred Tax Assets
Each period, we evaluate the likelihood of whether
some portion or all of each deferred tax asset will not
be realized. This evaluation is based on historic and
future expected levels of taxable income, the pattern
and timing of reversals of taxable temporary timing
differences that give rise to deferred tax liabilities, and
tax planning activities. Levels of future taxable income
are affected by, among other things, market gold prices,
and production costs, quantities of proven and probable
gold and copper reserves, interest rates and foreign
currency exchange rates. If we determine that it is
probable (a likelihood of more than 50%) that all or
some portion of a deferred tax asset will not be realized,
we do not recognize it in our financial statements.
Changes in recognition of deferred tax assets are
recorded as a component of income tax expense or
recovery for each period. The most significant recent
trend impacting expected levels of future taxable
income and the amount of recognition of deferred tax
assets, has been rising market gold prices. A decline
in market gold prices could lead to derecognition
of deferred tax assets and a corresponding increase
in income tax expense.
Deferred Tax Assets Not Recognized
($ millions)
As at December 31
Australia and Papua New Guinea
Canada
Argentina
Barbados
Zambia
Tanzania
Other
2012
2011
$ 181
88
–
73
48
43
17
$ 122
76
35
73
–
31
23
$ 450
$ 360
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 specific sources.
Australia: most of the unrecognized deferred tax
assets relate to capital losses that can only be utilized if
capital gains are realized.
78
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Non-Gaap Financial Performance Measures13
Adjusted Net Earnings (Adjusted Net Earnings
per Share) and Adjusted Return on Equity
Adjusted net earnings is a non-GAAP financial measure
which excludes the following from net earnings:
n Significant tax adjustments not related to current
period earnings;
n Impairment charges (reversals) related to intangibles,
goodwill, property, plant and equipment, and
investments;
n Gains/losses and other one-time costs relating to
acquisitions/dispositions;
n Foreign currency translation gains/losses;
n Non-recurring restructuring costs;
n Unrealized gains/losses on non-hedge derivative
instruments; and
n 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 restructuring charges do not reflect the
underlying operating performance of our core mining
business and are not necessarily indicative of future
operating results.
We also adjust 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 underlying
results. Furthermore, foreign currency translation gains/
losses and unrealized gains/losses from non-hedge
derivatives are not necessarily reflective of the underlying
operating results for the reporting periods presented.
As noted, the Company uses this measure for its
own internal purposes. Management’s internal budgets
and forecasts and public guidance do not reflect
potential impairment charges, potential gains/losses on
the acquisition/disposition of assets, foreign currency
translation gains/losses, or unrealized gains/losses on
non-hedge 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 adjusted 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. We use adjusted net earnings to calculate
the adjusted return on equity as management believes it
is a useful measure of the Company’s underlying
operating performance of our core mining business.
Adjusted net earnings is intended to provide
additional information only and does not have any
standardized definition 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
profit or cash flow 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.
13. The amounts presented in the non-GAAP financial performance measure
tables include the results of discontinued operations.
79
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Return on Equity1
2012
(665)
(83)
($ millions, except per share amounts in dollars)
Net earnings/(losses)attributable to equity holders of the Company $
Significant 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
Other items
Unrealized (gains)/losses on non-hedge derivative instruments
4,425
(13)
125
–
–
18
57
(37)
For the years
ended Dec. 31
For the three months
ended Dec. 31
2011
2010
2012
$ 4,484
122
$ 3,582
(4)
165
(165)
(5)
2
97
32
–
(66)
(65)
(62)
32
43
–
–
–
(9)
$ (3,062)
(42)
4,161
1
97
–
–
–
42
(89)
2011
959
86
$
153
(6)
21
–
(18)
32
–
(61)
Adjusted net earnings
Net earnings/(losses) per share4
Adjusted net earnings per share4
Average Shareholders’ Equity
Adjusted return on equity5
$ 3,827
$ 4,666
$ 3,517
$ 1,108
$ 1,166
(0.66)
$ 3.82
$ 22,604
17%
4.49
$
4.67
$ 21,418
22%
3.63
$ 3.56
$ 17,352
20%
(3.06)
$ 1.11
$ 23,509
19%
0.96
$ 1.17
$ 22,869
20%
1. Amounts presented in this table are after-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 of 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 our 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 flow is a non-GAAP financial
measure which excludes the effect of elimination of gold
sales contracts, the effect of the settlement of currency
contracts, the impact of one-time costs and working
capital adjustments relating to business combinations.
Management uses adjusted operating cash flow as a
measure internally to evaluate the underlying operating
cash flow performance of the Company as a whole for
the reporting periods presented, and to assist with the
planning and forecasting of future operating cash flow.
The elimination of gold sales contracts and one-time
costs and working capital adjustments relating to
business combinations are activities that are not reflective
of the underlying capacity of our operations to generate
operating cash flow and therefore this adjustment will
result in a more meaningful operating cash flow measure
for investors and analysts to evaluate our performance
in the period and assess our future operating cash
flow-generating capability.
Starting in Q1 2012, we have also adjusted our
operating cash flow to remove the effect of the
settlement of contingent consideration and non-
recurring tax payments. This settlement activity and
non-recurring tax payments are not reflective of the
underlying capacity of our operations to generate
operating cash flow on a recurring basis, and therefore
this adjustment will result in a more meaningful
operating cash flow measure for investors and analysts
to evaluate our performance in the period and assess our
future operating cash flow-generating capability.
We also present adjusted operating cash flow before
working capital changes as a measure which excludes
working capital changes from adjusted operating cash
flow. Management uses operating cash flow before
working capital changes as a measure internally to
evaluate the Company’s ability to generate cash flows
from its mining operations, before the impact of
working capital movements.
80
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Free cash flow is a measure which excludes our share
of capital expenditures from adjusted operating cash
flow. Management believes this to be a useful indicator
of the Company’s ability to operate without reliance on
additional borrowing or usage of existing cash.
Adjusted operating cash flow, adjusted operating
cash flow before working capital changes and free cash
flow are intended to provide additional information
only and do not have any standardized definition under
Reconciliation of Adjusted Operating Cash Flow
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 profit or cash flow 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.
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions)
2012
2011
2010
2012
2011
Operating cash flow
Elimination of gold sales contracts
Settlement of contingent consideration
Settlement of currency contracts
Non-recurring tax payments
Withholding tax payments
Acquisition costs expensed and related working capital movements
Adjusted operating cash flow
Changes in working capital
$ 5,439
–
50
(385)
52
–
–
$ 5,156
236
$ 5,315
–
–
–
–
161
204
$ 5,680
139
$ 4,585
656
–
–
–
–
–
$ 5,241
1
$ 1,672
–
–
80
–
–
–
$ 1,752
(56)
$ 1,224
–
–
–
–
75
-
$ 1,299
106
Adjusted operating cash flow before working capital changes
$ 5,392
$ 5,819
$ 5,242
$ 1,696
$ 1,405
Adjusted operating cash flow
Capital expenditures – Barrick’s share
$ 5,156
(5,994)
$ 5,680
(4,598)
$ 5,241
(3,371)
$ 1,752
(1,818)
$ 1,299
(1,231)
Free cash flow
$ (838)
$ 1,082
$ 1,870
$
(66)
$
68
Total Cash Costs per ounce, C1 Cash Costs
per pound, C3 Fully Allocated Costs per pound
and All-In Sustaining Cash Costs per ounce
Total cash costs per ounce, C1 cash costs per pound,
C3 fully allocated costs per pound and all-in sustaining
cash costs per ounce are non-GAAP financial measures.
Total cash costs per ounce includes all costs absorbed
into inventory, as well as royalties, and by-product
credits, and excludes inventory purchase accounting
adjustments, unrealized gains/losses from non-hedge
currency and commodity contracts, and depreciation and
accretion. Our total cash costs exclude the impact of ore
purchase agreements that have economic characteristics
similar to a toll milling arrangement, as the cost of
producing these ounces is not indicative of our normal
production costs. Hence, we remove such costs from
total cash costs. This measure also includes 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. This measure is
calculated by dividing the aggregate of the applicable
costs by gold ounces or copper pounds sold. This
measure is calculated on a consistent basis for the
periods presented.
Starting in Q1 2012, we have replaced the non-
GAAP measure “total cash cost per pound” for our
copper business with “C1 cash costs per pound”.
We believe that this change will enable investors to
better understand the performance of our global copper
segment in comparison to other copper producers who
present results on a similar basis. As part of this change,
we also introduced “C3 fully allocated costs per pound”.
The primary difference between total cash costs and
C1 cash costs is that royalties and non-routine charges
are excluded from C1 cash costs as they are not direct
production costs. C3 fully allocated costs per pound
include C1 cash costs, depreciation, royalties, exploration
and evaluation expense, administration expense and
non-routine charges.
81
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Beginning in 2013, we are adopting an “all-in
sustaining cash costs per ounce” measure. The Company
believes that current operating measures commonly
used in the gold industry do not capture all of the
sustaining expenditures incurred in order to produce
gold, and therefore they do not present a complete
picture of a company’s operating performance or its
ability to generate free cash flow from its current
operations. Similarly, they do not reflect all of the
expenditures that would be included in the valuation
of a gold mining company. For these reasons, the
Company is working with the members of the World
Gold Council (“WGC”) to define an all-in sustaining
cash costs measure that better represents the total costs
associated with producing gold. We believe this measure
will better meet the needs of analysts, investors and
other stakeholders of the Company in assessing its
operating performance, its ability to generate free cash
flow from current operations and its overall value.
The WGC project to define all-in sustaining cash
costs is ongoing and a final standard is expected in
the middle of 2013. We expect to conform our disclosure
of all-in sustaining cash costs to the measure that is
ultimately approved by the WGC. Our current definition
of all-in sustaining cash costs commences with total
cash costs and then adds sustaining capital expenditures,
corporate general and administrative costs, mine site
exploration and evaluation costs and environmental
rehabilitation costs. This measure seeks to represent
the total costs of producing gold from current
operations, and therefore it does not include capital
expenditures attributable to projects or mine expansions,
exploration and evaluation costs attributable to
growth projects, income tax payments, interest costs or
dividend payments. Consequently, this measure is not
representative of all of the Company’s cash expenditures.
In addition, our calculation of all-in sustaining cash costs
does not include depreciation expense as it does not
reflect the impact of expenditures incurred in prior
periods. Therefore, it is not indicative of the Company’s
overall profitability.
We calculate total cash costs and all-in sustaining
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
statistics only reflect our equity share of production.
Total cash costs, C1 cash costs, C3 fully allocated
costs and all-in sustaining cash costs are intended to
provide additional information only and do not have
any standardized definition 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 profit or cash flow 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.
82
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS Total Cash Costs per ounce, All-In Sustaining Cash Costs per ounce, C1 Cash Costs per pound
($ millions)
Gold
Copper
Oil & Gas
Total
For the years ended
December 31
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
Cost of sales
Less: Depreciation
$ 6,210 $ 5,169 $ 4,610 $ 1,279
231
1,152 1,077
1,389
$ 915 $ 407
88
170
$ 165
102
$ 156 $ 114 $ 7,654 $ 6,240 $ 5,131
1,419 1,212
1,722
97
47
Cash costs of sales $ 4,821 $ 4,017 $ 3,533 $ 1,048
$ 745 $ 319
$ 63
$ 59
$ 67 $ 5,932 $ 4,821 $ 3,919
($ millions)
For the three months ended
December 31
Cost of sales
Less: Depreciation
Cash costs of sales
Gold
Copper
Oil & Gas
Total
2012
2011
2012
2011
2012
2011
2012
2011
$ 1,771 $ 1,384
312
421
$ 418 $ 274
61
66
$ 40
24
$ 48 $ 2,229 $ 1,706
402
511
29
$ 1,350 $ 1,072
$ 352 $ 213
$ 16
$ 19 $ 1,718 $ 1,304
Reconciliation of Cost of Sales to Total Cash Costs per ounce
Gold
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per ounce information in dollars)
2012
2011
2010
2012
2011
Cash 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
Realized non-hedge gains/losses on fuel hedges
Treatment and refinement charges2
Impact of Barrick Energy
Total cash cost of sales
$ 4,821
–
(168)
(161)
(139)
(9)
6
(90)
$ 4,017
–
(171)
(126)
(137)
(5)
8
(118)
$ 3,533
10
(97)
(104)
(120)
3
8
(56)
$ 1,350
–
(44)
(42)
(38)
(19)
2
(25)
$ 1,072
–
(45)
(26)
(33)
1
1
(32)
$ 4,260
$ 3,468
$ 3,177
$ 1,184
$ 938
Ounces sold – consolidated basis (000s ounces)
Ounces sold – non-controlling interest (000s ounces)1
Ounces sold – equity basis (000s ounces)
7,465
(173)
7,292
7,758
(208)
7,550
7,902
(160)
7,742
2,071
(44)
2,027
1,913
(48)
1,865
Total cash costs per ounce3
$ 584
$ 460
$ 409
$ 584
$ 505
1. Relates to interest in ABG held by outside shareholders.
2. In first quarter 2012, we amended the presentation of treatment and refinement charges incurred on concentrate sales in the consolidated financial statements.
Previously, these charges were included in cost of sales and they are now deducted from revenues. We have amended this non-GAAP financial performance measure
to reflect this change and therefore result in a measure that is consistent with prior periods.
3. Total cash costs per ounce may not calculate based on amounts presented in this table due to rounding.
83
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Reconciliation of Total Cash Cost of Sales to All-In Sustaining Cash Costs per ounce
($ millions, except per ounce information in dollars)
Total cash cost of sales
General & administrative costs
Rehabilitation – accretion and amortization
Mine on-site exploration and evaluation costs
Mine development expenditures
Sustaining capital expenditures
All-in sustaining cash costs
Ounces sold – consolidated basis (000s ounces)
Ounces sold – non-controlling interest (000s ounces)1
Ounces sold – equity basis (000s ounces)
For the years
ended Dec. 31
For the three months
ended Dec. 31
2011
2010
2012
2011
$ 3,468
314
134
136
750
876
$ 3,177
311
111
89
561
785
$ 1,184
111
38
47
233
356
$ 938
82
40
38
173
265
$ 5,678
$ 5,034
$ 1,969
$ 1,536
7,758
(208)
7,550
7,902
(160)
7,742
2,071
(44)
2,027
1,913
(48)
1,865
2012
$ 4,260
373
147
156
833
1,129
$ 6,898
7,465
(173)
7,292
All-in sustaining cash costs per ounce2
$ 945
$ 752
$ 649
$ 972
$ 826
1. Relates to interest in ABG held by outside shareholders.
2. All-in sustaining cash costs per ounce may not calculate based on amounts presented in this table due to rounding.
Reconciliation of Cost of Sales to C1 Cash Costs per pound
Copper
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per pound information in dollars)
2012
2011
Cost of sales
Cost of sales applicable to discontinued operations
Treatment and refinement charges1
Less: royalties
Less: non-routine charges
Other metal sales
Other
C1 cash cost of sales
Depreciation/amortization
Royalties
Non-routine charges
Exploration and evaluation
Administration costs
Other expense (income)
$ 1,048
–
95
(34)
(62)
(1)
(22)
$ 745
–
68
(17)
(34)
(3)
–
$ 1,024
$ 759
231
34
62
14
9
27
170
17
34
12
22
9
C3 fully allocated cost of sales
$ 1,401
$ 1,023
Pounds sold – consolidated basis (millions pounds)
472
444
C1 cash cost per pound2
C3 fully allocated cost per pound2
$ 2.17
$ 1.71
$ 2.97
$ 2.30
2010
$ 319
91
23
(6)
–
(6)
–
$ 421
88
6
–
–
5
19
$ 539
391
$ 1.08
$ 1.38
2012
$ 352
–
26
(11)
(45)
–
(5)
$ 317
66
11
45
7
4
15
$ 465
154
$ 2.07
$ 3.04
2011
$ 213
–
26
(3)
29
–
–
$ 265
61
3
(29)
4
12
19
$ 335
135
$ 1.96
$ 2.47
1. In first quarter 2012, we amended the presentation of treatment and refinement charges incurred on concentrate sales in the consolidated financial statements.
Previously, these charges were included in cost of sales and they are now deducted from revenues. We have amended this non-GAAP financial performance measure
to reflect this change and therefore result in a measure that is consistent with prior periods.
2. C1 cash costs per pound and C3 fully allocated costs per pound may not calculate based on amounts presented in this table due to rounding.
84
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
EBITDA and Adjusted EBITDA
EBITDA is a non-GAAP financial measure, which excludes
the following from net earnings:
n Income tax expense;
n Finance costs;
n Finance income; and
n Depreciation.
Management believes that EBITDA is a valuable indicator
of the Company’s ability to generate liquidity by
producing operating cash flow to: fund working capital
needs, service debt obligations, and fund capital
expenditures. Management uses EBITDA for this purpose.
EBITDA is also frequently used by investors and analysts
for valuation purposes whereby EBITDA is multiplied
by a factor or “EBITDA multiple” that is based on an
observed or inferred relationship between EBITDA and
market values to determine the approximate total
enterprise value of a company.
Starting in this MD&A, we are introducing “Adjusted
EBITDA” as a non-GAAP measure. We have adjusted our
EBITDA to remove the effect of “impairment charges”.
These charges are not reflective of our ability to generate
liquidity by producing operating cash flow and therefore
this adjustment will result in a more meaningful valuation
measure for investors and analysts to evaluate our
performance in the period and assess our future ability
to generate liquidity.
EBITDA and adjusted EBITDA are intended to provide
additional information to investors and analysts and do
not have any standardized definition under IFRS and
should not be considered in isolation or as a substitute
for measures of performance prepared in accordance
with IFRS. EBITDA and adjusted EBITDA exclude the
impact of cash costs of financing activities and taxes, and
the effects of changes in operating working capital
balances, and therefore is not necessarily indicative of
operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate
EBITDA and adjusted EBITDA differently.
The following table provides a reconciliation of
EBITDA and adjusted EBITDA to net earnings.
Reconciliation of Net Earnings to EBITDA
($ millions, except per share amounts in dollars)
2012
2011
2010
2012
2011
For the years
ended Dec. 31
For the three months
ended Dec. 31
Net earnings/(loss)
Income tax expense
Finance costs
Finance income
Depreciation
EBITDA
Impairment charges
Adjusted EBITDA
Reported as:
Gold
North America
South America
Australia Pacific
African Barrick Gold
Copper
Capital Projects
Barrick Energy
Other
EBITDA
Impairment charges
Adjusted EBITDA
$ (665)
(236)
177
(11)
1,722
$ 987
$ 6,470
$ 7,457
$ 3,862
1,771
1,446
330
564
(113)
66
(6,939)
$ 4,484
2,287
199
(13)
1,419
$ 3,582
1,561
180
(14)
1,212
$ (3,062)
(1,514)
44
(2)
511
$ 959
589
51
(3)
402
$ 8,376
$ 6,521
$ (4,023)
$ 1,998
$ 235
$
(73)
$ 6,196
$ 212
$ 8,611
$ 6,448
$ 2,173
$ 2,210
$ 3,648
2,121
1,687
538
$ 2,317
1,996
1,096
429
827
(151)
49
(343)
697
(15)
47
(46)
$ 1,109
556
370
75
134
(63)
16
(6,220)
$ 820
662
462
119
188
(99)
(22)
(132)
$ 987
$ 8,376
$ 6,521
$ (4,023)
$ 1,998
$ 6,470
$ 235
$
(73)
$ 6,196
$ 212
$ 7,457
$ 8,611
$ 6,448
$ 2,173
$ 2,210
85
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Realized Prices
Realized price is a non-GAAP financial measure which
excludes from sales:
n Unrealized gains and losses on non-hedge derivative
contracts;
n Unrealized mark-to-market gains and losses on
provisional pricing from copper and gold sales
contracts;
n Sales attributable to ore purchase arrangements; and
n 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 values 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
Reconciliation of Sales to Realized Price per ounce/per pound1
losses will become realized. The amounts of these gains
and losses reflect fair values based on market valuation
assumptions at the end of each period and do not
necessarily represent the amounts that will become
realized on maturity. We also exclude export duties that
are paid upon sale and netted against revenues. We
believe this provides investors and analysts with a more
accurate measure with which to compare to market gold
prices and to assess our gold sales performance. For
those reasons, Management believes that this measure
provides a more accurate reflection of our past
performance and is a better indicator of its expected
performance in future periods.
The realized price measure is intended to provide
additional information, and does not have any
standardized definition 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.
($ millions, except per ounce/pound information in dollars)
Gold
Copper
For the years ended December 31
2012
2011
2010
2012
2011
2010
Sales
Sales applicable to discontinued operations
Sales applicable to non-controlling interests
Sales attributable to ore purchase agreement
Realized non-hedge gold/copper derivative (losses) gains
Treatment and refinement charges1
Unrealized mark-to-market provincial price adjustment
Other
Export duties
$ 12,564
–
(288)
(174)
–
6
–
–
65
$ 12,255
–
(329)
(137)
43
8
–
–
73
$ 9,679
43
(206)
(111)
26
8
(1)
–
68
$ 1,689
–
–
–
(76)
95
–
(22)
–
$ 1,646
–
–
–
(21)
68
–
–
–
$ 1,033
244
–
–
30
23
–
–
–
Revenues – as adjusted
$ 12,173
$ 11,913
$ 9,506
$ 1,686
$ 1,693
$ 1,330
Ounces/pounds sold (000s ounces/millions pounds)
7,292
7,550
7,742
472
444
391
Realized gold/copper price per ounce/pound2
$ 1,669
$ 1,578
$ 1,228
$ 3.57
$ 3.82
$ 3.41
1. In first quarter 2012, we amended the presentation of treatment and refinement charges incurred on concentrate sales in the consolidated financial statements.
Previously, these charges were included in cost of sales and they are now deducted from revenues. We have amended this non-GAAP financial performance measure
to reflect this change and therefore result in a measure that is consistent with prior periods.
2. Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.
86
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
Adjusted Debt and Net Debt
Management uses non-GAAP financial measures
“adjusted debt” and “net debt” since they are more
indicative of how we manage our debt levels internally
than the 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 definition under IFRS and should not be
considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.
We adjust our long-term debt to exclude fair value
and other adjustments and our partner’s share of project
financing to arrive at adjusted debt. We exclude the
impact of fair value and other adjustments in order to
reflect the actual settlement obligation in relation to
the debt instrument. We exclude our partner’s shares
of project financing, 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
($ millions)
As at December 31
Debt per financial statements
Fair value and other adjustments1
Pueblo Viejo financing – partner’s share2
Adjusted debt
Cash and equivalents
Cash and equivalents – partner’s share at Pueblo Viejo2
Net debt
2012
2011
$ 13,943
$ 13,369
113
(376)
65
(376)
$ 13,680
$ 13,058
(2,093)
12
(2,745)
7
$ 11,599
$ 10,320
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.
87
Barrick Gold Corporation | Financial Report 2012MANAGEMENT’S DISCUSSION AND ANALYSIS
GLOSSARY OF TECHNICAL TERMS
Glossary of Technical Terms
AUTOCLAVE: Oxidation process in which high temperatures
and pressures are applied to convert refractory sulfide
mineralization into amenable oxide ore.
BACKFILL: Primarily waste sand or rock used to support the roof
or walls after removal of ore from a stope.
HEAP LEACH PAD: A large impermeable foundation or pad used
as a base for ore during heap leaching.
MILL: A processing facility where ore is finely ground and
thereafter undergoes physical or chemical treatment to extract
the valuable metals.
BY-PRODUCT: A secondary metal or mineral product recovered
in the milling process such as silver.
MINERAL RESERVE: See pages 163 to 170 – Summary Gold/
Copper Mineral Reserves and Mineral Resources.
CONCENTRATE: A very fine, powder-like product containing the
valuable ore mineral from which most of the waste mineral
has been eliminated.
CONTAINED OUNCES: Represents ounces in the ground before
reduction of ounces not able to be recovered by the applicable
metallurgical process.
DEVELOPMENT: Work carried out for the purpose of opening up
a mineral deposit. In an underground mine this includes shaft
sinking, crosscutting, drifting and raising. In an open pit mine,
development includes the removal of overburden.
DILUTION: The effect of waste or low-grade ore which is
unavoidably included in the mined ore, lowering the
recovered grade.
DORÉ: Unrefined gold and silver bullion bars usually consisting
of approximately 90 percent precious metals that will be
further refined to almost pure metal.
DRILLING:
Core: drilling with a hollow bit with a diamond cutting rim to
produce a cylindrical core that is used for geological study and
assays. Used in mineral exploration.
In-fill: any method of drilling intervals between existing holes,
used to provide greater geological detail and to help establish
reserve estimates.
EXPLORATION: Prospecting, sampling, mapping, diamond-drilling
and other work involved in searching for ore.
GRADE: The amount of metal in each ton of ore, expressed as
troy ounces per ton or grams per tonne for precious metals
and as a percentage for most other metals.
Cut-off grade: the minimum metal grade at which an ore
body can be economically mined (used in the calculation of
ore reserves).
Mill-head grade: metal content of mined ore going into a mill
for processing.
Recovered grade: actual metal content of ore determined after
processing.
Reserve grade: estimated metal content of an ore body, based
on reserve calculations.
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.
88
Barrick Gold Corporation | Financial Report 2012
MINERAL RESOURCE: See pages 163 to 170 – 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 specified
time period.
OPEN PIT: A mine where the minerals are mined entirely from
the surface.
ORE: Rock, generally containing metallic or non-metallic
minerals, which can be mined and processed at a profit.
ORE BODY: A sufficiently large amount of ore that can be
mined economically.
OUNCES: Troy ounces of a fineness of 999.9 parts per
1,000 parts.
RECLAMATION: The process by which lands disturbed as a result
of mining activity are modified to support beneficial land use.
Reclamation activity may include the removal of buildings,
equipment, machinery and other physical remnants of mining,
closure of tailings storage facilities, leach pads and other mine
features, and contouring, covering and re-vegetation of waste
rock and other disturbed areas.
RECOVERY RATE: A term used in process metallurgy to indicate
the proportion of valuable material physically recovered in
the processing of ore. It is generally stated as a percentage
of the material recovered compared to the total material
originally present.
