Barrick Gold Corporation
Annual Report 2014
www.barrick.com
Barrick Gold Corporation
Head 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: investor@barrick.com
barrick.com
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FINANCIAL HIGHLIGHTS
(In millions of US dollars, except per share data)
2014
2013
2012
$ 10,239
(2,907)
(2.50)
793
0.68
2,296
2,699
0.20
0.20
6,249
1,265
598
864
436
3.03
1.92
2.43
$
$
$
$
$
$
$ 12,527
(10,366)
(10.14)
2,569
2.51
4,239
2,404
0.50
0.20
7,166
1,407
566
915
539
3.39
1.92
2.42
$
$
$
$
$
$
$ 14,394
(538)
(0.54)
3,954
3.95
5,983
2,097
0.75
0.80
7,421
1,669
563
1,014
468
3.57
2.05
2.85
$
$
$
$
$
$
(Based on IFRS)
Revenues
Net earnings (loss)
per share
Adjusted net earnings1
per share1
Operating cash flow
Cash and equivalents
Dividends paid per share
Annualized dividend per share2
Gold production (000s oz)
Average realized gold price per ounce1
Cash costs per ounce1, 3
All-in sustaining cash costs per ounce1
Copper production (Mlbs)
Average realized copper price per pound1
C1 cash costs per pound1
C3 fully allocated costs per pound1
1. Non-GAAP financial measure—see pages 75–84 of the 2014 Financial Report.
2. Calculation based on annualizing the last dividend paid in the respective year.
3. Unchanged from the measure previously referred to as adjusted operating costs.
Message from the Chairman
Message from the Co-Presidents
Board of Directors
Corporate Governance and Committees
of the Board
Executive Officers and Advisory Boards
Management’s Discussion and Analysis
Mineral Reserves and Resources
Financial Statements
Notes to Financial Statements
Shareholder Information
2
4
10
11
12
14
86
98
103
171
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference
in this Annual Report 2014, 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,
copper or certain other commodities (such as silver, diesel
fuel and electricity); changes in national and local government
legislation, taxation, controls or regulations and/or changes in
the administration of laws, policies and practices, expropriation
or nationalization of property and political or economic
developments in Canada, the United States, Zambia and other
jurisdictions in which the Company does or may carry on
business in the future; failure to comply with environmental
and health and safety laws and regulations; timing of receipt
of, or failure to comply with, necessary permits and approvals;
diminishing quantities or grades of reserves; increased costs,
delays, suspensions and technical challenges associated with
the construction of capital projects; 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; adverse changes in our credit rating; the impact of
inflation; operating or technical difficulties in connection with
mining or development activities; the speculative nature of
mineral exploration and development; risk of loss due to acts
of war, terrorism, sabotage and civil disturbances; fluctuations
in the currency markets; changes in U.S. dollar interest rates;
risks arising from holding derivative instruments; litigation;
contests over title to properties, particularly title to undeveloped
properties, or over access to water, power and other required
infrastructure; business opportunities that may be presented to,
or pursued by, the Company; our ability to successfully integrate
acquisitions or complete divestitures; employee relations;
availability and increased costs associated with mining inputs
and labor; 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, copper cathode or gold or copper concentrate
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 2014 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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O
Barrick became the world’s leading gold producer through
a strong partnership culture, an entrepreneurial
spirit, and a conservative financial strategy. We are
recovering these principles to deliver the full value of our
distinctive profile: a high-quality portfolio, attractive
growth prospects, the lowest costs of our peers,
and outstanding talent. We are committed to growing
free cash flow per share and improving returns—our
prime obligations to you—and we are pursuing them
with single-minded intensity.
From left:
James Gowans, Co-President
Kelvin Dushnisky, Co-President
MESSAGE FROM THE CHAIRMAN
Peter Munk grew Barrick from a startup
to the world’s largest gold miner in under
three decades.
He did so by a relentless commitment to certain
basic principles: focus on gold; find the best people
to run the mines and get out of the way; measure
success by free cash flow per share; invest that cash
flow with a mixture of boldness and prudence in
order to grow the per share value of the Company
and not just its size; keep the balance sheet
strong; demand excellence and inspire passion at
every level. As Peter wrote in his letter to you in
1992, Barrick creates wealth for its shareholders
through its disciplined commitment to simple
business principles: “entrepreneurial management,
conservative financial strategies, efficient mining
operations, and a clear focus on profitability.”
These are the principles we have in mind when
we say we are taking Barrick “back to the future.”
We are recovering what made Barrick so successful,
and we are suiting these principles to contemporary
circumstances.
We are putting a renewed emphasis on talent.
We elevated our human resources function from
what was essentially a staff support role to a central
place on our Executive Team. We also attracted
12 new leaders who personify the Company’s
original values and bring vital skills and experience
that support our business objectives.
We are returning to the model where our people
are owners. We recently extended our partnership
plan to 35 leaders, from mine managers and country
directors to technical experts in the field, and other
senior leaders at our head office. Each year, they
will be graded on their collective performance as
measured against a transparent long-term scorecard
disclosed to you in advance. A significant portion
of their total compensation, if earned, will be long
term in nature, awarded in units that convert into
Barrick common shares, which cannot be sold until
they retire or leave the Company. The interests of
management and the interests of owners are now
one and the same.
The partnership plan is part of a broader effort
to recover Barrick’s distinctive partnership culture.
In Barrick’s early years, Peter led a small group of
exceptional people who worked together as a team.
They knew each other intimately, and they trusted
each other completely. They shared responsibility
and accountability for the Company’s success and
for its setbacks.
It was this principle of partnership that motivated
our decision to have two Co-Presidents. Often in
the mining industry, the license-to-operate people
and the operations team work independently of one
another. Our new approach gives shared responsibility
and accountability to the head of operations and the
head of corporate affairs, which means they each
have a stake in the other’s success. The approach is
working just as planned.
We are bringing the same partnership
approach to our relationships with governments
and communities. Partnership means that we do
not negotiate solely with our own interests in mind.
Rather we make certain that our partners get a
good and fair deal, both for the present and the
long-term future. In the short term, that can result
in the revenue split being slightly less favorable for
us, but in the long term, it means that governments
will want to work with us, giving us a strong
competitive advantage.
Our partnership culture also underpins our return
to the decentralized model that first made Barrick so
successful: our executives and our mine managers
work closely together but do not interfere with each
other. We have therefore reduced our head office
by almost 50 percent, and we have eliminated all
management layers between Toronto and our mines.
Free from bureaucracy and middle management, our
operational leaders are now focused on maximizing
2
Barrick Gold Corporation | Annual Report 2014
free cash flow per share. That has left the head
office free to focus on allocating that cash flow
to maximize shareholder value.
We take heart in the fact that the most successful
businesses in history have all shared this operating
model. As he outlines in his book The Outsiders,
private equity investor William Thorndike identified
exactly eight CEOs who beat the performance
record of Jack Welch—people like Henry Singleton,
Katharine Graham, and Warren Buffett. As Thorndike
discovered, these CEOs all ran their businesses
according to the same uncommon principles, the
most important of which is decentralization. As
Thorndike writes, “There is a fundamental humility
to decentralization, an admission that headquarters
does not have all the answers and that much of
the real value is created by local managers in the
field.” Or as Buffett likes to say: “Hire well, manage
little.” With operations creating consistent free cash
flow as they see fit, the head office can be small
and focus on allocating capital, both financial and
human, to generate maximum per share value. This
implies rigorous commitment to hurdle rates, and a
willingness to buy back shares when they present
a more attractive investment than acquisitions or
expansion of existing operations.
With these principles in mind, Barrick’s head
office will now be focused almost exclusively on
the allocation of people and money. Our focus is
gold—we have no plans to diversify into other metals,
and we have no plans to add to our existing copper
position. We will focus our investments in our core
regions. This means high-quality, long-life assets in
attractive jurisdictions. We expect our portfolio to
deliver a 10 to 15 percent return on invested capital
through the metal price cycle and, as such, we will
assess any individual project against our hurdle rate
of 15 percent. We will defer, cancel, or sell projects
that cannot achieve this target. In time, investments
in new projects will compete with acquisitions and
share buybacks, along with our objective of paying
a dividend to our owners.
Finally, we are restoring our balance sheet to
a position of strength. We plan to reduce our debt
by at least $3 billion this year. We will do so by
selling mines, engaging in joint ventures and other
partnership arrangements, and using free cash flow.
In his penultimate year as Chairman, Peter
distilled the distinctive vision that drove Barrick’s
success: “Right from the beginning, we ran our
Company with extraordinary executives with a good
business sense and put our mines in the hands of
experienced miners who were the best in their field.
Although we all worked closely together, the business
people didn’t interfere with the mine operations, and
the mine managers didn’t interfere with the business
strategy. In this way, we became a unique entity
that blended entrepreneurial verve, unconventional
thinking, and operational excellence, with everything
united by a passionate commitment to success.”
We are working tirelessly to give these values a new
expression, one that lives up to the distinctive history
that Peter laid down.
We recognize we are only at the beginning
of this journey, and the initiatives we are outlining are
foundational. In many ways, the real work begins now,
and we know we will be measured against how well
we execute. But we see enormous inherent value in
our Company, and as your fellow shareholders, we are
determined to realize that value in the years to come.
John L. Thornton
Chairman
Barrick Gold Corporation | Annual Report 2014
3
MESSAGE FROM THE CO-PRESIDENTS
Last year was one of fundamental change
at Barrick that, for all its challenges, gave us
renewed optimism for the future.
We began restoring the focus, discipline, and
drive that accounted for Barrick’s initial success.
We revitalized our operating structure, refreshed
our talent, refocused our portfolio, lowered costs,
improved safety, and pushed innovation.
The new Co-President structure is part of a
broader shift to our original partnership culture—
the key element that made Barrick the gold industry
leader. We have always collaborated closely with
our host communities and governments, and
worked to make a positive difference wherever we
operate. Yet, more than ever, our license to operate
plays a vital role in the success of our business, and
the new management structure recognizes that.
Our equal responsibility and shared accountability
ensure that we coordinate our efforts in a
proactive, efficient and strategic way.
The new model is working just as we
expected. We make decisions faster and more
effectively; we do not duplicate our efforts,
nor do we work at cross-purposes. Our skills are
complementary, and we find our collaboration
stimulating and rewarding. Naturally there are
times when we disagree—something we regard
as valuable: lively debate challenges our thinking
and prompts us to seek out other points of view
both within the Company and outside it. Invariably,
we appreciate the other’s perspective and almost
always arrive at a consensus quickly.
We have also rejuvenated our executive
leadership, adding a number of extraordinary
individuals who bring diverse backgrounds, new
skills and fresh energy. As part of our return
to a lean, decentralized operating model, we
have shrunk our head office by close to half and
eliminated all middle management between it and
the mines. As a result, our head office has been
freed up to focus on allocating capital and setting
strategy, while our mine managers and country
directors have full autonomy to run their businesses
as they see fit in order to maximize free cash flow
and maintain their license to operate.
We had a strong operating year in 2014.
At $864 per ounce, our 2014 all-in sustaining
costs (AISC) came in well below guidance and
about $100 per ounce below our peer average—
“ 2014 was a transformative year for Barrick
in which we refocused the Company on
the key drivers to maximize free cash flow
and improve shareholder returns.”
Kelvin Dushnisky, Co-President
4
Barrick Gold Corporation | Annual Report 2014
achieved while recording the best safety year in
our history and earning the top industry rank in
the Dow Jones Sustainability World Index. This
year, we expect our AISC to be in the range of
$860 to $895 per ounce, the lowest among
senior producers.
Our portfolio offers exceptional leverage to
higher gold prices, underpinned by our five core
mines in the Americas—Cortez, Goldstrike, Pueblo
Viejo, Lagunas Norte and Veladero. Together,
those operations accounted for 60 percent of our
2014 production at AISC of just $716 per ounce.
We expect them to contribute a similar level of
production in 2015 at AISC of $725 to $775 per
ounce, significantly below average industry costs
and current gold prices. At two grams per tonne,
these mines also have an average reserve grade
more than double that of our peer group.
Our mine operators are also identifying
opportunities to realize substantially more value
The new thiosulfate circuit at Goldstrike
poured first gold (pictured here) in
November and is ramping up towards
full production in 2015. This patented
processing method—which does not use
cyanide—will accelerate the cash flow
from four million stockpiled ounces.
from our properties and to extend their lives.
At the Cortez mine in Nevada, for instance, we
will complete a prefeasibility study later this year
for expanded underground mining below existing
permitted levels. Drilling indicates that this zone
is oxide in nature and higher grade than the areas
of current underground mining, and its limits have
not yet been defined.
At Pueblo Viejo in the Dominican Republic,
we are increasing throughput by optimizing ore
blending and autoclave availability. At Veladero
“ Our five core mines in the Americas provide
us with an unparalleled platform to drive
profitable growth. We are advancing our
Nevada project pipeline with four new
studies in 2015.”
James Gowans, Co-President
Barrick Gold Corporation | Annual Report 2014
5
Goldstrike’s thiosulfate circuit
is the only commercial use of
this innovative technology for
gold processing in the world.
in Argentina, we are reducing costs by improving
the efficiency and effectiveness of inventory
management and maintenance. At Lagunas Norte
in Peru, we are evaluating a plan to significantly
extend the mine’s life by mining refractory ore
below the current oxide ore body.
We are continuing to drive innovation in
order to unlock the full value of our assets.
A prime example of this is playing out at our
Goldstrike mine in Nevada, where last November
we produced first gold from our patented
thiosulfate circuit. The TCM process, as we refer
to it, does not use cyanide and will accelerate
production of about four million ounces. It is
the only commercial use of this technology for
gold processing in the world.
Beyond these opportunities at our core
mines, we have a number of promising growth
prospects in Nevada and the Andes—both
regions where we maintain a strong competitive
advantage due to our operational experience,
existing infrastructure, technical and exploration
expertise, and established partnerships with
communities and governments.
This year we will complete four prefeasibility
studies on projects in Nevada, including the study
at Cortez, that could begin generating significant
new production within the next five years.
At Turquoise Ridge, we completed a
prefeasibility study in early 2015 on installing an
additional shaft that could accelerate one million
ounces of production. This would roughly double
total output—on a 100 percent basis—to an
average of 500,000 ounces per year at AISC of
$625 to $675 per ounce in the first full eight years.
Turquoise Ridge has a reserve grade of 17 grams
per tonne, among the highest in the industry,
making the operation a potential future core mine
in a great region.
Our Goldrush discovery, located six kilometers
from the Cortez mine, is one of the largest
gold discoveries of the last decade. At the end
of 2014, measured and indicated resources stood
at 10.6 million ounces and inferred resources
were 4.9 million ounces. We remain on schedule
to share prefeasibility findings with our third
quarter 2015 results.
The Goldrush discovery is a prime example
of Barrick’s exploration success. Since 1990,
6
Barrick Gold Corporation | Annual Report 2014
we have spent approximately $3.3 billion on
exploration, which has resulted in the discovery
of approximately 131 million ounces of reserves,
or more than 90 percent of the 142 million ounces
that we have produced over the same period.
Our average finding cost of $25 per ounce over
this period is about half the industry average.
We hold extensive land positions on many of the
world’s most prospective trends and are optimistic
that we will continue to convert prospects
into significant discoveries and ultimately into
profitable production.
The fourth prefeasibility study will define the
initial parameters of our 75-percent owned Spring
Valley project in late 2015. Located approximately
120 kilometers west of Cortez, Spring Valley is a
low capital cost, heap leach project with excellent
potential to become another standalone mine
in Nevada.
In addition to these near-mine opportunities,
we have a number of the world’s largest
undeveloped gold deposits, including Pascua-Lama.
MESSAGE FROM THE CO-PRESIDENTS
Geologist Wesley Perrin examines drill core from
the Goldrush deposit near the Cortez mine in
Nevada. One of the largest discoveries of the last
decade, Goldrush contains 10.6 million ounces of
measured and indicated resources and 4.9 million
ounces of inferred resources. The limits of the
deposit have not yet been defined.
Located on the border of Chile and Argentina,
Pascua-Lama has the potential to generate
significant free cash flow over a 25-year mine
life. We are well aware of its challenges and have
acknowledged the issues that led to its suspension.
A decision to resume development will ultimately
depend on improved economics.
Barrick’s Executive Team is committed
to restoring the Company’s original values,
including a strong balance sheet. The
Company intends to reduce its debt by
at least $3 billion in 2015.
Left to right:
Shaun Usmar, Senior Executive Vice President and CFO
Darian Rich, Executive Vice President, Talent Management
Kevin Thomson, Senior Executive Vice President, Strategic Matters
Richard Williams, Chief of Staff
Barrick Gold Corporation | Annual Report 2014
7
all investments align with our strategic focus and
contribute to maximizing free cash flow in pursuit of
industry-leading returns. Existing mines will compete
for capital, and we will not subsidize loss-makers.
At $2.2 billion, our capital expenditures
came in below our original 2014 guidance range,
and we expect a further drop this year. We
are also taking steps to improve procurement
efficiency and supply chain practices, which will
free up working capital by reducing inventories.
We expect to generate additional cash flow
through improved integration of site maintenance
programs and our global procurement and
logistics system.
No priority is more important than restoring
a strong balance sheet. We intend to reduce our
debt by a minimum of $3 billion in 2015 through
disciplined non-core asset sales, maximizing
MESSAGE FROM THE CO-PRESIDENTS
Barrick’s Water Conservation Standard ensures
we protect local water systems. The Company
has developed a patented flotation technology
that uses seawater, reducing demand on scarce
fresh water resources.
Last year we hired Sergio Fuentes as Pascua-Lama’s
new Executive Director. Sergio has 30 years of
experience managing complex high-altitude
construction projects in Chile. He and his team
are working to address legal and regulatory issues
in Chile as expeditiously as possible and are
also defining a new plan to optimize remaining
construction activities. We will consider resuming
construction only if the plan aligns with our capital
allocation objectives and provides a minimum
return on invested capital of 15 percent on the
remaining capital spend.
This is the type of rigor that we are now
applying to all of our mines and projects. Our new
approach to capital allocation demands that
Barrick’s 2014 safety performance was the
best in its history. Our Turquoise Ridge mine
in Nevada (pictured) achieved the year’s best
small mine safety record. Turquoise Ridge has
strong potential to become a core mine by
adding a second shaft, which would double
production at low AISC.
8
Barrick Gold Corporation | Annual Report 2014
The Lagunas Norte mine in Peru is
one of the five core operations that
contributed 60 percent of Barrick’s
production in 2014 at average all-in
sustaining costs of $716 per ounce.
While our recent setbacks have been
challenging, we have learned from our mistakes
and reconnected with our core identity. Most
importantly, we are rebuilding a partnership culture
at Barrick, one that promotes the key values that
drove our initial success: trust and transparency,
efficiency and accountability, collaboration and the
relentless pursuit of excellence. We are restoring
the culture and returning to a strategy that will
once again maximize wealth for our shareholders
and the communities with which we partner.
Kelvin Dushnisky
Co-President
James Gowans
Co-President
free cash flow, and joint ventures or strategic
partnerships where they make sense. We will
move forward with asset sales only if the terms
are favorable to our shareholders.
Our strong liquidity allows us to tackle our
debt in a disciplined manner. We ended 2014
with $2.7 billion of cash and an additional
$4 billion available on our fully undrawn credit
facility. Our debt repayment schedule is modest,
with less than $1 billion due through 2017.
We continue to calculate our reserves
using a conservative assumption of $1,100 per
ounce. This is below the Company’s gold price
outlook and current spot prices, and underscores
Barrick’s determination to maximize free cash
flow and shareholder returns. We closed 2014
with reserves of 93 million ounces, down from
104 million ounces in 2013. Approximately
two-thirds of the reduction was due to ounces
processed last year, with the balance reflecting
divestitures. Our exploration efforts are primarily
focused on near-mine opportunities in our core
regions and we see good potential to convert
a significant portion of resources at our Nevada
prefeasibility projects into reserves in 2015.
Barrick Gold Corporation | Annual Report 2014
9
BOARD OF DIRECTORS
Board of Directors
C. William D. Birchall
Non-Independent
Toronto, Ontario
Vice Chairman,
Barrick Gold Corporation
(Finance and Management, Metals
and Mining, International Business)
Gustavo A. Cisneros
Independent
Santo Domingo, Dominican Republic
Chairman,
Cisneros Group of Companies
(Latin America, International
Business, Media and Entertainment,
Consumer Products)
J. Michael Evans
Independent
New York, New York
Corporate Director
(Finance and Management, Asia,
International Business, Equity
Capital Markets)
Ned Goodman
Independent
Toronto, Ontario
Founder,
Dundee Corporation
(Finance and Acquisitions, Metals
and Mining, International Business)
C. David Naylor
Independent
Toronto, Ontario
Professor of Medicine and
President Emeritus,
University of Toronto
(Administration and Management,
Research and Development,
Quantitative Analysis, Education,
Public Policy)
Steven J. Shapiro
Independent
Silverthorne, Colorado
Corporate Director
(Oil and Gas, Finance and
Management)
John L. Thornton
Non-Independent
Palm Beach, Florida
Chairman,
Barrick Gold Corporation
(Finance and Management, China,
International Business)
Ernie L. Thrasher
Independent
Latrobe, Pennsylvania
Chief Executive Officer and
Chief Marketing Officer,
Xcoal Energy & Resources
(Metals and Mining, Coal,
International Business)
Brian L. Greenspun
Independent
Henderson, Nevada
Publisher and Editor,
Las Vegas Sun and Chairman and
Chief Executive Officer,
Greenspun Media Group
(Business and Management,
Nevada, Media and Entertainment)
J. Brett Harvey
Independent
Canonsburg, Pennsylvania
Chairman,
CONSOL Energy Inc.
(Metals and Mining, Coal, Oil and
Gas, Environment, Finance and
Management)
Nancy H.O. Lockhart
Independent
Toronto, Ontario
Corporate Director
(Administration and Management,
Consumer Products)
Dambisa Moyo
Independent
London, England
International Economist and
Commentator
(African Region, Corporate Social
Responsibility, Finance and
Management)
Anthony Munk
Non-Independent
Toronto, Ontario
Senior Managing Director,
Onex Corporation
(Finance and Acquisitions)
Left to right: C. William D. Birchall, Ernie L. Thrasher, J. Michael Evans, Brian L. Greenspun, Dambisa Moyo, C. David Naylor,
Steven J. Shapiro, Nancy H.O. Lockhart, J. Brett Harvey, Gustavo A. Cisneros, Ned Goodman, John L. Thornton, Anthony Munk.
10
CORPORATE GOVERNANCE AND COMMITTEES OF THE BOARD
Corporate Governance
Our Board is committed to acting in the best interests
of the Company and its shareholders. Sound corporate
governance practices contribute to achieving our
strategic and operational plans, goals and objectives.
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 compliance hotline to allow for
anonymous reporting by telephone or Internet portal
of any suspected Code violations, including concerns
Committees of the Board
Audit Committee
(S.J. Shapiro, D. Moyo, C.D. Naylor, E.L. Thrasher)
Assists the Board in its oversight 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 internal
controls over financial reporting, 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, E.L. Thrasher)
Assists the Board in designing Barrick’s compensation
policies and practices and administering Barrick’s share
compensation plans. The Committee is responsible for
reviewing and recommending director and executive
compensation.
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/
company/governance and is available in print from the
Company to any shareholder upon request.
Mr. J.B. Harvey is Barrick’s Lead Director. The Lead
Director facilitates the functioning of the Board independently
from management, serves as an independent leadership
contact for directors and executive officers, and assists in
maintaining and enhancing the quality of the Company’s
corporate governance.
Corporate Governance and Nominating Committee
(G.A. Cisneros, N.H.O. Lockhart, B.L. Greenspun, D. Moyo)
Assists the Board with establishing Barrick’s corporate
governance policies and practices, identifying individuals
qualified to become members of the Board, reviewing
the composition and functioning of the Board and its
Committees, and succession planning for senior executives.
Corporate Responsibility Committee
(N.H.O. Lockhart, C.W.D. Birchall, B.L. Greenspun,
E.L. Thrasher)
Assists the Board in overseeing Barrick’s programs and
performance relating to environmental, health and safety,
corporate social responsibility and human rights matters.
Risk Committee
(J.M. Evans, C.W.D. Birchall, D. Moyo, A. Munk,
C.D. Naylor)
Assists the Board in overseeing the Company’s management
of enterprise risks and monitoring and reviewing the
Company’s financial structure and investment and financial
risk management programs.
EXECUTIVE OFFICERS AND ADVISORY BOARDS
Executive Officers
John L. Thornton
Chairman
C. William D. Birchall
Vice Chairman
Kelvin P.M. Dushnisky
Co-President
James K. Gowans
Co-President
Kevin J. Thomson
Senior Executive
Vice President,
Strategic Matters
Shaun A. Usmar
Senior Executive
Vice President and
Chief Financial Officer
Darian K. Rich
Executive Vice President,
Talent Management
Richard J.E. Williams
Chief of Staff
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
Canada
Prime Minister 1984-1993
Members
His Excellency
José María Aznar
Spain
Prime Minister 1996-2004
The Honourable
John R. Baird
Canada
Minister of Foreign Affairs
2011-2015
Gustavo A. Cisneros
Dominican Republic
Chairman, Cisneros Group
of Companies
Secretary
William S. Cohen
United States
Senator 1979-1997 and
Secretary of Defense
1997-2001
The Honorable
Newt Gingrich
United States
Speaker of the House of
Representatives 1995-1999
The Honourable
Karl-Theodor
zu Guttenberg
Germany
Federal Minister of Defense
2009-2011
Vernon E. Jordan, Jr.
United States
Senior Counsel, Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
Andrónico Luksic
Chile
Vice Chairman,
Banco de Chile
Peter Munk
Canada
Founder and Chairman
Emeritus, Barrick Gold
Corporation
Lord Charles Powell
of Bayswater KCMG
United Kingdom
Foreign Policy Advisor to
Prime Minister Margaret
Thatcher 1983-1991
John L. Thornton
United States
Chairman, Barrick Gold
Corporation
Corporate Social Responsibility Advisory Board
Barrick’s Corporate Social Responsibility Advisory Board was formed in 2012 and acts as an external sounding board on a range
of corporate responsibility issues, including community relations, sustainable development, water, energy, climate change,
security and human rights.
Members
Aron Cramer
San Francisco, California
President and
Chief Executive Officer,
Business for Social
Responsibility (BSR)
Gare A. Smith
Washington, DC
Partner, Foley Hoag, LLP
Chair, Corporate Social
Responsibility and
Federal Affairs Practice
at Foley Hoag, LLP
Robert Fowler
Ottawa, Ontario
Senior Fellow at the
University of Ottawa’s
Graduate School of Public
and International Affairs
Canadian Diplomat
Canadian ambassador
to Italy 2000-2006
Canadian ambassador
to the United Nations
1995-2000
Special Consultant
John G. Ruggie
Cambridge, Massachusetts
Berthold Beitz Professor
in Human Rights and
International Affairs,
Kennedy School of
Government
Affiliated Professor
in International
Legal Studies,
Harvard Law School
12
Barrick Gold Corporation | Annual Report 2014
Financial Report
Management’s Discussion and Analysis
Mineral Reserves and Resources
Financial Statements
Notes to Financial Statements
Shareholder Information
14
86
98
103
171
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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 18, 2015, should be read
in conjunction with our audited consolidated financial
statements for the year ended December 31, 2014.
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 85.
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, copper or certain other
commodities (such as silver, diesel fuel and electricity);
changes in national and local government legislation,
taxation, controls or regulations and/or changes in the
administration of laws, policies and practices, expropriation
or nationalization of property and political or economic
developments in Canada, the United States, Zambia and
other jurisdictions in which the Company does or may
carry on business in the future; failure to comply with
environmental and health and safety laws and regulations;
timing of receipt of, or failure to comply with, necessary
permits and approvals; diminishing quantities or grades
of reserves; increased costs, delays, suspensions and
technical challenges associated with the construction of
capital projects; 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; adverse changes in our credit rating; the impact of
inflation; operating or technical difficulties in connection
with mining or development activities; the speculative
nature of mineral exploration and development; risk of
loss due to acts of war, terrorism, sabotage and civil
14
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS disturbances; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from
holding derivative instruments; litigation; contests over
title to properties, particularly title to undeveloped
properties, or over access to water, power and other
required infrastructure; business opportunities that
may be presented to, or pursued by, the Company; our
ability to successfully integrate acquisitions or complete
divestitures; employee relations; availability and increased
costs associated with mining inputs and labor; 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, copper cathode or gold or copper concentrate
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.
Index
16 Overview
16 Our Business and Strategy
19 Risks to Achieving our Strategy
21 Review of 2014 Results
25 Key Business Developments
28 Outlook for 2015
33 Market Overview
38 Review of Annual Financial Results
Production Costs
Exploration and Project Costs
38 Revenue
38
39 General & Administrative Expenses
39 Other Expense (Income)
39
40 Capital Expenditures
40
40
41
41 Operating Segments Performance
Finance Cost/Finance Income
Impairment Charges/Reversals
Income Tax Expense
63 Financial Condition Review
Shareholders’ Equity
63 Balance Sheet Review
63
63 Comprehensive Income
64
Financial Position and Liquidity
Summary of Financial Instruments
66
66 Commitments and Contingencies
67
Internal Control over Financial Reporting and
Disclosure Controls and Procedures
68 Review of Quarterly Results
69
IFRS Critical Accounting Policies and
Accounting Estimates
75 Non-GAAP Financial Performance Measures
85 Glossary of Technical Terms
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15
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Overview
Our Business and Strategy
Our Business
Barrick is one the world’s leading gold mining companies
with annual gold production and gold reserves that are
the largest in the industry. 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 have 14 producing gold mines, located
in Canada, the United States, Peru, Argentina, Australia,
the Dominican Republic and Papua New Guinea. We
also hold a 63.9% equity interest in Acacia Mining plc
(“Acacia”), formerly African Barrick Gold plc, a company
listed on the London Stock Exchange that owns gold
mines and exploration properties in Africa. Our copper
business contains copper mines located in Chile and
Zambia and a mine progressing through operational
readiness located in Saudi Arabia. We also have projects
located in South America and the United States. 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.
2014 REVENUE BY METAL ($ millions)
Gold $8,744
Copper $1,224
Other
2014 GOLD PRODUCTION BY REGION (millions of ounces)
North America 2.66
Latin America 1.99
Other 1.60
16
Our Strategy
Barrick’s strategy is anchored in five pillars:
n An entrepreneurial structure;
n Our balance sheet and financial flexibility;
n Maximizing free cash flow;
n A focus on our best assets and regions; and
n Profitable growth in the Americas.
Entrepreneurial Structure
Barrick became the world’s leading gold company by
pursuing its founding purpose: the generation of wealth
for its owners, employees, and the communities with
which it partners. Those who founded and first led the
company were committed to a culture of partnership
and the values underpinning such a culture: trust,
transparency, shared responsibility and accountability,
and a sense of emotional and financial ownership.
A small head office managed the company with a
balance of entrepreneurialism and prudence, focusing on
only a few core activities: defining and implementing
strategy, allocating human and financial capital, and
fulfilling the obligations required of a public company.
Leaders at the operational level had greater autonomy,
responsibility, and accountability, functioning as business
owners. Free from bureaucracy and middle management,
they focused on maximizing free cash flow, and the head
office focused on allocating that cash flow to maximize
shareholder returns.
We have cut our head office by close to half and
eliminated all management layers between Toronto
and the mines. What remains are shared service centers
in the field that provide support directly to our mines
and projects, with costs charged directly to the
relevant operation.
Along with managing financial capital, managing
our talent is a central responsibility of Barrick’s leaders.
Attracting, retaining and developing exceptional people
are a fundamental component of our partnership
culture. Accordingly, we have extended our innovative
partnership plan to 35 leaders across the business.
Each year, these leaders will be graded on their collective
performance, as measured against a transparent long-
term scorecard disclosed to shareholders in advance.
A significant portion of their total compensation, if
earned, will be long-term in nature, awarded in units
that convert into Barrick common shares which cannot
be sold until an individual retires or leaves the company.
A smaller proportion of total compensation, if earned,
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS will be in the form of annual bonuses, determined
for each individual based on a personal scorecard tailored
to the individual’s specific responsibilities. This plan
increases financial and emotional ownership among
our senior leaders, and will deepen to include new
partners over time.
Restoring a Strong Balance Sheet
For many years, Barrick had the only A-rated balance
sheet in the gold industry. Prudent financial management
was a bedrock principle of the company. Our current
level of debt is inconsistent with that principle, and that
inconsistency is reflected in the company’s share price.
As we return to our original values, no priority is more
important than restoring a strong balance sheet.
We are targeting to reduce our net debt by at least
$3 billion by the end of 2015. The company has a
number of options to achieve this goal, including the
following levers:
n Maximizing free cash flow by implementing a leaner,
decentralized operating model with more efficient
capital spending, reduced general and administrative
(“G&A”) costs, and profitable growth;
n Disposal of non-core assets, beginning with a process
to sell the Porgera Joint Venture and Cowal mine;
n Joint ventures and strategic partnerships if and where
they make sense.
Our strong liquidity means the company can tackle its
debt in a disciplined manner. We have less than $1 billion
in debt due over the next three years, a $4 billion
undrawn credit facility, and $2.7 billion in cash at the
end of 2014.
Maximizing Free Cash Flow
A return to the lean, decentralized operating model that
underpinned Barrick’s early success is freeing up our
country and mine managers to focus on maximizing free
cash flow across the business.
As part of this transformation, we expect to
realize $30 million in savings from reduced general and
administrative expenditures and overhead costs in
2015. These savings are projected to reach $70 million
on an annualized basis in 2016. We expect more to
follow, as our leaders focus on maximizing cash flow
without the constraints of bureaucracy and unnecessary
management layers.
We are reducing the size of our head office by close
to half, from 260 positions in 2014 to 140 positions in
2015. As a result, our corporate administration expense
is expected to be about $145 million this year, and even
lower in 2016.
We have eliminated all management layers between
the head office and our operations; what remains are
shared service centers that provide support directly to
our mines and projects. These costs will no longer
be reported as G&A. They will be charged directly to
the mines and projects that use the services, and will
be reflected in operating costs. Services that are not
required will be eliminated, driving further cost savings.
In addition, we are taking steps to improve the
efficiency of our procurement and supply chain practices,
freeing up working capital by reducing inventories. We
also expect to generate additional free cash flow over
the next 12 months through better integration of mine
site maintenance programs and our global procurement
and logistics system.
Innovation also plays a key role in improving
efficiency and unlocking the cash-generating potential
of our assets. We see this in action at Goldstrike, where
a revolutionary new cyanide-free processing technology
developed in-house at Barrick is allowing us to accelerate
cash flow from about four million stockpiled ounces of
gold (see page 46 for more details). Our in-house research
and development team has also developed a patented
flotation technology capable of utilizing sea water,
reducing demand on scarce fresh water resources. We
will continue to develop industry-leading processing
technologies, while expanding our focus to include more
efficient ways to use water and power at our operations.
Best Assets and Regions
Barrick’s five cornerstone mines in the Americas are
expected to account for 60 percent of our production in
2015 at average all-in sustaining costs of $725–$775 per
ounce. At two grams per tonne, these mines have an
average reserve grade more than double that of our peer
group average1. They are among the most attractive
assets in the entire gold industry, generating strong free
cash flow even in today’s gold price environment, while
offering exceptional leverage to higher gold prices.
1. Comparison based on the average overall reserve grade for Goldcorp Inc.,
Kinross Gold Corporation, Newmont Mining Corporation and Newcrest Mining
Limited as reported in each of the Kinross and Newcrest reserve reports as of
December 31, 2014, and as reported in each of the Goldcorp and Newmont
reserve reports as of December 31, 2013.
17
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS We maintain a strong competitive advantage in
Nevada and the Andean region in South America under-
pinned by proven operating experience, a critical mass of
infrastructure, technical and exploration expertise, and
established partnerships with host governments and
communities. We believe these regions provide the best
opportunities to generate returns for shareholders, and
we will therefore give them the majority of our focus.
Divestments outside of the Americas, including the
Porgera Joint Venture and the Cowal mine, will further
center the company’s portfolio on its strongest assets.
Two-thirds of our 2015 exploration budget of
$220–$260 million is focused on high-quality, brownfield
projects, with the remainder targeted at emerging
discoveries that have the potential to become profitable
mines. Approximately 85 percent of the total exploration
budget is allocated to the Americas and about half of the
budget will be directed to Nevada.
Growth in the Americas
This year, Barrick is advancing growth opportunities at or
near existing operations in Nevada, with four prefeasibility
studies on track for completion in 20152.
We also have within our portfolio a number of the
world’s largest undeveloped gold deposits, including
Pascua-Lama, Donlin Gold and Cerro Casale. These
projects offer leverage to higher gold prices, with more
than 38 million ounces of gold in reserves (100 percent
basis) and more than 50 million ounces of gold in
measured and indicated resources (100 percent basis).
They provide the company with a platform for long-term
growth in a higher gold price environment. In the
meantime, we will work to optimize the economics of
these projects, spending the minimum required to
maintain them as development options within our
portfolio. As with all our investments, we will only
proceed with construction if these projects meet our
capital allocation objectives and with a robust execution
plan to ensure execution on budget and on schedule.
n Goldrush – Major new discovery near existing
infrastructure (see page 44)
n Turquoise Ridge – A core mine in the making
(see page 54)
n Cortez – High-grade underground expansion
(see page 44)
n Spring Valley – Low capital cost, heap leach project
The Spring Valley project, 70 percent owned by Barrick
and located approximately 75 miles west of Cortez, is a
low capital cost, oxide heap leach project with excellent
potential to become another standalone mine in Nevada.
Barrick reported an initial measured and indicated
resource of 1.3 million ounces (70% basis) averaging
0.66 grams per tonne and an inferred resource of
0.6 million ounces (70% basis) averaging 0.62 grams
per tonne for Spring Valley at the end of 2014. In
addition, there is good potential to expand the current
resource at higher gold prices. The company expects
to complete a prefeasibility study in late 2015.
Pascua-Lama
During the fourth quarter of 2013, Barrick announced
the temporary suspension of construction at its Pascua-
Lama project, except for those activities required for
environmental and regulatory compliance. The ramp-
down was completed on schedule and budget in mid-
2014 and the mine is now on care and maintenance. In
2015, Barrick anticipates expenditures of approximately
$170 to $190 million for the project, including
approximately $140 to $150 million3 for care and
maintenance, including water management system costs,
and approximately $30 to $40 million4 for other project
costs, including those related to permit obligations in
Argentina and Chile.
Barrick is engineering the permanent water
management system and assessing the permitting
requirements for construction with Chilean regulators.
The engineering studies indicate that an increase in the
capacity of the water management system may be
required above the volume approved in the project’s
Chilean environmental approval. We expect to submit
our application for the new water management system
by June 2015, with permitting taking about two years.
A decision to re-start development of the project will
depend on improved economics and more certainty
regarding legal and permitting matters. The Company
will preserve the option to resume development of this
asset, including by completing a new execution plan to
optimize remaining construction activities.
2. Complete mineral reserve and mineral resource data for each of these
projects and all other mines and projects referenced in this MD&A, including
tonnes, grades and ounces, can be found on pages 86–93.
3. This amount is expected to be expensed.
4. This amount is expected to be capitalized.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Donlin Gold
The 50% owned Donlin Gold project located in Alaska
is one of the largest undeveloped gold deposits in the
world. In terms of size, grade, and jurisdictional safety,
Donlin Gold is an excellent asset in Barrick’s portfolio
with significant leverage to the price of gold.
The Donlin Gold project has approximately 39 million
ounces of contained gold (100% basis) in the measured
and indicated resource categories (approximately 8 million
tonnes grading 2.52 g/t (measured) and 533 million
tonnes grading 2.24 g/t (indicated)). In addition to its
already large mineral endowment, the project also has
exploration potential which could expand the current
open pit resource.
Under our disciplined capital allocation framework,
we have continued to work with our partner, Novagold
Resources, to advance the Donlin Gold project. Current
activities, by which we maintain and enhance the option
value of this project at a modest cost, are focused
on permitting, community outreach and workforce
development. In 2014, Donlin Gold secured long-term
surface use rights and significantly advanced the
permitting of the Donlin Gold project which is now
about halfway complete.
Barrick is working closely with its partner on
alternatives designed to minimize initial capital outlay.
The outcome of that effort may include engagement of
third party operators and exploring possibilities for third
party financing of some capital intensive infrastructure.
Collectively, we are also investing about $3 million
(100% basis) on technical studies to identify potential
design and execution enhancements. Donlin Gold has
substantial leverage to gold prices and has the potential
to add significant value to Barrick and its future growth
pipeline in a higher gold price environment.
Any decision to proceed with development, either as
currently envisaged, or in an optimized scenario, will
depend on the project meeting Barrick’s minimum hurdle
rate which will depend in large part on the prevailing
gold prices and market conditions.
Risks to Achieving our Strategy
Risk is an inherent component of our business. Delivery
on our vision and strategic objectives depends on
our ability to understand the uncertainties, threats and
opportunities in our world and respond effectively.
Enterprise risk management (“ERM”) is focused on
top-level business risks and provides a framework to:
n Identify, assess and communicate inherent and
residual risk;
n Embed ERM responsibilities into the operating model;
n Integrate risk responses into strategic priorities and
business plans; and
n Provide assurance to the Executive Committee and
relevant Committees to the Board of Directors on the
effectiveness of control activities.
Our business is subject to risks in financial, regulatory,
strategic and operational areas. In managing risk,
management focuses on the risk factors that impact our
ability to operate in a safe, profitable and responsible
manner, including:
Financial and Regulatory Risk Factors
n fluctuations in the spot and forward prices of gold,
copper and silver;
n the impact of global financial conditions such as
inflation, fluctuations in the currency markets and
changes in U.S. dollar interest rates;
n our liquidity profile, level of indebtedness and
credit ratings;
n changes in governments or the intervention of
governments, or other political or economic
developments in the jurisdictions in which we do
or may carry on business in the future;
n changing or increasing regulatory requirements,
including increasing royalties and taxes, and our ability
to obtain and to maintain compliance with permits
and licenses necessary to operate in our industry;
n our ability to maintain appropriate internal control
over financial reporting and disclosure;
Barrick_AR14_MDA.indd 19
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19
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS n our ability to maintain compliance with anti-corruption
n business interruption or loss due to acts of terrorism,
standards;
n our reliance on models and plans that are based
on estimates, including mineral reserves and
resources; and
n the organization of our Acacia operations and
properties under a separate listed company.
Strategic and Operating Risk Factors
n diminishing quantities or declining grades of reserves
and our ability to replace mineral reserves and
resources through discovery or acquisition;
n our ability to discover or acquire new resources and
integrate acquisitions or complete divestitures;
n our ability to operate within joint ventures;
n our ability to compete for mining properties, to
obtain and maintain valid title and to obtain and
maintain access to required land, water and
power infrastructure;
n our ability to execute development and capital
projects, including managing scope, costs and
timelines associated with construction, to successfully
deliver expected operating and financial performance;
n availability and increased cost of mining inputs, critical
parts and equipment, and certain commodities,
including fuel and electricity;
n sequencing or processing challenges resulting in lower
than expected recovery rates;
n technical complexity in connection with mining or
expansion activities;
n unusual or unexpected ore body formations,
ore dilution, varying metallurgical and other ore
characteristics;
intrusion, sabotage, work stoppage and civil
disturbances;
n loss due to theft of gold bullion, copper cathode or
gold/copper concentrate;
n permit or regulatory breaches resulting in fines,
temporary shut-down or suspension of operations,
or litigation;
n our ability to manage security and human rights
matters;
n relationships with the communities in which
we operate;
n employee and labor relations; and
n availability and increased costs associated with labor.
In addition, there are hazards associated with the business
of mineral exploration, development and mining, including
environmental incidents, industrial accidents, and natural
phenomena such as inclement weather conditions,
flooding and earthquakes or cave-ins (and the risk
of inadequate insurance, or inability to obtain insurance,
to cover these risks) that could result in unexpected
negative impacts to future cash flows.
We have provided a description of our approach to
managing our top-level business risks throughout this
MD&A. For a more fulsome discussion of risks relevant to
investors, see “Risk Factors” in our most recent Form
40-F/Annual Information Form on file with the SEC and
Canadian provincial securities regulatory authorities.
20
Barrick_AR14_MDA.indd 20
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Review of 2014 Results
($ millions, except where indicated)
Financial Data
Revenue
Net earnings (loss)1
Per share (“EPS”)2
Adjusted net earnings3
Per share (“adjusted EPS”)2,3
Total project capital expenditures4,5
Total capital expenditures – expansion4
Total capital expenditures – sustaining4
Operating cash flow
Adjusted operating cash flow3
Free cash flow3
Debt to Adjusted EBITDA6
Operating Data
Gold
Gold produced (000s ounces)7
Gold sold (000s ounces)7
Realized price ($ per ounce)3
Cash costs ($ per ounce)3
Cash costs on a co-product basis ($ per ounce)3
All-in sustaining costs ($ per ounce)3
All-in sustaining costs on a co-product basis ($ per ounce)3
All-in costs ($ per ounce)3
All-in costs on a co-product basis ($ 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
Safety
Total reportable injury frequency rate
For the three months ended
December 31
For the years ended
December 31
2014
2013
2014
2013
$ 2,510
(2,851)
(2.45)
174
0.15
121
90
438
371
371
$ (176)
1,527
1,572
$ 1,204
$ 628
$ 648
$ 925
$ 945
$ 1,094
$ 1,114
134
139
$ 2.91
$ 1.78
$ 2,942
(2,830)
(2.61)
406
0.37
658
122
568
1,016
1,085
$ (280)
1,713
1,829
$ 1,272
$ 573
$ 592
$ 899
$ 918
$ 1,317
$ 1,336
139
134
$ 3.34
$ 1.81
$ 10,239
(2,907)
(2.50)
793
0.68
234
392
1,638
2,296
2,296
(136)
$
3.43:1
6,249
6,284
$ 1,265
598
$
618
$
864
$
884
$
986
$
$ 1,006
436
435
$ 3.03
$ 1.92
$ 12,527
(10,366)
(10.14)
2,569
2.51
2,434
468
2,473
4,239
4,359
$ (1,142)
2.60:1
7,166
7,174
$ 1,407
566
$
589
$
915
$
$
938
$ 1,282
$ 1,305
539
519
$ 3.39
$ 1.92
0.58
0.64
1. Net loss represents net loss attributable to the equity holders of the Company.
2. Calculated using weighted average number of shares outstanding under the basic method.
3. These are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and detailed reconciliations, please see
pages 75–84 of this MD&A.
4. These amounts are presented on a 100% accrued basis. Project and expansion capital expenditures are included in our calculation of all-in costs, but not included
in our calculation of all-in sustaining costs.
5. Project capital expenditures include the reversal of contract claim accruals that were closed out during the year and the reclassification of assets from inventory
to construction-in-process at Pascua-Lama.
6. Represents total debt divided by Adjusted EBITDA as at December 31, 2014 and December 31, 2013.
7. Gold production and sales include our pro rata share of Acacia and Pueblo Viejo at our equity share.
Barrick_AR14_MDA.indd 21
2015-03-11 5:00 PM
21
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Full Year Financial and Operating Highlights
Net Income, Adjusted Net Income, Operating Cash
Flow and Free Cash Flow
The net loss was lower in 2014 than the net loss
recorded in the prior year, which was primarily due to the
recognition of $11.5 billion in impairment losses in the
prior year compared to $3.4 billion in 2014. The decrease
in adjusted net earnings was primarily due to lower
realized gold and copper prices combined with lower
gold and copper sales volumes, partially offset by lower
cost of sales applicable to gold and copper.
The increase in EPS over the same prior year period
reflects the lower net loss in 2014, and the impact of our
equity offering in fourth quarter 2013 that increased
our total shares outstanding by 15%, and therefore
decreased our per share net loss. The decrease in
adjusted EPS over the prior year was primarily due to the
decrease in adjusted net earnings, as described above,
combined with the increase in total shares outstanding.
Operating cash flow decreased 46% primarily
reflecting lower sales volumes and lower gross margins,
partially offset by a decrease in income tax payments.
Free cash flow in 2014 was an outflow of $136 million,
an improvement of $1 billion over the prior year,
primarily reflecting lower capital expenditures which
more than offset lower operating cash flows.
FACTORS AFFECTING ADJUSTED NET EARNINGS ($ millions)
FACTORS AFFECTING OPERATING CASH FLOW ($ millions)
281
288
2,569
950
&
e
m
u
o
v
l
s
t
s
o
c
h
s
a
c
l
s
e
a
s
d
o
G
l
s
t
s
o
c
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n
I
892
280
i
n
g
r
a
m
r
e
p
p
o
C
e
c
i
r
p
d
e
z
i
l
a
e
r
d
o
G
l
267
t
s
e
r
e
t
n
i
d
e
z
i
l
a
t
i
p
a
C
44
793
r
e
h
t
O
i
s
g
n
n
r
a
e
t
e
n
j
d
e
t
s
u
d
A
4
1
0
2
j
t
c
e
o
r
p
&
n
o
i
t
a
r
o
p
x
E
l
i
s
g
n
n
r
a
e
t
e
n
j
d
e
t
s
u
d
A
3
1
0
2
Gold production, Cash Costs and All-in Sustaining Costs
Gold production for 2014 was 13% lower, primarily due
to the impact of the divestiture of the Yilgarn South
assets in fourth quarter 2013, the Plutonic and Kanowna
assets in first quarter 2014 and the Marigold assets in
second quarter 2014, which accounted for 10% of 2013
5000
production. The lower production in 2014 also reflects
lower production at Cortez, partially offset by higher
4000
production at Goldstrike, Pueblo Viejo, Lagunas Norte,
Veladero, Turquoise Ridge and at Porgera.