REFINING: The final stage of metal production in which
impurities are removed from the molten metal.
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.
Management’s Responsibility
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by and are the responsibility of the Board
of Directors and Management of the Company.
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board and reflect 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 financial information.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants.
Their report outlines the scope of their examination and opinion on the consolidated financial statements.
Ammar Al-Joundi
Executive Vice President
and Chief Financial Officer
Toronto, Canada
February 13, 2013
89
MANAGEMENT’S RESPONSIBILITYBarrick Gold Corporation | Financial Report 2012 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 financial reporting.
Barrick’s management assessed the effectiveness of the Company’s internal control over financial reporting as at
December 31, 2012. Barrick’s Management used the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) framework to evaluate the effectiveness of Barrick’s internal control over financial reporting.
Based on Barrick management’s assessment, Barrick’s internal control over financial reporting is effective as at
December 31, 2012.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2012 has been
audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on
pages 91–92 of Barrick’s 2012 Annual Financial Statements.
90
Barrick Gold Corporation | Financial Report 2012 Independent Auditor’s Report
Independent Auditor’s Report
February 13, 2013
To the Shareholders of
Barrick Gold Corporation
We have completed integrated audits of Barrick Gold Corporation’s 2012 and 2011 consolidated financial statements
and its internal control over financial reporting as at December 31, 2012. Our opinions, based on our audits, are
presented below.
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Barrick Gold Corporation which comprise
the consolidated balance sheets as at December 31, 2012 and December 31, 2011 and the consolidated statements
of income, comprehensive income, cash flow and changes in equity for the years then ended and the related notes.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.
An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis
for our audit opinion on the consolidated financial statements.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Barrick Gold Corporation as at December 31, 2012 and December 31, 2011 and its financial performance and its cash
flows for the years then ended in accordance with IFRS as issued by the IASB.
91
INDEPENDENT AUDITOR’S REPORTBarrick Gold Corporation | Financial Report 2012 INDEPENDENT AUDITOR’S REPORT
Report on internal control over financial reporting
We have also audited Barrick Gold Corporation’s internal control over financial reporting as at December 31, 2012,
based on criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Management’s responsibility for internal control over financial reporting
Management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our
audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
An audit of internal control over financial reporting includes obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control, based on the assessed risk, and performing such other procedures as
we consider necessary in the circumstances.
We believe that our audit provides a reasonable basis for our audit opinion on the Company’s internal control
over financial reporting.
Definition of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements.
Inherent limitations
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
Opinion
In our opinion, Barrick Gold Corporation maintained, in all material respects, effective internal control over financial
reporting as at December 31, 2012, based on criteria established in Internal Control – Integrated Framework
issued by COSO.
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
92
Barrick Gold Corporation | Financial Report 2012 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 (note 9b)
Other income (note 9c)
Income (loss) from equity investees (note 14a)
Gain on non-hedge derivatives (note 23e)
Income (loss) before finance items and income taxes
Finance items
Finance income
Finance costs (note 12)
Income (loss) before income taxes
Income tax recovery (expense) (note 10)
Net income (loss)
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests (note 30)
2012
2011
$ 14,547
$ 14,236
7,654
195
429
633
6,470
15,381
69
(13)
31
6,240
166
346
576
235
7,563
248
8
81
(747)
7,010
11
(177)
(913)
236
13
(199)
6,824
(2,287)
$
(677)
$ 4,537
$
$
(665)
(12)
$ 4,484
53
$
(677)
4,537
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation (note 11)
Net income (loss)
Basic
Diluted
$
$
(0.66)
(0.66)
$ 4.49
$ 4.48
The accompanying notes are an integral part of these consolidated financial statements.
93
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Consolidated Statements
of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Net income (loss)
Other comprehensive income (loss), net of taxes
Unrealized gains (losses) on available-for-sale (“AFS”) financial securities, net of tax $6, $9
Realized (gains) losses and impairments on AFS financial securities, net of tax $6, $5
Unrealized gains on derivative investments designated as cash flow hedges, net of tax $20, $41
Realized (gains) on derivative investments designated as cash flow hedges, net of tax $96, $93
Actuarial (losses) on post employment benefit obligations, net of tax $3, $13
Currency translation adjustments gain (loss), net of tax $nil, $nil
Total other comprehensive loss
Total comprehensive income (loss)
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2012
2011
$ (677)
$ 4,537
(37)
34
167
(331)
(5)
35
(137)
(91)
36
370
(413)
(22)
(36)
(156)
$ (814)
$ 4,381
$ (802)
$ (12)
$ 4,328
53
$
94
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Operating Activities
Net income (loss)
Adjustments for the following items:
Depreciation
Finance costs (excludes accretion)
Impairment charges (note 9b)
Income tax expense (note 10)
Increase in inventory
Proceeds from settlement of Australian dollar hedge contracts
Gain on non-hedge derivatives (note 23e)
Gain on sale of long-lived assets/investments
Other operating activities (note 13a)
Operating cash flows before interest and income taxes
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
Long-term debt (note 23b)
Proceeds
Repayments
Dividends
Funding from non-controlling interests (note 30)
Deposit on silver sale agreement (note 27)
Other financing activities (note 13c)
Net cash provided by financing activities
Effect of exchange rate changes on cash and equivalents
Net decrease in cash and equivalents
Cash and equivalents at beginning of year (note 23a)
Cash and equivalents at the end of year (note 23a)
The accompanying notes are an integral part of these consolidated financial statements.
2012
2011
$
(677)
$ 4,537
1,722
123
6,470
(236)
(616)
465
(31)
(18)
(186)
7,016
(118)
(1,459)
1,419
147
235
2,287
(708)
–
(81)
(229)
(187)
7,420
(137)
(1,968)
5,439
5,315
(6,369)
18
(37)
–
168
(301)
(4,973)
48
(7,677)
(72)
80
(233)
(6,521)
(12,827)
18
57
2,000
(1,462)
(750)
505
137
(25)
6,648
(380)
(509)
403
138
(66)
423
6,291
7
(2)
(652)
2,745
(1,223)
3,968
$ 2,093
$ 2,745
95
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars)
Assets
Current assets
Cash and equivalents (note 23a)
Accounts receivable (note 16)
Inventories (note 15)
Other current assets (note 16)
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 28)
Non-current portion of inventory (note 15)
Other assets (note 20)
Total assets
Liabilities and Equity
Current liabilities
Accounts payable (note 21)
Debt (note 23b)
Current income tax liabilities
Other current liabilities (note 22)
Total current liabilities
Non-current liabilities
Debt (note 23b)
Provisions (note 25)
Deferred income tax liabilities (note 28)
Other liabilities (note 27)
Total liabilities
Equity
Capital stock (note 29)
Retained earnings
Accumulated other comprehensive income
Other
Total equity attributable to Barrick Gold Corporation shareholders
Non-controlling interests (note 30)
Total equity
Contingencies and commitments (notes 16 and 34)
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
Signed on behalf of the Board,
Jamie C. Sokalsky, Director
Steven J. Shapiro, Director
96
As at
As at
December 31, December 31,
2011
2012
$ 2,093
449
2,695
626
$ 2,745
426
2,498
876
5,863
6,545
135
78
28,717
8,837
453
443
1,692
1,064
440
161
28,979
9,626
569
409
1,153
1,002
$ 47,282
$ 48,884
$ 2,265
1,848
41
261
$ 2,083
196
306
326
4,415
2,911
12,095
2,812
2,602
850
13,173
2,326
4,231
689
22,774
23,330
17,926
3,142
463
314
21,845
2,663
17,892
4,562
595
314
23,363
2,191
24,508
25,554
$ 47,282
$ 48,884
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
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
Accumulated
other
comprehensive
income (loss)1 Other2
Total equity
attributable to
shareholders
Non-
controlling
interests
Total
equity
At January 1, 2012
1,000,423
$ 17,892 $ 4,562
$ 595 $ 314
$ 23,363 $ 2,191 $ 25,554
Net loss
Total other comprehensive loss
–
–
–
–
(665)
(5)
–
(132)
Total comprehensive loss
–
$
– $
(670)
$ (132) $
Transactions with owners
Dividends
Issued on exercise of stock options
Recognition of stock option expense
Funding from non-controlling interests
Other decrease in non-controlling interests
–
685
–
–
–
–
18
16
–
–
(750)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(665)
(137)
(12)
–
(677)
(137)
$
(802) $
(12) $
(814)
(750)
18
16
–
–
–
–
–
505
(21)
(750)
18
16
505
(21)
Total transactions with owners
685
$
34 $
(750)
$
– $
–
$
(716) $ 484 $
(232)
At December 31, 2012
1,001,108
$ 17,926 $ 3,142
$ 463 $ 314
$ 21,845 $ 2,663 $ 24,508
At January 1, 2011
998,500
$ 17,820 $ 609
$ 729 $ 314
$ 19,472 $ 1,745 $ 21,217
Net income
Total other comprehensive loss
Total comprehensive income (loss)
Transactions with owners
Dividends
Issued on exercise of stock options
Recognition of stock option expense
Funding from non-controlling interests
Other decrease in non-controlling interests
–
–
–
–
1,923
–
–
–
–
–
4,484
(22)
–
(134)
$
– $ 4,462
$ (134) $
–
57
15
–
–
(509)
–
–
–
–
–
–
–
–
–
Total transactions with owners
1,923
$
72 $
(509)
$
– $
–
–
–
–
–
–
–
–
–
4,484
(156)
53
–
4,537
(156)
$ 4,328 $
53 $ 4,381
(509)
57
15
–
–
–
–
–
403
(10)
(509)
57
15
403
(10)
$
(437) $ 393 $
(44)
At December 31, 2011
1,000,423
$ 17,892 $ 4,562
$ 595 $ 314
$ 23,363 $ 2,191 $ 25,554
1. Includes cumulative translation adjustments as at December 31, 2012: $13 million (2011: $22 million loss).
2. Includes additional paid-in capital as at December 31, 2012: $276 million (December 31, 2011: $276 million) and convertible borrowings – equity component as at
December 31, 2012: $38 million (December 31, 2011: $38 million).
The accompanying notes are an integral part of these consolidated financial statements.
97
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Notes to Consolidated Financial Statements
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$, ZAR, CLP,
PGK, TZS, JPY, ARS, GBP, EUR and ZMW are to Canadian dollars, Australian dollars, South African rand, Chilean pesos, Papua New Guinea kina,
Tanzanian shillings, 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 Corporations
Act (Ontario). The Company’s head and registered office
is located at Brookfield 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 Pacific. 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 financial 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 modified by
revaluation of derivative contracts and certain financial
assets. The policies applied in these financial statements
are based on IFRSs in effect as at December 31, 2012.
These consolidated financial statements were
approved for issuance by the Board of Directors on
February 13, 2013.
b) Basis of Preparation
Subsidiaries
These consolidated financial statements include the
accounts of Barrick and its subsidiaries. All intercompany
balances, transactions, income and expenses, and profits
98
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 financial and operating policies
of the entity. Control is normally achieved through
ownership, directly or indirectly, of more than 50% 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.
Profit 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
significant operating and financial 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 benefit 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 flows of JCAs are incorporated
into the consolidated financial statements under the
appropriate headings.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 On acquisition, an equity method investment is
initially recognized at cost. The carrying amount of equity
method investments includes goodwill identified 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”).
Associates
An associate is an entity over which the investor has
significant influence but not control and that is neither a
subsidiary nor an interest in a joint venture. Significant
influence is presumed to exist where the Company has
between 20% and 50% of the voting rights, but can
also arise where the Company has less than 20% if we
have the power to be actively involved and influential in
policy decisions affecting the entity. Our share of the
net assets and net income or loss is accounted for in the
consolidated financial statements using the equity
method of accounting.
Outlined below is information related to our jointly controlled assets and entities other than 100% owned
Barrick subsidiaries:
Marigold Mine
Round Mountain Mine
Turquoise Ridge Mine
Kalgoorlie Mine
Porgera Mine
African Barrick Gold plc2
Pueblo Viejo Project2
Cerro Casale Project2
Donlin Gold Project3
Reko Diq Project3
Kabanga Project3
Entity type at December 31, 2012
Economic interest at
December 31, 20121
JCA
JCA
JCA
JCA
JCA
Subsidiary, publicly traded
Subsidiary
Subsidiary
JCE
JCE
JCE
33%
50%
75%
50%
95%
73.9%
60%
75%
50%
37.5%
50%
Method
Proportional
Proportional
Proportional
Proportional
Proportional
Consolidation
Consolidation
Consolidation
Equity Method
Equity Method
Equity Method
1. Unless otherwise noted, all of our joint ventures are funded by contributions made by their partners in proportion to their economic interest.
2. 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.
3. 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 13 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 identifiable assets
and liabilities on the basis of fair value at the date of
acquisition. Provisional fair values allocated at a reporting
date are finalized 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 the amount of 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 finalized
before the purchase price allocation is finalized, the
adjustment is allocated to the identifiable assets and
liabilities acquired. Subsequent changes to the estimated
fair value of contingent consideration are recorded in
the consolidated statement of income.
99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
When the cost of the acquisition exceeds the
fair values of the identifiable net assets acquired, the
difference is recorded as goodwill. If the fair value
attributable to Barrick’s share of the identifiable 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 acquisition of control
is compared with the fair value of the identifiable net
assets at that date. If fair value is greater than/less than
carrying value, 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 financial
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
be completed within one year from the date of
classification. Results of operations and any gain or
loss from disposal are excluded from earnings before
finance 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 expenses 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 significant 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 benefits associated
with the sale will flow to us; and
The costs incurred or to be incurred in respect of
the sale can be reliably measured.
These conditions are generally satisfied when title passes
to the customer.
Gold Bullion Sales
Gold bullion is sold primarily in the London spot market.
The sales price is fixed 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.
100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Concentrate Sales
Under the terms of concentrate sales contracts with
independent smelting companies, gold and copper sales
prices are provisionally set on a specified future date
after shipment based on market prices. We record
revenues under these contracts at the time of shipment,
which is also when the risk and rewards of ownership
pass to the smelting companies, using forward market
gold and copper prices on the expected date that
final sales prices will be determined. Treatment and
refinement charges incurred on the sale of concentrates
are recorded as a reduction of revenue. Variations
between the price recorded at the shipment date and
the actual final price set under the smelting contracts
are caused by changes in market gold and copper prices,
which result in the existence of an embedded derivative
in accounts receivable. The embedded derivative is
recorded at fair value each period until final settlement
occurs, with changes in fair value classified 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 specified
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 final selling prices will be
determined. Variations occur between the price recorded
on the date of revenue recognition and the actual final
price under the terms of the contracts due to changes
in market copper prices, which result in the existence
of an embedded derivative in accounts receivable. This
embedded derivative is recorded at fair value each period
until final settlement occurs, with changes in fair value
classified 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 (“E&E”)
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
developing mineral deposits identified 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 classified as either a mineral resource or a
proven and probable reserve; (ii) determining the optimal
methods of extraction and metallurgical and treatment
processes; (iii) studies related to surveying, transportation
and infrastructure requirements; (iv) permitting activities;
and (v) economic evaluations to determine whether
development of the mineralized material is commercially
justified, including scoping, prefeasibility and final
feasibility studies.
Exploration and evaluation expenditures are
capitalized if management determines that probable
future economic benefits will be generated as a result
of the expenditures.
Cash flows attributable to capitalized exploration
and evaluation expenditures are classified as investing
activities in the consolidated statement of cash flow.
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 specific 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 reflect 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
options, the number of additional shares for inclusion
in diluted earnings per share calculations is determined
101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 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.
In respect of deductible temporary differences
associated with investments in subsidiaries 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 profit will be
available against which the temporary differences
can be utilized.
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 financial 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 profit
nor taxable profit or loss; and
In respect of taxable temporary differences associated
with investments in subsidiaries 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 and the carry-forward
of unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit 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:
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 profit
nor taxable profit or loss; and
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 sufficient taxable
profit 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 fulfills 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 profit
whereby taxable profit represents net income adjusted
for certain items defined in the applicable legislation.
j) Other Investments
Investments in publicly 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 significant or prolonged. If an unrealized loss
on an available-for-sale investment has been recognized
in OCI and it is deemed to be either significant or
prolonged, any cumulative loss that had been recognized
in OCI is reclassified as an impairment loss in the
102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 consolidated statement of income. The reclassification
adjustment is calculated as the difference between
the acquisition cost and current fair value, less any
impairment loss on that financial 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 classified as either
ore or waste. Ore represents material that, at the time
of extraction, we expect to process into a saleable form
and sell at a profit. Raw materials are comprised of both
ore in stockpiles and ore on leach pads as processing
is required to extract benefit 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. 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
classified 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.
We record provisions to reduce inventory to net
realizable value to reflect changes in economic factors
that impact inventory value and to reflect 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 reflect
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 reflect 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 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 specifications); 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 benefit, 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 extracted,
after which time such costs are either capitalized to
inventory or, if it qualifies as an open pit stripping activity
that provides a future benefit, to PP&E. 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 life of mine (“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.
103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 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.
Buildings, plant and equipment are depreciated over
their expected useful life, which commences when the
assets are considered available for use. Once buildings,
plant and equipment are considered available for use
they are measured at cost less accumulated depreciation
and applicable impairment losses.
Depreciation on equipment utilized in the
development of assets, including open pit and
underground mine development, is recapitalized as
development costs attributable to the related asset.
Estimated Useful Lives of Major Asset Categories
Buildings, plant and equipment
Underground mobile equipment
Light vehicles and other mobile equipment
Furniture, computer and office equipment
5 – 35 years
5 – 7 years
2 – 3 years
2 – 3 years
Leasing Arrangements
We enter into leasing arrangements and arrangements
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
fulfillment of the arrangement is dependent on the
use of a specific asset or assets or whether the
arrangement conveys a right to use the asset.
Leasing arrangements that transfer substantially all
the risks and rewards of ownership of the asset to Barrick
are classified as finance leases. Finance leases are
recorded as an asset with a corresponding liability at an
amount equal to the lower of the fair value of the leased
property and the present value of the minimum lease
payments. Each lease payment is allocated between the
liability and finance costs using the effective interest
104
method, whereby a constant rate of interest expense is
recognized on the balance of the liability outstanding.
The interest element of the lease is charged to the
consolidated statement of income as a finance cost.
PP&E assets acquired under finance 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 classified 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 mineral
resources considered to be probable of economic
extraction. 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Capitalized underground development costs incurred
to enable access to specific ore blocks or areas of the
underground mine, and which only provide an economic
benefit over the period of mining that ore block or
area, are depreciated on a UOP basis, whereby the
denominator is estimated ounces/pounds of gold/copper
in proven and probable reserves and the portion of
resources within that ore block or area that is considered
probable of economic extraction.
If capitalized underground development costs
provide an economic benefit over the entire mine life,
the costs are depreciated on a UOP basis, whereby the
denominator is the estimated ounces/pounds of gold/
copper in total accessible proven and probable reserves
and the portion of resources that is considered probable
of economic extraction.
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 benefit. Production phase stripping
costs generate a future economic benefit when the
related stripping activity: (i) improves 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). Production phase stripping costs that are expected
to generate a future economic benefit 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
economic extraction based on the current LOM plan.
Capitalized open pit mine development costs are
depreciated once the open pit has entered production
and the future economic benefit is being derived.
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.
Depreciation commences once the asset is complete and
available for use.
Capitalized Interest
We capitalize interest costs for qualifying assets.
Qualifying assets are assets that require a significant
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 significant expansion
projects at our operating mines. Capitalized interest
costs are considered an element of the 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 finance
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 specific to those
borrowings. Where surplus funds available out of money
borrowed specifically to finance a project are temporarily
invested, the total capitalized interest is reduced by
income generated from short-term investments of
such funds.
105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 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 fixed or determinable. For
business interruption the amount is only recognized
when it is virtually certain as supported by receipt of
notification 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
identifiable 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 the gold and capital projects segments and at the
end of the fourth quarter for the copper and Barrick
Energy segments. 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. At the date
of acquisition, goodwill is assigned to the cash
generating unit (“CGU”) or group of CGUs that is
expected to benefit from the synergies of the business
combination. For the purposes of impairment testing,
goodwill is allocated to the Company’s operating
segments, which corresponds to the level at which
goodwill is internally monitored by the Chief Operating
Decision Maker (“CODM”).
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. Goodwill
impairment charges are not reversible.
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,
106
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 definite 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 identifiable cash flows are largely independent
of the cash flows 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. 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.
q) Debt
Debt is recognized initially at fair value, net of financing
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 r) Derivative Instruments and Hedge Accounting
Derivative Instruments
Derivative instruments are recorded at fair value on
the consolidated balance sheet, classified based on
contractual maturity. Derivative instruments are classified
as either hedges of the fair value of recognized assets or
liabilities or of firm commitments (“fair value hedges”),
hedges of highly probable forecast transactions (“cash
flow hedges”) or non-hedge derivatives. Derivatives
designated as either a fair value or cash flow hedge that
are expected to be highly effective in achieving offsetting
changes in fair value or cash flows are assessed on an
ongoing basis to determine that they actually have been
highly effective throughout the financial 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 firm commitment that is attributable to
the hedged risk.
Cash Flow Hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow 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-financial asset or a non-financial 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 flow 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 flow 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 financial instruments or
executory contracts are accounted for as separate
derivatives when their risks and characteristics are not
closely related to their host financial 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. Refer to note 24 for
further information.
u) Environmental Rehabilitation Provision
Mining, extraction and processing activities normally
give rise to obligations for environmental rehabilitation.
Rehabilitation work can include facility decommissioning
and dismantling; removal or treatment of waste
materials; site and land rehabilitation, including
compliance with and monitoring of environmental
regulations; security and other site-related costs required
to perform the rehabilitation work; and operation
of equipment designed to reduce or eliminate
environmental effects. The extent of work required and
the associated costs are dependent on the requirements
of relevant authorities and our environmental policies.
Routine operating costs that may impact the ultimate
closure and rehabilitation activities, such as waste
material handling conducted as an integral part of a
mining or production process, are not included in the
provision. Costs arising from unforeseen circumstances,
such as the contamination caused by unplanned
discharges, are recognized as an expense and liability
107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 when the event that gives rise to an obligation occurs
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 reflect the
risks and probabilities of alternative estimates of cash
flows 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 flows,
which exclude the effect of inflation, discounted to
their present value using a current US dollar real risk-free
pre-tax discount rate. The unwinding of the discount,
referred to as accretion expense, is included in finance
costs and results in an increase in the amount of the
provision. Provisions are updated each reporting period
for changes to expected cash flows 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.
Significant judgments and estimates are involved
in forming expectations of future activities and the
amount and timing of the associated cash flows.
Those expectations are formed based on existing
environmental and regulatory requirements or, if more
stringent, our environmental policies which give rise
to a constructive obligation.
108
When provisions for closure and rehabilitation are
initially recognized, the corresponding cost is capitalized
as an asset, representing part of the cost of acquiring
the future economic benefits of the operation. The
capitalized cost of closure and rehabilitation activities is
recognized in 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 flows are a normal
occurrence in light of the significant judgments and
estimates involved. The principal factors that can cause
expected cash flows to change are: the construction
of new processing facilities; changes in the quantities of
material in reserves and resources with a corresponding
change in the life of mine plan; changing ore
characteristics that impact required environmental
protection measures and related costs; changes in water
quality that impact the extent of water treatment
required; changes in discount rates; changes in 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 cost 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 finance 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 outflow 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 finance costs.
Certain conditions may exist as of the date the
financial 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 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 inflow of economic
benefits is 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, officers and
directors 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 as 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 as the award recipient’s payroll costs.
The cost of a cash-settled award is recorded within
liabilities until settled.
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 officers and key employees
of the Corporation may purchase common shares at an
exercise price that is equal to the closing share price on
the day before the grant of the option. The grant date
is the date when the details of the award, including the
number of options granted 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 reflect 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.
109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Deferred Share Units
Under our DSU plan, Directors must receive a specified
portion of their basic annual retainer in the form of
DSUs, with the option to elect to receive 100% of such
retainer in DSUs. Each DSU has the same value as one
Barrick common share. DSUs must be retained until the
Director leaves the Board, at which time the cash value
of the DSUs is paid out. Additional DSUs are credited to
reflect 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
compensation expense in the period.
Performance Restricted Share Units
Under our PRSU plan, selected employees are granted
PRSUs, where each PRSU has a value equal to one Barrick
common share. PRSUs vest at the end of a three-year
period and are settled in cash on the third anniversary of
the grant date. Additional PRSUs are credited to reflect
dividends paid on Barrick common shares over the
vesting period. 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 of units.
The value of a PRSU reflects 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
Under our ESPP plan, Barrick employees can 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 one year from contribution date.
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
vesting, 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 defined contribution
employee benefit plans whereby we contribute up to
6% of the employees’ annual salary and bonus. We
also have a retirement plan for certain officers of Barrick
under which we contribute 15% of the officer’s annual
salary. 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 qualified defined benefit pension plans
that cover certain of our United States and Canadian
employees and provide benefits based on employees’
years of service. Our policy is to fund the amounts
necessary on an actuarial basis to provide enough
assets to meet the benefits payable to plan members.
Independent trustees administer assets of the plans,
which are invested mainly in fixed income and
equity securities.
As well as the qualified plans, we have non-qualified
defined benefit pension plans covering certain employees
and former directors of Barrick.
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 accrued benefit
obligations change during 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 and the present value of the plan
obligations as an asset or liability on the consolidated
balance sheets.
110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Pension Plan Assets and Liabilities
Pension plan assets, which consist primarily of fixed-
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 significant impact on our
pension cost and obligation.
The expected rate of return on assets for pension
cost purposes is the weighted average of expected
long-term asset return assumptions. We use long-term
historical returns on equities and fixed-income
investments, reflecting the widely accepted capital
market principle that assets with higher volatility
generate a greater return over the long run, in estimating
the long-term rate of return for plan assets. Current
market factors such as inflation and interest rates are
evaluated before long-term capital market assumptions
are finalized.
Wage increases reflect the best estimate of merit
increases to be provided, consistent with assumed
inflation rates.