3000
2000
1000
0
22
Barrick_AR14_MDA.indd 22
4,239
w
o
l
f
h
s
a
c
g
n
i
t
a
r
e
p
O
3
1
0
2
950
s
t
s
o
c
h
s
a
c
&
e
m
u
o
v
l
s
e
a
s
l
l
d
o
G
892
101
r
e
h
t
O
e
z
i
r
p
d
e
z
i
l
a
e
r
l
d
o
G
2,296
w
o
l
f
h
s
a
c
g
n
i
t
a
r
e
p
O
4
1
0
2
GOLD PRODUCTION (000s ounces)
7,166
6,249
6,200
to
6,600
2013
2014
2015E
5000
4000
3000
2000
1000
0
5000
4000
3000
2000
1000
0
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Lowest AISC of
senior producers
Cash costs for 2014 increased 6% primarily due to the
impact of lower production levels on unit production
costs; partially offset by lower total direct mining costs
and lower depreciation expense. All-in sustaining costs
for 2014 decreased 6% as lower minesite sustaining
capital expenditures more than offset the increase in
cash costs. As a result of our actions to reduce and defer
sustaining capital expenditures, we were able to finish
the year below our guidance range for all-in sustaining
costs, which had already been reduced twice throughout
the year. We will continue this focus on controlling our
expenditures in order to maximize the free cash flow
we generate from operations in this lower gold price
environment, as can be seen in our 2015 guidance
range of $860 to $895 per ounce. All-in costs for 2014
were 23% lower as a result of lower all-in sustaining
costs and lower non-sustaining capital, primarily as a
result of the temporary suspension of construction at
Pascua-Lama that occurred in fourth quarter 2013.
5 core mines produced
3.8 million ounces at
AISC of $716 per ounce
CASH COSTS AND ALL-IN SUSTAINING COSTS
($ per ounce)
ALL-IN SUSTAINING COSTS 2014 ($ per ounce)
915
566
864
598
860
to
895
600
to
640
980
to
920
940
to
900
920
to
880
864
2013
2014
2015E
Original
Guidance
2014
Revised Q2
Guidance
2014
Revised Q3
Guidance
2014
Actual 2014
AISC
Cash costs
Copper Production and C1 Costs
Copper production for 2014 decreased 19% compared
to the prior year, due to lower production at Zaldívar
and at Lumwana. The decrease in copper production at
Zaldívar was due to lower tonnes processed combined
with a minor disruption in leaching irrigation due to
piping and pump failures. The decrease in production
at Lumwana was primarily due to the partial conveyor
collapse that occurred in second quarter 2014 which
shut down concentrate production for most of the
second quarter. Copper C1 cash costs were similar to
the prior year as the impact of lower production levels
on unit production costs was offset by lower total direct
mining costs.
COPPER PRODUCTION (millions of pounds)
539
436
310
to
340
2013
2014
2015E
5000
4000
3000
2000
1000
Barrick_AR14_MDA.indd 23
0
23
2015-03-11 5:00 PM
5000
4000
3000
2000
1000
0
5000
4000
3000
2000
1000
0
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Significant Adjusting Items
Significant adjusting items (net of tax and non-
controlling interest effects) in 2014 include: $3.4 billion
in impairment losses; $169 million in unrealized foreign
currency translation losses; $137 million in unrealized
losses on non-hedge derivative instruments, partially
offset by $49 million in tax adjustments and $48 million
in gains on sale of assets.
Capital Expenditures
Capital expenditures for 2014 were down 58% primarily
due to lower project capital expenditures, our initiatives
to reduce sustaining capital at each of our operating sites
and lower minesite expansion capital expenditures. The
lower minesite expansion capital expenditures is primarily
due to a reduction in costs at Cortez as well as at
Bulyanhulu due to the expansion of the carbon-in-leach
(“CIL”) plant which was commissioned in fourth quarter
2014. The reduction in project capital expenditures is
primarily due to our decision in fourth quarter 2013 to
temporarily suspend the Pascua-Lama project.
Safety
Nothing is more important to Barrick than the safety,
health and well-being of workers and their families. In
2014, we continued a ten-year trend of improving our
total reportable injury frequency rate5 (“TRIFR”) and since
2004, there has been a 79 percent improvement in the
TRIFR (from 2.79 to 0.58). Another example of our safety
culture was that our Turquoise Ridge mine, with more
than 500 employees and contractors, operated throughout
2014 without a single medical treatment injury. Although
we are pleased with these trends, this performance was
overshadowed by the tragic occurrence of a fatality in
2014 at our Zaldívar mine.
5. Total reportable incident frequency rate (TRIFR) is a ratio calculated as follows:
number of reportable injuries x 200,000 hours divided by the total number of
hours worked. Reportable injuries include fatalities, lost time injuries, restricted
duty injuries, and medically treated injuries.
24
Barrick_AR14_MDA.indd 24
NET LOSS TO ADJUSTED NET EARNINGS ($ millions)
3,394
169
137
97
793
49
48
(2,907)
s
s
o
l
t
e
N
4
1
0
2
s
e
g
r
a
h
c
t
n
e
m
r
i
a
p
m
I
s
e
s
s
o
l
y
c
n
e
r
r
u
c
i
n
g
e
r
o
f
d
e
z
i
l
a
e
r
n
U
s
t
n
e
m
t
s
u
d
a
j
x
a
T
s
e
s
s
o
l
e
v
i
t
a
v
i
r
e
d
e
g
d
e
h
-
n
o
n
d
e
z
i
l
a
e
r
n
U
s
t
e
s
s
a
f
o
l
e
a
s
n
o
i
n
a
G
r
e
h
t
O
i
s
g
n
n
r
a
e
t
e
n
j
d
e
t
s
u
d
A
4
1
0
2
CAPITAL EXPENDITURES ($ millions)
5000
5,375
4000
6,000
3000
4,000
2000
1000
2,000
0
0
2,264
1,900
to
2,200
2013
2014
2015E
Expansion
Project
Sustaining
TOTAL REPORTABLE INJURY FREQUENCY
0.64
0.58
2013
2014
2015-03-11 5:00 PM
1.0
0.5
0
5000
4000
3000
2000
1000
0
5000
4000
3000
2000
1000
0
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Reserves and Resources
Barrick calculated its 2014 reserves using a conservative
gold price assumption of $1,100 per ounce, unchanged
from 2013. While this is below the company’s gold price
outlook and current spot prices, it reflects Barrick’s
emphasis on pursuing profitable ounces. Gold reserves
were 93.0 million ounces6 at the end of 2014, compared
to 104.1 million ounces at the end of 2013. Approximately
65 percent of the reduction was attributable to ounces
mined and processed in 2014, with the balance reflecting
the divestiture of the Kanowna, Plutonic and Marigold
mines, and the partial sale of Barrick’s equity interest
in Acacia Mining plc during the year. This includes
17.4 million ounces related to our 75% share of Cerro
Casale which, notwithstanding the impairment we took
on the project in fourth quarter 2014, still qualify as
reserves pursuant to National Instrument 43-101.
Measured and indicated gold resources were
94.3 million ounces6 at the end of 2014, compared to
99.4 million ounces at the end of 2013. The majority of
the reduction relates to a lower gold price assumption
of $1,400 per ounce (compared to $1,500 per ounce for
2013), with divestitures and movements to reserves
more than offset by additions in the year. Inferred gold
resources were 29.3 million ounces6 at the end of 2014,
compared to 31.9 million ounces at the end of 2013,
primarily due to ounces upgraded to the measured and
indicated category and from divestitures.
Copper reserves decreased to 9.6 billion pounds6
from 14.0 billion pounds based on a copper price
assumption of $3.00 per pound (unchanged from 2013),
primarily reflecting the transfer of Lumwana reserves
into resources following the company’s decision to place
the mine on care and maintenance. Measured and
indicated copper resources decreased to 4.6 billion
pounds6 compared to 6.9 billion pounds at the end of
2013 based on an unchanged copper price assumption
of $3.50 per pound. Inferred copper resources were
0.1 billion pounds6 compared to 0.2 billion pounds at
the end of 2013.
Key Business Developments
Royalty Increase in Zambia
On December 18, 2014, the Zambian government
passed changes to the country’s mining tax regime that
would replace the current corporate income tax and
variable profit tax with a 20 percent royalty which took
effect on January 1, 2015. The application of a 20 percent
royalty rate compared to the 6 percent royalty the
company was paying challenges the economic viability
of the mine. As such, on December 18, 2014 Barrick
announced the initiation of procedures to suspend
operations at the Lumwana mine, transitioning the mine
to care and maintenance. The transition is expected to
be completed in second quarter 2015. The increased
royalty has created an unsustainable level of taxation
for Lumwana and this together with lower estimated
long-term copper prices resulted in the recording of
an impairment to the carrying value of Lumwana of
$930 million at December 31, 2014. Refer to note 20
to the annual consolidated financial statements for
further details.
Electricity Price Increase in Zambia
On April 2, 2014 Zambia’s energy regulator approved
a 28.8% electricity price increase for mining companies.
Subsequently, the bulk power supply agreement tariffs
between state power company ZESCO and Copperbelt
Energy Corporation were increased to 6.84 cents per
KWhr from 5.31 cents per KWhr. The Lumwana Mining
Company has a long-term power supply contract with
ZESCO and does not believe that the rates it pays
thereunder should be affected by the announced rate
increase. Lumwana and several other mining companies
in Zambia have been granted leave to challenge the rate
increase in court. As noted above, we have announced
our intention to suspend operations at the mine and
therefore this electricity price increase will not have
any immediate impact. We will continue to progress
the matter.
6. Calculated in accordance with National Instrument 43-101 as required by
Canadian securities regulatory authorities. For a breakdown and additional
detail on tonnes, grade and ounces, see pages 86–93.
25
Barrick_AR14_MDA.indd 25
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Cerro Casale
In November 2014, we completed a strategy optimization
study for our Cerro Casale project with the goal of
identifying a development model that would improve
the project economics and risk by reducing the upfront
capital requirements in order to generate a higher return
on our investment. The study was unable to identify an
alternative that provided an overall rate of return above
our hurdle rate for a project of this size and complexity.
As a result, the budget for 2015 for the project has been
significantly reduced, with the 2015 budget focused
on preserving the optionality of the project. We will
continue activities to protect the asset and assess
alternative ways to develop the project in a more
economic manner, however management’s expectation
of achieving a suitable rate of return in the current metal
price environment has been diminished. The foregoing
developments were deemed to be indicators of impairment,
and as a result, we assessed the recoverable amount of
the project and have recorded an impairment loss on the
project of $778 million (Barrick’s share). Refer to note 20
to the annual consolidated financial statements for
further details.
Hemlo Land Acquisition
On December 11, 2014, Barrick entered into a definitive
agreement to acquire certain surface and mineral
lands adjacent to the Hemlo property in Ontario from
subsidiaries of Newmont Mining Corporation. The
acquisition will enable Hemlo to realize additional value
through near-term, lower-cost ounces, optimize its
current operation with the potential for mine life
extensions, and increase exploration potential. The
transaction is expected to close in first quarter 2015.
Divestitures
On July 13, 2014 Barrick entered into an agreement to
form Ma’aden Barrick Copper Company, a joint venture
with Ma’aden to operate the Jabal Sayid copper project.
Ma’aden, which is 50% owned by the Saudi Arabian
government, acquired its 50% interest in the new joint
venture company for cash consideration of $216 million.
The acquisition closed on December 3, 2014. Mining
operations are expected to recommence in early 2015
and commissioning of the milling and flotation circuits
will begin towards the end of the same year with first
shipments of concentrate expected in early 2016. Once
the mine reaches full production, the average annual
output is expected to be 100 million pounds per year in
the first full five years, with the potential to increase to
130 million pounds. As at June 30, 2014, all of the assets
and liabilities of Jabal Sayid were classified as held for
sale, as the transaction resulted in a loss of control.
Consequently the assets and liabilities were written
down to their fair value less cost of disposal, which
resulted in an impairment loss of $514 million, including
$316 million of goodwill and $198 million in asset
impairment charges in second quarter 2014. The new
joint venture is being equity accounted for starting in
fourth quarter 2014. Refer to note 20 for details of the
impairment loss.
On April 4, 2014, we completed the sale of our
minority interest in the Marigold mine for cash
consideration of $86 million. As a result of the sale, we
recorded a pre-tax gain on sale of $21 million in 2014.
On March 11, 2014, we completed the divestment
of 41 million shares in Acacia, representing in aggregate
approximately 10 percent of the issued ordinary shares of
Acacia, for net proceeds of approximately $186 million.
Subsequent to the partial divestment, we continue to
hold approximately 262 million shares of Acacia,
representing approximately 64 percent of the issued
ordinary share capital of Acacia.
On March 1, 2014, we completed the sale of our
Kanowna mine for cash consideration of $67 million. As
a result of the sale, we recorded a pre-tax loss of
$5 million in 2014.
On January 31, 2014, we completed the sale of our
Plutonic mine for cash consideration of $22 million. As a
result of the sale, we recorded a pre-tax gain on sale of
$8 million in 2014.
Pascua-Lama
On December 30, 2014, the Chilean Supreme Court
declined to consider Barrick’s appeal of an Environmental
Court decision regarding sanctions imposed on the
project in Chile in May 2013 by that country’s environ-
mental regulator (known as the SMA) (the “Resolution”).
As a result of the ruling, the SMA will now re-evaluate
the approximately $16 million administrative fine it
previously imposed on the project for deviations from
certain requirements of the project’s Chilean environmental
approval in 2013. A new resolution from the SMA is
26
Barrick_AR14_MDA.indd 26
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS pending and could include more severe sanctions against
the project such as a material increase in the amount of
the fine above the approximately $16 million imposed by
the SMA in May 2013 and/or the revocation of the
project’s environmental permit. Refer to note 35 to the
annual consolidated financial statements for further
details. In fourth quarter 2014, we recorded an impairment
loss on the project of $382 million. Refer to note 20
of the annual consolidated financial statements for
further details.
New Executive Management Structure
In third quarter 2014, former President and Chief
Executive Officer Jamie Sokalsky stepped down and we
unveiled a new executive management structure to
respond to the distinct demands and challenges of the
mining industry in today’s environment. The new
management structure places a greater emphasis on
operational excellence, and acceleration of portfolio
optimization and cost reduction initiatives, while
fostering a partnership culture. Our two Co-Presidents
execute on Barrick’s operating plans and strategic
priorities: Kelvin Dushnisky, formerly Senior Executive
Vice President responsible for Corporate and Government
Affairs and Chairman of Acacia, and Jim Gowans,
formerly Executive Vice President and Chief Operating
Officer. The new structure emphasizes the critical
importance of joint responsibility and accountability
for the management of operations and our key
relationships with host governments and local
communities that afford the company its license to
operate; the Co-Presidents are responsible for the
seamless execution of both functions at all times.
In addition, Darian Rich, formerly Senior Vice
President, Human Resources, was promoted to Executive
Vice President, Talent Management, reflecting the critical
requirement that any company seeking to be the leader
in its field must attract, retain and develop exceptional
people. During third quarter 2014, Barrick added to its
leadership team, appointing Woo C. Lee as President,
China, Kevin Thomson as Senior Executive Vice President,
Strategic Matters, and Richard Williams as Chief of Staff.
In fourth quarter 2014, we announced the
appointment of Shaun Usmar as Senior Executive
Vice-President and Chief Financial Officer, effective
February 18, 2015, following the departure of Ammar
Al-Joundi, former Senior Executive Vice-President and
Chief Financial Officer.
Two Independent Directors Appointed
In July 2014, the Board of Directors appointed
Mr. J. Michael Evans, former Vice Chairman of Goldman
Sachs and Mr. Brian Greenspun, former Chairman and
CEO of Greenspun Media Group and a prominent Nevada
business leader, to serve as independent directors on
Barrick’s Board.
Barrick_AR14_MDA.indd 27
2015-03-11 5:00 PM
27
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook for 2015
Operating Unit Guidance
Our 2014 gold and copper production, cash costs, all-in sustaining costs and forecast gold production, cash costs and
all-in sustaining costs ranges by operating unit for 2015 are as follows:
2014
production
(000s ozs)
2014
cash costs
($/oz)
2014
all-in
sustaining
costs ($/oz)
2015
forecast
production
(000s ozs)
2015
forecast
cash costs
($/oz)
2015
forecast
all-in sustaining
costs ($/oz)
Operating unit
Gold
Cortez
Goldstrike
Pueblo Viejo (60%)
Lagunas Norte
Veladero
902
902
665
582
722
Total Core Mines
3,773
Turquoise Ridge (75%)
Porgera (95%)
Kalgoorlie (50%)
Acacia (63.9%)
Cowal
Hemlo
Round Mountain (50%)
Bald Mountain
Golden Sunlight
Ruby Hill
195
493
326
470
268
206
164
161
86
33
Total Continuing Operations
6,175
Kanowna
Pierina
Marigold (33%)
Plutonic
Total Divested/Closed Sites
Total Gold1
Total Consolidated Barrick
39
17
11
7
74
6,249
6,249
$ 498
571
446
379
566
$ 500
473
915
817
732
608
829
936
724
893
637
$ 608
641
1,419
1,001
1,120
$ 945
$ 614
$ 598
$ 706
854
588
543
815
825 – 900
1,000 – 1,150
625 – 675
600 – 650
575 – 625
$ 560 – $ 610
540 – 590
390 – 425
375 – 425
600 – 650
$ 760 – $ 835
700 – 800
540 – 590
675 – 725
990 – 1,075
$ 716
3,800 – 4,000
$ 500 – $ 540
$ 725 – $ 775
628
996
1,037
1,105
787
1,059
1,170
1,070
1,181
713
175 – 200
500 – 550
315 – 330
480 – 510
250 – 280
200 – 225
170 – 190
170 – 195
90 – 105
–
570 – 600
775 – 825
775 – 800
695 – 725
630 – 655
675 – 715
875 – 900
560 – 600
740 – 765
–
875 – 925
1,025 – 1,125
915 – 940
1,050 – 1,100
740 – 775
940 – 980
1,180 – 1,205
1,060 – 1,100
1,000 – 1,025
–
$ 825
6,200 – 6,600
$ 580 – $ 620
$ 820 – $ 855
674
2,277
1,197
1,206
$ 1,213
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$ 832
6,200 – 6,600
$ 580 – $ 620
$ 820 – $ 855
$ 864
6,200 – 6,6002
$ 600 – $640
$ 860 – $ 895
2014
production
(millions lbs)
2014
C1 cash
costs ($/lb)
2014
C3 fully
allocated
costs ($/lb)
2015
forecast
production
(millions lbs)
2015
forecast
C1 cash
costs ($/lb)
2015
forecast C3
fully allocated
costs ($/lb)
Copper
Zaldívar
Lumwana
Total Copper
222
214
436
$ 1.79
2.08
$ 1.92
$ 2.14
2.76
$ 2.43
240 – 260
70 – 80
$ 1.65 – $ 1.95
$ 1.90 – $ 2.15
$ 2.00 – $ 2.30
$ 3.05 – $ 3.35
310 – 340
$ 1.75 – $ 2.00
$ 2.30 – $ 2.60
1. Total gold cash costs and all-in sustaining costs exclude the impact of hedges (2014: $16/oz gain; 2015: $20/oz loss) and/or corporate general & administrative
costs (2014: $48/oz; 2015: $20/oz). 2015 forecast cash costs include an allocation of costs that were formerly reported as general & administrative expense.
2. Operating unit guidance ranges reflect expectations at each individual operating unit, but do not add up to corporate-wide guidance range total.
28
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Consolidated Expense & Capital Guidance
Our 2014 consolidated expenses and capital
expenditures and forecast consolidated expenses and
capital expenditures for 2015 are as follows:
($ millions, except per ounce/pound data)
2014 Actual
2015 Guidance
Depreciation:
Gold ($ per ounce)
Copper ($ per pound)
Exploration and project expenses
Exploration and evaluation
Project expenses
General and administrative1:
Corporate Administration
Operating Segment Administration
Stock Based Compensation
Acacia
Total General and Administrative
Other expense
Finance costs
Capital expenditures:
Minesite sustaining
Minesite expansion
Projects
Total capital expenditures
202
0.39
392
184
208
180
–
9
44
233
47
796
240 – 260
0.35 – 0.45
370 – 460
220 – 270
150 – 190
~145
–
~50
~30
~225
40 – 60
800 – 825
1,584
362
234
2,180
1,600 – 1,800
150 – 200
150 – 200
1,900 – 2,200
1. 2014 General and administrative expenses have been restated to conform
with current period presentation. Total general and administrative expenses
of $385 million in 2014 include $120 million in segment administration costs
and $25 million in severance costs.
2015 Guidance Analysis
Highlights
n Forecast gold production between 6.2 to 6.6 million
ounces and over 6.0 million ounces in 2016 and 2017
n All-in sustaining costs forecast to be between $860
to $895 per ounce and lower than this year by 2017
n Forecast capital spending to be between $1.9 to
$2.2 billion
n Free cash flow positive at current gold prices
n Higher production and lower cash costs and all-in
sustaining costs in second half of the year
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 risk factors, including whether
the volume and/or grade of ore mined differs from
estimates, changing mining rates, and/or short-term
mining conditions that require different sequential
development of ore bodies or mining in different areas
of the mine. Mining rates are also impacted by various
non-operating risks and operating risks and hazards
inherent at each operation, including those described
on page 19.
We prepare estimates of cost of sales, cash costs and
all-in sustaining 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,
cash costs and all-in sustaining costs per ounce, C1 cash
costs, and C3 fully allocated costs 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 the
accounting for stripping costs incurred during the
production phase of the mine. In the normal course of
our operations, we manage these risks to mitigate,
where economically feasible, the effect these risks have
on our operating results.
Consolidated Guidance
Operating Outlook
We expect 2015 gold production to be about 6.2 to
6.6 million ounces. Our 2015 gold production is
expected to be higher than 2014 as a result of
the following:
n Higher production at Goldstrike (2014 production:
902 thousand ounces) primarily due to the
commissioning of the thiosulfate circuit at the end
of 2014. Goldstrike achieved first gold production
through its autoclaves in fourth quarter 2014,
after being successfully retrofitted with Barrick’s
patented thiosulfate technology. In 2015, Goldstrike’s
production is expected to exceed 1.0 million ounces
as a result of the contribution from the thiosulfate
process. This process utilizes new technology, and,
as with any such new process, there are risks
associated with the ramp-up to full capacity. If
the ramp-up progresses slower than we currently
anticipate, then our production guidance for both
Goldstrike and Cortez would be at risk.
n Higher production at Acacia (2014 production:
470 thousand ounces) primarily due to an increase in
production at Bulyanhulu as a result of improved ore
grade, coupled with improved throughput, due to
the mechanization of the mine and a full year of
benefit from the CIL plant.
Barrick_AR14_MDA.indd 29
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29
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Depreciation
Depreciation applicable to gold is expected to be in the
range of $240 to $260 per ounce, which reflects an
increase from $202 per ounce in 2014 primarily due to
higher depreciation at Lagunas Norte, Goldstrike, Cortez
and Pueblo Viejo. At Lagunas Norte, higher depreciation
is mainly due to a change in mine plan resulting in a
shorter mine life from 2019 to 2018 which accelerates
depreciation of straight line assets combined with higher
depreciation as a result of an increase in the projected
costs of water treatment during the post-closure period.
At Goldstrike depreciation is expected to increase mainly
due to the commencement of depreciation on the
thiosulfate circuit at the autoclave in 2015 and the
impact of mining the North Betze layback and the
Banshee underground development, which both have
higher capitalized costs and consequently result in higher
per ounce depreciation expense. At Cortez, depreciation
has increased due to a shift in mining to the Cortez Hills
open pit in 2015, which carries a higher depreciation
rate than the Pipeline and GAP open pits where mining
took place in 2014. At Pueblo Viejo, depreciation is
expected to increase mainly due to a full year of
depreciation for assets placed into service at the end
of 2014. We expect similar increases in depreciation
expense and depreciation per ounce over the next
two years.
Exploration and Project Expenses
We expect to incur approximately $220 to $270 million
of exploration and evaluation (“E&E”) expenditures in
2015. This reflects a slight increase over last year’s
expenditure as we invest in our near mine opportunities
where we can take advantage of existing infrastructure
and advance key growth projects such as Goldrush,
Cortez Hills Lower Zone, Spring Valley and Turquoise
Ridge. These will provide a near term return on this
investment by adding to and upgrading our reserve and
resource base, and in some cases may positively impact
production.
About 85% of the budget is allocated to our two
core regions (Nevada and the Andean region in South
America), of which 36% is allocated to Cortez and
Goldrush and 24% predominantly towards Chile.
n Higher production at Lagunas Norte (2014 production:
582 thousand ounces) as a result of an increase
in the tonnage placed on the leach pads and an
increase in the flow rate through the Merrill Crowe
and Carbon in Column plant. This will allow us to
convert additional leach pad inventory into production
in 2015.
These production increases are expected to be partially
offset by a decrease in production at Veladero (2014
production: 722 thousand ounces) as a result of lower
ore grade in the Federico pit in line with the mine plan,
and lower production following the sale of Kanowna,
Plutonic and Marigold in 2014 (2014 aggregate
production: 57 thousand ounces).
Cash costs are expected to be in the range of
$600 to $640 per ounce, which is slightly higher than
$598 per ounce in 2014, primarily due to the impact of
expected hedge losses from our currency and fuel
hedging programs in 2015. In 2014, we realized about
$15 per ounce in hedge gains, mainly related to our
Australian dollar and Canadian dollar currency hedging
programs, whereas in 2015 we expect to record about
$20 per ounce in realized hedge losses from our currency
and fuel hedging programs based on our oil and
exchange rate assumptions. The impact of hedge losses
in 2015 is expected to be partially offset by the impact
of a decrease in overall tonnes processed and higher
expected recoveries as compared to the prior year.
2015 gold production forecast of 6.2 to
6.6 million ounces at all-in sustaining costs
$860 to $895 per oz
All-in sustaining costs are expected to be in the
range of $860 to $895 per ounce for gold, up slightly
from $864 per ounce in 2014, primarily due to an
increase in minesite sustaining capital expenditures at
Lagunas Norte, Cortez and Turquoise Ridge and an
increase in mine development capital expenditures due
to capitalized stripping activities at Porgera, Veladero,
and Bald Mountain in 2015.
Approximately 55% of our production is expected to
occur in the second half of the year, largely due to higher
production at Cortez and Goldstrike as a result of the
ramp up of the thiosulfate circuit, as well as higher
second half production at Pueblo Viejo. Accordingly,
cash costs and all-in sustaining costs are expected to be
significantly higher in the first half of the year.
30
Barrick_AR14_MDA.indd 30
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Project Expenses
We expect to incur approximately $150 to $190 million
of Project Expenses in 2015. Project expenses primarily
relate to care and maintenance activities at Pascua-Lama,
and other project expenditures associated with Cerro
Casale, Donlin Gold and Reko Diq.
General and Administrative Expenses
In 2015, Barrick is returning to a lean, decentralized
operating model as discussed in the “Business and
Strategy” section of the MD&A. As part of this
transformation, we expect to realize $30 million in
savings in 2015 from reduced general and administrative
expenditures and overhead costs, growing to $70 million
in annualized savings by 2016.
We have reduced our corporate office by close to
50 percent, from 260 positions in 2014 to 140 people in
2015. As a result, our corporate administration expense
is expected to be about $145 million in 2015, and even
lower in 2016 as we benefit from a full year of savings.
We have eliminated all management layers between the
head office and our operations. What remains are shared
service centers that provide support directly to our mines
and projects. These costs will no longer be reported as
G&A. They will be charged directly to the mines that use
the services, and will be reflected in operating costs. This
incentivizes country and mine managers to use only the
services they truly need to support the business. Services
that are not required will be eliminated.
In 2014, Barrick reported total G&A expenses of
$385 million, which included the corporate office, costs
associated with our former regional business units,
stock-based compensation, expenses from Acacia plc,
and $25 million in severance costs. In 2015, our
total reported G&A expense is forecast to be about
$225 million (exclusive of severance and other non-
recurring expenses), and no longer includes the portion
of 2014 G&A costs associated with our former regional
business units as such costs are now allocated to
operating costs.
Finance Costs
Finance costs primarily represent interest expense on
long-term debt. We expect finance costs in 2015 to be
consistent with 2014 levels and do not expect to
capitalize significant interest costs in 2015.
Capital Expenditures
Total capital expenditures for 2015 are expected to be in
the range of $1.9 to $2.2 billion, compared to
$2.2 billion in 2014. The expected decrease primarily
relates to lower expansion capital expenditures at
Goldstrike due to the completed commissioning of the
thiosulfate circuit at the autoclave in fourth quarter
2014, lower sustaining and development capital
expenditures at Lumwana following the decision to
suspend operations as a result of the substantial impact
of the new royalty and current copper prices and lower
project capital expenditures at Pascua-Lama in 2015.
These capital expenditure decreases are expected to
be partially offset by an increase in minesite sustaining
capital expenditures at Lagunas Norte, Cortez and
Turquoise Ridge and an increase in development capital
expenditures at Porgera, Veladero and Bald Mountain
due to production phase stripping activities in 2015.
2015 forecast capital spending
$1.9 to $2.2 billion
Minesite sustaining capital expenditures reflect the
capital spending required to support current planned
production levels and those which do not meet our
definition of non-sustaining capital. This includes
capitalized production phase stripping costs at our open
pit mines, underground mine development and E&E
expenditures that meet our criteria for capitalization.
Minesite sustaining capital expenditures are expected
to increase from 2014 expenditure levels of $1,584 million
to a range of about $1,600 to $1,800 million mainly
due to an increase in sustaining capital expenditures at
Lagunas Norte, Cortez and Turquoise Ridge. At Lagunas
Norte, the increase is primarily due to the construction
of the Leach Pad Phase 6 Expansion and the engineering
and construction of the East Waste dump expansion
and ARD Treatment Plant. At Cortez, the increase is
mainly due to a shift in timing of expenditures from
fourth quarter 2014 to 2015, and at Turquoise Ridge
the increase is primarily due to higher sustaining capital
expenditures to support ongoing infrastructure
requirements in the North Zone as well as adding
additional mobile equipment to expand mining into the
South Zone, subject to approval by our joint venture
partner, earlier than previously planned, which is
expected to benefit production beginning in 2016.
Minesite development capital expenditures are
expected to increase due to an increase in production
phase stripping activities at Porgera as part of the change
in mine plan related to the expansion of the open pit, at
Veladero due to an increase in waste material mined as
part of the development of the Federico pit and at Bald
Mountain due to a higher proportion of waste material
mined in line with mine plan.
31
Barrick_AR14_MDA.indd 31
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS These capital expenditure increases are expected to
be partially offset by lower sustaining and development
capital expenditures at Lumwana following the decision
to suspend operations as a result of the enactment of
the new royalty rate and lower copper prices.
Minesite expansion capital expenditures include
non-sustaining capital expenditures at new projects and
existing operations that are related to discrete projects
that significantly increase the net present value of the
mine and are not related to current production activity.
Expansion capital expenditures are expected to decrease
from 2014 expenditure levels of $362 million to a range
of about $150 to $200 million, mainly due to lower
expansion capital expenditures at Goldstrike due to the
completed commissioning of the thiosulfate circuit at
the autoclave in fourth quarter 2014. The project will
finalize some adjustments to the system in first quarter
2015, with total project costs expected to remain in line
with expectations of about $620 million. Other 2015
expansion expenditures primarily relate to feasibility and
development expenditures related to the Cortez Hills
Lower Zone expansion, which is expected to extend the
mine life by up to 7 years.
Project capital expenditures reflect capital
expenditures related to the initial construction of the
project and include all of the expenditures required to
bring the project into operation and achieve commercial
production levels. In 2015, we expect our share of
project capital costs to be in the range of $150 to
$200 million, a slight decrease from project capital
costs of $234 million in 2014 primarily due to lower
project capital expenditures at Pascua-Lama, partially
offset by an increase in capitalized construction costs
at Jabal Sayid and commencement of pre-stripping
activities at South Arturo. At Pascua-Lama, capital
expenditures in 2014 primarily related to capitalization
of Linea Minera power line costs and water management
system costs. We expect to incur approximately $30 to
$40 million in capitalized costs in 2015, primarily
attributable to permitting and engineering activities
related to the final water management solution, as well
as commitments to support local communities.
Capital expenditures at Jabal Sayid are expected to
increase in 2015 as compared to 2014, as a resumption
of underground development expenditures are expected
to be incurred in order for the mine to begin producing
concentrate at the end of 2015, following the completion
of the joint venture agreement with Ma’aden in the
fourth quarter of 2014.
Capital expenditures at South Arturo are expected to
increase in 2015 mainly due to the commencement of
pre-stripping activities following initial site preparation
and infrastructure development activities in 2014.
Free cash flow positive at
current gold prices
Effective Income Tax Rate
Our effective tax rate is 42% on all income excluding
expenses from non-operating entities, which do not have
a present source of gold production or taxable income.
These expenses cannot be recognized as a deferred tax
asset, and therefore there is no tax recovery recorded on
these expenses. The effect of these expenses in our
income statement, with no corresponding tax effect, is
to increase our effective rate on total net income to
53%. In the event that there will be sources of taxable
income in the future, we may recognize some or all of
these deferred tax assets.
32
Barrick_AR14_MDA.indd 32
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook Assumptions and Economic Sensitivity Analysis
Gold revenue, net of royalties
Copper revenue, net of royalties
Gold all-in sustaining costs
Gold royalties & production taxes
WTI crude oil price3,4
Australian dollar exchange rate3
AVERAGE MONTHLY SPOT GOLD PRICES
AVERAGE MONTHLY SPOT GOLD PRICES
Australian dollar exchange rate3
Canadian dollar exchange rate3
Canadian dollar exchange rate3
$/oz
2,000
Copper C1 cash costs
WTI crude oil price3,4
1,750
Chilean peso exchange rate3
1,300
Chilean peso exchange rate3
2015 Guidance
Hypothetical
Impact on
assumption
change
$ 1,250/oz2
$ 2.50/lb2
+/-$ 100/oz
+$ 0.50/lb
$ 1,250/oz
$ 50/bbl
0.83:1
0.83:1
1.20:1
1.20:1
$ 100/oz
$ 10/bbl
+10%
-10%
+10%
-10%
AISC
n/a
n/a
$ 3/oz
$ 3/oz
$ (3)/oz
$ 3/oz
$ (4)/oz
$ 2/oz
$ 50/bbl
610:1
610:1
$ 10/bbl
+10%
-10%
Impact on C1
$ 0.00/lb
$ (0.03)/lb
$ 0.00/lb
USD
90
85
80
EBITDA1
(millions)
$ 635
$ 163
$ 19
$ 19
$ (23)
$ 23
$ (27)
$ 11
$ 1
$ (11)
$ 1
75
1,200
1. EBITDA is a non-GAAP financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation,
please see pages 82–83 of this MD&A.
1,100
2. We have assumed a gold price of $1,250 per ounce and copper price of $2.50 per pound, which are in line with current market prices.
3. Due to our hedging activities, which are reflected in these sensitivities, we are partially protected against changes in these factors.
1,000
4. Impact on EBITDA only reflects contracts that mature in 2015.
65
70
The decline in the price of gold in 2014 primarily
occurred as a result of a strengthening US dollar in
the second half of the year, which was due to increasing
economic strength in the United States versus concerns
over weakening economic performance in Europe and
China, as well as the tapering of the unprecedented
monetary stimulus provided by the US Federal Reserve
and growing expectations of US benchmark rate
increases starting in 2015. Investor sentiment regarding
gold remained muted, particularly in the Western world,
as was evidenced by decreased holdings in Exchange
Traded Funds (“ETFs”) of 5 million ounces, versus a
decrease in holdings of 29 million ounces in 2013.
However, physical demand for jewelry and other uses,
particularly in China and India, remained strong and
continues to be a significant driver of the overall
gold market.
900
60
50
55
2011
2009
Average Spot Price
Market Overview
800
Gold
700
The market prices of gold, and, to a lesser extent copper,
2010
are the primary drivers of our profitability and our ability
to generate free cash flow for our shareholders. The
price of gold is subject to volatile price movements over
short periods of time and is affected by numerous
industry and macroeconomic factors. During the year,
the gold price ranged from $1,131 per ounce to
$1,392 per ounce. The average market price for the year
of $1,266 per ounce represented a decrease of 10%
versus 2013.
USD Index
AVERAGE MONTHLY SPOT GOLD PRICES
(dollars per ounce)
2,000
1,750
1,500
1,250
1,000
750
500
2010
2011
2012
2013
2014
Barrick_AR14_MDA.indd 33
2015-03-11 5:00 PM
33
90
85
80
75
70
65
60
55
50
90
85
80
75
70
65
60
55
50
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
GOLD ETF HOLDINGS as at December 31
(millions of ounces)
89.4
79.9
73.3
60.3
55.1
100
90
80
70
60
50
40
30
20
10
0
2010
2011
2012
2013
2014
Source: UBS
80
Going forward, we believe that gold will attract
investment interest through its role as a safe haven
investment, store of value and alternative to fiat currency
due to concerns over 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. While there are risks that investor interest in gold
will decrease, we believe that the continuing uncertain
macroeconomic environment, together with the limited
choice of alternative safe haven investments, is
supportive of continued strong demand for gold.
70
50
40
60
30
Gold prices continue to be influenced by long-term
20
0
10
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
continue to slow the pace of new production in
future years.
In the fifth and final year of the Central Bank Gold
Agreement (“CBGA”), which ended in September 2014,
the signatory members sold 7 tonnes of gold, or less
than 2% of the maximum agreed amount. In May 2014,
the signing of a subsequent five-year CBGA, which is
now the current agreement, was announced. There are
no annual limitations on gold sales under the new
agreement, but the signatories noted that they do not
have any plans to sell significant amounts of gold.
34
In addition, for the fifth consecutive year, global central
banks were net buyers of gold in 2014, with the central
banks of Russia, Iraq and Kazakhstan, among others,
adding to their gold reserves.
OFFICIAL SECTOR GOLD PURCHASES
(tonnes)
544
457
461
409
600
500
400
300
200
100
0
77
2010
2011
2012
2013
2014E
Source: World Gold Council and Thomson Reuters GFMS
The reserve gold holdings as a percentage of total
reserves of emerging market countries, such as the
BRIC countries (Brazil, Russia, India, and China), are
significantly lower than other developed countries.
The central banks of these developing economies hold
a significant portion of their reserves in US dollar
denominated 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, which
is expected to continue in the current year of the
agreement, the net purchases of gold by global central
banks provide a strong indication that gold is viewed
as a reserve asset and a de facto currency.
-200
600
200
400
0
Copper
-400
During 2014, London Metal Exchange (“LME”) copper
prices traded in a range of $2.83 to $3.38 per pound,
-600
averaged $3.11 per pound, and closed the year at
$2.88 per pound. The copper market’s strength lies
mainly in strong physical demand from emerging
markets, especially China, which has resulted in a
physical deficit in recent years.
During early 2015, the price of copper has fallen
to levels not seen since the global financial crisis in
2009, reaching a low of $2.42 per pound. The decline
Barrick_AR14_MDA.indd 34
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS has been the result of increasing global inventories,
disappointing economic releases out of China, which is
by far the largest single market for copper demand, and
a declining cost structure as a result of lower oil prices
and US dollar strength.
Copper prices should continue to be influenced by
demand from Asia, global economic growth, the limited
availability of scrap metal and production levels of mines
and smelters in the future. While there are risks that the
copper price will fall further, we believe that difficulties in
bringing projects to the production stage, a limited
global development pipeline and continuing growth in
demand from the developing world will lead to physical
market deficits in the later part of this decade that will
act as a positive catalyst for the price.
AVERAGE MONTHLY SPOT
COPPER PRICES (dollars per pound)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
2010
2011
2012
2013
2014
We have provisionally priced copper sales for which final
price determination versus the relevant copper index is
outstanding at the balance sheet date. As at December 31,
2014, we have recorded 82 million pounds of copper
sales subject to final settlement at an average provisional
price of $2.88 per pound. The impact to net income
before taxation of a 10% movement in the market price
of copper would be approximately $24 million, holding
all other variables constant.
AVERAGE MONTHLY SPOT
Silver
COPPER PRICES (dollars per pound)
Silver traded in a range of $14.29 to $22.18 per ounce in
2014, averaged $19.08 per ounce and closed the year
2,000
at $15.97 per ounce. The silver price is driven by factors
similar to those influencing investment demand for gold.
1,750
Investment demand is expected to be the primary driver
of prices in the near term.
1,500
Silver prices do not significantly impact our current
operating earnings, cash flows or gold cash costs. Silver
prices, however, will have a significant impact on the
overall economics for our Pascua-Lama project.
AVERAGE MONTHLY SPOT
SILVER PRICES (dollars per ounce)
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
2010
2011
2012
2013
2014
Currency Exchange Rates
The results of our mining operations outside of the
United States are affected by US dollar exchange rates.
Approximately 25% of our operating and capital
expenditures are denominated in currencies other than
the US dollar. We have exposure to the Australian and
Canadian dollars, and the Chilean peso through a
combination of mine operating, capital projects and
corporate administration costs. In addition, we have
exposure to the Argentine peso, Papua New Guinea
kina, Peruvian sol, Zambian kwacha, Tanzanian shilling
and Dominican peso through mine and capital project
operating and capital costs.
Fluctuations in the US dollar increase the volatility
AVERAGE MONTHLY SPOT
SILVER PRICES (dollars per ounces)
of our costs reported in US dollars, subject to protection
that we have put in place through our currency hedging
program. In 2014, the Australian dollar traded in a
range of $0.81 to $0.95 against the US dollar, while
the US dollar against the Canadian dollar and Chilean
peso ranged from $1.06 to $1.17 and CLP525 to
CLP623, respectively.
675
625
575
During the second half of 2014 and continuing into
525
the beginning of 2015, the US dollar has significantly
strengthened against a basket of global currencies
as well as against our key foreign currency exposures.
This US dollar strength has mainly occurred due to
a reduction in monetary stimulus measures by the
US Federal Reserve as a result of an improved economic
475
425
1,250
1,000
750
Barrick_AR14_MDA.indd 35
500
2007
2008
2009
2010
2011
2009
2010
2011
35
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS outlook for the US economy and an expectation of a
process of benchmark interest rate normalization
beginning later in 2015.
Due to expectations of a strengthened US dollar,
in recent years we have reduced our overall foreign
currency derivative positions, whether by closing out
positions before maturity or limiting the addition of new
positions. As a result, our foreign currency derivative
contracts in place beyond 2015 currently consist only
of AUD $85 million of contracts maturing in 2016.
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: 2014 – $93 million; 2013 – $268 million; and
2012 – $336 million. As a result of the gains from our
currency hedging program, cash costs were reduced
by $15 per ounce in 2014. Also for 2014, we recorded
currency hedge gains in our corporate administration
costs of $4 million (2013 – $11 million and 2012 –
$20 million) and capitalized additional currency hedge
gains of $nil (2013 – $14 million and 2012 – $13 million).
Assuming December 31, 2014 market exchange rate
curves and year-end spot prices, we expect to record
currency hedge losses of approximately $65 million
against operating, administrative and capital costs in
2015. Despite potential future losses on currency
derivative positions, a strengthening US dollar versus
our key currency exposures is beneficial to our cost
structure in 2015 as we are less than fully (63%) hedged
against such exposures.
AUD Currency Contracts
Contracts
Effective
average
(AUD hedge rate
(AUDUSD)
millions)
% of total
expected
AUD
exposure1
hedged
% of
expected
operating
Crystallized
cost gain/(loss) in
OCI2 (USD
millions)
exposure
hedged
CLP Currency Contracts
% of total
% of
expected
expected operating
Contracts
Effective
average
(CLP hedge rate
(USDCLP)
millions)4
CLP
exposure1 exposure
hedged
hedged
Crystallized
cost gain/(loss) in
OCI2 (USD
millions)
2015 102,000
521
63%
100%
–
1. Includes all forecasted operating, administrative, sustainable and eligible
project capital expenditures.
2. To be reclassified from Other Comprehensive Income (“OCI”) to earnings
when indicated.
3. Includes C$240 million CAD collar contracts with an average range of
$1.03 – $1.15.
4. Includes CLP 102,000 million collar contracts with an average range
of 521 – 601.
Contracts Maturing in 2015
Effective
average
Hedge
rate
hedge rate assumption
Expected
realized
loss (USD)
millions)
Impact of
change in
exchange rate
on realized
loss (USD
millions)1
Hypo-
thetical
change
AUD
CAD
CAD
CLP
CLP
0.93
1.03
1.03
521
521
0.83
1.20
1.20
610
610
$ 42
9
9
3
$ 3
+/-10%
+10%
-10%
+10%
-10%
+/-$ 23
(27)
11
(22)
$ 7
1. Includes the impact of hedges currently in place.
AVERAGE MONTHLY AUD SPOT AND HEDGE RATES
1.10
1.00
0.90
0.80
0.70
0.60
2015
2016
377
85
0.93
0.91
49%
11%
58%
13%
(4)
(19)
2010
2011
2012
2013
2014
Average Spot Rate
Average Hedge Rate
CAD Currency Contracts
Contracts
Effective
average
(CAD hedge rate
(USDCAD)
millions)3
% of total
expected
CAD
exposure1
hedged
% of
expected
operating
Crystallized
cost gain/(loss) in
OCI2 (USD
millions)
exposure
hedged
AVERAGE MONTHLY CAD SPOT AND HEDGE RATES
2015
240
1.03
55%
62%
1.20
–
36
Barrick_AR14_MDA.indd 36
1.10
1.00
0.90
0.80
2010
2011
2012
2013
2014
2015-03-11 5:00 PM
0.8
Average Spot Rate
Average Hedge Rate
1.2
1.1
1.0
0.9
0.8
0.7
0.6
1.3
1.2
1.1
1.0
0.9
1.2
1.1
1.0
0.9
0.8
0.7
0.6
1.3
1.2
1.1
1.0
0.9
0.8
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
AVERAGE MONTHLY AUD SPOT AND HEDGE RATES
1.10
1.00
0.90
0.80
0.70
0.60
2010
2011
2012
2013
2014
Average Spot Rate
Average Hedge Rate
1.2
1.1
1.0
0.9
0.8
0.7
0.6
AVERAGE MONTHLY CAD SPOT AND HEDGE RATES
CRUDE OIL MARKET PRICE (WTI) (dollars per barrel)
1.20
1.10
1.00
0.90
0.80
2010
2011
2012
2013
2014
Average Spot Rate
Average Hedge Rate
AVERAGE MONTHLY CLP SPOT AND HEDGE RATES
650
600
550
500
450
400
2010
2011
2012
2013
2014
Average Spot Rate
Average Hedge Rate
1.3
$120
1.2
$100
1.1
$80
1.0
$60
0.9
$40
0.8
$20
2010
2011
2012
2013
2014
The price of crude oil in the remainder of 2015 will be
highly dependent on the impact of lower prices on
anticipated supply, as a significant amount of the new
North American production is likely uneconomic if
current prices are sustained for a prolonged period.
650
550
500
600
In 2014, we recorded hedge losses in earnings of
120
$4 million on our fuel hedge positions (2013 – $9 million
gain and 2012 – $24 million gain). Assuming December 31,
100
2014 market forward curves and year-end spot prices,
we expect to realize fuel hedge losses of approximately
$85 million against operating, administrative and capital
costs in 2015. These losses have already been recorded in
the consolidated statements of income as an unrealized
loss on non-hedge derivatives. Beginning in January
2015, upon early adoption of IFRS 9, our fuel hedges will
qualify for hedge accounting and unrealized gains and
losses will be recorded in Other Comprehensive Income.
450
400
80
60
20
40
1.2
1.1
1.0
0.9
0.8
0.7
0.6
1.3
1.2
1.1
1.0
0.9
0.8
650
600
550
500
450
400
Fuel
For 2014, the price of West Texas Intermediate (“WTI”)
crude oil traded in a wide range between $52 and
$108 per barrel, averaged $93 per barrel and closed the
year at $53 per barrel. During the second half of 2014
and continuing into the beginning of 2015, the price
of crude oil has decreased significantly as a result of
concerns over global economic growth, limiting
expectations for demand at the same time that North
American supply has been dramatically increasing due
to advances in extraction technology.
In addition, at a November meeting of the Organization
of the Petroleum Exporting Countries, the organization
announced that its members would keep their crude oil
production quota static for the time being, despite declining
prices, in order to maintain market share. Following the
announcement, the price of oil has continued to fall to
levels not experienced since the global financial crisis.
Financial Fuel Hedge Summary
Barrels
(thousands)
Average
price
% of
expected
exposure
Impact of $10
change on
realized loss
(USD millions)1
2015
2016
2017
2018
2,755
2,811
1,920
1,080
90
85
81
79
58%
65%
49%
29%
1. Includes the impact of hedges currently in place.
$ 20
15
20
$ 27
US Dollar Interest Rates
Beginning in 2008, in response to the contraction of
global credit markets and in an effort to spur economic
activity and avoid potential deflation, the US Federal
Reserve reduced its benchmark rate to between 0% and
0.25%. The benchmark was kept at this level through
2014. In determining how long to maintain the current
0% to 0.25% range for the benchmark rate, the FOMC
37
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
has noted that it will use a wide range of information,
including measures of labor market conditions, indicators
of inflation pressures and inflation expectations, and
readings on financial developments, to assess progress
towards its objectives of maximum employment and 2%
inflation. As economic conditions in the US continue to
normalize, we expect incremental increases to short-term
rates to begin in 2015.