Other Post-Retirement Benefits
We provide post-retirement medical, dental, and life
insurance benefits to certain employees. Actuarial gains
and losses resulting from variances between actual
results and economic estimates or actuarial assumptions
are recorded in OCI.
y) New Accounting Standards
IFRS 9 Financial Instruments
In November 2009, the IASB issued IFRS 9 Financial
Instruments as the first step in its project to replace
IAS 39 Financial Instruments: Recognition and
Measurement. IFRS 9 retains but simplifies the mixed
measurement model and establishes two primary
measurement categories for financial assets: amortized
cost and fair value. The basis of classification depends
on an entity’s business model and the contractual cash
flows of the financial asset. Classification is made at
the time the financial 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 the
measurement of financial liabilities and derecognition of
financial 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 financial statements, including the
applicability 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 definition of control so that the
same criteria apply to all entities, both operating and
special purpose entities, to determine control. The
revised definition focuses on the need to have both
power over the investee to direct relevant activities
and exposure to variable returns before control is
present. IFRS 10 will be applied starting January 1,
2013. We are currently finalizing our assessment of
the impact of adopting IFRS 10 on our consolidated
financial 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 defines two types of arrangements: Joint
Operations and Joint Ventures. Focus is on the rights and
obligations of the parties to 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 will be applied
starting January 1, 2013. We are currently finalizing our
assessment of the impact of adopting IFRS 11 on our
consolidated financial 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 and the
reporting entity’s involvement with other entities. It also
includes the requirements for unconsolidated structured
111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 entities (i.e. special purpose entities). IFRS 12 will be
applied starting January 1, 2013. We have completed
our assessment and note that additional disclosures
will be required in our 2013 annual consolidated
financial 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 definition of fair
value and guidance on how to measure fair value as
well as a requirement for enhanced disclosures. IFRS 13
will be applied starting January 1, 2013. We are currently
finalizing our assessment of the impact of adopting
IFRS 13 on our consolidated financial 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 benefits 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 will be applied starting January 1,
2013. We will amend our accounting policy on
production phase stripping costs to require our open
pit mines to consider components of the pit in their
assessment of whether or not a future benefit has been
created by the mining activities in the period. We expect
that this will lead to an increase in the amount of
stripping costs that are capitalized over the life of an
open pit mine. Based on our analysis, we expect that
our restated 2012 financial statements will show
an increase in PP&E, a decrease in inventory and an
increase in net income. The quantum of these changes
is currently under review in preparation of our first
quarter 2013 reporting.
3 Significant Judgments, Estimates, and Assumptions
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
estimates. Information about such judgments and
estimates is contained in the description of our
accounting policies and/or other notes to the financial
statements. The key areas where judgments,
estimates and assumptions have been made are
summarized below.
Reserves and Resources
Estimates of the quantities of proven and probable
mineral reserves and mineral resources, form the basis
for our life of mine (“LOM”) plans, which are used for a
number of important business and accounting purposes,
including: 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. In addition, the
underlying LOM plans are used in the impairment tests
for goodwill and non-current assets. We estimate our ore
reserves and mineral resources based on information
compiled by qualified persons as defined in accordance
with the Canadian Securities Administrators’ National
Instrument 43-101 Standards of Disclosure for Mineral
Projects requirements.
Impairment of Goodwill and Non-Current Assets
Goodwill and non-current assets are tested for
impairment if there is an indicator of impairment, and
annually at the beginning of the fourth quarter for our
gold and capital projects segments, and at the end
of the fourth quarter for our copper and Barrick Energy
segments. Calculating the estimated fair values of
cash generating units for non-current asset impairment
tests and groups of CGUs for goodwill impairment
tests requires management to make estimates and
assumptions with respect to future production levels,
operating and capital costs in our LOM plans, future
metal prices, foreign exchange rates, Net Asset Value
(“NAV”) multiples and discount rates. Changes in any
of the assumptions or estimates used in determining
the fair values could impact the impairment analysis.
112
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Management is also required to make a judgment with
respect to which CGUs should be grouped together for
goodwill testing purposes, including the assessment of
operating segments, the highest level at which goodwill
can be tested. Refer to note 2(n), note 2(p) and note 19
for further information.
Capitalization of Exploration and Evaluation Costs
Management has determined that costs related to
exploration drilling, evaluation studies and other
development work that have been capitalized have
probable future benefit and are economically
recoverable. Management’s criteria for assessing the
economic recoverability of these costs is disclosed
in note 2(g).
Production Stage of a Mine
The determination of the date on which a mine enters
the production stage is a significant judgment since
capitalization of certain costs ceases upon entering
production. As a mine is constructed, costs incurred are
capitalized and proceeds from mineral sales are offset
against the capitalized costs. This continues until the
mine is available for use in the manner intended by
management, which requires significant judgment in its
determination. Refer to note 2(l) for further information
on the criteria used to make this assessment.
Purchase Price Allocations
In a business combination, we are required to fair value
each identifiable asset and liability as at the acquisition
date. This requires management to make judgments and
estimates, as of the acquisition date, to determine the
fair value, including the amount of mineral reserves and
resources acquired, future metal prices, future operating
costs and capital expenditure requirements and discount
rates. Any excess of acquisition cost over the fair value
of the identifiable net assets is recognized as goodwill.
Provisional and final fair value allocations recorded as
a result of business combinations are discussed further
in note 4.
Provisions for Environmental Rehabilitation
Management assesses its provision for environmental
rehabilitation on an annual basis or when new
information becomes available. This assessment includes
the estimation of the future rehabilitation costs, the
timing of these expenditures, and the impact of changes
in discount rates and foreign exchange rates. The actual
future expenditures may differ from the amounts
currently provided if the estimates made are significantly
different than actual results or if there are significant
changes in environmental and/or regulatory requirements
in the future. Refer to note 2(u) for further information.
Income Taxes
Management is required to make estimations regarding
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 timing
of repatriation of earnings, which would impact the
recognition of withholding taxes and taxes related to the
outside basis on subsidiaries/associates. A number of
these estimates require management to make estimates
of future taxable profit, and if actual results are
significantly different than our estimates, the ability to
realize the deferred tax assets recorded on our balance
sheet could be impacted. Refer to note 2(i), note 10 and
note 28 for further information.
Contingencies
Contingencies can be either possible assets or possible
liabilities arising from past events which, by their nature,
will only be resolved when one or more future events
not wholly within our control occur or fail to occur. The
assessment of such contingencies inherently involves the
exercise of significant judgment and estimates of the
outcome of future events. In assessing loss contingencies
related to legal proceedings that are pending against us
or unasserted claims, that may result in such proceedings
or regulatory or government actions that may negatively
impact our business or operations, the Company and its
legal counsel evaluate the perceived merits of any legal
proceedings or unasserted claims or actions as well as
the perceived merits of the nature and amount of relief
sought or expected to be sought, when determining
the amount, if any, to recognize as a contingent liability
or assessing the impact on the carrying value of assets.
Contingent assets are not recognized in the consolidated
financial statements.
113
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Other Notes to the Financial Statements
Note
Page
Acquisitions and divestitures
Segment information
Revenue
Cost of sales
Exploration and evaluation
Other charges
Income tax expense
Earnings (loss) per share
Finance costs
Cash flow – other items
Investments
Inventories
Accounts receivable and other current assets
Property, plant and equipment
Goodwill and other intangible assets
Impairment of goodwill and non-current 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 benefits
Contingencies
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
114
116
118
119
120
120
121
123
123
123
124
125
126
127
128
129
132
132
132
132
142
144
145
148
149
151
151
152
152
154
158
4 Acquisitions and Divestitures
For the years ended December 31
2012
2011
Cash paid on acquisition1
Equinox
Oil and gas acquisitions
Other2
Less: cash acquired
Cash proceeds on divestiture1
Highland Gold
Sedibelo
Pinson
$
–
–
37
$ 37
–
$ 7,482
278
–
$ 7,760
(83)
$ 37
$ 7,677
$ 122
–
–
$
–
44
15
$ 122
$
59
1. All amounts represent gross cash paid on acquisition or received on divestiture.
2. Represents ABG’s acquisition of Aviva Corporation as well as an asset
acquisition by our North American Regional Business Unit.
114
a) Disposition of our 20% interest in Highland Gold
On April 26, 2012, we completed the sale of our 20.4%
investment in Highland Gold for net proceeds of
$122 million. As a result of the sale of this holding,
we recognized an impairment loss of $86 million
representing the difference between the net proceeds
and our carrying value.
b) Acquisition of Equinox Minerals Limited
On June 1, 2011, we acquired 83% of the voting shares
of Equinox Minerals Limited (“Equinox”), thus obtaining
control. Throughout June we obtained a further 13% of
the voting shares and obtained the final 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
represented a business combination with Barrick
identified as the acquirer. We began consolidating the
operating results, cash flows and net assets of Equinox
from June 1, 2011.
Equinox was a publicly traded mining company
that owned 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 fourth quarter 2011.
The tables below present the purchase price and our
final allocation of the purchase price to the assets and
liabilities acquired. This allocation was finalized in fourth
quarter 2011 to reflect the final determination of the
assigned values of the assets and liabilities acquired. The
significant 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 adjustments
made to the consolidated statement 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
Fair value 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Summary of Final Purchase Price Allocation
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
Fair value
at acquisition
$
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 underlying assets acquired and liabilities assumed,
based primarily upon their estimated fair values at the
date of acquisition. We primarily used a static discounted
cash flow model (being the net present value of expected
future cash flows) 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 flows are based on
estimates of projected future revenues, expected
conversions of resources to reserves, and 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 identifiable 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 financing, 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
reflect fair value. The goodwill is not deductible for
income tax purposes.
c) 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
represent business combinations, with Barrick Energy
identified as the acquirer. The tables below present the
combined purchase cost and the final 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
flows, 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 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
115
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
5 Segment Information
Barrick’s business is organized into seven primary
operating segments: four regional gold businesses, a
global copper business unit, an oil and gas business, and
a capital projects group. Barrick’s Chief Operating
Decision Maker reviews the operating results, assesses
performance and makes capital allocation decisions at an
operating segment level. Therefore, these business units
are operating segments for financial 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 performance is evaluated based on a
number of measures including segment income before
income tax, production levels and unit production costs.
Income tax, corporate administration, finance 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 reflected in segment income.
Consolidated Statements of Income Information
Cost of sales
Direct mining
For the year ended December 31, 2012
Revenue
& royalties Depreciation
Exploration &
Operating
segment
evaluation administration
Gold
North America
South America
Australia Pacific
ABG
Copper2
Capital Projects3
Barrick Energy
$ 5,722
2,668
3,233
1,081
1,690
–
153
$ 1,742
793
1,649
637
1,048
–
63
$ 593
295
315
162
231
3
102
$ 14,547
$ 5,932
$ 1,701
$ 46
15
53
29
14
27
–
$ 184
$ 61
31
49
51
9
9
12
$ 222
Other
expenses1
Segment
income
(loss)
$ 30
70
46
38
58
80
13
$ 3,250
1,464
1,121
164
330
(119)
(37)
$ 335
$ 6,173
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)
Gold
North America
South America
Australia Pacific
ABG
Copper2
Capital Projects3
Barrick Energy
$ 5,263
2,864
3,073
1,210
1,649
–
177
$ 1,453
698
1,304
562
745
–
59
$ 471
207
307
138
170
8
97
$ 14,236
$ 4,821
$ 1,398
$ 35
7
51
30
12
40
–
$ 175
$ 45
30
42
48
22
2
12
$ 201
$ 102
16
–
35
45
111
58
$ 3,157
1,906
1,369
397
655
(161)
(49)
$ 367
$ 7,274
1. Other expenses include accretion expense, which is included with finance costs in the consolidated statements of income. For the year ended December 31, 2012,
accretion expense was $54 million (2011: $52 million).
2. The Copper segment includes exploration and evaluation expense and losses from equity investees that hold copper projects.
3. The Capital Projects segment relates to our interests in our significant gold projects under construction. Segment loss for the Capital Projects segment includes
exploration and evaluation expense and losses from equity investees that hold capital projects.
116
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Reconciliation of Segment Income to Income (Loss) from Continuing Operations Before Income Taxes
For the years ended December 31
Segment income
Depreciation of corporate assets
Exploration not managed by segments
Evaluation not managed by segments
Corporate administration
Other (expenses) income
Impairment charges
Finance income
Finance costs (excludes accretion)
Gain on non-hedge derivatives
Gain from equity investees not attributable to segments
Income (loss) before income taxes
2012
2011
$ 6,173
(21)
(211)
(47)
(195)
(61)
(6,470)
11
(123)
31
–
$ 7,274
(21)
(145)
(40)
(166)
49
(96)
13
(147)
81
22
$ (913)
$ 6,824
Geographic Information
Non-current assets1
Revenue2
United States
Zambia
Chile
Dominican Republic
Argentina
Tanzania
Canada
Saudi Arabia
Australia
Papua New Guinea
Peru
Other
Unallocated1
Total
1. Unallocated assets include goodwill, deferred tax assets and certain financial assets.
2. Presented based on the location from which the product originated.
As at
Dec. 31, 2012 Dec. 31, 2011
As at
2012
2011
$ 6,380
973
6,029
4,797
4,391
2,314
1,289
1,550
1,643
1,176
767
–
10,110
$ 5,675
5,153
5,111
3,638
2,893
2,099
1,405
1,611
1,485
1,017
602
121
11,529
$ 5,373
567
1,124
–
1,230
1,081
502
–
2,520
713
1,437
–
–
$ 4,914
475
1,148
–
1,397
1,210
525
–
2,330
769
1,468
–
–
$ 41,419
$ 42,339
$ 14,547
$ 14,236
117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Asset Information1
Gold
North America
South America
Australia Pacific
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
Other items not allocated to segments
Total
Total assets
Segment capital expenditures2
As at
As at
Dec. 31, 2012 Dec. 31, 2011
For the year
ended
For the year
ended
Dec. 31, 2012 Dec. 31, 2011
$ 8,927
3,074
4,317
2,469
7,206
13,135
955
$ 40,083
2,093
3,770
–
78
453
443
362
$ 8,200
2,925
3,982
2,258
12,398
9,484
1,104
$ 40,351
2,745
3,800
209
161
569
409
640
$ 47,282
$ 48,884
$ 1,379
362
527
317
740
2,974
128
$ 6,427
–
–
–
–
–
–
34
$ 6,461
$ 1,056
491
465
309
433
2,563
163
$ 5,480
–
–
–
–
–
–
27
$ 5,507
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 2012, cash expenditures were $6,369 million (2011: $4,973 million) and the increase in accrued expenditures was
$92 million (2011: $534 million).
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
2012
2011
Gold bullion sales1
Spot market sales
Concentrate sales2
Copper sales1
Copper cathode sales
Concentrate sales2
Oil and gas sales
Other metal sales3
Total
$ 12,241
323
$ 11,819
436
$ 12,564
$ 12,255
$ 1,123
566
$ 1,141
505
$ 1,689
$ 1,646
$
153
$
141
$
$
177
158
$ 14,547
$ 14,236
1. Revenues include amounts transferred from OCI to earnings for commodity
cash flow hedges (see note 23d).
2. Concentrate revenues are presented net of treatment charges and refinement
charges incurred on the sale of concentrates. For the year ended December 31,
2012, treatment charges and refinement charges for gold were $6 million
(2011: $8 million) and for copper were $95 million (2011: $68 million).
3. Revenues include the sale of by-products for our gold and copper mines.
118
Principal Products
All of our gold mining operations produce gold in doré
form, except Bulyanhulu and Buzwagi which produce
both gold doré and gold concentrate. Gold doré is
unrefined gold bullion bars usually consisting of 90%
gold that is refined to pure gold bullion prior to sale to
our customers. 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
$65 million (2011: $50 million). Incidental revenues
from the sale of by-products, primarily copper and
silver, are classified within other metal sales.
In 2012, we reclassified treatment and refinement
charges incurred on the sale of concentrates from cost
of sales and began recording them as an offset against
revenue. This change does not have any impact on our
net income or net assets. We have restated our prior
period results to conform to the current presentation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Provisional Copper and Gold Sales
We have provisionally priced sales for which price
finalization, referenced to the relevant copper and gold
index, is outstanding at the balance sheet date. Our
exposure at December 31, 2012 to the impact of
movements in market commodity prices for provisionally
priced sales is set out in the following table:
Impact on net
income before
taxation of 10%
movement in
market price US$M
Volumes subject to
final pricing
As at December 31
2012
2011
2012
2011
Copper pounds (millions)
Gold ounces (000s)
64
28
63
29
$ 23
5
$ 22
5
For the year ended December 31, 2012, our provisionally
priced copper sales included provisional pricing gains of
$10 million (2011: $63 million loss) and our provisionally
priced gold sales included provisional pricing gains of
$3 million (2011: $9 million gain).
At December 31, 2012, our provisionally priced
copper and gold sales subject to final settlement were
recorded at average prices of $3.59/lb (2011: $3.45/lb)
and $1,688/oz (2011: $1,653/oz), respectively. The
sensitivities in the above tables have been determined as
the impact of a 10% 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
2012
2011
Direct mining cost1,2
Depreciation
Royalty expense
Total
$ 5,558
1,722
374
$ 4,486
1,419
335
$ 7,654
$ 6,240
1. Direct mining cost includes charges to reduce the cost of inventory to net
realizable value as follows: $74 for the year ended December 31, 2012
(2011: nil).
2. Direct mining cost includes the costs of extracting by-products.
Cost of Sales
Cost of sales consists of direct mining costs (which
include personnel costs, certain general and
administrative costs, energy costs (principally diesel
fuel and electricity), maintenance and repair costs,
operating supplies, external services, third-party smelting
and transport fees), and depreciation related to sales
and royalty expenses. Cost of sales is based on the
weighted average cost of contained or recoverable
ounces sold and royalty expense for the period. Costs
also 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, refining and
transportation costs. Other types of royalties include:
Net profits interest (NPI) royalty,
Modified net smelter return (NSR) royalty,
Net smelter return sliding scale (NSRSS) royalty,
Gross proceeds sliding scale (GPSS) royalty,
Gross smelter return (GSR) royalty,
Net value (NV) royalty,
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 profits interest (NPI) royalty,
Overriding royalty (ORR), and a
Freehold royalty (FH).
119
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
8 Exploration and Evaluation
For the years ended December 31
2012
2011
Exploration:
Minesite exploration
Global programs
Evaluation costs
$ 82
211
$ 293
136
$ 72
145
$ 217
129
Exploration and evaluation expense1
$ 429
$ 346
1. Approximates the impact on operating cash flow.
9 Other Charges
a) Other Expense
For the years ended December 31
2012
2011
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
benefit expense (note 33)
Severance and other restructuring costs
Equinox acquisition costs
Other expensed items
$ 222
83
$ 201
55
39
14
73
–
19
–
183
79
9
22
4
6
39
161
Total
$ 633
$ 576
1. Relates to general and administrative costs incurred at business unit offices.
2. Amounts attributable to currency translation losses on working
capital balances.
b) Impairment Charges
For the years ended December 31
Impairment of long-lived assets1
Impairment of other intangibles1
Impairment of other investments1
Impairment of goodwill1
Impairment of available-for-sale investments
Total
2012
2011
$ 5,251
169
206
$ 5,626
798
46
$ 6,470
$ 138
–
–
$ 138
–
97
$ 235
Producing mines and
capital projects
North America
Goldstrike
Williams
David Bell
Hemlo – Interlake property
Round Mountain
Bald Mountain
Ruby Hill
Cortez
Cortez – Pipeline/South
Pipeline deposit
Cortez – portion of Pipeline/
Type of royalty
0%–5% NSR, 0%–6% NPI
1.5% NSR, 0.75%–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% modified NSR
1.5% GSR
0.4%–9% GSR
South Pipeline deposit
5% NV
South America
Veladero
Lagunas Norte
Australia Pacific
Porgera
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% of gold revenue
4% of net gold revenue
4% NSR2
4% NSR2
4% NSR2, 1% LT
4% NSR2, 1.1% LT
4% NSR, 30% NPI2,3
1.5% NSR (first 5 years),
4.5% NSR (thereafter),
8.0% NPI4
Pascua-Lama Project –
Chile gold production
1.4%–9.6% GPSS
Pascua-Lama Project –
Chile copper production
1.9% NSR
Pascua-Lama Project –
Argentina production
Pueblo Viejo
Cerro Casale
Copper
Lumwana
Kabanga
Other
Barrick Energy
3% modified NSR
3.2% NSR (for gold & silver),
28.75% NPI4
3% NSR (capped at
$3 million cumulative)
6% GSR5
4% NSR
1. Includes the Kalgoorlie, Kanowna, Granny Smith, Plutonic, Darlot and
Lawlers mines.
2. The NSR increased from 3% to 4% effective April 2012.
3. 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.
4. 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.
5. The GSR increased from 3% to 6% effective April 2012.
120
0.23% NPI, 3.06% FH&ORR,
19.61% Crown Royalty
1. Refer to note 19 for further details.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
c) Other Income
For the years ended December 31
2012
2011
Gain on sale of long-lived assets/investments1
Pension and other post-retirement
benefit gain (note 33)
Royalty income
Other
Total
$ 18
$ 229
19
3
29
–
3
16
$ 69
$ 248
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).
10 Income Tax Expense (Recovery)
For the years ended December 31
2012
2011
Currency Translation
Deferred tax balances are subject to remeasurement for
changes in currency exchange rates each period. The
most significant balances are Argentinean deferred
tax liabilities with a carrying amount of approximately
$300 million. In 2012, tax expense of $46 million
primarily arose from translation losses due to the
weakening of the Argentinean peso against the
US dollar. In 2011 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. These
losses and gains are included within deferred tax
expense/recovery.
$ 1,422
(67)
$ 1,861
24
Tax Rate Changes
In second quarter 2012, a tax rate change was enacted
in the province of Ontario, Canada, resulting in a
deferred tax recovery of $11 million.
$ 1,355
$ 1,885
In third quarter 2012, a tax rate change was enacted
Tax on profit
Current tax
Charge for the year
Adjustment in respect of prior years
Deferred tax
Origination and reversal
of temporary differences in the
current year
Adjustment in respect of prior years
$ (1,679)
88
$ 405
(3)
$ (1,591)
$ 402
Income tax expense (recovery)
$
(236)
$ 2,287
Tax expense related to continuing operations
Current
Canada
International
Deferred
Canada
International
Income tax expense (recovery) before
elements below:
Net currency translation losses (gains) on
deferred tax balances
Impact of tax rate changes
Amendment in Australia
Foreign Income Tax Assessment
Impact of functional currency changes
Dividend withholding tax
Impact of Peruvian Tax Court decision
$
10
1,404
$
23
1,736
$ 1,414
$ 1,759
(38)
$
(1,575)
$
(15)
453
$ (1,613)
$ 438
$ (199)
$ 2,197
46
(22)
(58)
(19)
16
–
–
(32)
–
–
–
(4)
87
39
Income tax expense (recovery)
$ (236)
$ 2,287
in Chile, resulting in a current tax expense of $4 million
and deferred tax recovery of $15 million.
Amendment in Australia
In fourth quarter 2012, amendments were made to
prior year tax returns for one of our Australian
consolidated tax groups, based on updated tax pool
amounts from the time of the consolidation election.
These amendments resulted in a current tax recovery of
$44 million and a deferred tax recovery of $14 million.
Foreign Income Tax Assessment
In second quarter 2012, a foreign income tax assessment
was received which resulted in a current tax recovery of
$19 million.
Functional Currency Changes
In fourth quarter 2012, we received approval to prepare
certain of our Papua New Guinea tax returns using
US dollar functional currency effective January 1, 2012.
This approval resulted in a one-time deferred tax expense
of $16 million. Going forward, the material Papua New
Guinea tax return will now be filed using a US dollar
functional currency.
In 2011, we filed 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 benefit of
$4 million. Going forward, all material Australian
tax returns will now be filed using a US dollar
functional currency.
121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Dividend Withholding Tax
In 2011, we recorded an $87 million dollar dividend
withholding current tax expense in respect of funds
repatriated from foreign subsidiaries.
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 confirmation
that there would be no appeal of the September 30,
2004 Tax Court of Peru decision. In December 2004,
we recorded a $141 million reduction in current and
deferred income tax liabilities and a $21 million reduction
in other accrued costs. The confirmation concluded the
administrative and judicial appeals process with
resolution in Barrick’s favor.
Notwithstanding the favorable Tax Court decision
we received in 2004 on the 1999 to 2000 revaluation
matter, in an audit concluded in 2005, The Tax
Administration in Peru (SUNAT) has reassessed us on
the same issue for tax years 2001 to 2003. On
October 19, 2007, SUNAT confirmed their reassessment.
We filed 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 filing. As a result, we would
incur interest and penalties in some years and earn
refund interest income in other years. SUNAT initially
assessed us $100 million for this matter. However, after
appeal, on February 27, 2012 an agreed amount of
$52 million was paid in respect of the 2001 and 2003
taxation years. In addition, we have claimed or will
claim tax refunds for the 2006 to 2009 taxation years.
Reflecting what we believe is the probable amount, we
recorded a current tax expense of $39 million in 2011
in respect of this matter.
On November 15, 2011, we appealed the Tax Court
decision to the Judicial Court with respect to the timing
of certain deductions for the Pierina mining concession.
SUNAT also appealed the Tax Court decision to the
Judicial Court.
Reconciliation to Canadian Statutory Rate
For the years ended December 31
2012
2011
At 26.5% (2011: 28%) statutory rate
Increase (decrease) due to:
Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Impairment charges not tax deductible
Net currency translation losses/(gains) on
deferred tax balances
Current year tax losses not recognized
in deferred tax assets
Adjustments in respect of prior years
Impact of tax rate changes
Amendment in Australia
Foreign tax assessment
Impact of Peruvian Tax Court decision
Impact of functional currency changes
Dividend withholding tax
Other withholding taxes
Mining taxes
Other items
$ (242)
$ 1,911
(272)
(505)
47
456
46
72
21
(22)
(58)
(19)
–
16
–
43
175
6
(243)
270
22
–
(32)
17
21
–
–
–
39
(4)
87
31
167
1
Income tax expense (recovery)
$ (236)
$ 2,287
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. Amounts in 2012 included the impact
of impairments in a high tax jurisdiction.
122
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
11 Earnings (Loss) per Share
For the years ended December 31
($ millions, except shares in millions and per share amounts in dollars)
Net income (loss)
Net (income) loss attributable to non-controlling interests
2012
2011
Basic Diluted
Basic Diluted
$ (677) $ (677)
12
12
$ 4,537 $ 4,537
(53)
(53)
Net (loss) income attributable to equity holders of Barrick Gold Corporation
$ (665) $ (665)
$ 4,484 $ 4,484
Weighted average shares outstanding
Stock options
1,001
–
1,001
–
999
–
999
2
1,001
1,001
999
1,001
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation
$ (0.66) $ (0.66)
$ 4.49 $ 4.48
12 Finance Costs
13 Cash Flow – Other Items
For the years ended December 31
2012
2011
Interest
Amortization of debt issue costs
Amortization of discount and other
Interest capitalized1
Accretion
Total
$ 680
14
(4)
(567)
54
$ 541
17
(3)
(408)
52
$ 177
$ 199
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, 2012,
the general capitalization rate was 5.30% (2011: 5.43%).
a) Operating Cash Flows – Other Items
For the years ended December 31
2012
2011
Adjustments for non-cash income
statement items:
Currency translation losses (note 9a)
RSU expense
Stock option expense
Income (loss) from investment in jointly
controlled entities/equity
investees (note 14)
Change in estimate of rehabilitation
provisions at closed mines
Inventory impairment charges
(reversals) (note 15)
Accretion
Cash flow 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
Contingent consideration related to the
acquisition of the additional 40%
of the Cortez property
Settlement of rehabilitation obligations
$ 73
29
16
$ 22
30
15
13
39
74
54
(51)
17
(22)
(23)
(14)
(115)
105
(280)
(50)
(51)
(8)
79
–
52
(78)
(32)
(68)
49
(81)
(35)
(64)
(24)
–
(44)
Other net operating activities
$ (186)
$ (187)
Operating cash flow includes payments for:
Cash interest paid
$ 118
$ 137
123
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
b) Investing Cash Flows – Other Items
c) Financing Cash Flows – Other Items
For the years ended December 31
2012
2011
For the years ended December 31
Financing fees on long-term debt
Derivative settlements
Other net financing activities
Funding of investments in jointly controlled entities/
equity investees (note 14)
Value added tax recoverable on project
capital expenditures
Other
Other net investing activities
Investing cash flow includes payments for:
Capitalized interest (note 23)
$ (37) $
(36)
(252)
(12)
(147)
(50)
$ (301) $ (233)
$ 547
$ 382
14 Investments
a) Equity Accounting Method Investment Continuity
2012
2011
$ (22)
(3)
$ (59)
(7)
$ (25)
$ (66)
At January 1, 2011
Equity pick-up (loss) from equity investees
Funds invested (dividends received)
At December 31, 2011
Loss from equity investees
Funds invested
Impairment charges
Transfer to other investments
At December 31, 2012
Publicly traded
1. Refer to note 4a and 19 for further details.
2. Refer to note 19 and 34 for further details.
b) Other Investments
Highland Gold1
Reko Diq2 Donlin Gold
Kabanga
$ 192
22
(5)
$ 209
–
–
–
(209)
$
–
Yes
$ 124
(12)
9
$ 121
(11)
10
(120)
–
$
–
$ 79
(2)
22
$ 99
(1)
17
–
–
$ 115
No
No
$ 1
–
10
$ 11
(1)
10
–
–
$ 20
No
Total
$ 396
8
36
$ 440
(13)
37
(120)
(209)
$ 135
Available-for-sale securities
$ 78
$ 22
$ 161
$ 25
As at Dec. 31, 2012
As at Dec. 31, 2011
Cumulative
Fair value1 gains in AOCI
Cumulative
Fair value1 gains in AOCI
1. Refer to note 24 for further information on the measurement of fair value.
Gains on Investments Recorded in Earnings
For the years ended December 31
Gains realized on sales
Cash proceeds from sales
2012
2011
$ 6
46
$ 55
80
124
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
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, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011
As at
As at
As at
$ 1,888
303
956
345
114
–
–
5
$ 1,401
335
757
371
111
–
–
3
$ 3,611
(1,451)
$ 2,978
(980)
$ 2,160
$ 1,998
$ 272
325
140
6
–
11
22
–
$ 776
(241)
$ 535
2012
$ 74
–
$ 189
247
128
6
–
14
89
–
$ 673
(173)
$ 500
2011
$ 1
(1)
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 charges1
Inventory impairment charges reversed
1. Reflects impairment of inventory at our Lumwana mine.
Ore on leach pads
The recovery of gold and copper from certain oxide ores
is achieved through the heap leaching process. Our
Pierina, Lagunas Norte, Veladero, Cortez, Bald Mountain,
Round Mountain, Ruby Hill and Marigold mines all use a
heap leaching process for gold and our Zaldívar mine
uses a heap leaching process for copper. Under this
method, ore is placed on leach pads where it is treated
with a chemical solution, which dissolves the gold or
copper contained in the ore. The resulting “pregnant”
solution is further processed in a plant where the gold or
copper is recovered. For accounting purposes, costs are
added to ore on leach pads based on current mining
and leaching costs, including applicable depreciation,
depletion and amortization relating to mining operations.
Costs are removed from ore on leach pads as ounces
or pounds are recovered based on the average cost
per recoverable ounce of gold or pound of copper on
the leach pad.
Estimates of recoverable gold or copper on the leach
pads are calculated from the quantities of ore placed
on the leach pads (measured tons added to the
leach pads), the grade of ore placed on the leach
pads (based on assay data) and a recovery percentage
(based on ore type).
Although the quantities of recoverable gold or
copper placed on the leach pads are reconciled by
comparing the grades of ore placed on pads to
the quantities of gold or copper actually recovered
(metallurgical balancing), the nature of the leaching
process inherently limits the ability to precisely 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, 2012, the weighted average
125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
cost per recoverable ounce of gold and recoverable
pound of copper on leach pads was $820 per ounce
and $1.07 per pound, respectively (2011: $653 per
ounce of gold and $1.03 per pound of copper).
Variations between actual and estimated quantities
resulting from changes in assumptions and estimates
that do not result in write-downs to net realizable value
are accounted for on a prospective basis.
The ultimate recovery of gold or copper from a leach
pad will not be known until the leaching process is
concluded. Based on current mine plans, we expect to
place the last ton of ore on our current leach pads at
dates for gold ranging from 2013 to 2032 and for
copper ranging from 2013 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 on Leachpads
Gold
Veladero
Bald Mountain
Marigold
Ruby Hill
Cortez
Round Mountain
Pierina
Lagunas Norte
Copper
Zaldívar
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 123
75
27
19
17
16
16
10
325
$ 628
$ 128
61
22
9
12
17
71
15
247
$ 582
Purchase Commitments
At December 31, 2012, we had purchase obligations
for supplies and consumables of approximately
$1,859 million (2011: $1,748 million).
16 Accounts Receivable and Other Current Assets
As at
Dec. 31,
2012
As at
Dec. 31,
2011
Accounts receivable
Amounts due from concentrate sales
Amounts due from copper cathode sales
Other receivables
Other current assets
Derivative assets (note 23f)
Goods and services taxes recoverable1
Prepaid expenses
Other
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 139
122
188
$ 449
$ 124
226
239
37
$ 626
$ 99
107
220
$ 426
$ 507
194
123
52
$ 876
1. Includes $141 million and $26 million in VAT and fuel tax receivables in
South America and Africa, respectively (2011: $131 million and $22 million).
$ 684
260
221
201
115
100
86
53
40
36
24
15
53
152
67
53
$ 525
149
192
55
90
99
59
75
47
30
22
15
43
175
14
–
$ 2,160
$ 1,590
Ore in Stockpiles
Gold
Goldstrike
Porgera
Cortez
Pueblo Viejo
Cowal
Kalgoorlie
Buzwagi
North Mara
Round Mountain
Veladero
Lagunas Norte
Turquoise Ridge
Other
Copper
Zaldívar
Lumwana
Jabal Sayid
126
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
17 Property, Plant and Equipment
At January 1, 2012
Net of accumulated depreciation
Adjustment on currency translation
Additions
Capitalized interest
Disposals
Depreciation
Impairments charges
Transfers4
At December 31, 2012
At December 31, 2012
Mining
property
costs
subject to
Mining
property
costs not
subject to
depreciation1,3 depreciation1,2
Buildings, plant
and equipment
Oil and gas
properties
Total
$ 3,681
$ 10,014
$ 14,270
$ 1,014
$ 28,979
–
203
–
(15)
(731)
(9)
700
–
956
–
–
(1,030)
(2,527)
873
–
5,033
558
(12)
–
(2,508)
(1,602)
22
137
–
(2)
(101)
(207)
–
22
6,329
558
(29)
(1,862)
(5,251)
(29)
$ 3,829
$ 8,286
$ 15,739
$ 863
$ 28,717
Cost
Accumulated depreciation and impairments
$ 10,371
(6,542)
$ 18,865
(10,579)
$ 18,336
(2,597)
$ 1,416
(553)
$ 48,988
(20,271)
Net carrying amount – December 31, 2012
$ 3,829
$ 8,286
$ 15,739
$ 863
$ 28,717
Mining
property
costs
subject to
depreciation1,3
Mining
property
costs not
subject to
depreciation1,2
Buildings, plant
and equipment
Oil and gas
properties
Total
At January 1, 2011
Cost
Accumulated depreciation and impairments
$ 8,825
(5,441)
$ 12,261
(5,992)
$ 7,577
–
$ 761
(101)
$ 29,424
(11,534)
Net carrying amount – January 1, 2011
$ 3,384
$ 6,269
$ 7,577
$ 660
$ 17,890
Adjustment on currency translation
Additions
Capitalized interest
Disposals
Acquisitions
Depreciation
Impairments charges
Transfers4
At December 31, 2011
At December 31, 2011
–
180
–
(20)
–
(430)
–
567
–
219
–
(4)
3,078
(869)
–
1,321
–
4,874
396
–
3,400
–
(89)
(1,888)
(22)
178
–
–
342
(95)
(49)
–
(22)
5,451
396
(24)
6,820
(1,394)
(138)
–
$ 3,681
$ 10,014
$ 14,270
$ 1,014
$ 28,979
Cost
Accumulated depreciation and impairments
$ 9,519
(5,838)
$ 17,036
(7,022)
$ 14,359
(89)
$ 1,281
(267)
$ 42,195
(13,216)
Net carrying amount – December 31, 2011
$ 3,681
$ 10,014
$ 14,270
$ 1,014
$ 28,979
1. Includes capitalized reserve acquisition costs, capitalized development costs and capitalized exploration and evaluation costs other than exploration license costs
included in intangible assets.
2. Assets not subject to depreciation includes construction-in-progress, capital projects and acquired mineral resources and exploration potential at operating mine
sites and development projects.
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. Primarily relates to long-lived assets in the Capital Projects segment that are transferred to the relevant operating segment on commissioning of the mine.
The Pueblo Viejo mine entered commercial production subsequent to year-end. As a result, all mining property costs not subject to depreciation related to Pueblo
Viejo ($4.6 billion at December 31, 2012) will be transferred to mining property costs subject to depreciation in early January. This will be reflected in the
Q1 2013 financial statements.
127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
a) Mineral Property Costs Not Subject to Depreciation
Carrying
amount at
Dec. 31,
2011
Carrying
amount at
Dec. 31,
2012
Construction-in-progress1
Acquired mineral resources
and exploration potential
Projects
Pascua-Lama
Pueblo Viejo2
Cerro Casale2
Jabal Sayid
$ 1,590
$ 1,314
370
2,639
5,861
4,585
1,836
1,497
3,749
3,554
1,732
1,282
$ 15,739
$ 14,270
1. Represents assets under construction at our operating mine sites.
2. Amounts are presented on a 100% basis and include our partner’s
non-controlling interest.
Changes in Gold and Copper Mineral Reserves
At the end of each fiscal year, as part of our annual
business cycle, we prepare updated estimates of proven
and probable gold and copper mineral reserves for each
mineral property. We prospectively revise calculations
18 Goodwill and Other Intangible Assets
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 2012 was a
$51 million decrease (2011: $119 million decrease).
b) Capital Commitments and Operating Leases
In addition to entering into various operational
commitments in the normal course of business, we
had commitments of approximately $1,800 million
at December 31, 2012 (2011: $1,338 million) for
construction activities at our capital projects.
Operating leases are recognized as an operating cost
in the consolidated statement of income on a straight-
line basis over the lease term. At December 31, 2012, we
have operating lease commitments totaling $173 million,
of which $29 million is expected to be paid within a
year, $67 million is expected to be paid within two to
five years and the remaining amount to be paid
beyond five years.
a) Goodwill
At December 31, 2012, goodwill has been assigned to each operating segment as follows:
Gold
Opening balance
January 1, 2011
Additions1
Other2
Closing balance
December 31, 2011
Additions
Other2
Impairments3
Closing balance
December 31, 2012
North
America
Australia
South
America
ABG
Capital
Projects
Copper
Barrick
Energy
Total
$ 2,376
$ 1,480
$ 441
$ 179
$ 809
$ 743
$ 68
$ 6,096
–
–
–
–
–
–
–
–
–
–
3,506
–
26
(2)
3,532
(2)
$ 2,376
$ 1,480
$ 441
$ 179
$ 809
$ 4,249
$ 92
$ 9,626
–
–
–
–
–
–
–
–
–
6
–
–
–
–
–
–
–
(798)
$ 2,376
$ 1,480
$ 441
$ 185
$ 809
$ 3,451
–
3
–
$ 95
$ 95
–
6
3
(798)
$ 8,837
$ 9,635
(798)
Cost
Accumulated impairment losses
$ 2,376
–
$ 1,480
–
$ 441
–
$ 185
–
$ 809
–
$ 4,249
(798)
Net carrying amount
$ 2,376
$ 1,480
$ 441
$ 185
$ 809
$ 3,451
$ 95
$ 8,837
1. Represents goodwill acquired as a result of the acquisition of Equinox ($3,506 million) (note 4b) and Venturion and Culane ($26 million) (note 4c).
2. Represents the impact of foreign exchange rate changes on the translation of Barrick Energy from C $ to US $.
3. Refer to note 19.
128
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
b) Intangible Assets
Opening balance January, 2011
Additions
Closing balance December 31, 2011
Additions
Amortization and impairment losses
Closing balance December 31, 2012
Cost
Accumulated amortization and impairment losses
Net carrying amount December 31, 2012
Water
rights1
$ 116
–
Technology2
Supply
contracts3
Exploration
potential4
$ 17
–
$ 7
16
$ 335
78
Total
$ 475
94
$ 116
$ 17
$ 23
$ 413
$ 569
–
–
$ 116
$ 116
–
$ 116
–
–
$ 17
$ 17
–
$ 17
–
(1)
$ 22
$ 39
(17)
$ 22
54
(169)
54
(170)
$ 298
$ 453
$ 467
(169)
$ 639
(186)
$ 298
$ 453
1. Water rights in South America ($116 million) are subject to annual impairment testing and will be amortized through cost of sales when we begin using these
in the future.
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 is 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)).
19 Impairment of Goodwill and Non-Current Assets
a) Goodwill Impairment Test
In accordance with our accounting policy, goodwill was
tested for impairment in the fourth quarter, with our
gold segments and capital projects segment being tested
at the beginning of the quarter, and our copper and
Barrick Energy segments at the end of the quarter. When
there is an indicator of impairment of non-current assets
within an operating segment containing goodwill, we
test the non-current assets for impairment first and
recognize any impairment loss on the non-current assets
before testing the operating segment containing the
goodwill for impairment. The recoverable amount of
each operating segment has been determined based
on its FVLCS, which has been determined to be greater
than the value in use (VIU) model. For the year ended
December 31, 2012, we recorded an impairment of
goodwill related to our copper segment of $798 million
(2011: nil).
Gold and Capital Projects
FVLCS for each of the gold segments and the capital
projects segment was determined by calculating the net
present value (“NPV”) of the future cash flows expected
to be generated by the segments. The estimates of
future cash flows were derived from the most recent
LOM plans, with mine lives ranging from 2 to 34 years
and an average mine life of 14 years, aggregated to
the segment level, the level at which goodwill is tested.
We have used an estimated long-term gold price of
$1,700 per ounce (2011: $1,600 per ounce) to estimate
future revenues. The future cash flows for each gold
mine/capital project were discounted using a real
weighted average cost of capital ranging from 3% to
8% depending on the location and market risk factors
for each mine/project, which results in an average
weighted cost of capital for the gold segments and
capital projects segments of 5% (2011 average real
weighted cost of capital of 5%). Gold companies
consistently trade at a market capitalization greater
than the NPV of their expected cash flows. Market
participants describe this as a “NAV multiple”, whereby
the NAV multiple represents the multiple applied to the
NPV to arrive at the trading price. The NAV multiple
represents the value of the exploration potential of the
mineral property, namely the ability to find and produce
more metal than what is currently included in the LOM
plan, and the benefit of gold price optionality. As a
result, we applied a NAV multiple to the NPV of each
CGU within each gold segment and the capital projects
segment based on the observable NAV multiples of
comparable companies as at the test date. In 2012, the
average NAV multiple was approximately 1.2 (2011: 1.2).
129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Copper
For our copper segment, the FVLCS was determined
based on the NPV of future cash flows expected to be
generated using the most recent LOM plans, with mine
lives ranging from 13 to 33 years, aggregated to the
segment level. We utilized a long-term risk-adjusted
copper price of $3.43 per pound (2011: $3.44 per
pound) to estimate future revenues. The risk adjustment
to the average long-term copper price was approximately
5.8% (2011: 4.5%). The expected future cash flows
were additionally discounted using rates from 4.5%
to 6.5% (2011: 4.5% to 5.5%) to reflect the time value
of money and a residual risk factor for cash flow
uncertainties not related to metal price. This results
in an effective weighted average cost of capital for the
copper segment of approximately 7% (2011: 7%).
We recorded a non-current asset impairment charge
of $5.0 billion for the Lumwana CGU in the fourth
quarter of 2012 (see the Non-current asset impairment
test section below for further details). After reflecting
this charge, we conducted our goodwill impairment test
and determined that the carrying value of our copper
segment exceeded its FVLCS, and therefore we recorded
a goodwill impairment charge of $798 million. The
FVLCS of our copper segment was impacted in the
current year by an increase in expected future operating
and capital costs.
Oil & gas
For our oil and gas segment, the FVLCS was determined
based on the NPV of future cash flows expected to be
generated from our oil and gas CGUs, aggregated to the
segment level. We have estimated future oil prices using
the forward curve provided by an independent reserve
evaluation firm, with prices starting at $90 per barrel
(WTI) (2011: $97 per barrel). The future cash flows were
discounted using a real weighted average cost of capital
for long life oil and gas assets of 8.5% (2011: 8.5%). In
fourth quarter 2012, we recorded a non-current asset
impairment charge of $207 million for certain CGUs in
this segment (see the Non-current asset impairment test
section below for further details). After reflecting these
charges, the FVLCS of Barrick Energy exceeds its carrying
amount by about $40 million and therefore segment
goodwill was recoverable (see Key assumptions and
sensitivities for further details).
b) Non-Current Asset Impairment Test
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 identifiable cash flows are largely
independent of the cash flows of other assets. Non-
current assets, other than goodwill, that have been
impaired are reviewed for possible reversal of the
impairment at each reporting date.
For the year ended December 31, 2012, we
recorded impairment charges of $5.6 billion (2011:
$0.1 billion) for non-current assets, as summarized
in the table below:
For the years ended December 31
2012
2011
Lumwana
Barrick Energy CGUs
Exploration properties
Reko Diq
Highland Gold
PV power assets
Tulawaka
Other
$ 4,950
207
169
120
86
46
31
17
$
–
49
–
–
–
83
–
6
Total impairment charges
$ 5,626
$ 138
We have prepared an updated LOM plan for Lumwana,
which reflects information obtained from the extensive
exploration and infill drilling program that was
completed late in the fourth quarter of 2012. We
needed to complete this exploration program in order
to better define the limits of the mineralization and
establish and develop a more comprehensive and
accurate block model of the ore body for mine planning
purposes. The new LOM plan also reflects revised
operating and sustaining capital costs. In particular,
unit mining costs were determined to be significantly
higher than previously estimated.
While the drilling program was successful in
increasing reserves and defining significant additional
mineralization, the revised LOM cost estimates reduced
overall copper resources, expected copper production
and, in turn, profitability over the mine life. We continue
to progress a number of key initiatives, including
improvements to operating systems and processes, and a
130
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
full transition to an owner maintained operation. A focus
on higher utilization and productivity of the mining fleet
has also been identified as one of the major opportunities
to improve value. Until we can improve the operating
costs, the expansion opportunity to increase the
throughput capacity of the processing plant does not
currently meet our investment criteria.
The significant changes in the LOM plan were
considered an indicator of impairment, and, accordingly,
we performed an impairment assessment for Lumwana
as at the end of the year. As a result of this assessment,
we have recorded an impairment charge of $5.0 billion,
related to the carrying value of the PP&E at Lumwana in
the fourth quarter of 2012.
In fourth quarter 2012, we recorded an impairment
charge of $207 million (2011: $49 million) related to
PP&E in certain of our CGUs in our Barrick Energy
segment. The impairment charges were primarily as a
result of lower WTI prices and a significant increase in
the discount of Edmonton par prices, from which Barrick
Energy’s realized prices are derived, compared to the
WTI equivalent prices in the prior year.
In fourth quarter 2012, we also recorded the
following impairment charges: $31 million in PP&E
impairment charges related to Tulawaka in our ABG
segment, primarily as a result of a decrease in the
expected remaining mine life in its most recent LOM
plan; $120 million related to our equity method
investment in TCC, which holds our interest in the Reko
Diq project; and a further $46 million write-down of
power-related assets at our Pueblo Viejo project in fourth
quarter 2012, above the impairment charge recorded
in 2011, based on new information with respect to
the recoverable amount of these assets received in
fourth quarter 2012.
Other impairment charges recorded in 2012
included: $169 million related to exploration properties,
included in intangible assets, in Papua New Guinea
and Saudi Arabia as a result of our decision to cease
exploration activities ($141 million in Papua New Guinea
in third quarter 2012 and $28 million in Saudi Arabia
in fourth quarter 2012); and $86 million related to
our equity method investment in Highland Gold as a
result of the disposition of our equity interest in first
quarter 2012.
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 oil recovery
issues at one of our properties. Impairment charges also
included an $83 million write-down of power-related
assets at our Pueblo Viejo project as a result of a decision
to proceed with an alternative long-term power solution.
c) Key Assumptions and Sensitivities
The key assumptions used in determining the recoverable
amount (FVLCS) are related to commodity prices,
discount rates, NAV multiples for gold assets, operating
costs, exchange rates and capital expenditures. The
Company performed a sensitivity analysis on all key
assumptions that assumed a negative 10% change for
each individual assumption while holding the other
assumptions constant and determined that, other than
as discussed below, no reasonably possible change in any
of the key assumptions would cause the carrying value
of our business segments to exceed its recoverable
amount for the purposes of the goodwill impairment test
or the carrying value of any of our CGUs to exceed its
recoverable amount for the purposes of the non-current
asset impairment test where an indicator of potential
impairment for the non-current asset was noted.
As at December 31, after reflecting the impairments
of Lumwana’s long-life assets and the copper segment’s
goodwill, the recoverable amount of the copper
segment is equal to its carrying amount, including
goodwill. Therefore any significant negative change in
the key assumptions could result in an additional
impairment charge to non-current assets of Lumwana
and/or copper segment goodwill. As at December 31,
2012 the carrying amount of goodwill for the copper
segment is $3.5 billion.
In second quarter 2012 we identified a potential
indicator of impairment at our Pascua-Lama project
based on a significant increase in the expected
construction costs and delay in the expected completion
date. We conducted an impairment assessment at that
time and determined that the fair value of the project
exceeded its carrying value. In fourth quarter 2012, upon
completion of the final cost estimate, schedule and the
associated LOM plan, we updated our assessment and
determined that the fair value of the project exceeds its
131
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 carrying value as at December 31, 2012 by about
$1.5 billion. A decrease of about 7% in long-term gold
prices, a decrease of about 12% in silver prices, an
increase of about 10% in operating costs or an increase
of about 15% in the total LOM capital expenditures,
would in isolation, cause the estimated recoverable
amount to be equal to the carrying value. As at
December 31, 2012, the carrying value of Pascua-Lama
is $5.24 billion (2011: $3.06 billion).
We also conducted an internal assessment of our
Buzwagi mine, in our ABG segment, in fourth quarter
2012 and determined that the fair value of the project
exceeds its carrying value by about $165 million. A
decrease of about 5% in gold prices or an increase of
about 10% in cash operating costs, would in isolation,
cause the estimated recoverable amount to be equal to
the carrying value. The current carrying value of Buzwagi
is $747 million (2011: $634 million). In addition, the
recoverable amount of Tulawaka is approximately equal
to its carrying amount, and therefore any significant
change in the key assumptions could result in additional
impairment charges. The current carrying value of
Tulawaka is $8 million (2011: $28 million).
As at December 31, an indicator of potential
impairment was noted for our Darlot mine, in our
Australia Pacific operating segment, in relation to a
significant increase in operating costs in its most recent
LOM plan. Accordingly, we conducted an impairment
assessment and determined that the fair value of the
mine exceeds its carrying value as at December 31,
2012 by about $50 million. A decrease of about 15% in
gold prices, an increase of about 20% in cash operating
costs or an increase of about 15% in the Australian
dollar compared to the US dollar would, in isolation,
cause the estimated recoverable amount to be equal
to the carrying value. The current carrying value of
Darlot is $66 million (2011: $90 million.) In addition,
the recoverable amount of our Kanowna mine is
approximately equal to its carrying amount, and
therefore any significant change in the key assumptions
could result in an impairment charge. The current
carrying value of Kanowna is $162 million (2011:
$197 million).