At present, our interest rate exposure mainly relates
to interest receipts on our cash balances ($2.7 billion
at December 31, 2014); the mark-to-market value of
derivative instruments; and to the interest payments on
our variable-rate debt ($1.0 billion at December 31, 2014).
Currently, the amount of interest expense recorded in
our consolidated statement of income is not materially
impacted by changes in interest rates because the
majority of debt was issued at fixed interest rates. The
relative amounts of variable-rate financial assets and
liabilities may change in the future, depending on the
amount of operating cash flow we generate, as well as
the level of capital expenditures and our ability to borrow
on favorable terms using fixed rate debt instruments.
Review of Annual Financial Results
Revenue
($ millions, except per ounce/pound
data in dollars)
For the years ended December 31
Gold
000s oz sold1
Revenue
Market price2
Realized price2,3
Copper
millions lbs sold1
Revenue
Market price2
Realized price2,3
Oil & gas sales4
Other sales
2014
2013
2012
6,284 7,174 7,292
$ 8,744 $ 10,670 $ 12,564
1,266 1,411 1,669
1,265 1,407 1,669
519
435
472
$ 1,224 $ 1,651 $ 1,689
3.61
3.57
153
141
3.32
3.39
93
206 $
3.11
3.03
–
$ 271 $
1. Includes our equity share of gold ounces from Acacia and Pueblo Viejo.
2. Per ounce/pound weighted average.
3. 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 83 of this MD&A.
4. Relates to revenue from our Barrick Energy segment that was sold in third
quarter 2013.
In 2014, gold revenues were down 18% compared to
the prior year. The decrease was primarily due to lower
realized gold prices and lower gold sales volumes
compared to the prior year. Copper revenues for 2014
were down 26% compared to the prior year. The
decrease was primarily due to the impact of lower
realized copper prices compared to the prior year, as
well as due to lower copper sales volumes at both
Zaldívar and Lumwana.
Realized gold prices for 2014 were down $142 per
ounce compared to the prior year. The decrease in
realized gold prices reflects the lower market gold prices
in 2014 compared to the prior year. In 2014, realized
copper prices were down $0.36 per pound compared
to the prior year, due to the decline in market copper
prices in 2014.
38
In 2014, gold production was 6.25 million ounces,
a decrease of 13% compared to the prior year. The
decrease was primarily due to the impact of divestitures
in 2014, including Marigold in second quarter 2014,
Plutonic and Kanowna in first quarter 2014 and Yilgarn
South in fourth quarter 2013 as well as lower production
at Cortez. This was partially offset by higher production
at Goldstrike, Pueblo Viejo, Veladero, Turquoise Ridge
and Porgera.
In 2014, copper production decreased by 19%
compared to the prior year due to lower production at
Zaldívar and at Lumwana. The lower production at
Zaldívar was primarily due to fewer tonnes processed
combined with a higher proportion of sulfide material,
which has a lower recovery rate. At Lumwana, the
decrease was primarily due to the conveyor collapse that
occurred during second quarter 2014, which shut down
the mill and concentrate production for much of the
second quarter.
Production Costs
($ millions, except per ounce/pound
data in dollars)
For the years ended December 31
Cost of sales
Direct mining cost
Depreciation
Royalty expense
Community relations
Cost of sales – gold1
Cash costs2,3
All-in sustaining costs – gold2,3
Cost of sales – copper1
C1 cash costs2,3
C3 fully allocated costs2,3
2014
2013
2012
$ 4,803 $ 5,205 $ 5,232
1,651
1,732
1,648
374
321
303
75
71
76
5,881
6,054
5,795
563
566
598
1,014
915
864
1,238
1,100
954
2.05
1.92
1.92
$ 2.43 $ 2.42 $ 2.85
1. 2013 and 2012 figures restated to include community relations costs.
2. Per ounce/pound weighted average.
3. Cash costs, all-in sustaining costs, C1 cash costs and C3 fully allocated costs
are non-GAAP financial performance measures with no standard meaning
under IFRS. For further information and a detailed reconciliation, please see
pages 75–84 of this MD&A.
Barrick_AR14_MDA.indd 38
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2014, cost of sales applicable to gold decreased
Other Expense (Income)
4% compared to the prior year. The decrease reflects
lower direct mining costs and lower depreciation expense,
primarily due to lower sales volumes as a result of the
asset divestitures.
Gold cash costs for 2014 were up $32 per ounce,
or 6%, compared to the prior year. The increase was
primarily due to the impact of lower production levels
on unit production costs. In 2014, all-in sustaining costs
were down $51 per ounce compared to the prior year.
The decrease was primarily due to lower mine development
and minesite sustaining capital expenditures, which more
than offset the increase in cash costs.
In 2014, cost of sales applicable to copper decreased
$146 million compared to the prior year. The decreases
were primarily due to lower sales volumes due to lower
production levels at Zaldívar and at Lumwana in 2014.
C1 cash costs per pound for 2014 were in line with
the prior year. The impact of lower production levels
on unit production costs was offset by lower direct
mining costs. In 2014, C3 fully allocated costs for 2014
were in line with the prior year, primarily reflecting the
effect of the above factors on C1 cash costs.
General & Administrative Expenses
($ millions)
For the years ended December 31
2014
20131
20121
Corporate administration
Operating segment administration
$ 217
168
$ 192
198
$ 274
229
($ millions)
For the years ended December 31
Consulting fees
Bank charges
Lease termination charges
Mine site severance and
non-operational costs
Gain on sale of long-lived
assets/investments
Miscellaneous income
2014
20131
20121
$ 28
16
15
$ 35
22
–
$ 10
15
–
12
47
2
(52)
(33)
(41)
(7)
(18)
(26)
Total other (income)/expense
$ (14)
$ 56
$ (17)
1. Presentation amended to exclude certain general & administrative expenditures
related to management of our operating unit offices, which are now classified
within general & administrative expenses.
Other income for 2014 increased by $70 million compared
to the prior year. The increase is primarily due to the
recognition of $30 million in gains arising from the sale
of Marigold and Plutonic as well as $15 million in gains
realized on equipment sale leaseback transactions at
Pascua-Lama combined with a 20% decrease in
consulting fees.
Exploration and Project Costs
($ millions)
For the years ended December 31
Exploration:
Minesite programs
Global programs
2014
20131
20121
$ 32
131
163
21
$ 51
128
179
29
$ 82
211
293
66
Total general & administrative expenses
$ 385
$ 390
$ 503
Evaluation costs
1. Presentation amended to include certain general & administrative expenditures
related to management of our operating unit offices, which were previously
classified within Other Expense.
In 2014, general & administrative expenses were down
$5 million compared to the prior year. The decrease was
primarily due to the impact of headcount reductions as
part of the organizational restructuring that took place in
2013, combined with a decrease in deferred share-based
compensation costs, partially offset by severance costs
incurred due to the departure of several senior executives
during third quarter 2014 and further corporate office
headcount reductions in fourth quarter 2014.
Exploration and evaluation expense
$ 184
$ 208
$ 359
Advanced project costs:
Pascua-Lama
Jabal Sayid
Other project related costs:
Cerro Casale
Kainantu
Reko Diq
Corporate development
Community relations
$ 88
30
$ 370
52
$ 33
33
14
4
12
35
25
4
6
5
17
18
1
6
–
54
8
Exploration and project costs
$ 392
$ 680
$ 494
1. Presentation amended to include project costs which were previously classified
in Other Expense.
Exploration and project costs for 2014 decreased
$288 million compared to the prior year. The decrease is
primarily due to a 76% decrease in project costs at Pascua-
Lama due to the suspension of the project in fourth quarter
2013. Exploration and evaluation costs decreased 12%
compared to the prior year, primarily due to a decrease in
mine site exploration activities in Australia-Pacific.
39
Barrick_AR14_MDA.indd 39
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital Expenditures1
($ millions)
For the years ended December 31
Project capital expenditures2,3
Minesite sustaining4
Mine development
Minesite expansion2
Capitalized interest
2014
2013
2012
$ 234 $ 2,137 $ 2,951
1,733
1,150
1,537
1,317
208
468
566
303
764
874
362
30
In 2014, finance costs increased $139 million
compared to the prior year. Interest costs incurred for
2014 decreased 6%, reflecting lower total debt levels
compared to the prior year. Interest capitalized for 2014
decreased by $267 million compared to the prior year,
primarily due to the cessation of interest capitalization
at our Pascua-Lama project in fourth quarter 2013.
Total consolidated capital expenditures
$ 2,264 $ 5,375 $ 6,995
Impairment Charges/Reversals1
1. These amounts are presented on a 100% accrued basis.
2. Project and expansion capital expenditures are included in our calculation of
all-in costs, but not included in our calculation of all-in sustaining costs.
3. Project capital expenditures include the reversal of contract claim accruals
that were closed out during the year and the reclassification of assets from
inventory to construction-in-process at Pascua-Lama.
4. Minesite sustaining includes capital expenditures from discontinued
operations of $64 million for the year ended December 31, 2013.
In 2014, capital expenditures decreased 58% compared
to the prior year. The decrease is primarily due to lower
project capital expenditures due to the decision made in
fourth quarter 2013 to temporarily suspend the Pascua-
Lama project and the completion of the power plant at
Pueblo Viejo in fourth quarter 2013. Minesite sustaining
capital for 2014 decreased 34%, which reflects our
continued focus on reducing and/or deferring sustaining
capital at all of our sites. The decrease in minesite
expansion expenditures for 2014 was primarily due to
a decrease in expenditures at Cortez and at Bulyanhulu
relating to the construction of the CIL plant which is
in the final stages of commissioning, partially offset by
an increase in expenditures related to the construction
of the thiosulfate project at Goldstrike. Capitalized
interest decreased compared to the prior year, primarily
due to the cessation of interest capitalization at Pascua-
Lama in fourth quarter 2013.
Finance Cost/Finance Income
($ millions)
For the years ended December 31
Interest incurred
Interest capitalized
Accretion
Debt extinguishment fees
Finance costs
2014
2013
2012
$ 751
(30)
75
–
$ 796
(297)
68
90
$ 688
(567)
53
–
$ 796
$ 657
$ 174
($ millions)
For the years ended December 31
2014
2013
2012
Goodwill
Zaldívar
Jabal Sayid
Lumwana
Bald Mountain
Round Mountain
Copper
Australia Pacific
Capital projects
Acacia
$ 712 $
316
214
131
36
– $
–
–
–
–
1,033
– 1,200
397
–
185
–
–
–
–
–
–
798
–
–
–
Total goodwill impairment charges
$ 1,409 $ 2,815 $ 798
Asset impairments
Cerro Casale
Lumwana
Pascua-Lama
Jabal Sayid
Porgera
Buzwagi
Veladero
Cortez
North Mara
Pierina
Exploration
Reko Diq
Highland Gold
Round Mountain
Granny Smith
Marigold Mine
Ruby Hill
Kanowna
Plutonic
Darlot
Bald Mountain
Tulawaka
Available for sale investments
Other2
$ 1,476 $
– $
–
720
382 6,061
198
(160)
–
–
46
–
–
7
–
–
–
–
–
–
–
–
–
–
–
18
10
860
746
721
464
–
286
140
112
–
–
78
73
60
66
41
37
36
16
16
26
33
–
4,982
–
–
–
–
–
–
–
–
169
120
86
–
–
–
–
–
–
–
–
–
46
93
Total asset impairment charges
$ 2,697 $ 9,872 $ 5,496
Total impairment charges
$ 4,106 $ 12,687 $ 6,294
1. Impairment figures are presented on a 100% pre-tax basis.
2. Includes the impairment reversal relating to the Pueblo Viejo power assets.
Refer to note 20 to the consolidated financial statements
for a full description of impairment charges.
40
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Income Tax Expense
Reconciliation to Canadian Statutory Rate
($ millions)
For the years ended December 31
At 26.5% statutory rate
Increase (decrease) due to:
Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Goodwill impairment charges
not tax deductible
Impairment charges not recognized
in deferred tax assets
Net currency translation losses on
deferred tax balances
Current year tax losses not recognized
in deferred tax assets
Restructure of internal debt to equity
Pueblo Viejo SLA amendment
Non-recognition of US AMT credits
Adjustments in respect of prior years
Impact of tax rate changes
Other withholding taxes
Mining taxes
Other items
2014
2013
$ (703) $ (2,509)
(93)
18
96
(181)
(169)
111
373
837
334 1,699
46
49
20
(112)
–
43
(8)
20
40
227
5
183
–
384
48
5
–
64
134
(25)
Income tax expense (recovery)
$ 306 $
630
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.
The more significant items impacting income tax expense
in 2014 and 2013 include the following:
Currency Translation
Deferred tax balances are subject to re-measurement for
changes in currency exchange rates each period. The
most significant balances are Argentinean deferred tax
liabilities. In 2014 and 2013, tax expense of $46 million
and $49 million, respectively, primarily arose from
translation losses due to the weakening of the Argentine
peso against the US dollar. These losses and gains are
included within deferred tax expense/recovery.
Restructure of Internal Debt to Equity
In second quarter 2014, a deferred tax recovery of
$112 million arose from a restructure of internal debt
to equity in subsidiary corporations, which resulted in
the release of a deferred tax liability and a net increase
in deferred tax assets.
Non-Recognition of US Alternative Minimum Tax
(AMT) Credits
In fourth quarter 2014 and 2013, we recorded a deferred
tax expense of $43 million and $48 million, respectively,
related to US AMT credits which are not probable to be
realized based on our current life of mine plans.
Tax Rate Changes
In third quarter 2014, a tax rate change was enacted in
Chile, resulting in current tax expense of $2 million.
In fourth quarter 2014, a tax rate change was enacted
in Peru, reducing corporate income tax rates. This resulted
in a deferred tax expense of $18 million due to recording
the deferred tax asset in Peru at the lower rates.
Pueblo Viejo Special Lease Agreement (SLA) Amendment
In third quarter 2013, the Pueblo Viejo Special Lease
Agreement (SLA) Amendment was substantively enacted.
The amendment included the following items: elimination
of a 10 percent return embedded in the initial capital
investment for purposes of the net profits tax (NPI); an
extension of the period over which Pueblo Viejo will
recover its capital investment; a delay of application of
NPI deductions; a reduction of the depreciation rates;
and the establishment of a graduated minimum tax.
The tax impact of the amendment is a charge of
$384 million, comprised of current tax and deferred tax
expense, including $36 million of graduated minimum
tax related to 2012 sales proceeds.
Operating Segments Performance
Review of Operating Segments Performance
As a result of the organizational changes that were
implemented in third quarter 2014, we have determined
that our Co-Presidents, acting together, are Barrick’s
Chief Operating Decision Maker (“CODM”). Beginning in
fourth quarter 2014, the CODM reviews the operating
results, assesses performance and makes capital allocation
decisions at the mine site or project level, with the
exception of Acacia which is reviewed and assessed as a
separate business. Therefore, each individual mine site
and Acacia are operating segments for financial reporting
purposes. As a result, our former North America
Portfolio, Australia Pacific and Copper operating segments
have been eliminated and each individual mine within
those segments is now an operating segment. For
segment reporting purposes, we present our reportable
operating segments as follows: eight individual gold
Barrick_AR14_MDA.indd 41
2015-03-11 5:00 PM
41
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
mines, Acacia and our Pascua-Lama project. The
remaining operating segments have been grouped into
two “other” categories: (a) our remaining gold mines
and (b) our two copper mines. We have restated our
prior period results to conform to the current
presentation. See note 19 to the consolidated financial
statements for details regarding prospective goodwill
reallocation in 2014.
Segment performance is evaluated based on a
number of measures including operating income before
tax, production levels and unit production costs. Income
tax, operating segment administration, finance income
and costs, impairment charges and reversals, investment
write-downs and gains/losses on hedge and non-hedge
derivatives are managed on a consolidated basis and are
therefore not reflected in segment income.
Summary of Operations
For the years ended December 31
Cortez
Goldstrike
Pueblo Viejo (60%)
Lagunas Norte
Veladero
2014
2013
Gold
produced
(ozs)
902
902
665
582
722
Gold
sold
(ozs)
865
908
667
604
724
All-in
Cash
sustaining
costs
($/oz) costs ($/oz)
Gold
produced
(ozs)
$ 498
571
446
379
566
$
706
854
588
543
815
1,337
892
488
606
641
Gold
sold
(ozs)
1,371
887
444
591
659
Cash
costs
($/oz)
All-in
sustaining
costs ($/oz)
$ 229
618
561
361
501
$ 440
913
735
627
833
Total Core Mines
3,773
3,768
$ 500
$
716
3,964
3,952
$ 419
$ 673
Turquoise Ridge (75%)
Porgera (95%)
Kalgoorlie (50%)
Acacia (63.9%)1
Cowal
Hemlo
Round Mountain (50%)
Bald Mountain
Golden Sunlight
Ruby Hill
195
493
326
470
268
206
164
161
86
33
200
507
330
459
270
223
171
161
83
33
$ 473
915
817
732
608
829
936
724
893
637
628
996
1,037
1,105
787
1,059
1,170
1,070
1,181
713
167
482
315
474
297
204
156
94
92
91
162
465
330
481
301
198
159
95
95
91
$ 586
965
846
812
530
922
892
894
680
789
$ 928
1,361
1,070
1,346
854
1,227
1,345
2,182
915
910
Total Continuing Operations
6,175
6,205
$ 608
$
825
6,336
6,329
$ 565
$ 874
Kanowna
Pierina
Marigold (33%)
Plutonic
Yilgarn South
Total Divested/Closed Sites
39
17
11
7
–
74
37
19
15
8
–
$ 641
1,419
1,001
1,120
–
$
674
2,277
1,197
1,206
–
226
97
54
114
339
231
94
49
117
354
$ 881
1,085
908
1,183
749
$ 958
1,349
1,563
1,316
1,014
79
$ 945
$ 1,213
830
845
$ 892
$ 1,110
Total Gold2
6,249
6,284
$ 614
Total Consolidated Barrick
6,249
6,284
$ 598
Copper Copper
sold
(lbs)
produced
(lbs)
C1 cash
costs
($/lb)
$
$
832
864
C3 cash
costs
($/lb)
7,166
7,174
$ 615
$ 914
7,166
7,174
$ 566
$ 915
Copper Copper
sold
(lbs)
produced
(lbs)
C1 cash
costs
($/lb)
C3 cash
costs
($/lb)
Zaldívar
Lumwana
Total Copper
222
214
222
213
$ 1.79
2.08
$ 2.14
2.76
279
260
279
240
$ 1.65
2.29
$ 1.99
2.97
436
435
$ 1.92
$ 2.43
539
519
$ 1.92
$ 2.42
1. 2013 production and sales ounces for Acacia include amounts relating to the Tulawaka mine.
2. Total gold cash costs and all-in sustaining costs exclude the impact of hedges (2014: $16/oz gain; 2013: $41/oz gain) and/or corporate general & administrative costs
(2014: $48/oz; 2013: $42/oz). Total gold cash costs for 2013 also excludes the impact of the Barrick Energy gross margin ($8/oz), which was divested in third quarter 2013.
42
Barrick_AR14_MDA.indd 42
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Cortez, Nevada USA
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)1
All-in sustaining costs (per oz)1
All-in costs (per oz)1
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)1
Capital expenditures ($ millions)2
Minesite sustaining
Minesite expansion
2014
2013
% Change
2012
152,146
25,957
1.34
902
865
$ 687
$ 498
$ 706
$ 728
2014
$ 393
$ 648
$ 189
$ 170
$ 19
134,007
19,999
2.59
1,337
1,371
$ 636
$ 229
$ 440
$ 536
14%
30%
(48%)
(33%)
(37%)
8%
117%
60%
36%
109,046
8,954
5.16
1,370
1,346
$ 603
$ 237
$ 612
$ 632
2013
% Change
2012
$ 1,289
$ 1,610
$ 396
$ 264
$ 132
(70%)
(60%)
(52%)
(36%)
(86%)
$ 1,598
$ 1,887
$ 502
$ 475
27
$
1. These are non-GAAP financial performance measures; for further information and a detailed reconciliation, please see pages 75–84 of this MD&A.
2. Amounts presented exclude capitalized interest.
Financial Results
Segment EBIT for 2014 was 70% lower than the prior
year, primarily due to a reduction in sales volumes
combined with a lower realized gold price.
In 2014, gold production decreased 33% from the
prior year, primarily due to the anticipated processing of
lower grade ore combined with the impact of a negative
grade reconciliation in an area of the open pit in early
2014. Mining in that area of the pit ceased at the
beginning of 2015 and consequently a write-down of
$46 million related to the attributable capitalized costs
was recorded in fourth quarter 2014. This was partially
offset by an increase in ore tonnes placed on the leach
pads and an increase in tonnes mined from the open pit
resulting from the commissioning of new trucks at the
end of 2013.
Cost of sales for 2014 was 8% higher than the prior
year, primarily due to an increase in processing costs
resulting from an increase in tonnes of refractory ore
processed, higher reagent costs as a result of increased
tonnes on the leach pad and a reduction in capitalized
stripping costs, partially offset by lower sales volumes.
Cash costs were 117% higher than the prior year,
primarily due to the impact of lower sales volume on
unit production costs. All-in sustaining costs for 2014
increased by $266 per ounce over the prior year due
to higher cash costs, partially offset by a decrease in
minesite sustaining capital expenditures.
Barrick_AR14_MDA.indd 43
SEGMENT EBIT
($ millions)
1,500
750
0
$ 1,289
2013
PRODUCTION
(000s ounces)
$ 393
2014
1,337
902
825
to
900
2013
2014
2015E
$ 440
2013
$ 706
$ 760
to
$ 835
2014
2015E
43
2015-03-11 5:00 PM
1,500
750
0
AISC
($ per ounce)
600
1,000
400
200
500
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Capital expenditures for 2014 decreased by $207 million,
or 52%, from the prior year. The decrease was primarily
due to a reduction in capitalized stripping costs and in
minesite expansion capital expenditures.
Operational Excellence
Improving performance by improving
shift change sequencing; maintenance
practices; capital efficiency;
advanced process controls; and
geo-metallurgical modeling
Outlook
At Cortez we expect 2015 gold production to be in the
range of 825 to 900 thousand ounces, down slightly
compared to 2014 production levels mainly due to a
decrease in open pit tonnage processed as a result of
mine sequencing, and declining underground ore grade
and tonnage due to a transition to lower grade
underground ore zones as we advance deeper in the
mine. Mining in 2015 will include Cortez Hills and
Crossroads pre-stripping, and as a result open pit tonnes
processed will be down significantly. The impact of lower
tonnes processed from the open pit will be partially
offset by higher processed ore grades.
In 2015, we expect cash costs to be in the range
of $560 to $610 per ounce, higher than 2014, due
to lower capitalized stripping and higher processing
costs. Processing costs are expected to rise as a higher
proportion of production will be processed at the
Goldstrike autoclaves. All-in sustaining costs are expected
to be in the range of $760 to $835 per ounce, higher
than 2014, primarily due to the impact of lower sales
volumes on unit production costs and higher sustaining
capital expenditures.
Goldrush
The Goldrush project, located six kilometers from the
Cortez mine, is one of the largest gold discoveries of
the last decade. Measured and indicated resources stood
at 10.6 million ounces and inferred resources were
4.9 million ounces at the end of 2014. The prefeasibility
study remains on schedule for completion in mid-2015.
Infill drilling in 2014 continued to demonstrate high
grade continuity and led to resource upgrades, with
nearly 70 percent of the overall resource now in the
measured and indicated category. A permit application
for twin exploration declines that will allow the company
to better explore the northern limits of the known
deposit was submitted in the second quarter of 2014.
Goldrush Deposit
10.6M oz M&I resources
4.9M oz inferred resources
Cortez Hills Lower Zone
A prefeasibility study for underground mining at Cortez
below currently permitted levels will be completed in
late 2015. Mineralization in this zone is primarily oxide
and higher grade compared to the current underground
mine, which is sulfide in nature. The limits of the Lower
Zone have not yet been defined, and drilling has indicated
the potential for new targets at depth. The exploration
drift has been extended to the south, enabling additional
step-out drilling, which is anticipated to begin in June.
Drill results to date include 36.6 meters at 31.5 grams
per tonne and 27.4 meters at 20.9 grams per tonne,
both oxide in nature, which compare favorably with the
average grade of 13.8 grams per tonne in refractory ore
above the 3,800 foot level7.
Cortez Hills Lower Zone
Primarily oxide and higher grade
than current underground mine
Scientific and technical information relating to
exploration at the company’s Cortez property contained
in this MD&A has been reviewed and approved by
Robert Krcmarov, Senior Vice President, Global
Exploration of Barrick, who is a “Qualified Person” as
defined in National Instrument 43-101 – Standards of
Disclosure for Mineral Projects.
44
7. The drill results for the Cortez mine contained in this MD&A have been pre-
pared in accordance with National Instrument 43-101 – Standards of Disclosure
for Mineral Projects. For additional details regarding the Cortez exploration
information included in this MD&A, please see Barrick’s most recent Form 40-F/
Annual Information Form on file with the SEC and Canadian provincial
securities regulatory authorities.
Barrick_AR14_MDA.indd 44
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Goldstrike, Nevada USA
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Financial Results
Segment EBIT for 2014 was 15% lower than the prior
year. The decrease was primarily due to a lower realized
gold price and an increase in underground mining costs
and depreciation expense, partially offset by an increase
in capitalized stripping costs.
In 2014, gold production of 902 thousand ounces
increased by 1% over the prior year. The increase
was primarily due to higher grades from the open pit,
combined with increased recoveries, partially offset
by a decrease in ore tonnes processed.
Cost of sales for 2014 of $651 million was
$11 million, or 2%, lower than the prior year. The
decrease was primarily due to a decrease in processing
costs and an increase in capitalized stripping costs,
partially offset by an increase in sales volume. Cash costs
were $571 per ounce, down $47 per ounce, or 8%,
compared to the prior year. The decrease was primarily
due to the impact of higher sales volume on unit
production costs. All-in sustaining costs for 2014
decreased by $59 per ounce compared to the prior year
primarily due to the lower cash costs combined with a
decrease in minesite sustaining capital expenditures.
In 2014, capital expenditures increased by $59 million,
or 12%, compared to the prior year. The increase was
primarily due to an increase in minesite expansion capital
expenditure as a result of construction activity at the
thiosulfate technology project.
Barrick_AR14_MDA.indd 45
2014
2013
% Change
2012
81,410
5,307
6.28
902
908
$ 651
$ 571
$ 854
$ 1,170
2014
$ 496
$ 628
$ 533
$ 246
$ 287
87,350
6,829
5.01
892
887
$ 662
$ 618
$ 913
$ 1,165
(7%)
(22%)
25%
1%
2%
(2%)
(8%)
(6%)
–
100,118
7,487
5.89
1,174
1,175
$ 730
$ 527
$ 809
$ 933
2013
% Change
2012
$ 581
$ 693
$ 474
$ 251
$ 223
(15%)
(10%)
12%
(2%)
29%
$ 1,227
$ 1,340
$ 453
$ 308
$ 145
SEGMENT EBIT
($ millions)
1,000
500
0
PRODUCTION
(000s ounces)
$ 581
2013
$ 496
2014
892
902
1,000
to
1,150
2013
2014
2015E
$ 913
$ 854
$ 700
to
$ 800
2013
2014
2015E
45
2015-03-11 5:00 PM
1,500
750
0
AISC
($ per ounce)
600
1,000
400
200
500
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Goldstrike Thiosulfate Technology Project
Goldstrike achieved first gold production through its
autoclaves in fourth quarter 2014, after being successfully
retrofitted with Barrick’s innovative and proprietary
thiosulfate technology. The new thiosulfate circuit
allows for continued production from the autoclaves
and accelerates the cash flow from about four million
stockpiled ounces. The expected average annual
contribution is about 350 to 450 thousand ounces of
production (including Cortez ore processed at Goldstrike)
in the first full five years following implementation of
this process. In 2015, Goldstrike’s production is expected
to exceed 1.0 million ounces with contributions from
the thiosulfate process. The project will finalize some
adjustments to the system in first quarter 2015, with
total project costs expected to remain at about
$620 million.
Over 1 million ounces of annual
production over next 5 years; patented
thiosulfate process uses no cyanide
and accelerates production
Outlook
At Goldstrike we expect 2015 production to be in the
range of 1,000 to 1,150 thousand ounces, which is
up from 2014 production levels, due primarily to the
commissioning of the thiosulfate circuit. As a result
of the thiosulfate circuit, ounces produced at the
autoclave will increase by approximately 250 thousand
ounces in 2015. This will be partially offset by lower
production from the roaster due to lower grades from
the open pit in 2015. Underground production is
expected to be consistent with 2014.
Operating costs are expected to be higher in 2015
due to higher process throughput at the autoclaves, but
this will largely be offset by the impact of higher sales
volumes on unit production costs. As a result, we expect
cash costs to be in the range of $540 to $590 per ounce,
which is consistent with 2014, and all-in sustaining
costs to be $700 to $800 per ounce, which is down
significantly compared to 2014 due to the impact of
higher production levels.
Achieving these production and related cost
guidance ranges is dependent on the thiosulfate circuit
ramping up as planned. This process utilizes new
technology, and, as with any such new process, there are
risks associated with the ramp-up to full capacity. If the
ramp-up progresses slower than we currently anticipate,
then our production guidance for both Goldstrike and
Cortez would be at risk.
46
Barrick_AR14_MDA.indd 46
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Pueblo Viejo, Dominican Republic
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Project capex
Financial Results
Segment EBIT in 2014 was 56% higher than the prior
year primarily due to increased sales volume as the
minesite ramped up to full production, partially offset
by a lower realized gold price.
In 2014, gold production increased by 36% over the
prior year, following the completion of major modifications
to the autoclave facility in the second half of 2013 as
the mine worked to achieve design capacity and all four
autoclaves came online. In second quarter 2014, the
autoclaves achieved targeted and sustainable run rates,
achieving full production. Modifications to the lime
circuit are essentially complete and the mine is progressing
toward design capacities on copper and silver.
Cost of sales for 2014 was 54% higher than the
prior year, primarily due to increased sales volume. Cash
costs were 20% lower than the prior year primarily due
to the impact of higher sales volume on unit production
costs. All-in sustaining costs decreased by 20% from
the prior year due to the lower cash costs, partially offset
by increased capitalized stripping costs.
In 2014, capital expenditures decreased by 21%
from the prior year primarily due to a decrease in project
capital expenditures resulting from the completion of
the 215 megawatt power plant that was commissioned
in third quarter 2013, partially offset by an increase in
capitalized stripping costs.
Barrick_AR14_MDA.indd 47
2014
21,055
4,027
5.53
665
667
$ 885
$ 446
$ 588
$ 588
2014
$ 669
$ 912
$ 80
$ 80
–
–
2013
% Change
9,192
2,658
6.14
488
444
$ 574
$ 561
$ 735
$ 800
129%
52%
(10%)
36%
50%
54%
(20%)
(20%)
(27%)
2013
% Change
$ 430
$ 569
$ 101
$ 73
–
$ 28
56%
60%
(21%)
10%
–
(100%)
2012
9,651
445
5.23
67
–
–
–
–
–
2012
–
–
$ 949
$ 95
–
$ 854
$ 669
2014
625
to
675
2015E
$ 540
to
$ 590
2015E
47
2015-03-12 3:49 PM
SEGMENT EBIT
($ millions)
1,000
500
0
PRODUCTION
(000s ounces)
$ 430
2013
488
2013
665
2014
$ 735
$ 588
2013
2014
1,500
750
0
AISC
($ per ounce)
600
1,000
400
200
500
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Outlook
At Pueblo Viejo, we expect our equity share of 2015 gold
production to be in the range of 625 to 675 thousand
ounces, which is in line with 2014 production levels. In
2015, a decrease in processed grade will be offset
by greater throughput, mainly as a result of greater
plant availability following the completion of plant
debottlenecking modifications to the autoclave facility
resulting in achievable targeted and sustainable run
rates. Modifications to the lime circuit are essentially
complete and the mine is progressing toward design
capacities on silver and copper.
We expect cash costs to be in the range of $390 to
$425 per ounce and all-in sustaining costs to be $540
to $590 per ounce. Operating costs are expected to be
lower primarily due to an improvement in higher silver
and copper by-product credits as the mine works toward
design capacities on silver and copper.
Barrick’s team of technical experts has identified
multiple opportunities to optimize operations and
increase cash flow at Pueblo Viejo. Over the next 12
to 24 months, we will concentrate on decreasing costs
and increasing production. This will involve:
n Increasing plant processing throughput by optimizing
blending and autoclave availability
n Decreasing overall power cost by switching from
heavy fuel oil to lower-cost liquid natural gas
n Reducing costs by optimizing our maintenance spend
and reducing G&A
These initiatives and the transition from ramp-up to
steady state operations create the opportunity to
significantly decrease our all-in sustaining costs over the
next five years. In the longer term, Pueblo Viejo has
significant reserves and resources as well as substantial
exploration potential that will continue to extend the
profitable life of the mine. We are actively exploring
opportunities to extend the life of the asset beyond 2050.
World’s largest autoclaves
220 tonnes per hour;
further optimization
potential exists
Pueblo Viejo is one of the world’s leading gold
mines. It is expected to produce more than 1 million
ounces of gold a year at all-in sustaining costs of less
than $700 per ounce over the next three years. The mine
is now past commissioning, is fully up and running, and
has a long operating life ahead of it with the potential
for further additions to reserves and resources.
On February 17, 2015, the Pueblo Viejo mine
achieved certain operational and technical milestones
as required for the mine’s $1.035 billion loan facility to
become non-recourse to Barrick and Goldcorp Inc. As
a result, the sponsor guarantees previously provided
by Barrick and Goldcorp Inc,. in proportion to their
ownership interest in the mine, were terminated as
of February 17, 2015.
48
Barrick_AR14_MDA.indd 48
2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Lagunas Norte, Peru
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Financial Results
Segment EBIT for 2014 decreased 20% from the prior
year primarily due to a lower realized gold price
combined with higher operating costs, partially offset
by an increased sales volume.
In 2014, gold production was 4% lower, compared
to the prior year, primarily due to a decrease in average
grade, partially offset by increased mine equipment
availability resulting in increased tonnes placed on the
leach pad combined with higher throughput due to
increased crusher availability.
Cost of sales for 2014 was 19% higher than the
prior year, primarily due to higher operating costs
resulting from an increase in ore tonnes mined combined
with higher depreciation expense. Cash costs were 5%
higher than the prior year, primarily due to increased
mining costs resulting from an increase in ore tonnes
mined. All-in sustaining costs decreased 13% from the
prior year due to lower minesite sustaining capital
expenditures, partially offset by the higher cash costs.
In 2014, capital expenditures decreased by 42%
from the prior year, primarily due to the significant
construction progress made in 2013 on the new Phase 5
leach pad, which is now operational, and the water
treatment plants and tailings ponds, which are currently
undergoing commissioning.
Barrick_AR14_MDA.indd 49
2014
2013
% Change
50,030
22,110
0.99
582
604
$ 335
$ 379
$ 543
$ 543
2014
$ 439
$ 531
$ 81
$ 81
–
36,934
21,089
1.06
606
591
$ 281
$ 361
$ 627
$ 627
35%
5%
(7%)
(4%)
2%
19%
5%
(13%)
(13%)
2013
% Change
$ 548
$ 602
$ 139
$ 139
–
(20%)
(12%)
(42%)
(42%)
–
2012
31,226
20,533
1.26
754
734
$ 296
$ 318
$ 565
$ 565
2012
$ 929
$ 987
$ 162
$ 162
–
SEGMENT EBIT
($ millions)
1,000
500
0
PRODUCTION
(000s ounces)
1,000
$ 548
2013
$ 439
2014
500
606
582
600
to
650
2013
2014
2015E
$ 627
$ 543
$ 675
to
$ 725
2013
2014
2015E
49
2015-03-11 5:00 PM
0
AISC
($ per ounce)
600
1,000
400
200
500
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Outlook
At Lagunas Norte we expect 2015 production to be in
the range of 600 to 650 thousand ounces, which is
higher than 2014 production levels as a result of the
availability of better recovery ore for the leach pad,
increasing the tonnage placed on the leach pads and
increasing the flow rate through the Merrill Crowe and
CIC plants, which will allow us to convert leach pad
inventory into production.
In 2015, we expect cash costs to be in the range of
$375 to $425 per ounce and all-in sustaining costs to be
$675 to $725 per ounce, which is higher than 2014
levels. The increase in all-in sustaining costs is mainly due
to the construction of the Leach Pad Phase 6 Expansion
and the engineering and construction of the East Waste
dump expansion and ARD Treatment Plant.
Lagunas Norte Refractory Ore
We are currently evaluating options for mining and
processing the refractory ore body below the current
mine. If successful, this project has the potential to
extend the mine life by approximately eight years. The
project would leverage existing on-site infrastructure,
which improves the risk profile and expected return on
investment from the project. If it proceeds, this project
will have the potential to unlock the value of other
refractory ore deposits in the area.
Refractory ore body holds the
potential to extend the mine life
by approximately 8 years
50
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2015-03-11 5:00 PM
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Veladero, Argentina
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Financial Results
Segment EBIT for 2014 was 7% lower than the prior year,
primarily due to an increase in sales volume, partially
offset by the lower realized gold price.
In 2014, gold production was 13% higher compared
to the prior year, primarily due to a positive grade
reconciliation from Phase 3 of the Federico pit, partially
offset by lower tonnes mined due to decreased primary
crusher availability resulting from increased maintenance
downtime in first quarter 2014 and lower mine
equipment availability.
Cost of sales for 2014 was slightly lower than the
prior year, primarily due to lower depreciation expense
as a result of impairment charges recorded in 2013
combined with lower operating costs due to the
devaluation of the Argentine peso in 2014, partially
offset by the impact of higher sales volume. Cash costs
were 13% higher than the prior year, primarily due
the impact of lower silver by-product credits, partially
offset by the impact of higher production levels on
unit production costs. All-in sustaining costs decreased
slightly, compared to the prior year, primarily due to
a reduction in capitalized stripping costs, partially
offset by the higher cash costs.
Barrick_AR14_MDA.indd 51
2014
2013
% Change
2012
67,686
29,500
1.00
722
724
$ 554
$ 566
$ 815
$ 815
2014
$ 330
$ 446
$ 173
$ 173
–
78,592
29,086
0.94
641
659
$ 568
$ 501
$ 833
$ 833
(14%)
1%
6%
13%
10%
(2%)
13%
(2%)
(2%)
2013
% Change
$ 354
$ 522
$ 208
$ 208
–
(7%)
(15%)
(17%)
(17%)
–
83,892
27,695
1.10
766
754
$ 586
$ 487
$ 761
$ 761
2012
$ 625
$ 819
$ 196
$ 196
–
SEGMENT EBIT
($ millions)
600
300
0
$ 354
2013
PRODUCTION
(000s ounces)
1,000
500
641
722
$ 330
2014
575
to
625
2013
2014
2015E
$ 833
$ 815
$ 990
to
$ 1,075
2013
2014
2015E
51
2015-03-11 5:00 PM
0
AISC
($ per ounce)
600
1,500
400
200
750
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2014, capital expenditures decreased 17%
compared to the prior year, primarily due to lower
minesite sustaining capital expenditures as a result of
a reduction in costs related to the leach pad expansion,
as construction activities relating to both phases 4 and
5 were ongoing in the first half of 2013, combined
with lower capitalized stripping costs. This was partially
offset by the commencement in third quarter 2014 of a
project related to the recirculation of leach solution to
achieve improved recoveries.
mining productivity and energy costs. Operating costs
at Veladero are highly sensitive to local inflation and the
foreign exchange rate of the Argentine peso. We have
assumed an average ARS:USD exchange rate of 10.2:1
for the purposes of preparing our cash cost and all-in
sustaining cost guidance for 2015; however, we do
expect further devaluation of the Argentine peso over
the next several years which will have a significant
impact on our local labor costs and therefore our cash
costs and all-in sustaining costs.
Outlook
At Veladero, we expect 2015 production to be in the
range of 575 to 625 thousand ounces, which is down
compared to 2014 production levels as a result of lower
grade from the Federico pit.
We expect cash costs in 2015 to be in the range of
$600 to $650 per ounce and all-in sustaining costs to
be $990 to $1,075 per ounce, higher than 2014 levels
mainly due to the decline in gold production and higher
mining costs associated with lower grades and an
increase in waste material being mined in 2015. At
Veladero, there are a number of initiatives under way to
reduce operating costs mainly in the areas of supply
chain and inventory management, maintenance practices,
Lowering costs by improving
inventory management, maintenance,
mining productivity and energy costs
Veladero continues to be subject to restrictions that
affect the amount of leach solution. New government
regulations set a level limit for the leach solution pond,
reducing storage capacity, impacting operational capacity
to manage solution balance and reducing leaching
kinetics, as ore has to be placed on upper levels of the
leach pad to maintain pond level. These restrictions are
considered in our 2015 operating guidance.
52
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Turquoise Ridge, Nevada USA
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Financial Results
Segment EBIT for 2014 increased 21% from the prior
year, primarily due to an increase in sales volume,
partially offset by a lower realized gold price and higher
depreciation expense.
In 2014, gold production of 195 thousand ounces
was 17% higher, compared to the prior year. The
increase was primarily due to increased throughput and
improved ore grades.
Cost of sales for 2014 was consistent with the prior
year. Cash costs were 19% lower than the prior year.
The decrease was primarily due to the impact of higher
sales volume on unit production costs. All-in sustaining
costs decreased by 32% compared to the prior year
due to lower per ounce cash costs combined with lower
minesite sustaining capital expenditures.
In 2014, capital expenditures decreased by 45%
compared to the prior year, primarily due to lower minesite
sustaining capital expenditures.
Barrick_AR14_MDA.indd 53
2014
312
335
19.62
195
200
$ 111
$ 473
$ 628
$ 628
2014
$ 139
$ 156
$ 30
$ 30
–
2013
% Change
2012
305
340
16.29
167
162
$ 109
$ 586
$ 928
$ 928
2%
(1%)
20%
17%
23%
2%
(19%)
(32%)
(32%)
265
293
16.60
144
145
94
$
$ 547
$ 1,410
$ 1,410
2013
% Change
2012
$ 115
$ 129
$ 55
$ 55
–
21%
21%
(45%)
(45%)
–
$ 147
$ 162
45
$
45
$
–
SEGMENT EBIT
($ millions)
300
150
0
PRODUCTION
(000s ounces)
$ 115
2013
$ 139
2014
500
250
0
167
2013
195
2014
AISC
($ per ounce)
600
1,000
400
$ 928
$ 628
175
to
200
2015E
$ 875
to
$ 925
2013
2014
2015E
53
2015-03-11 5:00 PM
200
500
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Outlook
At Turquoise Ridge we expect 2015 production to be in
the range of 175 to 200 thousand ounces, which is in
line with 2014 production levels. In 2015, as we expand
into the South Zone8, lower grades will be offset with
higher tonnage mined and processed. We will see the
benefit of this expansion into the South Zone in 2016
and beyond through increased production.
We expect cash costs in 2015 to be in the range of
$570 to $600 per ounce and all-in sustaining costs to
be in the range of $875 to $925 per ounce. Cash costs
are expected to be higher due to the impact of higher
operating costs as a result of higher tonnage mined and
processed with expansion into the South Zone. All-in
sustaining costs in 2015 are expected to be higher than
2014, due to higher spend on sustaining capital to
support the ongoing infrastructure requirements in
the North Zone as well as mobile equipment for the
South Zone.
Turquoise Ridge Second Shaft
The Turquoise Ridge mine contains 4.5 million ounces in
reserves (75 percent basis) at an average grade of
16.9 grams per tonne – the highest reserve grade in the
company’s operating portfolio and among the highest in
the entire gold industry. Turquoise Ridge has considerable
untapped potential and could become a core operation
for Barrick. The company is advancing a project to
develop an additional shaft, which could bring forward
more than one million ounces of production, roughly
doubling output to an average of 375 thousand ounces
per year (75 percent basis) at all-in sustaining costs of
about $625 to $675 per ounce9. The prefeasibility study
was completed in January 2015 and key permits are
expected in the third quarter. Pending approval by the
joint venture partners, construction could commence
in the fourth quarter of 2015, with initial production
beginning in 2019. Preliminary estimates indicate capital
expenditures of approximately $225 to $245 million
(75% basis) for additional underground development
and shaft construction, and an attractive payback period
of roughly two and a half years using a gold price
assumption of $1,300 per ounce.
Emerging core mine with
the potential to nearly
double production
Drilling at the northern extension of the deposit
confirms the ore body is larger than previously known,
at higher grades. Due to the substantial thickness of the
mineralization, our engineering team is also looking at
the economics of introducing bulk underground mining
in some parts of the ore body. Advanced ground support
technology and improved reinforcement techniques have
also mitigated ground stability issues that challenged
previous mining operations at the site.
8. Expansion into the South Zone is subject to approval by the joint
venture partners.
9. Annual average for the first full eight years.
54
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Porgera, Papua New Guinea
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Financial Results
Segment EBIT for 2014 was 28% lower than the prior
year. The decrease was primarily due to the lower
realized gold price, partially offset by an increase in
sales volume.
In 2014, gold production of 493 thousand ounces
was 2% higher compared to the prior year. The increase
was primarily due to higher recoveries and throughput as
a result of improved mill availability.
Cost of sales for 2014 of $545 million was 4%
higher than the prior year. The increase was primarily due
to the increased sales volume combined with higher
operating costs as a result of increased transport and
maintenance costs as well as a decrease in capitalized
stripping costs. Cash costs were $915 per ounce, down
$50 per ounce compared to the prior year. The decrease
was primarily due to the impact of higher sales volume
on unit production costs. All-in sustaining costs
decreased by $365 per ounce, or 27%, compared to the
prior year reflecting the focus to significantly decrease
minesite sustaining capital expenditures.
In 2014, capital expenditures decreased by
$138 million, or 81%, compared to the prior year. The
decrease was primarily due to a reduction in capitalized
stripping costs as a result of a change in the 2014 mine
plan to reduce open pit mining activity.
Barrick_AR14_MDA.indd 55
2014
2013
% Change
2012
15,719
5,584
3.10
493
507
$ 545
$ 915
$ 996
$ 996
2014
$ 84
$ 164
$ 33
$ 33
–
18,628
5,354
3.22
482
465
$ 524
$ 965
$ 1,361
$ 1,361
(16%)
4%
(4%)
2%
9%
4%
(5%)
(27%)
(27%)
2013
% Change
$ 116
$ 190
$ 171
$ 171
–
(28%)
(14%)
(81%)
(81%)
–
21,935
4,963
3.17
436
426
$ 484
$ 968
$ 1,452
$ 1,452
2012
$ 223
$ 292
$ 194
$ 194
–
SEGMENT EBIT
($ millions)
200
100
0
PRODUCTION
(000s ounces)
$ 116
2013
$ 84
2014
1,000
500
0
482
2013
493
2014
500
to
550
2015E
AISC
($ per ounce)
600
1,500
400
$ 1,361
$ 996
$ 1,025
to
$ 1,125
2013
2014
2015E
55
2015-03-12 3:49 PM
200
750
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2014, management resolved technical issues and
developed an optimized mine plan to sequence the
west wall cutback in an economical manner. As a result,
management was able to bring a significant portion
of the ounces from the open pit back into the 2015 mine
plan. The new plan resulted in an increase in the
estimated mine life from 8 to 12 years, and an increase
in the estimated fair value less cost to dispose (“FVLCD”)
of the mine, which has resulted in a partial reversal
of a previous impairment loss of $160 million in fourth
quarter 2014.
Outlook
At Porgera we expect 2015 gold production to be in the
range of 500 to 550 thousand ounces, which is slightly
higher than 2014 production levels. Porgera production
is expected to be higher than 2014 mainly due to the
change in the mine plan which focuses on the increasing
underground mining rates and mining of higher grade
open pit material. Processed tonnes are constrained due
to sulfur oxidation capacity. However, the commencement
of concentrate export will allow for stored concentrate to
be reclaimed or optimal mill throughput to be achieved.
In 2015, we expect cash costs to be in the range
of $775 to $825 per ounce which is lower than 2014
cash costs of $915, primarily due to an increase in
capitalized stripping in the open pit. All-in sustaining
costs are expected to be higher than 2014, mainly due
to the increase in sustaining capital in line with the
new mine plan.
Porgera is a well-established asset in a highly
prospective region with extensive infrastructure, proven
technology, and a team that is able to operate
successfully in a challenging environment.
Well established asset; highly prospective
region; extensive infrastructure; proven
technology & team
As part of Barrick’s global strategy we continue to
focus on further decreasing Porgera’s cost structure in
the short term, with initiatives that could reduce our
all-in sustaining costs by approximately 50% over the
next decade. In addition, we are advancing plans that
could significantly increase the life of the mine. The large
drivers of cost and mine life improvements we are
exploring include:
n Decreasing energy costs through a contracted build,
own, operate, and transfer model;
n Reducing the number of expatriate staff by training
and developing local talent;
n Implementing a cost optimization program focused
on reducing external spending through commercial
negotiations, inventory optimization, and demand
management;
n Consistent positive reconciliation of actual versus
mined tonnage, which adds process life and
associated underground mine life; and
n In the longer term, expansions from high-potential
targets in the area surrounding the mine.
56
Barrick_AR14_MDA.indd 56
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Kalgoorlie, Australia
Summary of Operating Data
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
2014
2013
% Change
2012
34,644
5,809
2.01
326
330
$ 309
$ 817
$ 1,037
$ 1,037
2014
$ 106
$ 148
$ 66
$ 66
–
36,445
5,924
1.97
315
330
$ 309
$ 846
$ 1,070
$ 1,070
(5%)
(2%)
2%
3%
–
–
(3%)
(3%)
(3%)
2013
% Change
$ 154
$ 182
$ 66
$ 66
–
(31%)
(19%)
–
–
–
33,905
5,871
2.05
327
340
$ 295
$ 803
$ 1,085
$ 1,085
2012
$ 266
$ 286
$ 87
$ 87
–
Financial Results
Segment EBIT for 2014 was 31% lower than the prior
year. The decrease was primarily due to lower realized
gold prices and an increase in depreciation expense
compared to the prior year.