As at December 31, the recoverable amounts of
certain CGUs within Barrick Energy are approximately
equal to their carrying amounts and therefore any
significant change in the key assumptions could result in
additional impairment charges. The current carrying
value of these CGUs is $589 million (2011: $231 million).
132
20 Other Assets
Derivative assets (note 23f)
Goods and services taxes recoverable1
Notes receivable
Other
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 183
514
149
218
$ 455
272
121
154
$ 1,064
$ 1,002
1. Includes $442 million and $73 million in VAT and fuel tax receivables in
South America and Africa, respectively (2011: $209 million and $63 million).
21 Accounts Payable
Accounts Payable
Accruals
22 Other Current Liabilities
Provision for environmental
rehabilitation (note 25)
Derivative liabilities (note 23f)
Post-retirement benefits (note 33)
Restricted stock units (note 32b)
Contingent purchase consideration
Other
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 1,018
1,247
$ 963
1,120
$ 2,265
$ 2,083
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 74
10
5
28
–
144
$ 79
22
14
27
50
134
$ 261
$ 326
23 Financial Instruments
Financial instruments include cash; evidence of ownership
in an entity; or a contract that imposes an obligation on
one party and conveys a right to a second entity to
deliver/receive cash or another financial instrument.
Information on certain types of financial instruments is
included elsewhere in these consolidated financial
statements as follows: accounts receivable – note 16;
investments – note 14; restricted share units – note 32b.
a) Cash and Equivalents
Cash and equivalents include cash, term deposits,
treasury bills and money market investments with
original maturities of less than 90 days.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Cash and Equivalents
Cash deposits
Term deposits
Money market investments
As at
Dec. 31,
2012
$ 1,151
184
758
$ 2,093
As at
Dec. 31,
2011
$ 1,009
278
1,458
$ 2,745
b) Long-Term Debt1
2012
At Dec. 31
Proceeds
Repayments
Amortization
and other2
Credit facility
Equinox credit facility
Project financing
Other fixed rate notes
3.85%/5.25% notes
1.75%/2.9%/4.4%/5.7% notes3
5.80%/4.875% notes4
5.75%/6.35% notes5
Other debt obligations6
Capital leases
Less: current portion7
Credit facility
Equinox credit facility
Project financing
Other fixed rate notes
1.75%/2.9%/4.4%/5.7% notes3
5.80%/4.875% notes4
5.75%/6.35% notes5
Other debt obligations6
Capital leases
Less: current portion7
$
–
–
–
–
2,000
–
–
–
–
–
$ 300
1,000
–
–
–
–
–
–
118
44
$ –
6
17
6
(15)
2
–
1
(7)
26
At Jan. 1
$ 1,500
994
873
3,190
–
3,972
750
988
899
203
$ 1,200
–
890
3,196
1,985
3,974
750
989
774
185
$ 13,943
(1,848)
$ 2,000
–
$ 1,462
–
$ 36
–
$ 13,369
(196)
$ 12,095
$ 2,000
$ 1,462
$ 36
$ 13,173
2011
At Dec. 31
Proceeds
Repayments
Amortization
and other2
$ 1,500
994
873
3,190
3,972
750
988
899
203
$ 13,369
(196)
$ 1,500
1,000
148
–
4,000
–
–
–
–
$ 6,648
–
$ 13,173
$ 6,648
$ –
–
–
–
–
–
–
–
20
$ 20
–
$ 20
$
–
(6)
(16)
–
(28)
–
–
2
151
$ 103
–
$ 103
At Jan. 1
$
–
–
741
3,190
–
750
988
897
72
$ 6,638
(14)
$ 6,624
1. The agreements that govern our long-term debt each contain various provisions which are not summarized herein. 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.
4. In 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 on October 15, 2016 and $600 million of US dollar notes with a coupon rate of 6.35% mature
on October 15, 2036.
6. The obligations have an aggregate amount of $774 million, of which $50 million is subject to floating interest rates and $724 million is subject to fixed interest rates
ranging from 6.38% to 8.05%. The obligations mature at various times between 2013 and 2035.
7. The current portion of long-term debt consists of the credit facility ($1,200 million, 2011: $50 million), other fixed rate notes ($500 million, 2011: nil), other debt
obligations ($65 million, 2011: $118 million), project financing ($45 million, 2011: nil), and capital leases ($38 million, 2011: $28 million).
133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Credit Facility
We have a credit and guarantee agreement (the “Credit
Facility”) with certain Lenders, which requires such
Lenders to make available to us a credit facility of up to
$1.45 billion ($1.5 billion prior to second quarter 2012)
or the equivalent amount in Canadian dollars. We drew
$1.5 billion on the Credit Facility in 2011 to finance a
portion of the acquisition of Equinox Minerals Limited,
including the payment of related fees and expenses. 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 matured in the second quarter of
2012 and an additional $250 million was repaid during
the second quarter of 2012. The remaining $1.2 billion
matures in 2013.
Equinox Acquisition Financing
In May 2011, we entered into a credit and guarantee
agreement (the “Equinox credit facility”) with certain
lenders, which required such Lenders to make available
to us a credit facility of $2 billion or the equivalent
amount in Canadian dollars. The Equinox credit facility,
which was unsecured, had an interest rate of LIBOR plus
1.25% on drawn down amounts, and a commitment
rate of 0.20% on undrawn amounts.
In order to finance a portion of the Equinox
acquisition, including the payment of related fees and
expenses, we drew $1.5 billion on the Credit Facility in
May 2011 and $1.0 billion on the Equinox credit facility
in June 2011.
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 that mature
in 2014 and $1.1 billion of 2.90% notes that mature in
2016 issued by Barrick (collectively, the “Barrick Notes”)
as well as $1.35 billion of 4.40% notes that mature in
2021 and $850 million of 5.70% notes that mature
in 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 finance a portion of the acquisition
of Equinox, including the payment of related fees
and expenses.
Refinancing of Equinox Credit Facility
In January 2012, we finalized a credit and guarantee
agreement (the “2012 Credit Facility”) with certain
Lenders, which required such Lenders to make available
to us a credit facility of $4 billion or the equivalent
amount in Canadian dollars. The credit facility, which is
unsecured, has an interest rate of LIBOR plus 1.20%
on drawn amounts, and a commitment rate of 0.175%
on undrawn amounts. The $4 billion facility matures
in 2018. Coincident with this agreement becoming
effective, we drew $1.0 billion on the 2012 Credit
Facility, paid down the $1.0 billion outstanding under
the Equinox Credit Facility and then terminated the
Equinox Credit Facility.
Pueblo Viejo Project Financing Agreement
In April 2010, Barrick and Goldcorp finalized terms for
$1.035 billion (100% basis) in non-recourse project
financing for Pueblo Viejo. The lending syndicate is
comprised of international financial institutions including
export development agencies and commercial banks. The
amount is divided into three tranches of $400 million,
$375 million and $260 million with tenors of 15, 15 and
12 years, respectively. The $400 million tranche bears
a coupon of LIBOR+3.25% pre-completion and scales
gradually to LIBOR+5.10% (inclusive of political risk
insurance premium) for years 13–15. The $375 million
tranche bears a fixed coupon of 4.02% for the entire
15 years. The $260 million tranche bears a coupon of
LIBOR+3.25% pre-completion and scales gradually
to LIBOR+4.85% (inclusive of political risk insurance
premium) for years 11–12. Barrick and Goldcorp each
provided a guarantee for their proportionate share
which will terminate upon Pueblo Viejo meeting certain
operating completion tests and are subject to an
exclusion for certain political risk events.
134
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 We have drawn $940 million to date and the
remaining undrawn amount in this financing agreement
was $95 million as at December 31, 2012.
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 Hedges1 and some of the
Floating Contracts1. In exchange, we provide sufficient
funds to BPDAF to meet the principal and interest
obligations on the notes. We also provided an
unconditional and irrevocable guarantee of these
payments, which will rank equally with our other
unsecured and unsubordinated obligations.
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 sufficient funds to the LLCs to meet the principal
and interest obligations on the Notes. We also provided
an unconditional and irrevocable guarantee of these
payments, which will rank equally with our other
unsecured and unsubordinated obligations.
3.85 and 5.25 Notes
On April 3, 2012, we issued an aggregate of $2 billion
in debt securities comprised of $1.25 billion of 3.85%
notes that matures in 2022 and $750 million of 5.25%
notes that matures in 2042. $1.0 billion of the net
proceeds from this offering were used to repay existing
indebtedness under the 2012 Credit Facility.
ABG Credit Facility
On January 22, 2013, ABG concluded negotiations with
a syndicate of commercial banks for an export credit
backed term loan facility (“ABG facility”) for the amount
of $142 million. The ABG facility is secured by the
Bulyanhulu project, and has a term of seven years and
has an interest rate of LIBOR plus 2.5% on drawn
down amounts.
Debt Issue Costs
In 2012, a total of $15 million of debt issue costs arose
from debt issued during the year. In 2011, a total of
$50 million of debt issue costs arose from debt issued
during the year.
1.
Gold Hedges were fixed price (non-participating) gold contracts and the
floating contracts were spot-price (fully-participating) gold contracts.
135
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Interest
For the years ended December 31
Credit facility
Equinox credit facility
Project financing
Other fixed rate notes
3.85%/5.25% notes
1.75%/2.9%/4.4%/5.7% notes
5.80%/4.875% notes
5.75%/6.35% notes
Other debt obligations
Capital leases
Deposit on silver sale agreement (note 27)
Accretion
Other interest
Less: interest capitalized
Cash interest paid
Amortization of debt issue costs
Amortization of discount and other
Increase in interest accruals
Accretion
Interest cost
2012
2011
Interest
cost
Effective
rate1
Interest
cost
Effective
rate1
0.89%
1.73%
3.72%
6.53%
4.42%
3.84%
5.43%
6.20%
5.55%
3.89%
8.59%
$ 12
4
33
213
66
154
41
62
45
7
46
54
7
$ 744
(567)
$ 177
$ 665
14
(4)
15
54
$ 744
0.56%
1.62%
4.22%
6.27%
3.77%
5.63%
6.22%
5.30%
5.03%
8.59%
$ 5
10
36
212
88
42
62
48
7
33
52
12
$ 607
(408)
$ 199
$ 519
17
(3)
22
52
$ 607
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 Repayments1
Credit facility
Project financing
Other fixed rate notes
3.85%/5.25% notes
1.75%/2.9%/4.4%/5.7% notes
5.80%/4.875% notes
5.75%/6.35% notes
Other debt obligations
2013
2014
$ 1,200
45
500
–
–
–
–
65
$
–
90
–
–
700
350
–
–
$ 1,810
$ 1,140
Minimum annual payments under capital leases
$
38
$
39
2015
$
–
90
–
–
–
–
–
100
$ 190
$ 32
2016
2017
$
–
90
–
–
1,100
–
400
–
$ 1,590
$
26
$ –
90
–
–
–
–
–
–
$ 90
$ 21
2018 and
thereafter
$
–
535
2,750
2,000
2,200
400
600
566
$ 9,051
$
29
1. This table illustrates the contractual undiscounted cash flows, and may not agree with the amounts disclosed in the consolidated balance sheet.
136
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
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, silver,
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, EUR and ZMW
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,
GBP and ZAR
Capital expenditures
Non-US dollar capital
expenditures
Currency exchange rates –
US dollar versus A$, ARS,
C$, CLP, EUR, PGK, GBP
and ZAR
Consumption of steel
Price of steel
Interest earned on cash
US dollar interest rates
and equivalents
Interest paid on fixed-rate
US dollar interest rates
borrowings
The 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
firm commitments (“fair value hedges”) or hedges of
highly probable forecasted transactions (“cash flow
hedges”), collectively known as “accounting hedges”.
Hedges that are expected to be highly effective in
achieving offsetting changes in fair value or cash flows
are assessed on an ongoing basis to determine that
they actually have been highly effective throughout
the financial 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”.
137
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
d) Summary of Derivatives at December 31, 2012
Notional amount by term to maturity
Accounting
classification by
notional amount
Within
1 year
2 to 3
years
4 to 5
years
Cash flow
hedge
Total
Fair value
hedge
Non-
hedge
Fair value
(USD)
US dollar interest rate contracts
Total pay variable receive fixed swap positions
$ 100
$ 100
$ –
$ 200
$ –
$ 200
$ –
$ 6
Currency contracts
A$:US$ contracts (A$ millions)
C$:US$ contracts (C$ millions)
CLP:US$ contracts (CLP millions)1
PGK:US$ contracts (PGK millions)
ZAR:US$ contracts (ZAR millions)
540
424
356,175
50
870
1,045
96
365,016
–
79
Commodity contracts
Copper collar sell contracts (millions of pounds)
Silver collar sell contracts (millions of ounces)
Diesel contracts (thousands of barrels)2
Electricity contracts (thousands of megawatt hours)
99
5
3,354
26
–
28
2,460
48
480
–
–
–
–
–
32
–
–
2,065
520
721,191
50
949
1,740
513
245,173
–
475
99
65
5,814
74
99
55
960
–
–
–
–
–
–
–
–
–
–
325
7
476,018
50
474
–
10
4,854
74
103
12
55
1
1
16
64
20
–
1. Non-hedge contracts economically hedge pre-production capital expenditures at our Pascua-Lama and Cerro Casale projects and operating/administration costs
at various South American locations.
2. Diesel commodity contracts represent a combination of WTI, BRENT, and BRENT/WTI spread swaps. 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, and MOPS represents
Mean of Platts Singapore.
Fair Values of Derivative Instruments
Asset derivatives
Liability derivatives
Balance sheet
classification
Fair value
as at
Dec. 31,
2012
Fair value
as at
Dec. 31,
2011
Balance sheet
classification
Fair value
as at
Dec. 31,
2012
Fair value
as at
Dec. 31,
2011
Other assets
Other assets
Other assets
$ 6
133
81
$ 7 Other liabilities
629 Other liabilities
312 Other liabilities
$ 220
$ 948
48
39
$ 87
$ 307
4 Other liabilities
10 Other liabilities
$ 14
$ 962
Derivatives designated as
hedging instruments
US dollar interest rate contracts
Currency contracts
Commodity contracts
Total derivatives classified
as hedging instruments
Derivatives not designated as
hedging instruments
Currency contracts
Commodity contracts
Other assets
Other assets
Total derivatives not designated as hedging instruments
Total derivatives
138
$ –
–
11
$ 11
9
9
$ 18
$ 29
$ –
26
6
$ 32
26
6
$ 32
$ 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
US Dollar Interest Rate Contracts
Fair Value Hedges
We have a $200 million pay variable receive fixed swap
position outstanding that is used to hedge changes in
the fair value of a portion of our long-term fixed-rate
debt. The effective portion of changes in the fair
value of the swap contracts is recorded in interest
expense. Gains and losses from hedge ineffectiveness
are recognized in current earnings, classified in the
consolidated statement of income as gains/(losses) on
non-hedge derivatives.
Currency Contracts
Cash Flow Hedges
During the year, currency contracts totaling
A$ 1,474 million, CAD$ 372 million, and ZAR
515 million 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$ 1,740 million, CAD$ 513 million,
CLP 245 billion and ZAR 475 million designated as cash
flow 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 five
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 classified in the consolidated statement
of income as gains (losses) on non-hedge derivatives.
Non-hedge Derivatives
We concluded that CLP 476 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 474 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 $200 million at December 31, 2012.
We also wrote CAD put option contracts with no
outstanding notional amount at December 31, 2012.
As a result of these activities we earned $15 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 960 thousand
barrels of WTI, and Brent-WTI swaps designated as cash
flow 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,
classified 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 $12 million of crystallized
gains in OCI as at December 31, 2012, 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 12 months.
During the year, we entered into 1,740 thousand barrels
of WTI, 480 thousand barrels of Brent-WTI swaps, and
252 thousand barrels of Brent to economically hedge our
exposure to forecasted fuel purchases for expected
consumption at our mines. In total, on a combined basis
we have 3,854 thousand barrels of WTI, Brent and
Brent-WTI swaps outstanding that economically hedge
our exposure to forecasted fuel purchases at our mines.
139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Non-hedge electricity contracts of 74 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 significant 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 three million barrels of
WTI put options with an outstanding notional of one
million barrels at December 31, 2012. As a result of this
activity, we recorded $6 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 99 million pounds of
copper collar contracts to designate as hedges against
copper cathode sales at our Zaldívar mine in 2013. These
contracts contain purchased put and sold call options
with weighted average strike prices of $3.50/lb and
$4.25/lb, respectively. These contracts were designated
as cash flow hedges, with the effective portion of the
hedge recognized in OCI and the ineffective portion,
together with the changes in time value, recognized in
non-hedge derivative gains (losses). These contracts
mature evenly throughout 2013.
During the year, contracts totaling 20 million ounces
of silver were purchased to designate as hedges against
silver sales in 2014 to 2018. Silver collar contracts
totaling 55 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 $53/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 losses on
our copper collars and silver collars of $46 million and
$48 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 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 positions with an average outstanding notional
of 10 thousand ounces. We also wrote gold put and
call options with an average outstanding notional of
12 thousand and 108 thousand ounces, respectively.
As a result of these activities, we recorded nil in the
consolidated statement of income as gains on non-
hedge derivatives. There are no outstanding gold
positions at December 31, 2012.
We currently have 10 million ounces of silver collar
contracts which do not meet the requirements for hedge
accounting treatment as the timing of the exposure
has changed. As a result, we have recorded gains of
$12 million in the consolidated statement of income
as gains on non-hedge derivatives.
140
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)
Commodity
price hedges
Currency hedges
Interest rate
hedges
Gold/Silver1
Copper
Operating Administration/
other costs
costs
Fuel
Capital
expenditures
Long-term
debt
Total
At January 1, 2011
Effective portion of change in
$ 1
$ (20)
$ 51
$ 716
$ 42
$ 65
$ (27)
$ 828
fair value of hedging instruments
46
128
26
200
1
17
(7)
411
Transfers to earnings:
On recording hedged items in
earnings/PP&E1
Hedge ineffectiveness due to changes
in original forecasted transaction
At December 31, 2011
Effective portion of change in fair value
of hedging instruments
Transfers to earnings:
On recording hedged items in
earnings/PP&E1
(3)
–
(22)
(48)
(344)
(24)
(64)
(4)
–
–
–
$ 44
$ 82
$ 29
$ 572
(34)
(45)
2
220
–
(37)
(24)
(336)
3
–
(502)
(4)
$ 18
$ (31)
$ 733
21
(3)
187
(13)
3
(427)
$ 26
$ (31)
$ 493
–
$ 19
26
(20)
$ 25
At December 31, 2012
$ 10
$ –
$ 7
$ 456
Hedge gains/losses classified within
Gold/Silver
sales
Copper
sales
Cost of
sales
Cost of Administration/
other expense
sales
Property,
plant, and
equipment
Interest
expense
Portion of hedge gain (loss)
expected to affect 2013 earnings2
$ –
$ –
$
8
$ 269
$ 17
$ 26
$ (3)
$ 317
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, 2012.
Cash Flow Hedge Gains (Losses) at December 31
Derivatives in cash flow
hedging relationships
Amount of gain
(loss) recognized
in OCI
2012
2011
Location of gain (loss)
transferred from OCI
into income/PP&E
(effective portion)
Amount of gain
(loss) transferred
from OCI into income
(effective portion)
2012
2011
Interest rate contracts
$
(3)
$
(7) Finance income/finance costs
$
(3) $
(3)
Foreign exchange
contracts
267
218
Cost of sales/corporate
administration
369
432
Commodity contracts
(77)
200
Revenue/cost of sales
61
73
Total
$ 187
$ 411
$ 427
$ 502
Location of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
Gain (loss) on non-
hedge derivatives
Gain (loss) on non-
hedge derivatives
Gain (loss) on non-
hedge derivatives
Amount of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
2012
2011
$ –
$
–
7
(2)
(95)
168
$ (88)
$ 166
Fair Value Hedge Gains (Losses) 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
2012
$ (2)
2011
$ 2
141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
e) Gains (Losses) on Non-hedge Derivatives
2012
For the years ended December 31
Commodity contracts
Gold
Silver
Copper
Fuel
Currency contracts
Interest rate contracts
$ –
12
(5)
6
107
(1)
$ 119
2011
$ 43
–
(85)
(1)
(48)
6
$ (85)
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
$ (48)
$ 64
(46)
94
7
(1)
$ (88)
$ 31
(2)
10
$ 166
$ 81
1. Represents unrealized gains (losses) attributable to changes in time value of
the collars, which are excluded from the hedge effectiveness assessment.
For the twelve months ended December 31, 2012, we
unwound approximately $2.6 billion of our Australian
dollar hedges at an average spot price of $1.05. We
realized net cash proceeds of approximately $0.5 billion
24 Fair Value Measurements
upon settlement of these contracts. The corresponding
accounts will be recognized in the consolidated
statement of income based on the original hedge
contract maturity dates, by 2014.
f) Derivative Assets and Liabilities
At January 1
Derivatives cash (inflow) outflow
Operating activities
Financing activities
Early settlement of derivatives
Change in fair value of:
Non-hedge derivatives
Cash flow hedges:
Effective portion
Fair value hedges
Excluded from effectiveness changes
2012
2011
$ 898
$ 848
(374)
3
(465)
119
187
(2)
(88)
(428)
7
–
(85)
411
(21)
166
At December 31
$ 278
$ 898
Classification:
Other current assets
Other long-term assets
Other current liabilities
Other long-term obligations
$ 124
183
(10)
(19)
$ 507
455
(22)
(42)
$ 278
$ 898
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, 2012
Cash and equivalents
Available-for-sale securities
Derivatives
Receivables from provisional copper and gold sales
142
Quoted prices
in active
markets for
identical assets
(Level 1)
$ 2,093
78
–
–
$ 2,171
Significant
other
observable
inputs
(Level 2)
$
–
–
278
261
$ 539
Significant
unobservable
inputs
(Level 3)
$ –
–
–
–
$ –
Aggregate
fair value
$ 2,093
78
278
261
$ 2,710
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
b) Fair Values of Financial Assets and Liabilities
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
At Dec. 31, 2012
At Dec. 31, 2011
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
$ 2,093
449
156
78
307
$ 2,093
449
156
78
307
$ 2,745
426
138
161
962
$ 2,745
426
138
161
962
$ 3,083
$ 3,083
$ 4,432
$ 4,432
$ 2,265
13,943
29
323
$ 2,265
15,502
29
323
$ 2,083
13,369
64
202
$ 2,083
14,374
64
202
$ 16,560
$ 18,119
$ 15,718
$ 16,723
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.
c) Assets Measured at Fair Value on a Non-Recurring Basis
Other Assets1
Property, plant and equipment2
Intangible assets3
Goodwill4
Quoted prices
in active
markets for
identical assets
(Level 1)
$ –
–
–
–
Significant
other
observable
inputs
(Level 2)
$ –
–
–
–
Significant
unobservable
inputs
(Level 3)
$
6
1,638
65
3,451
Aggregate
fair value
$
6
1,638
65
3,451
1. Other assets with a carrying amount of $128 million were written down to their fair value of $6 million, which was included in earnings this period.
2. Property, plant and equipment with a carrying amount of $6,883 million were written down to their fair value of $1,638 million, which was included in
earnings this period.
3. Intangible assets with a carrying amount of $234 million were written down to their fair value of $65 million, which was included in earnings this period.
4. Goodwill with a carrying amount of $4,249 million were written down to their fair value of $3,451 million, which was included in earnings this period.
Valuation Techniques
Cash Equivalents
The fair value of our cash equivalents is classified within
Level 1 of the fair value hierarchy because they are
valued using quoted market prices in active markets.
Our cash equivalents are comprised of U.S. Treasury bills
and money market securities that are invested primarily
in U.S. Treasury bills.
Available-for-Sale Securities
The fair value of available-for-sale securities is determined
based on the closing price of each security at the balance
sheet date. The closing price is a quoted market price
obtained from the exchange that is the principal active
market for the particular security, and therefore available-
for-sale securities are classified within Level 1 of the fair
value hierarchy.
143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
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 value of all our derivative contracts
includes an adjustment for credit risk. For counterparties
in a net asset position, credit risk is based upon the
observed credit default swap spread for each particular
counterparty, as appropriate. For counterparties in a
net liability position, credit risk is based upon Barrick’s
observed credit default swap spread. The fair value of
US dollar interest rate and currency swap contracts is
determined by discounting contracted cash flows using
a discount rate derived from observed LIBOR and swap
rate curves and CDS rates. In the case of currency
contracts, we convert non-US dollar cash flows into US
dollars using an exchange rate derived from currency
swap curves and CDS rates. The fair value of commodity
forward contracts is determined by discounting
contractual cash flows using a discount rate derived from
observed LIBOR and swap rate curves and CDS rates.
Contractual cash flows are calculated using a forward
pricing curve derived from observed forward prices for
each commodity. Derivative instruments are classified
within Level 2 of the fair value hierarchy.
Receivables from Provisional Copper and Gold Sales
The fair value of receivables rising from copper and
gold sales contracts that contain provisional pricing
mechanisms is determined using the appropriate quoted
forward price from the exchange that is the principal
active market for the particular metal. As such, these
receivables, which meet the definition of an embedded
derivative, are classified 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 flows and as a result is classified
within Level 3 of the fair value hierarchy.
25 Provisions and Environmental Rehabilitation
a) Provisions
Environmental rehabilitation (“PER”)
Post-retirement benefits
RSUs
Other
b) Environmental Rehabilitation
At January 1
PERs acquired (divested) during the year
PERs arising in the year
Impact of revisions to expected
cash flows recorded in earnings
Settlements
Cash payments
Settlement gains
Accretion
At December 31
Current portion (note 22)
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 2,589
125
26
72
$ 2,080
146
22
78
$ 2,812
$ 2,326
2012
2011
$ 2,159
(3)
469
$ 1,621
67
391
37
(51)
(2)
54
75
(44)
(3)
52
$ 2,663
(74)
2,159
(79)
$ 2,589
$ 2,080
The eventual settlement of all PERs is expected to take
place between 2013 and 2053.