SEGMENT EBIT
($ millions)
300
In 2014, gold production was 3% higher compared
150
to the prior year primarily due to increased grades and
improved recovery, partially offset by a decrease in ore
tonnes processed.
Cost of sales for 2014 was in line with the prior year
as lower operating costs, resulting from a decrease in ore
tonnes mined were offset by an increase in depreciation
expense. Cash costs were 3% lower than the prior year
primarily due to a decrease in mining costs resulting from
a decrease in ore tonnes mined. All-in sustaining costs
decreased by $33 per ounce compared to the prior year,
primarily due to the lower cash costs.
In 2014, capital expenditures were in line with the
prior year as lower capitalized stripping costs at Golden
Pike were offset by higher capital expenditures
associated with the emissions reduction program.
Barrick_AR14_MDA.indd 57
$ 154
2013
$ 106
2014
0
PRODUCTION
(000s ounces)
315
326
315
to
330
2013
2014
2015E
$ 1,070
$ 1,037
2013
2014
$ 915
to
$ 940
2015E
57
2015-03-11 5:00 PM
500
250
0
AISC
($ per ounce)
600
1,500
400
200
750
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Outlook
At Kalgoorlie we expect 2015 production to be in the
range of 315 to 330 thousand ounces, which is line with
2014 levels. Kalgoorlie’s mine plan reflects a slightly
lower mined grade from Golden Pike in the open pit
and an associated lower feed grade and mill recovery.
This is offset by higher processed tonnes due to an
increase in throughput rates in the Fimiston circuit.
Productivity improvements with
shorter open pit hauls and increased
mill throughput
In 2015, we expect cash costs to be in the range of
$775 to $800 per ounce and all-in sustaining costs to
be in the range of $915 to $940 per ounce, which are
expected to be lower than 2014 levels mainly due to the
decrease in the expected AUD/USD exchange rate and
lower mining costs due to the fall in the diesel price.
Mine scheduling in 2015 is expected to result in lower
capitalized stripping due to lower waste movement at
Golden Pike.
58
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Acacia Mining plc1, Africa
Summary of Operating Data
100% basis
For the years ended December 31
Total tonnes mined (000s)
Ore tonnes processed (000s)
Average grade (grams/tonne)
Gold produced (000s/oz)
Gold sold (000s/oz)
Cost of sales ($ millions)
Cash costs (per oz)
All-in sustaining costs (per oz)
All-in costs (per oz)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
1. Formerly African Barrick Gold plc.
2014
2013
% Change
2012
44,847
9,036
3.00
719
704
$ 693
$ 732
$ 1,105
$ 1,190
2014
$ 191
$ 320
$ 251
$ 195
$ 56
54,100
7,980
2.86
641
650
$ 756
$ 812
$ 1,346
$ 1,519
(17%)
13%
5%
12%
8%
(8%)
(10%)
(18%)
(22%)
2013
% Change
$ 115
$ 275
$ 385
$ 272
$ 113
66%
16%
(35%)
(28%)
(50%)
48,303
7,697
2.86
627
609
$ 794
$ 958
$ 1,585
$ 1,645
2012
$ 216
$ 378
$ 323
$ 287
$ 36
Financial Results
Segment EBIT for 2014 was 66% higher than the prior
year. The increase was primarily due to higher sales
volumes and lower cost of sales, partially offset by lower
realized gold prices.
SEGMENT EBIT
($ millions)
300
In 2014, gold production was 12% higher compared
150
to the prior year. The increase was due to higher
production across all sites. In 2014, production at Buzwagi
increased by 15% over the prior year, mainly due to higher
ore grades as a result of mining in the main ore zone and
increased recovery rates. Production at Bulyanhulu
increased by 18% over the prior year primarily due to an
increase in ore grades combined with the contribution of
ounces from the CIL plant that was commissioned during
fourth quarter 2014. At North Mara, production increased
by 7% over the prior year primarily due to the processing
of more ore tonnes as a result of improved mill efficiency.
Cost of sales for 2014 was 8% lower than the prior
year. The decrease was primarily due to lower labor cost
as a result of headcount reductions and lower general
and administrative costs, partially offset by increased
maintenance costs due to higher mine equipment repairs.
Cash costs were down 10% from the prior year, primarily
due to the reduction in costs of sales combined with the
impact of higher production levels on unit production
costs. All-in sustaining costs decreased by 18% over the
prior year reflecting the lower per ounce cash costs, a
decrease in minesite sustaining capital expenditures across
all sites and a reduction in capitalized stripping costs at
North Mara and Buzwagi.
Barrick_AR14_MDA.indd 59
0
$ 115
2013
PRODUCTION (Barrick’s Share)
(000s ounces)
474
470
$ 191
2014
480
to
510
2013
2014
2015E
$ 1,346
$ 1,105
$ 1,050
to
$ 1,100
2013
2014
2015E
59
2015-03-11 5:00 PM
500
250
0
AISC
($ per ounce)
600
1,500
400
200
750
0
0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2014, capital expenditures decreased by 35%
from the prior year, primarily due to a reduction in
minesite sustaining capital expenditures across all sites,
partially offset by higher capitalized underground
development costs at Bulyanhulu.
Outlook
We expect Acacia’s 2015 gold production to be in the
range of 480 to 510 thousand ounces (Barrick’s share),
which is higher than 2014 production levels. Acacia’s
production is expected to be higher than 2014 mainly
due to a significant increase at Bulyanhulu as a result
of grade improvements combined with the processing
of more ore tonnes and the contribution of ounces
from the CIL expansion. This will be partially offset by
a decrease in production at North Mara due to the
expected decline in grade as the Gokona pit transitions
from an open pit to an underground operation, resulting
in an increased proportion of ore being sourced from
the lower grade Nyabirama pit.
Increasing production at
reduced all-in sustaining costs
In 2015, we expect cash costs to be in the range of
$695 to $725 per ounce, which is lower than 2014 cash
costs of $732 per ounce, primarily due to further cost
reductions at Bulyanhulu. All-in sustaining costs are
expected to be $1,050 to $1,100 per ounce, which is
lower compared to 2014 mainly due to a decrease
in sustaining capital at Buzwagi.
60
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Global Copper, Zambia and Chile
Summary of Operating Data
For the years ended December 31
Copper produced (millions of lbs)
Copper sold (millions of lbs)
Cost of sales ($ millions)
C1 cash costs (per lb)
C3 fully allocated costs (per lb)
Summary of Financial Data
For the years ended December 31
Segment EBIT ($ millions)
Segment EBITDA ($ millions)
Capital expenditures ($ millions)
Minesite sustaining
Minesite expansion
Project capex
Financial Results
Segment EBIT for 2014 was 50% lower than the prior
year. The decrease was primarily due to a lower realized
copper price combined with a decrease in sales volume,
due to a lower production in 2014.
In 2014, copper production of 436 million pounds
was 19% lower compared to the prior year. The decrease
was primarily due to lower production at Zaldívar resulting
from lower tonnes processed combined with a minor
disruption in leaching irrigation due to piping and pump
failures. The decrease in production at Lumwana was
primarily due to the shutdown of the mill and concentrate
production for a significant portion of the second quarter
2014 due to the partial collapse of the terminal end of
the main conveyor, combined with the adverse effect of
an unusually long and severe rainy season in Zambia
during second quarter 2014. The partial collapse of the
conveyor resulted in an impairment charge of $5 million
and the incurring of $10 million in abnormal costs in
second quarter 2014.
Cost of sales for 2014 was $961 million, a decrease
of 14% compared to the prior year. The decrease was
primarily due to lower sales volumes compared to the
prior year. C1 cash costs were $1.92 per pound, in line
with the prior year. The impact of decreased production
levels on unit production costs was more than offset by
the benefit of lower direct mining costs. C3 fully allocated
costs per pound were $2.43 per pound, in line with the
prior year. C3 fully allocated costs primarily reflect the
effect of the above factors on C1 cash costs.
Barrick_AR14_MDA.indd 61
2014
436
435
$ 961
$ 1.92
$ 2.43
2014
$ 233
$ 407
$ 298
$ 292
–
6
$
2013
% Change
2012
539
519
$ 1,114
$ 1.92
$ 2.42
(19%)
(16%)
(14%)
–
–
468
472
$ 1,227
$ 2.05
$ 2.85
2013
% Change
$ 468
$ 656
$ 405
$ 342
–
$ 63
(50%)
(38%)
(26%)
(15%)
–
(90%)
2012
$ 394
$ 647
$ 741
$ 555
–
$ 186
SEGMENT EBIT
($ millions)
500
250
0
$ 468
2013
PRODUCTION
(millions pounds)
1,000
500
0
539
2013
436
2014
C1 CASH COSTS
($ per pound)
600
$ 1.92
$ 1.92
$ 233
2014
310
to
340
2015E
$ 1.75
to
$ 2.00
2013
2014
2015E
61
2015-03-11 5:00 PM
2.0
400
200
1.0
0
0.0
-200
-400
600
-600
400
200
0
-200
-400
600
-600
400
200
0
-200
-400
-600
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2014, capital expenditures decreased by
$107 million, or 26%, compared to the prior year.
The decrease was primarily due to lower minesite
sustaining capital expenditures at Zaldívar due to the
deferral of expenditures, as well as lower project
capital expenditures at Jabal Sayid, which was put on
care and maintenance in late 2013.
On December 18, 2014, the Zambian government
passed changes to the country’s mining tax regime
that would replace the current corporate income tax
and variable profit tax with a 20 percent royalty which
took effect on January 1, 2015. The application of a
20 percent royalty rate compared to the 6 percent royalty
rate the company was paying has a significant negative
impact on the expected future cash flows of our Lumwana
mine and was considered an indicator of impairment.
As a result, we conducted an impairment test and, as
a result of the new royalty rate, along with the decrease
in our copper price assumptions, recorded $930 million
in impairment charges, including the full amount of
goodwill of $214 million allocated to Lumwana as a
result of the change in segments (see note 19 to the
consolidated financial statements).
We have initiated activities to
suspend operations at Lumwana
Our Zaldívar mine experienced a significant decrease
in the estimated FVLCD of the mine, primarily as a result
of the decrease in fourth quarter 2014 of our long-term
copper price assumption and to a lesser extent, as a
result of the final assessment of the tax rate increase in
Chile. Accordingly, we recorded a goodwill impairment
loss of $712 million on Zaldívar.
On April 2, 2014 Zambia’s energy regulator approved a
28.8% electricity price increase for mining companies.
Subsequently, the bulk power supply agreement tariffs
between state power company ZESCO and Copperbelt
Energy Corporation were increased to 6.84 cents per
KWhr from 5.31 cents per KWhr. The Lumwana Mining
Company has a long-term power supply contract with
ZESCO and does not believe that the rates it pays
thereunder should be affected by the announced rate
increase. Lumwana and several other mining companies
in Zambia have been granted leave to challenge the rate
increase in court. As noted above, we have announced
our intention to suspend operations at the mine and
therefore this electricity price increase will not have
any immediate impact. We will continue to progress
the matter.
Outlook
Copper production is expected to be in the range of
310 to 340 million pounds, lower than 2014 production
levels, due to the expected suspension of operations at
Lumwana in the first quarter of 2015, following the
ratification of the new 20 percent royalty rate in Zambia.
The production decrease at Lumwana is partially offset
by the increased production at Zaldívar as a result of
improved stacker reliability and shovel availability as
compared to 2014.
C1 cash costs are expected to be $1.75 to $2.00 per
pound compared to $1.92 per pound in 2014 and C3
fully allocated costs are expected to be in the range of
$2.30 to $2.60 per pound. C1 cash costs are expected to
be slightly lower in 2015 due to cost reductions and the
impact of suspending Lumwana operations.
62
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Financial Condition Review
Summary Balance Sheet and Key Financial Ratios1
($ millions, except ratios and share amounts)
As at December 31
Total cash and equivalents
Current assets
Non-current assets
Total Assets
Current liabilities excluding short-term debt
Non-current liabilities excluding long-term debt
Debt (current and long-term)
Total Liabilities
Total shareholders’ equity
Non-controlling interests
Total Equity
Dividends
Debt
Total common shares outstanding (millions of shares)2
Key Financial Ratios:
Current ratio3
Debt-to-equity4
Debt-to-total capitalization5
2014
2013
$ 2,699
3,451
27,729
$ 2,424
3,588
31,436
$ 33,879
$ 37,448
$ 2,227
5,709
13,081
$ 2,626
5,741
13,080
$ 21,017
$ 21,447
10,247
2,615
13,533
2,468
$ 12,862
$ 16,001
$
232
$ 13,081
1,165
$
508
$ 13,080
1,165
2.40:1
1.02:1
0.39:1
2.14:1
0.82:1
0.39:1
1. Figures include assets and liabilities classified as held-for-sale as at December 31, 2013.
2. Total common shares outstanding do not include 5.4 million stock options.
3. Represents current assets divided by current liabilities (including short-term debt) as at December 31, 2014 and December 31, 2013.
4. Represents debt divided by total shareholders’ equity (including minority interest) as at December 31, 2014 and December 31, 2013.
5. Represents debt divided by capital stock and debt as at December 31, 2014 and December 31, 2013.
Balance Sheet Review
Total assets were $33.9 billion at December 31, 2014,
a decrease of $3.6 billion compared to total assets at
December 31, 2013. The decrease primarily reflects
impairments against the carrying value of non-current
assets of $2 billion post-tax (pre-tax $2.7 billion) and
against goodwill of $1.4 billion. 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, indirect
taxes and other government receivables, 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 at December 31, 2014 totaled
$21 billion, consistent with total liabilities at
December 31, 2013.
Shareholders’ Equity
As at February 10, 2015
Common shares
Stock options
Number of shares
1,164,669,708
5,145,638
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.
Barrick_AR14_MDA.indd 63
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63
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
For 2014 other comprehensive income was a loss
of $149 million on an after-tax basis. The loss reflected
losses of $41 million on hedge contracts designated
for future periods, caused primarily by changes in
currency exchange rates, copper prices, and fuel prices,
reclassification adjustments totaling $87 million for gains
on hedge contracts designated for 2014 (or ineffective
amounts) that were transferred to earnings or PPE of
conjunction with the recognition of the related hedge
exposure, $18 million of gains recorded as a result of
changes in the fair value of investments held during the
quarter and $42 million in losses for currency translation
adjustments, partially offset by $18 million of losses
transferred to earnings related to impaired investments,
$29 million actuarial losses on pension liability and
$15 million gain due to tax recoveries on the overall
decrease in OCI.
Included in accumulated other comprehensive
income at December 31, 2014 were unrealized pre-tax
losses on currency, commodity and interest rate hedge
contracts totaling $89 million. The balance primarily
relates to currency hedge contracts that are designated
against operating costs and capital expenditures,
primarily over the next two years, including $23 million
remaining in crystallized hedge losses related to our
Australian dollar contracts that were settled in the third
quarter of 2012 or closed out in the second half of
2013 and $21 million in crystallized hedge gains related
to our silver contracts. These hedge gains/losses are
expected to be recorded in earnings at the same time
the corresponding hedged operating costs/depreciation
are recorded in earnings.
Financial Position and Liquidity
Our capital structure comprises a mix of debt and
shareholders’ equity. As at December 31, 2014, our total
debt was $13.1 billion (debt net of cash and equivalents
was $10.4 billion) and our debt-to-equity ratio and
debt-to-total capitalization ratios were 1.02:1 and 0.39:1,
respectively. This compares to debt as at December 31,
2013 of $13.1 billion (debt net of cash and equivalents
was $10.7 billion), and debt-to-equity and debt-to-total
capitalization ratios of 0.82:1 and 0.39:1, respectively.
We have attributable debt of approximately $200 million
maturing by the end of 2015 and less than $1 billion due
by the end of 2017 (refer to note 24b to the consolidated
financial statements). Our $4.0 billion revolving credit
facility (“2012 Credit Facility”) is fully undrawn and
expires in January 2020.
64
FINANCIAL FLEXIBILITY ($ billions as at December 31, 2014)
Undrawn credit
facility $4.0
Total $6.7B
Cash position $2.7
REPAYMENT OF PRINCIPAL SCHEDULE1 (USD millions)
6,000
5,000
4,000
3,000
2,000
1,000
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+
1. Amounts exclude capital leases and include 60% of the Pueblo Viejo financing
1. Amounts include 60% of the Pueblo Viejo financing and 100%
of the ABG financing.
and 100% of the Acacia financing.
90
81
72
Our top priority is restoring a strong balance sheet. While
our level of debt needs to come down, strong liquidity
means the company can tackle its debt in a disciplined
manner. Our primary source of liquidity is our operating
cash flow, which is dependent on the ability of our
operations to deliver projected future cash flows. Other
options to enhance liquidity include drawing the
$4.0 billion available under our 2012 Credit Facility
(subject to compliance with covenants and the making
of certain representations and warranties, this facility
is available for drawdown as a source of financing),
further non-core asset sales and issuances of debt or
equity securities in the public markets or to private
investors, which could be undertaken for liquidity
enhancement and/or in connection with establishing a
strategic partnership. Many factors, including but not
limited to, general market conditions and then prevailing
metals prices could impact our ability to issue securities
45
54
63
18
27
36
0
9
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS on acceptable terms, as could our credit ratings. Moody’s
and S&P currently rate our long-term debt Baa2 and
BBB, respectively. Changes in our ratings could affect the
trading prices of our securities and our cost of capital.
If we were to borrow under our 2012 Credit Facility, the
applicable interest rate on the amounts borrowed would
be based, in part, on our credit ratings at the time. The
key financial covenant in the 2012 Credit Facility
(undrawn as at February 18, 2015) requires Barrick to
maintain a consolidated tangible net worth (“CTNW”) of
at least $3.0 billion. Barrick’s CTNW was $5.7 billion as at
December 31, 2014.
Cash and Equivalents and Cash Flow
Total cash and cash equivalents as at December 31,
2014 were $2.7 billion10. Our cash position consists of a
mix of term deposits, treasury bills and money market
investments and is primarily denominated in US dollars.
Summary of Cash Inflow (Outflow)
($ millions)
For the years ended December 31
2014
2013
Operating inflows
$ 2,296
$ 4,239
Investing activities
Capital Expenditures1
Proceeds from Jabal Sayid JV agreement
Divestitures
Other
$ (2,432)
216
166
100
$ (5,501)
–
522
(258)
Total investing outflows
$ (1,950)
$ (5,237)
Financing activities
Net change in debt
Dividends
Proceeds from divestment of 10% of issued
ordinary share capital of Acacia
Net proceeds from equity offering
Other
$
(47)
(232)
$
(998)
(508)
186
–
33
–
2,910
(62)
Total financing (outflows) inflows
$
(60)
$ 1,342
Effect of exchange rate
(11)
Increase/(decrease) in cash and equivalents
275
(17)
327
1. The amounts include capitalized interest of $29 million for year ended
December 31, 2014 (2013: $394 million).
In 2014, we generated $2.3 billion in operating cash
flow, compared to $4.2 billion of operating cash flow in
the prior year. The decrease in operating cash flow
primarily reflects lower gross margin levels, primarily due
to lower realized gold and copper prices and lower sales
volumes, partially offset by a decrease in income tax
payments of $594 million in 2014. The most significant
driver of the change in operating cash flow is market
gold and copper prices. The ability of our operations to
deliver projected future cash flows within the parameters
of a reduced production profile, as well as future changes
in gold and copper market prices, either favorable or
unfavorable, will continue to have a material impact on
our cash flow and liquidity. The principal uses of
operating cash flow are to fund our capital expenditures,
interest and dividend payments.
Cash used in investing activities in 2014 amounted
to $2 billion compared to $5.2 billion in the prior
year. The decrease of $3.3 billion from the prior year
is primarily due to a decrease in capital expenditures,
partially offset by the proceeds from divestitures,
including $216 million in proceeds from the sale of
50% of Jabal Sayid that occurred in 2014. In 2014,
capital expenditures on a cash basis were $2.4 billion
compared to $5.5 billion in the prior year. The decrease
of $3.1 billion is primarily due to a decrease in project
capital expenditures due to the decision made in fourth
quarter 2013 to temporarily suspend the Pascua-Lama
project, and a decrease in minesite sustaining capital
across most sites. The decrease in minesite expansion
expenditures was primarily due to a reduction in costs
at Cortez and Bulyanhulu relating to the CIL plant
which was commissioned in fourth quarter 2014.
Net financing cash outflows for 2014 amounted to
$60 million, compared to $1.3 billion of cash inflows in
the prior year. The net financing cash outflows for 2014
primarily consist of $186 million in proceeds from the
divestment of 10% of our share ownership in Acacia,
partially offset by $232 million of dividend payments and
$188 million in debt repayments. The net financing cash
inflows for 2013 primarily consist of $5.4 billion in debt
proceeds and $2.9 billion from an equity offering,
partially offset by debt repayments of $6.4 billion and
$508 million in dividend payments.
10. Includes $670 million cash held at Acacia and Pueblo Viejo, which may not
be readily deployed outside of Acacia and/or Pueblo Viejo.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Summary of Financial Instruments
As at December 31, 2014
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 – copper contracts
Principal/
Notional Amount
Associated
Risks
n Interest rate
$ 2,699 million
n Credit
n Credit
$ 418 million
n Market
n Market
$ 35 million
n Liquidity
$ 1,653 million
n Liquidity
$ 13,187 million
n Interest rate
$ 30 million
n Market
$ 3 million
n Market
CAD
CLP
AUD
ZAR
240 million
102,000 million
462 million
421 million
n Market/liquidity
n Credit
n Interest rate
4 million lbs
n Market/liquidity
n Credit
n Interest rate
Derivative instruments – energy contracts
Diesel
9 million bbls
n Market/liquidity
n Credit
n Interest rate
Derivative instruments – interest rate contracts
Receive float interest rate swaps $ 142 million
n Market/liquidity
Commitments and Contingencies
Litigation and Claims
We are currently subject to various litigation as disclosed
in note 35 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.
66
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Contractual Obligations and Commitments
($ millions)
As at December 31, 2014
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 costs6
Payments due
2015
2016
2017
2018
2019
2020 and
thereafter
Total
$ 262
71
663
119
27
15
21
157
492
133
73
$ 665
65
654
118
19
3
21
89
271
5
71
$
127
62
633
76
19
9
21
28
124
5
8
$
878
56
624
80
19
3
21
12
74
5
8
$ 877
42
551
129
11
–
21
1
54
4
8
$ 10,026
56
6,449
2,071
39
–
427
–
139
7
57
$ 12,835
352
9,574
2,593
134
30
532
287
1,154
159
225
Total
$ 2,033
$ 1,981
$ 1,112
$ 1,780
$ 1,698
$ 19,271
$ 27,875
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 our attributable share is 60 per cent of this total, consistent with our ownership interest in the mine.
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, 2014. 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 uninflated 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 24C 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.
6. Social Development Costs – Includes Pascua-Lama’s commitment related to the potential funding of a power transmission line in Argentina of $120 million,
expected to be paid over the period 2015–2016.
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
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
67
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
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.
The management of Barrick, at the direction of our
Co-Presidents and Chief Financial Officer, evaluated
the effectiveness of the design and operation of internal
control over financial reporting as of the end of the
period covered by this report based on the framework
and criteria established in Internal Control – Integrated
Framework (2013) as issued by the Committee of
Sponsoring Organizations (COSO) of the Treadway
Commission. Based on that evaluation, Management
concluded that the company’s internal control over
financial reporting was effective as of December 31, 2014.
Review of Quarterly Results
Quarterly Information1
As described on page 27 of this report, we announced
a change to our organizational structure. Management
will continue to monitor the effectiveness of its internal
control over financial reporting and disclosure controls
and procedures under the new organizational structure
and may make modifications from time to time as
considered necessary.
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, 2014 will be included in Barrick’s 2014
Annual Report and its 2014 Form 40-F/Annual
Information Form on file with the US Securities and
Exchange Commission (“SEC”) and Canadian provincial
securities regulatory authorities.
($ millions, except where indicated)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2014
2013
Revenues
Realized price per ounce – gold2
Realized price per pound – copper2
Cost of sales
Net earnings (loss)
Per share (dollars)2,3
Adjusted net earnings2
Per share (dollars)2,3
Operating cash flow
Adjusted operating cash flow2
$ 2,510 $ 2,598 $ 2,432 $ 2,632
1,285
3.03
1,692
88
0.08
238
0.20
585
$ 371 $ 852 $ 488 $ 585
1,289
3.17
1,590
(269)
(0.23)
159
0.14
488
1,285
3.09
1,642
125
0.11
222
0.19
852
1,204
2.91
1,799
(2,851)
(2.45)
174
0.15
371
$ 2,942 $ 2,985 $ 3,201 $ 3,399
1,629
3.56
1,810
847
0.85
923
0.92
1,085
$ 1,085 $ 1,300 $ 815 $ 1,158
1,411
3.28
1,832
(8,555)
(8.55)
663
0.66
907
1,323
3.40
1,788
172
0.17
577
0.58
1,231
1,272
3.34
1,853
(2,830)
(2.61)
406
0.37
1,016
1. Sum of all the quarters may not add up to the annual total due to rounding.
2. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
3. Realized price, adjusted net earnings, adjusted EPS 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 75–84 of this MD&A.
Our recent financial results reflect a trend of declining
spot gold prices, and as a result of an emphasis on cost
control and maximizing free cash flow, costs have also
decreased. Our adjusted net earnings and adjusted
operating cash flow levels have fluctuated with gold
and copper realized prices and production levels each
quarter. In fourth quarter 2014, we recorded asset and
goodwill impairments of $2.8 billion (net of tax effects
and non-controlling interests), primarily at Lumwana,
Zaldívar and Cerro Casale. The net loss in second quarter
2014 reflected asset and goodwill impairment charges
of $514 million relating to Jabal Sayid as a result of
classifying the project as held for sale. In fourth quarter
2013, we recorded asset and goodwill impairment
charges totaling $2.8 billion (net of tax effects and
non-controlling interests), primarily at Pascua-Lama,
Porgera, Veladero and goodwill related to our Australia
Pacific segment. The net loss in second quarter 2013
reflected asset and goodwill impairment charges totaling
$8.7 billion (net of tax and non-controlling interest
effects), primarily at Pascua-Lama, Buzwagi, Jabal Sayid
and goodwill related to our global copper, Australia
Pacific and Capital Projects segments.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Fourth Quarter Results
In fourth quarter 2014, we reported a net loss and
adjusted net earnings of $2.9 billion and $174 million,
respectively, compared to a net loss and adjusted net
earnings of $2.8 billion and $406 million, respectively, in
fourth quarter 2013. The net loss in fourth quarter 2014
reflects the recording of $2.8 billion (net of tax effects
and non-controlling interests) in impairment charges
similar to impairment charges of $2.8 billion (net of tax
effects and non-controlling interests) recorded in fourth
quarter 2013.
The higher net loss and decrease in adjusted net
earnings reflects the lower realized gold and copper
prices as well as decreased gold sales volume in fourth
quarter 2014 compared to the same prior year period.
In fourth quarter 2014, gold and copper sales were
1.57 million ounces and 139 million pounds, respectively,
compared to 1.83 million ounces and 134 million pounds,
respectively, in fourth quarter 2013. Revenues in fourth
quarter 2014 were lower than the same prior year period
reflecting lower market prices for gold and copper and
lower gold sales volumes. In fourth quarter 2014, cost of
sales was $1.8 billion, a decrease of $54 million
compared to the same prior year period, reflecting lower
direct mining costs. Cash costs were $628 per ounce, an
increase of $55 per ounce, primarily due to lower
production levels, partially offset by lower direct mining
costs. C1 cash costs were $1.78 per pound for copper,
a decrease of $0.03 per pound from the same prior year
period due to lower direct mining costs at Lumwana.
In fourth quarter 2013, operating cash flow was
$371 million, down 63% from the same prior year period.
The decrease in operating cash flow primarily reflects
lower realized gold and copper prices, partially offset
by a decrease in income tax payments and a lower
net loss.
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. 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. Our significant accounting
policies are disclosed in note 2 of the consolidated
financial statements, including a summary of current
and future changes in accounting policies.
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
Barrick_AR14_MDA.indd 69
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS 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.
As at December 31, 2014, we have used a gold price
of $1,100 per ounce to calculate our gold reserves,
consistent with the price used as at December 31, 2013.
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.
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. A 1% increase
in the discount rate would result in a decrease of PER
by $323 million and a 1% decrease in the discount rate
would result in an increase in PER by $295 million,
while holding the other assumptions constant.
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.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS 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, 2014, our PER
balance increased by $125 million primarily due to a
decrease in the discount rate used to calculate the
PER ($185 million). The increase was partially offset by
the divestiture of various sites that occurred in 2014
($112 million). The offset was a corresponding increase
in PP&E for our operations and a debit to other expense
at our closed sites.
PERs
($ millions)
As at December 31
Summary of Impairments
For the year ended December 31, 2014, we recorded
post-tax impairment losses of $2 billion (2013: $8.7 billion)
for non-current assets and $1.4 billion (2013: $2.8 billion)
for goodwill, as summarized in the table below:
($ millions)
For the years
ended December 31
Goodwill
Australia Pacific
Copper
Zaldívar
Jabal Sayid
Lumwana
Bald Mountain
Round Mountain
Capital projects
Acacia
2014
2013
Post-tax
(our
share)
Pre-tax
(100%)
Post-tax
(our
share)
Pre-tax
(100%)
$
– $
–
712
316
214
131
36
–
–
– $ 1,200 $ 1,200
1,033 1,033
–
–
–
712
–
–
316
–
–
214
–
–
131
–
–
36
397
397
–
185
185
–
2014
2013
Total goodwill
Operating mines
Closed mines and mines in closure
Development projects
Total
$ 1,629
734
121
$ 1,524
731
104
$ 2,484
$ 2,359
Accounting for Impairment of Non-current Assets
In accordance with our accounting policy, goodwill is
tested for impairment at the beginning of the fourth
quarter and also when there is an indicator of impairment.
Non-current assets are tested for impairment when
events or changes in circumstances suggest that the
carrying amount may not be recoverable. Refer to
note 20 to the consolidated financial statements for
further details including key assumptions and sensitivities.
impairment charges
$ 1,409 $ 1,409 $ 2,815 $ 2,815
Asset impairments
Cerro Casale
Lumwana
Pascua-Lama
Jabal Sayid
Porgera
Cortez
Buzwagi
Veladero
North Mara
Pierina
Kalgoorlie
Exploration sites
Round Mountain
Granny Smith
Marigold
Ruby Hill
Kanowna
Plutonic
Darlot
AFS investments
Other1
Total asset
$ 1,476 $ 778 $
720
382
198
(160)
46
–
–
–
–
9
7
–
–
–
–
–
–
–
18
1
–
– $
–
–
6,061 6,007
704
595
–
439
300
125
98
–
94
51
73
39
33
41
26
25
23
57
860
746
–
721
464
286
140
–
112
78
73
60
51
41
37
36
26
80
720
382
198
(160)
29
–
–
–
–
9
7
–
–
–
–
–
–
–
18
4
impairment charges
$ 2,697 $ 1,985 $ 9,872 $ 8,730
Tax effects and NCI
–
712
– 1,142
Total impairment
charges (100%)
$ 4,106 $ 4,106 $ 12,687 $ 12,687
1. Includes the impairment reversal relating to the Pueblo Viejo power assets.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Indicators of Impairment
2014
In second quarter 2014, our Jabal Sayid project in
Saudi Arabia met the criteria as an asset held for sale.
Accordingly, we were required to allocate goodwill
from the Copper Operating Unit to Jabal Sayid and test
the Jabal Sayid group of assets for impairment. We
determined that the carrying value exceeded the FVLCD,
and consequently recorded $514 million in impairment
charges, including the full amount of goodwill allocated
on a relative fair value basis, of $316 million. In fourth
quarter 2014, we closed a transaction to sell a 50%
interest of Jabal Sayid for cash proceeds of $216 million.
We reached an agreement to sell a power-related
asset at our Pueblo Viejo mine for proceeds that exceeded
its carrying value. This asset had previously been impaired
in fourth quarter 2012, and therefore we recognized a
pre-tax impairment reversal of $9 million. This transaction
closed on September 30, 2014.
In fourth quarter 2014, as described in note 19 to
the consolidated financial statements, we reorganized
our internal management reporting structure. As a result,
the goodwill attributable to our former North America
Portfolio, Australia Pacific and Copper segments was
allocated to the individual cash generating units (“CGUs”)
within those operating segments on a relative fair value
basis. The allocation of goodwill to the carrying value of
our Bald Mountain and Round Mountain CGUs resulted
in their carrying values exceeding their FVLCD and,
as a result, we recorded goodwill impairment losses of
$131 million and $36 million, respectively.
On December 18, 2014, the Zambian government
passed changes to the country’s mining tax regime
that would replace the current corporate income tax
and variable profit tax with a 20 percent royalty which
took effect on January 1, 2015. The application of a
20 percent royalty rate compared to the 6 percent royalty
rate the company was paying has a significant negative
impact on the expected future cash flows of our Lumwana
mine and was considered an indicator of impairment.
As a result, we conducted an impairment test and, as
a result of the new royalty rate along with the decrease
in our copper price assumptions, recorded $930 million
in impairment charges, including the full amount of
goodwill of $214 million allocated to Lumwana as
a result of the change in segments (see note 19 to the
consolidated financial statements).
Our Zaldívar mine experienced a significant decrease
in the estimated FVLCD of the mine, primarily as a result
of the decrease in fourth quarter 2014 of our forecast of
72
the long-term copper price and to a lesser extent, as a
result of the final assessment of the tax rate increase
in Chile. Accordingly, we recorded a goodwill impairment
loss of $712 million on this CGU.
In December 2014, the Chilean Supreme Court
declined to consider Barrick’s appeal of the Environmental
Court Decision on Pascua-Lama on procedural grounds
(see note 35). As a result, the Superintendencia del
Medio Ambiente (“SMA”) will now re-evaluate the
Resolution. Although we cannot reasonably predict the
outcome of the resolution, this risk, in combination with
the decrease in our long-term silver price assumption in
fourth quarter 2014 due to declining market prices, and
the continued uncertainty about the timing, and cost
and legal and permitting of the project, were deemed to
be indicators of impairment. As a result, we assessed the
recoverable amount of the project and have recorded an
impairment loss on Pascua-Lama of $382 million.
In November 2014, we completed a strategy
optimization study for our Cerro Casale project with the
goal of identifying a development model that would
improve the project economics and risk by reducing the
upfront capital requirements in order to generate a
higher return on our investment. The study was unable
to identify an alternative that provided an overall rate of
return above our hurdle rate for a project of this size
and complexity. As a result, the budget for 2015 for the
project has been significantly reduced, with the 2015
budget focused on preserving the optionality of the
project. We will continue activities to protect the asset
and assess alternative ways to develop the project in a
more economic manner; however, management’s
expectation of achieving a suitable rate of return in the
current metal price environment has been diminished.
The foregoing developments were deemed to be
indicators of impairment, and as a result, we assessed
the recoverable amount of the project and have recorded
an impairment loss on the project of $778 million
(Barrick’s share).
At our Porgera mine in Papua New Guinea, we have
revised our LOM plan to include a portion of the open
pit resources that were removed from the plan in the
prior year. In 2013, we did not have a feasible plan to
access the open pit reserves due to technical and
financial issues with respect to the west wall of the open
pit. In 2014, management resolved these technical issues
and developed an optimized mine plan to sequence the
west wall cutback in an economical manner. As a result,
management was able to bring a significant portion of
the ounces from the open pit back into the LOM plan.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS The new plan resulted in an increase in the estimated
mine life from 8 to 12 years, and an increase in the
estimated FVLCD of the mine, which has resulted in
a partial reversal of a previous impairment loss of
$160 million.
The annual update to the LOM plan at Cortez resulted
in a cessation of mining in one of the open pits at the
mine. This was identified as an indicator of impairment,
resulting in the impairment of assets specifically related
to this pit of $29 million.
2013
The significant decrease in our long-term gold, silver
and copper price assumptions in second quarter 2013,
due to declining market prices, as well as the regulatory
challenges to Pascua-Lama in May 2013 and the resulting
schedule delays and associated capital expenditure
increases, and a significant change to the mine plan
at our Pierina mine, were all considered indicators
of impairment, and, accordingly, we performed an
impairment assessment for every mine site and
significant advanced development project. As a result
of this assessment, we recorded non-current asset
impairment losses of $6.4 billion after any related
income tax effects, including a $5.1 billion impairment
loss related to the carrying value of the PP&E at Pascua-
Lama; $401 million related to the Jabal Sayid project in
our copper segment; $502 million related to Buzwagi
and North Mara in Acacia; $219 million related to the
Kanowna, Granny Smith, Plutonic and Darlot mines in
our Australia Pacific Gold segment; and $98 million
related to our Pierina mine in South America.
After reflecting the above non-current asset
impairment losses, we conducted goodwill impairment
tests and determined that the carrying value of our
Copper, Australia Pacific Gold, Capital Projects and
Acacia segments exceeded their FVLCD, and therefore
we recorded a total goodwill impairment loss of
$2.3 billion. The FVLCD of our Copper segment was
negatively impacted by the decrease in our long-term
copper price assumption in second quarter 2013.
The FVLCD of our Australia Pacific Gold segment was
negatively impacted by the significant decrease in
second quarter 2013 in our long-term gold price
assumption. The FVLCD of our Capital Projects segment
was negatively impacted by the significant decrease in
second quarter 2013 in our long-term gold and silver
price assumptions, as well as the schedule delays and
associated capital expenditure increase at our Pascua-
Lama project. The FVLCD of our Acacia segment was
negatively impacted by significant changes in the LOM
plans in second quarter 2013 for various assets in
the segment, as well as the significant decrease in our
long-term gold price assumption.
In fourth quarter 2013, as described below, we
identified indicators of impairment at certain of our
mines, resulting in non-current asset impairment losses
totaling $2.3 billion after any related income tax effects.
As a result of our fourth quarter 2013 decision to
temporarily suspend construction of our Pascua-Lama
Project, we have recorded a further impairment loss on
the project of $896 million, bringing the total impairment
loss for Pascua-Lama to $6.0 billion for the full year.
At our Porgera mine in Papua New Guinea, we have
changed our LOM plan to focus primarily on the higher
grade underground mine. The new plan resulted in a
decrease in the estimated mine life from 13 to 9 years,
and a decrease in the estimated FVLCD of the mine,
which has resulted in an impairment loss of $595 million.
At our Veladero mine in Argentina, the annual update
to the LOM plan, which was completed in fourth quarter
2013, was significantly impacted by the lower gold price
assumption as well as the effect of sustained local
inflationary pressures on operating and capital costs.
The new plan resulted in a reduction of reserves and
LOM production as the next open pit cutback is
uneconomic at current gold prices. This resulted in a
significant decrease in the estimated FVLCD of the mine,
and accordingly, we recorded an impairment loss of
$300 million (post-tax). The annual update to the LOM
plan resulted in a decrease in the net present value of
our Jabal Sayid project, which is the basis for estimating
the project’s FVLCD, and was therefore considered
an indicator of impairment. Jabal Sayid’s FVLCD was
also negatively impacted by the delay in achieving
first production as a result of the High Commission For
Industrial Security (“HCIS”) compliance requirements
and ongoing discussions with the Deputy Ministry for
Mineral Resources (“DMMR”) with respect to the
transfer of ownership of the project. As a result, we
recorded an impairment loss of $303 million. The annual
update to the LOM plan showed a decrease in the net
present value at our Round Mountain mine, which was
considered to be an indicator of impairment, and we
recorded an impairment loss of $51 million. At North
Mara, several changes were made to the LOM plan,
including a decision to defer Gokona Cut 3, while Acacia
finalized a feasibility study into the alternative of mining
out this reserve by underground methods. This was
considered an indicator of impairment for North Mara,
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS resulting in an impairment loss of $58 million. A wall
failure at our Ruby Hill mine in Nevada was also
identified as an indicator of impairment, resulting in
the impairment of assets specifically related to the
open pit of $33 million.
As at December 31, 2013, four of our mines,
namely Plutonic, Kanowna, Marigold and Tulawaka, met
the criteria as assets held for sale. Accordingly, we were
required to re-measure these CGUs to the lower of
carrying value and FVLCD. Using these new re-measured
values resulted in impairment losses of $12 million at
Plutonic and $39 million at Marigold. Also, based on the
estimated FVLCD of the expected proceeds related to the
expected sale of Kanowna, we have reversed $66 million
of the impairment loss recorded in second quarter 2013.
After reflecting the above non-current asset
impairment losses, we conducted our annual goodwill
impairment test, prior to the reorganization of our
operating segments, and determined that the carrying
value of our Australia Pacific segment exceeded its
FVLCD and therefore we recorded a goodwill impairment
loss of $551 million bringing the total impairment loss
for Australia Pacific Gold goodwill to $1,200 million for
the full year. After the reorganization of the operating
segments, we did not identify any indicators of impairment.
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 increased 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
As at December 31
Australia and Papua New Guinea
Canada
US
Chile
Argentina
Barbados
Tanzania
Zambia
Saudi Arabia
$
2014
2013
367 $ 456
139
371
50
93
471
776
928
823
71
68
107
92
43
–
17
67
$ 2,657
$ 2,282
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Australia and Papua New Guinea: most of the unrecognized
deferred tax assets relate to capital losses that can only
be utilized if capital gains are realized, as well as to
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 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 and to capital losses
that can only be utilized if capital gains are realized
in the future.
US: most of the unrecognized deferred tax assets
relate to AMT credits which are not probable to be utilized.
Chile and Argentina: most of the unrecognized
deferred tax assets relate to Pascua-Lama tax assets, that,
considering the suspension of construction activities,
Non-GAAP Financial Performance Measures
Adjusted Net Earnings and Adjusted Net
Earnings per Share
Adjusted net earnings is a non-GAAP financial measure
which excludes the following from net 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 Significant tax adjustments not related to current
period earnings;
n Costs related to restructuring/severance arrangements,
care and maintenance and demobilization costs, and
other expenses not related to current operations;
n Unrealized gains/losses on non-hedge derivative
instruments; and
n Change in the measurement of the PER at closed sites.
Management uses this measure internally to evaluate
our underlying operating performance 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 our underlying business.
do not have any present sources of gold production or
taxable income. In the event that there will be sources
of taxable income in the future, we may recognize some
or all of the deferred tax assets.
Barbados, Tanzania and Saudi Arabia: the unrecognized
deferred tax assets relate to the full amount of tax assets
in subsidiaries that do not have any present, or sufficient,
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.
Zambia: Legislation was enacted in December
2014 to reduce the tax rate on mining income to zero.
Therefore, the gross deferred tax asset in Zambia is
recorded at Nil. There are significant tax pools available
to offset future taxable income in Zambia, should the
tax rate be increased in the future.
Management believes that adjusted net earnings
is a useful measure of our performance because tax
adjustments not related to the current period; impairment
charges, gains/losses and other one-time costs relating to
asset acquisitions/dispositions and business combinations;
and project costs related to restructuring/severance
arrangements, project care and maintenance and
demobilization costs, 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 current operating sites and not necessarily 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, we use this measure for 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.
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS 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.
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.
Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Net Earnings per Share1
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per share amounts in dollars)
2014
2013
2012
2014
2013
Net earnings (loss) attributable to equity holders
of the Company
Impairment charges related to intangibles, goodwill,
property, plant and equipment, and investments
Acquisition/disposition (gains)/losses
Foreign currency translation (gains)/losses
Tax adjustments
Other expense adjustments2
Unrealized losses/(gains) on non-hedge derivative instruments
$ (2,907)
$ (10,366)
$
(538)
$ (2,851)
$ (2,830)
3,394
(48)
169
(49)
97
137
11,536
442
233
297
483
(56)
4,425
(13)
125
(83)
75
(37)
2,848
(13)
(17)
63
6
138
2,815
(31)
138
17
296
1
Adjusted net earnings
$
793
$ 2,569
$ 3,954
$
174
$
406
Net earnings (loss) per share3
Adjusted net earnings per share3
$
(2.50)
$ 0.68
$
$
(10.14)
2.51
$ (0.54)
$ 3.95
(2.45)
$
$ 0.15
$
(2.61)
$ 0.37
1. Amounts presented in this table are after-tax and net of non-controlling interest.
2. Other expense adjustments include $30 million of demobilization costs relating to Pascua-Lama for the year ended December 31, 2014 (2013: $196 million).
3. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
Adjusted Operating Cash Flow and Free Cash Flow
Adjusted operating cash flow is a non-GAAP financial
measure which excludes the effect of the settlement of
currency contracts and the impact of one-time costs.
These costs 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.
We have 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.
Management uses adjusted operating cash flow as a
Free cash flow is a measure which excludes our share
measure internally to evaluate our underlying operating
cash flow performance for the reporting periods
presented, and to assist with the planning and forecasting
of future operating cash flow.
of capital expenditures from adjusted operating cash
flow. Management believes this to be a useful indicator
of our ability to operate without reliance on additional
borrowing or usage of existing cash.
76
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Adjusted operating cash flow and free cash flow 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 table reconciles
these non-GAAP measures to the most directly
comparable IFRS measure.
Reconciliation of Operating Cash Flow to Adjusted Operating Cash Flow and Free Cash Flow
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions)
2014
2013
2012
2014
2013
Operating cash flow
Settlement of currency and commodity contracts
Settlement of contingent consideration
Non-recurring tax payments
Adjusted operating cash flow
Capital expenditures
Free cash flow
$ 2,296
–
–
–
$ 2,296
(2,432)
$ 4,239
64
–
56
$ 4,359
(5,501)
$ 5,983
(385)
50
52
$ 5,700
(6,773)
$ 371
–
–
–
$ 371
(547)
$ 1,016
69
–
–
$ 1,085
(1,365)
$
(136)
$ (1,142)
$ (1,073)
$ (176)
$
(280)
Cash costs per ounce, All-in sustaining costs per ounce,
All-in costs per ounce, C1 cash costs per pound and C3
fully allocated costs per pound
Beginning with our 2012 Annual Report, we adopted
a non-GAAP “all-in sustaining costs per ounce” measure.
This was based on the expectation that the World Gold
Council (“WGC”) (a market development organization
for the gold industry comprised of and funded by 18 gold
mining companies from around the world, including
Barrick) was developing a similar metric and that investors
and industry analysts were interested in a measure that
better represented the total recurring costs associated with
producing gold. The WGC is not a regulatory organization.
In June 2013, the WGC published its definition of
“adjusted operating costs”, “all-in sustaining costs” and
also a definition of “all-in costs.” Barrick voluntarily
adopted the definition of these metrics starting with our
second quarter 2013 MD&A. Starting in this MD&A,
the non-GAAP “adjusted operating costs” was renamed
“cash costs”. The manner in which this measure is
calculated has not been changed.
expenditures were presented as mine expansion projects,
whereas they meet the definition of sustaining capital
expenditures under the WGC definition, and therefore
these expenditures have been reclassified as sustaining
capital expenditures.
Our “all-in costs” measure starts with “all-in
sustaining costs” and adds additional costs which reflect
the varying costs of producing gold over the life-cycle
of a mine, including: non-sustaining capital expenditures
(capital expenditures at new projects and capital
expenditures at existing operations related to projects
that significantly increase the net present value of the
mine and are not related to current production) and
other non-sustaining costs (primarily exploration and
evaluation (“E&E”) costs, community relations costs and
general and administrative costs that are not associated
with current operations). This definition recognizes that
there are different costs associated with the life-cycle of
a mine, and that it is therefore appropriate to distinguish
between sustaining and non-sustaining costs.
We believe that our use of “all-in sustaining costs”
The “all-in sustaining costs” measure is similar to
our presentation in reports prior to second quarter 2013,
with the exception of the classification of sustaining
capital. In our previous calculation, certain capital
and “all-in costs” will assist analysts, investors and other
stakeholders of Barrick in understanding the costs
associated with producing gold, understanding the
economics of gold mining, assessing our operating
Barrick_AR14_MDA.indd 77
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
performance and also our ability to generate free cash
flow from current operations and to generate free cash
flow on an overall Company basis. Due to the capital
intensive nature of the industry and the long useful lives
over which these items are depreciated, there can be a
significant timing difference between net earnings
calculated in accordance with IFRS and the amount of
free cash flow that is being generated by a mine. In the
current market environment for gold mining equities,
many investors and analysts are more focused on the
ability of gold mining companies to generate free cash
flow from current operations, and consequently we
believe these measures are useful non-GAAP operating
metrics and supplement our IFRS disclosures. These
measures are not representative of all of our cash
expenditures as they do not include income tax payments,
interest costs or dividend payments. These measures do
not include depreciation or amortization. “All-in sustaining
costs” and “all-in costs” are intended to provide
additional information only and do not have standardized
definitions under IFRS and should not be considered in
isolation or as a substitute for measures of performance
prepared in accordance with IFRS. These measures are
not equivalent to net income or cash flow from operations
as determined under IFRS. Although the WGC has
published a standardized definition, other companies
may calculate these measures differently.
In addition to presenting these metrics on a
by-product basis, we have calculated these metrics on
a co-product basis. Our co-product metrics remove
the impact of other metal sales that are produced as a
by-product of our gold production from cost per ounce
calculations, but does not reflect a reduction in costs
for costs associated with other metal sales.
We believe that C1 cash costs per pound enables
investors to better understand the performance of
our global copper segment in comparison to other
copper producers who present results on a similar basis.
C1 cash costs per pound excludes royalties and non-
routine charges 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.
78
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS Reconciliation of Gold Cost of Sales to Cash Costs per ounce, All-in Sustaining Costs per ounce and All-in Costs per ounce
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per ounce information in dollars)
Reference
2014
2013
2012
2014
2013
Cost of sales
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
Community relations costs related to current operations
Treatment and refinement charges
Total production costs
Depreciation
Impact of Barrick Energy
Cash Costs
General & administrative costs
Rehabilitation – accretion and amortization (operating sites)
Mine on-site exploration and evaluation costs
Mine development expenditures2
Sustaining capital expenditures2
All-in sustaining costs
Community relations costs not related to current operations
Rehabilitation – accretion and amortization not related
to current operations
Exploration and evaluation costs (non-sustaining)
Non-sustaining capital expenditures2
Pascua-Lama
Pueblo Viejo
Cortez
Goldstrike thiosulfate project
Bulyanhulu CIL
Other
A
B
C
D
E
F
G
H
I
J
K
L
M
M
F
K
L
M
M
M
M
M
M
$ 5,662
(514)
–
(183)
(8)
53
11
$ 6,063
(383)
(46)
(189)
(20)
52
6
$ 6,078
(216)
(161)
(141)
(8)
39
6
$ 1,472
(132)
–
(45)
4
16
3
$ 1,445
(104)
–
(43)
(5)
20
2
$ 5,021
$ 5,483
$ 5,597
$ 1,318
$ 1,315
$ (1,267)
–
$ (1,363)
(57)
$ (1,401)
(90)
$
(332)
–
$
(268)
–
$ 3,754
$ 4,063
$ 4,106
$
986
$ 1,047
300
127
20
655
569
298
139
61
1,101
901
438
131
115
1,222
1,381
82
30
6
141
208
63
31
16
236
251
$ 5,425
$ 6,563
$ 7,393
$ 1,453
$ 1,644
35
12
153
195
–
19
287
29
43
23
10
117
1,998
29
132
223
83
24
26
10
193
1,869
512
27
145
27
35
19
3
45
103
–
5
65
4
22
12
2
30
605
(4)
9
71
30
7
All-in costs
$ 6,198
$ 9,202
$ 10,237
$ 1,719
$ 2,406
Ounces sold – consolidated basis (000s ounces)
Ounces sold – non-controlling interest (000s ounces)1
Ounces sold – equity basis (000s ounces)
Total production costs per ounce3
Cash costs per ounce3
Cash costs per ounce (on a co-product basis)3,4
All-in sustaining costs per ounce3
All-in sustaining costs per ounce (on a co-product basis)3,4
6,960
(675)
6,284
$
$
$
$
$
800
598
618
864
884
$
$
$
$
$
764
566
589
915
938
All-in costs per ounce3
All-in costs per ounce (on a co-product basis)3,4
986
$
$ 1,006
$ 1,282
$ 1,305
7,604
(430)
7,174
7,465
(173)
7,292
1,741
(168)
1,572
1,951
(122)
1,829
$
$
$
767
563
580
$ 1,014
$ 1,031
$ 1,404
$ 1,421
$
$
$
$
$
839
628
648
925
945
$ 1,094
$ 1,114
$ 719
$ 573
$ 592
$ 899
$ 918
$ 1,317
$ 1,336
1. Relates to interest in Pueblo Viejo and Acacia held by outside shareholders.
2. Amounts represent our share of capital expenditures.
3. Total production costs, cash costs, all-in sustaining costs, and all-in costs per ounce may not calculate based on amounts presented in this table due to rounding.
4. Amounts presented on a co-product basis remove the impact of other metal sales (net of non-controlling interest) from cost per ounce calculations that are
produced as a by-product of our gold production.
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($ millions, except per ounce information in dollars)
2014
2013
2012
2014
2013
For the years
ended Dec. 31
For the three months
ended Dec. 31
References
A Cost of sales – gold
Cost of sales (statement of income)
Less: cost of sales – copper (Note 5)
Direct mining, royalties and community relations
Depreciation
Hedge gains
Add: Barrick Energy depreciation
Less: Community relations costs – gold & other non-operating
Less: Cost of sales related to power sales
Less: Cost of sales – corporate1
$ 6,830
(954)
787
174
(7)
–
(69)
(72)
(73)
$ 7,329
(1,098)
926
188
(16)
43
(62)
(15)
(134)
$ 7,332
(1,231)
985
253
(7)
102
(64)
–
(61)
$ 1,799
(272)
221
53
(2)
–
(22)
(17)
(16)
$ 1,853
(265)
219
50
(4)
–
(24)
(15)
(104)
Total Cost of Sales – Gold
$ 5,662
$ 6,063
$ 6,078
$ 1,472
$ 1,445
1. 2013 and 2012 figures include amounts related to Barrick Energy that was sold in third quarter 2013.
B Cost of sales applicable to non-controlling interests
Cost of sales applicable to Acacia (Note 5)
Direct mining, royalties and community relations
Depreciation
Total related to Acacia
Portion attributable to non-controlling interest
Cost of sales applicable to Pueblo Viejo (Note 5)
Direct mining, royalties and community relations
(excluding cost of sales related to power sales)
Depreciation
Total related to Pueblo Viejo
Portion attributable to non-controlling interest
Cost of sales applicable to non-controlling interests
C Cost of sales applicable to ore purchase arrangement
$
$
$
$
$
$
$
564
129
693
222
566
243
809
292
514
$
$
$
$
$
$
$
596
160
756
189
420
139
559
194
383
$
$
$
$
$
$
$
647
162
809
216
–
–
–
–
216
$
$
$
$
$
$
$
165
35
200
$ 155
29
$ 184
66
$
42
138
56
194
$ 143
44
$ 187
66
$
62
132
$ 104
Equal to the cost of sales from 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. These figures cannot be tied directly to the financial statements or notes.
D Other metal sales
By-product revenues from metals produced in conjunction with gold are deducted from the costs incurred to produce gold (note 6). By-product
revenues from metals produced net of copper and non-controlling interest for the three months and year ended December 31, 2014 were
$35 million and $139 million, respectively (2013: $37 million and $168 million, respectively, 2012: $130 million).
E Realized non-hedge gains/losses on fuel hedges
Fuel gains/(losses) (Note 24e)
Add/Less: Unrealized gains/(losses)
Realized non-hedge gains/(losses) on fuel hedges
F Community relations costs
Community relations costs (Note 7)
Community relations costs relating to Pascua-Lama
Less: NCI of Community relations costs
Less: Community relations costs – non-gold
Total Community relations costs – gold
Community relations costs related to current operations
Community relations costs not related to current operations
Total Community relations costs – gold
G Treatment and refinement charges
$
(181)
173
$
12
(32)
$
(8)
$
(20)
$
$
$
76
25
(4)
(9)
88
53
35
88
$
$
$
71
18
(5)
(9)
75
52
23
75
$
$
$
$
$
6
(14)
(8)
75
8
(3)
(15)
65
39
26
65
$ (201)
205
$
$
$
$
4
23
16
(2)
(2)
35
16
19
35
$
$
$
(6)
1
(5)
28
10
(3)
(3)
$
32
20
12
$
32
Treatment and refinement charges, which are recorded against concentrate revenues, for the three months and year ended December 31, 2014
were $3 million and $11 million, respectively (2013: $2 million and $6 million, respectively, 2012: $6 million).
80
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
($ millions, except per ounce information in dollars)
2014
2013
2012
2014
2013
For the years
ended Dec. 31
For the three months
ended Dec. 31
H Depreciation – gold
Depreciation (Note 7)
Less: copper depreciation (Note 5)
Add: Barrick Energy depreciation
Less: NCI portion
Less: Depreciation – corporate assets
$ 1,648
(174)
–
(135)
(72)
$ 1,732
(188)
43
(88)
(136)
$ 1,651
(253)
102
(46)
(53)
$
434
(53)
–
(33)
(16)
$ 442
(50)
-
(17)
(107)
Total depreciation – gold
$ 1,267
$ 1,363
$ 1,401
$
332
$ 268
Impact of Barrick Energy (Note 4)
I
Revenue related to Barrick Energy
Less: Cost of sales related to Barrick Energy
Add: Barrick Energy depreciation
Impact of Barrick Energy
J General & administrative costs
Total general & administrative costs (statement of income)
Less: non-gold and non-operating general & administrative costs
Less: NCI portion
Add: World Gold Council fees
Less: non-recurring items1
$
$
$
–
–
–
–
$
93
(79)
43
$
153
(165)
102
$
57
$
90
385
(56)
(15)
3
(17)
$
390
(58)
(10)
8
(32)
$
503
(74)
–
26
(17)
$
$
$
–
–
–
–
102
(15)
(5)
–
–
$
$
$
–
–
–
–
93
(16)
(2)
2
(14)
Total general & administrative costs
$
300
$
298
$
438
$
82
$
63
1. 2014 figures include amounts relating to severance costs.
K Rehabilitation – accretion and amortization
Includes depreciation (note 7) on the assets related to rehabilitation provisions of our gold operations of $17 million and $73 million for the
three months and year ended December 31, 2014, respectively (2013: $18 million and $88 million, respectively, 2012: $91 million) and
accretion (note 13) on the rehabilitation provision of our gold operations of $16 million and $66 million for the three months and year ended
December 31, 2014, respectively (2013: $16 million and $61 million, respectively, 2012: $50 million).
L Exploration and evaluation costs
Exploration and evaluation costs (note 8)
Less: exploration and evaluation costs – non-gold & NCI
$
184
(11)
$
208
(30)
$
359
(51)
Total exploration and evaluation costs – gold
$
173
$
178
$
308
Exploration & evaluation costs (sustaining)
Exploration and evaluation costs (non-sustaining)
20
153
61
117
115
193
Total exploration and evaluation costs – gold
$
173
$
178
$
308
$
$
$
$
54
(3)
51
6
45
51
$
54
(8)
$
46
16
30
$
46
443
103
48
$ 624
635
51
M Capital expenditures
Gold segments (Note 5)
Pascua-Lama operating unit (Note 5)
Other gold projects1
Capital expenditures – gold
Less: NCI portion
Less: capitalized interest (note 13)
Add: capitalized interest relating to copper
$ 1,702
195
72
$ 2,558
2,226
177
$ 3,630
2,113
128
$ 1,969
$ 4,961
$ 5,871
$
594
$ 1,310
(142)
(30)
–
(173)
(297)
–
(204)
(567)
118
(38)
(8)
–
(38)
(67)
–
Total capital expenditures – gold
$ 1,797
$ 4,491
$ 5,218
$
548
$ 1,205
Mine development expenditures
Sustaining capital expenditures
Non-sustaining capital expenditures
655
569
573
1,101
901
2,489
1,222
1,381
2,615
141
208
199
236
251
718
Total capital expenditures – gold
$ 1,797
$ 4,491
$ 5,218
$
548
$ 1,205
1. 2013 and 2012 figures include capital expenditures related to Barrick Energy that was sold in third quarter 2013.
81
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Reconciliation of Copper Cost of Sales to C1 Cash Costs per pound and C3 Fully Allocated Costs per pound
($ millions, except per pound information in dollars)
2014
2013
2012
2014
2013
For the years
ended Dec. 31
For the three months
ended Dec. 31
Cost of sales
Depreciation/amortization
Treatment and refinement charges
Community relations
Less: royalties
Non-routine charges
Other metal sales
Other1
C1 cash cost of sales
Depreciation/amortization
Royalties
Non-routine charges
Administration costs
Other expense (income)
$
947
(171)
120
7
(39)
(1)
(1)
(26)
$ 1,091
(184)
126
9
(48)
5
(1)
–
$ 1,227
(253)
95
10
(34)
(56)
(1)
(22)
$ 270
(52)
42
2
(14)
–
–
–
$ 267
(49)
36
2
(12)
1
–
–
$
836
$ 998
$ 966
$ 248
$ 245
171
39
1
16
(5)
184
48
(5)
16
17
253
34
56
9
27
52
14
–
4
(2)
49
12
(1)
3
3
$ 316
139
$ 311
134
C3 fully allocated cost of sales
$ 1,058
$ 1,258
$ 1,345
Pounds sold – consolidated basis (millions pounds)
435
519
472
C1 cash cost per pound2
$ 1.92
$ 1.92
$ 2.05
$ 1.78
$ 1.81
C3 fully allocated cost per pound2
$ 2.43
$ 2.42
$ 2.85
$ 2.27
$ 2.33
1. Includes $17 million related to copper cathode purchases and $10 million of abnormal costs related to the conveyor collapse at Lumwana, as these costs are not
indicative of our normal production costs.
2. C1 cash costs per pound and C3 fully allocated costs may not calculate based on amounts presented in this table due to rounding.
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 our 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.
Adjusted EBITDA removes 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.
82
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
The following table provides a reconciliation of EBITDA and adjusted EBITDA to net earnings.
EBITDA and Adjusted EBITDA
($ millions)
Net earnings (loss)
Income tax expense
Finance costs
Finance income
Depreciation
EBITDA
Impairment charges
Adjusted EBITDA
Reported as:
Cortez
Goldstrike
Pueblo Viejo
Lagunas Norte
Veladero
Turquoise Ridge
Porgera
Kalgoorlie
Acacia
Copper
Other
Impairment charges
EBITDA
Impairment charges
Adjusted EBITDA
For the years
ended Dec. 31
For the three months
ended Dec. 31
2014
2013
2012
2014
2013
$ (2,959) $ (10,603)
630
589
(9)
1,732
306
721
(11)
1,648
$
(549)
(164)
121
(11)
1,753
$ (3,040)
(381)
180
(2)
434
$ (2,772)
(338)
248
(2)
442
$
(295) $
(7,661)
$ 1,150
$ (2,809)
$ (2,422)
$ 4,106
$ 12,687
$ 6,502
$ 3,564
3,342
$ 3,811
$ 5,026
$ 7,652
$
755
$
920
$
648
628
912
531
446
156
164
148
320
407
(549)
$ 1,610
693
569
602
522
129
190
182
275
656
(402)
$ 1,887
1,340
–
987
819
162
292
286
378
647
854
$
96
114
197
152
121
31
32
35
72
139
$
290
198
166
151
92
41
29
52
37
180
(234)
(316)
(4,106)
(12,687)
(6,502)
(3,564)
(3,342)
$
(295) $
(7,661)
$ 1,150
$ (2,809)
$ (2,422)
$ 4,106 $ 12,687
$ 6,502
$ 3,564
$ 3,342
$ 3,811 $ 5,026
$ 7,652
$
755
$
920
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 value of non-hedge gold and copper
derivatives are subject to change each period due to
changes in market factors such as market and forward
gold and copper prices so that prices ultimately realized
may differ from those recorded. The exclusion of such
unrealized mark-to-market gains and losses from the
presentation of this performance measure enables
investors to understand performance based on the
realized proceeds of selling gold and copper production.
The gains and losses on non-hedge derivatives and
receivable balances relate to instruments/balances that
mature in future periods, at which time the gains and
losses will become realized. The amounts of these gains
and losses reflect fair values based on market valuation
Barrick_AR14_MDA.indd 83
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83
Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
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.
Reconciliation of Sales to Realized Price per ounce/per pound
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)
For the years ended December 31
Gold
Copper
2014
2013
2012
2014
2013
2012
Sales
Sales applicable to non-controlling interests
Sales attributable to ore purchase agreement
Realized non-hedge gold/copper derivative (losses) gains
Treatment and refinement charges
Export duties
Other1
$ 8,744
(851)
–
1
11
48
–
$ 10,670
(589)
(46)
1
6
51
–
$ 12,564
(288)
(174)
–
6
65
–
$ 1,224
–
–
(11)
120
–
–
$ 1,651
–
–
(22)
126
–
–
$ 1,689
–
–
(76)
95
–
(22)
Revenues – as adjusted
$ 7,953
$ 10,093
$ 12,173
$ 1,333
$ 1,755
$ 1,686
Ounces/pounds sold (000s ounces/millions pounds)
6,284
7,174
7,292
435
519
472
Realized gold/copper price per ounce/pound2
$ 1,265
$ 1,407
$ 1,669
$ 3.03
$ 3.39
$ 3.57
1. Revenue related to copper cathode purchases made in second quarter 2014.
2. Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.
84
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS
Glossary of Technical Terms
AUTOCLAVE: Oxidation process in which high temperatures and
pressures are applied to convert refractory sulfide mineralization
into amenable oxide ore.
BY-PRODUCT: A secondary metal or mineral product recovered in
the milling process such as silver.
CONCENTRATE: A very fine, powder-like product containing the
valuable ore mineral from which most of the waste mineral has
been eliminated.
CONTAINED OUNCES: Represents ounces in the ground before
reduction of ounces not able to be recovered by the applicable
metallurgical process.
DEVELOPMENT: Work carried out for the purpose of opening up
a mineral deposit. In an underground mine this includes shaft
sinking, crosscutting, drifting and raising. In an open pit mine,
development includes the removal of overburden.
DILUTION: The effect of waste or low-grade ore which is
unavoidably included in the mined ore, lowering the
recovered grade.
DORÉ: Unrefined gold and silver bullion bars usually consisting
of approximately 90 percent precious metals that will be further
refined to almost pure metal.
DRILLING:
Core: drilling with a hollow bit with a diamond cutting rim to
produce a cylindrical core that is used for geological study and
assays. Used in mineral exploration.
In-fill: any method of drilling intervals between existing holes,
used to provide greater geological detail and to help establish
reserve estimates.
EXPLORATION: Prospecting, sampling, mapping, diamond-drilling
and other work involved in searching for ore.
GRADE: The amount of metal in each tonne 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).
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/
sulfuric acid which dissolves the contained gold/copper. The
gold/copper-laden solution is then collected for gold/
copper recovery.
HEAP LEACH PAD: A large impermeable foundation or pad used
as a base for ore during heap leaching.
MILL: A processing facility where ore is finely ground and
thereafter undergoes physical or chemical treatment to extract
the valuable metals.
MINERAL RESERVE: See pages 86 to 93 — Summary Gold/Copper
Mineral Reserves and Mineral Resources.
MINERAL RESOURCE: See pages 86 to 93 — Summary Gold/
Copper Mineral Reserves and Mineral Resources.
MINING RATE: Tonnes 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.
Mill-head grade: metal content of mined ore going into a mill
for processing.
REFINING: The final stage of metal production in which
impurities are removed from the molten metal.
Recovered grade: actual metal content of ore determined
after processing.
Reserve grade: estimated metal content of an ore body, based
on reserve calculations.
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 tonnes 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.
85
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Barrick Gold Corporation | Financial Report 2014MANAGEMENT’S DISCUSSION AND ANALYSIS 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 87 to 93.
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
86
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 at least a preliminary feasibility study.
This study must include adequate information on mining,
processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that
economic extraction can be justified.
A proven mineral reserve is the economically
mineable part of a measured mineral resource
demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining,
processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that
economic extraction is justified.
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Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES Summary Gold Mineral Reserves and Mineral Resources1,2,3
For the years ended December 31
2014
2013
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 (0.00%)4
Spring Valley (70.00%)
Golden Sunlight
Donlin Gold (50.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
(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.
4. See accompanying footnote #2.
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
Tonnes
(000s)
Grade
(gm/t)
Ounces
(000s)
74,192
4,496
6,661
3,740
80,853
8,236
87,522
74,748
153,821
38,925
–
68,122
60,477
206,947
8,199
81,206
27,299
23,766
1,711
32,420
1,566
188,345
12,267
36,930
–
–
–
62,369
2,281
5,610
–
270,668
898,202
222,485
324,626
157,465
172,003
171,971
69,650
19,383
3.24
1.90
8.83
11.60
3.70
6.30
3.31
2.62
1.99
2.81
–
7,724
274
1,890
1,395
9,614
1,669
9,318
6,301
9,851
3,513
–
4.83 10,574
1,361
0.70
4,160
0.63
4,458
16.91
4.64 12,111
690
0.79
440
0.58
242
4.40
1,525
1.46
24
0.48
3,923
0.65
820
2.08
1,671
1.41
–
–
–
–
–
–
0.66
1.73
1.56
–
1,326
127
281
–
2.24 19,503
0.60 17,434
2,529
0.35
1.47 15,384
6,459
1.28
4,737
0.86
3,872
0.70
2,833
1.27
429
0.69
76,436
5,361
9,502
5,430
85,938
10,791
92,844
115,606
188,434
91,142
–
68,529
122,518
187,278
8,893
82,119
42,146
38,115
18,620
29,598
4,502
161,869
12,802
52,847
80,010
11,188
–
–
3,650
4,279
–
270,668
898,202
228,576
324,626
157,465
186,626
164,387
90,800
33,795
3.31
2.40
8.46
10.37
8,122
413
2,585
1,810
3.88 10,707
2,223
6.41
9,694
3.25
9,011
2.42
1.82 11,024
4,914
1.68
–
–
4.52
9,960
2,460
0.62
3,579
0.59
5,070
17.73
4.35 11,488
919
0.68
904
0.74
1,007
1.68
1,440
1.51
140
0.97
3,612
0.69
1,019
2.48
1,903
1.12
1,389
0.54
158
0.44
–
–
–
–
196
1.67
170
1.24
–
–
2.24 19,503
0.60 17,434
0.34
2,530
1.47 15,384
6,459
1.28
5,117
0.85
3,588
0.68
3,751
1.28
757
0.70
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Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Summary Gold Mineral Reserves and Mineral Resources1,2,3
For the years ended December 31
2014
2013
Based on attributable ounces
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Plutonic (0.00%)4
Kanowna Belle (0.00%)5
Africa
Bulyanhulu (63.90%)6
North Mara (63.90%)6
Buzwagi (63.90%)6
Nyanzaga (63.90%)6
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)
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 #3.
5. See accompanying footnote #4.
6. See accompanying footnote #5.
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
Tonnes
(000s)
Grade
(gm/t)
Ounces
(000s)
17,049
34,256
89,067
23,634
41,470
48,915
–
–
–
–
24,769
7,923
15,114
11,477
13,267
30,885
–
62,208
12,422
239
5.49
3.68
1.22
1.51
1.17
1.09
–
–
–
–
7.65
8.49
2.69
2.87
1.35
1.30
–
1.31
0.27
0.13
3,008
4,050
3,482
1,146
1,555
1,708
–
–
–
–
6,090
2,163
1,308
1,060
574
1,289
–
2,621
107
1
23,134
36,592
91,793
25,185
47,875
63,328
442
4,204
2,616
3,392
27,775
7,556
16,043
18,672
17,813
36,291
–
71,943
25,338
870
4.10
2.75
1.26
1.49
1.18
1.08
9.22
6.53
4.85
4.70
7.77
10.65
3.17
3.32
1.45
1.29
–
1.31
3,051
3,238
3,718
1,204
1,816
2,203
131
883
408
513
6,937
2,588
1,634
1,991
828
1,506
–
3,032
0.27
0.18
217
5
2,113,635
1,889,133
1.37 93,017
1.55 94,324
2,413,440
1,976,285
1.34 104,051
1.56 99,362
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Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Gold Mineral Reserves1
As at December 31, 2014
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
Golden Sunlight
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Africa
Bulyanhulu (63.90%)
North Mara (63.90%)
Buzwagi (63.90%)
Other
Total
Copper Mineral Reserves1
Proven
Probable
Total
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
56,802
4,156
60,958
27,235
15,418
16,421
4,619
15,255
–
270
1,103
846
3.01
9.85
3.48
3.17
2.30
0.96
17.39
0.84
–
0.46
2.26
1.43
5,504
1,316
6,820
2,780
1,141
509
2,583
414
–
4
80
39
17,390
2,505
19,895
60,287
138,403
44,056
3,580
12,044
1,711
1,296
11,164
1,435
3.97
7.13
4.37
3.37
1.96
0.60
16.29
0.71
4.40
0.48
2.06
1.91
2,220
574
2,794
6,538
8,710
852
1,875
276
242
20
740
88
74,192
6,661
80,853
87,522
153,821
60,477
8,199
27,299
1,711
1,566
12,267
2,281
3.24
8.83
3.70
3.31
1.99
0.70
16.91
0.79
4.40
0.48
2.08
1.73
7,724
1,890
9,614
9,318
9,851
1,361
4,458
690
242
24
820
127
172,276
31,934
21,491
17,087
0.65
1.84
0.80
1.42
3,586
1,887
552
780
725,926
292,692
150,512
52,563
0.59 13,848
1.43 13,497
4,185
0.86
2,053
1.21
898,202
324,626
172,003
69,650
0.60 17,434
1.47 15,384
4,737
0.86
2,833
1.27
2,426
64,175
15,507
8.50
0.94
0.97
663
1,940
485
14,623
24,892
25,963
4.99
1.93
1.28
2,345
1,542
1,070
17,049
89,067
41,470
5.49
1.22
1.17
3,008
3,482
1,555
941
2,466
4,244
11.73
2.12
1.01
355
168
138
23,828
12,648
9,023
7.49
2.80
1.50
5,735
1,140
436
24,769
15,114
13,267
7.65
2.69
1.35
6,090
1,308
574
224
0.28
2
12,198
0.27
105
12,422
0.27
107
474,896
1.63 24,926
1,638,739
1.29 68,091
2,113,635
1.37 93,017
As at December 31, 2014
Proven
Probable
Total
Based on attributable pounds
Zaldívar
Lumwana
Jabal Sayid (50.00%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
360,824
164,369
224
0.556 4,419.3
0.572 2,071.7
11.1
2.248
100,620
93,586
12,198
0.513 1,138.7
0.609 1,257.3
688.2
2.559
461,444
257,955
12,422
0.546 5,558.0
0.585 3,329.0
699.3
2.554
Total
525,417
0.561 6,502.1
206,404
0.678 3,084.2
731,821
0.594 9,586.3
1. See accompanying footnote #1.
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89
Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Gold Mineral Resources1,2
As at December 31, 2014
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
Spring Valley (70.00%)
Golden Sunlight
Donlin Gold (50.00%)
South America
Cerro Casale (75.00%)
Pascua-Lama
Veladero
Lagunas Norte
Australia Pacific
Porgera (95.00%)
Kalgoorlie (50.00%)
Cowal
Africa
Bulyanhulu (63.90%)
North Mara (63.90%)
Buzwagi (63.90%)
Nyanzaga (63.90%)
Other
Total
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Contained
ounces
(000s)
Tonnes Grade
(gm/t)
(000s)
Contained
ounces
(000s)
620
1,161
1,781
2,185
3,060
3,106
40,133
14,206
10,413
5
2,898
457
1,736
22
3,865
2.46
12.86
9.24
2.88
2.08
5.09
0.78
6.12
0.61
–
0.87
4.29
0.73
1.41
2.52
49
480
529
202
205
508
3,876
2,579
6,455
72,563
35,865
65,016
1,004 166,814
67,000
2,793
13,353
204
32,415
–
81 185,447
36,473
63
60,633
41
5,588
1
313 266,803
225
1.81
915
11.04
1,140
5.49
6,099
2.61
2.87
3,308
4.82 10,066
3,156
0.59
9,318
4.33
236
0.55
1,525
1.46
3,842
0.64
1,608
1.37
1,285
0.66
1.56
280
2.24 19,190
274
1,395
1,669
6,301
3,513
10,574
4,160
12,111
440
1,525
3,923
1,671
1,326
281
19,503
469
2.65
1,657 10.32
8.63
2,126
2.51
1,993
1.52
23,630
5.42
27,920
0.48
29,687
5.50
29,373
0.51
7,861
0.68
5,799
1.39
22,627
2.10
5,025
0.62
27,909
2.02
2,280
2.02
46,108
40
550
590
161
1,156
4,868
461
5,198
130
126
1,010
340
553
148
2,997
17,217
14,772
7,174
1,322
0.30
1.49
0.63
0.75
167 205,268
710 142,693
145 164,797
18,061
32
0.36
1.25
0.70
0.68
2,362
5,749
3,727
397
2,529
6,459
3,872
429
371,580
19,486
5,911
1,566
0.38
1.56
0.44
0.73
4,493
975
83
37
161
5,410
7,186
5.80
1.48
0.63
30
257
146
34,095
18,224
41,729
3.67
1.52
1.16
4,020
889
1,562
4,050
1,146
1,708
20,875
604
4,090
3.14
2.27
1.28
2,105
44
168
–
1,821
134
–
–
2.70
1.62
–
–
158
7
–
7,923
9,656
30,751
62,208
8.49
2.91
1.30
1.31
2,163
902
1,282
2,621
2,163
1,060
1,289
2,621
8,770
6,437
2,954
1,944
9.90
3.24
1.24
0.93
2,791
670
118
58
–
–
–
239
0.13
1
1
246
0.25
2
139,064
1.70
7,596 1,750,069
1.54 86,728
94,324
676,801
1.35 29,282
Copper Mineral Resources1,2
As at December 31, 2014
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Zaldívar
Lumwana
Jabal Sayid (50.00%)
Tonnes
(000s)
102,863
52,727
–
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tonnes Grade
(%)
(000s)
Contained
lbs
(millions)
0.460 1,043.3
0.510
37,652
592.7 216,623
239
–
0.460
382.2
0.549 2,621.5
7.6
1.442
1,425.5
3,214.2
7.6
6,081 0.612
38 0.477
246 2.747
82.0
0.4
14.9
Total
155,590
0.477 1,636.0
254,514
0.537 3,011.3
4,647.3
6,365 0.693
97.3
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying footnote #1.
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Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Contained Silver Within Reported Gold Reserves1
For the year ended
December 31, 2014
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
Africa
Bulyanhulu (63.90%)
Tonnes Grade
(gm/t)
(000s)
Contained
ounces
(000s)
Tonnes Grade
(gm/t)
(000s)
Contained
ounces
(000s)
Tonnes Grade
(gm/t)
(000s)
Contained Process
ounces recovery
%
(000s)
27,235 22.928
20,076
60,287 19.74
38,255
87,522 20.73
58,331 87.0%
172,276 1.907
31,934 69.840
15,123 3.856
12,606 11.989
10,565
71,705
1,875
4,859
1.43
725,926
292,692 64.09
4.75
150,512 16.51
52,563
33,451
603,137
8,026
79,892
1.52
898,202
324,626 64.66
4.55
163,118 16.16
67,686
44,016 69.0%
674,842 81.7%
9,901 19.5%
9.6%
84,751
941
8.83
267
23,828
7.22
5,530
24,769
7.28
5,797 64.9%
Total
260,115 13.08 109,347
1,305,808 18.30
768,291
1,565,923 17.43
877,638 73.6%
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, 2014
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 (63.90%)
Buzwagi (63.90%)
Tonnes Grade
(%)
(000s)
Contained
lbs
(millions)
Tonnes Grade
(%)
(000s)
Contained
lbs
(millions)
Tonnes Grade
(%)
(000s)
Contained Process
lbs recovery
%
(millions)
27,235 0.094
56.6
60,287 0.118
156.5
87,522 0.110
213.1 79.5%
172,276 0.190
31,934 0.094
721.3
66.1
725,926 0.226
292,692 0.069
3,613.3
447.8
898,202 0.219
324,626 0.072
4,334.6 87.4%
513.9 38.5%
941 0.660
0.067
4,244
13.7
6.3
18,025 0.583
0.109
9,023
231.5
21.6
18,966 0.586
0.095
13,267
245.2 95.0%
27.9 64.9%
Total
236,630
0.166
864.0
1,105,953
0.183
4,470.7
1,342,583
0.180
5,334.7 82.6%
1. Copper is accounted for as a by-product credit against reported or projected gold production costs.
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91
Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Contained Silver Within Reported Gold Resources1
For the year ended December 31, 2014
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
Africa
Bulyanhulu (63.90%)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Contained
ounces
(000s)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
2,185
18.18
1,277
72,563
15.17 35,394
36,671
1,993
21.22 1,360
17,217
14,772
1,322
7,174
1.19
661 205,268
26.37 12,525 142,658
18,061
96
2,304 164,797
2.26
9.99
1.06
6,985
22.28 102,178
1,221
12.93 68,497
2.10
7,646 371,580
19,476
1,566
5,911
114,703
1,317
70,801
1.04 12,379
20.13 12,607
2.48
125
9.67 1,838
–
–
–
7,923
6.50
1,657
1,657
8,576
7.26 2,001
Total
42,670
12.29 16,863 611,270
10.99 215,932
232,795 409,102
2.30 30,310
1. Resources which are not reserves do not have demonstrated economic viability.
Contained Copper Within Reported Gold Resources1
For the year ended December 31, 2014
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 (63.90%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tonnes
(000s)
Grade
Contained
lbs
(%) (millions)
2,185
0.118
5.7
72,563
0.083
133.1
138.8
1,993
0.020
0.9
17,217
14,772
0.132
0.072
50.1 205,268
23.5 142,693
0.164
0.061
743.8
193.4
793.9 371,580
19,486
216.9
0.192 1,570.2
17.3
0.040
134
0.102
0.3
30,751
0.110
74.3
74.6
2,954
0.109
7.1
Total
34,308
0.105
79.6 451,275
0.115 1,144.6
1,224.2 396,013
0.183 1,595.5
1. Resources which are not reserves do not have demonstrated economic viability.
Nickel Mineral Resources1
For the year ended December 31, 2014
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Africa
Kabanga (50.00%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tonnes
(000s)
Grade
Contained
lbs
(%) (millions)
6,905
2.490
379.0
11,705
2.720
701.9
1,080.9
10,400
2.600 596.1
1. Resources which are not reserves do not have demonstrated economic viability.
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Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES
Mineral Reserves and Resources Notes
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2014 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. 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, Steven Haggarty, Senior
Director, Metallurgy, of Barrick and Patrick Garretson, Director, LOM Planning, of Barrick. Except as noted below, reserves have been calculated using an assumed
long-term average gold price of USD $1,100 per ounce, a silver price of USD $17.00 per ounce, a copper price of US $3.00 per pound and exchange rates of
1.10 CAD/USD and 0.91 USD/AUD. Reserves at Round Mountain have been calculated using an assumed long-term average gold price of USD $1,200. Reserves
at Kalgoorlie assumed a gold price of AUD $1,350 and Bulyanhulu, North Mara and Buzwagi assumed a gold price of US $1,300. 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, 2014 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. On April 4, 2014, the Company divested its interest in the Marigold mine. For additional information regarding this matter, see page 26 of Barrick’s Year-End
Report 2014.
3. On January 31, 2014, the Company divested the Plutonic mine. For additional information regarding this matter, see page 26 of Barrick’s Year-End Report 2014.
4. On March 1, 2014, the Company divested the Kanowna Bell mine. For additional information regarding this matter, see page 26 of Barrick’s Year-End
Report 2014.
5. On March 11, 2014, the Company divested 41 million shares in Acacia Gold, reducing the Company’s interest in Acacia Gold to 63.90%. For additional
information regarding this matter, see page 26 of Barrick’s Year-End Report 2014.
6. On December 3, 2014, the Company divested 50% of its interest in the Jabal Sayid project. For additional information regarding this matter, see page 26
of Barrick’s Year-End Report 2014.
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93
Barrick Gold Corporation | Financial Report 2014MINERAL RESERVES AND MINERAL RESOURCES 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
Senior Executive Vice President
and Chief Financial Officer
Toronto, Canada
February 18, 2015
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MANAGEMENT’S RESPONSIBILITYBarrick Gold Corporation | Financial Report 2014 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 internal control over financial reporting.
Barrick’s management assessed the effectiveness of the Company’s internal control over financial reporting as at
December 31, 2014. Barrick’s Management used the Internal Control – Integrated Framework (2013) as issued by the
Committee of Sponsoring Organizations (COSO) of the Treadway Commission to evaluate the effectiveness of Barrick’s
internal control over financial reporting. Based on management’s assessment, Barrick’s internal control over financial
reporting is effective as at December 31, 2014.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2014 has
been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on
pages 96 – 97 of Barrick’s 2014 Annual Financial Statements.
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Barrick Gold Corporation | Financial Report 2014 95
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
Independent Auditor’s Report
February 18, 2015
To the Shareholders of
Barrick Gold Corporation
We have completed integrated audits of Barrick Gold Corporation’s (the company) 2014 and 2013 consolidated
financial statements and its internal control over financial reporting as at December 31, 2014. 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, 2014 and December 31, 2013 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.
96
Barrick Gold Corporation | Financial Report 2014
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INDEPENDENT AUDITOR’S REPORT
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Barrick Gold Corporation as at December 31, 2014 and December 31, 2013 and its financial performance and its
cash flows for the years then ended in accordance with IFRS as issued by the IASB.
Report on internal control over financial reporting
We have also audited Barrick Gold Corporation’s internal control over financial reporting as at December 31, 2014,
based on criteria established in Internal Control – Integrated Framework (2013), 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, 2014, based on criteria established in Internal Control – Integrated Framework (2013)
issued by COSO.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
Barrick Gold Corporation | Financial Report 2014 97
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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)
General and administrative expenses (note 10)
Exploration, evaluation and project expenses (notes 5 and 8)
Impairment charges (note 9b)
Loss on currency translation
Closed mine rehabilitation
Loss (gain) on non-hedge derivatives (note 24e)
Other expense (income) (note 9a)
Loss before finance items and income taxes
Finance items
Finance income
Finance costs (note 13)
Loss before income taxes
Income tax expense (note 11)
Loss from continuing operations
Loss from discontinued operations (note 4e)
Net loss
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests (note 31)
Earnings per share data attributable to the equity holders of Barrick Gold Corporation (note 12)
Loss from continuing operations
Basic
Diluted
Loss from discontinued operations
Basic
Diluted
Net loss
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
2014
2013
$ 10,239
$ 12,527
6,830
385
392
4,106
132
83
193
(14)
7,329
390
680
12,687
180
100
(76)
56
(1,868)
(8,819)
11
(796)
(2,653)
(306)
(2,959)
–
9
(657)
(9,467)
(630)
(10,097)
(506)
$ (2,959)
$ (10,603)
$ (2,907)
(52)
$
$ (10,366)
(237)
$
$
$
(2.50)
(2.50)
$
$
–
–
$
$
$
$
(9.65)
(9.65)
(0.49)
(0.49)
$
$
(2.50)
(2.50)
$
$
(10.14)
(10.14)
98
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Consolidated Statements
of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Net loss
Other comprehensive income (loss), net of taxes
Items that may be reclassified subsequently to profit or loss:
Unrealized gains (losses) on available-for-sale (“AFS”) financial securities, net of tax $nil, $6
Realized (gains) losses and impairments on AFS financial securities, net of tax $nil, ($3)
Unrealized gains (losses) on derivative investments designated as cash flow hedges, net of tax $6, ($7)
Realized (gains) losses on derivative investments designated as cash flow hedges, net of tax ($1), $73
Currency translation adjustments gain (loss), net of tax $nil, $nil
Items that will not be reclassified to profit or loss:
Remeasurement gains (losses) of post-employment benefit obligations, net of tax $10, ($13)
Total other comprehensive loss
Total comprehensive loss
Attributable to:
Equity holders of Barrick Gold Corporation
Continuing operations
Discontinued operations
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2014
2013
$ (2,959)
$ (10,603)
18
18
(35)
(88)
(43)
(19)
(149)
(68)
17
(63)
(325)
(93)
24
(508)
$ (3,108)
$ (11,111)
$ (3,056)
$
$
–
(52)
$ (10,337)
(537)
$
(237)
$
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99
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Operating Activities
Net loss from continuing operations
Adjustments for the following items:
Depreciation
Finance costs (note 13)
Impairment charges (note 9b)
Income tax expense (note 11)
Increase in inventory
Proceeds from settlement of hedge contracts
Loss (gain) on non-hedge derivatives (note 24e)
Gain on sale of long-lived assets/investments
Other operating activities (note 14a)
Operating cash flows before interest and income taxes
Interest paid
Income taxes paid
Net cash provided by operating activities from continuing operations
Net cash provided by operating activities from discontinued operations
Net cash provided by operating activities
Investing Activities
Property, plant and equipment
Capital expenditures (note 5)
Sales proceeds
Proceeds from joint venture agreement of Jabal Sayid
Divestitures (note 4)
Investment sales
Other investing activities (note 14b)
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
Net cash used in investing activities
Financing Activities
Capital stock
Proceeds on exercise of stock options
Proceeds on common share offering (note 30)
Proceeds from divestment of 10% of issued ordinary share capital of Acacia (note 4c)
Debt (note 24b)
Proceeds
Repayments
Dividends (note 30)
Funding from non-controlling interests (note 31)
Other financing activities (note 14c)
Net cash provided by (used in) financing activities from continuing operations
Net cash provided by financing activities from discontinued operations
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and equivalents
Net increase in cash and equivalents
Cash and equivalents at beginning of year (note 24a)
Add: cash and equivalents of assets classified as held for sale at the beginning of year
Cash and equivalents at the end of year (note 24a)
Less: cash and equivalents of assets classified as held for sale at the end of year
2014
2013
$ (2,959)
$ (10,097)
1,648
796
4,106
306
(78)
–
193
(52)
(442)
3,518
(707)
(515)
2,296
–
2,296
(2,432)
72
216
166
120
(92)
(1,950)
–
(1,950)
–
–
186
141
(188)
(232)
24
9
(60)
–
(60)
(11)
275
2,404
20
1,732
657
12,687
630
(352)
219
(76)
(41)
601
5,960
(662)
(1,109)
4,189
50
4,239
(5,501)
50
–
522
18
(262)
(5,173)
(64)
(5,237)
1
2,910
–
5,414
(6,412)
(508)
55
(118)
1,342
–
1,342
(17)
327
2,097
–
$ 2,699
$ 2,424
–
20
Cash and equivalents excluding assets classified as held for sale at the end of year
$ 2,699
$ 2,404
The accompanying notes are an integral part of these consolidated financial statements.
100
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars)
Assets
Current assets
Cash and equivalents (note 24a)
Accounts receivable (note 17)
Inventories (note 16)
Other current assets (note 17)
Total current assets (excluding assets classified as held for sale)
Assets classified as held for sale
Total current assets
Non-current assets
Equity in investees (note 15a)
Other investments (note 15b)
Property, plant and equipment (note 18)
Goodwill (note 19a)
Intangible assets (note 19b)
Deferred income tax assets (note 29)
Non-current portion of inventory (note 16)
Other assets (note 21)
Total assets
Liabilities and Equity
Current liabilities
Accounts payable (note 22)
Debt (note 24b)
Current income tax liabilities
Other current liabilities (note 23)
Total current liabilities (excluding liabilities classified as held for sale)
Liabilities classified as held for sale
Total current liabilities
Non-current liabilities
Debt (note 24b)
Provisions (note 26)
Deferred income tax liabilities (note 29)
Other liabilities (note 28)
Total liabilities
Equity
Capital stock (note 30)
Deficit
Accumulated other comprehensive income (loss)
Other
Total equity attributable to Barrick Gold Corporation shareholders
Non-controlling interests (note 31)
Total equity
Contingencies and commitments (notes 2, 16, 18 and 35)
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
Signed on behalf of the Board,
John L. Thornton, Chairman
Steven J. Shapiro, Director
As at
As at
December 31, December 31,
2013
2014
$ 2,699
418
2,722
311
6,150
–
6,150
206
35
19,193
4,426
308
674
1,684
1,203
$ 33,879
$ 1,653
333
84
490
2,560
–
2,560
12,748
2,561
2,036
1,112
21,017
20,864
(10,739)
(199)
321
10,247
2,615
12,862
$ 2,404
385
2,679
421
5,889
323
6,212
27
120
21,688
5,835
320
501
1,679
1,066
$ 37,448
$ 2,165
179
75
303
2,722
162
2,884
12,901
2,428
2,258
976
21,447
20,869
(7,581)
(69)
314
13,533
2,468
16,001
$ 33,879
$ 37,448
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Consolidated Statements
of Changes in Equity
Barrick Gold Corporation
(in millions of United States dollars)
Common Shares
(in thousands) Capital stock
Retained
earnings
(deficit)
Other
comprehensive
income (loss)1 Other2
Total equity
attributable to
shareholders
Non-
controlling
interests
Total
equity
At January 1, 2014
1,164,652
$ 20,869 $ (7,581)
$
(69) $ 314
$ 13,533 $ 2,468 $ 16,001
Attributable to equity holders of the company
Net loss
Total other comprehensive loss
Total comprehensive loss
Transactions with owners
Dividends
Issued on exercise of stock options
Derecognition of stock option expense
Recognized on divestment of 10% of
Acacia Mining plc
Funding from non-controlling interests
Other decrease in non-controlling interests
–
–
–
–
18
–
–
–
–
–
–
(2,907)
(19)
–
(130)
–
–
(2,907)
(149)
(52)
–
(2,959)
(149)
$
– $ (2,926)
$ (130) $
–
$ (3,056) $
(52) $ (3,108)
–
–
(5)
(232)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7
–
–
(232)
–
(5)
–
–
–
7
–
–
174
29
(4)
(232)
–
(5)
181
29
(4)
Total transactions with owners
18
$
(5) $
(232)
$
– $ 7
$
(230) $ 199 $
(31)
At December 31, 2014
1,164,670
$ 20,864 $ (10,739)
$ (199) $ 321
$ 10,247 $ 2,615 $ 12,862
At January 1, 2013
1,001,108
$ 17,926 $ 3,269
$ 463 $ 314
$ 21,972 $ 2,664 $ 24,636
Net loss
Total other comprehensive income (loss)
Total comprehensive loss
Transactions with owners
Dividends
–
–
–
– (10,366)
24
–
–
(532)
–
–
(10,366)
(508)
(237) (10,603)
(508)
–
$
– $ (10,342)
$ (532) $
–
$ (10,874) $ (237) $ (11,111)
Issued on public equity offering
Issued on exercise of stock options
Recognition of stock option expense
Funding from non-controlling interests
Other decrease in non-controlling interests
–
163,500
44
–
–
–
–
2,934
1
8
–
–
(508)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(508)
2,934
1
8
–
–
–
–
–
–
55
(14)
(508)
2,934
1
8
55
(14)
Total transactions with owners
163,544
$ 2,943 $
(508)
$
– $
–
$ 2,435 $
41 $ 2,476
At December 31, 2013
1,164,652
$ 20,869 $ (7,581)
$
(69) $ 314
$ 13,533 $ 2,468 $ 16,001
1. Includes cumulative translation adjustments as at December 31, 2014: $122 million loss (2013: $80 million).
2. Includes additional paid-in capital as at December 31, 2014: $283 million (December 31, 2013: $276 million) and convertible borrowings – equity component
as at December 31, 2014: $38 million (December 31, 2013: $38 million).
The accompanying notes are an integral part of these consolidated financial statements.
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Notes to Consolidated Financial Statements
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to A$, ARS, C$, CLP,
DOP, EUR, GBP, JPY, PGK, TZS, ZAR, and ZMW are to Australian dollars, Argentine pesos, Canadian dollars, Chilean pesos, Dominican pesos, Euros,
British pound sterling, Japanese yen, Papua New Guinea kina, Tanzanian shillings, South African rand, 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. Our producing
gold mines are located in Canada, the United States,
Peru, Argentina, Australia, Dominican Republic and
Papua New Guinea. We also hold a 63.9% equity
interest in Acacia Mining plc (“Acacia”), formerly African
Barrick Gold plc, a company listed on the London Stock
Exchange that owns gold mines and exploration properties
in Africa. Our Copper business contains producing
copper mines located in Chile and Zambia and a mine
under construction in Saudi Arabia. We also have projects
located in South America and North America. 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. Accounting policies
are consistently applied to all years presented, unless
otherwise stated. Certain items within the statement of
income have been reclassified in the current year. The prior
periods have been restated to reflect the change in
presentation. The most significant changes relate to:
i) reclassifying closed mine rehabilitation costs and loss
(gain) on currency translation from other expense (income)
into separate line items on the consolidated statement of
income; ii) corporate social responsibility costs have been
reclassi fied from other expenses (income) into community
relations costs within cost of sales and within exploration,
evaluation and project expenses; and iii) reclassifying
energy sales and related cost of sales from other expense
(income) into revenue and cost of sales respectively. These
consolidated financial statements were approved for
issuance by the Board of Directors on February 18, 2015.
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
or losses have been eliminated on consolidation. We
consolidate subsidiaries where we have the ability to
exercise control. Control of an investee is defined to exist
when we are exposed to variable returns from our
involvement with the investee and have the ability to
affect those returns through our power over the
investee. Specifically, we control an investee if, and only
if, we have all of the following: power over the investee
(i.e., existing rights that give us the current ability to
direct the relevant activities of the investee); exposure,
or rights, to variable returns from our involvement with
the investee; and the ability to use our power over
the investee to affect its returns. For non wholly-owned,
controlled 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 Arrangements
A joint arrangement is defined as one over which
two or more parties have joint control, which is the
contractually agreed sharing of control over an
arrangement. This exists only when the decisions about
the relevant activities (being those that significantly
affect the returns of the arrangement) require the
unanimous consent of the parties sharing control. There
are two types of joint arrangements, joint operations
(“JO”) and joint ventures (“JV”).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 A JO is a joint arrangement whereby the parties
that have joint control of the arrangement have rights
to the assets and obligations for the liabilities, relating
to the arrangement. In relation to our interests in joint
operations, we recognize our share of any assets,
liabilities, revenues and expenses of the JO. A JV is a joint
arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the
joint venture. Our investment in the JV is accounted for
using the equity method.
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, cash contributions
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 arrangement.