The PER has increased from third quarter 2012 by
$289 million primarily due to changes in discount rates
and increases in cost estimates. A 1% increase in the
discount rate would result in a decrease of PER by
$374 million and a 1% decrease in the discount rate
would result in an increase in PER by $482 million.
144
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
26 Financial Risk Management
Our financial instruments are comprised of financial
liabilities and financial assets. Our principal financial
liabilities, other than derivatives, comprise accounts
payable and debt. The main purpose of these financial
instruments is to manage short-term cash flow and raise
funds for our capital expenditure program. Our principal
financial 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 financial risks.
We manage our exposure to key financial risks in
accordance with our financial risk management policy.
The objective of the policy is to support the delivery
of our financial targets while protecting future financial
security. The main risks that could adversely affect
our financial assets, liabilities or future cash flows 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 financial
risks. Our senior management ensures that our financial
risk-taking activities are governed by appropriate policies
and procedures and that financial risks are identified,
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 financial
instruments. We manage market risk by either accepting
it or mitigating it through the use of derivatives and
other economic hedging strategies.
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 profitability and ability to generate
both operating and free cash flow. All of our future gold
production is un-hedged 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 floor protection on approximately
20% of our expected copper production for 2013 at an
average floor price of $3.50 per pound. In addition, we
have sold an equal amount of call options at an average
price of $4.25. Our remaining copper production is
subject to market prices.
Silver
We expect to produce significant amounts of silver as
Pascua-Lama enters production in 2014. We utilize
option collar strategies, whereby we have hedge
protection on a total of 65 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. Changes in the market silver
price have a significant impact on the fair value of these
collars. Changes in the expected long-term price of silver
have a significant impact on the estimated fair value of
the Pascua-Lama project.
Fuel
On average we consume approximately 5 million barrels
of diesel fuel annually across all our mines. Diesel fuel is
refined from crude oil and is therefore subject to the
same price volatility affecting crude oil prices. Therefore,
volatility in crude oil prices has a significant direct and
indirect impact on our production costs. To mitigate this
volatility, we employ a strategy of combining the use of
financial 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 profit 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 10% with
all other variables held constant.
145
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Impact of a 10% change from year-end price
Effect on
earnings
Effect on
equity
Products
2012
2011
2012
2011
10% increase in gold price
10% increase in copper price
10% increase in silver price1
10% increase in oil price
$ 799
103
(33)
9
$ 776
143
(42)
10
$ 799
115
(37)
10
$ 776
46
(21)
(1)
The following table shows gains (losses)
associated with a 10% change in exchange rate of
the Australian dollar:
Impact of a 10% change in exchange rate of Australian dollar
Average
exchange rate
Effect on
net earnings
Effect on
equity
2012 2011
2012 2011
2012 2011
Effect on
earnings
Effect on
equity
10% strengthening $ 1.03 $ 1.03
1.03 1.03
10% weakening
$ (26)
26
$ –
–
$ (26)
26
$ –
–
Interest Rate Risk
Interest rate risk refers to the risk that the value of a
financial instrument or cash flows associated with the
instruments will fluctuate due to changes in market
interest rates. Currently, our interest rate exposure
mainly relates to interest receipts on our cash balances
($2.1 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
($2.3 billion at December 31, 2012).
The following table shows the approximate interest
rate sensitivities of our financial assets and liabilities as
at December 31:
Impact of a 1% change in interest rate
Effect on
net earnings
Effect on
equity
2012
2011
2012
2011
$ (2)
2
$ 16
(16)
$ (2)
2
$ 16
(16)
1% increase
1% decrease
b) Credit Risk
Credit risk is the risk that a third party might fail to
fulfill its performance obligations under the terms of a
financial 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
Products
2012
2011
2012
2011
10% decrease in gold price
10% decrease in copper price
10% decrease in silver price1
10% decrease in oil price
$ (799) $ (776) $ (799) $ (776)
(47)
30
1
(130)
32
(10)
(67)
18
(9)
(9)
52
(9)
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 to the
Papua New Guinea kina, Peruvian sol, Chilean peso,
Argentinean peso and Zambian kwacha through mine
operating costs. Consequently, fluctuations 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 some of our Australian and
Canadian dollar exposures as well as a significant portion
of our Chilean peso exposures. In third quarter 2012,
the Company unwound approximately AUD $2.6 billion
of our Australian dollar hedges (see note 23d for further
details). As a result we now have greater exposure
to fluctuation in the value of the Australian dollar
compared to the US dollar.
146
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
basis, and ensure liquidity of available funds. We also
invest our cash and equivalents in highly rated financial
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 significant
impact on our operating results or financial 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;
continuous monitoring of forecast and actual cash flows.
Details of the undrawn credit facility are included in
Note 23. Our ability to access public debt markets and
the related cost of debt financing is dependent upon
maintaining an investment grade credit rating. In third
quarter 2012, our credit rating was downgraded to BBB+
from A- by S&P, with a negative outlook, following our
announcement of a capital cost increase and delay to
production start-up at our Pascua-Lama project. Our
credit rating, as established by Moody’s has remained
stable throughout this period. We do not expect the
change in our credit rating by S&P to adversely affect
our ability to access the debt markets, but it could
impact funding costs for any new debt financing.
Limiting the amount of net exposure with each
At current market gold and copper prices, we expect
counterparty; and
Monitoring the financial condition of counterparties
on a regular basis.
The Company’s maximum exposure to credit risk at
the reporting date is the carrying value of each of the
financial assets disclosed as follows:
At December 31
2012
2011
Cash and equivalents
Accounts receivable
Net derivative assets by counterparty
$ 2,093
449
282
$ 2,745
426
901
$ 2,824
$ 4,072
1. Investment grade countries include Canada, Chile, Australia, and Peru.
Investment grade countries are defined as being rated BBB- or higher by S&P.
c) Liquidity Risk
Liquidity risk is the risk of loss from not having access to
sufficient funds to meet both expected and unexpected
cash demands. We manage our exposure to liquidity
risk by maintaining adequate cash reserves, access to
undrawn credit facilities and access to public debt
markets, by staggering the maturities of outstanding
debt instruments to mitigate refinancing risk and by
to generate negative free cash flow in 2013. This is
primarily due to expected capital expenditures of about
$2.6 billion at our Pascua-Lama project. In addition,
we have approximately $1.8 billion in debt maturing in
2013. We expect to meet our financing needs related
to these developments by utilizing a number of different
options, including the $4.25 billion available under
our credit facilities (subject to compliance with covenants
and the making of certain representations and
warranties, these facilities are available for draw down as
a source of financing), operating cash flow, asset sales
and future debt or equity issuances, should the need
arise. These alternatives should provide us with the
flexibility to fund any potential cash flow shortfall and
are continually evaluated to determine the optimal
capital structure.
The following table outlines the expected maturity of
our significant financial 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 flows, these balances may not agree
with the amounts disclosed in the balance sheet.
147
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
As at December 31, 2012
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
As at December 31, 2011
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
Less than 1 year
1 to 3 years
3 to 5 years Over 5 years
Total
$ 2,093
449
124
2,265
1,848
10
117
$
–
–
119
–
1,401
13
123
$
–
–
51
–
1,727
6
36
$
–
–
13
–
9,080
–
47
$ 2,093
449
307
2,265
14,056
29
323
Less than 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
$ 2,745
426
504
2,083
196
22
12
$
–
–
369
–
3,257
30
140
$
–
–
56
–
2,820
12
18
$
–
–
33
–
7,161
–
32
$ 2,745
426
962
2,083
13,434
64
202
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
27 Other Non-Current Liabilities
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 financial flexibility in
order to maximize shareholder value. We define 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
significant financial covenants or capital requirements
with our lenders or other parties.
Deposit on silver sale agreement
Derivative liabilities (note 23f)
Provision for supply contract
restructuring costs
Provision for offsite remediation
Other
As at
Dec. 31,
2012
As at
Dec. 31,
2011
$ 620
19
$ 453
42
20
62
129
25
61
108
$ 850
$ 689
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
148
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
to an annual inflation adjustment of 1% starting three
years after project completion at Pascua-Lama) and the
prevailing market price for each ounce of silver delivered
under the agreement.
During 2012 we received the final cash payment
from the agreement of $137.5 million (2011:
$137.5 million). 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.
28 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 $31 million and deferred
income taxes of $49 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 $8,549 million as at December 31, 2012.
Sources of Deferred Income Tax Assets and Liabilities
At December 31
2012
2011
Deferred tax assets
Tax loss carry forwards
Alternative minimum tax (“AMT”) credits
Environmental rehabilitation
Property, plant and equipment
Post-retirement benefit obligations
Accrued interest payable
Other
Deferred tax liabilities
Property, plant and equipment
Derivative instruments
Inventory
Classification:
Non-current assets
Non-current liabilities
$
430
44
724
46
34
72
41
$ 624
165
683
26
16
45
41
$ 1,391
$ 1,600
(3,189)
(35)
(326)
(5,067)
(138)
(217)
$ (2,159)
$ (3,822)
$ 443
(2,602)
$ 409
(4,231)
$ (2,159)
$ (3,822)
The deferred tax asset of $443 million includes
$365 million expected to be realized in more than one
year. The deferred tax liability of $2,602 million includes
$2,582 million expected to be realized in more than
one year.
Expiry Dates of Tax Losses and AMT Credits
2013 2014 2015 2016
No
expiry
date
2017+
Total
Non-capital
tax losses1
Canada
Dominican Republic
Barbados
Chile
Tanzania
Zambia
Other
– 367
–
– $ 1,412 $
–
$ – $ 4 $ 5 $
–
– 738 834 5,340
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
902
– 168
– 138
–
– 60
– $ 1,421
367
– 6,912
168
138
902
61
$ – $ 4 $ 744 $ 834 $ 7,654 $ 733 $ 9,969
AMT credits2
$ 44 $
44
1. Represents the gross amount of tax loss carry forwards translated at closing
exchange rates at December 31, 2012.
2. Represents the amounts deductible against future taxes payable in years
when taxes payable exceed “minimum tax” as defined by United States
tax legislation.
149
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
The non-capital tax losses include $7,528 million of
losses which are not recognized in deferred tax assets. Of
these, $4 million expire in 2014, $743 million expire in
2015, $834 million expire in 2016, $5,674 million expire
in 2017 or later, and $273 million have no expiry date.
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 sufficient 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 reflect our latest assessment of
the amount of deferred tax assets that is probable will
be realized.
A deferred income tax asset totaling $358 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 and Papua New Guinea
Canada
Argentina
Barbados
Tanzania
Zambia
Other
2012
2011
$ 181
88
–
73
43
48
17
$ 450
$ 122
76
35
73
31
–
23
$ 360
Deferred Tax Assets Not Recognized relate to: non-capital
loss carry forwards of $271 million (2011: $170 million),
capital loss carry forwards with no expiry date of
$126 million (2011: $120 million), and other deductible
temporary differences with no expiry date of $53 million
(2011: $70 million).
Source of Changes in Deferred Tax Balances
For the years ended December 31
2012
2011
Temporary differences
Property, plant and equipment
Environmental rehabilitation
Tax loss carry forwards
AMT credits
Derivatives
Other
Net currency translation (losses)/gains on
deferred tax balances
Impact of tax rate changes
Impact of amendment in Australia
Impact of functional currency changes
Intraperiod allocation to:
Loss (Income) from continuing operations
before income taxes
Equinox acquisition
Barrick Energy acquisitions
Acquisition of Aviva Corporation
OCI
Other
$ 1,898
41
(194)
(121)
103
(42)
$ (2,865)
214
287
(152)
21
(17)
1,685
(2,512)
(46)
26
14
(16)
32
–
–
4
$ 1,663
$ (2,476)
$ 1,591
–
–
(6)
79
(1)
$ (402)
(2,108)
(37)
–
69
2
$ 1,663
$ (2,476)
150
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Income Tax Related Contingent Liabilities
Tax Years Still Under Examination
At January 1
Additions based on tax positions related to
the current year
Additions based on tax positions related to
prior years
Reductions for tax positions of prior years
2012
$ 64
2011
$ 64
1
9
(10)
1
–
(1)
At December 311
$ 64
$ 64
1. If reversed, the total amount of $64 million would be recognized as a benefit
to income taxes on the income statement, and therefore would impact the
reported effective tax rate.
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 $46 million through a potential
settlement with tax authorities that may result in a
reduction of available tax pools.
Canada
United States
Dominican Republic
Peru
Chile
Argentina
Australia
Papua New Guinea
Saudi Arabia
Tanzania
Zambia
29 Capital Stock
2008–2012
2012
2009–2012
2007–2009, 2011–2012
2009–2012
2006–2012
All years open
2004–2012
2007–2012
All years open
2009–2012
Common Shares
Our authorized capital stock includes an unlimited number
of common shares (issued 1,001,107,981 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 2012, we declared and paid dividends in US dollars
totaling $0.75 per share ($750 million) (2011: $0.51 per
share, $509 million).
30 Non-Controlling Interests
At January 1, 2011
Share of income (loss)
Cash contributed
Decrease of non-controlling interest
At December 31, 2011
Share of income (loss)
Cash contributed
Decrease in non-controlling interest3
At December 31, 2012
Pueblo Viejo
ABG1
Cerro Casale2
Total
$ 598
(26)
365
–
$ 937
(19)
487
–
$ 1,405
$ 680
82
_
(10)
$ 752
15
–
(21)
$ 746
$ 467
(3)
38
_
$ 502
(8)
18
–
$ 1,745
53
403
(10)
$ 2,191
(12)
505
(21)
$ 512
$ 2,663
1. Represents non-controlling interest in ABG. The balance includes the non-controlling interest of 30% in our Tulawaka mine.
2. Represents non-controlling interest in Cerro Casale.
3. Represents dividends received from African Barrick Gold.
151
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
31 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 benefits1
Post-employment benefits2
Termination benefits
Share-based payments and other3
1. Includes annual salary and annual short-term incentives/other bonuses earned in the year.
2. Represents company contributions to retirement savings plans.
3. Relates to stock option, RSU, and PRSU grants and other compensation.
32 Stock-Based Compensation
2012
$ 23
2
18
50
$ 93
2011
$ 20
3
–
28
$ 51
a) Stock Options
Under Barrick’s stock option plan, certain officers and key
employees of the Corporation may purchase common
shares at an exercise price that is equal to the closing
share price on the day before the grant of the option.
The grant date is the date when the details of the award,
including the number of options granted by individual
and the exercise price, are approved. Stock options vest
evenly over four years, beginning in the year after
granting. Options granted in July 2004 and prior are
exercisable over 10 years, whereas options granted since
December 2004 are exercisable over seven years. At
December 31, 2012, 6.9 million (2011: 6.9 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
$16 million in 2012 (2011: $15 million), and is presented
as a component of corporate administration and other
expense, consistent with the classification 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 2012 by $0.02 per share (2011: $0.01 per share).
Total intrinsic value relating to options exercised in
2012 was $8 million (2011: $40 million).
Employee Stock Option Activity (Number of Shares in Millions)
2012
2011
Shares Average price
Shares
Average price
1.1
(0.4)
(0.1)
0.6
5.8
1.1
(0.2)
(0.2)
(0.2)
6.3
$ 27
24
28
$ 28
$ 41
44
30
41
46
$ 42
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
C$ options
At January 1
Exercised
Cancelled/expired
At December 31
US$ options
At January 1
Granted
Exercised
Forfeited
Cancelled/expired
At December 31
152
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Stock Options Outstanding (Number of Shares in Millions)
Range of exercise prices
C$ options
$ 22 – $ 27
$ 28 – $ 31
US$ options
$ 9 – $ 19
$ 20 – $ 27
$ 28 – $ 41
$ 42 – $ 55
Outstanding
Exercisable
Shares
Average
price
Average
life (years)
Intrinsic
value1
($ millions)
Shares
Average
price
Intrinsic
value1
($ millions)
0.1
0.5
0.6
0.1
0.7
1.5
4.0
6.3
$ 22
30
$ 28
$ 13
26
37
47
$ 42
0.3
0.9
0.8
0.1
2.8
3.4
4.5
4.0
$ 1
3
$ 4
$ 1
6
(3)
(49)
$ (45)
0.1
0.5
0.6
0.1
0.7
1.1
2.2
4.1
$ 22
30
$ 28
$ 13
26
38
45
$ 40
$ 1
3
$ 4
$ 1
6
(3)
(22)
$ (18)
1. Based on the closing market share price on December 31, 2012 of C$34.82 and US$35.01.
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,
2012
Dec. 31,
2011
Lattice1,2
5.3
33%–38%
1.22%
0.04%–2.04%
Lattice1,2
5.3
33%–38%
1.22%
0.04%–2.04%
1.1
$ 12
0.5
$ 14
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. Forfeitures have
also been factored in based on historical forfeiture rates.
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, 2012, there was $11 million
(2011: $15 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 (2011: 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 reflect 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, 2012, the weighted
average remaining contractual life of RSUs was
1.09 years (2011: 1.55 years).
153
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Compensation expense for RSUs was $29 million
in 2012 (2011: $30 million) and is presented as a
component of corporate administration and other
expense, consistent with the classification of other
elements of compensation expense for those employees
who had RSUs.
Under our DSU plan, Directors must receive a
specified portion of their basic annual retainer in the
form of DSUs, with the option to elect to receive 100%
of such retainer in DSUs. Each DSU has the same value as
one Barrick common share. DSUs must be retained until
the Director leaves the Board, at which time the cash
value of the DSUs will be paid out. Additional DSUs are
credited to reflect dividends paid on Barrick common
shares. DSUs are recorded at fair value on the grant date
and are adjusted for changes in fair value. The fair value
of amounts granted each period together with changes
in fair value are expensed.
DSU and RSU Activity
At January 1, 2011
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2011
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
DSUs
(thousands)
Fair
value
RSUs
($ millions) (thousands)
Fair
value
($ millions)
180
(29)
–
36
–
–
187
(23)
–
43
–
–
$ 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)
$ 8.4 2,815 $ 49.2
(28.9)
(708)
(0.8)
(2.4)
(57)
–
16.0
387
1.7
2.1
52
–
18.1
–
(2.3)
At December 31, 2012
207
$ 7.0 2,489 $ 54.1
c) Performance Restricted Share Units (PRSUs)
In 2008, Barrick launched a PRSU plan. Under this plan,
selected employees are granted PRSUs, where each
PRSU has a value equal to one Barrick common share.
PRSUs vest at the end of a three-year period and are
settled in cash on the third anniversary of the grant date.
Additional PRSUs are credited to reflect dividends
paid on Barrick common shares over the vesting
period. Vesting, and therefore the liability, is based
on the achievement of performance goals and the
target settlement will range from 0% to 200% of the
value. At December 31, 2012, 185 thousand units
were outstanding (2011: 201 thousand units).
d) Employee Share Purchase Plan (ESPP)
In 2008, Barrick launched an Employee Share Purchase
Plan. This plan enables Barrick employees to purchase
Company shares through payroll deduction. Each year,
employees may contribute 1%–6% of their combined
base salary and annual bonus, and Barrick will match
50% of the contribution, up to a maximum of $5,000
per year. During 2012, Barrick contributed and expensed
$0.8 million to this plan (2011: $0.8 million).
e) ABG Stock Options
African Barrick Gold has a stock option plan for its
directors and selected employees. The exercise price
of the granted options is determined by the ABG
Remuneration Committee before the grant of an option
provided that this price cannot be less than the average
of the middle-market quotation of ABG’s shares (as
derived from the London Stock Exchange Daily Official
List) for the three dealing days immediately preceding
the date of grant. All options outstanding at the end
of the year expire in 2017 and 2018. There were
0.7 million ABG options granted which were exercisable
at December 31, 2011. Stock option expense of
$1.5 million (2011: $1.4 million) is included as a
component of other expense.
33 Post-Retirement Benefits
a) Description of Plans
Defined Contribution Pension Plans
Certain employees take part in defined contribution
employee benefit plans. We also have a retirement plan
for certain officers of the Company, under which we
contribute 15% of the officer’s annual salary and bonus.
Our share of contributions to these plans, which is
expensed in the year it is earned by the employee, was
$66 million in 2012 (2011: $58 million).
Defined Benefit Pension Plans
We have qualified defined benefit pension plans that
cover certain of our United States and Canadian
employees and provide benefits based on employees’
years of service. Our policy is to fund the amounts
necessary on an actuarial basis to provide enough assets
to meet the benefits payable to plan members.
Independent trustees administer assets of the plans,
which are invested mainly in fixed income and equity
securities. In 2012, certain vested participants elected a
lump sum to settle their obligations, resulting in a
settled gain of $5 million.
154
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
We also have certain plans that are unfunded that
cover certain of our employees. No funding is done on
these plans and contributions for future years will be
equal to benefit payments.
Actuarial gains and losses arise when the actual
return on plan assets differs from the expected return
on plan assets for a period, or when the expected and
actuarial accrued benefit obligations differ at the end of
the year. We record actuarial gains and losses in the
Statement of Comprehensive Income.
Post-Retirement Health Care Plans
We provide post-retirement medical, dental, and life
insurance benefits to certain employees. In 2012, one
of our health care plans was wound up, resulting in a
settlement gain of $14 million.
b) Post-Retirement Plan Information
Actuarial Assumptions
As at December 31
Discount rate
Benefit obligation
Pension cost
Expected return on plan assets
Wage increases
Pension plans
2012
Other post-
retirement
benefits 2012
Pension plans
2011
Other post-
retirement
benefits 2011
1.75–4.55%
2.80–5.21%
n/a
2.25%
2.95–3.10%
3.68–4.10%
n/a
n/a
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%
Pension plan assets, which consist primarily of fixed-
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, rate of return on plan assets and
wage increases are the assumptions that generally
have the most significant impact on our pension cost
and obligation.
The discount rate for benefit obligation and pension
cost purposes is the rate used to determine present
value of estimated future cash outflows expected to be
required to settle the pension obligations. This rate was
developed by matching the cash flows underlying the
pension obligation with a spot rate curve based on the
actual returns available on high-quality (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 five basis points.
The procedure was applied separately for pension and
post-retirement plan purposes, and produced the same
rate in each case.
The expected 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. Long-term historical returns on
equities and fixed-income investments reflect the widely
accepted capital market principle that assets with higher
volatility generate a greater return over the long run.
Current market factors such as inflation and interest
rates are evaluated before long-term capital market
assumptions are finalized.
Wage increases reflect the best estimate of merit
increases to be provided, consistent with expected
inflation rates.
We have assumed a health care cost trend rate of
increase of 7.75% in 2013 (2012: 8%), decreasing
ratably to 4.75% in 2019 and thereafter (2012: 4.75%).
The assumed health care cost trend rate of increase had
a minimal effect on the amounts reported. A one
percentage point change in the assumed health care cost
trend rate at December 31, 2012 would have had no
significant effect on the post-retirement obligation and
would have had no significant effect on the benefit
expense for 2012.
155
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Expense Recognized in the Income Statement
As at December 31
Expected return on plan assets
Past service cost
Interest cost
Settlements
Total expense (recovery)
Pension plans
2012
Other post-
retirement
benefits 2012
Pension plans
2011
Other post-
retirement
benefits 2011
$ (15)
1
14
(5)
$ (5)
$
–
–
–
(14)
$ (14)
$ (15)
1
16
1
$ 3
$ –
–
1
–
$ 1
Actual return for the year ended December 31, 2012 was $29 million (2011: $13 million).
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.
As at December 31
Present value of defined benefit obligation
Fair value of plan assets
Funded status
Experience adjustments on plan liabilities
Experience adjustments on plan assets
Pension plans
2012
Other post-
retirement
benefits 2012
Pension plans
2011
Other post-
retirement
benefits 2011
$ 1
3
119
(9)
$ 114
$
–
2
6
1
$ 9
$ 2
12
124
(38)
$ 100
$ (49)
$ 5
$ (40)
2012
$ 336
207
(129)
22
14
2011
$ 385
227
(158)
26
(3)
$ –
2
22
4
$ 28
$ 4
2010
$ 363
227
(136)
19
–
Defined Benefit Obligation
The movement in the defined benefit obligation over the year is as follows:
As at December 31
Balance at January 1
Service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Settlements
Balance at December 31
Funded status2
Pension plans
20121
Other post-
retirement
benefits 2012
Pension plans
2011
Other post-
retirement
benefits 2011
$ 361
1
14
23
(32)
(39)
$ 328
$ (121)
$ 24
–
1
(1)
(2)
(14)
$ 8
$ (8)
$ 336
1
16
29
(21)
–
$ 361
$ (134)
$ 27
–
1
(3)
(1)
–
$ 24
$ (24)
1. Includes unfunded pension obligations of $87 million for the year ended December 31, 2012 (2011: $93 million).
2. Represents the fair value of plan assets less projected benefit obligations.
156
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
Expected contributions to the pension plans and post-employment benefit plans for the year ended December 31,
2013 are $7 million and $2 million, respectively.
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 (losses)
Company contributions
Settlements
Benefits paid
Balance at December 31
As at December 31, 2012
Composition of plan assets2
Equity securities
Fixed income securities
Pension plans
2012
Other post-
retirement
benefits 2012
Pension plans
2011
Other post-
retirement
benefits 2011
$ 227
15
14
17
(34)
(32)
$ 207
$ –
–
–
2
–
(2)
$ –
$ 227
16
(3)
9
–
(22)
$ 227
$ –
–
–
1
–
(1)
$ –
Target1
Actual
Actual
52%
48%
100%
52%
48%
100%
$ 108
99
$ 207
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 Benefit Payments
For the years ending December 31
2013
2014
2015
2016
2017
2018 – 2022
Pension plans
Other post-
retirement
benefits
$ 22
22
22
21
21
102
$ 2
1
1
1
1
3
157
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012
34 Contingencies
Certain conditions may exist as of the date the financial
statements are issued that 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.
a) Litigation and Claims
In assessing loss contingencies related to legal
proceedings that are pending against us or unasserted
claims that may result in such proceedings, the Company
and its legal counsel evaluate the perceived merits of
any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or
expected to be sought.
Cortez Hills Complaint
On November 12, 2008, the United States Bureau of
Land Management (the “BLM”) issued a Record of
Decision approving the Cortez Hills Expansion Project.
On November 20, 2008, the TeMoak Shoshone Tribe, the
East Fork Band Council of the TeMoak Shoshone Tribe
and the Timbisha Shoshone Tribe, the Western Shoshone
Defense Project, and Great Basin Resource Watch filed
a lawsuit against the United States seeking to enjoin
the majority of the activities comprising the Project on
various grounds.
In December 2009, on appeal from a decision
denying certain of the plaintiffs’ claims, the Ninth Circuit
issued an opinion in which it held that the plaintiffs were
likely to succeed on two of their claims and ordered
that a supplemental Environmental Impact Statement
(“EIS”) be prepared by Barrick. On March 15, 2011, the
BLM issued its record of decision that approved the
supplemental EIS. On January 3, 2012, the District Court
issued a decision granting summary judgment in favor
of Barrick and the BLM on all remaining issues. The
plaintiffs have appealed this decision.
Marinduque Complaint
Placer Dome Inc. was named the sole defendant in a
Complaint filed in October 2005 by the Provincial
Government of Marinduque, an island province of the
Philippines (“Province”), with the District Court in Clark
County, Nevada. The Complaint asserted that Placer
Dome Inc. was responsible for alleged environmental
degradation with consequent economic damages and
impacts to the environment in the vicinity of the
Marcopper mine that was owned and operated by
Marcopper Mining Corporation (“Marcopper”). Placer
Dome Inc. indirectly owned a minority shareholding of
39.9% in Marcopper until the divestiture of its
shareholding in 1997. The Province sought “to recover
damages for injuries to the natural, ecological and
wildlife resources within its territory”. In addition, the
Province sought compensation for the costs of restoring
the environment, an order directing Placer Dome Inc.
to undertake and complete “the remediation,
environmental cleanup, and balancing of the ecology
of the affected areas,” and payment of the costs of
environmental monitoring. The Complaint addressed
the discharge of mine tailings into Calancan Bay, the
1993 Maguila-guila dam breach, the 1996 Boac river
tailings spill, and alleged past and continuing damage
from acid rock drainage. In October 2010, the Nevada
state court issued an order granting the Company’s
motion to dismiss the action on the grounds of forum
non conveniens. The Province has appealed the Court’s
dismissal order to the Nevada Supreme Court. The
Company intends to continue to defend the action
vigorously. No amounts have been accrued for any
potential loss under this complaint.
Calancan Bay (Philippines) Complaint
In July 2004, a complaint was filed against Marcopper
and Placer Dome Inc. in the Regional Trial Court of
Boac, on the Philippine island of Marinduque, on behalf
of a putative class of fishermen who reside in the
communities around Calancan Bay, in northern
Marinduque. The complaint alleges injuries to health
and economic damages to the local fisheries resulting
from the disposal of mine tailings from the Marcopper
mine. The total amount of damages claimed is
approximately US$1 billion.
In April 2008, Placer Dome Inc. made a special
appearance by counsel to move to dismiss the complaint
for lack of personal jurisdiction and on other grounds.
The plaintiffs have opposed the motion to dismiss. In
October 2008, the plaintiffs filed a motion challenging
158
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Placer Dome Inc.’s legal capacity to participate in the
proceedings in light of its alleged “acquisition” by the
Company. Placer Dome Inc. opposed this motion. In
January 2009, Marcopper filed an entry of appearance
in the action and in March 2012 filed a motion to
dismiss the action on various grounds. The plaintiffs have
opposed the motion to dismiss. It is not known when
the motions will be decided by the Court. The Company
intends to defend the action vigorously. No amounts
have been accrued for any potential loss under
this complaint.
Perilla Complaint
In 2009, Barrick Gold Inc. and Placer Dome Inc. were
purportedly served in Ontario with a complaint filed in
November 2008 in the Regional Trial Court of Boac, on
the Philippine island of Marinduque, on behalf of two
named individuals and purportedly on behalf of the
approximately 200,000 residents of Marinduque. The
complaint alleges injury to the economy and the ecology
of Marinduque as a result of the discharge of mine
tailings from the Marcopper mine into Calancan Bay,
the Boac River, and the Mogpog River. The plaintiffs are
claiming for abatement of a public nuisance allegedly
caused by the tailings discharge and for nominal
damages for an alleged violation of their constitutional
right to a balanced and healthful ecology. In June 2010,
Barrick Gold Inc. and Placer Dome Inc. filed a motion
to have the Court resolve their unresolved motions to
dismiss before considering the plaintiffs’ motion to admit
an amended complaint and also filed an opposition to
the plaintiffs’ motion to admit on the same basis. It is
not known when these motions or the outstanding
motions to dismiss will be decided by the Court. The
Company intends to defend the action vigorously. No
amounts have been accrued for any potential loss
under this complaint.
Writ of Kalikasan
On February 25, 2011 a Petition for the Issuance of
a Writ of Kalikasan with Prayer for Temporary
Environmental Protection Order was filed in the
Supreme Court of the Republic of the Philippines in
Eliza M. Hernandez, Mamerto M. Lanete and Godofredo
L. Manoy versus Placer Dome Inc. and Barrick Gold
Corporation (the “Petition”). On March 8, 2011, the
Supreme Court issued an En Banc Resolution and Writ
of Kalikasan and directed service of summons on Placer
Dome Inc. and the Company, ordered Placer Dome Inc.
and the Company to make a verified return of the Writ
with ten (10) days of service and referred the case to the
Court of Appeal for hearing. The Petition alleges that
Placer Dome Inc. violated the petitioners’ constitutional
right to a balanced and healthful ecology as a result
of, among other things, the discharge of tailings into
Calancan Bay, the 1993 Maguila-Guila dam break, the
1996 Boac river tailings spill and failure of Marcopper
to properly decommission the Marcopper mine. The
petitioners have pleaded that the Company is liable for
the alleged actions and omissions of Placer Dome Inc.
which was a minority indirect shareholder of Marcopper
at all relevant times and is seeking orders requiring the
Company to environmentally remediate the areas in and
around the mine site that are alleged to have sustained
environmental impacts. The petitioners purported to
serve the Company on March 25, 2011. On March 31,
2011, the Company filed an Urgent Motion For Ruling
on Jurisdiction with the Supreme Court challenging
the constitutionality of the Rules of Procedure in
Environmental Cases (the “Environmental Rules”)
pursuant to which the Petition was filed, as well as
the jurisdiction of the Court over the Company. On
November 23, 2011, the Company’s counsel received
a Motion for Intervention, dated November 18, 2011,
filed with the Supreme Court, in which two local
governments, or “baranguays” (Baranguay San Antonio
and Baranguay Lobo), seek intervenor status in the
proceedings with the intention of seeking a dismissal
of the proceedings. No decision has as yet been issued
with respect to the Urgent Motion for Ruling on
Jurisdiction, the Motion for Intervention, or certain
other matters before the Court. The Company intends
to continue to defend the action vigorously. No
amounts have been accrued for any potential loss
under this matter.
159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Reko Diq Arbitration
On February 15, 2011, Tethyan Copper Company
Pakistan (Private) Limited (“TCCP”) (the local operating
subsidiary of Tethyan Copper Company (“TCC”))
submitted to the Government of the Province of
Balochistan (the “GOB”) an application for a mining
lease in respect of the Reko Diq project in Pakistan.
Barrick currently indirectly holds 50% of the shares of
TCC, with Antofagasta Plc (“Antofagasta”) indirectly
holding the other 50%.
TCC believes that, under the Chagai Hills Joint
Venture Agreement (the “CHEJVA”) between TCC and
the GOB, as well as under the 2002 Balochistan Mineral
Rules, TCCP was legally entitled to the mining lease
subject only to “routine” government requirements.
On November 15, 2011, the GOB notified TCCP of the
rejection of TCCP’s application for the mining lease.
On November 28, 2011, TCC filed two requests for
international arbitration: one against the Government
of Pakistan (“GOP”) with the International Centre for
Settlement of Investment Disputes (“ICSID”) asserting
breaches of the Bilateral Investment Treaty (“BIT”)
between Australia (where TCC is incorporated) and
Pakistan, and another against the GOB with the
International Chamber of Commerce (“ICC”), asserting
breaches of the CHEJVA. In December 2012, the ICSID
tribunal declined to issue provisional measures to prevent
the GOP from disposing of or encumbering any rights
TCC may have to the property until the arbitration is
concluded, but advised that it expected that neither
the GOP nor the GOB would involve third parties nor
conduct further work beyond the limited amount the
GOP had disclosed, and imposed certain obligations
on the GOP to report to the tribunal if its intentions
changed. A hearing was held on the same issue before
the ICC tribunal, which has not yet issued its decision.
The GOP filed jurisdictional objections before ICSID on
the grounds that the BIT should not apply, which were
not accepted. The GOP and GOB have renewed their
objections in light of the Pakistani Constitutional
Litigation (below). A merits hearing in the ICSID matter
has been scheduled for December 2013, and a merits
hearing in the ICC matter is tentatively set for March
2014. Issues related to damages in both proceedings
have been bifurcated until after rulings on the merits.
Pakistani Constitutional Litigation
In November 2006, a Constitutional Petition was filed in
the High Court of Balochistan by three Pakistani citizens
against: Barrick, the GOB and the GOP, the Balochistan
Development Authority (“BDA”), TCCP, Antofagasta,
Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
The Petition alleged, among other things, that the entry
by the BDA into the 1993 Joint Venture Agreement
(“JVA”) with BHP to facilitate the exploration of the
Reko Diq area and the grant of related exploration
licenses were illegal and that the subsequent transfer of
the interests of BHP in the JVA and the licenses to TCC
was also illegal and should therefore be set aside. In
June 2007, the High Court of Balochistan dismissed the
Petition against Barrick and the other respondents in
its entirety. In August 2007, the petitioners filed a Civil
Petition for Leave to Appeal in the Supreme Court of
Pakistan. On May 25, 2011, the Supreme Court ruled,
among other things, that the GOB should proceed to
expeditiously decide TCCP’s application for the grant
of a mining lease, transparently and fairly in accordance
with laws and applicable rules. The Supreme Court
also ruled that the petitions before the Court would
remain pending.
In early 2012, the Supreme Court resumed hearing
various petitions relating to TCC and the Reko Diq
project, including applications seeking to have the
CHEJVA declared invalid and applications seeking an
order staying the ICSID and ICC arbitrations. In January
2013, the Supreme Court ruled that the GOB exceeded
its authority in entering into the CHEJVA, and that
the contract was invalid. The GOP and the GOB have
indicated that they will argue that this ruling deprives
the tribunals of jurisdiction, which TCC will
oppose vigorously.
Argentine Glacier Legislation and
Constitutional Litigation
On September 30, 2010, the National Law on Minimum
Requirements for the Protection of Glaciers was enacted
in Argentina, and came into force in early November
2010. The federal law bans new mining exploration and
exploitation activities on glaciers and in the “peri-glacial”
environment, and subjects ongoing mining activities to
an environmental audit. If such audit identifies significant
160
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 impacts on glaciers and peri-glacial environment, the
relevant authority is empowered to take action, which
according to the legislation could include the suspension
or relocation of the activity. In the case of the Veladero
mine and the Pascua-Lama project, the competent
authority is the Province of San Juan. In late January
2013, the Province announced that it had completed
the required environmental audit, which concluded
that Veladero and Pascua-Lama do not impact glaciers
or peri-glaciers.
In November 2010, the Federal Court in the
Province of San Juan granted injunctions, based on the
unconstitutionality of the federal law, suspending its
application in the Province and, in particular to Veladero
and Pascua-Lama. The National Supreme Court of Justice
of Argentina (the “Supreme Court”) issued a decision
determining that this case falls within its jurisdiction.
The National State filed a remedy for revocation of the
decision of the Federal Court in the Province of San Juan
to grant injunctions suspending the application of the
federal law in the Province of San Juan. On July 3, 2012,
the Supreme Court overturned the injunctions. The
Supreme Court has not yet ruled on the constitutionality
of the federal law. No amounts have been accrued for
any potential loss under this matter.
Pascua-Lama Constitutional Protection Actions
On September 28, 2012, a constitutional rights
protection action was filed in the Court of Appeals of
Copiapo, Chile by representatives of four Diaguita
indigenous communities against Compania Minera
Nevada (“CMN”), Barrick’s Chilean subsidiary that
holds the Chilean portion of the Pascua-Lama Project
(the “Project”), and the Environmental Evaluation
Commission (“EEC”) of the III Region of Atacama,
Chile, the regulatory body with oversight authority
over the Project.
On October 22, 2012, a second constitutional rights
protection action was filed in the Court of Appeals of
Copiapo, Chile by a representative of a Diaguita
indigenous community and certain other individuals
against CMN and the EEC.
The plaintiffs in the actions allege that the
construction of the Project affects their constitutional
rights to life and to live in an environment free of
contamination. The actions allege certain non-
compliances with the Project´s environmental approval
in Chile, including the carrying out of pre-stripping
activities allegedly prior to full completion and operation
of the acid rock drainage water management and
treatment system and alleged impacts on the Toro 1,
Toro 2 and Esperanza glaciers.
The plaintiffs assert that the alleged non-
compliances with the environmental approval, together
with the lack of inspections, sanctions and injunctions
on the part of the regulatory bodies, have resulted in
negative impacts on water sources and contamination,
or at least the risk of contamination, of the Estrecho and
Huasco rivers.
The relief sought in the actions is the suspension
of the construction of the Project in Chile until all
environmental obligations are fulfilled. At the time of
filing of the first action, the plaintiffs sought the
immediate granting of a preliminary injunction to halt
pre-stripping activities. The preliminary injunction
request was not granted. However, both cases have
been admitted for review by the Court. No amounts
have been accrued for any potential losses related
to these actions.
b) Other Contingencies
Pascua-Lama
During the fourth quarter of 2012, after observing
increased dust in the open pit area, exacerbated by
stronger than normal winds, the Pascua-Lama project
voluntarily halted pre-stripping activities in order to
implement additional dust mitigation and control
measures. Regulatory authorities in Chile subsequently
issued an order to suspend pre-stripping activities until
dust-related health and safety concerns are addressed.
The project is strengthening dust mitigation and control
measures, including enhanced tunnel ventilation, revised
blasting fragmentation, use of more robust protective
equipment and a robust dust monitoring system. Further
restrictions may be placed on the project due to the
need to repair and improve certain aspects of the water
management system in Chile. Pre-stripping is unlikely
to recommence until matters related to dust and water
management are resolved. To date, the suspension
of pre-stripping has not altered the Company’s target of
161
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 first production in the second half of 2014. However, the
outcomes of the regulatory processes related to dust and
water management, and of the constitutional rights
protection actions, are uncertain (see “Pascua-Lama
Constitutional Protection Actions”). The Company will
continue to assess the potential for impacts on the
timing of first production.
Pueblo Viejo
Certain members of the Dominican Republic (“DR”)
Congress, including the President of the Chamber of
Deputies, have expressed a desire to amend the Special
Lease Agreement (“SLA”) to accelerate and increase the
benefits that the DR will derive from the Pueblo Viejo
mine. The SLA, which provides for substantial benefits
to the DR, including through royalties and taxes, in
addition to the other indirect benefits derived by the
country such as through employment and purchasing
of goods and services, was approved by Congress in
2009 and cannot be unilaterally altered. However, the
Company, while reserving its rights under the SLA,
has engaged in dialogue with representatives of the
government with a view to achieving a mutually
acceptable outcome. At this time, the outcome of the
dialogue is uncertain, but any amendments to the
SLA could impact overall project economics.
Jabal Sayid
Since the Company acquired its interest in the Jabal
Sayid project through its acquisition of Equinox Minerals
in 2011, the Deputy Ministry for Mineral Resources
(“DMMR”), which oversees the mining license, has
questioned whether such change in the indirect
ownership of the project, as well as previous changes in
ownership, required the prior consent of the DMMR. In
December 2012, the DMMR required the project to cease
commissioning of the plant using stockpiled ore, citing
alleged noncompliances with the mining investment law
and the mining license, and in January 2013 required
related companies to cease exploration activities, citing
noncompliance with the law and the exploration licenses
related to the ownership changes. The Company does
not believe that such consent was required as a matter
of law, but has responded to requests of the DMMR,
including through the provision of additional guarantees
and undertakings, and expressed its desire to fully satisfy
any related requirements of the DMMR.
162
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2012 Mineral Reserves and Mineral Resources
The tables on the next seven pages set forth Barrick’s interest in the total proven and probable gold and copper
reserves and in the total measured, indicated and inferred gold, copper and nickel resources and certain related
information at each property. For further details of proven and probable mineral reserves and measured, indicated
and inferred mineral resources by category, metal and property, see pages 162 to 170.
The Company has carefully prepared and verified the mineral reserve and mineral resource figures and believes
that its method of estimating mineral reserves has been verified by mining experience. These figures are estimates,
however, and no assurance can be given that the indicated quantities of metal will be produced. Metal price fluctuations
may render mineral reserves containing relatively lower grades of mineralization uneconomic. Moreover, short-term
operating factors relating to the mineral reserves, such as the need for orderly development of ore bodies or the
processing of new or different ore grades, could affect the Company’s profitability in any particular accounting period.
Definitions
A mineral resource is a concentration or occurrence of
diamonds, natural solid inorganic material, or natural solid
fossilized organic material including base and precious
metals, coal, and industrial minerals in or on the Earth’s
crust in such form and quantity and of such a grade or
quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological
evidence and knowledge. Mineral resources are
sub-divided, in order of increasing geological confidence,
into inferred, indicated and measured categories.
An inferred mineral resource is that part of a mineral
resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited
sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on
limited information and sampling gathered through
appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
An indicated mineral resource is that part of a
mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics, can be
estimated with a level of confidence sufficient to
allow the appropriate application of technical and
economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration
and testing information gathered through appropriate
techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be
reasonably assumed.
A measured mineral resource is that part of a
mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well
established that they can be estimated with confidence
sufficient to allow the appropriate application of
technical and economic parameters, to support
production planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed
and reliable exploration, sampling and testing
information gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm
both geological and grade continuity.
Mineral resources, which are not mineral reserves, do
not have demonstrated economic viability.
A mineral reserve is the economically mineable part
of a measured or indicated mineral resource
demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining,
processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that
economic extraction can be justified.
A mineral reserve includes diluting materials and
allowances for losses that may occur when the material
is mined. Mineral reserves are sub-divided in order of
increasing confidence into probable mineral reserves and
proven mineral reserves. A probable mineral reserve is
the economically mineable part of an indicated and, in
some circumstances, a measured mineral resource
demonstrated by a least a preliminary feasibility study.
This study must include adequate information on mining,
processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that
economic extraction can be justified.
A proven mineral reserve is the economically
mineable part of a measured mineral resource
demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining,
processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that
economic extraction is justified.
163
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012 Summary Gold Mineral Reserves and Mineral Resources1,2,3
For the years ended December 31
2012
2011
Tons
(000s)
Grade Ounces
(000s)
(oz/ton)
Tons
(000s)
Grade
(oz/ton)
Ounces
(000s)
94,541
3,621
14,632
6,144
109,173
9,765
181,788
133,565
306,190
50,943
–
65,914
295,559
125,190
15,258
79,690
70,683
44,293
33,770
16,377
7,823
172,646
16,424
55,899
108,257
16,750
6,164
1,715
–
298,358
990,088
245,990
424,117
269,930
471,153
30,186
205,008
39,462
50,013
2,764
8,933
0.094
118
0.033
3,405
0.233
1,864
0.303
0.113 12,338
1,982
0.203
0.083 15,008
8,353
0.063
0.049 15,058
2,701
0.053
–
–
8,367
0.127
5,161
0.017
1,472
0.012
5,815
0.381
9,552
0.120
1,243
0.018
925
0.021
1,421
0.042
731
0.045
326
0.042
3,463
0.020
1,150
0.070
1,827
0.033
1,640
0.015
207
0.012
318
0.052
55
0.032
–
–
0.065 19,503
0.018 17,434
2,494
0.010
0.042 17,861
6,734
0.025
0.021 10,024
400
0.013
5,828
0.028
669
0.017
542
0.011
41
0.015
97,325
4,612
11,895
6,077
109,220
10,689
188,729
120,194
306,879
54,391
–
11,221
307,162
123,191
11,986
62,394
82,688
83,420
28,237
21,482
16,778
107,626
16,620
4,735
77,285
10,977
8,932
716
–
298,358
990,088
245,990
424,117
269,930
481,153
44,029
214,418
35,164
67,865
10,243
9,342
0.096
147
0.032
3,035
0.255
0.301
1,828
0.113 12,377
1,975
0.185
0.080 15,173
0.055
6,597
0.047 14,488
3,757
0.069
–
–
1,273
0.113
5,102
0.017
1,623
0.013
5,294
0.442
7,641
0.122
1,411
0.017
1,338
0.016
1,398
0.050
828
0.039
978
0.058
2,245
0.021
1,139
0.069
410
0.087
1,194
0.015
135
0.012
487
0.055
29
0.041
–
–
0.065 19,503
0.018 17,434
0.010
2,494
0.042 17,861
6,734
0.025
0.022 10,558
464
0.011
6,151
0.029
505
0.014
771
0.011
132
0.013
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Goldrush
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
Donlin Gold (50.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
Pierina
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
3. Measured plus indicated resources.
164
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Summary Gold Mineral Reserves and Mineral Resources1,2,3
For the years ended December 31
2012
2011
Based on attributable ounces
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Reko Diq (37.50%)4
Africa
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Nyanzaga (73.90%)
Tulawaka (51.73%)
Other
Total
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
(proven and probable)
(mineral resource)
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
3. Measured plus indicated resources.
4. See accompanying footnote #2.
Tons
(000s)
Grade Ounces
(000s)
(oz/ton)
Tons
(000s)
Grade
(oz/ton)
Ounces
(000s)
65,476
30,705
108,253
21,247
83,632
29,322
1,077
2,619
4,071
4,827
2,685
573
34,795
5,511
2,963
670
–
–
30,111
8,694
27,865
15,573
51,592
12,116
–
63,672
24
540
0.095
0.077
0.039
0.035
0.033
0.035
0.191
0.298
0.155
0.127
0.126
0.204
0.054
0.067
0.131
0.206
–
–
0.267
0.282
0.080
0.114
0.039
0.030
–
0.042
0.458
0.193
26,494
3,501
0.008
0.001
6,221
2,361
4,195
737
2,764
1,034
206
781
632
614
338
117
1,866
368
387
138
–
–
8,040
2,453
2,226
1,781
1,994
360
–
2,681
11
104
201
2
75,372
27,369
108,843
23,211
65,280
37,191
2,987
2,451
5,861
6,326
2,805
1,345
4,034
2,507
1,669
977
–
1,232,986
22,963
14,472
28,997
13,025
50,036
28,910
–
60,186
135
500
0.084
0.071
0.040
0.033
0.034
0.032
0.135
0.275
0.142
0.124
0.127
0.192
0.157
0.166
0.140
0.289
–
0.008
0.342
0.154
0.089
0.082
0.043
0.033
–
0.043
0.348
0.160
6,366
1,933
4,394
766
2,209
1,187
402
675
832
786
357
258
635
417
234
282
–
9,506
7,857
2,230
2,575
1,064
2,154
947
–
2,572
47
80
173
37
0.306
0.351
53
13
3,730,506
1,859,007
0.038 140,248
0.045 83,007
3,701,312
2,966,243
0.038 139,931
0.027 80,399
165
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Gold Mineral Reserves1
As at December 31, 2012
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
Pierina
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Africa
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Tulawaka (51.73%)