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 joint arrangements and entities other than 100% owned Barrick
subsidiaries at December 31, 2014:
Place of business
Entity type
Economic interest1
Method2
Round Mountain Mine
Turquoise Ridge Mine3
Kalgoorlie Mine
Porgera Mine
Acacia Mining plc4
Pueblo Viejo4
Cerro Casale Project4
Donlin Gold Project
Jabal Sayid5
Kabanga Project5,6
United States
United States
Australia
Papua New Guinea
Tanzania
Dominican Republic
Chile
United States
Saudi Arabia
Tanzania
JO
JO
JO
JO
Subsidiary, publicly traded
Subsidiary
Subsidiary
JO
JV
JV
50%
75%
50%
95%
63.9%
60%
75%
50%
50%
50%
Our share
Our share
Our share
Our share
Consolidation
Consolidation
Consolidation
Our share
Equity Method
Equity Method
1. Unless otherwise noted, all of our joint arrangements are funded by contributions made by their partners in proportion to their economic interest.
2. For our JOs, we recognize our share of any assets, liabilities, revenues and expenses of the JO.
3. We have joint control given that decisions about relevant activities require unanimous consent of the parties to the joint operation.
4. We consolidate our interests in Pueblo Viejo, Cerro Casale and Acacia and record a non-controlling interest for the 40%, 25% and 36.1%, respectively,
that we do not own.
5. Barrick has commitments of $29 million relating to its interest in the joint ventures in 2014.
6. Our JV is an early stage exploration project and, as such, does not have any significant assets, liabilities, income, contractual commitments or contingencies.
Expenses are recognized through our equity pick-up (loss). Refer to note 15 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.
104
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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.
environment in which it operates. The functional
currency of all of our 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 the rates
at the time of acquisition;
Non-controlling interests represent the fair value of
Available-for-sale securities using the closing exchange
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) Non-Current Assets and Disposal Groups Held
for Sale and Discontinued Operations
Non-current assets and disposal groups are classified
as assets held for sale (“HFS”) if it is highly probable that
the value of these assets will be recovered primarily
through sale rather than through continuing use. They
are recorded at the lower of carrying amount and fair
value less cost of disposal. Impairment losses on initial
classification as HFS and subsequent gains and losses on
remeasurement are recognized in the income statement.
Once classified as held-for sale, property, plant and
equipment are no longer amortized. 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.
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 the value of this component is
expected to be recovered primarily through sale rather
than continuing use.
Results of operations and any gain or loss from
disposal are excluded from income before finance items
and income taxes and are reported separately as income/
loss from discontinued operations.
e) Foreign Currency Translation
The functional currency of the Company, for each
subsidiary of the Company, and for joint arrangements
and associates, is the currency of the primary economic
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.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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. 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.
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 expensed
as incurred unless management determines that probable
future economic benefits will be generated as a result of
the expenditures. Once the technical feasibility and
commercial viability of a program or project has been
demonstrated with a prefeasibility study, and we have
recognized reserves in accordance with National
Instrument 43-101, we account for future expenditures
incurred in the development of that program or project
in accordance with our policy for Property, Plant &
Equipment, as described in note 2(m).
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 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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.
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.
Indirect Taxes
Indirect tax recoverable is recorded at its undiscounted
amount, and is disclosed as non-current if not expected
to be recovered within twelve months.
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
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.
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
consolidated statement of income. The reclassification
adjustment is calculated as the difference between the
acquisition cost and current fair value, less any
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 reversed
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
A mine that is under construction is determined to enter
the production stage when the project is in the location
and condition necessary for it to be capable of operating
in the manner intended by management. We use the
following factors to assess whether these criteria have
been met: (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
expenditures that meet the criteria for capitalization in
accordance with IAS 16 Property Plant and Equipment.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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
on a straight-line basis 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 – 29 years
5 – 7 years
2 – 3 years
2 – 3 years
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
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, 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 statements 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. In addition, we incur project costs
which are generally capitalized when the expenditures
result in a future benefit.
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.
Capitalized underground development costs incurred
to enable access to specific ore blocks or areas of the
underground mine, and which only provide an economic
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 are
incurred, unless these costs are expected to provide a
future economic benefit to an identifiable component of
the ore body. Components of the ore body are based
on the distinct development phases identified by the
mine planning engineers when determining the optimal
development plan for the open pit. Production phase
stripping costs generate a future economic benefit when
the related stripping activity: (i) improves access to a
component of the ore body 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 proven
and probable reserves and the portion of resources
considered probable of economic extraction based on
the current LOM plan in the current component of the
ore body that has been made more accessible through
the stripping activity and all future components in the
110
current plan that benefit from the particular stripping
activity. Capitalized open pit mine development costs are
depreciated once the open pit has entered production
and the future economic benefit is being derived.
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 which is determined based on gross expenditures
incurred on an asset. Capitalization ceases when the asset
is substantially complete or if active development is
suspended or ceases. 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.
Insurance
We record losses relating to insurable events as they
occur. Proceeds receivable from insurance coverage are
recorded at such time as receipt is receivable or virtually
certain and the amount receivable is fixed or determinable.
For business interruption the amount is only recognized
when it is virtually certain or receivable as supported by
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 start of the fourth quarter for all of
our 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 Co-Presidents.
The recoverable amount of an operating segment is
the higher of Value in Use (“VIU”) and Fair Value Less
Costs of Disposal (“FVLCD”). A goodwill impairment is
recognized for any excess of the carrying amount of the
operating 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,
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 CGU, which is the lowest level
for which identifiable cash flows are largely independent
of the cash flows of other assets and includes any
liabilities specific to the CGU. For operating mines and
projects, the individual mine/project represents a CGU
for impairment testing.
The recoverable amount of a CGU is the higher of
VIU and FVLCD. An impairment loss is recognized for
any excess of the carrying amount of a CGU over its
recoverable amount where both the recoverable amount
and carrying value include the associated other assets
and liabilities including taxes where applicable, of the
CGU. 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 there has been a change in the estimates
used to determine the asset’s recoverable amount since
the last impairment loss was recognized, and it has been
determined that the asset is no longer impaired or that
impairment has decreased. This reversal is recognized in
the consolidated statements 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 FVLCD.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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
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 statements of income. Amounts
accumulated in equity are transferred to the consolidated
statements 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
statements 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 statements of income.
112
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 statements 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 25 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
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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 and security of closed mines. Costs
included in the provision encompass all closure and
rehabilitation activity expected to occur progressively
over the life of the operation at the time of closure and
post-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.
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 real 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 (“ESOP”)
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 equally
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 (“RSU”)
Under our RSU plan, selected employees are granted
RSUs where each RSU has a value equal to one Barrick
common share. RSUs generally vest from two-and-a-half
to three 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 operating segment
administration. Compensation expenses for RSUs
incorporate an estimate for expected forfeiture rates
based on which the fair value is adjusted.
In assessing loss contingencies related to legal proceedings
that are pending against us or unasserted claims that
may result in such proceedings, the Company with
assistance from 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”)),
cash-settled (Restricted Share Units (“RSU”), Deferred
Share Units (“DSU”), Performance Restricted Share Units
(“PRSU”)) and Performance Granted Share Units
(“PGSU”) 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, operating segment administration, corporate
administration) and the corresponding entry is recorded
in equity. Equity-settled awards are not remeasured
subsequent to the initial grant date.
Cash-settled awards are measured at fair value
initially using the market value of the underlying shares
on the day preceding the date of the grant of the award
and are required to be remeasured 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 Deferred Share Units (“DSU”)
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
remeasured, with any change in fair value recorded as
compensation expense in the period. Officers may also
elect to receive a portion or all of their incentive
compensation in the form of DSUs.
Performance Restricted Share Units (“PRSU”)
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. Vesting, and therefore the liability, 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 and the number of shares issued is
adjusted for its relative performance against certain
competitors and other internal financial performance
measures. 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.
Performance Granted Share Units (“PGSU”)
Under our PGSU plan, selected employees are granted
PGSUs, where each PGSU has a value equal to one
Barrick common share. Annual PGSU awards are
determined based on a multiple ranging from one to six
times base salary (depending on position and level of
responsibility) multiplied by a performance factor. The
number of PGSUs granted to a plan participant is
determined by dividing the dollar value of the award by
the closing price of Barrick common shares on the day
prior to the grant. Upon vesting, PGSUs are converted
into common shares and these shares cannot be sold
until the employee retires or leaves Barrick. PGSUs vest at
the end of the third year from the date of the grant.
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 short-term incentive, 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 approximately 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. We also have
a retirement plan for certain officers of Barrick under
which we contribute 15% of the officer’s annual salary
and annual short-term incentive. The contributions
are recognized as compensation expense as incurred.
The Company has no further payment obligations
once the contributions have been paid.
115
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 Defined Benefit Pension Plans
We have qualified defined benefit pension plans that
cover certain former 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. No funding is done on
these plans and contributions for future years are
required to be equal to benefit payments.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to equity in other comprehensive
income in the period in which they arise.
Our valuations are carried out using the projected
unit credit method. 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.
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 and life expectancy are the
assumption that generally have the most significant
impact on our pension cost and obligation.
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 Adopted During the Year
The Company has adopted IFRIC 21 Levies effective
January 1, 2014.
IFRIC 21 Levies
In May 2013, the IASB issued IFRIC 21 Levies, which
sets out the accounting for an obligation to pay a levy
that is not income tax. The interpretation addresses
what the obligating event is that gives rise to the
recognition of a liability to pay a levy. We performed an
assessment of the impact of IFRIC 21 and concluded
it did not have a significant impact on our consolidated
financial statements.
z) New Accounting Standards Issued But
Not Yet Effective
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments bringing together the classification
and measurement, impairment and hedge accounting
phases of the IASB’s 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. IFRS 9 also
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 financial liabilities and
derecognition of financial instruments.
The mandatory effective date of IFRS 9 would be
annual periods beginning on or after January 1, 2018,
with early adoption permitted. IFRS 9 will be applied
starting January 1, 2015 and consequently, we will
amend our accounting policy for derivative instruments
and hedge accounting reflecting the early adoption.
We expect to have reduced volatility in our income
statements and an increase in the amount of unrealized
gains and losses being reported in OCI as a result of
adopting IFRS 9.
IFRS 15 Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15 Revenue from
Contracts with Customers, which covers principles that
an entity shall apply to report useful information to
users of financial statements about the nature, amount,
timing, and uncertainty of revenue and cash flows arising
from a contract with a customer. Application of the
standard is mandatory for annual reporting periods
beginning on or after January 1, 2017, with earlier
application permitted. We are currently assessing the
impact on our consolidated financial statements along
with timing of our adoption of IFRS 15.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 3 Critical Judgments, Estimates, Assumptions and Risks
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 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. Refer to notes 18 and 20.
Impairment and Reversal of Impairment for
Non-Current Assets and Impairment of Goodwill
Goodwill and non-current assets are tested for impairment
if there is an indicator of impairment, and in the case
of goodwill, annually at the start of the fourth quarter
for all of our operating segments. Calculating the
estimated fair values of CGUs for non-current asset
impairment tests and CGUs or 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, value of reserves
outside LOM plans in relation to the assumptions related
to comparable entities and the market values per ounce
and per pound and discount rates. Changes in any of
the assumptions or estimates used in determining the
fair values could impact the impairment analysis. Refer
to note 2n, note 2p and note 20 for further information.
Other than what is disclosed in note 20, we have not
identified any impairment triggers or any indicators that
prior impairments are required to be tested for reversal
for the year ended December 31, 2014.
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 notes 2u and 26 for further information.
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 the recoverability of indirect
taxes, and if actual results are significantly different than
our estimates, the ability to realize the deferred tax assets
and indirect tax receivables recorded on our balance
sheet could be impacted. Refer to note 2i, note 11 and
note 29 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
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117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 with
assistance from its legal counsel evaluates 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.
Refer to note 35 for more information.
Pascua-Lama
As a result of our decision to suspend the construction
of our Pascua-Lama project, significant judgment and
estimation has been used in determining our accrued
liabilities, including: demobilization, contract claims,
severance and VAT refunds previously received in Chile.
For contractors, it is necessary to estimate accruals for
work completed but not yet invoiced based on subjective
assessments of the stage of completion of their work in
relation to invoices rendered; and for costs arising from
existing contracts for legal or constructive obligations
arising from our demobilization actions. In addition, we
have received VAT refunds in Chile related to Pascua-
Lama of $543 million that will require repayment should
the project not come into production by 2017, which
has not been accrued as the suspension is considered
temporary. We expect to be able to extend the date of
the commencement of production with the Chilean
authorities to avoid repaying these amounts, although if
unsuccessful, would be required to repay them. We also
recorded VAT recoverable in Argentina of $461 million at
December 31, 2014 (December 31, 2013 – $519 million),
which may not be recoverable should the project not
advance to production and is subject to devaluation risk
as the amounts are recoverable in Argentine pesos.
Refer to note 27 for a summary of our key
financial risks.
Other Notes to the Financial Statements
Note
Page
Divestitures
Segment information
Revenue
Cost of sales
Exploration, evaluation and project expenses
Other expense (income)
General and administrative expenses
Income tax expense
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
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 Divestitures
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
35
118
119
122
122
124
124
124
124
126
126
126
127
128
129
130
131
133
138
139
139
139
149
151
152
155
156
158
159
160
160
162
166
a) Divestment of 50 percent interest in Jabal Sayid
On July 13, 2014, Barrick entered into an agreement
to form a joint venture with Ma’aden to operate the
Jabal Sayid copper project. Ma’aden, which is 50 percent
owned by the Saudi Arabian government, acquired its
50 percent interest in the new joint venture company
for cash consideration of $216 million. The transaction
closed on December 3, 2014. Since the transaction
resulted in a loss of control, the assets and liabilities were
written down to their fair value less costs of disposal,
which resulted in an impairment loss of $514 million,
including $316 million of goodwill, for the year ended
December 31, 2014. Refer to note 20 for further details
of the impairment loss.
118
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Jabal Sayid is a joint arrangement which is structured
through a separate entity of which Barrick is a 50 percent
shareholder. The terms of the contractual arrangement
provide that we have rights to 50 percent of the net
earnings of the entity, and therefore we concluded that it
was a joint venture and, as such, we recorded it as an
equity method investment.
b) Disposition of Australian Assets
On January 31, 2014, we closed the sale of our Plutonic
mine for total cash consideration of $22 million. In
addition, on March 1, 2014, we completed the sale
of our Kanowna mine for total cash consideration of
$67 million. The transactions resulted in a loss of
$5 million for the year ended December 31, 2014.
On September 30, 2013, we recorded the sale of
Yilgarn South assets, which comprised of Granny Smith,
Lawlers and Darlot mines from Australia for total proceeds
of $266 million, consisting of $135 million in cash and
$131 million in Gold Fields Limited shares (“GFL”). We
measured GFL shares using the quoted market price at
September 30, 2013 and there were no restrictions on
when we would be able to divest these shares. As a result
of this sale, we recognized a gain of $11 million for the
year ended December 31, 2013.
c) Disposition of 10 Percent Interest in Acacia
On March 11, 2014, we completed the divestment of
41 million ordinary shares in Acacia, representing 10 percent
of the issued ordinary share capital of Acacia for net cash
proceeds of $186 million. Subsequent to the divestment,
we continue to retain a controlling interest in Acacia and
continue to consolidate Acacia. We have accounted for
the divestment as an equity transaction and, accordingly,
5 Segment Information
recorded the difference between the proceeds received
and the carrying value of $179 million as $7 million of
additional paid-in capital in shareholders’ equity.
d) Disposition of Marigold Mine
On April 4, 2014, we completed the divestiture of our
minority interest in the Marigold mine, for total cash
consideration of $86 million. The transaction resulted in a
gain of $21 million for the year ended December 31, 2014.
e) Disposition of Barrick Energy
On July 31, 2013, we closed the sale of Barrick Energy
for total proceeds of $435 million, consisting of
$387 million in cash and a future royalty valued at
$48 million. As a result of the sale, we recognized a loss
of $519 million for the year ended December 31, 2013
representing the difference between the net proceeds
and our carrying value.
The condensed statement of income for Barrick
Energy for the year ended December 31, 2013, which
has been disclosed as a discontinued operation in the
consolidated statements of income, is as follows:
For the year ended December 31
Revenue
Cost of sales1
Loss on remeasurement/impairment
Other expense
Loss before finance items and income taxes
Finance items
Loss before income taxes
Income tax recovery
Net loss
2013
$ 93
79
519
13
(518)
(1)
(519)
13
$ (506)
1. Includes depreciation of $43 million for the year ended December 31, 2013.
As a result of the organizational changes that were
implemented in third quarter 2014, we have determined
that our Co-Presidents, acting together, are Barrick’s
Chief Operating Decision Maker (“CODM”). Beginning
in fourth quarter 2014, CODM reviews the operating
results, assesses performance and makes capital allocation
decisions at the mine site or project level, with the
exception of Acacia which is reviewed and assessed as
a separate business. Therefore, each individual mine
site and Acacia are operating segments for financial
reporting purposes. As a result, our former North
America Portfolio, Australia Pacific and Copper operating
segments have been eliminated and each individual
mine within those segments is now an operating
segment. For segment reporting purposes, we present
our reportable operating segments as follows: eight
individual gold mines, Acacia and our Pascua-Lama
project. The remaining operating segments have been
grouped into two other categories: (a) our remaining
gold mines and (b) our two copper mines.
Segment performance is evaluated based on a
number of measures including operating income before
tax, production levels and unit production costs. Income
tax, operating segment administration, finance income
and costs, impairment charges and reversals, investment
write-downs and gains/losses on hedge and non-hedge
derivatives are managed on a consolidated basis and are
therefore not reflected in segment income.
119
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2014
Goldstrike
Cortez
Pueblo Viejo
Lagunas Norte
Veladero
Turquoise Ridge
Porgera
Kalgoorlie
Acacia
Pascua-Lama
Other Mines – Gold
Other Mines – Copper2
Revenue
$ 1,154
1,093
1,552
775
894
252
644
417
923
–
1,282
1,226
Exploration,
evaluation and
project
expenses
relations Depreciation
$ 519
432
642
243
438
94
465
267
564
–
785
787
$ 132
255
243
92
116
17
80
42
129
14
301
174
$ 1
1
–
2
3
1
2
1
18
113
13
42
Other
expenses
(income)1
Segment
income
(loss)
$
6
12
(2)
(1)
7
1
13
1
21
(12)
(4)
(10)
$ 496
393
669
439
330
139
84
106
191
(115)
187
233
$ 10,212
$ 5,236
$ 1,595
$ 197
$ 32
$ 3,152
Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2013
Goldstrike
Cortez
Pueblo Viejo
Lagunas Norte
Veladero
Turquoise Ridge
Porgera
Kalgoorlie
Acacia
Pascua-Lama
Other Mines – Gold
Other Mines – Copper2
Revenue
$ 1,252
1,938
995
839
941
225
659
468
937
–
2,474
1,653
Exploration,
evaluation and
project
expenses
relations Depreciation
$ 550
315
435
227
400
95
450
281
596
–
1,485
926
$ 112
321
139
54
168
14
74
28
160
3
409
188
$ –
3
–
3
6
–
7
1
17
388
30
57
Other
expenses
(income)1
Segment
income
(loss)
$
9
10
(9)
7
13
1
12
4
49
–
25
14
$ 581
1,289
430
548
354
115
116
154
115
(391)
525
468
1. Other expenses include accretion expense, which is included with finance costs in the consolidated statements of income. For the year ended December 31, 2014,
accretion expense was $51 million (2013: $51 million). Refer to note 9a for details of other expenses (income).
2. Includes exploration and evaluation expense and losses from equity investees that hold copper projects.
$ 12,381
$ 5,760
$ 1,670
$ 512
$ 135
$ 4,304
Reconciliation of Segment Income to Loss from Continuing Operations Before Income Taxes
For the years ended December 31
2014
2013
Segment income
Other revenue1
Other cost of sales/amortization1,2
Exploration, evaluation and project expenses not attributable to segments
General and administrative expenses
Other (expense) income not attributable to segments
Impairment charges
Loss on currency translation
Closed mine rehabilitation
Finance income
Finance costs (includes non-segment accretion)
(Loss) gain on non-hedge derivatives
$ 3,152
27
1
(195)
(385)
(5)
(4,106)
(132)
(83)
11
(745)
(193)
$ 4,304
146
101
(168)
(390)
28
(12,687)
(180)
(100)
9
(606)
76
Loss before income taxes
$ (2,653)
$ (9,467)
1. Includes revenue and costs from Pierina, which is not part of any of our operating segments. Pierina entered closure in 2013.
2. Includes all realized hedge gains/losses.
120
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Geographic Information
Non-current assets1
Revenue2
United States
Zambia
Chile
Dominican Republic
Argentina
Tanzania
Canada
Saudi Arabia
Australia
Papua New Guinea
Peru
Unallocated1
Total
As at Dec. 31, As at Dec. 31,
2013
2014
2014
2013
$ 9,455
395
3,711
5,208
2,517
1,717
495
343
1,155
668
1,045
1,020
$ 7,014
1,036
3,998
4,836
2,425
1,549
448
741
997
672
734
6,786
$ 3,095
515
711
1,552
894
923
283
–
821
644
801
–
$ 4,117
666
987
995
941
937
278
–
1,962
659
985
–
$ 27,729
$ 31,236
$ 10,239
$ 12,527
1. As a result of the reorganization of our operating segments in the fourth quarter of 2014, the presentation of the 2014 non-current asset information differs
from the 2013 information, which reflects the presentation under the previous operating segment grouping. The primary difference relates to the presentation of
goodwill in our former operating units in 2013 while being presented with the individual mine site for 2014. We have determined that it is not practical to restate
prior year comparative information into current year segment presentation, nor is it practical to disclose 2014 information into the previous segment grouping,
as the goodwill impairments recorded in each of 2013 and 2014 would have been determined at the operating segment level which is different in each year.
As a result, the 2014 non-current asset information is presented under the updated segment presentation and the comparative 2013 information is disclosed
under the previous segment grouping.
2. Presented based on the location from which the product originated.
Capital Expenditures Information
Segment capital expenditures1
For the year
For the year
ended Dec. 31, ended Dec. 31,
2013
2014
Goldstrike
Cortez
Pueblo Viejo
Lagunas Norte
Veladero
Turquoise Ridge
Porgera
Kalgoorlie
Acacia
Pascua-Lama
Other Mines – Gold
Other Mines – Copper
Segment total
Other items not allocated to segments
Total
$ 558
189
134
82
173
30
33
66
254
195
183
298
$ 2,195
69
$ 2,264
$ 474
396
169
145
208
55
171
66
387
2,226
487
405
$ 5,189
120
$ 5,309
1. Segment capital expenditures are presented for internal management reporting purposes on an accrual basis. Capital expenditures in the Consolidated Statements
of Cash Flow are presented on a cash basis. In 2014, cash expenditures were $2,432 million (2013: $5,501 million) and the decrease in accrued expenditures was
$168 million (2013: $192 million decrease).
Barrick_AR14_FINANCIALS_E.indd 121
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121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
$
271
$
206
As at December 31
2014
2013
2014
2013
6 Revenue
For the years ended December 31
2014
2013
Gold bullion sales1
Spot market sales
Concentrate sales
Copper sales1
Copper cathode sales
Concentrate sales
Other sales2
Total
$ 8,471
273
$ 10,427
243
$ 8,744
$ 10,670
$
710
514
$
987
664
$ 1,224
$ 1,651
$ 10,239
$ 12,527
1. Revenues include amounts transferred from OCI to earnings for commodity
cash flow hedges (see note 24d).
2. Revenues include the sale of by-products for our gold and copper mines and
energy sales from Monte Rio.
Principal Products
All of our gold mining operations produce gold in doré
form, except Acacia’s gold mines of 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
$48 million (2013: $51 million). Incidental revenues
from the sale of by-products, primarily copper, silver
and energy at our gold mines, are classified within
other sales.
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, 2014 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 $M
Volumes subject to
final pricing
Copper pounds (millions)
Gold ounces (000s)
82
28
63
19
$ 24
3
$ 21
3
For the year ended December 31, 2014, our provisionally
priced copper sales included provisional pricing losses of
$38 million (2013: $9 million loss) and our provisionally
priced gold sales included provisional pricing losses of
$1 million (2013: $10 million loss).
At December 31, 2014, our provisionally priced
copper and gold sales subject to final settlement were
recorded at average prices of $2.88/lb (2013: $3.34/lb)
and $1,201/oz (2013: $1,349/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
2014
2013
Direct mining cost1,2,3
Depreciation
Royalty expense
Community relations
Total
$ 4,803
1,648
303
76
$ 5,205
1,732
321
71
$ 6,830
$ 7,329
1. Direct mining cost includes charges to reduce the cost of inventory to net
realizable value of $121 million (2013: $46 million).
2. Direct mining cost includes the costs of extracting by-products.
3. Includes employee costs of $1,381 million (2013: $1,737 million).
122
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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),
depreciation related to sales, royalty expenses, and
community relations expense at our operating sites. Cost
of sales also includes costs associated with power sales
from Monte Rio in the Dominican Republic. 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 to other than
a government,
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 or sales process.
Producing mines and projects
Type of royalty
Goldstrike
Cortez
Cortez – Pipeline/South
Pipeline deposit
Cortez – portion of Pipeline/
South Pipeline deposit
Pueblo Viejo
Lagunas Norte
Veladero
Porgera
Kalgoorlie
Acacia
Bulyanhulu
North Mara – Nyabirama and
Nyabigena pit
North Mara – Gokona pit
Buzwagi
Pascua-Lama Project –
Chile gold production
Pascua-Lama Project –
Chile copper production
Pascua-Lama Project –
Argentina production
Other Mines – Gold
Williams
David Bell
Hemlo – Interlake property
Round Mountain
Bald Mountain
Ruby Hill
Western Australia production
Cowal
Other Mines – Copper
Lumwana
Kabanga
Other
Cerro Casale
Donlin Gold Project
0%–5% NSR, 0%–6% NPI
1.5% GSR
0.4%–9% GSR
5% NV
3.2% NSR (for gold & silver)
2.51% NSR
3.75% gross proceeds
2% NSR, 0.25% other
2.5% of gold revenue
4% NSR
4% NSR, 1% LT
4% NSR, 1.1% LT
4% NSR, 30% NPI1
1.4%–9.6% GPSS
1.9% NSR
3% modified NSR
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
2.5% of gold revenue
4% of net gold revenue
6% GSR2
4% NSR
3% NSR (capped at $3 million
cumulative)
1.5% NSR (first 5 years),
4.5% NSR (thereafter),
8.0% NPI3
1. 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.
2. This has been replaced by a royalty of 20% on revenue effective
January 1, 2015.
3. The NPI is calculated as a percentage of profits realized from the mine
until all funds invested to date with interest at an agreed upon rate are
recovered. No amount is currently payable.
123
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
8 Exploration, Evaluation and Project Expenses
b) Impairment Charges
For the years ended December 31
2014
2013
Exploration:
Minesite exploration
Global programs
Evaluation costs
Exploration and evaluation expense
Advanced project costs:
Pascua-Lama
Jabal Sayid
Other project related costs:
Cerro Casale
Kainantu
Reko Diq
Corporate Development
Community relations related to projects
For the years ended December 31
2014
2013
Impairment of long-lived assets1
Impairment of other intangibles1
Impairment of goodwill1
Impairment of available-for-sale investments
Total
1. Refer to note 20 for further details.
$ 2,672
7
$ 2,679
1,409
18
$ 9,734
112
$ 9,846
2,815
26
$ 4,106
$ 12,687
10 General and Administrative Expenses
For the years ended December 31
Corporate administration2
Operating segment administration
Total1
2014
$ 217
168
$ 385
2013
$ 192
198
$ 390
1. Includes employee costs of $231 million (2013: $241 million).
2. Includes $24 million (2013: $12 million) related to one time severance payments.
11 Income Tax Expense
For the years ended December 31
2014
2013
$ 32
131
$ 163
21
$ 51
128
$ 179
29
$ 184
$ 208
88
30
14
4
12
35
25
370
52
4
6
5
17
18
$ 680
$ 35
22
–
Exploration, evaluation and project expenses1
$ 392
1. Approximates the impact on operating cash flow.
9 Other Expense (Income)
a) Other Expense (Income)
For the years ended December 31
2014
2013
Other Expense:
Consulting fees
Bank charges
Lease termination charges
Mine site severance and
non-operational costs
World Gold Council fees
Pension and other post-retirement benefit
$ 28
16
15
12
3
3
Tax on profit
Current tax
Charge for the year
Adjustment in respect of prior years
47
7
3
Deferred tax
Origination and reversal of temporary
differences in the current year
Adjustment in respect of prior years
Total other expense
$ 77
$ 114
Other Income:
Gain on sale of long-lived assets/investments
Incidental interest income
Insurance (recovery) expense
Management fee income
Royalty income
Toll milling
Incidental income
Total other income
$ (52)
(14)
(7)
(5)
(4)
–
(9)
$ (41)
(5)
3
(3)
(6)
(5)
(1)
(91)
(58)
Deferred
Canada
Current
Canada
International
Net other expense (income)
$ (14)
$ 56
International
Income tax expense
$ 750
(64)
$ 1,106
(5)
$ 686
$ 1,101
$ (436)
56
$ (517)
46
$ (380)
$ (471)
$
–
686
(6)
$
1,107
$ 686
$ 1,101
$ (181)
(199)
$
(11)
(460)
$ (380)
$ (471)
$ 306
$ 630
Income tax expense (recovery)
$ 306
$ 630
Tax expense related to continuing operations
124
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Non-Recognition of US Alternative Minimum
Tax (AMT) Credits
In fourth quarter 2014 and 2013, we recorded a deferred
tax expense of $43 million and $48 million respectively
related to US AMT credits which are not probable to be
realized based on our current life of mine plans.
Tax Rate Changes
In third quarter 2014, a tax rate change was enacted in
Chile, resulting in current tax expense of $2 million.
In fourth quarter 2014, a tax rate change was
enacted in Peru, reducing corporate income tax rates.
This resulted in a deferred tax expense of $18 million
due to recording the deferred tax asset in Peru at the
lower rates.
Pueblo Viejo Special Lease Agreement (SLA) Amendment
In third quarter 2013, the Pueblo Viejo Special Lease
Agreement (SLA) Amendment was substantively
enacted. The amendment included the following items:
Elimination of a 10 percent return embedded in the
initial capital investment for purposes of the net profits
tax (NPI); an extension of the period over which Pueblo
Viejo will recover its capital investment; a delay of
application of NPI deductions; a reduction of the
depreciation rates; and the establishment of a graduated
minimum tax.
The tax impact of the amendment is a charge of
$384 million, comprised of current tax and deferred tax
expense, including $36 million of graduated minimum
tax related to 2012 sales proceeds.
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. In 2014 and 2013, tax expense of $46 million
and $49 million respectively primarily arose from translation
losses due to the weakening of the Argentinean peso
against the US dollar. These losses and gains are included
within deferred tax expense/recovery.
Restructure of Internal Debt to Equity
In second quarter 2014, a deferred tax recovery of
$112 million arose from a restructure of internal debt
to equity in subsidiary corporations, which resulted
in the release of a deferred tax liability and a net increase
in deferred tax assets.
Reconciliation to Canadian Statutory Rate
For the years ended December 31
2014
2013
At 26.5% statutory rate
Increase (decrease) due to:
Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Goodwill impairment charges not
$ (703)
$ (2,509)
(93)
18
96
(181)
(169)
111
tax deductible
373
837
Impairment charges not recognized in
deferred tax assets
Net currency translation losses on
deferred tax balances
Current year tax losses not recognized in
deferred tax assets
Restructure of internal debt to equity
Pueblo Viejo SLA amendment
Non-recognition of US AMT credits
Adjustments in respect of prior years
Impact of tax rate changes
Other withholding taxes
Mining taxes
Other items
334
1,699
46
20
(112)
–
43
(8)
20
40
227
5
49
183
–
384
48
5
–
64
134
(25)
Income tax expense
$ 306
$
630
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.
Barrick_AR14_FINANCIALS_E.indd 125
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125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
12 Loss per Share
For the years ended December 31
($ millions, except shares in millions and per share amounts in dollars)
Loss from continuing operations
Loss from discontinued operations
Loss attributable to non-controlling interests
2014
2013
Basic
Diluted
Basic
Diluted
$ (2,959)
–
52
$ (2,959) $ (10,097)
(506)
237
–
52
$ (10,097)
(506)
237
Net loss attributable to equity holders of Barrick Gold Corporation
$ (2,907)
$ (2,907) $ (10,366)
$ (10,366)
Weighted average shares outstanding
Stock options
Loss per share data attributable to the equity holders of Barrick Gold Corporation
Loss from continuing operations
Loss from discontinued operations
Net loss
13 Finance Costs
For the years ended December 31
2014
2013
Interest
Amortization of debt issue costs
Amortization of premium
Gain on interest rate hedges
Interest capitalized1
Accretion
Debt extinguishment fees
Total
$ 733
21
(1)
(2)
(30)
75
–
$ 775
22
–
(1)
(297)
68
90
$ 796
$ 657
1,165
–
1,165
1,165 1,022
–
–
1,022
–
1,165 1,022
1,022
$
$
$
(2.50)
–
(2.50)
$
$
$
(2.50) $
– $
(9.65)
(0.49)
(2.50) $ (10.14)
(9.65)
$
$
(0.49)
$ (10.14)
b) Investing Cash Flows – Other Items
For the years ended December 31
2014
2013
Value added tax recoverable on project
capital expenditures
Derivative settlements
Other
Other net investing activities
$ (66)
–
(26)
$ (237)
20
(45)
$ (92)
$ (262)
Investing cash flow includes payments for:
Capitalized interest (note 24)
$ 29
$ 394
Financing fees on long-term debt
Debt extinguishment fees
Derivative settlements
2014
2013
$ –
–
9
$
(32)
(90)
4
Other net financing activities
$ 9
$ (118)
1. For the year ended December 31, 2014, the general capitalization rate
was 5.40% (2013: 5.00%).
c) Financing Cash Flows – Other Items
For the years ended December 31
14 Cash Flow – Other Items
a) Operating Cash Flows – Other Items
For the years ended December 31
2014
Adjustments for non-cash income statement items:
Loss on currency translation
RSU expense (recovery)
Stock option expense (recovery)
Change in estimate of rehabilitation costs
$ 132
8
(5)
at closed mines
Net inventory impairment charges (note 16)
Cash flow arising from changes in:
Accounts receivable
Other current assets
Accounts payable
Other current liabilities
Other assets and liabilities
Settlement of rehabilitation obligations
83
121
(24)
(177)
(329)
141
(284)
(108)
2013
$ 180
(1)
8
100
46
28
(31)
429
17
(119)
(56)
Other net operating activities
$ (442)
$ 601
126
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
15 Investments
a) Equity Accounting Method Investment Continuity
At January 1, 2013
Funds invested
At December 31, 2013
Funds invested
Kabanga
Jabal Sayid
Total
$ 20
7
$ 27
1
$
$
–
–
–
178
$
$
20
7
27
179
At December 31, 2014
$ 28
$ 178
$ 206
Publicly traded
No
No
Reconciliation of Summarized Financial Information
to Carrying Value
Opening net assets, January 1
Profit/(loss) for the period
Closing net assets, December 31
Barrick’s share of net assets (50%)
Goodwill recognition
Carrying value
$ 111
–
$ 111
55
123
$ 178
Summarized Equity Investee Financial Information
b) Other Investments
As at
Dec. 31, 2014
As at
Dec. 31, 2013
Cumulative
gains in
AOCI
Fair value1
Cumulative
losses in
AOCI
Fair value1
Available-for-sale
securities
$ 35
$ 4
$ 120
$ (32)
1. Refer to note 25 for further information on the measurement of fair value.
Gains on Investments Recorded in Earnings
For the years ended December 31
2014
2013
Gains realized on sales
Cash proceeds from sales1
–
$
120
$ 6
18
1. Primarily relates to sale of Goldfields investments.
For the year ended December 31
Summarized Balance Sheet
Cash and equivalents
Other current assets
Total current assets
Non-current assets
Total assets
Current financial liabilities (excluding trade,
other payables & provisions)
Other current liabilities
Total current liabilities
Non-current financial liabilities (excluding trade,
other payables & provisions)
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Jabal Sayid
2014
$ 10
21
$ 31
429
$ 460
3
1
$
4
2
343
$ 345
$ 349
$ 111
The information above reflects the amounts presented in
the financial information of the joint venture adjusted for
differences between IFRS and Saudi GAAP.
Barrick_AR14_FINANCIALS_E.indd 127
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127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
16 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,
2014
As at
Dec. 31,
2013
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 2,036
357
875
245
129
–
–
11
$ 1,835
334
1,027
209
177
–
–
4
$ 3,653
(1,584)
$ 3,586
(1,477)
$ 2,069
$ 2,109
$ 182
392
132
7
–
12
28
–
$ 753
(100)
$ 653
2014
$ 121
–
$ 236
320
151
6
–
12
47
–
$ 772
(202)
$ 570
2013
$ 53
(7)
1. Ore that we do not expect to process in the next 12 months is classified within other long-term assets.
For the years ended December 31
Inventory impairment charges
Inventory impairment charges reversed
Ore on Leach Pads
The recovery of gold and copper from certain oxide ores
is achieved through the heap leaching process. Our
Pierina, Lagunas Norte, Veladero, Cortez, Bald Mountain,
Round Mountain and Ruby Hill 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, 2014, the
weighted average cost per recoverable ounce of gold
128
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
and recoverable pound of copper on leach pads was
$687 per ounce and $1.24 per pound, respectively
(2013: $753 per ounce of gold and $1.28 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 2015 to 2023 and for copper
in 2028. Including the estimated time required for residual
leaching, rinsing and reclamation activities, we expect
that our leaching operations will terminate within a
period of up to six years following the date that the last
ton of ore is placed on the leach pad.
The current portion of ore inventory on leach pads is
determined based on estimates of the quantities of gold
or copper at each balance sheet date that we expect to
recover during the next 12 months.
Ore in Stockpiles
Gold
Goldstrike
Pueblo Viejo
Porgera
Cortez
Cowal
Kalgoorlie
Buzwagi
North Mara
Lagunas Norte
Veladero
Turquoise Ridge
Other
Copper
Zaldívar
Jabal Sayid
Lumwana
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 656
271
259
203
129
104
43
42
37
35
17
39
$ 760
340
257
159
176
103
69
43
54
32
18
25
108
–
74
Ore on Leachpads
Gold
Veladero
Cortez
Bald Mountain
Round Mountain
Lagunas Norte
Ruby Hill
Pierina
Copper
Zaldívar
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 149
40
108
21
37
–
2
$ 178
56
38
29
18
9
6
392
320
$ 749
$ 654
Purchase Commitments
At December 31, 2014, we had purchase obligations for
supplies and consumables of approximately $1,154 million
(2013: $1,221 million).
17 Accounts Receivable and Other Current Assets
Accounts receivable
Amounts due from concentrate sales
Amounts due from copper cathode sales
Receivable from Dominican
Republic government2
Other receivables
Other current assets
Derivative assets (note 24f)
Goods and services taxes recoverable1
Prepaid expenses
Other
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 98
86
109
125
$ 418
$ 7
208
62
34
$ 311
$ 144
84
39
118
$ 385
$ 37
262
81
41
$ 421
140
54
42
1. Primarily includes VAT and fuel tax receivables of $84 million in Argentina,
$44 million in Tanzania, $33 million in Dominican Republic, $24 million
in Chile, and $8 million in Peru (Dec. 31, 2013: $86 million, $91 million,
$31 million, $24 million and $15 million, respectively).
$ 2,218
$ 2,071
2. Amounts receivable from the Dominican Republic government relate to sales
of energy from Pueblo Viejo’s power plant and balances due under the
Special Lease Agreement for payments made by Pueblo Viejo on behalf of
the government.
Barrick_AR14_FINANCIALS_E.indd 129
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
18 Property, Plant and Equipment
At January 1, 2014
Net of accumulated depreciation
Additions
Capitalized interest
Disposals
Depreciation
Impairment charges
Transfers5
At December 31, 2014
At December 31, 2014
Mining
property
costs
subject to
Mining
property
costs not
subject to
depreciation1,3 depreciation1,2
Buildings, plant
and equipment
Oil and gas
properties4
Total
$ 6,210
$ 8,551
$ 6,927
$
190
–
(36)
(933)
(105)
1,400
301
2
(15)
(891)
(422)
738
2,048
28
(523)
–
(2,139)
(2,138)
$ 6,726
$ 8,264
$ 4,203
–
–
–
–
–
–
–
–
–
–
–
$ 21,688
2,539
30
(574)
(1,824)
(2,666)
–
$ 19,193
$ 53,136
(33,943)
$ 19,193
$
$
$
Cost
Accumulated depreciation and impairments
$ 15,316
(8,590)
$ 21,803
(13,539)
$ 16,017
(11,814)
Net carrying amount – December 31, 2014
$ 6,726
$ 8,264
$ 4,203
Mining
property
costs
subject to
depreciation1,3
Mining
property
costs not
subject to
depreciation1,2
Buildings, plant
and equipment
Oil and gas
properties4
Total
At January 1, 2013
Cost
Accumulated depreciation and impairments
$ 10,371
(6,542)
$ 19,373
(10,651)
$ 18,460
(2,597)
$ 1,416
(553)
$ 49,620
(20,343)
Net carrying amount – January 1, 2013
$ 3,829
$ 8,722
$ 15,863
$ 863
$ 29,277
Adjustment on currency translation
Additions
Capitalized interest
Disposals
Depreciation
Impairment charges
Transfers5
Assets held for sale
At December 31, 2013
At December 31, 2013
–
151
–
(531)
(848)
(1,046)
4,691
(36)
–
630
–
4
(1,052)
(1,524)
1,867
(96)
–
4,420
295
(5)
–
(7,078)
(6,539)
(29)
(28)
7
–
(799)
(43)
–
–
–
(28)
5,208
295
(1,331)
(1,943)
(9,648)
19
(161)
$ 6,210
$ 8,551
$ 6,927
$
–
$ 21,688
Cost
Accumulated depreciation and impairments
$ 13,817
(7,607)
$ 20,769
(12,218)
$ 16,602
(9,675)
Net carrying amount – December 31, 2013
$ 6,210
$ 8,551
$ 6,927
$
$
–
–
–
$ 51,188
(29,500)
$ 21,688
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, 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. Represents Barrick Energy which was divested in July 2013 (refer to note 4e).
5. Primarily relates to long-lived assets that are transferred to PP&E once they are placed into service.
130
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
extraction for each mineral property. This forms the basis
for our LOM plans. We prospectively revise calculations
of amortization expense for property, plant and
equipment amortized using the UOP method, where the
denominator is our LOM ounces. The effect of changes
in our LOM on amortization expense for 2014 was a
$201 million increase (2013: $45 million decrease).
c) Capital Commitments and Operating Leases
In addition to entering into various operational
commitments in the normal course of business, we
had commitments of approximately $159 million
at December 31, 2014 (2013: $249 million) for
construction activities at our sites and 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, 2014, we
have operating lease commitments totaling $134 million,
of which $27 million is expected to be paid within a year,
$68 million is expected to be paid within two to five
years and the remaining amount to be paid beyond
five years.
a) Mineral Property Costs Not Subject to Depreciation
Construction-in-progress1
Acquired mineral resources and
exploration potential
Projects
Pascua-Lama
Cerro Casale2
Jabal Sayid3
Donlin Gold
Carrying
amount at
Dec. 31,
2014
Carrying
amount at
Dec. 31,
2013
$ 1,490
$ 1,870
264
272
1,867
444
–
138
2,053
1,920
687
125
$ 4,203
$ 6,927
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.
3. Refer to note 4a for further details.
b) Changes in Gold and Copper Mineral Life
of Mine Plan
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 and the
portion of resources considered probable of economic
19 Goodwill and Other Intangible Assets
a) Goodwill
Gold
Opening balance January 1, 2013
$ 2,376
$ 1,480
$ 441
$ 185
$ 809
$ 3,451
$ 95
$ 8,837
North
America
Australia
South
America
Acacia
Capital
Projects
Copper
Barrick
Energy
Total
Additions
Other1
Impairments2
Transfers3
Net carrying amount
December 31, 2013
–
(18)
–
412
–
(74)
(1,200)
–
–
–
–
–
–
–
(185)
–
–
–
(397)
(412)
–
–
(1,033)
–
–
–
(95)
–
–
(92)
(2,910)
–
$ 2,770
$ 206
$ 441
$
–
$
–
$ 2,418
$ –
$ 5,835
1. Represents the allocation of goodwill to assets held for sale as well as the disposition of YSS assets.
2. Refer to note 20.
3. In the first quarter 2013 we transferred $412 million of goodwill from the Capital Projects segment to the North American segment as a result of Pueblo Viejo
entering production.
As a result of the reorganization of our operating
segments in fourth quarter 2013, we reallocated goodwill,
which had previously been recorded in our Regional
Business Units (our former operating segments), to the
new Operating Units on a relative fair value basis except
for Pueblo Viejo, which had specifically identified goodwill
from the earlier allocation in 2013. The reorganization
of the Operating Units did not result in any indicators of
impairment (see note 20). In 2014, we also reorganized
our segments and reallocated goodwill, which had
previously been recorded in our North America Portfolio,
Australia Pacific and Copper Operating units on a relative
fair value basis. These reorganized operating segments
were then tested for impairment (see note 20).
131
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Goldstrike
Cortez
Pueblo Viejo
Lagunas Norte
Veladero
North America Portfolio
Turquoise Ridge
Hemlo
Bald Mountain
Round Mountain
Australia Pacific
Kalgoorlie
Cowal
Porgera
Copper
Zaldívar
Lumwana
Total
Closing balance
December 31,
2013
Additions
Impairments
(Q2 2014)2
Reallocation1
Closing balance
Impairments December 31,
2014
(Q4 2014)
$ 730
869
412
247
195
758
–
–
–
–
206
–
–
–
2,418
–
–
$ 5,835
$ –
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$ –
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(316)
–
–
$
–
–
–
–
–
(758)
528
63
131
36
(206)
71
64
71
(2,102)
1,888
214
$
–
–
–
–
–
–
–
–
(131)
(36)
–
–
–
–
–
(712)
(214)
$ 730
869
412
247
195
–
528
63
–
–
–
71
64
71
–
1,176
–
$ (316)
$
–
$ (1,093)
$ 4,426
1. As a result of the reorganization of our operating segments in November 2014, we reallocated goodwill, which had previously been recorded in our North America
Portfolio, Australia Pacific and Copper Operating Units on a relative fair value basis. The reorganized operating segments were then tested for impairment (see note 20).
2. In Q2 we reclassified Jabal Sayid to Held for Sale pending the sale of 50% to our Joint Venture partner. As a result, we recorded an impairment of goodwill of $316 million.
On a total basis, the gross amount and accumulated impairment losses are as follows:
Cost
Accumulated impairment losses and other January 1, 2013
Impairment losses and other 2013
Impairment losses 2014
Accumulated impairment losses and other December 31, 2014
Net carrying amount December 31, 2014
b) Intangible Assets
Opening balance January 1, 2013
Additions
Amortization and impairment losses
Closing balance December 31, 2013
Additions
Amortization and impairment losses
Closing balance December 31, 2014
Cost
Accumulated amortization and impairment losses
Net carrying amount December 31, 2014
$ 9,635
(798)
(3,002)
(1,409)
(5,209)
$ 4,426
Total
$ 453
–
(133)
Water
rights1
$ 116
–
–
Technology2
Supply
contracts3
Exploration
potential4
$ 17
$ 22
$ 298
–
(1)
–
(2)
–
(130)
$ 116
$ 16
$ 20
$ 168
$ 320
–
–
$ 116
$ 116
–
$ 116
–
(2)
–
(3)
–
(7)
–
(12)
$ 14
$ 17
$ 161
$ 308
$ 17
(3)
$ 14
$ 39
(22)
$ 467
(306)
$ 639
(331)
$ 17
$ 161
$ 308
1. Relates to water rights in South America which 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 LOM ounces 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)).
See note 20 for details of impairment charges recorded against exploration assets.
132
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
20 Impairment of Goodwill and Non-Current Assets
In accordance with our accounting policy, goodwill is
tested for impairment at the beginning of the fourth
quarter and also when there is an indicator of impairment.
Non-current assets are tested for impairment when
events or changes in circumstances suggest that the
carrying amount may not be recoverable.
When there is an indicator of impairment of non-
current assets within an operating segment consisting of
a CGU or group of CGUs that contains 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 for any potential goodwill
impairment. When there is an indicator of impairment of
non-current assets within an operating segment consisting
of a single CGU that contains goodwill, we test the
non-current assets for impairment first and recognize
any impairment loss on goodwill first and then any
remaining impairment loss is applied against the non-
current assets. As at December 31, 2014, we no longer
have any groups of CGUs that contain goodwill as a
result of the management reorganization, and therefore
each CGU is tested for impairment independently.
An impairment loss is recognized when the carrying
amount exceeds the recoverable amount. The recoverable
amount of each operating segment for goodwill testing
purposes has been determined based on its estimated
FVLCD, which has been determined to be greater than
the VIU amounts. The recoverable amount for non-
current asset testing is calculated using the same
approach as 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. A CGU is generally an
individual operating mine or development project.
Summary of Impairments (Reversals)
For the year ended December 31, 2014, we recorded
impairment losses of $2.7 billion (2013: $9.9 billion) for
non-current assets and $1.4 billion (2013: $2.8 billion)
for goodwill, as summarized in the following table:
For the years ended December 31
2014
2013
Cerro Casale
Lumwana
Pascua-Lama
Jabal Sayid
Cortez
AFS Investments
Exploration (Tusker, Kainantu, Saudi Licenses)
Porgera
Buzwagi
Veladero
North Mara
Pierina
Round Mountain
Granny Smith
Ruby Hill
Marigold Mine
Kanowna
Plutonic
Darlot
Bald Mountain
Tulawaka
Other
$ 1,476
720
382
198
46
18
7
(160)
–
–
–
–
–
–
–
–
–
–
–
–
–
10
$
–
–
6,061
860
–
26
112
746
721
464
286
140
78
73
66
60
41
37
36
16
16
33
Total non-current asset impairment losses
$ 2,697
$ 9,872
Zaldívar
Jabal Sayid
Lumwana
Bald Mountain
Round Mountain
Copper
Australia Pacific
Capital Project
Acacia
712
316
214
131
36
–
–
–
–
–
–
–
–
–
1,033
1,200
397
185
Total goodwill impairment losses
$ 1,409
$ 2,815
Total impairment losses
$ 4,106
$ 12,687
2014 Indicators of Impairment
In second quarter 2014, our Jabal Sayid project in
Saudi Arabia met the criteria as an asset held for sale.
Accordingly, we were required to allocate goodwill
from the Copper Operating Unit to Jabal Sayid and test
the Jabal Sayid group of assets for impairment. We
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
determined that the carrying value exceeded the FVLCD,
and consequently recorded $514 million in impairment
charges, including the full amount of goodwill allocated
on a relative fair value basis, of $316 million. The
recoverable amount after the impairment, based on
FVLCD, was $560 million. In fourth quarter 2014,
we closed a transaction to sell a 50 percent interest of
Jabal Sayid for cash proceeds of $216 million.
We reached an agreement to sell a power-related
asset at our Pueblo Viejo mine for proceeds that
exceeded its carrying value. This asset had previously
been impaired in fourth quarter 2012, and therefore we
recognized an impairment reversal of $9 million. This
transaction closed on September 30, 2014.
In fourth quarter 2014, as described in note 19,
we reorganized our internal management reporting
structure. As a result, the goodwill attributable to our
former North America Portfolio, Australia Pacific and
Copper segments was allocated to the individual CGUs
within those operating segments on a relative fair value
basis. The allocation of goodwill to the carrying value
of our Bald Mountain and Round Mountain CGUs,
resulted in their carrying values exceeding their FVLCD
and, as a result, we recorded goodwill impairment losses
of $131 million and $36 million, respectively. The
recoverable amounts after the impairment of Bald
Mountain and Round Mountain, based on FVLCD, were
$482 million and $131 million, respectively.
On December 18, 2014, the Zambian government
passed changes to the country’s mining tax regime
that would replace the current corporate income tax
and variable profit tax with a 20 percent royalty which
took effect on January 1, 2015. The application of a
20 percent royalty rate compared to the 6 percent royalty
rate the company was paying has a significant negative
impact on the expected future cash flows of our Lumwana
mine and was considered an indicator of impairment.
As a result, we conducted an impairment test and as
a result of the new royalty rate along with the decrease
in our copper price assumptions, recorded $930 million
in impairment charges, including the full amount of
goodwill of $214 million allocated to Lumwana as a
result of the change in segments (see note 19). The
recoverable amount after the impairment, based on
FVLCD, was $300 million.
Our Zaldívar mine experienced a significant decrease
in the estimated FVLCD of the mine, primarily as a result
of the decrease in fourth quarter of 2014 of our forecast
of the long-term copper price and to a lesser extent, as
a result of the final assessment of the tax rate increase in
Chile. Accordingly, we recorded a goodwill impairment
loss of $712 million on this CGU. The recoverable
amount after the impairment, based on FVLCD, was
$2,411 million.
In November 2014, we completed a strategy
optimization study for our Cerro Casale project with the
goal of identifying a development model that would
improve the project economics and risk by reducing the
upfront capital requirements in order to generate a
higher return on our investment. The study was unable
to identify an alternative that provided an overall rate
of return above our hurdle rate for a project of this size
and complexity. As a result, the budget for 2015 for
the project has been significantly reduced, with the 2015
budget focused on preserving the optionality of the
project. We will continue activities to protect the asset
and assess alternative ways to develop the project in a
more economic manner; however management’s
expectation of achieving a suitable rate of return in the
current metal price environment has been diminished.
The foregoing developments were deemed to be
indicators of impairment, and as a result, we assessed
the recoverable amount of the project and have recorded
an impairment loss on the project of $1,467 million. The
recoverable amount after the impairment, based on the
project’s estimated FVLCD, was $500 million (100% basis).
In December 2014, the Chilean Supreme Court
declined to consider Barrick’s appeal of the Environmental
Court Decision on Pascua-Lama on procedural grounds
(see note 35). As a result, the Superintendencia del
Medio Ambiente (“SMA”) will now re-evaluate the
Resolution. Although we cannot reasonably predict the
outcome of the resolution, this risk, in combination with
the decrease in our long-term silver price assumption in
fourth quarter 2014 due to declining market prices, and
the continued uncertainty about the timing, cost and
permitting of the project, were deemed to be indicators
of impairment. As a result, we assessed the recoverable
amount of the project and have recorded an impairment
loss on Pascua-Lama of $382 million. The recoverable
134
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 amount after the impairment, based on the project’s
estimated FVLCD, was $1,200 million, which is equal to
the project’s carrying value at the start of the year.
At our Porgera mine in Papua New Guinea, we have
revised our LOM plan to include a portion of the open pit
resources that were removed from the plan in the prior
year. In 2013, we did not have a feasible plan to access
the open pit reserves due to technical and financial issues
with respect to the west wall of the open pit. In 2014,
management resolved these technical issues and
developed an optimized mine plan to sequence the west
wall cutback in an economical manner. As a result,
management was able to bring a significant portion of
the ounces from the open pit back into the LOM plan.
The new plan resulted in an increase in the estimated
mine life from 8 to 12 years, and an increase in the
estimated FVLCD of the mine, which has resulted in a
partial reversal of a previous impairment loss of
$160 million. The recoverable amount after the
impairment reversal, based on FVLCD, was $600 million.
The annual update to the LOM plan at Cortez
resulted in a cessation of mining in one of the open pits
at the mine. This was identified as an indicator of
impairment, resulting in the impairment of assets
specifically related to this pit of $46 million.
2013 Indicators of Impairment
The significant decrease in our long-term gold, silver
and copper price assumptions in second quarter 2013,
due to declining market prices, as well as the regulatory
challenges to Pascua-Lama in May 2013 and the resulting
schedule delays and associated capital expenditure
increases; and a significant change to the mine plan at
our Pierina mine, were all considered indicators of
impairment, and, accordingly, we performed an
impairment assessment for every mine site and
significant advanced development project. As a result
of this assessment, we recorded non-current asset
impairment losses of $7.1 billion, including a $5.2 billion
impairment loss related to the carrying value of the
PP&E at Pascua-Lama; $501 million related to the Jabal
Sayid project in our copper segment; $874 million related
to Buzwagi and North Mara in Acacia; $236 million
related to the Kanowna, Granny Smith, Plutonic and
Darlot mines in our Australia Pacific Gold segment; and
$140 million related to our Pierina mine in South
America. The recoverable amounts after the
impairments, based on FVLCD, were: Pascua-Lama:
$1,420 million; Jabal Sayid: $1,022 million; Buzwagi:
$354 million; North Mara: $502 million; Kanowna:
$42 million; Granny Smith: $146 million; Plutonic:
$38 million; Darlot: $45 million; and Pierina: $nil.
After reflecting the above non-current asset
impairment losses, we conducted goodwill impairment
tests and determined that the carrying value of our Copper,
Australia Pacific Gold, Capital Projects and Acacia segments
exceeded their FVLCD, and therefore we recorded a total
goodwill impairment loss of $2.3 billion. The FVLCD of
our copper segment was negatively impacted by the
decrease in our long-term copper price assumption in
second quarter 2013. The FVLCD of our Australia Pacific
Gold segment was negatively impacted by the significant
decrease in second quarter 2013 in our long-term gold
price assumption. The FVLCD of our Capital Projects
segment was negatively impacted by the significant
decrease in second quarter 2013 in our long-term gold
and silver price assumptions, as well as the schedule
delays and associated capital expenditure increase at our
Pascua-Lama project. The FVLCD of our Acacia segment
was negatively impacted by significant changes in the
LOM plans in second quarter 2013 for various assets in
the segment, as well as the significant decrease in our
long-term gold price assumption.
In fourth quarter 2013, as described below, we
identified indicators of impairment at certain of our
mines, resulting in non-current asset impairment losses
totaling $2.8 billion. As a result of our fourth quarter
2013 decision to temporarily suspend construction of
our Pascua-Lama Project, we have recorded a further
impairment loss on the project of $896 million, bringing
the total impairment loss for Pascua-Lama to $6.1 billion
for the full year. The recoverable amount after the
impairment, based on FVLCD, was $1.2 billion. At
our Porgera mine in Papua New Guinea, we have
changed our LOM plan to focus primarily on the higher
grade underground mine. The new plan resulted in a
decrease in the estimated mine life from 13 to 9 years,
and a decrease in the estimated FVLCD of the mine,
which has resulted in an impairment loss of $746 million.
The recoverable amount after the impairment, based
on FVLCD, was $447 million. At our Veladero mine
in Argentina, the annual update to the LOM plan, which
was completed in fourth quarter 2013, was significantly
impacted by the lower gold price assumption as well
Barrick_AR14_FINANCIALS_E.indd 135
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 as the effect of sustained local inflationary pressures
on operating and capital costs. The new plan resulted
in a reduction of reserves and LOM production as the
next open pit cutback is uneconomic at current gold
prices. This resulted in a significant decrease in the
estimated FVLCD of the mine, and accordingly, we
recorded an impairment loss of $462 million. The
recoverable amount after the impairment, based on
FVLCD, was $808 million. The annual update to the
LOM plan resulted in a decrease in the net present
value of our Jabal Sayid project, which is the basis for
estimating the project’s FVLCD, and was therefore
considered an indicator of impairment. Jabal Sayid’s
FVLCD was also negatively impacted by the delay in
achieving first production as a result of the High
Commission For Industrial Security (“HCIS”) compliance
requirements and ongoing discussions with the Deputy
Ministry for Mineral Resources (“DMMR”) with respect
to the transfer of ownership of the project. As a result,
we recorded an impairment loss of $359 million. The
recoverable amount after the impairment, based on
FVLCD, was $700 million. The annual update to the
LOM plan showed a decrease in the net present value
at our Round Mountain mine, which was considered to
be an indicator of impairment, and we recorded an
impairment loss of $78 million. The recoverable amount
after the impairment, based on FVLCD, was $133 million.
At North Mara, several changes were made to the LOM
plan, including a decision to defer Gokona Cut 3, while
Acacia finalized a feasibility study into the alternative of
mining out this reserve by underground methods. This
was considered an indicator of impairment for North
Mara, resulting in an impairment loss of $133 million.
The recoverable amount after the impairment, based on
FVLCD, was $407 million. A wall failure at our Ruby Hill
mine in Nevada was also identified as an indicator of
impairment, resulting in the impairment of assets
specifically related to the open pit of $51 million.
As at December 31, 2013, four of our mines, namely
Plutonic, Kanowna, Marigold and Tulawaka, met the
criteria as assets held for sale. Accordingly, we were
required to remeasure these CGUs to the lower of
carrying value and FVLCD. Using these new remeasured
values, resulted in impairment losses of $17 million at
Plutonic and $60 million at Marigold. Also, based on the
estimated FVLCD of the expected proceeds related to the
expected sale of Kanowna, we have reversed $66 million
of the impairment loss recorded in second quarter 2013.
After reflecting the above non-current asset
impairment losses, we conducted our annual goodwill
impairment test, prior to the reorganization of our
operating segments, and determined that the carrying
value of our Australia Pacific segment exceeded its
FVLCD and therefore we recorded a goodwill impairment
loss of $551 million bringing the total impairment loss
for Australia Pacific Gold goodwill to $1,200 million for
the full year. After the reorganization of the operating
segments, we did not identify any indicators of impairment.
Key Assumptions
The key assumptions and estimates used in determining
the FVLCD are related to commodity prices, discount
rates, NAV multiples for gold assets, operating costs,
exchange rates, capital expenditures, the LOM production
profile, continued license to operate, and for our projects
the expected start of production. In addition, assumptions
related to observable market evaluation metrics, including
identification of comparable entities, and associated
market values per ounce and per pound of reserves
and/or resources, as well as the valuation of resources
beyond what is included in LOM plans.
Gold
For the gold segments, excluding Pascua-Lama and Cerro
Casale, FVLCD for each of the CGUs was determined by
calculating the net present value (“NPV”) of the future
cash flows expected to be generated by the mines and
projects within the segments (level 3 of the fair value
hierarchy). The estimates of future cash flows were
derived from the most recent LOM plans and, where the
LOM plans excludes a material portion of total reserves
and resources, we assign value to reserves and resources
not considered in these base models. These values are
then aggregated to the segment level, if applicable, the
level at which goodwill was tested in 2013. In 2014, each
of our mines/projects is its own segment, therefore it is
not aggregated. Based on observable market or publicly
available data, including spot and forward prices and
equity sell-side analyst forecasts, we make an assumption
of future gold and silver prices to estimate future
revenues. The future cash flows for each gold mine are
discounted using a real weighted average cost of capital
(“WACC”), which reflects specific market risk factors for
each mine. Some gold companies trade at a market
capitalization greater than the NPV of their expected cash
flows. Market participants describe this as a “NAV
136
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 multiple”, which represents the multiple applied to the
NPV to arrive at the trading price. The NAV multiple is
generally understood to take account of a variety of
additional value factors such as 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 or reserve and resource estimates, and the
benefit of gold price optionality. As a result, we applied a
specific NAV multiple to the NPV of each CGU within
each gold segment based on the NAV multiples observed
in the market in recent periods and that we judged to be
appropriate to the CGU.
Cerro Casale
The FVLCD for Cerro Casale was determined by
considering both the NPV, determined consistent with
our gold and copper CGUs, as well as observable market
values for comparable assets expressed as dollar per
ounce and dollar per pound of proven and probable
reserves (both level 3 of the fair value hierarchy). Both
these approaches were used, with the market approach
being the primary method, to reflect the risk and
uncertainty of the current LOM and to reflect the
significant option value inherent in a large project with
significant reserves and resources. The observable market
values were adjusted, where appropriate, for country risk
if the comparable asset was in a different country, for
any change in metal prices since the valuation date of
the comparable asset and the fact that this project has
high initial capital, which depresses the value in
comparison to other assets with lower initial capital.
Pascua-Lama
The FVLCD for Pascua-Lama was determined by
considering observable market values for comparable
assets expressed as dollar per ounce of proven and
probable reserves (level 3 of the fair value hierarchy).
The market approach being the primary method as the
LOM for Pascua-Lama has significant uncertainty with
respect to the estimated timeline for the project and the
estimated remaining construction costs. The observable
market values were adjusted, where appropriate, for
country risk if the comparable asset was in a different
country and any change in metal prices since the
valuation date of the comparable asset.
Copper
For our Copper segment, the FVLCD for each of the
CGUs was determined based on the NPV of future cash
flows expected to be generated using the most recent
LOM plans aggregated to the segment level in 2013
(level 3 of the fair value hierarchy). In 2014, each of the
mines is its own segment, therefore it is not aggregated.
Based on observable market or publicly available data
including spot and forward prices and equity sell-side
analyst consensus, we make an assumption of future
copper prices to estimate future revenues. The future
cash flows for each copper mine were discounted using
a WACC depending on the location and market risk
factors for each mine. FVLCD for Lumwana was also
estimated by considering market multiples expressed
as dollar per pound based primarily on the observed
valuation metrics for comparable assets (level 3 of the
fair value hierarchy). Both these approaches were used
with the market approach being the primary method,
as the LOM for Lumwana does not meet our investment
criteria once the new tax regime has been implemented
and we wanted to reflect the value of the minerals on
the property. The observable market multiples were
adjusted where appropriate for country risk if the
comparable asset was in a different country and any
change in metal prices since the valuation date of the
comparable asset.
The key assumptions used in our impairment testing
are summarized in the table below:
Gold price per oz (long-term)
Silver price per oz (long-term)
Copper price per lb (long-term)
WACC – gold (range)
WACC – gold (avg)
WACC – copper (range)
WACC – copper (avg)
NAV multiple – gold (avg)
LOM years – gold (range)
LOM years – gold (avg)
Value per ounce of gold1
Value per pound of copper1
2014
2013
$ 1,300
21
$
$ 3.00
3%–8%
5%
7%–9%
7%
1.1
3–23
12
$45–$80
$0.05–$0.06
$ 1,300
$
23
$ 3.25
2%–7%
5%
7%–9%
7%
1.1
3–29
13
$60–$70
n/a
1. The value per ounce/pound used is dependent on the characteristics of the
property being valued.
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137
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
In addition, for our Cerro Casale and Pascua-Lama
projects and Lumwana mine, we have determined our
valuation primarily based on a market approach. The key
assumption that impacts the impairment calculations,
should there be an indication of impairment for these
CGUs, is the value per ounce of gold and per pound of
copper based on an analysis of comparable companies.
We assumed a negative 10% change for the assumption
of gold, silver and copper value per unit, while holding
all other assumptions constant and, based on the results
of the impairment testing performed in fourth quarter
2014 for Cerro Casale, Pascua-Lama and Lumwana,
the fair value of the CGUs would have been reduced
from $500 million to $450 million; $1,200 million to
$1,080 million; and, $300 million to $270 million
respectively. We note that this sensitivity identifies the
decrease in the value that, in isolation, would cause
the carrying value of the CGU to exceed its recoverable
amount. For Cerro Casale, Pascua-Lama and Lumwana,
this value decrease is linear to the decrease in value
per ounce/pound.
21 Other Assets
Derivative assets (note 24f)
Goods and services taxes
recoverable1
Notes receivable
Due from joint venture2
Other3
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$
2
$
10
565
112
164
360
618
112
–
326
$ 1,203
$ 1,066
1. Includes VAT and fuel tax receivables of $461 million in Argentina, $62 million
in Tanzania and $42 million in Chile (Dec. 31, 2013: $519 million, $54 million
and $45 million, respectively). The VAT in Argentina is recoverable once
Pascua-Lama has entered production.
2. Represents the non-interest bearing shareholder loan due from the Jabal Sayid
JV as a result of the divestment of 50 percent interest in Jabal Sayid.
3. Includes a cash balance at Pueblo Viejo of $59 million (2013: $nil) that is
contractually restricted to the disbursements for environmental rehabilitation
that are expected to occur near the end of Pueblo Viejo’s mine life.
Sensitivities
We performed a sensitivity analysis on commodity price,
which is the key assumption that impacts the impairment
calculations. We assumed a negative 10% change for
the assumption, taking sales price from $1,300 per
ounce down to $1,170 per ounce for gold, $3.00 per
pound down to $2.70 per pound for copper and $21 per
ounce to $18.90 per ounce for silver, while holding all
other assumptions constant. We note that this sensitivity
identifies the key assets where the decrease in the sales
price, in isolation, could cause the carrying value of our
operating 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 impairment for
the non-current asset was identified.
Should there be a significant decline in commodity
prices, we would take actions to assess the implications
on our life of mine plans, including the determination of
reserves and resources, and the appropriate cost structure
for the operating segments. The recoverable amount
of the CGUs would also be impacted by other market
factors such as changes in net asset value multiples and
the value per ounce/pound of comparable market
entities. We performed this sensitivity based on the
results of our last impairment test performed in fourth
quarter 2014 and noted that the goodwill at most CGUs
would be fully impaired, with only Goldstrike, Lagunas
Norte, Turquoise Ridge and Zaldívar having material
balances remaining. The decreases in fair value with
a 10% decrease in sales prices for these sites are as
follows: Goldstrike ($1,105), Lagunas Norte ($269),
Turquoise Ridge ($459) and Zaldívar ($449). In addition
to the goodwill impairments, the following sites would
have material non-current asset impairments as well:
As at December 31, 2014
Carrying value1
Decrease in fair value
with a 10% decrease
in sales prices
Cortez1
Pueblo Viejo1
Veladero1
Bald Mountain2
Porgera2
Round Mountain2
$ 3,894
5,291
804
538
528
140
$ 1,371
2,185
474
237
418
114
1. Includes goodwill (refer to note 19).
2. These CGUs have been impaired or had a reversal in 2014 and therefore their
fair value approximates carrying value.
138
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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.
Cash deposits
Term deposits
Money market investments
As at
Dec. 31,
2014
$ 967
630
1,102
As at
Dec. 31,
2013
$ 648
235
1,521
$ 2,699
$ 2,404
Of total cash and cash equivalents as of December 31,
2014, $614 million (2013: $305 million) was held in
subsidiaries which have regulatory regulations, contractual
restrictions or operate in countries where exchange
controls and other legal restrictions apply and are
therefore not available for general use by the Company.
In addition, $242 million (2013: $936 million) of cash
and equivalents is held in subsidiaries where we have
determined the cash is reinvested for the foreseeable
future for the calculation of deferred income tax. This
cash can be repatriated, however there would be a
tax cost of doing so.
22 Accounts Payable
Accounts payable
Accruals
23 Other Current Liabilities
Provision for environmental
rehabilitation (note 26)
Derivative liabilities (note 24f)
Restricted stock units (note 33b)
Other
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 974
679
$ 1,058
1,107
$ 1,653
$ 2,165
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 109
158
15
208
$ 105
31
19
148
$ 490
$ 303
24 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 17);
investments (note 15); restricted share units (note 33b).
Barrick_AR14_FINANCIALS_E.indd 139
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139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
b) Long-Term Debt1
2014
2.9%/4.4%/5.7% notes3
3.85%/5.25% notes
5.80% notes
5.75%/6.35% notes
Other fixed rate notes4
Project financing
Capital leases5
Other debt obligations
2.5%/4.10%/5.75% notes6
Acacia Credit facility7
Less: current portion8
1.75%/2.9%/4.4%/5.7% notes3
3.85%/5.25% notes
4.875%/5.80% notes
5.75%/6.35% notes
Other fixed rate notes4
Project financing
Capital leases5
Other debt obligations
Credit Facility
2012 Credit Facility
2.5%/4.10%/5.75% notes6
Acacia Credit facility7
Less: current portion8
At Dec. 31
Proceeds
Repayments
Amortization
and other2
$ 2,409
1,983
395
855
2,720
850
354
794
2,579
142
$ 13,081
(333)
$
–
–
–
–
–
–
133
8
–
–
$
–
–
–
–
–
102
46
40
–
–
$ 141
–
$ 188
–
$ 3
–
–
–
8
11
27
(3)
2
–
$ 48
–
At Jan. 1
$ 2,406
1,983
395
855
2,712
941
240
829
2,577
142
$ 13,080
(179)
$ 12,748
$ 141
$ 188
$ 48
$ 12,901
2013
At Dec. 31
Proceeds
Repayments
Amortization
and other2
$ 2,406
1,983
395
855
2,712
941
240
829
–
–
2,577
142
$ 13,080
(179)
$
–
–
–
–
–
94
–
178
–
2,000
3,000
142
$ 5,414
–
$ 1,571
–
350
136
500
45
93
119
1,200
2,000
398
–
$ 6,412
–
$ 6
2
1
1
4
2
148
(4)
–
–
(25)
–
$ 135
–
At Jan. 1
$ 3,971
1,981
744
990
3,208
890
185
774
1,200
–
–
–
$ 13,943
(1,848)
$ 12,901
$ 5,414
$ 6,412
$ 135
$ 12,095
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. Consists of $2.4 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”). This consists of $229 million of BGC notes
due 2016, $1.35 billion of BNAF notes due 2021 and $850 million of BNAF notes due 2041. We provide an unconditional and irrevocable guarantee on all BNAF
Notes and generally provide such guarantees on all BNAF notes issued, which will rank equally with our other unsecured and unsubordinated obligations.
4. Consists of $2.8 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”) and our wholly-owned subsidiary Barrick
(PD) Australia Finance Pty Ltd. (“BPDAF”). This consists of $500 million of BNAF notes due 2018, $750 million of BGC notes due 2019, $400 million of BPDAF
notes due 2020, $250 million of BNAF notes due 2038 and $850 million of BPDAF notes due 2039. We provide an unconditional and irrevocable guarantee on
all BNAF and BPDAF notes and generally provide such guarantees on all BNAF and BPDAF notes issued, which will rank equally with our other unsecured and
unsubordinated obligations.
5. Consists primarily of capital leases at Pascua-Lama $199 million and Lagunas Norte, $123 million (2013: $71 million and $150 million, respectively).
6. Consists of $2.6 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”). This consists of $252 million of BGC notes
due 2018, $1.5 billion of BGC notes due 2023 and $850 million of BNAF notes due 2043. We provide an unconditional and irrevocable guarantee on all BNAF
Notes and generally provide such guarantees on all BNAF notes issued, which will rank equally with our other unsecured and unsubordinated obligations.
7. Consists of an export credit backed term loan facility.
8. The current portion of long-term debt consists of project financing ($98 million; 2013: $102 million), other debt obligations ($150 million, 2013: $39 million), and
capital leases ($71 million, 2013: $38 million) and Acacia credit facility ($14 million, 2013: nil).
140
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
1.75%/2.9%/4.4%/5.7% Notes
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 had an original
maturity date in 2014 and $1.1 billion of 2.90% notes
that had an original maturity date 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.
During 2013, the entire balance ($700 million) of the
1.75% notes was repaid along with $871 million out of
the $1.1 billion of 2.9% notes.
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 mature in 2022 and $750 million of 5.25%
notes that mature in 2042. $1.0 billion of the net
proceeds from this offering were used to repay the
existing indebtedness under the 2012 Credit Facility.
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”). We also provide an
unconditional and irrevocable guarantee of these
payments, which 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”).
We also provide an unconditional and irrevocable
guarantee of these payments, which rank equally with
our other unsecured and unsubordinated obligations.
During 2013, the entire balance ($500 million) of the
5-year notes with a coupon rate of 6.125% that was due
in September 2013 was repaid.
Pueblo Viejo Project Financing Agreement
In April 2010, Barrick and Goldcorp finalized terms for
$1.035 billion (100% basis) in project financing for
Pueblo Viejo. The project financing is non-recourse
subject to guarantees provided by Barrick and Goldcorp
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. On February 17, 2015, we received
notification that the completion tests have been met,
resulting in termination of the guarantees. 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
3.86% 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.
We have drawn the entire $1.035 billion to date.
During the year, $102 million of loans was repaid. The
remaining principal balance under the Pueblo Viejo
Financing Agreement is $888 million.
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141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 Credit Facility
We had a credit and guarantee agreement (the “Credit
Facility”) with certain Lenders which required 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 Equinox acquisition, including the
payment of related fees and expenses. The Credit Facility,
which was unsecured, had 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
was repaid in 2013. Subsequent to the repayment, we
terminated the Credit Facility.
Refinancing of the Credit Facility
In January 2012, we finalized a credit and guarantee
agreement (the “2012 Credit Facility”) with certain
Lenders, which requires such Lenders to make available
to us a credit facility of $4.0 billion or the equivalent
amount in Canadian dollars. The 2012 Credit Facility,
which is unsecured, currently has an interest rate of
LIBOR plus 1.50% on drawn amounts, and a commitment
rate of 0.25% on undrawn amounts. The $4.0 billion
facility currently matures in 2020. In first quarter 2013,
we drew $2.0 billion on our $4.0 billion revolving credit
facility (“2012 Credit Facility”), using the proceeds to
repay $1.2 billion on our $1.45 billion credit facility,
which expired in April 2013. In second quarter 2013, we
issued $3.0 billion of debt, using $2.0 billion of the net
proceeds to repay the outstanding balance on the 2012
Credit Facility. The 2012 Credit Facility is undrawn as at
December 31, 2014.
2.50%/4.10%/5.75% Notes
On May 2, 2013, we issued an aggregate of $3 billion
in notes through our wholly-owned indirect subsidiary
Barrick North America Finance LLC consisting of
$650 million of 2.50% notes that mature in 2018,
$1.5 billion of 4.10% notes that mature in 2023 and
$850 million of 5.75% notes that mature in 2043.
$2.0 billion of the net proceeds from this offering were
used to repay existing indebtedness under our $4 billion
revolving credit facility which matures in 2020. We
provided an unconditional and irrevocable guarantee
of these payments, which will rank equally with our
other unsecured and unsubordinated obligations.
During 2013, $398 million of the $650 million
2.50% notes were repaid.
Acacia Credit Facility
In January 2013, Acacia concluded negotiations with a
group of commercial banks for the provision of an export
credit backed term loan facility (the “Facility”) for the
amount of US$142 million. The Facility has been put in
place to fund a substantial portion of the construction
costs of the new CIL circuit at the process plant at the
Bulyanhulu Project (“Project”). The Facility is collateralized
by the Project, has a term of seven years and, when
drawn, the spread over LIBOR will be 250 basis points.
The Facility is repayable in equal installments over the
term of the Facility, after a two-year repayment holiday
period. The interest rate has been fixed at an effective
rate of 3.6% through the use of an interest rate swap.
At December 31, 2014, the full value of the Facility has
been drawn.
Debt Issue Costs
In 2013, a total of $30 million of debt issue costs arose
from debt issued during the year.
142
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 Interest
2014
2013
For the years ended December 31
1.75%/2.9%/4.4%/5.7% notes
3.85%/5.2% notes
5.80% notes
5.75%/6.35% notes
Other fixed rate notes
Project financing
Capital leases
Other debt obligations
Credit facility
2012 Credit Facility
2.5%/4.10%/5.75% notes
Acacia credit facility
Deposits on silver contracts (note 28)
Accretion
Other interest
Debt extinguishment fees
Less: interest capitalized
Cash interest paid
Amortization of debt issue costs
Gain on interest rate hedges
(Decrease) Increase in interest accruals
Accretion
Debt extinguishment fees
Interest cost
Interest
cost
Effective
rate1
4.84%
4.44%
5.87%
6.25%
6.50%
5.09%
3.51%
5.97%
–
–
4.59%
2.80%
8.32%
$ 118
89
23
54
179
47
13
46
–
–
120
4
57
75
1
–
$ 826
(30)
$ 796
$ 736
21
(2)
(4)
75
–
$ 826
Effective
rate1
3.97%
4.34%
5.58%
6.11%
6.53%
4.77%
3.20%
5.12%
0.88%
1.47%
4.30%
2.80%
8.59%
Interest
cost
$ 153
87
40
60
202
46
6
42
2
5
85
2
55
68
11
90
$ 954
(297)
$ 657
$ 1,056
22
(1)
(281)
68
90
$ 954
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 debt.
Scheduled Debt Repayments1
2.9%/4.4%/5.7% notes
3.85%/5.2% notes
5.80% notes
5.75%/6.35% notes
Other fixed rate notes
Project financing
Other debt obligations
2.5%/4.10%/5.75% notes
Acacia credit facility
Minimum annual payments
under capital leases
2015
$
–
–
–
–
–
98
150
–
14
$ 262
2016
$ 229
–
–
264
–
98
46
–
28
$ 665
2017
$
–
–
–
–
–
98
–
–
29
$ 127
2018
$
–
–
–
–
500
98
–
252
28
$ 878
2019
$
–
–
–
–
750
98
–
–
29
2020 and
thereafter
$ 2,200
2,000
400
600
1,500
398
564
2,350
14
Total
$ 2,429
2,000
400
864
2,750
888
760
2,602
142
$ 877
$ 10,026
$ 12,835
$ 71
$ 65
$ 62
$ 56
$ 42
$
56
$
352
1. This table illustrates the contractual undiscounted cash flows, and may not agree with the amounts disclosed in the consolidated balance sheet.
Barrick_AR14_FINANCIALS_E.indd 143
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143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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
Impacted by
Prices of gold, silver
and copper
By-product credits
Prices of silver, copper
and gold
Cost of sales
Consumption of diesel fuel,
propane, natural gas and
electricity
Prices of diesel fuel,
propane, natural gas,
and electricity
Non-US dollar expenditures
Corporate and operating
segment administration,
exploration and
evaluation costs
Capital expenditures
Currency exchange rates –
US dollar versus A$, ARS,
C$, CLP, EUR, JPY, PGK,
TZS, ZAR, and ZMW
Currency exchange rates –
US dollar versus A$, ARS,
C$, CLP, GBP, JPY, PGK,
TZS, ZAR and ZMW
Non-US dollar capital
Currency exchange
expenditures
rates – US dollar versus
A$, ARS, C$, CLP, EUR,
GBP, PGK 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 accounting 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”.
144
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 d) Summary of Derivatives at December 31, 2014
Notional amount by term to maturity
Accounting
classification by
notional amount
Within
1 year
2 to 3
years
4 to 5
years
Total
Cash flow
hedge
Non-
hedge
Fair value
(USD)
US dollar interest rate contracts (US$ millions)
Total receive – float swap positions
$ 14
$ 57
$ 71
$ 142
$ 142
$ –
$ 1
Currency contracts
A$:US$ contracts (A$ millions)
C$:US$ contracts (C$ millions)
CLP:US$ contracts (CLP millions)
PGK:US$ contracts (PGK millions)
ZAR:US$ contracts (ZAR millions)
Commodity contracts
Copper collar sell contracts (millions of pounds)
Diesel contracts (thousands of barrels)1
377
240
102,000
15
421
85
–
–
–
–
–
–
–
–
–
462
240
102,000
15
421
429
240
83,474
–
171
33
–
18,526
15
250
(83)
(6)
(7)
–
(1)
4
2,855
–
4,731
–
1,080
4
8,666
–
–
4
8,666
3
(185)
1. Diesel commodity contracts represent a combination of WTI and BRENT. 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
Fair value
as at
sheet Dec. 31,
2014
classification
Fair value
as at
Dec. 31,
2013
Balance
Fair value
as at
sheet Dec. 31,
2014
classification
Fair value
as at
Dec. 31,
2013
Derivatives designated as
hedging instruments
US dollar interest
rate contracts
Currency contracts
Commodity contracts
Total derivatives classified
as hedging instruments
Derivatives not designated as
hedging instruments
US dollar interest rate contracts
Currency contracts
Commodity contracts
Total derivatives not designated
as hedging instruments
Total derivatives
Other assets
Other assets
Other assets
$ 2
–
–
$ 6
–
7
Other liabilities
Other liabilities
Other liabilities
$
1
71
–
$ 1
55
–
$ 2
$ 13
$ 72
$ 56
Other assets
Other assets
Other assets
$ –
4
3
$ 7
$ 9
$ 2
12
20
$ 34
$ 47
Other liabilities
Other liabilities
Other liabilities
$
–
30
185
$
–
39
11
$ 215
$ 50
$ 287
$ 106
Barrick_AR14_FINANCIALS_E.indd 145
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145
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
As of December 31, 2014, we had 24 counterparties
to our derivative positions. We proactively manage our
exposure to individual counterparties in order to mitigate
both credit and liquidity risks. For those counterparties
with which we hold a net asset position (total balance
attributable to the counterparties is $1 million), two hold
greater than 10% of our mark-to-market asset position,
with the largest counterparty holding 74%. We have
22 counterparties with which we are in a net liability
position, for a total net liability of $279 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.
US Dollar Interest Rate Contracts
Fair value hedges
During the year, we closed out $400 million of pay-
variable receive-fixed swap positions which were used
to hedge the fair value of a portion of our long-term
fixed-rate debt.
Cash flow hedges
At December 31, 2014, Acacia has $142 million of
pay-fixed receive-float interest rate swaps to hedge the
floating rate debt associated with the Bulyanhulu plant
expansion. These contracts, designated as cash flow
hedges, convert the floating rate debt as it is drawn
against the Financing agreement.
Currency Contracts
Cash Flow Hedges
During the year, currency contracts totaling C$170 million
and CLP 21 billion have been designated against
forecasted non-US dollar denominated expenditures,
some of which are hedges which matured within the
year. In total, we have A$429 million, C$240 million,
CLP 83 billion and ZAR 171 million designated as cash
flow hedges of our anticipated operating, administrative
and sustaining 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 two 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.
During the year, we sold back and effectively closed
out approximately C$149 million of our Canadian dollar
option contracts as a loss mitigation strategy. We
crystallized losses of approximately $1 million, which
were recognized in the consolidated statement of
income based on the original hedge contract maturity
dates. At December 31, 2014, none of these losses
remain crystallized in OCI.
During 2013, we sold back and effectively closed out
approximately A$990 million of our Australian dollar
forward contracts as a loss mitigation strategy. No cash
settlement occurred and payments will net at maturity
(2014–2016). Including Australian dollar contracts closed
out in 2012, $23 million of losses remain crystalized in
OCI at December 31, 2014.
During 2013, we also unwound approximately
CLP 500 billion of our Chilean peso hedges. We realized
net cash proceeds of approximately $50 million with
$18 million being crystallized in OCI. Any unrealized
change and realized gain/losses on ineffective amounts
or time value have been recognized in the consolidated
statement of income as gains on non-hedge derivatives.
At December 31, 2014, none of the gains remain
crystallized in OCI.
Non-hedge Derivatives
We concluded that CLP 19 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 American
locations, including operating mines and projects. Also,
ZAR 250 million represents an economic hedge of
Acacia’s anticipated operating, capital and administrative
spending at various locations in Africa. Although not
qualifying as accounting hedges, the contracts provide
protection 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 did not write any currency
options. As a result, there are no outstanding notional
amounts to report at December 31, 2014.
146
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 During the year, we recorded unrealized losses on
our copper collars of $6 million to changes in time value.
This was included in current period earnings as losses on
non-hedge derivative activities. Gains and losses from
hedge ineffectiveness and time value of options, which
are generally excluded, are recognized in the consolidated
statement of income as gains on non-hedge derivatives.
During 2013, we early terminated 65 million ounces
of silver hedges. We realized net cash proceeds of
approximately $190 million with $21 million remaining
crystallized in OCI to be recognized in revenue as the
exposure occurs. Any unrealized changes and realized
gains/losses on ineffective amounts or time value have
been recognized in the consolidated statements 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 some of our gold sales. During the year, we wrote
gold put and call options with an average outstanding
notional of 34 thousand ounces. As a result of these
activities, we recorded approximately $1 million in the
consolidated statement of income as gains on non-hedge
derivatives. There are no outstanding gold positions at
December 31, 2014.
Commodity Contracts
Diesel/Propane/Electricity/Natural Gas
Non-hedge Derivatives
During the year, we entered into 1,680 thousand barrels
of WTI and 563 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 8,566 thousand
barrels of WTI and Brent swaps outstanding that
economically hedge our exposure to forecasted fuel
purchases at our mines. During the year, we wrote 100
thousand barrels of WTI put options with an outstanding
notional of 100 thousand barrels at December 31, 2014.
Metals Contracts
Cash Flow Hedges
During 2013, we purchased 148 million pounds of
copper collar contracts to designate as hedges against
copper cathode sales at our Zaldívar mine for 2013.
These contracts contained purchased put and sold
call options with weighted average strike prices of
$3.50/lb and $4.25/lb, respectively. During 2013, we
also purchased 251 million pounds of copper collars for
2014 which matured evenly throughout 2014. These
contracts contained purchased put and sold call options
with weighted average strike prices of $3.00/lb and
$3.75/lb, respectively. At December 31, 2014 there are
no remaining positions classified as cash flow hedges or
economic hedges of our Zaldívar mine. Previously, 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). Provided that the spot copper price remains
within the collar band, any unrealized gain (loss) on the
collar will be attributable to time value.
Barrick_AR14_FINANCIALS_E.indd 147
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147
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)
Commodity
price hedges
Gold/Silver1
Copper
Operating
costs
Fuel
Currency hedges
General and
administrative
costs
Interest rate
hedges
Capital
expenditures
Long-term
debt
Total
At January 1, 2013
Effective portion of change in
$ 10
$ –
$ 7
$ 456
$ 25
$ 26
$ (31)
$ 493
fair value of hedging instruments
55
57
(2)
(140)
(16)
(12)
Transfers to earnings:
On recording hedged items in
earnings/PP&E1
Hedge ineffectiveness due to changes
in original forecasted transaction
At December 31, 2013
Effective portion of change in fair
value of hedging instruments
Transfers to earnings:
On recording hedged items in
earnings/PP&E1
Hedge ineffectiveness due to changes
in original forecasted transaction
(46)
$ 18
–
–
–
(1)
(57)
(9)
(268)
(11)
(14)
–
–
5
–
–
$ –
$ (4)
$ 53
$ (2)
$ –
$ (26)
$ 39
2
(2)
–
–
4
–
(44)
(93)
5
3
(4)
–
–
–
–
(2)
(41)
3
–
(92)
5
2
3
–
(56)
(357)
(41)
At December 31, 2014
$ 18
$ –
$ –
$ (79)
$ (3)
$ –
$ (25)
$ (89)
Hedge gains/losses classified within
Gold/Silver
sales
Copper
sales
Cost of
sales
Cost of
sales
General and
administrative
costs
Property,
plant, and
equipment
Interest
expense
Total
Portion of hedge gain (loss)
expected to affect 2015 earnings2
$ 13
$ –
$ –
$ (54)
$ (3)
$ –
$
(4)
$ (48)
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, 2014.
Cash Flow Hedge Gains (Losses) at December 31
Derivatives in cash flow
hedging relationships
Amount of gain
(loss) recognized
in OCI
2014
2013
Location of gain (loss)
transferred from OCI
into income/PP&E
(effective portion)
Amount of gain
(loss) transferred
from OCI into income
(effective portion)
2014
2013
Interest rate contracts
$
(2)
$ 2 Finance income/finance costs
$
(3) $
(3)
Foreign exchange
contracts
(41)
(168)
General and
administrative costs
97
293
Commodity contracts
2
110
Revenue/cost of sales
(2)
67
Total
$ (41) $ (56)
$ 92
$ 357
Location of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
Amount of gain (loss)
recognized in income
(ineffective portion and
amount excluded from
effectiveness testing)
Gain (loss) on non-
hedge derivatives
Gain (loss) on non-
hedge derivatives
Gain (loss) on non-
hedge derivatives
2014
2013
$ –
$
–
(4)
(18)
(6)
(7)
$ (10)
$ (25)
Fair Value Hedge Gains at December 31
Derivatives in fair value hedging relationships
Location of gain (loss)
recognized in income
on derivatives
Amount of gain (loss)
recognized in income
on derivatives
Interest rate contracts
Interest income/expense
2014
$ 1
2013
$ (2)
148
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
e) Gains (Losses) on Non-hedge Derivatives
2014
For the years ended December 31
Commodity contracts
Gold
Silver
Copper
Fuel
Currency contracts
Interest rate contracts
$
1
–
3
(181)
(8)
2
2013
$ 1
104
(9)
12
(8)
1
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
$ (183)
$ 101
$
–
$ (36)
(6)
1
(5)
(17)
(13)
41
$ (10)
$ (25)
$ (193)
$ 76
1. Represents unrealized gains (losses) attributable to changes in time value of
the collars, which are excluded from the hedge effectiveness assessment.
25 Fair Value Measurements
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
Ineffective portion
Fair value hedges
Excluded from effectiveness changes
2014
2013
$ (59)
$ 278
14
(9)
–
(71)
(4)
(239)
(183)
101
(41)
5
–
(5)
(56)
(41)
(2)
(25)
At December 31
$ (278)
$ (59)
Classification:
Other current assets
Other long-term assets
Other current liabilities
Other long-term obligations
$
7
2
(158)
(129)
$ 37
10
(31)
(75)
$ (278)
$ (59)
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, 2014
Cash and equivalents
Available-for-sale securities
Derivatives
Receivables from provisional copper and gold sales
Quoted prices
in active
markets for
identical assets
(Level 1)
$ 2,699
35
–
–
$ 2,734
Significant
other
observable
inputs
(Level 2)
$
–
–
(278)
184
$ (94)
Significant
unobservable
inputs
(Level 3)
$ –
–
–
–
$ –
Aggregate
fair value
$ 2,699
35
(278)
184
$ 2,640
149
Barrick_AR14_FINANCIALS_E.indd 149
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Fair Value Measurements
At December 31, 2013
Cash and equivalents
Available-for-sale securities
Derivatives
Receivables from provisional copper and gold sales
b) Fair Values of Financial Assets and Liabilities
Quoted prices
in active
markets for
identical assets
(Level 1)
$ 2,404
120
–
–
$ 2,524
Significant
other
observable
inputs
(Level 2)
$
–
–
(59)
246
$ 187
Significant
unobservable
inputs
(Level 3)
$ –
–
–
–
$ –
Aggregate
fair value
$ 2,404
120
(59)
246
$ 2,711
Financial assets
Other receivables
Available-for-sale securities1
Derivative assets
Financial liabilities
Debt2
Derivative liabilities
Other liabilities
At Dec. 31, 2014
At Dec. 31, 2013
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
$
385
35
9
$
385
35
9
$
167
120
47
$
167
120
47
$
429
$
429
$
334
$
334
$ 13,081
287
360
$ 13,356
287
360
$ 13,080
106
355
$ 12,525
106
355
$ 13,728
$ 14,003
$ 13,541
$ 12,986
1. Recorded at fair value. Quoted market prices are used to determine fair value.
2. 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 debt is primarily determined using quoted
market prices. Balance includes both current and long-term portions of debt.
We do not offset financial assets with financial liabilities.
c) Assets Measured at Fair Value on a Non-Recurring Basis
Property, plant and equipment1
Intangible assets2
Goodwill3
Quoted prices
in active
markets for
identical assets
(Level 1)
$ –
–
–
Significant
other
observable
inputs
(Level 2)
$ –
–
–
Significant
unobservable
inputs
(Level 3)
$ 3,665
2
3,278
Aggregate
fair value
$ 3,665
2
3,278
1. Property, plant and equipment were written down by $2,672 million which was included in earnings in this period, to their fair value less costs of disposal
of $3,665 million.
2. Intangible assets were written down by $7 million which was included in earnings in this period, to their fair value less costs of disposal of $2 million.
3. Goodwill was written down by $1,409 million which was included in earnings in this period.
150
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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.
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 arising 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, Goodwill
and Intangibles
The fair value of property, plant and equipment, goodwill
and intangibles is determined primarily using an income
approach based on unobservable cash flows and a
market multiples approach where applicable, and as a
result is classified within Level 3 of the fair value hierarchy.
Refer to note 20 for disclosure of inputs used to develop
these measures.
26 Provisions
a) Provisions
Environmental rehabilitation
(“PER”)
Post-retirement benefits
RSUs
Other
b) Environmental Rehabilitation
At January 1
PERs divested during the year
PERs arising (decreasing) in the year
Impact of revisions to expected
cash flows recorded in earnings
Settlements
Cash payments relating to
continuing operations
Cash payments relating to
discontinued operations
Settlement gains
Accretion
Assets held for sale
At December 31
Current portion (note 23)
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 2,375
103
15
68
$ 2,254
83
11
80
$ 2,561
$ 2,428
2014
2013
$ 2,359
(17)
125
$ 2,663
(164)
(145)
58
91
(108)
–
(8)
75
–
(56)
(1)
(2)
69
(96)
$ 2,484
(109)
$ 2,359
(105)
$ 2,375
$ 2,254
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
The eventual settlement of all PERs is expected to take
place between 2015 and 2054.
The PER has increased from third quarter 2014 by
$22 million primarily due to changes in cost estimates,
partially offset by changes in discount rates. For the year
ended December 31, 2014, our PER balance increased by
$125 million as a result of various impacts at our mine
sites including new requirements related to water
treatment, expanded footprints of our operations and
updated estimates for reclamation activities. A 1%
increase in the discount rate would result in a decrease in
PER by $323 million and a 1% decrease in the discount
rate would result in an increase in PER by $295 million,
while holding the other assumptions constant.
27 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 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 the
appropriate functions.
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 unhedged in order to provide our
shareholders with full exposure to changes in the market
gold price. Our corporate treasury function implements
hedging strategies on an opportunistic basis to protect
us from downside price risk on our copper production.
At December 31, 2014, we have no open position on
our copper production and as such all our 2015 copper
production is subject to market prices.
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 using financial
contracts to hedge our exposure to oil prices.
Foreign Currency Risk
The functional and reporting currency for our gold
and copper segments and Pascua-Lama is the US dollar
and we report our results using the US dollar. The
majority of our operating and capital expenditures are
denominated and settled in US dollars. We have
exposure to the Australian dollar and Canadian dollar
through a combination of mine operating costs and
corporate administration costs; and to the Papua New
Guinea kina, Peruvian sol, Chilean peso, Argentinean
peso, Dominican Republic peso and Zambian kwacha
through mine operating costs. Consequently, fluctuations
152
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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 portion of our Chilean peso exposures. In 2013, the
Company unwound approximately CLP 500 billion of our
Chilean peso hedges and $990 million of our Australian
dollar forward contracts. As a result, we now have greater
exposure to fluctuations in the value of the Chilean
pesos and Australian dollars compared to the US dollar.
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
2014 2013
2014 2013
2014 2013
10% strengthening $ 0.90 $ 0.89
0.90 0.89
10% weakening
$ (33) $ (91)
91
33
$ (33) $ (91)
33
91
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 ($2.7 billion
at the end of the year); the mark-to-market value of
derivative instruments; the fair value and ongoing
payments under US dollar interest-rate swaps; and to
the interest payments on our variable-rate debt ($1 billion
at December 31, 2014).
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
2014
2013
2014
2013
$ 12
(12)
$ 6
(6)
$ 12
(12)
$ 6
(6)
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
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;
Limiting the amount of net exposure with each
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:
Cash and equivalents
Accounts receivable
Net derivative assets
by counterparty
As at
Dec. 31,
2014
$ 2,699
418
As at
Dec. 31,
2013
$ 2,404
385
1
19
$ 3,118
$ 2,808
1. Investment grade countries include Canada, Chile, Australia, and Peru.
Investment grade countries are defined as being rated BBB- or higher by S&P.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
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 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 monitoring of forecasted
and actual cash flows. Details of the undrawn credit
facility are included in note 24.