Other
Total
Proven
Probable
Total
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
61,008
4,743
65,751
22,954
31,856
82,580
6,493
22,654
–
806
3,620
12,881
1,532
0.088
0.300
0.103
0.102
0.066
0.020
0.396
0.021
–
0.042
0.091
0.020
0.053
5,342
1,424
6,766
2,333
2,089
1,621
2,573
472
–
34
329
254
81
33,533
9,889
43,422
158,834
274,334
212,979
8,765
48,029
33,770
7,017
12,804
95,376
4,632
3,591
0.107
1,981
0.200
0.128
5,572
0.080 12,675
0.047 12,969
3,540
0.017
3,242
0.370
771
0.016
1,421
0.042
292
0.042
821
0.064
1,386
0.015
237
0.051
94,541
14,632
109,173
181,788
306,190
295,559
15,258
70,683
33,770
7,823
16,424
108,257
6,164
0.094
8,933
3,405
0.233
0.113 12,338
0.083 15,008
0.049 15,058
5,161
0.017
5,815
0.381
1,243
0.018
1,421
0.042
326
0.042
1,150
0.070
1,640
0.015
318
0.052
189,900
43,514
33,045
16,766
5,941
0.019
0.050
0.021
0.035
0.009
3,586
2,167
704
592
52
800,188
380,603
438,108
188,242
44,072
0.017 13,848
0.041 15,694
9,320
0.021
5,236
0.028
490
0.011
990,088
424,117
471,153
205,008
50,013
0.018 17,434
0.042 17,861
0.021 10,024
5,828
0.028
542
0.011
14,027
69,523
17,587
380
1,958
643
827
794
0.124
0.029
0.024
0.203
0.176
0.121
0.173
0.134
1,733
2,019
427
77
345
78
143
106
51,449
38,730
66,045
697
2,113
2,042
33,968
2,169
0.087
0.056
0.035
0.185
0.136
0.127
0.051
0.130
4,488
2,176
2,337
129
287
260
1,723
281
65,476
108,253
83,632
1,077
4,071
2,685
34,795
2,963
0.095
0.039
0.033
0.191
0.155
0.126
0.054
0.131
6,221
4,195
2,764
206
632
338
1,866
387
674
9,225
4,786
6
0.292
0.077
0.032
–
197
706
151
–
29,437
18,640
46,806
18
0.266
0.082
0.039
0.611
7,843
1,520
1,843
11
30,111
27,865
51,592
24
0.267
0.080
0.039
0.458
8,040
2,226
1,994
11
527
0.028
15
25,967
0.007
186
26,494
0.008
201
661,250
0.045 29,650
3,069,256
0.036 110,598
3,730,506
0.038 140,248
Copper Mineral Reserves1
As at December 31, 2012
Proven
Probable
Total
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
447,548
266,378
484
0.538
0.510
2.273
4,812
2,715
22
161,167
313,826
25,965
0.525
0.529
2.538
1,691
3,323
1,318
608,715
580,204
26,449
0.534
0.520
2.533
6,503
6,038
1,340
714,410
0.528
7,549
500,958
0.632
6,332
1,215,368
0.571 13,881
Based on attributable pounds
Zaldívar
Lumwana
Jabal Sayid
Total
1. See accompanying footnote #1.
166
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Gold Mineral Resources1,2
As at December 31, 2012
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Goldrush
Bald Mountain
Turquoise Ridge (75.00%)
Round Mountain (50.00%)
South Arturo (60.00%)
Ruby Hill
Hemlo
Marigold Mine (33.33%)
Golden Sunlight
Donlin Gold (50.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
Pierina
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic
Kanowna Belle
Darlot
Granny Smith
Lawlers
Africa
Bulyanhulu (73.90%)
North Mara (73.90%)
Buzwagi (73.90%)
Nyanzaga (73.90%)
Tulawaka (51.73%)
Other
Total
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Tons Grade
(oz/ton)
(000s)
Contained
ounces
(000s)
454
1,249
1,703
4,315
3,358
2,696
31,189
10,198
11,933
–
2,341
381
581
167
4,261
0.033
0.383
0.289
0.072
0.054
0.136
0.012
0.126
0.028
–
0.025
0.178
0.014
0.036
0.073
3,167
15
4,895
478
493
8,062
311 129,250
47,585
180
63,218
367
94,001
373
69,492
1,283
32,360
331
16,377
–
59 170,305
55,519
68
16,169
8
1,548
6
313 294,097
103
0.033
1,386
0.283
1,489
0.185
8,042
0.062
2,521
0.053
8,000
0.127
1,099
0.012
8,269
0.119
594
0.018
731
0.045
3,404
0.020
1,760
0.032
199
0.012
0.032
49
0.065 19,190
118
1,864
1,982
8,353
2,701
8,367
1,472
9,552
925
731
3,463
1,828
207
55
19,503
3,049 0.066
2,387 0.265
5,436 0.153
10,857 0.064
25,174 0.065
43,183 0.132
88,864 0.009
38,114 0.124
21,357 0.015
28,123 0.015
5,152 0.043
3,126 0.119
29,853 0.012
1,573 0.041
50,825 0.059
201
633
834
690
1,633
5,679
762
4,709
310
422
220
373
371
64
2,997
19,356
23,420
3,167
849
201
0.008
0.031
0.009
0.020
0.015
164 226,634
722 246,510
27,019
38,613
2,563
30
17
3
0.010
0.024
0.014
0.017
0.015
2,330
6,012
370
652
38
2,494
6,734
400
669
41
413,013 0.011
35,590 0.034
66,309 0.008
8,896 0.015
7,487 0.009
4,513
1,215
526
129
64
10,345
5,298
–
319
1,459
168
134
–
0.079
0.038
–
0.141
0.139
0.185
0.216
–
–
2,468
60
–
–
–
0.120
0.033
–
–
822
199
–
45
203
31
29
–
–
295
2
–
–
20,360
15,949
29,322
2,300
3,368
405
5,377
670
0.076
0.034
0.035
0.320
0.122
0.212
0.063
0.206
1,539
538
1,034
736
411
86
339
138
8,694
13,105
12,056
63,672
540
0.282
0.113
0.030
0.042
0.193
2,453
1,486
358
2,681
104
2,361
737
1,034
781
614
117
368
138
2,453
1,781
360
2,681
104
29,874 0.128
360 0.075
11,143 0.033
2,945 0.328
2,910 0.121
338 0.228
4,750 0.204
1,025 0.187
3,816
27
373
966
352
77
969
192
6,896 0.348
877 0.107
5,874 0.032
10,592 0.056
105 0.133
2,403
94
189
591
14
–
–
–
3,501
0.001
2
2
780 0.022
17
140,367
0.045
6,354 1,718,641
0.045 76,654
83,008
961,401 0.037 35,591
Copper Mineral Resources1,2
As at December 31, 2012
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Zaldívar
Lumwana
Jabal Sayid
Total
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons Grade
(%)
(000s)
Contained
lbs
(millions)
79,153
105,428
–
0.435
0.369
–
688
778
46,050
809,871
3,501
0.460
0.512
1.871
424
8,287
131
1,112
9,065
131
26,089 0.556
23,938 0.363
780 2.692
290
174
42
184,581
0.397
1,466
859,422
0.514
8,842
10,308
50,807 0.498
506
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
167
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Contained Silver Within Reported Gold Reserves1
For the year ended
December 31, 2012
In proven
gold reserves
In probable
gold reserves
Total
Based on attributable ounces
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Lagunas Norte
Veladero
Pierina
Africa
Bulyanhulu (73.90%)
Tons Grade
(oz/ton)
(000s)
Contained
ounces
(000s)
Tons Grade
(oz/ton)
(000s)
Contained
ounces
(000s)
Tons Grade
(oz/ton)
(000s)
Contained Process
ounces recovery
%
(000s)
22,954
0.75
17,179
158,834
0.48
76,619
181,788
0.52
93,798 87.2%
189,900
43,514
16,766
33,045
5,941
0.06
1.73
0.12
0.28
0.66
10,565
75,454
1,947
9,172
3,915
800,188
380,603
188,242
438,108
44,072
0.04
33,451
1.58 600,795
21,546
0.11
0.41 179,720
14,279
0.32
990,088
424,117
205,008
471,153
50,013
0.04
44,016 69.0%
1.59 676,249 81.6%
23,493 19.1%
0.11
0.40 188,892 5.9%
18,194 26.9%
0.36
674
0.20
134
29,437
0.23
6,904
30,111
0.23
7,038 67.2%
Total
312,794
0.38 118,366
2,039,484
0.46
933,314
2,352,278
0.45 1,051,680 65.5%
1. Silver is accounted for as a by-product credit against reported or projected gold production costs.
Contained Copper Within Reported Gold Reserves1
For the year ended
December 31, 2012
In proven
gold reserves
In probable
gold reserves
Total
Based on attributable pounds
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Africa
Bulyanhulu (73.90%)
Buzwagi (73.90%)
Tons Grade
(%)
(000s)
Contained
lbs
(millions)
Tons Grade
(%)
(000s)
Contained
lbs
(millions)
Tons Grade
(%)
(000s)
Contained
lbs
(millions)
Process
recovery
%
22,954 0.081
37.0
158,834 0.098
310.5
181,788 0.096
347.5
79.0%
189,900 0.190
43,514 0.096
721.3
83.7
800,188 0.226
380,603 0.075
3,613.3
574.4
990,088 0.219 4,334.6
658.1
424,117 0.078
87.4%
63.0%
674 0.326
4,786 0.074
4.4
7.1
29,437 0.526
46,806 0.107
309.7
99.9
30,111 0.522
51,592 0.104
314.1
107.0
93.6%
70.0%
Total
261,828 0.163
853.5
1,415,868 0.173
4,907.8
1,677,696 0.172 5,761.3
84.2%
1. Copper is accounted for as a by-product credit against reported or projected gold production costs.
168
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Contained Silver Within Reported Gold Resources1
For the year ended December 31, 2012
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable ounces
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Lagunas Norte
Veladero
Pierina
Africa
Bulyanhulu (73.90%)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
Contained
ounces
(000s)
Tons
(000s)
Contained
ounces
(000s)
Grade
(oz/ton)
4,315
0.44
1,913 129,250
0.34 44,566
46,479 10,857
0.42 4,535
19,356
23,420
849
3,167
201
0.04
720 226,634
0.71 16,708 246,510
38,613
76
0.09
27,019
429
0.14
2,563
49
0.24
0.03
7,257
0.68 168,459
2,370
0.06
0.39 10,454
566
0.22
7,977 413,013
185,167 35,590
8,896
10,883 66,309
7,487
2,446
615
0.03 12,594
0.45 16,055
371
0.04
0.34 22,478
0.29 2,150
–
–
–
8,694
0.24
2,066
2,066
6,648
0.30 1,979
Total
51,308
0.39 19,895 679,283
0.35 235,738
255,633 548,800
0.11 60,162
1. Resources which are not reserves do not have demonstrated economic viability.
Contained Copper Within Reported Gold Resources1
For the year ended December 31, 2012
In measured (M)
gold resources
In indicated (I)
gold resources
(M) + (I)
Inferred
Based on attributable pounds
North America
Pueblo Viejo (60.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Africa
Buzwagi (73.90%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Grade
Contained
lbs
(%) (millions)
4,315
0.12
10.3 129,250
0.091
235.7
246.0
10,857
0.075
16.2
19,356
23,420
0.126
0.061
48.7
28.7
226,634
246,510
0.161
0.053
730.5
261.0
779.2 413,013
35,590
289.7
0.191 1,580.1
33.7
0.047
60
0.08
0.1
12,056
0.083
20.0
20.1
5,874
0.076
8.9
Total
47,151
0.093
87.8
614,450
0.101 1,247.2
1,335.0 465,334
0.176 1,638.9
1. Resources which are not reserves do not have demonstrated economic viability.
Nickel Mineral Resources1
For the year ended December 31, 2012
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Africa
Kabanga (50.00%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Tons
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tons
(000s)
Grade
Contained
lbs
(%) (millions)
7,606
2.490
378.8
12,897
2.720
701.6
1,080.4
11,464
2.600 596.1
1. Resources which are not reserves do not have demonstrated economic viability.
169
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012
Mineral Reserves and Resources Notes
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2012 in accordance with National Instrument
43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7, (under the Securities and Exchange
Act of 1934), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting
purposes, approximately 1.98 million ounces of reserves at Pueblo Viejo (Barrick’s 60% interest) is classified as mineralized material. In addition, while the
terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the U.S. Securities and Exchange
Commission does not recognize such terms. Canadian standards differ significantly from the requirements of the U.S. Securities and Exchange Commission,
and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the
requirements of the U.S. Securities and Exchange Commission. U.S. investors should understand that “inferred” mineral resources have a great amount of
uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, U.S. investors are cautioned not to assume that
any part or all of Barrick’s mineral resources constitute or will be converted into reserves. Calculations have been prepared by employees of Barrick, its joint
venture partners or its joint venture operating companies, as applicable, under the supervision of Rick Sims, Senior Director, Resources and Reserves, of Barrick,
David Londono, Director, Open Pit Life-of-Mine Business Planning, of Barrick and Steven Haggarty, Senior Director, Metallurgy, of Barrick. Except as noted
below, reserves have been calculated using an assumed long-term average gold price of $US 1,500 per ounce, a silver price of $US 28.00 per ounce, a copper
price of $US 3.00 per pound and exchange rates of 1.0 $Can/$US and 1.00 $US/$Aus. Reserves at Round Mountain have been calculated using an assumed
long-term average gold price of $US 1,200. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying
cut-off grades have been used depending on the mine and type of ore contained in the reserves. Barrick’s normal data verification procedures have been
employed in connection with the calculations. Resources as at December 31, 2012 have been estimated using varying cut-off grades, depending on both the
type of mine or project, its maturity and ore types at each property. For a breakdown of reserves and resources by category and for a more detailed description
of the key assumptions, parameters and methods used in calculating Barrick’s reserves and resources, see Barrick’s most recent Annual Information Form/
Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
2. In connection with the write-down of the Company’s investment in Tethyan Copper Company (TCC), which holds the Company’s interest in the Reko Diq
project, the Company has removed the estimate of mineralized material associated with the Reko Diq project from its statement of resources for 2012.
For additional information regarding this matter, see pages 130–131 of this Annual Report 2012.
170
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation | Financial Report 2012 CORPORATE GOVERNANCE AND COMMITTEES OF THE BOARD
Corporate Governance and
Committees of the Board
Corporate Governance
Over the past several years, there has been an increased
focus on corporate governance in both the United States
and Canada. Among other regulatory initiatives, the
New York Stock Exchange added corporate governance
standards to its listing rules. Although, as a regulatory
matter, the vast majority of the NYSE corporate
governance standards are not directly applicable to
Barrick as a Canadian company, Barrick has implemented
a number of structures and procedures to comply with
the NYSE standards. There are no significant differences
between Barrick’s corporate governance practices and
the NYSE standards applicable to U.S. companies.
The Board of Directors has approved a set of
Corporate Governance Guidelines to promote the
effective functioning of the Board of Directors and
its Committees and to set forth a common set of
expectations as to how the Board should manage its
affairs and perform its responsibilities. Barrick has also
adopted a Code of Business Conduct and Ethics that is
applicable to all directors, officers and employees of
Barrick. In conjunction with the adoption of the Code,
Barrick established a toll-free compliance hotline to
allow for anonymous reporting of any suspected Code
violations, including concerns regarding accounting,
internal accounting controls or other auditing matters.
A copy of the Corporate Governance Guidelines, the
Code of Business Conduct and Ethics and the mandates
of the Board of Directors and each of the Committees
of the Board, including the Audit Committee, the
Compensation Committee and the Corporate
Governance and Nominating Committee, is posted
on Barrick’s website at www.barrick.com and is available
in print from the Company to any shareholder
upon request.
Committees of the Board
Audit Committee
(S.J. Shapiro, D.J. Carty, R.M. Franklin, D. Moyo)
Reviews the Company’s financial statements and
management’s discussion and analysis of financial and
operating results, and assists the Board in its oversight
of the integrity of Barrick’s financial reporting process
and the quality, transparency, and integrity of Barrick’s
financial statements and other relevant public disclosures,
the Company’s compliance with legal and regulatory
requirements relating to financial reporting, the external
auditors’ qualifications and independence, and the
performance of the internal and external auditors.
Compensation Committee
(J.B. Harvey, G.A. Cisneros, S.J. Shapiro)
Assists the Board in monitoring, reviewing and
approving Barrick’s compensation policies and practices,
and administering Barrick’s share compensation
plans. The Committee is responsible for reviewing and
recommending director and senior management
compensation and for succession planning with respect
to senior executives.
Corporate Governance and Nominating Committee
(R.M. Franklin, H.L. Beck, D. Moyo)
Assists the Board in establishing Barrick’s corporate
governance policies and practices. The Committee also
identifies individuals qualified to become members of
the Board and reviews the composition and functioning
of the Board and its Committees.
Corporate Responsibility Committee
(C.W.D. Birchall, D. Moyo, J.L. Thornton)
The Committee reviews corporate social responsibility,
environmental and health and safety policies and
programs, oversees the Company’s corporate social
responsibility, environmental and health and safety
performance, and monitors current and future
regulatory issues.
Finance Committee
(C.W.D. Birchall, H.L. Beck, A. Munk)
Reviews the Company’s financial structure and
investment and financial risk management programs.
Barrick Gold Corporation | Financial Report 2012 171
SHAREHOLDER INFORMATION
Shareholder Information
Common Shares
(millions)
Outstanding at December 31, 2012
Weighted average 2012
Basic
Fully diluted
1,001
1,001
1,001
The Company’s shares were split on a two-for-one basis
in 1987, 1989 and 1993.
Volume of Shares Traded
(millions)
NYSE
TSX
Closing Price of Shares
December 31, 2011
NYSE
TSX
2012
2011
647
720
774
781
US$33.71
C$34.82
Shares are traded on two stock exchanges
New York
Toronto
Ticker Symbol
ABX
Number of Registered Shareholders at
December 31, 2012
17,630
Index Listings
S&P/TSX Composite Index
S&P/TSX 60 Index
S&P/TSX Global Gold Index
S&P Global 1200 Index
Philadelphia Gold/Silver Index
NYSE Arca Gold Miners Index
Dow Jones Sustainability Index (DJSI) – North America
Dow Jones Sustainability Index (DJSI) – World
NASDAQ Global Sustainability Index
2012 Dividend per Share
US$0.75
Share Trading Information
New York Stock Exchange
Quarter
First
Second
Third
Fourth
Toronto Stock Exchange
Quarter
First
Second
Third
Fourth
Share Volume
(millions)
High
Low
2012
2011
2012
2011
2012
2011
145
180
175
147
647
198
200
227
149
774
Share Volume
(millions)
US$50.38
44.49
43.15
42.53
US$54.26
55.74
55.94
53.26
US$42.21
34.82
31.00
32.81
US$45.60
42.50
44.25
42.90
High
Low
2012
2011
2012
2011
2012
2011
177
185
195
163
720
187
190
216
188
781
C$50.33
44.75
42.08
41.73
C$52.85
53.11
55.36
54.05
C$42.19
35.11
31.18
32.43
C$45.57
42.06
43.25
44.09
172
Barrick Gold Corporation | Financial Report 2012
SHAREHOLDER INFORMATION
For information on such matters as share transfers,
dividend cheques and change of address, inquiries
should be directed to the Company’s Transfer Agents.
Transfer Agents and Registrars
CIBC Mellon Trust Company*
P.O. Box 700, Postal Station B
Montreal, Quebec, Canada H3B 3K3
or
American Stock Transfer & Trust Company, LLC
6201 – 15th Avenue
Brooklyn, NY, USA 11219
Tel: 1-800-387-0825
Toll-free throughout North America
Fax: 416-643-5501 or 1-888-249-6189
Email: inquiries@canstockta.com
Website: www.canstockta.com
* Effective November 2010, shareholder records are
maintained by Canadian Stock Transfer (“CST”) as
administrative agent for CIBC Mellon Trust Company.
Auditors
PricewaterhouseCoopers LLP
Toronto, Canada
Annual Meeting
The Annual Meeting of Shareholders will be held on
Wednesday, April 24, 2013 at 10:00 a.m. (Toronto time)
in the Metro Toronto Convention Centre, John Bassett
Theatre, 255 Front Street West, Toronto, Ontario.
Barrick Gold Corporation | Financial Report 2012 173
Dividend Policy
The Board of Directors reviews the dividend policy
quarterly based on the cash requirements of the
Company’s operating assets, exploration and
development activities, as well as potential acquisitions,
combined with the current and projected financial
position of the Company.
Dividend Payments
In 2012, the Company paid a cash dividend of
$0.75 per share – $0.15 on March 15, $0.20 on June 15,
$0.20 on September 17 and $0.20 on December 17.
A cash dividend of $0.51 per share was paid in 2011 –
$0.12 on March 15, $0.12 on June 15, $0.12 on
September 15 and $0.15 on December 15.
Form 40-F
The Company’s Annual Report on Form 40-F is filed
with the United States Securities and Exchange
Commission. This report is available on Barrick’s website
www.barrick.com and will be made available to
shareholders, without charge, upon written request to
the Secretary of the Company at the Corporate Office.
Other Language Reports
A Spanish version of this annual report is available
from Investor Relations at the Corporate Office and on
Barrick’s website www.barrick.com.
Shareholder Contacts
Shareholders are welcome to contact the Investor
Relations Department for general information on
the Company:
Gregory S. Panagos
Senior Vice President, Investor Relations
and Communications
Telephone: 416-309-2943
Email: gpanagos@barrick.com
Amy Schwalm
Vice President, Investor Relations
Telephone: 416-307-7422
Email: aschwalm@barrick.com
Susan Muir
Senior Director, Investor Relations
Telephone: 416-307-5107
Email: s.muir@barrick.com
BOARD OF DIRECTORS AND SENIOR OFFICERS
Board of Directors and
Senior Officers
Board of Directors
Howard L. Beck, Q.C.
Toronto, Ontario
Corporate Director
C. William D. Birchall
Toronto, Ontario
Vice Chairman,
Barrick Gold Corporation
Donald J. Carty, O.C.
Dallas, Texas
Chairman,
Porter Airlines Inc.,
Virgin America Airlines and
e-Rewards Inc.
Gustavo A. Cisneros
Santo Domingo,
Dominican Republic
Chairman, Cisneros Group
of Companies
Senior Officers
Peter Munk
Chairman
John L. Thornton
Co-Chairman
C. William D. Birchall
Vice Chairman
Jamie C. Sokalsky
President and
Chief Executive Officer
Robert M. Franklin
Toronto, Ontario
President,
Signalta Capital Corporation
J. Brett Harvey
Canonsburg, Pennsylvania
Chairman and
Chief Executive Officer,
CONSOL Energy Inc.
Dambisa Moyo
London, United Kingdom
International Economist
and Commentator
The Right Honourable
Brian Mulroney, P.C.
Montreal, Quebec
Senior Advisor,
Global Affairs,
Barrick Gold Corporation
Chairman,
Barrick International
Advisory Board
Senior Partner,
Norton Rose Canada LLP
Anthony Munk
Toronto, Ontario
Senior Managing Director,
Onex Corporation
Peter Munk, C.C.
Toronto, Ontario
Founder and Chairman,
Barrick Gold Corporation
Steven J. Shapiro
Houston, Texas
Corporate Director
Jamie C. Sokalsky
Toronto, Ontario
President and
Chief Executive Officer
Barrick Gold Corporation
John L. Thornton
Palm Beach, Florida
Co-Chairman
Barrick Gold Corporation
Professor and Director of the
Global Leadership Program,
Tsinghua University School of
Economics and Management
Kelvin P.M. Dushnisky
Senior Executive
Vice President
Robert L. Krcmarov
Senior Vice President,
Global Exploration
Donald D. Ritz
Senior Vice President,
Safety and Leadership
Ammar Al-Joundi
Executive Vice President
and Chief Financial Officer
Richard G. McCreary
Senior Vice President,
Corporate Development
Sybil E. Veenman
Senior Vice President and
General Counsel
Igor Gonzales
Executive Vice President
and Chief Operating Officer
Ivan J. Mullany
Senior Vice President,
Capital Projects
International Advisory Board
The International Advisory Board was established to provide advice to Barrick’s Board of Directors and management on geo-political
and other strategic issues affecting the Company.
Chairman
The Right Honourable
Brian Mulroney
Former Prime Minister
of Canada
Members
His Excellency
José María Aznar
Spain
The Honorable
John Ellis Bush
United States
Gustavo A. Cisneros
Dominican Republic
Secretary William S. Cohen
United States
Vernon E. Jordan, Jr.
United States
Andrónico Luksic
Chile
Lord Charles Powell of
Bayswater KCMG
United Kingdom
174
Barrick Gold Corporation | Financial Report 2012
FINANCIAL HIGHLIGHTS
REVENUE
(US dollars millions)
OPERATING CASH FLOW
ADJUSTED NET EARNINGS1
(US dollars millions)
(US dollars millions)
14,236 14,547
5,315
5,439
4,585
10,970
4,666
3,827
3,517
Barrick’s strategy is focused on maximizing risk-adjusted
returns and free cash flow to position the company to
return more capital to shareholders over time.
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Barrick reported record revenue and operating cash flow as well as strong adjusted net earnings in 2012
ANNUALIZED DIVIDEND2
(US cents per share)
80
60
48
GOLD RESERVES AND
RESOURCES3
(Ounces millions)
37
76
40
80
36
83
140
140
140
ALL-IN SUSTAINING
CASH COSTS1
(US dollars per ounce)
945
752
649
2010
2011
2012
2010
2011
2012
2010
2011
2012
0
0
Increased dividend 33% to
80 cents on an annualized basis
Replaced gold reserves
in 2012
Inferred Resources
M&I Resources
2P Reserves
A new measure that better
reflects the total costs of
producing gold
0
0
(In millions of US dollars, except per share data)
(Based on IFRS)
Revenues
Net earnings (loss)
per share
Adjusted net earnings1
per share1
Operating cash flow
Adjusted operating cash flow1
Adjusted EBITDA1
Cash and equivalents
Dividends paid per share
Annualized dividend per share2
Gold production (000s oz)
Average realized gold price per ounce1
All-in sustaining cash costs per ounce1
Total cash costs per ounce1
Copper production (M lbs)
Average realized copper price per pound1
C1 cash costs per pound1
C3 fully allocated costs per pound1
2012
2011
2010
$ 14,547
(665)
(0.66)
3,827
3.82
5,439
5,156
7,457
2,093
0.75
0.80
7,421
1,669
945
584
468
3.57
2.17
2.97
$
$
$
$
$
$
$ 14,236
4,484
4.49
4,666
4.67
5,315
5,680
8,611
2,745
0.51
0.60
7,676
1,578
752
460
451
3.82
1.71
2.30
$
$
$
$
$
$
$ 10,970
3,582
3.63
3,517
3.56
4,585
5,241
6,448
3,968
0.44
0.48
7,765
1,228
649
409
368
3.41
1.08
1.40
$
$
$
$
$
$
1. Non-GAAP financial measure – see pages 79–87 of the 2012 Financial Report.
2. Calculation based on annualizing the last dividend paid in the respective year.
3. See pages 163–170 of the 2012 Annual Report for additional information on Barrick’s reserves and resources.
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this Annual Report 2012, including any information as to our
strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements,
other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”,
“contemplate”, “target”, “plan”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions
identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from
those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and
forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); diminishing quantities
or grades of reserves; the impact of inflation; changes in national and local government legislation, taxation, controls, regulations,
expropriation or nationalization of property and political or economic developments in Canada, the United States and other
jurisdictions in which the Company does or may carry on business in the future; the impact of global liquidity and credit
availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; increased
costs, delays and technical challenges associated with the construction of capital projects; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from holding derivative instruments; risk of loss due to acts of war, terrorism,
sabotage and civil disturbances; business opportunities that may be presented to, or pursued by, the Company; our ability
to successfully integrate acquisitions or complete divestitures; operating or technical difficulties in connection with mining or
development activities; employee relations; availability and increased costs associated with mining inputs and labor; litigation;
the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits;
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 mineral exploration, development and mining, including environmental
hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion or copper cathode
losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties
and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied
in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are
not guarantees of future performance. All of the forward-looking statements made in this Annual Report 2012 are qualified
by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file
with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying
forward-looking statements.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by applicable law.
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Financial Highlights >
page 10
page 18
Driven
by Returns
Profitable production.
Focus on Free Cash Flow PAGE 8
World Class Assets PAGE 10
Adding Value Through Exploration PAGE 16
Corporate Responsibility PAGE 20
Ethical Business Practices PAGE 26
Barrick Gold Corporation
Annual Report 2012
www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Fax: 416 861-2492
Email: investors@barrick.com
barrick.com
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