Our capital structure comprises a mix of debt and
shareholders’ equity. As at December 31, 2014, our total
debt was $13.1 billion (debt net of cash and equivalents
was $10.4 billion) compared to total debt as at
December 31, 2013 of $13.1 billion (debt net of cash
and equivalents was $10.7 billion).
In 2013, we made a number of changes to our
capital structure. In first quarter 2013, we drew
$2.0 billion on our $4.0 billion revolving credit facility
(“2012 Credit Facility”), using the proceeds to repay
$1.2 billion on our $1.45 billion credit facility, which
expired in April 2013. In second quarter 2013, we issued
$3.0 billion of debt, using $2.0 billion of the net
proceeds to repay the outstanding balance on the 2012
Credit Facility. In fourth quarter 2013, we issued new
equity for net proceeds of $2.9 billion, using $2.6 billion
of those proceeds to redeem outstanding debt with
near-term maturities. The $4.0 billion credit facility was
fully undrawn at year end and the termination date has
been extended by one year such that the facility now
expires in January 2020.
As part of our capital allocation strategy, we are
constantly evaluating our capital expenditures and
making reductions where the risk-adjusted returns do
not justify the investment. Since the beginning of 2013,
we have also made divestments of non-core assets and
assets that do not meet our investment criteria, such as
the sale of our oil & gas business and certain of our
Australian and North American assets for total cash
proceeds of approximately $720 million. In July 2013,
the Company’s Board of Directors authorized reducing
the quarterly dividend to $0.05 per share as a further
prudent step to improve liquidity (the declaration and
payment of dividends is at the discretion of the Board
of Directors and will depend on the Company’s financial
results, cash requirements, future prospects and other
factors deemed relevant by the Board).
Our primary source of liquidity is our operating cash
flow. Other options to enhance liquidity include drawing
the $4.0 billion available under our 2012 Credit Facility
(subject to compliance with covenants and the making of
certain representations and warranties, this facility is
available for drawdown as a source of financing), further
asset sales and issuances of debt or equity securities in
the public markets or to private investors, which could
be undertaken for liquidity enhancement and/or in
connection with establishing a strategic partnership.
Many factors, including, but not limited to, general
market conditions and then prevailing metals prices
could impact our ability to issue securities on acceptable
terms, as could our credit ratings. Moody’s and S&P rate
our long-term debt Baa2 and BBB, respectively. Changes
in our ratings could affect the trading prices of our
securities and our cost of capital. If we were to borrow
under our 2012 Credit Facility, the applicable interest
rate on the amounts borrowed would be based, in part,
on our credit ratings at the time. The key financial
covenant in the 2012 Credit Facility (undrawn as at
December 31, 2014) requires Barrick to maintain a
consolidated tangible net worth (“CTNW”) of at least
$3.0 billion (Barrick’s CTNW was $5.7 billion as at
December 31, 2014).
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 As at December 31, 2014
(in $ millions)
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
As at December 31, 2013
(in $ millions)
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
$ 2,699
418
7
1,653
333
157
67
$
–
–
1
–
919
117
112
$
–
–
1
–
1,853
13
46
$
–
–
–
–
10,082
–
135
$ 2,699
418
9
1,653
13,187
287
360
Less than 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
$ 2,404
385
34
2,165
179
32
111
$
–
–
7
–
1,002
72
145
$
–
–
5
–
1,068
2
41
$
–
–
1
–
10,958
–
58
$ 2,404
385
47
2,165
13,207
106
355
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 expansion plans. Our
objectives are also to ensure that we maintain a strong
balance sheet and optimize the use of debt and equity to
support our business and provide 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 have no significant
financial covenants or capital requirements with our
lenders or other parties other than what is discussed
under liquidity risk section of note 27.
28 Other Non-Current Liabilities
Deposit on silver sale agreement
Derivative liabilities (note 24f)
Deferred revenue
Provision for supply contract
restructuring costs
Provision for offsite remediation
Other
As at
Dec. 31,
2014
$ 668
129
85
8
56
166
As at
Dec. 31,
2013
$ 646
75
6
13
62
174
$ 1,112
$ 976
Silver Sale Agreement
On September 22, 2009, we entered into an agreement
with Silver Wheaton Corp. (“Silver Wheaton”) to sell
the amount equal to 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 (“South American mines”) until the end
of 2013. 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
in cash of the lesser of $3.90 (subject to an annual
inflation adjustment of 1% starting three years after
project completion at Pascua-Lama) and the prevailing
market price for each ounce of silver delivered under
the agreement.
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.
We had provided Silver Wheaton with a completion
guarantee, requiring us to complete Pascua-Lama to
at least 75% design capacity by December 31, 2015.
During 2014 and 2015, Silver Wheaton would be
entitled to the silver production from the South American
mines to the extent of any production shortfall at Pascua
Lama, until we satisfy the completion guarantee. Per the
terms of the original silver purchase agreement, if the
requirements of the completion guarantee have not been
satisfied by December 31, 2015, the agreement may be
terminated by Silver Wheaton, in which case Silver
Wheaton will be entitled to the return of the upfront
cash consideration paid less a credit for silver delivered
up to the date of that event.
In December 2014, Silver Wheaton agreed to extend
the completion date for Pascua-Lama to June 30, 2020
and will continue to receive silver production from
the South American mines until March 31, 2018.
At December 31, 2014, the cash obligation was
$341 million.
29 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 $78 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 $6,174 million as
at December 31, 2014.
Sources of Deferred Income Tax Assets and Liabilities
Deferred tax assets
Tax loss carry forwards
Alternative minimum tax (“AMT”) credits
Environmental rehabilitation
Property, plant and equipment
Post-retirement benefit obligations
and other employee benefits
Accrued interest payable
Derivative instruments
Other
Deferred tax liabilities
Property, plant and equipment
Inventory
Classification:
Non-current assets
Non-current liabilities
As at
Dec. 31,
2014
As at
Dec. 31,
2013
$ 369
11
586
81
$ 251
9
603
4
73
51
32
55
43
33
10
65
$ 1,258
$ 1,018
(2,216)
(404)
(2,367)
(408)
$ (1,362)
$ (1,757)
$ 674
(2,036)
$ 501
(2,258)
$ (1,362)
$ (1,757)
The deferred tax asset of $674 million includes
$665 million expected to be realized in more than
one year. The deferred tax liability of $2,036 million
includes $1,978 million expected to be realized in
more than one year.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Expiry Dates of Tax Losses and AMT Credits
2015 2016 2017
2018 2019+
No
expiry
date
Total
Non-capital
tax losses1
Canada
Dominican
$ 4 $
2 $
1 $
– $ 1,533 $
– $ 1,540
Republic –
Barbados
Chile
Tanzania
Zambia
Other
–
–
–
–
– 627 148 4,751 1,271
–
–
–
–
384
–
–
–
–
–
–
–
– 261
5
9
–
–
–
7
94
–
268
149
–
508
94
6,797
268
149
645
529
$ 4 $ 638 $ 415 $ 4,758 $ 3,188 $ 1,019 $ 10,022
AMT credits2
$ 103 $
103
1. Represents the gross amount of tax loss carry forwards translated at closing
exchange rates at December 31, 2014.
2. Represents the amounts deductible against future taxes payable in years
when taxes payable exceed “minimum tax” as defined by United States
tax legislation.
The non-capital tax losses include $8,588 million of
losses which are not recognized in deferred tax assets. Of
these, $4 million expire in 2015, $629 million expire in
2016, $410 million expire in 2017, $4,751 million expire
in 2018, $1,878 million expire in 2019 or later, and
$916 million have no expiry date.
The AMT credits include $92 million which are not
recognized in deferred tax assets.
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 $505 million
(December 31, 2013 – $322 million) has been recorded
in Canada. This deferred tax asset primarily arose from
derivative realized losses, finance costs, and general and
administrative expenses. 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
US
Chile
Argentina
Barbados
Tanzania
Zambia
Saudi Arabia
As at
Dec. 31,
2014
$ 367
371
93
776
823
68
92
–
67
As at
Dec. 31,
2013
$ 456
139
50
471
928
71
107
43
17
$ 2,657
$ 2,282
Deferred Tax Assets Not Recognized relate to: non-capital
loss carry forwards of $348 million (2013: $334 million),
capital loss carry forwards with no expiry date of
$518 million (2013: $200 million), US AMT credits of
$92 million (2013: $48 million) and other deductible
temporary differences with no expiry date of
$1,699 million (2013: $1,700 million).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Source of Changes in Deferred Tax Balances
Tax Years Still Under Examination
For the years ended December 31
2014
2013
Temporary differences
Property, plant and equipment
Environmental rehabilitation
Tax loss carry forwards
AMT credits
Inventory
Derivatives
Other
Intraperiod allocation to:
Loss from continuing operations
before income taxes
Loss from discontinued operations
Barrick Energy disposition
OCI
Issuance of share capital
Other
Income Tax Related Contingent Liabilities
At January 1
Additions based on tax positions related
to the current year
Reductions for tax positions of prior years
Reduction related to discontinued operations
$ 228
(17)
118
2
4
22
38
$ 938
(121)
(179)
(35)
(169)
45
(5)
$ 395
$ 474
$ 380
–
–
15
–
–
$ 471
13
(91)
56
24
1
$ 395
$ 474
2014
2013
$ 51
$
64
1
(3)
–
1
(2)
(12)
At December 311
$ 49
$
51
1. If reversed, the total amount of $49 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 $1 million to
$2 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
30 Capital Stock
2011–2014
2014
2011–2014
2009, 2011–2014
2011–2014
2007–2014
2010–2014
2004–2014
2007–2014
All years open
2010–2014
Authorized Capital Stock
Our authorized capital stock includes an unlimited
number of common shares (issued 1,164,669,608
common shares); an unlimited number of first preferred
shares issuable in series (the first series is designated as
the “First Preferred Shares, Series A” and consists of
10,000,000 first preferred shares (issued nil); the second
series is designated as the “First Preference Shares,
Series B” and consists of 10,000,000 first preferred
shares (issued nil); and the third series is designated as
the “First Preferred Shares, Series C Special Voting
Share” and consists of 1 Special Voting Share (issued nil));
and an unlimited number of second preferred shares
issuable in series (the first series is designated as the
“Second Preferred Shares, Series A” and consists
of 15,000,000 second preferred shares (issued nil)).
Our common shares have no par value.
Common Stock offering
On November 14, 2013, we issued 163.5 million shares
of Barrick at a price of $18.35, for net proceeds of
$2,910 million.
Dividends
In 2014, we declared and paid dividends in US dollars
totaling $0.20 per share, $232 million (2013: $0.50 per
share, $508 million).
158
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
31 Non-Controlling Interests
a) Non-Controlling Interests Continuity
NCI in subsidiary at December 31, 2014
40%
36.1%
25%
Various
Pueblo Viejo
Acacia
Cerro Casale
Other
Total
At January 1, 2013
Share of loss
Cash contributed
Decrease of non-controlling interest
At December 31, 2013
Share of income (loss)
Cash contributed
Increase (decrease) in non-controlling interest1
$ 1,405
(21)
48
–
$ 1,432
89
–
–
$ 747
(211)
–
(14)
$ 522
62
–
174
At December 31, 2014
$ 1,521
$ 758
$ 512
(5)
7
–
$ 514
(199)
4
–
$ 319
$ –
–
–
–
$ –
(4)
25
(4)
$ 2,664
(237)
55
(14)
$ 2,468
(52)
29
170
$ 17
$ 2,615
1. Primarily represents the increase in non-controlling interests as a result of divestment of 10% of issued ordinary share capital of Acacia (see note 4c).
b) Summarized Financial Information on Subsidiaries with Material Non-Controlling Interests
Summarized Balance Sheets
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Pueblo Viejo
Acacia
Cerro Casale
As at
Dec. 31,
2014
$
771
5,209
As at
Dec. 31,
2013
$
473
5,252
As at
Dec. 31,
2014
$ 672
1,810
As at
Dec. 31,
2013
$ 675
1,655
$ 5,980
$ 5,725
$ 2,482
$ 2,330
1,338
1,175
1,487
744
214
365
152
322
As at
Dec. 31,
2014
$
5
561
$ 566
40
42
As at
Dec. 31,
2013
$
5
2,040
$ 2,045
36
526
$ 2,513
$ 2,231
$ 579
$ 474
$ 82
$ 562
Summarized Statements of Income
Pueblo Viejo
Acacia
Cerro Casale
For the years ended December 31
Revenue
Income (loss) from continuing operations
after tax
Other comprehensive income (loss)
Total comprehensive income (loss)
Dividends paid to NCI
2014
$ 1,552
311
–
$ 311
$
–
2013
$ 995
199
–
$ 199
$
–
2014
2013
2014
$ 923
$
937
$
–
79
(1)
$ 78
$
5
(1,022)
2
(1,018)
–
$ (1,020)
$ (1,018)
$
14
$
–
2013
$ –
(20)
–
$ (20)
$ –
Summarized Statements of Cash Flows
Pueblo Viejo
Acacia
Cerro Casale
For the years ended December 31
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
2014
$ 533
(184)
(101)
2013
$ 190
(259)
96
2014
$ 286
(255)
(19)
2013
$ 172
(375)
84
2014
$ (2)
(1)
4
2013
$ 11
(21)
8
Net increase (decrease) in cash and
cash equivalents
$ 248
$ 27
$
12
$ (119)
$ 1
$
(2)
159
Barrick_AR14_FINANCIALS_E.indd 159
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Under the terms of Pueblo Viejo’s project financing
agreement described in note 24b, Pueblo Viejo
Dominicana Corporation is prohibited from making
cash payments to Barrick and Goldcorp in the form of
dividends or certain shareholder loan interest and
principal payments until Pueblo Viejo achieves specified
requirements, including requirements relating to
operational, social, and environmental matters.
The project financing agreement contains covenants
which limit certain activities by Pueblo Viejo Dominicana,
including Pueblo Viejo’s ability to sell assets and incur
debt. Furthermore, Pueblo Viejo’s material tangible and
intangible assets, including the proceeds from metal
sales, are segregated and pledged for the benefit of the
project lenders, thus restricting our access to those assets
and our ability to use those assets to settle our liabilities
to third parties.
33 Stock-Based Compensation
a) Stock Options
Under Barrick’s stock option plan, certain officers and key
employees of the Corporation may purchase common
shares at an exercise price that is equal to the closing
share price on the day before the grant of the option.
The grant date is the date when the details of the award,
including the number of options granted by individual
and the exercise price, are approved. Stock options
vest evenly over four years, beginning in the year after
granting. Options are exercisable over seven years.
At December 31, 2014, 5.4 million (2013: 6.5 million)
common shares were available for granting options.
Employee Stock Option Activity (Number of Shares in Millions)
32 Remuneration of Key Management Personnel
Key management personnel include the members of the
Board of Directors and the Executive leadership team.
Compensation for key management personnel (including
Directors) was as follows:
For the years ended December 31
2014
2013
Salaries and short-term employee benefits1
Post-employment benefits2
Termination Benefits
Share-based payments and other3
$ 20
2
11
6
$ 39
$ 22
3
7
13
$ 45
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.
Compensation recovery for stock options was
$5 million in 2014 (2013: $8 million), and is presented
as a component of corporate administration and
operating segment administration, 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 2014 by $nil per share
(2013: $0.01 per share).
Total intrinsic value relating to options exercised in
2014 was $nil million (2013: $nil million).
C$ options
At January 1
Granted
Exercised
Cancelled/expired
At December 31
US$ options
At January 1
Granted
Exercised
Forfeited
Cancelled/expired
At December 31
160
2014
2013
Shares Average price
Shares
Average price
0.1
0.1
–
–
0.2
6.4
–
–
(0.3)
(0.9)
5.2
$ 19
20
–
–
$ 19
$ 41
–
–
42
41
$ 41
0.6
0.1
–
(0.6)
0.1
6.3
1.1
–
(0.5)
(0.5)
6.4
$ 28
18
–
28
$ 19
$ 42
32
–
32
42
$ 41
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
Stock Options Outstanding (Number of Shares in Millions)
Range of exercise prices
C$ options
$ 18 – $ 21
US$ options
$ 20 – $ 27
$ 28 – $ 41
$ 42 – $ 55
Outstanding
Exercisable
Shares
Average
price
Average
life (years)
Intrinsic
value1
($ millions)
Shares
Average
price
Intrinsic
value1
($ millions)
0.2
0.2
0.4
1.8
3.0
5.2
$ 19
$ 19
$ 26
34
47
$ 41
6.1
6.1
0.8
3.9
2.5
2.8
$
$
$
(1)
(1)
(6)
(42)
(111)
$ (159)
–
–
0.4
0.9
2.6
3.9
$ –
$ –
$ 26
36
47
$
$
$
–
–
(6)
(23)
(95)
$ 42
$ (124)
1. Based on the closing market share price on December 31, 2014 of C$12.52 and US$10.75.
Option Information
(per share and per option amounts in dollars)
Dec. 31,
2014
Dec. 31,
2013
Valuation assumptions
Expected term (years)
Expected volatility2
Expected dividend yield
Risk-free interest rate2
Lattice1,2
5.5
30%–35%
2.02%
0.10%–1.91%
Lattice1,2
5.5
30%–35%
2.02%
0.10%–1.91%
Options granted (in millions)
Weighted average fair value per option
0.1
$ 5
1.2
$ 7
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, 2014, there was $3 million
(2013: $8 million) of total unrecognized compensation
cost relating to unvested stock options. We expect to
recognize this cost over a weighted average period of
1 year (2013: 1 year).
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 generally vest from two-and-a-half
to three years and are settled in cash upon vesting.
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, 2014, the weighted
average remaining contractual life of RSUs was
1.46 years (2013: 1.17 years).
Compensation expense for RSUs was an $8 million
credit to earnings in 2014 (2013: $1 million reversal) and
is presented as a component of corporate administration
and operating segment administration, consistent with
the classification of other elements of compensation
expense for those employees who had RSUs.
Under our DSU plan, Directors must receive a
specified portion of their basic annual retainer in the
form of DSUs, with the option to elect to receive 100%
of such retainer in DSUs. Officers may also elect to
receive a portion or all of their incentive compensation in
the form of DSUs. Each DSU has the same value as one
Barrick common share. DSUs must be retained until the
Director or officer leaves the Board or Barrick, at which
time the cash value of the DSUs will be paid out.
Additional DSUs are credited to reflect dividends paid on
Barrick common shares. DSUs are recorded at fair value
161
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
on the grant date and are adjusted for changes in fair
value. The fair value of amounts granted each period
together with changes in fair value are expensed.
DSU and RSU Activity
At January 1, 2013
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2013
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
DSUs
(thousands)
Fair
value
RSUs
($ millions) (thousands)
Fair
value
($ millions)
207
(72)
–
66
–
–
201
(53)
–
113
–
–
$ 7.0 2,489 $ 54.1
(19.2)
(803)
(1.2)
(15.8)
(764)
–
58.7
1.3 1,847
1.8
81
(49.8)
–
–
(2.4)
$ 4.7 2,850 $ 29.8
(17.2)
(992)
(0.6)
(11.5)
(629)
–
42.9
1.6 2,327
0.7
49
(14.6)
–
–
(2.9)
At December 31, 2014
261
$ 2.8 3,605 $ 30.1
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.
At December 31, 2014, 1,675 thousand units were
outstanding (2013: 598 thousand units).
d) Performance Granted Share Units (PGSUs)
In 2014, Barrick launched a PGSU plan. Under this plan,
selected employees are granted PGSUs, where each
PGSU has a value equal to one Barrick common share.
At December 31, 2014, no units had been granted.
e) 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. During
2014, Barrick contributed and expensed $0.6 million
to this plan (2013: $0.8 million).
34 Post-Retirement Benefits
Barrick operates various post-employment plans,
including both defined benefit and defined contribution
pension plans and other post-retirement plans. The
table below outlines where the Company’s post-
employment amounts and activity are included in
the financial statements:
For the years ended December 31
2014
2013
Balance sheet obligations for:
Defined pension benefits
Other post-retirement benefits
Liability in the balance sheet
Income statement charge included
income statement for:
Defined pension benefits
Other post-retirement benefits
Measurements for:
Defined pension benefits
Other post-retirement benefits
$ 96
7
$ 103
$
$
3
–
3
$ (29)
(1)
$ (30)
$ 77
6
$ 83
$ 3
–
$ 3
$ 36
1
$ 37
The amounts recognized in the balance sheet are
determined as follows:
For the years ended December 31
2014
2013
Present value of funded obligations
Fair value of plan assets
Deficit of funded plans
Present value of unfunded obligations
Total deficit of defined benefit pension plans
Impact of minimum funding requirement/
asset ceiling
$ 241
(218)
$ 23
73
$ 96
$ 216
(216)
$
–
72
$ 72
–
5
Liability in the balance sheet
$ 96
$ 77
a) Defined Benefit Pension Plans
We have qualified defined benefit pension plans that
cover certain of our former United States and Canadian
employees and provide benefits based on an employee’s
years of service. The plans operate under similar regulatory
frameworks and generally face similar risks. The majority
of benefit payments are from trustee-administered
funds; however, there are also a number of unfunded
plans where the Company meets the benefit payment
obligation as it falls due. Plan assets held in trust are
governed by local regulations and practice in each
country. Responsibility for governance of the plans
– overseeing all aspects of the plans including investment
decisions and contribution schedules – lies with the
Company. We have set up pension committees to assist
in the management of the plans and have also appointed
experienced independent professional experts such as
actuaries, custodians and trustees.
162
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
At January 1, 2013
Current service cost
Interest expense (income)
Remeasurements:
Loss from demographic assumptions
Loss from financial assumptions
Experience gains
Change in asset ceiling
Exchange differences
Contributions – employers
Benefit payments
At December 31, 2013
Interest expense (income)
Remeasurements:
Loss from demographic assumptions
Loss from financial assumptions
Experience gains
Change in asset ceiling
Exchange differences
Contributions – employers
Benefit payments
Settlements
At December 31, 2014
Present value
of obligation
$ 328
1
11
Fair value
of plan
assets
$ (207)
–
(9)
Total
$ 121
1
2
$ 340
$ (216)
$ 124
6
(25)
(5)
–
$ (24)
(4)
–
(24)
$ 288
12
–
–
(17)
–
(17)
1
(8)
24
$
$ (216)
(9)
6
(25)
(22)
–
$ (41)
(3)
(8)
–
$ 72
3
$ 300
$ (225)
$ 75
25
24
(4)
–
$ 45
(5)
–
(21)
(5)
–
–
(11)
–
(11)
1
(8)
21
4
$
25
24
(15)
–
$ 34
(4)
(8)
–
(1)
$ 314
$ (218)
$ 96
Impact of minimum
funding requirement/
asset ceiling
$ –
–
–
$ –
–
–
–
5
$ 5
–
–
–
$ 5
–
$ 5
–
–
–
(5)
$ (5)
–
–
–
–
$ –
Total
$ 121
1
2
$ 124
6
(25)
(22)
5
$ (36)
(3)
(8)
–
$ 77
3
$ 80
25
24
(15)
(5)
$ 29
(4)
(8)
–
(1)
$ 96
The significant actuarial assumptions were as follows:
As at December 31
Discount rate
Pension Plans 2014
Other Post-Retirement
Benefits 2014
Pension Plans 2013
Other Post-Retirement
Benefits 2013
1.95–4.05%
3.40–3.55%
2.15–4.90%
3.90–4.10%
The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan
of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact
for each assumption presented.
Change in assumption
Increase in assumption
Decrease in assumption
Impact on defined benefit obligation
Discount rate
0.50%
Life expectancy
Decrease by 5.3%
Increase by 1 year
in assumption
Increase by 4.2%
Increase by 5.8%
Decrease by 1 year
in assumption
Decrease by 4.1%
Barrick_AR14_FINANCIALS_E.indd 163
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163
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
b) Other Post-Retirement Benefits
We provide post-retirement medical, dental, and life insurance benefits to certain employees in the US. All of these
plans are unfunded.
The movement in the defined benefit liability over the year is as follows:
At January 1, 2013
Remeasurements:
Experience gains
Contributions – employers
Benefit payments
Settlements
At December 31, 2013
Remeasurements:
Loss from demographic assumptions
Contributions – employers
Benefit payments
At December 31, 2014
Present value
of obligation
Fair value of
plan assets
$ 8
(1)
$ (1)
–
(1)
–
$ 6
1
$ 1
–
–
$ 7
$ –
–
$ –
(1)
1
–
$ –
–
$ –
(1)
1
$ –
Total
$ 8
(1)
$ (1)
(1)
–
–
$ 6
1
$ 1
(1)
1
$ 7
The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan
of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact
for each assumption presented.
Change in assumption
Increase in assumption
Decrease in assumption
Impact on defined benefit obligation
Discount rate
Healthcare cost increase
0.50%
1%
Life expectancy
Decrease by 3.7%
Increase by 8.6%
Increase by 1 year
in assumption
Increase by 9.1%
Increase by 4.0%
Decrease by 7.7%
Decrease by 1 year
in assumption
Decrease by 8.3%
Plan assets, which are funding the Company’s defined
pension plans are comprised as follows:
2014
2013
Through the defined benefit pension plans and other
post-retirement benefit plans, we are exposed to a number
of risks, most significant of which are detailed below:
As at December 31
in %
Total
in %
Total
Composition of plan assets1
Cash
Equity instruments
Fixed income securities
3%
48%
49%
7
$
104
107
–
53%
47%
–
$
116
100
100%
$ 218
100%
$ 216
1. Holdings in equity and fixed income securities consist of Level 1 and
Level 2 assets within the fair value hierarchy.
Asset Volatility
The plan liabilities are calculated using discount rates
that were 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. If plan assets
underperform this yield, this will create a deficit. Our
plans hold a significant proportion of equities, which
contribute certain degree of risk and volatility.
164
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
As the plans mature, we intend to reduce the level
of investment risk by investing more in assets that better
match the liabilities. However, we believe that due to
the long-term nature of the plan liabilities, a level of
continuing equity investment is an appropriate
component of our long-term strategy to manage the
plans efficiently.
Changes in Bond Yields
A decrease in corporate bond yields will increase plan
liabilities, although this be would likely be partially offset
by an increase in the value of the plan’s bond holdings.
Inflation Risk
Most of the plans’ obligations are linked to inflation and
higher inflation will lead to higher liabilities (although, in
most cases, caps on the level of inflationary increases are
in place to protect the plan against extreme inflation).
The majority of the plan’s assets are either unaffected by
(fixed interest bonds) or loosely correlated with (equities)
inflation, meaning that an increase in inflation will also
increase the deficit.
Life Expectancy
The majority of the plans’ obligations are to provide
benefits for the life of the member, so increases in
the life expectancy will result in an increase in the
plans’ liabilities.
Each sensitivity analysis disclosed in this note is based
on changing one assumption while holding all other
assumptions constant. In practice, this is unlikely to
occur, and changes in some of the assumptions may be
correlated. When calculating the sensitivity of the
defined benefit obligation to variations in significant
actuarial assumptions, the same method (present value
of the defined benefit obligation calculated with the
project unit credit method at the end of the reporting
period) has been applied as for calculating the liability
recognized in the balance sheet.
In case of the funded plans, the Company ensures
that the investment positions are managed within an
asset-liability matching (ALM) framework that has been
developed to achieve long-term investments that are in
line with the obligations under the pension plans. Within
this framework, the Company’s ALM objective is to
match assets to the pension obligations by investing
in long-term fixed interest securities with maturities
that match the benefit payments as they fall due and
in the appropriate currency. The Company actively
monitors how the duration and the expected yield of
the investments are matching the expected cash
outflows arising from the pension obligations. The
Company has not changed the processes used to
manage its risks from previous periods. The Company
does not currently use derivatives to manage its risk.
Investments are well diversified, such that the failure of
any single investment would not have a material impact
on the overall level of assets. All of the assets in 2014
consist of equities and fixed income securities. The
Company believes that equities offer the best returns
over the long term with an acceptable level of risk. The
majority of equities are in a globally diversified portfolio
of international blue chip entities. The plans are not
exposed to significant foreign currency risk.
The Company has pension plans (mostly in the US)
at December 31, 2014. The expected contribution to
post-employment benefit plans for the year ending
December 31, 2014 is $6 million (2013: $8 million).
The weighted average duration of the defined
benefit obligation is 11 years (2013: 10 years).
Less Between Between
1–2
years
than a
year
years
2–5 Over 5
years
Total
Pension benefits
Other post-
retirement benefits
At December 31,
2013
$ 21
$ 21
$ 61
$ 381
$ 484
1
1
1
6
9
$ 22
$ 22
$ 62
$ 387
$ 493
Pension benefits
Other post-retirement
benefits
$ 20
$ 20
$ 60
$ 421 $ 521
1
1
2
5
9
At December 31,
2014
$ 21
$ 21
$ 62
$ 426
$ 530
c) Defined Contribution Pension Plans
Certain employees take part in defined contribution
employee benefit plans and we also have a retirement
plan for certain officers of the Company. Our share of
contributions to these plans, which is expensed in the
year it is earned by the employee, was $42 million in
2014 (2013: $64 million).
165
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014
35 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. The impact of
any resulting loss from such matters affecting these
financial statements and noted below may be material.
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
with assistance from 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.
U.S. Shareholder Class Action
On December 6, 2013, lead counsel and plaintiffs in the
securities class action filed a consolidated amended
complaint (the “Complaint”) in the U.S. District Court
for the Southern District of New York (the “Court”),
on behalf of anyone who purchased the common stock
of the Company between May 7, 2009, and November 1,
2013. The Complaint asserts claims against the Company
and individual defendants Jamie Sokalsky, Aaron Regent,
Ammar Al-Joundi, Igor Gonzales, Peter Kinver, George
Potter and Sybil Veenman (collectively, the “Defendants”).
The Complaint alleges that the Defendants made false
and misleading statements to the investing public
relating (among other things) to the cost of the Pascua-
Lama project (the “Project”), the amount of time it
would take before production commenced at the Project,
and the environmental risks of the Project, as well as
alleged internal control failures. The Complaint seeks an
unspecified amount of damages.
The Complaint largely tracks the legal theories
advanced in three prior complaints filed on June 5,
2013, June 14, 2013 and August 2, 2013. The Court
consolidated those complaints and appointed lead
counsel and lead plaintiffs for the resulting consolidated
action in September 2013.
The Court held oral arguments on Defendants’
motion to dismiss on September 5, 2014. A decision of
the Court is pending. The Company intends to vigorously
defend this matter. No amounts have been recorded
for any potential liability arising from this matter, as the
Company cannot reasonably predict the outcome.
166
Proposed Canadian Securities Class Actions
Between April and September 2014, eight proposed
class actions were commenced against the Company in
Canada in connection with the Pascua-Lama project.
Four of the proceedings were commenced in Ontario,
two were commenced in Alberta, one was commenced
in Saskatchewan, and one was commenced in Quebec.
The allegations in each of the eight Canadian proceedings
are substantially similar to those in the Complaint filed by
lead counsel and plaintiffs in the U.S. shareholder class
action (see “U.S. Shareholder Class Action” above). Of
the eight proposed class actions, three of the Ontario
claims, both of the Alberta claims, the Quebec claim and
the Saskatchewan claim have been formally served on
the Company.
The first Ontario and Alberta actions were
commenced by Statement of Claim on April 15, 2014
and April 17, 2014, respectively, and served on May 20,
2014 and July 29, 2014, respectively. The same law firm
acts for the plaintiffs in these two proceedings, and the
Statements of Claim are largely identical. Aaron Regent,
Jamie Sokalsky and Ammar Al-Joundi are also named
as defendants in the two actions. Both actions purport
to be on behalf of anyone who, during the period
from May 7, 2009 to May 23, 2013, purchased Barrick
securities in Canada. Both actions seek $4.3 billion in
general damages and $350 million in special damages
for alleged misrepresentations in the Company’s
public disclosure.
The second Ontario action was commenced by
Notice of Action on April 24, 2014, and the Statement of
Claim was served on May 27, 2014. Aaron Regent, Jamie
Sokalsky, Ammar Al-Joundi and Peter Kinver are also
named as defendants. Following a September 8, 2014
amendment to the Statement of Claim, this action
purports to be on behalf of anyone who acquired Barrick
securities during the period from October 29, 2010 to
October 30, 2013, and seeks $6 billion in damages for
alleged misrepresentations in the Company’s public
disclosure. The amended claim also reflects the addition
of a law firm that previously acted as counsel in the third
Ontario action referred to below.
The third Ontario action was commenced by Notice
of Action on April 28, 2014. Aaron Regent, Jamie
Sokalsky, Ammar Al-Joundi and Peter Kinver are also
named as defendants. This action purports to be on
behalf of anyone who acquired Barrick securities during
Barrick_AR14_FINANCIALS_E.indd 166
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 the period from May 7, 2009 to November 1, 2013, and
seeks $3 billion in damages for alleged misrepresentations
in the Company’s public disclosure. This action has not
been served and will not be pursued as counsel has
joined the second Ontario action noted above.
The Quebec action was commenced and served on
April 30, 2014. Aaron Regent, Jamie Sokalsky, Ammar
Al-Joundi and Peter Kinver are also named as defendants.
This action purports to be on behalf of any person who
resides in Quebec and acquired Barrick securities during
the period from May 7, 2009 to November 1, 2013.
The action seeks unspecified damages for alleged
misrepresentations in the Company’s public disclosure.
The second Alberta action was commenced by
Statement of Claim on May 23, 2014, and served on
June 6, 2014. Aaron Regent, Jamie Sokalsky, Ammar
Al-Joundi and Peter Kinver are also named as defendants.
This action purports to be on behalf of any person who
acquired Barrick securities during the period from May 7,
2009 to November 1, 2013, and seeks $6 billion in
damages for alleged misrepresentations in the
Company’s public disclosure.
The Saskatchewan action was commenced by
Statement of Claim on May 26, 2014, and served on
May 28, 2014. Aaron Regent, Jamie Sokalsky, Ammar
Al-Joundi and Peter Kinver are also named as defendants.
This action purports to be on behalf of any person who
acquired Barrick securities during the period from May 7,
2009 to November 1, 2013, and seeks $6 billion in
damages for alleged misrepresentations in the
Company’s public disclosure.
The fourth Ontario action was commenced on
September 5, 2014. Aaron Regent, Jamie Sokalsky,
Ammar Al-Joundi and Peter Kinver are also named as
defendants. This action purports to be on behalf of
any person who acquired Barrick securities during the
period from May 7, 2009 to November 1, 2013 in
Canada. The action seeks $3 billion in damages for
alleged misrepresentations in the Company’s public
disclosure. The Statement of Claim was amended on
October 20, 2014, to include two additional law firms,
one of which is acting as counsel in the first Ontario
action referred to above. The Amended Statement of
Claim was served on October 22, 2014.
In November 2014, an Ontario court heard a motion
to determine which of the competing counsel groups will
take the lead in the Ontario litigation. On December 10,
2014, the court issued a decision in favor of the counsel
group that commenced the first and fourth Ontario
actions, which will be consolidated in a single action.
The losing counsel group has sought and obtained leave
to appeal. The appeal is scheduled to be heard in
March 2015.
The Company intends to vigorously defend all of the
proposed Canadian securities class actions. No amounts
have been recorded for any potential liability arising from
any of the proposed class actions, as the Company
cannot reasonably predict the outcome.
Pascua-Lama – SMA Regulatory Sanction
In May 2013, Compañía Minera Nevada (“CMN”),
Barrick’s Chilean subsidiary that holds the Chilean
portion of the Pascua-Lama project (the “Project”),
received a Resolution (the “Resolution”) from Chile’s
environmental regulator (the Superintendencia del Medio
Ambiente, or “SMA”) that requires the company to
complete the water management system for the Project
in accordance with the Project’s environmental permit
before resuming construction activities in Chile. The
Resolution also required CMN to pay an administrative
fine of approximately $16 million for deviations from
certain requirements of the Project’s Chilean environmental
approval, including a series of reporting requirements
and instances of non-compliance related to the Project’s
water management system. CMN paid the administrative
fine in May 2013.
In June 2013, CMN began engineering studies to
review the Project’s water management system in
accordance with the Resolution. These studies indicate
that an increase in the capacity of the water management
system may be required above the volume approved
in the Project’s Chilean environmental approval. An
increase in the capacity of the system may require a
new environmental approval and the construction
of additional water management facilities, which could
impact the schedule and estimated budget for completion
of water management activities in Chile to the satisfaction
of the authorities.
In June 2013, a group of local farmers and indigenous
communities challenged the Resolution. The challenge,
which was brought in the Environmental Court of
Santiago, Chile (the “Environmental Court”), claims that
the fine was inadequate and requests more severe
sanctions against CMN including the revocation of the
Project’s environmental permit. The SMA presented its
defense of the Resolution in July 2013. On August 2,
2013, CMN joined as a party to this proceeding and
vigorously defended the Resolution. On March 3, 2014,
the Environmental Court annulled the Resolution and
remanded the matter back to the SMA for further
167
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 consideration in accordance with its decision (the
“Environmental Court Decision”). In particular, the
Environmental Court ordered the SMA to issue a new
administrative decision that recalculates the amount of
the fine to be paid by CMN using a different methodology
and addresses certain other errors it identified in the
Resolution. A new resolution from the SMA could
include more severe sanctions against CMN such as a
material increase in the amount of the fine above the
approximately $16 million imposed by the SMA in
May 2013 and/or the revocation of the Project’s
environmental permit. The Environmental Court did
not annul the portion of the SMA Resolution that
required the Company to halt construction on the
Chilean side of the project until the water management
system is completed in accordance with the project’s
environmental permit. On December 30, 2014, the
Chilean Supreme Court declined to consider CMN’s
appeal of the Environmental Court Decision on procedural
grounds. As a result of the Supreme Court’s ruling, the
SMA will now re-evaluate the Resolution in accordance
with the Environmental Court Decision. A new resolution
from the SMA in this matter is pending. No amounts
have been recorded for any potential liability or asset
impairment arising from this matter, as the Company
cannot reasonably predict the outcome or, in particular,
the potential financial impact in the event that more
severe sanctions are imposed.
Pascua-Lama – Environmental Damage Claim
In June 2013, a group of local farmers filed an
environmental damage claim against CMN in the
Environmental Court, alleging that CMN has damaged
glaciers located in the Project area. The plaintiffs are
seeking a court order requiring CMN to remedy the
alleged damage and implement measures to prevent
such environmental impact from continuing, including
by halting construction of the Project in Chile. CMN
presented its defense on October 9, 2013. A settlement
and evidentiary hearing took place on January 8, 2014.
Having failed to reach a settlement during that hearing,
the parties proceeded to present documentary evidence
and witness testimony to the Environmental Court.
A final hearing was held in this matter on December 3,
2014, and a decision of the Environmental Court is
pending. The Company intends to vigorously defend
this matter. No amounts have been recorded for any
potential liability or asset impairment arising from
this matter, as the Company cannot reasonably predict
the outcome.
168
Pueblo Viejo – Amparo Action
In October 2014, Pueblo Viejo Dominicana Corporation
(“PVDC”) received a copy of an action filed in an
administrative court (the “Administrative Court”) in the
Dominican Republic by Rafael Guillen Beltre (the
“Petitioner”), who claims to be affiliated with the
Dominican Christian Peace Organization. The action
alleges that environmental contamination in the vicinity
of the Pueblo Viejo mine has caused illness and affected
water quality in violation of the Petitioner’s fundamental
rights under the Dominican Constitution and other laws.
The primary relief sought in the action, which is styled
as an “Amparo” remedy, is the suspension of operations
at the Pueblo Viejo mine as well as other mining projects
in the area until an investigation into the alleged
environmental contamination has been completed by
the relevant governmental authorities. On November 21,
2014, the Administrative Court granted PVDC’s motion
to remand the matter to a trial court in the Municipality
of Cotuí (the “Trial Court”) on procedural grounds. On
January 27, 2015, the Trial Court granted PVDC’s motion
to suspend the action pending receipt of the litigation
file from the Administrative Court. The Company intends
to vigorously defend this matter. No amounts have been
recorded for any potential liability or asset impairment
arising from this matter, as the Company cannot
reasonably predict any potential losses.
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
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.
The constitutionality of the federal glacier law is the
subject of a challenge before the National Supreme
Court of Argentina, which has not yet ruled on the issue.
Barrick_AR14_FINANCIALS_E.indd 168
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 On October 27, 2014, the Company submitted its
response to a motion by the federal government to
dismiss the constitutional challenge to the federal glacier
law on standing grounds. A decision on the motion
is pending. If the federal government’s arguments with
respect to standing are accepted then the case will be
dismissed. If they are not accepted then the National
Supreme Court of Argentina will proceed to hear evidence
on the merits. No amounts have been recorded for any
potential liability or asset impairment under this matter,
as the Company cannot reasonably predict the outcome
and in any event the provincial audit concluded that the
Company’s activities do not impact glaciers or peri-glaciers.
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 “Court”). 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 Court issued an order
granting the Company’s motion to dismiss the action
on the grounds of forum non conveniens. The Province
appealed the Court’s dismissal order to the Nevada
Supreme Court. Oral arguments were held on February 3,
2015, and a decision of the Court is pending. The
Company intends to continue to defend the action
vigorously. No amounts have been recorded for any
potential liability under this complaint, as the Company
cannot reasonably predict the outcome.
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
(the “Court”), 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 recorded for any
potential liability under this complaint, as the Company
cannot reasonably predict the outcome.
Writ of Kalikasan
In February 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 (the “Supreme Court”)
in Eliza M. Hernandez, Mamerto M. Lanete and
Godofredo L. Manoy versus Placer Dome Inc. and Barrick
Gold Corporation (the “Petition”). In March 2011, the
Supreme Court issued an En Banc Resolution and Writ of
Kalikasan, 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
169
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 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
in March 2011, following which 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 Supreme Court over the
Company. In November 2011, two local governments,
or “baranguays” (Baranguay San Antonio and Baranguay
Lobo) filed a motion with the Supreme Court seeking
intervenor status 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 Supreme Court. The Company
intends to continue to defend the action vigorously. No
amounts have been recorded for any potential liability
under this matter, as the Company cannot reasonably
predict the outcome.
b) Other Contingencies
Jabal Sayid
After 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, 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.
On December 3, 2014, the Company announced
that it formed a joint venture with Saudi Arabian Mining
Company (Ma’aden) to operate the Jabal Sayid project.
The Company and Ma’aden own equal shares in a new
joint venture company established to hold the Jabal Sayid
assets free of the restrictions that had been placed on
Bariq Mining Ltd., the former owner. The arrangement
was approved by the DMMR, and the matter is
now closed.
Cerro Casale
One of the environmental permits related to the open
pit and water management system at the Company’s 75
percent-owned Cerro Casale project in Chile is subject
to an environmental regulation (the “Regulation”) that,
if applied as written, would have required the Company
to begin construction of the project by January 26,
2015. Construction did not begin by that date, and the
environmental permit is therefore subject to cancellation.
However, the Company is seeking relief from the
Regulation under a procedure established by the Chilean
environmental authority. If the Company does not obtain
the requested relief then it will evaluate a potential legal
challenge to the Regulation. Permits required for the
majority of the project’s proposed operations have been
obtained under a new environmental approval not
subject to the January 26, 2015 construction deadline.
Although it is not subject to the January 26, 2015
construction deadline, the new environmental approval
mentioned above is currently being challenged by local
and indigenous community members in an administrative
proceeding before the Chilean environmental authority
for, among other claims, alleged deficiencies in water
quality baseline information and the indigenous
consultation process. An unfavorable outcome in this
proceeding could result in cancellation of, or changes to,
the new environmental permit.
Cerro Casale had a carrying value on a 100 percent
basis of $500 million as at December 31, 2014, reflecting
an impairment loss that was recorded on the project in
the fourth quarter of 2014 (see note 20). Cancellation
of either of the two environmental permits could result
in a further impairment charge against the carrying
value of the asset.
170
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2014 SHAREHOLDER INFORMATION
Shareholder Information
Shares are traded on two stock exchanges
New York
Toronto
Ticker Symbol
ABX
Number of Registered Shareholders at
December 31, 2014
17,042
Index Listings
S&P/TSX Composite Index
S&P/TSX 60 Index
S&P Global 1200 Index
Philadelphia Gold/Silver Index
NYSE Arca Gold Miners Index
Dow Jones Sustainability Index (DJSI) – North America
Dow Jones Sustainability Index (DJSI) – World
Common Shares
(millions)
Outstanding at December 31, 2014
Weighted average 2014
Basic
Fully diluted
1,165
1,165
1,165
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, 2014
NYSE
TSX
2014
2013
902
682
1,266
989
US$10.75
C$12.52
2014 Dividend per Share
US$0.20
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
2014
2013
2014
2013
2014
2013
223
176
166
337
902
173
426
349
318
1,266
Share Volume
(millions)
US$21.45
19.22
19.48
15.03
US$36.07
29.39
21.20
20.62
US$17.59
15.47
14.56
10.05
US$28.31
14.67
13.43
15.27
High
Low
2014
2013
2014
2013
2014
2013
199
157
131
195
682
168
327
249
245
989
C$23.78
20.97
21.14
16.80
C$35.50
29.89
22.29
21.55
C$19.00
16.81
16.32
11.67
C$29.08
15.41
14.22
16.33
Barrick Gold Corporation | Financial Report 2014 171
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SHAREHOLDER INFORMATION
Dividend Policy
The Board of Directors reviews the dividend policy
quarterly based on the cash requirements of the
Company’s operating assets, exploration and
development activities, as well as potential acquisitions,
combined with the current and projected financial
position of the Company.
Dividend Payments
In 2014, the Company paid a cash dividend of $0.20
per share – $0.05 on March 17, $0.05 on June 16, $0.05
on September 15, and $0.05 on December 15. A cash
dividend of $0.50 per share was paid in 2013 – $0.20 on
March 15, $0.20 on June 17, $0.05 on September 16,
and $0.05 on December 16.
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 Head Office at
corporatesecretary@barrick.com or at 416-861-9911.
Shareholder Contacts
Shareholders are welcome to contact the Investor
Relations Department for general information on
the Company at investor@barrick.com or at
416-861-9911.
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
CST 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 11219, USA
Tel: 1-800-387-0825
Toll-free throughout North America
Fax: 1-888-249-6189
Email: inquiries@canstockta.com
Website: www.canstockta.com
Auditors
PricewaterhouseCoopers LLP
Toronto, Canada
Annual Meeting
The Annual Meeting of Shareholders will be held on
Tuesday, April 28, 2015 at 10:00 a.m. (Toronto time)
in the Metro Toronto Convention Centre,
John Bassett Theatre, 255 Front Street West,
Toronto, Ontario.
172
Barrick Gold Corporation | Financial Report 2014
Barrick_AR14_FINANCIALS_E_Mar_13.indd 172
2015-03-13 12:32 PM
FINANCIAL HIGHLIGHTS
(In millions of US dollars, except per share data)
2014
2013
2012
$ 10,239
(2,907)
(2.50)
793
0.68
2,296
2,699
0.20
0.20
6,249
1,265
598
864
436
3.03
1.92
2.43
$
$
$
$
$
$
$ 12,527
(10,366)
(10.14)
2,569
2.51
4,239
2,404
0.50
0.20
7,166
1,407
566
915
539
3.39
1.92
2.42
$
$
$
$
$
$
$ 14,394
(538)
(0.54)
3,954
3.95
5,983
2,097
0.75
0.80
7,421
1,669
563
1,014
468
3.57
2.05
2.85
$
$
$
$
$
$
(Based on IFRS)
Revenues
Net earnings (loss)
per share
Adjusted net earnings1
per share1
Operating cash flow
Cash and equivalents
Dividends paid per share
Annualized dividend per share2
Gold production (000s oz)
Average realized gold price per ounce1
Cash costs per ounce1, 3
All-in sustaining cash costs per ounce1
Copper production (Mlbs)
Average realized copper price per pound1
C1 cash costs per pound1
C3 fully allocated costs per pound1
1. Non-GAAP financial measure—see pages 75– 84 of the 2014 Financial Report.
2. Calculation based on annualizing the last dividend paid in the respective year.
3. Unchanged from the measure previously referred to as adjusted operating costs.
Message from the Chairman
Message from the Co-Presidents
Board of Directors
Corporate Governance and Committees
of the Board
Executive Officers and Advisory Boards
Management’s Discussion and Analysis
Mineral Reserves and Resources
Financial Statements
Notes to Financial Statements
Shareholder Information
2
4
10
11
12
14
86
98
103
171
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference
in this Annual Report 2014, 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,
copper or certain other commodities (such as silver, diesel
fuel and electricity); changes in national and local government
legislation, taxation, controls or regulations and/or changes in
the administration of laws, policies and practices, expropriation
or nationalization of property and political or economic
developments in Canada, the United States, Zambia and other
jurisdictions in which the Company does or may carry on
business in the future; failure to comply with environmental
and health and safety laws and regulations; timing of receipt
of, or failure to comply with, necessary permits and approvals;
diminishing quantities or grades of reserves; increased costs,
delays, suspensions and technical challenges associated with
the construction of capital projects; 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; adverse changes in our credit rating; the impact of
inflation; operating or technical difficulties in connection with
mining or development activities; the speculative nature of
mineral exploration and development; risk of loss due to acts
of war, terrorism, sabotage and civil disturbances; fluctuations
in the currency markets; changes in U.S. dollar interest rates;
risks arising from holding derivative instruments; litigation;
contests over title to properties, particularly title to undeveloped
properties, or over access to water, power and other required
infrastructure; business opportunities that may be presented to,
or pursued by, the Company; our ability to successfully integrate
acquisitions or complete divestitures; employee relations;
availability and increased costs associated with mining inputs
and labor; 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, copper cathode or gold or copper concentrate
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 2014 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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Barrick Gold Corporation
Annual Report 2014
www.barrick.com
Barrick Gold Corporation
Head 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: investor@barrick.com
barrick.com
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